Tandy To Break Into Two Firms
Jan. 11, 1993
DALLAS (AP) _ Tandy Corp., the nation's largest seller of consumer electronics, said today it plans to spin off its manufacturing units and restructure its retail operations, closing about 100 stores.
The company, best known for its Radio Shack stores, said it would take a $47.5 million pre-tax charge for costs related to the restructuring.
The restructuring is not expected to affect the company's 7,000 Radio Shack stores.
Tandy will combine its 25 manufacturing subsidiaries - including O'Sullivan Industries, Memtek Products and Grid Systems Corp. - into a new public company called TE Electronics Inc., which will be led by current executives.
Had the split taken place in its fiscal year ended last June 30, TE Electronics would have accounted for $1.5 billion of Tandy's $4.6 billion in revenue. During calendar 1992, Tandy's retail units had $3.8 billion in sales.
Company officials believe the change can boost declining earnings.
''We think this enhances the profitability potential for both sides of our business,'' Tandy chief executive John Roach said.
''We don't want our retail formats to be impeded by those ties to manufacturing, and we want to open new opportunities to our manufacturing side that may not have been there before.''
Tandy earned $183.8 million, or $2.24 per share, in fiscal 1992. A year earlier, the company earned $195.4 million, or $2.44 per share, on revenue of $4.5 billion.
Meanwhile, the company plans to close about 100 of the 413 stores that compose Tandy's Name Brand Retail Group, which do business as McDuff and Video Concepts. They may be replaced in some markets by other Tandy outlets.
Further word on the closings is expected Tuesday.
Tandy will open up to five additional Incredible Universe stores, a megastore three times the size of typical warehouse-style outlets that has been tested in Dallas-Fort Worth and Portland, Ore. It will add up to 16 Computer City locations during the next two years.
William Bousquette, Tandy's chief financial officer and executive vice president, will be chief executive officer of TE Electronics. Robert McClure, formerly president of Tandy Electronics, will be chief operating officer.
Roach and Tandy's board of directors will have no management positions in the new manufacturing company.
Existing shareholders will receive shares in the new company as a tax-free dividend, Roach said, adding that it has not been determined how many shares of the new company will be issued for each outstanding share.
Tandy's plans must be approved by the company's board and the U.S. Securities and Exchange Commission. Although it may not be completed until midyear, the operational and organizational changes are effective immediately, Roach said.