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)
|
(I.R.S. Employer Identification No.)
|
|
1900 Southeast Loop 820, Fort Worth, TX 76140
|
817/872-3200
|
|
(Address of Principal Executive Offices and Zip Code)
|
(Registrant’s telephone number, including area code)
|
|
Title of Each Class
|
Name of Each Exchange on Which Registered
|
|
Common Stock, par value $0.0024
|
NASDAQ Global Market
|
Item
|
Page
|
|
Part 1
|
||
1
|
1 | |
1A
|
5 | |
1B
|
6 | |
2
|
6 | |
3
|
6 | |
4
|
6 | |
Part II
|
||
5
|
7 | |
6
|
7 | |
7
|
8 | |
7A
|
12 | |
8
|
13 | |
9
|
27 | |
9A
|
27 | |
9B
|
27 | |
Part III
|
||
10
|
27 | |
11
|
27 | |
12
|
27 | |
13
|
27 | |
14
|
27 | |
27 | ||
Part IV
|
||
15
|
28 |
Segment
|
Subsidiaries included:
|
Wholesale Leathercraft
|
The Leather Factory, LP;
The Leather Factory of Canada, Ltd (3 stores)
|
Retail Leathercraft
|
Tandy Leather Company, LP;
The Leather Factory of Canada, Ltd (7 stores)
|
International Leathercraft
|
Tandy Leather Factory UK Ltd.
Tandy Leather Factory Australia Pty Ltd
Tandy Leather Factory Espana, SL
|
Wholesale Leathercraft
|
Retail Leathercraft
|
International Leathercraft
|
||||||||||
Year Ended
|
Opened
|
Conv. (1)
|
Closed
|
Total
|
Opened (2)
|
Closed
|
Total
|
Opened
|
Closed
|
Total
|
||
Balance Fwd
|
22
|
N/A
|
N/A
|
|||||||||
1999
|
4
|
-
|
-
|
26
|
-
|
-
|
-
|
-
|
-
|
-
|
||
2000
|
2
|
-
|
-
|
28
|
1*
|
-
|
1
|
-
|
-
|
-
|
||
2001
|
2
|
-
|
-
|
30
|
-
|
-
|
1
|
-
|
-
|
-
|
||
2002
|
1
|
(1)
|
-
|
30
|
14
|
1*
|
14
|
-
|
-
|
-
|
||
2003
|
-
|
-
|
-
|
30
|
12
|
-
|
26
|
-
|
-
|
-
|
||
2004
|
-
|
-
|
-
|
30
|
16
|
-
|
42
|
-
|
-
|
-
|
||
2005
|
-
|
-
|
-
|
30
|
8
|
-
|
50
|
-
|
-
|
-
|
||
2006
|
-
|
(1)
|
-
|
29
|
12
|
-
|
62
|
-
|
-
|
-
|
||
2007
|
1^
|
-
|
-
|
30
|
10
|
-
|
72
|
-
|
-
|
-
|
||
2008
|
-
|
-
|
-
|
30
|
1
|
-
|
73
|
1
|
-
|
1
|
||
2009
|
-
|
-
|
-
|
30
|
2
|
-
|
75
|
-
|
-
|
1
|
||
2010
|
-
|
-
|
1^
|
29
|
1
|
-
|
76
|
-
|
-
|
1
|
||
2011
|
-
|
-
|
-
|
29
|
1
|
-
|
77
|
1
|
-
|
2
|
||
2012
|
-
|
-
|
-
|
29
|
1
|
-
|
78
|
1
|
-
|
3
|
Product Category
|
2012 Sales Mix
|
2011 Sales Mix
|
2010 Sales Mix
|
||
Belts strips and straps
|
3%
|
3%
|
3%
|
||
Books, patterns, videos
|
2%
|
2%
|
2%
|
||
Buckles
|
4%
|
4%
|
4%
|
||
Conchos^
|
4%
|
4%
|
4%
|
||
Craft supplies
|
4%
|
5%
|
5%
|
||
Dyes, finishes, glues
|
6%
|
6%
|
6%
|
||
Hand tools
|
15%
|
15%
|
14%
|
||
Hardware
|
7%
|
7%
|
7%
|
||
Kits
|
8%
|
7%
|
8%
|
||
Lace
|
5%
|
7%
|
7%
|
||
Leather
|
38%
|
35%
|
36%
|
||
Stamping tools
|
4%
|
5%
|
4%
|
||
100%
|
100%
|
100%
|
Product Category
|
2012 Sales Mix
|
2011 Sales Mix
|
2010 Sales Mix
|
||
Belts strips and straps
|
5%
|
5%
|
5%
|
||
Books, patterns, videos
|
2%
|
2%
|
2%
|
||
Buckles
|
4%
|
4%
|
4%
|
||
Conchos
|
3%
|
4%
|
4%
|
||
Craft supplies
|
3%
|
3%
|
4%
|
||
Dyes, finishes, glues
|
7%
|
7%
|
8%
|
||
Hand tools
|
16%
|
16%
|
15%
|
||
Hardware
|
7%
|
7%
|
6%
|
||
Kits
|
8%
|
9%
|
10%
|
||
Lace
|
3%
|
3%
|
3%
|
||
Leather
|
37%
|
35%
|
34%
|
||
Stamping tools
|
5%
|
5%
|
5%
|
||
100%
|
100%
|
100%
|
Name and Age
|
Position
|
Served as Executive Officer Since
|
Jon W. Thompson, 51
|
Chief Executive Officer since July 2009; President and Chief Operating Officer since June 2008; Vice President from June 1993 to June 2008
|
2008
|
Shannon L. Greene, 47
|
Chief Financial Officer since May 2000; Treasurer and Chief Accounting Officer since 2001
|
2000
|
Mark J. Angus, 52
|
Senior Vice President and Assistant Secretary since June 2008; Operational Vice President of Merchandising since June 1993
|
2008
|
William M. Warren, 69
|
Secretary and Corporate Counsel
|
1993
|
State
|
Wholesale Leathercraft
|
Retail Leathercraft
|
International
|
Alabama
|
-
|
1
|
n/a
|
Alaska
|
-
|
1
|
n/a
|
Arizona
|
2
|
3
|
n/a
|
Arkansas
|
-
|
1
|
n/a
|
California
|
3
|
7
|
n/a
|
Colorado
|
1
|
3
|
n/a
|
Connecticut
|
-
|
1
|
n/a
|
Florida
|
1
|
3
|
n/a
|
Georgia
|
-
|
1
|
n/a
|
Idaho
|
-
|
1
|
n/a
|
Illinois
|
1
|
1
|
n/a
|
Indiana
|
-
|
2
|
n/a
|
Iowa
|
1
|
-
|
n/a
|
Kansas
|
1
|
-
|
n/a
|
Kentucky
|
-
|
1
|
n/a
|
Louisiana
|
1
|
-
|
n/a
|
Maryland
|
-
|
1
|
n/a
|
Massachusetts
|
-
|
1
|
n/a
|
Michigan
|
1
|
1
|
n/a
|
Minnesota
|
-
|
2
|
n/a
|
Missouri
|
1
|
2
|
n/a
|
Montana
|
1
|
-
|
n/a
|
Nebraska
|
-
|
1
|
n/a
|
Nevada
|
-
|
2
|
n/a
|
New Mexico
|
1
|
2
|
n/a
|
New York
|
-
|
1
|
n/a
|
North Carolina
|
-
|
2
|
n/a
|
North Dakota
|
-
|
1
|
n/a
|
Ohio
|
1
|
2
|
n/a
|
Oklahoma
|
-
|
2
|
n/a
|
Oregon
|
1
|
1
|
n/a
|
Pennsylvania
|
1
|
2
|
n/a
|
South Carolina
|
-
|
1
|
n/a
|
South Dakota
|
-
|
1
|
n/a
|
Tennessee
|
1
|
3
|
n/a
|
Texas
|
5
|
9
|
n/a
|
Utah
|
1
|
3
|
n/a
|
Virginia
|
-
|
1
|
n/a
|
Washington
|
1
|
2
|
n/a
|
Wisconsin
|
-
|
1
|
n/a
|
Wyoming
|
-
|
1
|
n/a
|
Canadian locations:
|
|||
Alberta
|
1
|
1
|
n/a
|
British Columbia
|
-
|
1
|
n/a
|
Manitoba
|
1
|
-
|
n/a
|
Nova Scotia
|
-
|
1
|
n/a
|
Ontario
|
1
|
2
|
n/a
|
Quebec
|
-
|
1
|
n/a
|
Saskatchewan
|
-
|
1
|
n/a
|
International locations:
|
|||
United Kingdom
|
n/a
|
n/a
|
1
|
Australia
|
n/a
|
n/a
|
1
|
Spain
|
n/a
|
n/a
|
1
|
2012
|
High
|
Low
|
2011
|
High
|
Low
|
|
4th quarter
|
$5.52
|
$5.16
|
4th quarter
|
$5.00
|
$4.17
|
|
3rd quarter
|
$5.66
|
$5.07
|
3rd quarter
|
$5.25
|
$4.29
|
|
2nd quarter
|
$5.25
|
$4.84
|
2nd quarter
|
$5.22
|
$4.45
|
|
1st quarter
|
$5.42
|
$4.68
|
1st quarter
|
$5.35
|
$4.50
|
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
|
121,600
|
$4.53
|
33,400
|
Equity compensation plans not approved by stockholders
|
-
|
-
|
-
|
TOTAL
|
121,600
|
$4.53
|
33,400
|
Income Statement Data,
Years ended December 31,
|
2012
|
2011
|
2010
|
2009
|
2008
|
||||
Net sales
|
$72,720,624
|
$66,102,947
|
$59,892,870
|
$54,482,739
|
$52,491,538
|
||||
Gross profit
|
45,905,674
|
40,337,159
|
36,250,857
|
32,609,374
|
31,050,359
|
||||
Operating income
|
9,144,005
|
7,706,650
|
6,635,611
|
5,095,101
|
4,025,342
|
||||
Net income from continuing operations
|
5,596,070
|
4,753,969
|
4,158,491
|
3,261,143
|
2,511,847
|
||||
Income from discontinued operations, net of tax
|
-
|
(1,368)
|
1,766
|
56,914
|
92,336
|
||||
Net income
|
$5,596,070
|
$4,752,601
|
$4,160,257
|
$3,318,057
|
$2,604,183
|
||||
Basic
|
$0.55
|
$0.47
|
$0.41
|
$0.31
|
$0.23
|
||||
Diluted
|
$0.55
|
$0.47
|
$0.41
|
$0.31
|
$0.23
|
Basic
|
$0.55
|
$0.47
|
$0.41
|
$0.32
|
$0.24
|
|||||
Diluted
|
$0.55
|
$0.47
|
$0.41
|
$0.31
|
$0.24
|
|||||
Weighted average common shares outstanding for:
|
||||||||||
Basic EPS
|
10,157,395
|
10,156,442
|
10,208,944
|
10,471,103
|
10,931,306
|
|||||
Diluted EPS
|
10,175,346
|
10,182,098
|
10,251,863
|
10,535,736
|
11,015,657
|
|||||
Cash dividend declared per common share
|
$0.25
|
-
|
$0.75
|
-
|
-
|
Balance Sheet Data, as of December 31,
|
2012
|
2011
|
2010
|
2009
|
2008
|
||||
Cash and certificates of deposit
|
$7,705,182
|
$11,189,484
|
$5,915,339
|
$12,908,962
|
$10,821,298
|
||||
Total assets
|
49,087,672
|
45,502,915
|
40,595,574
|
43,327,231
|
40,975,913
|
||||
Capital lease obligation, including current portion
|
-
|
-
|
-
|
-
|
593,949
|
||||
Long-term debt, including current portion
|
3,105,000
|
3,307,500
|
3,510,000
|
3,712,500
|
3,915,000
|
||||
Total Stockholders’ Equity
|
$37,521,017
|
$34,433,801
|
$29,761,594
|
$33,359,655
|
$31,264,762
|
Year
|
Wholesale Leathercraft
|
Retail Leathercraft
|
International Leathercraft
|
Total Company
|
Increase from Prior Year
|
2012
|
$26,850,002
|
$42,616,546
|
$3,254,076
|
$72,720,624
|
10.0%
|
2011
|
