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): March 14, 2013
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):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | 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 March 14, 2013, Lifetime Brands, Inc. (the “Company”) issued a press release announcing the Company’s results for the fourth quarter and year ended December 31, 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, income taxes, interest, depreciation and amortization, stock compensation expense, loss on early retirement of debt, intangible asset impairment and acquisition related expenses. The Company is also presenting non-GAAP information regarding adjusted net income and adjusted diluted income per share regarding net income, adjusted to exclude the bargain purchase gain included in equity in earnings, a tax benefit recorded in equity in earnings, a write down in the Vasconia investment to fair value, intangible asset impairment, a loss on early retirement of debt related to the repayment of the Company’s Term Loan, an expense related to retirement benefit obligations, acquisition related expenses, a reduction of the Company’s deferred tax liability related to the prior period and includes an adjustment to reflect a normalized annual tax rate.
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 | Press release dated March 14, 2013 |
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: March 14, 2013
Exhibit 99.1
Lifetime Brands Reports 2012 Financial Results
Announces a 25% Increase in its Quarterly Dividend
Garden City, NY, March 14, 2013 — 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 fourth quarter and year ended December 31, 2012.
Fourth Quarter Highlights:
| • | Consolidated net sales were $154.8 million, an increase of 12.5%, as compared to consolidated net sales of $137.6 million in the fourth quarter of 2011. |
| • | Net income was $15.2 million, or $1.19 per diluted share, in the 2012 period, as compared to $5.4 million, or $0.43 per diluted share, in the prior-year period. |
| • | Adjusted net income was $8.7 million, or $0.67 per diluted share, in the 2012 period, as compared to $6.5 million, or $0.52 per diluted share, in the 2011 period. |
| • | Consolidated EBITDA for the three-month period ended December 31, 2012 was $17.9 million, as compared to $14.3 million for the corresponding 2011 period. |
Full Year Highlights:
| • | Consolidated net sales were $486.8 million, an increase of 9.5%, as compared to consolidated net sales of $444.4 million for 2011. |
| • | Net income was $20.9 million, or $1.64 per diluted share, in 2012, as compared to $14.1 million, or $1.12 per diluted share, in 2011. |
| • | Adjusted net income was $16.2 million, or $1.26 per diluted share, in 2012, as compared to $14.5 million, or $1.16 per diluted share, in 2011. |
| • | Consolidated EBITDA was $41.2 million, as compared to $38.1 million for the year ended December 31, 2011. |
On March 12, 2013, the Board of Directors declared a quarterly dividend of $0.03125 per share payable on May 15, 2013 to shareholders of record on May 1, 2013.
Jeffrey Siegel, Lifetime’s Chairman, President and Chief Executive Officer commented,
“Lifetime finished 2012 on a very positive note. For the quarter, Consolidated Net Sales increased 12.5% on an actual basis and 8.6% on an organic basis. During the quarter, we acquired the business and assets of Fred® & Friends, a line of innovative products featuring fun kitchen tools, tabletop accessories, party goods and giftware products.
“For the year, Consolidated Net Sales increased 9.5% (actual) and 1.4% (organic).
“Despite the increase in Consolidated Net Sales, the acquisition of Fred® and Friends and a planned, temporary build-up of inventory in the UK in anticipation of increased duties on Chinese ceramics, which are expected to be enacted later this year, total inventory at year-end decreased to $104.6 million, from $110.3 million, reflecting our improving inventory management practices.
“Earlier this month, we presented our new line-up of kitchenware products at the annual International Home + Housewares Show in Chicago. The reaction to our new products was overwhelmingly positive, which we believe foretells the successful placement of many of these new products later in the year.
“While the U.S. and European economies remain troubled, we nevertheless foresee our overall business increasing by 4-6% in 2013. The increased cash dividend we announced today demonstrates our positive outlook and confidence in our products.”
Conference Call
Lifetime has scheduled a conference call for Thursday, March 14, 2013 at 11:00 a.m. ET to discuss its fourth quarter 2012 results. The dial-in number for the conference call is (800) 510-9836 or (617) 614-3670, passcode #15045565. A replay of the call will also be available through March 15, 2013 and can be accessed by dialing (888) 286-8010 or (617) 801-6888, conference ID #43636130. 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.
