Leon's Furniture Limited - 2008 Fourth Quarter



    TORONTO, Feb. 19 /CNW/ - Leon's Furniture Limited is pleased to announce
record fourth quarter and full year 2008 results. For the three months ended
December 31, 2008, total Leon's sales were $269,891,000 including $63,803,000
of franchise sales ($246,853,000 including $60,931,000 of franchise sales in
2007), an increase of 9.3% and net income was $23,203,000, $0.33 per common
share ($21,610,000, $0.31 per common share in 2007), an increase of 7.4% per
share.
    The increase in sales in the fourth quarter 2008 was attributable to the
acquisition of Appliance Canada. We saw evidence that the Canadian economy was
slowing down in the latter part of 2008 as same store corporate sales were
down 1.7% in the fourth quarter of 2008 when compared to the same quarter
2007.
    For the year ended December 31, 2008, total Leon's sales were
$950,221,000 including $209,848,000 franchise sales ($833,381,000 including
$195,925,000 franchise sales in 2007), an increase of 14.0%. Net income was
$63,388,000, $0.90 per common share ($58,494.000, $0.83 per common share in
2007), an increase of 8.4% per share. Excluding Appliance Canada, same store
corporate sales were up 2.3% over the prior year.
    Even with an economic slowdown that commenced in the later part of the
year, we are pleased to report that Leon's Furniture Limited continued to
increase sales and grow profits in 2008. Once again, we thank all our
Associates across Canada for their hard work, and dedication in helping
achieve these goals. We are also pleased with the first year performance of
our Appliance Canada division which was acquired in January 2008. Appliance
Canada is involved in the wholesale of appliances to the building and
apartment trade, as well as some retail of high-end appliances to the public.
    Major renovations are well on their way at our Laval, Quebec warehouse
and showroom and the grand re-opening is scheduled for late spring 2009. Our
new store in downtown Toronto at the John Street Roundhouse is currently being
renovated and is scheduled to open this summer.
    The Directors are pleased to declare a quarterly dividend of 7 cents per
common share, payable on April 6, 2009 to the shareholders of record at the
close of business on March 6, 2009. 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 2008 Annual Report will be mailed in early April to shareholders of
record on March 24, 2009. The Annual Meeting of Shareholders will take place
on May 13, 2009.

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

    2008  -  Basic           16 cents  16 cents  25 cents  33 cents    $0.90
          -  Fully Diluted   15 cents  16 cents  24 cents  32 cents    $0.87

    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


    LEON'S FURNITURE LIMITED / MEUBLES LEON LTEE

    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               As at
                                             December 31         December 31
    ($ in thousands)                                2008                2007
    -------------------------------------------------------------------------

    ASSETS
    Current
    Cash and cash equivalents                     39,483              25,699
    Marketable securities                         83,194             102,013
    Restricted marketable securities              16,598              14,567
    Accounts receivable                           30,291              33,684
    Income taxes recoverable                       2,037                   -
    Inventory                                     92,904              75,640
    Income taxes recoverable                           -                   -
    Future tax assets                                270                   -
    -------------------------------------------------------------------------
    Total current assets                         264,777             251,603
    Prepaid expenses                               1,490               1,282
    Goodwill                                      11,282                   -
    Intangibles                                    4,875                   -
    Other receivables                                419                   -
    Future tax assets                             10,752              10,722
    Property, plant & equipment net              219,813             211,619
    -------------------------------------------------------------------------
                                                 513,408             475,226
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current
    Accounts payable and accrued liabilities      95,247              92,051
    Income taxes payable                               -               2,137
    Customers' deposits                           14,119              13,533
    Dividends payable                              4,952               4,949
    Deferred warranty plan revenue                15,267              13,812
    Future tax liabilities                             -                 355
    -------------------------------------------------------------------------
    Total current liabilities                    129,585             126,837
    Deferred warranty plan revenue                21,712              19,124
    Redeemable share liability                       285                 180
    Future tax liabilities                         8,468               7,080
    -------------------------------------------------------------------------
    Total liabilities                            160,050             153,221
    -------------------------------------------------------------------------

