What changed in this filing

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Item 1. Financial Statements

2024-08-08 compared with 2024-05-09 · 218 added, 157 removed, 687 unchanged (35% of the section changed)

6 unchanged sentences

Cash and cash equivalents $ 3,396 $ 16,189

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

Accounts receivable, less allowances of $ 13,684 at June 30, 2024 and $ 15,952 at December 31, 2023

112,530 155,180

1 unchanged sentence

Prepaid expenses and other current assets 15,344 16,339

Income taxes receivable 3,546 —

TOTAL CURRENT ASSETS 343,296 376,355

1 unchanged sentence

OPERATING LEASE RIGHT-OF-USE ASSETS 64,091 69,756

INVESTMENTS — 1,826

INVESTMENT — 1,826

INTANGIBLE ASSETS, net 191,624 199,133

20 unchanged sentences

Common stock, $ 0.01 par value, shares authorized:

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

50,000,000 at June 30, 2024 and December 31, 2023;

shares issued and outstanding:

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

22,157,912 at June 30, 2024 and 21,813,266 at December 31, 2023

Paid-in capital 278,484 277,728

10 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Net sales $ 141,666 $ 146,436 $ 283,908 $ 291,871

4 unchanged sentences

Restructuring expenses — — — 856

Income (loss) from operations

Income from operations

1,167 4,396 2,997 2,590

Interest expense ( 5,157 ) ( 5,528 ) ( 10,771 ) ( 10,864 )

Mark to market loss on interest rate derivatives

Mark to market (loss) gain on interest rate derivatives

( 82 ) 197 ( 256 ) ( 37 )

Loss before income taxes and equity in losses

Gain on extinguishments of debt, net — 1,520 — 1,520

Loss on equity securities ( 14,152 ) — ( 14,152 ) —

(Loss) income before income taxes and equity in losses

( 18,224 ) 585 ( 22,182 ) ( 6,791 )

Income tax (provision) benefit

Income tax benefit (provision)

57 ( 1,242 ) ( 153 ) 106

11 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

$ ( 18,167 ) $ ( 6,520 ) $ ( 24,427 ) $ ( 15,325 )

Other comprehensive income, net of taxes:

Translation adjustment 40 1,561

Net change in translation adjustment 14,205 1,237 14,245 2,798

Net change in cash flow hedges 22 ( 300 ) 223 ( 1,453 )

1 unchanged sentence

Other comprehensive income, net of taxes

14,239 948 14,493 1,368

Comprehensive loss

22 unchanged sentences

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

— — — ( 18,167 ) — ( 18,167 )

Other comprehensive income, net of taxes

— — — — 14,239 14,239

Net issuance of restricted shares granted to employees and directors 92 1 ( 1 ) — — —

Stock compensation expense — — 1,044 — — 1,044

Shares effectively repurchased for required employee withholding taxes ( 7 ) — ( 55 ) — — ( 55 )

Dividends (1)

— — — ( 957 ) — ( 957 )

BALANCE AT JUNE 30, 2024

22,158 $ 222 $ 278,484 $ ( 39,895 ) $ ( 19,006 ) $ 219,805

Common stock Paid-in

17 unchanged sentences

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

(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.

— — — ( 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

(1) Cash dividends declared per share of common stock were $ 0.085 and $ 0.085 in the six months ended June 30, 2024 and 2023, respectively.

See accompanying notes to unaudited condensed consolidated financial statements.

2 unchanged sentences

(in thousands) (unaudited)

Three Months Ended

Six Months Ended

OPERATING ACTIVITIES

5 unchanged sentences

Non-cash lease adjustment ( 965 ) ( 1,255 )

Provision for doubtful accounts

(Recovery) provision for doubtful accounts

( 287 ) 1,528

Deferred income taxes 144 —

Stock compensation expense 1,844 1,872

Undistributed losses from equity investment, net of taxes

Equity in losses, net of taxes

Contingent consideration fair value adjustments — ( 50 )

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

Loss on equity securities 14,152 —

Changes in operating assets and liabilities

14 unchanged sentences

Repayments of revolving credit facility ( 101,804 ) ( 16,546 )

