UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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### FORM 10-Q

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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934



|For the quarterly period ended:April 1, 2006
|--------------------------------------------



|Commission file number:     1-11908
|-----------------------------------



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|Lenox Group Inc                                       
|------------------------------------------------------
|(Exact name of registrant as specified in its charter)

|Delaware                                                      |  | 13-3684956                         
|------------------------------------------------------------- |  | -----------------------------------
|(State or other jurisdiction ofincorporation or organization) |  | (I.R.S. EmployerIdentification No.)

One Village Place, 6436 City West Parkway, Eden Prairie, MN 55344

(Address of principal executive offices)

(Zip Code)



|                                                    
|----------------------------------------------------
|(952) 944-5600                                      
|(Registrants telephone number, including area code)

Not Applicable

(Former name, former address, and former fiscal year, if changed since last report)





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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 | o
|--- | - | -- | -



Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act (Check one):



Large accelerated filero
Accelerated filerxNon-accelerated filero



Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).



|Yes | o | No | x
|--- | - | -- | -



As of April 28, 2006, 14,066,345 shares of the registrants common stock, par value $.01 per share, were outstanding.





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PART I  -  FINANCIAL INFORMATION



Item 1.  Financial Statements



LENOX GROUP INC AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(In thousands)



ASSETS

|                                               | APRIL 1,
2006 |  | DECEMBER 31,
2005 |         | APRIL 2,
2005
|---------------------------------------------- | ------------- |  | ----------------- | ------- | -------------
|                                               |               |  |                   |         |              
|                                              
|Current assets:                                |               |  |                   |         |              
|Cash and cash equivalents                      |               |  | $                 | 440     |              
|Short-term investments                         |               |  |                   |        |              
|Accounts receivable, net                       |               |  |                   | 46,625  |              
|Inventories                                    |               |  |                   | 97,532  |              
|Deferred taxes                                 |               |  |                   | 10,031  |              
|Income tax receivable                          |               |  |                   | 1,881   |              
|Other current assets                           |               |  |                   | 9,189   |              
|Current assets of discontinued operations      |               |  |                   |        |              
|                                               |               |  |                   |         |              
|Total current assets                           |               |  |                   | 165,698 |              
|                                              
|Property and equipment, net                    |               |  |                   | 69,410  |              
|Assets held for sale                           |               |  |                   | 17,018  |              
|Goodwill, net                                  |               |  |                   | 53,901  |              
|Trademarks, net                                |               |  |                   | 121,971 |              
|Other intangibles, net                         |               |  |                   | 16,022  |              
|Marketable securities                          |               |  |                   | 1,874   |              
|Other assets                                   |               |  |                   | 12,666  |              
|Noncurrent assets of discontinued operations   |               |  |                   |        |              
|                                               |               |  |                   |         |              
|                                               |               |  | $                 | 458,560 |              
|                                               |               |  |                   |         |              
|                                              
|LIABILITIES AND STOCKHOLDERS EQUITY           |               | 
|                                              
|Current liabilities:                           |               | 
|Current portion of long-term debt              |               |  | $                 | 10,170  |              
|Borrowings on revolving credit facility        |               |  |                   | 26,193  |              
|Accounts payable                               |               |  |                   | 28,616  |              
|Accrued compensation and benefits payable      |               |  |                   | 14,773  |              
|Income tax payable                             |               |  |                   |        |              
|Severance and restructuring reserves           |               |  |                   | 7,999   |              
|Other current liabilities                      |               |  |                   | 3,973   |              
|Current liabilities of discontinued operations |               |  |                   | 1       |              
|                                               |               |  |                   |         |              
|Total current liabilities                      |               |  |                   | 91,725  |              
|                                              
|Deferred compensation obligation               |               |  |                   | 1,898   |              
|Pension obligations                            |               |  |                   | 88,048  |              
|Postretirement obligations                     |               |  |                   | 28,761  |              
|Deferred taxes                                 |               |  |                   | 322     |              
|Long-term debt                                 |               |  |                   | 87,580  |              
|Other noncurrent liabilities                   |               |  |                   | 5,038   |              
|Stockholders equity                           |               |  |                   | 155,188 |              
|                                               |               |  |                   |         |              
|                                               |               |  | $                 | 458,560 |              
|                                               |               |  |                   |         |              





See notes to condensed consolidated financial statements.

2

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LENOX GROUP INC AND SUBSIDIARIES



CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(In thousands, except per share amounts)





|                                                    | 13 WEEKS
ENDED
APRIL 1,
2006 |  | 13 WEEKS
ENDED
APRIL 2,
2005
|--------------------------------------------------- | ---------------------------- |  | ----------------------------
|                                                    |                              |  |                             
|NET SALES                                           |                              |  | $                           
|COST OF SALES                                       |                              |  |                             
|                                                    |                              |  |                             
|Gross profit                                        |                              |  |                             
|                                                   
|OPERATING EXPENSES:                                 |                              | 
|Selling, general and administrative                 |                              |  |                             
|                                                    |                              |  |                             
|                                                   
|OPERATING LOSS FROM CONTINUING OPERATIONS           |                              |  |                             
|                                                   
|OTHER EXPENSE (INCOME):                             |                              | 
|Interest expense                                    |                              |  |                             
|Other, net                                          |                              |  |                             
|                                                    |                              |  |                             
|                                                   
|LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES |                              |  |                             
|                                                   
|INCOME TAX BENEFIT                                  |                              |  |                             
|                                                    |                              |  |                             
|                                                   
|LOSS FROM CONTINUING OPERATIONS                     |                              |  |                             
|                                                    |                              |  |                             
|LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX       |                              |  |                             
|                                                   
|NET LOSS                                            |                              |  | $                           
|                                                   
|NET LOSS PER SHARE  BASIC:                         |                              | 
|LOSS PER SHARE FROM CONTINUING OPERATIONS           |                              |  | $                           
|LOSS PER SHARE FROM DISCONTINUED OPERATIONS         |                              |  |                             
|                                                    |                              |  |                             
|                                                   
|NET LOSS PER SHARE  BASIC                          |                              |  | $                           
|                                                    |                              |  |                             
|                                                   
|NET LOSS PER SHARE  ASSUMING DILUTION:             |                              | 
|LOSS PER SHARE FROM CONTINUING OPERATIONS           |                              |  | $                           
|LOSS PER SHARE FROM DISCONTINUED OPERATIONS         |                              |  |                             
|                                                    |                              |  |                             
|                                                   
|NET LOSS PER SHARE  ASSUMING DILUTION              |                              |  | $                           
|                                                    |                              |  |                             
|                                                   
|WEIGHTED AVERAGE SHARES OUTSTANDING:                |                              | 
|BASIC                                               |                              |  |                             
|ASSUMING DILUTION                                   |                              |  |                             

See notes to condensed consolidated financial statements.

