TANDYCRAFTS, INC.
1400 EVERMAN PARKWAY
FORT WORTH, TEXAS 76140
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
NOVEMBER 13, 1996
To the Stockholders of Tandycrafts, Inc.:
The Annual Meeting of Stockholders of Tandycrafts, Inc. will be held on
Wednesday, November 13, 1996 at 9:30 a.m., Central Time, at the Diamond Club at
The Ballpark, located at 1000 Ballpark Way, Arlington, Texas 76011, for the
following purposes:
(1) To elect directors to serve for the ensuing year and until successors
are duly elected; and
(2) To transact such other business as may properly come before the
meeting or any adjournment thereof.
The transfer books will not be closed. The date fixed by the Board of
Directors as the record date for the determination of the stockholders entitled
to notice of and to vote at the Annual Meeting is the close of business on
September 16, 1996.
By order of the Board of Directors,
Russell L. Price
Secretary
Fort Worth, Texas
September 30, 1996
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THIS MEETING. WHETHER OR NOT
YOU EXPECT TO ATTEND THE MEETING IN PERSON, YOU ARE URGED TO COMPLETE, SIGN AND
DATE THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. YOU MAY, IF YOU WISH,
WITHDRAW YOUR PROXY AT ANY TIME PRIOR TO THE TIME IT IS VOTED AND VOTE YOUR
SHARES PERSONALLY.
TANDYCRAFTS, INC.
1400 EVERMAN PARKWAY
FORT WORTH, TEXAS 76140
PROXY STATEMENT
SOLICITATION OF PROXY AND REVOCABILITY OF PROXY
This Proxy Statement is furnished to the stockholders of Tandycrafts, Inc.,
a Delaware Corporation (the "Corporation"), in connection with the solicitation
by the Board of Directors of the Corporation (the "Board") of proxies for use at
the Annual Meeting of Stockholders to be held on November 13, 1996, or any
adjournment thereof (the "Annual Meeting"). This Proxy Statement and the
enclosed proxy card were first sent to the stockholders of the Corporation on or
about October 3, 1996.
The cost of preparing, assembling and mailing this Proxy Statement, Notice
of the Annual Meeting and the enclosed Proxy, is to be borne by the Corporation.
In addition to the solicitation of Proxies by use of the mails, the Corporation
may utilize the services of some of its officers and regular employees (who will
receive no compensation therefor in addition to their regular salaries) to
solicit proxies personally and by telephone or other means of communication.
The Corporation may request banks, brokers and other custodians, nominees and
fiduciaries to forward copies of the proxy materials to their principals, and
will reimburse such persons for their reasonable expenses in so doing.
Giving the Proxy will not in any way affect the stockholder's right to
attend the meeting and to vote in person, or his or her right to revoke the
Proxy at any time before it is exercised, by giving written notice of revocation
to the Secretary of the Corporation prior to the meeting at the above address or
at the meeting at The Diamond Club at the Ballpark, 1000 Ballpark Way,
Arlington, Texas 76011.
RECORD DATE AND VOTING SECURITIES
Only holders of the Corporation's $1.00 par value common stock (the "Common
Stock") of record as of the close of business on September 16, 1996, will be
entitled to vote on matters presented at the meeting. At the close of business
on that date there were outstanding 12,331,604 shares of Common Stock, with each
share having one vote on each matter to be acted upon at the meeting.
The presence in person or by proxy of the holders of a majority of the
Corporation's outstanding shares of Common Stock will constitute a quorum. The
affirmative vote of a plurality of the shares represented at the Annual Meeting,
in person or by proxy, will be necessary for the election of directors. The
affirmative vote of a majority of the shares represented at the Annual Meeting,
in person or by proxy, will be necessary to approve and for the taking of all
other actions which may properly come before the Annual Meeting.
All shares of Common Stock represented by properly executed Proxies will be
voted at the Annual Meeting in accordance with the directions marked on the
Proxies, unless the Proxies have previously been revoked. If no directions are
indicated on the Proxies, they will be voted "For" each of the proposals before
the Annual Meeting. If any other matters are properly presented at the Annual
Meeting for action, which is not presently anticipated, the Proxy holders will
vote the Proxies (which confer discretionary authority upon the holder to vote
on such matters) in accordance with their best judgment. Any stockholder
present (including a holder whose shares are deemed present by a broker non-
vote) at the Annual Meeting, but who abstains from voting, will be counted as
present for purposes of determining whether a quorum exists. With respect to
all matters other than the election of directors, an abstention (or broker non-
vote) has the same effect as a vote against the proposal.
