[X]
|
ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
[
]
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934 [NO FEE REQUIRED]
|
Commission
File Number 1-12368
|
Tandy
Leather Factory, Inc.
|
(exact
name of registrant as specified in its
charter)
|
Delaware
|
75-2543540
|
|
(State
or other jurisdiction of incorporation)
|
(IRS
Employer Identification Number)
|
3847
East Loop 820 South, Fort Worth, Texas
|
76119
|
|
(Address
of principal executive offices)
|
(Zip
Code)
|
Registrant’s
telephone number, including area code:
(817) 496-4414
|
Title
of Each Class
|
Name
of Each Exchange on Which Registered
|
|
Common
Stock, par value $0.0024
|
American
Stock Exchange
|
Leather
Factory wholesale centers
|
Tandy
Leather retail stores
|
|||||
Year
Ended
|
Opened
|
Conversions(1)
|
Total
|
Opened
(2)
|
Closed
|
Total
|
Balance
Fwd
|
22
|
N/A
|
||||
1999
|
4
|
0
|
26
|
N/A
|
||
2000
|
2
|
0
|
28
|
1*
|
0
|
1
|
2001
|
2
|
0
|
30
|
0
|
0
|
1
|
2002
|
1
|
(1)
|
30
|
14
|
1*
|
14
|
2003
|
0
|
0
|
30
|
12
|
0
|
26
|
2004
|
0
|
0
|
30
|
16
|
0
|
42
|
2005
|
0
|
0
|
30
|
8
|
0
|
50
|
Product
Category
|
2005
Sales
Mix
|
2004
Sales
Mix
|
|
Belts
strips and straps
|
2%
|
2%
|
|
Books,
patterns, videos
|
1%
|
2%
|
|
Buckles
|
4%
|
4%
|
|
Conchos^
|
4%
|
3%
|
|
Craft
supplies
|
5%
|
7%
|
|
Tools
and Hardware
|
1%
|
1%
|
|
Dyes,
finishes, glues
|
5%
|
5%
|
|
Hand
tools
|
12%
|
13%
|
|
Hardware
|
8%
|
6%
|
|
Kits
|
8%
|
8%
|
|
Lace
|
13%
|
12%
|
|
Leather
|
34%
|
34%
|
|
Stamping
tools
|
3%
|
3%
|
|
100%
|
100%
|
Product
Category
|
2005
Sales
Mix
|
2004
Sales
Mix
|
|
Belts
strips and straps
|
5%
|
5%
|
|
Books,
patterns, videos
|
3%
|
3%
|
|
Buckles
|
4%
|
3%
|
|
Conchos
|
4%
|
3%
|
|
Craft
supplies
|
3%
|
4%
|
|
Dyes,
finishes, glues
|
7%
|
7%
|
|
Hand
tools
|
16%
|
18%
|
|
Hardware
|
6%
|
4%
|
|
Kits
|
12%
|
13%
|
|
Lace
|
4%
|
5%
|
|
Leather
|
30%
|
30%
|
|
Stamping
tools
|
6%
|
5%
|
|
100%
|
100%
|
Name
and Age
|
Position
and Business Experience During
Past Five Years
|
Served
as Officer Since
|
J.
Wray Thompson, 74
|
Chief
Executive Officer since June 1993. President from June 1993 to
January
2001
|
1993
|
Shannon
L. Greene, 40
|
Chief
Financial Officer since May 2000. Controller from January 1998
to May 2000
|
2000
|
Robin
L. Morgan, 55
|
Vice
President of Administration since June 1993
|
1993
|
Ronald
C. Morgan, 58
|
President
since January 2001. Chief Operating Officer since June 1993
|
1993
|
State
|
Wholesale
Leathercraft
|
Retail
Leathercraft
|
Other
|
Alabama
|
-
|
1
|
-
|
Arizona
|
2
|
2
|
-
|
California
|
3
|
5
|
-
|
Colorado
|
1
|
2
|
-
|
Connecticut
|
-
|
1
|
-
|
Florida
|
1
|
2
|
-
|
Georgia
|
-
|
1
|
-
|
Idaho
|
-
|
1
|
-
|
Illinois
|
1
|
1
|
-
|
Indiana
|
-
|
1
|
-
|
Iowa
|
1
|
-
|
-
|
Kansas
|
1
|
-
|
-
|
Kentucky
|
-
|
1
|
-
|
Louisiana
|
1
|
-
|
-
|
Maryland
|
-
|
1
|
-
|
Michigan
|
1
|
1
|
-
|
Minnesota
|
-
|
1
|
-
|
Missouri
|
1
|
2
|
-
|
Montana
|
1
|
-
|
-
|
Nebraska
|
-
|
1
|
-
|
Nevada
|
-
|
2
|
-
|
New
Mexico
|
1
|
2
|
-
|
New
York
|
-
|
1
|
1
|
North
Carolina
|
1
|
-
|
-
|
Ohio
|
1
|
1
|
-
|
Oklahoma
|
0
|
2
|
-
|
Oregon
|
1
|
-
|
-
|
Pennsylvania
|
1
|
1
|
-
|
Tennessee
|
1
|
2
|
-
|
Texas
|
5
|
6
|
-
|
Utah
|
1
|
1
|
-
|
Virginia
|
-
|
1
|
-
|
Washington
|
1
|
2
|
-
|
Wisconsin
|
-
|
1
|
-
|
Canadian
locations:
|
|||
Alberta
|
1
|
1
|
-
|
British
Columbia
|
-
|
1
|
-
|
Manitoba
|
1
|
-
|
-
|
Ontario
|
1
|
2
|
-
|
2005
|
High
|
Low
|
4th
quarter
|
$7.23
|
$4.15
|
3rd
quarter
|
$5.65
|
$4.30
|
2nd
quarter
|
$4.95
|
$3.25
|
1st
quarter
|
$3.79
|
$3.20
|
2004
|
High
|
Low
|
4th
quarter
|
$4.85
|
$3.97
|
3rd
quarter
|
$4.58
|
$3.25
|
2nd
quarter
|
$3.42
|
$2.90
|
1st
quarter
|
$3.45
|
$2.80
|
Plan
Category
|
Column
(a)
Number
of Securities to be issued upon exercise of outstanding options,
warrants
and rights
|
Column
(b)
Weighted-average
exercise price of outstanding options, warrants and
rights
|
Column
(c)
Number
of securities remaining available for future issuance under equity
compensation plans (excluding securities reflected in Column
(a)
|
Equity
compensation plans approved by stockholders
|
421,000
|
$1.93
|
44,000
|
Equity
compensation plans not approved by stockholders
|
140,000
|
3.78
|
-
|
TOTAL
|
561,000
|
$2.39
|
44,000
|
Income
Statement Data, Years
ended December 31,
|
2005
|
2004
|
2003
|
2002
|
2001
|
|||||
Net
sales
|
$50,719,574
|
$46,146,284
|
$41,712,191
|
$39,728,615
|
$37,279,262
|
|||||
Cost
of sales
|
21,964,530
|
20,706,239
|
19,020,292
|
18,393,914
|
17,934,935
|
|||||
Gross
profit
|
28,755,044
|
25,440,045
|
22,691,899
|
21,334,701
|
19,344,327
|
|||||
Operating
expenses
|
23,181,633
|
21,181,599
|
18,594,240
|
17,202,927
|
15,442,359
|
|||||
Operating
income
|
5,573,411
|
4,258,446
|
4,097,659
|
4,131,774
|
3,901,968
|
|||||
Operating
income per share - basic
|
$0.52
|
$0.40
|
$0.40
|
$0.41
|
$0.39
|
|||||
Operating
income per shares - diluted
|
$0.51
|
$0.39
|
$0.38
|
$0.38
|
$0.37
|
|||||
Other
(income) expense
|
(134,502)
|
44,800
|
125,169
|
311,917
|
533,482
|
|||||
Income before
income taxes
|
5,707,913
|
4,213,646
|
3,972,490
|
3,819,857
|
3,368,486
|
|||||
Income
tax provision
|
1,994,199
|
1,559,605
|
1,232,116
|
1,224,868
|
1,362,053
|
|||||
Income before
cumulative effect of change in accounting principle
|
3,713,714
|
2,654,041
|
2,740,374
