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
2, 2006
|
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)
|
|
3847
East Loop 820 South, Fort Worth, Texas
|
76119
|
|
|
(Address
of Principal Executive Offices)
|
(Zip
Code)
|
|
(817)
496-4414
|
|
(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 2, 2006 issued a press release regarding its
financial results for the three and six months ended June 30, 2006. 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 2, 2006
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 2, 2006
|
By:
/s/ Wray Thompson
|
|
Wray
Thompson, Chairman of the Board
|
|
|
and
Chief Executive Officer
|
EXHIBIT
99.1
FOR
IMMEDIATE RELEASE August
2, 2006
TANDY
LEATHER FACTORY REPORTS 2ND QUARTER 2006 EPS UP 42%
FORT
WORTH, TEXAS - Tandy Leather Factory, Inc. (AMEX: TLF) today reported financial
results for the second quarter of 2006. Consolidated net income for the quarter
ended June 30, 2006 was $1,132,000 compared to consolidated net income of
$787,000 for the second quarter of 2005. Fully diluted earnings per share for
the quarter was $0.10, compared to $0.07 in the second quarter of last year.
Total sales for the quarter ended June 30, 2006 increased 10% to $13.4 million
from $12.1 million for the same quarter last year.
Consolidated
sales for the six months ended June 30, 2006 were $27.8 million, an increase
of
12% over 2005 first half total sales of $24.9 million. Consolidated net income
for the first half of 2006 was $2.5 million or $0.22 per fully-diluted share
versus $1.8 million or $0.17 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 27% improvement over last year's
second quarter. Sixty-one stores comprised the Tandy Leather's retail operations
on June 30, 2006, compared to forty-six retail stores a year ago. Five stores
were added in the second quarter of 2006 bringing the total number of new stores
added in 2006 to eleven as of the end of the quarter. For the first six months
of 2006, Tandy Leather sales increased $2.3 million, or 28%, over the first
six
months of 2005. Second quarter sales for the Wholesale Leathercraft segment,
which consists of the Leather Factory wholesale centers and national account
group, increased $83,000 over the same quarter last year, a 1% increase. For
the
first six months of 2006, Wholesale Leathercraft’s sales were up $558,000, or
4%, over the same period in 2005.
Consolidated
gross profit margin for the current quarter was 57.6%, improving from 56.6%
for
the second quarter of 2005. For the first two quarters, consolidated gross
profit margin for the current year was 56.9%, a slight improvement over last
year's gross profit margin of 56.5%. Consolidated operating expenses rose
$377,000 in the current quarter and $930,000 for the first six months over
the
same periods a year ago. Costs associated with the new retail stores (personnel,
rents, utilities, etc.), are the primary drivers of the increases. Consolidated
operating margins improved for the quarter and year to 12.7% and 13.4%,
respectively, compared to 10.8% and 11.6% a year ago.
Wray
Thompson, Chairman and Chief Executive Officer, commented, “Overall, we are
pleased with the quarter. Same store sales in our Retail Leathercraft segment,
were up 8% and 9% for the quarter and the year, respectively. In our Wholesale
Leathercraft segment, both the wholesale centers and the National Account group
reported sales gains of 1-5% for the quarter and the year. We continue to
achieve our goal of greater operating efficiency as our consolidated operating
margins improved by 28% and 29% for the quarter and the year, respectively,
on
sales gains of 10% and 11%."
