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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 June 30, 1999
Commission File Number 0-18927
TANDY BRANDS ACCESSORIES, INC.
EMPLOYEES INVESTMENT PLAN
(full title of Plan)
TANDY BRANDS ACCESSORIES, INC.
690 East Lamar Blvd., Suite 200
Arlington, Texas 76011
(Name of issuer of the securities held pursuant to the Plan and
address of its principal executive office.)
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CONTENTS
<TABLE>
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Page
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TABLE OF CONTENTS ................................................. 1
CERTIFIED PUBLIC ACCOUNTANT'S REPORT .............................. 4
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS ................... 5
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS ........ 6
NOTES TO FINANCIAL STATEMENTS ..................................... 7-11
SCHEDULES ......................................................... 12-14
SIGNATURE PAGE .................................................... 15
CONSENT OF INDEPENDENT ACCOUNTANTS ................................ 16
</TABLE>
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TANDY BRANDS ACCESSORIES, INC.
EMPLOYEES INVESTMENT PLAN
FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 1999 AND 1998
[WHITLEY PENN LOGO]
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TANDY BRANDS ACCESSORIES, INC.
EMPLOYEES INVESTMENT PLAN
FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 1999 AND 1998
TABLE OF CONTENTS
<TABLE>
<S> <C>
Report of Independent Auditors ....................................... 4
Financial Statements:
Statements of Net Assets Available for Benefits .................. 5
Statements of Changes in Net Assets Available for Benefits ....... 6
Notes to Financial Statements ........................................ 7
Schedules:
Item 27a - Schedule of Assets Held for Investment Purposes ..... 13
Item 27d - Schedule of Reportable Transactions ................. 14
</TABLE>
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 not been included in the financial
statements or notes thereto.
[WHITLEY PENN LOGO]
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[WHITLEY PENN LETTERHEAD]
REPORT OF INDEPENDENT AUDITORS
To the Administrative Committee and Participants of
Tandy Brands Accessories, Inc. Employees Investment Plan
We have audited the accompanying statements of net assets available for benefits
of Tandy Brands Accessories Inc. Employees Investment Plan ("the Plan") as of
June 30, 1999 and 1998 and the related statement 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 audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
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, based on our audits, 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 June 30,
1999 and 1998, and the changes in its net assets available for benefits for the
years then ended in conformity with generally accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets held
for investment purposes and reportable transactions are presented for the
purpose of additional analysis and are not a required part of the basic
financial statements but are supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Security Act of 1974. The supplemental schedules have
been subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, are fairly stated in all material
respects in relation to the basic financial statements taken as a whole
/s/ WHITLEY PENN
Fort Worth, Texas
March 10, 2000
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TANDY BRANDS ACCESSORIES, INC. EMPLOYEES INVESTMENT
PLAN STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
<TABLE>
<CAPTION>
JUNE 30,
1999 1998
----------- -----------
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 724 $ 5,143
Receivables 31,903 33,430
Employee contributions
Employer contributions 154,413 110,867
Other -- 1,349
Investment in Tandy Brands Accessories, Inc. common stock,
at fair value 16,396,468 18,162,076
Investment in The Bombay Company, Inc. common stock,
at fair value 592 375
----------- -----------
Total assets 16,584,100 18,313,240
LIABILITIES
Federal withholding payable -- 36,816
Excess contributions payable 205,894 195,739
Line of credit (Note H) 1,367,898 1,068,705
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1,573,792 1,301,260
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Net assets available for benefits $15,010,308 $17,011,980
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</TABLE>
See accompanying notes. 5
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TANDY BRANDS ACCESSORIES, INC. EMPLOYEES INVESTMENT PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
1999 1998
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<S> <C> <C>
Additions to net assets
Investment income
Net realized and unrealized appreciation (depreciation)
of investments $ (1,552,936) $ 8,786,017
Interest and dividends 6,433 11,774
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(1,546,503) 8,797,791
Contributions
Employee contributions 482,529 371,865
Employer contributions 723,516 527,747
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1,206,045 899,612
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Total additions (subtractions) to net assets (340,458) 9,697,403
Deductions from net assets
Benefit distributions 1,354,232 1,622,974
Interest expense 102,398 --
Administrative expenses (1,310) 6,395
Contribution refunds 205,894 499,079
------------ ------------
Total deductions to net assets 1,661,214 2,128,448
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Net increase (decrease) (2,001,672) 7,568,955
Net assets available for benefits, beginning of year 17,011,980 9,443,025
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Net assets available for benefits, end of year $ 15,010,308 $ 17,011,980
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</TABLE>
See accompanying notes. 6
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TANDY BRANDS ACCESSORIES, INC. EMPLOYEES INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999
A. DESCRIPTION OF PLAN
The following description of the Tandy Brands Accessories Inc. Employees
Investment Plan (the "Plan") provides only general information. Participants
should refer to the Plan agreement for a more complete description of the Plan's
provisions.