Repayments of term loan ( 1,875 ) ( 44,866 )

Payment of financing costs — ( 433 )

Payments for finance lease obligations ( 14 ) ( 14 )

2 unchanged sentences

Cash dividends paid ( 1,977 ) ( 1,907 )

NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES

NET CASH USED IN FINANCING ACTIVITIES

( 32,546 ) ( 36,464 )

Effect of foreign exchange on cash ( 79 ) ( 12 )

(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS

DECREASE IN CASH AND CASH EQUIVALENTS

( 12,793 ) ( 8,476 )

4 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024

June 30, 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 months ended March 31, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024.

Operating results for the three and six months ended June 30, 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.

13 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024

June 30, 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 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.

The Company did not sell receivables to HSBC during the three and six months ended June 30, 2024 and June 30, 2023.

At June 30, 2024, $ 18.7 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.

12 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024

June 30, 2024

Fair value of financial instruments

28 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024

June 30, 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 %.

The Company completed the quantitative impairment analysis for its indefinite-lived asset as of October 1, 2023, by comparing the fair value of the indefinite-lived trade name to the carrying value using a relief from royalty method.

As of October 1, 2023, the fair value of the Company’s indefinite-lived trade name exceeded its carrying value 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.

21 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.

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”).

LIFETIME BRANDS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2024

During the six months ended June 30, 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.

22 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 $ 0.6 million and $ 0.5 million for the three months ended March 31, 2024 and 2023, 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 $ 1.2 million for the three and six months ended June 30, 2024, respectively and $ 0.5 million and $ 0.9 million for the three and six months ended June 30, 2023, respectively.

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

3 unchanged sentences

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.

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 months ended March 31, 2024 and 2023 (in thousands):

Three Months Ended

LIFETIME BRANDS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2024

The following tables present the Company’s net sales disaggregated by segment, product category and geographic region for the three and six months ended June 30, 2024 and 2023 (in thousands):

Three Months Ended Six Months Ended

June 30, June 30,

2024 2023 2024 2023

Kitchenware $ 80,787 $ 84,015 $ 164,317 $ 169,747

10 unchanged sentences

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

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

The components of lease expense for the three and six months ended June 30, 2024 and 2023 were as follows (in thousands):

Three Months Ended

Six Months Ended

2024 2023 2024 2023

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

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

Supplemental cash flow information for lease related liabilities and assets for the six months ended June 30, 2024 and 2023 were as follows (in thousands):

Six Months Ended

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

Operating cash flows for operating leases $ 9,493 $ 9,661

Three Months Ended

Six Months Ended

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

Operating leases $ 423 $ 2,715

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)

LIFETIME BRANDS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2024

The aggregate future lease payments for operating leases as of June 30, 2024 were as follows (in thousands):

2024 (excluding the six months ended June 30, 2024)

Thereafter 11,762

3 unchanged sentences

Average lease terms and discount rates were as follows:

March 31, 2024

June 30, 2024

Operating leases:

1 unchanged sentence

Weighted-average discount rate 6.4 %

NOTE 4 — INVESTMENTS

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

NOTE 4 — INVESTMENT

As of June 30, 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.

1 unchanged sentence

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 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

During the second quarter of 2024, Vasconia’s shareholders’ approved a resolution to a reorganization process in terms of the Law of Commercial Bankruptcy in Mexico and subsequently a bankruptcy suit was filed against Vasconia by one of its largest suppliers.

The Company concluded that the recent events constituted a loss of significant influence and resulted in the discontinuation of the equity method of accounting.

The Company will account for its Vasconia investment at fair value in accordance with Accounting Standards Codification (“ASC”) Topic 321:

Investments — Equity Securities , with any changes in fair value recorded within income (loss) on equity securities on the consolidated statements of operations.

As a result of the loss of significant influence, the accumulated other comprehensive losses previously recognized under the equity method of accounting was reclassified to the carrying value of the Vasconia investment and subsequently resulted in a non-cash loss of $ 14.2 million to reduce the investment to its fair value.

The fair value of the Vasconia investment was not material as of June 30, 2024.