3

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LENOX GROUP INC AND SUBSIDIARIES



CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(In thousands)



|                                                                   | 13 WEEKS
ENDED
APRIL 1,
2006 |  | 13 WEEKS
ENDED
APRIL 2,
2005
|------------------------------------------------------------------ | ---------------------------- |  | ----------------------------
|                                                                   |                              |  |                             
|CASH FLOWS FROM OPERATING ACTIVITIES:                              |                              |  |                             
|Net cash used in operating activities                              |                              |  | $                           
|Net cash used in operating activities from discontinued operations |                              |  |                             
|                                                                   |                              |  |                             
|Net cash used in operating activities                              |                              |  |                             
|                                                                  
|CASH FLOWS FROM INVESTING ACTIVITIES:                              |                              | 
|Purchases of property and equipment                                |                              |  |                             
|Proceeds from sale of assets                                       |                              |  |                             
|Net purchase of available-for-sale securities                      |                              |  |                             
|Net cash used in investing activities from discontinued operations |                              |  |                             
|                                                                   |                              |  |                             
|Net cash used in investing activities                              |                              |  |                             
|                                                                   |                              |  |                             
|CASH FLOWS FROM FINANCING ACTIVITIES:                              |                              | 
|Proceeds from the exercise of common stock options                 |                              |  |                             
|Excess tax benefits from stock-based compensation                  |                              |  |                             
|Borrowings on revolving credit facility                            |                              |  |                             
|Payments on long-term debt                                         |                              |  |                             
|                                                                   |                              |  |                             
|Net cash provided by financing activities                          |                              |  |                             
|                                                                   |                              |  |                             
|                                                                  
|NET DECREASE IN CASH AND CASH EQUIVALENTS                          |                              |  |                             
|                                                                  
|CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                   |                              |  |                             
|                                                                   |                              |  |                             
|                                                                  
|CASH AND CASH EQUIVALENTS AT END OF PERIOD                         |                              |  | $                           
|                                                                   |                              |  |                             
|                                                                  
|SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION -                |                              | 
|Depreciation expense                                               |                              |  | $                           
|Amortization expense                                               |                              |  |                             
|Cash paid (received) for:                                          |                              | 
|Interest                                                           |                              |  |                             
|Income taxes                                                       |                              |  |                             

See notes to condensed consolidated financial statements.

4

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LENOX GROUP INC AND SUBSIDIARIES



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)

(In thousands, except per share amounts)



|1. | Basis of Presentation
|-- | ---------------------



The accompanying Condensed Consolidated Balance Sheet as of December 31, 2005 was derived from the audited consolidated balances as of that date. The remaining accompanying condensed consolidated financial statements are unaudited and, in the opinion of management, include all adjustments necessary for a fair presentation.



The results of operations for the quarter ended April 1, 2006 are not necessarily indicative of the results for the full fiscal year. It is suggested that these financial statements be read in conjunction with the Consolidated Financial Statements and notes thereto included in the 2005 Annual Report on Form 10-K as filed by Lenox Group Inc (the Company) with the Securities and Exchange Commission (SEC). Comprehensive income for the periods ended April 1, 2006 and April 2, 2005 was equivalent to reported net income.



Reclassifications Certain prior year amounts have been reclassified to conform to the current year presentation. These reclassifications had no impact on net loss or retained earnings and are primarily related to the reporting of the discontinued operations of the Companys Time to Celebrate business. See Note 4.



|2. | Stock-Based Compensation
|-- | ------------------------



Effective January 1, 2006, the Company adopted Statement of Financial Accounting Standards No. (SFAS) 123R (revised 2004),Share-Based Payment, which revised SFAS No. 123,Accounting for Stock-Based Compensation, and supersedes APB Opinion No. 25,Accounting for Stock Issued to Employees(APB 25). This standard requires compensation costs related to share-based payment transactions to be recognized in the financial statements. The Company adopted the standard using the modified prospective transition method, which requires the application of the accounting standard to all share-based awards issued on or after the date of adoption and any outstanding share-based awards that were issued but not vested as of the date of adoption. Accordingly, the Company did not restate
the financial information for 2005 as a result of the adoption.



Total stock-based compensation expense from continuing operations in the first quarter of 2006 and the first quarter of 2005 was $371 and $55, respectively. The adoption of SFAS 123R in 2006 resulted in the recognition of incremental pre-tax stock-based compensation expense of $58, an increase in net loss of $36 ($0.00 impact on basic and diluted earnings per share), a reduction in cash flows from operating activities of $19 and an increase in cash flows from financing activities of $19. Additionally, the Company reclassified unearned compensation on non-vested restricted stock of $3,469 to additional paid in capital. The cumulative effect adjustment for forfeitures related to non-vested restricted stock and options was not material.

5

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Prior to 2006, the Company applied APB 25 and the disclosure-only provisions of SFAS No. 123. The following table illustrates the effect on net loss and net loss per share if the Company had applied the fair value recognition provisions of SFAS No. 123 to stock-based employee compensations during the first quarter of 2005. The estimated fair value of each option was calculated using the Black-Scholes option-pricing model.



|                                                     | 13 WEEKS
ENDED
APRIL 2,
2005
|---------------------------------------------------- | ----------------------------
|                                                     |                             
|Net loss:                                            |                             
|As reported                                          |                             
|Stock-based compensation, net of related tax effects |                             
|                                                     |                             
|Pro forma                                            |                             
|                                                     |                             
|                                                    
|Net loss per common share  basic:                   |                             
|As reported                                          |                             
|Pro forma                                            |                             
|                                                    
|Net loss per common share  assuming dilution:       |                             
|As reported                                          |                             
|Pro forma                                            |                             

The Company estimates the fair
values using the Black-Scholes option-pricing model using the following assumptions:

|                                | 2006 |  | 2005
|------------------------------- | ---- |  | ----
|                                |      |  |     
|Risk-free interest rate         |      |  |     
|Expected dividend yield         |      |  |     
|Expected stock price volatility |      |  |     
|Expected life (in years)        |      |  |     

Stock Incentive Plans



As of April 1, 2006, the Company had incentive plans allowing the Company to grant options, stock appreciation rights, shares or performance units to employees, directors, officers, consultants and advisors. As of April 1, 2006, 230,388 shares were available for granting under the stock incentive plans.



Stock Options Under the stock incentive plans, all employee options granted have an exercise price equal to the market value of the common stock at the date of grant, generally have a term of ten years, and generally are exercisable in equal installments beginning on each of the first, second and third anniversaries of the date of the grant.

6

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A summary of the status of the Companys stock option activity as of April 1, 2006 and changes during the quarter then ended is presented below:



|                                      | 2006  
|------------------------------------- | ------
|                                      |       
|                                      | Shares
|                                      |       
|Outstanding at beginning of quarter   |       
|Granted                               |       
|Exercised                             |       
|Forfeited                             |       
|Expired or Canceled                   |       
|                                      |       
|Outstanding at end of quarter         |       
|                                      |       
|Options exercisable at end of quarter |       

The weighted-average grant date fair value of options granted in the first quarters of 2006 and 2005 was estimated to be $6.73 and $6.47 per share, respectively. The total intrinsic value of options that were exercised during the first quarters of 2006 and 2005 was $50 and $670, respectively. As of April 1, 2006, the total unrecognized compensation cost related to stock options was $330 and is expected to be recognized over a weighted average period of 1.0 years.



