The Leather Factory (TLF)
By: Robert Davis

New Credit Lines for The Leather Factory

March 20, 2002

Earlier today, The Leather Factory (AMEX:TLF) announced that it had been granted a new credit facility by Wells Fargo Bank, replacing a prior agreement with Wells Fargo Business Credit, an asset-based lender affiliated with the Bank.

This agreement provides TLF with a $7,500,000 revolving line of credit with an interest rate at prime. But this announcement is most significant for what it tells us about TLF itself and how the Company is perceived by financial institutions.

Possibly the most significant point is that the Company's borrowing relationship has now moved to the Bank itself, from an asset-based lending subsidiary. Such a move normally signals that the lender has greater confidence in the borrower, leading to a reduction in the required controls and paperwork.

This signal is reinforced by the term of the loan, which is for two and a half years, until November 30, 2004, which is a fairly lengthy term for this type of loan. Also significant is the fact that this new lending agreement includes "an increase in the advance rate for eligible inventory," which indicates that Wells Fargo is satisfied with the Company's inventory valuations and controls.

We continue to strongly recommend The Leather Factory's stock for value-oriented portfolios.

J.M.Dutton & Associates, LLC. John M. Dutton, President and Supervisory Analyst, 1129 Manning Drive, Suite 310, El Dorado Hills, CA 95762 Phone (916) 941-4985, Fax (978) 418-6422 Email: [email protected] Web site: www.JMDutton.com

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© Copyright, 2002, by J.M. Dutton & Associates, LLC.