UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended June 30, 1995
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ________ to ________
Commission File No. 1-7258
TANDYCRAFTS, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 75-1475224
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1400 EVERMAN PARKWAY
FORT WORTH, TEXAS 76140
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (817) 551-9600
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
- -------------------------- -----------------------
Common stock, $1 par value New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the Registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No __
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. X
As of September 8, 1995, there were 11,733,078 shares of Common Stock,
$1.00 par value, outstanding, and the aggregate market value of the Common Stock
of Registrant held by non-affiliates was approximately $76.4 million.
DOCUMENTS INCORPORATED BY REFERENCE
Location in Form 10-K Incorporated Document
--------------------- --------------------------
Part III Proxy Statement for 1995 Annual Meeting
TANDYCRAFTS, INC.
Form 10-K
PART I
------
Item 1. Business
- ------ --------
Tandycrafts, Inc. (the "Company"), a Delaware corporation, was incorporated
in June 1975 to operate the handicrafts segment previously operated by Tandy
Corporation. The Company consists of two primary industry segments: specialty
retail and specialty manufacturing. Industry Segment and Geographic Area
Information with respect to the Company's business is found in Note 10 of Notes
to Consolidated Financial Statements which is set forth in Item 8 herein.
Specialty Retail
- ----------------
The specialty retail segment consists of four retail concepts, each
specializing in the sale to the public of distinctive lines of products.
Included in this segment are Tandy Leather Company, Joshua's Christian Stores,
Sav-On Discount Office Supplies and Cargo Furniture and Accents. The specialty
retail segment has accounted for 45.9%, 50.1% and 58.9% of the total
consolidated net sales of the Company for fiscal years 1995, 1994 and 1993,
respectively. Substantially all of the Company's specialty retail products are
marketed through 325 Company-owned and operated specialty retail stores located
in 45 states of the United States as follows:
Stores at Stores at
July 1, 1994 Opened Closed June 30, 1995
------------ ------ ------ -------------
Tandy Leather Company 175 - - 175
Cargo Furniture and Accents 43 - 3 40
Joshua's Christian Stores 61 11 - 72
Sav-On Discount Office Supplies 21 18 1 38
--- -- -- ---
300 29 4 325
=== == == ===
Tandy Leather Company retails leathercraft materials, kits and equipment
used to produce functional and ornamental items and finished leathergoods. The
principal merchandise lines consist of various leathers, belts and buckles,
billfold kits and accessories, footwear and ladies' handbag kits, leatherworking
tools and decorative items made of leather. Approximately 3,000 items are sold
through 175 company-owned and operated specialty retail stores in the United
States, with the strongest concentration in the southwest and on the east and
west coasts. A portion of Tandy Leather Company's sales is to the institutional
market. This market is composed of industrial arts and crafts programs in
schools, hospitals, prisons and recreational organizations. Semi-professionals
and hobbyists make up an additional portion of Tandy Leather Company's market.
Tandy Leather Company has been successful in developing a loyal repeat customer
base. An important element in this achievement has been the effective use of
customer purchasing information in focusing Tandy Leather Company's advertising
and direct mail efforts. Tandy Leather Company also sponsors in-store classes,
workshops and offers demonstrations in leathercrafting techniques such as
carving, stamping, dyeing and jewelry making, which helps to cultivate new and
repeat customers. Store managers and employees also go out into the community
to give on-site demonstrations before school groups and other organizations. In
fiscal 1995, Tandy Leather Company's retail operations contributed approximately
19% of the consolidated net sales of the Company.
Cargo Furniture and Accents ("Cargo") sells a proprietary line of solid
wood furniture, bedding and complimentary accessories to residential,
institutional and commercial customers from 40 company-owned and operated
specialty retail stores primarily located in regional shopping malls in 12
states across the country. Cargo stores are located primarily in the Northeast,
Mid-Atlantic, Southeast and South-Central United States. The company obtains
the furniture it sells primarily from one source, but merchandise could be
obtained from other sources, if necessary. In fiscal 1995, Cargo contributed
approximately 8% of the consolidated net sales of the Company.
Joshua's Christian Stores is one of the largest national specialty retail
chains of inspirational books, music and gift items. Joshua's Christian Stores
operates a chain of 72 stores, located in Texas, Georgia, Tennessee, Alabama,
South Carolina, Colorado, New Mexico, Florida, Arizona and California. The
stores average approximately 3,000 square feet in size. Store locations are
predominantly in strip centers close to major shopping malls, which allows for
lower rent and occupancy costs, while at the same time benefiting from their
proximity to major shopping malls. Joshua's Christian Stores carries an
extensive selection of quality books, Bibles, music, gifts and cards which are
purchased from various suppliers. In fiscal 1995, Joshua's Christian stores
contributed approximately 12% of the consolidated net sales of the Company.
Sav-On Discount Office Supplies ("Sav-On") sells discount office supplies
from 38 company-owned and operated specialty retail stores which average
approximately 6,000 square feet. Sav-On's stores are located in Texas, Oklahoma
and Louisiana. Management's present strategy is to open future Sav-On stores
primarily in cities and towns with less than 70,000 people, with the intention
of avoiding direct competition with the major discount office supply chains.
Sav-On stores carry approximately 6,000 products, consisting primarily of office
and school supplies. The products sold are purchased from a variety of
suppliers. The primary customers for Sav-On are small business owners, students
and homeowners. In fiscal 1995, Sav-On contributed approximately 8% of the
consolidated net sales of the Company.
Specialty Manufacturing
- -----------------------
The specialty manufacturing segment is comprised of four divisions:
Picture Frames and Framed Art, Belts and Accessories, Outerwear and the Tandy
Wholesale International ("TWI") division. The specialty manufacturing segment
has accounted for 54.1%, 49.9% and 41.1% of total consolidated net sales of the
Company for fiscal years 1995, 1994 and 1993, respectively.
During fiscal 1995, the specialty manufacturing segment had net sales of
approximately $26.8 million to a group of customers under common control. The
Company had no other individual customer or group of customers which accounted
for more than 10% of the Company's total consolidated net sales.
The Picture Frames and Framed Art division, consisting of the Magee Company
and Impulse Designs manufactures and distributes a broad range of picture
frames, framed art, mirrors and bulletin boards. From facilities in Pocahontas
and Piggott, Arkansas, Magee produces over 29 million frames annually. Magee is
widely recognized for manufacturing low-cost frames out of oak, pine and poplar.
During fiscal 1995, Magee expanded its production capacity for metal frames and
developed a new line of extruded plastic frames. Impulse Designs, located in
Los Angeles, California, was a strategic acquisition made by the Company in
November 1993. Impulse is a manufacturer of framed art for the mass market.
Impulse has achieved a national following by introducing the works of well-known
artists at popular price points. Magee and Impulse's products are sold in the
United States and Canada by national account sales representatives, selling
primarily to mass-merchandise retail chains, drug and food retail chains,
department stores, general houseware merchants and specialty frame outlets.
While Magee's revenues are spread evenly throughout the year, Impulse's revenues
have been historically seasonal with almost one-third of their sales generated
during the Christmas season. The Picture Frames and Framed Art division
contributed 32% of the Company's total consolidated net sales in fiscal 1995.
The Belts and Accessories division is comprised of the Nocona Belt Company
located in Nocona, Texas and Prestige Leather Creations located in Los Angeles,
California. Nocona Belt Company manufactures a wide selection of western-style
belts and leather accessories such as wallets, money clips and hatbands. This
product line was expanded in 1994 to include a line of medium priced western
jewelry and leather care products. Acquired in 1992, Nocona Belt Company
markets its products nationally and internationally through independent
representatives who are responsible for maintaining Nocona Belt's existing
account base numbering more than 3,500 customers, as well as generating new
business. Nocona Belt Company attends national trade shows several times
annually, publishes catalogs, brochures and stickers, and distributes direct
mail packages on a monthly basis. Prestige Leather Creations, which was
acquired in November 1993, manufactures and markets a broad line of men's and
women's belts. Prestige Leather operates three principal divisions, each
representing distinct market segments of the belt industry. The cut-up division
manufactures and distributes ornamental fashion belts to garment manufacturers
who use these belts to accessorize their products. The retail division
manufactures and distributes women's fashion belts to the moderate and budget
segment of the retail business. Retail division customers include a variety of
mass-merchandise stores, department stores and specialty retail chains. The Al
Beres(R) division is a designer belt line that markets its collection to high-
end department stores and boutiques. For fiscal 1995, the Belts and Accessories
division contributed 6% to Tandycrafts' total consolidated net sales.
The Outerwear division is comprised of Birdlegs, located in St. Simon's
Island, Georgia, and Brand Name Apparel and David James Fashions, both located
in McAllen, Texas. Birdlegs, acquired in September 1993, is a producer of
screen-printed souvenir activewear including T-shirts, sweatshirts, cover-ups
and tank tops. Recognizing that creative design is critical to the success of
most screen printing companies, Birdlegs maintains a strong creative staff to
generate the hundreds of new designs required each year. Birdlegs markets its
products through its own in-house sales force as well as independent
representatives. Since being acquired, Birdlegs has provided new synergies
through its design and distribution of new products specifically designed for
Joshua's Christian Stores. Birdlegs is beginning to market and distribute these
and other new designs into the Christian retail market. Brand Name Apparel,
acquired in 1992, manufactures a line of leather jackets, vests, chaps and other
garments which are sold directly to Harley Davidson(R). David James Fashions,
also acquired in 1992, manufactures a high-end line of western jackets which are
marketed nationally through a direct sales force to over 4,500 customers. As
the licensed sales representatives to the Professional Cowboy's Rodeo
Association, David James Fashions is recognized as a leader in the Western
apparel industry. David James Fashions attends national trade shows and sells
its products to many of the same customers as Nocona Belt Company in the Belts
and Accessories division. The Outerwear division contributed 7% of the
Company's consolidated net sales for fiscal 1995.
The TWI division includes Tandy Wholesale International, J-Mar Associates,
TAG Express and Rivertown Button Company. Tandy Wholesale International, a
manufacturing arm for the Tandy Leather stores, produces many of the kits, tools
and supplies which are sold through those stores nationwide and wholesales
similar products to other leading craft stores throughout the United States and
Canada. As a significant purchaser of leather, TWI is able to command favorable
pricing and terms from its suppliers which enhance this division's overall
profitability. Also, as a significant supplier of materials including leather
and other manufactured products to the Belts and Accessories division, Tandy
Leather Retail and Joshua's Christian Stores, TWI also enhances their
competitiveness and profitability. J-Mar Associates, acquired in 1992, is a
producer and wholesale distributor of inspirational gift items both domestically
and internationally. J-Mar's customer base is primarily comprised of Christian
retail gift and book stores. Through its telemarketing sales force, J-Mar
distributes its product line to over 5,700 Christian book stores. TAG Express,
acquired in October 1993, distributes products featuring leading professional
and collegiate sports logos, including auto tags, bumper stickers, key tags,
decals, light switch covers, door knob hangers, luggage tags, automobile flags,
wind socks and pennants. TAG Express has licenses with the NFL, NBA, NHL, Major
League Baseball, U.S. Soccer League, the 1996 Olympics and all major colleges.
The automobile flags, wind socks and pennants sold by TAG are manufactured at
its facility in Lancaster, South Carolina. TAG Express sells its products
through a network of independent sales representatives, distributors and in-
house telemarketing personnel. Rivertown Button Company, acquired in May 1994,
is a contract manufacturer of promotional buttons. Buttons are manufactured for
a wide range of customers including corporate promotions and advertising
campaigns, political campaigns and public service groups. The company also
sells ribbons, posters and stickers. The TWI division contributed 10% of the
Company's consolidated net sales for fiscal 1995.
Raw Materials
- -------------
Raw materials used in the specialty manufacturing segment are available
from numerous sources and the Company believes that the availability of such
materials is adequate for its needs.
Intangible Assets
- -----------------
The Company owns a number of trademarks and copyrights. Management
considers these intangibles to be valuable assets and vigorously defends them
when necessary.
Seasonality
- -----------
The Company's operating results are subject to seasonal variation.
Historically, the Company has realized a larger proportion of its sales and
operating income in its second fiscal quarter (the Christmas season). Cash also
increases in December due to the Christmas business achieved by the Company's
specialty retail segment.
Competitive Conditions
- ----------------------
Tandy Leather Company competes with hobby and crafts stores, including
department and specialty stores, operated by individuals and various companies
in all trade areas. The picture frames and framed art sold by the Magee Company
and Impulse Designs are readily available from other suppliers who compete
actively for sales. The Cargo Furniture and Accents line of furniture, Joshua's
Christian Stores line of inspirational items and Sav-On Discount Office Supplies
line of discount office supplies, compete vigorously for sales with other
nationally-known brand names that are marketed by department stores, chain
stores and local specialty stores. The belts, accessories and apparel sold by
the Nocona Belt Company, Prestige Leather Creations, Birdlegs and David James
Fashions are readily available from other suppliers who compete actively for
sales. The licensed novelty and promotional products sold by TAG Express and
Rivertown Button are readily available from other suppliers who compete actively
for sales.
Environmental Affairs
- ---------------------
Compliance by the Company with federal, state and local environmental
protection laws have not had, and are not expected to have, a material effect
upon capital expenditures, earnings or the competitive position of the Company.
Foreign Operations and Export Sales
- -----------------------------------
A small amount of products produced by the Company is exported to
independent distributors and other customers in foreign nations. The combined
export operations contributed less than 10% of consolidated revenue and/or
income and utilized less than 10% of the consolidated assets of Tandycrafts,
Inc. for each of the last three fiscal years.
Employees
- ---------
The Company has approximately 4,200 employees, including part-time and
temporary employees. Tandycrafts, Inc. sponsors an employees' deferred salary
and investment (401-K) plan, which is coupled with the Tandycrafts, Inc.
Employee Stock Ownership Plan (the "ESOP") in which eligible employees and
officers may participate. As of June 30, 1995, approximately 92.1% of the
eligible employees were members of the ESOP, which invests primarily in common
stock of the Company. The Company is not a party to any union contract and
considers its relations with its employees to be very good.
Item 2. Properties
- -------------------
The Company owns buildings which it uses for offices, manufacturing and
warehousing. The Company also leases a significant amount of retail store
space. The total space owned and leased is as follows:
Approximate Square Footage
-----------------------------
Owned Leased Total
------- --------- --------
Warehouse and Office 349,235 353,859 703,094
Retail 4,750 824,023 828,773
Factory 367,235 430,026 797,261
------- --------- ---------
Totals 721,220 1,607,908 2,329,128
======= ========= =========
The warehouse, office and factory space is located approximately 38% in
Fort Worth, Texas (specialty retail and specialty manufacturing), 30% at three
site locations in Arkansas (specialty manufacturing), 15% at two locations in
California (specialty manufacturing), 8% at three other locations in Texas
(specialty manufacturing), with the remaining 9% located in Georgia, Minnesota
and South Carolina (specialty manufacturing). The leased retail stores are
generally small outlets and are located throughout 45 states of the United
States.
For additional lease information see Note 7 of Notes to Consolidated
Financial Statements, which is set forth in Item 8 herein.
Item 3. Legal Proceedings
- --------------------------
The Company is not involved in any legal proceeding required to be
disclosed pursuant to Item 103 of Regulation S-K, and no such proceeding was
terminated during the fourth quarter of the 1995 fiscal year.
Item 4. Submission of Matters to a Vote of Security Holders
- ------------------------------------------------------------
There were no matters submitted to a vote of security holders during the
fourth quarter of the 1995 fiscal year.
Executive Officers of the Registrant
- ------------------------------------
The following table sets forth certain information concerning the executive
officers of the Company.
Position and Business Experience Served as
Name and Age During Past Five Years Officer Since
- --------------- ------------------------------------- ---------------
Jerry L. Roy, 53 President and Chief Executive Officer 1988
since August, 1992. Senior Vice
President and Chief Operating Officer
prior thereto since 1988. Employed
by the Company in various positions
since 1959.
Michael J. Walsh, 54 Executive Vice President and Chief 1983
Financial Officer since August, 1992.
Vice President prior thereto since
1986. Secretary since 1983.
Corporate Counsel and Director of Tax
Administration since 1981.
Jim D. Allen, 35 Vice President and Director of SEC 1993
Reporting since November 1993.
Director of Special Projects since
May 1993. Prior to May 1993,
Mr. Allen was a Senior Manager in the
accounting firm of Price Waterhouse LLP.
None of the above officers are related by birth, adoption or marriage. All
officers are elected annually by the Board of Directors to serve for the ensuing
year.
PART II
-------
Item 5. Market for the Registrant's Common Equity and Related Stockholder
- ---------------------------------------------------------------------------
Matters
- -------
Price Range of Common Stock
(Quoted by quarter for the two most recent fiscal years.)
High Low High Low
-------- -------- -------- --------
Sept. 1993 $ 18.38 $ 12.13 Sept. 1994 $ 13.13 $ 10.88
Dec. 1993 $ 19.50 $ 13.25 Dec. 1994 $ 13.00 $ 10.75
March 1994 $ 19.75 $ 11.38 March 1995 $ 11.50 $ 8.25
June 1994 $ 13.50 $ 10.38 June 1995 $ 9.50 $ 7.50
The principal market for the Company's common stock is the New York Stock
Exchange. As of September 8, 1995, there were approximately 9,240 shareholders
of record of the Company's common stock.
The Company's present policy is to retain earnings for the foreseeable
future for use in the Company's business and the financing of its growth. The
Company did not pay any cash dividends on its common stock during fiscal 1995
and 1994. The Company's revolving credit agreement contains provisions
specifying limitations on the amount of cash payments and distributions which
may be paid by the Company, including cash dividends and purchases of treasury
stock.
