4Kids Entertainment Reports Second Quarter Results
4Kids Entertainment, Inc. (NYSE: KDE - News) today announced net revenues for the second quarter ended June 30, 2005 of $19.0 million compared to $22.1 million in the same period last year. Net income for the quarter was $631,000, or $0.05 per diluted share, compared to net income of $2.0 million, or $0.14 per diluted share, in the year-earlier period. The diluted weighted average common shares outstanding for the three months ended June 30, 2005 was 13,700,291 shares compared with 14,493,824 shares for the prior year.
For the six months ended June 30, 2005, net revenues totaled $39.3 million compared to $44.6 million in the same period last year. Net income for the six-month period was $2.6 million, or $0.19 per diluted share, compared to net income of $5.2 million, or $0.36 per diluted share, in the same period a year ago.
Al Kahn, Chairman and Chief Executive Officer, said "The decline in second quarter 2005 net revenues and net income resulted mainly from reduced home video revenue and international television sales. In addition, softer sales of Yu-Gi-Oh!(TM) licensed merchandise and reduced licensing revenues from Kirby(TM) were only partially offset by increased licensing revenue for Winx Club(TM) and American Kennel Club(TM) in the domestic market and Shaman King(TM) internationally."
Second quarter 2005 results were also impacted by somewhat higher overall expenses including increased advertising and promotional costs associated with building the "4Kids TV" brand and achieving and maintaining compliance with Sarbanes-Oxley.
"We continue to execute our strategic plan," said Kahn. "Our investment in the re-branding of the four hours of children's programming produced by 4Kids and broadcast on Saturday mornings on FOX as "4Kids TV" has helped to improve ratings, and has enhanced our ability to attract new programming that can translate into future licensing revenues and stronger ad sales.
"We are particularly excited about our strong fall 2005 line-up on 4Kids TV." We will be building on the initial broadcast success of Winx Club (TM), our first girls' television property. In September, 4Kids TV will be premiering the new BRATZ ® television series, based upon the top-selling line of fashion dolls from MGA Entertainment, as well as MAGICAL DOREMI (TM), one of Japan's most successful girls' programs. For our boys' audience, this fall, we will also debut the all new G.I. Joe: Sigma 6 (TM) series on 4Kids TV," stated Kahn.
"In addition to Yu-Gi-Oh! Season 5 which is scheduled to be broadcast on Kids WB in the fall of 2005, a new Yu-Gi-Oh! spin-off series called Yu-Gi-Oh! GX, is scheduled for broadcast this fall on the Cartoon Network. The GX series, set a generation in the future, is expected to benefit from an expanded licensing program slated to begin in the second half of the year," said Kahn.
In the second quarter of 2005, 4Kids repurchased an additional 250,000 shares of the Company's common stock, bringing the total number of shares repurchased under the current 1 million share authorization to 600,000.
"Our goal is to build the world's leading vertically integrated children's entertainment company specializing in licensing," Kahn said. "With no debt and cash and investments of $108.1 million at June 30, 2005, we have significant resources with which to execute our growth strategy and build our portfolio of kids content. Going forward, we will remain sharply focused on building the 4Kids TV brand and expanding our content to promising new distribution platforms that can drive long-term growth and enhanced profitability," concluded Kahn.
About 4Kids Entertainment
Headquartered in New York City with international offices in London, 4Kids Entertainment, Inc. (NYSE: KDE - News) is a global provider of children's entertainment and merchandise licensing. 4Kids, through its wholly owned subsidiaries, provides domestic and international merchandise licensing; product development; television, film, music and home video production and distribution; media planning and buying; and Web site development. For further information, please visit the Company's Web sites at www.4KidsEntertainment.com and www.4Kids.TV
The information contained in this press release, other than historical information, consists of forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. These statements may involve risks and uncertainties that could cause actual results to differ materially from those described in such statements. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Important factors beyond the Company's control, including general economic conditions, consumer spending levels, competition from toy companies, motion picture studios and other licensing companies, the uncertainty of public response to the Company's properties and other factors could cause actual results to differ materially from the Company's expectations.
