##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2010
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from                    to
 Commission file number: 1-8681
 
 KID BRANDS, INC.
  New Jersey
    
    22-1815337(State of or other jurisdiction of
    
    (I.R.S. Employer Identification Number)incorporation or organization)1800 Valley Road, Wayne, New Jersey
    
    07470(Address of principal executive offices)
    
    (Zip Code)
 (201) 405-2400
 (Former name, former address and former fiscal year, if changed since last report)
 þ o
 o o
  Large accelerated filer o
Accelerated filer o
Non-accelerated filer o (Do not check if a smaller reporting company)
Smaller reporting company þ o þ
  CLASS
    
    SHARES OUTSTANDINGCommon Stock, $0.10 stated value
    
    21,546,174




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##### 



KID BRANDS, INC.
 INDEX
 PART I  FINANCIAL INFORMATIONItem 1. Financial Statements (unaudited)a) Consolidated Balance Sheets as of June 30, 2010 and December 31, 2009
    
    
    3b) Consolidated Statements of Operations for the three and six months ended June 30, 2010 and 2009
    
    
    4c) Consolidated Statements of Cash Flows for the six months ended June 30, 2010 and 2009
    
    
    5d) Notes to Unaudited Consolidated Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    20Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    29Item 4. Controls and Procedures
    
    
    30PART II  OTHER INFORMATIONItem 1A. Risk Factors
    
    
    30Item 6. Exhibits
    
    
    30Signatures
    
    
    31Exhibit Index
    
    
    32Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   2




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##### Table of Contents



PART 1  FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 
 KID BRANDS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share and Per Share Data)  (UNAUDITED)
 June 30, 2010
    
    
    December 31, 2009AssetsCurrent assets:Cash and cash equivalents
    
    $
    2,844
    
    
    $
    1,593Accounts receivable- trade, less allowances of $7,121 in 2010 and $7,101 in 2009
    
    
    43,089
    
    
    
    42,940Inventories, net
    
    
    37,565
    
    
    
    37,018Prepaid expenses and other current assets
    
    
    1,470
    
    
    
    2,950Income tax receivable
    
    
    471
    
    
    
    241Deferred income taxes, net
    
    
    1,608
    
    
    
    2,607Total current assets
    
    
    87,047
    
    
    
    87,349Property, plant and equipment, net
    
    
    4,445
    
    
    
    4,251Intangible assets
    
    
    78,971
    
    
    
    80,352Deferred income taxes, net
    
    
    27,669
    
    
    
    30,993Other assets
    
    
    3,390
    
    
    
    3,933Total assets
    
    $
    201,522
    
    
    $
    206,878Liabilities and Shareholders EquityCurrent liabilities:Current portion of long-term debt
    
    $
    13,513
    
    
    $
    13,533Short-term debt
    
    
    5,975
    
    
    
    15,100Accounts payable
    
    
    19,843
    
    
    
    17,420Accrued expenses
    
    
    8,388
    
    
    
    8,684Income taxes payable
    
    
    3,834
    
    
    
    3,630Total current liabilities
    
    
    51,553
    
    
    
    58,367Deferred taxes
    
    
    98
    
    
    
    Income taxes payable
    
    
    657
    
    
    
    1,065Long-term debt
    
    
    47,500
    
    
    
    54,492Other long-term liabilities
    
    
    1,610
    
    
    
    1,860Total liabilities
    
    
    101,418
    
    
    
    115,784Commitments and contingenciesShareholders equity:Common stock: $0.10 stated value; authorized 50,000,000 shares; issued
26,727,780 shares at June 30, 2010 and December 31, 2009
    
    
    2,674
    
    
    
    2,674Additional paid-in capital
    
    
    89,932
    
    
    
    89,756Retained earnings
    
    
    108,321
    
    
    
    100,377Accumulated other comprehensive income
    
    
    442
    
    
    
    458Treasury stock, at cost 5,181,606 and 5,227,985 shares at June 30, 2010 and
December 31, 2009, respectively
    
    
    (101,265
    )
    
    
    (102,171
    )Total shareholders equity
    
    
    100,104
    
    
    
    91,094Total liabilities and shareholders equity
    
    $
    201,522
    
    
    $
    206,878
 The accompanying notes are an integral part of these unaudited consolidated financial statements.
  3




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KID BRANDS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Share and Per Share Data)
(UNAUDITED)
 Three Months Ended June 30,
    
    
    Six Months Ended June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Net sales
    
