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Lifetime Brands Reports Record Third Quarter 2011 Results

Lifetime Brands, Inc.

Lifetime Brands is a global provider of kitchenware, tabletop, home décor, and lifestyle products. The Company markets its products under such well-known kitchenware brands as Farberware®, KitchenAid®, CasaMōda®, Cuisinart®, Cuisine de France®, Hoffritz®, Kamenstein®, Kizmos™, Misto®, Pedrini®, Roshco®, Sabatier® and Vasconia®; respected tabletop brands such as Mikasa®, Pfaltzgraff®, Creative Tops®, Calvin Klein®, Gorham®, International® Silver, Kirk Stieff®, Nautica®, Sasaki®, Towle® Silversmiths, Tuttle®, Wallace®, V&A® and Royal Botanic Gardens Kew®; and leading home décor and lifestyle brands, including Design for Living™, Elements® and Melannco®.

The Company’s corporate website is www.lifetimebrands.com.

           
LIFETIME BRANDS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands - except per share data)

(unaudited)

 
Three Months Ended Nine Months Ended
September 30, September 30,
2011       2010 2011       2010
 
 
Net sales $ 124,663 $ 124,918 $ 306,807 $ 300,543
 
Cost of sales 80,424 78,762 195,132 185,656
Distribution expenses 10,352 11,312 30,598 31,042
Selling, general and administrative expenses   23,589     24,615     66,451     68,567  
 
Income from operations 10,298 10,229 14,626 15,278
 
Interest expense (1,789 ) (2,090 ) (5,807 ) (7,163 )
Loss on early retirement of debt   (764 )
 
Income before income taxes and equity in earnings 8,509 8,139 8,819 7,351
 
Income tax provision (2,089 ) (2,390 ) (2,609 ) (3,002 )
Equity in earnings, net of taxes   1,113     836     2,437     1,984  
 
NET INCOME $ 7,533   $ 6,585   $ 8,647   $ 6,333  
 
BASIC INCOME PER COMMON SHARE $ 0.62   $ 0.55   $ 0.72   $ 0.53  

DILUTED INCOME PER COMMON SHARE

$ 0.60   $ 0.52   $ 0.69   $ 0.51  

Cash dividends declared per common share

$ 0.05
         
LIFETIME BRANDS, INC.
CONSOLIDATED BALANCE SHEETS

(In thousands - except share data)

 
September 30, December 31,
2011 2010
(unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 760 $ 3,351
Accounts receivable, less allowances of $4,509 at 2011
and $12,611 at 2010 96,162 72,795
Inventory 123,158 99,935
Prepaid expenses and other current assets 4,647 5,048
Deferred income taxes 1,124 1,124
Income taxes receivable   1,050    
TOTAL CURRENT ASSETS 226,901 182,253
 
PROPERTY AND EQUIPMENT, net 33,858 36,093
INTANGIBLE ASSETS, net 30,358 30,818
INVESTMENT IN GRUPO VASCONIA, S.A.B. 23,450 24,068
OTHER ASSETS   4,160     4,354  
TOTAL ASSETS $ 318,727   $ 277,586  
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Revolving Credit Facility

$

$

4,100
Accounts payable 27,198 19,414
Accrued expenses 32,776 31,962
Income taxes payable

 

    5,036  
TOTAL CURRENT LIABILITIES 59,974 60,512
 
DEFERRED RENT & OTHER LONG-TERM LIABILITIES 14,368 14,482
DEFERRED INCOME TAXES 2,189 1,429
REVOLVING CREDIT FACILITY 66,745 10,000
TERM LOAN 40,000 40,000
4.75% CONVERTIBLE SENIOR NOTES

 

23,557
 
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: 12,092,943 in 2011 and 12,064,543 in 2010 121 121
Paid-in capital 133,481 131,350
Retained earnings 9,356 1,312
Accumulated other comprehensive loss   (7,507 )   (5,177 )
TOTAL STOCKHOLDERS’ EQUITY   135,451     127,606  
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 318,727   $ 277,586  
 
