Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2018 | Apr. 30, 2018 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | LCUT | |
Entity Registrant Name | LIFETIME BRANDS, INC | |
Entity Central Index Key | 874,396 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 20,605,314 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 11,904 | $ 7,600 |
Accounts receivable, less allowances of $6,164 at March 31, 2018 and $6,190 at December 31, 2017 | 87,622 | 108,033 |
Inventory | 177,567 | 132,436 |
Prepaid expenses and other current assets | 16,262 | 10,354 |
TOTAL CURRENT ASSETS | 293,355 | 258,423 |
PROPERTY AND EQUIPMENT, net | 27,052 | 23,065 |
INVESTMENTS | 24,517 | 23,978 |
INTANGIBLE ASSETS, net | 371,087 | 88,479 |
DEFERRED INCOME TAXES | 8,889 | 5,826 |
OTHER ASSETS | 2,015 | 1,750 |
TOTAL ASSETS | 726,915 | 401,521 |
CURRENT LIABILITIES | ||
Current maturity of term loan | 1,285 | |
Short term loan | 151 | 69 |
Accounts payable | 34,119 | 25,461 |
Accrued expenses | 49,588 | 44,121 |
Income taxes payable | 104 | 1,864 |
TOTAL CURRENT LIABILITIES | 85,247 | 71,515 |
DEFERRED RENT & OTHER LONG-TERM LIABILITIES | 20,569 | 20,249 |
DEFERRED INCOME TAXES | 34,419 | 4,423 |
INCOME TAXES PAYABLE, LONG-TERM | 311 | 311 |
REVOLVING CREDIT FACILITY | 45,047 | 94,744 |
TERM LOAN | 263,581 | |
STOCKHOLDERS' EQUITY | ||
Preferred stock, $1.00 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: 50,000,000 at March 31, 2018 and December 31, 2017; shares issued and outstanding: 20,605,877 at March 31, 2018 and 14,902,527 at December 31, 2017 | 206 | 149 |
Paid-in capital | 255,408 | 178,909 |
Retained earnings | 48,068 | 60,546 |
Accumulated other comprehensive loss | (25,941) | (29,325) |
TOTAL STOCKHOLDERS' EQUITY | 277,741 | 210,279 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 726,915 | $ 401,521 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Accounts receivable, allowances | $ 6,164 | $ 6,190 |
Preferred stock, par value | $ 1 | $ 1 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 50,000,000 | 50,000,000 |
Common stock, shares issued | 20,605,877 | 14,902,527 |
Common stock, shares outstanding | 20,605,877 | 14,902,527 |
Preferred stock Series A | ||
Preferred stock, shares authorized | 100 | 100 |
Preferred stock, issued | 0 | 0 |
Preferred stock, outstanding | 0 | 0 |
Preferred stock Series B | ||
Preferred stock, shares authorized | 2,000,000 | 2,000,000 |
Preferred stock, issued | 0 | 0 |
Preferred stock, outstanding | 0 | 0 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Net sales | $ 118,169 | $ 113,356 |
Cost of sales | 73,082 | 69,415 |
Gross margin | 45,087 | 43,941 |
Distribution expenses | 17,822 | 13,433 |
Selling, general and administrative expenses | 40,175 | 32,382 |
Restructuring expenses | 406 | |
Loss from operations | (13,316) | (1,874) |
Interest expense | (2,103) | (941) |
Loss on early retirement of debt | (66) | |
Loss before income taxes and equity in earnings | (15,485) | (2,815) |
Income tax benefit | 3,810 | 944 |
Equity in earnings, net of taxes | 77 | 540 |
NET LOSS | $ (11,598) | $ (1,331) |
BASIC LOSS PER COMMON SHARE | $ (0.70) | $ (0.09) |
DILUTED LOSS PER COMMON SHARE | (0.70) | (0.09) |
Cash dividends declared per common share | $ 0.0425 | $ 0.0425 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Net loss | $ (11,598) | $ (1,331) |
Other comprehensive income (loss), net of taxes: | ||
Translation adjustment | 3,380 | 1,976 |
Derivative fair value adjustment | (14) | 13 |
Effect of retirement benefit obligations | 18 | 15 |
Other comprehensive income, net of taxes | 3,384 | 2,004 |
Comprehensive income (loss) | $ (8,214) | $ 673 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
OPERATING ACTIVITIES | ||
Net loss | $ (11,598) | $ (1,331) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Depreciation and amortization | 4,309 | 3,286 |
Amortization of financing costs | 220 | 217 |
Deferred rent | 370 | (140) |
Stock compensation expense | 838 | 804 |
Undistributed equity in earnings, net of taxes | (77) | (540) |
Loss on early retirement of debt | 66 | |
Changes in operating assets and liabilities (excluding the effects of business acquisitions) | ||
Accounts receivable | 48,119 | 43,044 |
Inventory | (17,303) | (18,648) |
Prepaid expenses, other current assets and other assets | (1,476) | (1,073) |
Accounts payable, accrued expenses and other liabilities | (7,050) | (18,135) |
Income taxes receivable | (132) | |
Income taxes payable | (3,880) | (1,373) |
NET CASH PROVIDED BY OPERATING ACTIVITIES | 12,538 | 5,979 |
INVESTING ACTIVITIES | ||
Purchases of property and equipment | (2,408) | (373) |
Filament acquisition, net of cash acquired | (217,932) | |
NET CASH USED IN INVESTING ACTIVITIES | (220,340) | (373) |
FINANCING ACTIVITIES | ||
Proceeds from revolving credit facility | 73,725 | 66,298 |
Repayments of revolving credit facility | (123,938) | (70,620) |
Proceeds from Term Loan | 275,000 | |
Repayment of Credit Agreement term loan | (2,500) | |
Proceeds from short term loan | 79 | 119 |
Payment of financing costs | (11,049) | (29) |
Payment of equity issuance costs | (929) | |
Payments for capital leases | (24) | |
Payments of tax withholding for stock based compensation | (258) | |
Proceeds from exercise of stock options | 92 | |
Cash dividends paid | (652) | (613) |
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | 211,954 | (7,253) |
Effect of foreign exchange on cash | 152 | 53 |
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 4,304 | (1,594) |
Cash and cash equivalents at beginning of period | 7,600 | 7,883 |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ 11,904 | $ 6,289 |
BASIS OF PRESENTATION AND SUMMA
BASIS OF PRESENTATION AND SUMMARY ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2018 | |
BASIS OF PRESENTATION AND SUMMARY ACCOUNTING POLICIES | NOTE A — BASIS OF PRESENTATION AND SUMMARY ACCOUNTING POLICIES Organization and business Lifetime Brands, Inc. (the “Company”) designs, sources and sells branded kitchenware, tableware and other products used in the home and markets its products under a number of brand names and trademarks, which are either owned or licensed by the Company, or through retailers’ private labels. The Company markets and sells its products principally on a wholesale basis to retailers. The Company also markets and sells a limited selection of its products directly to consumers through third parties and its own internet websites. On March 2, 2018, the Company expanded its portfolio of products and brands through the acquisition of Taylor Holdco LLC and its subsidiaries (doing business as Filament Brands) (“Filament”). Filament primarily designs, markets, and distributes consumer and food service precision measurement products, including kitchen scales, thermometers and timers, bath scales, wine accessories, kitchen tools, hydration products, and select outdoor products. The three months ended March 31, 2018 includes the operations of Filament for the period from March 2, 2018 to March 31, 2018. See Note C for additional information. Basis of presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q Regulation S-X. 10-K Operating results for the three month period ended March 31, 2018 are not necessarily indicative of the results that may be expected for the year ending December 31, 2018. The Company’s business and working capital needs are highly seasonal, with a majority of sales occurring in the third and fourth quarters. In 2017 and 2016, net sales for the third and fourth quarters accounted for 60% and 61% of total annual net sales, respectively. In anticipation of the pre-holiday Revenue recognition The Company sells products wholesale, to retailers and distributors, and retail, directly to the consumer. Wholesale sales and retail sales are recognized at the point in time the customer obtains control of the products, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those products. The Company offers various sales incentives and promotional programs to its customers in the normal course of business. These incentives and promotions typically include arrangements such as cooperative advertising, buydowns, volume rebates and discounts. These arrangements and returns are reflected as reductions of revenue at the time of sale. See Note B for additional information. Cost of sales Cost of sales consists primarily of costs associated with the production and procurement of product, inbound freight costs, purchasing costs, royalties and other product procurement related charges. Distribution expenses Distribution expenses consist primarily of warehousing expenses and freight-out Accounts receivable The Company periodically reviews the collectability of its accounts receivable and establishes allowances for estimated losses that could result from the inability of its customers to make required payments. A considerable amount of judgment is required to assess the ultimate realization of these receivables including assessing the initial and on-going The Company also maintains an allowance for anticipated customer deductions. The allowances for deductions are primarily based on contracts with customers. However, in certain cases the Company does not have a formal contract and, therefore, customer deductions are non-contractual. non-contractual Receivable purchase agreement The Company has an uncommitted Receivables Purchase Agreement with HSBC Bank USA, National Association (“HSBC”), as Purchaser (the “Receivables Purchase Agreement”). The sale of accounts receivable, under the Company’s Receivable Purchase Agreement with HSBC, are reflected as a reduction of accounts receivable in the Company’s condensed consolidated balance sheet at the time of sale and any related expense is included in selling, general and administrative expenses in the Company’s condensed consolidated statements of operations. Pursuant to this agreement, the Company sold to HSBC $19.6 million and $21.6 million of Receivables during the three months ended March 31, 2018 and 2017, respectively. A charge of $90,000 and $67,000 related to the sale of the Receivables is included in selling, general and administrative expenses in the condensed consolidated statements of operations for the three months ended March 31, 2018 and 2017, respectively. Inventory Inventory consists principally of finished goods sourced from third-party suppliers. Inventory also includes finished goods, work in process and raw materials related to the Company’s manufacture of sterling silver products. Inventory is priced using the lower of cost (first-in, first-out The components of inventory are as follows: March 31, 2018 December 31, 2017 (in thousands) Finished goods $ 174,565 $ 129,611 Work in process 1,738 1,548 Raw materials 1,264 1,277 Total $ 177,567 $ 132,436 Fair value of financial instruments The Company determined that the carrying amounts of cash and cash equivalents, accounts receivable and accounts payable are reasonable estimates of their fair values because of their short-term nature. The Company determined that the carrying amounts of borrowings outstanding under its revolving credit facility, term loan and short term loan approximate fair value since such borrowings bear interest at variable market rates. Derivatives The Company accounts for derivative instruments in accordance with Accounting Standard Codification (“ASC”) Topic No. 815, Derivatives and Hedging. ASC Topic No. 815 requires that all derivative instruments be recognized on the balance sheet at fair value as either an asset or liability. Changes in the fair value of derivatives that qualify as hedges and have been designated as part of a hedging relationship for accounting purposes have no net impact on earnings until the hedged item is recognized in earnings. The change in the fair value of hedges are included in accumulated other comprehensive income (loss) and is subsequently recognized in the Company’s condensed consolidated statements of operations to mirror the location of the hedged items impacting earnings. For derivatives that do not qualify or are not designated as hedging instruments for accounting purposes, changes in fair value are recorded in operations. Goodwill, intangible assets and long-lived assets Goodwill and intangible assets deemed to have indefinite lives are not amortized