Tandy Brands Reports Fiscal 2014 First Quarter Earnings Results

Tandy Brands Reports Fiscal 2014 First Quarter Earnings Results

DALLAS, Nov. 14, 2013 (GLOBE NEWSWIRE) -- Tandy Brands Accessories, Inc.
(Nasdaq:TBAC) today reported financial results for its first quarter ended
September 30, 2013.

Net sales for the first quarter of fiscal 2014 were $19.9 million, a decrease
of twenty three percent versus the prior year first quarter. Accessories
segment net sales were $17.7 million for the first quarter, a decline of $2.3
million from the same quarter of fiscal 2013. The decline reported in the
accessories segment net sales was a result of higher sales of exited product
categories in the prior year and lower levels of replenishment orders by one
of the Company's largest customers during the current year. Net sales for the
gifts segment were $2.3 million for the first quarter of fiscal 2014, a
decrease of $3.6 million over the prior year, primarily due to later timing of
gifts shipments during the current year and higher sales of exited products in
the prior year. The later timing was driven by delays in obtaining financing
for holiday 2013 sales and certain retailers delaying deliveries.

First quarter fiscal 2014 gross margin as a percentage of net sales was 27.8
percent, compared to 31.6 percent in the first quarter of fiscal 2013.
Accessories segment margins were 28.2 percentin the fiscal 2014 first quarter
compared to 33.9 percentin the same quarter last year. The decline was due to
increased material and freight costs in the current year and higher sales to
close out customers, which were a result ofthe Company'sprior year
restructuring plan. Gifts segment gross margin was 24.4 percent, compared to
24.0 percent in the first quarter of fiscal 2013. The increase in gift gross
margin percentage was driven by lower customer deductions and freight costs in
the current year.

Total selling, general and administrative (SG&A) expenses of $5.1 million for
the first quarter of fiscal 2014 were $3.8 million, or 42 percent, lower than
the first quarter of fiscal 2013. SG&A as a percentage of net sales improved
to 25.6 percent, down from 34.2 percentover the same period last year. The
reductions were primarily due to decreased expenses such as compensation costs
and variable selling and distribution costs.

"Our first quarter results reflect the cost savings and lower margins we
expected as we continue to liquidate exited products in connection with our
previously announced restructuring plan," said Roger Hemminghaus, Chief
Executive Officer of Tandy Brands. "Furthermore, results for the quarter were
impacted by delays in our Holiday 2013 deliveries of gifts products which
resulted from closing our new credit facilities 60 days later than expected."

For the first quarter, the Company reported a net loss of $1.0 million, or
$0.13 per diluted share, compared to a net loss of $1.3 million, or $0.18 per
diluted share, in the prior year period. Adjusted net loss was $1.3
million,compared to an adjusted net loss of$1.2 million in the prior year
period. Adjusted EBITDA improved by $0.6 million to $0.1 million adjusted
EBITDA compared to an adjusted EBITDA loss of $0.5 million in the prior year
period.

Financial Position

The Company ended the 2014 first quarter with $11.9 million in working
capital, including $6.4 million of receivables, $31.0 million of inventories,
and short-term borrowings of $18.3 million.

Net cash used for operating activities was $5.0 million lower than the prior
year period primarily due to lower current year inventory and other assets due
to later receipt of holiday 2013 gift inventory resulting from delays in
obtaining financing. Net cash provided by financing activities was $4.7
million lower than the prior year period due to lower net borrowings under
credit facilities due to receiving gift inventories later in the current year
period.

The Company reported it was in violation of certain weekly availability
covenants with its senior lender.

"In early October typhoon Fitow struck Northern China causing production
delays in several gift factories which delayed production, receipt and
shipments to our retailers by three to five weeks," said Hemminghaus. "As a
consequence, our October shipments by week, as reset by our senior lender in
the first amendment, were later than planned, triggering weekly covenant
violations. At this time we are in discussions with our senior lender
concerning the violations, but can provide no assurances as to the outcome of
those discussions."

About Tandy Brands

Tandy Brands is a leading designer and marketer of branded men's, women's and
children's accessories, including belts, gifts and small leather goods.
Merchandise is marketed under various national as well as private brand names
through all major retail distribution channels.

