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 3, 2004
The 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 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits.
99.1 Press release dated August 3, 2004 furnished pursuant to
Item 12.
ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION
The Registrant is furnishing the press release attached as Exhibit 99.1
announcing the Registrant's second quarter 2004 financial results. This press
release was issued on August 3, 2004.
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: August 6, 2004 BY: /s/ Wray Thompson
Wray Thompson, Chairman of the Board
and Chief Executive Officer
EXHIBIT 99.1
FOR IMMEDIATE RELEASE AUGUST 3, 2004
THE LEATHER FACTORY REPORTS 2ND QUARTER 2004 RESULTS
FORT WORTH, TEXAS - The Leather Factory, Inc. (AMEX: TLF) today reported
financial results for the second quarter of 2004. Consolidated net income for
the quarter ended June 30, 2004 was $516,000 compared to consolidated net income
of $778,000 for the second quarter of 2003. Fully diluted earnings per share
for the quarter was $0.05, compared to $0.07 in the second quarter of last year.
Total sales for the quarter ended June 30, 2004 increased 4.8% to $10.9 million
from $10.5 million for the same quarter last year.
Consolidated sales for the six months ended June 30, 2004 were $23.1 million, an
increase of 10% over 2003 first half total sales of $21.0 million. Consolidated
net income for the first half of 2004 was $1.5 million or $0.14 per
fully-diluted share versus $1.6 million or $0.14 per fully-diluted share in the
comparable period last year.
Sales at our Tandy Leather subsidiary increased $860,000 in the second quarter,
a 40% improvement over last year's second quarter. Thirty-two stores comprised
the Tandy Leather's retail operations on June 30, 2004, compared to twenty-two
retail stores a year ago. Three stores were added in the second quarter of 2004
bringing the total number of new stores added in 2004 to six as of the end of
the quarter. For the first six months of 2004, Tandy Leather sales increased
$2.2 million, or 54%, over the first six months of 2003. Second quarter sales
for the Leather Factory wholesale centers decreased $378,000 over the same
quarter last year, a 4.8% decline. The sales decrease is due to a reduction in
sales to our national account customers of $648,000 that was partially offset by
sales gains to our other customer groups of $270,000. For the first six months
of 2004, Leather Factory's sales were down $136,000 over the same period in
2003.
Consolidated gross profit margin for the current quarter was 54.6%, a slight
decline from 54.7% for the second quarter of 2003. For the first two quarters,
consolidated gross profit margin for the current year was 54.9%, an improvement
over last year's gross profit margin at this point of 54.1%. Consolidated
operating expenses rose $560,000 in the current quarter and $1.3 million for the
first six months over the same periods a year ago. Costs associated with the
new Tandy Leather stores (personnel, rents, utilities, etc.), marketing and
advertising costs, and rising health insurance costs account for the majority of
the increase.
Wray Thompson, Chairman and Chief Executive Officer, commented, "Our second
quarter story is one of positives and negatives. The Leather Factory wholesale
centers performed well, generating a 4.5% and 5.6% sales gain for the quarter
and the year, respectively. However, that success was more than offset by the
poor performance of our national account group. Overall, we're pleased with the
performance of the Tandy stores as we've opened or acquired ten new Tandy stores
so far this year and expect to open two more in the third quarter. Our cost
management initiatives are working as many expenses showed decreases from last
year. Unfortunately, this progress was masked by increases in a few expenses
such as employee health insurance costs and reserves for uncollectible customer
accounts. Overall, we have made good progress in the first half of 2004, and we
believe we are still on track to meet our guidance for the year."
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, CEO, The Leather Factory, Inc. (817) 496-4414
Shannon L. Greene, CFO, 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.
THE LEATHER FACTORY, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2004 AND 2003
Three Months Six months
2004 2003 2004 2003
----------- ------------ ----------- ------------
NET SALES $10,959,813 $10,460,675 $23,140,689 $21,020,760
COST OF SALES 4,978,754 4,739,621 10,434,717 9,654,202
----------- ------------ ----------- ------------
Gross Profit 5,981,059 5,721,054 12,705,972 11,366,558
OPERATING EXPENSES 5,127,223 4,566,590 10,405,002 9,096,422
----------- ------------ ----------- ------------
INCOME FROM OPERATIONS 853,836 1,154,464 2,300,970 2,270,136
Interest expense 12,471 70,468 26,109 133,820
Other, net 25,353 (43,705) 27,089 (74,523)
----------- ------------ ----------- ------------
Total other expense 37,824 26,763 53,198 59,297
----------- ------------ ----------- ------------
INCOME BEFORE INCOME TAXES 816,012 1,127,701 2,247,772 2,210,839
PROVISION FOR INCOME TAXES 299,799 348,997 760,594 657,617
----------- ------------ ----------- ------------
NET INCOME $ 516,213 $ 778,704 $ 1,487,178 $ 1,553,222
=========== ============ =========== ============
NET INCOME PER COMMON SHARE - BASIC $ 0.05 $ 0.08 $ 0.14 $ 0.15
=========== ============ =========== ============
NET INCOME PER COMMON SHARE - DILUTED $ 0.05 $ 0.07 $ 0.14 $ 0.14
=========== ============ =========== ============
Weighted Average Number of Shares Outstanding:
Basic 10,553,243 10,234,054 10,530,119 10,205,900
Diluted 11,006,638 10,805,019 11,011,525 10,802,677
THE LEATHER FACTORY, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
6/30/04 12/31/03
------------ ------------
Cash $ 1,181,604 $ 1,728,344
Accounts receivable, net of allowance for doubtful accounts 2,695,997 1,828,738
Inventory 12,189,111 11,079,893
Prepaid income taxes 4,388 206,023
Deferred income taxes 199,368 134,312
Other current assets 808,784 702,236
------------ ------------
TOTAL CURRENT ASSETS 17,079,252 15,679,546
Property and equipment, net 1,844,288 1,905,893
Goodwill and other intangibles, net 1,154,893 1,136,784
Other assets 323,896 336,183
------------ ------------
$20,402,329 $19,058,406
============ ============
Accounts payable $ 1,888,053 $ 1,545,079
Accrued expenses and other liabilities 1,102,728 1,000,427
Notes payable and current maturities of long-term debt - 1,134
------------ ------------
TOTAL CURRENT LIABILITIES 2,990,781 2,546,640
Deferred income taxes 207,947 209,289
Notes payable and long-term debt, net of current maturities 1,100,000 1,792,984
------------ ------------
Total liabilities 4,298,728 4,548,913
------------ ------------
Common stock 25,345 25,171
Paid-in capital 4,796,999 4,673,158
Retained earnings 11,291,897 9,804,719
Notes receivable secured by common stock (15,000) (20,000)
Accumulated other comprehensive loss 4,360 26,445
------------ ------------
Total Stockholders' Equity 16,103,601 14,509,493
------------ ------------
$20,402,329 $19,058,406
============ ============