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@tandyleather.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 06/30/06
|
Quarter
Ended 06/30/05
|
||||||
|
Sales
|
Operating
Income
|
Sales
|
Operating
Income
|
||||
|
Wholesale
Leathercraft
|
$7,7484,892
|
$1,245,696
|
$7,665,067
|
$861,177
|
|||
|
Retail
Leathercraft
|
5,196,198
|
464,538
|
4,094,303
|
414,734
|
|||
|
Other
|
447,992
|
(11,483)
|
422,329
|
45,703
|
|||
|
Total
Operations
|
$13,393,082
|
$1,698,751
|
$12,181,699
|
$1,321,614
|
|||
|
Six
Months Ended 06/30/06
|
Six
Months Ended 06/30/05
|
||||||
|
Sales
|
Operating
Income
|
Sales
|
Operating
Income
|
||||
|
Wholesale
Leathercraft
|
$16,137,156
|
$2,764,714
|
$15,578,959
|
$2,030,159
|
|||
|
Retail
Leathercraft
|
10,737,280
|
960,362
|
8,379,909
|
801,452
|
|||
|
Other
|
932,295
|
15,463
|
930,347
|
59,550
|
|||
|
Total
Operations
|
$27,806,731
|
$3,740,539
|
$24,889,215
|
$2,891,161
|
|||
|
Wholesale
Leathercraft
|
Quarter
Ended 06/30/05
|
Quarter
Ended 06/30/05
|
|||
|
Sales
|
Sales
|
||||
|
Distribution
centers
|
$6,441,428
|
$6,289,667
|
|||
|
Center
converted to retail store
|
-
|
92,197
|
|||
|
National
account group
|
1,307,464
|
1,283,203
|
|||
|
Total
Sales - Wholesale Leathercraft
|
$7,748,892
|
$7,665,067
|
|||
|
Wholesale
Leathercraft
|
Six
Months Ended 06/30/06
|
Six
Months Ended 06/30/05
|
|||
|
Sales
|
Sales
|
||||
|
Distribution
centers
|
$13,525,087
|
$12,852,458
|
|||
|
Center
converted to retail store
|
28,641
|
178,359
|
|||
|
National
account group
|
2,583,428
|
2,548,142
|
|||
|
Total
Sales - Wholesale Leathercraft
|
$16,137,156
|
$15,578,959
|
|||
|
Retail
Leathercraft
|
Quarter
Ended 06/30/06
|
Quarter
Ended 6/30/05
|
|||
|
#
of stores
|
Sales
|
#
of stores
|
Sales
|
||
|
Same
store sales
|
44
|
$4,358,929
|
44
|
$4,054,993
|
|
|
Store
converted from wholesale center
|
1
|
117,771
|
-
|
-
|
|
|
New
store sales
|
16
|
719,498
|
2
|
39,310
|
|
|
Total
Sales - Retail Leathercraft
|
61
|
$5,196,198
|
46
|
$4,094,303
|
|
|
Retail
Leathercraft
|
Six
Months Ended 06/30/06
|
Six
Months Ended 06/30/05
|
|||
|
#
of stores
|
Sales
|
#
of stores
|
Sales
|
||
|
Same
store sales
|
42
|
$8,944,653
|
42
|
$8,178,808
|
|
|
Store
converted from wholesale center
|
1
|
216,677
|
-
|
-
|
|
|
New
store sales
|
18
|
1,575,950
|
4
|
201,101
|
|
|
Total
Sales - Retail Leathercraft
|
61
|
$10,737,280
|
46
|
$8,379,909
|
|
TANDY
LEATHER FACTORY, INC.
CONSOLIDATED
STATEMENTS OF INCOME
(UNAUDITED)
FOR
THE THREE AND SIX MONTHS ENDED JUNE 30, 2006 AND 2005
|
THREE
MONTHS
|
THREE
MONTHS
|
SIX
MONTHS
|
SIX
MONTHS
|
||
|
2006
|
2005
|
2006
|
2005
|
||
|
NET
SALES
|
$13,393,082
|
$12,181,699
|
$27,806,731
|
$24,889,215
|
|
|
COST
OF SALES
|
5,670,782
|
5,281,828
|
11,970,297
|
10,832,061
|
|
|
Gross
Profit
|
7,722,300
|
6,899,871
|
15,836,434
|
14,057,154
|
|
|
OPERATING
EXPENSES
|
6,023,549
|
5,578,257
|
12,095,895
|
11,165,993
|
|
|
INCOME
FROM OPERATIONS
|
1,698,751
|
1,321,614
|
3,740,539
|
2,891,161
|
|
|
Interest
expense
|
-
|
-
|
-
|
3,188
|
|
|
Other,
net
|
(29,421)
|
(39,684)
|
(47,530)
|
(24,219)
|
|
|
Total
other expense
|
(29,421)
|
(39,684)
|
(47,530)
|
(21,031)
|
|
|
INCOME
BEFORE INCOME TAXES
|
1,728,172
|
1,361,298
|
3,788,069
|
2,912,192
|
|
|
PROVISION
FOR INCOME TAXES
|
595,678
|
573,629
|
1,309,313
|
1,075,301
|
|
|
NET
INCOME
|
$1,132,494
|
$787,669
|
$2,478,756
|
$1,836,891
|
|
|
NET
INCOME PER COMMON SHARE - BASIC
|
$0.11
|
$0.07
|
$0.23
|
$0.17
|
|
|
NET
INCOME PER COMMON SHARE - DILUTED
|
$0.10
|
$0.07
|
$.022
|
$0.17
|
|
|
Weighted
Average Number of Shares Outstanding:
|
|||||
|
Basic
|
10,790,661
|
10,615,802
|
10,773,772
|
10,600,156
|
|
|
Diluted
|
11,112,475
|
10,955,282
|
11,107,692
|
10,933,433
|
TANDY
LEATHER FACTORY, INC.
