TANDYCRAFTS, INC. REPORTS SECOND QUARTER RESULTS
WHICH INCLUDES ANNOUNCED RESTRUCTURING CHARGE
Fort Worth, Texas. January 23, 1996 -- TANDYCRAFTS, INC. (NYSE: TAC) today
reported a net loss after restructuring charge of $12,379,000 or $1.04 per share
for the second quarter of fiscal 1996 compared with net income of $4,097,000 or
$0.36 per share in the second quarter of fiscal 1995.
The results for the second quarter reflect the Company's adoption of a
strategic restructuring and consolidation program designed to increase its
competitive position and to increase value to Tandycrafts' shareholders. As a
result, a pre-tax restructuring charge totaling $18.8 million, or $12.6 million
net of income taxes, is included in the second quarter loss. Of this amount,
approximately $16.9 million, before income taxes, relates to non-cash items. Net
sales for the second quarter were $74,347,000, a decrease of 2% from the
$75,619,000 in the second quarter of fiscal 1995. For the quarter, total retail
sales increased 2% when compared to the same period in fiscal 1995 while
manufacturing sales were down 4% for the quarter when compared to the same
period last year.
For the six months ended December 31, 1995, the Company reported a net loss
of $12,370,000, or $1.04 per share, compared to net income of $6,151,000, or
$0.54 per share, for the corresponding period of the prior fiscal year. These
results include the effects of the restructuring charge taken in the current
quarter. Net sales for the six months ended December 31, 1995 decreased 3% to
$136,696,000 versus $141,131,000 for fiscal 1995.
In commenting on the proposed restructuring and consolidation program
approved by the Board, Mr. Cox stated that "the program, which is designed to
increase the Company's competitive position and to increase value to
Tandycrafts' shareholders, will allow the Company to become more focused when
completed. Tandycrafts will be comprised of three specialty retail operations;
Tandy Leather, Joshua's Christian Stores and Sav-On Discount Office Supplies,
and two manufacturing divisions; TWI and Frames and Framed Art. The primary
components of this program include:
- The sale of Cargo Furniture & Accents.
- The sales or closings of David James Manufacturing, Brand Name Apparel
and Prestige Leather Creations.
- The consolidation of certain functions within TWI ("Tandy Wholesale
International") of Nocona Belt Company and Rivertown Button Company,
which is being relocated from Houston, Minnesota to Fort Worth, Texas.
- The closings of 11 underperforming retail outlets including two at
Sav-On Discount Office Supplies, five at Joshua's Christian Stores
and four at Tandy Leather Company.
- The consolidation, streamlining, and in some cases, outsourcing of
certain functions, including advertising, to increase efficiency
throughout the various operating units.
- The retention of an outside consulting firm to assist senior
management in evaluating the Company's retail concepts.
The pre-tax restructuring charge includes the following components:
- $18.0 million for asset write downs and other exit costs associated
with businesses which are expected to be sold or closed
- $0.8 million for estimated tenancy, inventory disposition and other
exit costs associated with the closure of eleven stores
The total goodwill write-off included in the aggregate pre-tax charge of
$18.8 million is $7.7 million."
Three Months Ended Six Months Ended
-------------------------- --------------------------
December 31, December 31, December 31, December 31,
1995 1994 1995 1994
------------ ------------ ------------ ------------
Net sales $ 74,347 $ 75,619 $ 136,696 $ 141,131
Operating costs and expenses:
Cost of goods sold 47,885 44,572 86,698 84,374
Selling, general and
administrative 23,136 22,583 44,049 42,888
Depreciation and amortization 1,715 1,207 3,240 2,556
Restructuring charge 18,818 - 18,818 -
------------ ------------ ------------ -----------
Total operating costs
and expenses 91,554 68,362 152,805 129,818
------------ ------------ ------------ -----------
Operating income (loss) (17,207) 7,257 (16,109) 11,313
Interest expense, net 1,244 950 2,329 1,776
------------ ------------ ------------ -----------
Income (loss) before
income taxes (18,451) 6,307 (18,438) 9,537
Provision (benefit) for
income taxes (6,072) 2,210 (6,068) 3,386
------------ ------------ ------------ -----------
Net income (loss) $ (12,379) $ 4,097 $ (12,370) $ 6,151
============ ============ ============ ===========
Net income (loss) per share ($1.04) $0.36 ($1.04) $0.54
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Weighted average common and
common equivalent shares 11,935 11,383 11,852 11,298
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