**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON, D.C. 20549**

**Form 10-Q**

-----------------------

 

| **(Mark One)** |
|----------------|
| **x**          |   | **Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934** |
|           |   |
|           | **For the quarterly period ended March 31, 2009** |
|           |   |
|           | **OR** |
|           |   |   |
| **o**          |   | **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)* |   | **04-1886990***(IRS Employer Identification Number)* |
|                                                                         |   |                                                 |
| **90 Park Avenue****New York, NY***(Address of principal executive offices)* |   | **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 x  |   | No o |
|------------------|--------|-----------|

 

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such        files). 

| Yes  o |   | No o |
|------------------|--------|-----------|

 

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

|        | Large accelerated filer | o |        | Accelerated filer         | o |
|--------|-------------------------|---|--------|---------------------------|---|
|   | Non-accelerated filer   | o |   | Smaller reporting company | x |

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

| Yes  o |   | No x |
|------------------|--------|-----------|

 

 

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               | Shares Outstanding on April 30, 2009 |
|------------------------------|--------------------------------------|
| Common Stock, $.10 par value | 5,681,790                            |

 

 

----

**SWANK, INC.**

 

**INDEX**

 

|                              | Page No.                                                                                    |
|-----------------------------------|---------------------------------------------------------------------------------------------|
| **Part I. Financial Information** |                                                                                        |
|                              |                                                                                        |   |
| Item 1.                           | Condensed Financial Statements and Related Notes                                            | 3 – 9 |
|                              |                                                                                        |   |
| Item 2.                           | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 9 – 13 |
|                              |                                                                                        |   |
| Item 3.                           | Quantitative and Qualitative Disclosures about Market Risk                                  | 13 |
|                              |                                                                                        |   |
| Item 4.                           | Controls and Procedures                                                                     | 13 |
|                              |                                                                                        |   |
|                              |                                                                                        |   |
| **Part II. Other Information**    |                                                                                        |
|                              |                                                                                        |   |
|                              |                                                                                        |   |
| Item 6.                           | Exhibits                                                                                    | 14 |
|                              |                                                                                        |   |
| Signatures                        | 15                                                                                          |
|                              |                                                                                        |   |
| Exhibit Index                     | 16                                                                                          |
|                              |                                                                                             |  |  |

 

2

 

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****Part I. Financial Information****

 

****Item 1. Financial Statements****

 

**SWANK, INC.**

**CONDENSED BALANCE SHEETS**

**(Dollars in thousands except share data)**

 

