form8k04197004_03262012.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): March 26, 2012
 
STEEL PARTNERS HOLDINGS L.P.
(Exact name of registrant as specified in its charter)
     
Delaware
0-5465
13-3727655
(State or other jurisdiction
of incorporation)
(Commission
File Number)
(IRS Employer
Identification No.)
     
590 Madison Avenue, 32nd Floor, New York, New York 
10022
(Address of principal executive offices)
(Zip Code)

Registrant’s telephone number, including area code: (212) 520-2300
 
N/A
(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 
 

 
 
Item 2.02.
Results of Operations and Financial Condition.
 
On March 26, 2012, Steel Partners Holdings L.P., a Delaware corporation (the “Company”), issued a press release regarding its financial results for the full year ended December 31, 2011 and other information.  The full text of the press release is attached hereto as Exhibit 99.1.
 
The information in this Current Report, including the exhibit attached hereto, is being furnished and shall not be deemed  “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the  “Exchange Act”), or otherwise subject to the liabilities of such section.  The information in this Current Report, including the exhibit, shall not be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any incorporation by reference language in any such filing, unless the Company expressly sets forth in such future filing that such information is to be considered “filed” or incorporated by reference therein.
 
Item 9.01.
Financial Statements and Exhibits.
 
(d)           Exhibits
 
 
Exhibit No.
Exhibits

 
99.1
Press Release issued March 26, 2012.
 
 
 

 
 
SIGNATURES
 
Pursuant to the requirements of the Exchange Act, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
 
STEEL PARTNERS HOLDINGS L.P.
     
     
     
Dated: March 26, 2012
By:
/s/ James F. McCabe, Jr.
 
Name:
James F. McCabe, Jr.
 
Title:
Chief Financial Officer
 

 
 

 
 
Exhibits
 
 
 
Exhibit No.
Exhibits
 
 
99.1
Press Release issued March 26, 2012.
 
ex991to8k04197004_03262012.htm
Exhibit 99.1
 
PRESS RELEASE Source: Steel Partners Holdings L.P.

Steel Partners Holdings L.P. Reports Full Year 2011 Financial Results

New York, NY – March 26, 2012 -- Steel Partners Holdings L.P. (SPNHU.PK.) (“SPH” or the “Company”) reported revenues of $712.2 million for the year ended December 31, 2011 as compared to approximately $424.7 million for the same period in 2010.  Net income attributable to the Company’s common unitholders for 2011 was $35.5 million, or $0.99 per diluted LP unit, as compared to $31.7 million, or $1.16 per diluted LP unit, for 2010.

“SPH had a very productive 2011,” said Warren Lichtenstein, Chairman and CEO of Steel Partners Holdings GP Inc. “Our companies saw growth through both acquisitions and improved demand in core markets, while SPH worked to create a continuous improvement culture and implemented operational excellence programs. These gains put SPH in a strong position as we complete our transition into a global, publicly-traded diversified holding company.”

Financial Summary ($000s)
       
   
Yea r Ended December 31,
 
   
2011
   
2010
 
Revenue
  $ 712,222     $ 424,665  
Costs and Expenses
    666,084       410,777  
Income before taxes and equity method
    46,138       13,888  
Income tax benefit (provision)
    63,965       (2,657 )
(Loss) income from equity method investments
    (13,823 )     10,305  
Loss from other investments - related party
    (15,743 )     (3,220 )
Income from continuing operations
    80,537       18,316  
Income from discontinued operations
    740       28,130  
Net income
    81,277       46,446  
Income attributable to noncontrolling interests
    (45,808 )     (14,699 )
Net income attributable to common unitholders
  $ 35,469     $ 31,747  
Net income per common unit - basic
  $ 1.41     $ 1.26  
Net income per common unit - diluted
  $ 0.99     $ 1.16  
Total Partners Capital, end of year
  $ 415,797     $ 405,732  
 
Total revenue for 2011 includes $700,969 for the Diversified Industrial segment, as compared to $385,805 in the prior year period.  This results from the consolidation of Handy & Harman Ltd. (“HNH”) effective May 7, 2010, the acquisition of SWH, Inc. (“SWH”) by BNS Holding, Inc. on February 2, 2011 and the acquisition of DGT Holdings Corp. on July 5, 2011. HNH’s revenues of $664,017 in 2011 increased 16.9% over the full year 2010, relating principally to higher silver prices and increased units sold. SWH owns Sun Well Services, Inc., (“Sun Well”) a provider of premium well services to exploration and production companies. Revenues of Sun Well for the period February 2, 2011 through December 31, 2011 of $32,984 grew by 26.8% as compared to the full year ended December 31, 2010, resulting from an increase in the average number of rigs in operation and an increase in the revenue per rig hour.
 
