8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of Report:
(Date of earliest event reported)

August 16, 2005

TANDY BRANDS ACCESSORIES, INC.

(Exact name of registrant as specified in charter)

Delaware	0-18927	75-2349915
(State or other jurisdiction of	(Commission File Number)	(IRS Employer Identification
incorporation or organization)		No.)

690 East Lamar Blvd., Suite 200
Arlington, Texas 76011
(Address of principal executive offices and zip code)

(817) 265-4113
(Registrant’s telephone
number, including area code)

N/A
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425).

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12).

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)).

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)).

TABLE OF CONTENTS

Acknowledgment and Release Agreement

Press Release

Item 1.01 Entry into a Material Definitive Agreement.

     On August 19, 2005, the Board of Directors of Tandy Brands Accessories, Inc. (the “Company”), entered into an Acknowledgment and Release Agreement (the “Agreement”) with J.S.B. Jenkins settling amounts owed to him under the Tandy Brands Accessories, Inc. Supplemental Executive Retirement Plan (the “Plan”). The Board of Directors voted to terminate the Plan on August 2, 2005, effective September 2, 2005. On the effective date of the termination of the Plan, Mr. Jenkins will be the only actively employed participant in the Plan.

     Under the Agreement, Mr. Jenkins waives his right to any benefit which he had accrued under or to which he would be entitled as a result of the termination of the Plan in return for (i) the balance, as of the effective date of the termination of the Plan and after the payment of any other benefits due and payable under the Plan to any other participants in the Plan, of any funds remaining in the rabbi trust (the “Trust”) established by the Company for the purpose of setting aside amounts to assist the Company in satisfying its obligation under the Plan, plus (ii) beginning with the 2006 fiscal year and continuing until June 30, 2008, an additional $330,593 for each such fiscal year, which will be accrued on the books of the Company, or, at the Company’s discretion, contributed to the Trust. For the additional accrual or contribution of $330,593 per fiscal year until June 30, 2008, Mr. Jenkins must remain employed with the Company for each such fiscal year and be employed with the Company on the last day of any such fiscal year. The funds remaining in the Trust, together with any additional contributions made by the Company to the Trust in satisfaction of it obligations under the Agreement, will continue to be invested under the terms of the Trust. Any amounts that are not contributed to the Trust, but are accrued on the books of the Company shall accrue interest at a rate per annum equal to the Company’s cost of borrowing in effect from time to time. Mr. Jenkins may elect payment of the benefits described in the Agreement either as a lump sum payment after his termination or as a designated number of annual payments after his termination.

     The Agreement is set forth in the attached Exhibit 10.45 and is incorporated herein by reference.

Item 2.02 Results of Operations and Financial Condition.

     Pursuant to Item 2.02 of Form 8-K, the information contained in Item 9.01(c) and this Item 2.02 is furnished to, but not filed with, the Securities and Exchange Commission for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and, therefore, shall not be incorporated by reference in any filing under the Securities Act of 1933, as amended.

     On August 22, 2005, the Company issued a press release announcing its financial results for the fourth quarter ended June 30, 2005. A copy of the press release is furnished herewith as Exhibit 99 and is incorporated herein by reference.

Item 8.01 Other Events.

     The Board of Directors on August 16, 2005, declared a quarterly dividend of $0.0275 per common share that will be payable October 20, 2005, to shareholders of record at the close of

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business on September 30, 2005. A copy of a press release announcing the dividend is attached hereto as Exhibit 99.

Item 9.01(c)Exhibits.

Exhibit 10.45	Acknowledgment and Release Agreement.
Exhibit 99	Press Release, dated August 22, 2005.

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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 hereunto duly authorized.

	TANDY BRANDS ACCESSORIES, INC.
Date: August 22, 2005	By:	/s/ J.S.B. Jenkins
		J.S.B. Jenkins
		President and Chief Executive Officer

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EX-10.45

EXHIBIT 10.45

ACKNOWLEDGEMENT AND RELEASE AGREEMENT

     J.S.B. Jenkins, President and CEO of Tandy Brands Accessories, Inc. (the “Company”), an individual (hereinafter referred to as “Executive”), and the Company, in consideration of the mutual agreements and covenants set forth in this Acknowledgement and Release Agreement (“Agreement”), hereby agree as follows:

W I T N E S S E T H:

     WHEREAS, the Company established the Tandy Brands Accessories, Inc. Supplemental Executive Retirement Plan (the “SERP”), effective as of January 1, 2003, to provide retirement income to a select group of key management personnel and highly compensated employees who contribute materially to the continued growth, development and future of the business success of the Company;

     WHEREAS, Executive was a participant in and had accrued a benefit under the terms of the SERP;

     WHEREAS, the Company has determined that it is in the Company’s best interest that the SERP be terminated;

     WHEREAS, Section 5.1 of the SERP provides that the Company reserves the right to amend or terminate the plan when, in the sole opinion of the Company, such amendment or termination is advisable;

     WHEREAS, the Company and Executive have mutually agreed that, in connection with the termination of the SERP, it is in the Company’s and Executive’s best interests to enter into this Agreement pursuant to which the Executive will waive his right to any benefit which he had accrued under or to which he would be entitled as a result of the termination of the SERP in return for the benefits described herein;

     WHEREAS, the Company and Executive agree that, in connection with the termination of the SERP, Executive shall be entitled to a benefit equal to (i) the balance, as of the effective date of the termination of the SERP and after the payment of any other benefits due and payable under the SERP to any other participants in the SERP, of any funds remaining in the rabbi trust (the “Trust”) established by the Company for the purpose of setting aside amounts to assist the Company in satisfying its obligation under the SERP (the “Present Benefit”), plus (ii) beginning with the 2006 fiscal year and continuing until June 30, 2008, an additional $330,593 for each such fiscal year will be accrued on the books of the Company, or, at the Company’s discretion, contributed to the Trust (the “Future Benefit,” and, together with the Present Benefit, the “Benefits”); provided, however, that Executive remains employed with the Company for the fiscal year; and, provided further, however, that Executive is still employed with the Company on the last day of any such fiscal year; and

     WHEREAS, the Company and Executive (i) acknowledge that the benefits provided under this Agreement are subject to the requirements of section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and (ii) agree, notwithstanding any provision of this

Agreement to the contrary, that to the extent any provision of this Agreement is found, prior to the end of any permitted transition period authorized by the Internal Revenue Service, to violate section 409A of the Code or any official guidance issued by the Internal Revenue Service with respect to section 409A of the Code, they will modify terms of this Agreement the extent necessary to comply with the requirements of section 409A of the Code.

     NOW, THEREFORE, by the Company’s and Executive’s signatures below,

     Executive acknowledges and agrees that Executive’s Present Benefit will continue to be held by the Trust and will be invested by the Trust in accordance with the terms of the Trust as from time to time in effect during the term of this Agreement until Executive, Executive’s Contingent Annuitant, as such term is defined under the terms of the SERP, or such other beneficiary as Executive may designate, provided such beneficiary designation is in a form acceptable to the Company, is entitled to receive the Present Benefit as herein provided.

     The Company acknowledges and agrees that, beginning with the 2006 fiscal year and continuing for each fiscal year thereafter until June 30, 2008, an additional $330,593 for each such fiscal year will be accrued on the books of the Company, or, at the Company’s discretion, contributed to the Trust, for the benefit of Executive; provided, however, that Executive remains employed with the Company for the fiscal year; and, provided further, however, that Executive is still employed with the Company on the last day of any such fiscal year. If any part of the Future Benefit is accrued on the books of the Company, it shall accrue interest at a rate per annum equal to the Company’s cost of borrowing in effect from time to time during the term of this Agreement until Executive, Executive’s Contingent Annuitant, as such term is defined under the terms of the SERP, or such other beneficiary as Executive may designate, provided such beneficiary designation is in a form acceptable to the Company, is entitled to receive the Future Benefit as herein provided. If any part of the Future Benefit is contributed to the Trust, such funds will be invested by the Trust in accordance with the terms of the Trust as from time to time in effect during the term of this Agreement until Executive, Executive’s Contingent Annuitant, as such term is defined under the terms of the SERP, or such other beneficiary as Executive may designate, provided such beneficiary designation is in a form acceptable to the Company, is entitled to receive the Future Benefit as herein provided.

     Executive acknowledges that the Benefits, together with any and all earnings thereon under the terms of the Trust or interest accrued on the books of the Company as herein provided, all as described in this Agreement, are in full accord and satisfaction of any obligation the Company originally had with to Executive pursuant to the terms of the SERP, and Executive releases the Company from any and all obligations which may exist under the SERP with respect to the provision of benefits to Executive pursuant to its terms.

