##### 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, 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
(State of or other jurisdiction of 
incorporation or organization)
    
    22-1815337
(I.R.S. Employer Identification Number)1800 Valley Road, Wayne, New Jersey
(Address of principal executive offices)
    
    07470
(Zip Code)
 (201) 405-2400
 (Former name, former address and former fiscal year, if changed since last report)
 þ o
 Yes o No o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ
 o þ
  CLASS
    
    SHARES OUTSTANDINGCommon Stock, $0.10 stated value
    
    21,544,339




---



##### 



KID BRANDS, INC.
 INDEX
 PART I  FINANCIAL INFORMATIONItem 1. Financial Statements (unaudited)a) Consolidated Balance Sheets as of March 31, 2010 and December 31, 2009
    
    
    3b) Consolidated Statements of Operations for the three months ended March 31, 2010 and 2009
    
    
    4c) Consolidated Statements of Cash Flows for the three months ended March 31, 2010 and 2009
    
    
    5d) Notes to Unaudited Consolidated Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    18Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    26Item 4. Controls and Procedures
    
    
    26PART II  OTHER INFORMATIONItem 1A. Risk Factors
    
    
    27Item 6. Exhibits
    
    
    27Signatures
    
    
    28Exhibit Index
    
    
    29Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   2




---



##### 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)
 March 31, 2010
    
    
    December 31, 2009AssetsCurrent assets:Cash and cash equivalents
    
    $
    2,733
    
    
    $
    1,593Accounts receivable- trade, less allowances of $6,816 in 2010 and $7,101 in 2009
    
    
    44,408
    
    
    
    42,940Inventories, net
    
    
    30,708
    
    
    
    37,018Prepaid expenses and other current assets
    
    
    1,867
    
    
    
    2,950Income tax receivable
    
    
    81
    
    
    
    241Deferred income taxes, net
    
    
    2,174
    
    
    
    2,607Total current assets
    
    
    81,971
    
    
    
    87,349Property, plant and equipment, net
    
    
    4,130
    
    
    
    4,251Intangible assets
    
    
    79,666
    
    
    
    80,352Deferred income taxes, net
    
    
    29,798
    
    
    
    30,993Other assets
    
    
    3,687
    
    
    
    3,933Total assets
    
    $
    199,252
    
    
    $
    206,878Liabilities and Shareholders EquityCurrent liabilities:Current portion of long-term debt
    
    $
    13,533
    
    
    $
    13,533Short-term debt
    
    
    10,500
    
    
    
    15,100Accounts payable
    
    
    12,019
    
    
    
    17,420Accrued expenses
    
    
    9,737
    
    
    
    8,684Income taxes payable
    
    
    4,124
    
    
    
    3,630Total current liabilities
    
    
    49,913
    
    
    
    58,367Income taxes payable
    
    
    1,071
    
    
    
    1,065Long-term debt
    
    
    51,256
    
    
    
    54,492Other long-term liabilities
    
    
    1,735
    
    
    
    1,860Total liabilities
    
    
    103,975
    
    
    
    115,784Commitments and contingenciesShareholders equity:Common stock: $0.10 stated value; authorized 50,000,000 shares; issued
26,727,780 shares at March 31, 2010 and December 31, 2009
    
    
    2,674
    
    
    
    2,674Additional paid-in capital
    
    
    89,504
    
    
    
    89,756Retained earnings
    
    
    103,845
    
    
    
    100,377Accumulated other comprehensive income
    
    
    555
    
    
    
    458Treasury stock, at cost 5,183,441 and 5,227,985 shares at March 31, 2010 and
December 31, 2009, respectively
    
    
    (101,301
    )
    
    
    (102,171
    )Total shareholders equity
    
    
    95,277
    
    
    
    91,094Total liabilities and shareholders equity
    
    $
    199,252
    
    
    $
    206,878
 The accompanying notes are an integral part of these unaudited consolidated financial statements.
  3




---



##### Table of Contents



KID BRANDS, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (In Thousands, Except Share and Per Share Data)
 (UNAUDITED)
 Three Months Ended March 31,2010
    
    
    2009Net sales
    
    $
    61,474
    
    
    $
    56,278Cost of sales
    
    
    42,806
    
    
    
    39,663Gross profit
    
    
    18,668
    
    
    
    16,615Selling, general and administrative expenses
    
    
    12,013
    
    
    
    12,229Income from operations
    
    
    6,655
    
    
    
    4,386Other (expense) income:Interest expense, including amortization
and write-off of deferred financing
costs
    
    
    (1,181
    )
    
    
    (2,179
    )Other, net
    
    
    228
    
    
    
    (16
    )(953
    )
    
    
    (2,195
    )Income before income tax provision
    
    
    5,702
    
    
    
    2,191Income tax provision
    
    
    2,234
    
    
    
    855Net income
    
    $
    3,468
    
    
    $
    1,336Basic earnings per share
    
    $
    0.16
    
    
    $
    0.06Diluted earnings per share
    
    $
    0.16
    
    
    $
    0.06Weighted average shares:Basic
    
    
    21,578,000
    
    
    
    21,369,000Diluted
    
    
    21,811,000
    
    
    
    21,495,000
 The accompanying notes are an integral part of these unaudited consolidated financial statements.
  4




---



##### Table of Contents



KID BRANDS, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (In Thousands)
 (UNAUDITED)
 Three Months Ended March 31,2010
    
    
    2009Cash flows from operating activities:Net income
    
    $
    3,468
    
    
    $
    1,336Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization
    
    
    898
    
    
    
    952Amortization of deferred financing costs
    
    
    231
    
    
    
    709Provision for customer allowances
    
    
    8,915
    
    
    
    6,233Provision for inventory reserve
    
    
    
    
    
    
    545Share-based compensation expense
    
    
    389
    
    
    
    536Deferred income taxes
    
    
    1,628
    
    
    
    809Change in assets and liabilities:Accounts receivable
    
    
    (10,350
    )
    
    
    (5,659
    )Income tax receivable
    
    
    160
    
    
    
    Inventories
    
    
    6,336
    
    
    
    9,938Prepaid expenses and other current assets
    
    
    1,086
    
    
    
    500Other assets
    
    
    15
    
    
    
    15Accounts payable
    
    
    (5,405
    )
    
    
    (9,806
    )Accrued expenses
    
    
    989
    
    
    
    (3,624
    )Income taxes payable
    
    
    500
    
    
    
    (91
    )Net cash provided by operating activities
    
    
    8,860
    
    
    
    2,393Cash flows from investing activities:Capital expenditures
    
    
    (91
    )
    
    
    (185
    )Net cash used in investing activities
    
    
    (91
    )
    
    
    (185
    )Cash flows from financing activities:Proceeds from issuance of common stock
    
    
    229
    
    
    
    80Repayment of long-term debt
    
    
    (3,236
    )
    
    
    (12,430
    )Payment of deferred financing fees
    
    
    
    
    
    
    (1,631
    )Net borrowing on revolving credit facility
    
    
    (4,600
    )
    
    
    9,900Net cash used in financing activities
    
    
    (7,607
    )
    
    
    (4,081
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    (22
    )
    
    
    (9
    )Net increase (decrease) in cash and cash equivalents
    
    
    1,140
    
    
    
    (1,882
    )Cash and cash equivalents at beginning of period
    
    
    1,593
    
    
    
    3,728Cash and cash equivalents at end of period
    
    $
    2,733
    
    
    $
    1,846Cash paid during the period for:Interest
    
    $
    1,451
    
    
    $
    1,421Income taxes
    
    $
    
    
    
    $
    105
 The accompanying notes are an integral part of these unaudited consolidated financial statements.
  5




---



##### Table of Contents



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




---



##### Table of Contents



KID BRANDS, INC AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
  Impact on Net Income
  Three Months Ended March 31,2010
    
    
    2009Stock option expense
    
    $
    159,000
    
    
    $
    192,000Restricted stock expense
    
    
    100,000
    
    
    
    170,000Restricted stock unit expense
    
    
    20,000
    
    
    
