Tandy Brands Announces Restructuring Plan: to Reduce Headcount by 32%

Tandy Brands Accessories, Inc. TBAC today announced a broad restructuring plan that is expected to reduce operating expenses by $6.0 to $7.0 million on an annualized basis, beginning in fiscal year 2014, and the Company provided an update on negotiations with its senior lender to address covenant violation. Restructuring Plan The Company announced the elements of the restructuring plan, which are expected to improve customer service, increase profits, improve working capital efficiency, and reduce overhead. The key elements of the plan include: * Eliminating low-volume products   * Emphasizing licensed products and high volume private label products   * Reducing the amount of risk associated with the Gifts business   * Reducing corporate employee headcount by approximately 32%   * Closing or downsizing four of eight leased facilities   * Outsourcing and relocating Gifts distribution from Dallas to California   * Exiting development efforts and accelerating recognition of future expenses associated with non-core brands The Company expects net revenues to decline in fiscal 2014 while reducing operating expenses by a significantly greater percentage. The Company estimates pre-tax charges related to the restructuring will be in the range of $10.6 to $13.8 million as follows:   Second Fiscal  Third Fiscal  Fourth Fiscal Quarter Quarter Quarter     December 31, March 31, 2013  June 30, 2013 2012             Inventory write-off $6.0 - $7.0  $ -  $ -    million  Severances  $ -  $0.6 - $0.7  $ -   million  Intangibles $ -  $2.0 - $3.5  $ -    impairment million Other charges $ -   $1.6 - $2.0  $0.4 to $0.6 million million Total  $6.0 - $7.0 $4.2 - $6.2 $0.4 to $0.6 million   million  million Updates on negotiations with senior lender to address covenant violation Tandy Brands confirmed it is in breach of the fixed-charge coverage covenant and is in negotiations with its senior lender to address this violation.  "Today, although we are in violation of the fixed-charge coverage covenant, we remain in compliance with the liquidity covenants with our senior lender and we expect to obtain a waiver for this covenant violation in the next few weeks," said McGeachy.  The Company expects to generate $4.0 million to $6.0 million of additional liquidity from inventory liquidation over the next four to six months in connection with the restructuring plan.