# UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-Q

_________________

# (Mark One)

| |  | Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
| |  | ---------------------------------------------------------------------------------------

# For the quarterly
period ended March 31, 2007

# OR

| |  | Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
| |  | ----------------------------------------------------------------------------------------

# For the transition
period from__________ to__________

# Commission File Number
1-5354

Swank, Inc.(Exact name of
registrant as specified in its charter)

|>Delaware
(State or other jurisdiction of incorporation or organization) 90 Park Avenue
New York, NY
(Address of principal executive offices) | 04-1886990
(IRS Employer Identification Number) 10016
(Zip code)
|--------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------

(212) 867-2600
(Registrants telephone number, including area code) NOT APPLICABLE
(Former name, former address and former fiscal year, if changed since last report)

Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months, and (2) has been subject to such filing requirements for
the past 90 days.

Yes          
       
       
       
No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated
filer, or a non-accelerated filer. See definition of accelerated filer and large
accelerated filer in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer 
        
        
        
        
Accelerated filer 
        
        
        
         Non-accelerated filer

Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act). Yes   No

APPLICABLE ONLY TO
CORPORATE ISSUERS:Indicate the number of shares outstanding of each of the issuers
classes of common stock as of the latest practicable date:

|Title of Class
Common stock, $.10 par value | Shares Outstanding on April 30, 2007
6,074,699
|------------------------------------------- | ----------------------------------------------



---

# SWANK, INC.
INDEX

|                                 |                                                                                      
|-------------------------------- | -------------------------------------------------------------------------------------
|Part I.    Financial Information |                                                                                      
|Item 1.                          | Condensed Financial Statements and Related Notes                                     
|Item 2.                          | Management's Discussion and Analysis of Financial Condition and Results of Operations
|Item 3.                          | Quantitative and Qualitative Disclosures about Market Risk                           
|Item 4.                          | Controls and Procedures                                                              
|Part II.    Other Information    |                                                                                      
|Item 1A.                         | Risk Factors                                                                         
|Item 6.                          | Exhibits                                                                             
|Signatures                       |                                                                                      
|Exhibit Index                    |                                                                                      

2



---

# Part I. Financial
Information

# Item 1.    Financial Statements

# SWANK, INC.CONDENSED BALANCE SHEETS
(Dollars in thousands except share data)

|                                                   | March 31, 2007 | December 31, 2006
|-------------------------------------------------- | -------------- | -----------------
|
|ASSETS                                             |                |                  
|Current:                                           |                |                  
|Cash and cash equivalents                          |                |                  
|Accounts receivable, less allowances               |                |                  
|of $5,398 and $6,196, respectively                 |                |                  
|Inventories, net:                                  |                |                  
|Work in process                                    |                |                  
|Finished goods                                     |                |                  
|                                                   |                |                  
|Deferred taxes, current                            |                |                  
|Prepaid and other current assets                   |                |                  
|Total current assets                               |                |                  
|Property, plant and equipment, net of              |                |                  
|accumulated depreciation and amortization          |                |                  
|Deferred taxes, noncurrent                         |                |                  
|Other assets                                       |                |                  
|Total assets                                       |                |                  
|LIABILITIES                                        |                |                  
|Current:                                           |                |                  
|Note payable to bank                               |                |                  
|Current portion of long-term obligations           |                |                  
|Accounts payable                                   |                |                  
|Accrued employee compensation                      |                |                  
|Other current liabilities                          |                |                  
|Total current liabilities                          |                |                  
|Long-term obligations                              |                |                  
|Total liabilities                                  |                |                  
|STOCKHOLDERS' EQUITY                               |                |                  
|Preferred stock, par value $1.00:                  |                |                  
|Authorized - 1,000,000 shares                      |                |                  
|Common stock, par value $.10:                      |                |                  
|Authorized - 43,000,000 shares:                    |                |                  
|Issued  6,380,379 shares                          |                |                  
|Capital in excess of par value                     |                |                  
|Retained earnings                                  |                |                  
|Accumulated other comprehensive (loss), net of tax |                |                  
|Treasury stock, at cost, 305,680 shares            |                |                  
|Total stockholders' equity                         |                |                  
|Total liabilities and stockholders' equity         |                |                  

The accompanying
notes are an integral part of the condensed financial statements.