$26,540,899
|
$37,435,832
|
$2,126,216
|
$66,102,947
|
10.4%
|
2010
|
$25,908,177
|
$32,291,442
|
$1,693,251
|
$59,892,870
|
9.9%
|
Year
|
Wholesale Leathercraft
|
Retail Leathercraft
|
International Leathercraft
|
Total Company
|
2012
|
67.3%
|
60.6%
|
61.7%
|
63.1%
|
2011
|
61.3%
|
60.5%
|
66.9%
|
61.0%
|
2010
|
60.7%
|
60.2%
|
63.8%
|
60.5%
|
Expense
|
2012 amount
|
Increase (Decrease) over 2011
|
Employee compensation & benefits
|
$19.6 million
|
$1.6 million
|
Travel expense
|
507,000
|
177,000
|
Advertising and marketing
|
$3.5 million
|
571,000
|
Rent & utilities
|
4.4 million
|
280,000
|
Professional fees and licenses
|
798,000
|
(237,000)
|
Repairs and maintenance
|
435,000
|
133,000
|
Supplies
|
857,000
|
147,000
|
Workers compensation and property insurance
|
506,000
|
184,000
|
Litigation settlement
|
993,000
|
993,000
|
Expense
|
2011 amount
|
Increase (Decrease) over 2010
|
Employee compensation & benefits
|
$18.0 million
|
$2.1 million
|
Travel expense
|
330,000
|
(50,000)
|
Credit card fees
|
910,000
|
100,000
|
Rent & utilities
|
4.0 million
|
190,000
|
Professional fees and licenses
|
1.4 million
|
600,000
|
Freight out – shipping product to customers
|
1.7 million
|
120,000
|
Year
|
Net Sales
Increase (Decrease) from Prior Yr
|
Operating
Income
|
Operating Income
Increase (Decrease) from Prior Year
|
Operating Income
as a Percentage of Sales
|
2012
|
1.2%
|
$3,730,678
|
33.1%
|
13.9%
|
2011
|
2.4%
|
$2,803,034
|
4.2%
|
10.6%
|
2010
|
3.2%
|
$2,690,061
|
33.3%
|
10.4%
|
Customer Group
|
2012
|
2011
|
2010
|
Retail
|
37%
|
33%
|
31%
|
Institution
|
4%
|
5%
|
6%
|
Wholesale
|
45%
|
43%
|
43%
|
National Accounts
|
7%
|
12%
|
12%
|
Manufacturers
|
7%
|
7%
|
8%
|
100%
|
100%
|
100%
|
Year
|
Net Sales
Increase from Prior Yr
|
Operating
Income
|
Operating Income
Increase (Decrease) from Prior Year
|
Operating Income
as a Percentage of Sales
|
2012
|
13.8%
|
$5,436,745
|
16.8%
|
12.8%
|
2011
|
15.9%
|
$4,656,067
|
28.8%
|
12.4%
|
2010
|
15.0%
|
$3,614,856
|
24.6%
|
11.2%
|
Customer Group
|
2012
|
2011
|
2010
|
Retail
|
60%
|
62%
|
64%
|
Institution
|
4%
|
5%
|
6%
|
Wholesale
|
33%
|
30%
|
29%
|
National Accounts
|
0%
|
0%
|
0%
|
Manufacturers
|
3%
|
3%
|
1%
|
100%
|
100%
|
100%
|
2012
|
2011
|
2010
|
||
Solvency Ratios:
|
||||
Quick Ratio
|
(Cash+Accts Rec)/Total Current Liabilities
|
1.09
|
1.76
|
1.04
|
Current Ratio
|
Total Current Assets/Total Current Liabilities
|
4.54
|
4.74
|
4.17
|
Current Liabilities to Net Worth
|
Total Current Liabilities/Net Worth
|
0.21
|
0.21
|
0.23
|
Current Liabilities to Inventory
|
Total Current Liabilities/Inventory
|
0.30
|
0.36
|
0.34
|
Total Liabilities to Net Worth
|
Total Liabilities/Net Worth
|
0.31
|
0.32
|
0.36
|
Fixed Assets to Net Worth
|
Fixed Assets/Net Worth
|
0.32
|
0.30
|
0.35
|
Efficiency Ratios:
|
||||
Collection Period (Days Outstanding)
|
Accounts Receivable/Credit Sales x 365
|
40.06
|
42.35
|
39.83
|
Inventory Turnover
|
Sales/Average Inventory
|
3.18
|
3.29
|
3.23
|
Assets to Sales
|
Total Assets/Sales
|
0.68
|
0.69
|
0.68
|
Sales to Net Working Capital
|
Sales/Current Assets - Current Liabilities
|
2.62
|
2.49
|
2.74
|
Accounts Payable to Sales
|
Accounts Payable/Sales
|
0.02
|
0.03
|
0.02
|
Profitability Ratios:
|
||||
Return on Sales (Profit Margin)
|
Net Profit After Taxes/Sales
|
0.08
|
0.07
|
0.07
|
Return on Assets
|
Net Profit After Taxes/Total Assets
|
0.11
|
0.10
|
0.10
|
Return on Net Worth (Return on Equity)
|
Net Profit After Taxes/Net Worth
|
0.15
|
0.14
|
0.14
|
Segment
|
2012
|
2011
|
2010
|
Wholesale Leathercraft
|
2.09
|
1.95
|
1.96
|
Retail Leathercraft
|
5.58
|
6.41
|
6.45
|
International Leathercraft
|
3.20
|
6.91
|
5.65
|
Wholesale Leathercraft stores only
|
5.26
|
6.68
|
7.40
|
Payments Due by Periods
|
|||||
Contractual Obligations
|
Total
|
Less than 1 Year
|
1 - 3 Years
|
3 -5 Years
|
More than 5 Years
|
Long-Term Debt(1)
|
$3,105,000
|
$202,500
|
$405,000
|
$405,000
|
$2,092,500
|
Operating Leases(2)
|
8,895,194
|
2,950,179
|
4,117,494
|
1,761,793
|
65,728
|
Total Contractual Obligations
|
$12,000,194
|
$3,152,679
|
$4,522,494
|
$2,166,793
|
$2,158,228
|
December 31,
2012
|
December 31,
2011
|
||||||
ASSETS
|
|||||||
CURRENT ASSETS:
|
|||||||
Cash
|
$7,705,182
|
$10,765,591
|
|||||
Short-term investments, including certificates of deposit
|
-
|
423,893
|
|||||
Accounts receivable-trade, net of allowance for doubtful accounts of $112,000 and $81,000 in 2012 and 2011, respectively
|
822,772 | 1,328,579 | |||||
Inventory
|
25,862,784
|
19,940,251
|
|||||
Deferred income taxes
|
349,478
|
281,251
|
|||||
Other current assets
|
929,913
|
948,459
|
|||||
Total current assets
|
35,670,129
|
33,688,024
|
|||||
PROPERTY AND EQUIPMENT, at cost
|
17,574,895
|
14,999,826
|
|||||
Less accumulated depreciation and amortization
|
(5,630,305)
|
(4,700,476)
|
|||||
11,944,590
|
10,299,350
|
||||||
GOODWILL
|
990,725
|
987,009
|
|||||
OTHER INTANGIBLES, net of accumulated amortization of $582,000 and $539,000 in 2012 and 2011, respectively
|
145,533 | 187,292 | |||||
OTHER assets
|
336,695
|
341,240
|
|||||
Total Assets
|
$49,087,672
|
$45,502,915
|
|||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|||||||
CURRENT LIABILITIES:
|
|||||||
Accounts payable-trade
|
$1,612,627
|
$1,622,697
|
|||||
Accrued expenses and other liabilities
|
5,928,798
|
4,641,191
|
|||||
Income taxes payable
|
113,705
|
638,897
|
|||||
Current maturities of long-term debt
|
202,500
|
202,500
|
|||||
Total current liabilities
|
7,857,630
|
7,105,285
|
|||||
DEFERRED INCOME TAXES
|
806,525
|
858,829
|
|||||
LONG-TERM DEBT, net of current maturities
|
2,902,500
|
3,105,000
|
|||||
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,
|
|||||||
authorized, 11,156,065 and 11,150,065 shares issued at 2012 and 2011,
|
|||||||
10,162,442 and 10,156,442 shares outstanding at 2012 and 2011, respectively
|
26,775
|
26,760
|
|||||
Paid-in capital
|
5,767,508
|
5,736,543
|
|||||
Retained earnings
|
34,241,875
|
31,181,936
|
|||||
Treasury stock at cost (993,623 shares at 2012 and 2011)
|
(2,894,068)
|
(2,894,068)
|
|||||
Accumulated other comprehensive income
|
378,927
|
382,630
|
|||||
Total stockholders' equity
|
37,521,017
|
34,433,801
|
|||||
Total Liabilities and Stockholders’ Equity
|
$49,087,672
|
$45,502,915
|
2012
|
2011
|
2010
|
||||
NET SALES
|
$72,720,624
|
$66,102,947
|
$59,892,870
|
|||
COST OF SALES
|
26,814,950
|
25,765,788
|
23,642,013
|
|||
Gross Profit
|
45,905,674
|
40,337,159
|
36,250,857
|
|||
OPERATING EXPENSES
|
36,761,669
|
32,630,509
|
29,615,246
|
|||
INCOME FROM OPERATIONS
|
9,144,005
|
7,706,650
|
6,635,611
|
|||
OTHER (INCOME) EXPENSE:
|
||||||
Interest expense
|
240,934
|
248,576
|
265,405
|
|||
Other, net
|
(42,574)
|
(83,428)
|
(105,540)
|
|||
Total other expense
|
198,360
|
165,148
|
159,865
|
|||
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
|
8,945,645
|
7,541,502
|
6,475,746
|
|||
PROVISION FOR INCOME TAXES
|
3,349,575
|
2,787,533
|
2,317,255
|
|||
NET INCOME FROM CONTINUING OPERATIONS
|
5,596,070
|
4,753,969
|
4,158,491
|
|||
INCOME FROM DISCONTINUED OPERATIONS, NET OF TAX
|
-
|
(1,368)
|
1,766
|
|||
NET INCOME
|
$5,596,070
|
$4,752,601
|
$4,160,257
|
|||
NET INCOME FROM CONTINUING OPERATIONS PER COMMON SHARE:
|
||||||
BASIC
|
$0.55
|
$0.47
|
$0.41
|
|||
DILUTED
|
$0.55
|
$0.47
|
$0.41
|
|||
INCOME FROM DISCONTINUED OPERATIONS, NET OF TAX PER COMMON SHARE:
|
||||||
BASIC
|
$0.00
|
$0.00
|
