What changed in this filing

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Item 1. Financial Statements

2022-11-03 compared with 2022-08-04 · 277 added, 204 removed, 774 unchanged (38% of the section changed)

3 unchanged sentences

(in thousands, except share data)

September 30,

2022 December 31,

1 unchanged sentence

Cash and cash equivalents $ 5,930 $ 27,982

Accounts receivable, less allowances of $ 13,876 at June 30, 2022 and $ 16,544 at December 31, 2021

Accounts receivable, less allowances of $ 13,984 at September 30, 2022 and $ 16,544 at December 31, 2021

135,343 175,076

12 unchanged sentences

Current maturity of term loan $ — $ 5,771

Current maturity of revolving credit facility 20,347 —

Short-term loan 30 —

Accounts payable 42,960 82,573

7 unchanged sentences

DEFERRED INCOME TAXES 12,981 12,842

REVOLVING CREDIT FACILITY 32,545 —

TERM LOAN 242,505 241,873

4 unchanged sentences

Common stock, $ 0.01 par value, shares authorized:

50,000,000 at June 30, 2022 and December 31, 2021;

50,000,000 at September 30, 2022 and December 31, 2021;

shares issued and outstanding:

22,058,883 at June 30, 2022 and 22,018,016 at December 31, 2021

22,004,268 at September 30, 2022 and 22,018,016 at December 31, 2021

Paid-in capital 274,301 271,556

9 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

4 unchanged sentences

Selling, general and administrative expenses 36,462 42,042 114,208 116,379

(Loss) income from operations

Wallace facility remediation expense 5,140 500 5,140 500

Income from operations

7,590 21,680 11,481 41,927

2 unchanged sentences

637 120 1,990 664

(Loss) income before income taxes and equity in earnings

Income before income taxes and equity in (losses) earnings

3,646 17,965 1,391 30,923

Income tax benefit (provision)

Income tax provision

( 1,845 ) ( 5,589 ) ( 3,420 ) ( 9,837 )

Equity in earnings, net of taxes

Equity in (losses) earnings, net of taxes

( 8,159 ) 195 ( 7,409 ) 341

10 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

45 unchanged sentences

22,059 $ 221 $ 273,279 $ 8,224 $ ( 36,356 ) $ 245,368

— — — ( 6,358 ) — ( 6,358 )

Other comprehensive loss, net of taxes

— — — — ( 2,303 ) ( 2,303 )

Net issuance of restricted shares granted to employees and directors ( 1 ) — — — — —

Stock compensation expense — — 1,023 — — 1,023

Shares effectively repurchased for required employee withholding taxes ( 1 ) — — — — —

Stock repurchase ( 53 ) ( 1 ) ( 1 ) ( 477 ) — ( 479 )

Dividends (1)

— — — ( 952 ) — ( 952 )

BALANCE AT SEPTEMBER 30, 2022

22,004 $ 220 $ 274,301 $ 437 $ ( 38,659 ) $ 236,299

(1) Cash dividends declared per share of common stock were $ 0.1275 and $ 0.1275 in the nine months ended September 30, 2022 and 2021, respectively.

Common stock Paid-in

18 unchanged sentences

— — — 5,789 — 5,789

Total comprehensive income

Other comprehensive income, net of taxes

Net issuance of restricted shares granted to employees and directors 44 0 0 — — —

6 unchanged sentences

22,007 $ 220 $ 268,976 $ 7,423 $ ( 34,818 ) $ 241,801

(1) Cash dividends declared per share of common stock were $ 0.085 and $ 0.085 in the six months ended June 30, 2022 and 2021, respectively.

— — — 12,571 — 12,571

Other comprehensive income, net of taxes

Stock compensation expense — — 1,192 — — 1,192

Net exercise of stock options 12 — 142 — — 142

Shares effectively repurchased for required employee withholding taxes ( 1 ) — ( 1 ) — — ( 1 )

Dividends (1)

— — — ( 995 ) — ( 995 )

BALANCE AT SEPTEMBER 30, 2021 22,018 $ 220 $ 270,309 $ 18,999 $ ( 33,553 ) $ 255,975

(1) Cash dividends declared per share of common stock were $ 0.1275 and $ 0.1275 in the nine months ended September 30, 2022 and 2021, respectively.

See accompanying notes to unaudited condensed consolidated financial statements.

2 unchanged sentences

(in thousands)

Six Months Ended

Nine Months Ended

September 30,

OPERATING ACTIVITIES

10 unchanged sentences

Stock compensation expense 3,565 3,973

Undistributed (earnings) from equity investment, net of taxes

Undistributed losses (earnings) from equity investment, net of taxes

7,409 ( 341 )

10 unchanged sentences

Purchases of property and equipment ( 1,975 ) ( 3,361 )

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

Acquisitions ( 17,956 ) ( 178 )

5 unchanged sentences

Repayments of term loan ( 6,216 ) ( 10,478 )

Proceeds from short-term loan 30 31

Repayments of short-term loan — ( 31 )

Payment of financing costs ( 882 ) —

Payments for finance lease obligations ( 24 ) ( 71 )

13 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

September 30, 2022

NOTE 1 — BASIS OF PRESENTATION AND SUMMARY OF ACCOUNTING POLICIES

14 unchanged sentences

These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

Operating results for the three and six months ended June 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.

The Company’s business and working capital needs are highly seasonal, with a majority of sales occurring in the third and fourth quarters.

Operating results for the three and nine months ended September 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.

The Company’s business and working capital needs are seasonal, with a majority of sales occurring in the third and fourth quarters.

In 2021 and 2020, net sales for the third and fourth quarters accounted for 56 % and 62 % of total annual net sales, respectively.

1 unchanged sentence

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

In 2022, the Company's inventory trends may deviate from historical trends due to a change in inventory strategy to react to the current market conditions impacting the Company and retailers.

The Company’s current estimates contemplate current and expected future conditions, as applicable, however it is reasonably possible that actual conditions could differ from expectations, which could materially affect the Company’s results of operations and financial position.

10 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

September 30, 2022

Distribution expenses

11 unchanged sentences

The sale of accounts receivable, under the Receivables Purchase Agreement with HSBC, is excluded from the Company’s unaudited condensed consolidated balance sheets at the time of sale and the related sale expense is included in selling, general and administrative expenses in the Company’s unaudited condensed consolidated statements of operations.

