f8k-08072012.htm
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 7, 2012
 
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):
   
 
o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
     
 
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
     
 
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
     
 
o
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 August 7, 2012, Lifetime Brands, Inc. (the “Company”) issued a press release announcing the Company’s results for the second quarter ended June 30, 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, an extraordinary item, income taxes, interest, depreciation and amortization, restructuring expenses, stock compensation expense, acquisition related expenses 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.
 
Item  9.01   Financial Statements and Exhibits.
 
 
 
(d)
Exhibits
     
    99.1 
 
 
 
 
 
 
 
 
 
2

 
 
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:  August 7, 2012
 
 
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ex99_1-f8k08072012.htm
 
Logo
Exhibit 99.1
 
 
Lifetime Brands, Inc. Reports Second Quarter 2012 Results
 
Expands and Refinances Loan Facilities
 
Declares Quarterly Dividend of $0.025 per Share
 
 
GARDEN CITY, NY, August 7, 2012 – 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 quarter ended June 30, 2012.
 
Net sales for the three months ended June 30, 2012 were $94.9 million. Net sales grew by 5.0% compared to the corresponding period in 2011. Net sales increased primarily as a result of including the net sales of Creative Tops, acquired in November 2011, and increased net sales of Kitchenware products, offset by a decrease in net sales of Home Solutions products.
 
Gross margin for the three months ended June 30, 2012 was $35.4 million, or 37.3%, as compared to $34.0 million, or 37.7%, for the corresponding period in 2011. The decrease in the gross margin percentage primarily reflects a decline in the gross margin percentage of Home Solutions products.
 
Net income decreased to $0.6 million, or $0.04 per diluted share, from $2.1 million, or $0.17 per diluted share.
 
Adjusted net income for the quarter was $1.0 million, or $0.08 per diluted share, as compared to $1.7 million, or $0.14 per diluted share, in 2011. Adjusted net income in the 2012 period excludes a loss on early retirement of debt, related to the repayment of $10 million principal amount of the Company’s Term Loan, and an expense related to retirement benefit obligations. Adjusted net income in 2011 excludes the equity earnings from an entity that discontinued the sale of products in late 2011.
 
Jeffrey Siegel, Chairman, President and Chief Executive Officer said,
 
 
“The quarter was marked by continuing economic uncertainty, which restrained retail sales in most of our product categories. In response, our major retailer partners generally maintained conservative inventory positions.
 
 
“Despite this uncertainty, Lifetime achieved continued growth and margin expansion in our core Kitchenware categories; however, these gains were offset by a decline in net sales and gross margin in our Home Solutions product category.
 
 
 “Within our Home Solutions products category, net sales of home décor products decreased, due to an industry-wide shift that resulted in many retailers reducing floor space allotted to home décor products. As previously noted, we are transitioning our home décor business to higher quality branded products designed to be sold under our Mikasa® and Pfaltzgraff® brands. While these new product lines have been well received by our key retailer partners, I do not foresee a significant turnaround in this category taking place in the next 12 to 18 months.
 
 
 
 

 
 
 
“There is good reason to be optimistic about the second half of the year, during which we expect to roll-out a number of new Kitchenware programs, including the roll-out of our new Guy Fieri® cookware line and the launch of our new Savora line of kitchen tools & gadgets.
 
 
“We are very pleased with the progress of our non-U.S. businesses, especially with the significant growth achieved by our partner companies in Canada and Mexico. In early July, we brought Creative Tops onto our SAP enterprise system, a project that was completed on time and within budget.
 
 
“During the quarter, our strong liquidity position enabled us to repay $10 million of our second lien term loan. In July, we expanded our bank facility and refinanced the remaining balance of the second lien term loan with a new $35 million senior secured term loan. In addition to providing us with greater operating flexibility, the lower borrowing rate of our new term loan, on a pro-forma basis, reduces our annual interest expense by approximately $2.0 million.
 
 
“Overall, we believe Lifetime is well positioned to meet its business and financial goals for the year."
 
On July 31, 2012, the Board of Directors declared a quarterly dividend of $0.025 per share payable on November 15, 2012 to shareholders of record on November 1, 2012.
 
Conference Call
 
The Company has scheduled a conference call for Tuesday, August 7, 2012 at 11:00 a.m. ET. The dial-in number for the conference call is (866) 202-3109 or (617) 213-8844, passcode #95620231.  A replay of the call will also be available through August 14, 2012 and can be accessed by dialing (888) 286-8010 or (617) 801-6888, conference ID #83393356.  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.
 
