LIFETIME HOAN CORP - 10-K Annual Report

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K

[X] Annual Report Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
[No Fee Required]
For the fiscal year ended December 31, 2003
or
[ ] Transition Report Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
[No Fee Required]

For the transition period from to

Commission file number 1-19254
Lifetime Hoan Corporation
(Exact name of registrant as specified in its charter)

Delaware 11-2682486
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)

One Merrick Avenue, Westbury, New York 11590
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (516)683-6000

Securities registered pursuant to Section 12(b) of the Act:
None

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, par value $.01 per share
(Title of Class)

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 periods that the registrant was
required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No

Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K 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 [ ].

Indicate by check mark whether the registrant is an
accelerated filer (as defined by Rule 12b-2 of the Act).
Yes No X

The aggregate market value of 6,879,000 shares of the voting
stock held by non-affiliates of the registrant as of June
30, 2003 was approximately $52,624,000. 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 February 28, 2003 was 10,848,278.

DOCUMENTS INCORPORATED BY REFERENCE
Parts of the registrant's definitive proxy statement for the
2004 Annual Meeting of Stockholders to be filed pursuant to
Regulation 14A under the Securities Exchange Act of 1934 are
incorporated by reference into Items 11,12 and 13 hereof.

LIFETIME HOAN CORPORATION

FORM 10-K

TABLE OF CONTENTS

PART I
1. Business 3
2. Properties 12
3. Legal Proceedings 12
4. Submission of Matters to a Vote of Security Holders 12

PART II
5. Market for the Registrant's Common Stock and Related
Stockholder Matters 13
6. Selected Financial Data 14
7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 16
7A. Quantitative and Qualitative Disclosures about
Market Risk 20
8. Financial Statements and Supplementary Data 21
9. Changes in and Disagreements with Accountants on
Accountingand Financial Disclosure 21
9A. Controls and Procedures 22

PART III
10. Directors and Executive Officers of the Registrant 23
11. Executive Compensation 24
12. Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters 24
13. Certain Relationships and Related Transactions 24
14. Principal Accounting Fees and Services 25

PART IV
15. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K 25
Exhibit Index 25
Index to Financial Statements and Financial Statement
Schedule F-1

Signatures

Certifications

2

PART I

ITEM 1. BUSINESS

General

Forward Looking Statements: This Annual Report on Form 10-K
contains certain forward-looking statements within the meaning of
the "safe harbor" provisions of the Private Securities Litigation
Reform Act of 1995, including statements concerning the Company's
products, results of operations and prospects. These forward-
looking statements involve risks and uncertainties, including
risks relating to general economic and business conditions, as
well as changes which could affect customer payment practices or
consumer spending; industry trends; the loss of major customers;
changes in demand for the Company's products; the timing of
orders received from customers; cost and availability of raw
materials; increases in costs relating to the manufacture and
transportation of products; dependence on foreign sources of
supply and foreign manufacturing; and the seasonal nature of the
business as detailed elsewhere in this Annual Report on Form 10-K
and from time to time in the Company's other filings with the
Securities and Exchange Commission. Such statements are based on
management's current expectations and are subject to a number of
factors and uncertainties which could cause actual results to
differ materially from those described in the forward-looking
statements.

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 which we file with the SEC at the
SEC's Public Reference Room at 450 Fifth Street, NW, 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.lifetime.hoan.com where users can access the
Company's electronic filings free of charge.

Lifetime Hoan Corporation designs, markets and distributes a
broad range of consumer products in the home, including kitchen
tools and gadgets, household cutlery and cutting boards, bakeware
and hostess accessories, pantryware, and decorative bath
accessory products. The Company has developed a strong consumer
franchise by promoting and marketing innovative products under
both owned and licensed trade names. Owned trade names include
Hoffritz(R), Roshco(R), Baker's Advantage(R), Kamenstein(R), Casa Moda(TM),
Hoan(R), Tristar(R), Gemco(R), :USE(R) and Old Homestead(R). Licensed
trade names include Farberware(R), KitchenAid(R), Cuisinart(R) and
various names under license from The Pillsbury Company. The
Farberwarer trade name is used pursuant to a 200 year royalty-
free license. As used herein, unless the context requires
otherwise, the terms "Company" and "Lifetime" mean Lifetime Hoan
Corporation and its subsidiaries.

Sales growth is stimulated by expanding product offerings and
penetrating various channels of distribution, both domestically
and to a minor extent, internationally. In addition, the Company
has made the following acquisitions and entered into the
following agreements since 1995:

Hoffritz(R)

In 1995, the Company acquired the Hoffritz(R) trademarks and brand
name. The Company uses the name on various products including
cutlery, scissors, personal care implements, kitchen tools,
bakeware, barware and barbecue accessories. The Company believes
that Hoffritz(R) is a well-known, respected name with a history of
quality. The Company markets these products primarily through
major department stores and high-end specialty stores nationwide.

3

Farberware(R)

In 1996, the Company entered into an agreement to acquire certain
assets of Farberware, Inc. ("Farberware"). Under the terms of the
acquisition agreement the Company acquired a 200 year, royalty-
free, exclusive right to use the Farberware(R) name in connection
with the product lines covered by its then existing license
agreements, which included kitchen cutlery products (excluding
flatware) and kitchen tools such as spatulas, barbecue forks and
kitchen "gadgets" (but excluding appliances), plus a limited
number of certain additional products. The Company also acquired
50 Farberware retail outlet stores pursuant to the acquisition
agreement.

Meyer Agreement

In 1997, the Company entered into an agreement with Meyer
Corporation, regarding the operation of the Company's Farberware(R)
retail outlet stores. Pursuant to the agreement, as amended, the
Company continues to own and operate the Farberware(R) retail outlet
stores, which the Company acquired in 1996, and Meyer
Corporation, the licensed manufacturer of Farberware(R) branded
cookware products, assumes responsibility for merchandising and
stocking cookware products in the stores. Meyer Corporation
receives all revenue from sales of Farberware(R) cookware, currently
occupies 30% of the space in each store and reimburses the
Company for 30% of the operating expenses of the stores. For the
first nine months of 2003 and all of fiscal year 2002, the
Company and Meyer Corporation each occupied 50% of the space in
each store and the Meyer Corporation reimbursed the Company for
50% of the operating expenses of the stores. In fiscal years
2000 and 2001, the Company and Meyer Corporation each occupied
40% of the space in the outlet stores, and Salton, Inc. occupied
the other 20% of the space. Meyer Corporation and Salton, Inc.
reimbursed the Company for 40% and 20%, respectively, of the
operating expenses of the stores. See paragraph below entitled
"Salton Agreement".

Salton Agreement

In January 2000, the Company entered into an agreement with
Salton Inc. regarding the operation of the Company's Farberware(R)
retail outlet stores. Pursuant to the agreement, the Company
continued to own and operate the Farberware(R) retail outlet stores,
which the Company acquired in 1996, and Salton Inc., the licensed
manufacturer of Farberware(R) branded electric products, assumed
responsibility for merchandising and stocking electric products
in the stores. Salton Inc. received all revenue from sales of
Farberware(R) electric products, occupied 20% of the space in each
store and reimbursed the Company for 20% of the operating
expenses of the stores. The Salton agreement was terminated
effective December 31, 2001.

Roshco Acquisition

In 1998, the Company acquired all of the outstanding common stock
of Roshco, Inc. ("Roshco"), a privately-held bakeware and baking-
related products distributor, located in Chicago, Illinois.
Roshco marketed its bakeware and baking-related products under
the Roshco(R) and Baker's Advantage(R) trade names.

4

Kamenstein Acquisition

Effective September 1, 2000, the Company acquired the assets and
assumed certain liabilities of M. Kamenstein, Inc.
("Kamenstein"), a privately-held 107-year old housewares company,
whose products included pantryware, teakettles, and home
organization accessories.

KitchenAid Agreement

On October 16, 2000, the Company entered into a licensing
agreement with KitchenAid, a division of the Whirlpool
Corporation. This agreement allows the Company to design,
manufacture and market an extensive range of kitchen utensils,
barbecue items, and pantryware products under the KitchenAid(R)
brand name. On January 1, 2002, the licensing agreement between
the Company and KitchenAid, was amended, expanding the covered
products to include bakeware and baking related products. A
second amendment to the licensing agreement was entered into
effective August 1, 2003, which extended the term of the
agreement through December 31, 2007 and further expanded the
covered products to include kitchen cutlery. Shipments of
products under the KitchenAid(R) name began in the second quarter
of 2001.

Cuisinart Agreement

On March 19, 2002, the Company entered into a licensing agreement
with Conair Corporation. This agreement allows the Company to
design, manufacture and market a wide variety of kitchen cutlery
products under the Cuisinart(R) brand name. Shipments of products
under the Cuisinart(R) name began in the fourth quarter of 2002.

Prestige Acquisition and Disposition

In September 1999, the Company acquired 51% of the capital stock
of Prestige Italiana, Spa. ("Prestige Italy") and Prestige
Haushaltswaren GmbH ("Prestige Germany" and together with
Prestige Italy, the "Prestige Companies") for approximately $1.3
million in cash. Effective September 27, 2002, the Company sold
its interest in Prestige Italiana, Spa and, together with its
minority interest shareholder, caused Prestige Haushaltswaren
GmbH to sell all of its receivables and inventory to a European
housewares distributor. As a result the Company received
approximately $1.0 million in cash. The sale resulted in a net
loss of approximately $811,000 which included the write-off of
goodwill of approximately $540,000. For 2001 and 2002, the
Company has reclassified its financial statements to classify the
operations of the Prestige Companies as discontinued operations.

The Prestige Companies marketed and distributed kitchen tools,
gadgets, cutlery and bakeware under the Prestige(R) trade name
primarily in Italy and Germany.

5

:USE Acquisition

In October 2003, the Company acquired the business and certain
assets of the :USE - Tools for Civilization Division of DX Design
Express, Inc. which focused on creating contemporary lifestyle
products for the home, including decorative hardware, mirrors and
lighting for the bath, as well as decorative window accessories.

Gemco Ware, Inc. Acquisition

In November 2003, the Company acquired the assets of Gemco Ware,
Inc., a distributor of functional glassware products for storing
and dispensing food and condiments.

6

Products

The Company designs, markets and distributes a broad range of
consumer products used in the home, including kitchen tools and
gadgets, household cutlery and cutting boards, bakeware and
hostess accessories, pantryware, and decorative bath accessory
products. The Company's products are marketed under various
trade names including Farberware(R), KitchenAid(R), Cuisinart(R),
Hoffritz(R), Kamenstein(R), Gemco(R), :USE(R), Hoan(R) and Bakers
Advantage(R).