but, instead, are subject to an annual impairment assessment. Additionally, if events or conditions were to indicate the carrying value of a reporting unit may not be recoverable, the Company would evaluate goodwill and other intangible assets for impairment at that time. As it relates to the goodwill assessment, the Company first assesses qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step Intangibles – Goodwill and Other two-step two-step two-step Long-lived assets, including intangible assets deemed to have finite lives, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Impairment indicators include, among other conditions, cash flow deficits, historic or anticipated declines in revenue or operating profit or material adverse changes in the business climate that indicate that the carrying amount of an asset may be impaired. When impairment indicators are present, the recoverability of the asset is measured by comparing the carrying value of the asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the asset is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Employee healthcare The Company self-insures certain portions of its health insurance plans. The Company maintains an accrual for unpaid claims and estimated claims incurred but not yet reported (“IBNR”). Although management believes that it uses the best information available to estimate claims IBNR, actual claims may vary significantly from estimated claims. Restructuring expenses Costs associated with restructuring activities are recorded at fair value when a liability has been incurred. A liability has been incurred at the point of closure for any remaining operating lease obligations and at the communication date for severance. In connection with the Company’s March 2018 acquisition of Filament, the Company commenced a restructuring plan to integrate the operations of Filament with the Company’s operations and realize the savings expected from the synergies of the acquisition. During the three months ended March 31, 2018 the Company incurred $0.4 million of restructuring charges, all of which is accrued. Adoption of new accounting pronouncements Effective January 1, 2018, the Company adopted Accounting Standards Update (“ASU”) 2017-01, Clarifying the Definition of a Business Effective January 1, 2018, the Company adopted Accounting Standards Codification (“ASC”) Topic 606. The standard supersedes existing revenue recognition guidance and replaces it with a five step revenue model with a core principle that an entity recognizes revenue to reflect the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. The Company adopted the new guidance under the modified retrospective approach. The adoption of this guidance did not have a significant impact on the Company’s condensed consolidated financial statements. The adoption resulted in the recognition of right of a return asset related to certain product returns by increasing the returns liability; this gross up had no corresponding impact on the Condensed Consolidated Statement of Operations. Effective January 1, 2018, the Company adopted ASU 2017-12, Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities (Topic 815), both non-financial and Accounting pronouncements to be adopted in future periods In February 2018, the Financial Accounting Standards Board (“FASB”) issued ASU 2018-02, Income Statement- Reporting Comprehensive Income: Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments In February 2016, the FASB issued ASU 2016-02, Leases, right-of-use right-of-use |
REVENUE
REVENUE | 3 Months Ended |
Mar. 31, 2018 | |
REVENUE | NOTE B —REVENUE The Company sells products wholesale, to retailers and distributors, and retail, directly to the consumer. Wholesale sales and retail sales are recognized at the point in time the customer obtains control of the products in an amount that reflects the consideration the Company expects to be entitled to in exchange for those products. To indicate the transfer of control, the Company must have a present right to payment, legal title must have passed to the customer, the customer must have the significant risks and rewards of ownership, and where acceptance is not a formality, the customer must have accepted the product or service. The Company’s principal terms of sale are FOB Shipping Point, or equivalent, and, as such, the Company primarily transfers control and records revenue for product sales upon shipment. Sales arrangements with delivery terms that are not FOB Shipping Point are not recognized upon shipment and the transfer of control for revenue recognition is evaluated based on the associated shipping terms and customer obligations. Shipping and handling fees that are billed to customers in sales transactions are included in net sales and amounted to $545,000 and $561,000 for the three months ended March 31, 2018 and 2017, respectively. Net sales exclude taxes that are collected from customers and remitted to the taxing authorities. The Company offers various sales incentives and promotional programs to its wholesale customers from time to time in the normal course of business. These incentives and promotions typically include arrangements such as cooperative advertising, buydowns, volume rebates and discounts. These arrangements represent forms of variable consideration, and an estimate of sales returns are reflected as reductions in net sales in the Company’s condensed consolidated statements of operations. These estimates are based on historical experience and other known factors or as the most likely amount in a range of possible outcomes. On a quarterly basis, variable consideration is assessed on a portfolio approach in estimating the extent to which the components of variable consideration are constrained. Payment terms with customers vary by customer, but generally range from 30 to 90 days or at the point of sale for the Company’s retail direct sales. The Company incurs certain direct incremental costs to obtain contracts with customers, such as sales-related commissions, where the recognition period for the related revenue is less than one year. These costs are expensed as incurred and recorded within selling, general and administrative expenses in the condensed consolidated statement of operations. Incidental items that are immaterial in the context of the contract are expensed as incurred. The following tables present the Company’s net sales disaggregated by segment, product category and geographic region for the three months ended March 31, 2018 (in thousands). U.S. Wholesale Kitchenware $ 56,965 Tableware 20,905 Home Solutions 12,925 International Kitchenware 13,000 Tableware 8,846 Retail Direct 5,528 $ 118,169 United States $ 91,714 United Kingdom 15,623 Rest of World 10,832 $ 118,169 |
ACQUISITION
ACQUISITION | 3 Months Ended |
Mar. 31, 2018 | |
ACQUISITION | NOTE C —ACQUISITION On December 22, 2017, the Company entered into an agreement providing for the acquisition of Filament by the Company. At a special meeting of stockholders held on February 28, 2018, stockholders approved the issuance of shares pursuant to the agreement and the acquisition was completed on March 2, 2018. The aggregate consideration for Filament was $295.8 million, $218.9 million of cash consideration and 5,593,116 newly issued shares of the Company’s common stock, with a value equal to $76.9 million, based on the market value of the Company’s common stock as of March 2, 2018. The estimated cash portion of the consideration is subject to adjustments as defined in the agreement. The acquisition is being accounted for as a business combination using the acquisition method of accounting in accordance with FASB ASC Topic 805, which established a new basis of accounting for all identifiable assets acquired and liabilities assumed at fair value. The purchase price has been determined to be as follows (in thousands): Cash $ 218,917 Share consideration 76,905 Total purchase price $ 295,822 The purchase price was allocated based on the Company’s preliminary estimate of the fair value of the assets acquired and liabilities assumed, as follows (in thousands): Accounts receivable $ 26,453 Inventory 26,696 Other assets 10,086 Other liabilities (24,393 ) Deferred income tax (26,633 ) Goodwill and other intangibles 283,613 Total allocated value $ 295,822 Goodwill results from such factors as an assembled workforce. The total amount of goodwill is not expected to be deductible for tax purposes. The goodwill and other intangible assets are primarily included in the U.S. Wholesale segment. Customer relationships are amortized on a straight-line basis over their estimated useful lives (see Note E). The three months ended March 31, 2018 includes the operations of Filament for the period from March 2, 2018, the date of acquisition, to March 31, 2018. The condensed consolidated statement of operations for the three months ended March 31, 2018, include $9.3 million of net sales and $1.1 million net loss from operations contributed by Filament. Unaudited Pro forma Results The following table presents the Company’s pro forma consolidated net sales, loss before income taxes and equity in earnings and net loss for the three months ended March 31, 2018 and March 31, 2017. The unaudited pro forma results include the historical statement of operations information of the Company and of Filament, giving effect to the Filament acquisition and related financing as if they had occurred at the beginning of the periods presented. Unaudited pro forma results Three Months Ended March 31, 2018 March 31, 2017 (In thousands, except per share data) Net sales $ 143,980 $ 158,270 Loss before income taxes and equity in earnings (15,844 ) (4,962 ) Net loss (11,868 ) (2,566 ) Basic and diluted loss per common share (0.58 ) (0.13 ) The pro forma results, prepared in accordance with U.S. GAAP, include the following pro forma adjustments related to the Filament acquisition: (1) as a result of a $1.5 million increase in the fair value of acquired inventory at the acquisition date, the Company recorded a $0.3 million charge in cost of sales in the three months ended March 31, 2018 condensed consolidated financial statements. The pro forma adjustments reflect the elimination of this charge; (2) a net increase in amortization expense related to the fair value of the identifiable intangible assets of $0.3 million for the three months ended March 31, 2018 and a net decrease in amortization expense related to the fair value of the identifiable intangible assets of $0.2 million in the three months ended March 31, 2017; (3) the elimination of acquisition costs recorded in the three months ended March 31, 2018 of $0.8 million incurred by the Company; (4) an adjustment to reflect the refinancing of the Company’s debt in connection with the acquisition. The three months ended March 31, 2018 and 2017 reflects a net decrease of $0.9 million and $1.4 million, respectively, for the change in interest expense, amortization of debt issuance costs and elimination of historical debt and preferred interest expense of Filament; (5) an adjustment to reflect additional compensation for a key executive as a result of the acquisition; (6) an increase in the weighted average shares outstanding to reflect the issuance of consideration shares. The unaudited pro forma results do not include any revenue or cost reductions that may be achieved through the business combination, or the impact of non-recurring The unaudited pro forma results are not necessarily indicative of the operating results that would have occurred if the Filament acquisition had been completed as of the date for which the pro forma financial information is presented. In addition, the unaudited pro forma results do not purport to project the future condensed consolidated operating results of the combined company. |
INVESTMENTS
INVESTMENTS | 3 Months Ended |
Mar. 31, 2018 | |