     Executive requests that Executive’s Benefits under this Agreement, together with any and all earnings thereon under the terms of the Trust or interest accrued on the books of the Company as herein provided, be paid:

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     þ in a lump sum in cash as soon as is administratively practicable following Executive’s termination of service with the Company.

     o in ___equal annual installments payable as soon as administratively practicable following the January 1^st of each calendar year with the first payment to begin as soon as is administratively practicable following Executive’s termination of service with the Company.

     Executive acknowledges that if Executive dies prior to receipt of the entire amount of the Benefits, together with any and all earnings thereon under the terms of the Trust or interest accrued on the books of the Company as herein provided, due to Executive under the terms of this Agreement, any amount remaining due and payable under this Agreement will be paid to Executive’s Contingent Annuitant, as such term is defined under the terms of the SERP, or such other beneficiary as Executive may designate provided such beneficiary designation is in a form acceptable to the Company.

     Executive understands and acknowledges that the benefit otherwise payable under this Agreement shall be to the extent applicable to such benefit governed by terms of the SERP on the date the SERP was terminated.

     The Company and Executive (i) acknowledge that the benefits provided under this Agreement are subject to the requirements of section 409A of Code, and (ii) agree, notwithstanding any provision of this Agreement to the contrary, that to the extent any provision of this Agreement is found, prior to the end of any permitted transition period authorized by the Internal Revenue Service, to violate section 409A of the Code or any official guidance issued by the Internal Revenue Service with respect to section 409A of the Code, they will modify terms of this Agreement the extent necessary to comply with the requirements of section 409A of the Code.

     This Agreement shall become effective and in full force and effect on the day and at the time the SERP is terminated in accordance with its terms. If the SERP is not terminated, then this Agreement shall be of no force and effect, and all Executive’s rights under the SERP shall remain in full force and effect.

Executed this 19th day of August, 2005.

TANDY BRANDS ACCESSORIES, INC.
By:	/s/ Mark J. Flaherty
Its:	Chief Financial Officer
J.S.B. JENKINS
/s/ J.S.B. Jenkins

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EX-99

EXHIBIT 99

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 2005 RESULTS

-Announces Ninth Consecutive Quarterly Dividend-

ARLINGTON, TX, August 22, 2005 – Tandy Brands Accessories, Inc. (Nasdaq NM:TBAC) today announced financial results for the fourth quarter ended June 30, 2005.

For the fourth quarter of fiscal 2005, net sales decreased 3.6% to $42.9 million compared to $44.5 million for the same period last year. The company reported a net loss for the fourth quarter of $2.1 million, or ($0.33) per diluted share compared to net income of $129,000 or $0.02 per share in the prior year’s fourth quarter. These results are in-line with the financial results previously announced on August 12^th. The fourth quarter net loss includes a non-cash charge net of tax of $0.08 per diluted share related to goodwill impairment associated with the women’s department store business.

For the fiscal year ended June 30, 2005, net sales were $221.2 million compared to $215.4 million for the same period in the prior year. Net income for the twelve-month period totaled $4.0 million, or $0.61 per diluted share, compared to net income of $7.0 million, or $1.09 per diluted share, for the same period last year.

J. S. B. Jenkins, President and Chief Executive Officer, commented, “As we previously announced on August 12^th, we did not meet our plan for the fiscal 2005 fourth quarter. Our sales decrease and net loss were the result of a delayed shipment of women’s mass merchant accessories to a large customer from the fourth quarter 2005 to the first quarter 2006 and ongoing restructuring activities related to the consolidation of our women’s mass merchant and department store business units. We are taking the right steps to improve the management, distribution, and infrastructure in our women’s business and believe our initiatives will better position the business for growth ahead.”

Mr. Jenkins continued, “Our balance sheet showed improvement in the fourth quarter. The Company’s cash flows were solid and we were able to reduce our debt position during the fourth quarter by $4.5 million. Going forward, we plan to continue to reduce our debt position which will allow us greater operating flexibility.”

As a result of the Company’s annual audit, an adjustment related to a deferred tax asset associated with our Canadian operations was identified that will require restatement of the fiscal 2004 and prior financial statements. This restatement will reduce 2004 reported earnings per diluted share by $0.01. Additionally, beginning stockholders’ equity for fiscal 2004 will be reduced by approximately $866,000. This deferred tax adjustment had no impact on the Company’s fiscal 2005 financial results.

For the 2006 fiscal year, the company anticipates net sales to be in the range of $226 to $230 million and earnings to be within a range of $1.05 to $1.11 per diluted share. In the first fiscal quarter, the Company anticipates net sales to be in the range of $60 to $63 million and earnings to be in the range of $0.37 to $0.41 per diluted share.

