##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-K
 Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
 For the fiscal year ended June 30, 2006
    
    Commission File Number 0-18927
 TANDY BRANDS ACCESSORIES, INC.
  Delaware
(State or other jurisdiction of 
incorporation or organization)
    
    75-2349915
(I.R.S. Employer
Identification Number)
 690 East Lamar Boulevard, Suite 200, Arlington, TX 76011
 817-548-0090
 Common Stock, Par Value $1.00 Per Share
 None
  o þ
  o þ
  þ o
 o
  o o þ
  o þ
   DOCUMENTS INCORPORATED BY REFERENCE




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##### 



TABLE OF CONTENTS
 PART IItem 1
    
    Business
    
    
    3Item 1A
    
    Risk Factors
    
    
    10Item 1B
    
    Unresolved Staff Comments
    
    
    14Item 2
    
    Properties
    
    
    14Item 3
    
    Legal Proceedings
    
    
    14Item 4
    
    Submission Of Matters To A Vote Of Security Holders
    
    
    14PART IIItem 5
    
    Market For Registrants Common Equity, Related Stockholder Matters
And Issuer Purchases Of Equity Securities
    
    
    15Item 6
    
    Selected Financial Data
    
    
    18Item 7
    
    Managements Discussion and Analysis Of Financial Condition And Results Of Operation
    
    
    18Item 7A
    
    Quantitative And Qualitative Disclosures About Market Risk
    
    
    26Item 8
    
    Financial Statements And Supplementary Data
    
    
    27Item 9
    
    Changes In And Disagreements With Accountants On Accounting And Financial Disclosure
    
    
    46Item 9A
    
    Controls And Procedures
    
    
    46Item 9B
    
    Other Information
    
    
    46PART IIIItem 10
    
    Directors And Executive Officers Of The Registrant
    
    
    47Item 11
    
    Executive Compensation
    
    
    47Item 12
    
    Security Ownership Of Certain Beneficial Owners And Management
And Related Stockholder Matters
    
    
    47Item 13
    
    Certain Relationships And Related Transactions
    
    
    47Item 14
    
    Principal Accountant Fees And Services
    
    
    47PART IVItem 15
    
    Exhibits, Financial Statement Schedules
    
    
    48SIGNATURES
    
    
    48EXHIBIT INDEXCertification Pursuant to Rule 13a-14(a)/15d-14(a) (Chief Executive Officer)Certification Pursuant to Rule 13a-14(a)/15d-14(a) (Chief Financial Officer)Section 1350 Certifications  CEO & CFOAmended and Restated Credit AgreementAmendment No. 2 to the 1995 Stock Deferral Plan for Non-Employee DirectorsAmended and Restated Credit AgreementList of SubsidiariesConsent of Ernst & Young LLPCertification Pursuant to Rule 13a-14(a)/15d-14(a)(CEO)Certification Pursuant to Rule 13a-14(a)/15d-14(a)(CFO)Section 1350 Certifications
  2




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FORWARD-LOOKING STATEMENTS
 This Annual Report on Form 10-K , including the Managements Discussion And Analysis Of Financial
Condition And Results Of Operation, contains forward-looking statements regarding future events
and our future results that are subject to the safe harbors created under the Securities Act of
1933 and the Securities Exchange Act of 1934. Words such as expects, anticipates, intends,
plans, believes, seeks, estimates, continue, may, variations of such words, and
similar expressions are intended to identify forward-looking statements. In addition, any
statements that refer to projections of our future financial performance, our anticipated growth
and trends in our business, and other characterizations of future events or circumstances are
forward-looking statements. We have based these forward looking statements on our current
expectations about future events, estimates and projections about the industry in which we operate.
These statements are not guarantees of future performance and involve risks, uncertainties and
assumptions that are difficult to predict. Our actual results may differ materially from those
suggested by these forward-looking statements for various reasons, including those identified under
Risk Factors on page 10. Given these risks and uncertainties, you are cautioned not to place
undue reliance on forward-looking statements. The forward-looking statements included in this
report 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, we do not
undertake, and specifically decline, 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 report, whether as a result of new information, future events, changes in
assumptions, or otherwise.
 
 PART I
 
 ITEM 1  BUSINES
 What do we do?
  What are our product lines?
  Belts
    
    
    53.3
    %Small leather goods
    
    
    18.0Gift accessories
    
    
    7.9Socks
    
    
    6.1Cold weather goods
    
    
    3.7Handbags and hats
    
    
    3.6Other products
    
    
    7.4100.0
    %
  3




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Belts
   Small Leather Goods
   Other Accessories
  2006
    
    
    2005
    
    
    2004Gift accessories
    
    $
    17.9
    
    
    $
    13.6
    
    
    $
    Socks
    
    
    14.0
    
    
    
    12.1
    
    
    
    17.0Cold weather goods
    
    
    8.4
    
    
    
    6.4
    
    
    
    6.8Handbags and hats
    
    
    8.1
    
    
    
    10.6
    
    
    
    18.3Other products
    
    
    16.7
    
    
    
    17.7
    
    
    
    10.4$
    65.1
    
    
    $
    60.4
    
    
    $
    52.5
 What brands do we sell?
  Type
    
    Net SalesPrivate brands
    
    $
    122.8
    
    
    
    54.0
    %Proprietary brands
    
    
    72.2
    
    
    
    31.8Licensed brands
    
    
    32.3
    
    
    
    14.2$
    227.3
 Private Brand Products
  4




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##### Table of Contents



Exclusive License Agreements
 Ò Ò Ò Ò Ò Ò
   Proprietary Brands
  Distribution Of Our Key Brands
  Brand
    
    Distribution Channel
    
    ProductsDockersÒ
    
    National chain stores
    
    BeltsDepartment stores
    
    HandbagsSpecialty stores
    
    Small leather goodsLevisÒ
    
    National chain stores
    
    BeltsDepartment stores
    
    Small leather goodsSpecialty storesLevi Strauss Signature
    
    Mass merchants
    
    BeltsNational chain stores
    
    Small leather goods
Casual multipurpose bagsJones New YorkÒ
    
    Department stores
    
    BeltsSpecialty stores
    
    Small leather goodsRolfsÒ
    
    Department stores
    
    Small leather goodsSpecialty storesHaggarÒ
    
    National chain stores
    
    BeltsDepartment stores
    
    Small leather goodsCatalogs
 5




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##### Table of Contents



Brand
    
    Distribution Channel
    
    ProductsJordacheÒ
    
    National chain stores
    
    BeltsCanterburyÒ
    
    Specialty stores
    
    BeltsGolf pro shops
    
    Small leather goodsPrince GardnerÒ
    
    National chain stores
    
    Small leather goodsSpecialty storesPrincess GardnerÒ
    
    National chain stores
    
    Small leather goodsSpecialty storesAmityÒ
    
    Mass merchants
    
    Small leather goodsNational chain storesColettaÒ
    
    Mass merchants
    
    HandbagsNational chain storesAccessory Design GroupÒ
    
    Mass merchants
    
    BeltsNational chain stores
    
    Womens accessoriesTigerÒ
    
    Mass merchants
    
    BeltsNational chain storesStaggÒ
    
    Mass merchants
    
    BeltsNational chain stores
    
    Small leather goodsETONÒ
    
    Department stores
    
    Gift accessoriesSpecialty storestotesÒ
    
    Department stores
    
    Gift accessoriesSpecialty storesSurplus®
    
    National chain stores
    
    BeltsSmall leather goodsGift accessoriesEileen West
    
    Department stores
    
    BeltsSpecialty stores
    
    Small leather goodsHandbags
 What are our channels of distribution?
  Department stores
    
    E-commerce websitesSpecialty chains
    
    National chain storesMass merchants
    
    Outlet storesUnited States military retail exchange operations
    
    Off-price storesGolf pro shops
    
    Sporting goods storesSupermarkets
    
    Individual specialty storesUniform stores
    
    Catalog retailersTV shopping networks
    
    Shoe storesDrug stores
    
    Wholesale clubsOffice supply stores
    
    Premium markets
 6




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Who are our customers?
  Department Stores
    
    National Chains
    
    Mass MerchantsFederated/Macys
    
    JCPenney (U.S. and Mexico)
    
    Wal-Mart (U.S., Canada and Mexico)Belk
    
    Kohls
    
    TargetSaks, Inc.
    
    Goodys
    
    Shopko/PamidaDillards
    
    AAFES
    
    Fred MeyerBon-Ton/Carsons
    
    Mervyns
    
    K MartStage
    
    Casual Male
    
    Zellers (Canada)Nordstrom
    
    Sears (U.S. and Canada)
    
    MeijerGottschalks
    
    Stein MartThe Bay (Canada)
    
    TJ MaxxMarshallsMoores (Canada)
  How do we maintain strong customer relations?
   Did we have firm backlog orders for fiscal 2006 and the prior fiscal year?
  7




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How do we merchandise and develop our products?
   What is our competitive position?
  
    
    trends toward more casual attire which has increased demand for accessories outside the
traditional dress category;
    
    increased consumer awareness of branded accessories as a fashion and lifestyle statement; and
    
    a desire for newness and change in accessories styles.
   Product Segment
    
    Primary CompetitorsMens and Boys Belts
    
    Swank, Randa/Humphreys, Cipriani, and FossilMens Wallets
    
    Buxton, Randa/Humphreys, Mundi, Fossil, Swank, and CiprianiWomens and Girls Belts
    
    Cipriani, Liz Claiborne, Circa, Accessory Network, and FossilWomens Handbags
    
    Nine West, Liz Claiborne, Kenneth Cole, and FossilWomens
Small Leather Goods
    
    Buxton, Mundi, Fossil, Liz Claiborne, and Nine West
  How do we seek to grow our business?
  8




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Where and how do we manufacture our products?
   Is our business seasonal?
 ®
 First
    
    Second
    
    Third
    
    FourthQuarter
    
    Quarter
    
    Quarter
    
    QuarterNet salesFiscal 2006
    
    
    26.8
    %
    
    
    32.5
    %
    
    
    20.0
    %
    
    
    20.7
    %Fiscal 2005
    
    
    27.3
    
    
    
    33.4
    
    
    
    19.9
    
    
    
    19.4Net income (loss)Fiscal 2006
    
    
    42.4
    %
    
    
    58.8
    %
    
    
    (171.0
    )%
    
    
    (30.2
    )%Fiscal 2005
    
    
    70.6
    
    
    
    107.6
    
    
    
    (25.0
    )
    
    
    (53.2
    )
 What are the sources and availability of our raw materials?
  Are we subject to governmental regulations?
   How many employees do we have?
  9




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What role does intellectual property play in our business?
  What are our working capital practices?
  What financial information about our business segments and geographic areas of operation is
available?
  Where can investors access additional information about Tandy Brands?
  
