Leon's Furniture Limited - 2010 FOURTH QUARTER

TORONTO, Feb. 17 /CNW/ - Leon's Furniture Limited is pleased to announce its results for the full year 2010 and the fourth quarter 2010. For the year ended December 31, 2010, total Leon's sales were $896,834,000 including $197,062,000 franchise sales ($897,470,000 including $194,290,000 franchise sales in 2009). Net income was $63,284,000, $0.90 per common share ($56,864,000, $0.80 per common share in 2009), an increase of 12.5% per share. Same store corporate sales were down 1.1% from the prior year.

For the three months ended December 31, 2010, total Leon's sales were $254,517,000 including $59,820,000 of franchise sales ($255,665,000 including $57,679,000 of franchise sales in 2009), a decrease of 0.4%.  Same store corporate sales were down 2.9% from the prior year fourth quarter. Net income was $21,360,000, $0.30 per common share ($24,030,000, $0.34 per common share in 2009), a decrease of 11.1% per share.  

Although sales were flat compared to the prior year, we are very pleased with the profit improvements this year. We thank our Associates for all their efforts this year in improving our productivity and reducing overall expenditures which in turn helped improve profitability in 2010.

During the year 2010, the Corporation opened a new corporate store in Thunder Bay, Ontario, and welcomed new Leon's franchises in Collingwood, Ontario and Fort Frances, Ontario.  Construction has begun on a new warehouse and showroom in Regina, Saskatchewan.  In addition, leasing documentation was signed for new corporate stores to be located in Guelph, Ontario; Rosèmere, Quebec; and Mississauga, Ontario.  We anticipate the opening of these showrooms in the fall of 2011. Given the success of our 100th Anniversary program in 2009, the Corporation continued its donations to hospitals and charities in communities where Leon's corporate stores are located.

The Directors are pleased to declare a quarterly dividend of 9¢ per common share, payable on April 4, 2011 to the shareholders of record at the close of business on March 4, 2011. Dividends paid by Leon's Furniture Limited are "eligible dividends" pursuant to the changes to the Income Tax Act under Bill C-28, Canada.

EARNINGS PER SHARE FOR EACH QUARTER

  MARCH 31 JUNE 30 SEPT. 30 DEC. 31 YEAR
TOTAL
2010 -
-
Basic
Fully Diluted
17¢
17¢
17¢
16¢
26¢
25¢
30¢
29¢
$0.90
$0.87
2009 -
-
Basic
Fully Diluted
12¢
12¢
12¢
12¢
22¢
21¢
34¢
33¢
$0.80
$0.78
2008 -
-
Basic
Fully Diluted
16¢
15¢
16¢
16¢
25¢
24¢
33¢
32¢
$0.90
$0.87

LEON'S FURNITURE LIMITED / MEUBLES LEON LTÉE

Mark J. Leon
Chairman of the Board


       
Leon's Furniture Limited / Meubles Leon Ltée      
Incorporated under the laws of Ontario      
       
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
       
  As at December 31   As at December 31
($ in thousands) 2010   2009
       
ASSETS      
Current      
Cash and cash equivalents 71,589   58,301
Marketable securities 120,726   94,337
Restricted marketable securities 19,498   18,088
Accounts receivable 28,569   31,501
Inventory 85,423   83,957
Future tax assets 1,251   1,133
Total current assets 327,056   287,317
Prepaid expenses 1,574   1,560
Goodwill 11,282   11,282
Intangibles 4,902   5,334
Future tax assets 11,951   11,465
Property, plant & equipment net 209,909   212,198
  566,674   529,156
       
LIABILITIES AND SHAREHOLDERS' EQUITY      
Current      
Accounts payable and accrued liabilities 84,065   83,880
Income taxes payable 524   1,958
Customers' deposits 17,198   15,632
Dividends payable 6,310   4,938
Deferred warranty plan revenue  16,882   16,150
Total current liabilities 124,979   122,558
Deferred warranty plan revenue  21,392   22,248
Redeemable share liability 172   383
Future tax liabilities 9,845   8,829
Total liabilities 156,388   154,018
       
Shareholders' equity      
Common shares 19,177   17,704
Retained earnings 390,629   357,576
Accumulated other comprehensive income 480   (142)
Total shareholders' equity 410,286   375,138
  566,674   529,156

           
Leon's Furniture Limited / Meubles Leon Ltée          
           
CONSOLIDATED STATEMENTS OF INCOME AND
RETAINED EARNINGS
(UNAUDITED)
Period ended December 31st          
($ in thousands)   3 months ended     12 months ended
  2010 2009   2010 2009
           