Tables follow:
CONSOLIDATED BALANCE SHEETS
JUNE 30, 2005 and DECEMBER 31, 2004
(In thousands of dollars, except share data)
ASSETS 2005 2004
CURRENT ASSETS: (Unaudited)
Cash and cash equivalents $100,646 $111,759
Investments 7,484 16,067
-------------- --------------
Total cash and investments 108,130 27,826
Accounts receivable - net 24,644 39,917
Prepaid 4Kids TV broadcast fee,
net of accumulated amortization
of $74,864 and $64,306 in 2005
and 2004, respectively 15,841 6,991
Prepaid income taxes 2,630 3,074
Prepaid expenses and other current
assets 2,021 1,759
Deferred income taxes -- 158
-------------- --------------
Total current assets 153,266 179,725
PROPERTY AND EQUIPMENT - NET 2,627 2,821
OTHER ASSETS:
Accounts receivable - noncurrent,
net 1,402 901
Investment in equity securities 726 726
Film and television costs - net 11,968 10,518
Deferred income taxes - noncurrent 1,700 2,241
Other assets - net 8,063 8,083
-------------- --------------
TOTAL ASSETS $179,752 $205,015
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Due to licensors $ 7,137 $ 16,859
Media payable 276 3,723
Accounts payable and accrued
expenses 10,112 12,589
Deferred revenue 5,675 6,855
Deferred income taxes 443 --
-------------- --------------
Total current liabilities 23,643 40,026
DEFERRED RENT 1,127 1,011
-------------- --------------
Total liabilities 24,770 41,037
-------------- --------------
STOCKHOLDERS' EQUITY
Preferred stock, $.01 par value -
authorized, 3,000,000 shares;
none issued -- --
Common stock, $.01 par value -
authorized, 40,000,000 shares;
issued, 14,431,143 and 14,411,768
shares; outstanding 13,081,143 and
13,661,768 shares in 2005 and
2004, respectively 144 144
Additional paid-in capital 58,378 58,068
Accumulated other comprehensive
income 702 1,124
Retained earnings 122,181 119,586
-------------- --------------
181,405 178,922
Less- cost of 1,350,000 and 750,000
treasury shares in 2005 and 2004,
respectively 26,423 14,944
-------------- --------------
154,982 163,978
-------------- --------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $179,752 $205,015
============== ==============
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
THREE AND SIX MONTHS ENDED JUNE 30, 2005 AND 2004
(In thousands of dollars, except share data)
Three Months Ended Six Months Ended
June 30, June 30,
2005 2004 2005 2004
----------- ----------- ----------- -----------
NET REVENUES $18,997 $22,097 $39,263 $44,564
----------- ----------- ----------- -----------
COSTS AND EXPENSES:
Selling, general
and administrative 8,948 8,424 17,804 16,938
Production service
costs 1,986 3,038 4,122 5,001
Amortization of
television and
film costs and Fox
broadcast fee 7,733 7,555 14,403 14,549
----------- ----------- ----------- -----------
Total costs and
expenses 18,667 19,017 36,329 36,488
----------- ----------- ----------- -----------
INCOME FROM
OPERATIONS 330 3,080 2,934 8,076
INTEREST INCOME 753 293 1,400 578
----------- ----------- ----------- -----------
INCOME BEFORE INCOME
TAXES 1,083 3,373 4,334 8,654
INCOME TAXES 452 1,330 1,739 3,444
----------- ----------- ----------- -----------
NET INCOME $631 $2,043 $2,595 $5,210
=========== =========== =========== ===========
PER SHARE AMOUNTS:
Basic earnings per
common share $0.05 $0.15 $0.19 $0.38
=========== =========== =========== ===========
Diluted earnings
per common share $0.05 $0.14 $0.19 $0.36
=========== =========== =========== ===========
Weighted average
common shares
outstanding -
basic 13,248,711 13,794,353 13,315,162 13,880,984
=========== =========== =========== ===========
Weighted average
common shares
outstanding -
diluted 13,700,291 14,493,824 13,766,632 14,608,084
=========== =========== =========== ===========
For the six months ended June 30, 2005, net revenues totaled $39.3 million compared to $44.6 million in the same period last year. Net income for the six-month period was $2.6 million, or $0.19 per diluted share, compared to net income of $5.2 million, or $0.36 per diluted share, in the same period a year ago.
