f11k_061413.htm

11-K 1 f11k_061413.htm FORM 11-K f11k_061413.htm

UNITED STATES 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, 2012

Commission File Number 0-18927

TANDY BRANDS ACCESSORIES, INC.

EMPLOYEES INVESTMENT PLAN

(Full title of plan)

TANDY BRANDS ACCESSORIES, INC.

3631 West Davis, Suite A

Dallas, Texas 75211

(Name of issuer of the securities held pursuant to the plan and

the address of its principal executive office)

TANDY BRANDS ACCESSORIES, INC.

EMPLOYEES INVESTMENT PLAN

TABLE OF CONTENTS

Page

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM	3

FINANCIAL STATEMENTS:
Statements of Net Assets Available for Benefits as of December 31, 2012 and 2011	4

Statements of Changes in Net Assets Available for Benefits for the Years Ended December 31, 2012 and 2011	5

Notes to Financial Statements	6

SUPPLEMENTAL SCHEDULE – FORM 5500, SCHEDULE H, LINE 4i – SCHEDULE OF ASSETS (HELD AT END OF YEAR)	12

SIGNATURE	13

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM	14

NOTE: All other schedules required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974 have been omitted since they are either not applicable or the information required therein has been included in the financial statements or notes thereto.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Investment Committee and Participants of the

Tandy Brands Accessories, Inc. Employees Investment Plan

We have audited the accompanying statements of net assets available for benefits of the Tandy Brands Accessories, Inc. Employees Investment Plan as of December 31, 2012 and 2011 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 the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Plan is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plan's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, 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 the Tandy Brands Accessories, Inc. Employees Investment Plan as of December 31, 2012 and 2011, 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.

Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedule of Form 5500, Schedule H, Line 4i – Schedule of Assets (Held at End of Year) is presented for the purpose of additional analysis and is not a required part of the basic financial statements but is supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplemental schedule is the responsibility of the Plan’s management. The supplemental schedule has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the financial statements taken as a whole.

Fort Worth, Texas

June 14, 2013

TANDY BRANDS ACCESSORIES, INC.
EMPLOYEES INVESTMENT PLAN

STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS

	December 31
	2012		2011
Assets
Investments, at fair value:
Registered investment companies	$	5,533,873	$	5,442,871
Cash equivalents		933,964		698,866
Tandy Brands Accessories, Inc. common stock		196,710		134,805
Total investments		6,664,547		6,276,542
Receivables:
Notes receivable from participant loans		60,543		49,829
Participant contributions		17,260		18,693
Company contributions		8,187		9,163
Total receivables		85,990		77,685
Cash		1,072		27,591

Net Assets Available For Benefits	$	6,751,609	$	6,381,818

See accompanying notes to financial statements.

TANDY BRANDS ACCESSORIES, INC.
EMPLOYEES INVESTMENT PLAN

STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS


	Year Ended December 31
	2012		2011
Additions
Contributions:
Participants	$	522,296	$	596,725
Company		250,692		246,081
Rollover		31,377		3,474
Dividends and interest		177,402		125,190
Net appreciation (depreciation) in value of investments		585,553		(482,124	)
Total Additions		1,567,320		489,346

Deductions
Benefits paid to participants		1,194,061		2,429,306
Participant loans deemed distributed		3,468		1,142
Total Deductions		1,197,529		2,430,448

Net Increase (Decrease) in Net Assets Available for Benefits		369,791		(1,941,102	)

Net Assets Available For Benefits
Beginning of year		6,381,818		8,322,920
End of year	$	6,751,609	$	6,381,818

See accompanying notes to financial statements.

TANDY BRANDS ACCESSORIES, INC.

EMPLOYEES INVESTMENT PLAN

NOTES TO FINANCIAL STATEMENTS

Qualified Retirement Plan

The Tandy Brands Accessories, Inc. Employees Investment Plan (the “Plan”) is a defined contribution plan with a qualified cash or deferred arrangement. Tandy Brands Accessories, Inc. (the “Company”) is the plan administrator and named fiduciary of the Plan (“Plan Administrator”).

