4Kids Entertainment Posts 3rd Quarter Results

4KIDS ENTERTAINMENT REPORTS THIRD QUARTER RESULTS

4Kids Entertainment, Inc. (NYSE: KDE - News) today announced net revenues for the third quarter ended September 30, 2005 of $20.5 million as compared to $24.7 million in the same period last year. Net income for the third quarter was $2.0 million, or $0.15 per diluted share, as compared to net income of $2.5 million, or $0.18 per diluted share, in the same period last year. The diluted weighted average common shares outstanding for the three months ended September 30, 2005 were 13,424,913 shares as compared to 14,124,098 shares for the three months ended September 30, 2004.

For the nine months ended September 30, 2005, net revenues were $59.8 million as compared to $69.2 million in the same period last year. Net income for the nine month period was $4.6 million, or $0.33 per diluted share, as compared to net income of $7.7 million, or $0.54 per diluted share in the same period last year. The diluted weighted average common shares outstanding for the nine months ended September 30, 2005 were 13,651,572 shares as compared to 14,445,848 shares for the nine months ended September 30, 2004.

Al Kahn, 4Kids Entertainment Chairman and Chief Executive Officer, said "The decline in third quarter 2005 net revenues as compared with the comparable period last year resulted principally from softer sales of licensed merchandise and home videos and reduced broadcast sales of our Yu-Gi-Oh!(TM) and Teenage Mutant Ninja Turtles(TM) properties. In addition, 2004 included sales related to the theatrical release of the Yu-Gi-Oh! movie that were not replaced in the current periods. These declines were partially offset by increased licensing revenue from our Cabbage Patch Kids® and Winx Club(TM) properties and increased domestic and international program sales of our One Piece(TM) television series."

"4Kids TV, our four hours of children's programming broadcast on Saturday mornings on FOX, has experienced improved ratings this fall on the strength of girls' shows such as Winx Club(TM) and newly debuted television series Bratz® and Magical DoReMi(TM). We expect that the new Yu-Gi-Oh! spin-off series called Yu-Gi-Oh! GX(TM), which debuted on the Cartoon Network in October, will enhance the Yu-Gi-Oh! brand and drive licensing revenues with new merchandise that will be available in stores for the 2005 holiday season," said Kahn.

In the third quarter of 2005, 4Kids repurchased 323,000 shares of its common stock at an aggregate cost of approximately $5.5 million, bringing the total number of shares repurchased under the one million share authorization announced by the Company in November, 2004 to 923,000. Subsequent to September 30, 2005, 4Kids repurchased 77,000 additional shares of its common stock at an aggregate cost of approximately $1.3 million, which completed the repurchase under the November 2004 authorization. The Company also announced today that its Board of Directors had authorized the Company to purchase, from time to time through December 31, 2006, up to 1,000,000 additional shares of the Company's common stock in the open market or through negotiated prices.

"Our core properties continue to be substantial contributors to our performance providing us with a solid base from which to continue to build our portfolio of kids content. We remain focused on our strategic goal to generate revenue contributions from a diverse group of properties while seeking out and delivering the most compelling content for kids in the marketplace. With cash and investments of $104 million and no debt at September 30, 2005, we are well positioned to continue to pursue the acquisition of new content and additional distribution platforms that will enable our content to reach a larger audience of kids both domestically and internationally," 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; television, film, music and home video production and distribution; media planning and buying; product development; 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.

