FORT WORTH, Texas, Aug. 3, 2010 (GLOBE NEWSWIRE) -- Tandy Leather Factory, Inc. (Nasdaq:TLF) today reported financial results for the second quarter of 2010. Consolidated net income for the quarter ended June 30, 2010 was $1,061,000 compared to consolidated net income of $761,000 for the second quarter of 2009, an increase of 39%. Fully diluted earnings per share for the quarter were $0.10, compared to $0.07 in the second quarter of last year. Total sales for the quarter ended June 30, 2010 were $14.3 million, up 10% from $13.0 million in the second quarter last year.

Consolidated sales for the six months ended June 30, 2010 were $28.9 million, up 10% from the 2009 first half sales of $26.2 million. Consolidated net income for the first half of 2010 was up 38% at $2.0 million or $0.20 per fully-diluted share versus $1.5 million or $0.14 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 16% improvement over last year's second quarter. Seventy-six stores comprised Tandy Leather's retail operations on June 30, 2010, compared to seventy-five retail stores a year ago. For the first six months of 2010, Retail Leathercraft's sales increased $2.1 million, or 16%, over the first six months of 2009. Second quarter sales for the Wholesale Leathercraft segment, which consists of the Leather Factory wholesale stores and national account group, were up 2% or $136,000 from the same quarter last year. For the first six months of 2009, Wholesale Leathercraft's sales were up $437,000, or 4%, from the same period in 2009. International Leathercraft, consisting of one combination wholesale and retail store located in the United Kingdom, reported a sales increase of 29%, or $88,000, compared to the second quarter of 2009. For the year, International Leathercraft's sales were up 30%, or $179,000, over the same period last year. 

Consolidated gross profit margin for the current quarter was 60.7%, improving from 58.8% for the second quarter of 2009. For the first two quarters, consolidated gross profit margin for the current year was 61.1%, increasing from last year's gross profit margin of 58.8%. Consolidated operating expenses rose approximately 11% for the quarter and the year, increasing $702,000 in the current quarter and $1.4 million for the first six months over the same periods a year ago. For the second quarter, the significant increases in expenses occurred in advertising, freight out, and credit card fees, all of which are related to the sales increase. Store manager bonuses are also up as a result of increased profit at the stores. Legal fees are also up due to an increase in trademark registrations in foreign countries. For the year, expense increases mirrored that of the second quarter. Consolidated operating margin improved for the quarter to 10.1% compared to 8.5% last year. On a year-to-date basis, consolidated operating margin improved from 8.0% last year to 10.3% in the current year.

Jon Thompson, Chief Executive Officer and President, commented, "The second quarter was another solid one, with higher sales and earnings compared to last year's second quarter. Gross profit margins continue to improve and all divisions reported sales gains and strong profits. Our inventory is up some as we are stocking our stores with slightly more product, in order to keep our sales momentum moving forward through the last half of the year."

Chief Financial Officer and Treasurer, Shannon Greene, added, "We have enjoyed great success so far this year with very solid results. We paid our one-time dividend totaling $7.6 million in early July so our cash will decrease in the third quarter. The level of operating expenses through the end of June was not a surprise as the majority of the expense increases are related to the sales gains. Looking to the last half of the year, we are working against strong comps from last year, particularly in the fourth quarter, so it is important that we manage expenses well against those comps in order to maximize profits." 

Tandy Leather Factory, Inc., (http://www.tandyleatherfactory.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 through its 29 Leather Factory stores, located in 19 states and 3 Canadian provinces, 76 Tandy Leather retail stores, located in 36 states and 6 Canadian provinces, one combination wholesale/retail store located in the United Kingdom, and Mid-Continent Leather Sales, one store located in Oklahoma. Its common stock trades on the Nasdaq with the symbol "TLF". To be included on Tandy Leather Factory's email distribution list, go to http://www.b2i.us/irpass.asp?BzID=1625&to=ea&s=0.

The Tandy Leather Factory, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=7760

This news release may contain statements regarding future events, occurrences, circumstances, activities, performance, outcomes and results that are considered "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Actual results and events may differ from those projected as a result of certain risks and uncertainties. These risks and uncertainties include but are not limited to: changes in general economic conditions, negative trends in general consumer-spending levels, failure to realize the anticipated benefits of opening retail stores; availability of hides and leathers and resultant price fluctuations; change in customer preferences for our product, and other factors disclosed in our filings with the Securities and Exchange Commission. These forward-looking statements are made only as of the date hereof, and except as required by law, we do not intend to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Selected financial data:
  Quarter Ended June 30, 2010 Quarter Ended June 30, 2009
    Sales Operating Income   Sales Operating Income
Wholesale Leathercraft $6,248,279 $623,266 $6,112,421 $473,527
Retail Leathercraft 7,706,679 769,477 6,626,225 646,307
International Leathercraft 395,864 51,568 307,852 (12,063)
Total Operations $14,350,822 $1,444,311 $13,046,498 $1,107,771
     
