What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2022-03-09 compared with 2021-03-10 · 281 added, 370 removed, 1353 unchanged (32% of the section changed)

1 unchanged sentence

Evaluation of Disclosure Controls and Procedures

are effective to ensure that information required to be disclosed by the Company in the reports filed by it under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and include controls and procedures designed to ensure that information required to be disclosed by the Company in such reports is accumulated and communicated to the Company’s management, including the Chief Executive Officer and Chief Financial Officer of the Company, as appropriate to allow timely decisions regarding required disclosure.

The Chief Executive Officer and the Chief Financial Officer of the Company (its principal executive officer and principal financial officer, respectively) have concluded, based on their evaluation as of December 31, 2021, that the Company’s controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports filed by it under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and include controls and procedures designed to ensure that information required to be disclosed by the Company in such reports is accumulated and communicated to the Company’s management, including the Chief Executive Officer and Chief Financial Officer of the Company, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Controls

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Not applicable.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

Items 10, 11, 12, 13 and 14

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and Robert B.

Kay, effective April 13, 2020

Kay, effective April 13, 2020 (incorporated by reference to Exhibit 10.

1 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2020)

10.37 Second Amendment, dated February 1, 2021, to the Employment Agreement, dated as of December 22, 2017, by and between Lifetime Brands, Inc.

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(incorporated by reference to Exhibit 10.01 to the Company’s Current Report on Form 8-K filed November 15, 2018)

10.41 Credit Agreement, dated as of March 2, 2018, by and among the Company, the other Borrowers from time to time party thereto, the other Loan Parties from time to time party thereto, the Lenders from time to time party thereto, and JPMorgan Chase Bank, N.A., as Administrative Agent (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed March 6, 2018)

0 2 to the Company’s Current Report on Form 8-K filed March 6, 2018)

10.42 Amendment No.

1, dated as of December 28, 2021, by and among the Company, the other Loan Parties party thereto (as defined therein), and JPMorgan Chase Bank, N.A., as Administrative Agent (incorporated by re ference to Exhibit 10.01 to the Company's Current Report on Form 8-K filed Decem b er 29, 2021)

10.43 Loan Agreement, dated as of March 2, 2018, by and among the Company, the other Loan Parties from time to time party thereto, the Lenders from time to time party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent and Golub Capital LLC, as Syndication Agent.

(incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed March 6, 2018)

10.43 Amendment No.1 to the Receivables Purchase Agreement, dated as of October 9, 2020 by and among the Company, as a Seller and as a Seller Agent and initial Servicer, for itself and each of its subsidiaries thereto as a Seller, and HSBC Bank USA, National Association, as Purchaser

(incorporated by reference to Exhibit 10.

0 3 to the Company’s Current Report on Form 8-K filed March 6, 2018)

10.44 Amendment No.1 to the Receivables Purchase Agreement, dated as of October 9, 2020 by and among the Company, as a Seller and as a Seller Agent and initial Servicer, for itself and each of its subsidiaries thereto as a Seller, and HSBC Bank USA, National Association, as Purchaser (incorporated by reference to Exhibit 10.

43 to the Company's Annual Report on Form 10- K for the year ended December 31, 2020)

21.1 Subsidiaries of the Company

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are filed as part of this Annual Report under Item 8 – Financial Statements and Supplementary Data.

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm (PCAOB ID:

Consolidated Balance Sheets as of December 31, 2021 and 2020

Consolidated Statements of Operations for the Years ended December 31, 202 1 , 20 20 , and 201 9

Consolidated Statements of Comprehensive Loss for the Years ended December 31, 2020, 2019 and 2018

Consolidated Statements of Comprehensive Income (Loss) for the Years ended December 31, 202 1 , 20 20 and 201 9

Consolidated Statements of Stockholders’ Equity for the Years ended December 31, 202 1 , 20 20 , and 201 9

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All other financial schedules are not required under the related instructions or are inapplicable, and therefore have been omitted.

The unaudited supplementary data regarding quarterly results of operations are incorporated by reference to the information set forth in Item 8 – Financial Statements and Supplementary Data .

Report of Independent Registered Public Accounting Firm

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In the consolidated financial statements, the Company’s investment in Grupo Vasconia, S.A.B.

and Subsidiaries is stated at $20.0 million and $21.3 million as of December 31, 2020 and 2019, respectively, and the Company’s equity in the net income of Grupo Vasconia, S.A.B.

and Subsidiaries is stated at $22.3 million and $20.0 million as of December 31, 2021 and 2020, respectively, and the Company’s equity in the net (loss) income of Grupo Vasconia, S.A.B.

and Subsidiaries is stated at $1.8 million in 2021, $1.5 million in 2020 and $0.5 million in 2019.

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The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Valuation of Goodwill and Trade names

Long-lived Asset Impairment

Description of the Matter

At December 31, 2020, the Company’s intangible assets consist of goodwill in the U.S.

reporting unit with a carrying value of $30.3 million and two indefinite-lived trade names in the U.S.

reportable segment with an aggregated carrying value of $49.6 million.

As discussed in Note 7 of the audited consolidated financial statements, the Company tests goodwill and indefinite-lived trade names for impairment at least annually, or more frequently when events or changes in circumstances indicate that the carrying value of these assets may not be recoverable.

An impairment loss is recognized when the fair value of goodwill or the indefinite-lived trade names is less than its carrying amount.

During the current year, the Company recognized a goodwill impairment charges of $19.1 million in the U.S.

reporting unit and $1.0 million of an indefinite-lived trade name in the U.S.

reportable segment.

Auditing management’s annual and interim goodwill and indefinite-lived trade names impairment tests was complex as valuation of the reporting unit and indefinite-lived trade names involves considerable management judgment and estimation.

For goodwill, the Company estimated the fair value of the reporting unit using a combination of the discounted cash flow method, a form of the income approach, and the guideline public company method, a form of the market approach.

The discounted cash flow method is largely dependent upon estimates made by management with respect to significant assumptions, including projected net sales, projected earnings before interest, tax, depreciation and amortization (“EBITDA”), terminal growth rates, and the cost of capital For the guideline public company method, the significant assumptions related to the selection of the appropriate guideline companies and related valuation multiples used in the analysis.

For indefinite-lived trade names, significant assumptions used in management’s fair value analysis included future net sales for the related brands, royalty rates, and the cost of capital.

These assumptions are forward-looking.

Changes in market, industry and company-specific conditions could materially impact the determination of the fair value of these assets and the measurement of the impairments.

As described in Note 7 to the consolidated financial statements, during the fourth quarter of 2021, the Company identified triggering events, which resulted in the Company assessing its International asset group for recoverability.

The Company's test of recoverability and fair value measurement for the asset group resulted in an impairment charge of $14.8 million relating to finite-lived intangible assets in the International segment.

Auditing the Company's measurement of impairment involved a high degree of subjectivity as estimates underlying the determination of fair values were based on assumptions about future economic conditions.

Significant assumptions used in the Company's fair value estimates included projected net sales, earnings before interest, taxes, depreciation and amortization (“EBITDA”), terminal growth rates and the discount rate.

How We Addressed the Matter in Our Audit

We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company’s valuation of goodwill and indefinite-lived trade names.

We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company's processes to determine its asset groups, the fair value of the related assets and calculation of the long-lived asset impairment charges.

This included testing management’s review controls relating to the Company’s valuation models and significant assumptions, described above.

As part of our audit, we assessed the methodologies and significant assumptions used for the purposes of performing the impairment tests, among other procedures.

We evaluated our historical experience with management’s effort in producing accurate projections of revenue growth and profitability by comparing its historical projections to the Company’s actual performance.

To test the estimated fair value of the company's long-lived assets, we performed audit procedures that included, among other procedures, assessing methodologies and testing the significant assumptions and the underlying data used by the Company in its analyses.

We evaluated our historical experience with management’s effort in producing accurate projections of revenue growth and EBITDA by comparing its historical projections to the Company’s actual performance.

We tested the significant assumptions discussed above, as well as the completeness and accuracy of the underlying data used in the valuations.

We assessed the appropriateness of the Company’s projections by comparing them to general and sector-specific market expectations.

We engaged our valuation specialists to assess the reasonableness of the cost of capital, the valuation models and significant assumptions used in the valuation of the U.S.

reporting unit and the indefinite-lived trade names.

In order to reflect the uncertainty inherent in the projections, we inspected the sensitivity analyses performed by the Company and performed our own sensitivity analyses by increasing or decreasing the significant assumptions and evaluated the potential outcome for the U.S.

reporting unit and the indefinite-lived trade names in the U.S.

reportable segment.

For the guideline public company method, we evaluated the reasonableness of the selected guideline public companies and the resulting market multiples calculation.

In addition, we tested the reconciliation of the fair value of the reporting units developed by management to the stock market capitalization of the Company as of the valuation date and evaluated the implied control premium for reasonableness.

We engaged our valuation specialists to assist in assessing the reasonableness of the discount rate, the valuation models and significant assumptions used in the valuation of the finite-lived assets in the International segment.