|                                                                     |   | **(Unaudited)**    |   |                  |       |
|--------------------------------------------------------------------------|--------|--------------------|--------|-----------------------|------------|
|                                                                     |   | **March 31, 2009** |   | **December 31, 2008** |       |
| **ASSETS**                                                               |   |               |   |                  |       |   |   |   |   |   |   |
| Current:                                                                 |   |               |   |                  |       |   |   |   |   |   |   |
| Cash and cash equivalents                                                |   |               |   | $                     | 664        |   |   |   | $ | 343 |   |
| Accounts receivable, less allowances of $4,513 and $5,419, respectively  |   |               |   |                  | 15,798     |   |   |   |   | 13,502 |   |
| Inventories, net:                                                        |   |               |   |                  |       |   |   |   |   |   |   |
| Work in process                                                          |   | 1,156              |   |                  |       |   | 1,174 |   |   |   |   |
| Finished goods                                                           |   | 21,117             |   |                  |       |   | 25,113 |   |   |   |   |
|                                                                     |   |               |   |                  | 22,273     |   |   |   |   | 26,287 |   |
| Deferred taxes, current                                                  |   |               |   |                  | 1,874      |   |   |   |   | 1,874 |   |
| Prepaid and other current assets                                         |   |               |   |                  | 2,894      |   |   |   |   | 2,966 |   |
|                                                                     |   |               |   |                  |       |   |   |   |   |   |   |
| Total current assets                                                     |   |               |   |                  | 43,503     |   |   |   |   | 44,972 |   |
|                                                                     |   |               |   |                  |       |   |   |   |   |   |   |
| Property, plant and equipment, net of accumulated depreciation           |   |               |   |                  | 1,094      |   |   |   |   | 1,162 |   |
| Deferred taxes, noncurrent                                               |   |               |   |                  | 2,242      |   |   |   |   | 2,242 |   |
| Other assets                                                             |   |               |   |                  | 3,473      |   |   |   |   | 3,638 |   |
|                                                                     |   |               |   |                  |       |   |   |   |   |   |   |
| Total assets                                                             |   |               |   | **$**                 | **50,312** |   |   |   | **$** | **52,014** |   |
|                                                                     |   |               |   |                  |       |   |   |   |   |   |   |
| **LIABILITIES**                                                          |   |               |   |                  |       |   |   |   |   |   |   |
| Current:                                                                 |   |               |   |                  |       |   |   |   |   |   |   |
| Note payable to bank                                                     |   |               |   | $                     | 11,158     |   |   |   | $ | 10,005 |   |
| Current portion of long-term obligations                                 |   |               |   |                  | 663        |   |   |   |   | 891 |   |
| Accounts payable                                                         |   |               |   |                  | 2,353      |   |   |   |   | 4,222 |   |
| Accrued employee compensation                                            |   |               |   |                  | 751        |   |   |   |   | 1,126 |   |
| Other current liabilities                                                |   |               |   |                  | 1,555      |   |   |   |   | 2,047 |   |
|                                                                     |   |               |   |                  |       |   |   |   |   |   |   |
| Total current liabilities                                                |   |               |   |                  | 16,480     |   |   |   |   | 18,291 |   |
|                                                                     |   |               |   |                  |       |   |   |   |   |   |   |
| Long-term obligations                                                    |   |               |   |                  | 6,339      |   |   |   |   | 6,048 |   |
|                                                                     |   |               |   |                  |       |   |   |   |   |   |   |
| Total liabilities                                                        |   |               |   |                  | 22,819     |   |   |   |   | 24,339 |   |
|                                                                     |   |               |   |                  |       |   |   |   |   |   |   |
| **STOCKHOLDERS’ EQUITY**                                           |   |               |   |                  |       |   |   |   |   |   |   |
| Preferred stock, par value $1.00:                                        |   |               |   |                  |       |   |   |   |   |   |   |
| Authorized - 1,000,000 shares                                            |   |               |   |                  | —    |   |   |   |   | — |   |
| Common stock, par value $.10:                                            |   |               |   |                  |       |   |   |   |   |   |   |
| Authorized - 43,000,000 shares:                                          |   |               |   |                  |       |   |   |   |   |   |   |
| Issued -- 6,418,789 shares and 6,385,379 shares, respectively            |   |               |   |                  | 642        |   |   |   |   | 639 |   |
| Capital in excess of par value                                           |   |               |   |                  | 2,133      |   |   |   |   | 2,037 |   |
| Retained earnings                                                        |   |               |   |                  | 27,199     |   |   |   |   | 27,478 |   |
| Accumulated other comprehensive (loss), net of tax                       |   |               |   |                  | (380       | ) |   |   |   | (378 | ) |
| Treasury stock, at cost, 736,999 shares and 736,999 shares, respectively |   |               |   |                  | (2,101     | ) |   |   |   | (2,101 | ) |
|                                                                     |   |               |   |                  |       |   |   |   |   |   |   |
| Total stockholders’ equity                                         |   |               |   |                  | 27,493     |   |   |   |   | 27,675 |   |
|                                                                     |   |               |   |                  |       |   |   |   |   |   |   |
| Total liabilities and stockholders’ equity                         |   |               |   | **$**                 | **50,312** |   |   |   | **$** | **52,014** |   |

 

*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, 2009 AND 2008**

**(Dollars in thousands except share and per share data)**

**---------------------------------**

 

|                                                             |   | **2009** |      | **2008** |   |
|------------------------------------------------------------------|--------|----------|-----------|----------|--------|
|                                                             |   |     |      |     |   |   |   |
| Net sales                                                        |   | $        | 23,971    |     | $      | 24,718 |   |
|                                                             |   |     |      |     |   |   |   |
| Cost of goods sold                                               |   |     | 16,478    |     |   | 17,271 |   |
|                                                             |   |     |      |     |   |   |   |
| Gross profit                                                     |   |     | 7,493     |     |   | 7,447 |   |
|                                                             |   |     |      |     |   |   |   |
| Selling and administrative expenses                              |   |     | 7,836     |     |   | 7,886 |   |
|                                                             |   |     |      |     |   |   |   |
| (Loss) from operations                                           |   |     | (343      | )        |   | (439 | ) |
|                                                             |   |     |      |     |   |   |   |
| Interest expense                                                 |   |     | 119       |     |   | 221 |   |
|                                                             |   |     |      |     |   |   |   |
| (Loss) from operations before income taxes                       |   |     | (462      | )        |   | (660 | ) |
|                                                             |   |     |      |     |   |   |   |
| (Benefit) for income taxes                                       |   |     | (183      | )        |   | (249 | ) |
|                                                             |   |     |      |     |   |   |   |
| Net (loss)                                                       |   | $        | (279      | )        | $      | (411 | ) |
|                                                             |   |     |      |     |   |   |   |
| Share and per share information:             |   |     |      |     |   |   |   |
| Basic net (loss) per weighted average common share outstanding   |   | $        | (.05      | )        | $      | (.07 | ) |
| Basic weighted average common shares outstanding                 |   |     | 5,659,517 |     |   | 6,011,805 |   |
| Diluted net (loss) per weighted average common share outstanding |   | $        | (.05      | )        | $      | (.07 | ) |
| Diluted weighted average common shares outstanding               |   |     | 5,659,517 |     |   | 6,011,805 |   |

