TORONTO, Nov. 14 /CNW/ - For the three months ended September 30, 2005,
total Leon's sales were $187,055,000 including $45,070,000 of franchise sales
($173,221,000 including of $42,076,000 franchise sales in 2004), an increase
of 8.0%. Net income was $13,630,000, 76 cents per common share ($13,947,000,
75 cents per common share in 2004), an increase of 1.3% per common share. The
third quarter 2004 includes a net after tax gain from sale of property of
$850,000 or 4 cents per common share.
For the nine months ended September 30, 2005, total Leon's sales were
$496,008,000 including $118,508,000 of franchise sales ($461,896,000 including
$110,385,000 of franchise sales in 2004), an increase of 7.6% and net income
was $29,306,000, $1.62 per common share ($29,014,000, $1.56 per common share
in 2004), an increase of 3.8% per common share.
The Directors have declared a quarterly dividend of 20 cents per common
share payable on the 12th day of January 2006 to shareholders of record at the
close of business on the 12th day of December 2005. In addition, the annual
dividend on the convertible non-voting series shares of 40 cents , will be
payable on January 12th, 2006 to the shareholders of record at the close of
business on December 12th, 2005.
From September 6, 2005, the date on which Leon's current issuer bid
commenced, to today, the company has purchased 238,200 Common Shares at an
average price of $38.54 per share. Leon's management and Directors believe
that this is an appropriate use of its corporate funds.
<<
EARNINGS PER SHARE FOR EACH QUARTER
YEAR
MARCH 31 JUNE 30 SEPT. 30 DEC. 31 TOTAL
---------- ---------- ---------- ---------- ----------
2005 - Basic 43 cents 43 cents 76 cents $1.62
- Fully
Diluted 41 cents 42 cents 74 cents $1.57
2004 - Basic 40 cents 41 cents 75 cents 93 cents $2.49
- Fully
Diluted 39 cents 40 cents 73 cents 89 cents $2.41
2003 - Basic 23 cents 33 cents 58 cents 85 cents $1.99
Restated - Fully
Diluted 23 cents 31 cents 56 cents 82 cents $1.92
LEON'S FURNITURE LIMITED - MEUBLES LEON LTEE
Mark J. Leon
Chairman of the Board
MANAGEMENT'S DISCUSSION AND ANALYSIS
November 14, 2005
Management's Discussion and Analysis should be read in conjunction with
the unaudited consolidated interim financial statements of the Company for the
nine months ended September 30, 2005, Management's Discussion and Analysis for
the year ended December 31, 2004, the audited consolidated financial
statements for the year ended December 31, 2004 and the Company's Annual
Information Form dated February 21, 2005.
Financial Statements Governance Practice
Leon's Furniture Limited's financial statements have been prepared in
accordance with Canadian Generally Accepted Accounting Principles and the
amounts expressed are in Canadian dollars.
The Audit Committee of the Board of Directors of Leon's Furniture Limited
reviewed the Management's Discussion and Analysis ("MD & A") and the financial
statements, and recommended the Board of Directors approve them. Following
review by the full Board, the financial statements and MD & A were approved.
Revenues and Expenses
For the three months ended September 30, 2005, total Leon's sales were
$187,055,000 including $45,070,000 of franchise sales ($173,221,000 including
$42,076,000 of franchise sales in 2004), an increase of 8.0%.
Leon's corporate sales of $141,985,000 in the third quarter of 2005,
increased by $10,840,000, or 8.3%, compared to the third quarter of 2004. The
increase in sales was attributable to many factors such as: an additional new
showroom and warehouse stored opened in Edmonton, Alberta in October, 2004, a
new showroom and warehouse stores opened in Quebec City, Quebec in November
2004 replacing our Vanier, QuDebec store and a new showroom and warehouse
opened in Beauport, Quebec in August, 2005 replacing our Ste Foy, Quebec
store. We also saw sales growth from newly renovated stores, with our most
recent renovated showroom and warehouse reopened in Windsor, Ontario in the
spring of 2005. Merchandise volumes sold for the quarter and the year
continued to rise at a higher pace than sales dollars as the trend of bringing
in lower priced offshore furniture products especially from Asia continued to
increase. We have been able to pass these savings to our customers through
lower priced merchandise. For the quarter, all regions were up in sales with
the strongest sales growth taking place in Western Canada. Same store
corporate sales were up by 2.6% in the quarter when compared to the prior
year.