Al Kahn, Chairman and Chief Executive Officer, said "The decline in second quarter 2005 net revenues and net income resulted mainly from reduced home video revenue and international television sales. In addition, softer sales of Yu-Gi-Oh!(TM) licensed merchandise and reduced licensing revenues from Kirby(TM) were only partially offset by increased licensing revenue for Winx Club(TM) and American Kennel Club(TM) in the domestic market and Shaman King(TM) internationally."
Second quarter 2005 results were also impacted by somewhat higher overall expenses including increased advertising and promotional costs associated with building the "4Kids TV" brand and achieving and maintaining compliance with Sarbanes-Oxley.
"We continue to execute our strategic plan," said Kahn. "Our investment in the re-branding of the four hours of children's programming produced by 4Kids and broadcast on Saturday mornings on FOX as "4Kids TV" has helped to improve ratings, and has enhanced our ability to attract new programming that can translate into future licensing revenues and stronger ad sales.
"We are particularly excited about our strong fall 2005 line-up on 4Kids TV." We will be building on the initial broadcast success of Winx Club (TM), our first girls' television property. In September, 4Kids TV will be premiering the new BRATZ ® television series, based upon the top-selling line of fashion dolls from MGA Entertainment, as well as MAGICAL DOREMI (TM), one of Japan's most successful girls' programs. For our boys' audience, this fall, we will also debut the all new G.I. Joe: Sigma 6 (TM) series on 4Kids TV," stated Kahn.
"In addition to Yu-Gi-Oh! Season 5 which is scheduled to be broadcast on Kids WB in the fall of 2005, a new Yu-Gi-Oh! spin-off series called Yu-Gi-Oh! GX, is scheduled for broadcast this fall on the Cartoon Network. The GX series, set a generation in the future, is expected to benefit from an expanded licensing program slated to begin in the second half of the year," said Kahn.
In the second quarter of 2005, 4Kids repurchased an additional 250,000 shares of the Company's common stock, bringing the total number of shares repurchased under the current 1 million share authorization to 600,000.
"Our goal is to build the world's leading vertically integrated children's entertainment company specializing in licensing," Kahn said. "With no debt and cash and investments of $108.1 million at June 30, 2005, we have significant resources with which to execute our growth strategy and build our portfolio of kids content. Going forward, we will remain sharply focused on building the 4Kids TV brand and expanding our content to promising new distribution platforms that can drive long-term growth and enhanced profitability," concluded Kahn.
About 4Kids Entertainment
Headquartered in New York City with international offices in London, 4Kids Entertainment, Inc. (NYSE: KDE - News) is a global provider of children's entertainment and merchandise licensing. 4Kids, through its wholly owned subsidiaries, provides domestic and international merchandise licensing; product development; television, film, music and home video production and distribution; media planning and buying; and Web site development. For further information, please visit the Company's Web sites at www.4KidsEntertainment.com and www.4Kids.TV
The information contained in this press release, other than historical information, consists of forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. These statements may involve risks and uncertainties that could cause actual results to differ materially from those described in such statements. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Important factors beyond the Company's control, including general economic conditions, consumer spending levels, competition from toy companies, motion picture studios and other licensing companies, the uncertainty of public response to the Company's properties and other factors could cause actual results to differ materially from the Company's expectations.
