##### 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, 2011
 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)One Meadowlands Plaza, East Rutherford, New Jersey
    
    07073(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 þ
    
    Non-accelerated filer o
    
    Smaller reporting company o
 o þ
  CLASS
    
    SHARES OUTSTANDINGCommon Stock, $0.10 stated value
    
    21,650,245




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##### 



KID BRANDS, INC.
 INDEX
 PART I  FINANCIAL INFORMATIONItem 1. Financial Statements (unaudited)a) Consolidated Balance Sheets as of March 31, 2011 and December 31, 2010
    
    
    3b) Consolidated Statements of Operations for the three months ended March 31, 2011 and 2010
    
    
    4c) Consolidated Statements of Cash Flows for the three months ended March 31, 2011 and 2010
    
    
    5d) Notes to Unaudited Consolidated Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    23Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    34Item 4. Controls and Procedures
    
    
    35PART II  OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    35Item 1A. Risk Factors
    
    
    35Item 6. Exhibits
    
    
    37Signatures
    
    
    38Exhibit Index
    
    
    39Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   2




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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, 2011
    
    
    December 31, 2010AssetsCurrent assets:Cash and cash equivalents
    
    $
    1,549
    
    
    $
    1,075Accounts receivable- trade, less allowances of $7,267 in 2011 and $6,934 in 2010
    
    
    50,063
    
    
    
    55,270Inventories, net
    
    
    52,046
    
    
    
    48,564Prepaid expenses and other current assets
    
    
    3,254
    
    
    
    3,843Income tax receivable
    
    
    205
    
    
    
    307Deferred income taxes, net
    
    
    6,433
    
    
    
    6,372Total current assets
    
    
    113,550
    
    
    
    115,431Property, plant and equipment, net
    
    
    5,091
    
    
    
    5,030Intangible assets
    
    
    76,465
    
    
    
    77,154Note receivable, net allowance of $16,814 in 2011 and $16,648 in 2010
    
    
    
    
    
    
    Deferred income taxes, net
    
    
    41,793
    
    
    
    41,626Other assets
    
    
    2,685
    
    
    
    3,255Total assets
    
    $
    239,584
    
    
    $
    242,496Liabilities and Shareholders EquityCurrent liabilities:Current portion of long-term debt
    
    $
    13,533
    
    
    $
    13,526Short-term debt
    
    
    22,660
    
    
    
    18,595Accounts payable
    
    
    17,189
    
    
    
    22,940Accrued expenses
    
    
    18,307
    
    
    
    16,954Income taxes payable
    
    
    341
    
    
    
    207Total current liabilities
    
    
    72,030
    
    
    
    72,222Income taxes payable non-current
    
    
    37
    
    
    
    37Deferred income taxes
    
    
    337
    
    
    
    332Long-term debt
    
    
    37,750
    
    
    
    41,000Other long-term liabilities
    
    
    997
    
    
    
    923Total liabilities
    
    
    111,151
    
    
    
    114,514Commitments and contingenciesShareholders equity:Common stock: $0.10 stated value; authorized 50,000,000 shares; issued
26,727,780 shares at March 31, 2011 and December 31, 2010
    
    
    2,674
    
    
    
    2,674Additional paid-in capital
    
    
    89,673
    
    
    
    90,645Retained earnings
    
    
    134,836
    
    
    
    135,049Accumulated other comprehensive income
    
    
    482
    
    
    
    503Treasury stock, at cost 5,077,535 and 5,162,354 shares at March 31, 2011 and
December 31, 2010, respectively
    
    
    (99,232
    )
    
    
    (100,889
    )Total shareholders equity
    
    
    128,433
    
    
    
    127,982Total liabilities and shareholders equity
    
    $
    239,584
    
    
    $
    242,496
 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 March 31,2011
    
    
    2010Net sales
    
    $
    59,836
    
    
    $
    61,474Cost of sales
    
    
    43,570
    
    
    
    42,806Gross profit
    
    
    16,266
    
    
    
    18,668Selling, general and administrative expenses
    
    
    15,370
    
    
    
