What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-05-09 compared with 2023-11-09 · 212 added, 408 removed, 632 unchanged (50% of the section changed)

3 unchanged sentences

(in thousands, except share data)

September 30,

2024 December 31,

1 unchanged sentence

Cash and cash equivalents $ 4,639 $ 16,189

Accounts receivable, less allowances of $ 16,810 at September 30, 2023 and $ 14,606 at December 31, 2022

Accounts receivable, less allowances of $ 15,177 at March 31, 2024 and $ 15,952 at December 31, 2023

113,645 155,180

1 unchanged sentence

Prepaid expenses and other current assets 13,915 16,339

Income taxes receivable 1,254 —

TOTAL CURRENT ASSETS 322,019 376,355

24 unchanged sentences

Common stock, $ 0.01 par value, shares authorized:

50,000,000 at September 30, 2023 and December 31, 2022;

50,000,000 at March 31, 2024 and December 31, 2023;

shares issued and outstanding:

21,814,236 at September 30, 2023 and 21,779,799 at December 31, 2022

22,073,256 at March 31, 2024 and 21,813,266 at December 31, 2023

Paid-in capital 277,496 277,728

(Accumulated deficit) retained earnings

Accumulated deficit

( 20,771 ) ( 13,568 )

8 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Net sales $ 142,242 $ 145,435

4 unchanged sentences

Restructuring expenses — 856

Wallace facility remediation expense — 5,140 — 5,140

Income from operations

Income (loss) from operations

1,830 ( 1,806 )

Interest expense ( 5,614 ) ( 5,336 )

Mark to market (loss) gain on interest rate derivatives

Mark to market loss on interest rate derivatives

( 174 ) ( 234 )

Gain on early retirement of debt — — 1,520 —

Income before income taxes and equity in losses

Loss before income taxes and equity in losses

( 3,958 ) ( 7,376 )

Income tax provision

Income tax (provision) benefit

( 210 ) 1,348

1 unchanged sentence

( 2,092 ) ( 2,777 )

NET INCOME (LOSS)

$ ( 6,260 ) $ ( 8,805 )

BASIC INCOME (LOSS) PER COMMON SHARE

BASIC LOSS PER COMMON SHARE

$ ( 0.29 ) $ ( 0.41 )

DILUTED INCOME (LOSS) PER COMMON SHARE

DILUTED LOSS PER COMMON SHARE

$ ( 0.29 ) $ ( 0.41 )

1 unchanged sentence

LIFETIME BRANDS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(in thousands)

Three Months Ended

September 30, Nine Months Ended

September 30,

$ ( 6,260 ) $ ( 8,805 )

Net income (loss)

$ 4,206 $ ( 6,358 ) $ ( 11,119 ) $ ( 9,438 )

Other comprehensive (loss) income, net of taxes:

Other comprehensive income, net of taxes:

Translation adjustment 40 1,561

1 unchanged sentence

Effect of retirement benefit obligations 13 12

Other comprehensive (loss) income, net of taxes

( 795 ) ( 2,303 ) 573 ( 5,110 )

Comprehensive income (loss)

Other comprehensive income, net of taxes

Comprehensive loss

$ ( 6,006 ) $ ( 8,385 )

4 unchanged sentences

Common stock Paid-in

capital Retained earnings (accumulated deficit)

capital Accumulated deficit

Accumulated other

10 unchanged sentences

Shares effectively repurchased for required employee withholding taxes ( 105 ) ( 1 ) ( 1,027 ) — — ( 1,028 )

Stock repurchase ( 320 ) ( 3 ) — ( 2,536 ) — ( 2,539 )

Dividends (1)

2 unchanged sentences

22,073 $ 221 $ 277,496 $ ( 20,771 ) $ ( 33,245 ) $ 223,701

— — — ( 6,520 ) — ( 6,520 )

Other comprehensive income, net of taxes

— — — — 948 948

Net issuance of restricted shares granted to employees and directors 141 1 ( 1 ) — — —

Stock compensation expense — — 1,010 — — 1,010

Shares effectively repurchased for required employee withholding taxes ( 18 ) — ( 98 ) — — ( 98 )

Dividends (1)

— — — ( 950 ) — ( 950 )

BALANCE AT JUNE 30, 2023

21,814 $ 218 $ 275,915 $ ( 18,596 ) $ ( 34,486 ) $ 223,051

— — — 4,206 — 4,206

Other comprehensive loss, net of taxes

— — — — ( 795 ) ( 795 )

Stock compensation expense — — 898 — — 898

Dividends (1)

— — — ( 943 ) — ( 943 )

BALANCE AT SEPTEMBER 30, 2023

21,814 $ 218 $ 276,813 $ ( 15,333 ) $ ( 35,281 ) $ 226,417

(1) Cash dividends declared per share of common stock were $ 0.1275 and $ 0.1275 in the nine months ended September 30, 2023 and 2022, respectively.