Pursuant to the Receivable Purchase Agreement, the Company sold to HSBC $ 33.5 million and $ 79.8 million of receivables during the three and six months ended June 30, 2022, respectively and $ 38.9 million and $ 79.5 million of receivables during three and six months ended June 30, 2021, respectively.

Charges of $ 0.2 million and $ 0.1 million related to the sale of the receivables are included in selling, general and administrative expenses in the unaudited condensed consolidated statements of operations for the three months ended June 30, 2022 and 2021, respectively.

Charges of $ 0.3 million and $ 0.2 million related to the sale of the receivables are included in selling, general and administrative expenses in the unaudited condensed consolidated statements of operations for the six months ended June 30, 2022 and 2021, respectively.

At June 30, 2022 and 2021, $ 25.6 million and $ 14.6 million, respectively, of receivables sold were outstanding and due to HSBC from customers.

Pursuant to the Receivable Purchase Agreement, the Company sold to HSBC $ 30.0 million and $ 109.8 million of receivables during the three and nine months ended September 30, 2022, respectively and $ 33.7 million and $ 113.2 million of receivables during three and nine months ended September 30, 2021, respectively.

Charges of $ 0.5 million and $ 0.3 million related to the sale of the receivables are included in selling, general and administrative expenses in the unaudited condensed consolidated statements of operations for the nine months ended September 30, 2022 and 2021, respectively.

At September 30, 2022 and 2021, $ 20.2 million and $ 15.8 million, respectively, of receivables sold were outstanding and due to HSBC from customers.

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

5 unchanged sentences

The components of inventory were as follows (in thousands):

September 30,

2022 December 31, 2021

5 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

September 30, 2022

Fair value of financial instruments

24 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

September 30, 2022

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

26 unchanged sentences

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

On October 18, 2022, the Company's management approved a reorganization plan related to a reduction in its U.K.

The reorganization is the result of the Company’s efforts to realign the management and operating structure of the U.K.

business in response to changing market conditions.

The restructuring expense expected to be incurred with this plan is $ 0.6 million and will be recorded in the fourth quarter of 2022.

The Company expects the restructuring to be completed in Q4 2022, and expects annual savings of $ 2.3 million associated with the plan.

On November 1, 2022, the Company entered into a transition agreement with its Executive Chairman, Jeffrey Siegel, which terminates his employment with the Company on March 31, 2023.

The transition agreement amends Mr.

Siegel’s employment agreement which was set to expire on December 31, 2022.

The employment agreement provides for a one-time termination

LIFETIME BRANDS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022

payment which will now be paid upon the expiration of the transition agreement.

The Company estimates the one-time termination payment to be approximately $ 1.4 million and expects it to be recognized over the remaining employment period.

Adoption of new accounting pronouncements

3 unchanged sentences

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

LIFETIME BRANDS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

New accounting pronouncements

6 unchanged sentences

Early adoption is permitted.

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

Management expects the adoption of ASU 2016-13 will not have a material impact on the Company's consolidated financial statements.

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

8 unchanged sentences

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.

Shipping and handling fees that are billed to customers in sales transactions are included in net sales and amounted to $ 1.0 million and $ 2.0 million for the three and six months ended June 30, 2022, respectively, and $ 0.7 million and $ 1.4 million for the three and six months ended June 30, 2021, respectively.

Shipping and handling fees that are billed to customers in sales transactions are included in net sales and amounted to $ 1.2 million and $ 3.2 million for the three and nine months ended September 30, 2022, respectively, and $ 1.0 million and $ 2.4 million for the three and nine months ended September 30, 2021, respectively.

Net sales exclude taxes that are collected from customers and remitted to the taxing authorities.

3 unchanged sentences

These estimates are based on historical experience and other known factors or as the most likely amount in a range of possible outcomes.

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.

On a quarterly basis, variable consideration is assessed on a portfolio approach in estimating the extent to

LIFETIME BRANDS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022

which the components of variable consideration are constrained.

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 sale s.

2 unchanged sentences

Incidental items that are immaterial in the context of the contract are expensed as incurred.

LIFETIME BRANDS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

The following tables present the Company’s net sales disaggregated by segment, product category and geographic region for the three and six months ended June 30, 2022 and 2021 (in thousands):

Three Months Ended Six Months Ended

June 30, June 30,

The following tables present the Company’s net sales disaggregated by segment, product category and geographic region for the three and nine months ended September 30, 2022 and 2021 (in thousands):

Three Months Ended Nine Months Ended

September 30, September 30,

2022 2021 2022 2021

14 unchanged sentences

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

The purchase price was comprised of the following (in thousands):

The preliminary purchase price was comprised of the following (in thousands):

Cash paid $ 17,956

1 unchanged sentence

Total purchase price $ 18,606

The value of contingent consideration represents the present value of estimated contingent payments of $ 0.7 million, related to the attainment of certain gross contribution targets for the year 2024.

The maximum undiscounted contingent consideration to be paid under the agreement is $ 5.0 million.

The value of contingent consideration represents the present value of estimated contingent payments of $ 0.7 million, related to the attainment of certain net sales contribution targets for the year 2024.

Acquisition related costs of $ 0.9 million were recorded within selling, general and administrative expenses in the unaudited condensed consolidated statements of operations.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

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

September 30, 2022

The purchase price was allocated based on the Company’s preliminary estimate of the fair values of the assets acquired and liabilities assumed at the acquisition date, as follows (in thousands):

Purchase Price Allocation

8 unchanged sentences

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 fair values of net assets acquired are based on the Company’s preliminary estimate of the respective fair values.

The preliminary estimated fair values that are not yet finalized relate to the valuation of accounts receivable, inventory, accounts payable, accrued expenses, intangibles, deferred taxes and valuation of the contingent consideration.

The goodwill recognized results from such factors as assembled workforce and the value of other synergies expected from combining operations with the Company.

The associated goodwill is deductible for tax purposes.

The associated goodwill is deductible for tax purposes over 15 years.

Goodwill and the trade name intangible asset are included in the U.S.

The trade name intangible asset is amortized on a straight-line basis over its estimated useful life of 12 years (see Note 6).

The condensed consolidated statement of operations includes $ 3.5 million and $ 4.4 million of net sales attributable to the S'well brand for the three and six months ended June 30, 2022, respectively.

For financial purposes, the trade name intangible asset is amortized on a straight-line basis over its estimated useful life of 12 years (see NOTE 6 — INTANGIBLE ASSETS).