Estimation of Variable Consideration

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As described in Note 2 of the audited consolidated financial statements, the Company offers various sales incentives and promotional programs to its customers in the normal course of business.

These sales incentives and promotional spending, typically including cooperative advertising, buydowns, volume discounts and discounts, represent variable consideration and are reflected as reductions in net sales in the Company’s consolidated statements of operations.

These sales incentives and promotional spending, typically including cooperative advertising, buydowns, volume rebates and discounts, represent variable consideration and are reflected as reductions in net sales in the Company’s consolidated statements of operations.

While a majority of the sales incentives and promotions are contractually agreed upon with the Company’s customers, certain discounts require the Company to estimate the sales incentive and promotions based on historical experience and other known factors or as the most likely amount in a range of possible outcomes.

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Prepaid expenses and other current assets 11,499 12,129

Income taxes receivable — 1,577

TOTAL CURRENT ASSETS 485,073 421,293

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Selling, general and administrative expenses 156,945 155,872 161,618

Goodwill and other impairments 20,100 42,990 2,205

Goodwill and other intangible asset impairments 14,760 20,100 42,990

Restructuring expenses — 211 1,435

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Interest expense ( 15,524 ) ( 17,277 ) ( 20,780 )

Mark to market (loss) gain on interest rate derivatives

Mark to market gain (loss) on interest rate derivatives

1,062 ( 2,144 ) 402

Loss on early retirement of debt

Income (loss) before income taxes and equity in earnings

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962 1,310 467

NET INCOME (LOSS)

$ 20,801 $ ( 3,007 ) $ ( 44,415 )

BASIC LOSS PER COMMON SHARE

BASIC INCOME (LOSS) PER COMMON SHARE

$ 0.97 $ ( 0.14 ) $ ( 2.16 )

DILUTED LOSS PER COMMON SHARE

DILUTED INCOME (LOSS) PER COMMON SHARE

$ 0.94 $ ( 0.14 ) $ ( 2.16 )

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LIFETIME BRANDS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands)

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2021 2020 2019

Net income (loss)

$ 20,801 $ ( 3,007 ) $ ( 44,415 )

Other comprehensive (loss) income, net of tax:

Other comprehensive income (loss), net of tax:

Translation adjustment 690 ( 2,062 ) ( 292 )

Amount reclassified 3,404 235 —

Total translation loss

Total translation gain (loss)

4,094 ( 1,827 ) ( 292 )

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Settlement of cash flow hedges 1,514 984 ( 209 )

Total deferred (losses) gains on cash flow hedges

Total deferred gains (losses) on cash flow hedges

1,203 ( 2,289 ) 1,003

Effect of retirement benefit obligations:

Net (loss) income arising from retirement benefit obligations, net of tax of $( 259 ), $( 251 ) and $ 93

Net income (loss) arising from retirement benefit obligations, net of tax of $( 64 ), $ 259 and $ 251

191 ( 680 ) ( 601 )

amortization of loss included in net loss, net of tax of $ 52 , $ 34 and $ 23

amortization of loss included in net income (loss), net of tax of $( 45 ), $( 52 ) and $( 34 )

Total effects of retirement benefit obligations 326 ( 601 ) ( 550 )

Other comprehensive (loss) income, net of tax

Other comprehensive income (loss), net of tax

5,623 ( 4,717 ) 161

Comprehensive loss

Comprehensive income (loss)

$ 26,424 $ ( 7,724 ) $ ( 44,254 )

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20,764 $ 208 $ 258,637 $ 55,264 $ ( 34,616 ) $ 279,493

Comprehensive (loss) income:

— — — ( 44,415 ) — ( 44,415 )

Translation adjustment — — — — ( 5,906 ) ( 5,906 )

Derivative fair value adjustment — — — — 147 147

Effect of retirement benefit obligations — — — — 468 468

Total comprehensive loss

Restricted shares granted to directors 46 — — — — —

Net issuance of restricted shares granted to employees 211 2 ( 2 ) — — —

Issuance of 5,593,116 shares of common stock for acquisition of Filament, net of equity issuance costs

Other comprehensive income, net of tax

— — — — 161 161

Performance shares issued to employees 67 1 ( 1 ) — — —

Net issuance of restricted shares granted to employees and directors 416 4 ( 4 ) — — —

Stock compensation expense — — 5,021 — — 5,021

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21,256 $ 213 $ 263,386 $ 7,173 $ ( 34,455 ) $ 236,317

Comprehensive (loss) income:

— — — ( 3,007 ) — ( 3,007 )

Translation adjustment — — — — ( 292 ) ( 292 )

Derivative fair value adjustment — — — — 1,003 1,003

Effect of retirement benefit obligations — — — — ( 550 ) ( 550 )

Total comprehensive loss

Other comprehensive loss, net of tax

— — — — ( 4,717 ) ( 4,717 )

Performance shares issued to employees 62 1 ( 1 ) — — —

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21,755 $ 218 $ 268,666 $ 424 $ ( 39,172 ) $ 230,136

Comprehensive loss:

— — — 20,801 — 20,801

Translation adjustment — — — — ( 1,827 ) ( 1,827 )

Derivative fair value adjustment — — — — ( 2,289 ) ( 2,289 )

Effect of retirement benefit obligations — — — — ( 601 ) ( 601 )

Total comprehensive loss

Other comprehensive income, net of tax

— — — — 5,623 5,623

Performance shares issued to employees 150 1 ( 1 ) — — —

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OPERATING ACTIVITIES

Net income (loss)

$ 20,801 $ ( 3,007 ) $ ( 44,415 )

Adjustments to reconcile net loss to net cash provided by operating activities:

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation and amortization 22,520 24,664 25,115

Goodwill and other impairments 20,100 42,990 2,205

Goodwill and other intangible asset impairments 14,760 20,100 42,990

Amortization of financing costs 1,739 1,774 1,748

Mark to market loss (gain) on interest rate derivatives

Mark to market (gain) loss on interest rate derivatives

( 1,062 ) 2,144 ( 402 )

Deferred rent — — 57

Non-cash lease expense ( 1,294 ) 2,379 1,047

Provision for doubtful accounts, net of (recoveries) 3,291 ( 163 ) 338

Provision (recovery) for doubtful accounts ( 5 ) 3,291 ( 163 )

Deferred income taxes 1,799 ( 1,861 ) ( 1,073 )

Stock compensation expense 5,217 5,951 5,041

Undistributed equity (earnings), net of taxes

Undistributed (earnings) from equity investment, net of taxes

( 807 ) ( 1,258 ) ( 343 )

Loss on early retirement of debt — — 66

SKU Rationalization — — 8,500

Contingent consideration fair value adjustment — — ( 1,774 )

Changes in operating assets and liabilities (excluding the effects of business acquisitions)

Changes in operating assets and liabilities

Accounts receivable ( 5,531 ) ( 43,760 ) ( 2,096 )

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Purchases of property and equipment ( 3,986 ) ( 2,082 ) ( 9,169 )

Filament acquisition, net of cash acquired — — ( 216,527 )

Net proceeds from sale of property — — 249

Proceeds from sale of shares of equity method investment 3,061 — —

Acquisition ( 178 ) — —

NET CASH USED IN INVESTING ACTIVITIES

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Repayments of revolving credit facility ( 130,662 ) ( 135,463 ) ( 355,730 )

Proceeds from Term Loan — — 275,000

Repayments of Term Loan ( 10,478 ) ( 7,583 ) ( 2,750 )

Proceeds from short term loan — — 216

Payments from short term loan — — ( 278 )

Payment of financing costs — — ( 11,171 )

Payment of equity issuance costs — — ( 936 )

Cash dividends paid ( 3,843 ) ( 3,651 ) ( 3,571 )

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Payments of tax withholding for stock based compensation ( 3,189 ) ( 658 ) ( 399 )

NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES

NET CASH USED IN FINANCING ACTIVITIES

( 44,027 ) ( 18,236 ) ( 16,916 )

Effect of foreign exchange on cash 161 98 ( 64 )

INCREASE IN CASH AND CASH EQUIVALENTS

(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS

( 7,981 ) 24,593 3,723

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Realized and unrealized gains and losses from non-designated foreign currency hedges are recognized in selling, general and administrative expenses in the consolidated statements of operations.

Foreign currency gains and losses included within selling, general and administrative expenses were a $ 0.5 million gain in 2020, a $ 0.1 million gain in 2019, and a $ 0.5 million loss in 2018.

Foreign currency gains and losses included within selling, general and administrative expenses were a $ 1.3 million loss in 2021, a $ 0.5 million gain in 2020, and a $ 0.1 million gain in 2019.

LIFETIME BRANDS, INC.

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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.

These arrangements and an estimate for products expected to be returned are reflected as reductions of revenue at the time of sale.

See NOTE 2 — REVENUE for additional information.

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The inventory charge, which was recognized in cost of sales during the three months ended June 30, 2019, represented approximately 8 % of the Company's consolidated inventory at June 30, 2019.

Prior to January 1, 2019, depreciation associated with certain tooling used to produce products was recorded in selling, general and administrative expenses in the consolidated statement of operations.