$0.00
|
|||
DILUTED
|
$0.00
|
$0.00
|
$0.00
|
|||
NET INCOME PER COMMON SHARE:
|
||||||
BASIC
|
$0.55
|
$0.47
|
$0.41
|
|||
DILUTED
|
$0.55
|
$0.47
|
$0.41
|
|||
Weighted Average Number of Shares Outstanding:
|
||||||
Basic
|
10,157,395
|
10,156,442
|
10,208,944
|
|||
Diluted
|
10,175,346
|
10,182,098
|
10,251,863
|
2012
|
2011
|
2010
|
||||
NET INCOME
|
$5,596,070
|
$4,752,601
|
$4,160,257
|
|||
Foreign currency translation adjustments
|
(3,703)
|
(113,550)
|
161,975
|
|||
COMPREHENSIVE INCOME
|
$5,592,367
|
$4,639,051
|
$4,322,232
|
2012
|
2011
|
2010
|
|||||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|||||||||||
Net income
|
$5,596,070
|
$4,752,601
|
$4,160,257
|
||||||||
Income (loss) from discontinued operations
|
-
|
(1,368)
|
1,766
|
||||||||
5,596,070
|
4,753,969
|
4,158,491
|
|||||||||
Adjustments to reconcile net income to net cash provided by operating activities -
|
|||||||||||
Depreciation and amortization
|
1,068,226
|
1,016,561
|
972,409
|
||||||||
Loss on disposal or abandonment of assets
|
21,092
|
84,168
|
49,154
|
||||||||
Non-cash stock-based compensation
|
10,000
|
33,156
|
41,692
|
||||||||
Deferred income taxes
|
(120,531)
|
256,544
|
(90,520)
|
||||||||
Other
|
(15,227)
|
(106,345)
|
150,203
|
||||||||
Net changes in assets and liabilities, net of effect of business acquisitions:
|
|||||||||||
Accounts receivable-trade, net
|
505,807
|
(74,940)
|
(56,736)
|
||||||||
Inventory
|
(5,922,533)
|
295,777
|
(3,370,202)
|
||||||||
Income taxes
|
(525,192)
|
84,216
|
186,940
|
||||||||
Other current assets
|
18,546
|
107,742
|
(264,317)
|
||||||||
Accounts payable-trade
|
(10,070)
|
374,876
|
62,788
|
||||||||
Accrued expenses and other liabilities
|
1,287,607
|
(252,045)
|
905,092
|
||||||||
Total adjustments
|
(3,682,275)
|
1,819,710
|
(1,413,497)
|
||||||||
Net cash provided by continuing operating activities
|
1,913,795
|
6,573,679
|
2,744,994
|
||||||||
Cash provided used by discontinued operating activities
|
-
|
(1,067)
|
(23,751)
|
||||||||
Net cash provided by operating activities
|
1,913,795
|
6,572,612
|
2,721,243
|
||||||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|||||||||||
Purchase of property and equipment
|
(2,686,221)
|
(1,100,523)
|
(1,553,339)
|
||||||||
Purchases of certificates of deposit
|
-
|
(87,893)
|
(2,572,593)
|
||||||||
Proceeds from maturities of certificates of deposit
|
423,893
|
1,285,593
|
5,968,000
|
||||||||
Proceeds from sale of assets
|
1,230
|
26,263
|
7,570
|
||||||||
Decrease (increase) in other assets
|
4,545
|
(21,707)
|
(4,612)
|
||||||||
Net cash provided by (used in) continuing investing activities
|
(2,256,553)
|
101,733
|
1,845,026
|
||||||||
Net cash provided by (used in) investing activities
|
(2,256,553)
|
101,733
|
1,845,026
|
||||||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|||||||||||
Payments on notes payable and long-term debt
|
(202,500)
|
(202,500)
|
(202,500)
|
||||||||
Payment of cash dividend
|
(2,536,131)
|
-
|
(7,690,832)
|
||||||||
Repurchase of common stock (treasury stock)
|
-
|
-
|
(441,419)
|
||||||||
Proceeds from issuance of common stock
|
20,980
|
-
|
170,266
|
||||||||
Net cash used in continuing financing activities
|
(2,717,651)
|
(202,500)
|
(8,164,485)
|
||||||||
Net cash used in financing activities
|
(2,717,651)
|
(202,500)
|
(8,164,485)
|
||||||||
NET INCREASE (DECREASE) IN CASH
|
(3,060,409)
|
6,471,845
|
(3,598,216)
|
||||||||
CASH, beginning of period
|
10,765,591
|
4,293,746
|
7,891,962
|
||||||||
CASH, end of period
|
$7,705,182
|
$10,765,591
|
$4,293,746
|
||||||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
|
|||||||||||
Interest paid during the period
|
$240,934
|
$248,576
|
$265,405
|
||||||||
Income tax paid during the period, net of (refunds)
|
4,004,510
|
2,437,701
|
2,208,819
|
||||||||
Number of Shares
|
Par Value
|
Paid-in Capital
|
Treasury Stock
|
Retained Earnings
|
Accumulated Other Comprehensive
Income (Loss)
|
Total
|
|||||||
BALANCE, December 31, 2009
|
10,130,628
|
$26,453
|
$5,491,736
|
$(2,452,649)
|
$29,959,910
|
$334,205
|
$33,359,655
|
||||||
Shares issued - stock options exercised
|
128,114
|
307
|
169,959
|
-
|
-
|
-
|
170,266
|
||||||
Stock-based compensation
|
-
|
-
|
41,692
|
-
|
-
|
-
|
41,692
|
||||||
Purchase of treasury stock
|
(102,300)
|
-
|
-
|
(441,419)
|
-
|
-
|
(441,419)
|
||||||
Net income
|
-
|
-
|
-
|
-
|
4,160,257
|
-
|
4,160,257
|
||||||
Cash dividend paid
|
-
|
-
|
-
|
-
|
(7,690,832)
|
-
|
(7,690,832)
|
||||||
Translation adjustment
|
-
|
-
|
-
|
-
|
-
|
161,975
|
161,975
|
||||||
BALANCE, December 31, 2010
|
10,156,442
|
26,760
|
5,703,387
|
(2,894,068)
|
26,429,335
|
496,180
|
29,761,594
|
||||||
Stock-based compensation
|
-
|
-
|
33,156
|
-
|
-
|
-
|
33,156
|
||||||
Net income
|
-
|
-
|
-
|
-
|
4,752,601
|
-
|
4,752,601
|
||||||
Translation adjustment
|
-
|
-
|
-
|
-
|
-
|
(113,550)
|
(113,550)
|
||||||
BALANCE, December 31, 2011
|
10,156,442
|
26,760
|
5,736,543
|
(2,894,068)
|
31,181,936
|
382,630
|
34,433,801
|
||||||
Shares issued - stock options exercised
|
6,000
|
15
|
20,965
|
-
|
-
|
-
|
20,980
|
||||||
Stock-based compensation
|
-
|
-
|
10,000
|
-
|
-
|
-
|
10,000
|
||||||
Net income
|
-
|
-
|
-
|
-
|
5,596,070
|
-
|
5,596,070
|
||||||
Cash dividend paid
|
-
|
-
|
-
|
-
|
(2,536,131)
|
-
|
(2,536,131)
|
||||||
Translation adjustment
|
-
|
-
|
-
|
-
|
-
|
(3,703)
|
(3,703)
|
||||||
BALANCE, December 31, 2012
|
10,162,442
|
$26,775
|
$5,767,508
|
$(2,894,068)
|
$34,241,875
|
$378,927
|
$37,521,017
|
·
|
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
|
2012
|
2011
|
2010
|
||
Net income
|
$5,596,070
|
$4,752,601
|
$4,160,257
|
||
Weighted average common shares outstanding
|
10,157,395
|
10,156,442
|
10,208,944
|
||
Earnings per share – basic
|
$0.55
|
$0.47
|
$0.41
|
||
DILUTED
|
|||||
Net income
|
$5,596,070
|
$4,752,601
|
$4,160,257
|
||
Weighted average common shares outstanding
|
10,157,395
|
10,156,442
|
10,208,944
|
||
Effect of assumed exercise of stock options and warrants
|
17,951
|
25,656
|
42,919
|
||
Weighted average common shares outstanding, assuming dilution
|
10,175,346
|
10,182,098
|
10,251,863
|
||
Earnings per share - diluted
|
$0.55
|
$0.47
|
$0.41
|
||
Outstanding options and warrants excluded as anti-dilutive
|
-
|
25,000
|
13,000
|
·
|
Goodwill and other intangibles
|
Leather Factory
|
Tandy Leather
|
Total
|
|||
Balance, December 31, 2010
|
$606,962
|
$383,406
|
$990,368
|
||
Acquisitions and adjustments
|
-
|
-
|
-
|
||
Foreign exchange gain/loss
|
(3,359)
|
-
|
(3,359)
|
||
Impairments
|
-
|
-
|
-
|
||
Balance, December 31, 2011
|
$603,603
|
$383,406
|
$987,009
|
||
Acquisitions and adjustments
|
-
|
-
|
-
|
||
Foreign exchange gain/loss
|
3,716
|
-
|
3,716
|
||
Impairments
|
-
|
-
|
-
|
||
Balance, December 31, 2012
|
$607,319
|
$383,406
|
$990,725
|
As of December 31, 2012
|
|||||
Gross
|
Accumulated Amortization
|
Net
|
|||
Trademarks, Copyrights
|
$544,369
|
$456,836
|
$87,533
|
||
Non-Compete Agreements
|
183,216
|
125,216
|
58,000
|
||
$727,585
|
$582,052
|
$145,533
|
As of December 31, 2011
|
|||||
Gross
|
Accumulated Amortization
|
Net
|
|||
Trademarks, Copyrights
|
$544,369
|
$425,418
|
$118,951
|
||
Non-Compete Agreements
|
182,365
|
114,024
|
68,341
|
||
$726,734
|
$539,442
|
$187,292
|
Leather Factory
|
Tandy Leather
|
Total
|
|
2013
|
$768
|
$33,337
|
$34,105
|
2014
|
455
|
33,337
|
33,792
|
2015
|
-
|
28,635
|
28,635
|
2016
|
-
|
2,000
|
2,000
|
