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:)
|
August 5,
2008
|
|
Tandy Leather Factory,
Inc.
|
|
(Exact
Name of Registrant as Specified in Its
Charter)
|
|
Delaware
|
|
(State
or Other Jurisdiction of
Incorporation
|
|
1-12368
|
75-2543540
|
|
|
(Commission
File Number)
|
(IRS
Employer Identification Number)
|
|
1900
Southeast Loop 820, Fort Worth, Texas
|
76140
|
|
|
(Address
of Principal Executive Offices)
|
(Zip
Code)
|
|
(817)
872-3200
|
|
(Registrant’s
Telephone Number, Including Area
Code)
|
|
(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 5, 2008 issued a press release regarding its
financial results for the three and six months ended June 30, 2008. 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.
|
(c)
|
Exhibits.
|
No. Exhibit
99.1 Press
release dated August 5, 2008
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: August
5, 2008
|
By:
/s/ Ron
Morgan
|
|
Ron
Morgan, Chief Executive Officer
|
EXHIBIT
99.1
FOR
IMMEDIATE
RELEASE AUGUST
5, 2008
TANDY
LEATHER FACTORY REPORTS 2ND QUARTER 2008 EPS OF $0.06 UP 50% OVER
2007
CASH
APPROACHING $10 MILLION; INTERNATIONAL OPERATION STRONG
FORT
WORTH, TEXAS – Tandy Leather Factory, Inc. (AMEX: TLF) today reported financial
results for the second quarter of 2008. Consolidated net income for
the quarter ended June 30, 2008 was $655,000 compared to consolidated net income
of $397,000 for the second quarter of 2007. Fully diluted earnings
per share for the quarter was $0.06, compared to $0.04 in the second quarter of
last year. Total sales for the quarter ended June 30, 2008 were $13.8
million, up 4% from $13.4 million in the second quarter last year.
Consolidated
sales for the six months ended June 30, 2008 were $27.1 million, down 3% from
the 2007 first half sales of $27.9 million. Consolidated net income
for the first half of 2008 was $1.2 million or $0.11 per fully-diluted share
versus $1.7 million or $0.16 per fully-diluted share in the comparable period
last year.
Sales in
the Retail Leathercraft segment, which consists of the Tandy Leather stores,
increased $393,000 in the second quarter, a 7% improvement over last year's
second quarter. Seventy-two stores comprised the Tandy Leather's
retail operations on June 30, 2008, compared to sixty-eight retail stores a year
ago. For the first six months of 2008, Tandy Leather sales increased
$410,000, or 3%, over the first six months of 2007. Second quarter
sales for the Wholesale Leathercraft segment, which consists of the Leather
Factory wholesale centers and national account group, basically matched that of
the same quarter last year, reporting a $42,000 or a ½% increase. For
the first six months of 2008, Wholesale Leathercraft’s sales were down $1.2
million, or 8%, over the same period in 2007. International
Leathercraft, consisting of one combination wholesale and retail store located
in the United Kingdom, added sales of $194,000 and $235,000 for the quarter and
year, respectively. This store was opened in February
2008.
Consolidated
gross profit margin for the current quarter was 57.9%, improving slightly from
57.5% for the second quarter of 2007. For the first two quarters,
consolidated gross profit margin for the current year was 58.1%, declining
minimally from last year's gross profit margin of 58.4%. Consolidated
operating expenses decreased $61,000 in the current quarter but increased
$315,000 for the first six months over the same periods a year
ago. For the second quarter, the significant reductions in expenses
occurred in personnel costs, rent, supplies and professional/consulting
fees. For the year, the operating expenses associated with the new
stores accounting for the increase in operating
expenses. Consolidated operating margin improved for the quarter to
7.9% compared to 5.3% last year. On a year-to-date basis,
consolidated operating margin declined from 9.5% last year to 6.7% in the
current year.
Ron
Morgan, Chief Executive Officer, commented, “While we are still behind in terms
of sales and profits from where we were at this time last year, our second
quarter results are positive. We achieved a respectable sales gain in
light of the economy, gross profit margin rose slightly and our operating
expenses were down, even with the several new stores in this quarter that didn’t
exist last year. I think that demonstrates that we are making good
decisions to keep the company headed in the right direction. We said
in previous releases that we could get our expenses under control, after making
some mistakes last year. I hope this quarter’s results speak loudly to
that.”
Mr.
Morgan continued, “We are very pleased with the growth from our UK store despite
the fact that the inflation rate is higher than expected and economists there
are expecting consumer spending to tighten. Our presence has been
well received and it certainly shows in the financial performance of our store
as it generated a profit in the month of June. It is performing ahead of our
expectations as we continue to add to our customer base throughout
Europe.”
