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, 2004
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 (I.R.S. Employer
of incorporation 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
period that the registrant was required to file such
reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes 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 X No

The aggregate market value of 7,339,128 shares of the
voting stock held by non-affiliates of the registrant
as of June 30, 2004 was approximately $167,258,727.
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, 2005 was
11,051,349.

DOCUMENTS INCORPORATED BY REFERENCE
Parts of the registrant's definitive proxy statement
for the 2005 Annual Meeting of Stockholders to be
filed pursuant to Regulation 14A under the Securities
Exchange Act of 1934 are incorporated by reference
into Items 10,11,12,13 and 14 hereof.

LIFETIME HOAN CORPORATION

FORM 10-K

TABLE OF CONTENTS

PART I
1. Business 3
2. Properties 13
3. Legal Proceedings 13
4. Submission of Matters to a Vote of Security Holders 13

PART II
5. Market for the Registrant's Common Stock and Related
Stockholder Matters 14
6. Selected Financial Data 15
7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 17
7A. Quantitative and Qualitative Disclosures about Market
Risk 23
8. Financial Statements and Supplementary Data 23
9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 23
9A. Controls and Procedures 24

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

PART IV
15. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K 26
Exhibit Index 26
Index to Financial Statements and Financial Statement
Schedule F-1

Signatures

Certifications

2

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 products, results of
operations and prospects of Lifetime Hoan Corporation and
its wholly-owned subsidiaries (collectively the
"Company"). These forward-looking statements involve
risks and uncertainties, including but not limited to the
following:

our relationships with key customers;
our relationships with key licensors;
our dependence on foreign sources of supply and
foreign manufacturing;
the level of competition in the industry;
changes in demand for the Company's products and the
success of new products;
changes in general economic and business condition
which could affect customer payment practices or
consumer spending;
industry trends;
increases in costs relating to manufacturing and
transportation of products;
the seasonal nature of our business;
the departure of key personnel;
the timing of orders received from customers

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. Except as required by law, we undertake no
obligation to publicly update or revise forward-looking
statements which may be made to reflect events or
circumstances after the date of this filing or to reflect
the occurrence of unanticipated events.

Other Information:The Company is required to file its
annual reports on Forms 10-K and quarterly reports on
Forms 10-Q, and other reports and documents as required
from time to time with the United States Securities and
Exchange Commission (the "SEC"). The public may read and
copy any materials that 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.

PART I

ITEM 1. BUSINESS

The Company is a leading designer, developer and marketer
of a broad range of branded consumer products used in the
home, including Kitchenware, Cutlery and Cutting Boards,
Bakeware and Cookware, Pantryware and Spices, Tabletop
and Bath Accessories. Products are marketed under brand
names including Farberware(R), KitchenAid(R), Cuisinart(R),
Hoffritz(R), Sabatier(R), DBK-Daniel Boulud Kitchen(TM), Joseph
Abboud Environments(R), Roshco(R), Baker's Advantage(R),
Kamenstein(R), Casa-Moda(R), Hoan(R), Gemco(R) and :USE(R). The
Company uses the Farberware(R) brand name for kitchenware,
cutlery and cutting boards and bakeware pursuant to a 200-
year royalty-free license. The Company licenses the
KitchenAid(R), Cuisinart(R), Farberware(R) (for flatware and
dinnerware), Sabatier(R), DBK-Daniel Boulud Kitchen(TM) and
Joseph Abboud Environments(R) trade names pursuant to
licenses granted by the owners of those brands. All other
brand names listed above are owned. Several product
lines are marketed within each of the Company's product
categories and under brands primarily targeting moderate
to medium price points, through every major level of
trade.

3

Over the last several years, sales growth has come from:
(i) expanding product offerings within current
categories, (ii) developing and acquiring product
categories and (iii) entering new channels of
distribution, primarily in the United States. Key
factors in the Company's growth strategy have been, and
will continue to be, the selective use and management of
strong brands and the ability to bring to market a steady
stream of innovative products and designs.

Acquisitions and Dispositions

Since 1995 the Company has made several acquisitions that
expanded our product offerings, allowed us to enter new
product categories or added another strong brand. In
1995, the Company acquired the Hoffritz trademarks and
brand name, which we use on various cutlery, kitchenware,
bakeware and barware products. In 1998, the Company
acquired the stock of Roshco, Inc., a Chicago-based
bakeware and baking-related products company, which
introduced us to the Bakeware category. In September
2000, the Company acquired substantially all of the
assets of M. Kamenstein, Inc., a 107-year old housewares
company, whose products included pantryware, tea kettles,
spices and spice racks, and home organization
accessories. As noted below, in late 2003, the Company
made two additional acquisitions that introduced us to
two new product categories: bath accessories and
functional glassware products. Further, in July 2004 the
Company made an additional acquisition that provided us
two new product categories: tabletop and cookware.

: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. (":USE"), which
focused on creating high-end contemporary lifestyle
products for the home, including decorative hardware,
mirrors and lighting for the bath, as well as decorative
window accessories. The :USE acquisition gives us a
presence in another room in the house - the bathroom.

Gemco Acquisition

In November 2003, the Company acquired certain assets of
Gemco Ware, Inc. ("Gemco"), a distributor of functional
glassware products for storing and dispensing food and
condiments, a new product category for us.

Excel Acquisition

On July 23, 2004, the Company completed the acquisition
of the business and certain assets of Excel Importing,
Inc. ("Excel"), which designed, marketed and distributed
a diversified line of high quality cutlery, tabletop,
cookware and barware products under well-recognized
premium brand names, including Sabatier, Farberware,
Joseph Abboud Environments, DBK-Daniel Boulud Kitchen and
Legnoart, all of which are licensed, and Retroneu Design
Studio, which is owned. The Excel acquisition broadened
the Company's portfolio of brands, expanded our customer
base to include additional higher-end retailers and
specialty stores and made us a more complete resource for
our retail customers by adding flatware, dinnerware,
glassware and cookware to the product categories we
offer.

Prestige Companies 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 Italy, and, together with its
minority interest shareholder, caused Prestige Germany to
sell all of its receivables and inventory to a European
housewares distributor. The Prestige Companies marketed
and distributed kitchen tools, gadgets, cutlery and
bakeware under the Prestige(R) trade name primarily in
Italy and Germany.

4

Licenses

The Company uses the Farberware brand name pursuant to a
200-year royalty-free license and licenses the KitchenAid
and Cuisinart brand names from Whirlpool Corporation and
Conair Corporation, respectively. We have also recently
entered into a license agreement with Hershey Foods
Corporation, and with the Excel acquisition in July, 2004
we acquired license agreements for the Sabatier, Joseph
Abboud Environments, DBK-Daniel Boulud Kitchen and
Legnoart brand names and an additional license for
Farberware dinnerware and flatware not covered by our
existing Farberware license.

Farberware Agreement

In 1996, the Company entered into an agreement to acquire
certain assets of Farberware, Inc. Under the terms of
the acquisition agreement we acquired a 200-year, royalty-
free, exclusive right to use the Farberware name in
connection with product lines covered by then existing
license agreements between the Company and Farberware,
which included kitchen cutlery products (excluding
flatware), 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. With the July
2004 acquisition of Excel, the Company obtained an
additional Farberware license for dinnerware and
flatware, which extends until June 30, 2005.

KitchenAid Agreement

On September 24, 2000, the Company entered into a
licensing agreement with Whirlpool Corporation. This
agreement allows us to design, manufacture and market an
extensive range of kitchen utensils, barbecue items and
pantryware products under the KitchenAid brand name. On
January 1, 2002, our licensing agreement with Whirlpool
Corporation was amended, to include bakeware and baking
related products as covered products. A second amendment
to the license agreement was entered into effective
August 1, 2003, which extended the term of the license
through December 31, 2007 and further expanded the
covered products to include kitchen cutlery. Shipments
of products by us under the KitchenAid 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
us to design, manufacture and market a wide variety of
kitchen cutlery products under the Cuisinart brand name.
On April 8, 2004, the licensing agreement with Conair
Corporation was amended, expanding the covered products
to include cutting boards. The license for kitchen
cutlery products expires on June 30, 2005 and the license
for cutting board products expires on June 30, 2007.
Each license renews automatically for successive one year
terms provided the agreement is not earlier terminated by
either party and certain minimum royalty requirements are
met. Shipments of products by us under the Cuisinart
name began in the fourth quarter of 2002.

Hershey's Agreement

On February 20, 2004, the Company entered into a
licensing agreement with Hershey Foods Corporation. This
agreement allows us to design, manufacture and market
S'mores Makers and Fondues under the Hershey brand name.
The licensing agreement expires February 28, 2006 and may
be renewed for one year at our option provided certain
minimum royalty requirements are met. Shipment of
products by us under the Hershey name began in the third
quarter of 2004.

5

Sabatier Agreement

On July 23 2004, the Company acquired from Excel a
licensing agreement with Rousellon Freres to utilize the
Sabatier brand name for cutlery as well as flatware,
serveware, bakeware and dinnerware line extensions. The
licensing agreement extends for twenty years until
December 31, 2023 and may be automatically renewed for
two additional ten-year terms at our option.

