- 10/21/2008 (9:24:30 am)
- Press Release
……
JAKKS Pacific(R) Reports 2008 Third Quarter Results
MALIBU, Calif., Oct 21, 2008 (BUSINESS WIRE) -- JAKKS Pacific, Inc. (NASDAQ: JAKK) announces results for the Company's third quarter and first nine months ended September 30, 2008.
Third quarter 2008 net sales were $357.8 million, compared to $318.4 million recorded in the comparable period last year. Net income for the third quarter was $54.1 million, or $1.70 per diluted share, compared to $47.3 million, or $1.45 per diluted share, reported in the third quarter of 2007. Included in net income are tax benefits relating to the reversal of prior tax accruals in the amount of $13.3 million, or $0.41 per diluted share, in 2008 and $1.4 million, or $0.04 per diluted share, in 2007, and $9.1 million, or $0.18 per diluted share, in pre-tax non-cash charges relating to the write-down of certain of the Company's trademarks in 2008.
Net sales for the nine months ended September 30, 2008 were $634.1 million, compared to $572.0 million during the same period in 2007. Net income for the first nine months of 2008 was $59.2 million, or $1.88 per diluted share, compared to the first nine months of 2007 earnings of $55.6 million, or $1.75 per diluted share. Included in net income are tax benefits relating to the reversal of prior tax accruals in the amount of $13.3 million, or $0.41 per diluted share, in 2008 and $1.4 million, or $0.04 per diluted share, in 2007, and $9.1 million, or $0.18 per diluted share, in pre-tax non-cash charges relating to the write-down of certain of the Company's trademarks in 2008.
"The bulk of our new items for this year shipped in the third quarter as retailers stocked shelves for the upcoming holiday season, and initial reads on our award-winning top drivers have been promising," said Jack Friedman, Chairman and Chief Executive Officer, JAKKS Pacific. "We remain confident that our vast and diverse product line, based on classic and known licenses, as well as new internally developed initiatives, will perform for JAKKS and our retail partners. Thus far we are seeing positive momentum for a strong full year for our business."
"We saw solid results coming from our dolls, action figures, role play, activity toys and electronics categories, including our Girl Gourmet(TM) Cupcake Maker, EyeClops(TM) Night Vision Goggles, UltiMotion(TM) motion gaming systems, classic Disney(R) Princess and Hannah Montana(TM) toy lines, and Cabbage Patch Kids(R), among others," added JAKKS' President and Chief Operating Officer, Stephen Berman.
"We have been working diligently on our lines for next year and we're encouraged by the reviews we received from mass market retailers last week at the Dallas Fall Toy Preview. We showcased products from all of our divisions, including our two newest acquisitions, Kids Only children's indoor and outdoor furniture and Tollytots baby doll accessories. We have already begun working on new licensing initiatives for these newest JAKKS divisions and expect to see expanded distribution opportunities in the US and abroad beginning in early 2009."
Operations provided cash in the quarter of $20.1 million and $13.9 million for the first nine months of 2008 as working capital approaches seasonal highs, and our financial position remains very strong. As of September 30, 2008, our working capital was $392.7 million, including cash, equivalents and marketable securities of $192.8 million, and we continue to evaluate additional complementary acquisitions to further invest in our future and bolster our diverse portfolio.
Friedman concluded, "We remain confident that we will achieve our 2008 forecast for net sales of at least $891.4 million, with $89.5 million in net income and $2.80 diluted EPS."
Conference Call
JAKKS Pacific is hosting a teleconference today at 6:30 a.m. PDT (9:30 a.m. EDT) on October 21, 2008. Anyone interested will be able to listen to the teleconference, scheduled to begin at 9:30 a.m. ET (6:30 a.m. PT) on October 21, 2008, via the Internet at investors.jakks.com. The website will host an archive of the teleconference for 30 days. A telephonic playback will be available from 10:30 a.m. ET on October 21, 2008 through 12:00 a.m. ET on November 21, 2008. The playback can be accessed by calling 800-642-1687, or 706-645-9291 for international callers, pass code "68794515."
About JAKKS Pacific, Inc.
