================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
FORM 10-Q
Quarterly Report Pursuant To Section 13 or 15(d)
of the Securities Exchange Act of 1934
----------
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2002
COMMISSION FILE NUMBER 0-18927
TANDY BRANDS ACCESSORIES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 75-2349915
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
690 EAST LAMAR BOULEVARD, SUITE 200, ARLINGTON, TX 76011
(Address of principal executive offices and zip code)
(817) 548-0090
(Registrant's telephone number, including area code)
Former name, former address and former fiscal year,
if changed since last report:
NOT APPLICABLE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).
Yes No X
--- ---
Indicate the number of shares outstanding of each of the issuer's classes
of common stock as of the latest practicable date.
Number of shares outstanding
Class at November 11, 2002
COMMON STOCK, $1.00 PAR VALUE 5,903,640
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TANDY BRANDS ACCESSORIES, INC. AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 2002
================================================================================
TABLE OF CONTENTS
PART I -- FINANCIAL INFORMATION
<Table>
<Caption>
Item Page No.
- ---- --------
1. Financial Statements 3 - 12
2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 13 - 16
3. Quantitative and Qualitative Disclosures About Market Risk 17
4. Controls and Procedures 17
PART II -- OTHER INFORMATION
Item
- ----
4. Submission of Matters to a Vote of Security Holders 18
6. Exhibits and Reports on Form 8-K 18
SIGNATURES 19
CERTIFICATIONS 20-21
EXHIBIT INDEX 22-25
</Table>
2
TANDY BRANDS ACCESSORIES, INC. AND SUBSIDIARIES
FILE NUMBER 0 -18927
FORM 10 - Q
===============================================================================
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<Table>
<Caption>
Three Months
Ended
September 30
-------------------------------
2002 2001
------------ ------------
Net sales $ 60,028 $ 54,106
Cost of goods sold 39,243 35,073
------------ ------------
Gross margin 20,785 19,033
Selling, general and administrative expenses 15,126 13,310
Depreciation and amortization 1,080 1,387
------------ ------------
Total operating expenses 16,206 14,697
------------ ------------
Operating income 4,579 4,336
Interest expense (658) (778)
Royalty and other income 1 9
------------ ------------
Income before provision for income taxes and cumulative
effect of accounting change 3,922 3,567
Provision for income taxes 1,527 1,385
------------ ------------
Net income before cumulative effect of accounting change 2,395 2,182
Cumulative effect of accounting change for
SFAS No. 142, net of income taxes of $369,000 (581) --
------------ ------------
Net income $ 1,814 $ 2,182
============ ============
Earnings per common share
Before cumulative effect of accounting change $ 0.41 $ 0.38
Cumulative effect of accounting change (0.10) --
------------ ------------
$ 0.31 $ 0.38
============ ============
Earnings per common share - assuming dilution
Before cumulative effect of accounting change $ 0.40 $ 0.38
Cumulative effect of accounting change (0.10) --
------------ ------------
$ 0.30 $ 0.38
============ ============
Common shares outstanding 5,888 5,718
============ ============
Common shares outstanding - assuming dilution 5,984 5,725
============ ============
Cash dividends per common share None None
</Table>
The accompanying notes are an integral part of these condensed
financial statements.
3
TANDY BRANDS ACCESSORIES, INC. AND SUBSIDIARIES
FILE NUMBER 0 -18927
FORM 10 - Q
================================================================================
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<Table>
<Caption>
September 30, June 30,
2002 2002
------------- ------------
ASSETS (Unaudited)
Current assets:
Cash and cash equivalents $ 1,440 $ 6,506
Accounts receivable, net 45,437 33,699
Inventories:
Raw materials and work in process 4,643 4,957
Finished goods 48,809 47,861
Other current assets 4,830 4,806
------------ ------------
Total current assets 105,159 97,829
------------ ------------
Property and equipment, at cost 30,132 29,441
Accumulated depreciation (15,146) (14,373)
------------ ------------
Net property and equipment 14,986 15,068
------------ ------------
Other assets:
Goodwill, less amortization 11,471 12,467
Intangible assets, less amortization 5,270 5,403
Other assets 2,609 2,670
------------ ------------
Total other assets 19,350 20,540
------------ ------------
$ 139,495 $ 133,437
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 7,174 $ 12,755
Accrued expenses 7,814 6,857
------------ ------------
Total current liabilities 14,988 19,612
------------ ------------
Other liabilities:
Notes payable 38,352 30,000
Other noncurrent liabilities 3,650 3,161
------------ ------------
Total other liabilities 42,002 33,161
------------ ------------
Stockholders' equity:
Preferred stock, $1 par value, 1,000,000 shares authorized, none issued -- --
Common stock, $1 par value, 10,000,000 shares authorized,
5,910,703 shares and 5,899,173 shares issued and outstanding
as of September 30, 2002 and June 30, 2002, respectively 5,911 5,899
Additional paid-in capital 22,866 22,690
Cumulative other comprehensive income (2,272) (1,706)
Retained earnings 56,107 54,293
Treasury stock, at cost (107) (512)
------------ ------------
Total stockholders' equity 82,505 80,664
------------ ------------
$ 139,495 $ 133,437
============ ============
</Table>
The accompanying notes are an integral part of these condensed
financial statements.
