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Kid Brands Inc Reports Operating Results (10-K)
Posted by: gurufocus (IP Logged)
Date: March 31, 2011 05:22PM
Kid Brands Inc (KID) filed Annual Report for the period ended 2010-12-31. Kid Brands Inc. has a market cap of $157.1 million; its shares were traded at around $7.29 with a P/E ratio of 9.5 and P/S ratio of 0.6.
Highlight of Business Operations:
Most of our infant and juvenile products have selling prices between $1 and $235, with the exception of LaJobi furniture products, which have selling prices of $10 to $575. Product sales are highly diverse and no single item represented more than 4% of our consolidated net sales in 2010. The Company currently categorizes its sales in five product categories: Soft Good Basics, Hard Good Basics, Accessories and Décor, Toys and Entertainment, and Other. Soft Good Basics includes bedding, blankets and mattresses. Hard Good Basics includes cribs and other nursery furniture, feeding, food preparation and kitchen products, baby gear and organizers. Accessories and Décor includes hampers, lamps, rugs and décor. Toys and Entertainment includes developmental toys, bath toys and mobiles. Other includes all other products that do not fit in the above four categories. The following table sets forth the Companys consolidated net sales by product category, as a percentage of total consolidated net sales, for the years ended December 31, 2010, 2009, and 2008:
Our products are marketed through our own direct sales force of full-time employees, as well as through independent manufacturers representatives and distributors to retail customers in the United States and certain foreign countries including, but not limited to, mass merchandisers, baby superstores, specialty stores, department stores and boutiques. During 2010, we maintained a direct sales force and distribution network for our operations in the United States, the United Kingdom and Australia. We also maintain relationships with several independent representatives to service select domestic and foreign retail customers, as well as international distributors to service certain retail customers in several foreign countries. Our sales attributable to foreign-based operations were $9.4 million, $8.5 million and $8.5 million for the years ended December 31, 2010, 2009, and 2008, respectively. Our consolidated foreign sales from continuing operations, including export sales from the United States, aggregated $22.9 million, $19.8 million and $18.8 million for the years ended December 31, 2010, 2009, and 2008, respectively. See Note 17 of Notes to Consolidated Financial Statements for information with respect to revenues from external customers and total assets for each of the years ending December 2010, 2009, and 2008, respectively, as well as specified geographic information.
In connection with the Gift Sale, a newly-formed Delaware limited liability company owned 100% by KID (the Licensor) executed a license agreement (the License Agreement) with The Russ Companies (TRC), the purchaser of the Gift Business (Buyer). Pursuant to the License Agreement, the Licensor has granted to TRC an exclusive license (subject to certain specified exceptions) permitting the Licensee to use specified intellectual property, consisting generally of the Russ and Applause trademarks and trade names (the Retained IP). Subject to provisions for early termination for specified events of default, the License Agreement will expire on December 23, 2013 (subject to a nine-month extension under specified circumstances). TRC has the option to purchase all of the Retained IP from the Licensor for $5.0 million, and the Licensor has the option to require TRC to purchase all of the Retained IP for $5.0 million, each under specified circumstances. Under the License Agreement, TRC is required to pay the Licensor a fixed, annual royalty (the Royalty) equal to $1,150,000. The initial annual Royalty was due and payable in one lump sum on December 31, 2009. Thereafter, the Royalty is due quarterly at the close of each three (3) month period during the term. TRC has not paid the initial lump sum Royalty payment and, to date, only the quarterly Royalty payment due on March 23, 2010 has been received, which was recorded as other income in the first quarter of 2010. KID and TRC are continuing their discussions with respect to among other things, payments due to Licensor under the License Agreement. See Item 7, Managements Discussion and Analysis of Financial Condition and Results of Operations under the section entitled Other Events and Circumstances Pertaining to Liquidity for a discussion of the Royalty defaults and ongoing discussions with respect thereto and other arrangements with TRC. A detailed description of the Gift Sale can be found in the Companys Current Report on Form 8-K filed on December 29, 2008.
Stocks Discussed: KID,