GENERAL
Tandy Brands Accessories, Inc. (the "Company") established the Plan effective as
of January 1, 1991. The Plan is a defined contribution plan covering employees
of the Company who have completed two years of service, of not less than 1,000
hours per year. The Plan is subject to Titles I and II of the Employees
Retirement Income Security Act of 1974 (ERISA) relating to the protection of
employee benefit rights and amendments to the Internal Revenue Code,
respectively, but is not subject to Title IV, relating to plan termination
insurance coverage, such insurance will not be extended to participants in the
Plan in the future.
CONTRIBUTIONS
A participant contributes to the Plan 5% of his qualifying compensation and, for
participants who are employed on the last day of the calendar quarter, such
contribution is matched by a quarterly Company contribution equal to 7 1/2% of
the participants' qualifying compensation for the applicable quarter.
A participant is not subject to federal income tax on Company contributions to
the Plan, or other accumulations, until he makes a withdrawal from the Plan.
PARTICIPANT ACCOUNTS
During the year, the Plan converted from unit accounting to share accounting for
the participant's accounts, further discussed in Note J. Each participant's
account is credited with the participant's contribution monthly and the
Company's contribution for each calendar quarter. The valuation date for
participant contributions is the day the contribution is received or the
following day. For each calendar quarter the Company's contribution will be
allocated as of the last day of the quarter.
VESTING
Participants are immediately vested (at all times) in all contributions plus
actual earnings thereon.
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TANDY BRANDS ACCESSORIES, INC. EMPLOYEES INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
A. DESCRIPTION OF PLAN - CONTINUED
PAYMENT OF BENEFITS
On termination of service due to death or retirement, or in instances of
disability, financial hardship or attainment of age 59 1/2, a participant may
elect to receive (a) lump-sum payment in cash, (b) monthly installments over any
designated period of years, not to exceed ten years, or (c) a combination of
lump-sum payment in cash and Company stock.
B. SUMMARY OF SIGNIFICANT ACCOUNT POLICIES
BASIS OF ACCOUNTING
The financial statements of the Plan are prepared using the accrual method of
accounting.
ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires the plan administrator to make estimates and
assumptions that affect certain reported amounts and disclosures. Accordingly,
actual results may differ from those estimates.
INVESTMENT VALUATION AND INCOME RECOGNITION
The Plan's investments, primarily stock of the Company, are stated at fair
value. The Company stock is valued at its quoted market price. This investment
is subject to market or credit risks customarily associated with equity
investments.
Purchases and sales of securities are recorded on a trade-date basis. Interest
income is recorded on the accrual basis.
PAYMENT OF BENEFITS
Benefits are recorded when paid.
C. TAX STATUS
The Internal Revenue Service has determined and informed the Company by a letter
dated November 28, 1994, that the Plan and related trust are designed in
accordance with applicable sections of the Internal Revenue Code (IRC). The Plan
has been amended since receiving the determination letter. However, the Plan
administrator believes that the Plan is currently designed and being operated in
compliance with the applicable requirements of the Code. Therefore, they believe
that the Plan was qualified and the related trust was tax-exempt as of the
financial statement date.
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TANDY BRANDS ACCESSORIES, INC. EMPLOYEES INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
D. PLAN TERMINATION
Although it has not expressed any intent to do so, the Company has the right
under the Plan to discontinue its contributions at any time and to terminate the
Plan subject to the provisions of ERISA.
E. ADMINISTRATION OF PLAN ASSETS
THE Plan's assets, which consist principally of Tandy Brands Accessories, Inc.
common shares, are held by the trustee of the Plan.
Contributions are held and managed by the trustee, which invests cash received
and interest income, and makes distributions to participants.
Certain administrative functions are performed by officers or employees of the
Company. No such officer or employee receives compensation from the Plan.
Administrative expenses related to the Plan are paid directly by the Company.
