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): November 7, 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 November 7, 2013, Lifetime Brands, Inc. (the “Company”) issued a press release announcing the Company’s results for the third quarter ended September 30, 2013. 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 (loss), adjusted to exclude: (i) undistributed equity in earnings (losses), (ii) income taxes, (iii) interest, (iv) losses on early retirement of debt, (v) depreciation and amortization, (vi) stock compensation expense, (vii) intangible asset impairment, (viii) acquisition related expenses and (ix) restructuring expenses. The Company is also presenting non-GAAP information regarding adjusted net income and adjusted diluted income per share regarding net income (or loss) adjusted to exclude: (i) restructuring expenses, (ii) a recovery by one of the Company’s equity investees of value-added taxes and interest related to a 2004 tax position, (iii) a loss on early retirement of debt (iv) retirement benefit obligations, (v) acquisition related expenses and (vi) impairment charges.

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 November 7, 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: November 7, 2013

EX-99.1

Exhibit 99.1

 

LOGO

Lifetime Brands, Inc. Reports Third Quarter 2013 Results

Income from Operations Increases 58.1% on 11.0% Sales Gain

Annual Dividend Raised to $0.15 per Share

GARDEN CITY, NY, November 7, 2013 – Lifetime Brands, Inc. (NasdaqGS: LCUT), a leading global provider of branded kitchenware, tableware and other products used in the home, today reported its financial results for the third quarter ended September 30, 2013.

Third Quarter Financial Highlights:

 

    Consolidated net sales were $142.2 million in the quarter ended September 30, 2013; an increase of $14.1 million, or 11.0%, as compared to consolidated net sales of $128.1 million for the corresponding period in 2012. Consolidated net sales in the 2013 period included $4.8 million of net sales from Fred® & Friends, which was acquired in December 2012.

 

    Gross margin was $51.3 million, or 36.0%, in the quarter ended September 30, 2013 as compared to $44.9 million, or 35.1%, for the corresponding period in 2012.

 

    Income from Operations was $11.7 million, as compared to $7.4 million in the prior year’s quarter.

 

    Net income was $1.1 million, or $0.08 per diluted share, in the quarter ended September 30, 2013, as compared to net income of $3.9 million, or $0.30 per diluted share, in the corresponding period in 2012.

 

    Adjusted net income was $6.1 million, or $0.47 per diluted share, in the quarter ended September 30, 2013, as compared to adjusted net income of $5.1 million, or $0.40 per diluted share, in the corresponding period in 2012.

 

    Consolidated EBITDA was $15.1 million, equal to 10.6% of consolidated net sales, in the quarter ended September 30, 2013, as compared to $11.6 million, or 9.0% of consolidated net sales, for the corresponding 2012 period.

 

    Equity in earnings (losses), net of taxes, was $(5.5) million (including a charge of $5.0 million, net of tax, for the reduction in the fair value of the Company’s investment in Grupo Vasconia SAB) for the three months ended September 30, 2013, as compared to equity in earnings of $0.7 million for the three months ended September 30, 2012.

Nine Months Financial Highlights:

 

    Consolidated net sales were $337.9 million in the nine months ended September 30, 2013; an increase of $5.9 million, or 1.8%, as compared to consolidated net sales of $332.0 million for the corresponding period in 2012. Consolidated net sales in the 2013 period included $12.1 million of net sales from Fred® & Friends, which was acquired in December 2012.

 

1


    Gross margin was $123.9 million, or 36.7%, in the nine months ended September 30, 2013 as compared to $120.7 million, or 36.4%, for the corresponding period in 2012.

 

    Income from Operations was $11.6 million, as compared to $12.8 million in the prior year’s nine months.

 

    Net loss was $0.1 million, or $0.01 per diluted share, in the nine months ended September 30, 2013, as compared to net income of $5.8 million, or $0.45 per diluted share, in the corresponding period in 2012.

 

    Adjusted net income was $4.4 million, or $0.34 per diluted share, in the nine months ended September 30, 2013, as compared to adjusted net income of $7.6 million, or $0.60 per diluted share, in the corresponding period in 2012.