Item 6. Selected Financial Data
- --------------------------------
Selected Financial Data (Unaudited)
(in thousands, except per share amounts)
<TABLE>
<S><C>
1995 1994 1993 1992 1991
-------- -------- -------- -------- --------
Net sales $256,523 $214,869 $163,255 $133,135 $119,243
Operating income $ 11,860 $ 15,417 $ 12,749 $ 1,575 $ 4,109
Income before income taxes $ 8,027 $ 13,980 $ 12,299 $ 1,129 $ 3,560
Net income $ 5,217 $ 8,906 $ 7,750 $ 536 $ 2,150
Net income per common share $ .46 $ .79 $ .69 $ .05 $ .20
Weighted average shares
outstanding 11,434 11,336 11,232 10,263 10,760
Net income as percent of net
sales 2.0% 4.1% 4.7% .4% 1.8%
Net income as percent of
beginning equity 6.6% 13.3% 15.6% 1.1% 4.7%
Current assets $101,980 $ 85,414 $ 62,365 $ 46,201 $ 42,181
Current liabilities $ 27,113 $ 28,211 $ 17,427 $ 15,163 $ 13,008
Working capital $ 74,867 $ 57,203 $ 44,938 $ 31,038 $ 29,173
Current ratio 3.8 to 1 3.0 to 1 3.6 to 1 3.1 to 1 3.2 to 1
Total assets $178,803 $150,431 $ 89,865 $ 71,328 $ 68,121
Net property and equipment $ 28,707 $ 24,953 $ 20,427 $ 20,859 $ 22,990
Long-term liabilities $ 61,029 $ 43,138 $ 5,340 $ 6,668 $ 7,000
Retained earnings $ 80,084 $ 74,867 $ 65,961 $ 58,211 $ 57,675
Total stockholders' equity $ 90,661 $ 79,082 $ 67,098 $ 49,497 $ 48,113
Common shares outstanding 11,717 11,161 11,163 10,144 10,549
Stockholders' equity per
common share $ 7.75 $ 7.09 $ 6.01 $ 4.88 $ 4.56
</TABLE>
Item 7. Management's Discussion and Analysis of Financial Condition and Results
- --------------------------------------------------------------------------------
of Operations
- -------------
Tandycrafts, Inc. (the "Company") operates in two primary industry
segments, specialty retail and specialty manufacturing. The specialty retail
segment consists of four distinct retail concepts: Tandy Leather Company, which
sells leathercraft and related products through 175 stores located in 45 states;
Joshua's Christian Stores, which sells inspirational books, music and gifts
through a chain of 72 stores in ten states; Sav-On Discount Office Supplies,
which sells office supplies and related products through a chain of 38 stores
located primarily in smaller markets; and Cargo Furniture and Accents, which
sells a proprietary line of solid wood furniture and accessories through a chain
of 40 stores located in regional shopping malls. The specialty manufacturing
segment is comprised of four divisions: Picture frames and framed art, belts and
accessories, outerwear and the Tandy Wholesale International ("TWI") division.
RESULTS OF OPERATIONS
The following tables present selected financial data for each significant
company or division comprising the Company's two primary industry segments for
the years ended June 30, 1995 and 1994:
Fiscal Years Ended June 30, 1995 and 1994
(Dollars in Thousands)
<TABLE>
<S><C>
1995 1994 Increase (Decrease)
--------------------- -------------------- --------------------
Operating Operating
Income Income Operating
Sales (loss) Sales (loss) Sales Income
--------- ---------- -------- --------- ------- ---------
Specialty retail:
- ----------------
Tandy Leather $ 47,757 $ 3,970 $ 49,273 $ 4,802 (3.1%) (17.3%)
Sav-On 20,647 (1,735) 14,635 (390) 41.1% (344.9%)
Joshua's 29,615 525 23,254 1,060 27.4% (50.5%)
Cargo 19,776 761 20,488 898 (3.5%) (15.3%)
-------- -------- -------- -------- ------- -------
117,795 3,521 107,650 6,370 9.4% (44.7%)
-------- -------- -------- -------- ------- -------
Specialty manufacturing;
- -----------------------
Picture Frames &
Framed Art 81,423 11,451 59,142 7,350 37.7% 55.8%
Belts & Accessories 14,720 (1,063) 14,436 1,364 2.0% (177.9%)
Outerwear 17,879 (526) 18,460 950 (3.1%) (155.4%)
TWI 24,706 3,127 15,181 3,598 62.7% (13.1%)
-------- -------- -------- -------- ------- -------
138,728 12,989 107,219 13,262 29.4% (2.1%)
-------- -------- -------- -------- ------- -------
Total operations,
excluding corporate $256,523 $ 16,510 $214,869 $ 19,632 19.4% (15.9%)
======== ======== ======== ======== ======= =======
Fiscal Years Ended June 30, 1994 and 1993
(Dollars in Thousands)
1994 1993 Increase (Decrease)
--------------------- -------------------- --------------------
Operating Operating
Income Income Operating
Sales (loss) Sales (loss) Sales Income
--------- ---------- -------- --------- ------- ---------
Specialty retail:
- ----------------
Tandy Leather $ 49,273 $ 4,802 $ 46,648 $ 3,884 5.6% 23.6%
Sav-On 14,635 (390) 11,363 (68) 8.8% (473.5%)
Joshua's 23,254 1,060 16,193 401 43.6% 164.3%
Cargo 20,488 898 21,914 (359) 6.5%) 350.1%
-------- -------- -------- -------- ------- ----------
107,650 6,370 96,118 3,858 12.0% 65.1%
-------- -------- -------- -------- ------- ----------
Specialty manufacturing:
- -----------------------
Picture Frames and
Framed Art 59,142 7,350 44,854 7,100 31.9% 3.5%
Belts and Accessories 14,436 1,364 6,480 1,070 122.8% 27.5%
Outerwear 18,460 950 7,249 (25) 154.7% 3900.0%
TWI 15,181 3,598 8,554 1,946 77.5% 84.9%
-------- ------- -------- -------- ------- ---------
107,219 13,262 67,137 10,091 59.7% 31.4%
-------- ------- -------- -------- ------- ---------
Total operations,
excluding corporate $214,869 $19,632 $163,255 $13,949 31.6% 40.7%
======== ======= ======== ======== ======= =========
</TABLE>
FISCAL YEARS ENDED JUNE 30, 1995 AND 1994
Net sales
For fiscal 1995, consolidated net sales increased $41,654,000, or 19.4%,
compared to fiscal 1994. Discussions relative to each of the Company's industry
segments are set forth below.
Specialty retail
Net sales for the specialty retail segment increased $10,145,000, or 9.4%,
compared to fiscal 1994. The specialty retail segment contributed 45.9% of
consolidated net sales in fiscal 1995 compared to 50.1% in the prior year.
Tandy Leather Company's net retail sales decreased $1,516,000, or 3.1%,
from fiscal 1994 with a decrease in same-store sales of 3.4%. The decrease in
sales reflects a reduction in the average number of transactions per store
compared to the previous year due primarily to a decline in sales of Southwest
fashion merchandise. The decrease in sales related to this merchandise category
is due in part to a decline in popularity, but also due to increased
competition.
Sav-On Discount Office Supplies achieved a $6,012,000, or 41.1%, increase
in net sales over fiscal 1994, primarily as a result of an aggressive store
expansion program. During fiscal 1995, Sav-On continued to increase its store
base by opening 18 new stores in targeted markets. Same-store sales were flat
primarily as a result of management's decision to forego in fiscal 1995 certain
low margin government and contract sales at the store level which occurred in
the months of July and December of fiscal 1994.
Joshua's Christian Stores achieved a $6,361,000, or 27.4%, increase in net
sales over fiscal 1994. The increase in total net sales is primarily due to the
effect of new store openings. Joshua's had 72 stores open at June 30, 1995
compared to 61 stores open at June 30, 1994. Same-store sales at Joshua's
increased 3.7% for the year and reflect the impact of increased competition in
certain markets.
Net sales for Cargo Furniture & Accents decreased $712,000, or 3.5%,
compared to fiscal 1994, primarily as a result of the closure of three stores
during fiscal 1995. Same-store sales increases for the year were 1.2%. The flat
same-store sales were attributable to the sluggish economy, particularly in the
fourth quarter, higher interest rates, and reduced new home starts during fiscal
1995.
Specialty manufacturing
Net sales for the specialty manufacturing segment increased $31,509,000, or
29.4%, compared to fiscal 1994. The specialty manufacturing segment contributed
54.1% of consolidated net sales in fiscal 1995 compared to 49.9% in the prior
year.
The increase in net sales for the Picture Frames and Framed Art division
was $22,281,000, or 37.7%, compared to fiscal 1994. The increase reflects the
contribution of Impulse Designs, which was acquired effective November 1, 1993,
as well as strong demand from the existing customer base and the addition of new
customers.
Net sales for the Belts and Accessories division increased $284,000, or
2.0%, compared to fiscal 1994. The slight sales increase reflects continuing
weak demand in the cut-up belt market and continued softness in the western
apparel market. Also, the sales increase reflects the acquisition of Prestige
Leather Creations effective as of November 1, 1993.
Net sales for the Outerwear division, decreased $581,000, or 3.1%, compared
to fiscal 1994. Sales for the year were adversely impacted by continued soft
demand experienced in the western apparel market and by the warm weather
conditions in the fall and early winter which affected the sale of jackets and
sweatshirts.
Net sales for the Tandy Wholesale International ("TWI") division, increased
$9,525,000, or 62.7%, compared to fiscal 1994. The increase in net sales
reflects the contributions of Rivertown Button, College Flags and Tag Express,
which were acquired effective April 1, 1994, June 1, 1994 and September 1, 1993,
respectively. Sales for the year also reflect strong sales gains from the
wholesale operations of the Tandy Leather Company and Tag Express primarily as a
result of the addition of new customers, penetration into new markets and the
introduction of new product lines.
Operating income
Total operating income before corporate expenses decreased $3,122,000, or
15.9%, to $16,510,000 for fiscal 1995 compared to fiscal 1994. A discussion of
operating income for each segment follows.
Specialty retail
Operating income for the specialty retail segment decreased $2,849,000, or
44.7%, from fiscal 1994. The specialty retail segment contributed 21.3% of
consolidated operating income before corporate expenses for fiscal 1995 compared
to 32.4% in the previous year.
Operating income for Tandy Leather decreased $832,000, or 17.3%, when
compared to the prior year. The decrease in operating income is primarily a
result of the decrease in sales, particularly sales of Southwest fashion
merchandise with its corresponding higher gross profit. For the year, gross
profit decreased $1,264,000 primarily as a result of decreased sales and a
change in the sales mix. Selling, general and administrative expenses decreased
approximately $447,000 for the year when compared to last year; however,
expenses as a percent of sales were up slightly due to the decrease in sales.
Sav-On experienced an operating loss of $1,735,000 for the year ended June
30, 1995 compared to an operating loss of $390,000 for the previous year. The
increase in operating loss is primarily a result of start-up and increased
administrative expenses incurred in expanding the store base from 21 stores at
June 30, 1994 to 38 stores at June 30, 1995. Gross profit as a percent of sales
for the year decreased compared to fiscal 1994 primarily as a result of
escalating paper costs which could not be passed on to customers because of
significant price competition. Also, administrative expenses have increased as a
percent of sales reflecting new store openings as well as investments made to
strengthen the management team and to build the necessary infrastructure to
support a larger store base.
Joshua's Christian Stores had operating income for the year ended June 30,
1995 of $525,000 compared to operating income for the same period last year of
$1,060,000. Gross margins for fiscal 1995 were consistent with fiscal 1994 while
selling, general and administrative expenses increased as a percent of sales.
The increase in selling, general and administrative expenses was due primarily
to increased advertising, increased labor expense resulting from store expansion
and additional support personnel, and increases in communication and data
processing expenses associated with the installation and implementation of a new
merchandising and management information system. These costs reflect an
investment made in building the necessary systems to support and manage a larger
store base.
Operating income for Cargo Furniture & Accents decreased $137,000 from
$898,000 in fiscal 1994 to $761,000 for fiscal 1995. The decrease in operating
income is attributable to a sluggish economy, primarily in the fourth quarter,
higher interest rates and fewer home starts, which caused flat same store sales.
For fiscal 1995, gross profit as a percent of sales remained consistent with the
prior year; however, selling, general and administrative expenses were reduced
as a result of cost savings stemming from closed stores as well as from internal
reorganization.
Specialty manufacturing
Operating income for the specialty manufacturing segment decreased
$273,000, or 2.1%, from fiscal 1994 to $12,989,000. The specialty manufacturing
segment contributed 78.7% of consolidated operating income before corporate
expenses for the year ended June 30, 1995 compared to 67.6% for the previous
year.
Operating income for the Picture Frames and Framed Art division increased
55.8% over fiscal 1994 to $11,451,000. The increase reflects the contribution of
Impulse Designs, which was acquired effective November 1, 1993. The increase in
operating income for fiscal 1995 also reflects increased sales and improved
gross margins resulting from manufacturing efficiency gains and a more
profitable sales mix.
The Belts and Accessories division posted an operating loss of $1,063,000
for fiscal 1995 compared to operating income of $1,364,000 for fiscal 1994. The
decrease in operating profitability compared to the previous year reflects the
continued softness in demand experienced in the cut-up and western apparel
markets, resulting in lower sales and gross margins. Gross margins were also
negatively impacted by increased raw material and labor costs.
The Outerwear division had an operating loss of $526,000 for the year ended
June 30, 1995 compared to operating income of $950,000 for the previous year.
The decrease in operating profitability compared to the prior year reflects the
softness in demand experienced in the western apparel market as well as the warm
weather conditions in the fall and early winter which adversely impacted sales
of sweatshirts and jackets. Gross margins were also negatively impacted by
increased raw materials costs and increased labor costs which could not be
passed on to customers.
The TWI division's operating income decreased $471,000, or 13.1% for fiscal
1995, compared to the previous year. The decrease in operating income reflected
the impact of the disruption of the professional baseball and hockey seasons on
the sales of related licensed products as well as production difficulties
encountered in bringing the recently acquired pennant manufacturing operation up
to capacity. These production difficulties have been addressed and are largely
resolved.
Selling, general and administrative expenses
Consolidated selling, general and administrative expenses were 32.6% as a
percent of sales for fiscal 1995 compared to 32.0% for fiscal 1994. In total
dollars, selling, general and administrative expenses increased $14,699,000, or
21.4%, for fiscal 1995 when compared to the previous year. The increase in
expenses was primarily due to acquisitions included for a full period this year
compared to a partial period last year and to new store openings.
Interest expense
Interest expense increased $2,319,000, or 146.7%, for fiscal 1995 when
compared to the prior year. The increase in interest expense was due to an
increase in average borrowings during the current year when compared to the
prior year and to increased interest rates.
Depreciation and amortization
Consolidated depreciation and amortization increased $1,457,000, or 36.3%,
for fiscal 1995 when compared to the previous year. The increase is due
primarily to depreciation related to property and equipment of businesses
acquired as well as amortization of goodwill related to acquisitions.
Depreciation expense has also increased over the prior year due to a higher
level of capital expenditures in the current year.
Provision for income taxes
The effective income tax rate for fiscal 1995 was 35.0% compared to 36.3%
for the prior year. The decrease in the effective tax rate reflects a decrease
in the 1995 federal statutory rate because of the decline in income before
taxes, the utilization of both federal and state hiring tax credit programs as
well as tax benefits generated from the creation of a Foreign Sales Corporation.
On July 1, 1993, the Company adopted Statement of Financial Accounting
Standards No. 109 (SFAS 109), Accounting for Income Taxes. The adoption of SFAS
109 had no material impact on the Company's financial position or results of
operations.
FISCAL YEARS ENDED JUNE 30, 1994 AND 1993
Net sales
For fiscal 1994, consolidated net sales increased $51.6 million, or 31.6%,
compared to fiscal 1993. Discussions relative to each of the Company's industry
segments are set forth below.
Specialty retail
Net sales for the specialty retail segment increased $11.5 million, or
12.0%, compared to fiscal 1993. Tandy Leather Company's net sales increased $2.6
million, or 5.6%, over fiscal 1993 with an increase in same-store sales of 5%.
The increase in sales was primarily attributable to increased sales of fashion-
related merchandise including jewelry and accessory items, beads and leather
suede laces together with strong support from in-store workshops and classes
designed to promote sales of new merchandise offerings.
Sav-On Discount Office Supplies achieved a $3.3 million, or 28.8%, increase
in net sales over fiscal 1993, primarily as a result of an aggressive store
expansion program and a strong 14% increase in same-store sales. During fiscal
1994, Sav-On continued to increase its store base by opening nine new stores in
targeted markets. The increase in same-store sales reflects the growth in the
local customer bases as younger stores in the chain continue to mature as well
as the effective use of targeted print advertising coupled with seasonal sales
promotions.
Joshua's Christian Stores achieved a $7.1 million, or 43.6%, increase in
net sales over fiscal 1993. The increase in net sales was due primarily to an
aggressive store expansion program which resulted in a net increase of 21 stores
in fiscal 1994. Joshua's also achieved a 9% increase in same-store sales which
reflects the effective use of customer profile information used in connection
with its advertising campaigns and promotions.
Net sales for Cargo Furniture & Accents decreased $1.4 million, or 6.5%,
compared to fiscal 1993, primarily as a result of the closure of six stores
during fiscal 1994. The decrease in total net sales was partially offset by a
9% increase in same-store sales. The increase in same-store sales reflects the
positive impact of new and redesigned products, improved visual merchandising
and increased focus on accessory merchandise.
Specialty manufacturing
Net sales for the specialty manufacturing segment increased $40.1 million,
or 59.7%, compared to fiscal 1993. The increase in net sales for the Picture
frames and framed art division, which includes the Magee Company and Impulse
Designs, was $14.3 million, or 31.9%, compared to fiscal 1993 and reflects the
acquisition of Impulse Designs effective as of November 1, 1993.
Net sales for the Belts and Accessories division, which includes Nocona
Belt Company and Prestige Leather Creations, increased $8.0 million, or 122.8%,
compared to fiscal 1993 and reflects the acquisition of Prestige Leather
Creations effective as of November 1, 1993.
Net sales for the Outerwear division, which includes David James Fashions,
Brand Name Apparel and Birdlegs, increased $11.2 million, or 154.7%, compared to
fiscal 1993 and reflects the acquisition of Birdlegs effective as of October 1,
1993 as well as a full year of activity for David James Fashions and Brand Name
Apparel in fiscal 1994. David James Fashions and Brand Name Apparel were
purchased effective November 1, 1992 and, therefore, were included for only a
portion of fiscal 1993.
Net sales for the Tandy Wholesale International division ("TWI"), which
includes the wholesale arm of Tandy Leather Company, J-Mar, TAG Express,
Rivertown Button and College Flags, increased $6.6 million, or 77.5%, compared
to fiscal 1993. The increase in sales reflects the acquisition of TAG Express
effective as of September 1, 1993, the acquisition of Rivertown Button effective
as of April 1, 1994 and the acquisition of College Flags effective as of June 1,
1994.
The businesses acquired during fiscal 1994 contributed aggregate net sales
of $33.9 million to the specialty manufacturing segment.