F. INVESTMENTS
The Plan's investments are held by a brokerage-administered trust. During 1999
and 1998, the Plan's investments (including investments bought, sold, as well as
held during the year) appreciated (depreciated) in fair value by $(1,552,936)
and $8,786,017, respectively, as follows:
<TABLE>
<CAPTION>
NET APPRECIATION
(DEPRECIATION)
IN FAIR VALUE FAIR VALUE AT
DURING YEAR END OF YEAR
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<S> <C> <C>
Year Ended June 30, 1999:
Fair value as determined by quoted
market price:
Common stock:
Tandy Brands Accessories, Inc. $ (1,553,153) $ 16,396,468
The Bombay Company, Inc. 217 592
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$ (1,552,936) $ 16,397,060
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Year Ended June 30, 1998:
Fair value as determined by quoted
market price:
Common stock:
Tandy Brands Accessories, Inc. $ 8,786,037 $ 18,162,076
The Bombay Company, Inc. (20) 375
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$ 8,786,017 $ 18,162,451
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</TABLE>
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TANDY BRANDS ACCESSORIES, INC. EMPLOYEES INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
F. Investments - CONTINUED
The fair value of individual investments that represent 5% or more of the Plan's
net assets are as follows:
<TABLE>
<CAPTION>
1999 1998
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<S> <C> <C>
Tandy Brands Accessories, Inc. Common Stock
(957,458 and 975,145 shares, respectively) $16,396,468 $18,162,076
</TABLE>
G. BENEFITS PAYABLE
Net assets available for benefits at June 30, 1999 and 1998 includes $326,705
and $1,036,962, respectively, allocated to participants who have elected to
withdraw from the Plan but have not been paid as of year end.
H. LINE OF CREDIT
On February 13, 1998, the Plan entered into a revolving line of credit agreement
with NationsBank of Texas, N.A. (the "Bank") in the amount of $1,500,000, or
such lesser aggregate amount of advances. The line of credit bears interest at
the lesser of (a) the sum of the eurodollar rate for the applicable interest
period, plus three quarter percent (.75%) or (b) the highest nonusurious rate of
interest permitted by applicable law on such day. Interest payments are due
monthly. On August 13, 1998, the Plan amended their revolving line of credit to
increase the available amount to $2,500,000. The unpaid principal amount and all
accrued-but-unpaid interest thereon, shall be due and payable on February 12,
2000.
As security for the payment and performance of the line of credit, the Plan has
pledged and granted a security interest in and to three hundred fifty-seven
thousand one hundred forty-three (357,143) shares of common stock of Tandy
Brands Accessories, Inc. When the line of credit has been paid and performed in
full and all commitments to lend under the agreement have terminated, the pledge
agreement shall terminate and be of no further force or effect.
I. CONTRIBUTION REFUNDS
For the years ended June 30, 1999 and 1998, the excess contribution refunds was
$205,894 and $195,739, respectively. The plan's sponsor paid all taxes related
to these refunds.
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TANDY BRANDS ACCESSORIES, INC. EMPLOYEES INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
J. PLAN AMENDMENT
On February 4, 1999, the Plan's sponsor approved several Plan amendments
effective April 1, 1999. The more significant provisions approved include the
adoption of a 401(k) feature to allow participant salary deferrals; removal of
Frost National Bank as trustee and appointment of Merrill Lynch as successor
trustee; and the removal of Deloitte & Touche as the Trusts' recordkeeper and
the appointment of Benefit Management Pro Systems, Inc. as the Trusts' successor
recordkeeper.
As a part of the amendment, the valuation of accounts will no longer be
expressed in units, but will be converted into shares of Tandy Brands
Accessories, Inc. common stock. As of June 30, 1999, participant accounts will
be expressed in actual number of shares of Tandy Brands stock plus the value of
any cash or other investments. This will enable the accounts to be valued on a
daily basis instead of quarterly, as it has been done in the past. This new
feature also allows terminating participants the freedom to request withdrawals
from the plan on a daily basis instead of waiting to the end of the calendar
quarter to withdraw account balances.
K. SUBSEQUENT EVENT
On September 10, 1999, the Plan reduced their revolving line of credit from
$2,500,000 to $1,500,000.
On March 4, 2000, the Plan's sponsor approved the removal of Merrill Lynch as
trustee and appointment of Morgan Stanley Dean Witter as successor trustee.
