I D E N T I F Y I N G O P P O R T U N I T I E S
Lifetime Brands Annual Report 2011
lifetime Brands, inc.
1000 stewart avenue, garden city, new York 11530
Financial HigHligHts
500000
400000
300000
200000
100000
0
$444
50
40
30
20
10
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
$14
200
150
100
50
$98
$1.12
2008
2009
2010
2011
2008
2009
2010
2011
2008
2009
2010
2011
2008
2009
2010
2011
NEt SalES
IN MILLIONS
NEt iNcomE (loSS)
IN MILLIONS
DilutED iNcomE (loSS)
PER COMMON SHARE
DEBt
IN MILLIONS
Year Ended December 31,
(in thousands, except per share data)
2008
2009
2010
2011
NEt SalES
$487,935
$415,040
$443,171
$444,417
NEt iNcomE (loSS)
($47,755)
$2,715
$20,261
$14,066
DilutED iNcomE (loSS)
pEr commoN SharE
($3.99)
$0.22
$1.64
$1.12
DEBt
$157,164
$95,128
$77,657
$97,625
oFFicers and directors
oFFices
corporatE hEaDQuartErS
1000 Stewart Avenue
Garden City, NY 11530
(516) 683-6000
corporate inFormation
corporatE couNSEl
Samuel B. Fortenbaugh III
New York, NY 10111
iNDEpENDENt rEgiStErED
puBlic accouNtiNg firm
Ernst & Young LLP
Jericho, NY 11753
traNSfEr agENt & rEgiStrar
Computershare
480 Washington Boulevard
Jersey City, NJ 07310
aNNual mEEtiNg
The Annual Meeting of Shareholders will
be held at 10:30 a.m. on Thursday, June 13, 2012,
at the Corporate Headquarters.
JEffrEY SiEgEl
Chairman of the Board of Directors
Chief Executive Officer and President
roNalD ShiftaN
Vice Chairman of the Board of Directors
Chief Operating Officer
DaNiEl SiEgEl
Executive Vice President
craig phillipS
Senior Vice President – Distribution
and Director
laurENcE WiNoKEr
Senior Vice President – Finance
Treasurer and Chief Financial Officer
Sara ShiNDEl
General Counsel and Secretary
DaViD E. r. DaNgoor
Director
michaEl JEarY
Director
JohN KoEgEl
Director
chErriE NaNNiNga
Director
William u. WEStErfiElD
Director
IdentIfyIng OppOrtunities
Lifetime Brands, Inc.
We are one of the world’s
leading designers, developers,
and marketers of a broad
range of nationally branded
consumer products used in the
home. Our categories include
Kitchenware, Cutlery, Cutting
Boards, Bakeware, Cookware,
Dinnerware, Flatware,
Glassware, Pantryware, Spices
and Home Décor.
Mission Statement
We are committed to delivering
five-star experiences to the
earth’s consumers through
innovative products, services
and solutions for the home.
In return, they reward us
with increased market share
and profitability, allowing our
associates, stakeholders and
shareholders to prosper.
Lifetime Brands, Inc. | 2011 Annual Report
1
IdentIfyIng OppOrtunities
Dear Fellow Shareholders
I am proud of Lifetime’s achievements in 2011.
Our core U.S. wholesale businesses, Kitchenware and Tabletop, which account
for approximately 80% of the Company’s revenue, performed well in 2011.
In our Kitchenware categories, we recorded sales growth
of 3.5%, all of which was organic, while our tabletop
categories achieved actual sales growth of 14.5%, with
9.1% organic growth. these gains were accomplished
in spite of weak consumer demand, reflecting the
critical importance of our commitment to innovation
and our successful effort to gain market share.
internatiOnal expansiOn
five years ago, recognizing that the U.S. market for
housewares products was mature, we embarked on a
journey to transform our company into a global enterprise.
Lifetime’s initial step was to purchase a 30% equity interest
in grupo Vasconia SAB, Mexico’s largest housewares
company. the following year, we joined with Accent-
fairchild group, Inc. to form Lifetime Brands Canada.
In the few years since we made our initial investments, both
grupo Vasconia and Lifetime Brands Canada have seen
rapid growth, largely due to their access to Lifetime’s brands,
product design groups and Asia sourcing infrastructure.
In fact, both had record years in sales and profits in 2011.
We further broadened our geographic reach in 2011 by
making investments in Brazil and China. these are two large
and rapidly growing markets where consumer classes are
expanding and enthusiastic about acquiring household goods
with leading brands that were previously out of their reach.
Brazil In Brazil, we acquired a 40% equity interest in gS
Internacional S/A, a leading wholesale distributor
of branded housewares products. gSI markets
dinnerware, glassware, home décor, kitchenware and
barware to more than 7,000 customers, including
major department stores, housewares retailers
and independent shops. By combining gSI’s
experience and market knowledge with access to
Lifetime’s product lines, brands and sourcing, we
expect gSI to emerge as a preeminent housewares
company in the Mercosur Area, which encompasses
Argentina, Brazil, Paraguay and Uruguay.
China In China, we established a joint venture to market
Mikasa® dinnerware, glassware and giftware products.
China’s rapidly growing middle class – which within
a few years could equal the total population of the
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Lifetime Brands, Inc. | 2011 Annual Report
US – is clearly the right place for us to establish our key
brand, as the Mikasa® style of contemporary patterns
and designs, which has proven very successful in the
United States, also matches the shopping preferences
of young, urban, middle-income Chinese families.
King’s flair (group) development Company, Ltd.,
our joint venture partner and a company Lifetime
has done business with for more than 25 years, has
a solid infrastructure that is highly experienced in
distributing better brands to the Chinese market.
to further accelerate our international growth, we also acquired
Creative tops Holdings Limited, a leading provider of tableware
and kitchenware products in the UK and its Hong Kong-based
sourcing affiliate, Creative tops far east Limited. Our goal is to
use Creative tops as a base for building a powerful housewares
company in the UK, as well as a platform for expanding our
tabletop businesses throughout europe.
additiOnal internatiOnal Ventures
early in 2011, we formed Housewares Corporation of Asia
Limited, a Hong Kong-based joint venture that supplies direct
import kitchenware programs to retailers in north, Central and
South America. Our partners in this venture are Accent-fairchild
group, grupo Vasconia and fackelmann gmbH & Co., a german
company with ownership interests in a number of Chinese
factories. Our goal is to use HCA to offer retailers in the US that
want to develop proprietary kitchenware programs sourced
directly from Asia, access to well-established product design
resources, factories and sourcing networks.
Between our own company and the companies in which
we have made a significant investment, we now have the
infrastructure to reach customers on four continents.
We expect a very significant part of our future sales and
profits will come from outside of the United States.
new Brand initiatiVes
In the past, I have written that Lifetime’s success is
based on its brands, its commitment to innovation and
its sourcing capabilities. As we grow internationally,
we need to rely on brands that we own and that we
can use on a wide range of products globally. and that
are portable - brands that we can use globally.
IdentIfyIng OppOrtunities
to complement our company-owned Mikasa® brand, we
have developed two new and very exciting brand concepts:
saVOra™ Savora™ is a new brand of high-end kitchen
products we believe set a new standard in
kitchenware. Our designers drew inspiration
from every corner of modern lifestyles, including
fashion, cosmetics and even luxury vehicles,
to create Savora’s form and color palette. the
result is a high-end line of kitchen tools as
functional as they are beautiful. Savora™ products
were first shown at the International Home +
Housewares Show in March 2012 and will be
available at selected retailers later this year.
KizmOs™ Kizmos™ is a line of whimsical kitchenware that
incorporates elements of personality, color and fun
to everyday items. their distinctive bright colors
and fun shapes are intended to add delight to
any kitchen. the playful personality of each item
appeals to the fun nature of cooking itself and every
item in the collection cheerfully makes cooking
and entertaining enjoyable for the whole family.
Creating lOng-term sharehOlder Value
Lifetime’s Board of directors is committed to enhancing
shareholder value through growth in revenues, net income
and diluted earnings per share. Lifetime’s strategy for achieving
these objectives is to introduce new products, to increase
its penetration of existing distribution channels, to pursue
strategic acquisitions in the United States and to expand
internationally while maintaining a healthy financial position.
I hope you share our excitement and optimism about the future.
Jeffrey Siegel
Chairman of the Board,
President and Chief executive Officer
Jeffrey Siegel
Chairman of the Board,
President and Chief Executive Officer
Lifetime Brands, Inc. | 2011 Annual Report
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IdentIfyIng OppOrtunities
Identifying Opportunities
Lifetime Brands is constantly exploring opportunities to increase our
presence in the marketplace. In 2011, we capitalized on three such
opportunities, including expanding our overseas operations, acquiring
new companies, and partnering with an established culinary icon.
of cookware, kitchen tools, gadgets and cutting boards.
guy plugs his electrifying personality into each piece, fusing
his creativity and signature style with quality and performance.
His outrageous culinary passion is evident in every detail
of the collection and his exciting personal touches deliver
the celebrity experience to at-home chefs across America.
guy made a point of reflecting his celebrity persona
and culinary rock-star status in the line. He channeled
his trademark energy and enthusiasm into adding
design details into each piece, creating a collection
that is unique on the kitchenware landscape.
Celebrity chefs perform extremely well at retail and
guy’s status as a culinary icon, author and television
personality enhances his visibility across all media
channels. He is the host of three of food network’s top-
rated shows, a three-time New York Times bestselling
cookbook author and host of nBC’s Minute to Win It.
to further accelerate growth outside of the U.S., Lifetime
Brands acquired Creative tops group, a leading UK-
based supplier of private label and branded tableware
and kitchenware products. Creative tops supplies major
supermarket groups, major department stores, housewares
retailers and independent retailers throughout the UK.
the company also has a growing customer base outside
the UK, accounting for approximately 13% of its revenue.
Additionally, their sourcing office in Hong Kong represents a
significant complement to Lifetime Brands’ existing operations.
Lifetime Brands also expanded into South America by
acquiring 40% of the equity capital of gS International S/A,
a distributor of branded housewares products in Brazil.
to position gSI for further profitable growth, Lifetime
Brands plans to utilize the same strategies that have helped
grupo Vasconia and Lifetime Brands Canada succeed:
+ We will give each of them access to Lifetime’s global
sourcing infrastructure, brands and product design groups
+ We will expand and diversify each of them into
new product categories
+ We will support sales and marketing efforts and related
brand segmentation towards new customer channels
+ We will give each of them access to Lifetime Brands’
established B2B and B2C internet infrastructure
In the last five years, Lifetime Brands has become a truly
global company. the market size of the housewares
industry outside of the U.S. is estimated to be greater
than $200 billion, compared to an estimate of $65 billion
in the U.S. We started our international expansion with
our investment in Vasconia, followed by the formation of
Lifetime Brands Canada. In 2011 we accelerated the effort
to tap into this revenue stream by forming Housewares
Corporation of Asia Limited and embarking on a joint
venture to introduce Mikasa® products in China.
Lifetime Brands has entered into a licensing agreement with
internationally recognized food network® star and culinary
icon guy fieri. this agreement positions guy to explode
onto the kitchenware scene by having Lifetime Brands
design, manufacture and market a sizzling new collection
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Lifetime Brands, Inc. | 2011 Annual Report
IdentIfyIng OppOrtunities
UK & EUROPE
CHINA
CANADA
UNITED STATES
MEXICO
BRAZIL
Global Presence
+ united states
Lifetime Brands, Inc.
+ Brazil
GS International
+ uK & eurOpe
Creative Tops
+ Canada
Lifetime Brands Canada
+ mexiCO
Vasconia
+ China
Housewares Corporation
of Asia Limited &
Mikasa Joint Venture
Lifetime Brands, Inc. | 2011 Annual Report
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IdentIfyIng OppOrtunities
Innovation
Lifetime Brands believes a great idea can come from anywhere.
We’re open to receiving inspiration not only from our internal
resources, but from our external sources as well.
that’s why we’ve developed and actively pursue an
Open Innovation policy. We’re proud to have embraced
external innovation by growing and fostering a robust
inventor network. through these channels, we’ve brought
numerous products from outside inventors to market.
Our involvement with our independent inventor network
is a valuable source of new perspectives, ideas and
solutions and is a great addition to our internal staff.
the Mag-Lid™ containers feature revolutionary technology
that uses magnetic force to automatically turn lids closed
for you. All you have to do is place the lid on the body
of the container and the magnets take over, rotating the
lid until it closes. In other words, the lid closes itself.
this technology is especially helpful for anyone who
has conditions affecting their grip, such as seniors with
arthritis. It literally takes the job out of your hands.
Our in-house product design and development department of
over 100 professionals is an additional resource for developing
innovative products. they utilize forward-thinking concepts and
advanced materials to produce innovative kitchenware items.
In 2011, this team was responsible for creating a sleek and
sophisticated line of new kitchen gadgets called Savora™.
Set to launch in the second half of 2012, Savora™ is a bold
and dramatic entry into the realm of high-end consumer
goods. each product in the line is intended to be displayed
and admired for its artful, advanced design. Our designers
drew inspiration from every corner of modern lifestyles,
including fashion, cosmetics and even luxury vehicles, to
create Savora’s form and color palette. the result is a high-
end line of kitchen tools as functional as they are beautiful.
In cutlery, we are proud to be the leader in break-resistant
ceramic technology. Our newest line of ceramic knives
features a striking new black color, while still delivering
the same chip-resistant technology on the sharpest cutting
edge available today.
Our Kizmos™ line incorporates elements of personality, color
and fun to everyday items. their distinctive bright colors and
fun shapes are intended to add delight to any kitchen.
the playful personality of each item appeals to the fun nature
of cooking itself and every item in the collection cheerfully
makes cooking and entertaining enjoyable for the whole family.
We also recently introduced two new and innovative
products to market: the trap-door Colander and Mag-Lid™
containers. the trap-door Colander presents an extremely
useful innovation to the long-standing design of the colander:
dispensing doors on the bottom. this one-of-a-kind feature
makes emptying food into a bowl easier than ever before.
It allows you to simply lift levers under the handles and have
the food drop into a bowl without upending the colander.
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Lifetime Brands, Inc. | 2011 Annual Report
We’ve also expanded our food storage category by
offering consumers our innovative Perfect Seal™ collection.
Made from eastman tritan™ copolyester – a virtually
unbreakable material that resists odors and stains – Perfect
Seal food storage features a patent-pending lid locking
system that is easy to open and close. A dial on the lid is
turned to lock the lid in place, creating a perfect seal.
Lifetime Brands also embraces innovation by utilizing new and
emerging technologies in business. We are at the forefront
of Quick Response – or QR – codes on packaging and other
promotional materials. these small square bar codes provide
additional information when scanned by smartphones.
On packaging, our QR codes link to informative product videos.
We also relate to consumers through social media
channels. We are connected to our consumers on
facebook, providing us a platform to engage in dialogue
with our fans. Our Mikasa®, Pfaltzgraff and Kizmos™
facebook pages are forums for product information and
fun user-generated content, giving our consumers a
direct channel to communicate and interact with us.
We also keep our consumers informed through the
use of twitter. We send out – or “tweet” – promotional
messages, topical tabletop advice and tips about our
products to keep consumers connected with trends.
Lifetime Brands is also an active member on Pinterest, an
online pinboard where users post and share photos.
We actively seek out home décor and tabletop photos and
even repost some on our Mikasa® facebook page for users
to comment on them. In the realm of social media, this
helps establish Mikasa® as an expert in entertaining.
64
53.99
113.75
108.95
166
IdentIfyIng OppOrtunities
55.07
48.39
R40
2012
AND
BEYOND
SET TO LAUNCH IN THE SECOND
HALF OF 2012, SAVORA™ IS A
BOLD AND DRAMATIC ENTRY
INTO THE REALM OF HIGH-END
CONSUMER GOODS. EXTENSIVE
RESEARCH WAS CONDUCTED
TO DETERMINE THE IDEAL
FUNCTIONALITY FOR EACH ITEM.
Savora Rotary Grater
Lifetime Brands, Inc. | 2011 Annual Report
6
IdentIfyIng OppOrtunities
Creating a 5-Star Experience
At Lifetime Brands, we recognize the importance of the role the consumer
plays in our continued success. We believe a thorough understanding
of our consumers’ buying habits is vital to our company’s growth.
Lifetime Brands is committed to providing consumers with
superlative service through every step of the purchase process.
from pre-purchase research to post-purchase feedback, our
goal is to ensure every consumer has a 5-Star experience.
We have studied how consumers go about buying a product
and are being proactive in the process to enhance their
experience. the overwhelming majority of today’s consumers
go through 4 distinct actions when buying a product: Search,
Study, Select and Share. In turn, these actions produce 4
distinct results: find, decide, experience and Create demand.
these actions and results combine to produce a cyclical buying
pattern that the 5-Star experience affects at every turn.
searCh & Find
the cycle begins when consumers search for a product to
buy. to ensure our products show up in their search, we
have partnered with the best retailers in America to put as
many of our products as possible on their Internet sites. We
provide rich multimedia content and populate our product
descriptions with search engine optimized – or SeO – copy
so our products are displayed high up in search results.
studY & deCide
In today’s Internet-driven society, 70% of purchases are
researched online before they’re bought1. We strive to
have our products stand out among the competition with
glowing, 5-star reviews. Additionally, our descriptive and
compelling product copy entices consumers to buy.
Research has shown consumers are 85% more likely to make
a purchase after watching a video2; therefore, our informative
videos engage, entertain and sell to the consumer.
Our packaging is also designed to sell our products. We make
them easy to understand, explaining the product perfectly.
seleCt & experienCe
After the consumer selects a product to purchase, we want
the experience to follow them home and exceed their
expectations. We achieve this by delivering quality packaging
that is attractive and also providing the consumer with
extra features like recipes, décor tips and even alternative
uses for the product. We include instructions that are easy
to read and understand and even anticipate frequently
asked questions – or fAQ – and answer them in advance.
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Lifetime Brands, Inc. | 2011 Annual Report
share & Create demand
In today’s information age, consumers’ post-purchase
feedback and online product ratings and reviews have
become increasingly important. two-thirds of the
economy is infl uenced by personal recommendations.
When consumers share positive feedback about
our products, it helps create demand for them.
retail partners
Lifetime Brands is also committed to providing our retail
partners with superlative service through every step of the
ordering process. from placing to receiving an order, our
goal is to ensure every retailer has a 5-Star experience.
that means providing a smooth and easy order process,
maintaining in-stock levels and quick shipment and delivery
for each order placed. With Lifetime Brands, each retailer will
fi nd a large assortment of products at every price point to fi t
its needs and have their orders arrive quickly and effi ciently.
1 google Clickstream White Paper, 2011
2 Internet Retailer, April 2010
SEARCH & FIND
SHARE &
CREATE DEMAND
STUDY & DECIDE
SELECT & EXPERIENCE
IdentIfyIng OppOrtunities
70%
OF PURCHASES ARE RESEARCHED
ONLINE BEFORE THEY’RE BOUGHT.
Lifetime Brands, Inc. | 2011 Annual Report
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IdentIfyIng OppOrtunities
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
X ANNUAL REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2011
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)
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
Delaware
11-2682486
1000 Stewart Avenue, Garden City, New York 11530
(Address of principal executive offices, including Zip Code)
(516) 683-6000
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Common Stock, $.01 par value The NASDAQ Stock Market LLC
(Title of each class) (Name of each exchange on which registered)
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act.
Yes (cid:1) No (cid:2)
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of
the Act.
Yes (cid:1) No (cid:2)
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 (cid:2) No (cid:1)
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site,
if any, every Interactive Data File required to be submitted and posted 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 and post such files).
Yes (cid:2)
No (cid:1)
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of
this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in
definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.
(cid:2)
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and
“smaller reporting company” in Rule 12b-2 of the Exchange Act:
Accelerated filer (cid:2)
Non-accelerated filer (do not check if a smaller reporting company) (cid:1) Smaller reporting company (cid:1)
Large accelerated filer (cid:1)
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
Yes (cid:1)
No (cid:2)
The aggregate market value of 9,557,190 shares of the voting common equity held by non-affiliates of the
registrant as of June 30, 2011 was approximately $112,201,411. Directors, executive officers, and trusts
controlled by said individuals are considered affiliates for the purpose of this calculation and should not
necessarily be considered affiliates for any other purpose.
The number of shares of common stock, par value $.01 per share, outstanding as of March 9, 2012 was
12,430,893.
DOCUMENTS INCORPORATED BY REFERENCE
Parts of the registrant’s definitive proxy statement for the 2012 Annual Meeting of Stockholders to be filed
pursuant to Regulation 14A under the Securities Exchange Act of 1934 are incorporated by reference in Part III
of this Annual Report.
LIFETIME BRANDS, INC.
FORM 10-K
TABLE OF CONTENTS
PART I
1.
Business.............................................................................................................................................................3
1A. Risk Factors.......................................................................................................................................................6
1B. Unresolved Staff Comments .......................................................................................................................... 10
2.
Properties........................................................................................................................................................ 10
3.
Legal Proceedings .......................................................................................................................................... 10
4. Mine Safety Disclosure (Not Applicable) ...................................................................................................... 11
PART II
5.
Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities ...........................................................................................................................................11
6.
7.
Selected Financial Data...................................................................................................................................13
Management’s Discussion and Analysis of Financial Condition and Results of Operations......................... 14
7A. Quantitative and Qualitative Disclosures About Market Risk.........................................................................25
8.
Financial Statements and Supplementary Data ...............................................................................................26
9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ........................27
9A. Controls and Procedures..................................................................................................................................27
9B. Other Information............................................................................................................................................29
PART III
10. Directors, Executive Officers and Corporate Governance ..............................................................................29
11. Executive Compensation.................................................................................................................................29
12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters ......29
13. Certain Relationships and Related Transactions, and Director Independence................................................29
14. Principal Accounting Fees and Services ........................................................................................................29
PART IV
15. Exhibits and Financial Statement Schedules ..................................................................................................30
SIGNATURES ......................................................................................................................................................34
1
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K contains “forward-looking statements” as defined by the Private Securities
Litigation Reform Act of 1995. These forward-looking statements include information concerning Lifetime Brands,
Inc. and its subsidiaries’ (the “Company’s”) plans, objectives, goals, strategies, future events, future revenues,
performance, capital expenditures, financing needs and other information that is not historical information. Many of
these statements appear, in particular, under the headings Business and Management’s Discussion and Analysis of
Financial Condition and Results of Operations included in Item 1 of Part I and Item 7 of Part II, respectively. When
used in this Annual Report on Form 10-K, the words “estimates,” “expects,” “anticipates,” “projects,” “plans,”
“intends,” “believes” and variations of such words or similar expressions are intended to identify forward-looking
statements. All forward-looking statements, including, without limitation, the Company’s examination of historical
operating trends, are based upon the Company’s current expectations and various assumptions. The Company
believes there is a reasonable basis for its expectations and assumptions, but there can be no assurance that the
Company will realize its expectations or that the Company’s assumptions will prove correct.