PROPOSAL 1: ELECTION OF DIRECTORS
Six directors are to be elected at this Annual Meeting to hold office until
the next Annual Meeting of Stockholders and until their successors are elected
and have qualified. The Board of Directors recommends a vote for the election
of the listed director nominees. It is the intention of the persons named in
the accompanying proxy to vote for the nominees listed below unless authority to
do so is withheld. All nominees have indicated their willingness to serve for
the ensuing term but if any nominee is unable to or should decline to serve as a
director at the date of the Annual Meeting, it is the intention of the persons
named in the Proxy to vote for such other person or persons as they in their
discretion shall determine.
NOMINEES AGE DIRECTOR SINCE
- -------- --- --------------
B. Franklin Bigger 54 1988
R.E. Cox, III 63 1985
Joe K. Pace 51 1986
Robert Schutts 74 1975
Sheldon Stein 43 1995
Michael J. Walsh 55 1992
INFORMATION CONCERNING THE BOARD AND ITS COMMITTEES
MR. BIGGER has served as the Chief Executive Officer of the Frames and Framed
Art division since January 16, 1995. Mr. Bigger served as President of Magee
Company, a division of the Corporation, from 1976 to 1995, Vice President and
General Manager of Magee Company from 1972 to 1976 and Vice President of Sales
from 1970 to 1972. Mr. Bigger also serves on the Board of Directors of the Bank
of Pocahontas, Pocahontas, Arkansas.
MR. COX has served as Chairman of the Corporation since February, 1992. For
more than the past five years, Mr. Cox has served as President of R.E. Cox
Realty Company, Fort Worth, Texas; the General Partner of Sav-On Development
Company, Fort Worth; and has been the Co-Owner of Ofco Office Furniture, Fort
Worth and of Berry Street Realty Company, Fort Worth. From 1977 to 1982, Mr.
Cox served as Chairman of the Board of R.E. Cox and Company Department Stores,
Fort Worth. Mr. Cox is also a director on the Boards of Millers Group Companies
and KBK Capital Corporation.
MR. PACE has been the President of J.C. Pace & Company and J.C. Pace Holding
Company, Fort Worth, Texas for over five years. Other business interests
include Traders Village, Ltd. in Dallas/Fort Worth; Trader Village Houston,
Inc.; Kimbell, Inc., Fort Worth; Anderson International Corp., Cleveland, Ohio;
W.C. Cantrell Co., Fort Worth; Automatic Laundry Co., Denver, Colorado; M/System
Super Markets, West Texas; TA Ranch, Saratoga, Wyoming.
MR. SCHUTTS has been Vice President of Royer & Schutts Inc., an office furniture
company, Fort Worth, Texas for over five years.
MR. STEIN has been the Senior Managing Director and Head of the Southwestern
Corporate Finance Department for Bear, Stearns & Co. Inc. since 1989. Mr. Stein
joined Bear Stearns in 1986 and prior to that was a partner with the law firm of
Hughes & Luce, LLP. Mr. Stein is also a director of The Men's Wearhouse, Inc.,
Cinemark USA, Inc., AMRE, Inc., Fresh America Corp., RAC Financial Group, Inc. ,
Cellstar Corporation and Jerell, Inc.
MR. WALSH has served as President and Chief Executive Officer of the Corporation
since April 1996. Previously, he served as Executive Vice President and Chief
Financial Officer of the Corporation from August 1992 until July 1996 and as
General Counsel and Secretary since 1983. He also served as Vice President from
1986 to 1992.
BOARD COMMITTEES
The Board of Directors of the Corporation met ten (10) times during fiscal
year 1996. All Directors were present at each meeting of the Board and each
Committee on which he or she served.
The Board of Directors has an Audit Committee currently composed of Messrs.
Cox, Pace, Schutts and Stein. On June 17, 1996, Mr. Stein was added to the
Audit Committee. The Audit Committee is primarily concerned with the
effectiveness of the Corporation's accounting policies and practices, financial
reporting, and internal controls. The Audit Committee reviews and approves the
scope of the annual examination of the books and records of the Corporation and
reviews the findings and recommendations of the outside auditors on completion
of the audit; considers the organization, scope and adequacy of the
Corporation's internal controls function; monitors the extent to which the
Corporation has implemented changes recommended by the independent auditors or
the Audit Committee; and provides over-sight with respect to accounting
principles employed in the Corporation's financial reporting. The Audit
Committee, comprised entirely of non-employee Directors, met two (2) times
during the past fiscal year.
