Lifetime Brands (LCUT) Q4 2007 earnings summary

Executive summary

• FY2007 net sales rose 7.9% to $493.7M, while operating income fell to $20.8M and net income declined to $8.9M.

• Wholesale growth was supported by the full-year inclusion of Syratech and Food Preparation growth; direct-to-consumer sales and operating results weakened.

• Growth strategy centered on established brands, product innovation, acquisitions and broader distribution; over 3,600 products were introduced or redesigned in 2007.

Financial highlights

• Revenue was $493.7M, up 7.9% YoY; operating income was $20.8M versus $29.8M, and net income was $8.9M versus $15.5M.

• Basic and diluted EPS were $0.69 and $0.68, respectively, versus $1.18 and $1.14 in 2006.

• Interest expense increased to $8.4M from $4.6M; other income of $3.9M included a $3.7M gain on the sale of the former headquarters.

• Operating cash flow was $31.6M, compared with a $11.5M use in 2006; inventory reduction and lower working-capital investment supported the improvement.

Outlook and guidance

• 2008 product plans call for approximately 4,000 new or redesigned products.

• Up to $5.0M of additional pre-tax store-closure charges was estimated for 2008; 30 underperforming stores were slated to close by the end of Q1.

• 2008 capital expenditures were estimated at $7.0M, funded from operations and, if needed, credit-facility borrowings.

• Cash, internally generated funds and available credit were expected to fund operations for the next 12 months.