There are a number of risks and uncertainties that could cause the Company’s actual results to differ materially from
the forward-looking statements contained in this Annual Report. Important factors that could cause the Company’s
actual results to differ materially from those expressed as forward-looking statements are set forth in this Annual
Report, including the risk factors discussed in Part I, Item 1A under the heading Risk Factors.
Except as may be required by law, the Company undertakes no obligation to publicly update or revise
forward-looking statements which may be made to reflect events or circumstances after the date made or to reflect
the occurrence of unanticipated events.
OTHER INFORMATION
The Company is required to file its annual reports on Forms 10-K and quarterly reports on Forms 10-Q, and other
reports and documents as required from time to time with the United States Securities and Exchange Commission
(the “SEC”). The public may read and copy any materials that the Company files with the SEC at the SEC’s
Public Reference Room at 100 F Street, NE, Washington, DC 20549. Information may be obtained with respect
to the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains an
Internet site that contains reports, proxy and information statements, and other information regarding the
Company’s electronic filings with the SEC at http://www.sec.gov. The Company also maintains a website at
http://www.lifetimebrands.com where users can access the Company’s electronic filings free of charge.
2
PART I
Item 1. Business
OVERVIEW
The Company designs, sources and sells branded kitchenware, tabletop and other products used in the home. The
Company either owns or licenses its brands. The Company’s licenses generally only permit the Company to sell
certain products using the licensed brand name. The Company sells its products to retailers and distributors and
sells a limited selection of its products directly to consumers through its Internet websites. The Company markets
its products under well-respected and widely-recognized brand names in the housewares industry. According to
the Home Furnishing News Brand Survey issued in 2009, three of the Company’s brands, KitchenAid®,
Cuisinart® and Farberware®, are among the four most recognized brands in the “Kitchen Tool, Cutlery and
Gadgets” category. In addition, the Company also sells products under private-label brand names controlled by
certain of its retailer customers. The Company primarily targets moderate to premium price points through every
major level of trade and generally markets several lines within each of its product categories under more than one
brand. At the heart of the Company is a culture of innovation. The Company brought over 4,200 new or
redesigned products to market in 2011 and expects to introduce approximately 4,200 new or redesigned products
in the U.S. and an additional 3,750 in the United Kingdom and other countries in 2012.
The Company’s product categories include two categories of products that people use to prepare, serve and
consume foods, Kitchenware (kitchen tools and gadgets, cutlery, cutting boards, bakeware and cookware) and
Tabletop (dinnerware, flatware and glassware); and one category, Home Solutions, which comprises other
products used in the home (food storage, pantryware, spices and home décor).
The Company sources almost all of its products from suppliers located outside the United States, primarily in the
People’s Republic of China. The Company manufactures its sterling silver products at a leased facility in San
Germán, Puerto Rico and fills spices and assembles spice racks at its owned Winchendon, Massachusetts
distribution facility.
The Company has expanded its presence in international markets through investments in various companies that
operate outside of the United States. In 2007, the Company acquired a 30% equity interest in Grupo Vasconia,
S.A.B. (“Vasconia”), a housewares company based in Mexico. In January 2008, the Company entered into a
strategic alliance to distribute products in Canada. In January 2011, the Company, together with Vasconia and
unaffiliated partners, formed Housewares Corporation of Asia Limited, a Hong Kong-based company that
supplies direct import kitchenware products to retailers in North, Central and South America. In November 2011,
the Company acquired 100% of the share capital of each of Creative Tops Holdings Limited and Creative Tops
Far East Limited (collectively, “Creative Tops”). Creative Tops is a UK-based supplier of private label and
branded tabletop and kitchenware products. In December 2011, the Company acquired a 40% equity interest in
GS Internacional S/A (“GSI”). GSI is a wholesale distributor of branded housewares products in Brazil. GSI
markets dinnerware, glassware, home décor, kitchenware and barware to customers, including major department
stores, housewares retailers and independent shops throughout Brazil. In February 2012, the Company entered
into a joint venture to distribute Mikasa® products in China.
In addition, the Company licenses certain of its brands to other companies in various foreign markets, including
Vasconia in Mexico and through a strategic alliance in Canada. The Company will continue to seek opportunities
to license certain brands in other foreign markets.
The Company continues to evaluate opportunities to expand the recognition of its brands and to invest in other
companies that operate principally outside the United States. These opportunities involve risks as the industry and
foreign markets may not evolve as anticipated and the Company’s objectives may not be achieved.
3
The Company’s top brands and their respective product categories are:
Brand
Farberware®
Mikasa®
KitchenAid®
Pfaltzgraff®
Cuisinart®
Elements®
Melannco®
Wallace Silversmiths®
Kamenstein®
Pedrini®
Towle®
V&A®
Royal Botanic Gardens Kew®
Licensed/Owned
Product Category
Licensed*
Owned
Licensed
Owned
Licensed
Owned
Owned
Owned
Owned
Licensed
Owned
Licensed
Licensed
Kitchenware and Tabletop
Tabletop and Home Solutions
Kitchenware
Tabletop and Home Solutions
Kitchenware and Tabletop
Home Solutions
Home Solutions
Tabletop and Home Solutions
Kitchenware
Kitchenware
Tabletop and Home Solutions
Tabletop
Tabletop
* The Company has a 183 year royalty free license to utilize the Farberware® brand for kitchenware and tabletop products.
The Company’s wholesale customers include mass merchants, specialty stores, national chains, department stores,
warehouse clubs, supermarkets, off-price retailers and Internet retailers.
BUSINESS SEGMENTS
The Company operates in two business segments: the Wholesale segment, which is the Company’s primary business
that designs, markets and distributes its products to retailers and distributors, and the Retail Direct segment in which
the Company markets and sells a limited selection of its products through its Pfaltzgraff®, Mikasa®, Lifetime
SterlingTM and Housewares DealsTM Internet websites. The Company has segmented its operations to reflect the
manner in which management reviews and evaluates the results of its operations.
Additional information regarding the Company’s reportable segments is included in Note J of the Notes to the
Consolidated Financial Statements included in Item 15.
CUSTOMERS
The Company’s products are sold globally to a diverse customer base including mass merchants (such as Wal-Mart
and Target), specialty stores (such as Bed Bath & Beyond and Dunelm), national chains (such as Kohl’s, JC Penney
and Sears), department stores (such as Macy’s), warehouse clubs (such as Costco, BJ’s Wholesale Club and Sam’s
Club), supermarkets (such as Stop & Shop, Kroger, Tesco and Sainsbury’s), off-price retailers (such as Marshalls,
T.J. Maxx and Ross Stores), and Internet retailers (such as Amazon.com).
The Company also operates its own Internet sites that provide information about the Company’s products and offer
consumers the opportunity to purchase a limited selection of the Company’s products directly from the Company.
During the years ended December 31, 2011, 2010 and 2009, Wal-Mart Stores, Inc. (including Sam’s Club and Asda
Superstore) accounted for 15%, 15%, and 18% of net sales, respectively. No other customer accounted for 10% or
more of the Company’s net sales during these periods.
4
DISTRIBUTION
The Company operates the following distribution centers:
Location
Fontana, California
Robbinsville, New Jersey
Winchendon, Massachusetts
Corby, United Kingdom
Medford, Massachusetts
Size
(square feet)
830,690
700,000
175,000
90,000
5,590
SALES AND MARKETING
The Company’s sales and marketing staff coordinates directly with its wholesale customers to devise marketing
strategies and merchandising concepts and to furnish advice on advertising and product promotion. The Company
has developed many promotional programs for use in the ordinary course of business to promote sales throughout
the year.
The Company’s sales and marketing efforts are supported from its principal offices and showroom in Garden
City, New York; as well as showrooms in New York, New York; Medford, Massachusetts; Atlanta, Georgia;
Bentonville, Arkansas; Menomonee Falls, Wisconsin and Corby, United Kingdom.
The Company generally collaborates with its largest wholesale customers and in many instances produces specific
versions of the Company’s product lines with exclusive designs and/or packaging for their stores.
DESIGN AND INNOVATION
At the heart of the Company is a culture of innovation and new product development. The Company’s in-house
design and development teams currently consist of 105 professional designers, artists and engineers. Utilizing the
latest available design tools, technology and materials, these teams create new products, redesign products and create
packaging and merchandising concepts.
SOURCES OF SUPPLY
The Company sources its products from over 400 suppliers. Most of the Company’s suppliers are located in the
People’s Republic of China. The Company also sources products from suppliers in the United States, India, Japan,
United Kingdom, Indonesia, Korea, Italy, Thailand, Germany, Slovakia, Vietnam, Czech Republic, Canada, Poland,
Portugal, Switzerland, Malaysia, Slovenia, Mexico, Taiwan, and Singapore. The Company orders products
substantially in advance of the anticipated time of their sale. The Company does not have any formal long-term
arrangements with any of its suppliers and its arrangements with most manufacturers allow for flexibility in
modifying the quantity, composition and delivery dates of orders.
MANUFACTURING
The Company manufactures its sterling silver products at its leased manufacturing facility in San Germán, Puerto
Rico and fills spices and assembles spice racks at its owned Winchendon, Massachusetts distribution facility.
COMPETITION
The markets for kitchenware, tabletop and other products used in the home including home décor products are
highly competitive and include numerous domestic and foreign competitors, some of which are larger than the
Company. The primary competitive factors in selling such products to retailers are innovative products, brand,
quality, aesthetic appeal to consumers, packaging, breadth of product line, distribution capability, prompt delivery
and selling price.
5
PATENTS
The Company owns 138 design and utility patents. The Company believes that the expiration of any of its patents
would not have a material adverse effect on the Company’s business.
BACKLOG
Backlog is not material to the Company’s business because actual confirmed orders from the Company’s customers
are typically not received until close to the required shipment dates.
EMPLOYEES
At December 31, 2011, the Company had a total of 1,150 full-time employees, of whom 185 are located in Asia and
113 in Europe. In addition, the Company employed 59 people on a part-time basis, predominately in customer
service. None of the Company’s employees are represented by a labor union. The Company considers its employee
relations to be good.
REGULATORY MATTERS
The Company, its subsidiaries and affiliates are subject to significant regulation by various governmental,
regulatory and other administrative authorities.
As a manufacturer and distributor of consumer products, the Company is subject to the Consumer Products Safety
Act. Additionally, laws regulating certain consumer products exist in some cities and states, as well as in other
countries in which the Company or its subsidiaries and affiliates sell products.
The Company’s spice container filling operation is regulated by the Food and Drug Administration.
The Company’s operations also are subject to federal, state and local environmental and health and safety laws
and regulations, including those that impose workplace standards and regulate the discharge of pollutants into the
environment and establish standards for the handling, generation, emission, release, discharge, treatment, storage
and disposal of materials and substances including solid and hazardous wastes.
Item 1A. Risk Factors
The Company’s businesses, operations and financial condition are subject to various risks. The risks and
uncertainties described below are those that the Company considers material.
General Economic Factors and Political Conditions
The Company’s performance is affected by general economic factors, strength of retail economies and political
conditions that are beyond its control. Retail economies are impacted by factors such as consumer demand and the
condition of the retail industry, which in turn, is effected by general economic factors. These general economic
factors include, among other factors, recession, inflation, deflation, housing markets, consumer credit availability,
consumer debt levels, fuel and energy costs, material input costs, foreign currency translation, labor cost inflation,
interest rates, government policies including tax policies and social compliance standards, unemployment trends,
the impact of natural disasters and terrorist activities, conditions affecting the retail environment for the home and
other matters that influence consumer spending. Unfavorable economic conditions in the United States adversely
affected the Company’s performance in 2008 and 2009 and global economic conditions could adversely affect the
Company’s performance in the future. Unstable economic and political conditions, civil unrest and political
activism, particularly in Asia, could adversely impact the Company’s businesses. Any substantial deterioration in
general economic conditions could also adversely affect consumer spending patterns which tend to be highly
correlated with the levels of disposable income of consumers. If the global economy experiences significant
disruptions or a slowdown, the Company’s business could be negatively impacted by reduced demand for its
products.
The Company conducts business outside of the United States through subsidiaries, affiliates and joint ventures.
These entities have operations in the United Kingdom, Mexico, Canada, Brazil, Hong Kong and China; therefore,
the Company is subject to increases and decreases in its investments resulting from the impact of fluctuations in
6
foreign currency exchange rates. These entities also bear risks similar to those risks of the Company; however,
there are specific additional risks related to these organizations such as the failure of the Company’s partners or
other investors to meet their obligations and higher credit and liquidity risks related to thinly capitalized entities.
Failure of these entities or the Company’s vendors to adhere to required regulatory or other standards, including
social compliance standards, can impact the Company’s reputation and adversely impact the Company’s business.
The Company has achieved growth through investments and acquisitions. There can be no assurance that the
Company will continue to be able to successfully integrate these businesses or identify and integrate future
acquisitions into its existing business without substantial costs, delays or other operational or financial difficulties.
Additionally, the failure of these businesses to achieve expected results, diversion of the Company’s
management’s attention and failure to retain key personnel at these businesses could have a material adverse
effect on the Company’s business, results of operations and financial condition.
Liquidity
The Company has substantial indebtedness and depends upon its bank lenders to finance its liquidity needs. In
October 2011, the Company entered into a new $150.0 million secured credit agreement (the “Revolving Credit
Facility”) and amended its $40.0 million second lien credit agreement (the “Term Loan”). Amounts loaned under
these agreements bear interest at floating rates. An increase in interest rates would adversely affect the
Company’s profitability. To the extent that the Company’s access to credit was to be restricted because of its own
performance, its bank lenders’ performances or conditions in the capital markets generally, the Company would
not be able to operate normally.
Competition
The markets for the Company’s products are intensely competitive. The Company competes with many other
suppliers, some of which are larger than the Company, have greater financial and other resources or employ
brands that are more established, have greater consumer recognition or are more favorably perceived by
consumers or retailers than the Company’s brands.
Customers
The Company’s wholesale customers include mass merchants, specialty stores, national chains, department stores,
warehouse clubs, supermarkets, off-price retailers and Internet retailers. Unanticipated changes in purchasing and
other practices by the Company’s customers, including a customer’s pricing and payment terms, inventory
destocking, limitations on shelf space, use of private label brands and other practices, could adversely affect the
Company’s profitability. In addition, as a result of the desire of retailers to more closely manage inventory levels,
there is a growing trend among retailers to make purchases on a “just-in-time” basis. This requires the Company
to shorten its lead time for production in certain cases and more closely anticipate demand, which could in the
future require the Company to carry additional inventories. The Company’s annual earnings and cash flows also
depend to a great extent on the results of operations in the latter half of the year due to the seasonality of its sales.
The Company’s success and sales growth is also dependent on its evaluation of consumer preferences and
changing trends. The Company also sells a limited quantity of the Company’s products to individual consumers
and smaller retailers through its own Internet sites.
Many of the Company’s wholesale customers are significantly larger than the Company, have greater financial
and other resources and also purchase goods directly from vendors in Asia and elsewhere. Decisions by large
customers to increase their purchases directly from overseas vendors could have a materially adverse affect on the
Company. Significant changes or financial difficulties, including consolidations of ownership, restructurings,
bankruptcies, liquidations or other events that affect retailers, could result in fewer stores selling the Company’s
products, the Company having to rely on a smaller group of customers, an increase in the risk of extending credit
to these customers or limitations on the Company’s ability to collect amounts due from these customers. Although
the Company has long-established relationships with many of its customers, the Company does not have any
long-term supply or binding contracts or guarantees of minimum purchases. Purchases by the Company’s
customers are generally made using individual purchase orders. As a result, these customers may cancel their
orders, change purchase quantities from forecast volumes, delay purchases for a number of reasons beyond the
Company’s control or change other terms of their business relationship with the Company. Significant or
7
numerous cancellations, reductions, delays in purchases or changes in business practices by customers could have
a material adverse effect on the Company’s business.
In 2011, Wal-Mart Stores, Inc. (including Sam’s Club and Asda Superstore) accounted for 15% of the Company’s
net sales. A material reduction in purchases by Wal-Mart Stores, Inc. could have a significant adverse effect on the
Company’s business and operating results. In addition, pressures by Wal-Mart Stores, Inc. that would cause the
Company to materially reduce the price of the Company’s products could result in reductions of the Company’s
operating margin. The concentration of the Company’s business with Wal-Mart extends to its international
businesses, including Vasconia in Mexico and its strategic alliance in Canada, due to the market presence of Wal-
Mart in these foreign countries.
Supply Chain
The Company sources its products from suppliers located in Asia, Europe and the United States. The Company’s
Asia vendors are located primarily in the People’s Republic of China, which subjects the Company to various risks
within the region including regulatory, political, economic and foreign currency changes. The Company’s ability
to select and retain reliable vendors and suppliers who provide timely deliveries of quality parts and products
efficiently will impact its success in meeting customer demand for timely delivery of quality products. The
Company’s sourcing operations and its vendors are impacted by labor costs in China. Labor historically has been
readily available at relatively low cost as compared to labor costs in North America. However, as China is
experiencing rapid social, political and economic changes, labor costs have risen in some regions and there can be
no assurance that labor will continue to be available to the Company in China at costs consistent with historical
levels or that changes in labor or other laws will not be enacted which would have a material adverse effect on the
Company’s operations in China. Interruption of supplies from any of the Company’s vendors, or the loss of one or
more key vendors, could have a negative effect on the Company’s business and operating results.
Changes in currency exchange rates might negatively affect the profitability and business prospects of the
Company and its overseas vendors. The Company does not have access to its vendors’ financial information and is
unable to assess its vendors’ financial conditions including their liquidity.
The Company is subject to risks and uncertainties associated with economic and political conditions in foreign
countries, including but not limited to, foreign government regulations, taxes including value-added taxes, import
and export duties and quotas, anti-dumping regulations, incidents and fears involving security, terrorism and wars,
political unrest and other restrictions on trade and travel.
The Company imports its products for delivery to its distribution centers, as well as arranges for its customers to
import goods to which title has passed overseas or at port of entry. For purchases that are to be delivered to its
distribution centers, the Company arranges for transportation, primarily by sea, from ports in Asia and Europe to
ports in the United States, principally New York/Newark/Elizabeth and Los Angeles/Long Beach. Accordingly, the
Company is subject to risks incidental to such transportation. These risks include, but are not limited to, increases in
fuel costs, the availability of ships, increased security restrictions, work stoppages and carriers’ ability to provide
delivery services to meet the Company’s shipping needs. Transportation disruptions and increased transportation
costs could adversely affect the Company’s business.
The Company delivers its products to its customers or makes such products available for customer pickup from its
distribution centers. Prolonged domestic transportation disruptions, as well as workforce or systems issues related to
the Company’s distribution centers, could have a negative effect on the Company’s ability to deliver goods to its
customers.
Intellectual Property
Significant portions of the Company’s business are dependent on trade names, trademarks and patents, some of
which are licensed from third-parties. Several of these license agreements are subject to termination by the
licensor. The loss of certain licenses or a material increase in the royalty rates the Company pays under such
licenses upon renewal could result in a reduction of the Company’s operating margin.
8
Regulatory
The Company is subject in the ordinary course of its business, in the United States and elsewhere, to many
statutes, ordinances, rules and regulations that if violated by the Company or its affiliates, partners or vendors
could have a material adverse effect on the Company’s business.
The marketing of certain of the Company’s consumer products involve an inherent risk of product liability claims or
recalls or other regulatory or enforcement actions initiated by the U.S. Consumer Product Safety Commission, by
other regulatory authorities or through private causes of action. Any defects in products the Company markets could
harm the Company’s credibility, adversely affect its relationship with its customers and decrease market acceptance
of the Company’s products and the strength of the brand names under which the Company markets such products.
Potential product liability claims may exceed the amount of the Company’s insurance coverage and could materially
damage the Company’s business and its financial condition.
The Company is subject to significant regulations, including the Dodd-Frank Wall Street Reform and Consumer
Protection Act of 2010 and the Sarbanes-Oxley Act of 2002. The Company cannot assure strict adherence to these
regulations nor that it will not find material weaknesses in the future or that the Company’s independent registered
public accounting firm will conclude that the Company’s internal control over financial reporting is operating
effectively.
The Company is subject to general business regulations and laws, as well as regulations and laws specifically
governing the Internet and e-commerce. Such existing and future laws and regulations may impede the growth of the
Internet or other online services. These regulations and laws may cover taxation, user privacy, data protection,
pricing, content, copyrights, distribution, electronic contracts and other communications, consumer protection, the
provision of online payment services, broadband residential Internet access and the characteristics and quality of
products and services. It is not clear how existing laws governing issues such as property ownership, sales and other
taxes and personal privacy apply to the Internet and e-commerce. Unfavorable resolutions of these issues would
harm the Company’s business. This could, in turn, diminish the demand for the Company’s products on the Internet
and increase the Company’s cost of doing business.
Technology
The Company relies on many information technology systems for the operation of its principal business functions,
including the Company’s enterprise, warehouse management, inventory forecast and re-ordering and call center
systems. In the case of the Company’s inventory forecast and re-ordering system, most of the Company’s orders are
received directly through electronic connections with the Company’s largest customers. The failure of any of these
systems could have a material adverse effect on the Company’s business and results of operations. To keep pace
within a competitive retail environment, the Company uses and will continue to evaluate new technologies to
improve the efficiency of designing new innovative products. The success of certain product categories can be
dependent upon the creation and launch of new innovative products in a competitive marketplace.
Availability of information on the Internet and, in particular, on social media websites subjects the Company to
reputational risks related to its brands and the perceived quality of its products.
The Company has made significant efforts to secure its computer network to mitigate the risk of possible cyber
attacks. However, the Company’s computer network could be compromised and confidential information such as
customer credit card information could be misappropriated. This could lead to adverse publicity, loss of sales and
profits or cause the Company to incur significant costs to reimburse third-parties for damages which could
adversely impact profits.
In addition, although the Company’s systems and procedures comply with Payment Card Industry (“PCI”) data
security standards, failure by the Company to maintain compliance with the PCI requirements or rectify a security
issue could result in fines and the imposition of restrictions on the Company’s ability to accept credit cards.
Personnel
The Company’s success depends on its ability to identify, hire and retain skilled personnel. The Company’s industry
is characterized by a high level of employee mobility and aggressive recruiting among competitors for personnel
with successful track records. The Company may not be able to attract and retain skilled personnel or may incur
significant costs in order to do so.
