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): May 15, 2012
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STEEL PARTNERS HOLDINGS L.P.
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(Exact name of registrant as specified in its charter)
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Delaware
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0-5465
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13-3727655
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(State or other jurisdiction
of incorporation)
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(Commission
File Number)
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(IRS Employer
Identification No.)
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590 Madison Avenue, 32nd Floor, New York, New York
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10022
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(Address of principal executive offices)
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(Zip Code)
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Registrant’s telephone number, including area code: xxx
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N/A
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(Former name or former address, if changed since last report.)
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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))
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Item 2.02.
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Results of Operations and Financial Condition.
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On May 15, 2012, Steel Partners Holdings L.P., a Delaware corporation (the “Company”), issued a press release regarding its financial results for the quarter ended March 31, 2012. 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.
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Item 9.01.
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Financial Statements and Exhibits.
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(d) Exhibits
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Exhibit No.
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Exhibits
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99.1
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Press Release issued May 15, 2012.
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2
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.
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Dated: May 15, 2012
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STEEL PARTNERS HOLDINGS L.P.
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By:
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Steel Partners Holdings GP Inc.
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Its General Partner
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By:
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/s/ James F. McCabe, Jr.
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James F. McCabe, Jr.
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Chief Financial Officer
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Exhibits
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Exhibit No.
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Exhibits
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99.1
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Press Release issued May 15, 2012.
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4
Exhibit 99.1
Steel Partners Holdings L.P. Reports First Quarter Financial Results
New York, NY - May 15, 2012 -- Steel Partners Holdings L.P. (NYSE: SPLP) (“SPH” or the “Company”) reported revenue of $186.0 million for the period ending March 31, 2012 as compared to $175.1 million for the same period of 2011. Net income attributable to the Company's common unitholders for the first quarter of 2012 was $46.0 million, or $1.83 per diluted common unit, as compared to $12.5 million, or $0.43 per diluted common unit, for the same period of 2011.
Warren Lichtenstein, Chairman & Chief Executive Officer of Steel Partners Holdings GP Inc., SPH's general partner, stated, "The first quarter saw solid revenue growth in our diversified industrial segment and a strong rise in revenue in the financial services segment. It was also an important quarter for the Company as we completed the process of registering our units with the SEC, and in April listed our units on the NYSE.”
Financial Summary ($000s)
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Three Months Ended March 31,
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2012
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2011
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Revenues
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$ | 186,022 | $ | 175,100 | ||||
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Costs and Expenses
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186,143 | 159,713 | ||||||
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(Loss) income before taxes and equity method investments
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(121 | ) | 15,387 | |||||
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Income tax (provision) benefit
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(1,872 | ) | 5,607 | |||||
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Income from associated companies
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50,540 | 1,858 | ||||||
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Loss from other investments - related party
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(10,800 | ) | (8,284 | ) | ||||
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Income (loss) from investments held at fair value
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8,638 | (1,564 | ) | |||||
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Income from continuing operations
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46,385 | 13,004 | ||||||
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Income from discontinued operations
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3,753 | 2,127 | ||||||
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Net income
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50,138 | 15,131 | ||||||
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Income attributable to noncontrolling interests
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(4,168 | ) | (2,640 | ) | ||||
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Net income attributable to common unit holders
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$ | 45,970 | $ | 12,491 | ||||
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Net income per common unit – basic
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$ | 1.83 | $ | 0.49 | ||||
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Net income per common unit – diluted
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$ | 1.83 | $ | 0.43 | ||||
Performance Overview
The Diversified Industrial segment saw revenue of $179.5 million, as compared to $158.4 million in the prior year period, a 13.3% increase. Handy & Harman Ltd. (“HNH”) saw increased sales volume in most of its segments, driven by higher demand for its products, resulting in 7.0% sales growth over the prior year.
Revenues for the first quarter of 2012 include $4.0 million for the Financial Services segment, a 23.8% increase over the 2011 period, due primarily to a new lending program at WebBank.
In addition, the 2012 period reflects a full three months of operations for SWH, Inc. (“SWH”), which was acquired by BNS Holding, Inc. on February 2, 2011 and DGT Holdings Corp., which was acquired on July 5, 2011.
