Lifetime Brands Announces Results for 2007
Reaffirms Financial Guidance for 2008 Company to Launch 2,500 Products in 1Q08
GARDEN CITY, N.Y., Mar 10, 2008 (BUSINESS WIRE) -- Lifetime Brands, Inc. (Nasdaq NM: LCUT), North America's leading resource for nationally branded kitchenware, tabletop and home decor products, today announced, subject to final review of its auditors which is expected within the next several days, results for the year ended December 31, 2007.
Net sales for the year were $493.7 million, an increase of 7.9% over the net sales of $457.4 million that the Company reported for 2006.
Net income for the year was $8.9 million, or $0.68 per diluted share, compared to net income of $15.5 million, or $1.14 per diluted share, for 2006.
The Company's net income for 2007 includes a charge of approximately $0.08 per diluted share related to the restructuring of Lifetime's Direct to Consumer ("DTC") business, as well as income of $0.15 per diluted share related to the sale of the Company's former corporate office building. For the fourth quarter of 2007, Lifetime's net sales totaled $155.1 million compared to net sales of $157.3 million for the same period in 2006. Including the charge to earnings for the restructuring of its DTC business, the Company reported net income of $5.4 million, or $0.40 per diluted share, for the quarter, as compared to net income of $9.5 million, or $0.63 per diluted share, for the 2006 period.
The income tax rate was 45.5% for the full year 2007 and 49.2% for the fourth quarter compared to 38.5% for both periods in 2006. The increase is primarily attributable to an increase in certain stock option expenses that are not deductible for income tax purposes and, to a lesser degree, the effect of DTC losses in certain states where the Company cannot recognize a tax benefit.
Jeffrey Siegel, Lifetime's Chairman, President and Chief Executive Officer, commented, "The unfavorable retail environment during the fourth quarter negatively impacted many of Lifetime's businesses. I am pleased to note that, despite the negative to flat same store sales growth experienced by many of our wholesale customers, most of our wholesale lines performed reasonably well during the quarter. In those areas that did not meet our expectations, we took corrective action to improve the Company's performance on a going-forward basis.
"We determined that the Company would be best served by closing 30 of our retail stores, representing all those stores that would not be profitable on a "four-wall profit" basis. Going Out of Business Sales in those stores began in the second week of December, and will conclude at the end of the first quarter of 2008. This also has allowed us to reduce the overhead in our retail store division.
"In late 2007, we brought in new management to revitalize our wholesale dinnerware and glassware businesses; and, in the first quarter of 2008, we brought in new management to run the catalog and Internet segments of our DTC business, accelerating the shift away from traditional bricks and mortar retail.
"For 2008, we are focused on introducing a greatly expanded array of new and exciting products which we anticipate will enable Lifetime to take market share and drive profitable growth despite today's difficult economy. In the first quarter alone, we will launch more than 2,500 new products that will be available for shipment in 2008. Among our new initiatives are (a) the Vasconia(R) line of housewares products designed to appeal to the Latina consumer, (b) new lines of upscale trash cans with unique features, to be sold under two of our most well-known brands, and (c) an entirely new line of products to be sold under the EcoWorld(R) brand made with a non-petroleum based plastic. EcoWorld(R) represents a unique and dramatically new approach that we believe provides an innovative solution for retailers that are committed to providing their consumers with a choice of environmentally friendly products.
"All of the Company's new initiatives build on Lifetime's traditional strengths - our unique innovation capabilities, outstanding brands, growing retail placement and advanced product sourcing. We also expect our 2008 results to benefit from full-year sales from the major new lines we launched late last year, including the Martha Stewart Collection(TM) at Macy's and Food Network(R) branded kitchen tools, gadgets and cutlery at Kohl's.
"We continue to expect net sales for 2008 to be in the range of $510 to $525 million and diluted earnings per share to be in the range of $0.86 to $1.06, net of the previously announced charge of $0.19 per diluted share due to the restructuring of our DTC business.
As of December 31, 2007, Lifetime had repurchased on the open market and retired 1,362,505 shares of shares of common stock for a total cost of $22.7 million under the Company's previously announced $40 million share buyback program.
