RUSS BERRIE CO INC 
By After Transformational Year, Company's Strategy Is Focused On the Attractive Infant & Juvenile Industry
As a result of the sale of the Company's gift business on
Summary Results (1)
-- The Company reported that net sales increased 40.6% to $229.2 million in
2008, as compared to $163.1 million in 2007, as a result of the
Acquisitions
-- Aggregate net sales of the Company and LaJobi and CoCaLo were $251.7
million in 2008, as compared to $236.5 million in 2007, an increase of
6.4%
-- Adjusted pre-tax income from continuing operations, which excludes
specified non-cash impairment charges of an aggregate of $140.6 million
in 2008 and $10.9 million in 2007 (the "Impairment Charges"),
was $12.2 million in 2008 as compared to $24.2 million in 2007
(1) Aggregate net sales and adjusted pre-tax income from continuing operations 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.
Full Year 2008 Results
Net sales for 2008 increased 40.6% to
Gross profit for 2008 was
Selling, general and administrative expenses for 2008 were
Loss from continuing operations for 2008 was
Loss from discontinued operations, net of tax, was a loss of
Net income/(loss), which includes the aggregate impairment charges of
At
Fourth Quarter 2008 Results
Net sales for the fourth quarter of 2008 increased 31.2% to
Loss from continuing operations for the fourth quarter of 2008 was
Income/(loss) from discontinued operations, net of tax, was
Net loss for the fourth quarter of 2008 which includes the aggregate impairment charges of
Mr. Crain concluded, "Looking ahead to 2009 and beyond, we believe we are well-positioned to further build upon our market leadership positions and manage costs prudently to ensure we are protecting margins. We anticipate consumer spending and retailer inventory replenishment will remain conservative at least through the first half of 2009. At the same time, we believe our design-led and branded products sold as Kids Line(R), Sassy(R), LaJobi(R) and CoCaLo(R), as well as our licensed products, such as Carter's(R) brand bedding separates, Graco(R) brand cribs and Serta(R) crib mattresses, remain appealing to retailers and consumers alike. While our businesses will continue to be managed independently, we plan to maximize synergies across our businesses through opportunities to cross-market and consolidate certain operational and other activities."
Change of Address
The Company also announced that it has moved the location of its principal executive offices to 1800 Valley Road,
Non-GAAP Information
In this release, certain financial measures for the years ended
Aggregate net sales combines the sales of the Company with those of LaJobi and CoCaLo for the periods prior to their respective acquisitions presented herein. Adjusted pre-tax income from continuing operations excludes the non-cash Impairment Charges.
The non-cash Impairment Charges excluded from the full year of 2008 to arrive at adjusted pre-tax income from continuing operations consist of an aggregate of
(i) a non-cash impairment charge of
(ii) a non-cash impairment charge of
(iii) a non-cash impairment charge of
The Impairment Charges excluded from the full year of 2007 to arrive at pro forma pre-tax income from continuing operations consist of an aggregate of
(i) an aggregate non-cash impairment charge of
(ii) a
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. Such reconciliations indicate the specific items included in, or excluded from, net sales and income/(loss) from continuing operations before income tax provision to arrive at the non-GAAP adjusted financial measures presented.
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 Years Ended
December 31, December 31,
2008 2007 2008 2007
Net sales $55,548 $42,342 $229,194 $163,066
Cost of sales 44,334 33,320 159,792 111,361
Gross profit 11,214 9,022 69,402 51,705
Selling, general and
administrative expenses 15,218 8,914 51,457 34,790
Impairment of goodwill and
intangibles 136,931 - 136,931 -
Total operating expenses 152,149 8,914 188,388 34,790
(Loss) income from
continuing operations (140,935) 108 (118,986) 16,915
Other (expense) income (4,043) (723) (9,385) (3,693)
(Loss) income from
continuing operations
before income tax
provision (144,978) (615) (128,371) 13,222
Income tax (benefit)
provision (33,860) (240) (29,031) 4,127
(Loss) income from
continuing operations (111,118) (375) (99,340) 9,095
Discontinued Operations:
Loss from discontinued
operations (1,645) (5,310) (17,268) (1,370)
Gain on disposition 905 - 905 -
Income tax provision
(benefit) from
discontinued operations (2,236) 2,625 (4,147) (1,183)
(Loss) income from
discontinued operations
net of tax 1,496 (7,935) (12,216) (187)
Net income (loss) $(109,622) $(8,310) $(111,556) $8,908
Basic (loss) earnings per
share:
Continuing operations $(5.16) $(0.02) $(4.66) $0.43
Discontinued operations 0.07 $(0.37) (0.57) (0.01)
$(5.09) $(0.39) $(5.23) $0.42
Diluted (loss) earning per
share:
Continuing operations $(5.16) $(0.02) $(4.66) $0.43
Discontinued operations 0.07 $(0.37) (0.57) (0.01)
$(5.09) $(0.39) $(5.23) $0.42
Weighted average shares:
Basic 21,477,000 21,130,000 21,344,000 21,130,000
Diluted 21,477,000 21,215,000 21,344,000 21,215,000
Russ Berrie and Company, Inc.
Selected Consolidated Balance Sheet Data
(Dollars in Thousands)
December 31, December 31,
2008 2007*
Cash and cash equivalents $3,728 $21,925
Accounts receivable, net 39,509 62,103
Inventories, net 47,169 59,658
Other current assets 4,208 5,419
Long-term assets 140,820 191,018
Total assets $235,434 $340,123
Short-term debt $27,047 $34,844
Other current liabilities 42,521 51,128
Long-term liabilities 87,990 49,512
Total liabilities 157,558 135,484
Shareholders' equity 77,876 204,639
Total liabilities and shareholders' equity $235,434 $340,123
* The balance sheet as of December 31, 2007 includes the assets and
liabilities of the gift business, which was subsequently sold on
December 23, 2008.
Russ Berrie and Company, Inc.
Reconciliation of Aggregate Net Sales
and
Adjusted Income (Loss) from Continuing Operations
Before Income Tax Provision
(Dollars in Thousands, Except per Share Data)
Years Ended
December 31,
2008 2007
Net sales, as reported $229,194 $163,066
Add: Net sales of LaJobi for periods
prior to its acquisition 16,955 54,249
Add: Net sales of CoCaLo for periods
prior to its acquisition 5,547 19,221
Aggregate net sales $251,696 $236,536
Income (loss) from continuing operations
before income tax provision, as reported $(128,371) $13,222
Add: Goodwill impairment charge 130,200 -
Add: Applause tradename impairment
charge 6,700 -
Add: I&J tradename impairment charges 3,700 -
Add: MAM Agreement impairment charge - 10,000
Add: Note receivable write-down - 940
Adjusted pre-tax income from continuing
operations $12,229 $24,162
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.
