SECURITIES AND EXCHANGE COMMISSION |
| WASHINGTON, D.C. |
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FORM 8-K |
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CURRENT REPORT PURSUANT |
TO SECTION 13 OR 15(d) OF THE |
SECURITIES EXCHANGE ACT OF 1934 |
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| Date of report (Date of earliest event reported): | August 1, 2005 |
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Tandy Leather Factory, Inc. (Exact Name of Registrant as Specified in Its Charter) |
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Delaware (State or Other Jurisdiction of Incorporation) |
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1-12368 (Commission File Number) | 75-2543540 (IRS Employer Identification Number) |
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3847 East Loop 820 South, Fort Worth, Texas (Address of Principal Executive Offices) | 76119 (Zip Code) |
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(817) 496-4414 (Registrant’s Telephone Number, Including Area Code) |
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THE LEATHER FACTORY, INC. (Former Name or Former Address, if Changed Since Last Report |
Item 2.02. Results of Operations and Financial Condition
Tandy Leather Factory, Inc. on August 1, 2005 issued a press release regarding its financial results for the quarter and six months ended June 30, 2005. A copy of the press release is attached as Exhibit 99.1.
The information in this report and the exhibit attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall they be deemed incorporated by reference in any filing with the Securities and Exchange Commission under the Securities Exchange Act of 1934 or the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.
Item 9.01. Financial Statements and Exhibits
| (a) | Financial statements of businesses acquired. |
Not applicable.
| (b) | Pro forma financial information. |
Not applicable.
No. Exhibit
99.1 Press release dated August 1, 2005
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
TANDY LEATHER FACTORY, INC.
Date: September 1, 2005 BY: /s/ Wray Thompson
Wray Thompson, Chairman of the Board
and Chief Executive Officer
EXHIBIT 99.1
FOR IMMEDIATE RELEASE AUGUST 1, 2005
TANDY LEATHER FACTORY REPORTS 2ND QUARTER 2005 EPS UP 40%
REVISES 2005 EARNINGS GUIDANCE UPWARDS
FORT WORTH, TEXAS - Tandy Leather Factory, Inc. (AMEX: TLF) today reported financial results for the second quarter of 2005. Consolidated net income for the quarter ended June 30, 2005 was $787,000 compared to consolidated net income of $516,000 for the second quarter of 2004. Fully diluted earnings per share for the quarter was $0.07, compared to $0.05 in the second quarter of last year. Total sales for the quarter ended June 30, 2005 increased 11.2% to $12.2 million from $10.9 million for the same quarter last year.
Consolidated sales for the six months ended June 30, 2005 were $24.9 million, an increase of 7.6% over 2004 first half total sales of $23.1 million. Consolidated net income for the first half of 2005 was $1.8 million or $0.17 per fully-diluted share versus $1.5 million or $0.14 per fully-diluted share in the comparable period last year.
Sales in the Retail Leathercraft segment, which consists of the Tandy Leather stores, increased $1.1 million in the second quarter, a 38% improvement over last year's second quarter. Forty-six stores comprised the Tandy Leather's retail operations on June 30, 2005, compared to thirty-two retail stores a year ago. Two stores were added in the second quarter of 2005 bringing the total number of new stores added in 2005 to four as of the end of the quarter. For the first six months of 2005, Tandy Leather sales increased $2.2 million, or 36%, over the first six months of 2004. Second quarter sales for the Wholesale Leathercraft segment, which consists of the Leather Factory wholesale centers and national account group, increased $241,000 over the same quarter last year, a 3.3% increase. The sales increase is the result of an increase of $388,000 at the wholesale centers that was partially offset by a sales decline in our national account group of $147,000. For the first six months of 2005, Wholesale Leathercraft’s sales were down $288,000 over the same period in 2004. The national account group sales were down $584,000 for the year, offset somewhat by a sales increase at the wholesale centers of $296,000.
Consolidated gross profit margin for the current quarter was 56.6%, improving from 54.6% for the second quarter of 2004. For the first two quarters, consolidated gross profit margin for the current year was 56.5%, an improvement over last year's gross profit margin of 54.9%. Consolidated operating expenses rose $451,000 in the current quarter and $761,000 for the first six months over the same periods a year ago. Costs associated with the new retail stores (personnel, rents, utilities, etc.), marketing and advertising costs account for the majority of the increase.
Wray Thompson, Chairman and Chief Executive Officer, commented, “Overall, we had a strong second quarter. Our Retail Leathercraft segment reported a 38% sales gain for the quarter and same store sales, consisting of 32 Tandy Leather stores, were up 8%. The Leather Factory wholesale centers, part of the Wholesale Leathercraft segment, reported a 6.5% sales gain for the quarter, while our national account group ended the quarter with a 10% sales decline compared to the second quarter of 2004. This group did achieve a sales gain for the month of June, however, a sign that we are making some progress in our efforts to get them back on a positive track. All segments contributed to the increase in operating income of 55% and 25% for the second quarter and year, respectively. Based on our results for the first half of the year, we’re raising our 2005 earnings guidance to 30-34 cents."