     
LIFETIME BRANDS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands - unaudited)

 
Nine Months Ended
September 30,
2011       2010
OPERATING ACTIVITIES
Net income $ 8,647 $ 6,333
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation and amortization 6,061 7,518
Amortization of debt discount 543 1,577
Deferred rent (41) 296
Deferred income taxes 573
Stock compensation expense 2,105 2,182
Undistributed equity earnings (1,971) (1,588)
Loss on early retirement of debt 764
Changes in operating assets and liabilities:
Accounts receivable, net (23,367) (27,167)
Inventory (23,223) (22,370)
Prepaid expenses, other current assets and other assets 1,040 (98)
Accounts payable, accrued expenses and other liabilities 8,601 21,969
Income taxes payable (6,094) 470
NET CASH USED IN OPERATING ACTIVITIES (27,126) (10,114)
 
INVESTING ACTIVITIES
Purchases of property and equipment, net (3,366) (2,311)
NET CASH USED IN INVESTING ACTIVITIES (3,366) (2,311)
 
FINANCING ACTIVITIES
Proceeds from revolving credit facility 52,645 52,677
Proceeds from term loan 40,000
Repayments of prior credit facility, net (24,601)
Repurchase of 4.75% convertible senior notes (24,100) (51,028)
Financing costs (3,185)
Excess tax benefits from exercise of stock options 8 98
Proceeds from exercise of stock options 26 71
Payment of capital lease obligations (74) (125)
Cash dividend paid (604)
NET CASH PROVIDED BY FINANCING ACTIVITIES 27,901 13,907
 
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (2,591) 1,482
Cash and cash equivalents at beginning of period 3,351 682
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 760 $ 2,164
     

LIFETIME BRANDS, INC.

Supplemental Information

(In thousands)

 
Consolidated EBITDA – Four Quarters Ended
September 30, 2011
 
Consolidated EBITDA for the three months ended:
September 30, 2011 $ 13,524
June 30, 2011 7,512
March 31, 2011 2,720
December 31, 2010   17,544
Consolidated EBITDA $ 41,300
 

Consolidated EBITDA – Four Quarters Ended

September 30, 2010

 
Consolidated EBITDA for the three months ended:
September 30, 2010 $ 13,529
June 30, 2010 6,117
March 31, 2010 5,728
December 31, 2009   15,558
Consolidated EBITDA $ 40,932
     

Reconciliation of GAAP to Non-GAAP Operating Results

 
Three Months Ended
September 30,       June 30,       March 31,       December 31,
2011 2011 2011 2010
Net income (loss) reported $ 7,533 $ 2,063 $ (949) $ 13,928
Less:
Undistributed equity earnings (1,113) (393) (465) (733)
Extraordinary item (2,477)
Add:
Income tax (benefit) provision 2,089 1,108 (588) 1,600
Interest expense 1,789 2,039 1,979 2,188
Depreciation and amortization 2,046 2,020 1,995 2,292
Acquisition related expenses 498
Stock compensation expense 682 675 748 746
Consolidated EBITDA $ 13,524 $ 7,512 $ 2,720 $ 17,544
Three Months Ended
September 30, June 30, March 31, December 31,
2010 2010 2010 2009
Net income (loss) reported $ 6,585 $ (981)

$ 729

$ 5,048
Less:
Undistributed equity earnings (836) (82) (670) (534)
Add:
Income tax provision 2,390 573

39

1,311
Interest expense 2,090 2,644

2,429

4,124
Depreciation and amortization 2,518 2,458

2,542

3,214
Restructuring expenses

1,784
Stock compensation expense 782 741

659

611
Loss on early retirement of debt 764

Consolidated EBITDA $ 13,529 $ 6,117

$ 5,728

$ 15,558




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