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Lifetime Brands, Inc. Reports Third Quarter 2012 Results

Stocks in this article: LCUT

Lifetime Brands, Inc.

Lifetime Brands is a leading global 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 ®, Guy Fieri ®, Hoffritz ®, Kizmos™, Misto ®, Pedrini ®, Roshco ®, Sabatier ®, Savora™ 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 website is www.lifetimebrands.com.

               
 

  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,
2012     2011 2012     2011
 
Net sales $ 128,050 $ 124,663 $ 332,030 $ 306,807
 
Cost of sales   83,141     80,424     211,287     195,132  
 
Gross margin 44,909 44,239 120,743 111,675
 
Distribution expenses 10,536 10,352 31,943 30,598
Selling, general and administrative expenses 25,893 23,589 74,935 66,451
Intangible asset impairment   1,069     -     1,069     -  
 
Income from operations 7,411 10,298 12,796 14,626
 
Interest expense (1,271 ) (1,789 ) (4,644 ) (5,807 )
Loss on early retirement of debt   (1,015 )   -     (1,363 )   -  
 
Income before income taxes and equity in earnings 5,125 8,509 6,789 8,819
 
Income tax provision (1,930 ) (2,089 ) (2,612 ) (2,609 )
Equity in earnings, net of taxes   695     1,113     1,616     2,437  
 
NET INCOME $ 3,890   $ 7,533   $ 5,793   $ 8,647  
 
BASIC INCOME PER COMMON SHARE $ 0.31   $ 0.62   $ 0.46   $ 0.72  
 
DILUTED INCOME PER COMMON SHARE $ 0.30   $ 0.60   $ 0.45   $ 0.69  
 
Cash dividends declared per common share $ 0.025 $ - $ 0.10 $ 0.05
 
 
               
 

LIFETIME BRANDS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

 (In thousands - except share data)

(unaudited)

 
September 30, December 31,
2012 2011
(unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 1,749 $ 2,972

Accounts receivable, less allowances of $3,381 at September 30, 2012

 and $4,602 at December 31, 2011

91,269 77,749
Inventory 128,954 110,337
Prepaid expenses and other current assets 6,052 5,264
Deferred income taxes 3,441 2,475
TOTAL CURRENT ASSETS 231,465 198,797
 
PROPERTY AND EQUIPMENT, net 32,002 34,324
INVESTMENTS 36,228 34,515
INTANGIBLE ASSETS, net 44,668 46,937
OTHER ASSETS 2,904 4,172
TOTAL ASSETS $ 347,267 $ 318,745
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Revolving Credit Facility $ 37,826 $ 15,000
Current portion of Senior Secured Term Loan 3,500 -
Accounts payable 27,133 18,985
Accrued expenses 35,349 33,877
Income taxes payable 1,342 2,100
TOTAL CURRENT LIABILITIES 105,150 69,962
 
DEFERRED RENT & OTHER LONG-TERM LIABILITIES 16,207 14,598
DEFERRED INCOME TAXES 4,821 5,385
REVOLVING CREDIT FACILITY 35,838 42,625
SENIOR SECURED TERM LOAN 31,500 -
TERM LOAN - 40,000
 
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: 12,570,899 at September 30, 2012 and

 12,430,893 at December 31, 2011

126 124
Paid-in capital 139,975 137,467
Retained earnings 19,013 14,465
Accumulated other comprehensive loss (5,363) (5,881)
TOTAL STOCKHOLDERS’ EQUITY 153,751 146,175
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 347,267 $ 318,745
 
 
             
 

LIFETIME BRANDS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(unaudited)

 
Nine Months Ended
September 30,
2012     2011
OPERATING ACTIVITIES
Net income $ 5,793 $ 8,647

Adjustments to reconcile net income to net cash provided by (used in) operating

 activities:

Depreciation and amortization 6,878 6,061
Amortization of debt discount - 543
Deferred rent (421 ) (41 )
Deferred income taxes (687 ) 573
Stock compensation expense 2,131 2,105
Undistributed equity earnings (1,201 ) (1,971 )
Loss on early retirement of debt 1,363 -
Intangible asset impairment 1,069 -
Changes in operating assets and liabilities (excluding the effects of business

acquisitions)

Accounts receivable (13,170 ) (23,367 )
Inventory (18,617 ) (23,223 )
Prepaid expenses, other current assets and other assets (883 ) 1,040
Accounts payable, accrued expenses and other liabilities 10,642 8,601
Income taxes payable   (758 )   (6,094 )
NET CASH USED IN OPERATING ACTIVITIES   (7,861 )   (27,126 )
 
