##### 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 March 31, 2009
 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
 RUSS BERRIE AND COMPANY, 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
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o
 o þ
  CLASS
    
    OUTSTANDING  At May 8, 2009Common Stock, $0.10 stated value
    
    21,497,015




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##### 



RUSS BERRIE AND COMPANY, INC.
 INDEX
 PART I  FINANCIAL INFORMATIONItem 1. Financial Statements (unaudited)a) Consolidated Balance Sheets as of March 31, 2009 and December 31, 2008
    
    
    3b) Consolidated Statements of Operations for the three months ended March 31, 2009 and 2008
    
    
    4c) Consolidated Statements of Cash Flows for the three months ended March 31, 2009 and 2008
    
    
    5d) Notes to Unaudited Consolidated Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    21Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    32Item 4. Controls and Procedures
    
    
    32PART II  OTHER INFORMATIONItem 1A. Risk Factors
    
    
    32Item 6. Exhibits
    
    
    32Signatures
    
    
    33Exhibit Index
    
    
    34Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   2




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PART I  FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 RUSS BERRIE AND COMPANY, INC. AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS
 (In Thousands, Except
Share and Per Share Data)
(UNAUDITED)
 March 31, 2009
    
    
    December 31, 2008AssetsCurrent assets:Cash and cash equivalents
    
    $
    1,846
    
    
    $
    3,728Accounts receivable- trade, less allowances of $6,192 in 2009 and $4,285 in 2008
    
    
    38,940
    
    
    
    39,509Inventories, net
    
    
    36,664
    
    
    
    47,169Prepaid expenses and other current assets
    
    
    2,688
    
    
    
    3,252Income tax receivable
    
    
    16
    
    
    
    16Deferred income taxes
    
    
    940
    
    
    
    940Total current assets
    
    
    81,094
    
    
    
    94,614Property, plant and equipment, net
    
    
    4,433
    
    
    
    4,466Intangible assets
    
    
    83,286
    
    
    
    84,019Note receivable
    
    
    15,481
    
    
    
    15,300Investment
    
    
    4,500
    
    
    
    4,500Deferred income taxes
    
    
    28,161
    
    
    
    28,960Other assets
    
    
    5,252
    
    
    
    3,575Total assets
    
    $
    222,207
    
    
    $
    235,434Liabilities and Shareholders EquityCurrent liabilities:Current portion of long-term debt
    
    $
    13,533
    
    
    $
    14,933Short-term debt
    
    
    22,014
    
    
    
    12,114Accounts payable
    
    
    13,589
    
    
    
    23,546Accrued expenses
    
    
    10,598
    
    
    
    13,249Income taxes payable
    
    
    5,621
    
    
    
    5,726Total current liabilities
    
    
    65,355
    
    
    
    69,568Income taxes payable, long-term
    
    
    4,267
    
    
    
    4,252Long-term debt, excluding current portion
    
    
    64,735
    
    
    
    75,765Deferred royalty income  long-term
    
    
    5,804
    
    
    
    5,065Other long-term liabilities
    
    
    2,235
    
    
    
    2,908Total liabilities
    
    
    142,396
    
    
    
    157,558Commitments and contingenciesShareholders equity:Common stock: $0.10 stated value; authorized 50,000,000 shares; issued
26,724,660 and 26,727,780 shares at March 31, 2009 and December 31, 2008,
respectively
    
    
    2,674
    
    
    
    2,674Additional paid-in capital
    
    
    89,237
    
    
    
    89,173Retained earnings
    
    
    90,008
    
    
    
    88,672Accumulated other comprehensive income
    
    
    118
    
    
    
    134Treasury stock, at cost, 5,230,765 and 5,258,962 shares at March 31, 2009 and
December 31, 2008, respectively
    
    
    (102,226
    )
    
    
    (102,777
    )Total shareholders equity
    
    
    79,811
    
    
    
    77,876Total liabilities and shareholders equity
    
    $
    222,207
    
    
    $
    235,434
 The accompanying notes are an integral part of these unaudited consolidated financial statements.
  3




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RUSS BERRIE AND COMPANY, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (In Thousands, Except Share and Per Share Data)
 (UNAUDITED)
 Three Months Ended March 31,2009
    
    
    2008Net sales
    
    $
    56,278
    
    
    $
    41,612Cost of sales
    
    
    39,397
    
    
    
    26,457Gross profit
    
    
    16,881
    
    
    
    15,155Selling, general and administrative expenses
    
    
    12,495
    
    
    
    8,985Income from continuing operations
    
    
    4,386
    
    
    
    6,170Other (expense) income:Interest expense, including amortization and write-off of deferred financing costs
    
