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: November 4, 1998
Date of Earliest Event Reported: October 21, 1998
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 5. OTHER EVENTS
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(a) On October 21, 1998, Registrant issued a press release announcing
the unaudited results of operations for the three months ended
September 30, 1998.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
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(c) Exhibits.
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Exhibit
Number Description
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99 Copy of press release announcing the unaudited
results of operations for the three- months ended
September 30, 1998.
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.
TANDYCRAFTS, INC.
Date: October 21, 1998 By:/s/ Michael J. Walsh
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Michael J. Walsh
President
Date: October 21, 1998 By:/s/ James D. Allen
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James D. Allen
Chief Financial Officer
FOR IMMEDIATE RELEASE
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TANDYCRAFTS REPORTS FIRST QUARTER
EARNINGS OF $0.08 PER SHARE
FT. WORTH, Texas (October 21, 1998) -- TANDYCRAFTS, INC. (NYSE: "TAC"), a
manufacturer, wholesaler and retailer of specialty consumer and business
products, today announced a modest improvement in earnings for the first quarter
of its 1999 fiscal year.
For the three months ended September 30, 1998, the Company's net income
increased 6.2% to $1,008,000 ($0.08 per share), compared with net income of
$949,000 ($0.08 per share) in the first quarter of FY1998. Net sales from
continuing operations increased 5.4% to approximately $51.1 million, versus
$48.4 million in the prior-year quarter. Reported net sales in the quarter
ended September 30, 1997, totaled approximately $55.4 million, including sales
from stores and operating units which have been closed or sold since June 30,
1997.
"Pretax profit margins improved to 3.2% of sales in the first quarter of Fiscal
1999, compared with 2.6% in the year-earlier period, as we continued to pare
back the number of underperforming retail stores and eliminate unprofitable
operations," commented Michael J. Walsh, President and Chief Executive Officer
of Tandycrafts, Inc.
"Our Frames and Wall Decor division continued to enjoy strong sales momentum and
improved operating efficiencies, with sales rising 30% and an operating profit
gain of 69% when compared with the same quarter last year," continued Walsh.
"This impressive performance underscores the need for additional manufacturing
capacity and further supports our decision to invest in a new facility in
Mexico. More information will be forthcoming on this project in the near
future."
"Benefitting from a strong back-to-school season, the Office Supplies division
also posted a solid increase in sales and operating income during the most
recent quarter. Meanwhile, sales in the Novelty and Promotional products
division declined 30%, reflecting a soft market for sports-licensed novelty
products, a strategic focus upon larger, more profitable customers, and the
elimination of marginal accounts."
"An 18% decrease in sales at the Leather and Crafts division resulted primarily
from the closing of 41 unprofitable stores, or approximately 25% of the total
number of Tandy Leather stores in operation, during the past twelve months. We
shall continue to emphasize the most profitable retail markets and expect to
close additional non-performing stores in weaker markets during the next several
months. Our emphasis upon building the mail order and wholesale channels of
this division will also continue during the balance of the fiscal year. The
recent opening of a new prototype Tandy Leather & Crafts store in Dallas
represents our first new store format in decades, and we are optimistic that
improved merchandising concepts developed for the new store will appeal to a
broader demographic customer base. We also opened our first Craft Your World
store earlier this month, in Plano, Texas. This entirely new craft and gift
retail concept is designed to provide consumers with a broader assortment of
unique merchandise than is available in the Company's traditional Tandy Leather
& Crafts stores. We will evaluate this concept over the next several months to
determine its potential for expansion into other markets," concluded Walsh.
"Tandycrafts' balance sheet continues to reflect our strengthened financial
position, as evidenced by the continued reduction in outstanding long-term
debt," observed Jim Allen, Chief Financial Officer of the Company. "At September
30, 1998, outstanding long-term debt approximated $35.9 million, which
represents a decrease of 22% when compared with $45.9 million a year earlier.
Our improved financial condition is also allowing the Company to pursue
strategic investments which should improve productivity, strengthen our
corporate infrastructure, expand divisional capabilities and support our
strategy to position each of our divisions for long-term growth and
profitability."
"Under the auspices of a stock buyback program announced last month, we had
repurchased approximately 143,000 shares of the Company's common stock by the
end of the first quarter, at an average price of $3.47 per share," continued
Allen. "As of September 30, 1998, our shareholders' equity totaled $88.9
million, which is equivalent to $7.21 per common share outstanding."
Tandycrafts, Inc. manufactures, distributes and/or retails products through four
distinct product-related divisions: Frames and Wall Decor, Leather and Crafts,
Office Supplies, and Novelties and Promotional. Its products are marketed and
sold through various channels, including direct-to-consumer (e.g., retail
stores, mail order, the Internet) and wholesale distribution (e.g., direct sales
force, telemarketing, outside sales representatives). The Company is
headquartered in Ft. Worth, Texas and its common stock is listed on the New York
Stock Exchange under the ticker symbol "TAC".
THIS PRESS RELEASE INCLUDES STATEMENTS THAT MAY CONSTITUTE "FORWARD-
LOOKING" STATEMENTS, USUALLY CONTAINING THE WORDS "BELIEVE",
"ESTIMATE", "PROJECT", "EXPECT" OR SIMILAR EXPRESSIONS. THESE
STATEMENTS ARE MADE PURSUANT TO THE SAFE HARBOR PROVISIONS OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. FORWARD-LOOKING
STATEMENTS INHERENTLY INVOLVE RISKS AND UNCERTAINTIES THAT COULD CAUSE
ACTUAL RESULTS TO DIFFER MATERIALLY FROM THE FORWARD-LOOKING
STATEMENTS. FACTORS THAT WOULD CAUSE OR CONTRIBUTE TO SUCH
DIFFERENCES INCLUDE, BUT ARE NOT LIMITED TO, CONTINUED ACCEPTANCE OF
THE COMPANY'S PRODUCTS IN THE MARKETPLACE, COMPETITIVE FACTORS,
DEPENDENCE UPON THIRD-PARTY VENDORS, AND OTHER RISKS DETAILED IN THE
COMPANY'S PERIODIC REPORT FILINGS WITH THE SECURITIES AND EXCHANGE
COMMISSION. BY MAKING THESE FORWARD-LOOKING STATEMENTS, THE COMPANY
UNDERTAKES NO OBLIGATION TO UPDATE THESE STATEMENTS FOR REVISIONS OR
CHANGES AFTER THE DATE OF THIS RELEASE.
For further information, please contact:
James Allen, Chief Financial Officer at (817) 551-9600 or
R. Jerry Falkner, CFA, Investor Relations Counsel at (800) 377-9893
TANDYCRAFTS, INC.
AND SUBSIDIARIES
SELECTED FINANCIAL HIGHLIGHTS
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Three Months Ended
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(000)
September 30 September 30
1998 1997
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NET SALES $ 51,065 $ 55,359
Operating Costs & Expenses:
Cost of Goods Sold 34,791 35,834
Selling, General & Administrative 13,077 15,932
Depreciation and Amortization 1,079 1,270
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Total Operating Costs & Expenses 48,947 53,036
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Operating Income 2,118 2,323
Interest Expense, net 492 862
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Income Before Income Taxes 1,626 1,461
Provision for Income Taxes 618 512
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Net Income $ 1,008 $ 949
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Net Income Per Share:
Basic and Diluted $ 0.08 $ 0.08
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Weighted Average Common Shares:
Basic 12,472 12,636
Diluted 12,475 12,636
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