 ITEM 1A  RISK FACTORS
  Risks Relating To Our Business
 A significant portion of our sales are to a few major customers.
  10




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We do not maintain long-term contracts with our customers and are unable to control their
purchasing decisions.
  Direct sales to customers by suppliers could negatively impact our sales.
  We extend unsecured credit to our customers and are subject to potential financial difficulties
they may face.
  The loss of certain of our license agreements could result in the loss of significant sales.
 ®
 Manufacturing and distribution problems could delay product shipments.
   The loss of, or problems with, third-party manufacturers could adversely impact our operations.
  11




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Our business is dependent on our ability to maintain proper inventory levels.
  Increases in the market price of leather could negatively affect our operating results.
  Risks Relating To Our Industry
 Our business is highly subject to consumer preferences and fashion trends.
  Our industry is highly competitive and subject to pricing pressures that could adversely affect our
financial position.
  Our industry is highly subject to economic cycles and retail industry conditions.
  Consolidation in the retail industry may negatively impact our operations.
  
    
    store closures;
    
    increased customer leverage over suppliers, resulting in lower product prices or lower margins;
    
    tighter inventory management on the part of the customer, resulting in lower inventory
levels and decreased orders; and
    
    a greater exposure to customer credit risk.
 12




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Risks Relating To International Operations
 We source many of our products from foreign countries.
  Fluctuations in foreign currencies could adversely impact our financial condition.
  Risks Relating To Our Company
 Our business depends on a limited number of key personnel with whom we do not have employment
agreements. The loss of any one of these individuals could disrupt our business.
  We are dependent on the creative talent of our designers and the effectiveness of our sales
personnel.
  The failure to successfully integrate future acquisitions could negatively impact our business.
  The requirements of complying with the Exchange Act and the Sarbanes-Oxley Act may strain our
resources.
  13




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ITEM 1B  UNRESOLVED STAFF COMMENTS
  
 ITEM 2  PROPERTIES
  Form ofFacility Location
    
    Use
    
    OwnershipYoakum, Texas (4 facilities)
    
    Leather product manufacturing, product
distribution, 
and administrative offices
    
    OwnWest Bend, Wisconsin
    
    Distribution of small leather goods and handbags
    
    OwnScarborough, Ontario, Canada
    
    Manufacture and distribution of leather goods
    
    LeaseDallas, Texas
    
    Distribution of womens accessories
    
    LeaseArlington, Texas
    
    Corporate offices
    
    LeaseNew York, New York
    
    Office space
    
    LeaseBirmingham, Alabama
    
    Office space
    
    LeaseMinneapolis, Minnesota
    
    Office space
    
    LeaseNew Orleans, Louisiana
    
    Office space
    
    LeaseHong Kong
    
    Office space
    
    Lease
  Square FeetOwned
    
    Leased
    
    TotalWarehouse and Office
    
    
    506,000
    
    
    
    267,000
    
    
    
    773,000Factory
    
    
    60,000
    
    
    
    27,000
    
    
    
    87,000Total
    
    
    566,000
    
    
    
    294,000
    
    
    
    860,000
 
 ITEM 3  LEGAL PROCEEDINGS
  
 ITEM 4  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  14




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PART II
 
 ITEM 5  MARKET FOR THE REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES
 What is the principal market for our common stock
  Fiscal 2006
    
    Fiscal 2005Quarter Ended
    
    High
    
    Low
    
    High
    
    LowSeptember 30
    
    $
    12.00
    
    
    $
    10.23
    
    
    $
    14.45
    
    
    $
    12.76December 31
    
    $
    12.30
    
    
    $
    10.77
    
    
    $
    14.84
    
    
    $
    13.74March 31
    
    $
    12.10
    
    
    $
    9.93
    
    
    $
    15.01
    
    
    $
    13.02June 30
    
    $
    10.85
    
    
    $
    9.78
    
    
    $
    14.99
    
    
    $
    10.43
 How many common stockholders do we have?
  Did we declare any cash dividends in fiscal 2006 or the prior fiscal year?
  DividendDeclaration Date
    
Record Date
    
    
    Payable Date
    
    Per ShareFiscal 2006August 16, 2005
    
    September 30, 2005
    
    October 20, 2005
    
    $0.0275October 18, 2005
    
    December 30, 2005
    
    January 20, 2006
    
    $0.0275January 12, 2006
    
    March 31, 2006
    
    April 20, 2006
    
    $0.0275April 18, 2006
    
    June 30, 2006
    
    July 20, 2006
    
    $0.0275Fiscal 2005August 12, 2004
    
    September 30, 2004
    
    October 19, 2004
    
    $0.0275December 2, 2004
    
    December 31, 2004
    
    January 20, 2005
    
    $0.0275February 8, 2005
    
    March 31, 2005
    
    April 20, 2005
    
    $0.0275April 21, 2005
    
    June 30, 2005
    
    July 20, 2005
    
    $0.0275
  15




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How many shares of common stock are authorized for issuance under our equity compensation plans?
          (A)
    
    (B)
    
    (C)Number of Securities
    
    
    
    
    
    Number Of Securities RemainingTo Be Issued Upon
    
    Weighted-Average
    
    Available For Future IssuanceExercise Of
    
    Exercise Price Of
    
    Under Equity CompensationOutstanding Options,
    
    Outstanding Options,
    
    Plans (Excluding SecuritiesPlan Category
    
    Warrants And Rights
    
    Warrants And Rights
    
    Reflected In Column (A))Equity Compensation
Plans Approved by Stockholders
    
    
    739,203
    (1)
    
    $
    11.85
    (2)
    
    
    939,367
    (3) (5)Equity Compensation
Plans Not Approved by Stockholders
    
    
    15,000
    (4)
    
    $
    6.09
    
    
    
    Total
    
    
    754,203
    
    
    $
    11.73
    (2)
    
    
    939,367
 
 (1)
    
    Includes options to purchase common stock:1993 Employee Stock Option Plan  1,800 shares;1997 Employee Stock Option Plan  316,057 shares;Nonqualified Formula Stock Option Plan for Non-Employee Directors  66,591 shares;2002 Omnibus Plan  328,292 shares; and1995 Stock Deferral Plan for Non-Employee Directors  26,463 shares of common stock
issuable upon settlement of phantom stock units.(2)
    
    Calculation of weighted-average exercise price does not include phantom stock
units credited to participants accounts under the 1995 Stock Deferral Plan for
Non-Employee Directors.(3)
    
    Includes 434,443 shares of common stock issuable under the 2002 Omnibus Plan and
23,537 shares of common stock issuable under the 1995 Stock Deferral Plan for Non-Employee
Directors. Upon adoption of the 2002 Omnibus Plan by our stockholders at our 2002 annual
stockholders meeting, the number of shares authorized and reserved for issuance under our
previously existing stock option plans were transferred to the 2002 Omnibus Plan and are
presently authorized and reserved for issuance under that plan. All shares of common stock
authorized and reserved for issuance on the exercise of outstanding stock options under our
previous stock option plans and the 2002 Omnibus Plan will, on the cancellation or
expiration of any such stock options, automatically be authorized and reserved for issuance
under the 2002 Omnibus Plan.(4)
    
    Options to purchase an aggregate of 15,000 shares of common stock under
nonqualified stock option agreements for non-employee directors dated October 16, 2001 with
Dr. James F. Gaertner (4,250), Gene Stallings (4,250), Roger R. Hemminghaus (2,500), and
Colombe M. Nicholas (4,000). These options became fully vested six months after the grant
date and expire on October 16, 2011. 16




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(5)
    
    Includes 481,387 shares of common stock issuable under the Stock Purchase
Program. The Stock Purchase Program is open to all full-time employees who have been
employed at least six months, but less than one year, or who have been employed one year or
more and are contributing to the Tandy Brands Accessories, Inc. Employees Investment Plan.
Under the Stock Purchase Program participants may contribute 5% or 10% of their earnings
and we match 25% or 50% of each participants contribution depending on their length of
employment or other considerations. The Stock Purchase Program purchases treasury stock,
if available, or unissued common stock directly from the Company at monthly average market
prices. The participants shares are fully vested upon purchase and the participant may
withdraw from the Stock Purchase Program at any time. The shares purchased under the Stock
Purchase Program are distributed to participants annually. Did the company repurchase any shares of common stock during the fourth quarter of fiscal 2006?
  Total Number Of
    
    Maximum NumberTotal
    
    
    
    
    
    Shares Purchased
    
    Of Shares That MayNumber
    
    Average
    
    As Part Of Publicly
    
    Yet Be Purchased AsOf Shares
    
    Price Paid
    
    Announced Plans
    
    Part Of The PlansPeriod
    
    Purchased
    
    Per Share
    
    Or Programs
    
    Or ProgramsApril 1, 2006 to April 30, 2006
    
    
    185
    
    
    $
    10.48
    
    
    
    N/A
    
    
    
    N/AMay 1, 2006 to May 31, 2006
    
    
    9,739
    
    
    $
    10.60
    
    
    
    N/A
    
    
    
    N/AJune 1, 2006 to June 30, 2006
    
    
    478
    
    
    $
    10.33
    
    
    
    N/A
    
    
    
    N/ATotal
    
    
    10,402
    
    
    $
    10.58
    
    
    
    N/A
    
    
    
