Form 8-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of The

Securities Exchange Act of 1934

Date of report (Date of earliest event reported): March 14, 2013

 

 

Lifetime Brands, Inc.

(Exact Name of Registrant as Specified in Its Charter)

 

 

Delaware

(State or Other Jurisdiction

of Incorporation)

 

0-19254   11-2682486

(Commission

File Number)

 

(IRS Employer

Identification No.)

1000 Stewart Avenue, Garden City, New York 11530

(Address of Principal Executive Offices) (Zip Code)

(Registrant’s Telephone Number, Including Area Code) 516-683-6000

(Former Name or Former Address, if Changed Since Last Report) N/A

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

  ¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

  ¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

  ¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

  ¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 


Item 2.02. Results of Operations and Financial Condition.

On March 14, 2013, Lifetime Brands, Inc. (the “Company”) issued a press release announcing the Company’s results for the fourth quarter and year ended December 31, 2012. A copy of the Company’s press release is attached as Exhibit 99.1.

The press release attached as Exhibit 99.1 contains non-GAAP financial measures within the meaning of Regulation G promulgated by the Securities and Exchange Commission. For purposes of Regulation G, a non-GAAP financial measure is a numerical measure of a company’s performance, financial position, or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles. To supplement the Company’s results of operations presented in accordance with GAAP, the Company is presenting non-GAAP information regarding net income, adjusted to exclude undistributed earnings of investments, income taxes, interest, depreciation and amortization, stock compensation expense, loss on early retirement of debt, intangible asset impairment and acquisition related expenses. The Company is also presenting non-GAAP information regarding adjusted net income and adjusted diluted income per share regarding net income, adjusted to exclude the bargain purchase gain included in equity in earnings, a tax benefit recorded in equity in earnings, a write down in the Vasconia investment to fair value, intangible asset impairment, a loss on early retirement of debt related to the repayment of the Company’s Term Loan, an expense related to retirement benefit obligations, acquisition related expenses, a reduction of the Company’s deferred tax liability related to the prior period and includes an adjustment to reflect a normalized annual tax rate.

These non-GAAP measures are provided to enhance the user’s overall understanding of the Company’s current financial performance. Specifically, the Company believes the non-GAAP results provide useful information to both management and investors by excluding certain items that may not be indicative of the Company’s core operating results. These measures should be considered in addition to results prepared in accordance with GAAP, but are not a substitute for or superior to GAAP results. The non-GAAP measures included in the attached press release have been reconciled to the equivalent GAAP measure.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

 

99.1    Press release dated March 14, 2013


Signature

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

 

Lifetime Brands, Inc.
By:  

/s/ Laurence Winoker

  Laurence Winoker
  Senior Vice President – Finance, Treasurer and Chief Financial Officer

Date: March 14, 2013

EX-99.1

Exhibit 99.1

 

 

LOGO

Lifetime Brands Reports 2012 Financial Results

Announces a 25% Increase in its Quarterly Dividend

Garden City, NY, March 14, 2013 — Lifetime Brands, Inc. (NasdaqGS: LCUT), a global provider of branded products used to prepare, serve and consume foods in the home, today reported its financial results for the fourth quarter and year ended December 31, 2012.

Fourth Quarter Highlights:

 

   

Consolidated net sales were $154.8 million, an increase of 12.5%, as compared to consolidated net sales of $137.6 million in the fourth quarter of 2011.

 

   

Net income was $15.2 million, or $1.19 per diluted share, in the 2012 period, as compared to $5.4 million, or $0.43 per diluted share, in the prior-year period.

 

   

Adjusted net income was $8.7 million, or $0.67 per diluted share, in the 2012 period, as compared to $6.5 million, or $0.52 per diluted share, in the 2011 period.

 

   

Consolidated EBITDA for the three-month period ended December 31, 2012 was $17.9 million, as compared to $14.3 million for the corresponding 2011 period.