The Board of Directors has a Compensation Committee currently composed of
Mrs. Smith and Messrs. Cox, Pace, Schutts, Stein and Walsh. On April 12, 1996,
Mr. Roy resigned from the Compensation Committee and was replaced by Mr. Walsh.
On June 17, 1996, Mr. Stein and Mr. Cox were added to the Compensation
Committee. The principal functions of the Compensation Committee are to review
and make recommendations to the Board of Directors concerning compensation plans
for officers and appointments and promotions to executive positions at the
corporate level. The Compensation Committee met one (1) time during fiscal
year 1996.
The Board of Directors has a Nominating Committee currently composed of
Messrs. Cox, Schutts and Walsh. On April 12, 1996, Mr. Roy resigned from the
Nominating Committee and was replaced by Mr. Walsh. The Nominating Committee
reviews and makes recommendations to the Board of Directors with respect to
candidates for directors of the Corporation, compensation of directors and
assignments of directors to committees of the Board. The Nominating Committee
met one time during fiscal year 1995. Stockholders who wish to suggest nominees
for election at the 1997 Annual Meeting should submit their suggestion in
writing to the Nominating Committee no later than June 2, 1997 to the Secretary
of the Corporation.
The Board of Directors also formed a temporary Progress Committee on April
18, 1996. The temporary Progress Committee is composed of Messrs. Cox, Pace,
Schutts, Stein and Walsh. The principal functions of the Progress Committee are
to discuss strategic and operational issues relating to the Company and to
monitor the progress of the Company's restructuring program. The Progress
Committee met twice during fiscal year 1996.
DIRECTOR COMPENSATION
For fiscal 1996, directors who were not full time employees of the
Corporation or its subsidiaries were paid an annual retainer of $15,000 and a
fee of $1,000 for each Board meeting and each committee meeting attended ($1,500
per meeting for Chairperson). Employees of Tandycrafts who are also directors
do not receive additional compensation for their services as directors or
committee members. As approved on November 10, 1993, each non-employee director
also received a grant of a stock option for 60,000 shares under the Tandycrafts,
Inc. 1992 Director Stock Option Plan. Mr. Stein was granted stock options for
60,000 shares upon becoming a director in December 1995.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth information based upon the records of the
Corporation and filings with the Securities and Exchange Commission as of
September 1, 1996, with respect to the ownership of the Corporation's Common
Stock by each person known to be the beneficial owner of more than five percent
(5%) of the outstanding Common Stock of the Corporation, each director and
nominee, each executive officer named in the Summary Compensation Table and the
total shares owned by all directors and executive officers as a group.
<TABLE>
<S><C>
AMOUNT AND
NATURE
NAME AND ADDRESS OF OF BENEFICIAL PERCENT OF
BENEFICIAL OWNER OWNERSHIP(1) CLASS
- ------------------- ------------- ----------
B. Franklin Bigger 168,689(2) 1.37%
R.E. Cox, III 62,700(3) *
Joe K. Pace 61,300(4) *
Jerry Roy 160,307(5) 1.30%
Robert Schutts 161,836(6) 1.31%
Carol Smith 33,327(7) *
Sheldon Stein 20,000(8) *
Michael J. Walsh 197,579(9) 1.60%
James D. Allen 20,523(10) *
All Executive Officers and Directors as a group (9 persons) 886,261(11) 7.19%
Tandycrafts Investment Plan 259,420 2.10%
Tandycrafts, Inc. Employee Stock Ownership Plan 4,334,857(12) 35.15%
The T.C.W. Group, Inc. 677,000(13) 5.49%
</TABLE>
- --------------------
(1) Shares are deemed to be "beneficially owned" by a person if such person,
directly or indirectly, has or shares (i) the power to vote or direct the
voting of such shares, or (ii) the power to dispose or direct the disposition
of such shares. In addition, a person is deemed to beneficially own any
shares for which voting or investment power may be acquired within 60 days
pursuant to options or other rights.