2017
|
-
|
-
|
-
|
·
|
Fair value of financial Instruments
|
·
|
Income taxes
|
·
|
Stock-based compensation
|
Weighted Average Exercise Price
|
# of shares
|
Weighted Average Remaining Contractual Term (in years)
|
Aggregate Intrinsic Value
|
|
Outstanding, January 1, 2011
|
$4.35
|
103,600
|
||
Granted
|
4.80
|
12,000
|
||
Cancelled
|
-
|
-
|
||
Exercised
|
-
|
-
|
||
Outstanding, December 31, 2011
|
$4.40
|
115,600
|
5.15
|
$206,332
|
Exercisable, December 31, 2011
|
$4.40
|
115,600
|
5.15
|
$206,332
|
Outstanding, January 1, 2012
|
$4.40
|
115,600
|
||
Granted
|
5.27
|
12,000
|
||
Cancelled
|
-
|
-
|
||
Exercised
|
3.50
|
(6,000)
|
||
Outstanding, December 31, 2012
|
$4.53
|
121,600
|
4.83
|
$206,760
|
Exercisable, December 31, 2012
|
$4.53
|
121,600
|
4.83
|
$206,760
|
2012
|
2011
|
2010
|
|
Weighted average grant-date fair value of stock options granted
|
$0.83
|
$1.19
|
$1.42
|
Total fair value of stock options vested
|
$10,000
|
$14,257
|
$18,388
|
Total intrinsic value of stock options exercised
|
$9,572
|
N/A
|
$114,603
|
·
|
Comprehensive income
|
·
|
Shipping and handling costs
|
·
|
Advertising
|
·
|
Cash flows presentation
|
·
|
Allowance for uncollectible accounts
|
Year ended:
|
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
|
December 31, 2012
|
$80,926
|
-
|
77,143
|
242
|
(46,315)
|
$111,996
|
December 31, 2011
|
$146,929
|
-
|
(45,315)
|
156
|
(20,844)
|
$80,926
|
December 31, 2010
|
$136,023
|
-
|
25,348
|
595
|
(15,037)
|
$146,929
|
·
|
Sales returns and defective merchandise
|
·
|
Slow-moving and obsolete inventory
|
December 31, 2012
|
December 31, 2011
|
||
INVENTORY
|
|||
On hand:
|
|||
Finished goods held for sale
|
$24,039,846
|
$17,742,298
|
|
Raw materials and work in process
|
495,182
|
479,686
|
|
Inventory in transit
|
1,327,756
|
1,718,267
|
|
TOTAL
|
$25,862,784
|
$19,940,251
|
|
PROPERTY AND EQUIPMENT
|
|||
Building
|
$6,412,861
|
$6,412,861
|
|
Land
|
1,451,132
|
1,451,132
|
|
Leasehold improvements
|
652,641
|
636,526
|
|
Equipment and machinery
|
4,124,553
|
3,851,697
|
|
Furniture and fixtures
|
3,034,128
|
2,576,593
|
|
Vehicles
|
77,396
|
71,017
|
|
Construction in progress
|
1,822,184
|
-
|
|
17,574,895
|
14,999,826
|
||
Less: accumulated depreciation
|
(5,630,305)
|
(4,700,476)
|
|
TOTAL
|
$11,944,590
|
$10,299,350
|
|
OTHER CURRENT ASSETS
|
|||
Accounts receivable – employees
|
$47,533
|
$53,282
|
|
Accounts receivable – other
|
17,195
|
5,689
|
|
Prepaid expenses
|
781,845
|
744,679
|
|
Payments for merchandise not received
|
83,341
|
144,809
|
|
TOTAL
|
$929,913
|
$948,459
|
|
OTHER ASSETS
|
|||
Security deposits - utilities, locations, etc.
|
$84,695
|
$89,240
|
|
Leather art collection
|
252,000
|
252,000
|
|
TOTAL
|
$336,695
|
$341,240
|
|
ACCRUED EXPENSES AND OTHER LIABILITIES
|
|
|
|
Accrued bonuses
|
$2,238,057
|
$1,955,012
|
|
Accrued payroll
|
629,636
|
527,540
|
|
Deferred revenue
|
826,467
|
747,335
|
|
Sales and payroll taxes payable
|
295,482
|
293,155
|
|
Inventory in transit
|
1,327,756
|
799,647
|
|
Other
|
611,400
|
318,502
|
|
TOTAL
|
$5,928,798
|
$4,641,191
|
2012
|
2011
|
||
Credit Agreement with JPMorgan Chase Bank – collateralized by real estate; payable as follows:
|
|||
Line of Credit Note dated July 31, 2007, converted to a 10-year term note on April 30, 2008; $16,875 monthly principal payments plus interest at 7.1% per annum; matures April 30, 2018
|
$ 3,105,000
|
$ 3,307,500
|
|
3,105,000
|
3,307,500
|
||
Less - Current maturities
|
(202,500)
|
(202,500)
|
|
$2,902,500
|
$3,105,000
|
2013
|
$202,500
|
2014
|
202,500
|
2015
|
202,500
|
2016
|
202,500
|
2017
|
202,500
|
2018
|
2,092,500
|
$3,105,000
|
Year Ended December 31,
|
Maximum Matching Contribution per Participant*
|
Total Matching Contribution
|
2012
|
$7,500
|
$308,567
|
2011
|
$7,350
|
$217,539
|
2010
|
$7,350
|
$199,716
|
2012
|
2011
|
2010
|
||||
Current provision:
|
||||||
Federal
|
$3,054,862
|
$2,155,653
|
$2,121,604
|
|||
State
|
415,244
|
375,336
|
286,171
|
|||
3,470,106
|
2,530,989
|
2,407,775
|
||||
Deferred provision (benefit):
|
||||||
Federal
|
(107,843)
|
229,540
|
(80,991)
|
|||
State
|
(12,688)
|
27,004
|
(9,529)
|
|||
(120,531)
|
256,544
|
(90,520)
|
||||
$3,349,575
|
$2,787,533
|
$2,317,255
|
2012
|
2011
|
2010
|
|||
United States
|
$7,941,689
|
$6,344,634
|
$5,670,352
|
||
United Kingdom
|
509,426
|
476,414
|
319,290
|
||
Canada
|
999,609
|
945,041
|
486,981
|
||
Australia
|
(210,372)
|
(131,467)
|
-
|
||
Spain
|
(294,707)
|
(93,120)
|
-
|
||
$8,945,645
|
$7,541,502
|
$6,476,623
|
2012
|
2011
|
||
Deferred income tax assets:
|
|||
Allowance for doubtful accounts
|
$39,310
|
$30,729
|
|
Capitalized inventory costs
|
200,017
|
147,135
|
|
Warrants and stock-based compensation
|
54,042
|
54,042
|
|
Accrued expenses, reserves, and other
|
110,151
|
103,387
|
|
Total deferred income tax assets
|
403,520
|
335,293
|
|
Deferred income tax liabilities:
|
|||
Property and equipment depreciation
|
689,893
|
758,024
|
|
Goodwill and other intangible assets amortization
|
170,674
|
154,847
|
|
Total deferred income tax liabilities
|
860,567
|
912,871
|
|
Net deferred tax asset (liability)
|
$(457,047)
|
$(577,578)
|
2012
|
2011
|
||
Current deferred tax assets
|
$349,478
|
$281,251
|
|
Long-term deferred tax liabilities
|
(806,525)
|
(858,829)
|
|
Net deferred tax asset (liability)
|
$(457,047)
|
$(577,578)
|
2012
|
2011
|
2010
|
||
Statutory rate – Federal US income tax
|
34%
|
34%
|
34%
|
|
State and local taxes
|
4%
|
4%
|
4%
|
|
Non-U.S. income tax at different rates
|
1%
|
2%
|
-
|
|
Domestic production activities deduction
|
(1%)
|
(1%)
|
(1%)
|
|
Other, net
|
(1%)
|
(2%)
|
(1%)
|
|
Effective rate
|
37%
|
37%
|
36%
|
Year ending December 31:
|
|
2013
|
$2,950,179
|
2014
|
2,348,945
|
2015
|
1,768,549
|
2016
|
1,127,051
|
2017
|
634,742
|
2018
|
65,728
|
Total minimum lease payments
|
$8,895,194
|
a)
|
Stock Option Plan
|
|
2012
|
2011
|
2010
|
|||||||||
Weighted
|
Weighted
|
Weighted
|
||||||||||
Average
|
Average
|
Average
|
||||||||||
Option
|
Exercise
|
Option
|
Exercise
|
Option
|
Exercise
|
|||||||
Shares
|
Price
|
Shares
|
Price
|
Shares
|
Price
|
|||||||
Outstanding at January 1
|
115,600
|
$4.40
|
103,600
|
$4.35
|
197,700
|
$2.23
|
||||||
Granted
|
12,000
|
5.27
|
12,000
|
4.80
|
42,600
|
4.59
|
||||||
Forfeited or expired
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||
Exchanged
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||
Exercised
|
(6,000)
|
|
3.50
|
-
|
|
-
|
(136,700)
|
1.65
|
||||
Outstanding at December 31
|
121,600
|
$4.53
|
115,600
|
$4.40
|
103,600
|
$4.35
|
||||||
Exercisable at end of year
|
121,600
|
$4.53
|
115,600
|
$4.40
|
70,000
|
$4.33
|
||||||
Weighted-average fair value of
|
||||||||||||
options granted during year
|
$0.83
|
$1.19
|
$1.42
|
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)
|
||||||
$2.72 to $3.90
|
4,000
|
$3.885
|
1.24
|
4,000
|
$3.885
|
1.24
|
||||||
$3.91 to $5.30
|
117,600
|
4.553
|
4.96
|
117,600
|
4.553
|
4.96
|
||||||
121,600
|
$4.53
|
4.83
|
121,600
|
$4.53
|
4.83
|
b)
|
Stock Repurchase Program
|
c)
|
Cash Dividend
|
2012
|
2011
|
2010
|
|
Sales
|
-
|
-
|
$(419)
|
Earnings before income taxes
|
-
|
-
|
$877
|
Current provision (benefit):
|
|||
Federal
|
-
|
$(1,394)
|
$701
|
State
|
-
|
26
|
(2,261)
|
-
|
(1,368)
|
(1,560)
|
|
Deferred provision (benefit):
|
|||
Federal
|
-
|
-
|
617
|
State
|
-
|
-
|
54
|
-
|
-
|
671
|
|
-
|
$(1,368)
|
$(889)
|
a.