Tandy Leather Factory, Inc., (http://www.leatherfactory.com), headquartered in Fort Worth, Texas, is a specialty retailer and wholesale distributor of a broad product line including leather, leatherworking tools, buckles and adornments for belts, leather dyes and finishes, saddle and tack hardware, and do-it-yourself kits. The Company distributes its products as The Leather Factory through its wholesale centers and as Tandy Leather Company through its retail stores (http://www.tandyleather.com). Its common stock trades on the American Stock Exchange with the symbol "TLF".
Contact: Wray Thompson, CEO, Tandy Leather Factory, Inc. (817) 496-4414
Shannon L. Greene, CFO, Tandy Leather Factory, Inc. sgreene@leatherfactory.com
This news release may contain forward-looking statements. All forward-looking statements made here or in other news releases issued by Tandy Leather Factory, Inc. are based on current expectations as of the date of the release. These forward-looking statements involve risks and uncertainties that could cause the results of Tandy Leather Factory, Inc. to differ materially from management’s current expectations. Many of these risks and uncertainties are detailed from time to time in TLF’s reports filed with the Securities and Exchange Commission, including its most recent annual report on Form 10-K and the most recent quarterly report on Form 10-Q. Investors are reminded that past performance may not be predictive of future results.
Selected financial data:
| | Quarter Ended 06/30/05 | | Quarter Ended 06/30/04 |
| | Sales | | Operating Income | | Sales | | Operating Income |
| Wholesale Leathercraft | $7,665,067 | | $861,178 | | $7,423,795 | | $645,145 |
| Retail Leathercraft | 4,094,303 | | 414,733 | | 2,972,746 | | 190,756 |
| Other | 422,329 | | 45,704 | | 563,272 | | 17,935 |
| Total Operations | $12,181,699 | | $1,321,615 | | $10,959,813 | | $853,836 |
| | Six Months Ended 06/30/05 | | Six Months Ended 06/30/04 |
| | Sales | | Operating Income | | Sales | | Operating Income |
| Wholesale Leathercraft | $15,578,959 | | $2,030,159 | | $15,866,885 | | $1,718,178 |
| Retail Leathercraft | 8,379,909 | | 801,452 | | 6,139,484 | | 492,322 |
| Other | 930,347 | | 59,551 | | 1,134,320 | | 90,470 |
| Total Operations | $24,889,215 | | $2,891,162 | | $23,140,689 | | $2,300,970 |
Wholesale Leathercraft | Quarter Ended 06/30/05 | | Quarter Ended 06/30/04 |
| | | Sales | | | Sales |
| Distribution centers | | $6,381,865 | | | $5,993,624 |
| National account group | | 1,283,202 | | | 1,430,171 |
| Total Sales - Wholesale Leathercraft | | $7,665,067 | | | $7,423,795 |
Wholesale Leathercraft | Six Months Ended 06/30/05 | | Six Months Ended 06/30/04 |
| | | Sales | | | Sales |
| Distribution centers | | $13,030,817 | | | $12,734,918 |
| National account group | | 2,548,142 | | | 3,131,967 |
| Total Sales - Wholesale Leathercraft | | $15,578,959 | | | $15,866,885 |
Retail Leathercraft | Quarter Ended 06/30/05 | | Quarter Ended 06/30/04 |
| | # of stores | Sales | | # of stores | Sales |
| Same store sales | 32 | $3,203,196 | | 32 | $2,972,746 |
| New store sales | 14 | 891,107 | | - | - |
| Total Sales - Retail Leathercraft | | $4,094,303 | | | $2,972,746 |
Retail Leathercraft | Six Months Ended 06/30/05 | | Six Months Ended 06/30/04 |
| | # of stores | Sales | | # of stores | Sales |
| Same store sales | 29 | $6,191,872 | | 29 | $6,011,473 |
| New store sales | 17 | 2,188,037 | | 3 | 128,011 |
| Total Sales - Retail Leathercraft | | $8,379,909 | | | $6,139,484 |
TANDY LEATHER FACTORY, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2005 AND 2004
| | Three Months | | Six Months |
| | 2005 | 2004 | | 2005 | 2004 |
| NET SALES | $12,181,699 | $10,959,813 | | $24,889,215 | $23,140,689 |
| COST OF SALES | 5,281,828 | 4,978,754 | | 10,832,061 | 10,434,717 |
| Gross Profit | 6,899,871 | 5,981,059 | | 14,057,154 | 12,705,972 |
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| OPERATING EXPENSES | 5,578,256 | 5,127,223 | | 11,165,992 | 10,405,002 |
| INCOME FROM OPERATIONS | 1,321,615 | 853,836 | | 2,891,162 | 2,300,970 |
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| Interest expense | - | 12,471 | | 3,188 | 26,109 |
| Other, net | (39,684) | 25,353 | | (24,219) | 27,089 |
| Total other expense | (39,684) | 37,824 | | (21,031) | 53,198 |
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| INCOME BEFORE INCOME TAXES | 1,361,299 | 816,012 | | 2,912,193 | 2,247,772 |
| PROVISION FOR INCOME TAXES | 573,630 | 299,799 | | 1,075,301 | 760,594 |
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NET INCOME | $ 787,669 | $ 516,213 | | $1,836,892 | $1,487,178 |
| NET INCOME PER COMMON SHARE - BASIC | $ 0.07 | $ 0.05 | | $ 0.17 | $ 0.14 |
| NET INCOME PER COMMON SHARE - DILUTED | $ 0.07 | $ 0.05 | | $ 0.17 | $ 0.14 |
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| Weighted Average Number of Shares Outstanding: | | | | | |
| Basic | 10,615,711 | 10,553,243 | | 10,600,065 | 10,530,119 |
| Diluted | 10,955,191 | 11,006,638 | | 10,933,342 | 11,011,525 |
TANDY LEATHER FACTORY, INC.
