8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):  October 25, 2005

Tuesday Morning Corporation

(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of
incorporation) 0-19658
(Commission File Number) 75-2398532
(IRS Employer Identification No.)

6250 LBJ Freeway
Dallas, Texas
(Address of principal executive offices) 75240
(Zip Code)

Registrant’s telephone number, including area code:  (972) 387-3562

Not applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition.

On October 25, 2005, Tuesday Morning Corporation, a Delaware corporation, issued a press release announcing net income, earnings per share and final net sales for the third quarter and nine-months ended September 30, 2005.  The press release is attached to this Form 8-K as Exhibit 99.1 and incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits.

(c)Exhibits

Exhibit Number	Exhibit Title
99.1	Press release dated October 25, 2005

2

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	TUESDAY MORNING CORPORATION
Date:  October 25, 2005		By:	/s/ LOREN K. JENSEN
		Loren K. Jensen
		Executive Vice President and Chief
		Financial Officer

3

EXHIBIT INDEX

Exhibit Number	Exhibit Title
99.1	Press release dated October 25, 2005

4

EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE

CONTACT:	Loren K. Jensen
	Chief Financial Officer
	TUESDAY MORNING CORPORATION
	972/934-7299
	Laurey Peat
	LAUREY PEAT + ASSOCIATES
	214/871-8787

TUESDAY MORNING CORPORATION

ANNOUNCES 11% INCREASE IN EARNINGS PER SHARE

FOR THE THIRD QUARTER OF 2005

DALLAS, TX – October 25, 2005 — Tuesday Morning Corporation (NASDAQ: TUES) today reported that net income for the third quarter ended September 30, 2005 increased 9.2% to $8.2 million, or $0.20 per diluted share, compared to $7.5 million, or $0.18 per diluted share, for the third quarter of 2004.  For the nine-months ended September 30, 2005, net income was down slightly to $25.4 million, or $0.61 per diluted share, compared to $25.7 million, or $0.62 per diluted share, in the same prior year period.  Net income and diluted earnings per share for the current nine-month period, excluding the after-tax lease adjustment in the first quarter of 2005, were $27.8 million and $0.67, both representing over an 8% increase for the nine-months ended September 30, 2004.

As previously reported, net sales for the third quarter of 2005 increased 3.3% to $192.3 million from $186.1 million for the third quarter last year.  Comparable store sales, excluding the impact from the hurricanes, decreased 3.6% for the third quarter of 2005.  Without the hurricane adjustment, comparable store sales declined 4.4%.   On a year-to-date basis, sales are up 5.5% to $596.6 million, with a comparable store sales decrease of 3.3%, compared to the first nine-months of 2004.

“In an obviously difficult quarter for sales, we are pleased that we delivered earnings per share growth of over 10%,” said Kathleen Mason, President and Chief Executive Officer.   “We see continuing challenges that the consumer faces with reduced discretionary income, but our model has demonstrated the ability to produce earnings growth despite this type of environment.”

1

Our sales release on October 6, 2005 contained guidance for the remainder of 2005 including annual sales of approximately $960 million, flat comparable store sales for the fourth quarter, low-single digit negative comparable store sales for the full year, and annual diluted earnings per share of approximately $1.58.  Based on the above guidance, diluted earnings per share for the full-year would be approximately $1.64, excluding the $0.06 charge in the first quarter of 2005.  Diluted earnings per share for fiscal year 2004 were $1.50.

Tuesday Morning management will review third quarter financial results in a teleconference call on October 25, 2005 at 10:00 a.m. Eastern Time.

About Tuesday Morning

Tuesday Morning is the leading closeout retailer of upscale, decorative home accessories and famous-maker gifts in the United States. The Company opened its first store in 1974 and currently operates 713 stores in 45 states during periodic “sale events.” Tuesday Morning is nationally known for bringing its more than 7.5 million loyal customers a treasure hunt of high-end, first quality, brand name merchandise at prices 50% to 80% below department and specialty stores and catalogues.

