4Kids Entertainment Reports Year-End 2006 Results
NEW YORK--(BUSINESS WIRE)--4Kids Entertainment, Inc. (NYSE: KDE - News), a global provider of children's entertainment and merchandise licensing, today announced financial results for the quarter and year ended December 31, 2006.
Net revenues in the fourth quarter of 2006 totaled $18.3 million, as compared to $23.5 million for the same period in 2005. The Company's net loss for the quarter ended December 31, 2006 was $(2.3) million, or $(0.18) per diluted share (consisting of a loss from continuing operations of $(2.5) million, or $(0.19) per diluted share and income from discontinued operations of $0.2 million or $0.01 per diluted share), as compared to net income of $0.5 million, or $0.04 per diluted share, for the fourth quarter of 2005 (consisting of a loss from continuing operations of $(1.2) million, or $(0.09) per diluted share and income from discontinued operations of $1.7 million, or $0.13 per diluted share). As of June 30, 2006 the Company's media buying subsidiary, The Summit Media Group, Inc., ceased operations and reports Summit's results as a discontinued operation.
For the year ended December 31, 2006, net revenues totaled $71.8 million, as compared to $80.6 million for the year ended December 31, 2005. The Company's net loss for the year ended December 31, 2006 was $(1.0) million, or $(0.08) per diluted share (consisting of a loss from continuing operations of $(1.7) million, or $(0.13) per diluted share and income from discontinued operations of $0.7 million, or $0.05 per diluted share), compared to net income of $5.1 million, or $0.37 per diluted share for the year ended December 31, 2005 (consisting of income from continuing operations of $3.0 million, or $0.22 per diluted share and income from discontinued operations of $2.0 million, or $0.15 per diluted share). The diluted weighted average common shares outstanding for the year ended December 31, 2006 were 13,104,051 shares compared with 13,536,830 shares for the year ended December 31, 2005.
Alfred R. Kahn, 4Kids Entertainment's Chairman and Chief Executive Officer, said, "Our financial results for 2006 were disappointing with the Company losing $1.7 million from continuing operations. Net revenues were down for the year as a result of decreased licensing revenue from the "Teenage Mutant Ninja Turtles" and "Yu-Gi-Oh!" properties and a decline in ad sales revenues from 4Kids TV. We also incurred substantial severance and other related costs in 2006."
"The Company started a number of important initiatives in 2006 that we are hopeful will benefit the Company beginning in 2007," said Kahn. "We entered into a relationship with Microsoft and, in the fall of 2006, launched Viva Pinata, an animated series based on the Microsoft property. In December 2006, we started a trading card company, TC Digital Games LLC, and purchased a 50% interest in the Chaotic trading card game companion website which, when it goes live in May 2007, will enable kids to upload codes from the Chaotic trading cards to the website and play the Chaotic trading card game online. We believe that the trading card company and the Chaotic website will also provide the Company with platforms upon which to launch future properties and will enhance the Company's ability to compete in the digital universe."
"We also implemented a number of cost-cutting initiatives aimed at reducing overall expenses including negotiating a multi-year extension of our agreement with Fox to broadcast 4Kids TV through the 2007-2008 season," Kahn continued.
"We are excited about next week's theatrical release by Warner Bros. and The Weinstein Company of TMNT, the new Teenage Mutant Ninja Turtles movie. We are hopeful that the movie will drive demand for Turtles merchandise, including the new TMNT video game from Ubisoft. We also look forward to the late May release of the Chaotic trading card game to comic and hobby stores and to the launch of its companion website, www.chaoticgame.com, at that time."
"With cash and investments of $111.0 million and no debt at December 31, 2006, 4Kids remains well positioned for the future," concluded Kahn.
About 4Kids Entertainment
Headquartered in New York City with an international office 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; 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 the Private Securities Litigation Reform Act of 1995. 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.
