Good day, ladies and gentlemen and welcome to Tandy Leather Factory Fourth Quarter 2013 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. (Operator Instructions). As a reminder, this conference is being recorded. I would now turn the call over to your host Shannon Greene. Please go ahead.

Thank you. Thank you for joining us for our 2013 earnings conference call. We will be discussing our fourth quarter and year end 2013 results as well as our plans for 2014. I am Shannon Greene, Chief Financial Officer and I'm joined by Jon Thompson, our CEO and Mark Angus, our Senior Vice President. Before we get started, I call your attention to the fact that these conversations will contain forward-looking statements to the extent we speak today of any future events or make other forward-looking statements. You are reminded of the inherent uncertainties of looking into the future that there are risks to Tandy Leather Factory that could prevent these events from occurring in the manner foreseen. Please see our Form 10-K for 2012 and subsequent forms 10-Q for a discussion of some of these risks. Copies of these documents are available to the SEC's EDGAR system and from our Investor Relations office. Also, statements made today by us as management of Tandy Leather Factory are made as of this moment and we disclaim any duty to the update those statements. 2013 was a good year for us. Sales and earnings increased compared to 2012 which is always our goal. We opened three new stores. 2013 added another year to our consecutive year-over-year sales gains and was our 17th consecutive year of operating profit increasing 23% since 2012. In this morning's earnings release, we also provided our 2014 revenue and earnings guidance and will be discussing that in further detail a little later in the call. Here is a quick run [through] of the numbers for the fourth quarter and the year. Quarterly results are as follows, consolidated sales increased 4%, sales were $21.5 million this year compared to $20.6 million in the fourth quarter 2012. Wholesale Leathercraft sales…

Thank you. (Operator Instructions). Our first question comes from Steve Shaw with Sidoti & Company. Your line is open. Steve Shaw - Sidoti & Company: Shannon, how are you?

I’m good. How are you? Steve Shaw - Sidoti & Company: Good. Question on the new stores, do you guys plan on continuing to open up sister stores in some of the stronger markets or you guys looking at new markets?

Probably, I guess it depends on how you look at, I mean for us the LA market always has been underserved, Bay Area moving around San Francisco is a little weak, so we surround some of these areas, but we feel like there is still a lot of room to grow. I guess if you consider sister city (inaudible). Steve Shaw - Sidoti & Company: Okay. Alright, thanks Jon. And then when opening the new stores, do you guys generally see a shift in the mix to more tool purchasing for first time buyers?

No, not really. Generally, it’s across the board product. So, it’s excited to see it there and (inaudible). Steve Shaw - Sidoti & Company: Okay. And then lastly, what’s the current stance or 2014 stance on the marketing plan? I know you guys were ramping up especially now marketing, what’s the plan for ‘14?

2014 is going to be similar to 2013. We’ve tweaked some of the mailings and changed some of the (inaudible) things but overall it’s going to be just the same. Steve Shaw - Sidoti & Company: Okay. All right, thanks guys.

Our next question comes from [Alan Teflon] with -- he’s a private investor. Your line is open. Alan, your line is open.

Hi Alan.

Hi. I was just curious about sales in other countries. Do you have websites? I assume that sales are in local currencies.

Yes. There are multiple currencies and the way our website is set up is that you’re for instance outside the U.S., [user end up] selecting a website like for instance you select UK or the Spain site if you want to buy in euros or pounds, so you can buy from either site. Normally, what we have to set up is the blockade, you want to buying either outside the U.S. or buying in the U.S.

Okay. And then -- okay that kind of answers my question.

All right.

Thank you.

You’re welcome.

Our next question comes from Ron (inaudible) with Tandy Leather Factory. Your line is open.

Hi. Hello?

Yes.

Hello.

I had a question for you, so what -- can you guys estimate how much of your website sales come from other countries ex-North America?

Specific countries or just non-U.S.?

Non-U.S. or Canada?

Yes and no. We can tell obviously the way the website works is when you go to our website, you can select countries. We obviously sell out of 5 total, U.S.; Canada; Spain; Australia; and UK. Then…

And Japan or something, I can go on the website and buy and get it shipped, get products shipped to Japan or some other random country where you don’t have a store?

