SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report: February 6, 1996
(Date of earliest event reported): (January 23, 1996)
TANDYCRAFTS, INC.
A DELAWARE CORPORATION
1-7258 75-1475224
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(Commission File Number) (IRS Employer Identification No.)
1400 Everman Parkway
Fort Worth, Texas 76140
(817) 551-9600
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
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(a) General. On January 23, 1996, Tandycrafts, Inc. (the "Company")
announced the implementation of a strategic restructuring program which includes
the divestiture of Prestige Leather Creations ("Prestige"), the sale or closure
of certain other individually insignificant businesses and the closure of 11
retail stores (collectively, the "Other Businesses"). Such announcement was
filed as an exhibit to a Current Report on Form 8-K dated January 24, 1996, and
is incorporated herein by reference. The sale of Prestige is deemed to involve
a significant amount of assets as defined in the instructions to Form 8-K. The
Company has entered into a letter of intent to sell substantially all of the
assets of Prestige to certain members of the current management of Prestige;
however, this transaction is subject to completion. The Company has also
entered into letters of intent with various buyers to sell substantially all of
the assets of certain of the Other Businesses; however, all such agreements are
subject to completion.
The pro forma financial information required pursuant to Article 11 of
Regulation S-X with respect to the planned dispositions noted above is furnished
under Item 7 of this Report.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION, AND EXHIBITS
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(a) Pro Forma Financial Information.
--------------------------------
Pro Forma Financial Information
Pro Forma Condensed Consolidated Balance Sheet - September 30, 1995
Pro Forma Condensed Consolidated Statement of Income - Year Ended
June 30, 1995
Pro Forma Condensed Consolidated Statement of Income - Three Months
Ended September 30, 1995
Notes to Pro Forma Condensed Consolidated Financial Statements
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf of the
undersigned thereunto duly authorized.
Date: February 6, 1996 By:/s/ Jerry L. Roy
-------------------------
Jerry L. Roy,
President and Chief Executive Officer
Date: February 6, 1996 By:/s/ Michael J. Walsh
-------------------------
Michael J. Walsh
Chief Financial Officer
TANDYCRAFTS, INC.
PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma financial information is based on the
historical financial statements of Tandycrafts, Inc. (the "Company") adjusted to
give effect to the disposition of the assets of Prestige Leather Creations
("Prestige"), the disposition of the assets of certain other individually
insignificant businesses and the closure of 11 retail stores (collectively, the
"Other Businesses") pursuant to a strategic restructuring plan as if such
dispositions had taken place on June 30, 1994 for the pro forma condensed
consolidated statements of income and on September 30, 1995, for the pro forma
condensed consolidated balance sheet using the assumptions and adjustments set
forth in the accompanying notes to the pro forma condensed consolidated
financial statements.
The pro forma financial information is not necessarily indicative of the
results of operations or the financial position which would have been attained
had the dispositions been consummated at either of the foregoing dates or
earlier, or which may be attained in the future, nor does it give effect to any
matters other than those described in the notes thereto.
The pro forma financial information should be read in conjunction with the
historical financial statements of the Company.
TANDYCRAFTS, INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1995
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<S><C>
Historical
-----------
Tandycrafts, Other Pro Forma
ASSETS Inc. Prestige(a) Businesses(b) Proceeds(c) Exit costs(d) Consolidated
----------- ----------- ------------- ----------- ------------- ------------
Current assets
Cash and cash equivalents $ 2,068 $ - $ - $ - $ - $ 2,068
Accounts receivable, net 32,319 (1,370) (5,230) 2,429 - 28,148
Inventories 66,062 (2,532) (9,487) - - 54,043
Other current assets 3,695 (129) (930) - - 2,636
----------- ----------- ----------- ----------- ----------- -----------
Total current assets 104,144 (4,031) (15,647) 2,429 - 86,895
----------- ----------- ----------- ----------- ----------- -----------
Property and equipment, net 28,285 (516) (1,926) - - 25,843
Other assets 619 (33) (41) 725 - 1,270
Goodwill, net 47,277 (5,640) (1,898) - - 39,739
----------- ----------- ----------- ----------- ----------- -----------
$ 180,325 $ (10,220) $ (19,512) $ 3,154 $ - $ 153,747
=========== =========== =========== =========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable and current
portion of long-term debt $ 3,400 $ - $ - $ - $ - $ 3,400
Accounts payable 14,199 (203) (1,469) - - 12,527
Accrued liabilities
and other 9,996 (3,545) (6,838) 2,972 1,756 4,341
----------- ----------- ----------- ----------- ----------- -----------
Total current liabilities 27,595 (3,748) (8,307) 2,972 1,756 20,268
----------- ----------- ----------- ----------- ----------- -----------
Long-term debt 59,000 - - (5,338) - 53,662
Deferred taxes 2,029 - - - - 2,029
Stockholders' equity
Common stock, $1 par value;
50,000,000 shares authorized,
18,527,988 issued 18,528 - - - - 18,528
Additional paid-in capital 18,009 - - - - 18,009
Retained earnings 80,093 (6,472) (11,205) 5,520 (1,756) 66,180
Treasury stock (24,929) - - - - (24,929)