DBK - Daniel Boulud Kitchen Agreements

The Company also acquired from Excel on July 23, 2004,
three licensing and endorsement agreements with Dinex
Licensing to utilize the DBK Daniel Boulud Kitchen brands
for cutlery (expires June 30, 2006), cookware, kitchen
gadgets, dinnerware and bakeware (expires September 30,
2006), and flatware, glassware, barware and vases
(expires December 31, 2008). DBK cutlery, cookware and
utensils are the inspiration of 4-star chef Daniel
Boulud. The licenses renew automatically for successive
one year terms provided the agreements are not earlier
terminated by either party and certain minimum royalty
requirements are met.

Joseph Abboud Agreement

Another license agreement acquired from Excel on July
23,2004 is with JA Apparel Corp. for the Joseph Abboud
Environments brand for use on flatware, dinnerware,
glassware, textile, tableware and giftware products. The
license extends to December 31, 2007, and may be renewed
with the consent of the licensor.

6

Products

The Company designs, develops and markets a broad range
of branded consumer products used in the home, including
Kitchenware, Cutlery and Cutting Boards, Bakeware and
Cookware, Pantryware and Spices, Tabletop and Bath
Accessories. We have a design and development team
consisting of 33 professional designers and engineers who
create new products, packaging, and merchandising
concepts. In 2004, we developed or redesigned
approximately 600 individual products. Our products are
marketed under various trade names including Farberware,
KitchenAid, Cuisinart, Hoffritz, Sabatier(R), DBK-Daniel
Boulud Kitchen(TM), Joseph Abboud Environments(R), Roshco(R),
Baker's Advantage(R), Kamenstein(R), Casa-Moda(R), Hoan(R),
Gemco(R) and :USE(R). Our products are manufactured to our
specifications, primarily in the People's Republic of
China, and are generally shipped fully assembled.

Kitchenware

The Company sells over 4,000 kitchenware items under
various trade names including Farberware, KitchenAid,
Hoffritz, Gemco and Hoan. Our kitchenware products
include tools and gadgets used in the preparation and
serving of meals, functional glassware products for
storing and dispensing food and condiments and barbeque
tools and accessories. These items are typically packaged
cards, which generally are hung on racks for maximum
point of sale display visibility. We also provide J-Hook
and Clip Strip merchandising systems to retail customers,
especially supermarkets and mass merchants, to create
additional selling space and to trigger impulse buying.

Some of the key items developed during 2004 under the
KitchenAid brand include a salad spinner, mandoline
slicer, silicone brushes and a variety of innovative
specialty peelers and fruit slicers. In 2004, we
introduced a high-end line of Farberware Industrial tools
and gadgets, featuring a completely new look for the
brand, a new line of silicone-over-steel kitchen tools
with chrome-plated zinc alloy castings, 20 new items of
barbecue tools, as well as a line of over 50 new
Farberware Innovations items that include a number of
potentially patentable inventions, which can be
incorporated into all of the Farberware kitchenware
lines. Over 50 new functional glassware items were added,
including the new Swirl Glass collection, offered in both
open stock and sets, plus new oil and vinegar sets, oil
bottles, and glass pitchers, all with colored tops. The
Company has also developed a new Facet Glass collection,
bringing an elegant, upscale look to affordable,
functional glassware.

New kitchenware items planned for 2005 include further
expansion of KitchenAid branded products and new lines of
innovative Farberware and Hoffritz utensils. With the
acquisition of Excel the Company will also be marketing
kitchenware under the Sabatier brand name.

Cutlery and Cutting Boards

The Company sells kitchen cutlery under a variety of
trade names including Farberware, Cuisinart, KitchenAid,
Sabatier, DBK Daniel Bouloud and Hoffritz. Cutlery is
sold individually, in blister packages, in boxed sets and
in sets fitted into wooden counter blocks, resin
carousels and stainless carousels. Some Cuisinart open
stock cutlery is sold in reusable hard plastic locking
cases. We also sell a full range of cutting boards made
of polyethylene, wood, glass and acrylic. These products
are distributed under several trade names including
Farberware, KitchenAid, Cuisinart and Hoffritz. We also
package cutting boards with cutlery items and/or
kitchenware.

7

A major development in 2004 was the introduction of three
full lines of KitchenAid cutlery, pursuant to an
expansion of our license from the Whirlpool Corporation.
We have designed and developed 45 cutlery SKUs, all using
a similar design concept; however each line incorporates
different materials. One line has handles made out of all
stainless steel; one utilizes heavy-duty poly-resin; and
one features the world's first series of silicone
handles, combining the benefits of comfort and slip-
resistance. The knives are offered in open stock as well
as countertop wood block sets, a molded block, and a
revolving carousel block. Each line is moderately priced
for distribution at all levels of retail trade. Shipments
of KitchenAid cutlery began in the fourth quarter of
2004.

In addition, the Company introduced a fourth line of
Cuisinart cutlery in 2004, utilizing the same high
quality standards, but with a distinctly different handle
design and incorporating a cast metal cap on the back of
the handle. Also introduced in 2004 was the patented
Cuisinart Knife Vault, a knife block designed to match
today's professional-looking kitchens with built-in
mechanisms making it virtually childproof.

In Cuisinart cutting boards, the Company debuted a line
of heavy-duty polypropylene boards, a series of
polypropylene with non-slip Santoprene-corner boards,
curved wood paddle boards, and the patented Chop 'N Slide
board in both wood and polypropylene.

Farberware Classic forged cutlery, in both a 14-Piece and
23-Piece gift block set were major additions, as were the
Farberware Bamboo cutting board collection and wood
cutting boards. In all lines of cutlery, the traditional
Japanese "Santoku" knife was the signature piece,
combining ancient technique with modern technology and
design.

New cutlery items planned for 2005 include further
expansion of KitchenAid branded cutlery sets and open
stock items and with the acquisition of Excel, the
Company will also be marketing cutlery under the
prestigious Sabatier and DBK Daniel Bouloud brands.

Bakeware and Cookware

The Company sells a variety of bakeware and baking
related products under the Roshco, KitchenAid, Baker's
Advantage and Hoffritz trade names. This product line
includes baking, measuring, and rangetop products such as
metal and silicone cake and pie pans, cookie sheets,
muffin 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.

In 2004, the KitchenAid brand lines of premium
bakeware were expanded to include aluminum versions of
the patented "Slider" cookie sheets, silicone specialty
baking pans, silicone baking mats, gift sets in silicone
bakeware, and combinations of metal pans with silicone
liners. The Company also introduced 14 items in
Roshco branded silicone bakeware, many of which feature a
wire-frame carrying "sled".

The Company also markets a diverse line of products
catering to the growing trend of casual home
entertaining, encompassing items such as barware, buffet
servers and warmers, and innovative devices for tabletop
cooking. These products are marketed under the Hoffritz,
Farberware and Casa-Moda brands.

8

The home entertaining trend continued to be strong in
2004. We introduced the new "Tabletop Grill", which
allows for smokeless cooking right at the dining table in
2004 and expanded our line of patented S'mores makers
with the Hershey's brand ceramic S'mores maker. The
Hershey's brand ceramic "Kiss" fondue was also added, as
were the ceramic inserts that convert all of the
Company's S'mores makers into dessert fondues.

In 2004, Splash, an assortment of barware items utilizing
a combination of colored plastic and steel with non-skid
bases, was expanded to include a pitcher, chip and dip,
and coasters, in new opaque colors. A series of ceramic
buffetware was introduced, including a party laptray, 3-
section sauce dish, flatware caddy, chip and dip, 2-tier
dessert server, 4-section serving dish, gravy boat with
built-in candle warmer, and a double-decker buffet stand
with candle warmers.

New bakeware and cookware items planned for 2005 include
expansion of KitchenAid silicone bakeware products, the
introduction of KitchenAid ceramic bakeware and with the
acquisition of Excel, the Company will also be marketing
bakeware and cookware under the Sabatier brand name.

Pantryware and Spices

In September 2000, with the acquisition of Kamenstein,
the Company began marketing pantryware, teakettles, spice
racks and home organization accessories. These products
are distributed under the trade names Kamenstein,
Farberware, Hoffritz, Mrs. K's Organics, and PerfectTear.
Our pantryware lines are manufactured in wood, wire,
stainless steel and mixed media and include bread boxes,
mug holders, paper towel dispensers, spice carousels,
mail caddies, 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 our specifications outside the United
States; however, spice containers are filled domestically
in our Winchendon, Massachusetts facility.

The patented PerfectTear Paper Towel Holder was
introduced in 2003, in five designs and in four materials
and finishes (stainless steel, wood, chrome, and satin
nickel). In 2004, 36 new PerfectTear designs were added,
while also broadening the material choices to include
antiqued bronze, polycarbonate, ceramic and wire. Two of
the 30 newly developed spice racks were significant, the
Commercial Stainless Steel spice racks in three sizes and
the stainless steel "Jar Tower" spice racks. We also
developed and introduced a full line of Bamboo pantryware
and a new and patented line of magnetic storage and
organization canisters for the kitchen and home office,
along with a new sift and pour dispenser cap for spice
bottles.

