What changed in this filing

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Item 1. Financial Statements

2023-05-10 compared with 2022-11-03 · 246 added, 401 removed, 650 unchanged (50% of the section changed)

3 unchanged sentences

(in thousands, except share data)

September 30,

2023 December 31,

1 unchanged sentence

Cash and cash equivalents $ 40,958 $ 23,598

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

Accounts receivable, less allowances of $ 15,832 at March 31, 2023 and $ 14,606 at December 31, 2022

124,653 141,195

28 unchanged sentences

Common stock, $ 0.01 par value, shares authorized:

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

50,000,000 at March 31, 2023 and December 31, 2022;

shares issued and outstanding:

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

21,690,766 at March 31, 2023 and 21,779,799 at December 31, 2022

Paid-in capital 275,004 274,579

Retained earnings

(Accumulated deficit) retained earnings

( 11,126 ) 1,145

Accumulated other comprehensive loss

7 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Net sales $ 145,435 $ 182,717

3 unchanged sentences

Selling, general and administrative expenses 37,907 39,488

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

Income from operations

Restructuring expenses 856 —

(Loss) income from operations

( 1,806 ) 4,355

Interest expense ( 5,336 ) ( 3,767 )

Mark to market gain on interest rate derivatives

Mark to market (loss) gain on interest rate derivatives

( 234 ) 1,049

Income before income taxes and equity in (losses) earnings

(Loss) income before income taxes and equity in (losses) earnings

( 7,376 ) 1,637

Income tax provision

Income tax benefit (provision)

1,348 ( 1,673 )

12 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Net (loss) income

$ ( 8,805 ) $ 380

Other comprehensive (loss) income, net of taxes:

Other comprehensive income, net of taxes:

Translation adjustment 1,561 ( 116 )

1 unchanged sentence

Effect of retirement benefit obligations 12 29

Other comprehensive (loss) income, net of taxes

( 2,303 ) 1,265 ( 5,110 ) 5,619

Other comprehensive income, net of taxes

Comprehensive (loss) income

5 unchanged sentences

Common stock Paid-in

capital Retained earnings

capital Retained earnings (accumulated deficit)

Accumulated other

9 unchanged sentences

Stock compensation expense — — 866 — — 866

Net exercise of stock options 22 — 233 — — 233

Shares effectively repurchased for required employee withholding taxes ( 74 ) ( 1 ) ( 438 ) — — ( 439 )

4 unchanged sentences

21,691 $ 217 $ 275,004 $ ( 11,126 ) $ ( 35,434 ) $ 228,661

— — — ( 3,460 ) — ( 3,460 )

Other comprehensive loss, net of taxes

— — — — ( 3,328 ) ( 3,328 )

Net issuance of restricted shares granted to employees and directors 54 1 ( 1 ) — — —

Stock compensation expense — — 1,280 — — 1,280

Net exercise of stock options 3 — — — — —

Shares effectively repurchased for required employee withholding taxes ( 30 ) ( 1 ) ( 369 ) — — ( 370 )

Stock repurchase ( 286 ) ( 2 ) 671 ( 4,197 ) — ( 3,528 )

Dividends (1)

— — — ( 958 ) — ( 958 )

BALANCE AT JUNE 30, 2022

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

13 unchanged sentences

Shares effectively repurchased for required employee withholding taxes ( 45 ) — ( 568 ) — — ( 568 )

Stock repurchase ( 51 ) ( 1 ) ( 670 ) — — ( 671 )

Dividends (1)

2 unchanged sentences

22,318 $ 223 $ 271,698 $ 16,839 $ ( 33,028 ) $ 255,732

— — — 5,789 — 5,789

Other comprehensive income, net of taxes

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

Stock compensation expense — — 1,323 — — 1,323

Net exercise of stock options 50 1 550 — — 551

Shares effectively repurchased for required employee withholding taxes ( 67 ) ( 1 ) ( 1,024 ) — — ( 1,025 )

Dividends (1)

— — — ( 914 ) — ( 914 )

BALANCE AT JUNE 30, 2021

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

— — — 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.

(1) Cash dividends declared per share of common stock were $ 0.0425 and $ 0.0425 in the three months ended March 31, 2023 and 2022, respectively.

See accompanying notes to unaudited condensed consolidated financial statements.