Yes you can, you absolutely can but you like for Japan, we have -- depending on where you are we’ll have -- those orders will route to whichever country and stores closest. So you are example in Japan, yes if you are in Japan you can order from us, it’s going to -- you are going to be routed because of your address, you are going be routed to the Australia website and our Australia stores going to handle your order because they are closer to you than the U.S. or Europe is.

Okay, thank you. Just one other question; I remember that back when you guys were ramping up Tandy in the U.S., Thompson Sr. said that a lot of the stores would open based on where do they kind of knew the markets did really well. In the new countries that you are going into, what are the factors that you look at when you decide of where to open the store?

Well for us, we have a lot of history for sales from other countries, so we were trying to go in the markets where we already had a lot of dealers and a lot of sales to start with. And so where we ended up being where we already had market, Tandy Leather sold overseas for as long as I can remember and we have when we bought them out, we had their list of sales plus our list. So for instance, the UK was a no brainer because we knew who -- we had a lot of distributors already; same way in Australia, Spain (inaudible) didn’t have a lot of pre-existing clients when we went into that market.

Okay, thank you.

Yes.

Our next question comes from [Fabian Vanier], a private investor. Your line is open. Your line is open, sir.

Yes, hi. Can you hear me?

Hi Fabian.

Okay, awesome, great. I’m good. So I was just to ask a few questions, first of all, I was hoping to maybe breakdown what the annual salary cost per store is for your new 6,000 to 8,000 square foot stores, what kind of the sum of the employee and store manager wages for a store of that size, so just the base salary though? I know, because I know for your store managers you have kind of a profit sharing and scheme, so just the base salary for a store of that size?

Sure. So, all of the stores in the U.S. are required to have obviously a manager, the MNC full time employees. The larger stores don’t necessarily require more staff, although they could from volume. So, but may be you are talking, may be if we went from a 3,000 square foot store to 6,000 square foot store, may be it add up a full time -- one more full time employee, so you’d have a total of four including the manager, but not necessarily. So just because they’re double in size per foot wise doesn’t mean they are going to double in size personnel wise. The manager comp is base salary in 2014 has moved to 36,000, base salary. And then as you indicated they do earn 25% of the operating profit of the store that they manage. And that’s the same, I mean that bonus plan and that compensation range is the same regardless of what size store you’re in.

Right. And could you be may be provide us breakdown for just normal employees or you could kind of calculate what the salary across the store is, can you please provide that breakdown or…?

Generally no, but the store associates are generally full time, so 40 hours a week, and average $10 an hour.

Okay, great. Thank you very much. So then the next question is has there been any change in the locations of your new stores, because you used say that your old stores are kind of in strip malls and recognizable streets, so that now that you move into larger stores and larger areas, do you move to areas where maybe the rent per square foot is higher? And also do these new stores carry a wider range of SKUs or do they just trade more of a same rent SKUs?

As we are moving into larger locations, we are trying to upgrade the general locations. Always good shopping centers certainly work; maybe what we are looking at is not quite as old as maybe when we first opened. We want the areas to be nicer because these are nicer stores. But the risk factors are not increasing significantly; in fact most of them aren’t increasing at all. The rent expense obviously for a larger number of square feet is the total rent increasing, but the rent rate no not really, somewhere between depending on the locations, somewhere between $10 and $15 a square foot is generally what we look for. Increasing SKUs, the total dollar -- we are not, we don’t increase the number of SKUs in a larger store, we carry right now about 2,400, 2,500 active SKUs in the line. The only thing that the larger stores do is instead carrying three of some item maybe they are carrying 12 of an item. So the SKU is increasing, but the number of SKUs is not.

Okay, great. And then last question if I may, so in your management training program in international stores, you have people in the pipeline does not give any training, they are right now -- you kind of prepare them for new stores opening and how is that coming and integrate the international expansion?

