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
Dominic Scarangella, Tel: 416.243.4073