Lifetime Brands Announces Third Quarter 2008 Results
GARDEN CITY, N.Y.--(BUSINESS WIRE)--Nov. 6, 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 September 30, 2008.
For the third quarter of 2008, Lifetime's net sales totaled $140.6 million, as compared to net sales of $143.5 million for the same period in 2007. Including $17.0 million in sales due to the June 2008 acquisition of the business and certain assets of Mikasa, Inc., net sales for the Company's wholesale segment increased slightly to $124.3 million from $123.2 million for the prior-year period. Net sales for the Company's direct-to-consumer ("DTC") segment were $16.4 million for the 2008 third quarter as compared to $20.3 million for the 2007 period. This decline was due primarily to the closing of 30 outlet retail stores in the first quarter of 2008. Comparable DTC segment store sales declined 5.0% for the quarter.
The Company reported a net loss of $0.7 million, or $0.06 per diluted share, compared to net income of $6.8 million, or $0.47 per diluted share, for the third quarter of 2007. The Company's results for the 2008 third quarter included a charge of $4.6 million, which was primarily non-cash, or approximately $0.25 per diluted share, related to the closing of its remaining 53 outlet retail stores and related restructuring activity. Excluding this charge, the Company's net income would have been $2.3 million, or $0.19 per diluted share.
Jeffrey Siegel, Chairman, President and Chief Executive Officer, commented, "Although the recent economic uncertainty and weak retail environment made the third quarter extremely challenging, Lifetime is weathering the storm and seizing opportunities to grow market share across all categories. Our acquisition of Mikasa has turned out to be every bit as beneficial as we expected, providing us with many opportunities to strengthen our existing placement and open new doors. Our organic sales held up relatively well, with the shortfall in the third quarter primarily reflecting reduced sales to Canadian customers, who are now serviced through our Canadian strategic alliance, plus lower sales to certain retailers that are liquidating or in financial trouble, such as Linens 'N Things, which historically accounted for approximately 3% of Lifetime's sales. In 2009, we expect most, if not all, of these sales to be absorbed by other retailers who are customers of Lifetime.
"Our initiatives to reduce inventory and improve distribution efficiency continue to yield results and the closing of our retail stores is proceeding smoothly. With all the stores expected to be closed by year-end, the DTC segment, which also includes the Internet and catalog business that we will continue to operate, should contribute to the Company's earnings in 2009. In the last four quarters, the DTC segment had approximately $8 million in pretax losses, excluding restructuring expenses. The elimination of these losses will boost profits substantially."
Separately, the Company announced that its Board of Directors declared a regular quarterly cash dividend of $0.0625 per share, payable on November 28, 2008 to shareholders of record on November 14, 2008.
Lifetime has scheduled a conference call Thursday, November 6, at 11:00 a.m. ET to discuss its third quarter 2008 results. The dial-in number for the call is (706) 634-1218. A replay of the call will also be available through Thursday, November 13, 2008 and can be accessed by dialing (706) 645-9291, conference ID #68507205.
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.
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), 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.
Non-GAAP Financial Measures
This release contains non-GAAP financial measures within the meaning of Regulation G promulgated by the Securities and Exchange Commission. Included in this release is a reconciliation of these non-GAAP financial measures to the comparable financial measures calculated in accordance with GAAP.