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, 2023 and 2022, respectively.

(1) Cash dividends declared per share of common stock were $ 0.0425 and $ 0.0425 in the three months ended March 31, 2024 and 2023, respectively.

See accompanying notes to unaudited condensed consolidated financial statements.

2 unchanged sentences

(in thousands) (unaudited)

Nine Months Ended

September 30,

Three Months Ended

OPERATING ACTIVITIES

$ ( 6,260 ) $ ( 8,805 )

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

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

Depreciation and amortization 4,939 4,870

Amortization of financing costs 739 477

Mark to market loss (gain) on interest rate derivatives

135 ( 1,990 )

Mark to market loss on interest rate derivatives

Non-cash lease adjustment ( 455 ) ( 713 )

Provision (recovery) for doubtful accounts

2,193 ( 140 )

Deferred income taxes 5 —

Provision for doubtful accounts

Stock compensation expense 807 861

Undistributed losses from equity investment, net of taxes

Contingent consideration fair value adjustments ( 50 ) —

Gain on early retirement of debt ( 1,520 ) —

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

Changes in operating assets and liabilities

Accounts receivable 41,119 15,336

4 unchanged sentences

Income taxes payable ( 71 ) ( 235 )

NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES

NET CASH PROVIDED BY OPERATING ACTIVITIES

10,513 12,105

1 unchanged sentence

Purchases of property and equipment ( 600 ) ( 511 )

Acquisition — ( 17,956 )

NET CASH USED IN INVESTING ACTIVITIES

3 unchanged sentences

Repayments of revolving credit facility ( 70,822 ) ( 8,680 )

Repayments of term loan ( 44,866 ) ( 6,216 )

Payment of financing costs ( 433 ) ( 882 )

Payments for finance lease obligations ( 7 ) ( 7 )

Payments of tax withholding for stock based compensation ( 1,028 ) ( 439 )

Proceeds from the exercise of stock options — 233

Payments for stock repurchase — ( 2,539 )

3 unchanged sentences

Effect of foreign exchange on cash ( 64 ) 59

DECREASE IN CASH AND CASH EQUIVALENTS

(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS

( 11,550 ) 17,360

4 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

March 31, 2024

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, 2023.

Operating results for the three and nine months ended September 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023.

Operating results for the three months ended March 31, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024.

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

In 2023 and 2022, net sales for the third and fourth quarters accounted for 57 % and 54 % of total annual net sales, respectively.

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.

In 2023, 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.

6 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.

LIFETIME BRANDS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 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.

LIFETIME BRANDS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024

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.

The Company did not sell receivables to HSBC during the three and nine months ended September 30, 2023.

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.

Charges of $ 0.2 million and $ 0.5 million, respectively, related to the sale of the receivables were included in selling, general and administrative expenses in the unaudited condensed consolidated statements of operations for the three and nine months ended September 30, 2022.

At September 30, 2023 and 2022, zero and $ 20.2 million, respectively, of receivables sold were outstanding and due to HSBC from customers.

At September 30, 2023, $ 24.8 million of accounts receivables were available for sale to HSBC, net of applicable charges.

The Company did not sell receivables to HSBC during the three months ended March 31, 2024 and March 31, 2023.

At March 31, 2024, $ 23.8 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,

2024 December 31, 2023

5 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

March 31, 2024

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 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.

Projected net sales, projected EBITDA and terminal growth rates were determined to be significant assumptions because they are three primary drivers of the projected cash flows in the discounted cash flow fair value model.

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

reporting unit as of October 1, 2023 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, 2023, the fair value of the U.S.

reporting unit exceeded the carrying value of goodwill by 4 %.

Projected net sales and projected EBITDA were determined to be significant assumptions because they are the primary drivers of the projected cash flows in the discounted cash flow fair value model.

Cost of capital was also determined to be a significant assumption as it is the discount rate used to calculate the current fair value of those projected cash flows.

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

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

3 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

March 31, 2024

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

1 unchanged sentence

The significant assumptions used in the relief from royalty model are future net sales for the related brands, royalty rates and the cost of capital to determine the fair value of the indefinite-lived intangibles.

The Company completed the quantitative impairment analysis for its indefinite-lived assets as of October 1, 2023, 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, 2023, the fair value of the Company’s indefinite-lived trade names exceeded their respective carrying values by 7 %.

While the indefinite-lived trade name was not determined to be impaired, if the indefinite-lived trade name does not perform as projected or if market factors utilized in the impairment analysis deteriorate, including an unfavorable change in the weighted average cost of capital, could materially affect the expected cash flows, and such impacts could potentially result in a material non-cash impairment charge.

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.

20 unchanged sentences

Although management believes that it uses the best information available to estimate IBNR claims, actual claims may vary significantly from estimated claims.

