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Tandy Brands Reports Fiscal 2013 Second Quarter Earnings Results And Provides Update On Current Events

The non-binding term sheet contains customary pre-close requirements with respect to diligence investigations and any new credit facility is expected to contain customary post-close covenants. Borrowings under the proposed credit facility are expected to bear interest in the LIBOR plus 8.5% to LIBOR plus 11.3% range (or 9.3% to 12.0%) over a 24 month period.

"We expected the new facility would be more expensive than our previous facility. However, it is important to us to balance the capital cost with potential dilution to our shareholders," said McGeachy. "The current term sheet contains no dilutive features and we believe this new facility will provide us the liquidity we need to execute our recently announced restructuring initiatives."

Outlook

"Through the execution of our recently announced restructuring plans, we are reducing our cost structure by $6 million to $7 million, reducing the risk associated with our gifts business and focusing on our most profitable core brands and customers," commented McGeachy. "We believe the execution of these initiatives will allow us to strengthen our competitive position and significantly improve profitability in fiscal 2014." 

About Tandy Brands

Tandy Brands is a leading designer and marketer of branded men's, women's and children's accessories, including belts, gifts, small leather goods and bags. 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, our ability to successfully complete our proposed new credit facility, our ability to secure additional or alternative capital, our ability to successfully implement certain restructuring initiatives, 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 our 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
(in thousands except per share amounts)
         
         
   Three Months Ended Six Months Ended
  December 31 December 31
  2012 2011 2012 2011
Net sales  $ 47,914  $ 45,434  $ 73,785  $ 72,177
Cost of goods sold  34,530  30,774  52,222  48,385
Inventory write-down  6,694  --  6,694  --
   41,224  30,774  58,916  48,385
Gross margin  6,690  14,660  14,869  23,792
Selling, general and administrative expenses  11,261  10,909  20,115  20,029
Depreciation and amortization  485  567  968  1,150
Total operating expenses  11,746  11,476  21,083  21,179
Operating (loss) income  (5,056)  3,184  (6,214)  2,613
Interest expense  (479)  (382)  (771)  (749)
Other (expense) income  (31)  27  5  (11)
(Loss) income before income taxes   (5,566)  2,829  (6,980)  1,853
Income tax expense (benefit)  60  103  (69)  202
Net (loss) income  $ (5,626)  $ 2,726  $ (6,911)  $ 1,651
Other comprehensive (loss) income:        
Currency translation adjustments (51) 25 178 (379)
Total comprehensive (loss) income (5,677) 2,751 (6,733) 1,272
(Loss) income per share:        
Basic (0.79) 0.39 (0.97) 0.23
Diluted (0.79) 0.39 (0.97) 0.23
Weighted average common shares outstanding:        
Basic 7,130 7,064 7,132 7,072
Diluted 7,130 7,076 7,132 7,087
         
Tandy Brands Accessories, Inc. And Subsidiaries
Unaudited Consolidated Balance Sheets
(in thousands)
       
  December 31 June 30 December 31
  2012 2012 2011
Assets      
Current assets:      
Cash and cash equivalents  $ 606  $ 217  $ 994
Accounts receivable, net  7,098  7,042  16,352
Inventories, net  29,706  28,743  32,715
Inventory deposits  298  7,107  281
Other current assets  2,794  2,824  3,711
Total current assets  40,502  45,933  54,053
Property and equipment, net  5,240  5,474  5,954
Other assets:      
Intangibles  3,757  4,115  4,519
Other assets  849  934  937
Total other assets  4,606  5,049  5,456
   $ 50,348  $ 56,456  $ 65,463
Liabilities And Stockholders' Equity      
Current liabilities:      
Accounts payable  $ 11,807  $ 10,548  $ 9,997
Accrued compensation  982  1,309  1,448
Accrued expenses  2,329  1,584  2,268
Credit facility  10,687  11,810  15,290
Total current liabilities  25,805  25,251  29,003
Other liabilities  4,310  4,290  4,257
Stockholders' equity:      
Preferred stock, $1.00 par value, 1,000 shares authorized, none issued  --  --  --
Common stock, $1.00 par value, 10,000 shares authorized, 7,130 shares,      
7,102 shares and 7,067 shares issued and outstanding, respectively  7,130  7,102  7,067
Additional paid-in capital  34,152  34,129  34,129
Accumulated deficit  (22,881)  (15,970)  (10,667)
Other comprehensive income  1,832  1,654  1,674
Total stockholders' equity  20,233  26,915  32,203
   $ 50,348  $ 56,456  $ 65,463
       