    N/A
 17




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ITEM 6  SELECTED FINANCIAL DATA
 Selected Financial Data
(in thousands except per share amounts)
 Year Ended June 302006(1)
    
    2005
    
    2004
    
    2003(2)
    
    2002(2)Net sales
    
    $
    227,323
    
    
    $
    221,232
    
    
    $
    215,420
    
    
    $
    224,487
    
    
    $
    205,769Gross margin
    
    
    68,871
    
    
    
    81,233
    
    
    
    75,285
    
    
    
    78,088
    
    
    
    72,063Operating (loss) income
    
    
    (2,405
    )
    
    
    7,386
    
    
    
    13,711
    
    
    
    15,371
    
    
    
    13,385Interest expense
    
    
    2,057
    
    
    
    1,222
    
    
    
    2,357
    
    
    
    2,833
    
    
    
    3,152Net (loss) income
    
    
    (3,462
    )
    
    
    3,987
    
    
    
    6,952
    
    
    
    7,011
    
    
    
    6,177(Loss) earnings per common share
    
    
    (0.52
    )
    
    
    0.63
    
    
    
    1.12
    
    
    
    1.18
    
    
    
    1.07(Loss) earnings per common share assuming dilution
    
    
    (0.52
    )
    
    
    0.61
    
    
    
    1.09
    
    
    
    1.16
    
    
    
    1.06Cash dividends declared per common share
    
    
    0.11
    
    
    
    0.11
    
    
    
    0.10
    
    
    
    
    
    
    
    Working capital
    
    
    86,530
    
    
    
    86,625
    
    
    
    80,684
    
    
    
    88,416
    
    
    
    77,476Total assets
    
    
    138,944
    
    
    
    150,762
    
    
    
    134,623
    
    
    
    147,120
    
    
    
    132,037Long-term debt
    
    
    14,000
    
    
    
    16,055
    
    
    
    10,000
    
    
    
    30,000
    
    
    
    30,000Stockholders equity
    
    
    104,839
    
    
    
    105,430
    
    
    
    98,948
    
    
    
    89,188
    
    
    
    79,923
 
 (1)
    
    Information about discontinued product line inventory, associated packaging
costs, and severance payments and a goodwill impairment charge and their impact on fiscal
2006 is incorporated herein by reference to Notes 4 and 5 of the notes to consolidated
financial statements included in Item 8 of this Annual Report(2)
    
    Fiscal 2003 net income was reduced $581,000, or $0.10 per share, by the
cumulative effect of the accounting change from adopting Statement of Financial Accounting
Standards No. 142, Goodwill and Other Intangible Assets. Fiscal 2002 net income would
have been $622,000, or $0.11 per share, greater if the accounting change had been made
prior to that year. 
 ITEM 7  MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
  Overview
  18




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Increase
    
    
    
    
    
    
    Increase2006
    
    
    (Decrease)
    
    
    2005
    
    
    (Decrease)
    
    
    2004Net sales:Mens accessories
    
    $
    138,515
    
    
    
    2.9
    %
    
    $
    134,584
    
    
    
    18.5
    %
    
    $
    113,558Womens accessories
    
    
    88,808
    
    
    
    2.5
    
    
    
    86,648
    
    
    
    (14.9
    )
    
    
    101,862$
    227,323
    
    
    
    2.8
    
    
    $
    221,232
    
    
    
    2.7
    
    
    $
    215,420Gross margin:Mens accessories
    
    $
    51,157
    
    
    
    (5.2
    )%
    
    $
    53,941
    
    
    
    21.6
    %
    
    $
    44,360Womens accessories
    
    
    17,714
    
    
    
    (35.1
    )
    
    
    27,292
    
    
    
    (11.7
    )
    
    
    30,925$
    68,871
    
    
    
    (15.2
    )
    
    $
    81,233
    
    
    
    7.9
    
    
    $
    75,285Gross margin percent of sales:Mens accessories
    
    
    36.9
    %
    
    
    
    
    
    
    40.1
    %
    
    
    
    
    
    
    39.1
    %Womens accessories
    
    
    19.9
    
    
    
    
    
    
    
    31.5
    
    
    
    
    
    
    
    30.4Total
    
    
    30.3
    
    
    
    
    
    
    
    36.7
    
    
    
    
    
    
    
    34.9
   2006
    

Mens
    
    

Womens
    
    
    TotalBelts
    
    $
    88,879
    
    
    
    64.2
    %
    
    $
    32,350
    
    
    
    36.4
    %
    
    $
    121,229
    
    
    
    53.3
    %Small leather goods
    
    
    18,500
    
    
    
    13.4
    
    
    
    22,502
    
    
    
    25.4
    
    
    
    41,002
    
    
    
    18.0Gift accessories
    
    
    17,903
    
    
    
    12.9
    
    
    
    
    
    
    
    
    
    
    
    17,903
    
    
    
    7.9Socks
    
    
    
    
    
    
    
    
    
    
    13,981
    
    
    
    15.7
    
    
    
    13,981
    
    
    
    6.1Cold weather goods
    
    
    
    
    
    
    
    
    
    
    8,380
    
    
    
    9.5
    
    
    
    8,380
    
    
    
    3.7Handbags and hats
    
    
    
    
    
    
    
    
    
    
    8,114
    
    
    
    9.1
    
    
    
    8,114
    
    
    
    3.6Other products
    
    
    13,233
    
    
    
    9.5
    
    
    
    3,481
    
    
    
    3.9
    
    
    
    16,714
    
    
    
    7.4$
    138,515
    
    
    
    
    
    
    $
    88,808
    
    
    
    
    
    
    $
    227,3232005Belts
    
    $
    91,401
    
    
    
    67.9
    %
    
    $
    27,682
    
    
    
    32.0
    %
    
    $
    119,083
    
    
    
    53.8
    %Small leather goods
    
    
    17,408
    
    
    
    12.9
    
    
    
    24,329
    
    
    
    28.1
    
    
    
    41,737
    
    
    
    18.9Gift accessories
    
    
    13,655
    
    
    
    10.2
    
    
    
    
    
    
    
    
    
    
    
    13,655
    
    
    
    6.2Socks
    
    
    
    
    
    
    
    
    
    
    12,077
    
    
    
    13.9
    
    
    
    12,077
    
    
    
    5.5Cold weather goods
    
    
    
    
    
    
    
    
    
    
    6,441
    
    
    
    7.4
    
    
    
    6,441
    
    
    
    2.8Handbags and hats
    
    
    
    
    
    
    
    
    
    
    10,561
    
    
    
    12.2
    
    
    
    10,561
    
    
    
    4.8Other products
    
    
    12,120
    
    
    
    9.0
    
    
    
    5,558
    
    
    
    6.4
    
    
    
    17,678
    
    
    
    8.0$
    134,584
    
    
    
    
    
    
    $
    86,648
    
    
    
    
    
    
    $
    221,2322004Belts
    
    $
    87,226
    
    
    
    76.8
    %
    
    $
    30,390
    
    
    
    29.8
    %
    
    $
    117,616
    
    
    
    54.6
    %Small leather goods
    
    
    18,329
    
    
    
    16.2
    
    
    
    27,018
    
    
    
    26.5
    
    
    
    45,347
    
    
    
    21.1Socks
    
    
    
    
    
    
    
    
    
    
    16,977
    
    
    
    16.7
    
    
    
    16,977
    
    
    
    7.9Cold weather goods
    
    
    
    
    
    
    
    
    
    
    6,809
    
    
    
    6.7
    
    
    
    6,809
    
    
    
    3.2Handbags and hats
    
    
    
    
    
    
    
    
    
    
    18,303
    
    
    
    18.0
    
    
    
    18,303
    
    
    
    8.4Other products
    
    
    8,003
    
    
    
    7.0
    
    
    
    2,365
    
    
    
    2.3
    
    
    
    10,368
    
    
    
    4.8$
    113,558
    
    
    
    
    
    
    $
    101,862
    
    
    
    
    
    
    $
    215,420
 19




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##### Table of Contents



Increase
    
    
    
    
    
    
    Increase2006
    
    
    (Decrease)
    
    
    2005
    
    
    (Decrease)
    
    
    2004Selling, general and administrative expense:Mens accessories
    
    $
    40,037
    
    
    
    0.4
    %
    
    $
    39,866
    
    
    
    34.8
    %
    
    $
    29,574Womens accessories
    
    
    25,183
    
    
    
    (10.4
    )
    
    
    28,109
    
    
    
    0.6
    
    
    
    27,945$
    65,220
    
    
    
    (4.1
    )
    
    $
    67,975
    
    
    
    18.2
    
    
    $
    57,519Depreciation and amortization:Mens accessories
    
    $
    3,253
    
    
    
    5.9
    %
    
    $
    3,073
    
    
    
    43.8
    %
    
    $
    2,137Womens accessories
    
    
    1,865
    
    
    
    (4.5
    )
    
    
    1,952
    
    
    
    1.8
    
    
    
    1,918$
    5,118
    
    
    
    1.9
    
    
    $
    5,025
    
    
    
    23.9
    
    
    $
    4,055Interest expense
    
    $
    2,057
    
    
    
    68.3
    %
    
    $
    1,222
    
    
    
    (48.2
    )%
    
    $
    2,357
 Challenges And Opportunities
   
    
    The womens segment will focus on our core competencies of womens and childrens belts,
small leather goods, handbags, and gift accessories;
    
    All other product categories in the womens segment, including socks, cold weather
accessories, fashion scarves, evening bags, and childrens accessories (excluding belts),
have been discontinued, except for fulfilling existing orders and programs;
    
    A $6.9 million provision was recorded in the third quarter ended March 31, 2006 to write
down inventory and packaging to our best estimate of the market value that we expect will
be realized; and
    
    Thirty-three positions in our womens Dallas distribution facility were eliminated in
the discontinued product areas resulting in one-time payroll costs of approximately
$200,000 in the third quarter.
  2006 COMPARED TO 2005
 Net Sales And Gross Margins
 ®
 20




