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Kid Brands, Inc. Announces Suspension of LaJobi Wood Furniture Operations
$4.0 Million to $6.0 Million of Annualized Savings Anticipated
|By Marketwired .
|May 22, 2014 05:09 PM EDT
EAST RUTHERFORD, NJ -- (Marketwired) -- 05/22/14 -- Kid Brands, Inc. (OTCQB: KIDB) today announced that, in connection with the Company's previously announced review of strategic alternatives, it has decided to suspend the wood furniture operations of its LaJobi business unit.
Kid Brands and Graco Children's Products Inc. have mutually agreed to discontinue their license agreement for the design, manufacture and production of cribs, changing tables, dressers and other infant and juvenile furniture, including an immediate waiver of LaJobi's obligation to pay additional guaranteed royalties. The Company and Graco will work together to the benefit of retail customers to facilitate a seamless transition of the production of Graco-branded furniture to a new licensee. As part of the suspension of LaJobi's wood furniture operations, Kid Brands plans to sell its remaining inventory of Graco, Bonavita and other wood furniture brands.
Kerry Carr, Executive Vice President, COO and CFO of Kid Brands, commented, "In working to improve Kid Brands' overall financial performance, our management team and Board of Directors are continuing to conduct a comprehensive evaluation of the Company's businesses. After a thorough review of our LaJobi business unit, we have determined that the wood furniture operations are unable to meet satisfactory financial objectives within the current business structure. Accordingly, we have made the decision to suspend these operations, which will allow us to focus our resources on other areas of our business, further right-size our expense structure and continue our efforts to improve Kid Brands' overall profitability."
Ms. Carr added, "Graco has been a wonderful business partner throughout the years of our license agreement. We recognize the strong value that our customers and consumers attribute to the Graco brand. As our partnership concludes, we are working diligently with Graco's team to preserve the brand's strong reputation in the marketplace, as well as to ensure a smooth servicing of customer orders."
Laurel Hurd, President of Graco Children's Products, Inc., commented, "Over the years, our relationship with Kid Brands and LaJobi has produced high quality products for consumers. We are working closely with the Kid Brands and LaJobi teams to seamlessly transition the business to a new licensee, while maintaining the high levels of quality and service that our customers have come to expect from Graco."
The Company anticipates that the suspension of the wood furniture operations of LaJobi will generate annualized savings of approximately $4.0 million to $6.0 million. Kid Brands expects a reduction in the work force associated with the cessation of LaJobi's wood furniture operations. Certain positions, however, are expected to be retained to help maximize value from LaJobi's assets. The Company also intends to keep its Consumer Services function active to receive and address consumer inquiries. LaJobi's warehouse and corporate office lease expires in July 2014 and will not be renewed.
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 ecommerce retailers worldwide.
The Company's current operating subsidiaries consist of: Kids Line, LLC; LaJobi, Inc.; Sassy, Inc.; and CoCaLo, Inc. Through these wholly-owned subsidiaries, the Company designs, manufactures (through third parties) and markets branded infant and juvenile products in a number of complementary categories including, among others: infant bedding and related nursery accessories and décor and nursery appliances (Kids Line® and CoCaLo®); developmental toys and feeding, bath and baby care items with features that address the various stages of an infant's early years, as well as a line of infant gear products (Sassy®); and mattresses and related products (LaJobi®). In addition to the Company's branded products, the Company also markets certain categories of products under various licenses, including Carter's®, Disney® and Serta®. Additional information about the Company is available at kidbrands.com.
Note: This press release contains certain forward-looking statements, including, but not limited to, statements with respect to the conduct of the Company's strategic and financial review process. 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, "believe", "plan", "anticipate", "may", "potential", "should", "will", "would", "could", "might", "possible", "contemplate", "continue", "expect", "intend", and/or "seek". The Company cautions readers that results predicted by forward-looking statements, including, without limitation, those relating to our future business prospects, revenues, working capital, liquidity, capital needs, 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, the risk that the Company may not realize the anticipated savings from the suspension of LaJobi's wood furniture operations or be able to identify or consummate other appropriate transactions or opportunities to improve the Company's overall profitability or enhance shareholder value and those set forth under Part I, Item 1A, Risk Factors, of the Company's most recent Annual Report on Form 10-K and any subsequent filings with the SEC. Forward-looking statements speak only as of the date the statements are made. Except as required under the federal securities laws and rules and regulations of 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.
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