INVESTMENTS | NOTE D —INVESTMENTS The Company owns approximately a 30% interest in Grupo Vasconia S.A.B. (“Vasconia”), an integrated manufacturer of aluminum products and one of Mexico’s largest housewares companies. Shares of Vasconia’s capital stock are traded on the Bolsa Mexicana de Valores, the Mexican Stock Exchange. The Quotation Key is VASCONI. The Company accounts for its investment in Vasconia using the equity method of accounting and records its proportionate share of Vasconia’s net income in the Company’s statement of operations. Accordingly, the Company has recorded its proportionate share of Vasconia’s net income (reduced for amortization expense related to the customer relationships acquired) for the three month periods ended March 31, 2018 and 2017 in the accompanying condensed consolidated statements of operations. The value of the Company’s investment balance has been translated from Mexican Pesos (“MXN”) to U.S. Dollars (“USD”) using the spot rates of MXN 18.16 and MXN 19.68 at March 31, 2018 and December 31, 2017, respectively. The Company’s proportionate share of Vasconia’s net income has been translated from MXN to USD using the average exchange rates of MXN 18.71 and MXN 20.30 during the three months ended March 31, 2018 and 2017, respectively. The effect of the translation of the Company’s investment resulted in an increase to the investment of $0.7 million and $1.3 million during the three months ended March 31, 2018 and 2017, respectively (also see Note M). These translation effects are recorded in accumulated other comprehensive income (loss). Included within prepaid expenses and other current assets at March 31, 2018 and December 31, 2017 are amounts due from Vasconia of $112,000 and $64,000, respectively. Included within accrued expenses and accounts payable at March 31, 2018 and December 31, 2017 are amounts due to Vasconia of $7,000 and $0, respectively. A summarized statement of income information for Vasconia in USD and MXN is as follows: Three Months Ended March 31, 2018 2017 (in thousands) USD MXN USD MXN Net sales $ 39,570 $ 740,406 $ 36,823 $ 747,495 Gross profit 7,119 133,207 7,853 159,421 Income from operations 1,149 21,503 2,430 49,329 Net (loss) income (362 ) (6,776 ) 1,234 25,043 The Company recorded equity in earnings of Vasconia, net of taxes, of $77,000 and $0.5 million, for the three months ended March 31, 2018 and 2017, respectively. Equity in earnings for the three months ended March 31, 2018 and 2017, includes deferred tax benefit of $0.2 million in both periods, due to the requirement to record tax benefits for foreign currency translation gains and losses through other comprehensive income (loss), with a corresponding adjustment to deferred tax liabilities. As of March 31, 2018 and December 31, 2017, the fair value (based upon Vasconia’s quoted stock price) of the Company’s investment in Vasconia was $35.9 million and $31.8 million, respectively. The carrying value of the Company’s investment in Vasconia was $24.3 million and $23.8 million as of March 31, 2018 and December 31, 2017, respectively. |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 3 Months Ended |
Mar. 31, 2018 | |
INTANGIBLE ASSETS | NOTE E — INTANGIBLE ASSETS Intangible assets consist of the following (in thousands): March 31, 2018 December 31, 2017 Gross Accumulated Amortization Net Gross Accumulated Amortization Net Goodwill $ 98,889 $ — $ 98,889 $ 15,772 $ — $ 15,772 Indefinite-lived intangible assets: Trade names 64,816 — 64,816 7,616 — 7,616 Finite-lived intangible assets: Licenses 15,847 (9,489 ) 6,358 15,847 (9,375 ) 6,472 Trade names 33,841 (11,926 ) 21,915 33,368 (11,109 ) 22,259 Customer relationships 193,492 (19,298 ) 174,194 52,961 (16,966 ) 35,995 Other 5,781 (866 ) 4,915 1,165 (800 ) 365 Total $ 412,666 $ (41,579 ) $ 371,087 $ 126,729 $ (38,250 ) $ 88,479 A summary of the activities related to the Company’s intangible assets for the three months ended March 31, 2018 consists of the following (in thousands): Goodwill and Intangible Assets, December 31, 2017 $ 88,479 Goodwill acquired 82,613 Trade names acquired 57,200 Customer relationships acquired 139,200 Other intangibles acquired 4,600 Foreign currency translation adjustment 1,675 Amortization (2,680 ) Goodwill and Intangible Assets, March 31, 2018 $ 371,087 |
DEBT
DEBT | 3 Months Ended |
Mar. 31, 2018 | |
DEBT | NOTE F— DEBT In connection with the Company’s acquisition of Filament, on March 2, 2018, the Company entered into a new credit agreement (the “ABL Agreement”) with JPMorgan Chase Bank, N.A. (“JPMorgan”), as administrative agent, and the lenders and issuing banks party thereto, evidencing a senior secured asset-based revolving credit facility provided to the Company in the maximum aggregate principal amount of $150.0 million, which facility will mature on March 2, 2023, and a new loan agreement (the “Term Loan” and together with the ABL Agreement, the “Debt Agreements”) with the Company, as the borrower and a guarantor, the other guarantors, JPMorgan, as administrative agent, Golub Capital LLC, as syndication agent, and the lenders party thereto, providing for a senior secured term loan credit facility to the Company in the original principal amount of $275.0 million, which will mature on February 28, 2025. The Term Loan facility will be repaid, commencing June 30, 2018, in quarterly payments of principal equal to 0.25% of the original aggregate principal amount of the term loan facility. The maximum borrowing under the ABL Agreement may be increased to up to $200.0 million if certain conditions are met. One or more tranches of additional term loans (the “Incremental Facilities”) may be added under the Term Loan if certain conditions are met. The Incremental Facilities may not exceed the sum of (i) $50.0 million plus (ii) an unlimited amount so long as, in the case of (ii) only, the Company’s secured net leverage ratio, as defined in and computed pursuant to the Term Loan, is no greater than 3.75 to 1.00 subject to certain limitations and for the period defined pursuant to the Term Loan. At March 31, 2018, borrowings outstanding under the ABL Agreement were $45.0 million, and open letters of credit were $3.2 million. At March 31, 2018, availability under the ABL Agreement was approximately $79.5 million. Availability under the ABL Agreement depends on the valuation of certain current assets comprising the borrowing base. Due to the seasonality of the Company’s business, this may mean that the Company will have greater borrowing availability during the third and fourth quarters of each year. The borrowing capacity under the ABL Agreement will depend, in part, on eligible levels of accounts receivable and inventory that fluctuate regularly. Consequently, the $150.0 million commitment thereunder may not represent actual borrowing capacity. At March 31, 2018, $275.0 million was outstanding under the Term Loan. At March 31, 2018, unamortized debt issuance costs of $1.5 million and $8.7 million offset the short-term and long-term outstanding balances, respectively, of the Term Loan. The Company’s payment obligations under its Debt Agreements are unconditionally guaranteed by its existing and future U.S. subsidiaries with certain minor exceptions. Certain payment obligations under the ABL Agreement are also direct obligations of its foreign subsidiary borrowers designated as such under the ABL Agreement and, subject to limitations on such guaranty, are guaranteed by the foreign subsidiary borrowers, as well as by the Company. The obligations of the Company under the Debt Agreements and any hedging arrangements and cash management services and the guarantees by its domestic subsidiaries in respect of those obligations are secured by substantially all of the assets and stock (but in the case of foreign subsidiaries, limited to 65% of the capital stock in first-tier foreign subsidiaries and not including the stock of subsidiaries of such first-tier foreign subsidiaries) owned by the Company and the U.S. subsidiary guarantors, subject to certain exceptions. Such security interest consists of (1) a first-priority lien, subject to certain permitted liens, with respect to certain assets of the Company and its domestic subsidiaries (the “ABL Collateral”) pledged as collateral in favor of lenders under the ABL Agreement and a second-priority lien in the ABL Collateral in favor of the lenders under the Term Loan and (2) a first-priority lien, subject to certain permitted liens, with respect to certain assets of the Company and its domestic subsidiaries (the “Term Loan Collateral”) pledged as collateral in favor of lenders under the Term Loan and a second-priority lien in the Term Loan Collateral in favor of the lenders under the ABL Agreement. Borrowings under the revolving credit facility bear interest, at the Company’s option, at one of the following rates: (i) alternate base rate, defined, for any day, as the greater of the prime rate, a federal funds and overnight bank funding based rate plus 0.5% or one-month The term loan facility bears interest, at the Company’s option, at one of the following rates: (i) alternate base rate, defined, for any day, as the greater of the prime rate, a federal funds and overnight bank funding based rate plus 0.5% or one-month The Debt Agreements provide for customary restrictions and events of default. Restrictions include limitations on additional indebtedness, acquisitions, investments and payment of dividends, among other things. Further, the ABL Agreement provides that during any period (a) commencing on the last day of the most recently ended four consecutive fiscal quarters on or prior to the date availability under the ABL Agreement is less than the greater of $15.0 million and 10% of the aggregate commitment under the ABL Agreement at any time and (b) ending on the day after such availability has exceeded the greater of $15.0 million and 10% of the aggregate commitment under the ABL Agreement for forty-five (45) consecutive days, the Company is required to maintain a minimum fixed charge coverage ratio of 1.10 to 1.00 as of the last day of any period of four consecutive fiscal quarters. The Company was in compliance with the covenants of the Debt Agreements at March 31, 2018. At December 31, 2017, borrowings outstanding under the Company’s former credit facility were $94.7 million and open letters of credit were $3.2 million. Availability under the former credit agreement was approximately $58.0 million at December 31, 2017. Upon entering into the Debt Agreements in March 2018 the Company repaid its outstanding borrowings under its former credit agreement. In connection therewith, debt issuance costs of $66,000 were written off. |
DERIVATIVES
DERIVATIVES | 3 Months Ended |
Mar. 31, 2018 | |
DERIVATIVES | NOTE G- The Company has entered into certain foreign exchange contracts, primarily to offset the earnings impact related to fluctuations in foreign currency exchange rates associated with inventory purchases denominated in foreign currencies. The aggregate gross notional values of foreign exchange contracts at March 31, 2018 and December 31, 2017 were $28.3 million and $34.9 million, respectively. These foreign exchange contracts have not been designated as hedges as required in order to apply hedge accounting. The changes in the fair values of these contracts are recorded in earnings immediately. The fair values of the Company’s derivative financial instruments included in the condensed consolidated balance sheets are presented as follows (in thousands): Derivatives not designated as hedging instruments Balance Sheet March 31, 2018 December 31, 2017 Foreign exchange contracts Accrued expenses $ 2,428 $ 1,951 The fair values of the derivatives have been obtained from the counterparties to the agreements and were based on Level 2 observable inputs using proprietary models and estimates about relevant future market conditions. The amounts of the gains and losses related to the Company’s derivative financial instruments not designated as hedging instruments are recognized in earnings as follows (in thousands): Three Months Derivatives not designated as hedging instruments Location of loss 2018 2017 Foreign exchange contracts Selling, general and administrative $ (1,515 ) $ (189 ) In connection with the financing transaction described in Note F, the Company settled its outstanding interest rate swaps, which had an aggregate notional value of $5.3 million. The net gain reported in accumulated other comprehensive income at December 31, 2017 related to the interest rate swap was reclassified into interest expense during the three months ended March 31, 2018. |
STOCK COMPENSATION
STOCK COMPENSATION | 3 Months Ended |
Mar. 31, 2018 | |