The amount recorded in cost of sales for the year ended December 31, 2020 and 2019 was $ 1.0 million and $ 1.4 million, respectively.

The impact on the comparative periods presented is immaterial and therefore, the comparative periods have not been adjusted to reflect this change in accounting policy.

Distribution expenses

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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, taking into consideration customer credit history and financial condition, industry and market segment information, credit reports, and economic trends and conditions such as the impact of the COVID-19 pandemic in 2020.

A considerable amount of judgment is required to assess the ultimate realization of these receivables including assessing the initial and on-going creditworthiness of the Company’s customers.

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To evaluate the reasonableness of non-contractual customer deductions, the Company analyzes currently available information and historical trends of deductions.

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 consolidated balance sheet at the time of sale and any related expense is included in selling, general and administrative expenses in the Company’s consolidated statements of operations.

LIFETIME BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2020

The sales of accounts receivable, under the Company’s Receivable Purchase Agreement with HSBC, are reflected as a reduction of accounts receivable in the Company’s consolidated balance sheet at the time of sale and any related expense is included in selling, general and administrative expenses in the Company’s consolidated statements of operations.

Inventory consists principally of finished goods sourced from third-party suppliers.

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Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable cost of completion, disposal and transportation.

LIFETIME BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2021

Property and equipment

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During the years ended December 31, 2021, 2020 and 2019, Wal-Mart Stores, Inc., including Sam’s Club and, in the U.K., Asda Superstore, (“Walmart”), accounted for 18 %, 20 % and 16 % 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.

During the years ended December 31, 2021, 2020 and 2019, sales to Costco Wholesale Corporation (“Costco”) accounted for 12 %, 11 %, and 11 % of consolidated net sales.

During the year ended December 31, 2021 and 2020, Amazon.com Inc., (“Amazon”), accounted for 12 % and 10 % of consolidated net sales.

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

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The Company determined that the carrying amounts of borrowings outstanding under its ABL Agreement and Term Loan approximate fair value since such borrowings bear interest at variable market rates.

LIFETIME BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2020

The Company accounts for derivative instruments in accordance with ASC Topic 815, Derivatives and Hedging.

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Changes in fair value of derivatives that do not qualify as hedging instruments for accounting purposes are recorded in the consolidated statements of operations.

LIFETIME BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2021

Goodwill, intangible assets and long-lived assets

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See NOTE 7 — GOODWILL AND INTANGIBLE ASSETS for further discussion regarding goodwill impairment.

The Company also evaluates qualitative factors to determine whether or not its indefinite lived intangibles have been impaired and then performs quantitative tests if required.

The Company also evaluates qualitative factors to determine whether impairment indicators exist for its indefinite lived intangibles and performs quantitative tests if required.

These tests can include the relief from royalty model or other valuation models.

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If the carrying amount of the asset is not recoverable, the impairment to be recognized is measured by the amount by which the carrying amount of each long-lived asset exceeds the fair value of the asset.

See NOTE 7 — GOODWILL AND INTANGIBLE ASSETS for further discussion regarding impairment of long-lived assets.

The Company accounts for income taxes using the asset and liability method.

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Forfeitures are accounted for as they occur.

LIFETIME BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2020

The Company uses the Black-Scholes option valuation model to estimate the fair value of its stock options.

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The number of shares of common stock earned will be determined based on the attainment of specified performance goals, as determined by the Compensation Committee of the Board of Directors, by the end of the performance period.

Compensation expense for performance awards is recognized over the vesting period and will vary based on remeasurement during the performance period.

Compensation expense for performance awards is recognized over the

LIFETIME BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2021

vesting period and will vary based on remeasurement during the performance period.

If achievement of the performance metrics is not probable of achievement during the performance period, compensation expense is reversed.

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Charges associated with lease terminations, related to restructuring activities, are recognized at the effective date of the lease modification.

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 integration of Filament, of which $ 0.1 million was accrued at December 31, 2019.

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.

LIFETIME BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2020

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 had no international restructuring accrual as of December 31, 2020 and December 31, 2019.

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

During the year ended December 31, 2019, the Company's U.S.

segment incurred $ 0.7 million of restructuring expense related to the integration of Filament.

During the year ended December 31, 2019, the Company's International segment incurred $ 0.7 million of restructuring expense primarily related to the integration of its legal entities operating in Europe.

Commitments and Contingencies

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The Company recognizes liabilities for contingencies and commitments when a loss is probable and estimable.

LIFETIME BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2021

Adopted accounting pronouncements

On April 10, 2020, the FASB staff issued a question-and-answer document to address stakeholder questions on the application of the lease accounting guidance for lease concessions related to the effects of the COVID-19 pandemic (the “Question-and-Answer Document”).

The guidance allows concessions related to the timing of payments, where the total consideration has not changed, to not be accounted for as lease modifications.

Instead, any such concessions can be accounted for as if no change was made to the contract or as variable lease payments.

The Company adopted the guidance on April 1, 2020 and elected to account for COVID-19-related rent concessions that did not result in a substantial increase in the rights of the lessor or the obligations of the lessee not as lease modifications.

See NOTE 4 — LEASES for additional information on the Company’s adoption of this guidance.

Accounting Pronouncements to be Adopted in Future Periods

Updates not listed below were assessed and either determined to not be applicable or are expected to have a minimal effect on the Company’s financial position, results of operations, and disclosures.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740):

Effective January 1, 2021, the Company adopted ASU 2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes, which simplifies the accounting for income taxes by removing certain exceptions to the general principles and simplifies the application of U.S.

GAAP for other areas of Topic 740 by clarifying and amending the existing guidance.

The guidance is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2020.

The impact of the adoption is not expected to have a material impact on the Company's consolidated financial statements.

The adoption did not have a material impact on the Company’s consolidated financial statements.

New accounting pronouncements

In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments.

This guidance introduces a new model for recognizing credit losses on financial instruments based on an estimate of current expected credit losses.

The ASU also provides updated guidance regarding the impairment of available-for-sale debt securities and includes additional disclosure requirements.

ASU 2016-13 also provides updated guidance regarding the impairment of available-for-sale debt securities and includes additional disclosure requirements.

The new guidance is effective for public business entities that meet the definition of a Smaller Reporting Company as defined by the Securities and Exchange Commission for interim and annual periods beginning after December 15, 2022.

The Company met the definition of a Smaller Reporting Company as of the one-time determination date of November 15, 2019.

Early adoption is permitted.

1 unchanged sentence

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional expedients and exceptions to account for contract modifications, hedging relationships and other transactions that reference LIBOR or another reference rate that is expected to be discontinued as a result of reference rate reform.

The guidance was effective upon issuance and may be applied prospectively to contract modifications and hedging relationships entered into or evaluated as of any date from March 12, 2020 but no later than December 31, 2022.

The Company has not yet applied the guidance in this ASU and is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures.

Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional expedients and exceptions to account for contract modifications, hedging relationships and other transactions that reference the London Inter-Bank Offered Rate ("LIBOR") or another reference rate that is expected to be discontinued as a result of reference rate reform.

The guidance in ASU 2020-04 may be applied to contract modifications and hedging relationships as of any date from March 12, 2020 but no later than December 31, 2022 and should be applied on a prospective basis.

The Company has not yet applied the guidance in ASU 2020-04 and is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures.

In October 2021, the FASB issued ASU No.

2021-08, Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (ASU 2021-08), which clarifies that an acquirer of a business should recognize and measure contract assets and contract liabilities in a business combination in accordance with Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers.

The new guidance is effective for public business entities for fiscal years beginning after December 15, 2022 on a prospective basis, with early adoption permitted.

Management is currently evaluating the timing of adoption and the impact of this standard on its consolidated financial statements and related disclosures.

NOTE 2 — REVENUE

2 unchanged sentences

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 Free on Board ("FOB") Shipping Point, or equivalent, and, as such, the Company primarily

LIFETIME BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2020

transfers control and records revenue for product sales upon shipment.

The Company’s principal terms of sale are Free on Board ("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.

6 unchanged sentences

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.

LIFETIME BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2021

Payment terms vary by customer, but generally range from 30 to 90 days or at the point of sale for the Company’s retail direct sales.

As a result of the COVID-19 pandemic, beginning in the first quarter of 2020 and lasting through the fourth quarter of 2020, many of the Company's customers that operate retail locations temporarily closed their stores voluntarily or as mandated by government stay at home orders.

In response to these closings, the affected customers have requested extended payment terms.

The Company has been working with these customers to address their temporary extended payment requests.

In response to these closings, the affected customers had requested temporary extended payment terms.

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.

10 unchanged sentences

International segment 92,291 85,630 90,731

Kitchenware 69,322 62,845 59,657

Tableware 16,308 27,886 35,771

Total International segment 85,630 90,731 95,428

Total net sales $ 862,924 $ 769,169 $ 734,902

6 unchanged sentences

Total net sales $ 862,924 $ 769,169 $ 734,902

LIFETIME BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2020

NOTE 3 — ACQUISITIONS

On December 22, 2017, the Company entered into an agreement providing for the acquisition of Filament by the Company.

The acquisition was completed on March 2, 2018.

