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Press release from CNW Group

Leon's Furniture Limited - 2012 Fourth Quarter

Thursday, February 21, 2013

Leon's Furniture Limited - 2012 Fourth Quarter14:13 EST Thursday, February 21, 2013TORONTO, 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 31JUNE 30SEPT. 30DEC. 31YEAR TOTAL2012--BasicFully Diluted12¢12¢13¢12¢19¢18¢23¢22¢$0.67$0.652011--BasicFully Diluted15¢14¢16¢15¢22¢21¢28¢27¢$0.81$0.782010--BasicFully Diluted17¢16¢17¢16¢26¢25¢30¢29¢$0.90$0.87LEON'S FURNITURE LIMITED / MEUBLES LEON LTÉEMark J. LeonChairman of the Board   Leon's Furniture LimitedCONSOLIDATED STATEMENTS OF FINANCIAL POSITION(UNAUDITED)    As at December 31As at December 31($ in thousands)20122011   ASSETS  Current  assets  Cash and cash equivalents 74,94972,505Available-for-sale financial assets146,735149,318Trade receivables 30,24528,937Income taxes receivable3,6445,182Inventories86,05787,830Deferred financing costs1,317-Total current assets342,947343,772Other assets1,2731,431Property, plant and equipment 218,146214,158Investment properties 8,3158,366Intangible assets 3,1013,958Goodwill 11,28211,282Deferred income tax assets5281,444Total assets585,592584,411   LIABILITIES AND SHAREHOLDERS' EQUITY  Current liabilities  Trade and other payables 73,54286,357Customers' deposits20,38619,157Dividends payable 7,05517,457Deferred warranty plan revenue14,74316,152Total current liabilities115,726139,123Deferred warranty plan revenue17,25119,445Redeemable share liability 428382Total liabilities133,405158,950   Shareholders' equity attributable to the shareholders of the Company Common shares 26,69320,918Retained earnings423,099404,647Accumulated other comprehensive income 2,395(104)Total shareholders' equity452,187425,461Total liabilities and shareholder's equity585,592584,411          Leon's Furniture Limited CONSOLIDATED INCOME STATEMENTS (UNAUDITED)   Three months ended December 31 Year ended December 31($ in thousands) 2012 2011 2012 2011         Revenue  188,462 193,823 682,163 682,836Cost of sales  106,625 108,010 398,704 394,099Gross profit 81,837 85,813 283,459 288,737Operating expenses         General and administrative expenses 27,278 24,338 99,346 96,038Sales and marketing expenses 22,422 22,993 83,479 78,387Occupancy expenses 8,762 9,928 34,289 32,731Other operating expenses 2,539 2,354 6,012 6,239  61,001 59,613 223,126 213,395Operating profit 20,836 26,200 60,333 75,342Finance income 1,253 1,088 3,350 3,506Profit before income tax 22,089 27,288 63,683 78,848Income tax expense  5,968 7,416 16,901 22,182Profit 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$0.81Diluted $0.22 $0.27 $0.65$0.78                  Weighted average number of common shares outstanding         Basic 70,312,354 69,824,750 70,032,721 69,969,417Diluted 72,351,313 72,152,050 72,317,598 72,305,424     Leon's Furniture Limited CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME(UNAUDITED)  Three months ended December 31   Net of tax($ in thousands)2012 Tax effect 2012    Profit for the period16,121-16,121Other comprehensive income, net of tax    Unrealized gains on available-for-sale financial assets arising during the period74897651 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 period68789598Comprehensive income for the period attributable to the shareholders of the Company16,8088916,719       Net of tax 2011 Tax effect 2011    Profit for the period19,872-19,872Other comprehensive income, net of tax    Unrealized gains on available-for-sale financial assets arising during the period1,060148912 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 period1,009141868Comprehensive income for the period attributable to the shareholders of the Company20,88114120,740  Year ended December 31   Net of tax($ in thousands)2012 Tax effect 2012    Profit for the year46,782-46,782Other comprehensive income, net of tax    Unrealized gains on available-for-sale financial assets arising during the year3,1834142,769 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 year2,8723732,499Comprehensive income for the year attributable to the shareholders of the Company49,65437349,654       Net of tax 2011 Tax effect 2011    Profit for the year56,666-56,666Other 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 Company55,987(95)56,082      Leon's Furniture Limited CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY(UNAUDITED)     ($ in thousands)Common sharesAccumulated other comprehensive incomeRetained earningsTotal     As at January 1, 201119,177480390,629   410,286     Comprehensive income    Profit for the year——56,66656,666Change in unrealized (losses) on available-for-sale financial assets arising during the year—(584)—(584)Total comprehensive income—(584)56,66656,082     Transactions with shareholders    Dividends declared ——(36,371)(36,371)Management share purchase plan 1,798——1,798Repurchase of common shares (57)—(6,277)(6,334)Total transactions with shareholders1,741—(42,648)(40,907)     As at December 31, 201120,918(104)404,647425,461     As at January 1, 201220,918(104)404,647425,461     Comprehensive income    Profit for the year——46,78246,782Change in unrealized gains on available-for-sale financial assets arising during the year—2,499—2,499Total comprehensive income—2,49946,78249,281     Transactions with shareholders    Dividends declared ——(28,047)(28,047)Management share purchase plan 5,778——5,778Repurchase of common shares (3)—(283)(286)Total transactions with shareholders5,775—(28,330)(22,555)     As at December 31, 201226,6932,395423,099452,187         Leon's Furniture Limited CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)   Year ended December 31 ($ in thousands)20122011   OPERATING ACTIVITIES  Profit for the year46,78256,666Add (deduct) items not involving an outlay of cash   Depreciation of property, plant and equipment and investment properties14,02012,705 Amortization of intangible assets866880 Amortization of deferred warranty plan revenue(16,543)(17,271) Gain on sale of property, plant and equipment(15)(21) Deferred income taxes5432,008 Loss on sale of available-for-sale financial assets12135 Cash paid for deferred financing costs(1,317)- Cash received on warranty plan sales12,94014,594 57,39769,596Net change in non-cash working capital balances related to operations (9,493)(4,426)Cash provided by operating activities47,90465,170   INVESTING ACTIVITIES  Purchase of property, plant & equipment(17,897)(24,999)Purchase of intangible assets(9)64Proceeds on sale of property, plant & equipment2339Purchase of available-for-sale financial assets(467,939)(569,050)Proceeds on sale of available-for-sale financial assets473,273559,242Issuance of series 2012 shares 3,804-Decrease in employee share purchase loans2,0202,008Cash 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 year2,444916Cash and cash equivalents, beginning of year72,50571,589Cash and cash equivalents, end of year74,94972,505    SOURCE: Leon's Furniture LimitedFor further information: Dominic Scarangella, Tel: 416.243.4073