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SCHEDULES
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OMB No. 1210-0016
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1998
--------------------
THIS FORM IS OPEN
TO PUBLIC INSPECTION
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SCHEDULE G
(FORM 5500)
Department of the Treasury
Internal Revenue Service
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Department of Labor
Pension and Welfare Benefits Administration
FINANCIAL SCHEDULES
This schedule may be filed as an attachment to the Annual Report Return/Report
Form 5500 under Section 104 of the Employee Retirement Income Security Act
of 1974, referred to as ERISA.
SEE THE INSTRUCTIONS FOR ITEM 27 OF THE FORM 5500.
o ATTACH TO FORM 5500.
For calendar plan year 1998 or fiscal plan year beginning July 1, 1998, and
ending June 30, 1999
Name of plan sponsor as shown on line 1a of Form 5500
TANDY BRANDS ACCESSORIES, INC.
- --------------------------------------------------------------------------------
NAME OF PLAN
TANDY BRANDS ACCESSORIES, INC. EMPLOYEE INVESTMENT PLAN
- --------------------------------------------------------------------------------
EMPLOYER IDENTIFICATION NUMBER
75:2349915
- -------------------------------------
Three-digit
plan number -> 001
- -------------------------------------
PART I SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES--SEE FORM 5500, ITEM 27a
<TABLE>
<CAPTION>
(b) (c) (d) (e)
(a) Identity of issue, borrower, Description of investment including Cost Current value
lessor, or similar party maturity date, rate of interest,
collateral, par or maturity value
<S> <C> <C> <C> <C>
The Bombay Company, Inc. 79 shares of common stock 90 593
- --- ------------------------------- --------------------------------------------- --------- ---------------
* Tandy Brands Accessories, Inc. 958,458 shares of common stock 7,516,395 16,396,520
- --- ------------------------------- --------------------------------------------- --------- ---------------
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FOR PAPERWORK REDUCTION ACT NOTICE, SEE THE INSTRUCTIONS FOR FORM 5500. MGA SCHEDULE G (FORM 5500) 1998
</TABLE>
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Schedule G (Form 5500) 1998 Page 3
<TABLE>
<CAPTION>
PART IV SCHEDULE OF LEASES IN DEFAULT OR CLASSIFIED AS UNCOLLECTIBLE--SEE FORM 5500, ITEM 27c.
(a) (b) (c) (d) (e)
Terms and description (type of
Relationship to plan, property, location and date it was
Identity of employer, employee purchased, terms regarding rent,
lessor/lessee organization, or other taxes, insurance, repairs, Original cost
party-in-interest expenses, renewal options, date
property was leased)
<S> <C> <C> <C> <C>
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</TABLE>
<TABLE>
<CAPTION>
(f) (g) (h) (i) (j)
Gross rental Expenses
Current receipts paid during Net receipts Amount in
value at during the the plan arrears
time of lease plan year year
- -------------- ------------- ------------ ------------ ----------
<S> <C> <C> <C> <C>
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</TABLE>
PART V SCHEDULE OF REPORTABLE TRANSACTIONS--SEE FORM 5500, LINE 27d.
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
Identity of party Description of asset
involved (include interest rate and Purchase Selling price Lease rental
maturity in case of a loan) price
- ----------------- ------------------------------ ----------- -------------- ------------
<S> <C> <C> <C> <C>
Frost National Short Term Treasury Obligation 1,469,577 1,469,577 0
Bank Fund
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</TABLE>
<TABLE>
<CAPTION>
(f) (g) (h) (i)
Expense Cost of Current value Net gain or (Loss)
incurred asset of asset on
with transaction
transaction date
- -------------- ------------- ------------- ------------------
<S> <C> <C> <C>
0 0 0 0
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</TABLE>
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Administrative Committee has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
TANDY BRANDS ACCESSORIES, INC.
EMPLOYEES INVESTMENT PLAN
/s/ J.S.B. Jenkins
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J.S.B. Jenkins
Administrative Committee Member
Date: March 31, 2000
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[WHITLEY PENN LETTERHEAD]
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation of our report dated March 10, 2000, accompanying
the financial statements included in this annual report on Form 11-K, in the
registration statement of Form S-8 (Registration No. 33-41262) pertaining to
the Tandy Brands Accessories, Inc. Employees Investment Plan and the related
prospectus.
/s/ WHITLEY PENN
Fort Worth, Texas
March 10, 2000
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