Cash received from option exercises for the first quarters of 2006 and 2005 was $97 and $1,496, respectively. The actual tax benefit realized for the tax deductions from option exercises totaled $19 and $241 for the quarters ended April 1, 2006 and April 2, 2005, respectively.



Performance- and Time- Vesting Restricted Stock The Company granted 34,000 restricted shares of common stock to executive officers, directors and employees during the first quarter of 2006. Of these shares, 9,000 shares were performance-vesting and 25,000 shares were time-vesting. Performance-vesting shares may be earned and become vested in a specific percentage depending upon the extent to which the target performance is met as of the last day of the performance cycle. Time-vesting shares generally become vested after the duration of a specified period of time.



A summary of the status of the Companys non-vested restricted stock activity as of April 1, 2006 and changes during the quarter then ended is presented below:



|                                    | 2006  
|----------------------------------- | ------
|                                    |       
|                                    | Shares
|                                    |       
|Outstanding at beginning of quarter |       
|Granted                             |       
|Forfeited                           |       
|                                    |       
|Outstanding at end of quarter       |       
|                                    |       

7

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As of April 1, 2006, the total unrecognized compensation cost related to non-vested restricted stock granted was $3.5 million. Of this amount, $2.1 million is expected to be recognized over a weighted average period of 1.1 years, and the remaining $1.4 million relates to the performance-vesting restricted stock for which target performance is not expected to be met and therefore the cost not expected to be recognized. The total fair value of restricted stock vested during the first quarters of 2006 and 2005 were $0 and $0, respectively (as no restricted shares vested during these periods).



|3. | Loss per Common Share
|-- | ---------------------



Net loss per common share is calculated by dividing net loss by the weighted average number of shares outstanding during the period. Net loss per common share assuming dilution reflects per share amounts that would have resulted had the Companys dilutive outstanding stock options been converted to common stock. Restricted stock is considered outstanding on the date the stock becomes vested when computing net loss per common share  basic. Restricted stock, to the extent it is probable that the stock will become vested, is considered outstanding on the grant date when computing net loss per common share  assuming dilution. All options and unvested restricted stock were considered anti  dilutive and excluded from the computation of common equivalent shares at April 1, 2006 and April 2, 2005 because the Company reported a net loss.



|4. | Discontinued Operations
|-- | -----------------------



In October 2005, the Company committed to a plan to cease operations of its Time to Celebrate business. Time to Celebrate ceased operations in December 2005, and in accordance with SFAS No. 144,Accounting for the Impairment or Disposal of Long-Lived Assets, the Company has reclassified Time to Celebrates results into discontinued operations for all periods presented. Prior to being classified as discontinued operations, Time to Celebrates operating results had been presented in the retail reportable segment. Time to Celebrates sales for the first quarter of 2006 was $0 compared to $421 during the first quarter of 2005.



|5. | Acquisition
|-- | -----------



Effective September 1, 2005, the Company completed
the acquisition of all of the capital stock of Lenox, Incorporated (Lenox) from Brown-Forman Corporation for $204.0 million, which
included transaction costs of $7.6 million. The acquisition of Lenox, which sells products under the Lenox, Dansk,
and Gorham brand names, added strong, market-leading brands and complementary product lines and distribution channels to
the Companys portfolio.



The initial allocation of purchase price for the
Lenox acquisition was based on preliminary estimates and will be revised as asset valuations are finalized and further information
is obtained on the fair value of liabilities.

8

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The following condensed consolidated financial results of operations are presented comparing actual first quarter 2006 results to pro forma first quarter 2005 results (with the pro forma information assuming that the acquisition described above had been completed at the beginning of 2005):

|                                          |  | Three months ended 
|----------------------------------------- |  | -------------------
|                                          |  | ActualApril 1, 2006
|                                          |  |                    
|                                         
|Net sales                                 |  |                    
|Loss from continuing operations           |  |                    
|Net loss                                  |  |                    
|                                         
|Loss per share from continuing operations |  |                    
|Basic                                     |  |                    
|Assuming dilution                         |  |                    
|                                         
|Weighted average shares outstanding       |  |                    
|Basic                                     |  |                    
|Assuming dilution                         |  |                    

The actual first quarter 2006 results above include a $3.1 million net positive purchase accounting adjustment as a result of the requirement to value Lenox inventory at its estimated selling price less cost of disposal at the opening balance sheet date.



The pro forma condensed consolidated financial results have been prepared for comparative purposes only and include certain adjustments, such as increased interest expense on acquisition debt. They do not reflect the effect of synergies that would have been expected to result from the integration of these acquisitions and do not include any impact from the amortization of the purchase accounting adjustment mentioned above as this purchase accounting adjustment is not expected to have a continuing impact. The pro forma information does not purport to be indicative of the results of operations that actually would have resulted had the combination occurred at the beginning of each period presented, or of future results of the consolidated entities.

9

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|6. | Severance and Restructuring Costs
|-- | ---------------------------------



In connection with the acquisition of Lenox, the Company assumed severance reserves related to plant closings, retail store closings and general restructurings that took place prior to the Companys acquisition of Lenox. At September 1, 2005, the acquisition date, the Company accrued additional amounts related to an additional plant closing, retail store closings and general restructurings that were planned as part of the acquisition.



The severance and restructuring reserves recorded at the acquisition date were based on preliminary estimates and may be revised as the plans are finalized. The Company expects to substantially complete the plant closing, retail store closings, and general restructuring by the end of the second quarter of fiscal 2006.



The table below shows a reconciliation of the severance and restructuring reserve activity as of April 1, 2006:

|                           |  | PlantClosings |   | Retail StoreClosings |   | GeneralRestructuring |       | Total    
|-------------------------- |  | ------------- | - | -------------------- | - | -------------------- | ----- | ---------
|                           |  | Severance     |   | Other                |   | Severance            |       | Severance
|                           |  |               |   |                      |   |                      |       |          
|Balance, December 31, 2005 |  |               | $ | 3,694                |   | $                    | 2,609 |          
|Incurred                   |  |               |   | (2,308               | ) |                      | (73   | )        
|                           |  |               |   |                      |   |                      |       |          
|                          
|Balance, April 1, 2006     |  |               | $ | 1,386                |   | $                    | 2,536 |          
|                           |  |               |   |                      |   |                      |       |          

|7. | Concentrations
|-- | --------------



At April 1, 2006, one customer accounted for approximately 17% of the Companys total accounts receivable. For the three months ended April 1, 2006, this same customer accounted for approximately 12% of the Companys total net sales.



|8. | Inventories
|-- | -----------



Inventories from continuing operations were comprised of:



|                  |  | April 1,2006 |   | December 31,2005 |  | April 2,2005
|----------------- |  | ------------ | - | ---------------- |  | ------------
|                  |  |              |   |                  |  |             
|Raw materials     |  |              | $ | 3,636            |  | $           
|Work-in-process   |  |              |   | 6,531            |  |             
|Finished goods    |  |              |   | 87,365           |  |             
|                  |  |              |   |                  |  |             
|Total inventories |  |              | $ | 97,532           |  | $           
|                  |  |              |   |                  |  |             

10

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|9. | Goodwill and Other Intangible Assets
|-- | ------------------------------------



Changes in the carrying amount of goodwill as of
April 1, 2006 by segment were as follows:



|                               
|-------------------------------
|Balance at December 31, 2005   
|Adjustment to Acquired Goodwill
|                               
|Balance at April 1, 2006       

* The Company has not yet allocated the goodwill acquired in connection with the purchase of Lenox to a reporting segment as it continues to evaluate the purchase price allocation.



