SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
Form 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): November 30, 2000
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The Leather Factory, Inc..
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(Exact Name of Registrant as Specified in Its Charter)
Delaware
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(State or Other Jurisdiction of Incorporation)
1-12368 75-2543540
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(Commission File Number) (IRS Employer Identification Number)
3847 East Loop 820 South, Fort Worth, Texas 76119
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(Address of Principal Executive Offices) (Zip Code)
(817) 496-4414
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(Registrant's Telephone Number, Including Area Code)
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(Former Name or Former Address, if Changed Since Last Report)
Item 2. Acquisition or Disposition of Assets
On November 30, 2000, Leather Tan Acquisition, Inc. ("Leather Tan") a
Texas corporation and a newly-formed subsidiary of the Registrant, acquired the
operating assets (the "Acquired Assets") of TLC Direct, Inc., a Texas
corporation, and Tandy Leather Dealers, Inc., a Texas corporation, (collectively
called the "Sellers"). The Sellers are subsidiaries of Tandycrafts, Inc.
("Tandycrafts"), a New York Stock Exchange-listed company based in Fort Worth,
Texas. Prior to this transaction, the Acquired Assets were operated as the
"Tandy Leather" business of Tandycrafts. The Acquired Assets include machinery,
equipment, materials, supplies, inventory, trade booth inventory, catalog
inventory, fixtures, goods in process, intellectual property, goodwill, trade
names including "Tandy Leather" and "Tandy Leather Company," patents,
trademarks, copyrights, leases, subleases, contracts, agreements, accounts,
notes and other receivables, rights to Sellers' Internet Domain, certain
leathercraft art, mailing lists and certain historic furniture.
The consideration paid by Leather Tan for the Acquired Assets was cash
in the amount of $2.85 million plus the assumption of (a) all of the Sellers'
trade payables incurred in the ordinary course of business within ninety days
prior to November 30, 2000, (b) all liabilities relating to any contracts
assumed by the Registrant (including the obligations of the Sellers under
certain listed licenses, sub-licenses, leases, sub-leases, contracts, and other
arrangements), (c) certain other listed obligations, (d) transfer, filing,
recording and other similar fees, and (e) any liabilities arising on or after
November 30, 2000 The total amount of the liabilities assumed by Leather Tan is
estimated to be between $450,000 and $500,000. . The purchase price was
determined by arms' length negotiations between representatives of the
Registrant and Tandycrafts.
The source of Leather Tan's cash for this transaction was funds drawn
on the Registrant's line of credit with Wells Fargo Business Credit, Inc. See
Item 5.
The transaction described in this Item 2 was pursuant to an Asset
Purchase Agreement between Leather Tan and the Sellers. The Registrant and
Tandycrafts also executed the Asset Purchase Agreement for limited purposes. A
copy of this agreement is filed as an exhibit to this report. See Item 7.
Item 5. Other Events.
On November 30, 2000, the Registrant and its subsidiaries (including
Leather Tan) entered into a First Amendment to Credit and Security Agreement
(the Amendment"), with Wells Fargo Business Credit, Inc. a Minnesota corporation
("Wells Fargo"). The Amendment amended the provisions of a Credit and Security
Agreement that the Registrant and its subsidiaries entered with Wells Fargo in
November 1999.
In the Amendment, Wells Fargo consented to the transaction described in
Item 2 above and amended certain financial tests to reflect the acquisition of
the Tandy Leather assets and to make previously contemplated extensions of these
tests. Among these changes, the Amendment dropped a minimum debt service
requirement in the existing credit agreement, and increased the percent of
eligible inventory book value and the total amount of eligible inventory (both
computed as provided in the credit agreement) that can be included in the
Registrant's borrowing base under the credit agreement. Also, the Registrants'
required minimum book net worth and minimum net income (as these are computed
under the agreement) were adjusted for the balance of the calendar year 2000. In
addition, extensions of these requirements were negotiated that set higher
standards for the Registrant than the earlier provisions. The increased
standards reflected the Registrant's improved financial performance since the
credit agreement was signed.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Businesses Acquired.
To be filed supplementally in accordance with Instruction 4 to
Item 7(a).
(b) Pro Forma Financial Information.
To be filed supplementally in accordance with Instruction 2 to
Item 7(b).
(c) Exhibits.
2.1 Asset Purchase Agreement, dated November 30, 2000, by and among
Leather Tan Acquisition, Inc., a Texas corporation, as the
purchaser, and, TLC Direct, Inc., a Texas corporation, and Tandy
Leather Dealer, Inc., a Texas corporation as the sellers. Also
entering into this agreement for limited purposes were the
Registrant and Tandycrafts, Inc. [Schedules to this agreement
have been omitted in accordance with the Instructions to Item 601
(b) (2) to Regulation S-K.]
The Registrant agrees to furnish supplementally a copy of any
omitted Schedule to the Commission upon request.
99.1 First Amendment to Credit and Security Agreement, dated November
30, 2000, among the Registrant, The Leather Factory, Inc., a
Texas corporation, The Leather Factory, Inc., an Arizona
corporation, Roberts, Cushman & Company, Inc., a New York
corporation, Hi-Line Leather & Manufacturing Company, a
California corporation, Leather Tan Acquisition, Inc., a Texas
corporation and Wells Fargo Business Credit, Inc., a Minnesota
corporation.
This Report contains forward-looking statements based on current
expectations that involve a number of uncertainties. Details on the factors that
could affect The Leather Factory, Inc.'s financial results are included in The
Leather Factory, Inc.'s Securities and Exchange Commission (SEC) filings,
including the latest Annual Report on Form 10-K and on its Quarterly Reports on
Form 10-Q.
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 of the
undersigned hereunto duly authorized.
THE LEATHER FACTORY, INC.
Date: December 14, 2000 BY: /s/ Wray Thompson
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Wray Thompson, Chairman of the Board, President
and Chief Executive Officer