    4,000SAR expense
    
    
    77,000
    
    
    
    131,000ESPP expense
    
    
    33,000
    
    
    
    39,000Total share-based payment expense
    
    $
    389,000
    
    
    $
    536,000
   Stock Options
    All Stock Options OutstandingWeighted AverageShares
    
    
    Exercise PriceOptions Outstanding as of December 31, 2009
    
    
    880,615
    
    
    $
    13.14Options Granted
    
    
    Options Forfeited/Cancelled*
    
    
    (123,640
    )
    
    $
    12.36Options Outstanding as of March 31, 2010
    
    
    756,975
    
    
    $
    13.27Option price range at March 31, 2010
    
    $
    6.63-$34.05
 *
    
    See disclosure below regarding forfeitures.  7




---



##### Table of Contents



KID BRANDS, INC AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
   Weighted Average GrantOptions
    
    
    Date Fair ValueUnvested stock optionsUnvested at December 31, 2009
    
    
    499,400
    
    
    $
    12.28Granted
    
    
    
    
    
    $
    Vested
    
    
    (20,000
    )
    
    $
    14.83Forfeited/cancelled*
    
    
    (36,000
    )
    
    $
    9.38Unvested options at March 31, 2010
    
    
    443,400
    
    
    $
    12.41
 *
    
    See disclosure below regarding forfeitures. Restricted Stock
    Restricted Stock Units
    8




---



##### Table of Contents



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
    
    
    147,250
    
    
    $
    5.01Vested
    
    
    
    
    
    
    Forfeited/cancelled
    
    
    (2,000
    )
    
    $
    5.03Unvested at March 31, 2010
    
    
    186,370
    
    
    $
    5.06
  Stock Appreciation Rights
 provided
  Year Ended March 31,2010
    
    
    2009Dividend yield
    
    
    0.0
    %
    
    
    0.0
    %Risk-free interest rate
    
    
    2.36
    %
    
    
    1.62
    %Volatility
    
    
    0.830
    %
    
    
    0.837
    %Expected term (years)
    
    
    5.0
    
    
    
    4.2Weighted-average fair value of SARs granted
    
    $
    3.34
    
    
    $
    0.86
  Weighted-Average GrantShares
    
    
    Date Value Per ShareUnvested, December 31, 2009
    
    
    579,400
    
    
    $
    3.21Granted
    
    
    423,250
    
    
    $
    5.01Vested
    
    
    (65,000
    )
    
    $
    1.53Forfeited*
    
    
    (5,000
    )
    
    $
    5.03Unvested, March 31, 2010
    
    
    932,650
    
    
    $
    4.14
 *
    
    See disclosure below regarding forfeitures.    9




---



##### Table of Contents



KID BRANDS, INC AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 Option/SAR Forfeitures
  Employee Stock Purchase Plan
   Three Months Ended March 31,2010
    
    
    2009Dividend yield
    
    
    0
    %
    
    
    0
    %Risk-free interest rate
    
    
    0.45
    %
    
    
    0.40
    %Volatility
    
    
    89.20
    %
    
    
    129.0
    %Expected term (years)
    
    
    1.0
    
    
    
    1.0
  NOTE 3  WEIGHTED AVERAGE COMMON SHARES
    10




---



##### Table of Contents



KID BRANDS, INC AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
  Three Months Ended March 31,2010
    
    
    2009Weighted average common shares outstanding-Basic
    
    
    21,578
    
    
    
    21,369Dilutive effect of common shares issuable upon
exercise of stock options, SARs and RSUs
    
    
    233
    
    
    
    126Weighted average common shares outstanding assuming
dilution
    
    
    21,811
    
    
    
    21,495
  NOTE 4  DEBT
  March 31,
    
    
    December 31,2010
    
    
    2009Term Loan (Credit Agreement)
    
    $
    63,750
    
    
    $
    67,000Note Payable (CoCaLo purchase)
    
    
    1,039
    
    
    
    1,025Total
    
    
    64,789
    
    
    
    68,025Less current portion
    
    
    13,533
    
    
    