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##### Table of Contents



Operating Expense
       Summary
  21




---



##### Table of Contents



2005 COMPARED TO 2004
 Net Sales And Gross Margins
    Operating Expense
     22




---



##### Table of Contents



Summary
  LIQUIDITY AND CAPITAL RESOURCES
      23




---



##### Table of Contents



OFF-BALANCE SHEET ARRANGEMENTS
  CONTRACTUAL OBLIGATIONS
  Less Than
    
    
    
    
    
    
    
    
    
    
    More ThanTotal
    
    
    1 Year
    
    
    1-3 Years
    
    
    3-5 Years
    
    
    5 YearsLong-term debt (1)
    
    $
    14,000
    
    
    $
    
    
    
    $
    14,000
    
    
    $
    
    
    
    $
    Operating leases (2)
    
    
    8,754
    
    
    
    2,107
    
    
    
    4,213
    
    
    
    1,723
    
    
    
    711License royalties (2)
    
    
    2,606
    
    
    
    1,348
    
    
    
    1,247
    
    
    
    11
    
    
    
    Supplemental executive retirement obligation (3)
    
    
    1,133
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,133Purchase obligations (4)
    
    
    40,287
    
    
    
    40,287
    
    
    
    
    
    
    
    
    
    
    
    $
    66,780
    
    
    $
    43,742
    
    
    $
    19,460
    
    
    $
    1,734
    
    
    $
    1,844
 
 (1)
    
    Consolidated financial statement Notes 6 and 7. Interest is expensed and paid
monthly and is not included in the obligation. Our interest rate at June 30, 2006 was
7.35%.(2)
    
    Consolidated financial statement Note 9 describes our lease and license
agreements.(3)
    
    Consolidated financial statement Note 13 describes the supplemental executive
retirement obligation.(4)
    
    Purchase orders in the ordinary course of business that may be cancelled without
penalty, including $3 million of outstanding letters of credit which typically mature in
two to six months in conjunction with purchase commitments. 24




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##### Table of Contents



CRITICAL ACCOUNTING POLICIES
   Revenues And Accounts Receivable Allowances
  Sensitivity Analysis
 Sales
    
    Allowances
    
    
    
    
    
    EarningsChange
    
    Reserves
    
    Expense
    
    Per ShareChange in customer allowances and returns
    
    
    +/-    0.5
    %
    
    $
    1,137/($1,137
    )
    
    $
    1,137/$(1,137
    )
    
    $
    (0.11)/$0.11Change in accounts receivable reserve
    
    
    +/- 0.125
    
    
    
    284/(284
    )
    
    
    284/(284
    )
    
    
    (0.03)/ 0.03
 Inventories
  Sensitivity Analysis
 Percentage
    
    
    
    
    
    
    
    
    
    EarningsOf Inventory
    
    Inventory
    
    Expense
    
    Per ShareChange in inventory markdown
    
    
    -1
    %
    
    $
    (618
    )
    
    $
    618
    
    
    $
    (0.06
    )
 25




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##### Table of Contents



Goodwill
   Share-Based Compensation
  IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS
  INFLATION
  
 ITEM
7A  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    26




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##### Table of Contents



ITEM 8
 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
        
 27




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##### Table of Contents



Tandy Brands Accessories, Inc. And Subsidiaries
Consolidated Balance Sheets
(in thousands of dollars)
 June 302006
    
    
    2005AssetsCurrent assets:Cash and cash equivalents
    
    $
    4,182
    
    
    $
    3,429Accounts receivable
    
    
    27,322
    
    
    
    31,437Inventories
    
    
    61,770
    
    
    
    67,981Deferred income taxes
    
    
    3,792
    
    
    
    4,229Other current assets
    
    
    5,784
    
    
    
    2,359Total current assets
    
    
    102,850
    
    
    
    109,435Property and equipment
    
    
    12,430
    
    
    
    13,846Other assets:Goodwill
    
    
    16,292
    
    
    
    17,101Other intangibles
    
    
    5,653
    
    
    
    6,403Supplemental Executive Retirement Plan
    
    
    
    
    
    
    1,702Other assets
    
    
    1,719
    
    
    
    2,275Total other assets
    
    
    23,664
    
    
    
    27,481$
    138,944
    
    
    $
    150,762Liabilities And Stockholders EquityCurrent liabilities:Accounts payable
    
    $
    10,106
    
    
    $
    15,908Accrued compensation
    
    
    2,583
    
    
    
    3,558Accrued expenses
    
    
    3,631
    
    
    
    3,344Total current liabilities
    
    
    16,320
    
    
    
    22,810Other liabilities:Notes payable
    
    
    14,000
    
    
    
    16,055Supplemental executive retirement obligation
    
    
    1,133
    
    
    
    2,926Deferred income taxes
    
    
    1,640
    
    
    
    2,086Other liabilities
    
    
    1,012
    
    
    
    1,455Total other liabilities
    
    
    17,785
    
    
    
    22,522CommitmentsStockholders equity:Preferred stock, $1 par value, 1,000,000 shares authorized, none issued
    
    
    
    
    
    
    Common stock, $1 par value, 10,000,000 shares authorized,
6,795,183 shares and 6,573,166 shares issued and outstanding
    
    
    6,795
    
    
    
    6,573Additional paid-in capital
    
    
    31,911
    
    
    
    29,597Retained earnings
    
    
    65,960
    
    
    
    70,164Other comprehensive income
    
    
    988
    
    
    
    77Shares held by Benefit Restoration Plan Trust
    
    
    (815
    )
    
    
    (981
    )Total stockholders equity
    
    
    104,839
    
    
    
    105,430$
    138,944
    
    
    $
    150,762
  28




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##### Table of Contents



Tandy Brands Accessories, Inc. And Subsidiaries
Consolidated Statements Of Operations
(in thousands except per share amounts)
 Year Ended June 302006
    
    
    2005
    
    
    2004Net sales
    
    $
    227,323
    
    
    $
    221,232
    
    
    $
    215,420Cost of goods sold
    
    
    151,552
    
    
    
    139,999
    
    
    
    140,135Provision for discontinued product line inventory
    
    
    6,900
    
    
    
    
    
    
    
    158,452
    
    
    
    139,999
    
    
    
    140,135Gross margin
    
    
    68,871
    
    
    
    81,233
    
    
    
    75,285Selling, general and administrative expenses
    
    
    65,220
    
    
    
    67,975
    
    
    
    57,519Depreciation and amortization
    
    
    5,118
    
    
    
    5,025
    
    
    
    4,055Goodwill impairment
    
    
    938
    
    
    
    847
    
    
    
    Total operating expenses
    
    
    71,276
    
    
    
    73,847
    
    
    
    61,574Operating (loss) income
    
    
    (2,405
    )
    
    
    7,386
    
    
    
    13,711Interest expense
    
    
    (2,057
    )
    
    
    (1,222
    )
    
    
    (2,357
    )Royalty and other income
    
    
    187
    
    
    
    246
    
    
    
    128(Loss) income before income taxes
    
    
    (4,275
    )
    
    
    6,410
    
    
    
    11,482Income taxes (benefit)
    
    
    (813
    )
    
    
    2,423
    
    
    
    4,530Net (loss) income
    
    $
    (3,462
    )
    
    $
    3,987
    
    
    $
    6,952(Loss) earnings per common share
    
    $
    (0.52
    )
    
    $
    0.63
    
    
    $
    1.12(Loss) earnings per common share assuming dilution
    
    $
    (0.52
    )
    
    $
    0.61
    
    
    $
    1.09Cash dividends declared per common share
    
    $
    0.11
    
    
    $
    0.11
    
    
    $
    0.10Common shares outstanding
    
    
    6,598
    
    
    
    6,349
    
    
    
    6,229Common shares outstanding assuming dilution
    
    
    6,598
    
    
    
    6,588
    
    
    
    6,389
  29




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##### Table of Contents



Tandy Brands Accessories, Inc. And Subsidiaries
Consolidated Statements Of Cash Flows
(in thousands)
 Year Ended June 302006
    
    
    2005
    
    
    2004Cash flows provided by operating activities:Net (loss) income
    
    $
    (3,462
    )
    
    $
    3,987
    
    
    $
    6,952Adjustments to reconcile net (loss) income
to net cash provided by operating activities:Provision for discontinued product line inventory
    
    
    6,900
    
    
    
    
    
    
    
    Depreciation and amortization
    
    
    5,295
    
    
    
    5,190
    
    
    
    4,229Goodwill impairment
    
    
    938
    
    
    
    847
    
    
    
    Stock compensation expense
    
    
    860
    
    
    
    
    
    
    
    Amortization of debt origination costs
    
    
    149
    
    
    
    127
    
    
    
    116Excess income tax benefit from stock option exercises
    
    
    (71
    )
    
    
    216
    
    
    
    257Deferred income taxes
    
    
    (167
    )
    
    
    (1,930
    )
    
    
    477Other
    
    
    286
    
    
    
    229
    
    
    
    90Change in assets and liabilities net of effects from acquisitions:Accounts receivable
    
    
    4,115
    
    
    
    2,567
    
    
    
    8,245Inventories
    
    
    (689
    )
    
    
    (8,319
    )
    
    
    5,070Other assets
    
    
    (2,451
    )
    
    
    (1,476
    )
    
    
    (655
    )Accounts payable
    
    
    (4,426
    )
    
    
    1,641
    
    
    
    (298
    )Accrued expenses
    
    
    (1,060
    )
    
    
    1,477
    
    
    
    (1,470
    )Net cash provided by operating activities
    
    
    6,217
    
    
    
    4,556
    
    
    
    23,013Cash flows used for investing activities:Purchases of property and equipment
    
    
    (2,972
    )
    
    
    (3,513
    )
    
    
    (3,118
    )Purchase of Superior Merchandise Company
    
    
    
    
    
    
    (10,000
    )
    
    
    Purchase of SERP investments
    
    
    
    
    
    
    (850
    )
    
    
    Net cash used for investing activities
    
    
    (2,972
    )
    
    
    (14,363
    )
    
    
    (3,118
    )Cash flows (used) provided by financing activities:Stock sold to stock purchase program
    
    
    1,235
    
    
    