The Plan was initially adopted effective January 1, 1991 and has been subsequently amended by the Company from time to time. The Company most recently amended and restated the Plan on December 7, 2009, to be effective as of January 1, 2010, by adopting a prototype plan sponsored by Merrill Lynch, Pierce, Fenner & Smith.

The Plan is subject to Titles I and II of the Employee Retirement Income Security Act of 1974, as amended, (“ERISA”) relating to the protection of employee benefit rights, but is not subject to Title IV relating to plan termination insurance. The Plan is qualified under Section 401(a) of the Internal Revenue Code of 1986, as amended (the “Code”).

The following descriptions of the Plan provide only general information about the Plan. Participants should refer to the Plan documents, including the Summary Plan Description, for a complete description of the Plan’s provisions.

Plan Description

Information about the Plan and the benefit provisions is contained in the Summary Plan Description, a copy of which may be obtained from the Plan Administrator.

Contributions

All employees of the Company who have completed one month of service may elect to defer up to 35% of eligible annual compensation as elective pretax and Roth contributions to the Plan, subject to the deferral limitation in Section 402(g) of the Code, but without regard to permissible catch-up contributions permitted under Section 414(v) of the Code. Eligible annual compensation is the participant’s total remuneration reported on the federal income tax withholding statement, plus amounts not includable in gross income pursuant to Sections 125, 132(f)(4), 457, and 402(g)(3) of the Code, but excluding any amounts realized from the exercise of a non-qualified stock option or from the disqualifying disposition of qualified stock options. Notwithstanding the foregoing, the amount of eligible annual compensation that is taken into account under the Plan is subject to the maximum earnings limitation as adjusted by the United States Secretary of the Treasury under Section 401(a)(17) of the Code. Contributions by a highly-compensated employee may be limited or refunded if the Plan does not meet certain of the Code’s discrimination tests. Highly-compensated employees age 50 or older may make catch-up contributions exceeding the maximum annual elective deferral limitation in Section 402(g) of the Code up to the amount permitted under Section 414(v) of the Code.

Qualified cash distributions from other plans may be rolled over into the Plan without regard to an employee’s eligibility to participate in the Plan.

TANDY BRANDS ACCESSORIES, INC.

EMPLOYEES INVESTMENT PLAN

NOTES TO FINANCIAL STATEMENTS

Plan Description (continued)

Contributions (continued)

Participants employed by the Company subsequent to 2009 become eligible for Company matching contributions as of the first day of the month following the applicable 12 consecutive month period during which they complete 1,000 hours of service with the Company. For each participant who elects to make elective deferrals under the Plan during the Plan year, the Company makes safe-harbor contributions to the Plan equal to 100% of the first 3% of the participant’s eligible annual compensation contributed for the Plan year plus 50% of the next 2% of the participant’s eligible annual compensation contributed for the Plan year, for a maximum safe-harbor matching contribution equal to 4% of the participant’s eligible annual compensation. The Company may eliminate the safe-harbor election with proper notice to participants. Participants’ and Company safe-harbor contributions to the Plan are always 100% vested; Company matching contributions made with respect to Plan years commencing prior to January 1, 2010 are subject to a three-year vesting schedule.

Generally, contributions to the Plan, excluding Roth contributions, and earnings thereon are not subject to federal income tax until distributed from the Plan to the participant.

Participant Accounts

Each participant’s account is credited with the participant’s contributions, the Company’s matching contributions, and the earnings thereon. Participants may allocate contributions and their account balances among those investments designated by the Plan Administrator. The participants’ accounts are valued on a daily basis.