Chief
Financial Officer, Shannon Greene, added, “Our goal has been less inventory,
less expense and more cash and we achieved all three in the second
quarter. Inventory is down $2 million from year-end 2007 and our cash
is up almost $3 million during that same time period. But more
importantly, we reduced our operating expenses in the second
quarter. The consolidated expense reduction was only $61,000, which
doesn’t sound like much, but when you consider that the operating expenses in
the new stores totaled $250,000, the reduction becomes a greater
achievement. Our work is not over however. Inventory is
almost too low now so as we move through the third quarter, I expect it to
increase slightly. But we will continue to focus on controlling
expenses in order to maximize earnings for the year.”
Tandy
Leather Factory, Inc., (http://www.tandyleatherfactory.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 through
its 29 Leather Factory stores, located in 19 states and 3 Canadian provinces, 72
Tandy Leather retail stores, located in 34 states and 5 Canadian provinces, one
combination wholesale/retail store located in the United Kingdom, and
Mid-Continent Leather Sales, one store located in Oklahoma. Its
common stock trades on the American Stock Exchange with the symbol
"TLF".
|
Contact:
|
Shannon
L. Greene, Tandy Leather Factory, Inc.
|
817/872-3200
or sgreene@tandyleather.com
|
|
Mark
Gilbert, Magellan Fin, LC
|
317/867-2839
or
mgilbert@magellanfin.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 June 30, 2008
|
Quarter
Ended June 30, 2007
|
||||||
|
Sales
|
Operating
Income
|
Sales
|
Operating
Income
|
||||
|
Wholesale
Leathercraft
|
$7,218,197
|
$524,619
|
$7,176,153
|
$411,368
|
|||
|
Retail
Leathercraft
|
6,235,427
|
571,869
|
5,842,198
|
265,964
|
|||
|
International
Leathercraft
|
193,822
|
(7,456)
|
-
|
-
|
|||
|
Other
|
200,518
|
2,486
|
358,636
|
27,019
|
|||
|
Total
Operations
|
$13,847,964
|
$1,091,518
|
$13,376,987
|
$704,351
|
|||
|
Six
Months Ended 06/30/08
|
Six
Months Ended 06/30/07
|
||||||
|
Sales
|
Operating
Income
|
Sales
|
Operating
Income
|
||||
|
Wholesale
Leathercraft
|
$13,956,408
|
$648,574
|
$15,116,639
|
$1,757,571
|
|||
|
Retail
Leathercraft
|
12,506,201
|
1,186,321
|
12,096,416
|
819,712
|
|||
|
International
Leathercraft
|
235,560
|
(48,917)
|
-
|
-
|
|||
|
Other
|
409,955
|
26,923
|
671,737
|
81,848
|
|||
|
Total
Operations
|
$27,108,124
|
$1,812,901
|
$27,884,792
|
$2,659,131
|
|||
|
Wholesale
Leathercraft
|
Quarter
Ended 06/30/08
|
Quarter
Ended 06/30/07
|
||||
|
#
of stores
|
Sales
|
#
of stores
|
Sales
|
|||
|
Same
store sales
|
30
|
$6,069,076
|
30
|
$6,316,463
|
||
|
National
account group
|
n/a
|
1,149,121
|
n/a
|
859,690
|
||
|
Total
Sales – Wholesale Leathercraft
|
$7,218,197
|
$7,176,153
|
||||
|
Wholesale
Leathercraft
|
Six
Months Ended 06/30/08
|
Six
Months Ended 06/30/07
|
||||
|
#
of stores
|
Sales
|
#
of stores
|
Sales
|
|||
|
Same
store sales
|
29
|
$11,744,151
|
29
|
$12,737,194
|
||
|
New
store sales
|
1
|
316,877
|
1
|
389,137
|
||
|
National
account group
|
n/a
|
1,895,380
|
n/a
|
1,990,308
|
||
|
Total
Sales – Wholesale Leathercraft
|
$13,956,408
|
$15,116,639
|
||||
|
Retail
Leathercraft
|
Quarter
Ended 06/30/08
|
Quarter
Ended 06/30/07
|
|||
|
#
of stores
|
Sales
|
#
of stores
|
Sales
|
||
|
Same
store sales
|
68
|
$6,027,222
|
68
|
$5,842,198
|
|
|
New
store sales
|
4
|
208,205
|
-
|
-
|
|
|
Total
Sales – Retail Leathercraft
|
72
|
$6,235,427
|
68
|
$5,842,198
|
|
|
Retail
Leathercraft
|
Six
Months Ended 06/30/08
|
Six
Months Ended 06/30/07
|
|||
|
#
of stores
|
Sales
|
#
of stores
|
Sales
|
||
|
Same
store sales
|
64
|
$11,739,052
|
64
|
$11,948,058
|
|
|
New
store sales
|
8
|
767,149
|
4
|
148,358
|
|
|
Total
Sales – Retail Leathercraft
|
72
|
$12,506,201
|
68
|
$12,096,416
|
|
Tandy
Leather Factory, Inc.