----------- ----------- ------------ ----------- ----------- -----------
Total stockholders'
equity 91,701 (6,472) (11,205) 5,520 (1,756) 77,788
----------- ----------- ------------ ----------- ----------- -----------
$ 180,325 $ (10,220) $ (19,512) $ 3,154 $ - $ 153,747
=========== =========== ============ =========== =========== ===========
</TABLE>
TANDYCRAFTS, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEAR ENDED JUNE 30, 1995
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<S><C>
Historical
-----------
Tandycrafts, Other Interest Pro Forma
Inc. Prestige (e) Businesses (f) Expense (g) Consolidated (h)
------------ ----------- ------------- ---------- ---------------
Net sales $ 256,523 $ (8,852) $ (40,646) $ - $ 207,025
Operating costs and expenses:
Cost of goods sold 155,644 (5,871) (24,770) - 125,003
Selling, general and
administrative 83,544 (4,465) (15,414) - 63,665
Depreciation and
amortization 5,475 (197) (738) - 4,540
---------- ---------- ------------ ---------- ---------------
Total operating costs
and expenses 244,663 (10,533) (40,922) - 193,208
---------- ---------- ------------ ---------- ---------------
Operating income 11,860 1,681 276 - 13,817
Interest expense, net 3,833 (263) 3,570
---------- ---------- ------------ ---------- ---------------
Income before income taxes 8,027 1,681 276 263 10,247
Provision for income taxes 2,810 588 97 92 3,587
---------- ---------- ------------ ---------- ---------------
Net income $ 5,217 $ 1,093 $ 179 $ 171 $ 6,660
========== ========== ============ ========== ===============
Net income per share $0.46 $0.58
===== =====
Average common and common share
equivalents outstanding 11,434 11,434
====== ======
</TABLE>
TANDYCRAFTS, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1995
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<S><C>
Historical
-----------
Tandycrafts, Other Interest Pro Forma
Inc. Prestige (e) Businesses (f) Expense (g) Consolidated (h)
----------- ----------- ------------- ---------- ---------------
Net sales $ 62,349 $ (1,873) $ (8,691) $ - $ 51,785
Operating costs and expenses:
Cost of goods sold 38,813 (1,215) (5,414) - 32,184
Selling, general and
administrative 20,913 (809) (3,565) - 16,539
Depreciation and
amortization 1,525 (53) (186) - 1,286
----------- ----------- ------------- ---------- --------------
Total operating costs
and expenses 61,251 (2,077) (9,165) - 50,009
----------- ----------- ------------- ---------- --------------
Operating income 1,098 204 474 - 1,776
Interest expense, net 1,085 - - (66) 1,019
----------- ----------- ------------- ---------- --------------
Income before income taxes 13 204 474 66 757
Provision for income taxes 4 71 166 23 264
----------- ----------- ------------- ---------- --------------
Net income $ 9 $ 133 $ 308 $ 43 $ 493
=========== =========== ============= ========== ==============
Net income per share $0.00 $0.04
===== =====
Average common and common
share equivalents
outstanding 11,769 11,769
====== ======
</TABLE>
TANDYCRAFTS, INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(UNAUDITED)
(a) The adjustments in this column represent the elimination of the
historical assets and liabilities of Prestige as of September 30, 1995, with the
net after-tax loss resulting from the elimination of such balances reflected as
a charge to retained earnings.
(b) The adjustments in this column represent the elimination of the
historical assets and liabilities of the Other Businesses as of September 30,
1995, with the net after-tax loss resulting from the elimination of such
balances reflected as a charge to retained earnings.
(c) The adjustments in this column represent the estimated proceeds from
the sale of Prestige and the Other Businesses based on signed letters of intent
with various buyers. Estimated cash proceeds at closing are reflected as a
reduction of long-term debt. The net after-tax effect of the estimated cash
proceeds and receivables is reflected as a credit to retained earnings. No
proceeds have been assumed with respect to the disposition of assets of
businesses for which letters of intent have not yet been obtained. The
aggregate net assets for such businesses at September 30, 1995 was approximately
$4.0 million.
(d) The adjustments in this column represent estimated transaction costs
and other exit costs (e.g., lease obligations and other contractual commitments)
directly related to the disposition of Prestige and the Other Businesses. The
net after-tax effect of such estimated costs is reflected as a charge to
retained earnings.
(e) The adjustments in this column represent the elimination of the
historical income, expenses and related income tax effect of Prestige for the
respective period.
(f) The adjustments in this column represent the elimination of the
historical income, expenses and related income tax effect of the Other
Businesses for the respective period.
(g) The adjustment to interest expense reflects the use of the estimated
net proceeds resulting from the disposition of the assets of Prestige and the
Other Businesses as reflected in Notes (c) and (d), above, to reduce long-term
debt based on an annual interest rate of 7%. For purposes of this adjustment,
no consideration has been given to the realization of expected benefits from tax
carrybacks, totaling approximately $8.9 million, related to the sale or
disposition of Prestige and the Other Businesses as reflected in Notes (a) and
(b), above.
(h) The pro forma income statements do not reflect certain estimated
nonrecurring charges (i.e., transaction and other exit costs) related to the
disposition of Prestige and the Other Businesses. Such costs are reflected in
the pro forma balance sheet as indicated in Note (d), above.
