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): August 8, 2011
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):
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Item 2.02. Results of Operations and Financial Condition.
On August 8, 2011, Lifetime Brands, Inc. (the “Company”) issued a press release announcing the Company’s results for the second quarter ended June 30, 2011. 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, an extraordinary item, income taxes, interest, depreciation and amortization, restructuring expenses, stock compensation expense, and loss on early retirement of debt.
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.
(d) Exhibits
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.
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Lifetime Brands, Inc.
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By:
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/s/ Laurence Winoker
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Laurence Winoker
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Senior Vice President – Finance, Treasurer
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and Chief Financial Officer
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Date: August 8, 2011
Exhibit 99.1
Lifetime Brands Reports Record Second Quarter 2011 Results
Net Income Rises to $2.1 Million or $0.17 Per Share
Wholesale Net Sales Increase by 5.9%
Garden City, NY, August 8, 2011 -- Lifetime Brands, Inc. (NasdaqGS: LCUT), North America's leading resource for nationally branded kitchenware, tabletop, home décor, and lifestyle products today reported its financial results for the three months ended June 30, 2011.
Consolidated net sales for the three months ended June 30, 2011 increased 4.0% to $90.4 million, as compared to consolidated net sales of $86.9 million for the corresponding period in 2010.
Net sales for the Wholesale segment increased 5.9%, or $4.8 million, to $86.3 million in the second quarter of 2011. Net sales for the Retail Direct segment were $1.3 million, as compared to $4.1 million, in the second quarter of 2011. The decline in direct-to-consumer sales reflected reduced promotional activity in the 2011 quarter, as compared to the corresponding quarter in the prior year, as well as the Company’s decision to terminate its print consumer catalog.
Gross margin as a percentage of net sales for the Wholesale segment declined to 36.2% in the second quarter of 2011 from 37.2% in the corresponding period in 2010. The decrease in the Company’s gross margin percentage was primarily attributable to changes in product mix. Gross margin for the Retail Direct segment was 68.0% in the second quarter of 2011 as compared to 66.8% for the corresponding period in 2010. The increase in the gross margin for the Retail Direct segment was the result of reduced promotional activities.
Income from operations for the three months ended June 30, 2011 was $4.4 million, as compared to $2.5 million for the corresponding period in 2010. The increase in income from operations reflected lower distribution expense and a reduction in selling, general and administrative expenses in the 2011 period, as compared to the corresponding period in 2010.
Interest expense for the three months ended June 30, 2011 declined to $2.0 million from $2.6 million in 2010, which reflected both lower average borrowings and lower interest rates. On July 15, 2011, the Company retired the $24.1 million aggregate principal amount of its convertible notes.
Consolidated net income for the second quarter of 2011 was $2.1 million, or $0.17 per diluted share, as compared to a net loss of $1.0 million, or $0.08 per diluted share, for the second quarter of 2010.
Jeffrey Siegel, Chairman, President and Chief Executive Officer, said, "The net income we are reporting this morning is a second quarter record for Lifetime Brands. Despite the challenging business environment, we are on target to achieve top line growth and increased profitability for the full year. Our solid operating results and further strengthened financial position give us better flexibility to profitably grow our company in the future.”
Consolidated EBITDA for the three months ended June 30, 2011 was $7.5 million, as compared to $6.1 million for the corresponding period in 2010. Consolidated EBITDA for the trailing four quarters ended June 30, 2011, was $41.3 million as compared to $39.0 million for the trailing four quarters ended June 30, 2010.
EBITDA is a non-GAAP measure that the Company defines as net income, adjusted to exclude undistributed equity earnings, an extraordinary item, income taxes, interest, depreciation and amortization, restructuring expenses, stock compensation expense and loss on early retirement of debt, as shown in the table below.
On May 16, 2011, the Board of Directors declared a quarterly dividend of $0.025 per share payable on August 16, 2011, to shareholders of record on August 2, 2011.
