Leon's Furniture Limited - 2014 Fourth Quarter

TORONTO, Feb. 26, 2015 /CNW/ - Leon's Furniture Limited is pleased to announce its results for the fourth quarter 2014 and the full year 2014. For the three months ended December 31, 2014, total system wide sales were $649,386,000, including $107,180,000 of franchise sales ($633,870,000 including $110,846,000 of franchise sales in 2013). Same store corporate sales increased by 4.3% compared to the prior year. Net income was $29,914,000, $0.42 per common share ($26,334,000, $0.37 per common share in 2013). Net income per fully diluted common share for 2014 was $0.38 ($0.34 per fully diluted common share in 2013), an increase of 11.8% per share. We are pleased to announce that our earnings per share for the fourth quarter 2014 and the year were a record high.

For the year ended December 31, 2014, total system wide sales were $2,348,376,000 including $373,959,000 franchise sales ($2,039,428,000 including $344,785,000 franchise sales in 2013). Same store sales increased 0.4% compared to the prior year. Net income was $75,524,000, $1.07 per common share ($68,392,000, $0.97 per common share in 2013). Net income per fully diluted common share for 2014 was $0.96 ($0.89 per fully diluted common share in 2013), an increase of 7.9% per share. These figures include the results of The Brick Limited since March 28, 2013.

We are pleased with the increase in profits for both the fourth quarter and 2014 when compared to the prior year. We are also very encouraged by the increase in same store sales for the fourth quarter and year when compared to 2013. Integration and synergies between The Brick and Leon's divisions are progressing as planned. We are also pleased to confirm that we are in the early stages of a 15 month implementation of a new computer system that will result in improved efficiencies in the operations of both divisions.

The Directors are pleased to declare a quarterly dividend of 10¢ per common share, payable on April 9, 2015 to the shareholders of record at the close of business on March 9, 2015. 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

2014

-

-

Basic

Fully Diluted

24¢

21¢

38¢

34¢

42¢

38¢

$1.07

$0.96

2013

-

-

Basic

Fully Diluted

21¢

18¢

31¢

28¢

37¢

34¢

$0.97

$0.89

2012

-

-

Basic

Fully Diluted

12¢

12¢

13¢

12¢

19¢

18¢

23¢

22¢

$0.67

$0.65

LEON'S FURNITURE LIMITED / MEUBLES LEON LTÉE

Mark J. Leon
Chairman of the Board










Leon's Furniture Limited

INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(UNAUDITED)





As at December 31

As at December 31

($ in thousands)

2014

2013



Restated

ASSETS



Current assets



Cash and cash equivalents 

17,941

5,832

Restricted marketable securities

18,310

20,104

Available-for-sale financial assets 

22,358

17,336

Trade receivables 

112,171

104,275

Income taxes receivable

-

-

Inventories 

266,628

277,656

Deferred acquisition costs 

4,957

1,659

Deferred financing costs

923

903

Total current assets

443,288

427,765

Other assets

6,192

4,970

Deferred acquisition costs 

11,093

7,250

Property, plant and equipment 

334,052

352,707

Investment properties 

21,992

22,304

Intangible assets 

321,302

324,837

Goodwill 

418,079

418,079

Deferred income tax assets 

7,478

7,444

Total assets

1,563,476

1,565,356




LIABILITIES AND SHAREHOLDERS' EQUITY



Current liabilities



Trade and other payables 

197,044

200,361

Provisions 

4,576

4,769

Income taxes payable

34,773

12,135

Customers' deposits

97,705

93,609

Finance lease liability 

2,002

2,010

Dividends payable 

7,105

7,063

Deferred warranty plan revenue

51,111

54,028

Debentures 

-

15,503

Loans and borrowings

30,000

50,000

Total current liabilities

424,316

439,478

Loans and borrowings 

285,363

325,255

Convertible debentures 

91,773

90,952

Finance lease liability 

13,849

15,851

Deferred warranty plan revenue  

92,254

85,494

Redeemable share liability 

401

859

Deferred rent liabilities and lease inducements

6,794

4,652

Deferred income tax liabilities 

99,621

105,051

Total liabilities

1,014,371

1,067,592




Shareholders' equity attributable to the shareholders of the Company



Common shares 

31,169

27,352

Equity component of convertible debentures 

7,089

7,089

Retained earnings

510,398

463,244

Accumulated other comprehensive income 

449

79

Total shareholders' equity

549,105

497,764

Total liabilities and shareholders' equity

1,563,476

1,565,356
















Leon's Furniture Limited

INTERIM CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)







