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: February 2, 2000
Date of Earliest Event Reported: January 31, 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 5. OTHER EVENTS
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(a) On January 31, 2000, Registrant issued a press release announcing
the unaudited results of operations for the three- and six-month
periods ended December 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 six-month periods ended December 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: February 2, 2000 By:/s/ Michael J. Walsh
--------------------------
Michael J. Walsh, Chairman
and CEO
Date: February 2, 2000 By:/s/ James D. Allen
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James D. Allen
President
CONTACT: Jim Allen or Leo Taylor
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 SECOND-QUARTER RESULTS
FORT WORTH, Texas, January 31, 2000 --Tandycrafts, Inc. (NYSE: TAC) today
announced financial results for its fiscal 2000 second quarter ended December
31, 1999.
The Fort Worth, Texas-based manufacturer and marketer of products for the home
and office reported net income of $61,000, or $0.01 per share, on net sales of
$47.4 million in the fiscal 2000 second quarter, compared with a net loss of
$12.2 million, or $1.00 per share, on net sales of $52.9 million in the same
period last year. The loss in the second quarter of fiscal 1999 included pre-
tax charges of $14.8 million related primarily to the closure of Tandycrafts'
former leather and crafts retail stores and related manufacturing operations.
Net sales from continuing operations increased 12.6 percent over the prior-year
second quarter, reflecting the consolidation of Cargo Furniture Inc., acquired
in June 1999, and increased sales at the Company's Pinnacle Art & Frame and
Tandy Leather Direct units. Pinnacle sales advanced 6.9 percent over the prior-
year period, reflecting strong order flow from major customers. Sales in the
Company's Gift division advanced $492,000, or 10 percent, versus the prior-year
quarter, due primarily to the inclusion of Tandy Leather Direct, which sells
leather-craft products via catalog and the Internet. Tandy Leather Direct
posted sales of approximately $2 million in the quarter, helping offset
decreased sales at other Gift division units, particularly Licensed Lifestyles,
which sells sports-related memorabilia. Increases at Pinnacle and the positive
contribution of Tandy Leather Direct helped offset a 5 percent decrease in sales
at the Company's Sav-On office supplies chain, which was negatively impacted by
increased competition in key markets.
Our results in the second quarter show some early indications of our vision to
focus on the businesses which have the most potential for market leadership and
profitable growth," said Michael J. Walsh, chairman and chief executive officer
of Tandycrafts. "Over the past several quarters, we have expanded our
capabilities, centralized core business functions and increased our investment
in marketing. These investments, plus the realignment of responsibilities
within our organization, have brought greater focus and accountability to
Tandycrafts."
Tandycrafts reported that consolidated operating income increased to $1 million,
versus a year-ago loss. The Company said operating income declined by $1
million at Pinnacle Art & Frame in the fiscal 2000 second quarter, reflecting
increased investment in design, marketing and manufacturing capabilities at the
maker and marketer of frames, framed art and wall decor. While the Company is
incurring additional costs by operating facilities in both Van Nuys, California
and Durango, Mexico, management expects Pinnacle's production costs to improve
after it completes the relocation of the Van Nuys facility to Durango. The
operating loss at the Company's Gift division widened versus last year's second
quarter, though it improved dramatically versus the first quarter of fiscal
2000.
"Cost management, consolidation, and better execution are providing a foundation
for improved financial performance," Walsh said. "While this improvement is
encouraging, we continue to rationalize each of our businesses to ensure that we
maximize the value of each asset within the Tandycrafts family."
Walsh continued: "Increased focus and investment at Pinnacle Art & Frame, in
particular, has allowed that unit to make substantial progress in the second
half of 1999 and the first weeks of 2000. In the past seven months, Pinnacle
has consolidated its brand names, expanded capabilities with a new manufacturing
facility in Mexico, and centralized its core business functions in Fort Worth.
"These changes have fostered a greater focus on customers and products by
allowing Pinnacle to leverage corporate expertise in areas such as sourcing,
logistics, finance and administration. The recently announced leadership
changes at Pinnacle, including the appointment of Jim Allen as President of the
division, are allowing us to accelerate our efforts to become a profit-driven
market leader in this attractive niche in the home decor industry."
"The potential for profitable growth at Tandycrafts represents long-term value
for our shareholders that has yet to be unlocked," said Jim Allen, president and
chief operating officer. "In the coming months, the board and senior management
team of Tandycrafts will be aggressively addressing the opportunities to
generate cash and long-term profits from all of our operating companies."
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.
TANDYCRAFTS, INC.
AND SUBSIDIARIES
SELECTED FINANCIAL HIGHLIGHTS
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<TABLE><S><C>
Three Months Ended Six Months Ended
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December 31, December 31, December 31, December 31,
1999 1998 1999 1998
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Net sales $ 47,431 $ 52,853 $ 92,564 $ 103,918
Operating costs and expenses:
Cost of goods sold 32,525 39,476 63,021 74,267
Selling, general and administrative 12,467 20,354 25,601 33,431
Restructuring charge - 8,145 - 8,145
Depreciation and amortization 1,434 1,088 2,503 2,167
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Total operating costs and expenses 46,426 69,063 91,125 118,010
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Operating income (loss) 1,005 (16,210) 1,439 (14,092)
Interest expense, net 907 591 1,550 1,083
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Income (loss) before income taxes 98 (16,801) (111) (15,175)
Provision (benefit) for income taxes 37 (4,578) (42) (3,960)
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Net income (loss) $ 61 $ (12,223) $ (69) $ (11,215)
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Net income (loss) per share:
Basic and diluted $0.01 ($1.00) ($0.01) ($0.91)
===== ===== ===== =====
Weighted average common shares:
Basic and diluted 12,005 12,179 12,008 12,326
</TABLE>
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