The participant, or his or her designated beneficiary, is entitled to the vested portion of the participant’s account following his or her termination of employment. Nonetheless, a participant who has attained age 59½ may withdraw all or any part of his or her vested account balance at any time while employed. Participants who have previously made rollover contributions or after-tax contributions to the Plan may withdraw amounts attributable to such contributions at any time. Any employee who was a participant in the Plan prior to January 1, 2010 may withdraw the balance of his or her vested account as of December 31, 2009 (other than any portion credited to his or her elective deferral contribution account) upon becoming disabled (as defined under the Plan). In addition, any employee who was a participant in the Plan prior to January 1, 2010 may withdraw the balance of his or her pre-1986 contribution account as of December 31, 2009.

Upon termination of employment for any reason, those with vested account balances greater than $5,000 may elect (a) lump sum payments in cash or, where applicable, Company stock, or a combination thereof, or (b) payment in monthly installments over a designated period not to exceed the participant’s life expectancy or joint life expectancy of the participant and their designated beneficiary, subject to specified minimum distribution requirements. Vested account balances of $5,000 or less are distributed in a lump sum. Payments may be rolled over directly to another eligible retirement plan.

A participant may borrow from his or her account, provided that such loan must be for a minimum amount of $1,000 and may not exceed an amount equal to the lesser of (a) the greater of 50% of his or her vested account balance or $10,000 and (b) $50,000 reduced by the amount

TANDY BRANDS ACCESSORIES, INC.

EMPLOYEES INVESTMENT PLAN

NOTES TO FINANCIAL STATEMENTS

Plan Description (continued)

Participant Accounts (continued)

by which the participant’s highest loan balance from the Plan in the preceding one-year period exceeded the participant’s outstanding loan balance at the time of the new loan.

Hardship withdrawals of specified amounts may be made in the event of a participant’s immediate and heavy financial need for which funds are not reasonably available from other resources as specified in the Plan and determined by the Plan Administrator.

Under specified conditions, an alternate payee may receive a distribution from a participant’s account in compliance with a qualified domestic relations order.

Vesting

Participants are immediately vested in their elective contributions as well as safe-harbor Company matching contributions and the earnings thereon. Company matching contributions made to the Plan prior to January 1, 2010 are subject to a vesting schedule based on years of completed service: one but less than two years – 33%; two but less than three years – 67%; three years or more – 100%. However, upon attaining age 65, or in the event of the participant’s disability (as defined in the Plan) or death, a participant becomes 100% vested in the Company’s matching contributions and the earnings thereon.

Forfeitures

Forfeited balances of terminated participants’ nonvested accounts are used in the following order: (1) to reduce Company matching contributions, (2) to offset the Plan’s administrative costs and (3) allocated to the participants’ accounts as a nonelective (profit sharing) contribution.

Summary of Significant Accounting Policies

Basis of Accounting

The accompanying financial statements of the Plan are presented on the accrual basis of accounting in conformity with accounting principles generally accepted in the United States of America.

Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the Investment Committee to make estimates and assumptions that affect certain reported amounts and disclosures, including events through the financial statements issuance date. Accordingly, actual results may differ from these estimates.

TANDY BRANDS ACCESSORIES, INC.

EMPLOYEES INVESTMENT PLAN

NOTES TO FINANCIAL STATEMENTS

Summary of Significant Accounting Policies (continued)

Investments

The valuation methodologies for determining the fair values of the Plan’s investments at December 31, 2012 and 2011 are:

·	Level 1 investments:

§	Registered investment companies - The net asset value (“NAV”) of the investment shares calculated in a manner consistent with investment company accounting. There are no significant restrictions on redeeming at NAV.

§	Common stock – The closing price reported on the active market on which it is traded.

§	Cash equivalents – Valued at $1.00 per share.

These methods may produce a fair value that may not be indicative of net realizable value or reflective of future fair values and use of different methodologies or assumptions could result in different fair value measurements. The Plan’s investments are subject to market or credit risks customarily associated with debt and equity investments.

