EAST RUTHERFORD, NJ--( April 1, 2011) - Kid Brands, Inc. (NYSE: KID) today reported financial results for the fourth quarter and full year ended December 31, 2010 ("Q4 2010" and "FY 2010," respectively).

Summary Results
Three Months Ended
December 31,
Twelve Months Ended
December 31,
in millions, 2010 2009 % Change 2010 2009 %
Change
Net sales $ 75.3 $ 67.6 11.3 % $ 275.8 $ 243.9 13.1 % Net income (loss) $ 22.8 $ 13.2 72.6 % $ 34.7 $ 11.7 196.2 % Net income (loss) per diluted share $ 1.04 $ 0.61 70.5 % $ 1.59 $ 0.54 194.4 % Adjusted net income* $ 3.9 $ 4.6 (15.3 )% $ 16.0 $ 12.8 25.0 % Adjusted net income per diluted share* $ 0.18 $ 0.21 (16.8 )% $ 0.73 $ 0.60 23.3 %
* "Adjusted net income" and "Adjusted net income per diluted share" for each of Q4 2010, FY 2010 and the three and 12 months ended December 31, 2009 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 table at the end of this release.

Bruce G. Crain, President and Chief Executive Officer, commented, "We are pleased with our 2010 operating performance and the progress we continue to achieve on our core longer-term strategic growth initiatives. As a result of our efforts, we exceeded our prior guidance for full year 2010 net sales and adjusted earnings per share. Even within a challenging consumer and retailer environment, we had a solid 2010, and believe we are well-positioned to achieve our growth initiatives and benefit from any macroeconomic improvement. We believe we continue to strengthen our market positions in our core categories and have executed well against our new product and new channel growth initiatives."

Fourth Quarter 2010 Results

Net sales for Q4 2010 increased 11.3% to $75.3 million, compared to $67.6 million for the three months ended December 31, 2009 ("Q4 2009"). This organic growth, which was primarily the result of strong top-line growth at LaJobi and new product launches at Sassy, was somewhat offset by softness in our bedding businesses. LaJobi's growth was driven substantially by further expansion of crib placements at Walmart and Sassy's increase was driven primarily by the further expansion of its licensed Garanimals® product line at Walmart.

Gross profit was $16.3 million, or 21.6% of net sales, for Q4 2010, as compared to $21.2 million, or 31.3% of net sales, for Q4 2009. Gross profit and gross profit margins decreased as a result of: (i) a $6.5 million charge recorded in Q4 2010 related to previously announced anti-dumping duties that we anticipate will be incurred by LaJobi, which decreased gross margins by 8.7 percentage points; (ii) higher commodity and labor costs affecting our cost of goods sold; (iii) incremental promotional allowances provided to retailers; (iv) strong sales growth at LaJobi, whose furniture and mattress products typically carry lower gross margins due to the nature of the category; (v) a continued shift in product mix toward more opening price point and other lower margin product categories, including strong sales of licensed products, which tend to have a lower margin as a result of royalties recorded in cost of goods sold; and (vi) increased freight and product costs.

Selling, general and administrative expense was $15.4 million, or 20.5% of net sales, for Q4 2010 compared to $12.9 million, or 19.1% of net sales, for Q4 2009. SG&A expense increased as a percentage of sales and in absolute terms primarily as a result of additional investments in product development, marketing and operational resources to drive future growth, partially offset by variable cost leverage associated with core product sales growth.

Other expense was $1.3 million for Q4 2010 as compared to $1.1 million for Q4 2009. This increase is due primarily to $0.3 million of interest expense related to the anticipated anti-dumping duties at LaJobi, offset by lower borrowings and borrowing costs, as well as a non-recurring favorable change of $0.7 million in the fair market value of an interest rate swap agreement in Q4 2009, which was not a factor in 2010.

Income tax benefit was $23.2 million for Q4 2010 as compared to $6.1 million for Q4 2009. The difference between the effective rate and the statutory rate for each period was primarily related to reductions in the Company's tax valuation allowances.

As a result of the foregoing, net income for Q4 2010 was $22.8 million, or $1.04 per diluted share, compared to net income of $13.2 million, or $0.61 per diluted share, for Q4 2009.

Adjusted net income for Q4 2010 was $3.9 million, or $0.18 per diluted share, as compared to $4.6 million, or $0.21 per diluted share, for Q4 2009. Adjusted net income for Q4 2010 reflects adjustments to net income, as reported, to exclude the effect of: (i) the accruals recorded in the aggregate amount of $6.9 million related to anticipated anti-dumping duty payment requirements and associated interest expense (the "Customs Accrual"); and (ii) an income tax benefit of $23.2 million resulting from a reduction of tax valuation allowances (collectively, the "Q4 2010 Items"), and the related assumed tax effects. Adjusted net income for Q4 2009 reflects adjustments to net income, as reported, to exclude the effect of: (i) an income tax benefit of $6.1 million resulting from a reduction of tax valuation allowances and (ii) $0.5 million in severance costs associated with a former executive (collectively, the "Q4 2009 Items"), and the related assumed tax effects.

Full Year 2010 Results

Net sales for FY 2010 increased 13.1% to $275.8 million, compared to $243.9 million for the twelve months ended December 31, 2009 ("FY 2009"). This increase was primarily the result of organic top-line growth at LaJobi, Sassy and CoCaLo. Strong growth at LaJobi was driven primarily by the performance of its Graco® licensed products and recent crib placements at Walmart stores, while Sassy's increase was driven primarily by its licensed Garanimals® product line for Walmart and the launch of a collection of Carter's licensed products, and CoCaLo's increase was due to continued strong performance of several top-selling collections.

Net income for FY 2010 was $34.7 million, or $1.59 per diluted share, compared to net income of $11.7 million, or $0.54 per diluted share, for FY 2009.

Adjusted net income for FY 2010 was $16.0 million, or $0.73 per diluted share, as compared to $12.8 million, or $0.60 per diluted share, for FY 2009. Adjusted net income for FY 2010 reflects adjustments to net income, as reported, to exclude the effect of:
(i) the Customs Accrual;
(ii) an income tax benefit of $16.2 million resulting from a reduction of tax valuation allowances;
(iii) $0.3 million in severance costs recorded in the third quarter of 2010 associated with a former executive; and
(iv) $0.7 million in charges in the third quarter of 2010 associated with the discontinuance of Sassy's sleep positioner product line (collectively, the "FY 2010 Items"), and the related assumed tax effects.

Adjusted net income for FY 2009 reflects adjustments to net income, as reported, to exclude the effect of:
(i) an aggregate $15.6 million non-cash charge recorded in the second quarter of 2009 related to the consideration received by the Company in connection with the divestiture of its former gift business and the impairment of the Applause® trade name;
(ii) an income tax benefit of $7.2 million resulting from a reduction of tax valuation allowances; and
(ii) $0.9 million in aggregate severance costs recorded in the first and fourth quarters of 2009 associated with two former executives (collectively, the "FY 2009 Items"), and the related assumed tax effects.

At December 31, 2010, outstanding bank debt was $72.6 million. The Company's available borrowing capacity was $28.3 million at year end. Since the Company's current credit facility commenced on April 2, 2008, the Company has repaid approximately $58.4 million of debt, including approximately $9.5 million of bank debt during 2010 ($10.1 million in total debt including repayment of a note issued in connection with the CoCaLo acquisition).

2011 Outlook

Based on management's macroeconomic outlook and product launch plans for later in 2011, the Company currently estimates that it will achieve approximately mid-single digit net sales growth for the full year 2011 as compared to the full year 2010. The Company also currently anticipates that full year non-GAAP adjusted net income per diluted share for 2011 will be approximately flat as compared to 2010. This outlook assumes taxes at an effective tax rate of 39%.

As previously announced on March 15, 2011, the Company expects that:
(i) net sales for the first quarter of 2011 ("Q1 2011") will decline as compared to the comparable period in 2010, and substantially all estimated net sales growth in 2011 is anticipated to occur in the second half of the year due to several new product launches and assumptions about the macroeconomic consumer environment and specific retailer plans; and
(ii) it will experience slight profitability with respect to Q1 2011 non-GAAP adjusted net income. The foregoing adjusted net income outlook does not reflect any further adjustments that may result from the previously disclosed investigation at LaJobi.

