SECURITIES AND EXCHANGE COMMISSION
FORM 11-K
ANNUAL REPORT PURSUANT TO
SECTION 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Six Months Ended December 31, 2003 and the Year Ended June 30, 2003
Commission File Number 0-18927
TANDY BRANDS ACCESSORIES, INC.
(full title of Plan)
TANDY BRANDS ACCESSORIES, INC.
690 East Lamar Blvd., Suite 200
Arlington, Texas 76011
(Name of issuer of the securities held pursuant to the Plan and
address of its principal executive office.)
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CONTENTS
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Administrative Committee and Participants of the
Tandy Brands Accessories, Inc. Benefit Restoration Plan
We have audited the accompanying statements of net assets available for benefits of the Tandy Brands Accessories, Inc. Benefit Restoration Plan as of December 31, 2003 and June 30, 2003 and the related statements of changes in net assets available for benefits for the six months ended December 31, 2003 and the year ended June 30, 2003. 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 audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). 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 consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, 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, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Tandy Brands Accessories, Inc. Benefit Restoration Plan as of December 31, 2003 and June 30, 2003, and the changes in its net assets available for benefits for the six months ended December 31, 2003 and the year ended June 30, 2003 in conformity with accounting principles generally accepted in the United States of America.
/s/ Whitley Penn
Fort Worth, Texas
March 18, 2005
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TANDY BRANDS ACCESSORIES, INC. BENEFIT RESTORATION PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
December 31, | June 30, | |||||||
2003 | 2003 | |||||||
Assets | ||||||||
Investments, at fair value: | ||||||||
Shares of registered investment companies: | ||||||||
Mutual funds | $ | 136,533 | $ | 97,356 | ||||
Tandy Brands Accessories, Inc. common stock | 1,234,651 | 856,716 | ||||||
Total investments | 1,371,184 | 954,072 | ||||||
Receivables: | ||||||||
Employee contributions | 9,613 | 10,390 | ||||||
Employer contributions | 44,484 | 42,005 | ||||||
Interest | 1,992 | 4 | ||||||
Total receivables | 56,089 | 52,399 | ||||||
Cash and cash equivalents | 21,937 | 13,652 | ||||||
Total assets | 1,449,210 | 1,020,123 | ||||||
Liabilities | — | — | ||||||
Net Assets Available for Benefits | $ | 1,449,210 | $ | 1,020,123 | ||||
See accompanying notes to financial statements.
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TANDY BRANDS ACCESSORIES, INC. BENEFIT RESTORATION PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
Six Months Ended | Year Ended | |||||||
December 31, | June 30, | |||||||
2003 | 2003 | |||||||
Additions to Net Assets | ||||||||
Investment income: | ||||||||
Net realized and unrealized gains on investments | $ | 258,308 | $ | 56,820 | ||||
Interest and dividends | 5,568 | 2,245 | ||||||
Total investment income | 263,876 | 59,065 | ||||||
Contributions: | ||||||||
Employee contributions | 66,084 | 116,851 | ||||||
Employer contributions | 99,127 | 174,067 | ||||||
Total contributions | 165,211 | 290,918 | ||||||
Total additions | 429,087 | 349,983 | ||||||
Deductions from Net Assets | ||||||||
Benefit payments | — | 12,181 | ||||||
�� | ||||||||
Net increase in net assets available for benefits | 429,087 | 337,802 | ||||||
Net assets available for benefits at beginning of period | 1,020,123 | 682,321 | ||||||
Net assets available for benefits at end of period | $ | 1,449,210 | $ | 1,020,123 | ||||
See accompanying notes to financial statements.
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TANDY BRANDS ACCESSORIES, INC. BENEFIT RESTORATION PLAN
NOTES TO FINANCIAL STATEMENTS
A. Description of the Plan
The following description of the Tandy Brands Accessories, Inc. Benefit Restoration Plan (the “Plan”) provides only general information. Participants should refer to the Plan agreement for a more complete description of the Plan’s provisions.
General
Tandy Brands Accessories, Inc. (the “Company”) established the Plan effective as of July 1, 1993, as amended effective July 1, 2003. The Plan is an unfunded nonqualified plan of deferred compensation, the purpose of which is to restore retirement benefits to a select group of the Company’s management and highly compensated employees whose retirement benefits have been decreased by the limitations imposed by Sections 401(a)(17) and 402(g) of the Internal Revenue Code of 1986, as amended.
Contributions
For any Plan year, participants may elect to defer, on a pre-tax basis, up to 10% of their gross salary and wages otherwise payable to them during a Plan year, reduced by the total contributions made during such Plan year to the Tandy Brands Accessories, Inc. Employee Investment Plan.
The Company makes quarterly matching contributions to the Plan on each participant’s behalf equal to 150% of the amount the participant deferred during such calendar quarter. Matching contributions are required to be invested in Company common stock.
Participant Accounts
Each participant’s account is credited with the participant’s contribution and the Company’s contribution for each month and quarter, respectively. Participant accounts are valued on a quarterly basis in accordance with the Plan’s provisions.
Vesting
Participants are immediately vested in all contributions plus actual earnings thereon.