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®, Fred ®, Guy Fieri®, Hoffritz®, Kizmos™, Misto®, Pedrini®, Roshco®, Sabatier® 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 also provides exclusive private label products to leading retailers worldwide.
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 |
LIFETIME BRANDS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands - except per share data)
| Three Months Ended December 31, |
Year
Ended December 31, |
|||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||
| Net sales |
$ | 154,812 | $ | 137,611 | $ | 486,842 | $ | 444,418 | ||||||||
| Cost of sales |
98,767 | 86,926 | 310,054 | 282,058 | ||||||||||||
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| Gross margin |
56,045 | 50,685 | 176,788 | 162,360 | ||||||||||||
| Distribution expenses |
12,103 | 13,284 | 44,046 | 43,882 | ||||||||||||
| Selling, general and administrative expenses |
29,403 | 27,443 | 104,338 | 93,894 | ||||||||||||
| Intangible asset impairment |
— | — | 1,069 | — | ||||||||||||
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| Income from operations |
14,539 | 9,958 | 27,335 | 24,584 | ||||||||||||
| Interest expense |
(1,254 | ) | (1,951 | ) | (5,898 | ) | (7,758 | ) | ||||||||
| Loss on early retirement of debt |
— | — | (1,363 | ) | — | |||||||||||
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| Income before income taxes and equity in earnings |
13,285 | 8,007 | 20,074 | 16,826 | ||||||||||||
| Income tax provision |
(2,596 | ) | (3,513 | ) | (5,208 | ) | (6,122 | ) | ||||||||
| Equity in earnings, net of taxes |
4,465 | 925 | 6,081 | 3,362 | ||||||||||||
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| NET INCOME |
$ | 15,154 | $ | 5,419 | $ | 20,947 | $ | 14,066 | ||||||||
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| BASIC INCOME PER COMMON SHARE |
$ | 1.21 | $ | 0.45 | $ | 1.67 | $ | 1.16 | ||||||||
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| DILUTED INCOME PER COMMON SHARE |
$ | 1.19 | $ | 0.43 | $ | 1.64 | $ | 1.12 | ||||||||
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LIFETIME BRANDS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands - except share data)
| December 31, | ||||||||
| 2012 | 2011 | |||||||
| ASSETS |
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| CURRENT ASSETS |
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| Cash and cash equivalents |
$ | 1,871 | $ | 2,972 | ||||
| Accounts receivable, less allowances of $3,996 at December 31, 2012 and $4,602 at December 31, 2011 |
97,369 | 77,749 | ||||||
| Inventory |
104,584 | 110,337 | ||||||
| Prepaid expenses and other current assets |
5,393 | 5,264 | ||||||
| Deferred income taxes |
3,542 | 2,475 | ||||||
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| TOTAL CURRENT ASSETS |
212,759 | 198,797 | ||||||
| PROPERTY AND EQUIPMENT, net |
31,646 | 34,324 | ||||||
| INVESTMENTS |
43,685 | 34,515 | ||||||
| INTANGIBLE ASSETS, net |
57,842 | 46,937 | ||||||
| OTHER ASSETS |
2,865 | 4,172 | ||||||
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| TOTAL ASSETS |
$ | 348,797 | $ | 318,745 | ||||
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| LIABILITIES AND STOCKHOLDERS’ EQUITY |
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| CURRENT LIABILITIES |
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| Revolving Credit Facility |
$ | 7,000 | $ | 15,000 | ||||
| Current maturity of Senior Secured Term Loan |
4,375 | — | ||||||
| Accounts payable |
18,555 | 18,985 | ||||||
| Accrued expenses |
33,354 | 33,877 | ||||||
| Income taxes payable |
3,615 | 2,100 | ||||||
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| TOTAL CURRENT LIABILITIES |
66,899 | 69,962 | ||||||
| DEFERRED RENT & OTHER LONG-TERM LIABILITIES |
21,565 | 14,598 | ||||||
| DEFERRED INCOME TAXES |
3,510 | 5,385 | ||||||
| REVOLVING CREDIT FACILITY |
53,968 | 42,625 | ||||||
| SENIOR SECURED TERM LOAN |
30,625 | — | ||||||
| TERM LOAN |
— | 40,000 | ||||||
| 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 |