The aggregate consideration for Filament, after taking into account certain adjustments, was $ 294.4 million, consisting of $ 217.5 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.

In the first two months of 2019, the Company decreased goodwill by approximately $ 1.0 million due to certain opening balance sheet fair value adjustments, primarily related to deferred taxes.

The purchase price, as adjusted, has been determined to be as follows (in thousands):

Cash $ 217,511

Share consideration 76,905

Total purchase price $ 294,416

The purchase price was allocated based on the Company’s final estimate of the fair value of the assets acquired and liabilities assumed, as follows (in thousands):

Accounts receivable $ 26,224

Inventory 29,044

Other assets 5,620

Other liabilities ( 23,018 )

Deferred income tax ( 13,881 )

Goodwill and other intangibles 270,427

Total allocated value $ 294,416

The acquisition was being accounted for as a business combination using the acquisition method of accounting in accordance with FASB ASC Topic 805, Business Combinations (“ASC Topic 805”), which established a new basis of accounting for all identifiable assets acquired and liabilities assumed at fair value.

ASC Topic 805 allows the acquiring company to adjust preliminary amounts recognized at the acquisition date to their subsequently determined final fair values during a measurement period, generally up to one year from the date of the acquisition.

The goodwill and other intangible assets are included in the U.S.

Customer relationships and certain trade names, which are included in intangible assets, net, are amortized on a straight-line basis over their estimated useful lives (see NOTE 7 — GOODWILL AND INTANGIBLE ASSETS).

Goodwill results from such factors as an assembled workforce.

The total amount of goodwill is not expected to be deductible for tax purposes.

The year ended December 31, 2018 includes the operations of Filament for the period from March 2, 2018, the date of the acquisition of Filament, to December 31, 2018.

The consolidated statement of operations for the year ended December 31, 2018, includes $ 128.8 million of net sales contributed by Filament.

Included in Selling, general and administrative expenses for the year ended December 31, 2018 is a $ 1.8 million credit to reflect the change in fair value of a contingent consideration obligation acquired by the Company in connection with its acquisition of Filament.

Unaudited Pro forma Results

The following unaudited pro forma financial information presents the results of the Company as if the acquisition of Filament had occurred on January 1, 2018.

LIFETIME BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2020

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 items directly related to the business combination.

Year ended December 31,

(In thousands, except per share data)

Net sales $ 730,353

Income before income taxes and equity in earnings 2,439

Net loss ( 267 )

Basic and diluted loss per common share $ ( 0.01 )

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 consolidated operating results of the combined company.

NOTE 3 — ACQUISITION

On February 26, 2021, the Company acquired the business and certain assets of Year & Day, a designer and distributor of ceramic dinnerware, stainless steel flatware and Italian glassware, for cash in the amount of $ 0.2 million.

The assets and operating results of the Year & Day brand are reflected in the Company’s consolidated financial statements in accordance with ASC Topic No.

805, Business Combinations, commencing from the acquisition date.

The purchase price was allocated based on the fair values of the assets acquired which consistent of inventory $ 0.3 million and liabilities assumed of $ 0.1 million.

The Year & Day acquisition did not have a material impact on the Company's consolidated statement of operations for the year ended December 31, 2021.

NOTE 4 — LEASES

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The Company’s lease term includes options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option.

ROU assets also include any advance lease payments.

ROU assets also include any advance

LIFETIME BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2021

lease payments.

As most of the Company’s operating leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments.

1 unchanged sentence

Year Ended December 31,

2021 2020 2019

Operating lease costs (1) :

2 unchanged sentences

Total $ 23,693 $ 21,979 $ 23,469

(1) Expenses are recorded in selling, general and administrative expenses.

Rent and related expenses under operating leases was $ 18.4 million for the years ended December 31, 2018.

(1) Expenses are recorded within distribution expenses and selling, general and administrative expenses.

Supplemental cash flow information for the year ended December 31, 2021, 2020 and 2019 were as follows (in thousands):

Year Ended December 31,

2021 2020 2019

Cash paid for amounts included in the measurement of lease liabilities:

1 unchanged sentence

Total $ 19,154 $ 15,802 $ 17,851

LIFETIME BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2020

Year Ended December 31,

2021 2020 2019

Right-of-use assets obtained in exchange for lease obligations:

2 unchanged sentences

Included in machinery, furniture and equipment at each of December 31, 2021 and 2020 is $ 0.3 million and $ 0.4 million, respectively, related to assets recorded under finance leases.

Included in accumulated depreciation and amortization at December 31, 2020 and December 31, 2019 is $ 0.2 million and $ 0.1 million, respectively, related to assets recorded under finance leases.

In response to the COVID-19 pandemic, the Company negotiated COVID-19-related rent concessions for several of its leased properties.

Included in accumulated depreciation and amortization at December 31, 2021 and December 31, 2020 is $ 0.2 million related to assets recorded under finance leases.

During the period ended December 31, 2020, in response to the COVID-19 pandemic, the Company negotiated COVID-19-related rent concessions for several of its leased properties.

The majority of these rent concessions were in the form of deferred rent payments for one or more months.

For these rent concessions the Company elected to account for these as if no changes to the lease were made and continued to recognize the straight-line lease expense for these leases in accordance with the FASB Question-and-Answer Document.

COVID-19-related deferred rent payments at December 31, 2020 were $ 1.0 million and were recorded in accrued expenses in the condensed consolidated balance sheet at December 31, 2020.

In addition, there were a limited number of rent concessions obtained by the Company in the form of rent abatement and changes in lease terms.

These lease modifications were accounted for as a resolution to a contingency that fixes previously variable lease payments which resulted in the remeasurement of the right-of-use asset and lease liability.

The remeasurement of the right-of-use and lease liability did not have a material effect on our consolidated financial statements or results of operations.

The Company applied the guidance issued in the FASB staff Q&A - Topic 842 and Topic 840:

Accounting For Lease Concessions Related to the Effects of the COVID-19 Pandemic, and elected to account for these rent concessions as if no changes to the lease were made and continued to recognize the straight-line lease expense.

The COVID-19 related deferred rent payments as of December 31, 2020 were $ 1.0 million were deferred into fiscal year 2021.

As of December 31, 2021, all deferred payments have been paid.

LIFETIME BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2021

The aggregate future lease payments for operating leases as of December 31, 2021 were as follows (in thousands):

4 unchanged sentences

Present value of lease payments $ 103,436

The Company expects to make payments related to the deferrals obtained as a result of COVID-19-related rent concessions of $ 1.0 million in 2021, per the updated terms of the applicable lease agreements.

Average lease terms and discount rates were as follows:

5 unchanged sentences

Operating leases 6.2 % 6.2 %

LIFETIME BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2020

NOTE 5 — SALE OF ACCOUNTS RECEIVABLE

9 unchanged sentences

At December 31, 2021 and 2020, $ 28.8 million and $ 24.7 million, respectively, of receivables sold are outstanding and are due to HSBC Bank USA from customers.

A charge of $ 0.4 million and $ 0.6 million related to the sale of the Receivables is included in selling, general and administrative expenses in the consolidated statements of operations for the years ended December 31, 2020 and 2019, respectively.

A charge of $ 0.4 million related to the sale of the Receivables is included in selling, general and administrative expenses in the consolidated statements of operations for both the years ended December 31, 2021 and 2020.

NOTE 6 — EQUITY INVESTMENTS

The Company owns approximately 30 % of the outstanding capital stock of Vasconia, an integrated manufacturer of aluminum products and one of Mexico’s largest housewares companies.

The Company owns 24.7 % of the outstanding capital stock of 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.

2 unchanged sentences

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 years ended December 31, 2021, 2020 and 2019 in the accompanying consolidated statements of operations.

On June 30, 2021, Vasconia sold shares, which diluted the Company’s investment ownership from approximately 30 % to approximately 27 %.

The Company recorded a non-cash gain of $ 1.7 million, increasing the Company’s investment balance.

Additionally, a loss of $ 2.0 million was recognized for the proportionate share of the diluted ownership for amounts previously recognized in accumulated other comprehensive loss.

The net loss of $ 0.3 million was included in equity in earnings, net of taxes, in the accompanying consolidated statements of operations for the year ended December 31, 2021.

LIFETIME BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2021

On July 29, 2021, the Company sold 2.2 million shares further reducing its ownership from approximately 27 % to 24.7 % in Vasconia for net cash proceeds of approximately $ 3.1 million, as a result the Company recorded a gain of $ 1.0 million, after decreasing the Company’s investment balance.

The gain on the sale resulted in a tax expense of $ 0.1 million.

Additionally, a loss of $ 1.4 million was recognized for the proportionate share of the reduced ownership for amounts previously recognized in accumulated other comprehensive loss.

The net loss, including taxes, of $ 0.5 million was included in equity in earnings, net of taxes, in the accompanying consolidated statements of operations for the year ended December 31, 2021.

The Company continues to apply the equity method of accounting.

The value of the Company’s investment balance has been translated from Mexican pesos (“MXN”) to U.S.

