-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VeHy74/gBEXcnJjtFqsK0RTIw9lai2AWg6QwieNjiNL+GGExdIb6FLteVmijZLgn IaEj58UcJagauJlXDGMMYQ== 0001157523-04-009390.txt : 20041019 0001157523-04-009390.hdr.sgml : 20041019 20041019082925 ACCESSION NUMBER: 0001157523-04-009390 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20041019 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20041019 DATE AS OF CHANGE: 20041019 FILER: COMPANY DATA: COMPANY CONFORMED NAME: JAKKS PACIFIC INC CENTRAL INDEX KEY: 0001009829 STANDARD INDUSTRIAL CLASSIFICATION: GAMES, TOYS & CHILDREN'S VEHICLES (NO DOLLS & BICYCLES) [3944] IRS NUMBER: 954527222 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-28104 FILM NUMBER: 041084224 BUSINESS ADDRESS: STREET 1: 22761 PACIFIC COAST HWY STREET 2: #B202 CITY: MALIBU STATE: CA ZIP: 90265 BUSINESS PHONE: 3104567799 MAIL ADDRESS: STREET 1: 22761 PACIFIC COAST HWY STREET 2: B202 CITY: MALIBU STATE: CA ZIP: 90265 8-K 1 a4744514.txt JAKKS PACIFIC 8-K 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): October 19, 2004 (October 19, 2004) JAKKS PACIFIC, INC. (Exact Name of registrant as specified in its charter) Delaware 0-28104 95-4527222 (State or other jurisdiction (Commission File Number) (I.R.S. Employer of incorporation) Identification No.) 22619 Pacific Coast Highway 90265 Malibu, California (Zip Code) (Address of principal executive offices) Registrant's telephone number, including area code: (310) 456-7799 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 (see General Instruction A.2. below): [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) JAKKS PACIFIC, INC. INDEX TO FORM 8-K FILED WITH THE SECURITIES AND EXCHANGE COMMISSION October 19, 2004 ITEMS IN FORM 8-K ----------------- Page ---- Facing Page 1 Item 2.02 Results of Operations and Financial Condition 3 Item 9.01 Financial Statements and Exhibits 3 Signatures 4 Exhibit Index 5 Item 2.02. Results of Operations and Financial Condition. On October 19, 2004, we issued a press release announcing our results of operations for the quarter ended September 30, 2004. A copy of such release is annexed as an exhibit and is incorporated by reference hereto in its entirety. Item 9.01. Financial Statements and Exhibits. (c) Exhibits Exhibit Number Description - ------- ----------- 99.1* October 19, 2004 Press Release - ----------------------------- * Filed herewith 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. Dated: October 19, 2004 JAKKS PACIFIC, INC. By: /s/ Jack Friedman ----------------- Jack Friedman Chairman and Chief Executive Officer Exhibit Index Exhibit Number Description - ------- ----------- 99.1* October 19, 2004 Press Release - ----------------------------- * Filed herewith EX-99.1 2 a4744514ex991.txt JAKKS PACIFIC EXHIBIT 99.1 PRESS RELEASE Exhibit 99.1 JAKKS Pacific Reports Third Quarter 2004 Financial Results MALIBU, Calif.--(BUSINESS WIRE)--Oct. 19, 2004-- Reported Revenue and Net Income Surge 128.2% and 148.8% Company Raises 2004 Revenue and Earnings Guidance JAKKS Pacific, Inc. (NASDAQ:JAKK), a leading multi-brand company that designs and markets a broad range of consumer products, including toys and writing instruments, today announced record results for the three- and nine-month periods ended September 30, 2004. Third quarter net sales increased 128.2% to $206.1 million in 2004, compared to $90.3 million in the comparable period last year. Excluding non-cash, stock-based compensation charges and also a one-time gain in 2003, net income for the period increased 195.8% to $25.7 million, or $0.95 per diluted share, compared to $8.7 million, or $0.35 per diluted share, for the third quarter of last year. Reported net income for the third quarter 2004, including pre-tax non-cash, stock-based compensation charges of $2.5 million, was $23.8 million, or $0.88 per diluted share, in 2004, an increase of 148.8% over the $9.6 million, or $0.39 per diluted share, for the same period last year, after a one-time, pre-tax gain of $0.7 million relating to recoveries on a recall of one of the Company's products. The Company's net sales for the nine months ended September 30, 2004, increased 68.3% to $389.5 million, from $231.4 million during the same period in 2003. Excluding pre-tax, non-cash, stock-based compensation charges and a one-time net product recall charge, net income for the nine-month period was $41.3 million, or $1.57 per diluted share, an increase of 106.7% from $20.0 million, or $0.81 per diluted share, in the comparable period last year. Reported net income for the first nine months of 2004, including pre-tax charges of $8.5 million for non-cash, stock-based compensation in 2004 and a one-time net charge of $2.0 million for the voluntary product recall in 2003, was $34.7 million, or $1.32 per diluted share, compared to first nine-month 2003 earnings of $18.7 million, or $0.76 per diluted share. "We are extremely