Intangible assets, other than goodwill, are comprised of the following:



|                                 
|---------------------------------
|Grosscarryingamount              
|Finite-life intangible assets    
|Customer relationships           
|Favorable lease interests        
|Non-compete agreements           
|                                 
|Indefinite-life intangible assets
|Trademarks                       
|                                 
|                                 
|Total Intangibles                
|                                 

Intangible asset amortization expense for the three
months ended April 1, 2006 and three months ended April 2, 2005 was $1,016 and $35, respectively. The increase in amortization
expense for the quarter ended April 1, 2006 was the result of the Lenox acquisition. Expected future amortization expense for
finite-lived intangible assets is as follows:



|2006 (full year) |  |  | $ | 2,905  | 
|---------------- |  |  | - | ------ | 
|2007             |  |  |   | 2,149  | 
|2008             |  |  |   | 1,938  | 
|2009             |  |  |   | 1,846  | 
|2010             |  |  |   | 1,560  | 
|Thereafter       |  |  |   | 6,639  | 
|                 |  | 
|                 |  |  | $ | 17,037 | 
|                 |  | 

The above amortization expense forecast is an estimate. Actual amounts of amortization expense may differ from estimated amounts due to additional intangible asset acquisitions, impairment of intangible assets, accelerated amortization of intangible assets, purchase price reallocations and other events.

11

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|10. | Benefit Plans
|--- | -------------



Components of net periodic benefit cost for the three months ended April 1, 2006 were as follows:



|                            
|----------------------------
|Service cost                
|Interest cost               
|Expected return on assets   
|Amortization of gain        
|                            
|Net periodic pension expense
|                            

|11. | Contingencies
|--- | -------------



In August 2004, plaintiffs purporting to represent a class of consumers who purchased tableware sold in the United States filed suit against Federated Department Stores, the May Department Stores Company, Waterford Wedgwood U.S.A., and Lenox, Incorporated in United States District Court for the Northern District of California. In November 2004, plaintiffs filed a consolidated amended complaint alleging that for the period beginning at least as early as May 1, 2001 through the filing of the amended complaint on November 12, 2004, defendants violated Section 1 of the Sherman Act by conspiring to fix prices and to boycott sales to Bed, Bath & Beyond. Plaintiffs seek to recover an undisclosed amount of damages, trebled in accordance with antitrust laws, as well as costs, attorneys fees and injunctive relief. This matter is currently in the pre-trial discovery phase. The cut-off
dates for fact discovery and expert discovery are March 31, 2006 and August 11, 2006, respectively. The court has set August 29, 2006 as the date for filling defendants motions for summary judgment and plaintiffs motion for class certification. The trial date is scheduled for January 15, 2007.



On May 26, 2004, Ashley Seaberg filed a product liability suit against Department 56, Inc. and Time to Celebrate in United States District Court for the District of Oregon, claiming that a strand of lights from defendant Time to Celebrate started a house fire. On May 16, 2005, the court granted plaintiffs motion to amend the complaint to add a claim for $10 million in punitive damages. On January 9, 2006, the court denied the Companys motion for summary judgment on plaintiffs punitive damages claim and granted plaintiffs motion for summary judgment on its negligenceper seclaim. Trial is set for early June 2006.



The Company denies the allegations and claims of the cases above and intends to defend the cases vigorously. It is not possible at this time to estimate possible losses or a range of losses, if any, in these lawsuits. However, an adverse result in either of these lawsuits could have a material adverse effect on the Companys financial position, results of operations and/or cash flows.



In addition to the above lawsuits, the Company is involved in various legal proceedings, claims, and governmental audits in the ordinary course of its business. The Company believes it has meritorious defenses to all proceedings, claims, and audits. Management believes the impact, if any, of these legal proceedings would not be material to the results of operations, financial position or cash flows of the Company.

12

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|12. | Segments of the Company and Related Information
|--- | -----------------------------------------------



The Company has three reportable segments  Wholesale, Retail, and Direct. Although the product produced and sold for each segment is similar, the type of customer for the product and the method used to distribute the product are different. The segmentation of these operations also reflects how the Companys chief executive officer currently reviews the results of these operations. Operating income (loss) from continuing operations for each operating segment includes specifically identifiable operating costs such as cost of sales and selling expenses. General and administrative expenses are generally not allocated to specific operating segments and are therefore reflected in the corporate category. Other components of the statement of operations, which are classified below operating income (loss) from continuing operations, are also not allocated by segment. In addition, the Company does not
account for or report assets, capital expenditures or certain depreciation and amortization by segment. All transactions between operating segments have been eliminated and are not included in the following table.



|(In thousands)                                     | 13 WEEKSENDEDAPRIL 1,2006 |  | % ofNet Sales |        | 13 WEEKSENDEDAPRIL 2,2005 |  | % ofNet Sales
|-------------------------------------------------- | ------------------------- |  | ------------- | ------ | ------------------------- |  | -------------
|                                                  
|WHOLESALE:                                         |                           |  |               |        |                           |  |              
|Net sales                                          |                           |  | $             | 51,821 |                           |  | 100          
|Gross profit                                       |                           |  |               | 22,270 |                           |  | 43           
|Selling expenses                                   |                           |  |               | 9,479  |                           |  | 18           
|Operating income from continuing operations        |                           |  |               | 12,791 |                           |  | 25           
|                                                  
|RETAIL:                                            |                           | 
|Net sales                                          |                           |  | $             | 16,197 |                           |  | 100          
|Gross profit                                       |                           |  |               | 11,602 |                           |  | 72           
|Selling expenses                                   |                           |  |               | 9,362  |                           |  | 58           
|Operating income (loss) from continuing operations |                           |  |               | 2,240  |                           |  | 14           
|                                                  
|DIRECT:                                            |                           | 
|Net sales                                          |                           |  | $             | 22,369 |                           |  | 100          
|Gross profit                                       |                           |  |               | 14,591 |                           |  | 65           
|Selling expenses                                   |                           |  |               | 10,133 |                           |  | 45           
|Operating income from continuing operations        |                           |  |               | 4,458  |                           |  | 20           
|                                                  
|CORPORATE:                                         |                           | 
|Unallocated general and administrative expenses    |                           |  | $             | 27,828 |                           |  |              
|                                                  
|CONSOLIDATED:                                      |                           | 
|Net sales                                          |                           |  | $             | 90,387 |                           |  | 100          
|Operating loss from continuing operations          |                           |  |               | (8,339 | )                         |  | (9           

