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): April
25, 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 April 25, 2006 issued a press release regarding its
financial results for the quarter ended March 31, 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 April 25, 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:
April 25, 2006
BY:
/s/
Wray Thompson
Wray
Thompson, Chairman of the Board
and
Chief Executive
Officer
EXHIBIT
99.1
FOR
IMMEDIATE RELEASE
April
25, 2006
TANDY
LEATHER FACTORY REPORTS 1ST
QUARTER 2006 EARNINGS UP 28%
FORT
WORTH, TEXAS - Tandy Leather Factory, Inc. (AMEX: TLF) today reported financial
results for the first quarter of 2006. Net income for the quarter ended March
31, 2006 was $1.3 million, a 28% increase from $1.0 million for the first
quarter of 2005. Fully-diluted earnings per share for the quarter increased
to
$0.12 from $0.10 in the first quarter of last year. Total sales for the first
quarter were $14.4 million, up 13% from $12.7 million in the same quarter last
year.
Sales
from the Retail Leathercraft operation, consisting of the Tandy Leather retail
store chain, increased $1.3 million in the first quarter, a 29% improvement
over
last year's first quarter. The chain consists of fifty-six stores as of March
31, 2006, compared to forty-four retail stores a year ago. Six new stores were
opened in the first quarter of 2006. First quarter sales for the Wholesale
Leathercraft operation, consisting of the Leather Factory wholesale centers
and
the National Account group, increased $474,000 or 6% over the same quarter
last
year.
Consolidated
gross profit margins held steady at 56.3% for the first quarters of 2006 and
2005. Operating expenses increased from $5.6 million in the first quarter of
2005 to $6.1 million in the first quarter of 2006, but decreased as a percentage
of revenue from 43.9% in 2005 to 42.1% in 2006. Expenses (rent, personnel,
utilities, etc.) associated with new retail stores, increases in bonuses earned
by store managers, and higher freight costs were the primary contributors to
the
additional expense.
Wray
Thompson, Chairman and Chief Executive Officer, commented, “I am very pleased
with our first quarter results because we accomplished our goal of strong sales
growth with greater earnings growth. Our sales grew by 13% this quarter while
our operating income grew by 30%. The Retail Leathercraft division, consisting
of the expanding Tandy Leather store chain, will continue to be the primary
driver of growth. However, the Wholesale Leathercraft division is performing
extremely well and beating our internal targets for sales growth. We are
optimistic about our momentum generated in the first quarter and are working
hard to continue that momentum into the second quarter.”
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@leatherfactory.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.
TANDY
LEATHER FACTORY, INC.
CONSOLIDATED
BALANCE SHEETS
|
3/31/06
(unaudited)
|
12/31/05
|
|
|
Cash
|
$4,770,970
|
$3,215,727
|
|
Accounts
receivable, net of allowance for doubtful accounts
|
2,985,271
|
2,178,848
|
|
Inventory
|
15,043,787
|
15,669,182
|
|
Deferred
income taxes
|
240,697
|
273,872
|
|
Other
current assets
|
924,541
|
358,058
|
|
Total
current assets
|
23,965,266
|
21,695,687
|
|
Property
and equipment, net
|
1,784,657
|
1,759,477
|
|
Goodwill
and other intangibles, net
|
1,135,297
|
1,145,578
|
|
Other
assets
|
1,079,270
|
1,079,731
|
|
$27,964,490
|
$25,680,473
|
|
|
Accounts
payable
|
$2,267,647
|
$1,220,420
|
|
Accrued
expenses and other liabilities
|
1,895,321
|
2,550,573
|
|
Income
taxes payable
|
719,824
|
199,581
|
|
Current
maturities of capital lease obligations and long-term debt
|
134,067
|
134,067
|
|
Total
current liabilities
|
5,016,859
|
4,104,641
|
|
Deferred
income taxes
|
216,327
|
206,253
|
|
Capital
lease obligations and long-term debt, net of current
maturities
|
78,206
|
111,722
|
|
Total
Liabilities
|
5,311,392
|
4,422,616
|
|
Common
stock
|
25,855
|
25,780
|
|
Paid-in
capital
|
5,048,651
|
4,988,445
|
|
Retained
earnings
|
17,518,738
|
16,172,475
|
|
Treasury
stock
|
(25,487)
|
(25,487)
|
|
Accumulated
other comprehensive loss
|
85,341
|
96,644
|
|
Total
Stockholders' Equity
|
22,653,098
|
21,257,857
|
|
$27,964,490
|
$25,680,473
|
TANDY
LEATHER FACTORY, INC.
