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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________
FORM 10-Q
__________________________
(Mark One)
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: September 30, 2024
or
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission File Number: 0-19254
__________________________
LIFETIME BRANDS, INC.
(Exact name of registrant as specified in its charter)
__________________________
Delaware11-2682486
(State or other jurisdiction of
incorporation or organization)		(I.R.S. Employer
Identification No.)
1000 Stewart Avenue, Garden City, New York 11530
(Address of principal executive offices) (Zip Code)
(516) 683-6000
(Registrant’s telephone number, including area code)
__________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading
Symbol(s)		Name of each exchange
on which registered
Common Stock, $.01 par valueLCUTThe Nasdaq Global Select Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer☐Accelerated filer☒
Non-accelerated filer☐Smaller reporting company☒
Emerging growth company☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  ☐    No  ☒
The number of shares of the registrant’s common stock outstanding as of October 31, 2024 was 22,156,735.


LIFETIME BRANDS, INC.
FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 2024
INDEX
Page No.
Part I.
Item 1.
Condensed Consolidated Statements of Operations (unaudited) – Three and Nine Months Ended September 30, 2024 and 2023
Condensed Consolidated Statements of Comprehensive Income (Loss) (unaudited) – Three and Nine Months Ended September 30, 2024 and 2023
Condensed Consolidated Statements of Stockholders’ Equity (unaudited) –Three and Nine Months Ended September 30, 2024 and 2023
Condensed Consolidated Statements of Cash Flows (unaudited) – Nine Months Ended September 30, 2024 and 2023
Item 2.
Item 3.
Item 4.
Part II.
Item 1.
Item 1A.
Item 5.
Item 6.























PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
LIFETIME BRANDS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
September 30,
2024		December 31,
2023
(unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents$5,984 $16,189 
Accounts receivable, less allowances of $13,237 at September 30, 2024 and $15,952 at December 31, 2023
142,238 155,180 
Inventory235,015 188,647 
Prepaid expenses and other current assets13,814 16,339 
Income taxes receivable2,894 — 
TOTAL CURRENT ASSETS399,945 376,355 
PROPERTY AND EQUIPMENT, net16,562 16,970 
OPERATING LEASE RIGHT-OF-USE ASSETS62,007 69,756 
INVESTMENT— 1,826 
INTANGIBLE ASSETS, net187,977 199,133 
OTHER ASSETS2,247 3,102 
TOTAL ASSETS$668,738 $667,142 
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Current maturity of term loan$6,867 $4,742 
Accounts payable79,608 54,154 
Accrued expenses68,428 78,356 
Income taxes payable— 641 
Current portion of operating lease liabilities14,818 14,075 
TOTAL CURRENT LIABILITIES169,721 151,968 
OTHER LONG-TERM LIABILITIES14,153 9,126 
INCOME TAXES PAYABLE, LONG-TERM1,493 1,493 
OPERATING LEASE LIABILITIES60,094 70,009 
DEFERRED INCOME TAXES7,700 7,438 
REVOLVING CREDIT FACILITY64,489 60,395 
TERM LOAN130,170 135,834 
STOCKHOLDERS’ EQUITY
Preferred stock, $1.00 par value, shares authorized: 100 shares of Series A and 2,000,000 shares of Series B; none issued and outstanding
— — 
Common stock, $0.01 par value, shares authorized: 50,000,000 at September 30, 2024 and December 31, 2023; shares issued and outstanding: 22,157,361 at September 30, 2024 and 21,813,266 at December 31, 2023
222 218 
Paid-in capital279,530 277,728 
Accumulated deficit
(40,510)(13,568)
Accumulated other comprehensive loss
(18,324)(33,499)
TOTAL STOCKHOLDERS’ EQUITY220,918 230,879 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY$668,738 $667,142 
See accompanying notes to unaudited condensed consolidated financial statements.
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LIFETIME BRANDS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Three Months Ended
September 30,		Nine Months Ended
September 30,
 2024202320242023
Net sales$183,837 $191,669 $467,745 $483,540 
Cost of sales116,420 120,718 288,231 302,756 
Gross margin67,417 70,951 179,514 180,784 
Distribution expenses20,034 17,125 51,267 49,742 
Selling, general and administrative expenses38,770 40,214 116,637 113,984 
Restructuring expenses— — — 856 
Income from operations
8,613 13,612 11,610 16,202 
Interest expense(5,834)(5,246)(16,605)(16,110)
Mark to market loss on interest rate derivatives
(928)(98)(1,184)(135)
Gain on extinguishments of debt, net— — — 1,520 
Loss on equity securities— — (14,152)— 
Income (loss) before income taxes and equity in losses
1,851 8,268 (20,331)1,477 
Income tax provision
(1,507)(3,015)(1,660)(2,909)
Equity in losses, net of taxes
— (1,047)(2,092)(9,687)
NET INCOME (LOSS)
$344 $4,206 $(24,083)$(11,119)
BASIC INCOME (LOSS) PER COMMON SHARE
$0.02 $0.20 $(1.12)$(0.52)
DILUTED INCOME (LOSS) PER COMMON SHARE
$0.02 $0.20 $(1.12)$(0.52)
See accompanying notes to unaudited condensed consolidated financial statements.