Operating income
Total operating income before corporate expenses increased $5.7 million, or
40.7%, to $19.6 million in fiscal 1994. A discussion of operating income for
each segment follows.
Specialty retail
Operating income for the specialty retail segment increased $2.5 million,
or 65.1%, over fiscal 1993. Operating income for Tandy Leather increased
$918,000, or 23.6%, primarily as a result of the increase in same-store sales
without a proportionate increase in selling, general and administrative expenses
due to the fixed and semi-variable nature of such expenses. Gross margins for
Tandy Leather remained constant with the prior year.
The operating loss for Sav-On Discount Office Supplies increased from
$68,000 in fiscal 1993 to $390,000 in fiscal 1994 due primarily to start-up and
administrative costs incurred in expanding the store base from 12 stores at June
30, 1993 to 21 stores at June 30, 1994. These costs were partially offset by
increased sales and an increase in gross margin, primarily as a result of
increases in sales prices on selected items and reductions in certain product
costs due to greater volume discounts on purchases.
Operating income for Joshua's Christian Stores increased 164.3% over fiscal
1993 to $1.1 million. The increase was due primarily to an increase in sales
without a proportionate increase in selling, general and administrative expenses
due to the fixed and semi-variable nature of such expenses, offset by a slight
decrease in gross margin.
Operating income for Cargo Furniture & Accents increased $1,257,000 from a
$359,000 operating loss in fiscal 1993 to operating income of $898,000 for
fiscal 1994. The increase is attributable to a 9% same-store sales increase
coupled with a reduction in selling, general and administrative expenses,
primarily salaries and rent, partially as a result of closing six unprofitable
stores during fiscal 1994, and an increase in gross margin.
Specialty manufacturing
Operating income for the specialty manufacturing segment increased 31.4%
over fiscal 1993 to $13.3 million. Operating income for the Picture Frames and
Framed Art division increased 3.5% over fiscal 1993 to $7.4 million. The
increase in operating income reflects the acquisition of Impulse Designs
effective November 1, 1993, offset by a reduction in operating margin at the
Magee Company resulting primarily from the loss of certain customers that had to
be replaced during the year and increased raw material prices which Magee was
not able to pass on to customers due to aggressive price competition in the
industry.
Operating income for the Belts and Accessories division increased 27.5%
from fiscal 1993 to $1.4 million in fiscal 1994. The increase reflects the
acquisition of Prestige Leather Creations effective as of November 1, 1993.
Operating income for the Outerwear division increased from an operating
loss of $25,000 in fiscal 1993 to operating income of $950,000 in fiscal 1994.
The increase reflects the substantial growth in Brand Name Apparel during fiscal
1994 and the acquisition of Birdlegs effective as of October 1, 1993.
Operating income for the TWI division increased 84.9% over fiscal 1993 to
$3.6 million. The increase reflects increases in both sales and operating
margins for the Tandy Wholesale International division of Tandy Leather and for
J-Mar. The increase in operating income for the TWI division also reflects the
acquisition of TAG Express as of September 1, 1993 and Rivertown Button as of
April 1, 1994.
The businesses acquired during fiscal 1994 contributed aggregate operating
income of $2.4 million to the specialty manufacturing segment.
Selling, general and administrative expenses
Consolidated selling, general and administrative expenses as a percent of
sales decreased from 32.5% in fiscal 1993 to 32.0% in fiscal 1994. In total
dollars, expenses increased $15.8 million, or 29.9%, over fiscal 1993 primarily
due to acquisitions, new store openings and increases in corporate general and
administrative expenses.
Interest expense
Interest expense increased $913,000, or 136.7%, over fiscal 1993 due to an
increase in outstanding borrowings which were used to finance acquisitions
during fiscal 1994.
Provision for income taxes
The effective income tax rate for fiscal 1994 was 36.3% compared to 37.0%
for the prior year. The decrease in the effective income tax rate was primarily
due to a decrease in the effective state income tax rate. On July 1, 1993, the
Company adopted Statement of Financial Accounting Standards No. 109 (SFAS 109),
Accounting for Income Taxes. The adoption of SFAS 109 had no material impact on
the Company's financial position or results of operations.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary sources of liquidity have come from cash flows from
operations, sales of treasury stock to employee benefit programs, and borrowings
under the Company's revolving credit facility. Primarily, these funds have been
used to finance acquisitions, purchase property and equipment, retire the ESOP
loan and finance the growth in inventories and receivables.
During fiscal 1995, cash increased approximately $301,000. Cash used by
operating activities of approximately $4.0 million primarily resulted from an
increase in receivables and inventories related mainly to new store expansion
and sales increases requiring the expansion of working capital. Cash used for
investing activities of approximately $16.9 million resulted primarily from
capital expenditures for property and equipment of approximately $9.5 million,
the acquisition of the Novelty Division of Trench Manufacturing Company, Inc.,
which required cash payments of approximately $3.7 million and additional
consideration paid, as stipulated in the Asset Purchase Agreement, for the
acquisition of Impulse Designs, Inc. of $4.3 million. Cash of approximately
$21.2 million was provided by financing activities, primarily from borrowings
under the Company's revolving credit facility.
The Company has a $60 million revolving credit facility with a group of
banks. The credit facility is a two-year revolving line of credit, renewable
annually, and is convertible into a five-year term loan at the end of the
revolving period if not renewed. The Company also established a separate
unsecured $5 million borrowing facility from one of the banks, with interest
charged on borrowings based on the bank's prime rate. During July 1995, the
Company established an additional $10 million revolving credit facility that
terminates on March 31, 1996.
In connection with the November 1993 acquisition of Impulse Designs, the
Asset Purchase Agreement (the "Agreement") provides for a contingent payment to
be made based upon the attainment of certain earnings thresholds for the year
ended December 31, 1994. In April 1995, the Company made an additional payment
of $4.3 million pursuant to the terms of the Agreement. In June 1995, the former
owners of Impulse Designs filed an objection notice disputing the amount of the
additional payment. In the event of a dispute, the Agreement provides for
resolution through a process of binding arbitration. The additional amount
sought by the former owners of Impulse Designs is approximately $5.7 million.
The Company believes that no additional payment is required and has responded by
filing a counterclaim for a refund of an amount yet to be determined of the
April 1995 payment. This dispute is expected to proceed to arbitration during
fiscal 1996. The range of additional payment or refund, if any, cannot yet be
reasonably determined.
Cash of approximately $9.5 million was used for capital expenditures during
fiscal 1995. Planned capital expenditures for fiscal 1996 approximate $5.4
million and are primarily targeted for investments in the frames and framed art
division and expansion of Joshua's store base. Current store expansion plans
call for Joshua's to open 17 new stores in fiscal 1996. Funding for new store
expansion planned for fiscal 1996, exclusive of capital expenditures, will
approximate $2.5 million. The Company's minimum operating lease commitments for
fiscal 1996, including the new stores planned, are approximately $8.6 million.
Management believes that the Company's current cash position, its cash flows
from operations and available borrowing capacity will be sufficient to fund its
current operations, capital expenditures and current growth plans.
ACQUISITIONS
Effective November 1, 1994, the Company acquired the assets and assumed
certain liabilities of the Novelty Division of Trench Manufacturing Company,
Inc. ("Trench"). Trench's Novelty Division manufactures and markets pennants,
bumper stickers, foam hands and other novelty items. The acquisition was made
for approximately $3.7 million in cash and resulted in the recording of goodwill
of $3.1 million.
During fiscal 1995, the Company, through its wholly-owned subsidiary
Joshua's Christian Stores, purchased two Christian book stores for an aggregate
purchase price of approximately $600,000 in cash. The acquisitions resulted in
the recording of goodwill of approximately $284,000.
These acquisitions did not have a significant impact on sales or operating
income for the year ended June 30, 1995.
The Company may, from time to time, evaluate acquisition candidates which
complement its existing businesses. To the extent that debt is utilized to
finance any such acquisitions and goodwill related to such acquisitions is
recorded, results of operations in future periods will be impacted by increased
interest expense and the amortization of goodwill associated with such
acquisitions.
IMPACT OF INFLATION AND CHANGING PRICES
Inflation has not had a significant impact on the consolidated results of
operations of the Company.
STRATEGY REVIEW
The Company plans to evaluate each of its various business segments during
the first half of fiscal 1996 to identify available actions to increase their
value to the Company and its shareholders. It is expected that the Company will
consider several options including changes in strategy or management,
restructuring of operations to achieve greater efficiency and divestiture
through a sale, spin-off or discontinuance of selected business units. Taking
one or more of these actions may result in the recognition of one-time gains or
charges during 1996. The timing and possible effect of any such actions will not
be known until completion of the strategic evaluation by the Company and its
advisors.
Item 8. Financial Statements and Supplementary Data
- ----------------------------------------------------
Index to Financial Statements
Financial Statements: Page
-------------------- ------
Report of Independent Accountants 16
Consolidated Balance Sheets, June 30, 1995
and 1994 17
Consolidated Statements of Income for the
Years Ended June 30, 1995, 1994 and 1993 18
Consolidated Statements of Cash Flowsfor the
Years Ended June 30, 1995, 1994 and 1993 19
Consolidated Statements of Stockholders'
Equity for the Years Ended June 30, 1995,
1994 and 1993 20
Notes to Consolidated Financial Statements 21
Financial Statement Schedules:
-----------------------------
For each of the three years in the period
ended June 30, 1995:
Schedule VIII - Valuation and Qualifying
Accounts and Reserves 32
Schedule IX - Short-Term Borrowings 33
All other schedules are omitted because they are not applicable or the
required information is shown in the financial statements or notes thereto.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of
Tandycrafts, Inc.
In our opinion, the consolidated financial statements listed in the
accompanying index present fairly, in all material respects, the financial
position of Tandycrafts, Inc. and its subsidiaries at June 30, 1995 and 1994,
and the results of their operations and their cash flows for each of the three
fiscal years in the period ended June 30, 1995, in conformity with generally
accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
/s/ PRICE WATERHOUSE LLP
- -------------------------
PRICE WATERHOUSE LLP
Fort Worth, Texas
August 8, 1995
TANDYCRAFTS, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
June 30,
---------------------
1995 1994
--------- ---------
ASSETS
Current assets:
Cash, including short-term investments
of $259 and $75, respectively $ 1,807 $ 1,506
Trade accounts receivable, net of allowance
for doubtful accounts of $605 and
$441, respectively 31,440 26,021
Inventories 65,742 53,297
Other current assets 2,991 4,590
--------- ---------
Total current assets 101,980 85,414
--------- ---------
Property and equipment, net 28,707 24,953
Other assets 604 739
Goodwill, net 47,512 39,325
--------- ---------
$ 178,803 $ 150,431
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $ 2,000 $ 4,000
Accounts payable 12,558 11,333
Accrued liabilities and other 12,555 12,878
--------- ---------
Total current liabilities 27,113 28,211
--------- ---------
Long-term debt 59,000 41,600
Deferred taxes 2,029 1,538
Stockholders' equity:
Common stock, $1 par value, 50,000,000 shares
authorized, 18,527,988 issued 18,528 18,528
Additional paid-in capital 17,447 13,158
Retained earnings 80,084 74,867
Common stock in treasury, at cost, 6,811,300
and 7,367,357 shares, respectively (25,398) (27,471)
--------- ---------
Total stockholders' equity 90,661 79,082
--------- ---------
Commitments and contingencies (Note 7)
$ 178,803 $ 150,431
========= =========
The accompanying notes are an integral part of these financial statements.
TANDYCRAFTS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share amounts)
Year Ended June 30,
----------------------------
1995 1994 1993
-------- -------- --------
Net sales $256,523 $214,869 $163,255
-------- -------- --------
Operating costs and expenses:
Cost of products sold (exclusive
of depreciation) 155,644 126,589 94,468
Selling, general and administrative 83,544 68,845 53,009
Depreciation and amortization 5,475 4,018 3,029
-------- -------- --------
Total operating costs and expenses 244,663 199,452 150,506
-------- -------- --------
Operating income 11,860 15,417 12,749
Interest income 67 144 218
Interest expense 3,900 1,581 668
-------- -------- --------
Income before income taxes 8,027 13,980 12,299
Provision for income taxes 2,810 5,074 4,549
-------- -------- --------
Net income $ 5,217 $ 8,906 $ 7,750
======= ======== ========
Net income per common share $.46 $.79 $.69
==== ==== ====
Weighted average number of common and
common equivalent shares 11,434 11,336 11,232
====== ====== ======
The accompanying notes are an integral part of these financial statements.
TANDYCRAFTS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
Year Ended June 30,
----------------------------
1995 1994 1993
------- -------- --------
Cash flows from operating activities:
Net income $ 5,217 $ 8,906 $ 7,750
Adjustments to reconcile net income to net
cash provided (used) by operating activities:
Depreciation and amortization 5,475 4,018 3,029
(Gain) loss on sale or abandonment
of assets (163) 56
Changes in assets and liabilities,
excluding effect of businesses acquired:
Receivables (5,036) (5,781) 1,098
Inventories (11,901) (7,143) (8,233)
Other current assets 1,734 (2,605) 1,146
Accounts payable, accrued expenses
and income taxes 644 592 (2,000)
------- -------- -------
Net cash provided (used) by
operating activities (4,030) (1,957) 2,790
------- -------- -------
Cash flows from investing activities:
Additions to property and equipment (9,519) (6,269) (2,891)
Purchase of business, net of cash acquired (9,052) (45,064) (414)
Proceeds from sale of fixed assets 1,685 43 175
Decrease in other receivables - - 1,250
Other investing activities - - (75)
------- -------- -------
Net cash used by investing activities (16,886) (51,290) (1,955)
-------- -------- -------
Cash flows from financing activities:
Sales of treasury stock to employee
benefit programs 5,817 2,254 1,806
Purchases of treasury stock (2,201) (970)
Principal payments on ESOP debt (4,000) (2,000) (1,000)
Borrowings under bank credit facility 19,400 41,600 -
Loan payments received from ESOP - 3,025 2,828
------- -------- --------
Net cash provided by financing
activities 21,217 42,678 2,664
------- -------- --------
Increase (decrease) in cash and cash
equivalents 301 (10,569) 3,499
Balance, beginning of year 1,506 12,075 8,576
------- -------- --------
Balance, end of year $ 1,807 $ 1,506 $ 12,075
======= ======== ========
Supplemental cash flow information:
Cash paid during the year for:
Interest $ 3,902 $ 1,490 $ 709
======= ======== ========
Income taxes $ 3,272 $ 5,114 $ 3,814
======= ======== ========
The accompanying notes are an integral part of these financial statements.
TANDYCRAFTS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Dollars in thousands)
<TABLE>
<S><C>
Additional Receivable
Common paid-in Retained Treasury from
stock capital earnings stock ESOP Total
------- --------- -------- -------- --------- -------
Balance, June 30, 1992 9,264 16,741 58,211 (28,866) (5,853) 49,497
Purchase of 69,628 shares
of treasury stock - - - (970) - (970)
Sale of 111,625 shares of
treasury stock to employee
benefit plan - 1,218 - 588 - 1,806
Acquisition of subsidiaries
for 494,530 shares of
treasury stock - 2,769 - 3,418 - 6,187
ESOP loan payments to
Company, 409,455 pledged
shares released - - - - 2,828 2,828
Two-for-one stock split
to shareholders of record
on February 5, 1993 9,264 (9,264) - - - -
Net income - - 7,750 - - 7,750
------- ------- ------- -------- ------- -------
Balance, June 30, 1993 18,528 11,464 65,961 (25,830) (3,025) 67,098
Purchase of 156,518
shares of treasury stock - - - (2,201) - (2,201)
Sale of 154,190 shares of
treasury stock to
employee benefit plan - 1,694 - 560 - 2,254
ESOP loan payments to
Company, 698,993
pledged shares
released - - - - 3,025 3,025
Net income - - 8,906 - - 8,906
------- ------- ------- -------- -------- -------
Balance, June 30, 1994 18,528 13,158 74,867 (27,471) - 79,082
Sale of 514,399 shares
of treasury stock to
employees benefit plan - 3,899 - 1,918 - 5,817
Contingent payment of
41,658 shares for
acquired business - 390 - 155 - 545
Net income - - 5,217 - - 5,217
------- ------- ------- -------- -------- -------
Balance, June 30, 1995 $18,528 $17,447 $80,084 $(25,398) $ - $90,661
======= ======= ======= ======== ======== =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
TANDYCRAFTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - ACCOUNTING PRINCIPLES
Principles of consolidation - The accompanying consolidated financial statements
include the accounts of the Company and its wholly-owned subsidiaries after
elimination of significant inter-company accounts and transactions.
Cash and cash equivalents - The Company considers, for purposes of the statement
of cash flows, all highly liquid investments purchased with an original maturity
of three months or less to be cash equivalents.
Inventories - Inventories are stated at the lower of average cost or market and
consist of the following (in thousands):
June 30,
-------------------
1995 1994
-------- --------
Finished goods $ 46,276 $ 35,189
Raw materials and work-in-process 19,466 18,108
-------- --------
$ 65,742 $ 53,297
======== ========
Property and equipment - Property and equipment is depreciated over the
estimated useful lives of the assets using principally the straight-line
method at the rates shown below:
Buildings 3% to 10%
Fixtures and equipment 5% to 50%
Leasehold improvements 5% to 20%
or the life of the lease.
Expenditures for maintenance, repairs, renewals and betterments which do
not materially prolong the useful lives of the assets are charged to income as
incurred. The cost of property retired or sold, and the related accumulated
depreciation, are removed from the accounts and any gain or loss, after taking
into consideration proceeds from sales, is reflected in income.
Pre-opening expenses - Expenses associated with the opening of new stores are
expensed as incurred.
Fair value of financial instruments - The fair value of the Company's long-term
debt approximates the carrying value due to the floating interest rates on such
debt. The carrying value of the Company's other financial instruments
approximates fair value due to the short-term maturities of the assets and
liabilities.
Goodwill - The cost of businesses acquired in purchase transactions has been
allocated among the identifiable assets and liabilities acquired based upon
their fair values at the dates of acquisition. Any cost in excess of the fair
value of such identifiable net assets acquired has been allocated to goodwill.
In general, goodwill is amortized using the straight-line method over the
estimated useful life of forty years. Accumulated amortization of goodwill at
June 30, 1995 and 1994 was $1,743,000 and $674,000, respectively. Goodwill which
arose prior to October 31, 1970, aggregating $2,147,000, is reviewed annually by
the Board of Directors and will continue to be carried as an asset unless the
Board determines that events and circumstances indicate that there has been a
decline or limitation in the value, at which time an appropriate amortization
policy will be adopted. Annually, the carrying value of goodwill related to
purchase transactions is evaluated to determine if events and circumstances
indicate a potential impairment of the recoverability of such goodwill. The
carrying value of goodwill will be reduced if it is probable that the
undiscounted cash flows from the related operations will be less than the
carrying amounts of the goodwill and other long-lived assets.