Income from continuing operations of $46.4 million includes income from equity method investments in associated companies of $50.5 million, which primarily relates to net changes in the market value of the investments held by the Company.
Meanwhile, income from investments held at fair value was $8.6 million in the quarter, compared with a loss of $1.6 million in the same period of 2011.
Loss from other investments - related party totaled $10.8 million, compared with a loss of $8.3 million in the same period of 2011. The figure primarily represents changes in the market value of the investments held by the SPII Liquidating Series Trust during the period. 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 March 31, 2012, the Company owned 53.7% of HNH.
Liquidity
In addition to cash and cash equivalents, SPH, excluding its operating subsidiaries (the “Holding 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 March 31, 2012, the Holding Company had cash and cash equivalents of $27.1 million and investments at fair value of $110.8 million.
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.
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)
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March 31, 2012
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December 31, 2011
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ASSETS
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(unaudited)
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Current assets:
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Cash and cash equivalents
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$ | 171,042 | $ | 127,027 | ||||
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Restricted cash
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26,736 | 23,736 | ||||||
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Trade and other receivables (net of allowance for doubtful accounts of $2,555 in 2012 and $2,504 in 2011)
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106,553 | 90,239 | ||||||
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Receivable from related parties
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3,479 | 116 | ||||||
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Loans receivable, net
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26,060 | 34,820 | ||||||
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Inventories
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58,317 | 53,776 | ||||||
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Deferred income taxes
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20,147 | 20,038 | ||||||
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Prepaid and other current assets
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16,144 | 16,123 | ||||||
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Assets of discontinued operations
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— | 35,387 | ||||||
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Total current assets
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428,478 | 401,262 | ||||||
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Long-term loans receivable, net
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8,855 | 8,942 | ||||||
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Goodwill
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42,806 | 42,797 | ||||||
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Other intangibles, net
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133,147 | 135,341 | ||||||
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Deferred income taxes
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67,913 | 70,625 | ||||||
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Other non-current assets
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19,615 | 22,143 | ||||||
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Investments at fair value
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146,327 | 150,020 | ||||||
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Property, plant and equipment, net
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130,294 | 127,842 | ||||||
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Investments in associated companies
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189,683 | 128,218 | ||||||
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Other investments at fair value - related party
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31,853 | 42,653 | ||||||
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Total Assets
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$ | 1,198,971 | $ | 1,129,843 | ||||
STEEL PARTNERS HOLDINGS L.P.
Consolidated Balance Sheets
(in thousands except common units)
(continued)
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March 31, 2012
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December 31, 2011
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LIABILITIES AND CAPITAL
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(unaudited)
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Current liabilities:
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Accounts payable
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$ | 49,620 | $ | 37,843 | ||||
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Accrued liabilities
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39,528 | 40,944 | ||||||
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Financial instruments
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24,314 | 23,736 | ||||||
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Deposits
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40,985 | 38,293 | ||||||
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Payable to related parties
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5,912 | 4,930 | ||||||
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Current portion of deferred fee liability to related party
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— | 1,107 | ||||||
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Short-term debt
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37,824 | 24,168 | ||||||
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Current portion of long-term debt
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8,531 | 8,531 | ||||||
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Deferred income taxes
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943 | 736 | ||||||
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Other current liabilities
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3,631 | 3,239 | ||||||
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Liabilities of discontinued operations
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— | 15,310 | ||||||
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Total current liabilities
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211,288 | 198,837 | ||||||
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Long-term deposits
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49,981 | 56,589 | ||||||
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Deferred fee liability to related party
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70,508 | 57,640 | ||||||
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Long-term debt
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129,965 | 130,955 | ||||||
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Accrued pension liability
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182,546 | 186,212 | ||||||
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Deferred income taxes
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4,061 | 6,231 | ||||||
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Other liabilities
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16,282 | 12,959 | ||||||
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Total Liabilities
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664,631 | 649,423 | ||||||
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Commitments and Contingencies
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— | — | ||||||
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Capital:
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Partners’ capital (common units: 25,183,039 issued and outstanding after deducting 2,808,725 held in treasury, at cost of $48,099 at March 31, 2012 and December 31, 2011).
