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Tandy Brands Reports Fiscal 2013 Fourth Quarter And Year-End Earnings Results

"As a consequence of our recent results, our external auditors modified their audit opinion to include language regarding our ability to continue as a going concern," said Hemminghaus. "Our form 10-K filed today fully outlines our initiatives to continue satisfying obligations and effectively managing liquidity. Those initiatives include completing the Restructuring Plan, executing the new lending agreements completed in July 2013, liquidating unproductive assets and raising additional capital during fiscal 2014." 

The Company confirmed their lender amended the credit agreement on September 26, 2013 to eliminate the going concern language in the audit opinion as an event of default. 

"We are pleased that our new lenders are supporting our efforts to execute our business plan," said Hemminghaus. 

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 capitalize on our restructuring initiatives, our ability to return to profitability, our ability to service our debt, our ability to comply with covenants contained in our financing arrangements, our ability to secure additional or alternative capital, 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
Consolidated Statements Of Operations
(in thousands except per share amounts)
         
  Three Months Ended Twelve Months Ended
  June 30 June 30
  2013 2012 2013 2012
Net sales  $ 20,643  $ 21,562  $ 114,010  $ 117,601
Cost of goods sold  15,254  15,045  81,825  79,718
Inventory write-down  464  --  7,158  --
   15,718  15,045  88,983  79,718
Gross margin  4,925  6,517  25,027  37,883
Selling, general and administrative expenses 7,057  7,896  34,758  37,742
Depreciation and amortization 384  506  1,818  2,205
Intangibles and held for sale impairment  5  --  3,011  --
Restructuring charges  497  --  3,072  --
Total operating expenses  7,943  8,402  42,659  39,947
Operating loss  (3,018)  (1,885)  (17,632)  (2,064)
Interest expense  (734)  (203)  (1,741)  (1,159)
Other expense  (172)  (31)  (107)  (44)
Loss before income taxes   (3,924)  (2,119)  (19,480)  (3,267)
Income tax (benefit) expense   (133)  119  (303)  385
Net loss  $ (3,791)  $ (2,238)  $ (19,177)  $ (3,652)
Other comprehensive loss:        
Currency translation adjustments  (175)  (174) (170) (399)
Total comprehensive loss  $ (3,966)  $ (2,412)  $ (19,347)  $ (4,051)
Loss per share:        
Basic  $ (0.53)  $ (0.32)  $ (2.69)  $ (0.52)
Diluted  $ (0.53)  $ (0.32)  $ (2.69)  $ (0.52)
Weighted average common shares outstanding:    
Basic  7,130  7,078  7,131  7,075
Diluted  7,130  7,078  7,131  7,075
     
 
 Tandy Brands Accessories, Inc. And Subsidiaries
 Consolidated Balance Sheets
 (in thousands)
     
  June 30
  2013 2012
Assets    
Current assets:    
Cash and cash equivalents  $ 518  $ 217
Accounts receivable, net  4,605  7,042
Inventories, net  21,361  28,743
Inventory deposits  837  7,107
Other current assets  1,757  2,824
Total current assets  29,078  45,933
Property and equipment, net  4,373  5,474
Other assets:    
Intangibles  1,100  4,115
Other assets  625  934
Total other assets  1,725  5,049
   $ 35,176  $56,456
Liabilities And Stockholders' Equity    
Current liabilities:    
Accounts payable  $ 9,294  $10,548
Accrued compensation  776  1,309
Accrued expenses  2,204  1,584
Accrued restructuring charges   2,086  --
Credit facility  9,058  11,810
Total current liabilities  23,418  25,251
Other liabilities  4,150  4,290
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 and 7,102 shares issued and outstanding, respectively  7,130  7,102
Additional paid-in capital  34,141  34,129
Accumulated deficit  (35,147)  (15,970)
Other comprehensive income  1,484  1,654
Total stockholders' equity  7,608  26,915
   $ 35,176  $56,456
 
Tandy Brands Accessories, Inc. And Subsidiaries
Consolidated Statements Of Cash Flows
(in thousands)
     
  Year Ended June 30
  2013 2012
Cash flows provided by operating activities:    
Net loss  $(19,177)  $ (3,652)
Adjustments to reconcile net loss to net    
cash provided by operating activities:    
Inventory write-down  7,158  --
Intangibles and held for sale impairments  3,011  --
Deferred income taxes  (215)  127
Doubtful accounts receivable provision  174  802
Depreciation and amortization  2,068  2,455
Stock compensation expense  (130)  152
Amortization of debt costs  389  196
Loss on sale of property and equipment  111  20
Changes in assets and liabilities:    
Accounts receivable  2,251  6,375
Inventories  542  12
Other assets  154  380
Inventory deposits  6,270  (2,906)
Accounts payable  (1,461)  2,289
Accrued expenses and restructuring charges  2,935  (1,337)
Net cash provided by operating activities  4,080  4,913
Cash flows used for investing activities:    
Purchases of property and equipment  (592)  (664)
Sales of property and equipment  391  192
Net cash used for investing activities  (201)  (472)
Cash flows used for financing activities:    
Change in cash overdrafts  (737)  145
Change in restricted cash  --  1,405
Net repayments under credit facility  (2,752)  (6,091)
Net cash used for financing activities  (3,489)  (4,541)
Effect of exchange-rate changes on cash and cash equivalents  (89)  (97)
Net increase (decrease) in cash and cash equivalents  301  (197)
Cash and cash equivalents beginning of year  217  414
Cash and cash equivalents end of period  $ 518  $ 217
Supplemental cash flow information:    
Interest paid  $ 1,080  $ 1,146
Income taxes paid  $ 33  $ 144

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 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 Year Ended
  June 30 June 30
  2013  2012   2013   2012 
Net loss $(3,791) $(2,238) $(19,177) $(3,652)
Income taxes (133) 119 (303) 385
Interest expense 734 203 1,741 1,159
Depreciation and amortization 384 506 1,818 2,205
Other expense 172  31 107  44
Inventory write-down 464   -- 7,158   --
Restructuring charges 443  -- 2,369  --
Intangibles and held for sale impairments 5  -- 3,011  --
Investment in new licenses 189 -- 1,439 597
Facilities consolidation costs --  -- --  222
Bad debt expense --  (105) --  802
Severance costs  54    --  839    --
Adjusted EBITDA (loss) $(1,479) $(1,484) $(998) $1,762

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 Year Ended
  June 30 June 30
   2013   2012   2013   2012 
Net loss $(3,791) $(2,238) $(19,177) $(3,652)
Inventory write-down 464    -- 7,158    --
Restructuring charges 443  -- 2,369  --
Intangibles and held for sale impairments 5  -- 3,011  --
Investment in new licenses 189 -- 1,439 597
Facilities consolidation costs -- -- --  222
Bad debt expense 23  (105) 175  802
Severance costs 54   -- 839   --
Write-off of unamortized debt costs  267   --  267  98
Adjusted net loss $(2,346) $(2,343) $(3,919) $(1,933)
Common shares outstanding assuming dilution 7,130 7,078 7,131 7,075
Adjusted net loss per common share assuming dilution ($0.33) ($0.33) ($0.55) ($0.27)
CONTACT: Tandy Brands Accessories, Inc.	
         Roger Hemminghaus			
         Chief Executive Officer and Chairman
         214-519-5200				

         Investor Relations
         Chuck Talley	
         EVP and Chief Financial Officer
         214-519-5200

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