Kitchen Tools and Gadgets

The Company sells over 4,000 kitchen tools and gadget items under
various trade names including Farberware(R), Hoffritz(R),
KitchenAid(R), Hoan(R) and Smart Choice. The kitchenware items are
manufactured to the Company's specifications outside the United
States, primarily in the People's Republic of China, and are
generally shipped fully assembled. These items are typically
packaged on a card, which can be mounted for sale on racks at the
retailers' premises for maximum display visibility. Products
include the following:

Kitchen Tools and Gadgets

These items include food preparation and serving tools such as
metal, plastic and wooden spoons, spatulas, serving forks,
graters, strainers, ladles, shears, vegetable and fruit knives,
juicers, pizza cutters, pie servers, and slicers.

These items also include barbecue accessories, in sets and
individual pieces, featuring such items as spatulas, tongs,
forks, skewers, hamburger and fish grills, brushes, corn holders,
food umbrellas, and nut and lobster crackers.

Impulse Purchase Products

J-Hook and Clip Strip merchandising systems are distributed by
the Company to create additional selling space for this line in
stores. The line consists of a variety of quality, novelty items
designed to trigger impulse buying. This line is targeted towards
supermarkets and mass merchants.

Household Cutlery and Cutting Boards

The Company designs, markets and distributes kitchen cutlery
under a variety of trade names including Farberware(R), Cuisinart(R),
Hoffritz(R) and Tristar(R). Cutlery is sold individually, in blister
packages, boxed sets and in sets fitted into wooden counter
blocks, resin carousels and stainless carousels.

The Company designs, markets and distributes a full range of
cutting boards made of polyethylene, wood, glass and acrylic.
These products are distributed under several trade names
including Farberware(R), KitchenAid(R) and Hoffritz(R). All cutting
boards are imported. Boards are also packaged with cutlery items
and kitchen gadgets.

7

Bakeware and Hostess Accessories

Bakeware
The Company designs, markets and distributes a variety of
bakeware and baking related products. Trade names that these
products are sold under include Hoffritz(R), KitchenAid(R), Baker's
Advantage(R), Roshco(R) and under a license from Pillsbury.

This product line includes baking, measuring, and rangetop
products such as cookie sheets, muffin, cake and pie pans, drip
pans, bake, roast and loaf pans, scraper sets, whisks, cutters,
rolling pins, baking shells, baking cups, measuring devices,
thermometers, timers, pizza stones, fondues, woks, ceramics and
coasters. These items are manufactured to the Company's
specifications outside the United States and are generally
shipped fully assembled.

Hostess Accessories
The Company markets a diverse line of products catering to the
growing trend of casual home entertaining, encompassing items for
the bar and the serving of appetizers, buffet dining and
desserts. Hostess accessories are marketed under the Hoffritz(R),
Farberware(R) and Casa Moda(R) brands.

Pantryware
In September 2000 with the acquisition of Kamenstein, the Company
began to design, market and distribute pantryware, teakettles,
spice racks and home organization accessories. Products are
distributed under the trade names Kamenstein(R), MKI(R), Farberware(R),
Hoffrtiz(R), Warren Kimble(R), Precious Moments(R), Mrs. K's Organics(R),
Kathy Ireland(R) and Perfect Tear(R).

These pantryware lines are manufactured in wood, wire, stainless
steel and mixed media and include bread boxes, mug holders, paper
towel dispensers, spice carousels, mail caddy's, enamel
teakettles, stainless steel teakettles, storage and organization
products and hardwood message centers. Organic and non-organic
spices are sold separately in gift packs. These items are
manufactured to the Company's specifications outside the United
States and are generally shipped fully assembled. The spice
containers are filled domestically in Kamenstein's Massachusetts
facility.

Decorative Bath Accessories
The Company designs, markets and distributes under the :USE trade
name, decorative hardware, mirrors and lighting for the bath.
:USE products are distributed through home fashion stores and
independent bath and lighting specialty stores.

New Products

The Company has a design and development department consisting of
28 employees who create new products, packaging, and
merchandising concepts. In excess of 600 items were developed or
remodeled in 2003, including the following:

KitchenAid: Expansion of over 150 new items in the Company's
premium line of culinary tools, gadgets, and cutting boards. Most
significant were: the expansion of the boxed food preparation
category; a new line of nylon cooking tools; an extended
assortment of gift and bridal sets; additional cutting boards,
and three completely new lines of tools and gadgets for alternate
levels of retail trade.

Cutlery and Cutting Boards: Full offerings of all 3 lines of
Cuisinart branded cutlery, including multiple gift sets, wood
block sets, molded block sets, and 61 open stock items.

Cuisinart cutlery uses the finest steel blades, with a Rockwell
hardness of 56 and a chromium content of 18%. These knives create
two new standards of excellence and performance in cutlery: the
sharpest blades made with the hardest, most rust-resistant steel
ever used in cutlery.

8

The Company also introduced Farberware Elite, a line of cutlery
designed specifically for women that is dishwasher safe, with
smaller handles, and never-needs-sharpening blades. Forged
cutlery was a major trend in 2003, with introductions of
Farberware Forged Classic (fine edge cutlery with never-needs-
sharpening blades), triple-riveted Farberware Pro Forged II, and
Farberware Pro Forged and Pro Stainless, with both lines
featuring bonus cleavers in gift boxed sets. The Santoku knife
(an Asian designed Chef's knife) was also new and it was added to
many of the Farberware forged lines. The Company expanded it's
assortment of glass cutting boards with non-slip corners,
introduced curved wood boards, and designed a new "chop & slide"
board for countertop/sink use.

Gadgets: Introduction of 35 new items, including an upscale line
of Farberware Commercial gadgets, featuring a new line of
silicone-over-steel kitchen tools, chrome-plated zinc alloy
castings, and a new merchandising concept for point-of-purchase
displays. The Company also introduced a new line of Farberware
barbeque tools, as well as boxed, food preparation items.

Bakeware: Expansion of the KitchenAid brand line of premium
bakeware to include a second series, consisting of 21 items of
metal bakeware as well as a pizza baking stone. For both the
original and second series of KitchenAid bakeware, the Company
introduced the patented, award-winning "Roaster with Floating
Rack", a unique innovation that keeps the rack above the bottom
surface of the pan. The introduction of KitchenAid Silicone
bakeware, consisting of 13 items each offered in 2 colors, was
well received by the Company's customers. Other new lines were
Farberware Ceramic Serveware as well as a matching series of
Farberware Candlelight Serveware; ceramic bakeware in attractive
stands that keeps food warm at the table. The Company also
expanded the fondue assortment with 7 new offerings, and
introduced a line of 8 ceramic buffet items.

Casa Moda: The Company established the Casa Moda division to
focus on the growing trend of casual home entertaining,
encompassing products and accessories for the bar and the serving
of appetizers, buffet dining and desserts. In 2003, the Company
introduced Splash, an assortment of barware items in 6 colors,
utilizing a combination of colored plastic and steel, with non-
skid bases. Also introduced were an array of tempered, patterned
glass coaster sets in steel and wire holders, 16 wood bar/hostess
items, and the award-winning "E-Z Out", a patented, totally safe
champagne bottle opener.

The Company also introduced different styles, under 3 brands, of
the world's first (and patented) S'mores Maker. The S'mores
Maker works on a concept similar to a fondue, using canned
chafing fuel inside a small roaster kettle, which has a stainless
steel grill surface, as the heat source for roasting the
marshmallows.

Kamenstein: The Company introduced the patented "Perfect-Tear"
Paper Towel Holder in 2003 in 5 designs and in 4 materials and
finishes (stainless steel, wood, chrome, and satin nickel). The
other significant additions to Kamenstein were the commercial
stainless steel spice racks in 3 sizes as well as the stainless
steel "Jar Tower" spice racks.

9

Sources of Supply

The Company sources its products from approximately 55
manufacturers located primarily in the People's Republic of
China, and to a smaller extent in the United States, Malaysia,
Thailand, Taiwan, Indonesia, Italy and India. A majority of the
Company's cutlery was purchased from three suppliers in 2003 who
accounted for 48%, 20%, and 14% of the total cutlery purchases,
respectively, and from three suppliers in 2002, who accounted for
58%, 20% and 10% of the total cutlery purchases, respectively. A
majority of the Company's pantryware was purchased from four
suppliers in 2003 that accounted for 20%, 16%, 13% and 11% of the
total pantryware purchases, respectively, and from three
suppliers in 2002, that accounted for 37%, 19% and 13% of the
total pantryware purchases, respectively. An interruption of
supply from any of these manufacturers could have an adverse
impact on the Company's ability to fill orders on a timely basis.
However, the Company believes other manufacturers with whom the
Company does business would be able to increase production to
fulfill the Company's requirements.

The Company's policy is to maintain several months of supply of
inventory and, accordingly, it orders products substantially in
advance of the anticipated time of sale to its customers. While
the Company does not have any long-term formal arrangements with
any of its suppliers, in certain instances, particularly with
respect to the manufacture of cutlery, the Company places firm
commitments for products several months in advance of receipt of
firm orders from customers. Lifetime's arrangements with most
manufacturers allow for flexibility in modifying the quantity,
composition and delivery dates of each order. All purchase
orders are in United States dollars.

Marketing

The Company markets its product lines directly through its own
sales force and through a network of independent sales
representatives. The Company's products are sold primarily in
the United States to approximately 700 customers including
national retailers, department store chains, mass merchant retail
and discount stores, supermarket chains, warehouse clubs, home
centers, direct marketing companies and specialty chains and
through other channels of distribution. During the years ended
December 31, 2003, 2002 and 2001, Wal-Mart Stores, Inc.
(including Sam's Clubs) accounted for approximately 29%, 20% and
18% of net sales, respectively. No other customer accounted for
10% or more of the Company's net sales during 2003, 2002 or 2001.

Competition

The markets for household cutlery, kitchenware, cutting boards,
pantryware, bakeware and decorative bath accessories 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 consumer brand name recognition, quality, packaging, breadth
of product line, distribution capability, prompt delivery and
price to the consumer.

10

Patents and Trademarks

The Company uses a number of owned trademarks, primarily
Hoffritz(R), Baker's Advantage(R), Roshco(R), Kamenstein(R), Tristar(R),
Gemco(R), :USE(R) and Hoan(R). The Farberware(R) trademark is licensed
under a 200 year royalty-free agreement. The Company considers
these trademarks significant to its competitive position. Some of
these trademarks are registered in the United States and others
have become distinctive marks as to which the Company has
acquired common law rights. The Company also licenses trademarks
from The Pillsbury Company, KitchenAid(R) (a division of the
Whirlpool Corporation) and Cuisinart (a division of Conair
Corporation).

The Company also owns several design and utility patents expiring
from 2004 to 2023 on the overall design of some of its products.
The Company also acquired patents, trademarks and copyrights as
part of the Hoffritz(R), Roshco, Kamenstein and :USE acquisitions
that expire from 2004 to 2022. The Company believes that the
expiration of any of its patents would not have a material
adverse effect on its business.

Seasonality

Although the Company sells its products throughout the year, the
Company has traditionally had higher net sales during its third
and fourth quarters as order volume from the Company's customer
base reaches its peak during these periods to stock for the
holiday season. The following table sets forth the unaudited
quarterly net sales from continuing operations for the years
ended December 31, 2003, 2002 and 2001:

Backlog

The Company receives projections on a seasonal basis from its
principal customers; however, firm purchase orders are most
frequently placed on an as needed basis. The Company's experience
has been that while there may be some modifications of customers'
projections, the Company is able, with some degree of certainty,
to predict its product needs.

The Company's backlog at December 31, 2003 and 2002 was
$5,242,000 and $7,555,000, respectively. The Company expects to
fill the 2003 backlog during 2004. The Company does not believe
that backlog is indicative of its future results of operations or
prospects. Although the Company seeks commitments from customers
well in advance of shipment dates, actual confirmed orders are
typically not received until close to the required shipment
dates.

Employees

As of December 31, 2003, Lifetime had 731 full-time employees, of
whom 6 were employed in an executive capacity, 89 in sales,
marketing, design or product development capacities, 74 in
financial, administrative or clerical capacities, 260 in
warehouse or distribution capacities and 302 were outlet store
personnel. None of the Company's employees are represented by a
labor union. The Company considers its employee relations to be
good.

11

ITEM 2. PROPERTIES

The following table describes the facilities at which the Company
operates its business:

In addition to the properties listed above, the Company's Outlet
Store subsidiary leases approximately 62 stores in retail outlet
centers located in 30 states throughout the United States. The
square footage of the stores range from approximately 2,000
square feet to 5,500 square feet. The terms of these leases
range from month-to-month to five years with expiration dates
beginning in January 2004 and extending through November 2008.

The Cranbury, New Jersey warehouse and distribution facility is
no longer occupied by the Company and, effective August 2003, the
Company began subleasing the warehouse to an unrelated third
party.

ITEM 3. LEGAL PROCEEDINGS

The Company is, from time to time, a party to litigation arising
in the normal course of its business. The Company believes that
there are currently no material legal proceedings the outcome of
which would have a material adverse effect on the Company's
consolidated financial position or results of operations.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not applicable.

12

PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
STOCKHOLDER MATTERS

The Company's Common Stock is traded under the symbol "LCUT" on
The Nasdaq National Market ("Nasdaq") and has been since its
initial public offering in June 1991. The Board of Directors of
the Company has authorized a repurchase of up to 3,000,000 of its
outstanding shares of common stock in the open market. Through
December 31, 2003, a cumulative total of 2,128,000 shares of
common stock had been repurchased and retired at a cost of
approximately $15,235,000. There were no repurchases in 2003 or
2002.

The following table sets forth the high and low sales prices for
the Common Stock of the Company for the fiscal periods indicated
as reported by Nasdaq.

At December 31, 2003, the Company estimates that there were
approximately 1,700 beneficial holders of the Common Stock of the
Company.

The Company is authorized to issue 2,000,000 shares of Series B
Preferred Stock, none of which is issued or outstanding.

The Company paid quarterly cash dividends of $0.0625 per share,
or a total annual cash dividend of $0.25 per share, on its Common
Stock during 2003 and 2002. The Board of Directors currently
intends to continue to pay quarterly cash dividends of $0.0625
per share of Common Stock for the foreseeable future, although
the Board may in its discretion determine to modify or eliminate
such dividends at any time.

The following table summarizes the Company's equity compensation
plans as of December 31, 2003:

13

ITEM 6. SELECTED FINANCIAL DATA

The selected consolidated income statement data for the years
ended December 31, 2003, 2002 and 2001, and the selected
consolidated balance sheet data as of December 31, 2003 and 2002,
have been derived from the Company's audited consolidated
financial statements included elsewhere in this Annual Report on
Form 10-K. The selected consolidated income statement data for
the years ended December 31, 2000 and 1999, and the selected
consolidated balance sheet data as of December 31, 2001, 2000 and
1999, are derived from the Company's audited consolidated
financial statements which are not included in this Annual Report
on Form 10-K. The Company acquired M. Kamenstein in September
2000, the business and certain assets of :USE in October 2003 and
Gemco Ware, Inc. in November 2003. . 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.

(in thousands except per share data)

14

Effective September 2002, the Company sold its 51% controlling
interest in Prestige Italia, Spa and, together with its minority
interest shareholder, caused Prestige Haushaltwaren GmbH
(combined, the "Prestige Companies") to sell all of its
receivables and inventory to a European housewares distributor.
The results of operations of the Prestige Companies through the
date of disposal are reflected as discontinued operations and are
therefore excluded from the selected consolidated income
statement data presented above.

Certain balances included within the prior years' balance sheet
data above have been reclassified to conform with the current
year presentation. These items include the reclassification of
deferred tax liabilities to non-current liabilities to conform
with the classification guidelines of Statement of Financial
Accounting Standards No 109, "Accounting for Income Taxes", the
reclassification of deferred financing fees relating to the
Company's reducing revolving credit facility to non-current
assets, the reclassification to non-current assets of the long-
term portion of notes receivable and the reclassification to non-
current liabilities of the liability recorded for the effect of
recording rent expense on a straight-line basis.

15

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS
General
The following discussion should be read in conjunction with the
consolidated financial statements for the Company and notes
thereto set forth in item 8.

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
accounting principles generally accepted in the United States.
The preparation of these financial statements requires management
to make estimates and assumptions that affect the reported
amounts of assets and liabilities and 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 judgements, including those related
to inventories. Management bases its estimates and judgements 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 judgements about the carrying
values of assets and liabilities that are not readily apparent
from other sources. Actual results may differ from these
estimates under different assumptions or conditions. The
Company's accounting policies are more fully described in Note A
of the consolidated financial statements. The Company believes
that the following discussion addresses the Company's 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.

Merchandise inventories, principally finished goods, are priced
by the lower of cost (first-in, first-out basis) or market
method. Reserves for excess or obsolete inventory reflected in
the Company's consolidated balance sheets at December 31, 2003
and 2002 are determined to be adequate by the Company's
management; however, there can be no assurance that these
reserves will prove to be adequate over time to provide for
ultimate losses in connection with the Company's inventory. The
Company's management periodically reviews and analyzes inventory
reserves based on a number of factors including, but not limited
to, future product demand of items and estimated profitability of
merchandise.

Effective January 1, 2002, the Company adopted Statement of
Financial Accounting Standard ("SFAS") No. 141, "Business
Combinations" and SFAS No. 142, "Goodwill and Other Intangible
Assets". SFAS No. 141 requires all business combinations
initiated after June 30, 2001 to be accounted for using the
purchase method. Under SFAS No. 142, goodwill and intangible
assets with indefinite lives are no longer amortized but are
reviewed at least annually for impairment. For each of the years
ended December 31, 2003 and December 31, 2002, the Company
completed its assessment. Based upon such reviews, no impairment
to the carrying value of goodwill was identified, and the Company
ceased amortizing goodwill effective January 1, 2002.

The following table sets forth income statement data of the
Company as a percentage of net sales for the periods indicated
below.

16

2003 COMPARED TO 2002

Net Sales

Net sales in 2003 were $160.4 million, an increase of
approximately $29.1 million, or 22.2% higher than 2002. The
increase in sales volume was attributable primarily to increased
shipments of KitchenAid branded kitchen tools and gadgets and
bakeware, the Company's newly designed S'mores Makers and
Kamenstein pantryware products.

Cost of Sales

Cost of sales for 2003 was $92.9 million, an increase of
approximately $19.8 million, or 27.0% higher than 2002. Cost of
sales as a percentage of net sales increased to 57.9% in 2003
from 55.7% in 2002, due primarily to higher sales of licensed
branded products which generate lower margins due to the added
costs of royalties and a higher cost of sales-to-net sales
relationship for Kamenstein products in 2003. The amount of
direct import sales increased in 2003. These sales relate to
products shipped directly from contract manufacturers to the
Company's retail customers and therefore carry lower gross profit
margins as the pricing of such sales recognize that the Company
does not incur any warehousing or distribution costs.

Distribution Expenses

Distribution expenses which primarily consist of warehousing
expenses, handling costs of products sold and freight-out
expenses, were $20.1 million for 2003 as compared to $21.3
million for 2002. These expenses included relocation charges,
duplicate rent and other costs associated with the Company's move
into its Robbinsville, New Jersey warehouse amounting to $0.7
million in 2003 and $2.2 million in 2002. Excluding these moving
related costs, distribution expenses were 1.1% higher in 2003 as
compared to 2002 due to higher depreciation expense related to
capital expenditures for the new automated warehouse system and
related equipment, offset by lower payroll costs. As a
percentage to net sales, distribution expenses, excluding the
aforementioned relocation charges, were 12.1% in 2003 as
compared to 14.6% in 2002. This improved relationship reflects
the benefits of labor savings generated by the new systems in our
Robbinsville, New Jersey warehouse.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for 2003 were $32.7
million, an increase of $2.9 million, or 9.6%, from 2002. The
increase in selling, general and administrative expenses is
primarily attributable to increased personnel costs, including
the planned personnel additions in the sales and product design
departments, increased commission expense related to the higher
sales volume and higher consulting fees.

Interest Expense

Interest expense for 2003 was $0.7 million, a decrease of $0.3
million or 27.9%, from 2002. The decrease is attributable to a
decrease in the average level of borrowings outstanding during
2003 under the Company's secured, revolving credit facility.

Income Taxes
Income taxes for 2003 were $5.6 million, an increase of $3.2
million or 131.6%, from 2002. The increase in income taxes is
directly related to the increase in income before taxes from 2003
to 2002. Income taxes as a percentage of income before taxes
remained consistent from year-to-year at approximately 40%.

17

2002 COMPARED TO 2001

Net Sales

Net sales in 2002 were $131.2 million, a decrease of
approximately $3.8 million, or 2.8% lower than 2001. The lower
sales volume was primarily the result of decreased sales in the
Kamenstein business due to lost sales to customers that were no
longer in business in 2002 as compared to 2001 and a major fall
promotion that did not perform as projected. Sales were also
lower in the Company's traditional or core business as first
quarter 2002 shipments were negatively impacted by issues related
to the January 2002 startup of the Company's new automated
warehouse in Robbinsville, New Jersey, offset by increased sales
in the Company's Farberware Outlet stores.

Cost of Sales

Cost of sales for 2002 was $73.1 million, a decrease of
approximately $2.5 million, or 3.3% lower than 2001. Cost of
sales as a percentage of net sales decreased to 55.7% in 2002
from 56.0% in 2001, due primarily to higher gross margins
generated by the Company's Kamenstein business, the result of
better sourcing of products from suppliers and changes in product
mix.

Distribution Expenses

Distribution expenses were $21.4 million for 2002 as compared to
$21.2 million for 2001. These expenses included relocation
charges, duplicate rent and other costs associated with the
Company's move into its Robbinsville, New Jersey warehouse
amounting to $2.2 million in 2002 and $2.9 million in 2001.
Excluding these moving related costs, distribution expenses were
4.9% higher in 2002 as compared to 2001 due to higher
depreciation expense related to capital expenditures for the new
automated warehouse system and related equipment and higher
freight out costs, partially offset by lower payroll costs.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for 2002 were $29.8
million, a decrease of $1.5 million, or 4.7%, from 2001. The
decrease in selling, general and administrative expenses was
primarily attributable to less bad debt expense and decreased
selling costs on lower sales volume.

