Leon's Furniture Limited - 2009 Fourth Quarter

TORONTO, Feb. 17 /CNW/ - Leon's Furniture Limited is pleased to announce its results for the fourth quarter and full year 2009. For the three months ended December 31, 2009, total Leon's sales were $255,665,000 including $57,679,000 of franchise sales ($269,891,000 including $63,803,000 of franchise sales in 2008), a decrease of 5.3%. Same store corporate sales were down 4.5% from the prior year fourth quarter. Despite this sales decrease, net income was $24,030,000, $0.34 per common share ($23,205,000, $0.33 per common share in 2008), an increase of 3.0% per share.

Although sales were down in the fourth quarter 2009 compared to the prior year, we are very pleased with the strong profit results this quarter. We thank our Associates for all their efforts this year in improving our productivity. Working as a team, we were able to put in place stronger controls which resulted in a reduction of overall expenditures. What makes all of this extra special is that it was accomplished in a year in which we celebrated our Company's 100th Anniversary. Once again, we thank all our Associates across Canada for their hard work and dedication in helping to achieve these goals.

For the year ended December 31, 2009, total Leon's sales were $897,470,000 including $194,290,000 franchise sales ($950,224,000 including $209,848,000 franchise sales in 2008), a decrease of 5.6%. Net income was $56,864,000, $0.80 per common share ($63,390.000, $0.90 per common share in 2008), a decrease of 11.1% per share. Same store corporate sales were down 5.4% from the prior year.

During 2009, the Company continued its renovation and expansion program. In the spring of 2009, a major renovation was completed in our warehouse and showroom store in Laval, Quebec. That was followed by the opening of our first downtown Toronto, Ontario showroom store known as the "Roundhouse" in the summer of 2009. Renovations were also completed in the third quarter of 2009 at our Barrie and Whitby, Ontario stores. Construction will commence shortly on two new superstores in Thunder Bay, Ontario (75,000 sq ft) and in Regina, Saskatchewan (85,000 sq ft).

The Directors are pleased to declare a quarterly dividend of 7 cents per common share, payable on April 5, 2010 to the shareholders of record at the close of business on March 5, 2010. 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 2009 Annual Report will be mailed in early April to shareholders of record on March 24, 2010. The Annual Meeting of Shareholders will take place on May 12, 2010.

    
    EARNINGS PER SHARE FOR EACH QUARTER
    -----------------------------------

                              MARCH 31   JUNE 30  SEPT. 30   DEC. 31    YEAR
                              --------   -------  --------   -------    ----
                                                                       TOTAL
                                                                       -----

    2009  -  Basic            12 cents  12 cents  22 cents  34 cents   $0.80
          -  Fully Diluted    12 cents  12 cents  21 cents  33 cents   $0.78

    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


    LEON'S FURNITURE LIMITED/MEUBLES LEON Ltèe

    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)                                       2009         2008
    -------------------------------------------------------------------------

    ASSETS
    Current
    Cash and cash equivalents                            58,301       39,483
    Marketable securities                                94,337       83,194
    Restricted marketable securities                     18,088       16,598
    Accounts receivable                                  31,501       30,291
    Income taxes recoverable                                  -        2,037
    Inventory                                            83,957       92,904
    Future tax assets                                     1,133          270
    -------------------------------------------------------------------------
    Total current assets                                287,317      264,777
    Prepaid expenses                                      1,560        1,490
    Goodwill                                             11,282       11,282
    Intangibles                                           5,334        5,401
    Other receivables                                         -          419
    Future tax assets                                    11,465       10,752
    Property, plant & equipment net                     212,198      219,287
    -------------------------------------------------------------------------
                                                        529,156      513,408
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current
    Accounts payable and accrued liabilities             83,880       95,247
    Income taxes payable                                  1,958            -
    Customers' deposits                                  15,632       14,119
    Dividends payable                                     4,938        4,952
    Deferred warranty plan revenue                       16,150       15,267
    -------------------------------------------------------------------------
    Total current liabilities                           122,558      129,585
    Deferred warranty plan revenue                       22,248       21,712
    Redeemable share liability                              383          285
    Future tax liabilities                                8,829        8,468
    -------------------------------------------------------------------------
    Total liabilities                                   154,018      160,050
    -------------------------------------------------------------------------

    Shareholders' equity
    Common shares                                        17,704       16,493
    Retained earnings                                   357,576      338,960
    Accumulated other comprehensive income                 (142)      (2,095)
    -------------------------------------------------------------------------
    Total shareholders' equity                          375,138      353,358
    -------------------------------------------------------------------------
                                                        529,156      513,408
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    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
                                       2009       2008       2009       2008