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LIFETIME BRANDS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in thousands)
(unaudited)
Three Months Ended
September 30,		Nine Months Ended
September 30,
 2024202320242023
Net income (loss)
$344 $4,206 $(24,083)$(11,119)
Other comprehensive income (loss), net of taxes:
Net change in translation adjustment872 (1,242)15,117 1,556 
Net change in cash flow hedges(203)435 20 (1,018)
Effect of retirement benefit obligations13 12 38 35 
Other comprehensive income (loss), net of taxes
682 (795)15,175 573 
Comprehensive income (loss)
$1,026 $3,411 $(8,908)$(10,546)
See accompanying notes to unaudited condensed consolidated financial statements.
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LIFETIME BRANDS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands)
(unaudited)
 Common stockPaid-in
capital
Accumulated deficit
Accumulated other
comprehensive
 loss
Total
SharesAmount
BALANCE AT DECEMBER 31, 2023
21,813 $218 $277,728 $(13,568)$(33,499)$230,879 
Net loss
— — — (6,260)— (6,260)
Other comprehensive income, net of taxes
— — — — 254 254 
Performance shares issued to employees152 2 (2)— — — 
Net issuance of restricted shares granted to employees213 2 (2)— — — 
Stock compensation expense— — 799 — — 799 
Shares effectively repurchased for required employee withholding taxes(105)(1)(1,027)— — (1,028)
Dividends (1)
— — — (943)— (943)
BALANCE AT MARCH 31, 2024
22,073 $221 $277,496 $(20,771)$(33,245)$223,701 
Net loss
— — — (18,167)— (18,167)
Other comprehensive income, net of taxes
— — — — 14,239 14,239 
Net issuance of restricted shares granted to employees and directors92 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 
Net income
— — — 344 — 344 
Other comprehensive income, net of taxes
— — — — 682 682 
Net issuance of restricted shares granted to employees
(1)— — — — — 
Stock compensation expense— — 1,046 — — 1,046 
Dividends (1)
— — — (959)— (959)
BALANCE AT SEPTEMBER 30, 2024
22,157 $222 $279,530 $(40,510)$(18,324)$220,918 
(1) Cash dividends declared per share of common stock were $0.1275 and $0.1275 in the nine months ended September 30, 2024 and 2023, respectively.
- 5 -
Common stockPaid-in
capital
Retained earnings (accumulated deficit)
Accumulated other
comprehensive
 loss
 Total
SharesAmount
BALANCE AT DECEMBER 31, 2022
21,780 $218 $274,579 $1,145 $(35,854)$240,088 
Net loss
— — — (8,805)— (8,805)
Other comprehensive income, net of taxes
— — — — 420420 
Performance shares issued to employees120 1 (1)— — — 
Net issuance of restricted shares granted to employees185 2 (2)— — — 
Stock compensation expense— — 866 — — 866 
Shares effectively repurchased for required employee withholding taxes(74)(1)(438)— — (439)
Stock repurchase(320)(3)— (2,536)— (2,539)
Dividends (1)
— — — (930)— (930)
BALANCE AT MARCH 31, 2023
21,691 $217 $275,004 $(11,126)$(35,434)$228,661 
Net loss
— — — (6,520)— (6,520)
Other comprehensive income, net of taxes
— — — — 948 948 
Net issuance of restricted shares granted to employees and directors141 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 
Net income
— — — 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, 2024 and 2023, respectively.
See accompanying notes to unaudited condensed consolidated financial statements.
- 6 -
LIFETIME BRANDS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands) (unaudited)
Nine Months Ended
September 30,
 20242023
OPERATING ACTIVITIES
Net loss
$(24,083)$(11,119)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization16,241 14,616 
Amortization of financing costs2,195 1,397 
Mark to market loss on interest rate derivatives
1,184 135 
Operating leases, net
(1,476)(1,617)
(Recovery) provision for doubtful accounts
(241)2,193 
Deferred income taxes144 5 
Stock compensation expense2,886 2,770 
Equity in losses, net of taxes
2,092 9,687 
Contingent consideration fair value adjustments— (50)
Gain on extinguishments of debt, net
— (1,520)
Loss on equity securities14,152 — 
Changes in operating assets and liabilities
Accounts receivable13,859 (14,279)
Inventory(44,821)4,828 
Prepaid expenses, other current assets and other assets2,929 1,784 
Accounts payable, accrued expenses and other liabilities16,759 9,615 
Income taxes receivable(2,894)(1,254)
Income taxes payable(663)(230)
 NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES
(1,737)16,961 
INVESTING ACTIVITIES
Purchases of property and equipment(1,604)(1,765)
NET CASH USED IN INVESTING ACTIVITIES
(1,604)(1,765)
FINANCING ACTIVITIES
Proceeds from revolving credit facility180,725 69,954 
Repayments of revolving credit facility(177,984)(51,123)
Repayments of term loan(5,625)(44,866)
Payment of financing costs— (433)
Payments for finance lease obligations(22)(20)
Payments of tax withholding for stock based compensation(1,083)(537)
Payments for stock repurchase— (2,539)
Cash dividends paid(2,893)(2,832)
NET CASH USED IN FINANCING ACTIVITIES
(6,882)(32,396)
Effect of foreign exchange on cash18 (80)
DECREASE IN CASH AND CASH EQUIVALENTS
(10,205)(17,280)
Cash and cash equivalents at beginning of period16,189 23,598 
CASH AND CASH EQUIVALENTS AT END OF PERIOD$5,984 $6,318 
See accompanying notes to unaudited condensed consolidated financial statements.
