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Chums Direct Chapters, Canada . Buy Now Pay Later With Interest Free Credit | Indigo’s comparable store sales increase 7.8% in first quarter Toronto, August 21, 2002 - Indigo Books & Music Inc. (TSX: IDG) Canada’s largest book retailer, reported strong sales results for the first quarter due to significant inventory and merchandising improvements. Total consolidated revenues for the 13 weeks ended June 29, 2002 increased 16% to $156.3 million from $135.3 million in the first quarter last year. The increase, due to strong comparative store sales and the addition of 12 superstores, was offset somewhat by decreases from closing 16 traditional format stores. In the first quarter, revenues at Chapters and Indigo superstores including World’s Biggest Bookstore grew to $111.4 million, a 28% increase compared to revenue of $87.2 million in the first quarter of the previous year. Comparative store sales increased 7.8% during the quarter as compared to 2.3% in the same period last year. The total number of superstores at the end of the quarter is 89, compared to 77 last year. I feel very pleased with the results, said Heather Reisman, CEO of Indigo. Through careful product selection, continuing improvements in merchandising and by working closely with publishers and vendors, we have been able to show strong comparative store sales for the period. Total traditional store revenues declined to $33.9 million in the first quarter, a decrease of $1.8 million or 5% in comparison to $35.7 million in the first quarter last year. The decline in revenue is the result of operating 16 (8%) fewer stores compared to the first quarter last year. Sales declined due to the smaller portfolio but were offset by strong sales increases from improved in-stock position and merchandising. Comparative store sales increased 4.5% in the first quarter, compared to 3.6% in the first quarter last year. The total number of traditional stores at the end of the quarter is 182, compared to 198 last year. Consolidated losses before interest, taxes, amortization and non-controlling interest (operating losses) for the first quarter were $2.9 million compared to $1.7 million in the first quarter last year, representing an increase in operating losses of $1.2 million in the quarter. The increase is largely due to increased store expenses as a result of operating an additional 12 superstores. In this quarter, Indigo typically incurs operating losses due to the seasonality of its business. The consolidated net loss for the quarter was $13.2 million ($ 0.63 per share) as compared to a consolidated net loss of $7.0 million ($0.48 per share) in the first quarter last year. The variance is largely attributable to two non-cash items that reduced last year’s losses. The Company had a non-controlling interest in Chapters Online in the first quarter last year that reduced last year’s interest losses by $820,000. Similarly, $3.8 million in income taxes recoverable reduced the reported net loss for the quarter last year. In accordance with Canadian generally accepted accounting principles, income tax recoverable was not recognized in the quarter this year. 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 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 www.chapters.indigo.ca, an online retailer of books, videos and DVDs. Indigo is a publicly traded company, listed on the Toronto Stock Exchange under the stock symbol IDG. To learn more about Indigo, please visit the About Our Company section of www.chapters.indigo.ca . For more information please contact: Tracy Nesdoly Vice President Communications Indigo Books & Music Inc. 416-263-5025 Indigo Books & Music Inc. Consolidated Statements of Loss Unaudited [in thousands of dollars, except per share data] 13-week period ended June 29, 2002 13-week period ended June 30, 2001 Revenue $ 156,336 $ 135,285 Cost of product, purchasing, selling and administration 159,189 136,978 (2,853) (1,693) Amortization of capital assets 5,974 7,301 Amortization of pre-opening store costs 14 195 Amortization of goodwill - 250 Loss before the undernoted items (8,841) (9,439) Interest on long-term debt and financing charges 2,240 978 Interest on current debt 1,951 1,162 Loss before income tax recovery and non-controlling interest (13,032) (11,579) Income tax expense (benefit) 150 (3,802) Loss before non-controlling interest (13,182) (7,777) Non-controlling interest - (820) Net loss for the period $ (13,182) $ (6,957) Basic net loss per common share $ (0.63) $ (0.48) Diluted net loss per common share $ (0.63) $ (0.48) Weighted average common shares outstanding 20,760 14,353 Indigo Books & Music Inc. Consolidated Balance Sheets Figures as at June 29, 2002 and June 30, 2001 are unaudited [in thousands of dollars] As at June 29, 2002 As at June 30, 2001 As at March 30, 2000 Assets Cash and cash equivalents $ 407 $ 367 $ 677 Accounts receivable 11,067 13,036 12,817 Inventories 228,856 207,141 223,467 Income taxes receivable 352 8,152 4,950 Prepaid expenses 3,856 4,995 4,338 Future income tax assets 6,538 5,281 6,538 Total current assets 251,076 238,972 252,787 Capital assets, net 109,233 131,643 115,041 Future income taxes assets 4,145 6,405 4,145 Goodwill 64,570 8,051 64,570 Deferred financing fees, net of accumulated amortization of $1,217 [March 30, 2002 - $886] 2,958 - 3,289 Total assets 431,982 385,071 439,832 Liabilities and shareholders' equity Bank indebtedness 61,433 69,033 57,254 Accounts payable and accrued liabilities 184,536 170,220 198,746 Deferred revenue 7,332 5,354 6,625 Current portion long-term debt 31,000 - 31,000 Total current liabilities 284,301 244,607 293,625 Accrued benefit obligations 1,306 1,416 1,306 Long-term debt 53,000 54,000 53,000 Convertible debentures 28,665 - 28,071 Non-controlling interest - 896 - Total liabilities 367,272 300,919 376,002 Shareholders' equity Share capital 177,567 144,775 163,505 Equity portion of convertible debentures 1,903 - 1,903 Deficit (114,760) (60,623) (101,578) Total shareholders' equity 64,710 84,152 63,830 Total liabilities and shareholders' equity $ 431,982 $ 385,071 $ 439,832 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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