(2) Includes 52,005 shares held by the Tandycrafts, Inc. Employee Stock
Ownership Plan (the "ESOP"), over which Mr. Bigger has voting power but not
investment power, and 4,420 shares in the ESOP Benefit Restoration Plan.
Also includes 42,000 exercisable shares under option granted pursuant to
Tandycrafts, Inc. 1992 Stock Option Plan.
(3) Includes 50,000 exercisable shares under option granted pursuant to
Tandycrafts, Inc. 1992 Director Stock Option Plan.
(4) Includes 50,000 exercisable shares under option granted pursuant to
Tandycrafts, Inc. 1992 Director Stock Option Plan.
(5) Includes 48,352 shares held by the Corporation's ESOP, over which Mr.
Roy has voting power but not investment power and 8,225 in the ESOP Benefit
Restoration Plan. Also includes 2,941 shares owned by Mr. Roy's spouse and
daughter.
(6) Includes 50,000 exercisable shares under option granted pursuant to
Tandycrafts, Inc. 1992 Director Stock Option Plan.
(7) Includes 8,334 shares held by the Corporation's ESOP, over which Mrs.
Smith has voting power but not investment power. Also includes 14,997 shares
held by the Corporation's ESOP in the name of Mrs. Smith's spouse. Includes
6,000 exercisable shares under option granted to Mrs. Smith and 3,000
exercisable shares under option granted to Mrs. Smith's spouse, which will
both be forfeited in September, 1996.
(8) Includes 20,000 exercisable shares under option granted pursuant to
Tandycrafts, Inc. 1992 Director Stock Option Plan.
(9) Includes 45,442 shares held by the Corporation's ESOP, over which Mr.
Walsh has voting but not investment power and 5,437 shares in the ESOP
Benefit Restoration Plan. Also includes 74,000 exercisable shares under
options granted pursuant to Tandycrafts, Inc. 1992 Stock Option Plan.
(10) Includes 8,523 shares held by the Corporation's ESOP, over which Mr.
Allen has voting but not investment power. Also includes 12,000 exercisable
shares under option granted pursuant to Tandycrafts, Inc. 1992 Stock Option
Plan.
(11) Excludes an aggregate of 259,420 shares owned by Tandycrafts Investment
Plan of which Messrs. Allen and Walsh share investment power and voting power
as members of the Administrative Committee of the Plan.
(12) As of September 16, 1996, a total of 4,334,857 shares of Tandycrafts,
Inc. Common Stock were held in the Corporation's ESOP, which was formed prior
to December 31, 1987 to replace the Tandycrafts Employee Deferred Salary and
Investment Plan which was suspended as of that date. Each participant in the
ESOP is entitled to direct the Trustee with respect to the voting of the
Common Stock allocated to his or her account. If a participant does not
direct the Trustee with respect to the voting of the shares of his or her
account, such shares will be voted in the discretion of the Trustee.
(13) Based on a Schedule 13G, dated February 12, 1996, the T.C.W. Group,
Inc., a Nevada Corporation, located at 865 Figueroa St., Los Angeles, CA
90017, and Robert Day, located at 200 Park Avenue, Suite 2200, New York, NY
10166, hold sole voting and dispositive power over 677,000 shares of the
Corporation's Common Stock.
* Less than 1%.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Corporation's directors, executive officers, and persons who own more than
10% of the Corporation's Common Stock, to file with the Securities and Exchange
Commission ("SEC") reports of ownership and changes of ownership of the Common
Stock. Directors, executive officers, and greater-than-10% stockholders are
required by SEC regulations to furnish the Corporation with copies of all such
Section 16(a) reports. Based solely on review of the copies of such reports
furnished to the Corporation or written representations, the Corporation
believes that all filing requirements applicable to the Corporation's directors,
executive officers and greater-than-10% stockholders were complied with except
that Mr. R.E. Cox, III reported two Form 4 transactions on a Form 5
approximately one month late and that Mr. Jerry L. Roy filed his Form 5
approximately one month late.
EXECUTIVE COMPENSATION
The following table sets forth a summary of the compensation paid during the
past three fiscal years for services in all capacities to the Corporation and
its subsidiaries of those persons who at June 30, 1996 were the Corporation's
chief executive officer and the four other most highly paid executive officers
of the Corporation whose salary and bonus exceeded $100,000 for the year ended
June 30, 1996.