LIFETIME BRANDS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024

Restructuring expenses

2 unchanged sentences

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

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 September 30, 2023, the accrual balance was $ 0.1 million, and the remaining payments are expected to be paid within fiscal year 2023.

LIFETIME BRANDS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

During the nine months ended September 30, 2023, the Company incurred $ 0.8 million of unallocated corporate expense related to the termination payment with its Executive Chairman, Jeffrey Siegel (the “Executive Chairman”).

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 former Executive Chairman, Jeffrey Siegel (the “Executive Chairman”).

On November 1, 2022, the Company entered into a transition agreement with its Executive Chairman 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.

The termination payment was paid on April 7, 2023.

Adoption of new accounting pronouncements

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.

The employment agreement provided for a one-time payment, which was paid on April 7, 2023.

New accounting pronouncements

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.

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 November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures:

which enhances the disclosures required for operating segments in the Company’s annual and interim consolidated financial statements.

The new guidance is effective for public business entities for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024 on a retrospective basis.

Early adoption is permitted.

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

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures:

This guidance is intended to enhance the transparency and decision usefulness of income tax disclosures.

The amendments in ASU 2023-09 address investor requests for enhanced income tax information primarily through changes to the rate reconciliation and income taxes paid information.

Early adoption is permitted.

The new guidance is effective for public business entities for annual periods beginning after December 15, 2024 on a prospective basis.

Retrospective application is permitted.

Management is currently evaluating the impact of this standard on its consolidated financial statements and related 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 $ 0.8 million and $ 1.7 million for the three and nine months ended September 30, 2023, respectively and $ 1.2 million and $ 3.2 million for the three and nine months ended September 30, 2022, respectively.

Shipping and handling fees that are billed to customers in sales transactions are included in net sales and amounted to $ 0.6 million and $ 0.5 million for the three months ended March 31, 2024 and 2023, respectively.

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

1 unchanged sentence

These incentives and promotions typically include arrangements such as cooperative advertising, buydowns, volume rebates and discounts.

These arrangements, which represent forms of variable consideration and an estimate of sales returns, are reflected as reductions in net sales in the Company’s unaudited condensed consolidated statements of operations.

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.

These sales incentives and promotions represent variable consideration and are reflected as reductions in net sales in the Company’s unaudited condensed consolidated statements of operations.

While many of the sales incentives and promotions are contractually agreed upon with the Company’s customers, certain of the sales incentives and promotions are non-contractual and require the Company to estimate the amount of variable consideration 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

LIFETIME BRANDS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024

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

September 30, 2023

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, 2023 and 2022 (in thousands):

Three Months Ended Nine Months Ended

September 30, September 30,

2023 2022 2023 2022

The following tables present the Company’s net sales disaggregated by segment, product category and geographic region for the three months ended March 31, 2024 and 2023 (in thousands):

Three Months Ended

Kitchenware $ 83,530 $ 85,732

8 unchanged sentences

Total net sales $ 142,242 $ 145,435

NOTE 3 — ACQUISITIONS

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

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

The Company paid cash consideration of $ 18.0 million.

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):

Cash paid (1)

Value of contingent consideration 650

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.

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, 2023

Purchase Price Allocation

Accounts receivable $ 2,280

Inventory 4,005

Fixed assets 40

Intangible assets 13,000

Goodwill 2,966

Accounts payable and accrued expenses ( 3,685 )

Total allocated value $ 18,606

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.

A credit of $( 0.1 ) million is included in Selling, general and administrative expenses for the nine months ended September 30, 2023 to reflect the change in fair value of a contingent consideration obligation acquired by the Company in connection with its acquisition of S'well.

There was no such adjustment in the three months ended September 30, 2023.

NOTE 3 — 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, 2023 and 2022 were as follows (in thousands):

The components of lease expense for the three months ended March 31, 2024 and 2023 were as follows (in thousands):

Three Months Ended

September 30,

Nine Months Ended

September 30,

2023 2022 2023 2022

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.

Supplemental cash flow information for lease related liabilities and assets for the nine months ended September 30, 2023 and 2022 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 $ 14,279 $ 14,447

LIFETIME BRANDS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

Nine Months Ended

September 30,

March 31, 2024

Supplemental cash flow information for lease related liabilities and assets for the three months ended March 31, 2024 and 2023 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 $ 4,718 $ 4,887

Three Months Ended

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

Operating leases $ — $ 1,184

The aggregate future lease payments for operating leases as of September 30, 2023 were as follows (in thousands):

2023 (excluding the nine months ended September 30, 2023)

The aggregate future lease payments for operating leases as of March 31, 2024 were as follows (in thousands):

2024 (excluding the three months ended March 31, 2024)

Thereafter 11,749

3 unchanged sentences

Average lease terms and discount rates were as follows:

September 30, 2023

March 31, 2024

Operating leases:

2 unchanged sentences

NOTE 4 — INVESTMENTS

As of September 30, 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.