Income taxes - On July 1, 1993, the Company adopted Statement of Financial
Accounting Standards No. 109 (SFAS 109), Accounting for Income Taxes, on a
prospective basis. The adoption of SFAS 109 changed the Company's method of
accounting for income taxes from the deferred method (APB 11) to an asset and
liability approach. Previously the Company deferred the past tax effects of
timing differences between financial reporting and taxable income. Under SFAS
109, deferred tax assets and liabilities are recognized based on differences
between financial statement and tax bases of assets and liabilities using
presently enacted rates. The adoption of SFAS 109 had no material impact on the
Company's financial position or results of operations.
Net income per share - Net income per share of common stock is based upon the
weighted average number of shares of common stock and common stock equivalents
outstanding during the periods, after giving effect to stock splits. The
computation of weighted average shares outstanding for fiscal 1995 and fiscal
1994 includes common stock equivalents of 5,000 and 171,000, respectively.
Advertising costs - Advertising costs are expensed the first time the
advertising takes place. Advertising expense for fiscal 1995, 1994 and 1993
was $8.1 million, $5.1 million and $3.7 million, respectively.
Stock split - In January, 1993, the Board of Directors of the Company authorized
a two-for-one common stock split payable in the form of a 100% stock dividend to
shareholders of record on February 5, 1993. Additional paid-in capital was
charged and common stock was credited for the par value of 9,263,994 shares
issued in connection with the stock split.
All applicable per-share data appearing in the consolidated financial
statements and notes thereto reflect the two-for-one stock split.
NOTE 2 - ACQUISITIONS
During the last three fiscal years, the Company completed a number of
strategic acquisitions to complement its operations. All acquisitions were
accounted for using the purchase method of accounting, except for the fiscal
1993 acquisition of J-Mar Associates, Inc. which was accounted for as a pooling
of interests. Goodwill resulting from these acquisitions is being amortized
over forty years.
Fiscal 1995
Effective November 1, 1994, the Company acquired the assets and assumed
certain liabilities of the Novelty Division of Trench Manufacturing Company,
Inc. ("Trench"). Trench's Novelty Division manufactures pennants, bumper
stickers, foam hands and other novelty items. The acquisition was made for
approximately $3.7 million in cash and resulted in the recording of goodwill of
$3.1 million.
During fiscal 1995, the Company, through its wholly-owned subsidiary
Joshua's Christian Stores, purchased two Christian book stores for an aggregate
purchase price of approximately $600,000 in cash. The acquisitions resulted in
the recording of goodwill of approximately $284,000.
These acquisitions are considered insignificant for presentation of pro
forma financial information.
Fiscal 1994
Effective September 1, 1993, the Company acquired the net assets of TAG
Express, a marketer of products featuring leading professional and collegiate
sports logos, for approximately $5.2 million in cash. The acquisition resulted
in the recording of goodwill of $4.0 million.
On September 30, 1993, the Company acquired the net assets of Birdlegs,
Inc. ("Birdlegs") for approximately $4.2 million in cash. Birdlegs produces and
markets screen-printed active wear. The acquisition resulted in the recording of
goodwill of $2.4 million.
Effective November 1, 1993, the Company purchased substantially all of the
assets and assumed certain liabilities of Prestige Leather Creations, Inc.
("Prestige") for $8.7 million in cash. Prestige manufactures and markets a broad
line of men's and women's belts ranging from the low-end to the high-end market
segments of the belt industry. During fiscal 1995, additional consideration of
$600,000 became due to the former owners based upon the occurrence of certain
events as specified in the purchase agreement. The acquisition resulted in the
recording of goodwill of $5.9 million.
Effective November 1, 1993, the Company purchased substantially all of the
assets and assumed certain liabilities of Impulse Designs, Inc. ("Impulse") for
$17.7 million in cash. Impulse is a leading producer of framed art to mass-
market retailers. The terms of the purchase agreement provide for a contingent
cash payment based upon the attainment of certain earnings thresholds for the
year ended December 31, 1994. In April 1995, the Company paid an additional $4.3
million in accordance with such provision of the purchase agreement. This
acquisition has resulted in the recording of goodwill of $18.9 million.
Effective April 1, 1994, the Company purchased the net assets of Rivertown
Button for approximately $6.0 million in cash. Rivertown Button is a contract
manufacturer of promotional buttons. The acquisition resulted in the recording
of goodwill of $4.3 million.
During fiscal 1994, the Company, through its wholly-owned subsidiary
Joshua's Christian Stores, purchased eight Christian book stores for an
aggregate purchase price of $1.9 million in cash. The acquisitions resulted in
the recording of goodwill of $1.4 million.
During fiscal 1994, the Company purchased three other businesses for cash
aggregating $1.9 million. These acquisitions resulted in the recording of
goodwill of $1.6 million.
Fiscal 1993
With respect to transactions involving common stock described below, the
shares issued have been restated to reflect stock splits which occurred
subsequent to date of consummation of the acquisitions.
Nocona Belt Company ("Nocona"), an established manufacturer of a high-
quality line of western leather belts and other accessories, was acquired
effective July 1, 1992. The Company purchased all of the outstanding stock of
Nocona in exchange for 866,668 shares of the Company's common stock, valued at
approximately $4.6 million at July 1, 1992. The acquisition resulted in the
recording of goodwill of $3.4 million.
In November 1992, all of the outstanding stock of David James
Manufacturing, Inc. ("David James") and Brand Name Apparel, Inc. ("Brand Name")
was acquired in exchange for 122,392 shares of the Company's common stock valued
at $1.6 million at the date of acquisition. David James and Brand Name
manufacture apparel which is sold under their own labels and private labels for
certain customers. Under the terms of the purchase agreements with David James
and Brand Name, additional shares of common stock of the Company may be issuable
to the previous owners based on pre-tax income of the acquired companies for
each of the five years following the date of acquisition. As of June 30, 1995,
41,658 additional shares have been paid pursuant to these agreements. These
acquisitions have resulted in the recording of goodwill of $1.2 million.
On October 15, 1992, the Company acquired all of the outstanding stock of
J-Mar Associates, Inc. ("J-Mar") in exchange for 295,841 shares of the Company's
common stock. J-Mar designs and wholesales inspirational gift items to gift and
stationery retailers in the United States and other countries. The acquisition
was accounted for as a pooling of interests.
NOTE 3 - PROPERTY AND EQUIPMENT AND ACCUMULATED DEPRECIATION
As of June 30 (in thousands) 1995 1994
------- -------
Property and equipment, at cost:
Land $ 2,441 $ 2,688
Buildings 12,568 12,911
Leasehold improvements 7,187 5,941
Fixtures and equipment 26,462 20,763
------- -------
48,658 42,303
Less accumulated depreciation (19,951) (17,350)
------- -------
Property and equipment, net $28,707 $24,953
======= =======
NOTE 4 - ACCRUED LIABILITIES AND OTHER
Accrued liabilities and other consisted of the following at June 30, 1995
and 1994 (in thousands):
1995 1994
------- -------
Accrued payroll and bonus $ 6,652 $ 6,837
Income taxes payable (receivable) (265) 389
Taxes, other than income taxes 1,135 817
Customer deposits 430 1,096
Interest 335 337
Other 4,268 3,402
------- -------
$12,555 $12,878
======= ========
NOTE 5 - DEBT
The Company has a $60 million revolving credit facility with a group of
banks. The credit facility is an unsecured, two-year revolving line of credit,
renewable annually, and is convertible into a five-year term loan at the end of
the revolving period if not renewed. Interest rates on borrowings are based on
current LIBOR or prime rates, at the option of the Company. A commitment fee of
1/4% is charged on the unused portion of the credit facility. Interest rates on
borrowings at June 30, 1995 ranged from 6.87% to 6.94%. At June 30, 1995, the
Company had borrowings aggregating $58 million and letters of credit aggregating
$445,000 outstanding under this facility. The loan agreement contains provisions
specifying certain limitations on the amount of future indebtedness, investments
and dividends, and requires the maintenance of certain financial ratios and
balances. At June 30, 1995, the Company was in compliance with such covenants.
In April 1995, the Company executed three $1 million promissory notes with
its primary banker. These promissory notes are unsecured and bear interest at
the prime rate, which was 9.00% at June 30, 1995. The balance of these
promissory notes is due on July 3, 1995. One of the promissory notes was
refinanced under the Company's long-term credit facility discussed above and is
therefore classified as long-term debt at June 30, 1995.
On July 6, 1995, the Company established an additional $10 million
revolving credit facility with its primary bankers. The credit facility is an
unsecured revolving line of credit that terminates on March 31, 1996. Interest
rates on borrowings are based on current LIBOR or prime rates, at the option of
the Company. A commitment fee of 1/4% is charged on the unused portion of the
credit facility. The loan agreement contains provisions specifying certain
limitations on the amount of future indebtedness, investments and dividends, and
requires the maintenance of certain financial ratios and balances.
In January 1988, the Company borrowed $14,738,000 which was concurrently
loaned to the newly formed Tandycrafts, Inc. Employee Stock Ownership Plan (the
"ESOP") on the same terms. With the proceeds, the ESOP purchased 850,160 shares
(pre-splits) of the Company's common stock. This note was retired on January 5,
1995 when the final installment of $4,000,000 was paid.
NOTE 6 - INCOME TAXES
The provision for income taxes was as follows (in thousands):
1995 1994 1993
-------- ------- --------
Current tax expense:
Federal $ 2,205 $ 4,440 $ 3,353
State and local 114 436 524
-------- ------- --------
Total current 2,319 4,876 3,877
Deferred tax expense:
Federal 491 198 672
-------- ------- --------
Total provision $ 2,810 $ 5,074 $ 4,549
======== ======= ========
Deferred tax liabilities (assets) are comprised of the following at June
30 (in thousands):
1995 1994
-------- -------
Depreciation $ 1,758 $ 1,648
Goodwill 834 305
-------- -------
Total deferred tax liabilities 2,592 1,953
-------- -------
Inventory (273) (164)
Bad debts (172) (148)
Loss carryforwards - (35)
Deferred compensation (65) -
Lease reserves (42) (75)
Other (11) (28)
-------- -------
Total deferred tax assets (563) (450)
Deferred tax assets valuation
allowance - 35
-------- -------
$ 2,029 $ 1,538
======== =======
The net change in the valuation allowance for deferred tax assets was a
decrease of $35,000. The decrease relates to the expiration of loss
carryforwards generated in prior years.
The provision for income taxes differs from the amount of income tax
determined by applying the applicable U.S. statutory federal income tax rate to
pretax income as a result of the following differences (in thousands):
Year ended June 30,
---------------------------
1995 1994 1993
------- ------- -------
Statutory U.S. tax rates $ 2,729 $ 4,793 $ 4,181
Increase (decrease) in rates
resulting from:
State and local taxes, net 75 286 393
Other 6 (5) (25)
------- ------- -------
Effective tax rates $ 2,810 $ 5,074 $ 4,549
======= ======= =======
NOTE 7 - COMMITMENTS AND CONTINGENCIES
The Company leases certain properties consisting primarily of retail stores
and transportation equipment under operating leases expiring through 2004. Real
estate taxes, maintenance and certain other costs are borne by the Company under
the provisions of most of the leases. The composition of total rental expense
for operating leases is as follows (in thousands):
Year ended June 30,
---------------------------
1995 1994 1993
------ ------- -------
Rentals:
Minimum $ 9,598 $ 7,760 $ 6,921
Contingent (percentage of sales) 31 54 34
------- ------- -------
$ 9,629 $ 7,814 $ 6,955
======= ======= =======
Minimum rental commitments for noncancellable operating leases (primarily
retail store space) at June 30, 1995 are summarized as follows (in thousands):
Year ended June 30,
1996 8,607
1997 7,152
1998 5,524
1999 4,239
2000 2,561
2001 and thereafter 3,520
-------
$31,603
=======
In connection with the November 1993 acquisition of Impulse Designs, the
Asset Purchase Agreement (the "Agreement") provides for a contingent payment to
be made based upon the attainment of certain earnings thresholds for the year
ended December 31, 1994. In April 1995, the Company made an additional payment
of approximately $4.3 million pursuant to the terms of the Agreement. In June
1995, the former owners of Impulse Designs filed an objection notice disputing
the amount of the additional payment. In the event of a dispute, the Agreement
provides for resolution through a process of binding arbitration. The additional
amount sought by the former owners of Impulse Designs is approximately $5.7
million. The Company believes that no additional payment is required and has
responded by filing a counterclaim for a refund of an amount yet to be
determined of the April 1995 payment. This dispute is expected to proceed to
arbitration during fiscal 1996. The range of additional payment or refund, if
any, cannot yet be reasonably determined.
NOTE 8 - EMPLOYEE STOCK OWNERSHIP PLAN
During fiscal 1988, the Company adopted the Tandycrafts, Inc. Employee
Stock Ownership Plan (the "ESOP" or the "Plan") which is open to all eligible
employees of the Company employed in the United States. Under the Plan,
participants contribute 5% of their earnings into the section 401(k) portion of
the Plan, which is immediately vested and used to purchase common stock of the
Company. The Company's matching contribution is 200% of the participant's
contribution. The Company's contribution is vested upon completion of five years
of credited service. The employee and Company contributions are paid to a
corporate trustee. Company contributions to the ESOP for the years ended June
30, 1995, 1994, and 1993 were approximately $3,933,000, $3,953,000 and
$3,474,000, respectively.
NOTE 9 - STOCK OPTION PLANS
The Tandycrafts, Inc. 1992 Stock Option Plan (the "Stock Option Plan")
provides for the grant of options to purchase up to 1,400,000 shares of the
Company's common stock by officers and key employees. Options granted under the
Stock Option Plan may not have an option price less than the fair market value
of common stock on the date of grant. Options are exercisable at a rate of 20%
per year beginning at least one year after the date of grant and, if not
exercised, expire ten years from the date of grant.
The Tandycrafts, Inc. 1992 Director Stock Option Plan (the "Director Plan")
provides for the grant of options to non-employee directors to purchase up to
240,000 shares of the Company's common stock. The Director options are
exercisable 33-1/3% at date of grant and 16-2/3% on the first, second, third and
fourth anniversaries of the date of grant and, if not exercised, expire ten
years from the date of grant.
A summary of stock option activity under these plans follows:
Option Amount
Shares Per Share
------------ -------------
Options outstanding,
June 30, 1993 1,127,500 $ 12.32
Options granted 349,900 $10.69-18.44
Options exercised (5,600) $ 12.32
Options terminated (52,900) $12.32-17.62
------------ -------------
Options outstanding,
June 30, 1994 1,418,900 $10.69-18.44
Options granted 77,000 $ 8.82-12.57
Options exercised
Options terminated (35,800) $11.13-18.44
------------ -------------
Options outstanding,
June 30, 1995 1,460,100 $ 8.82-12.57
============ ============
Options exercisable,
June 30, 1995 547,344 $10.69-18.44
============ ============
Options available for
future grant, June 30, 1995 174,300
============
NOTE 10 - INDUSTRY SEGMENT AND GEOGRAPHIC AREA INFORMATION
The Company operates in two primary industry segments, specialty retail and
specialty manufacturing. The specialty retail segment is comprised of four
distinct retail concepts. The specialty manufacturing segment is comprised of
four divisions: Picture Frames and Framed Art, Belts and Accessories, Outerwear
and TWI. Substantially all of the specialty retail products are marketed through
325 Company-owned specialty retail stores located in 45 states of the United
States. The specialty retail segment grants nominal credit primarily to
institutional customers. The specialty manufacturing segment, during fiscal
1995, 1994 and 1993, had net sales of $26,774,000, $24,259,000 and $22,424,000,
respectively, to a group of customers under common control. The Company had no
other individual customer or group of customers which accounted for more than
10% of the Company's total revenue. The specialty manufacturing segment, in the
normal course of business, grants credit with the majority of its sales.
Intersegment sales represent sales from the specialty manufacturing group
to the specialty retail group. Operating income is segment revenue less segment
operating expenses, which excludes corporate charges, goodwill amortization,
interest expense and income taxes. Identifiable assets by segment are those
assets that are used in each segment. Corporate assets are comprised of cash and
short-term investments.