The condensed consolidated statement of operations includes $ 8.0 million and $ 12.4 million of net sales attributable to the S'well brand for the three and nine months ended September 30, 2022, respectively.

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.

4 unchanged sentences

The Company has operating leases for corporate offices, distribution facilities, a manufacturing plant, and certain vehicles.

The components of lease expense for the three and six months ended June 30, 2022 and 2021 were as follows (in thousands):

The components of lease expense for the three and nine months ended September 30, 2022 and 2021 were as follows (in thousands):

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

2022 2021 2022 2021

6 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

Supplemental cash flow information for lease related liabilities and assets for the six months ended June 30, 2022 and 2021 were as follows (in thousands):

Six Months Ended

September 30, 2022

Supplemental cash flow information for lease related liabilities and assets for the nine months ended September 30, 2022 and 2021 were as follows (in thousands):

Nine Months Ended

September 30,

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

Operating cash flows for operating leases $ 14,447 $ 14,556

Six Months Ended

Nine Months Ended

September 30,

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

Operating leases $ 2,477 $ 1,307

The aggregate future lease payments for operating leases as of June 30, 2022 were as follows (in thousands):

2022 (excluding the six months ended June 30, 2022)

The aggregate future lease payments for operating leases as of September 30, 2022 were as follows (in thousands):

2022 (excluding the nine months ended September 30, 2022)

Thereafter 22,595

3 unchanged sentences

Average lease terms and discount rates were as follows:

June 30, 2022

September 30, 2022

Operating leases:

2 unchanged sentences

NOTE 5 — INVESTMENTS

As of June 30, 2022, the Company owned 24.7 % of the outstanding capital stock of Grupo Vasconia S.A.B.

As of September 30, 2022, the Company owned 24.7 % of the outstanding capital stock of Grupo Vasconia S.A.B.

(“Vasconia”), an integrated manufacturer of aluminum products and one of Mexico’s largest housewares companies.

1 unchanged sentence

The Quotation Key is VASCONI.

For the period ended June 30, 2021, the Company's investment ownership was 30.0 %.

The Company's investment ownership decreased to approximately 27.0 % on June 30, 2021 and was further reduced to 24.7 % on July 29, 2021 as a result of transactions that occurred in those periods.

The Company accounts for its investment in Vasconia using the equity method of accounting and records its proportionate share of Vasconia’s net income in the Company’s condensed consolidated statements of operations.

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 three and six months ended June 30, 2022 and 2021 in the accompanying unaudited condensed consolidated statements of operations.

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 three and nine months ended September 30, 2022 and 2021 in the accompanying unaudited condensed consolidated statements of operations.

On June 30, 2021, Vasconia issued additional shares of its stock, 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

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

LIFETIME BRANDS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

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 unaudited condensed consolidated statements of operations for the three and six months ended June 30, 2021.

September 30, 2022

earnings, net of taxes, in the accompanying unaudited condensed consolidated statements of operations for the nine months ended September 30, 2021.

On July 29, 2021, the Company sold 2.2 million shares further reducing its ownership from approximately 27 % to approximately 25 % 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 (losses), net of taxes, in the accompanying unaudited condensed consolidated statements of operations for the three and nine months ended September 30, 2021.

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

Dollars (“USD”) using the spot rates of MXN 20.15 and MXN 20.46 at June 30, 2022 and December 31, 2021, respectively.

The Company’s proportionate share of Vasconia’s net income has been translated from MXN to USD using the following exchange rates:

Dollars (“USD”) using the spot rates of MXN 20.13 and MXN 20.46 at September 30, 2022 and December 31, 2021, respectively.

The Company’s proportionate share of Vasconia’s net (loss) income has been translated from MXN to USD using the following exchange rates:

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

2022 2021 2022 2021

2 unchanged sentences

20.01 - 20.33

The effect of the translation of the Company’s investment, as well as the translation of Vasconia’s balance sheet, resulted in a decrease to the investment of $ 0.9 million and an increase of $ 1.6 million during the six months ended June 30, 2022 and 2021, respectively.

The effect of the translation of the Company’s investment, as well as the translation of Vasconia’s balance sheet, resulted in a decrease to the investment of $ 0.5 million and an increase of $ 1.3 million during the nine months ended September 30, 2022 and 2021, respectively.

These translation effects are recorded in accumulated other comprehensive loss.

Summarized income statement information for the three and six months ended June 30, 2022 and 2021 for Vasconia in USD and MXN is as follows (in thousands):

Summarized income statement information for the three and nine months ended September 30, 2022 and 2021 for Vasconia in USD and MXN is as follows (in thousands):

Three Months Ended

September 30,

USD MXN USD MXN

1 unchanged sentence

4,405 89,061 12,958 259,285

Income from operations

(Loss) income from operations

( 5,459 ) ( 110,380 ) 3,886 77,756

Net (loss) income

( 8,009 ) ( 161,936 ) 2,952 59,063

Six Months Ended

Nine Months Ended

September 30,

USD MXN USD MXN

1 unchanged sentence

29,629 600,976 40,837 821,125

Income from operations

(Loss) income from operations

( 256 ) ( 3,974 ) 14,169 284,799

Net (loss) income

( 4,875 ) ( 98,366 ) 4,562 91,063

The Company recorded equity in earnings of Vasconia, net of taxes, of $ 0.3 million and $ 0.8 million for the three and six months ended June 30, 2022, respectively.

The Company recorded equity in earnings of Vasconia, net of taxes, of $ 0.7 million and $ 0.5 million for the three and six months ended June 30, 2021, respectively.

The Company recorded equity in losses of Vasconia, net of taxes, of $ 8.2 million and $ 7.4 million for the three and nine months ended September 30, 2022, respectively.

Equity in losses for the three and nine months ended September 30, 2022, included a non-cash charge of $ 6.2 million for an impairment charge to write-down the Company's investment balance to fair value, as discussed below.

The Company recorded equity in earnings of Vasconia, net of taxes, of $ 0.7 million and $ 1.2 million for the three and nine months ended September 30, 2021, respectively.