    1,500
    
    
    
    1,640Stock options exercised
    
    
    441
    
    
    
    1,092
    
    
    
    1,203Dividends paid
    
    
    (737
    )
    
    
    (691
    )
    
    
    (466
    )Change in cash overdrafts
    
    
    (1,376
    )
    
    
    
    
    
    
    Proceeds from borrowings
    
    
    69,148
    
    
    
    81,626
    
    
    
    36,950Borrowing repayments
    
    
    (71,203
    )
    
    
    (76,377
    )
    
    
    (56,950
    )Net cash (used) provided by financing activities
    
    
    (2,492
    )
    
    
    7,150
    
    
    
    (17,623
    )Net increase (decrease) in cash and cash equivalents
    
    
    753
    
    
    
    (2,657
    )
    
    
    2,272Cash and cash equivalents beginning of year
    
    
    3,429
    
    
    
    6,086
    
    
    
    3,814Cash and cash equivalents end of year
    
    $
    4,182
    
    
    $
    3,429
    
    
    $
    6,086Supplemental cash flow information:Interest paid
    
    $
    1,848
    
    
    $
    1,065
    
    
    $
    2,686Income taxes paid
    
    $
    1,841
    
    
    $
    3,371
    
    
    $
    4,717
  30




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##### Table of Contents



Tandy Brands Accessories, Inc. And Subsidiaries
Consolidated Statements Of Stockholders Equity
(in thousands of dollars except per share amounts)
 Shares HeldAdditional
    
    
    
    
    
    
    Other
    
    
    By Benefit
    
    
    TotalCommon Stock
    
    
    Paid-In
    
    
    Retained
    
    
    Comprehensive
    
    
    Restoration
    
    
    Stockholders'Shares
    
    
    Amount
    
    
    Capital
    
    
    Earnings
    
    
    Income (Loss)
    
    
    Plan Trust
    
    
    EquityBalance June 30, 2003
    
    
    6,019,286
    
    
    $
    6,019
    
    
    $
    23,802
    
    
    $
    60,563
    
    
    $
    (1,196
    )
    
    $
    
    
    
    $
    89,188Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,952
    
    
    
    
    
    
    
    
    
    
    
    6,952Currency translation adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    57
    
    
    
    
    
    
    
    57Interest rate swap fair value
net of tax of $646
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,018
    
    
    
    
    
    
    
    1,0188,027Cash dividends declared  $0.10 per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (623
    )
    
    
    
    
    
    
    
    
    
    
    (623
    )Stock sold to Stock Purchase Program
    
    
    117,299
    
    
    
    118
    
    
    
    1,522
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,640Stock options exercised
    
    
    142,781
    
    
    
    142
    
    
    
    1,318
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,460Restricted stock issued
    
    
    26,520
    
    
    
    27
    
    
    
    306
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    333Restricted stock unearned compensation
    
    
    
    
    
    
    
    
    
    
    (183
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (183
    )Benefit Restoration Plan Trust shares purchased
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (894
    )
    
    
    (894
    )Balance June 30, 2004
    
    
    6,305,886
    
    
    
    6,306
    
    
    
    26,765
    
    
    
    66,892
    
    
    
    (121
    )
    
    
    (894
    )
    
    
    98,948Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,987
    
    
    
    
    
    
    
    
    
    
    
    3,987Currency translation adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    467
    
    
    
    
    
    
    
    467SERP minimum liability increase
net of tax of $158
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (269
    )
    
    
    
    
    
    
    (269
    )4,185Cash dividends declared  $0.11 per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (715
    )
    
    
    
    
    
    
    
    
    
    
    (715
    )Stock sold to Stock Purchase Program
    
    
    108,964
    
    
    
    109
    
    
    
    1,391
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,500Stock options exercised
    
    
    133,738
    
    
    
    133
    
    
    
    1,175
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,308Restricted stock issued
    
    
    20,970
    
    
    
    21
    
    
    
    274
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    295Restricted stock unearned compensation
    
    
    
    
    
    
    
    
    
    
    (38
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (38
    )Directors stock deferral plan shares issued
    
    
    3,608
    
    
    
    4
    
    
    
    30
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    34Benefit Restoration Plan Trust shares purchased
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (87
    )
    
    
    (87
    )Balance June 30, 2005
    
    
    6,573,166
    
    
    
    6,573
    
    
    
    29,597
    
    
    
    70,164
    
    
    
    77
    
    
    
    (981
    )
    
    
    105,430Comprehensive income (loss):Net (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,462
    )
    
    
    
    
    
    
    
    
    
    
    (3,462
    )Currency translation adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    642
    
    
    
    
    
    
    
    642SERP minimum liability decrease
net of tax of $158
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    269
    
    
    
    
    
    
    
    269(2,551
    )Cash dividends declared  $0.11 per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (742
    )
    
    
    
    
    
    
    
    
    
    
    (742
    )Stock sold to Stock Purchase Program
    
    
    112,876
    
    
    
    113
    
    
    
    1,122
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,235Stock options exercised
    
    
    57,694
    
    
    
    58
    
    
    
    383
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    441Share-based compensation
    
    
    51,447
    
    
    
    51
    
    
    
    809
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    860Benefit Restoration Plan Trust net shares sold
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    166
    
    
    
    166Balance June 30, 2006
    
    
    6,795,183
    
    
    $
    6,795
    
    
    $
    31,911
    
    
    $
    65,960
    
    
    $
    988
    
    
    $
    (815
    )
    
    $
    104,839
  31




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 1  Overview
 The Company
  Basis Of Presentation
   Foreign Currency Translation
  Financial Instrument Fair Values
  Note 2  Summary Of Significant Accounting Policies
 Cash And Cash Equivalents
  Accounts Receivable And Allowances
  32




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##### Table of Contents



Note 2  Summary Of Significant Accounting Policies
  Beginning
    
    Charged To
    
    
    
    
    
    EndingFiscal Year
    
    Balance
    
    Expense
    
    Deductions
    
    Balance2006
    
    $
    1,483
    
    
    $
    7,278
    
    
    $
    7,163
    
    
    $
    1,5982005
    
    
    1,142
    
    
    
    7,843
    
    
    
    7,502
    
    
    
    1,4832004
    
    
    1,745
    
    
    
    3,902
    
    
    
    4,505
    
    
    
    1,142
 Inventories
  2006
    
    
    2005Raw materials
    
    $
    3,999
    
    
    $
    4,971Work-in-process
    
    
    1,321
    
    
    
    1,154Finished goods
    
    
    56,450
    
    
    
    61,856$
    61,770
    
    
    $
    67,981
  Property And Equipment
  2006
    
    
    2005
    
    
    Depreciation RatesBuildings
    
    $
    8,343
    
    
    $
    8,272
    
    
    
    3%Leasehold improvements
    
    
    2,799
    
    
    
    2,901
    
    
    Lesser of lease term or asset lifeMachinery and equipment
    
    
    25,977
    
    
    
    26,569
    
    
    10% to 50%37,119
    
    
    
    37,742Accumulated depreciation
    
    
    (24,689
    )
    
    
    (23,896
    )$
    12,430
    
    
    $
    13,846
   Goodwill And Other Intangibles
  Impairment Of Long-Lived Assets And Goodwill
  33




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##### Table of Contents



Note 2  Summary Of Significant Accounting Policies
  Derivative Instruments And Hedging Activities
  Revenues And Cost Of Goods Sold
   Advertising Costs
  Share-Based Compensation
  34




---



##### Table of Contents



Note 2  Summary Of Significant Accounting Policies
  2005
    
    
    2004Net income:As reported
    
    $
    3,987
    
    
    $
    6,952Add share-based compensation expense net of tax
    
    
    160
    
    
    
    99As adjusted
    
    
    4,147
    
    
    
    7,051Less compensation expense per SFAS No. 123 net of tax
    
    
    (711
    )
    
    
    (574
    )Pro forma
    
    $
    3,436
    
    
    $
    6,477Earnings per share:As reported
    
    $
    0.63
    
    
    $
    1.12Pro forma
    
    $
    0.54
    
    
    $
    1.04Earnings per share assuming dilution:As reported
    
    $
    0.61
    
    
    $
    1.09Pro forma
    
    $
    0.52
    
    
    $
    1.01
  Impact Of Recently Issued Accounting Standards
   Note 3  Acquisition
 ® ®
 35




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##### Table of Contents



Note 4  Discontinued Product Lines
  Note 5  Goodwill And Intangibles
  Mens
    
    
    WomensAccessories
    
    
    Accessories
    
    
    TotalJune 30, 2004
    
    $
    9,871
    
    
    $
    1,784
    
    
    $
    11,655Purchase of ETON
    
    
    6,182
    
    
    
    
    
    
    
    6,182Impairment
    
    
    
    
    
    
    (847
    )
    
    
    (847
    )Currency translation adjustment
    
    
    111
    
    
    
    
    
    
    
    111June 30, 2005
    
    
    16,164
    
    
    
    937
    
    
    
    17,101Impairment
    
    
    
    
    
    
    (937
    )
    
    
    (937
    )Currency translation adjustment
    
    
    128
    
    
    
    
    
    
    
    128June 30, 2006
    
    $
    16,292
    
    
    $
    
    
    
    $
    16,292
    2006
    
    
    2005Gross carrying
amount
    
    
    
    
    
    $
    9,561
    
    
    $
    11,383Accumulated
amortization
    
    
    
    
    
    
    (3,908
    )
    
    
    (4,980
    )$
    5,653
    
    
    $
    6,403
 2006
    
    
    Weighted-Average LifeBalance
    
    
    Expense
    
    
    Total
    
    
    RemainingTrade names
    
    $
    3,752
    
    
    $
    347
    
    
    
    22
    
    
    
    11Customer lists
    
    
    1,786
    
    
    
    357
    
    
    
    7
    
    
    
    5Other
    
    
    115
    
    
    
    47
    
    
    
    8
    
    
    
    4$
    5,653
    
    
    $
    751
    
    
    
    14
    
    
    