1
Conference Call
Lifetime has scheduled a conference call for Monday, August 8, 2011 at 11:00 a.m. ET to discuss its second quarter 2011 results. The dial-in number for the conference call is (617) 786-2964 conference ID# 46883510. A live webcast of the conference call will be broadcast in the Investor Relations section of the Company’s website, www.lifetimebrands.com.
A replay of the call will also be available through August 15, 2011 and can be accessed by dialing (617) 801-6888, conference ID #54391056. For those who cannot listen to the live broadcast, an audio replay of the call will also be available on the Company’s website.
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 North America’s leading resource for nationally branded kitchenware, tabletop, home décor and lifestyle products. The Company markets its products under such well-known kitchenware brands as Farberware®, KitchenAid®, CasaMōda®, Cuisinart®, Cuisine de France®, Hoffritz®, Kamenstein®, Kizmos™, Misto®, Pedrini®, Roshco®, Sabatier® and Vasconia®; respected tabletop brands such as Mikasa®, Pfaltzgraff®, Calvin Klein®, Gorham®, International® Silver, Kirk Stieff®, Nautica®, Sasaki®, Towle® Silversmiths, Tuttle®, and Wallace®; and leading home décor and lifestyle brands, including Design for Living™, Elements® and Melannco®. The Company’s website is www.lifetimebrands.com.
Contacts:
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Lifetime Brands, Inc.
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Lippert/Heilshorn & Assoc.
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Laurence Winoker, Chief Financial Officer
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Harriet Fried, SVP
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516-203-3590
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212-838-3777
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investor.relations@lifetimebrands.com
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hfried@lhai.com
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2
LIFETIME BRANDS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands - except per share data)
(unaudited)
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Three Months Ended
June 30,
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Six Months Ended
June 30,
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2011
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2010
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2011
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2010
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Net sales
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$ | 90,371 | $ | 86,889 | $ | 182,144 | $ | 175,625 | ||||||||
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Cost of sales
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56,325 | 52,942 | 114,708 | 106,894 | ||||||||||||
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Distribution expenses
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9,306 | 9,597 | 20,246 | 19,730 | ||||||||||||
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Selling, general and administrative expenses
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20,389 | 21,828 | 42,862 | 43,952 | ||||||||||||
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Income from operations
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4,351 | 2,522 | 4,328 | 5,049 | ||||||||||||
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Interest expense
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(2,039 | ) | (2,644 | ) | (4,018 | ) | (5,073 | ) | ||||||||
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Loss on early retirement of debt
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― | (764 | ) | ― | (764 | ) | ||||||||||
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Income (loss) before income taxes and equity in earnings
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2,312 | (886 | ) | 310 | (788 | ) | ||||||||||
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Income tax provision
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(1,108 | ) | (573 | ) | (520 | ) | (612 | ) | ||||||||
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Equity in earnings, net of taxes
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859 | 478 | 1,324 | 1,148 | ||||||||||||
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NET INCOME (LOSS)
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$ | 2,063 | $ | (981 | ) | $ | 1,114 | $ | (252 | ) | ||||||
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BASIC INCOME (LOSS) PER COMMON SHARE
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$ | 0.17 | $ | (0.08 | ) | $ | 0.09 | $ | (0.02 | ) | ||||||
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DILUTED INCOME (LOSS) PER COMMON SHARE
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$ | 0.17 | $ | (0.08 | ) | $ | 0.09 | $ | (0.02 | ) | ||||||
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Cash dividends declared per common share
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$ | 0.025 | ― | $ | 0.050 | ― | ||||||||||
3
LIFETIME BRANDS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands - except share data)
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June 30,
2011 |
December 31,
2010 |
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(unaudited)
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ASSETS
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CURRENT ASSETS
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Cash and cash equivalents
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$ | 1,940 | $ | 3,351 | ||||
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Accounts receivable, less allowances of $5,504 at June 30, 2011 and $12,611 at December 31, 2010
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58,924 | 72,795 | ||||||
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Inventory
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110,506 | 99,935 | ||||||
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Deferred income taxes
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1,124 | 1,124 | ||||||
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Prepaid income taxes
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― | ― | ||||||
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Prepaid expenses and other current assets
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4,729 | 5,048 | ||||||
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TOTAL CURRENT ASSETS
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177,223 | 182,253 | ||||||
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PROPERTY AND EQUIPMENT, net
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34,458 | 36,093 | ||||||
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INTANGIBLE ASSETS, net
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30,504 | 30,818 | ||||||
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INVESTMENT IN GRUPO VASCONIA, S.A.B
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25,708 | 24,068 | ||||||
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OTHER ASSETS
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4,469 | 4,354 | ||||||
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TOTAL ASSETS
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$ | 272,362 | $ | 277,586 | ||||
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LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
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Revolving Credit Facility
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$ | ― | $ | 4,100 | ||||
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Accounts payable
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20,807 | 19,414 | ||||||
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Accrued expenses
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23,375 | 31,962 | ||||||
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Deferred income tax liabilities
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― | ― | ||||||