Leon franchise sales of $45,070,000 in the third quarter of 2005,
increased by $2,994,000, or 7.1%, compared to the third quarter of 2004. The
sales increase is the result of two new franchise stores opened in the fall of
2004, Simcoe, Ontario and Truro, Nova Scotia. Regionally we saw some marginal
sales growth in Western Canada, with flat sales in Central Canada and lower
sales in Eastern Canada.
Our gross margin for the third quarter 2005 of 40.61% was down just over
one quarter of a percentage point from the third quarter 2004. This was mainly
the result of offering sales value to our customers in order to increase
sales.
Net Operating expenses of $36,850,000 were up $3,357,000 or 10% for the
third quarter 2005 compared to the third quarter 2004. Payroll and commission
costs were in line with higher sales of 8.3% for the quarter compared to the
prior year. We saw advertising expenses increase by $870,000 or 15.2% for the
third quarter compared to the prior year. Additional advertising dollars were
used to help drive higher sales and we incurred incremental marketing costs
associated with the grand opening of our new showroom and warehouse in
Beauport, Quebec, in August 2005. Delivery and utility costs were up just over
$1,000,000 for the third quarter 2005 compared to 2004 mainly as a result of
increased fuel and hydro rates.
As a result of the above, net income for the third quarter 2005 was
$13,630,000, 76 cents per common share ($13,947,000, 75 cents per common share
in 2004), an increase of 1.3% per common share. The third quarter 2004
includes a net after tax gain from sale of property of $850,000 or 4 cents per
common share.
Annual Financial Information
($ in thousands, except earnings per share) 2004 2003 2002
Net Corporate Sales 504,591 455,702 449,693
Leon Franchise Sales 165,252 133,422 129,192
Total Leon sales 669,843 589,104 578,885
Net Income 46,104 38,438 38,520
Earnings per Share
Basic $2.49 $1.99 $1.96
Diluted $2.41 $1.92 $1.93
Total Assets 368,121 340,093 320,439
Common Share Dividends Declared $0.74 $0.50 $0.98
Convertible Non-Voting Shares Dividends
Declared $0.40 $0.24 $0.24
Liquidity and Financial Resources
In $000 - except Per Share Data
Balances as at: Sept. Dec. Sept.
30/05 31/04 30/04
--------- --------- ---------
Cash and marketable securities $71,318 $98,995 $84,707
Accounts receivable 11,093 17,763 11,130
Inventory 78,597 71,279 68,027
Total assets 351,950 368,121 341,623
Working capital 76,596 90,838 91,198
Current Prior First
Quarter Quarter Quarter
Sept. June Mar.
For the 3 Months Ended 30/05 30/05 31/05
--------- --------- ---------
Cash flow from operations $21,161 $22,144 $(18,976)
Purchase of capital assets 11,305 5,313 2,265
Repurchase of capital stock 16,772 7,635 0
Dividends paid 3,660 3,659 3,656
Dividends paid per share $0.20 $0.20 $0.20
Cash investments and marketable securities decreased by $9,479,000 in the
quarter. In the third quarter of 2005, $11,305,000 of the Company's financial
resources were used for the acquisition of land and buildings and $16,772,000
for the repurchase of common shares on the Toronto Stock Exchange.
Marketable securities consist primarily of bonds with maturities not
exceeding ten years with an interest rate range of 2.48% to 4.71% and are
stated at the lower of cost and market value. As of September 30, 2005 the
market value exceeds the cost of the marketable securities.
As part of the warranty reinsurance agreement with a subsidiary, the
Company has pledged assets, which are part of the investment portfolio. The
pledged assets are for the benefit of the primary insurance company for the
purposes of insuring customer product warranty sales. The assets are in the
form of a trust with a financial institution amounting to $9,509,000.
Inventory increased by $10,238,000 from the second quarter. The increase
in inventory is mainly attributable to the opening of our new stores in South
Edmonton, Alberta; Quebec City and Beauport, Quebec and the receipt of
merchandise that was delayed as a result of labour unrest in the port of
Vancouver. We also began to increase inventory coming from Asia for our fourth
quarter 2005.
The cash provided by operating activities of $21,161,000 is the result of
the improvement in after tax profits in the quarter and the net changes in non-
cash working capital balances.
