Lifetime Brands Annual Report 2011 Lifetime Brands, Inc
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IDENTIFYING OPPORTUNITIES Lifetime Brands Annual Report 2011 Lifetime Brands, Inc. 1000 Stewart Avenue, Garden City, New York 11530 FINANCIAL HIGHLIGHTS 500000 50 4.0 200 $444 3.5 400000 40 3.0 150 2.5 300000 30 $98 2.0 100 200000 20 1.5 $14 $1.12 1.0 50 100000 10 0.5 0 2008 2009 2010 2011 2008 2009 2010 2011 2008 2009 2010 2011 2008 2009 2010 2011 NET SALES NET INCOME (LOSS) DILUTED INCOME (LOSS) DEBT IN MILLIONS IN MILLIONS PER COMMON SHARE IN MILLIONS Year Ended December 31, (in thousands, except per share data) 2008 2009 2010 2011 NET SALES $487,935 $415,040 $443,171 $444,417 NET INCOME (LOSS) ($47,755) $2,715 $20,261 $14,066 DILUTED INCOME (LOSS) PER COMMON SHARE ($3.99) $0.22 $1.64 $1.12 DEBT $157,164 $95,128 $77,657 $97,625 OffICERS AND DIRECTORS OffICES JEFFREY SIEGEL CORPORATE HEADQUARTERS Chairman of the Board of Directors 1000 Stewart Avenue Chief Executive Officer and President Garden City, NY 11530 (516) 683-6000 RONALD SHIFTAN Vice Chairman of the Board of Directors Chief Operating Officer CORPORATE INFORMATION DANIEL SIEGEL Executive Vice President CORPORATE COUNSEL CRAIG PHILLIPS Samuel B. Fortenbaugh III Senior Vice President – Distribution New York, NY 10111 and Director INDEPENDENT REGISTERED LAURENCE WINOKER PUBLIC ACCOUNTING FIRM Senior Vice President – Finance Ernst & Young LLP Treasurer and Chief Financial Officer Jericho, NY 11753 SARA SHINDEL TRANSFER AGENT & REGISTRAR General Counsel and Secretary Computershare 480 Washington Boulevard DAVID E. R. DANGOOR Jersey City, NJ 07310 Director ANNUAL MEETING MICHAEL JEARY The Annual Meeting of Shareholders will Director be held at 10:30 a.m. on Thursday, June 13, 2012, at the Corporate Headquarters. JOHN KOEGEL Director CHERRIE NANNINGA Director WILLIAM U. WESTERFIELD Director IDENTIFYING OPPORTUNITIES Lifetime Brands, Inc. We are one of the world’s leading designers, developers, and marketers of a broad range of nationally branded consumer products used in the home. Our categories include Kitchenware, Cutlery, Cutting Boards, Bakeware, Cookware, Dinnerware, Flatware, Glassware, Pantryware, Spices and Home Décor. Mission Statement We are committed to delivering five-star experiences to the earth’s consumers through innovative products, services and solutions for the home. In return, they reward us with increased market share and profitability, allowing our associates, stakeholders and shareholders to prosper. Lifetime Brands, Inc. | 2011 Annual Report 1 IDENTIFYING OPPORTUNITIES Dear Fellow Shareholders I am proud of Lifetime’s achievements in 2011. Our core U.S. wholesale businesses, Kitchenware and Tabletop, which account for approximately 80% of the Company’s revenue, performed well in 2011. In our Kitchenware categories, we recorded sales growth US – is clearly the right place for us to establish our key of 3.5%, all of which was organic, while our Tabletop brand, as the Mikasa® style of contemporary patterns categories achieved actual sales growth of 14.5%, with and designs, which has proven very successful in the 9.1% organic growth. These gains were accomplished United States, also matches the shopping preferences in spite of weak consumer demand, reflecting the of young, urban, middle-income Chinese families. critical importance of our commitment to innovation King’s Flair (Group) Development Company, Ltd., and our successful effort to gain market share. our joint venture partner and a company Lifetime has done business with for more than 25 years, has INTERNATIONAL EXPANSION a solid infrastructure that is highly experienced in Five years ago, recognizing that the U.S. market for distributing better brands to the Chinese market. housewares products was mature, we embarked on a journey to transform our company into a global enterprise. To further accelerate our international growth, we also acquired Creative Tops Holdings Limited, a leading provider of tableware Lifetime’s initial step was to purchase a 30% equity interest and kitchenware products in the UK and its Hong Kong-based in Grupo Vasconia SAB, Mexico’s largest housewares sourcing affiliate, CreativeT ops Far East Limited. Our goal is to company. The following year, we joined with Accent- use Creative Tops as a base for building a powerful housewares Fairchild Group, Inc. to form Lifetime Brands Canada. company in the UK, as well as a platform for expanding our In the few years since we made our initial investments, both tabletop businesses throughout Europe. Grupo Vasconia and Lifetime Brands Canada have seen rapid growth, largely due to their access to Lifetime’s brands, ADDITIONAL INTERNATIONAL VENTURES product design groups and Asia sourcing infrastructure. Early in 2011, we formed Housewares Corporation of Asia In fact, both