INVESTING ACTIVITIES
Purchases of property and equipment (3,371 ) (3,366 )
Net proceeds from sale of property   15     -  
NET CASH USED IN INVESTING ACTIVITIES   (3,356 )   (3,366 )
 
FINANCING ACTIVITIES
Proceeds from Revolving Credit Facility, net of repayments 16,039 52,645
Proceeds from Senior Secured Term Loan 35,000 -
Repayment of Term Loan (40,000 ) -
Repurchase of 4.75% convertible senior notes - (24,100 )
Proceeds from exercise of stock options 380 26
Excess tax benefits from exercise of stock options - 8
Payment of capital lease obligations - (74 )
Cash dividend paid   (935 )   (604 )
NET CASH PROVIDED BY FINANCING ACTIVITIES   10,484     27,901  
 
Effect of foreign exchange on cash (490 ) -
 
DECREASE IN CASH AND CASH EQUIVALENTS (1,223 ) (2,591 )
Cash and cash equivalents at beginning of period   2,972     3,351  
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,749   $ 760  
 
 
   
 

LIFETIME BRANDS, INC.

Supplemental Information

(In thousands)

 
Consolidated EBITDA for the four quarters ended
September 30, 2012
Three months ended September 30, 2012 $ 11,568
Three months ended June 30, 2012 5,584
Three months ended March 31, 2012 6,222
Three months ended December 31, 2011   14,342
Total for the four quarters $ 37,716
 
 
Consolidated EBITDA for the four quarters ended
September 30, 2011
Three months ended September 30, 2011 $ 13,524
Three months ended June 30, 2011 7,512
Three months ended March 31, 2011 2,720
Three months ended December 31, 2010   17,544
Total for the four quarters $ 41,300
 
 
                             
 

Reconciliation of GAAP to Non-GAAP Operating Results

 

Consolidated EBITDA:

 
Three Months Ended
September 30,

2012

June 30,

2012

March 31,

2012

December 31, 2011

Net income as reported $ 3,890 $ 559 $ 1,344 $ 5,419
Subtract out:
Undistributed equity earnings (695 ) (108 ) (398 ) (925 )
Add back:
Income tax provision (benefit) 1,930 94 588 3,513
Interest expense 1,271 1,675 1,698 1,951
Loss on early retirement of debt 1,015 348 - -
Intangible asset impairment 1,069 - - -
Depreciation and amortization 2,409 2,262 2,207 2,336
Stock compensation expense 679 754 698 690
Permitted acquisition related expenses   -     -     85     1,358  
Consolidated EBITDA $ 11,568   $ 5,584   $ 6,222   $ 14,342  
 
 
 
 
 

 

LIFETIME BRANDS, INC.

Supplemental Information

(In thousands - except per share data)

 

Reconciliation of GAAP to Non-GAAP Operating Results (continued)

 

Consolidated EBITDA:

 
Three Months Ended
September 30,

2011

June 30,

2011

March 31,

2011

December 31, 2010

Net income as reported $ 7,533 $ 2,063 $ (949 ) $ 13,928
Subtract out:
Undistributed equity earnings (1,113 ) (393 ) (465 ) (733 )
Extraordinary item, net of taxes - - - (2,477 )
Add back:
Income tax provision (benefit) 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
Stock compensation expense 682 675 748 746
Permitted acquisition related expenses   498     -     -     -  
Consolidated EBITDA $ 13,524   $ 7,512   $ 2,720   $ 17,544  
 
 
               
 

Adjusted Net Income and Adjusted Diluted Income Per Share:

 
Three Months Ended Nine Months Ended
September 30, September 30,
2012       2011 2012       2011
 
Net income as reported $ 3,890 $ 7,533 $ 5,793 $ 8,647
Adjustments:
Intangible asset impairment, net of tax 645 - 645 -
Loss on early retirement of debt, net of tax 612 - 822 -
Retirement benefit obligation expense, net of tax - - 268 -
Acquisition related expenses, net of tax - 311 85 306

Equity in earnings of World Alliance

 Enterprises Limited

- (133 ) - (448 )
Normalized tax provision on reported income   -   (1,115 )   -   (784 )
Adjusted net income $ 5,147 $ 6,596   $ 7,613 $ 7,721  
Adjusted diluted income per share $ 0.40 $ 0.52   $ 0.60 $ 0.62  
 
 




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