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Liquidation World Inc. (LQW – TSX; LIQWF – Nasdaq) announces results for the third quarter, the thirteen weeks ended July 7, 2002. Revenue increased 1% to $42,749,000 from $42,334,000 during the corresponding period in 2001. Net earnings decreased 143% to a loss of $501,000 or ($0.06) per share during the third quarter of fiscal 2002 from $1,174,000 or $0.14 per share during the corresponding period in fiscal 2001.
On a cumulative basis, revenue for the first three quarters of 2002 totaled $134.0 million, a 2% decrease from $136.2 million during the 39 weeks ended July 1, 2001. Net earnings decreased 64% to $1,820,000 ($0.21 per share) during the three quarters of fiscal 2002 from $4,992,000 ($0.59 per share) during the corresponding period of fiscal 2001. Additional details are provided in the financial statements below.
“Start-up expenses at our new subsidiary, Clear Thinking Group, and a $699,000 foreign exchange loss stemming from the surprising strength of the Canadian dollar at quarter end eliminated profitable results from our retailing operations” said Company founder and C.E.O., Dale Gillespie. “We believe the moves we are making today in building a full suite of related services will benefit the Company and its shareholders in the long term. The Company continues to enjoy a very strong financial position with over $3 million in the bank.”
Liquidation World announced on March 18, 2002 that it had acquired Clear Thinking Group, Inc. (a retail, consumer products, and manufacturing turnaround consultancy) and that the start up losses were anticipated to reduce Liquidation World profit by $1.4 million over the balance of the fiscal year.
Liquidation World will open a new outlet in High River, Alberta on September 5, 2002, bringing to 97 the total number of outlets. This outlet extends Liquidation World’s market penetration and takes advantage of existing marketing and logistical infrastructure.
About Liquidation World
Liquidation World offers a uniquely diversified menu of solutions for organizations with asset recovery issues. Services include auctions, reverse logistics and processing, store closure sales management, turnaround consulting, and retail liquidations of consumer merchandise through 96 outlets across North America. Liquidation World solves asset recovery problems, in a professional manner, for the financial services industry, insurance companies, manufacturers and other organizations. Liquidation World opened its first retail outlet in 1986 and is now the largest liquidator in Canada, with more than 1,600 employees in outlets and offices across Canada and the United States.
LIQUIDATION WORLD INC.
|
| Consolidated Statements of Earnings and Retained Earnings |
| (unaudited) (In thousands of Canadian dollars, except per share amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13 Weeks
Ended
|
|
39 Weeks
Ended
|
|
|
|
|
July 7
2002
|
|
July
2001
|
|
July 7
2002
|
|
