Lifetime Brands (LCUT) Q4 2010 earnings summary

Executive summary

• FY2010 net sales rose 6.8% to $443.2M; operating income increased to $29.8M from $15.6M, and net income reached $20.3M, including a $2.5M extraordinary gain.

• Q4 net sales were $142.6M and net income was $13.9M; Q4 included the $2.5M extraordinary gain.

Financial highlights

• FY2010 gross profit was $169.4M; cost of sales was 61.8% of sales versus 62.1% in 2009.

• Excluding the extraordinary gain, FY2010 net income was $17.8M and basic EPS was $1.48; reported net income was $20.3M and basic EPS was $1.68.

• Interest expense fell to $9.4M from $13.2M, primarily due to lower average borrowings and rates following the 2010 refinancing.

• Operating cash flow was $30.1M versus $64.0M in 2009; year-end cash increased to $3.4M from $0.7M.

Outlook and guidance

• Plans called for 4,000–5,000 new or redesigned products in 2011, following more than 4,000 introduced in 2010.

• Planned 2011 capital expenditures were not expected to exceed $4.0M.

• Sales are highly seasonal: Q3 and Q4 generated 60% of FY2010 sales; inventory typically builds from June through October ahead of holiday shipments.