 
 
2

 
 
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, acquisition related expenses and loss on early retirement of debt, as shown in the table below.
 
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®, Guy Fieri®, Hoffritz®, Kizmos™, Misto®, Pedrini®, Roshco®, Sabatier®, Savora™ 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’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
 
 
 

 

 
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LIFETIME BRANDS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 (In thousands - except per share data)
(unaudited)
 
 
   
Three Months Ended
 
Six Months Ended
   
June 30,
 
June 30,
   
2012
 
2011
 
2012
 
2011
                         
Net sales
  $ 94,939     $ 90,371     $ 203,980     $ 182,144  
                                 
Cost of sales
    59,565       56,325       128,146       114,708  
                                 
Gross margin
    35,374       34,046       75,834       67,436  
                                 
Distribution expenses
    9,663       9,306       21,407       20,246  
Selling, general and administrative expenses
    23,558       20,389       49,042       42,862  
                                 
Income from operations
    2,153       4,351       5,385       4,328  
                                 
Interest expense
    (1,675 )     (2,039 )     (3,373 )     (4,018 )
Loss on early retirement of debt
    (348 )     -       (348 )     -  
                                 
Income before income taxes and equity in earnings
    130       2,312       1,664       310  
                                 
Income tax provision
    (94 )     (1,108 )     (682 )     (520 )
Equity in earnings, net of taxes
    523       859       921       1,324  
                                 
NET INCOME
  $ 559     $ 2,063     $ 1,903     $ 1,114  
                                 
BASIC INCOME PER COMMON SHARE
  $ 0.04     $ 0.17     $ 0.15     $ 0.09  
                                 
DILUTED INCOME PER COMMON SHARE
  $ 0.04     $ 0.17     $ 0.15     $ 0.09  
 
 
 
 

 
 
4

 

LIFETIME BRANDS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
 (In thousands - except share data)
(unaudited)
 
   
June 30,
   
December 31,
 
   
2012
   
2011
 
   
(unaudited)
       
ASSETS
           
CURRENT ASSETS
           
Cash and cash equivalents
  $ 2,779     $ 2,972  
Accounts receivable, less allowances of $2,943 at June 30, 2012 and $4,602 at December 31, 2011
    56,755       77,749  
Inventory
    121,093       110,337  
Prepaid expenses and other current assets   
    5,476       5,264  
Income taxes receivable
    504       -  
Deferred income taxes
    3,239       2,475  
TOTAL CURRENT ASSETS
    189,846       198,797  
                 
PROPERTY AND EQUIPMENT, net
    32,602       34,324  
INVESTMENTS
    34,599       34,515  
INTANGIBLE ASSETS, net
    46,137       46,937  
OTHER ASSETS
    3,179       4,172  
TOTAL ASSETS
  $ 306,363     $ 318,745  
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY
               
CURRENT LIABILITIES
               
Revolving Credit Facility
  $ -     $ 15,000  
Accounts payable
    20,845       18,985  
Accrued expenses
    22,405       33,877  
Income taxes payable
    -       2,100  
TOTAL CURRENT LIABILITIES
    43,250       69,962  
                 
DEFERRED RENT & OTHER LONG-TERM LIABILITIES
    15,930       14,598  
DEFERRED INCOME TAXES
    5,479       5,385  
REVOLVING CREDIT FACILITY
    63,376       42,625  
TERM LOAN
    30,000       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: 12,531,076 at June 30, 2012 and 12,430,893
        at 
December 31, 2011
    126       124  
Paid-in capital
    139,129       137,467  
Retained earnings
    15,435       14,465  
Accumulated other comprehensive loss
    (6,362 )     (5,881 )
TOTAL STOCKHOLDERS’ EQUITY
    148,328       146,175  
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
  $ 306,363     $ 318,745  

 
 
 
 
 
5

 

LIFETIME BRANDS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)

   
Six Months Ended
 
   
June 30,
 
   
2012
   
2011
 
OPERATING ACTIVITIES
           
Net income
  $ 1,903     $ 1,114  
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
         
Provision for doubtful accounts
    (25 )     -  
Depreciation and amortization
    4,469       4,015  
Amortization of debt discount
    -       464  
Deferred rent
    (252 )     (21 )
Stock compensation expense
    1,452       1,423  
Undistributed equity earnings
    (506 )     (858 )
Loss on early retirement of debt
    (348 )     -  
Changes in operating assets and liabilities (excluding the effects of business acquisitions)
         