Interest Expense

Interest expense for 2002 and 2001 remained consistent at $1.0
million as the average level of borrowings outstanding under the
Company's secured, revolving credit facility was consistent
during both periods.

Income Taxes
Income taxes and income taxes as a percentage of income before
income taxes for 2002 and 2001 remained consistent at $2.4
million and approximately 40%, respectively.

18

LIQUIDITY AND CAPITAL RESOURCES

At December 31, 2003, the Company had cash and cash equivalents
of $1.2 million, an increase of $1.1 million from the prior year,
working capital was $41.3 million, an increase of $7.9 million
from December 31, 2002, the current ratio was 1.88 to 1 and
borrowings increased from the prior year by $2.6 million to $16.8
million at December 31, 2003. The increase in working capital
primarily resulted from an increase in accounts receivable and
merchandise inventories offset in part by an increase in accounts
payable and trade acceptances, accrued expenses and income taxes
payable.

Cash provided by operating activities was approximately $5.7
million, primarily resulting from net income before depreciation,
amortization, provisions for losses on accounts receivable and
other non-cash charges, increased accounts payable and trade
acceptances, accrued expenses and income taxes payable offset by
increased accounts receivable and merchandise inventories. Cash
used in investing activities was approximately $6.2 million,
which consisted of purchases of fixed assets and the cash paid in
connection with the acquisitions of the :USE and Gemco
businesses. Cash provided by financing activities was
approximately $1.6 million, primarily as a result of an increase
in short-term borrowings and proceeds from the exercise of stock
options, offset by cash dividends paid.

Capital expenditures were $2.2 million in 2003 and $1.8 million
in 2002. Total planned capital expenditures for 2004 are
estimated at $3.0 million. These expenditures are expected to be
funded from current operations, cash and cash equivalents and, if
necessary, borrowings under the Company's revolving credit
agreement.

As of December 31, 2003, the Company's contractual obligations
were as follows (in thousands of dollars):

The Company has a $35 million three-year, secured, reducing
revolving credit facility under an agreement (the "Agreement")
with a group of banks. The Agreement is secured by all of the
assets of the Company and matures in November 2004. Under the
terms of the Agreement, the Company is required to satisfy
certain financial covenants, including limitations on
indebtedness and sale of assets; a minimum fixed charge ratio;
and net worth maintenance. Borrowings under the Agreement have
different interest rate options that are based on either an
alternate base rate, LIBOR rate, or a lender's cost of funds
rate. As of December 31, 2003, the Company had $1.1 million of
letters of credit and trade acceptances outstanding and $16.8
million of borrowings under the Agreement and, as a result, the
availability under the Agreement was $17.1 million. Interest
rates on borrowings at December 31, 2003 ranged from 2.9375% to
4.59%. Management is currently evaluating alternative borrowing
arrangements and other available sources of financing to replace
the Agreement upon its maturity which include, but are not
limited to, entering into a new credit facility or term loan
arrangement. The Company has had preliminary meetings with its
banks and believes that it will be able to enter into a
definitive multi-year credit facility on terms no less favorable
than its current agreement; however, there can be no assurance
that financing will be available in amounts or on terms
acceptable to the Company, if at all. Should the Company not be
able to obtain financing it could have a material adverse impact
on the Company's financial condition.

19

Products are sold to retailers primarily on 30-day credit terms,
and to distributors primarily on 60-day credit terms. As of
December 31, 2003, the Company had an aggregate of $2.1 million
of accounts receivable outstanding in excess of 60 days or
approximately 5.4% of gross receivables, and had inventory of
$49.3 million.

The Company believes that its cash and cash equivalents plus
internally generated funds and its credit arrangements will be
sufficient to finance its operations for the next twelve months.

The results of operations of the Company for the periods
discussed have not been significantly affected by inflation or
foreign currency fluctuations. The Company negotiates all of its
purchase orders with its foreign manufacturers in United States
dollars. Thus, notwithstanding any fluctuations in foreign
currencies, the Company's cost for a purchase order is generally
not subject to change after the time the order is placed.
However, the weakening of the United States dollar against local
currencies could lead certain manufacturers to increase their
United States dollar prices for products. The Company believes it
would be able to compensate for any such price increase.

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. The Company's
revolving credit facility bears interest at variable rates and,
therefore, the Company is subject to increases and decreases in
interest expense on its variable rate debt resulting from
fluctuations in interest rates. There have been no changes in
interest rates that would have a material impact on the
consolidated financial position, results of operations or cash
flows of the Company for the year ended December 31, 2003.

20

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The Company's Consolidated Financial Statements as of and for the
year ended December 31, 2003 are included herein commencing on
page F-1.

The following is a summary of the unaudited quarterly results of
operations for the years ended December 31, 2003 and 2002.

The unaudited quarterly results of operations shown above have
been adjusted to present the results of operations of the
Prestige Companies (sold in September 2002) as discontinued
operations.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.

None.

21

ITEM 9A. 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 a date within 90 days prior to the date of the
filing of this Report on Form 10-K, that the Company's controls
and procedures are effective to ensure that information required
to be disclosed by the Company in the reports filed by it under
the Securities and Exchange Act of 1934, as amended, is recorded,
processed, summarized and reported within the time periods
specified in the SEC'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.

There were no significant changes in the Company's internal
controls or in other factors that could significantly affect
these controls subsequent to the date of such evaluation.

22

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The following table sets forth certain information concerning the
Executive Officers and Directors of the Company:

Mr. Siegel has been continuously employed by the Company as
its President since 1999. In 2000, Mr. Siegel became the Chief
Executive Officer of the Company. In 2001, Mr. Siegel became the
Chairman of the Board of Directors. Prior to becoming President,
Mr. Siegel was Executive Vice President of the Company since
1967.

Mr. Cohen was first elected a Director in 1998 and has been
continuously employed by the Company in his present capacity
since 1999. Prior thereto Mr.Cohen was Vice President - National
Sales Manager of the Company since 1991.

Mr. Miller was named Executive Vice President in 2002. Prior
thereto Mr. Miller was a Senior Vice President - Sales of the
Company since 2000. Prior thereto, Mr. Miller was Vice
President - National Sales Manager of the Company since 1985.

Mr. Reichenbach was named Executive Vice President in 2002.
Prior thereto Mr. Reichenbach was President of the Cutlery
Division of the Company since 2001. Prior thereto, Mr.
Reichenbach was Senior Vice President - General Merchandise
Manager of Linens `N Things since 1998.

Mr. Phillips has been continuously employed by the Company in
his present capacity since 1981.

Mr. McNally has been continuously employed by the Company in
his present capacity since 1997.

Mr. Sklute was designated an executive officer by the Board of
Directors on March 25, 2004. Mr. Sklute has been President of the
Gadget Division of the Company since 2001. Prior thereto, Mr. Sklute
was Vice President of Marketing since 1993.

23

Mr. Shiftan has been a consultant to the Company since 2002.
Prior thereto, Mr. Shiftan served as Deputy Executive Director of
The Port Authority of New York & New Jersey from 1998 to 2002.
Mr. Shiftan is also a director of Rumson Fair Haven Bank & Trust
Co., the shares of which are traded on the NASDAQ Bulletin Board
(RFHB.OB).

Mr. Bernstein has been a member of the Certified Public
Accounting firm, Cole, Samsel &
Bernstein LLC (and its predecessors), for approximately fifty-one
years.

Mr. Florence was Chairman of the Board of Syratech, Inc., a
consumer products company from 1986 to 2003. Mr. Florence was
Chief Executive Officer and President of Syratech, Inc. from 1986
to 2001.

Ms. Nanninga has been the Chief Operating Officer for the New
York Tri-State Region of CB Richard Ellis, Inc., a commercial
real estate firm since 2002. Prior thereto, Ms. Nanninga served
as Deputy Chief Financial Officer and Director of Real Estate for
the Port Authority of New York and New Jersey.

Jeffrey Siegel and Craig Phillips are cousins.

Bruce Cohen and Evan Miller are brothers-in-law.

The Board of Directors has an audit committee, whose three
members (Messrs. Bernstein, Florence and Ms. Nanninga) are
independent directors.

The directors and officers of the Company are elected annually
by the stockholders and Board of Directors of the Company,
respectively. Directors serve until the next annual meeting of
the stockholders or until their successors have been elected and
qualified or until their earlier resignation or removal.
Officers are elected at the first Board of Directors meeting
following the annual stockholders meeting and serve at the
pleasure of the Board of Directors.

Directors who are not employees of the Company receive a
retainer of $10,000 per year, and an additional fee of $1,000 for
each Board meeting attended, plus reimbursement of reasonable out-
of-pocket expenses. Directors who are employees of the Company do
not receive compensation for serving as directors or attending
meetings. The Company has entered into indemnification agreements
with the directors and officers of the Company.

ITEM 11. EXECUTIVE COMPENSATION

The information required by this item is incorporated by
reference, from the information contained under the caption
"Executive Compensation" in the Company's definitive Proxy
Statement for its 2004 Annual Meeting of Stockholders.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information required by this item is incorporated by
reference, from the information contained under the caption
"Principal Stockholders" in the Company's definitive Proxy
Statement for its 2004 Annual Meeting of Stockholders.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by this item is incorporated by
reference, from the information contained under the caption
"Certain Transactions" in the Company's definitive Proxy
Statement for its 2004 Annual Meeting of Stockholders.

24

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

The information required by this item is incorporated by
reference, from the information contained under the caption
"Principal Accounting Fees and Services" in the Company's
definitive Proxy Statement for its 2004 Annual Meeting of
Stockholders.

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K

(a) (1) and (2) - see list of Financial Statements and Financial
Statement Schedule on F-1.

(b) Reports on Form 8-K in the fourth quarter of 2003.

On October 30, 2003, the Company filed a report on Form 8-K
announcing results of operations and financial condition
for its third quarter ended September 30, 2003.

(c) Exhibits*:

Exhibit
No. Description

3.1 Restated Certificate of Incorporation of the Company
(incorporated herein by reference to Exhibit 3[a] to Form S-
1 [No. 33-40154] of Lifetime Hoan Corporation).

3.2 Amendment dated June 9, 1994 to the Restated Certificate of
Incorporation of the Company (incorporated herein by reference to
the December 31, 1994 Form 10-K [No. 1-19254] of Lifetime Hoan
Corporation).

3.3 By-Laws of the Company (incorporated herein by reference to
Exhibit 3[b] to Form S-1 [No. 33-40154] of Lifetime Hoan
Corporation).

10.1 Loan Agreement dated as of May 11, 1988 with Bank of New
York, as amended (incorporated by reference to Exhibit 10[d]
to Form S-1 [No. 33-40154] of Lifetime Hoan Corporation).