    8
   36




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##### Table of Contents



Note 6  Credit Arrangements
     Total credit facilities
    
    $
    85,897Less:Debt outstanding
    
    
    14,000Letters of credit outstanding
    
    
    2,972Canadian standby letter of credit
    
    
    897Credit available
    
    $
    68,028
   Note 7  Credit Facility Amendment
  Note 8  Related Party Transactions
  37




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##### Table of Contents



Note 9  Commitments
    Fiscal Year
    
    Rent
    
    
    Royalty2007
    
    $
    2,107
    
    
    $
    1,3482008
    
    
    2,108
    
    
    
    9522009
    
    
    2,105
    
    
    
    2952010
    
    
    1,146
    
    
    
    62011
    
    
    577
    
    
    
    5Thereafter
    
    
    711
    
    
    
    $
    8,754
    
    
    $
    2,606
 Note 10  Preferred Stock And Preferred Share Purchase Rights
 Preferred Stock
   Preferred Share Purchase Rights
   38




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##### Table of Contents



Note 11  Share-Based Compensation
 Omnibus Plan
    Awards Granted
    39




---



##### Table of Contents



Note 11  Share-Based Compensation
  2006
    
    2005
    
    2004Stock Option Estimated Fair Value AssumptionsStock price volatility
    
    
    0.390
    %
    
    
    0.388
    %
    
    
    0.238
    %Dividend yield
    
    
    1.0
    %
    
    
    1.0
    %
    
    
    1.0
    %Expected holding period
    
    5 years
    
    5 years
    
    7 yearsRisk-free interest rate
    
    4% and 4.59%
    
    
    3.25
    %
    
    
    5.25
    %Weighted-Average Estimated Fair Value Of GrantsRestricted stock
    
    $
    10.74
    
    
    $
    13.55
    
    
    $
    12.56Stock options
    
    $
    3.95
    
    
    $
    4.74
    
    
    $
    4.76Fair Value Of Restricted Stock Vested
    
    $
    48,000
    
    
    $
    24,000
    
    
    
    Options ExercisedTotal intrinsic value
    
    $
    255,000
    
    
    $
    769,000
    
    
    $
    879,000Cash received
    
    $
    371,000
    
    
    $
    1,092,000
    
    
    $
    1,203,000Tax benefit realized
    
    $
    71,000
    
    
    $
    216,000
    
    
    $
    257,000Compensation ExpenseRecognized
    
    $
    860,000
    
    
    $
    257,000
    
    
    $
    150,000Income tax benefit
    
    $
    318,000
    
    
    $
    97,000
    
    
    $
    51,000Unrecognized
    
    $
    722,000Weighted-average
future recognition period
    
    1.7 years
  Weighted-Average
    
    AggregateRemaining
    
    IntrinsicNumber
    
    Exercise
    
    Contractual
    
    ValueStock Options
    
    Of Shares
    
    Price
    
    Term
    
    ($000)Outstanding June 30, 2005
    
    
    919,462
    
    
    $
    11.92Granted
    
    
    90,426
    
    
    $
    10.74Exercised
    
    
    (67,243
    )
    
    $
    7.02Forfeited and cancelled
    
    
    (214,905
    )
    
    $
    13.62Outstanding June 30, 2006
    
    
    727,740
    
    
    $
    11.73Vested and expected to vest
    
    
    711,461
    
    
    $
    11.75
    
    
    5.6 Years
    
    $
    603Exercisable
    
    
    549,704
    
    
    $
    11.66
    
    
    4.9 Years
    
    $
    603
 Weighted-AverageNumber
    
    Grant-DateRestricted Stock
    
    Of Shares
    
    Fair ValueNonvested June 30, 2005
    
    
    45,820
    
    
    $
    13.12Granted
    
    
    51,447
    
    
    $
    10.74Vested
    
    
    (4,148
    )
    
    $
    14.59Nonvested June 30, 2006
    
    
    93,119
    
    
    $
    11.74
 40




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##### Table of Contents



Note 12  Director Stock Deferral Plan
  Note 13  Employee Benefit Plans
      41




---



##### Table of Contents



Note 13  Employee Benefit Plans
    Projected benefit obligation change:Balance June 30, 2004
    
    $
    2,285Service cost
    
    
    19Interest cost
    
    
    171Actuarial gain
    
    
    899Balance June 30, 2005
    
    $
    3,374Funded status reconciliation:Funded status
    
    $
    (3,374
    )Unrecognized prior service cost
    
    
    1,702Unrecognized net loss
    
    
    875Accrued benefit liability
    
    $
    (797
    )
 Note 14  Income Taxes
  2006
    
    
    2005Deferred tax assets:Accounts receivable valuation
    
    $
    344
    
    
    $
    507Inventory valuation
    
    
    2,584
    
    
    
    3,200Compensation plans
    
    
    1,305
    
    
    
    1,157Other net
    
    
    65
    
    
    
    4,298
    
    
    
    4,864Deferred tax liabilities:Goodwill and other intangibles
    
    
    (1,992
    )
    
    
    (1,916
    )Depreciation
    
    
    (154
    )
    
    
    (791
    )Other net
    
    
    
    
    
    
    (14
    )(2,146
    )
    
    
    (2,721
    )Net deferred tax asset
    
    $
    2,152
    
    
    $
    2,143
 42




---



##### Table of Contents



Note 14  Income Taxes
  2006
    
    
    2005
    
    
    2004Current:Federal
    
    $
    (1,023
    )
    
    $
    3,586
    
    
    $
    3,341State and local
    
    
    275
    
    
    
    407
    
    
    
    594Foreign
    
    
    244
    
    
    
    202
    
    
    
    118(504
    )
    
    
    4,195
    
    
    
    4,053Deferred:Federal
    
    
    (265
    )
    
    
    (1,577
    )
    
    
    458State and local
    
    
    (44
    )
    
    
    (195
    )
    
    
    19(309
    )
    
    
    (1,772
    )
    
    
    477$
    (813
    )
    
    $
    2,423
    
    
    $
    4,530
  2006
    
    2005
    
    2004Statutory rate
    
    
    (34.0
    )%
    
    
    34.0
    %
    
    
    34.0
    %State, foreign and local taxes net of federal tax benefit
    
    
    5.2
    
    
    
    2.3
    
    
    
    3.5Goodwill impairment
    
    
    7.5
    
    
    
    
    
    
    
    Other net
    
    
    2.3
    
    
    
    1.5
    
    
    
    2.0(19.0
    )%
    
    
    37.8
    %
    
    
    39.5
    %
 Note 15  Earnings (Loss) Per Share
  2006
    
    
    2005
    
    
    2004Numerator for basic and diluted earnings (loss) per share:Net (loss) income
    
    $
    (3,462
    )
    
    $
    3,987
    
    
    $
    6,952Denominator:Weighted-average shares outstanding
    
    
    6,575
    
    
    
    6,327
    
    
    
    6,208Contingently issuable shares
    
    
    23
    
    
    
    22
    
    
    
    21Denominator for basic earnings (loss) per share
    
    
    6,598
    
    
    
    6,349
    
    
    
    6,229Effect of dilutive stock options
    
    
    
    
    
    
    239
    
    
    
    160Denominator for diluted earnings (loss) per share
    
    
    6,598
    
    
    
    6,588
    
    
    
    6,389(Loss) earnings per common share
    
    $
    (0.52
    )
    
    $
    0.63
    
    
    $
    1.12(Loss) earnings per common share assuming dilution
    
    $
    (0.52
    )
    
    $
    0.61
    
    
    $
    1.09
  43




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##### Table of Contents



Note 16  Disclosures About Segments Of Our Business And Related Information
   2006
    
    
    2005
    
    
    2004Net sales to external customers:Mens accessories
    
    $
    138,515
    
    
    $
    134,584
    
    
    $
    113,558Womens accessories
    
    
    88,808
    
    
    
    86,648
    
    
    
    101,862$
    227,323
    
    
    $
    221,232
    
    
    $
    215,420Operating income (loss): (1)Mens accessories (2)
    
    $
    7,867
    
    
    $
    11,002
    
    
    $
    12,612Womens accessories (3)
    
    
    (10,272
    )
    
    
    (3,616
    )
    
    
    1,099(2,405
    )
    
    
    7,386
    
    
    
    13,711Interest expense
    
    
    (2,057
    )
    
    
    (1,222
    )
    
    
    (2,357
    )Other income (4)
    
    
    187
    
    
    
    246
    
    
    
    128(Loss) income before income taxes
    
    $
    (4,275
    )
    
    $
    6,410
    
    
    $
    11,482Depreciation and amortization:Mens accessories
    
    $
    3,253
    
    
    $
    3,073
    
    
    $
    2,137Womens accessories
    
    
    1,865
    
    
    
    1,952
    
    
    
    1,918$
    5,118
    
    
    $
    5,025
    
    
    $
    4,055Capital expenditures:Mens accessories
    
    $
    579
    
    
    $
    559
    
    
    $
    475Womens accessories
    
    
    524
    
    
    
    354
    
    
    
    1,102Corporate
    
    
    1,869
    
    
    
    2,600
    
    
    
    1,541$
    2,972
    
    
    $
    3,513
    
    
    $
    3,118Total assets:Mens accessories
    
    $
    83,539
    
    
    $
    88,451
    
    
    $
    70,144Womens accessories
    
    
    36,227
    
    
    
    44,929
    
    
    
    44,584Corporate
    
    
    19,178
    
    
    
    17,382
    
    
    
    19,895$
    138,944
    
    
    $
    150,762
    
    
    $
    134,623
 
 (1)
    
    Operating income (loss) consists of net sales less cost of goods sold and specifically identifiable and allocated
selling, general and administrative expenses.(2)
    
    Mens accessories 2006 operating income includes a $1.1 charge for inventory mark downs.(3)
    
    Womens accessories 2006 operating loss includes a $7.1 million charge for discontinued product line inventory,
associated packaging costs, and severance payments and a $938,000 charge for goodwill impairment. In 2005
womens accessories incurred an $847,000 goodwill impairment charge.(4)
    