— | — | ||||||
| Common stock, $.01 par value, shares authorized: 25,000,000; shares issued and outstanding: 12,754,467 at December 31, 2012 and 12,430,893 at December 31, 2011 |
128 | 124 | ||||||
| Paid-in capital |
142,489 | 137,467 | ||||||
| Retained earnings |
33,849 | 14,465 | ||||||
| Accumulated other comprehensive loss |
(4,236 | ) | (5,881 | ) | ||||
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| TOTAL STOCKHOLDERS’ EQUITY |
172,230 | 146,175 | ||||||
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| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
$ | 348,797 | $ | 318,745 | ||||
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LIFETIME BRANDS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
| Year
ended December 31, |
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| 2012 | 2011 | |||||||
| OPERATING ACTIVITIES |
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| Net income |
$ | 20,947 | $ | 14,066 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
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| Provision for doubtful accounts |
123 | (24 | ) | |||||
| Depreciation and amortization |
9,324 | 8,397 | ||||||
| Amortization of debt discount |
— | 543 | ||||||
| Deferred rent |
(668 | ) | (133 | ) | ||||
| Deferred income taxes |
(3,011 | ) | (1,218 | ) | ||||
| Stock compensation expense |
2,793 | 2,795 | ||||||
| Undistributed equity earnings |
(5,665 | ) | (2,896 | ) | ||||
| Intangible asset impairment |
1,069 | — | ||||||
| Loss on early retirement of debt |
1,363 | — | ||||||
| Changes in operating assets and liabilities (excluding the effects of business acquisitions) |
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| Accounts receivable |
(14,741 | ) | 3,297 | |||||
| Inventory |
9,694 | (5,365 | ) | |||||
| Prepaid expenses, other current assets and other assets |
120 | 1,120 | ||||||
| Accounts payable, accrued expenses and other liabilities |
(166 | ) | (4,673 | ) | ||||
| Income taxes payable |
1,515 | (3,722 | ) | |||||
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| NET CASH PROVIDED BY OPERATING ACTIVITIES |
22,697 | 12,187 | ||||||
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| INVESTING ACTIVITIES |
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| Purchases of property and equipment |
(4,955 | ) | (4,959 | ) | ||||
| Equity investments |
(2,765 | ) | (5,123 | ) | ||||
| Business acquisition, net of cash acquired |
(14,500 | ) | (20,584 | ) | ||||
| Net proceeds from sale of property |
27 | 31 | ||||||
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| NET CASH USED IN INVESTING ACTIVITIES |
(22,193 | ) | (30,635 | ) | ||||
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| FINANCING ACTIVITIES |
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| Proceeds from Revolving Credit Facility, net |
3,343 | 43,525 | ||||||
| Proceeds from Term Loan |
35,000 | — | ||||||
| Repayment of Term Loan |
(40,000 | ) | — | |||||
| Repurchase of 4.75% convertible senior notes |
— | (24,100 | ) | |||||
| Financing Costs |
— | (761 | ) | |||||
| Cash dividends paid |
(1,249 | ) | (913 | ) | ||||
| Payment of capital lease obligations |
— | (78 | ) | |||||
| Proceeds from the exercise of stock options |
577 | 225 | ||||||
| Excess tax benefits from exercise of stock options |
150 | — | ||||||
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| NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES |
(2,179 | ) | 17,898 | |||||
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| Effect of foreign exchange on cash |
574 | 171 | ||||||
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| INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS |
(1,101 | ) | (379 | ) | ||||
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| Cash and cash equivalents at beginning of year |
2,972 | 3,351 | ||||||
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| CASH AND CASH EQUIVALENTS AT END OF YEAR |
$ | 1,871 | $ | 2,972 | ||||
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LIFETIME BRANDS, INC.