Tables follow:
CONSOLIDATED BALANCE SHEETS
JUNE 30, 2005 and DECEMBER 31, 2004
(In thousands of dollars, except share data)
ASSETS 2005 2004
CURRENT ASSETS: (Unaudited)
Cash and cash equivalents $100,646 $111,759
Investments 7,484 16,067
-------------- --------------
Total cash and investments 108,130 27,826
Accounts receivable - net 24,644 39,917
Prepaid 4Kids TV broadcast fee,
net of accumulated amortization
of $74,864 and $64,306 in 2005
and 2004, respectively 15,841 6,991
Prepaid income taxes 2,630 3,074
Prepaid expenses and other current
assets 2,021 1,759
Deferred income taxes -- 158
-------------- --------------
Total current assets 153,266 179,725
PROPERTY AND EQUIPMENT - NET 2,627 2,821
OTHER ASSETS:
Accounts receivable - noncurrent,
net 1,402 901
Investment in equity securities 726 726
Film and television costs - net 11,968 10,518
Deferred income taxes - noncurrent 1,700 2,241
Other assets - net 8,063 8,083
-------------- --------------
TOTAL ASSETS $179,752 $205,015
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Due to licensors $ 7,137 $ 16,859
Media payable 276 3,723
Accounts payable and accrued
expenses 10,112 12,589
Deferred revenue 5,675 6,855
Deferred income taxes 443 --
-------------- --------------
Total current liabilities 23,643 40,026
DEFERRED RENT 1,127 1,011
-------------- --------------
Total liabilities 24,770 41,037
-------------- --------------
STOCKHOLDERS' EQUITY
Preferred stock, $.01 par value -
authorized, 3,000,000 shares;
none issued -- --
Common stock, $.01 par value -
authorized, 40,000,000 shares;
issued, 14,431,143 and 14,411,768
shares; outstanding 13,081,143 and
13,661,768 shares in 2005 and
2004, respectively 144 144
Additional paid-in capital 58,378 58,068
Accumulated other comprehensive
income 702 1,124
Retained earnings 122,181 119,586
-------------- --------------
181,405 178,922
Less- cost of 1,350,000 and 750,000
treasury shares in 2005 and 2004,
respectively 26,423 14,944
-------------- --------------
154,982 163,978
-------------- --------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $179,752 $205,015
============== ==============
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
THREE AND SIX MONTHS ENDED JUNE 30, 2005 AND 2004
(In thousands of dollars, except share data)
Three Months Ended Six Months Ended
June 30, June 30,
2005 2004 2005 2004
----------- ----------- ----------- -----------
NET REVENUES $18,997 $22,097 $39,263 $44,564
----------- ----------- ----------- -----------
COSTS AND EXPENSES:
Selling, general
and administrative 8,948 8,424 17,804 16,938
Production service
costs 1,986 3,038 4,122 5,001
Amortization of
television and
film costs and Fox
broadcast fee 7,733 7,555 14,403 14,549
----------- ----------- ----------- -----------
Total costs and
expenses 18,667 19,017 36,329 36,488
----------- ----------- ----------- -----------
INCOME FROM
OPERATIONS 330 3,080 2,934 8,076
INTEREST INCOME 753 293 1,400 578
----------- ----------- ----------- -----------
INCOME BEFORE INCOME
TAXES 1,083 3,373 4,334 8,654
INCOME TAXES 452 1,330 1,739 3,444
----------- ----------- ----------- -----------
NET INCOME $631 $2,043 $2,595 $5,210
=========== =========== =========== ===========
PER SHARE AMOUNTS:
Basic earnings per
common share $0.05 $0.15 $0.19 $0.38
=========== =========== =========== ===========
Diluted earnings
per common share $0.05 $0.14 $0.19 $0.36
=========== =========== =========== ===========
Weighted average
common shares
outstanding -
basic 13,248,711 13,794,353 13,315,162 13,880,984
=========== =========== =========== ===========
Weighted average
common shares
outstanding -
diluted 13,700,291 14,493,824 13,766,632 14,608,084
=========== =========== =========== ===========
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