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471,555 | 427,534 | ||||||
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Accumulated other comprehensive loss
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(6,870 | ) | (11,737 | ) | ||||
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Total Partners’ Capital
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464,685 | 415,797 | ||||||
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Noncontrolling interests in consolidated entities
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69,655 | 64,623 | ||||||
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Total Capital
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534,340 | 480,420 | ||||||
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Total Liabilities and Capital
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$ | 1,198,971 | $ | 1,129,843 | ||||
STEEL PARTNERS HOLDINGS L.P.
Consolidated Statements of Operations
(unaudited)
(in thousands except units and per unit data)
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Three Months Ended
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March 31,
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2012
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2011
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Revenue
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Diversified industrial net sales
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$ | 179,531 | $ | 158,407 | ||||
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Financial services revenue
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4,036 | 3,261 | ||||||
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Investment and other income
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116 | 374 | ||||||
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Net investment gains
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2,339 | 13,058 | ||||||
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Total revenue
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186,022 | 175,100 | ||||||
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Costs and expenses
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Diversified industrial cost of goods sold
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128,811 | 117,360 | ||||||
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Selling, general and administrative expenses
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41,506 | 32,482 | ||||||
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Finance interest expense
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320 | 346 | ||||||
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(Recovery of) provision for loan losses
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(145 | ) | 116 | |||||
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Interest expense
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3,308 | 3,215 | ||||||
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Realized and unrealized (gain) loss on derivatives
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(571 | ) | 3,538 | |||||
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Management fees - related party
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1,559 | 2,167 | ||||||
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Increase in deferred fee liability to related party
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11,762 | 489 | ||||||
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Other income
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(407 | ) | — | |||||
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Total costs and expenses
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186,143 | 159,713 | ||||||
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(Loss) Income from continuing operations before income taxes
and equity method income (loss)
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(121 | ) | 15,387 | |||||
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Income tax (provision) benefit
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(1,872 | ) | 5,607 | |||||
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Income (loss) from equity method investments and investments held at fair value:
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Income of associated companies, net of taxes
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50,540 | 1,858 | ||||||
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Loss from other investments - related party
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(10,800 | ) | (8,284 | ) | ||||
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Income (loss) from investments held at fair value
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8,638 | (1,564 | ) | |||||
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Net income from continuing operations
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46,385 | 13,004 | ||||||
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Discontinued operations:
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Income (Loss) from discontinued operations, net of taxes
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601 | (607 | ) | |||||
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Gain on sale of discontinued operations, net of taxes
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3,152 | 2,734 | ||||||
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Income from discontinued operations
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3,753 | 2,127 | ||||||
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Net income
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50,138 | 15,131 | ||||||
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Net (income) loss attributable to noncontrolling interests in consolidated entities:
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Continuing operations
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(2,347 | ) | (1,619 | ) | ||||
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Discontinued operations
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(1,821 | ) | (1,021 | ) | ||||
| (4,168 | ) | (2,640 | ) | |||||
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Net income attributable to common unitholders
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$ | 45,970 | $ | 12,491 | ||||
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Net income per common unit – basic
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Net income from continuing operations
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$ | 1.75 | $ | 0.45 | ||||
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Net income from discontinued operations
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0.08 | 0.04 | ||||||
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Net income attributable to common unitholders
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$ | 1.83 | $ | 0.49 | ||||
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Net income per common unit – diluted
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Net income from continuing operations
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$ | 1.75 | $ | 0.39 | ||||
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Net income from discontinued operations
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0.08 | 0.04 | ||||||
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Net income attributable to common unitholders
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$ | 1.83 | $ | 0.43 | ||||
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Weighted average number of common units outstanding - basic
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25,183,039 | 25,253,287 | ||||||
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Weighted average number of common units outstanding - diluted
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25,210,214 | 30,492,331 | ||||||
Consolidated Statements of Cash Flows
(unaudited)
(in thousands)
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Three Months Ended
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March 31,
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2012
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2011
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Cash flows from operating activities:
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Net income
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$ | 50,138 | $ | 15,131 | ||||
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Adjustments to reconcile net income to net cash provided by (used in) operating activities:
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Net investment gains
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(2,339 | ) | (13,058 | ) | ||||
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(Recovery of) Provision for loan losses
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(145 | ) | 116 | |||||