As announced on March 15, 2011 and further discussed in the Company's Form 10-K for the year ended December 31, 2010 (the "2010 10-K"), this outlook reflects an expectation that margin pressures will continue in 2011 primarily related to rising commodity prices that will impact cost of goods sold, including costs of raw materials (particularly cotton and other fabrics), third party manufacturing labor, and freight. The Company is seeking to mitigate these pressures through vendor negotiations and resourcing, product reengineering, new product introductions and additional select pricing actions. The Company also expects to continue to make planned overhead and capital expenditure investments to drive longer-term growth and efficiencies.

Mr. Crain concluded, "We remain excited about our leadership position and growth potential within the large infant and juvenile industry. We believe our successful growth over the past few years has been driven increasingly by our strong brands and innovative product designs, as well as our ability to grow market share in a fragmented marketplace. While we believe we are prepared to navigate and mitigate what we now expect will be a difficult 2011 with respect to product costs, consumer uncertainty and retailer pressure, we remain confident that we will continue executing on our long-term growth and operational strategies.

Beyond 2011, we believe that emerging positive demographics for parenting could lead to a rebound in U.S. birth and that the prospects for, and our position in, the infant and juvenile products market will become even more favorable. As a result, we remain optimistic about Kid Brands' multi-faceted growth strategies."

Update on LaJobi Investigation

Subsequent to the Company's initial LaJobi-related disclosure on March 15, 2011, the Company's credit facility was amended to revise the definitions used in its financial covenants to accommodate the 2010 accounting treatment and potential future impact of specified LaJobi matters and to waive specified defaults related thereto. In addition to the termination of the two LaJobi executives, the Company has also taken other remedial actions including the initiation of certain enhancements to product import processes and procedures. The investigation by the Board is continuing, focusing on certain of LaJobi's business and staffing practices in Asia.

The Company also reported that:
(i) as a result of the Customs Accrual and related facts and circumstances, it has concluded that no earnout consideration related to the LaJobi acquisition is payable; and
(ii) it has concluded that no earnout consideration related to the CoCaLo acquisition is payable. The Company had previously disclosed a potential earnout payment of approximately $12 to $15 million in the aggregate relating to its acquisitions of LaJobi and CoCaLo, substantially all of which was estimated to relate to LaJobi.

See the related disclosure in the 2010 10-K for additional information regarding, among other things, the Customs Accrual and other related events, including the LaJobi earnout consideration, an internal investigation conducted by the Company's Board of Directors, the bank amendment, and other actions taken by the Company in connection with such events, as well as a related recent shareholder litigation.

KID BRANDS, INC. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (Dollars in Thousands, Except for Share and Per Share Data) (Unaudited) Three Months Ended Twelve Months Ended December 31, December 31, 2010 2009* 2010 2009* To arrive at Adjusted net income and Adjusted net income diluted share: Net income, as reported $ 22,768 $ 13,190 $ 34,672 $ 11,705 Less: tax benefit (23,212 ) (6,075 ) (16,208 ) (7,162 ) Income (loss) from operations before income tax benefit (444 ) 7,115 18,464 4,543 Add: Impairment and valuation reserve - - - 15,620 Add: U.S. Customs anti-dumping 6,859 - 6,859 - Add: Charge for discontinuance of sleep positioners products - - 667 - Add: Severance - 459 286 853 Less: Tax impact of above items (using assumed 39% effective rate) (2,502 ) (2,954 ) (10,248 ) (8,196 ) Adjusted net income $ 3,913 $ 4,620 $ 16,028 $ 12,820 Adjusted net income per diluted share $ 0.18 $ 0.21 $ 0.73 $ 0.60 Weighted-average diluted shares outstanding, as reported 21,952,000 21,568,000 21,838,000 21,532,000 Kid Brands, Inc.

Kid Brands, Inc. and its subsidiaries are leaders in the design, development and distribution of infant and juvenile branded products. Its design-led products are primarily distributed through mass market, baby super stores, specialty, food, drug, independent and e-commerce retailers worldwide.

The Company's operating business is composed 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 décor, kitchen and nursery appliances, and diaper bags (Kids Line® and CoCaLo®); nursery furniture and related products (LaJobi®); and developmental toys and feeding, bath and baby care items with features that address the various stages of an infant's early years (Sassy®). In addition to the Company's branded products, the Company also markets certain categories of products under various licenses, including Carter's®, Disney®, Graco® and Serta®. Additional information about the Company is available at www.kidbrandsinc.com.

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