- 7 -

LIFETIME BRANDS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2024
(unaudited)

NOTE 1 — BASIS OF PRESENTATION AND SUMMARY OF ACCOUNTING POLICIES
Organization and business
Lifetime Brands, Inc. (“the Company”) designs, sources and sells branded kitchenware, tableware and other products used in the home and markets its products under a number of widely-recognized brand names and trademarks, which are either owned or licensed by the Company or through retailers’ private labels and their licensed brands. The Company’s products, which are targeted primarily towards consumers purchasing moderately priced kitchenware, tableware and housewares, are sold through virtually every major level of trade. The Company generally markets several lines within each of its product categories under more than one brand. The Company sells its products directly to retailers (who may resell the Company’s products through their websites) and, to a lesser extent, to distributors. The Company also sells a limited selection of its products directly to consumers through its own websites.
Basis of presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with the instructions to Quarterly Reports on Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments, which consist of normal recurring accruals and non-recurring adjustments, considered necessary for a fair presentation have been included.
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, 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. In anticipation of the pre-holiday shipping season, inventory levels increase primarily in the June through October time period.
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.
Revenue recognition
The Company sells products wholesale, to retailers and distributors, and retail, directly to the consumer. Wholesale sales and retail sales are primarily recognized at the point in time the customer obtains control of the products, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those products.
The Company offers various sales incentives and promotional programs to its customers in the normal course of business. These incentives and promotions typically include arrangements such as cooperative advertising, buydowns, volume rebates and discounts. These arrangements and an estimate for products expected to be returned are reflected as reductions of revenue at the time of sale. See NOTE 2 —REVENUE to the unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for additional information.
Cost of sales
Cost of sales consist primarily of costs associated with the production and procurement of product, inbound freight costs, purchasing costs, royalties, and other product procurement related charges.

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LIFETIME BRANDS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2024
(unaudited)
Distribution expenses
Distribution expenses consist primarily of warehousing expenses and freight-out expenses. Handling costs of products sold are included in cost of sales.
Accounts receivable
The Company periodically reviews the collectability of its accounts receivable and establishes allowances for estimated credit losses that could result from the inability of its customers to make required payments, taking into consideration customer credit history and financial condition, industry and market segment information, credit reports, and expectations of current and future economic conditions. A considerable amount of judgment is required to assess the ultimate realization of these receivables, including assessing the initial and on-going creditworthiness of the Company’s customers.
The Company also maintains an allowance for anticipated customer deductions. The allowances for deductions are primarily based on contracts with customers. However, in certain cases, the Company does not have a formal contract and, therefore, customer deductions are non-contractual. To evaluate the reasonableness of non-contractual customer deductions, the Company analyzes currently available information and historical trends of deductions.
Receivable purchase agreement
The Company has an uncommitted Receivables Purchase Agreement with HSBC Bank USA, National Association (“HSBC”) as Purchaser (the “Receivables Purchase Agreement”). 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, 2024 and September 30, 2023.
At September 30, 2024, $18.0 million of accounts receivables were available for sale to HSBC, net of applicable charges.
Inventory
Inventory consists principally of finished goods sourced from third-party suppliers. Inventory also includes finished goods, work in process and raw materials related to the Company’s manufacture of sterling silver products. Inventory is priced using the lower of cost (first-in, first-out basis) or net realizable value. The Company estimates the selling price of its inventory on a product-by-product basis based on the current selling environment. If the estimated selling price is lower than the inventory’s cost, the Company reduces the value of the inventory to its net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable cost of completion, disposal and transportation.
The components of inventory were as follows (in thousands):
September 30,
2024		December 31, 2023
Finished goods$223,036 $180,860 
Work in process122 106 
Raw materials11,857 7,681 
Total$235,015 $188,647 
- 9 -
LIFETIME BRANDS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2024
(unaudited)
Fair value of financial instruments
The Company determined that the carrying amounts of cash and cash equivalents, accounts receivable and accounts payable are reasonable estimates of their fair values because of their short-term nature. The Company determined that the carrying amounts of borrowings outstanding under its ABL Agreement and Term Loan (each as defined in NOTE 6 — DEBT to the unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q) approximate fair value since such borrowings bear interest at variable market rates.
Derivatives
The Company accounts for derivative instruments in accordance with Accounting Standard Codification (“ASC”) Topic 815, Derivatives and Hedging (“ASC 815”). ASC 815 requires that all derivative instruments be recognized on the balance sheet at fair value as either an asset or liability. Changes in the fair value of derivatives that qualify as hedges and have been designated as part of a hedging relationship for accounting purposes have no net impact on earnings until the hedged item is recognized in earnings. The changes in the fair value of hedges are included in accumulated other comprehensive loss and are subsequently recognized in the Company’s unaudited condensed consolidated statements of operations to mirror the location of the hedged items impacting earnings. Changes in fair value of derivatives that do not qualify as hedging instruments for accounting purposes are recorded in the Company’s unaudited condensed consolidated statements of operations.