    $
    67,921
    
    
    $
    59,966
    
    
    $
    129,395
    
    
    $
    116,244Cost of sales
    
    
    47,215
    
    
    
    41,013
    
    
    
    90,021
    
    
    
    80,676Gross profit
    
    
    20,706
    
    
    
    18,953
    
    
    
    39,374
    
    
    
    35,568Selling, general and administrative expenses
    
    
    12,810
    
    
    
    11,388
    
    
    
    24,823
    
    
    
    23,617Impairment and valuation reserve
    
    
    
    
    
    
    15,620
    
    
    
    
    
    
    
    15,620Income (loss) from operations
    
    
    7,896
    
    
    
    (8,055
    )
    
    
    14,551
    
    
    
    (3,669
    )Other (expense) income:Interest expense, including amortization
and write-off of deferred financing
costs
    
    
    (883
    )
    
    
    (1,714
    )
    
    
    (2,064
    )
    
    
    (3,893
    )Interest and investment income
    
    
    4
    
    
    
    5
    
    
    
    7
    
    
    
    10Other, net
    
    
    40
    
    
    
    224
    
    
    
    265
    
    
    
    203(839
    )
    
    
    (1,485
    )
    
    
    (1,792
    )
    
    
    (3,680
    )Income (loss) before income tax
provision (benefit)
    
    
    7,057
    
    
    
    (9,540
    )
    
    
    12,759
    
    
    
    (7,349
    )Income tax provision (benefit)
    
    
    2,581
    
    
    
    (3,851
    )
    
    
    4,815
    
    
    
    (2,996
    )Net income (loss)
    
    $
    4,476
    
    
    $
    (5,689
    )
    
    $
    7,944
    
    
    $
    (4,353
    )Net income (loss) per share:Basic
    
    $
    0.21
    
    
    $
    (0.26
    )
    
    $
    0.37
    
    
    $
    (0.20
    )Diluted
    
    $
    0.20
    
    
    $
    (0.26
    )
    
    $
    0.36
    
    
    $
    (0.20
    )Weighted average shares:Basic
    
    
    21,545,000
    
    
    
    21,370,000
    
    
    
    21,545,000
    
    
    
    21,369,000Diluted
    
    
    22,028,000
    
    
    
    21,370,000
    
    
    
    21,920,000
    
    
    
    21,369,000
 The accompanying notes are an integral part of these unaudited consolidated financial statements.
  4




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KID BRANDS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(UNAUDITED)
 Six Months Ended June 30,2010
    
    
    2009Cash flows from operating activities:Net income (loss)
    
    $
    7,944
    
    
    $
    (4,353
    )Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization
    
    
    1,799
    
    
    
    1,909Amortization of deferred financing costs
    
    
    462
    
    
    
    950Provision for impairment and valuation reserve
    
    
    
    
    
    
    15,620Provision for customer allowances
    
    
    17,689
    
    
    
    13,932Provision for inventory reserve
    
    
    440
    
    
    
    588Share-based compensation expense
    
    
    851
    
    
    
    945Deferred income taxes
    
    
    4,421
    
    
    
    (3,362
    )Change in assets and liabilities:Accounts receivable
    
    
    (17,893
    )
    
    
    (13,699
    )Income tax receivable
    
    
    (230
    )
    
    
    11Inventories
    
    
    (1,038
    )
    
    
    11,276Prepaid expenses and other current assets
    
    
    1,478
    
    
    
    886Other assets
    
    
    72
    
    
    
    46Accounts payable
    
    
    2,429
    
    
    
    (7,515
    )Accrued expenses
    
    
    (476
    )
    
    
    (4,787
    )Income taxes payable
    
    
    (203
    )
    
    
    (288
    )Net cash provided by operating activities
    
    
    17,745
    
    
    
    12,159Cash flows from investing activities:Capital expenditures
    
    
    (612
    )
    
    
    (259
    )Other
    
    
    
    
    
    
    (2
    )Net cash used in investing activities
    
    
    (612
    )
    
    
    (261
    )Cash flows from financing activities:Proceeds from issuance of common stock
    
    
    229
    
    
    
    80Excess tax benefit from share-based compensation
    
    
    2
    
    
    
    Repayment of long-term debt
    
    
    (7,012
    )
    
    
    (16,200
    )Payment of deferred financing fees
    
    
    
    
    
    
    (1,646
    )Net (payment) borrowing on revolving credit facility
    
    
    (9,125
    )
    
    
    5,006Net cash used in financing activities
    
    
    (15,906
    )
    
    
    (12,760
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    24
    
    
    