4
TANDY BRANDS ACCESSORIES, INC. AND SUBSIDIARIES
FILE NUMBER 0 -18927
FORM 10 - Q
================================================================================
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<Table>
<Caption>
Three Months Ended
September 30,
-------------------------------
2002 2001
------------ ------------
Cash flows from operating activities:
Net income $ 1,814 $ 2,182
Adjustments to reconcile net income to net cash provided by (used for)
operating activities:
Depreciation 993 1,049
Amortization 133 383
Cumulative effect of accounting change, net 581 --
Other (243) (46)
Change in assets and liabilities:
Accounts receivable (11,738) (11,442)
Inventories (634) 556
Other assets 393 (162)
Accounts payable (5,581) (1,284)
Accrued expenses 962 1,866
------------ ------------
Net cash used for operating activities (13,320) (6,898)
------------ ------------
Cash flows from investing activities:
Purchases of property and equipment (691) (149)
------------ ------------
Net cash used for investing activities (691) (149)
------------ ------------
Cash flows from financing activities:
Exercise of employee stock options 92 --
Sale of stock to stock purchase program 501 347
Proceeds from borrowings 19,172 29,494
Payments under borrowings (10,820) (21,938)
------------ ------------
Net cash provided by financing activities 8,945 7,903
------------ ------------
Net increase (decrease) in cash and cash equivalents (5,066) 856
Cash and cash equivalents at beginning of period 6,506 79
------------ ------------
Cash and cash equivalents at end of period $ 1,440 $ 935
============ ============
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 603 $ 557
Income taxes 567 11
Noncash activities:
None
</Table>
The accompanying notes are an integral part of these condensed
financial statements.
5
TANDY BRANDS ACCESSORIES, INC. AND SUBSIDIARIES
================================================================================
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - ACCOUNTING PRINCIPLES
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and Article
10 of Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three month period ended September 30,
2002 are not necessarily indicative of the results that may be expected for the
year ended June 30, 2003. For further information, refer to the consolidated
financial statements and footnotes thereto included in our 2002 Annual Report.
NOTE 2 - IMPACT OF NEW ACCOUNTING STANDARDS
Effective July 1, 2002, we adopted Statement of Financial Accounting
Standards, commonly referred to as SFAS, No. 142, "Goodwill and Other Intangible
Assets." Please refer to Note 6 for information regarding goodwill and other
intangible assets and the impact the adoption of this statement had on our
condensed consolidated financial statements.
In July 2001, the Financial Accounting Standards Board issued SFAS No. 143,
"Accounting for Asset Retirement Obligations," effective for fiscal years
beginning after June 15, 2002. This statement addresses financial accounting and
reporting for legal obligations associated with the retirement of tangible
long-lived assets and the associated asset retirement costs. We adopted SFAS No.
143 during the first quarter of fiscal 2003. The adoption of this statement did
not have a material effect on our consolidated financial position or statements
of income, stockholders' equity and cash flows.
In August 2001, the Financial Accounting Standards Board issued SFAS No.
144, "Accounting for Impairment or Disposal of Long-Lived Assets," effective for
fiscal years beginning after December 15, 2001. This statement addresses
financial accounting and reporting for the impairment or disposal of long-lived
assets. We adopted SFAS No. 144 during the first quarter of fiscal 2003. The
adoption of this statement did not have a material effect on our consolidated
financial position or statements of income, stockholders' equity and cash flows.
In July 2002, the Financial Accounting Standards Board issued SFAS No. 146,
"Accounting for Costs Associated with Exit or Disposal Activities." This
statement addresses financial accounting and reporting for costs associated with
exit or disposal activities, such as restructurings, terminating employees
involuntarily and consolidating facilities. SFAS No. 146 is effective for exit
and disposal activities that are initiated after December 31, 2002. We do no not
expect the adoption of this statement to have a material effect on our
consolidated financial position or statements of income, stockholders' equity
and cash flows.
6
TANDY BRANDS ACCESSORIES, INC. AND SUBSIDIARIES
================================================================================
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 3 - COMPREHENSIVE INCOME
The following table illustrates the components of comprehensive income, net
of related tax, for the three months ended September 30, 2002 and 2001 (in
thousands).
<Table>
<Caption>
Three Months
Ended
September 30,
-------------------------------
2002 2001
------------ ------------
Net income $ 1,814 $ 2,182
Foreign currency translation adjustments (269) (61)
Change in the fair value of interest rate swap (297) (1,015)
------------ ------------
Comprehensive income $ 1,248 $ 1,106
============ ============
</Table>
7
TANDY BRANDS ACCESSORIES, INC. AND SUBSIDIARIES
================================================================================
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 4 - EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted
earnings per share (in thousands, except per share amounts).
<Table>
<Caption>
Three Months
Ended
September 30,
-------------------------------
2002 2001
------------ ------------
Numerator for basic and diluted earnings per share:
Net income before cumulative effect of
accounting change $ 2,395 $ 2,182
Cumulative effect of accounting change for
SFAS No. 142, net of income taxes (581) --
------------ ------------
Net income $ 1,814 $ 2,182
============ ============
Denominator:
Weighted average shares outstanding 5,872 5,705
Contingently issuable shares 16 13
------------ ------------
Denominator for basic earnings per
share - weighted average shares 5,888 5,718
Effect of dilutive securities:
Employee stock options 80 7
Director stock options 16 --
------------ ------------
Dilutive potential common shares 96 7
Denominator for diluted earnings per
share - adjusted weighted - average
shares 5,984 5,725
============ ============
Basic earnings per share:
Before cumulative effect of accounting change $ 0.41 $ 0.38
Cumulative effect of accounting change (0.10) 0.00
------------ ------------
$ 0.31 $ 0.38
============ ============
Diluted earnings per share:
Before cumulative effect of accounting change $ 0.40 $ 0.38
Cumulative effect of accounting change (0.10) 0.00
------------ ------------
$ 0.30 $ 0.38
============ ============
</Table>
8
TANDY BRANDS ACCESSORIES, INC. AND SUBSIDIARIES
================================================================================
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 5 - DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED INFORMATION
We sell our products to a variety of retail outlets, including mass
merchants, national chain stores, major department stores, men's and women's
specialty stores, catalog retailers, grocery stores, drug stores, golf pro
shops, sporting goods stores and the retail exchange operations of the United
States military. To facilitate our internal operations as well as our customer
relationships, we organize our products along men's and women's product lines.