6 unchanged sentences

19.11 - 19.42

The effect of the translation of the Company’s investment, as well as the translation of Vasconia’s balance sheet, resulted in a decrease of the investment of $ 2.7 million during the year ended December 31, 2020 and a decrease of the investment of $ 1.6 million during the year ended December 31, 2019.

The effect of the translation of the Company’s investment, as well as the translation of Vasconia’s balance sheet, resulted in an increase of the investment of $ 1.0 million during the year ended December 31, 2021 and a decrease of the investment of $ 2.7 million during the year ended December 31, 2020.

These translation effects are recorded in accumulated other comprehensive loss.

The Company received cash dividends of $ 52,000 , $ 124,000 and $ 115,000 , from Vasconia during the years ended December 31, 2020, 2019 and 2018, respectively.

The Company received cash dividends of $ 0.2 million, $ 0.1 million and $ 0.1 million, from Vasconia during the years ended December 31, 2021, 2020 and 2019, respectively.

The amounts due to and due from Vasconia as of December 31, 2021 and 2020 are as follows (in thousands):

2 unchanged sentences

Amounts due to Vasconia Accrued expenses and Accounts payable $ ( 146 ) ( 91 )

LIFETIME BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2020

Summarized income statement information for the years ended December 31, 2021, 2020 and 2019, as well as summarized balance sheet information as of December 31, 2021 and 2020, for Vasconia, calculated in accordance with U.S.

7 unchanged sentences

Gross profit 52,574 1,064,557 24,947 540,244 34,032 654,342

(Loss) income from operations

Income (loss) from operations

15,536 313,156 ( 102 ) 6,674 8,620 165,287

8 unchanged sentences

The Company recorded equity in earnings of Vasconia, net of taxes, of $ 1.8 million, $ 1.5 million and $ 0.5 million for the years ended December 31, 2021, 2020 and 2019, respectively.

Equity in earnings in 2018 includes deferred tax benefit of $ 0.1 million due to a change in the tax basis of the investment as a result of the Tax Act.

LIFETIME BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2021

As of December 31, 2021, the fair value (based on Level 1 inputs using the quoted stock price) of the Company’s investment in Vasconia was $ 31.5 million.

4 unchanged sentences

Foreign currency translation losses of $ 0.2 million, which were previously recorded as a component of stockholder’s equity within accumulated other comprehensive loss, were recognized in earnings upon dissolution of this subsidiary during the year ended December 31, 2020.

The Company included this loss within equity in earnings (losses), net of taxes.

In February 2012, the Company entered into a joint venture, Grand Venture Holdings Limited (“Grand Venture”), with Manweal Development Limited (“Manweal”), a Chinese corporation, to distribute Mikasa® products in China, which included an initial investment by the Company of $ 0.5 million.

The Company and Manweal each own 50 % of Grand Venture and have rights and obligations proportionate to their ownership percentages.

The Company accounts for its investment in Grand Venture using the equity method of accounting and has recorded its proportionate share of Grand Venture’s net loss as equity in earnings (losses) in the Company’s consolidated statements of operations.

Due to the operating losses the Company evaluated the carrying value of its investment for other-than temporary impairment under the equity method of accounting and recorded an impairment charge of approximately $ 0.2 million during the year ended December 31, 2018.

As of December 31, 2020 and 2019, the Company had a carrying value of zero in Grand Venture.

LIFETIME BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2020

The Company included this loss within equity in earnings, net of taxes.

NOTE 7 — GOODWILL AND INTANGIBLE ASSETS

18 unchanged sentences

These trade names are being amortized over an estimated useful life of 18 years.

LIFETIME BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2021

A summary of the activities related to the Company’s intangible assets for the years ended December 31, 2021, 2020 and 2019 consists of the following (in thousands):

1 unchanged sentence

Goodwill and Intangible Assets, December 31, 2018 $ 247,157 $ 91,690 $ 338,847

Acquisition of goodwill — 78,795 78,795

Acquisition of trade names 61,500 — 61,500

Acquisition of customer relationships 124,430 — 124,430

Acquisition of other intangible assets 5,367 — 5,367

Purchase price adjustment — 972 972

Foreign currency translation adjustment 786 ( 301 ) 485

2 unchanged sentences

Goodwill and Intangible Assets, December 31, 2019 231,100 49,371 280,471

Purchase price adjustment — 972 972

Foreign currency translation adjustment 607 — 607

Amortization ( 16,953 ) — ( 16,953 )

Impairment of indefinite -lived intangible assets ( 1,000 ) — ( 1,000 )

Impairment of goodwill — ( 19,100 ) ( 19,100 )

2 unchanged sentences

Amortization ( 16,223 ) — ( 16,223 )

Impairment of indefinite -lived intangible assets ( 1,000 ) — ( 1,000 )

Impairment of goodwill — ( 19,100 ) ( 19,100 )

Impairment of finite -lived intangible assets ( 14,760 ) — ( 14,760 )

Goodwill and Intangible Assets, December 31, 2021 $ 182,407 $ 30,271 $ 212,678

LIFETIME BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2020

The weighted-average amortization periods for the Company’s finite-lived intangible assets as of December 31, 2021 are as follows:

4 unchanged sentences

2022 $ 13,654

Amortization expense for the years ended December 31, 2020, 2019 and 2018 was $ 17.0 million, $ 16.8 million and $ 15.3 million, respectively.

Goodwill impairment test

5 unchanged sentences

For the guideline public company method, significant assumptions relate to the selection of appropriate guideline companies and related valuation multiples used in the market analysis.

LIFETIME BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2021

Although the Company believes the assumptions and estimates made are reasonable and appropriate, different assumptions and estimates could materially impact its reported financial results.

5 unchanged sentences

International Reporting Unit

The carrying value of the goodwill for the International reporting unit was zero as of December 31, 2020.

The carrying value of the goodwill for the International reporting unit was zero as of December 31, 2021 and 2020.

During 2019 several impairment indicators for the European kitchenware business were considered by the Company including the continued uncertainties of the macro-environment in Europe as a result of the then-ongoing Brexit negotiations.

6 unchanged sentences

The fair value of the business was approximately 30.1 % below its carrying value as of September 30, 2019.

LIFETIME BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2020

During the third quarter of 2019 the Company also determined its European kitchenware and tableware reporting units had met the criteria to be combined into one reporting unit based on the guidance of ASC Topic No.

1 unchanged sentence

280, Segment Reporting.

In 2018, the Company incurred a non-cash goodwill impairment charge of $ 2.2 million related to the European tableware business due to a decline in operating performance and reduced expectations for future cash flows.

Reporting Unit

During the first quarter of 2020, as a result of the economic downturn caused by the COVID-19 pandemic, the Company performed an interim assessment of the goodwill for the U.S.

reporting unit as of March 31, 2020, by comparing the fair value of the reporting unit with its carrying value.

The Company performed the analysis using a discounted cash flow and market multiple method.

Based upon the analysis performed, the Company recognized a non-cash goodwill impairment charge of $ 19.1 million during the first quarter of 2020.

The goodwill impairment charge resulted from, among other factors, the uncertain market conditions arising from the COVID-19 pandemic, which impacted the Company's market capitalization, as well as a reduction of forecasted future cash flows associated with the effects of the COVID-19 pandemic.

The fair value of the U.S.

reporting unit was approximately 3.9 % below its carrying value as of March 31, 2020.

The Company performed its annual impairment assessment of its U.S.

5 unchanged sentences

Changes in any of the significant assumptions used in the valuation of the reporting unit could materially affect the expected cash flows, and such impacts could potentially result in a material non-cash impairment charge.

As of December 31, 2020, the Company assessed the carrying value of goodwill and determined, based on qualitative factors, that no further impairment existed for goodwill.

As of December 31, 2021, the Company assessed the carrying value of goodwill and determined, based on qualitative factors, that no impairment indicators existed for goodwill.

During the first quarter of 2020, as a result of the economic downturn caused by the COVID-19 pandemic, the Company performed an interim assessment of the goodwill for the U.S.

reporting unit as of March 31, 2020, by comparing the fair value of the reporting unit with its carrying value.

The Company performed the analysis using a discounted cash flow and market multiple method.

Based upon the analysis performed, the Company recognized a non-cash goodwill impairment charge of $ 19.1 million during the first quarter of 2020.

The fair value of the U.S.

reporting unit was approximately 3.9 % below its carrying value as of March 31, 2020.

In 2019, the Company recognized a non-cash goodwill impairment charge of $ 33.2 million, during the three months ended December 31, 2019.

2 unchanged sentences

The fair value of the U.S, reporting unit was approximately 6.1 % below its carrying value at October 1, 2019.

LIFETIME BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2021

Annual indefinite-lived trade name impairment test

The Company values its indefinite-lived trade names using a relief-from-royalty approach, which assumes the value of the trade name is the discounted cash flows of the amount that would be paid by a hypothetical market participant had they not owned the trade name and instead licensed the trade name from another company.

During the first quarter of 2020, as a result of the economic decline caused by the COVID-19 pandemic, the Company determined its indefinite-lived trade names had indicators for impairment.