Bath Accessories

With the acquisition of :USE in October 2003, we now
market upscale contemporary decorative hardware, mirrors
and lighting for the bath and decorative window
accessories under the :USE trade name. Since the
purchase, three new lines of product have been developed
for introduction in 2005, totaling over 70 items, all
targeted for the more moderately priced retail segment
with many featuring innovative and potentially patentable
items. One of these lines is specifically targeted
towards the back to school market and will make it simple
and inexpensive for students to accessorize their bath.
The other two new lines showcase new designs and concepts
like an expanding towel bar, as well as a toilet tissue
holder that utilizes the patented technology of the
PerfectTear Paper Towel holders.

9

Tabletop

In July 2004, with the acquisition Excel, the Company
began to market tabletop products under well-recognized
brand names, including Sabatier, Farberware, Joseph
Abboud Environments, DBK-Daniel Boulud Kitchen and
Legnoart, all of which are licensed, and Retroneu Design
Studio, which is owned. The Excel acquisition broadened
our product categories adding flatware, dinnerware and
drinkware to the product categories we offer. Flatware
includes knives, forks and spoons; dinnerware includes
plates, bowls, cups, and accessories and drinkware
products include beverage glasses as well as pitchers,
vases and related accessories.

For 2005, the Company is planning on introducing over 50
new patterns of flatware, dinnerware and drinkware with
increased placement in the Company's existing customer
base.

Sources of Supply

The Company sources its products from approximately 98
suppliers located primarily in the People's Republic of
China, and to a lesser extent in the United States,
Taiwan, Thailand, Malaysia, Indonesia, Germany, France,
Korea, Czechoslovakia, Italy, India and Hong Kong. For
the fiscal year ended December 31, 2004 our three largest
suppliers provided us with approximately 54% of the
products we distributed, as compared to 62% for the
fiscal year ended December 31, 2003. This concentration
of sourcing in certain key vendors is a risk to our
business. Furthermore, because our product lines cover
thousands of products, many products are produced for us
by only one or two manufacturers. An interruption of
supply from any of these manufacturers could have an
adverse impact on our ability to fill orders on a timely
basis. However, we believe other manufacturers with whom
we do business would be able to increase production to
fulfill our requirements.

The Company's policy is to maintain several months of
supply of inventory and, accordingly, we order products
substantially in advance of the anticipated time of its
sale to our customers. While we do not have any long-
term formal arrangements with any of our suppliers, in
certain instances, particularly with respect to the
manufacture of cutlery, we place firm commitments for
products several months in advance of receipt of firm
orders from our customers. Our 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.

Customers

The Company's products are sold primarily in the United
States to approximately 900 customers including mass
merchants, specialty stores, national chains, department
stores, warehouse clubs, supermarkets, off-price
retailers and home centers, as well as through other
channels of distribution. During the years ended December
31, 2004, 2003 and 2002, Wal-Mart Stores, Inc. (including
Sam's Clubs) accounted for approximately 24%, 29% and 20%
of net sales, respectively. No other customer accounted
for 10% or more of the Company's net sales during 2004,
2003 or 2002. For the years ended December 31, 2004,
2003 and 2002, our ten largest customers accounted for
approximately 59%, 62% and 56% of net sales,
respectively.

10

Marketing and Distribution

The Company distributes its products through a diverse
nationwide retail customer base of approximately 900
customers including mass merchants, specialty stores,
national chains, department stores, warehouse clubs,
supermarkets, off-price retailers and home centers, as
well as through other channels of distribution, and
through its Farberware outlet stores. The 20 largest
customers are each serviced by an in-house team that
includes representatives from our sales, marketing,
merchandising and product development departments. This
team effort enables us to maximize the sales of our
products to each of these customers. We believe we have
developed close and collaborative relationships with
our major customers, for whom we often develop specific
versions and packaging of our product lines to be sold
in their stores.

The Company operates approximately 60 retail outlet
stores in 31 states under the Farberware name. In 2004
under an agreement with the Meyer Corporation, Meyer
Corporation assumed responsibiity for merchandising and
for stocking Farberware cookware products in the stores,
received all revenue from store sales of Farberware
cookware, occupied 30% of the space in each store and
reimbursed us for 30% of the operating expenses of the
stores. We utilize the outlet stores to sell excess
inventory, overstock and discontinued items. The Company
also uses the outlet stores to test certain marketing
techniques we develop prior to using such techniques
with our customers. In 2003 Meyer Corporation occupied
50% of each stores space during the first nine months of
the year and 30% of each stores space in the final three
months of the year. The outlet stores represented 8.4%,
6.9% and 7.8% of the Company's net sales in 2004, 2003
and 2002, respectively.

The Company's 550,000 square foot distribution facility
in Robbinsville, New Jersey is our largest distribution
facility and most of our products are shipped to our
customers from that facility. This advanced distribution
facility was designed to enable us to comply with the
current "just-in-time" delivery requirements of our major
customers, as well as to enable us to meet the
increasingly more stringent requirements that we
anticipate will be imposed upon us by our retail
customers in the foreseeable future.

Competition

The markets for Kitchenware, Cutlery and Cutting Boards,
Bakeware and Cookware, Pantryware and Spices, Tabletop
and Bath Accessories are highly competitive and include
numerous domestic and foreign competitors, some of which
are larger than we are. 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.

11

Patents and Trademarks

The Company has licenses for the following trademarks:
KitchenAid under a license from Whirlpool Corporation,
Cuisinart under a license from Conair Corporation,
Farberware, Sabatier, Joseph Abboud Environments, DBK-
Daniel Boulud Kitchen, Legnoart and Hershey's. We also
use a number of owned trademarks, primarily Hoffritz,
Baker's Advantage, Roshco, Kamenstein, Tristar, Gemco,
:USE, Hoan and Retroneu Design Studio. The Farberware
trademark is licensed under a 200-year royalty-free
agreement. We consider these trademarks significant to
our competitive position. Some of these trademarks are
registered in the United States and others have become
distinctive marks as to which we have acquired common law
rights.

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

Seasonality

The Company's business and working capital needs are
highly seasonal, with a significant majority of sales
occurring in the third and fourth quarters. In 2004, 2003
and 2002, net sales for the third and fourth quarters
combined accounted for 63%, 66% and 61% of total annual
net sales, respectively, and operating profit earned in
the third and fourth quarters combined accounted for 92%,
97% and 100% of total annual profits, respectively.
Inventory levels increase primarily in the June through
October time period in anticipation of the pre-holiday
shipping season.

Backlog

The Company's backlog at December 31, 2004 and 2003 was
$10,568,000 and $5,242,000, respectively. The Company
expects to fill the 2004 backlog during 2005. 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, 2004, the Company had 751 full-time
employees, of whom 7 were employed in an executive
capacity, 100 in sales, marketing, design or product
development capacities, 97 in financial, administrative
or clerical capacities, 220 in distribution capacities
and 327 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.

Regulatory Matters

Certain of the products the Company manufactures are
subject to the jurisdiction of the U.S. Consumer Product
Safety Commission (CPSC). Our spice packing facility in
Winchendon, Massachusetts is subject to regulation by the
Food and Drug Administration (FDA).

12

ITEM 2. PROPERTIES

The following table describes the facilities (other than
the outlet stores) at which the Company operates its
business:

In addition to the properties listed above, the Company
leases approximately 60 stores in retail outlet centers
located in 31 states throughout the United States. The
stores range in size 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 2005 and extending through July
2009.

Subject to certain provisions in the lease agreement for
the Robbinsville, New Jersey distribution facility, the
Company has three separate renewable options each of
which would extend the term of the lease for a period of
five years.

The Company no longer occupies approximately 13,000
square feet of leased office space located in Westbury,
New York under a lease that will expire on May 31, 2006
and intends to sublease this space.

ITEM 3. LEGAL PROCEEDINGS

The Company has, from time to time, been involved in
various legal proceedings. The Company believes that all
current litigation is routine in nature and incidental to
the conduct of our business, and that none of this
litigation, if determined adversely to us, would have a
material adverse effect on our consolidated financial
position or results of operations.

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

Not applicable.
13

PART II

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

The Company's Common Stock has been traded under the
symbol "LCUT" on The NASDAQ National Market ("NASDAQ")
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,
2004, 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
2004 or 2003.

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.

The Company estimates that at December 31, 2004, there
were approximately 2,000 beneficial holders of the Common
Stock of the Company.