Segment information for each of the three years in the period ended June
30, 1995 is as follows (in thousands):
Specialty Specialty
1995 manufacturing retailing Consolidated
----------- --------- -----------
Total sales $ 150,552 $ 117,966 $ 268,518
Intersegment sales (11,824) (171) (11,995)
--------- --------- ---------
Net sales $ 138,728 $ 117,795 $ 256,523
========= ========= =========
Operating income $ 12,989 $ 3,521 $ 16,510
========= =========
Corporate expenses including goodwill
amortization and interest expense, net (8,483)
---------
Income before income taxes 8,027
=========
Depreciation 2,225 2,180 4,405
Goodwill amortization 1,027 43 1,070
--------- --------- ---------
Total depreciation and amortization $ 3,252 $ 2,223 $ 5,475
========= ========= =========
Identifiable assets $ 121,753 $ 55,243 $ 176,996
========= =========
Corporate assets 1,807
---------
$ 178,803
=========
Capital expenditures $ 5,272 $ 4,247 $ 9,519
========= ========= =========
1994
Total sales $ 116,736 $ 107,650 $ 224,386
Intersegment sales (9,517) (9,517)
--------- --------- ---------
Net sales $ 107,219 $ 107,650 $ 214,869
========= ========= =========
Operating income $ 13,262 $ 6,370 $ 19,632
========= ========= =========
Corporate expenses including goodwill
amortization and interest expense, net (5,652)
---------
Income before income taxes $ 13,980
=========
Depreciation $ 1,705 $ 1,730 $ 3,435
Goodwill amortization 571 12 583
--------- --------- ---------
Total depreciation and amortization $ 2,276 $ 1,742 $ 4,018
========= ========= =========
Identifiable assets $ 103,538 $ 45,387 $ 148,925
========= =========
Corporate assets 1,506
---------
$ 150,431
=========
Capital expenditures $ 3,147 $ 3,122 $ 6,269
========= ========= =========
1993
Total sales $ 77,689 $ 96,118 $ 173,807
Intersegment sales (10,552) (10,552)
--------- --------- ---------
Net sales $ 67,137 $ 96,118 $ 163,255
========= ========= =========
Operating income $ 10,091 $ 3,858 $ 13,949
========= =========
Corporate expenses including goodwill
amortization and interest expense, net (1,650)
---------
Income before income taxes $ 12,299
=========
Depreciation $ 916 $ 2,022 $ 2,938
Goodwill amortization 91 91
--------- --------- ---------
Total depreciation and amortization $ 1,007 $ 2,022 $ 3,029
========= ========= =========
Identifiable assets $ 36,319 $ 41,471 $ 77,790
========= =========
Corporate assets 12,075
---------
$ 89,865
=========
Capital expenditures $ 1,327 $ 1,564 $ 2,891
========= ========= =========
NOTE 11 - QUARTERLY RESULTS (UNAUDITED)
Summarized quarterly income statements (in thousands of dollars, except per
share amounts) for the years ended June 30, 1995 and 1994 are set forth below:
<TABLE>
<S><C>
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
--------------- --------------- ----------------- ----------------
1995 1994 1995 1994 1995 1994 1995 1994
------- ------- ------- ------- ------- -------- ------- -------
Net sales $65,512 $42,487 $75,619 $63,092 $54,891 $52,469 $60,501 $56,821
Costs and expenses:
Cost of goods
sold 39,802 24,893 44,572 37,686 33,160 31,222 38,110 32,788
Selling and
administrative 20,305 13,910 22,583 18,441 20,902 17,024 19,754 19,470
Depreciation and
amortization 1,349 798 1,207 1,022 1,465 1,046 1,454 1,152
------- ------- ------- ------- ------- ------- ------- -------
Operating income
(loss) 4,056 2,886 7,257 5,943 (636) 3,177 1,183 3,411
Interest expense,
net 826 173 950 356 1,001 476 1,056 432
------- ------- ------- ------- ------- ------- ------- -------
Income (loss)
before income
taxes 3,230 2,713 6,307 5,587 (1,637) 2,701 127 2,979
Provision (benefit)
for income taxes 1,176 1,004 2,210 2,185 (581) 1,021 5 864
------- ------- ------- ------ ------- ------ ------- -------
Net income (loss) $ 2,054 $ 1,709 $ 4,097 $3,402 $(1,056) $ 1,680 $ 122 $ 2,115
======= ======= ======= ====== ======= ======= ======= =======
Net income (loss)
per common share $.18 $.15 $.36 $.30 ($.09) $.15 $.01 $.19
==== ==== ==== ==== ==== ==== ==== ====
</TABLE>
Item 9. Changes In and Disagreements With Accountants on Accounting and
- ------------------------------------------------------------------------
Financial Disclosure
- --------------------
None.
PART III
--------
Item 10. Directors and Executive Officers of the Registrant
- ------------------------------------------------------------
The information required by this item with regard to executive officers is
included in Part I, Item 4 of this report under the heading "Executive Officers
of the Registrant", which information is incorporated herein by reference.
The information required by this item regarding the Directors of the
Company and compliance with Section 16(a) of the Securities Exchange Act of 1934
is set forth in the Company's Proxy Statement for its 1995 Annual Meeting of
Stockholders (the "Proxy Statement") under the heading "Election Of Directors",
which information is incorporated herein by reference. Such Proxy Statement
will be filed with the Commission pursuant to Regulation 14A within 120 days of
the fiscal year ended June 30, 1995.
Item 11. Executive Compensation
- --------------------------------
The information concerning executive compensation is set forth in the Proxy
Statement under the heading "Executive Compensation", which is incorporated
herein by reference. Such Proxy Statement will be filed with the Commission
pursuant to Regulation 14A within 120 days of the fiscal year ended June 30,
1995.
Item 12. Security Ownership of Certain Beneficial Owners and Management
- ------------------------------------------------------------------------
The information concerning security ownership of certain beneficial owners
and management is set forth in the Proxy Statement under the heading "Security
Ownership of Certain Beneficial Owners and Management", which information is
incorporated herein by reference. Such Proxy Statement will be filed with the
Commission pursuant to Regulation 14A within 120 days of the fiscal year ended
June 30, 1995.
Item 13. Certain Relationships and Related Transactions
- --------------------------------------------------------
The information concerning relationships and related transactions is set
forth in the Proxy Statement under the heading "Executive Compensation -
Transactions With Management and Directors", which information is incorporated
herein by reference. Such Proxy Statement will be filed with the Commission
pursuant to Regulation 14A within 120 days of the fiscal year ended June 30,
1995.
PART IV
-------
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
- -------------------------------------------------------------------------
(a) The following financial statements, schedules and exhibits are filed as
part of this report.
(1) Financial Statements and Financial Statement Schedules - See
Index to Financial Statements at Item 8 on page 15 of this
report.
(b) Reports on Form 8-K:
The Company filed a Current Report on Form 8-K, dated April 28, 1995,
which included the contents of a press release announcing the unaudited
results of operations for the three and nine-month periods ended March 31,
1995.
(c) Exhibits:
A list of the exhibits required by Item 601 of regulation S-K to be
filed as part of this report is set forth in the Index to Exhibits, which
immediately precedes such exhibits, and is incorporated herein by
reference.
(d) Not applicable
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
TANDYCRAFTS, INC.
(Registrant)
September 27, 1995 By /s/ Jerry L. Roy
----------------------
Jerry L. Roy
President and Chief Executive Officer
and Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below on this 27th day of September, 1995, by the
following persons on behalf of the Registrant and in the capacities indicated.
/s/ B. Frank Bigger
-------------------------------
B. Frank Bigger
Director
/s/ R.E. Cox III
-------------------------------
R. E.. Cox III
Chairman of the Board
/s/ Jim D. Allen
-------------------------------
Jim D. Allen
Vice President and Director
of SEC Reporting
(Chief Accounting Officer)
/s/ Joe K. Pace
-------------------------------
Joe K. Pace
Director
/s/ Jerry L. Roy
-------------------------------
Jerry L. Roy
President and Chief Executive Officer
and Director
/s/ Robert Schutts
-------------------------------
Robert Schutts
Director
/s/ Carol Smith
-------------------------------
Carol Smith
Director
/s/ Michael J. Walsh
-------------------------------
Michael J. Walsh
Executive Vice President, Secretary,
Chief Financial Officer and Director
Schedule VIII
TANDYCRAFTS, INC. AND SUBSIDIARIES
Valuation and Qualifying Accounts and Reserves
(In thousands)
Year ended June 30,
----------------------------------
1995 1994 1993
-------- -------- --------
Allowance for doubtful accounts:
Balance, beginning of year $ 441 $ 264 $ 129
Additions charged to profit and loss 788 343 153
Accounts receivable charged off, net
of recoveries (624) (166) (18)
-------- --------- ---------
Balance, end of year $ 605 $ 441 $ 264
======== ========= =========
Schedule IX
TANDYCRAFTS, INC. AND SUBSIDIARIES
Short-Term Borrowings
(Dollars in thousands)
<TABLE>
<S><C>
End of Period During the Period
-------------------------- -------------------------------------------------------
Category of aggregate Weighted Maximum Average Weighted
short-term borrowings average amount amount average
(a) Balance interest rate outstanding (b) outstanding (c) interest rate (d)
- ------------------- -------- ------------- ----------------- -------------- -----------------
Year ended 6-30-95
- ------------------
Banks $ 61,000 7.03% $ 62,310 $ 54,903 6.77%
Year ended 6-30-94
- ------------------
Banks $ 41,600 5.19% $ 41,600 $ 24,141 4.60%
Year ended 6-30-93 - - - - -
- ------------------
</TABLE>
(a) Bank borrowings represent short-term loans which are generally payable in
30, 60 or 90 day maturities with interest at the lending banks' prime
commercial rate (9.0% and 7.25% at June 30, 1995 and June 30, 1994,
respectively) or at LIBOR plus .75% (weighted average of 7.03% at June 30,
1995 and June 30, 1994, respectively).
(b) The maximum amount outstanding is based on the highest month-end balance
during the period.
(c) The average amount of short-term borrowings is determined by using the
average daily balances during the period.
(d) The weighted average interest rate of short-term borrowings was computed by
dividing the total interest expense for the period by the average short-
term borrowings.
TANDYCRAFTS, INC.
INDEX TO EXHIBITS
Filed with the Annual Report on Form 10-K for the year ended June 30, 1995.
Exhibit
Number Description
- ------- -----------
3.1 Certificate of Incorporation (1)
3.2 # Amended and Restated Bylaws of the Company
3.3 Certificate of Amendment of Certificate of Incorporation
dated December 7, 1992 (3)
10.1 * # Executive Officers Incentive Bonus Plan
10.2 * The Tandycrafts, Inc. 1992 Stock Option Plan (2)
10.3 * The Tandycrafts, Inc. 1992 Director Stock Option Plan (2)
10.4 * Form of Stock Option Agreement used to evidence stock options
granted under the Tandycrafts, Inc. 1992 Stock Option Plan (3)
10.5 * Form of Stock Option Agreement used to evidence stock options
granted under the Tandycrafts, Inc. 1992 Director Stock Option
Plan (3)
10.6 * # Amended and Restated Tandycrafts, Inc. ESOP Benefit Restoration
Plan
10.7 Revolving Credit and Term Loan Agreement (4)
10.8 * Amendment to the Tandycrafts, Inc. 1992 Stock Option Plan (5)
10.9 * Amended Tandycrafts, Inc. 1992 Director Stock Option Plan (6)
10.10 Second Amendment to Revolving Credit and Term Loan Agreement (7)
10.11 # Third Amendment to Revolving Credit and Term Loan Agreement
10.12 # Fourth Amendment to Revolving Credit and Term Loan Agreement
21 # Subsidiaries of the Registrant
23 # Consent of Independent Accountants
27 # Financial Data Schedule (filed electronically only)
# Filed herewith.
* Indicates management compensatory plan, contract or arrangement.
(1)Filed with the Commission as an Exhibit to the Company's Form S-1
Registration Statement (No. 2-54086) and incorporated herein by reference.
(2)Filed with the Commission as an Exhibit to the Company's Definitive Proxy
Statement dated October 5, 1993, which Proxy Statement was filed with the
Commission as an Exhibit to the Company's Annual Report on Form 10-K for the
year ended June 30, 1993. Such Exhibit is incorporated herein by reference.
(3)Filed with the Commission as an Exhibit to the Company's Annual Report on
Form 10-K for the fiscal year ended June 30, 1993, and incorporated herein
by reference.
(4)Filed with the Commission as an Exhibit to the Company's Quarterly Report on
Form 10-Q for the quarter ended September 30, 1993, and incorporated herein
by reference.
(5)Filed with the Commission as an Exhibit to the Company's Annual Report on
Form 10-K for the fiscal year ended June 30, 1994, and incorporated herein
by reference.
(6)Filed with the Commission as an Exhibit to the Company's Definitive Proxy
Statement dated October 3, 1994, which Proxy Statement was filed with the
Commission as an Exhibit to the Company's Annual Report on Form 10-K for the
year ended June 30, 1994.
(7)Filed with the Commission as an Exhibit to the Company's Quarterly Report on
Form 10-Q for the quarter ended September 30, 1994, and incorporated herein
by reference.
EXHIBIT 10.1
TANDYCRAFTS, INC.
Executive Officers Incentive Bonus Plan
The annual incentive bonus program for executive officers is the principal
short-term incentive compensation program of the Corporation. Cash bonuses are
paid following the conclusion of the Corporation's fiscal year. These cash
bonus awards are based upon the extent to which the Corporation meets or exceeds
specified pretax profit thresholds designated by the Compensation Committee of
the Board of Directors at the beginning of the Corporation's fiscal year. The
Committee establishes a threshold, target and maximum bonus payable for
specified levels of pretax profits for each executive officer. The minimum and
maximum bonus amount for each executive officer is equal to 50% and 150%,
respectively, of the target bonus amount.
EXHIBIT 3.2
TANDYCRAFTS, INC.
AMENDED AND RESTATED BYLAWS
ARTICLE I
OFFICES.
SECTION 1. Registered Office. The registered office of the Corporation in
the State of Delaware shall be located in the City of Wilmington, County of New
Castle, State of Delaware, and the name of the resident agent in charge thereof
shall be The Corporation Trust Company.
SECTION 2. Other Offices. The principal office of the Corporation and such
other offices as may be deemed appropriate shall be at such place or places as
the Board of Directors may from time to time appoint or the business of the
Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS.
SECTION 1. Place of Meeting. All meetings of the stockholders for the
election of directors shall be held at such place within or without the State of
Delaware as the Board of Directors may designate, provided that at least ten
(10) days' notice must be given to the stockholders entitled to vote thereat of
the place so fixed. Meetings of stockholders for any other purpose may be held
at such place and time as shall be stated in the notice of the meeting.
SECTION 2. Annual Meetings. The Annual Meeting of the Stockholders of the
Corporation for the election of directors by a plurality vote and for the
transaction of such other business as may properly come before the meeting shall
be held each year on the second Wednesday of November, if not a legal holiday,
and if a legal holiday, then on the following day, at 9:30 a.m. at the corporate
office of Tandycrafts, Inc. or at such other time or place as the directors may
determine as provided in Section 1 of Article II of these By-Laws.
SECTION 3. Special Meetings. Special meetings of the stockholders for any
purpose or purposes, unless otherwise prescribed by statute or the Certificate
of Incorporation, may be called by the Chairman of the Board or by the directors
(either by written instrument signed by a majority or by resolution adopted by a
vote of the majority, and special meetings shall be called by the Chairman of
the Board or the President or the Secretary whenever stockholders owning a
majority of the capital stock issued, outstanding and entitled to vote so
request in writing. Such request shall state the purpose or purposes of the
proposed meeting.
SECTION 4. Notice. Written or printed notice of every meeting of
stockholders, annual or special, stating the time and place thereof, and, if a
special meeting, the purpose or purposes in general terms for which the meeting
is called, shall not less than ten (10) days before such meeting be served upon
or mailed to each stockholder entitled to vote thereat, at his address as it
appears upon the books of the Corporation or, if such stockholder shall have
filed with the Secretary of the Corporation a written request that notices
intended for him be mailed to some other address, then to the address designated
in such request.
SECTION 5. Quorum. Except as otherwise provided by law or by the
Certificate of Incorporation, the presence in person or by proxy at any meeting
of stockholders of the holders of a majority of the shares of the capital stock
of the Corporation issued and outstanding and entitled to vote thereat shall be
requisite and shall constitute a quorum. If, however, such majority shall not
be represented at any meeting of the stockholders regularly called, the holders
of a majority of the shares present in person or by proxy and entitled to vote
thereat shall have power to adjourn the meeting to another time, or to another
time and place, without notice other than announcement of adjournment at the
meeting, and there may be successive adjournments for like cause and in like
manner until the requisite amount of shares entitled to vote at such meeting
shall be represented. At such adjourned meeting at which the requisite amount
of shares entitled to vote thereat shall be represented, any business may be
transacted which might have been transacted at the meeting as originally
notified.
SECTION 6. Votes. Proxies. At each meeting of stockholders every
stockholder shall have one vote for each share of capital stock entitled to vote
which is registered in his name on the books of the Corporation on the date on
which the transfer books were closed, if closed, or on the date set by the Board
of Directors for the determination of stockholders entitled to vote at such
meeting. At each such meeting every stockholder shall be entitled to vote in
person, or by proxy appointed by an instrument in writing subscribed by such
stockholder and bearing a date not more than three years prior to the meeting in
question, unless said instrument provides for a longer period during which it is
to remain in force.
At all meetings of the stockholders, a quorum being present, all matters
shall be decided by majority vote of the shares of stock entitled to vote held
by stockholders present in person or by proxy, except as otherwise required by
the Certificate of Incorporation or the laws of the State of Delaware. Unless
so directed by the chairman of the meeting, or required by the laws of the State
of Delaware, the vote thereat on any question need not be by ballot.
On a vote by ballot, each ballot shall be signed by the stockholder voting,
or in his name by his proxy, if there be such proxy, and shall state the number
of shares voted by him and the number of votes to which each share is entitled.
On a vote by ballot, the chairman shall appoint two inspectors of election, who
shall first take and subscribe an oath or affirmation faithfully to execute the
duties of inspector at such meeting with strict impartiality and according to
the best of their ability and who shall take charge of the polls and after the
balloting shall make a certificate of the result of the vote taken; but no
director or candidate for the office of director shall be appointed as such
inspector.
SECTION 7. Stock List. At least ten (10) days before every election of
directors, a complete list of stockholders entitled to vote at such election,
arranged in alphabetical order, with the residence of each and the number of
voting shares held by each shall be prepared by the Secretary. Such list shall
be open at the place where the election is to be held for said ten (10) days, to
the examination of any stockholder entitled to vote at that election and shall
be produced and kept at the time and place of election during the whole time
thereof, and subject to the inspection of any stockholder who may be present.
ARTICLE III
DIRECTORS.
SECTION 1. Number. The business and property of the Corporation shall be
conducted and managed by a Board consisting of such number of directors, but not
less than three (3), as may be fixed from time to time by resolution adopted by
the Board or by the stockholders. Directors need not be stockholders.
SECTION 2. Term of Office. Except as otherwise provided by law, each
director shall hold office until the next annual meeting of stockholders, and
until his successor is duly elected and qualified or until his earlier death or
resignation.
SECTION 3. Chairman of the Board. The Chairman of the Board shall preside
at all meetings of the stockholders and of the Board of Directors
SECTION 4. Vacancies. If any vacancy shall occur among the directors, or
if the number of directors shall at any time be increased, the directors in
office, although less than a quorum, by a majority vote may fill the vacancies
or newly created directorships, or any such vacancies or newly created
directorships may be filled by the stockholders at any meeting. When one or
more directors shall resign from the Board of Directors, effective at a future
date, a majority of the directors then in office, including those who have so
resigned, shall have power to fill such vacancy or vacancies, the vote thereon
to take effect when such resignation or resignations shall become effective, and
each director so chosen shall hold office as herein provided in the filling of
other vacancies.
SECTION 5. Meetings. Meetings of the Board of Directors shall be held at
such place within or without the State of Delaware as may from time to time be
fixed by resolution of the Board of Directors or by the Chairman of the Board,
or by the President or as may be specified in the notice or waiver of notice of
any meeting. Meetings may be held at any time upon the call of the Chairman of
the Board, the President or the Secretary or any two (2) of the directors in
office by oral, telegraphic, or written notice, duly served or sent or mailed to
each director not less than one (1) day before such meeting. Meetings may be
held at any time and place without notice if all the directors are present, or
if those not present shall in writing or by telegram or cable waive notice
thereof. A regular meeting of the Board of Directors may be held without notice
immediately following the annual meeting of stockholders at the place where such
annual meeting is held. Regular meetings of the Board may also be held without
notice at such time and place as shall from time to time be determined by
resolution of the Board of Directors.
