Leon's Furniture Limited - 2012 Fourth Quarter

TORONTO, Feb. 21, 2013 /CNW/ - Leon's Furniture Limited is pleased to announce its results for the full year 2012 and the fourth quarter 2012. For the year ended December 31, 2012, total Leon's system wide sales were $880,240,000 including $198,077,000 franchise sales ($879,561,000 including $196,725,000 franchise sales in 2011), a slight increase. Same store corporate sales were down 2.9% from the prior year. Net income was $46,782,000, $0.67 per common share ($56,666,000, $0.81 per common share in 2011), a decrease of 17.3% per share.

For the three months ended December 31, 2012, total Leon's system wide sales were $248,187,000 including $59,725,000 of franchise sales ($254,989,000 including $61,166,000 of franchise sales in 2011), a decrease of 2.7%. Same store corporate sales were down 2.0% from the comparable quarter. Net income was $16,121,000, $0.23 per common share ($19,872,000, $0.28 per common share in 2011), a decrease of 17.9% per share. The fourth quarter 2012 includes a net after tax cost of $1,470,000 or $0.02 per common share for professional fees relating to the acquisition of The Brick Ltd., representing an adjusted $0.25 per common share as compared to $0.28 per common share in the prior year.

2012 proved to be another challenging year where we saw continuing weakness in the economy, creating a very competitive retail environment. We want to thank all of our associates for their efforts and dedication in helping us to mitigate the impact of these challenges on our financial results.

In the third quarter of 2012, the Company celebrated grand openings of newly renovated stores in Sault Ste. Marie and Sudbury, Ontario, as well as our third Appliance Canada showroom which opened in Toronto, Ontario. In the fourth quarter of 2012, we celebrated the opening of a new franchise store that replaced an existing store in St. John, New Brunswick.

We plan to celebrate grand openings of a new 42,000 sq. ft. store in Orangeville, Ontario and a 36,000 sq. ft. store in Brantford, Ontario in the first quarter of 2013. In the second quarter of 2013, we are planning the grand opening of a new 50,000 sq, ft. store in Sherbrooke, Quebec.

On November 11, 2012, the Company entered into a definitive agreement to acquire all the outstanding shares of The Brick Ltd. which is subject to the approval of the Competition Bureau and other customary closing conditions. The total consideration for the purchase of The Brick Ltd. is approximately $700 million. We anticipate this deal closing in the first quarter of 2013.

The Directors are pleased to declare a quarterly dividend of 10¢ per common share, payable on April 5, 2013 to the shareholders of record at the close of business on March 5, 2013. 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 31 JUNE 30 SEPT. 30 DEC. 31 YEAR TOTAL
2012 -
-
Basic
Fully Diluted
12¢
12¢
13¢
12¢
19¢
18¢
23¢
22¢
$0.67
$0.65
2011 -
-
Basic
Fully Diluted
15¢
14¢
16¢
15¢
22¢
21¢
28¢
27¢
$0.81
$0.78
2010 -
-
Basic
Fully Diluted
17¢
16¢
17¢
16¢
26¢
25¢
30¢
29¢
$0.90
$0.87

LEON'S FURNITURE LIMITED / MEUBLES LEON LTÉE

Mark J. Leon
Chairman of the Board

     
Leon's Furniture Limited
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(UNAUDITED)
     
  As at December 31 As at December 31
($ in thousands) 2012 2011
     
ASSETS    
Current  assets    
Cash and cash equivalents  74,949 72,505
Available-for-sale financial assets 146,735 149,318
Trade receivables  30,245 28,937
Income taxes receivable 3,644 5,182
Inventories 86,057 87,830
Deferred financing costs 1,317 -
Total current assets 342,947 343,772
Other assets 1,273 1,431
Property, plant and equipment  218,146 214,158
Investment properties  8,315 8,366
Intangible assets  3,101 3,958
Goodwill  11,282 11,282
Deferred income tax assets 528 1,444
Total assets 585,592 584,411
     
LIABILITIES AND SHAREHOLDERS' EQUITY    
Current liabilities    
Trade and other payables  73,542 86,357
Customers' deposits 20,386 19,157
Dividends payable  7,055 17,457
Deferred warranty plan revenue 14,743 16,152
Total current liabilities 115,726 139,123
Deferred warranty plan revenue 17,251 19,445
Redeemable share liability  428 382
Total liabilities 133,405 158,950
     
Shareholders' equity attributable to the shareholders of the Company  
Common shares  26,693 20,918
Retained earnings 423,099 404,647
Accumulated other comprehensive income  2,395 (104)
Total shareholders' equity 452,187 425,461
Total liabilities and shareholder's equity 585,592 584,411

 

                 
Leon's Furniture Limited
CONSOLIDATED INCOME STATEMENTS 
(UNAUDITED)
 
    Three months ended December 31   Year ended December 31
($ in thousands)   2012   2011   2012   2011
                 
Revenue    188,462   193,823   682,163   682,836
Cost of sales    106,625   108,010   398,704   394,099
Gross profit   81,837   85,813   283,459   288,737
Operating expenses                 
General and administrative expenses   27,278   24,338   99,346   96,038
Sales and marketing expenses   22,422   22,993   83,479   78,387
Occupancy expenses   8,762   9,928   34,289   32,731
Other operating expenses   2,539   2,354   6,012   6,239
    61,001   59,613   223,126   213,395
Operating profit   20,836   26,200   60,333   75,342
Finance income   1,253   1,088   3,350   3,506
Profit before income tax   22,089   27,288   63,683   78,848
Income tax expense    5,968   7,416   16,901   22,182
Profit for the period attributable to the shareholders of the Company   16,121   19,872   46,782   56,666
                 