Supplemental Information
Reconciliation of GAAP to Non-GAAP Operating Results
(In thousands - except per share data)
Consolidated EBITDA:
| Three Months Ended December 31, |
Year
Ended December 31, |
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| 2012 | 2011 | 2012 | 2011 | |||||||||||||
| (in thousands) | ||||||||||||||||
| Net income as reported |
$ | 15,154 | $ | 5,419 | $ | 20,947 | $ | 14,066 | ||||||||
| Subtract out: |
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| Undistributed equity in earnings, net |
(4,464 | ) | (925 | ) | (5,665 | ) | (2,896 | ) | ||||||||
| Add back: |
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| Income tax provision |
2,596 | 3,513 | 5,208 | 6,122 | ||||||||||||
| Interest expense |
1,254 | 1,951 | 5,898 | 7,758 | ||||||||||||
| Depreciation and amortization |
2,446 | 2,336 | 9,324 | 8,397 | ||||||||||||
| Stock compensation expense |
662 | 690 | 2,793 | 2,795 | ||||||||||||
| Loss on early retirement of debt |
— | — | 1,363 | — | ||||||||||||
| Intangible asset impairment |
— | — | 1,069 | — | ||||||||||||
| Permitted acquisition related expenses |
220 | 1,358 | 305 | 1,856 | ||||||||||||
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| Consolidated EBITDA |
$ | 17,868 | $ | 14,342 | $ | 41,242 | $ | 38,098 | ||||||||
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| Adjusted net income and adjusted diluted income per share: | ||||||||||||||||
| Three Months Ended December 31, |
Year Ended December 31, |
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| 2012 | 2011 | 2012 | 2011 | |||||||||||||
| (in thousands) | ||||||||||||||||
| Net income as reported |
$ | 15,154 | $ | 5,419 | $ | 20,947 | $ | 14,066 | ||||||||
| Adjustments: |
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| Bargain purchase gain in equity in earnings, net of tax |
(4,112 | ) | — | (4,112 | ) | — | ||||||||||
| Tax benefit recorded in equity in earnings |
(1,116 | ) | — | (1,116 | ) | — | ||||||||||
| Impairment of Vasconia investment, net of tax |
1,336 | — | 1,336 | — | ||||||||||||
| Intangible asset impairment, net of tax |
— | — | 645 | — | ||||||||||||
| Loss on early retirement of debt, net of tax |
— | — | 822 | — | ||||||||||||
| Retirement benefit obligation expense, net of tax |
— | — | 268 | — | ||||||||||||
| Acquisition related expenses, net of tax |
135 | 895 | 188 | 1,230 | ||||||||||||
| Reduction of deferred tax liability related to prior year |
(2,283 | ) | — | (2,283 | ) | — | ||||||||||
| Normalized tax benefit (provision) on reported income |
(435 | ) | 214 | (539 | ) | (810 | ) | |||||||||
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| Adjusted net income |
$ | 8,679 | $ | 6,528 | $ | 16,156 | $ | 14,486 | ||||||||
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| Adjusted diluted income per share |
$ | 0.67 | $ | 0.52 | $ | 1.26 | $ | 1.16 | ||||||||
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Consolidated EBITDA is a non-GAAP measure that the Company defines as net income, adjusted to exclude undistributed equity earnings, income taxes, interest, depreciation and amortization, stock compensation expense, loss on early retirement of debt, intangible asset impairment and acquisition related expenses, as shown in the table above.
Adjusted net income in 2012 excludes the bargain purchase gain included in equity in earnings, a tax benefit recorded in equity in earnings, a write down in the Vasconia investment to fair value, intangible asset impairment, a loss on early retirement of debt related to the repayment of the Company’s Term Loan, an expense related to retirement benefit obligations, acquisition related expenses, a reduction of the Company’s deferred tax liability related to the prior year and includes an adjustment to reflect a normalized annual tax rate. Adjusted net income in 2011 excludes acquisition related expenses and includes an adjustment to reflect a normalized annual tax rate.
Adjusted net income in the three-month period ending December 31, 2012 excludes the bargain purchase gain included in equity in earnings, a tax benefit recorded in equity in earnings, a write down in the Vasconia investment to fair value, acquisition related expenses, a reduction of the Company’s deferred tax liability related to the prior year and includes an adjustment to reflect a normalized annual tax rate. Adjusted net income in the corresponding 2011 period excludes acquisition related expenses and includes an adjustment to reflect a normalized annual tax rate.