    (145
    )Net increase (decrease) in cash and cash equivalents
    
    
    1,251
    
    
    
    (1,007
    )Cash and cash equivalents at beginning of period
    
    
    1,593
    
    
    
    3,728Cash and cash equivalents at end of period
    
    $
    2,844
    
    
    $
    2,721Cash paid during the period for:Interest
    
    $
    2,277
    
    
    $
    3,666Income taxes
    
    $
    830
    
    
    $
    799
 The accompanying notes are an integral part of these unaudited consolidated financial statements.
  5




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KID BRANDS, INC AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 1  INTERIM CONSOLIDATED FINANCIAL STATEMENTS
       NOTE 2  SHAREHOLDERS EQUITY
 Share-Based Compensation
    6




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KID BRANDS, INC AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
   Impact on Net Income
  Three Months Ended June 30,
    
    
    Six Months Ended June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Stock option expense
    
    $
    159
    
    
    $
    192
    
    
    $
    318
    
    
    $
    384Restricted stock expense
    
    
    99
    
    
    
    170
    
    
    
    199
    
    
    
    340Restricted stock unit expense
    
    
    47
    
    
    
    4
    
    
    
    67
    
    
    
    8SAR expense
    
    
    124
    
    
    
    
    
    
    
    201
    
    
    
    131ESPP expense
    
    
    33
    
    
    
    43
    
    
    
    66
    
    
    
    82Total share-based payment expense
    
    $
    462
    
    
    $
    409
    
    
    $
    851
    
    
    $
    945
   Stock Options
    7




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KID BRANDS, INC AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
  All Stock Options OutstandingWeighted AverageShares
    
    
    Exercise PriceOptions Outstanding as of December 31, 2009
    
    
    880,615
    
    
    $
    13.14Options Granted
    
    
    Options Forfeited/Cancelled*
    
    
    (132,640
    )
    
    $
    12.45Options Outstanding as of June 30, 2010
    
    
    747,975
    
    
    $
    13.27Option price range at June 30, 2010
    
    $
    6.63-$34.05
 *
    
    See disclosure below regarding forfeitures.   Weighted AverageUnvested stock options
    
    Options
    
    
    Grant Date Fair ValueUnvested at December 31, 2009
    
    
    499,400
    
    
    $
    12.28Granted
    
    
    
    
    
    $
    Vested
    
    
    (30,200
    )
    
    $
    14.43Forfeited/cancelled*
    
    
    (36,000
    )
    
    $
    9.38Unvested options at June 30, 2010
    
    
    433,200
    
    
    $
    12.38
 *
    
    See disclosure below regarding forfeitures. Restricted Stock
    Restricted Stock Units
   8




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KID BRANDS, INC AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
    WeightedRestricted
    
    
    AverageStock
    
    
    Grant-DateUnits
    
    
    Fair ValueUnvested at December 31, 2009
    
    
    41,120
    
    
    $
    5.23Granted
    
    
    149,250
    
    
    $
    5.08Vested
    
    
    
    
    
    
    Forfeited/cancelled*
    
    
    (2,160
    )
    
    $
    5.13Unvested at June 30, 2010
    
    
    188,210
    
    
    $
    5.11
 *
    
    See disclosure below regarding forfeitures.  Stock Appreciation Rights
 provided
  Six Months Ended June 30,2010
    
    
    2009Dividend yield
    
    
    0.0
    %
    
    
    0.0
    %Risk-free interest rate
    
    
    2.36
    %
    
    
    1.62
    %Volatility
    
    
    0.830
    %
    
    
    0.837
    %Expected term (years)
    
    
    5
    
    
    
    4.2Weighted-average fair value of SARs granted
    
    $
    3.39
    
    
    $
    0.86
  9




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KID BRANDS, INC AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
  Weighted-Average GrantShares
    
    
    Date Value Per ShareUnvested at December 31, 2009
    
    
    579,400
    
    
    $
    3.21Granted
    
    
    429,250
    
    
    $
    5.08Vested
    
    
    (65,000
    )
    
    $
    1.53Forfeited*
    
    
    (5,960
    )
    
    $
    5.26Unvested at June 30, 2010
    
    
    937,690
    
    
    $
    4.17
 *
    
    See disclosure below regarding forfeitures.   Option/SAR Forfeitures
  RSU Forfeitures
  Employee Stock Purchase Plan
   Six Months Ended June 30,2010
    
