EX-99 2 pressrealkcsa63007.htm PRESS RELEASE DATED AUGUST 9, 2007

 

INVESTOR CONTACTS:

Todd Fromer / Garth Russell

KCSA Worldwide

(212) 896-1215 / (212) 896-1250

 

tfromer@kcsa.com / grussell@kcsa.com

 

4Kids Entertainment Reports Second Quarter 2007 Results

---

NEW YORK, August 9, 2007 – 4Kids Entertainment, Inc. (NYSE: KDE), a global provider of children’s entertainment and merchandise licensing, today announced financial results for the quarter ended June 30, 2007.

Net revenues in the second quarter of 2007 totaled $12.0 million from continuing operations as compared to $16.7 million for the same period last year. The Company’s net loss for the quarter ended June 30, 2006 was $(2.2) million, or $(0.17) per diluted share (consisting of a loss from continuing operations for the second quarter of 2007 of $(2.2) million, or $(0.17) per diluted share) as compared to net income of approximately $34,000, or $0.00 per diluted share, in the second quarter of 2006 (consisting of a loss from continuing operations for the second quarter of 2006 of $(0.6) million, or $(0.05) per diluted share and income from discontinued operations of $0.7 million or $0.05 per diluted share) . The diluted weighted average common shares outstanding for the quarter ended June 30, 2007 was 13,195,054 shares compared with 13,090,901 shares for the quarter ended June 30, 2006. The Company reported the results of Summit Media, its media buying subsidiary, as a discontinued operation since its operation ceased in June 2006.

For the six months ended June 30, 2007, net revenues totaled $26.9 million compared to $35.9 million from the same period last year. The Company’s net loss for the six months ended June 30, 2007 was $(2.4) million, or $(0.18) per diluted share (consisting of loss from continuing operations of $(2.4) million, or $(0.18) per diluted share), as compared to net income for the six months ended June 30, 2006 of $1.6 million, or $0.12 per diluted share (consisting of income from continuing operations of $1.0 million, or $0.08 per diluted share and income from discontinued operations of $0.6 million, or $0.04 per diluted share). The diluted weighted average common shares outstanding for the six months ended June 30, 2007 were 13,189,199 shares compared with 13,370,177 shares for the six months ended June 30, 2006.

“Although we are disappointed by the Company’s overall financial results for the second quarter of 2007, the Company continued to take the necessary steps to build for the future” said Alfred R. Kahn, 4Kids Entertainment’s Chairman and Chief Executive Officer. “In the first half of the year, we invested over $3 million in the Company’s digital assets, our 4Kids.TV website, our new trading card company, TC Digital Games LLC and our new website company, TC Websites LLC which is building out the www.chaoticgame.com website. We are also encouraged by the performance of the ‘Teenage Mutant Ninja Turtles’ property in the first half of 2007 spurred on by the successful theatrical release of the new Turtles movie, 'TMNT' in March 2007”, said Kahn.

 


 

“We are excited about the much anticipated launch of the Chaotic card game and website, www.chaoticgame.com, which we expect will occur this October. We are also looking forward to the new 2007 – 2008 4Kids TV season on Fox when we will be broadcasting new episodes of Chaotic and Viva Piñata as well as launching the popular Dinosaur King animated series from Sega. We anticipate that some of our newer properties will begin to contribute to our revenues in the second half of the year joining our core properties, including ‘Yu-Gi-Oh!’, ‘Teenage Mutant Ninja Turtles’, ‘Cabbage Patch Kids’ and ‘The Dog’,” concluded Kahn.

 

About 4Kids Entertainment

Headquartered in New York City with an international office in London, 4Kids Entertainment, Inc. (NYSE: KDE), 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.

 

(Tables follow)

 

# # #

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4KIDS ENTERTAINMENT, INC. AND SUBSIDIARIES

 

CONSOLIDATED BALANCE SHEETS

JUNE 30, 2007 and DECEMBER 31, 2006

(In thousands of dollars, except share data)

Assets

 

2007

 

2006

 

Current assets:

 

(Unaudited

)

 

 

 

Cash and cash equivalents

 

$

18,796

 

$

18,066

 

Investments

 

 

86,849

 

 

92,910

 

Total cash, cash equivalents and investments

 

 

105,645

 

 

110,976

 

 

 

 

 

 

 

 

 

Accounts receivable - net

 

 

18,469

 

 

27,944

 

Prepaid income taxes

 

 

5,689

 

 

5,924

 

Prepaid expenses and other current assets

 

 

4,843

 

 

3,916

 

Current assets from discontinued operations

 

 

372

 

 

326

 

Deferred income taxes

 

 

799

 

 

707

 

Total current assets

 

 

135,817

 

 

149,793

 

 

 

 

 

 

 

 

 

Property and equipment - net

 

 