Consolidated
Balance Sheets
|
June
30,
2008
(unaudited)
|
December
31,
2007
(audited)
|
||||||
|
ASSETS
|
|||||||
|
CURRENT
ASSETS:
|
|||||||
|
Cash
|
$9,485,677
|
$6,810,396
|
|||||
|
Marketable
securities
|
400,000
|
-
|
|||||
|
Accounts
receivable-trade, net of allowance for doubtful accounts
|
|||||||
|
of
$165,000 and $104,000 in 2008 and 2007, respectively
|
2,355,647
|
2,538,816
|
|||||
|
Inventory
|
15,310,946
|
17,473,352
|
|||||
|
Prepaid
income taxes
|
116,990
|
||||||
|
Deferred
income taxes
|
253,325
|
256,938
|
|||||
|
Other
current assets
|
893,202
|
1,102,836
|
|||||
|
Total
current assets
|
28,815,788
|
28,182,338
|
|||||
|
PROPERTY
AND EQUIPMENT, at cost
|
15,083,775
|
11,793,317
|
|||||
|
Less
accumulated depreciation and amortization
|
(4,719,233)
|
(4,794,505)
|
|||||
|
10,364,542
|
6,998,812
|
||||||
|
GOODWILL
|
987,526
|
990,536
|
|||||
|
OTHER
INTANGIBLES, net of accumulated amortization of
|
|||||||
|
$339,000
and $313,000 in 2008 and 2007, respectively
|
358,489
|
384,134
|
|||||
|
OTHER
assets
|
373,779
|
1,095,686
|
|||||
|
$40,900,125
|
$37,651,506
|
||||||
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|||||||
|
CURRENT
LIABILITIES:
|
|||||||
|
Accounts
payable-trade
|
$1,789,676
|
$1,497,564
|
|||||
|
Accrued
expenses and other liabilities
|
2,793,616
|
2,072,640
|
|||||
|
Income
taxes payable
|
-
|
67,150
|
|||||
|
Current
maturities of long-term debt and capital lease obligations
|
513,871
|
135,000
|
|||||
|
Total
current liabilities
|
5,097,163
|
3,772,354
|
|||||
|
DEFERRED
INCOME TAXES
|
503,448
|
148,648
|
|||||
|
LONG-TERM
DEBT, net of current maturities
|
3,813,750
|
3,915,000
|
|||||
|
CAPITAL
LEASE OBLIGATION, net of current maturities
|
441,124
|
-
|
|||||
|
COMMITMENTS
AND CONTINGENCIES
|
-
|
-
|
|||||
|
STOCKHOLDERS'
EQUITY:
|
|||||||
|
Preferred
stock, $0.10 par value; 20,000,000 shares authorized;
|
|||||||
|
none
issued or outstanding; attributes to be determined on
issuance
|
-
|
-
|
|||||
|
Common
stock, $0.0024 par value; 25,000,000 shares authorized;
|
|||||||
|
10,992,951
shares issued at 2008 and 2007;
|
|||||||
|
10,987,092
shares outstanding at 2008 and 2007
|
26,383
|
26,359
|
|||||
|
Paid-in
capital
|
5,448,203
|
5,419,477
|
|||||
|
Retained
earnings
|
25,277,419
|
24,037,672
|
|||||
|
Treasury
stock (5,859 shares at cost)
|
(25,487)
|
(25,487)
|
|||||
|
Accumulated
other comprehensive income
|
318,122
|
357,483
|
|||||
|
Total
stockholders' equity
|
31,044,640
|
29,815,504
|
|||||
|
$40,900,125
|
$37,651,506
|
||||||
Tandy
Leather Factory, Inc.