As a result, we have two reportable segments: men's accessories, consisting of
belts, wallets, suspenders and other small leather goods and women's
accessories, consisting of belts, wallets, handbags, socks, scarves, hats and
hair accessories. We allocate general corporate expenses to each segment based
on the respective segment's asset base. We allocate depreciation and
amortization expense related to assets recorded on our corporate accounting
records to each segment as described above. We measure profit or loss on each
segment based on income or loss before taxes utilizing the accounting policies
consistent in all material respects with those described in Note 1 of our 2002
Annual Report. No inter-segment revenue is recorded.
The following table sets forth information regarding operations and assets
by reportable segment (in thousands).
<Table>
<Caption>
Three Months Ended
September 30,
-------------------------------
2002 2001
------------ ------------
Revenue from external customers:
Men's accessories $ 30,243 $ 27,143
Women's accessories 29,785 26,963
------------ ------------
$ 60,028 $ 54,106
============ ============
Operating income (1):
Men's accessories 2,404 2,266
Women's accessories 2,175 2,070
------------ ------------
$ 4,579 $ 4,336
============ ============
Interest expense (658) (778)
Other income (2) 1 9
------------ ------------
Income before income taxes and
cumulative effect of accounting change $ 3,922 $ 3,567
============ ============
Depreciation and amortization expense:
Men's accessories $ 611 $ 846
Women's accessories 469 541
------------ ------------
$ 1,080 $ 1,387
============ ============
Capital expenditures:
Men's accessories $ 156 $ --
Women's accessories 112 141
Corporate 423 8
------------ ------------
$ 691 $ 149
============ ============
</Table>
(1) Operating income consists of net sales less cost of sales and specifically
identifiable selling, general and administrative expenses.
(2) Other income includes royalty income on corporate tradenames and other
income not specifically identifiable to a segment.
9
TANDY BRANDS ACCESSORIES, INC. AND SUBSIDIARIES
================================================================================
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 6 - GOODWILL AND OTHER INTANGIBLE ASSETS
Effective July 1, 2002, we adopted SFAS No. 142, "Goodwill and Other
Intangible Assets." This statement changed the accounting for goodwill and
indefinite-lived intangible assets from an amortization approach to an
impairment-only approach. The SFAS No. 142 goodwill impairment model is a
two-step process. The first step compares the fair value of a reporting unit
that has goodwill assigned to it, to its carrying value. We estimate the fair
value of a reporting unit using discounted cash flow analysis. If the fair value
of the reporting unit is determined to be less than its carrying value, a second
step is performed to compute the amount of goodwill impairment, if any. Step two
allocates the fair value of the reporting unit to the reporting unit's net
assets other than goodwill. The excess of the fair value of the reporting unit
over the amounts assigned to its net assets other than goodwill is considered
the implied fair value of the reporting unit's goodwill. The implied fair value
of the reporting unit's goodwill is then compared to the carrying value of its
goodwill. Any shortfall represents the amount of goodwill impairment.
Using the SFAS No. 142 approach described above, we recorded a transitional
goodwill impairment charge during the first quarter of fiscal 2003 of $950,000
($581,000 net of tax), presented as a cumulative effect of accounting change.
This charge related to our women's segment of products.
The transitional impairment charge resulted from application of the new
impairment methodology introduced by SFAS No. 142. Previous accounting rules
incorporated a comparison of carrying value to undiscounted cash flows, whereas
new rules require a comparison of carrying value to fair value, which are lower.
Under previous requirements, no goodwill impairment would have been recorded on
July 1, 2002.
Pursuant to SFAS No. 142, goodwill and indefinite-lived intangible assets
must be tested for impairment annually at the same time every year, and in
between annual testing dates if an event occurs or circumstances change that
would more likely than not reduce the fair value of the reporting unit below its
carrying value.
In conjunction with the adoption of SFAS No. 142, we reassessed the useful
lives and the classification of our finite-lived acquired intangible assets and
determined that no revisions were necessary. The following table illustrates the
gross carrying amount and accumulated amortization of our acquired intangible
assets as of September 30, 2002 and June 30, 2002 (in thousands).
<Table>
<Caption>
September 30, June 30,
2002 2002
------------ ------------
Amortized intangible assets
(various, principally tradenames):
Gross carrying amount $ 8,774 $ 8,774
============ ============
Accumulated Amortization $ (3,504) $ (3,371)
============ ============
Net Amortized Intangible Assets $ 5,270 $ 5,403
============ ============
</Table>
10
TANDY BRANDS ACCESSORIES, INC. AND SUBSIDIARIES
================================================================================
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 6 - GOODWILL AND OTHER INTANGIBLE ASSETS (CONTINUED)
Amortization expense for acquired finite-lived intangible assets during the
three months ended September 30, 2002 was $133,000. The following table
illustrates our estimated amortization expense for the remainder of fiscal 2003
through June 30, 2007.