2,573

 

 

2,126

 

 

 

 

 

 

 

 

 

Other assets:

 

 

 

 

 

 

 

Accounts receivable - noncurrent, net

 

 

295

 

 

138

 

Investment in unconsolidated affiliate

 

 

3,983

 

 

2,702

 

Film and television costs - net

 

 

15,279

 

 

14,827

 

Non-current assets from discontinued operations

 

 

926

 

 

1,333

 

Deferred income taxes - noncurrent

 

 

3,897

 

 

1,733

 

Other assets – net

 

 

9,587

 

 

8,743

 

Total assets

 

$

172,357

 

$

181,395

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Due to licensors

 

$

6,085

 

$

6,536

 

Accounts payable and accrued expenses

 

 

9,463

 

 

14,317

 

Current liabilities from discontinued operations

 

 

20

 

 

20

 

Deferred revenue

 

 

3,181

 

 

5,014

 

Total current liabilities

 

 

18,749

 

 

25,887

 

 

 

 

 

 

 

 

 

Deferred rent

 

 

676

 

 

771

 

 

 

 

 

 

 

 

 

Total liabilities

 

 

19,425

 

 

26,658

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

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, 14,968,987 and 14,933,218 shares; outstanding 13,210,782 and         13,183,218 shares in 2007 and 2006, respectively

 

 

149

 

 

149

 

Additional paid-in capital

 

 

63,445

 

 

62,859

 

Accumulated other comprehensive income

 

 

1,491

 

 

1,329

 

Retained earnings

 

 

121,231

 

 

123,649

 

 

 

186,316

 

 

187,986

 

Less cost of 1,758,205 and 1,750,000 treasury shares in 2007 and 2006, respectively

 

 

33,384

 

 

33,249

 

 

 

 

152,932

 

 

154,737

 

Total liabilities and stockholders’ equity

 

$

172,357

 

$

181,395

 

 

 

 

 

4KIDS ENTERTAINMENT, INC. AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

THREE AND SIX MONTHS ENDED JUNE 30, 2007 AND 2006

(In thousands of dollars, except share data)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2007

 

 

2006

 

 

2007

 

 

2006

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net revenues

$

12,009

 

$

16,672

 

$

26,940

 

$

35,925

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

10,176

 

 

10,285

 

 

19,139

 

 

18,562

 

Production service costs

 

1,788

 

 

3,155

 

 

3,568

 

 

6,031

 

Amortization of television and film costs

 

1,444

 

 

1,371

 

 

3,131

 

 

3,017

 

Amortization of 4Kids TV broadcast fee

 

3,825

 

 

4,874

 

 

8,244

 

 

9,682

 

Total costs and expenses

 

17,233

 

 

19,685

 

 

34,082

 

 

37,292

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from operations

 

(5,224

)

 

(3,013

)

 

(7,142

)

 

(1,367

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

1,480

 

 

1,009

 

 

2,567

 

 

1,896

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) income before income taxes

 

(3,744

)

 

(2,004

)

 

(4,575

)

 

529

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Benefit from income taxes

 

(1,598

)

 

(1,382

)

 

(2,275

)

 

(477

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from unconsolidated operations –

 

(67

)

 

—

 

 

(118

)

 

—

 

net of a tax benefit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) income from continuing operations

 

(2,213

)

 

(622

)

 

(2,418

)

 

1,006

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from discontinued operations

 

—

 

 

656

 

 

—

 

 

576

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income

$

(2,213

)

$

34

 

$

(2,418

)

$

1,582

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Per share amounts:

 

 

 

 

 

 

 

 

 

 

 

 

Basic (loss) earnings per common share

 

 

 

 

 

 

 

 

 

 

 

 

Continuing Operations

$

(0.17

)

$

(0.05

)

$

(0.18

)

$

0.08

 

Discontinued Operations

 

—

 

 

0.05

 

 

—

 

 

0.04

 

Basic (loss) earnings per common share

$

(0.17

)

$

0.00

 

$

(0.18

)

$

0.12

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted (loss) earnings per common share

 

 

 

 

 

 

 

 

 

 

 

 

Continuing Operations

$

(0.17

)

$

(0.05

)

$

(0.18

)

$

0.08

 

Discontinued Operations

 

—

 

 

0.05

 

 

—

 

 

0.04

 

Diluted (loss) earnings per common share

$

(0.17

)

$

0.00

 

$

(0.18

)

$

0.12

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares

 

 

 

 

 

 

 

 

 

 

 

 

outstanding - basic

 

13,195,054

 

 

13,090,901

 

 

13,189,199

 

 

13,083,937

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares

 

 

 

 

 

 

 

 

 

 

 

 

outstanding - diluted

 

13,195,054

 

 

13,090,901

 

 

13,189,199

 

 

13,370,177