*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, 2009 AND 2008**

**(Dollars in thousands)**

**--------------**

 

 

|                                                                  |   | **2009** |      | **2008** |   |
|-----------------------------------------------------------------------|--------|----------|-----------|----------|--------|
| Cash flows from operating activities:                                 |   |     |      |     |   |   |   |
|                                                                  |   |     |      |     |   |   |   |
| Net (loss)                                                            |   | $        | (279      | )        | $      | (411 | ) |
| Adjustments to reconcile net (loss) to net cash (used in) operations: |   |     |      |     |   |   |   |
| Depreciation and amortization                                         |   |     | 96        |     |   | 102 |   |
| Bad debt expense                                                      |   |     | 184       |     |   | 115 |   |
| Stock-based compensation expense                                      |   |     | 64        |     |   | 22 |   |
|                                                                  |   |     |      |     |   |   |   |
| Changes in assets and liabilities:                                    |   |     |      |     |   |   |   |
| (Increase) decrease in accounts receivable                            |   |     | (2,480    | )        |   | 2,157 |   |
| Decrease in inventory                                                 |   |     | 4,014     |     |   | 3,291 |   |
| Decrease (increase) in prepaid and other assets                       |   |     | 114       |     |   | (263 | ) |
| (Decrease) in accounts payable                                        |   |     | (1,869    | )        |   | (3,713 | ) |
| (Decrease) in all other current liabilities                           |   |     | (1,060    | )        |   | (4,279 | ) |
| Increase in long-term obligations                                     |   |     | 291       |     |   | 50 |   |
| **Net cash (used in) operations**                                     |   |     | **(925**  | **)**    |   | **(2,929** | **)** |
|                                                                  |   |     |      |     |   |   |   |
| Cash flows from investing activities:                                 |   |     |      |     |   |   |   |
| Capital expenditures                                                  |   |     | (20       | )        |   | (275 | ) |
| Proceeds from life insurance                                          |   |     | 216       |     |   | — |   |
| Premiums on life insurance                                            |   |     | (103      | )        |   | (20 | ) |
| **Net cash provided by (used in) investing activities**               |   |     | **93**    |     |   | **(295** | **)** |
|                                                                  |   |     |      |     |   |   |   |
| Cash flows from financing activities:                                 |   |     |      |     |   |   |   |
| Borrowing under revolving credit agreements                           |   |     | 13,816    |     |   | 14,385 |   |
| Payments of revolving credit obligations                              |   |     | (12,663   | )        |   | (12,885 | ) |
| **Net cash provided by financing activities**                         |   |     | **1,153** |     |   | **1,500** |   |
|                                                                  |   |     |      |     |   |   |   |
| **Net increase (decrease) in cash and cash equivalents**              |   |     | **321**   |     |   | **(1,724** | **)** |
|                                                                  |   |     |      |     |   |   |   |
| Cash and cash equivalents at beginning of period                      |   |     | 343       |     |   | 2,339 |   |
|                                                                  |   |     |      |     |   |   |   |
| **Cash and cash equivalents at end of period**                        |   | **$**    | **664**   |     | **$**  | **615** |   |
|                                                                  |   |     |      |     |   |   |   |
| **Cash paid during the three months for:**                            |   |     |      |     |   |   |   |
| Interest                                                              |   | $        | 119       |     | $      | 221 |   |
| Taxes                                                                 |   | $        | 49        |     | $      | 1,673 |   |
|                                                                  |   |     |      |     |   |   |   |
| **Non-cash transactions during the period:**                          |   |     |      |     |   |   |   |
| Issuance of common stock in lieu of cash compensation                 |   | $        | 35        |     |   | — |   |

 