<TABLE>
<S><C>
SUMMARY COMPENSATION TABLE
LONG-
TERM
COMPEN-
ANNUAL COMPENSATION SATION
--------------------------------- --------
NUMBER OF
OTHER SECURITIES ALL
FISCAL ANNUAL UNDERLYING OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(5) COMPENSATION OPTIONS(6) COMPENSATION(7)
- --------------------------- ------ ------ -------- ------------ ---------- ---------------
Jerry L. Roy(1) 1996 $147,353 -0- (4) -0- $286,855
Former President and Chief 1995 $157,500 $204,945 (4) -0- $ 51,406
Executive Officer 1994 $150,000 $225,000 (4) 150,000 $ 40,516
Michael J. Walsh(2) 1996 $137,813 $ 89,450 (4) -0- $ 20,791
President and Chief 1995 $131,250 $170,787 (4) -0- $ 42,119
Executive Officer 1994 $125,000 $187,500 (4) 130,000 $ 33,865
B. Franklin Bigger 1996 $ 80,000 $260,091 (4) -0- $ 29,814
Director and Chief Executive 1995 $ 80,000 $214,508 (4) -0- $ 31,808
Officer of Frames and 1994 $ 80,743 $161,284 (4) 70,000 $ 33,045
Framed Art Division
James D. Allen(3) 1996 $ 92,610 $ 17,890 (4) -0- $ 10,348
Executive Vice President and 1995 $ 88,200 $ 34,157 (4) -0- $ 17,445
Chief Financial Officer 1994 $ 84,000 $ 37,500 (4) 25,000 $ 13,652
</TABLE>
- --------------------
(1) Mr. Roy resigned as President and Chief Executive Officer effective
April 12, 1996. Mr. Roy's All Other Compensation column includes severance-
related compensation in the amount of $263,375.
(2) Mr. Walsh was named Acting President and Chief Executive Officer
effective April 12, 1996. Effective July 9, 1996 Mr. Walsh was appointed as
President and Chief Executive Officer.
(3) Mr. Allen, 36, became an executive officer on November 10, 1993.
Effective July 9, 1996, Mr. Allen was named Executive Vice President and
Chief Financial Officer.
(4) None of the named executive officers received Other Annual Compensation
in excess of the lesser of $50,000 or 10% of combined salary and bonus for
each fiscal year.
(5) Bonus figures reflect the bonus earned during the represented fiscal
year, although such bonus is paid during the next fiscal year.
(6) No options were granted to these executive officers during fiscal years
1995 and 1996. Totals for fiscal year 1994 include options granted during
fiscal year 1993 but repriced during fiscal year 1994. Options granted
during fiscal year 1994 are as follows: 20,000 to Mr. Roy, 20,000 to Mr.
Walsh and 15,000 to Mr. Allen.
(7) Consists of contributions to the Employee Stock Ownership Plan (ESOP) by
the Corporation on behalf of the named executive officers, contributions to
the ESOP Benefit Restoration Plan and certain life insurance premiums paid by
the Corporation. The 1994 totals for Messrs. Bigger, Roy and Walsh have been
amended due to certain amendments to the ESOP Benefit Restoration Plan, as
discussed below in the section relating to the Tandycrafts, Inc. ESOP Benefit
Restoration Plan.
REPORT OF COMPENSATION COMMITTEE
The Compensation Committee is responsible for developing and implementing a
compensation program that is designed to attract, motivate, reward and retain
the broad-based management talent required to achieve the Corporation's
corporate objectives and to increase stockholder value. The Committee believes
that corporate performance and, in turn, stockholder value will be enhanced by a
compensation system which supports and reinforces the Corporation's key
operating and strategic goals while aligning the financial interests of the
Corporation's executive officers with those of the stockholders. For executive
officers, the Corporation relies on an annual incentive program and has created
a stock option program to align the executives' financial interests with those
of stockholders.
The Corporation's compensation program for executive officers consists of a
base salary, an annual incentive bonus program and a stock option program. The
base salary and annual incentive bonus program components of the compensation
program in effect for fiscal year 1996 were put in place with the change in
executive management of the Corporation in August 1992. The stock option
component of the compensation program was adopted by the Board of Directors in
November 1992 and approved by the stockholders at the November 10, 1993 Annual
Meeting.
Under the fiscal year 1996 compensation program, the percentage increase in
base salary for executive officers is commensurate with the average annual
percentage wage increase for all employees of the Corporation. 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 Committee 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.