Goodwill, intangible assets and long-lived assets
Goodwill and intangible assets deemed to have indefinite lives are not amortized but, instead, are subject to an annual impairment assessment. Additionally, if events or conditions were to indicate the carrying value of a reporting unit may not be recoverable, the Company would evaluate goodwill and other intangible assets for impairment at that time.
As it relates to the goodwill assessment, the Company first assesses qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the quantitative goodwill impairment testing described in the Financial Accounting Standards Board's (“FASB”) ASC Topic 350, Intangibles – Goodwill and Other. If, after assessing qualitative factors, the Company determines that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the quantitative test is unnecessary and the Company’s goodwill is considered to be unimpaired. However, if based on the Company’s qualitative assessment it concludes that it is more likely than not that the fair value of the reporting unit is less than its carrying amount, or if the Company elects to bypass the qualitative assessment, the Company will proceed with performing the quantitative impairment test.
The Company reviews goodwill and other intangibles that have indefinite lives for impairment annually as of October 1 or when events or changes in circumstances indicate the carrying value of these assets might exceed their current fair values. Impairment testing is based upon the best information available, including estimates of fair value which incorporate assumptions marketplace participants would use in making their estimates of fair value. The Company performed its annual impairment assessment of its U.S. reporting unit as of October 1, 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%.
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”), and the cost of capital. 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.
Although the Company believes the assumptions and estimates made are reasonable and appropriate, different assumptions and estimates could materially impact its reported financial results. In addition, sustained declines in the Company’s stock price and related market capitalization could impact key assumptions in the overall estimated fair values of its reporting units and could result in non-cash impairment charges that could be material to the Company’s consolidated balance sheet or results of operations. Should the carrying value of a reporting unit be in excess of the estimated fair value of that reporting unit, an impairment charge will be recorded to reduce the reporting unit to fair value.
- 10 -
LIFETIME BRANDS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2024
(unaudited)
The Company also evaluates qualitative factors to determine whether impairment indicators exist for its indefinite-lived intangibles and performs quantitative tests if required. These tests can include the relief from royalty model or other valuation models. The 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 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.
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. Impairment indicators include, among other conditions, cash flow deficits, historic or anticipated declines in revenue or operating profit or material adverse changes in the business climate that indicate that the carrying amount of an asset may be impaired. When impairment indicators are present, the recoverability of the asset is measured by comparing the carrying value of the asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of the asset is not recoverable, the impairment to be recognized is measured by the amount by which the carrying amount of each long-lived asset exceeds the fair value of the asset.
See NOTE 5 — INTANGIBLE ASSETS to the unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for additional information.
Leases
The Company determines if an arrangement is a lease at the inception of a contract. Operating lease right-of-use (“ROU”) assets are included in operating lease right-of-use assets on the condensed consolidated balance sheets. The current and long-term components of operating lease liabilities are included in the current portion of operating lease liability and operating lease liabilities, respectively, on the condensed consolidated balance sheets. Finance leases are included in property and equipment, net, accrued expenses and other long-term liabilities. The Company’s finance leases are not material to the Company’s condensed consolidated balance sheets.
Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term. As most of the Company’s leases do not provide an implicit rate, the Company uses an incremental borrowing rate based on the information available at the commencement date in determining the present value of future payments. The operating lease ROU asset may also include any lease payments made, adjusted for any prepaid or accrued rent payments, lease incentives, and initial direct costs incurred. Certain leases may include options to extend or terminate the lease. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.
For certain equipment leases, the Company applies a portfolio approach to effectively account for any ROU assets and lease liabilities. Leases with an initial term of twelve months or less are not recorded on the balance sheet.
The Company has elected the practical expedient to account for each separate lease component of a contract and its associated non-lease components as a single lease component, thus causing all fixed payments to be capitalized.
Employee healthcare
The Company self-insures certain portions of its health insurance plan. The Company maintains an accrual for estimated unpaid claims and claims incurred but not yet reported (“IBNR”). Although management believes that it uses the best information available to estimate IBNR claims, actual claims may vary significantly from estimated claims.
Restructuring expenses
Costs associated with restructuring activities are recorded at fair value when a liability has been incurred. Generally, a liability has been incurred at the communication date for severance. Charges associated with lease terminations, related to restructuring activities, are recognized at the effective date of the lease modification.
- 11 -
LIFETIME BRANDS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2024
(unaudited)
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 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 payment, which was paid on April 7, 2023.
New accounting pronouncements
Updates not listed below were assessed and either determined to not be applicable or are expected to have a minimal effect on the Company’s financial position, results of operations, and disclosures.
In November 2023, the FASB issued Accounting Standards Update No. (“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. The adoption requires additional disclosures, but is not expected to have a material impact on the Company's consolidated financial statements.
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.
In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. The guidance requires additional disclosure in the notes to the financial statements for specified information about certain costs and expenses. The new guidance is effective for public business entities for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027. Early adoption is permitted. The amendments in this ASU may be applied either (1) prospectively to financial statements issued for reporting periods after the effective date of this ASU or (2) retrospectively to all prior periods presented in the financial statements. Management is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures.