    12,013Income from operations
    
    
    896
    
    
    
    6,655Other (expense) income:Interest expense, including amortization
and write-off of deferred financing costs
    
    
    (1,102
    )
    
    
    (1,181
    )Interest and investment income
    
    
    3
    
    
    
    Other, net
    
    
    42
    
    
    
    228(1,057
    )
    
    
    (953
    )(Loss) income before income tax provision
    
    
    (161
    )
    
    
    5,702Income tax provision
    
    
    52
    
    
    
    2,234Net (loss) income
    
    $
    (213
    )
    
    $
    3,468Net (loss) income per share:Basic
    
    $
    (0.01
    )
    
    $
    0.16Diluted
    
    $
    (0.01
    )
    
    $
    0.16Weighted average shares:Basic
    
    
    21,633,000
    
    
    
    21,578,000Diluted
    
    
    21,633,000
    
    
    
    21,811,000
 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)
 Three Months Ended March 31,2011
    
    
    2010Cash flows from operating activities:Net (loss) income
    
    $
    (213
    )
    
    $
    3,468Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:Depreciation and amortization
    
    
    992
    
    
    
    898Amortization of deferred financing costs
    
    
    229
    
    
    
    231Provision for customer allowances
    
    
    8,150
    
    
    
    8,915Provision for inventory reserve
    
    
    485
    
    
    
    Share-based compensation expense
    
    
    466
    
    
    
    389Deferred income taxes
    
    
    (223
    )
    
    
    1,628Change in assets and liabilities:Accounts receivable
    
    
    (2,904
    )
    
    
    (10,350
    )Income tax receivable
    
    
    102
    
    
    
    160Inventories
    
    
    (3,929
    )
    
    
    6,336Prepaid expenses and other current assets
    
    
    595
    
    
    
    1,086Other assets
    
    
    456
    
    
    
    15Accounts payable
    
    
    (5,748
    )
    
    
    (5,405
    )Accrued expenses
    
    
    1,274
    
    
    
    989Income taxes payable
    
    
    134
    
    
    
    500Net cash (used in) provided by operating activities
    
    
    (134
    )
    
    
    8,860Cash flows from investing activities:Capital expenditures
    
    
    (364
    )
    
    
    (91
    )Net cash used in investing activities
    
    
    (364
    )
    
    
    (91
    )Cash flows from financing activities:Proceeds from issuance of common stock
    
    
    243
    
    
    
    229Excess tax benefit from stock-based compensation
    
    
    (24
    )
    
    
    Repayment of long-term debt
    
    
    (3,243
    )
    
    
    (3,236
    )Net borrowing (payment) on revolving credit facility
    
    
    4,065
    
    
    
    (4,600
    )Net cash provided by (used in) financing activities
    
    
    1,041
    
    
    
    (7,607
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    (69
    )
    
    
    (22
    )Net increase in cash and cash equivalents
    
    
    474
    
    
    
    1,140Cash and cash equivalents at beginning of period
    
    
    1,075
    
    
    
    1,593Cash and cash equivalents at end of period
    
    $
    1,549
    
    
    $
    2,733Cash paid during the period for:Interest
    
    $
    877
    
    
    $
    1,451Income taxes
    
    $
    35
    
    
    $
    
 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 March 31,2011
    
    
    2010Stock option expense
    
    $
    116
    
    
    $
    159Restricted stock expense
    
    
    79
    
    
    
    100Restricted stock unit expense
    
    
    59
    
    
    
    20SAR expense
    
    
    178
    
    
    
    772009 ESPP expense
    
    
    34
    
    
    
    33Total share-based payment expense
    
    $
    466
    
    
    $
    389
   Stock Options
    All Stock Options OutstandingWeighted AverageShares
    
    
    Exercise PriceOptions Outstanding as of December 31, 2010
    
    
    704,175
    
    
    $
    13.53Options Granted
    
    
    
    
    
    
    Options Forfeited/Cancelled*
    
    
    (37,200
    )
    