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Income taxes payable
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182 | 5,036 | ||||||
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TOTAL CURRENT LIABILITIES
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44,364 | 60,512 | ||||||
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DEFERRED RENT & OTHER LONG-TERM LIABILITIES
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14,416 | 14,482 | ||||||
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DEFERRED INCOME TAXES
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1,603 | 1,429 | ||||||
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REVOLVING CREDIT FACILITY
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17,354 | 10,000 | ||||||
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TERM LOAN
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40,000 | 40,000 | ||||||
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4.75% CONVERTIBLE SENIOR NOTES
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24,021 | 23,557 | ||||||
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STOCKHOLDERS’ EQUITY
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Preferred stock, $.01 par value, shares authorized: 100 shares of Series A and 2,000,000 shares of Series B; none issued and outstanding
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― | ― | ||||||
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Common stock, $.01 par value, shares authorized: 25,000,000; shares issued and outstanding:
12,082,943 at June 30, 2011 and 12,064,543 at December 31, 2010 |
121 | 121 | ||||||
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Paid-in capital
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132,789 | 131,350 | ||||||
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Retained earnings
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1,823 | 1,312 | ||||||
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TOTAL STOCKHOLDERS’ EQUITY
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130,604 | 127,606 | ||||||
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TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
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$ | 272,362 | $ | 277,586 | ||||
4
LIFETIME BRANDS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands - unaudited)
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Six Months Ended
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June 30,
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2011
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2010
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OPERATING ACTIVITIES
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Net income (loss)
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$ | 1,114 | $ | (252 | ) | ||||
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Adjustments to reconcile net income (loss) to net cash
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provided by (used in) operating activities:
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Depreciation and amortization
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4,015 | 5,000 | |||||||
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Amortization of debt discount
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464 | 1,357 | |||||||
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Deferred rent
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(21 | ) | 286 | ||||||
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Stock compensation expense
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1,423 | 1,400 | |||||||
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Undistributed equity earnings
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(858 | ) | (750 | ) | |||||
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Loss on early retirement of debt
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― | 764 | |||||||
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Changes in operating assets and liabilities:
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Accounts receivable, net
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13,871 | 8,943 | |||||||
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Inventory
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(10,571 | ) | (10,762 | ) | |||||
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Prepaid expenses, other current assets and other assets
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643 | 99 | |||||||
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Accounts payable, accrued expenses and other liabilities
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(7,485 | ) | 6,892 | ||||||
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Income taxes receivable
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― | ― | |||||||
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Prepaid income taxes
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― | (951 | ) | ||||||
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Income taxes payable
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(4,854 | ) | (906 | ) | |||||
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NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
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(2,259 | ) | 11,120 | ||||||
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INVESTING ACTIVITIES
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Purchases of property and equipment, net
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(2,066 | ) | (1,251 | ) | |||||
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NET CASH USED IN INVESTING ACTIVITIES
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(2,066 | ) | (1,251 | ) | |||||
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FINANCING ACTIVITIES
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Proceeds from revolving credit facility
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3,254 | 58,828 | |||||||
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Proceeds from term loan
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― | 10,000 | |||||||
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Repayments of prior credit facility, net
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― | (24,601 | ) | ||||||
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Repurchase of 4.75% convertible senior notes
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― | (51,028 | ) | ||||||
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Financing costs
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― | (3,058 | ) | ||||||
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Proceeds from the exercise of stock options
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15 | 57 | |||||||
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Excess tax benefits from the exercise of stock options
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6 | 226 | |||||||
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Payment of capital lease obligations
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(59 | ) | (89 | ) | |||||
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Cash dividend paid
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(302 | ) | ― | ||||||
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NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
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2,914 | (9,665 | ) | ||||||
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INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
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(1,411 | ) | 204 | ||||||
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Cash and cash equivalents at beginning of period
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3,351 | 682 | |||||||
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CASH AND CASH EQUIVALENTS AT END OF PERIOD
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$ | 1,940 | $ | 886 | |||||
5
LIFETIME BRANDS, INC.
