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: July 12, 2000
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 2. ACQUISITIONS OR DISPOSITION OF ASSETS
Through a series of transactions, the last of which was completed in July
2000, the Company finalized the sale of the assets and certain
liabilities of its Gifts and Office Supplies divisions, consisting of
Rivertown Button, Licensed Lifestyles, J-Mar and Sav-On Office Supplies.
Cash from the sales totaled approximately $12,088,000. Estimated
liabilities retained including contingencies relating to lease
commitments and related cost total approximately $1,300,000. Proceeds
from the sales will be used to liquidate the retained liabilities and
reduce outstanding bank debt. The dispositions are being accounted for
as discontinued operations for financial reporting purposes.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(b) Unaudited pro forma consolidated financial information
Tandycrafts, Inc.
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
The following unaudited pro forma consolidated statements of operations for
the years ended June 30, 1999, 1998, and 1997, and for the nine months
ended March 31, 2000 and 1999 reflect the historical accounts of
Tandycrafts, Inc. (the "Company") adjusted to give effect to the
dispositions of the Company's Gift and Office Supply business segments as
if the dispositions had occurred as of the beginning of each period
presented.
The following unaudited pro forma consolidated balance sheet as of March
31, 2000 reflects the historical consolidated balance sheet of the Company
adjusted to give effect to the disposition of the Company's Gift and Office
Supply business segments as if such dispositions had taken place on March
31, 2000.
The unaudited pro forma consolidated financial information should be read
in conjunction with the Company's historical financial statements and other
disclosures included in the June 30, 1999 annual report or Form 10K and
most recent quarterly reports on Form 10Q. The unaudited pro forma
consolidated financial data is for informational purposes only. It is not
necessarily indicative of the results of operations or the financial
position which would have been attained had the dispositions been
consummated at the foregoing dates and is not intended to project the
Company's financial condition on any future date or results of operations
for any future period.
Tandycrafts, Inc.
Pro Forma Consolidated Statement of Operations
For the Nine Months Ended March 31, 2000
(In thousands, except per share data)
<TABLE><S><C>
HISTORICAL DISCONTINUED PRO FORMA
CONSOLIDATED OPERATIONS (1) CONSOLIDATED
------------ -------------- ------------
Net sales $ 119,115 $ 29,931 $ 89,184
Cost of goods sold 81,713 19,136 62,577
------------ -------------- ------------
Gross profit 37,402 10,795 26,607
Selling, general and administrative 32,743 9,090 23,653
Depreciation and amortization 3,362 566 2,796
------------ -------------- ------------
Operating income 1,297 1,139 158
Interest expense, net 2,701 771(2) 1,930
------------ -------------- ------------
Income (loss) before income tax (1,404) 368 (1,772)
Provision (benefit) for income taxes (463) 121 (584)
------------ -------------- ------------
Income (loss) from continuing
operations $ (941) $ 247 $ (1,188)
============ ============== ============
Loss per average common share -
continuing operations
Basic and Diluted $ (0.08) $ (0.10)
============ ============
Weighted average common shares 12,049 12,049
</TABLE>
Tandycrafts, Inc.
Pro Forma Consolidated Statement of Operations
For the Nine Months Ended March 31, 1999
(In thousands, except per share data)
<TABLE><S><C>
HISTORICAL DISCONTINUED PRO FORMA
CONSOLIDATED OPERATIONS (1) CONSOLIDATED
------------ -------------- ------------
Net sales $ 140,006 $ 31,232 $ 108,774
Cost of goods sold 101,008 20,018 80,990
------------ -------------- ------------
Gross profit 38,998 11,214 27,784
Selling, general and administrative 43,588 9,139 34,449
Restructuring charge 8,145 - 8,145
Depreciation and amortization 2,918 811 2,107
------------ -------------- ------------
Operating income (loss) (15,653) 1,264 (16,917)
Interest expense, net 1,600 629(2) 971
------------ -------------- ------------
Income (loss) before income tax (17,253) 635 (17,888)
Provision (benefit) for income taxes (4,471) 209 (4,680)
------------ -------------- ------------
Income (loss) from continuing
operations $ (12,782) $ 426 $ (13,208)
============ ============== ============
Loss per average common share - continuing
operations
Basic and Diluted $ (1.04) $ (1.08)
============ ============
Weighted average common shares 12,236 12,236
</TABLE>
Tandycrafts, Inc.