|
Wholesale Leathercraft, which consists of a chain of wholesale stores operating under the name, The Leather Factory, located in North America;
|
b.
|
Retail Leathercraft, which consists of a chain of retail stores operating under the name, Tandy Leather Company, located in North America;
|
c.
|
International Leathercraft, which sells to both wholesale and retail customers. We have one store located in Northampton, United Kingdom which opened in February 2008, one store located in Sydney, Australia which opened in October 2011, and one store located in Jerez, Spain which opened in January 2012. These stores carry the same products as our North American stores.
|
Wholesale Leathercraft
|
Retail Leathercraft
|
International Leathercraft
|
Total
|
|
For the year ended December 31, 2012
|
||||
Net Sales
|
$26,850,002
|
$42,616,546
|
$3,254,076
|
$72,720,624
|
Gross Profit
|
18,063,191
|
25,833,852
|
2,008,631
|
45,905,674
|
Operating earnings
|
3,730,678
|
5,436,745
|
(23,418)
|
9,144,005
|
Interest expense
|
240,934
|
-
|
-
|
240,934
|
Other, net
|
(14,498)
|
(13)
|
(27,763)
|
(42,574)
|
Income before income taxes
|
3,504,542
|
5,436,758
|
4,345
|
8,945,645
|
Depreciation and amortization
|
820,622
|
193,394
|
54,210
|
1,068,226
|
Fixed asset additions
|
2,111,569
|
496,846
|
77,806
|
2,686,221
|
Total assets
|
$36,535,099
|
$10,037,416
|
$2,515,157
|
$49,087,672
|
For the year ended December 31, 2011
|
||||
Net Sales
|
$26,540,899
|
$37,435,832
|
$2,126,216
|
$66,102,947
|
Gross Profit
|
16,268,075
|
22,645,847
|
1,423,237
|
40,337,159
|
Operating earnings
|
2,803,034
|
4,656,067
|
247,549
|
7,706,650
|
Interest expense
|
248,576
|
-
|
-
|
248,576
|
Other, net
|
(79,149)
|
-
|
(4,279)
|
(83,428)
|
Income before income taxes
|
2,642,586
|
4,647,089
|
251,827
|
7,541,502
|
Depreciation and amortization
|
841,058
|
158,804
|
16,699
|
1,016,561
|
Fixed asset additions
|
535,713
|
350,570
|
214,240
|
1,100,523
|
Total assets
|
$35,966,965
|
$7,185,016
|
$2,350,934
|
$45,502,915
|
For the year ended December 31, 2010
|
||||
Net Sales
|
$25,908,177
|
$32,291,442
|
$1,693,251
|
$59,892,870
|
Gross Profit
|
15,731,593
|
19,439,045
|
1,080,219
|
36,250,857
|
Operating earnings
|
2,690,061
|
3,614,856
|
330,694
|
6,635,611
|
Interest expense
|
265,405
|
-
|
-
|
265,405
|
Other, net
|
(125,700)
|
8,756
|
11,404
|
(105,540)
|
Income before income taxes
|
2,550,356
|
3,606,100
|
319,290
|
6,475,746
|
Depreciation and amortization
|
826,515
|
132,217
|
13,677
|
972,409
|
Fixed asset additions
|
1,372,040
|
179,703
|
1,596
|
1,553,339
|
Total assets
|
$33,595,847
|
$6,230,213
|
$769,514
|
$40,595,574
|
2012
|
2011
|
2010
|
|
United States
|
$61,041,650
|
$56,337,737
|
$51,561,070
|
Canada
|
7,496,840
|
6,714,100
|
5,862,857
|
All other countries
|
4,182,134
|
3,051,110
|
2,468,943
|
$72,720,624
|
$66,102,947
|
$59,892,870
|
First
|
Second
|
Third
|
Fourth
|
||
2012
|
Quarter
|
Quarter
|
Quarter
|
Quarter
|
|
Net sales
|
$18,177,078
|
$16,904,254
|
$17,000,728
|
$20,638,564
|
|
Gross profit
|
11,365,633
|
10,940,201
|
10,404,770
|
13,195,070
|
|
Net income from continuing operations
|
1,574,105
|
1,539,639
|
280,770
|
2,201,556
|
|
Net income
|
1,574,105
|
1,539,639
|
280,770
|
2,201,556
|
|
Net income from continuing operations per common share:
|
|||||
Basic
|
0.15
|
0.15
|
0.03
|
0.22
|
|
Diluted
|
0.15
|
0.15
|
0.03
|
0.22
|
|
Net income per common share:
|
|||||
Basic
|
0.15
|
0.15
|
0.03
|
0.22
|
|
Diluted
|
0.15
|
0.15
|
0.03
|
0.22
|
|
Weighted average number of common shares outstanding:
|
|||||
Basic
|
10,156,442
|
10,156,442
|
10,156,442
|
10,159,877
|
|
Diluted
|
10,172,950
|
10,172,171
|
10,177,466
|
10,178,759
|
|
First
|
Second
|
Third
|
Fourth
|
||
2011
|
Quarter
|
Quarter
|
Quarter
|
Quarter
|
|
Net sales
|
$15,879,040
|
$15,933,921
|
$15,385,421
|
$18,904,565
|
|
Gross profit
|
9,524,848
|
9,845,254
|
9,238,278
|
11,728,779
|
|
Net income from continuing operations
|
1,150,576
|
1,076,356
|
830,474
|
1,696,563
|
|
Net income
|
1,150,576
|
1,076,356
|
829,106
|
1,696,563
|
|
Net income from continuing operations per common share:
|
|||||
Basic
|
0.11
|
0.11
|
0.08
|
0.17
|
|
Diluted
|
0.11
|
0.11
|
0.08
|
0.17
|
|
Net income per common share:
|
|||||
Basic
|
0.11
|
0.11
|
0.08
|
0.17
|
|
Diluted
|
0.11
|
0.11
|
0.08
|
0.17
|
|
Weighted average number of common shares outstanding:
|
|||||
Basic
|
10,156,442
|
10,156,442
|
10,156,442
|
10,156,442
|
|
Diluted
|
10,169,701
|
10,168,098
|
10,168,326
|
10,166,658
|
·
|
Consolidated Balance Sheets at December 31, 2012 and 2011
|
·
|
Consolidated Statements of Income for the years ended December 31, 2012, 2011 and 2010
|
·
|
Consolidated Statements of Comprehensive Income for the years ended December 31, 2012, 2011 and 2010
|
·
|
Consolidated Statements of Cash Flows for the years ended December 31, 2012, 2011 and 2010
|
·
|
Consolidated Statements of Stockholders' Equity for the years ended December 31, 2012, 2011 and 2010
|
By:
|
/s/ Jon Thompson
|
|
Jon Thompson
|
||
Chief Executive Officer and President
|
||
By:
|
/s/ Shannon L. Greene
|
|
Shannon L. Greene
|
||
Chief Financial Officer, Chief Accounting Officer and Treasurer
|
Signature
|
Title
|
Date
|
/s/ Joseph R. Mannes
|
Chairman of the Board
|
March 28, 2013
|
Joseph R. Mannes
|
||
/s/ Jon W. Thompson
|
Chief Executive Officer, President and Director
|
March 28, 2013
|
Jon Thompson
|
||
/s/ Shannon L. Greene
|
Chief Financial Officer, Chief Accounting Officer, Treasurer and Director
|
March 28, 2013
|
Shannon L. Greene
|
||
/s/ Mark J. Angus
|
Senior Vice President, Assistant Secretary and Director
|
March 28, 2013
|
Mark J. Angus
|
||
/s/ William M. Warren
|
Secretary, General Counsel and Director
|
March 28, 2013
|
William M. Warren
|
||
/s/ T. Field Lange
|
Director
|
March 28, 2013
|
T. Field Lange
|
||
/s/ L. Edward Martin III
|
Director
|
March 28, 2013
|
L. Edward Martin III
|
||
/s/ Michael A. Nery
|
Director
|
March 28, 2013
|
Michael A. Nery
|
||
/s/ J. Bryan Wilkinson
|
Director
|
March 28, 2013
|
J. Bryan Wilkinson
|
TANDY LEATHER FACTORY, INC. AND SUBSIDIARIES
EXHIBIT INDEX
|
|
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 Tandy Leather Factory, Inc.’s Quarterly Report on Form 10-Q filed 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.