    13,533Long-term debt
    
    $
    51,256
    
    
    $
    54,492
   At March 31, 2010LIBOR Loans
    
    
    Base Rate LoansRevolving Loan
    
    
    4.23
    %
    
    
    6.25
    %Term Loan
    
    
    4.27
    %
    
    
    6.25
    %
 Credit Agreement Summary
    11




---



##### Table of Contents



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




---



##### Table of Contents



KID BRANDS, INC AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 NOTE 5 INTANGIBLE ASSETS
  Weighted Average
    
    March 31,
    
    
    December 31,Amortization Period
    
    2010
    
    
    2009Sassy trade name
    
    Indefinite life
    
    $
    5,400
    
    
    $
    5,400Kids Line customer relationships
    
    20 years
    
    
    28,768
    
    
    
    29,156Kids Line trade name
    
    Indefinite life
    
    
    5,300
    
    
    
    5,300LaJobi trade name
    
    Indefinite life
    
    
    18,600
    
    
    
    18,600LaJobi customer relationships
    
    20 years
    
    
    11,430
    
    
    
    11,589LaJobi royalty agreements
    
    5 years
    
    
    1,602
    
    
    
    1,712CoCaLo trade name
    
    Indefinite life
    
    
    6,100
    
    
    
    6,100CoCaLo customer relationships
    
    20 years
    
    
    2,430
    
    
    
    2,464CoCaLo foreign trade name
    
    Indefinite life
    
    
    36
    
    
    
    31Total intangible assets
    
    
    
    $
    79,666
    
    
    $
    80,352
  ®
  NOTE 6  CONCENTRATION OF RISK
  Three Months Ended      March 31,2010
    
    
    2009Net domestic sales
    
    $
    58,854
    
    
    $
    54,240Net foreign sales
(Australia and United
Kingdom)*
    
    
    2,620
    
    
    
    2,038Total net sales
    
    $
    61,474
    
    
    $
    56,278Net incomeDomestic income
    
    $
    3,267
    
    
    $
    1,091Foreign income (Australia and United Kingdom)
    
    
    201
    
    
    
    245Total net income
    
    $
    3,468
    
    
    $
    1,336March 31,
    
    
    December 31,2010
    
    
    2009Domestic assets
    
    $
    195,256
    
    
    $
    203,155Foreign assets (Australia and United Kingdom)
    
    
    3,996
    
    
    
    3,723Total assets
    
    $
    199,252
    
    
    $
    206,878
 *
    
    Excludes export sales from the United States  13




---



##### Table of Contents



KID BRANDS, INC AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
  Three Months Ended March 31,2010
    
    
    2009Functional Soft Goods
    
    
    41.7
    %
    
    
    43.9
    %Functional Hard Goods
    
    
    38.2
    %
    
    
    36.2
    %Accessories and Décor
    
    
    9.8
    %
    
    
    10.6
    %Toys and Entertainment
    
    
    9.6
    %
    
    
    8.6
    %Other
    
    
    0.7
    %
    
    
    0.7
    %Total
    
    
    100.0
    %
    
    
    100.0
    %
     NOTE 7  FINANCIAL INSTRUMENTS
      14




---



##### Table of Contents



KID BRANDS, INC AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
    Fair Value Measurements as of March 31, 2010March 31, 2010
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3Interest Rate Swap Agreement
    
    $
    (170
    )
    
    $
    
    
    
    $
    (170
    )
    
    $
    
     NOTE 8  COMPREHENSIVE INCOME
  Three Months Ended March 31,2010
    
    
    2009Net income
    
    $
    3,468
    
    
    $
    1,336Other comprehensive income:Foreign currency translation adjustments
    
    
    97
    
    
    
    (16
    )Comprehensive income
    
    $
    3,565
    
    
    $
    1,320
 NOTE 9  INCOME TAXES
    15




---



##### Table of Contents



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
    
    
    11Balance at March 31, 2010
    
    $
    4,481
   NOTE 10  LITIGATION; COMMITMENTS AND CONTINGENCIES
        16




---



##### Table of Contents



KID BRANDS, INC AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 NOTE 11  RECENTLY ISSUED ACCOUNTING STANDARDS
   NOTE 12 RELATED PARTY TRANSACTIONS
     17