STOCK COMPENSATION | NOTE H STOCK COMPENSATION Option Awards A summary of the Company’s stock option activity and related information for the three months ended March 31, 2018 is as follows: Options Weighted- Weighted- Aggregate Options outstanding, January 1, 2018 1,456,200 $ 13.64 Grants 150,000 13.75 Cancellations (6,625 ) 18.23 Expirations (3,750 ) 15.41 Options outstanding, March 31, 2018 1,595,825 13.63 4.8 $ 1,393,000 Options exercisable, March 31, 2018 1,246,923 $ 13.04 3.8 $ 1,393,000 The aggregate intrinsic value in the table above represents the total pre-tax in-the-money Total unrecognized stock option compensation expense at March 31, 2018, before the effect of income taxes, was $1.4 million and is expected to be recognized over a weighted-average period of 2.5 years. Restricted Stock A summary of the Company’s restricted stock activity and related information for the three months ended March 31, 2018 is as follows: Restricted Weighted- Non-vested 219,317 $ 17.12 Grants 75,944 13.65 Cancellations (5,375 ) 16.82 Non-vested 289,886 $ 16.22 Total unrecognized compensation expense remaining $ 3,486,000 Weighted-average years expected to be recognized over 2.6 No restricted stock vested during the three months ended March 31, 2018. Performance shares Each performance award represents the right to receive up to 150% of the target number of shares of common stock. The number of shares of common stock earned will be determined based on the attainment of specified performance goals by the end of the performance period, as determined by the Compensation Committee. The shares are subject to the terms and conditions of the Company’s Amended and Restated 2000 Long-Term Incentive Plan (the “Plan”). A summary of the Company’s performance-based award activity and related information for the three months ended March 31, 2018 is as follows: Performance- (1) Weighted- Non-vested 228,892 $ 16.49 Cancellations (7,293 ) 15.90 Vested (58,888 ) 14.84 Non-vested 162,711 $ 17.11 Total unrecognized compensation expense remaining $ 1,419,000 Weighted-average years expected to be recognized over 1.5 (1) Represents the target number of shares to be issued for each performance-based award. The total fair value of performance-based awards that vested during the three months ended March 31, 2018 was $792,000. The Company recognized total stock compensation expense of $0.8 million for the three months ended March 31, 2018, of which $0.2 million represents stock option compensation expense and $0.6 million represents restricted stock and performance based compensation expense. The Company recognized total stock compensation expense of $0.8 million for the three months ended March 31, 2017, of which $0.4 million represents stock option compensation expense and $0.4 million represents restricted stock and performance based compensation expense. At March 31, 2018, there were 374,558 shares available for awards that could be granted under the Plan, assuming maximum performance of performance-based awards. |
LOSS PER COMMON SHARE
LOSS PER COMMON SHARE | 3 Months Ended |
Mar. 31, 2018 | |
LOSS PER COMMON SHARE | NOTE I—LOSS PER COMMON SHARE Basic loss per common share has been computed by dividing net loss by the weighted-average number of shares of the Company’s common stock outstanding during the relevant period. Diluted loss per common share adjusts net loss and basic loss per common share for the effect of all potentially dilutive shares of the Company’s common stock. The calculations of basic and diluted loss per common share for the three month periods ended March 31, 2018 and 2017 are as follows: Three Months Ended 2018 2017 (in thousands, except per share amounts) Net loss– basic and diluted $ (11,598 ) $ (1,331 ) Weighted-average shares outstanding – basic and diluted 16,601 14,396 Basic and diluted loss per common share $ (0.70 ) $ (0.09 ) The computation of diluted loss per common share for the three months ended March 31, 2018 and 2017 excludes 1,885,711 shares and 2,003,162 shares, respectively, related to options to purchase shares and other stock awards. These shares were excluded due to their antidilutive effects. |
INCOME TAXES
INCOME TAXES | 3 Months Ended |
Mar. 31, 2018 | |
INCOME TAXES | NOTE J — INCOME TAXES On December 22, 2017, the legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”) was enacted. The Tax Act revises the U.S. corporate income tax by, among other things, lowering the corporate income tax rate from 35% to 21%, adopting a quasi-territorial income tax system and imposing a one-time The Securities and Exchange Commission issued Staff Accounting Bulletin (“SAB”) 118 to provide guidance to companies that have not yet completed their accounting for the Tax Act in the period of enactment. SAB 118 provides that the Company include in its financial statements a reasonable estimate of the impact of the Tax Act on earnings to the extent such estimate has been determined. Accordingly, the Company recorded a provisional income tax expense of $3.3 million in the year ended December 31, 2017 associated with the re-measurement one-time As of March 31, 2018 the Company has not changed the provisional estimates recognized in 2017 and the Company is not yet able to calculate a reasonable estimate for the impact of the one-time Beginning January 1, 2018, the Tax Act subjects the Company to a tax on global intangible low-taxed Pursuant to SAB 118, the Company is allowed a measurement period of up to one year after the enactment date of the Tax Act to finalize the recording of the related tax impacts. The Company will continue to calculate the impact of the Tax Act and will record any resulting tax adjustments during 2018. Income tax benefit of $3.8 million and $0.9 million for the three months ended March 31, 2018 and 2017, respectively, represent taxes on both U.S. and foreign earnings at a combined effective income tax benefit rates of 24.6% and 33.5%, respectively. The effective rate for the three months ended March 31, 2018 reflects the reduced U.S. corporate income tax rate, partially offset by non-deductible On a quarterly basis, the Company evaluates its tax positions and revises its estimates accordingly. The estimated value of the Company’s uncertain tax positions at March 31, 2018 is a gross liability of tax and interest of $3.7 million. The Company believes that $2.8 of its tax positions will be resolved within the next twelve months. The Company has identified the following jurisdictions as “major” tax jurisdictions: U.S. Federal, California, Massachusetts, New York, New Jersey, Illinois and the United Kingdom. The Company is no longer subject to U.S. Federal income tax examinations for the years prior to 2014. At March 31, 2018, the periods subject to examination for the Company’s major state jurisdictions are the years ended 2013 through 2017. The Company’s policy for recording interest and penalties is to record such items as a component of income taxes. Interest and penalties were not material to the Company’s results of operations or cash flows as of and for the three month periods ended March 31, 2018 and 2017. At March 31, 2018, interest and penalties included in the Company’s uncertain tax position gross liability was approximately $1.0 million. |
BUSINESS SEGMENTS
BUSINESS SEGMENTS | 3 Months Ended |
Mar. 31, 2018 | |
BUSINESS SEGMENTS | NOTE K– BUSINESS SEGMENTS The Company has three reportable business segments: U.S. Wholesale, International and Retail Direct. The U.S. Wholesale segment is the Company’s primary domestic business that designs, markets and distributes its products to retailers and distributors. The International segment consists of certain business operations conducted outside the U.S. The Retail Direct segment is where the Company markets and sells a limited selection of its products directly to consumers through third party and its own internet websites. The Company has segmented its operations to reflect the manner in which management reviews and evaluates the results of its operations. While the three segments distribute similar products, the segments are distinct due to the different methods the Company uses to sell, market, and distribute the products. Management evaluates the performance of the U.S. Wholesale, International and Retail Direct segments based on net sales and income (loss) from operations. Such measures give recognition to specifically identifiable operating costs such as cost of sales, distribution expenses and selling, general and administrative expenses. Certain general and administrative expenses, such as senior executive salaries and benefits, stock compensation, director fees and accounting, legal and consulting fees, are not allocated to the specific segments and are reflected as unallocated corporate expenses. Three Months Ended March 31, 2018 2017 (in thousands) Net sales U.S. Wholesale $ 90,795 $ 87,392 International 21,846 21,228 Retail Direct 5,528 4,736 Total net sales $ 118,169 $ 113,356 Income (loss) from operations U.S. Wholesale $ (5,528 ) $ 2,235 International (3,220 ) (1,157 ) Retail Direct (12 ) 116 Unallocated corporate expenses (4,556 ) (3,068 ) Loss from operations $ (13,316 ) $ (1,874 ) Depreciation and amortization U.S. Wholesale $ 3,091 $ 2,302 International 1,162 951 Retail Direct 56 33 Total depreciation and amortization $ 4,309 $ 3,286 March 31, December 31, (in thousands) Assets U.S. Wholesale $ 597,784 $ 281,398 International 107,726 105,984 Retail Direct 612 613 Unallocated/ Corporate/ Other 20,793 13,526 Total assets $ 726,915 $ 401,521 |
CONTINGENCIES
CONTINGENCIES | 3 Months Ended |
Mar. 31, 2018 | |
CONTINGENCIES | NOTE L — CONTINGENCIES Wallace Silversmiths de Puerto Rico, Ltd. (“WSPR”), a wholly-owned subsidiary of the Company, operates a manufacturing facility in San Germán, Puerto Rico that is leased from the Puerto Rico Industrial Development Company (“PRIDCO”). In March 2008, the United States Environmental Protection Agency (the “EPA”) announced that the San Germán Ground Water Contamination site in Puerto Rico (the “Site”) had been added to the Superfund National Priorities List due to contamination present in the local drinking water supply. In May 2008, WSPR received from the EPA a Notice of Potential Liability and Request for Information Pursuant to 42 U.S.C. Sections 9607(a) and 9604(e) of the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”). In July 2011, WSPR received a letter from the EPA requesting access to the property that it leases from PRIDCO to conduct an environmental investigation, and the Company granted such access. In February 2013, the EPA requested access to conduct a further environmental investigation at the property. PRIDCO agreed to such access and the Company consented. The EPA conducted a further investigation during 2013 and, in April 2015, notified the Company and PRIDCO that the results from vapor intrusion sampling may warrant implementation of measures to mitigate potential exposure to sub-slab sub-surface in-situ in-situ Accordingly, based on the above uncertainties and variables, it is not possible at this time for the Company to estimate its share of liability, if any, related to this matter. However, in the event of one or more adverse determinations related to this matter, it is possible that the ultimate liability resulting from this matter and the impact on the Company’s results of operations could be material. The Company is, from time to time, involved in other legal proceedings. The Company believes that other current litigation is routine in nature and incidental to the conduct of the Company’s business and that none such litigation, individually or collectively, would have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows. |
OTHER
OTHER | 3 Months Ended |
Mar. 31, 2018 | |
