New Threads Only:  Add to Google Reader or Homepage
New Threads & Replies:  Add to Google Reader or Homepage
Forums are for serious investors only. GuruFocus Forum Rules.

Forum List » Business News and Headlines
SEC Filings, Earing Reports, Press Releases
New Topic Search
Goto Thread: PreviousNext
Goto: Forum ListMessage ListNew TopicSearchLog In
Kid Brands Inc Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: November 9, 2011 06:11AM

Kid Brands Inc (KID) filed Quarterly Report for the period ended 2011-09-30. Kid Brands has a market cap of $64.9 million; its shares were traded at around $3 with a P/E ratio of 4.4 and P/S ratio of 0.2.



Highlight of Business Operations:

Selling, general and administrative expense was $16.3 million, or 23.5% of net sales, for the three months ended September 30, 2011 compared to $13.7 million, or 19.3% of net sales, for the three months ended September 30, 2010. Selling, general and administrative expense increased primarily as a result of: (i) professional fees incurred in the aggregate amount of approximately $1.4 million in connection with the Company’s internal investigation of LaJobi’s import, business and staffing practices in Asia (the “LaJobi Investigation”) and Customs compliance investigations at Kids Line and CoCaLo, as well as related litigation and other costs (collectively, the “Customs Costs”); (ii) $0.8 million of transition costs related to the resignation of our former CEO, consisting primarily of severance and other benefits (of which approximately $0.4 million is a non-cash charge related to the acceleration of vesting of certain equity awards) (collectively “CEO Transition Costs”); (iii) approximately $0.7 million of trade show costs incurred in the third quarter of 2011, whereas similar costs were incurred in the fourth quarter during 2010; and (iv) on a percentage basis, a lower sales base.

The income tax provision for the three months ended September 30, 2011 was $246,000 on income before income tax provision of $166,000. The difference between the effective tax rate of 148.5% for the three months ended September 30, 2011 and the U.S. federal tax rate of 35% primarily relates to: (1) the true-up of prior year federal and state estimates in the aggregate amount of $166,000; (2) a provision for state tax, net of federal tax benefit, in the amount of $60,000; (3) an increase in the liability for unrecognized tax benefits of $7,000 as a result of additional interest being accrued; and (4) the effect of permanent adjustments of $9,000; offset by foreign adjustments related to foreign rate differences and unrepatriated foreign earnings in the amount of $54,000. The income tax provision for the three months ended September 30, 2010 was approximately $2,189,000 on income before tax provision of approximately $6,149,000. The difference between the effective tax rate of 36% for the three months ended September 30, 2010 and the U.S. federal tax rate of 35% primarily relates to: (1) the provision for state taxes, net of federal tax benefit, in the amount of $282,000; (2) the true-up of prior year federal and state estimates in the aggregate amount of $39,000; (3) foreign adjustments related to foreign rate differences and withholding taxes in the amount of $38,000; and (4) the effect of permanent adjustments of $50,000; offset by (i) state tax credits generated and utilized in the amount of $254,000; and (ii) settlement of a liability for unrecognized tax benefits of $56,000.

Gross profit was $49.2 million, or 25.9% of net sales, for the nine months ended September 30, 2011, as compared to $60.0 million, or 29.9% of net sales, for the nine months ended September 30, 2010. Gross profit decreased primarily as a result of: (i) a $2.2 million accrual for anticipated customs duty payment requirements resulting from the Customs Review; (ii) an accrual aggregating $0.7 million for remediation activities to bring certain LaJobi cribs into compliance with new federal crib safety standards that went into effect on June 28, 2011; (iii) additional inventory reserves related to certain underperforming product lines (approximately $1.2 million primarily related to a discontinued product program at Kids Line); (iv) $0.3 million in increased warehouse expense as a result of higher inventory levels; and (v) $0.3 million for anticipated customs duty payment requirements resulting from the LaJobi Investigation; and (vi) on an absolute basis, lower net sales, all of which was partially offset by a reduction in markdown allowances in the amount of $3.3 million.

Selling, general and administrative expense was $46.5 million, or 24.5% of net sales, for the nine months ended September 30, 2011 compared to $38.5 million, or 19.2% of net sales, for the nine months ended September 30, 2010. Selling, general and administrative expense increased primarily as a result of: (i) an aggregate of $4.5 million in Customs Costs; (ii) the $1.1 million accrual in connection with the TRC Lease; (iii) $0.8 million of CEO Transition Costs; (iv) approximately $0.7 million of trade show costs incurred in the first nine months ended September 30, 2011, whereas similar trade show costs were incurred in the fourth quarter of 2010; (v) $0.5 million of increased warehouse, outbound handling and shipping costs as a result of increased inventory; and (vi) on a percentage basis, a lower sales base.

The income tax provision for the nine months ended September 30, 2011 was $4.7 million on income before income tax provision of $0.4 million. The difference between the effective tax rate of 1,117.9% for the nine months ended September 30, 2011 and the U.S. federal tax rate of 35% primarily relates to the following discrete items: (1) a change in the valuation allowance against deferred tax assets associated with the sale of the Company’s former gift business in light of the TRC bankruptcy filing in the amount of $3.6 million, (2) an adjustment to the state deferred tax asset related to the enactment of a single sales factor in New Jersey in the amount of $0.6 million, (3) an increase for unrecognized tax benefits of $0.2 million, and (4) the true-up of prior year federal and state estimates in the aggregate amount of $166,000. The difference between the U.S. federal tax rate of 35% and the estimated effective tax rate for the year (excluding discrete items) of 42.7% primarily relates to: (1) a provision for state tax, net of federal benefit $22,000; and (2) the effect of permanent adjustments of $10,000. The income tax provision for the nine months ended September 30, 2010 was $7.0 million on income before income tax provision of $18.9 million. The difference between the effective tax rate of 37% for the nine months ended September 30, 2010 and the U.S. federal tax rate of 35% primarily relates to the provision for state taxes, net of federal tax benefit, in the amount of $964,000; offset by: (1) state tax credits generated and utilized of $254,000, (2) true-up of prior year tax estimates of $133,000, and (3) settlement of a liability for unrecognized tax benefits of $42,000.

Read the The complete Report



Stocks Discussed: KID,
Rate this post:




Sorry, only registered users may post in this forum.

Please Login if you have an account or Create a Free Account if you don't




Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial