ANNUAL REPORT 2012
FINANCIAL HIGHLIGHTS
NET SALES
IN MILLIONS
EBITDA(1)
IN MILLIONS
500
0
45
0
2009
2010
2011
2012
2009
2010
2011
2012
NET INCOME AND ADJUSTED NET INCOME(1)
IN MILLIONS
DILUTED INCOME PER COMMON SHARE AND
ADJUSTED DILUTED INCOME PER COMMON SHARE(1)
NET INCOME
ADJUSTED NET INCOME
DILUTED INCOME PER COMMON SHARE
ADJUSTED DILUTED INCOME PER COMMON SHARE
Year Ended December 31,
(in thousands, except per share data)
2009
2010
2011
2012
$415,040
$443,171
$444,418
$486,842
$32,014
$2,715
$5,195
$0.22
$0.43
$42,918
$20,261
$14,569
$1.64
$1.18
$38,098
$14,066
$14,486
$1.12
$1.16
$41,242
$20,947
$16,156
$1.64
$1.26
NET SALES
EBITDA(1)
NET INCOME
ADJUSTED NET INCOME(1)
DILUTED INCOME
PER COMMON SHARE
ADJUSTED DILUTED INCOME
PER COMMON SHARE(1)
(1) EBITDA AND ADJUSTED NET INCOME ARE NON-GAAP FINANCIAL MEASURES THAT
ARE RECONCILED TO GAAP NET INCOME ON PAGE 13 OF THIS ANNUAL REPORT.
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.
2
Lifetime Brands, Inc. 2012 Annual Report DEAR FELLOW SHAREHOLDERS
2012 was, in all respects, a very positive year for Lifetime Brands; although, given our
strong portfolio of brands, our commitment to market-leading product innovation, and
our sophisticated systems, I believe we can do an even better job in the years ahead.
As shown in the tables on the inside cover of
this Annual Report, we delivered solid financial
results, notwithstanding lackluster economic
conditions in North America and Europe.
Growth in consolidated net sales was fueled by
a 19% increase in sales of kitchenware products,
which reflected the strength of our key brands, the
introduction of over 5000 new products, which
featured innovative styles and designs, and by the
inclusion of Creative Tops, the UK-based tableware and
kitchenware company we acquired in November 2011.
Our strong cash flow enabled us to strengthen our
balance sheet and reduce our leverage ratio. We
refinanced our $40.0 million term loan with a new $35.0
million senior secured term loan at a significantly reduced
interest rate. Additionally, we entered into an interest
rate swap agreement that effectively converts a portion
of our variable rate interest payments to a fixed rate.
While continuing to focus on our core markets, we
expanded into new classifications. During the year,
we introduced several major kitchenware programs,
including Savora®, a new concept in high-end kitchen
tools that features sleek and dramatic styling, the
highest quality materials and workmanship, and
unique functionality; several new lines of cookware
under the Guy Fieri® brand; and Fred® & Friends, a
a line of innovative and fun kitchen tools, tabletop
accessories, party goods, and giftware products we
acquired in December 2012. We will augment each of
these programs in 2013 by adding approximately ten
additional Savora® items, introducing a line of Guy Fieri®
kitchen cutlery, and many more Fred® & Friends items.
3
Beginning in 2007, with our acquisition of a 30% equity
interest in Grupo Vasconia S.A.B., we made expansion
into international markets a priority for Lifetime Brands.
Our Partner Company model has been very successful,
as it combines Lifetime’s strengths in branding,
product design, sourcing, and marketing with the
market knowledge and expertise of seasoned local
management teams that have significant economic
stakes in their enterprises. In 2012, total sales of Lifetime
and its Partner Companies exceeded $700 million.
In 2012, Grupo Vasconia acquired Almexa Aluminio, S.A.
Already one of Mexico’s largest housewares companies,
this acquisition made Vasconia Mexico’s largest
integrated producer of aluminum products,
and Mexico’s only domestic manufacturer of aluminum
foil. Since becoming a Lifetime Partner Company,
Grupo Vasconia’s sales have more than doubled, in
large measure due to its access to Lifetime’s brands,
product design groups, and Asia sourcing organization.
In December 2011, we acquired a 40% equity interest
in GS Internacional S/A, a wholesale distributor of
tabletop and kitchenware products in Brazil. Prior to
becoming a Lifetime Partner Company, GS marketed its
products primarily to independent shops and to small
chains. We have worked closely with management to
transition GS into a more broadly-based housewares
company, employing the same successful model we
used with Grupo Vasconia. GS will begin shipping
Farberware® kitchenware products to one of Brazil’s
largest retailers in the third quarter of 2013.
Lifetime Brands Canada also has continued to do
well, reflecting the steadier Canadian economy.
Lifetime Brands, Inc. 2012 Annual Report During the year, we undertook two
important corporate initiatives:
Lifetime Next™ is a strategic initiative designed to
evaluate every part of our business to assure they are
properly aligned with our strategic goals. Beginning
with a comprehensive assessment of our internal
strengths and weaknesses, Lifetime Next™ provided us
with valuable insight into how to refocus our efforts in
areas as diverse as product quality, brand development,
resource allocation, and consumer satisfaction.
Lifetime QM™ is a revolutionary tablet-based
quality assurance tool that is integrated into our
SAP enterprise system. Developed entirely in-house,
Lifetime QM™ enhances our ability to assure the
design, materials, and workmanship of all our products
are in strict compliance with our specifications
and customers’ requirements. By greatly reducing
quality issues at the factory level, Lifetime QM™
should help expand our profitability and enhance
the overall quality of our products and packaging.
Looking at 2013, I foresee little change in the global
macroeconomic outlook. With consumer demand
for housewares products in North America likely
to remain essentially flat, our growth at home will
come from developing new and innovative products
that provide opportunities to increase our overall
share of market. We also will continue to look for
attractive acquisitions that expand our product
categories and further our expansion into international
markets, and make investments in our systems and
infrastructure that allow us to become more efficient.
At the Company’s Annual Meeting in June 2012,
stockholders elected Michael J. Regan to Lifetime’s
Board of Directors. Mike is a former Vice Chairman
and Chief Administrative Officer of KPMG LLP, and
has extensive public company board experience.
Mike has been an active and valuable participant
on the board and as a member of the Audit and
the Nominating and Governance Committees.
Jeffrey Siegel
Chairman of the Board,
President and Chief Executive Officer
promotions and annual plan-o-gram changes, which
are part of the normal retail calendar. Quarter-to-
quarter shifts also result from the timing of shipments
to certain large warehouse clubs that do not follow
predictable cycles. These fluctuations are inherent
in Lifetime’s business and, consequently, I believe
one should look at our results on an annual basis
and not be overly surprised if one or two quarters
are out of line with prior periods or published
forecasts. We expect our growth in 2013 to occur
primarily in the third and fourth quarters.
In March 2013, we announced a 25% increase in
our cash dividend, which reflects the confidence
the Board of Directors and management have in our
business strategy and our ability to achieve long-term
growth. By continuing to leverage our brands with
market-leading product innovation and continued
international expansion, I am confident we can
deliver profitable growth for our stockholders.
Respectfully yours,
On the Company’s Fourth Quarter 2012 Conference
Call earlier this year, I noted that our financial results
can vary significantly from quarter to quarter. These
fluctuations, in part, reflect the timing of seasonal
Jeffrey Siegel
Chairman of the Board,
President and Chief Executive Officer
4
Lifetime Brands, Inc. 2012 Annual Report MOVING TO LIFETIME NEXT™
Strategic planning allows us to proactively take control of the future. It
lays the crucial foundation for our growth and continued success, while
solidifying our dedication and commitment to constantly improve.
To create positive results for the company, we will
hold ourselves accountable to our plan. It is a top
priority to create measureable milestones for every
strategic action point in our plan. As we are in the
process of developing these metrics, we now begin
to communicate about and live towards our future.
The 12 priorities center around
global expansion, innovation,
process improvement, and
delivering a 5-star experience.
The primary result of the strategic planning process
is defined direction, and by focusing on our 12
priorities, our company will be poised for industry
leadership. Our strategic plan will guide our
business decisions, further our success, and help
us achieve both our short- and long-term goals.
Lifetime Next™ lets us take care of day-to-day
activities while giving us a long-term direction.
It’s a way for us to layout what we need to do
now and in the future to achieve our goals. These
goals stem from our vision of being the leader in
the housewares industry, and led us to create 12
priorities we must focus on for continued success.
Lifetime Next puts us on the path that best fits
our company and culture to achieve our vision.
Through this process, we break down our vision into
actionable steps we can measure. Measuring our
progress against this roadmap gives us early warning
signs if we get off track from our stated objectives.
Lifetime Next helps us know if we are doing
the right things, and if we are doing things
right. In other words, it helps us make decisions.
Strategy helps us determine the best way to
allocate our resources of time and money.
We have made it our mission to meet
or exceed goals at every turn, and our
new plan demonstrates our promise
to strengthen our organization
to achieve market supremacy.
To ensure our strategic plan is embraced at
every level, we will integrate it into all aspects
of our culture and everyday thinking. We
will communicate to all associates that the
strategic plan provides the “North Star” that
governs our everyday decision-making.
5
Lifetime Brands, Inc. 2012 Annual Report
6
Lifetime Brands, Inc. 2012 Annual Report MOVING ACROSS BORDERS
International expansion has been at the heart of
Lifetime Brands’ growth strategy since 2006.
International Expansion
We have focused our efforts in two directions:
emerging markets – in which a rapidly
expanding middle class is creating a demand
for branded household products – and large
established markets where our products
have not been previously available.
We have pursued this strategy in a
measured way, leading to a strong
and fast-growing portfolio of Partner
Companies that provide strong growth
and attractive economic returns.
Our investments in these Partner Companies
include direct ownership, minority equity
investments, joint ventures, and profit sharing
relationships. In each case we rely on experienced
local leadership with deep market knowledge
and strong management expertise.
Emerging Markets
To date, our largest investments have been in Latin
America, where Lifetime’s Partner Companies are
Grupo Vasconia SAB, Mexico’s largest housewares
company, in which we own a 30% equity interest,
and GS Internacional S/A, a leading wholesale
distributor of branded housewares products in
Brazil, in which we own a 40% equity interest.
Grupo Vasconia, a Partner Company since
2007, operates in both the industrial and
consumer segments of the Mexican market.
7
Vasconia’s net sales for 2012
were $168.7 million.
Vasconia acquired Industria Mexicana del Aluminio,
an integrated manufacturer of aluminum
products, in 2008 and in 2012 purchased Almexa
Aluminio, Mexico’s only other domestic aluminum
producer and its sole manufacturer of aluminum
foil. Operating as Almexa, Vasconia is Mexico’s
largest industrial producer of aluminum products.
In the consumer segment, Vasconia manufactures
aluminum cookware and imports kitchenware
and tabletop products that it sources
through Lifetime’s Asia sourcing network. In
2013, will begin manufacturing and selling
enamel-on-steel cookware products.
GS Internacional (“GSI”) markets dinnerware,
glassware, home décor, kitchenware, and
barware to more than 7,000 customers, including
major department stores, housewares retailers,
and independent shops. Since becoming a
Partner Company in 2011, GSI has used its
access to Lifetime’s product lines, brands,
and sourcing to expand its business into the
mass market and grocery retail channels.
We also have established in a joint venture
in China to market Mikasa® dinnerware,
glassware, and giftware products, and are
pursuing opportunities for joint ventures and
partnerships in other large developing markets.
Lifetime Brands, Inc. 2012 Annual Report LIFETIME BRANDS CANADA (“LBC”)
GRUPO VASCONIA
GS INTERNACIONAL
CREATIVE TOPS HOLDINGS LIMITED
CREATIVE TOPS FAR EAST LIMITED
Established Markets
In 2008, we entered into an agreement with Accent-
Fairchild Group (“AFG”), a leading provider of
consumer products based in Montreal and Toronto
to form Lifetime Brands Canada (“LBC”). AFG had been
a distributor of our products in the Canadian market.
In 2012, Creative Tops introduced
Lifetime’s kitchenware and
tabletop product lines in the UK.
Net sales were $42.6 million.
Since becoming a Partner Company,
LBC has grown rapidly. LBC’s net
sales in 2012 were $36.0 million.
The company also supplies retailers in Australia,
France, Germany, Italy, Ireland, Korea, the
Netherlands, New Zealand, Norway, Russia, South
Africa, Spain, Taiwan, and the United States.
In 2011, we acquired Creative Tops Holdings
Limited and Creative Tops Far East Limited
(collectively, “Creative Tops”). Creative Tops
designs and markets private label and branded
tabletop and kitchenware products.
Its customer base comprises major supermarket
groups, department stores, mass-market retailers,
national chains, garden centers, and thousands
of independent shops throughout the UK.
8
Lifetime Brands, Inc. 2012 Annual Report MOVING WITH TECHNOLOGY
Quality assurance has always played a critical role in assuring
we deliver the highest-quality product to market.
Additionally, Lifetime QM is loaded with industry
and retailers’ standards for both product and
packaging. This allows inspectors to produce
quantifi able quality reports on the product level that
Category Managers can view simply by logging into
SAP on their computers.
Lifetime QM has inspection plans for
over 16,000 items, and each one is
customized by division and category.
Lifetime QM enables us to create more robust
vendor compliance scorecards that also include
social compliance conformance and shipping
performance. In turn, we will be able to reduce
the number of defective materials being received,
and also reduce allowances paid to customers by
providing proper quality measurement facts.
Due to this, we will see an approximately
20% reduction in warehouse re-work cost.
The end result of this process is that it produces a
positive impact on the overall consumer experience.
The products consumers purchase both online
and in stores have passed extremely strict and
sophisticated quality tests, assuring them of the
highest-quality goods possible.
We have a team of inspectors who regularly
conduct in-fi eld audits at all of our factories to
assure our products meet or exceed industry and
retailers’ standards. In the past, this proved to be a
time-consuming and labor-intensive task. Results
and fi ndings were handwritten on multiple sheets
of paper without any standardized wording. It
was a process we knew we could improve.
We are proud to have developed, tested,
and launched a revolutionary new
mobile inspector toolkit: Lifetime QM.
This toolkit provides a digital, systemized approach
to quality assurance. The digital app runs on
iPad Minis, and formalizes the gathering and
maintaining of inspection requirements, quality
objectives, and approval processes. Now our
inspectors have a powerful, handheld digital toolkit
loaded with proprietary software to measure
performance, record results, and identify issues.
Because we designed the patent-pending user
interface – or UI – from scratch, we were able to
build custom-tailored features directly into the app.
We made Lifetime QM integrate seamlessly with our
existing SAP system, so changes can be received and
results reported instantly. Reports are generated
in real time to allow high-level analytics and
immediate identifi cation of potential issues, along
with corrective action plans.
9
Lifetime Brands, Inc. 2012 Annual Report
Lifetime Brands, Inc. 2012 Annual Report 10
MOVING FORWARD WITH FRED® & FRIENDS
As we continue to explore opportunities to expand our operations, we
acquired Fred & Friends, a supplier of whimsical gift-based products.
We are thrilled to welcome Fred® & Friends to
The Lifetime Brands family.
Fred sells exclusively through brick-and-
mortar retailers, catalogs, and web stores.
Fred® & Friends fully supports their products
with close manufacturing supervision,
ongoing safety testing, and handsome
packaging. They keep everything in stock for
shipment to the US, Canada, and Mexico.
They boast a thriving network
of thousands of independent
retailers, which increases Lifetime’s
market presence by over 30%.
This enables us to take advantage of their business
model and place our existing brands – like
Savora® and Misto® – into more retail outlets.
Fred® has a unique take on everyday products and
packaging, and it’s evident in everything they do.
They focus on products that are
well designed, put a smile on your
face, and don’t cost a fortune. In
short, products that are fun to own.
Fred® & Friends product line is more about
attitude and style than actual categories, but
they do focus on a few broadly defined areas:
tabletop accessories, kitchen implements and
tools, party goods, personal accessories, and
desk and tech products. They delight in taking
everyday functional products and turning
them into something fresh and unexpected,
something funny, something personal.
11
Lifetime Brands, Inc. 2012 Annual Report 12
Lifetime Brands, Inc. 2012 Annual Report LIFETIME BRANDS, INC.
Supplemental Information
Reconciliation of GAAP to Non-GAAP Operating Results
(In thousands - except per share data)
Consolidated EBITDA:
Net income as reported
Subtract out:
Undistributed equity in earnings, net
Extraordinary item, net of tax
Add back:
Income tax provision
Interest expense
Depreciation and amortization
Restructuring expenses
Stock compensation expense
Loss on early retirement of debt
Intangible asset impairment
Permitted acquisition related expenses
Year Ended
December 31,
2009
2010
2011
2012
(unaudited)
$
2,715
$
20,261
$ 14,066
$ 20,947
(1,953)
-
(2,321)
(2,477)
(2,896)
-
(5,665)
-
1,880
13,185
11,472
2,616
2,099
-
-
-
4,602
9,351
9,810
-
2,928
764
-
-
6,122
7,758
8,397
-
2,795
-
-
1,856
$ 38,098
5,208
5,898
9,324
-
2,793
1,363
1,069
305
$ 41,242
Consolidated EBITDA
$ 32,014
$ 42,918
Consolidated EBITDA is a non-GAAP measure that the Company defines as net income, adjusted to exclude undistributed equity earnings, income
taxes, interest, depreciation and amortization, stock compensation expense, loss on early retirement of debt, intangible asset impairment and acquisition
related expenses, as shown in the table above.
Adjusted net income and adjusted diluted income per common share:
Net income as reported
Adjustments:
Restructuring expenses, net of tax
Extraordinary item, net of tax
Bargain purchase gain in equity in earnings, net of tax
Tax benefit recorded in equity in earnings
Impairment of Vasconia investment, net of tax
Intangible asset impairment, net of tax
Loss on early retirement of debt, net of tax
Retirement benefit obligation expense, net of tax
Acquisition related expenses, net of tax
Reduction of deferred tax liability related to prior year
Normalized tax benefit (provision) on reported income
Adjusted net income
Adjusted diluted income per share
Year Ended
December 31,
2009
2010
2011
2012
(unaudited)
$
2,715
$
20,261
$
14,066
$
20,947
1,570
-
-
-
-
-
-
-
-
-
-
(2,477)
-
-
-
-
443
-
-
-
-
-
-
-
-
-
-
1,230
-
-
(4,112)
(1,116)
1,336
645
822
268
188
-
-
(2,283)
910
5,195
0.43
$
$
(3,658)
14,569
1.18
$
$
(810)
14,486
1.16
$
$
(539)
16,156
1.26
$
$
Adjusted net income in 2009 excludes a charge for restructuring activities. Adjusted net income in 2010 excludes an extraordinary gain and a loss on
early retirement of debt. Adjusted net income in 2011 excludes acquisition related expenses. Adjusted net income in 2012 excludes the bargain purchase
gain included in equity in earnings, a tax benefit recorded in equity in earnings, a write down in the Vasconia investment to fair value, intangible asset
impairment, a loss on early retirement of debt related to the repayment of the Company’s Term Loan, an expense related to retirement benefit obligations,
acquisition related expenses, and a reduction of the Company’s deferred tax liability related to the prior year. All years include an adjustment to reflect
a normalized annual tax rate.
EBITDA, adjusted net income and adjusted diluted income per common share are non-GAAP financial measures. For purposes of Regulation G, a non-
GAAP financial measure is a numerical measure of a company’s historical or future financial performance, financial position or cash flows that excludes
amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable measure calculated and
presented in accordance with GAAP in the statements of income, balance sheets, or statements of cash flows of the Company; or includes amounts, or is
subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable measure so calculated and presented.
Pursuant to the requirements of Regulation G, the Company has provided a reconciliation of the non-GAAP financial measures to the most directly
comparable GAAP financial measures. These non-GAAP measures are provided because management of the Company uses these financial measures in
evaluating the Company’s on-going financial results and trends. Management uses this non-GAAP information as an indicator of business performance.
13
Lifetime Brands, Inc. 2012 Annual Report
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, 2012
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:133) No (cid:53)
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:133) No (cid:53)
Lifetime Brands 2012 10-K FINAL_rev.indd 1
Lifetime Brands 2012 10-K FINAL_rev.indd 1
4/25/13 12:44 PM
4/25/13 12:44 PM
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:53) No (cid:133)
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:53)
No (cid:133)
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:53)
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:
Large accelerated filer (cid:133) Accelerated filer (cid:53)
Non-accelerated filer (do not check if a smaller reporting company) (cid:133) Smaller reporting company (cid:133)
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
Yes (cid:133)
No (cid:53)
The aggregate market value of 9,562,520 shares of the voting common equity held by non-affiliates of the
registrant as of June 30, 2012 was approximately $119,244,624. 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 15, 2013 was
12,756,467.
DOCUMENTS INCORPORATED BY REFERENCE
Parts of the registrant’s definitive proxy statement for the 2013 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 2012 10-K FINAL_rev.indd 2
Lifetime Brands 2012 10-K FINAL_rev.indd 2
4/25/13 12:44 PM
4/25/13 12:44 PM
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 ........................................................................................................................................................ 11
3. Legal Proceedings .......................................................................................................................................... 11
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 ........................................................................................................................................... 12
6. Selected Financial Data ................................................................................................................................... 14
7. Management’s Discussion and Analysis of Financial Condition and Results of Operations......................... 15
7A. Quantitative and Qualitative Disclosures About Market Risk ......................................................................... 27
8. Financial Statements and Supplementary Data ............................................................................................... 28
9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ........................ 28
9A. Controls and Procedures .................................................................................................................................. 29
9B. Other Information ............................................................................................................................................ 31
PART III
10. Directors, Executive Officers and Corporate Governance .............................................................................. 31
11. Executive Compensation ................................................................................................................................. 31
12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters ...... 31
13. Certain Relationships and Related Transactions, and Director Independence ................................................ 31
14. Principal Accounting Fees and Services ......................................................................................................... 31
PART IV
15. Exhibits and Financial Statement Schedules .................................................................................................. 32
SIGNATURES ...................................................................................................................................................... 37
1
Lifetime Brands 2012 10-K FINAL_rev.indd 3
Lifetime Brands 2012 10-K FINAL_rev.indd 3
4/25/13 12:44 PM
4/25/13 12:44 PM
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
Lifetime Brands 2012 10-K FINAL_rev.indd 4
Lifetime Brands 2012 10-K FINAL_rev.indd 4
4/25/13 12:44 PM
4/25/13 12:44 PM
PART I
Item 1. Business
OVERVIEW
The Company designs, sources and sells branded kitchenware, tabletop and other products used in the home and
markets its products under a number of well-respected and widely-recognized brand names and trademarks, which
are either owned or licensed by the Company, or through retailers’ private labels. 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 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 3,600 new or redesigned products to
market in 2012 and expects to bring to market over 4,000 new or redesigned products in 2013.
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, cookware and novelty
housewares) 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”), an aluminum manufacturer and 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 imported 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 invested in Grand Venture Holdings Limited, a joint venture with Manweal Development Limited, a
Chinese corporation, to distribute Mikasa® products in China.
In December 2012, the Company acquired Fred® and Friends, a business which designs and markets novelty
houseswares and other products under the Fred® brand. The acquisition resulted in an expansion of the Company’s
Kitchenware product category to include innovative kitchen tools, tabletop accessories, party goods, personal
accessories and other products.
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
Lifetime Brands 2012 10-K FINAL_rev.indd 5
Lifetime Brands 2012 10-K FINAL_rev.indd 5
4/25/13 12:44 PM
4/25/13 12:44 PM
The Company’s top brands and their respective product categories are:
Owned Tabletop and Home Solutions
Owned
Brand Licensed/Owned Product Category
Farberware® Licensed* Kitchenware and Tabletop
KitchenAid® Licensed Kitchenware
Mikasa®
Pfaltzgraff®
Kamenstein®
Cuisinart® Licensed Kitchenware and Tabletop
Elements®
Melannco®
Wallace Silversmiths®
Misto® Licensed Kitchenware
Fred®
Kitchenware
V&A®
Royal Botanic Gardens Kew®
Owned Home Solutions
Owned Home Solutions
Home Solutions
Licensed
Licensed
Tabletop
Owned
Owned
Owned
Tabletop and Home Solutions
Tabletop and Home Solutions
* The Company has a 183 year royalty free license to utilize the Farberware
Tabletop
® 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
Sterling® and Housewares Deals® 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),
department stores (such as Macy’s and Bon-Ton), warehouse clubs (such as Costco and Sam’s Club), supermarkets
(such as Stop & Shop, Kroger, Tesco and Sainsbury’s), off-price retailers (such as Marshalls, T.J. Maxx, Home
Goods, Ross Stores and Big Lots) 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, 2012, 2011 and 2010, Wal-Mart Stores, Inc. (including Sam’s Club and Asda
Superstore) accounted for 16%, 15% and 15% of net sales, respectively. No other customer accounted for 10% or
more of the Company’s net sales during these periods.
4
Lifetime Brands 2012 10-K FINAL_rev.indd 6
Lifetime Brands 2012 10-K FINAL_rev.indd 6
4/25/13 12:44 PM
4/25/13 12:44 PM
DISTRIBUTION
The Company operates distribution centers at the following locations:
Location
Fontana, California
Robbinsville, New Jersey
Winchendon, Massachusetts
Corby, England
Cumberland, Rhode Island
Medford, Massachusetts
Size
(square feet)
753,000
700,000
175,000
130,000
28,000
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, England.
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 101 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 Hong Kong, the United States,
Japan, Vietnam, Taiwan, Indonesia, Malaysia, Slovakia, Korea, Italy, India, Slovenia, Germany, Portugal, Thailand,
Switzerland, the Czech Republic, Turkey, Poland, France, Canada and the United Kingdom. The Company orders
products substantially in advance of the anticipated time of their sale by the Company. 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
Lifetime Brands 2012 10-K FINAL_rev.indd 7
Lifetime Brands 2012 10-K FINAL_rev.indd 7
4/25/13 12:44 PM
4/25/13 12:44 PM
PATENTS
The Company owns approximately 140 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 received within close proximity to the required shipment dates.
EMPLOYEES
At December 31, 2012, the Company had a total of 1,247 full-time employees, of whom 200 are located in Asia and
115 in Europe. In addition, the Company employed 51 people on a part-time basis, predominately in Corporate
Marketing/Sales Support. 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 in the United States and the Consumer Protection Act in the United Kingdom. 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 national, 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.
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 and related tariffs associated with certain types of products,
incidents and fears involving security, terrorism and wars, political unrest and other restrictions on trade and travel.
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 relating to value-added taxes, import and export duties
and quotas, anti-dumping regulations and related tariffs 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, the United
Kingdom and elsewhere 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.
6
Lifetime Brands 2012 10-K FINAL_rev.indd 8
Lifetime Brands 2012 10-K FINAL_rev.indd 8
4/25/13 12:44 PM
4/25/13 12:44 PM
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
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, could 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, the diversion of the Company’s
management’s attention and the 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
July 2012, the Company amended its $150.0 million secured credit agreement (the “Revolving Credit Facility”) to
increase the lenders’ commitment to $175.0 million and replaced its $40.0 million second lien credit agreement
(the “Term Loan”) with a $35.0 million senior secured credit agreement (the “Senior Secured Term Loan”).
Interest
The Company’s borrowings bear interest at floating rates. An increase in interest rates would adversely affect the
Company’s profitability. The Company entered into an interest rate swap agreement in August 2012 to manage
interest rate exposure in connection with a portion of its variable interest rate borrowings. To the extent that the
Company’s access to credit may 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, more extensive packaging requirements, changes in order quantities, 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 effect on the
Company. Significant changes or financial difficulties, including consolidations of ownership, restructurings,
7
Lifetime Brands 2012 10-K FINAL_rev.indd 9
Lifetime Brands 2012 10-K FINAL_rev.indd 9
4/25/13 12:44 PM
4/25/13 12:44 PM
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. 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 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 2012, Wal-Mart Stores, Inc. (including Sam’s Club and Asda Superstore) accounted for 16% 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 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, and the United
Kingdom, principally Felixstowe. Accordingly, the Company is subject to risks incidental to such transportation.
These risks include, but are not limited to, increases in fuel costs, fuel shortages, 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
Lifetime Brands 2012 10-K FINAL_rev.indd 10
Lifetime Brands 2012 10-K FINAL_rev.indd 10
4/25/13 12:44 PM
4/25/13 12:44 PM
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 Company is required to comply with the
United States Foreign Corrupt Practices Act, the U.K. Bribery Act and similar anti-bribery laws prohibiting the
Company from engaging in bribery or making other prohibited payments to foreign officials for the purpose of
obtaining or retaining business. The Company’s employees and other agents could engage in such conduct for
which the Company might be held responsible. If the Company’s employees or other agents are found to have
engaged in such practices, the Company could suffer substantial penalties.
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, the
Office of Fair Trading in the U.K., by other regulatory authorities or through private causes of action. Any defects in
products the Company markets could harm the Company’s reputation, 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’s product standards could be impacted by new or revised environmental rules and regulations or other
social initiatives.
The Company is subject to significant laws and regulations, including the Dodd-Frank Wall Street Reform and
Consumer Protection Act of 2010 and the Sarbanes-Oxley Act of 2002 and the regulations under these laws. The
Company cannot assure strict adherence to these laws and 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 laws and regulations, 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 laws and regulations 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 and regulations 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 in a
competitive marketplace can be dependent upon the creation and launch of new innovative products.
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 which could impact operations 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.
9
Lifetime Brands 2012 10-K FINAL_rev.indd 11
Lifetime Brands 2012 10-K FINAL_rev.indd 11
4/25/13 12:44 PM
4/25/13 12:44 PM
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.
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. The
U.S. federal healthcare legislation enacted in 2010 and proposed amendments to the legislation contain provisions
which could materially impact the Company’s future healthcare costs. While the legislation’s ultimate impact is not
yet known, it is possible that these changes could significantly impact the Company’s costs.
Business Interruptions
The Company’s worldwide operations could be subject to natural and man-made disasters, telecommunications
failures, water shortages, tsunamis, floods, hurricanes, typhoons, fires, extreme weather conditions, health epidemics
and other business interruptions. The occurrence of any of these business disruptions could seriously harm the
Company’s business, revenue and financial condition and increase the Company’s costs and expenses. If the
Company’s or its manufacturers’ warehousing facilities or transportation facilities are damaged or destroyed, the
Company would be unable to distribute products on a timely basis, which could harm the Company’s business. The
Company’s back-up operations may be inadequate, and the Company’s business interruption insurance may not be
enough to compensate for any losses that may occur.
Item 1B. Unresolved Staff Comments
None
10
Lifetime Brands 2012 10-K FINAL_rev.indd 12
Lifetime Brands 2012 10-K FINAL_rev.indd 12
4/25/13 12:44 PM
4/25/13 12:44 PM
Item 2. Properties
The following table lists the principal properties at which the Company operates its business at December 31, 2012:
Location
Fontana, California
Description
Principal West Coast warehouse and
distribution facility
Size
(square feet)
753,000
Owned/
Leased
Leased
Robbinsville, New Jersey
Principal East Coast warehouse and
700,000
Leased
distribution facility
Winchendon, Massachusetts
Warehouse and distribution facility,
175,000
Owned
and spice packing line
Garden City, New York
Corby, England
Corporate headquarters/main showroom
Offices, showroom, warehouse and
146,000
145,000
Leased
Leased
Medford, Massachusetts
Offices, showroom, warehouse and
69,000
Leased
distribution facility
San Germán, Puerto Rico
Cumberland, Rhode Island
Sterling silver manufacturing facility
Offices, warehouse and distribution
distribution facility
Shanghai, China
Guangzhou, China
New York, New York
York, Pennsylvania
Atlanta, Georgia
Kowloon, Hong Kong
Bentonville, Arkansas
Menomonee Falls, Wisconsin
Item 3. Legal Proceedings
facility
Offices
Offices
Showrooms
Offices
Showrooms
Offices and showrooms
Offices and showroom
Showroom
55,000
34,000
22,000
18,000
17,000
14,000
11,000
9,000
7,000
4,000
Leased
Leased
Leased
Leased
Leased
Leased
Leased
Leased
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. In February 2013, the EPA requested
access to conduct further environmental investigation at the property during May 2013.
The Company is not aware of any determination by the EPA that any remedial action is required 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.
Item 4. Mine Safety Disclosure
Not applicable
11
Lifetime Brands 2012 10-K FINAL_rev.indd 13
Lifetime Brands 2012 10-K FINAL_rev.indd 13
4/25/13 12:44 PM
4/25/13 12:44 PM
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.
First quarter
Second quarter
Third quarter
Fourth quarter
2012
2011
High
$12.77
12.54
13.25
12.40
Low
$10.52
10.18
10.91
9.21
High
$15.00
15.99
11.81
13.03
Low
$11.46
10.52
9.23
8.67
At December 31, 2012, the Company estimates that there were approximately 2,228 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, 2012.
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, May 15, 2012, August 15, 2012, November 15, 2012 and February 15, 2013. 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, 2012:
Number of
shares of
common
stock to be
issued upon
exercise of
outstanding
options
Weighted-
average
exercise price
of
outstanding
options
2,528,177 $ 13.06
-
-
2,528,177 $ 13.06
Number of
shares of
common
stock
remaining
available for
future
issuance
756,832
-
756,832
Plan category
Equity compensation plan approved by security holders
Equity compensation plan not approved by security holders
Total
12
Lifetime Brands 2012 10-K FINAL_rev.indd 14
Lifetime Brands 2012 10-K FINAL_rev.indd 14
4/25/13 12:44 PM
4/25/13 12:44 PM
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.
Date
Lifetime
Brands, Inc.
Hemscott
Group Index
NASDAQ
Market
Index
12/31/2007 $ 100.00 $ 100.00 $ 100.00
60.02
12/31/2008
87.25
12/31/2009
103.08
12/31/2010
102.27
12/31/2011
120.40
12/31/2012
28.24
57.05
112.02
97.44
85.89
42.48
75.89
90.55
84.75
125.17
Note:
(1) The chart assumes $100 was invested on January 1, 2008 and dividends were reinvested. Measurement points are at the last trading
day of each of the fiscal years ended December 31, 2008, 2009, 2010, 2011 and 2012. 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.
13
Lifetime Brands 2012 10-K FINAL_rev.indd 15
Lifetime Brands 2012 10-K FINAL_rev.indd 15
4/25/13 12:44 PM
4/25/13 12:44 PM
Item 6. Selected Financial Data
The selected consolidated statement of operations data for the years ended December 31, 2012, 2011 and 2010
and the selected consolidated balance sheet data as of December 31, 2012 and 2011 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, 2009 and 2008 and the
selected consolidated balance sheet data at December 31, 2010, 2009 and 2008 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.
STATEMENT OF OPERATIONS DATA(1)
Net sales
Cost of sales
Distribution expenses
Selling, general and administrative expenses
Goodwill and intangible asset impairment
Restructuring expenses
Income (loss) from operations
Interest expense
Loss on early retirement of debt
Income (loss) before income taxes, equity in earnings and
extraordinary item
Income tax benefit (provision)
Equity in earnings, net of taxes
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
Weighted-average shares outstanding – basic
2012
Year ended December 31,
2011
2010(2)
2009
(in thousands, except per share data)
2008(3)
$ 444,418
282,058
43,882
93,894
$ 443,171 $ 415,040 $ 487,935
$ 486,842
273,774 257,839 303,535
310,054
44,570 43,329 57,695
44,046
104,338
95,044 95,647 131,226
1,069 - - - 29,400
- - - 2,616 17,992
27,335
29,783 15,609 (51,913)
(5,898) (7,758) (9,351) (13,185) (11,577)
-
- (764) -
(1,363)
19,668 2,424 (63,490)
16,826
20,074
24,584
(5,208) (6,122) (4,602) (1,880) 14,249
2,718 2,171 1,486
6,081
3,362
17,784 2,715 (47,755)
14,066
20,947
2,477 -
- -
-
$ 20,261 $ 2,715 $ (47,755)
$ 14,066
$ 20,947
$ 1.16
$ 1.67
$ 1.48 $ 0.23 $ (3.99)
- - 0.20 - -
$ 1.68 $ 0.23 $ (3.99)
$ 1.67
12,036 12,009 11,976
12,511
$ 1.16
12,128
Diluted income (loss) per common share before extraordinary item $ 1.64
Diluted income per common share of extraordinary item
Diluted income (loss) per common share
Weighted-average shares outstanding – diluted
$ 1.44 $ 0.22 $ (3.99)
- - 0.20 - -
$ 1.64 $ 0.22 $ (3.99)
$ 1.64
12,376 12,075 11,976
12,810
$ 1.12
12,529
$ 1.12
Cash dividends declared per common share
$ 0.125
$ 0.075
$ - $ - $ 0.25
14
Lifetime Brands 2012 10-K FINAL_rev.indd 16
Lifetime Brands 2012 10-K FINAL_rev.indd 16
4/25/13 12:44 PM
4/25/13 12:44 PM
BALANCE SHEET DATA(1)
Current assets
Current liabilities
Working capital
Total assets
Short-term borrowings
Long-term debt
Convertible senior notes
Stockholders’ equity
2012
2011
December 31,
2010
(in thousands)
2009
2008(3)
$ 198,797
$ 212,759
69,962
66,899
128,835
145,860
318,745
348,797
15,000
11,375
84,593
82,625
- -
146,175
172,230
$ 232,678
$ 173,850
$ 182,253
149,981
77,210
60,512
82,697
96,640
121,741
341,781
276,723
277,586
4,100
89,300
24,601
50,000 - -
67,864
70,527
23,557
97,509
104,012
127,606
Notes:
(1)
Investments and acquisitions of the following, in the respective years noted, which affect the comparability of the periods: the acquisition of the
business and certain assets of Mikasa® in June 2008, the acquisition of Creative Tops in November 2011, a 40% equity investment in GS
Internacional S/A (“GSI”) in December 2011 and the acquisition of Fred® & Friends in December 2012.
(2)
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 this year to reflect the provisions of ASC Topic No. 470-20, Debt with Conversion and Other Options, on a
retrospective basis.
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, cookware, bakeware and novelty
housewares) 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). In 2012,
Kitchenware products and Tabletop products accounted for approximately 80% of the Company’s wholesale net
sales and 76% of its consolidated net sales.
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®, KitchenAid®, Mikasa®, Pfaltzgraff®, Cuisinart®, Elements®,
Melannco®, Fred® 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 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.
15
Lifetime Brands 2012 10-K FINAL_rev.indd 17
Lifetime Brands 2012 10-K FINAL_rev.indd 17
4/25/13 12:44 PM
4/25/13 12:44 PM
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
Fred® & Friends are included in the Wholesale segment from December 20, 2012, the date it was acquired by the
Company.
EQUITY INVESTMENTS
The Company owns approximately 30% of the outstanding capital stock of Grupo Vasconia, S.A.B. (“Vasconia”),
a leading Mexican housewares company and aluminum manufacturer. 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. 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.
In January 2011, the Company, together with Vasconia and unaffiliated partners, formed Housewares Corporation
of Asia Limited (“HCA”), a Hong Kong-based company that supplies imported kitchenware products to retailers
in North, Central and South America. The Company accounts for its 40% investment in HCA using the equity
method of accounting and has recorded its proportionate share of HCA’s net income as equity in earnings in the
Company’s consolidated statements of operations.
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 throughout Brazil including major department
stores, housewares retailers and independent shops. 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).
In February 2012, the Company entered into Grand Venture Holdings Limited (“Grand Venture”), a joint venture
with Manweal Development Limited (“Manweal”), a Chinese corporation, to distribute Mikasa® products in
China, which included an initial investment of $500,000. The Company and Manweal each own 50% of Grand
Venture and have rights and obligations proportionate to their ownership percentage. The Company accounts for
its investment in Grand Venture using the equity method of accounting and has recorded its proportionate share of
Grand Venture’s net loss in equity in earnings in the Company’s consolidated statements of operations.
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 2012, 2011 and 2010, net sales for the third and fourth quarters accounted for 58%,
59%, and 60% 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 July 2012, the FASB issued ASU No. 2012-02, Intangibles—Goodwill and Other (Topic 350): Testing
Indefinite-Lived Intangible Assets for 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 quantitative impairment test described in ASC
Topic No. 350, Intangibles – Goodwill and Other. The amendments in this update are effective for annual and
interim impairment tests performed for fiscal years beginning after September 15, 2012. 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.
16
Lifetime Brands 2012 10-K FINAL_rev.indd 18
Lifetime Brands 2012 10-K FINAL_rev.indd 18
4/25/13 12:44 PM
4/25/13 12:44 PM
In January 2013, the FASB issued ASU No. 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts
Reclassified Out of Accumulated Other Comprehensive Income, which requires an entity to provide information
about the amounts reclassified out of accumulated other comprehensive income by component. In addition, an
entity is required to present, either on the face of the statement where net income is presented or in the notes,
significant amounts reclassified out of accumulated other comprehensive income by the respective line items of
net income but only if the amount reclassified is required under GAAP to be reclassified to net income in its
entirety in the same reporting period. For other amounts that are not required under GAAP to be reclassified in
their entirety to net income (e.g., net periodic pension benefit cost), an entity is required to cross-reference to
other disclosures required under GAAP that provide additional detail about those amounts. The amendments in
this update are effective prospectively for reporting periods beginning after December 15, 2012. The Company
has determined that the adoption of this guidance will 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
Gross margin
Distribution expenses
Selling, general and administrative expenses
Intangible asset impairment
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
2012
2010
100.0 %
63.7
100.0 %
63.5
100.0 %
61.8
36.3
9.0
21.4
0.2
36.5
9.9
21.1
38.2
10.1
21.4
-
-
5.7
5.5
6.7
(1.2)
(0.3)
4.2
(1.1)
1.2
(1.7)
-
(2.1)
(0.2)
3.8
(1.4)
0.8
4.4
(1.0)
0.6
4.3
3.2
4.0
-
4.3 %
-
3.2 %
0.6
4.6 %
MANAGEMENT’S DISCUSSION AND ANALYSIS
2012 COMPARED TO 2011
Net Sales
Net sales for the year were $486.8 million, an increase of 9.5% compared to net sales of $444.4 million in 2011.
The increase was primarily the result of the inclusion of Creative Tops, which was acquired in November 2011.
Net sales for the Wholesale segment in 2012 were $464.8 million, an increase of $43.7 million, or 10.4%, as
compared to net sales of $421.1 million in 2011. Net sales included $42.6 million from Creative Tops in 2012
compared to $6.7 million from Creative Tops in 2011. Net sales for the Company’s Kitchenware product
category in 2012 were $256.1 million, an increase of $40.4 million, or 18.7%, as compared to net sales of $215.7
million in 2011. The increase in the Company’s Kitchenware product category was primarily attributable to the
strength and expansion of certain brands and the introduction of new innovative styles and designs including the
new Guy Fieri® line. The Kitchenware category also included $0.2 million of sales from the Fred® & Friends
business acquired on December 20, 2012. Net sales for the Company’s Tabletop product category in 2012 were
$113.9 million, a decrease of $20.7 million, or 15.4%, as compared to net sales of $134.6 million for 2011. The
Tabletop product category sales decrease was partially attributable to the absence, in the 2012 period, of sales of
17
Lifetime Brands 2012 10-K FINAL_rev.indd 19
Lifetime Brands 2012 10-K FINAL_rev.indd 19
4/25/13 12:44 PM
4/25/13 12:44 PM
excess sterling silver finished goods inventory and a major rollout of dinnerware each of which occurred in the
2011 period. In addition, the category experienced weakness at the retail level. Net sales for the Company’s
Home Solutions products category in 2012 were $52.2 million, a decrease of $11.9 million, or 18.6%, as
compared to net sales of $64.1 million in 2011. The decrease in sales for the Company’s Home Solutions product
category was due to weak consumer demand for this category.
Net sales for the Retail Direct segment in 2012 were $22.0 million, a decrease of $1.3 million, or 5.6%, as
compared to $23.3 million for 2011. The decrease was primarily attributable to a reduction in promotional
activities in 2012.
Gross margin
Gross margin for 2012 was $176.8 million, or 36.3%, as compared to $162.4 million, or 36.5%, for the
corresponding period in 2011.
Gross margin for the Wholesale segment was 34.8% for 2012 as compared to 34.9% for 2011.
Gross margin for the Retail Direct segment was 68.6% for 2012 as compared to 66.9% for 2011. The increase in
gross margin reflects the mix in product sales, less promotional activities, a revised pricing strategy and more
effective web design which favorably affected margins during the 2012 period.
Distribution expenses
Distribution expenses for 2012 were $44.0 million as compared to $43.9 million for 2011. Distribution expenses
as a percentage of net sales were 9.0% in 2012 and 9.9% for 2011.
Distribution expenses as a percentage of sales shipped from the Company’s warehouses located in the United
States for the Wholesale segment were 8.9% for 2012 as compared to 9.4% for 2011. The percentage decrease
resulted from significant improvements in labor management and other operating expense savings.
Distribution expenses as a percentage of net sales for the Retail Direct segment were 28.9% for 2012 compared to
29.8% for 2011. Retail Direct also benefitted from improved labor management and other operating expense
savings.
Selling, general and administrative expenses
Selling, general and administrative expenses (“SG&A”) for 2012 were $104.3 million, an increase of $10.4
million, or 11.1%, as compared to $93.9 million for 2011. Excluding the expenses of Creative Tops, SG&A
expenses for 2012 were $94.7 million, an increase of $1.9 million as compared to $92.8 million for 2011.
SG&A expenses for 2012 for the Wholesale segment were $82.4 million, an increase of $11.0 million, or 15.4%,
as compared to $71.4 million in 2011. As a percentage of net sales, SG&A expenses were 17.7% for 2012
compared to 17.0% for 2011. The increase principally reflects higher expenses for Creative Tops to support its
business expansion plan and an increase in employee related expenses.
SG&A expenses for 2012 for the Retail Direct segment were $8.3 million compared to $9.2 million for 2011.
The decrease was primarily attributable to improved expense management.
Unallocated corporate expenses for 2012 and 2011 were $13.6 million and $13.3 million, respectively, due to an
increase in compensation offset by a reduction in acquisition related expenses.
Intangible asset impairment
During the past twelve months, the Company’s home décor products category has experienced a significant
decline in sales. The Company believes the most significant factor was the reduction in retail space allocated to
the category which has also contributed to pricing pressure. While the Company believes this market condition is
not permanent, following a strategic review of the business, it has decided to re-brand a portion of the home décor
products under the Mikasa® and Pfaltzgraff® trade names. As a result of these factors, the Company recorded an
impairment charge of $1.1 million in its statement of operations which reduced the book value of its Elements® trade
name.
18
Lifetime Brands 2012 10-K FINAL_rev.indd 20
Lifetime Brands 2012 10-K FINAL_rev.indd 20
4/25/13 12:44 PM
4/25/13 12:44 PM
Interest expense
Interest expense for 2012 was $5.9 million as compared to $7.8 million for 2011. 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 Company’s 4.75% convertible senior notes
(the “Notes”).
Loss on early retirement of debt
In June and July 2012, the Company repaid its second lien credit agreement (the “Term Loan”). In connection
therewith, the Company wrote off debt issuance costs of $1.4 million.
Income tax provision
The income tax provision was $5.2 million in 2012 and $6.1 million in 2011. The Company’s effective tax rate
for 2012 was 25.9% as compared to 36.4% for 2011. The effective tax rate in 2012 reflects an income tax benefit
for a non-cash adjustment to a deferred tax liability of $2.3 million related to the prior year. The effective tax rate
for 2011 included a valuation allowance reversal related to various deferred tax assets, including net operating
losses, for which a tax benefit was not previously recognized.
Equity in earnings
The Company’s equity in earnings for 2012 and 2011 are as follows:
Equity in earnings of Grupo Vasconia:
Equity earnings before bargain purchase gain, tax benefit and reduction in investment
to fair value, net of tax
Bargain purchase gain in equity in earnings, net of tax
Tax benefit recorded in equity in earnings(1)
Reduction in investment to fair value, net of tax
Equity in earnings of Grupo Vasconia
Equity in earnings (losses) of GSI
Equity in earnings (losses) of other investments
Year Ended December 31,
2012 2011
(in thousands)
$
3,015
$
2,895
-
4,112
-
-
2,895
21
446
1,116
(1,336)
6,907
(727)
(99)
$
6,081
$
3,362
Note:
(1) Income tax benefit related to the valuation allowance reversal for deferred taxes associated with the cumulative foreign currency translation
adjustment.
Equity in earnings of Vasconia, net of taxes, was $6.9 million for 2012 and $2.9 million for 2011. Vasconia
reported income from operations for 2012 of $14.6 million compared to $17.3 million for 2011 and net income of
$34.2 million in 2012 compared to $11.4 million in 2011. The increase in net income is primarily due to a $22.9
million bargain purchase gain recognized by Vasconia on its purchase of Almexa, an aluminum mill and
manufacturer of aluminum foil.
Equity in earnings for 2012 also includes a loss of $0.7 million from the Company’s 40% equity interest in GSI
and losses of $0.1 million related to other investments. Equity in earnings for 2011 includes income of $0.5
million derived from the Company’s 50% joint venture investment in World Alliance Enterprises Limited which
was dissolved in 2012.
19
Lifetime Brands 2012 10-K FINAL_rev.indd 21
Lifetime Brands 2012 10-K FINAL_rev.indd 21
4/25/13 12:44 PM
4/25/13 12:44 PM
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.
2011 COMPARED TO 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 Wholesale segment 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
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 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 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.
Gross margin
Gross margin for 2011 was $162.3 million as compared to $169.4 million for 2010. Gross margin as a percentage
of net sales was 36.5% for 2011 as compared to 38.2% for 2010.
Gross margin as a percentage of net sales for the Wholesale segment was 34.9% for 2011 compared to 36.3% 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 the Company’s 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.
Gross margin as a percentage of net sales for the Retail Direct segment increased to 66.9% in 2011 from 65.1% 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 for 2011 were $93.9 million, a decrease of 1.2% compared to $95.0
million for 2010.
20
Lifetime Brands 2012 10-K FINAL_rev.indd 22
Lifetime Brands 2012 10-K FINAL_rev.indd 22
4/25/13 12:44 PM
4/25/13 12:44 PM
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 was 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.
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 reflect 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 net income 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.
21
Lifetime Brands 2012 10-K FINAL_rev.indd 23
Lifetime Brands 2012 10-K FINAL_rev.indd 23
4/25/13 12:44 PM
4/25/13 12:44 PM
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 collectability 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. 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. The Company first assesses qualitative factors to determine whether it is more
likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining
whether it is necessary to perform the two-step goodwill impairment testing described in ASU Topic No. 350,
Intangibles – Goodwill and Other. The Company also evaluates qualitative factors to determine whether or not its
indefinite lived intangibles have been impaired and then performs quantitative tests if required. These tests can
include the royalty savings model or other valuation models.
22
Lifetime Brands 2012 10-K FINAL_rev.indd 24
Lifetime Brands 2012 10-K FINAL_rev.indd 24
4/25/13 12:44 PM
4/25/13 12:44 PM
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, 2012.
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 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.
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.
23
Lifetime Brands 2012 10-K FINAL_rev.indd 25
Lifetime Brands 2012 10-K FINAL_rev.indd 25
4/25/13 12:44 PM
4/25/13 12:44 PM
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, acquisitions and investments and payments of principal and
interest on its debt.
At December 31, 2012, the Company had cash and cash equivalents of $1.9 million compared to $3.0 million at
December 31, 2011, working capital was $145.9 million at December 31, 2012 compared to $128.8 million at
December 31, 2011 and the current ratio was 3.18 to 1 at December 31, 2012 compared to 2.84 to 1 at December
31, 2011.
Borrowings under the Company’s revolving credit facility increased to $61.0 million at December 31, 2012
compared to $57.6 million at December 31, 2011. The increase in borrowings was primarily attributable to the
acquisition of Fred® & Friends.
The Company believes that availability under the Revolving Credit Facility and cash flows from operations are
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 could be
materially affected in the future.
In 2012, Wal-Mart Stores, Inc. (including Sam’s Club and Asda Superstore) accounted for 16% 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 $150.0 million secured credit agreement (the “Revolving Credit Facility”), maturing on October
28, 2016, with a bank group led by JPMorgan Chase Bank, N.A. On July 27, 2012, the Company amended the
Revolving Credit Facility to increase the lenders’ commitment to $175.0 million and to, among other things, extend
the maturity date to July 27, 2017 and increase the expansion option which permits the Company, subject to certain
conditions including the consent of the Senior Secured Term Loan (defined below) lenders, to increase the
maximum borrowing commitment from $175.0 million to $225.0 million.
At December 31, 2012, borrowings outstanding under the Revolving Credit Facility were $61.0 million and open
letters of credit were $1.2 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
LIBO Rate plus 1.0%, plus a margin of 1.0% to 1.75%, or (ii) the Eurodollar Rate, defined as the Adjusted LIBO
Rate plus a margin of 2.0% to 2.75%. The respective margins are based upon availability. Interest rates on
outstanding borrowings at December 31, 2012 ranged from 2.50% to 4.50%. In addition, the Company pays a
commitment fee of 0.375% to 0.50% on the unused portion of the Revolving Credit Facility. Availability under the
Revolving Credit Facility was approximately $77.7 million, or 44%, of the total loan commitment at December 31,
2012.
The Company classifies a portion of the Revolving Credit Facility as a current liability if the Company’s intent and
ability is 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 and other corporate needs.
24
Lifetime Brands 2012 10-K FINAL_rev.indd 26
Lifetime Brands 2012 10-K FINAL_rev.indd 26
4/25/13 12:44 PM
4/25/13 12:44 PM
Senior Secured Term Loan
The Company has a $35.0 million senior secured credit agreement (the “Senior Secured Term Loan”), which
matures on July 27, 2018, with JPMorgan Chase Bank, N.A.
The Senior Secured Term Loan bears interest, at the Company’s option, at the Alternate Base Rate (as defined)
plus 4.00%, or the Adjusted LIBOR Rate (as defined) plus 5.00%. The interest rate on outstanding borrowings at
December 31, 2012 was 5.25%.
The Senior Secured Term Loan provides that for any four consecutive fiscal quarters ending after July 27, 2012,
(x) if at any time EBITDA (as defined) is less than $34.0 million but equal to or greater than $30.0 million, the
ratio of Indebtedness (as defined) to EBITDA shall not exceed 3.0 to 1.0 and (y) EBITDA shall not be less than
$30.0 million at any time. Capital expenditures are limited and for the year ending December 31, 2012, such limit
is $7.5 million. The Senior Secured Term Loan provides for other customary restrictions and events of default.
Restrictions include limitations on additional indebtedness, acquisitions, investments and payment of dividends,
among others. Further, the Senior Secured Term Loan provides that the Company shall maintain a minimum fixed
charge coverage ratio of 1.10 to 1.00 for any four consecutive fiscal quarters ending after July 27, 2012. The
Company was in compliance with the financial covenants of the Senior Secured Term Loan and the Revolving
Credit Facility at December 31, 2012.
The Company’s Consolidated EBITDA for the four quarters ended December 31, 2012 was $41.2 million, as
follows:
Consolidated EBITDA for the four quarters ended
December 31, 2012
(in thousands)
Three months ended December 31, 2012
Three months ended September 30, 2012
Three months ended June 30, 2012
Three months ended March 31, 2012
Total for the four quarters
$ 17,868
11,568
5,584
6,222
$ 41,242
Capital expenditures for the year ended December 31, 2012 were $5.0 million.
25
Lifetime Brands 2012 10-K FINAL_rev.indd 27
Lifetime Brands 2012 10-K FINAL_rev.indd 27
4/25/13 12:44 PM
4/25/13 12:44 PM
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. This measure is provided because management of the Company uses this
financial measure in evaluating the Company’s on-going financial results and trends. Management uses this non-
GAAP information as an indicator of business performance. The following is a reconciliation of net income as
reported to Consolidated EBITDA for the three and twelve months ended December 31, 2012 and 2011:
Three Months Ended
December 31,
Year Ended
December 31,
2012
2011
2012
2011
(in thousands)
$ 15,154
$ 5,419
$ 20,947
$ 14,066
Net income as reported
Subtract out:
Undistributed equity earnings, net
(4,464)
(925)
(5,665)
(2,896)
Add back:
Income tax provision
Interest expense
Depreciation and amortization
Stock compensation expense
Loss on early retirement of debt
Intangible asset impairment
Permitted acquisition related expenses
Consolidated EBITDA
2,596
1,254
2,446
662
-
-
220
$ 17,868
3,513
1,951
2,336
690
-
-
1,358
$ 14,342
5,208
5,898
9,324
2,793
1,363
1,069
305
$ 41,242
6,122
7,758
8,397
2,795
-
-
1,856
$ 38,098
Term Loan
In June 2012, the Company repaid $10.0 million of the principal owing under its second lien credit agreement (the
“Term Loan”). In July 2012, the Company utilized the proceeds of the Senior Secured Term Loan to repay the
remaining $30.0 million of the then outstanding Term Loan. The loss on early retirement of debt in the
accompanying consolidated statements of operations of $1.4 million represents a write-off of unamortized debt
issuance costs related to the repayment of the Term Loan.
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, May 15, 2012,
August 15, 2012, November 15, 2012 and February 15, 2013.
Operating activities
Net cash provided by operating activities was $22.7 million in 2012 as compared to net cash provided by
operating activities of $12.2 million in 2011. The increase was primarily attributable to a decrease in inventory, a
decrease in payments of accounts payable, accrued expenses and other liabilities and income taxes and an increase
in net income offset by an increase in accounts receivable.
Investing activities
Net cash used in investing activities was $22.2 million in 2012 as compared to $30.6 million in 2011. The
decrease in cash used in investing activities principally related to: i) cash consideration of $14.5 million paid in
2012 for the acquisition of Fred® and Friends, ii) cash consideration of $2.6 million paid in 2012 for the
investment in GSI, iii) additional cash consideration of $0.2 million paid in 2012 for the investment in the joint
venture to distribute Mikasa® products as compared to i) cash consideration of $20.6 million paid in 2011 for the
acquisition of Creative Tops, ii) cash consideration of $5.0 million paid in 2011 for the investment in GSI, iii) an
investment in Housewares Corporation of Asia of $0.1 million in 2011.
26
Lifetime Brands 2012 10-K FINAL_rev.indd 28
Lifetime Brands 2012 10-K FINAL_rev.indd 28
4/25/13 12:45 PM
4/25/13 12:45 PM
Financing activities
Net cash used in financing activities was $2.2 million in 2012 as compared to net cash provided by financing
activities of $17.9 million in 2011. The Company had net borrowings of $3.3 million from its Revolving Credit
Facility in 2012 as compared to net borrowings of $43.5 million in 2011. The proceeds from the 2012 borrowings
were principally used to finance a portion of the Fred® & Friends acquisition. 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.
Contractual obligations
As of December 31, 2012, the Company’s contractual obligations were as follows (in thousands):
Operating leases
Short-term debt
Long-term debt
Interest on debt
Minimum royalty payments
Post retirement benefits
Total
Payment due by period
Total
$ 91,254
11,375
84,593
15,240
21,839
5,900
$230,201
Less than
1 year
$ 14,818
11,375
-
4,166
6,423
143
$ 36,925
1-3 years
$ 29,293
-
33,570
6,996
12,625
258
$ 82,742
3-5 years
$ 23,323
-
43,149
3,912
1,022
613
$ 72,019
More than
5 years
$ 23,820
-
7,874
166
1,769
4,886
$ 38,515
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 Senior Secured 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 entered into an interest rate swap agreement in August
2012 to manage interest rate exposure in connection with its variable interest rate borrowings. 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.
27
Lifetime Brands 2012 10-K FINAL_rev.indd 29
Lifetime Brands 2012 10-K FINAL_rev.indd 29
4/25/13 12:45 PM
4/25/13 12:45 PM
Item 8. Financial Statements and Supplementary Data
The Company’s Consolidated Financial Statements as of and for the year ended December 31, 2012 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, 2012. 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 from operations
Net income
Basic income per common share
Diluted income per common share
Net sales
Gross profit
Income (loss) from operations
Net income (loss)
Basic income (loss) per common share
Diluted income (loss) per common share
Year ended December 31, 2012
First
quarter
Second
quarter
Third
quarter
Fourth
quarter(1)
(in thousands, except per share data)
$ 109,041 $ 94,939 $ 128,050 $ 154,812
40,460 35,374 44,909 56,045
3,232 2,153 7,411 14,539
1,344 559 3,890 15,154
0.11 0.04 0.31 1.21
0.11 0.04 0.30 1.19
Year ended December 31, 2011
First
quarter
Second
quarter
Third
quarter
Fourth
quarter
(in thousands, except per share data)
$ 91,773 $ 90,371 $ 124,663 $ 137,611
33,390 34,046 44,239 50,685
(23) 4,351 10,298 9,958
(949) 2,063 7,533 5,419
(0.08) 0.17 0.62 0.45
(0.08) 0.17 0.60 0.43
Note:
(1) The fourth quarter ended December 31, 2012 reflects an income tax benefit for a non-cash adjustment to a deferred tax liability of $2.3 million
related to the prior year fourth quarter.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None
28
Lifetime Brands 2012 10-K FINAL_rev.indd 30
Lifetime Brands 2012 10-K FINAL_rev.indd 30
4/25/13 12:45 PM
4/25/13 12:45 PM
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, 2012, 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 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, 2012. 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, 2012 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,
2012 is effective.
The effectiveness of the Company’s internal control over financial reporting as of December 31, 2012 has been
audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report.
29
Lifetime Brands 2012 10-K FINAL_rev.indd 31
Lifetime Brands 2012 10-K FINAL_rev.indd 31
4/25/13 12:45 PM
4/25/13 12:45 PM
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, 2012, 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, 2012 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, 2012 and 2011, and
the related consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows for
each of the three years in the period ended December 31, 2012 of Lifetime Brands, Inc. and our report dated
March 15, 2013 expressed an unqualified opinion thereon.
/s/ ERNST & YOUNG LLP
Jericho, New York
March 15, 2013
30
Lifetime Brands 2012 10-K FINAL_rev.indd 32
Lifetime Brands 2012 10-K FINAL_rev.indd 32
4/25/13 12:45 PM
4/25/13 12:45 PM
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 2013 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.
31
Lifetime Brands 2012 10-K FINAL_rev.indd 33
Lifetime Brands 2012 10-K FINAL_rev.indd 33
4/25/13 12:45 PM
4/25/13 12:45 PM
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
3.2
4.1
10.1
10.2
10.3
10.4
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)**
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)**
32
Lifetime Brands 2012 10-K FINAL_rev.indd 34
Lifetime Brands 2012 10-K FINAL_rev.indd 34
4/25/13 12:45 PM
4/25/13 12:45 PM
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)**
33
Lifetime Brands 2012 10-K FINAL_rev.indd 35
Lifetime Brands 2012 10-K FINAL_rev.indd 35
4/25/13 12:45 PM
4/25/13 12:45 PM
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)**
34
Lifetime Brands 2012 10-K FINAL_rev.indd 36
Lifetime Brands 2012 10-K FINAL_rev.indd 36
4/25/13 12:45 PM
4/25/13 12:45 PM
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)**
10.39 Amendment of Employment Agreement, dated April 12, 2012, between Lifetime Brands, Inc. and
Laurence Winoker (incorporated by reference to the Registrant’s Form 8-K dated April 16, 2012)**
10.40 First Amendment to Employment Agreement, dated April 30, 2012, between Lifetime Brands, Inc. and
Jeffrey Siegel (incorporated by reference to the Registrant’s Form 8-K dated April 30, 2012)**
10.41 Amendment No. 2 to Amended and Restated Credit Agreement, dated as of July 27, 2012, by and among
Lifetime Brands, Inc., the financial institutions party hereto as Lenders and JPMorgan Chase Bank, N.A.,
as Administrative Agent (incorporated by reference to the Registrant’s Form 8-K dated August 2,
2012)**
10.42 Senior Secured Credit Agreement, dated as of July 27, 2012, among Lifetime Brands, Inc., the Subsidiary
Guarantors, the Lenders and JPMorgan Chase Bank, N.A., as Administrative Agent and Collateral Agent
(incorporated by reference to the Registrant’s Form 8-K dated August 2, 2012)**
10.43 Second Amended and Restated Employment Agreement, dated as of December 20, 2012, by and between
Lifetime Brands, Inc. and Ronald Shiftan (incorporated by reference to the Registrant’s Form 8-K dated
December 21, 2012)**
14.1 Code of Ethics dated February 28, 2013 (incorporated by reference to the Registrant’s Form 8-K dated
March 6, 2013)**
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***
23.2 Consent of Castillo Miranda Y Compañía, S.C.***
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.), separate financial statements and Report of
Independent Registered Accounting Firm (incorporated by reference to the Registrant’s Annual Report on
Form 10-K/A for the year ended December 31, 2011)
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, 2012 formatted in XBRL
(eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated
Statements of Operations, (iii) the Consolidated Statements of Comprehensive Income, (iv) the
35
Lifetime Brands 2012 10-K FINAL_rev.indd 37
Lifetime Brands 2012 10-K FINAL_rev.indd 37
4/25/13 12:45 PM
4/25/13 12:45 PM
Consolidated Statements of Stockholders’ Equity, (v) the Consolidated Statements of Cash Flows and (vi)
Notes to the Consolidated Financial Statements.
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.
36
Lifetime Brands 2012 10-K FINAL_rev.indd 38
Lifetime Brands 2012 10-K FINAL_rev.indd 38
4/25/13 12:45 PM
4/25/13 12:45 PM
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 15, 2013
/s/ Ronald Shiftan
Ronald Shiftan Chief Operating Officer and Director
Vice Chairman of the Board of Directors,
March 15, 2013
/s/ Laurence Winoker
Laurence Winoker
Senior Vice President – Finance,
Treasurer and Chief Financial Officer
(Principal Financial and Accounting Officer)
March 15, 2013
/s/ Craig Phillips
Craig Phillips
Senior Vice-President – Distribution
and Director
March 15, 2013
/s/ David Dangoor
David Dangoor
/s/ Michael Jeary
Michael Jeary
/s/ John Koegel
John Koegel
/s/ Cherrie Nanninga
Cherrie Nanninga
/s/ Michael Regan
Michael Regan
/s/ William Westerfield
William Westerfield
Director
Director
Director
Director
Director
March 15, 2013
March 15, 2013
March 15, 2013
March 15, 2013
March 15, 2013
Director March 15, 2013
37
Lifetime Brands 2012 10-K FINAL_rev.indd 39
Lifetime Brands 2012 10-K FINAL_rev.indd 39
4/25/13 12:45 PM
4/25/13 12:45 PM
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, 2012 and 2011
Consolidated Statements of Operations for the Years ended
December 31, 2012, 2011, and 2010
Consolidated Statements of Comprehensive Income for the Years ended
December 31, 2012, 2011 and 2010
Consolidated Statements of Stockholders’ Equity for the Years ended
December 31, 2012, 2011, and 2010
Consolidated Statements of Cash Flows for the Years ended
December 31, 2012, 2011, and 2010
Notes to Consolidated Financial Statements
F-2
F-3
F-4
F-5
F-6
F-7
F-8
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
Lifetime Brands 2012 10-K FINAL_rev.indd 40
Lifetime Brands 2012 10-K FINAL_rev.indd 40
4/25/13 12:45 PM
4/25/13 12:45 PM
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, 2012 and 2011, and the related consolidated statements of operations, comprehensive income,
stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2012. 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 $36.4 million and $26.3 million at December 31, 2012 and 2011,
respectively, and the Company’s equity in the net income of Grupo Vasconia, S.A.B. and Subsidiaries is stated at $6.9
million for the year ended December 31, 2012, $2.9 million for the year ended December 31, 2011 and $2.7 million
for the year ended December 31, 2010.
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, 2012 and
2011, and the consolidated results of its operations, comprehensive income and its cash flows for each of the three
years in the period ended December 31, 2012, 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, 2012, 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 15, 2013 expressed an unqualified opinion thereon.
Jericho, New York
March 15, 2013
/s/ ERNST & YOUNG LLP
F-2
Lifetime Brands 2012 10-K FINAL_rev.indd 41
Lifetime Brands 2012 10-K FINAL_rev.indd 41
4/25/13 12:45 PM
4/25/13 12:45 PM
LIFETIME BRANDS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands-except share data)
ASSETS
CURRENT ASSETS
Cash and cash equivalents
Accounts receivable, less allowances of $3,996 at December 31, 2012 and $4,602 at
December 31, 2011
Inventory (Note M)
Prepaid expenses and other current assets
Deferred income taxes (Note I)
TOTAL CURRENT ASSETS
PROPERTY AND EQUIPMENT, net (Note M)
INVESTMENTS (Note C)
INTANGIBLE ASSETS, net (Note D)
OTHER ASSETS
TOTAL ASSETS
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Revolving Credit Facility (Note E)
Current maturity of Senior Secured Term Loan (Note E)
Accounts payable
Accrued expenses (Note M)
Income taxes payable (Note I)
TOTAL CURRENT LIABILITIES
DEFERRED RENT & OTHER LONG-TERM LIABILITIES (Note M)
DEFERRED INCOME TAXES (Note I)
REVOLVING CREDIT FACILITY (Note E)
SENIOR SECURED TERM LOAN (Note E)
TERM LOAN (Note E)
STOCKHOLDERS’ EQUITY
December 31,
2012
2011
$ 1,871
$ 2,972
97,369
104,584
5,393
3,542
212,759
31,646
43,685
57,842
2,865
$ 348,797
77,749
110,337
5,264
2,475
198,797
34,324
34,515
46,937
4,172
$ 318,745
$ 7,000
4,375
18,555
33,354
3,615
66,899
21,565
3,510
53,968
30,625
-
$ 15,000
-
18,985
33,877
2,100
69,962
14,598
5,385
42,625
-
40,000
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: 12,754,467 at December 31, 2012 and 12,430,893 at December 31, 2011
Paid-in capital
Retained earnings
Accumulated other comprehensive loss (Note M)
TOTAL STOCKHOLDERS’ EQUITY
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
-
-
128
142,489
33,849
(4,236)
172,230
$ 348,797
124
137,467
14,465
(5,881)
146,175
$ 318,745
See notes to consolidated financial statements.
F-3
Lifetime Brands 2012 10-K FINAL_rev.indd 42
Lifetime Brands 2012 10-K FINAL_rev.indd 42
4/25/13 12:45 PM
4/25/13 12:45 PM
LIFETIME BRANDS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands – except per share data)
Year Ended December 31,
2011
2012
2010
Net sales
Cost of sales
Gross margin
Distribution expenses
Selling, general and administrative expenses
Intangible asset impairment (Note D)
Income from operations
Interest expense (Note E)
Loss on early retirement of debt (Note E)
$ 486,842
$ 444,418
$ 443,171
310,054
282,058
273,774
176,788
162,360
169,397
44,046
104,338
43,882
93,894
44,570
95,044
1,069
-
-
27,335
24,584
29,783
(5,898)
(1,363)
(7,758)
-
(9,351)
(764)
Income before income taxes, equity in earnings and extraordinary item
20,074
16,826
19,668
Income tax provision (Note I)
Equity in earnings, net of taxes (Note C)
Income before extraordinary item
Extraordinary item, net of taxes
NET INCOME
(5,208)
6,081
(6,122)
3,362
(4,602)
2,718
20,947
-
14,066
-
17,784
2,477
$ 20,947
$ 14,066
$ 20,261
Basic income per common share before extraordinary item (Note H)
Basic income per common share of extraordinary item (Note H)
$ 1.67
$ 1.16
-
-
$ 1.48
0.20
BASIC INCOME PER COMMON SHARE (NOTE H)
$ 1.67
$ 1.16
$ 1.68
Diluted income per common share before extraordinary item (Note H)
Diluted income per common share of extraordinary item (Note H)
$ 1.64
$ 1.12
-
-
$ 1.44
0.20
DILUTED INCOME PER COMMON SHARE (NOTE H)
$ 1.64
$ 1.12
$ 1.64
See notes to consolidated financial statements.
F-4
Lifetime Brands 2012 10-K FINAL_rev.indd 43
Lifetime Brands 2012 10-K FINAL_rev.indd 43
4/25/13 12:45 PM
4/25/13 12:45 PM
LIFETIME BRANDS, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
Net income
Other comprehensive income (loss), net of tax:
Translation adjustment (Note M)
Deferred gains (losses) on cash flow hedges (Notes F & M):
Fair value adjustment, net of tax of $182 in 2012 and
$36 in 2010
Hedge de-designation, net of tax of $216 in 2010
Interest rate swap termination, net of tax of $95 in 2010
Total deferred gains (losses) on cash flow hedges
Effect of retirement benefit obligations (Note M):
Net loss arising from retirement benefit obligations, net of tax
of $791 in 2012
Less: amortization of loss included in net income, net of tax of
$18 in 2012
Total effects of retirement benefit obligations
Other comprehensive income (loss), net of tax
Comprehensive income
Year ended December 31,
2011
2012
2010
$ 20,947
$ 14,066
$ 20,261
3,077
(704)
1,088
(272)
-
57
-
-
(272)
-
-
-
342
150
549
(1,187)
27
-
-
-
-
(1,160)
1,645
$ 22,592
-
(704)
$ 13,362
-
1,637
$ 21,898
See notes to consolidated financial statements.
F-5
Lifetime Brands 2012 10-K FINAL_rev.indd 44
Lifetime Brands 2012 10-K FINAL_rev.indd 44
4/25/13 12:45 PM
4/25/13 12:45 PM
LIFETIME BRANDS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands)
BALANCE AT DECEMBER 31, 2009
Comprehensive income:
Net income
Grupo Vasconia, S.A.B. translation
adjustment (Note C)
Derivative hedge de-designation
Derivative fair value adjustment
Interest rate swap termination
Total comprehensive income
Convertible Senior Note repurchase
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
BALANCE AT DECEMBER 31, 2010
Comprehensive income:
Common stock
Amount
$ 120
Shares
12,015
Retained
earnings
(accumulated
deficit)
Paid-in
capital
$ 129,655 $ (18,949)
Accumulated
other
comprehensive
loss
$ (6,814)
Total
$ 104,012
-
-
- 20,261
- 20,261
-
-
-
-
-
-
-
-
-
-
-
-
- 1,088
- 342
- 57
- 150
1,088
342
57
150
21,898
- (2,366)
-
- (2,366)
-
-
10
-
-
40
12,065
- 836
- 150
- 2,778
- 124
173
131,350
1
121
-
-
-
-
-
- 836
- 150
- 2,778
- 124
- 174
127,606
1,312 (5,177)
Net income
Translation adjustment
-
-
-
-
- 14,066
-
- (704)
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
Exercise of stock options
Dividends (Note G)
BALANCE AT DECEMBER 31, 2011
Comprehensive income:
21
-
- 183
- 2,612
-
-
256
89
-
3
3,097
- 225
-
- (913)
-
-
12,431
124
137,467
14,465 (5,881)
- 14,066
(704)
13,362
- 183
- 2,612
- 3,100
- 225
- (913)
146,175
Net income
Translation adjustment
Derivative fair value adjustment (Note F)
Effect of retirement benefit obligations
-
-
-
-
-
-
-
-
-
-
-
-
-
20,947
3,077
-
(272)
-
- (1,160)
Total comprehensive income
Shares issued to directors (Note G)
Stock compensation expense (Note G)
Issuance of 143,568 shares of common stock for
acquisition of Fred® & Friends (Note B)
Tax benefit on exercise of stock options
Exercise of stock options
Dividends (Note G)
BALANCE AT DECEMBER 31, 2012
23
-
-
-
267
2,526
-
-
-
-
144
-
156
-
12,754
1
1,506
- 150
573
-
$ 142,489
3
-
$ 128
-
-
-
(1,563)
$ 33,849
-
1,507
- 150
576
(1,563)
$ 172,230
-
-
$ (4,236)
20,947
3,077
(272)
(1,160)
22,592
267
2,526
See notes to consolidated financial statements.
F-6
Lifetime Brands 2012 10-K FINAL_rev.indd 45
Lifetime Brands 2012 10-K FINAL_rev.indd 45
4/25/13 12:45 PM
4/25/13 12:45 PM
LIFETIME BRANDS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Year ended December 31,
2011
2012
2010
OPERATING ACTIVITIES
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
$ 20,947
$ 14,066
$ 20,261
Extraordinary gain
Provision for doubtful accounts
Depreciation and amortization
Amortization of debt discount
Deferred rent
Deferred income taxes
Stock compensation expense
Undistributed equity earnings
Intangible asset impairment (Note C)
Loss on early retirement of debt (Note E)
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 payable
NET CASH PROVIDED BY OPERATING ACTIVITIES
INVESTING ACTIVITIES
Purchases of property and equipment
Equity investments
Business acquisition, net of cash acquired
Net proceeds from sale of property
NET CASH USED IN INVESTING ACTIVITIES
FINANCING ACTIVITIES
Repayments of prior credit facility, net
Proceeds from Revolving Credit Facility, net (Note E)
Proceeds from Senior Secured Term Loan (Note E)
Proceeds (repayments) of Term Loan (Note E)
Repurchase of 4.75% convertible senior notes
Financing Costs
Cash dividends paid (Note G)
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
-
123
9,324
-
(668)
(3,011)
2,793
(5,665)
1,069
1,363
-
(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
(14,741)
9,694
120
(166)
1,515
22,697
3,297
(5,365)
1,120
(4,673)
(3,722)
12,187
(11,619)
3,996
3,981
628
4,356
30,100
(4,955)
(2,765)
(14,500)
27
(22,193)
(4,959)
(5,123)
(20,584)
31
(30,635)
(2,864)
-
-
70
(2,794)
-
3,343
35,000
(40,000)
-
-
(1,249)
-
577
150
(24,601)
-
14,100
43,525
-
-
40,000
-
(24,100)
(51,028)
(761) (3,248)
-
(913)
(158)
(78)
174
225
124
-
(2,179)
17,898
(24,637)
574
171
-
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(1,101)
(379)
2,669
Cash and cash equivalents at beginning of year
2,972
3,351
682
CASH AND CASH EQUIVALENTS AT END OF YEAR
$ 1,871
$ 2,972
$ 3,351
See notes to consolidated financial statements
F-7
Lifetime Brands 2012 10-K FINAL_rev.indd 46
Lifetime Brands 2012 10-K FINAL_rev.indd 46
4/25/13 12:45 PM
4/25/13 12:45 PM
LIFETIME BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2012
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 by the Company or through retailers’ private labels. 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
consumers through its Pfaltzgraff®, Mikasa®, Housewares Deals® and Lifetime Sterling® 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.
