What changed in this filing

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Item 1. Business

2021-03-10 compared with 2020-03-13 · 38 added, 39 removed, 92 unchanged (46% of the section changed)

2 unchanged sentences

The Company generally markets several lines within each of its product categories under more than one brand.

The Company sells its products directly to retailers (who may resell the Company’s products through their Internet websites) and, to a lesser extent, to distributors.

The Company also sells a limited selection of its products directly to consumers through its own Internet websites.

The Company sells its products directly to retailers (who may resell the Company’s products through their websites) and, to a lesser extent, to distributors.

The Company also sells a limited selection of its products directly to consumers through its own websites.

The Company’s product categories include two categories of products used to prepare, serve and consume foods, Kitchenware (kitchen tools and gadgets, cutlery, kitchen scales, thermometers, cutting boards, shears, cookware, pantryware, spice racks and bakeware) and Tableware (dinnerware, stemware, flatware and giftware);

10 unchanged sentences

Kitchen Craft is a leading supplier of kitchenware and tableware products and accessories in the United Kingdom (“U.K.”) and in over 80 other countries.

The Company continued its operational consolidation efforts of Lifetime Brands Europe Limited to create operational efficiencies in 2019.

As a result, Lifetime Brands Europe Limited’s brand development and design teams, administrative teams, and a majority of distribution combined and operated out of one state of the art facility in Aston, England.

In 2020, the Company completed its consolidation efforts of Lifetime Brands Europe Limited to create operational efficiencies.

As a result, Lifetime Brands Europe Limited’s brand development and design teams, administrative teams, and distribution combined and operated out of one state of the art facility in Aston, England.

The Company also has a subsidiary in the People’s Republic of China (“China”) to supply kitchenware and tableware products to the Chinese market and a subsidiary based in Hong Kong to facilitate the sale of its products to other parts of Asia and smaller markets elsewhere in the world.

21 unchanged sentences

segment includes the domestic operations of the Company’s business that design, market and distribute its products to retailers, distributors and directly to consumers through retail websites.

Business operations conducted outside the U.S.

are primarily included in the International segment.

Prior to December 31, 2018, certain international operations of the Company’s business were managed domestically by the U.S.

In 2019, the Company realigned its operating segments to reflect the changes in how the Company manages its business, reviews operating performance and allocates resources.

The prior period segment information has been recast to reflect the current reportable segment structure of the Company.

Additional information regarding the Company’s reportable segments is included in Note M- Business Segments of the Notes to the consolidated financial statements included in Item 15.

The International segment consists of certain business operations conducted outside the U.S.

Additional information regarding the Company’s reportable segments is included in NOTE 13 — BUSINESS SEGMENTS of the Notes to the consolidated financial statements included in Item 15.

The Company’s wholesale customers include mass market merchants, specialty stores, commercial stores, department stores, warehouse clubs, grocery stores, off-price retailers, food service distributors, pharmacies, food and beverage outlets and e-commerce.

The Company’s products are sold globally to a diverse customer base including mass market merchants (such as Walmart and Target), specialty stores (such as Bed Bath & Beyond and Dunelm), commercial stores (such as Williams Sonoma, Sur La Table and Kohl’s), department stores (such as Macy’s, Belk and John Lewis), warehouse clubs (such as Costco, Sam’s Club and BJs), grocery stores (such as Publix, Kroger, HEB, Meijer, Winn-Dixie, Tesco, Waitrose and Sainsbury’s), off-price retailers (such as TJX Companies, Ross Stores and Big Lots), food service distributors (such as US Foods, Clark Food Service and Jetro), food and beverage outlets (such as Starbucks) and e-commerce (such as Amazon).

The Company also does business with independent retailers, including through business-to-business Internet sites aimed at independent retailers.

The Company also operates its own consumer Internet sites that provide information about the Company’s products and offer consumers the opportunity to purchase a limited selection of the Company’s products directly.

During the years ended December 31, 2019, 2018 and 2017, Wal-Mart Stores, Inc., including Sam’s Club and, in the U.K., Asda Superstore, (“Walmart”), accounted for 16%, 14% and 15% of net sales, respectively.

Sales to Walmart are included in the Company's U.S.