2 unchanged sentences

(in thousands)

Nine Months Ended

September 30,

Three Months Ended

OPERATING ACTIVITIES

1 unchanged sentence

$ ( 8,805 ) $ 380

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

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

Depreciation and amortization 4,870 4,899

Amortization of financing costs 477 426

Mark to market (gain) on interest rate derivatives

Mark to market loss (gain) on interest rate derivatives

234 ( 1,049 )

Non-cash lease expense ( 1,055 ) ( 1,089 )

Recovery for doubtful accounts

Non-cash lease adjustment ( 713 ) ( 335 )

Provision (recovery) for doubtful accounts

1,643 ( 219 )

9 unchanged sentences

Income taxes payable ( 235 ) 1,175

NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES

NET CASH PROVIDED BY OPERATING ACTIVITIES

12,105 13,404

1 unchanged sentence

Purchases of property and equipment ( 511 ) ( 382 )

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

Acquisitions ( 17,956 ) ( 178 )

Acquisition — ( 17,977 )

NET CASH USED IN INVESTING ACTIVITIES

4 unchanged sentences

Repayments of term loan — ( 6,216 )

Payment of financing costs ( 882 ) —

Payments for finance lease obligations ( 7 ) ( 9 )

6 unchanged sentences

Effect of foreign exchange on cash 59 ( 26 )

DECREASE IN CASH AND CASH EQUIVALENTS

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

17,360 ( 13,136 )

4 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022

March 31, 2023

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, 2022.

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.

Operating results for the three months ended March 31, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023.

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

In 2022 and 2021, net sales for the third and fourth quarters accounted for 54 % and 56 % of total annual net sales, respectively.

The increase in the Company's net sales in the first half of the year in 2021 compared to historical trend was a result of increased demand for the Company's products due to shifts in consumer purchasing patterns.

The current market conditions and shifts in both consumer and retailer purchasing patterns has impacted the seasonality of the Company's net sales compared to historical trends.

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

8 unchanged sentences

See NOTE 2 —REVENUE to the unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for additional information.

Cost of sales

Cost of sales consist primarily of costs associated with the production and procurement of product, inbound freight costs, purchasing costs, royalties, and other product procurement related charges.

LIFETIME BRANDS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022

March 31, 2023

Cost of sales

Cost of sales consist primarily of costs associated with the production and procurement of product, inbound freight costs, purchasing costs, royalties, and other product procurement related charges.

Distribution expenses

2 unchanged sentences

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 impacts of the COVID-19 pandemic.

The Company periodically reviews the collectability of its accounts receivable and establishes allowances for estimated credit 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 expectations of current and future economic conditions.

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.

6 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 $ 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 $ 0.2 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 September 30, 2022 and 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.

The Company did not sell receivables to HSBC during the three months ended March 31, 2023.

Pursuant to the Receivable Purchase Agreement, the Company sold to HSBC $ 46.3 million of receivables during the three months ended March 31, 2022.

Charges of $ 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 March 31, 2022.

At March 31, 2023 and 2022, zero and $ 28.1 million, respectively, of receivables sold were outstanding and due to HSBC from customers.

At March 31, 2023, $ 21.9 million of accounts receivables were available for sale to HSBC, net of applicable charges.

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,

2023 December 31, 2022

5 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022

March 31, 2023

Fair value of financial instruments

15 unchanged sentences

Impairment testing is based upon the best information available, including estimates of fair value which incorporate assumptions marketplace participants would use in making their estimates of fair value.

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

reporting unit as of October 1, 2022 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.

As of October 1, 2022, the fair value of the U.S.

reporting unit exceeded the carrying value of goodwill by 10 %.

The significant assumptions used under the income approach, or discounted cash flow method, are projected net sales, projected earnings before interest, tax, depreciation and amortization (“EBITDA”), terminal growth rates, and the cost of capital.

3 unchanged sentences

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

In addition, sustained declines in the Company’s stock price and related market capitalization could impact key assumptions in the overall estimated fair values of its reporting units and could result in non-cash impairment charges that could be material to the Company’s consolidated balance sheet or results of operations.

Should the carrying value of a reporting unit be in excess of the estimated fair value of that reporting unit, an impairment charge will be recorded to reduce the reporting unit to fair value.

LIFETIME BRANDS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022

March 31, 2023

Should the carrying value of a reporting unit be in excess of the estimated fair value of that reporting unit, an impairment charge will be recorded to reduce the reporting unit to fair value.

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.

The Company completed the quantitative impairment analysis for its indefinite-lived assets as of October 1, 2022, by comparing the fair value of the indefinite-lived trade names to their respective carrying value using a relief from royalty method.

As of October 1, 2022, the fair value of the Company’s indefinite-lived trade names exceeded their respective carrying values by 12 %.

Long-lived assets, including intangible assets deemed to have finite lives, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

24 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.

March 31, 2023

In the fourth quarter of 2022, the Company's U.S.

segment incurred $ 0.4 million of restructuring expense in connection with the reorganization the U.S.

segment's sales management structure.

At March 31, 2023, the accrual balance was $ 0.3 million, and the remaining payments are expected to be paid within fiscal year 2023.