As a result, the Company bypassed the optional qualitative impairment analysis for its indefinite-lived trade names and performed an interim quantitative impairment analysis as of March 31, 2020, by comparing the fair value of the indefinite-lived trade names to their respective carrying values.

As a result of the impairment testing performed in connection with the COVID-19 pandemic triggering event, the Company determined that certain of its indefinite-lived intangible assets in the U.S.

segment were impaired.

As a result, the Company recorded a $ 1.0 million non-cash impairment charge during the first quarter of 2020.

The Company bypassed the optional qualitative impairment analysis for its indefinite-lived trade name assets annual October 1, 2021 impairment test.

3 unchanged sentences

As of December 31, 2021, the Company assessed the carrying value of its indefinite-lived trade names and determined based on qualitative factors that no impairment existed.

LIFETIME BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2020

During the first quarter of 2020, as a result of the economic decline caused by the COVID-19 pandemic, the Company determined its indefinite-lived trade names had indicators for impairment.

As a result of the impairment testing performed in connection with the COVID-19 pandemic triggering event, the Company determined that certain of its indefinite-lived intangible assets in the U.S.

segment were impaired.

As a result, the Company recorded a $ 1.0 million non-cash impairment charge during the first quarter of 2020.

Long-lived assets impairment test

During the fourth quarter of 2021, due to lower than expected operating results for the International segment caused by continuing impacts of COVID-19 and the exit of the U.K.

from the European Union, impairment indicators were identified for the International asset group.

The Company tested the recoverability of the asset group, concluding it was not recoverable and performed an analysis of the fair value of the international long-lived assets.

For the finite-lived intangible assets, the Company performed discounted cash flow analysis and recorded an impairment of $ 14.8 million within the international segment.

NOTE 8 — DEBT

The Company’s credit agreement (the “ABL Agreement”) with JPMorgan Chase Bank, N.A.

(“JPMorgan”), includes a senior secured asset-based revolving credit facility in the maximum aggregate principal amount of $ 150.0 million, which facility will mature on March 2, 2023, and a loan agreement (the “Term Loan” and together with the ABL Agreement, the “Debt Agreements”) provides for a senior secured term loan credit facility in the original principal amount of $ 275.0 million, which matures on February 28, 2025.

(“JPMorgan”), includes a senior secured asset-based revolving credit facility in the maximum aggregate principal amount of $ 150.0 million, which will mature on March 2, 2023, and a loan agreement (the “Term Loan” and together with the ABL Agreement, the “Debt Agreements”) that provides for a senior secured term loan credit facility in the original principal amount of $ 275.0 million, which matures on February 28, 2025.

The Term Loan facility will be repaid in quarterly payments, which commenced June 30, 2018, of principal equal to 0.25 % of the original aggregate principal amount of the Term Loan facility.

12 unchanged sentences

Total availability under the ABL Agreement $ 146,341 $ 120,000

LIFETIME BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2021

Availability under the ABL Agreement depends on the valuation of certain current assets comprising the borrowing base.

5 unchanged sentences

Current portion of Term Loan facility:

Term Loan facility payment $ — $ 2,750

Estimated Excess Cash Flow principal payment $ 7,200 $ 19,120

5 unchanged sentences

Total Non-current portion of Term Loan facility $ 241,873 $ 238,977

As of December 31, 2020, the future principal payments of the Term Loan are $ 19.1 million, due in 2021 and $ 243.5 million, due at loan maturity in 2025.

The quarterly principal payments have been satisfied through maturity of the Term Loan by the annual Excess Cash Flow payments.

LIFETIME BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2020

The estimated Excess Cash Flow principal payment recorded at December 31, 2021 represents the Company’s estimate for the 2022 Excess Cash Flow payment.

The 2021 Excess Cash Flow payment, paid on March 30, 2021, totaled $ 10.5 million.

The Excess Cash Flow payment differs from the estimated amount at December 31, 2020 of $ 19.1 million as certain lenders opted to not require payment per the terms of the Debt Agreements.

The Company’s payment obligations under its Debt Agreements are unconditionally guaranteed by its existing and future U.S.

5 unchanged sentences

Borrowings under the revolving credit facility bear interest, at the Company’s option, at one of the following rates:

(i) an 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 0.25 % to 0.75 %, or (ii) LIBOR plus a margin of 1.25 % to 1.75 %.

or Sterling Overnight Index Average “SONIA” for borrowings denominated in Pounds Sterling), 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.

The interest rate on outstanding borrowings under the ABL Agreement at December 31, 2020 was 1.52 %.

In addition, the Company paid a commitment fee that ranged from 0.250 % to 0.375 % on the unused portion of the ABL Agreement during the year ended December 31, 2020.

There were no outstanding borrowings under the ABL Agreement at December 31, 2021.

In addition, the Company paid a commitment fee of 0.375 % on the unused portion of the ABL Agreement during the year ended December 31, 2021.

The Term Loan facility bears interest, at the Company’s option, at one of the following rates:

3 unchanged sentences

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 or 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 or 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.

Further, the ABL Agreement provides that

LIFETIME BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2021

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 or 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 or 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 December 31, 2021.

1 unchanged sentence

Other Credit Agreements

In 2019, a subsidiary of the Company held a credit facility (“HSBC Facility”) with HSBC Bank (China) Company Limited, Shanghai Branch (“HSBC”) for up to $ 18.0 million Chinese renminbi ($ 2.6 million).

The HSBC Facility was subject to annual renewal and may have been used to fund general working capital needs of the Company’s subsidiary, which is a trading company in the China.

A subsidiary of the Company holds a credit facility (“HSBC Facility”) with HSBC Bank (China) Company Limited, Shanghai Branch (“HSBC”) for up to $ 10.0 million Chinese renminbi ($ 1.6 million).

The HSBC Facility is subject to annual renewal and may be used to fund general working capital needs of the Company’s subsidiary, which is a trading company in the China.

Borrowings under the HSBC Facility were guaranteed by the Company and were granted at the sole discretion of HSBC.

No borrowings were outstanding under the HSBC Facility at December 31, 2019.

The credit facility was not renewed as of December 31, 2020.

No borrowings were outstanding under the HSBC Facility at December 31, 2021 and 2020.

NOTE 9 — DERIVATIVES

2 unchanged sentences

The Company designated a portion of these interest rate swaps as cash flow hedges of the Company’s exposure to the variability of the payment of interest on a portion of its Term Loan borrowings.

The hedge periods of these agreements commenced in April 2018 and

LIFETIME BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2020

expire in March 2023.

The hedge periods of these agreements commenced in April 2018 and expire in March 2023.

The original notional values are reduced over these periods.

6 unchanged sentences

Where the Company deems it prudent, the Company engages in hedging programs using foreign currency forward contracts aimed at limiting the impact of foreign currency exchange rate fluctuations on earnings.

The Company purchases short-term (i.e., 12 months or less) foreign currency forward contracts to protect against currency exchange risks associated with the payment of merchandise purchases to foreign suppliers.

The Company purchases foreign currency forward contracts with terms less then 18 months to protect against currency exchange risks associated with the payment of merchandise purchases to foreign suppliers.

The Company does not hedge the translation of foreign currency profits into USD, as the Company regards this as an accounting exposure rather than an economic exposure.

The Company's foreign exchange contracts, that had been designed as hedges in order to apply hedge accounting, matured in April 2020.

At December 31, 2020, the Company had no outstanding foreign exchange contracts.

The aggregate gross notional values of foreign exchange contracts at December 31, 2021 was $ 22.6 million.

The Company had no outstanding foreign exchange contracts at December 31, 2020.

The Company is exposed to market risks, as well as changes in foreign currency exchange rates, as measured against the USD and each other, and changes to credit risk of derivative counterparties.

5 unchanged sentences

These foreign exchange contracts have been designated as hedges in to order to apply hedge accounting.

LIFETIME BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2021

The fair values of the Company’s derivative financial instruments included in the consolidated balance sheets are presented as follows (in thousands):

Derivatives designated as hedging instruments Balance Sheet Location 2021 2020

Interest rate swaps Prepaid expenses $ — $ 427

Other assets — 1,267

Accrued expenses 504 —

Interest rate swaps Accrued expenses $ 288 $ 504

Other Long-Term Liabilities 292 1,034

Foreign exchange contracts Accrued expenses — 180

Foreign exchange contracts Prepaid expenses and other current assets 461 —

Derivatives not designated as hedging instruments Balance Sheet Location 2021 2020

Interest rate swaps Other assets $ — $ 402

Other Long-Term Liabilities 1,742 —

Interest rate swaps Other Long-Term Liabilities $ 680 $ 1,742

The fair value of the interest rate swaps 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.

3 unchanged sentences

The Company does not anticipate non-performance by any of its counterparties.

LIFETIME BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2020

The amounts of the gains and (losses), realized and unrealized, net of taxes, related to the Company’s derivative financial instruments designated as hedging instruments are recognized in other comprehensive (loss) income as follows (in thousands):

Year ended December 31,

6 unchanged sentences

Realized gains or (losses) on foreign exchange contracts that are reported in other comprehensive income (loss) are reclassified into cost of sales as the underlying inventory purchased is sold.