    
    (2,179
    )
    
    
    (1,020
    )Interest and investment income
    
    
    6
    
    
    
    45Other, net
    
    
    (22
    )
    
    
    (14
    )(2,195
    )
    
    
    (989
    )Income from continuing operations before income tax provision
    
    
    2,191
    
    
    
    5,181Income tax provision
    
    
    855
    
    
    
    2,021Income from continuing operations
    
    
    1,336
    
    
    
    3,160Discontinued operations:Loss from discontinued operations before income tax (benefit)
    
    
    
    
    
    
    (2,206
    )Income tax (benefit) from discontinued operations
    
    
    
    
    
    
    (1,046
    )(Loss) from discontinued operations, net of tax
    
    
    
    
    
    
    (1,160
    )Net income
    
    $
    1,336
    
    
    $
    2,000Basic earning (loss) per share:Continuing operations
    
    $
    0.06
    
    
    $
    0.15Discontinued operations
    
    
    
    
    
    
    (0.06
    )$
    0.06
    
    
    $
    0.09Diluted earning (loss) per share:Continuing operations
    
    $
    0.06
    
    
    $
    0.15Discontinued operations
    
    
    
    
    
    
    (0.06
    )$
    0.06
    
    
    $
    0.09Weighted average shares:Basic
    
    
    21,498,000
    
    
    
    21,300,000Diluted
    
    
    21,498,000
    
    
    
    21,325,000
 The accompanying notes are an integral part of these unaudited consolidated financial statements.
  4




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RUSS BERRIE AND COMPANY, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
 (UNAUDITED)
 Three Months Ended March 31,2009
    
    
    2008Cash flows from operating activities:Net income
    
    $
    1,336
    
    
    $
    2,000Adjustments to reconcile net income to net cash provided by (used in) operating activities:Depreciation and amortization
    
    
    952
    
    
    
    1,053Amortization of deferred financing costs
    
    
    709
    
    
    
    163Accounts receivable allowance
    
    
    6,233
    
    
    
    2,712Provision for inventory reserve
    
    
    545
    
    
    
    1,361Share-based compensation expense
    
    
    536
    
    
    
    445Deferred income taxes
    
    
    809
    
    
    
    Other
    
    
    
    
    
    
    (203
    )Change in assets and liabilities:Restricted cash
    
    
    
    
    
    
    15Accounts receivable
    
    
    (5,659
    )
    
    
    877Income tax receivable
    
    
    
    
    
    
    (367
    )Inventories
    
    
    9,938
    
    
    
    3,941Prepaid expenses and other current assets
    
    
    500
    
    
    
    285Other assets
    
    
    15
    
    
    
    (1,532
    )Accounts payable
    
    
    (9,806
    )
    
    
    (10,471
    )Accrued expenses
    
    
    (3,624
    )
    
    
    (2,208
    )Accrued income taxes
    
    
    (91
    )
    
    
    571Net cash provided by (used in) operating activities
    
    
    2,393
    
    
    
    (1,358
    )Cash flows from investing activities:Capital expenditures
    
    
    (185
    )
    
    
    (537
    )Payment of Kids Line, LLC earnout consideration
    
    
    
    
    
    
    (3,617
    )Net cash used in investing activities
    
    
    (185
    )
    
    
    (4,154
    )Cash flows from financing activities:Proceeds from issuance of common stock
    
    
    80
    
    
    
    Repayment of long-term debt
    
    
    (12,430
    )
    
    
    (2,500
    )Payment of deferred financing fees
    
    
    (1,631
    )
    
    
    Net borrowing on revolving credit facility
    
    
    9,900
    
    
    
    3,469Payment of capital lease obligations
    
    
    
    
    
    
    (42
    )Net cash (used in) provided by financing activities
    
    
    (4,081
    )
    
    
    927Effect of exchange rate changes on cash and cash equivalents
    
    
    (9
    )
    
    
    (10
    )Net decrease in cash and cash equivalents
    
    
    (1,882
    )
    
    
    (4,595
    )Cash and cash equivalents at beginning of period
    
    
    3,728
    
    
    
    21,925Cash and cash equivalents at end of period
    
    $
    1,846
    
    
    $
    17,330Cash paid during the period for:Interest
    
    $
    1,421
    
    
    $
    798Income taxes
    
    $
    105
    
    
    $
    62
 The accompanying notes are an integral part of these unaudited consolidated financial statements.
  5




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RUSS BERRIE AND COMPANY, INC. AND SUBSIDIARIES
 
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 1  INTERIM CONSOLIDATED FINANCIAL STATEMENTS
      NOTE 2  ACQUISITIONS
 LaJobi
    6