Revenues for 2011 include $14,921 for the Financial Services segment, a 38.1% increase over the 2010 period. Interest and noninterest income increased due primarily to a new lending program. The program began in the third quarter of 2010.
 
Income from continuing operations, net of tax, in 2011 includes a net tax benefit of approximately $83,000 which was principally generated by a non-cash tax benefit related to the reversal of deferred tax valuation allowances. Of this amount, approximately $73,000 was related to HNH and approximately $9,000 was related to BNS. The recognition of this non-cash tax benefit follows an assessment of the profitability of the Company’s domestic operations and the likelihood that the deferred tax assets will be realized.
 
(Loss) income from equity method investments primarily relates to net changes in the market value of the investments held by the Company in Steel Excel Inc. and API Group plc.
 
 
 

 
 
Loss from other investments – related party represents the changes in the market value of the investments held by the SPII Liquidating Series Trust, whose holdings include interests in Barbican Group Holdings Limited and Fox & Hound Restaurant Group, among other investments. The Company has a 43.75% interest in the SPII Liquidating Series Trust.
 
Noncontrolling interests primarily represent the minority ownership’s share of the net income relating to HNH. As of December 31, 2011, the Company owned 55.5% of HNH.
 
Liquidity
 
In addition to cash and cash equivalents, the Company considers investments at fair value included in its consolidated balance sheet as being generally available to meet its liquidity needs.  Investments at fair value are not as liquid as cash and cash equivalents, but they are generally convertible into cash within a reasonable period of time.  As of December 31, 2011, the Company had cash and cash equivalents of $13,417 and investments at fair value of $120,734.  In addition, the Company had $23,736 of restricted cash which serves as collateral with respect to foreign currency financial instruments.  The Company is not able to use these funds for other purposes, and the Company does not consider this amount to be available to meet its liquidity needs.
 
Our Company
 
SPH is a global diversified holding company that engages in multiple businesses through consolidated subsidiaries, associated companies and other interests.  We own and operate businesses and have significant interests in leading companies in various industries, including diversified industrial products, energy, defense, banking, insurance, food products and services, oilfield services, sports, training, education, and the entertainment and lifestyle industries.
 
For additional information, please refer to our Annual Report on Form 10-K which we filed with the Securities and Exchange Commission on March 26, 2012. This Form 10-K, current reports on Form 8-K, and all amendments to those reports, are available free of charge through our website www.steelpartners.com as soon as reasonably practicable after those materials have been electronically filed with, or furnished to, the Securities and Exchange Commission.
 
Forward-Looking Statements
 
This press release contains certain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that reflect SPH’s current expectations and projections about its future results, performance, prospects and opportunities.  SPH has tried to identify these forward-looking statements by using words such as “may”, “should,” “expect,” “hope,” “anticipate,” “believe,” “intend,” “plan,” “estimate” and similar expressions.  These forward-looking statements are based on information currently available to the Company and are subject to a number of risks, uncertainties and other factors that could cause its actual results, performance, prospects or opportunities in 2012 and beyond to differ materially from those expressed in, or implied by, these forward-looking statements.  These factors include, without limitation, SPH’s need for additional financing and the terms and conditions of any financing that is consummated, customers’ acceptance of its new and existing products, the risk that the Company will not be able to compete successfully, and the possible volatility of the Company’s stock price and the potential fluctuation in its operating results.  Although SPH believes that the expectations reflected in these forward-looking statements are reasonable and achievable, such statements involve significant risks and uncertainties and no assurance can be given that the actual results will be consistent with these forward-looking statements.  Investors should read carefully the factors described in the “Risk Factors” section of the Company’s filings with the SEC, including the Company’s Form 10-K for the year ended December 31, 2011 for information regarding risk factors that could affect the Company’s results.  Except as otherwise required by Federal securities laws, SPH undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances or any other reason.
 
Investor contact: Steel Partners Holdings GP Inc.
James F. McCabe, Jr., Chief Financial Officer
212-520-2300
 
 
 

 
 
Steel Partners Holdings L.P.
Consolidated Balance Sheets
(in thousands except common units)
 
   
December 31,
 
   
2011
   
2010
 
ASSETS
           
Current Assets:
           
Cash and cash equivalents
  $ 127,027     $ 180,684  
Restricted cash
    23,736       143,698  
Financial Instruments
    -       13,772  
Trade and other receivables (net of allowance for doubtful accounts of $2,504 in 2011 and $2,198 in 2010)
    90,239       67,747  
Receivable from related party
    116       1,463  
Loans receivable, net
    34,820       16,408  
Inventories
    53,776       50,822  
Deferred income taxes
    20,038       4,700  
Prepaid and other current assets
    16,123       10,087  
Assets of discontinued operations
    35,387       33,306  
        Total current assets
    401,262       522,687  
                 