*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, 2009 and 2008. 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 2008 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, 2009 may not be indicative of the results that may be expected for the year ended December 31, 2009 or any other period.                          |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | **Net (Loss) per Share**. The following table sets forth the computation of the net (loss) per share for the periods ended March 31, 2009 and March 31, 2008 (in thousands, except for share and per share data): |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

 

|                                                                                                |   | Quarter         |      |
|-----------------------------------------------------------------------------------------------------|--------|-----------------|-----------|
|                                                                                                |   | Ended March 31, |      |
|                                                                                                |   | 2009            |      | 2008 |   |
| Numerator:                                                                                          |   |            |      |   |   |   |   |
| Net (loss)                                                                                          |   | $               | (279      | ) | $ | (411 | ) |
| Denominators:                                                                                       |   |            |      |   |   |   |   |
| Shares used in computing basic net (loss) per weighted average common share outstanding             |   |            | 5,659,517 |   |   | 6,011,805 |   |
| Effect of dilutive options                                                                          |   |            | —   |   |   | — |   |
| Shares used in computing net (loss) per weighted average common share outstanding assuming dilution |   |            | 5,659,517 |   |   | 6,011,805 |   |
|                                                                                                |   |            |      |   |   |   |   |
| Basic and fully diluted net (loss) per weighted average common share outstanding                    |   | $               | (.05      | ) | $ | (.07 | ) |
| Fully diluted net (loss) per weighted average common share outstanding                              |   | $               | (.05      | ) | $ | (.07 | ) |

 

We excluded 376,667 common shares from the computation of diluted net (loss) per weighted average common share for each of the quarters ended March 31, 2009 and March 31, 2008 because their effect would be anti-dilutive.

 

| (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) | **Stock Options**. In 1994, we established the 1994 Non-Employee Director Stock Option Plan (the “1994 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 1994 Plan were for a period                        of five years and were immediately exercisable. All of the shares available for grant under the 1994 Plan have been granted. In April 1998, our stockholders approved the 1998 Equity Incentive Compensation Plan (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. 

 

During the first quarter of 2008, the remaining 375,000 shares under the 1998 Plan were granted to certain key executives of the Company. Of the 375,000 shares granted, 260,000 incentive stock option shares were granted at an exercise price equal to the fair market price on the date of the grant of $5.05 per share. The remaining 115,000                        shares, which were issued to participants owning greater than 10% of the Company’s outstanding voting stock, were issued at an exercise price of 110% of the fair market value at the date of the grant, or $5.56 per share. The options expire five years from the date of grant and vest 25% on each of the first four anniversary dates of the grant. The fair value of the option grant was estimated on the date of grant using the Black-Scholes option-pricing model. Expected                        volatility was estimated using the Company’s historical volatility, calculated on a trailing 39-month basis. We believe that the significant improvement in the Company’s financial condition during the past four years makes share prices prior to December 2004 not meaningful as indicators of expected future volatility. The expected term of the options is four years, based on the simplified method of calculating expected life pursuant to SFAS 123(R) and Staff                        Accounting Bulletin No. 107. The risk-free rate of 2.73% is based upon the yield of a zero-coupon U.S. Treasury Note with a maturity date close to the expiration date of the expected term of the grant. SFAS 123(R) requires the Company to reflect the benefits of tax deductions in excess of recognized compensation cost to be reported as both a financing cash inflow and an operating cash outflow. The Company has recognized no such tax benefits to date. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

 

6

 

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The following assumptions were used to estimate the fair value of stock option shares granted to employees using the Black-Scholes option-pricing model during the three months ended March 31, 2008:

 

|                    | Granted        |
|-------------------------|----------------|
|                    | Quarter ended  |
|                    | March 31, 2008 |
|                    |           |
| Expected volatility     | 70%            |   |
| Risk-free interest rate | 2.73%          |   |
| Expected option life    | 4 years        |   |
| Expected dividend yield | N/A            |   |
| Assumed forfeiture rate | 0%             |   |

 

The weighted average grant date fair value of share options granted during the three months ended March 31, 2008 was $2.70. No shares were granted during the three months ended March 31, 2009. There were no stock options exercised and the Company did not recognize any related tax benefits during the three months ended March 31, 2009 and 2008. As of March 31, 2009, there        was $739,000 in total unrecognized compensation cost related to outstanding options granted after the adoption of SFAS 123(R) that is expected to be recognized over the vesting period of the grant.