4KIDS ENTERTAINMENT, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2006 and 2005 (In thousands of dollars, except share data) ----------------------------------------------------------------------Assets 2006 2005 --------- --------- Current assets: Cash and cash equivalents $18,066 $35,142 Investments 92,910 78,383 -------------------
Total cash and investments 110,976 113,525
Accounts receivable - net 30,498 32,193 Prepaid 4Kids TV broadcast fee, net of accumulated amortization -- 6,606 Prepaid income taxes 5,924 2,312 Prepaid expenses and other current assets 3,916 1,683 Current assets from discontinued operations 326 2,316 Deferred income taxes 707 466 ------------------- Total current assets 152,347 159,101
Property and equipment - net 2,126 2,853
Other assets: Accounts receivable - non-current, net 138 891 Investment in unconsolidated affiliate 2,702 -- Film and television costs - net 14,827 12,208 Non-current assets from discontinued operations 1,333 -- Deferred income taxes, non-current 1,733 1,971 Other assets - net 6,189 6,914 ------------------- Total assets $181,395 $183,938 ===================
Liabilities and stockholders' equity Current liabilities: Due to licensors $6,536 $13,503 Accounts payable and accrued expenses 14,317 9,239 Current liabilities from discontinued operations 20 1,486 Deferred revenue 5,014 5,297 ------------------- Total current liabilities 25,887 29,525 Deferred rent 771 1,016 ------------------- Total liabilities 26,658 30,541 -------------------
Commitments and contingencies (Note 13)
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, 14,933,218 and 14,826,643 shares; outstanding 13,183,218 and 13,076,643 shares in 2006 and 2005, respectively 149 148 Additional paid-in capital 62,859 61,415 Accumulated other comprehensive income 1,329 428 Retained earnings 123,649 124,655 ------------------- 187,986 186,646 Less- cost of 1,750,000 treasury shares in 2006 and 2005 33,249 33,249 ------------------- 154,737 153,397 ------------------- Total liabilities and stockholders' equity $181,395 $183,938 =================== 4KIDS ENTERTAINMENT, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS YEARS ENDED DECEMBER 31, 2006, 2005 and 2004 (In thousands of dollars, except share data) ----------------------------------------------------------------------
2006 2005 2004 ----------- ----------- -----------
Net revenues $71,781 $80,607 $99,189 -----------------------------------
Cost and expenses: Selling, general and administrative 39,155 33,835 33,437 Production service costs 11,259 8,851 10,029 Amortization of television and film costs 8,041 9,790 9,639 Amortization of 4Kids TV broadcast fee 22,462 26,408 27,859 ----------------------------------- Total costs and expenses 80,917 78,884 80,964 -----------------------------------
(Loss) income from operations (9,136) 1,723 18,225
Other income: Interest income 4,143 2,834 1,469 Gain on sale of investment in equity securities -- 234 -- ----------------------------------- Total other income 4,143 3,068 1,469 -----------------------------------
(Loss) income before income taxes (4,993) 4,791 19,694
(Benefit from) provision for income taxes (3,506) 1,762 7,907
Loss from unconsolidated operations - net of a tax benefit of $218 (280) -- -- Minority Interest - net of tax of $30 39 -- -- -----------------------------------
(Loss) income from continuing operations (1,728) 3,029 11,787
Income from discontinued operations 722 2,040 943 -----------------------------------
Net (loss) income ($1,006) $5,069 $12,730 ===================================
Per share amounts: Basic (loss) earnings per common share Continuing operations ($0.13) $0.23 $0.86 Discontinued operations 0.05 0.16 0.07 ----------------------------------- Basic (loss) earnings per common share ($0.08) $0.39 $0.93 ===================================
Diluted (loss) earnings per common share Continuing operations ($0.13) $0.22 $0.82 Discontinued operations 0.05 0.15 0.07 ----------------------------------- Diluted (loss) earnings per common share ($0.08) $0.37 $0.89 ===================================
Weighted average common shares outstanding - basic 13,104,051 13,115,687 13,683,756 ===================================
=================================== Weighted average common shares outstanding - diluted 13,104,051 13,536,830 14,335,343 ===================================