|
10.1
|
2007 Director Non-qualified Stock Option Plan of Tandy Leather Factory, Inc. dated March 22, 2007, filed as an Exhibit to Tandy Leather Factory, Inc.’s Definitive Proxy Statement, filed with the Securities and Exchange Commission on April 18, 2007 and incorporated by reference herein.
|
10.2
|
Agreement of Purchase and Sale, dated June 25, 2007, by and between Standard Motor Products, Inc. and Tandy Leather Factory, L.P., filed as Exhibit 10.2 to Tandy Leather Factory’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 30, 2011 and incorporated by reference herein.
|
10.3
|
Credit Agreement, dated July 31, 2007, by and between The Leather Factory, L.P. and JPMorgan Chase Bank, N.A., filed as Exhibit 10.2 to Tandy Leather Factory’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 6, 2007 and incorporated by reference herein.
|
10.4
|
Line of Credit Note, dated July 31, 2007, by and between The Leather Factory, L.P. and JPMorgan Chase Bank, N.A., filed as Exhibit 10.1 to Tandy Leather Factory’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 6, 2007 and incorporated by reference herein.
|
10.5
|
Deed Of Trust, Assignment of Leases and Rents, Security Agreement and Financing Statement, dated as of July 31, 2007, by and among The Leather Factory, L.P., Randall B. Durant and JPMorgan Chase Bank, N.A., filed as Exhibit 10.3 to Tandy Leather Factory’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 6, 2007 and incorporated by reference herein.
|
10.6
|
Consultation Agreement, dated as of June 1, 2011, by and between Tandy Leather Factory, Inc. and J. Wray Thompson, filed as Exhibit 10.1 to Tandy Leather Factory’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 25, 2011 and incorporated by reference herein.
|
10.7
|
Consultation Agreement, dated as of June 1, 2012, by and between Tandy Leather Factory, Inc. and J. Wray Thompson, filed as Exhibit 10.1 to Tandy Leather Factory’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 18, 2012 and incorporated by reference herein.
|
10.8
|
Line of Credit Note, dated June 21, 2012, by and between The Leather Factory, L.P. and JPMorgan Chase Bank, N.A., filed as Exhibit 10.1 to Tandy Leather Factory’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 14, 2012 and incorporated by reference herein.
|
10.9
|
Settlement Agreement, dated September 24, 2012, filed as Exhibit 10.1 to Tandy Leather Factory’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on September 28, 2012 and incorporated by reference herein.
|
10.10
|
Form of Change of Control Agreement between the Company and each of Jon Thompson, Shannon Greene and Mark Angus, each effective as of December 3, 2012, filed as Exhibit 10.1 to Tandy Leather Factory’s Current Report on Form 8-K filed with the Securities and Exchange Commission on December 6, 2012 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.
|
*31.1
|
Certification by the Chief Executive Officer and President pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934
|
*31.2
|
Certification by the Chief Financial Officer and Treasurer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934
|
*32.1
|
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
101.INS^
|
XBRL Instance Document
|
101.SCH^
|
XBRL Taxonomy Extension Schema Document
|
101.CAL^
|
XBRL Taxonomy Extension Calculation Document
|
101.DEF^
|
XBRL Taxonomy Extension Definition Document
|
101.LAB^
|
XBRL Taxonomy Extension Labels Document
|
101.PRE^
|
XBRL Taxonomy Extension Presentation Document
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ Jon Thompson
|
|
Jon Thompson
|
|
Chief Executive Officer and President
|
|
(principal executive officer)
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ Shannon L. Greene
|
|
Shannon L. Greene
|
|
Chief Financial Officer and Treasurer
|
|
(principal financial officer)
|
i.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
ii.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
March 28, 2013
|
By: /s/ Jon Thompson
|
Jon Thompson
|
|
Chief Executive Officer and President
|
|
March 28, 2013
|
By: /s/ Shannon L. Greene
|
Shannon L. Greene
|
|
Chief Financial Officer and Treasurer
|
Note 2 - Significant Accounting Policies (Detail) - Intangible assets and related accumulated amortization consisted of the following: (USD $)
|
Dec. 31, 2012
|
Dec. 31, 2011
|
---|---|---|
Accumulated Amortization | $ 582,000 | $ 539,000 |
Net | 145,533 | 187,292 |
Trademarks [Member]
|
||
Gross | 544,369 | 544,369 |
Accumulated Amortization | 456,836 | 425,418 |
Net | 87,533 | 118,951 |
Noncompete Agreements [Member]
|
||
Gross | 183,216 | 182,365 |
Accumulated Amortization | 125,216 | 114,024 |
Net | 58,000 | 68,341 |
Total [Member]
|
||
Gross | 727,585 | 726,734 |
Accumulated Amortization | 582,052 | 539,442 |
Net | $ 145,533 | $ 187,292 |
Note 8 - Income Taxes (Detail) - The provision for income taxes consists of the following: (USD $)
|
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2012
|
Dec. 31, 2011
|
Dec. 31, 2010
|
|
Current provision: | |||
Federal | $ 3,054,862 | $ 2,155,653 | $ 2,121,604 |
State | 415,244 | 375,336 | 286,171 |
3,470,106 | 2,530,989 | 2,407,775 | |
Deferred provision (benefit): | |||
Federal | (107,843) | 229,540 | (80,991) |
State | (12,688) | 27,004 | (9,529) |
(120,531) | 256,544 | (90,520) | |
$ 3,349,575 | $ 2,787,533 | $ 2,317,255 |
Note 6 - Notes Payable And Long-Term Debt (Detail) (USD $)
|
0 Months Ended | 1 Months Ended | 7 Months Ended | 25 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|---|---|
Apr. 30, 2008
|
Jul. 31, 2007
|
Jul. 31, 2007
|
Jul. 31, 2012
|
Dec. 31, 2012
|
Dec. 31, 2011
|
Jul. 31, 2007
Building [Member]
sqft
|
Jul. 31, 2007
Land [Member]
acre
|
Dec. 31, 2012
JPMorgan Chase Bank [Member]
|
Jul. 12, 2012
JPMorgan Chase Bank [Member]
|
|
Line of Credit Facility, Maximum Borrowing Capacity (in Dollars) | $ 5,500,000 | $ 5,500,000 | $ 4,000,000 | |||||||
Area of Real Estate Property (in Square feet) | 191,000 | 30 | ||||||||
Area of Real Estate Property (in Acres) | 191,000 | 30 | ||||||||
Line of Credit Facility, Capacity Available for Specific Purpose Other than for Trade Purchases (in Dollars) | 5,500,000 | 5,500,000 | ||||||||
Line Of Credit Facility Covenant Percentage | 90.00% | |||||||||
Debt Instrument Maturity Period | 10 years | |||||||||
Debt Instrument, Interest Rate, Stated Percentage | 7.10% | 7.10% | 7.10% | |||||||
Proceeds from Bank Debt (in Dollars) | $ 4,050,000 | |||||||||
Line of Credit Facility, Covenant Terms | 1.2 to 1.0 | |||||||||
Debt Instrument, Basis Spread on Variable Rate | 2.2087% | 2.00% |
Note 16 - Quarterly Financial Data (Unaudited) (Detail) - Summary of Quarterly Financial Data (Unaudited) (USD $)
|
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2012
|
Dec. 31, 2011
|
Dec. 31, 2010
|
|
Gross profit (in Dollars) | $ 45,905,674 | $ 40,337,159 | $ 36,250,857 |
Net income from continuing operations (in Dollars) | 5,596,070 | 4,753,969 | 4,158,491 |
Net income (in Dollars) | 5,596,070 | 4,752,601 | 4,160,257 |
Basic | $ 0.55 | $ 0.47 | $ 0.41 |
Diluted | $ 0.55 | $ 0.47 | $ 0.41 |
Basic | $ 0.55 | $ 0.47 | $ 0.41 |
Diluted | $ 0.55 | $ 0.47 | $ 0.41 |
Diluted (in Shares) | 10,175,346 | 10,182,098 | 10,251,863 |
First Quarter [Member]
|
|||
Net sales (in Dollars) | 18,177,078 | 15,879,040 | |
Gross profit (in Dollars) | 11,365,633 | 9,524,848 | |
Net income from continuing operations (in Dollars) | 1,574,105 | 1,150,576 | |
Net income (in Dollars) | 1,574,105 | 1,150,576 | |
Basic | $ 0.15 | $ 0.11 | |
Diluted | $ 0.15 | $ 0.11 | |
Basic | $ 0.15 | $ 0.11 | |
Diluted | $ 0.15 | $ 0.11 | |
Basic (in Shares) | 10,156,442 | 10,156,442 | |
Diluted (in Shares) | 10,172,950 | 10,169,701 | |
Second Quarter [Member]
|
|||
Net sales (in Dollars) | 16,904,254 | 15,933,921 | |
Gross profit (in Dollars) | 10,940,201 | 9,845,254 | |
Net income from continuing operations (in Dollars) | 1,539,639 | 1,076,356 | |
Net income (in Dollars) | 1,539,639 | 1,076,356 | |
Basic | $ 0.15 | $ 0.11 | |
Diluted | $ 0.15 | $ 0.11 | |
Basic | $ 0.15 | $ 0.11 | |
Diluted | $ 0.15 | $ 0.11 | |
Basic (in Shares) | 10,156,442 | 10,156,442 | |
Diluted (in Shares) | 10,172,171 | 10,168,098 | |
Third Quarter [Member]
|
|||
Net sales (in Dollars) | 17,000,728 | 15,385,421 | |
Gross profit (in Dollars) | 10,404,770 | 9,238,278 | |
Net income from continuing operations (in Dollars) | 280,770 | 830,474 | |
Net income (in Dollars) | 280,770 | 829,106 | |
Basic | $ 0.03 | $ 0.08 | |