Lifetime has scheduled a conference call for Monday, March 10th at 11:00 a.m. Eastern time to discuss fourth-quarter 2006 results. The dial-in number for the call is (706) 634-1218. A replay of the call will also be available through Monday, March 17, 2008 and can be accessed by dialing (706) 645-9291, conference ID #36444429. A live webcast of the call will be broadcast at 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.
About Lifetime Brands, Inc.
Lifetime Brands is North America's leading designer, developer and marketer of kitchenware, cutlery & cutting boards, bakeware & cookware, pantryware & spices, tabletop, home decor, picture frames and bath accessories. The Company markets its products under some of the industry's best known brands, including KitchenAid(R), Farberware(R), Pfaltzgraff(R), Cuisinart(R), Block(R) China and Crystal, Calvin Klein(R), CasaModa(R), Cuisine de France(R), Gorham(R), Hoffritz(R), International(R) Silver, Joseph Abboud(TM), Kamenstein(R), Kirk Stieff(R), Lisa Jenks(R), Melannco(R), Nautica(R), Pedrini(R), Roshco(R), Sabatier(R), Sasaki(R), Towle(R) Silversmiths, Tuttle(R), Wallace(R), :USE(R) and Vasconia(R). Lifetime's products are distributed through almost every major retailer in the United States.
The information herein contains certain forward-looking statements including statements concerning the Company's future prospects. These statements involve risks and uncertainties, including risks relating to general economic conditions and risks relating to the Company's operations, such as the risk of loss of major customers and risks relating to changes in demand for the Company's products, as detailed from time to time in the Company's filings with the Securities and Exchange Commission.
LIFETIME BRANDS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands - except per share data)
Three months ended
December 31,
(unaudited)
-------------------
2007 2006
--------- ---------
Net sales $155,097 $157,274
Cost of sales 91,460 91,456
Distribution expenses 15,393 14,804
Selling, general and administrative expenses 36,986 33,767
Asset impairment and restructuring expenses 1,924 --
--------- ---------
Income from operations 9,334 17,247
Interest expense 2,738 1,908
Other income, net (4,056) (51)
--------- ---------
Income before income taxes 10,652 15,390
Income tax provision 5,246 5,931
--------- ---------
NET INCOME $ 5,406 $ 9,459
========= =========
BASIC INCOME PER COMMON SHARE(1) $ 0.44 $ 0.71
========= =========
DILUTED INCOME PER COMMON SHARE(1) $ 0.40 $ 0.63
========= =========
See accompanying note (1)
LIFETIME BRANDS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands - except per share data)
Year ended
December 31,
-------------------
2007 2006
--------- ---------
Net sales $493,725 $457,400
Cost of sales 288,997 265,749
Distribution expenses 53,493 49,729
Selling, general and administrative expenses 128,527 112,122
Asset impairment and restructuring expenses 1,924 --
--------- ---------
Income from operations 20,784 29,800
Interest expense 8,397 4,576
Other income, net (3,935) (31)
--------- ---------
Income before income taxes 16,322 25,255
Income tax provision 7,430 9,723
--------- ---------
NET INCOME $ 8,892 $ 15,532
========= =========
BASIC INCOME PER COMMON SHARE(2) $ 0.69 $ 1.18
========= =========
DILUTED INCOME PER COMMON SHARE(2) $ 0.68 $ 1.14
========= =========
See accompanying note (2)
LIFETIME BRANDS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands - except share data)
December 31,
------------------
ASSETS 2007 2006
--------- --------
CURRENT ASSETS
Cash and cash equivalents $ 4,172 $ 150
Accounts receivable, less allowances of $16,400
at 2007 and $12,097 at 2006 65,030 60,516
Inventory 143,684 155,350
Deferred income taxes 7,925 8,519
Prepaid expenses and other current assets 7,267 7,098
--------- --------
TOTAL CURRENT ASSETS 228,078 231,633
PROPERTY AND EQUIPMENT, net 54,332 42,722
GOODWILL 27,432 20,951
OTHER INTANGIBLES, net 35,383 42,391
INVESTMENT IN EKCO 22,950 --
OTHER ASSETS 3,240 5,367
--------- --------
TOTAL ASSETS $371,415 $343,064
========= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term borrowings $ 13,500 $ 21,500
Accounts payable 21,759 15,585
Accrued expenses 31,504 45,743
Income taxes payable 4,520 6,899
--------- --------
TOTAL CURRENT LIABILITIES 71,283 89,727
DEFERRED RENT & OTHER LONG-TERM LIABILITIES 14,481 5,522
DEFERRED INCOME TAXES 8,381 6,204
LONG-TERM DEBT 55,200 5,000
CONVERTIBLE NOTES 75,000 75,000
STOCKHOLDERS' EQUITY
Common stock, $.01 par value, shares authorized:
25,000,000; shares issued and outstanding:
11,964,388 in 2007 and 13,283,313 in 2006 120 133
Paid-in capital 113,995 111,165
Retained earnings 33,250 50,235
Accumulated other comprehensive income (295) 78
--------- --------
TOTAL STOCKHOLDERS' EQUITY 147,070 161,611
--------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $371,415 $343,064
========= ========
Notes:
(1) Basic income per common share has been computed by dividing net
income by the weighted average number of shares of the Company's
common stock outstanding. Diluted income per common share adjusts
net income and basic income per common share for the effect of
all potentially dilutive shares of the Company's common stock.
