EX-99.2 4 v79699ex99-2.txt EXHIBIT 99.2 CONTACTS: Joel Bennett Philip Bourdillon/Eugene Heller Chief Financial Officer Silverman Heller Associates (310) 456-7799 (310) 208-2550 JAKKS PACIFIC REPORTS NET SALES AND INCOME FOR 2001 -- Further Growth Expected in 2002 -- MALIBU, CALIFORNIA -- FEBRUARY 12, 2002 -- JAKKS PACIFIC, INC. (NASDAQ NM: JAKK) today reported net sales and net income for its fiscal fourth quarter and year ended December 31, 2001. For the year, net sales were a record $284.4 million compared to $252.3 million in 2000, an increase of 12.7%. Net income on a pro forma basis increased 11.5% to $32.0 million, or $1.65 per diluted share, from $28.7 million, or $1.41 per diluted share, in the prior year. Including a special reserve of $5.0 million relating to Kmart Corporation's recent bankruptcy filing, net income was $28.2 million, or $1.45 per diluted share. Also included in the full year net income are non-cash charges of $2.6 million and $0.1 million for 2001 and 2000, respectively, relating to the 2000 price reset of certain of the Company's outstanding stock options. In 2001, the THQ/JAKKS joint venture contributed profit of $6.7 million compared to $15.9 million in 2000. Fully diluted shares outstanding were 19.4 million in 2001 and 20.3 million in 2000. Fourth-quarter net sales were $61.4 million compared to $59.1 million a year ago, and net income on a pro forma basis was $8.1 million, or $0.42 per diluted share, compared to net income of $6.0 million, or $0.32 per diluted share, in the fourth quarter of 2000. Including the special reserve of $5.0 million, net income was $4.4 million, or $0.22 per diluted share. Also included in the fourth quarter results were non-cash charges of $1.1 million and $0.1 million for 2001 and 2000, respectively, relating to the 2000 stock option price reset. In the fourth quarter of 2001, the THQ/JAKKS joint venture contributed profit of $5.7 million compared to $7.7 million in 2000. Fully diluted shares outstanding were 19.8 million in 2001 and 18.6 million in 2000. "While 2001 was clearly a challenging year for our economy and the retail industry, JAKKS nonetheless remained true to its core business model and was able to continue both internal and external growth," noted Jack Friedman, Chairman and Chief Executive Officer of JAKKS Pacific. "We are proud that despite a difficult year the retail sector has endured, we have continued our year-over-year growth, and kept tight reins on our operations both domestically and overseas. Now more than ever we are looking forward to aggressively looking to new distribution channels to further propel our position with the industry." At fiscal year-end, JAKKS Pacific had $115.1 million in working capital, including $62.2 million in cash and marketable securities, nominal debt, and shareholders' equity of approximately $244.4 million. "Given our exceptionally strong balance sheet, in addition to $50 million in available credit, we are in an excellent position to continue to execute on our strategy of internal and external growth in 2002," continued Friedman. "We expect 2002 will be another record year for JAKKS, with new introductions expected in all segments," said Stephen Berman, President and Chief Operating Officer of JAKKS Pacific. "New introductions this year include new writing instruments using gel ink technologies, extensions to our extreme sports toy lines with gyros, and new World Wrestling Federation(R) action figures and accessories scheduled for release this year. Likewise, with the industry's transition to new video game hardware essentially complete, and with several exciting new titles due for release, we anticipate substantially higher profits from JAKKS' World Wrestling Federation video game joint venture with THQ Inc. In light of two recent announcements -- our distribution arrangement with Funtastic Limited in Australia, and our acquisition of Kidz Biz Ltd. in the UK -- international sales, which last year represented approximately 11.8% of total net sales, are expected to play an increasingly important role in top-line growth. "Also in 2002, with the inclusion of the Toymax acquisition, we expect to have record sales of $360 million to $380 million and diluted earnings per share of $1.90 to $2.01. These numbers reflect a substantial paring down of Toymax sales in order for us to focus on their more profitable products and streamline operations to increase overall profitability. We expect that Toymax operations will be fully integrated by the end of 2002. "Much of the growth we anticipate in 2002 will be based on relationships we recently initiated or extended," continued Berman. "Among the highlights was unquestionably our signing of a long-term master activity toy and stationery licensing agreement with Nickelodeon, under which our Flying Colors division will continue to develop a variety of products based on such popular properties as Dora The Explorer(TM), Jimmy Neutron Boy Genius(TM), and SpongeBob SquarePants(TM). Additionally, Flying Colors will introduce a number of new Nickelodeon-branded compound product lines, including Smatter(TM) and Skweeez(TM), and extensions for Goooze(R) and Crystal Zyrofoam(R). JAKKS also signed several other licensing agreements, covering a variety of properties and product categories, which will contribute to top- and bottom-line growth in 2002. Among these are the perennially popular Barney(R); The Scorpion King action-adventure film; Power Rangers(R) and Junkyard Wars television series; and Ice Age, an animated epic. And, we will be introducing