 

Option activity under the stock-based compensation plans during the quarter ended March 31, 2009 is summarized below: 

 

 

|                                     |   | Number ofShares |   | WeightedAverageExercisePrice |    | WeightedAverageRemainingContractualTerm(years) |    | AggregateIntrinsicValue(in thousands)                        * |   |
|------------------------------------------|--------|-----------------|--------|------------------------------|---------|------------------------------------------------|---------|----------------------------------------------------------------|--------|
| Outstanding at December 31, 2008         |   | 376,667         |   | $                            | 5.19    |                                           | 4.16    |                                                           | $      | — |   |
| Granted                                  |   | —         |   |                         | — |                                           | — |                                                           |   | — |   |
| Exercised                                |   | —         |   |                         | — |                                           | — |                                                           |   | — |   |
| Forfeited/ Expired                       |   | —         |   |                         | — |                                           | — |                                                           |   | — |   |
| Outstanding at March 31, 2009            |   | 376,667         |   | $                            | 5.19    |                                           | 3.90    |                                                           | $      | — |   |
|                                     |   |            |   |                         |    |                                           |    |                                                           |   |   |   |
|                                     |   |            |   |                         |    |                                           |    |                                                           |   |   |   |
| Vested and Exercisable at March 31, 2009 |   | 95,417          |   | $                            | 5.14    |                                           | 3.81    |                                                           | $      | — |   |

 

* The aggregate intrinsic value on this table was calculated based on the positive difference, if any, between the valuation of our common stock on March 31, 2009 and the exercise price of the underlying options.

 

All options granted under the 1994 Plan are vested as of March 31, 2009. 

 

The above table reflects the 375,000 option shares issued under the 1998 Plan and 1,667 option shares issued, outstanding, and exercisable at $1.60 per share under the 1994 Plan.

 

| (5) | **Income Taxes**. We 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 our 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 our review, we do not believe that we have included any “uncertain tax positions” in our federal income tax return or in any state income tax returns. With few                        exceptions, we are no longer subject to federal income tax examinations for years prior to 2002. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

7

 

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| (6)              | **Fair Value Measurements**. In September 2006, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards No. 157, “*Fair Value Measurements*” (“SFAS 157”). We adopted SFAS 157 on January 1, 2008 for our                        financial assets and financial liabilities. However, the FASB deferred the effective date of SFAS 157 for one year as it relates to fair value measurement requirements for nonfinancial assets and nonfinancial liabilities that are not recognized or disclosed at fair value on a recurring basis. The adoption of SFAS 157 for our financial assets and financial liabilities did not have a material impact on our financial statements. We are evaluating the effect the                        implementation of SFAS 157 for our nonfinancial assets and nonfinancial liabilities will have on our financial statements. SFAS 157 defines fair value, provides guidance for measuring fair value and requires certain disclosures. This statement applies under other accounting pronouncements that require or permit fair value measurements. The statement indicates, among other things, that a fair value measurement assumes that the transaction to sell an asset or transfer a                        liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability. SFAS 157 defines fair value based upon an exit price model. SFAS No. 157 discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or                        replacement cost). The statement utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels: |
|-----------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

|   | Level 1: | Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities. |
|--------|----------|-------------------------------------------------------------------------------------------------------------|

|   | Level 2: | Inputs, other than quoted prices, that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. |
|--------|----------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Level 3: | Unobservable inputs that reflect the reporting entity’s own assumptions. |
|--------|----------|--------------------------------------------------------------------------------|

 

Our cash and cash equivalents consist of cash on deposit at various financial institutions at March 31, 2009. We did not have any financial assets or liabilities that required disclosure of fair value at March 31, 2009.

 

| (7) | **Recent Accounting Pronouncements.**In February 2007, the FASB issued SFAS No. 159, “*The Fair Value Option for Financial Assets and Financial Liabilities*” (“SFAS 159”). SFAS 159 permits entities to choose to measure certain financial instruments and                        other eligible items at fair value when the items are not otherwise currently required to be measured at fair value. We adopted SFAS 159 effective January 1, 2008. Upon adoption, we did not elect the fair value option for any items within the scope of SFAS 159 and, therefore, the adoption of SFAS 159 did not have an impact on our consolidated financial statements. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