SECTION 6. Quorum. One-third, but not less than two (2), of the directors
shall constitute a quorum for the transaction of business. If at any meeting of
the Board of Directors there shall be less than a quorum present, a majority of
those present may adjourn the meeting from time to time without notice other
than announcement of the adjournment at the meeting, and at such adjourned
meeting at which a quorum is present any business may be transacted which might
have been transacted at the meeting as originally notified.
SECTION 7. Compensation. The directors may be paid their expenses, if any,
of attendance at each meeting of the Board of Directors, a fixed sum for
attendance at each meeting of the Board of Directors and/or a stated fee as
director. No such payment shall preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor. Members
of the Executive Committee and/or of other committees may be allowed like
compensation and reimbursement of expenses for attending committee meetings.
ARTICLE IV
EXECUTIVE COMMITTEE AND OTHER COMMITTEES.
SECTION 1. Executive Committee. The Board of Directors may, by resolution
passed by a majority of the whole Board, appoint an Executive Committee of two
(2) or more members, to serve during the pleasure of the Board of Directors, to
consist of such directors as the Board of Directors may from time to time
designate. The Chairman of the Executive Committee shall be designated by the
Board of Directors.
SECTION 2. Procedure. The Executive Committee, by a vote of a majority of
its members, shall fix its own times and places of meeting, shall determine the
number of its members constituting a quorum for the transaction of business, and
shall prescribe its own rules of procedure, no change in which shall be made
save by a majority vote of its members.
SECTION 3. Powers. During the intervals between the meetings of the Board
of Directors, the Executive Committee shall possess and may exercise all the
powers of the Board of Directors in the management and direction of the business
and affairs of the Corporation, to the extent permitted by law.
SECTION 4. Minutes. The Executive Committee shall keep regular minutes of
its proceedings and all action by the Executive Committee shall be reported to
the Board of Directors at its next meeting. Such action shall be subject to
review by the Board of Directors, provided that no rights of third parties shall
be affected by such review.
SECTION 5. Other Committees. From time to time the Board of Directors, by
the affirmative vote of a majority of the whole Board of Directors, may appoint
other committees for any purpose or purposes, and such committees shall have
such powers as shall be conferred by the resolution of appointment, and as shall
be permitted by law.
ARTICLE V
OFFICERS.
SECTION 1. Officers. The Board of Directors shall elect, as officers, a
President, one or more Vice Presidents (the number thereof to be determined by
the Board of Directors), a Treasurer and a Secretary, and in their discretion
one or more Assistant Secretaries, and Assistant Treasurers. Such officers
shall be elected annually by the Board of Directors at its first meeting
following the annual meeting of stockholders, and each shall hold office until
the corresponding meeting of the Board of Directors in the next year and until
his successor shall have been duly elected and qualified, or until he shall have
died or resigned or shall have been removed in the manner provided herein. The
powers and duties of two or more offices may be exercised and performed by the
same person, except the offices of President and Secretary.
SECTION 2. Vacancies. Any vacancy in any office may be filled for the
unexpired portion of the term by the Board of Directors at any regular or
special meeting.
SECTION 3. President. The President shall be the chief executive officer
of the Corporation. Subject to the direction of the Board of Directors, he
shall have and exercise direct charge of and general supervision over the
business and affairs of the Corporation and shall perform such other duties as
may be assigned to him from time to time by the Board of Directors.
SECTION 4. Vice Presidents. The Vice Presidents shall, in the order of
their seniority or in such order as may be specified by the Board of Directors,
have and perform all the powers and duties of the President, in his absence or
disability, and shall in addition have and exercise such powers and shall
perform such duties as from time to time may be conferred upon or assigned to
them by the Board of Directors or as may be delegated to them by the Chairman of
the Board or the President.
SECTION 5. Treasurer. The Treasurer shall have charge of and be
responsible for all funds, securities, receipts and disbursements of the
Corporation, and shall deposit, or cause to be deposited, in the name of the
Corporation, all moneys or other valuable effects in such banks, trust companies
or other depositaries as shall, from time to time, be selected by the Board of
Directors; he may endorse for collection on behalf of the Corporation, checks,
notes and other obligations; he may sign receipts and vouchers for payments made
to the Corporation; singly or jointly with another person as the Board of
Directors may authorize, he may sign checks of the Corporation and pay out and
dispose of the proceeds under the direction of the Board of Directors; he shall
cause to be kept correct books of account of all the business and transactions
of the Corporation, shall see that adequate audits thereof are currently and
regularly made, and shall examine and certify the accounts of the Corporation;
he shall render to the Board of Directors, the Executive Committee, the Chairman
of the Board or to the President, whenever requested, an account of the
financial condition of the Corporation; he may sign with the President or a Vice
President, certificates of stock of the Corporation; and, in general, shall
perform all the duties incident to the office of a treasurer of a corporation,
and such other duties as from time to time may be assigned to him by the Board
of Directors.
SECTION 6. Assistant Treasurers. The Assistant Treasurers in order of
their seniority shall, in the absence or disability of the Treasurer, perform
the duties and exercise the powers of the Treasurer and shall perform such other
duties as the President or the Board of Directors shall prescribe.
SECTION 7. Secretary. The Secretary shall keep the minutes of all meetings
of the stockholders and of the Board of Directors in books provided for the
purpose; he shall see that all notices are duly given in accordance with the
provisions of law and these Bylaws; he shall be custodian of the records and of
the corporate seal or seals of the Corporation; he shall see that the corporate
seal is affixed to all documents, the execution of which, on behalf of the
Corporation, under its seal, is duly authorized and when the seal is so affixed
he may attest the same; he may sign, with the President or a Vice President,
certificates of stock of the Corporation; and, in general, he shall perform all
duties incident to the office of a secretary of a corporation, and such other
duties as from time to time may be assigned to him by the Board of Directors.
SECTION 8. Assistant Secretaries. The Assistant Secretaries in order of
their seniority shall, in the absence or disability of the Secretary, perform
the duties and exercise the powers of the Secretary and shall perform such other
duties as the President or the Board of Directors shall prescribe.
SECTION 9. Subordinate Officers. The Board of Directors may appoint such
subordinate officers as it may deem desirable. Each such officer shall hold
office for such period, have such authority and perform such duties as the Board
of Directors may prescribe. The Board of Directors may, from time to time,
authorize any officer to appoint and remove subordinate officers and to
prescribe the powers and duties thereof.
SECTION 10. Compensation. The Board of Directors shall have power to fix
the compensation of all officers of the Corporation. It may authorize any
officer, upon whom the power of appointing subordinate officers may have been
conferred, to fix the compensation of such subordinate officers.
SECTION 11. Removal. Any officer of the Corporation may be removed, with
or without cause, by a majority vote of the Board of Directors at a meeting
called for that purpose.
SECTION 12. Bonds. The Board of Directors may require any officer of the
Corporation to give a bond to the Corporation, conditional upon the faithful
performance of his duties, with one or more sureties and in such amount as may
be satisfactory to the Board of Directors.
ARTICLE VI
CERTIFICATES OF STOCK.
SECTION 1. Form and Execution of Certificates. The interest of each
stockholder of the Corporation shall be evidenced by a certificate or
certificates for shares of stock in such form as may be prescribed from time to
time by law and by the Board of Directors. The certificates of stock of each
class and series now authorized or which may hereafter be authorized by the
Certificate of Incorporation shall be consecutively numbered and signed by
either the President or a Vice President together either with the Secretary or
an Assistant Secretary or the Treasurer or an Assistant Treasurer of the
Corporation, and may be countersigned and registered in such manner as the Board
of Directors may prescribe, and shall bear the corporate seal or a printed or
engraved facsimile thereof. Where any such certificate is signed by a transfer
agent or transfer clerk and by a registrar, the signatures of any such
President, Vice President, Treasurer, Assistant Treasurer, Secretary or
Assistant Secretary upon such certificate may be facsimiles engraved or printed.
In case any officer or officers who shall have signed, or whose facsimile
signature or signatures shall have been placed upon, such certificate or
certificates shall have ceased to be such, whether because of death, resignation
or otherwise, before such certificate or certificates shall have been issued and
delivered, such certificate or certificates may nevertheless be issued and
delivered with the same effect as if such officer or officers had not ceased to
be such at the date of its issue and delivery.
SECTION 2. Transfer of Shares. The shares of the stock of the Corporation
shall be transferred on the books of the Corporation by the holder thereof in
person or by his attorney lawfully constituted, upon surrender for cancellation
of certificates for the same number of shares, with an assignment and power of
transfer endorsed thereon or attached thereto, duly executed, with such proof or
guaranty of the authenticity of the signature as the Corporation or its agents
may reasonably require. The Corporation shall be entitled to treat the holder
of record of any share or shares of stock as the holder in fact thereof and
accordingly shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person whether or not
it shall have express or other notice thereof, except as otherwise expressly
provided by law.
SECTION 3. Closing of Transfer Books and Record Dates. The Board of
Directors may in its discretion prescribe in advance a period not exceeding
fifty (50) days prior to the date of any meeting of the stockholders or prior to
the last day on which the consent or dissent of stockholders may be effectively
expressed for any purpose without a meeting, during which no transfer of stock
on the books of the Corporation may be made; or in lieu of prohibiting the
transfer of stock, may fix in advance a time not more than fifty (50) days prior
to the date of any meeting of stockholders or prior to the last day on which the
consent or dissent of stockholders may be effectively expressed for any purpose
without a meeting, as the time as of which stockholders entitled to notice of
and to vote at such a meeting or whose consent or dissent is required or may be
expressed for any purpose, as the case may be, shall be determined; and all
persons who were holders of record of voting stock at such time and no others
shall be entitled to notice of and to vote at such meeting or to express their
consent or dissent, as the case may be, notwithstanding any transfer of any
stock on the books of the Corporation after any record date fixed as aforesaid.
The Board of Directors may also, in its discretion, fix in advance a date not
exceeding fifty (50) days preceding the date fixed for the payment of any
dividend or the making of any distribution, or for the delivery of evidence of
rights, or evidences of interests arising out of any issuance, change,
conversion or exchange of capital stock, as a record date for the determination
of the stockholders entitled to receive or participate in any such dividend,
distribution, rights or interests, notwithstanding any transfer of any stock on
the books of the Corporation after any record date fixed as aforesaid, or, at
its option, in lieu of so fixing a record date, may prescribe in advance a
period not exceeding fifty (50) days prior to the date for such payment,
distribution or delivery during which no transfer of stock on the books of the
Corporation may be made.
SECTION 4. Lost or Destroyed Certificates. In case of the loss or
destruction of any outstanding certificate of stock, a new certificate may be
issued upon the following conditions:
The owner of said certificate shall file with the Secretary of the
Corporation an affidavit giving the facts in relation to the ownership, and in
relation to the loss or destruction of said certificate, stating its number and
the number of shares represented thereby; such affidavit to be in such form and
contain such statements as shall satisfy the President and Secretary that said
certificate has been accidentally destroyed or lost, and that a new certificate
ought to be issued in lieu thereof. Upon being so notified, the President and
Secretary shall require such owner to file with the Secretary a bond in such
penal sum and in such form as they may deem advisable, and with a surety or
sureties approved by them, to indemnify and save harmless the Corporation from
any claim, loss, damage or liability which may be occasioned by the issuance of
a new certificate in lieu thereof. Upon such bond being so filed, a new
certificate for the same number of shares shall be issued to the owner of the
certificate so lost or destroyed; and the transfer agent and registrar of stock,
if any, shall countersign and register such new certificate upon receipt of a
written order signed by the said President and Secretary, and thereupon the
Corporation will save harmless said transfer agent and registrar in the
premises. Any Vice President may act hereunder in the stead of the President,
and an Assistant Secretary in the stead of the Secretary. In case of the
surrender of the original certificate, in lieu of which a new certificate has
been issued, or the surrender of such new certificate, for cancellation, the
bond of indemnity given as a condition of the issue of such new certificate may
be surrendered. A new certificate may be issued without requiring any bond when
in the judgment of the Board of Directors it is proper to do so.
ARTICLE VII
CHECKS, NOTES, ETC.
SECTION 1. Execution of Checks, Notes, etc. All checks and drafts on the
Corporation's bank accounts and all bills of exchange and promissory notes, and
all acceptances, obligations and other instruments for the payment of money,
shall be signed by such officer or officers, agent or agents, as shall be
thereunto authorized from time to time by the Board of Directors.
SECTION 2. Execution of Contracts, Assignments, etc. All contracts,
agreements, endorsements, assignments, transfers, stock powers, or other
instruments (except as provided in Sections 1 and 3 of this Article VII) shall
be signed by the President or any Vice President and by the Secretary or any
Assistant Secretary or the Treasurer or any Assistant Treasurer, or by such
other officer or officers, agent or agents, as shall be thereunto authorized
from time to time by the Board of Directors.
SECTION 3. Execution of Proxies. The President or a Vice President of the
Corporation may authorize from time to time the signature and issuance of
proxies to vote upon shares of stock of other companies standing in the name of
the Corporation. All such proxies shall be signed in the name of the
Corporation by the President or a Vice President and by the Secretary or an
Assistant Secretary.
ARTICLE VIII
WAIVERS AND CONSENTS.
SECTION 1. Waivers. Whenever under the provisions of any law or under the
provisions of the Certificate of Incorporation of the Corporation or these
Bylaws, the Corporation, or the Board of Directors or any committee thereof, is
authorized to take any action after notice to stockholders or the directors or
the members of such committee, or after the lapse of a prescribed period of
time, such action may be taken without notice and without the lapse of any
period of time if, at any time before or after such action be completed, such
requirements be waived in writing by the person or persons entitled to said
notice or entitled to participate in the action to be taken, or, in the case of
a stockholder, by his attorney thereunto authorized.
SECTION 2. Consents. Any action required or permitted to be taken at any
meeting of the Board of Directors or of any committee of the Board of Directors
may be taken without a meeting, if prior to such action a written consent
thereto is signed by all members of the Board of Directors or of such committee
as the case may be, and such written consent is filed with the minutes of
proceedings of the Board of Directors or of such committee.
ARTICLE IX
DIVIDENDS AND RESERVE FUNDS.
SECTION 1. Dividends. Except as otherwise provided by law or by the
Certificate of Incorporation, the Board of Directors may declare dividends out
of the surplus of the Corporation at such times and in such amounts as it may
from time to time designate.
SECTION 2. Reserve Funds. Before crediting net profits to the surplus in
any year, there may be set aside out of the net profits of the Corporation for
that year such sum or sums as the Board of Directors from time to time in its
absolute discretion may deem proper as a reserve fund or funds to meet
contingencies or for equalizing dividends or for repairing or maintaining any
property of the Corporation or for such other purpose as the Board of Directors
shall deem conducive to the interests of the Corporation.
ARTICLE X
INSPECTION OF BOOKS
The Board of Directors shall determine from time to time whether, and if
allowed when and under what conditions and regulations, the accounts and books
of the Corporation (except such as may by statute be specifically open to
inspection) or any of them shall be open to the inspection of the stockholders;
and the stockholders' rights in this respect are and shall be restricted and
limited accordingly.
ARTICLE XI
FISCAL YEAR.
The fiscal year of the Corporation shall end on the thirtieth day of June of
each year unless another date shall be fixed by resolution of the Board of
Directors. After such date is fixed it may be changed for future fiscal years
at any time or from time to time by further resolution of the Board of
Directors.
ARTICLE XII
SEAL.
The corporate seal shall be circular in form and shall contain the name of
the Corporation, the State of incorporation, and the words "Corporate Seal".
ARTICLE XIII
INDEMNIFICATION OF DIRECTORS, OFFICERS,
EMPLOYEES AND AGENTS.
The Corporation shall indemnify and reimburse each person, and his heirs,
executors or administrators, who is made or is threatened to be made a party to
any action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he was or is a director, officer,
employee or agent of the Corporation or was or is serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorney's fees), judgments, fines and amounts paid in settlement,
actually or reasonably incurred by him in connection with such action, suit or
proceeding and shall advance the expenses defending any such action, suit or
proceeding to the full extent permitted by Section 145 of the General
Corporation Law of the State of Delaware as it may be amended or supplemented
from time to time. Such right of indemnification or advancement of expenses of
any such person shall not be deemed exclusive of any other rights to which he
may be entitled under stockholders or disinterested directors of otherwise both
as to action in his official capacity and as to action in another capacity while
holding such office.
The foregoing provisions of this Article XIII shall be deemed to be a
contract between the Corporation and each person who serves in any capacity
specified therein at any time while this Bylaw is in effect, and any repeal or
modification thereof shall not affect any rights or obligations then existing
with respect to any state of facts then or theretofore existing or any action,
suit or proceeding theretofore or thereafter brought based in whole or part upon
any such state of facts.
ARTICLE XIV
AMENDMENTS.
SECTION 1. By Stockholders. These Bylaws may be amended by a majority vote
of the stock entitled to vote and present or represented at any annual or
special meeting of the stockholders at which a quorum is present or represented,
if notice of the proposed amendment shall have been contained in the notice of
the meeting.
SECTION 2. By Directors. Except as otherwise specifically provided in the
Bylaws, if any, adopted by the stockholders, these Bylaws may be amended by the
affiramtive vote of a majority of the Board of Directors, at any regular or
special meeting thereof, if notice of the proposed amendment shall have been
contained in the notice of such meeting. If any Bylaw regulating an impending
election of directors is adopted or amended or repealed by the Board of
Directors, there shall be set forth in the notice of the next meeting of the
stockholders for the election of directors the Bylaw so adopted or amended or
repealed together with a concise statement of the chances made.
EXHIBIT 10.6
(AMENDED)
TANDYCRAFTS, INC.
