Liquidation World Inc.
TSX : LQW

Liquidation World Inc.

August 14, 2008 08:00 ET

Liquidation World Announces Q3 Results

BRANTFORD, ONTARIO--(Marketwire - Aug. 14, 2008) - Liquidation World Inc. (TSX:LQW) today announces the results of the third quarter of the 2008 fiscal year, representing the 13-week period ended July 6, 2008.

Revenue from continuing operations in Q3 2008 increased 5.1% to $43.8 million from $41.7 million in Q3 2007. Same store sales during the quarter increased 3.3%. During Q3 2008, the Company recorded a net loss from continuing operations of $3.8 million ($0.46 per share) versus a net loss from continuing operations of $2.1 million ($0.25 per share) during Q3 2007. Including the results of discontinued operations, the Company recorded a net loss and comprehensive loss of $3.8 million ($0.46 per share) in Q3 2008 versus a net loss and comprehensive loss of $2.9 million ($0.35 per share) in Q3 2007.



2008 2007 Change
(millions) (millions) (millions)
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Q3 revenue $ 43.8 $ 41.7 +$2.1
Q3 net loss from continuing operations ($3.8) ($2.1) -$1.7
Q3 net loss and comprehensive loss ($3.8) ($2.9) -$0.9


In the first three quarters of fiscal 2008, revenue from continuing operations totaled $138.8 million, down 2.1% from $141.8 million during the same period last year. Same store sales for the first three quarters decreased 5.4%. During the first three quarters of fiscal 2008, the Company recorded a net loss from continuing operations of $7.6 million ($0.92 per share) versus a net loss from continuing operations of $2.3 million ($0.28 per share) during the first three quarters of fiscal 2007. Including the results of discontinued operations, the Company recorded a net loss and comprehensive loss of $8.6 million ($1.05 per share) during the first three quarters of fiscal 2008 versus a net loss and comprehensive loss of $4.1 million ($0.50 per share) during the same period in fiscal 2007.



2008 2007 Change
(millions) (millions) (millions)
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YTD revenue $ 138.8 $ 141.8 -$3.0
YTD net loss from continuing operations ($7.6) ($2.3) -$5.3
YTD net loss and comprehensive loss ($8.6) ($4.1) -$4.5


Additional details are provided in the financial statements below.

Jonathan Hill, President & CEO commented:

"After posting disappointing results in our second quarter, we made it clear that we would take immediate action to reduce costs and simplify our business. And during the third quarter, that's exactly what we did.

-Our buying team and buying processes were revamped to focus on procuring more unique and exciting inventory.

- We revised our markdown policies to aggressively manage old stock on an ongoing basis and launched a major clearance of aged and under-performing merchandise.

- We lowered non-store costs by eliminating a number of positions and thoroughly reviewing all other non-store expenses

- We initiated the closure of 7 outlets in order to rationalize our investment in inventory, improve cash flow and lower overall costs.

Our results do not yet reflect the impact of the changes we have made. However, I believe that we have created a more nimble organization that will benefit our financial performance moving forward. We are particularly pleased that our revamped buying team has recently been able to land several strong deals that we expect will help to improve our gross margin in the fourth quarter."

About Liquidation World

Liquidation World liquidates consumer merchandise through 105 stores in Canada and the United States. The Company solves asset recovery problems in a professional manner for the financial services industry, insurance companies, manufacturers, wholesalers and other organizations. Liquidation World is based in Brantford, Ontario and maintains a number of regional buying offices in Canada and the United States. The Company opened its first store in Calgary, Alberta in 1986 and today, with more than 1,600 employees, is Canada's largest liquidator.

Forward-Looking Statements

This release includes forward-looking statements and potential future circumstances and developments. Forward-looking statements regarding future performance are subject to risks and uncertainties, and actual results may differ materially. Due to fluctuations in gross margins and expenses, an increase in revenue does not directly correlate to an increase in net earnings.

Liquidation World has scheduled a conference call to begin promptly at 1:00 p.m. EST on




Thursday August 14, 2008 at 1:00 p.m. EST

Conference call dial in number is 1-888-789-9572 or 1-416-695-7806
Passcode: 3267454#


A replay of the conference call will be accessible on Liquidation World's website within forty-eight hours at www.liquidationworld.com by selecting "Investor Info", "News Releases", and "Q3 Conference Call".