    Sales                           197,986    206,088    703,180    740,376
    Cost of sales                   111,735    116,866    419,819    440,360
    -------------------------------------------------------------------------
    Gross profit                     86,251     89,222    283,361    300,016
    -------------------------------------------------------------------------
    Operating expenses (income)
    Salaries and commissions         26,166     28,882    103,977    112,270
    Advertising                       9,140     10,452     34,732     33,752
    Rent and property taxes           3,183      2,864     12,165     11,268
    Amortization                      4,154      4,474     16,562     16,253
    Employee profit-sharing plan      1,350      1,350      4,177      4,321
    Other operating expenses         11,553     12,177     42,359     46,447
    Interest income                    (796)    (1,302)    (3,165)    (4,836)
    Other income                     (2,871)    (3,191)    (9,980)   (13,595)
    -------------------------------------------------------------------------
                                     51,879     55,706    200,827    205,880
    -------------------------------------------------------------------------
    Income before income taxes       34,372     33,516     82,534     94,136
    Provision for income taxes       10,342     10,311     25,670     30,746
    -------------------------------------------------------------------------
    Net income for the period        24,030     23,205     56,864     63,390
    Retained earnings, beginning
     of the period                  355,519    320,711    338,960    307,068
    Dividends declared              (19,094)    (4,952)   (33,951)   (26,873)
    Excess of cost of share
     repurchase over carrying
     value of related shares         (2,879)        (4)    (4,297)    (4,625)
    -------------------------------------------------------------------------
    Retained earnings, end
     of period                      357,576    338,960    357,576    338,960
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Weighted average number of
     common shares outstanding
     ('000's)
    Basic                            70,682     70,730     70,714     70,729
    Diluted                          73,399     72,629     73,321     72,818
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Earnings per share
    Basic                             $0.34      $0.33      $0.80      $0.90
    Diluted                           $0.33      $0.32      $0.78      $0.87
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Dividends declared per share
    Common                            $0.27      $0.07      $0.48      $0.38
    Convertible, non-voting            0.14       0.14       0.14       0.14
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------




    Leon's Furniture Limited-Meubles Leon Ltee

               CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
                                 (UNAUDITED)

    Three month period ended December 31st
    ($ in thousands)
                                                                      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
                                               ------------------------------
                                               ------------------------------


                                                                      Net of
                                                                         tax
                                                  2008   Tax effect     2008


    Net income for the period                   23,205          -     23,205
    Other comprehensive income, net of tax
      Unrealized losses on available-for-sale
       financial assets arising during
       the period                                 (424)       (73)      (351)
      Reclassification adjustment for net gains
       and (losses) included in net income          16          3         13
      Change in unrealized losses on
       available-for-sale financial assets
       arising during the period                  (408)       (70)      (338)
                                               ------------------------------
    Comprehensive income for the period         22,797        (70)    22,867
                                               ------------------------------
                                               ------------------------------


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

                                                                      Net of
                                                                         tax
                                                  2008   Tax effect     2008

    Net income for the period                   63,390          -     63,390
    Other comprehensive income, net of tax
      Unrealized losses on available-for-sale
       financial assets arising during
       the period                               (2,671)      (454)    (2,217)
      Reclassification adjustment for net gains
       and (losses) included in net income        (957)      (162)      (795)
      Change in unrealized losses on
       available-for-sale financial assets
       arising during the period                (3,628)      (616)    (3,012)
                                               ------------------------------
    Comprehensive income for the period         59,762       (616)    60,378
                                               ------------------------------
                                               ------------------------------



    Leon's Furniture Limited-Meubles Leon Ltee

                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (UNAUDITED)

    Period ended December 31st
    ($ in thousands)                    3 months ended       12 months ended
                                       2009       2008       2009       2008
    -------------------------------------------------------------------------

    OPERATING ACTIVITIES
    Net income for the period        24,030     23,201     56,864     63,390
    Add (deduct) items not involving
     a current cash payment
      Amortization of property,
       plant & equipment              3,967      4,162     15,810     15,472
      Amortization of intangible
       assets                           187        312        752        781
      Amortization of deferred
       warranty revenue              (3,951)    (3,714)   (15,900)   (14,541)
      Loss (gain) on sale of
       marketable securities           (229)        65        275       (411)
      Future tax expense             (2,087)     1,190     (1,608)     1,350
      Gain on sale of property,
       plant & equipment                  1          -        (32)    (1,665)
      Cash received on
       warranty sales                 5,009      5,155     17,319     17,834
    -------------------------------------------------------------------------
                                     26,927     30,371     73,480     82,210
    Net change in non-cash working
     capital balances related to
     operations                      21,517    (14,012)     4,035    (12,482)
    -------------------------------------------------------------------------
    Cash provided by operating
     activities                      48,444     16,359     77,515     69,728
    -------------------------------------------------------------------------

    INVESTING ACTIVITIES
    Purchase of property,
     plant & equipment               (1,480)    (7,161)   (10,545)   (22,587)
    Purchase of intangibles            (330)         -       (685)       (81)
    Proceeds on sale of property,
     plant & equipment                    -          -         48      2,775
    Purchase of marketable
     securities                      80,882   (124,737)  (285,311)  (287,913)
    Proceeds on sale of marketable
     securities                     (92,262)   138,776    274,749    301,482
    Issuance of series 2009
     redeemable share liability           -          -     10,683          -
    Decrease(increase) in employee
     share purchase loans               217        670     (9,154)     2,626
    Purchase of Appliance Canada Ltd.     -     (1,982)         -    (20,704)
    -------------------------------------------------------------------------
    Cash used in investing
     activities                     (12,973)     5,566    (20,215)   (24,402)
    -------------------------------------------------------------------------

    FINANCING ACTIVITIES
    Dividends paid                  (19,111)    (4,943)   (33,965)   (26,870)
    Repurchase of common shares      (3,023)         -     (4,517)    (4,672)
    -------------------------------------------------------------------------
    Cash used in financing
     activities                     (22,134)    (4,943)   (38,482)   (31,542)
    -------------------------------------------------------------------------
    Net increase in cash and
     cash equivalents
     during the period               13,337     16,982     18,818     13,784
    Cash and cash equivalents,
     beginning of period             44,964     22,501     39,483     25,699
    -------------------------------------------------------------------------
    Cash and cash equivalents,
     end of period                   58,301     39,483     58,301     39,483
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

SOURCE Leon's Furniture Limited

For further information: For further information: Dominic Scarangella, (416) 243-4073


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