Full Year Highlights:

 

   

Consolidated net sales were $486.8 million, an increase of 9.5%, as compared to consolidated net sales of $444.4 million for 2011.

 

   

Net income was $20.9 million, or $1.64 per diluted share, in 2012, as compared to $14.1 million, or $1.12 per diluted share, in 2011.

 

   

Adjusted net income was $16.2 million, or $1.26 per diluted share, in 2012, as compared to $14.5 million, or $1.16 per diluted share, in 2011.

 

   

Consolidated EBITDA was $41.2 million, as compared to $38.1 million for the year ended December 31, 2011.

On March 12, 2013, the Board of Directors declared a quarterly dividend of $0.03125 per share payable on May 15, 2013 to shareholders of record on May 1, 2013.

Jeffrey Siegel, Lifetime’s Chairman, President and Chief Executive Officer commented,

“Lifetime finished 2012 on a very positive note. For the quarter, Consolidated Net Sales increased 12.5% on an actual basis and 8.6% on an organic basis. During the quarter, we acquired the business and assets of Fred® & Friends, a line of innovative products featuring fun kitchen tools, tabletop accessories, party goods and giftware products.

“For the year, Consolidated Net Sales increased 9.5% (actual) and 1.4% (organic).


“Despite the increase in Consolidated Net Sales, the acquisition of Fred® and Friends and a planned, temporary build-up of inventory in the UK in anticipation of increased duties on Chinese ceramics, which are expected to be enacted later this year, total inventory at year-end decreased to $104.6 million, from $110.3 million, reflecting our improving inventory management practices.

“Earlier this month, we presented our new line-up of kitchenware products at the annual International Home + Housewares Show in Chicago. The reaction to our new products was overwhelmingly positive, which we believe foretells the successful placement of many of these new products later in the year.

“While the U.S. and European economies remain troubled, we nevertheless foresee our overall business increasing by 4-6% in 2013. The increased cash dividend we announced today demonstrates our positive outlook and confidence in our products.”

Conference Call

Lifetime has scheduled a conference call for Thursday, March 14, 2013 at 11:00 a.m. ET to discuss its fourth quarter 2012 results. The dial-in number for the conference call is (800) 510-9836 or (617) 614-3670, passcode #15045565. A replay of the call will also be available through March 15, 2013 and can be accessed by dialing (888) 286-8010 or (617) 801-6888, conference ID #43636130. A live webcast of the conference call will be broadcast in the Investor Relations section of the Company’s web site, www.lifetimebrands.com. For those who cannot listen to the live broadcast, an audio replay of the call will also be available on the site.

Non-GAAP Financial Measures

This earnings release contains non-GAAP financial measures. For purposes of Regulation G, a non-GAAP financial measure is a numerical measure of a company’s historical or future financial performance, financial position or cash flows that excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable measure calculated and presented in accordance with GAAP in the statements of income, balance sheets, or statements of cash flows of the Company; or includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable measure so calculated and presented. Pursuant to the requirements of Regulation G, the Company has provided reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures. These non-GAAP measures are provided because management of the Company uses these financial measures in evaluating the Company’s on-going financial results and trends. Management uses this non-GAAP information as an indicator of business performance.

Forward-Looking Statements

In this press release, the use of the words “believe,” “could,” “expect,” “may,” “positioned,” “project,” “projected,” “should,” “will,” “would” or similar expressions is intended to identify forward-looking statements that represent the Company’s current judgment about possible future events. The Company believes these judgments are reasonable, but these statements are not guarantees of any events or financial results, and actual results may differ materially due to


a variety of important factors. Such factors might include, among others, the Company’s ability to comply with the requirements of its credit agreements; the availability of funding under such credit agreements; the Company’s ability to maintain adequate liquidity and financing sources and an appropriate level of debt; changes in general economic conditions which could affect customer payment practices or consumer spending; the impact of changes in general economic conditions on the Company’s customers; changes in demand for the Company’s products; shortages of and price volatility for certain commodities; significant changes in the competitive environment and the effect of competition on the Company’s markets, including on the Company’s pricing policies, financing sources and an appropriate level of debt.