<Table>
Estimated amortization expense :
Fiscal year ending 6/30/03 $ 372,000
Fiscal year ending 6/30/04 394,000
Fiscal year ending 6/30/05 361,000
Fiscal year ending 6/30/06 361,000
Fiscal year ending 6/30/07 361,000
</Table>
The following table reconciles net income, earnings per common share and
earnings per share, assuming dilution, adjusted to exclude amortization expense
recognized in such periods related to goodwill (in thousands except per share
amounts).
<Table>
<Caption>
Three Months
Ended
September 30,
------------------------------
2002 2001
------------ ------------
Reported net income before cumulative effect
of accounting change $ 2,395 $ 2,182
Add back after-tax amounts:
Goodwill amortization -- 156
------------ ------------
Adjusted net income before cumulative effect
of accounting change $ 2,395 $ 2,338
============ ============
Earnings per common share before accounting change:
Reported net income $ 0.41 $ 0.38
Goodwill amortization -- 0.03
------------ ------------
Adjusted basic earnings per common share
before accounting change $ 0.41 $ 0.41
============ ============
Earnings per share - assuming dilution before accounting change:
Reported net income $ 0.40 $ 0.38
Goodwill amortization -- 0.03
------------ ------------
Adjusted earnings per share -assuming dilution
before accounting change $ 0.40 $ 0.41
============ ============
</Table>
11
TANDY BRANDS ACCESSORIES, INC. AND SUBSIDIARIES
================================================================================
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 6 - GOODWILL AND OTHER INTANGIBLE ASSETS (CONTINUED)
The following table illustrates the changes in the carrying amount of
goodwill by reportable segment for the three months ended September 30, 2002.
<Table>
<Caption>
June 30, Impairment September 30,
2002 Losses Other(1) 2002
------------ ------------ ------------ -------------
Men's accessories $ 9,733 $ -- $ (46) $ 9,687
Women's accessories 2,734 (950) -- 1,784
------------ ------------ ------------ ------------
Total $ 12,467 $ (950) $ (46) $ 11,471
============ ============ ============ ============
</Table>
(1) Difference due to foreign currency translation adjustments.
12
TANDY BRANDS ACCESSORIES, INC. AND SUBSIDIARIES
================================================================================
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
GENERAL
We are a leading designer, manufacturer and marketer of branded men's,
women's and children's accessories, including belts and small leather goods such
as wallets. Our product line also includes handbags, socks, scarves, gloves,
hats, hair accessories, suspenders, cold weather accessories and sporting goods
accessories. We market our merchandise under a broad portfolio of nationally
recognized licensed and proprietary brand names, including DOCKERS(R),
LEVI'S(R), JONES NEW YORK(R), PERRY ELLIS(R), ROLFS(R), HAGGAR(R), WOOLRICH(R),
JORDACHE(R), INDIAN MOTORCYCLE(R), BUGLE BOY(R), CANTERBURY(R), PRINCE
GARDNER(R), PRINCESS GARDNER(R), AMITY(R), DON LOPER(R), ACCESSORY DESIGN
GROUP(R), TEX TAN(R) and TIGER(R), as well as private brands for major retail
customers. We sell our products to a variety of retail outlets, including mass
merchants, national chain stores, major department stores, men's and women's
specialty stores, catalog retailers, grocery stores, drug stores, golf pro
shops, sporting goods stores and the retail exchange operations of the United
States military.
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 2002 COMPARED TO THE THREE MONTHS ENDED
SEPTEMBER 30, 2001
NET SALES AND GROSS MARGINS
The following table illustrates sales and gross margin data from our
reportable segments for the three months ended September 30, 2002 compared to
the same period last year.
<Table>
<Caption>
Three Months Ended
September 30,
-------------------------------
2002 2001
------------ ------------
Net sales:
Men's accessories $ 30,243 $ 27,143
Women's accessories 29,785 26,963
------------ ------------
Total net sales $ 60,028 $ 54,106
============ ============
Gross margin:
Men's accessories $ 11,079 $ 10,148
Women's accessories 9,706 8,885
------------ ------------
Total gross margin $ 20,785 $ 19,033
============ ============
Gross margin as a percentage of sales:
Men's accessories 36.6% 37.4%
Women's accessories 32.6% 33.0%
Total 34.6% 35.2%
</Table>
13
TANDY BRANDS ACCESSORIES, INC. AND SUBSIDIARIES
================================================================================
For the three month period ended September 30, 2002, net sales increased
10.9% to $60,028,000 compared to net sales of $54,106,000 for the same period
last year. Net sales of men's accessories increased 11.4% for the three month
period ended September 30, 2002 compared to the same period last year. We
attribute the increase in net sales of men's accessories to a greater number of
mass merchant store orders than originally expected. Similarly, the net sales of
women's accessories increased 10.5% for the three month period ended September
30, 2002 compared to the same period last year. We attribute the increase in net
sales of women's accessories to increased sales of our Rolfs(R) handbags,
licensed small leather goods and belts such as LEVI'S(R) and DOCKERS(R) as well
as increased sales of women's mass merchant accessories.
Gross margins increased by $1,752,000 for the three month period ended
September 30, 2002, or 9.2% compared to the same period last year. As a
percentage of sales, gross margins decreased 0.6% for the three month period
ended September 30, 2002 compared to the same period last year. The overall
decrease was due to a greater sales mix weighted towards mass merchant
accessories and an initial direct sales shipment of women's accessories to
Payless Shoes.
