-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, M/6GUOLc3eQawGinC8rKomY1uKXFqXd3b4SZiywQZ8ntV+G+QYwWEaCIcXlFdcCR F8uSIO3BsW8CpxtNAGTB+w== 0000869487-97-000004.txt : 19970223 0000869487-97-000004.hdr.sgml : 19970223 ACCESSION NUMBER: 0000869487-97-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970214 DATE AS OF CHANGE: 19970221 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: TANDY BRANDS ACCESSORIES INC CENTRAL INDEX KEY: 0000869487 STANDARD INDUSTRIAL CLASSIFICATION: 2300 IRS NUMBER: 752349915 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-18927 FILM NUMBER: 97537214 BUSINESS ADDRESS: STREET 1: 690 E LAMAR BLVD STE 200 CITY: ARLINGTON STATE: TX ZIP: 76011 BUSINESS PHONE: 8175480090 MAIL ADDRESS: STREET 1: 690 E LAMAR BLVD CITY: ARLINGTON STATE: TX ZIP: 76011 10-Q 1 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 Period Ended December 31, 1996 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) (Zip Code) Registrant's telephone number, including area code (817) 548-0090 _______________________________________________________________________________ Former name, former address and former fiscal year, if changed since last report 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 the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date. Class Number of shares outstanding at December 31, 1996 - - -------------------------- ---------------------------------------------- Common stock, $1 par value 5,446,633 TANDY BRANDS ACCESSORIES, INC. Form 10-Q Quarter Ended December 31, 1996 TABLE OF CONTENTS PART I -- FINANCIAL INFORMATION Item Page No. 1. Financial Statements 3 - 6 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7 - 8 PART II -- OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders 9 6. Exhibits and Reports on Form 8-K 9 SIGNATURES 10 INDEX TO EXHIBITS AND EXHIBITS 11 - 13 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) Three Months Six Months Ended Ended December 31 December 31 ----------------- ----------------- 1996 1995 1996 1995 ------- ------- ------- ------- Gross sales, less discounts, returns and allowances $29,879 $24,406 $53,540 $47,109 Royalty, interest and other income 50 30 52 95 ------ ------ ------ ------ Total revenues 29,929 24,436 53,592 47,204 ------ ------ ------ ------ Costs and expenses: Cost of goods sold 18,993 14,898 33,721 28,999 Selling, general and administrative 7,473 7,284 13,995 13,799 Depreciation and amortization 428 549 874 1,066 Interest 355 400 641 723 ------ ------ ------ ------ Total costs and expenses 27,249 23,131 49,231 44,587 ------ ------ ------ ------ Income before income taxes 2,680 1,305 4,361 2,617 Provision for income taxes (980) (464) (1,598) (930) ------ ------ ----- ----- Net Income $1,700 $841 $2,763 $1,687 ====== ====== ====== ====== Average common shares and common share equivalents 5,464 5,347 5,450 5,335 ===== ===== ===== ===== Earnings per average common share and common share equivalent $0.31 $0.16 $0.51 $0.32 ===== ===== ===== ===== Cash dividends per common share None None None None 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) December 31, June 30, 1996 1996 --------------- ---------- (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 551 $ 88 Accounts receivable, net 15,623 13,746 Inventories: Raw materials and work in process 7,037 6,046 Finished goods 25,760 20,564 Other current assets 1,818 2,505 ------ ------ Total current assets 50,789 42,949 ------ ------ Property and equipment, at cost 9,745 9,326 Accumulated depreciation (4,759) (4,246) ------ ------ Net property and equipment 4,986 5,080 ------ ------ Other assets: Goodwill, less amortization 8,232 8,526 Other assets, less amortization 1,798 1,856 ------ ------ Total other assets 10,030 10,382 ------ ------ TOTAL ASSETS $ 65,805 $ 58,411 ====== ====== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Notes payable $ 3,000 $ 2,200 Accounts payable 3,555 4,624 Accrued expenses 3,168 2,043 ------ ------ Total current liabilities 9,723 8,867 ------ ------ Other liabilities: Notes payable 15,800 12,400 Other noncurrent liabilities 268 297 ------ ------ Total other liabilities 16,068 12,697 ------ ------ Stockholders' equity: Preferred stock, $1 par value, 1,000,000 shares authorized, non-issued Common stock, $1 par value, 10,000,000 shares authorized, 5,446,633 shares and 5,382,267 shares issued and outstanding as of December 31, 1996, and June 30, 1996, respectively 5,447 5,382 Additional paid-in capital 18,391 18,038 Retained Earnings 16,176 13,427 ------ ------ Total stockholders' equity 40,014 36,847 ------ ------ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 65,805 $ 58,411 ====== ====== 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 Statement of Cash Flows (Dollars in thousands) (Unaudited) Six Months Ended December 31 -------------------------- 1996 1995 ---------- ---------- Cash Flows from operating activities: Net income $ 2,763 $ 1,687 Adjustments to reconcile net income to net cash provided by (used for) continuing activities: Depreciation 523 520 Amortization 429 624 Other (38) 50 Change in assets and liabilities: Accounts receivable (1,877) (1,517) Inventories (6,187) 6,118 Other assets 599 182 Accounts payable (1,069) (2,736) Accrued expenses 1,125 (134) ------- ------- Net cash used for (provided by) operating activities (3,732) 4,794 ------- ------- Cash flows from investing activities: Purchases of property and equipment (423) (418) ------- ------- Net cash used for investing activities (423) (418) ------- ------- Cash flows from financing activities: Exercise of employee stock options, net of purchase of treasury stock -- 20 Sale of stock to stock purchase program 418 482 Proceeds from borrowings 25,950 14,070 Payments under borrowings (21,750) (19,995) ------- ------- Net cash provided by (used for) financing activities 4,618 (5,423) ------- ------- Net increase (decrease) in cash and cash equivalents 463 (1,047) Cash and cash equivalents at beginning of period 88 1,488 ------- ------- Cash and cash equivalents at end of period $ 551 $ 441 ======= ======= Supplemental disclosures of cash flow information: Cash paid during the period for: Interest $ 774 $ 757 Income Taxes 816 636 Noncash activities: None The accompanying notes are an integral part of these condensed financial statements. 5 Tandy Brands Accessories, Inc. and Subsidiaries Notes to Condensed 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 and six month periods ended December 31, 1996, are not necessarily indicative of the results that may be expected for the year ended June 30, 1997. For further information, refer to the consolidated financial statements and footnotes thereto included in the Tandy Brands Accessories, Inc. and Subsidiaries Annual Report on Form 10-K for the year ended June 30, 1996. 6 MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL CONDITION AND RESULTS OF OPERATIONS TANDY BRANDS ACCESSORIES, INC. AND SUBSIDIARIES GENERAL Tandy Brands Accessories, Inc. (the "Company") manufactures and markets men's, women's and children's accessories. The Company's business is conducted primarily in the United States. Historically, the Company's sales and operating results are generally consistent throughout the fiscal year, but there is normally a seasonal increase during the second quarter. Although the Company's operations are affected by general economic trends, the Company does not believe that inflation has had a material effect on the results of operations. RESULTS OF OPERATIONS Three and Six Months Ended December 31, 1996, Compared to the Three and Six Months Ended December 31, 1995. For the three month period ended December 31, 1996, net sales increased 22% to $29,879,000, as compared to net sales of $24,406,000 for the same period last year. Net income for the second quarter increased 102% to $1,700,000, or $ .31 per share, compared to net income of $841,000, or $ .16 per share, for the same three months last year. For the six month period ended December 31, 1996, net sales increased 14% to $53,540,000, as compared to net sales of $47,109,000 for the same period last year. Net income for the six month period increased 64% to $2,763,000, or $ .51 per share, compared to net income of $1,687,000, or $ .32 per share, for the same six months last year. The net sales increases for the three and six months reflect sales increases of women's products of $4,429,000 and $5,860,000, respectively, as compared to the same periods of the prior year. Consistent with Company historical trends, these increased women's sales were made at lower gross margins compared to men's product sales. However, these women's product sales incur lower selling, general and administrative expenses than men's product sales which resulted in improved net income performance as a percentage of sales compared to the three and six months results for the prior year. Additionally, decreased selling, general and administrative expenses as a percent of sales for the three and six month periods ended December 31, 1996, reflect the results of certain strategic initiatives in fiscal 1996, which included curtailment of many variable selling, general and administrative expenses. Men's products had net sales increases over the prior year in both the three and six month periods of $1,257,000 and $499,000, respectively. Men's belt and wallet sales increases offset sales decreases in the Company's neckwear business caused by loss of customers and fashion trends moving toward more casual men's business dress. The effective tax rate for the three and six months ended December 31, 1996, was 36.6% compared to 35.5% for the same prior year periods. 7 LIQUIDITY AND CAPITAL RESOURCES The Company's primary sources of liquidity are cash flows from operations and the Company's lines of credit. The Company has two unsecured bank credit lines aggregating $45,000,000 which can be used for seasonal borrowings and letters of credit. The Company also has an unsecured line of credit of $1,500,000CND with a Canadian bank for seasonal borrowings, letters of credit and foreign exchange forward contract requirements of the Company's Canadian operations. The Company's borrowings under its credit lines increased $1,248,000 to $18,800,000 from $17,552,000 as of December 31, 1996 and 1995, respectively. For the six months ended December 31, 1996, the Company's operating activities used cash of $3,732,000. The use of cash resulted primarily from a $6,187,000 increase in inventories, a $1,877,000 increase in accounts receivable, a decrease in accounts payable of $1,069,000 offset by net income of $2,763,000. The net use of cash relates to the increasing sales trends for the first two quarters of fiscal 1997 requiring increased inventory levels and booked orders for shipment in the Company's third fiscal quarter. Capital expenditures were $423,000 for the six months ended December 31, 1996, which approximated the $418,000 expended for the same period of the prior year. The Company believes that its cash flows from operations and borrowing available under bank lines of credit are sufficient to fund its operations. 