Lifetime Brands, Inc.

Lifetime Brands is a provider of kitchenware, tabletop and other products used in the home. The Company markets its products under such well-known kitchenware brands as Farberware®, KitchenAid®, CasaMōda®, Cuisinart®, Cuisine de France®, Fred ®, Guy Fieri®, Hoffritz®, Kizmos™, Misto®, Pedrini®, Roshco®, Sabatier® and Vasconia®; respected tabletop brands such as Mikasa®, Pfaltzgraff®, Creative Tops®, Gorham®, International® Silver, Kirk Stieff®, Sasaki®, Towle® Silversmiths, Tuttle®, Wallace®, V&A® and Royal Botanic Gardens Kew®; and home solutions brands, including Elements®, Melannco®, Kamenstein® and Design for Living™. The Company also provides exclusive private label products to leading retailers worldwide.

The Company’s corporate website is www.lifetimebrands.com.

Contacts:

 

Lifetime Brands, Inc.    Lippert/Heilshorn & Assoc.
Laurence Winoker, Chief Financial Officer    Harriet Fried, SVP
516-203-3590    212-838-3777
investor.relations@lifetimebrands.com    hfried@lhai.com


LIFETIME BRANDS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands - except per share data)

 

     Three Months Ended
December 31,
    Year Ended
December 31,
 
     2012     2011     2012     2011  

Net sales

   $ 154,812      $ 137,611      $ 486,842      $ 444,418   

Cost of sales

     98,767        86,926        310,054        282,058   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross margin

     56,045        50,685        176,788        162,360   

Distribution expenses

     12,103        13,284        44,046        43,882   

Selling, general and administrative expenses

     29,403        27,443        104,338        93,894   

Intangible asset impairment

     —          —          1,069        —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Income from operations

     14,539        9,958        27,335        24,584   

Interest expense

     (1,254     (1,951     (5,898     (7,758

Loss on early retirement of debt

     —          —          (1,363     —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes and equity in earnings

     13,285        8,007        20,074        16,826   

Income tax provision

     (2,596     (3,513     (5,208     (6,122

Equity in earnings, net of taxes

     4,465        925        6,081        3,362   
  

 

 

   

 

 

   

 

 

   

 

 

 

NET INCOME

   $ 15,154      $ 5,419      $ 20,947      $ 14,066   
  

 

 

   

 

 

   

 

 

   

 

 

 

BASIC INCOME PER COMMON SHARE

   $ 1.21      $ 0.45      $ 1.67      $ 1.16   
  

 

 

   

 

 

   

 

 

   

 

 

 

DILUTED INCOME PER COMMON SHARE

   $ 1.19      $ 0.43      $ 1.64      $ 1.12   
  

 

 

   

 

 

   

 

 

   

 

 

 


LIFETIME BRANDS, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands - except share data)

 

     December 31,  
     2012     2011  

ASSETS

    

CURRENT ASSETS

    

Cash and cash equivalents

   $ 1,871      $ 2,972   

Accounts receivable, less allowances of $3,996 at December 31, 2012 and $4,602 at December 31, 2011

     97,369        77,749   

Inventory

     104,584        110,337   

Prepaid expenses and other current assets

     5,393        5,264   

Deferred income taxes

     3,542        2,475   
  

 

 

   

 

 

 

TOTAL CURRENT ASSETS

     212,759        198,797   

PROPERTY AND EQUIPMENT, net

     31,646        34,324   

INVESTMENTS

     43,685        34,515   

INTANGIBLE ASSETS, net

     57,842        46,937   

OTHER ASSETS

     2,865        4,172   
  

 

 

   

 

 

 

TOTAL ASSETS

   $ 348,797      $ 318,745   
  

 

 

   

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

    

CURRENT LIABILITIES

    