The company also announced today that the Board of Directors approved a quarterly dividend of $0.0275 per common share that will be payable October 20, 2005, to shareholders of record at the close of business on September 30, 2005.

Mr. Jenkins concluded, “As we enter the 2006 fiscal year, we are confident in our ability to grow the key components to both business segments. On the men’s side, opening new doors and increasing our product penetration in existing doors is our top priority. The first quarter is trending well for our core small leather goods and belt businesses, as well as from our newer gift accessories and neckwear businesses. We expect the performance in our women’s business to improve as we continue to achieve cost savings, and identify synergies that will enhance our margins and sales performance in the fiscal year ahead.”

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 22, 2005, at 10:00 a.m. ET. The dial-in number for the call is (913) 981-4911. For those who are unable to listen to the live broadcast, an audio replay of the call will be available through Monday, August 29, 2005, and can be accessed by dialing (719) 457-0820, passcode #7920794. A live webcast of the conference call will also be broadcast at: www.viavid.net.

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, wallets, handbags, suspenders, socks, scarves, neckwear, gifts, sporting goods, and cold weather and hair accessories. 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 at www.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.

(Tables to follow)

TANDY BRANDS ACCESSORIES, INC.

Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)

	Three Months Ended						Year Ended
	June 30,						June 30,
	2005			2004			2005			2004
				(As Restated)						(As Restated)
Net sales	$	42,864		$	44,469		$	221,232		$	215,420
Cost of goods sold		27,788			28,278			139,999			140,135
Gross margin		15,076			16,191			81,233			75,285
Selling, general and administrative expenses		16,143			14,660			67,975			57,519
Goodwill impairment		847			—			847			—
Depreciation and amortization		1,312			1,005			5,025			4,055
Total operating expenses		18,302			15,665			73,847			61,574
Operating income (loss)		(3,226	)		526			7,386			13,711
Interest expense		(251	)		(391	)		(1,222	)		(2,357	)
Royalty and other income		38			73			246			128
Income (loss) before provision for income taxes		(3,439	)		208			6,410			11,482
Provision (benefit) for income taxes		(1,318	)		79			2,423			4,530
Net income (loss)	$	(2,121	)	$	129		$	3,987		$	6,952
Earnings (loss) per common share:	$	(0.33	)	$	0.02		$	0.63		$	1.12
Earnings (loss) per common share-assuming dilution:	$	(0.33	)	$	0.02		$	0.61		$	1.09
Dividends declared per share	$	0.0275		$	0.025		$	0.11		$	0.10
Common shares outstanding		6,444			6,319			6,349			6,229
Common shares outstanding shares-assuming dilution		6,444			6,457			6,588			6,389

TANDY BRANDS ACCESSORIES, INC.

Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)

	June 30,			June 30,
	2005			2004
				(As Restated)
ASSETS
Current assets:
Cash and cash equivalents	$	3,429		$	6,086
Accounts receivable, net		31,437			33,427
Inventories		67,584			57,086
Deferred income taxes		4,229			3,058
Other current assets		2,359			1,613
Total current assets		109,038			101,270
Property, plant and equipment, at cost:
Property and equipment, at cost		37,742			34,581
Accumulated depreciation		(23,896	)		(20,206	)
Net property, plant and equipment		13,846			14,375
Goodwill, net of accumulated amortization		17,047			11,655
Other intangibles, net of accumulated amortization		6,403			4,534
Supplemental Executive Retirement Plan assets		2,552			1,255
Other noncurrent assets		1,425			1,534
TOTAL ASSETS	$	150,311		$	134,623
LIABILITIES & STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	15,510		$	14,224
Accrued expenses		6,849			6,362
Total current liabilities		22,359			20,586
Notes payable		16,055			10,000
Deferred income taxes		2,244			2,066
Supplemental Executive Retirement Plan liability		2,926			1,721
Other noncurrent liabilities		1,297			1,302
Total liabilities		44,881			35,675
Stockholders’ equity:
Common stock		6,573			6,306
Additional paid-in capital		29,597			26,765
Cumulative other comprehensive income (loss)		77			(121	)
Shares held by Benefit Restoration Plan Trust		(981	)		(894	)
Retained earnings		70,164			66,892
Total stockholders’ equity		105,430			98,948
TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY	$	150,311		$	134,623