During the year ended December 31, 2020, the Company reclassified $ 1.0 million of cash flow hedges in other comprehensive losses to earnings.

This comprised of a charge of $ 1.2 million related to interest rate swaps recognized in interest expense and a gain of $ 0.2 million related to foreign exchange contracts recognized in cost of sales.

During the year ended December 31, 2021, the Company reclassified $ 1.5 million of cash flow hedges in accumulated other comprehensive losses to earnings.

This comprised of a charge of $ 0.9 million related to interest rate swaps recognized in interest expense and a loss of $ 0.6 million related to foreign exchange contracts recognized in cost of sales.

At December 31, 2021, the estimated amount of existing losses expected to be reclassified into earnings within the next 12 months was $ 0.5 million.

During the year ended December 31, 2019, the Company reclassified $ 0.2 million of cash flow hedges in other comprehensive losses to earnings.

During the year ended December 31, 2020, the Company reclassified $ 1.0 million of cash flow hedges in accumulated other comprehensive losses to earnings.

This comprised of $ 1.2 million related to interest rate swaps recognized in interest expense and a gain of $ 0.2 million related to foreign exchange contracts recognized in cost of sales.

5 unchanged sentences

$ 604 $ ( 2,471 ) $ 407

Foreign exchange contracts Selling, general & administrative expense $ — $ — $ 150

LIFETIME BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2021

NOTE 10 — CAPITAL STOCK

2 unchanged sentences

Dividend per share Date declared Date of record Payment date

$ 0.0425 March 12, 2019 May 1, 2019 May 15, 2019

$ 0.0425 March 10, 2020 November 16, 2020 December 16, 2020

$ 0.0425 June 25, 2020 August 3, 2020 August 17, 2020

1 unchanged sentence

$ 0.0425 November 3, 2020 January 29, 2021 February 12, 2021

$ 0.0425 March 10, 2020 November 16, 2020 December 16, 2020

$ 0.0425 March 9, 2021 May 3, 2021 May 17, 2021

$ 0.0425 June 24, 2021 August 2, 2021 August 16, 2021

2 unchanged sentences

On March 8, 2022, the Board of Directors declared a quarterly dividend of $ 0.0425 per share payable on May 16, 2022 to shareholders of record on May 2, 2022.

LIFETIME BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2020

Stock repurchase program

11 unchanged sentences

Performance-based awards that have been granted under the Plan vest after 3 years based upon the attainment of specified performance goals.

On June 25, 2020, the shareholders of the Company approved an amendment and restatement of the Company’s Amended and Restated 2000 Long Term Incentive Plan (the “Plan”).

The amendment and restatement of the Plan revised the terms and conditions of the Plan to, among other things, increase the shares available for grant under the Plan by 850,000 shares.

As of December 31, 2021, there were 357,858 shares available for the grant of awards under the Plan.

LIFETIME BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2021

Stock options

17 unchanged sentences

Exercises (1)

Cancellations ( 14,313 ) 11.09

( 236,325 ) 11.71

Expirations ( 4,000 ) 19.10

1 unchanged sentence

Options exercisable at December 31, 2021 911,115 $ 14.31 4.2 $ 2,345

(1) Includes the exercise of 2,000 options settled in cash in accordance with the Company’s Amended and Restated 2000 Long-Term Incentive Plan ("the Plan").

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value that would have been received by the option holders had all option holders exercised their exercisable in-the-money stock options on December 31, 2021.

The intrinsic value is

LIFETIME BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2020

calculated for each in-the-money stock option as the difference between the closing price of the Company’s common stock on December 31, 2020 and the exercise price.

The total intrinsic value of those stock options that were exercised in the year ended December 31, 2020 was less than $ 0.1 million.

The total intrinsic values of those stock options that were exercised in the years ended December 31, 2019 and 2018 were $ 0.3 million and $ 0.4 million, respectively.

The intrinsic value is calculated for each in-the-money stock option as the difference between the closing price of the Company’s common stock on December 31, 2021 and the exercise price.

The total intrinsic value of those stock options that were exercised in the year ended December 31, 2021 was $ 0.8 million.

The total intrinsic values of those stock options that were exercised in the year ended December 31, 2020 was less than $ 0.1 million and in the year ended December 31, 2019 was $ 0.3 million.

The intrinsic value of a stock option that is exercised is calculated at the date of exercise.

5 unchanged sentences

The weighted-average per share grant date fair value of stock options granted during the years ended December 31, 2021, 2020 and 2019, was $ 6.31 , $ 2.26 and $ 2.77 , respectively.

LIFETIME BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2021

The fair values for these stock options were estimated at the dates of grant using the following weighted-average assumptions:

23 unchanged sentences

The total fair value of restricted stock that vested during the year ended December 31, 2021 was $ 8.9 million.

LIFETIME BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2020

Performance shares

2 unchanged sentences

The shares are subject to the terms and conditions of the Plan.

LIFETIME BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2021

A summary of the Company’s performance-based award activity and related information for the three years ended December 31, 2021 is as follows:

29 unchanged sentences

December 31, 2021

NOTE 11 — 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.

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.

NOTE 11 — INCOME (LOSS) PER COMMON SHARE

Basic income (loss) per common share has been computed by dividing net income (loss) by the weighted-average number of shares of the Company’s common stock outstanding.

Diluted income (loss) per common share adjusts net income (loss) and basic income (loss) per common share for the effect of all potentially dilutive shares of the Company’s common stock.

Anti-dilutive securities are not included in the computation of diluted earnings per share under the treasury stock method.

The calculations of basic and diluted loss per common share for the years ended December 31, 2020, 2019 and 2018, are as follows:

The calculations of basic and diluted income (loss) per common share for the years ended December 31, 2021, 2020 and 2019, are as follows:

2021 2020 2019

(in thousands - except per share amounts)

Net loss – Basic and Diluted

Net income (loss) – Basic and Diluted

$ 20,801 $ ( 3,007 ) $ ( 44,415 )

3 unchanged sentences

Weighted-average shares outstanding – Diluted 22,037 20,860 20,597

Basic loss per common share

Basic income (loss) per common share

$ 0.97 $ ( 0.14 ) $ ( 2.16 )

Diluted loss per common share

Diluted income (loss) per common share

$ 0.94 $ ( 0.14 ) $ ( 2.16 )

3 unchanged sentences

NOTE 12 — INCOME TAXES

The components of income before income taxes and equity in earnings are as follows:

The components of income (loss) before income taxes and equity in earnings are as follows:

Year Ended December 31,

19 unchanged sentences

The CARES Act remedied certain aspects of the Tax Act such as accelerated depreciation recovery for assets defined as qualified improvement property and carryback of operating losses to fiscal tax years.

The latter required carryback of Filament losses to pre-acquisition fiscal years ended March 31, 2017 and March 31, 2016, which resulted in a tax expense that exceeded the benefit received

The latter required carryback of Filament losses to pre-

LIFETIME BRANDS, INC.

1 unchanged sentence

December 31, 2021

from the various CARES Act provisions claimed by the Company.

acquisition fiscal years ended March 31, 2017 and March 31, 2016, which resulted in a tax expense that exceeded the benefit received from the various CARES Act provisions claimed by the Company.

The Company received a tax refund of $ 2.3 million in the third quarter of 2020.

On December 22, 2017, the Tax Cuts and Jobs Act (“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, imposing a one-time transition tax on foreign unremitted earnings, and setting limitations on the deductibility of certain costs (e.g., interest expense).

For the year ended December 31, 2017, the Company accrued $ 0.3 million of tax expense for the Tax Act’s one-time transition tax on the Company’s material wholly owned foreign subsidiaries’ accumulated, unremitted earnings and $ 3.0 million in provisional expense related to the net change in deferred tax assets stemming from the Tax Act’s reduction of the U.S.

federal tax rate from 35% to 21%.

As of December 31, 2018, the Company had completed the accounting for the effects of the Act.

The Company had included the impact of the Act on its annual effective tax rate and has recorded an additional provision of $ 0.7 million primarily related to an adjustment to the estimated transition tax liability, including an uncertain tax position.

Since January 1, 2018, the Tax Act has subjected the Company to a tax on global intangible low-taxed income (“GILTI”) earned by certain foreign subsidiaries, base erosion anti-abuse tax (“BEAT”), foreign derived intangible income tax (“FDII”), and IRC Section 163(j) interest limitation (“Interest Limitation”).

Entities can make an accounting policy election to either recognize deferred taxes for temporary basis differences expected to reverse as GILTI in future years or provide for the tax expense related to GILTI in the year the tax is incurred.

The Company had elected to account for the GILTI tax as a current period expense.

The Company did not have GILTI liability and was not subject to BEAT in 2020 and 2019.

The tax impact of FDII was immaterial for 2020 and 2019.

The Company was not subject to an interest limitation in 2020 and 2019, due to the favorable provisions provided under the CARES Act.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

16 unchanged sentences

Total deferred income tax liabilities ( 49,758 ) ( 53,494 )

Net deferred income tax liability

Net deferred income tax asset (liability)

2,230 ( 3,811 )

6 unchanged sentences

The state net operating losses begin to expire in 2026.

federal losses have been carried back as a result of the CARES Act and no carryforwards remain.