3



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# SWANK, INC.
CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE QUARTERS ENDED MARCH 31, 2007 AND 2006
(Dollars in thousands except share and per share data)

_________________

|                                                                 | 2007 |  | 2006 |          
|---------------------------------------------------------------- | ---- |  | ---- | ---------
|Net sales                                                        |      |  | $    | 24,988   
|Cost of goods sold                                               |      |  |      | 16,853   
|                                                                 |      |  |      |          
|Gross profit                                                     |      |  |      | 8,135    
|Selling and administrative expenses                              |      |  |      | 7,648    
|                                                                 |      |  |      |          
|Income from operations                                           |      |  |      | 487      
|Interest expense                                                 |      |  |      | 337      
|Income from operations before income taxes                       |      |  |      | 150      
|Income taxes                                                     |      |  |      | 57       
|                                                                 |      |  |      |          
|Net income                                                       |      |  | $    | 93       
|                                                                 |      |  |      |          
|Share and per share information:                                 |      | 
|Basic net income per weighted average common share outstanding   |      |  | $    | .02      
|Basic weighted average common shares outstanding                 |      |  |      | 6,074,699
|Diluted net income per weighted average common share outstanding |      |  | $    | .02      
|Diluted weighted average common shares outstanding               |      |  |      | 6,082,411

The accompanying
notes are an integral part of the condensed financial statements.

4



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# SWANK, INC.
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE THREE-MONTHS ENDED MARCH 31, 2007 AND 2006
(Dollars in thousands)

_________________

|                                                                      | 2007 |  | 2006 |        
|--------------------------------------------------------------------- | ---- |  | ---- | -------
|Cash flows from operating activities:                                 |      |  |      |        
|Net income                                                            |      |  | $    | 93     
|Adjustments to reconcile net income to net cash (used in) operations: |      | 
|Depreciation and amortization                                         |      |  |      | 47     
|Bad debt expense                                                      |      |  |      | 102    
|Changes in assets and liabilities:                                    |      | 
|Decrease (increase) in accounts receivable                            |      |  |      | 82     
|(Increase) in inventory                                               |      |  |      | (7,099 
|(Increase) in prepaid and other assets                                |      |  |      | (233   
|(Decrease) in accounts payable, accrued and other liabilities         |      |  |      | (4,367 
|Increase in other long-term obligations and deferred credits          |      |  |      | 112    
|                                                                      |      |  |      |        
|Net cash (used in) operations                                         |      |  |      | (11,263
|                                                                      |      |  |      |        
|Cash flows from investing activities:                                 |      | 
|Capital expenditures                                                  |      |  |      | (81    
|Premiums on life insurance                                            |      |  |      | (20    
|                                                                      |      |  |      |        
|Net cash (used in) investing activities                               |      |  |      | (101   
|                                                                      |      |  |      |        
|Cash flows from financing activities:                                 |      | 
|Borrowing under revolving credit agreements                           |      |  |      | 23,564 
|Payments of revolving credit obligations                              |      |  |      | (12,646
|Proceeds from stock option exercises                                  |      |  |      | -      
|Treasury stock received                                               |      |  |      | -      
|                                                                      |      |  |      |        
|Net cash provided by financing activities                             |      |  |      | 10,918 
|                                                                      |      |  |      |        
|Net (decrease) increase in cash and cash equivalents                  |      |  |      | (446   
|Cash and cash equivalents at beginning of period                      |      |  |      | 899    
|                                                                      |      |  |      |        
|Cash and cash equivalents at end of period                            |      |  | $    | 452    
|                                                                      |      |  |      |        
|Cash paid during the three months for:                                |      | 
|Interest                                                              |      |  | $    | 337    
|Taxes                                                                 |      |  | $    | 1,076  

The accompanying
notes are an integral part of the condensed financial statements.

5



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# SWANK, INC.Notes to Condensed Financial Statements (Unaudited)