Right now, we don’t have anybody or anything going on right now as far as the training program for international. Right now we have nothing on the horizon internationally, but we certainly have stores that they could be trained in, in Spain or in the UK where we've got people who have been around a long time. We have a regional manager from the U.S. that runs that division who has been with us for a long time that certainly is capable of training anybody that we do get and train him over there.

Got you. Okay. Okay. Thanks so much. That's it from me right now. Thank you.

Thanks [Fabian].

(Operator Instructions). Our next question comes from Jason Lee, a private investor. Your line is open.

Hi, guys. Congratulations on the quarter.

Thanks.

Just two questions, first question is could you please discuss working capital and inventory? And if you guys have any plans to improve working capital management and inventory turnover?

So, inventory turns are -- they have improved over the last couple of years due to moving more of the inventory out of our warehouse and what we would consider back stock or replenishment stock and into the stores. So, it feels -- I mean I think relative to other retailers, the turnover rate is lower. I think it turns, on a consolidated basis it turns in the low 3s annually. And historically that's been because we keep -- the way our system, the way we’re set up is a buyer source product worldwide, everything comes here to our warehouse in Fort Worth. And our stores replenish or order replenishment starts once a week. So we're shipping an order, replenishment order to all of our stores weekly out of the stock here in inventory as opposed to having the vendors that we buy from shipped directly to the stores. It's more cost effective to have it all housed here and shipped to the stores weekly. Does that make sense? Does that help?

It does. That’s very helpful, thanks. And my second question is what has contributed to the relatively stronger cash generation this past quarter? And do you have any thoughts on perhaps returning excess cash to shareholders whether it be through share buybacks or dividends?

So fourth quarter always -- well overall this business generates cash and it has for a long time and that’s all you can knew. Fourth quarter cash is a couple of things, while we’re not as seasonal as a traditional retailer for fourth quarter obviously fourth quarter sales are the strongest of the four quarters and a lot of that business is retail customers of course. So kind of cash has generated in fourth quarter simply because of that. The other thing is that we do all of our -- the majority of our inventory buying for fourth quarter we do in second and third quarter. So we use cash in second and third quarter to get inventory in here and then obviously we don’t buy a lot, we don’t replenish a lot during, throughout the fourth quarter we start that towards the end and then in the first quarter. So fourth quarter always generates a lot of cash, lots of cash sales because of the retail customer holiday, Christmas shopping season and then we’re not buying as much inventory in fourth quarter because we have stocked that beginning late second quarter and all throughout the third. Inventory obviously we wanted to have by the end of September. As far as use of cash, there is really two options and the Board discusses with it every Board meeting. There are no acquisitions to buy; there is really no place to put the cash that we can really get any return on it. So the two options are stock buyback and a dividend. And as you probably know we’ve done two one-time dividends one in 2010 one in 2012. We had a Board meeting in February discussed it then what to do and no decision was made, but the Board will continue to talk about it at our next meeting which comes up in the next 45 days whether dividend makes sense or whether a stock buyback makes sense or if there is some other positive uses of cash. But those are generally the two options and the Board will make that decision when they feel like it’s appropriate.

Great, thanks. And I actually have one more question if you don’t mind. Would you be able to provide any guidance on CapEx and free cash flow for 2014?

So the CapEx is $1.7 million to $2 million for 2014, that’s made up of store fixtures that will go in the relocated stores in 2014 which is $1.2 million to $1.5 million. $200,000 in factory equipments that needs to be replaced upgraded. And $0.25 million in just general computer equipment replacements as computer equipment like our work stations and that kind of things, so total CapEx is expected to be $1.8 million to $2 million in 2014.

Great. And do you have kind of like a estimate or guidance for free cash flow 2014?

No we don’t put that up.

Great. Thanks very much.

And I’m showing no further questions. I will now turn the call back over to management for closing remarks.

Thank you. On behalf of the entire management team, I would like to thank you for participation in our 2013 earnings conference call today. And we look forward to speaking with you again next quarter. Have a good afternoon.

Thank you. Ladies and gentlemen that does conclude today’s conference. You may all disconnect. And have a great day.