LIFETIME BRANDS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022

Included within the Company's unaudited condensed consolidated balance sheets were the following amounts due to and due from Vasconia (in thousands):

Vasconia due to and due from balances Balance Sheet Location June 30, 2022 December 31, 2021

Vasconia due to and due from balances Balance Sheet Location September 30, 2022 December 31, 2021

Amounts due from Vasconia Prepaid expenses and other current assets $ 80 $ 80

Amounts due to Vasconia Accrued expenses and Accounts payable ( 1 ) ( 146 )

LIFETIME BRANDS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

As of June 30, 2022 and December 31, 2021, the fair value (based on Level 1 inputs using the quoted stock price) of the Company’s investment in Vasconia was $ 21.3 million and $ 31.5 million, respectively.

The carrying value of the Company’s investment in Vasconia was $ 22.1 million and $ 22.3 million as of June 30, 2022 and December 31, 2021, respectively The Company evaluated the decline in fair value of the investment and concluded that the decline is temporary.

The fair value (based on Level 1 inputs using the quoted stock price) of the Company's investment in Vasconia declined in the third quarter.

As a result of the decline in the quoted stock price and the quarterly decline in the operating results of Vasconia the Company determined the decline in fair value was other than temporary.

The Company reduced its investment by $ 6.2 million during the three months ended September 30, 2022 to its fair value.

The carrying value of the Company’s investment in Vasconia, after the recorded impairment, was $ 14.4 million as of September 30, 2022.

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.

The carrying value of the Company’s investment in Vasconia was $ 22.3 million as of December 31, 2021, respectively.

LIFETIME BRANDS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

September 30, 2022

NOTE 6 — INTANGIBLE ASSETS

Intangible assets consisted of the following as of June 30, 2022 and December 31, 2021 (in thousands):

June 30, 2022 December 31, 2021

Intangible assets consisted of the following as of September 30, 2022 and December 31, 2021 (in thousands):

September 30, 2022 December 31, 2021

Gross Accumulated

12 unchanged sentences

Total $ 302,285 $ ( 84,759 ) $ 217,526 $ 331,385 $ ( 14,760 ) $ ( 103,947 ) $ 212,678

(1) The gross value and accumulated amortization at June 30, 2022 reflect a reduction of $ 44.1 million and $( 29.3 ) million, respectively, for the net $ 14.8 million impairment charge on finite-lived intangible assets within the international segment during the period ended December 31, 2021.

A summary of the activities related to the Company’s intangible assets for the six months ended June 30, 2022 consists of the following (in thousands):

(1) The gross value and accumulated amortization at September 30, 2022 reflect a reduction of $ 44.1 million and $( 29.3 ) million, respectively, for the net $ 14.8 million impairment charge on finite-lived intangible assets within the international segment during the period ended December 31, 2021.

A summary of the activities related to the Company’s intangible assets for the nine months ended September 30, 2022 consists of the following (in thousands):

Assets Goodwill Total Intangible

5 unchanged sentences

Amortization ( 10,749 ) — ( 10,749 )

Goodwill and Intangible Assets, June 30, 2022

Goodwill and Intangible Assets, September 30, 2022

$ 184,289 $ 33,237 $ 217,526

NOTE 7 — DEBT

The Company’s credit agreement, dated as of March 2, 2018 (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”) 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 requires the Company to make an annual prepayment of principal based upon a percentage of the Company's excess cash flow, (“Excess Cash Flow”), if any.

On August 26, 2022, the Company entered into Amendment No.

2 (the “Amendment”) to the Company’s credit agreement, dated as of March 2, 2018 (as amended, the “ABL Agreement”) among the Company, as a Borrower, certain subsidiaries of the Company, as Borrowers and/or Loan Parties, JPMorgan Chase Bank, N.A., as Administrative Agent and a Lender, HSBC Bank USA, National Association and Wells Fargo Bank, National Association, as Co-Documentation Agents and Lenders, and Manufacturers and Traders Trust Company, as a Lender, that provides for the Company’s ABL facility.

The ABL Agreement provides for a senior secured asset-based revolving credit facility in the maximum aggregate principal amount of $ 200.0 million, which facility will mature on August 26, 2027 (subject to an earlier springing maturity date that is 90 days prior to the Term Loan maturity date of February 28, 2025 if the Company’s Term Loan has not been repaid or refinanced by such date).

The Company's loan agreement, dated as of March 2, 2018, (the “Term Loan Agreement” 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.

The Term Loan Agreement requires the Company to make an annual prepayment of principal based upon a percentage of the Company's excess cash flow, (“Excess Cash Flow”), if any.

The percentage applied to the Company’s excess cash flow is based on the Company’s Total Net Leverage Ratio (as defined in the Debt Agreements).

When an Excess Cash Flow payment is required, lenders have the option to decline a portion or all of the prepayment amount.

This estimated amount is recorded in current maturity of term loan on the unaudited condensed consolidated balance sheets.

Additionally, the Term Loan facility requires quarterly payments, which commenced on June 30, 2018, of principal equal to 0.25 % of the original aggregate principal amount of the Term Loan facility.

Per the Debt Agreements, when the Company makes an Excess Cash Flow payment, the payment is first applied to satisfy the future quarterly required payments in order of maturity.

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

The maximum borrowing amount under the ABL Agreement may be increased to up to $ 200.0 million if certain conditions are met.

One or more tranches of additional term loans (the “Incremental Facilities”) may be added under the Term Loan if certain

When an Excess Cash Flow payment is required, each lender has the option to decline a portion or all of the prepayment amount payable to it.

An estimate of the amount of the Excess Cash Flow payment is recorded in current maturity of term loan on the unaudited condensed consolidated balance sheets.

Additionally, the Term Loan Agreement requires

LIFETIME BRANDS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

conditions are met.

The Incremental Facilities may not exceed the sum of (i) $ 50.0 million plus (ii) an unlimited amount so long as, in the case of (ii) only, the Company’s secured net leverage ratio, as defined in and computed pursuant to the Term Loan, is no greater than 3.75 to 1.00, subject to certain limitations and for the period defined pursuant to the Term Loan.

As of June 30, 2022 and December 31, 2021, the total availability under the ABL Agreement was as follows (in thousands):

June 30, 2022

September 30, 2022

quarterly payments, which commenced on June 30, 2018, of principal equal to 0.25 % of the original aggregate principal amount of the Term Loan facility, which payments are to be adjusted from time to time to account for prepayments made.

Per the Term Loan Agreement, when the Company makes an Excess Cash Flow payment, the payment is first applied to satisfy the next eight (8) scheduled future quarterly required payments of the Term Loan in order of maturity and then to the remaining scheduled installments on a pro rata basis.