Earnings per share                 
Basic  $ 0.23  $ 0.28  $ 0.67 $ 0.81
Diluted  $ 0.22  $ 0.27  $ 0.65 $ 0.78
                 
                 
Weighted average number of common shares outstanding                 
Basic   70,312,354   69,824,750   70,032,721   69,969,417
Diluted   72,351,313   72,152,050   72,317,598   72,305,424

 


       
Leon's Furniture Limited
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
 
  Three months ended December 31
      Net of tax
($ in thousands) 2012  Tax effect  2012
       
Profit for the period 16,121 - 16,121
Other comprehensive income, net of tax      
  Unrealized gains on available-for-sale financial assets arising during the period 748 97 651
  Reclassification adjustment for net gains and (losses) included in profit for the period (61) (8) (53)
  Change in unrealized gains on available-for-sale financial assets arising during the period 687 89 598
Comprehensive income for the period attributable to the shareholders of the Company 16,808 89 16,719
       
      Net of tax
  2011  Tax effect  2011
       
Profit for the period 19,872 - 19,872
Other comprehensive income, net of tax      
  Unrealized gains on available-for-sale financial assets arising during the period 1,060 148 912
  Reclassification adjustment for net gains and (losses) included in profit for the period (51) (7) (44)
  Change in unrealized gains on available-for-sale financial assets arising during the period 1,009 141 868
Comprehensive income for the period attributable to the shareholders of the Company 20,881 141 20,740
 
  Year ended December 31
      Net of tax
($ in thousands) 2012  Tax effect  2012
       
Profit for the year 46,782 - 46,782
Other comprehensive income, net of tax      
  Unrealized gains on available-for-sale financial assets arising during the year 3,183 414 2,769
  Reclassification adjustment for net gains and (losses) included in profit for the year (311) (41) (270)
  Change in unrealized gains on available-for-sale financial assets arising during the year 2,872 373 2,499
Comprehensive income for the year attributable to the shareholders of the Company 49,654 373 49,654
       
      Net of tax
  2011  Tax effect  2011
       
Profit for the year 56,666 - 56,666
Other comprehensive income, net of tax      
  Unrealized (losses) on available-for-sale financial assets arising during the year (621) (87) (534)
  Reclassification adjustment for net gains and (losses) included in profit for the year (58) (8) (50)
  Change in unrealized (losses) on available-for-sale financial assets arising during the year (679) (95) (584)
Comprehensive income for the year attributable to the shareholders of the Company 55,987 (95) 56,082

 

         
Leon's Furniture Limited
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(UNAUDITED)
         
($ in thousands) Common shares Accumulated other
comprehensive
income
Retained earnings Total
         
As at January 1, 2011 19,177 480 390,629    410,286
         
Comprehensive income        
Profit for the year 56,666 56,666
Change in unrealized (losses) on available-for-sale
 financial assets arising during the year
(584) (584)
Total comprehensive income (584) 56,666 56,082
         
Transactions with shareholders        
Dividends declared  (36,371) (36,371)
Management share purchase plan  1,798 1,798
Repurchase of common shares  (57) (6,277) (6,334)
Total transactions with shareholders 1,741 (42,648) (40,907)
         
As at December 31, 2011 20,918 (104) 404,647 425,461
         
As at January 1, 2012 20,918 (104) 404,647 425,461
         
Comprehensive income        
Profit for the year 46,782 46,782
Change in unrealized gains on available-for-sale
 financial assets arising during the year
2,499 2,499
Total comprehensive income 2,499 46,782 49,281
         
Transactions with shareholders        
Dividends declared  (28,047) (28,047)
Management share purchase plan  5,778 5,778
Repurchase of common shares  (3) (283) (286)
Total transactions with shareholders 5,775 (28,330) (22,555)
         
As at December 31, 2012 26,693 2,395 423,099 452,187
         

 

     
Leon's Furniture Limited
CONSOLIDATED STATEMENTS OF CASH FLOWS
 (UNAUDITED)
 
   Year ended December 31 
($ in thousands) 2012 2011
     
OPERATING ACTIVITIES    
Profit for the year 46,782 56,666
Add (deduct) items not involving an outlay of cash    
  Depreciation of property, plant and equipment and investment properties 14,020 12,705
  Amortization of intangible assets 866 880
  Amortization of deferred warranty plan revenue (16,543) (17,271)
  Gain on sale of property, plant and equipment (15) (21)
  Deferred income taxes 543 2,008
  Loss on sale of available-for-sale financial assets 121 35
  Cash paid for deferred financing costs (1,317) -
  Cash received on warranty plan sales 12,940 14,594
  57,397 69,596
Net change in non-cash working capital balances related to operations  (9,493) (4,426)
Cash provided by operating activities 47,904 65,170
     
INVESTING ACTIVITIES    
Purchase of property, plant & equipment (17,897) (24,999)
Purchase of intangible assets (9) 64
Proceeds on sale of property, plant & equipment 23 39
Purchase of available-for-sale financial assets (467,939) (569,050)
Proceeds on sale of available-for-sale financial assets 473,273 559,242
Issuance of series 2012 shares  3,804 -
Decrease in employee share purchase loans 2,020 2,008
Cash used in investing activities (6,725) (32,696)
     
FINANCING ACTIVITIES    
Dividends paid (38,449) (25,224)
Repurchase of common shares  (286) (6,334)
Cash used in financing activities (38,735) (31,558)
Net increase in cash and cash equivalents during the year 2,444 916
Cash and cash equivalents, beginning of year 72,505 71,589
Cash and cash equivalents, end of year 74,949 72,505

 

 

 

 

SOURCE: Leon's Furniture Limited

For further information:

Dominic Scarangella, Tel: 416.243.4073


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