The Company’s products are sold globally to a diverse customer base including mass market merchants (such as Walmart and Target), specialty stores (such as Bed Bath & Beyond and Dunelm), commercial stores (such as Williams Sonoma and Kohl’s), department stores (such as Macy’s, Belk and John Lewis), warehouse clubs (such as Costco, Sam’s Club and BJs), grocery stores (such as Publix, Kroger, HEB, Meijer, Winn-Dixie, Tesco, Waitrose and Sainsbury’s), off-price retailers (such as TJX Companies, Ross Stores and Big Lots), food service distributors (such as US Foods, Clark Food Service and Jetro), food and beverage outlets (such as Starbucks) and e-commerce (such as Amazon).

The Company also does business with independent retailers, including through business-to-business websites aimed at independent retailers.

The Company also operates its own consumer websites that provide information about the Company’s products and offer consumers the opportunity to purchase a limited selection of the Company’s products directly.

During the years ended December 31, 2020, 2019 and 2018, Wal-Mart Stores, Inc., including Sam’s Club and, in the U.K., Asda Superstore, (“Walmart”), accounted for 20%, 16% and 14% of consolidated net sales, respectively.

During the years ended December 31, 2020 and 2019, sales to Costco Wholesale Corporation (“Costco”) accounted for 11% of consolidated net sales.

During the year ended December 31, 2020, Amazon.com Inc., (“Amazon”), accounted for 10% of consolidated net sales.

Sales to Walmart, Costco and Amazon are included in the Company's U.S.

and International segments.

During the year ended December 31, 2019, sales to Costco Wholesale Corporation (“Costco”) accounted for 11% of consolidated net sales.

Sales to Costco are included in the Company's U.S.

and International segment.

No other customers accounted for 10% or more of the Company’s sales during these periods.

The Company sells its products directly to retailers and, to a lesser extent, to distributors.

The Company also sells a limited quantity of the Company’s products to individual consumers and smaller retailers through its own Internet sites.

The Company operates distribution centers at the following locations:

The Company also sells a limited quantity of the Company’s products to individual consumers and smaller retailers through its own websites.

The Company operates distribution facilities at the following locations:

Location Size

4 unchanged sentences

Winchendon, Massachusetts 175,000

Corby, England (1)

Las Cruces, New Mexico 24,000

Medford, Massachusetts 5,600

(1) As of December 31, 2019, the International segment utilized the Corby, England distribution center for a limited portion of customer orders.

The Company expects to complete the consolidation of its Corby, England distribution center into the Aston, England distribution center in 2020.

Additionally, the Company uses third-party operated distribution facilities to supplement its distribution capacity.

SALES AND MARKETING

1 unchanged sentence

The Company has developed many promotional programs for use in the ordinary course of business to promote sales throughout the year.

The Company’s sales and marketing efforts are supported from its principal offices and showroom in Garden City, New York, as well as showrooms in New York, New York;

The Company’s sales and marketing efforts are supported from its principal office and showroom in Garden City, New York, as well as showrooms in New York, New York;

Medford, Massachusetts;

14 unchanged sentences

Most of the Company’s suppliers are located in China.

The Company also sources products from suppliers in Hong Kong, Taiwan, Japan, South Korea, Vietnam, Malaysia, Thailand, India, the United States, Canada, Mexico, the U.K., Italy, France, Portugal, Poland, Slovenia, Sweden, Turkey, Netherlands, Denmark, Israel, Belgium, Germany, Czech Republic, Slovakia, American Samoa, Cambodia, Indonesia, the Philippines and Australia.

The Company orders products substantially in advance of the anticipated time of their sale by the Company.

The Company also sources products from suppliers across various countries including, Hong Kong, Taiwan, Japan, South Korea, Vietnam, Malaysia, Thailand, India, the United States, Canada, Mexico, the U.K., Italy, France, Portugal, Poland, Sweden, Turkey, Netherlands, Denmark, Belgium, Germany, Czech Republic, Slovakia, Cambodia, Indonesia and Australia.

The Company orders products significantly in advance of the anticipated time of their sale by the Company.

The Company does not have any formal long-term arrangements with any of its suppliers and its arrangements with most manufacturers allow for flexibility in modifying the quantity, composition and delivery dates of orders.

MANUFACTURING

The Company manufactures its sterling silver products at its leased manufacturing facility in San Germán, Puerto Rico and fills jars and other containers with spices and assembles spice racks at the Company’s owned distribution facility in Winchendon, Massachusetts.

