Welcome to the Lifetime Brands Conference Call. At this time, all participants are in a listen-only mode. Following management’s prepared remarks, we’ll hold a Q-&-A session. (Operator Instructions) I would now like to turn the conference over to Harriet Fried of LHA. Please go ahead, ma’am.

Thank you, operator. Good morning everyone, and thank you for joining Lifetime Brands third quarter 2009 conference call. With us today from management are Jeff Siegel, Chairman, President and Chief Executive Officer and Larry Winoker, Senior Vice President and Chief Financial Officer. Before we begin, I’ll read the Safe Harbor statement under the Private Securities Litigation Reform Act of 1995. The statements that are about to made in this conference call that are not historical facts are forward-looking statements and involve risks and uncertainties, including the company’s ability to comply with the requirements of it’s credit agreement, the availability of funding under that credit agreement, the company’s ability to maintain adequate liquidity and financing sources and an appropriate level of debt, changes in general economic conditions which could affect customer payment practices or consumer spending, changes in demand for company’s products, shortages of and price volatility for certain commodities, the effect of competition on the company’s markets and other risks detailed in the company’s filings with the SEC. The company undertakes no obligation to update these forward-looking statements. The company’s earnings release contained non-GAAP financial measures within the meaning of regulation G promulgated by the SEC. Included in this mornings release is a reconciliation of these non-GAAP financial measures to the comparable financial measures calculated in accordance with GAAP. With that introduction, I would like to turn the call over to Mr. Siegel.

Thank you, Harriet. Good morning everyone. This morning we announced our third quarter 2009 results. I’m pleased to report that Lifetime Brands delivered a solid quarter. For the quarter operating cash flow was $8.3 million, net income was $4.9 million and diluted income per common share was $0.40. Each of these key financial indicators shows a significant improvement over last year. I’m also pleased to note that our improved operating results and our continued disciplined approach in closing expenses and reducing inventory levels enabled the company to reduce its bank borrowings by $52.8 million as compared to September 30, 2008. It’s a reflection of the tough decisions we’ve made beginning in 2007 and a credit to our employees that we are able to achieve these positive results despite the continuing weak economy. While we are not professional economist, it’s clear that higher employment, low home prices and the volatile stock markets, and concerns about the shape of the recovery continued to have a dampening effect on consumer spending. In addition, retailers significantly brought down their inventories. In principle this is a positive strategy, however in the short term, this transition had a negative impact on our wholesale sales as replenishment generally was at rates below those of retail sales groups. Our net sales declined by 20.8% in the quarter and by 13.3% for the nine months as compared to the same period last year. In our wholesale business, net sales decreased by 14.5% in the quarter and by 4.85% year-to-date. It’s important to note however, that a significant portion of the decline in the third quarter reflect several factors that make it difficult to compare the 2009 third quarter to same quarter in 2008. Notably, 2008 quarter included sales of Linens ’N Things, which began liquidating its source in the…

Thanks Jeff. As reported, net sales were a $111.4 million for the third quarter 2009 versus a $140.6 million in 2008. Net income was 4.9 or $0.40 per diluted share for the third quarter of 2009, as compared to a net loss of $1.1 million or $0.09 per share in 2008. Income from operations excluding restructuring expenses was $8.3 million in 2009 versus $8 million in 2008. Looking at our wholesale segment, segment income from operations excluding restructuring expenses was $11.6 million in the 2009 quarter versus $12.1 in the 2008 period. Net sales for the 2009 period were $106.3 million, a decrease of $80 million compared to a $124.3 million for the 2008 period, approximately half of the decrease reflects the 2009 quarter, the absence of sales to Linens-N-Things, the non-recurrence of sales of excess inventory acquired with our June 2008 purchase of Mikasa, and a discontinuance of certain low margin sales to a direct response retailer. Wholesale gross margin was 35.7% in 2009, compared to 35.9% in 2008. During the second quarter earnings call, we commented that gross margin was expected to increase from the benefit of lower inbound ocean freight cost. This cost reduction added approximately a 150 basis points for the gross margin in the third quarter. However, unfavorable product mix, most notably from our decision to fill excess sterlings over inventory offset the freight cost savings. Wholesale distribution expenses were 7.8% of net sales in 2009, compared to 9% last year. This improvement reflects the elimination of distribution services for Mikasa provided by the seller in 2008, the closing of the York, Pennsylvania facility, during this year and then improved labor efficiency. SG&A expenses for 2009 were $18.1 million or 70% of sales versus $21.2 million or 17.1% of sales in 2008. The decrease is…

(Operator Instructions) Your first question comes from Jonathan Brussler - EJF Capital.

I just got two quick things; do you guys have any thoughts on how you are planning on dealing with the convert?

I just got two quick things; do you guys have any thoughts on how you are planning on dealing with the convert?