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RUSS BERRIE AND COMPANY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 CoCaLo
    Pro
Forma Information
   March 31, 2008Net sales
    
    $
    64,114Net income
    
    $
    2,650Basic (loss) income per share:Continuing operations
    
    $
    0.18Discontinued operations
    
    
    (0.06
    )$
    0.12Diluted (loss) income per share:Continuing operations
    
    $
    0.18Discontinued operations
    
    
    (0.06
    )$
    0.12
   7




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RUSS BERRIE AND COMPANY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 3
 SALE OF GIFT BUSINESS AND DISCONTINUED OPERATIONS
  ® ®
   Three Months EndedMarch
31, 2008Sales
    
    $
    34,312Loss before income taxes
    
    $
    2,206Provision (benefit) for income taxes
    
    $
    (1,046
    )Income (loss) from discontinued operations
    
    $
    (1,160
    )
 NOTE 4  SHAREHOLDERS EQUITY
 Share-Based Compensation
   Equity Plans
   8




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RUSS BERRIE AND COMPANY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
   Impact on Net Income
  Three Months Ended March 31,2009
    
    
    2008Stock option expense
    
    $
    192
    
    
    $
    221Restricted stock expense
    
    
    170
    
    
    
    179Restricted stock unit expense
    
    
    4
    
    
    
    SAR expense
    
    
    131
    
    
    
    ESPP expense
    
    
    39
    
    
    
    45Total share-based payment expense
    
    $
    536
    
    
    $
    445
  Stock Options
    9




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RUSS BERRIE AND COMPANY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
  Three Months EndedMarch 31, 2008Dividend yield
    
    
    0.0
    %Risk-free interest rate
    
    
    3.18
    %Volatility
    
    
    38.6
    %Expected term (years)
    
    
    5Weighted-average fair value of options granted
    
    $
    14.83
  All Stock Options OutstandingWeighted AverageShares
    
    
    Exercise PriceOptions Outstanding as of December 31, 2008
    
    
    1,941,379
    
    
    $
    17.31Options Granted
    
    
    Options Exercised
    
    
    Options Forfeited / Cancelled
    
    
    (220,704
    )
    
    $
    20.10Options Outstanding as of March 31, 2009
    
    
    1,720,675
    
    
    $
    16.95Option price range at March 31, 2009
    
    $
    7.28-$34.05
   WeightedAverageGrant-DateStock options
    
    Options
    
    
    Fair ValueUnvested at December 31, 2008
    
    
    672,837
    
    
    $
    12.69Granted
    
    
    Vested
    
    
    20,000
    
    
    $
    14.83Forfeited/cancelled
    
    
    Unvested options at March 31, 2009
    
    
    652,837
    
    
    $
    12.63
 Restricted Stock
    10




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RUSS BERRIE AND COMPANY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
  Restricted Stock Units
    WeightedRestricted
    
    
    AverageStock
    
    
    Grant-DateUnits
    
    
    Fair ValueUnvested at December 31, 2008
    
    
    13,900
    
    
    $
    6.43Granted
    
    
    
    
    
    
    Vested
    
    
    
    
    
    
    Forfeited/cancelled
    
    
    
    
    
    
    Unvested at March 31, 2009
    
    
    13,900
    
    
    $
    6.43
  Stock Appreciation Rights
 provided
    11




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RUSS BERRIE AND COMPANY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
  Three Months EndedMarch 31, 2009Dividend yield
    
    
    0
    %Risk-free interest rate
    
    
    1.62
    %Volatility
    
    
    0.837
    %Expected term (years)
    
    
    4.2Weighted-average fair value of SARs granted
    
    $
    0.86
  All SARs OutstandingWeighted AverageSARs
    
    
    Exercise PriceSARs outstanding as of December 31, 2008
    
    
    118,000
    
    
    $
    6.43SARs Granted
    
    
    564,943
    
    
    
    1.50SARs Exercised
    
    
    
    
    
    
    SARs Forfeited / Cancelled
    
    
    
    
    
    
    SARs Outstanding as of March 31, 2009
    
    
    682,943
    
    
    $
    2.35SAR price range at March 31, 2009
    
    $
    1.36-$6.43
   Employee Stock Purchase Plan
   12




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RUSS BERRIE AND COMPANY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
  Three Months Ended March 31,2009
    
    
    2008Dividend yield
    
    
    0.0
    %
    
    
    0.0
    %Risk-free interest rate
    
    
    0.40
    %
    
    
    3.17
    %Volatility
    
    
    129.0
    %
    
    
    34.4
    %Expected term (years)
    
