TORONTO, Feb. 21 /CNW/ - Leon's Furniture Limited is pleased to announce record fourth quarter and full year 2007 results. For the three months ended December 31, 2007, total Leon's sales were $246,853,000 including $60,931,000 of franchise sales ($236,766,000 including $56,658,000 of franchise sales in 2006), an increase of 3.2% and net income was $21,610,000, $0.31 per common share ($20,712,000, $0.29 per common share in 2006), an increase of 6.9% per share. These results include a one-time tax adjustment of $1,000,000 due to the write down of future tax assets related to corporate income tax rate reductions enacted by the federal government in the quarter. Excluding the one-time tax adjustment, fourth quarter net earnings were $0.32 per common share, an increase of 10.3% compared to the previous year.
In our fourth quarter 2007, we continued to see good growth in sales and profits over the prior year. We had a very successful grand opening of a new warehouse and showroom in Longueuil, Quebec and same store corporate sales were up 2.1% for the quarter.
For the year ended December 31, 2007, total Leon's sales were $833,381,000 including $195,925,000 franchise sales ($768,453,000 including $177,167,000 franchise sales in 2006), an increase of 8.4%. Net income was $58,494.000, $0.83 per common share ($53,602,000, $0.76 per common share in 2006), an increase of 9.2% per share. Excluding the one-time tax adjustment, net earnings were $0.84 per common share, an increase of 10.5% compared to the previous year. Same store corporate sales were up 4.4% over the prior year.
Overall, we are proud to report that Leon's Furniture Limited continued to increase sales and grow profits in 2007. We want to congratulate all our Associates across Canada for their strong efforts, hard work, and dedication in helping achieve these goals.
The company completed its purchase of the assets of Appliance Canada Limited in January 2008. It is currently operating the business under the name "Appliance Canada" as a separate division.
Major renovations have recently been completed in Kitchener, Ontario and Calgary, Alberta with both stores scheduled to have their Grand Re-Openings later this month. Our new store in downtown Toronto at the John Street Roundhouse is currently being renovated and is scheduled to open in late Fall of this year. We also plan to renovate stores in Ottawa, London and Mississauga in 2008. Finally, we will begin this month a total renovation of our store in Laval, Quebec the last of our original 150,000 sq. ft. warehouse and showrooms to be renovated.
The Directors are pleased to declare a quarterly dividend of 7 cents per common share, payable on April 7, 2008 to the shareholders of record at the close of business on March 7, 2008. In addition, the Directors have declared a special dividend of 10 cents per common share, payable on May 7, 2008 to the shareholders of record at the close of business on April 7, 2008. As of 2007, dividends paid by Leon's Furniture Limited are "eligible dividends" pursuant to the changes to the Income Tax Act under Bill C-28, Canada.
The 2007 Annual Report will be mailed in early April to shareholders of record on March 24, 2008. The Annual Meeting of Shareholders will take place on May 12, 2008.
EARNINGS PER SHARE FOR EACH QUARTER
-----------------------------------
YEAR
MARCH 31 JUNE 30 SEPT. 30 DEC. 31 TOTAL
-------- -------- -------- -------- --------
2007 - Basic 15 cents 14 cents 23 cents 31 cents $0.83
- Fully Diluted 15 cents 13 cents 22 cents 30 cents $0.80
2006 - Basic 14 cents 12 cents 21 cents 29 cents $0.76
- Fully Diluted 14 cents 11 cents 20 cents 28 cents $0.73
2005 - Basic 10 cents 11 cents 19 cents 28 cents $0.68
- Fully Diluted 10 cents 11 cents 18 cents 26 cents $0.65
LEON'S FURNITURE LIMITED - MEUBLES LEON LTEE
Mark J. Leon
Chairman of the Board
Leon's Furniture Limited-Meubles Leon Ltee
Incorporated under the laws of Ontario
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
As at As at
December 31 December 31
($ in thousands) 2007 2006
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ASSETS
Current
Cash and cash equivalents 25,699 28,172
Marketable securities 116,580 92,055
Accounts receivable 33,684 25,740
Inventory 75,640 74,733
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Total current assets 251,603 220,700
Prepaid expenses 1,282 1,221
Future tax assets 10,722 10,652
Capital assets, net 211,619 207,066
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475,226 439,639
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and accrued liabilities 92,051 94,665
Income taxes payable 2,137 2,963
Customers' deposits 13,533 12,887
Dividends payable 4,949 4,427
Deferred warranty plan revenue 13,812 12,487
Future tax liabilities 355 204
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Total current liabilities 126,837 127,633
Deferred warranty plan revenue 19,124 18,216
Redeemable share liability 180 631
Future tax liabilities 7,080 5,584
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Total liabilities 153,221 152,064
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Shareholders' equity
Common shares 14,020 11,538
Retained earnings 307,068 276,037
Accumulated other comprehensive income 917 -
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Total shareholders' equity 322,005 287,575
