EXHIBIT 99.1
Tandy Brands Accessories, Inc. | Investor Relations: | |
J.S.B. Jenkins | Integrated Corporate Relations | |
President/Chief Executive Officer | Bill Zima (203) 682-8200 | |
(817) 548-0090 | Media Relations: | |
britt_jenkins@tandybrands.com | Monarch Communications, Inc. | |
Jeff Siegel (516) 569-4271 |
TANDY BRANDS ACCESSORIES REPORTS FOURTH QUARTER AND YEAR END 2006 RESULTS
— Anticipates Return to Profitability in Fiscal 2007 due to Restructuring Efforts —
— Declares 13th Consecutive Quarterly Dividend —
— Declares 13th Consecutive Quarterly Dividend —
ARLINGTON, TX, August 21, 2006 – Tandy Brands Accessories, Inc. (Nasdaq NM:TBAC)today announced financial results for the fourth quarter and year ended June 30, 2006.
For the fourth quarter of fiscal 2006, net sales increased 9.9% to $47.1 million compared to $42.9 million for the same period last year. The Company reported a net loss of $1.0 million, or ($0.16) per diluted share, compared to a net loss of $2.1 million, or ($0.33) per diluted share, in the prior year’s fourth quarter.
The increase in net sales was a result of continued strength in men’s and women’s belt sales as well as from the sale of inventory from discontinued product categories at lower gross margins. Selling, general and administrative expenses decreased $922,000, or 5.7%, to $15.2 million, compared to $16.1 million for the prior year period, primarily due to the Company’s restructuring efforts.
For the 2006 fiscal year, net sales increased 2.8% to $227.3 million compared to $221.2 million for the same period last year. The Company reported a net loss of $3.5 million, or ($0.52) per diluted share, compared to net income of $4.0 million, or $0.61 per diluted share reported in the 2005 fiscal year.
The fiscal 2006 results include a third quarter restructuring charge of $0.67 per diluted share, net of tax, from the write down of inventory, packaging and staff reduction costs associated with the
discontinuation of certain product lines in the women’s division. The Company also recorded a non-cash charge of $0.14 per diluted share in the fiscal 2006 second quarter for impairment of goodwill associated with the women’s mass merchant business. Excluding these two charges, diluted earnings per share for fiscal 2006 would have been $0.29, which was at the top of the Company’s previous diluted earnings per share guidance range of $0.22 to $0.29 issued on April 26, 2006.
J.S.B. Jenkins, President and Chief Executive Officer commented, “Our results for the fourth quarter were on plan and reflect our continued efforts to improve the overall performance of our accessories business. We completed the exit from certain lower margin women’s product categories, made strategic improvements to our management team, reduced our workforce, and maintained tight controls on inventories and spending.”
Mr. Jenkins concluded, “Over the past six months we have taken significant steps to restructure our business and better prepare ourselves for future growth. We believe that our efforts in these areas will prove responsible for generating improvements in margins and operating profitability in the upcoming fiscal year.”
The Company anticipates full year fiscal 2007 sales to be in the range of $177 to $182 million compared to $227.3 million for fiscal 2006. The Company’s exit from certain women’s product categories in fiscal 2006, as well as its ongoing efforts to improve its operating profitability and the quality of distribution, is expected to result in a reduction in sales of approximately $45 million for fiscal 2007 compared to fiscal 2006. Fiscal 2007 earnings per share are anticipated to be in the range of $0.67 to $0.72 per diluted share.
The Company also reported that the Board of Directors approved a quarterly dividend of $0.0275 per common share that will be payable October 20, 2006, to shareholders of record at the close of business on September 30, 2006.
Conference Call Information
Investors and interested parties will have the opportunity to listen to management’s discussion of Tandy Brands’ fourth quarter results in a conference call to be held today, Monday, August 21, 2006, at 4:30 p.m. ET. The dial-in number for the call is (913) 981-4911. A live webcast of the conference call will also be broadcast at: www.viavid.net. For those who are unable to listen to the live broadcast, an audio replay of the call will be available through Monday, August 28, 2006, and can be accessed by dialing (719) 457-0820, passcode #5459378.
About Tandy Brands Accessories, Inc.
Tandy Brands Accessories, Inc. designs, manufactures and markets fashion accessories for men, women and children. Key product categories include belts,
Tandy Brands Accessories, Inc. designs, manufactures and markets fashion accessories for men, women and children. Key product categories include belts,
wallets, handbags, suspenders, neckwear, gifts and sporting goods. Merchandise is sold under various national brand names as well as private labels to all major levels of retail distribution, including the ROLFS e-commerce web site atwww.rolfs.net.
Safe Harbor Language
Except for historical information contained herein, the statements in this release are forward-looking and made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties, which may cause the Company’s actual results in future periods to differ materially from forecasted or expected results. Those risks include, among other things, the competitive environment in the industry in general and in the Company’s specific market areas, inflation, changes in costs of goods and services and economic conditions in general and in the Company’s specific market area. Those and other risks are more fully described in the Company’s filings with the Securities and Exchange Commission.
Except for historical information contained herein, the statements in this release are forward-looking and made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties, which may cause the Company’s actual results in future periods to differ materially from forecasted or expected results. Those risks include, among other things, the competitive environment in the industry in general and in the Company’s specific market areas, inflation, changes in costs of goods and services and economic conditions in general and in the Company’s specific market area. Those and other risks are more fully described in the Company’s filings with the Securities and Exchange Commission.