    $
    13.65Options Outstanding as of March 31, 2011
    
    
    666,975
    
    
    $
    13.52Option price range at March 31, 2011
    
    $
    6.63-$34.05
 *
    
    See disclosure below regarding forfeitures.  7




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KID BRANDS, INC AND SUBSIDIARIES
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
   Weighted Average GrantUnvested stock options
    
    Options
    
    
    Date Fair ValueUnvested at December 31, 2010
    
    
    278,200
    
    
    $
    5.22Granted
    
    
    
    
    
    $
    Vested
    
    
    
    
    
    $
    Forfeited/cancelled*
    
    
    (16,800
    )
    
    $
    5.21Unvested stock options at March 31, 2011
    
    
    261,400
    
    
    $
    5.22
 *
    
    See disclosure below regarding forfeitures. Restricted Stock
    Weighted Average GrantUnvested Restricted Stock
    
    Restricted Stock
    
    
    Date Fair ValueUnvested at December 31, 2010
    
    
    29,270
    
    
    $
    15.91Granted
    
    
    
    
    
    $
    Vested
    
    
    
    
    
    $
    Forfeited/cancelled*
    
    
    (2,580
    )
    
    $
    13.65Unvested restricted stock at March, 31, 2011
    
    
    26,690
    
    
    $
    16.13
 *
    
    See disclosure below regarding forfeitures.  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, 2010
    
    
    174,730
    
    
    $
    5.22Granted
    
    
    10,000
    
    
    $
    8.50Vested
    
    
    (26,250
    )
    
    $
    5.01Forfeited/cancelled*
    
    
    (13,400
    )
    
    $
    5.03Unvested at March 31, 2011
    
    
    145,080
    
    
    $
    5.50
 *
    
    See disclosure below regarding forfeitures.  Stock Appreciation Rights
 provided
  Three Months Ended March 31,2011
    
    
    2010Dividend yield
    
    
    0.0
    %
    
    
    0.0
    %Risk-free interest rate
    
    
    1.03
    %
    
    
    2.36
    %Volatility
    
    
    1.04
    %
    
    
    0.830
    %Expected term (years)
    
    
    3.0
    
    
    
    5.0Weighted-average fair value of SARs granted
    
    $
    5.42
    
    
    $
    3.34
  9




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KID BRANDS, INC AND SUBSIDIARIES
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
  All SARs OutstandingWeighted AverageShares
    
    
    Exercise PriceSARs Outstanding as of December 31, 2010
    
    
    1,111,513
    
    
    $
    4.17SARs Granted
    
    
    50,000
    
    
    $
    8.50SARs Exercised
    
    
    (1,100
    )
    
    $
    5.54SARs Forfeited/Cancelled*
    
    
    (133,600
    )
    
    $
    2.82SARs Outstanding as of March 31, 2011
    
    
    1,026,813
    
    
    $
    4.55SAR price range at March 31, 2011
    
    $
    1.36-9.86
 *
    
    See disclosure below regarding forfeitures.   Weighted-Average GrantShares
    
    
    Date Value Per ShareUnvested at December 31, 2010
    
    
    888,830
    
    
    $
    2.90Granted
    
    
    50,000
    
    
    $
    5.42Vested
    
    
    (130,550
    )
    
    $
    2.31Forfeited*
    
    
    (84,200
    )
    
    $
    2.04Unvested at March 31, 2011
    
    
    724,080
    
    
    $
    3.28
 *
    
    See disclosure below regarding forfeitures.  Option/SAR Forfeitures
  Restricted Stock/RSU Forfeitures
   10




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KID BRANDS, INC AND SUBSIDIARIES
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 Employee Stock Purchase Plan
   Three Months Ended March 31,2011
    
    
    2010Dividend yield
    
    
    0
    %
    
    
    0
    %Risk-free interest rate
    
    
    0.29
    %
    
    
    0.45
    %Volatility
    
    
    73.5
    %
    
    
    89.2
    %Expected term (years)
    
    
    1.0
    
    
    