Given Vasconia's limited trading activity, recent operating results of Vasconia and impact of the bankruptcy related activity, the fair value of the Vasconia investment was measured using the income approach based on Level 3 unobservable inputs.

Prior to accounting for the investment in Vasconia at fair value, equity in losses, net of taxes recognized for the six months ended June 30, 2024 and the three and six months ended June 30, 2023, included the following:

Three Months Ended

June 30, Six Months Ended

Vasconia equity in losses, net of taxes

3 unchanged sentences

$ — $ ( 5,863 ) $ ( 2,092 ) $ ( 8,640 )

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.

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.

LIFETIME BRANDS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2024

NOTE 5 — INTANGIBLE ASSETS

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

March 31, 2024 December 31, 2023

Intangible assets consisted of the following as of June 30, 2024 and December 31, 2023 (in thousands):

June 30, 2024 December 31, 2023

Gross Accumulated

13 unchanged sentences

Total $ 302,590 $ ( 110,966 ) $ 191,624 $ 302,607 $ ( 103,474 ) $ 199,133

(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.

(1) The gross and net value at June 30, 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 June 30, 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

1 unchanged sentence

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.

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.

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.

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

9 unchanged sentences

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

March 31, 2024

LIFETIME BRANDS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2024

As of June 30, 2024 and December 31, 2023, the total availability under the ABL Agreement were as follows (in thousands):

June 30, 2024

December 31, 2023

8 unchanged sentences

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

March 31, 2024

As of June 30, 2024, the availability under the ABL Agreement, limited by the Term Loan financial covenant, was $ 97.2 million.

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, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Current portion of Term Loan:

7 unchanged sentences

Total Non-current portion of Term Loan $ 133,278 $ 135,834

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.

The estimated Excess Cash Flow principal payment recorded at June 30, 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.

6 unchanged sentences

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.

LIFETIME BRANDS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2024

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 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 interest rate on outstanding borrowings under the ABL Agreement at June 30, 2024 was between 4.91 % and 8.75 %.

The Company paid a commitment fee of 0.25 % on the unused portion of the ABL Agreement during the six months ended June 30, 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

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 interest rate on outstanding borrowings under the Term Loan at June 30, 2024 was 10.94 %.

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

2 unchanged sentences

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 March 31, 2024.

The Company was in compliance with the covenants of the Debt Agreements at June 30, 2024.

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 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 of $ 1.5 million, net of fees and expenses, was recognized during the three and six months ended June 30, 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 .

4 unchanged sentences

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 total outstanding notional value of interest rate swaps was $ 50.0 million at June 30, 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 March 31, 2024.

The Company has no designated interest rate swaps at June 30, 2024.

LIFETIME BRANDS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 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 March 31, 2024 was $ 7.0 million.

The aggregate gross notional value of foreign exchange contracts at June 30, 2024 was $ 5.2 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

LIFETIME BRANDS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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 Company does not enter into such contracts for speculative purposes, and as of June 30, 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 March 31, 2024 December 31, 2023

Derivatives designated as hedging instruments Balance Sheet Location June 30, 2024 December 31, 2023

Foreign exchange contracts Prepaid expenses and other current assets $ 44 $ 56

Accrued expenses 53 144

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

Derivatives not designated as hedging instruments Balance Sheet Location June 30, 2024 December 31, 2023

Interest rate swaps

5 unchanged sentences

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

As of March 31, 2024, the Company did not anticipate non-performance by any of its counterparties.

As of June 30, 2024, the Company did not anticipate non-performance by any of its counterparties.

LIFETIME BRANDS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2024

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 income, net of taxes, as follows (in thousands):

Three Months Ended

June 30, Six Months Ended

Derivatives designated as hedging instruments 2024 2023 2024 2023

5 unchanged sentences

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.

During the three and six months ended June 30, 2024, the Company reclassified $ 0.02 million and $ 0.2 million, respectively, of cash flow hedges in accumulated other comprehensive losses to earnings, related to foreign exchange contracts recognized in cost of sales.

At June 30, 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 June 30, 2023, the Company reclassified $ 0.04 million of cash flow hedges in accumulated other comprehensive losses to earnings.