|
2,594,989
|
2,006,433
|
|||||
Cumulative
effect of change in accounting principle
|
-
|
-
|
-
|
(4,008,831)
|
-
|
|||||
Net
income (loss)
|
$3,713,714
|
$2,654,041
|
$2,740,374
|
$(1,413,842)
|
$
2,006,433
|
|||||
Earnings
(loss) per share
|
$0.35
|
$0.25
|
$0.27
|
$(0.14)
|
$0.20
|
|||||
Earnings
(loss) per share- assuming
dilution
|
$0.34
|
$0.24
|
$0.25
|
$(0.13)
|
$0.19
|
|||||
Weighted
average common shares outstanding for:
|
||||||||||
Basic
EPS
|
10,643,004
|
10,543,994
|
10,323,549
|
10,063,581
|
9,976,181
|
|||||
Diluted
EPS
|
10,976,240
|
10,957,518
|
10,861,305
|
10,761,670
|
10,449,306
|
Balance
Sheet Data, as of December 31,
|
2005
|
2004
|
2003
|
2002
|
2001
|
||||
Cash
and cash equivalents
|
$3,215,727
|
$2,560,202
|
$1,728,344
|
$101,557
|
$409,040
|
||||
Total
assets
|
25,680,473
|
22,167,163
|
19,058,406
|
19,675,602
|
19,548,323
|
||||
Capital
lease obligation, including current portion
|
245,789
|
379,857
|
1,134
|
7,691
|
35,173
|
||||
Long-term
debt, including current portion
|
-
|
505,154
|
1,792,984
|
4,213,533
|
4,500,422
|
||||
Total
Stockholders’ Equity
|
$21,257,857
|
$17,310,233
|
$14,509,493
|
$11,170,062
|
$12,423,671
|
Year
|
Wholesale
Leathercraft
|
Retail
Leathercraft
|
Other
|
Total
Company
|
Total
Company Increase
from
Prior Year
|
2005
|
$31,046,268
|
$18,023,214
|
$1,650,092
|
$50,719,574
|
9.9%
|
2004
|
$30,630,122
|
$13,515,662
|
$2,000,500
|
$46,146,284
|
10.6%
|
2003
|
$30,684,092
|
$9,216,838
|
$1,811,261
|
$41,712,191
|
5.0%
|
Year
|
Wholesale
Leathercraft
|
Retail
Leathercraft
|
Other
|
Total
Company
|
2005
|
55.20%
|
61.82%
|
27.89%
|
56.69%
|
2004
|
53.82%
|
61.77%
|
30.31%
|
55.13%
|
2003
|
53.23%
|
62.98%
|
30.62%
|
54.40%
|
Year
|
Net
Sales Incr
(Decr)
from
Prior Yr
|
Operating
Income
|
Operating
Income Incr
(Decr)
from
Prior Year
|
Operating
Income as a Percentage of
Sales
|
2005
|
1.4%
|
$3,721,891
|
23.5%
|
12.0%
|
2004
|
(0.2)%
|
$3,013,316
|
(13.0)%
|
9.8%
|
2003
|
1.2%
|
$3,462,457
|
(7.5)%
|
11.3%
|
Customer
Group
|
2005
|
2004
|
2003
|
Retail
|
23%
|
23%
|
23%
|
Institution
|
7%
|
7%
|
8%
|
Wholesale
|
45%
|
47%
|
42%
|
National
Accounts
|
16%
|
16%
|
20%
|
Manufacturers
|
9%
|
7%
|
7%
|
100%
|
100%
|
100%
|
Year
|
Net
Sales Increase
from
Prior Yr
|
Operating
Income
|
Operating
Income Incr
(Decr)
from
Prior Year
|
Operating
Income as a Percentage of
Sales
|
2005
|
33.4%
|
$1,766,960
|
45.9%
|
9.8%
|
2004
|
46.6%
|
$1,210,566
|
100.3%
|
8.9%
|
2003
|
24.7%
|
$604,291
|
62.7%
|
6.6%
|
Customer
Group
|
2005
|
2004
|
2003
|
Retail
|
62%
|
72%
|
72%
|
Institution
|
11%
|
6%
|
6%
|
Wholesale
|
26%
|
21%
|
21%
|
National
Accounts
|
0%
|
0%
|
0%
|
Manufacturers
|
1%
|
1%
|
1%
|
100%
|
100%
|
100%
|
· |
Raleigh,
NC
|
· |
Lubbock,
TX
|
· |
Charlotte,
NC*
|
· |
South
Denver, CO
|
· |
Little
Rock, AR
|
· |
Irving,
TX
|
2005
|
2004
|
2003
|
||
Solvency
Ratios:
|
||||
Quick
Ratio
|
Cash+Accts
Rec/Total Current Liabilities
|
1.31
|
1.21
|
1.40
|
Current
Ratio
|
Total
Current Assets/Total Current Liabilities
|
5.30
|
4.79
|
6.16
|
Current
Liabilities to Net Worth
|
Total
Current Liabilities/Net Worth
|
0.19
|
0.22
|
0.17
|
Current
Liabilities to Inventory
|
Total
Current Liabilities/Inventory
|
0.26
|
0.30
|
0.23
|
Total
Liabilities to Net Worth
|
Total
Liabilities/Net Worth
|
0.21
|
0.28
|
0.31
|
Fixed
Assets to Net Worth
|
Fixed
Assets/Net Worth
|
0.08
|
0.11
|
0.13
|
Efficiency
Ratios:
|
||||
Collection
Period (Days Outstanding)
|
Accounts
Receivable/Credit Sales x 365
|
44.17
|
43.57
|
41.45
|
Inventory
Turnover
|
Sales/Average
Inventory
|
3.57
|
3.87
|
3.51
|
Assets
to Sales
|
Total
Assets/Sales
|
0.51
|
0.48
|
0.46
|
Sales
to Net Working Capital
|
Sales/Current
Assets - Current Liabilities
|
2.38
|
3.21
|
3.18
|
Accounts
Payable to Sales
|
Accounts
Payable/Sales
|
0.02
|
0.04
|
0.04
|
Profitability
Ratios:
|
||||
Return
on Sales (Profit Margin)
|
Net
Profit After Taxes/Sales
|
0.07
|
0.06
|
0.07
|
Return
on Assets
|
Net
Profit After Taxes/Total Assets
|
0.14
|
0.12
|
0.14
|
Return
on Net Worth
(Return on Equity)
|
Net
Profit After Taxes/Net Worth
|
0.18
|
0.15
|
0.19
|
4th
Qtr. ‘04
|
1st
Qtr. ‘05
|
2nd
Qtr. ‘05
|
3rd
Qtr. ‘05
|
4th
Qtr. ‘05
|
$505,154
|
$-0-
|
$-0-
|
$-0-
|
$-0-
|
December
31,
|
|||||||
2004
|
2005
|
||||||
Principal
|
Accrued
Interest
|
Principal
|
Accrued
Interest
|
||||
Revolving
Line
|
$505,154
|
$6,219
|
$-0-
|
$-0-
|
Segment
|
2005
|
2004
|
2003
|
Wholesale
Leathercraft
|
2.68
|
3.11
|
2.97
|
Retail
Leathercraft
|
8.23
|
8.88
|
8.69
|
Other
|
3.75
|
4.12
|
3.71
|
Wholesale
Leathercraft distribution centers only
|
7.73
|
8.69
|
8.26
|
Payments
Due by Periods
|
|||||
Contractual
Obligations
|
Total
|
Less
than 1
Year
|
1
- 3 Years
|
4
-5 Years
|
After
5 Years
|
Long-Term
Debt(1)
|
--
|
--
|
--
|
--
|
--
|
Capital
Lease Obligations
|
245,789
|
$
134,067
|
111,722
|
--
|
--
|
Operating
Leases(2)
|
6,222,988
|
2,248,426
|
3,710,456
|
$264,106
|
--
|
Total
Contractual Obligations
|
$6,468,777
|
$2,382,493
|
$3,822,178
|
$264,106
|
$
--
|
· |
We
might fail to realize the anticipated benefits of the opening of
Tandy
Leather retail stores or we might be unable to obtain sufficient
new
locations on acceptable terms to meet our growth plans. Further,
we might
fail to hire and train competent managers to oversee the stores
opened.
