RUSS BERRIE CO INC 
By Adjusted Net Income was
The Company noted that: (i) the first quarter of 2009 was its first full quarter as a streamlined business focused on the demographically attractive infant and juvenile market, following the divestiture of its gift business in
Summary Results (1)(2)
-- Net sales for the three months ended March 31, 2009 ("Q1
2009") increased 35.2% to $56.3 million, as compared to $41.6
million for the three months ended March 31, 2008 ("Q1 2008"),
primarily reflecting the acquisitions of LaJobi and CoCaLo on April 2,
2008
-- Net sales for the trailing 12-months ended March 31, 2009 (the "TTM
Period") were $243.9 million
-- Net income for Q1 2009 was $1.3 million, or $0.06 per diluted share, as
compared to $2.0 million, or $0.09 per diluted share, in Q1 2008
-- Adjusted net income(1) was $1.9 million, or $0.09 per diluted share, in
Q1 2009, as compared to $2.0 million, or $0.09 per diluted share, in Q1
2008
-- EBITDA from continuing operations(1) for Q1 2009 was $6.3 million
-- EBITDA from continuing operations(1) for the TTM Period was $27.3
million
(1) "Adjusted net income" and "Adjusted net income per share" for Q1 2009 and "EBITDA from continuing operations" for Q1 2009 and for the TTM Period are non-GAAP financial measures, which are described in detail under the heading "Non-GAAP Information" below and are reconciled to GAAP measures in the tables at the end of this release.
(2) As a result of the sale of the gift business on
Mr. Crain continued, "We believe we now have a strong and focused business model that generates considerable positive cash flow, even during a period of economic contraction, as our trailing 12-month results demonstrate. We also have several strategies in place to further expand our business. First, our core focus remains on creating design-led, innovative, branded products at a variety of price points that resonate across the spectrum of retailers and consumers we serve. Second, we are expanding our product offerings by developing new products in complementary categories. Third, we are pursuing opportunities to expand and diversify our distribution channels, with a particular emphasis on further penetrating key domestic accounts and expanding internationally. Fourth, we are leveraging our industry expertise to provide even more complete solutions for the baby nursery through sales and marketing collaborations among our businesses. Fifth, we will continue to aggressively manage our cost structure within each of our businesses and collaboratively through the consolidation of operational activities that capture supply chain, distribution channel and back office synergies. I am confident that these actions will enable us to realize additional opportunities to grow profitably and deliver shareholder value."
Mr. Crain concluded, "While the economic trends and consumer behavior are difficult to predict and our current expectations remain cautious for the remainder of the year, we are assuming some strengthening in the economy during the second half. Accordingly, we currently anticipate that our earnings performance for the full year 2009 will reflect modest improvement over our trailing 12-month results, as adjusted for special items."
First Quarter 2009 Results
Net sales for Q1 2009 increased 35.2% to
Gross profit for Q1 2009 was
Selling, general and administrative expense for Q1 2009 was
Other expense was
Net income was
At
Non-GAAP Information
In this release, certain financial measures for the three months ended
In addition to the interest expense, income taxes, depreciation and amortization added back to net income for continuing operations and set forth in detail in the reconciliation table attached to this press release, the following non-cash, special or non-recurring charges were added back to net loss from continuing operations to arrive at EBITDA from continuing operations for the TTM Period:
(i) a non-cash impairment charge of $130.2 million to goodwill, recorded
in the fourth quarter and full year 2008 in "impairment of goodwill
and other intangibles", as a result of the annual impairment testing
process under SFAS 142;
(ii) a non-cash impairment charge of $6.7 million, recorded in the fourth
quarter and full year 2008 in "impairment of goodwill and other
intangibles", related to the reduced value of the Company's
Applause(R) trademark resulting from the sale of the gift business;
(iii) a non-cash impairment charge of $3.7 million, recorded in the fourth
quarter and full year 2008 in "cost of goods sold", related to
certain infant and juvenile trade names as a result of the annual
impairment testing process under SFAS 142;
(iv) non-cash expense of $1.7 million related to stock-based
compensation, recorded in selling, general and administrative
expense;
(v) transaction costs related to the sale of the gift business of
$1.4 million, recorded in selling, general and administrative
expense; and
(vi) $0.4 million of severance costs associated with a former executive
recorded in Q1 2009 in selling, general and administrative expense.
These non-GAAP measures are not based on any comprehensive set of accounting rules or principles. We believe that non-GAAP measures have limitations in that they do not reflect all of the amounts associated with our results of operations as determined in accordance with GAAP. However, the Company believes that the non-GAAP measures presented in this release are useful to investors as they enable the Company and its investors to evaluate and compare the Company's results from operations and cash resources generated from its business in a more meaningful and consistent manner (by excluding specific items which are not reflective of ongoing operating results) and provides an analysis of operating results using the same measures used by the Company's chief operating decision makers to measure the performance of the Company. These non-GAAP financial measures result largely from our management's determination that the facts and circumstances surrounding the excluded charges are not indicative of the ordinary course of the ongoing operation of our business. As a result, the non-GAAP financial measures presented by us in this release may not be comparable to similarly titled measures reported by other companies, and are included only as supplementary measures of financial performance. This data is furnished to provide additional information and should not be considered in isolation as a substitute for measures of performance prepared in accordance with GAAP. Reconciliations of these non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP are included in the tables attached to this press release.
Conference Call Information
The conference call, which will be held at
Corporate Governance and Available Information
The Company makes available a wide variety of information free of charge on its website at www.russberrieij.com. The Company's filings with the United States Securities and Exchange Commission (the "SEC"), including our Annual Reports on Form 10-K, are available on the Company's website as soon as reasonably practicable after the reports are electronically filed with the SEC. Mailed copies of our complete audited financial statements for fiscal 2008 can be obtained free of charge by writing to the Company at Russ Berrie and Company, Inc., 1800 Valley Road,
About Russ Berrie and Company, Inc.