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

The maximum borrowing amount under the ABL Agreement may be increased to up to $ 250.0 million if certain conditions are met and further limited to $ 220.0 million pursuant to the Term Loan Agreement.

One or more tranches of additional term loans (the “Incremental Term Facilities”) may be added under the Term Loan Agreement if certain conditions are met.

The Incremental Facilities may not exceed the sum of (i) $ 50.0 million plus (ii) an unlimited amount so long as, in the case of (ii) only, the Company’s secured net leverage ratio, as defined in and computed on a pro forma basis pursuant to the Term Loan Agreement, after giving effect to such increase, is no greater than 3.75 to 1.00, subject to certain limitations and for the period defined pursuant to the Term Loan Agreement but not to mature earlier than the maturity date of the then existing term loans.

As of September 30, 2022 and December 31, 2021, the total availability under the ABL Agreement was as follows (in thousands):

September 30, 2022

December 31, 2021

3 unchanged sentences

Total availability under the ABL Agreement $ 164,690 $ 146,341

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

Availability under the ABL Agreement is limited to the lesser of the$ 200.0 million commitment thereunder and the borrowing base and therefore depends on the valuation of certain current assets comprising the borrowing base.

The borrowing capacity under the ABL Agreement will depend, in part, on eligible levels of accounts receivable and inventory that fluctuate regularly.

2 unchanged sentences

The current and non-current portions of the Company’s Term Loan facility included in the condensed consolidated balance sheets were as follows (in thousands):

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Current portion of Term Loan facility:

6 unchanged sentences

Total Non-current portion of Term Loan facility $ 242,505 $ 241,873

The estimated Excess Cash Flow principal payment recorded at June 30, 2022 represents the Company’s estimate for the 2023 Excess Cash Flow payment.

The estimated Excess Cash Flow principal payment recorded at September 30, 2022 represents the Company’s estimate for the 2023 Excess Cash Flow payment.

The 2022 Excess Cash Flow payment, paid on March 30, 2022, totaled $ 6.2 million.

The Excess Cash Flow payment differs from the estimated amount at December 31, 2021 of $ 7.2 million as certain lenders opted to not require payment per the terms of the Debt Agreements.

The Excess Cash Flow payment differs from the estimated amount at December 31, 2021 of $ 7.2 million as certain lenders opted to decline their payments per the terms of the Term Loan Agreement.

LIFETIME BRANDS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022

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

1 unchanged sentence

Certain payment obligations under the ABL Agreement are also direct obligations of its foreign subsidiary borrowers designated as such under the ABL Agreement and, subject to limitations on such guaranty, are guaranteed by the foreign subsidiary borrowers, as well as by the Company.

The obligations of the Company under the Debt Agreements and any hedging arrangements and cash management services and the guarantees by its domestic subsidiaries in respect of those obligations are secured by substantially all of the assets and stock (but in the case of foreign subsidiaries, limited to 65 % of the capital stock in first-tier foreign subsidiaries and not including the stock of subsidiaries of such first-tier foreign subsidiaries) owned by the Company and the U.S.

The obligations of the foreign subsidiary borrowers under the ABL Agreement are secured by security interests in substantially all of the assets of, and stock in, such foreign subsidiary borrowers, subject to certain limitations.

The obligations of the Company under the Debt Agreements and any hedging arrangements and cash management services and the guarantees by its domestic subsidiaries in respect of those obligations are secured by security interests in substantially all of the assets and stock (but in the case of foreign subsidiaries, limited to 65 % of the capital stock in first-tier foreign subsidiaries and not including the stock of subsidiaries of such first-tier foreign subsidiaries) owned by the Company and the U.S.

subsidiary guarantors, subject to certain exceptions.

Such security interest consists of (1) a first-priority lien, subject to certain permitted liens, with respect to certain assets of the Company and its domestic subsidiaries (the “ABL Collateral”) pledged as collateral in favor of lenders under the ABL Agreement and a second-priority lien in the ABL Collateral in favor of the lenders under the Term Loan and (2) a first-priority lien, subject to certain permitted liens, with respect to certain assets of the Company and its domestic subsidiaries (the “Term Loan Collateral”) pledged as collateral in favor of lenders under the Term Loan and a second-priority lien in the Term Loan Collateral in favor of the lenders under the ABL Agreement.

LIFETIME BRANDS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

Borrowings under the ABL Agreement bear interest, at the Company’s option, at one of the following rates:

(i) 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 (or Euro Interbank Offered Rate "EURIBOR" for borrowings denominated in Euro;

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 June 30, 2022 was between 2.44 % and 5.00 %.

In addition, the Company pays a commitment fee of 0.375 % on the unused portion of the ABL Agreement.

Such security interests consist of (1) a first-priority lien, subject to certain permitted liens, with respect to certain assets of the Company and certain of its subsidiaries (the “ABL Collateral”) pledged as collateral in favor of lenders under the ABL Agreement and a second-priority lien in the ABL Collateral in favor of the lenders under the Term Loan Agreement and (2) a first-priority lien, subject to certain permitted liens, with respect to certain assets of the Company and certain of its subsidiaries (the “Term Loan Collateral”) pledged as collateral in favor of lenders under the Term Loan Agreement and a second-priority lien in the Term Loan Collateral in favor of the lenders under the ABL Agreement.

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 Adjusted Term Secured Overnight Financing Rate (“SOFR”) plus 1.0 % as of a specified date in advance of the determination, but in each case not less than 1.0 %, plus a margin of 0.25 % to 0.50 %, or (ii) Adjusted Term SOFR, which is the Term SOFR Rate for the selected 1, 3 or 6 month interest period plus 0.10 % (or Euro Interbank Offered Rate “EURIBOR” for borrowings denominated in Euro;

or Sterling Overnight Index Average “SONIA” for borrowings denominated in Pounds Sterling), but in each case not less than zero, plus a margin of 1.25 % to 1.50 %.

The respective margins are based upon average quarterly availability, as defined in and computed pursuant to the ABL Agreement.

In addition, the Company pays a commitment fee of 0.20 % to 0.25 % per annum based on the average daily unused portion of the aggregate commitment under the ABL Agreement.

The interest rate on outstanding borrowings under the ABL Agreement at September 30, 2022 was between 2.19 % and 6.75 %.