     
  Six Months Ended 06/30/10 Six Months Ended 06/30/09
    Sales Operating Income   Sales Operating Income
Wholesale Leathercraft $12,836,082 $1,157,461 $12,399,123 $839,774
Retail Leathercraft 15,322,976 1,692,215 13,229,746 1,196,475
International Leathercraft 780,302 131,003 600,724 69,054
Total Operations $28,939,360 $2,980,679 $26,229,593 $2,105,303
     
     
Wholesale Leathercraft Quarter Ended 06/30/10 Quarter Ended 06/30/09
  # of stores Sales # of stores Sales
Same store sales 30 $5,568,230 30 $5,327,001
National account group n/a 680,049 n/a 785,420
Total Sales – Wholesale Leathercraft   $6,248,279   $6,112,421
     
     
Wholesale Leathercraft Six Months Ended 06/30/10 Six Months Ended 06/30/09
  # of stores Sales # of stores Sales
Same store sales 30 $11,351,406 30 $10,741,998
National account group n/a 1,484,676 n/a 1,657,125
Total Sales – Wholesale Leathercraft   $12,836,082   $12,399,123
     
     
Retail Leathercraft Quarter Ended 06/30/10 Quarter Ended 06/30/09
   # of stores Sales # of stores Sales
Same store sales 74 $7,588,880 74 $6,624,026
New store sales 2 117,799 1 2,199
Total Sales – Retail Leathercraft 76 $7,706,679 75 $6,626,225
     
     
Retail Leathercraft Six Months Ended 06/30/10 Six Months Ended 06/30/09
  # of stores Sales # of stores Sales
Same store sales 74 $15,116,514 74 $13,227,547
New store sales 2 206,462 1 2,199
Total Sales – Retail Leathercraft 76 $15,322,976 75 $13,229,746
 
 
Tandy Leather Factory
Consolidated Balance Sheets
 
  June 30,  2010 (unaudited) December 31,  2009 (audited)
ASSETS    
CURRENT ASSETS:    
Cash $10,596,697 $7,891,962
Short-term investments, including certificates of deposit 2,503,593 5,017,000
Accounts receivable-trade, net of allowance for doubtful accounts of $174,000 and $136,000 in 2010 and 2009, respectively 1,392,682 1,202,811
Inventory  18,110,290 16,865,826
Prepaid income taxes 7,673 --
Deferred income taxes 294,788 271,481
Other current assets 1,854,913 791,884
Total current assets 34,760,636 32,040,964
     
PROPERTY AND EQUIPMENT, at cost 13,838,322 15,111,497
Less accumulated depreciation and amortization (4,380,971) (5,431,776)
  9,457,351 9,679,721
     
GOODWILL 982,117 983,823
OTHER INTANGIBLES, net of accumulated amortization of $448,000 and $418,000 in 2010 and 2009, respectively 277,258 307,802
OTHER assets 316,533 314,921
  $45,793,895 $43,327,231
     
LIABILITIES AND STOCKHOLDERS' EQUITY    
CURRENT LIABILITIES:    
Accounts payable-trade $1,702,281 $1,185,032
Accrued expenses and other liabilities 4,371,225 3,988,144
Dividend payable 7,690,832 --
Income taxes payable -- 399,536
Current maturities of long-term debt and capital lease obligations 202,500 202,500
Total current liabilities 13,966,838 5,775,212
     
DEFERRED INCOME TAXES 623,519 682,364
     
LONG-TERM DEBT, net of current maturities 3,408,750 3,510,000
CAPITAL LEASE OBLIGATION, net of current maturities -- --
     
COMMITMENTS AND CONTINGENCIES -- --
     
STOCKHOLDERS' EQUITY:    
Preferred stock, $0.10 par value; 20,000,000 shares authorized; none issued or outstanding; attributes to be determined on issuance -- --
Common stock, $0.0024 par value; 25,000,000 shares authorized; 11,148,065 and 11,021,951 shares issued at 2010 and 2009, respectively; 10,254,442 and 10,130,628 shares outstanding at 2010 and 2009, respectively 26,755 26,453
Paid-in capital 5,676,288 5,491,736
Retained earnings 24,278,304 29,959,910
Treasury stock (893,623 and 891,323 shares at cost at 2010 and 2009, respectively) (2,461,068) (2,452,649)
Accumulated other comprehensive income 274,509 334,205
Total stockholders' equity 27,794,788 33,359,655
  $45,793,895 $43,327,231
 
 
Tandy Leather Factory, Inc.
Consolidated Statements of Income
(Unaudited)
For the Three and Six Months Ended June 30, 2010 and 2009
     