The Company is authorized to issue 2,000,000 shares of
Series B Preferred Stock, par value of One Dollar ($1.00)
each, none of which is outstanding. The Company is
also authorized to issue 100 shares of Series A Preferred
Stock, par value of One Dollar ($1.00) each, none of
which is 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 each of 2004 and 2003.
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, 2004:

14

ITEM 6. SELECTED FINANCIAL DATA

The selected consolidated income statement data for the
years ended December 31, 2004, 2003 and 2002, and the
selected consolidated balance sheet data as of December
31, 2004 and 2003, 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, 2001 and 2000, and the selected
consolidated balance sheet data as of December 31, 2002,
2001 and 2000, are derived from audited consolidated
financial statements of the Company which are not
included in this Annual Report on Form 10-K. The Company
acquired the business and certain assets of Kamenstein.
in September 2000, of :USE in October 2003, of Gemco in
November 2003 and of Excel in July 2004. 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)

15

Effective September 2002, the Company sold its 51%
controlling interest in Prestige Italia, Spa ("Prestige
Italy"), and, together with its minority interest
shareholder, caused Prestige Haushaltwaren GmbH
("Prestige Germany", and together with Prestige Italy,
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 selling, general and administrative expenses have been
reclassified to distribution expenses in 2003, 2002, 2001 and
2000 to conform with the current year's presentation.

16

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 filed under item 8.

OVERVIEW

The Company is a leading designer, developer and marketer
of a broad range of branded consumer products used in the
home, including Kitchenware, Cutlery and Cutting Boards,
Bakeware and Cookware, Pantryware and Spices, Tabletop
and Bath Accessories. Products are marketed under brand
names including Farberware(R), KitchenAid(R), Cuisinart(R),
Hoffritz(R), Sabatier(R), DBK-Daniel Boulud Kitchen(TM), Joseph
Abboud Environments(R), Roshco(R), Baker's Advantage(R),
Kamenstein(R), Casa-Moda(R), Hoan(R), Gemco(R) and :USE(R). The
Company uses the Farberware(R) brand name for kitchenware,
cutlery and cutting boards and bakeware pursuant to a 200-
year royalty-free license. The Company licenses the
KitchenAid(R), Cuisinart(R), Farberware(R) (for flatware and
dinnerware), Sabatier(R), DBK-Daniel Boulud Kitchen(TM) and
Joseph Abboud Environments(R) trade names pursuant to
licenses granted by the owners of those brands. All other
brand names listed above are owned. Several product
lines are marketed within each of the Company's product
categories and under brands primarily targeting moderate
to medium price points, through every major level of
trade.

Over the last several years, sales growth has come from:
(i) expanding product offerings within current
categories, (ii) developing and acquiring product
categories and (iii) entering new channels of
distribution, primarily in the United States. Key
factors in the Company's growth strategy have been, and
will continue to be, the selective use and management of
strong brands and the ability to provide a steady stream
of new products and designs.

For the year ended December 31, 2004, net sales were
$189.5 million, which represented an 18.1% growth over
the previous year. The combined net sales in 2004 for
the Gemco, :USE and Excel businesses that had been
acquired during the past 15 months, were approximately
$14.3 million compared to $0.6 million in 2003.
Excluding the impact of these acquisitions, net sales for
2004 were approximately $175.2 million, a 9.6% growth
over 2003. The 9.6% increase in sales was primarily
attributable to the continuing growth in demand for
KitchenAid branded products and higher Outlet Store
sales, offset by lower sales in 2004 of the Company's
S'mores Maker. Net sales for the Outlet Stores in 2004
were $15.9 million compared to $11.0 million in 2003.
The sales growth for the Outlet Stores was principally
attributable to the Company assuming responsibility for
an additional 20% of the floor space in each store,
effective October 1, 2003.

The Company's gross profit margin is subject to
fluctuation due primarily to product mix and, in some
instances, customer mix. In 2004 our gross profit margin
declined as a substantial portion of our sales growth
came from sales of KitchenAid branded products, which
generate lower margins due to the added cost of
royalties, and increased sales of other product lines,
including Gemco functional glassware and Excel products,
that generate lower gross profit margins.

Our operating profit margin declined in 2004 due to three
factors: (i) the $14.3 million in sales for the recently
acquired Gemco, :USE and Excel businesses generated a
small operating loss in 2004, (ii) the distribution of
the Company's products through its outlet stores generated
higher sales and a larger operating loss in 2004
compared to 2003 and (iii)added personnel costs incurred
in 2004 to expand the product design group, the overseas
sourcing department and our sales and marketing
departments to accommodate future growth. In addition,
the Company incurred in excess of $900,000 of direct
expenses in 2004 related to Sarbanes-Oxley compliance
work.

17

The Company's business and working capital needs are
highly seasonal, with a significant majority of sales
occurring in the third and fourth quarters. In 2004, 2003
and 2002, net sales for the third and fourth quarters
combined accounted for 63%, 66% and 61% of total annual
net sales, respectively, and operating profit earned in
the third and fourth quarters combined accounted for 92%,
97% and 100% of total annual operating profits,
respectively. Inventory levels increase primarily in the
June through October time period in anticipation of the
pre-holiday shipping season.

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 judgments,
including those related to inventories. Management bases
its estimates and judgments on historical experience and
on various other factors that are believed to be
reasonable under the circumstances, the results of which
form the basis for making judgments about the carrying
values of assets and liabilities that are not readily
apparent from other sources. 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, consisting principally of
finished goods, are priced under 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, 2004 and 2003
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.

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.

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. Accordingly, the Company ceased
amortizing goodwill effective January 1, 2002. For each
of the years ended December 31, 2004 and December 31,
2003, the Company completed its assessment. Based upon
such reviews, no impairment to the carrying value of
goodwill was identified.

Effective January 1, 2002, the Company adopted SFAS 144,
"Accounting for Impairment or Disposal of Long-Lived
Assets". SFAS 144 requires that a long-lived asset shall
be tested for impairment whenever events or changes in
circumstances indicate that its carrying amount may not
be recoverable. For each of the years ended December 31,
2004 and December 31, 2003, the Company completed its
assessment. Based upon such reviews, no impairment to
the carrying value of any long-lived asset was
identified.

18

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

2004 COMPARED TO 2003

Net Sales

Net sales in 2004 were $189.5 million, an increase of
approximately $29.1 million, or 18.1% higher than 2003.
The combined net sales in 2004 for the Gemco and :USE
businesses acquired in the fourth quarter of 2003 and the
Excel business that was acquired in July 2004, totaled
approximately $14.3 million compared to $0.6 million in
2003. The Outlet Stores sales were $15.9 million in 2004
compared to $11.0 million in 2003. Excluding the net
sales attributable to the Gemco, :USE, and Excel
businesses and the Outlet Stores, net sales totaled
approximately $159.2 million, a 7.0% increase over 2003's
sales of $148.7 million. The increase in sales was
primarily attributable to increased sales of KitchenAid
branded products in the Company's kitchenware, bakeware
and cutlery product lines and, to a lesser extent, higher
sales of its pantryware products. These sales increases
in 2004 were offset primarily by lower sales of the
Company's S'mores Maker. Sales of Farberware and
Cuisinart branded cutlery and Roshco branded bakeware
also declined in 2004.

The Outlet Stores sales increased to $15.9 million
compared to $11.0 million in 2003. The Outlet Stores
sales growth was principally attributable to the Company
assuming responsibility for 70% of the space in each
store, effective October 1, 2003, compared to 50% of the
space in prior periods. The Outlet Stores had an
operating loss of $1.3 million in 2004, compared to an
operating loss of $1.0 million in 2003.

Cost of Sales

Cost of sales for 2004 was $111.5 million, an increase of
approximately $18.6 million, or 20.0% more than 2003.
Cost of sales as a percentage of net sales increased to
58.9% in 2004 from 57.9% in 2003, primarily as a result
of higher sales of KitchenAid branded products which
generate lower margins due to the added costs of
royalties and an increase in sales of other products that
carry lower gross profit margins, including Gemco
functional glassware products and Excel products.

Distribution Expenses

Distribution expenses, which primarily consist of
warehousing expenses, handling costs of products sold and
freight-out expenses, were $22.8 million for 2004 as
compared to $21.0 million for 2003. In 2003 these
expenses included relocation charges, duplicate rent and
other costs associated with the Company's move into its
Robbinsville, New Jersey distribution facility amounting
to $0.7 million. No such expenses were incurred in 2004.
Excluding these moving related costs, distribution
expenses were 12.3% higher in 2004 as compared to 2003.
However, as a percentage of net sales, distribution
expenses, excluding the aforementioned relocation
charges, were 12.0% in 2004 as compared to 12.7% in 2003.
This improved relationship reflects primarily the
benefits of labor savings and efficiencies generated by
our main distribution center in Robbinsville, New Jersey.

19

Selling, General and Administrative Expenses

Selling, general and administrative expenses for 2004
were $40.3 million, an increase of $8.5 million, or
26.8%, from 2003. The increase in selling, general and
administrative expenses was primarily attributable to the
following: increased Outlet Store operating expenses,
resulting from the Company being responsible for 70% of
the space and expenses of each store for the last three
months of 2003 and all of 2004 compared to 50% of the
space and expenses of each store for the first nine
months of 2003; additional operating expenses of the
:USE, Gemco and Excel businesses recently acquired; the
higher personnel costs associated with planned personnel
increases in the product design group, the overseas
sourcing department and sales and marketing departments
and expenses related to Sarbanes-Oxley compliance work.

Interest Expense

Interest expense for 2004 was $0.8 million, an increase
of $0.1 million or 15.3%, from 2003.

