Leon's Furniture Limited - 2007 Fourth Quarter



    TORONTO, Feb. 21 /CNW/ - Leon's Furniture Limited is pleased to announce
record fourth quarter and full year 2007 results. For the three months ended
December 31, 2007, total Leon's sales were $246,853,000 including $60,931,000
of franchise sales ($236,766,000 including $56,658,000 of franchise sales in
2006), an increase of 3.2% and net income was $21,610,000, $0.31 per common
share ($20,712,000, $0.29 per common share in 2006), an increase of 6.9% per
share. These results include a one-time tax adjustment of $1,000,000 due to
the write down of future tax assets related to corporate income tax rate
reductions enacted by the federal government in the quarter. Excluding the
one-time tax adjustment, fourth quarter net earnings were $0.32 per common
share, an increase of 10.3% compared to the previous year.
    In our fourth quarter 2007, we continued to see good growth in sales and
profits over the prior year. We had a very successful grand opening of a new
warehouse and showroom in Longueuil, Quebec and same store corporate sales
were up 2.1% for the quarter.
    For the year ended December 31, 2007, total Leon's sales were
$833,381,000 including $195,925,000 franchise sales ($768,453,000 including
$177,167,000 franchise sales in 2006), an increase of 8.4%. Net income was
$58,494.000, $0.83 per common share ($53,602,000, $0.76 per common share in
2006), an increase of 9.2% per share. Excluding the one-time tax adjustment,
net earnings were $0.84 per common share, an increase of 10.5% compared to the
previous year. Same store corporate sales were up 4.4% over the prior year.
    Overall, we are proud to report that Leon's Furniture Limited continued
to increase sales and grow profits in 2007. We want to congratulate all our
Associates across Canada for their strong efforts, hard work, and dedication
in helping achieve these goals.
    The company completed its purchase of the assets of Appliance Canada
Limited in January 2008. It is currently operating the business under the name
"Appliance Canada" as a separate division.
    Major renovations have recently been completed in Kitchener, Ontario and
Calgary, Alberta with both stores scheduled to have their Grand Re-Openings
later this month. Our new store in downtown Toronto at the John Street
Roundhouse is currently being renovated and is scheduled to open in late Fall
of this year. We also plan to renovate stores in Ottawa, London and
Mississauga in 2008. Finally, we will begin this month a total renovation of
our store in Laval, Québec the last of our original 150,000 sq. ft. warehouse
and showrooms to be renovated.
    The Directors are pleased to declare a quarterly dividend of 7 cents per
common share, payable on April 7, 2008 to the shareholders of record at the
close of business on March 7, 2008. In addition, the Directors have declared a
special dividend of 10 cents per common share, payable on May 7, 2008 to the
shareholders of record at the close of business on April 7, 2008. As of 2007,
dividends paid by Leon's Furniture Limited are "eligible dividends" pursuant
to the changes to the Income Tax Act under Bill C-28, Canada.
    The 2007 Annual Report will be mailed in early April to shareholders of
record on March 24, 2008. The Annual Meeting of Shareholders will take place
on May 12, 2008.

    
    EARNINGS PER SHARE FOR EACH QUARTER
    -----------------------------------
                                                                       YEAR
                             MARCH 31   JUNE 30  SEPT. 30   DEC. 31    TOTAL
                             --------  --------  --------  --------  --------

    2007  -  Basic           15 cents  14 cents  23 cents  31 cents    $0.83
          -  Fully Diluted   15 cents  13 cents  22 cents  30 cents    $0.80

    2006  -  Basic           14 cents  12 cents  21 cents  29 cents    $0.76
          -  Fully Diluted   14 cents  11 cents  20 cents  28 cents    $0.73

    2005  -  Basic           10 cents  11 cents  19 cents  28 cents    $0.68
          -  Fully Diluted   10 cents  11 cents  18 cents  26 cents    $0.65


