Lifetime Brands Announces Second Quarter 2008 Results
Company Declares Regular Quarterly Dividend; Postpones Earnings Guidance Update
GARDEN CITY, N.Y.--(BUSINESS WIRE)--Aug. 7, 2008--Lifetime Brands, Inc. (Nasdaq: LCUT), North America's leading resource for nationally branded kitchenware, tabletop and home decor products, today announced results for the three months ended June 30, 2008.
For the second quarter of 2008, Lifetime's net sales totaled $92.4 million, as compared to net sales of $91.4 million for the same period in 2007. The Company reported a net loss of $3.2 million, or $0.27 per diluted share, compared to a net loss of $2.0 million, or $0.15 per diluted share, for the second quarter of 2007.
Jeffrey Siegel, Chairman, President and Chief Executive Officer, commented, "Given the weak retail environment, we are pleased with the improvement in sales growth compared to the first quarter. Net wholesale sales rose 3.2%, as compared to the 2007 quarter. Excluding net wholesale sales attributable to Mikasa, which we acquired on June 6, net wholesale sales for the quarter were approximately 1% lower than in the prior year.
"A highlight of the quarter was our acquisition of the business and certain assets of Mikasa, Inc. The addition of this outstanding brand expands our already strong position in the tabletop industry. The purchase price was approximately $20 million, including $5.0 million to be paid on December 15, 2008, as a non-refundable advance against additional payments equal to 5% of the net sales of Mikasa products in 2009, 2010 and 2011. As previously reported, we expect the acquisition to be accretive in 2008.
"During the quarter, we also completed the consolidation of our West Coast distribution facilities. We expect the consolidation of these facilities to generate approximately $1 million in annual savings, beginning in the second half of 2008.
"Our inventory reduction initiative continues to yield results, with inventories as of June 30, 2008, down 19%, or $31 million, on an acquisition-adjusted basis, compared to the prior year.
"The weak retail environment has negatively impacted the results of our Direct-to-Consumer division, especially our retail outlet stores. We are in the process of evaluating our strategic options with regard to the outlet stores.
"Based on our year-to-date results and the likelihood that the economy will remain weak through the fall selling season, it is clear that we will not achieve the financial results we previously had forecasted. Given the challenges of an uncertain and volatile retail climate, we have concluded that it would not be prudent for us to speculate as to our results for the balance of the year. Consequently, we are not providing updated financial guidance at this time. We will comment on our expectations for the year when we report our results for the third quarter and may provide additional financial guidance at that time."
Mr. Siegel concluded, "We remain confident that we have the right initiatives in place to meet our long-term strategic objectives and to create long-term shareholder value."
Separately, the Company announced that its Board of Directors declared a regular quarterly cash dividend of $0.0625 per share, payable on August 15, 2008 to shareholders of record on August 1, 2008.
Lifetime has scheduled a conference call Thursday, August 7, at 11:00 a.m. ET to discuss second quarter 2008 results and additional matters. The dial-in number for the call is (706) 679-7464. A replay of the call will also be available through Thursday, August 14, 2008 and can be accessed by dialing (706) 645-9291, conference ID #55824403. 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 resource for nationally branded kitchenware, tabletop and home decor products. The Company markets its products under many of the industry's best known brands, including Farberware(R), KitchenAid(R), Pfaltzgraff(R), Mikasa(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), Melannco(R), Nautica(R), Pedrini(R), Roshco(R), Sabatier(R), Sasaki(R), Towle(R) Silversmiths, Tuttle(R), Wallace(R) and Vasconia(R). Lifetime's products are distributed through most major retailers in North America.
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.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ -------------------
2008 2007 2008 2007
--------- -------- --------- ---------
Net sales $ 92,399 $91,371 $190,593 $195,158
Cost of sales 55,288 51,906 114,893 113,003
Distribution expenses 12,766 11,721 26,156 25,032
Selling, general and
administrative expenses 31,183 29,494 62,286 59,425
Restructuring expenses 107 -- 2,987 --
--------- -------- --------- ---------
Loss from operations (6,945) (1,750) (15,729) (2,302)
Interest expense (2,053) (1,546) (4,146) (3,081)
--------- -------- --------- ---------
Loss before income taxes and
equity in earnings of Grupo
Vasconia, S.A.B. (8,998) (3,296) (19,875) (5,383)
Income tax benefit 5,108 1,270 9,731 2,074
Equity in earnings of Grupo
Vasconia, S.A.B., net of taxes 707 -- 964 --
--------- -------- --------- ---------
NET LOSS $ (3,183) $(2,026) $ (9,180) $ (3,309)
========= ======== ========= =========
BASIC AND DILUTED LOSS PER
COMMON SHARE $ (0.27) $ (0.15) $ (0.77) $ (0.25)
========= ======== ========= =========
LIFETIME BRANDS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
June 30, December 31,
2008 2007
----------- ------------
(unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 1,150 $ 4,172
Accounts receivable, less allowances of
$12,529 at 2008 and $16,400 at 2007 52,242 65,030
Inventory 160,858 143,684
Deferred income taxes 7,983 7,925
Prepaid expenses and other current assets 6,455 7,267
Prepaid income taxes 9,010 --
----------- ------------
TOTAL CURRENT ASSETS 237,698 228,078
PROPERTY AND EQUIPMENT, net 54,351 54,332
GOODWILL 27,432 27,432
OTHER INTANGIBLES, net 34,887 35,383
INVESTMENT IN GRUPO VASCONIA, S.A.B. 24,141 22,950
OTHER ASSETS 3,020 3,240
----------- ------------
TOTAL ASSETS $ 381,529 $ 371,415
=========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term borrowings $ 40,600 $ 13,500
Accounts payable 20,761 21,759
Accrued expenses 28,042 31,504
Income taxes payable -- 4,520
----------- ------------
TOTAL CURRENT LIABILITIES 89,403 71,283
DEFERRED RENT & OTHER LONG-TERM LIABILITIES 15,732 14,481
DEFERRED INCOME TAX 8,437 8,211
LONG-TERM DEBT 55,200 55,200
CONVERTIBLE NOTES 75,000 75,000
STOCKHOLDERS' EQUITY
Common stock, $.01 par value, shares
authorized: 25,000,000; shares issued and
outstanding: 11,966,888 in 2008 and
11,964,388 in 2007 120 120
Paid-in capital 115,269 113,995
Retained earnings 22,571 33,250
Accumulated other comprehensive loss (203) (125)
----------- ------------
TOTAL STOCKHOLDERS' EQUITY 137,757 147,240
----------- ------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 381,529 $ 371,415
=========== ============
CONTACT: Lifetime Brands, Inc.
Senior Vice President
Christian G. Kasper, 516-203-3590
chris.kasper@lifetimebrands.com
or
Investor Relations:
Lippert/Heilshorn & Assoc.
Harriet Fried/Jody Burfening, 212-838-3777
hfried@lhai.com
SOURCE: Lifetime Brands, Inc.