OTHER | NOTE M — OTHER Cash dividends On March 8, 2018, the Board of Directors declared a quarterly dividend of $0.0425 per share payable on May 15, 2018 to shareholders of record on May 1, 2018. As of March 31, 2018, the Company accrued $0.9 million for the payment of these dividends. On February 15, 2018, the Company paid dividends of $624,000 to shareholders of record on February 1, 2018. Supplemental cash flow information Three Months Ended March 31, 2018 2017 (in thousands) Supplemental disclosure of cash flow information: Cash paid for interest $ 746 $ 787 Cash paid for taxes 70 537 Non-cash Translation gain adjustment $ 3,380 $ 1,976 Components of accumulated other comprehensive loss, net Three Months Ended March 31, 2018 2017 (in thousands) Accumulated translation adjustment: Balance at beginning of period $ (27,821 ) $ (35,644 ) Translation gain during period 3,380 1,976 Balance at end of period $ (24,441 ) $ (33,668 ) Accumulated deferred gains (losses) on cash flow hedges: Balance at beginning of period $ 14 $ (3 ) Amounts reclassified from accumulated other comprehensive loss: (1) Settlement of cash flow hedge (14 ) — Derivative fair value adjustment, net of taxes of $0 and $9 for the three month periods ended March 31, 2018 and 2017, respectively. — 13 Balance at end of period $ — $ 10 Accumulated effect of retirement benefit obligations: Balance at beginning of period $ (1,518 ) $ (1,352 ) Amounts reclassified from accumulated other comprehensive loss: (2) Amortization of actuarial losses, net of taxes of $12 and $10 for the three month periods ended March 31, 2018 and 2017, respectively. 18 15 Balance at end of period $ (1,500 ) $ (1,337 ) (1) Amount is recorded as interest expense on the condensed consolidated statement of operations. (2) Amounts are recorded in selling, general and administrative expense on the condensed consolidated statements of operations. |
BASIS OF PRESENTATION AND SUM20
BASIS OF PRESENTATION AND SUMMARY ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2018 | |
Basis of presentation | Basis of presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q Regulation S-X. 10-K Operating results for the three month period ended March 31, 2018 are not necessarily indicative of the results that may be expected for the year ending December 31, 2018. The Company’s business and working capital needs are highly seasonal, with a majority of sales occurring in the third and fourth quarters. In 2017 and 2016, net sales for the third and fourth quarters accounted for 60% and 61% of total annual net sales, respectively. In anticipation of the pre-holiday |
Revenue recognition | Revenue recognition The Company sells products wholesale, to retailers and distributors, and retail, directly to the consumer. Wholesale sales and retail sales are recognized at the point in time the customer obtains control of the products, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those products. The Company offers various sales incentives and promotional programs to its customers in the normal course of business. These incentives and promotions typically include arrangements such as cooperative advertising, buydowns, volume rebates and discounts. These arrangements and returns are reflected as reductions of revenue at the time of sale. See Note B for additional information. |
Cost of sales | Cost of sales Cost of sales consists primarily of costs associated with the production and procurement of product, inbound freight costs, purchasing costs, royalties and other product procurement related charges. |
Distribution expenses | Distribution expenses Distribution expenses consist primarily of warehousing expenses and freight-out |
Accounts receivable | Accounts receivable The Company periodically reviews the collectability of its accounts receivable and establishes allowances for estimated losses that could result from the inability of its customers to make required payments. A considerable amount of judgment is required to assess the ultimate realization of these receivables including assessing the initial and on-going The Company also maintains an allowance for anticipated customer deductions. The allowances for deductions are primarily based on contracts with customers. However, in certain cases the Company does not have a formal contract and, therefore, customer deductions are non-contractual. non-contractual |
Receivable purchase agreement | Receivable purchase agreement The Company has an uncommitted Receivables Purchase Agreement with HSBC Bank USA, National Association (“HSBC”), as Purchaser (the “Receivables Purchase Agreement”). The sale of accounts receivable, under the Company’s Receivable Purchase Agreement with HSBC, are reflected as a reduction of accounts receivable in the Company’s condensed consolidated balance sheet at the time of sale and any related expense is included in selling, general and administrative expenses in the Company’s condensed consolidated statements of operations. Pursuant to this agreement, the Company sold to HSBC $19.6 million and $21.6 million of Receivables during the three months ended March 31, 2018 and 2017, respectively. A charge of $90,000 and $67,000 related to the sale of the Receivables is included in selling, general and administrative expenses in the condensed consolidated statements of operations for the three months ended March 31, 2018 and 2017, respectively. |
Inventory | Inventory Inventory consists principally of finished goods sourced from third-party suppliers. Inventory also includes finished goods, work in process and raw materials related to the Company’s manufacture of sterling silver products. Inventory is priced using the lower of cost (first-in, first-out The components of inventory are as follows: March 31, 2018 December 31, 2017 (in thousands) Finished goods $ 175,946 $ 129,611 Work in process 357 1,548 Raw materials 1,264 1,277 Total $ 177,567 $ 132,436 |
Fair value of financial instruments | Fair value of financial instruments The Company determined that the carrying amounts of cash and cash equivalents, accounts receivable and accounts payable are reasonable estimates of their fair values because of their short-term nature. The Company determined that the carrying amounts of borrowings outstanding under its revolving credit facility, term loan and short term loan approximate fair value since such borrowings bear interest at variable market rates. |
Derivatives | Derivatives The Company accounts for derivative instruments in accordance with Accounting Standard Codification (“ASC”) Topic No. 815, Derivatives and Hedging. ASC Topic No. 815 requires that all derivative instruments be recognized on the balance sheet at fair value as either an asset or liability. Changes in the fair value of derivatives that qualify as hedges and have been designated as part of a hedging relationship for accounting purposes have no net impact on earnings until the hedged item is recognized in earnings. The change in the fair value of hedges are included in accumulated other comprehensive income (loss) and is subsequently recognized in the Company’s condensed consolidated statements of operations to mirror the location of the hedged items impacting earnings. For derivatives that do not qualify or are not designated as hedging instruments for accounting purposes, changes in fair value are recorded in operations. |
Goodwill, intangible assets and long-lived assets | Goodwill, intangible assets and long-lived assets Goodwill and intangible assets deemed to have indefinite lives are not amortized but, instead, are subject to an annual impairment assessment. Additionally, if events or conditions were to indicate the carrying value of a reporting unit may not be recoverable, the Company would evaluate goodwill and other intangible assets for impairment at that time. As it relates to the goodwill assessment, the Company first assesses qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step Intangibles – Goodwill and Other two-step two-step two-step Long-lived assets, including intangible assets deemed to have finite lives, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Impairment indicators include, among other conditions, cash flow deficits, historic or anticipated declines in revenue or operating profit or material adverse changes in the business climate that indicate that the carrying amount of an asset may be impaired. When impairment indicators are present, the recoverability of the asset is measured by comparing the carrying value of the asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the asset is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds the fair value of the asset. |
Employee healthcare | Employee healthcare The Company self-insures certain portions of its health insurance plans. The Company maintains an accrual for unpaid claims and estimated claims incurred but not yet reported (“IBNR”). Although management believes that it uses the best information available to estimate claims IBNR, actual claims may vary significantly from estimated claims. |
Restructuring expenses | Restructuring expenses Costs associated with restructuring activities are recorded at fair value when a liability has been incurred. A liability has been incurred at the point of closure for any remaining operating lease obligations and at the communication date for severance. In connection with the Company’s March 2018 acquisition of Filament, the Company commenced a restructuring plan to integrate the operations of Filament with the Company’s operations and realize the savings expected from the synergies of the acquisition. During the three months ended March 31, 2018 the Company incurred $0.4 million of restructuring charges, all of which is accrued. |
Adoption of new accounting pronouncements | Adoption of new accounting pronouncements Effective January 1, 2018, the Company adopted Accounting Standards Update (“ASU”) 2017-01, Clarifying the Definition of a Business Effective January 1, 2018, the Company adopted Accounting Standards Codification (“ASC”) Topic 606. The standard supersedes existing revenue recognition guidance and replaces it with a five step revenue model with a core principle that an entity recognizes revenue to reflect the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. The Company adopted the new guidance under the modified retrospective approach. The adoption of this guidance did not have a significant impact on the Company’s condensed consolidated financial statements. The adoption resulted in the recognition of right of a return asset related to certain product returns by increasing the returns liability; this gross up had no corresponding impact on the Condensed Consolidated Statement of Operations. Effective January 1, 2018, the Company adopted ASU 2017-12, Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities (Topic 815), both non-financial and |
Accounting pronouncements to be adopted in future periods | Accounting pronouncements to be adopted in future periods In February 2018, the Financial Accounting Standards Board (“FASB”) issued ASU 2018-02, Income Statement- Reporting Comprehensive Income: Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments In February 2016, the FASB issued ASU 2016-02, Leases, right-of-use right-of-use |
BASIS OF PRESENTATION AND SUM21
BASIS OF PRESENTATION AND SUMMARY ACCOUNTING POLICIES (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Components of Inventory | The components of inventory are as follows: March 31, 2018 December 31, 2017 (in thousands) Finished goods $ 174,565 $ 129,611 Work in process 1,738 1,548 Raw materials 1,264 1,277 Total $ 177,567 $ 132,436 |
REVENUE (Tables)
REVENUE (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Summary of Company's Revenue Disaggregated by Geographic Region and Revenue | The following tables present the Company’s net sales disaggregated by segment, product category and geographic region for the three months ended March 31, 2018 (in thousands). U.S. Wholesale Kitchenware $ 56,965 Tableware 20,905 Home Solutions 12,925 International Kitchenware 13,000 Tableware 8,846 Retail Direct 5,528 $ 118,169 United States $ 91,714 United Kingdom 15,623 Rest of World 10,832 $ 118,169 |
ACQUISITION (Tables)
ACQUISITION (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Summary of Purchase Price | The purchase price has been determined to be as follows (in thousands): Cash $ 218,917 Share consideration 76,905 Total purchase price $ 295,822 |
Summary of Purchase Price Allocated Based on Estimated Fair Value of Assets and Liabilities | The purchase price was allocated based on the Company’s preliminary estimate of the fair value of the assets acquired and liabilities assumed, as follows (in thousands): Accounts receivable $ 26,453 Inventory 26,696 Other assets 10,086 Other liabilities (24,393 ) Deferred income tax (26,633 ) Goodwill and other intangibles 283,613 Total allocated value $ 295,822 |