|
· |
Political
considerations here and abroad could disrupt our sources of supplies
from
abroad or affect the prices we pay for
goods.
|
· |
Continued
involvement by the United States in war and other military operations
in
the Middle East and other areas abroad could disrupt international
trade
and affect our inventory sources.
|
· |
A
slump in the economy in the United States, as well as abroad, may
cause
our sales to decrease or not to increase or adversely affect the
prices
charged for our products. Also, hostilities, terrorism or other events
could worsen this condition.
|
· |
As
a result of the on-going threat of terrorist attacks on the United
States,
consumer buying habits could change and decrease our
sales.
|
· |
Livestock
diseases such as mad cow could reduce the availability of hides and
leathers or increase their cost. Also, the prices of hides and leathers
fluctuate in normal times, and these fluctuations can affect
us.
|
· |
If,
for whatever reason, the costs of our raw materials and inventory
increase, we may not be able to pass those costs on to our
customers.
|
· |
Other
factors could cause either fluctuations in buying patterns or possible
negative trends in the craft and western retail markets. In addition,
our
customers may change their preferences to products other than ours,
or
they may not accept new products as we introduce them.
|
· |
Tax
or interest rates might increase. In particular, interest rates have
been
increasing. These increases will increase our costs of borrowing
funds as
needed in our business.
|
· |
Any
change in the commercial banking environment may affect us and our
ability
to borrow capital as needed.
|
· |
Other
uncertainties, which are difficult to predict and many of which are
beyond
our control, may occur as well.
|
December
31,
2005
|
December
31,
2004
|
||
ASSETS
|
|||
CURRENT
ASSETS:
|
|||
Cash
|
$3,215,727
|
$2,560,202
|
|
Accounts
receivable-trade, net of allowance for doubtful accounts of $138,000
and
$85,000 in 2005 and 2004, respectively
|
2,178,848
|
2,032,289
|
|
Inventory
|
15,669,182
|
12,749,709
|
|
Deferred
income taxes
|
273,872
|
199,308
|
|
Other
current assets
|
358,058
|
629,723
|
|
Total
current assets
|
21,695,687
|
18,171,231
|
|
PROPERTY
AND EQUIPMENT, at cost
|
6,424,091
|
6,181,834
|
|
Less
accumulated depreciation and amortization
|
(4,664,614)
|
(4,277,269)
|
|
1,759,477
|
1,904,565
|
||
GOODWILL
|
746,611
|
742,860
|
|
OTHER
INTANGIBLES, net of accumulated amortization of $223,000 and $185,000
in
2005 and 2004, respectively
|
398,967
|
437,758
|
|
OTHER
assets
|
1,079,731
|
910,749
|
|
$25,680,473
|
$22,167,163
|
||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|||
CURRENT
LIABILITIES:
|
|||
Accounts
payable-trade
|
$1,220,420
|
$1,954,146
|
|
Accrued
expenses and other liabilities
|
2,550,573
|
1,682,003
|
|
Income
taxes payable
|
199,581
|
22,764
|
|
Current
maturities of capital lease obligation
|
134,067
|
134,067
|
|
Total
current liabilities
|
4,104,641
|
3,792,980
|
|
DEFERRED
INCOME TAXES
|
206,253
|
313,006
|
|
LONG-TERM
DEBT, net of current maturities
|
-
|
505,154
|
|
CAPITAL
LEASE OBLIGATION, net of current maturities
|
111,722
|
245,790
|
|
COMMITMENTS
AND CONTINGENCIES
|
-
|
-
|
|
STOCKHOLDERS'
EQUITY:
|
|||
Preferred
stock, $0.10 par value; 20,000,000 shares authorized, none issued
or
outstanding
|
-
|
-
|
|
Common
stock, $0.0024 par value; 25,000,000 shares
|
|||
authorized,
10,741,835 and 10,560,661 shares issued at 2005 and 2004,
|
|||
10,735,976
and 10,554,711 outstanding at 2005 and 2004, respectively
|
25,780
|
25,345
|
|
Paid-in
capital
|
4,988,445
|
4,796,999
|
|
Retained
earnings
|
16,172,475
|
12,458,760
|
|
Treasury
stock
|
(25,487)
|
(25,487)
|
|
Accumulated
other comprehensive income
|
96,644
|
54,616
|
|
Total
stockholders' equity
|
21,257,857
|
17,310,233
|
|
$25,680,473
|
$22,167,163
|
2005
|
2004
|
2003
|
|||
NET
SALES
|
$
50,719,574
|
$
46,146,284
|
$
41,712,191
|
||
COST
OF SALES
|
21,964,530
|
20,706,239
|
19,020,292
|
||
Gross
Profit
|
28,755,044
|
25,440,045
|
22,691,899
|
||
OPERATING
EXPENSES
|
23,181,633
|
21,181,599
|
18,594,240
|
||
INCOME
FROM OPERATIONS
|
5,573,411
|
4,258,446
|
4,097,659
|
||
OTHER
(INCOME) EXPENSE:
|
|||||
Interest
expense
|
3,188
|
53,400
|
206,942
|
||
Other,
net
|
(137,690)
|
(8,600)
|
(81,773)
|
||
Total
other (income) expense
|
(134,502)
|
44,800
|
125,169
|
||
INCOME
BEFORE INCOME TAXES
|
5,707,913
|
4,213,646
|
3,972,490
|
||
PROVISION
FOR INCOME TAXES
|
1,994,199
|
1,559,605
|
1,232,116
|
||
NET
INCOME
|
$3,713,714
|
$2,654,041
|
$
2,740,374
|
||
NET
INCOME PER COMMON SHARE - BASIC
|
$0.35
|
$0.25
|
$
0.27
|
||
NET
INCOME PER COMMON SHARE - DILUTED
|
$0.34
|
$0.24
|
$
0.25
|
||
Weighted
Average Number of Shares Outstanding:
|
|||||
Basic
|
10,643,004
|
10,543,994
|
10,323,549
|
||
Diluted
|
10,976,240
|
10,957,518
|
10,861,305
|
2005
|
2004
|
2003
|