As of March 31, 2024, the Company owned 24.7 % of the outstanding capital stock of Grupo Vasconia S.A.B.

(“Vasconia”), an integrated manufacturer of aluminum products and a housewares company in Mexico.

Shares of Vasconia’s capital stock are traded on the Bolsa Mexicana de Valores, the Mexican Stock Exchange.

The Quotation Key is VASCONI.

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, 2023 and 2022 in the accompanying unaudited condensed consolidated statements of operations.

The Company’s equity in losses, net of taxes, for the three and nine months ended September 30, 2023 and 2022 included the following:

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

Accordingly, the Company has recorded its proportionate share of Vasconia’s net loss for the three months ended March 31, 2024 and 2023 in the accompanying unaudited condensed consolidated statements of operations.

The Company’s equity in losses, net of taxes, for the three months ended March 31, 2024 and 2023 included the following:

LIFETIME BRANDS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024

Three Months Ended

September 30, Nine Months Ended

September 30,

Vasconia equity in losses, net of taxes

3 unchanged sentences

$ ( 2,092 ) $ ( 2,777 )

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 17.41 and MXN 19.47 at September 30, 2023 and December 31, 2022, respectively.

LIFETIME BRANDS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

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

Three Months Ended

September 30,

Nine Months Ended

September 30,

2023 2022 2023 2022

Average exchange rate (USD to MXN) 17.06

20.22 17.06 - 18.66

20.02 - 20.50

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 $ 1.1 million and a decrease of $ 0.5 million during the nine months ended September 30, 2023 and 2022, respectively.

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 $ 0.3 million and an increase of $ 0.7 million during the three months ended March 31, 2024 and 2023, respectively.

These translation effects are recorded in accumulated other comprehensive loss.

Summarized income statement information for the three and nine months ended September 30, 2023 and 2022 for Vasconia in USD and MXN is as follows (in thousands):

Three Months Ended

September 30,

USD MXN USD MXN

Net sales $ 38,745 $ 660,991 $ 56,488 $ 1,142,171

10,994 187,559 4,405 89,061

Loss from operations

( 1,060 ) ( 18,081 ) ( 5,459 ) ( 110,380 )

( 2,858 ) ( 48,771 ) ( 8,009 ) ( 161,936 )

Nine Months Ended

September 30,

USD MXN USD MXN

Net sales $ 121,537 $ 2,164,683 $ 187,001 $ 3,785,921

29,330 520,224 29,629 600,976

Loss from operations

( 1,874 ) ( 33,464 ) ( 256 ) ( 3,974 )

( 11,544 ) ( 205,204 ) ( 4,875 ) ( 98,366 )

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, 2023 December 31, 2022

Amounts due from Vasconia Prepaid expenses and other current assets $ 42 $ 48

Amounts due to Vasconia Accrued expenses and Accounts payable ( 220 ) ( 16 )

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

As a result of the decline in the quoted stock price, the continued decline in the operating results of Vasconia and the recent downgrade in Vasconia’s debt rating, the Company determined the decline in fair value was other than temporary.

The Company reduced its investment by $ 0.3 million during the three months ended September 30, 2023 to its fair value, and recognized the non-cash impairment charge within equity in losses in the unaudited condensed consolidated statement of operations.

The carrying value of the Company’s investment in Vasconia, after the recorded impairment, was $ 4.0 million as of September 30, 2023.

For the nine months ended September 30, 2023, the Company has recognized non-cash impairment charges of $ 6.8 million.

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, 2023

The carrying value of the Company’s investment in Vasconia, was zero and $ 1.8 million as of March 31, 2024 and December 31, 2023, respectively.

Amounts due to and from Vasconia are recorded in the Company’s unaudited condensed consolidated balance sheet within prepaid expenses, other current assets, accrued expenses and accounts payable.

As of March 31, 2024 and December 31, 2023, these amounts were not material individually or in the aggregate.

On April 29, 2024, Vasconia’s shareholders’ approved a resolution to a reorganization process in terms of the Law of Commercial Bankruptcy in Mexico.

In the second quarter of fiscal 2024, the Company will assess the impact of the approved reorganization process on its ability to exercise significant influence to determine if equity method accounting for its investment remains appropriate.

In the event that the Company no longer exercises significant influence, the investment would not be accounted for using the equity method of accounting which may result in the recognition of a non-cash loss for amounts previously recognized in accumulated other comprehensive loss.

At March 31, 2024, the accumulated other comprehensive loss related to the investment was $ 14.2 million.

NOTE 5 — INTANGIBLE ASSETS

Intangible assets consisted of the following as of September 30, 2023 and December 31, 2022 (in thousands):

September 30, 2023 December 31, 2022

Intangible assets consisted of the following as of March 31, 2024 and December 31, 2023 (in thousands):

March 31, 2024 December 31, 2023

Gross Accumulated

13 unchanged sentences

Total $ 302,586 $ ( 107,243 ) $ 195,343 $ 302,607 $ ( 103,474 ) $ 199,133

(1) The gross and net value at September 30, 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 September 30, 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.

