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): October 27, 2003
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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)
_____________________________________________________________________________
(Former Name or Former Address, if Changed Since Last Report)
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits.
99.1 Press release dated October 27, 2003.
ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION
The Registrant is furnishing the press release attached as Exhibit 99.1
announcing the Registrant's 3rd quarter 2003 financial results. This press
release was issued on October 27, 2003.
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.
THE LEATHER FACTORY, INC.
Date: October 27, 2003 BY: /s/ Wray Thompson
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Wray Thompson, Chairman of the Board
and Chief Executive Officer
EXHIBIT 99.1
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FOR IMMEDIATE RELEASE OCTOBER 27, 2003
THE LEATHER FACTORY REPORTS 3RD QUARTER 2003 RESULTS
REVENUES UP 6.7% AND FULLY-DILUTED EPS UP FROM $0.05 TO $0.06
FORT WORTH, TEXAS - The Leather Factory, Inc. (AMEX: TLF) today reported
financial results for the third quarter of 2003. Net income for the quarter
ended September 30, 2003 was $602,000 compared to net income of $534,000 for the
third quarter of 2002, up 12.6%. Fully-diluted earnings per share for the
quarter increased $0.01 to $0.06, versus $0.05 in the third quarter of last
year. Total sales for the third quarter increased 6.7% to $10.1 million from
$9.5 million for the same quarter last year.
Sales for the nine months ended September 30, 2003 were $31.1 million, an
increase of 4.7% from sales of $29.7 million in the first three quarters of
2002. Net income for the first nine months of 2003 was $2.2 million or $0.20
per fully-diluted share versus a loss of $1.9 million or $0.18 per fully-diluted
shares in last year's comparable period. Last year's results included a $4.0
million charge, net of tax, for the cumulative effect of a previously reported
accounting change. Net income for the first three quarters of 2002 before the
cumulative effect of the accounting change was $2.1 million or $0.19 per
fully-diluted share.
Third quarter sales for the Leather Factory warehouse distribution centers
increased $128,000 or 1.8% over the same quarter last year. Leather Factory's
year-to-date sales are up $606,000 or 2.7% over the first nine months of 2002.
This sales growth is in line with the company's guidance of 2-4% growth
annually.
Tandy Leather sales increased $606,000 in the third quarter or 35.1% above last
year's third quarter. Tandy Leather operations consist of 26 retail stores as
of September 30, 2003 (four of which opened this quarter) producing sales of
$2.3 million for the current quarter compared to ten retail stores a year ago,
that produced sales of $1.1 million in last year's third quarter. Tandy's sales
for the year are up $892,000 or 16.5% over the same period last year with the
stores producing $6.3 million in the current year versus $1.8 million last year.
Tandy's centralized mail order center, which was closed on September 1, 2002,
produced sales of $606,000 in the third quarter of 2002 and $3.6 million for the
nine months ended September 30, 2002 and will no longer be in subsequent
quarter-to-quarter comparisons.
Roberts, Cushman's third quarter sales decreased $99,000 or 19.4% over the same
period a year ago and are down $98,000, or 6.4% for the year.
Consolidated gross profit margins for the quarter increased 1.6 percentage
points, or $501,000, to 55.2% while operating expenses rose $426,000. Costs
associated with the new Tandy store openings (rents, utilities, personnel,
etc.), and marketing and advertising costs account for the majority of the
increase. For the nine months ended September 30, 2003, consolidated gross
profit margins increased 1.0 percentage point, or $1.1 million, to 54.4% while
operating expenses are up $1.1 million for the year over the same period a year
ago.
Wray Thompson, Chairman and Chief Executive Officer, commented, "Despite the
costs of opening four new Tandy stores during the period, results for the third
quarter were in line with our expectations. All four new stores began producing
profits in September and we are continuing with our plan to open several stores
in the first quarter of 2004. Leather Factory's sales to the wholesale/dealer
customers picked up in the third quarter, after some new marketing programs we
put in place late in the second quarter. I'd like to have seen more improvement
in our operating efficiencies, although we are making some progress in our
efforts to consolidate expenses and increase operating margins. That will
continue to be a priority in the coming quarters."
The Leather Factory, Inc., (http://www.leatherfactory.com), headquartered in
Fort Worth, Texas, is a marketer and distributor of a broad product line
including leather, leatherworking tools, buckles and adornments for belts,
leather dyes and finishes, shoe repair supplies, saddle and tack hardware, and
do-it-yourself leathercraft kits. The Company distributes its products worldwide
though its Leather Factory stores, Tandy Leather retail stores and
mail/telephone/website orders (http://www.tandyleather.com). Its common stock
trades on the American Stock Exchange with the symbol "TLF".