9
Increases in the cost of employee benefits could impact the Company’s financial results and cash flows. The
Company self insures a substantial portion of the costs of employee healthcare and workers compensation. This
could result in higher volatility in the Company’s earnings and exposes the Company to higher financial risks.
Healthcare costs in the United States and other countries have risen significantly over the past several years and
increases may continue in the future.
Item 1B. Unresolved Staff Comments
None
Item 2. Properties
The following table lists the principal properties at which the Company operates its business at December 31, 2011:
Location
Description
Size
(square feet)
Owned/
Leased
Fontana, California
Principal West Coast warehouse and distribution facility
830,690
Leased
Robbinsville, New Jersey
Principal East Coast warehouse and distribution facility
700,000
Leased
Winchendon, Massachusetts
Warehouse and distribution facility, and spice packing line
175,000
Owned
Garden City, New York
Corporate headquarters/main showroom
Corby, United Kingdom
Offices and distribution facility
146,000
Leased
100,000
Leased
Medford, Massachusetts
Offices, showroom, warehouse and distribution facility
69,000
Leased
San Germán, Puerto Rico
Sterling silver manufacturing facility
Guangzhou, China
Offices
New York, New York
Showrooms
York, Pennsylvania
Offices
Atlanta, Georgia
Showrooms
Shanghai, China
Kowloon, Hong Kong
Offices
Offices
Item 3. Legal Proceedings
55,000
Leased
18,000
Leased
17,000
Leased
14,000
Leased
11,000
Leased
11,000
4,000
Leased
Leased
Wallace Silversmiths de Puerto Rico, Ltd. (“Wallace de Puerto Rico”), a wholly-owned subsidiary of the
Company, operates a manufacturing facility in San Germán, Puerto Rico that is leased from the Puerto Rico
Industrial Development Company (“PRIDCO”). In March 2008, the United States Environmental Protection
Agency (the “EPA”) announced that the San Germán Ground Water Contamination site in Puerto Rico (the
“Site”) had been added to the Superfund National Priorities List due to contamination present in the local drinking
water supply.
In May 2008, Wallace de Puerto Rico received from the EPA a Notice of Potential Liability and Request for
Information Pursuant to 42 U.S.C. Sections 9607(a) and 9604(e) of the Comprehensive Environmental Response,
Compensation, Liability Act. The Company responded to the EPA's Request for Information on behalf of Wallace
de Puerto Rico. In July 2011, Wallace de Puerto Rico received a letter from the EPA requesting access to the
property that it leases from PRIDCO, and the Company granted such access.
The Company is not aware of any determination by the EPA that any remedial action is warranted for the Site
and, accordingly, is not able to estimate the extent of any possible liability.
The Company is, from time to time, involved in other legal proceedings. The Company believes that such other
current litigation is routine in nature and incidental to the conduct of the Company’s business and that none of this
litigation, individually or collectively, would have a material adverse effect on the Company’s consolidated
financial position, results of operations or cash flows.
10
Item 4. Mine Safety Disclosure
Not applicable
PART II
Item 5. Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
(a)
The Company’s common stock is traded under the symbol “LCUT” on the NASDAQ Global Select
Market (“NASDAQ”).
The following table sets forth the quarterly high and low sales prices for the common stock of the
Company for the fiscal periods indicated as reported by NASDAQ.
2011
2010
High
Low
High
Low
First quarter
$ 15.00 $ 11.46
$ 12.00
$ 6.61
Second quarter
15.99
10.52
15.86
11.87
Third quarter
11.81
9.23
15.68
13.53
Fourth quarter
13.03
8.67
15.23
12.70
At December 31, 2011, the Company estimates that there were approximately 2,675 beneficial holders of
the Company’s common stock.
The Company is authorized to issue 100 shares of Series A Preferred stock and 2,000,000 shares of Series
B Preferred stock, none of which were issued or outstanding at December 31, 2011.
In March 2011, the Company determined that it would resume paying cash dividends on its outstanding
shares of common stock, which was suspended in February 2009. The Board of Directors declared a
dividend of $0.025 per share payable on May 16, 2011, August 16, 2011, November 29, 2011, February
15, 2012 and May 15, 2012. The Board of Directors currently intends to continue paying cash dividends
for the foreseeable future, although the Board of Directors may in its discretion determine to modify or
eliminate such dividends at any time.
The following table summarizes the Company’s equity compensation plan as of December 31, 2011:
Plan category
Equity compensation plan approved by security holders
Number of
shares of
common stock
to be issued
upon exercise
of outstanding
options
2,475,750
Weighted-
average
exercise
price of
outstanding
options
$12.62
Number of
shares of
common
stock
remaining
available for
future
issuance
332,476
Equity compensation plan not approved by security holders
―
―
―
Total
2,475,750
$12.62
332,476
11
PERFORMANCE GRAPH
The following chart compares the cumulative total return on the Company’s common stock with the NASDAQ
Market Index and the Hemscott Group Index for Housewares & Accessories. The comparisons in this chart are
required by the SEC and are not intended to forecast or be indicative of the possible future performance of the
Company’s common stock.
Comparison of Year Cumulative Total Return
Lifetime Bra nds , Inc.
NASDAQ Market Index
Hems cott Group Index
S
R
A
L
L
O
D
$120
$100
$80
$60
$40
$20
$0
2006
2007
2008
2009
2010
2011
ASSUMES $100 INVESTED ON JAN. 01, 2007
ASSUMES DIVIDEND REINVESTED
FISCAL YEAR ENDING DEC. 31, 2011
Date
12/31/2006
12/31/2007
12/31/2008
12/31/2009
12/31/2010
12/31/2011
Lifetime
Brands, Inc.
$ 100.00
80.05
22.61
45.67
89.67
78.00
Hemscott
Group Index
$ 100.00
86.45
36.72
65.61
78.27
73.26
NASDAQ
Market
Index
$ 100.00
110.66
66.41
96.54
114.06
113.16
Note:
(1) The chart assumes $100 was invested on January 1, 2007 and dividends were reinvested. Measurement points are at the
last trading day of each of the fiscal years ended December 31, 2007, 2008, 2009, 2010 and 2011. The material in this
chart is not soliciting material, is not deemed filed with the Securities and Exchange Commission and is not incorporated
by reference in any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act
of 1934, as amended, whether or not the chart is prepared before or after the date of this Annual Report on Form 10-K and
irrespective of any general incorporation language in such filing. A list of the companies included in the Hemscott Group
Index will be furnished by the Company to any stockholder upon written request to the Chief Financial Officer of the
Company.
12
Item 6. Selected Financial Data
The selected consolidated statement of operations data for the years ended December 31, 2011, 2010 and 2009
and the selected consolidated balance sheet data as of December 31, 2011 and 2010 has been derived from the
Company’s audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
The selected consolidated statement of operations data for the years ended December 31, 2008 and 2007 and the
selected consolidated balance sheet data at December 31, 2009, 2008 and 2007 have been derived from the
Company’s audited consolidated financial statements included in the Company’s Annual Reports on Form 10-K
for those respective years, which are not included in this Annual Report on Form 10-K.
This information should be read together with the discussion in Management’s Discussion and Analysis of Financial
Condition and Results of Operations and the Company’s consolidated financial statements and notes to those
statements included elsewhere in this Annual Report on Form 10-K.
Year ended December 31,
STATEMENT OF OPERATIONS DATA (1)
2011
2010(2)
2009
(in thousands, except per share data)
2008(3)
2007(3)
Net sales
$ 444,418
$ 443,171
$ 415,040
$ 487,935
$ 493,725
Cost of sales
Distribution expenses
Selling, general and administrative expenses
Goodwill and intangible asset impairment
Restructuring expenses
282,058
43,882
93,894
―
―
257,839
43,329
95,647
273,774
44,570
95,044
―
― 2,616
303,535
57,695
131,226
― 29,400
17,992
288,997
53,493
128,527
―
1,924
Income (loss) from operations
Interest expense
Loss on early retirement of debt
Other income, net
24,584
29,783
15,609 (51,913) 20,784
(7,758) (9,351)
― (764)
― ―
(13,185)
―
―
(11,577)
―
―
(10,623)
―
3,935
Income (loss) before income taxes, equity in
earnings and extraordinary item
16,826
19,668
2,424 (63,490) 14,096
Income tax benefit (provision)
Equity in earnings, net of taxes
(6,122) (4,602) (1,880)
3,362
2,718
2,171
14,249 (6,567)
―
1,486
Income (loss) before extraordinary item
Extraordinary item, net of taxes
$ 14,066
$ 17,784
― 2,477
$ 2,715 $ (47,755)
$ 7,529
― ― ―
Net income (loss)
$ 14,066
$ 20,261
$ 2,715 $ (47,755)
$ 7,529
Basic income (loss) per common share before
extraordinary item
Basic income per common share of
extraordinary item
Basic income (loss) per common share
Weighted-average shares outstanding – basic
Diluted income (loss) per common share
before extraordinary item
Diluted income per common share of
extraordinary item
Diluted income (loss) per common share
$ 1.16
$ 1.48
$ 0.23 $ (3.99)
$ 0.58
$ ― $ 0.20
$ 1.68
$ 1.16
$ ― $ ― $ ―
$ 0.58
$ 0.23 $ (3.99)
12,128
12,036
12,009
11,976
12,969
$ 1.12
$ 1.44
$ 0.22 $ (3.99)
$ 0.57
$ ― $ 0.20
$ 1.64
$ 1.12
$ ― $ ― $ ―
$ 0.57
$ 0.22 $ (3.99)
Weighted-average shares outstanding – diluted
12,529
12,376
12,075
11,976
13,099
Cash dividends per common share
$ 0.075
$ ― $ ― $ 0.25
$ 0.25
13
BALANCE SHEET DATA (1)
Current assets
Current liabilities
Working capital
Total assets
Short-term borrowings
Long-term debt
Convertible senior notes
Stockholders’ equity
December 31,
2011
2010
2009
2008(3)
2007(3)
(in thousands)
$ 198,797 $ 182,253 $ 173,850 $ 232,678 $ 228,078
77,210 149,981 71,283
69,962 60,512
96,640 82,697 156,795
128,835 121,741
276,723 341,781 371,415
318,745 277,586
15,000 4,100
24,601 89,300 13,500
82,625 50,000 ― ― 55,200
70,527 67,864 65,428
104,012 97,509 153,102
― 23,557
146,175 127,606
Notes:
(1)
(2)
Investments and acquisitions of the following, in the respective years noted, which affect the comparability of the periods: a 30% equity investment
in Vasconia in December 2007, the acquisition of the business and certain assets of Mikasa® in June 2008, the acquisition of Creative Tops Holding
in November 2011 and a 40% equity investment in GSI in December 2011.
In 2010, the Company recorded an extraordinary gain of $2.5 million as a result of the elimination of the negative goodwill recorded in conjunction
with the purchase of the business and certain assets of Mikasa, Inc.
(3) Certain amounts have been adjusted in these years to reflect the provisions of ASC Topic No. 470-20, Debt with Conversion and Other Options, on
a retrospective basis. See Note E of the Notes to the Consolidated Financial Statements included in Item 15 for further information regarding the
provisions of ASC Topic No. 470-20.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with the consolidated financial statements for the
Company and notes thereto set forth in Item 15. This discussion contains forward-looking statements relating to
future events and the future performance of the Company based on the Company’s current expectations,
assumptions, estimates and projections about it and the Company’s industry. These forward-looking statements
involve risks and uncertainties. The Company’s actual results and timing of various events could differ materially
from those anticipated in such forward-looking statements as a result of a variety of factors, as more fully
described in this section and elsewhere in this Annual Report. The Company undertakes no obligation to update
publicly any forward-looking statements for any reason, even if new information becomes available or other
events occur in the future.
ABOUT THE COMPANY
The Company designs, sources and sells branded kitchenware, tabletop and other products used in the home. The
Company’s product categories include two categories of products that people use to prepare, serve and consume
foods, Kitchenware (kitchen tools and gadgets, cutlery, cutting boards, bakeware and cookware) and Tabletop
(dinnerware, flatware and glassware); and one category, Home Solutions, which comprises other products used in
the home (food storage, pantryware, spices and home décor). Net sales of Kitchenware products and Tabletop
products accounted for approximately 83% of the Company’s net wholesale sales and 79% of the Company’s
consolidated net sales in 2011. Creative Tops, acquired in November 2011, is a UK-based company from which
the Company will manage its European business. These product categories, which include a change to establish a
Home Solutions product category and incorporate the additional revenue source from Creative Tops acquired in
2011, reflect a refined alignment of the Company’s products into the sources of revenue which the Company
analyzes. The Company markets several product lines within each of its product categories and under most of the
Company’s brands, primarily targeting moderate to premium price points through every major level of trade. The
Company believes it possesses certain competitive advantages based on its brands, its emphasis on innovation and
new product development and its sourcing capabilities. The Company owns or licenses a number of the leading
brands in its industry including Farberware®, Mikasa®, KitchenAid®, Pfaltzgraff®, Elements®, Cuisinart®,
Melannco® and V&A®. Historically, the Company’s sales growth has come from expanding product offerings
within its product categories, by developing existing brands, acquiring new brands and establishing new product
categories. Key factors in the Company’s growth strategy have been the selective use and management of the
14
Company’s brands and the Company’s ability to provide a stream of new products and designs. A significant
element of this strategy is the Company’s in-house design and development teams that create new products,
packaging and merchandising concepts.
BUSINESS SEGMENTS
The Company operates in two reportable business segments: the Wholesale segment, which is the Company’s
primary business that designs, markets and distributes its products to retailers and distributors, and the Retail
Direct segment, in which the Company markets and sells a limited selection of its products to consumers through
its Pfaltzgraff®, Mikasa®, Housewares Deals™ and Lifetime Sterling™ Internet websites. The operating results
of Creative Tops, which was acquired by the Company on November 4, 2011, for the post acquisition period are
included within the Wholesale segment.
EQUITY INVESTMENTS
The Company owns approximately 30% of the outstanding capital stock of Vasconia, a leading Mexican
housewares company. The Company accounts for its investment in Vasconia using the equity method of
accounting and has recorded its proportionate share of Vasconia’s net income, net of taxes, as equity in earnings
in the Company’s consolidated statements of operations. Pursuant to a Shares Subscription Agreement (the
“Agreement”), the Company may designate four persons to be nominated as members of Vasconia’s Board of
Directors. The Agreement also provides a mechanism whereby, through December 2012, the Company is able to
acquire from certain shareholders of Vasconia a controlling interest in Vasconia; subject to such shareholders
electing not to sell their interest and, instead, acquiring the Company’s shares or Vasconia repurchasing the
Company’s shares. Shares of Vasconia’s capital stock are traded on the Bolsa Mexicana de Valores, the Mexican
Stock Exchange (www.bmv.com.mx). The Quotation Key is VASCONI.
The Company has a 50% joint venture investment in World Alliance Enterprises Limited (“World Alliance”), a
Hong-Kong based company that primarily sells kitchenware and cutlery products to retailers other than in North
and South America. The Company accounts for its investment in World Alliance using the equity method of
accounting and has recorded its proportionate share of World Alliance’s net income, net of taxes, as equity in
earnings in the Company’s consolidated statements of operations.
In January 2011, the Company, together with Vasconia and unaffiliated partners, formed Housewares Corporation
of Asia Limited, a Hong Kong-based company that supplies direct import kitchenware products to retailers in
North, Central and South America. During 2011, the results of the operations were immaterial.
In December 2011, the Company acquired a 40% equity interest in GS Internacional S/A (“GSI”). GSI is a
leading wholesale distributor of branded housewares products in Brazil. The company markets dinnerware,
glassware, home décor, kitchenware and barware to customers including: major department stores, housewares
retailers and independent shops throughout Brazil. The Company accounts for its investment in GSI using the
equity method of accounting and has recorded its proportionate share of GSI’s net income, net of taxes, as equity
in earnings in the Company’s consolidated statements of operations. Pursuant to a Shareholders’ Agreement, the
Company has the right to designate three persons (including one independent person, as defined) to be nominated
as members of GSI’s Board of Directors. GSI’s Board of Directors is comprised of seven members (including
two independent members).
SEASONALITY
The Company’s business and working capital needs are highly seasonal, with a majority of sales occurring in the third
and fourth quarters. In 2011, 2010 and 2009, net sales for the third and fourth quarters accounted for 59%, 60%, and
58% 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.
EFFECT OF ADOPTION OF ACCOUNTING PRINCIPLE
In June 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”)
No. 2011-05, Presentation of Comprehensive Income, which amends Accounting Standards Codification (“ASC”)
Topic No. 220, Comprehensive Income. The updated guidance requires that all changes in stockholders’ equity
be presented either as a single continuous statement of comprehensive income or in two separate but consecutive
statements. In December 2011, the FASB issued Accounting Standards Update No. 2011-12 (“ASU 2011-12”)
which defers certain reclassification requirements within ASU 2011-05. This guidance is effective for interim and
15
annual periods beginning after December 15, 2011. The guidance is limited to the form and content of the
financial statements and disclosures, and the Company has determined that the adoption of this guidance does not
have a material impact on the Company’s consolidated financial position, results of operations or cash flows.
In September 2011, the FASB issued ASU No. 2011-08, Intangibles—Goodwill and Other (Topic 350): Testing
for Goodwill Impairment, which permits an entity to first assess 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 two-step goodwill impairment test described in ASC Topic No. 350,
Intangibles – Goodwill and Other. The amendments in this update are effective for annual and interim goodwill
impairment tests performed for fiscal years beginning after December 15, 2011. The Company has determined
that the adoption of this guidance does not have a material impact on the Company’s consolidated financial
position, results of operations or cash flows.
RESULTS OF OPERATIONS
The following table sets forth statement of operations data of the Company as a percentage of net sales for the
periods indicated below.
Net sales
Cost of sales
Distribution expenses
Selling, general and administrative expenses
Restructuring expenses
Income from operations
Interest expense
Loss on early retirement of debt
Income before income taxes, equity in earnings and
extraordinary item
Income tax provision
Equity in earnings, net of taxes
Income before extraordinary item
Extraordinary item, net of taxes
Net income
Year Ended December 31,
2011
100.0 %
63.5
9.9
21.1
―
2010
100.0 %
61.8
10.1
21.4
―
2009
100.0 %
62.1
10.4
23.0
0.6
5.5
6.7
(1.7)
―
(2.1)
(0.2)
3.9
(3.2)
―
3.8
4.4
0.7
(1.4)
0.8
3.2
―
(1.0)
0.6
(0.5)
0.5
4.0
0.6
0.7
―
3.2 %
4.6 %
0.7 %
MANAGEMENT’S DISCUSSION AND ANALYSIS
2011 COMPARED TO 2010
Net Sales
Net sales for the year were $444.4 million, an increase of 0.3% compared to net sales of $443.2 million in 2010.
Net sales for the Wholesale segment in 2011 were $421.1 million, an increase of $7.3 million, or 1.8%, as
compared to net sales of $413.8 million in 2010. Net sales for the Company’s Kitchenware product category in
2011 were $215.7 million, an increase of $7.2 million, or 3.5%, as compared to net sales of $208.5 million in
2010. The increase in the Company’s Kitchenware product category was primarily attributable to increased
volumes due, in part, to successful new programs and promotions during the year as compared to 2010. Net sales
for the Company’s Tabletop product category in 2011 were $134.6 million, an increase of $11.2 million, or 9.1%,
as compared to net sales of $123.4 million for 2010. The Tabletop product category sales increase was primarily
attributable to higher volumes related to new programs and the successful promotion of certain tabletop lines
which increased sales by $7.7 million. The Tabletop product category also benefited from an increase of $3.5
million in net sales of excess silver finished goods and from silver products produced under manufacturing
16
contracts. Net sales for the Company’s Home Solutions products category in 2011 were $64.1 million, a decrease
of $17.8 million, or 21.7%, as compared to net sales of $81.9 million in 2010. The decrease in sales for the
Company’s Home Solutions product category reflects lower volumes due, in part, to certain sales programs in
2010 not repeated in the 2011 period. Net sales for the Wholesale segment also include $6.7 million of net sales
in 2011 from Creative Tops, which was acquired by the Company in November 2011.
Net sales for the Retail Direct segment in 2011 were $23.3 million, a decrease of $6.1 million, or 20.7%, as
compared to $29.4 million for 2010. The decrease in net sales was primarily attributable to a reduction in
promotional activities and the Company’s decision to terminate its print consumer catalog during the second
quarter of 2011.
Cost of sales
Cost of sales for 2011 was $282.1 million as compared to $273.8 million for 2010. Cost of sales as a percentage
of net sales was 63.5% for 2011 as compared to 61.8% for 2010.
Cost of sales as a percentage of net sales for the Wholesale segment was 65.1% for 2011 compared to 63.7% for
2010. The decrease in gross margin primarily reflected promotional allowances and changes in product mix.
Wholesale gross profit declined by $3.5 million. This was primarily due to the weakness of our Home Solutions
category for which net sales and gross margin declined in 2011. The decline was partially offset in other product
categories and from the inclusion of Creative Tops, since its acquisition.
Cost of sales as a percentage of net sales for the Retail Direct segment decreased to 33.1% in 2011 from 34.9% in
2010. The increase in gross margin primarily reflected reduced promotional activities which favorably affected
margins during the 2011 period.
Distribution expenses
Distribution expenses for 2011 were $43.9 million as compared to $44.6 million for 2010. Distribution expenses
as a percentage of net sales were 9.9% in 2011 and 10.1% for 2010.
Distribution expenses as a percentage of sales for the Wholesale segment shipped from the Company’s
warehouses located in the United States were 9.4% as compared to 9.6% for the corresponding period in 2010.
The decrease resulted from reduced labor costs in the 2011 period from efficiencies associated with an inventory
management system upgrade put in place in the 2010 period.
Distribution expenses as a percentage of net sales for the Retail Direct segment were 29.8% for 2011 compared to
29.2% for 2010. A substantial portion of distribution expenses are fixed and, therefore, cannot be reduced to
offset a reduction in sales volumes.
Selling, general and administrative expenses
Selling, general and administrative expenses (“SG&A”) for 2011 were $93.9 million, a decrease of 1.2%
compared to $95.0 million for 2010.
SG&A for 2011 for the Wholesale segment were $71.4 million, an increase of $0.1 million or 0.1%, as compared
to $71.3 million in 2010. As a percentage of net sales, SG&A expenses were 17.0% for 2011, as compared to
17.2 % for 2010. Excluding the expenses of Creative Tops, SG&A declined by $1.0 million. This decline in
SG&A is the result of reductions of bad debt expense and certain office related expenses which substantially
offset an increase in employee related and selling expenses.
