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: January 22, 1999
(Date of earliest event reported): (January 8, 1999)
TANDYCRAFTS, INC.
A DELAWARE CORPORATION
1-7258 75-1475224
(Commission File Number) (IRS Employer Identification No.)
1400 Everman Parkway
Fort Worth, Texas 76140
(817) 551-9600
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
(a) General. On January 8, 1999, Tandycrafts, Inc. (the "Company")
announced a plan to close its 121 leather and crafts retail stores and
related manufacturing operations. The announcement of this plan was
filed as an exhibit to Form 8-K dated January 13, 1999, and is
incorporated herein by reference. These dispositions are deemed to
involve a significant amount of assets as defined in the instructions
to Form 8-K.
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
(a) Pro Forma Financial Information.
Pro Forma Financial Information
Pro Forma Condensed Consolidated Balance Sheet - September 30, 1998
Pro Forma Condensed Consolidated Statement of Income - Year Ended
June 30, 1998
Pro Forma Condensed Consolidated Statement of Income - Three Months
Ended September 30, 1998
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: January 22, 1999 By:/s/Michael J. Walsh
----------------------
Michael J. Walsh
President and Chief Executive
Officer
Date: January 22, 1999 By:/s/ James D. Allen
----------------------
James D. Allen
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 operations of the Company's 121 leather
and crafts retail stores and related manufacturing operations pursuant to the
Board of Directors' approved plan, as if such dispositions had taken place on
June 30, 1998 for the pro forma condensed consolidated statements of income and
on September 30, 1998, 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, 1998
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE><S><C>
Historical
-----------
Tandycrafts, Tandy Pro Forma
ASSETS Inc. Leather (a) Proceeds (b) Exit costs (c) Consolidated
----------- ----------- ------------ -------------- ------------
Current assets
Cash $ 913 $ - $ - $ - $ 913
Accounts receivable, net 26,332 (1,605) - - 24,727
Inventories 47,123 (14,222) - - 32,901
Other current assets 7,996 (377) 1,950 - 9,569
----------- ---------- ---------- ------------- ------------
Total current assets 82,364 (16,204) 1,950 - 68,110
----------- ---------- ---------- ------------- ------------
Property and equipment, net 23,664 (1,198) - - 22,466
Other assets 6,773 (414) - - 6,359
Goodwill, net 37,548 (3,945) - - 33,603
----------- ---------- ---------- ------------- ------------
$ 150,349 $ (21,761) $ 1,950 $ - $ 130,538
=========== ========== ========== ============= ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable 12,031 (1,360) - - 10,671
Accrued liabilities and
other 10,720 (655) - 2,703 12,768
----------- ---------- ---------- ------------- ------------
Total current
liabilities 22,751 (2,015) - 2,703 23,439
----------- ---------- ---------- ------------- ------------
Long-term debt 35,910 - - - 35,910
Deferred taxes 2,822 - - - 2,822
Stockholders' equity
Common stock, $1 par value;
50,000,000 shares authorized,
18,527,988 issued 18,528 - - - 18,528
Additional paid-in capital 20,544 - - - 20,544
Retained earnings 73,082 (19,746) 1,950 (2,703) 52,583
Treasury stock (23,288) - - - (23,288)
----------- ---------- ---------- ------------- ------------
Total stockholders'
equity 88,866 (19,746) 1,950 (2,703) 68,367
----------- ---------- ---------- ------------- ------------
$ 150,349 $ (21,761) $ 1,950 $ - $ 130,538
=========== ========== ========== ============= ============
</TABLE>
TANDYCRAFTS, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEAR ENDED JUNE 30, 1998
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE><S><C>
Historical
-----------
Tandycrafts, Tandy Interest Pro Forma
Inc. Leather (d) Expense (e) Consolidated (f)
----------- ----------- ----------- ---------------
Net sales $ 232,495 $ (45,247) $ - $ 187,248
Operating costs and expenses:
Cost of goods sold 153,484 (24,799) - 128,685
Selling, general and
administrative 63,182 (19,693) - 43,489
Depreciation and amortization 4,828 (355) - 4,473
Loss on sale of business unit 623 - - 623
----------- ----------- ---------- ---------------
Total operating costs
and expenses 222,117 (44,847) - 177,270
----------- ----------- ---------- ---------------
Operating income 10,378 (400) - 9,978
Interest expense, net 3,259 - (136) 3,123
----------- ----------- ---------- ---------------
Income before income taxes 7,119 (400) 136 6,855
Provision for income taxes 2,502 (141) 48 2,409
----------- ----------- ---------- ---------------
Net income $ 4,617 $ (259) $ 88 $ 4,446
=========== =========== ========== ===============
Net income per common share:
Basic and diluted $0.37 $0.35
===== =====
Weighted average common shares:
Basic 12,645 12,645
Diluted 12,659 12,659
</TABLE>
TANDYCRAFTS, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1998
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE><S><C>
Historical
------------
Tandycrafts, Tandy Interest Pro Forma
Inc. Leather (d) Expense (e) Consolidated (f)
------------ ----------- ----------- ---------------
Net sales $ 51,065 $ (8,868) $ - $ 42,197
Operating costs and expenses:
Cost of goods sold 34,791 (5,040) - 29,751
Selling, general and
administrative 13,077 (4,179) - 8,898
Depreciation and amortization 1,079 (95) - 984
------------ ----------- ---------- ---------------
Total operating costs
and expenses 48,947 (9,314) - 39,633
------------ ----------- ---------- ---------------
Operating income 2,118 446 - 2,564
Interest expense, net 492 - (34) 458
------------ ----------- ---------- ---------------
Income before income taxes 1,626 446 34 2,106
Provision for income taxes 618 170 13 801
------------ ----------- ---------- ---------------
Net income $ 1,008 $ 276 $ 21 $ 1,305
============ ============ ========== ===============
Net income per common share:
Basic and diluted $0.08 $0.10
===== =====
Weighted average common shares:
Basic 12,472 12,472
Diluted 12,475 12,475
</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 the Company's leather and crafts retail
stores and related manufacturing operations as of September 30, 1998, 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 estimated proceeds from the
disposition of the operations of the Company's leather and crafts retail stores
and related manufacturing operations and are comprised entirely of the NOL
carryback the Company will realize resulting from the adoption of the plan of
liquidation of Tandy Leather Company. No other proceeds from liquidatiuon or
from NOL carryfowards are assumed for purposes of these proforma financial
statements.
(c) 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 the Company's leather and crafts retail
stores and related manufacturing operations.
(d) The adjustments in this column represent the elimination of the
historical income, expenses and related income tax effect of the divested
operations of the Company's leather and crafts retail stores and related
manufacturing operations for the respective period.
(e) The adjustment to interest expense reflects the use of the estimated
proceeds resulting from the disposition of the operations the Company's leather
and crafts retail stores and related manufacturing operations as reflected in
note (b) above, to reduce long-term debt based on an annual interest rate of 7%.
(f) The pro forma income statements do not reflect certain estimated
charges (i.e., transaction and other exit costs) related to the disposition of
the operations of the Company's leather and crafts retail stores and related
manufacturing operations. Such costs are reflected in the pro forma balance
sheet as indicated in Note (c), above.