Supplemental Information
(In thousands)
Consolidated EBITDA – Four Quarters Ended
June 30, 2011
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Consolidated EBITDA for the three months ended:
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June 30, 2011
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$ | 7,512 | ||
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March 31, 2011
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2,720 | |||
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December 31, 2010
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17,544 | |||
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September 30, 2010
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13,529 | |||
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Consolidated EBITDA
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$ | 41,305 | ||
Consolidated EBITDA – Four Quarters Ended
June 30, 2010
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Consolidated EBITDA for the three months ended:
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June 30, 2010
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$ | 6,117 | ||
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March 31, 2010
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5,728 | |||
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December 31, 2009
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15,558 | |||
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September 30, 2009
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11,611 | |||
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Consolidated EBITDA
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$ | 39,014 | ||
Reconciliation of GAAP to Non-GAAP Operating Results
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Three Months Ended
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June 30,
2011 |
March 31,
2011 |
December 31,
2010 |
September 30,
2010 |
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Net income (loss) reported
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$ | 2,063 | $ | (949 | ) | $ | 13,928 | $ | 6,585 | |||||||
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Less:
Undistributed equity earnings
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(393 | ) | (465 | ) | (733 | ) | (836 | ) | ||||||||
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Extraordinary item
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― | ― | (2,477 | ) | ― | |||||||||||
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Add:
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Income tax (benefit) provision
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1,108 | (588 | ) | 1,600 | 2,390 | |||||||||||
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Interest expense
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2,039 | 1,979 | 2,188 | 2,090 | ||||||||||||
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Depreciation and amortization
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2,020 | 1,995 | 2,292 | 2,518 | ||||||||||||
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Stock compensation expense
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675 | 748 | 746 | 782 | ||||||||||||
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Consolidated EBITDA
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$ | 7,512 | $ | 2,720 | $ | 17,544 | $ | 13,529 | ||||||||
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Three Months Ended
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June 30,
2010 |
March 31,
2010 |
December 31,
2009 |
September 30,
2009 |
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Net income (loss) reported
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$ | (981 | ) | $ | 729 | $ | 5,048 | $ | 4,879 | |||||||
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Less:
Undistributed equity earnings
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(82 | ) | (670 | ) | (534 | ) | (703 | ) | ||||||||
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Add:
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Income tax provision
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573 | 39 | 1,311 | 153 | ||||||||||||
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Interest expense
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2,644 | 2,429 | 4,124 | 3,294 | ||||||||||||
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Depreciation and amortization
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2,458 | 2,542 | 3,214 | 2,770 | ||||||||||||
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Restructuring expenses
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― | ― | 1,784 | 671 | ||||||||||||
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Stock compensation expense
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741 | 659 | 611 | 547 | ||||||||||||
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Loss on early retirement of debt
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764 | ― | ― | ― | ||||||||||||
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Consolidated EBITDA
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$ | 6,117 | $ | 5,728 | $ | 15,558 | $ | 11,611 | ||||||||
6