Summary of Pro Forma Consolidated Net Sales and Income (Loss) Before Income Taxes and Equity in Earnings | The following table presents the Company’s pro forma consolidated net sales, loss before income taxes and equity in earnings and net loss for the three months ended March 31, 2018 and March 31, 2017. The unaudited pro forma results include the historical statement of operations information of the Company and of Filament, giving effect to the Filament acquisition and related financing as if they had occurred at the beginning of the periods presented. Unaudited pro forma results Three Months Ended March 31, 2018 March 31, 2017 (In thousands, except per share data) Net sales $ 143,980 $ 158,270 Loss before income taxes and equity in earnings (15,844 ) (4,962 ) Net loss (11,868 ) (2,566 ) Basic and diluted loss per common share (0.58 ) (0.13 ) |
INVESTMENTS (Tables)
INVESTMENTS (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Grupo Vasconia S.A.B. | |
Summarized Income Statement Information for Vasconia in USD and MXN | A summarized statement of income information for Vasconia in USD and MXN is as follows: Three Months Ended March 31, 2018 2017 (in thousands) USD MXN USD MXN Net sales $ 39,570 $ 740,406 $ 36,823 $ 747,495 Gross profit 7,119 133,207 7,853 159,421 Income from operations 1,149 21,503 2,430 49,329 Net (loss) income (362 ) (6,776 ) 1,234 25,043 |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Components of Intangible Assets | Intangible assets consist of the following (in thousands): March 31, 2018 December 31, 2017 Gross Accumulated Amortization Net Gross Accumulated Amortization Net Goodwill $ 98,889 $ — $ 98,889 $ 15,772 $ — $ 15,772 Indefinite-lived intangible assets: Trade names 64,816 — 64,816 7,616 — 7,616 Finite-lived intangible assets: Licenses 15,847 (9,489 ) 6,358 15,847 (9,375 ) 6,472 Trade names 33,841 (11,926 ) 21,915 33,368 (11,109 ) 22,259 Customer relationships 193,492 (19,298 ) 174,194 52,961 (16,966 ) 35,995 Other 5,781 (866 ) 4,915 1,165 (800 ) 365 Total $ 412,666 $ (41,579 ) $ 371,087 $ 126,729 $ (38,250 ) $ 88,479 |
Summary of Activities Relating to Intangible Assets | A summary of the activities related to the Company’s intangible assets for the three months ended March 31, 2018 consists of the following (in thousands): Goodwill and Intangible Assets, December 31, 2017 $ 88,479 Goodwill acquired 82,613 Trade names acquired 57,200 Customer relationships acquired 139,200 Other intangibles acquired 4,600 Foreign currency translation adjustment 1,675 Amortization (2,680 ) Goodwill and Intangible Assets, March 31, 2018 $ 371,087 |
DERIVATIVES (Tables)
DERIVATIVES (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Fair Values of Derivative Financial Instruments Included in Condensed Consolidated Balance Sheets | The fair values of the Company’s derivative financial instruments included in the condensed consolidated balance sheets are presented as follows (in thousands): Derivatives not designated as hedging instruments Balance Sheet March 31, 2018 December 31, 2017 Foreign exchange contracts Accrued expenses $ 2,428 $ 1,951 |
Gains and Losses Related to Derivative Financial Instruments Not Designated as Hedging Instruments | The amounts of the gains and losses related to the Company’s derivative financial instruments not designated as hedging instruments are recognized in earnings as follows (in thousands): Three Months Derivatives not designated as hedging instruments Location of loss 2018 2017 Foreign exchange contracts Selling, general and administrative $ (1,515 ) $ (189 ) |
STOCK COMPENSATION (Tables)
STOCK COMPENSATION (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Summary of Stock Option Activity and Related Information | A summary of the Company’s stock option activity and related information for the three months ended March 31, 2018 is as follows: Options Weighted- Weighted- Aggregate Options outstanding, January 1, 2018 1,456,200 $ 13.64 Grants 150,000 13.75 Cancellations (6,625 ) 18.23 Expirations (3,750 ) 15.41 Options outstanding, March 31, 2018 1,595,825 13.63 4.8 $ 1,393,000 Options exercisable, March 31, 2018 1,246,923 $ 13.04 3.8 $ 1,393,000 |
Summary of Restricted Stock Activity | A summary of the Company’s restricted stock activity and related information for the three months ended March 31, 2018 is as follows: Restricted Weighted- Non-vested 219,317 $ 17.12 Grants 75,944 13.65 Cancellations (5,375 ) 16.82 Non-vested 289,886 $ 16.22 Total unrecognized compensation expense remaining $ 3,486,000 Weighted-average years expected to be recognized over 2.6 |
Summary of Performance-based Award Activity | A summary of the Company’s performance-based award activity and related information for the three months ended March 31, 2018 is as follows: Performance- (1) Weighted- Non-vested 228,892 $ 16.49 Cancellations (7,293 ) 15.90 Vested (58,888 ) 14.84 Non-vested 162,711 $ 17.11 Total unrecognized compensation expense remaining $ 1,419,000 Weighted-average years expected to be recognized over 1.5 (1) Represents the target number of shares to be issued for each performance-based award. |
LOSS PER COMMON SHARE (Tables)
LOSS PER COMMON SHARE (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Calculations of Basic and Diluted Loss per Common Share | The calculations of basic and diluted loss per common share for the three month periods ended March 31, 2018 and 2017 are as follows: Three Months Ended 2018 2017 (in thousands, except per share amounts) Net loss– basic and diluted $ (11,598 ) $ (1,331 ) Weighted-average shares outstanding – basic and diluted 16,601 14,396 Basic and diluted loss per common share $ (0.70 ) $ (0.09 ) |
BUSINESS SEGMENTS (Tables)
BUSINESS SEGMENTS (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Segment Reporting Information | The Company has segmented its operations to reflect the manner in which management reviews and evaluates the results of its operations. While the three segments distribute similar products, the segments are distinct due to the different methods the Company uses to sell, market, and distribute the products. Management evaluates the performance of the U.S. Wholesale, International and Retail Direct segments based on net sales and income (loss) from operations. Such measures give recognition to specifically identifiable operating costs such as cost of sales, distribution expenses and selling, general and administrative expenses. Certain general and administrative expenses, such as senior executive salaries and benefits, stock compensation, director fees and accounting, legal and consulting fees, are not allocated to the specific segments and are reflected as unallocated corporate expenses. Three Months Ended March 31, 2018 2017 (in thousands) Net sales U.S. Wholesale $ 90,795 $ 87,392 International 21,846 21,228 Retail Direct 5,528 4,736 Total net sales $ 118,169 $ 113,356 Income (loss) from operations U.S. Wholesale $ (5,528 ) $ 2,235 International (3,220 ) (1,157 ) Retail Direct (12 ) 116 Unallocated corporate expenses (4,556 ) (3,068 ) Loss from operations $ (13,316 ) $ (1,874 ) Depreciation and amortization U.S. Wholesale $ 3,091 $ 2,302 International 1,162 951 Retail Direct 56 33 Total depreciation and amortization $ 4,309 $ 3,286 March 31, December 31, (in thousands) Assets U.S. Wholesale $ 597,784 $ 281,398 International 107,726 105,984 Retail Direct 612 613 Unallocated/ Corporate/ Other 20,793 13,526 Total assets $ 726,915 $ 401,521 |
OTHER (Tables)
OTHER (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Supplemental Cash Flow Information | Supplemental cash flow information Three Months Ended March 31, 2018 2017 (in thousands) Supplemental disclosure of cash flow information: Cash paid for interest $ 746 $ 787 Cash paid for taxes 70 537 Non-cash Translation gain adjustment $ 3,380 $ 1,976 |
Components of Accumulated Other Comprehensive Loss, Net | Components of accumulated other comprehensive loss, net Three Months Ended March 31, 2018 2017 (in thousands) Accumulated translation adjustment: Balance at beginning of period $ (27,821 ) $ (35,644 ) Translation gain during period 3,380 1,976 Balance at end of period $ (24,441 ) $ (33,668 ) Accumulated deferred gains (losses) on cash flow hedges: Balance at beginning of period $ 14 $ (3 ) Amounts reclassified from accumulated other comprehensive loss: (1) Settlement of cash flow hedge (14 ) — Derivative fair value adjustment, net of taxes of $0 and $9 for the three month periods ended March 31, 2018 and 2017, respectively. — 13 Balance at end of period $ — $ 10 Accumulated effect of retirement benefit obligations: Balance at beginning of period $ (1,518 ) $ (1,352 ) Amounts reclassified from accumulated other comprehensive loss: (2) Amortization of actuarial losses, net of taxes of $12 and $10 for the three month periods ended March 31, 2018 and 2017, respectively. 18 15 Balance at end of period $ (1,500 ) $ (1,337 ) (1) Amount is recorded as interest expense on the condensed consolidated statement of operations. (2) Amounts are recorded in selling, general and administrative expense on the condensed consolidated statements of operations. |
Basis of Presentation and Sum31
Basis of Presentation and Summary Accounting Policies - Additional Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Schedule Of Significant Accounting Policies [Line Items] | ||||
Percentage of total annual net sales in the third and fourth quarters | 60.00% | 61.00% | ||
Restructuring charges | $ 406 | |||
Receivables Purchase Agreement | ||||
Schedule Of Significant Accounting Policies [Line Items] | ||||
Sale of receivable | 19,600 | $ 21,600 | ||
Receivables Purchase Agreement | Selling, General and Administrative Expenses | ||||
Schedule Of Significant Accounting Policies [Line Items] | ||||
Charge related to sale of receivables | $ 90 | $ 67 |
Components of Inventory (Detail
Components of Inventory (Detail) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Inventory [Line Items] | ||
Finished goods | $ 174,565 | $ 129,611 |
Work in process | 1,738 | 1,548 |
Raw materials | 1,264 | 1,277 |
Total | $ 177,567 | $ 132,436 |
Revenue - Additional Informatio
Revenue - Additional Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Disaggregation of Revenue [Line Items] | ||
Shipping and handling revenue | $ 545 | $ 561 |
Summary of Company's Revenue Di
Summary of Company's Revenue Disaggregated by Geographic Region and Revenue (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Disaggregation of Revenue [Line Items] | ||
Net sales | $ 118,169 | $ 113,356 |
U. S. Wholesale | ||
Disaggregation of Revenue [Line Items] | ||
Net sales | 90,795 | 87,392 |
U. S. Wholesale | Kitchenware | ||
Disaggregation of Revenue [Line Items] | ||
Net sales | 56,965 | |
U. S. Wholesale | Tableware | ||
Disaggregation of Revenue [Line Items] | ||
Net sales | 20,905 | |
U. S. Wholesale | Home Solutions | ||
Disaggregation of Revenue [Line Items] | ||
Net sales | 12,925 | |
International | Kitchenware | ||
Disaggregation of Revenue [Line Items] | ||
Net sales | 13,000 | |
International | Tableware | ||
Disaggregation of Revenue [Line Items] | ||
Net sales | 8,846 | |
Retail Direct | ||
Disaggregation of Revenue [Line Items] | ||
Net sales | 5,528 | $ 4,736 |
United States | ||
Disaggregation of Revenue [Line Items] | ||
Net sales | 91,714 | |
United Kingdom | ||
Disaggregation of Revenue [Line Items] | ||
Net sales | 15,623 | |
Rest of World | ||
Disaggregation of Revenue [Line Items] | ||
Net sales | $ 10,832 |
Acquisition - Additional Inform
Acquisition - Additional Information (Detail) - USD ($) $ in Thousands | Mar. 02, 2018 | Mar. 31, 2018 | Mar. 31, 2017 |
Business Acquisition [Line Items] | |||
Cost of sales | $ 73,082 | $ 69,415 | |
Filament | |||
Business Acquisition [Line Items] | |||
Business acquisition, date of acquisition agreement | Dec. 22, 2017 | ||
Business acquisition, effective date of acquisition | Mar. 2, 2018 | ||
Aggregate acquisition agreement amount | $ 295,822 | ||
Business acquisition, cash consideration | $ 218,917 | ||
Business acquisition, equity interest issued or issuable, number of shares | 5,593,116 | ||
Business combination, consideration transferred, equity interests issued and issuable | $ 76,905 | ||
Net sales | $ 9,300 | ||