During the three months ended March 31, 2023, the Company incurred $ 0.8 million of unallocated corporate expense related to the termination payment with its Executive Chairman, Jeffrey Siegel.

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

The employment agreement provided for a one-time termination payment.

The one-time payment of $ 1.4 million was recognized over the remaining employment period with $ 0.6 million recognized in the fourth quarter of 2022.

At March 31, 2023, the accrual balance was $ 1.4 million.

The termination payment was paid on April 7, 2023.

Adoption of new accounting pronouncements

Effective January 1, 2022, the Company adopted 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 adoption did not have a material impact on the Company’s condensed consolidated financial statements.

Effective January 1, 2023, the Company adopted 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, to include historical experience, current conditions and reasonable and supportable forecasts.

The Company adopted this guidance on a modified retrospective basis and the adoption did not have a material impact on the Company’s condensed consolidated financial statements.

New accounting pronouncements

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 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.

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.

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):

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.

All recent accounting pronouncements 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.

NOTE 2 — REVENUE

4 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 $ 1.2 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.

Shipping and handling fees that are billed to customers in sales transactions are included in net sales and amounted to $ 0.5 million and $ 1.0 million for the three months ended March 31, 2023 and 2022, 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

LIFETIME BRANDS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022

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 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.

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

LIFETIME BRANDS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

The following tables present the Company’s net sales disaggregated by segment, product category and geographic region for the three months ended March 31, 2023 and 2022 (in thousands):

Three Months Ended

Kitchenware $ 85,732 $ 114,130

8 unchanged sentences

Total net sales $ 145,435 $ 182,717

NOTE 3 — ACQUISITION

NOTE 3 — ACQUISITIONS

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

2 unchanged sentences

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

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

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

Cash paid (1)

1 unchanged sentence

Total purchase price $ 18,606

(1) Reflects final working capital adjustment of $21k pursuant to the terms of the Asset Purchase Agreement.

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.

Acquisition related costs of $ 0.9 million were recorded within selling, general and administrative expenses in the unaudited condensed consolidated statements of operations for the three months ended March 31, 2022.

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

LIFETIME BRANDS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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):

March 31, 2023

Purchase Price Allocation

6 unchanged sentences

Total allocated value $ 18,606

The acquisition is 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 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 acquisition was 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.

The goodwill and intangible assets 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 — INTANGIBLE ASSETS).

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 over 15 years.

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

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.

The assets and operating results of the Year & Day brand are reflected in the Company’s condensed 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 consisted of inventory of $ 0.3 million and liabilities assumed of $( 0.1 ) million.

MPA International, LP

On May 3, 2023, the Company executed an asset purchase agreement to acquire the assets of MPA International, LP (a U.S.

based company) and its subsidiary, Compania de Servicios de Manufactura de la Frontera, S.

de C.V (COSMA).

The estimated purchase price is approximately $ 0.4 million, with the asset purchases and transfers expected to occur in the second and third quarter of 2023.

The acquisition will result in the Company having manufacturing operations in Mexico in the form of a maquiladora producing a variety of plastic molded products, primarily for the Company’s kitchenware products.

NOTE 4 — LEASES

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 nine months ended September 30, 2022 and 2021 were as follows (in thousands):

The components of lease expense for the three months ended March 31, 2023 and 2022 were as follows (in thousands):

Three Months Ended

September 30,

Nine Months Ended

September 30,

2022 2021 2022 2021

Operating lease expenses (1) :

3 unchanged sentences

(1) Expenses are recorded within distribution expenses and selling, general and administrative expenses on the unaudited condensed consolidated statement of operations.

LIFETIME BRANDS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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,

Supplemental cash flow information for lease related liabilities and assets for the three months ended March 31, 2023 and 2022 were as follows (in thousands):

Three Months Ended

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

Operating cash flows for operating leases $ 4,887 $ 4,743

Nine Months Ended

September 30,

LIFETIME BRANDS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

Three Months Ended

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

Operating leases $ 1,184 $ 1,528

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)

The aggregate future lease payments for operating leases as of March 31, 2023 were as follows (in thousands):

2023 (excluding the three months ended March 31, 2023)

Thereafter 15,884

3 unchanged sentences

Average lease terms and discount rates were as follows:

September 30, 2022

March 31, 2023

Operating leases:

2 unchanged sentences

NOTE 5 — INVESTMENTS

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

As of March 31, 2023, 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.

2 unchanged sentences

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 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 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

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.

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 months ended March 31, 2023 and 2022 in the accompanying unaudited condensed consolidated statements of operations.

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 20.13 and MXN 20.46 at September 30, 2022 and December 31, 2021, respectively.