13

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|13. | Subsequent Events
|--- | -----------------



On April 27, 2006, the Company entered into amendments to its revolving credit facility and term loan facility. The amendments were entered into in connection with the Companys intention to sell its manufacturing facility located in Pomona, New Jersey and its distribution/office facility located in Langhorne, Pennsylvania. Pursuant to the amendments, the lenders granted the Company limited consent to sell the facilities, provided that 100% of the net cash proceeds of such sales are used to repay a portion of the indebtedness with respect to the term loan facility. The amendments also adjusted the maximum leverage ratios and interest coverage ratios set forth in the credit facility agreements and required the payment of an amendment fee of $397. In addition, the amendment to the term loan facility increased the applicable margin by 0.25% to 2.75% for Alternate Base Rate loans and to 3.75% for Adjusted
LIBOR Rate loans.

14

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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations



RESULTS OF OPERATIONS



This Item should be read in conjunction with the
segment financial table presented in Note 12 to the Condensed Consolidated Financial Statements. Other components of the Condensed
Consolidated Statement of Operations which are classified below income from operations (i.e. interest expense, provision for
income taxes, etc.) are not allocated by segment and are discussed separately.



Comparison of Results of Operations for the Quarter Ended April 1, 2006 to the Quarter Ended April 2, 2005.



Wholesale



Net sales increased $33.5 million, or 184%, to
$51.8 million in the first quarter of 2006 from $18.3 million in the first quarter of 2005. The increase in revenue was
principally due to the acquisition of Lenox, Inc. in September 2005 (the Acquisition), offset by a decrease in Department 56
branded sales of $5.0 million. The decrease in Department 56 branded sales was principally due to the timing of receipt of product
from manufacturers overseas as well as the continued softness experienced in the Gift and Specialty channel.



Gross profit as a percentage of net sales was 43%
and 44% in the first quarter of 2006 and 2005, respectively. The decrease in gross profit as a percentage of net sales was
principally due to the Acquisition.



Selling expenses were $9.5 million or 18% of sales
in the first quarter of 2006 compared to $3.4 million or 19% of sales in the first quarter of 2005. The increase in selling
expenses was principally due to the Acquisition.



Operating income from continuing operations
increased to $12.8 million in the first quarter of 2006 from $4.6 million in the first quarter of 2005. The increase in operating
income was principally due to the Acquisition as described above.



Retail



Net sales increased $14.9 million to $16.2 million
in the first quarter of 2006 from $1.3 million in the first quarter of 2005, reflecting the impact of the Acquisition. Same-store
sales (including stores added as a result of the Acquisition which are compared against pre-acquisition results) increased by 0.4%
across all of the Companys retail stores, led by stores operated under theDepartment
56trade name that had a 12% increase in same store sales.

15

---

Gross profit as a percentage of net sales was 72% and 67% in the first quarter of 2006 and 2005, respectively, reflecting the impact of the Acquisition. In the first quarter of 2006, the Company closed 31 stores operated under theLenoxtrade name and liquidated excess product acquired as part of the Acquisition. The impact of this activity normally would have resulted in lower gross margins for the Lenox retail business; however, this was offset by the requirement to value Lenox inventory at its estimated selling price less cost of disposal under the purchase method of accounting on the opening balance sheet date. The impact of this purchase accounting adjustment was approximately $4.3 million, which increased gross profit as a percentage of sales by 27 percentage points for the first quarter of 2006. Gross profit as a percentage of net sales was negatively
impacted by the store closings and liquidation of excess product indicated above, but primarily reflects the fact that outlet stores operated under theLenoxtrade name typically carry lower gross profit percentages than the stores operated under theDepartment 56trade name.



Selling expenses were $9.4 million or 58% of sales
in the first quarter of 2006 compared to $1.7 million or 127% of sales in the first quarter of 2005. The increase in selling
expenses was primarily due to the Acquisition.



Operating income from continuing operations
increased from a loss of $0.8 million in the first quarter of 2005 to income of $2.2 million in the first quarter of 2006. The
increase in operating income was principally due to the Acquisition as described above.



Direct



The Direct business was acquired as part of the
Acquisition. Net sales from the Direct business were $22.4 million for the first quarter of 2006. The gross profit percentage of
65% was negatively impacted by a purchase accounting fair market value adjustment related to the write up of inventory to its
estimated selling price less cost of disposal under the purchase method of accounting on the opening balance sheet date. The
impact of this purchase accounting adjustment was $1.2 million, which decreased gross profit as a percentage of sales by six
percentage points for the first quarter of 2006. Selling expenses were $10.1 million, or 45% of sales.



Corporate



General and administrative expenses were $27.8
million in the first quarter of 2006 compared to $7.4 million in 2005, reflecting the impact of the Acquisition.



Provision for Income Taxes



The effective income tax rate was 38% in the first
quarter of 2006 compared to 36% in the first quarter of 2005. The increase in the effective income tax rate reflected the impact
of the Acquisition as Lenox, Inc. (the acquired entity) has an effective state tax rate that is higher than
Department 56, Inc. (the legacy company).

16



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SEASONALITY



The Company is highly seasonal. It has historically
recorded its highest Wholesale segment sales during the third and fourth quarters of each year as wholesale customers stock
merchandise in anticipation of the holiday season. In addition, the Company records its highest Retail and Direct segment sales in
the fourth quarter during the peak holiday shopping season. However, the Company can experience fluctuations in quarterly sales
and related net income compared with the prior year due to the timing of receipt of product from suppliers and subsequent shipment
of product from the Company to customers, as well as the timing of orders placed by customers. The Company is not managed to
maximize quarter-to-quarter results, but rather to achieve annual objectives designed to achieve long-term growth consistent with
the Companys business strategy.



LIQUIDITY AND CAPITAL RESOURCES



The Companys primary source of cash is the
funds generated from operations and its credit facility which is available for working capital and investment needs. Based on
current levels of operations, the Company believes its funds generated from operations and its revolving credit facility will be
sufficient to finance any working capital needs, capital expenditures or contractual obligations.



Consistent with customary practice in the giftware
industry, the Company offers extended payment terms to some of its Wholesale customers. This practice has typically created
significant working capital requirements in the second and third quarters that the Company has generally financed with its cash
balances and/or seasonal borrowings under its revolving credit facility. The Companys collection of Wholesale customer
accounts receivable with extended payment terms and cash receipts from the Companys Retail and Direct operations typically
peak in the fourth quarter and first quarter of the subsequent year. These cash receipts are then typically used to pay down
existing current debt under the Companys credit facilities (or held as cash and cash equivalents and short-term investments
to the extent that current debt is repaid).