	2012		2011
	Level 1		Level 1
Registered investment companies:
Growth funds	$	1,905,355	$	1,830,258
Value funds		1,279,157		1,337,709
International funds		1,120,130		974,428
Fixed income funds		587,227		681,351
Blended funds		642,004		619,125
Total registered investment companies		5,533,873		5,442,871
Tandy Brands Accessories, Inc. common stock		196,710		134,805
Cash equivalents		933,964		698,866
	$	6,664,547	$	6,276,542

Investment transactions are recorded on a trade-date basis with realized and unrealized gains and losses being a component of the net appreciation and depreciation in the value of investments. Dividend income is recognized on the ex-dividend date and interest income is recognized on the accrual basis.

Investment appreciation (depreciation):

	2012		2011
Registered investment companies	$	517,885	$	(218,990	)
Tandy Brands Accessories, Inc. common stock		67,668		(263,134	)
	$	585,553	$	(482,124	)

TANDY BRANDS ACCESSORIES, INC.

EMPLOYEES INVESTMENT PLAN

NOTES TO FINANCIAL STATEMENTS

Summary of Significant Accounting Policies (continued)

Investments (continued)

Investments greater than 5% of net assets available for benefits at fair value at December 31:

	2012		2011
Ivy Large Cap Growth - Class Y	$	1,195,093	$	1,153,023
Merrill Lynch Retirement Bank Account		933,964		698,866
MFS International Diversification Fund - Class A		673,212		591,425
Blackrock S&P 500 Stock Fund - Class I		642,004		***
Nuveen Dividend Value Fund - Class A		607,761		***
Prudential Jennison Mid Cap Growth Fund - Class A		484,340		454,523
Ivy Asset Strategy Fund - Class Y		422,343		363,092
Victory Established Value Fund - Class A		415,248		431,436
Delaware Diversified Income Fund - Class A		*		424,456
Eaton Vance Large-Cap Value Fund - Class A		**		649,712
Davis New York Venture Fund Incorporated - Class A		**		619,125

*	Represented less than 5% of the Plan's net assets
**	Fund was not held at December 31, 2012
***	Fund was a new investment option in 2012

Participant Loans

Loans, stated at amortized cost, are secured by the participant’s account balance, bear interest (2012 and 2011 – 3.25% to 5%), and require repayment within five years (10 years for loans to purchase the participant’s principal residence).

Contributions

Participant contributions are accrued in the period in which they are deducted. Rollover contributions are recorded when received. The Company used $16,200 and $35,500 of forfeited matching contributions to reduce employer contributions in 2012 and 2011, respectively. Approximately $6,500 and $19,400 of forfeited Company matching contributions was available at December 31, 2012 and 2011, respectively, to reduce future Company contributions.

Benefit Payments

Disbursements for benefits are recorded when paid.

Benefits Payable

At December 31, 2012 and 2011 there were no amounts due to participants who had elected to withdraw from the Plan and requested payment of benefits, but which had not yet been paid.

TANDY BRANDS ACCESSORIES, INC.

EMPLOYEES INVESTMENT PLAN

NOTES TO FINANCIAL STATEMENTS

Plan Management

Administration

The Plan is administered by the Company’s Investment Committee. A third-party trustee holds and manages the Plan’s assets. Administrative expenses are paid by the Company.

Amendment or Termination

The Company may amend or terminate the Plan at any time, but no such action shall cause the Plan’s assets to be used for, or diverted to, any purpose other than the exclusive benefit of participants, nor shall any amendment have the effect of reducing a participant’s accrued benefit without the permission of the United States Secretary of Labor. Participants become 100% vested in Company contributions and earnings thereon upon termination of the Plan or discontinuance, other than a temporary suspension, of Company matching contributions.