In April 2009, the FASB issued three related Staff Positions: (i) FSP 157-4, “*Determining Fair Value When the Volume and Level of Activity for the Asset or Liability have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP 157-4”), (ii) SFAS 115-2 and SFAS        124-2, “Recognition and Presentation of Other-Than-Temporary Impairment”* (“FSP 115-2” and “FSP 124-2”), and (iii) SFAS 107-1 and APB 28-1, “ *Interim Disclosures about Fair Value of Financial Instruments”* (“FSP 107” and “APB 28-1”), which will be effective for interim and annual periods ending after June 15, 2009. FSP 157-4 provides guidance on how to determine the fair value of assets and        liabilities under SFAS 157 in the current economic environment and reemphasizes that the objective of a fair value measurement remains an exit price. If we were to conclude that there has been a significant decrease in the volume and level of activity of the asset or liability in relation to normal market activities, quoted market values may not be representative of fair value and we may conclude that a change in valuation technique or the use of multiple valuation techniques may be        appropriate. FSP 115-2 and FSP 124-2 modify the requirements for recognizing other-than-temporarily impaired debt securities and revise the existing impairment model for such securities, by modifying the current intent and ability indicator in determining whether a debt security is other-than-temporarily impaired. FSP 107 and APB 28-1 enhance the disclosure of instruments under the scope of SFAS 157 for both interim and annual periods. We are currently evaluating these Staff Positions        and the impact, if any, that adoption will have on our financial position, results of operations, and cash flows.

 

In December 2007, the FASB issued SFAS No. 141 (revised 2007), *“Business Combinations”*(“SFAS 141R”). SFAS 141R addresses the recognition and accounting for identifiable assets acquired, liabilities assumed, and noncontrolling interests in business combinations. SFAS 141R also establishes expanded disclosure        requirements for business combinations. The effect of SFAS 141 R, which we adopted on January 1, 2009, will depend on the economic terms of any applicable future transactions.

 

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In December 2007, the FASB issued SFAS No.160, “*Noncontrolling Interests in Consolidated Financial Statements – an amendment of ARB No. 51*” (“SFAS No. 160”), to improve the relevance, comparability, and transparency of the financial information a reporting entity provides in its consolidated financial        statements. SFAS No. 160 amends ARB 51 to establish accounting and reporting standards for noncontrolling interests in subsidiaries and to make certain consolidation procedures consistent with the requirements of SFAS No. 141R. It defines a noncontrolling interest in a subsidiary as an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. SFAS No. 160 changes the way the consolidated income statement is presented by        requiring consolidated net income to include amounts attributable to the parent and the noncontrolling interest. SFAS No. 160 establishes a single method of accounting for changes in a parent’s ownership interest in a subsidiary which do not result in deconsolidation. SFAS No. 160 also requires expanded disclosures that clearly identify and distinguish between the interests of the parent and the interests of the noncontrolling owners of a subsidiary. SFAS No. 160 is effective for        financial statements issued for fiscal years beginning on or after December 15, 2008, and interim periods within those fiscal years. The adoption of SFAS No. 160 on January 1, 2009 did not have a material effect on our financial condition, results of operations and cash flows.

 

In March 2008, the FASB issued SFAS No. 161, “*Disclosures about Derivative Instruments and Hedging Activities - an amendment of FASB Statement No. 133*” (“SFAS 161”). SFAS 161 amends and expands the disclosure requirements of Statement 133 to provide a better understanding of how and why an entity uses derivative        instruments, how derivative instruments and related hedged items are accounted for, and their effect on an entity’s financial position, financial performance, and cash flows. The adoption of SFAS No. 161 did not have a material effect on our financial condition, results of operations and cash flows.

 

In April 2008, the FASB issued Staff Position (“FSP”) No. 142-3, “*Determination of the Useful Life of Intangible Assets*” (“FSP 142-3”) which amends SFAS No. 142, “Goodwill and Other Intangible Assets.” FSP 142-3 amends the factors that an entity should consider in developing renewal or        extension assumptions used in estimating the useful life of an intangible asset under SFAS No. 142. FSP No. 142-3 is effective for fiscal years and interim periods beginning after December 15, 2008. The adoption of FSP 142-3 did not have a material effect on our financial condition, results of operations and cash flows.

 

In May 2008, the FASB issued SFAS No. 162, “*The Hierarchy of Generally Accepted Accounting Principles*” (“SFAS 162”). SFAS 162 identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements of nongovernmental entities that are        presented in conformity with generally accepted accounting principles in the United States. SFAS 162 is effective 60 days following the SEC’s approval of the Public Company Accounting Oversight Board amendments to AU Section 411, *“The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles*”. We do not expect the adoption of SFAS 162 to have a material impact on our financial condition,        results of operations and cash flows.

 

****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 four factory outlet stores that distribute excess and out of line merchandise as well as certain other accessories.