This was a gain of $ 0.04 million related to foreign exchange contracts recognized in cost of sales.

During the six months ended June 30, 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.

LIFETIME BRANDS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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):

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

June 30, Six Months Ended

Derivatives not designated as hedging instruments Location of gain (loss) 2024 2023 2024 2023

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

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

$ ( 82 ) $ 197 $ ( 256 ) $ ( 37 )

Interest expense 309 196 530 361

1 unchanged sentence

NOTE 8 — STOCK COMPENSATION

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.

On June 20, 2024, 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 1,500,000 shares.

As of June 30, 2024, there were 1,804,161 shares available for the grant of awards under the Plan, assuming maximum performance of performance-based awards.

LIFETIME BRANDS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2024

Option Awards

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

A summary of the Company’s stock option activity and related information for the six months ended June 30, 2024 is as follows:

Options Weighted-

6 unchanged sentences

Expirations ( 252,000 ) 18.68

Options outstanding, March 31, 2024

Options outstanding, June 30, 2024

797,500 11.40 5.2 $ 197

Options exercisable, March 31, 2024

Options exercisable, June 30, 2024

674,500 $ 11.78 4.5 $ 97

1 unchanged sentence

Weighted-average years expected to be recognized over 1.8

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 March 31, 2024.

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 ” ).

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.

LIFETIME BRANDS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024

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 June 30, 2024 and the exercise price.

Restricted Stock

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

A summary of the Company’s restricted stock activity and related information for the six months ended June 30, 2024 is as follows:

Shares Weighted-

5 unchanged sentences

Cancellations ( 8,599 ) 10.07

Non-vested restricted shares, March 31, 2024

Non-vested restricted shares, June 30, 2024

595,703 $ 9.46

1 unchanged sentence

Weighted-average years expected to be recognized over 1.7

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

The total fair value of restricted stock that vested during the six months ended June 30, 2024 was $ 2.8 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 three months ended March 31, 2024 is as follows:

LIFETIME BRANDS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2024

A summary of the Company’s performance-based award activity and related information for the six months ended June 30, 2024 is as follows:

average grant

4 unchanged sentences

Cancellations ( 23,815 ) 13.35

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

Non-vested performance-based awards, June 30, 2024

530,944 $ 8.96

4 unchanged sentences

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, 2024 was $ 1.5 million.

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

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:

A summary of the Company’s cash-settled performance-based awards activity and related information for the six months ended June 30, 2024 is as follows:

Cash-settled performance-based awards (1)

2 unchanged sentences

Cancellations ( 1,269 ) 8.44

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

Non-vested cash-settled performance-based awards, June 30, 2024

82,342 $ 8.59

6 unchanged sentences

Three Months Ended

Six Months Ended

Stock Compensation Expense Components 2024 2023 2024 2023

6 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024

June 30, 2024

NOTE 9 — LOSS PER COMMON SHARE

2 unchanged sentences

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

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

The calculations of basic and diluted loss per common share for the three and six months ended June 30, 2024 and 2023 are as follows:

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

(in thousands, except per share amounts)

10 unchanged sentences

Antidilutive Securities (1)

1,507 1,624 1,556 1,603

(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

March 31, 2024

June 30, 2024

NOTE 10— INCOME TAXES

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.

Income tax benefit of $ 0.1 million and income tax provision of $ 0.2 million for the three and six months ended June 30, 2024, respectively, represent taxes on both U.S.

and foreign earnings at a combined effective income tax benefit rate of 0.3 % and provision rate of ( 0.7 )%, respectively.

The effective tax rate for the three months ended June 30, 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 negative rate for the six months ended June 30, 2024 reflects tax expense on a pretax financial reporting loss.

The effective tax rate for the six months ended June 30, 2024 differs from the federal statutory income tax rate of 21.0 % primarily due to foreign losses for which no tax benefit is recognized as such amounts are fully offset with a valuation allowance.

Income tax provision of $ 1.2 million and income tax benefit of $ 0.1 million for the three and six months ended June 30, 2023, respectively, represent taxes on both U.S.

and foreign earnings at a combined effective income tax provision rate of 212.3 % and income tax benefit rate of 1.6 %, respectively.