Income Taxes

Income taxes for each of 2004 and 2003 were $5.6 million.
Income taxes as a percentage of income before taxes
remained consistent from year-to-year at approximately
40%.
20

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.

The Outlet Stores sales increased to $11.0 million
compared to $10.3 million in 2002. The Outlet Stores
became responsible for 70% of the space and expenses in
each store, effective October 1, 2003, compared to 50% of
the space and expenses in prior periods. The Outlet
Stores had an operating loss of $1.0 million in 2003,
compared to an operating loss of $0.1 million in 2002.

Cost of Sales

Cost of sales for 2003 was $92.9 million, an increase of
approximately $19.8 million, or 27.0% more 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. In addition, 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
recognizes 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 $21.0 million for 2003 as
compared to $22.2 million for 2002. These expenses
included relocation charges, duplicate rent and other
costs associated with the Company's move into its
Robbinsville, New Jersey distribution facility amounting
to $0.7 million in 2003 and $2.2 million in 2002.
Excluding these moving related costs, distribution
expenses were 1.2% higher in 2003 as compared to 2002 due
to higher depreciation expense related to capital
expenditures for the new automated distribution system
and related equipment, offset by lower payroll costs. As
a percentage of net sales, distribution expenses,
excluding the aforementioned relocation charges, were
12.7% in 2003 as compared to 15.3% in 2002. This
improved relationship reflects the benefits of labor
savings generated by the new systems in our Robbinsville,
New Jersey distribution facility.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for 2003
were $31.8 million, an increase of $2.8 million, or 9.8%,
from 2002. The increase in selling, general and
administrative expenses was primarily attributable to
increased personnel costs, including 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 2002 to 2003. Income taxes as a
percentage of income before taxes remained consistent
from year-to-year at approximately 40%.

21

LIQUIDITY AND CAPITAL RESOURCES

The Company's principal sources of cash to fund liquidity
needs are: (i) cash provided by operating activities and
(ii) borrowings available under its credit facility. Its
primary uses of funds consist of capital expenditures,
acquisitions, funding for working capital increases,
payments of principal and interest on its debt and payment
of cash dividends.

At December 31, 2004, the Company had cash and cash
equivalents of $1.7 million, compared to $1.2 million at
December 31, 2003; working capital was $49.6 million,
compared to $41.3 million at December 31, 2003; the
current ratio was 1.94 to 1 compared to 1.88 to 1 at
December 31, 2003; and borrowings increased to $24.4
million at December 31, 2004 compared to $16.8 million at
December 31, 2003. The increase in working capital
primarily resulted from an increase in merchandise
inventories offset in part by an increase in accounts
payable and trade acceptances and accrued expenses.

Cash provided by operating activities was approximately
$4.4 million, primarily resulting from net income before
depreciation, amortization, provisions for losses on
accounts receivable and other non-cash charges and
increased income taxes payable offset by increased
merchandise inventories, decreased accounts payable and
trade acceptances and accrued expenses. Cash used in
investing activities was approximately $9.9 million,
which consisted of purchases of property and equipment
and the cash paid in connection with the Excel
acquisition. Net cash provided by financing activities
was approximately $6.0 million, primarily as a result of
an increase in short and long-term borrowings and the
proceeds from the exercise of stock options, offset by
cash dividends paid.

Capital expenditures were $2.9 million in 2004 and $2.2
million in 2003. Total planned capital expenditures for
2005 are estimated at $5.0 million. These expenditures
are expected to be funded from current operations, cash
and cash equivalents and, if necessary, from borrowings
under the Company's secured credit facility.

As of December 31, 2004, the Company's contractual
obligations were as follows (in thousands of dollars):

On July 28, 2004, the Company entered into a $50 million
five-year, secured credit facility (the "Credit
Facility") with a group of banks and, in conjunction
therewith, canceled its $35 million secured, reducing
revolving credit facility which was due to mature in
November 2004. Borrowings under the Credit Facility are
secured by all of the assets of the Company. Under the
terms of the Credit Facility, the Company is required to
satisfy certain financial covenants, including
limitations on indebtedness and sale of assets; a minimum
fixed charge ratio; a maximum leverage ratio and
maintenance of a minimum net worth. Borrowings under the
credit facility have different interest rate options that
are based on an alternate base rate, the LIBOR rate and
the lender's cost of funds rate, plus in each case a
margin based on a leverage ratio. As of December 31,
2004, the Company had outstanding $0.4 million of letters
of credit and trade acceptances, $19.4 million of short-
term borrowings and a $5.0 million term loan under its
Credit Facility and, as a result, the availability under
the Credit Facility was $25.2 million. The $5.0 million
long-term loan is non-amortizing, bears interest at 5.07%
and matures in August 2009. Interest rates on short-term
borrowings at December 31, 2004 ranged from 3.3125% to
5.25%.

22

Products are sold to retailers primarily on 30-day credit
terms, and to distributors primarily on 60-day credit
terms.

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, 2004.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The Company's Consolidated Financial Statements as of and
for the years ended December 31, 2004 and 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,
2004 and 2003.

The quarterly results of operations for the periods ended
September 30, 2004 and December 31, 2004 include the
operations of Excel acquired in July 2004.

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

None.

23

ITEM 9A. CONTROLS and PROCEDURES

Management's Evaluation of Disclosure Controls and
Procedures

The term disclosure controls and procedures is defined in
the Securities Exchange Act of 1934, as amended (the
"Exchange Act") or Rules 13a-15(e) and 15d-15(e) of the
Exchange Act. This term refers to the controls and
procedures of a company that are designed to ensure that
information required to be disclosed by the company in
the reports that it files under the Exchange Act is
recorded, processed, summarized and reported within the
time periods specified by the Securities and Exchange
Commission. An evaluation was performed under the
supervision and with the participation of the Company's
management, including its Chief Executive Officer ("CEO")
and Chief Financial Officer ("CFO"), of the effectiveness
of the Company's disclosure controls and procedures as of
December 31, 2004. Based on that evaluation, the
Company's management, including the CEO and CFO,
concluded that the Company's disclosure controls and
procedures were effective as of December 31, 2004.
During the quarter ended on December 31, 2004, there was
no change in the Company's internal control over
financial reporting that has materially affected, or is
reasonably likely to materially affect, the Company's
internal control over financial reporting.

Management's Report on Internal Control over Financial
Reporting

Management of the Company is responsible for establishing
and maintaining effective internal control over financial
reporting as defined in Rule 13a-15(f) under the Exchange
Act. The Company's internal control over financial
reporting is designed to provide reasonable assurance
regarding the reliability of financial reporting and the
preparation of financial statements for external purposes
in accordance with accounting principles generally
accepted in the United States of America.

Because of inherent limitations, internal control over
financial reporting may not prevent or detect
misstatements. Therefore, even those systems determined
to be effective can provide only reasonable assurance
with respect to financial statement preparation and
presentation.

As required by Section 404 of the Sarbanes-Oxley Act of
2002, management assessed the effectiveness of the
Company's internal control over financial reporting as of
December 31, 2004 using the criteria set forth in
Internal Control - Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway
Commission ("COSO"). Based on this assessment,
management believes that, as of December 31, 2004, the
Company's internal control over financial reporting was
effective based on those criteria.

During this process the Company identified control
opportunities, none of which constituted a material
weakness, and implemented a process to investigate and,
as appropriate, remediate such matters. The Company is
continuing to review, evaluate, document and test our
internal control and procedures and may identify areas
where disclosure and additional corrective measures are
advisable or required. The Company will also look for
methods to improve its overall system of controls.

Management's assessment of the effectiveness of the
Company's internal control over financial reporting as of
December 31, 2004, has been audited by Ernst & Young LLP,
the independent registered public accounting firm who
also audited the Company's consolidated financial
statements. Ernst & Young LLP's attestation report on
management's assessment of the Company's internal control
over financial reporting appears on page F-3.

24

PART III

ITEMS 10, 11, 12, 13 and 14

Information required under these items is contained in
the Company's 2005 Proxy Statement , which will be filed
with the Securities and Exchange Commission within 120
days after the close of the Company's fiscal year covered
by this Form 10-K. Accordingly, this information is
therefore incorporated herein by reference.

25

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 2004.

On November 4, 2004, the Company filed a report on
Form 8-K announcing results of operations and
financial condition for its third quarter ended
September 30, 2004.

On November 8, 2004, the Company filed a report on
Form 8-K announcing that Mr. Ronald Shiftan had
been elected Vice Chairman of the Board.

(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).

26

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).

27

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.

28

10.41 Evan Miller Employment Agreement dated July 1,
2003.

10.42 Robert Reichenbach Employment Agreement dated
July 1, 2003.

10.43 Amendment and Restated Credit Facility
Agreement between Lifetime Hoan Corporation and the
Bank of New York dated July 28, 2004.

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.

