CONTACT: Tandycrafts, Inc.
Leo Taylor (817) 551-9600
or
FOR IMMEDIATE RELEASE Brian Edwards, Jeff Lambert
Lambert, Edwards & Associates, Inc.
(616) 233-0500 (mail@lambert-edwards.com)
TANDYCRAFTS ANNOUNCES SECOND QUARTER RESULTS
FORT WORTH, Texas, March 8, 2001 - Tandycrafts, Inc. (NYSE: TAC), the nation's
#2 maker and marketer of picture frames and wall decor, today announced its
operating results for the quarter ended December 31, 2000.
The Fort Worth, Texas-based company reported a net loss from continuing
operations of $3.2 million, or $0.26 per share, on net sales of $27.9 million in
the fiscal 2001 second quarter, compared to net income of $0.7 million, or $0.06
per share, on net sales of $29.4 million for the same period last year. For the
six months ended December 31, 2000, Tandycrafts reported a net loss from
continuing operations of $4.1 million, or $0.34 per share, on net sales of $51.4
million, compared to net income from continuing operations of $0.7 million, or
$0.05 per share, on net sales of $53.9 million for the same period last year.
Tandycrafts said that demand for its frame products has remained consistent with
last year. However, soft framed art sales and the bankruptcy of certain retail
customers contributed to a 5% sales decline for the 2001 second quarter and six
month periods. In addition to the sales decline, inefficiencies at Tandycrafts'
manufacturing plant in Durango, Mexico and higher interest rates on its
outstanding debt have negatively impacted Tandycrafts' profitability for the
first six months of fiscal 2001.
Tandycrafts is focusing on increasing efficiencies at its Durango plant and has
engaged a consulting organization with Mexican manufacturing expertise to advise
Tandycrafts on improvements in its Durango operations. Tandycrafts has also
implemented several cost reduction initiatives and continues to evaluate ways to
improve cost effectiveness and operating efficiencies.
Tandycrafts also announced that it has engaged an investment banking firm to
assist the Company in its efforts to refinance its existing credit facility.
Tandycrafts' current revolving credit facility expires March 31, 2001. While
Tandycrafts continues its efforts to obtain the refinancing, there can be no
assurance that it will be able to secure such financing on a timely basis.
Until Tandycrafts completes its refinancing, its liquidity will continue to be
limited. Failure to obtain such refinancing would have a material adverse
effect on Tandycrafts' liquidity, operations, financial condition and ability to
operate as a going concern. As a result of Tandycrafts' on-going efforts to
obtain such refinancing, Tandycrafts has not filed its Annual Report on Form 10-
K for fiscal year 2000 and its Quarterly Reports on Form 10-Q for the quarters
ended September 30, 2000 and December 31, 2000. Tandycrafts intends to file
these reports as soon as other priorities permit.
Tandycrafts also reported that it has been advised by the New York Stock
Exchange (NYSE) that it currently falls below NYSE continued listing standards
requiring total market capitalization of not less than $50 million and total
stockholder's equity of not less than $50 million. The NYSE also notified
Tandycrafts that it currently falls below NYSE continued listing standards
requiring total market capitalization of not less than $15 million over a thirty
(30) day trading period. While Tandycrafts has exceeded these levels in the
past, it does not do so at the present time.
As required by the NYSE, Tandycrafts will be submitting a plan to the NYSE
Listing and Compliance Committee demonstrating how it plans to comply with the
listing standards by the August 2002 deadline. If the Committee accepts the
plan, Tandycrafts will be subject to quarterly monitoring for compliance with
the plan. If the Committee does not accept the plan, Tandycrafts will be
subject to NYSE trading suspension and delisting. Should Tandycrafts shares
cease to be traded on the NYSE, Tandycrafts will pursue an alternative trading
venue.
Tandycrafts, Inc. (www.tandycrafts.com) is the nation's #2 maker and marketer of
frames and wall decor. Tandycrafts' products are sold nationwide through
wholesale distribution channels, including mass merchandisers and specialty
retailers.
Statements in this news release which are not purely historical facts are
forward looking statements, including statements containing the words "believe",
"estimate", "project", "expect" or similar expressions. These statements are
made pursuant to the safe harbor provisions of Section 21E of the Securities
Exchange Act of 1934, as amended. Although Tandycrafts believes that the
expectations in the forward looking statements are reasonable, Tandycrafts can
give no assurance that such expectations or the forward looking statements will
prove to be correct. Any forward-looking statement inherently involves 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
Tandycrafts' products in the marketplace, successful implementation of its
strategic plan, the extension or refinancing of its existing bank facility and
the restrictions any such extension or refinancing could place on Tandycrafts,
the ability to obtain new financing from other financing sources, the ability to
generate positive cash flow from operations and asset sales, competitive
factors, dependence upon third-party vendors, and other risks detailed in
Tandycrafts' periodic report filings with the Securities and Exchange
Commission. By making these forward-looking statements, Tandycrafts undertakes
no obligation to update these statements for revisions or changes after the date
of this release. Readers are cautioned not to place undue reliance on forward-
looking statements. The inclusion of any statement in this release does not
constitute an admission by Tandycrafts or any other person that the events or
circumstances described in such statement are material.
###
TANDYCRAFTS, INC.
AND SUBSIDIARIES
SELECTED FINANCIAL HIGHLIGHTS
-----------------------------
THREE MONTHS ENDED SIX MONTHS ENDED
--------------------------- ---------------------------
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
2000 1999 2000 1999
------------ ------------ ------------ ------------
Net sales $ 27,923 $ 29,351 $ 51,412 $ 53,913
Operating costs and expenses:
Cost of goods sold 23,163 21,712 40,976 39,613
Selling, general and
administrative 5,206 5,049 9,703 9,974
Restructuring charge - - - -
Depreciation and amortization 1,097 1,051 2,149 1,718
------------ ----------- ------------ ------------
Total operating costs and
expenses 29,466 27,812 52,828 51,305
Operating income (loss) (1,543) 1,539 (1,416) 2,608
Interest expense, net 1,688 907 2,705 1,550
------------ ----------- ------------ ------------
Loss before income tax (3,231) 632 (4,121) 1,058
Income taxes expense - (78) - 403
------------ ----------- ------------ ------------
Loss from continuing operations (3,231) 710 (4,121) 655
------------ ----------- ------------ ------------
Discontinued operations:
Income (Loss) from discontinued
operations, net applicable
income taxes (1,481) (649) (1,871) (724)
Loss on disposal of discontinued
operations, net applicable
income taxes 314 - 314 -
------------ ----------- ----------- ------------
Total income (loss) on
discontinued operations (1,167) (649) (1,557) (724)
------------ ----------- ----------- ------------
Net Loss $ (4,398) $ 61 $ (5,678) $ (69)
============ =========== =========== ============
Basic and diluted net loss per average
common share:
Continuing operations ($0.26) $0.06 ($0.34) $0.05
===== ===== ===== =====
Discontinued operations ($0.10) ($0.05) ($0.13) ($0.06)
===== ===== ===== =====
Net loss per average comm share ($0.36) $0.01 ($0.47) ($0.01)
===== ===== ===== =====
Weighted average common shares 12,261 12,005 12,233 12,008