OPERATING EXPENSES
Selling, general and administrative expenses as a percentage of net sales
for the three months ended September 30, 2002 increased 0.6% compared to the
same period last year. The increase resulted from higher salary expense due to
nonrecurring costs associated with the implementation of distribution software
in our Dallas, Texas distribution center totaling $290,000, as well as severance
costs totaling $430,000.
Depreciation and amortization expenses as a percentage of net sales for the
three months ended September 30, 2002 decreased 0.8% to $1,080,000, compared to
$1,387,000 in the same period of the prior year. We attribute this decrease
primarily to the adoption of SFAS No. 142 "Goodwill and Other Intangible
Assets," in which goodwill is no longer amortized (see note 6). Goodwill
amortization expense for the same three month period in the prior year was
approximately $256,000.
Interest expense for the three month period ended September 30, 2002
decreased $120,000 compared to the same period last year. This decrease
primarily relates to lower interest rates as well as lower debt levels compared
to the same period last year.
The effective tax rate for the three months ended September 30, 2002 was
38.9%, which is consistent with the same period last year.
Net income, before the cumulative effect of accounting change resulting
from the adoption of SFAS No. 142, for the three month period ended September
30, 2002 increased 9.8% to $2,395,000, or $.40 per diluted share, compared to
net income of $2,182,000, or $.38 per diluted share, for the same period last
year.
In June 2001, the Financial Accounting Standards Board issued SFAS No. 142,
"Goodwill and Other Intangible Assets." Under the new rules, goodwill and
indefinite-lived intangible assets are no longer amortized but are reviewed
annually for impairment. Separable intangible assets that do not have an
indefinite life will continue to be amortized over their useful lives.
As discussed in our 2002 Annual Report, the required adoption of SFAS No.
142 is considered a change in accounting principle and the cumulative effect of
adopting this standard resulted in a non-cash after-tax charge in the first
quarter of fiscal 2003 of $581,000, or $(0.10) per diluted share. This amount
does not affect our on-going operations. The adoption of the new accounting
standard will result in a reduction in amortization expense of approximately $1
million.
Net income, after the cumulative effect of accounting change resulting from
the adoption of SFAS No. 142, for the three month period ended September 30,
2002 was $1,814,000, or $.30 per diluted share, compared to net income of
$2,182,000, or $.38 per diluted share, for the same period last year.
14
TANDY BRANDS ACCESSORIES, INC. AND SUBSIDIARIES
================================================================================
LIQUIDITY AND CAPITAL RESOURCES
For the three months ended September 30, 2002, our operating activities used
cash of $13,320,000 compared to $6,898,000 for the same period last year. We
attribute this increase in the use of cash to the timing of disbursements
related to fall season inventory procurement. Additionally, during fiscal 2002,
improved inventory control measures were introduced which reduced our use of
cash as compared to the same period in fiscal 2001.
Capital expenditures totaled $691,000 for the three months ended September
30, 2002, an increase of $542,000 from the same period last year. We attribute
this increase to the implementation of a distribution software application
during the first quarter of fiscal 2003. We anticipate that our capital
expenditures for fiscal 2003 will approximate our capital investments of
property and equipment for fiscal 2002. Capital commitments for fiscal 2003
include additional equipment for our distribution facility in Dallas, Texas, as
well as additional hardware and software applications. We expect to fund our
fiscal 2003 capital commitments through cash flows from operations and drawing
on our existing credit facility.
Generally, our primary sources of liquidity are cash flows from operations
and our line of credit. We have an $80,000,000 committed secured revolving
credit facility, which can be used for seasonal borrowings and letters of
credit. This credit facility is secured by substantially all of our assets along
with our subsidiaries' assets and requires us to maintain certain financial
covenants which, if not maintained, could adversely impact our liquidity
position. Our borrowings under our credit facility were $38,352,000 as of
September 30, 2002 and $54,956,000 as of September 30, 2001. As of September 30,
2002, we had approximately $33,816,000 of credit available to us under our
credit facility.
We have never paid a cash dividend on our common stock. We currently intend
to retain earnings for the foreseeable future to provide funds for the expansion
of our business and the reduction of debt. Our existing credit facility
restricts our ability to pay dividends.
We believe we have adequate financial resources and access to sufficient
credit lines to satisfy our future working capital needs.
OFF BALANCE SHEET ARRANGEMENTS
We do not have transactions, arrangements or relationships with "special
purpose" entities, nor do we have any off balance sheet debt.
CRITICAL ACCOUNTING POLICIES
The preparation of our consolidated financial statements in accordance with
accounting principles generally accepted in the United States requires the use
of estimates that affect the reported value of assets, liabilities, revenues and
expenses. These estimates are based on historical experience and various other
factors we believe to be reasonable under the circumstances, the results of
which form the basis for our conclusions. We continually evaluate the
information used to make these estimates as the business and economic
environment changes. Actual results may differ from these estimates under
different assumptions or conditions. The use of estimates is pervasive
throughout the consolidated financial statements, but the accounting policies
and estimates considered most critical are as follows:
REVENUES
We recognize revenue when merchandise is shipped to customers and title to
the goods has passed to the customer. We record sales returns and allowances at
the time we can reasonably estimate the amounts.
We perform periodic credit evaluations of our customers' financial
conditions and generally do not require collateral. Credit losses have
historically been within our expectations.
15
TANDY BRANDS ACCESSORIES, INC. AND SUBSIDIARIES
================================================================================
INVENTORIES
Inventories are stated at the lower of cost (principally standard cost
which approximates actual cost on a first-in, first-out basis) or market. Cost
includes materials, direct and indirect labor and factory overhead. Market, with
respect to raw materials, is replacement cost; and for work-in-process and
finished goods, it is net realizable value. If circumstances arise in which the
market value of items in inventory decline below cost, an inventory markdown
would be estimated and charged to expense in the period identified. We closely
monitor fashion trend items and anticipate additional inventory markdowns if
market indications in fashion trends justify further reserves.