    
    2009Dividend yield
    
    
    0
    %
    
    
    0
    %Risk-free interest rate
    
    
    0.45
    %
    
    
    0.40
    %Volatility
    
    
    89.20
    %
    
    
    129.0
    %Expected term (years)
    
    
    1.0
    
    
    
    1.0
   10




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KID BRANDS, INC AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 NOTE 3  WEIGHTED AVERAGE COMMON SHARES
    Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Weighted average common shares outstanding-Basic
    
    
    21,545
    
    
    
    21,370
    
    
    
    21,545
    
    
    
    21,369Dilutive effect of common shares issuable upon
exercise of stock options, RSUs and SARs
    
    
    483
    
    
    
    
    
    
    
    375
    
    
    
    Weighted average common shares outstanding assuming
dilution
    
    
    22,028
    
    
    
    21,370
    
    
    
    21,920
    
    
    
    21,369
  NOTE 4  DEBT
  June 30,
    
    
    December 31,2010
    
    
    2009Term Loan (Credit Agreement)
    
    $
    60,500
    
    
    $
    67,000Note Payable (CoCaLo purchase)
    
    
    513
    
    
    
    1,025Total
    
    
    61,013
    
    
    
    68,025Less current portion
    
    
    13,513
    
    
    
    13,533Long-term debt
    
    $
    47,500
    
    
    $
    54,492
   At June 30, 2010LIBOR Loans
    
    
    Base Rate LoansRevolving Loan
    
    
    3.28
    %
    
    
    5.00
    %Term Loan
    
    
    3.28
    %
    
    
    5.00
    %
  11




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KID BRANDS, INC AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 Credit Agreement Summary
        12




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KID BRANDS, INC AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
     NOTE 5 INTANGIBLE ASSETS
  Weighted Average
    
    June 30,
    
    
    December 31,Amortization Period
    
    2010
    
    
    2009Sassy trade name
    
    Indefinite life
    
    $
    5,400
    
    
    $
    5,400Kids Line customer relationships
    
    20 years
    
    
    28,379
    
    
    
    29,156Kids Line trade name
    
    Indefinite life
    
    
    5,300
    
    
    
    5,300LaJobi trade name
    
    Indefinite life
    
    
    18,600
    
    
    
    18,600LaJobi customer relationships
    
    20 years
    
    
    11,271
    
    
    
    11,589LaJobi royalty agreements
    
    5 years
    
    
    1,494
    
    
    
    1,712CoCaLo trade name
    
    Indefinite life
    
    
    6,100
    
    
    
    6,100CoCaLo customer relationships
    
    20 years
    
    
    2,396
    
    
    
    2,464CoCaLo foreign trade name
    
    Indefinite life
    
    
    31
    
    
    
    31Total intangible assets
    
    
    
    $
    78,971
    
    
    $
    80,352
  ®
  NOTE 6  CONCENTRATION OF RISK
  Three Months
    
    
    Six MonthsEnded
June 30,
    
    

Ended
June 30,Net sales
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009Net domestic sales
    
    $
    65,670
    
    
    $
    57,752
    
    
    $
    124,523
    
    
    $
    111,993Net foreign sales
(Australia and United
Kingdom)*
    
    
    2,251
    
    
    
    2,214
    
    
    
    4,872
    
    
    
    4,251Total net sales
    
    $
    67,921
    
    
    $
    59,966
    
    
    $
    129,395
    
    
    $
    116,244
  13




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KID BRANDS, INC AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 June 30,
    
    
    December 31,2010
    
    
    2009Domestic assets
    
    $
    197,971
    
    
    $
    203,155Foreign assets (Australia and United Kingdom)
    
    
    3,551
    
    
    
    3,723Total assets
    
    $
    201,522
    
    
    $
    206,878
 
 *
    
    Excludes export sales from the United States.  Three months ended June 30,
    
    
    Six months ended June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Functional Soft Goods
    
    
    38.1
    %
    
    
    46.4
    %
    
    
    39.8
    %
    
    
    45.2
    %Functional Hard Goods
    
    
    39.6
    %
    
    
    31.0
    %
    
    
    38.9
    %
    
    
    33.5
    %Accessories and Décor
    
    
    10.1
    %
    
    
    11.4
    %
    
    
    10.0
    %
    
    
    11.0
    %Toys and Entertainment
    
    
    11.4
    %
    
    
    10.0
    %
    
    
    10.6
    %
    
    
    9.3
    %Other
    
    
    0.8
    %
    
    
    1.2
    %
    
    
    0.7
    %
    
    
    1.0
    %Total
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
     NOTE 7  FINANCIAL INSTRUMENTS
   14