    
    1.0
    
    
    
    1.0
  NOTE 5  WEIGHTED AVERAGE COMMON SHARES
  Three Months Ended March 31,2009
    
    
    2008Weighted average common shares outstanding-Basic
    
    
    21,498
    
    
    
    21,300Dilutive effect of common shares issuable upon
exercise of stock options and SARS
    
    
    
    
    
    
    25Weighted average common shares outstanding
assuming dilution
    
    
    21,498
    
    
    
    21,325
  NOTE 6  DEBT
  March 31,
    
    
    December 31,2009
    
    
    2008Term Loan (Credit Agreement)
    
    $
    76,750
    
    
    $
    89,200Note Payable (CoCaLo purchase)
    
    
    1,518
    
    
    
    1,498Total
    
    
    78,268
    
    
    
    90,698Less current portion
    
    
    13,533
    
    
    
    14,933Long-term debt
    
    $
    64,735
    
    
    $
    75,765
   At March 31, 2009LIBOR Loans
    
    
    Base Rate LoansRevolving Loan
    
    
    3.62
    %
    
    
    6.25
    %Term Loan
    
    
    4.59
    %
    
    
    6.25
    %
  13




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RUSS BERRIE AND COMPANY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 Credit Agreement Summary
        14




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RUSS BERRIE AND COMPANY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
             15




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RUSS BERRIE AND COMPANY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
  EITF”) Debtor’s Accounting for a Modification or Exchange of Debt
Instruments, Debtor’s Accounting for Changes in
Line-of-Credit or Revolving-Debt Arrangements
 NOTE 7
 INTANGIBLE ASSETS
  Weighted Average
    
    March 31,
    
    
    December 31,Amortization Period
    
    2009
    
    
    2008Sassy trade name
    
    Indefinite life
    
    $
    5,400
    
    
    $
    5,400Applause trade name
    
    5 years
    
    
    866
    
    
    
    911Kids Line customer relationships
    
    20 years
    
    
    30,323
    
    
    
    30,711Kids Line trade name
    
    Indefinite life
    
    
    5,300
    
    
    
    5,300LaJobi trade name
    
    Indefinite life
    
    
    18,600
    
    
    
    18,600LaJobi customer relationships
    
    20 years
    
    
    12,065
    
    
    
    12,224LaJobi royalty agreements
    
    5 years
    
    
    2,039
    
    
    
    2,146CoCaLo trade name
    
    Indefinite life
    
    
    6,100
    
    
    
    6,100CoCaLo customer relationships
    
    20 years
    
    
    2,565
    
    
    
    2,599CoCaLo foreign trade name
    
    Indefinite life
    
    
    28
    
    
    
    28Total intangible assets
    
    
    
    $
    83,286
    
    
    $
    84,019
   NOTE 8  CONCENTRATION OF RISK
     16




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RUSS BERRIE AND COMPANY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
  NOTE 9  FINANCIAL INSTRUMENTS
         Fair Value Measurements as of March 31, 2009March 31, 2009
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3Interest Rate Swap Agreement
    
    $
    (1,827
    )
    
    $
    
    
    
    $
    (1,827
    )
    
    $
    
  17




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RUSS BERRIE AND COMPANY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
    NOTE 10  COMPREHENSIVE INCOME (LOSS)
  Three Months Ended March 31,2009
    
    
    2008Net income
    
    $
    1,336
    
    
    $
    2,000Other comprehensive income:Foreign currency translation adjustments
    
    
    (16
    )
    
    
    212Comprehensive income
    
    $
    1,320
    
    
    $
    2,212
 NOTE 11  INCOME TAXES
    (in thousands)Balance at January 1, 2009
    
    $
    9,582Increase related to interest expense
    
    
    15Increases related to prior year tax positions
    
    
    Decreases related to prior year tax positions
    
    
    Increases related to current year tax positions/settlements
    
    
    Lapse of statute of limitations
    
    
    Balance at March 31, 2009
    
    $
    9,597
   18




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RUSS BERRIE AND COMPANY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
  NOTE 12  LITIGATION; COMMITMENTS AND CONTINGENCIES
        NOTE 13  RECENTLY ISSUED ACCOUNTING STANDARDS
   19




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RUSS BERRIE AND COMPANY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
  NOTE 14  RELATED PARTY TRANSACTIONS
    20




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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  OVERVIEW
  Shift to Infant and Juvenile Business
    ® ® ® ® Recent Disposition
    21




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Continuing Operations
          22