10.2 Amendment No. 6 dated as of March 5, 1992 between Lifetime
Hoan Corporation and The Bank of New York (incorporated by
reference to the December 31, 1991 Form 10-K [No. 1-19254]
of Lifetime Hoan Corporation).

10.3 Stock Option Plan for key employees of Lifetime Hoan
Corporation, as amended June 9, 1994 (incorporated by
reference to the December 31, 1994 Form 10-K [No. 1-19254]
of Lifetime Hoan Corporation).

10.4 Promissory notes dated December 17, 1985 of Milton L. Cohen,
Jeffrey Siegel, Craig Phillips and Robert Phillips, as
amended (incorporated by reference to Exhibit 10[f] to Form
S-1 [No. 33-40154] of Lifetime Hoan Corporation).

25

10.5 Lease to Dayton, New Jersey premises dated August 20, 1987
and amendment between the Company and Isaac Heller
(incorporated by reference to Exhibit 10[h] to Form S-1 [No.
33-40154] of Lifetime Hoan Corporation).

10.6 License Agreement dated December 14, 1989 between the
Company and Farberware, Inc. (incorporated by reference to
Exhibit 10[j] to Form S-1 [No. 33-40154] of Lifetime Hoan
Corporation).

10.7 License Agreement dated as of April 19, 1991 between the
Company and The Pillsbury Company (incorporated by reference
to Exhibit 10[m] to Form S-1 [No. 33-40154] of Lifetime Hoan
Corporation).

10.8 Real Estate Sales Agreement dated October 28, 1993 between
the Company and The Olsten Corporation (incorporated by
reference to the December 31, 1993 Form 10-K [No. 1-19254]
of Lifetime Hoan Corporation).

10.9 Amendment to the Real Estate Sales Agreement dated September
26, 1994 between the Company and The Olsten Corporation.
(incorporated by reference to the December 31, 1995 Form 10-
K [No. 1-19254] of Lifetime Hoan Corporation).

10.10 Lease to additional Dayton, New Jersey premises dated
December 7, 1994. (incorporated by reference to the December
31, 1995 Form 10-K [No. 1-19254] of Lifetime Hoan
Corporation).

10.11 License Agreement dated December 21, 1995 between the
Company and The Walt Disney Company.

10.12 Memorandum of purchase dated September 18, 1995 between
the Company and Alco Capital Group, Inc. (incorporated by
reference to the September 30, 1995 Form 10-Q [No. 1-19254]
of Lifetime Hoan Corporation).

10.13 Registration Rights Agreement dated September 18, 1995
between the Company and Alco Capital Group, Inc.
(incorporated by reference to the September 30, 1995 Form 10-
Q [No. 1-19254] of Lifetime Hoan Corporation).

10.14 Amendment No. 1 dated September 26, 1995 to the Lease
for the additional Dayton, New Jersey premises.
(incorporated by reference to the September 30, 1995 Form 10-
Q [No. 1-19254] of Lifetime Hoan Corporation).

10.15 Form of Extension Agreement dated as of December 15,
1995 between Milton L. Cohen and Lifetime Hoan Corporation
(incorporated by reference to the January 8, 1996 Form 8-K
[No. 1-19254] of Lifetime Hoan Corporation).

10.16 Form of Extension Agreement dated as of December 15,
1995 between Jeffrey Siegel and Lifetime Hoan Corporation
(incorporated by reference to the January 8, 1996 Form 8-K
[No. 1-19254] of Lifetime Hoan Corporation).

10.17 Form of Extension Agreement dated as of December 15,
1995 between Craig Phillips and Lifetime Hoan Corporation
(incorporated by reference to the January 8, 1996 Form 8-K
[No. 1-19254] of Lifetime Hoan Corporation).

10.18 Asset Purchase Agreement by and between Farberware,
Inc., Far-b Acquisition Corp., Syratech Corporation and
Lifetime Hoan Corporation, dated February 2, 1996.

10.19 Joint Venture Agreement by and among Syratech
Corporation, Lifetime Hoan Corporation and Far-b Acquisition
Corp., dated February 2, 1996.

10.20 Employment Agreement dated April 7, 1996 with Milton L.
Cohen (incorporated by reference to the March 31, 1996 10-Q).

26

10.21 Employment Agreement dated April 7, 1996 with Jeffrey
Siegel (incorporated by reference to the March 31, 1996 10-
Q).

10.22 Employment Agreement dated April 7, 1996 with Craig
Phillips (incorporated by reference to the March 31, 1996
10-Q).

10.23 Lifetime Hoan 1996 Incentive Stock Option Plan
(incorporated by reference to the March 31, 1996 10-Q).

10.24 Lifetime Hoan 1996 Incentive Bonus Compensation Plan
(incorporated by reference to the March 31, 1996 10-Q).

10.25 Meyer Operating Agreement dated July 1, 1997 between
Lifetime Hoan Corporation and Meyer Corporation and
Amendment to Agreement dated July 1, 1998.

10.26 Jeffrey Siegel Employment Agreement Amendment No. 1,
dated June 6, 1997

10.27 Milton L. Cohen Employment Agreement Amendment No. 1,
dated June 6, 1997

10.28 Stock Purchase Agreement between Lifetime Hoan
Corporation and Roshco, Inc. dated August 10, 1998.

10.29 Stock Purchase Agreement between Lifetime Hoan
Corporation and Meyer International Holdings Limited and
Prestige Italiana, SPA dated September 2, 1999.

10.30 Stock Purchase Agreement between Lifetime Hoan
Corporation and Meyer International Holdings Limited and
Prestige Haushaltswaren GmbH, dated September 2, 1999.

10.31 Asset Purchase Agreement between MK Acquisition Corp.,
a wholly owned subsidiary of Lifetime Hoan Corporation, and M.
Kamenstein, Inc., dated September 28, 2000.

10.32 Employment Agreement dated April 6, 2001 between
Jeffrey Siegel and Lifetime Hoan Corporation.

10.33 Consulting Agreement dated April 7, 2001 between Milton
L. Cohen and Lifetime Hoan Corporation.

10.34 Credit Facility Agreement between Lifetime Hoan
Corporation and The Bank of New York, HSBC Bank USA,
Citibank, N.A., Wells Fargo Bank, N.A., and Bank Leumi USA,
dated November 9, 2001.

10.35 Stock Sale Agreement of Prestige Italiana, SPA, between
Lifetime Hoan Corporation, Meyer International Holdings
Limited and Meyer Prestige Holdings Ltd and Meyer Prestige
GmbH, dated October 11, 2002.

10.36 Consulting Agreement dated October 1, 2002 between Lifetime
Hoan Corporation and Ronald Shiftan.

10.37 Amendment No. 6 to Outlet Store Operating Agreement,
dated as of April 30, 2003 (the "Amendment", made by and between
Outlet Retail Stores, Inc. and Cookware Concepts, Inc.

10.38 Robert McNally Employment Agreement, dated July 1, 2003.

10.39 Craig Phillips Employment Agreement dated July 1, 2003.

10.40 Bruce Cohen Employment Agreement dated July 1, 2003.

27

10.41 Evan Miller Employment Agreement dated July 1, 2003.

10.42 Robert Reichenbach Employment Agreement dated July 1, 2003.

21 Subsidiaries of the registrant

23 Consent of Ernst & Young LLP.

31.1 Certification by Jeffrey Siegel, Chief Executive 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.

31.2 Certification by Robert McNally, 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 Certification by Jeffrey Siegel, Chief Executive Officer and
Robert McNally, Chief Financial Officer pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.

*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 exhibits.

(d) Financial Statement Schedules - the response to this portion
of Item 15 is submitted as a separate section of this report.

28

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 Hoan Corporation

/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 Chairman of the Board of Directors,
Jeffrey Siegel Chief Executive Officer, President March 29, 2004
and Director

/s/ Robert McNally Vice-President - Finance
Robert McNally and Treasurer March 29, 2004
(Principal Financial and
Accounting Officer)

/s/ Craig Phillips
Craig Phillips Director March 29, 2004

/s/ Bruce Cohen
Bruce Cohen Director March 29, 2004

/s/ Ronald Shiftan
Ronald Shiftan Director March 29, 2004

/s/ Howard Bernstein
Howard Bernstein Director March 29, 2004

/s/ Leonard Florence
Leonard Florence Director March 29, 2004

/s/ Cherrie Nanninga
Cherrie Nanninga Director March 29, 2004

Exhibit 31.1
CERTIFICATIONS

I, Jeffrey Siegel, certify that:

1. I have reviewed this annual report on Form 10-K of Lifetime
Hoan Corporation ("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-14 and 15d-
14) 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. 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
c. disclosed in this report any change in the registrant's
internal controls 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 controls over financial reporting; and

5. The registrant's other certifying officers and I have
disclosed, based on our most recent evaluation of internal
controls 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 controls 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 controls over financial reporting.

Date: March 29, 2004

__/s/ Jeffrey Siegel______________
Jeffrey Siegel
President and Chief Executive Officer

Exhibit 31.2
CERTIFICATIONS

I, Robert McNally, certify that:

1. I have reviewed this annual report on Form 10-K of Lifetime
Hoan Corporation ("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-14 and 15d-
14) 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. 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
c. disclosed in this report any change in the registrant's
internal controls 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 controls over financial reporting; and
5. The registrant's other certifying officers and I
have disclosed, based on our most recent evaluation of
internal controls 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 controls over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record,
process, summarize and report 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 controls over financial reporting.

Date: March 29, 2004

___/s/ Robert McNally___________
Robert McNally
Vice President and Chief Financial
Officer

FORM 10-K - ITEM 15(a)(1) and (2)
LIFETIME HOAN CORPORATION

INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE

The following Financial Statements and Schedule of Lifetime Hoan
Corporation are included in Item 8.

Report of Independent Auditors F-2
Consolidated Balance Sheets as of December 31, 2003 and 2002 F-3
Consolidated Statements of Income for the
Years ended December 31, 2003, 2002 and 2001 F-4
Consolidated Statements of Stockholders' Equity for the
Years ended December 31, 2003, 2002 and 2001 F-5
Consolidated Statements of Cash Flows for the
Years ended December 31, 2003, 2002 and 2001 F-6
Notes to Consolidated Financial Statements F-7

The following financial statement schedule of Lifetime Hoan
Corporation is included in Item 15 (d);

Schedule II - Valuation and qualifying accounts S-1

All other schedules in the applicable accounting regulation of
the Securities and Exchange Commission are not required under the
related instructions or are inapplicable, and therefore have been
omitted.

F-1

REPORT OF INDEPENDENT AUDITORS

To the Board of Directors and Stockholders
Lifetime Hoan Corporation

We have audited the accompanying consolidated balance sheets of
Lifetime Hoan Corporation as of December 31, 2003 and 2002 and
the related consolidated statements of income, stockholders'
equity, and cash flows for each of the three years in the period
ended December 31, 2003. Our audits also included the financial
statement schedule listed in the Index at Item 15(a). These
consolidated financial statements and schedule are the
responsibility of the Company's management. Our responsibility
is to express an opinion on these consolidated financial
statements and schedule based on our audits.