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KID BRANDS, INC AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
       Fair Value Measurements as of June 30, 2010June 30, 2010
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3Interest Rate Swap Agreement
    
    $
    (16
    )
    
    $
    
    
    
    $
    (16
    )
    
    $
    
     Derivative Instruments
  Cash Flow Hedges
   15




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KID BRANDS, INC AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
     Non-Qualifying Derivative Instruments
   NOTE 8  COMPREHENSIVE INCOME
  Three Months Ended June 30,
    
    
    Six Months Ended June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Net income (loss)
    
    $
    4,476
    
    
    $
    (5,689
    )
    
    $
    7,944
    
    
    $
    (4,353
    )Other comprehensive income:Unrealized loss on derivative
    
    
    (16
    )
    
    
    
    
    
    
    (16
    )
    
    
    Foreign currency translation adjustments
    
    
    (97
    )
    
    
    163
    
    
    
    
    
    
    
    147Comprehensive income (loss)
    
    $
    4,363
    
    
    $
    (5,526
    )
    
    $
    7,928
    
    
    $
    (4,206
    )
 NOTE 9  INCOME TAXES
   16




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KID BRANDS, INC AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
   (in thousands)Balance at December 31, 2009
    
    $
    4,470Increase related to interest expense
    
    
    21Balance at June 30, 2010
    
    $
    4,491
    NOTE 10  LITIGATION; COMMITMENTS AND CONTINGENCIES
      17




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KID BRANDS, INC AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
   .
  NOTE 11  RECENTLY ISSUED ACCOUNTING STANDARDS
   NOTE 12 RELATED PARTY TRANSACTIONS
    18




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KID BRANDS, INC AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
   19




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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  OVERVIEW
         20




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Strategy
  
    
    focusing on design-led and branded product development at each of our
subsidiaries to enable us to continue to introduce compelling new products;
    
    pursuing organic growth opportunities to capture additional market share,
including:
 (i)
    
    expanding our product offerings into related categories;(ii)
    
    increasing our existing product penetration (selling more products
to existing customer locations);(iii)
    
    increasing our existing store penetration (selling to more store
locations within each large, national retail customer); and
  21




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(iv)
    
    expanding and diversifying of our distribution channels, with
particular emphasis on sales into international markets;
 
    
    growing through licensing, distribution or other strategic alliances, including
pursuing acquisition opportunities in businesses complementary to ours;
    
    implementing strategies to further capture synergies within and between our
confederation of businesses, through cross-marketing opportunities, consolidation of
certain operational activities and other collaborative activities; and
    
    continuing efforts to manage costs within and across each of our businesses.
 General Economic Conditions as they Impact Our Business
   SEGMENTS
  RESULTS OF OPERATIONSTHREE MONTHS ENDED JUNE 30, 2010 AND 2009
 ® ®
    22




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®
     RESULTS OF OPERATIONSSIX MONTHS ENDED JUNE 30, 2010 AND 2009
 ® ®
      23




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Liquidity and Capital Resources
         24




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.
 Sale of Gift Business
  ® ®
   25




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Debt Financing
  June 30,
    
    
    December 31,2010
    
    
    2009Term Loan (Credit Agreement)
    
    $
    60,500
    
    
    $
    67,000Note Payable (CoCaLo purchase)
    
    
    513
    
    
    
    1,025Total
    
    
    61,013
    
    
    
    68,025Less current portion
    
    
    13,513
    
    
    
    13,533Long-term debt
    
    $
    47,500
    
    
    $
    54,492
   At June 30, 2010LIBOR Loans
    
    
    Base Rate LoansRevolving Loan
    
    
    3.28
    %
    
    
    5.00
    %Term Loan
    
    
    3.28
    %
    
    
    5.00
    %
 Credit Agreement Summary
     26




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Other Events and Circumstances Pertaining to Liquidity
    27




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Contractual Obligations
  Total
    
    
    2010
    
    
    2011
    
    
    2012
    
    
    2013
    
    
    2014
    
    
    ThereafterOperating Lease Obligations
    
    $
    10,993
    
    
    $
    1,101
    
    
    $
    2,084
    
    
    $
    2,143
    
    
    $
    2,224
    
    
    $
    941
    
    
    $
    2,500Capitalized Leases
    
    
    5
    
    
    
    4
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Purchase Obligations (1)
    
    
    71,036
    
    
    
    71,036
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Debt Repayment Obligations (2)
    
    
    60,500
    
    
    
    6,500
    
    
    