This release and prior releases are available on the Company's Worldwide Web site at www.4KidsEntertainment.com

4KIDS ENTERTAINMENT, INC. AND SUBSIDIARIES



CONSOLIDATED BALANCE SHEETS

SEPTEMBER 30, 2005 and DECEMBER 31, 2004

(In thousands of dollars, except share data)

----------------------------------------------------------------------

2005 2004

ASSETS ---- ----

CURRENT ASSETS: (Unaudited)

Cash and cash equivalents $ 84,451 $ 111,759

Investments 19,548 16,067

--------- ---------

Total cash and investments 103,999 127,826



Accounts receivable - net 26,852 39,917

Prepaid 4Kids TV broadcast fee, net of

accumulated amortization of $79,968

and $64,306 in 2005 and 2004,

respectively 13,945 6,991

Prepaid income taxes 1,939 3,074

Prepaid expenses and other current

assets 2,618 1,759

Deferred income taxes -- 158

--------- ---------

Total current assets 149,353 179,725



PROPERTY AND EQUIPMENT - NET 2,536 2,821



OTHER ASSETS:

Accounts receivable - noncurrent, net 1,029 901

Investment in equity securities 726 726

Film and television costs - net 13,032 10,518

Deferred income taxes - noncurrent 1,436 2,241

Other assets - net 8,927 8,083

--------- ---------

TOTAL ASSETS $ 177,039 $ 205,015

========= =========



LIABILITIES AND STOCKHOLDERS' EQUITY



CURRENT LIABILITIES:

Due to licensors $ 7,990 $ 16,859

Media payable -- 3,723

Accounts payable and accrued expenses 10,352 12,589

Deferred revenue 5,564 6,855

Deferred income taxes 396 --

--------- ---------

Total current liabilities 24,302 40,026



DEFERRED RENT 1,093 1,011

--------- ---------

Total liabilities 25,395 41,037

--------- ---------

COMMITMENTS AND CONTINGENCIES



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,

14,451,143 and 14,411,768 shares;

outstanding 12,778,143 and 13,661,768

shares in 2005 and 2004, respectively 145 144

Additional paid-in capital 58,638 58,068

Accumulated other comprehensive income 617 1,124

Retained earnings 124,159 119,586

--------- ---------

183,559 178,922

Less- cost of 1,673,000 and 750,000

treasury shares in 2005 and 2004,

respectively 31,915 14,944

--------- ---------

151,644 163,978

--------- ---------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 177,039 $ 205,015

========= =========





4KIDS ENTERTAINMENT, INC. AND SUBSIDIARIES



CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004

(In thousands of dollars, except share data)

----------------------------------------------------------------------



Three Months Ended Nine Months Ended

September 30, September 30,

2005 2004 2005 2004

----------- ----------- ----------- -----------





NET REVENUES $ 20,522 $ 24,682 $ 59,785 $ 69,246

----------- ----------- ----------- -----------



COSTS AND EXPENSES:

Selling, general and

administrative 8,802 10,473 26,606 27,411

Production service

costs 2,093 1,941 6,215 6,942

Amortization of

television and film

costs and Fox

broadcast fee 7,248 8,408 21,651 22,957

----------- ----------- ----------- -----------

Total costs and

expenses 18,143 20,822 54,472 57,310

----------- ----------- ----------- -----------



INCOME FROM OPERATIONS 2,379 3,860 5,313 11,936



INTEREST INCOME 654 375 2,054 953

----------- ----------- ----------- -----------





INCOME BEFORE INCOME

TAXES 3,033 4,235 7,367 12,889



INCOME TAXES 1,055 1,704 2,794 5,148

----------- ----------- ----------- -----------

NET INCOME $ 1,978 $ 2,531 $ 4,573 $ 7,741

=========== =========== =========== ===========



PER SHARE AMOUNTS:

Basic earnings per

common share $ 0.15 $ 0.19 $ 0.35 $ 0.56

=========== =========== =========== ===========



Diluted earnings per

common share $ 0.15 $ 0.18 $ 0.33 $ 0.54

=========== =========== =========== ===========





Weighted average

common shares

outstanding - basic 13,000,418 13,527,388 13,209,094 13,762,211

=========== =========== =========== ===========





Weighted average

common shares

outstanding -

diluted 13,424,913 14,124,098 13,651,572 14,445,848

=========== =========== =========== ===========

Contact:
KCSA
Todd Fromer or Michael Cimini
212-896-1215 or 212-896-1233
[email protected] or [email protected]