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: May 5, 2000
Date of Earliest Event Reported: May 1, 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 May 1, 2000, Registrant issued a press release announcing the
unaudited results of operations for the three- and nine-month
periods ended March 31, 2000.
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, 2000.
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: May 5, 2000 By:/s/ Michael J. Walsh
--------------------------
Michael J. Walsh, Chairman
and Chief Executive Officer
Date: May 5, 2000 By:/s/ James D. Allen
--------------------------
James D. Allen, President
and Chief Operating Officer
CONTACT: 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 FISCAL THIRD QUARTER RESULTS
REPORTS SIGNIFICANT PROGRESS ON STRATEGIC PLAN
FORT WORTH, Texas, May 1, 2000 - Tandycrafts, Inc. (NYSE: TAC) today announced
financial results for its fiscal 2000 third quarter ended March 31, 2000.
The Fort Worth, Texas-based consumer products maker and marketer posted a net
loss from continuing operations of $1.9 million, or $0.16 per share, on net
sales of $34.5 million in the 2000 third quarter, compared with a net loss from
continuing operations of $1.7 million, or $0.14 per share, on net sales of $45.9
million in the same period in 1999. The 1999 results include approximately $3.2
million in expenses related to the closure of the Company's former leather and
craft retail stores and related manufacturing operations.
Tandycrafts recorded an estimated loss on discontinued operations, net of tax,
of $4.7 million or $0.39 per share, related to the planned divestitures of the
three companies in its Gifts Division: Licensed Lifestyles, J-Mar and Rivertown
Button. Tandycrafts said it has entered into letters of intent with buyers on
the three companies and expects to complete the divestitures in the fiscal 2000
fourth quarter. The divestitures were initiated as part of Tandycrafts
previously announced strategic plan aimed at focusing the Company on its core
frames and wall decor, home furnishings and consumer direct operations.
Tandycrafts reported that it had received purchase offers on all of its non-core
businesses, including Sav-On Office Supplies. The Company has not yet reached
any agreements on Sav-On.
"We have worked hard to implement the strategic plan and get results," said
Michael J. Walsh, Tandycrafts' chairman of the board and chief executive
officer. "We intend to complete this process in the near term and get back to
building the core strengths of Tandycrafts."
Tandycrafts attributed the decrease in sales in the fiscal 2000 third quarter
versus the prior year primarily to the divestiture of its former leather and
crafts operations in 1999. The Company also experienced lower sales at its
Pinnacle Art & Frame division, due primarily to the delay in orders received
from a major customer. The Company said order flow from that customer is
currently running 13 percent ahead of last year in the fourth quarter of fiscal
2000.
Tandycrafts said the loss from continuing operations in the 2000 third quarter
reflects duplicate costs incurred in the period as it transitions its frames and
wall decor division from Van Nuys, California to a new, modern facility in
Durango, Mexico. Additionally, the closure of a distribution facility and shift
to new sourcing partners at its Cargo Furniture operation hurt profitability in
the quarter. The Company said Sav-On was profitable in the fiscal 2000 third
quarter.
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TANDYCRAFTS / PAGE 2 OF 2
"The net loss in the quarter reflects our decision to invest resources for the
future, which for Tandycrafts entails our core frames and wall decor, home
furnishings and consumer direct operations," Walsh said. "We are committed to
getting the right people, processes and production facilities in place to
support our growth opportunities in our core business, and we will not let our
exit from our non-core businesses distract us from that process."
Tandycrafts announced a new strategic plan in the fiscal 2000 third quarter,
which called for the sale of its non-core Gifts and Office Supply divisions and
significant operating improvements in the core business. Other progress in the
quarter included the addition of full e-commerce capabilities for Tandy Leather
Direct, which enjoyed a strong spike in traffic and sales activity at
www.tandyleather.com following its March 2000 launch. In addition, the Company
reported it has transitioned much of the sourcing for Cargo Furniture's products
to a group of new manufacturing partners and Tandycrafts remains on pace to
complete the move of its frame manufacturing from California to Mexico by fiscal
year-end. Tandycrafts also is evaluating its corporate overhead for cost
reductions in line with the streamlining of its organizational structure.
"Our stated target was to complete the sales of our non-core assets and the bulk
of our operating improvements in fiscal 2000," said Jim Allen, Tandycrafts
president and chief operating officer. "We are pleased to report that we are on
plan and aggressively transitioning our focus from restructuring to growth."
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,
successful implementation of this strategic plan, 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
Three Months Ended Nine Months Ended
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March 31, March 31, March 31, March 31,
2000 1999 2000 1999
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Net sales $ 34,457 $ 45,868 $119,115 $ 140,006
Operating costs and expenses:
Cost of goods sold 24,350 33,117 81,713 101,008
Selling, general and
administrative 10,715 13,457 32,743 43,588
Restructuring charge - - - 8,145
Depreciation and amortization 1,087 997 3,362 2,918
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Total operating costs and
expenses 36,152 47,571 117,818 155,659
Operating income (loss) (1,695) (1,703) 1,297 (15,653)
Interest expense, net 1,152 517 2,701 1,600
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Loss before income tax (2,847) (2,220) (1,404) (17,253)
Benefit for income taxes (934) (559) (463) (4,471)
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Loss from continuing operations (1,913) (1,661) (941) (12,782)
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Discontinued operations:
Loss from discontinued
operations, net applicable
income taxes (585) (212) (1,625) (307)
Loss on disposal of
discontinued operations,
net applicable income taxes (4,142) - (4,142) -
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Total loss on discontinued
operations (4,727) (212) (5,767) (307)
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Net Loss $ (6,640) $ (1,873) $ (6,708) $ (13,089)
========= ========= ======== =========
Basic and diluted net loss per
average common share:
Continuing operations ($0.16) ($0.14) ($0.08) ($1.04)
========= ========= ======== =========
Discontinued operations ($0.39) ($0.02) ($0.48) ($0.03)
========= ========= ======== =========
Net loss per average
common share ($0.55) ($0.16) ($0.56) ($1.07)
========== ========= ======== =========
Weighted average common shares 12,093 12,052 12,049 12,236