NOTE 2 —REVENUE
The Company sells products wholesale, to retailers and distributors, and retail, directly to consumers. Wholesale sales and retail sales are recognized at the point in time the customer obtains control of the products in an amount that reflects the consideration the Company expects to be entitled to in exchange for those products. To indicate the transfer of control, the Company must have a present right to payment, legal title must have passed to the customer, the customer must have the significant risks and rewards of ownership, and where acceptance is not a formality, the customer must have accepted the product or service. The Company’s principal terms of sale are Free On Board (“FOB”) Shipping Point, or equivalent, and, as such, the Company primarily transfers control and records revenue for product sales upon shipment. Sales arrangements with delivery terms that are not FOB Shipping Point are not recognized upon shipment and the transfer of control for revenue recognition is evaluated based on the associated shipping terms and customer obligations. Shipping and handling fees that are billed to customers in sales transactions are included in net sales and amounted to $0.9 million and $2.2 million for the three and nine months ended September 30, 2024, respectively and $0.8 million and $1.7 million for the three and nine months ended September 30, 2023, respectively. Net sales exclude taxes that are collected from customers and remitted to the taxing authorities.
The Company offers various sales incentives and promotional programs to its wholesale customers from time to time in the normal course of business. These incentives and promotions typically include arrangements such as cooperative advertising, buydowns, volume rebates and discounts. 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
- 12 -
LIFETIME BRANDS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2024
(unaudited)
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 sales.
The Company incurs certain direct incremental costs to obtain contracts with customers, such as sales-related commissions, where the recognition period for the related revenue is less than one year. These costs are expensed as incurred and recorded within selling, general and administrative expenses in the unaudited condensed consolidated statements of operations. Incidental items that are immaterial in the context of the contract are expensed as incurred.
The following tables present the Company’s net sales disaggregated by segment, product category and geographic region for the three and nine months ended September 30, 2024 and 2023 (in thousands):
Three Months EndedNine Months Ended
September 30,September 30,
2024202320242023
U.S. segment
Kitchenware$97,343 $97,656 $261,660 $267,403 
Tableware40,917 48,881 93,017 99,029 
Home Solutions31,962 32,856 76,528 81,425 
Total U.S. segment170,222 179,393 431,205 447,857 
International segment13,615 12,276 36,540 35,683 
Total net sales$183,837 $191,669 $467,745 $483,540 
United States$159,759 $166,917 $409,588 $421,458 
United Kingdom8,909 8,129 23,525 24,420 
Rest of World15,169 16,623 34,632 37,662 
Total net sales$183,837 $191,669 $467,745 $483,540 
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, 2024 and 2023 were as follows (in thousands):
Three Months Ended
September 30,
Nine Months Ended
September 30,
2024202320242023
Operating lease expenses(1):
Fixed lease expense$4,276 $4,256 $12,804 $12,662 
Variable lease expense1,628 1,444 4,646 4,194 
Total$5,904 $5,700 $17,450 $16,856 
(1) Expenses are recorded within distribution expenses and selling, general and administrative expenses on the unaudited condensed consolidated statement of operations.
- 13 -
LIFETIME BRANDS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2024
(unaudited)
Supplemental cash flow information for lease related liabilities and assets for the nine months ended September 30, 2024 and 2023 were as follows (in thousands):
Nine Months Ended
September 30,
2024
2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases$14,280 $14,279 
Nine Months Ended
September 30,
2024
2023
Right-of-use assets obtained in exchange for lease obligations:
Operating leases$479 $5,582 
The aggregate future lease payments for operating leases as of September 30, 2024 were as follows (in thousands):
 Operating
2024 (excluding the nine months ended September 30, 2024)
$4,825 
202519,050 
202618,671 
202714,432 
202812,957 
20296,819 
Thereafter12,313 
Total lease payments89,067 
Less: Interest(14,155)
Present value of lease payments$74,912 
Average lease terms and discount rates were as follows:
 September 30, 2024
Operating leases:
Weighted-average remaining lease term (years)5.4
Weighted-average discount rate6.4 %
NOTE 4 —INVESTMENT
As of September 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. Shares of Vasconia’s capital stock are traded on the Bolsa Mexicana de Valores, the Mexican Stock Exchange. The Quotation Key is VASCONI. 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 accounts 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 were reclassified to the carrying value of the Vasconia investment and subsequently resulted in a non-cash loss of
- 14 -
LIFETIME BRANDS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2024
(unaudited)
$14.2 million to reduce the investment to its fair value during the three months ended June 30, 2024. The fair value of the Vasconia investment was not material as of September 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 nine months ended September 30, 2024 and the three and nine months ended September 30, 2023, included the following:
Three Months Ended
September 30,		Nine Months Ended
September 30,
2024
2023
2024
2023
Vasconia equity in losses, net of taxes
$— $(707)$(2,092)$(2,853)
Impairment on investment in Vasconia— (340)— (6,834)
Equity in losses, net of taxes
$— $(1,047)$(2,092)$(9,687)
NOTE 5 — INTANGIBLE ASSETS
Intangible assets consisted of the following as of September 30, 2024 and December 31, 2023 (in thousands):
 September 30, 2024December 31, 2023
GrossAccumulated
Amortization		NetGrossAccumulated
Amortization		Net
Goodwill(1)
$33,237 $— $33,237 $33,237 $— $33,237 
Indefinite-lived intangible asset:
Trade name(1)
42,000 — 42,000 42,000 — 42,000 
Finite-lived intangible assets:
Licenses15,847 (12,451)3,396 15,847 (12,110)3,737 
Trade names(2)
62,605 (27,008)35,597 62,493 (23,862)38,631 
Customer relationships(2)
143,159 (71,046)72,113 143,158 (63,630)79,528 
Other (2)
5,892 (4,258)1,634 5,872 (3,872)2,000 
Total$302,740 $(114,763)$187,977 $302,607 $(103,474)$199,133 
(1) The gross and net value at September 30, 2024 and December 31, 2023 reflect a reduction of $91.7 million in impairment charges on goodwill and $1.0 million impairment charge on the indefinite-lived intangible asset.