GOODWILL
We adopted the provisions of SFAS No. 142, effective July 1, 2002. This
statement changed the accounting for goodwill and indefinite-lived intangible
assets from an amortization approach to an impairment-only approach. The SFAS
No. 142 goodwill impairment model is a two-step process. The first step compares
the fair value of a reporting unit that has goodwill assigned to it, to its
carrying value. We estimate the fair value of a reporting unit using discounted
cash flow analysis. If the fair value of the reporting unit is determined to be
less than its carrying value, a second step is performed to compute the amount
of goodwill impairment, if any. Step two allocates the fair value of the
reporting unit to the reporting unit's net assets other than goodwill. The
excess of the fair value of the reporting unit over the amounts assigned to its
net assets other than goodwill is considered the implied fair value of the
reporting unit's goodwill. The implied fair value of the reporting unit's
goodwill is then compared to the carrying value of its goodwill. Any shortfall
represents the amount of goodwill impairment.
We continually evaluate whether events and circumstances have occurred that
indicate the remaining balance of goodwill may not be recoverable. In evaluating
impairment, we estimate the sum of the expected future cash flows derived from
such goodwill. Such evaluations for impairment are significantly impacted by
estimates of future revenues, costs and expenses and other factors.
DERIVATIVES
Our risk management policy as it relates to derivative investments is
to mitigate, subject to market conditions, against interest rate risk. We do not
enter into any derivative investments for the purpose of speculative investment.
We reevaluate our overall risk management philosophy as business conditions
arise.
SEASONALITY
Our quarterly sales, net income and use of cash results are fairly
consistent throughout the fiscal year, with a seasonal increase during the
second quarter.
INFLATION
Although our operations are affected by general economic trends, we do not
believe inflation has had a material effect on our results of operations.
FORWARD-LOOKING STATEMENTS
This Form 10-Q contains forward looking statements that are based on
current expectations, estimates and projections about the industry in which we
operate, management's beliefs, and assumptions made by management. In addition,
other written or oral statements which constitute forward-looking statements may
be made by or on our behalf. Words such as "expect," "anticipate," "intend,"
"plan," "believe," "seek," "estimate," or variations of such words and similar
expressions are intended to identify forward-looking statements. These
statements are not guarantees of future performance and involve certain risks,
uncertainties and assumptions which are difficult to predict. Therefore, actual
outcomes and results may differ materially from what is expressed or forecasted
in these forward-looking statements. We undertake no obligation to update
publicly any forward-looking statements, whether as a result of new information,
future events or otherwise.
16
TANDY BRANDS ACCESSORIES, INC. AND SUBSIDIARIES
================================================================================
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are subject to interest rate risk on our long-term debt. We manage our
exposure to changes in interest rates by the use of variable and fixed interest
rate debt. In addition, we have hedged our exposure to changes in interest rates
on a portion of our variable debt by entering into an interest rate swap
agreement to lock in a fixed interest rate for a portion of these borrowings. At
September 30, 2002, our borrowings under our credit facility totaled
$38,352,000, bearing a weighted-average interest rate of 4.46%. On July 1, 2001,
we entered into a three year interest rate swap agreement with Wells Fargo Bank,
N.A., which expires on June 27, 2004, converting $30,000,000 of outstanding
indebtedness from a variable to a fixed interest rate. The average receive rate
is based on a 90-day LIBOR rate. At September 30, 2002, the receive rates
related to the interest rate swap were 1.86% and the pay rates related to
interest rate swap were 5.60%. Interest differentials paid or received under the
swap agreement are reflected as an adjustment to interest expense when paid. The
interest rate swap agreement represents a valid cash flow hedge investment under
SFAS No. 133. As such, during fiscal 2003 and 2002, changes in the fair value of
the interest rate swap were recognized as other comprehensive income with the
fair value at September 30, 2002, approximating ($2,184,000). The potential
impact of market conditions on the fair value of our indebtedness is not
expected to be material. Given that such lines of credit bear interest at
floating market interest rates, the fair value of amounts borrowed thereunder
approximates carrying value.
Theoretically, we are also exposed to market risk with respect to changes
in the global price level of certain commodities used in the production of our
products. We routinely purchase leather hides during the year for use in the
manufacture of men's belts. We also purchase a substantial amount of leather
items from third-party suppliers. An unanticipated material increase in the
market price of leather could increase the cost of these products to us and
therefore have a negative effect on our results of operations.
ITEM 4. CONTROLS AND PROCEDURES
Within the 90-day period prior to the date of this report, we carried out
an evaluation, under the supervision and with the participation of management,
including our Chief Executive Officer and our Chief Financial Officer, of the
effectiveness of the design and operation of our disclosure controls and
procedures pursuant to Rule 13a-14 of the Exchange Act. Based upon that
evaluation, our Chief Executive Officer and our Chief Financial Officer
concluded that our disclosure controls and procedures are effective in timely
alerting them to material information relating to us (including our consolidated
subsidiaries) required to be included in our Exchange Act filings.
There have been no significant changes in our internal controls or in other
factors that could significantly affect internal controls subsequent to the date
we carried out our evaluation.