Revolving Credit Facility

   $ 7,000      $ 15,000   

Current maturity of Senior Secured Term Loan

     4,375        —     

Accounts payable

     18,555        18,985   

Accrued expenses

     33,354        33,877   

Income taxes payable

     3,615        2,100   
  

 

 

   

 

 

 

TOTAL CURRENT LIABILITIES

     66,899        69,962   

DEFERRED RENT & OTHER LONG-TERM LIABILITIES

     21,565        14,598   

DEFERRED INCOME TAXES

     3,510        5,385   

REVOLVING CREDIT FACILITY

     53,968        42,625   

SENIOR SECURED TERM LOAN

     30,625        —     

TERM LOAN

     —          40,000   

STOCKHOLDERS’ EQUITY

    

Preferred stock, $.01 par value, shares authorized: 100 shares of Series A and 2,000,000 shares of Series B; none issued and outstanding

     —          —     

Common stock, $.01 par value, shares authorized: 25,000,000; shares issued and outstanding: 12,754,467 at December 31, 2012 and 12,430,893 at December 31, 2011

     128        124   

Paid-in capital

     142,489        137,467   

Retained earnings

     33,849        14,465   

Accumulated other comprehensive loss

     (4,236     (5,881
  

 

 

   

 

 

 

TOTAL STOCKHOLDERS’ EQUITY

     172,230        146,175   
  

 

 

   

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

   $ 348,797      $ 318,745   
  

 

 

   

 

 

 


LIFETIME BRANDS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

 

     Year ended
December 31,
 
     2012     2011  

OPERATING ACTIVITIES

    

Net income

   $ 20,947      $ 14,066   

Adjustments to reconcile net income to net cash provided by operating activities:

    

Provision for doubtful accounts

     123        (24

Depreciation and amortization

     9,324        8,397   

Amortization of debt discount

     —          543   

Deferred rent

     (668     (133

Deferred income taxes

     (3,011     (1,218

Stock compensation expense

     2,793        2,795   

Undistributed equity earnings

     (5,665     (2,896

Intangible asset impairment

     1,069        —     

Loss on early retirement of debt

     1,363        —     

Changes in operating assets and liabilities (excluding the effects of business acquisitions)

    

Accounts receivable

     (14,741     3,297   

Inventory

     9,694        (5,365

Prepaid expenses, other current assets and other assets

     120        1,120   

Accounts payable, accrued expenses and other liabilities

     (166     (4,673

Income taxes payable

     1,515        (3,722
  

 

 

   

 

 

 

NET CASH PROVIDED BY OPERATING ACTIVITIES

     22,697        12,187   
  

 

 

   

 

 

 

INVESTING ACTIVITIES

    

Purchases of property and equipment

     (4,955     (4,959

Equity investments

     (2,765     (5,123

Business acquisition, net of cash acquired

     (14,500     (20,584

Net proceeds from sale of property

     27        31   
  

 

 

   

 

 

 

NET CASH USED IN INVESTING ACTIVITIES

     (22,193     (30,635
  

 

 

   

 

 

 

FINANCING ACTIVITIES

    

Proceeds from Revolving Credit Facility, net

     3,343        43,525   

Proceeds from Term Loan

     35,000        —     

Repayment of Term Loan

     (40,000     —     

Repurchase of 4.75% convertible senior notes

     —          (24,100

Financing Costs

     —          (761

Cash dividends paid

     (1,249     (913

Payment of capital lease obligations

     —          (78

Proceeds from the exercise of stock options

     577        225   

Excess tax benefits from exercise of stock options

     150        —     
  

 

 

   

 

 

 

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES

     (2,179     17,898   
  

 

 

   

 

 

 

Effect of foreign exchange on cash

     574        171   
  

 

 

   

 

 

 

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

     (1,101     (379
  

 

 

   

 

 

 

Cash and cash equivalents at beginning of year

     2,972        3,351   
  

 

 

   

 

 

 

CASH AND CASH EQUIVALENTS AT END OF YEAR

   $ 1,871      $ 2,972   
  

 

 

   

 

 

 


LIFETIME BRANDS, INC.