|(1) |  | Basis
of Presentation. The unaudited information furnished herein reflects all
               adjustments (consisting only of normal recurring adjustments) which are,
in the                opinion of management, necessary to present a fair statement of the
results for                the periods ended March 31, 2007 and 2006. The financial
information contained                herein represents condensed financial data and,
therefore, does not include all                footnote disclosures required to be
included in financial statements prepared in                conformity with generally
accepted accounting principles. Footnote information                was included in the
financial statements included in the Companys 2006                Annual Report on
Form 10-K. The condensed financial data included herein should                be read in
conjunction with the information in the Annual Report. The results of
               operations for the three months ended March 31, 2007 may not be indicative
of                the results that may be expected for the year ended December 31, 2007
or any                other period.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) |  | Net
Income per Share. The following table sets forth the computation of the net
               income per share for the periods ended March 31, 2007 and March 31, 2006
(in                thousands, except for share and per share data):
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                                                    | Quarter
Ended March 31, | 
|--------------------------------------------------------------------------------------------------- | ----------------------- | 
|
|Numerator:                                                                                          |                         | 
|Net income                                                                                          |                         | 
|Denominators:                                                                                       |                         | 
|Shares used in computing basic net income per weighted average common share outstanding             |                         | 
|Effect of dilutive options                                                                          |                         | 
|                                                                                                    |                         | 
|Shares used in computing net income per weighted average common share outstanding assuming dilution |                         | 
|                                                                                                    |                         | 
|Basic net income per weighted average common share outstanding                                      |                         | 
|Fully diluted net income per weighted average common share outstanding                              |                         | 

| | Certain
convertible securities in the amount of 119,048 shares were not included in the
computation of diluted earnings per share for the quarter ended March 31, 2006 since the
inclusion would have been antidilutive.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) |  | Segment
Information. We presently have one reportable segment, mens
               accessories, consisting of mens costume jewelry, belts and
suspenders and                personal leather goods.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) |  | Conversion
of Convertible Note. On June 30, 2006, the Estate of Marshall Tulin                (the
Estate) converted the Convertible Promissory Note of the
               Company dated April 1, 2004, as amended and restated as of June 30, 2004,
and                payable to the order of the Estate (the Note) in the
amount of                $350,000, into 116,666 shares of the Companys common
stock, $.10 par value                per share (Common Stock) pursuant to a
formula set forth in the                Note.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) |  | Share-Based
Compensation. In December 2004, the Financial Accounting Standards                Board
issued Statement of Financial Accounting Standard No. 123 (revised 2004,
               SFAS 123R), Share-Based Payment. SFAS 123R
               addresses the accounting for share-based payments to employees, including
grants                of employee stock options. Under the new standard, companies are no
longer                permitted to account for share-based compensation transactions
using the                intrinsic value method in accordance with APB Opinion No. 25,
Accounting                For Stock Issued To Employees. Instead, companies
are now required to                account for such transactions using a fair-value
method and recognize the                expense in the statement of income. We adopted
SFAS 123R under the modified                prospective method effective January 1,
2006. Under that method,                compensation cost is recognized for share-based
payments granted prior to                January 1, 2006, but not yet vested, based on
the grant date fair value                estimated in accordance with the provisions of
SFAS 123. The results for prior                periods are not restated. Stock options
issued by us previously to certain                executives and non-employee directors
under either our 1998 Equity Incentive                Compensation Plan (the 1998
Plan) or 1994 Non-Employee                Director Plan (the 1994
Director Plan) respectively, vested                immediately. We did not grant
any stock options during either of the quarters                ended March 31, 2007 or
March 31, 2006.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Prior
to the adoption of SFAS 123R, we accounted for share-based compensation using the
intrinsic value method prescribed in Accounting Principles Board Opinion No. 25, Accounting
for Stock Issued toEmployees, and related interpretations.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

6



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|(6) |  | Stock
Options. In 1994, we established the 1994 Director Plan pursuant to which
               options could be granted to non-employee directors to purchase up to
50,000                shares of common stock at market value on the date of grant.
Options granted                under the 1998 Plan were for a period of five years and
were immediately                exercisable. All of the shares available for grant under
the 1998 Plan have been                granted. In April 1998, our stockholders approved
the 1998 Plan, which replaced                our prior incentive stock plans, all of
which had expired by their terms. The                1998 Plan permits our Board of
Directors to grant a maximum of 1,000,000 shares                to key employees through
stock options, stock appreciation rights, restricted                stock units,
performance awards and other stock-based awards. We granted options                for
625,000 shares under the 1998 Plan in 2001. These shares vested immediately.
               Under the 1998 Plan, 375,000 shares remain available for future grants.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | A summary of option activity under the stock-based compensation plans as of March 31, 2007
and changes during the quarter then ended, is detailed below:
| | --------------------------------------------------------------------------------------------------------------------------------------------------------

