-----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, NFJFmzi29dHnofPYR+xYONwlBo59dDunDmP78gwRErTngTxG9D97u3o7jgMJTZh8 krJrIDiJmxYnB7g+F/GHcg== 0001157523-07-001999.txt : 20070226 0001157523-07-001999.hdr.sgml : 20070226 20070226100732 ACCESSION NUMBER: 0001157523-07-001999 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20070226 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20070226 DATE AS OF CHANGE: 20070226 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: 07647723 BUSINESS ADDRESS: STREET 1: 22619 PACIFIC COAST HWY STREET 2: SUITE 250 CITY: MALIBU STATE: CA ZIP: 90265 BUSINESS PHONE: 3104567799 MAIL ADDRESS: STREET 1: 22619 PACIFIC COAST HWY STREET 2: SUITE 250 CITY: MALIBU STATE: CA ZIP: 90265 8-K 1 a5342125.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): February 26, 2007 (February 26, 2007) 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 February 26, 2007 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 February 26, 2007, we issued a press release announcing our results of operations for the quarter and year ended December 31, 2006. A copy of such release is annexed hereto as an exhibit. Item 9.01. Financial Statements and Exhibits. (c) Exhibits Exhibit Number Description - ------ ----------- 99.1* February 26, 2007 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: February 26, 2007 JAKKS PACIFIC, INC. By: /s/ Jack Friedman ------------------ Jack Friedman Chairman and Chief Executive Officer Exhibit Index Exhibit Number Description - ------ ----------- 99.1* February 26, 2007 Press Release - ------------------------- * Filed herewith EX-99.1 2 a5342125ex99_1.txt EXHIBIT 99.1 Exhibit 99.1 JAKKS Pacific(R) Reports Preliminary Fourth Quarter and Year-End Results for 2006 Record Sales and Earnings Results Expected for 2006 Company Provides Guidance for First Quarter and Fiscal 2007 MALIBU, Calif.--(BUSINESS WIRE)--Feb. 26, 2007--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 preliminary results for the fourth quarter and year-ended December 31, 2006. Fourth quarter net sales increased 43.3% to $238.3 million in 2006, compared to $166.3 million in the comparable period last year. Excluding non-cash stock-based compensation and acquisition-related amortization charges, net income for the fourth quarter of 2006 is expected to be $26.9 million, or $0.84 per diluted share, compared to $12.7 million, or $0.41 per diluted share, for the same period last year. Reported net income for the fourth quarter of 2006, including pre-tax non-cash stock-based compensation charges of $1.7 million and acquisition-related amortization charges of $4.1 million, is expected to be $23.2 million, or $0.73 per diluted share, compared to $9.0 million, or $0.30 per diluted share, for the same period last year, which included charges of $4.2 million for stock-based compensation and $1.8 million for acquisition-related amortization. The Company's net sales for the year ended December 31, 2006 increased 15.7% to $765.4 million, from $661.5 million in 2005. Excluding non-cash stock-based compensation and acquisition-related amortization charges, net income for the year ended December 31, 2006 is expected to have increased 23.2% to $86.7 million, or $2.74 per diluted share, compared to $70.4 million, or $2.28 per diluted share, for the same period last year. Reported net income for the year ended December 31, 2006, including pre-tax non-cash stock-based compensation charges of $6.5 million and $14.5 million for acquisition-related amortization, is expected to be $72.4 million, or $2.30 per diluted share, compared to $63.5 million, or $2.06 per diluted share, for the same period last year, which included charges of $3.4 million for stock-based compensation and $7.0 million for acquisition-related amortization. As noted above, the foregoing results are preliminary pending the completion of the review of the Company's annual goodwill valuation by its outside auditors. The valuation pursuant to SFAS 142 was performed by a third-party valuation consultant and the review is expected to be completed by March 16, 2007. Any impairment of the book value of the Company's goodwill may result in a non-cash charge to earnings in 2006. "The fourth quarter successfully concluded a record year of strong sales and earnings growth," said Jack Friedman, Chairman and Chief Executive Officer, JAKKS Pacific. "We had robust sales in several of our traditional toy segments, including dress-up and role play items, action figures, dolls and plush based on classic brands and well-known evergreen licenses due to our innovative products and prime retail placement throughout the year. As we look to 2007, we believe that our solid diversified portfolio will continue to drive revenue and earnings growth." Stephen Berman, President and Chief Operating Officer, stated, "We have an excellent mix of new consumer products planned for 2007 based on entertainment content that is popular with young kids of today, including Pokemon, which airs ten times per week on Cartoon Network; Hannah Montana and The Cheetah Girls, two hit Disney "tween" sensations; Nickelodeon's Dora the Explorer, which remains a top-rated preschool property; and the new hit game show on NBC, Deal or No Deal." "We have meaningful line extensions planned