Dollars (“USD”) using the spot rates of MXN 18.06 and MXN 19.47 at March 31, 2023 and December 31, 2022, 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

September 30,

Nine Months Ended

September 30,

2022 2021 2022 2021

Average exchange rate (USD to MXN) 18.66

20.01 20.02 - 20.50

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 $ 0.5 million and an increase of $ 1.3 million during the nine months ended September 30, 2022 and 2021, respectively.

LIFETIME BRANDS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

The effect of the translation of the Company’s investment, as well as the translation of Vasconia’s balance sheet, resulted in an increase to the investment of $ 0.7 million and $ 0.1 million during the three months ended March 31, 2023 and 2022, respectively.

These translation effects are recorded in accumulated other comprehensive loss.

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):

Summarized income statement information for the three months ended March 31, 2023 and 2022 for Vasconia in USD and MXN is as follows (in thousands):

Three Months Ended

September 30,

USD MXN USD MXN

5 unchanged sentences

( 2,931 ) ( 54,696 ) 1,731 35,479

Nine Months Ended

September 30,

USD MXN USD MXN

Net Sales $ 187,001 $ 3,785,921 $ 174,468 $ 3,508,858

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

(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 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

The Company recorded equity in (losses) earnings of Vasconia, net of taxes, of $( 0.7 ) million and $ 0.4 million for the three months ended March 31, 2023 and 2022, respectively.

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 September 30, 2022 December 31, 2021

Vasconia due to and due from balances Balance Sheet Location March 31, 2023 December 31, 2022

Amounts due from Vasconia Prepaid expenses and other current assets $ 31 $ 48

Amounts due to Vasconia Accrued expenses and Accounts payable ( 27 ) ( 16 )

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.

The fair value (based on Level 1 inputs using the quoted stock price) of the Company’s investment in Vasconia declined in the first quarter of 2023.

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.

The Company reduced its investment by $ 2.1 million during the three months ended March 31, 2023 to its fair value, and recognized the non-cash impairment charge within equity in (losses) earnings in the unaudited condensed consolidated statement of operations.

The carrying value of the Company’s investment in Vasconia, after the recorded impairment, was $ 10.4 million as of March 31, 2023.

As of December 31, 2022, the fair value (based on Level 1 inputs using the quoted stock price) of the Company’s investment in Vasconia was $ 15.0 million, respectively.

The carrying value of the Company’s investment in Vasconia was $ 12.5 million as of December 31, 2022.

LIFETIME BRANDS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022

March 31, 2023

NOTE 6 — INTANGIBLE ASSETS

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

September 30, 2022 December 31, 2021

Intangible assets consisted of the following as of March 31, 2023 and December 31, 2022 (in thousands):

March 31, 2023 December 31, 2022

Gross Accumulated

Amortization Net Gross Impairment Accumulated

Amortization Net Gross Accumulated

Amortization Net

Goodwill $ 33,237 $ — $ 33,237 $ 30,271 $ — $ — $ 30,271

$ 33,237 $ — $ 33,237 $ 33,237 $ — $ 33,237

Indefinite-lived intangible assets:

8 unchanged sentences

Total $ 302,534 $ ( 92,287 ) $ 210,247 $ 302,482 $ ( 88,595 ) $ 213,887

(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

Goodwill and Intangible Assets, December 31, 2021

$ 182,407 $ 30,271 $ 212,678

Acquisition of goodwill — 2,966 2,966

Acquisition of trade name 13,000 — 13,000

Foreign currency translation adjustment ( 369 ) — ( 369 )

Amortization ( 10,749 ) — ( 10,749 )

Goodwill and Intangible Assets, September 30, 2022

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

(1) The gross and net value at March 31, 2023 and December 31, 2022 reflect a reduction of $ 91.7 million in impairment charges on goodwill and $ 1.0 million in impairment charges on indefinite-lived intangible assets.

(2) The gross value and accumulated amortization at March 31, 2023 reflect a reduction of $ 44.1 million and $( 29.3 ) million, respectively, for the net $ 14.8 million previous impairment charge on finite-lived intangible assets within the international segment and a $ 6.5 million reduction in gross value for previous impairment charges on finite-lived intangible assets within the U.S.

NOTE 7 — DEBT

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 Company’s loan agreement, dated as of March 2, 2018, (the “Term Loan” and together with the ABL Agreement, the “Debt Agreements”) provides for a senior secured term loan credit in the original principal amount of $ 275.0 million, which matures on February 28, 2025.

On December 29, 2022, the Company entered into Amendment No.

1 to the Term Loan, which replaces the LIBOR-based interest rates with SOFR-based interest rates and modifies the provisions for determining the alternative rate of interest upon the occurrence of certain events relating to the availability of interest rate benchmarks.

