UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM SE FORM FOR SUBMISSION OF PAPER FORMAT EXHIBITS BY ELECTRONIC FILERS Tandycrafts, Inc. 96294 ----------------- ----- Exact Name of Registrant as Specified in Charter Registrant CIK Number Form 11 K - Tandycrafts, Inc. Retirement Savings Plan for the fiscal Year ended June 30, 2000 Commission File Number 1/7258 - ------------------------------------------- ----------------------------- Electronic Report, Schedule or Registration Statement of Which the Documents are a Part (give period of report) _______________________________________ Name of Person Filing the Document (If Other than the Registrant) SECURITIES AND EXCHANGE COMMISSON WASHINGTON, D.C. 20549 FORM 11-K ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended June 30, 2000 TANDYCRAFTS, INC. RETIREMENT SAVINGS PLAN (F/K/A TANDYCRAFTS, INC. EMPLOYEE STOCK OWNERSHIP PLAN) (Full Title of Plan) TANDYCRAFTS, INC. 1400 Everman Parkway Fort Worth, Texas 76140 (Name of Issuer and Address of Principal Office) TANDYCRAFTS RETIREMENT SAVINGS PLAN FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 30, 2000 AND 1999 EXHIBIT 1 CONSENT OF INDEPENDENT ACCOUNTANT --------------------------------- We consent to the incorporation of our report dated February 2, 2001, accompanying the financial statements included in the annual report on Form 11-K of Tandycrafts' registration statement on Form S-8 for its Retirement Savings Plan. /s/ Whitney Penn - ----------------- Fort Worth, Texas February 2, 2001 TANDYCRAFTS RETIREMENT SAVINGS PLAN FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 30, 2000 AND 1999 TABLE OF CONTENTS Report of Independent Auditors............................................ 1 Financial Statements: Statements of Net Assets Available for Benefits ............................2 Statements of Changes in Net Assets Available for Benefits ............. 3 Notes to Financial Statements............................................. 4 Schedules: Form 5500, Schedule H, Line 4I, Schedule of Assets Held for Investment Purposes at End of Year........................................... 12 All other schedules required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974 have been omitted since they are either not applicable or the information required therein has not been included in the financial statements or notes thereto. REPORT OF INDEPENDENT AUDITORS To the Administrative Committee and Participants of Tandycrafts Retirement Savings Plan We have audited the accompanying statements of net assets available for benefits of Tandycrafts Retirement Savings Plan (the "Plan") as of June 30, 2000 and 1999 and the related statements of changes in net assets available for benefits for the years then ended. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, based on our audit, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan as of June 30, 2000 and 1999, and the changes in its net assets available for benefits for the years then ended in conformity with generally accepted accounting principles. Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedule of assets held for investment purposes at end of year is presented for the purpose of additional analysis and is not a required part of the basic financial statements but is supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Security Act of 1974. The supplemental schedule has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/ Whitney Penn - ----------------- Fort Worth, Texas February 2, 2001 TANDYCRAFTS RETIREMENT SAVINGS PLAN STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS JUNE 30, 2000 1999 ------------- ------------- Assets Investments, at fair value - participant directed: Shares of registered investment companies: Mutual funds $ 4,126,244 $ 3,076,745 Participant loans 280,978 291,050 Money market investment funds: Munder cash investment fund 361,296 600,702 ------------- ------------- 4,768,518 3,968,497 Investments, at fair value - non-participant directed: Tandycrafts common stock 5,495,469 8,824,652 ------------- ------------- 10,263,987 12,793,149 Receivables: Employers' contributions 75,936 57,399 Employers' contributions 46,310 31,477 ------------- ------------- 122,246 88,876 ------------- ------------- Total assets 10,386,233 12,882,025 Liabilities - Securities Sale Transfer - 232,000 ------------- ------------- Net assets available for benefits $ 10,386,233 $ 12,650,025 ============= ============= TANDYCRAFTS RETIREMENT SAVINGS PLAN STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS YEAR ENDED JUNE 30, 2000 1999 ------------- ------------- Additions to net assets attributed