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TANDY BRANDS ACCESSORIES, INC. BENEFIT RESTORATION PLAN
NOTES TO FINANCIAL STATEMENTS (continued)
A. Description of Plan - continued
Benefit Payments
On termination of service due to death or retirement, all payments of benefits from the Plan will be made in either a single, lump-sum distribution or in monthly installments over a certain period, not to exceed 10 years.
In the event of an unforeseeable emergency, a participant may make a written request to the committee for a hardship withdrawal from his account. An unforeseeable emergency is defined as an unexpected illness or accident of the participant or of a dependent of the participant, loss of the participant’s property due to casualty, or other similar extraordinary circumstances arising as a result of events beyond the control of the participant.
Investment Options
A participant may direct employee contributions to the available mutual fund or in Tandy Brands Accessories, Inc. common stock.
B. Summary of Significant Accounting Policies
Basis of Accounting
The financial statements of the Plan are prepared using the accrual method of accounting in accordance with accounting principles generally accepted in the United States of America.
Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the Plan Administrator to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results may differ from these estimates.
Contributions
Contributions from the participants and the employer are accrued in the period in which they are deducted in accordance with salary deferral agreements and as they become obligations of the Company as determined by the Plan’s administrator .
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TANDY BRANDS ACCESSORIES, INC. BENEFIT RESTORATION PLAN
NOTES TO FINANCIAL STATEMENTS (continued)
B. Summary of Significant Accounting Policies - continued
Investments
The Plan’s investments are stated at fair value. Shares of registered investment companies are valued at quoted market prices, which represent the net asset value of shares held by the Plan at year-end. These investments are subject to market or credit risks customarily associated with debt and equity investments.
Purchases and sales of investments are recorded on a trade-date basis. Interest income is accrued when earned. Dividend income is recorded on the ex-dividend date. Capital gain distributions are included in dividend income.
The net realized and unrealized gains and losses on investments include 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. Benefit payments made during the year ended June 30, 2003 were approximately $12,000. No benefit payments were made during the six months ended December 31, 2003.
C. Investments
The following table presents the individual investments that exceeded 5% of the Plan’s net assets available for benefits at December 31, 2003 and June 30, 2003:
December 31, | June 30, | |||||||
2003 | 2003 | |||||||
Non-participant directed: | ||||||||
Tandy Brands Accessories, Inc. common stock (47,857 and 42,771 shares, respectively) | $ | 743,225 | $ | 513,252 | ||||
Participant directed: | ||||||||
Tandy Brands Accessories, Inc. common stock (31,664 and 28,622 shares, respectively) | 491,426 | 343,464 | ||||||
Total | $ | 1,234,651 | $ | 856,716 | ||||
Munder Money Market Fund | $ | 136,533 | $ | 97,356 | ||||
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TANDY BRANDS ACCESSORIES, INC. BENEFIT RESTORATION PLAN
NOTES TO FINANCIAL STATEMENTS (continued)
C. Investments - continued
The changes in net assets available for benefits for the non-participant directed Company stock for the six months ended December 31, 2003 and the year ended June 30, 2003, are as follows:
Non-Participant Directed | ||||||||
Company Stock | ||||||||
Six Months | Year | |||||||
Ended | Ended | |||||||
December 31, 2003 | June 30, 2003 | |||||||
Additions to Net Assets | ||||||||
Investment income | ||||||||
Net realized and unrealized gains on investments | $ | 229,973 | $ | 150,577 | ||||
Deductions to Net Assets | ||||||||
Benefits paid to participants | — | 7,751 | ||||||
Net increase in net assets available for benefits | 229,973 | 142,826 | ||||||
Net assets available for benefits at beginning of period | 513,252 | 370,426 | ||||||
Net assets available for benefits at end of period | $ | 743,225 | $ | 513,252 | ||||
D. Tax Status
The Plan is not a qualified plan as determined by the Internal Revenue Code.
E. 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.
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TANDY BRANDS ACCESSORIES, INC. BENEFIT RESTORATION PLAN
NOTES TO FINANCIAL STATEMENTS (continued)
F. Administration of Plan Assets
Contributions are held and managed by the trustee, who invests cash and investment income received and makes distributions to participants.
Officers and employees of the Company perform certain administrative functions for the Plan with no compensation from the Plan. Administrative expenses related to the Plan are paid directly by the Company and are not reflected in the accompanying financial statements.
G. Benefits Payable
At December 31, 2003 and June 30, 2003, there were no amounts due to participants who had elected to withdraw from the Plan and requested payment of benefits, that had not yet been paid.
H. Plan Amendments
On July 1, 2003, the Plan’s sponsor approved the change in the Plan’s year-end from June 30 to December 31. The Plan reported its financial statements for the six months ended December 31, 2003 as a “short plan year” in accordance with the amendment to the Plan.
I. Concentrations
Approximately 85% and 84% of the Plan’s assets are invested in common stock of the Company at December 31, 2003 and June 30, 2003, respectively.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Administrative Committee has duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.
TANDY BRANDS ACCESSORIES, INC. BENEFIT RESTORATION PLAN | ||||
/s/ J.S.B. Jenkins | ||||
J.S.B. Jenkins | ||||
Administrative Committee Member |
Date: June 22 ,2005
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