This press release contains forward-looking statements, within the meaning of the federal securities laws and the Private Securities Litigation Reform Act of 1995, which are based on management’s current expectations, estimates and projections.  Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “estimates,” variations of such words and similar expressions are intended to identify such forward-looking statements.  Forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ materially from those projected or implied in the forward-looking statements.  Such risks and uncertainties include: the success of new store openings, competitive factors, access to merchandise and unanticipated changes in consumer demand and economic trends, as well as other risks detailed in the company’s filings with the Securities and Exchange Commission, including the company’s  Annual Report on Form 10-K for the period ending December 31, 2004.

# # #

2

Tuesday Morning Corporation

Consolidated Statement of Income

(In thousands, except per share data)

	Three Months Ended Sept. 30,						Nine-Months Ended Sept. 30,
	2005			2004			2005			2004
	unaudited						unaudited
Net Sales	$	192,276		$	186,148		$	596,626		$	565,442
Cost of sales	117,577			117,525			367,951			354,417
Gross profit	74,699			68,623			228,675			211,025
Selling, general and administrative expenses	61,387			55,700			188,181			168,068
Operating income	13,312			12,923			40,494			42,957
Other income (expense):
Interest expense	(553		)	(868		)	(922		)	(1,751		)
Interest income	—			1			98			8
Other income (expense), net	202			190			633			637
Other income (expense)	(351		)	(677		)	(191		)	(1,106		)
Income before income taxes	12,961			12,246			40,303			41,851
Income tax expense	4,748			4,724			14,894			16,131
Net income	$	8,213		$	7,522		$	25,409		$	25,720
Earnings Per Share:
Net income per common share:
Basic	$	0.20		$	0.18		$	0.62		$	0.63
Diluted	$	0.20		$	0.18		$	0.61		$	0.62
Weighted average number of common shares:
Basic	41,352			41,061			41,229			41,029
Diluted	41,872			41,771			41,768			41,743

Consolidated Balance Sheets

(in thousands)

	Sept. 30,				Dec 31,
	2005		2004		2004
	unaudited
Assets
Current assets:
Cash and cash equivalents	$	6,146	$	8,583	$	45,067
Inventories	293,358		262,318		189,132
Prepaid expenses and other assets	8,176		6,343		5,169
Deferred income taxes	5,991		5,106		5,991
Total current assets	313,671		282,350		245,359
Property and Equipment, net	88,610		85,035		86,332
Other long-term assets:
Deferred financing costs	728		895		877
Other assets	4,744		2,590		3,552
Total Assets	$	407,753	$	370,870	$	336,120
Liabilities and Stockholders’ Equity
Current liabilities:
Revolving credit facility, current portion	$	—	$	60,700	$	—
Accounts payable	102,939		86,144		72,722
Accrued liabilities	35,036		34,909		39,714
Income taxes payable	8,286		4,930		17,483
Total current liabilities	146,261		186,683		129,919
Revolving credit facility, excl. current portion	49,500		20,000		—
Deferred rent	4,481		—		—
Deferred income taxes	9,051		5,641		9,051
Total Liabilities	209,293		212,324		138,970
Stockholders’ equity	198,460		158,546		197,150
Total Liabilities and Stockholders’ Equity	$	407,753	$	370,870	$	336,120

Consolidated Statement of Cash Flows

(in thousands)

	Nine-Months Ended Sept. 30,
	2005			2004
	unaudited
Net cash flows from operating activities:
Net income	$	25,409		$	25,720
Adjustments to reconcile net income to net cash (used in) operating activities:
Depreciation and amortization	10,713			8,289
Amortization of financing fees	128			399
Cumulative effect of lease accounting adj.	3,898			—
Other non-cash charges	(4		)	55
Net change in operating assets and liabilities	(91,479		)	(112,118		)
Net cash used in operating activities	(51,335		)	(77,655		)
Net cash flows from investing activities:
Capital expenditures	(12,991		)	(18,449		)
Other	—			—
Net cash used in investing activities	(12,991		)	(18,449		)
Net cash flows from financing activities:
Net borrowings-revolving credit facility	49,500			80,700
Payment of cash dividend	(26,854		)	—
Other	2,759			451
Net cash provided by (used in) financing act.	25,405			81,151
Net decrease in cash and cash equivalents	(38,921		)	(14,953		)
Cash and cash equivalents, beginning of period	45,067			23,536
Cash and cash equivalents, end of period	$	6,146		$	8,583