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Press release from Business Wire

JAKKS Pacific® Reports Second Quarter Results for 2011

<p class='bwalignc'> <i><b>Board Authorizes Quarterly Cash Dividend</b></i> </p>

Wednesday, July 20, 2011

JAKKS Pacific® Reports Second Quarter Results for 201106:00 EDT Wednesday, July 20, 2011 MALIBU, Calif. (Business Wire) -- JAKKS Pacific, Inc. (NASDAQ: JAKK) reported results for the Company's second quarter and first six months ended June 30, 2011. Net sales for the second quarter of 2011 were $131.9 million, compared to $123.3 million reported in the comparable period last year; and net sales for the six months were $204.3 million, compared to $200.6 million in 2010. Net income for the second quarter was $4.2 million, or $0.16 per diluted share, compared to $3.0 million, or $0.11 per diluted share, reported in the second quarter of 2010. The net loss reported for the six month period was $6.3 million, or $0.23 per diluted share, compared to a loss for the first six months of 2010 of $2.2 million, or $0.08 per diluted share which included a tax benefit adjustment of $4.9 million, or $0.18 per diluted share. Excluding the tax benefit the 2010 six month loss would have been $7.1 million or $0.26 per diluted share. “Today we are excited to have announced in a separate release a global content distribution agreement with Nickelodeon, the leading children's entertainment network for worldwide broadcast rights to the new original animated entertainment franchise Monsuno™,” remarked Stephen Berman, CEO and President of JAKKS Pacific. “This represents a milestone for our Company in developing a proprietary entertainment property such as Monsuno, which was initiated by JAKKS Pacific and has been developed in a joint venture with Dentsu Entertainment USA, FremantleMedia Enterprises and The Topps Company. In addition to having the exclusive worldwide rights to the toy line we are manufacturing based on the animated series, which is expected to have its initial broadcast in Spring 2012, we anticipate that this property will cross over into multiple entertainment and licensing opportunities, and represents an important achievement for the Company in its development and exploitation of children's content and proprietary properties.” “Our results for the second quarter reflect our commitment to tightening controls on our overall business and creating and delivering diverse products that are well received by our customers and consumers. We began shipping some of our new toys, electronics and Halloween costumes for the second half of the year with the bulk expected to ship during the third and fourth quarter,” Mr. Berman also noted. “We are also pleased to announce that our Board of Directors has authorized a regular quarterly cash dividend of 10 cents per common share, payable to holders of the Company's common stock,” Mr. Berman continued. “The first such quarterly dividend of 10 cents per common share is payable October 3, 2011 to shareholders of record as of September 15, 2011.” Mr. Berman noted, “The adoption by JAKKS Board of a quarterly dividend policy reflects the Company's history of generating substantial cash flow and its strong balance sheet, as well as the Board's confidence in our long-term outlook, and demonstrates its commitment to enhancing shareholder value.” “We continue to maintain tight reins on our overall business and work to achieve growth in earnings despite the challenging economic and retail environments,” commented Joel Bennett. “We remain confident we will achieve our earnings guidance for this year in the range of $1.32 to $1.35 per diluted share on net sales of $770 to $775 million.” Operations used cash of $14.6 million for the first six months of 2011 with inventory and accounts receivable at seasonal highs, and as of June 30, 2011, the Company's working capital was $372.8 million, including cash and equivalents and marketable securities of $247.1 million. Conference Call JAKKS Pacific will webcast its second quarter earnings conference call 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 can be accessed by calling (888) 203-1112, or (719) 325-4745 for international callers, pass code “8400231,” and will be available from approximately one hour after the call concludes, through July 20, 2011. 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®, Warner Bros.®, Ultimate Fighting Championship®, Hello Kitty®, Graco®, Cabbage Patch Kids® and Pokémon®. 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. Continued payment of the quarterly cash dividend will depend on depend on many factors, including, but not limited to, JAKKS' earnings, financial condition, business development needs, and is at the discretion of the Board of Directors. 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. © 2011 JAKKS Pacific, Inc. All rights reserved. JAKKS Pacific, Inc. and SubsidiariesCondensed Consolidated Balance Sheets                         June 30,December 31,   2011     2010   (In thousands)   ASSETS   Current assets: Cash and cash equivalents $ 246,846 $ 278,346 Marketable securities 210 207 Accounts receivable, net 109,327 122,476 Inventory, net 55,257 43,230 Income taxes receivable 18,871 19,052 Deferred income taxes 23,882 23,576 Prepaid expenses and other current assets   34,109     25,275   Total current assets   488,502     512,162     Property and equipment 79,162 76,150 Less accumulated depreciation and amortization   58,506     59,204   Property and equipment, net   20,656     16,946     Goodwill 6,988 6,988 Trademarks & other assets, net 38,044 38,388 Deferred income taxes 58,856 58,848 Investment in joint venture   1,846     74   Total assets $ 614,892   $ 633,406       LIABILITIES AND STOCKHOLDERS' EQUITY   Current liabilities: Accounts payable and accrued expenses $ 89,390 $ 90,389 Reserve for sales returns and allowances 16,888 28,378 Income taxes payable   9,382     6,143   Total current liabilities   115,660     124,910     Long term debt 90,823 89,458 Other liabilities 1,579 1,625 Income taxes payable   4,497     5,005   Total liabilities   212,559     220,998     Stockholders' equity: Common stock, $.001 par value 27 28 Additional paid-in capital 293,082 302,425 Treasury Stock - (5,641 ) Retained earnings 113,549 119,884 Accumulated other comprehensive income (loss)   (4,325 )   (4,288 )   402,333     412,408   Total liabilities and stockholders' equity $ 614,892   $ 633,406       JAKKS Pacific, Inc. and SubsidiariesSecond Quarter Earnings Announcement, 2011Condensed Statements of Income (Unaudited)                                     Three Months Ended June 30,Six Months Ended June 30,     2011     2010     2011     2010   (In thousands, expect per share data)(In thousands, expect per share data)   Net sales $ 131,930 $ 123,255 $ 204,253 $ 200,600 Less cost of sales Cost of goods 70,552 66,359 110,371 108,886 Royalty expense 14,070 11,402 20,936 19,408 Amortization of tools and molds   2,216     2,265     3,583     3,844   Cost of sales   86,838     80,026     134,890     132,138   Gross profit 45,092 43,229 69,363 68,462 Direct selling expenses 9,646 7,855 17,811 16,650 Selling, general and administrative expenses 30,595 31,026 59,841 58,951 Depreciation and amortization   2,853     3,074     4,503     5,215   Income (loss) from operations 1,998 1,274 (12,792 ) (12,354 ) Other income (expense): Income from video game joint venture 6,000 6,000 6,000 6,000 Equity in net income (loss) of joint venture (8 ) 1 Interest income 122 95 227 152 Interest expense, net of benefit   (2,025 )   (3,007 )   (4,065 )   (4,204 ) Income (loss) before provision (benefit) for income taxes 6,087 4,362 (10,629 ) (10,406 ) Provision (benefit) for income taxes   1,847     1,387     (4,294 )   (8,224 ) Net income (loss) $ 4,240   $ 2,975   $ (6,335 ) $ (2,182 ) Earnings (loss) per share $ 0.16 $ 0.11 $ (0.23 ) $ (0.08 ) Shares used in earnings (loss) per share 27,096 27,672 27,095 27,388 JAKKS Pacific, Inc.Joel Bennett, 310-455-6210orAnne-Marie Feliciano, 310-455-6245