Consolidated
Statements of Income
(Unaudited)
For
the Three and Six Months Ended June 30, 2008 and 2007
|
THREE
MONTHS
|
SIX
MONTHS
|
||||||
|
2008
|
2007
|
2008
|
2007
|
||||
|
NET
SALES
|
$13,847,964
|
$13,376,987
|
$27,108,124
|
$27,884,792
|
|||
|
COST
OF SALES
|
5,836,312
|
5,691,318
|
11,355,450
|
11,601,170
|
|||
|
Gross
profit
|
8,011,652
|
7,685,669
|
15,752,674
|
16,283,622
|
|||
|
OPERATING
EXPENSES
|
6,920,134
|
6,981,318
|
13,939,773
|
13,624,491
|
|||
|
INCOME
FROM OPERATIONS
|
1,091,518
|
704,351
|
1,812,901
|
2,659,131
|
|||
|
OTHER
INCOME (EXPENSE):
|
|||||||
|
Interest
expense
|
(87,912)
|
-
|
(169,653)
|
-
|
|||
|
Other,
net
|
26,293
|
27,522
|
306,683
|
76,514
|
|||
|
Total
other income (expense)
|
(61,619)
|
27,522
|
137,030
|
76,514
|
|||
|
INCOME
BEFORE INCOME TAXES
|
1,029,899
|
731,873
|
1,949,931
|
2,735,645
|
|||
|
PROVISION
FOR INCOME TAXES
|
374,649
|
335,181
|
710,183
|
992,603
|
|||
|
NET
INCOME
|
$655,250
|
$396,692
|
$1,239,748
|
$1,743,042
|
|||
|
NET
INCOME PER COMMON SHARE-BASIC
|
$ 0.06
|
$ 0.04
|
$ 0.11
|
$ 0.16
|
|||
|
NET
INCOME PER COMMON SHARE-DILUTED
|
$ 0.06
|
$ 0.04
|
$ 0.11
|
$ 0.16
|
|||
|
Weighted
Average Number of Shares Outstanding:
|
|||||||
|
Basic
|
10,981,378
|
10,945,661
|
10,979,235
|
10,931,201
|
|||
|
Diluted
|
11,076,340
|
11,145,066
|
11,072,102
|
11,159,188
|
|||
Tandy
Leather Factory, Inc.
Consolidated
Statements of Cash Flows
(Unaudited)
For
the Six Months Ended June 30, 2008 and 2007
|
2008
|
2007
|
||
|
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|||
|
Net
income
|
$1,239,748
|
$1,743,042
|
|
|
Adjustments
to reconcile net income to net
|
|||
|
cash
provided by (used in) operating activities-
|
|||
|
Depreciation
& amortization
|
509,325
|
233,742
|
|
|
Loss
on disposal of assets
|
14,760
|
-
|
|
|
Non-cash
stock-based compensation
|
15,250
|
15,251
|
|
|
Deferred
income taxes
|
358,413
|
(61)
|
|
|
Other
|
(36,352)
|
144,723
|
|
|
Net
changes in assets and liabilities:
|
|||
|
Accounts
receivable-trade, net
|
183,169
|
(323,170)
|
|
|
Inventory
|
2,162,405
|
(2,660,008)
|
|
|
Income
taxes
|
(184,139)
|
(546,488)
|
|
|
Other
current assets
|
209,633
|
(25,420)
|
|
|
Accounts
payable
|
292,112
|
138,298
|
|
|
Accrued
expenses and other liabilities
|
777,199
|
(634,526)
|
|
|
Total
adjustments
|
4,301,775
|
(3,657,660)
|
|
|
Net
cash provided by (used in) operating activities
|
5,541,523
|
(1,914,618)
|
|
|
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
|||
|
Purchase
of property and equipment
|
(3,098,638)
|
(352,880)
|
|
|
Payments
in connection with businesses acquired
|
-
|
(650,000)
|
|
|
Proceeds
from sale of assets
|
38,181
|
25,338
|
|
|
Increase
in marketable securities
|
(400,000)
|
-
|
|
|
Decrease
(increase) in other assets
|
721,907
|
(115,559)
|
|
|
Net
cash used in investing activities
|
(2,738,550)
|
(1,093,101)
|
|
|
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|||
|
Payments
on long-term debt and notes payable
|
(33,750)
|
-
|
|
|
Payments
on capital lease obligations
|
(107,411)
|
(67,034)
|
|
|
Proceeds
from issuance of common stock
|
13,500
|
54,960
|
|
|
Net
cash used in financing activities
|
(127,661)
|
(12,074)
|
|
|
NET
CHANGE IN CASH
|
2,675,282
|
(3,019,793)
|
|
|
CASH,
beginning of period
|
6,810,396
|
6,739,891
|
|
|
CASH,
end of period
|
$9,485,678
|
$3,720,098
|
|
|
SUPPLEMENTAL
DISCLOSURES OF CASH FLOW INFORMATION:
|
|||
|
Interest
paid during the period
|
$169,653
|
-
|
|
|
Income
taxes paid during the period, net of (refunds)
|
534,957
|
$1,548,067
|
|
|
NON-CASH
INVESTING ACTIVITIES:
|
|||
|
Equipment
acquired under capital lease financing arrangements
|
$803,713
|
-
|