across many of JAKKS' divisions for this year, including new licensed and non-licensed preschool products, large and small doll and plush lines, an expanded line of XPV Xtreme Performance Vehicles, action figures, large feature role-play sets and dress-up items, and electronic gadgets that utilize our plug and play technology. Classic play patterns infused with innovation remain at the forefront of our product development, and we believe our product portfolio and expected retail support will help make 2007 the strongest year yet for JAKKS Pacific. "Cash flow from operations in 2006 was approximately $63.9 million, and our financial position remains very strong. As of December 31, 2006, our working capital was approximately $291.4 million, including cash and equivalents of $184.5 million. We expect to continue to grow our business by actively pursuing accretive and complementary acquisitions and executing on internal growth initiatives, including creating new products and securing new licenses, to provide continued growth for JAKKS Pacific." Friedman concluded, "For our initial 2007 guidance, we expect net sales of at least $800.0 million in 2007, with net income of $75.8 million, or $2.39 earnings per diluted share. This forecast anticipates first quarter net sales in the range of $114.0 million to $120.0 million, and diluted earnings per share of $0.07 to $0.10." JAKKS Pacific is hosting a teleconference today at 7:30 a.m. PT (10:30 a.m. ET) on February 26th, 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 8:30 a.m. PT on February 26th through 12 a.m. PT on March 12th. The playback can be accessed by calling 800-642-1687, or 706-645-9291 for international callers, pass code "9745773." About JAKKS Pacific, Inc. JAKKS Pacific, Inc. (Nasdaq:JAKK) 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 may contain 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. (C) JAKKS Pacific, Inc. All Right Reserved. JAKKS Pacific, Inc. and Subsidiaries Condensed Consolidated Balance Sheets December December 31, 31, 2006 2005 ----------- --------- (In thousands) ASSETS Current assets: Cash and cash equivalents $184,489 $240,238 Marketable securities 210 - Accounts receivable, net 153,116 87,199 Inventory, net 76,787 66,729 Deferred income taxes 13,654 13,618 Prepaid expenses and other current assets 26,543 17,533 ----------- --------- Total current assets 454,799 425,317 ----------- --------- Property and equipment 49,781 38,089 Less accumulated depreciation and amortization 32,899 25,394 ----------- --------- Property and equipment, net 16,882 12,695 ----------- --------- Goodwill, net 330,268 269,298 Trademarks & other assets, net 61,202 36,280 Investment in video game joint venture 14,873 10,365 ----------- --------- Total assets $878,024 $753,955 =========== ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued expenses $113,307 $94,948 Reserve for sales returns and allowances 32,589 25,123 Income taxes payable 17,477 3,792 ----------- --------- Total current liabilities 163,373 123,863 ----------- --------- Long term debt 98,000 98,000 Deferred rent liability 854 995 Deferred income taxes 6,690 6,446 ----------- --------- 105,544 105,441 ----------- --------- Total liabilities 268,917 229,304 Stockholders' equity: Common stock, $.001 par value 28 27 Additional paid-in capital 300,074 287,356 Retained earnings 312,432 240,057 Accumulated other comprehensive income (loss) (3,427) (2,789) ----------- --------- 609,107 524,651 ----------- --------- Total liabilities and stockholders' equity $878,024 $753,955 =========== ========= JAKKS Pacific, Inc. and Subsidiaries Fourth Quarter Earnings Announcement, 2006 Condensed Statements of Income (Unaudited) Three Months Ended Twelve Months Ended December 31, December 31, 2006 2005 2006 2005 --------- --------- --------- --------- (In thousands, expect per share data) Net sales $238,311 $166,270 $765,386 $661,536 Less cost of sales Cost of goods 124,419 77,128 393,965 323,303 Royalty expense 23,756 16,835 70,634 67,069 Amortization of tools and molds 1,667 1,337 5,993 4,457 --------- --------- --------- --------- Cost of sales 149,842 95,300 470,592 394,829 --------- --------- --------- --------- Gross profit 88,469 70,970 294,794 266,707 Direct selling expenses 30,662 26,031 78,794 78,982 Selling, general and administrative expenses 29,854 29,859 105,650 89,638 Depreciation and amortization 5,052 2,603 18,038 10,102 --------- --------- --------- --------- Income from operations 22,901 12,477 92,312 87,985 Other income (expense): Profit (loss) from video game joint venture 12,494 7,873 13,226 9,414 Interest income 1,400 1,763 4,930 5,182 Interest expense (1,133) (1,141) (4,533) (4,543) Other expense - - - (1,401) --------- --------- --------- --------- Income before provision for income taxes 35,662 20,972 105,935 96,637 Provision for income taxes 12,477 11,958 33,560 33,144 --------- --------- --------- --------- Net income $23,185 $9,014 $72,375 $63,493 ========= ========= ========= ========= Earnings per share -- diluted $0.73 $0.30 $2.30 $2.06 Shares used in earnings per share -- diluted 32,803 32,197 32,714 32,193 CONTACT: JAKKS Pacific, Inc. Genna Rosenberg, 310-455-6235 or Integrated Corporate Relations John Mills, 310-954-1100 -----END PRIVACY-ENHANCED MESSAGE-----