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.

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).

1 unchanged sentence

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

Additionally, the Term Loan 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, which payments are to be adjusted from time to time to account for prepayments made.

Per the Term Loan, 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 but limited to $ 220.0 million pursuant to the Term Loan.

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

LIFETIME BRANDS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

March 31, 2023

leverage ratio, as defined in and computed on a pro forma basis pursuant to the Term Loan, 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 but not to mature earlier than the maturity date of the then existing term loans.

As of March 31, 2023 and December 31, 2022, the total availability under the ABL Agreement was as follows (in thousands):

March 31, 2023

December 31, 2022

7 unchanged sentences

Consequently, the $ 200.0 million commitment thereunder may not represent actual borrowing capacity.

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):

September 30, 2022 December 31, 2021

Current portion of Term Loan facility:

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

March 31, 2023 December 31, 2022

Current portion of Term Loan:

Estimated Excess Cash Flow principal payment $ 9,000 $ —

Estimated unamortized debt issuance costs ( 1,409 ) —

Total Current portion of Term Loan facility $ — $ 5,771

Non-current portion of Term Loan facility:

Term Loan facility, net of current portion $ 245,911 $ 244,927

Total Current portion of Term Loan $ 7,591 $ —

Non-current portion of Term Loan:

Term Loan, net of current portion $ 236,911 $ 245,911

Estimated unamortized debt issuance costs ( 1,292 ) ( 3,054 )

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

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 decline their payments per the terms of the Term Loan Agreement.

LIFETIME BRANDS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022

Total Non-current portion of Term Loan $ 235,619 $ 242,857

The estimated Excess Cash Flow principal payment recorded at March 31, 2023 represents the Company’s estimate for the 2024 Excess Cash Flow Payment.

There was no Excess Cash Flow payment due in 2023.

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

4 unchanged sentences

subsidiary guarantors, subject to certain exceptions.

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.

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 (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”)

LIFETIME BRANDS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

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.

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

3 unchanged sentences

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 for the applicable interest period, multiplied by any statutory reserve rate, but not less than 1.0 %, plus a margin of 3.5 %.

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

The interest rate on outstanding borrowings under the ABL Agreement at March 31, 2023 was between 4.18 % and 4.21 %.

The Company paid a commitment fee of 0.25 % during the three months ended March 31, 2023.

The Term Loan 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 Adjusted Term SOFR, but not less than 1.0 %, plus 1.0 %, plus a margin of 2.5 % or (ii) SOFR for the applicable interest period, multiplied by any statutory reserve rate, but not less than 1.0 %, plus a margin of 3.5 %.

The interest rate on outstanding borrowings under the Term Loan at March 31, 2023 was 8.42 %.

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

1 unchanged sentence

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 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 was in compliance with the covenants of the Debt Agreements at March 31, 2023.

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 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.

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

The original notional values are reduced over these periods.

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.

The Company’s total outstanding notional value of interest rate swaps was $ 25.0 million at March 31, 2023.

These non-designated interest rate swaps were entered into in June 2019 and 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.

The Company’s interest rate swaps that were designated 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 expired in March 2023.

The Company has no designated interest rate swaps at March 31, 2023.

Foreign Exchange Contracts

1 unchanged sentence

Fluctuations in the value of certain foreign currencies as compared to the USD may positively or negatively affect the Company’s revenues, gross margins, operating expenses, and retained earnings, all of which are expressed in USD.

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.

Where the Company deems it prudent, the Company engages in hedging programs using foreign currency forward contracts aimed at

LIFETIME BRANDS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

limiting the impact of foreign currency exchange rate fluctuations on earnings.

The Company purchases foreign currency forward contracts with terms less than 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 aggregate gross notional value of foreign exchange contracts at September 30, 2022 was $ 3.5 million.

The aggregate gross notional value of foreign exchange contracts at March 31, 2023 was $ 8.3 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 September 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 March 31, 2023, 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 September 30, 2022 December 31, 2021

Derivatives designated as hedging instruments Balance Sheet Location March 31, 2023 December 31, 2022

Interest rate swaps Prepaid expenses and other current assets $ — $ 122

Accrued expenses — 288

Other long-term liabilities — 292

Foreign exchange contracts Prepaid expenses and other current assets 663 461

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

Foreign exchange contracts Accrued expenses 369 260

Derivatives not designated as hedging instruments Balance Sheet Location March 31, 2023 December 31, 2022

Interest rate swaps Other assets $ 1,058 $ 1,292

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 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):

As of March 31, 2023, the Company did not anticipate non-performance by any of its counterparties.

Three Months Ended

September 30, Nine Months Ended

September 30,

Derivatives designated as hedging instruments 2023 2022

2 unchanged sentences

$ ( 1,153 ) $ 608

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 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 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.