|||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|||||
Net
income
|
$
3,713,714
|
$
2,654,041
|
$
2,740,374
|
||
Adjustments
to reconcile net income to net cash provided by operating activities
-
|
|||||
Depreciation
and amortization
|
456,706
|
452,653
|
529,262
|
||
Gain
on disposal of assets
|
(9,145)
|
(2,000)
|
(9,103)
|
||
Deferred
income taxes
|
(181,317)
|
38,721
|
47,991
|
||
Other
|
38,276
|
20,123
|
47,235
|
||
Net
changes in assets and liabilities, net of effect of business
acquisitions:
|
|||||
Accounts
receivable-trade, net
|
(146,559)
|
(112,738)
|
109,960
|
||
Inventory
|
(2,919,473)
|
(1,303,762)
|
1,615,451
|
||
Income
taxes
|
176,817
|
228,787
|
(150,379)
|
||
Other
current assets
|
271,664
|
(102,163)
|
(30,119)
|
||
Accounts
payable-trade
|
(733,726)
|
406,357
|
(49,830)
|
||
Accrued
expenses and other liabilities
|
868,570
|
658,692
|
(1,502,904)
|
||
Total
adjustments
|
(2,178,187)
|
284,670
|
607,564
|
||
Net
cash provided by operating activities
|
1,535,527
|
2,938,711
|
3,347,938
|
||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
|||||
Purchase
of property and equipment
|
(272,826)
|
(369,559)
|
(360,202)
|
||
Payments
in connection with businesses acquired
|
-
|
(556,794)
|
-
|
||
Proceeds
from sale of assets
|
9,145
|
2,000
|
6,217
|
||
Decrease
(increase) in other assets
|
(168,981)
|
10,280
|
(27,970)
|
||
Net
cash used in investing activities
|
(432,662)
|
(914,073)
|
(381,955)
|
||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|||||
Net
decrease in revolving credit loans
|
(505,154)
|
(1,287,830)
|
(2,420,550)
|
||
Payments
on notes payable and long-term debt
|
(134,067)
|
(23,478)
|
(6,556)
|
||
Decrease
(increase) in cash restricted for payment on revolver
|
-
|
-
|
553,839
|
||
Payments
received on notes secured by common stock
|
-
|
20,000
|
24,003
|
||
Repurchase
of common stock (treasury stock)
|
-
|
(25,487)
|
-
|
||
Proceeds
from issuance of common stock and warrants
|
191,881
|
124,015
|
510,068
|
||
Net
cash used in financing activities
|
(447,340)
|
(1,192,780)
|
(1,339,196)
|
||
NET
INCREASE IN CASH
|
655,525
|
831,858
|
1,626,787
|
||
CASH,
beginning of period
|
2,560,202
|
1,728,344
|
101,557
|
||
CASH,
end of period
|
$3,215,727
|
$2,560,202
|
$
1,728,344
|
||
SUPPLEMENTAL
DISCLOSURES OF CASH FLOW INFORMATION:
|
|||||
Interest
paid during the period
|
$
3,188
|
$
59,773
|
$
216,275
|
||
Income
tax paid during the period, net of (refunds)
|
1,954,364
|
1,197,347
|
1,138,799
|
||
NON-CASH
INVESTING ACTIVITIES:
|
|||||
Equipment
acquired under capital lease financing arrangements
|
-
|
$
402,201
|
-
|
Number
of Shares
|
Par
Value
|
Paid-in
Capital
|
Treasury
Stock
|
Retained
Earnings
|
Notes
receivable - secured by common stock
|
Accumulated
Other Comprehensive Income (Loss)
|
Total
|
Comprehensive
Income
|
||||||||||
BALANCE,
December 31, 2002
|
10,149,961
|
$24,360
|
$4,163,901
|
-
|
$7,064,345
|
$(44,003)
|
$(38,541)
|
$11,170,062
|
||||||||||
Payments
on notes receivable
secured
by common stock
|
-
|
-
|
-
|
-
|
-
|
24,003
|
-
|
24,003
|
||||||||||
Shares
issued - stock options
exercised
|
338,000
|
811
|
442,016
|
-
|
-
|
-
|
-
|
442,827
|
||||||||||
Warrants
to acquire 100,000 shares
of
common stock issued
|
-
|
-
|
67,241
|
-
|
-
|
-
|
-
|
67,241
|
||||||||||
Net
income
|
-
|
-
|
-
|
-
|
2,740,374
|
-
|
-
|
2,740,374
|
$2,740,374
|
|||||||||
Translation
adjustment
|
-
|
-
|
-
|
-
|
-
|
-
|
64,986
|
64,986
|
64,986
|
|||||||||
BALANCE,
December 31, 2003
|
10,487,961
|
$25,171
|
$4,673,158
|
-
|
$9,804,719
|
$(20,000)
|
$26,445
|
$14,509,493
|
Comprehensive
income for the year ended December 31, 2003
|
$2,805,360
|
Payments
on notes receivable
secured
by common stock
|
-
|
-
|
-
|
-
|
20,000
|
-
|
20,000
|
||||||||||
Shares
issued - stock options and
warrants
exercised
|
72,700
|
174
|
74,896
|
-
|
-
|
-
|
-
|
75,070
|
|||||||||
Warrants
to acquire 50,000 shares
of
common stock issued
|
-
|
-
|
48,945
|
-
|
-
|
-
|
-
|
48,945
|
|||||||||
Purchase
of treasury stock
|
-
|
-
|
-
|
(25,487)
|
-
|
-
|
-
|
(25,487)
|
|||||||||
Net
income
|
-
|
-
|
-
|
-
|
2,654,041
|
-
|
-
|
2,654,041
|
$2,654,041
|
||||||||
Translation
adjustment
|
-
|
-
|
-
|
-
|
-
|
-
|
28,171
|
28,171
|
28,171
|
||||||||
BALANCE,
December 31, 2004
|
10,560,661
|
$25,345
|
$4,796,999
|
$(25,487)
|
$12,458,760
|
-
|
$54,616
|
$17,310,233
|
|||||||||
Comprehensive
income for the year ended December 31, 2004
|
$2,682,212
|
Shares
issued - stock options and
warrants
exercised
|
181,174
|
435
|
191,446
|
-
|
-
|
-
|
-
|
191,881
|
|||||||||
Net
income
|
-
|
-
|
-
|
-
|
3,713,714
|
-
|
-
|
3,713,714
|
$3,713,714
|
||||||||
Translation
adjustment
|
-
|
-
|
-
|
-
|
-
|
-
|
42,029
|
42,029
|
42,029
|
||||||||
BALANCE,
December 31, 2005
|
10,741,835
|
$25,780
|
$4,988,445
|
$(25,487)
|
$16,172,474
|
-
|
$96,645
|
$21,257,857
|
Comprehensive
income for the year ended December 31, 2005