Based on the Company's performance for fiscal 1996, the bonus amounts included
in the Summary Compensation Table for fiscal year 1996 were approximately the
minimum bonus that could be earned under the plan.
The Corporation's long-term incentive program is a stock option program
under which the Committee reviews and recommends proposed grants of long-term
incentive compensation in the form of stock options. The Committee considers
stock options to be an important means of insuring that executive officers
maintain their incentive to increase the profitability of the Corporation and
the value of its Common Stock. Because the value of stock options is entirely a
function of the value of the Corporation's Common Stock, the Committee believes
that this component of the Corporation's compensation policy aligns the
interests of executive officers with those of the Corporation's stockholders
and will enhance the value of the Common Stock for all stockholders.
The Committee determined the compensation of Jerry L. Roy, former Chief
Executive Officer, and Michael J. Walsh, present Chief Executive Officer, for
the fiscal year ended June 30, 1996 in a manner consistent with the guidelines
described above.
Compensation Committee R.E. Cox, III
Joe K. Pace
Robert Schutts
Carol Smith
Sheldon Stein
Michael J. Walsh
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Carol Smith, former Operations Manager of Joshua's Christian Stores, a
subsidiary of the Corporation, serves as member of the Compensation Committee of
the Board of Directors. Until April 12, 1996, Mr. Jerry L. Roy served as a
member of the Compensation Committee and as Chief Executive Officer. After
April 12, 1996, Mr. Roy was succeeded in both positions by Mr. Michael J. Walsh.
Mr. Cox and Mr. Schutts, who serve on the Compensation Committee, are
beneficiaries of certain leases with Sav-On, Inc. and Joshua's Christian Stores,
as further described herein in the Transactions with Management and Directors
section.
EMPLOYEE STOCK OWNERSHIP PLAN
Under the Tandycrafts, Inc. Employee Stock Ownership Plan (the "ESOP"), an
eligible employee may elect to defer 5% of his or her wages as a salary
reduction contribution. The Corporation in turn contributed an amount equal to
200% of the employee's contribution. Beginning July 1, 1996, the Contribution
of the Corporation was reduced to 100% of the Employee's Contribution. All
contributions are currently invested in the form of Common Stock of the
Corporation. Generally, all contributions by the Corporation become 100% vested
and nonforfeitable upon the completion of five (5) years of credited service.
Participation in the Tandycrafts Employee Deferred Salary and Investment Plan
(the "Prior Plan") is counted in determining years of service. Generally, upon
retirement, death or termination of employment, the value of the employee's
account may be paid out in a lump sum, in installments payable generally over a
period of five (5) years or may be deferred until retirement age in a
combination of cash or securities. Officers and directors who are employees
participate on the same terms as other employees.
TANDYCRAFTS, INC. ESOP BENEFIT RESTORATION PLAN
The Board approved the Tandycrafts, Inc. ESOP Benefit Restoration Plan (the
"Benefit Restoration Plan") during 1993. The Benefit Restoration Plan covers a
select group of the Corporation's management or highly compensated employees
(the "Plan Participants"). The Benefit Restoration Plan restores to certain
Plan Participants benefits lost under the Tandycrafts, Inc. Employee Stock
Ownership Plan because of certain limitations imposed by the Internal Revenue
Code. During fiscal year 1995, the Benefit Restoration Plan was amended to
become a calendar year plan and to take into account certain changes in the tax
code. The contributions made by the Corporation under the Benefit Restoration
Plan during the fiscal year ended June 30, 1996 for Messrs. Bigger, Roy and
Walsh were $14,815, $20,019 and $13,830, respectively, and for all present Plan
Participants as a group were $75,153.
STOCK OPTION PLANS
No stock options were granted during the fiscal year ending June 30, 1996
to the Chief Executive Officer or the named executive officers in the Summary
Compensation Table. During fiscal year 1996, a total of 3,000 stock options
were granted to employees and 60,000 to directors under the Plans.
AGGREGATED OPTION EXERCISES IN THE LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table provides information relating to the exercise of stock
options during the last fiscal year by the Chief Executive Officer and the other
named executive officers in the Summary Compensation Table, and the number and
value of exercisable and unexercisable stock options held by such officers at
June 30, 1996.