Cash Flows from Operations



Net cash used in operating activities increased
$12.1 million from $1.1 million used during the first three months of 2005 to $13.2 million used during the first three months of
2006. The increase in cash used in operating activities was principally due to the seasonal working capital requirements of the
acquired Lenox business and $4.2 million in payments of severance and restructuring costs accrued as part of the Acquisition. See
Note 6 to the Condensed Consolidated Financial Statements.



Cash Flows from Investing Activities



Net cash used in investing activities decreased
$8.0 million during the first three months of 2006 compared to the first three months of 2005. This decrease was principally due
to an $8.9 million decrease in purchases of available-for-sale securities in the first quarter of 2006 compared to the first
quarter of 2005, offset by a $1.0 million increase in purchases of property and equipment primarily related to the acquired
business.

17

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Cash Flows from Financing Activities



The Company made a contractual scheduled payment of
$2.5 million under its term credit facility during the first quarter of 2006 and borrowed $15.7 million under its revolving credit
facility in the first quarter of 2006 to fund its operating and investing activities. The Companys borrowing capacity under
the revolving credit facility as of April 1, 2006, was $72.4 million; the Company anticipates that this borrowing capacity will
fluctuate throughout the year based upon accounts receivable and inventory levels.



The credit facilities (as amended) also require
maintenance of minimum levels of interest coverage and maximum levels of leverage, in each case at the end of each fiscal quarter.
The minimum interest coverage ratio (as defined within the credit facility agreements) requires the Company to maintain a minimum
ratio of earnings before interest, income taxes, depreciation and amortization (EBITDA) to interest expense over a 12-month period
ending on each fiscal quarter. The minimum ratio to be maintained at each quarter-end over the term of the facilities is defined
within the credit facility agreements, and ranges from 2.35:1.0 to 3.75:1.0. The maximum leverage ratio (as defined within the
credit facility agreements) requires the Company to maintain a maximum ratio of debt (as measured at the end of each fiscal
quarter) to EBITDA over a 12-month period ending on each fiscal quarter. The maximum leverage ratio to be maintained at each
quarter-end over the term of the facilities is defined within the credit facility agreements, and ranges from 2.0:1.0 to 5.75:1.0.
As of April 1, 2006, the Company was in compliance with all material conditions and covenants under the credit
facilities.



The Company utilized its cash on hand during the
first quarter of 2005 to fund its operating and investing activities during that period.



OFF-BALANCE SHEET ARRANGEMENTS



The Company does not have off-balance sheet
arrangements.

18

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CONTRACTUAL OBLIGATIONS



As of April 1, 2006, the Company is obligated to
make cash payments in connection with its debt obligations, operating leases, purchase obligations, and royalty guarantees in the
amounts listed below. The Company has no off-balance sheet debt or other unrecorded obligations other than the items noted in the
following table:



|                             | Payments Due (in thousands)
|---------------------------- | ---------------------------
|                            
|
|                            
|Revolving Credit Facility1,2 |                            
|Long-term Debt2              |                            
|Operating Leases             |                            
|Purchase Commitments3        |                            
|Royalty Guarantees4          |                            
|                             |                            
|Total                        |                            
|                             |                            

|1 | The Companys borrowings under the revolving
credit facility are classified as current liabilities on the Consolidated Balance Sheets in accordance with Emerging Issues Task
Force Issue No. 95-22, Balance Sheet Classification of Borrowings Outstanding under Revolving Credit Agreements That Include
both a Subjective Acceleration Clause and a Lock-Box Arrangement.                   
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2 | In addition to the principal payments on debt
included in the summary of significant contractual obligations, the Company will incur interest expense on outstanding variable
rate debt. All amounts outstanding under the revolving and term loan credit facilities are variable interest rate debt with
weighted average interest rates as of April 1, 2006 of 7.31% and 8.33%, respectively.
|3 | The Company is committed to pay suppliers of product
under the terms of open purchase orders issued in the normal course of business.                                                                                                                                                                                                                                                          
|4 | The Company is committed to pay licensors under the
terms of license agreements entered into in the normal course of business.                                                                                                                                                                                                                                                                 



CRITICAL ACCOUNTING POLICIES



Our Condensed Consolidated Financial Statements are
prepared in accordance with generally accepted accounting principles of the United States. In connection with the preparation of
the financial statements, the Company is required to make assumptions, make estimates and apply judgment that affect the reported
amounts of assets, liabilities, revenue, expenses and related disclosures. The Company bases its assumptions, estimates and
judgments on historical experience, current trends and other factors that management believes to be relevant at the time the
Consolidated Financial Statements are prepared. On a regular basis, management reviews the accounting policies, assumptions,
estimates and judgments to ensure that the Companys financial statements are presented fairly and in accordance with
generally accepted accounting principles. However, because future events and their effects cannot be determined with certainty,
actual results could differ from the Companys assumptions and estimates, and such differences could be material.



Management believes the following critical
accounting policies require the most difficult, subjective or complex judgments about matters that are inherently uncertain and
are therefore particularly important to an understanding of the Companys results of operations and financial
position:

19

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Sales Returns and Credits An allowance is established for credits related to possible returned or damaged product, markdowns and pricing and
shipping discrepancies. The amount of the allowance is based on historical ratios of credits to sales, the historical average
length of time between the sale and the credit, and other factors. Changes in customers behavior versus historical
experience, changes in product damage or defect rates, or changes in the Companys return policies are among the factors that
would result in materially different amounts for this item.



Inventory Valuation Inventory is valued at the lower of cost or net realizable value. The amount is determined by analyzing historical and
projected sales information, plans for discontinued products and other factors. The Company procures product based on forecasted
sales volume. If actual sales were significantly lower than forecasted sales due to unexpected economic or competitive conditions,
it could result in materially higher surplus and discontinued inventories.



Allowance for Doubtful Accounts The Company records an allowance for estimated uncollectible accounts receivable based on an evaluation of its
accounts receivable balance. This evaluation includes a number of factors including the age of the receivable, the financial
condition of the customer, the current business environment, and the historical collection experience for customers and consumers
of similar background and nature. Additionally, since many of the Companys wholesale sales have dating terms which come due
in November and December, the Company does not have visibility into overdue balances for most of its wholesale customers until the
fourth quarter of its fiscal year. Due to the seasonality of the Companys business, the extended dating terms provided to
wholesale customers and the relative size of accounts receivable balances at yearend, it is not uncommon for the Company to
experience fluctuations in the provision for bad debt expense from quarter to quarter as the Company refines its estimate.
Unexpected changes in the aforementioned factors would result in materially different amounts for this item. In addition, results
could be materially different if economic conditions worsened for the Companys customers.