|
$3,755,743
|
· |
Management
estimates and reporting
|
· |
Principles
of consolidation
|
· |
Foreign
currency translation
|
· |
Revenue
recognition
|
· |
Discounts
|
· |
Expense
categories
|
· |
Property
and equipment, net of accumulated depreciation and amortization
|
· |
Inventory
|
· |
Impairment
of long-lived assets
|
· |
Earnings
per share
|
BASIC
|
2005
|
2004
|
2003
|
||
Net
income
|
$3,713,714
|
$
2,654,041
|
$
2,740,374
|
||
Weighted
average common shares outstanding
|
10,643,004
|
10,543,994
|
10,323,549
|
||
Earnings
per share - basic
|
$
0.35
|
$
0.25
|
$
0.27
|
||
DILUTED
|
|||||
Net
income
|
$
3,713,714
|
$
2,654,041
|
$
2,740,374
|
||
Weighted
average common shares outstanding
|
10,643,004
|
10,543,994
|
10,323,549
|
||
Effect
of assumed exercise of stock options and warrants
|
333,236
|
413,524
|
537,756
|
||
Weighted
average common shares outstanding, assuming
dilution
|
10,976,240
|
10,957,518
|
10,861,305
|
||
Earnings
per share - diluted
|
$
0.34
|
$
0.24
|
$
0.25
|
||
Outstanding
options and warrants excluded as anti-dilutive
|
-
|
136,000
|
60,000
|
· |
Goodwill
and other intangibles
|
Wholesale
Leathercraft
|
Retail Leathercraft
|
Total
|
|||
Balance,
December 31, 2003
|
$351,406
|
$352,829
|
$704,235
|
||
Acquisitions
and adjustments
|
-
|
30,577
|
30,577
|
||
Foreign
exchange gain/loss
|
8,048
|
-
|
8,048
|
||
Impairments
|
-
|
-
|
-
|
||
Balance,
December 31, 2004
|
$359,454
|
$383,406
|
$742,860
|
||
Acquisitions
and adjustments
|
-
|
-
|
-
|
||
Foreign
exchange gain/loss
|
3,751
|
-
|
3,751
|
||
Impairments
|
-
|
-
|
-
|
||
Balance,
December 31, 2005
|
$363,205
|
$383,406
|
$746,611
|
As
of December 31, 2005
|
|||||
Gross
|
Accumulated
Amortization
|
Net
|
|||
Trademarks,
Copyrights
|
$544,369
|
$210,902
|
$333,467
|
||
Non-Compete
Agreements
|
78,000
|
12,500
|
65,500
|
||
$622,369
|
$223,402
|
$398,967
|
As
of December 31, 2004
|
|||||
Gross
|
Accumulated
Amortization
|
Net
|
|||
Trademarks,
Copyrights
|
$544,369
|
$174,611
|
$369,758
|
||
Non-Compete
Agreements
|
78,000
|
10,000
|
68,000
|
||
$622,369
|
$184,611
|
$437,758
|
Wholesale
Leathercraft
|
Retail
Leathercraft
|
Total
|
|
2006
|
$5,954
|
$32,837
|
$38,291
|
2007
|
5,954
|
31,837
|
37,791
|
2008
|
5.954
|
30,337
|
36,291
|
2009
|
5,954
|
30,337
|
36,291
|
2010
|
5,954
|
30,337
|
36,291
|
· |
Fair
value of financial Instruments
|
· |
Deferred
taxes
|
· |
Stock
options
|
Years
Ended December 31,
|
|||||
2005
|
2004
|
2003
|
|||
Net
income, as reported
|
$3,713,714
|
$2,654,041
|
$2,740,374
|
||
Plus:
Stock -based employee compensation expense included in reported net
income, net of tax
|
-
|
-
|
-
|
||
Less:
Total stock-based compensation expense determined under fair value
based
method for all awards, net of related tax effects
|
122,934
|
117,443
|
98,186
|
||
Pro
forma net income
|
$3,590,780
|
$2,536,598
|
$2,642,188
|
||
Earnings
per share:
|
|||||
Basic
- as reported
|
$0.35
|
$0.25
|
$0.27
|
||
Basic
- pro forma
|
$0.34
|
$0.24
|
$0.26
|
||
Diluted
- as reported
|
$0.34
|
$0.24
|
$0.25
|
||
Diluted
- pro forma
|
$0.33
|
$0.23
|
$0.24
|
2005
|
2004
|
2003
|
|
Volatility
|
36.6%
|
36.4%
|
69.6%
|
Expected
option life
|
3-5
|
3-5
|
5
|
Interest
rate (risk free)
|
4.25%
|
3.375%
|
3.25%
|
Dividends
|
None
|
None
|
None
|
· |
Comprehensive
income
|
· |
Shipping
and handling costs
|
· |
Advertising
|
· |
Cash
flows presentation
|
· |
Allowance
for uncollectible accounts
|
Balance
at beginning of year
|
Reserve
"purchased" during year
|
Additions
(reductions) charged to costs and expenses
|
Foreign
exchange gain/loss
|
Write-offs
|
Balance
at
end
of year
|
|
Year
ended December 31, 2005
|
$
85,133
|
-
|
87,873
|
527
|
(35,946)
|
$137,587
|
Year
ended December 31, 2004
|
$
31,469
|
9,785
|
104,587
|
4,980
|
(65,688)
|
$85,133
|
Year
ended December 31, 2003
|
$
77,657
|
-
|
87,175
|
967
|
(134,330)
|
$31,469
|
· |
Sales
returns and defective merchandise
|
· |
Slow-moving
and obsolete inventory
|
2005
|
2004
|
|||
INVENTORY
|
||||
On
hand:
|
||||
Finished
goods held for sale
|
$14,035,384
|
$11,571,869
|
||
Raw
materials and work in process
|
984,878
|
1,177,840
|
||
Inventory
in transit
|
648,920
|
-
|
||
TOTAL
|
$15,669,182
|
$12,749,709
|
||
PROPERTY
AND EQUIPMENT
|
||||
Leasehold
improvements
|
$1,199,996
|
$1,181,828
|
||
Equipment
|
4,093,722
|
3,837,654
|
||
Furniture
and fixtures
|
1,064,081
|
939,976
|
||
Vehicles
|
66,292
|
46,068
|
||
6,424,091
|
6,005,526
|
|||
Less:
accumulated depreciation
|
(4,664,614)
|
(4,100,961)
|
||
TOTAL
|
$1,759,477
|
$1,904,565
|
2005
|
2004
|
|||
OTHER
CURRENT ASSETS
|
||||
Accounts
receivable - employees
|
$12,158
|
$40,401
|
||
Accounts
receivable - other
|
2,037
|
70,814
|
||
Prepaid
expenses
|
313,344
|
436,011
|
||
Payments
on merchandise not received
|
30,519
|
82,497
|
||
TOTAL
|
$358,058
|
$629,723
|
||
OTHER
ASSETS
|
||||
Security
deposits - utilities, locations, etc.