In the third quarter of 2023, the Company observed a sustained decline in the market valuation of the Company's common stock over a twelve month period and an increase in the risk free interest rate.

Based on these factors and considering the limited excess fair value over carrying value observed in the last annual impairment test on October 1, 2022, the Company concluded that a triggering event had occurred and performed an interim impairment test of goodwill and certain intangible assets as of September 30, 2023.

The Company performed an interim impairment test of the goodwill in the U.S.

reporting unit by comparing its fair value with its carrying value.

The analysis was performed by using a discounted cash flow and market multiple method.

Based upon the analysis performed, the Company determined that the fair value of the Company's U.S.

reporting unit exceeded its carrying value, and therefore goodwill was not impaired.

As of September 30, 2023, the fair value of the U.S.

reporting unit exceeded the carrying value of goodwill by 4 %.

Indefinite-lived trade names

The Company performed an interim quantitative impairment analysis of its indefinite-lived trade names by comparing the fair value of the indefinite-lived trade names to their respective carrying values.

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

The Company determined that the fair value of all its indefinite-lived trade names were above their respective carrying values, and therefore its indefinite-lived intangible assets were not impair ed.

In connection with the interim impairment analysis, the Company determined that one trade name, previously estimated to contribute to cash flows indefinitely, has a definite life.

Accordingly, the trade name will be reclassified from indefinite-lived to finite-lived or amortizable intangible assets as of October 1, 2023.

The trade name will be amortized over an estimated useful life of 15 years.

As of September 30, 2023, the fair value of the Company’s indefinite-lived trade name exceeded the respective carrying value by 7 %.

LIFETIME BRANDS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

(1) The gross and net value at March 31, 2024 and December 31, 2023 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, 2024 and December 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 6 — 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.

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” 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.

LIFETIME BRANDS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024

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.

On November 14, 2023, the Company entered into Amendment No.

2 to amend the Loan Agreement, dated as of March 2, 2018, among the Company, as borrower, the other loan parties from time to time party thereto, the lenders from time to time party thereto, and JPMorgan Chase Bank, N.A., as Administrative Agent (as amended, the “Term Loan” and together with the ABL Agreement, the “Debt Agreements”).

The Term Loan has a principal amount of $ 150.0 million, and matures on August 26, 2027.

The Term Loan requires the Company to make quarterly payments of principal each equal to 1.25 % of the aggregate principal amount of the Term Loan, commencing on March 31, 2024, with the remaining balance payable on the maturity date.

The Term Loan requires the Company to make an annual prepayment of principal, beginning with those for the fiscal year ending December 31, 2024, 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, 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 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.

Per the Term Loan, when the Company makes an Excess Cash Flow prepayment, 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 maximum borrowing amount under the ABL Agreement may be increased to up to $ 250.0 million if certain conditions are met.

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 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 3.25 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 September 30, 2023 and December 31, 2022, the total availability under the ABL Agreement was as follows (in thousands):

September 30, 2023

As of March 31, 2024 and December 31, 2023, the total availability under the ABL Agreement were as follows (in thousands):

March 31, 2024

December 31, 2023

5 unchanged sentences

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

Due to the seasonality of the Company’s business, this means that the Company may have greater borrowing availability during the third and fourth quarters of each year.

Due to the seasonality of the Company’s business, the Company may have greater borrowing availability during the third and fourth quarters of each year.

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

On June 8, 2023, the Company completed the repurchase of $ 47.2 million in principal amount of the Term Loan, for $ 95 per $ 100 of principal.

The repurchase was executed by way of a reverse Dutch auction, pursuant to and in accordance with the

The Company’s borrowing capacity may be further limited by the Term Loan financial covenant of 5.00 to 1.00 maximum Total Net Leverage Ratio.

LIFETIME BRANDS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

terms and conditions provided for in the Term Loan.

In connection therewith, debt issuance costs of $ 0.5 million were written off and fees of $ 0.4 million were incurred.

The gain on the early retirement of the Term Loan was $ 1.5 million, net of fees and expenses.

March 31, 2024

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

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Current portion of Term Loan:

Term Loan payment $ 9,375 $ 7,500

Estimated Excess Cash Flow principal payment 4,000 —

5 unchanged sentences

Total Non-current portion of Term Loan $ 130,626 $ 135,834

The estimated Excess Cash Flow principal payment recorded at September 30, 2023 represents the Company’s estimate for the 2024 Excess Cash Flow Payment.

The estimated Excess Cash Flow principal payment recorded at March 31, 2024 represents the Company’s estimate for the Excess Cash Flow Payment due in 2025.

There was no Excess Cash Flow payment due in 2024.

5 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 (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 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 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 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, 2023 was between 6.44 % and 8.75 %.