29

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 March 16, 2005
Jeffrey Siegel Directors,
Chief Executive Officer,
President and Director

/s/ Robert McNally
Robert McNally Vice-President - Finance March 16, 2005
and Treasurer
(Principal Financial and
Accounting Officer)

/s/ Craig Phillips
Craig Phillips Director March 16, 2005

/s/ Bruce Cohen
Bruce Cohen Director March 16, 2005

/s/ Ronald Shiftan
Ronald Shiftan Director March 16, 2005

/s/ Howard Bernstein
Howard Bernstein Director March 16, 2005

/s/ Leonard Florence
Leonard Florence Director March 16, 2005

/s/ Cherrie Nanninga
Cherrie Nanninga Director March 16, 2005

/s/ William Westerfield
William Westerfield Director March 16, 2005

/s/ Sheldon Misher
Sheldon Misher Director March 16, 2005

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-15(e) and 15d-14 and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and
15d-15(f))) for the registrant and have:

a. designed such disclosure controls and procedures, or
caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material
information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in
which this annual report is being prepared;
b. designed such internal control over financial
reporting, or caused such internal control over financial
reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial
statements for external purposes in accordance with
generally accepted accounting principles;
c. evaluated the effectiveness of the registrant's
disclosure controls and procedures and presented in this
report our conclusions about the effectiveness of the
disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation;
and
d. disclosed in this report any change in the
registrant's internal control over financial reporting
that occurred during the registrant's most recent fiscal
quarter that has materially affected or is reasonably
likely to materially affect the registrant's internal
controls over financial reporting; and

5. The registrant's other certifying officers and I
have disclosed, based on our most recent evaluation of
internal control over financial reporting, to the
registrant's auditors and the audit committee of
registrant's board of directors (or persons performing
the equivalent functions):
a. all significant deficiencies in the design or
operation of internal control over financial reporting
which are reasonably likely to adversely affect the
registrant's ability to record, process, summarize and
report financial information; and
b. any fraud, whether or not material, that involves
management or other employees who have a significant role
in the registrant's internal control over financial
reporting.

Date: March 16, 2005

__/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-15(e) and 15d-14 and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and
15d-15(f))) for the registrant and have:

a. designed such disclosure controls and procedures, or
caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material
information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in
which this annual report is being prepared;
b. designed such internal control over financial
reporting, or caused such internal control over financial
reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial
statements for external purposes in accordance with
generally accepted accounting principles;
c. evaluated the effectiveness of the registrant's
disclosure controls and procedures and presented in this
report our conclusions about the effectiveness of the
disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation;
and
d. disclosed in this report any change in the
registrant's internal control over financial reporting
that occurred during the registrant's most recent fiscal
quarter that has materially affected or is reasonably
likely to materially affect the registrant's internal
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 control 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 control over financial
reporting.

Date: March 16, 2005

___/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 Registered Public Accounting Firm F-2
Report of Independent Registered Public Accounting Firm
on Internal Control Over Financial Reporting F-3
Consolidated Balance Sheets as of December 31, 2004 and 2003 F-5
Consolidated Statements of Income for the
Years ended December 31, 2004, 2003 and 2002 F-6
Consolidated Statements of Stockholders' Equity for the
Years ended December 31, 2004, 2003 and 2002 F-7
Consolidated Statements of Cash Flows for the
Years ended December 31, 2004, 2003 and 2002 F-8
Notes to Consolidated Financial Statements F-9

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 Registered Public Accounting Firm

To the Board of Directors and Stockholders of
Lifetime Hoan Corporation

We have audited the accompanying consolidated balance
sheets of Lifetime Hoan Corporation and subsidiaries (the
"Company") as of December 31, 2004 and 2003 and the
related consolidated statements of income, stockholders'
equity, and cash flows for each of the three years in the
period ended December 31, 2004. Our audits also included
the financial statement schedule listed in the Index at
Item 15(d). 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 the standards
of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and
perform the audit to obtain reasonable assurance about
whether the financial statements are free of material
misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes
assessing the accounting principles used and significant
estimates made by management, as well as evaluating the
overall financial statement presentation. We believe
that our audits 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, 2004 and 2003, and the
consolidated results of its operations and its cash flows
for each of the three years in the period ended December
31, 2004, 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.

We have also audited, in accordance with the standards of
the Public Company Accounting Oversight Board (United
States), the effectiveness of the Company's internal
control over financial reporting as of December 31, 2004,
based on the criteria established in Internal Control--
Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission and
our report dated March 11, 2005, expressed an unqualified
opinion thereon.

Ernst & Young LLP

Melville, New York
March 11, 2005

F-2

Report of Independent Registered Public Accounting Firm
on Internal Control Over Financial Reporting

To the Board of Directors and Stockholders of
Lifetime Hoan Corporation

We have audited management's assessment, included in the
accompanying Report by Management on Internal Control
over Financial Reporting, that Lifetime Hoan Corporation
maintained effective internal control over financial
reporting as of December 31, 2004, based on criteria
established in Internal Control-Integrated Framework
issued by the Committee of Sponsoring Organizations of
the Treadway Commission (the COSO criteria). Lifetime
Hoan Corporation's management is responsible for
maintaining effective internal control over financial
reporting and for its assessment of the effectiveness of
internal control over financial reporting. Our
responsibility is to express an opinion on management's
assessment and an opinion on the effectiveness of the
company's internal control over financial reporting based
on our audit.

We conducted our audit in accordance with the standards
of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether
effective internal control over financial reporting was
maintained in all material respects. Our audit included
obtaining an understanding of internal control over
financial reporting, evaluating management's assessment,
testing and evaluating the design and operating
effectiveness of internal control, and performing such
other procedures as we considered necessary in the
circumstances. We believe that our audit provides a
reasonable basis for our opinion.

A company's internal control over financial reporting is
a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the
preparation of financial statements for external purposes
in accordance with generally accepted accounting
principles. A company's internal control over financial
reporting includes those policies and procedures that (1)
pertain to the maintenance of records that, in reasonable
detail, accurately and fairly reflect the transactions
and dispositions of the assets of the company; (2)
provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial
statements in accordance with generally accepted
accounting principles, and that receipts and expenditures
of the company are being made only in accordance with
authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized
acquisition, use, or disposition of the company's assets
that could have a material effect on the financial
statements.

Because of its inherent limitations, internal control
over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk
that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the
policies or procedures may deteriorate.

F-3

In our opinion, management's assessment that Lifetime
Hoan Corporation maintained effective internal control
over financial reporting as of December 31, 2004, is
fairly stated, in all material respects, based on the
COSO criteria. Also, in our opinion, Lifetime Hoan
Corporation maintained, in all material respects,
effective internal control over financial reporting as of
December 31, 2004, based on the COSO criteria.

We also have audited, in accordance with the standards of
the Public Company Accounting Oversight Board (United
States), the consolidated balance sheets of Lifetime Hoan
Corporation and subsidiaries as of December 31, 2004 and
2003 and the related consolidated statements of income,
stockholders' equity, and cash flows for each of the
three years in the period ended December 31, 2004 and our
report dated March 11, 2005 expressed an unqualified
opinion thereon.

Ernst & Young LLP

Melville, New York
March 11, 2005

F-4

LIFETIME HOAN CORPORATION

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

See notes to consolidated financial statements.

F-5

LIFETIME HOAN CORPORATION

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

See notes to consolidated financial statements.

F-6

LIFETIME HOAN CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(in thousands)

See notes to consolidated financial statements.
F-7

LIFETIME HOAN CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

See notes to consolidated financial statements.

F-8

LIFETIME HOAN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2004

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 (collectively the "Company"), 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 a
broad range of consumer products used in the home, including kitchenware,
cutlery and cutting boards, bakeware and cookware, pantryware and spices,
tabletop and decorative bath accessories and markets 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 60 retail outlet stores in 31
states under the Farberware(R) name. Under an agreement with the Meyer
Corporation, Meyer Corporation assumed responsibility for merchandising
and for stocking Farberware cookware products in the stores, receives all
revenue from sales of Farberware cookware and since October 31, 2003,
occupies 30% of the space in each store and reimburses the Company for 30%
of the operating expenses of the stores. For the periods prior to October
1, 2003, Meyer was responsible for 50% of the space in each store and
50% 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 when goods are shipped and
title of ownership transfers to the customer. Related freight-out costs
are included in distribution expenses and amounted to $3.3 million, $2.7
million and $2.7 million for 2004, 2003 and 2002, 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
distribution facility, amounting to $0.7 million and $2.2 million in 2003
and 2002, respectively. No such expenses were incurred in 2004.

Inventories: Merchandise inventories, consisting principally of
finished goods, are priced at 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, 2004 and 2003 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 under the straight-line method over the estimated useful lives
of the assets. Buildings 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 their
estimated useful lives, 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-9

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. The carrying value of long-term debt
outstanding under the Company's revolving credit facility approximates fair
value of such debt and bears interest at the current market rate of 5.07%.

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 ceased amortizing goodwill effective January 1,
2002. The Company completed its annual assessment of goodwill impairment
in the fourth quarters of 2004 and 2003. Based upon such reviews, no
impairment to the carrying value of goodwill was identified in either
period.