Foreign Currency
All foreign subsidiaries use the local currency of their respective countries as their functional currency. Assets and
liabilities are translated into U.S. dollars at exchange rates prevailing at the balance sheet dates. Revenues, costs and
expenses are translated into U.S. dollars at average exchange rates for the relevant period. Gains and losses resulting
from translation are recorded as a component of accumulated other comprehensive gain (loss). Gains and losses from
foreign currency transactions are recognized in selling, general and administrative expenses in the consolidated
statements of operations. Foreign currency gain/loss was a $415,000 loss in 2012, a $28,000 gain in 2011 and a
$62,000 gain in 2010.
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, $1.4
million and $1.9 million for the years ended December 31, 2012, 2011 and 2010, 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 and freight-out expenses. Freight-out expenses were
$8.5 million, $7.5 million and $8.2 million for the years ended December 31, 2012, 2011 and 2010, respectively.
Handling costs of products sold are included in cost of sales.
Advertising expenses
Advertising expenses are expensed as incurred and are included in selling, general and administrative expenses.
Advertising expenses were $775,000, $702,000 and $775,000 for the years ended December 31, 2012, 2011 and 2010,
respectively.
Accounts receivable
The Company periodically reviews the collectability of its accounts receivable and establishes allowances for
estimated losses that could result from the inability of its customers to make required payments. 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.
F-8
Lifetime Brands 2012 10-K FINAL_rev.indd 47
Lifetime Brands 2012 10-K FINAL_rev.indd 47
4/25/13 12:45 PM
4/25/13 12:45 PM
LIFETIME BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2012
NOTE A — SIGNIFICANT ACCOUNTING POLICIES (continued)
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.
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 valuations, 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, 2012, 2011 and 2010, Wal-Mart Stores, Inc. (including Sam’s Club and Asda
Superstore, in the United Kingdom) accounted for 16%, 15%, and 15% of net sales, respectively. Sales to Wal-Mart
Stores, Inc. are included in the Company’s Wholesale segment. No other customer accounted for 10% or more of the
Company’s sales during these periods.
F-9
Lifetime Brands 2012 10-K FINAL_rev.indd 48
Lifetime Brands 2012 10-K FINAL_rev.indd 48
4/25/13 12:45 PM
4/25/13 12:45 PM
LIFETIME BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2012
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 annual
goodwill and other intangible asset impairment tests and derivatives, described in Notes D and F, respectively.
Fair value of financial instruments
The Company determined the carrying amounts of cash and cash equivalents, accounts receivable and accounts
payable are reasonable estimates of their fair values because of their short-term nature. The Company determined that
the carrying amounts of borrowings outstanding under its revolving credit facility and senior secured term loan
approximate fair value since such borrowings bear interest at variable market rates.
Derivatives
The Company accounts for derivative instruments in accordance with ASC Topic No. 815, Derivatives and
Hedging. ASC Topic No. 815 requires that all derivative instruments be recognized on the balance sheet at fair value
as either an asset or liability. Changes in the fair value of derivatives that qualify as hedges and have been designated
as part of a hedging relationship for accounting purposes have no net impact on earnings to the extent the derivative is
considered highly effective in achieving offsetting changes in fair value or cash flows attributable to the risk being
hedged, until the hedge item is recognized in earnings. If the derivative which is designated as part of a hedging
relationship is considered ineffective in achieving offsetting changes in fair value or cash flows attributable to the risk
being hedged, the changes in fair value are recorded in operations. 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. The Company first assesses qualitative factors to determine whether it is more likely than not
that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary
to perform the two-step goodwill impairment testing described in ASU Topic No. 350, Intangibles – Goodwill and
Other. The Company also evaluates qualitative factors to determine whether or not its indefinite lived intangibles
have been impaired and then performs quantitative tests if required. These tests can include the royalty savings model
or other valuation models.
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.
F-10
Lifetime Brands 2012 10-K FINAL_rev.indd 49
Lifetime Brands 2012 10-K FINAL_rev.indd 49
4/25/13 12:45 PM
4/25/13 12:45 PM
LIFETIME BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2012
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 accounts for foreign income taxes based upon anticipated reinvestment of profits
into respective foreign tax jurisdictions.
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 July 2012, the FASB issued ASU No. 2012-02, Intangibles—Goodwill and Other (Topic 350): Testing Indefinite-
Lived Intangible Assets for 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 quantitative impairment test described in ASC Topic No. 350,
Intangibles – Goodwill and Other. The amendments in this update are effective for annual and interim impairment
tests performed for fiscal years beginning after September 15, 2012. The Company has determined that the adoption
of this guidance will not have a material impact on the Company’s consolidated financial position, results of
operations or cash flows.
In January 2013, the FASB issued ASU No. 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts
Reclassified Out of Accumulated Other Comprehensive Income, which requires an entity to provide information about
the amounts reclassified out of accumulated other comprehensive income by component. In addition, an entity is
required to present, either on the face of the statement where net income is presented or in the notes, significant
amounts reclassified out of accumulated other comprehensive income by the respective line items of net income but
only if the amount reclassified is required under GAAP to be reclassified to net income in its entirety in the same
reporting period. For other amounts that are not required under GAAP to be reclassified in their entirety to net income
(e.g., net periodic pension benefit cost), an entity is required to cross-reference to other disclosures required under
GAAP that provide additional detail about those amounts. The amendments in this update are effective prospectively
for reporting periods beginning after December 15, 2012. The Company has determined that the adoption of this
guidance will not have a material impact on the Company’s consolidated financial position, results of operations or
cash flows.
F-11
Lifetime Brands 2012 10-K FINAL_rev.indd 50
Lifetime Brands 2012 10-K FINAL_rev.indd 50
4/25/13 12:45 PM
4/25/13 12:45 PM
LIFETIME BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2012
NOTE B —ACQUISITIONS
Fred® & Friends
On December 20, 2012, the Company acquired the Fred® & Friends (“F&F”) business from Easy Aces, Inc., a Rhode
Island corporation, for $21.4 million consideration, comprised of $14.5 million cash, 143,568 shares of common stock
with a value of $1.5 million and $5.4 million of contingent consideration. F&F, which reported net sales of
approximately $16.6 million for the year ended December 31, 2011, designs and distributes novelty housewares under
the Fred® brand directly to retailers throughout the United States and Canada. The assets, liabilities and operating
results of F&F have been reflected in the Company’s consolidated financial statements in accordance with ASC Topic
No. 805, Business Combinations, commencing from the acquisition date and did not significantly impact the
Company’s consolidated financial results for the year ended December 31, 2012.
The purchase price has been determined as follows (in thousands):
Cash paid
Common stock issued
Value of contingent consideration
Total purchase price
$ 14,500
1,507
5,370
$ 21,377
The cash portion of the purchase price was funded by borrowings under the Company’s credit facility (“Revolving
Credit Facility”). The value of contingent consideration is comprised of the present value of estimated contingent
payments of $4.0 million related to the attainment of certain gross contribution targets for the years 2013 through
2016 and the present value of the contractual holdback amount of $1.4 million, which serves as security for payments
in satisfaction of any claim. The maximum undiscounted deferred and contingent consideration to be paid under the
agreement is $7.7 million.(cid:3)
The purchase price has been preliminarily allocated based on management’s estimate of the fair value of the assets
acquired and liabilities assumed, as follows (in thousands):
Accounts receivable(1)
Inventory
Other assets
Other liabilities
Goodwill and other intangibles
Total allocated value
Purchase
Price
Allocation
$ 5,003
3,941
360
(1,519)
13,592
$ 21,377
Note:
(1) The fair value of accounts receivable approximated the gross contractual amounts receivable.
F-12
Lifetime Brands 2012 10-K FINAL_rev.indd 51
Lifetime Brands 2012 10-K FINAL_rev.indd 51
4/25/13 12:45 PM
4/25/13 12:45 PM
LIFETIME BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2012
NOTE B — ACQUISITIONS (continued)
On the basis of estimated fair values, the excess of the purchase price over the net assets acquired of $13.6 million has
been allocated as follows: $7.2 million for customer relationships, $3.9 million for trade names and $2.5 million for
goodwill. The goodwill recognized results from such factors as an assembled workforce and the value of other
synergies expected from combining operations with the Company. The total amount of goodwill is expected to be
deductible for tax purposes. All of the goodwill and other intangibles are included in the Wholesale segment.
Customer relationships and trade names are amortized on a straight-line basis over their estimated useful lives (see
Note D).
Creative Tops
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
tabletop and kitchenware products. The purpose of this acquisition was 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
and did not significantly impact the Company’s consolidated financial results for the year ended December 31, 2011.
The purchase price was 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 Revolving Credit Facility. Cash paid is
reflected net of cash acquired of £0.1 million ($0.2 million).
The purchase price was allocated based on management’s estimate of the fair value of the assets acquired and liabilities
assumed, as follows (in thousands):
Accounts receivable(1)
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
(1) The fair value of accounts receivable approximated the gross contractual amounts receivable.
F-13
Lifetime Brands 2012 10-K FINAL_rev.indd 52
Lifetime Brands 2012 10-K FINAL_rev.indd 52
4/25/13 12:45 PM
4/25/13 12:45 PM
LIFETIME BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2012
NOTE B — ACQUISITIONS (continued)
On the basis of estimated fair values, the excess of the purchase price over the net assets acquired of $13.3 million
was 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. The goodwill
recognized results from such factors as an assembled workforce and the value of other synergies expected from
combining operations with the Company. Customer relationships and trade names are amortized on a straight-line
basis over their estimated useful lives (see Note D).
NOTE C — EQUITY INVESTMENTS
The Company owns approximately 30% of the outstanding capital stock of 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, 2012, 2011 and 2010 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 12.97 and MXN 13.95 at December 31, 2012 and 2011,
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 12.94 to 13.51, MXN 11.74 to 13.62 and MXN 12.37 to 12.79 during the
years ended December 31, 2012, 2011 and 2010, respectively. The effect of the translation of the Company’s
investment resulted in an increase (decrease) of the investment of $2.7 million, $(0.5) million and $1.1 million during
the years ended December 31, 2012, 2011 and 2010, respectively. These translation effects are recorded in
accumulated other comprehensive loss. The Company received cash dividends of $416,000, $466,000 and $398,000
from Vasconia during the years ended December 31, 2012, 2011 and 2010, respectively. Included in prepaid
expenses and other currents assets at December 31, 2012 and 2011 are amounts due from Vasconia of $71,000 and
$216,000, respectively.
Summarized income statement information for the years ended December 31, 2012, 2011 and 2010, as well as
summarized balance sheet information as of December 31, 2012 and 2011, for Vasconia in USD and MXN is as
follows:
2012
Year Ended December 31,
2011
(in thousands)
2010
Income Statement
Net Sales
Gross Profit
Income from operations
Net Income
USD
$ 168,712
38,134
14,614
34,172
MXN
$2,224,256
497,413
192,182
443,630
USD
$ 132,310
38,143
17,254
11,395
MXN
$1,647,479
476,501
216,715
142,698
USD
$ 113,454
32,451
15,122
9,910
MXN
$ 1,430,528
409,263
190,862
125,115
December 31,
2012
2011
(in thousands)
Balance Sheet
Current assets
Non-current assets
Current liabilities
Non-current liabilities
USD
$ 106,953
75,511
29,282
44,405
MXN
$1,386,731
979,059
379,663
575,746
USD
$ 54,262
42,904
14,645
7,310
MXN
$ 756,792
598,382
204,254
101,953
F-14
Lifetime Brands 2012 10-K FINAL_rev.indd 53
Lifetime Brands 2012 10-K FINAL_rev.indd 53
4/25/13 12:45 PM
4/25/13 12:45 PM
LIFETIME BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2012
NOTE C — EQUITY INVESTMENTS (continued)
The Company recorded equity in earnings of Vasconia, net of taxes, of $6.9 million, $2.9 million and $2.7 million for
the years ended December 31, 2012, 2011 and 2010, respectively. Equity in earnings of Vasconia in 2012 includes
$4.1 million related to the Company’s portion of a bargain purchase gain recognized by Vasconia on its purchase of
Almexa, an aluminum mill and manufacturer of aluminum foil, a $1.1 million tax benefit realized in the period and
the reduction of the investment to fair value of $1.3 million, net of tax.
As a result of recording the bargain purchase gain and a corresponding increase in the investment, the Company
determined it was necessary to perform an impairment test on its investment in Vasconia as of December 31, 2012.
The test involved the assessment of the fair value of the Company’s investment in Vasconia based on Level 1 quoted
prices in active markets. The result of the assessment of the Company’s investment in Vasconia indicated that the
carrying amount of the investment exceeded its fair value and, therefore, was required to be reduced by $1.3 million,
net of tax, to its fair value. As of December 31, 2012, the carrying value of the Company’s investment in Vasconia
was $36.4 million.
The Company owns a 40% equity interest in GS Internacional S/A (“GSI”), a leading wholesale distributor of branded
housewares products in Brazil, which the Company acquired in December 2011. The Company recorded equity in
losses of GSI, net of taxes, of $727,000 for the year ended December 31, 2012. The operating results of GSI were not
significant during the period of December 9, 2011 through December 31, 2011. As of December 31, 2012, the
carrying value of the Company’s investment in GSI was $6.8 million.
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 initially invested $105,000 for a 40% equity interest in this entity during 2011.
The operating results of HCA were not significant through December 31, 2012. As of December 31, 2012, the
carrying value of the Company’s investment in HCA was $0.1 million.
In February 2012, the Company entered into Grand Venture Holdings Limited (“Grand Venture”), a joint venture with
Manweal Development Limited (“Manweal”), a Chinese corporation, to distribute Mikasa® products in China, which
included an initial investment of $500,000. The Company and Manweal each own 50% of Grand Venture and have
rights and obligations proportionate to their ownership percentage. The Company accounts for its investment in
Grand Venture using the equity method of accounting and has recorded its proportionate share of Grand Venture’s net
loss as equity in earnings in the Company’s consolidated statements of operations. The Company recorded equity in
losses of the joint venture of $125,000 for the year ended December 31, 2012. As of December 31, 2012, the carrying
value of the Company’s investment in Grand Venture was $0.4 million.
The Company evaluated the disclosure requirements of ASC Topic No. 860, Transfers and Servicing, and determined
that at December 31, 2012, 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-15
Lifetime Brands 2012 10-K FINAL_rev.indd 54
Lifetime Brands 2012 10-K FINAL_rev.indd 54
4/25/13 12:45 PM
4/25/13 12:45 PM
LIFETIME BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2012
NOTE D — GOODWILL AND INTANGIBLE ASSETS
The Company’s intangible assets, all of which are included in the Wholesale segment, consist of the following (in
thousands):
Ye ar Ended December 31,
2012
Accumulated
Amortization
Gross
Net
Gross
2011
Accumulated
Amortization
Ne t
Goodwill
Inde finite -live d intangible assets:
5,085
-
5,085
2,673
-
2,673
Trade names
18,364
-
18,364
19,433
-
19,433
Finite-lived intangible assets:
Licenses
Trade names
Customer relationships
Patents
Total
15,847
10,056
18,406
584
68,342
(7,096)
(1,800)
(1,409)
(195)
(10,500)
8,751
8,256
16,997
389
57,842
15,847
6,116
11,166
584
55,819
(6,641)
(1,400)
(681)
(160)
(8,882)
9,206
4,716
10,485
424
46,937
The Company performed its 2012 annual impairment tests for its indefinite-lived intangible assets as of October 1,
2012. 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 12.5%-14.0%
and an annual growth rate of 2.0%-4.0%. The result of the assessment of the Company’s indefinite-lived intangibles
indicated that the carrying amount of the Elements® trade name exceeded its fair value.