Tax Status

The Internal Revenue Service (the “IRS”) has determined and informed the sponsor of the prototype plan by an opinion letter dated March 31, 2008 and the Company by letter dated January 31, 2011 that the prototype plan and related trust are designed in accordance with applicable sections of the Code. The Investment Committee believes the Plan is currently designed and being operated in compliance with the applicable requirements of the Code. Therefore, the Investment Committee believes the Plan was qualified and the related trust was tax-exempt as of December 31, 2012.

Accounting principles generally accepted in the United States of America require plan management to evaluate tax positions taken by the Plan and recognize a tax liability (or asset) if the Plan has taken an uncertain position that more likely than not would not be sustained upon examination by the IRS. The Plan Administrator has analyzed the tax positions taken by the Plan and has concluded that as of December 31, 2012, there are no uncertain positions taken or expected to be taken that would require recognition of a liability (or asset) or disclosure in the financial statements. The Plan is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress. The Company believes it is no longer subject to income tax examinations for years prior to 2009.

Parties-in-Interest Transactions

Participants have the option to invest their salary deferrals into the Company’s common stock. The Plan also invested in a retirement bank account managed by Bank of America, N.A., which acted as trustee for only those investments as defined by the Plan. Transactions in such investments qualify as party-in-interest transactions, which are exempt from the prohibited transaction rules.

TANDY BRANDS ACCESSORIES, INC.

EMPLOYEES INVESTMENT PLAN

FORM 5500, SCHEDULE H, LINE 4i

SCHEDULE OF ASSETS (HELD AT END OF YEAR)

December 31, 2012

EIN: 75-2349915 Plan: 001

(e) Current

(a)

(b) Identity of Issue or Borrower

Investment

(d) Cost

Value

Ivy Large Cap Growth

Class Y Shares

1,195,093

Merrill Lynch Retirement Bank Account

Cash Equivalent

933,964

MFS International Diversification Fund

Class A Shares

673,212

Blackrock S&P 500 Stock Fund

Class I Shares

642,004

Nuveen Dividend Value Fund

Class A Shares

607,761

Prudential Jennison Mid Cap Growth Fund

Class A Shares

484,340

Ivy Asset Strategy Fund

Class Y Shares

422,343

Victory Established Value Fund

Class A Shares

415,248

Delaware Diversified Income Fund

Class A Shares

332,553

American Century Small Cap Value Fund

Class A Shares

256,148

Sentinel Small Company Fund

Class A Shares

225,923

Franklin U.S. Government Securities Fund

Series A

212,165

Tandy Brands Accessories, Inc.

Common Stock

196,710

Franklin Strategic Income Fund

Class A Shares

35,959

Lazard Emerging Markets

Open Shares

24,574

Templeton Global Bond Fund

Class A Shares

6,550

Participant loans

Due 1 to 10 Years -

3.25% to 5% Interest

-0-

60,543

Total Investments

6,725,090

*		Indicates a party-in-interest to the Plan.
**		Cost of participant-directed investments omitted.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Investment Committee has duly caused this Annual Report to be signed on its behalf by the undersigned hereunto duly authorized.

TANDY BRANDS ACCESSORIES, INC.

EMPLOYEES INVESTMENT PLAN

June 14, 2013 /s/ N. Roderick McGeachy, III

N. Roderick McGeachy, III

Investment Committee Member

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Registration Statement No. 333-38526 on Form S-8 of Tandy Brands Accessories, Inc. of our report dated June 14, 2013, with respect to the statements of net assets available for benefits of the Tandy Brands Accessories, Inc. Employees Investment Plan as of December 31, 2012 and 2011, the related statements of changes in its net assets available for benefits for the years then ended, and the related supplemental schedule of Form 5500, Schedule H, Line 4i – Schedule of Assets (Held at End of Year) as of December 31, 2012, which report appears in the December 31, 2012 annual report on Form 11-K of the Tandy Brands Accessories, Inc. Employees Investment Plan.

Fort Worth, Texas

June 14, 2013