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Income of associated companies
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(50,540 | ) | (1,858 | ) | ||||
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Loss from other investments - related party
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10,800 | 8,284 | ||||||
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(Income) Loss from investments held at fair value
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(8,638 | ) | 1,564 | |||||
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Gain on sale of discontinued operations
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(3,152 | ) | (2,734 | ) | ||||
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Depreciation and amortization
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6,392 | 6,191 | ||||||
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Reclassification of net cash settlements on derivative instruments
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(22 | ) | 2,794 | |||||
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Stock based compensation
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1,775 | 929 | ||||||
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Unrealized loss on derivatives
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— | 808 | ||||||
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Income tax benefit from release of deferred tax valuation allowance
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— | (7,957 | ) | |||||
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Other
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(406 | ) | 1,466 | |||||
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Net change in operating assets and liabilities:
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Receivables
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(15,646 | ) | (21,324 | ) | ||||
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Receivables from related parties
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(2,889 | ) | — | |||||
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Inventories
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(4,453 | ) | (7,599 | ) | ||||
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Prepaid and other assets
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(799 | ) | 267 | |||||
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Accounts payable, accrued and other liabilities
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10,823 | (1,137 | ) | |||||
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Payable to related parties
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314 | 781 | ||||||
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Increase in deferred fee liability to related party
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11,762 | 489 | ||||||
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Net decrease (increase) in loans held for sale
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8,539 | (7,630 | ) | |||||
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Net cash provided by (used in) operating activities of discontinued operations
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610 | (2,654 | ) | |||||
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Net cash provided by (used in) operating activities
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12,124 | (27,131 | ) | |||||
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Cash flows from investing activities:
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Purchases of investments
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(6,656 | ) | (62,761 | ) | ||||
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Proceeds from sales of investments
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29,829 | 83,117 | ||||||
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Net decrease (increase) in loans receivable
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452 | (690 | ) | |||||
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Purchases of property and equipment
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(6,554 | ) | (3,911 | ) | ||||
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Reclassification of restricted cash
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(578 | ) | (5,692 | ) | ||||
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Net cash settlements on derivative instruments
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22 | (2,794 | ) | |||||
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Acquisitions, net of cash acquired
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488 | (57,414 | ) | |||||
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Purchase of subsidiary shares from noncontrolling interests
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(414 | ) | (628 | ) | ||||
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Investments in associated companies
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(10,923 | ) | (207 | ) | ||||
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Proceeds from sales of discontinued operations
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22,761 | 26,543 | ||||||
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Other
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577 | 85 | ||||||
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Net cash provided by (used in) investing activities
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29,004 | (24,352 | ) | |||||
STEEL PARTNERS HOLDINGS L.P.
Consolidated Statements of Cash Flows (continued)
(unaudited)
(in thousands)
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Three Months Ended
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||||||||
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March 31,
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||||||||
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2012
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2011
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Cash flows from financing activities:
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Net revolver borrowings
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13,473 | 3,727 | ||||||
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Net borrowings of term loans - foreign
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548 | 758 | ||||||
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Repayments of term loans - domestic
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(1,134 | ) | (1,460 | ) | ||||
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Deferred finance charges
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— | (204 | ) | |||||
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Net change in overdrafts
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(2,808 | ) | 2,804 | |||||
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Net decrease in deposits
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(4,031 | ) | (3,180 | ) | ||||
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Other
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(3,329 | ) | 1,141 | |||||
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Net cash provided by financing activities
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2,719 | 3,586 | ||||||
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Net change for the period
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43,847 | (47,897 | ) | |||||
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Effect of exchange rate changes on cash and cash equivalents
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168 | 178 | ||||||
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Cash and cash equivalents at beginning of period
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127,027 | 180,684 | ||||||
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Cash and cash equivalents at end of period
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$ | 171,042 | $ | 132,965 | ||||
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Cash paid during the period for:
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Interest
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$ | 3,920 | $ | 2,661 | ||||
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Taxes
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$ | 728 | $ | 1,154 | ||||
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Non-cash investing activities:
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Net (increase) decrease in restricted cash from purchase of foreign currency financial instruments
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$ | (578 | ) | $ | 31,451 | |||
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Non-cash financing activities:
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||||||||
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Common units issued for directors compensation
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$ | — | $ | 275 | ||||