|
$83,087
|
$75,903
|
||
Leather
art collection
|
250,000
|
250,000
|
||
Computer
software not implemented yet
|
746,644
|
584,846
|
||
TOTAL
|
$1,079,731
|
$910,749
|
||
ACCRUED
EXPENSES AND OTHER LIABILITIES
|
|
|||
Accrued
bonuses
|
$1,120,517
|
$768,937
|
||
Accrued
payroll
|
328,691
|
212,298
|
||
Accrued
ESOP contribution
|
-
|
140,000
|
||
Sales
and payroll taxes payable
|
208,396
|
208,896
|
||
Inventory
in transit
|
648,920
|
-
|
||
Other
|
244,049
|
351,872
|
||
TOTAL
|
$2,550,573
|
$1,682,003
|
2005
|
2004
|
|
Credit
Agreement with Chase - collateralized by inventory and accounts
receivable; payable as follows:
|
||
Line
of Credit Note dated October 6, 2004 in the maximum principal amount
of
$3,000,000 with revolving features as more fully described below
-
interest due quarterly at prime less .5% (7.25% at 12/31/2005) or
LIBOR
plus 1.35%; matures October 6, 2008
|
$
-
|
$505,154
|
-
|
505,154
|
|
Less
- Current maturities
|
-
|
-
|
$
-
|
$505,154
|
2005
|
2004
|
|
Capital
Lease secured by certain licensed software - total monthly principal
payments of $11,172, no interest, maturing October 2007
|
$245,789
|
$379,857
|
Less
- Current maturities
|
134,067
|
134,067
|
$111,722
|
$245,790
|
Number
of Shares
|
Market
Value
|
||||||
2005
|
2004
|
2003
|
2005
|
2004
|
2003
|
||
Allocated
|
943,241
|
948,147
|
981,540
|
$6,461,201
|
$3,365,922
|
$4,750,654
|
|
Unearned
|
-
|
-
|
-
|
-
|
-
|
-
|
|
Total
|
943,241
|
948,147
|
981,540
|
$6,461,201
|
$3,365,922
|
$4,750,654
|
2005
|
2004
|
2003
|
||||
Current
provision:
|
||||||
Federal
|
$1,932,791
|
$1,380,951
|
$1,144,763
|
|||
State
|
242,725
|
139,933
|
40,267
|
|||
2,175,516
|
1,520,884
|
1,185,030
|
||||
Deferred
provision (benefit):
|
||||||
Federal
|
(166,850)
|
33,483
|
46,850
|
|||
State
|
(14,467)
|
5,238
|
236
|
|||
(181,317)
|
38,721
|
47,086
|
||||
$1,994,199
|
$1,559,605
|
$1,232,116
|
2005
|
2004
|
2003
|
|||
United
States
|
$5,220,991
|
$
4,078,434
|
$
3,744,550
|
||
Canada
|
486,922
|
135,212
|
227,940
|
||
$5,707,913
|
$
4,213,646
|
$
3,972,490
|
2005
|
2004
|
Allowance
for doubtful accounts
|
$
45,665
|
$
26,546
|
|
Capitalized
inventory costs
|
134,466
|
115,022
|
|
Warrants
|
41,498
|
42,989
|
|
Accrued
expenses, reserves, and other
|
93,741
|
57,740
|
|
Total
deferred income tax assets
|
315,370
|
242,297
|
|
Property
and equipment depreciation
|
193,337
|
249,892
|
|
Goodwill
and other intangible assets amortization
|
54,414
|
106,103
|
|
Total
deferred income tax liabilities
|
247,751
|
355,995
|
|
Net
deferred tax asset (liability)
|
$67,619
|
($113,698)
|
2005
|
2004
|
||
Current
deferred tax assets
|
$273,872
|
$
199,308
|
|
Long-term
deferred tax liabilities
|
(206,253)
|
(313,006)
|
|
Net
deferred tax asset (liability)
|
$
67,619
|
$
(113,698)
|
2005
|
2004
|
2003
|
||
Statutory
rate
|
34%
|
34%
|
34%
|
|
State
and local taxes
|
4%
|
4%
|
1%
|
|
Other
|
(3%)
|
(1%)
|
(4%)
|
|
Effective
rate
|
35%
|
37%
|
31%
|
Year
ending December 31:
|
|
2006
|
$2,248,426
|
2007
|
1,895,477
|
2008
|
1,172,786
|
2009
|
642,193
|
2010
and thereafter
|
264,106
|
Total
minimum lease payments
|
$6,222,988
|
(a) |
Stock
Option Plans
|
1995
Stock Option Plan
|
|
In
connection with the 1995 Stock Option Plan for officers and key
management
employees, we have outstanding options to purchase our common stock.
The
plan provides for the granting of either qualified incentive stock
options
or non-qualified options at the discretion of the Compensation
Committee
of the Board of Directors. Options are granted at the fair market
value of
the underlying common stock at the date of grant and vest over
a five-year
period. We have reserved 1,000,000 shares of common stock for issuance
under this plan.
|
|
1995
Director Non-Qualified Stock Option Plan
|
|
In
connection with the 1995 Director Non-qualified Stock Option Plan
for
non-employee directors, we have outstanding options to purchase
our common
stock. The plan provides for the granting of non-qualified options
at the
discretion of the Compensation Committee of the Board of Directors.
Options are granted at the fair market value of the underlying
common
stock at the date of grant and vest after six months. We have reserved
100,000 shares of common stock for issuance under this plan.
|
|
Stock
Option Summary
|
|
All
options expire ten years from the date of grant and are exercisable
at any
time after vesting. Of the combined 1,100,000 shares available
for
issuance under the two plans, at December 31, 2005, 2004 and 2003,
there
were 44,000, 40,000, and 58,000, respectively, in un-optioned shares
available for future grants.
