This excerpt taken from the LCUT 10-Q filed Aug 9, 2006.
On July 7, 2006, the Company entered into an Asset Purchase Agreement (the Agreement) to acquire certain assets comprising the WearEver cookware and bakeware businesses (the WearEver Assets) of Global Home Products LLC (Global). WearEver is a leading supplier of cookware, bakeware and other accessories sold under the WearEver®, Mirro®, Regal®, AirBake® and Cushion Air® brand names. Global and certain of its affiliates, including certain of the companies that make up the WearEver business, filed for bankruptcy protection in April 2006. The Agreement provided that Lifetime would purchase the WearEver Assets pursuant to Section 363 of the United States Bankruptcy Code. The transaction was subject to a number of conditions, including completion of an auction process and bankruptcy court approval. An auction was held on August 7, 2006, at which the Company was not the successful bidder. The Company believes that a party which objected to the terms of the sale intends to file a motion to stay the sale. The Company cannot determine what effect, if any, the filing of such motion, or the granting of a stay, would have on the eventual outcome of the sale.
In connection with the agreement, the Company had agreed to provide certain advances to Global in the form of letters of credit issued to certain of Globals vendors to ensure the continued production of WearEver products until the transaction closed. As of August 9, 2006, letters of credit totaling $12.9 million have been issued by the Company in connection with the agreement. Pursuant to the terms of the agreement the successful bidder of the WearEver business is required to release the Company from its obligations in connection with these letters of credit upon the closing of the transaction.
On July 27, 2006, the Company entered into a 15-year lease agreement (the Lease Agreement) for approximately 60,000 square feet of office space located in the Greenway Tech Centre at 540 South George Street in York, Pennsylvania. The lease includes a renewal option for two additional five-year periods. The location will serve as the headquarters for the Companys Farberware Outlet Store, Pfaltzgraff Factory Store and Pfaltzgraff Catalogue and Internet operations and will also serve as the Companys principal design center for ceramic dinnerware and other ceramic products. Annual rent at the outset of the lease will be approximately $600,000 and will increase over the initial term of the lease to approximately $700,000. Occupancy is expected to begin in October 2006. This new office space will replace approximately 67,000 square feet of office space that the Company currently leases in five separate locations in the York, Pennsylvania area, the leases of which were entered into in connection with the Companys acquisition of the business and certain assets of Pfaltzgraff in July 2005.