(2) The gross value and accumulated amortization at September 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. segment.
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. 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. 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.
- 15 -
LIFETIME BRANDS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2024
(unaudited)
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. 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, 2024 and December 31, 2023, the total availability under the ABL Agreement were as follows (in thousands):
September 30, 2024
December 31, 2023
Maximum aggregate principal allowed$200,000 $181,919 
Outstanding borrowings under the ABL Agreement(64,489)(60,395)
Standby letters of credit(8,828)(2,894)
Total availability under the ABL Agreement$126,683 $118,630 
Availability under the ABL Agreement is limited to the lesser of the $200.0 million commitment thereunder and the borrowing base and therefore depends on the valuation of certain current assets comprising the borrowing base. The borrowing capacity under the ABL Agreement will depend, in part, on eligible levels of accounts receivable and inventory that fluctuate regularly. 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. 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. As of September 30, 2024, the availability under the ABL Agreement, limited by the Term Loan financial covenant, was $51.6 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):
September 30, 2024December 31, 2023
Current portion of Term Loan:
Term Loan payment$7,500 $7,500 
Estimated Excess Cash Flow principal payment2,000 — 
Estimated unamortized debt issuance costs(2,633)(2,758)
Total Current portion of Term Loan$6,867 $4,742 
Non-current portion of Term Loan:
Term Loan, net of current portion$134,875 $142,500 
Estimated unamortized debt issuance costs(4,705)(6,666)
Total Non-current portion of Term Loan$130,170 $135,834 
- 16 -
LIFETIME BRANDS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2024
(unaudited)
The estimated Excess Cash Flow principal payment recorded at September 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.
The Company’s payment obligations under its Debt Agreements are unconditionally guaranteed by its existing and future U.S. subsidiaries with certain minor exceptions. Certain payment obligations under the ABL Agreement are also direct obligations of its foreign subsidiary borrowers designated as such under the ABL Agreement and, subject to limitations on such guaranty, are guaranteed by the foreign subsidiary borrowers, as well as by the Company. The obligations of the foreign subsidiary borrowers under the ABL Agreement are secured by security interests in substantially all of the assets of, and stock in, such foreign subsidiary borrowers, subject to certain limitations. The obligations of the Company under the Debt Agreements and any hedging arrangements and cash management services and the guarantees by its domestic subsidiaries in respect of those obligations are secured by security interests in substantially all of the assets and stock (but in the case of foreign subsidiaries, limited to 65% of the capital stock in first-tier foreign subsidiaries and not including the stock of subsidiaries of such first-tier foreign subsidiaries) owned by the Company and the U.S. subsidiary guarantors, subject to certain exceptions. Such security 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: (i) an alternate base rate, defined, for any day, as the greater of the prime rate, a federal funds and overnight bank funding based rate plus 0.5% or one-month Adjusted Term Secured Overnight Financing Rate (“SOFR”) plus 1.0% as of a specified date in advance of the determination, but in each case not less than 1.0%, plus a margin of 0.25% to 0.50%, or (ii) Adjusted Term SOFR, which is the Term SOFR Rate for the selected 1, 3 or 6 month interest period plus 0.10% (or Euro Interbank Offered Rate “EURIBOR” for borrowings denominated in Euro; or Sterling Overnight Index Average “SONIA” for borrowings denominated in Pounds Sterling), but in each case not less than zero, plus a margin of 1.25% to 1.50%. The respective margins are based upon average quarterly availability, as defined in and computed pursuant to the ABL Agreement. In addition, the Company pays a commitment fee of 0.20% to 0.25% per annum based on the average daily unused portion of the aggregate commitment under the ABL Agreement. The interest rate on outstanding borrowings under the ABL Agreement at September 30, 2024 was between 4.79% and 6.68%. The Company paid a commitment fee of 0.25% on the unused portion of the ABL Agreement during the nine months ended September 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 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 September 30, 2024 was 10.73%.
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, 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
- 17 -
LIFETIME BRANDS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2024
(unaudited)
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 nine months ended September 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.
NOTE 7 — DERIVATIVES
Interest Rate Swap Agreements
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 September 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 September 30, 2024.
Foreign Exchange Contracts
The Company is party from time to time to certain foreign exchange contracts, primarily to offset the earnings impact related to fluctuations in foreign currency exchange rates associated with inventory purchases denominated in foreign currencies. Fluctuations in the value of certain foreign currencies as compared to the USD may positively or negatively affect the Company’s revenues, gross margins, operating expenses, and retained earnings, all of which are expressed in USD. Where the Company deems it prudent, the Company engages in hedging programs using foreign currency forward contracts aimed at limiting the impact of foreign currency exchange rate fluctuations on earnings. The Company purchases foreign currency forward contracts with terms less than 18 months to protect against currency exchange risks associated with the payment of merchandise purchases to foreign suppliers. The Company does not hedge the translation of foreign currency profits into USD, as the Company regards this as an accounting exposure rather than an economic exposure.