pleased with our third quarter results and the dramatic success of our TV Games line of products," said Jack Friedman, Chairman and Chief Executive Officer, JAKKS Pacific. "Our strategy to build an extensive portfolio of innovative non-licensed and licensed products, while simultaneously improving operating efficiencies, is reflected in the strength of our record revenue and net income for the third quarter. We continue to expand our category offerings and believe our marketing programs are fueling sales and product placement, even in the face of a challenging retail environment. The current pace of our business is robust as we head into the holiday season, and due to this continuing strength, we are raising our 2004 guidance. We now anticipate revenue for 2004 to be approximately $500 million and earnings to be in the range of $1.85 to $1.90 per diluted share before non-cash stock-based compensation charges, up from $440 million in sales and earnings in the range of $1.75 to $1.80 per diluted share. "We are pleased with the performance of our new products obtained through the acquisition of Play Along, including our new Cabbage Patch Kids(R) dolls and Care Bears(R) plush and preschool learning toys." Stephen Berman, President and Chief Operating Officer, stated, "Our ability to reinvent and expand our portfolio of brands is most evident in our traditional toys segment, which includes action figures, wheels, TV Games and plush dolls. We have maintained our industry-leading position in TV Games, and expect to continue to capitalize on this growing market in the coming quarters through innovation and new products based on top current and retro licenses. By the end of 2004, we will have a total of 12 TV Games(TM) products in the market, up from four at the end of 2003. We have also begun to expand our distribution of the games to international markets, including Europe, Australia and New Zealand. Looking to 2005, JAKKS will be introducing over 20 new exciting titles." Mr. Berman continued, "We are very encouraged about the upcoming holiday season based on early responses from our retail partners. We anticipate that Care Bears, Cabbage Patch Kids and TV Games will top several `Hot Toy' lists for the 2004 holiday season, as they have been named to several already. We have secured prime placement at retailers nationwide for our TV Games line in the fourth quarter of this year, and expect our plush toys and World Wrestling Entertainment product lines, as well as other lines, to perform very well." Mr. Berman concluded, "Our strong performance led to $86.4 million in cash flow from operations during the first nine months of 2004. We have over $218.5 million of working capital, including cash and equivalents and marketable securities of $151.9 million. Given the increasing strength of our balance sheet, we are well positioned to take advantage of acquisition opportunities and to continue to deliver both sales and earning expansion throughout 2004 and beyond." The Company also announced that it is engaged in discussions with WWE concerning the restructuring of its toy license and with WWE and THQ with respect to the restructuring of the JAKKS THQ Joint Venture video games license agreement with WWE. The discussions are an outgrowth of certain litigation that has been pending between WWE and a former licensing consultant to WWE and a former employee of WWE, to which the Company is not a party. WWE has raised questions about the validity of the licenses as a result of certain transactions between the Company and that licensing consultant that occurred more than six years ago. The Company has denied any wrongdoing in connection with the transactions with the licensing consultant and maintains that they were unrelated to either the toy or video game license. If the discussions are satisfactorily concluded, the restructuring of the licenses may have an impact on the Company's future revenues and net income to an extent that is presently unknown. If the discussions with WWE and THQ are not satisfactorily concluded, the Company anticipates that litigation is likely to be commenced by WWE challenging the validity of the licenses and seeking compensatory and punitive damages, in which event the Company intends to vigorously defend itself against claims which it believes are without merit. Anyone interested will be able to listen to the teleconference, scheduled to begin at 9:00 a.m. EDT (6:00 a.m. PDT) on October 19, via the Internet at www.jakkspacific.com or www.CompanyBoardroom.com. These websites will host an archive of the teleconference for 30 days. A telephonic playback will be available from 11:00 a.m. EDT on October 19 through 12:00 a.m. EDT on November 2. Calling 800-642-1687 or 706-645-9291 for international callers, password "271443," can access the playback. JAKKS Pacific, Inc. is a multi-brand company that designs and markets