Three months ended December 31

Years ended December 31



Restated


Restated

($ in thousands)

2014

2013

2014

2013






Revenue 

542,206

523,024

1,974,417

1,694,643

Cost of sales 

304,529

289,244

1,117,460

959,307

Gross profit

237,677

233,780

856,957

735,336

Operating expenses 





General and administrative expenses

77,821

80,623

305,816

264,953

Sales and marketing expenses

68,750

66,979

248,913

213,562

Occupancy expenses

42,594

40,571

166,449

134,685

Other operating expenses

2,451

4,393

15,370

14,562

Total operating expenses

191,616

192,566

736,548

627,762

Operating profit

46,061

41,214

120,409

107,574

Finance costs 

(4,247)

(5,597)

(18,847)

(16,798)

Finance income

(104)

869

1,572

2,494

Net income before income tax

41,710

36,486

103,134

93,270

Income tax expense 

11,796

10,152

27,610

24,878

Net income 

29,914

26,334

75,524

68,392






Weighted average number of common shares outstanding 





Basic

71,040,021

70,626,561

70,898,590

70,612,407

Diluted

82,332,550

81,664,033

82,177,519

79,818,914






Earnings per share  





Basic

$

0.42

$

0.37

$

1.07

$

0.97

Diluted

$

0.38

$

0.34

$

0.96

$

0.89













Leon's Furniture Limited

INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)




Three months ended December 31




Net of tax

($ in thousands)

2014

 Tax effect 

2014





Net income for the period

29,914

-

29,914

Other comprehensive income, net of tax




Other comprehensive income to be reclassified to profit or loss in subsequent periods:





Unrealized gains on available-for-sale financial assets arising during the period

116

4

112


Reclassification adjustment for net gains(losses) included in profit for the period

(239)

(43)

(195)


Change in unrealized losses on available-for-sale financial





   assets arising during the period

(123)

(39)

(84)

Comprehensive income for the period

29,791

(39)

29,830


 Restated 


 Restated 




Net of tax


2013

 Tax effect 

2013





Net income for the period

26,334

-

26,334

Other comprehensive income, net of tax




Other comprehensive income to be reclassified to profit or loss in subsequent periods:





 Unrealized gains on available-for-sale financial assets arising during the period

509

115

394


Reclassification adjustment for net gains(losses) included in profit for the period

(245)

(64)

(181)


Change in unrealized gains on available-for-sale financial





   assets arising during the period

264

51

213

Comprehensive income for the period

26,598

51

26,547







Twelve months ended December 31




Net of tax

($ in thousands)

2014

 Tax effect 

2014





Net income for the year

75,524

-

75,524

Other comprehensive income, net of tax




Other comprehensive income to be reclassified to profit or loss in subsequent years:





Unrealized gains on available-for-sale financial assets arising during the year

908

175

733


Reclassification adjustment for net gains(losses) included in profit for the year

(453)

(90)

(363)


Change in unrealized gains on available-for-sale financial





   assets arising during the year

455

85

370

Comprehensive income for the year

75,979

85

75,894


 Restated 


 Restated 




Net of tax


2013

 Tax effect 

2013





Net income for the year

68,392

-

68,392

Other comprehensive income, net of tax




Other comprehensive income to be reclassified to profit or loss in subsequent years:





Unrealized gains on available-for-sale financial assets arising during the year

276

44

232


Reclassification adjustment for net gains(losses) included in profit for the year

(2,998)

(450)