|                                             | Number of Shares |  | Weighted Average
Exercise Price |       | Weighted Average
Remaining
Contractual Term
(years) |   | Aggregate
Intrinsic
Value
(in thousands) | 
|-------------------------------------------- | ---------------- |  | ------------------------------- | ----- | --------------------------------------------------- | - | ---------------------------------------- | 
|Outstanding at December 31, 2006             |                  |  |                                 | 8,333 |                                                     | $ | .79                                      | 
|Granted                                      |                  |  |                                 | -     |                                                     |   | -                                        | 
|Exercised                                    |                  |  |                                 | -     |                                                     |   | -                                        | 
|Forfeited/ Expired                           |                  |  |                                 | -     |                                                     |   | -                                        | 
|                                             |                  |  |                                
|Outstanding at March 31, 2007                |                  |  |                                 | 8,333 |                                                     | $ | .79                                      | 
|                                             |                  |  |                                
|Vested or expected to vest at March 31, 2007 |                  |  |                                 | 8,333 |                                                     | $ | .79                                      | 
|Exercisable at March 31, 2007                |                  |  |                                 | 8,333 |                                                     | $ | .79                                      | 

| | All
options granted under the 1994 Director Plan are vested as of March 31, 2007.
| | ---------------------------------------------------------------------------------

| | The
table above reflects 8,333 option shares issued, outstanding, and exercisable at prices
ranging from $.18 to $1.60 per share under the 1994 Director Plan. All options issued
under the 1998 Plan have been either exercised or forfeited and no shares are
outstanding.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(7) |  | Income
Taxes. The company adopted the provisions of FIN 48  Accounting for
          Uncertainty in Income Taxes  an interpretation of FASB Statement No. 109,
          on January 1, 2007. We performed a comprehensive review of our tax positions in
          accordance with recognition standards established by FIN 48. In this regard, an
          uncertain tax position represents the companys expected treatment of a
tax           position taken in a filed tax return, or planned to be taken in a future
tax           return, that has not been reflected in measuring income tax expense for
          financial reporting purposes. As a result of this review, we do not believe
that           we have included any uncertain tax positions in our federal
income           tax return or any of the state income tax returns it is currently
filing. With           few exceptions, we are no longer subject to federal income tax
examinations for           years before 2002.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(8) |  | Recent
Accounting Pronouncements. In February 2007, the Financial           Accounting
Standards Board (FASB) issued Statement of Financial           Accounting
Standard No. 159, The Fair Value Option for Financial           Assets andFinancial Liabilities (SFAS 159)           including an
amendment of FASB Statement No. 115. SFAS 159 permits companies to           choose to
measure certain financial instruments and certain other items at fair           value.
The standard requires that unrealized gains and losses on items for which           the
fair value option has been elected be reported in earnings. SFAS 159 is
          effective for us beginning in the first quarter of fiscal year 2008, although
          earlier adoption is permitted. We are currently assessing the impact of SFAS
          159, but do not presently anticipate it will have a material effect on our
          financial condition, results of operations, or cash flows.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
September 2006, the FASB issued SFAS No. 157, Fair Value Measurements(SFAS
157). SFAS 157 establishes a common definition for fair value to be applied to US
GAAP guidance requiring use of fair value, establishes a framework for measuring fair
value, and expands disclosure about such fair value measurements. SFAS 157 is effective
for fiscal years beginning after November 15, 2007. We are currently assessing the impact
of the adoption of SFAS 157 but do not presently anticipate it will have a material
effect on our financial condition, results of operations, or cash flows.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
June 2006, the FASB issued Interpretation No. 48, Accounting for Uncertainty in
Income Taxes  An Interpretation of FASB Statement No. 109 (FIN 48).
FIN 48 clarifies the accounting for uncertainty in income taxes recognized in a companys
financial statements in accordance with FASB Statement No. 109, Accounting for
Income Taxes. FIN 48
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

7



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| | prescribes
the recognition and measurement of a tax position taken or expected to be taken in a tax
return. It also provides guidance on derecognition, classification, interest and
penalties, accounting in interim periods, disclosure and transition. FIN 48 is effective
for fiscal years beginning after December 15, 2006. We adopted the provisions of FIN 48
on January 1, 2007.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Item 2.    Management's
Discussion and Analysis of Financial Condition and Results of Operations

Overview

We
are currently engaged in the importation, sale and distribution of mens belts,
leather accessories, suspenders, and mens jewelry. Our products are sold both
domestically and internationally under a broad assortment of brands including both
licensed tradenames and private labels. We distribute our merchandise principally through
department stores and through a wide variety of specialty stores and mass merchandisers.
We also operate a number of factory outlet stores primarily to distribute excess and out
of line merchandise.

