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 YEAR-END RESULTS, HIGHLIGHTED BY FOURTH QUARTER
DIVESTITURES, COMPLETION OF STRATEGIC PLAN
FORT WORTH, Texas, August 31, 2000 - Tandycrafts, Inc. (NYSE: TAC) today
announced results for its fiscal year ended June 30, 2000, reflecting the
Company's divestiture of its Gifts and Office Supplies units and significant
operating changes at its core wall decor and home furnishings businesses.
The Fort Worth, Texas-based consumer products company posted a net loss from
continuing operations of $12.4 million, or $1.02 per share, on net sales of
$110.8 million in fiscal 2000, compared with a net loss from continuing
operations of $16.3 million, or $1.34 per share, on net sales of $136.9 million
in fiscal 1999. Tandycrafts said the loss from continuing operations is the
result of duplicate costs incurred from the transition of its California
manufacturing operation to a new facility in Mexico, the closure of a
distribution facility and shift to new sourcing partners at its Cargo Furniture
operation, and other operational investments. The 1999 results include losses
of approximately $12.2 million related primarily to the Company's exit from its
Tandy Leather retail and manufacturing operations.
Tandycrafts also recorded a loss on discontinued operations of $7.3 million, or
$0.61 per share, in fiscal 2000 from the divestitures of its Office Supply and
Gifts divisions.
"We accomplished what we set out to do in fiscal 2000, including selling four
non-core businesses, finalizing our facility move from California to Mexico and
making substantial operating improvements," said Michael J. Walsh, Tandycrafts'
chairman of the board and chief executive officer. "We are poised to return to
profitability in fiscal 2001. It has been a challenging refinement process at
Tandycrafts, but I am pleased to report that we are done with the transitions
and have shifted into a growth mode."
Tandycrafts announced a strategic plan in February 2000, calling for the sale of
its non-core operations and significant operating improvements in its core
business. Tandycrafts said it completed its strategic plan by year-end,
including the following accomplishments in the fourth quarter:
- The sale of all three companies in its Gifts Division and its 41-store Sav-
On Office Supplies chain.
- The shutdown of its Van Nuys, Calif. manufacturing and the completed move
to a new and larger facility in Durango, Mexico.
- The conversion of the majority of its Cargo retail stores to the expanded
and more profitable Collection store format.
- more -
Commenting on the strategic plan, Tandycrafts president and chief operating
officer Jim Allen said: "The Company set an aggressive timetable for reworking
our operations and selling off our non-core businesses. We were able to beat
these objectives while remaining on track with projected proceeds. With these
initiatives behind us, we have a clear view of the opportunity that exists for
Pinnacle Art & Frame and Cargo Furniture and, more importantly, can be
singularly focused on achieving breakout performance at these companies."
Excluding the divested units, Tandycrafts sales grew nominally in fiscal 2000,
principally due to higher sales at the Company's Cargo Furniture unit. Pinnacle
Art & Frame, Tandycrafts' frames and wall decor business, recorded a decline in
sales in the fourth quarter and fiscal 2000 as a result of decreased sales to
one of its major customers and lower production levels as it transitioned its
manufacturing to Mexico and ramped up personnel and capacity.
Cargo Furniture and Tandy Leather Direct posted higher sales in both the fourth
quarter and for the year. Cargo's ability to substantially complete the
conversion of its retail stores to the better performing Collection format,
coupled with the success in increasing sales into non-retail channels, boosted
sales. Tandy Leather Direct sales grew on the strength of its newly launched e-
commerce website.
For the fourth quarter ended June 30, 2000, Tandycrafts reported net sales of
$21.5 million, versus net sales of $28.1 million in the same period in 1999.
Tandycrafts posted a net loss from continuing operations of $10.7 million, or
$0.88 per share, in the 2000 fourth quarter, versus a net loss from continuing
operations of $2.7 million, or $0.22 per share, in the 1999 quarter. The
current period loss from continuing operations reflects duplicate costs incurred
in its frames and wall decor operation from the transition from California to
Mexico and the write-down of inventory and equipment following the closure of
the Van Nuys, Calif. plant in the fourth quarter.
Tandycrafts, Inc. (www.tandycrafts.com) is a leading maker and marketer of
consumer products, including frames and wall decor and home furnishings. 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 Twelve Months Ended
---------------------- ---------------------
June 30, June 30, June 30, June 30,
2000 1999 2000 1999
---------- ---------- --------- ---------
Net sales $ 21,468 $ 28,095 $ 110,814 $ 136,868
Operating costs and expenses:
Cost of goods sold 20,984 19,381 83,722 100,369
Selling, general and
administrative 12,087 11,310 35,741 45,760
Restructuring charge - - - 8,145
Depreciation and amortization 1,280 653 4,075 2,760
---------- ---------- --------- ---------
Total operating costs
and expenses 34,351 31,344 123,538 157,034
Operating income (loss) (12,883) (3,249) (12,724) (20,166)
Interest expense, net 1,191 573 3,892 2,173
---------- ---------- --------- ---------
Loss before income tax (14,074) (3,822) (16,616) (22,339)
Benefit for income taxes (3,403) (1,127) (4,242) (6,014)
---------- ---------- --------- ---------
Loss from continuing operations (10,671) (2,695) (12,374) (16,325)
---------- ---------- --------- ---------
Discontinued operations:
Loss from discontinued
operations, net applicable
income taxes (593) (8,049) (1,384) (7,509)
Loss on disposal of
discontinued operations, net
applicable income taxes (1,751) - (5,965) -
---------- ---------- --------- ---------
Total loss on discontinued
operations (2,344) (8,049) (7,349) (7,509)
---------- ---------- --------- ---------
Net Loss $ (13,015) $ (10,744) $ (19,723) $ (23,834)
========== ========== ========= =========
Basic and diluted net loss per
average common share:
Continuing operations ($0.88) ($0.22) ($1.02) ($1.34)
========== ========== ========= =========
Discontinued operations ($0.19) ($0.67) ($0.61) ($0.62)
========== ========== ========= =========
Net loss per average
common share ($1.07) ($0.89) ($1.63) ($1.96)
========== ========== ========= =========
Weighted average common shares 12,146 12,036 12,073 12,182
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