LIFETIME BRANDS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
September December
30, 31,
2008 2007
----------- ---------
(unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 160 $ 4,172
Accounts receivable, less allowances of
$15,193 at 2008 and $16,400 at 2007 85,055 65,030
Inventory 170,633 143,684
Deferred income taxes 8,067 7,925
Prepaid expenses and other current assets 9,407 7,267
Prepaid income taxes 9,061 --
----------- ---------
TOTAL CURRENT ASSETS 282,383 228,078
PROPERTY AND EQUIPMENT, net 49,688 54,332
GOODWILL 27,432 27,432
OTHER INTANGIBLES, net 34,645 35,383
INVESTMENT IN GRUPO VASCONIA, S.A.B. 24,357 22,950
OTHER ASSETS 3,122 3,240
----------- ---------
TOTAL ASSETS $421,627 $371,415
=========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term borrowings $ 60,700 $ 13,500
Accounts payable 34,735 21,759
Accrued expenses 30,492 31,504
Income taxes payable -- 4,520
----------- ---------
TOTAL CURRENT LIABILITIES 125,927 71,283
DEFERRED RENT & OTHER LONG-TERM LIABILITIES 19,369 14,481
DEFERRED INCOME TAX 8,527 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: 11,985,123 in 2008 and
11,964,388 in 2007 120 120
Paid-in capital 115,903 113,995
Retained earnings 21,898 33,250
Accumulated other comprehensive loss (317) (125)
----------- ---------
TOTAL STOCKHOLDERS' EQUITY 137,604 147,240
----------- ---------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $421,627 $371,415
=========== =========
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,
------------------------- --------------------------
2008 2007 2008 2007
------------ ------------ ------------ -------------
Net sales $140,624 $143,470 $331,217 $338,628
Cost of sales 86,096 84,534 200,989 197,537
Distribution
expenses 14,104 13,068 40,260 38,100
Selling, general
and
administrative
expenses 32,464 32,116 94,750 91,541
Restructuring -- --
expenses 4,595 7,582
------------ ------------ ------------ -------------
Income (loss)
from operations 3,365 13,752 (12,364) 11,450
Interest expense (2,255) (2,578) (6,401) (5,659)
Other expense -- (121) -- (121)
------------ ------------ ------------ -------------
Income (loss)
before income
taxes and equity
in earnings of
Grupo Vasconia,
S.A.B. 1,110 11,053 (18,765) 5,670
Income tax
benefit
(provision) (2,174) (4,258) 7,557 (2,184)
Equity in
earnings of
Grupo Vasconia,
S.A.B., net of
taxes 390 -- 1,354 --
------------ ------------ ------------ -------------
NET INCOME (LOSS) $ (674) $ 6,795 $ (9,854) $ 3,486
============ ============ ============ =============
BASIC INCOME
(LOSS) PER
COMMON SHARE $ (0.06) $ 0.52 $ (0.82) $ 0.26
============ ============ ============ =============
DILUTED INCOME
(LOSS) PER
COMMON SHARE $ (0.06) $ 0.47 $ (0.82) $ 0.26
============ ============ ============ =============
Note:
Basic income (loss) per common share has been computed by dividing net income (loss) by the weighted average number of shares of the Company's common stock outstanding. Diluted income (loss) per common share adjusts net income (loss) and basic income (loss) per common share for the effect of all potentially dilutive shares of the Company's common stock. The calculations of basic and diluted income (loss) per common share for the three and nine months ended September 30, 2008 and 2007 are as follows:
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------- -----------------------
2008 2007 2008 2007
--------------- ------- --------------- -------
(in thousands, except per share amounts)
Net income (loss)-
basic $ (674) $ 6,795 $(9,854) $ 3,486
Net interest expense,
4.75% Convertible
Notes -- 654 -- --
--------------- ------- --------------- -------
Net income (loss)-
diluted $ (674) $ 7,449 $(9,854) $ 3,486
=============== ======= =============== =======
Weighted average
shares outstanding -
basic 11,985 13,002 11,973 13,197
Effect of dilutive
securities:
Stock options -- 139 -- 147
4.75% Convertible --
Notes 2,679 -- --
--------------- ------- --------------- -------
Weighted average
shares outstanding -
diluted 11,985 15,820 11,973 13,344
=============== ======= =============== =======
Basic income (loss)-
per common share $ (0.06) $ 0.52 $ (0.82) $ 0.26
=============== ======= =============== =======
Diluted income (loss)
- per common share $ (0.06) $ 0.47 $ (0.82) $ 0.26
=============== ======= =============== =======
The computation of diluted income per common share for the three months ended September 30, 2008 and 2007 excludes: (i) options to purchase 1,786,150 shares and 1,495,500 shares, respectively; and (ii) 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. The computation of diluted income (loss) per common share for the nine months ended September 30, 2008 and 2007 excludes: (i) options to purchase 1,791,650 shares and 1,560,767 shares, respectively; and (ii) 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. These shares were excluded due to their antidilutive effect.
LIFETIME BRANDS, INC.
Supplemental Information
Reconciliation of GAAP to Non-GAAP Operating Results
(In thousands, except per share data)
(unaudited)
Three
months
ended
September
30, 2008
---------
Reconciliation of net loss as reported to net income as
adjusted:
Net loss as reported $ (674)
Add: Restructuring expenses, net of taxes 2,987
---------
Net income as adjusted $2,313
=========
Reconciliation of diluted loss per common share as reported
to diluted income per common share as adjusted:
Diluted loss per common share as reported $(0.06)
Add: Restructuring expenses, net of taxes 0.25
---------
Diluted income per common share as adjusted $ 0.19
=========
CONTACT: 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
SOURCE: Lifetime Brands, Inc.