to: Investment income: Interest and dividends $ 309,713 $ 140,625 Net realized and unrealized depreciation in fair value of investments (862,939) (2,830,113) (553,226) (2,689,488) ------------- ------------- Contributions: Employer's cash contributions 149,482 998,072 Employer's non-cash contributions 444,424 - Employees' contributions 1,139,422 1,326,103 Employees' rollover 358,710 156,230 ------------- ------------- 2,092,038 2,480,405 ------------- ------------- Total additions (deductions) 1,538,812 (209,083) Deductions from net assets attributed to: Benefits paid to participants 3,802,604 4,692,682 Administrative expenses - 7,702 ------------- ------------- Total deductions 3,802,604 4,700,384 ------------- ------------- Net decrease (2,263,792) (4,909,467) Net assets available for benefits: Beginning of year 12,650,025 17,559,492 ------------- ------------- End of year $ 10,386,233 $ 12,650,025 ============= ============= TANDYCRAFTS RETIREMENT SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS JUNE 30, 2000 A.DESCRIPTION OF PLAN The following description of the Tandycrafts Retirement Savings Plan (the "Plan") provides only general information. The Plan is sponsored by Tandycrafts, Inc. and certain affiliated companies (collectively referred to as the "Company"). Participants should refer to the Plan agreement for a more complete description of the Plan's provisions. GENERAL The Plan is a defined contribution plan covering employees of the Company who have at least six months of service. Beginning July 1, 1997, employees hired on or after July 1, 1997 must complete 500 hours of service during their first six months with the Company in order to participate. Otherwise, the employee will not be eligible to participate until completing one year of service and 1,000 hours. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). CONTRIBUTIONS Beginning January 1, 1997, participants may contribute between 3%-15% of pretax annual compensation, as defined in the Plan. Prior to January 1, 1997, participants contributed either 0% or 5%. The Company matches 100% of the first 5% of base compensation that a participant contributes to the Plan. Matching contributions are either made in cash to exclusively purchase Tandycrafts common stock or the Company will transfer the stock directly to the Plan as non-cash contributions. PARTICIPANT ACCOUNTS Each participant's account is credited with the participant's contributions and the allocation of the Company's contributions and actual earnings thereon. VESTING Participants are immediately vested in their contributions plus or minus actual earnings or losses thereon. Vesting in the Company contribution portion of their accounts plus or minus actual earnings or losses thereon is based on years of service. Participants vest 100% after five years of credited service. ADMINISTRATIVE EXPENSES In accordance with Plan provisions, the Company may at its option pay some of the costs associated with the Plan. A.DESCRIPTION OF PLAN - CONTINUED INVESTMENT OPTIONS Upon enrollment in the Plan, a participant may direct employee contributions in 1% increments in any of the following investment options. Putnam Growth and Income Fund - Funds are invested primarily in common stocks that offer potential for capital growth, current income, or both. Putnam Income Fund - Funds are primarily invested in debt securities, including both government and corporate obligations, preferred stocks and dividend-paying stocks. Putnam New Opportunities Fund - Funds are invested primarily in common stocks of companies in sectors of the economy which Putnam Management believes possess above-average, long-term growth potential. Putnam Asset Allocation Funds - Funds consists of three separate portfolios (growth, balanced, and conservative) that a participant may elect, each of which is designed with a different strategic allocation of its investments between equity securities and fixed income securities. The funds' different strategic allocations generally correlate to different levels of investment risk. Putnam International Growth Fund - Funds are primarily invested in equity securities of companies located in a country other than the United States. Munder Index 500 Fund K - Funds are invested primarily in equity securities and it normally will hold the securities of at least 80% of the issuers in the S&P 500. Munder Cash Investment Fund K - Funds are invested solely in dollar- denominated debt securities with remaining maturities of 13 months or less and maintain an average dollar-weighted portfolio maturity of 90 days or less. Fidelity Advisor Growth Opportunity