<TABLE>
<S><C>
NUMBER OF SECURITIES VALUE OF
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
SHARES OPTIONS AT FISCAL YEAR-END FISCAL YEAR-END
ACQUIRED VALUE ---------------------------- ----------------------------
NAME ON EXERCISE REALIZE EXERCISABLE UNEXERCISABLE(1) EXERCISABLE UNEXERCISABLE(2)
- ---- ----------- ------- ----------- ---------------- ----------- ---------------
Jerry L. Roy(3) -0- -0- 86,000 -0- -0- -0-
Michael J. Walsh -0- -0- 74,000 82,000 -0- -0-
B. Franklin Bigger -0- -0- 42,000 42,000 -0- -0-
James D. Allen -0- -0- 12,000 18,000 -0- -0-
</TABLE>
- --------------------
(1) All options were granted on one of the following dates: December 21,
1992, May 3, 1993, April 20, 1994 and June 1, 1994, and vest ratably over a
five-year period from the date of grant.
(2) Computed as the difference between the option exercise price and $6.375
(the closing price of the Common Stock at fiscal year-end).
(3) Mr. Roy's unexercisable options were forfeited upon his resignation on
April 12, 1996 and his exercisable options were forfeited in July, 1996.
TRANSACTIONS WITH MANAGEMENT AND DIRECTORS
Mr. Cox and Mr. Schutts, individually and as Trustee for his children, are
indirect beneficiaries of two leases between Sav-On, Inc. and Sav-On Development
Company (a Texas Partnership). Mr. Cox owns a 50% partnership interest and Mr.
Schutts, individually and as Trustee for his children, owns a 16.67% partnership
interest in Sav-On Development Company. The total rents paid on such leases for
the period of July 1, 1995 through June 30, 1996 were $132,498.44. In addition,
Mr. Cox, as a minority stockholder of the Berry Street Realty Company, was an
indirect beneficiary of one lease with Sav-On, Inc. and of one lease with
Development Association, Inc. The total rent paid on the Sav-On lease for the
period of July 1, 1995 through June 30, 1996 was $63,000. The total paid on the
Development Association lease during the fiscal year 1996 was $8,176.73.
Management is of the opinion that rents paid for such leases were at least as
favorable to the Corporation as could have been obtained with unrelated parties.
STOCK PRICE PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return over a
five-year period, assuming $100 invested at June 30, 1991 in each of (i)
Tandycrafts, Inc. Common Stock, (ii) the NYSE Market Value Index, an index of
all companies listed on the New York Stock Exchange and (iii) a peer group
consisting of 40 similarly classified retail companies based on standardized SIC
codes. Total stockholder return is based on the increase in the price of the
Common Stock with dividends reinvested. Total return of the SIC Code Index is
weighted according to market capitalization of each company. The performance
shown in the graph is not necessarily indicative of future performance.
1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- ----
Tandycrafts, Inc. $100 $133 $457 $343 $197 $162
SIC Code Index $100 $105 $112 $103 $101 $110
NYSE Market Value Index $100 $114 $129 $134 $159 $199
INDEPENDENT ACCOUNTANTS
The firm of Price Waterhouse, LLP, which served as independent accountants
for the fiscal year ended June 30, 1996, has been selected by the Board of
Directors to continue as the Corporation's independent accountants for fiscal
year 1997. Representatives are expected to be present at the meeting with an
opportunity to make a statement and to respond to appropriate questions.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the 1997 Annual
Meeting of Stockholders must be received by the Corporation by June 2, 1997 in
order to be eligible for inclusion in the proxy statement and form of proxy of
the Corporation for that meeting.
OTHER BUSINESS
As of the date of this Proxy Statement, management has no knowledge of any
other business to be presented to the meeting, but if other business is properly
brought before the meeting, the persons named in the Proxy will vote according
to their discretion.
FINANCIAL STATEMENTS
A copy of the 1996 Annual Report of the Corporation containing the audited
financial statements accompanies this Proxy Statement. The Annual Report does
not constitute a part of the proxy solicitation material.
The Company will provide, without charge, to each person to whom a copy of
this proxy statement is delivered, upon the written or oral request of such
person and by first class mail or other equally prompt means within one business
day of receipt of such request, a copy of the annual report on Form 10-K of the
Corporation. Requests should be directed to Shareholder Services, c/o
Tandycrafts, Inc., 1400 Everman Parkway, Fort Worth, Texas 76140.
TANDYCRAFTS, INC.
Fort Worth, Texas
September 30, 1996
