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: August 17, 1999
Date of Earliest Event Reported: August 12, 1999
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 August 12, 1999, Registrant issued a press release announcing
the results of operations for the three- and twelve-month periods
ended June 30, 1999.
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 results
of operations for the three- and twelve-month
periods ended June 30, 1999.
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: August 17, 1999 By:/s/ Michael J. Walsh
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Michael J. Walsh
President
Date: August 17, 1999 By:/s/ James D. Allen
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James D. Allen
Chief Financial Officer
Date: August 17, 1999 By:/s/ Troy Huseman
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Troy Huseman
Assistant Vice President and Chief
Accounting Officer
CONTACT: Jim Allen, Mike Murray
Tandycrafts, Inc. (817) 551-9600
([email protected])
FOR IMMEDIATE RELEASE or
Jeff Lambert, Brian Edwards ([email protected])
Lambert, Edwards & Associates, Inc. (616)233-0500
TANDYCRAFTS ANNOUNCES FISCAL 1999 RESULTS
IMPAIRMENT OF GOODWILL CONTRIBUTES TO 4TH QUARTER LOSS
FORT WORTH, Texas, August 12, 1999 --Tandycrafts, Inc. (NYSE: TAC) today
announced financial results for its fourth quarter and fiscal year ended June
30, 1999.
The Fort Worth, Texas-based consumer products company reported a net loss of
$10.8 million, or $0.89 per share, on net sales of $40.5 million in the fiscal
1999 fourth quarter, compared with net income of $414,000, or $0.03 per share,
on net sales of $50.8 million in the same period last year. Tandycrafts said the
fiscal 1999 fourth quarter results include a pretax charge of approximately
$11.2 million for the impairment of goodwill and the writedown of other assets
at the Company's Licensed Lifestyles unit.
In fiscal 1999, Tandycrafts reported a net loss of $23.8 million, or $1.96 per
share, on net sales of $194.7 million, compared with net income of $4.6 million,
or $0.37 per share, on net sales of $232.5 million in fiscal 1998. The fiscal
1999 results include pre-tax charges of approximately $32.3 million related
primarily to Licensed Lifestyles, the Company's exit from the Tandy Leather
retail and manufacturing businesses and performance under a guaranty of bank
debt of Cargo Furniture & Accents.
Tandycrafts said the closure of the leather operations, combined with the 1998
sale of Joshua's Christian Stores, were the primary reasons for the decrease in
consolidated annual sales compared with fiscal 1998. Excluding Tandy Leather
and Joshua's, sales grew 3% to $159.8 million, due primarily to the
consolidation of Cargo Furniture and Accents into the Company as well as
increases at the Company's Frames and Wall Decor and Office Supplies divisions.
These gains helped offset lower sales at the Gifts division, including a 28%
decline at Licensed Lifestyles, which markets sports-licensed items.
"Our financial results mask the considerable progress we made in executing our
business plan and reshaping Tandycrafts for a profitable future," said Michael
Walsh, president and chief executive officer. "We shed underperforming assets,
refined our distribution channels, improved key business functions and continued
to invest in product development and systems. Additionally, we focused on
making the most of new opportunities in the home furnishings and decor markets,
as evidenced by our commitment to Cargo Furniture and investment in a new,
state-of-the-art frames manufacturing plant in Mexico. Moving forward, these
two businesses will play an important role as we shift toward becoming a
consumer-focused company that offers products for the home and office."
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TANDYCRAFTS, INC. /PAGE 2
Walsh continued: "The plan to consolidate the California framed art
manufacturing in Mexico and its administrative and distribution functions in
Fort Worth is progressing smoothly, and we are on track to substantially
complete this process by the end of calendar 1999. Our transition plan for
Tandy Leather has also proven effective, which has allowed us to minimize losses
from closing our stores in favor of more efficient direct distribution channels.
Total charges related to the Tandy Leather reorganization were approximately
$17.6 million, versus the previous estimate of $20 to $22 million and all stores
were closed prior to our June 30, 1999 target date. Additionally, our move to
direct marketing sales channels of leathercrafts via mail order and the Internet
(www.tandyleather.com) is yielding strong initial results."
Improved cash flow and early collection of receivables from the sale of Joshua's
helped Tandycrafts reduce its long-term debt and interest expense in fiscal
1999. Long-term debt at June 30, 1999 decreased 12% to $30 million compared
with the previous fiscal year-end balance of $34 million. Net interest expense
decreased $1.1 million -- or 33% -- in fiscal 1999 versus the same period a
year-ago.
"We are well-positioned for the future, both financially and operationally,"
said Jim Allen, executive vice president and chief operating officer of
Tandycrafts. "We continue to focus on cost and inventory management at all
levels, and have placed new emphasis on implementing best practices and
exploring across divisions opportunities for cross-selling and cross-marketing."
Walsh concluded: "The past several years of restructuring and reorganization
have been difficult, but worthwhile and necessary. While we still have some
transitional challenges and issues to address in the next six months, we are
poised for profitable growth. We will continue to refine our business and focus
on our most profitable segments in order to enhance value for shareholders and
ensure the long-term growth of Tandycrafts."
Tandycrafts, Inc. (www.tandycrafts.com) is a leading maker and marketer of
consumer products, including frames and wall decor, office supplies, home
furnishings and gift products. The Company's products are sold nationwide
through wholesale distribution channels, including mass merchandisers and
specialty retailers, and direct-to-consumer channels through the Company's
retail stores, mail order and the Internet.
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.
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TANDYCRAFTS, INC.
AND SUBSIDIARIES
SELECTED FINANCIAL HIGHLIGHTS
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Three Months Ended
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(000's)
June 30, June 30,
1999 1998
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NET SALES $ 40,527 $ 50,799
Operating Costs & Expenses:
Cost of Goods Sold 29,197 33,182
Selling, General & Administrative 15,593 14,650
Impairment of Long Lived Assets Charge 9,522 -
Loss on Sale of Business Unit - 623
Depreciation and Amortization 1,043 1,045
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Total Operating Costs & Expenses 55,355 49,500
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Operating Income (Loss) (14,828) 1,299
Interest Expense, net 573 645
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Income (Loss) Before Taxes (15,401) 654
Provision (Benefit) for Income Taxes (4,656) 240
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Net Income (Loss) $ (10,745) $ 414
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Net Income (Loss) Per Share:
Basic and Diluted $ (0.89) $ 0.03
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Weighted Average Common Shares:
Basic 12,036 12,617
Diluted 12,036 12,663
TANDYCRAFTS, INC.
AND SUBSIDIARIES
SELECTED FINANCIAL HIGHLIGHTS
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Fiscal Years Ended
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(000's)
June 30, June 30,
1999 1998
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NET SALES $ 194,698 $ 232,495
Operating Costs & Expenses:
Cost of Goods Sold 139,525 153,484
Selling, General & Administrative 64,118 63,182
Restructuring Charges 8,145 -
Impairment of Long Lived Assets Charge 9,522 -
Loss on Sale of Business Unit - 623
Depreciation and Amortization 4,327 4,828
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Total Operating Costs & Expenses 225,637 222,117
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Operating Income (Loss) (30,939) 10,378
Interest Expense, net 2,173 3,259
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Income (Loss) Before Taxes (33,112) 7,119
Provision (Benefit) for Income Taxes (9,279) 2,502
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Net Income (Loss) $ (23,833) $ 4,617
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Net Income (Loss) Per Share:
Basic and Diluted $ (1.96) $ 0.37
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Weighted Average Common Shares:
Basic 12,182 12,645
Diluted 12,184 12,659
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