Our
net sales during the quarter ended March 31, 2007 increased 12.7% to $24,988,000 compared
to $22,167,000 for the corresponding period in 2006. The increase was mainly due to
higher shipments of our mens personal leather goods and belt merchandise offset in
part by a reduction in net sales in our mens jewelry businesses. Gross profit
during the quarter increased 11.1% to $8,135,000 from $7,324,000 in 2006 but, as a
percentage of net sales, declined slightly to 32.6% compared to 33.0% last year. The
increase in gross profit dollars was due to higher net sales, offset in part by lower
margins on personal leather goods and jewelry, and higher inventory control costs.
Selling and administrative expenses increased $677,000 or 9.7% during the quarter
primarily due to higher variable sales, product development, and distribution
expenditures, offset partially by decreases in administrative professional fees, software
licensing and maintenance charges, and severance expense. During the first quarter of
2006, we recorded severance costs of $126,000 associated with certain changes we made to
our merchandising and production-control organization in an attempt to streamline our
operations and generally improve our ability to respond more quickly to changes in our
business.

Critical Accounting
Policies and Estimates

We
believe that the accounting policies discussed below are important to an understanding of
our financial statements because they require management to exercise judgment and
estimate the effects of uncertain matters in the preparation and reporting of financial
results. Accordingly, management cautions that these policies and the judgments and
estimates they involve are subject to revision and adjustment in the future.

Net
sales are generally recorded upon shipment, provided there exists persuasive evidence of
an arrangement, the fee is fixed or determinable and collectability of the related
receivable is reasonably assured. We record revenues net of sales allowances, including
cash discounts, in-store customer allowances, cooperative advertising, and customer
returns, which are all accounted for in accordance with Statement of Financial Accounting
Standards No. 48, Revenue Recognition When Right of Return Exists, and
Emerging Issues Task Force Issue No. 01-09, Accounting for Consideration Given by a
Vendor to a Customer or Reseller of the Vendors Products. Sales allowances
are estimated using a number of factors including historical experience, current trends
in the retail industry and individual customer and product experience. We reduce net
sales and cost of sales by the estimated effect of future returns of current period
shipments. Each spring upon the completion of processing returns from the preceding fall
season, we record adjustments to net sales in the second quarter to reflect the
difference between customer returns of prior year shipments actually received in the
current year and the estimate used to establish the allowance for customer returns at the
end of the preceding fiscal year.

We
determine our allowance for doubtful accounts using a number of factors including
historical collection experience, general economic conditions and the amount of time an
account receivable is past its payment due date. In certain circumstances where it is
believed a customer is unable to meet its financial obligations, a specific allowance for
doubtful accounts is recorded to reduce the account receivable to the amount believed to
be collectable.

In
accordance with AICPA Statement of Position 96-1, Environmental Remediation
Liabilities, environmental expenditures that relate to current operations are
expensed or capitalized, as appropriate. Expenditures that relate to an existing
condition caused by past operations, and which do not contribute to current or future
revenue generation, are expensed. Liabilities are recorded when environmental assessments
and/or remedial efforts are probable and the costs can be reasonably estimated.
Generally, adjustments to these accruals coincide with the completion of a feasibility
study or a commitment made by us to a formal plan of action or other appropriate
benchmark.

8



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Inventories
are stated at the lower of cost (principally average cost which approximates FIFO) or
market. Our inventory is somewhat fashion oriented and, as a result, is subject to risk
of rapid obsolescence. We believe that our inventory has been adequately adjusted, where
appropriate, and that we have adequate channels to dispose of excess and obsolete
inventory.

We
determine the valuation allowance for deferred tax assets based upon projections of
taxable income or loss for future tax years in which the temporary differences that
created the deferred tax asset are anticipated to reverse, and the likelihood that the
Companys deferred tax assets will be recovered.

Results of
Operations

As
is customary in the fashion accessories industry, we make modifications to our
merchandise lines coinciding with our Spring (January - June) and Fall (July - December)
selling seasons. We believe that the results of operations are more meaningful on a
seasonal basis than on a quarterly basis. The timing of shipments can be affected by the
availability of materials, retail sales, and fashion trends. These factors may shift
volume between quarters within a season differently in one year than in another. Due to
seasonality and other factors, the results for the quarter are not necessarily indicative
of the results to be expected for the full year.