    Other income includes royalty income from corporate trade names and other income not specifically identifiable
with a segment.  44




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##### Table of Contents



Note 16  Disclosures About Segments Of Our Business And Related Information
  2006
    
    
    2005
    
    
    2004Net sales:United States
    
    $
    218,255
    
    
    $
    213,368
    
    
    $
    208,570Canada
    
    
    9,068
    
    
    
    7,864
    
    
    
    6,850$
    227,323
    
    
    $
    221,232
    
    
    $
    215,420(Loss) income before income taxes:United States
    
    $
    (4,779
    )
    
    $
    5,976
    
    
    $
    11,232Canada
    
    
    504
    
    
    
    434
    
    
    
    250$
    (4,275
    )
    
    $
    6,410
    
    
    $
    11,482Property and equipment:United States
    
    $
    36,430
    
    
    $
    37,150
    
    
    $
    34,089Canada
    
    
    689
    
    
    
    592
    
    
    
    492$
    37,119
    
    
    $
    37,742
    
    
    $
    34,581Total assets:United States
    
    $
    131,361
    
    
    $
    143,586
    
    
    $
    128,735Canada
    
    
    7,583
    
    
    
    7,176
    
    
    
    5,888$
    138,944
    
    
    $
    150,762
    
    
    $
    134,623
  Note 17  Selected Quarterly Financial Data (Unaudited)
  First
    
    Second
    
    Third
    
    FourthFiscal 2006
    
    Quarter
    
    Quarter
    
    Quarter
    
    QuarterNet sales
    
    $
    60,948
    
    
    $
    73,866
    
    
    $
    45,414
    
    
    $
    47,095Gross margin
    
    
    20,280
    
    
    
    24,955
    
    
    
    7,901
    
    
    
    15,735Income (loss) before income taxes
    
    
    2,439
    
    
    
    3,938
    
    
    
    (9,466
    )
    
    
    (1,186
    )Net income (loss)
    
    
    1,467
    
    
    
    2,036
    
    
    
    (5,921
    )
    
    
    (1,044
    )Earnings (loss) per common share
    
    $
    0.22
    
    
    $
    0.31
    
    
    $
    (0.89
    )
    
    $
    (0.16
    )Earnings (loss) per common share assuming dilution
    
    $
    0.22
    
    
    $
    0.30
    
    
    $
    (0.89
    )
    
    $
    (0.16
    )
  Fiscal 2005Net sales
    
    $
    60,474
    
    
    $
    73,990
    
    
    $
    43,905
    
    
    $
    42,863Gross margin
    
    
    22,060
    
    
    
    28,032
    
    
    
    16,066
    
    
    
    15,075Income (loss)
before income taxes
    
    
    4,562
    
    
    
    6,998
    
    
    
    (1,711
    )
    
    
    (3,439
    )Net income (loss)
    
    
    2,814
    
    
    
    4,291
    
    
    
    (997
    )
    
    
    (2,121
    )Earnings (loss) per
common share
    
    $
    0.44
    
    
    $
    0.68
    
    
    $
    (0.16
    )
    
    $
    (0.33
    )Earnings (loss) per
common share
assuming dilution
    
    $
    0.43
    
    
    $
    0.65
    
    
    $
    (0.16
    )
    
    $
    (0.33
    )
  45




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##### Table of Contents



ITEM 9  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
  
 ITEM 9A  CONTROLS AND PROCEDURES
  
 ITEM
9B  OTHER INFORMATION
  46




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##### Table of Contents



PART III
  Caption In The
    
    Page Number In TheTandy Brands Accessories, Inc.
    
    Tandy Brands Accessories, Inc.Item
    
    2006 Proxy Statement
    
    2006 Proxy StatementITEM 10  DIRECTORS
AND EXECUTIVE
OFFICERS OF THE
REGISTRANT
    
    Proposal One: Election of
Directors
    
    
    5  7Executive Officers
    
    
    10Section 16(a) Beneficial
Ownership Reporting Compliance
    
    
    12  13Corporate Governance
 Has the Board of Directors
adopted a Code of Ethics? 
    
    
    19Corporate Governance
 What are the Board of
Directors committees? What
functions do they serve?
    
    
    19  21ITEM 11  EXECUTIVE
COMPENSATION
    
    Executive Officer and
Non-Employee Director
Compensation
 How do we compensate our
executive officers?
    
    
    13  16Executive Officer and
Non-Employee Director
Compensation
 How do we compensate our
non-employee directors?
    
    
    16  17Stock Performance
    
    
    18Corporate Governance
 What are the Board of
Directors committees? What
functions do they serve?
 Compensation Committee
Interlocks and Insider
Participation
    
    
    19  21Report of Compensation
Committee
    
    
    24  25ITEM 12  SECURITY
OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS
AND MANAGEMENT
    
    Security Ownership of Certain
Beneficial Owners
    
    
    10  12ITEM 13  CERTAIN
RELATIONSHIPS AND
RELATED TRANSACTIONS
    
    Certain Relationships and
Related Transactions
    
    
    17ITEM 14  PRINCIPAL
ACCOUNTANT FEES AND
SERVICES
    
    Independent Auditor
    
    
    21  22
 47




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##### Table of Contents



PART IV
 
 ITEM 15
 EXHIBITS, FINANCIAL STATEMENT SCHEDULES
   
 SIGNATURES
  TANDY BRANDS ACCESSORIES, INC.
(Registrant)/s/ J.S.B. JenkinsJ.S.B. JenkinsPresident and Chief Executive Officer   Name
    
    Position
    
    Date/s/Dr. James F. Gaertner

Dr. James F. Gaertner
    
    Director and
Chairman of the Board
    
    September 22, 2006/s/J.S.B. Jenkins

J.S.B. Jenkins
    
    Director, President and
Chief Executive
Officer (principal
executive officer)
    
    September 22, 2006/s/Roger R. Hemminghaus

Roger R. Hemminghaus
    
    Director
    
    September 22, 2006/s/Gene Stallings

Gene Stallings
    
    Director
    
    September 22, 2006/s/Colombe M. Nicholas

Colombe M. Nicholas
    
    Director
    
    September 22, 2006/s/George C. Lake

George C. Lake
    
    Director
    
    September 22, 2006/s/W. Grady Rosier

W. Grady Rosier
    
    Director
    
    September 22, 2006/s/Mark J. Flaherty

Mark J. Flaherty
    
    Chief Financial Officer

(principal financial
and accounting
officer)
    
    September 22, 2006
 48




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##### Table of Contents



TANDY BRANDS ACCESSORIES, INC. AND SUBSIDIARIES
 
 EXHIBIT INDEX
 Incorporated by Reference(if applicable)Exhibit Number and Description
    
    Form
    
    Date
    
    File No.
    
    Exhibit(3)
    
    Articles of Incorporation and Bylaws3.1
    
    
    Certificate of Incorporation of
Tandy Brands Accessories, Inc.
    
    S-1
    
    11/02/90
    
    33-37588
    
    
    3.13.2
    
    
    Restated Bylaws of Tandy Brands
Accessories, Inc.
    
    10-Q
    
    2/11/05
    
    0-18927
    
    
    3.2(4)
    
    Instruments defining the rights of security
holders, including indentures4.1
    
    
    Certificate of Designations, Powers,
Preferences, and Rights of Series A
Junior Participating Cumulative
Preferred Stock of Tandy Brands
Accessories, Inc.
    
    S-1
    
    12/17/90
    
    33-37588
    
    
    4.14.2
    
    
    Form of Common Stock Certificate of
Tandy Brands Accessories, Inc.
    
    S-1
    
    12/17/90
    
    33-37588
    
    
    4.24.3
    
    
    Form of Preferred Share Purchase
Rights Certificate of Tandy Brands
Accessories, Inc.
    
    S-1
    
    12/17/90
    
    33-37588
    
    
    4.34.4
    
    
    Form of Rights Certificate of Tandy
Brands Accessories, Inc.
    
    8-K
    
    11/02/99
    
    0-18927
    
    
    44.5
    
    
    Amended and Restated Rights
Agreement, dated October 19, 1999,
between Tandy Brands Accessories, Inc.
and Bank Boston, N.A.
    
    8-K
    
    11/02/99
    
    0-18927
    
    
    44.6
    
    
    Amendment to Rights Agreement, dated
October 19, 1999, between Tandy Brands
Accessories, Inc. and Fleet National
Bank (f.k.a. Bank Boston, N.A.)
    
    10-Q
    
    5/10/02
    
    0-18927
    
    
    4.74.7
    
    
    Amended and Restated Credit
Agreement among Tandy Brands
Accessories, Inc. as the Borrower, Wells
Fargo HSBC Trade Bank, N.A. as
Administrative Agent and as a Lender,
and Certain Financial Institutions, as
Lenders and Wells Fargo Bank, N.A. as
Arranger as of September 7, 2006**
    
    N/A
    
    N/A
    
    N/A
    
    
    N/A(10)
    
    Material Contracts10.1
    
    
    Tandy Brands Accessories, Inc.
Benefit Restoration Plan and related Trust
Agreement and Amendments Nos. 1 and 2
thereto*
    
    10-K
    
    9/25/97
    
    0-18927
    
    
    10.1410.2
    
    
    Amendment No. 3 to the Tandy Brands
Accessories, Inc. Benefit Restoration
Plan, effective as of July 1, 2003*
    
    10-K
    
    9/23/03
    
    0-18927
    
    
    10.32
 1




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##### Table of Contents



TANDY BRANDS ACCESSORIES, INC. AND SUBSIDIARIES
 EXHIBIT INDEX
 Incorporated by Reference(if applicable)Exhibit Number and Description
    
    Form
    
    Date
    
    File No.
    