17
TANDY BRANDS ACCESSORIES, INC. AND SUBSIDIARIES
================================================================================
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
We held our 2002 Annual Meeting of Stockholders on October 16, 2002. The
stockholders voted on the following matters at the meeting:
1. The re-election of J.S.B. Jenkins to our board of directors to serve as
a Class III director for a three year term expiring at the 2005 annual meeting
of stockholders, or until his successor is elected and qualified. The
stockholders re-elected Mr. Jenkins to our board of directors. The following
table indicates the number of votes cast for, the number of votes withheld and
the number of broker non-votes with respect to the election of Mr. Jenkins.
<Table>
<Caption>
For Withheld Broker Non-Votes
--- -------- ----------------
4,778,580 692,611 -0-
</Table>
The following directors' terms continued after the 2002 Annual Meeting:
Ms. Colombe M. Nicholas
Dr. James F. Gaertner
Mr. Gene Stallings
Mr. Roger R. Hemminghaus
Mr. C.A. Rundell, Jr.
2. To adopt and approve the Tandy Brands Accessories, Inc. 2002 Omnibus
Plan. The stockholders approved this proposal. The following table indicates the
number of votes cast for, the number of votes cast against, the number of
abstentions and the number of broker non-votes with respect to this matter.
<Table>
<Caption>
For Against Abstain Broker Non-Votes
--- ------- ------- ----------------
2,144,936 1,340,204 59,481 1,926,569
</Table>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
A list of exhibits filed as part of this report is set forth in the Exhibit
Index, which immediately precedes such exhibits and is incorporated herein by
reference.
(b) Reports on Form 8-K.
We filed a Form 8-K on October 17, 2002 to report the issuance of the press
release announcing our financial results for the first quarter of fiscal 2003.
18
TANDY BRANDS ACCESSORIES, INC. AND SUBSIDIARIES
================================================================================
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TANDY BRANDS ACCESSORIES, INC.
(Registrant)
/s/ J.S.B. Jenkins
-----------------------------------------
J.S.B. Jenkins
President and Chief Executive Officer
/s/ Mark J. Flaherty
-----------------------------------------
Mark J. Flaherty
Chief Financial Officer
Date: November 11, 2002
19
TANDY BRANDS ACCESSORIES, INC. AND SUBSIDIARIES
================================================================================
CERTIFICATION BY CHIEF EXECUTIVE OFFICER
I, J.S.B. Jenkins, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Tandy Brands
Accessories, Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a. designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;
b. evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c. presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
a. all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b. any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: November 11, 2002 /s/ J.S.B. Jenkins
--------------------------
J.S.B. Jenkins
Chief Executive Officer
20
TANDY BRANDS ACCESSORIES, INC. AND SUBSIDIARIES
================================================================================
CERTIFICATION BY CHIEF FINANCIAL OFFICER
I, Mark J. Flaherty, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Tandy Brands
Accessories, Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a. designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;
b. evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c. presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
a. all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b. any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: November 11, 2002 /s/ Mark J. Flaherty
--------------------------
Mark J. Flaherty
Chief Financial Officer
21
TANDY BRANDS ACCESSORIES, INC. AND SUBSIDIARIES
================================================================================
EXHIBIT INDEX
<Table>
<Caption>
Incorporated by Reference
(if applicable)
----------------------------------------------------------------
Exhibit Number and Description Form Date File No. Exhibit
- ---------------------------------------------- ---- ---- -------- -------
(3) Articles of Incorporation and By-laws
3.1 Certificate of Incorporation
of Tandy Brands Accessories, Inc. S-1 11/02/90 33-37588 3.1
3.2 By-laws of Tandy Brands
Accessories, Inc. S-1 11/02/90 33-37588 3.2
3.3 Amendment No. 1 to By-laws of
Tandy Brands Accessories, Inc. 10-Q 5/10/02 0-18927 3.3
(4) Instruments defining the rights of
security holders, including indentures
4.1 Certificate of Designations,
Powers, Preferences, and Rights of
Series A Junior Participating
Cumulative Preferred Stock of Tandy
Brands Accessories, Inc. S-1 11/02/90 33-37588 4.1
4.2 Form of Common Stock Certificate
of Tandy Brands Accessories, Inc. S-1 11/02/90 33-37588 4.2
4.3 Form of Preferred Share Purchase
Rights Certificate of Tandy Brands
Accessories, Inc. S-1 11/02/90 33-37588 4.3
4.4 Form of Rights Certificate of
Tandy Brands Accessories, Inc. 8-K 11/02/99 0-18927 4.5
4.5 Amended and Restated
Rights Agreement dated October 19,
1999, between Tandy Brands
Accessories, Inc. and Bank Boston,
N.A. 8-K 11/02/99 0-18927 4.6
4.6 Amendment to Rights Agreement dated