The calculations of basic and diluted income per common share for
the three months ended December 31, 2007 and 2006 are as follows:
Three months ended December 31,
(unaudited)
----------------------------------------
2007 2006
------------------ ---------------------
(in thousands, except per share amounts)
Net income- Basic $ 5,406 $ 9,459
Interest expense 4.75%
Convertible Notes, net of
tax 580 630
------------------ ---------------------
Net income- Diluted $ 5,986 $ 10,089
================== =====================
Weighted- average shares
outstanding - Basic 12,284 13,282
Effect of dilutive
securities:
Stock options 108 150
4.75% Convertible Notes 2,679 2,679
------------------ ---------------------
Weighted- average shares
outstanding - Diluted 15,071 16,111
================== =====================
Basic income per common share $ 0.44 $ 0.71
================== =====================
Diluted income per common
share $ 0.40 $ 0.63
================== =====================
The computation of diluted income per common share for the three
months ended December 31, 2007 and 2006 excludes options to
purchase 1,493,000 and 1,063,000 shares of the Company's common
stock, respectively, due to their antidilutive effect.
(2) Basic income per common share has been computed by dividing net
income by the weighted average number of shares of the Company's
common stock outstanding. Diluted income per common share adjusts
net income and basic income per common share for the effect of
all potentially dilutive shares of the Company's common stock.
The calculations of basic and diluted income per common share for
the years ended December 31, 2007 and 2006 are as follows:
Year ended December 31,
----------------------------------------
2007 2006
------------------- --------------------
(in thousands, except per share amounts)
Net income- Basic $ 8,892 $ 15,532
Interest expense 4.75%
Convertible Notes, net of
tax -- 1,312
------------------- --------------------
Net income- Diluted $ 8,892 $ 16,844
=================== ====================
Weighted- average shares
outstanding - Basic 12,969 13,171
Effect of dilutive
securities:
Stock options 130 183
4.75% Convertible Notes -- 1,362
------------------- --------------------
Weighted- average shares
outstanding - Diluted 13,099 14,716
=================== ====================
Basic income per common share $ 0.69 $ 1.18
=================== ====================
Diluted income per common
share $ 0.68 $ 1.14
=================== ====================
The computation of diluted income per common share for the years ended December 31, 2007 and 2006 excludes options to purchase 1,544,000 and 974,000 shares of the Company's common stock, respectively, due to their antidilutive effect. The computation of diluted income per common share for the year ended December 31, 2007 also excludes 2,678,571 shares of the Company's common stock issuable upon the conversion of the Company's 4.75% Convertible Notes and related interest expense, due to its antidilutive effect.
SOURCE: Lifetime Brands, Inc.
Lifetime Brands, Inc.
Christian G. Kasper, 516-203-3590
Senior Vice President
chris.kasper@lifetimebrands.com
or
Investor Relations:
Lippert/Heilshorn & Assoc.
Harriet Fried / Jody Burfening, 212-838-3777
hfried@lhai.com