We conducted our audits in accordance with auditing standards
generally accepted in the 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 provide a reasonable basis for our
opinion.

In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of Lifetime Hoan Corporation at December 31,
2003 and 2002, and the consolidated results of its operations and
its cash flows for each of the three years in the period ended
December 31, 2003, in conformity with accounting principles
generally accepted in the United States. 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.

As discussed in Note A to the consolidated financial statements,
effective January 1, 2002, the Company changed its method of
accounting for goodwill.

Ernst & Young LLP

Melville, New York
February 18, 2004

F-2

LIFETIME HOAN CORPORATION

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

See notes to consolidated financial statements.

F-3

LIFETIME HOAN CORPORATION

CONSOLIDATED STATEMENTS OF INCOME
(in thousands - except per share data)

See notes to consolidated financial statements.

F-4

LIFETIME HOAN CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(in thousands)

See notes to consolidated financial statements.
F-5

LIFETIME HOAN CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

See notes to consolidated financial statements.
F-6

LIFETIME HOAN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2003

NOTE A - SIGNIFICANT ACCOUNTING POLICIES

Organization and Business: The accompanying consolidated financial
statements include the accounts of Lifetime Hoan Corporation
("Lifetime") and its wholly-owned subsidiaries, Outlet Retail Stores,
Inc. ("Outlets"), Roshco, Inc. ("Roshco") and M. Kamenstein Corp.
("Kamenstein"), collectively, the "Company". Effective September 27,
2002, the Company sold its 51% owned and controlled subsidiaries,
Prestige Italiana, Spa. ("Prestige Italy") and Prestige Haushaltswaren
GmbH ("Prestige Germany" and together with Prestige Italy, the
"Prestige Companies"). Accordingly, the Company has classified the
Prestige Companies business as discontinued operations. Significant
intercompany accounts and transactions have been eliminated in
consolidation.

The Company is engaged in the design, marketing and distribution
of household cutlery, kitchenware, cutting boards, pantryware,
bakeware and decorative bath accessories, marketing its products under
a number of trade names, some of which are licensed. The Company sells
its products primarily to retailers throughout the United States.

The Company also operates approximately 62 retail outlet stores
in 30 states under the Farberwarer name. Under an agreement with the
Meyer Corporation, Meyer Corporation receives all revenue from sales
of Farberware cookware, occupies 30% of the space in each store and
reimburses the Company for 30% of the operating expenses of the
stores.

The significant accounting policies used in the preparation of the
consolidated financial statements of the Company are as follows:

Revenue Recognition: Revenue is recognized upon the shipment of
merchandise. Related freight-out costs are included in distribution
expenses and amounted to $2.7 million, $2.7 million and $2.3 million
for 2003, 2002 and 2001, respectively.

Distribution Expenses: Distribution expenses primarily consist
of warehousing expenses, handling costs of products sold and freight-
out. These expenses include relocation charges, duplicate rent and
other costs associated with the Company's move into it's Robbinsville,
New Jersey warehouse, amounting to $0.7 million, $2.2 million and $2.9
million in 2003, 2002 and 2001, respectively.

Inventories: Merchandise inventories, principally finished
goods, are priced by the lower of cost (first-in, first-out basis) or
market method. Reserves for excess or obsolete inventory reflected in
the Company's consolidated balance sheets at December 31, 2003 and
2002 are considered adequate by the Company's management; however,
there can be no assurance that these reserves will prove to be
adequate over time to provide for ultimate losses in connection with
the Company's inventory.

Accounts Receivable: The Company is required to estimate the
collectibility of its accounts receivable. A considerable amount of
judgment is required in assessing the ultimate realization of these
receivables including the current credit-worthiness of each customer.
The Company maintains allowances for doubtful accounts for estimated
losses resulting from the inability of its customers to make required
payments. If the financial conditions of the Company's customers were
to deteriorate, resulting in an impairment of their ability to make
payments, additional allowances may be required.

Property and Equipment: Property and equipment is stated at cost.
Property and equipment other than leasehold improvements is being
depreciated by 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 3 to 10
years. Leasehold improvements are depreciated over the term of the
lease or the estimated useful lives of the improvements, whichever is
shorter.

Cash Equivalents: The Company considers 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 accounting principles generally accepted in the United
States 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.

F-7

LIFETIME HOAN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued

NOTE A - SIGNIFICANT ACCOUNTING POLICIES (continued)

Fair Value of Financial Instruments: The carrying amounts of the
Company's financial instruments, including cash and cash equivalents,
accounts receivable, accounts payable and trade acceptances
approximate their fair values because of the short-term nature of
these items. The carrying value of short-term borrowings outstanding
under the Company's revolving credit facility approximate fair value
as such borrowings bear interest at variable market rates.

Goodwill and Other Intangible Assets: Effective January 1, 2002,
the Company adopted Statement of Financial Accounting Standard
("SFAS") No. 141, "Business Combinations" and SFAS No. 142, "Goodwill
and Other Intangible Assets". SFAS No. 141 requires all business
combinations initiated after June 30, 2001 to be accounted for using
the purchase method. Under SFAS No. 142, goodwill and intangible
assets with indefinite lives are no longer amortized but are reviewed
at least annually for impairment. The Company completed its annual
assessment of goodwill impairment in the fourth quarters of 2003 and
2002. Based upon such reviews, no impairment to the carrying value of
goodwill was identified in either periods. The Company ceased
amortizing goodwill effective January 1, 2002. Had this standard been
applied for the year ended December 31, 2001, net income would have
been increased by $343,000 and basic and diluted earnings per share
would have been $0.31.

Other intangibles consist of a royalty-free license, trademarks /
tradenames, customer relationships and product designs acquired
pursuant to three acquisitions and are being amortized by the straight-
line method over periods ranging from 4 to 30 years. Accumulated
amortization at December 31, 2003 and 2002 was $3.1 million and $2.7
million, respectively. Amortization expense with respect to these
intangible assets for each of five succeeding fiscal years is
estimated to be as follows: 2004 - $527,000; 2005 - $527,000; 2006 -
$527,000; 2007 - $525,000; 2008 - $507,000.

Amortization expense for the years ended December 31, 2003,
December 31, 2002 and December 31, 2001 was $410,000, $390,000 and
$961,000, respectively.

Long-Lived Assets: The Company periodically reviews the
carrying value of intangibles and other long-lived assets for
recoverability or whenever events or changes in circumstances indicate
that such amounts have been impaired. Impairment indicators include
among other conditions, cash flow deficits, an historic or anticipated
decline in revenue or operating profit and a material decrease in the
fair value of some or all of the Company's long-lived assets. When
indicators are present, the Company compares the carrying value of the
asset to the estimated undiscounted future cash flows expected to be
generated from the use of the asset. If these estimated future cash
flows are less than the carrying value of the asset, the Company
recognizes impairment to the extent the carrying value of the asset
exceeds its fair value. Such a review has been performed by management
and does not indicate an impairment of such assets.

Income Taxes: Income taxes have been provided using the liability
method.

Earnings Per Share: Basic earnings per share has been computed by
dividing net income by the weighted average number of common shares
outstanding of 10,628,000 in 2003, 10,516,000 in 2002 and 10,492,000
in 2001. Diluted earnings per share has been computed by dividing
net income by the weighted average number of common shares
outstanding, including the dilutive effects of stock options, of
10,754,000 in 2003, 10,541,000 in 2002 and 10,537,000 in 2001.

F-8

LIFETIME HOAN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued

NOTE A - SIGNIFICANT ACCOUNTING POLICIES (continued)

Accounting for Stock Option Plan: At December 31, 2003, the
Company has a stock option plan, which is more fully described in Note
D. The Company accounts for the plan under the recognition and
measurement principles of APB Opinion No. 25, "Accounting for Stock
Issued to Employees", and related Interpretations. No stock-based
employee compensation cost is reflected in net income, as all options
granted under those plans had an exercise price equal to the market
values of the underlying common stock on the date of grant. The
following table illustrates the effect on net income and earnings per
share if the Company had applied the fair value recognition provisions
of Statement of Financial Accounting Standards ("SFAS") No. 123,
"Accounting for Stock-Based Compensation" to stock-based employee
compensation.

New Accounting Pronouncements: In June 2002, the FASB issued
SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal
Activities". This pronouncement is effective for exit or disposal
activities that are initiated after December 31, 2002, and requires
these costs to be recognized when the liability is incurred and not at
project initiation. The adoption of this statement did not have a
material impact on the Company's consolidated financial statements.

In January 2003, the FASB issued FASB Interpretation 46,
"Consolidation of Variable Interest Entities, an Interpretation of ARB
No. 51" (FIN 46). In December 2003, the FASB modified FIN 46 to make
certain technical corrections and address certain implementation
issues that had arisen. FIN 46 provides a new framework for
identifying variable interest entities ("VIEs") and determining when a
company should include the assets, liabilities, noncontrolling
interests and results of activities of a VIE in its consolidated
financial statements.

In general, a VIE is a corporation, partnership, limited-
liability corporation, trust, or any other legal structure used to
conduct activities or hold assets that either (1) has an insufficient
amount of equity to carry out its principal activities without
additional subordinated financial support, (2) has a group of equity
owners that are unable to make significant decisions about its
activities, or (3) has a group of equity owners that do not have the
obligation to absorb losses or the right to receive returns generated
by its operations.

FIN 46 requires a VIE to be consolidated if a party with an
ownership, contractual or other financial interest in the VIE (a
variable interest holder) is obligated to absorb a majority of the
risk of loss from the VIE's activities, is entitled to receive a
majority of the VIE's residual returns (if no party absorbs a majority
of the VIE's losses), or both. A variable interest holder that
consolidates the VIE is called the primary beneficiary. Upon
consolidation, the primary beneficiary generally must initially record
all of the VIE's assets, liabilities and noncontrolling interests at
fair value and subsequently account for the VIE as if it were
consolidated based on majority voting interest. FIN 46 also requires
disclosures about VIEs that the variable interest holder is not
required to consolidate but in which it has a significant variable
interest.

FIN 46 was effective immediately for VIEs created after January
31, 2003. The provisions of FIN 46, as revised, were adopted by the
Company as of December 31, 2003. The adoption of FIN 46 had no impact
on the Company's consolidated financial position or results of
operations.

F-9

LIFETIME HOAN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued

NOTE A - SIGNIFICANT ACCOUNTING POLICIES (continued)

Reclassifications: Certain 2002 and 2001 balances have been
reclassified to conform with the current presentation. These items
include the reclassification of deferred tax liabilities to non-
current liabilities to conform with the classification guidelines of
SFAS No 109, "Accounting for Income Taxes", the reclassification of
deferred financing fees relating to the Company's reducing revolving
credit facility to non-current assets, the reclassification to non-
current assets of the long-term portion of notes receivable and the
reclassification to non-current liabilities of the liability recorded
for the effect of recording rent expense on a straight-line basis.