SG&A expenses for 2011 for the Retail Direct segment were $9.2 million compared to $11.5 million for 2010.
The decrease was primarily attributable to a decrease in employee, selling and office related expenses associated
with the Company’s decision to terminate its print consumer catalog.
Unallocated corporate expenses for 2011 and 2010 were $13.3 million and $12.2 million, respectively. The
increase was primarily attributable to acquisition related expenses of $2.0 million, which was partially offset by a
reduction in other professional fees.
17
Interest expense
Interest expense for 2011 was $7.8 million as compared to $9.4 million for 2010. The decrease in interest
expense was primarily attributable to lower average interest rates and lower average borrowings. The most
significant factor in the rate reduction related to the retirement of the Notes.
Loss on early retirement of debt
During 2010, the Company entered into a new revolving credit facility and term loan and repurchased $50.9
million principal amount of its convertible senior notes. In connection with these activities, the Company incurred
a non-cash pre-tax charge of approximately $764,000 consisting primarily of the write-off of deferred financing
costs and unamortized debt discount related to the Company’s prior revolving credit facility and the Notes that
were repurchased.
Income tax provision
The income tax provision was $6.1 million in 2011 and $4.6 million in 2010. The effective tax rates for the years
ended December 31, 2011 and 2010 reflects taxes on income derived from U.S. sources and a reduction in
valuation allowances related to the utilization of certain deferred tax assets during each year, for which a tax
benefit was not previously recognized. The valuation allowance reversal in 2011 related to deferred tax assets for
net operating losses which became realizable and deferred taxes for stock options, deferred rent and other
temporary differences. The valuation allowance reversal reduced the effective tax rate by 8.2% and 19.8% in
2011 and 2010, respectively. The effective tax rates for 2011 and 2010 were 36.4% and 23.4% respectively.
Equity in earnings
Equity in earnings of Vasconia, net of taxes, was $2.9 million for 2011 and $2.7 million for 2010. Vasconia
reported net income of $11.4 million in 2011 compared to $9.9 million in 2010. This increase in income from
operations in 2011 compared to 2010 was primarily attributable to higher sales volumes in both the kitchenware
products and aluminum products divisions.
Equity in earnings for 2011 also included equity income of $447,000 derived from the Company’s 50% joint
venture investment in World Alliance Enterprises Limited and equity income of $20,000 earned since December
9, 2011, the date of the Company’s acquisition of a 40% equity interest in GSI.
2010 COMPARED TO 2009
Net Sales
Net sales for the year were $443.2 million, an increase of 6.8% compared to net sales of $415.0 million in 2009.
Net sales for the Wholesale segment in 2010 were $413.8 million, an increase of $24.8 million, or 6.4%,
compared to net sales of $389.0 million in 2009. Net sales in 2009 included approximately $4.7 million of net
sales in the going-out-of-business sales of a customer that was liquidated. Excluding the impact of the customer’s
2009 going-out-of business sales, net sales for the Wholesale segment in 2010 increased approximately $29.5
million, or 7.7%, compared to 2009. More specifically, excluding the impact of the customer’s 2009 going-out-of
business sales, net sales in the Company’s Kitchenware product category were $208.5 million in 2010, an increase
of $10.3 million, or 5.2%, as compared to $198.2 million of net sales in 2009, net sales for the Company’s
Tabletop product category were $123.4 million in 2010, an increase of $12.6 million, or 11.4%, as compared to
$110.8 million net sales in 2009, and net sales for the Company’s Home Solutions product category were $81.9
million in 2010, an increase of $6.6 million, or 8.8%, compared to $75.3 million net sales in 2009. Net sales to
Wal-Mart Stores Inc. decreased $8.5 million in 2010 as compared to 2009, principally due to changes in Wal-
Mart’s inventory management strategy, which have resulted in the maintenance of fewer product offerings in its
stores during the first half of 2010. The decrease in net sales to Wal-Mart Stores Inc., within the Kitchenware,
Tabletop and Home Solutions product categories, was substantially offset by an increase in sales to other retailers
attributable to higher volume and the introduction of new products.
Net sales for the Retail Direct segment in 2010 were $29.4 million, an increase of $3.4 million, or 13.1%,
compared to $26.0 million for 2009. The increase in net sales was primarily attributable to targeted sales
promotions on the Company’s Pfaltzgraff® and Mikasa® websites and additional net sales from the Company’s
18
new Lifetime Sterling™ and Housewares Deals™ websites. The increase was partially offset by lower shipping
income due to free shipping promotions.
Cost of sales
Cost of sales for 2010 was $273.8 million compared to $257.8 million for 2009. Cost of sales as a percentage of
net sales was 61.8% for 2010 compared to 62.1% for 2009.
Cost of sales as a percentage of net sales for the Wholesale segment was 63.7% for 2010 compared to 64.3% for
2009. Gross margin in 2010 increased as a result of favorable product mix. Gross margin in 2009 was negatively
affected by lower margin sales in the going-out-of-business sales of a customer that was liquidated.
Cost of sales as a percentage of net sales for the Retail Direct segment increased to 34.9% in 2010 from 29.4% in
2009. The decrease in gross margin was principally due to an increase in free shipping promotions.
Distribution expenses
Distribution expenses for 2010 were $44.6 million compared to $43.3 million for 2009. Distribution expenses as
a percentage of net sales were 10.1% in 2010 and 10.4% for 2009.
Distribution expenses as a percentage of net sales for the Wholesale segment was unchanged at 8.7% in both 2010
and 2009.
Distribution expenses as a percentage of net sales for the Retail Direct segment were 29.2% for 2010 compared to
35.3% for 2009. The decrease is primarily attributable to improved labor efficiencies due to the Company’s exit
from its York, Pennsylvania distribution center in July 2009.
Selling, general and administrative expenses
SG&A expenses for 2010 were $95.0 million, a decrease of 0.6% compared to $95.6 million for 2009.
SG&A expenses for 2010 for the Wholesale segment were $71.3 million, a decrease of $2.2 million or 3.0%
compared to $73.5 million for 2009. As a percentage of net sales, SG&A expenses were 17.2% for 2010
compared to 18.9% for 2009. The decrease of 3.0% was attributable to the benefit of the 2009 restructuring
activities and lower depreciation and amortization resulting from the write-off of fixed assets at exited facilities
and a reduction of occupancy expenses primarily from consolidating showrooms and the Company’s continued
expense reduction efforts. The decrease was offset by higher incentive compensation.
SG&A expenses for 2010 for the Retail Direct segment were $11.5 million compared to $10.8 million for 2009.
The increase was in support of sales growth and was attributable to higher employee expenses and an increase in
web related search expenses. This increase was partially offset by lower catalog related expenses.
Unallocated corporate expenses for 2010 and 2009 were $12.2 million and $11.3 million, respectively. The
increase was primarily attributable to higher compensation expense, including incentive compensation and stock
options.
Interest expense
Interest expense for 2010 was $9.4 million compared to $13.2 million for 2009. The decrease in interest expense
was primarily attributable to lower average borrowings and lower interest rates resulting from the Company’s
debt refinancing in 2010.
Loss on early retirement of debt
During 2010, the Company entered into a new revolving credit facility and term loan and repurchased $50.9
million principal amount of its Notes. In connection with these activities, the Company incurred a non-cash pre-
tax charge of approximately $764,000 consisting primarily of the write-off of deferred financing costs and
unamortized debt discount related to the Company’s prior revolving credit facility and the 4.75% convertible
senior notes that were repurchased.
19
Income tax provision
The income tax provision for 2010 was $4.6 million compared to $1.9 million for 2009. The effective tax rates in
2010 and 2009 reflect a reduction in the valuation allowance related to certain deferred tax assets. The increase in
the income tax provision resulted from higher income before income taxes offset by the effect of the valuation
allowance reduction.
Equity in earnings of Vasconia
Equity in earnings of Vasconia, net of taxes, was $2.7 million for 2010 compared to $2.2 million for 2009.
Vasconia reported net income of $9.9 million in 2010 compared to $8.3 million in 2009. The increase in net
income in 2010 compared to 2009 was primarily attributable to the growth in sales of aluminum products during
2010. Increased margins from kitchenware sales during 2010 were offset by increases in selling and distribution
expenses.
Extraordinary item
In 2010, the Company recorded an extraordinary gain of $2.5 million to eliminate the negative goodwill recorded
in conjunction with the purchase of the business and certain assets of Mikasa, Inc.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Management’s Discussion and Analysis of Financial Condition and Results of Operations discusses the
Company’s consolidated financial statements which have been prepared in accordance with U.S. generally
accepted accounting principles and with the instructions to Form 10-K and Article 10 of Regulation S-X. The
preparation of these financial statements requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during the reporting period. On an on-
going basis, management evaluates its estimates and judgments based on historical experience and on various
other factors that are believed to be reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying values of assets and liabilities that are not readily apparent from other
sources. The Company evaluates these estimates including those related to revenue recognition, allowances for
doubtful accounts, reserves for sales returns and allowances and customer chargebacks, inventory mark-down
provisions, health insurance reserves, impairment of goodwill, tangible and intangible assets, stock option
expense, accruals related to the Company’s tax positions and tax valuation allowances. Actual results may differ
from these estimates using different assumptions and under different conditions. The Company’s significant
accounting policies are more fully described in Note A of the Notes to the Consolidated Financial Statements
included in Item 15. The Company believes that the following discussion addresses its most critical accounting
policies, which are those that are most important to the portrayal of the Company’s consolidated financial
condition and results of operations and require management’s most difficult, subjective and complex judgments.
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 market method. 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.
Accounts Receivable
The Company periodically reviews the collectibility of its accounts receivable and establishes allowances for
estimated losses that could result from the inability of its customers to make required payments. 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
20
currently available information and historical trends of deductions. If the financial conditions of the Company’s
customers or general economic conditions were to deteriorate, resulting in an impairment of their ability to make
payments or sell the Company’s products at reasonable sales prices, or the Company’s estimate of non-contractual
deductions varied from actual deductions, revisions to allowances would be required, which could adversely
affect the Company’s financial condition. Historically, the Company’s allowances have been appropriate and have
not resulted in material unexpected charges.
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.
Long-lived assets, including intangible assets deemed to have finite lives, are reviewed for impairment whenever
events or changes in circumstances indicate that such assets may have been impaired. 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 Company compares the carrying value of the assets to the
estimated discounted future cash flows expected to be generated by the assets. If the assets are considered to be
impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets
exceeds the fair value of the assets. The Company considered indicators of impairment of its long-lived assets
and determined that no such indicators were present at December 31, 2011.
Revenue recognition
The Company sells products wholesale, to retailers and distributors, and retail, directly to the consumer through
the Company’s Retail Direct operations. Wholesale sales and Retail Direct sales are recognized when title passes
to the customer, which is primarily at the shipping point for Wholesale sales and upon delivery to the customer
for Retail Direct sales. Shipping and handling fees that are billed to customers in sales transactions are recorded
in net sales. Net sales exclude taxes that are collected from customers and remitted to the taxing authorities.
Allowances and accruals for various sales incentives and promotions, which include cooperative advertising,
buydowns, volume rebates and discounts, are reflected as reductions in net sales.
Employee stock options
The Company accounts for its stock options through measurement of compensation expense for all share-based
compensation granted to employees and non-employee directors at fair value on the date of grant and recognition
of compensation expense over the related service period for awards expected to vest. The Company uses the
Black-Scholes option valuation model to estimate the fair value of its stock options. The Black-Scholes option
valuation model requires the input of highly subjective assumptions including the expected stock price volatility
of the Company’s common stock and the risk-free interest rate. Changes in these subjective input assumptions
can materially affect the fair value estimate of the Company’s stock options on the date of the option grant. The
Company historically has not issued options which would be variable awards.
Employee healthcare
In 2011, the Company commenced self-insuring certain portions of its health insurance plan. The Company
maintains an estimated accrual for unpaid claims and claims incurred but not yet reported (“IBNR”). Although
management believes that it uses the best information available to estimate IBNR, actual claims may vary
significantly from estimated claims.
Income taxes
The Company applies the required provisions for financial statement recognition, measurement and disclosure of
uncertain tax positions recognized in the Company’s financial statements. Tax positions must meet a more-likely-
than-not recognition threshold and measurement attribute for the financial statement recognition and measurement
of a tax position taken. The valuation allowance is also calculated, established or maintained when it is “more
likely than not” that all or a portion of deferred tax assets will not be realized.
21
Derivatives
The Company accounts for all derivative instruments on the balance sheet at fair value as either an asset or a
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 to the extent the derivative is
considered perfectly effective in achieving offsetting changes in fair value or cash flows attributable to the risk
being hedged, until the hedged item is recognized in earnings. For derivatives that do not qualify or are not
designated as hedging instruments for accounting purposes, changes in fair value are recorded in operations.
LIQUIDITY AND CAPITAL RESOURCES
The Company’s principal sources of cash to fund liquidity needs are: (i) cash provided by operating activities and
(ii) borrowings available under its revolving credit facility. The Company’s primary uses of funds consist of
working capital requirements, capital expenditures and payments of principal and interest on its debt.
At December 31, 2011, the Company had cash and cash equivalents of $3.0 million as compared to $3.4 million at
December 31, 2010, working capital was $128.8 million at December 31, 2011 compared to $121.7 million at
December 31, 2010 and the current ratio was 2.84 to 1 at December 31, 2011 compared to 3.01 to 1 at December
31, 2010.
Borrowings under the Company’s revolving credit facility increased to $57.6 million at December 31, 2011
compared to $14.1 million at December 31, 2010. The increase in borrowings was primarily attributable to the
acquisition of Creative Tops and the retirement of the Notes.
The Company believes that availability under the Revolving Credit Facility and cash flows from operations is
sufficient to fund the Company’s operations for the next twelve months. However, if circumstances were to
adversely change, the Company may seek alternative sources of liquidity including debt and equity financing.
However, there can be no assurance that any such alternative sources would be available or sufficient. The
Company closely monitors the creditworthiness of its customers. Based upon the evaluation of changes in
customers’ creditworthiness, the Company may modify credit limits and/or terms of sale. However,
notwithstanding the Company’s efforts to monitor its customers’ financial condition, the Company may be
materially affected in the future.
In 2011, Wal-Mart Stores, Inc. (including Sam’s Club and Asda Superstore) accounted for 15% of the Company’s
net sales. A material reduction of product orders by Wal-Mart Stores, Inc. could have significant adverse effects on
the Company’s business and operating results and ultimately the Company’s liquidity, including the loss of
predictability and volume production efficiencies associated with such a large customer.
Revolving Credit Facility
The Company had a $125.0 million secured credit agreement (the “Revolving Credit Facility”), which matured on
June 9, 2015, with a bank group led by JPMorgan Chase Bank, N.A. On October 28, 2011, the Company amended
the Revolving Credit Facility to increase the commitment of the lenders to $150.0 million and to, among other
things, (i) increase the borrowing base limit for eligible trademarks to $25.0 million, (ii) revise the pricing grid
margins for Alternative Base Rate loans to 1.0% to 1.75% and for Adjusted LIBO Rate and Overnight LIBO Rate
loans to 2.0% to 2.75%, (iii) permit borrowings in multi-currencies, primarily U.S Dollars, Euros and Pounds
Sterling, (iv) extend, subject to certain conditions, the maturity date to October 28, 2016, (v) increase the expansion
option which permits the Company, subject to certain conditions including the consent of the Term Loan lender, to
increase the maximum borrowing up to $200.0 million, (vi) revise EBITDA (as defined) to provide for the add back
of acquisition related expenses, (vii) limit the domestic and foreign borrowing base, (viii) increase limitations on
foreign debt and (ix) increase the limit for investments.
At December 31, 2011, borrowings outstanding under the Revolving Credit Facility were $57.6 million and open
letters of credit were $1.4 million.
Borrowings under the Revolving Credit Facility bear interest, at the Company’s option, at one of the following rates:
(i) the Alternate Base Rate, defined as the greater of the Prime Rate, Federal Funds Rate plus 0.5% or the Adjusted
LIBOR rate plus 1.0%, plus a margin of 1.0% to 1.75%, or (ii) the Eurodollar Rate, defined as the Adjusted LIBOR
Rate plus a margin of 2.0% to 2.75%. The respective margins are based upon availability. Interest rates on
22
outstanding borrowings at December 31, 2011 ranged from 2.5% to 4.5%. In addition, the Company pays a
commitment fee of 0.375% on the unused portion of the Revolving Credit Facility. Availability under the Revolving
Credit Facility was approximately $67.8 million, or 45%, of the total loan commitment at December 31, 2011. On
July 15, 2011, the Company retired the outstanding $24.1 million aggregate principal amount of the Notes with
borrowings from the Revolving Credit Facility.
The Company classified a portion of the Revolving Credit Facility as a current liability based on the Company’s
intent and ability to repay the loan from cash flows from operations for which the payments are expected to occur
within the year. Repayments and borrowings under the facility can vary significantly from planned levels based
on cash flow needs and general economic conditions. The Company expects that it will continue to borrow and
repay funds, subject to availability, under the facility based on working capital and other corporate needs.
Term Loan
The Company has a $40.0 million second lien credit agreement (the “Term Loan”), which matures on June 8, 2015,
with Citibank, N.A.
The Term Loan bears interest, at the Company’s option, at one of the following rates: (i) the Alternate Base Rate,
defined as the greater of the corporate rate published by the lender and the Federal Funds Rate plus 0.50% provided
that such calculated rate is a minimum of 2.50%, plus a margin of 7.50%, or (ii) the Adjusted LIBOR rate which
shall be a minimum of 1.50%, plus a margin of 8.50%. The interest rate on the outstanding borrowings at December
31, 2011 was 10.0%.
On October 28, 2011, the Company amended the Term Loan to, among other things, (i) revise Permitted
Acquisitions (as defined), for which the lender gives prior written consent, to (a) allow Permitted Non-Control
Acquisitions and (b) reduce the limit on Permitted Acquisitions, (ii) increase the minimum consolidated EBITDA
covenant for the trailing twelve month periods ending March 31, 2012, June 30, 2012, September 30, 2012 and
December 31, 2012 and thereafter to $31.0 million, $31.0 million, $33.0 million and $34.0 million, respectively, (iii)
increase the limit for other investments, (iv) increase limitations on foreign subsidiary debt, (v) revise EBITDA (as
defined) to provide for the add back of acquisition related expenses, and (vi) revise the limitation on indebtedness
incurred to finance acquisitions.
The Term Loan requires the Company to have EBITDA, as defined, of not less than $30.0 million for the trailing
four fiscal quarters through December 31, 2011 and limits capital expenditures to $7.5 million for the year ended
December 31, 2011. The Company was in compliance with these financial covenants at December 31, 2011.
The Company’s Consolidated EBITDA for the four quarters ended December 31, 2011 was $38.1 million, as
follows:
Consolidated EBITDA for the four quarters ended
December 31, 2011
(in thousands)
Three months ended December 31, 2011
Three months ended September 30, 2011
Three months ended June 30, 2011
Three months ended March 31, 2011
Total for the four quarters
$14,342
13,524
7,512
2,720
$38,098
Capital expenditures for the year ended December 31, 2011 were $5.0 million.
23
Non-GAAP financial measure
Consolidated EBITDA is a non-GAAP financial measure within the meaning of Regulation G promulgated by the
Securities and Exchange Commission. The following is a reconciliation of net income as reported to
Consolidated EBITDA for the three and twelve months ended December 31, 2011 and 2010:
Net income as reported
Subtract out:
Undistributed equity earnings
Extraordinary item, net of taxes
Add back:
Provision for income taxes
Interest expense
Depreciation and amortization
Stock compensation expense
Loss on early retirement of debt
Permitted acquisition related expenses
Consolidated EBITDA
Three Months Ended
December 31,
Year Ended
December 31,
2011
2010
2011
2010
(in thousands)
$ 5,419
$ 13,928
$ 14,066
$ 20,261
(925)
―
(733)
(2,477)
(2,896)
(2,321)
― (2,477)
3,513
1,951
2,336
690
―
1,358
$14,342
1,600
2,188
2,292
746
―
―
$ 17,544
6,122
7,758
8,397
2,795
―
1,856
$38,098
4,602
9,351
9,810
2,928
764
―
$ 42,918
Convertible Notes
The Company had outstanding $24.1 million aggregate principal amount of 4.75% Convertible Senior Notes (“the
Notes”) at December 31, 2010. The Company had classified the Notes as a long-term liability based on the
Company’s intent and ability to refinance the Notes using proceeds from the Revolving Credit Facility.
In June 2010, the Company purchased $50.9 million principal amount of the Notes in privately negotiated
transactions for $51.0 million, reducing the aggregate principal amount to $24.1 million. On July 15, 2011, the
Company retired its convertible senior notes with borrowings from the Revolving Credit Facility.
Dividends
In March 2011, the Company determined that it would resume paying cash dividends on its outstanding shares of
common stock which were suspended in February 2009. The Board of Directors declared a dividend of $0.025
per share payable on May 16, 2011, August 16, 2011, November 29, 2011, February 15, 2012 and May 15, 2012.
Operating activities
Net cash provided by operating activities was $12.2 million in 2011 as compared to net cash provided by
operating activities of $30.1 million in 2010. The decrease was primarily attributable to an increase in inventory,
payments of accounts payable and accrued expenses and a reduction in net income.
Investing activities
Net cash used in investing activities was $30.6 million in 2011 as compared to $2.8 million in 2010. The increase
in cash used in investing activities related to: i) cash consideration of $20.6 million paid for the November 2011
acquisition of Creative Tops, ii) cash consideration of $5.0 million paid for the investment in GSI (does not
include contingent consideration payable in 2012), iii) an investment in Housewares Corporation of Asia of $0.1
million and iv) purchase of computer software and hardware, as well as, equipment purchases for the Company’s
distribution facilities.
24
Financing activities
Net cash provided by financing activities was $17.9 million in 2011 as compared to net cash used in financing
activities of $24.6 million in 2010. The Company borrowed $43.5 million from its Revolving Credit Facility in
2011 as compared to net borrowings of $29.5 million in 2010. The proceeds from the 2011 borrowings were
principally used to: i) finance the Creative Tops acquisition, ii) finance the Company’s investment in GSI, iii)
retire the Notes and iv) pay acquisition related costs of $2.0 million. In the year ended December 31, 2010, the
Company entered into the Revolving Credit Facility and Term Loan and utilized funds from these new facilities to
repay amounts outstanding under the Company’s prior credit facility and repurchase $50.9 million principal
amount of the Notes for $51.0 million.