8 TANDY BRANDS ACCESSORIES, INC. PART II - OTHER INFORMATION ITEM 4. Submission of Matters to a Vote of Security Holders. (a) The annual meeting of stockholders was held on November 4, 1996. (b) The matters voted upon were as follows: (i) The election of two directors in Class III to serve for a three- year term expiring in 1999, or until their successors are elected and qualified. The number of votes cast for and against the election of each nominee, as well as the number of abstentions and broker non-votes with respect to the election of each niminee were as follows: Mr. Clayton E. Niles -------------------- For 4,465,918 Against/Withheld 82,431 Abstain 0 Broker Non-Votes 0 Mr. J.S.B. Jenkins ------------------ For 4,525,380 Against/Withheld 22,969 Abstain 0 Broker Non-Votes 0 Directors whose terms continued after the annual meeting are as follows: Mr. C.A. Rundell, Jr. Mr. Robert E. Runice Dr. James F. Gaertner Ms. Maxine Clark (ii) The approval of the amendment to the Tandy Brands Accessories, Inc. Nonqualified Formula Stock Option Plan for Non-Employee Directors (the "Plan"). The number of votes cast for and against the approval of the amendment to the Plan, as well as the number of abstentions and broker non-votes with respect to the approval of the amendment to the Plan were as follows: For 3,930,010 Against/Withheld 302,362 Abstain 315,977 Broker Non-Votes 0 ITEM 6. Exhibits and Reports on Form 8-K. No reports on Form 8-K were filed during the quarter ended December 31, 1996. The exhibits filed as a part of this report are listed below. Exhibit No. Description 11 Statement Regarding Computation of Per Share Earnings 27 Financial Data Schedule 8 TANDY BRANDS ACCESSORIES, INC. 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/ Stan Ninemire ------------------------------------- Stan Ninemire Senior Vice President, Chief Financial Officer and Treasurer Date: February 14, 1997 10 TANDY BRANDS ACCESSORIES, INC. EXHIBIT INDEX Sequen- tially Incorporated by Reference Numbered (If applicable) Exhibit Number and Description Page Form Date File No. Exhibit - - ------------------------------ -------- ---- --------- -------- ------- (4) Instruments defining the rights of security holders, including indentures 4.1 Certificate of N/A S-1 11/02/90 33-37588 4.1 Designations, Powers, Preferences and Rights of Series A Junior Participating Cumulative Preferred Stock of Tandy Brands Accessories, Inc. 4.2 Form of Common N/A S-1 11/02/90 33-37588 4.2 Stock Certificate of Tandy Brands Accessories, Inc. 4.3 Form of Preferred N/A S-1 11/02/90 33-37588 4.3 Share Purchase Rights Certificate of Tandy Brands Accessories, Inc. 4.4 Rights agreement N/A S-1 11/02/90 33-37588 10.5 dated November 7, 1990, between Tandy Brands Accessories, Inc. and First National Bank of Boston (11) Statement re: Computation of per share earnings 11.1 Earnings per share 12 N/A N/A N/A N/A statement (27) Financial Statement Schedule 27.1 Financial statement schedule 13 N/A N/A N/A N/A 11 TANDY BRANDS ACCESSORIES, INC. Exhibit 11. Statement Regarding Computation of Per Share Earnings. Earnings per Share - Earnings per share is determined by dividing net income by the average number of common shares outstanding plus common stock equivalents. Common stock equivalents consist of shares issuable under outstanding stock options reduced by shares assumed to be purchased from the proceeds of such options. Earnings per share, as presented, is both primary and fully diluted. Three Months Six Months Ended Ended December 31 December 31 ---------------------- ---------------------- 1996 1995 1996 1995 ---------- ---------- ---------- ---------- Weighted average common shares outstanding 5,432,000 5,312,000 5,418,000 5,299,000 Common share equivalents 32,000 35,000 32,000 36,000 ---------- ---------- --------- --------- Average common shares and common share equivalents 5,464,000 5,347,000 5,450,000 5,335,000 ========== ========== ========= ========= 12 TANDY BRANDS ACCESSORIES, INC. Exhibit 27. Financial Data Schedule This schedule contains summary financial information extracted from Tandy Brands Accessoiries, Inc.'s December 31, 1996, Form 10-Q and is qualified in its entirety by reference to such form 10-Q filings. Dollars are in thousands. EX-27 2
5 1,000 6-MOS JUN-30-1997 DEC-31-1996 551 0 15,623 877 32,797 50,789 9,745 4,759 65,805 9,723 0 0 0 5,447 0 65,805 53,540 53,592 33,721 33,721 0 0 641 4,361 1,598 2,763 0 0 0 2,763 .51 .51
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