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
    
    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; and
 (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
 (iv)
    
    expanding and diversifying of our distribution channels, with
particular emphasis on sales into 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 each of our businesses.
 ® ®
  General Economic Conditions as they Impact Our Business
    23




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SEGMENTS
  BASIS OF PRESENTATION
  RESULTS OF OPERATIONSTHREE MONTHS ENDED MARCH 31, 2009 AND 2008
           24




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Liquidity and Capital Resources
      Recent Acquisitions
 LaJobi
   CoCaLo
   25




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Recent Disposition
 ®
 ® ®
   26




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Debt Financing
  March 31,
    
    
    December 31,2009
    
    
    2008Term Loan (Credit Agreement)
    
    $
    76,750
    
    
    $
    89,200Note Payable (CoCaLo purchase)
    
    
    1,518
    
    
    
    1,498Total
    
    
    78,268
    
    
    
    90,698Less current portion
    
    
    13,533
    
    
    
    14,933Long-term debt
    
    $
    64,735
    
    
    $
    75,765
   At March 31, 2009LIBOR Loans
    
    
    Base Rate LoansRevolving Loan
    
    
    3.62
    %
    
    
    6.25
    %Term Loan
    
    
    4.59
    %
    
    
    6.25
    %
 Credit Agreement Summary
     27




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EITF”) Debtor’s Accounting for a Modification or Exchange of Debt
Instruments, Debtor’s Accounting for Changes in
Line-of-Credit or Revolving-Debt Arrangements
 Other Events and Circumstances Pertaining to Liquidity
    29




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##### Table of Contents



Contractual Obligations
  Total
    
    
    2009
    
    
    2010
    
    
    2011
    
    
    2012
    
    
    2013
    
    
    ThereafterOperating Lease Obligations
    
    $
    12,736
    
    
    $
    1,505
    
    
    $
    1,906
    
    
    $
    1,930
    
    
    $
    1,942
    
    
    $
    2,012
    
    
    $
    3,441Capitalized Leases
    
    
    16
    
    
    
    7
    
    
    
    8
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    Purchase Obligations(1)
    
    
    44,808
    
    
    
    44,808
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Debt Repayment Obligations(2)
    
    
    76,750
    
    
    
    9,750
    
    
    
    13,000
    
    
    
    13,000
    
    
    
    13,000
    
    
    
    28,000
    
    
    
    Note Payable (3)
    
    
    1,600
    
    
    
    533
    
    
    
    533
    
    
    
    534
    
    
    
    
    
    
    
    
    
    
    
    Interest on Debt Repayment
Obligations(4)
    
    
    11,150
    
    
    
    3,675
    
    
    
    3,025
    
    
    
    2,375
    
    
    
    1,725
    
    
    
    350
    
    
    
    Royalty Obligations
    
    
    6,898
    
    
    
    2,113
    
    
    
    1,710
    
    
    
    900
    
    
    
    1,075
    
    
    
    1,100
    
    
    
    Total Contractual Obligations
    
    $
    153,958
    
    
    $
    62,391
    
    
    $
    20,182
    
    
    $
    18,740
    
    
    $
    17,742
    
    
    $
    31,462
    
    
    $
    3,441
 
 (1)
    
    The Companys purchase obligations consist primarily of purchase orders for inventory.(2)
    
    Reflects repayment obligations under the Second Amendment effective as of March 20, 2009. See
Note 6 of Notes to Unaudited Consolidated Financial Statements for a description of the Second
Amendment, including amounts and dates of repayment obligations and provisions that create,
increase and/or accelerate obligations thereunder. Excludes, as of March 31, 2009, approximately
$22.0 million borrowed under the Revolving Loan. The estimated 2009 interest payment for this
Revolving Loan using a 5.0% interest rate is $1.1 million. The Revolving Loan facility matures in
April 2013, at which time any amounts outstanding are due and payable.(3)
    
    Reflects note payable with respect to CoCaLo acquisition. The present value of the note is
$1,518,000 and the aggregate remaining imputed interest at 5.5% is $82,000. 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 March 31, 2009 calculated using an interest rate of 5.0% 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.   Off Balance Sheet Arrangements
   30




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##### Table of Contents



CRITICAL ACCOUNTING POLICIES
    Recently Issued Accounting Standards
   Forward-Looking Statements
   31




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##### Table of Contents



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
   
 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.
  32




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##### Table of Contents



SIGNATURES
  RUSS BERRIE AND COMPANY, INC.
(Registrant)Date: May 11, 2009
    By:
    /s/ Guy A. PaglincoGuy A. PaglincoVice President, Chief
Accounting Officer and
interim Chief Financial
Officer  33




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##### Table of Contents



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.
  34