Diluted | $ 0.03 | $ 0.08 | |
Basic | $ 0.03 | $ 0.08 | |
Diluted | $ 0.03 | $ 0.08 | |
Basic (in Shares) | 10,156,442 | 10,156,442 | |
Diluted (in Shares) | 10,177,466 | 10,168,326 | |
Fourth Quarter [Member]
|
|||
Net sales (in Dollars) | 20,638,564 | 18,904,565 | |
Gross profit (in Dollars) | 13,195,070 | 11,728,779 | |
Net income from continuing operations (in Dollars) | 2,201,556 | 1,696,563 | |
Net income (in Dollars) | $ 2,201,556 | $ 1,696,563 | |
Basic | $ 0.22 | $ 0.17 | |
Diluted | $ 0.22 | $ 0.17 | |
Basic | $ 0.22 | $ 0.17 | |
Diluted | $ 0.22 | $ 0.17 | |
Basic (in Shares) | 10,159,877 | 10,156,442 | |
Diluted (in Shares) | 10,178,759 | 10,166,658 |
Note 8 - Income Taxes (Detail) - Income before income taxes is earned in the following tax jurisdictions: (USD $)
|
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2012
|
Dec. 31, 2011
|
Dec. 31, 2010
|
|
United States [Member]
|
|||
United States | $ 7,941,689 | $ 6,344,634 | $ 5,670,352 |
United Kingdom [Member]
|
|||
Income before income taxes is earned in the following tax jurisdictions | 509,426 | 476,414 | 319,290 |
Canada [Member]
|
|||
Income before income taxes is earned in the following tax jurisdictions | 999,609 | 945,041 | 486,981 |
Australia [Member]
|
|||
Income before income taxes is earned in the following tax jurisdictions | (210,372) | (131,467) | |
Spain [Member]
|
|||
Income before income taxes is earned in the following tax jurisdictions | (294,707) | (93,120) | |
Total [Member]
|
|||
Income before income taxes is earned in the following tax jurisdictions | $ 8,945,645 | $ 7,541,502 | $ 6,476,623 |
Note 5 - Balance Sheet Components (Detail) (USD $)
|
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2012
|
Dec. 31, 2011
|
Dec. 31, 2010
|
|
Depreciation | $ 1,026,467 | $ 971,628 | $ 895,988 |
Gain (Loss) on Disposition of Assets | (21,092) | 84,168 | 49,154 |
Retail Leathercraft [Member]
|
|||
Gain (Loss) on Disposition of Assets | (13,536) | 13,884 | 11,849 |
Wholesale Leathercraft [Member]
|
|||
Gain (Loss) on Disposition of Assets | (6,232) | 70,284 | 37,305 |
Int’l Leathercraft [Member]
|
|||
Gain (Loss) on Disposition of Assets | $ (1,324) |
Note 13 - Discontinued Operations (Tables)
|
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2012
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Condensed Income Statement [Table Text Block] |
|
Note 8 - Income Taxes (Detail) - The net deferred tax liability is classified on the balance sheets as follows: (USD $)
|
Dec. 31, 2012
|
Dec. 31, 2011
|
---|---|---|
Current deferred tax assets | $ 349,478 | $ 281,251 |
Long-term deferred tax liabilities | (806,525) | (858,829) |
Net deferred tax asset (liability) | $ (457,047) | $ (577,578) |
Note 2 - Significant Accounting Policies (Tables)
|
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2012
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Calculation of Numerator and Denominator in Earnings Per Share [Table Text Block] |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Goodwill [Table Text Block] |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Finite-Lived Intangible Assets [Table Text Block] |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block] |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block] |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block] |
|
Note 6 - Notes Payable And Long-Term Debt (Detail) - Summary of Credit Agreement and Line of Credit Note: (Parentheticals) (USD $)
|
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2012
|
Dec. 31, 2011
|
Apr. 30, 2008
|
|
Term of note | 10 years | 10 years | |
Monthly principal payments (in Dollars) | $ 16,875 | $ 16,875 | |
Interest rate | 7.10% | 7.10% | 7.10% |
Note 2 - Significant Accounting Policies (Detail) - Other information pertaining to option activity: (USD $)
|
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2012
|
Dec. 31, 2011
|
Dec. 31, 2010
|
|
Weighted average grant-date fair value of stock options granted (in Dollars per share) | $ 0.83 | $ 1.19 | $ 1.42 |
Total fair value of stock options vested | $ 10,000 | $ 14,257 | $ 18,388 |
Total intrinsic value of stock options exercised | $ 9,572 | $ 114,603 |
Note 2 - Significant Accounting Policies (Detail) - Basic earnings per share are computed based on the weighted average number of common shares outstanding during the period: (USD $)
|
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2012
|
Dec. 31, 2011
|
Dec. 31, 2010
|
|
Net income (in Dollars) | $ 5,596,070 | $ 4,752,601 | $ 4,160,257 |
Weighted average common shares outstanding | 10,157,395 | 10,156,442 | 10,208,944 |
Earnings per share – basic (in Dollars per share) | $ 0.55 | $ 0.47 | $ 0.41 |
DILUTED | |||
Effect of assumed exercise of stock options and warrants | 17,951 | 25,656 | 42,919 |
Weighted average common shares outstanding, assuming dilution | 10,175,346 | 10,182,098 | 10,251,863 |
Earnings per share - diluted (in Dollars per share) | $ 0.55 | $ 0.47 | $ 0.41 |
Outstanding options and warrants excluded as anti-dilutive | 25,000 | 13,000 |
Note 7 - Employee Benefit And Savings Plans (Detail)
|
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2012
|
Dec. 31, 2011
|
Dec. 31, 2010
|
|
Defined Contribution Plan, Employer Matching Contribution, Percent | 100.00% | 100.00% | 100.00% |
Defined Contribution Plan, Maximum Annual Contribution Per Employee, Percent | 3.00% | 3.00% | 3.00% |
Note 14 - Segment Information (Detail)
|
12 Months Ended |
---|---|
Dec. 31, 2012
|
|
Number of Operating Segments | 3 |
Note 10 - Significant Business Concentrations And Risk (Detail)
|
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2012
|
Dec. 31, 2011
|
Dec. 31, 2010
|
|
Number of Major Customers | 5 | ||
Concentration Risk, Supplier | one | ||
Customer Concentration Risk [Member]
|
|||
Concentration Risk, Percentage | 30.00% | 34.00% | 32.00% |
Consolidated Revenues [Member]
|
|||
Concentration Risk, Percentage | 2.00% | 2.00% | 2.00% |
Sales Revenue, Goods, Net [Member]
|
|||
Concentration Risk, Percentage | 5.50% | 5.50% | |
Entity-Wide Revenue, Major Customer, Percentage | 2.90% |
Note 5 - Balance Sheet Components (Detail) - Summary of balance sheet components (USD $)
|
Dec. 31, 2012
|
Dec. 31, 2011
|
---|---|---|
INVENTORY | ||
Finished goods held for sale | $ 24,039,846 | $ 17,742,298 |
Raw materials and work in process | 495,182 | 479,686 |
Inventory in transit | 1,327,756 | 1,718,267 |
TOTAL | 25,862,784 | 19,940,251 |
PROPERTY AND EQUIPMENT | ||
Building | 6,412,861 | 6,412,861 |
Land | 1,451,132 | 1,451,132 |
Leasehold improvements | 652,641 | 636,526 |
Equipment and machinery | 4,124,553 | 3,851,697 |
Furniture and fixtures | 3,034,128 | 2,576,593 |
Construction in progress | 1,822,184 | |
17,574,895 | 14,999,826 | |
Less: accumulated depreciation | (5,630,305) | (4,700,476) |
TOTAL | 11,944,590 | 10,299,350 |
OTHER CURRENT ASSETS | ||
Accounts receivable – employees | 47,533 | 53,282 |
Accounts receivable – other | 17,195 | 5,689 |
Prepaid expenses | 781,845 | 744,679 |
Payments for merchandise not received | 83,341 | 144,809 |
TOTAL | 929,913 | 948,459 |
OTHER ASSETS | ||
Security deposits - utilities, locations, etc. | 84,695 | 89,240 |
Leather art collection | 252,000 | 252,000 |
TOTAL | 336,695 | 341,240 |
ACCRUED EXPENSES AND OTHER LIABILITIES | ||
Accrued bonuses | 2,238,057 | 1,955,012 |
Accrued payroll | 629,636 | 527,540 |
Deferred revenue | 826,467 | 747,335 |
Sales and payroll taxes payable | 295,482 | 293,155 |
Inventory in transit | 1,327,756 | 799,647 |
Other | 611,400 | 318,502 |
TOTAL | 5,928,798 | 4,641,191 |
Automobiles [Member]
|
||
PROPERTY AND EQUIPMENT | ||
Vehicles | $ 77,396 | $ 71,017 |
Note 2 - Significant Accounting Policies
|
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2012
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Significant Accounting Policies [Text Block] |
2. SIGNIFICANT
ACCOUNTING POLICIES
The
preparation of financial statements in conformity with
accounting principles generally accepted in the United States
of America requires us to make estimates and assumptions that
affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date
of the financial statements and reported amounts of revenues
and expenses during the periods presented. Actual
results could differ from those estimates. Assets
and liabilities with reported amounts based on significant
estimates include trade accounts receivable, inventory
(slow-moving), and deferred income taxes.