(Tables to follow)
TANDY BRANDS ACCESSORIES, INC.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended | Year Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||||||
Net sales | $ | 47,095 | $ | 42,864 | $ | 227,323 | $ | 221,232 | ||||||||
Cost of goods sold | 31,360 | 27,788 | 158,452 | 139,999 | ||||||||||||
Gross margin | 15,735 | 15,076 | 68,871 | 81,233 | ||||||||||||
Selling, general and administrative expenses | 15,221 | 16,143 | 65,220 | 67,975 | ||||||||||||
Goodwill impairment | 0 | 847 | 938 | 847 | ||||||||||||
Depreciation and amortization | 1,282 | 1,312 | 5,118 | 5,025 | ||||||||||||
Total operating expenses | 16,503 | 18,302 | 71,276 | 73,847 | ||||||||||||
Operating income (loss) | (768 | ) | (3,226 | ) | (2,405 | ) | 7,386 | |||||||||
Interest expense | (466 | ) | (251 | ) | (2,057 | ) | (1,222 | ) | ||||||||
Royalty and other income | 48 | 38 | 187 | 246 | ||||||||||||
Income (loss) before provision for income taxes | (1,186 | ) | (3,439 | ) | (4,275 | ) | 6,410 | |||||||||
Provision (benefit) for income taxes | (142 | ) | (1,318 | ) | (813 | ) | 2,423 | |||||||||
Net income (loss) | $ | (1,044 | ) | $ | (2,121 | ) | $ | (3,462 | ) | $ | 3,987 | |||||
Earnings (loss) per common share: | $ | (0.16 | ) | $ | (0.33 | ) | $ | (0.52 | ) | $ | 0.63 | |||||
Earnings (loss) per common share-assuming dilution: | $ | (0.16 | ) | $ | (0.33 | ) | $ | (0.52 | ) | $ | 0.61 | |||||
Dividends declared per share | $ | 0.0275 | $ | 0.0275 | $ | 0.11 | $ | 0.11 | ||||||||
Common shares outstanding | 6,652 | 6,444 | 6,603 | 6,349 | ||||||||||||
Common shares outstanding shares-assuming dilution | 6,652 | 6,444 | 6,603 | 6,588 | ||||||||||||
TANDY BRANDS ACCESSORIES, INC.
Condensed Consolidated Balance Sheets
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
(Unaudited)
June 30, | June 30, | |||||||
2006 | 2005 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 4,182 | $ | 3,429 | ||||
Accounts receivable, net | 27,322 | 31,437 | ||||||
Inventories | 61,770 | 67,981 | ||||||
Deferred income taxes | 3,792 | 4,229 | ||||||
Other current assets | 6,252 | 2,359 | ||||||
Total current assets | 103,318 | 109,435 | ||||||
Property, plant and equipment, at cost: | ||||||||
Property and equipment, at cost | 37,119 | 37,742 | ||||||
Accumulated depreciation | (24,689 | ) | (23,896 | ) | ||||
Net property, plant and equipment | 12,430 | 13,846 | ||||||
Goodwill, net of accumulated amortization | 16,292 | 17,101 | ||||||
Other intangibles, net of accumulated amortization | 5,653 | 6,403 | ||||||
Supplemental Executive Retirement Plan assets | 0 | 1,702 | ||||||
Other noncurrent assets | 1,719 | 2,275 | ||||||
TOTAL ASSETS | $ | 139,412 | $ | 150,762 | ||||
LIABILITIES & STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 10,106 | $ | 15,908 | ||||
Accrued expenses | 6,682 | 6,902 | ||||||
Total current liabilities | 16,788 | 22,810 | ||||||
Notes payable | 14,000 | 16,055 | ||||||
Deferred income taxes | 1,640 | 2,086 | ||||||
Supplemental Executive Retirement Plan liability | 1,133 | 2,926 | ||||||
Other noncurrent liabilities | 1,012 | 1,455 | ||||||
Total liabilities | 34,573 | 45,332 | ||||||
Stockholders’ equity: | ||||||||
Common stock | 6,717 | 6,573 | ||||||
Additional paid-in capital | 31,989 | 29,597 | ||||||
Cumulative other comprehensive income | 988 | 77 | ||||||
Shares held by Benefit Restoration Plan Trust | (815 | ) | (981 | ) | ||||
Retained earnings | 65,960 | 70,164 | ||||||
Total stockholders’ equity | 104,839 | 105,430 | ||||||
TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY | $ | 139,412 | $ | 150,762 | ||||
TANDY BRANDS ACCESSORIES, INC.
Reconciliation of Adjusted Earnings
Reconciliation of Adjusted Earnings
(In thousands, except per share amounts)
(Unaudited)
(Unaudited)
Year Ended | ||||
June 30, | ||||
2006 | ||||
Net loss, as reported | $ | (3,462 | ) | |
Adjustments, net of tax: | ||||
Goodwill impairment | 938 | |||
Restructuring charge for discontinued product line inventory | 4,452 | |||
Adjusted earnings | $ | 1,928 | ||
Adjusted earnings per common share — assuming dilution | $ | 0.29 | ||