Russ Berrie and Company, Inc. and its subsidiaries are leaders in the design, development and distribution of infant and juvenile branded products. Its design-led products are sold primarily through mass market, specialty, food, drug and independent retailers worldwide.
The Company's business is comprised of four wholly-owned subsidiaries: Kids Line, LLC; LaJobi, Inc.; Sassy, Inc.; and CoCaLo, Inc. Through these subsidiaries, the Company designs and markets branded infant and juvenile products in a number of complementary categories including, among others: infant bedding and related nursery accessories and decor (Kids Line(R) and CoCaLo(R)); nursery furniture and related products (LaJobi(R)); and developmental toys and feeding, bath and baby care items with features that address the various stages of an infant's early years (Sassy(R)). In addition to the Company's branded products, the Company also markets certain categories of products pursuant to various licenses, including Carter's(R), Disney(R), Graco(R) and Serta(R).
Note: This press release contains certain forward-looking statements. Additional written and oral forward-looking statements may be made by the Company from time to time in Securities and Exchange Commission (SEC) filings and otherwise. The Private Securities Litigation Reform Act of 1995 provides a safe-harbor for forward-looking statements. These statements may be identified by the use of forward-looking words or phrases including, but not limited to, "anticipate", "believe", "expect", "project", "intend", "may", "planned", "potential", "should", "will" or "would". The Company cautions readers that results predicted by forward-looking statements, including, without limitation, those relating to the Company's future business prospects, revenues, working capital, liquidity, capital needs, order backlog, interest costs and income are subject to certain risks and uncertainties that could cause actual results to differ materially from those indicated in the forward-looking statements. Specific risks and uncertainties include, but are not limited to those set forth under Item 1A, "Risk Factors", of the Company's most recent Annual Report on Form 10-K filed with the SEC. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise.
(tables to follow)
Russ Berrie and Company, Inc.
Consolidated Statements of Operations
(Dollars in Thousands, Except Per Share Data)
Three Months Ended March 31,
2009 2008
Net sales $56,278 $41,612
Cost of sales 39,397 26,457
Gross profit 16,881 15,155
Selling, general and administrative expenses 12,495 8,985
Operating income 4,386 6,170
Other (expense) income:
Interest expense, including amortization and
write-off of deferred financing costs (2,179) (1,020)
Interest and investment income 6 45
Other, net (22) (14)
(2,195) (989)
Income from continuing operations before
income tax provision 2,191 5,181
Income tax (benefit) provision 855 2,021
Income from continuing operations 1,336 3,160
Discontinued operations:
Loss from discontinued operations - (2,206)
Income tax (benefit) from discontinued
operations - (1,046)
(Loss) from discontinued operations, net
of tax - (1,160)
Net Income $1,336 $2,000
Basic earning (loss) per share:
Continuing operations $0.06 $0.15
Discontinued operations 0.00 (0.06)
$0.06 $0.09
Diluted earning (loss) per share:
Continuing operations $0.06 $0.15
Discontinued operations 0.00 (0.06)
$0.06 $0.09
Weighted average shares:
Basic 21,498,000 21,300,000
Diluted 21,498,000 21,325,000
Russ Berrie and Company, Inc.
Selected Consolidated Balance Sheet Data
(Dollars in Thousands)
March 31, December 31,
2009 2008
Cash and cash equivalents $1,846 $3,728
Accounts receivable, net 38,940 39,509
Inventories, net 36,664 47,169
Other current assets 3,644 4,208
Long-term assets 141,113 140,820
Total assets $222,207 $235,434
Short-term debt $35,547 $27,047
Other current liabilities 29,808 42,521
Long-term liabilities 77,041 87,990
Total liabilities 142,396 157,558
Shareholders' equity 79,811 77,876
Total liabilities and shareholders'
equity $222,207 $235,434
Russ Berrie and Company, Inc.
Reconciliation of Non-GAAP Financial Measures
(Dollars in Thousands, Except per Share Data)
Three Months Ended
March 31, 2009
To arrive at Adjusted net income and Adjusted
net income per share:
Net income from continuing operations, as reported $1,336
Add: Severance costs 394
Add: Write-off of deferred financing costs
and related legal expense 495
Less: Tax impact of above items (using
assumed 39% effective rate) 347
Adjusted net income $1,878
Adjusted net income per diluted share $0.09
To arrive at EBITDA from continuing operations:
Net income from continuing operations, as reported $1,336
Add: Net income tax provision 855
Add: Net interest expense, including amortization
and write-off of deferred financing costs 2,179
Add: Depreciation and amortization 952
Add: Stock-based compensation expense 536
Add: Severance costs 394
Add: Transaction costs related to gift sale 81
EBITDA from continuing operations $6,333
Trailing Twelve Months
Ended March 31, 2009
To arrive at EBITDA from continuing operations:
Net loss from continuing operations, as reported $(101,162)
Less: Net income tax benefit (30,198)
Add: Net interest expense, including amortization
and write-off of deferred financing costs 10,574
Add: Depreciation and amortization 3,897
Add: Goodwill impairment charge 130,198
Add: Applause tradename impairment charge 6,733
Add: I&J tradename impairment charges 3,700
Add: Stock-based compensation expense 1,726
Add: Transaction costs related to gift sale 1,405
Add: Severance costs 394
EBITDA from continuing operations $27,267
AT THE COMPANY AT FINANCIAL DYNAMICS
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Marc S. Goldfarb Erica Pettit / Leigh Parrish
Senior Vice President & General Counsel General Information
201-405-2454 212-850-5600
SOURCE Russ Berrie and Company, Inc.