Net Sales

Net
sales for the quarter ended March 31, 2007 increased $2,821,000, or 12.7%, compared to
the quarter ended March 31, 2006. The increase during the quarter was principally due to
higher shipments of mens personal leather goods and belts offset in part by a
decrease in mens jewelry shipments. The increase in both our belt and personal
leather goods businesses was principally due to merchandise shipments for a variety of
private label programs that were introduced or expanded during the fall 2006 season. We
also launched a new belt program with a major customer during the quarter and continued
to expand our Nautica collection of mens accessories which we first introduced to
retailers during last years second and third quarters. Net sales of our jewelry
merchandise declined 9.4%, reflecting a decrease in certain existing programs which were
partially offset by shipments of branded merchandise first shipped last fall, including
our Donald Trump, Chaps, and Steve Harvey collections.

Net
sales to international customers (including certain military accounts) increased $872,000
or 56.6% during the quarter. The increase was due to higher belt and personal leather
goods shipments mainly to certain international licensor-affiliates and other foreign
retailers compared to the prior year.

Gross profit

Gross
profit for the quarter ended March 31, 2007 increased $811,000 or 11.1% compared to the
quarter ended March 31, 2006. For the quarter, gross profit expressed as a percentage of
net sales was 32.6% compared to 33.0% last year.

The
increase in gross profit dollars was due mainly to higher net sales, offset in part by
lower initial markups on personal leather goods and jewelry, and higher inventory control
costs. The reduction in leather goods and jewelry markup was due to a change in sales mix
reflecting significant shipments of private label merchandise and, in the case of our
personal leather goods business, a substantial increase in export shipments. Merchandise
for many of our larger export customers is typically drop-shipped directly from the
manufacturer. Although these orders carry a lower initial markup, they generally require
less handling and are less costly to administer relative to domestic orders. The increase
in inventory-related expense was principally due to our efforts to sell our excess and
discontinued inventories in a timely fashion. Royalty expense increased 4.3% during the
quarter in response to both higher net sales and, in certain circumstances, increases in
minimum obligations due to licensors relative to the corresponding period in 2006.

Selling and
Administrative Expenses

Selling
and administrative expenses for the quarter ended March 31, 2007 increased $677,000 or
9.7% compared to the quarter ended March 31, 2006. Selling and administrative expenses
expressed as a percentage of net sales were 30.6% and 31.4% for the quarters ended March
31, 2007 and 2006 respectively.

Selling
expenses increased $898,000 or 18.5% compared to the quarter ended March 31, 2006, and,
expressed as a percentage of net sales, were 23.0% and 21.9% for the quarters ended March
31, 2007 and 2006, respectively. The increase in dollar terms was mainly due to higher
variable sales-related expenses associated with product development, field sales,
distribution, and freight costs.

9



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We
routinely make expenditures for advertising and promotion as necessary to maintain and
enhance both our licensed and private label businesses. Certain of our license agreements
also require specified levels of spending. These expenditures, which consist primarily of
media and print advertising, image fund contributions and other promotional costs, are
included in selling and administrative expenses as incurred. In addition, we frequently
make expenditures in connection with cooperative advertising programs to support various
marketing initiatives sponsored by our customers. Accruals associated with cooperative
advertising expenditures are recorded as a reduction to net sales. Expenditures for
advertising and promotion, including cooperative advertising, totaled $762,000 or 3.1% of
net sales for the quarter ended March 31, 2007, compared to $723,000 or 3.3% percent of
net sales for the same quarter in fiscal 2006.

Administrative
expenses decreased $221,000 or 10.4% during the quarter ended March 31, 2007 compared to
the corresponding period last year. As a percentage of net sales, administrative expenses
were 7.6% and 9.6% for the quarters ended March 31, 2007 and 2006, respectively. The
decrease in administrative expenses for the quarter ended March 31, 2007 was mainly due
to reductions in professional fees, software licensing and maintenance charges, and
severance expense. During the first quarter of 2006, we recorded severance costs of
$126,000 associated with certain changes we made to our merchandising and
production-control organization in an attempt to streamline our operations and generally
improve our ability to respond more quickly to changes in our business.

Interest Expense

Net
interest expense increased by $8,000 or 2.4% during the quarter ended March 31, 2007
compared to the corresponding period last year. The increase was mainly due to higher
average borrowing costs which were largely offset by a reduction in average bank
borrowings outstanding. Our average borrowing cost increased approximately 82 basis
points compared to last year due to increases generally in short-term interest rates.
Although average borrowings during the quarter ended March 31, 2007 were lower compared
to the corresponding time last year, borrowings under our revolving credit line generally
increased during the quarter due to inventory purchases made earlier this year in
anticipation of higher net sales during the spring 2007 selling season.

Income Taxes

We
recorded an income tax provision for the quarter ending March 31, 2007 of $57,000
reflecting an effective tax rate of 38.0%. We recorded no income tax provision on our net
income during the quarter ended March 31, 2006. During fiscal 2001, we began recording a
valuation reserve against all of our deferred tax assets. In accordance with the criteria
established in Statement of Financial Accounting Standards No. 109, Accounting for
Income Taxes (SFAS 109), we regularly assess the status of the
valuation allowance based upon a number of factors including future reversals of existing
taxable temporary differences which would enable us to offset gross deferred tax assets
against gross deferred tax liabilities; the availability of taxable income in carry-back
prior years (if carry-back is permitted under the tax law); tax planning strategies; and
projections of future taxable income exclusive of reversing temporary differences and
carry-forwards. Based upon the results of that evaluation, we determined at December 31,
2006 that it was more likely than not that our existing deferred tax assets will be fully
utilized in the normal course of operations and accordingly, reversed the remaining
valuation allowance. Beginning in 2007, we began recording a tax provision on our net
income at rates that approximate statutory federal and state income tax rates.

Liquidity and
Capital Resources

As
is customary in the fashion accessories industry, substantial percentages of our sales
and earnings occur in the months of September, October and November, when we make
significant shipments of our products to retailers for sale during the holiday season. As
a result, accounts receivable peak in the fourth quarter. We build inventory during the
year to meet the demand for the holiday season. The required cash is provided by a
revolving credit facility.

Our
working capital increased by $182,000 during the quarter ended March 31, 2007 compared to
an increase of $410,000 for the quarter ended March 31, 2006. The increase for the
quarter ended March 31, 2007 was mainly due to increases in inventory and reductions in
accounts payable, accrued employee compensation and other current liabilities, offset in
part by increases in short-term borrowings. The increase for the period ended March 31,
2006 was principally due to increases in both net accounts receivable and inventories and
decreases in accounts payable, offset in part by increases in short-term borrowings.

Cash
used in operations during the quarter ended March 31, 2007 was $11,263,000 compared to
cash used in 2006 of $8,231,000. Cash used in operations in the current quarter primarily
reflects increases in net inventories, prepaid and other

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assets,  and decreases in accounts  payable,  accrued and other  liabilities.  Cash
used in operations in the quarter
ended March 31, 2006 primarily reflects increases in accounts receivable and net
inventories as well as a decrease in accounts payable and other current liabilities.

The
increase in cash used during the quarter relative to last year was primarily associated
with anticipated increases in net sales during our 2007 spring selling season compared to
the corresponding period in 2006. Inventory balances generally increased during the
quarter ended March 31, 2007 due to the expected increases in shipping volume which
included certain new merchandise programs for which we had little or no current inventory
on hand. We also made an effort to respond more effectively to our retail customersdelivery
requirements by accelerating certain belt and personal leather goods inventory purchases
such that inventory deliveries to our warehouse were made somewhat earlier in the season
compared to the same time last year. Inventory purchases for the second quarter, however,
are planned somewhat lower when compared to the same quarter last year and, subject to
the changing requirements of our business, may result in some decrease in inventory
investment, particularly for belts, over the next few months.

Cash
used in investing activities was $101,000 and $20,000 for the quarters ended March 31,
2007 and March 31, 2006, respectively. Cash used in investing activities reflects capital
expenditures in 2007, and premiums on certain life insurance contracts owned by us, paid
in 2007 and 2006.

Cash
provided by financing activities for the quarter ended March 31, 2007 was $10,918,000
compared to cash provided of $8,405,000 during the quarter ended March 31, 2006. Cash
provided by financing activities in both years consists primarily of net borrowings of
short-term debt.

In
the ordinary course of business, we are contingently liable for performance under letters
of credit. At March 31, 2007, outstanding letters of credit totaled $90,000. We presently
are required to pay a fee quarterly equal to 2.00% per annum on outstanding letters of
credit.

The
following chart summarizes our contractual obligations as of December 31, 2006 (in
thousands):

|                                                                           | Payments due by period
|-------------------------------------------------------------------------- | ----------------------
|
|Operating leases                                                           | $8,725                
|Minimum royalty and advertising payments required under License Agreements | 19,890                
|Postretirement benefits                                                    | 3,860                 
|Deferred compensation                                                      | 349                   
|Total                                                                      | $32,824               

We
are also a party to employment agreements with certain of our executive officers that
provide for the payment of compensation and other benefits during the term of each
executives employment and, under certain circumstances, for a period of time
following their termination.

During
the quarter ended March 31, 2007, there were no material changes outside the ordinary
course of business in the contractual obligations set forth in the above chart.

The
Company is subject to legal proceedings and claims which arise in the ordinary course of
its business. Although there can be no assurance as to the disposition of these
proceedings, we do not anticipate that these matters will have a material impact on our
results of operations or financial condition.

Forward
Looking Statements

Certain
of the preceding paragraphs contain forward looking statements which are
based upon current expectations and involve certain risks and uncertainties. Under the
safe harbor provisions of the Private Securities Litigation Reform Act of 1995, readers
should note that these statements may be impacted by, and the Companys actual
performance may vary as a result of, a number of known and unknown risks and
uncertainties that could cause actual results, performance or achievements to differ
materially from those described or implied in the forward-looking statements, including,
but not limited to, general economic and business conditions, competition in the
accessories markets; potential changes in customer spending; acceptance of our product
offerings and designs; the level of inventories maintained by our customers; the
variability of consumer spending resulting from changes in domestic economic activity; a
highly promotional retail

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environment; any significant
variations between actual amounts and the amounts estimated for those matters identified
as our critical accounting estimates as well as other significant accounting estimates
made in the preparation of our financial statements; and the impact of the hostilities in
the Middle East and the possibility of hostilities in other geographic areas as well as
other geopolitical concerns. Accordingly, actual results may differ materially from such
forward-looking statements.

You
are urged to consider all such factors. In light of the uncertainty inherent in such
forward-looking statements, you should not consider their inclusion to be a
representation that such forward-looking matters will be achieved. We assume no
obligation for updating any such forward-looking statements to reflect actual results,
changes in assumptions or changes in other factors affecting such forward-looking
statements.

# Item 3.    Quantitative and Qualitative Disclosures about Market Risk

During
the quarter ended March 31, 2007, there were no material changes in the information
called for by this item from the information contained in Item 7A of our Annual Report on
Form 10-K for the fiscal year ended December 31, 2006.

# Item 4.    Controls and Procedures

At
the end of the period covered by this report, we carried out an evaluation, with the
participation of our management including our Chief Executive Officer and Chief Financial
Officer, of the effectiveness of our disclosure controls and procedures. Based on our
evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our
disclosure controls and procedures were effective. There was no change in our internal
control over financial reporting during the quarter ended March 31, 2007 that has
materially affected, or is reasonably likely to materially affect, our internal control
over financial reporting.

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# PART II - OTHER
INFORMATION

# Item 1A.    Risk Factors

There
were no material changes from the risk factors previously disclosed in Item 1A to Part I
of our Annual Report on Form 10-K for the fiscal year ended December 31, 2006.

# Item 6.     Exhibits

| | ExhibitNumber |  | Description
| | ------------- |  | -----------

| | 31.01 |  | Rule
13a-14(a) Certification of John Tulin, Chief Executive Officer of the Company.
| | ----- |  | -----------------------------------------------------------------------------------

| | 31.02 |  | Rule
13a-14(a) Certification of Jerold R. Kassner, Executive Vice President and Chief
Financial Officer of the Company.
| | ----- |  | -----------------------------------------------------------------------------------------------------------------------

| | 32.01 |  | Certification
Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
| | ----- |  | -----------------------------------------------------------------------------------------------------------------------

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# SIGNATURES

Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has caused this
report to be signed on its behalf by the undersigned thereunto duly authorized.

|Date: May 15, 2007 | SWANK, INC.
Registrant/s/ Jerold R. Kassner
Jerold R. Kassner,
Executive Vice President,
Chief Financial Officer
and Treasurer
|------------------ | ------------------------------------------------------------------------------------------------------------------------------

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# EXHIBIT INDEX

|Exhibit No. |  | Description
|----------- |  | -----------

|31.01 |  | Rule
13a-14(a) Certification of John Tulin, Chief Executive Officer of the Company.
|----- |  | -----------------------------------------------------------------------------------

|31.02 |  | Rule
13a-14(a) Certification of Jerold R. Kassner, Executive Vice President and Chief
Financial Officer of the Company.
|----- |  | -----------------------------------------------------------------------------------------------------------------------

|32.01 |  | Certification
Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
|----- |  | -----------------------------------------------------------------------------------------------------------------------

15