Net loss from operations | (1,100) | ||
Increase in fair value of acquired inventory | 1,500 | ||
Cost of sales | 300 | ||
Net increase decrease in amortization expense related to fair value of the identifiable intangible assets | 300 | (200) | |
Elimination of acquisition costs | 800 | ||
Net decrease for the change in interest expense, amortization of debt issuance costs and elimination of historical debt and preferred interest expense | $ (900) | $ (1,400) |
Summary of Purchase Price (Deta
Summary of Purchase Price (Detail) - Filament $ in Thousands | Mar. 02, 2018USD ($) |
Business Acquisition [Line Items] | |
Cash | $ 218,917 |
Share consideration | 76,905 |
Total purchase price | $ 295,822 |
Summary of Purchase Price Alloc
Summary of Purchase Price Allocated Based on Estimated Fair Value of Assets and Liabilities (Detail) - Filament $ in Thousands | Mar. 02, 2018USD ($) |
Business Acquisition [Line Items] | |
Accounts receivable | $ 26,453 |
Inventory | 26,696 |
Other assets | 10,086 |
Other liabilities | (24,393) |
Deferred income tax | (26,633) |
Goodwill and other intangibles | 283,613 |
Total allocated value | $ 295,822 |
Summary of Pro Forma Consolidat
Summary of Pro Forma Consolidated Net Sales and Income (Loss) Before Income Taxes and Equity in Earnings (Detail) - Filament - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Business Acquisition [Line Items] | ||
Net sales | $ 143,980 | $ 158,270 |
Loss before income taxes and equity in earnings | (15,844) | (4,962) |
Net loss | $ (11,868) | $ (2,566) |
Basic and diluted loss per common share | $ (0.58) | $ (0.13) |
Investments - Additional Inform
Investments - Additional Information (Detail) | 3 Months Ended | ||
Mar. 31, 2018USD ($)$ / $ | Mar. 31, 2017USD ($)$ / $ | Dec. 31, 2017USD ($)$ / $ | |
Schedule of Equity Method Investments [Line Items] | |||
Equity in earnings (losses), net of taxes | $ 77,000 | $ 540,000 | |
Grupo Vasconia S.A.B. | |||
Schedule of Equity Method Investments [Line Items] | |||
Percentage of ownership in equity method investment | 30.00% | ||
Exchange rate at period end - MXN to USD | $ / $ | 18.16 | 19.68 | |
Increase in equity method investment | $ 700,000 | 1,300,000 | |
Equity in earnings (losses), net of taxes | 77,000 | 500,000 | |
Equity in earnings, deferred taxes | 200,000 | $ 200,000 | |
Fair value of investment | 35,900,000 | $ 31,800,000 | |
Carrying value of investment | 24,300,000 | 23,800,000 | |
Grupo Vasconia S.A.B. | Prepaid expenses and other current assets | |||
Schedule of Equity Method Investments [Line Items] | |||
Due from related party | 112,000 | 64,000 | |
Grupo Vasconia S.A.B. | Accounts payable and accrued expenses | |||
Schedule of Equity Method Investments [Line Items] | |||
Due to related party | $ 7,000 | $ 0 | |
Grupo Vasconia S.A.B. | Transaction 02 | |||
Schedule of Equity Method Investments [Line Items] | |||
Average daily exchange rate for period - MXN to USD | $ / $ | 18.71 | 20.30 |
Summarized Statement of Income
Summarized Statement of Income Information for Vasconia in USD and MXN (Detail) - Grupo Vasconia S.A.B. $ in Thousands, $ in Thousands | 3 Months Ended | |||
Mar. 31, 2018USD ($) | Mar. 31, 2018MXN ($) | Mar. 31, 2017USD ($) | Mar. 31, 2017MXN ($) | |
Schedule of Equity Method Investments [Line Items] | ||||
Net sales | $ 39,570 | $ 740,406 | $ 36,823 | $ 747,495 |
Gross profit | 7,119 | 133,207 | 7,853 | 159,421 |
Income from operations | 1,149 | 21,503 | 2,430 | 49,329 |
Net (loss) income | $ (362) | $ (6,776) | $ 1,234 | $ 25,043 |
Components of Intangible Assets
Components of Intangible Assets (Detail) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Schedule of Intangible Assets Disclosure [Line Items] | ||
Goodwill, Gross | $ 98,889 | $ 15,772 |
Goodwill, Accumulated Amortization | 0 | 0 |
Goodwill, Net | 98,889 | 15,772 |
Indefinite-Lived Trade Names, Gross | 64,816 | 7,616 |
Indefinite-Lived Trade Names, Accumulated Amortization | 0 | 0 |
Indefinite-Lived Trade Names, Net | 64,816 | 7,616 |
Intangible Assets, Gross (Including Goodwill) | 412,666 | 126,729 |
Finite-Lived Intangible Assets, Accumulated Amortization | (41,579) | (38,250) |
Intangible Assets, Net (Including Goodwill) | 371,087 | 88,479 |
License | ||
Schedule of Intangible Assets Disclosure [Line Items] | ||
Finite-Lived Intangible Assets, Gross | 15,847 | 15,847 |
Finite-Lived Intangible Assets, Accumulated Amortization | (9,489) | (9,375) |
Finite-Lived Intangible Assets, Net | 6,358 | 6,472 |
Trade Names | ||
Schedule of Intangible Assets Disclosure [Line Items] | ||
Finite-Lived Intangible Assets, Gross | 33,841 | 33,368 |
Finite-Lived Intangible Assets, Accumulated Amortization | (11,926) | (11,109) |
Finite-Lived Intangible Assets, Net | 21,915 | 22,259 |
Customer Relationships | ||
Schedule of Intangible Assets Disclosure [Line Items] | ||
Finite-Lived Intangible Assets, Gross | 193,492 | 52,961 |
Finite-Lived Intangible Assets, Accumulated Amortization | (19,298) | (16,966) |
Finite-Lived Intangible Assets, Net | 174,194 | 35,995 |
Other | ||
Schedule of Intangible Assets Disclosure [Line Items] | ||
Finite-Lived Intangible Assets, Gross | 5,781 | 1,165 |
Finite-Lived Intangible Assets, Accumulated Amortization | (866) | (800) |
Finite-Lived Intangible Assets, Net | $ 4,915 | $ 365 |
Intangible Assets (Detail)
Intangible Assets (Detail) $ in Thousands | 3 Months Ended |
Mar. 31, 2018USD ($) | |
Goodwill and Intangible Assets | |
Goodwill and intangible assets, Beginning Balance | $ 88,479 |
Goodwill acquired | 82,613 |
Foreign currency translation adjustment | 1,675 |
Amortization | (2,680) |
Goodwill and Intangible Assets, Ending Balance | 371,087 |
Trade Names | |
Goodwill and Intangible Assets | |
Intangible assets acquired | 57,200 |
Customer Relationships | |
Goodwill and Intangible Assets | |
Intangible assets acquired | 139,200 |
Other | |
Goodwill and Intangible Assets | |
Intangible assets acquired | $ 4,600 |
Debt - Additional Information (
Debt - Additional Information (Detail) $ in Thousands | Mar. 02, 2018USD ($) | Mar. 31, 2018USD ($) | Dec. 31, 2017USD ($) |
Term Loan | |||
Debt Instrument [Line Items] | |||
Debt instrument, face amount | $ 275,000 | ||
Debt instrument, maturity date | Feb. 28, 2025 | ||
Debt instrument, quarterly repayment percentage of principal | 0.25% | ||
Debt instrument, date of first required payment | Jun. 30, 2018 | ||
Line of credit facility, description | The Incremental Facilities may not exceed the sum of (i) $50.0 million plus (ii) an unlimited amount so long as, in the case of (ii) only, the Company's secured net leverage ratio, as defined in and computed pursuant to the Term Loan, is no greater than 3.75 to 1.00 subject to certain limitations and for the period defined pursuant to the Term Loan. | ||
Debt instrument leverage ratio | 3.75 | ||
Outstanding borrowings under term loan | $ 275,000 | ||
Unamortized debt issuance costs- short term | 1,500 | ||
Unamortized debt issuance costs- long term | $ 8,700 | ||
Interest rates on outstanding borrowings | 5.20% | ||
Line of credit facility description | The term loan facility bears interest, at the Company's option, at one of the following rates (i) alternate base rate, defined, for any day, as the greater of the prime rate, a federal funds and overnight bank funding based rate plus 0.5% or one-month LIBOR plus 1.0%, plus a margin of 2.50% or (ii) LIBOR plus a margin of 3.50%. | ||
Term Loan | Prime rate, federal funds and overnight bank funding based rate | |||
Debt Instrument [Line Items] | |||
Debt instrument, basis spread on variable rate | 0.50% | ||
Term Loan | One-month LIBOR | |||
Debt Instrument [Line Items] | |||
Debt instrument, basis spread on variable rate | 1.00% | ||
Term Loan | Alternate Base Rate | |||
Debt Instrument [Line Items] | |||
Debt instrument, basis spread on variable rate | 2.50% | ||
Term Loan | LIBOR | |||
Debt Instrument [Line Items] | |||
Debt instrument, basis spread on variable rate | 3.50% | ||
Former Credit Facility | |||
Debt Instrument [Line Items] | |||
Outstanding borrowing under credit facility | $ 94,700 | ||
Open letters of credit | 3,200 | ||
Availability under credit facility | $ 58,000 | ||
Write off of debt issuance cost | $ 66 | ||
ABL Agreement | |||
Debt Instrument [Line Items] | |||
Credit facility, maximum borrowing capacity | 150,000 | ||
Outstanding borrowing under credit facility | 45,000 | ||
Open letters of credit | 3,200 | ||
Availability under credit facility | $ 79,500 | ||
Credit facility, maximum borrowing capacity terms | The borrowing capacity under the ABL Agreement will depend, in part, on eligible levels of accounts receivable and inventory that fluctuate regularly. Consequently, the $150.0 million commitment thereunder may not represent actual borrowing capacity. | ||
ABL Agreement | Senior Secured Asset Based Revolving Credit Facilities | |||
Debt Instrument [Line Items] | |||
Credit facility, maximum borrowing capacity | $ 150,000 | ||
Line of credit facility, expiration date | Mar. 2, 2023 | ||
Line of credit facility maximum borrowing capacity if certain conditions are met | $ 200,000 | ||
Increase in line of credit facility | $ 50,000 | ||
ABL Agreement | Revolving Credit Facility | |||
Debt Instrument [Line Items] | |||
Line of credit facility description | Borrowings under the revolving credit facility bear interest, at the Company's option, at one of the following rates (i) alternate base rate, defined, for any day, as the greater of the prime rate, a federal funds and overnight bank funding based rate plus 0.5% or one-monthLIBOR plus 1.0%, plus a margin of 0.25% to 0.75%, or (ii) LIBOR plus a margin of 1.25% to 1.75%. The respective margins are based upon the Company's total leverage ratio, as defined in and computed pursuant to the ABL Agreement | ||
ABL Agreement | Revolving Credit Facility | Minimum | |||
Debt Instrument [Line Items] | |||
Interest rates on outstanding borrowings | 2.00% | ||
Percentage of line of credit facility unused capacity commitment fee | 0.375% | ||
ABL Agreement | Revolving Credit Facility | Maximum | |||
Debt Instrument [Line Items] | |||
Interest rates on outstanding borrowings | 5.30% | ||
ABL Agreement | Revolving Credit Facility | Prime rate, federal funds and overnight bank funding based rate | |||
Debt Instrument [Line Items] | |||
Debt instrument, basis spread on variable rate | 0.50% | ||
ABL Agreement | Revolving Credit Facility | One-month LIBOR | |||
Debt Instrument [Line Items] | |||
Debt instrument, basis spread on variable rate | 1.00% | ||
ABL Agreement | Revolving Credit Facility | Alternate Base Rate | Minimum | |||
Debt Instrument [Line Items] | |||
Debt instrument, basis spread on variable rate | 0.25% | ||
ABL Agreement | Revolving Credit Facility | Alternate Base Rate | Maximum | |||
Debt Instrument [Line Items] | |||
Debt instrument, basis spread on variable rate | 0.75% | ||
ABL Agreement | Revolving Credit Facility | LIBOR | Minimum | |||
Debt Instrument [Line Items] | |||
Debt instrument, basis spread on variable rate | 1.25% | ||
ABL Agreement | Revolving Credit Facility | LIBOR | Maximum | |||
Debt Instrument [Line Items] | |||
Debt instrument, basis spread on variable rate | 1.75% | ||
ABL Agreement | Revolving Credit Facility | The first full fiscal quarter ending after closing | LIBOR | |||
Debt Instrument [Line Items] | |||
Debt instrument, basis spread on variable rate | 1.50% | ||
ABL Agreement | Revolving Credit Facility | The first full fiscal quarter ending after closing | Base Rate | |||
Debt Instrument [Line Items] | |||
Debt instrument, basis spread on variable rate | 0.50% | ||
Debt Agreements | |||
Debt Instrument [Line Items] | |||
Percentage of capital stock of foreign subsidiaries pledged as collateral | 65.00% | ||
Minimum availability under revolving credit to maintain minimum fixed charge ratio for four consecutive months | $ 15,000 | ||
Commitment Fee Percentage | 10.00% | ||
Number of days company required to maintain minimum fixed charge coverage ratio | 0 | ||
Fixed charge coverage ratio minimum | 110.00% | ||