    1.0
  NOTE 3  WEIGHTED AVERAGE COMMON SHARES
    Three Months EndedMarch 31,2011
    
    
    2010Weighted average common shares outstanding-Basic
    
    
    21,633
    
    
    
    21,578Dilutive effect of common shares issuable upon
exercise of stock options, RSUs and SARs
    
    
    
    
    
    
    233Weighted average common shares outstanding assuming
dilution
    
    
    21,633
    
    
    
    21,811
   11




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KID BRANDS, INC AND SUBSIDIARIES
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 NOTE 4  DEBT
  March 31,
    
    
    December 31,2011
    
    
    2010Term Loan (Credit Agreement)
    
    $
    50,750
    
    
    $
    54,000Note Payable (CoCaLo purchase)
    
    
    533
    
    
    
    526Total
    
    
    51,283
    
    
    
    54,526Less current portion
    
    
    13,533
    
    
    
    13,526Long-term debt
    
    $
    37,750
    
    
    $
    41,000
   At March 31, 2011LIBOR Loans
    
    
    Base Rate LoansRevolving Loan
    
    
    3.01
    %
    
    
    5.00
    %Term Loan
    
    
    3.06
    %
    
    
    5.00
    %
 Credit Agreement Summary
      12




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KID BRANDS, INC AND SUBSIDIARIES
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
      13




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KID BRANDS, INC AND SUBSIDIARIES
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
  ® ®
  NOTE 5 INTANGIBLE ASSETS
  Weighted Average
    
    March 31,
    
    
    December 31,Amortization Period
    
    2011
    
    
    2010Sassy trade name
    
    Indefinite life
    
    $
    5,400
    
    
    $
    5,400Kids Line customer relationships
    
    20 years
    
    
    27,213
    
    
    
    27,601Kids Line trade name
    
    Indefinite life
    
    
    5,300
    
    
    
    5,300LaJobi trade name
    
    Indefinite life
    
    
    18,600
    
    
    
    18,600LaJobi customer relationships
    
    20 years
    
    
    10,795
    
    
    
    10,954LaJobi royalty agreements
    
    5 years
    
    
    1,166
    
    
    
    1,278CoCaLo trade name
    
    Indefinite life
    
    
    5,800
    
    
    
    5,800CoCaLo customer relationships
    
    20 years
    
    
    2,160
    
    
    
    2,190CoCaLo foreign trade name
    
    Indefinite life
    
    
    31
    
    
    
    31Total intangible assets
    
    
    
    $
    76,465
    
    
    $
    77,154
     14




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KID BRANDS, INC AND SUBSIDIARIES
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 NOTE 6  GEOGRAPHIC INFORMATION AND CONCENTRATION OF RISK
  Three Months ended March 31,Net sales
    
    2011
    
    
    2010Net domestic sales
    
    $
    56,988
    
    
    $
    58,854Net foreign sales
(Australia and United
Kingdom)*
    
    
    2,848
    
    
    
    2,620Total net sales
    
    $
    59,836
    
    
    $
    61,474
 March 31,
    
    
    December 31,Assets
    
    2011
    
    
    2010Domestic assets
    
    $
    233,973
    
    
    $
    237,982Foreign assets (Australia and United Kingdom)
    
    
    5,611
    
    
    
    4,514Total assets
    
    $
    239,584
    
    
    $
    242,496
 *
    
    Excludes export sales from the United States.  Three months ended March 31,2011
    
    
    2010Soft Good Basics
    
    
    36.7
    %
    
    
    41.7
    %Hard Good Basics
    
    
    35.5
    %
    
    
    38.2
    %Accessories and Décor
    
    
    10.7
    %
    
    
    9.8
    %Toys and Entertainment
    
    
    15.6
    %
    
    
    9.6
    %Other
    
    
    1.5
    %
    
    
    0.7
    %Total
    
    
    100.0
    %
    
    
    100.0
    %
  Three months ended March 31,2011
    
    
    2010Toys R Us, Inc. and Babies R Us, Inc.
    