Long-term loans receivable, net
    8,942       11,919  
Goodwill
    42,797       16,212  
Other intangibles, net
    135,341       124,541  
Deferred income taxes
    70,625       -  
Other non-current assets
    22,143       19,518  
Investments at fair value
    150,020       79,540  
Property, plant and equipment, net
    127,842       91,625  
Investment in associated companies
    128,218       163,270  
Other investments at fair value - related party
    42,653       62,553  
   Total Assets
  $ 1,129,843     $ 1,091,865  

 
 

 
 
Steel Partners Holdings L.P.
Consolidated Balance Sheets
(in thousands except common units)
   
December 31,
 
   
2011
   
2010
 
LIABILITIES AND CAPITAL
           
Accounts payable
  $ 37,843     $ 37,959  
Accrued liabilities
    40,944       37,527  
Current portion of distribution payable
    -       29,869  
Financial instruments
    23,736       143,917  
Deposits
    38,293       29,102  
Payable to related parties
    4,930       6,330  
Current portion of deferred fee liability
    1,107       -  
Short-term debt
    24,168       42,890  
Current portion of long-term debt
    8,531       4,452  
Other current liabilities
    3,975       5,721  
Liabilities of discontinued operations
    15,310       9,997  
     Total current liabilities
    198,837       347,764  
Long-term deposits
    56,589       32,690  
Deferred fee liability to related parties
    57,640       64,854  
Long-term debt
    130,955       91,984  
Accrued pension liability
    186,212       113,004  
Deferred income taxes
    6,231       3,333  
Other liabilities
    12,959       7,924  
      Total Liabilities
    649,423       661,553  
Commitments and Contingencies
               
Partner's capital (common units: 25,183,039 in 2011 and 25,251,554 in 2010 issued and outstanding, after deducting 2,808,725 and 2,726,030 held in treasury, at cost of $48,099 and $47,107 in 2011 and 2010, respectively.
    427,534       397,970  
Accumulated other comprehensive (loss) income
    (11,737 )     7,762  
Total Partners' Capital
    415,797       405,732  
Noncontrolling interests in consolidated entities
    64,623       24,580  
     Total Capital
    480,420       430,312  
     Total Liabilities and Capital
  $ 1,129,843     $ 1,091,865  
 
 
 

 
 
Steel Partners Holdings L.P.
Consolidated Statements of Operations
(in thousands except units and per unit data)
 
   
Year Ended December 31,
 
   
2011
   
2010
 
Revenue:
           
Diversified Industrial, Financial Services and Other:
           
   Diversified industrial net sales
  $ 700,969     $ 385,805  
   Financial services revenue
    14,921       10,803  
   Investment and other income
    684       4,007  
   Net investment (losses) gain
    (4,352 )     24,050  
 Total revenue
    712,222       424,665  
                 
Costs and Expenses
               
Diversified Industrial, Financial Services and Other:
               
   Diversified industrial cost of goods sold
    513,741       289,839  
   Selling, general and administrative
    142,031       88,250  
   Asset impairment charges
    1,505       -  
   Finance interest
    1,571       2,022  
   Provision for loan losses (gains)
    8       (420 )
   Interest expense
    12,424       12,123  
   Realized and unrealized loss on derivatives
    397       5,164  
   Management fees - related party
    8,169       7,531  
  (Decrease) Increase in deferred fee liability to related party
    (6,107 )     6,268  
   Other income
    (7,655 )     -  
Total costs and expenses
    666,084       410,777  
                 
Income from continuing operations before income taxes and equity method income (loss)
    46,138       13,888  
Income tax benefit (provision)
    63,965       (2,657 )
(Loss) income from equity method investments:
               
   (Loss) income of associated companies, net of tax
    (13,823 )     10,305  
   Loss from other investments-related party
    (15,743 )     (3,220 )
Net income from continuing operations
    80,537       18,316  
Discontinued Operations:
               
  Loss from discontinued operations, net of taxes
    (231 )     (3,162 )
  Gain on sale of discontinued operations, net of taxes
    971       31,292  
  Income from discontinued operations
    740       28,130  
Net income
    81,277       46,446  
Net income attributable to noncontrolling interests in consolidated entities:
               
   Continuing operations
    (45,461 )     (997 )
   Discontinued operations
    (347 )     (13,702 )
      (45,808 )     (14,699 )
Net income attributable to common unitholders
  $ 35,469     $ 31,747  
                 
Net income per common unit - basic
               
Net income from continuing operations
  $ 1.39     $ 0.69  
Net income from discontinued operations
    0.02       0.57  
Net income attributable to common unitholders
  $ 1.41     $ 1.26  
                 