Valuation of Long-Lived Assets Long-lived assets on the Companys consolidated balance sheet consist primarily of property and equipment. The
Company periodically reviews the carrying value of these assets based, in part, upon projections of anticipated undiscounted cash
flows. Management undertakes this review when facts and circumstances suggest that cash flows emanating from those assets may be
diminished. Any impairment charge recorded reduces earnings. While the Company believes future estimates are reasonable, different
assumptions regarding items such as future cash flows and the volatility inherent in markets within which the Company operates
could affect evaluations and result in impairment charges against the carrying value of those assets.



Valuation of Goodwill, Trademarks and Other
Intangible Assets The Company evaluates goodwill, trademarks and other intangible assets on a
periodic basis. This evaluation relies on assumptions regarding estimated future cash flows and other factors to determine the
fair value of the respective assets. If these estimates or related assumptions change, the Company may be required to recognize
impairment charges.

20

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Pension and Postretirement Benefits The Company sponsors various defined benefit pension plans as well as postretirement plans providing retiree health care and retiree life insurance benefits. Benefits are based on such factors as years of service and compensation level during employment. The benefits expected to be paid are expensed over the employees expected service. To determine the expected benefits to be paid, the Company has to make assumptions regarding interest rates, return on plan assets, rate of salary increases and expected health care trend rates. Actual experience different from these assumptions could result in materially different benefit payments.



Tax Contingencies The Company is periodically contacted or audited by federal and state tax authorities. These contacts or audits include questions regarding the timing and amount of deductions and the allocation of income among various tax jurisdictions. In evaluating the exposure associated with various filing positions, the Company records a reserve for estimated probable exposures. The estimate of this reserve contains uncertainty because management must use judgment to estimate the exposure associated with its various filing positions. To the extent the Company does not have to pay taxes for which reserves have been established or is required to pay amounts in excess of its reserves, the Companys tax rate in a given financial period could be materially impacted.



Stock-Based Compensation In accordance with SFAS 123R the estimated grant date fair value of each stock-based award is recognized in income on an accelerated basis (for existing options) and a straight-line basis (for new grants) over the requisite service period. The estimated fair value of each option is calculated using the Black-Scholes option-pricing model. The Company makes certain assumptions using the Black-Scholes option-pricing model which includes the risk-free interest rate, expected dividend yield, expected stock price volatility, expected life and expected forfeitures. Non-vested restricted stock is recorded as compensation cost over the requisite service periods based on the market value on the date of grant. Prior to January 1, 2006, the Company applied the recognition and measurement principles of APB 25 to stock options and other stock-based incentive plans as
permitted pursuant to SFAS 123. In accordance with APB 25, cost for stock-based compensation was recognized in income based on the excess, if any, of the quoted market price of the stock at the grant date of the award or other measurement date over the amount an employee must pay to acquire the stock. The exercise price for stock options granted to employees equaled the fair market value of the Companys common stock at the date of grant, thereby resulting in no recognition of compensation expense. Non-vested restricted stock was recorded as compensation cost over the requisite service periods based on the market value on the date of grant. Unearned compensation cost on non-vested restricted stock was shown as a reduction to shareholders equity.



Notes concerning forward-looking statements:

Any conclusions or expectations expressed in, or drawn from, the statements in this filing concerning matters that are not historical corporate financial results are forward-looking statements that involve risks and uncertainties. These statements are based on managements estimates, assumptions and projections as of today and are not guarantees of future performance. Such risks and uncertainties that could affect performance include, but are not limited to, the ability of the Company to: (1) integrate Lenox into its business; (2) achieve revenue and cost synergies; and (3) generate cash flow to pay off debt. Actual results may vary materially from forward-looking statements and the assumptions on which they are based. The Company undertakes no obligation to update or publish in the future any forward-looking statements. Please read the bases, assumptions and factors set out in Item 1A
and Item 7 in the Companys 2005 Annual Report on Form 10-K all of which is incorporated herein by reference and applicable to the forward-looking statements set forth herein.

21

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Item 3.  Quantitative and Qualitative Disclosures about Market Risk



There has been no significant change in the Companys exposure to market risk since the end of fiscal 2005. The Companys market risks relate primarily to changes in interest rates and currency exchange rates. See Item 7A in the Companys 2005 Annual Report on Form 10-K for a discussion of these market risks.



Item 4.  Controls and Procedures



As of the end of the period covered by this report, an evaluation was carried out under the supervision and with the participation of the Companys management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Companys disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the Exchange Act)). Based upon and as of the date of that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that those disclosure controls and procedures were effective.



There have been no changes in the Companys internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that have materially affected, or are reasonably likely to materially affect, the Companys internal control over financial reporting.

22

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PART II  -  OTHER INFORMATION



|Item 1. | Legal Proceedings
|------- | -----------------



In August 2004, plaintiffs purporting to represent a class of consumers who purchased tableware sold in the United States filed suit against Federated Department Stores, the May Department Stores Company, Waterford Wedgwood U.S.A., and Lenox, Incorporated in United States District Court for the Northern District of California. In November 2004, plaintiffs filed a consolidated amended complaint alleging that for the period beginning at least as early as May 1, 2001 through the filing of the amended complaint on November 12, 2004, defendants violated Section 1 of the Sherman Act by conspiring to fix prices and to boycott sales to Bed, Bath & Beyond. Plaintiffs seek to recover an undisclosed amount of damages, trebled in accordance with antitrust laws, as well as costs, attorneys fees and injunctive relief. This matter is currently in the pre-trial discovery phase. The cut-off dates for fact
discovery and expert discovery are March 31, 2006 and August 11, 2006, respectively. The court has set August 29, 2006 as the date for filling defendants motions for summary judgment and plaintiffs motion for class certification. The trial date is scheduled for January 15, 2007.



On May 26, 2004, Ashley Seaberg filed a product liability suit against Department 56, Inc. and Time to Celebrate in United States District Court for the District of Oregon, claiming that a strand of lights from defendant Time to Celebrate started a house fire. On May 16, 2005, the court granted plaintiffs motion to amend the complaint to add a claim for $10 million in punitive damages. On January 9, 2006, the court denied the Companys motion for summary judgment on plaintiffs punitive damages claim and granted plaintiffs motion for summary judgment on its negligenceper seclaim. Trial is set for early June 2006.



The Company denies the allegations and claims of the cases above and intends to defend the cases vigorously. It is not possible at this time to estimate possible losses or a range of losses, if any, in these lawsuits. However, an adverse result in either of these lawsuits could have a material adverse effect on the Companys financial position, results of operations and/or cash flows.



In addition to the above lawsuits, the Company is involved in various legal proceedings, claims, and governmental audits in the ordinary course of its business. The Company believes it has meritorious defenses to all proceedings, claims, and audits. Management believes the impact, if any, of these legal proceedings would not be material to the results of operations, financial position or cash flows of the Company.



|Item 1A. | Risk Factors
|-------- | ------------



In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, Item 1A of the Companys Annual Report on Form 10-K for the fiscal year ended December 31, 2005, which could have a material impact on the Companys business, financial condition or results of operations. The risks described in the Companys Annual Report on Form 10-K are not the only risks facing the Company. Additional risks and uncertainties not presently known to the Company or that the Company currently believes to be immaterial may also adversely affect the Companys business, financial condition or results of operations.