Contractual obligations
As of December 31, 2011, the Company’s contractual obligations were as follows (in thousands):
Payment due by period
Operating leases
Short-term debt
Interest on short-term debt
Long-term debt
Interest on long-term debt
Purchase commitments
Minimum royalty payments
Post retirement benefits
Total
Less
than
1 year
More
than
5 years
Total
1-3 years
$ 98,916 $ 13,530 $ 26,113 $ 26,108 $ 33,165
3-5 years
15,000
382
82,625
20,110
6,276
9,256
3,391
$ 235,956
15,000
382
―
5,697
6,276
5,680
144
―
―
―
―
―
2,251
2,664
$ 46,709 $ 37,751 $ 113,416 $ 38,080
―
―
82,625
3,789
―
573
321
―
―
―
10,624
―
752
262
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Market risk represents the risk of loss that may impact the consolidated financial position, results of operations or
cash flows of the Company. The Company is exposed to market risk associated with changes in interest rates and
foreign currency exchange rates. The Company’s Revolving Credit Facility and Term Loan bear interest at
variable rates; and, therefore, the Company is subject to increases and decreases in interest expense resulting from
fluctuations in interest rates. The Company has foreign operations through its acquisitions, investments and
strategic alliances which have operations in the United Kingdom, Mexico, Canada, Brazil, Hong Kong and China;
therefore, the Company is subject to increases and decreases in its investments resulting from the impact of
fluctuations in foreign currency exchange rates.
25
Item 8. Financial Statements and Supplementary Data
The Company’s Consolidated Financial Statements as of and for the year ended December 31, 2011 in Item 15
commencing on page F-1 are incorporated herein by reference.
The following tables set forth certain unaudited consolidated quarterly statement of operations data for the eight
quarters ended December 31, 2011. This information is unaudited, but in the opinion of management, it has been
prepared substantially on the same basis as the audited consolidated financial statements appearing elsewhere in
this Annual Report on Form 10-K and all necessary adjustments, consisting only of normal recurring adjustments,
have been included in the amounts stated below to present fairly the unaudited consolidated quarterly results of
operations. The consolidated quarterly data should be read in conjunction with the Company’s audited
consolidated financial statements and the notes to such statements appearing elsewhere in this Annual Report.
The results of operations for any quarter are not necessarily indicative of the results of operations for any future
period:
Net sales
Gross profit
Income (loss) from operations
Net income (loss)
Basic income (loss) per common share
Diluted income (loss) per common share
Net sales
Gross profit
Income from operations
Income (loss) before extraordinary item
Extraordinary item, net of taxes
Net income (loss)
Basic income (loss) per common share before
extraordinary item
Basic income per common share of extraordinary item
Basic income (loss) per common share
Diluted income (loss) per common share before
extraordinary item
Diluted income per common share of extraordinary item
Diluted income (loss) per common share
Year ended December 31, 2011
First
quarter
Second
quarter
Third
quarter
Fourth
quarter
(in thousands, except per share data)
$ 91,773 $ 90,371
33,390
34,046
$ 124,663 $ 137,611
50,685
44,239
(23)
4,351
10,298
(949)
2,063
7,533
(0.08)
0.17
0.62
(0.08)
0.17
0.60
9,958
5,419
0.45
0.43
Year ended December 31, 2010
First
quarter
Second
quarter (1)
Third
quarter
Fourth
quarter (2)
(in thousands, except per share data)
$ 88,736 $ 86,889 $ 124,918 $ 142,628
34,784
33,947
46,156
54,510
2,527
2,522
10,229
14,505
729 (981)
―
―
729 (981)
6,585
―
6,585
11,451
2,477
13,928
0.06 (0.08)
―
0.06 (0.08)
―
0.55 0.96
―
0.55 1.16
0.20
0.06 (0.08)
―
0.06 (0.08)
―
0.52 0.87
―
0.52 1.07
0.20
Notes:
(1) The Company recognized a loss on the early retirement of debt of $764,000 in the second quarter of 2010.
(2) The Company recognized an extraordinary gain of $2.5 million during the fourth quarter of 2010.
26
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None
Item 9A. Controls and Procedures
(a)
Evaluation of Disclosure Controls and Procedures
The Chief Executive Officer and the Chief Financial Officer of the Company (its principal executive
officer and principal financial officer, respectively) have concluded, based on their evaluation as of
December 31, 2011, that the Company’s controls and procedures are effective to ensure that information
required to be disclosed by the Company in the reports filed by it under the Securities and Exchange Act of
1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the
Securities and Exchange Commission’s rules and forms, and include controls and procedures designed to
ensure that information required to be disclosed by the Company in such reports is accumulated and
communicated to the Company’s management, including the Chief Executive Officer and Chief Financial
Officer of the Company, as appropriate to allow timely decisions regarding required disclosure.
(b)
Changes in Internal Controls
There were no changes in the Company’s internal control over financial reporting that occurred during the
Company’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially
affect, the Company’s internal control over financial reporting.
Management’s Report on Internal Control over Financial Reporting
Management of the Company is responsible for establishing and maintaining effective internal control over
financial reporting and for performing an assessment of the effectiveness of internal control over financial
reporting as of December 31, 2011. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-
15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, the Company’s
principle executive and principal financial officers and effected by the Company’s Board of Directors,
management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with U.S. generally accepted
accounting principles.
Internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance
of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of
the Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit the
preparation of financial statements in accordance with U.S. generally accepted accounting principles and that
receipts and expenditures of the Company are being made only in accordance with authorizations of management
and directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the
financial statements.
All internal control systems, no matter how well designed, have inherent limitations. Because of the inherent
limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any
evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because
of changes in conditions or the degree of compliance with the policies or procedures may deteriorate.
Accordingly, even those systems determined to be effective can provide only reasonable assurance with respect to
financial statement preparation and presentation.
Management performed an assessment of the effectiveness of the Company’s internal control over financial
reporting as of December 31, 2011 using the criteria set forth in the Internal Control-Integrated Framework issued
by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment,
management has determined that the Company’s internal control over financial reporting as of December 31,
2011 is effective.
The effectiveness of the Company’s internal control over financial reporting as of December 31, 2011 has been
audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report.
27
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of Lifetime Brands, Inc.
We have audited Lifetime Brands Inc.’s internal control over financial reporting as of December 31, 2011, based
on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (the COSO criteria). Lifetime Brands Inc.’s management is
responsible for maintaining effective internal control over financial reporting, and for its assessment of the
effectiveness of internal control over financial reporting included in the accompanying Management Report on
Internal Control over Financial Reporting. Our responsibility is to express an opinion on the company’s internal
control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether effective internal control over financial reporting was maintained in all material respects. Our audit
included obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the
assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe
that our audit provides a reasonable basis for our opinion.
A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the
company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
In our opinion, Lifetime Brands, Inc. maintained, in all material respects, effective internal control over financial
reporting as of December 31, 2011 based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States), the consolidated balance sheets of Lifetime Brands, Inc. as of December 31, 2011 and 2010, and
the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the three years
in the period ended December 31, 2011 of Lifetime Brands, Inc. and our report dated March 9, 2012 expressed an
unqualified opinion thereon.
/s/ ERNST & YOUNG LLP
Jericho, New York
March 9, 2012
28
Item 9B. Other Information
Not applicable
PART III
Items 10, 11, 12, 13 and 14
The information required under these items is contained in the Company’s 2012 Proxy Statement, which will be
filed with the Securities and Exchange Commission within 120 days after the close of the Company’s fiscal year
covered by this Annual Report on Form 10-K and is herein incorporated by reference.
29
PART IV
Item 15. Exhibits and Financial Statement Schedules
(a) See Financial Statements and Financial Statement Schedule on page F-1.
(b)
Exhibits*:
Exhibit
No. Description
3.1
Second Restated Certificate of Incorporation of the Company (incorporated by reference to the
Registrant’s Annual Report on Form 10-K for the year ended December 31, 2005)**
3.2
4.1
10.1
10.2
10.3
10.4
Amended and Restated By-Laws of the Company (incorporated by reference to the Registrant’s Form
8-K dated November 5, 2007)**
Indenture dated as of June 27, 2006, Lifetime Brands, Inc. as issuer, and HSBC Bank USA, National
Association as trustee, $75,000,000 4.75% Convertible Senior Notes due 2011 (incorporated by reference
to the Registrant’s registration statement No. 333-137575 on Form S-3)**
License agreement dated December 14, 1989 between the Company and Farberware, Inc. (incorporated
by reference to the Registrant’s registration statement No. 33-40154 on Form S-1)**
Evan Miller employment agreement dated July 1, 2003 (incorporated by reference to the Registrant’s
Form 10-Q dated September 30, 2003)**
Employment agreement dated May 2, 2006 between Lifetime Brands, Inc. and Jeffrey Siegel
(incorporated by reference to the Registrant’s Form 8-K dated May 8, 2006)**
Lease agreement dated as of May 10, 2006 between AG Metropolitan Endo, L.L.C and Lifetime Brands,
Inc. for the property located at 1000 Stewart Avenue in Garden City, New York (incorporated by
reference to the Registrant’s Form 8-K dated May 15, 2006)**
10.5 Amended 2000 Long-Term Incentive Plan (incorporated by reference to the Registrant’s Form 8-K dated
June 9, 2006)**
10.6 Amended 2000 Incentive Bonus Compensation Plan (incorporated by reference to the Registrant’s Form
8-K dated June 9, 2006)**
10.7
10.8
10.9
First Amendment to the Lease Agreement dated as of May 10, 2006 between AG Metropolitan Endo,
L.L.C and Lifetime Brands, Inc. for the property located at 1000 Stewart Avenue in Garden City, New
York (incorporated by reference to the Registrant’s Form 10-Q dated September 30, 2006)**
Employment agreement dated June 28, 2007 between Lifetime Brands, Inc. and Laurence Winoker
(incorporated by reference to the Registrant’s Form 8-K dated July 3, 2007)**
Shares Subscription Agreement by and among Lifetime Brands, Inc., Ekco, S.A.B. and Mr. José Ramón
Elizondo Anaya and Mr. Miguel Ángel Huerta Pando, dated as of June 8, 2007 (incorporated by reference
to the Registrant’s Form 8-K dated June 11, 2007)**
30
10.10 Lease Agreement between Granite Sierra Park LP and Lifetime Brands, Inc. dated June 29, 2007
(incorporated by reference to the Registrant’s Form 8-K dated July 6, 2007)**
10.11 Evan Miller Amendment of Employment Agreement dated June 29, 2007 (incorporated by reference to
the Registrant’s Form 8-K dated July 3, 2007)**
10.12 Amendment No.1 dated September 5, 2007 to the Shares Subscription Agreement by and among Lifetime
Brands, Inc., Ekco, S.A.B. and Mr. José Ramón Elizondo Anaya and Mr. Miguel Ángel Huerta Pando,
dated as of June 8, 2007 (incorporated by reference to the Registrant’s Annual Report on Form 10-K for
the year ended December 31, 2008)**
10.13 Amendment to the Lifetime Brands, Inc. 2000 Long-Term Incentive Plan dated November 1, 2007
(incorporated by reference to the Registrant’s Form 8-K dated November 5, 2007)**
10.14 Amendment No. 2 to Second Amended and Restated Credit Agreement by and among Lifetime Brands,
Inc., Lenders party hereto, Citibank, N.A. and Wachovia Bank, National Association, as Co-
Documentation Agents, JP Morgan Chase Bank, N.A., as Syndication Agent, and HSBC Bank USA,
National Association, as Administrative Agent (incorporated by reference to the Registrant’s Form 8-K/A
dated April 22, 2008)**
10.15 Asset Purchase Agreement between Mikasa, Inc. and Lifetime Brands, Inc. dated June, 6 2008
(incorporated by reference to the Registrant’s Form 10-Q dated June 30, 2008)**
10.16 Amendment No. 2 dated September 25, 2008 to the Shares Subscription Agreement by and among
Lifetime Brands, Inc., Ekco, S.A.B. and Mr. José Ramón Elizondo Anaya and Mr. Miguel Ángel Huerta
Pando, dated as of June 8, 2007 (incorporated by reference to the Registrant’s Annual Report on Form 10-
K for the year ended December 31, 2008)**
10.17 Amendment to the Company’s Second Amended and Restated Credit Agreement, Amendment No. 3,
dated September 29, 2008 (incorporated by reference to the Registrant’s Form 8-K dated September 30,
2008)**
10.18 Forbearance Agreement and Amendment No. 4, dated as of February 12, 2009, by and among Lifetime
Brands, Inc., the several financial institutions parties thereto and HSBC Bank USA, National Association,
as Administrative Agent for the Lenders (incorporated by reference to the Registrant’s Form 8-K dated
February 19, 2009)**
10.19 Amendment to Forbearance Agreement and Amendment No. 4, dated as of March 6, 2009, by and among
Lifetime Brands, Inc., the several financial institutions parties thereto and HSBC Bank USA, National
Association, as Administrative Agent for the Lenders (incorporated by reference to the Registrant’s Form
8-K dated March 10, 2009)**
10.20 Waiver and Amendment No. 5 to Second Amended and Restated Credit Agreement, dated as of March
31, 2009, by and among Lifetime Brands, Inc., the several financial institutions parties thereto and HSBC
Bank USA, National Association, as Administrative Agent for the Lenders (incorporated by reference to
the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2008)**
10.21 Amendment of the Lifetime Brands, Inc. 2000 Long-Term Incentive Plan dated June 11, 2009
(incorporated by reference to the Registrant’s Form 8-K dated June 12, 2009)**
10.22 Amended and Restated Employment Agreement, dated August 10, 2009 by and between Lifetime Brands,
Inc. and Ronald Shiftan (incorporated by reference to the Registrant’s Form 8-K dated August 12,
2009)**
10.23 Amendment of Employment Agreement, dated August 10, 2009 by and between Lifetime Brands, Inc.
and Jeffrey Siegel (incorporated by reference to the Registrant’s Form 8-K dated August 12, 2009)**
31
10.24 Waiver to the Second Amended and Restated Credit Agreement, dated as of October 13, 2009, by and
among Lifetime Brands, Inc., the several financial institutions parties thereto and HSBC Bank USA,
National Association, as Administrative Agent and Co-Collateral Agent for the Lenders (incorporated by
reference to the Registrant’s Form 8-K dated October 16, 2009)**
10.25 Amendment No. 6 to Second Amended and Restated Credit Agreement, dated as of October 30, 2009, by
and among Lifetime Brands, Inc., the several financial institutions parties thereto and HSBC Bank USA,
National Association, as Administrative Agent for the Lenders (incorporated by reference to the
Registrant’s Form 8-K dated November 2, 2009)**
10.26 Termination of Lease and Sublease Agreement dated December 1, 2009 by and between Crispus Attucks
Association of York, Pennsylvania, Inc. and Lifetime Brands, Inc. (incorporated by reference to the
Registrant’s Form 8-K dated December 2, 2009)**
10.27 Amendment No. 7 to Second Amended and Restated Credit Agreement by and among Lifetime Brands,
Inc., Lenders party hereto, Citibank, N.A. and Wachovia Bank, National Association, as Co-
Documentation Agents, JP Morgan Chase Bank, N.A., as Syndication Agent, and HSBC Bank USA,
National Association, as Administrative Agent (incorporated by reference to the Registrant’s Form 8-K
dated February 12, 2010)**
10.28 Amendment to Employment Agreement, dated March 8, 2010, between Lifetime Brands, Inc. and
Laurence Winoker (incorporated by reference to the Registrant’s Form 8-K dated March 10, 2010)**
10.29 Amended and Restated Executive Employment Agreement, dated March 8, 2010, between Lifetime
Brands, Inc. and Craig Phillips (incorporated by reference to the Registrant’s Form 8-K dated March 10,
2010)**
10.30 Credit Agreement, dated as of June 9, 2010, among Lifetime Brands, Inc., JPMorgan Chase Bank, N.A.,
as administrative agent and a co-collateral agent, and HSBC Business Credit (USA) Inc., as syndication
agent and a co-collateral agent, with exhibits (incorporated by reference to the Registrant’s Form 8-K
dated June 15, 2010)**
10.31 Second Lien Credit Agreement, dated as of June 9, 2010, among Lifetime Brands, Inc. and Citibank,
N.A., as administrative agent and collateral agent, with exhibits (incorporated by reference to the
Registrant’s Form 8-K dated June 15, 2010)**
10.32 Second Amendment of Employment Agreement, dated November 9, 2010, by and between Lifetime
Brands, Inc. and Jeffrey Siegel (incorporated by reference to the Registrant’s Annual Report on Form 10-
K for the year ended December 31, 2010)**
10.33 Amendment of Amended and Restated Employment Agreement, dated November 9, 2010, by and
between Lifetime Brands, Inc. and Ronald Shiftan (incorporated by reference to the Registrant’s Annual
Report on Form 10-K for the year ended December 31, 2010)**
10.34 Amendment No. 1 to the Second Lien Credit Agreement, dated as of March 9, 2011, among Lifetime
Brands, Inc. and Citibank, N.A., as administrative agent and collateral agent (incorporated by reference to
the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2010)**
10.35 Employment Agreement, dated March 4, 2011, by and between Lifetime Brands, Inc. and Jeffrey Siegel
(incorporated by reference to the Registrant’s Form 8-K dated March 8, 2011)**
10.36 Amended and Restated Credit Agreement, dated as of October 28, 2011, by and among Lifetime Brands,
Inc., the Foreign Subsidiary Borrowers parties thereto, the Other Loan Parties hereto, the Lenders party
hereto JP Morgan Chase Bank, N.A., as Administrative Agent and a Co-Collateral Agent, and HSBC
Bank USA, National Association, as Syndication Agent and a Co-Collateral Agent (incorporated by
reference to the Registrant’s Form 8-K dated November 3, 2011)**
10.37 Amendment No. 2 of the Second Lien Credit Agreement, dated as of October 28, 2011,by and among
Lifetime Brands, Inc. and Citibank, N.A., as administrative agent and collateral agent, with exhibits
(incorporated by reference to the Registrant’s Form 8-K dated November 3, 2011)**
32
10.38 Share Purchase Agreement, dated November 4, 2011, by and among Lifetime Brands, Inc. and Creative
Tops Holding Limited and Creative Tops Far East Limited (incorporated by reference to the Registrant’s
Form 8-K dated November 8, 2011)**
14.1 Code of Conduct dated March 25, 2004, as amended on June 7, 2007 (incorporated by reference to the
Registrant’s Form 8-K dated June 7, 2007)**
18.1
Letter from Ernst & Young LLP stating an acceptable change in accounting method for the impairment of
goodwill dated October 28, 2008 (incorporated by reference to the Registrant’s Form 10-Q dated
September, 30 2008)**
21.1
Subsidiaries of the registrant***
23.1 Consent of Ernst & Young LLP***
31.1 Certification by Jeffrey Siegel, Chief Executive Officer and President, pursuant to Rule 13a-14(a) or Rule
15d-14(a) of the Securities and Exchange Act of 1934, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002***
31.2 Certification by Laurence Winoker, Senior Vice President – Finance, Treasurer and Chief Financial
Officer, pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities and Exchange Act of 1934, as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002***
32.1 Certification by Jeffrey Siegel, Chief Executive Officer and President, and Laurence Winoker, Senior
Vice President – Finance, Treasurer and Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002****
99.1 Grupo Vasconia, S.A.B. (formerly Ekco, S.A.B.), Report of Independent Registered Accounting Firm ***
99.2 Grupo Vasconia, S.A.B. (formerly Ekco, S.A.B.), Report of Independent Registered Accounting Firm
(incorporated by reference to the Registrant’s Annual Report on Form 10-K for the year ended December
31, 2010)
101
Interactive data files pursuant to Rule 405 of Regulation S-T. The following materials from Lifetime
Brands, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2011 formatted in XBRL
(eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated
Statements of Operations, (iii) the Consolidated Statements of Stockholders’ Equity, (iv) the Consolidated
Statements of Cash Flows and (v) Notes to the Consolidated Financial Statements, tagged as blocks of
text.
Notes to exhibits:
The Company will furnish a copy of any of the exhibits listed above upon payment of $5.00 per exhibit to cover the cost
of the Company furnishing the exhibit.
Incorporated by reference.
**
*** Filed herewith.
**** This exhibit is being “furnished” pursuant to Item 601(b)(32) of SEC Regulation S-K and is not deemed “filed” with the
Securities and Exchange Commission and is not incorporated by reference in any filing of the Company under the
Securities Act of 1933 or the Securities Exchange Act of 1934.
(c) Financial Statement Schedules — the response to this portion of Item 15 is submitted as a separate section
of this report.
33
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Lifetime Brands, Inc.
/s/ Jeffrey Siegel
Jeffrey Siegel
Chairman of the Board of Directors,
Chief Executive Officer, President
and Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature
Title
Date
/s/ Jeffrey Siegel
Jeffrey Siegel
Chairman of the Board of Directors,
Chief Executive Officer, President
and Director
March 9, 2012
/s/ Ronald Shiftan
Ronald Shiftan Chief Operating Officer and Director
Vice Chairman of the Board of Directors,
March 9, 2012
/s/ Laurence Winoker
Laurence Winoker
Senior Vice President – Finance,
Treasurer and Chief Financial Officer
(Principal Financial and Accounting Officer)
March 9, 2012
/s/ Craig Phillips
Craig Phillips
Senior Vice-President – Distribution
and Director
March 9, 2012
/s/ David Dangoor
David Dangoor
/s/ Michael Jeary
Michael Jeary
/s/ John Koegel
John Koegel
/s/ Cherrie Nanninga
Cherrie Nanninga
/s/ William Westerfield
William Westerfield
Director
Director
Director
Director
March 9, 2012
March 9, 2012
March 9, 2012
March 9, 2012
Director March 9, 2012
34
Item 15
LIFETIME BRANDS, INC.
LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE
The following consolidated financial statements of Lifetime Brands, Inc. are filed as part of this report
under Item 8 – Financial Statements and Supplementary Data.
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets as of December 31, 2011 and 2010
Consolidated Statements of Operations for the Years ended
December 31, 2011, 2010 and 2009
Consolidated Statements of Stockholders’ Equity for the Years ended
December 31, 2011, 2010, and 2009
Consolidated Statements of Cash Flows for the Years ended
December 31, 2011, 2010, and 2009
Notes to Consolidated Financial Statements
F-2
F-3
F-4
F-5
F-6
F-7
The following consolidated financial statement schedule of Lifetime Brands, Inc. required pursuant to
Item 15(a) is submitted herewith:
Schedule II – Valuation and Qualifying Accounts S-1
All other financial schedules are not required under the related instructions or are inapplicable, and
therefore have been omitted.
The unaudited supplementary data regarding quarterly results of operations are incorporated by
reference to the information set forth in Item 8 – Financial Statements and Supplementary Data.
F-1
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of Lifetime Brands, Inc.