Pro Forma Consolidated Statement of Operations
For the Year Ended June 30, 1999
(In thousands, except per share data)
<TABLE><S><C>
HISTORICAL DISCONTINUED PRO FORMA
CONSOLIDATED OPERATIONS (3) CONSOLIDATED
------------ -------------- ------------
Net sales $ 194,698 $ 57,830 $ 136,868
Cost of goods sold 139,525 39,157 100,368
------------ -------------- ------------
Gross profit 55,173 18,673 36,500
Selling, general and administrative 64,118 27,880 36,238
Restructuring charge 8,145 - 8,145
Impairment of long lived assets 9,522 9,522 -
Depreciation and amortization 4,327 1,567 2,760
------------ -------------- ------------
Operating loss (30,939) (20,296) (10,643)
Interest expense, net 2,173 839(2) 1,334
------------ -------------- ------------
Loss from continuing operations
before income tax (33,112) (21,135) (11,977)
Benefit for income taxes (9,279) (6,844) (2,435)
------------ -------------- ------------
Loss from continuing operations $ (23,833) $ (14,291) $ (9,542)
============ ============== ============
Loss per average common share -
continuing operations
Basic and Diluted $ (1.96) $ (0.78)
============ ============
Weighted average common shares 12,182 12,182
</TABLE>
Tandycrafts, Inc.
Pro Forma Consolidated Statement of Operations
For the Year Ended June 30, 1998
(In thousands, except per share data)
<TABLE><S><C>
HISTORICAL DISCONTINUED PRO FORMA
CONSOLIDATED OPERATIONS (3) CONSOLIDATED
------------ -------------- ------------
Net sales $ 232,495 $ 62,144 $ 170,351
Cost of goods sold 153,484 39,795 113,689
------------ -------------- ------------
Gross profit 79,011 22,349 56,662
Selling, general and administrative 63,182 19,396 43,786
Loss on sale of business unit 623 - 623
Depreciation and amortization 4,828 1,562 3,266
------------ -------------- ------------
Operating income 10,378 1,391 8,987
Interest expense, net 3,259 - 3,259
------------ -------------- ------------
Income from continuing operations 7,119 1,391 5,728
before income tax
Provision for income taxes 2,502 488 2,014
------------ -------------- ------------
Income from continuing operations $ 4,617 $ 903 $ 3,714
============ ============== ============
Income per average common share -
continuing operations
Basic $ 0.37 $ 0.29
============ ============
Diluted $ 0.36 $ 0.29
============ ============
Weighted average common shares
Basic 12,645 12,645
Diluted 12,659 12,659
</TABLE>
Tandycrafts, Inc.
Pro Forma Consolidated Statement of Operations
For the Year Ended June 30, 1997
(In thousands, except per share data)
<TABLE><S><C>
HISTORICAL DISCONTINUED PRO FORMA
CONSOLIDATED OPERATIONS (3) CONSOLIDATED
------------ -------------- ------------
Net sales $ 244,924 $ 62,032 $ 182,892
Cost of goods sold 160,325 36,838 123,487
------------ -------------- ------------
Gross profit 84,599 25,194 59,405
Selling, general and administrative 79,185 21,860 57,325
Depreciation and amortization 5,374 1,670 3,704
------------ -------------- ------------
Operating income (loss) 40 1,664 (1,624)
Interest expense, net 3,085 - 3,085
------------ -------------- ------------
Income (loss) from continuing
operations before income tax (3,045) 1,664 (4,709)
Provision (benefit) for income taxes (1,127) 616 (1,743)
------------ -------------- ------------
Income (loss) from continuing
operations $ (1,918) $ 1,048 $ (2,966)
============ ============== ============
Income (loss) per average common share -
continuing operations
Basic and Diluted $ (0.15) $ (0.24)
============ ============
Weighted average common shares 12,423 12,423
</TABLE>
Tandycrafts, Inc.