NOTE B - ACQUISITIONS, DISPOSALS AND LICENSES

Prestige Acquisition and Disposition: In September 1999, the
Company acquired 51% of the capital stock and controlling interest in
each of Prestige Italy and Prestige Germany. The Company paid
approximately $1.3 million for its majority interests in the Prestige
Companies. This acquisition was accounted for using the purchase
method and the Company recorded goodwill of $586,000. Effective
September 27, 2002, the Company sold its 51% controlling interest in
Prestige Italiana, Spa and, together with its minority interest
shareholder, caused Prestige Haushaltswaren GmbH (combined, "the
Prestige Companies") to sell all of its receivables and inventory to a
European housewares distributor. As a result the Company received
approximately $1.0 million in cash on October 21, 2002. The sale
resulted in a net loss of approximately $811,000 that includes the
write-off of goodwill of approximately $540,000. Accordingly, the
Company has classified the Prestige Companies business as discontinued
operations. For 2000 and 2001, the Company has reclassified its
financial statements to reflect the discontinued operations of the
Prestige Companies. Net sales of the Prestige Companies included in
loss from discontinued operations were $6.4 million, $8.5 million and
$8.3 million for 2002, 2001 and 2000, respectively.

Gemco Ware, Inc. Acquisition: In November 2003, the
Company acquired the assets of Gemco Ware, Inc. ("Gemco"), a
distributor of functional glassware products for storing and
dispensing food and condiments. The results of operations of
Gemco are included in the Company's consolidated statements of
income from the date of acquisition.

:USE Acquisition: In October 2003, the Company acquired
the business and certain assets of the :USE - Tools for
Civilization Division of DX Design Express, Inc., which was a
company focused on creating contemporary lifestyle products for
the home, including decorative hardware, mirrors and lighting for
the bath, as well as decorative window accessories. The results
of operations of Gemco are included in the Company's consolidated
statements of income from the date of acquisition.

In connection with the Gemco and :USE acquisitions, the
aggregate purchase price paid in cash, including associated expenses,
amounted to $4.0 million. The Company is also required to pay minimum
contingent consideration of $300,000 ($100,000 in each of the years
2004 - 2006) based upon a percentage of net sales of the :USE product
line up to a maximum of $1,500,000 ($500,000 in each of the years 2004
- - 2006). The acquisitions were accounted for under the purchase method
and, accordingly, acquired assets and liabilities are recorded at
their fair values. The preliminary purchase price allocation of the
acquired businesses resulted in the following condensed balance of
assets acquired (in thousands):

F-10

LIFETIME HOAN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued

NOTE B - ACQUISITIONS, DISPOSALS AND LICENSES (continued)

KitchenAid License Agreement: In October 2000, the Company
entered into a licensing agreement with KitchenAid, a division of the
Whirlpool Corporation. This agreement allows the Company to design,
manufacture and market an extensive range of kitchen utensils,
barbecue items and pantryware products under the KitchenAidr brand
name. On January 1, 2002, the licensing agreement between the Company
and KitchenAid, was amended, expanding the covered products to include
bakeware and baking related products. A second amendment to the
licensing agreement was signed effective August 1, 2003, between the
Company and KitchenAid. The second amendment extended the term of the
agreement through December 31, 2007 and further expanded the covered
products to include kitchen cutlery. Shipments of products under the
agreement began in the second quarter of 2001.

Cuisinart License Agreement: On March 19, 2002, the Company
entered into a licensing agreement with Conair Corporation. This
agreement allows the Company to design, manufacture and market a wide
variety of cutlery products under the Cuisinartr brand name.
Shipments of products under the Cuisinartr name began in the fourth
quarter of 2002.

NOTE C -CREDIT FACILITIES

On November 9, 2001, the Company entered into a $45 million three-
year, secured, reducing revolving credit agreement (the "Agreement")
with a group of banks and, in conjunction therewith, canceled its $40
million short-term line of credit. The Credit Facility reduced to $35
million at December 31, 2003 in accordance with the terms of the
agreement through the maturity date in November 2004. The Credit
Facility is secured by all of the assets of the Company and the
Company is required to satisfy certain financial covenants, including
limitations on indebtedness and sale of assets; a minimum fixed charge
ratio; and net worth maintenance. Borrowings under the Agreement have
different interest rate options that are based upon either an
alternate base rate, LIBOR, or a lender's cost of funds rate. As of
December 31, 2003 and 2002, the Company had $1.1 million and $2.5
million of letters of credit and trade acceptances outstanding,
respectively, and $16.8 million and $14.2 million of borrowings under
the Agreement, respectively, and, as a result, the availability under
the Agreement at December 31, 2003 and 2002 was $17.1 million and
$23.3 million, respectively. Interest rates on borrowings at December
31, 2003 ranged from 2.9375% to 4.59%, while interest rates on
borrowings at December 31, 2002 ranged from 4.125% to 4.75%.

The Company paid interest of approximately $0.7 million, $1.0
million and $1.0 million during the years ended December 31, 2003,
2002 and 2001, respectively.

NOTE D - CAPITAL STOCK

Cash Dividends: The Company paid regular quarterly cash
dividends of $0.0625 per share on its Common Stock, or a total annual
cash dividend of $0.25 per share, in 2003, 2002 and 2001. The Board
of Directors currently intends to maintain a quarterly cash dividend
of $0.0625 per share of Common Stock for the foreseeable future,
although the Board may in its discretion determine to modify or
eliminate such dividend at any time.
F-11

LIFETIME HOAN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued

NOTE D - CAPITAL STOCK (continued)

Common Stock Repurchase and Retirement: In December 1999, the Board
of Directors of the Company authorized the repurchase of up to
1,000,000 of the outstanding shares of Common Stock in the open
market. In 2000, the Board of Directors increased the authorized
amount of Common Stock that could be bought back from 1,000,000 shares
to 3,000,000 shares. Through December 31, 2003, 2,128,000 shares were
repurchased for approximately $15.2 million (none in 2003 and 2002).

Preferred Stock: The Company is authorized to issue 2,000,000
shares of Series B Preferred Stock, none of which is outstanding.

Stock Option Plans: In June 2000, the stockholders of the Company
approved the Long-Term Incentive Plan (the "Plan"), which replaced all
other Company stock option plans, whereby options to purchase up to
1,750,000 shares of common stock may be granted to key employees of
the Company, including directors and officers. The Plan authorizes
the Board of Directors of the Company to issue incentive stock options
as defined in Section 422A (b) of the Internal Revenue Code and stock
options that do not conform to the requirements of that Section of the
Code. Options expire over a range of ten years from the date of the
grant and vest over a range of up to five years, from the date of
grant.

As of December 31, 2003, approximately 999,000 shares were
available for grant under the Company's stock option plans and all
options granted through December 31, 2003 under the plan have exercise
prices equal to the market value of the Company's stock on the date of
grant.

The weighted average fair values of options granted during the
years ended December 31, 2003, 2002 and 2001 were $2.57, $0.16 and
$0.27, respectively. The fair value for these options was estimated
at the date of grant using a Black-Scholes option pricing model with
the following weighted-average assumptions: risk-free interest rates
of 3.37%, 3.47% and 4.55% for 2003, 2002 and 2001, respectively; 2.53%
dividend yield in 2003, 4.33% dividend yield in 2002 and 4.25%
dividend yield in 2001; volatility factor of the expected market price
of the Company's common stock of 0.41 in 2003, 0.06 in 2002 and 0.07
in 2001; and a weighted-average expected life of the options of 6.0,
6.0 and 4.7 years in 2003, 2002 and 2001, respectively.

The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options, which have no vesting
restrictions and are fully transferable. In addition, option
valuation models require the input of highly subjective assumptions
including the expected stock price volatility. Because the Company's
employee stock options have characteristics significantly different
from those of traded options, and because changes in the subjective
input assumptions can materially affect the fair value estimate, in
management's opinion, the existing models do not necessarily provide a
reliable single measure of the fair value of its employee stock
options.

F-12

LIFETIME HOAN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued

NOTE D - CAPITAL STOCK (continued)

A summary of the Company's stock option activity and
related information for the years ended December 31 follows:

The following table summarizes information about
employees' stock options outstanding at December 31, 2003:

At December 31, 2002 and 2001, there were 789,917 and
680,858 options exercisable, respectively, at weighted-average
exercise prices per share of $7.14 and $7.20, respectively.

In connection with the grant of certain options in prior
years, the Company recorded, and amortized, deferred compensation. As
of December 31, 2001, such deferred compensation had been fully
amortized.

In connection with the exercise of options under a stock
option plan which has since expired, the Company received cash of
$255,968 and notes in the amount of $908,000 in 1985. The notes bear
interest at 9% and are due no later than December 31, 2005. During
2001, a note from Milton L. Cohen, a director of the Company in the
amount of $422,000 was canceled. During 2001, a new note was received
from Milton L. Cohen in the amount of $855,000, which consolidated all
amounts due by Milton L. Cohen to the Company.

F-13

LIFETIME HOAN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued

NOTE E - INCOME TAXES

Pre-tax income from continuing operations for the years ended
December 31, 2003, 2002 and 2001 was $14.0 million, $6.0 million and
$6.1 million, respectively.

The provision for income taxes consists of (in thousands):

Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amount of assets and liabilities for
financial reporting purposes and the amounts used for income tax
purposes. Significant components of the Company's net deferred tax
assets (liabilities) are as follows (in thousands):

The provision for income taxes differs from the amounts computed by
applying the applicable federal statutory rates as follows (in
thousands):

The Company paid income taxes of approximately $3.1 million
during the year ended 2003. The Company received income tax refunds
(net of payments) of approximately $328,000 and $218,000 during the
years ended December 2002 and 2001, respectively.
F-14

LIFETIME HOAN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued

NOTE F - COMMITMENTS

Operating Leases: The Company has lease agreements for its
warehouses, showroom facilities, sales offices and outlet stores which
expire through 2016. These leases provide for, among other matters,
annual base rent escalations and additional rent for real estate taxes
and other costs. Leases for certain retail outlet stores provide for
rent based upon a percentage of monthly gross sales.
Future minimum payments under non cancelable operating leases are
as follows (in thousands):

Under an agreement with Meyer Corporation regarding the
operation of the Company's Farberwarer retail outlet stores, the
Company is reimbursed for use of floor space in its outlet stores.
Meyer Corporation receives all revenue from sales of Farberware
cookware, currently occupies 30% of the space in each store and
reimburses the Company for 30% of the operating expenses of the
stores. For the first nine months of 2003 and all of fiscal year
2002, Meyer Corporation occupied 50% of the space in each store and
reimbursed the Company for 50% of the operating expenses of the
stores. In fiscal year 2001, the Company and Meyer Corporation each
occupied 40% of the space in the outlet stores, as Salton, Inc. was
responsible for the other 20% of the space. In 2003, 2002 and 2001,
Meyer Corporation reimbursed the Company approximately $1.5 million,
$1.7 million and $1.3 million, respectively, for operating lease
expense. Salton Inc. reimbursed the Company approximately $668,000 in
2001 for operating lease expense. Salton, Inc. terminated its
agreement effective December 31, 2001.