 

    Consolidated EBITDA was $22.5 million in the nine months ended September 30, 2013, as compared to $23.4 million for the corresponding 2012 period.

 

    Equity in earnings (losses), net of taxes, was $(5.1) million (including a charge of $5.0 million, net of tax, for the reduction in the fair value of the Company’s investment in Grupo Vasconia SAB) for the nine months ended September 30, 2013, as compared to equity in earnings of $1.6 million for the nine months ended September 30, 2012.

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

Lifetime’s businesses performed well in the quarter, contributing to increases in consolidated net sales, gross margin percentage, income from operations, adjusted net income and EBITDA margin. Our core kitchenware products category performed exceptionally well, reflecting the roll-out of new products and programs, as well as the inclusion of Fred® & Friends, which Lifetime acquired in December 2012. I am especially pleased that our Home Solutions product category, which had been a laggard over the past several quarters, rebounded smartly during the period.

Our outlook for the fourth quarter remains positive. Nevertheless, due to some concerns about the overall strength of the holiday shopping season and the types of products on which consumers will spend their money, we are reducing our sales guidance for the full year to an increase of 3% to 5%.

On October 31, 2013, the Board of Directors declared a cash dividend of $0.0375 per share payable on February 14, 2014 to shareholders of record on January 31, 2014.

Conference Call

The Company has scheduled a conference call for Thursday, November 7, 2013 at 11:00 a.m. ET. The dial-in number for the conference call is (877) 703-6109 or (857) 244-7308, passcode #93858826. A replay of the call will also be available through Sunday, November 10, 2013 and can be accessed by dialing (888) 286-8010 or (617) 801-6888, conference ID #99948684. 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.

 

2


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 leading global provider of kitchenware, tableware and other products used in the home. The Company markets its products under such well-known kitchenware brands as Farberware®, KitchenAid®, CasaMōda®, Cuisine de France®, Fred®, Guy Fieri®, Hoffritz®, Kizmos™, Misto®, Mossy Oak®, Pedrini®, Roshco®, Sabatier®, Savora™ and Vasconia®; respected tableware 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.

 

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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

 

4


LIFETIME BRANDS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands - except per share data)

(unaudited)

 

     Three Months Ended     Nine Months Ended  
     September 30,     September 30,  
     2013     2012     2013     2012  

Net sales

   $ 142,229      $ 128,050      $ 337,862      $ 332,030   

Cost of sales

     90,952        83,141        213,917        211,287   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross margin

     51,277        44,909        123,945        120,743   

Distribution expenses

     10,564        10,536        31,489        31,943   

Selling, general and administrative expenses

     28,941        25,893        80,499        74,935   

Restructuring expenses

     79        —          367     

Intangible asset impairment

     —          1,069        —          1,069   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income from operations

     11,693        7,411        11,590        12,796   

Interest expense

     (1,280     (1,271     (3,591     (4,644

Loss on early retirement of debt

     —          (1,015     —          (1,363
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes and equity in earnings (losses)

     10,413        5,125        7,999        6,789   

Income tax provision

     (3,869     (1,930     (2,993     (2,612

Equity in earnings (losses), net of taxes

     (5,451     695        (5,113     1,616   
  

 

 

   

 

 

   

 

 

   

 

 

 

NET INCOME (LOSS)

   $ 1,093      $ 3,890      $ (107   $ 5,793   
  

 

 

   

 

 

   

 

 

   

 

 

 

BASIC INCOME (LOSS) PER COMMON SHARE

   $ 0.09      $ 0.31      $ (0.01   $ 0.46   
  

 

 

   

 

 

   

 

 

   

 

 

 

DILUTED INCOME (LOSS) PER COMMON SHARE

   $ 0.08      $ 0.30      $ (0.01   $ 0.45   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

5


LIFETIME BRANDS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands - except share data)

(unaudited)

 

     September 30,     December 31,  
     2013     2012  
     (unaudited)        

ASSETS

    

CURRENT ASSETS

    

Cash and cash equivalents

   $ 2,603      $ 1,871   

Accounts receivable, less allowances of $4,777 at September 30, 2013 and $3,996 at December 31, 2011