July 1
2001
|
|
|
|
|
|
|
|
|
|
|
|
| Revenue |
|
|
$ |
42,749 |
$ |
42,334 |
$ |
134,016 |
$ |
136,232 |
| Cost of sales |
|
|
|
26,602 |
|
26,269 |
|
82,916 |
|
83,538 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,147 |
|
16,065 |
|
51,100 |
|
52,694 |
| Expenses |
|
|
|
|
|
|
|
|
|
|
|
Selling and store operations |
|
14,113 |
|
12,293 |
|
41,112 |
|
38,553 |
|
General and administrative |
|
2,322 |
|
1,380 |
|
5,598 |
|
4,217 |
|
Depreciation and amortization |
|
385 |
|
344 |
|
1,079 |
|
1,031 |
|
Interest |
|
|
- |
|
28 |
|
7 |
|
70 |
|
|
|
|
16,820 |
|
14,045 |
|
47,796 |
|
43,871 |
|
|
|
|
|
|
|
|
|
|
|
| Earnings (loss) before income taxes |
|
(673) |
|
2,020 |
|
3,304 |
|
8,823 |
|
|
|
|
|
|
|
|
|
|
|
| Income taxes |
|
|
|
(172) |
|
846 |
|
1,484 |
|
3,831 |
|
|
|
|
|
|
|
|
|
|
|
| Net earnings (loss) |
|
|
(501) |
|
1,174 |
|
1,820 |
|
4,992 |
|
|
|
|
|
|
|
|
|
|
|
| Retained earnings, beginning of period |
|
39,211 |
|
33,727 |
|
36,890 |
|
29,909 |
| Excess of repurchase amount over stated |
|
(47) |
|
- |
|
(47) |
|
- |
|
capital of repurchased shares |
|
|
|
|
|
|
|
|
| Retained earnings, end of period |
$ |
38,663 |
$ |
34,901 |
$ |
38,663 |
$ |
34,901 |
|
|
|
|
|
|
|
|
|
|
|
| Earnings (loss) per share |
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.06) |
$ |
0.14 |
$ |
0.21 |
$ |
0.59 |
|
Diluted |
|
$ |
(0.06) |
$ |
0.12 |
$ |
0.21 |
$ |
0.57 |
|
|
|
|
|
|
|
|
|
|
|
| Shares outstanding at period end |
|
|
|
|
|
8,567,856 |
|
8,485,896 |
| Options outstanding at period end |
|
|
|
|
|
640,830 |
|
567,590 |
|
|
|
|
|
|
|
|
|
|
|
| Segmented Information |
|
|
|
|
|
|
|
|
| (unaudited) (In thousands of Canadian dollars, except per share amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2002 |
|
2001 |
|
2002 |
|
2001 |
|
|
|
|
|
|
|
|
|
|
|
| Revenue |
|
|
|
|
|
|
|
|
|
|
|
Canada |
|
$ |
33,978 |
$ |
33,506 |
$ |
105,819 |
$ |
104,086 |
|
United States |
|
|
8,771 |
|
8,828 |
|
28,197 |
|
32,146 |
|
Total |
|
$ |
42,749 |
$ |
42,334 |
$ |
134,016 |
$ |
136,232 |
| Capital assets |
|
|
|
|
|
|
|
|
|
|
Canada |
|
|
|
|
|
$ |
4,122 |
$ |
3,934 |
|
United States |
|
|
|
|
|
|
593 |
|
602 |
|
Total |
|
|
|
|
|
$ |
4,715 |
$ |
4,536 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIQUIDATION WORLD INC.
|
| Consolidated Statements of Cash Flows |
| (unaudited) (In thousands of Canadian dollars) |
|
|
|
|
13 Weeks
Ended
|
|
39 Weeks
Ended
|
|
|
|
|
July 7
2002
|
|
July 1
2001
|
|
July 7
2002
|
|
July 1
2001
|
|
|
|
|
|
|
|
|
|
|
|
| Cash provided by (used in): |
|
|
|
|
|
|
|
|
|
|
|
| Operations |
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) |
$ |
(501) |
$ |
1,174 |
$ |
1,820 |
$ |
4,992 |
|
Add (deduct) non-cash items: |
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
385 |
|
344 |
|
1,079 |
|
1,031 |
|
|
Equity in income of affiliate |
|
(60) |
|
(28) |
|
(108) |
|
(76) |
|
|
|
|
(176) |
|
1,490 |
|
2,791 |
|
5,947 |
|
Changes in non-cash operating working capital |
|
|
|
|
|
|
|
|
|
|