During 2012, the Company’s home décor products line experienced a significant decline in sales. The Company
believes the most significant factor was the reduction in retail space allocated to the category which has also contributed
to pricing pressure. While the Company believes this market condition is not permanent, following a strategic review of
the business, it has decided to re-brand a portion of the home décor products under the Mikasa® and Pfaltzgraff® trade
names. As a result of these factors, the Company recorded an impairment charge of $1.1 million in its statement of
operations in the third quarter of 2012 which reduced the book value of its Elements® trade name.
In addition, the Company assessed the carrying value of its goodwill, which arose from recent acquisitions, and
determined based on qualitative factors that no impairment existed as of December 31, 2012.
F-16
Lifetime Brands 2012 10-K FINAL_rev.indd 55
Lifetime Brands 2012 10-K FINAL_rev.indd 55
4/25/13 12:45 PM
4/25/13 12:45 PM
LIFETIME BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2012
NOTE D — GOODWILL AND INTANGIBLE ASSETS (continued)
A summary of the activities related to the Company’s intangible assets for the year ended December 31, 2012 consists
of the following (in thousands):
Goodwill and Intangible Assets, December 31, 2010
Acquisition of trade names
Acquisition of customer relationships
Goodwill from Creative Tops acquisition
Amortization
Goodwill and Intangible Assets, December 31, 2011
Acquisition of trade names
Acquisition of customer relationships
Goodwill from F&F acquisition
Impairment of Elements® trade name
Amortization
Goodwill and Intangible Assets, December 31, 2012
Intangible
Assets
$
30,818
3,639
10,580
-
(773)
44,264
3,940
7,240
-
(1,069)
(1,618)
52,757
$
Goodwill
$
-
-
-
2,673
-
2,673
-
-
2,412
-
-
5,085
$
Total
Intangible
Assets and
Goodwill
$
30,818
3,639
10,580
2,673
(773)
46,937
3,940
7,240
2,412
(1,069)
(1,618)
57,842
$
The weighted-average amortization periods for the Company’s finite-lived intangible assets as of December 31, 2012
are as follows:
Trade names
Licenses
Customer relationships
Patents
Ye ars
15
33
14
17
Estimated amortization expense for each of the five succeeding fiscal years is as follows (in thousands):
Year ending December 31,
2013
2014
2015
2016
2017
$2,692
2,692
2,688
2,685
2,552
Amortization expense for the years ended December 31, 2012, 2011 and 2010 was $1.6 million, $0.8 million and $0.7
million, respectively.
F-17
Lifetime Brands 2012 10-K FINAL_rev.indd 56
Lifetime Brands 2012 10-K FINAL_rev.indd 56
4/25/13 12:45 PM
4/25/13 12:45 PM
LIFETIME BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2012
NOTE E — DEBT
Revolving Credit Facility
The Company had a $150.0 million secured credit agreement (the “Revolving Credit Facility”), maturing on October 28,
2016, with a bank group led by JPMorgan Chase Bank, N.A. On July 27, 2012, the Company amended the Revolving
Credit Facility to increase the lenders’ commitment to $175.0 million and to, among other things, extend the maturity
date to July 27, 2017 and increase the expansion option which permits the Company, subject to certain conditions
including the consent of the Senior Secured Term Loan (defined below) lenders, to increase the maximum borrowing
commitment to $225.0 million.
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”),
which in turn holds the Company’s interest in Vasconia. 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.
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 outstanding borrowings
at December 31, 2012 ranged from 2.5% to 4.5%. In addition, the Company pays a commitment fee of 0.375% to
0.50% 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 $20.0 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
$23.5 million for a period of three consecutive months.
At December 31, 2012, the Company had $1.2 million of open letters of credit and $61.0 million of borrowings
outstanding under the Revolving Credit Facility. Availability under the Revolving Credit Facility was approximately
$77.7 million, or 44%, of the total loan commitment at December 31, 2012.
The Company classifies a portion of the Revolving Credit Facility as a current liability if the Company’s intent and
ability is 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 and other corporate needs.
Senior Secured Term Loan
On July 27, 2012, the Company entered into a $35.0 million senior secured credit agreement (the “Senior Secured
Term Loan”), which matures on July 27, 2018, with JPMorgan Chase Bank, N.A.
The Senior Secured Term Loan bears interest, at the Company’s option, at the Alternate Base Rate (as defined) plus
4.00%, or the Adjusted LIBO Rate (as defined) plus 5.00%. The interest rate on outstanding borrowings at December
31, 2012 was 5.25%.
F-18
Lifetime Brands 2012 10-K FINAL_rev.indd 57
Lifetime Brands 2012 10-K FINAL_rev.indd 57
4/25/13 12:45 PM
4/25/13 12:45 PM
LIFETIME BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2012
NOTE E — DEBT (continued)
The Senior Secured Term Loan provides that for any four consecutive fiscal quarters, (x) if EBITDA (as defined) is
less than $34.0 million but equal to or greater than $30.0 million, the ratio of Indebtedness (as defined) to EBITDA
shall not exceed 3.0 to 1.0 and (y) EBITDA shall not be less than $30.0 million. Capital expenditures are limited and
for the year ended December 31, 2012, such limit is $7.5 million. The Senior Secured Term Loan provides for other
customary restrictions and events of default. Restrictions include limitations on additional indebtedness, acquisitions,
investments and payment of dividends, among others. Further, the Senior Secured Term Loan provides that the
Company shall maintain a minimum fixed charge coverage ratio of 1.10 to 1.00 for any four consecutive fiscal
quarters. The Company was in compliance with the financial covenants of the Senior Secured Term Loan and
Revolving Credit Facility at December 31, 2012.
Term Loan
In June 2012, the Company repaid $10.0 million of the outstanding principal of its second lien credit agreement (the
“Term Loan”). In July 2012, the Company utilized the proceeds of the Senior Secured Term Loan to repay the
remaining $30.0 million of the then outstanding Term Loan. The loss on early retirement of debt in the accompanying
condensed consolidated statements of operations of $1.4 million represents a write-off of unamortized debt issuance
costs related to the repayment of the Term Loan.
NOTE F — DERIVATIVES
On August 20, 2012, the Company entered into an interest rate swap agreement with a notional amount of $35.0
million to manage interest rate exposure in connection with its variable interest rate borrowings. The hedge period in
the agreement commences in March 2013 and expires in June 2018. The interest rate swap agreement was designated
as a cash flow hedge under ASC Topic No. 815. The effective portion of the fair value gain or loss on this agreement
is recorded as a component of accumulated other comprehensive loss. The effect of recording this derivative at fair
value resulted in an unrealized loss of $272,000, net of taxes, for the year ended December 31, 2012. No amounts
recorded in accumulated other comprehensive loss are expected to be reclassified to interest expense in the next
twelve months.
The fair value of the derivative has been obtained from the counterparty to the agreement and was 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 $454,000 at December 31, 2012 and is included in
other long-term liabilities.
NOTE G — CAPITAL STOCK
Long-term incentive plan
In June 2012, 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 700,000 shares to 4,200,000 shares. These shares of the
Company’s common stock are available for grants 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, 2012, there were
756,832 shares available for the grant of awards.
Cash dividends
The Company did not pay cash dividends on its outstanding shares of common stock during the year ended December
31, 2010. In March 2011, the Company resumed the declaration of cash dividends on its outstanding shares of
common stock.
F-19
Lifetime Brands 2012 10-K FINAL_rev.indd 58
Lifetime Brands 2012 10-K FINAL_rev.indd 58
4/25/13 12:45 PM
4/25/13 12:45 PM
LIFETIME BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2012
NOTE G — CAPITAL STOCK (continued)
Dividends declared in 2012 and 2011 are as follows:
Dividend per share
$0.025
$0.025
$0.025
$0.025
$0.025
$0.025
$0.025
$0.025
Date declared
March 4, 2011
June 27, 2011
November 4, 2011
January 11, 2012
March 6, 2012
June 13, 2012
July 31, 2012
November 2, 2012
Date of record
May 2, 2011
August 2, 2011
November 18, 2011
February 1, 2012
May 1, 2012
August 1, 2012
November 1, 2012
February 1, 2013
Payment date
May 16, 2011
August 16, 2011
November 29, 2011
February 15, 2012
May 15, 2012
August 15, 2012
November 15, 2012
February 15, 2013
On March 12, 2013, the Board of Directors declared a quarterly dividend of $0.03125 per share payable on May 15,
2013 to shareholders of record on May 1, 2013.
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, 2012.
Restricted stock
In 2012, 2011 and 2010, the Company issued an aggregate of 23,394, 21,400 and 10,020 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 $270,000 in 2012, $230,000 in 2011 and
$150,000 in 2010. For all restricted stock grants, the restriction lapses one year from the date of grant and the stock is
expensed over the one year period.
F-20
Lifetime Brands 2012 10-K FINAL_rev.indd 59
Lifetime Brands 2012 10-K FINAL_rev.indd 59
4/25/13 12:45 PM
4/25/13 12:45 PM
LIFETIME BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2012
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,
2012, is as follows:
Options outstanding at De ce mbe r 31, 2009
Options outstanding at De ce mbe r 31, 2010
Options
1,786,667
573,000
We ighte d-
ave rage
e xe rcise
price
$ 12.14
Grants
13.12
Exercises (39,250) 4.44
Cancellations (101,217)
13.65
2,219,200 12.46
Grants
391,500
11.20
5.19
Exercises (123,500)
Cancellations (11,450)
13.29
2,475,750 12.62
305,000 11.64
5.47
12.82
13.06
14.19
Grants
Exercises (199,823)
Cancellations
(52,750)
2,528,177
1,616,052
Options outstanding at De ce mbe r 31, 2012
Options e xe rcisable at De ce mbe r 31, 2012
Options outstanding at De ce mbe r 31, 2011
We ighte d-
ave rage
re maining
contractual
life (ye ars)
Aggre gate
intrinsic
value
6.13
4.96
$ 4,525,905
$ 3,813,485
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, 2012. 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, 2012 and the exercise price.
The total intrinsic values of stock options exercised for the years ended December 31, 2012, 2011 and 2010 were
$1,182,000, $830,400 and $389,100, 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, $2.8 million and $2.9 million for the years
ended December 31, 2012, 2011 and 2010, respectively. The stock compensation expense recognized each year is
equal to the grant date fair value of stock options vested during the year. Total unrecognized compensation cost
related to unvested stock options at December 31, 2012, before the effect of income taxes, was $4.1 million and is
expected to be recognized over a weighted-average period of 1.77 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, was 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, 2012, 2011 and 2010 was $6.05, $5.69 and $7.96, respectively.
F-21
Lifetime Brands 2012 10-K FINAL_rev.indd 60
Lifetime Brands 2012 10-K FINAL_rev.indd 60
4/25/13 12:45 PM
4/25/13 12:45 PM
LIFETIME BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2012
NOTE G — CAPITAL STOCK (continued)
The fair value for these stock options was estimated at the date of grant using the following weighted-average
assumptions:
2012
2011
2010
Historical volatility
Expected term (years)
Risk-free interest rate
Expected dividend yield
61 % 60 % 73 %
6.0
1.10 % 1.96 % 2.18 %
0.00 %
0.86 % 0.89 %
5.0
5.6
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 and Diluted
2012
2010
2011
(in thousands - except per share amounts)
$ 20,947
$ 17,784
$ 14,066
-
-
2,477
$ 20,261
$ 14,066
$ 20,947
Weighted-average shares outstanding – Basic
Effect of dilutive securities:
Stock options
Weighted-average shares outstanding – Diluted
12,511
12,128
12,036
299
12,810
401
12,529
340
12,376
Basic income per common share before extraordinary item
Basic income per common share of extraordinary item
Basic income per common share
$ 1.67
-
$ 1.67
$ 1.16
-
$ 1.16
$ 1.48
0.20
$ 1.68
Diluted income per common share before extraordinary item
Diluted income per common share of extraordinary item
Diluted income per common share
$ 1.64
-
$ 1.64
$ 1.12
-
$ 1.12
$ 1.44
0.20
$ 1.64
The computations of diluted income per common share for the years ended December 31, 2012, 2011 and 2010
excludes options to purchase 1,450,200, 1,600,413 and 1,060,588 shares of the Company’s common stock,
respectively. The computations of diluted income per common share for the years ended December 31, 2011 and
2010 also exclude options to purchase 462,192 and 2,678,571 shares, respectively, of the Company’s common stock
that were issuable upon the conversion of the Company’s 4.75% convertible senior 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 2012 10-K FINAL_rev.indd 61
Lifetime Brands 2012 10-K FINAL_rev.indd 61
4/25/13 12:45 PM
4/25/13 12:45 PM
LIFETIME BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2012
NOTE I — INCOME TAXES
The components of income before income taxes, equity in earnings and extraordinary item are as follows:
Domestic
Foreign
Total income before income taxes, equity in earnings and
extraordinary income
2012
Year Ended December 31,
2011
(in thousands)
16,178
648
$
20,609
(535)
$
$
2010
20,867
(1,199)
$
20,074
$
16,826
$
19,668
The provision (benefit) for income taxes (before equity in earnings) consists of:
Year Ended December 31,
2011
2012
2010
(in thousands)
Current:
Federal
State and local
Foreign
Deferred
Income tax provision
$ 6,691
761
503
(2,747)
$ 5,208
$ 4,657
2,063
618
(1,216)
$ 6,122
$ 4,269
1,437
565
(1,669)
$ 4,602
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,
2012
2011
(in thousands)
$ 4,407
1,116
3,660
1,381
1,797
106
669
1,915
$ 15,051
$ 3,038
2,205
2,743
1,624
2,120
270
580
674
$ 13,254
F-23
Lifetime Brands 2012 10-K FINAL_rev.indd 62
Lifetime Brands 2012 10-K FINAL_rev.indd 62
4/25/13 12:45 PM
4/25/13 12:45 PM
LIFETIME BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2012
NOTE I — INCOME TAXES (continued)
Significant components of the Company’s net deferred income tax asset (liability) are as follows:
Deferred income tax liabilities:
Depreciation and amortization
Intangibles
Equity in earnings
Other
Total deferred income tax liabilities
December 31,
2012
2011
(in thousands)
$ (5,945)
(4,645)
(3,080)
(167)
(13,837)
$ (4,867)
(6,679)
(998)
(535)
(13,079)
Net deferred income tax asset
1,214
175
Valuation allowance
Net deferred income tax asset (liability)
(1,182)
$ 32
(3,085)
$ (2,910)
The Company has generated various state net operating loss carryforwards of which $18.7 million remains at
December 31, 2012 that begin to expire in 2014. The Company has net operating losses in foreign jurisdictions of
$2.1 million at December 31, 2012 that begin to expire in 2016. As of December 31, 2011, management had
determined that it was “more likely than not” that certain 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. In 2012, the Company recorded an income tax
benefit for a non-cash adjustment to a deferred tax liability of $2.3 million related to the prior year. Additionally, the
Company recorded a reduction in its valuation allowance of $1.9 million of which $1.1 million related to a portion of
the translation adjustment deferred tax asset in connection with the equity method investee, Vasconia. The valuation
allowance which remains as of December 31, 2012 relates to certain state net operating losses.
The provision for income taxes (before equity in earnings) differs from the amounts computed by applying the
applicable federal statutory rates as follows:
Year Ended December 31,
2011
2012
2010
Provision for federal income taxes at the statutory rate
Increases (decreases):
State and local income taxes, net of Federal income tax benefit
Foreign rate differences
Non-deductible stock options
Non-deductible expenses
Valuation allowance
Reduction of deferred tax liabilities related to the prior year
Other
Provision for income taxes
35.0 % 35.0 % 35.0 %
3.2
(1.8)
-
1.2
-
6.4
5.6
-
-
0.1
3.4
(8.2)
1.2
0.1
(19.8)
(11.6)
(0.1)
-
-
(0.3)
1.3
25.9 % 36.4 % 23.4 %
F-24
Lifetime Brands 2012 10-K FINAL_rev.indd 63
Lifetime Brands 2012 10-K FINAL_rev.indd 63
4/25/13 12:45 PM
4/25/13 12:45 PM
LIFETIME BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2012
NOTE I — INCOME TAXES (continued)
The estimated values of the Company’s gross uncertain tax positions at December 31, 2012, 2011 and 2010 are
liabilities of $301,000, $134,000 and $356,000, 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
Year Ended December 31,
2012
2010
2011
(in thousands)
$ (356)
-
(76)
-
298
$ (134)
$ (134)
-
(167)
-
-
$ (301)
$ (335)
-
(200)
-
179
$ (356)
The Company had approximately $39,000 and $34,000, net of federal tax benefit, accrued at December 31, 2012 and
2011, 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.