Pro Forma Consolidated Balance Sheet
As of March 30, 2000
(In thousands, except per share data)
<TABLE><S><C>
HISTORICAL DISCONTINUED PRO FORMA
CONSOLIDATED OPERATIONS (4) CONSOLIDATED
------------ -------------- ------------
ASSETS
Current assets:
Cash and short-term investments $ 913 $ - $ 913
Trade accounts receivable, net of
allowance for doubtful accounts 21,668 2,483 19,185
Inventories, at lower of cost
or market 36,349 7,280 29,069
Other current assets 5,346 372 4,974
------------ -------------- ------------
Total current assets 64,276 10,135 54,141
------------ -------------- ------------
Property and equipment 55,200 6,234 48,966
Less accumulated depreciation (26,006) (4,648) (21,358)
------------ -------------- ------------
Net property and equipment 29,194 1,586 27,608
------------ -------------- ------------
Other assets 586 - 586
Deferred tax assets 7,634 (762)(5) 8,396
Investment in Discontinued Operations 5,371 5,371 -
Goodwill, net 20,145 126 20,019
------------ -------------- ------------
TOTAL ASSETS $ 127,206 $ 16,456 $ 110,750
============ ============== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 12,369 $ 3,380 $ 8,989
Accrued liabilities and other 15,182 580 14,602
Current portion of long-term debt 1,800 1,800 -
------------ -------------- ------------
Total current liabilities 29,351 5,760 23,591
Long-term debt 40,000 9,024 30,976
Other non-current liabilities 1,292 - 1,292
------------ -------------- ------------
Total liabilities 70,643 14,784 55,859
------------ -------------- ------------
Stockholders' equity:
Common stock, $1 par value,
50,000,000 shares authorized,
18,527,988 shares issued 18,528 - 18,528
Additional paid-in capital 20,493 - 20,493
Retained earnings 41,534 1,672(6) 39,862
Treasury shares at cost (23,992) - (23,992)
------------ -------------- ------------
Total stockholders' equity 56,563 1,672 54,891
------------ -------------- ------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 127,206 $ 16,456 $ 110,750
============ ============== ============
</TABLE>
Tandycrafts, Inc.
Pro Forma Financial Statements Footnote
1.Represents the historical results of operations of Sav-On Office Supplies for
the nine month periods ended March 31, 2000 and 1999, which are being removed
for pro forma purposes from the Company's consolidated results of operations
for the same periods. Note that the operating results of and the estimated
loss on the disposal of the Gift Division were reflected in discontinued
operations in the financial statements as of March 31, 2000 and 1999.
2.Reflects the pro forma reduction of interest as a result of applying the
proceeds of $12,088,000 to reduce the Company bank debt after liquidating the
estimated retained liabilities of $1,264,000 assuming an interest rate of
9.5% and 7.75% for fiscal years 2000 and 1999, respectively.
3.Represents the historical results of operations of the disposed segments
(Rivertown button, Licensed Lifestyles, J-Mar (the "Gift Division"), and Sav-
On Office Supplies) for the three years ended June 30, 1999, 1998 and 1997,
which are being removed for pro forma purposes from the Company's consolidated
results of operations for the same periods.
4.Represents the book value of the assets and liabilities sold, net of deferred
tax assets relating to the loss on disposal (see note 2).
5.Represents deferred tax benefit discussed in note 4.
6.Represents the estimated loss on the disposal of Sav-On Office Supplies plus
the estimated additional loss on the disposal of the Gift division, net of
related deferred tax benefit.
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: July 27, 2000 By:/s/ Michael J. Walsh
-----------------------------
Michael J. Walsh, Chairman
and Chief Executive Officer
Date: July 27, 2000 By:/s/ James D. Allen
-----------------------------
James D. Allen, President
and Chief Operating Officer
Date: July 27, 2000 By:/s/ Leo Taylor
-----------------------------
Leo Taylor, Senior Vice
President of Finance
(Principal Finance Officer)