CONSOLIDATED
STATEMENTS OF INCOME
(UNAUDITED)
FOR
THE THREE MONTHS ENDED MARCH 31, 2006 AND 2005
|
Three
Months
|
||
|
2006
|
2005
|
|
|
NET
SALES
|
$14,413,649
|
$12,707,516
|
|
COST
OF SALES
|
6,299,515
|
5,550,233
|
|
Gross
Profit
|
8,114,134
|
7,157,283
|
|
OPERATING
EXPENSES
|
6,072,346
|
5,587,736
|
|
INCOME
FROM OPERATIONS
|
2,041,788
|
1,569,547
|
|
Interest
expense
|
-
|
3,188
|
|
Other,
net
|
(18,110)
|
15,465
|
|
Total
other expense
|
(18,110)
|
18,653
|
|
INCOME
BEFORE INCOME TAXES
|
2,059,898
|
1,550,894
|
|
PROVISION
FOR INCOME TAXES
|
713,635
|
501,672
|
|
NET
INCOME
|
$1,346,263
|
$1,049,222
|
|
NET
INCOME PER COMMON SHARE - BASIC
|
$0.13
|
$0.10
|
|
NET
INCOME PER COMMON SHARE-DILUTED
|
$0.12
|
$0.10
|
|
WEIGHTED
AVG NUMBER OF SHARES OUTSTANDING:
|
||
|
Basic
|
10,756,745
|
10,584,244
|
|
Diluted
|
11,102,906
|
10,911,103
|
Selected
financial data:
|
Quarter
Ended 03/31/06
|
Quarter
Ended 03/31/05
|
||||||
|
Sales
|
Operating
Income
|
Sales
|
Operating
Income
|
||||
|
Wholesale
Leathercraft
|
$8,388,265
|
$1,519,020
|
$
7,913,892
|
$1,168,982
|
|||
|
Retail
Leathercraft
|
5,541,082
|
495,824
|
4,285,606
|
386,718
|
|||
|
Other
|
484,302
|
26,944
|
508,018
|
13,847
|
|||
|
Total
Operations
|
$14,413,649
|
$2,041,788
|
$12,707,516
|
$1,569,547
|
|||
|
Wholesale
Leathercraft
|
Quarter
Ended 03/31/06
|
Quarter
Ended 03/31/05
|
|||
|
#
of stores
|
Sales
|
#
of stores
|
Sales
|
||
|
Distribution
centers
|
29
|
$7,083,659
|
29
|
$6,562,790
|
|
|
Center
converted to retail store
|
1
|
28,642
|
1
|
86,162
|
|
|
National
account group
|
1,275,964
|
1,264,940
|
|||
|
Total
Sales - Wholesale Leathercraft
|
$8,388,265
|
$7,913,892
|
|||
|
Retail
Leathercraft
|
Quarter
Ended 03/31/06
|
Quarter
Ended 03/31/05
|
|||
|
#
of stores
|
Sales
|
#
of stores
|
Sales
|
||
|
Same
store sales
|
42
|
$4,724,519
|
42
|
4,235,971
|
|
|
Store
converted from distr center
|
1
|
98,906
|
-
|
-
|
|
|
New
store sales
|
13
|
717,657
|
2
|
49,635
|
|
|
Total
Sales - Retail Leathercraft
|
$5,541,082
|
$4,285,606
|
|||
TANDY
LEATHER FACTORY, INC.
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(UNAUDITED)
FOR
THE THREE MONTHS ENDED MARCH 31, 2006 AND 2005
|
2006
|
2005
|
||
|
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|||
|
Net
income
|
$1,346,263
|
$1,049,222
|
|
|
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
|||
|
Depreciation
& amortization
|
97,185
|
118,431
|
|
|
Gain
on disposal of assets
|
-
|
(7,703)
|
|
|
Deferred
income taxes
|
43,249
|
(81,967)
|
|
|
Other
|
(10,592)
|
24,511
|
|
|
Net
changes in assets and liabilities:
|
|||
|
Accounts
receivable-trade, net
|
(806,423)
|
(512,929)
|
|
|
Inventory
|
625,395
|
(377,349)
|
|
|
Income
taxes
|
520,243
|
510,797
|
|
|
Other
current assets
|
(566,483)
|
(245,264)
|
|
|
Accounts
payable
|
1,047,227
|
(432,652)
|
|
|
Accrued
expenses and other liabilities
|
(655,252)
|
454,942
|
|
|
Total
adjustments
|
294,549
|
(549,183)
|
|
|
Net
cash provided by operating activities
|
1,640,812
|
500,039
|
|
|
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
|||
|
Purchase
of property and equipment
|
(112,793)
|
(29,030)
|
|
|
Proceeds
from sale of assets
|
-
|
7,703
|
|
|
Increase
in other assets
|
461
|
(88,502)
|
|
|
Net
cash used in investing activities
|
(112,332)
|
(109,829)
|
|
|
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|||
|
Net
increase (decrease) in revolving credit loans
|
-
|
(505,154)
|
|
|
Payments
on notes payable and long-term debt
|
(33,517)
|
(33,517)
|
|
|
Excess
tax benefits from share-based compensation expense
|
22,480
|
-
|
|
|
Proceeds
from issuance of common stock
|
37,800
|
55,350
|
|
|
Net
cash provided by (used in) financing activities
|
26,763
|
(483,321)
|
|
|
NET
CHANGE IN CASH
|
1,555,243
|
(93,111)
|
|
|
CASH,
beginning of period
|
3,215,727
|
2,560,202
|
|
|
CASH,
end of period
|
$4,770,970
|
$2,467,091
|
|
|
SUPPLEMENTAL
DISCLOSURES OF CASH FLOW INFORMATION:
|
|||
|
Interest
paid during the period
|
-
|
$3,188
|
|
|
Income
taxes paid during the period, net of (refunds)
|
$48,761
|
72,842
|