     93,177        97,369   

Inventory

     133,052        104,584   

Prepaid expenses and other current assets

     7,113        5,393   

Deferred income taxes

     3,384        3,542   
  

 

 

   

 

 

 

TOTAL CURRENT ASSETS

     239,329        212,759   

PROPERTY AND EQUIPMENT, net

     28,670        31,646   

INVESTMENTS

     36,163        43,685   

INTANGIBLE ASSETS, net

     55,822        57,842   

OTHER ASSETS

     2,557        2,865   
  

 

 

   

 

 

 

TOTAL ASSETS

   $ 362,541      $ 348,797   
  

 

 

   

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

    

CURRENT LIABILITIES

    

Revolving Credit Facility

   $ 7,000      $ 7,000   

Current portion of Senior Secured Term Loan

     3,500        4,375   

Accounts payable

     33,968        18,555   

Accrued expenses

     39,599        33,354   

Income taxes payable

     —          3,615   
  

 

 

   

 

 

 

TOTAL CURRENT LIABILITIES

     84,067        66,899   

DEFERRED RENT & OTHER LONG-TERM LIABILITIES

     19,192        21,565   

DEFERRED INCOME TAXES

     2,365        3,510   

REVOLVING CREDIT FACILITY

     58,103        53,968   

SENIOR SECURED TERM LOAN

     28,000        30,625   

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: 12,737,557 at September 30, 2013 and 12,754,467 at December 31, 2012

     127        128   

Paid-in capital

     145,563        142,489   

Retained earnings

     29,314        33,849   

Accumulated other comprehensive loss

     (4,190     (4,236
  

 

 

   

 

 

 

TOTAL STOCKHOLDERS’ EQUITY

     170,814        172,230   
  

 

 

   

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

   $ 362,541      $ 348,797   
  

 

 

   

 

 

 

 

6


LIFETIME BRANDS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(unaudited)

 

     Nine Months Ended  
     September 30,  
     2013     2012  

OPERATING ACTIVITIES

    

Net (loss) income

   $ (107   $ 5,793   

Adjustments to reconcile net (loss) income to net cash used in operating activities:

    

Provision for doubtful accounts

     17        —     

Depreciation and amortization

     7,707        6,878   

Deferred rent

     (721     (421

Deferred income taxes

     26        (687

Stock compensation expense

     2,131        2,131   

Undistributed equity earnings (losses)

     5,686        (1,201

Loss on early retirement of debt

     —          1,363   

Intangible asset impairment

     —          1,069   

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

    

Accounts receivable

     4,177        (13,170

Inventory

     (28,469     (18,617

Prepaid expenses, other current assets and other assets

     (994     (883

Accounts payable, accrued expenses and other liabilities

     20,266        10,642   

Income taxes payable

     (3,885     (758
  

 

 

   

 

 

 

NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES

     5,834        (7,861
  

 

 

   

 

 

 

INVESTING ACTIVITIES

    

Purchases of property and equipment

     (2,772     (3,371

Net proceeds from sale of property

     7        15   
  

 

 

   

 

 

 

NET CASH USED IN INVESTING ACTIVITIES

     (2,765     (3,356
  

 

 

   

 

 

 

FINANCING ACTIVITIES

    

Proceeds from Revolving Credit Facility, net of repayments

     4,135        16,039   

Proceeds from (repayment of) Senior Secured Term Loan

     (3,500     35,000   

Repayment of Term Loan

     —          (40,000

Payments for stock repurchase

     (3,229     —     

Proceeds from exercise of stock options

     943        380   

Cash dividend paid

     (1,117     (935
  

 

 

   

 

 

 

NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES

     (2,768     10,484   
  

 

 

   

 

 

 

Effect of foreign exchange on cash

     431        (490

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

     732        (1,223

Cash and cash equivalents at beginning of period

     1,871        2,972   
  

 

 

   

 

 

 

CASH AND CASH EQUIVALENTS AT END OF PERIOD

   $ 2,603      $ 1,749   
  

 

 

   

 

 

 

 

7


LIFETIME BRANDS, INC.