The aggregate gross notional value of foreign exchange contracts at September 30, 2024 was $2.8 million. These foreign exchange contracts have been designated as hedges in order to apply hedge accounting.
The Company is exposed to market risks as well as changes in foreign currency exchange rates as measured against the USD and each other, and to changes to the credit risk of derivative counterparties. The Company attempts to minimize these risks primarily by using foreign currency forward contracts and by maintaining counterparty credit limits. These hedging activities provide only limited protection against currency exchange and credit risk. Factors that could influence the effectiveness of the Company’s hedging programs include those impacting currency markets and the availability of hedging instruments and liquidity of the credit markets. All foreign currency forward contracts that the Company enters into are components of hedging programs and are entered into for the sole purpose of hedging an existing or anticipated currency exposure. The Company does not enter into such contracts for speculative purposes, and as of September 30, 2024, these foreign exchange contracts have been designated as hedges in to order to apply hedge accounting.
The fair values of the Company’s derivative financial instruments included in the condensed consolidated balance sheets are presented as follows (in thousands):
Derivatives designated as hedging instrumentsBalance Sheet LocationSeptember 30, 2024December 31, 2023
Foreign exchange contractsPrepaid expenses and other current assets$— $56 
Accrued expenses167 144 

- 18 -
LIFETIME BRANDS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2024
(unaudited)
Derivatives not designated as hedging instrumentsBalance Sheet LocationSeptember 30, 2024December 31, 2023
Interest rate swaps
Prepaid expenses and other current assets
$268 $— 

Other assets
— 793 
Other long-term liabilities659 — 
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. The fair values of the foreign exchange contracts were based on Level 2 observable inputs using quoted market prices for similar assets in an active market. The counterparties to the derivative financial instruments are major international financial institutions. The Company is exposed to credit risk for the net exchanges under these agreements, but not for the notional amounts. As of September 30, 2024, 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 income (loss), net of taxes, as follows (in thousands):
Three Months Ended
September 30,		Nine Months Ended
September 30,
Derivatives designated as hedging instruments2024202320242023
Interest rate swaps$— $— $— $(120)
Foreign exchange contracts(203)435 20 (898)
$(203)$435 $20 $(1,018)
Realized gains and losses on the interest rate swaps that are reported in other comprehensive income (loss) are reclassified into earnings as the interest expense on the debt is recognized. The Company’s interest rate swaps that were designated as hedging instruments had an aggregate notional value of $25.0 million and matured during the three months ended March 31, 2023.
Realized gains and losses on foreign exchange contracts that are reported in other comprehensive income (loss) are reclassified into cost of sales as the underlying inventory purchased is sold.
During the three and nine months ended September 30, 2024, the Company reclassified $0.03 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 September 30, 2024, 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, 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. This was comprised of a gain of $0.1 million related to realized interest rate swap and a gain of $0.7 million related to foreign exchange contracts recognized in cost of sales.
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 instrumentsLocation of gain (loss)2024202320242023
Interest rate swaps
Mark to market loss on interest rate derivatives
$(928)$(98)$(1,184)$(135)
Interest expense298 218 828 579 
$(630)$120 $(356)$444 

- 19 -
LIFETIME BRANDS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2024
(unaudited)
NOTE 8 — STOCK COMPENSATION
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 September 30, 2024, there were 1,805,462 shares available for the grant of awards under the Plan, assuming maximum performance of performance-based awards.
Option Awards
A summary of the Company’s stock option activity and related information for the nine months ended September 30, 2024 is as follows:
OptionsWeighted-
average
exercise price		Weighted-
average
remaining
contractual
life (years)		Aggregate
intrinsic
value
(in thousands)
Options outstanding, January 1, 2024
999,500 $13.31 
Grants(1)
65,000 9.46 
Expirations(252,000)18.68 
Options outstanding, September 30, 2024(1)
812,500 11.34 5.0$36 
Options exercisable, September 30, 2024
674,500 $11.78 4.3$13 
Total unrecognized stock option expense remaining (in thousands)$509 
Weighted-average years expected to be recognized over1.6
(1) Includes a non-plan stock option award of 15,000 stock options.
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, 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 September 30, 2024 and the exercise price.
Restricted Stock
A summary of the Company’s restricted stock activity and related information for the nine months ended September 30, 2024 is as follows:
Restricted
Shares		Weighted-
average grant
date fair
value
Non-vested restricted shares, January 1, 2024
597,528 $8.44 
Grants313,199 9.54 
Vested(306,425)7.53 
Cancellations(9,150)10.01 
Non-vested restricted shares, September 30, 2024
595,152 $9.46 
Total unrecognized compensation expense remaining (in thousands)$4,253 
Weighted-average years expected to be recognized over1.6
The total fair value of restricted stock that vested during the nine months ended September 30, 2024 was $2.8 million.