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. The Company has based
these forward-looking statements on its current expectations about future
events, estimates and projections about the industry in which it operates.
Forward-looking statements are not guarantees of future performance. Actual
results may differ materially from those suggested by these forward-looking
statements as a result of a number of known and unknown risks and
uncertainties that are difficult to predict, including, without limitation,
the Company's ability to successfully capitalize on its restructuring
initiatives, the Company's ability to return to profitability, the Company's
ability to service its debt, the Company's ability to comply with covenants
contained in its financing arrangements, the current default under the
Company's senior credit agreement, general economic and business conditions,
competition in the accessories and gifts markets, acceptance of the Company's
product offerings and designs, continued good relationships with suppliers,
issues relating to distribution, the termination or non-renewal of any
material licenses, the Company's ability to maintain proper inventory levels,
and a significant decrease in business from or loss of any major customers or
programs. Those and other risks are more fully described in the Company's
filings with the Securities and Exchange Commission. The forward-looking
statements included in this release are made only as of the date hereof.
Except as required under federal securities laws and the rules and regulations
of the United States Securities and Exchange Commission, the Company does not
undertake, and specifically declines, any obligation to update any of these
statements or to publicly announce the results of any revisions to any
forward-looking statements after the distribution of this release, whether as
a result of new information, future events, changes in assumptions, or
otherwise.



Tandy Brands Accessories, Inc. And Subsidiaries
Unaudited Consolidated Statements Of Operations and Comprehensive Loss
(in thousands except per share amounts)

                                                         
                                              Three Months Ended
                                              September 30
                                        2013        2012
Net sales                                      $19,919   $25,871
Cost of goods sold                             14,380     17,692
Gross margin                                   5,539      8,179
Selling, general and administrative expenses   5,093      8,854
Depreciation and amortization                  347        483
Total operating expenses                       5,440      9,337
Operating income (loss)                        99         (1,158)
Interest expense                               (1,133)    (292)
Other (expense) income                         (6)        36
Loss before income taxes                      (1,040)    (1,414)
Income tax benefit                             (82)       (129)
Net loss                                       $(958)    $(1,285)
Other comprehensive income (loss):                        
Currency translation adjustments               86         229
Total comprehensive loss                       $(872)    $(1,056)
Loss per share:                                           
Basic                                          $(0.13)   $(0.18)
Diluted                                        $(0.13)   $(0.18)
Weighted average common shares outstanding:                
Basic                                          7,161      7,134
Diluted                                        7,161      7,134



Tandy Brands Accessories, Inc. And Subsidiaries
Unaudited Consolidated Balance Sheets
(in thousands)
                                                               
                                          September 30 June 30   September 30
                                          2013         2013      2012
Assets                                                         
Current assets:                                                 
Cash and cash equivalents                  $677       $518    $176
Accounts receivable, net                   6,407       4,605    11,703
Inventories, net                           31,048      21,361   49,943
Inventory deposits                         346         837      1,029
Other current assets                       2,177       1,757    3,093
Total current assets                       40,655      29,078   65,944
Property and equipment, net                4,146       4,373    5,439
Other assets:                                                   
Intangibles                                989         1,100    3,936
Other assets                               1,704       625      893
Total other assets                         2,693       1,725    4,829
                                          $ 47,494    $ 35,176 $ 76,212
Liabilities And Stockholders' Equity                              
Current liabilities:                                            
Accounts payable                           $6,725     $9,294  $18,907
Accrued compensation                       906         776      1,174
Accrued expenses                           1,655       2,204    1,623
Accrued restructuring charges              1,105       2,086    --
Senior credit facility and term loan       15,097      9,058    24,380
Purchase order financing facility          2,157       --       --
Notes payable - current                    1,072       --       --
Total current liabilities                  28,717      23,418   46,084
Other liabilities:                                              
Notes payable - non-current                7,905       --      --
Other liabilities                          4,113       4,150    4,218
Total other liabilities                    12,018      4,150    4,218
                                                               
Stockholders' equity:                                           
Preferred stock, $1.00 par value, 1,000    --          --       --
shares authorized, none issued
Common stock, $1.00 par value, 10,000
shares authorized, 7,162 shares, 7,130     7,162       7,130    7,134
shares and 7,134 shares issued and
outstanding, respectively
Additional paid-in capital                 34,132      34,141   34,148
Accumulated deficit                        (36,105)    (35,147) (17,255)
Other comprehensive income                 1,570       1,484    1,883
Total stockholders' equity                 6,759       7,608    25,910
                                          $ 47,494    $ 35,176 $ 76,212