 

Our net sales during the quarter ended March 31, 2009 decreased 3.0% to $23,971,000 compared to $24,718,000 for the corresponding period in 2008. The decrease was mainly due to lower net sales of our men’s jewelry merchandise as well as a decline in net sales of our Luxury Division leather goods collections, in each case as compared to the prior year. Gross profit during the        quarter of $7,493,000 was approximately even with last year’s $7,447,000. Gross profit expressed as a percentage of net sales increased to 31.3% from 30.1% last year. 

 

Selling and administrative expenses during the quarter decreased $50,000 or less than 1% to $7,836,000 or 32.7% of net sales at March 31, 2009 from $7,886,000 or 31.9% of net sales at March 31, 2008. The decrease was due mainly to reductions in a number of variable sales-related expenses including warehouse and distribution expenses, sales commissions and in-store inventory coordinator        fees, offset in part by increases in certain advertising expenditures, bad debt expense, and certain fringe-benefit costs.

 

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***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. 

 

***Revenue Recognition***

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.

 

***Allowance for Doubtful Accounts***

We determine allowances 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.

 

***Environmental Costs***

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.

 

***Inventory and Reserves***

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.

 

***Income Taxes***

We utilize the liability method of accounting for income taxes. Under the liability method, deferred taxes are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. Net deferred tax assets are recorded when it is more likely than not that        such tax benefits will be realized. When necessary, a valuation allowance is recorded to reflect the estimated realization of the deferred tax asset. We determine if a valuation allowance for deferred tax assets is required 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 deferred tax assets will be recovered.

 

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***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***

 

Our net sales during the quarter ended March 31, 2009 decreased 3.0% to $23,971,000 compared to $24,718,000 for the corresponding period in 2008. The decrease was mainly due to lower net sales of our men’s jewelry merchandise and our Luxury Division leather goods collections, in each case as compared to the prior year, offset in part by a reduction in in-store markdowns generally        associated with slow moving or discontinued merchandise (we account for in-store markdowns and other customer allowances as a reduction to net sales). Spring 2008 represented the first spring collection of our luxury merchandise which was initially launched during the third quarter of 2007. Exclusive of our Luxury Division, net sales of our personal leather accessories merchandise increased 13.6% over last year. The increase was primarily associated with higher shipments of certain        branded merchandise collections. Net sales of our belts (exclusive of Luxury) decreased 2.0% in large part due to a decline in international net sales associated with lower shipments to foreign affiliates of certain of our licensors. The challenging economic conditions during the first quarter of 2009 resulted in a general decrease in wholesale orders from many of our department and specialty store customers and had a particularly severe effect on the Luxury segment of the        market.

 

Net sales to international customers (including certain military accounts) decreased $1,055,000 or 34.2% during the quarter due mostly to lower merchandise shipments in a number of our licensed brands to licensor retail stores and other licensor-affiliates.

 

***Gross profit***

 

Gross profit during the quarter of $7,493,000 was approximately even with last year’s $7,447,000. Gross profit expressed as a percentage of net sales increased to 31.3% from 30.1% last year. The increase in gross profit as a percentage of net sales was due mainly to improved margins for our personal leather goods and belt merchandise associated with a more favorable sales mix        and, particularly for belts, a reduction in landed product cost. Merchandise display expenditures, which are included in cost of sales, also declined during the quarter. We made substantial display expenditures during last year’s first quarter in connection with a fixturing program for a major chain store customer that was designed to give certain of our merchandise collections more prominent retail exposure. Product royalty costs fell 4.7% due to a combination of lower net sales        and, in certain instances, reductions in contractual minimums.

 

***Selling and Administrative Expenses***

 

Selling and administrative expenses decreased $50,000 to $7,836,000 or 32.7% of net sales at March 31, 2009 from $7,886,000 or 31.9% of net sales at March 31, 2008, or less than 1% during the quarter. 

 

Selling expenses decreased $109,000 or 1.8% to $5,887,000 compared to $5,996,000 for the quarter ended March 31, 2008, and, expressed as a percentage of net sales, were 24.6% this year compared to 24.3% last year. The decrease was primarily attributable to reductions in a number of variable sales-related expenses including warehouse and distribution costs, sales commissions and        in-store inventory coordinator fees.

 

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, which are recorded as a reduction to net sales, to support various marketing initiatives sponsored by our customers. Expenditures for advertising and promotion, including cooperative advertising, totaled $1,000,000 or 4.2% of net sales for the quarter ended March 31, 2009, compared to $831,000 or 3.4% percent of net sales for the same quarter in fiscal        2008. 