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.

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

The Company’s interest rate swaps that were designated as hedging instruments had an aggregate notional value of $ 25.0 million and matured during the three months ended March 31, 2023.

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

LIFETIME BRANDS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

During the three months ended March 31, 2023, the Company reclassified $ 0.9 million of cash flow hedges in accumulated other comprehensive losses to earnings.

This was comprised of a gain of $ 0.1 million related to realized interest rate swap and a gain of $ 0.8 million related to foreign exchange contracts recognized in cost of sales.

At March 31, 2023, the estimated amount of existing net losses expected to be reclassified into earnings within the next 12 months was $ 0.3 million.

During the three months ended March 31, 2022, the Company reclassified $ 0.1 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 gain of $ 0.1 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 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.

Interest and mark to market gains (losses) related to the Company’s derivative financial instruments not designated as hedging instruments that were recognized in earnings are as follows (in thousands):

Interest and mark to market (losses) gains related to the Company’s derivative financial instruments not designated as hedging instruments that were recognized in earnings are as follows (in thousands):

Three Months Ended

September 30, Nine Months Ended

September 30,

Derivatives not designated as hedging instruments Location of gain (loss) 2023 2022

Interest rate swaps Mark to market gain on interest rate derivatives

Interest rate swaps Mark to market (loss) gain on interest rate derivatives

$ ( 234 ) $ 1,049

3 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022

March 31, 2023

NOTE 9 — STOCK COMPENSATION

On June 23, 2022, the stockholders 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 1,180,000 shares.

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.

As of March 31, 2023, there were 652,923 shares available for the grant of awards under the Company's Amended and Restated 2000 Long Term Incentive Plan ( “ Plan ” ), assuming maximum performance of performance-based awards.

Option Awards

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

A summary of the Company’s stock option activity and related information for the three months ended March 31, 2023 is as follows:

Options Weighted-

5 unchanged sentences

Grants 50,000 5.92

Exercises ( 60,000 ) 11.64

Cancellations ( 3,375 ) 11.22

Expirations ( 1,750 ) 9.71

Options outstanding, September 30, 2022

Options outstanding, March 31, 2023

1,110,625 13.32 4.4 $ —

Options exercisable, September 30, 2022

Options exercisable, March 31, 2023

965,875 $ 13.93 3.7 $ —

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 September 30, 2022.

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.

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 March 31, 2023 and the exercise price.

On March 8, 2023, the exercise period for the Executive Chairman’s outstanding vested stock options were extended to remain exercisable until ninety days following termination of his service on the Company's Board of Directors.

The outstanding stock options remain subject to original expiration dates of such awards.

The Company recorded $ 0.1 million of stock compensation expense in connection with this extension during the three months ended March 31, 2023.

Restricted Stock

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

A summary of the Company’s restricted stock activity and related information for the three months ended March 31, 2023 is as follows:

Shares Weighted-

5 unchanged sentences

Cancellations ( 5,938 ) 11.15

Non-vested restricted shares, September 30, 2022

Non-vested restricted shares, March 31, 2023

574,672 $ 9.63

1 unchanged sentence

Weighted-average years expected to be recognized over 1.8

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

The total fair value of restricted stock that vested during the three months ended March 31, 2023 was $ 0.6 million.

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.

March 31, 2023

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 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 nine months ended September 30, 2022 is as follows:

A summary of the Company’s performance-based award activity and related information for the three months ended March 31, 2023 is as follows:

average grant

5 unchanged sentences

Cancellations ( 762 ) 14.18

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

Non-vested performance-based awards, March 31, 2023

487,818 $ 10.44

4 unchanged sentences

These awards vested in the three months ended March 31, 2023.

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

(3) The performance metric for the performance-based awards granted in 2022 is not probable of achievement.

Therefore, no compensation expense has been recorded on these awards.

The total fair value of performance-based awards that vested during the three months ended March 31, 2023 was $ 0.7 million.

Cash-settled performance-based awards

2 unchanged sentences

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 nine months ended September 30, 2022 is as follows:

A summary of the Company’s cash-settled performance-based awards activity and related information for the three months ended March 31, 2023 is as follows:

Cash-settled performance-based awards (1)

Non-vested cash-settled performance-based awards, January 1, 2023

Grants 87,825 6.85

85,776 $ 7.59

Cancellations ( 1,561 ) 5.88

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

Non-vested cash-settled performance-based awards, March 31, 2023

84,215 $ 5.88

2 unchanged sentences

(1) Represents the target number of units to be settled in cash.

Compensation expense for cash-settled performance-based awards is recognized over the 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.

The awards are forfeited if the performance metrics are not achieved as of the end of the performance period.