October 19, 1999, between Tandy
Brands Accessories, Inc. and Fleet
National Bank (f.k.a. Bank Boston,
N.A.) 10-Q 05/10/02 0-18927 4.7
(10) Material Contracts
10.1 Tandy Brands
Accessories, Inc. 1991
Stock Option Plan* S-1 11/02/90 33-37588 10.8
10.2 Form of Stock Option
Agreement - 1991 Stock
Option Plan* S-1 11/02/90 33-37588 10.9
</Table>
22
TANDY BRANDS ACCESSORIES, INC. AND SUBSIDIARIES
================================================================================
EXHIBIT INDEX
<Table>
<Caption>
Incorporated by Reference
(if applicable)
----------------------------------------------------------------
Exhibit Number and Description Form Date File No. Exhibit
- ---------------------------------------------- ---- ---- -------- -------
10.3 Tandy Brands Accessories,
Inc. Benefit Restoration
Plan and related Trust
Agreement and
Amendments No. 1 and 2
thereto* 10-K 09/25/97 0-18927 10.14
10.4 Form of Indemnification
Agreement between
Tandy Brands
Accessories, Inc. and
each of its Directors and
Officers S-1 11/02/90 33-37588 10.15
10.5 Office Lease Agreement
dated March 6, 1991,
between John Hancock
Mutual Life Insurance
Co. and Tandy Brands
Accessories, Inc. relating
to the corporate offices S-1 11/02/90 33-37588 10.16
10.6 Tandy Brands
Accessories, Inc. Non-
Qualified Formula Stock
Option Plan for Non-
Employee Directors* S-8 02/10/94 33-75114 28.1
10.7 Tandy Brands
Accessories, Inc. 1993
Employee Stock Option
Plan and form of Stock
Option Agreement
thereunder* S-8 02/10/94 33-75114 28.2
10.8 Tandy Brands
Accessories, Inc. Non-
Qualified Stock Option
Plan for Non-Employee
Directors* S-8 02/10/94 33-75114 28.3
10.9 Tandy Brands
Accessories, Inc. 1995
Stock Deferral Plan for
Non-Employee Directors* S-8 06/03/96 33-08579 99.1
10.10 Tandy Brands
Accessories, Inc. 1997
Employee Stock Option
Plan* S-8 12/12/97 33-42211 99.2
</Table>
23
TANDY BRANDS ACCESSORIES, INC. AND SUBSIDIARIES
================================================================================
EXHIBIT INDEX
<Table>
<Caption>
Incorporated by Reference
(if applicable)
----------------------------------------------------------------
Exhibit Number and Description Form Date File No. Exhibit
- ---------------------------------------------- ---- ---- -------- -------
10.11 Tandy Brands Accessories,
Inc. Employees Investment
Plan as Amended and
Restated Effective June 1,
2000* 10-K 09/26/00 0-18927 10.39
10.12 Credit Agreement Among
Tandy Brands Accessories,
Inc. as the Borrower, Wells
Fargo HSBC Trade Bank,
N.A. as Administrative Agent and as
Lender, and certain Financial
Institutions, as Lenders and Wells
Fargo Bank, N.A. as Arranger as of
June 27, 2001 10-K 09/25/01 0-18927 10.42
10.13 ISDA Master Agreement
between Tandy Brands
Accessories, Inc. and
Wells Fargo Bank, N.A. ,
dated as of June 27, 2001 10-K 09/25/01 0-18927 10.42
10.14 Tandy Brands
Accessories, Inc. Stock Purchase
Program* S-8 02/12/02 33-55436 99.5
10.15 Limited Consent and
Waiver dated November 5, 2001
between Tandy Brands Accessories,
Inc. and Wells Fargo HSBC Trade
Bank, N.A. as Administrative Agent
under the Agreement 10-Q 11/13/01 0-18927 10.43
10.16 Amendment No. 2 to
the Tandy Brands
Accessories, Inc. 1997
Employee Stock Option Plan * 10-Q 5/10/02 0-18927 10.44
10.17 Amendment No. 4 to the Tandy Brands
Accessories, Inc. Nonqualified
Formula Stock Option Plan For
Non-Employee Directors * 10-Q 5/10/02 0-18927 10.44
10.18 Nonqualified Stock Option Agreement
for Non-Employee Directors, dated
October 16, 2001, by and between
Tandy Brands Accessories, Inc. and
Dr. James F. Gaertner* S-8 5/15/02 33-88276 10.2
</Table>
24
TANDY BRANDS ACCESSORIES, INC. AND SUBSIDIARIES
================================================================================
EXHIBIT INDEX
<Table>
<Caption>
Incorporated by Reference
(if applicable)
----------------------------------------------------------------
Exhibit Number and Description Form Date File No. Exhibit
- ---------------------------------------------- ---- ---- -------- -------
10.19 Nonqualified Stock Option
Agreement for Non-Employee
Directors, dated October 16, 2001,
by and between Tandy Brands
Accessories, Inc. and Marvin J.
Girouard* S-8 5/15/02 33-88276 10.3
10.20 Nonqualified Stock Option Agreement
for Non-Employee Directors, dated
October 16, 2001, by and between
Tandy Brands Accessories, Inc. and
Gene Stallings* S-8 5/15/02 33-88276 10.4
10.21 Nonqualified Stock Option Agreement
for Non-Employee Directors, dated
October 16, 2001, by and between
Tandy Brands Accessories, Inc. and
Roger R. Hemminghaus* S-8 5/15/02 33-88276 10.5
10.22 Nonqualified Stock Option Agreement
for Non-Employee Directors, dated
October 16, 2001, by and between
Tandy Brands Accessories, Inc. and
Colombe M. Nicholas* S-8 5/15/02 33-88276 10.6
10.23 First Amendment to Credit Agreement
between Tandy Brands Accessories,
Inc. and Wells Fargo HSBC Trade
Bank, NA, dated June 28, 2002 10-K 9/27/02 0-18927 10.23
10.24 Tandy Brands Accessories, Inc.
2002 Omnibus Plan*** N/A N/A N/A N/A
(99) Other Exhibits
99.1 Certification pursuant to Section
906 of Sarbanes-Oxley Act (Chief
Executive Officer)** N/A N/A N/A N/A
99.2 Certification pursuant to Section
906 of Sarbanes-Oxley Act (Chief
Financial Officer)** N/A N/A N/A N/A
</Table>
* Management contract or compensatory plan
** Filed herewith
25