|
|
2005
|
2004
|
2003
|
|||||||||
Weighted
|
Weighted
|
Weighted
|
||||||||||
Average
|
Average
|
Average
|
||||||||||
Option
|
Exercise
|
Option
|
Exercise
|
Option
|
Exercise
|
|||||||
Shares
|
Price
|
Shares
|
Price
|
Shares
|
Price
|
|||||||
Outstanding
at January 1
|
602,500
|
$1.630
|
675,200
|
$1.540
|
747,200
|
$1.196
|
||||||
Granted
|
8,000
|
4.960
|
18,000
|
3.598
|
68,000
|
4.200
|
||||||
Forfeited
or expired
|
(12,000)
|
1.350
|
(18,000)
|
|
1.350
|
(2,000)
|
2.720
|
|||||
Exchanged
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||
Exercised
|
(177,500)
|
1.081
|
(72,700)
|
1.053
|
(138,000)
|
0.972
|
||||||
Outstanding
at December 31
|
421,000
|
$1.930
|
602,500
|
$1.630
|
675,200
|
$1.540
|
||||||
Exercisable
at end of year
|
295,000
|
$1.670
|
354,500
|
$1.320
|
308,200
|
$1.158
|
||||||
Weighted-average
fair value of
|
||||||||||||
options
granted during year
|
$1.48
|
$1.20
|
$2.31
|
Options
Outstanding
|
Options
Exercisable
|
|||||||||||
Weighted
|
Weighted
|
Weighted
|
Weighted
|
|||||||||
Average
|
Average
|
Average
|
Average
|
|||||||||
Option
|
Exercise
|
Maturity
|
Option
|
Exercise
|
Maturity
|
|||||||
Exercise
Price Range
|
Shares
|
Price
|
(Years)
|
Shares
|
Price
|
(Years)
|
||||||
$0.75
or Less
|
4,000
|
$0.595
|
3.24
|
14,000
|
$0.595
|
3.24
|
||||||
$0.76
to $1.125
|
52,000
|
$0.942
|
4.70
|
52,000
|
$0.942
|
4.70
|
||||||
$1.126
to $1.69
|
267,000
|
$1.350
|
5.40
|
193,000
|
$1.350
|
5.40
|
||||||
$1.70
to $2.55
|
2,000
|
$1.900
|
5.74
|
2,000
|
$1.900
|
5.74
|
||||||
$2.56
to $3.84
|
12,000
|
$3.270
|
8.31
|
4,000
|
$3.050
|
7.68
|
||||||
$3.85-$4.96
|
84,000
|
$4.241
|
8.01
|
40,000
|
$4.098
|
7.93
|
||||||
421,000
|
$1.930
|
5.90
|
295,000
|
$1.670
|
5.62
|
(b) |
Warrants
|
|
2005
|
2004
|
2003
|
|||||||||
Weighted
|
Weighted
|
Weighted
|
||||||||||
Average
|
Average
|
Average
|
||||||||||
Option
|
Exercise
|
Option
|
Exercise
|
Option
|
Exercise
|
|||||||
Shares
|
Price
|
Shares
|
Price
|
Shares
|
Price
|
|||||||
Outstanding
at January 1
|
150,000
|
3.7333
|
100,000
|
3.1000
|
200,000
|
.4375
|
||||||
Granted
|
-
|
-
|
50,000
|
5.0000
|
100,000
|
3.1000
|
||||||
Forfeited
or expired
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||
Exchanged
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||
Exercised
|
(10,000)
|
3.1000
|
-
|
-
|
(200,000)
|
.4375
|
||||||
Outstanding
at December 31
|
140,000
|
3.7786
|
150,000
|
3.7333
|
100,000
|
3.1000
|
||||||
Exercisable
at end of year
|
140,000
|
3.7786
|
150,000
|
3.7333
|
100,000
|
3.1000
|
||||||
Weighted-average
fair value of
|
||||||||||||
warrants
granted during year
|
-
|
$
0.98
|
$
0.67
|
Warrants
Outstanding
|
Warrants
Exercisable
|
|||||||||||
Weighted
|
Weighted
|
Weighted
|
Weighted
|
|||||||||
Average
|
Average
|
Average
|
Average
|
|||||||||
Exercise
|
Maturity
|
Exercise
|
Maturity
|
|||||||||
Exercise
Price Range
|
Warrant
|
Price
|
(Years)
|
Warrant
|
Price
|
(Years)
|
||||||
$3.00
or Less
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||
More
than $3.00 and
|
||||||||||||
Less
Than $5.00
|
90,000
|
$3.1000
|
2.12
|
90,000
|
$3.1000
|
2.12
|
||||||
$5.00
or More
|
50,000
|
$5.0000
|
3.15
|
50,000
|
$5.0000
|
3.15
|
||||||
140,000
|
$3.7786
|
2.49
|
140,000
|
$3.7786
|
2.49
|
Entity
|
Location
|
Date
of acquisition
|
Robyn's
LLC
|
Syracuse,
NY
|
January
2004
|
Hawkins
Handcrafted Leathers
|
St.
Louis, MO
|
February
2004
|
Santa
Fe Hides & Trappings
|
Santa
Fe, NM
|
July
2004
|
· |
Wholesale
Leathercraft,
which consists of a chain of warehouse distribution units operating
under
the name, The
Leather Factory,
located in the United States and Canada;
|
· |
Retail
Leathercraft,
which consists of a chain of retail stores operating under the name,
Tandy
Leather Company,
located in the United States and Canada;
and
|
· |
Other,
which is a manufacturer of decorative hat trims sold directly to
hat
manufacturers.
|
Wholesale
Leathercraft
|
Retail
Leathercraft
|
Other
|
Total
|
|
For
the year ended December 31, 2005
|
||||
Net
Sales
|
$31,046,268
|
$18,023,214
|
$1,650,092
|
$50,719,574
|
Gross
Profit
|
17,152,549
|
11,142,350
|
460,145
|
28,755,044
|
Operating
earnings
|
3,721,891
|
1,766,960
|
84,560
|
5,573,411
|
Interest
expense
|
(3,188)
|
-
|
-
|
(3,188)
|
Other,
net
|
126,040
|
11,650
|
-
|
137,690
|
Income
before income taxes
|
3,844,743
|
1,778,610
|
84,560
|
5,707,913
|
Depreciation
and amortization
|
323,881
|
125,493
|
7,332
|
456,706
|
Fixed
asset additions
|
131,603
|
136,630
|
4,593
|
272,826
|
Total
assets
|
$20,999,477
|
$3,896,291
|
$784,705
|
$25,680,473
|
For
the year ended December 31, 2004
|
||||
Net
Sales
|
$30,630,122
|
$13,515,662
|
$2,000,500
|
$46,146,284
|
Gross
Profit
|
16,485,052
|
8,348,616
|
606,377
|
25,440,045
|
Operating
earnings
|
3,013,316
|
1,210,566
|
34,564
|
4,258,446
|
Interest
expense
|
53,400
|
-
|
-
|
53,400
|
Other,
net
|
(6,748)
|
(1,852)
|
-
|
(8,600)
|
Income
before income taxes
|
2,966,664
|
1,212,418
|
34,564
|
4,213,646
|
Depreciation
and amortization
|
363,878
|
80,045
|
8,730
|
452,653
|
Fixed
asset additions
|
226,095
|
127,086
|
16,378
|
369,559
|
Total
assets
|
$17,991,403
|
$3,372,812
|
$802,918
|
$22,167,163
|
For
the year ended December 31, 2003
|
||||
Net
Sales
|
$30,684,092
|
$9,216,838
|
$1,811,261
|
$41,712,191
|
Gross
Profit
|
16,332,776
|
5,804,504
|
554,619
|
22,691,899
|
Operating
earnings
|
3,462,457
|
604,291
|
30,911
|
4,097,659
|
Interest
expense
|
206,942
|
-
|
-
|
206,942
|
Other,
net
|
(81,838)
|
65
|
-
|
(81,773)
|
Income
before income taxes
|
3,337,354
|
604,225
|
30,911
|
3,972,490
|
Depreciation
and amortization
|
443,623
|
75,854
|
9,785
|
529,262
|
Fixed
asset additions
|
214,256
|
137,115
|
8,831
|
360,202
|
Total
assets
|
$15,409,084
|
$2,908,429
|
$740,893
|
$19,058,406
|
2005
|
2004
|
2003
|
|
United
States
|
$45,492,215
|
$42,485,339
|
$38,934,923
|
Canada
|
3,643,133
|
2,112,601
|
1,611,093
|
All
other countries
|
1,584,226
|
1,548,344
|
1,166,175
|
$50,719,574