Our
consolidated financial statements include the accounts of
Tandy Leather Factory, Inc. and its wholly owned
subsidiaries, The Leather Factory, L.P. (a Texas limited
partnership) and its corporate partners, Tandy Leather
Company, L.P. (a Texas limited partnership) and its corporate
partners, Mid-Continent Leather Sales, Inc. (an Oklahoma
corporation), Roberts, Cushman & Company, Inc. (a Texas
corporation), The Leather Factory of Canada, Ltd. (a Canadian
corporation), Tandy Leather Factory UK Limited (a UK
corporation), Tandy Leather Factory Australia Pty. Limited
(an Australian corporation), and Tandy Leather Factory
España, S.L. (a Spanish corporation). All
intercompany accounts and transactions have been eliminated
in consolidation.
Foreign
currency translation adjustments arise from activities of our
foreign subsidiaries. Results of operations are
translated into U.S. dollars using the average exchange rates
during the period, while assets and liabilities are
translated using period-end exchange
rates. Foreign currency translation adjustments of
assets and liabilities are recorded in stockholders’
equity. Gains and losses resulting from foreign
currency transactions reported in the statements of income
under the caption “Other (Income) Expense”, net,
for all periods presented. We recognized a foreign
currency transaction gain of $26,000 in 2012, and foreign
currency transaction losses of $200 and $187,000 in 2011, and
2010, respectively.
Our
sales generally occur via two methods: (1) at the
store counter, and (2) shipment by common
carrier. Sales at the counter are recorded and
title passes as transactions occur. Otherwise,
sales are recorded and title passes when the merchandise is
shipped to the customer. Shipping terms are
normally FOB shipping point. Sales tax and
comparable foreign tax is excluded from revenue.
We
offer an unconditional satisfaction guarantee to all
customers and accept all product returns. Net
sales represent gross sales less negotiated price allowances,
product returns, and allowances for defective
merchandise.
We
maintain four price levels on a consistent
basis: retail, wholesale, business, and
distributor. Gross sales are reported after
deduction of discounts. We do not pay slotting
fees or make other payments to resellers. Several
customers require us to participate in their cooperative
advertising programs. These programs are a
negotiated percentage of their purchases and are accounted
for as a reduction of sales.
Cost
of goods sold includes inbound freight and duty charges from
vendors to our central warehouse, freight and handling
charges to move merchandise from our central warehouse to our
stores, and manufacturing overhead, as appropriate.
Operating
expenses include all selling, general and administrative
costs including wages and related employee expenses (payroll
taxes, health benefits, savings plans, etc.), advertising,
outbound freight charges (to ship merchandise to customers),
rent, and utilities.
Property
and equipment are stated at cost. Depreciation is
computed using the straight-line method over the estimated
useful lives of the assets, which are five to ten years for
equipment and machinery, five to seven years for furniture
and fixtures, five years for vehicles, and forty years for
buildings and related improvements. Leasehold
improvements are amortized over the lesser of the life of the
lease or the useful life of the asset. Repairs and
maintenance costs are expensed as incurred.
Inventory
is valued at the lower of first-in, first-out cost or
market. In addition, the value of inventory is
periodically reduced to net realizable value for slow-moving
or obsolete inventory based on management's review of items
on hand compared to their estimated future demand.
Potential
impairments of long-lived assets are reviewed annually or
when events and circumstances warrant an earlier
review. Impairment is determined when estimated
future undiscounted cash flows associated with an asset are
less than the asset’s carrying value.
Basic
earnings per share are computed based on the weighted average
number of common shares outstanding during the
period. Diluted earnings per share includes, to
the extent inclusion of such shares would be dilutive to
earnings per share, the effect of outstanding options and
warrants, computed using the treasury stock method.
For
additional disclosures regarding the employee stock options
and the warrants, see Note 11. The net effect of converting
stock options and warrants to purchase 125,600, 90,600, and
90,600 shares of common stock at option prices less than the
average market prices has been included in the computations
of diluted EPS for the years ended December 31, 2012, 2011
and 2010, respectively.
Goodwill
represents the excess of the purchase price over the fair
value of net assets acquired in a business combination.
Goodwill is required to be evaluated for impairment on an
annual basis, absent indicators of impairment during the
interim. Application of the goodwill impairment
test requires exercise of judgment, including the estimation
of future cash flows, determination of appropriate discount
rates and other important assumptions. Changes in these
estimates and assumptions could materially affect the
determination of fair value and/or goodwill impairment for
each reporting unit. Goodwill is not amortized, but is
evaluated at least annually for impairment. We
completed our annual goodwill impairment analysis as of
December 31 in each of the three years ended December 31,
2012, and determined that no adjustment to the carrying value
of goodwill was required.
A
summary of changes in our goodwill for the years ended
December 31, 2012 and 2011 is as follows:
As
of December 31, 2012 and 2011, our intangible assets and
related accumulated amortization consisted of the
following:
Excluding
goodwill, we have no intangible assets not subject to
amortization under U.S. GAAP. Amortization of
intangible assets of $41,759 in 2012, $44,933 in 2011, and
$76,421 in 2010 was recorded in operating
expenses. The weighted average amortization period
is 15 years for trademarks and copyrights. Based
on the current amount of intangible assets subject to
amortization, the estimated amortization expense for each of
the succeeding 5 years is as follows:
We
measure fair value as an exit price, which is the amount that
would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market
participants. As a basis for considering such
assumptions, accounting standards establish a three-tier fair
value hierarchy, which prioritizes the inputs used in the
valuation methodologies in measuring fair value:
Level
1 – observable inputs that reflect quoted prices
(unadjusted) for identical assets or liabilities in active
markets.
Level
2 – include other inputs that are directly or
indirectly observable in the marketplace.
Level
3 – unobservable inputs which are supported by little
or no market activity.
Classification
of the financial asset or liability within the hierarchy is
determined based on the lowest level input that is
significant to the fair value measurement.
Our
principal financial instruments held consist of certificates
of deposit, accounts receivable, accounts payable, notes
payable and long-term debt. The carrying value of
accounts receivable and accounts payable approximate their
fair value due to the relatively short-term nature of the
accounts. The terms of the long-term debt are
considered reasonable for this type of financing; therefore,
the carrying amount approximates fair value.
We
account for income taxes using the asset and liability
method. Under this method, the amount of taxes
currently payable or refundable is accrued, and deferred tax
assets and liabilities are recognized for the estimated
future tax consequences of temporary differences that
currently exist between the tax basis and the financial
reporting basis of our assets and liabilities.
Deferred
tax assets and liabilities are measured using the enacted tax
rates in effect in the years when those temporary differences
are expected to reverse. The effect on deferred
taxes from a change in tax rate is recognized through
continuing operations in the period that includes the
enactment date of the change. Changes in tax laws
and rates could affect recorded deferred tax assets and
liabilities in the future.
A
tax benefit from an uncertain tax position may be recognized
when it is more-likely-than-not that the position will be
sustained upon examination, including resolutions of any
related appeals or litigation processes, based on the
technical merits. Income tax position must meet a
more-likely-than-not recognition threshold to be
recognized.
We
recognize tax liabilities for uncertain tax positions and
adjust these liabilities when our judgment changes as a
result of the evaluation of new information not previously
available. Due to the complexity of some of these
uncertainties, the ultimate resolution may result in a
payment that is materially different from the current
estimate of the tax liabilities. These differences
will be reflected as increases or decreases to income tax
expense and the effective tax rate in the period in which new
information becomes available.
We
may be subject to periodic audits by the Internal Revenue
Service and other taxing authorities. These audits
may challenge certain of our tax positions, such as the
timing and amount of deductions and allocation of taxable
income to the various jurisdictions.
We
have one stock option plan which provides for annual stock
option grants to non-employee directors with an exercise
price equal to the fair market value of the shares at the
date of grant. Under this plan, 12,000 options
were awarded to directors in each of the years 2012 and
2011. These options vest and become exercisable
six months from the option grant date. We had two
other stock option plans from 1995 which provided for stock
option grants to officers, key employees and non-employee
directors. These plans expired in
2005. The expiration of the plans has no effect on
the options previously granted. Options
outstanding and exercisable were granted at a stock option
price which was not less than the fair market value of our
common stock on the date the option was granted and no option
has a term in excess of ten years. We recognized
share based compensation expense of approximately $10,000,
$33,000, and $42,000 for the years ended December 31, 2012,
2011 and 2010, respectively, as a component of operating
expenses.
During
the years ended December 31, 2012 and 2011, the stock option
activity under our stock option plans was as follows:
Other
information pertaining to option activity during the twelve
month periods ended December 31, 2012, 2011 and 2010 are as
follows:
As
of December 31, 2012, there was no unrecognized compensation
cost related to non-vested stock options.
Cash
received from the exercise of stock options for the years
ended December 31, 2012 and 2010 was $20,980, and $170,266,
respectively. No stock options were exercised in
2011.
The
fair value of each stock option granted is estimated on the
date of grant using the BSM option valuation
model. The assumptions used to calculate the fair
value of options granted are evaluated and revised, as
necessary, to reflect market conditions and our
experience. Compensation expense is recognized
only for those options expected to vest, with forfeitures
estimated at the date of grant based on our historical
experience and future expectations.
Comprehensive
income includes net income and certain other items that are
recorded directly to Stockholders’ Equity. The
Company’s only source of other comprehensive income is
foreign currency translation adjustments.
All
shipping and handling costs incurred by us are included in
operating expenses on the statements of
income. These costs totaled approximately
$1,767,000, $1,725,000, and $1,603,000 for the years ended
December 31, 2012, 2011 and 2010, respectively.
With
the exception of catalog costs, advertising costs are
expensed as incurred. Catalog costs are
capitalized and expensed over the estimated useful life of
the particular catalog in question, which is typically twelve
to eighteen months. Such capitalized costs are
included in other current assets and totaled $181,000 and
$145,000 at December 31, 2012 and 2011,
respectively. Total advertising expense was
$3,543,000 in 2012; $2,972,000 in 2011; and $3,002,000 in
2010.
For
purposes of the statement of cash flows, we consider all
highly liquid investments with initial maturities of three
months or less from the date of purchase to be cash
equivalents.
|