23

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|Item 6. | Exhibits
|------- | --------

| | 3.1 | Restated Certificate of Incorporation of the Company. (Incorporated herein by reference to Exhibit 3.1 of Registrants Annual Report on Form 10-K for the fiscal year ended December 31, 2005. SEC File No. 1-11908.)
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 3.2 | Certificate of Designation, Preferences and Rights of Series A Junior Participating Preferred Stock of the Company. (Incorporated herein by reference to Exhibit 1.1 of Registrants Amendment No. 1, dated May 12, 1997, to Registration Statement on Form 8-A, dated April 23, 1997. SEC File No. 1-11908.)
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 3.3 | Restated By-Laws of the Company. (Incorporated herein by reference to Exhibit 3.2 of Registrants Registration Statement on Form S-1, No. 33-61514 and to Exhibits 1 and 2 of Registrants Current Report on Form 8-K dated February 15, 1996. SEC File No. 1-11908.)
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 4.1 | Specimen Form of Companys Stock Certificate. (Incorporated herein by reference to Exhibit 4.1 of Registrants Annual Report on Form 10-K for the fiscal year ended December 31, 1994. SEC File No. 1-11908.)
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 4.2 | Rights Agreement (including Exhibits A, B and C thereto) dated as of April 23, 1997, between the Company and ChaseMellon Shareholder Services, L.L.C., as Rights Agent. (Incorporated herein by reference to Exhibit 1 of Registrants Registration Statement on Form 8-A, dated April 23, 1997. SEC File No. 1-11908.)
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 4.3 | First Amendment dated as of March 13, 1998, to Rights Agreement between the Company and ChaseMellon Shareholder Services, L.L.C., as Rights Agent. (Incorporated herein by reference to Exhibit 1 to Registrants Amendment No. 2, dated March 16, 1998, to Registration Statement on Form 8-A, dated April 23, 1997. SEC File No. 1-11908.)
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 4.4 | Amendment No. 2 to Rights Agreement, dated as of February 25, 1999, between the Company and ChaseMellon Shareholder Services, L.L.C., as Rights Agent. (Incorporated herein by reference to Exhibit 99.2 of Registrants Current Report on Form 8-K dated February 26, 1999. SEC File No. 1-11908.)
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 4.5 | Letter Agreement Adopting the Rights Agreement, dated as of March 14, 2005, between the Company and Wells Fargo Shareholder Services, as Rights Agent. (Incorporated herein by reference to Exhibit 4.5 of Registrants Annual Report on Form 10-K for the fiscal year ended January 1, 2005. SEC File No. 1-11908.)
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 10.1 | 2005 Form of Stock Option Agreement for Officers under the Lenox Group Inc 2004 Stock Incentive Plan. (Incorporated herein by reference to Exhibit 10.1 to Registrants Current Report on Form 8-K filed on January 5, 2006).
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

24

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| | 10.2 | 2005 Form of Stock Option Agreement for Directors under the Lenox Group Inc 2004 Stock Incentive Plan. (Incorporated herein by reference to Exhibit 10.2 to Registrants Current Report on Form 8-K filed on January 5, 2006).
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 10.3 | Agreement of Lease, dated as of December 30, 2005, by and between Island View TCI, L.P. and Lenox, Incorporated. (Incorporated herein by reference to Exhibit 10.1 to Registrants Current Report on Form 8-K filed on January 6, 2006).
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 10.4 | Agreement of Sale, dated as of December 30, 2005, by and between PREI Wheeler Way Associates, LP and Lenox, Incorporated. (Incorporated herein by reference to Exhibit 10.2 to Registrants Current Report on Form 8-K filed on January 6, 2006).
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 10.5 | Amendment, dated April 27, 2006, to the Revolving Credit Agreement, dated as of September 1, 2005, among D 56, Inc., Department 56 Retail, Inc., Time to Celebrate Inc. and Lenox, Incorporated, as Borrowers, Department 56, Inc. and the other Guarantors party thereto, as Guarantors, the Lenders party thereto, UBS Securities LLC, as Arranger and Co-Syndication Agent, UBS AG, Stamford Branch, as Issuing Bank and Administrative Agent, UBS Loan Finance LLC, as Swingline Lender, JP Morgan Chase Bank, N.A., as Collateral Agent and Co-Syndication Agent, and Wells Fargo Foothill, LLC and Bank of America, N.A. as Co-Documentation Agents. (Incorporated herein by reference to Exhibit 10.1 to Registrants Current Report on Form 8-K filed on May 3, 2006).
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 10.6 | Amendment, dated April 27, 2006, to the Term Loan Credit Agreement, dated as of September 1, 2005, among D 56, Inc., Department 56 Retail, Inc., Time to Celebrate, Inc. and Lenox, Incorporated, as Borrowers, Department 56, Inc. and the other Guarantors party thereto, as Guarantors, the Lenders party thereto, UBS Securities LLC, as Sole Arranger and Syndication Agent, UBS AG, Stamford Branch, as Administrative Agent and Collateral Agent, and Wells Fargo Foothill, LLC, as Documentation Agent. (Incorporated herein by reference to Exhibit 10.2 to Registrants Current Report on Form 8-K filed on May 3, 2006).
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 11.1 | Computation of net loss per share*
| | ---- | ----------------------------------



| | 31.1 | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*
| | ---- | ---------------------------------------------------------------------------------------------------



| | 31.2 | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*
| | ---- | ---------------------------------------------------------------------------------------------------



| | 32.1 | Officer Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*
| | ---- | --------------------------------------------------------------------------------



* Filed herewith

25

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SIGNATURES



Pursuant to the requirements 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.





| | LENOX GROUP INC
| | ---------------







|Date: | May 11, 2006   | /s/ Susan E. Engel
|----- | -------------- | ------------------
|      | Susan E. Engel |                   

Chairwoman of the Board and Chief Executive Officer

(Principal Executive Officer)





|Date: | May 11, 2006                                        | /s/ Timothy J. Schugel
|----- | --------------------------------------------------- | ----------------------
|      | Timothy J. Schugel                                  |                       
|      | Chief Financial Officer and Chief Operating Officer
|      | (Principal Financial Officer)                       |                       
|      |                                                     |                       

26

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EXHIBIT INDEX

|ExhibitNumber | Description
|------------- | -----------

| | 11.1 | Computation of net loss per share
| | ---- | ---------------------------------



| | 31.1 | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
| | ---- | --------------------------------------------------------------------------------------------------
| |      |                                                                                                   



| | 31.2 | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
| | ---- | --------------------------------------------------------------------------------------------------
| |      |                                                                                                   



| | 32.1 | Officer Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
| | ---- | -------------------------------------------------------------------------------
| |      |                                                                                

27

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