Sales 194,697 197,986   699,772 703,180
Cost of sales 112,130 111,735   412,379 419,819
Gross profit 82,567 86,251   287,393 283,361
Operating expenses (income)          
Salaries and commissions 27,174 26,166   105,368 103,977
Advertising 9,843 9,140   31,565 34,732
Rent and property taxes 3,538 3,183   14,000 12,165
Amortization 4,160 4,154   16,156 16,562
Employee profit-sharing plan 1,275 1,350   4,746 4,177
Other operating expenses 11,008 11,553   41,495 42,359
Interest income (991) (796)   (3,134) (3,165)
Other income (3,676) (2,871)   (11,757) (9,980)
  52,331 51,879   198,439 200,827
Income before gain on sale of capital property and income taxes 30,236 34,372   88,954 82,534
Gain on sale of capital property   1,231
Income before income taxes 30,236 34,372   90,185 82,534
Provision for income taxes 8,876 10,342   26,901 25,670
Net income for the period 21,360 24,030 63,284 56,864
Retained earnings, beginning of the period 377,319 355,519   357,576 338,960
Dividends declared (6,310) (19,094)   (22,492) (33,951)
Excess of cost of share repurchase over carrying value of related shares (1,740) (2,879)   (7,739) (4,297)
Retained earnings, end of period 390,629 357,576   390,629 357,576
Weighted average number of common shares outstanding ('000's)          
Basic 70,126 70,682   70,372 70,714
Diluted 72,781 73,399   73,134 73,321
Earnings per share          
Basic $0.30 $0.34   $0.90 $0.80
Diluted $0.29 $0.33   $0.87 $0.78
Dividends declared  per share          
Common $0.09 $0.27   $0.32 $0.48
Convertible, non-voting $0.18 $0.14   $0.18 $0.14
           

         
Leon's Furniture Limited / Meubles Leon Ltée        
         
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
         
Period ended December 31st        
($ in thousands)   3 months ended   12 months ended
  2010 2009 2010 2009
         
OPERATING ACTIVITIES        
Net income for the period 21,360 24,030 63,284 56,864
Add (deduct) items not involving a current cash payment        
   Amortization of property, plant & equipment 3,935 3,935 15,354 15,810
   Amortization of intangible assets 225 219 802 752
   Amortization of deferred warranty revenue (4,346) (3,951) (16,838) (15,900)
   Loss (gain) on sale of marketable securities          (181) (229) (337) 275
   Future tax expense (653) (2,087) 295 (1,608)
   Loss (gain) on sale of property, plant & equipment 2 1 (1,236) (32)
   Cash received on warranty sales 4,635 5,009 16,714 17,319
  24,977 26,927 78,038 73,480
Net change in non-cash working capital balances related to operations 17,656 21,517 1,391 4,035
Cash provided by operating activities 42,633 48,444 79,429 77,515
         
INVESTING ACTIVITIES        
Purchase of property, plant & equipment (5,502) (1,480) (13,568) (10,545)
Purchase of intangibles (108) (330) (370) (685)
Proceeds on sale of property, plant & equipment 4 2,117 48
Purchase of marketable securities (153,391) 80,882 (524,414) (285,311)
Proceeds on sale of marketable securities 140,551 (92,262) 497,691 274,749
Issuance of series 2009 redeemable share liability 10,683
Decrease(increase) in employee share purchase loans 461 217 1,556 (9,154)
Cash used in investing activities (17,985) (12,973) (36,988) (20,215)
         
FINANCING ACTIVITIES        
Dividends paid (6,309) (19,111) (21,120) (33,965)
Repurchase of common shares (1,800) (3,023) (8,033) (4,517)
Cash used in financing activities (8,109) (22,134) (29,153) (38,482)
Net increase in cash and cash equivalents during the period 16,539 13,337 13,288 18,818
Cash and cash equivalents, beginning of period 55,050 44,964 58,301 39,483
Cash and cash equivalents,end of period 71,589 58,301 71,589 58,301

       
Leon's Furniture Limited / Meubles Leon Ltée      
       
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(UNAUDITED)      
Three month period ended December 31st      
($ in thousands)      
      Net of tax
  2010 Tax effect 2010
       
Net income for the period 21,360 21,360
Other comprehensive income, net of tax      
   Unrealized gains on available-for-sale financial assets arising during the period 160 23 137
   Reclassification adjustment for net gains and (losses) included in net income (168) (25) (143)
   Change in unrealized (losses) on available-for-sale financial      
      assets arising during the period (8) (2) (6)
Comprehensive income for the period 21,352 (2) 21,354
       
      Net of tax
  2009 Tax effect 2009
       
Net income for the period 24,030 24,030
Other comprehensive income, net of tax      
   Unrealized gains on available-for-sale financial assets arising during the period 268 45 223
   Reclassification adjustment for net gains and (losses) included in net income (247) (39) (208)
   Change in unrealized gains on available-for-sale financial      
      assets arising during the period 21 6 15
Comprehensive income for the period 24,051 6 24,045
       
Twelve month period ended December 31st      
($ in thousands)      
      Net of tax
  2010 Tax effect 2010
       
Net income for the period 63,284   63,284
Other comprehensive income, net of tax      
   Unrealized  gains on available-for-sale financial assets arising during the period 917 144 773
   Reclassification adjustment for net gains and (losses) included in net income (178) (27) (151)
   Change in unrealized gains on available-for-sale financial      
      assets arising during the period 739 117 622
Comprehensive income for the period 64,023 117 63,906
       
       
      Net of tax
  2009 Tax effect 2009
       
Net income for the period 56,864 56,864
Other comprehensive income, net of tax      
   Unrealized gains on available-for-sale financial assets arising during the period 2,578 430 2,148
   Reclassification adjustment for net gains and (losses) included in net income (232) (37) (195)
   Change in unrealized gains on available-for-sale financial      
      assets arising during the period 2,346 393 1,953
Comprehensive income for the period 59,210 393 58,817

SOURCE Leon's Furniture Limited

For further information:

Dominic Scarangella, Tel: (416) 243-4073


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