If the Company’s tax positions are ultimately sustained, the Company’s liability, including interest, would be reduced
by $301,000, 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
$301,000 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, New Jersey and the United Kingdom. The Company is no longer subject to
U.S. Federal income tax examinations for the years prior to 2009. At December 31, 2012, the periods subject to
examination for the Company’s major state jurisdictions are the years ended 2008 through 2011.
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 and Fred® & Friends since the dates of the acquisitions are included in 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, 2012. 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.
F-25
Lifetime Brands 2012 10-K FINAL_rev.indd 64
Lifetime Brands 2012 10-K FINAL_rev.indd 64
4/25/13 12:45 PM
4/25/13 12:45 PM
LIFETIME BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2012
NOTE J — BUSINESS SEGMENTS (continued)
2012
Year Ended December 31,
2011
(in thousands)
2010
Net sales:
Wholesale
Retail Direct
Total net sales
Income from operations:
Wholesale(1)
Retail Direct
Unallocated corporate expenses
Total income from operations
Depreciation and amortization:
Wholesale
Retail Direct
Total depreciation and amortization
Assets:
Wholesale
Retail Direct
Unallocated/ corporate/ other
Total assets
Capital expenditures:
Wholesale
Retail Direct
Total capital expenditures
$ 464,862
21,980
$ 486,842
$ 421,119
23,299
$ 444,418
$ 413,809
29,362
$ 443,171
$ 40,530
463
(13,658)
$ 27,335
$ 38,410
(524)
(13,302)
$ 24,584
$ 42,997
(1,018)
(12,196)
$ 29,783
$ 9,074
250
$ 9,324
$ 8,183
214
$ 8,397
$ 9,719
91
$ 9,810
$ 342,872
512
5,413
$ 348,797
$ 317,435
813
497
$ 318,745
$ 271,670
1,441
4,475
$ 277,586
$ 4,897
58
$ 4,955
$ 4,730
229
$ 4,959
$ 2,541
323
$ 2,864
Note:
(1) In 2012, income from operations for the Wholesale segment includes $1.1 million of intangible asset impairment.
F-26
Lifetime Brands 2012 10-K FINAL_rev.indd 65
Lifetime Brands 2012 10-K FINAL_rev.indd 65
4/25/13 12:45 PM
4/25/13 12:45 PM
LIFETIME BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2012
NOTE J — BUSINESS SEGMENTS (continued)
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
Year ended December 31,
2012
2011
$ 430,758
56,084
$ 486,842
$ 426,405
18,013
$ 444,418
Long-lived assets at period-end:
United States
International
Total
$ 133,841
2,197
$ 136,038
$ 118,803
1,145
$ 119,948
Product category information – net sales
The following table sets forth net sales by major product categories included within the Company’s Wholesale
operating segment:
2010
2012
Year Ended December 31,
2011
(in thousands)
$ 215,707
134,652
64,099
6,661
$ 421,119
$ 256,154
113,911
52,176
42,621
$ 464,862
$ 208,491
123,432
81,886
-
$ 413,809
Category:
Kitchenware
Tabletop
Home Solutions
Creative Tops
Total
The product categories, which incorporate a 2011 change to establish a Home Solutions products category and the
additional revenue source from Creative Tops, reflect a refined alignment of the products into the sources of revenue
which the Company analyzes. The revenue source categories disclosed in 2010 have been reclassified to conform to
current year presentation for comparative purposes.
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.
F-27
Lifetime Brands 2012 10-K FINAL_rev.indd 66
Lifetime Brands 2012 10-K FINAL_rev.indd 66
4/25/13 12:45 PM
4/25/13 12:45 PM
LIFETIME BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2012
NOTE K — COMMITMENTS AND CONTINGENCIES (continued)
Future minimum payments under non-cancelable operating leases are as follows (in thousands):
Year Ending December 31,
2013
2014
2015
2016
2017
Thereafter
Total
$ 14,818
14,850
14,443
13,349
9,974
23,820
$ 91,254
Rent and related expenses under operating leases were $14.8 million, $13.3 million and $13.3 million for the years ended
December 31, 2012, 2011 and 2010, respectively. There was no sublease rental income in 2012. Sublease rental income
was $70,000 and $82,000 for the years ended December 31, 2011 and 2010, respectively.
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,
2013
2014
2015
2016
2017
Thereafter
Total
$ 6,423
6,251
6,374
472
550
1,769
$ 21,839
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. In February, 2013, the EPA requested access to
conduct further environmental investigation at the property during May 2013.
The Company is not aware of any determination by the EPA that any remedial action is required for the Site, and,
accordingly, is not able to estimate the extent of any possible liability.
F-28
Lifetime Brands 2012 10-K FINAL_rev.indd 67
Lifetime Brands 2012 10-K FINAL_rev.indd 67
4/25/13 12:45 PM
4/25/13 12:45 PM
LIFETIME BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2012
NOTE K — COMMITMENTS AND CONTINGENCIES (continued)
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.
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
$17,000 ($22,500 for employees 50 years or over) for 2012. Effective January 1, 2009, the Company suspended its
matching contribution as an expense savings measure. The Company’s U.K.-based subsidiary, Creative Tops, also
maintains a defined contribution pension plan.
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 and amounted to $5.9 million at December 31, 2012
and $3.4 million at December 31, 2011.
The discount rate used to calculate the retirement benefit obligations was 3.60% at December 31, 2012 and 4.50% at
December 31, 2011. The retirement benefit obligations are included in accrued expenses and deferred rent & other
long-term liabilities.
The Company expects to recognize $90,000 of the actuarial losses included in accumulated other comprehensive loss
in net periodic benefit cost in 2013.
Future retirement benefit payments are as follows (in thousands):
Year ending December 31,
2013
2014
2015
2016
2017
2018-2022
Total
$ 143
134
124
247
366
1,734
$ 2,748
F-29
Lifetime Brands 2012 10-K FINAL_rev.indd 68
Lifetime Brands 2012 10-K FINAL_rev.indd 68
4/25/13 12:45 PM
4/25/13 12:45 PM
LIFETIME BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2012
NOTE M — OTHER
Inventory
The components of inventory are as follows:
December 31,
2012
2011
(in thousands)
Finished goods
Work in process
Raw materials
Total
$ 101,021
2,046
1,517
$ 104,584
$ 107,471
1,683
1,183
$ 110,337
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,
2012
2011
(in thousands)
$ 75,896
26,334
1,604
920
100
104,854
(73,208)
$ 31,646
$ 70,037
25,050
1,604
1,900
100
98,691
(64,367)
$ 34,324
Depreciation and amortization expense on property and equipment for the years ended December 31, 2012, 2011 and
2010 was $7.8 million, $7.5 million and $8.2 million, respectively.
Included in machinery, furniture and equipment at each of December 31, 2012 and 2011 is $2.1 million related to
assets recorded under capital leases. Included in accumulated depreciation and amortization at each of December 31,
2012 and 2011 is $1.9 million related to assets recorded under capital leases.
F-30
Lifetime Brands 2012 10-K FINAL_rev.indd 69
Lifetime Brands 2012 10-K FINAL_rev.indd 69
4/25/13 12:45 PM
4/25/13 12:45 PM
LIFETIME BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2012
NOTE M — OTHER (continued)
Accrued expenses
Accrued expenses consist of:
Customer allowances and rebates
Compensation and benefits
Interest
Vendor invoices
Royalties
Commissions
Freight
Contingent consideration related to GSI investment
Contingent consideration related to F&F acquisition
Working capital excess related to F&F acquisition
Other
Total
Deferred rent & other long-term liabilities
Deferred rent & other long-term liabilities consist of:
Deferred rent liability
Retirement benefit obligations
Contingent consideration related to F&F acquisition
Derivative liability
Total
December 31,
2012
2011
(in thousands)
$ 10,595
7,824
401
5,355
2,259
1,089
1,122
-
730
845
3,134
$ 33,354
$ 10,422
7,950
441
1,984
2,181
1,093
1,419
2,622
-
-
5,765
$ 33,877
December 31,
2012
2011
(in thousands)
$ 10,719
5,752
4,640
454
$ 21,565
$ 11,354
3,244
-
-
$ 14,598
Extraordinary item
In December 2010, the Company paid $2.5 million to ARC International SA for all outstanding consideration
remaining due or payable related to its 2008 acquisition of the business and certain assets of Mikasa®, Inc. As a result
of the payment of this amount 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.
F-31
Lifetime Brands 2012 10-K FINAL_rev.indd 70
Lifetime Brands 2012 10-K FINAL_rev.indd 70
4/25/13 12:45 PM
4/25/13 12:45 PM
LIFETIME BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2012
NOTE M — OTHER (continued)
Supplemental cash flow information
2012
Year Ended December 31,
2011
(in thousands)
2010
Supplemental disclosure of cash flow information:
Cash paid for interest
Cash paid for taxes
$ 5,498
6,067
$ 6,877
10,331
$ 6,893
1,198
Non-cash investing activities:
Translation adjustment
$ 3,077
$ (704)
$ 1,088
Components of accumulated other comprehensive loss, net
Accumulated translation adjustment:
Balance at beginning of year
Translation adjustment during period
Balance at end of year
Accumulated effect of retirement benefit obligations:
Balance at beginning of year
Net loss arising from retirement benefit obligations, net of tax
Amounts reclassified from accumulated other comprehensive loss:
Amortization of loss, net of tax(1)
Balance at end of year
Accumulated deferred gains (losses) on cash flow hedges:
Balance at beginning of year
Derivative fair value adjustment, net of tax
Amounts reclassified from accumulated other comprehensive loss:
Hedge de-designation, net of tax(2)
Interest rate swap termination, net of tax
Balance at end of year
2012
Year Ended December 31,
2011
(in thousands)
2010
$ (5,881)
3,077
$ (2,804)
$ (5,177)
(704)
$ (5,881)
$ (6,265)
1,088
$ (5,177)
$ -
(1,187)
$ -
-
$ -
-
27
$ (1,160)
-
$ -
-
$ -
$ -
(272)
$ -
-
$ (549)
57
-
-
$ (272)
-
-
$ -
342
150
$ -
Notes:
(1) Amount is recorded in selling, general and adminstrative expenses on the consolidated statements of operations.
(2) Amount is recorded in interest expense on the consolidated statements of operations.
F-32
Lifetime Brands 2012 10-K FINAL_rev.indd 71
Lifetime Brands 2012 10-K FINAL_rev.indd 71
4/25/13 12:45 PM
4/25/13 12:45 PM
Item 15(a)
LIFETIME BRANDS, INC.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(in thousands)
COL. A
COL. B
COL. C
Additions
COL. D
COL. E
Description
Year ended December 31,
2012
Deducted from asset
accounts:
Allowance for doubtful
accounts
Reserve for sales
returns and allowances
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
Balance
at
beginning
of period
Due to
acquisitions
Charged to
costs and
expenses
Deductions
Balance
at end of
period
$ 328
$ 67
$ 181
$ (215)
(a)
$ 361
4,274
$ 4,602
179
$ 246
6,660
$ 6,841
(c)
(7,478)
$ (7,693)
(b)
3,635
$ 3,996
$ 1,057
$ -
$ 63
$ (792)
(a)
$ 328
11,554
$ 12,611
-
$ -
3,378
$ 3,441
(c)
(10,658)
$ (11,450)
(b)
4,274
$ 4,602
$ 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
(a) Uncollectible accounts written off, net of recoveries.
(b) Allowances granted.
(c) Charged to net sales.
Lifetime Brands 2012 10-K FINAL_rev.indd 72
Lifetime Brands 2012 10-K FINAL_rev.indd 72
4/25/13 12:45 PM
4/25/13 12:45 PM
Subsidiaries of the Registrant
Name of subsidiary
Exhibit 21.1
State/Country of
Incorporation
Ownership
Pfaltzgraff Factory Stores, Inc.
TMC Acquisition Inc.
Lifetime Delaware Holdings, LLC
Wallace Silversmiths de Puerto Rico Ltd.
Lifetime Brands Global Sourcing (Shanghai) Consultancy Limited
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.
Grand Venture Enterprises Limited
Creative Tops Far East Limited
LTB de México, S.A. de C.V.
LVA Limited
Delaware
Delaware
Delaware
Cayman Islands
China
Hong Kong
United Kingdom
United Kingdom
United Kingdom
United Kingdom
Brazil
Hong Kong
Hong Kong
Mexico
Hong Kong
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
99.99%
80%
Lifetime Brands 2012 10-K FINAL_rev.indd 73
Lifetime Brands 2012 10-K FINAL_rev.indd 73
4/25/13 12:45 PM
4/25/13 12:45 PM
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, 333-162734 and 333-186208) pertaining to the 2000 Long-Term Incentive Plan and
the Registration Statement on Form S-3 (No. 333-137575) of Lifetime Brands, Inc. of our reports dated
March 15, 2013, 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, 2012.
Jericho, New York
March 15, 2013
/s/ ERNST & YOUNG LLP
Lifetime Brands 2012 10-K FINAL_rev.indd 74
Lifetime Brands 2012 10-K FINAL_rev.indd 74
4/25/13 12:45 PM
4/25/13 12:45 PM
Exhibit 23.2
Lifetime Brands 2012 10-K FINAL_rev.indd 75
Lifetime Brands 2012 10-K FINAL_rev.indd 75
4/25/13 12:45 PM
4/25/13 12:45 PM
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 15, 2013
/s/ Jeffrey Siegel
Jeffrey Siegel
Chief Executive Officer and President
Lifetime Brands 2012 10-K FINAL_rev.indd 76
Lifetime Brands 2012 10-K FINAL_rev.indd 76
4/25/13 12:45 PM
4/25/13 12:45 PM
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 15, 2013
/s/ Laurence Winoker
Laurence Winoker
Senior Vice President – Finance, Treasurer and Chief Financial Officer
Lifetime Brands 2012 10-K FINAL_rev.indd 77
Lifetime Brands 2012 10-K FINAL_rev.indd 77
4/25/13 12:45 PM
4/25/13 12:45 PM
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, 2012
(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 15, 2013
Date: March 15, 2013
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.
Lifetime Brands 2012 10-K FINAL_rev.indd 78
Lifetime Brands 2012 10-K FINAL_rev.indd 78
4/25/13 12:45 PM
4/25/13 12:45 PM
Exhibit 99.1
Lifetime Brands 2012 10-K FINAL_rev.indd 79
Lifetime Brands 2012 10-K FINAL_rev.indd 79
4/25/13 12:45 PM
4/25/13 12:45 PM
Lifetime Brands 2012 10-K FINAL_rev.indd 80
Lifetime Brands 2012 10-K FINAL_rev.indd 80
4/25/13 12:45 PM
4/25/13 12:45 PM
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
CODE OF ETHICS
A copy of the Company’s Code of Ethics will
be furnished to any stockholder, without
charge, upon written request to the Senior Vice
President - Finance of the Company.
INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
Ernst & Young LLP
Jericho, NY 11753
TRANSFER AGENT & REGISTRAR
Computershare
P.O. Box 43006
Providence, RI 02940-3006
ANNUAL MEETING
The Annual Meeting of Shareholders will
be held at 10:30 a.m. on
Thursday, June 13, 2013,
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
MICHAEL J. REGAN
Director
WILLIAM U. WESTERFIELD
Director
Lifetime Brands, Inc.
1000 Stewart Avenue, Garden City, New York 11530