As mentioned a new showroom and warehouse was opened in Beauport, Quebec,
in the third quarter, 2005 (55,000 sq ft.) and to date sales are meeting
management expectations. Subsequent to the end of the third quarter, a new
major warehouse & showroom was opened in Hamilton, Ontario (75,000 sq. ft.)
with initial sales results being positive. Construction is close to completion
on our new Woodbridge, Ontario warehouse and showroom (70,000 sq. ft.). We
anticipate opening this store in early 2006. In addition, we anticipate
construction to commence very soon on a new warehouse and showroom in
Newmarket, Ontario (98,000 sq. ft.) and Saskatoon, Saskatchewan
(80,000 sq. ft.) Renovation plans have also been put in motion for Kitchener,
Ontario; Winnipeg, Manitoba; and Calgary, Alberta. We anticipate commencing
construction on these projects in the winter of 2006. All funding for new
store projects and renovations is scheduled to come from our existing cash
resources.
Common Shares
At September 30, 2005 there were 17,676,908 common shares issued and
outstanding. During the third quarter of 2005, 438,100 common shares were
repurchased by the Company and 11,407 convertible, non-voting series 1998
shares and 5,817 convertible, non-voting series 2002 shares were converted to
common shares.
For the nine-month period ending September 30, 2005, the Company
repurchased 643,500 common shares and 39,140 convertible, non-voting series
1998 and 2002 shares were converted to common shares. In addition, 3,393
convertible, non voting series 2002 shares were cancelled.
Commitments
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Contractual
Obligations Payments Due by Period 000's
-------------------------------------------------
Less than 2-3 4-5 After
Total 1 year years years 5 years
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Operating Leases(1) 13,273 302 3,514 1,751 7,706
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Purchase Obligations(2) 11,474 11,474
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Total Contractual
Obligations 24,747 11,776 3,514 1,751 7,706
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(1) The Company is obligated under operating leases to future minimum
annual rental payments for various land and building sites across
Canada.
(2) The estimated cost to complete construction in progress at four
locations in Canada.
In addition, the Company has commitments related to redeemable shares as
follows:
As at As at
September December
($ in thousands) 30, 2005 31, 2004
Authorized
350,000 convertible, non-voting, series 1998 shares
571,000 convertible, non-voting series 2002 shares
Issued
186,195 series 1998 shares (2004 - 186,195) $ 3,277 $ 3,863
398,413 series 2002 shares (2004 - 407,623) 11,453 11,719
Less employees share purchase loans (14,367) (15,383)
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$ 363 $ 199
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Under the terms of its Management Share Purchase Plan, the Company
advanced non-interest bearing loans to certain of its employees in 1998 and
2002 to allow them to acquire convertible, non-voting series, series 1998
shares and series 2002 shares, respectively, of the Company. These loans are
repayable through the application against the loans of any dividends on the
shares, with any remaining balance repayable on the date the shares are
converted to common shares. Each issued and fully paid for series 1998 and
2002 share may be converted into one common share at any time after the fifth
anniversary date of the issue of these shares and prior to the tenth
anniversary of such issue. Each share may also be redeemed at the option of
the holder or by the Company at any time after the fifth anniversary date of
the issue of these shares and prior to the tenth anniversary of such issue.
The redemption price is equal to the original issue price of the shares
adjusted for subsequent subdivisions of shares plus accrued and unpaid
dividends. The purchase prices of the shares are $17.60 per series 1998 share
and $28.75 per series 2002 share.
In October 2005, the Company advanced non-interest bearing loans to
certain of its employees to allow them to acquire 199,500 convertible non-
voting 2005 shares at a price of $37.77 per share. Under this Management Share
Purchase Plan, the holders are obligated to convert these shares at the issued
price, otherwise, the terms and conditions are similar to previously issued
convertible, non-voting shares.
Quarterly Results (2005, 2004, 2003)
Quarterly Income Statement ($000) - except Per Share Data
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Quarter Ended Quarter Ended
September 30 June 30
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2005 2004 2005 2004
-------------------------------------------------------------------------
Leon Corporate Sales $141,985 $131,145 $121,933 $115,894
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Leon Franchise sales 45,070 42,076 38,953 38,160
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Total Leon sales $187,055 $173,221 $160,886 $154,054
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Net Income Per Share $0.76 $0.75 $0.43 $0.41
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Fully Diluted Per Share $0.74 $0.73 $0.42 $0.40
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Quarter Ended Quarter Ended
March 31 December 31
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Restated
2005 2004 2004 2003
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Leon Corporate Sales 113,582 $104,472 $153,080 $136,865
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Leon Franchise sales 34,485 30,149 51,867 38,620
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Total Leon sales $148,067 $134,621 $204,947 $175,485
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Net Income Per Share $0.43 $0.40 $0.93 $0.85
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Fully Diluted Per Share $0.41 $0.39 $0.89 $0.82
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Revenue Recognition
Sales are recognized as revenue for accounting purposes upon the customer
either picking up the merchandise or when merchandise is delivered to the
customers' home.