Performance shares
Each performance award represents the right to receive up to 150% of the target number of shares of common stock. The number of shares of common stock earned will be determined based on the attainment of specified performance goals at the end
- 20 -
LIFETIME BRANDS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2024
(unaudited)
of the performance period, as determined by the Compensation Committee of the Board. 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, 2024 is as follows:
Performance-
based stock
awards (1)
Weighted-
average grant
date fair
value
Non-vested performance-based awards, January 1, 2024
486,972 $10.44 
Grants219,975 9.76 
Vested(152,188)14.18 
Cancellations(24,315)13.23 
Non-vested performance-based awards, September 30, 2024
530,444 $8.96 
Total unrecognized compensation expense remaining (in thousands)(2)
$2,105 
Weighted-average years expected to be recognized over2.0
(1)Represents the target number of shares to be issued for each performance-based award.
(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, 2024 was $1.5 million.
Cash-settled performance-based awards
Each cash-settled performance-based award represents the right to receive up to 150% of the target number of deferred stock units with payment in cash equivalent to the value of one share of the Company's common stock. The number of deferred stock units earned will be determined based on the attainment of specified performance goals at the end of the performance period, as determined by the Compensation Committee of the Board. 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, 2024 is as follows:
Cash-settled performance-based awards (1)
Weighted-
average fair
value
Non-vested cash-settled performance-based awards, January 1, 2024
83,611 $6.71 
Cancellations(1,419)6.77 
Non-vested cash-settled performance-based awards, September 30, 2024
82,192 $6.54 
Total unrecognized compensation expense remaining (in thousands)(2)
$— 
Weighted-average years expected to be recognized over0.0
(1) Represents the target number of units to be settled in cash.
(2) The performance metric for the cash-settled performance-based awards granted in 2022 is not probable of achievement. Therefore, no compensation expense has been recorded on these awards.
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LIFETIME BRANDS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2024
(unaudited)
The Company recorded stock compensation expense as follows (in thousands):
Three Months Ended
September 30,
Nine Months Ended
September 30,
Stock Compensation Expense Components2024202320242023
Equity based stock option expense$73 $46 $183 $225 
Restricted and performance-based stock awards expense973 852 2,706 2,549 
Stock compensation expense for equity based awards$1,046 $898 $2,889 $2,774 
Liability based stock option expense(4)— (3)(4)
Total Stock Compensation Expense$1,042 $898 $2,886 $2,770 
NOTE 9 —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. 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, 2024 and 2023 are as follows:
Three Months Ended
September 30,		Nine Months Ended
September 30,
2024202320242023
(in thousands, except per share amounts)
Net income (loss) – Basic and Diluted
$344 $4,206 $(24,083)$(11,119)
Weighted-average shares outstanding – Basic 21,562 21,216 21,454 21,188 
Effect of dilutive securities:
        Stock options and other stock awards
48 77 — — 
Weighted-average shares outstanding – Diluted21,610 21,293 21,454 21,188 
Basic income (loss) per common share
$0.02 $0.20 $(1.12)$(0.52)
Diluted income (loss) per common share
$0.02 $0.20 $(1.12)$(0.52)
Antidilutive Securities(1)
1,2311,2371,5041,600
(1) Stock options and other stock awards that have been excluded from the denominator as their inclusion would have been anti-dilutive.
- 22 -
LIFETIME BRANDS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2024
(unaudited)
NOTE 10— INCOME TAXES
Income tax provision of $1.5 million and $1.7 million for the three and nine months ended September 30, 2024, respectively, represent taxes on both U.S. and foreign earnings at a combined effective income tax provision rate of 81.4% and (8.2)%, respectively. The effective tax rate for the three months ended September 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. The negative rate for the nine months ended September 30, 2024 reflects tax expense on a pretax financial reporting loss. The effective tax rate for the nine months ended September 30, 2024 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 $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.
The Company has identified the following jurisdictions as “major” tax jurisdictions: U.S. Federal, California, Massachusetts, New Jersey, New York and the United Kingdom.
The Company evaluates its tax positions on a quarterly basis and revises its estimates accordingly. There were no material changes to the Company’s uncertain tax positions, interest, or penalties during the three-month periods ended September 30, 2024 and September 30, 2023.
- 23 -
LIFETIME BRANDS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2024
(unaudited)
NOTE 11 – BUSINESS SEGMENTS
The Company has two reportable segments, U.S. and International. The Company has segmented its operations to reflect the manner in which management reviews and evaluates the results of its operations. The U.S. segment includes the Company’s primary domestic business that designs, markets and distributes its products to retailers, distributors and directly to consumers through its own websites. The International segment consists of certain business operations conducted outside the U.S.. Management evaluates the performance of the U.S. 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. Certain general and administrative expenses, such as senior executive salaries and benefits, stock compensation, director fees, and accounting, legal fees and consulting fees, are not allocated to the specific segments and are reflected as unallocated corporate expenses.
Three Months Ended
September 30,		Nine Months Ended
September 30,
2024202320242023
(in thousands)
Net sales
U.S.$170,222 $179,393 $431,205 $447,857 
International13,615 12,276 36,540 35,683 
Total net sales$183,837 $191,669 $467,745 $483,540 
Income from operations
U.S.$16,191 $21,480 $34,822 $39,170 
International(3,292)(2,995)(9,313)(7,716)
Unallocated corporate expenses(4,286)(4,873)(13,899)(15,252)
Income from operations
$8,613 $13,612 $11,610 $16,202 
Depreciation and amortization
U.S.$6,113 $4,549 $15,381 $13,813 
International295 272