CONSOLIDATED BALANCE SHEETS
| | 06/30/05 (unaudited) | 12/31/04 |
| Cash | $2,815,421 | $2,560,202 |
| Accounts receivable, net of allowance for doubtful accounts | 2,520,900 | 2,032,289 |
| Inventory | 14,956,985 | 12,749,709 |
| Income tax receivable | 44,440 | - |
| Deferred income taxes | 222,564 | 199,308 |
| Other current assets | 946,644 | 629,723 |
Total current assets | 21,506,954 | 18,171,231 |
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| Property and equipment, net | 1,771,648 | 1,904,565 |
| Goodwill and other intangibles, net | 1,158,825 | 1,180,618 |
| Other assets | 1,049,474 | 910,749 |
| | $25,486,901 | $22,167,163 |
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| Accounts payable | $2,010,616 | $1,954,146 |
| Accrued expenses and other liabilities | 3,410,518 | 1,682,003 |
| Income taxes payable | 262,248 | 22,764 |
| Current maturities of capital lease obligations and long-term debt | 134,067 | 134,067 |
Total current liabilities | 5,817,449 | 3,792,980 |
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| Deferred income taxes | 227,216 | 313,006 |
| Capital lease obligations and long-term debt, net of current maturities | 178,756 | 750,944 |
| Total Liabilities | 6,223,421 | 4,856,930 |
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| Common stock | 25,576 | 25,345 |
| Paid-in capital | 4,912,931 | 4,796,999 |
| Retained earnings | 14,295,651 | 12,458,760 |
| Treasury stock | (25,487) | (25,487) |
| Accumulated other comprehensive loss | 54,809 | 54,616 |
| Total Stockholders' Equity | 19,263,480 | 17,310,233 |
| | $25,486,901 | $22,167,163 |
TANDY LEATHER FACTORY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 2005 AND 2004
| | 2005 | | 2004 |
| CASH FLOWS FROM OPERATING ACTIVITIES: | | | |
| Net income | $1,836,892 | | $1,487,178 |
| Adjustments to reconcile net income to net cash provided by operating activities: | | | |
| Depreciation & amortization | 235,678 | | 252,701 |
| Gain on disposal of assets | (7,703) | | - |
| Deferred income taxes | (109,046) | | (66,398) |
| Other | 2,341 | | (19,240) |
| Net changes in assets and liabilities: | | | |
| Accounts receivable-trade, net | (488,612) | | (867,259) |
| Inventory | (2,207,276) | | (1,064,766) |
| Income taxes | 195,044 | | 201,635 |
| Other current assets | (316,922) | | (106,548) |
| Accounts payable | 56,470 | | 342,974 |
| Accrued expenses and other liabilities | 1,728,515 | | 102,301 |
| Total adjustments | (911,510) | | (1,224,599) |
Net cash provided by operating activities | 925,381 | | 262,578 |
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| CASH FLOWS FROM INVESTING ACTIVITIES: | | | |
| Purchase of property and equipment | (83,115) | | (131,050) |
| Payments in connection with businesses acquired | - | | (125,452) |
| Proceeds from sale of assets | 7,703 | | - |
| Increase in other assets | (138,724) | | 12,287 |
Net cash used in investing activities | (214,137) | | (244,215) |
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| CASH FLOWS FROM FINANCING ACTIVITIES: | | | |
| Net increase (decrease) in revolving credit loans | (505,154) | | (692,984) |
| Payments on notes payable and long-term debt | (67,034) | | (1,134) |
| Payments received on notes secured by common stock | - | | 5,000 |
| Repurchase of common stock (treasury stock) | - | | - |
| Proceeds from issuance of common stock | 116,163 | | 124,015 |
Net cash used in financing activities | (456,025) | | (565,103) |
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| NET CHANGE IN CASH | 255,219 | | (546,740) |
| CASH, beginning of period | 2,560,202 | | 1,728,344 |
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| CASH, end of period | $2,815,421 | | $1,181,604 |
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| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | | | |
| Interest paid during the period | $ 3,188 | | $29,639 |
| Income taxes paid during the period, net of (refunds) | 972,205 | | 577,678 |