The Company contracts with third parties to manufacture all of its other products.

The Company contracts with third parties to manufacture the vast majority of its products.

The Company manufactures its sterling silver products at a leased manufacturing facility in San Germán, Puerto Rico and fills jars and other containers with spices and assembles spice racks at an owned facility in Winchendon, Massachusetts.

The markets for kitchenware, tableware and other products used in the home including home décor products are highly competitive and include numerous domestic and foreign competitors, some of which are larger than the Company.

The primary competitive factors in selling such products are innovative products, brand, quality, aesthetic appeal to consumers, packaging, breadth of product line, distribution capability and selling price.

The primary competitive factors

in selling such products are innovative products, brand, quality, aesthetic appeal to consumers, packaging, breadth of product line, distribution capability and selling price.

PATENTS AND LICENSES

4 unchanged sentences

The Company originally entered into a licensing arrangement for use of the KitchenAid brand in 2000, and has renewed the license, typically for three-year periods, since that time.

Backlog is not material to the Company’s business, because actual confirmed orders from the Company’s customers are typically received within close proximity to the required shipment dates.

At December 31, 2019, the Company had a total of approximately 1,400 full-time employees, of whom 180 were located in Asia, 270 were located in Europe and 950 were located in the United States and Puerto Rico.

HUMAN CAPITAL

The Company aspires to hire and retain the best and brightest employees.

At December 31, 2020, the Company had approximately 1,350 full-time employees, of whom 150 were located in Asia, 280 were located in Europe and 920 were located in the United States and Puerto Rico.

The Company also hires seasonal workers at its distribution centers through temporary staffing agencies.

None of the Company’s employees are represented by a labor union or subject to collective bargaining agreements, except as required by local law.

The Company believes in the importance of the retention, growth and development of our employees.

We believe we offer competitive compensation and benefits packages to our employees.

Further, we offer professional development opportunities to cultivate talent throughout the Company.

We are focused on employee health and safety initiatives and have implemented protocols during the COVID-19 pandemic to enhance workplace safety.

The Company also values diversity and inclusion and is striving to create a more diverse workforce and inclusive community.

REGULATORY MATTERS

8 unchanged sentences

In 2020, net sales in the third and fourth quarters accounted for 62% of total annual net sales.

In anticipation of the pre-holiday shipping season, inventory levels increase primarily in the June through October time period.

GEOGRAPHIC INFORMATION

Geographic information concerning the Company’s revenues and long-lived assets is contained in Note B- Revenue and Note M- Business Segments of the Notes to the consolidated financial statements included in Item 15 of this Annual Report.

In 2020, the Company's inventory levels did not significantly decrease during the fourth quarter.

The higher inventory levels at December 31, 2020, were a result of increased inventory purchases to meet higher expected demand in 2021 due in part to the effects on demand from the COVID-19 pandemic.

RESTRUCTURING

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 years ended December 31, 2019 and 2018, the Company's U.S.

segment incurred $0.7 million and $2.1 million, respectively, of restructuring expense related to the Filament integration, of which $0.1 million and $1.4 million was accrued at December 31, 2019 and 2018, respectively.

During the years ended December 31, 2019, and December 31, 2018 the Company's international segment incurred $0.7 million and $0.2 million, respectively, of restructuring expense primarily related to the integration of its legal entities operating in Europe of which $0.2 million was accrued at December 31, 2018.

The Company had no international restructuring accrual as of December 31, 2019.

The Company's International segment expects to incur restructuring charges of $0.5 million in 2020 to complete its warehouse integration efforts.

segment incurred $0.7 million and $2.1 million, respectively, of restructuring expense related to the integration of Filament.

During the year ended December 31, 2020, the Company's International segment incurred $0.2 million of restructuring expenses related to severance associated with the strategic reorganization of the International segment’s product development and sales workforce.

The strategic reorganization was the result of the Company's efforts for product development efficiencies and an international sales approach tailored to countries.

During the years ended December 31, 2019, and 2018, the Company's international segment incurred $0.7 million and $0.2 million, respectively, of restructuring expense primarily related to the integration of its legal entities operating in Europe.

The Company does not expect to incur any additional restructuring charges for these efforts.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business