The effective tax rate for the three months ended June 30, 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, partially offset by a benefit for federal credits.

The effective tax rate for the six months ended June 30, 2023 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:

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 March 31, 2024 and March 31, 2023.

There were no material changes to the Company’s uncertain tax positions, interest, or penalties during the three-month periods ended June 30, 2024 and June 30, 2023.

LIFETIME BRANDS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024

June 30, 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 (loss) from operations.

and International segments based on net sales and 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

June 30, Six Months Ended

2024 2023 2024 2023

(in thousands)

2 unchanged sentences

Total net sales $ 141,666 $ 146,436 $ 283,908 $ 291,871

Income (loss) from operations

Income from operations

$ 9,189 $ 11,736 $ 18,631 $ 17,690

1 unchanged sentence

Unallocated corporate expenses ( 5,090 ) ( 4,511 ) ( 9,613 ) ( 10,379 )

Income (loss) from operations

Income from operations

$ 1,167 $ 4,396 $ 2,997 $ 2,590

11 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024

June 30, 2024

NOTE 12 — CONTINGENCIES

32 unchanged sentences

On July 26, 2023, the U.S.

Government filed a complaint in United States District

Government filed a complaint in United States District Court for the District of Puerto Rico for the purpose of seeking judicial approval of the Consent Decree.

As required by

LIFETIME BRANDS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

June 30, 2024

applicable regulations, the U.S.

Government simultaneously lodged the Consent Decree for public comment.

2 unchanged sentences

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

On January 10, 2024, EPA issued a notice to proceed with the OU-1 remedial work.

The Company thereafter commenced remedial work on OU-1 in accordance with 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

March 31, 2024

June 30, 2024

NOTE 13 — OTHER

Cash dividends

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

Dividends declared in the six months ended June 30, 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

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.

$ 0.0425 6/20/2024 8/1/2024 8/15/2024

During the six months ended June 30, 2024, the Company paid dividends of $ 2.0 million.

This included payments made on February 15, 2024 and May 15, 2024 of $ 0.9 million and $ 0.9 million to stockholders of record on February 1, 2024 and May 1, 2024, and payments of $ 0.2 million for dividends payable upon the vesting of restricted shares and performance shares.

In the three months ended June 30, 2024, the Company reduced retained earnings for the accrual of $ 1.0 million relating to the dividend payable on August 15, 2024.

On August 6, 2024, the Board declared a quarterly dividend of 0.0425 per share of common stock payable on November 15, 2024 to stockholders of record on November 1, 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.

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.

No repurchases were effected during the six months ended June 30, 2024.

As of June 30, 2024, the remaining dollar amount available for repurchases under the Board authorized plan was $ 11.1 million.

Supplemental cash flow information

Three Months Ended

Six Months Ended

(in thousands)

4 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024

June 30, 2024

Components of accumulated other comprehensive loss, net

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

(in thousands)

2 unchanged sentences

Translation adjustment during period 53 1,237 93 2,798

Amounts reclassified from accumulated other comprehensive loss (1)

14,152 — 14,152 —

Net change in translation adjustment 14,205 1,237 14,245 2,798

Balance at end of period $ ( 18,369 ) $ ( 33,274 ) $ ( 18,369 ) $ ( 33,274 )

2 unchanged sentences

Change in unrealized gains (losses)

2 ( 261 ) 72 ( 511 )

Amounts reclassified from accumulated other comprehensive loss:

Settlement of cash flow hedge (2)

20 ( 39 ) 151 ( 942 )

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

8 unchanged sentences

$ ( 19,006 ) $ ( 34,486 ) $ ( 19,006 ) $ ( 34,486 )

(1) Amounts reclassified to the Vasconia investment carrying value as a result of the discontinuation of the equity method investment of accounting and subsequently recognized as a loss on equity securities in the unaudited condensed consolidated statements of operations, to reduce the Vasconia investment to its fair value.

Refer to NOTE 4 —INVESTMENT for additional information.

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

1 unchanged sentence

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

What changed 10-Q

Item 1. Financial Statements