ESOP BENEFIT RESTORATION PLAN
EFFECTIVE JANUARY 1, 1993
ESOP BENEFIT RESTORATION PLAN
TABLE OF CONTENTS
Article I. Establishment and Purpose Page
1.1 Establishment 1
1.2 Purpose 1
Article II. Definitions and Construction
2.1 Definitions 1
2.2 Gender and Number 2
2.3 Severability 2
2.4 Applicable Law 2
2.5 Plan Not an Employment Contract 2
Article III. Participation
3.1 Participation 2
Article IV. Benefit and Payment
4.1 Account 3
4.2 Allocable Share 3
4.3 Account Adjustments 3
4.4 Vesting 3
4.5 Distribution 3
Article V. Miscellaneous Provisions
5.1 Funding 4
5.2 Tax Withholding 4
5.3 Compensation 4
5.4 Nontransferability 4
Article VI. Administration
6.1 Administration 5
6.2 Finality of Determination 5
6.3 Expenses 5
6.4 Indemnification and Exculpation 5
6.5 Payment of Attorney's Fees 6
Article VII. Merger, Amendment, and Termination
7.1 Merger, Consolidation, or Acquisition 6
7.2 Amendment and Termination 6
7.3 Adoption by Affiliates 6
TANDYCRAFTS, INC.
ESOP BENEFIT RESTORATION PLAN
(AMENDED) EFFECTIVE JANUARY 1, 1993
ARTICLE I. ESTABLISHMENT AND PURPOSE
1.1 Establishment. Effective as of January 1, 1993, Tandycrafts, Inc.
hereby amends the Tandycrafts, Inc. ESOP Benefit Restoration Plan.
1.2 Purpose The purpose of this Plan is to provide to Plan Participants,
a restoration of benefits lost under the Tandycrafts, Inc. Employee Stock
Ownership Plan because of certain limitations imposed by the Internal Revenue
Code.
ARTICLE II. DEFINITIONS AND CONSTRUCTION
2.1 Definitions. Whenever used in the Plan, the following terms shall
have the meanings set forth below unless the context otherwise requires, and
when the defined meaning is intended, the term is capitalized.
(a) "Account" means an account established for each participant in
this Plan.
(b) "Allocable Share" is defined in Section 4.2 below.
(c) "Beneficiary" means the person designated by the Participant, or
otherwise treated as, his beneficiary(ies) under the Qualified Plan.
(d) "Board" means the board of directors of the Company or the
Executive Committee of the Board.
(e) "Code" means the Internal Revenue Code of 1986, as amended.
(f) "Committee" means the Plan administrative committee which is
appointed pursuant to Section 6.1 hereof..
(g) "Company" means Tandycrafts, Inc. or its successor.
(h) "Company Stock" means the common stock, $1 par value, of the
Company.
(i) "Compensation" means, for a given Plan Year, the amount of the
Participant's Compensation, as defined in the Qualified Plan, but without
regard to the limitations of Code Section 401(a)(17).
(j) "Matching Allocation" means, for a given Plan Year, the shares of
Company Stock or other assets allocable to a Participant under the
Qualified Plan resulting from Employer Contributions (including forfeitures
of Employer Contributions).
(k) "Participant" means an employee of the Company who is eligible to
participate in this Plan pursuant to Section 3.1 hereof.
(l) "Plan" means this document, the Tandycrafts, Inc. ESOP Benefit
Restoration Plan, as amended from time to time.
(m) "Plan Year" means the 12-month period beginning January 1 and
ending December 31.
(n) "Qualified Plan" means the Tandycrafts, Inc. Employee Stock
Ownership Plan, as amended from time to time.
2.2 Gender and Number Except when otherwise indicated by the context,
any masculine terminology when used in the Plan shall also include the feminine
gender and the neuter gender, and the definition of any term in the singular
shall also include the plural.
2.3 Severability. In the event any provision of the Plan shall be held
invalid or illegal for any reason, any illegality or invalidity shall not affect
the remaining parts of the Plan, but the Plan shall be construed and enforced as
if the illegal or invalid provision had never been inserted, and the Committee
shall have the privilege and opportunity to correct and remedy such questions of
illegality or invalidity by amendment as provided in the Plan.
2.4 Applicable Law. To the extent not preempted by Federal law, this
Plan shall be governed and construed in accordance with the laws of the State of
Texas.
2.5 Plan Not an Employment Contract. This Plan is not an employment
contract. It does not give to any Participant the right to continued employment
by the Company, and all Participants remain subject to change of salary,
transfer, change of job, discipline, layoff, discharge, or any other change of
employment status.
ARTICLE III. PARTICIPATION
3.1 Participation. In order to become a Participant in this Plan, an
employee must be selected by the Committee to participate and must meet each of
the following additional requirements: (i) be in the active employment of the
Company or any of its subsidiaries or affiliates on or after January 1, 1993,
(ii) have been eligible to participate in, and be an Active Participant, as
defined in the Qualified Plan, under the Qualified Plan, and (iii) the
employee's Matching Allocation under the Qualified Plan is subject to reduction
because of application of the limits of Sections 401(a)(17), 401(k)(3), 401(m),
402(g) or 415 of the Code. The Committee shall limit participation in the Plan
to a select group of the Company's management or highly compensated employees
meeting the above requirements. Participants shall be notified in writing by
the Committee of their participation in the Plan.
ARTICLE IV. BENEFIT AND PAYMENT
4.1 Account. An account shall be maintained by the Company for each
Participant (the Participant's Account") whose Matching Allocation under the
Qualified Plan for the Plan year in question is limited by reason of Code
Sections 401(a)(17), 401(k)(3), 401(m), 402(g) or 415.
4.2 Allocable Share. For each Plan Year beginning on or after January 1,
1993, a Participant's Allocable Share under this Plan shall be the excess of
(i) the aggregate Matching Allocations, expressed in shares of Company Stock,
which would have been received by the Participant under the Qualified Plan as of
all Qualified Plan allocation dates falling within the Plan Year in question if
Qualified Plan allocations were calculated without applying the limitations of
Code Sections 401(a) (17), 401(k)(3), 401(m), 402(g) or 415 to such Participant
over (ii) the actual aggregate Matching Allocation, expressed in shares of
Company Stock, credited to the Participant's accounts in the Qualified Plan as
of all Qualified Plan allocation dates within such Plan Year. In calculating the
hypothetical unlimited Matching Allocation under clause (i) of the preceding
sentence, the statutory limitations in effect for any portion of the Plan Year
shall be pro-rated in proportion to the number of months during the Plan Year
such limitation is in effect, and added to the similarly pro-rated limitation
(s) for each other portion of the Plan Year; and the average cost of all shares
actually allocated under the Qualified Plan as of any date within this Plan's
Plan Year shall be used to determine the number of shares that would have been
allocated under the Qualified Plan had the limitations not applied.
4.3 Account Adjustments. Each Participant shall have his Account
credited with the number of shares of "Phantom" stock equal to the number of
shares of Company Stock in Participant's Allocable Share. A Participant's
Account shall be credited, effective as of the payment date of any cash
dividend, with the amount of any "Phantom Stock" cash dividends which would have
been received, and the amount of any cash dividends shall be converted
immediately into shares of Company stock based upon the average of the high and
low trades of the Company Stock as published in a national newspaper ("market
price") for the date the cash dividend is paid. Participant's Account shall be
adjusted for any stock splits, stock dividends or similar transactions so as to
produce the same number of shares of stock as the holder of an equal number of
shares of Company Stock at the date of record would have following such
transactions. The crediting of shares of Company Stock to a Participants Account
is merely a bookkeeping entry for purposes of determining the Participant's
benefits under the Plan, and does not convey any rights or interest in Company
Stock to a Participant.
4.4 Vesting. A Participant's Account hereunder shall vest immediately.
4.5 Distribution. A Participant will be entitled to a distribution of
Company Stock equal to the number of shares of "Phantom Stock" allocated to
Participant's Account in the Plan upon termination of employment with the
Company for any reason; however, no distribution shall occur prior to
termination of employment with the Company and all of its subsidiaries and
affiliates. Distribution shall commence as soon as administratively practical
following the date the Participant is first eligible to receive a distribution
from the Qualified Plan.
In the event the Participant dies before the distribution is made,
distribution shall be made as soon as administratively practical to his
Beneficiary, or if there is no Beneficiary, to his estate.
ARTICLE V. MISCELLANEOUS PROVISIONS
5.1 Funding. This Plan is intended to be an unfunded plan within the
meaning of ERISA and the Code. All benefits under this Plan shall be paid in
company stock from the general assets of the Company or such other funding
vehicle as the Board shall provide; provided, however, that all assets paid into
any funding vehicle hereunder shall at all times prior to payment to a
Participant or Beneficiary remain subject to the claims of general unsecured
creditors of the Company. The benefits allocated to the Company Accounts of
Participants under the Plan shall be reflected on the accounting records of the
Company, but absent action by either the Board or Committee shall not be
construed to create, or require the creation of, a trust, custodial or escrow
account, or other fund of any kind.
No Participant or any other person shall have any right, title, or interest
whatever in or to, or any preferred claim in or to, any investment reserves,
accounts, or funds that the Company may purchase, establish, or accumulate to
aid in providing the payments described in this Plan. No Participant shall have
any voting rights or any other rights of a stockholder with respect to shares of
stock credited to his Account. Nothing contained in this Plan, and no action
taken pursuant to its provisions, shall create or be construed to create a trust
or a fiduciary relationship of any kind between the Company and a Participant or
any other person. Neither a Participant nor a Beneficiary shall acquire any
interest in any assets of the Company or in any investment reserves, accounts,
or funds that the Company may purchase, establish or accumulate for the purposes
of paying benefits hereunder.
5.2 Tax Withholding. The Company may withhold or cause to be withheld
from or with respect to any benefit hereunder any federal, state, or local taxes
required by law to be withheld with respect to such benefit and such sum as the
Company may reasonably estimate as necessary to cover any taxes for which the
Company may be liable and which may be assessed with regard to such benefit.
In the event any tax is required to be withheld prior to actual payment of
benefits hereunder, the Company may withhold such tax from the Participant's
other cash remuneration.
5.3 Compensation. No benefit accrued or payable hereunder shall be
deemed compensation to the Participant for the purposes of computing benefits to
which such Participant may be entitled under the Qualified Plan or any other
benefit plan or arrangement of the Company for the benefit of its employees;
provided, however, that in the event of a conflict with this Plan, the terms of
the Qualified Plan or such other retirement plan or arrangement shall control.
5.4 Nontransferability. A Participant or his Beneficiary shall have no
rights by way of anticipation or otherwise to assign or otherwise dispose of any
interest under this Plan, nor shall rights be assigned or transferred by
operation of law.
ARTICLE VI. ADMINISTRATION
6.1 Administration. The Company shall be the "Plan Administrator." The
Plan Administrator may resign or may be removed and a successor appointed by the
Board at any time. The Board may appoint an administrative committee (the
"Committee") to handle the day-to-day administration of the Plan, and the
Committee shall have the authority of the Plan Administrator to the extent the
Plan Administrator has delegated its authority to the Committee. Members of the
Committee may resign with 30 days' written notice to the Board or may be removed
by the Board at any time, whereupon a successor Committee member may be
appointed by the Board.
A majority of the members of the Committee shall constitute a quorum and
the acts of a majority of the members present, or acts approved in writing by a
majority of the members without a meeting, shall be the acts of the Committee.
The Committee shall have that authority which is expressly stated in this Plan
as being vested in the Committee and shall have the discretionary authority to
make administrative rules, to construe and interpret the Plan, to reconcile any
inconsistencies, correct any errors and supply any omissions in the Plan, to
decide all questions arising under the Plan, to establish a claims procedure and
to take such other action as may be appropriate to carry out the purposes of the
Plan. No Participant in this Plan may be a member of the Committee.
6.2 Finality of Determination. Determinations of the Plan Administrator
or Committee as to any disputed questions arising under this Plan, including
questions of construction and interpretation, shall be final, binding, and
conclusive upon all persons. Determinations of the Board as to eligibility and
the vehicle, if any, to be used to fund benefits shall be final, binding and
conclusive upon all persons.
6.3 Expenses. The expenses of administering the Plan shall be borne by
the Company.
6.4 Indemnification and Exculpation. In the event and to the extent not
insured against under any contract of insurance with an insurance company, the
Company shall indemnify and hold harmless each "Indemnified Person," as defined
below, against any and all claims, demands, suits, proceedings, losses, damages,
interest, penalties, expenses (specifically including, but not limited to
counsel fees to the extent approved by the Board of Directors of the Company or
otherwise provided by law, court costs and other reasonable expenses of
litigation), and liability of every kind, including amounts paid in settlement
with the approval of the Board of Directors, arising from any action or cause of
action related to the Indemnified Person's act or acts or failure to act in
connection with this Plan. Such indemnity shall apply regardless of whether
such claims, demands, suits, proceedings, losses, damages, interest, penalties,
expenses, and liability arise in whole or in part from the negligence or other
fault of the Indemnified Person, except when the same is judicially determined
to be due to gross negligence, fraud, recklessness, willful or intentional
misconduct of such Indemnified Person. "Indemnified Person" shall mean each
member of the Board, each member of the Committee and each other employee of the
Company who is allocated administrative or other responsibility hereunder.
6.5 Payment of Attorney's Fees. In the event a Participant or
Beneficiary is denied benefits under this Plan and brings a successful legal
action resulting in the award of such benefits to such Participant or
Beneficiary, the Company shall reimburse the Participant or Beneficiary for the
costs and expenses he or she has incurred in connection with such legal action,
including reasonable attorney's fees.
ARTICLE VII. MERGER, AMENDMENT, AND TERMINATION
7.1 Merger, Consolidation, or Acquisition. In the event of a merger,
consolidation, or acquisition where the Company is not the surviving
corporation, this Plan shall terminate but all amounts credited to participant
Accounts prior to Plan termination shall continue to be an obligation of the
successor acquiring corporation and the provisions of the Plan shall be binding
on such successor for all amounts credited to Participant Accounts prior to Plan
termination.
7.2 Amendment and Termination. The Company may amend, modify, or
terminate the Plan at any time, expressly including the making of retroactive
amendments; provided, that no such amendment or termination shall deprive a
Participant or Beneficiary of any benefits which have previously accrued
hereunder.
7.3 Adoption by Affiliates. Any subsidiary or affiliate of the Company
that has adopted the Qualified Plan for the benefit of its employees may adopt
this Plan for the benefit of its eligible employees, subject to the approval of
the Company's Board. The Company, however, reserves the exclusive right to
select the employees eligible to participate in the Plan, to administer the
Plan, to make all decisions regarding funding the Plan, and to amend or
terminate the Plan. In the event a subsidiary of affiliate adopts the Plan, it
shall be solely responsible for payment of any benefits due to its employees
hereunder and any related taxes, and for its pro rata portion of any
administrative expenses or other payments hereunder.
IN WITNESS WHEREOF, the Company has caused this instrument to be executed
as of this ---- day of June, 1995.
TANDYCRAFTS, INC.
By:
--------------------
Michael J. Walsh
EXHIBIT 10.11
THIRD AMENDMENT TO REVOLVING
CREDIT AND TERM LOAN AGREEMENT
------------------------------
This Third Amendment to Revolving Credit and Term Loan Agreement
("Third Amendment") is made by and among TANDYCRAFTS, INC., a Delaware
corporation ("Company"), CASUAL CONCEPTS, INC., a Texas corporation, THE
DEVELOPMENT ASSOCIATION, INC., a Texas corporation, SAV-ON, INC., a
Texas corporation, NOCONA BELT COMPANY, a Texas corporation, J-MAR
ASSOCIATES, INC., a Texas corporation, DAVID JAMES MANUFACTURING, INC.,
a Texas corporation, BRAND NAME APPAREL, INC., a Texas corporation, ART
IMAGE, INC., a California corporation, PLC LEATHER COMPANY, a Nevada
corporation, TANDYARTS, INC., a Nevada corporation, COLLEGE FLAGS AND
MANUFACTURING, INC., a South Carolina corporation, LORD'S VINEYARD,
INC., a Colorado corporation (hereinafter collectively referred to as
the "Guarantors"), and FIRST INTERSTATE BANK OF TEXAS, N.A., THE DAIWA
BANK, LTD., and NBD BANK, N.A. (collectively, the "Banks") and FIRST
INTERSTATE BANK OF TEXAS, N. A., as agent for the Banks ("Agent"); and
WHEREAS, the Company, certain of Guarantors and Agent entered into
that certain Revolving Credit and Term Loan Agreement dated September
29, 1993 (the "Loan Agreement"); and
WHEREAS, the Company, certain of Guarantors, Banks and Agent
entered into that certain First Amendment to Revolving Credit and Term
Loan Agreement dated December 3, 1993; and
WHEREAS, the Company, the Guarantors, Banks and Agent entered into
that certain Second Amendment To Revolving Credit and Term Loan
Agreement dated September 26, 1994; and
WHEREAS, the Company, Guarantors, Banks and Agent desire to amend
the Loan Agreement in certain respects; and
WHEREAS, capitalized terms used herein shall have the meaning
assigned to them in the Loan Agreement unless the context otherwise
requires or provides.
NOW, THEREFORE, it is agreed by and among the Company, Guarantors,
Banks and Agent as follows:
1.
Section 9.02 of the Loan Agreement is amended to read in its
entirety as follows:
9.02. Indebtedness To Consolidated Tangible Net Worth. Permit
the ratio of the sum of its Consolidated Indebtedness to its
Consolidated Tangible Net Worth to be greater than 2.75 to 1.0 on
December 31,1994 or to be greater than 2.5 to 1.0 on or after March
31, 1995.
2.
By their execution hereof, each of the Guarantors ratify and
confirm the terms of the Guaranty Agreement dated August 17, 1994, agree
that the Guaranty Agreement shall remain in full force and effect and
unconditionally agree that the Guaranty Agreement is enforceable against
each of them in accordance with its terms.
3.
Except as amended by the First Amendment, the Second Amendment and
this Third Amendment, the Loan Agreement is ratified and confirmed and
shall remain in full force and effect.
4.
This Third Amendment shall be governed by and construed in
accordance with the laws of the State of Texas.
5.
Company agrees to pay all expenses incurred by Agent and Banks in
connection with the negotiation and preparation of this Third Amendment,
including reasonable attorney's fees.
6.
This Third Amendment may be executed in any number of multiple
counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original, and
all of which taken together shall constitute one and the same agreement.
7.
Banks, Company, and Guarantors agree to be bound by the current
Arbitration Program of Agent which is incorporated by reference herein
and is acknowledged as received by the parties pursuant to which any and
all disputes shall be resolved by mandatory binding arbitration upon the
request of any party.
8.
This Third Amendment shall be binding upon and inure to the benefit
of the parties and their respective successors and assigns.
9.
THIS WRITTEN AGREEMENT REPRESENTS THE FINAL AGREEMENT AMONG THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE
NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
Executed to be effective as of December 31, 1994.