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

(i) alternate base rate, defined, for any day, as the greater of (x) the prime rate, (y) a federal funds and overnight bank funding based rate plus 0.5 % or (z) one-month LIBOR, but not less than 1.0 %, plus 1.0 %, which alternate base rate shall not be less than 2.0 %, plus a margin of 2.5 % or (ii) LIBOR, but not less than 1.0 %, plus a margin of 3.5 %.

The interest rate on outstanding borrowings under the Term Loan at June 30, 2022 was 4.6 %.

The interest rate on outstanding borrowings under the Term Loan at September 30, 2022 was 6.02 %.

The Debt Agreements provide for customary restrictions and events of default.

Restrictions include limitations on additional indebtedness, acquisitions, investments and payment of dividends, among other things.

Restrictions include limitations on additional indebtedness, liens, 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 $ 20.0 million and 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 $ 20.0 million and 10 % of the aggregate commitment under the ABL Agreement for 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 June 30, 2022.

The Company was in compliance with the covenants of the Debt Agreements at September 30, 2022.

Prior to the amendment of the credit agreement, the Company’s ABL provided for an aggregate principal amount of $ 150.0 million.

Upon entering into the Amendment to the ABL agreement the Company repaid its outstanding ABL borrowing in the amount of $ 32.0 million and re-borrowed such amounts under the ABL Agreement, as amended.

Unamortized debt issuance costs that were written off were immaterial.

The Company expects that it will continue to borrow, subject to availability, and repay funds under the ABL Agreement based on working capital and other corporate needs .

LIFETIME BRANDS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022

NOTE 8 — DERIVATIVES

Interest Rate Swap Agreements

The Company's total outstanding notional value of interest rate swaps was $ 50.0 million at June 30, 2022.

The Company's total outstanding notional value of interest rate swaps was $ 50.0 million at September 30, 2022.

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.

1 unchanged sentence

The original notional values are reduced over these periods.

The aggregate notional value of designated interest rate swaps was $ 25.0 million at June 30, 2022.

In June 2019, the Company entered into additional interest rate swap agreements, with an aggregate notional value of $ 25.0 million at June 30, 2022.

The aggregate notional value of designated interest rate swaps was $ 25.0 million at September 30, 2022.

In June 2019, the Company entered into additional interest rate swap agreements, with an aggregate notional value of $ 25.0 million at September 30, 2022.

These non-designated interest rate swaps serve 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 and expire in February 2025.

5 unchanged sentences

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.

LIFETIME BRANDS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

The aggregate gross notional values of foreign exchange contracts at June 30, 2022 was $ 13.5 million.

The aggregate gross notional value of foreign exchange contracts at September 30, 2022 was $ 3.5 million.

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

4 unchanged sentences

All foreign currency forward contracts that the Company enters into are components of hedging programs and are entered into for the sole purpose of hedging an existing or anticipated currency exposure.

The Company does not enter into such contracts for speculative purposes, and as of June 30, 2022, the Company did not have any foreign currency forward contract derivatives that are not designated as hedges.

The Company does not enter into such contracts for speculative purposes, and as of September 30, 2022, the Company did not have any foreign currency forward contract derivatives that are not designated as hedges.

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

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

Derivatives designated as hedging instruments Balance Sheet Location June 30, 2022 December 31, 2021

Derivatives designated as hedging instruments Balance Sheet Location September 30, 2022 December 31, 2021

Interest rate swaps Prepaid expenses and other current assets $ 179 $ —

2 unchanged sentences

Foreign exchange contracts Prepaid expenses and other current assets 663 461

Derivatives not designated as hedging instruments Balance Sheet Location June 30, 2022 December 31, 2021

Derivatives not designated as hedging instruments Balance Sheet Location September 30, 2022 December 31, 2021

Interest rate swaps Other assets $ 1,310 $ —

Other long-term liabilities — 680

LIFETIME BRANDS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022

The fair values 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.

2 unchanged sentences

The Company is exposed to credit risk for the net exchanges under these agreements, but not for the notional amounts.

As of June 30, 2022, the Company did not anticipate non-performance by any of its counterparties.

As of September 30, 2022, the Company did not anticipate non-performance by any of its counterparties.

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

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

Derivatives designated as hedging instruments 2022 2021 2022 2021

3 unchanged sentences

Realized gains and losses on the interest rate swaps that are reported in other comprehensive (loss) income are reclassified into earnings as the interest expense on the debt is recognized.

The Company had no terminated or matured interest rate swaps during the three and six months ended June 30, 2022.

The Company had no terminated or matured interest rate swaps during the three and nine months ended September 30, 2022.

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

During the three months ended June 30, 2022, the Company reclassified $ 0.1 million of cash flow hedges in accumulated other comprehensive losses to earnings.

This was comprised of $ 0.1 million related to realized interest rate swap losses and a gain of

LIFETIME BRANDS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

$ 0.2 million related to foreign exchange contracts recognized in cost of sales.

During the six months ended June 30, 2022, the Company reclassified $ 0.02 million of cash flow hedges in accumulated other comprehensive losses to earnings.

During the three months ended September 30, 2022, the Company reclassified $ 0.3 million of cash flow hedges in accumulated other comprehensive losses to earnings.

This was comprised of $ 0.03 million related to realized interest rate swap losses and a gain of $ 0.3 million related to foreign exchange contracts recognized in cost of sales.

At June 30, 2022, the estimated amount of existing net gains expected to be reclassified into earnings within the next 12 months was $ 1.4 million.

During the three months ended June 30, 2021, the Company reclassified $ 0.5 million of cash flow hedges in accumulated other comprehensive losses to earnings.

During the nine months ended September 30, 2022, the Company reclassified $ 0.3 million of cash flow hedges in accumulated other comprehensive losses to earnings.

This was comprised of $ 0.3 million related to realized interest rate swap losses and a gain of $ 0.6 million related to foreign exchange contracts recognized in cost of sales.

At September 30, 2022, the estimated amount of existing net gains expected to be reclassified into earnings within the next 12 months was $ 2.0 million.

During the three months ended September 30, 2021, the Company reclassified $ 0.5 million of cash flow hedges in accumulated other comprehensive losses to earnings.

This was comprised of $ 0.2 million related to realized interest rate swap losses and a loss of $ 0.3 million related to foreign exchange contracts recognized in cost of sales.

