FORT WORTH, Texas, April 25 /PRNewswire-FirstCall/ -- The Leather Factory, Inc. (Amex: TLF) today reported results for the first quarter of 2002. Net sales for the quarter ended March 31, 2002 were $10,203,951, up 9% over net sales of $9,372,613 for the same quarter last year. Leather Factory operations contributed 87% of the sales increase while Tandy Leather operations accounted for 13% of the increase. The Company continues to reduce its outstanding debt with the cash generated from operations, reporting a decrease in its debt balance of $1.5 million during the quarter.
As a result of the new accounting pronouncement (SFAS No. 142) adopted by the Company in January 2002, it has been determined that the goodwill on the balance sheet of Roberts, Cushman & Company, Inc., a subsidiary, is impaired and should be written off. This impairment charge of approximately $4 million is included in the Company's consolidated statement of income for the first quarter of 2002. This adjustment results in a loss for the quarter of $3,249,526 or ($0.30) per share (diluted), compared to net income of $497,283 or $0.05 per share for the first quarter of 2001. Without giving effect to SFAS No. 142, the Company would have reported net income of $759,805 or $0.07 per share (diluted) for the first quarter of this year. The Company's lender is expected to waive any non-compliance with financial requirements in our credit agreement attributable to the impairment.
Wray Thompson, Chairman and Chief Executive Officer, commented, "We're pleased with our operating results this quarter as we have once again generated solid earnings and healthy cash flow. The goodwill write-off is disappointing as it reflects an underperformance of that subsidiary since we acquired it in 1995. However, Roberts, Cushman has had encouraging operating results so far in 2002. Our other operating entities are performing well and we continue to work towards positioning the company to take advantage of the growth opportunities as they present themselves. "
The Leather Factory, Inc., (http://www.leatherfactory.com ), headquartered in Fort Worth, Texas, is an international marketer and wholesale distributor of a broad product line including leather, leatherworking tools, buckles and adornments for belts, leather dyes and finishes, shoe repair supplies, saddle and tack hardware, and do-it-yourself kits, and is a manufacturer and distributor of fancy hat trims, leather lacing and kits. The Company distributes its products through 30 sales and distribution units located throughout the U.S. and Canada and through its subsidiary, Tandy Leather Company, via 3 retail stores and mail/telephone/website orders (http://www.tandyleather.com ). Its common stock trades on the American Stock Exchange with the symbol "TLF".
This news release may contain forward-looking statements. All forward- looking statements made here or in other news releases issued by The Leather Factory, Inc. are based on current expectations as of the date of the release. These forward-looking statements involve risks and uncertainties that could cause the results of The Leather Factory, Inc. to differ materially from management's current expectations. Many of these risks and uncertainties are detailed from time to time in TLF's reports filed with the Securities and Exchange Commission, including its most recent annual report on Form 10-K
THE LEATHER FACTORY, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2002 AND 2001
Quarter ended March 31,
2002 2001
NET SALES $ 10,203,951 $ 9,372,613
COST OF SALES 4,835,356 4,488,397
Gross Profit 5,368,595 4,884,216
OPERATING EXPENSES 4,175,136 3,908,877
INCOME FROM OPERATIONS 1,193,459 975,339
OTHER EXPENSE:
Interest expense 89,869 148,593
Other, net 16,355 7,290
Total other expense 106,224 155,884
INCOME BEFORE INCOME TAXES AND
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE 1,087,235 819,455
PROVISION FOR INCOME TAXES 327,930 322,172
NET INCOME BEFORE CUMULATIVE EFFECT
OF CHANGE IN ACCOUNTING PRINCIPLE 759,305 497,283
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE, NET OF INCOME
TAXES (4,008,831) ---
NET INCOME (LOSS) $(3,249,526) $ 497,283
NET INCOME (LOSS) PER COMMON SHARE
- BASIC:
INCOME BEFORE CUMULATIVE EFFECT
OF CHANGE IN ACCTG PRINCIPLE $ 0.08 $ 0.05
CUMULATIVE EFFECT OF CHANGE IN
ACCTG PRINCIPLE, NET OF TAX (0.40) ---
NET INCOME (LOSS) PER COMMON SHARE $ (0.32) $ 0.05
NET INCOME (LOSS) PER COMMON SHARE
- ASSUMING DILUTION:
INCOME BEFORE CUMULATIVE EFFECT
OF CHANGE IN ACCTG PRINCIPLE $ 0.07 $ 0.05
CUMULATIVE EFFECT OF CHANGE IN
ACCTG PRINCIPLE, NET OF TAX (0.37) ---
NET INCOME (LOSS) PER COMMON
SHARE $ (0.30) $ 0.05
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding Tandy Leather Factory, Inc.'s business which are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see "Risk Factors" in the Company's Annual Report or Form 10-K for the most recently ended fiscal year.
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