    LEON'S FURNITURE LIMITED - MEUBLES LEON LTEE

    Mark J. Leon
    Chairman of the Board



    Leon's Furniture Limited-Meubles Leon Ltee
    Incorporated under the laws of Ontario


                         CONSOLIDATED BALANCE SHEETS
                                 (UNAUDITED)

                                                         As at         As at
                                                   December 31   December 31
    ($ in thousands)                                      2007          2006
    -------------------------------------------------------------------------

    ASSETS
    Current
    Cash and cash equivalents                           25,699        28,172
    Marketable securities                              116,580        92,055
    Accounts receivable                                 33,684        25,740
    Inventory                                           75,640        74,733
    -------------------------------------------------------------------------
    Total current assets                               251,603       220,700
    Prepaid expenses                                     1,282         1,221
    Future tax assets                                   10,722        10,652
    Capital assets, net                                211,619       207,066
    -------------------------------------------------------------------------
                                                       475,226       439,639
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current
    Accounts payable and accrued liabilities            92,051        94,665
    Income taxes payable                                 2,137         2,963
    Customers' deposits                                 13,533        12,887
    Dividends payable                                    4,949         4,427
    Deferred warranty plan revenue                      13,812        12,487
    Future tax liabilities                                 355           204
    -------------------------------------------------------------------------
    Total current liabilities                          126,837       127,633
    Deferred warranty plan revenue                      19,124        18,216
    Redeemable share liability                             180           631
    Future tax liabilities                               7,080         5,584
    -------------------------------------------------------------------------
    Total liabilities                                  153,221       152,064
    -------------------------------------------------------------------------

    Shareholders' equity
    Common shares                                       14,020        11,538
    Retained earnings                                  307,068       276,037
    Accumulated other comprehensive income                 917             -
    -------------------------------------------------------------------------
    Total shareholders' equity                         322,005       287,575
    -------------------------------------------------------------------------
                                                       475,226       439,639
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Leon's Furniture Limited-Meubles Leon Ltee


                    CONSOLIDATED STATEMENTS OF INCOME AND
                              RETAINED EARNINGS
                                 (UNAUDITED)

    Period ended December 31st
    ($ in thousands)                    3 months ended       12 months ended
                                       2007       2006       2007       2006

    Sales                           185,922    180,108    637,456    591,286
    Cost of sales                   100,159    101,604    363,261    341,403
    -------------------------------------------------------------------------
    Gross profit                     85,763     78,504    274,195    249,883
    -------------------------------------------------------------------------
    Operating expenses (income)
    Salaries and commissions         27,025     24,515     99,461     89,413
    Advertising                       9,833      9,845     32,008     32,326
    Rent and property taxes           2,555      2,809     10,486     10,656
    Amortization                      3,733      3,470     14,034     13,348
    Employee profit-sharing plan      1,345      1,175      4,200      3,645
    Other operating expenses         11,340     10,381     39,251     35,913
    Interest income                  (1,253)      (697)    (4,695)    (3,539)
    Other income                     (3,467)    (4,541)   (11,130)   (11,370)
    -------------------------------------------------------------------------
                                     51,111     46,957    183,615    170,392
    -------------------------------------------------------------------------
    Income before gain on sale of
     capital property and income
     taxes                           34,652     31,547     90,580     79,491
    Gain on sale of capital
     property                             -          -        443      2,010
    -------------------------------------------------------------------------
    Income before income taxes       34,652     31,547     91,023     81,501
    Provision for income taxes       13,042     10,835     32,529     27,899
    -------------------------------------------------------------------------
    Net income for the period        21,610     20,712     58,494     53,602
    Retained earnings, beginning
     of the period                  290,837    260,159    276,037    249,470
    Dividends declared               (4,949)    (4,427)   (19,828)   (26,554)
    Excess of cost of share
     repurchase over carrying
     value of related shares           (430)      (407)    (7,635)      (481)
    -------------------------------------------------------------------------
    Retained earnings, end of
     period                         307,068    276,037    307,068    276,037
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Weighted average number of
     common shares outstanding
     ('000's)
    Basic                            70,634     70,824     70,777     70,800
    Diluted                          72,986     73,740     73,403     73,716
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Earnings per share
    Basic                             $0.31      $0.29      $0.83      $0.76
    Diluted                           $0.30      $0.28      $0.80      $0.73
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Leon's Furniture Limited-Meubles Leon Ltee


               CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
                                 (UNAUDITED)

    Three month period ended December 31st
    ($ in thousands)
                                                      3 months     12 months
                                                         ended         ended
                                                          2007          2007

    Net income for the period                           21,610        58,494
                                                    -----------   -----------
    Other comprehensive income, net of tax
      Unrealized (losses) gains on
       available-for-sale financial assets
       arising during the period                            59          (290)
      Reclassification adjustment for net gains
       and losses included in net income                    43        (1,185)
                                                    -----------   -----------
      Change in unrealized gains(losses) on
       available-for-sale financial assets arising
       during the period                                   102        (1,475)
                                                    -----------   -----------
    Comprehensive income for the period                 21,712        57,019
                                                    -----------   -----------
                                                    -----------   -----------



    Leon's Furniture Limited-Meubles Leon Ltee


                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (UNAUDITED)

    Three month period ended
     December 31st
    ($ in thousands)                    3 months ended       12 months ended
                                       2007       2006       2007       2006
    -------------------------------------------------------------------------

    OPERATING ACTIVITIES
    Net income for the period        21,610     20,712     58,494     53,602
    Add (deduct) items not involving
     a current cash payment
      Amortization of capital
       assets                         3,733      3,470     14,034     13,348
      Amortization of deferred
       warranty revenue              (3,653)    (3,308)   (13,610)   (11,703)
      Loss (gain) on sale of
       marketable securities           (136)      (387)      (698)      (393)
      Future tax expense              2,765      1,221      1,577        611
      Loss (gain) on sale of
       capital assets                   (16)       (14)         5     (2,030)
      Cash received on warranty
       sales                          4,891      4,638     15,843     14,887
    -------------------------------------------------------------------------
                                     29,194     26,332     75,645     68,322
    Net change in non-cash working
     capital balances related to
     operations                      (2,220)     4,236     (7,112)    16,656
    -------------------------------------------------------------------------
    Cash provided by operating
     activities                      26,974     30,568     68,533     84,978
    -------------------------------------------------------------------------

    INVESTING ACTIVITIES
    Purchase of capital assets       (4,221)    (9,146)   (23,404)   (35,843)
    Proceeds on sale of capital
     assets                              31         25        218      2,154
    Purchase of marketable
     securities                    (135,697)   (33,829)  (253,617)  (148,567)
    Proceeds on sale of
     marketable securities          122,350     36,033    230,888    132,033
    Decrease in employee share
     purchase loans                     595          7      2,286        492
    -------------------------------------------------------------------------
    Cash used in investing
     activities                     (16,942)    (6,910)   (43,629)   (49,731)
    -------------------------------------------------------------------------

    FINANCING ACTIVITIES
    Dividends paid                   (5,602)    (4,427)   (19,671)   (25,663)
    Repurchase of capital stock        (434)      (412)    (7,706)      (486)
    -------------------------------------------------------------------------
    Cash used in financing
     activities                      (6,036)    (4,839)   (27,377)   (26,149)
    -------------------------------------------------------------------------
    Net increase (decrease) in
     cash and cash equivalents
     during the period                3,996     18,819     (2,473)     9,098
    Cash and cash equivalents,
     beginning of period             21,703      9,353     28,172     19,074
    -------------------------------------------------------------------------
    Cash and cash equivalents,
     end of period                   25,699     28,172     25,699     28,172
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    





For further information:

For further information: Terrence Leon, (416) 243-4073


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