The Company offers customers the option to finance purchases through
various third party financing companies. In situations where a customer elects
to take advantage of delayed payment terms, the cost of financing these sales
are deducted from sales. Finance costs deducted from sales for the third
quarter 2005 are up $1,100,000 when compared to the same period for 2004.
These additional costs were the result of increased sales and higher finance
rates.
Warranty Revenue
Warranty revenues are deferred and taken into income on a straight-line
basis over the life of the warranty period. Warranty revenues included in
sales year to date 2005 are $7,500,000 compared to $7,200,000 in 2004.
Warranty expenses deducted through costs of goods sold year to date 2005 are
$3,051,000 compared to $2,730,000 in 2004.
Franchise Royalties
Leon's franchisees operate as independent owners. The Company charges the
franchisee a royalty fee based primarily on a percentage of the franchisees
gross sales. This royalty income is recorded by the Company on an accrual
basis under the heading "other income" and is up 6.5% for the third quarter
2005 compared to 2004 which is in line with the increase in franchise sales
for the quarter.
Volume Rebates
The Company receives vendor rebates on certain products based on the
volume of purchases made during specified periods. The rebates are deducted
from the inventory value of goods received and are recognized as a reduction
of cost of goods sold as sales occur.
Accounting Estimates
Reserves for slow moving and damaged inventory are deducted in our
evaluation of inventories. The reserve for slow moving inventory is based on
many years of historic retail experience. The reserve is calculated by
analyzing all inventory on hand older than one year. Damaged inventory is
coded as such and placed in specific locations. The amount of damaged reserve
is determined by specific product categories.
Outlook
The third quarter sales improved over last year, which was a continuation
of a trend we saw for the first two quarters of 2005. The opening of two new
stores this year and the addition of two new stores in 2006, will help grow
sales going forward. We are continuing to experience a stable retail
environment this fall, and we feel confident in our ability to continue to
increase sales for the balance of the year.
Forward-Looking Statements
This news release, in particular the section under heading "Outlook",
includes forward-looking statements, which are not historic facts based on
certain assumptions and reflect Leon's Furniture Limited's current
expectations. These forward-looking statements are subject to a number of
risks and uncertainties that could cause actual results to differ materially
from current expectations. Some of the factors that can cause actual results
to differ materially from current expectations are: sudden slow down in the
Canadian economy, drop in consumer confidence and dependency of product from
third party suppliers. Given these risks and uncertainties, investors should
not place undue reliance on forward-looking statements as a prediction of
actual results.
Leon's Furniture Limited
P.O. Box 1100, Stn. "B"
Weston, ON
M9L 2R8
Phone: (416) 243-4073 Fax: (416) 243-7890
NOTICE OF NO AUDITOR REVIEW OF INTERIM FINANCIAL STATEMENTS
Under National Instrument 51-102, Part 4, subsection 4.3(3)(a), if an
auditor has not performed a review of the interim financial statements, they
must be accompanied by a notice indicating that the financial statements have
not been reviewed by an auditor.
The accompanying unaudited interim financial statements of the company
have been prepared by and are the responsibility of the company's management.
No auditor has performed a review of these financial statements.
--------------------------- -------------------------------
Terrence T. Leon Dominic Scarangella
President & Chief Executive Vice President & Chief Financial
Officer Officer
Dated as of the 14th day of November 2005.