LIFETIME BRANDS, INC.

11 unchanged sentences

Non-deductible expenses 3.3 16.4 ( 1.2 )

Tax Act- revaluation of net deferred tax assets and other — — 16.8

Tax Act- transition tax — — 43.0

Uncertain tax positions 0.1 4.0 ( 0.3 )

13 unchanged sentences

Additions based on tax positions related to the current year ( 49 ) ( 149 ) ( 29 )

Additions based on tax positions related to the prior year — — ( 1,302 )

Reductions for tax position of prior years 626 9 496

4 unchanged sentences

On a quarterly basis, the Company evaluates its tax positions and revises its estimates accordingly.

The Company believes that it is reasonably possible that none of its tax positions will be resolved within the next twelve months.

The Company believes that it is reasonably possible that an immaterial amount of its tax positions will be resolved within the next twelve months.

The Company is no longer subject to U.S.

4 unchanged sentences

In certain jurisdictions Filament may have additional periods subject to examination.

The Company’s 2015 U.S.

Federal income tax return audit was completed as of June 30, 2020 with no assessments.

The Company's New York State tax returns for years 2015-2016 remain under audit with no material assessments as of December 31, 2020.

The Company's New York State tax returns for years 2015-2016 remain under audit.

The audit has been expanded to include tax years 2017-2019.

As of December 31, 2021, there are no material assessments in any given year.

LIFETIME BRANDS, INC.

18 unchanged sentences

Total net sales $ 862,924 $ 769,169 $ 734,902

Income from operations:

Income (loss) from operations:

$ 100,336 $ 60,378 $ 19,826

2 unchanged sentences

Unallocated corporate expenses ( 24,443 ) ( 22,573 ) ( 20,259 )

Total income from operations $ 24,970 $ ( 23,395 ) $ 18,579

Total income (loss) from operations

$ 50,842 $ 24,970 $ ( 23,395 )

Depreciation and amortization:

6 unchanged sentences

Total capital expenditures $ 3,986 $ 2,082 $ 9,169

(1) In 2019 and 2018, income from operations for the U.S.

segment includes $ 0.7 million and $ 2.1 million of restructuring expenses related to the U.S.

(1) In 2019, income from operations for the U.S.

segment include $ 0.7 million of restructuring expenses related to the U.S.

restructuring plan and the Filament integration, respectively, as described in NOTE 1 — SIGNIFICANT ACCOUNTING POLICIES

1 unchanged sentence

segment as described in NOTE 7 — GOODWILL AND INTANGIBLE ASSETS

(3) In 2020, 2019 and 2018, income from operations for the International segment includes $ 0.2 million, $ 0.7 million and $ 0.2 million, respectively, of restructuring expenses, as described in NOTE 1 — SIGNIFICANT ACCOUNTING POLICIES.

(4) In 2019 and 2018, T he Company recognized a $ 9.7 million non-cash goodwill impairment charge related to the European kitchenware business and a non-cash goodwill impairment charge of $ 2.2 million related to the European tableware business, respectively, as described in NOTE 7 — GOODWILL AND INTANGIBLE ASSETS

(3) In 2020 and 2019, income from operations for the International segment includes $ 0.2 million and $ 0.7 million, respectively, of restructuring expenses, as described in NOTE 1 — SIGNIFICANT ACCOUNTING POLICIES

(4) In 2021 and 2019, the Company recognized non-cash impairment charges of $ 14.8 million and $ 9.7 million, respectively, related to the international segment as described in NOTE 7 — GOODWILL AND INTANGIBLE ASSETS

(in thousands)

9 unchanged sentences

Beginning balance $ 30,271 $ 49,371

Purchase price adjustment — 972

Impairment — ( 19,100 )

Ending balance 30,271 49,371

International

Beginning balance — 10,049

Foreign currency translation adjustment — ( 301 )

Impairment — ( 9,748 )

Ending balance — —

Total goodwill $ 30,271 $ 30,271

10 unchanged sentences

The Company has license agreements that require the payment of royalties on sales of licensed products which expire through 2048.

Future minimum royalties payable under these agreements are as follows (in thousands):

The estimated f uture minimum royalties payable under these agreements are as follows (in thousands):

Year ending December 31,

2 unchanged sentences

Total $ 13,367

LIFETIME BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2020

Legal proceedings

3 unchanged sentences

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.

LIFETIME BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2021

In May 2008, WSPR received from the EPA a Notice of Potential Liability and Request for Information pursuant to 42 U.S.C.

19 unchanged sentences

In November 2020, the tolling agreements were extended to November 2021.

In October 2021, the tolling agreements were extended to November 2022.

The tolling agreements do not constitute in any way an admission or acknowledgment of any fact, conclusion of law or liability by the parties to the agreements.

3 unchanged sentences

The EPA’s estimated total net present worth cost for its selected remedy is $ 17.3 million.

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.

In August 2021, WSPR received a Notice of Liability from the Department of Justice on behalf of the EPA, and in September 2021, WSPR submitted a good faith offer to conduct additional testing and remedial design, which is under consideration by the EPA.

The Company has reserved $ 0.5 million to cover probable and estimable liabilities with respect to the above testing and remedial design.

However, it is not possible at this time for the Company to estimate its share of liability, if any, related to this matter.

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.

Customs and Border Protection matter

4 unchanged sentences

The period of investigation is stated to be from August 26, 2014 to the present.

Since being notified of the investigation, the Company has obtained a significant amount of evidence that, the

Since being notified of the investigation, the Company has obtained a significant amount of evidence that, the Company believes, supports that the imported products were properly classified as specified sets.

The Company's counsel filed a Lead

LIFETIME BRANDS, INC.

1 unchanged sentence

December 31, 2021

Company believes, supports that the imported products were properly classified as specified sets.

The Company's counsel filed a Lead Protest and Application for Further Review with CBP on February 5, 2020 (the "Lead Protest") relating to a single shipment made during the investigation period.

Protest and Application for Further Review with CBP on February 5, 2020 (the "Lead Protest") relating to a single shipment made during the investigation period.

CBP approved the Company’s Lead Protest on June 8, 2020 stating that the specified set requirement was fulfilled with respect to the protested shipment based on information provided by the Company.

56 unchanged sentences

December 31, 2021

Long term liabilities

Long term liabilities consist of:

Other long-term liabilities

Other l ong-term liabilities consist of:

(in thousands)

1 unchanged sentence

Other non-income tax liabilities 2,927 2,824

Unearned revenue 1,159 1,444

Derivative financial instruments 972 2,776

Unearned revenues 1,444 1,728

Deferred payroll non-income tax liabilities — 1,261

Royalty obligation 475 878

Royalty obligations — 475

Other long term obligations 140 169

5 unchanged sentences

Compensation and benefits 21,258 19,016

Interest 749 334

Freight 16,110 6,669

Vendor invoices 16,082 6,536

Other non-income tax liabilities 7,496 4,136

Royalties 4,406 3,007

Commissions 1,380 894

Freight 6,669 3,263

Professional fees 2,954 2,060

Foreign exchange forward contracts — 180

Restructuring — 59

Commissions 813 1,380

Interest 402 749

Other 6,930 5,584

8 unchanged sentences

Translation adjustment $ 690 $ ( 2,062 ) $ ( 292 )

Translation loss recognized on change in Vasconia ownership 3,404 — —

Non-cash gain on dilution of Vasconia ownership ( 1,732 ) $ — $ —

LIFETIME BRANDS, INC.

9 unchanged sentences

Amount reclassified from accumulated other comprehensive loss (1)

Currency translation adjustment 235 — —

Balance at end of year $ ( 31,752 ) $ ( 35,846 ) $ ( 34,019 )

7 unchanged sentences

Balance at beginning of year $ ( 2,201 ) $ ( 1,600 ) $ ( 1,050 )

Net (loss) income arising from retirement benefit obligations, net of tax

Net income (loss) arising from retirement benefit obligations, net of tax

191 ( 680 ) ( 601 )

3 unchanged sentences

Total accumulated other comprehensive loss at end of period

$ ( 33,549 ) $ ( 39,172 ) $ ( 34,455 )

(1) Amount is recorded in equity in earnings on the consolidated statements of operations.

2 unchanged sentences

NOTE 17 — SUBSEQUENT EVENTS

Acquisition of Year and Day

On February 26, 2021, the Company acquired the business and certain assets of Year and Day, a designer and distributor of ceramic dinnerware, stainless steel flatware and Italian glassware.

On March 2, 2022, the Company completed the acquisition of certain assets of Can't Live Without It, LLC.

(dba S'well Bottle and which the Company refers to as “S'well”).

S'well is a global designer, wholesaler and retailer of reusable, vacuum-insulated products.

The Company paid consideration of $ 18.0 million in cash upon closing of the transaction, subject to working capital adjustments.

The transaction also includes up to $ 5.0 million in contingent consideration, subject to the acquired brand reaching certain milestones.

LIFETIME BRANDS, INC.

26 unchanged sentences

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 9A. Controls and Procedures