EX-99.1 2 a5128938ex99_1.txt EXHIBIT 99.1 Exhibit 99.1 JAKKS Pacific(R) Reports 2006 First Quarter Results; Reaffirms 2006 Sales Guidance of $825 Million and Diluted EPS of $2.63 MALIBU, Calif.--(BUSINESS WIRE)--April 20, 2006--JAKKS Pacific, Inc. (NASDAQ:JAKK), a leading multi-brand company that designs and markets a broad range of toys, writing instruments and other consumer products, today announced results for its first quarter ended March 31, 2006. First quarter 2006 net sales were $107.8 million, compared to $134.7 million in the comparable period last year. Net income for the first quarter was $2.3 million, or $0.09 per diluted share, compared to $10.1 million, or $0.34 per diluted share, reported in the first quarter of 2005. Included in the results were non-cash, stock-based compensation charges of $2.4 million, or $0.05 per share, in the first quarter of 2006 and $0.4 million in the first quarter of 2005, and acquisition accounting charges of $2.4 million, or $0.05 per share, in 2006 relating to the Company's recent acquisition of Creative Designs International. "Our sales for the first quarter met our expectations and we remain confident that we are on target to hit our goals for 2006," said Jack Friedman, Chairman and Chief Executive Officer, JAKKS Pacific. "We continue to expand many of our categories and brands by re-investing in our diverse portfolio of products and we continue our focus on positioning our company for continued long-term growth. Our TV Games(TM) product line is in its fourth year cycle, and we have a strong arsenal of kid-driven titles launching throughout the year, including `Sesame Street(R),' `Bob the Builder(R),' `Scooby-Doo(R),' and `Power Rangers(R).' Our JPI(TM) Pet products are gaining shelf space, and we expect that our pet and Play Along product lines, along with our recently acquired Creative Designs(TM) product lines, will be strong contributors for the balance of the year." Stephen Berman, President and Chief Operating Officer, stated, "During the first quarter, we saw the continued success of a number of product lines, including our Doodle Bear(R) plush products, vehicles and our action figure lines. We launched a number of new products and line extensions at the International Toy Fair in February and the response from retailers was extremely positive, particularly for our Tele-Story(TM) line, our interactive reading system for preschoolers, and our electronic Virtual Pets game line, both of which utilize our Plug It In & Play technology. In our pets division, the AKC(TM) line is a strong contributor, and we are especially enthusiastic about the introduction of our White Bites(TM) oral care treats for dogs. These products are expected to begin shipping at the end of the second quarter to our mass and specialty retail distribution channels worldwide. We are confident that our strong portfolio of brands has positioned JAKKS Pacific for continued growth throughout 2006." Mr. Friedman concluded, "As we enter the second quarter, we are excited about our diversified product line and we are looking forward to new product launches targeted for our extensive distribution channels. We will continue to grow our business both organically and by actively pursuing complementary acquisitions. At March 31, 2006, we had approximately $123.7 million in cash and cash equivalents and $226.9 million in working capital. "We are reaffirming our previously issued guidance of $825 million in sales for 2006, and net income of approximately $82 million, or $2.63 earnings per diluted share." JAKKS Pacific is hosting a teleconference today at 2:00 p.m. PDT (5:00 p.m. EDT) on April 20th, via the Internet at www.jakkspacific.com, www.CompanyBoardroom.com or www.StreetEvents.com. These websites will host an archive of the teleconference for 30 days. A telephonic playback will be available from 6:00 p.m. EDT on April 20th through 12:00 a.m. EDT on May 4th. The playback can be accessed by calling 888-843-8996, or 630-652-3044 for international callers, pass code "14406778." About JAKKS Pacific, Inc. JAKKS Pacific, Inc. is a multi-brand company that designs and markets a broad range of toys and consumer products. The product categories include: Action Figures, Art Activity Kits, Stationery, Writing Instruments, Performance Kites, Water Toys, Sports Activity