Leon's Furniture Limited-Meubles Leon Ltee
Incorporated under the laws of Ontario
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
As at September 30 As at December 31
(in thousands) 2005 2004
$ $
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ASSETS
Current
Cash and cash equivalents 4,770 14,995
Marketable securities 66,548 84,000
Accounts receivable 11,093 17,763
Inventory 78,597 71,279
Income taxes recoverable 4,838 3,472
Future income tax assets 305 305
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Total current assets 166,151 191,814
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Future income tax assets 5,964 6,285
Capital assets,net 179,835 170,022
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351,950 368,121
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and
accrued liabilities 68,183 79,451
Customers' deposits 9,496 9,896
Dividends payable 3,562 3,907
Deferred warranty plan revenue 8,314 7,722
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Total current liabilities 89,555 100,976
Deferred warranty plan revenue 17,394 17,079
Redeemable share liability 363 199
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Total liabilities 107,312 118,254
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Shareholders' equity
Common shares 10,983 10,532
Retained earnings 233,655 239,335
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Total shareholders' equity 244,638 249,867
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351,950 368,121
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See accompanying notes to interim financial statements.
Leon's Furniture Limited-Meubles Leon Ltee
Incorporated under the laws of Ontario
CONSOLIDATED STATEMENTS OF INCOME AND
RETAINED EARNINGS
(UNAUDITED)
Period ended September 30th
(in thousands, except earnings per share)
3 months ended 9 months ended
2005 2004 2005 2004
$ $ $ $
Sales 141,985 131,145 377,500 351,511
Cost of sales 84,318 77,490 225,217 207,966
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Gross profit 57,667 53,655 152,283 143,545
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Operating expenses(income)
Salaries and commissions 20,804 19,056 58,731 55,202
Advertising 6,607 5,735 20,692 19,677
Rent and property taxes 2,566 2,378 7,291 7,282
Amortization 3,015 2,532 8,778 7,539
Employee profit-sharing plan 725 700 2,276 2,120
Other operating expenses 8,348 7,601 23,557 21,955
Interest income (587) (720) (2,032) (2,287)
Other income (4,628) (3,789) (11,885) (11,452)
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36,850 33,493 107,408 100,036
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Income before gain on sale of
property and income taxes 20,817 20,162 44,875 43,509
Gain on sale of property - 1,177 - 1,177
Income before income taxes 20,817 21,339 44,875 44,686
Provision for income taxes 7,187 7,392 15,569 15,672
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Net income for the period 13,630 13,947 29,306 29,014
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Retained earnings,
beginning of the period 240,154 223,929 239,335 220,426
Dividends declared (3,563) (3,703) (10,882) (10,008)
Excess of cost of share
repurchase over carrying
value of related shares (16,566) (5,059) (24,104) (10,318)
-------------------------------------------------------------------------
Retained earnings,
end of period 233,655 229,114 233,655 229,114
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Weighted average number
of common shares
outstanding
Basic 18,009 18,505 18,050 18,539
Fully diluted 18,594 19,143 18,635 19,177
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Earnings per share
Basic $0.76 $0.75 $1.62 $1.56
Fully diluted $0.74 $0.73 $1.57 $1.51
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See accompanying notes to interim financial statements.
Leon's Furniture Limited-Meubles Leon Ltee
Incorporated under the laws of Ontario
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
3 months ended 9 months ended
Period ended September 30th 2005 2004 2005 2004
(in thousands) $ $ $ $
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OPERATING ACTIVITIES
Net income for the period 13,630 13,947 29,306 29,014
Add (deduct) items not
involving a current cash
payment
Amortization of capital
assets 3,015 2,532 8,778 7,539
Amortization of deferred
warranty revenue (2,476) (2,361) (7,774) (6,708)
Gain on sale of marketable
securities (669) (365) (1,176) (937)
Future tax expense 74 122 321 139
Gain on sale of
capital assets (22) (1,177) (97) (1,177)
Cash received on warranty
sales 3,381 2,848 8,681 7,780
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16,933 15,546 38,039 35,650
Net change in non-cash
working capital balances
related to operations 4,228 6,162 (13,710) (18,316)
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Cash provided by operating
activities 21,161 21,708 24,329 17,334
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INVESTING ACTIVITIES
Purchase of capital assets (11,305) (8,874) (18,883) (19,912)
Proceeds on sale of
capital assets 62 1,978 417 1,996
Purchase of marketable
securities (584,161) (465,754) (1,611,208) (1,340,795)
Proceeds on sale of
marketable securities 590,486 458,987 1,629,836 1,358,457
Decrease in employee share
purchase loans 368 122 666 956
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Cash (used in) provided by
investing activities (4,550) (13,541) 828 702
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FINANCING ACTIVITIES
Dividends paid (3,660) (3,704) (10,975) (8,961)
Repurchase of capital stock (16,772) (5,132) (24,407) (10,477)
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Cash used in financing
activities (20,432) (8,836) (35,382) (19,438)
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Net (decrease) in cash and
cash equivalents
during the period (3,821) (669) (10,225) (1,402)
Cash and cash equivalents,
beginning of period 8,591 11,916 14,995 12,649
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Cash and cash equivalents,
end of period 4,770 11,247 4,770 11,247
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See accompanying notes to interim financial statements.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED
1. BASIS OF PREPARATION
The Company prepares its financial statements in accordance with
accounting principles generally accepted in Canada. The disclosures
contained in these unaudited interim consolidated financial statements do
not include all requirements of Generally Accepted Accounting Principles
for annual financial statements. The unaudited interim consolidated
financial statements should be read in conjunction with the annual
consolidated financial statements for the year ended December 31, 2004.