Accounts receivable |
|
482 |
|
1,173 |
|
(940) |
|
(473) |
|
|
Inventory |
|
(1,007) |
|
(2,704) |
|
2,100 |
|
(5,230) |
|
|
Prepaid expenses |
|
(440) |
|
(953) |
|
(873) |
|
204 |
|
|
Accounts payable and accrued liabilities |
|
62 |
|
(2,405) |
|
4,108 |
|
(1,124) |
|
|
Income taxes |
|
(1,447) |
|
(330) |
|
(3,304) |
|
480 |
|
|
|
|
(2,526) |
|
(3,729) |
|
3,882 |
|
(196) |
|
|
|
|
|
|
|
|
|
|
|
| Investments |
|
|
|
|
|
|
|
|
|
|
|
Purchase of capital assets |
|
(318) |
|
(643) |
|
(1,170) |
|
(1,189) |
|
Business Acquisition |
|
- |
|
- |
|
(104) |
|
- |
|
|
|
|
(318) |
|
(643) |
|
(1,274) |
|
(1,189) |
|
|
|
|
|
|
|
|
|
|
|
| Financing |
|
|
|
|
|
|
|
|
|
|
|
Increase in bank indebtedness |
|
- |
|
4,337 |
|
- |
|
820 |
|
Proceeds on issuance of common shares |
|
- |
|
35 |
|
405 |
|
562 |
|
Repurchase of common shares |
|
(66) |
|
- |
|
(66) |
|
- |
|
|
|
|
(66) |
|
4,372 |
|
339 |
|
1,382 |
|
|
|
|
|
|
|
|
|
|
|
| Increase (decrease) in cash |
|
(2,910) |
|
- |
|
2,947 |
|
(3) |
|
|
|
|
|
|
|
|
|
|
|
| Cash and equivalents, beginning of period |
|
6,359 |
|
174 |
|
502 |
|
177 |
|
|
|
|
|
|
|
|
|
|
|
| Cash and equivalents, end of period |
$ |
3,449 |
$ |
174 |
$ |
3,449 |
$ |
174 |
|
|
|
|
|
|
|
|
|
|
|
| Supplemental disclosure of cash paid for: |
|
|
|
|
|
|
|
|
|
Income taxes |
$ |
1,287 |
$ |
1,152 |
$ |
4,768 |
$ |
3,434 |
|
Interest |
|
|
- |
|
13 |
|
8 |
|
84 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
1,287 |
$ |
1,165 |
$ |
4,776 |
$ |
3,518 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
LIQUIDATION WORLD INC.
|
| Consolidated Balance Sheets |
| (In thousands of Canadian dollars) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
July 7
|
|
October 7
|
|
|
|
|
|
|
|
|
2002
|
|
2001
|
|
|
|
|
|
|
|
|
(unaudited) |
|
|
| Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Current assets |
|
|
|
|
|
|
|
|
|
|
Cash and equivalents |
|
|
|
|
$ |
3,449 |
$ |
502 |
|
Accounts receivable |
|
|
|
|
|
2,165 |
|
1,225 |
|
Income taxes receivable |
|
|
|
|
|
2,395 |
|
- |
|
Inventory |
|
|
|
|
|
47,678 |
|
49,778 |
|
Prepaid expenses |
|
|
|
|
|
2,247 |
|
1,374 |
|
|
|
|
|
|
|
|
57,934 |
|
52,879 |
|
|
|
|
|
|
|
|
|
|
|
| Capital assets |
|
|
|
|
|
|
4,715 |
|
4,624 |
|
|
|
|
|
|
|
|
|
|
|
| Investment in affiliate |
|
|
|
|
|
|
590 |
|
482 |
|
|
|
|
|
|
|
|
|
|
|
| Goodwill |
|
|
|
|
|
|
|
278 |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
63,517 |
$ |
57,985 |
|
|
|
|
|
|
|
|
|
|
|
| Liabilities and Shareholders' Equity |
|
|
|
|
|
|
|
|
|
|
|
| Current liabilities |
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities |
|
|
|
|
$ |
8,829 |
$ |
4,721 |
|
Income taxes payable |
|
|
|
|
|
- |
|
909 |
|
|
|
|
|
|
|
|
8,829 |
|
5,630 |
|
|
|
|
|
|
|
|
|
|
|
| Shareholders' equity |
|
|
|
|
|
|
|
|
|
Share capital |
|
|
|
|
|
16,025 |
|
15,465 |
|
Retained earnings |
|
|
|
|
|
38,663 |
|
36,890 |
|
|
|
|
|
|
|
|
54,688 |
|
52,355 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
63,517 |
$ |
57,985 |
|