Supplemental Information

Reconciliation of GAAP to Non-GAAP Operating Results

(In thousands - except per share data)

Consolidated EBITDA:

 

     Three Months Ended
December 31,
    Year Ended
December 31,
 
     2012     2011     2012     2011  
     (in thousands)  

Net income as reported

   $ 15,154      $ 5,419      $ 20,947      $ 14,066   

Subtract out:

        

Undistributed equity in earnings, net

     (4,464     (925     (5,665     (2,896

Add back:

        

Income tax provision

     2,596        3,513        5,208        6,122   

Interest expense

     1,254        1,951        5,898        7,758   

Depreciation and amortization

     2,446        2,336        9,324        8,397   

Stock compensation expense

     662        690        2,793        2,795   

Loss on early retirement of debt

     —          —          1,363        —     

Intangible asset impairment

     —          —          1,069        —     

Permitted acquisition related expenses

     220        1,358        305        1,856   
  

 

 

   

 

 

   

 

 

   

 

 

 

Consolidated EBITDA

   $ 17,868      $ 14,342      $ 41,242      $ 38,098   
  

 

 

   

 

 

   

 

 

   

 

 

 
Adjusted net income and adjusted diluted income per share:                         
     Three Months Ended
December 31,
    Year Ended
December 31,
 
     2012     2011     2012     2011  
     (in thousands)  

Net income as reported

   $ 15,154      $ 5,419      $ 20,947      $ 14,066   

Adjustments:

        

Bargain purchase gain in equity in earnings, net of tax

     (4,112     —          (4,112     —     

Tax benefit recorded in equity in earnings

     (1,116     —          (1,116     —     

Impairment of Vasconia investment, net of tax

     1,336        —          1,336        —     

Intangible asset impairment, net of tax

     —          —          645        —     

Loss on early retirement of debt, net of tax

     —          —          822        —     

Retirement benefit obligation expense, net of tax

     —          —          268        —     

Acquisition related expenses, net of tax

     135        895        188        1,230   

Reduction of deferred tax liability related to prior year

     (2,283     —          (2,283     —     

Normalized tax benefit (provision) on reported income

     (435     214        (539     (810
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted net income

   $ 8,679      $ 6,528      $ 16,156      $ 14,486   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted diluted income per share

   $ 0.67      $ 0.52      $ 1.26      $ 1.16   
  

 

 

   

 

 

   

 

 

   

 

 

 

Consolidated EBITDA is a non-GAAP measure that the Company defines as net income, adjusted to exclude undistributed equity earnings, income taxes, interest, depreciation and amortization, stock compensation expense, loss on early retirement of debt, intangible asset impairment and acquisition related expenses, as shown in the table above.


Adjusted net income in 2012 excludes the bargain purchase gain included in equity in earnings, a tax benefit recorded in equity in earnings, a write down in the Vasconia investment to fair value, intangible asset impairment, a loss on early retirement of debt related to the repayment of the Company’s Term Loan, an expense related to retirement benefit obligations, acquisition related expenses, a reduction of the Company’s deferred tax liability related to the prior year and includes an adjustment to reflect a normalized annual tax rate. Adjusted net income in 2011 excludes acquisition related expenses and includes an adjustment to reflect a normalized annual tax rate.

Adjusted net income in the three-month period ending December 31, 2012 excludes the bargain purchase gain included in equity in earnings, a tax benefit recorded in equity in earnings, a write down in the Vasconia investment to fair value, acquisition related expenses, a reduction of the Company’s deferred tax liability related to the prior year and includes an adjustment to reflect a normalized annual tax rate. Adjusted net income in the corresponding 2011 period excludes acquisition related expenses and includes an adjustment to reflect a normalized annual tax rate.