Credit facility terms | The Debt Agreements provide for customary restrictions and events of default. Restrictions include limitations on additional indebtedness, acquisitions, investments and payment of dividends, among other things. Further, the ABL Agreement provides that during any period (a) commencing on the last day of the most recently ended four consecutive fiscal quarters on or prior to the date availability under the ABL Agreement is less than the greater of $15.0 million and 10% of the aggregate commitment under the ABL Agreement at any time and (b) ending on the day after such availability has exceeded the greater of $15.0 million and 10% of the aggregate commitment under the ABL Agreement for forty-five (45) consecutive days, the Company is required to maintain a minimum fixed charge coverage ratio of 1.10 to 1.00 as of the last day of any period of four consecutive fiscal quarters. |
Derivatives - Additional Inform
Derivatives - Additional Information (Detail) - USD ($) $ in Millions | Mar. 31, 2018 | Dec. 31, 2017 |
Designated as Hedging Instrument | Cash Flow Hedging | Interest Rate Contract | ||
Derivative [Line Items] | ||
Notional amount | $ 5.3 | |
Not Designated as Hedging Instrument | Foreign exchange contract | ||
Derivative [Line Items] | ||
Notional amount | $ 28.3 | $ 34.9 |
Fair Values of Derivative Finan
Fair Values of Derivative Financial Instruments Included in Consolidated Balance Sheets (Detail) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Not Designated as Hedging Instrument | Foreign exchange contract | Fair Value, Observable inputs, Level 2 | Accrued expenses | ||
Derivatives, Fair Value [Line Items] | ||
Fair Value of Derivative Assets | $ 2,428 | $ 1,951 |
Gains and Losses Related to Der
Gains and Losses Related to Derivative Financial Instruments Not Designated as Hedging Instruments (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Not Designated as Hedging Instrument | Foreign exchange contract | Selling, General and Administrative Expenses | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Amount of Gain or (Loss) Recognized in Income on Derivative | $ (1,515) | $ (189) |
Summary of Stock Option (Detail
Summary of Stock Option (Detail) $ / shares in Units, $ in Thousands | 3 Months Ended |
Mar. 31, 2018USD ($)$ / sharesshares | |
Options | |
Beginning balance | shares | 1,456,200 |
Grants | shares | 150,000 |
Cancellations | shares | (6,625) |
Expirations | shares | (3,750) |
Ending balance | shares | 1,595,825 |
Options exercisable at End of Period | shares | 1,246,923 |
Weighted-average exercise price | |
Beginning balance | $ / shares | $ 13.64 |
Grants | $ / shares | 13.75 |
Cancellations | $ / shares | 18.23 |
Expirations | $ / shares | 15.41 |
Ending balance | $ / shares | 13.63 |
Options exercisable at End of Period | $ / shares | $ 13.04 |
Weighted-average remaining contractual life (years) | |
Options outstanding, Ending balance | 4 years 9 months 18 days |
Options exercisable, Ending balance | 3 years 9 months 18 days |
Aggregate intrinsic value | |
Options outstanding, end of period | $ | $ 1,393 |
Options exercisable, end of period | $ | $ 1,393 |
Stock Compensation - Additional
Stock Compensation - Additional Information (Detail) - USD ($) | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Unrecognized stock option compensation cost | $ 1,400,000 | ||
Stock compensation expense | 838,000 | $ 804,000 | |
Stock compensation expense, stock option | 200,000 | 400,000 | |
Stock compensation expense, Performance based and restricted share | $ 600,000 | $ 400,000 | |
Stock Options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Weighted-average recognition period | 2 years 6 months | ||
Restricted Stock | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Weighted-average recognition period | 2 years 7 months 6 days | ||
Total fair value of performance-based awards, vested | $ 0 | ||
Performance Shares | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Weighted-average recognition period | [1] | 1 year 6 months | |
Total fair value of performance-based awards, vested | $ 792,000 | ||
Number of shares range percentage | 150.00% | ||
Performance Shares | Amended and Restated Long Term Incentive Plan Two Thousand | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Shares available for grant | 374,558 | ||
[1] | Represents the target number of shares to be issued for each performance-based award. |
Summary of Restricted Stock Act
Summary of Restricted Stock Activity (Detail) - Restricted Stock $ / shares in Units, $ in Thousands | 3 Months Ended |
Mar. 31, 2018USD ($)$ / sharesshares | |
Number of shares | |
Beginning balance | shares | 219,317 |
Grants | shares | 75,944 |
Cancellations | shares | (5,375) |
Ending balance | shares | 289,886 |
Total unrecognized compensation expense remaining | $ | $ 3,486 |
Weighted-average years expected to be recognized over | 2 years 7 months 6 days |
Weighted-average exercise price | |
Beginning balance | $ / shares | $ 17.12 |
Grants | $ / shares | 13.65 |
Cancellations | $ / shares | 16.82 |
Ending balance | $ / shares | $ 16.22 |
Summary of Performance-based Aw
Summary of Performance-based Award Activity (Detail) - Performance Shares $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2018USD ($)$ / sharesshares | ||
Number of shares | ||
Beginning balance | shares | 228,892 | [1] |
Cancellations | shares | (7,293) | [1] |
Vested | shares | (58,888) | [1] |
Ending balance | shares | 162,711 | [1] |
Total unrecognized compensation expense remaining | $ | $ 1,419 | [1] |
Weighted-average years expected to be recognized over | 1 year 6 months | [1] |
Weighted-average grant date fair value | ||
Beginning balance | $ / shares | $ 16.49 | |
Cancellations | $ / shares | 15.90 | |
Vested | $ / shares | 14.84 | |
Ending balance | $ / shares | $ 17.11 | |
[1] | Represents the target number of shares to be issued for each performance-based award. |
Calculations of Basic and Dilut
Calculations of Basic and Diluted Loss per Common Share (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Earnings Per Share Disclosure [Line Items] | ||
Net loss - basic and diluted | $ (11,598) | $ (1,331) |
Weighted-average shares outstanding - basic and diluted | 16,601 | 14,396 |
Basic and diluted loss per common share | $ (0.70) | $ (0.09) |
Loss Per Common Share - Additio
Loss Per Common Share - Additional Information (Detail) - shares | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Stock Options | ||
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items] | ||
Antidilutive securities excluded from computation of diluted loss per common share | 1,885,711 | 2,003,162 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Income Tax Examination [Line Items] | |||
Corporate income tax rate | 21.00% | 35.00% | |
Provisional income tax expense | $ 3,300 | ||
Income tax benefit | $ 3,810 | $ 944 | |
Gross liability for tax positions | 3,700 | ||
Change in unrecognized tax benefits reasonably possible | $ 2,800 | ||
Income tax examination years description | The Company is no longer subject to U.S. Federal income tax examinations for the years prior to 2014. | ||
Interest and Penalties | |||
Income Tax Examination [Line Items] | |||
Gross liability for tax positions | $ 1,000 | ||
State Jurisdiction | Minimum | |||
Income Tax Examination [Line Items] | |||
Income tax examination year | 2,013 | ||
State Jurisdiction | Maximum | |||
Income Tax Examination [Line Items] | |||
Income tax examination year | 2,017 | ||
Domestic | |||
Income Tax Examination [Line Items] | |||
Effective income tax rate | 24.60% | 33.50% | |
Foreign | |||
Income Tax Examination [Line Items] | |||
Effective income tax rate, change in enacted rate | 0.00% | 0.00% |
Business Segments - Additional
Business Segments - Additional Information (Detail) | 3 Months Ended |
Mar. 31, 2018Segment | |
Segment Reporting Information [Line Items] | |
Number of reportable business segment | 3 |
Segment Reporting Information (
Segment Reporting Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Segment Reporting Information [Line Items] | |||
Net sales | $ 118,169 | $ 113,356 | |
Depreciation and amortization | 4,309 | 3,286 | |
Income (loss) from operations | (13,316) | (1,874) | |
Assets | 726,915 | $ 401,521 | |
Unallocated corporate expenses | |||
Segment Reporting Information [Line Items] | |||
Income (loss) from operations | (4,556) | (3,068) | |
Assets | 20,793 | 13,526 | |
U. S. Wholesale | |||
Segment Reporting Information [Line Items] | |||
Net sales | 90,795 | 87,392 | |
Depreciation and amortization | 3,091 | 2,302 | |
U. S. Wholesale | Operating Segments | |||
Segment Reporting Information [Line Items] | |||
Income (loss) from operations | (5,528) | 2,235 | |
Assets | 597,784 | 281,398 | |
International | |||
Segment Reporting Information [Line Items] | |||
Net sales | 21,846 | 21,228 | |
Depreciation and amortization | 1,162 | 951 | |
International | Operating Segments | |||
Segment Reporting Information [Line Items] | |||
Income (loss) from operations | (3,220) | (1,157) | |
Assets | 107,726 | 105,984 | |
Retail Direct | |||
Segment Reporting Information [Line Items] | |||
Net sales | 5,528 | 4,736 | |
Depreciation and amortization | 56 | 33 | |
Retail Direct | Operating Segments | |||
Segment Reporting Information [Line Items] | |||
Income (loss) from operations | (12) | $ 116 | |
Assets | $ 612 | $ 613 |
Contingencies - Additional Info
Contingencies - Additional Information (Detail) $ in Millions | Dec. 11, 2015USD ($) |
Capital cost | |
Commitments and Contingencies Disclosure [Line Items] | |
Remedial alternative, EPA preferred remedy | $ 7.3 |
Other - Additional Information
Other - Additional Information (Detail) - USD ($) | Mar. 08, 2018 | Feb. 15, 2018 | Mar. 31, 2018 | Mar. 31, 2017 |
Other [Line Items] | ||||
Quarterly dividend declared | $ 0.0425 | $ 0.0425 | ||
Cash dividend paid | $ 652,000 | $ 613,000 | ||
Dividend Declared | ||||
Other [Line Items] | ||||
Dividend declaration date | Mar. 8, 2018 | |||
Quarterly dividend declared | $ 0.0425 | |||
Dividend payable date | Mar. 15, 2018 | |||
Dividend declared, date of record | May 1, 2018 | |||
Dividend payable | $ 900,000 | |||
Dividend Paid | ||||
Other [Line Items] | ||||
Dividend declared, date of record | Feb. 1, 2018 | |||
Cash dividend paid | $ 624,000 |
Supplemental Cash Flow Informat
Supplemental Cash Flow Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | $ 746 | $ 787 |
Cash paid for taxes | 70 | 537 |
Non-cash investing activities: | ||
Translation gain adjustment | $ 3,380 | $ 1,976 |
Components of Accumulated Other
Components of Accumulated Other Comprehensive Loss, Net (Detail) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Balance at beginning of period | $ 210,279 | ||
Balance at end of period | 277,741 | ||
Accumulated Translation Adjustment: | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Balance at beginning of period | (27,821) | $ (35,644) | |
Other Comprehensive Income (Loss), before Reclassifications, Net of Tax | 3,380 | 1,976 | |
Balance at end of period | (24,441) | (33,668) | |
Accumulated Deferred Gains (Losses) on Cash Flow Hedges: | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Balance at beginning of period | 14 | (3) | |
Amounts reclassified from accumulated other comprehensive loss | [1] | (14) | |
Other Comprehensive Income (Loss), before Reclassifications, Net of Tax | 13 | ||
Balance at end of period | 10 | ||
Accumulated Effect of Retirement Benefit Obligations: | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Balance at beginning of period | (1,518) | (1,352) | |
Amounts reclassified from accumulated other comprehensive loss | [2] | 18 | 15 |
Balance at end of period | $ (1,500) | $ (1,337) | |
[1] | Amount is recorded as interest expense on the condensed consolidated statement of operations. | ||
[2] | Amounts are recorded in selling, general and administrative expense on the condensed consolidated statements of operations. |
Components of Accumulated Oth60
Components of Accumulated Other Comprehensive Loss, Net (Parenthetical) (Detail) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | ||
Accumulated Deferred Gains (Losses) on Cash Flow Hedges: | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Derivative fair value adjustment, tax | $ 0 | $ 9 | |
Accumulated Effect of Retirement Benefit Obligations: | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Amortization of actuarial losses, taxes | [1] | $ 12 | $ 10 |
[1] | Amounts are recorded in selling, general and administrative expense on the condensed consolidated statements of operations. |