    13,000
    
    
    
    13,000
    
    
    
    28,000
    
    
    
    
    
    
    
    Note Payable (3)
    
    
    533
    
    
    
    
    
    
    
    533
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Interest on Debt Repayment
Obligations (4)
    
    
    4,118
    
    
    
    1,002
    
    
    
    1,663
    
    
    
    1,208
    
    
    
    245
    
    
    
    
    
    
    
    Royalty Obligations
    
    
    7,716
    
    
    
    867
    
    
    
    2,711
    
    
    
    2,976
    
    
    
    1,131
    
    
    
    31
    
    
    
    Total Contractual Obligations (5)
    
    $
    154,901
    
    
    $
    80,510
    
    
    $
    19,992
    
    
    $
    19,327
    
    
    $
    31,600
    
    
    $
    972
    
    
    $
    2,500
 
 (1)
    
    The Companys purchase obligations consist primarily of purchase orders for inventory.(2)
    
    Reflects repayment obligations under the Credit Agreement. See Note 4 of Notes to Unaudited
Consolidated Financial Statements for a description of the Credit Amendment, including amounts and
dates of repayment obligations and provisions that create, increase and/or accelerate obligations
thereunder. Excludes, as of June 30, 2010, approximately $6.0 million borrowed under the Revolving
Loan. The estimated 2010 interest payment for this Revolving Loan using a 3.5% interest rate is
$0.2 million. Such amounts are estimates only and actual interest payments could differ
materially. The Revolving Loan facility matures in April 2013, at which time any amounts
outstanding are due and payable.(3)
    
    Reflects a note payable with respect to the CoCaLo acquisition (the CoCaLo Note). The present
value of the CoCaLo Note is $513,000 and the aggregate remaining imputed interest at 5.5% is
$20,000. Upon the occurrence of an event of default under the note, the holder could elect to
declare all amounts outstanding to be immediately due and payable.(4)
    
    This amount reflects estimated interest payments on the long-term debt repayment obligation as
of June 30, 2010 calculated using an interest rate of 3.5% and then-current levels of outstanding
long-term debt. Such amounts are estimates only and actual interest payments could differ
materially. This amount also excludes interest on amounts borrowed under the Revolving Loan
(discussed in footnote 3 above).(5)
    
    Does not include contingent obligations under the Lease (or contingent obligations under
other off-balance sheet arrangements described in Item 7 of the 2009 10-K), as the amount if any
and/or timing of their potential settlement is not reasonably estimable. See Other Events and
Circumstances Pertaining to Liquidity above. In connection with the acquisitions of LaJobi and
CoCaLo, the Company has agreed to make certain potential Earnout
Consideration (together with finders fee) payments based on
the performance of the acquired businesses.
See Managements Discussion and Analysis of Results of Operations and Financial
ConditionLiquidity and Capital Resources. These amounts are not included in the above table, as
the amount of their potential settlement is not reasonably estimable.  28




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Off Balance Sheet Arrangements
  CRITICAL ACCOUNTING POLICIES
    Recently Issued Accounting Standards
  Forward-Looking Statements
  
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
   29




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ITEM 4. CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
    Changes in Internal Control over Financial Reporting
  
 PART II  OTHER INFORMATION
 
 ITEM 1A. RISK FACTORS
  
 ITEM 6. EXHIBITS
  31.1
    
    
    Certification of CEO required by Section 302 of the Sarbanes Oxley Act of 2002.31.2
    
    
    Certification of CFO required by Section 302 of the Sarbanes Oxley Act of 2002.32.1
    
    
    Certification of CEO required by Section 906 of the Sarbanes Oxley Act of 2002.32.2
    
    
    Certification of CFO required by Section 906 of the Sarbanes Oxley Act of 2002.
 Items 1, 2, 3, 4 and 5 are not applicable and have been omitted.
  30




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SIGNATURES
  KID BRANDS, INC.
(Registrant)By
    /s/ Guy A. PaglincoDate:      August 4, 2010
    
    Guy A. PaglincoVice President and Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)  31




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EXHIBIT INDEX
 31.1
    
    
    Certification of CEO required by Section 302 of the Sarbanes Oxley Act of 2002.31.2
    
    
    Certification of CFO required by Section 302 of the Sarbanes Oxley Act of 2002.32.1
    
    
    Certification of CEO required by Section 906 of the Sarbanes Oxley Act of 2002.32.2
    
    
    Certification of CFO required by Section 906 of the Sarbanes Oxley Act of 2002.
  32