a broad range of toys and leisure products. The product categories include: Action Figures, Arts & Activity Kits, Stationery, Writing Instruments, Performance Kites, Water Toys, Sports Activity Toys, Vehicles, Infant/Pre-School, Plush, Construction Toys and Dolls. The products are sold under various brand names, including Flying Colors(R), Play Along(R), Road Champs(R), Remco(R), Child Guidance(R), Pentech(R), Trendmasters(R), Toymax(R), Funnoodle(R), Go Fly a Kite(R) and ColorWorkshop(TM). The Company also participates in a joint venture with THQ Inc. that has exclusive worldwide rights to publish and market World Wrestling Entertainment(TM) video games. For further information, visit www.jakkspacific.com. This press release contains statements that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on current expectations, estimates and projections about JAKKS' business based, in part, on assumptions made by its management. These statements are not guarantees of JAKKS' future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements due to numerous factors, including, but not limited to, those described above and the following: changes in demand for JAKKS' products, product mix, the timing of customer orders and deliveries, the impact of competitive products, and pricing and difficulties encountered in the integration of acquired businesses. The forward-looking statements contained herein speak only as of the date on which they are made, and JAKKS does not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this release. JAKKS Pacific, Inc. and Subsidiaries Condensed Consolidated Balance Sheets September 30, December 31, 2004 2003 -------------- ---------------- (In thousands) ASSETS Current assets: Cash and cash equivalents $131,796 $118,182 Marketable Securities 20,091 19,345 Accounts receivable, net 129,041 86,119 Inventory, net 49,315 44,400 Prepaid expenses and other current assets 27,989 16,762 -------------- ---------------- Total current assets 358,232 284,808 -------------- ---------------- Property and equipment 44,632 43,473 Less accumulated depreciation and amortization 32,786 31,751 -------------- ---------------- Property and equipment, net 11,846 11,722 -------------- ---------------- Goodwill, net 291,179 206,952 Trademarks & other assets, net 24,347 24,785 Investment in joint venture 4,265 9,097 -------------- ---------------- Total assets $689,869 $537,364 ============== ================ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued expenses $126,712 $50,168 Current portion of long-term debt - 19 Income taxes payable 13,021 2,021 -------------- ---------------- Total current liabilities 139,733 52,208 -------------- ---------------- Long-term debt, net of current portion 98,000 98,042 Deferred income taxes 1,164 1,164 -------------- ---------------- 99,164 99,206 -------------- ---------------- Total liabilities 238,897 151,414 Stockholders' equity: Common stock, $.001 par value 26 25 Additional paid-in capital 275,624 245,219 Retained earnings 175,774 141,055 Accumulated other comprehensive income (loss) (452) (349) -------------- ---------------- 450,972 385,950 -------------- ---------------- Total liabilities and stockholders' equity $689,869 $537,364 ============== ================ JAKKS Pacific, Inc. and Subsidiaries Third Quarter Earnings Announcement, 2004 Condensed Statements of Operations (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2004 2003 2004 2003 --------- -------- --------- --------- (In thousands, except per share data) Net sales $206,083 $90,308 $389,463 $231,358 Less cost of sales Cost of goods 100,754 42,949 194,120 118,169 Royalty expense 22,661 9,741 38,013 16,951 Amortization of tools and molds 867 1,392 3,783 4,664 --------- -------- --------- --------- Cost of sales 124,282 54,082 235,916 139,784 --------- -------- --------- --------- Gross profit 81,801 36,226 153,547 91,574 Direct selling expenses 19,258 9,895 39,578 27,900 Selling, general and administrative expenses 30,961 13,879 66,166 35,909 Acquisition shut-down and recall costs - (700) - 2,000 Depreciation and amortization 784 573 2,037 1,618 --------- -------- --------- --------- Income from operations 30,798 12,579 45,766 24,147 Other (income) expense: Profit from Joint Venture (911) (936) (1,274) (1,303) Interest, net 785 922 1,954 794 Other - - - - --------- -------- --------- --------- Income before provision for income taxes 30,924 12,593 45,086 24,656 Provision for income taxes 7,112 3,023 10,367 5,918 --------- -------- --------- --------- Net income $23,812 $9,570 $34,719 $18,738 ========= ======== ========= ========= Earnings per share - diluted $0.88 $0.39 $1.32 $0.76 Shares used in earnings per share - diluted 27,019 24,629 26,343 24,716 CONTACT: JAKKS Pacific, Inc. Genna Goldberg, 310-455-6235 or Integrated Corporate Relations John Mills, 310-395-2215 -----END PRIVACY-ENHANCED MESSAGE-----