---



##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  OVERVIEW
         18




---



##### Table of Contents



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(iv)
    
    expanding and diversifying of our distribution channels, with
particular emphasis on sales into international markets;
  19




---



##### Table of Contents




    
    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
   SEGMENTS
  RESULTS OF OPERATIONSTHREE MONTHS ENDED MARCH 31, 2010 AND 2009
      20




---



##### Table of Contents



Liquidity and Capital Resources
         21




---



##### Table of Contents



Sale of Gift Business
  ® ®
  Debt Financing
  March
31,
    
    
    December 31,2010
    
    
    2009Term Loan (Credit Agreement)
    
    $
    63,750
    
    
    $
    67,000Note Payable (CoCaLo purchase)
    
    
    1,039
    
    
    
    1,025Total
    
    
    64,789
    
    
    
    68,025Less current portion
    
    
    13,533
    
    
    
    13,533Long-term debt
    
    $
    51,256
    
    
    $
    54,492
   22




---



##### Table of Contents



At March 31, 2010LIBOR Loans
    
    
    Base Rate LoansRevolving Loan
    
    
    4.23
    %
    
    
    6.25
    %Term Loan
    
    
    4.27
    %
    
    
    6.25
    %
  Credit Agreement Summary
       23




---



##### Table of Contents



Other Events and Circumstances Pertaining to Liquidity
       24




---



##### Table of Contents



Contractual Obligations
  Total
    
    
    2010
    
    
    2011
    
    
    2012
    
    
    2013
    
    
    2014
    
    
    ThereafterOperating Lease Obligations
    
    $
    11,670
    
    
    $
    1,779
    
    
    $
    2,084
    
    
    $
    2,143
    
    
    $
    2,224
    
    
    $
    940
    
    
    $
    2,500Capitalized Leases
    
    
    6
    
    
    
    5
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Purchase Obligations (1)
    
    
    50,417
    
    
    
    50,417
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Debt Repayment Obligations (2)
    
    
    63,750
    
    
    
    9,750
    
    
    
    13,000
    
    
    
    13,000
    
    
    
    28,000
    
    
    
    
    
    
    
    Note Payable (3)
    
    
    1,067
    
    
    
    533
    
    
    
    534
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Interest on Debt Repayment
Obligations (4)
    
    
    5,993
    
    
    
    1,987
    
    
    
    2,138
    
    
    
    1,553
    
    
    
    315
    
    
    
    
    
    
    
    Royalty Obligations
    
    
    9,055
    
    
    
    2,430
    
    
    
    2,630
    
    
    
    2,895
    
    
    
    1,100
    
    
    
    
    
    
    
    Total Contractual Obligations (5)
    
    $
    141,958
    
    
    $
    66,901
    
    
    $
    20,387
    
    
    $
    19,591
    
    
    $
    31,639
    
    
    $
    940
    
    
    $
    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 March 31, 2010, approximately
$10.5 million borrowed under the Revolving Loan. The estimated 2010 interest payment for this
Revolving Loan using a 4.5% interest rate is $0.5 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 present value of the note
is $1,039,000 and the aggregate remaining imputed interest at 5.5% is $28,000. 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, 2010 calculated using an interest rate of 4.5% 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.(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 payments based on the performance of the
acquired businesses. See Managements Discussion and Analysis of Results of Operations and
Financial ConditionRecent Acquisitions. These amounts are not included in the above table, as
the amount of their potential settlement is not reasonably estimable.  Off Balance Sheet Arrangements
  CRITICAL ACCOUNTING POLICIES
    25




---



##### Table of Contents



Recently Issued Accounting Standards
  Forward-Looking Statements
  
 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
   26




---



##### Table of Contents



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.
  27




---



##### Table of Contents



SIGNATURES
  KID BRANDS, INC.


(Registrant)By:
    /s/ Guy A. PaglincoDate:      May 5, 2010

    
    Guy A. PaglincoVice President and Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)  28




---



##### 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.
  29