Supplemental Information

(In thousands)

 

Consolidated EBITDA for the four quarters ended  

September 30, 2013

 

Three months ended September 30, 2013

   $ 15,067   

Three months ended June 30, 2013

     4,321   

Three months ended March 31, 2013

     3,079   

Three months ended December 31, 2012

     17,868   
  

 

 

 

Total for the four quarters

   $ 40,335   
  

 

 

 

 

Consolidated EBITDA for the four quarters ended  

September 30, 2012

 

Three months ended September 30, 2012

   $ 11,568   

Three months ended June 30, 2012

     5,584   

Three months ended March 31, 2012

     6,222   

Three months ended December 31, 2011

     14,342   
  

 

 

 

Total for the four quarters

   $ 37,716   
  

 

 

 

Reconciliation of GAAP to Non-GAAP Operating Results

Consolidated EBITDA:

 

     Three Months Ended  
     September 30,
2013
     June 30,
2013
    March 31,
2013
    December 31,
2012
 

Net income (loss) as reported

   $ 1,093       $ (568   $ (632   $ 15,154   

Subtract out:

         

Undistributed equity earnings (losses), net

     5,452         480        (246     (4,464

Add back:

         

Income tax provision (benefit)

     3,869         (477     (399     2,596   

Interest expense

     1,280         1,149        1,162        1,254   

Depreciation and amortization

     2,517         2,667        2,523        2,446   

Stock compensation expense

     738         722        671        662   

Permitted acquisition related expenses

     39         60        —          220   

Restructuring Expenses

     79         288        —          —     
  

 

 

    

 

 

   

 

 

   

 

 

 

Consolidated EBITDA

   $ 15,067       $ 4,321      $ 3,079      $ 17,868   
  

 

 

    

 

 

   

 

 

   

 

 

 

 

8


LIFETIME BRANDS, INC.

Supplemental Information

(In thousands - except per share data)

Reconciliation of GAAP to Non-GAAP Operating Results (continued)

Consolidated EBITDA:

 

     Three Months Ended  
     September 30,
2012
    June 30,
2012
    March 31,
2012
    December 31,
2011
 

Net income as reported

   $ 3,890      $ 559      $ 1,344      $ 5,419   

Subtract out:

        

Undistributed equity earnings

     (695     (108     (398     (925

Add back:

        

Income tax provision (benefit)

     1,930        94        588        3,513   

Interest expense

     1,271        1,675        1,698        1,951   

Loss on early retirement of debt

     1,015        348        —          —     

Intangible asset impairment

     1,069        —          —          —     

Depreciation and amortization

     2,409        2,262        2,207        2,336   

Stock compensation expense

     679        754        698        690   

Permitted acquisition related expenses

     —          —          85        1,358   
  

 

 

   

 

 

   

 

 

   

 

 

 

Consolidated EBITDA

   $ 11,568      $ 5,584      $ 6,222      $ 14,342   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted Net Income and Adjusted Diluted Income Per Share:

 

     Three Months Ended      Nine Months Ended  
     September 30,      September 30,  
     2013     2012      2013     2012  

Net income (loss) as reported

   $ 1,093      $ 3,890       $ (107   $ 5,793   

Adjustments:

         

Intangible asset impairment, net of tax

     —          645         —          645   

Loss on early retirement of debt, net of tax

     —          612         —          822   

Retirement benefit obligation expense, net of tax

     —          —           —          268   

Acquisition related expenses, net of tax

     —          —           —          85   

Restructuring expenses, net of tax

     47        —           220        —     

Impairment of Grupo Vasconia investment, net of tax

     5,040           5,040     

Grupo Vasconia recovery of value-added taxes

     (68     —           (740     —     
  

 

 

   

 

 

    

 

 

   

 

 

 

Adjusted net income

   $ 6,112      $ 5,147       $ 4,413      $ 7,613   
  

 

 

   

 

 

    

 

 

   

 

 

 

Adjusted diluted income per share

   $ 0.47      $ 0.40       $ 0.34      $ 0.60   
  

 

 

   

 

 

    

 

 

   

 

 

 

 

9