We have audited the accompanying consolidated balance sheets of Lifetime Brands, Inc. (the “Company”) as of
December 31, 2011 and 2010, and the related consolidated statements of operations, stockholders’ equity, and
cash flows for each of the three years in the period ended December 31, 2011. Our audits also included the
financial statement schedule listed in the Index at Item 15(a). These financial statements and schedule are the
responsibility of the Company’s management. Our responsibility is to express an opinion on these financial
statements and schedule based on our audits. We did not audit the financial statements of Grupo Vasconia, S.A.B.
and Subsidiaries (a corporation in which the Company has a 30% interest), which statements have been audited by
other auditors whose report has been furnished to us, and our opinion on the consolidated financial statements,
insofar as it relates to the amounts included for Grupo Vasconia, S.A.B. and Subsidiaries, is based solely on the
report of the other auditors. In the consolidated financial statements, the Company’s investment in Grupo
Vasconia, S.A.B. and Subsidiaries is stated at $26.3 million and $24.1 million at December 31, 2011 and 2010,
respectively, and the Company’s equity in the net income of Grupo Vasconia, S.A.B. and Subsidiaries is stated at
$2.9 million for the year ended December 31, 2011, $2.7 million for the year ended December 31, 2010 and $2.2
million for the year ended December 31, 2009.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits and the report of other auditors provide a reasonable
basis for our opinion.
In our opinion, based on our audits and the report of other auditors, the financial statements referred to above
present fairly, in all material respects, the consolidated financial position of Lifetime Brands, Inc. at December 31,
2011 and 2010, and the consolidated results of its operations and its cash flows for each of the three years in the
period ended December 31, 2011, in conformity with U.S. generally accepted accounting principles. Also, in our
opinion, the related financial statement schedule, when considered in relation to the basic financial statements
taken as a whole, presents fairly in all material respects the information set forth therein.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States), Lifetime Brands, Inc.’s internal control over financial reporting as of December 31, 2011, based
on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission and our report dated March 9, 2012 expressed an unqualified opinion
thereon.
Jericho, New York
March 9, 2012
/s/ ERNST & YOUNG LLP
F-2
LIFETIME BRANDS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands-except share data)
ASSETS
CURRENT ASSETS
Cash and cash equivalents
Accounts receivable, less allowances of $4,602 at 2011
$ 2,972
$ 3,351
December 31,
2011
2010
and $12,611 at 2010
Inventory (Note N)
Prepaid expenses and other current assets
Deferred income taxes (Note I)
TOTAL CURRENT ASSETS
PROPERTY AND EQUIPMENT, net (Note N)
INTANGIBLE ASSETS, net (Note D)
EQUITY INVESTMENTS (Note C)
OTHER ASSETS
TOTAL ASSETS
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Revolving Credit Facility (Note E)
Accounts payable
Accrued expenses (Note N)
Income taxes payable (Note I)
TOTAL CURRENT LIABILITIES
77,749
110,337
5,264
2,475
198,797
72,795
99,935
5,048
1,124
182,253
34,324
46,937
34,515
4,172
$ 318,745
36,093
30,818
24,068
4,354
$ 277,586
$ 15,000
18,985
33,877
2,100
69,962
$ 4,100
19,414
31,962
5,036
60,512
DEFERRED RENT & OTHER LONG-TERM LIABILITIES (Note N)
DEFERRED INCOME TAXES (Note I)
REVOLVING CREDIT FACILITY (Note E)
TERM LOAN (Note E)
4.75% CONVERTIBLE SENIOR NOTES (Note E)
STOCKHOLDERS’ EQUITY
Preferred stock, $.01 par value, shares authorized: 100 shares of Series
A and 2,000,000 shares of Series B; none issued and outstanding
Common stock, $.01 par value, shares authorized: 25,000,000; shares
issued and outstanding: 12,430,893 in 2011 and 12,064,543 in 2010
Paid-in capital
Retained earnings
Accumulated other comprehensive loss
TOTAL STOCKHOLDERS’ EQUITY
14,598
5,385
42,625
40,000
―
―
124
137,467
14,465
(5,881)
146,175
14,482
1,429
10,000
40,000
23,557
―
121
131,350
1,312
(5,177)
127,606
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 318,745
$ 277,586
See notes to consolidated financial statements.
F-3
LIFETIME BRANDS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands – except per share data)
Net sales
Cost of sales
Distribution expenses
Selling, general and administrative expenses
Restructuring expenses (Note M)
Year ended December 31,
2010
2011
2009
$ 444,418
$ 443,171
$ 415,040
282,058
43,882
93,894
―
273,774
44,570
95,044
―
257,839
43,329
95,647
2,616
Income from operations
24,584
29,783
15,609
Interest expense (Note E & F)
Loss on early retirement of debt (Note E)
Income before income taxes, equity in earnings
and extraordinary item
Income tax provision (Note I)
Equity in earnings, net of taxes (Note C)
Income before extraordinary item
Extraordinary item, net of taxes (Note D)
NET INCOME
(7,758)
―
(9,351)
(764)
(13,185)
―
16,826
19,668
2,424
(6,122)
3,362
(4,602)
2,718
(1,880)
2,171
14,066
―
17,784
2,477
2,715
―
$ 14,066
$ 20,261
$ 2,715
Basic income per common share before extraordinary
item (Note H)
Basic income per common share of extraordinary item (Note H)
BASIC INCOME PER COMMON SHARE
(NOTE H)
$ 1.16
―
$ 1.48
0.20
$ 0.23
―
$ 1.16
$ 1.68
$ 0.23
Diluted income per common share before extraordinary
item (Note H)
Diluted income per common share of extraordinary item (Note H)
DILUTED INCOME PER COMMON SHARE
(NOTE H)
$ 1.12 $ 1.44
―
0.20
$ 0.22
―
$ 1.12 $ 1.64
$ 0.22
See notes to consolidated financial statements.
F-4
LIFETIME BRANDS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands)
Common stock
Shares Amount
Paid-in
capital
Retained
earnings
(accumulated
deficit)
Accumulated
other
comprehensive
(loss)
Total
BALANCE AT DECEMBER 31, 2008
11,990 $ 120
$ 127,497
$ (21,515) $ (8,593)
$97,509
Comprehensive income:
Net income
Grupo Vasconia, S.A.B. translation
adjustment (Note C)
Derivative hedge de-designation (Note F)
Derivative fair value adjustment (Note F)
Total comprehensive income
Stock option expense (Note G)
Exercise of stock options
Retirement of shares (Note G)
2,715
456
780
543
46
(21)
2,099
59
(149)
2,715
456
780
543
4,494
2,099
59
(149)
BALANCE AT DECEMBER 31, 2009
12,015
120
129,655
(18,949)
(6,814)
104,012
Comprehensive income:
Net income
Grupo Vasconia, S.A.B. translation
adjustment (Note C)
Derivative hedge de-designation (Note F)
Derivative fair value adjustment (Note F)
Interest rate swap termination (Note F)
Total comprehensive income
Convertible Senior Note repurchase (Note E)
Tax effect on Convertible Senior Note
repurchase
Shares issued to directors (Note G)
Stock compensation expense (Note G)
Tax benefit on exercise of stock options
Exercise of stock options
20,261
1,088
342
57
150
20,261
1,088
342
57
150
21,898
(2,366)
836
150
2,778
124
174
(2,366)
836
150
2,778
124
173
10
40
1
BALANCE AT DECEMBER 31, 2010
12,065
121
131,350
1,312
(5,177)
127,606
Comprehensive income:
Net income
Translation adjustment
Total comprehensive income
Shares issued to directors (Note G)
Stock compensation expense (Note G)
Issuance of 255,908 shares of common stock
for acquisition of Creative Tops (Note B)
Exercise of stock options
Dividends (Note G)
14,066
(704)
21
256
89
183
2,612
3
3,097
225
(913)
14,066
(704)
13,362
183
2,612
3,100
225
(913)
BALANCE AT DECEMBER 31, 2011
12,431 $ 124 $ 137,467 $ 14,465 $ (5,881) $ 146,175
See notes to consolidated financial statements.
F-5
LIFETIME BRANDS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
OPERATING ACTIVITIES
Net income
Adjustments to reconcile net income to net cash provided by
operating activities:
Extraordinary gain
Provision for doubtful accounts
Depreciation and amortization
Amortization of debt discount
Deferred rent
Deferred income taxes
Stock compensation expense
Undistributed equity earnings
Fixed asset impairment
Loss on early retirement of debt
Changes in operating assets and liabilities (excluding the effects of
business acquisitions)
Accounts receivable
Inventory
Prepaid expenses, other current assets and other assets
Accounts payable, accrued expenses and other liabilities
Income taxes receivable
Income taxes payable
NET CASH PROVIDED BY OPERATING ACTIVITIES
INVESTING ACTIVITIES
Purchases of property and equipment
Equity investments
Acquisition of Creative Tops, net of cash acquired
Net proceeds from sale of property
Year ended December 31,
2011
2010
2009
$ 14,066
$ 20,261
$ 2,715
―
(24)
8,397
543
(133)
(1,218)
2,795
(2,896)
―
―
(2,477)
376
9,810
1,802
306
(2,691)
2,928
(2,321)
―
764
―
(420)
11,472
2,663
673
734
2,099
(1,953)
789
―
3,297
(5,365)
1,120
(4,673)
―
(3,722)
12,187
(11,619)
3,996
3,981
628
―
4,356
30,100
6,430
37,680
(271)
(10,324)
11,263
438
63,988
(4,959)
(5,123)
(20,584)
31
(2,864)
―
―
70
(2,344)
―
―
408
NET CASH USED IN INVESTING ACTIVITIES
(30,635)
(2,794)
(1,936)
FINANCING ACTIVITIES
Repayments of prior credit facility, net (Note E)
Proceeds from Revolving Credit Facility, net (Note E)
Proceeds from Term Loan (Note E)
Repurchase of 4.75% convertible senior notes (Note E)
Financing Costs
Cash dividends paid
Payment of capital lease obligations
Proceeds from the exercise of stock options
Excess tax benefits from exercise of stock options
NET CASH PROVIDED BY (USED IN) FINANCING
ACTIVITIES
Effect of foreign exchange on cash
―
43,525
―
(24,100)
(761)
(913)
(78)
225
(24,601)
14,100
40,000
(51,028)
(3,248)
―
(158)
174
124
17,898
171
(24,637)
―
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
Cash and cash equivalents at beginning of year
(379)
3,351
2,669
682
(64,699)
―
―
―
―
―
(225)
59
17
(64,848)
―
(2,796)
3,478
CASH AND CASH EQUIVALENTS AT END OF YEAR
$ 2,972
$ 3,351
$ 682
See notes to consolidated financial statements.
F-6
LIFETIME BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2011
NOTE A — SIGNIFICANT ACCOUNTING POLICIES
Organization and business
Lifetime Brands, Inc. (the “Company”) designs, sources and sells branded kitchenware, tabletop and other products
used in the home and markets its products under a number of brand names and trademarks, which are either owned
or licensed. The Company markets and sells its products principally on a wholesale basis to retailers. The
Company also markets and sells a limited selection of its products directly to the consumer through its
Pfaltzgraff®, Mikasa®, Lifetime Sterling™ and Housewares Deals™ Internet websites.
Principles of consolidation
The accompanying consolidated financial statements include the accounts of the Company and its subsidiaries. All
intercompany accounts and transactions have been eliminated in consolidation.
Revenue recognition
Wholesale sales and Retail Direct sales are recognized when title passes to the customer, which is primarily at the
shipping point for Wholesale sales and upon delivery to the customer for Retail Direct sales. Shipping and
handling fees that are billed to customers in sales transactions are included in net sales and amounted to $1.4
million, $1.9 million and $3.5 million for the years ended December 31, 2011, 2010 and 2009, 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 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 arrangements and an estimate of sales returns are
reflected as reductions in net sales in the Company’s consolidated statements of operations.
Distribution expenses
Distribution expenses consist primarily of warehousing expenses, handling costs of products sold and freight-out
expenses.
Advertising expenses
Advertising expenses are expensed as incurred and are included in selling, general and administrative expenses.
Advertising expenses were $702,000, $775,000 and $880,000 for the years ended December 31, 2011, 2010 and
2009, respectively.
Accounts receivable
The Company periodically reviews the collectibility of its accounts receivable and establishes allowances for
estimated losses that could result from the inability of its customers to make required payments. 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.
F-7
LIFETIME BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2011
NOTE A — SIGNIFICANT ACCOUNTING POLICIES (continued)
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 market method. 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.
Property and equipment
Property and equipment is stated at cost. Property and equipment, other than leasehold improvements, is
depreciated using the straight-line method over the estimated useful lives of the assets. Building and
improvements are being depreciated over 30 years and machinery, furniture and equipment over periods ranging
from 3 to 10 years. Leasehold improvements are amortized over the term of the lease or the estimated useful lives
of the improvements, whichever is shorter. Advances paid towards the acquisition of property and equipment and
the cost of property and equipment not ready for use before the end of the period are classified as construction in
progress.
Cash equivalents
The Company considers all highly liquid instruments with a maturity of three months or less when purchased to be
cash equivalents.
Use of estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires
management to make estimates and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates. Amounts subject to estimates include
judgments related to revenue recognition, allowances for doubtful accounts, reserves for sales returns and
allowances and customer chargebacks, inventory mark-down provisions, impairment of tangible and intangible
assets, stock option expense, estimates for unpaid healthcare claims, derivative valuation, accruals related to the
Company’s tax provision and tax valuation allowances.
Concentration of credit risk
The Company’s cash and cash equivalents are potentially subject to concentration of credit risk. The Company
maintains cash with several financial institutions that, in some cases, is in excess of Federal Deposit Insurance
Corporation insurance limits.
Concentrations of credit risk with respect to trade accounts receivable are limited due to the large number of
entities comprising the Company’s customer base.
During the years ended December 31, 2011, 2010 and 2009, Wal-Mart Stores, Inc. (including Sam’s Club and Asda
Superstore) accounted for 15%, 15%, and 18% of net sales, respectively. No other customer accounted for 10% or
more of the Company’s sales during these periods.
F-8
LIFETIME BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2011
NOTE A — SIGNIFICANT ACCOUNTING POLICIES (continued)
Fair value measurements
Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic No. 820,
Fair Value Measurements and Disclosures, provides enhanced guidance for using fair value to measure assets and
liabilities and establishes a common definition of fair value, provides a framework for measuring fair value under
U.S. generally accepted accounting principles and expands disclosure requirements about fair value measurements.
Fair value measurements included in the Company’s consolidated financial statements relate to the Company’s
4.75% convertible senior notes (the “Notes”), annual goodwill and other intangible asset impairment tests and
derivatives, described in Notes A, D and F, respectively.
Fair value of financial instruments
The Company estimated that the carrying amounts of cash and cash equivalents, accounts receivable and accounts
payable are a reasonable estimate of their fair value because of their short-term nature. The Company estimated
that the carrying amounts of borrowings outstanding under its term loan and revolving credit facility approximate
fair value since such borrowings bear interest at variable market rates. The fair value of the Notes was $24.0
million at December 31, 2010. The fair value was based on Level 2 observable inputs consisting of the most recent
quoted price for the Notes obtained from the FINRA Trade Reporting and Compliance Engine™ system at
December 31, 2010.
Derivatives
The Company accounts for derivative instruments in accordance with ASC Topic No. 815, Derivatives and
Hedging which requires that all derivative instruments be recognized on the balance sheet at fair value as either an
asset or a 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 to the extent the derivative is
considered perfectly effective in achieving offsetting changes in fair value or cash flows attributable to the risk
being hedged, until the hedged item is recognized in earnings. For derivatives that do not qualify or are not
designated as hedging instruments for accounting purposes, changes in fair value are recorded in 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.
Long-lived assets, including intangible assets deemed to have finite lives, are reviewed for impairment whenever
events or changes in circumstances indicate that such amounts may have been impaired. 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 Company compares the carrying value of the asset to the
estimated discounted future cash flows expected to be generated by the assets. If the assets are considered to be
impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets
exceeds the fair value of the assets. The Company considered indicators of impairment of its goodwill and long-
lived assets and determined that no such indicators were present at December 31, 2011.
F-9
LIFETIME BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2011
NOTE A — SIGNIFICANT ACCOUNTING POLICIES (continued)
Income taxes
The Company accounts for income taxes using the asset and liability method. Under this method, deferred tax
assets and liabilities are determined based on differences between financial reporting and tax bases of assets and
liabilities and are measured using the enacted tax rates and laws that are expected to be in effect when the
differences are expected to reverse.
The Company applies the authoritative guidance for the financial statement recognition, measurement and
disclosure of uncertain tax positions recognized in the Company’s financial statements. In accordance with this
guidance, tax positions must meet a more-likely-than-not recognition threshold and measurement attribute for the
financial statement recognition and measurement of a tax position. A valuation allowance is required to be
established or maintained when it is “more likely than not” that all or a portion of deferred tax assets will not be
realized.
Stock options
The Company measures compensation expense for all share-based compensation granted to employees and non-
employee directors at fair value on the date of grant and recognizes compensation expense over the related service
period for awards expected to vest. The Company uses the Black-Scholes option valuation model to estimate the
fair value of its stock options. The Black-Scholes option valuation model requires the input of highly subjective
assumptions including the expected stock price volatility of the Company’s common stock and the risk free interest
rate.
Employee Healthcare
In 2011, the Company commenced self insurance of certain portions of its health insurance plan. The Company
maintains an estimated accrual for unpaid claims and claims incurred but not yet reported (“IBNR”). Although
management believes that it uses the best information available to estimate IBNR, actual claims may vary
significantly from estimated claims.
New Accounting Pronouncements
In June 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”)
No. 2011-05, Presentation of Comprehensive Income, which amends Accounting Standards Codification (“ASC”)
Topic No. 220, Comprehensive Income. The updated guidance requires that all changes in stockholders’ equity be
presented either as a single continuous statement of comprehensive income or in two separate but consecutive
statements. In December 2011, the FASB issued Accounting Standards Update No. 2011-12 (“ASU 2011-12”) which
defers certain reclassification requirements within ASU 2011-05. This guidance is effective for interim and annual
periods beginning after December 15, 2011. The guidance is limited to the form and content of the financial
statements and disclosures, and the Company has determined that the adoption of this guidance is not expected to
have a material impact on the Company’s consolidated financial position, results of operations or cash flows.
In September 2011, the FASB issued ASU No. 2011-08, Intangibles—Goodwill and Other (Topic 350): Testing for
Goodwill Impairment, which permits an entity to first assess 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 two-step goodwill impairment test described in ASC Topic No. 350, Intangibles – Goodwill
and Other. The amendments in this update are effective for annual and interim goodwill impairment tests performed
for fiscal years beginning after December 15, 2011. The Company has determined that the adoption of this guidance
is not expected to have a material impact on the Company’s consolidated financial position, results of operations or
cash flows.
F-10
LIFETIME BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2011
NOTE B — CREATIVE TOPS ACQUISITION
On November 4, 2011, the Company acquired 100% of the share capital of each of Creative Tops Holdings
Limited and Creative Tops Far East Limited (collectively, “Creative Tops”), for £14.8 million ($23.7 million) of
consideration, comprised of cash in the amount of £12.9 million ($20.6 million) and 255,908 shares of common
stock with a value of £1.9 million ($3.1 million). Creative Tops, which reported net sales of approximately £26.3
million ($42.3 million) for its fiscal year ended March 31, 2011, is a leading UK-based supplier of private label
and branded tableware and kitchenware products. The purpose of this acquisition is to expand the Company’s sale
of products into Europe including growth in the sales of the traditional products of Creative Tops and new branded
product offerings. The assets, liabilities and operating results of Creative Tops are reflected in the Company’s
consolidated financial statements in accordance with ASC Topic No. 805, Business Combinations, commencing
from the acquisition date.
The purchase price has been determined as follows (in thousands):
Cash paid, net of cash acquired
Common stock issued
Total purchase price
$ 20,584
3,100
$ 23,684
The cash portion of the purchase price was funded by borrowings under the Company’s Credit Facility
(“Revolving Credit Facility”). Cash paid is reflected net of cash acquired of £0.1 million ($0.2 million).
The purchase price has been allocated based on management’s estimate of the fair value of the assets acquired and
liabilities assumed, as follows (in thousands):
Accounts receivable
Inventory
Other current assets
Property and equipment
Goodwill and other intangibles
Accounts payable
Accrued expenses
Other liabilities
Deferred tax liability
Total allocated value
Purchase
Price
Allocation
$ 8,559
5,228
508
844
16,892
(1,250)
(2,351)
(1,191)
(3,555)
$ 23,684
On the basis of estimated fair values, the excess of the purchase price over the net assets acquired of $13.3 million
has been allocated as follows: $10.6 million for customer relationships, $3.6 million for trade names, $2.7 million
for non-tax-deductible goodwill, net of a deferred tax liability related to amortizable intangibles of $3.6 million.
Customer relationships and trade names are amortized on a straight-line basis over their estimated useful lives
(see Note D).
F-11
LIFETIME BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2011
NOTE C — EQUITY INVESTMENTS
The Company owns a 30% interest in Grupo Vasconia, S.A.B. (“Vasconia”). The investment is accounted for
using the equity method of accounting. Accordingly, the Company has recorded its proportionate share of
Vasconia’s net income (reduced for amortization expense related to the customer relationships acquired) for the
years ended December 31, 2011, 2010 and 2009 in the accompanying consolidated statements of operations. The
value of the Company’s investment balance has been translated from Mexican Pesos (“MXN”) to U.S. Dollars
(“USD”) using the spot rate of MXN 13.95 and MXN 12.39 at December 31, 2011 and 2010, respectively. The
Company’s proportionate share of Vasconia’s net income has been translated from MXN to USD using the
average exchange rates of MXN 11.74 to 13.62, MXN 12.37 to 12.79 and MXN 13.05 to 14.32 during the years
ended December 31, 2011, 2010 and 2009, respectively. The effect of the translation of the Company’s
investment resulted in a decrease of the investment of $0.5 million during the year ended December 31, 2011 and
an increase of the investment of $1.1 million and $0.5 million during the years ended December 31, 2010 and
2009, respectively. These translation effects are recorded in accumulated other comprehensive loss. The
Company received cash dividends of $466,000 and $398,000 from Vasconia during the years ended December 31,
2011 and 2010, respectively. Included in prepaid expenses and other currents assets at December 31, 2011 and
2010 are amounts due from Vasconia of $216,000 and $102,000, respectively.