I just got two quick things; do you guys have any thoughts on how you are planning on dealing with the convert?

I just got two quick things; do you guys have any thoughts on how you are planning on dealing with the convert?

We are working on it. We are not ready to share anything yet.

How do you guys see the bank borrowings trending throughout the rest of the year, are you still expecting a reduction of about $15 to $20 million?

We, this is the time of the year that we just ran our seasonal PTs, so this is the time of the year where sales increased, inventory comes down and we bring down bank quality levels almost $20 millions, it should be a few more.

All right great and there is obviously some plans maybe to use that and maybe pay down the convert or are you guys not talking about that?

It just that something we are not ready to share obviously, we focused we think about it probably we are not ready to share any information about that.

Your next question comes from Gary Giblen - Quint Miller. Gary Giblen – Quint Miller & Co.: As consumers trade down to lower price points as you said Jeff in your remarks. Does that necessarily or usually mean that your margins will be lower on those products or is there not a correlation?

There is not a correlation, maybe not much of a difference for us, the only difference is we have to sell more units, but as I used in the example, it’s really working, I mean I was concerned about it a little earlier in the year, but I’m much less concerned about it now. The consumer is really responding for low price points, and it doesn’t cover all of our businesses, it certainly this is on the kitchen ware businesses, it definitely has no effect whatsoever, lowering the price points of the kitchen gadgets, but on the upper end products like couple of resets that’s happening and also other upper end products, we find that. Gary Giblen – Quint Miller & Co.: Well, Jeff are you saying that the added volume another as you generate the same gross margin dollars or are we talking, I was trying to get a percentage?

Gross margins dollars are good, I mean those are good, our gross margin is the same across our brands, not exactly the same, but very close across our brands and are obviously the most value to gross margin dollars comes in. Gary Giblen – Quint Miller & Co.: Is the wedding business still strong in the kitchenware/housewares arena?

Yes, that’s a very steady business, the bridal business is a - for us we find a rock steady business.

Your next question comes from Neal Goldman - Goldman Capital Management.

The first question, you had a great quarter, I assume you are translating it back with the pace of being 12.5, so wherever it is now, can you describe why they are doing so well at this point?

Their business is great, they sell mostly in the mass market with in next quarter they do, and now do every level using some of our brands, I think they are benefiting from the relationship and as are we in the United States, but they are rock solid as a company in Mexico, and the business reflects it, I mean they are certainly gaining market share, and growing and we anticipate that they will continue to grow.

How are you doing with their brand in the US?

We are starting to do very well of it here, it look longer I guess we introduced that’s not the best time in the environment, but I’m going to add one more thing, the Grupo Vasconia has a well into category management which is something that we do in the US, and they would really, it’s really quite on from them in Mexico and they are managing categories for many retailers, and it’s both helping the retailer to grow overall and certainly helping the Grupo Vasconia to growth in addition.

One of the things I remember earlier, you had shifted your Canadian operation, we are just getting a royalty which affects sales, right?

It has affected our top line sales this year.

You had mentioned that in terms of the differences of this year versus last year or was that in effect last year too?

Well in the third quarter there wasn’t that much of difference. Am I right?

Yes, that’s right but third quarter we had -.

We had already made the change by the third quarter, but for the year-to-date there was definitely a reduced sales, there is a much better arrangement gross profit was.

Okay, did you make, what was your comment on the bank borrowings that you expect from here to year end to be done approximately x what was that number?

The $20 million I think the early question and we reduced borrowings like $20 million and I said that it’s achievable.

So from like 70 --

Through the end of the year.

I’m sorry.

Let’s say at least somewhere in the - it should be able to be in the low 40.

40 to 45, right?

Yes.

Is that right?

Yes, that’s correct yes.

Okay, and what would be at the current run rate because it’s I mean, you are basically saying, that the fourth quarter which is not historically the best quarter, the third as you say in the fourth quarter we are better than the third by about, it looks like what $15 million right?

The fourth quarter is always our best, it’s our best quarter for volume and we should reduce more gross margin dollars in that quarter.

Yes, but basically your fourth quarter could be up to $20 million if you achieve it what you are saying it’s still early you could be up $19 to $20 million in the fourth quarter form the third and but with higher margins right?

Much of the revenue that wasn’t that high but...

Yes, you said your wholesale; your kind of wholesale was 119 plus catalog of 10.

Yes. So Yes which would make it about $10 million more than the.

Okay 130 right, okay.

Yes.

With higher profitability, when we look at next year forget sales and whatever, and what are the cost this year that were embedded in these numbers that basically we worked away through with including the warehousing and things of that nature okay, separate from reduced interest cost because of the lower borrowings. What kind of dollar amount that we are looking at just as a swing factor assuming sales for the same etcetera?

