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Press release from CNW Group

Leon's Furniture Limited - 2010 FOURTH QUARTER

Thursday, February 17, 2011

Leon's Furniture Limited - 2010 FOURTH QUARTER14:16 EST Thursday, February 17, 2011TORONTO, 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 31JUNE 30SEPT. 30DEC. 31YEAR TOTAL2010--BasicFully Diluted17¢17¢17¢16¢26¢25¢30¢29¢$0.90$0.872009--BasicFully Diluted12¢12¢12¢12¢22¢21¢34¢33¢$0.80$0.782008--BasicFully Diluted16¢15¢16¢16¢25¢24¢33¢32¢$0.90$0.87LEON'S FURNITURE LIMITED / MEUBLES LEON LTÉEMark J. LeonChairman of the Board    Leon's Furniture Limited / Meubles Leon Ltée   Incorporated under the laws of Ontario       CONSOLIDATED BALANCE SHEETS(UNAUDITED)     As at December 31 As at December 31($ in thousands)2010 2009    ASSETS   Current    Cash and cash equivalents71,589 58,301Marketable securities120,726 94,337Restricted marketable securities19,498 18,088Accounts receivable28,569 31,501Inventory85,423 83,957Future tax assets1,251 1,133Total current assets327,056 287,317Prepaid expenses1,574 1,560Goodwill11,282 11,282Intangibles4,902 5,334Future tax assets11,951 11,465Property, plant & equipment net209,909 212,198 566,674 529,156    LIABILITIES AND SHAREHOLDERS' EQUITY   Current    Accounts payable and accrued liabilities84,065 83,880Income taxes payable524 1,958Customers' deposits17,198 15,632Dividends payable6,310 4,938Deferred warranty plan revenue 16,882 16,150Total current liabilities124,979 122,558Deferred warranty plan revenue 21,392 22,248Redeemable share liability172 383Future tax liabilities9,845 8,829Total liabilities156,388 154,018    Shareholders' equity   Common shares19,177 17,704Retained earnings390,629 357,576Accumulated other comprehensive income480 (142)Total shareholders' equity410,286 375,138 566,674 529,156      Leon's Furniture Limited / Meubles Leon Ltée           CONSOLIDATED STATEMENTS OF INCOME ANDRETAINED EARNINGS(UNAUDITED)Period ended December 31st     ($ in thousands) 3 months ended  12 months ended 20102009 20102009      Sales194,697197,986 699,772703,180Cost of sales112,130111,735 412,379419,819Gross profit82,56786,251 287,393283,361Operating expenses (income)     Salaries and commissions27,17426,166 105,368103,977Advertising9,8439,140 31,56534,732Rent and property taxes3,5383,183 14,00012,165Amortization4,1604,154 16,15616,562Employee profit-sharing plan1,2751,350 4,7464,177Other operating expenses11,00811,553 41,49542,359Interest income(991)(796) (3,134)(3,165)Other income(3,676)(2,871) (11,757)(9,980) 52,33151,879 198,439200,827Income before gain on sale of capital property and income taxes30,23634,372 88,95482,534Gain on sale of capital property- -  1,231- Income before income taxes30,23634,372 90,18582,534Provision for income taxes8,87610,342 26,90125,670Net income for the period21,36024,030- 63,28456,864Retained earnings, beginning of the period377,319355,519 357,576338,960Dividends 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 period390,629357,576 390,629357,576Weighted average number of common shares outstanding ('000's)      Basic70,12670,682 70,37270,714Diluted72,78173,399 73,13473,321Earnings per share     Basic$0.30$0.34 $0.90$0.80Diluted$0.29$0.33 $0.87$0.78Dividends declared  per share     Common$0.09$0.27 $0.32$0.48Convertible, 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 2010200920102009     OPERATING ACTIVITIES    Net income for the period21,36024,03063,28456,864Add (deduct) items not involving a current cash payment       Amortization of property, plant & equipment3,9353,93515,35415,810   Amortization of intangible assets225219802752   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 & equipment21(1,236)(32)   Cash received on warranty sales4,6355,00916,71417,319 24,97726,92778,03873,480Net change in non-cash working capital balances related to operations17,65621,5171,3914,035Cash provided by operating activities42,63348,44479,42977,515     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 & equipment4- 2,11748Purchase of marketable securities(153,391)80,882(524,414)(285,311)Proceeds on sale of marketable securities140,551(92,262)497,691274,749Issuance of series 2009 redeemable share liability- - - 10,683Decrease(increase) in employee share purchase loans4612171,556(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 equivalentsduring the period16,53913,33713,28818,818Cash and cash equivalents, beginning of period55,05044,96458,30139,483Cash and cash equivalents,end of period71,58958,30171,58958,301    Leon's Furniture Limited / Meubles Leon Ltée       CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME(UNAUDITED)   Three month period ended December 31st   ($ in thousands)      Net of tax 2010Tax effect2010    Net income for the period21,360- 21,360Other comprehensive income, net of tax      Unrealized gains on available-for-sale financial assets arising during the period16023137   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 period21,352(2)21,354       Net of tax 2009Tax effect2009    Net income for the period24,030- 24,030Other comprehensive income, net of tax      Unrealized gains on available-for-sale financial assets arising during the period26845223   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 period21615Comprehensive income for the period24,051624,045    Twelve month period ended December 31st   ($ in thousands)      Net of tax 2010Tax effect2010    Net income for the period63,284 63,284Other comprehensive income, net of tax      Unrealized  gains on available-for-sale financial assets arising during the period917144773   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 period739117622Comprehensive income for the period64,02311763,906           Net of tax 2009Tax effect2009    Net income for the period56,864- 56,864Other comprehensive income, net of tax      Unrealized gains on available-for-sale financial assets arising during the period2,5784302,148   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 period2,3463931,953Comprehensive income for the period59,21039358,817For further information: Dominic Scarangella, Tel: (416) 243-4073