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475,226 439,639
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Leon's Furniture Limited-Meubles Leon Ltee
CONSOLIDATED STATEMENTS OF INCOME AND
RETAINED EARNINGS
(UNAUDITED)
Period ended December 31st
($ in thousands) 3 months ended 12 months ended
2007 2006 2007 2006
Sales 185,922 180,108 637,456 591,286
Cost of sales 100,159 101,604 363,261 341,403
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Gross profit 85,763 78,504 274,195 249,883
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Operating expenses (income)
Salaries and commissions 27,025 24,515 99,461 89,413
Advertising 9,833 9,845 32,008 32,326
Rent and property taxes 2,555 2,809 10,486 10,656
Amortization 3,733 3,470 14,034 13,348
Employee profit-sharing plan 1,345 1,175 4,200 3,645
Other operating expenses 11,340 10,381 39,251 35,913
Interest income (1,253) (697) (4,695) (3,539)
Other income (3,467) (4,541) (11,130) (11,370)
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51,111 46,957 183,615 170,392
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Income before gain on sale of
capital property and income
taxes 34,652 31,547 90,580 79,491
Gain on sale of capital
property - - 443 2,010
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Income before income taxes 34,652 31,547 91,023 81,501
Provision for income taxes 13,042 10,835 32,529 27,899
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Net income for the period 21,610 20,712 58,494 53,602
Retained earnings, beginning
of the period 290,837 260,159 276,037 249,470
Dividends declared (4,949) (4,427) (19,828) (26,554)
Excess of cost of share
repurchase over carrying
value of related shares (430) (407) (7,635) (481)
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Retained earnings, end of
period 307,068 276,037 307,068 276,037
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Weighted average number of
common shares outstanding
('000's)
Basic 70,634 70,824 70,777 70,800
Diluted 72,986 73,740 73,403 73,716
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Earnings per share
Basic $0.31 $0.29 $0.83 $0.76
Diluted $0.30 $0.28 $0.80 $0.73
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Leon's Furniture Limited-Meubles Leon Ltee
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(UNAUDITED)
Three month period ended December 31st
($ in thousands)
3 months 12 months
ended ended
2007 2007
Net income for the period 21,610 58,494
----------- -----------
Other comprehensive income, net of tax
Unrealized (losses) gains on
available-for-sale financial assets
arising during the period 59 (290)
Reclassification adjustment for net gains
and losses included in net income 43 (1,185)
----------- -----------
Change in unrealized gains(losses) on
available-for-sale financial assets arising
during the period 102 (1,475)
----------- -----------
Comprehensive income for the period 21,712 57,019
----------- -----------
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Leon's Furniture Limited-Meubles Leon Ltee
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three month period ended
December 31st
($ in thousands) 3 months ended 12 months ended
2007 2006 2007 2006
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OPERATING ACTIVITIES
Net income for the period 21,610 20,712 58,494 53,602
Add (deduct) items not involving
a current cash payment
Amortization of capital
assets 3,733 3,470 14,034 13,348
Amortization of deferred
warranty revenue (3,653) (3,308) (13,610) (11,703)
Loss (gain) on sale of
marketable securities (136) (387) (698) (393)
Future tax expense 2,765 1,221 1,577 611
Loss (gain) on sale of
capital assets (16) (14) 5 (2,030)
Cash received on warranty
sales 4,891 4,638 15,843 14,887
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29,194 26,332 75,645 68,322
Net change in non-cash working
capital balances related to
operations (2,220) 4,236 (7,112) 16,656
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Cash provided by operating
activities 26,974 30,568 68,533 84,978
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INVESTING ACTIVITIES
Purchase of capital assets (4,221) (9,146) (23,404) (35,843)
Proceeds on sale of capital
assets 31 25 218 2,154
Purchase of marketable
securities (135,697) (33,829) (253,617) (148,567)
Proceeds on sale of
marketable securities 122,350 36,033 230,888 132,033
Decrease in employee share
purchase loans 595 7 2,286 492
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Cash used in investing
activities (16,942) (6,910) (43,629) (49,731)
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FINANCING ACTIVITIES
Dividends paid (5,602) (4,427) (19,671) (25,663)
Repurchase of capital stock (434) (412) (7,706) (486)
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Cash used in financing
activities (6,036) (4,839) (27,377) (26,149)
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Net increase (decrease) in
cash and cash equivalents
during the period 3,996 18,819 (2,473) 9,098
Cash and cash equivalents,
beginning of period 21,703 9,353 28,172 19,074
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Cash and cash equivalents,
end of period 25,699 28,172 25,699 28,172
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