Well, we got pretty precise dollar amount the - opportunity what has, we don’t have the full year effect of these savings and the distribution center because we closed; you are in the second quarter and important to the third quarter. So we are going to get some benefit on our wholesale, but we will also get benefit on their direct-to-consumer business.

We are talking about four five millions swing on cost or less than that for next year just from that issues.

It’s probably less than 5 million.

Okay, Jeff what’s your inventory if you are running at the right level of inventory what should it be at this point in time I mean, going forward?

As you know we are focused on continually reducing it and doing it probably little slower than we could do it, only because we want to make sure we maintained the slope off of it. I think we can still take out another 15, may be, I am sorry, $20 million from our inventory. So there is plenty of room to go and we are focused on getting there next year. I think next year is going to that we finally achieve the goal that we set a long time ago.

Okay, so in theory between another let’s say, even say $15 million plus whatever, the earnings next year, our debt would be significantly reduced. I mean, if we are saying its $20 million three now in the fourth quarter, and we can add another $15 million plus profitability, we can have that down in the low 20s next year.

We certainly have a goal to get there.

I am not talking about on average, in the cost of the year, because obviously that’s seasonal borrowing talking about by the end of the next year.

Again to grow the business of course you do have higher working capital.

Right, I understand that. Actually in working capital needs for additional growth, right.

Yes, that’s correct.

Okay, so we will really be in great financial shape at that point, you know and hopefully easy to pay off the convertible debt going forward.

We are working on that and we believe that could be the case over, we are definitely working on that.

Great, the first time I am pleased in a long time, you finally get -- just look like you have your axe under control, thank you guys.

Your next question comes from [Peer Oslen] - Jefferies. Peer Oslen – Jefferies: Jeff, going back to your comments in the opener there, wholesale was down about 8% you said in the third quarter, kind of axing out the excess Mikasa inventory, the Linens-N-Things and the discontinued customer.

That’s correct.

And then the fourth quarter you mentioned that you think wholesale could be flat, does that contemplate, you know the Linens factor in the discontinued customer as well or is it probably?

Linens, in the third quarter we shipped a substantial amount of Linens where they are going out of business here frankly, and we didn’t have that in the fourth quarter. So we are not up again, we can send you that Larry.

There was some, quite of a much less than.

Much less.

So flat for the fourth quarter would be a fairly organic number at the end of the day.

Right, we are getting to more apples to apples comparison.

When you filed the waiver for the third quarter net sales bogey if you will, was that an issue of some programs, may be just getting pushed out a little bit, where orders didn’t materialize the same way as may be they’d been expected to or what kind of happened there, just out of curiosity?

No, things are changing and I guess we didn’t anticipate some of the things that we thought especially with Linens-N-Things augmentation which we were up against, which we didn’t have in the Mikasa, there was a substantial liquidation of excess Mikasa inventory, right after we acquired Mikasa. So, we just wanted to get things straight to where they are.

Sure, and there’s definitely a few factors that play there. Do you ever sense it as to just how much your sell in is lagging the POS right now?

Substantially. It’s shocking, but honestly sometimes a shocking number and I know, I can’t get into numbers by retailers, but we do get it from, like one retailer, but we are down about 6% on point of sale and at one retailer, inventories are down over 30%, over the same point last year. I think we reached the bottom of that destocking though, because it really started happening in November of last year and it got more severe in December and January, but it happened already. So we are now, I don’t think retailers are able to lower their inventories, much below where they are now, although I don’t anticipate them going back to the old methods of keeping high inventories, everything off of that will happen.

Now, I would suspect not. That makes sense. It looks like obviously you are making up a fair amount of the ground on the gross margin front, the margins certainly got closer to last year’s number versus the last several quarters where it’s been down more. As the lower freight and the lower china sourcing cost kind of start to flow into the P&L, do you see any changing of your pricing strategy or do, should we expect that a lot of that cost savings, or that lower cost will actually flow to the bottom line.

We’ve passed a lot of the savings on for the retailers in order to help them get to the right price points in many cases, but we’ve done that now. We probably passed it on a little faster than we got the benefit and now we should reap some of the benefits of what happened, so we are certainly improving, and it’s a lot to do with the mix that we are selling and we’ve discontinued business. We had a customer last year, who was a direct selling customer that we were an OEM supplier too and we were, the margins were horrible, we inherited that customer with one of our acquisitions and we finally decided just to give up the volume all together and it was, the mix is what’s changing our margins, it’s just getting better, we are fighting to make sure our cost stayed very much in line obviously, and we are trying to make a lot of money going forward, we are working on it.

The cost structure has certainly has gotten a lot better. Most of my other questions have been answered, so maybe just one housekeeping one, just to finish up, and I guess this would probably be for you Larry. I assume that the shares related to that convertible would have been anti diluted here in the third quarter and that’s why the share base was still around 11/09?

