8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported): November 3, 2004

Russ Berrie and Company, Inc.

(Exact Name of Registrant as Specified in Charter)

New Jersey	1-8681	22-1815337
(State or Other Jurisdiction	(Commission File Number)	(IRS Employer
of Incorporation)		Identification No.)
111 Bauer Drive, Oakland, New Jersey 07436
(Address of Principal Executive Offices) (Zip Code)
Registrant’s telephone number, including area code: (201) 337-9000
(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant

under any of the following provisions:

o            Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o            Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.l4a-12)

o            Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o            Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Section 2 – Financial Information

Item 2.02  Results of Operation and Financial Condition.

On  November 3, 2004, Russ Berrie and Company, Inc. issued a press release covering, among other things, results of operations and financial condition for the third quarter ended September 30, 2004.  Attached hereto as Exhibit 99.1 is a copy of the press release.

Section 9 – Financial Statements and Exhibits.

Item 9.01  Financial Statements and Exhibits.

Exhibit.  Attached hereto as Exhibit 99.1 is the press release of Russ Berrie and Company, Inc., dated November 3, 2004, announcing results of operations and financial condition for the quarter ended September 30, 2004.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date:	November 3, 2004	RUSS BERRIE AND COMPANY, INC.
		By:	/s/ JOHN D. WILLE
			John D. Wille
			Vice President and Chief Financial Officer

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EXHIBIT INDEX

Exhibit Number	Description
99.1	Press release announcing results of operations and financial conditions for the quarter ended September 30, 2004.

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EX-99.1

Exhibit 99.1

AT THE COMPANY:	AT FINANCIAL RELATIONS BOARD
John Wille – Vice President & CFO	Alison Ziegler
201-337-9000	212-445-8432

FOR IMMEDIATE RELEASE

RUSS BERRIE AND COMPANY REPORTS THIRD QUARTER RESULTS

Oakland, N.J. — November 3, 2004 — RUSS BERRIE AND COMPANY, INC. (NYSE: RUS) today reported results for its third quarter ended September 30, 2004.  Consolidated net sales were $79.3 million compared to $87.9 million in the third quarter 2003, a decrease of 9.8%.  Net income was $2.2 million or $0.11 per diluted share, compared to $11.6 million or $0.56 per diluted share in the third quarter of 2003.  As has been previously announced, the Company recognized a restructuring charge of $2.7 million after tax ($4.1 million pretax) in the quarter in order to right size its expense structure and align its management and sales organization with its strategic plans.  For the nine months ended September 30, 2004, consolidated net sales of $198.4 million were down $44.2 million or 18.2% compared to the prior year period.  The net loss of $12.9 million or $0.62 per share for the period compared to net income of $25.8 million or $1.25 per share in the first nine months of 2003.  The year-to-date loss includes the third quarter restructuring charge of $2.7 million after tax ($4.1 million pretax) and the previously disclosed second quarter inventory write-down of $9.0 million after tax ($13.0 million pre tax).

Mr. Andy Gatto, President and Chief Executive Officer commented, “This restructuring represents another major step in aligning our business to the changing retail environment. We are now more appropriately organized to address opportunities with both traditional specialty retailers and the mass distribution channel. Our recent acquisition of the Applause trademark will provide an important platform for developing the mass distribution channel. We have also made significant licensing progress. Along with the previously announced Marvel license, we have joined forces with Tom Wilson to create a new “Ziggy” line, with Sanrio (creators of “Hello Kitty”) to market the “KEROPPI” brand and with Dreamworks LLC to design and market products related to their 2005 movie release of “Madagascar”.”

Third quarter sales in the core segment declined from $73.7 million in 2003 to $63.7 million in 2004.  The Company attributes this decline to continued softness in the independent retail sales channel. Non-core sales for the quarter were up from $14.2 million in 2003 to $15.6 million in 2004 due to strong performance by its Sassy subsidiary. Non-core sales for the third quarter were negatively impacted in the amount of $2.6 million by the sale of Bright of America effective August 2, 2004.