Other intangibles consist of licenses, trademarks / trade names,
customer relationships and product designs acquired pursuant to four
acquisitions and are being amortized by the straight-line method over
periods ranging from 4 to 40 years. The remaining weighted-average
amortization period for such intangibles is approximately 28 years.
Accumulated amortization at December 31, 2004 and 2003 was $3.7 million and
$3.1 million, respectively. Amortization expense with respect to these
intangible assets for each of five succeeding fiscal years is estimated to
be as follows: 2005 - $677,000; 2006 - $677,000; 2007 - $677,000; 2008 -
$665,000; 2009 - $615,000.

Amortization expense for the years ended December 31, 2004, December 31,
2003 and December 31, 2002 was $602,000, $410,000 and $390,000,
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, a 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. Deferred income taxes have been provided for to 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.

Earnings Per Share: Basic earnings per share have been computed by
dividing net income by the weighted average number of common shares
outstanding of 10,982,000 in 2004, 10,628,000 in 2003 and 10,516,000 in
2002. Diluted earnings per share have been computed by dividing net
income by the weighted average number of common shares outstanding,
including the dilutive effects of stock options, of 11,226,000 in 2004,
10,754,000 in 2003 and 10,541,000 in 2002.

F-10

LIFETIME HOAN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued

NOTE A - SIGNIFICANT ACCOUNTING POLICIES (continued)

Accounting for Stock Option Plan: At December 31, 2004, the Company had
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.

The weighted average fair values of options granted during the years
ended December 31, 2004, 2003 and 2002 were $5.90, $2.57 and $0.16,
respectively. The fair values 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 3.73%, 3.37% and
3.47% for 2004, 2003 and 2002, respectively; 1.55% dividend yield in 2004,
2.53% dividend yield in 2003 and 4.33% dividend yield in 2002; volatility
factor of the expected market price of the Company's common stock of 0.37
in 2004, 0.41 in 2003 and 0.06 in 2002; and a weighted-average expected
life of the options of 6.0, 6.0 and 6.0 years in 2004, 2003 and 2002,
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 estimates, in management's opinion, the
existing models do not necessarily provide a reliable single measure of the
fair values of its employee stock options.

New Accounting Pronouncements: In December 2004, the FASB issued Statement
of Financial Accounting Standards No. 123R, Share-Based Payment, an
amendment of FASB Statements No. 123 ("SFAS No. 123R"). SFAS No. 123R
addresses the accounting for transactions in which an enterprise exchanges
its valuable equity instruments for employee services. It also addresses
transactions in which an enterprise incurs liabilities that are based on
the fair values of the enterprise's equity instruments or that may be
settled by the issuance of those equity instruments in exchange for
employee services. For public entities, the cost of employee services
received in exchange for equity instruments, including employee stock
options, would be measured based on the grant-date fair value of those
instruments. That cost would be recognized as compensation expense over the
requisite service period (often the vesting period). Generally, no
compensation cost would be recognized for equity instruments that do not
vest.

F-11

LIFETIME HOAN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued

NOTE A - SIGNIFICANT ACCOUNTING POLICIES (continued)

SFAS No. 123R is effective for periods beginning after June 15, 2005.
SFAS No. 123R will apply to awards granted, modified, or settled in cash on
or after that date. Companies may choose from one of three methods when
transitioning to the new standard, which may include restatement of prior
annual and interim periods. The impact on EPS of expensing stock options
will be dependent upon the method to be used for valuation of stock options
and the transition method determined by the Company. The total impact on an
annualized basis could range from approximately $0.01 to $0.02 per share-
diluted, assuming option grants continue at the same level as in 2004.

Reclassifications: Certain selling, general and administrative
expenses have been reclassified to distribution expenses in 2003 and 2002
to conform with the current presentation.

F-12

LIFETIME HOAN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued

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 Italiana, Spa ("Prestige Italy") and Prestige Haushaltswaren GmbH
("Prestige Germany" and, together with Prestige Italy, the "Prestige
Companies"). 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 Italy and, together with its minority interest shareholder,
caused Prestige Germany 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.

Gemco 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. This acquisition enabled the
Company to broaden its kitchenware product lines to include functional
glassware.

: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. This
acquisition enabled the Company to expand its product offering to include
bath accessories. The results of operations of :USE are included in the
Company's consolidated statements of income from the date of acquisition.

In connection with the Gemco and :USE acquisitions, the total of
the purchase prices paid in cash, including associated expenses, amounted
to approximately $4.0 million. In connection with the :USE acquisition
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 allocations
of the purchase prices of the acquired businesses resulted in the following
condensed balance of assets being acquired (in thousands):

F-13

LIFETIME HOAN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued

NOTE B - ACQUISITIONS, DISPOSALS AND LICENSES (continued)

In July 2004, the Company acquired the business and certain
assets of Excel Importing Corp., ("Excel"), a wholly-owned subsidiary of
Mickelberry Communications Incorporated. Excel marketed and distributed a
diversified line of high quality cutlery, tabletop, cookware and barware
products under well-recognized premium brand names, including Sabatier(R),
Farberware(R), Retroneu Design Studio(R), Joseph Abboud Environments(R), DBK-
Daniel Boulud Kitchen(TM) and Legnoart(R). The Excel acquisition provided
quality brand names that the Company can use to market many of its existing
product lines and added tabletop product categories to the Company's
current product lines. The purchase price, subject to post closing
adjustments, was approximately $8.5 million, of which $7.0 million was paid
in cash at the closing. The Company has not paid the balance of $1.5
million since it believes the total estimated post closing inventory
adjustments and certain indemnificiation claims are in excess of that
amount.

The Company has not yet determined either the amount or the allocation
of the purchase price for the Excel acquisition since the calculation of post
closing adjustments has not yet been finalized. The acquisition was
accounted for under the purchase method and, accordingly, acquired assets
and liabilities are recorded at their fair values. Preliminary the $7.0
million of the purchase price paid at closing has been allocated based on
management's estimates as follows (in thousands):

KitchenAid License Agreement: On September 24, 2000, the Company entered
into a license agreement with 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 license agreement was amended,
expanding the covered products to include bakeware and baking related
products as covered products. A second amendment to the license agreement
was entered into effective August 1, 2003, which extended the term of the
license through December 31, 2007 and further expanded the covered products
to include kitchen cutlery. Shipments of products by the Company under the
KitchenAid name began in the second quarter of 2001.

Cuisinart License Agreement: On March 19, 2002, the Company entered
into a license agreement with Conair Corporation. This agreement allows
the Company to design, manufacture and market a wide variety of cutlery
products under the Cuisinart(R) brand name. Shipments of products under the
Cuisinart(R) name began in the fourth quarter of 2002. On April 8, 2004, the
license agreement was amended, expanding the covered products to include
cutting boards.

F-14

LIFETIME HOAN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued

NOTE C -CREDIT FACILITIES

On July 28, 2004, the Company entered into a $50 million five-year,
secured credit facility (the "Credit Facility") with a group of banks and,
in conjunction therewith, canceled its $35 million secured, reducing
revolving credit facility which was due to mature in November 2004.
Borrowings under the Credit Facility are secured by all of the assets of
the Company. Under the terms of the Credit Facility, the Company is
required to satisfy certain financial covenants, including limitations on
indebtedness and sale of assets; a minimum fixed charge ratio; a maximum
leverage ratio; and maintenance of a minimum net worth. Borrowings under
the credit facility have different interest rate options that are based on
an alternate base rate, the LIBOR rate and the lender's cost of funds rate,
plus in each case a margin based on a leverage ratio. As of December 31,
2004, the Company had outstanding $0.4 million of letters of credit and
trade acceptances, $19.4 million of short-term borrowings and a $5.0
million term loan under its Credit Facility and, as a result, the
availability under the Credit Facility was $25.2 million. The $5.0 million
long-term loan is non-amortizing, bears interest at 5.07% and matures in
August 2009. Interest rates on short-term borrowings at December 31, 2004
ranged from 3.3125% to 5.25%. The weighted-average interest rate on short-
term borrowings was 3.857% and 3.502% at December 31, 2004 and December 31,
2003, respectively.

The Company paid interest of approximately $0.8 million, $0.7
million and $1.0 million during the years ended December 31, 2004, 2003 and
2002, 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 each of 2004, 2003 and 2002. 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.

Common Stock Repurchase and Retirement: During the years ended December
31, 1999 and 2000, the Board of Directors of the Company authorized the
repurchase of up to 3,000,000 shares of the outstanding Common Stock in the
open market. Through December 31, 2004, 2,128,000 shares had been
repurchased for approximately $15.2 million (none were repurchased in 2004,
2003 and 2002).

Preferred Stock: The Company is authorized to issue 2,000,000 shares of
Series B Preferred Stock, par value of One Dollar ($1.00) each, none of
which is outstanding. The Company is also authorized to issue 100 shares
of Series A Preferred Stock, par value of One Dollar ($1.00) each, none of
which is outstanding.