The Company paid a commitment fee of 0.25 % during the nine months ended September 30, 2023.

The interest rate on outstanding borrowings under the ABL Agreement at March 31, 2024 was between 6.44 % and 8.75 %.

The Company paid a commitment fee of 0.25 % on the unused portion of the ABL Agreement during the three months ended March 31, 2024.

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 4.5 % or (ii) Adjusted Term SOFR (Term SOFR plus

LIFETIME BRANDS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

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

The interest rate on outstanding borrowings under the Term Loan at September 30, 2023 was 8.93 %.

March 31, 2024

the Term SOFR Adjustment) for the applicable interest period, but not less than 1.0 %, plus a margin of 5.5 %.

The interest rate on outstanding borrowings under the Term Loan at March 31, 2024 was 10.94 %.

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

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

Under the Term Loan, the Total Net Leverage Ratio is not permitted to be greater than 5.00 to 1.00 determined as of the end of each fiscal quarters.

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, 2023.

The Company was in compliance with the covenants of the Debt Agreements at March 31, 2024.

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 .

1 unchanged sentence

Interest Rate Swap Agreements

The Company’s total outstanding notional value of interest rate swaps was $ 25.0 million at September 30, 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.

In June 2019 the Company entered into interest rate swap agreements, with an aggregate notional value of $ 25.0 million and expire in February 2025.

In March 2024, the Company entered into a new interest rate swap agreement, with an aggregate notional value of $ 25.0 million and expire in August 2027.

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.

The Company’s total outstanding notional value of interest rate swaps was $ 50.0 million at March 31, 2024.

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 September 30, 2023.

The Company has no designated interest rate swaps at March 31, 2024.

Foreign Exchange Contracts

4 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.

The aggregate gross notional value of foreign exchange contracts at September 30, 2023 was $ 8.8 million.

The aggregate gross notional value of foreign exchange contracts at March 31, 2024 was $ 7.0 million.

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

7 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

not enter into such contracts for speculative purposes, and as of September 30, 2023, these foreign exchange contracts have been designated as hedges in to order to apply hedge accounting.

March 31, 2024

not enter into such contracts for speculative purposes, and as of March 31, 2024, 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, 2023 December 31, 2022

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

Derivatives designated as hedging instruments Balance Sheet Location March 31, 2024 December 31, 2023

Foreign exchange contracts Prepaid expenses and other current assets $ 67 $ 56

Other Assets 33 —

Accrued expenses 73 144

Derivatives not designated as hedging instruments Balance Sheet Location September 30, 2023 December 31, 2022

Interest rate swaps Other assets $ 1,156 $ 1,292

Derivatives not designated as hedging instruments Balance Sheet Location March 31, 2024 December 31, 2023

Interest rate swaps

Prepaid expenses and other current assets

Other long-term liabilities 104 —

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, 2023, 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, 2024, 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 2024 2023

2 unchanged sentences

$ 201 $ ( 1,153 )

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.

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 (loss) income are reclassified into cost of sales as the underlying inventory purchased is sold.

During the three months ended September 30, 2023, the Company reclassified $ 0.2 million of cash flow hedges in accumulated other comprehensive losses to earnings.

This was a loss of $ 0.2 million related to foreign exchange contracts recognized in cost of sales.

During the nine months ended September 30, 2023, the Company reclassified $ 0.8 million of cash flow hedges in accumulated other comprehensive losses to earnings.

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.

During the three months ended March 31, 2024, the Company reclassified $ 0.1 million of cash flow hedges in accumulated other comprehensive losses to earnings.

This was related to foreign exchange contracts recognized in cost of sales.

At March 31, 2024, the estimated amount of existing net losses expected to be reclassified into earnings within the next 12 months was below $ 0.1 million.

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 September 30, 2023, the estimated amount of existing net losses expected to be reclassified into earnings within the next 12 months was $ 0.2 million.

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.

This was comprised of a $ 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.

LIFETIME BRANDS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

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):

March 31, 2024

Interest and mark to market (losses) 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) 2024 2023

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

$ ( 98 ) $ 637 $ ( 135 ) $ 1,990

Interest rate swaps Mark to market (loss) on interest rate derivatives $ ( 174 ) $ ( 234 )

Interest expense 221 165

1 unchanged sentence

NOTE 8 — STOCK COMPENSATION

As of September 30, 2023, there were 622,812 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.

As of March 31, 2024, there were 242,448 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, 2023 is as follows:

A summary of the Company’s stock option activity and related information for the three months ended March 31, 2024 is as follows:

Options Weighted-

5 unchanged sentences

Grants 50,000 9.76

Cancellations ( 4,375 ) 11.27

Expirations ( 100,000 ) 18.04

Options outstanding, September 30, 2023

Options outstanding, March 31, 2024

949,500 12.63 4.6 $ 742

Options exercisable, September 30, 2023

Options exercisable, March 31, 2024

806,875 $ 13.21 3.8 $ 506

1 unchanged sentence

Weighted-average years expected to be recognized over 1.9

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, 2023.

