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: April 23, 1999
Date of Earliest Event Reported: April 21, 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 April 21, 1999, Registrant issued a press release announcing
the unaudited results of operations for the three- and nine-month
periods ended March 31, 1999.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
---------------------------------
(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- and nine-
month periods ended March 31, 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: April 23, 1999 By:/s/ Michael J. Walsh
--------------------------
Michael J. Walsh, President
and Chief Executive Officer
Date: April 23, 1999 By:/s/ James D. Allen
--------------------------
James D. Allen, Executive Vice
President and Chief Financial
Officer
Date: April 23, 1999 By:/s/ Troy A. Huseman
--------------------------
Troy A. 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 THIRD-QUARTER RESULTS
FORT WORTH, Texas - April 21, 1999 - Tandycrafts, Inc. (NYSE: TAC) today
announced financial results and operating highlights for its fiscal 1999 third
quarter and nine-month period ended March 31, 1999.
The Fort Worth, Texas-based consumer products company reported a net loss of
$1.9 million, or $0.16 per share, on net sales of $50.3 million in the quarter
ended March 31, 1999, compared with net income of $198,000, or $0.02 per share,
on net sales of $53.1 million in the prior year period. Tandycrafts said the
results include approximately $3.2 million in expenses related to the previously
announced closure of its leather and craft retail stores and related
manufacturing operations.
Tandycrafts attributed the decrease in sales versus the year-ago quarter
primarily to the 1998 divestiture of its Joshua's Christian Stores operations
and the ongoing transition of the Company's leather and craft operations from
retail stores to direct distribution. Sales from comparable operations,
excluding leather and crafts, increased 5% over the same quarter last year,
fueled by Pinnacle Art & Frame, Tandycrafts' frames and wall decor division,
which posted a sales increase of 7% in the quarter. This sales performance
helped offset lower revenues at the Company's novelties and promotional segment,
reflecting this division's strategy of focusing on larger customers as well as
softness in the overall market for sports-licensed products.
"We are encouraged by our results, which reflect solid progress in both our
reorganization efforts and our continuing operations," said Michael Walsh,
president and chief executive officer. "Our Pinnacle frames business is having
a solid year of top-line growth and should continue to be the growth engine for
Tandycrafts. We are looking forward to bringing our new Mexico frames facility
online in the fourth quarter, which will provide increased efficiency and
production capabilities. We fully expect that our dual focus on accelerating
growth in our profitable operations and refocusing our underperforming divisions
will result in increased value for our shareholders."
Walsh continued: "The recent sale of Nocona Belt Company and better-than-
anticipated closeout sales of the leather and craft store inventories are
contributing to improved cash flow. Our transition plan is working efficiently
and, as a result, we expect our ultimate operating losses relating to the
closure of the leather and crafts division to be less than originally
anticipated."
Tandycrafts said total charges related to the reorganization of the Tandy
Leather division would likely be in the range of $20 million to $22 million in
fiscal 1999, versus the $25 million to $29 million range that was previously
announced. Tandycrafts' fiscal year ends June 30, 1999.
Lower-than-expected expenditures, early collection of receivables from the sale
of Joshua's and improved cash flow enabled Tandycrafts to further reduce its
long-term debt and interest expense in the most recent quarterly and nine-month
periods, versus the same periods last year. Long-term debt at March 31, 1999
was $27.5 million, down 32% versus the year-ago period, resulting in lower
interest expense. Net interest expense decreased 39% in the 1999 third quarter
versus the same period a year-ago. Tandycrafts reported a $1 million reduction
in net interest expense through the first nine months of 1999.
"Our efforts to refine the business and focus on our most profitable business
segments are designed to positively impact both our income statement and balance
sheet. We are working diligently to reduce long-term debt and improve our
financial strength and look forward to applying these additional resources
toward future growth," said Jim Allen, executive vice president and chief
operating officer of Tandycrafts.
Allen said areas that are receiving additional focus and spending include
advertising and new product development at several operating units. Continued
investment in information technology and distribution resources will allow the
Company to centralize certain corporate functions and improve operating
efficiency.
Tandycrafts, Inc. (www.tandycrafts.com) is a leading maker and marketer of
consumer products, including frames and wall decor, office supplies, leather and
crafts, and novelties 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.
<TABLE><S><C>
Three Months Ended Nine Months Ended
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March 31, March 31, March 31, March 31,
1999 1998 1999 1998
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Net sales $ 50,253 $ 53,100 $ 154,171 $ 181,696
Operating costs and expenses:
Cost of goods sold 36,061 35,766 110,328 120,302
Selling, general and
administrative 15,094 14,935 48,525 48,532
Restructuring charge - - 8,145 -
Depreciation and amortization 1,117 1,254 3,284 3,783
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Total operating costs
and expenses 52,272 51,955 170,282 172,617
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Operating income (loss) (2,019) 1,145 (16,111) 9,079
Interest expense, net 517 841 1,600 2,614
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Income (loss) before
income taxes (2,536) 304 (17,711) 6,465
Provision for income taxes (663) 106 (4,623) 2,262
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Net income (loss) $ (1,873) $ 198 $ (13,088) $ 4,203
========= ========= ========= =========
Net income (loss) per share -
basic and diluted $ (0.16) $ 0.02 $ (1.07) $ 0.33
========= ========= ========= =========
Weighted average common shares:
Basic 12,052 12,649 12,236 12,657
Diluted 12,052 12,649 12,239 12,657
</TABLE>
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