================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 11-K ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended December 31, 2002 Commission File Number 0-18927 TANDY BRANDS ACCESSORIES, INC. STOCK PURCHASE PLAN (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.) ================================================================================ CONTENTS <Table> <Caption> Page ---- TABLE OF CONTENTS ....................................................... 2 CERTIFIED PUBLIC ACCOUNTANT'S REPORT .................................... 5 STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS ......................... 6 STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS .............. 7 NOTES TO FINANCIAL STATEMENTS ........................................... 8-10 SIGNATURE PAGE .......................................................... 11 CONSENT OF INDEPENDENT ACCOUNTANTS ...................................... 12 </Table> 2 TANDY BRANDS ACCESSORIES, INC. STOCK PURCHASE PROGRAM FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2002 AND 2001 (WP LOGO) 3 TANDY BRANDS ACCESSORIES, INC. STOCK PURCHASE PROGRAM FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2002 AND 2001 TABLE OF CONTENTS <Table> Report of Independent Auditors ........................................... 5 Financial Statements: Statements of Net Assets Available for Benefits ..................... 6 Statements of Changes in Net Assets Available for Benefits .......... 7 Notes to Financial Statements ............................................ 8 </Table> (WP LOGO) 4 (WHITLEY PENN LETTERHEAD) (WHITLEY PENN LOGO) REPORT OF INDEPENDENT AUDITORS To the Administrative Committee and Participants of Tandy Brands Accessories, Inc. Stock Purchase Program We have audited the accompanying statements of net assets available for benefits of Tandy Brands Accessories, Inc. Stock Purchase Program as of December 31, 2002 and 2001, and the related statements of changes in net assets available for benefits for the years then ended. 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 auditing standards generally accepted in the United States of America. 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 examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes 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 Tandy Brands Accessories, Inc. Stock Purchase Program as of December 31, 2002 and 2001, and the changes in its net assets available for benefits for the years then ended in conformity with accounting principles generally accepted in the United States of America. /s/ WHITLEY PENN Fort Worth, Texas March 5, 2003 5 TANDY BRANDS ACCESSORIES, INC. STOCK PURCHASE PROGRAM STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS <Table> <Caption> DECEMBER 31, 2002 2001 ---------- --------- ASSETS Cash and cash equivalents $ 865,822 $ 747,338 Employer contribution receivables 430,164 371,173 ---------- ---------- Total assets 1,295,986 1,118,511 LIABILITIES -- -- ---------- ---------- NET ASSETS AVAILABLE FOR BENEFITS $1,295,986 $1,118,511 ========== ========== </Table> See accompanying notes. 6 TANDY BRANDS ACCESSORIES, INC. STOCK PURCHASE PROGRAM STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS <Table> <Caption> YEAR ENDED DECEMBER 31, 2002 2001 ---------- ---------- ADDITIONS TO NET ASSETS Contributions: Employee contributions $ 865,822 $747,338 Employer contributions 430,164 371,173 ---------- ---------- Total additions to net assets 1,295,986 1,118,511 DEDUCTIONS FROM NET ASSETS Benefit distributions 1,118,511 1,262,966 ---------- ---------- Net increase (decrease) 177,475 (144,455) NET ASSETS AVAILABLE FOR BENEFITS Beginning of year 1,118,511 1,262,966 ---------- ---------- End of year $1,295,986 $1,118,511 ========== ========== </Table> See accompanying notes. 7 TANDY BRANDS ACCESSORIES, INC. STOCK PURCHASE PROGRAM NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2002 A. DESCRIPTION OF PLAN The following description of the Tandy Brands Accessories, Inc. Stock Purchase Program (the "Plan") sponsored by Tandy Brands Accessories, Inc. (the "Company") provides only general information. Participants should refer to the Plan document for a more complete description of the Plan's provisions. GENERAL The purpose of the Plan is to assist the employees of the Company in building personal net worth and to encourage ownership in the Company by providing a Plan for regular investment in the Company's common stock. Employees who are of legal age, continuously employed for six months or more, and work a minimum of twenty hours per week are eligible to participate in the Plan. Once an eligible employee reaches two years of continuous service, participation in the Tandy Brands Accessories, Inc. Employees Investment Plan is required to continue participation in the Plan. CONTRIBUTIONS A participant may contribute to the Plan through authorized payroll deduction of 5% or 10% of their qualifying compensation. The Company matches 25% of the participant contributions for eligible employees with less than two years of continuous employment with the Company. Eligible employees with two years of continuous employment that participate in the Tandy Brands Accessories, Inc. Employees Investment Plan receive a 50% matching contribution from the Company. The employee payroll deduction is accumulated and the Company contribution is determined and accrued monthly. The total contributions for each month are credited to the participants' accounts as stock on the basis of a price equal to the average of the closing market price of the stock for the month. PARTICIPANT ACCOUNTS Each participant's account is credited with the participant's contribution and the Company's contribution for each month. Participant accounts are valued on a monthly basis in accordance with the Plan's provisions. VESTING Participants are immediately vested in all contributions plus actual earnings thereon. 8 TANDY BRANDS ACCESSORIES, INC. STOCK PURCHASE PROGRAM NOTES TO FINANCIAL STATEMENTS (CONTINUED) A. DESCRIPTION OF PLAN - CONTINUED PAYMENT OF BENEFITS Each participant's account is distributed by approximately February 15 following the end of each calendar year. Fractional shares are retained; however, fractional shares pertaining to former employees may be paid in cash in accordance with the Plan's provisions. B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF ACCOUNTING The financial statements of the Plan are prepared using the accrual method of accounting. 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. INVESTMENT VALUATION The Company stock is valued at its quoted market price. This investment is subject to market risks customarily associated with equity investments. PAYMENT OF BENEFITS Benefits are recorded when paid. Benefits payable at December 31, 2002 and 2001, were $1,295,986 and $1,118,511, respectively. C. ADMINISTRATION OF PLAN ASSETS The Plan's assets, which consist principally of cash, are held by the Company. Contributions are held and managed by the Company, which invests cash 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. 9 TANDY BRANDS ACCESSORIES, INC. STOCK PURCHASE PROGRAM NOTES TO FINANCIAL STATEMENTS (CONTINUED) D. AVERAGE SHARE PRICE The average share prices by month for the Company's common stock for the year ended December 31, 2002, were as follows: <Table> <Caption> AVERAGE MONTH SHARE PRICE - ----- ----------- January $ 7.9567 February 7.9647 March 9.1055 April 9.9691 May 11.1523 June 11.7565 July 11.0099 August 9.4787 September 9.1909 October 9.0753 November 9.3349 December 9.6166 </Table> E. TAX STATUS The Plan is not a qualified plan as determined by the Internal Revenue Code. 10 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. STOCK PURCHASE PLAN /s/ J.S.B. Jenkins --------------------------------------- J.S.B. Jenkins Administrative Committee Member Date: March 28, 2003 11 CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the incorporation of our report dated March 5, 2003, accompanying the financial statements included in this annual report on Form 11-K, in the registration statement of Form S-8 (Registration No 33-41262) pertaining to the Tandy Brands Accessories, Inc. Stock Purchase Program. Fort Worth, Texas March 5, 2003 12