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Press release from Business Wire

JAKKS Pacific® Reports First Quarter Results for 2011

Tuesday, April 26, 2011

JAKKS Pacific® Reports First Quarter Results for 201106:00 EDT Tuesday, April 26, 2011 MALIBU, Calif. (Business Wire) -- JAKKS Pacific, Inc. (NASDAQ: JAKK) reported results for the Company's first quarter ended March 31, 2011. Net sales for the first quarter of 2011 were $72.3 million, compared to $77.3 million reported in the first quarter of 2010. The Company reported a loss for the first quarter of 2011 of $10.6 million, or $0.39 per diluted share, compared to a loss for the first quarter of 2010 of $5.2 million, or $0.19, which included a tax benefit adjustment of $4.9 million, or $0.18 per diluted share. Excluding the tax benefit adjustment, the 2010 first quarter loss would have been $10.1 million, or $0.37 per diluted share. “2011 started off favorably, with our net sales exceeding and our earnings meeting the high end of our guidance ranges for the first quarter and our Fall lines proceeding on plan,” commented Stephen Berman, President and CEO, JAKKS Pacific. “So far, our gross margin is up over last year and we anticipate being able to achieve continued margin improvement in the second half of the year as a result of our ongoing commitment to closely managing our supply chain. “We remain pleased with our broad array of products which have widespread placement at retail. We expect the top contributors to be Disney Princess and Disney Fairies dolls, dress-up and pretend products, as well as the I Am T-Pain Microphone, SpyNet electronics, Cabbage Patch Kids dolls, Pokémon toys, Halloween costumes and other toys related to several movie properties, including Cars 2. We are also working on a number of exciting initiatives for our future including our new animated television show and related toy product line MONSUNO™.” Operations provided cash of $7.9 million for the first quarter of 2011, and as of March 31, 2011, the Company's working capital was $370.7 million, including cash and equivalents and marketable securities of $274.7 million. “We have been closely watching the acquisition landscape in search of quality additions to our portfolio,” commented Joel Bennett, Executive Vice President and CFO. “Using our disciplined approach, we continue to look for accretive acquisitions to complement the growth of our business and effectively deploy our capital.” Berman concluded, “At this point we are still anticipating an increase in net sales for 2011 over last year of 3% to 4% to approximately $770 to $775 million, with diluted EPS in the range of $1.32 to $1.35, an increase of 4% to 6% over fiscal 2010 adjusted EPS of $1.27, which excludes 2010's tax benefit adjustments and one-time benefit payment made to the estate of Jack Friedman, our deceased Chairman and former Co-CEO. We continue to have strong confidence in the future prospects for JAKKS Pacific and its shareholders." Conference Call JAKKS Pacific will webcast its fourth quarter earnings conference call today at 9:00a.m. ET (6:00a.m. PT) today. To listen to the live webcast, go to, and click on the earnings webcast link under Events and Presentations at least 10 minutes prior to register, download and install any necessary audio software. A telephonic playback will be available from approximately one hour after the call concludes through May 26, 2011. The playback can be accessed by calling 888-203-1112 or 719-457-0820 for international callers, pass code “1522613”. 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 brands and children's toy licenses in the world. JAKKS' diverse portfolio includes Action Figures, Electronics, Dolls, Dress-Up, Role Play, Halloween Costumes, Kids Furniture, Vehicles, Plush, Art Activity Kits, Seasonal Products, Infant/Pre-School, Construction Toys and Pet Toys sold under various proprietary brands including JAKKS Pacific®, Creative Designs International™, Road Champs®, Funnoodle®, JAKKS Pets™, Plug It In & Play TV Games™, Kids Only!™, Tollytots® and Disguise™. JAKKS is an award-winning licensee of several hundred nationally and internationally known trademarks including Disney®, Nickelodeon®, Pokémon®, Warner Bros.®, Ultimate Fighting Championship®, Hello Kitty®, Graco® and Cabbage Patch Kids®. 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. (Financial Tables Follow) © 2011 JAKKS Pacific, Inc. All rights reserved. JAKKS Pacific, Inc. and SubsidiariesCondensed Consolidated Balance Sheets                   March 31,December 31,   2011     2010   (In thousands)   ASSETS   Current assets: Cash and cash equivalents $ 274,467 $ 278,346 Marketable securities 209 207 Accounts receivable, net 57,432 122,476 Inventory, net 45,158 43,230 Income taxes receivable 19,043 19,052 Deferred income taxes 23,868 23,576 Prepaid expenses and other current assets   31,243     25,275   Total current assets   451,420     512,162     Property and equipment 77,400 76,150 Less accumulated depreciation and amortization   59,247     59,204   Property and equipment, net   18,153     16,946     Goodwill 6,988 6,988 Trademarks & other assets, net 37,431 38,388 Deferred income taxes 58,865 58,848 Investment in joint venture   1,814     74   Total assets $ 574,671   $ 633,406       LIABILITIES AND STOCKHOLDERS' EQUITY   Current liabilities: Accounts payable and accrued expenses $ 55,087 $ 90,389 Reserve for sales returns and allowances 17,982 28,378 Income taxes payable   7,675     6,143   Total current liabilities   80,744     124,910     Long term debt 90,140 89,458 Other liabilities 1,620 1,625 Income taxes payable   4,497     5,005   Total liabilities   177,001     220,998     Stockholders' equity: Common stock, $.001 par value 27 28 Additional paid-in capital 292,678 302,425 Treasury Stock - (5,641 ) Retained earnings 109,309 119,884 Accumulated other comprehensive income (loss)   (4,344 )   (4,288 )   397,670     412,408   Total liabilities and stockholders' equity $ 574,671   $ 633,406       JAKKS Pacific, Inc. and SubsidiariesFirst Quarter Earnings Announcement, 2011Condensed Statements of Income (Unaudited)                   Three Months Ended March 31,     2011     2010   (In thousands, expect per share data)   Net sales $ 72,323 $ 77,345 Less cost of sales Cost of goods 39,819 42,527 Royalty expense 6,866 8,006 Amortization of tools and molds   1,367     1,579   Cost of sales   48,052     52,112   Gross profit 24,271 25,233 Direct selling expenses 8,165 8,795 Selling, general and administrative expenses 29,246 27,925 Depreciation and amortization   1,650     2,141   Loss from operations (14,790 ) (13,628 ) Other income (expense): Equity in Net Income of Joint Venture 9 - Interest income 105 57 Interest expense, net of benefit   (2,040 )   (1,197 ) Loss before benefit for income taxes (16,716 ) (14,768 ) Benefit for income taxes   (6,141 )   (9,611 ) Net loss $ (10,575 ) $ (5,157 ) Loss per share $ (0.39 ) $ (0.19 ) Shares used in loss per share 27,217 27,394 JAKKS Pacific, Inc.Joel Bennett(310)