Toys, Vehicles, Infant/Pre-School, Plush, Construction Toys, Electronics, Dolls, Dress-Up, Role Play, and Pet Toys and Accessories. The products are sold under various brand names, including JAKKS Pacific(R), Play Along(R), Flying Colors(R), Creative Designs International(TM), Road Champs(R), Child Guidance(R), Pentech(R), Trendmasters(R), Toymax(R), Funnoodle(R), Go Fly a Kite(R), Color Workshop(R), JPI(TM) and Plug It In & Play TV Games(TM). JAKKS and THQ Inc. participate in a joint venture that has worldwide rights to publish and market World Wrestling Entertainment video games. For further information, visit www.jakkspacific.com. This press release contains forward-looking statements (within the meaning of the Private Securities Litigation Reform Act of 1995) that are based on current expectations, estimates and projections about JAKKS Pacific's business based partly on assumptions made by its management. These statements are not guarantees of 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 statements due to numerous factors, including, but not limited to, those described above, changes in demand for JAKKS' products, product mix, the timing of customer orders and deliveries, the impact of competitive products and pricing, and difficulties with integrating acquired businesses. The forward-looking statements contained herein speak only as of the date on which they are made, and JAKKS undertakes no obligation to update any of them to reflect events or circumstances after the date of this release. JAKKS Pacific, Inc. and Subsidiaries Condensed Consolidated Balance Sheets March 31, December 31, 2006 2005 ---------- ------------ (In thousands) ASSETS Current assets: Cash and cash equivalents $123,737 $240,238 Accounts receivable, net 67,795 87,199 Inventory, net 62,198 66,729 Deferred income taxes 13,639 13,618 Prepaid expenses and other current assets 35,653 17,533 ---------- ------------ Total current assets 303,022 425,317 ---------- ------------ Property and equipment 41,453 38,089 Less accumulated depreciation and amortization 27,234 25,394 ---------- ------------ Property and equipment, net 14,219 12,695 ---------- ------------ Goodwill, net 345,051 269,298 Trademarks & other assets, net 50,779 36,280 Investment in joint venture 3,201 10,365 ---------- ------------ Total assets $716,272 $753,955 ========== ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued expenses $54,048 $94,948 Reserve for sales returns and allowances 22,033 25,123 Income taxes payable - 3,792 ---------- ------------ Total current liabilities 76,081 123,863 ---------- ------------ Long term debt 98,000 98,000 Deferred rent liability 959 995 Deferred income taxes 7,013 6,446 ---------- ------------ 105,972 105,441 ---------- ------------ Total liabilities 182,053 229,304 Stockholders' equity: Common stock, $.001 par value 27 27 Additional paid-in capital 300,027 287,356 Retained earnings 242,388 240,057 Deferred compensation from restricted stock grants (5,388) - Accumulated other comprehensive income (loss) (2,835) (2,789) ---------- ------------ 534,219 524,651 ---------- ------------ Total liabilities and stockholders' equity $716,272 $753,955 ========== ============ JAKKS Pacific, Inc. and Subsidiaries First Quarter Earnings Announcement, 2006 Condensed Statements of Income (Unaudited) Three Months Ended March 31, 2006 2005 --------- --------- (In thousands, expect per share data) Net sales $107,760 $134,676 Less cost of sales Cost of goods 52,723 63,831 Royalty expense 9,615 15,541 Amortization of tools and molds 1,259 1,092 --------- --------- Cost of sales 63,597 80,464 --------- --------- Gross profit 44,163 54,212 Direct selling expenses 14,131 19,062 Selling, general and administrative expenses 23,264 19,129 Depreciation and amortization 4,524 2,346 --------- --------- Income from operations 2,244 13,675 Other income (expense): Profit from video game joint venture 757 150 Other expense - - Interest, net 282 (198) --------- --------- Income before provision for income taxes 3,283 13,627 Provision for income taxes 952 3,543 --------- --------- Net income $2,331 $10,084 ========= ========= Earnings per share - diluted $0.09 $0.34 Shares used in earnings per share - diluted 32,617 32,256 CONTACT: JAKKS Pacific, Inc. Genna Rosenberg, 310-455-6235 or Integrated Corporate Relations John Mills, 310-395-2215