CONSOLIDATED
BALANCE SHEETS
|
06/30/06
(unaudited)
|
12/31/05
|
|
|
Cash
|
$5,522,468
|
$3,215,727
|
|
Accounts
receivable, net of allowance for doubtful accounts
|
2,733,855
|
2,178,848
|
|
Inventory
|
16,920,547
|
15,669,182
|
|
Deferred
income taxes
|
264,290
|
273,872
|
|
Other
current assets
|
565,579
|
358,058
|
|
Total
current assets
|
26,006,739
|
21,695,687
|
|
Property
and equipment, net
|
1,816,917
|
1,759,477
|
|
Goodwill
and other intangibles, net
|
1,130,959
|
1,145,578
|
|
Other
assets
|
1,104,697
|
1,079,731
|
|
$30,059,312
|
$25,680,473
|
|
|
Accounts
payable
|
$2,395,919
|
$1,220,420
|
|
Accrued
expenses and other liabilities
|
3,252,659
|
2,550,573
|
|
Income
taxes payable
|
112,368
|
199,581
|
|
Current
maturities of capital lease obligations and long-term debt
|
134,067
|
134,067
|
|
Total
current liabilities
|
5,895,013
|
4,104,641
|
|
Deferred
income taxes
|
223,738
|
206,253
|
|
Capital
lease obligations and long-term debt, net of current
maturities
|
44,689
|
111,722
|
|
Total
Liabilities
|
6,163,440
|
4,422,616
|
|
Common
stock
|
25,948
|
25,780
|
|
Paid-in
capital
|
5,105,672
|
4,988,445
|
|
Retained
earnings
|
18,651,231
|
16,172,475
|
|
Treasury
stock
|
(25,487)
|
(25,487)
|
|
Accumulated
other comprehensive loss
|
138,508
|
96,644
|
|
Total
Stockholders' Equity
|
23,895,872
|
21,257,857
|
|
$30,059,312
|
$25,680,473
|
TANDY
LEATHER FACTORY, INC.
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(UNAUDITED)
FOR
THE SIX MONTHS ENDED JUNE 30, 2006 AND 2005
|
2006
|
2005
|
||
|
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|||
|
Net
income
|
$2,478,756
|
$1,836,891
|
|
|
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
|||
|
Depreciation
& amortization
|
191,481
|
235,677
|
|
|
Gain
on disposal of assets
|
(1,750)
|
(9,144)
|
|
|
Non-cash
stock-based compensation
|
44,960
|
-
|
|
|
Deferred
income taxes
|
27,067
|
(109,046)
|
|
|
Other
|
37,338
|
2,341
|
|
|
Net
changes in assets and liabilities:
|
|||
|
Accounts
receivable-trade, net
|
(555,007)
|
(488,611)
|
|
|
Inventory
|
(1,251,365)
|
(2,207,276)
|
|
|
Income
taxes
|
(87,213)
|
195,044
|
|
|
Other
current assets
|
(207,521)
|
(316,921)
|
|
|
Accounts
payable
|
1,175,499
|
56,470
|
|
|
Accrued
expenses and other liabilities
|
702,086
|
1,728,515
|
|
|
Total
adjustments
|
75,575
|
(912,951)
|
|
|
Net
cash provided by operating activities
|
2,554,331
|
923,940
|
|
|
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
|||
|
Purchase
of property and equipment
|
(229,775)
|
(83,115)
|
|
|
Proceeds
from sale of assets
|
1,750
|
9,144
|
|
|
Increase
in other assets
|
(24,966)
|
(138,725)
|
|
|
Net
cash used in investing activities
|
(252,991)
|
(212,696)
|
|
|
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|||
|
Net
increase (decrease) in revolving credit loans
|
-
|
(505,154)
|
|
|
Payments
on notes payable and long-term debt
|
(67,034)
|
(67,034)
|
|
|
Proceeds
from issuance of common stock
|
72,435
|
116,163
|
|
|
Net
cash used in financing activities
|
5,401
|
(456,025)
|
|
|
NET
CHANGE IN CASH
|
2,306,741
|
255,219
|
|
|
CASH,
beginning of period
|
3,215,727
|
2,560,202
|
|
|
CASH,
end of period
|
$5,522,468
|
$2,815,421
|
|
|
SUPPLEMENTAL
DISCLOSURES OF CASH FLOW INFORMATION:
|
|||
|
Interest
paid during the period
|
-
|
$3,188
|
|
|
Income
taxes paid during the period, net of (refunds)
|
$1,285,653
|
972,205
|