    Shareholders' equity
    Common shares                                 16,493              14,020
    Retained earnings                            338,960             307,068
    Accumulated other comprehensive income        (2,095)                917
    -------------------------------------------------------------------------
    Total shareholders' equity                   353,358             322,005
    -------------------------------------------------------------------------
                                                 513,408             475,226
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    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
                                          2008      2007      2008      2007

    Sales                              206,088   185,922   740,376   637,456
    Cost of sales                      116,866   100,159   440,360   363,261
    -------------------------------------------------------------------------
    Gross profit                        89,222    85,763   300,016   274,195
    -------------------------------------------------------------------------
    Operating expenses (income)
    Salaries and commissions            28,882    27,025   112,270    99,461
    Advertising                         10,452     9,833    33,752    32,008
    Rent and property taxes              2,864     2,555    11,268    10,486
    Amortization                         4,474     3,733    16,253    14,034
    Employee profit-sharing plan         1,350     1,345     4,321     4,200
    Other operating expenses            12,177    11,340    46,447    39,251
    Interest income                     (1,302)   (1,253)   (4,836)   (4,695)
    Other income                        (3,191)   (3,467)  (13,595)  (11,573)
    -------------------------------------------------------------------------
                                        55,706    51,111   205,880   183,172
    -------------------------------------------------------------------------
    Income before income taxes          33,516    34,652    94,136    91,023
    Provision for income taxes          10,311    13,042    30,746    32,529
    -------------------------------------------------------------------------
    Net income for the period           23,205    21,610    63,390    58,494
    Retained earnings, beginning of
     the period                        320,711   290,837   307,068   276,037
    Dividends declared                  (4,956)   (4,949)  (26,873)  (19,828)
    Excess of cost of share
     repurchase over carrying
     value of related shares                 -      (430)   (4,625)   (7,635)
    -------------------------------------------------------------------------
    Retained earnings, end of period   338,960   307,068   338,960   307,068
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Weighted average number of common
     shares outstanding ('000's)
    Basic                               70,730    70,634    70,729    70,777
    Diluted                             72,629    72,986    72,818    73,403
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Earnings per share
    Basic                                $0.33     $0.31     $0.90     $0.83
    Diluted                              $0.32     $0.30     $0.87     $0.80
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Dividends declared  per share
    Common                               $0.07     $0.07     $0.38   $0.2725
    Convertible, non-voting              $0.14     $0.14     $0.14     $0.14
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



               CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
                                 (UNAUDITED)
    Three month period ended December 31st
    ($ in thousands)
                                                                         Net
                                                               Tax    of tax
                                                    2008    effect      2008

    Net income for the period                     33,516         -    33,516
    Other comprehensive income, net of tax
      Unrealized losses on available-for-sale
       financial assets arising during the
       period                                         (6)       (1)       (5)
      Reclassification adjustment for net gains
       and (losses) included in net income             -         -         -
                                               ------------------------------
      Change in unrealized losses on
       available-for-sale financial
       assets arising during the
       period                                         (6)       (1)       (5)
                                               ------------------------------
    Comprehensive income for the period           33,510        (1)   33,511
                                               ------------------------------
                                               ------------------------------


                                                                         Net
                                                               Tax    of tax
                                                    2007    effect      2007

    Net income for the period                     34,652         -    34,652
    Other comprehensive income, net of tax
      Unrealized gains on available-for-sale
       financial assets arising during the
       period                                         71        12        59
      Reclassification adjustment for net gains
       and (losses) included in net income            54        11        43
                                               ------------------------------
      Change in unrealized gains on
       available-for-sale financial
       assets arising during the
       period                                        125        23       102
                                               ------------------------------
    Comprehensive income for the period           34,777        23    34,754
                                               ------------------------------
                                               ------------------------------


    Twelve month period ended December 31st
    ($ in thousands)

                                                                         Net
                                                               Tax    of tax
                                                    2008    effect      2008