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, 2023 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, 2024 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 “ Board ” ).

3 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

March 31, 2024

Restricted Stock

A summary of the Company’s restricted stock activity and related information for the nine months ended September 30, 2023 is as follows:

A summary of the Company’s restricted stock activity and related information for the three months ended March 31, 2024 is as follows:

Shares Weighted-

5 unchanged sentences

Cancellations ( 6,814 ) 10.39

Non-vested restricted shares, September 30, 2023

Non-vested restricted shares, March 31, 2024

670,629 $ 8.38

1 unchanged sentence

Weighted-average years expected to be recognized over 1.9

The total fair value of restricted stock that vested during the nine months ended September 30, 2023 was $ 1.2 million.

The total fair value of restricted stock that vested during the three months ended March 31, 2024 was $ 1.4 million.

Performance shares

2 unchanged sentences

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, 2023 is as follows:

A summary of the Company’s performance-based award activity and related information for the three months ended March 31, 2024 is as follows:

average grant

2 unchanged sentences

Grants 219,975 9.76

Achieved performance over target (2)

Vested ( 152,188 ) 14.18

Cancellations ( 23,047 ) 13.54

Non-vested performance-based awards, September 30, 2023

Non-vested performance-based awards, March 31, 2024

531,712 $ 8.96

2 unchanged sentences

(1) Represents the target number of shares to be issued for each performance-based award.

(2) Represents the number of shares earned over target for performance-based awards granted in 2020 based on performance goals attained.

These awards vested in the nine months ended September 30, 2023.

(2) 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 nine months ended September 30, 2023 was $ 0.7 million.

LIFETIME BRANDS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

The total fair value of performance-based awards that vested during the three months ended March 31, 2024 was $ 1.5 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, 2023 is as follows:

LIFETIME BRANDS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024

A summary of the Company’s cash-settled performance-based awards activity and related information for the three months ended March 31, 2024 is as follows:

Cash-settled performance-based awards (1)

2 unchanged sentences

Cancellations ( 1,107 ) 10.14

Non-vested cash-settled performance-based awards, September 30, 2023

Non-vested cash-settled performance-based awards, March 31, 2024

82,504 $ 10.48

6 unchanged sentences

Three Months Ended

September 30,

Nine Months Ended

September 30,

Stock Compensation Expense Components 2024 2023

3 unchanged sentences

Liability based stock option expense 8 ( 5 )

Cash-settled performance-based awards expense — 14 — 128

Total Stock Compensation Expense $ 807 $ 861

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

NOTE 10 — INCOME (LOSS) PER COMMON SHARE

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

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

March 31, 2024

NOTE 9 — LOSS PER COMMON SHARE

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

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

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 income (loss) per common share for the three and nine months ended September 30, 2023 and 2022 are as follows:

The calculations of basic and diluted loss per common share for the three months ended March 31, 2024 and 2023 are as follows:

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

(in thousands, except per share amounts)

Net income (loss) – Basic and Diluted

Net loss – Basic and Diluted

$ ( 6,260 ) $ ( 8,805 )

3 unchanged sentences

Weighted-average shares outstanding – Diluted 21,377 21,225

Basic income (loss) per common share

Basic loss per common share

$ ( 0.29 ) $ ( 0.41 )

Diluted income (loss) per common share

Diluted loss per common share

$ ( 0.29 ) $ ( 0.41 )

Antidilutive Securities (1)

1,237 1,682 1,600 1,675

(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, 2023

March 31, 2024

NOTE 10— INCOME TAXES

Income tax provision of $ 3.0 million and $ 2.9 million for the three and nine months ended September 30, 2023, respectively, represent taxes on both U.S.

and foreign earnings at a combined effective income tax provision rate of 36.5 % and 197.0 %, respectively.

The effective tax rate for the three months ended September 30, 2023 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.

The effective tax rate for the nine months ended September 30, 2023 differs from the federal statutory income tax rate of 21.0 % primarily due to 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.

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 $ 0.2 million and income tax benefit of $ 1.3 million for the three months ended March 31, 2024 and 2023, respectively, represent taxes on both U.S.

and foreign earnings at a combined effective income tax provision rate of ( 5.3 )% and benefit rate of 18.3 %, respectively.

The negative rate for the three months ended March 31, 2024 reflects tax expense on a pretax financial reporting loss.

The effective tax rate for the three months ended March 31, 2024 differs from the federal statutory income tax rate of 21.0 % primarily due to the expiration of non-qualified stock options and the vesting of equity-based awards, where the book expense exceeded the tax deduction upon vesting, 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, 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 Company has identified the following jurisdictions as “major” tax jurisdictions:

1 unchanged sentence

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, 2023 and September 30, 2022.