Contact: Wray Thompson, The Leather Factory, Inc. (817) 496-4414
Shannon L. Greene, The 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 The 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 The 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:
FOR THE THREE MONTHS ENDED
NET SALES: . . . . . . . . 09/30/03 09/30/02
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Leather Factory . . . $ 7,372,159 $7,244,610
Tandy Leather . . . . 2,334,127 1,727,925
Cushman . . . . . . . 412,784 512,195
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Total. . . . . . $10,119,070 $9,484,730
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FOR THE NINE MONTHS ENDED
NET SALES:. . . . . . . . 09/30/03 09/30/02
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Leather Factory. . . $23,375,158 $22,769,550
Tandy Leather. . . . 6,312,145 5,420,108
Cushman. . . . . . . 1,452,527 1,551,059
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Total . . . . . $31,139,830 $29,740,717
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FOR THE THREE MONTHS ENDED
TANDY LEATHER SALES DETAIL . . . . . . . . . . . . . . . 09/30/03 09/30/02
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Same stores (10 stores) . . . . . . . . . . . . . . $1,133,337 $1,121,736
New stores (16 stores). . . . . . . . . . . . . . . 1,198,246 -
Ceased operations (centralized mail order facility) 2,544 606,189
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Total. . . . . . . . . . . . . . . . . . . . . $2,334,127 $1,727,925
========== ==========
FOR THE NINE MONTHS ENDED
TANDY LEATHER SALES DETAIL . . . . . . . . . . . . . . . 09/30/03 09/30/02
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Same stores (2 stores). . . . . . . . . . . . . . . $ 892,149 $ 740,227
New stores (24 stores). . . . . . . . . . . . . . . 5,415,064 1,074,199
Ceased operations (centralized mail order facility) 4,932 3,605,682
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Total. . . . . . . . . . . . . . . . . . . . . $6,312,145 $5,420,108
========== ==========
BALANCE BALANCE
09/30/03 12/31/02
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Inventory . . . . . . . . . . . . . . $11,621,127 $12,695,344
Total assets. . . . . . . . . . . . . 19,007,207 19,675,602
Notes payable - current and long-term 2,671,929 4,221,224
Total stockholders' equity. . . . . . 13,703,393 11,170,062
THE LEATHER FACTORY, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002
Three Months Nine months
2003 2002 2003
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NET SALES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 10,119,070 $ 9,484,730 $31,139,830
COST OF SALES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,529,258 4,396,332 14,183,460
----------- ----------- -----------
Gross Profit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,589,812 5,088,398 16,956,370
OPERATING EXPENSES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,672,820 4,246,873 13,769,241
----------- ----------- -----------
INCOME FROM OPERATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 916,992 841,525 3,187,129
OTHER EXPENSE:
Interest expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,735 54,108 174,555
Other, net. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,089 18,578 (68,433)
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Total other expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46,824 72,686 106,122
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INCOME BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE. 870,168 768,839 3,081,007
PROVISION FOR INCOME TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 268,488 234,747 926,105
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NET INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE. . . . . . . 601,680 534,092 2,154,902
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE, NET OF INCOME TAXES. . . . . . - - -
------------ ----------- -----------
NET INCOME (LOSS) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 601,680 $ 534,092 $ 2,154,902
============ =========== ===========
NET INCOME (LOSS) PER COMMON SHARE - BASIC:
INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCTG PRINCIPLE. . . . . . . . . . . . $ 0.06 $ 0.05 $ 0.21
CUMULATIVE EFFECT OF CHANGE IN ACCTG PRINCIPLE, NET OF TAX. . . . . . . . . . . . . - - -
------------ ----------- -----------
NET INCOME (LOSS) PER COMMON SHARE. . . . . . . . . . . . . . . . . . . . . . . . . $ 0.06 $ 0.05 $ 0.21
============ =========== ===========
NET INCOME (LOSS) PER COMMON SHARE-DILUTED:
INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCTG PRINCIPLE. . . . . . . . . . . . $ 0.06 $ 0.05 $ 0.20
CUMULATIVE EFFECT OF CHANGE IN ACCTG PRINCIPLE, NET OF TAX. . . . . . . . . . . . . - - -
------------ ----------- -----------
NET INCOME (LOSS) PER COMMON SHARE. . . . . . . . . . . . . . . . . . . . . . . . . $ 0.06 $ 0.05 $ 0.20
============ =========== ===========
WEIGHTED AVG NUMBER OF SHARES OUTSTANDING:
Basic. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,394,374 10,064,249 10,269,415
Diluted. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,902,794 10,723,403 10,840,764
Nine Months
2002
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NET SALES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $29,740,717
COST OF SALES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,848,098
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Gross Profit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,892,619
OPERATING EXPENSES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,646,486
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INCOME FROM OPERATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,246,133
OTHER EXPENSE:
Interest expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 191,419
Other, net. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45,199
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Total other expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 236,618
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INCOME BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE. 3,009,515
PROVISION FOR INCOME TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 924,071
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NET INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE. . . . . . . 2,085,444
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE, NET OF INCOME TAXES. . . . . . (4,008,831)
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NET INCOME (LOSS) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(1,923,387)
===========
NET INCOME (LOSS) PER COMMON SHARE - BASIC:
INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCTG PRINCIPLE. . . . . . . . . . . . $ 0.21
CUMULATIVE EFFECT OF CHANGE IN ACCTG PRINCIPLE, NET OF TAX. . . . . . . . . . . . . (0.40)
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NET INCOME (LOSS) PER COMMON SHARE. . . . . . . . . . . . . . . . . . . . . . . . . $ (0.19)
===========
NET INCOME (LOSS) PER COMMON SHARE-DILUTED:
INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCTG PRINCIPLE. . . . . . . . . . . . $ 0.19
CUMULATIVE EFFECT OF CHANGE IN ACCTG PRINCIPLE, NET OF TAX. . . . . . . . . . . . . (0.37)
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NET INCOME (LOSS) PER COMMON SHARE. . . . . . . . . . . . . . . . . . . . . . . . . $ (0.18)
===========
WEIGHTED AVG NUMBER OF SHARES OUTSTANDING:
Basic. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,035,890
Diluted. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,759,677