  THREE MONTHS SIX MONTHS
  2010 2009 2010 2009
         
NET SALES $14,350,822 $13,046,498 $28,939,360 $26,229,593
         
COST OF SALES 5,635,856 5,370,457 11,247,798 10,813,106
Gross profit 8,714,966 7,676,041 17,691,562 15,416,487
         
OPERATING EXPENSES 7,270,655 6,568,270 14,710,883 13,311,184
INCOME FROM OPERATIONS 1,444,311 1,107,771 2,980,679 2,105,303
         
OTHER (INCOME) EXPENSE:        
Interest expense 65,615 83,575 131,219 160,487
Other, net (81,741) (142,915) (83,208) (219,690)
Total other (income) expense (16,126) (59,340) 48,011 (59,203)
         
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES   1,460,437   1,167,111   2,932,668   2,164,506
         
PROVISION FOR INCOME TAXES 399,326 431,014 923,981 755,350
         
NET INCOME FROM CONTINUING OPERATIONS  1,061,111  736,097  2,008,687  1,409,156
         
INCOME FROM DISCONTINUED OPERATIONS, NET OF TAX -- 25,154 536 50,012
         
NET INCOME $1,061,111 $761,251 $2,009,223 $1,459,168
         
         
NET INCOME FROM CONTINUING OPERATIONS PER COMMON SHARE:        
Basic $0.10 $0.07 $0.20 $0.14
Diluted $0.10 $0.07 $0.20 $0.14
         
INCOME FROM DISCONTINUED OPERATIONS, NET OF TAX PER COMMON SHARE:        
Basic $0.00 $0.00 $0.00 $0.00
Diluted $0.00 $0.00 $0.00 $0.00
         
NET INCOME PER COMMON SHARE:        
Basic $0.10 $0.07 $0.20 $0.14
Diluted $0.10 $0.07 $0.20 $0.14
         
Weighted average number of shares outstanding:        
Basic 10,191,506 10,673,245 10,164,759 10,650,573
Diluted 10,238,217 10,731,998 10,226,015 10,705,871
 
 
Tandy Leather Factory, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
For the Six Months Ended June 30, 2010 and 2009  
  2010 2009
CASH FLOWS FROM OPERATING ACTIVITIES:    
Net income $2,009,223 $1,459,168
Income from discontinued operations 536 50,012
  2,008,687 1,409,156
Adjustments to reconcile net income to net cash provided by (used in) operating activities--    
Depreciation & amortization 471,411 560,835
Loss on disposal of assets 8,303 --
Non-cash stock-based compensation 18,388 2,540
Deferred income taxes (82,823) 44,946
Other (52,842) 84,037
Net changes in assets and liabilities:    
Accounts receivable-trade, net (195,779) (446,874)
Inventory (1,244,464) 229,038
Income taxes (406,924) (194,104)
Other current assets (1,063,029) (294,962)
Accounts payable 517,249 365,711
Accrued expenses and other liabilities 383,081 (197,606)
Total adjustments (1,647,429) 153,561
     
Net cash provided by continuing operating activities 361,258 1,562,717
Cash provided by discontinued operating activities 6,831 (15,193)
Net cash provided by operating activities 368,089 1,547,524
     
CASH FLOWS FROM INVESTING ACTIVITIES:    
Purchase of property and equipment (238,507) (442,402)
Purchase of certificates of deposit (2,572,593) (5,336,000)
Proceeds from maturities of certificates of deposit 5,086,000 2,775,000
Proceeds from sale of assets 6,560 --
Decrease (increase) in other assets (1,611) 1,052
     
Net cash provided by continuing investing activities 2,279,849 (3,002,350)
Cash provided by discontinued investing activities -- --
Net cash used in investing activities 2,279,849 (3,002,350)
     
CASH FLOWS FROM FINANCING ACTIVITIES:    
Payments on long-term debt and notes payable (101,250) (101,250)
Payments on capital lease obligations -- (593,949)
Repurchase of common stock (treasury stock) (8,419) (64,897)
Proceeds from issuance of common stock 166,466 23,437
     
Net cash provided by continuing financing activities 56,797 (736,659)
Cash provided by discontinued financing activities -- --
Net cash used in financing activities 56,797 (736,659)
     
NET CHANGE IN CASH 2,704,735 (2,191,485)
     
CASH, beginning of period 7,891,962 7,810,298
     
CASH, end of period $10,596,697 $5,618,813
     
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:    
Interest paid during the period $131,219 $160,487
Income taxes paid during the period, net of (refunds) 1,405,089 884,425
CONTACT:  Tandy Leather Factory, Inc.          Shannon L. Greene          (817) 872-3200           sgreene@tandyleather.com          Magellan Fin, LLC          Mark Gilbert          (317) 867-2839           MGilbert@MagellanFin.com

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