 

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      Administrative expenses increased $59,000 or 3.1% during the quarter ended March 31, 2009 to $1,949,000 compared to $1,890,000 last year. Administrative expenses as a percentage of net sales were 8.1% and 7.6% for the quarters ended March 31, 2009 and 2008, respectively. The increase in administrative expenses for the quarter was mainly due to increases in bad debt        expense and certain fringe-benefit costs.

 

***Interest Expense***

 

Net interest expense decreased by $102,000 or 46.1% during the quarter ended March 31, 2009 compared to the corresponding period last year. The decrease was due to reductions in both average borrowings and average borrowing costs. Average borrowings under our revolving credit agreement during the quarter fell $1,092,000 or 9.4% compared to the same period last year. Our borrowing costs        declined due to a general reduction in domestic short-term interest rates.

 

***Income Taxes***

 

We recorded an income tax benefit for the quarter ended March 31, 2009 of $183,000 reflecting an effective tax rate of 39.7%. We recorded an income tax benefit on our net loss during the quarter ended March 31, 2008 of $249,000 or an effective rate of 37.7%. As of March 31, 2009, there have been no material changes to our uncertain tax positions disclosure as provided in Note D to the        financial statements included in our 2008 Form 10-K. We do not anticipate that our unrecognized tax benefits will significantly change during the next 12 months.

 

***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 $342,000 during the quarter ended March 31, 2009 compared to a decrease of $577,000 for the quarter ended March 31, 2008. The increase was due to increases in accounts receivable and decreases in accounts payable, accrued employee compensation, and other current liabilities all offset in part by a decrease in inventory investment. The decrease in working        capital during the quarter ended March 31, 2008 was mainly due to reductions in cash, net accounts receivable, and inventory balances, partially offset by decreases in accounts payable, accrued employee compensation and income taxes payable. The decrease in inventory balances during this year’s first quarter is consistent with our cautious outlook relative to retail sales and consumer spending over the next several months.

 

Cash (used in) operations during the quarter ended March 31, 2009 was ($925,000) compared to cash (used) of ($2,929,000) for the quarter ended March 31, 2008. Cash used in operations during the current quarter primarily reflects increases in net accounts receivable and decreases in accounts payable and other accrued liabilities, offset in part by a decrease in inventory and non-cash        charges including depreciation, amortization, stock-based compensation expense, and bad debt accruals. Cash used in operations last year also reflects a decrease in accounts payable and other current liabilities offset partially by decreases in net accounts receivable and inventories as well as certain non-cash charges. 

 

As discussed above, inventories declined during both the quarters ended March 31, 2009 and March 31, 2008. The decrease during the first quarter of 2009, however, was somewhat more pronounced than during the corresponding period last year due to the current challenging economic climate which has tempered our outlook with regard to retail sales for at least the remainder of our spring        selling season. Inventory levels during last year’s first quarter also reflected purchases to support initial spring shipments of our “Tumi” personal leather goods collections. We launched that merchandise during the third quarter of 2007.

 

Cash provided by (used in) investing activities was $93,000 and ($295,000) for the quarters ended March 31, 2009 and March 31, 2008, respectively. Cash provided by investing activities in 2009 includes life insurance proceeds associated with certain executive benefit plans while cash used in investing activities during both years reflects capital expenditures and premiums on certain        life insurance contracts owned by us. 

 

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      Cash provided by financing activities for the quarter ended March 31, 2009 was $1,153,000 compared to $1,500,000 during the quarter ended March 31, 2008. Cash provided by financing activities in both years consists of net borrowings under our revolving credit agreement.

 

In the ordinary course of business, we may be contingently liable from time to time for performance under letters of credit. At March 31, 2009, there were no outstanding letters of credit. We presently are required to pay a fee quarterly equal to 2.00% per annum on outstanding letters of credit.

 

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 executive’s employment and, under certain circumstances, for a period of time following their termination. Please see the information set forth in Item 11 of our 2008 Form 10-K under the caption        “Executive Compensation – Employment Contracts and Severance Agreements.”

 

We are subject to legal proceedings and claims that arise in the ordinary course of our 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 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**

 

|   | Not applicable. |
|--------|-----------------|

 

 

****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, 2009 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 6.** **Exhibits**

  |
|---------------------------------------|
|                                  |
|                                  | Exhibit Number | 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.

 

 

|             |                                       | SWANK, INC.           |
|-------------|---------------------------------------|-----------------------|
|             |                                       |                  |
|             |                                       | Registrant            |
|             |                                       |             |
|             |                                       |                  |
|             |                                       |                  |
| Date:  | May 14, 2009                          | /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. |

 

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