Rental and related expenses under operating leases were
approximately $6.9 million, $7.1 million and $7.6 million for the
years ended December 31, 2003, 2002 and 2001, respectively. Amounts
for 2003, 2002 and 2001 are prior to the Meyer Corporation and Salton
Inc. reimbursements described above.

Capital Leases: In November 2003 the Company entered into various
capital lease arrangements for the leasing of equipment to be utilized
in its Robbinsville, New Jersey warehouse. These leases expire in
2008 and the future minimum lease payments due under the leases as of
December 31, 2003 are as follows (in thousands):

The current and non-current portions of the Company's capital lease
obligations at December 31, 2003 of approximately $128,000 and
$586,000, respectively, are included in the accompanying consolidated
balance sheet within accrued expenses and deferred rent and other long-
term liabilities, respectively.

F-15

LIFETIME HOAN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued

NOTE F - COMMITMENTS (continued)
Royalties: The Company has royalty licensing agreements that
require payments of royalties on sales of licensed products which
expire through December 31, 2007. Future minimum royalties payable
under these agreements are as follows (in thousands):

Legal Proceedings: The Company is, from time to time, a party to
litigation arising in the normal course of its business. The Company
believes that there are currently no material legal proceedings the
outcome of which would have a material adverse effect on the Company's
consolidated financial position or results of operations.

Employment Agreements: Effective as of April 6, 2001, Mr. Jeffrey
Siegel entered into a new employment agreement with the Company that
provides that the Company will employ him as its President, Chief
Executive Officer and Chairman of the Board for a term commencing on
April 6, 2001, and continuing until April 6, 2006 and thereafter for
additional consecutive one year periods unless terminated by either
the Company or Mr. Siegel as provided in the agreement. The agreement
provides for an annual salary of $700,000 with annual increments based
on changes in the Consumer Price Index and for the payment to him of
bonuses pursuant to the Company's Incentive Bonus Compensation Plan.
The agreement also provides for, among other things, certain standard
fringe benefit arrangements, such as disability benefits, medical
insurance, life insurance and an accountable expense allowance. The
agreement further provides that if the Company is merged or otherwise
consolidated with any other organization or substantially all of the
assets of the Company are sold or control of the Company has changed
(the transfer of 50% or more of the outstanding stock of the Company)
which is followed by: (i) the termination of his employment agreement,
other than for cause; (ii) the diminution of his duties or change in
executive position; (iii) the diminution of his compensation (other
than a general reduction in the compensation of all employees); or
(iv) the relocation of his principal place of employment to other than
the New York Metropolitan Area, the Company would be obligated to pay
to Mr. Siegel or his estate the base salary required pursuant to the
employment agreement for the balance of the term. The employment
agreement also contains restrictive covenants preventing Mr. Siegel
from competing with the Company for a period of five years from the
earlier of the termination of Mr. Siegel's employment (other than a
termination by the Company without cause) or the expiration of his
employment agreement.

During 2003, several members of senior management entered into
employment agreements with the Company. The employment agreements
termination dates range from June 30, 2004 through December 31, 2006.
The agreements provide for annual salaries and bonuses, certain
standard fringe benefit arrangements, such as disability benefits,
medical insurance, life insurance and auto allowances.

Incentive Bonus Compensation Plan: In April 1996, the Board of
Directors adopted and in June 1996, the stockholders approved an
incentive bonus compensation plan ("1996 Bonus Plan"). The 1996 Bonus
Plan provided for the award of a bonus, with respect to each of the
ten fiscal years of the Company beginning with the 1996 fiscal year,
to each of the then President and Executive Vice President of the
Company. The bonus payable to each executive was an amount equal to
3.5% of pretax income, before any provision for executive
compensation, stock options exercised during the year under the
Company's stock option plans and extraordinary items. In June 2000,
the stockholders of the Company approved the adoption of an incentive
bonus compensation plan ("2000 Bonus Plan"), which provides for the
award of a bonus, to designated Senior Executive Officers based on a
predetermined financial performance measurement. For 2003, 2002 and
2001, the Chief Executive Officer was the only designated officer. In
each year the amount of the bonus payment was equal to 3.5% of pretax
income, before any provision for executive compensation, stock options
exercised during the year under the Company's stock option plans,
extraordinary items and non-recurring charges. During the years ended
December 31, 2003, 2002 and 2001, the Company recorded annual
compensation expense of approximately $576,000, $323,000, and
$346,000, respectively, pursuant to the bonus plans.

F-16

LIFETIME HOAN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued

NOTE F - COMMITMENTS (continued)

In February 2001, the Board of Directors declared special bonuses
for Milton L. Cohen and Jeffrey Siegel aggregating approximately
$850,000 which were charged to operations for the year ended December
31, 2000.

In April 2001, the Company paid Mr. Milton L. Cohen a bonus of
$178,500 for the period January 1, 2001 through April 6, 2001.

In March 2002, the Company awarded Mr. Jeffrey Siegel a special
bonus of $129,600.

NOTE G - RELATED PARTY TRANSACTIONS

Effective April 6, 2001, Milton L. Cohen, then a director of the
Company, and the Company entered into a 5-year consulting agreement
with an annual fee of $440,800.

As of December 31, 2003 and December 31, 2002, Milton L. Cohen
owed the Company approximately $453,000 and $579,000, respectively.
Milton L. Cohen remits $48,404 quarterly, inclusive of interest and
principal, and the loan matures on March 31, 2006. The loan due from
Milton L. Cohen is included within other current and non-current
assets in the accompanying consolidated balance sheets.

As of December 31, 2003 and December 31, 2002, Jeffrey Siegel
owed the Company approximately $344,000 and $439,000, respectively,
which, for each year, included $344,000 of an outstanding loan related
to the exercise of stock options under a stock option plan which has
since expired. Approximately $95,000 of the amount due from Jeffrey
Siegel at December 31, 2002 was included in other current assets in
the accompanying balance sheet.

As of December 31, 2003 and December 31, 2002, Craig Phillips, a
vice president of the Company, owed the Company approximately $135,000
for an outstanding loan related to the exercise of stock options under
a stock option plan which has since expired.

Notes receivable totaling $479,000 related to the exercise of
stock options under a stock option plan which has since expired are
included within total stockholders' equity in the accompanying balance
sheets at December 31, 2003 and 2002, respectively.

On October 1, 2002 the Company entered into a consulting agreement
with Ronald Shiftan, a director of the Company. The term of the
consulting agreement is a period of one year commencing October 1,
2002, which automatically renews for additional one year periods
unless either party terminates the agreement by providing written
notice of such termination to the other party thereto at least thirty
days prior to the expiration of the initial or additional term then in
effect. Mr. Shiftan is paid compensation under the consulting
agreement at a rate of $30,000 per month.

NOTE H - RETIREMENT PLAN

The Company maintains a defined contribution retirement plan ("the
Plan") for eligible employees under Section 401(k) of the Internal
Revenue Code. Participants can make voluntary contributions up to a
maximum of 15% of their respective salaries. The Company made matching
contributions to the Plan of approximately $206,000, $220,000 and
$178,000 in 2003, 2002 and 2001, respectively.

NOTE I - CONCENTRATION OF CREDIT RISK

The Company maintains cash and cash equivalents with various
financial institutions.

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 and their dispersion across the United
States. The Company periodically reviews the status of its accounts
receivable and, where considered necessary, establishes an allowance
for doubtful accounts.

During the years ended December 31, 2003, 2002 and 2001, Wal-Mart
Stores, Inc. (including Sam's Clubs) accounted for approximately 29%,
20% and 18% of net sales, respectively. No other customer accounted
for 10% or more of the Company's net sales during 2003, 2002 or 2001.
F-17

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued

LIFETIME HOAN CORPORATION

NOTE J - OTHER
Property and Equipment:
Property and equipment consist of (in thousands):

Depreciation expense for the years ended December 31, 2003, 2002 and
2001 was $3.3 million, $3.1 million and $2.7 million, respectively.
Included in machinery, furniture and equipment and related accumulated
depreciation above as of December 31, 2003 are $763,000 and $76,000,
respectively, related to assets recorded under capital leases.
Amortization expense relating to these assets for 2003 is included
within depreciation expense.

Accrued Expenses:

Accrued expenses consist of (in thousands):

Sources of Supply: The Company sources its products from
approximately 55 manufacturers located primarily in the People's
Republic of China, and to a smaller extent in the United States,
Malaysia, Thailand, Taiwan, Indonesia, Italy and India. A majority of
the Company's cutlery was purchased from three suppliers in 2003 who
accounted for 48%, 20%, and 14% of the total purchases, respectively,
and from three suppliers in 2002 who accounted for 58%, 20% and 10% of
the total purchases, respectively. A majority of the Company's
pantryware was purchased from four suppliers in 2003 that accounted
for 20%, 16%, 13% and 11% of the total purchases, respectively, and
from three suppliers in 2002 that accounted for 37%, 19% and 13% of
the total purchases, respectively. An interruption of supply from any
of these manufacturers could have an adverse impact on the Company's
ability to fill orders on a timely basis. However, the Company
believes other manufacturers with whom the Company does business would
be able to increase production to fulfill the Company's requirements.

F-18

LIFETIME HOAN CORPORATION

Schedule II - Valuation and Qualifying Accounts

Lifetime Hoan Corporation

(in thousands)

(a) Uncollectible accounts written off, net of recoveries.
(b) Allowances granted.
(c) Charged to net sales.

S-1

Exhibit 21. Subsidiaries of the Registrant

Outlet Retail Stores, Inc.
Incorporated in the state of Delaware

Roshco, Inc.
Incorporated in the state of Illinois

M. Kamenstein Corp.
Incorporated in the state of Delaware

Consent of Independent Auditors Exhibit 23

We consent to the incorporation by reference in the Registration
Statement (Form S-8 No. 33-51774) pertaining to the Lifetime Hoan
Corporation 1991 Stock Option Plan, of our report dated February
18, 2004, with respect to the consolidated financial statements
and schedule of Lifetime Hoan Corporation included in the Annual
Report (Form 10-K) for the year ended December 31, 2003.

Ernst & Young LLP

Melville, New York
March 29, 2004

EXHIBIT 32

Certification by Jeffrey Siegel, Chief Executive Officer and
Robert McNally, 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 I, Robert
McNally, Chief Financial Officer, of Lifetime Hoan Corporation, a
Delaware corporation (the "Company"), each hereby certifies that:

(1) the Company's Annual Report on Form 10-K for the annual
period ended December 31, 2003 (the "Report") fully complies with
the requirements of Section 13(a) or 15(d) of the Securities
Exchange Act of 1934, as amended; and
(2) the information contained in the Report fairly presents, in
all material respects, the financial condition and results of
operations of the Company.

/s/ Jeffrey Siegel /s/ Robert McNally
Jeffrey Siegel Robert McNally
Chief Executive Officer Chief Financial Officer

Date: March 29, 2004 Date: March 29, 2004