There were no material changes to the Company’s uncertain tax positions, interest, or penalties during the three-month periods ended March 31, 2024 and March 31, 2023.

LIFETIME BRANDS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

March 31, 2024

NOTE 11 – 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 income (loss) 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,

2023 2022 2023 2022

(in thousands)

2 unchanged sentences

Total net sales $ 142,242 $ 145,435

Income from operations

Income (loss) from operations

$ 9,442 $ 5,954

1 unchanged sentence

Unallocated corporate expenses ( 4,523 ) ( 5,868 )

Income from operations

Income (loss) from operations

$ 1,830 $ ( 1,806 )

3 unchanged sentences

Total depreciation and amortization $ 4,939 $ 4,870

September 30,

2024 December 31,

6 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

March 31, 2024

NOTE 12 — CONTINGENCIES

25 unchanged sentences

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 OU-2 in July 2019, and on September 30, 2019, the EPA issued the ROD OU-2.

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

1 unchanged sentence

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.

While the U.S.

Government and the potentially responsible parties (including WSPR) all signed the Consent Decree as of July 19, 2023, several procedural steps remain before the Consent Decree is effective.

WSPR has actively participated 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, which negotiations culminated in the finalization of a Consent Decree for Remedial Design and Remedial Action at Operable Unit One of the San German Groundwater Contamination Site (“Consent Decree”).

On July 26, 2023, the U.S.

Government filed a complaint in United States

Government filed a complaint in United States District

LIFETIME BRANDS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

District Court for the District of Puerto Rico for the purpose of seeking judicial approval of the Consent Decree, which is required for the Consent Decree to be effective.

March 31, 2024

Court for the District of Puerto Rico for the purpose of seeking judicial approval of the Consent Decree.

As required by applicable regulations, the U.S.

2 unchanged sentences

On September 6, 2023, at the conclusion of the public comment period, the U.S.

Government filed a Motion to Enter the Consent Decree.

The Consent Decree will be effective once the Court grants the U.S.

Government’s Motion.

Government filed a Motion to Enter the Consent Decree, which the court granted on December 1, 2023, thereby effectuating the Consent Decree.

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.

26 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

March 31, 2024

NOTE 13 — OTHER

Cash dividends

Dividends declared in the nine months ended September 30, 2023 were as follows:

Dividends declared in the three months ended March 31, 2024 were as follows:

Dividend per share Date declared Date of record Payment date

$ 0.0425 3/8/2024 5/1/2024 5/15/2024

$ 0.0425 6/22/2023 8/1/2023 8/15/2023

$ 0.0425 8/2/2023 11/1/2023 11/15/2023

During the nine months ended September 30, 2023, the Company paid dividends of $ 2.8 million.

This included payments made on February 15, 2023, May 15, 2023 and August 15, 2023 of $ 0.9 million, $ 0.9 million and $ 0.9 million to stockholders of record on February 1, 2023, May 1, 2023, and August 1, 2023 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, 2023, the Company reduced retained earnings for the accrual of $ 0.9 million relating to the dividend payable on November 15, 2023.

On November 7, 2023, the Board declared a quarterly dividend of 0.0425 per share of common stock payable on February 15, 2024 to stockholders of record on February 1, 2024.

During the three months ended March 31, 2024, the Company paid dividends of $ 1.0 million.

This included payments made on February 15, 2024 of $ 0.9 million to stockholders of record on February 1, 2024 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, 2024, the Company reduced retained earnings for the accrual of $ 0.9 million relating to the dividend payable on May 15, 2024.

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, 2023, the Company repurchased 320,204 shares for a total cost of $ 2.5 million and thereafter retired the shares.

No repurchases were effected during the three months ended September 30, 2023.

As of September 30, 2023, the remaining dollar amount available for repurchases under the Board authorized plan was $ 11.1 million.

No repurchases were effected during the three months ended March 31, 2024.

As of March 31, 2024, the remaining dollar amount available for repurchases under the Board authorized plan was $ 11.1 million.

Supplemental cash flow information

Nine Months Ended

September 30,

Three Months Ended

(in thousands)

4 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

March 31, 2024

Components of accumulated other comprehensive loss, net

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

(in thousands)

3 unchanged sentences

Balance at end of period $ ( 32,574 ) $ ( 34,511 )

Accumulated deferred (losses) gains on cash flow hedges:

Accumulated deferred gains (losses) on cash flow hedges:

Balance at beginning of period $ ( 134 ) $ 923

Change in unrealized gains (losses)

254 624 ( 257 ) 2,201

Amounts reclassified from accumulated other comprehensive loss:

Settlement of cash flow hedge (1)

181 ( 270 ) ( 761 ) ( 289 )

Net change in cash flow hedges, net of taxes of $ 0 , $( 2 )

11 unchanged sentences

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

What changed 10-Q

Item 1. Financial Statements