Stock Option Plans: In June 2000, the stockholders of the Company
approved the 2000 Long-Term Incentive Plan (the "Plan"), which replaced all
other Company stock option plans, whereby up to 1,750,000 shares of Common
Stock may be granted in the form of stock options or other equity-based
awards to directors, officers, employees, consultants and service providers
to the Company and its affiliates. The Plan authorizes the Board of
Directors of the Company to issue incentive stock options as defined in
Section 422 of the Internal Revenue Code, stock options that do not conform
to the requirements of that Section of the Code and other stock based
awards. Options that have been granted under the plan 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, 2004, approximately 949,500 shares were available
for grant under the Plan and all options granted through December 31, 2004
under the Plan have exercise prices equal to the market value of the
Company's stock on the date of grant.

F-15

LIFETIME HOAN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued

NOTE D - CAPITAL STOCK (continued)

The following table summarizes the Company's stock option
activity and related information for the years ended December 312004, 2003
and 2002:

The following table summarizes information about employees'
stock options outstanding at December 31, 2004:

At December 31, 2003 and 2002, there were outstanding
exercisable options to purchase 699,610 and 789,917 shares of Common Stock,
respectively, at weighted-average exercise prices per share of $6.94 and
$7.14, respectively.

In connection with the exercise of options issued
under a stock option plan that has since been terminated, 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 issued by Milton L. Cohen, a director of the Company,
in the amount of $422,000 was canceled and replaced by a new note issued
by Milton L. Cohen in the amount of $855,000, which consolidated such
$422,000 and all other amounts due by Milton L. Cohen to the Company. As
at December 31, 2004, the amount of such note had been reduced to
approximately $278,000.

F-16

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, 2004, 2003 and 2002 was $14.1 million, $14.0 million and $6.0 million,
respectively.

The provision for income taxes consists of the following (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 provisions 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 $4.2 million and $3.1
million during the years ended 2004 and 2003, respectively. The Company
received income tax refunds (net of payments) of approximately $328,000
during the year ended December 2002.

The Company and its subsidiaries' income tax returns are routinely
examined by various tax authorities. In management's opinion, adequate
provision for income taxes have been made for all open years in accordance
with SFAS No. 5, "Accounting for Contingencies".

F-17

LIFETIME HOAN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued

NOTE F - COMMITMENTS

Operating Leases: The Company has lease agreements for its distribution
facility, 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 the Meyer Corporation ("Meyer"), Meyer
assumed responsibility for merchandising and for stocking Farberware cookware
products in the outlet stores and receives all revenue from store sales
of Farberware(R) cookware. Since October 31, 2003, Meyer has occupied 30%
of the space in each store and reimbursed the Company for 30% of the
operating expenses of the stores. For the periods prior to October 1, 2003,
Meyer occupied 50% of the space in each store and 50% of the operating
expenses of the stores. In 2004, 2003 and 2002, Meyer Corporation reimbursed
the Company approximately $1.2 million, $1.5 million and $1.7 million,
respectively, for operating expenses.

Rental and related expenses under operating leases were approximately
$7.0 million, $6.9 million and $7.1 million for the years ended December
31, 2004, 2003 and 2002, respectively. Such amounts are prior to the Meyer
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 distribution facility. These leases expire
in 2008 and the future minimum lease payments due under the leases as of
December 31, 2004 are as follows (in thousands):

The current and non-current portions of the Company's capital lease
obligations at December 31, 2004 of approximately $262,000 and $819,000,
respectively, and at December 31, 2003 of approximately $128,000 and
$586,000, respectively, are included in the accompanying consolidated
balance sheets within accrued expenses and deferred rent and other long-
term liabilities, respectively.

F-18

LIFETIME HOAN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued

NOTE F - COMMITMENTS (continued)

Royalties: The Company has license agreements that require payments of
royalties on sales of licensed products which expire through December 31,
2008. Future minimum royalties payable under these agreements are as
follows (in thousands):

Legal Proceedings: The Company has, from time to time, been involved in
various legal proceedings. The Company believes that all current
litigation is routine in nature and incidental to the conduct of our
business, and that none of this litigation, if determined adversely to us,
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, Jeffrey Siegel
entered into a new employment agreement with the Company that provides that
the Company will employ him as its President and Chief Executive Officer
for a term commencing on April 6, 2001, and as its Chairman of the Board
for a term that commenced immediately following the 2001 Annual Meeting of
stockholders, 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 increases based on changes in
the Consumer Price Index and for the payment each year of a bonus in an
amount equal to 3.5% of the Company's pre-tax income for such fiscal year,
adjusted to include amounts payable during such year to Mr. Siegel under
the employment agreement and to Milton L. Cohen in his capacity as a
consultant to the Company and all significant non-recurring charges
deducted in determining such pre-tax income. During the years ended
December 31, 2004, 2003 and 2002, the Company recorded annual compensation
expense of approximately $555,000, $576,000 and $323,000, respectively, to
the bonus plan. In addition, under the terms of the employment
agreement, Mr. Siegel is entitled to $350,000 payable at the earlier of
April 5, 2006 and the occurrence of certain termination events. The
agreement also provides for, among other things, certain standard fringe
benefits, 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) and such event is followed by: (i) the
termination of his employment, other than for cause; (ii) the diminution of
his duties or change in his executive position; (iii) the diminution of his
compensation (other than as part of 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 and 2004, several members of senior management entered into
employment agreements with the Company. The employment agreements
termination dates range from June 30, 2006 through June 30, 2007. The
agreements provide for annual salaries and bonuses, and certain standard
fringe benefits, such as disability benefits, medical insurance, life
insurance and auto allowances.

F-19

LIFETIME HOAN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued

NOTE F - COMMITMENTS (continued)

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
pursuant to which the Company is paying Milton L. Cohen an annual
consulting fee of $440,800.

As of December 31, 2004 and December 31, 2003, Milton L. Cohen owed
the Company approximately $278,000 and $453,000, respectively. Milton L.
Cohen remits $48,404 quarterly in payment of interest and principal. The
loan, which matures on March 31, 2006, is included within other current and
non-current assets in the accompanying consolidated balance sheets.

As of December 31, 2004 and December 31, 2003, Jeffrey Siegel,
Chairman of the Board, President and Chief Executive Officer of the
Company, owed the Company approximately $344,000 with respect to an
outstanding loan related to the exercise of stock options under a stock
option plan which has since been terminated.

As of December 31, 2004 and December 31, 2003, Craig Phillips, a vice
president of the Company, owed the Company approximately $135,000 with
respect to an outstanding loan related to the exercise of stock options
under a stock option plan which has since been terminated.

The above referenced notes receivables due from Jeffery Siegel and
Craig Phillips totaling $479,000 are included within total stockholders'
equity in the accompanying balance sheets at December 31, 2004 and 2003,
respectively.

On October 1, 2002 the Company entered into a consulting agreement with
Ronald Shiftan, a director of the Company. The agreement was terminated
effective November 1, 2004 when Mr. Shiftan became Vice Chairman of the
Company. Mr. Shiftan was 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 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 $257,000, $206,000 and $220,000 in 2004, 2003 and
2002, 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, 2004, 2003 and 2002, Wal-Mart
Stores, Inc. (including Sam's Clubs) accounted for approximately 24%, 29%
and 20% of net sales, respectively. No other customer accounted for 10% or
more of the Company's net sales during 2004, 2003 or 2002. For the years
ended December 31, 2004, 2003 and 2002, our ten largest customers accounted
for approximately 59%, 62% and 56% of net sales, respectively.

F-20

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued

LIFETIME HOAN CORPORATION

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

Depreciation and amortization expense on property and equipment for the
years ended December 31, 2004, 2003 and 2002 was $3.5 million, $3.3 million
and $3.1 million, respectively. Included in machinery, furniture and
equipment and related accumulated depreciation above as of December 31,
2004 are $1,332,000 and $281,000, respectively, and as of December 31, 2003
are $763,000 and $76,000, respectively, related to assets recorded under
capital leases.

Accrued Expenses:

Accrued expenses consist of (in thousands):

Sources of Supply: The Company sources its products from
approximately 98 suppliers located primarily in the People's Republic
of China, and to a lesser extent in the United States, Taiwan,
Thailand, Malaysia, Indonesia, Germany, France, Korea, Czechoslovakia,
Italy, India and Hong Kong. For the fiscal year ended December 31,
2004 our three largest suppliers provided us with approximately 54% of
the products we distributed, as compared to 62% for the fiscal year
ended December 31, 2003. This concentration of sourcing in certain
key vendors is an additional risk to our business. Furthermore,
because our product lines cover thousands of products, many products
are produced for us by only by one or two manufacturers. An
interruption of supply from any of these manufacturers could have an
adverse impact on our ability to fill orders on a timely basis.
However, we believe other manufacturers with whom we do business would
be able to increase production to fulfill our requirements.

F-21

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

Exhibit 23
Consent of Independent Registered Public Accounting Firm

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 March 11,
2005, with respect to the consolidated financial statements and
schedule of Lifetime Hoan Corporation and its consolidated
subsidiaries included in the Annual Report (Form 10-K) for the year
ended December 31, 2004.

Ernst & Young LLP

Melville, New York
March 16, 2005

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, 2004 (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 16, 2005 Date: March 16, 2005