T Fund - Funds are invested primarily in common stocks and securities convertible into common stocks. Participants may change their investment options daily. A.DESCRIPTION OF PLAN - CONTINUED PARTICIPANT LOANS Participants may borrow from their fund accounts a minimum of $1,000 up to a maximum equal to the lesser of: (a) 50% of their vested account balance; (b) $50,000; or (c) the balance of the participant's contribution account balance. Loan transactions are treated as a transfer to (from) the investment fund from (to) the participants' loan fund. Generally, loan terms range from 1-5 years with the exception of loans used to acquire the borrower's principle residence, which may be up to 15 years. The loans are secured by the balance in the participant's account and bear interest at a rate commensurate with local prevailing rates as determined by the Plan administrator. Interest rates for loans are issued at the prime interest rate plus 1%. Current participant loans have all been issued ranging from 8.50% to 9.50%. Principal and interest is paid ratably through monthly payroll deductions. PAYMENT OF BENEFITS An account is established for each participant in the Plan to which contributions and related earnings thereon are credited. Generally, upon a break in service if a participant's account is less than $5,000, the vested accrued benefit is paid in a lump sum. If a participant's account is greater than $5,000, the participant may elect various payment options ranging from an immediate lump sum payment, installments, or deferred lump sum payment. FORFEITED ACCOUNTS At June 30, 2000 and 1999, forfeited nonvested accounts approximated $93,000 and $244,000, respectively. These accounts will be used to reduce future employer contributions in accordance with the Plan agreement. For the years ended June 30, 2000 and 1999, employer contributions were reduced by forfeited nonvested accounts of approximately $280,000 and $34,000, respectively. B.SUMMARY OF ACCOUNTING POLICIES BASIS OF ACCOUNTING The financial statements of the Plan are presented on the accrual basis of accounting. USE OF ESTIMATES The preparation of the financial statements in conformity with generally accepted accounting principles requires the Plan administrator to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results may differ from those estimates. B.SUMMARY OF ACCOUNTING POLICIES - CONTINUED INVESTMENT VALUATION AND INCOME RECOGNITION The Plan's investments are stated at fair value. Units of the various investment accounts are valued at quoted market prices, which represent the net asset values of shares held by the Plan at year-end. Participants' loans are valued at unpaid principal balance, which approximates fair value. The net appreciation (depreciation) of investments includes realized gains and losses on sales of investments during the year and unrealized increases or decreases in the market value of investments held at year-end. PAYMENT OF BENEFITS Benefits are recorded when paid. CONCENTRATION OF PLAN ASSETS The Plan has approximately 53% and 70% of its total assets invested in securities of its sponsor Tandycrafts, Inc. at June 30, 2000 and 1999, respectively. C.INVESTMENTS Comerica Bank and Bank One under their respective trust agreements hold the Plan's investments. Financial information relating to the investments is included in the accompanying financial statements based on information provided by each trustee. The investments are subject to market or credit risks customarily associated with debt and equity investments. In addition to the investment data set forth on the following pages, Comerica Bank, Putnam Investments and Bank One also certified all investment assets, transactions, and income and the schedules of investments and reportable transactions. Individual investments with market values greater than 5% of net assets available for benefit at June 30 are as follows: 2000 1999 ---------- ---------- Tandycrafts, Inc. Common Stock (non-participant directed) $5,495,469 $8,824,652 Putnam New Opportunities Fund 1,797,502 1,099,279 Fidelity Advisor Growth T Fund 601,919 - The changes in net assets available for benefits for the non-participant directed fund for the years ended June 30, 2000 and 1999 are shown on the following page. INVESTMENTS - CONTINUED NON-PARTICIPANT DIRECTED FUND COMPANY STOCK 2000 1999 Additions to net assets attributed to: ---------- ----------- Investment income: Interest and dividends $ - $ - Net realized and unrealized depreciations in fair value of investments (1,734,931) (3,162,784) ---------- ----------- (1,734,931) (3,162,784) Contributions: Employer's