had record years in sales and profits in 2011. Limited, a Hong Kong-based joint venture that supplies direct import kitchenware programs to retailers in North, Central and We further broadened our geographic reach in 2011 by South America. Our partners in this venture are Accent-Fairchild making investments in Brazil and China. These are two large Group, Grupo Vasconia and Fackelmann GmbH & Co., a German and rapidly growing markets where consumer classes are company with ownership interests in a number of Chinese expanding and enthusiastic about acquiring household goods factories. Our goal is to use HCA to offer retailers in the US that with leading brands that were previously out of their reach. want to develop proprietary kitchenware programs sourced directly from Asia, access to well-established product design BRAZIL In Brazil, we acquired a 40% equity interest in GS resources, factories and sourcing networks. Internacional S/A, a leading wholesale distributor of branded housewares products. GSI markets Between our own company and the companies in which dinnerware, glassware, home décor, kitchenware and we have made a significant investment, we now have the barware to more than 7,000 customers, including infrastructure to reach customers on four continents. major department stores, housewares retailers We expect a very significant part of our future sales and and independent shops. By combining GSI’s profits will come from outside of the United States. experience and market knowledge with access to Lifetime’s product lines, brands and sourcing, we NEW BRAND INITIATIVES expect GSI to emerge as a preeminent housewares In the past, I have written that Lifetime’s success is company in the Mercosur Area, which encompasses based on its brands, its commitment to innovation and Argentina, Brazil, Paraguay and Uruguay. its sourcing capabilities. As we grow internationally, we need to rely on brands that we own and that we CHINA In China, we established a joint venture to market can use on a wide range of products globally. and that Mikasa® dinnerware, glassware and giftware products. are portable - brands that we can use globally. China’s rapidly growing middle class – which within a few years could equal the total population of the 1 Lifetime Brands, Inc. | 2011 Annual Report IDENTIFYING OPPORTUNITIES To complement our company-owned Mikasa® brand, we have developed two new and very exciting brand concepts: SAvoRA™ Savora™ is a new brand of high-end kitchen products we believe set a new standard in kitchenware. Our designers drew inspiration from every corner of modern lifestyles, including fashion, cosmetics and even luxury vehicles, to create Savora’s form and color palette. The result is a high-end line of kitchen tools as functional as they are beautiful. Savora™ products were first shown at the International Home + Housewares Show in March 2012 and will be available at selected retailers later this year. KIZMOS™ Kizmos ™ is a line of whimsical kitchenware that incorporates elements of personality, color and fun to everyday items. Their distinctive bright colors and fun shapes are intended to add delight to any kitchen. The playful personality of each item appeals to the fun nature of cooking itself and every item in the collection cheerfully makes cooking and entertaining enjoyable for the whole family. CREATING LoNG-TERM SHAREHOLDER VALUE Lifetime’s Board of Directors is committed to enhancing shareholder value through growth in revenues, net income Jeffrey Siegel and diluted earnings per share. Lifetime’s strategy for achieving Chairman of the Board, these objectives is to introduce new products, to increase President and Chief Executive Officer its penetration of existing distribution channels, to pursue strategic acquisitions in the United States and to expand internationally while maintaining a healthy financial position. I hope you share our excitement and optimism about the future. Jeffrey Siegel Chairman of the Board, President and Chief Executive Officer Lifetime Brands, Inc. | 2011 Annual Report 2 IDENTIFYING OPPORTUNITIES Identifying Opportunities Lifetime Brands is constantly exploring opportunities to increase our presence in the marketplace. In 2011, we capitalized on three such opportunities, including expanding our overseas operations, acquiring new companies, and partnering with an established culinary icon. To further accelerate growth outside of the U.S., Lifetime of cookware, kitchen tools, gadgets and cutting boards. Brands acquired Creative Tops Group, a leading UK- Guy plugs his electrifying personality into each piece, fusing based supplier of private label and branded tableware his creativity and signature style with quality and performance. and kitchenware products. Creative Tops supplies major His outrageous culinary passion is evident