Tandy Brands Accessories, Inc. And Subsidiaries
Unaudited Consolidated Statements Of Cash Flows
(in thousands)
     
     
  Six Months Ended
  December 31
  2012 2011
Cash flows provided by operating activities:    
Net (loss) income  $ (6,911)  $ 1,651
Adjustments to reconcile net (loss) income to net    
cash provided by operating activities:    
Inventory write-down  6,694  --
Deferred income taxes  (22)  71
Doubtful accounts receivable provision  176  17
Depreciation and amortization  1,094  1,275
Stock compensation expense  60  25
Amortization of debt costs  61  141
Other   (7)  --
Changes in assets and liabilities:    
Accounts receivable  (202)  (2,115)
Inventories  (7,575)  (3,969)
Other assets  (76)  (222)
Inventory deposits  6,808  3,920
Accounts payable  1,978  2,474
Accrued expenses  406  (445)
Net cash provided by operating activities  2,484  2,823
Cash flows used for investing activities:    
Purchases of property and equipment  (495)  (363)
Sales of property and equipment  178  --
Net cash used for investing activities  (317)  (363)
Cash flows used for financing activities:    
Change in cash overdrafts  (737)  (592)
Change in restricted cash  --  1,434
Net repayments under credit facility  (1,123)  (2,633)
Net cash used for financing activities  (1,860)  (1,791)
Effect of exchange-rate changes on cash and cash equivalents  82  (89)
Net increase in cash and cash equivalents  389  580
Cash and cash equivalents beginning of year  217  414
Cash and cash equivalents end of period  $ 606  $ 994
     

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 (loss) income 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) income to the adjusted EBITDA disclosures.

  Three Months Ended Six Months Ended
  December 31 December 31
   2012   2011   2012   2011 
Net (loss) income $(5,626) $2,726 $(6,911) $1,651
Income taxes 60 103 (69) 202
Interest expense 479 382 771 749
Depreciation and amortization 485 567 968 1,150
Other income (expense)  31  (27)   (5)  11
Inventory write-down 6,694  -- 6,694  --
Investment in new licenses 661 205 756 384
Severances and other restructuring costs  40  86  111  86
Adjusted EBITDA $2,824 $4,042 $2,315 $4,233

We have provided our adjusted net (loss) income 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) income to the adjusted net (loss) income disclosure.

  Three Months Ended Six Months Ended
  December 31 December 31
   2012   2011   2012   2011 
Net (loss) income $(5,626) $2,726 $(6,911) $1,651
Inventory write-down 6,694  -- 6,694  --
Investment in new licenses 661 205 756 384
Severances and other restructuring costs  40  86  111  86
Write-off of unamortized debt costs  --   --  --  98
Adjusted net income $1,769 $3,017 $650 $2,219
Common shares outstanding assuming dilution 7,130 7,076 7,132 7,087
Adjusted net income per common share assuming dilution $0.25 $0.43 $0.09 $0.31
CONTACT: Tandy Brands Accessories, Inc.
         Rod McGeachy
         President and Chief Executive Officer
         214-519-5200
         
         Investor Relations
         Chuck Talley
         Chief Financial Officer
         214-519-5200

Stock quotes in this article: TBAC 

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