EX-99 2 pressrelease11907.htm PRESS RELEASE DATED NOVEMBER 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 Third Quarter 2007 Results

---

 

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

 

Net revenues in the third quarter of 2007 totaled $12.2 million from continuing operations as compared to $17.6 million for the same period in 2006. The Company’s net loss for the quarter ended September 30, 2007 was $(4.2) million, or $(0.31) per diluted share (consisting of a loss from continuing operations of $(4.2) million, or $(0.31) per diluted share) as compared to a net loss of approximately $(265,000), or $(0.02) per diluted share, in the same period in 2006 (consisting of a loss from continuing operations for the third quarter of 2006 of $(231,000), or $(0.02) per diluted share and a loss from discontinued operations of $(34,000), or $(0.00) per diluted share). The diluted weighted average common shares outstanding for the quarter ended September 30, 2007 was 13,211,222 shares compared with 13,100,477 shares for the same period in 2006. The Company has reported the results of Summit Media, its media buying subsidiary, as a discontinued operation since its operation ceased in June 2006.

 

For the nine months ended September 30, 2007, net revenues totaled $39.1 million from continuing operations compared to $53.5 million for the same period in 2006. The Company’s net loss for the nine months ended September 30, 2007 was $(6.6) million, or $(0.50) per diluted share (consisting of loss from continuing operations of $(6.6) million, or $(0.50) per diluted share), as compared to net income for the nine months ended September 30, 2006 of $1.3 million, or $0.10 per diluted share (consisting of income from continuing operations of $775,000, or $0.06 per diluted share, and income from discontinued operations of $542,000, or $0.04 per diluted share). The diluted weighted average common shares outstanding for the nine months ended September 30, 2007 were 13,196,621 shares compared with 13,373,422 shares for the same period in 2006.

 

Al Kahn, Chairman and CEO of 4Kids Entertainment, stated, “While we are disappointed by the financial results so far this year, we believe that we have taken important steps to strengthen our business for 2008 and beyond. On October 24, 2007, we released the highly anticipated Chaotic Trading Card Game to comic and hobby stores nationwide and launched the public beta version of the Chaotic website, www.chaoticgame.com. We expect sales of the Chaotic Trading Card Game to the comic and hobby channel to contribute to revenues in the fourth quarter. Beginning in the first quarter of 2008, the Chaotic Trading Card Game will be distributed to the mass market. Chaotic represents a

 

potentially dramatic shift in our business model as we will be able to add the gross revenues and profits from the distribution and sale of trading cards to the revenues from our share of the royalties that we receive in our traditional licensing business.”

 

“In addition, on October 3, 2007, we announced a new five-year broadcast deal with The CW Network, under which we will provide children's programming on Saturday mornings from 7 a.m. until 12 p.m. beginning in the 2008-09 broadcast season. We believe this deal will drive greater exposure for our hit properties and provide us with the opportunity to build ratings and increase advertising revenues over the long-term. Our strong balance sheet enables us to be pursue opportunities that we expect will increase shareholder value,” 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

SEPTEMBER 30, 2007 and DECEMBER 31, 2006

(In thousands of dollars, except share data)

 

Assets

 

2007

 

2006

 

Current assets:

 

(Unaudited

)

 

 

 

Cash and cash equivalents

 

$

28,420

 

$

18,066

 

Investments

 

 

64,855

 

 

92,910

 

Total cash, cash equivalents and investments

 

 

93,275

 

 

110,976

 

 

 

 

 

 

 

 

 

Accounts receivable - net

 

 

17,704

 

 

27,944

 

Prepaid income taxes

 

 

5,820

 

 

5,924

 

Prepaid expenses and other current assets

 

 

4,654

 

 

3,916

 

Current assets from discontinued operations

 

 

372

 

 

326

 

Deferred income taxes

 

 

787

 

 

707

 

Total current assets

 

 

122,612

 

 

149,793

 

 

 

 

 

 

 

 

 

Property and equipment - net

 

 

2,745

 

 

2,126

 

Long term investments

 

 

10,000

 

 

—

 

Accounts receivable - noncurrent, net

 

 

255

 

 

138

 

Investment in unconsolidated affiliate

 

 

2,798

 

 

2,702

 