    Net income for the period                     94,136              94,136
    Other comprehensive income, net of tax
      Unrealized losses on available-for-sale
       financial assets arising during the
       period                                         (9)       (1)       (8)
      Reclassification adjustment for net gains
       and (losses) included in net income             -         -         -
                                               ------------------------------
      Change in unrealized losses on
       available-for-sale financial
       assets arising during the
       period                                         (9)       (1)       (8)
                                               ------------------------------
    Comprehensive income for the period           94,127        (1)   94,128
                                               ------------------------------
                                               ------------------------------


                                                                         Net
                                                               Tax    of tax
                                                    2007    effect      2007

    Net income for the period                     91,023         -    91,023
    Other comprehensive income, net of tax
      Unrealized losses on available-for-sale
       financial assets arising during the
       period                                       (357)      (67)     (290)
      Reclassification adjustment for net gains
       and (losses) included in net income        (1,428)     (243)   (1,185)
                                               ------------------------------
      Change in unrealized losses on
       available-for-sale financial
       assets arising during the
       period                                     (1,785)     (310)   (1,475)
                                               ------------------------------
    Comprehensive income for the period           89,238      (310)   89,548
                                               ------------------------------
                                               ------------------------------



    Leon's Furniture Limited / Meubles Leon Ltée

                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (UNAUDITED)

    Three month period ended December 31st
    ($ in thousands)                      3 months ended     12 months ended
                                          2008      2007      2008      2007
    -------------------------------------------------------------------------

    OPERATING ACTIVITIES
    Net income for the period           23,201    21,610    63,390    58,494
    Add (deduct) items not involving
     a current cash payment
      Amortization of property, plant
       & equipment                       4,162     3,733    15,628    14,034
      Amortization of intangible
       assets                              312         -       625         -
      Amortization of deferred
       warranty revenue                 (3,714)   (3,653)  (14,541)  (13,610)
      Loss (gain) on sale of
       marketable securities                65      (136)     (411)     (698)
      Future tax expense                 1,190     2,765     1,350     1,577
      Loss (gain) on sale of
       property, plant &
       equipment                             -       (16)   (1,665)        5
      Cash received on warranty sales    5,155     4,891    17,834    15,843
    -------------------------------------------------------------------------
                                        30,371    29,194    82,210    75,645
    Net change in non-cash working
     capital balances related to
     operations                        (14,012)   (2,220)  (12,482)   (7,112)
    -------------------------------------------------------------------------
    Cash provided by operating
     activities                         16,359    26,974    69,728    68,533
    -------------------------------------------------------------------------

    INVESTING ACTIVITIES
    Purchase of property, plant &
     equipment                          (7,161)   (4,221)  (22,668)  (23,404)
    Proceeds on sale of property,
     plant & equipment                       -        31     2,775       218
    Purchase of marketable securities (124,737) (135,697) (287,913) (253,617)
    Proceeds on sale of marketable
     securities                        138,776   122,350   301,482   230,888
    Decrease in employee share
     purchase loans                        670       595     2,626     2,286
    Purchase of Appliance Canada        (1,982)        -   (20,704)        -
    -------------------------------------------------------------------------
    Cash used in investing activities    5,566   (16,942)  (24,402)  (43,629)
    -------------------------------------------------------------------------

    FINANCING ACTIVITIES
    Dividends paid                      (4,943)   (5,602)  (26,870)  (19,671)
    Repurchase of capital stock              -      (434)   (4,672)   (7,706)
    -------------------------------------------------------------------------
    Cash used in financing activities   (4,943)   (6,036)  (31,542)  (27,377)
    -------------------------------------------------------------------------
    Net increase (decrease) in cash
     and cash equivalents during
     the period                         16,982     3,996    13,784    (2,473)
    Cash and cash equivalents,
     beginning of period                22,501    21,703    25,699    28,172
    -------------------------------------------------------------------------
    Cash and cash equivalents, end of
     period                             39,483    25,699    39,483    25,699
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    





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