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

(2) The performance metric for the cash-settled performance-based awards granted in 2022 is not probable of achievement.

Therefore, no compensation expense has been recorded on these awards.

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.

March 31, 2023

The Company recorded stock compensation expense as follows (in thousands):

Three Months Ended

September 30,

Nine Months Ended

September 30,

Stock Compensation Expense Components 2023 2022

9 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 nine months ended September 30, 2022 and 2021 are as follows:

The calculations of basic and diluted (loss) income per common share for the three months ended March 31, 2023 and 2022 are as follows:

Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

(in thousands, except per share amounts)

10 unchanged sentences

Antidilutive Securities (1)

1,682 337 1,675 394

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

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022

March 31, 2023

NOTE 11— INCOME TAXES

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 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.

Income tax benefit of $ 1.3 million and income tax provision of $ 1.7 million for the three months ended March 31, 2023 and 2022, respectively, represent taxes on both U.S.

and foreign earnings at a combined effective income tax benefit rate of 18.3 % and income tax provision rate of 102.2 %, respectively.

The effective tax rate for the three months ended March 31, 2023 differs from the federal statutory income tax rate of 21.0 % primarily due to state and local tax expense, the impact of non-deductible expenses, and foreign losses for which no tax benefit is recognized as such amounts are fully offset with a valuation allowance.

The effective tax rate for the three months ended March 31, 2022 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:

Federal, California, Georgia, Illinois, Massachusetts, New Jersey, New York and the United Kingdom.

The audit of the Company's New York State tax returns for years 2015-2019 closed during the quarter ended March 31, 2022 with an immaterial adjustment.

Federal, California, Massachusetts, New Jersey, New York and the United Kingdom.

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 September 30, 2022 and September 30, 2021.

There were no material changes to the Company’s uncertain tax positions, interest, or penalties during the three-month periods ended March 31, 2023 and March 31, 2022.

LIFETIME BRANDS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022

March 31, 2023

NOTE 12 – BUSINESS SEGMENTS

5 unchanged sentences

Management evaluates the performance of the U.S.

and International segments based on net sales and income from operations.

and International segments based on net sales and (loss) income from operations.

Such measures give recognition to specifically identifiable operating costs such as cost of sales, distribution expenses and selling, general and administrative expenses.

1 unchanged sentence

Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

(in thousands)

2 unchanged sentences

Total net sales $ 145,435 $ 182,717

Income from operations

(Loss) income from operations

$ 5,954 $ 14,326

1 unchanged sentence

Unallocated corporate expenses ( 5,868 ) ( 5,853 )

Income from operations

(Loss) income from operations

$ ( 1,806 ) $ 4,355

3 unchanged sentences

Total depreciation and amortization $ 4,870 $ 4,899

September 30,

2023 December 31,

6 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022

March 31, 2023

NOTE 13 — CONTINGENCIES

13 unchanged sentences

On August 13, 2015, the EPA released its remedial investigation and feasibility study (“RI/FS”) for the Site.

On December 11, 2015, the EPA issued the Record of Decision (“ROD”) for an initial operable unit, electing to implement its preferred remedy which consists of soil vapor extraction and dual-phase extraction/in-situ treatment.

On December 11, 2015, the EPA issued the Record of Decision (“ROD”) for an initial operable unit (“OU-1”), electing to implement its preferred remedy which consists of soil vapor extraction and dual-phase extraction/in-situ treatment.

This selected remedy includes soil vapor extraction (“SVE”) to address soil (vadose zone) source areas at the Site, impermeable cover as necessary for the implementation of SVE, dual phase extraction in the shallow saprolite zone, and in-situ treatment as needed to address residual sources.

The EPA’s total net present worth estimated cost for its selected remedy is $ 7.3 million.

The EPA also designated a second operable unit under which the EPA has and will continue to conduct further investigations to determine the nature and extent of groundwater contamination, as well as a determination by the EPA on the necessity of any further response actions to address groundwater contamination.

In February 2017, the EPA indicated that it planned to expand its field investigation for the RI/FS to a second operable unit to further determine the nature and extent of the groundwater contamination at and from the Site and to determine the nature of the remedial action needed to address the contamination.

The EPA has requested access to the property occupied by WSPR to install monitoring wells and to undertake groundwater sampling as part of this expanded investigation.

WSPR has consented to the EPA’s access request, provided that the EPA receives PRIDCO’s consent, as the property owner.

In February 2017, the EPA indicated that it planned to expand its field investigation for the RI/FS to a second operable unit (“OU-2”) to determine the nature and extent of the groundwater contamination at and from the Site and to determine the nature of the remedial action needed to address the contamination.

The EPA requested access to the property occupied by WSPR to install monitoring wells and to undertake groundwater sampling as part of this expanded investigation.