lines of Disney art/activity and junior sports products based on classic characters as well as new filmed entertainment." JAKKS will conduct a teleconference in conjunction with today's release. The teleconference begins at 7:00 a.m. PST (10:00 a.m. EST) today, Tuesday, February 12, 2002. One may listen in via the Internet at www.jakkspacific.com. For those unable to attend, a playback of the call will be available from 9:00 a.m. PST (1:00 p.m. EST) on February 12, 2002 through 5:00 p.m. PST (8:00 p.m. EST) on February 13, 2002. You may access the playback by calling (800) 633-8284 (or for international callers 858-812-6440) and providing reservation number 18163171. JAKKS Pacific is a multi-brand toy company that designs, develops, produces and markets toys and related products under various brand names (including Flying Colors(R), Road Champs(R), Remco(R), Child Guidance(R) and Pentech(R)) in multiple product categories, including: Wheels; Action Figures; Art/Activities/Stationery; Infant/Pre-School; Writing Instruments; Plush; and Dolls. The Company also participates in a joint venture that has exclusive worldwide rights to publish and market World Wrestling Federation(R) video games. Additional information is available at www.jakkspacific.com. "Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: This press release contains forward-looking statements. Such statements reflect the current views of the Company with respect to future events and are subject to certain risks, uncertainties and assumptions. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual future results or events may vary materially from those described herein. (Financial Tables Follow) Income Statement JAKKS PACIFIC, INC. AND SUBSIDIARIES FOURTH QUARTER EARNINGS ANNOUNCEMENT, 2001 CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
THREE MONTHS ENDED DECEMBER 31, TWELVE MONTHS ENDED DECEMBER 31, ------------------------------- -------------------------------- 2001 2000 2001 2000 ------------- ------------- ------------- ------------- Net sales $ 61,437,819 $ 59,090,061 $ 284,309,021 $ 252,287,943 Less cost of sales Cost of goods 31,406,527 30,137,625 134,009,863 120,880,712 Royalty expense 4,322,192 3,701,909 23,045,209 23,254,482 Amortization of tools and molds 1,755,817 2,367,208 7,167,189 5,745,610 ------------- ------------- ------------- ------------- Cost of sales 37,484,536 36,206,742 164,222,261 149,880,804 ------------- ------------- ------------- ------------- Gross profit 23,953,283 22,883,319 120,086,760 102,407,139 Direct selling expenses 11,012,546 13,341,891 39,674,382 40,356,329 Selling, general and administrative expenses 12,706,101 8,414,450 44,847,765 36,551,236 Acquisition shut-down and recall costs 175,264 396,423 1,214,101 1,468,798 Depreciation and amortization 1,469,703 1,075,683 5,052,356 3,527,307 ------------- ------------- ------------- ------------- Income from operations (1,410,331) (345,128) 29,298,156 20,503,469 Profit from Joint Venture (5,708,198) (7,738,184) (6,675,428) (15,905,860) Interest, net (524,399) (733,998) (2,056,526) (3,833,359) Other -- -- -- (91,670) ------------- ------------- ------------- ------------- Income before provision for income taxes 4,822,266 8,127,054 38,030,110 40,334,358 Provision for income taxes 432,597 2,098,400 9,797,209 11,696,963 ------------- ------------- ------------- ------------- Net income $ 4,389,669 $ 6,028,654 $ 28,232,901 $ 28,637,395 ============= ============= ============= ============= Earnings per share - diluted $ 0.22 $ 0.32 $ 1.45 $ 1.41 Shares used in earnings per share - diluted 19,762,655 18,621,239 19,409,925 20,281,475
JAKKS PACIFIC, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS
DECEMBER 31, DECEMBER 31, 2001 2000 ------------- ------------- ASSETS Current assets: Cash and cash equivalents $ 25,036,203 $ 29,275,424 Marketable securities 37,119,071 13,617,912 Accounts receivable, net 52,888,452 47,053,699 Inventory, net 32,023,960 30,534,826 Prepaid expenses and other current assets 11,108,075 8,150,507 ------------- ------------- Total current assets 158,175,761 128,632,368 ------------- ------------- working capital 115,121,728 86,896,973 Property and equipment 33,515,575 29,636,719 Less accumulated depreciation and amortization 17,762,905 10,653,467 ------------- ------------- Property and equipment, net 15,752,670 18,983,252 ------------- ------------- Notes receivable - officers 2,224,000 2,450,000 Goodwill, net 89,863,415 74,590,189 Trademarks & other intangibles, net 11,567,679 12,104,546 Investment in joint venture 7,893,312 9,758,359 Other assets 2,945,076 2,203,679 ------------- ------------- Total assets $ 288,421,913 $ 248,722,393 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued expenses $ 35,602,252 $ 33,712,040 Current portion of long term debt 22,560 400,000 Income taxes payable 7,429,221 7,623,355 ------------- ------------- Total current liabilities 43,054,033 41,735,395 ------------- ------------- Long term debt 72,510 1,000,000 Deposits held 135,160 -- Deferred income taxes 756,817 1,456,817 ------------- ------------- 964,487 2,456,817 ------------- ------------- Total liabilities 44,018,520 44,192,212 Stockholders' equity: Common stock, $.001 par value 20,320 19,485 Additional paid-in capital 168,114,819 156,475,343 Treasury Stock, at cost (12,911,483) (12,911,483) Retained earnings 89,179,737 60,946,836 ------------- ------------- 244,403,393 204,530,181 ------------- ------------- Total liabilities and stockholders' equity $ 288,421,913 $ 248,722,393 ============= ============= -- --