    Exhibit10.3
    
    
    Succession Agreement, dated July 1,
2001, between Tandy Brands Accessories,
Inc. and Chase Texas, N.A. (the Former
Trustee) and Comerica Bank  Texas (the
Trustee), relating to the Tandy Brands
Accessories, Inc. Benefit Restoration
Plan*
    
    10-K
    
    9/23/03
    
    0-18927
    
    
    10.3410.4
    
    
    Form of Indemnification
Agreement between Tandy Brands
Accessories, Inc. and each of its Directors
    
    S-1
    
    12/17/90
    
    33-37588
    
    
    10.1610.5
    
    
    Form of Indemnification Agreement
between Tandy Brands Accessories, Inc. and
each of its Officers
    
    S-1
    
    12/17/90
    
    33-37588
    
    
    10.1710.6
    
    
    Tandy Brands Accessories, Inc.
Non-Qualified Formula Stock Option Plan
for Non-Employee Directors*
    
    S-8
    
    2/10/94
    
    33-75114
    
    
    28.110.7
    
    
    Amendment No. 4 to the Tandy Brands
Accessories, Inc. Nonqualified Formula
Stock Option Plan For Non-Employee
Directors*
    
    10-Q
    
    5/10/02
    
    0-18927
    
    
    10.3910.8
    
    
    Tandy Brands Accessories, Inc.
1993 Employee Stock Option Plan and form
of Stock Option Agreement
thereunder*
    
    S-8
    
    2/10/94
    
    33-75114
    
    
    28.210.9
    
    
    Tandy Brands Accessories, Inc.
Non-Qualified Stock Option Plan for
Non-Employee Directors*
    
    S-8
    
    2/10/94
    
    33-75114
    
    
    28.310.10
    
    
    Tandy Brands Accessories, Inc. 1995
Stock Deferral Plan for Non-Employee
Directors*
    
    S-8
    
    6/03/96
    
    33-08579
    
    
    99.110.11
    
    
    Tandy Brands Accessories, Inc. 1997
Employee Stock Option Plan*
    
    S-8
    
    12/12/97
    
    333-42211
    
    
    99.110.12
    
    
    Amendment No. 2 to the Tandy Brands
Accessories, Inc. 1997 Employee Stock
Option Plan*
    
    10-Q
    
    5/10/02
    
    0-18927
    
    
    10.3810.13
    
    
    Tandy Brands Accessories, Inc.
Employees Investment Plan, as Amended and
Restated effective July 1, 2000*
    
    10-K
    
    9/26/00
    
    0-18927
    
    
    10.39
 2




---



##### Table of Contents



TANDY BRANDS ACCESSORIES, INC. AND SUBSIDIARIES
 EXHIBIT INDEX
 Incorporated by Reference(if applicable)Exhibit Number and Description
    
    Form
    
    Date
    
    File No.
    
    Exhibit10.14
    
    
    Mid-Market Trust Agreement, dated
August 19, 2001, between Tandy Brands
Accessories, Inc. and State Street Bank and
Trust Company, relating to the Tandy Brands
Accessories, Inc. Employees Investment
Plan*
    
    10-K
    
    9/23/03
    
    0-18927
    
    
    10.2810.15
    
    
    Amendments Nos. 1-3 to the Tandy
Brands Accessories, Inc. Employees
Investment Plan, as Amended and Restated
effective July 1, 2000*
    
    10-K
    
    9/23/03
    
    0-18927
    
    
    10.3110.16
    
    
    Succession Agreement, dated June 20,
2002, between Tandy Brands Accessories,
Inc. and Comerica Bank  Texas, (the
Trustee), relating to the Tandy Brands
Accessories, Inc. Employees Investment
Plan*
    
    10-K
    
    9/23/03
    
    0-18927
    
    
    10.3510.17
    
    
    Amendment No. 4 to the Tandy Brands
Accessories, Inc. Employees Investment
Plan, dated December 22, 2003*
    
    10-Q
    
    2/12/04
    
    0-18927
    
    
    10.3810.18
    
    
    Nonqualified Stock Option Agreement
for Non-Employee Directors, dated October
16, 2001, by and between Tandy Brands
Accessories, Inc. and Dr. James F.
Gaertner*
    
    S-8
    
    5/15/02
    
    33-88276
    
    
    10.210.19
    
    
    Nonqualified Stock Option Agreement
for Non-Employee Directors, dated October
16, 2001, by and between Tandy Brands
Accessories, Inc. and Marvin J. Girouard*
    
    S-8
    
    5/15/02
    
    33-88276
    
    
    10.310.20
    
    
    Nonqualified Stock Option Agreement
for Non-Employee Directors, dated October
16, 2001, by and between Tandy Brands
Accessories, Inc. and Gene Stallings*
    
    S-8
    
    5/15/02
    
    33-88276
    
    
    10.410.21
    
    
    Nonqualified Stock Option Agreement
for Non-Employee Directors, dated October
16, 2001, by and between Tandy Brands
Accessories, Inc. and Roger R. Hemminghaus*
    
    S-8
    
    5/15/02
    
    33-88276
    
    
    10.510.22
    
    
    Nonqualified Stock Option Agreement
for Non-Employee Directors, dated October
16, 2001, by and between Tandy Brands
Accessories, Inc. and Colombe M. Nicholas*
    
    S-8
    
    5/15/02
    
    33-88276
    
    
    10.610.23
    
    
    Tandy Brands Accessories, Inc. 2002
Omnibus Plan*
    
    10-Q
    
    11/12/02
    
    0-18927
    
    
    10.24
 3




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##### Table of Contents



TANDY BRANDS ACCESSORIES, INC. AND SUBSIDIARIES
 EXHIBIT INDEX
 Incorporated by Reference(if applicable)Exhibit Number and Description
    
    Form
    
    Date
    
    File No.
    
    Exhibit10.24
    
    
    Form of Non-Employee Director
Nonqualified Stock Option Agreement
pursuant to the Tandy Brands Accessories,
Inc. 2002 Omnibus Plan*
    
    10-K
    
    9/23/04
    
    0-18927
    
    
    10.3910.25
    
    
    Form of Employee Nonqualified Stock
Option Agreement pursuant to the Tandy
Brands Accessories, Inc. 2002 Omnibus Plan*
    
    10-K
    
    9/23/04
    
    0-18927
    
    
    10.4010.26
    
    
    Form of Non-Employee Director
Restricted Stock Award Agreement pursuant
to the Tandy Brands Accessories, Inc. 2002
Omnibus Plan*
    
    10-K
    
    9/23/04
    
    0-18927
    
    
    10.4110.27
    
    
    Form of Employee Restricted Stock
Award Agreement pursuant to the Tandy
Brands Accessories, Inc. 2002 Omnibus Plan*
    
    10-K
    
    9/23/04
    
    0-18927
    
    
    10.4210.28
    
    
    Form of Severance Agreement between
Tandy Brands Accessories, Inc. for
Executive and Senior Officers*
    
    10-K
    
    9/23/03
    
    0-18927
    
    
    10.3310.29
    
    
    Office Lease Agreement, dated January
31, 2004, between Koll Bren Fund VI, LP and
Tandy Brands Accessories, Inc. relating to
the corporate office
    
    10-Q
    
    2/12/04
    
    0-18927
    
    
    10.3610.30
    
    
    Acknowledgement and Release Agreement
between Tandy Brands Accessories, Inc. and
J.S.B. Jenkins relating to the termination
of the Supplemental Executive Retirement
Plan*
    
    8-K
    
    8/22/05
    
    0-18927
    
    
    10.4510.31
    
    
    Tandy Brands Accessories, Inc.
Stock Purchase Program (As Amended And
Restated Effective December 1, 2005)*
    
    10-Q
    
    2/10/06
    
    0-18927
    
    
    10.4610.32
    
    
    Executive Officer Compensation
Summary  Fiscal 2007 and 2006 and
Non-Employee Director Compensation Summary
 Fiscal 2007*
    
    8-K
    
    4/24/06
    
    0-18927
    
    
    10.110.33
    
    
    Summary of Incentive Bonus Plan for
Executive Officers*
    
    8-K
    
    4/24/06
    
    0-18927
    
    
    10.210.34
    
    
    Amendments Nos. 5-6 to the Tandy
Brands Accessories, Inc. Employees
Investment Plan, as Amended and Restated
effective July 1, 2000*
    
    10-Q
    
    5/11/06
    
    0-18927
    
    
    10.4410.35
    
    
    Amendment No. 2 to the Tandy Brands
Accessories, Inc. 1995 Stock Deferral Plan
for Non-Employee Directors* **
    
    N/A
    
    N/A
    
    N/A
    
    
    N/A
 4




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##### Table of Contents



TANDY BRANDS ACCESSORIES, INC. AND SUBSIDIARIES
 EXHIBIT INDEX
 Incorporated by Reference(if applicable)Exhibit Number and Description
    
    Form
    
    Date
    
    File No.
    
    Exhibit10.36
    
    
    Amended and Restated Credit Agreement
among Tandy Brands Accessories, Inc. as the
Borrower, Wells Fargo HSBC Trade Bank, N.A.
as Administrative Agent and as a Lender,
and Certain Financial Institutions, as
Lenders and Wells Fargo Bank, N.A. as
Arranger as of September 7, 2006**
    
    N/A
    
    N/A
    
    N/A
    
    
    N/A(21)
    
    Subsidiaries of the registrant21.1
    
    
    List of subsidiaries**
    
    N/A
    
    N/A
    
    N/A
    
    
    N/A(23)
    
    Consents of experts and counsel23.1
    
    
    Consent of Ernst & Young LLP**
    
    N/A
    
    N/A
    
    N/A
    
    
    N/A(31)
    
    Rule 13a-14(a)/15d-14(a) Certifications31.1
    
    
    Certification pursuant to Rule
13a-14(a)/15d-14(a) (Chief Executive
Officer)**
    
    N/A
    
    N/A
    
    N/A
    
    
    N/A31.2
    
    
    Certification pursuant to Rule
13a-14(a)/15d-14(a) (Chief Financial
Officer)**
    
    N/A
    
    N/A
    
    N/A
    
    
    N/A(32)
    
    Section 1350 Certifications32.1
    
    
    Section 1350 Certifications (Chief
Executive Officer and Chief Financial 
Officer)**
    
    N/A
    
    N/A
    
    N/A
    
    
    N/A
 
 *
    
    Management contract or compensatory plan**
    
    Filed herewith 5