    
    38.5
    %
    
    
    45.4
    %Walmart
    
    
    13.9
    %
    
    
    6.8
    %Target
    
    
    9.6
    %
    
    
    10.9
    %
    15




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KID BRANDS, INC AND SUBSIDIARIES
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
   NOTE 7  FINANCIAL INSTRUMENTS
        Fair Value Measurements as of March 31, 2011March 31, 2011
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3Interest Rate Swap Agreement
    
    $
    (71
    )
    
    $
    
    
    
    $
    (71
    )
    
    $
    
 Fair Value Measurements as of December 31, 2010December 31, 2010
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3Interest Rate Swap Agreement
    
    $
    (87
    )
    
    $
    
    
    
    $
    (87
    )
    
    $
    
   16




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KID BRANDS, INC AND SUBSIDIARIES
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
    Derivative Instruments
  Cash Flow Hedges
      Non-Qualifying Derivative Instruments
   17




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KID BRANDS, INC AND SUBSIDIARIES
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
  NOTE 8  COMPREHENSIVE INCOME
  Three Months Ended March 31,2011
    
    
    2010Net (loss) income
    
    $
    (213
    )
    
    $
    3,468Other comprehensive income:Unrealized gain on derivative
    
    
    16
    
    
    
    Foreign currency translation adjustments
    
    
    (37
    )
    
    
    97Comprehensive (loss) income
    
    $
    (234
    )
    
    $
    3,565
 NOTE 9  INCOME TAXES
    (in thousands)Balance at December 31, 2010
    
    $
    542Increase related to prior year tax provisions
    
    
    176Balance at March 31, 2011
    
    $
    718
     18




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KID BRANDS, INC AND SUBSIDIARIES
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 NOTE 10  LITIGATION; COMMITMENTS AND CONTINGENCIES
      19




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KID BRANDS, INC AND SUBSIDIARIES
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
  Shah Rahman v. Kid Brands, et al.
         20




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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
    NOTE 13 SUBSEQUENT EVENTS
    21




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KID BRANDS, INC AND SUBSIDIARIES
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
    22




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ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  OVERVIEW
 ® ® ® ® ® ® ® ®
     Currency exchange rate fluctuations could increase
our expenses .
  23




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Inventory and Intangible Assets
    24




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Recent Developments
 TRC Matters
          25




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LaJobi Matters
  Company Outlook
  
    
    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;
  26




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(ii)
    
    increasing our existing product penetration (selling more products
to existing customer locations);
 (iii)
    
    increasing our existing store or online penetration (selling to
more store locations within each large, national retail customer or their
associated websites); and
 (iv)
    
    expanding and diversifying of our distribution channels, with
particular emphasis on sales into international markets and non-traditional
infant and juvenile retailers;
 
    
    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
 The state of the economy may impact our business
 Further
potential disruptions in the credit markets may adversely affect the availability and cost of
short-term funds for liquidity requirements and our ability to meet long-term commitments, which
could adversely affect our results of operations, cash flows, and financial condition
 SEGMENTS
  RESULTS OF OPERATIONSTHREE MONTHS ENDED MARCH 31, 2011 AND 2010
 ®
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Liquidity and Capital Resources
       28




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Earnouts with respect to Acquisitions
    Debt Financings
  March 31,
    
    
    December 31,2011
    
    
    2010Term Loan (Credit Agreement)
    
    $
    50,750
    
    
    $
    54,000Note Payable (CoCaLo purchase)
    
    
    533
    
    
    
    526Total
    
    
    51,283
    
    
    
    54,526Less current portion
    
    
    13,533
    
    
    
    13,526Long-term debt
    
    $
    37,750
    
    
    $
    41,000
  29




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At March 31, 2011LIBOR Loans
    
    
    Base Rate LoansRevolving Loan
    
    
    3.01
    %
    
    
    5.00
    %Term Loan
    
    
    3.06
    %
    
    
    5.00
    %
 Credit Agreement Summary
      30




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31




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Other Events and Circumstances Pertaining to Liquidity
        32