Net income per common unit - diluted
               
Net income from continuing operations
  $ 0.98     $ 0.63  
Net income from discontinued operations
    0.01       0.53  
Net income attributable to common unitholders
  $ 0.99     $ 1.16  
                 
Weighted average number of common units outstanding - basic
    25,232,985       25,234,827  
Weighted average number of common units outstanding - diluted
    29,669,582       27,482,804  
 
 

 
 
Steel Partners Holdings L.P.
Consolidated Statements of Cash Flows
(in thousands)
   
Year Ended December 31,
 
   
2011
   
2010
 
             
Cash flows from operating activities:
           
Net income
  $ 81,277     $ 46,446  
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
               
Investment losses (gains) and other than temporary impairment losses
    4,352       (24,050 )
Provision for loan losses
    8       (420 )
Loss (Income) of associated companies
    13,823       (10,305 )
Loss from other investments - related party
    15,743       3,220  
Gain on sale of discontinued operations
    (1,372 )     (31,292 )
Long-term interest on related party debt
    -       4,275  
Deferred income tax provision (benefit)
    15,845       (9 )
Income tax benefit from release of deferred tax valuation allowance
    (82,731 )     -  
Non-cash interest and dividend income
    -       (1,876 )
Non-cash income from derivatives
    (811 )     -  
Accrued interest not paid in cash
    2,275       -  
Depreciation and amortization
    23,983       14,029  
(Gain) Loss on extinguishment of debt
    (189 )     1,210  
Amortization of debt related costs
    1,743       1,226  
Reclassification of net cash settlements on derivative instruments
    1,047       5,124  
Stock based compensation
    4,509       528  
Asset impairment charges
    1,505       -  
Bargain purchase gain
    (8,978 )     -  
Other
    (230 )     (854 )
Net change in operating assets and liabilities:
               
Trade and other receivables
    (12,172 )     27,400  
Receivable from related party
    1,347       -  
Inventories
    (23 )     8,577  
Dividends and interest receivable
    -       1,379  
Prepaid and other assets
    571       (1,350 )
Accounts payable, accrued and other liabilities
    (29,253 )     (6,779 )
Payable to related parties
    51       606  
Dividends and interest payable
    -       (319 )
(Decrease) increase in deferred fee liability to related party
    (6,107 )     6,267  
Net increase in loans held for sale
    (18,460 )     (3,499 )
Net cash (used in) provided by operating activities of discontinued operations
    (2,265 )     7,127  
Net cash provided by operating activities
    5,488       46,661  

 
 

 
 
Steel Partners Holdings L.P.
Consolidated Statements of Cash Flows
(in thousands)
 
   
Year Ended December 31,
 
   
2011
   
2010
 
Cash flows from investing activities:
           
Purchases of investments
    (187,459 )     (359,575 )
Proceeds from sale of investments
    46,220       501,067  
Net increase in time deposits placed and other short-term investments
    851       -  
Proceeds from sale of loans
    -       2,054  
Net decrease in loans receivable
    2,447       3,616  
Purchases of property and equipment
    (22,137 )     (7,296 )
Reclassification of restricted cash
    119,962       (19,493 )
Net cash settlements on derivative instruments
    (1,047 )     (5,124 )
Proceeds from sales of assets
    1,648       457  
Acquisitions, net of cash acquired
    (35,751 )     2,115  
Purchase of subsidiary shares from noncontrolling interests
    (8,827 )     (14,134 )
Investments in associated companies
    (23,072 )     (51,675 )
Proceeds from sale of discontinued operations
    26,532       64,693  
Net cash (used in) provided by investing activities of discontinued operations
    (41 )     1,520  
Other
    (388 )     -  
Net cash (used in) provided by investing activities
    (81,062 )     118,225  
                 
Cash flows from financing activities:
               
Common unit cash distributions
    (29,868 )     (49,102 )
Proceeds from term loans – domestic
    67,981       46,000  
Net revolver borrowings
    (18,785 )     11,136  
Repayments of term loans – foreign
    (707 )     (1,970 )
Repayments of term loans – domestic
    (26,874 )     (86,018 )
Repayments of term loans – related party
    -       (5,563 )
Deferred finance charges
    (2,395 )     (3,842 )
Net change in overdrafts
    95       2,088  
Net increase in deposits
    33,189       11,604  
Repayment of debt of discontinued operations
    -       (22,772 )
Net cash used in financing activities of discontinued operations
    (219 )     -  
Other
    (225 )     -  
Net cash provided by (used in) financing activities
    22,192       (98,439 )
Net change for the period
    (53,382 )     66,447  
Effect of exchange rate changes on cash and cash equivalents
    (275 )     (10 )
Cash and cash equivalents at beginning of period/year
    180,684       114,247  
Cash and cash equivalents at end of period/year
  $ 127,027     $ 180,684