WSPR consented to the EPA’s access request, provided that the EPA received PRIDCO’s consent as the property owner.

WSPR never used the primary contaminant of concern and did not take up its tenancy at the Site until after the EPA had discovered the contamination in the local water supply.

The EPA has also issued notices of potential liability to a number of other entities affiliated with the Site, which used the contaminants of concern.

In December 2018, the Company, WSPR, and other identified potentially responsible parties affiliated with the Site entered into tolling agreements to extend the statute of limitations for potential claims for the recovery of response costs for the initial operable unit under Section 107 of CERCLA.

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

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

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

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

In December 2018, the Company, WSPR, and other identified potentially responsible parties affiliated with the Site entered into tolling agreements with the U.S.

government to extend the statute of limitations for potential claims for the recovery of response costs for the initial operable unit under Section 107 of CERCLA.

The tolling agreements have been extended multiple times and currently expire in 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.

The EPA released its proposed plan for a second operable unit in July 2019.

The public comment period for the proposed plan ended on September 10, 2019.

On September 30, 2019, the EPA issued the ROD for operable unit 2 (“OU-2”), electing to implement its preferred remedy which consists of in-situ treatment of groundwater and a monitored natural attenuation program including monitoring of the plume fringe at the Site.

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

The EPA released its proposed plan for OU-2 in July 2019, and on September 30, 2019, the EPA issued the ROD OU-2.

The EPA elected to implement its preferred remedy consisting of in-situ treatment of groundwater and a monitored natural attenuation program including monitoring of the plume fringe at the Site.

The EPA’s estimated total net present worth cost for its selected remedy for OU-2 is $ 17.3 million, and the EPA is currently leading remediation of OU-2.

In August 2021, WSPR received a Notice of Liability for the Site from the Department of Justice on behalf of the EPA, and in September 2021, WSPR responded with a good faith offer to conduct additional testing and remedial design work for OU-1.

Since that time, WSPR has been actively participating in negotiations among the U.S.

Government (the Department of Justice and the EPA) and other potentially responsible parties with respect to the remedial work at OU-1.

WSPR anticipates finalizing a Consent Decree for Remedial Design and Remedial Action at OU-1 in the near term.

LIFETIME BRANDS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 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 remains under consideration by the EPA.

March 31, 2023

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.

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

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.

24 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022

March 31, 2023

NOTE 14 — OTHER

Cash dividends

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

Dividends declared in the three months ended March 31, 2023 were as follows:

Dividend per share Date declared Date of record Payment date

$ 0.0425 3/8/2023 5/1/2023 5/15/2023

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

$ 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.

During the three months ended March 31, 2023, the Company paid dividends of $ 1.0 million.

This included payments made on February 15, 2023 of $ 0.9 million to stockholders of record on February 1, 2023 and payments of $ 0.1 million for dividends payable upon the vesting of restricted shares and performance shares.

In the three months ended March 31, 2023, the Company reduced retained earnings for the accrual of $ 0.9 million relating to the dividend payable on May 15, 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 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.

During the three months ended March 31, 2023, the Company repurchased 320,204 shares for a total cost of $ 2.5 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

Nine Months Ended

September 30,

Three Months Ended

(in thousands)

2 unchanged sentences

Cash paid for taxes, net of refunds 320 498

Non-cash investing activities:

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

LIFETIME BRANDS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022

March 31, 2023

Components of accumulated other comprehensive loss, net

Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

(in thousands)

2 unchanged sentences

Translation adjustment during period 1,561 ( 116 )

Amounts reclassified from accumulated other comprehensive loss (1)

— 1,362 — 3,404

Translation Adjustment ( 2,686 ) 240 ( 7,109 ) 4,463

Balance at end of period $ ( 34,511 ) $ ( 31,868 )

Accumulated deferred gains (losses) on cash flow hedges:

Accumulated deferred (losses) gains on cash flow hedges:

Balance at beginning of period $ 923 $ 78

Change in unrealized gains (losses)

624 528 2,201 ( 255 )

Change in unrealized (losses) gains

Amounts reclassified from accumulated other comprehensive loss:

Settlement of cash flow hedge (1)

( 270 ) 464 ( 289 ) 1,310

Net change in cash flow hedges, net of taxes of $( 2 ), $ 170

4 unchanged sentences

Amounts reclassified from accumulated other comprehensive loss:

Amortization of actuarial loss, net of taxes 29 33 87 101

Amortization of actuarial loss, net of taxes of $( 4 ), $ 10

Balance at end of period $ ( 693 ) $ ( 1,846 )

1 unchanged sentence

$ ( 35,434 ) $ ( 33,028 )

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

(1) 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