|
$46,146,284
|
$41,712,191
|
First
|
Second
|
Third
|
Fourth
|
||
2005
|
Quarter
|
Quarter
|
Quarter
|
Quarter
|
|
Net
sales
|
$12,707,516
|
$12,181,699
|
$11,777,133
|
$14,053,226
|
|
Gross
profit
|
7,157,283
|
6,899,872
|
6,763,802
|
7,934,087
|
|
Net
income
|
1,049,222
|
787,669
|
696,090
|
1,180,733
|
|
Net
income per common share:
|
|||||
Basic
|
0,10
|
0.07
|
0.07
|
0.11
|
|
Diluted
|
0.10
|
0.07
|
0.06
|
0.11
|
|
Weighted
average number of common shares outstanding:
|
|||||
Basic
|
10,584,244
|
10,615,802
|
10,679,389
|
10,735,702
|
|
Diluted
|
10,911,103
|
10,955,282
|
11,029,840
|
11,047,426
|
First
|
Second
|
Third
|
Fourth
|
||
2004
|
Quarter
|
Quarter
|
Quarter
|
Quarter
|
|
Net
sales
|
$12,180,877
|
$10,959,813
|
$10,580,074
|
$12,425,520
|
|
Gross
profit
|
6,724,913
|
5,981,059
|
5,939,433
|
6,794,640
|
|
Net
income
|
970,966
|
516,213
|
427,385
|
739,477
|
|
Net
income per common share:
|
|||||
Basic
|
0.09
|
0.05
|
0.04
|
0.07
|
|
Diluted
|
0.09
|
0.05
|
0.04
|
0.07
|
|
Weighted
average number of common shares outstanding:
|
|||||
Basic
|
10,506,995
|
10,553,243
|
10,560,661
|
10,554,776
|
|
Diluted
|
11,011,122
|
11,006,638
|
10,931,940
|
10,888,883
|
· |
Consolidated
Balance Sheets at December 31, 2005 and
2004
|
· |
Consolidated
Statements of Income for the years ended December 31, 2005, 2004
and
2003
|
· |
Consolidated
Statements of Cash Flows for the years ended December 31, 2005, 2004
and
2003
|
· |
Consolidated
Statements of Stockholders' Equity for the years ended December 31,
2005,
2004 and 2003
|
Signature
|
Title
|
Date
|
/s/
Wray Thompson
|
Chairman
of the Board, Chief Executive Officer and Director
|
March
27, 2006
|
Wray
Thompson
|
||
/s/
Shannon L. Greene
|
Chief
Financial Officer, Chief Accounting Officer, Treasurer and
Director
|
March
27, 2006
|
Shannon
L. Greene
|
||
/s/
T. Field Lange
|
Director
|
March
27, 2006
|
T.
Field Lange
|
||
/s/
Joseph R. Mannes
|
Director
|
March
27, 2006
|
Joseph
R. Mannes
|
||
/s/
H.W. Markwardt
|
Director
|
March
27, 2006
|
H.W.
Markwardt
|
||
/s/
Michael A. Markwardt
|
Director
|
March
27, 2006
|
Michael
A. Markwardt
|
||
/s/
Ronald C. Morgan
|
President
and Director
|
March
27, 2006
|
Ronald
C. Morgan
|
||
/s/
Robin L. Morgan
|
Vice
President and Assistant Secretary
|
March
27, 2006
|
Robin
L. Morgan
|
||
/s/
Michael A. Nery
|
Director
|
March
27, 2006
|
Michael
A. Nery
|
||
/s/
William M. Warren
|
Secretary
|
March
27, 2006
|
William
M. Warren
|
TANDY
LEATHER FACTORY, INC. AND SUBSIDIARIES
|
|
Exhibit
Number
|
Description
|
3.1
|
Certificate
of Incorporation of The Leather Factory, Inc., and Certificate
of
Amendment to Certificate of Incorporation of The Leather Factory,
Inc.
filed as Exhibit 3.1 to Form 10-Q filed by Tandy Leather Factory,
Inc.
with the Securities and Exchange Commission on August 12, 2005
and
incorporated by reference herein.
|
3.2
|
Bylaws
of The Leather Factory, Inc., filed as Exhibit 3.2 to the Registration
Statement on Form SB-2 of The Leather Factory, Inc. (Commission
File No.
33-81132) filed with the Securities and Exchange Commission on
July 5,
1994 and incorporated by reference herein.
|
4.1
|
Financial
Advisor's Warrant Agreement, dated February 12, 2003, between The
Leather
Factory, Inc. and Westminster Securities Corporation filed as Exhibit
4.1
to Form 10-Q filed by The Leather Factory, Inc. with the Securities
and
Exchange Commission on May 14, 2003 and incorporated by reference
herein.
|
4.2
|
Financial
Advisor’s Warrant Agreement, dated February 24, 2004, between The Leather
Factory, Inc. and Westminster Securities Corporation filed as Exhibit
4.1
to Form 10-Q filed by The Leather Factory, Inc. with the Securities
and
Exchange Commission on May 14, 2004 and incorporated by reference
herein.
|
4.3
|
Capital
Markets Services Engagement Agreement, dated February 24, 2004,
between
The Leather Factory, Inc. and Westminster Securities Corporation
filed as
Exhibit 4.2 to Form 10-Q filed by The Leather Factory, Inc. with
the
Securities and Exchange Commission on May 14, 2004 and incorporated
by
reference herein.
|
10.1
|
Credit
Agreement, dated as of October 6, 2004, made by The Leather Factory,
Inc.,
a Delaware corporation, and Bank One, National Association, filed
as
Exhibit 10.1 to the Current Report on Form 8-K of The Leather Factory,
Inc. (Commission File No. 1-12368) filed with the Securities and
Exchange
Commission on November 5, 2004 and incorporated by reference
herein.
|
10.2
|
Line
of Credit Note, dated October 6, 2004, in the principal amount
of up to
$3,000,000 given by The Leather Factory, Inc., a Delaware corporation
as
borrower, payable to the order of Bank One, National Association,
filed as
Exhibit 10.2 to the Current Report on Form 8-K of The Leather Factory,
Inc. (Commission File No. 1-12368) filed with the Securities and
Exchange
Commission on November 5, 2004 and incorporated by reference
herein.
|
14.1
|
Code
of Business Conduct and Ethics of The Leather Factory, Inc., adopted
by
the Board of Directors on February 26, 2004, filed as Exhibit 14.1
to the
Annual Report on Form 10-K of The Leather Factory, Inc. (Commission
File
No. 1-12368) filed with the Securities and Exchange Commission
on March
29, 2004 and incorporated by reference herein.
|
21.1
|
Subsidiaries
of Tandy Leather Factory, Inc. filed as Exhibit 21.1 to the Annual
Report
on Form 10-K of The Leather Factory, Inc. for the year ended December
31,
2002 filed with the Securities and Exchange Commission on March
28, 2003,
and incorporated by reference herein.
|
*23.1
|
Consent
of Weaver & Tidwell LLP dated March 27, 2006
|
*31.1
|
13a-14(a)
Certification by Wray Thompson, Chairman of the Board and Chief
Executive
Officer
|
*31.2
|
13a-14(a)
Certification by Shannon Greene, Chief Financial Officer and
Treasurer
|
*32.1
|
Certification
Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section
906 of
the Sarbanes-Oxley Act of 2002
|
______________
|
|
*Filed
herewith.
|