Accounts receivable
    21,368       13,871  
Inventory
    (10,755 )     (10,571 )
Prepaid expenses, other current assets and other assets
    1,129       643  
Accounts payable, accrued expenses and other liabilities
    (8,846 )     (7,485 )
Income taxes payable
    (2,603 )     (4,854 )
 NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES         
    6,986       (2,259 )
                 
INVESTING ACTIVITIES
               
Purchases of property and equipment
    (2,030 )     (2,066 )
NET CASH USED IN INVESTING ACTIVITIES
    (2,030 )     (2,066 )
                 
FINANCING ACTIVITIES
               
Proceeds from Revolving Credit Facility, net of repayments
    5,751       3,254  
Repayment of Term Loan
    (10,000 )     -  
Proceeds from exercise of stock options
    213       15  
Excess tax benefits from exercise of stock options
    -       6  
Payment of capital lease obligations
    -       (59 )
Cash dividend paid
    (622 )     (302 )
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES                     
    (4,658 )     2,914  
                 
Effect of foreign exchange on cash
    (491 )     -  
                 
DECREASE IN CASH AND CASH EQUIVALENTS
    (193 )     (1,411 )
Cash and cash equivalents at beginning of period
    2,972       3,351  
CASH AND CASH EQUIVALENTS AT END OF PERIOD
  $ 2,779     $ 1,940  





 
6

 

LIFETIME BRANDS, INC.
Supplemental Information
(In thousands)

Consolidated EBITDA for the four quarters ended
 
June 30, 2012
 
Three months ended June 30, 2012
  $ 5,584  
Three months ended March 31, 2012
    6,222  
Three months ended December 31, 2011
    14,342  
Three months ended September 30, 2011
    13,524  
Total for the four quarters
  $ 39,672  
         
         
Consolidated EBITDA for the four quarters ended
 
June 30, 2011
 
Three months ended June 30, 2011
  $ 7,512  
Three months ended March 31, 2011
    2,720  
Three months ended December 31, 2010
    17,544  
Three months ended September 30, 2010
    13,529  
Total for the four quarters
  $ 41,305  


Reconciliation of GAAP to Non-GAAP Operating Results

Consolidated EBITDA:

   
Three Months Ended
   
June 30,
2012
 
March 31,
2012
 
December 31,
2011
 
September 30,
2011
Net income as reported
  $ 559     $ 1,344     $ 5,419     $ 7,533  
Subtract out:
                               
Undistributed equity earnings
    (108 )     (398 )     (925 )     (1,113 )
Add back:
                               
Income tax provision (benefit)
    94       588       3,513       2,089  
Interest expense
    1,675       1,698       1,951       1,789  
Loss on early retirement of debt
    348       -       -       -  
Depreciation and amortization
    2,262       2,207       2,336       2,046  
Stock compensation expense
    754       698       690       682  
Permitted acquisition related expenses
    -       85       1,358       498  
Consolidated EBITDA
  $ 5,584     $ 6,222     $ 14,342     $ 13,524  
                                 
 
 
 
 
 
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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
   
June 30,
2011
 
March 31,
2011
 
December 31,
2010
 
September 30,
2010
Net income as reported
  $ 2,063     $ (949 )   $ 13,928     $ 6,585  
Subtract out:
                               
Undistributed equity earnings
    (393 )     (465 )     (733 )     (836 )
Extraordinary item, net of taxes
    -       -       (2,477 )     -  
Add back:
                               
Income tax provision (benefit)
    1,108       (588 )     1,600       2,390  
Interest expense
    2,039       1,979       2,188       2,090  
Depreciation and amortization
    2,020       1,995       2,292       2,518  
Stock compensation expense
    675       748       746       782  
Loss on early retirement of debt
    -       -       -       -  
Consolidated EBITDA
  $ 7,512     $ 2,720     $ 17,544     $ 13,529  



Adjusted Net Income and Adjusted Diluted Income Per Share:

   
Three Months Ended
 
Six Months Ended
   
June 30,
 
June 30,
   
2012
 
2011
 
2012
 
2011
                         
Net income as reported
  $ 559     $ 2,063     $ 1,903     $ 1,114  
   Adjustments:
                               
Loss on early retirement of debt, net of tax
    205       -       205       -  
Retirement benefit obligation expense, net of tax
    268       -       268       -  
Equity in earnings of World Alliance Enterprises Limited, net of tax
    -       (315 )     -       (315 )
Adjusted net income
  $ 1,032     $ 1,748     $ 2,376     $ 799  
Adjusted diluted income per share
  $ 0.08     $ 0.14     $ 0.19     $ 0.06  
 
 
 
 
 
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