JAKKS Pacific, Inc. (NASDAQ: JAKK) is a leading designer and marketer of toys and consumer products, with a wide range of products that feature some of the most popular children's toy licenses in the world. JAKKS' diverse portfolio includes 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, sold under various proprietary brands including JAKKS Pacific(R), Play Along(R), Flying Colors(R), Creative Designs International(TM), Road Champs(R), Child Guidance(R), Pentech(R), Funnoodle(R), Go Fly a Kite(R), Color Workshop(R), JAKKS Pets(TM), EyeClops(R), Plug It In & Play TV Games(TM), Kids Only(R) and Tollytots(R). JAKKS is an award-winning licensee of several hundred nationally and internationally known trademarks including Disney, Nickelodeon, Warner Bros., World Wrestling Entertainment, Ultimate Fighting Championship, Graco and Cabbage Patch Kids. 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.jakks.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.
JAKKS Pacific, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
September 30, December 31,
2008 2007
(In thousands)
ASSETS
Current assets:
Cash and cash equivalents $ 192,607 $ 241,250
Marketable securities 223 218
Accounts receivable, net 230,006 174,451
Inventory, net 110,829 75,486
Income taxes receivable - -
Deferred income taxes 13,297 13,921
Prepaid expenses and other current assets 33,481 21,733
Total current assets 580,443 527,059
Property and equipment 75,544 59,480
Less accumulated depreciation and amortization 48,901 38,073
Property and equipment, net 26,643 21,407
Deferred income taxes
Goodwill, net 354,993 353,340
Trademarks & other assets, net 30,105 45,768
Investment in video game joint venture 40,562 36,090
Total assets $ 1,032,746 $ 983,664
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 168,883 $ 122,372
Reserve for sales returns and allowances 17,481 26,036
Income taxes payable 1,347 21,997
Total current liabilities 187,711 170,405
Long term debt 98,000 98,000
Other liabilities 2,052 6,432
Income taxes payable 11,293 11,294
Deferred income taxes 6,416 6,536
117,761 122,262
Total liabilities 305,472 292,667
Stockholders' equity:
Common stock, $.001 par value 28 28
Additional paid-in capital 290,009 312,127
Retained earnings 441,467 382,288
Accumulated other comprehensive income (loss) (4,230 ) (3,446 )
727,274 690,997
Total liabilities and stockholders' equity $ 1,032,746 $ 983,664
JAKKS Pacific, Inc. and Subsidiaries
Third Quarter Earnings Announcement, 2008
Condensed Statements of Income (Unaudited)
Three Months Ended September 30, Nine Months Ended September 30,
2008 2007 2008 2007
(In thousands, expect per share data)
Net sales $ 357,824 $ 318,391 $ 634,050 $ 572,000
Less cost of sales
Cost of goods 188,020 163,034 330,693 296,532
Royalty expense 36,650 29,181 64,307 54,638
Amortization of tools and molds 4,089 2,126 10,486 5,977
Cost of sales 228,759 194,341 405,486 357,147
Gross profit 129,065 124,050 228,564 214,853
Direct selling expenses 21,390 20,132 45,834 40,956
Selling, general and administrative expenses 38,433 34,798 103,250 87,021
Depreciation and amortization 2,828 4,063 8,392 12,007
Write-down of intangible assets 9,076 - 9,076 -
Income from operations 57,338 65,057 62,012 74,869
Other income (expense):
Profit from video game joint venture 743 908 4,470 3,117
Interest income 709 1,814 2,802 5,121
Interest expense, net of benefit 2,013 (692 ) (1,187 ) (3,855 )
Other expense - - - -
Income before provision for income taxes 60,803 67,087 68,097 79,252
Provision for income taxes 6,658 19,769 8,919 23,662
Net income $ 54,145 $ 47,318 $ 59,178 $ 55,590
Earnings per share - diluted $ 1.70 $ 1.45 $ 1.88 $ 1.75
Shares used in earnings per share - diluted 32,257 33,145 32,728 33,083
SOURCE: JAKKS Pacific, Inc.
JAKKS Pacific, Inc. Genna Rosenberg, 310-455-6235 or Joel Bennett, 310-455-6210
Jakks stocks are currently at 20.52, which is up 36 cents from yesterday. Their 52 week low was $18.18, and their 52 week high was $30.55
