Leon's Furniture Limited - 2014 Fourth Quarter

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Feb 26, 2015, 17:26 ET

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

2¢

24¢

21¢

38¢

34¢

42¢

38¢

$1.07

$0.96

2013

Basic

Fully Diluted

8¢

7¢

21¢

18¢

31¢

28¢

37¢

34¢

$0.97

$0.89

2012

Basic

Fully Diluted

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