LIQUIDATION WORLD INC.
Consolidated Balance Sheets
As At July 6, 2008 and October 7, 2007
Unaudited
(In thousands of Canadian dollars)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
July 6, October 7,
2008 2007
Restated
----------------------------------------------------------------------------
Assets
Current assets
Cash and equivalents $ 199 $ 216
Accounts receivable 557 293
Inventory 45,140 48,816
Prepaid expenses 1,407 1,719
Income taxes recoverable 270 2,221
Current assets of discontinued operations - 1,237
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47,573 54,502

Property and equipment 11,213 12,542
Long-term assets of discontinued operations - 172
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$ 58,786 $ 67,216
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Liabilities and Shareholders' Equity
Current liabilities
Bank indebtedness $ 7,904 $ 7,820
Accounts payable and accrued liabilities 15,989 14,954
Current portion of obligations under capital
leases 1,843 1,256
Current liabilities of discontinued operations 434 1,265
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26,171 25,295
Obligations under capital leases 564 1,512
Shareholders' equity
Share capital 15,518 15,518
Contributed surplus 1,433 1,159
Retained earnings 15,100 23,732
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32,051 40,409

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$ 58,786 $ 67,216
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LIQUIDATION WORLD INC.
Consolidated Statements of Loss and Comprehensive Loss and Retained Earnings
For the thirteen weeks ended July 6, 2008 and July 1, 2007
Unaudited
(In thousands of Canadian dollars, except per share amounts)


----------------------------------------------------------------------------
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13 weeks 13 weeks 39 weeks 39 weeks
ended ended ended ended
July 6, July 1, July 6, July 1,
2008 2007 2008 2007
Restated Restated
----------------------------------------------------------------------------
Revenue $ 43,765 $ 41,650 $ 138,799 $ 141,806
Cost of sales 29,048 27,278 90,769 90,094

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Gross Margin 14,717 14,372 48,030 51,712
Expenses
Selling, general and
administrative 17,102 16,342 51,554 51,507
Depreciation and amortization 994 914 3,006 2,711
Stock-based compensation 91 94 274 291
Interest
Short Term 169 198 610 433
Long Term 61 25 147 137
Foreign exchange 83 (134) 28 (92)
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18,501 17,439 55,620 54,987
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Loss before income taxes (3,783) (3,067) (7,589) (3,275)
Income taxes (recovery)
Current - (1,020) - (984)
Future - 22 - 38
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- (998) - (946)
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Net loss from continuing
operations (3,783) (2,069) (7,589) (2,329)
Loss from discontinued
operations - (827) (1,043) (1,803)
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Net loss and comprehensive
loss (3,783) (2,896) (8,632) (4,132)
Retained earnings, beginning
of period 18,883 34,207 23,732 35,443

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Retained earnings, end of
period $ 15,100 $ 31,311 $ 15,100 $ 31,311
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Basic and diluted loss per
share
From continuing operations $ (0.46) $ (0.25) $ (0.92) $ (0.28)
From discontinued operations $ - $ (0.10) $ (0.13) $ (0.22)
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$ (0.46) $ (0.35) $ (1.05) $ (0.50)
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LIQUIDATION WORLD INC.
Consolidated Statements of Cash Flows
For the thirteen weeks ended July 6, 2008 and July 1, 2007
Unaudited
(In thousands of Canadian dollars)

----------------------------------------------------------------------------
----------------------------------------------------------------------------
13 weeks 13 weeks 39 weeks 39 weeks
ended ended ended ended
July 6, July 1, July 6, July 1,
2008 2007 2008 2007
Restated Restated
----------------------------------------------------------------------------
Operating activities
Net loss from continuing
operations $ (3,783) $ (2,069) $ (7,589) $ (2,329)
Add (deduct) non-cash items:
Depreciation and amortization 994 914 3,006 2,711
Loss (gain) on disposal of
capital asset - - 12 (118)
Stock based compensation 91 94 274 291
Future income taxes - 22 - 38
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(2,698) (1,039) (4,297) 593
Changes in non-cash operating
working capital
Accounts receivable 177 (75) (264) 99
Inventory 4,010 1,170 3,676 (4,951)
Prepaid expenses (140) (510) 312 (345)
Accounts payable and accrued
liabilities 3,340 653 1,035 3,665
Income taxes recoverable 2,140 (1,042) 1,951 (1,311)
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6,829 (843) 2,413 (2,250)

Investing activities
Purchase of capital assets (95) (641) (927) (2,746)
Proceeds on disposal of
capital assets - - 2 156
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(95) (641) (925) (2,590)

Financing activities
Increase (decrease) in bank
indebtedness (6,390) 845 84 7,476
Repayment of capital lease (348) (294) (1,125) (972)
Proceeds on issuance of common
shares - 8 - 8
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(6,738) 559 (1,041) 6,512
Cash provided by (applied to)
discontinued operations - 922 (465) (1,643)
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Increase (decrease) in cash (3) (3) (17) 29
Cash and equivalents,
beginning of period 202 216 216 184
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Cash and equivalents, end of
period $ 199 $ 213 $ 199 $ 213
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Supplemental disclosure of
cash paid for:
Income taxes $ 26 $ 90 $ 221 $ 397
Interest 229 255 769 655
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$ 255 $ 345 $ 990 $ 1,052
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