Tandy Brands Accessories, Inc. And Subsidiaries
Unaudited Consolidated Statements Of Cash Flows
(in thousands)

                                                                  
                                                          Three Months Ended
                                                          September 30
                                                          2013     2012
Cash flows used for operating activities:                          
Net loss                                                   $(958) $(1,285)
Adjustments to reconcile net loss to net                           
cash used for operating activities:                                
Deferred income taxes                                      2       (21)
Doubtful accounts receivable provision                     2       10
Depreciation and amortization                              409     547
Stock compensation expense                                 22      51
Amortization of debt costs                                 136     31
Other                                                     --      (37)
Changes in assets and liabilities:                                 
Accounts receivable                                        (1,792) (4,626)
Inventories                                                (9,641) (21,075)
Other assets                                               (1,621) (381)
Inventory deposits                                         491     6,078
Accounts payable                                           6,403   7,958
Accrued expenses and restructuring charges                 (1,444) (196)
Net cash used for operating activities                     (7,991) (12,946)
Cash flows used for investing activities:                          
Purchases of property and equipment                        (70)    (325)
Sales of property and equipment                            --      208
Net cash used for investing activities                     (70)    (117)
Cash flows provided by financing activities:                       
Change in cash overdrafts                                  --      374
Borrowings under purchase order financing facility         2,742   --
Repayments under purchase order financing facility         (585)   --
Net borrowings under senior credit facility                6,039   12,570
Net cash provided by financing activities                  8,196   12,944
Effect of exchange-rate changes on cash and cash           24      78
equivalents
Net increase (decrease) in cash and cash equivalents       159     (41)
Cash and cash equivalents beginning of year                518     217
Cash and cash equivalents end of period                    $677   $176
Supplemental disclosure of non-cash financing activities:           
Conversion of accounts payable to subordinated notes       $8,977 $--
payable
                                                                  

               Tandy Brands Accessories, Inc. And Subsidiaries
                        Unaudited Non-GAAP Disclosures
                   (in thousands except per share amounts)

Our adjusted EBITDA, a non-GAAP measurement, is defined as net income (loss)
before interest, taxes, depreciation and amortization, investments in new
licenses and other one-time items. Adjusted EBITDA is presented because we
believe it provides useful information about our business activities and also
is frequently used by securities analysts, investors, and other interested
parties in evaluating a company's performance.Not all companies utilize
identical calculations; therefore, our presentation of adjusted EBITDA may not
be comparable to other identically titled measures of other companies. EBITDA
and adjusted EBITDA have limitations as analytical tools and should not be
considered in isolation, or as substitutes for analysis of our results of
operations as reported under U.S. generally accepted accounting principles
("GAAP"). The following table reconciles our GAAP net loss to the adjusted
EBITDA disclosures.

                                        Three Months Ended
                                        September 30
                                        2013   2012
Net loss                                 $(958) $ (1,285)
Income taxes                             (82)    (129)
Interest expense                         1,133   292
Depreciation and amortization            347    483
Other expense (income)                   6     (36)
Investment in new licenses               84     95
Gain on licensing settlement             (524)   --
Severances and other restructuring costs 61    71
Adjusted EBITDA (loss)                   $ 67  $ (509)

We have provided our adjusted net loss disclosure, a non-GAAP measurement, as
we believe it is important for our stakeholders to understand the impact of
certain items on our statements of operations. The following table reconciles
our GAAP net loss to the adjusted net loss disclosure.

                                                    Three Months Ended
                                                    September 30
                                                    2013    2012
Net loss                                             $(958)  $ (1,285)
Investment in new licenses                           84      95
Gain on licensing settlement                         (524)    --
Severances and other restructuring costs             61      71
Property sale gain                                   --   (37)
Adjusted net loss                                    $ (1,337) $ (1,156)
Common shares outstanding assuming dilution          7,161  7,134
Adjusted net loss per common share assuming dilution ($0.19)  ($0.16)

CONTACT: Tandy Brands Accessories, Inc.
         Roger Hemminghaus
         Chief Executive Officer
         214-519-5200
        
         Investor Relations
         Chuck Talley
         Chief Financial Officer
         214-519-5200
 
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