cash contributions 206,881 1,025,055 Employer's non-cash contributions 368,488 - Employers' contributions - - Employees' rollovers - - ---------- ----------- 575,369 1,035,055 ---------- ----------- Total deductions (1,159,562) (2,137,729) Deductions to net assets attributed to: Benefits paid to participants 1,915,261 3,409,170 Administrative expenses - 5,276 ---------- ----------- Total deductions 1,915,261 3,414,455 ---------- ----------- Net decrease (3,074,823) (5,552,184) Interfund transfers - net (254,360) (149,197) Net assets available for benefits: Beginning of year 8,824,652 14,526,033 ---------- ----------- End of year $5,495,469 $ 8,824,652 ========== =========== D. PLAN TERMINATION Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. In the event of Plan termination, participants will become 100% vested in their accounts. E. PLAN AMENDMENTS Effective November 1, 1998, the Plan sponsor amended the plan to further define employees who are ineligible to participate in the Plan. This amendment states that any employee who is employed at a location outside the fifty United States and the District of Columbia are not eligible for participation in the Plan. Effective July 1, 1998, the Plan amended its benefit provisions to increase the involuntary benefit payment amount from $3,500 to $5,000. F. INCOME TAX STATUS The Internal Revenue Service has determined and informed the Plan administrator by a letter dated August 21, 1997, that the Plan and related trust are designed in accordance with applicable sections of the Internal Revenue Code (IRC). The Plan has been amended since receiving the determination letter. However, the Plan administrator and the Plan's tax counsel believe that the Plan is designed and is currently being operated in compliance with the applicable requirements of the IRC. G. RECONCILIATION TO FORM 5500 The IRS Form 5500 was not completed prior to the issuance of the accompanying financial statements. The principal differences between the accompanying financial statements and the Form 5500 are: (1) the method of determining realized and unrealized gains and losses and (2) the accrual of benefits allocated to accounts of persons who have elected to withdraw from the Plan but have not yet been paid. H. BENEFITS PAYABLE At June 30, 2000 and 1999, net assets available for plan benefits included approximately $258,000 and $513,000, respectively, for participants who have had a break in service but have not yet been paid their vested benefits. These amounts are considered liabilities by the DOL for regulatory reporting purposes. I. RELATED PARTY TRANSACTION Tandycrafts, Inc. provides certain administrative and accounting services at no cost to the Plan and, accordingly, no amounts have been recorded in the accompanying financial statements as of June 30, 2000 and 1999. During 1999, the Plan sold 78,000 shares of Tandycrafts, Inc. stock with a market value of $187,375 to certain individuals deemed to be parties-in-interest as defined by ERISA. However, ERISA Section 408(e) provides an exemption for the acquisition or sale by a plan of qualifying employer securities, if the sale is for adequate consideration, no commission is charged with respect to the sale, and the plan is an eligible individual account plan. The plan has complied with the provisions of ERISA section 408(e) and as such these transactions are not considered to be prohibited transactions. No such transactions occurred during the fiscal year that ended June 30, 2000. SCHEDULES TANDYCRAFTS RETIREMENT SAVINGS PLAN FORM 5500, SCHEDULE H, LINE 4I-SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES AT END OF YEAR AS OF JUNE 30, 2000 EIN: 75-6239501 Plan: 003 Description Number Current Identity of Issue of Investments of Shares (d) Cost Value - ----------------- ------------------------------- --------- ------------ ----------- Putnam Putnam Growth and Income Fund 24,200 $ - $ 435,122 Putnam Putnam Income Fund 14,528 - 91,093 Putnam Putnam New Opportunities Fund 18,606 - 1,797,502 Putnam Putnam Growth Portfolio Fund 23,949 - 353,968 Putman Putnam Balanced Portfolio Fund 11,657 - 150,724 Putman Putnam Conservative Portfolio Fund 4,377 - 45,651 Putnam International Growth Fund 13,612 - 407,276 Munder Munder Index 500 Fund 7,917 - 242,989 Fidelity Fidelity Advisor Growth Fund 13,529 - 601,919 Munder Munder Cash Investment Fund 361,296 - 391,296 Tandycrafts, Inc.* Tandycrafts, Inc. Common Stock Non-participant directed 1,953,600 10,539,671 5,495,469 Participant loans* Due in 1 to 5 years; 8.50%-9.50% - - 280,978 ----------- $10,263,987 =========== * Indicates a part-in-interest to the Plan.