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Contractual Obligations
  Total
    
    
    2011
    
    
    2012
    
    
    2013
    
    
    2014
    
    
    2015
    
    
    ThereafterOperating Lease Obligations
    
    $
    15,601
    
    
    $
    2,086
    
    
    $
    3,060
    
    
    $
    3,165
    
    
    $
    1,916
    
    
    $
    1,982
    
    
    $
    3,392Purchase Obligations (1)
    
    
    44,055
    
    
    
    44,055
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Debt Repayment Obligations (2)
    
    
    50,750
    
    
    
    9,750
    
    
    
    13,000
    
    
    
    28,000
    
    
    
    
    
    
    
    
    
    
    
    Note Payable (3)
    
    
    533
    
    
    
    533
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Interest on Debt Repayment
Obligations (4)
    
    
    2,323
    
    
    
    1,053
    
    
    
    1,056
    
    
    
    214
    
    
    
    
    
    
    
    
    
    
    
    Royalty Obligations
    
    
    12,314
    
    
    
    4,016
    
    
    
    5,206
    
    
    
    2,016
    
    
    
    1,076
    
    
    
    
    
    
    
    Total Contractual Obligations (5)
    
    $
    125,576
    
    
    $
    61,493
    
    
    $
    22,322
    
    
    $
    33,395
    
    
    $
    2,992
    
    
    $
    1,982
    
    
    $
    3,392
 
 (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, 2011, approximately $22.7 million borrowed under the
Revolving Loan. The estimated 2011 interest payment for this Revolving Loan using an assumed 3.01%
interest rate is $0.7 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 the final installment on the CoCaLo Note, which was paid on April 2, 2011.(4)
    
    This amount reflects estimated interest payments on the long-term debt repayment obligations as
of March 31, 2011 calculated using an assumed interest rate of 3.06% 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 2 above).(5)
    
    Does not include contingent obligations under the Lease (or contingent obligations under other
off-balance sheet arrangements or otherwise), 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 and Note 10 to the Notes to Unaudited Consolidated Financial Statements. In
connection with the acquisitions of LaJobi and CoCaLo, the Company has concluded that no CoCaLo
Earnout Consideration and no LaJobi Earnout Consideration (or related finders fee) was earned or
will become payable, therefore no amounts with respect thereto are included in the table above.
(See Earnouts with respect to Acquisitions above). These amounts are not included in the above
table, as the amount of their potential settlement is not reasonably estimable in accordance with
applicable accounting standards.  Off Balance Sheet Arrangements
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CRITICAL ACCOUNTING POLICIES
    Recently Issued Accounting Standards
  Forward-Looking Statements
  
 ITEM 3.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
   34




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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 1.
    
    LEGAL PROCEEDINGS
 In re The Russ Companies, Inc., et al Case No.
11-22474-DHS.
 Shah Rahman v. Kid Brands, et al.
 
 ITEM 1A.
    
    RISK FACTORS
  We may be unable to recover all or any portion of amounts owed to us by TRC as a result of the
filing by TRC and its domestic subsidiaries of a voluntary petition for bankruptcy protection under
the United States Bankruptcy Code (the Code).
 .
 We may be obligated to make certain payments to TRC and/or its subsidiaries as a result of or
in connection with its bankruptcy filing.
  35




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State statutes allow courts, under certain specific circumstances, to void purchase
transactions in the event of the bankruptcy of the purchaser.
  If our divested gift business fails to satisfy certain obligations relating to their
operations, we could face third-party claims seeking to hold us liable for those obligations.
 We may be obligated to make
certain payments to TRC and/or its subsidiaries as a result of or in connection with its
bankruptcy filing
  36




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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 2, 3, 4 and 5 are not applicable and have been omitted.
  37




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SIGNATURES
  KID BRANDS, INC.
(Registrant)By       /s/ Guy A. PaglincoDate:      May 10, 2011
    Guy A. PaglincoVice President and Chief Financial Officer
(Principal Financial Officer and Principal Accounting Officer)  38




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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.
  39