Summarized income statement information for the years ended December 31, 2011, 2010 and 2009, as well as
summarized balance sheet information as of December 31, 2011 and 2010, for Vasconia in USD and MXN is as
follows:
2011
Year Ended December 31,
2010
(in thousands)
2009
Income Statement
Net Sales
Gross Profit
Income from operations
Net Income
USD
MXN
$ 132,310 $ 1,647,479
476,501
216,715
142,698
38,143
17,254
11,395
USD
$ 113,454
32,451
15,122
9,910
MXN
$ 1,430,528
409,263
190,862
125,115
USD
$ 94,633
26,251
11,803
8,306
MXN
$ 1,276,126
353,500
159,531
111,709
Balance Sheet
Current assets
Non-current assets
Current liabilities
Non-current liabilities
2011
December 31,
(in thousands)
2010
USD
MXN
USD
MXN
$ 54,262 $ 756,792 $ 55,944 $ 693,118
402,733
201,936
68,340
598,382
204,254
101,953
42,904
14,645
7,310
32,506
16,299
5,516
The Company recorded equity in earnings of Vasconia, net of taxes, of $2.9 million, $2.7 million and $2.2 million
for the years ended December 31, 2011, 2010 and 2009, respectively.
The Company also has a 50% joint venture investment in World Alliance Enterprises Limited, a Hong-Kong based
company that primarily sells kitchenware and cutlery products to retailers other than in North and South America.
F-12
LIFETIME BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2011
NOTE C — EQUITY INVESTMENTS (continued)
During the year ended December 31, 2011, the Company recorded equity in earnings of $447,000. This reflects
the cumulative results of this investment through December 31, 2011.
In January 2011, the Company, together with Vasconia and unaffiliated partners, formed Housewares Corporation
of Asia Limited (“HCA”), a Hong Kong-based company, to supply direct import kitchenware products to retailers
in North, Central and South America. The Company paid $105,000 for a 40% equity interest in this entity during
2011. The operating results of HCA were not significant through December 31, 2011.
On December 9, 2011, the Company acquired a 40% equity interest in GS Internacional S/A (“GSI”), a leading
wholesale distributor of branded housewares products in Brazil. The consideration for this equity investment
amounted to $7.6 million, which consisted of cash consideration of $5.0 million and consideration payable of $2.6
million. During the period of December 9, 2011 through December 31, 2011, the Company’s equity in earnings
of GSI were not significant.
In February 2012, the Company entered into a joint venture to distribute Mikasa® products in China, which will
require an initial investment of $500,000 by the Company.
The Company incurred acquisition costs of $2.0 million in 2011, which have been recorded in Selling, General
and Administrative Expenses in the consolidated statement of operations.
The Company evaluated the disclosure requirements of ASC Topic No. 860, Transfers and Servicing, and
determined that at December 31, 2011, the Company did not have a controlling voting interest or variable interest
in any of its investments and therefore continued accounting for the investments using the equity method of
accounting.
F-13
LIFETIME BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2011
NOTE D — GOODWILL AND INTANGIBLE ASSETS
The Company performed its 2011 annual impairment tests for its indefinite-lived intangible assets as of October
1, 2011. The test involved the assessment of the fair market value of the Company’s indefinite-lived intangible
assets based on Level 2 observable inputs, using a discounted cash flow approach, assuming a discount rate of
13%-14% and an annual growth rate of 2%. The result of the assessment of the Company’s indefinite-lived
intangibles indicated that their fair values exceeded their carrying amounts.
In December 2010, the Company paid $2.5 million to ARC International SA (“ARC”) for all outstanding
consideration due or payable related to its 2008 acquisition of the business and certain assets of Mikasa, Inc. As a
result of payment of all final consideration to ARC, the Company adjusted the remaining book value of the
acquired Mikasa intangible assets, including the trade name and associated deferred tax liability, to zero and the
negative goodwill balance to approximately $2.5 million. Concurrently, the remaining balance of negative
goodwill was eliminated resulting in an extraordinary gain in the amount of $2.5 million in 2010.
The Company’s intangible assets, all of which are included in the Wholesale segment, consist of the following (in
thousands):
Year Ended December 31,
2011
Accumulated
Amortization
Gross
Net
Gross
2010
Accumulated
Amortization
Net
$ 2,673
$ ―
$ 2,673
$ ―
$ ―
$ ―
19,433
―
19,433
19,433
―
19,433
15,847
6,116
(6,641)
(1,400)
9,206
4,716
15,847
2,477
(6,186)
(1,267)
9,661
1,210
11,166
584
$ 55,819
(681)
(160)
$ (8,882)
10,485
424
$ 46,937
586
584
$ 38,927
(530)
(126)
$ (8,109)
56
458
$ 30,818
Goodwill
Indefinite-lived
intangible assets:
Trade names
Finite-lived
intangible assets:
Licenses
Trade names
Customer
relationships
Patents
Total
A summary of the activities related to the Company’s intangible assets for the year ended December 31, 2011
consists of the following (in thousands):
Goodwill and Intangible Assets, December 31, 2010
Goodwill
Acquisition of trade names
Acquisition of customer relationships
Amortization
Intangible Assets
$ 30,818
2,673
3,639
10,580
(773)
Goodwill and Intangible Assets, December 31, 2011
$ 46,937
F-14
LIFETIME BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2011
NOTE D — GOODWILL AND INTANGIBLE ASSETS (continued)
The weighted-average amortization periods for the Company’s finite-lived intangible assets as of December 31,
2011 are as follows:
Trade names
Licenses
Customer relationships
Patents
Years
19
33
15
17
Estimated amortization expense for each of the five succeeding fiscal years is as follows (in thousands):
Year ending December 31
2012
2013
2014
2015
2016
$ 1,587
1,587
1,587
1,584
1,580
Amortization expense for the years ended December 31, 2011, 2010 and 2009 was $773,000, $726,000 and
$775,000, respectively.
NOTE E — DEBT
Revolving Credit Facility
The Company had a $125.0 million secured credit agreement (the “Revolving Credit Facility”), maturing on June 9,
2015, with a bank group led by JPMorgan Chase Bank, N.A. On October 28, 2011, the Company amended the
Revolving Credit Facility to increase the commitment of the lenders to $150.0 million and to, among other things, (i)
increase the borrowing base limit for eligible trademarks to $25.0 million, (ii) revise the pricing grid margins for
Alternative Base Rate loans to 1.0% to 1.75% and for Adjusted LIBO Rate and Overnight LIBO Rate loans to 2.0%
to 2.75%, (iii) permit borrowings in multi-currencies, primarily U.S Dollars, Euros and Pounds Sterling, (iv) extend,
subject to certain conditions, the maturity date to October 28, 2016, (v) increase the expansion option which permits
the Company, subject to certain conditions including the consent of the Term Loan lender, to increase the maximum
borrowing up to $200.0 million, (vi) revise EBITDA (as defined) to provide for the add back of acquisition related
expenses, (vii) limit the domestic and foreign borrowing base, (viii) increase limitations on foreign debt and (ix)
increase the limit for investments.
Borrowings under the Revolving Credit Facility are secured by a first lien priority security interest in all of the
assets of the Company and its domestic subsidiaries, including a pledge of the Company’s outstanding shares of
stock in its subsidiaries (limited, in the case of its foreign subsidiaries, to 65.0% of the Company’s equity
interests), except regarding the Company’s shares in its wholly-owned subsidiary LTB de Mexico, S.A. de C.V.
(“LTB de Mexico”). Availability under the Revolving Credit Facility is subject to a borrowing base calculation
equal to the sum of (i) 85.0% of eligible domestic accounts receivable, (ii) 85.0% of the net orderly liquidation
value of eligible domestic inventory and (iii) the lesser of 50.0% of the orderly liquidation value of eligible
trademarks and $25.0 million less reserves. The borrowing base is also subject to reserves that may be established
by the administrative agent in its permitted discretion.
F-15
LIFETIME BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2011
NOTE E — DEBT (continued)
Borrowings under the Revolving Credit Facility bear interest, at the Company’s option, at one of the following rates:
(i) the Alternate Base Rate, defined as the greater of the Prime Rate, Federal Funds Rate plus 0.5% or the Adjusted
LIBOR rate plus 1.0%, plus a margin of 1.0% (1.25% prior to amendment) to 1.75%, or (ii) the Eurodollar Rate,
defined as the Adjusted LIBOR Rate plus a margin of 2.0% (2.25% prior to amendment) to 2.75%. The respective
margins are based upon availability. Interest rates on outstanding borrowings at December 31, 2011 ranged from
2.75% to 4.50%. In addition, the Company pays a commitment fee of 0.375% to 0.50% (0.50% prior to amendment)
on the unused portion of the Revolving Credit Facility.
The Revolving Credit Facility provides for customary restrictions and events of default. Restrictions include
limitations on additional indebtedness, acquisitions, investments and payment of dividends, among others.
Furthermore, if availability under the Revolving Credit Facility is less than $17.5 million, the Company will be
required to maintain a minimum fixed charge coverage ratio of 1.10 to 1.00, which covenant would remain
effective until availability is at least $20.0 million for a period of three consecutive months.
At December 31, 2011, the Company had $1.4 million of open letters of credit and $57.6 million of borrowings
outstanding under the Revolving Credit Facility. Availability under the Revolving Credit Facility was approximately
45% of the total loan commitment at December 31, 2011. The interest rate on the outstanding borrowings at
December 31, 2011 ranged from 2.5% to 4.5%.
Pursuant to the provisions of ASC Topic No. 470-10, Short-term Obligations Expected to be Refinanced, at
December 31, 2011 and 2010, the Company classified a portion of the Revolving Credit Facility as a current
liability based on the Company’s intent and ability to repay the loan from cash flows from operations which are
expected to occur within the year. Repayments and borrowings under the facility can vary significantly from
planned levels based on cash flow needs and general economic conditions. The Company expects that it will
continue to borrow and repay funds, subject to availability, under the facility based on working capital needs.
The loss on early retirement of debt in the accompanying consolidated statement of operations includes
approximately $408,000 in 2010 for the write-off of unamortized debt issuance costs related to the repayment of
amounts under the prior credit agreement.
Term Loan
The Company has a $40.0 million second lien credit agreement (the “Term Loan”), which matures on June 8, 2015,
with Citibank, N.A.
The Term Loan bears interest, at the Company’s option, at one of the following rates: (i) the Alternate Base Rate,
defined as the greater of the corporate rate published by the lender and the Federal Funds Rate plus 0.50% provided
that such calculated rate is a minimum of 2.50%, plus a margin of 7.50%, or (ii) the Adjusted LIBOR rate which
shall be a minimum of 1.50%, plus a margin of 8.50%. The interest rate on the outstanding borrowings at December
31, 2011 was 10.0%.
On October 28, 2011, the Company amended the Term Loan to, among other things, (i) revise Permitted
Acquisitions (as defined), for which the lender gives prior written consent, to (a) allow Permitted Non-Control
Acquisitions and (b) reduce the limit on Permitted Acquisitions, (ii) increase the minimum consolidated EBITDA
covenant for the trailing twelve month periods ending March 31, 2012, June 30, 2012, September 30, 2012 and
December 31, 2012 and thereafter to $31.0 million, $31.0 million, $33.0 million and $34.0 million, respectively, (iii)
increase the limit for other investments, (iv) increase limitations on foreign subsidiary debt, (v) revise EBITDA (as
defined) to provide for the add back of acquisition related expenses, and (vi) revise the limitation on indebtedness
incurred to finance acquisitions.
F-16
LIFETIME BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2011
NOTE E — DEBT (continued)
The Term Loan requires the Company to have EBITDA, as defined, of not less than $30.0 million for the trailing
four fiscal quarters through December 31, 2011 and limits capital expenditures to $7.5 million for 2011. The
Company was in compliance with the financial covenants of the Term Loan and Revolving Credit Facility at
December 31, 2011.
4.75% Convertible Senior Notes
At December 31, 2010, the Company had outstanding $24.1 million aggregate principal amount of the Notes due
July 15, 2011. Pursuant to the provisions of ASC Topic No. 470-10, the Company had classified the Notes as a
long-term liability based on the Company’s intent and ability to refinance the Notes using the proceeds from the
Revolving Credit Facility.
In June 2010, the Company purchased $50.9 million principal amount of the Notes in privately negotiated
transactions for $51.0 million, reducing the aggregate principal amount to $24.1 million. Pursuant to the
provisions of ASC Topic No. 470-20, Debt with Conversion and Other Options, the Company allocated the
consideration paid to repurchase the Notes to the debt and equity components of the Notes based on the fair value
of the debt component on the date the Company repurchased the Notes. The loss on early retirement of debt in the
accompanying consolidated statement of operations includes approximately $356,000 in 2010 for the write-off of
unamortized debt issuance costs related to notes which were repurchased. In addition, the Company recorded a
reduction of additional paid in capital of $2.4 million representing the portion of the consideration paid that was
allocated to the equity component of the Notes.
On July 15, 2011, the Company retired the $24.1 million aggregate principle amount of the Notes then outstanding
with borrowings from the Revolving Credit Facility.
Effective January 1, 2009, the Company adopted the provisions of ASC Topic No. 470-20 on a retrospective basis
as though the provisions were in effect at the date of issuance of the Notes in June 2006. As a result of the
adoption, on January 1, 2009 the Company reclassified $7.9 million (net of taxes of $2.8 million) of the principal
of the Notes to additional paid-in-capital and recorded a debt discount of $12.8 million that was amortized to
interest expense over the remaining term of the Notes.
At December 31, 2010, the carrying amounts of the debt and equity components of the Notes were as follows (in
thousands):
December 31,
2010
Carrying amount of equity component, net of tax
$ 8,262
Principal amount of debt component
Unamortized discount
Carrying amount of debt component
$ 24,100
(543)
$ 23,557
F-17
LIFETIME BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2011
NOTE F — DERIVATIVES
The Company had interest rate swaps with an aggregate notional amount of $50.0 million, which decreased to
$25.0 million in January 2010 and to $10.0 million in June 2010, and interest rate collars with an aggregate
notional amount of $40.2 million that were utilized to manage interest rate exposure related to the Company’s
variable interest rate borrowings. The interest rate collar agreements expired in November 2010 and the interest
rate swap agreements expired in January 2011.
An interest rate swap with a notional amount of $15.0 million and the interest rate collars were originally
designated as cash flow hedges at inception, with the effective portion of the fair value gains or losses on these
derivative instruments recorded as a component of accumulated other comprehensive loss. In November 2009,
the interest rate collars were de-designated as cash flow hedges as a result of reductions, and projected future
reductions, in the Company’s borrowings hedged by the interest rate collar agreements. Accordingly, the
Company reclassified a portion of the loss included in other comprehensive loss related to the interest rate collar
agreements of $780,000, representing the ineffective portion of the hedge, to interest expense. The remaining
portion of the loss of $382,000 included in other comprehensive loss related to these interest rate collar
agreements was recognized in earnings using the effective interest method over the remaining term of the interest
rate collar agreements. In June 2010, the Company terminated the $15.0 million interest rate swap agreement. In
connection with the termination of the agreement, the Company made a payment of $403,000 to the counterparty
of the agreement which was included in interest expense for the three months ended June 30, 2010.
The effect of recording the Company’s cash flow hedges at fair value for the portion of the periods that the swaps
and collars qualified for hedge accounting resulted in unrealized gains of $57,000 (net of taxes of $36,000) and
$543,000 for the years ended December 31, 2010 and 2009, respectively. In conjunction with the expiration of the
interest rate collar agreement in 2010, there were no remaining cumulative unrealized gains or losses recorded in
accumulated other comprehensive loss as of December 31, 2011 and 2010.
Interest rate swap agreements with an aggregate notional amount of $10.0 million were not designated as hedges at
inception and the fair value gains or losses from these swap agreements were recognized in interest expense. In
November 2010, the Company terminated the $40.2 million interest rate collar agreements. In connection with the
termination of the agreements, the Company made payments of $236,000 and $100,000 to the counterparties of the
agreements, respectively, that was included in interest expense for the year ended December 31, 2010.
The fair value of the above derivatives were 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
aggregate fair value of the Company’s derivative instruments was a liability of $10,900 at December 31, 2010 and
is included in accrued expenses and deferred rent & other long-term liabilities.
NOTE G — CAPITAL STOCK
Long-term incentive plan
In June 2009, the shareholders of the Company approved an amendment to the Company’s 2000 Long-Term
Incentive Plan (the “Plan”) to increase the shares available for grant by 1,000,000 shares to 3,500,000 shares.
These shares of the Company’s common stock may be subject to outstanding awards granted to directors, officers,
employees, consultants and service providers and affiliates in the form of stock options or other equity-based
awards. The Plan authorizes the Board of Directors of the Company, or a duly appointed committee thereof, to
issue incentive stock options, non-qualified options and other stock-based awards. Options that have been granted
under the Plan expire over a range of five to ten years from the date of grant and vest over a range of up to five
years from the date of grant. As of December 31, 2011, there were 332,476 shares available for the grant of awards
F-18
LIFETIME BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2011
NOTE G — CAPITAL STOCK (continued)
under the Plan. Through December 31, 2011, all stock options granted under the Plan have exercise prices equal to
the market values of the Company’s common stock on the dates of grant.
Cash dividends
The Company did not pay cash dividends on its outstanding shares of common stock during the years ended
December 31, 2010 and 2009.
In March 2011, the Company resumed the declaration of cash dividends on its outstanding shares of common
stock. Dividends declared in 2011 are as follows:
Dividend per share
$0.025
$0.025
$0.025
Date declared
March 4, 2011
June 27, 2011
November 4, 2011
Date of record
May 2, 2011
August 2, 2011
November 18, 2011
Payment date
May 16, 2011
August 16, 2011
November 29, 2011
On January 11, 2012, the Board of Directors declared a quarterly dividend of $0.025 per share payable on
February 15, 2012 to shareholders of record on February 1, 2012, and on March 6, 2012, the Board of Directors
declared a quarterly dividend of $0.025 per share payable on May 15, 2012 to shareholders on record on May 1,
2012.
Preferred stock
The Company is authorized to issue 100 shares of Series A Preferred Stock and 2,000,000 shares of Series B
Preferred Stock, none of which is issued or outstanding at December 31, 2011.
Escrow shares
In 2009, the Company received back 20,436 shares of its common stock valued at $149,000 that previously had
been held in escrow in connection with its 2006 acquisition of certain assets of Syratech Corporation.
Restricted stock
In 2011, 2010 and 2009, the Company issued an aggregate of 13,900, 10,020 and 33,335 restricted shares,
respectively, of the Company’s common stock to its non-employee directors representing payment of a portion of
their annual retainer. The total fair value of the restricted shares, based on the number of shares granted and the
quoted market price of the Company’s common stock on the date of grant, was $150,000 in each of the years 2011,
2010 and 2009. In addition, on August 4, 2011, the Company granted an aggregate of 7,500 shares of restricted
stock to its independent directors that vest one year from the date of grant, which had a fair value of $80,000 on the
grant date. All of the restricted stock grants vest over a one year period from the date of grant and are expensed
over the vesting period.
F-19
LIFETIME BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2011
NOTE G — CAPITAL STOCK (continued)
Stock options
A summary of the Company’s stock option activity and related information for the three years ended
December 31, 2011, is as follows:
Weighted-
average
exercise
price
Weighted-
average
remaining
contractual life
(years)
Aggregate
intrinsic
value
Options
Options outstanding, December 31, 2008
2,036,650
$ 20.41
Grants
Exercises
Cancellations
632,000
(12,650)
(869,333)
Options outstanding, December 31, 2009
1,786,667
Grants
Exercises
Cancellations
573,000
(39,250)
(101,217)
Options outstanding, December 31, 2010
2,219,200
Grants
Exercises
Cancellations
Options outstanding, December 31, 2011
Options exercisable, December 31, 2011
391,500
(123,500)
(11,450)
2,475,750
1,349,050
3.43
5.43
25.28
12.14
13.12
4.44
13.65
12.46
11.20
5.19
13.29
12.62
14.08
6.54
5.24
$ 7,317,203
$ 4,730,578
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 December 31, 2011. 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 December 31, 2011 and the exercise price.
The total intrinsic value of stock options exercised for the years ended December 31, 2011, 2010 and 2009 was
$830,400, $389,100, and $12,000 respectively. The intrinsic value of a stock option that is exercised is calculated
at the date of exercise.
The Company recognized stock compensation expense of $2.8 million, $2.9 million, and $2.1 million for the years
ended December 31, 2011, 2010 and 2009, respectively. Total unrecognized compensation cost related to unvested
F-20
LIFETIME BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2011
NOTE G — CAPITAL STOCK (continued)
stock options at December 31, 2011, before the effect of income taxes, was $4.5 million and is expected to be
recognized over a weighted-average period of 1.48 years.
The Company values stock options using the Black-Scholes option valuation model. The Black-Scholes option
valuation model as well as other available models were developed for use in estimating the fair value of traded
options, which have no vesting restrictions and are fully transferable. The Black-Scholes option valuation model
requires the input of highly subjective assumptions including the expected stock price volatility and risk-free
interest rate. Because the Company’s stock options have characteristics significantly different from those of traded
options, changes in the subjective input assumptions can materially affect the fair value estimate of the Company’s
stock options. The weighted-average per share grant date fair value of stock options granted during the years
ended December 31, 2011, 2010 and 2009 was $5.69, $7.96, and $1.92, respectively.
The fair value for these stock options was estimated at the date of grant using the following weighted-average
assumptions:
Historical volatility
Expected term (years)
Risk-free interest rate
Expected dividend yield
2011
2010
2009
60%
5.6
1.96%
0.89%
73%
5.0
2.18%
0.00%
73%
4.4
1.92%
0.00%
F-21
LIFETIME BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2011
NOTE H — INCOME PER COMMON SHARE
Basic income per common share has been computed by dividing net income by the weighted-average number of
shares of the Company’s common stock outstanding. Diluted income per common share adjusts net income and
basic income per common share for the effect of all potentially dilutive shares of the Company’s common stock.
The calculations of basic and diluted income per common share for the years ended December 31, 2011, 2010 and
2009 are as follows:
Income before extraordinary item
Extraordinary item, net of taxes
Net income – Basic
Net Interest expense, 4.75% Convertible Senior Notes
Net income – Diluted
Weighted-average shares outstanding – Basic
Effect of dilutive securities:
Stock options
4.75% Convertible Senior Notes
Weighted-average shares outstanding – Diluted
Basic income per common share before extraordinary item
Basic income per common share of extraordinary item
Basic income per common share
Diluted income per common share before extraordinary item
Diluted income per common share of extraordinary item
Diluted income per common share
2011
2010
2009
(in thousands - except per share amounts)
$ 14,066
―
$ 17,784
2,477
$ 2,715
―
14,066
―
$ 14,066
$ 20,261
―
$ 20,261
$ 2,715
―
$ 2,715
12,128
12,036
12,009
401
―
12,529
$1.16
―
$1.16
$1.12
―
$1.12
340
―
12,376
66
―
12,075
$ 1.48
0.20
$ 1.68
$ 1.44
0.20
$ 1.64
$ 0.23
―
$ 0.23
$ 0.22
―
$ 0.22
The computations of diluted income per common share for the years ended December 31, 2011, 2010 and 2009
excludes options to purchase 1,600,413, 1,060,588, and 1,435,348 shares of the Company’s common stock,
respectively. The computations of diluted income per common share for the years ended December 31, 2011, 2010
and 2009 also exclude options to purchase 462,192, 2,678,571, 2,678,571 shares, respectively, of the Company’s
common stock that were issuable upon the conversion of the Company’s Notes and related interest expense, which
were retired in July 2011. The above shares were excluded due to their antidilutive effect.