TANDYCRAFTS, INC., a Delaware corporation
By: /s/ Jerry L. Roy
----------------------------------
Jerry L. Roy, President
COMPANY
CASUAL CONCEPTS, INC., a Texas
corporation
By: /s/ Michael J. Walsh
----------------------------------
Michael J. Walsh, Vice President
SAV-ON, INC., a Texas corporation
By: /s/ Michael J. Walsh
----------------------------------
Michael J. Walsh, Vice President
NOCONA BELT COMPANY, a Texas
corporation
By: /s/ Michael J. Walsh
----------------------------------
Michael J. Walsh, Vice President
J-MAR ASSOCIATES, INC., a Texas
corporation
By: /s/ Michael J. Walsh
----------------------------------
Michael J. Walsh, Vice President
DAVID JAMES MANUFACTURING, INC., a Texas
corporation
By: /s/ Michael J. Walsh
----------------------------------
Michael J. Walsh, Vice President
BRAND NAME APPAREL, INC., a Texas
corporation
By: /s/ Michael J. Walsh
----------------------------------
Michael J. Walsh, Vice President
THE DEVELOPMENT ASSOCIATION, INC., a Texas
corporation
By: /s/ Michael J. Walsh
----------------------------------
Michael J. Walsh, Vice President
ART IMAGE, INC., a California corporation
By: /s/ Michael J. Walsh
----------------------------------
Michael J. Walsh, Vice President
PLC LEATHER COMPANY, a Nevada corporation
By: /s/ Michael J. Walsh
----------------------------------
Michael J. Walsh, Vice President
TANDYARTS, INC., a Nevada corporation
By: /s/ Michael J. Walsh
----------------------------------
Michael J. Walsh, Vice President
COLLEGE FLAGS AND MANUFACTURING, INC., a
South Carolina corporation
By: /s/ Michael J. Walsh
----------------------------------
Michael J. Walsh, Vice President
LORD'S VINEYARD, INC., a Colorado
corporation
By: /s/ Michael J. Walsh
----------------------------------
Michael J. Walsh, Vice President
GUARANTORS
FIRST INTERSTATE BANK OF TEXAS, N.A.
By: /s/ Steve Wood
----------------------------------
Steve Wood, Senior Vice President
By: /s/Todd Robichaux
----------------------------------
Todd Robichaux, Vice President
THE DAIWA BANK, LTD.
By: /s/ James T. Wang
----------------------------------
James T. Wang, Vice President
By: /s/ Kirk L. Stites
----------------------------------
Kirk L. Stites, Vice President
NBD BANK, N.A.
By: /s/ James D. Heinz
----------------------------------
James D. Heinz, Vice President
BANKS
EXHIBIT 10.12
FOURTH AMENDMENT TO REVOLVING
CREDIT AND TERM LOAN AGREEMENT
------------------------------
This Fourth Amendment to Revolving Credit and Term Loan Agreement ("Fourth
Amendment") is made by and among TANDYCRAFTS, INC., a Delaware corporation
("Company"), CASUAL CONCEPTS, INC., a Texas corporation, THE DEVELOPMENT
ASSOCIATION, INC., a Texas corporation, SAV-ON, INC., a Texas corporation,
NOCONA BELT COMPANY, a Texas corporation, DAVID JAMES MANUFACTURING, INC., a
Texas corporation, BRAND NAME APPAREL, INC., a Texas corporation, ART IMAGE,
INC., a California corporation, PLC LEATHER COMPANY, a Nevada corporation,
TANDYARTS, INC., a Nevada corporation, and COLLEGE FLAGS AND MANUFACTURING,
INC., a South Carolina corporation, (hereinafter collectively referred to as the
"Guarantors"), and FIRST INTERSTATE BANK OF TEXAS, N.A., THE DAIWA BANK, LTD.
and NBD BANK (collectively, the "Banks") and FIRST INTERSTATE BANK OF TEXAS, N.
A., as agent for the Banks ("Agent"); and
WHEREAS, the Company, certain of Guarantors and Agent entered into that
certain Revolving Credit and Term Loan Agreement dated September 29, 1993 (the
"Loan Agreement"); and
WHEREAS, the Company, certain of Guarantors, Banks and Agent entered into
that certain First Amendment to Revolving Credit and Term Loan Agreement dated
December 3, 1993; and
WHEREAS, the Company, the Guarantors, Banks and Agent entered into that
certain Second Amendment To Revolving Credit and Term Loan Agreement dated
September 26, 1994; and
WHEREAS, the Company, Guarantors, Banks and Agent entered into that certain
Third Amendment to Revolving Credit and Term Loan Agreement dated December 31,
1994; and
WHEREAS, the Company, Guarantors, Banks and Agent desire to amend the Loan
Agreement in certain respects; and
WHEREAS, capitalized terms used herein shall have the meaning assigned to
them in the Loan Agreement unless the context otherwise requires or provides.
NOW, THEREFORE, it is agreed by and among the Company, Guarantors, Banks
and Agent as follows:
1.
New Section 1.09A and Section 1.74A are added to the Loan Agreement which
shall read in their entirety as follows:
1.09A "Capital Expenditures" shall mean any expenditure by a Person
for an asset which will be used in a year or years subsequent to the year
in which the expenditure is made and which asset is properly classified in
the relevant financial statements of such Person as property, equipment,
improvements, fixed assets or a similar type of capitalized assets in
accordance with Generally Accepted Accounting Principles.
* * *
1.74A Short Term Credit Agreement shall mean that certain Revolving
Credit Agreement dated as of July 6, 1995 by and among Company, the
Guarantors, First Interstate Bank of Texas, N.A. and NBD Bank, as the same
may be amended, modified, supplemented or restated.
2.
Section 1.16 and Section 1.59 of the Loan Agreement are amended to read in
their entirety as follows:
1.16. "Consolidated Current Liabilities" shall mean without
duplication, as of any date, the sum of (a) current liabilities which would
be reflected on a Consolidated balance sheet of the Company and its
Subsidiaries prepared as of such date in accordance with GAAP, (b) all
liabilities and obligations of Company to Banks under the Loan Documents,
and (c) all liabilities and obligations of Company under the Short Term
Credit Agreement.
* * *
1.59. "Non-Cash Charges" shall mean the sum of depreciation and
amortization (including amortization of good will) plus the net increase in
deferred tax liability, if any, less the net decrease in deferred tax
liability, if any, plus contributions of common stock of Company by Company
to the Tandycrafts, Inc. Employee Stock Ownership Plan during such period,
all as reflected in the Consolidated financial statements of Company and
its Subsidiaries in accordance with GAAP in an amount not to exceed the
aggregate amount deducted by Company for such period for Federal income tax
purposes with respect to Company's contribution to the Tandycrafts, Inc.
Employee Stock Ownership Plan.
3.
Section 2.03 of the Loan Agreement is amended to read in its entirety as
follows:
2.03. Interest Rate. The unpaid principal of each Floating Prime
Advance shall bear interest from the date of advance until paid at a rate
per annum which shall from day to day be equal to the lesser of: (a) the
Floating Prime Rate in effect from day to day or (b) the Maximum Rate. The
unpaid principal of each Eurodollar Advance shall bear interest from the
date of advance until paid at a rate per annum which shall be equal to the
lesser of (a) the sum of the Adjusted Interbank Rate for the applicable
Interest Period, plus five-eighths percent (0.625%) or (b) the Maximum Rate
if as of the end of the most recent fiscal quarter the ratio of the sum of
(i) Consolidated Net Income and (ii) Non-Cash Charges for the preceding
four fiscal quarters to Senior Funded Debt as of the end of the most recent
fiscal quarter is equal to or greater than .40 to 1.0. The unpaid principal
of each Eurodollar Advance shall bear interest from the date of advance
until paid at a rate per annum which shall be equal to the lesser of (a)
the sum of the Adjusted Interbank Rate for the applicable Interest Period,
plus three-quarters percent (0.75%) or (b) the Maximum Rate if as of the
end of the most recent fiscal quarter the ratio of the sum of (i)
Consolidated Net Income and (ii) Non-Cash Charges for the preceding four
fiscal quarters to Senior Funded Debt as of the end of the most recent
fiscal quarter is less than .40 to 1.0 but equal to or greater than .30 to
1.0. The unpaid principal of each Eurodollar Advance shall bear interest
from the date of advance until paid at a rate per annum which shall be
equal to the lesser of (a) the sum of the Adjusted Interbank Rate for the
applicable Interest Period, plus seven-eighths percent (0.875%) or (b) the
Maximum Rate if as of the end of the most recent fiscal quarter the ratio
of the sum of (i) Consolidated Net Income and (ii) Non-Cash Charges for the
preceding four fiscal quarters to Senior Funded Debt as of the end of the
most recent fiscal quarter is less than .30 to 1.0 but equal to or greater
than .20 to 1.0. The unpaid principal of each Eurodollar Advance shall bear
interest at the lesser of (a) the Floating Prime Rate in effect from day to
day plus five percent (5%) or (b) the Maximum Rate if as of the end of the
most recent fiscal quarter the ratio of the sum of (i) Consolidated Net
Income and (ii) Non-Cash Charges for the preceding four fiscal quarters to
Senior Funded Debt as of the end of the most recent fiscal quarter is less
than .20 to 1.0. The unpaid principal balance of the Swing Line Note shall
bear interest at the lesser of (a) the Floating Prime Rate in effect from
day to day or (b) the Maximum Rate. All past due principal of, and to the
extent permitted by applicable law, interest on the Notes shall bear
interest at the Past Due Rate. If converted to Term Loans pursuant to
Section 3.01 hereof, the converted principal amount of the Notes shall
continue to bear interest as provided in this Section 2.03. Notwithstanding
the foregoing, the unpaid principal balance of the Notes shall bear
interest as provided in Section 4.05(c) hereof, upon the occurrence of the
circumstances described in such section.
4.
Section 9.07 of the Loan Agreement is amended to read in its entirety as
follows:
9.07. Limitations on Acquisitions. Acquire or commit or agree to
acquire the stock or assets of any Person prior to the termination of the
Short Term Credit Agreement.
Section 9.14 of the Loan Agreement is amended to read in its entirety as
follows:
9.14 Limitation on Additional Indebtedness. Incur or assume or permit
any subsidiary to incur or assume any Indebtedness for borrowed money,
except for (i) the Indebtedness evidenced by the Notes and the indebtedness
under the Short Term Credit Agreement, (ii) Consolidated indebtedness
(excluding the Indebtedness evidenced by the Notes and the indebtedness
under the Short Term Credit Agreement) not to exceed five million dollars
($5,000,000) in the aggregate at any one time, and (iii) trade indebtedness
incurred in the ordinary course of business.
6.
A new Section 9.18 is added to the Loan Agreement which shall read in its
entirety as follows:
9.18 Capital Expenditures. Permit the aggregate amount of Capital
Expenditures to exceed six million dollars ($6,000,000) during any fiscal
year beginning with the fiscal year ending June 30, 1996.
7.
A new Section 10.01(h) is added to the Loan Agreement which shall read in
its entirety as follows:
(h) The occurrence of an event of default under the terms of the Short Term
Credit Agreement.
8.
Company and Guarantors warrant and represent to Banks that no Event of
Default exists. By the execution hereof, each of the Guarantors ratify and
confirm the terms of the Guaranty Agreement dated August 17, 1994, agree that
the Guaranty Agreement shall remain in full force and effect and unconditionally
agree that the Guaranty Agreement is enforceable against each of them in
accordance with its terms.
9.
Except as amended by the First Amendment, the Second Amendment, the Third
Amendment and this Fourth Amendment, the Loan Agreement is ratified and
confirmed and shall remain in full force and effect.
10.
This Fourth Amendment shall be governed by and construed in accordance with
the laws of the State of Texas.
11.
Company agrees to pay all expenses incurred by Agent and Banks in
connection with the negotiation and preparation of this Fourth Amendment,
including reasonable attorney's fees.
12.
This Fourth Amendment may be executed in any number of multiple
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original, and all of which taken
together shall constitute one and the same agreement.
13.
Banks, Company, and Guarantors agree to be bound by the current Arbitration
Program of Agent which is incorporated by reference herein and is acknowledged
as received by the parties pursuant to which any and all disputes shall be
resolved by mandatory binding arbitration upon the request of any party.
14.
This Fourth Amendment shall be binding upon and inure to the benefit of the
parties and their respective successors and assigns.
15.
THIS WRITTEN AGREEMENT REPRESENTS THE FINAL AGREEMENT AMONG THE PARTIES AND
MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE
PARTIES.
Executed to be effective as of July 6, 1995.
TANDYCRAFTS, INC., a Delaware corporation
By: /s/ Jerry L. Roy
-----------------------------------
Jerry L. Roy, President
COMPANY
CASUAL CONCEPTS, INC., a Texas
corporation
By: /s/ Michael J. Walsh
-----------------------------------
Michael J. Walsh, Vice President
SAV-ON, INC., a Texas corporation
By: /s/ Michael J. Walsh
-----------------------------------
Michael J. Walsh, Vice President
NOCONA BELT COMPANY, a Texas corporation
By: /s/ Michael J. Walsh
-----------------------------------
Michael J. Walsh, Vice President
J-MAR ASSOCIATES, INC., a Texas
corporation
By: /s/ Michael J. Walsh
-----------------------------------
Michael J. Walsh, Vice President
DAVID JAMES MANUFACTURING, INC., a Texas
corporation
By: /s/ Michael J. Walsh
-----------------------------------
Michael J. Walsh, Vice President
BRAND NAME APPAREL, INC., a Texas
corporation
By: /s/ Michael J. Walsh
-----------------------------------
Michael J. Walsh, Vice President
THE DEVELOPMENT ASSOCIATION, INC., a Texas
corporation
By: /s/ Michael J. Walsh
-----------------------------------
Michael J. Walsh, Vice President
ART IMAGE, INC., a California corporation
By: /s/ Michael J. Walsh
-----------------------------------
Michael J. Walsh, Vice President
PLC LEATHER COMPANY, a Nevada
corporation
By: /s/ Michael J. Walsh
-----------------------------------
Michael J. Walsh, Vice President
TANDYARTS, INC., a Nevada corporation
By: /s/ Michael J. Walsh
-----------------------------------
Michael J. Walsh, Vice President
COLLEGE FLAGS AND MANUFACTURING, INC., a
South Carolina corporation
By: /s/ Michael J. Walsh
-----------------------------------
Michael J. Walsh, Vice President
LORD'S VINEYARD, INC., a Colorado
corporation
By: /s/ Michael J. Walsh
-----------------------------------
Michael J. Walsh, Vice President
GUARANTORS
FIRST INTERSTATE BANK OF TEXAS, N.A.
By: /s/ Steve Wood
-----------------------------------
Steve Wood, Senior Vice President
By: /s/ Todd Robichaux
-----------------------------------
Todd Robichaux, Vice President
THE DAIWA BANK, LTD.
By: /s/ James T. Wang
-----------------------------------
James T. Wang, Vice President
By: /s/ Kirk L. Stites
-----------------------------------
Kirk L. Stites, Vice President
NBD BANK, N.A.
By: /s/ James D. Heinz
-----------------------------------
James D. Heinz, Vice President
BANKS
EXHIBIT 21
TANDYCRAFTS, INC.
Significant Subsidiaries of Tandycrafts, Inc. as of June 30, 1994
Jurisdiction
of
Subsidiary's Legal Name Doing Business As Incorporation
----------------------- ----------------- -------------
Casual Concepts, Inc. Cargo Furniture & Accents Texas, U.S.A.
Development Association,
Inc. Joshua's Christian Stores Texas, U.S.A.
Sav-On, Inc. Sav-On Discount Office
Supplies Texas, U.S.A.
Nocona Belt Company Texas, U.S.A.
David James
Manufacturing, Inc. David James Fashions Texas, U.S.A.
Brand Name Apparel, Inc. The Leather Factory Texas, U.S.A.
TAC Holdings, Inc. Delaware, U.S.A.
PLC Leather Company Prestige Leather Creations Nevada, U.S.A.
TandyArts, Inc. Impulse Designs Nevada, U.S.A.
College Flags and
Manufacturing
Company, Inc. College Flags/TAG Express South Carolina,
U.S.A.
Hermitage Fine Arts, Inc. Hermitage Fine Arts Nevada, U.S.A.
Each of the corporations listed is a direct subsidiary of Tandycrafts,
Inc., which owns 100% of the voting securities of each, except for TAC Holdings,
Inc. which is 100% owned by Tandycrafts, Inc. and its various subsidiaries, and
Hermitage Fine Arts, Inc., which is 100% owned by TandyArts, Inc. Each of the
above subsidiaries is included in the Tandycrafts, Inc. Consolidated Financial
Statements for fiscal 1994.
EXHIBIT 23
TANDYCRAFTS, INC.
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the Registration
Statements on Form S-8 (No's. 33-85550, 33-85548 and 33-57525) and to the
incorporation by reference in the Prospectus constituting part of the
Registration Statement on Form S-3 (No. 33-88290) of Tandycrafts, Inc. of our
report dated August 8, 1995, appearing on page 16 of this Form 10-K.
/s/ Price Waterhouse LLP
- ------------------------
Price Waterhouse LLP
Fort Worth, Texas
September 27, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Tandycrafts,
Inc.'s June 30, 1995 Form 10-K and is qualified in its entirety by reference to
such Form 10-K filing.
</LEGEND>
<CIK> 0000096294
<NAME> TANDYCRAFTS, INC.
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-START> JUL-01-1994
<PERIOD-END> JUN-30-1995
<EXCHANGE-RATE> 1
<CASH> 1,807
<SECURITIES> 0
<RECEIVABLES> 32,045
<ALLOWANCES> 605
<INVENTORY> 65,742
<CURRENT-ASSETS> 101,980
<PP&E> 48,658
<DEPRECIATION> 19,951
<TOTAL-ASSETS> 178,803
<CURRENT-LIABILITIES> 27,113
<BONDS> 0
<COMMON> 18,528
0
0
<OTHER-SE> 72,133
<TOTAL-LIABILITY-AND-EQUITY> 178,803
<SALES> 256,523
<TOTAL-REVENUES> 256,523
<CGS> 155,644
<TOTAL-COSTS> 244,663
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,900
<INCOME-PRETAX> 8,027
<INCOME-TAX> 2,810
<INCOME-CONTINUING> 5,217
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,217
<EPS-PRIMARY> .46
<EPS-DILUTED> 0.00
</TABLE>