During the six months ended June 30, 2021, the Company reclassified $ 0.8 million of cash flow hedges in accumulated other comprehensive losses to earnings.

During the nine months ended September 30, 2021, the Company reclassified $ 1.3 million of cash flow hedges in accumulated other comprehensive losses to earnings.

This was comprised of $ 0.7 million related to realized interest rate swap losses and a loss of $ 0.6 million related to foreign exchange contracts recognized in cost of sales.

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

Derivatives not designated as hedging instruments Location of gain (loss) 2022 2021 2022 2021

3 unchanged sentences

$ 655 $ 4 $ 1,825 $ 322

LIFETIME BRANDS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022

NOTE 9 — STOCK COMPENSATION

1 unchanged sentence

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 1,180,000 shares.

As of June 30, 2022, there were 1,123,954 shares available for the grant of awards under the Plan, assuming maximum performance of performance-based awards.

As of September 30, 2022, there were 1,127,708 shares available for the grant of awards under the Plan, assuming maximum performance of performance-based awards.

Option Awards

A summary of the Company’s stock option activity and related information for the six months ended June 30, 2022 is as follows:

A summary of the Company’s stock option activity and related information for the nine months ended September 30, 2022 is as follows:

Options Weighted-

8 unchanged sentences

Expirations ( 13,450 ) 13.99

Options outstanding, June 30, 2022

Options outstanding, September 30, 2022

1,072,000 13.65 4.7 $ 13

Options exercisable, June 30, 2022

Options exercisable, September 30, 2022

957,125 $ 13.92 4.2 $ 6

1 unchanged sentence

Weighted-average years expected to be recognized over 2.0

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 stock options on June 30, 2022.

The intrinsic value is calculated for each

LIFETIME BRANDS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

in-the-money stock option as the difference between the closing price of the Company’s common stock on June 30, 2022 and the exercise price.

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 September 30, 2022 and the exercise price.

Restricted Stock

A summary of the Company’s restricted stock activity and related information for the six months ended June 30, 2022 is as follows:

A summary of the Company’s restricted stock activity and related information for the nine months ended September 30, 2022 is as follows:

Shares Weighted-

5 unchanged sentences

Cancellations ( 6,881 ) 10.92

Non-vested restricted shares, June 30, 2022

Non-vested restricted shares, September 30, 2022

517,509 $ 11.63

1 unchanged sentence

Weighted-average years expected to be recognized over 1.7

The total fair value of restricted stock that vested during the six months ended June 30, 2022 was $ 2.1 million.

The total fair value of restricted stock that vested during the nine months ended September 30, 2022 was $ 2.1 million.

Performance shares

Each performance award represents the right to receive up to 150 % of the target number of shares of common stock.

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

The number of shares of common stock earned will be determined based on the attainment of specified performance goals at the end

LIFETIME BRANDS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022

of the performance period, as determined by the Compensation Committee of the Board of Directors.

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

A summary of the Company’s performance-based award activity and related information for the six months ended June 30, 2022 is as follows:

A summary of the Company’s performance-based award activity and related information for the nine months ended September 30, 2022 is as follows:

average grant

5 unchanged sentences

Cancellations ( 4,128 ) 10.64

Non-vested performance-based awards, June 30, 2022

Non-vested performance-based awards, September 30, 2022

400,302 $ 11.56

4 unchanged sentences

These awards vested in the three months ended March 31, 2022.

The total fair value of performance-based awards that vested during the six months ended June 30, 2022 was $ 2.0 million.

The total fair value of performance-based awards that vested during the nine months ended September 30, 2022 was $ 2.0 million.

Cash-settled performance-based awards

Each cash-settled performance-based award represents the right to receive up to 150 % of the target number of deferred stock units with payment in cash equivalent to the value of one share of the Company's common stock.

The number of deferred stock units earned will be determined based on the attainment of specified performance goals at the end of the performance period, as

LIFETIME BRANDS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

determined by the Compensation Committee of the Board of Directors.

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

The cash-settled performance-based awards are subject to the terms and conditions of the Company’s Plan.

A summary of the Company’s cash-settled performance-based awards activity and related information for the six months ended June 30, 2022 is as follows:

A summary of the Company’s cash-settled performance-based awards activity and related information for the nine months ended September 30, 2022 is as follows:

Cash-settled performance-based awards (1)

2 unchanged sentences

Cancellations ( 2,049 ) 10.39

Non-vested cash-settled performance-based awards, June 30, 2022

Non-vested cash-settled performance-based awards, September 30, 2022

85,776 $ 6.77

6 unchanged sentences

The cash - settled performance-based awards are liability-classified awards and are recorded within other long-term liabilities in the Company's condensed consolidated balance sheet.

These awards are remeasured to fair value at the end of each reporting period until settlement.

These awards are

LIFETIME BRANDS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022

remeasured to fair value at the end of each reporting period until settlement.

The cash-settled performance-based awards vest at the end of a three year period, as determined by the Compensation Committee.

1 unchanged sentence

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Stock Compensation Expense Components 2022 2021 2022 2021

5 unchanged sentences

Total Stock Compensation Expense $ 1,026 $ 1,201 $ 3,565 $ 3,973

LIFETIME BRANDS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

NOTE 10 — (LOSS) INCOME PER COMMON SHARE

2 unchanged sentences

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) income per common share for the three and six months ended June 30, 2022 and 2021 are as follows:

The calculations of basic and diluted (loss) income per common share for the three and nine months ended September 30, 2022 and 2021 are as follows:

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

13 unchanged sentences

(1) Stock options and other stock awards that have been excluded from the denominator as their inclusion would have been anti-dilutive.

LIFETIME BRANDS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022

NOTE 11— INCOME TAXES

Income tax benefit of $ 0.1 million and income tax provision of $ 1.6 million for the three and six months ended June 30, 2022, respectively, represent taxes on both U.S.

and foreign earnings at a combined effective income tax benefit rate of 2.5 % and an income tax provision rate of ( 69.8 )%, respectively.

The negative rate for the six months ended June 30, 2022 reflects tax expense on a pretax financial reporting loss.

The effective tax rate for the three and six months ended June 30, 2022 differs from the federal statutory income tax rate of 21.0 % primarily due to foreign losses for which no tax benefit is recognized as such amounts are fully offset with a valuation allowance.

Income tax provision of $ 1.8 million and $ 4.2 million for the three and six months ended June 30, 2021, respectively, represent taxes on both U.S.