(2,548)


Change in unrealized losses on available-for-sale financial





   assets arising during the year

(2,722)

(406)

(2,316)

Comprehensive income for the year

65,670

(406)

66,076


















Leon's Furniture Limited

INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

(UNAUDITED)







($ in thousands)

Equity component

of convertible

debentures

Common shares

Accumulated
other

comprehensive

income (loss)

Restated 

Retained

earnings

Total







As at  December 31, 2012

-

26,693

2,395

423,099

452,187







Comprehensive income






Net income for the year

-

-

-

68,392

68,392

Change in unrealized losses on available-for-sale 

-

-

(2,316)

-

(2,316)


financial assets arising during the year






Total comprehensive income

-

-

(2,316)

68,392

66,076







Transactions with shareholders






Dividends declared 

-

-

-

(28,247)

(28,247)

Issuance of equity component of convertible debt

7,089

-

-

-

7,089

Management share purchase plan 

-

659

-

-

659

Total transactions with shareholders

7,089

659

-

(28,247)

(20,499)







As at December 31, 2013

7,089

27,352

79

463,244

497,764







As at December 31, 2013

7,089

27,352

79

463,244

497,764







Comprehensive income






Net income for the year

-

-

-

75,524

75,524

Change in unrealized gains on available-for-sale 

-

-

370

-

370


financial assets arising during the year






Total comprehensive income

-

-

370

75,524

75,894







Transactions with shareholders






Dividends declared 

-

-

-

(28,370)

(28,370)

Management share purchase plan

-

3,817

-

-

3,817

Total transactions with shareholders

-

3,817

-

28,370

24,553







As at December 31, 2014

7,089

31,169

449

510,398

549,105










Leon's Furniture Limited

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)



 Twelve months ended December 31 



 Restated 

($ in thousands)

2014

2013




OPERATING ACTIVITIES



Net income for the year

75,524

68,392

Add (deduct) items not involving an outlay of cash




Depreciation of property, plant and equipment and investment properties

35,431

30,461


Amortization of intangible assets

7,289

5,724


Amortization of deferred warranty plan revenue

(61,974)

(60,664)


Net finance costs

16,739

14,304


Deferred income taxes

(5,513)

(768)


Gain on sale of property, plant and equipment

(126)

(32)


Gain on sale of available-for-sale financial assets

(399)

(5,462)


66,971

51,955

Net change in non-cash working capital balances related




to operations

19,200

(39,414)


Cash received on warranty plan sales

65,817

63,852

Cash provided by operating activities

151,988

76,393




INVESTING ACTIVITIES



Purchase of property, plant and equipment and investment properties 

(16,562)

(18,984)

Purchase of intangible assets [note 9]

(3,754)

(6,669)

Proceeds on sale of property, plant and equipment

224

134

Purchase of available-for-sale financial assets

(12,801)

(109,674)

Proceeds on sale of available-for-sale financial assets

10,429

235,260

Interest received

2,501

2,494

Purchase of The Brick, net of cash acquired $31,069 

-

(654,954)

Cash used in investing activities

(19,963)

(552,393)




FINANCING ACTIVITIES



Repayment of finance leases

(1,949)

(1,512)

Dividends paid 

(28,328)

(28,239)

Repayment of employee loans-redeemable shares

3,358

1,090

Issuance of term loan 

-

400,000

Issuance of convertible debentures 

-

100,000

Finance costs paid

-

(4,693)

Repayment of debentures 

(15,000)

(19,616)

Repayment of term loan 

(60,000)

(20,000)

Interest paid

(17,997)

(20,147)

Cash (used in) provided by financing activities

(119,916)

406,883

Net increase (decrease) in cash and cash equivalents




during the year

12,109

(69,117)

Cash and cash equivalents, beginning of year

5,832

74,949

Cash and cash equivalents, end of year

17,941

5,832

SOURCE Leon's Furniture Limited

For further information: Dominic Scarangella, Tel: 416.243.4073

RELATED LINKS
http://www.leons.ca

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