These interim consolidated financial statements were prepared following
the same policies and standards as in the most recent annual consolidated
financial statements.
2. ACCOUNTING POLICIES
Revenue Recognition
Sales are recognized as revenue for accounting purposes upon the customer
either picking up the merchandise ordered or when merchandise is
delivered to the customers' home.
The Company offers customers the option to finance purchase through
various third party financing companies. In situations where a customer
elects to take advantage of delayed payment terms, the cost of financing
these sales are deducted from sales.
Warranty Revenue
Effective January 1, 2004, the Company adopted on a retroactive basis,
the standard of the Canadian Institute of Chartered Accountants in
accounting for warranty revenue and expenses over the life of the
warranty contract. Warranty revenues are deferred and taken into income
on a straight-line basis over the life of the warranty period. Warranty
costs are recorded as an expense as they are incurred.
Franchise Royalties
Leon's franchisees operate principally as independent owners. The Company
charges the franchisee a royalty fee based on a percentage of the
franchisees gross sales. This royalty income is recorded by the Company
on an accrual basis in other income.
Volume Rebates
The Company receives vendor rebates on certain products based on the
volume of purchases made during specified periods. The rebates are
deducted from the inventory value of goods received and are recognized as
a reduction of cost of goods sold as sales occur.
Accounting Estimates
Reserves for slow moving and damaged inventory are deducted in our
evaluation of inventories. The reserve for slow moving inventory is based
on many years of historic retail experience. The reserve is calculated by
analyzing all inventory on hand older than one year. Damaged inventory is
coded as such and placed in specific locations. The amount of damaged
reserve is determined by specific product categories.
3. COMMON SHARES
During the period, 438,100 common shares were repurchased (2004-
156,400) on the open market pursuant to the terms and conditions of
Normal Course Issuer Bids at a net cost of approximately $16,772,000
(2004-$5,133,000). For the nine month period, the Company repurchased
643,500 (2004-338,500) common shares at a net cost of $24,407,000
(2004-$10,477,000).
All shares repurchased by the Company pursuant to its Normal Course Bids
have been cancelled. The repurchase of common shares resulted in a
reduction of share capital in the amount of approximately $206,300
(2004-$73,000) for the three month period and $303,000 (2004-$159,000)
for the nine month period. The excess net cost over the average book
value of the shares, has been shown as a reduction in retained earnings.
During the period, 11,407 convertible, non-voting, series 1998 shares
were converted into common shares with a stated value of $200,000
(2004-6,954 for a stated value of $122,000). For the nine month period,
33,323 convertible, non-voting, series 1998 shares were converted into
common shares with a stated value of $586,000 (2004-51,603 for a stated
value of $908,000).
During the period, 5,817 convertible, non-voting, series 2002 shares were
converted into common shares with a stated value of $167,000 (2004-nil).
For the nine month period, 3,393 convertible, non-voting series 2002
shares were cancelled in the amount of $97,500 (2004-1,967 for a stated
value of $56,500).
4. INCOME TAXES
The Company's total cash payments for income taxes paid in the three
month period ending September 30, 2005 were $5,615,000 (2004-$6,354,000)
and for the nine month period were $17,605,000 (2004-$29,000,000).
5. SUBSEQUENT EVENTS
In October 2005, the Company advanced non-interest bearing loans to
certain of its employees to allow them to acquire 199,500 convertible
non-voting 2005 shares at a price of $37.77 per share. Under this
Management Share Purchase Plan, the holders are obligated to convert
these shares at the issued price, otherwise, the terms and conditions are
similar to previously issued convertible, non-voting shares.
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