I think actually this was the quarter where we have that were diluted.

They were, okay, when I worked through the math to get to the $0.41 I was getting an 11.09 number, so that’s...

Well, it’s actually I reported, now we said what the diluted was $0.40, there was only a penny diluted, if it was $0.41 on a basic and $0.40 diluted, so it turned out to be a penny diluted for this quarter.

Okay, so the full 2.7 million shares, not all of those go into the denominator on this?

No, but maybe perhaps the numerators were different, because we have both the interest on the notes as well as that EPP-14 adjustment we had to make the non cash.

So there was the interest expense add back in that so.

Then again, and even though we didn’t record federal tax provision in the quarter, and rule says, if you look at what you think you will have on a full year basis, we think it would be attached there, so the interest expenses numerator was tax effected.

Okay, all right.

Anyway it’s only a penny difference between the two.

(Operator Instruction). Your final question comes from David Lebuvitz - Horizon. David Lebuvitz – Horizon: One, looking at this holiday selling season versus last year’s holiday season. Do you have lodging of reserves vis-à-vis, what might occur against retail sales in getting marked down money or push money or what have you, versus last year where obviously everybody was quite flatfooted in that respect?

We do have reserves, but honestly in my opinion with the way the retailers are maintaining such a low inventory, I would expect is going to be much less in mark downs, it’s not going to be like last year, unless the world comes apart. David Lebuvitz – Horizon: No, what I’m saying is last year you had payments that exceeded the reserve quite apparently, as did everybody else in the industry, and is not pointing a finger. What I am asking is based on what you are seeing today, are you adequately reserved or might there be an incremental charge to earnings because we are under reserved?

We believe so, I mean, I don’t know that, we were not under reserved last year, but just to clarify Jeff’s point is that last year retails had inventory, more inventory than they expected, so then they go back to their suppliers and look for open call marked down money, but this year because retail inventories are so low, we think we are perhaps in a better position because there is less inventory and therefore it’s less to mark down. David Lebuvitz – Horizon: Okay.

Our second issue was that is there enough inventory historical or the business.

Yes, the way we see it, the retailers today are very willing to run out, and give up that last sale and like I said, I think of a healthier way to do business, but the inventories are the lowest I have ever seen them. David Lebuvitz – Horizon: Okay. Second question, the field itself is lit with failures right now or companies on the verge, are you looking or are you in the process of talking with any companies right now about perhaps acquiring them before they get pushed into chapter 11?

No, we don’t know, we talk about this, but I can say currently we are not looking at any acquisitions. We are very focused on running our business profitably, that’s all we are focused on. David Lebuvitz – Horizon: And two last questions. The balance sheet going forward, what ratio of debt to equity would you like to have and what cash component would you like to get back to on the balance sheet?

Well, I think more about in terms of leveraged debt to EBITDA. If I had a wish that could be investment grades, so I would like to the leverage ratio go like around below three, but we are going to focus on as we said, and we said a number of quarters, focus on de-leveraging, bring down our debt level, some much shrinking the balance sheet and fully able to grow business just by better management of our inventory levels and raise our operating profitability. So we bring that leverage ratio down. So that’s our goal and in time, let’s see, if there is acquisition opportunities perhaps we think that could be expanded. It’s also a function of what the marketplace will find it an acceptable leverage ratio, two years ago that number would have been higher than it is today. So, what I have to say is, we are going to control, we are going to control and we are working to increase our profitability, bring down our debt and the effect of that is improved leverage. David Lebuvitz – Horizon: And the last question if I may, if we look out two years would you expect your top five or top 10 accounts A to B the same vendors you have been dealing with, and second of all with the percentage of your total business going to those 5 or 10 be the same less or greater?

Our top 5 accounts I would, do you have any healthy condition. So I would expect that they will continue to be our top 5 accounts. We focus on actually the top 40 accounts and then we will narrow it top 30 and I would just say, it’s a percent of business I think it would probably be similar not, it’s going to move between accounts because it always does but it will be similar. David Lebuvitz – Horizon: And in other words, if we look at the traditional 80-20 row you think that’s going to be the case you think you would be moving close to the 90-10?

No, I think the 80-20 is a good way to look at it and I do believe that’s, we haven’t seen a shift away from that we honestly do.

There are no further questions at this time, please proceed with your presentation or any closing remarks.

Okay, thanks for joining us on this morning’s call. I hope we have given you a good overview of Lifetime and how we’ve adapted to today’s business environment, and while we think we are positioned to bring 2009 to a successful close. We focused on providing retailers with new and innovative products and price points that consumers find reasonable, and we are really focused on the consumer. We look forward to talking to you again after the holiday season, thank you all.

Ladies and gentlemen that concludes our conference call for today. We thank you for your participation and ask that you please disconnect your line.