Income tax provision of $ 1.8 million and $ 3.4 million for the three and nine months ended September 30, 2022, respectively, represent taxes on both U.S.

and foreign earnings at a combined effective income tax provision rate of 50.6 % and 245.9 %, respectively.

The effective tax rate for the three and nine months ended September 30, 2022 differs from the federal statutory income tax rate of 21.0 % primarily due to foreign losses for which no tax benefit is recognized as such amounts are fully offset with a valuation allowance.

Income tax provision of $ 5.6 million and $ 9.8 million for the three and nine months ended September 30, 2021, respectively, represent taxes on both U.S.

and foreign earnings at combined effective income tax provision rates of 31.1 % and 31.8 %, respectively.

The effective tax rate for the three and six months ended June 30, 2021 differs from the federal statutory income tax rate of 21.0 % primarily due to state and local tax expense, and foreign losses for which no tax benefit is recognized as such amounts are fully offset with a valuation allowance, net of a benefit related to share based equity compensation.

The effective tax rate for the three and nine months ended September 30, 2021 differs from the federal statutory income tax rate of 21.0 % primarily due to state and local tax expense, and foreign losses for which no tax benefit is recognized as such amounts are fully offset with a valuation allowance.

The Company has identified the following jurisdictions as “major” tax jurisdictions:

2 unchanged sentences

The Company evaluates its tax positions on a quarterly basis and revises its estimates accordingly.

There were no material changes to the Company’s uncertain tax positions, interest, or penalties during the three-month periods ended June 30, 2022 and June 30, 2021.

There were no material changes to the Company’s uncertain tax positions, interest, or penalties during the three-month periods ended September 30, 2022 and September 30, 2021.

LIFETIME BRANDS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

September 30, 2022

NOTE 12 – BUSINESS SEGMENTS

9 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

3 unchanged sentences

Total net sales $ 186,590 $ 224,777 $ 520,621 $ 607,066

(Loss) income from operations

Income from operations

$ 19,548 $ 30,958 $ 41,404 $ 66,339

1 unchanged sentence

Unallocated corporate expenses ( 9,457 ) ( 6,876 ) ( 20,232 ) ( 18,244 )

(Loss) income from operations

Income from operations

$ 7,590 $ 21,680 $ 11,481 $ 41,927

3 unchanged sentences

Total depreciation and amortization $ 4,598 $ 5,837 $ 14,535 $ 17,560

September 30,

2022 December 31,

6 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

September 30, 2022

NOTE 13 — CONTINGENCIES

26 unchanged sentences

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

In October 2022, the tolling agreements were extended to November 2023.

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.

5 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

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.

September 30, 2022

The Company has reserved $ 5.6 million to cover probable and estimable liabilities with respect to the above remedial design and remedial action for the initial operable unit.

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

25 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

September 30, 2022

NOTE 14 — OTHER

Cash dividends

Dividends declared in the six months ended June 30, 2022 were as follows:

Dividends declared in the nine months ended September 30, 2022 were as follows:

Dividend per share Date declared Date of record Payment date

1 unchanged sentence

$ 0.0425 6/23/2022 8/1/2022 8/15/2022

During the six months ended June 30, 2022, the Company paid dividends of $ 1.9 million.

This included payments made on February 14, 2022 and May 16, 2022 of $ 0.9 million and $ 0.9 million to stockholders of record on January 31, 2022 and May 2, 2022, respectively, and payments of $ 0.1 million for dividends payable upon the vesting of restricted shares and performance shares.

In the three months ended June 30, 2022, the Company reduced retained earnings for the accrual of $ 1.0 million relating to the dividend payable on August 15, 2022.

On August 2, 2022, the Board of Directors declared a quarterly dividend of $ 0.0425 per share of common stock payable on November 15, 2022 to stockholders of record on November 1, 2022.

$ 0.0425 8/2/2022 11/1/2022 11/15/2022

During the nine months ended September 30, 2022, the Company paid dividends of $ 2.9 million.

This included payments made on February 14, 2022, May 16, 2022 and August 15, 2022 of $ 0.9 million, $ 0.9 million and $ 0.9 million to stockholders of record on January 31, 2022, May 2, 2022 and August 1, 2022, respectively, and payments of $ 0.1 million for dividends payable upon the vesting of restricted shares and performance shares.

In the three months ended September 30, 2022, the Company reduced retained earnings for the accrual of $ 1.0 million relating to the dividend payable on November 15, 2022.

For the nine months ended September 30, 2022, the Company reduced retained earnings for the accrual of $ 2.9 million relating to the dividend payable on May 16, 2022, August 15, 2022 and November 15, 2022.

On November 1, 2022, the Board of Directors declared a quarterly dividend of 0.0425 per share of common stock payable on February 15, 2023 to stockholders of record on February 1, 2023.

Stock repurchase program

1 unchanged sentence

The repurchase authorization permits the Company to effect the repurchases from time to time through open market purchases and privately negotiated transactions.

During the three and six months ended June 30, 2022, the Company repurchased 285,646 and 336,791 shares, respectively, for a total cost of $ 3.5 million and $ 4.2 million respectively, and thereafter retired the shares.

During the nine months ended September 30, 2022, the Company repurchased 389,743 shares for a total cost of $ 4.7 million and thereafter retired the shares.

Please see Part II, Item 2—Unregistered Sales of Equity Securities and Use of Proceeds included in this Quarterly Report on Form 10-Q.

Supplemental cash flow information

Six Months Ended

Nine Months Ended

September 30,

(in thousands)

3 unchanged sentences

Non-cash investing activities:

Net (loss) on dilution of Vasconia ownership $ — $ ( 310 )

Net (loss) on dilution and partial sale of Vasconia ownership $ — $ ( 1,673 )

LIFETIME BRANDS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

September 30, 2022

Components of accumulated other comprehensive loss, net

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

24 unchanged sentences

$ ( 38,659 ) $ ( 33,553 ) $ ( 38,659 ) $ ( 33,553 )

(1) Amounts are recorded in equity in earnings on the unaudited condensed statements of operations.

(1) Amounts are recorded in equity in (losses) earnings on the unaudited condensed statements of operations.

(2) Amounts reclassified are recorded in interest expense and cost of sales on the unaudited condensed consolidated statement of operations.

1 unchanged sentence

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-Q

Item 1. Financial Statements