F-22
LIFETIME BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2011
NOTE I — INCOME TAXES
The provision (benefit) for income taxes consists of:
2011
Year Ended December 31,
2010
(in thousands)
2009
Current:
Federal
State and local
Foreign
Deferred
Income tax provision
$ 4,657
2,063
618
$ 4,269
1,437
565
(1,216)
(1,669)
$ 6,122 $ 4,602
$ 162
984
―
734
$ 1,880
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets
and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant
components of the Company’s deferred income tax assets are as follows:
Deferred income tax assets:
Deferred rent expense
Translation adjustment
Stock options
Inventory
Operating loss carry-forward
Accounts receivable allowances
Accrued compensation
Other
Total deferred income tax assets
December 31,
2011
2010
(in thousands)
$ 3,038
2,205
2,743
1,624
2,120
270
580
674
$ 13,254
$ 2,799
1,981
1,619
1,296
2,618
―
545
529
$ 11,387
Significant components of the Company’s net deferred income tax liability are as follows:
December 31,
2011
2010
(in thousands)
Deferred income tax liabilities:
Depreciation and amortization
Accounts receivable allowances
Intangibles
Convertible Senior Notes
Equity in earnings
Other
Total deferred income tax liabilities
$ (4,867)
(6,679)
―
―
(998)
(535)
(13,079)
$ (4,035)
(102)
(2,450)
(216)
(657)
―
(7,460)
Net deferred income tax (liability) asset
175
3,927
Valuation allowance
(3,085)
(4,232)
Net deferred income tax liabilities
$ (2,910)
$ (305)
F-23
LIFETIME BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2011
NOTE I — INCOME TAXES (continued)
As of December 31, 2010, the Company had fully utilized federal net operating loss and other credit carryforwards
generated in previous years. The Company has generated various state net operating loss carryforwards of which
$22.0 million remains at December 31, 2011 that begin to expire in 2014. The Company has net operating losses
in foreign jurisdictions of $2.6 million at December 31, 2011 that begin to expire in 2016. The Company has
offset its total deferred tax assets with certain deferred tax liabilities that are expected to reverse in the
carryforward period. As of December 31, 2011, management had determined that it was “more likely than not”
that its deferred tax assets would be realized and the corresponding valuation allowance had been released based
on the Company’s ability to utilize deferred tax assets currently and the expected future use of temporary
differences in the carryback periods. The valuation allowance which remains as of December 31, 2011 relates to
certain state net operating losses and foreign currency translation adjustments.
The provision for income taxes differs from the amounts computed by applying the applicable federal statutory
rates as follows:
Year Ended December 31,
2010
2009
2011
Provision for federal income taxes at
the statutory rate
Increases (decreases):
State and local income taxes, net of
Federal income tax benefit
Non-deductible stock options
Non-deductible expenses
Valuation allowance
Other
Provision for income taxes
35.0 %
35.0%
35.0%
6.4
0.1
3.4
(8.2)
(0.3)
36.4%
5.6
1.2
0.1
(19.8)
1.3
23.4%
37.9
11.5
6.4
(19.3)
6.1
77.6%
The estimated values of the Company’s gross uncertain tax positions at December 31, 2011, 2010 and 2009 are
liabilities of $134,000, $356,000 and $335,000, respectively, and consist of the following:
Balance at January 1
Additions based on tax positions related to the current year
Additions for tax positions of prior years
Reductions for tax position of prior years
Settlements
Balance at December 31
2009
2011
Year Ended December 31,
2010
(in thousands)
$ 335
―
200
―
(179)
$ 498
―
28
―
(191)
$ 335
$ 356
―
76
―
(298)
$ 134
$ 356
The Company had approximately $34,000 and $71,000, net of federal tax benefit, accrued at December 31, 2011
and 2010, respectively, for the payment of interest. The Company’s policy for recording interest and penalties is to
record such items as a component of income taxes.
F-24
LIFETIME BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2011
NOTE I — INCOME TAXES (continued)
If the Company’s tax positions are ultimately sustained, the Company’s liability, including interest, would be
reduced by $134,000, all of which would impact the Company’s tax provision. On a quarterly basis, the Company
evaluates its tax positions and revises its estimates accordingly. The Company believes that it is reasonably
possible that $134,000 of its tax positions will be resolved within the next twelve months.
The Company has identified the following jurisdictions as “major” tax jurisdictions: U.S. Federal, California,
Massachusetts, Pennsylvania, New York and New Jersey. The Company is no longer subject to U.S. Federal
income tax examinations for the years prior to 2009. The periods subject to examination for the Company’s major
state jurisdictions are the years ended 2007 through 2010.
NOTE J — BUSINESS SEGMENTS
Segment information
The Company operates in two reportable business segments: the Wholesale segment, the Company’s primary
business segment, in which the Company designs, markets and distributes products to retailers and distributors, and
the Retail Direct segment, in which the Company markets and sells a limited selection of its products directly to
consumers through its Pfaltzgraff®, Mikasa®, Housewares™ Deals and Lifetime Sterling™ Internet websites. The
operating results of Creative Tops since the date of acquisition are included within the Wholesale segment.
The Company has segmented its operations to reflect the manner in which management reviews and evaluates the
results of its operations. While both segments distribute similar products, the segments have been distinct due to
the different methods the Company uses to sell, market and distribute the products. Management evaluated the
performance of the Wholesale and Retail Direct segments based on net sales and income (loss) from operations
through December 31, 2011. 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 and consulting fees, are not allocated to the specific segments and are reflected as unallocated
corporate expenses. Assets in each segment consist of assets used in its operations and acquired intangible assets.
Assets in the unallocated corporate category consist of cash and tax related assets that are not allocated to the
segments.
2011
Year Ended December 31,
2010
(in thousands)
2009
Net sales:
Wholesale
Retail Direct
Total net sales
Income (loss) from operations:
Wholesale (1)
Retail Direct (2)
Unallocated corporate expenses
Total income (loss) from operations
Depreciation and amortization:
Wholesale
Retail Direct
Total depreciation and amortization
$ 421,119
23,299
$ 444,418
$ 413,809
29,362
$ 443,171
$ 389,078
25,962
$ 415,040
$ 38,410
(524)
(13,302)
$ 24,584
$ 42,997
(1,018)
(12,196)
$ 29,783
$ 30,581
(3,637)
(11,335)
$ 15,609
$ 8,183
214
$ 8,397
$ 9,719
91
$ 9,810
$ 11,252
220
$ 11,472
F-25
LIFETIME BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2011
NOTE J — BUSINESS SEGMENTS (continued)
Segment information (continued)
Assets:
Wholesale
Retail Direct
Unallocated/ corporate/ other
Total assets
Capital expenditures:
Wholesale
Retail Direct
Total capital expenditures
2011
Year Ended December 31,
2010
(in thousands)
2009
$ 317,435
813
497
$ 318,745
$ 271,670
1,441
4,475
$ 277,586
$ 273,589
2,452
682
$ 276,723
$ 4,730
229
$ 4,959
$ 2,541
323
$ 2,864
$ 1,684
660
$ 2,344
Notes:
(1) In 2009, income from operations for the Wholesale segment included $600,000 for restructuring and impairment expenses. See Note
M.
(2) In 2009, loss from operations for the Retail Direct segment includes $2.0 million of restructuring and non-cash fixed asset impairment
charges. See Note M.
Product category information – net sales
The following table sets forth net sales by the major product categories included within the Company’s Wholesale
operating segment:
Category:
Kitchenware
Tabletop
Home Solutions
Creative Tops
Total
2011
Year Ended December 31,
2010
(in thousands)
2009
$ 215,707
134,652
64,099
6,661
$ 421,119
$ 208,491 $ 199,567
113,479
123,432
76,032
81,886
―
―
$ 413,809 $ 389,078
The product categories, which incorporate a change to establish a Home Solutions products category and the
additional revenue source from Creative Tops in 2011, reflect a refined alignment of the products into the sources of
revenue which the Company analyzes. The revenue source categories disclosed in the prior years have been
reclassified to conform to current year presentation for comparative purposes.
F-26
LIFETIME BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2011
Geographical information
The following table sets forth net sales and long-lived assets by the major geographic locations (in thousands):
Net sales:
United States
International
Total
Long-lived assets at period-end:
United States
International
Total
Year ended
December 31,
2011
$ 426,405
18,013
$ 444,418
$ 118,803
1,145
$ 119,948
NOTE K — COMMITMENTS AND CONTINGENCIES
Operating leases
The Company has lease agreements for its corporate headquarters, distribution centers, showrooms and sales
offices that expire through 2025. These leases generally provide for, among other things, annual base rent
escalations and additional rent for real estate taxes and other costs.
Future minimum payments under non-cancelable operating leases are as follows (in thousands):
Year ending December 31
2012
2013
2014
2015
2016
Thereafter
Total
$ 13,530
13,138
12,975
13,130
12,978
33,165
$ 98,916
Rent and related expenses under operating leases were $13.3 million, $13.3 million and $13.5 million for the years
ended December 31, 2011, 2010 and 2009, respectively. Sublease rental income was $70,000 and $82,000 for the
years ended December 31, 2011 and 2010, respectively. There was no sublease rental income during the year ended
December 31, 2009.
Capital leases
The Company had various capital lease arrangements for the leasing of equipment that was primarily utilized in its
distribution centers. These leases expired in 2011 and were included in accrued expenses at December 31, 2010.
F-27
LIFETIME BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2011
Royalties
The Company has license agreements that require the payment of royalties on sales of licensed products which
expire through 2023. Future minimum royalties payable under these agreements are as follows (in thousands):
Year ending December 31
2012
2013
2014
2015
2016
Thereafter
Total
$ 5,680
408
344
348
225
2,251
$ 9,256
Purchase commitments
As of December 31, 2011, the Company had $6,276,000 of non-cancellable purchase commitments outstanding
related to 2012 purchases.
Legal proceedings
Wallace Silversmiths de Puerto Rico, Ltd. (“Wallace de Puerto Rico”), a wholly-owned subsidiary of the
Company, operates a manufacturing facility in San Germán, Puerto Rico that is leased from the Puerto Rico
Industrial Development Company (“PRIDCO”). In March 2008, the United States Environmental Protection
Agency (the “EPA”) announced that the San Germán Ground Water Contamination site in Puerto Rico (the “Site”)
had been added to the Superfund National Priorities List due to contamination present in the local drinking water
supply.
In May 2008, Wallace de Puerto Rico received from the EPA a Notice of Potential Liability and Request for
Information Pursuant to 42 U.S.C. Sections 9607(a) and 9604(e) of the Comprehensive Environmental Response,
Compensation, Liability Act. The Company responded to the EPA's Request for Information on behalf of Wallace
de Puerto Rico. In July 2011, Wallace de Puerto Rico received a letter from the EPA requesting access to the
property that it leases from PRIDCO, and the Company granted such access.
The Company is not aware of any determination by the EPA that any remedial action is warranted for the Site,
and, accordingly, is not able to estimate the extent of any possible liability.
The Company is, from time to time, involved in other legal proceedings. The Company believes that other current
litigation is routine in nature and incidental to the conduct of the Company’s business and that none of this
litigation, individually or collectively, would have a material adverse effect on the Company’s consolidated
financial position, results of operations or cash flows.
F-28
LIFETIME BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2011
NOTE L — RETIREMENT PLANS
401(k) plan
The Company maintains a defined contribution retirement plan for eligible employees under Section 401(k) of the
Internal Revenue Code. Participants can make voluntary contributions up to the Internal Revenue Service limit of
$16,500 ($22,000 for employees 50 years or over) for 2011. Effective January 1, 2009, the Company suspended
its matching contribution as an expense savings measure.
Retirement benefit obligations
The Company assumed retirement benefit obligations, which are paid to certain former executives of an acquired
business. The obligations under these agreements are unfunded. At December 31, 2011 and 2010, the total
unfunded retirement benefit obligation was $3.4 million and $3.3 million, respectively, and is included in accrued
expenses and deferred rent & other long-term liabilities. During the years ended December 31, 2011 and 2010, the
Company paid retirement benefits related to these obligations of $148,000 and $148,000, respectively. The
Company expects to pay a total of $148,000 in retirement benefits related to these obligations during the year
ending December 31, 2012.
NOTE M — RESTRUCTURING
No restructuring expenses were recognized and no remaining obligations existed relating to this restructuring
initiative during the years ended December 31, 2010 and 2011.
During the year ended December 31, 2009, the Company recorded restructuring charges of $2.6 million which
included store lease obligations and other costs of $1.5 million, non-cash asset impairment charges of $789,000
and employee related expenses of $363,000. The employee expenses were incurred in connection with a plan to
realign the management structure of certain of its divisions and eliminate a portion of the workforce at its Puerto
Rico sterling silver manufacturing facility.
F-29
LIFETIME BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2011
NOTE N — OTHER
Inventory
The components of inventory are as follows:
Finished goods
Work in process
Raw materials
Total
Property and equipment
Property and equipment consist of:
Machinery, furniture and equipment
Leasehold improvements
Building and improvements
Construction in progress
Land
Less: accumulated depreciation and amortization
Total
December 31,
2011
2010
(in thousands)
$ 107,471
1,683
1,183
$ 110,337
$ 96,375
1,890
1,670
$ 99,935
December 31,
2011
2010
(in thousands)
$ 70,037
25,050
1,604
1,900
100
98,691
(64,367)
$ 34,324
$ 66,450
24,551
1,604
272
100
92,977
(56,884)
$ 36,093
Depreciation and amortization expense on property and equipment for the years ended December 31, 2011, 2010
and 2009 was $7.5 million, $8.2 million and $9.4 million, respectively.
Included in machinery, furniture and equipment and accumulated depreciation at December 31, 2010 are $2.1
million and $1.8 million, respectively, related to assets recorded under capital leases.
F-30
LIFETIME BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2011
Accrued expenses
Accrued expenses consist of:
Customer allowances and rebates
Compensation and benefits
Interest
Vendor invoices
Royalties
Derivative liability
Commissions
Freight
Contingent consideration related to GSI investment
Other
Total
Deferred rent & other long-term liabilities
Deferred rent & other long-term liabilities consist of:
Deferred rent liability
Retirement benefit obligations
Total
Supplemental cash flow information
December 31,
2011
2010
(in thousands)
$ 10,422
7,950
441
1,984
2,181
―
1,093
1,419
2,622
5,765
$ 33,877
$ 13,549
8,287
985
2,020
1,520
11
1,231
771
―
3,588
$ 31,962
December 31,
2011
2010
(in thousands)
$ 11,354
3,244
$ 14,598
$ 11,283
3,199
$ 14,482
2011
Year Ended December 31,
2010
(in thousands)
2009
Supplemental disclosure of cash flow information:
Cash paid for interest
Cash paid for taxes
Non-cash investing activities:
Translation adjustment
$ 6,877 $ 6,893 $ 8,804
380
10,331
1,198
$ (704)
$ 1,088
$ 456
F-31
Item 15(a)
COL. A
Description
LIFETIME BRANDS, INC.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(in thousands)
COL. B
Balance at
beginning of
period
COL. C
Additions
charged to
costs and
expenses
COL. D
COL. E
Deductions
Balance at
end of period
Year ended December 31, 2011
Deducted from asset accounts:
Allowance for doubtful
accounts
Reserve for sales
returns and allowances
Year ended December 31, 2010
Deducted from asset accounts:
Allowance for doubtful
accounts
Reserve for sales
returns and allowances
Year ended December 31, 2009
Deducted from asset accounts:
Allowance for doubtful
accounts
Reserve for sales
returns and allowances
$ 1,057
$ 63
$ (792)
(a) $ 328
11,554
$ 12,611
3,378
$ 3,441
(c)
(10,658)
4,274
$ (11,450) $ 4,602
(b)
$ 1,433
$ 1,456
$ (1,832)
(a) $ 1,057
15,124
$ 16,557
661
$ 2,117
(c)
(4,231)
$ (6,063)
(b)
11,554
$ 12,611
$ 1,853 $ 1,204
$ (1,624)
(a) $ 1,433
12,798
$ 14,651
22,180
$ 23,384
(c)
(19,854)
$ (21,478)
(b)
15,124
$ 16,557
(a) Uncollectible accounts written off, net of recoveries.
(b) Allowances granted.
(c) Charged to net sales.
S-1
Subsidiaries of the Registrant
Name of subsidiary
Pfaltzgraff Factory Stores, Inc.
TMC Acquisition Inc.
Lifetime Delaware Holdings, LLC
Wallace Silversmiths de Puerto Rico Ltd.
Lifetime Brands, Inc. (HK) Limited
Exhibit 21.1
State/Country of
Incorporation
Ownership
Delaware
Delaware
Delaware
Cayman Islands
Hong Kong
Lifetime Brands Global Sourcing (Shanghai) Consultancy Limited
China
New Goal Development Limited
Lifetime Brands UK Limited
Creative Tops Holdings Limited
Creative Tops Limited
Lifetime Brands Holdings Limited
Lifetime Brands do Brasil Participacoes Ltda.
World Alliance Enterprises Limited
Grand Venture Enterprises Limited
Creative Tops Far East Limited
LTB de México, S.A. de C.V.
LVA Limited
Hong Kong
United Kingdom
United Kingdom
United Kingdom
United Kingdom
Brazil
Hong Kong
Hong Kong
Hong Kong
Mexico
Hong Kong
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
99.99%
80%
Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 333-
105382, 333-146017 and 333-162734) and the Registration Statement on Form S-3 (No. 333-137575) of
Lifetime Brands, Inc. of our reports dated March 9, 2012, with respect to the consolidated financial
statements and schedule of Lifetime Brands, Inc., and the effectiveness of internal control over financial
reporting of Lifetime Brands, Inc. included in this Annual Report (Form 10-K) for the year ended
December 31, 2011.
Jericho, New York
March 9, 2012
/s/ ERNST & YOUNG LLP
I, Jeffrey Siegel, certify that:
CERTIFICATION
Exhibit 31.1
1. I have reviewed this Annual Report on Form 10-K of Lifetime Brands, Inc. (“the registrant”);
2. Based on my knowledge, this Annual Report does not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period covered by this Annual
Report;
3. Based on my knowledge, the financial statements, and other financial information included in this
Annual Report, fairly present in all material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in this Annual Report;
4. The registrant’s other certifying officers and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-14 and internal
control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))) for the
registrant and have:
a. designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information relating to
the registrant, including its consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this Annual Report is being prepared;
b. designed such internal control over financial reporting, or caused such internal control over
financial reporting to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;
c. evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented
in this report our conclusions about the effectiveness of the disclosure controls and procedures,
as of the end of the period covered by this report based on such evaluation; and
d. disclosed in this report any change in the registrant’s internal control over financial reporting
that occurred during the registrant’s most recent fiscal quarter that has materially affected or is
reasonably likely to materially affect the registrant’s internal control over financial reporting;
and
5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of
internal control over financial reporting, to the registrant’s auditors and the audit committee of
registrant’s Board of Directors (or persons performing the equivalent functions):
a. all significant deficiencies in the design or operation of internal control over financial reporting
which are reasonably likely to adversely affect the registrant’s ability to record, process,
summarize and report financial information; and
b. any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant’s internal control over financial reporting.
Date: March 9, 2012
/s/ Jeffrey Siegel
Jeffrey Siegel
Chief Executive Officer and President
I, Laurence Winoker, certify that:
CERTIFICATION
Exhibit 31.2
1. I have reviewed this Annual Report on Form 10-K of Lifetime Brands, Inc. (“the registrant”);
2. Based on my knowledge, this Annual Report does not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period covered by this Annual
Report;
3. Based on my knowledge, the financial statements, and other financial information included in this Annual
Report, fairly present in all material respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this Annual Report;
4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-14 and internal control
over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))) for the registrant and
have:
a. designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information relating to
the registrant, including its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this Annual Report is being prepared;
b. designed such internal control over financial reporting, or caused such internal control over
financial reporting to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;
c. evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in
this report our conclusions about the effectiveness of the disclosure controls and procedures, as of
the end of the period covered by this report based on such evaluation; and
d. disclosed in this report any change in the registrant’s internal control over financial reporting that
occurred during the registrant’s most recent fiscal quarter that has materially affected or is
reasonably likely to materially affect the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of
internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s
Board of Directors (or persons performing the equivalent functions):
a. all significant deficiencies in the design or operation of internal control over financial reporting
which are reasonably likely to adversely affect the registrant’s ability to record, process,
summarize and report financial information; and
b. any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant’s internal control over financial reporting.
Date: March 9, 2012
/s/ Laurence Winoker
Laurence Winoker
Senior Vice President – Finance, Treasurer and Chief Financial Officer
Exhibit 32.1
Certification by Jeffrey Siegel, Chief Executive Officer and President, and Laurence Winoker, Senior
Vice President – Finance, Treasurer and Chief Financial Officer, Pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
I, Jeffrey Siegel, Chief Executive Officer and President, and I, Laurence Winoker, Senior Vice President
– Finance, Treasurer and Chief Financial Officer, of Lifetime Brands, Inc., a Delaware corporation (the
“Company”), each hereby certifies that:
(1)
(2)
The Company’s Annual report on Form 10-K for the year ended December 31, 2011
(the “Form 10-K”) fully complies with the requirements of Section 13(a) or 15(d) of the
Securities Exchange Act of 1934, as amended; and
The information contained in the Form 10-K fairly presents, in all material respects, the
financial condition and results of operations of the Company.
/s/ Jeffrey Siegel /s/ Laurence Winoker
Jeffrey Siegel
Laurence Winoker
Chief Executive Officer and President Senior Vice President- Finance, Treasurer
and Chief Financial Officer
Date: March 9, 2012
Date: March 9, 2012
A signed original of this written statement required by Section 1350 has been provided to Lifetime Brands, Inc.
and will be retained by Lifetime Brands, Inc. and furnished to the Securities and Exchange Commission or its
staff, upon request.