Film and television costs - net

 

 

15,719

 

 

14,827

 

Non-current assets from discontinued operations

 

 

926

 

 

1,333

 

Deferred income taxes - noncurrent

 

 

6,943

 

 

1,733

 

Other assets – net

 

 

10,515

 

 

8,743

 

Total assets

 

$

172,513

 

$

181,395

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Due to licensors

 

$

9,090

 

$

6,536

 

Accounts payable and accrued expenses

 

 

10,867

 

 

14,317

 

Current liabilities from discontinued operations

 

 

—

 

 

20

 

Deferred revenue

 

 

3,002

 

 

5,014

 

Total current liabilities

 

 

22,959

 

 

25,887

 

 

 

 

 

 

 

 

 

Deferred rent

 

 

654

 

 

771

 

 

 

 

 

 

 

 

 

Total liabilities

 

 

23,613

 

 

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, 14,969,737 and 14,933,218 shares; outstanding 13,211,532 and         13,183,218 shares in 2007 and 2006, respectively

 

 

149

 

 

149

 

Additional paid-in capital

 

 

63,456

 

 

62,859

 

Accumulated other comprehensive income

 

 

1,598

 

 

1,329

 

Retained earnings

 

 

117,081

 

 

123,649

 

 

 

182,284

 

 

187,986

 

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

 

 

33,384

 

 

33,249

 

 

 

 

148,900

 

 

154,737

 

Total liabilities and stockholders’ equity

 

$

172,513

 

$

181,395

 

 

 

 

4KIDS ENTERTAINMENT, INC. AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006

(In thousands of dollars, except share data)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2007

 

 

2006

 

 

2007

 

 

2006

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net revenues

$

12,183

 

$

17,562

 

$

39,123

 

$

53,487

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

10,487

 

 

9,278

 

 

29,626

 

 

27,840

 

Production service costs

 

1,482

 

 

3,225

 

 

5,050

 

 

9,256

 

Amortization of television and film costs

 

1,546

 

 

1,759

 

 

4,677

 

 

4,776

 

Amortization of 4Kids TV broadcast fee

 

5,482

 

 

5,490

 

 

13,726

 

 

15,172

 

Total costs and expenses

 

18,997

 

 

19,752

 

 

53,079

 

 

57,044

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from operations

 

(6,814

)

 

(2,190

)

 

(13,956

)

 

(3,557

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

1,254

 

 

1,114

 

 

3,821

 

 

3,010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss before income taxes

 

(5,560

)

 

(1,076

)

 

(10,135

)

 

(547

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Benefit from income taxes

 

(2,471

)

 

(845

)

 

(4,746

)

 

(1,322

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from unconsolidated operations –

 

 

 

 

 

 

 

 

 

 

 

 

net of a tax benefit

 

(1,061

)

 

—

 

 

(1,179

)

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) income from continuing operations

 

(4,150

)

 

(231

)

 

(6,568

)

 

775

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) income from discontinued operations

 

—

 

 

(34

)

 

—

 

 

542

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income

$

(4,150

)

$

(265

)

$

(6,568

)

$

1,317

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Per share amounts:

 

 

 

 

 

 

 

 

 

 

 

 

Basic (loss) earnings per common share

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

$

(0.31

)

$

(0.02

)

$

(0.50

)

$

0.06

 

Discontinued operations

 

—

 

 

—

 

 

—

 

 

0.04

 

Basic (loss) earnings per common share

$

(0.31

)

$

(0.02

)

$

(0.50

)

$

0.10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted (loss) earnings per common share

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

$

(0.31

)

$

(0.02

)

$

(0.50

)

$

0.06

 

Discontinued operations

 

—

 

 

—

 

 

—

 

 

0.04

 

Diluted (loss) earnings per common share

$

(0.31

)

$

(0.02

)

$

(0.50

)

$

0.10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares

 

 

 

 

 

 

 

 

 

 

 

 

outstanding - basic

 

13,211,222

 

 

13,100,477

 

 

13,196,621

 

 

13,089,511

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares

 

 

 

 

 

 

 

 

 

 

 

 

outstanding - diluted

 

13,211,222

 

 

13,100,477

 

 

13,196,621

 

 

13,373,422