Year-to-date core sales decreased 23.0% from $199.3 million in 2003 to $153.4 million in 2004.  The Company attributes this decline to the same factors that impacted the third quarter.  International sales benefited by approximately $5.9 million from favorable foreign exchange rates.  Year-to-date non-core sales increased 4% compared to the 2003 period. Year-to-date non-core sales were also negatively impacted by the sale of Bright of America.

The decline in third quarter and year-to-date results from the year ago period was attributable to reduced core segment sales, a lower gross margin and increased selling, general and administrative expense, in addition to the restructuring charge and inventory write-down as discussed above.

Russ Berrie and Company, Inc., an international leader in the gift industry, (and its wholly-owned subsidiaries), designs, develops, and distributes more than 8,000 innovative gift products through 41,000+ specialty retail stores worldwide. Known for its teddy bears and other plush animals, the Company's gift line is comprised of a diverse range of everyday, seasonal, and occasion-themed products. Founded in 1963 by the late Russ Berrie from a rented garage in New Jersey, today the Company operates offices, showrooms, and distribution centers throughout the world and trades on the NYSE under the symbol RUS.

Note: This News 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”, “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, 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 Company’s ability to continue to manufacture its products in the Far East, the seasonality of revenues, the actions of competitors, ability to increase production capacity, price competition, the effects of government regulation, results of any enforcement action by the People’s Republic of China (“PRC”) authorities with respect to the Company’s PRC operations, the resolution of various legal matters, possible delays in the introduction of new products, customer acceptance of products, changes in foreign currency exchange rates, issues related to the Company’s computer systems, the ability to obtain debt financing to fund acquisitions, the current and future outlook of the global retail market, and other factors.

—(Financial Tables Follow)—

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RUSS BERRIE AND COMPANY, INC.

FINANCIAL SUMMARY

(Unaudited)

(Dollars in Thousands, Except Per Share Data)

	THREE MONTHS ENDED SEPTEMBER 30,						NINE MONTHS ENDED SEPTEMBER 30,
	2004			2003			2004				2003
Net sales	$	79,272		$	87,848		$	198,405			$	242,566
Cost of Sales	41,893			41,228			117,094				112,618
Gross profit	37,379			46,620			81,311				129,948
Selling, general and administrative expense	35,349			32,217			103,819				98,032
Investment and other income-net	310			1,131			2,501				4,403
Income (loss) before provision (benefit)	2,340			15,534			(20,007			)	36,319
Provision (Benefit) for income taxes	92			3,939			(7,141			)	10,567
Net income (loss)	$		2,248	$		11,595	$		(12,866	)	$	25,752
Net income (loss) per share:
Basic	$		0.11	$		0.56	$		(0.62	)	$	1.25
Diluted	$		0.11	$		0.56	$		(0.62	)	$	1.25
Weighted average shares:
Basic	20,829,000			20,628,000			20,767,000				20,581,000
Diluted	20,829,000			20,732,000			20,767,000				20,681,000

—MORE—

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RUSS BERRIE AND COMPANY, INC.

SELECTED BALANCE SHEET DATA

(Unaudited)

(Dollars in thousands)

	September 30, 2004		December 31, 2003				September 30, 2003
Cash, cash equiv., marketable securities and other investments	$	72,495	$	232,050			$	223,953
Accounts receivable – net	68,741		82,795				84,778
Inventories – net	41,600		51,921				49,316
Other current assets	19,108		14,188				11,308
Property, plant and equipment and other assets	75,129		81,794				77,721
Total assets	$	277,073	$		462,748		$	447,076
Current liabilities	$	33,663	$			47,002	$	41,123
Deferred income taxes	328		328				—
Total liabilities	33,991		47,330				41,123
Shareholders’ equity	243,082		415,418				405,953
Total liabilities and shareholders’ equity	$	277,073	$	462,748			$		447,076

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