4Kids Entertainment, Inc. (NYSE: KDE), the global
children’s entertainment and merchandise licensing company, today
announced financial results for the first quarter ended March 31,
2010.
Net revenues for the three months ended March 31, 2010 totaled
$4.2 million, compared to $9.3 million for the same period in 2009.
The Company’s net loss attributable to 4Kids Entertainment for the
three months ended March 31, 2010 was $(3.5) million, or $(0.26)
per diluted share, as compared to a net loss of $(2.0) million, or
$(0.15) per diluted share, for the same period in 2009.
As of March 31, 2010, the Company had approximately $9.3 million
in cash and $11.7 million in investment securities at their fair
market value.
The Company announced that it had received a non-binding
indication of interest from a third party to acquire 4Kids for a
price representing a premium over the recent closing prices for the
Company’s common stock, subject to the satisfactory completion of
due diligence and negotiation of definitive agreements during a
requested exclusivity period. The Special Committee of the Board of
Directors formed in 2009 in connection with the Board of Directors’
evaluation of strategic alternatives has authorized the Company’s
management to provide the potential acquirer with due diligence
information regarding the Company’s assets and operations and
intends to enter into discussions with the potential acquirer
regarding exclusivity and the acquirer’s indication of interest.
There can be no assurance that any transaction with the potential
acquirer will be concluded.
The Company also announced that its market capitalization had
slipped below the minimum $15 million market capitalization that
New York Stock Exchange listed companies are required to maintain
in order to remain listed and that the Company’s shares could be
delisted at any time.
“In the first quarter of 2010, our revenue decreased from the
comparable period in 2009 due to lower licensing revenue and
reduced television advertising revenue. Although first quarter 2010
Yu-Gi-Oh! revenues were essentially flat, the Company received
reduced licensing revenues from several properties formerly
represented by the Company," said Alfred R. Kahn, Chairman and
Chief Executive Officer of 4Kids Entertainment.
“Our first quarter results benefited from the cost cutting
measures we put into place over the past year, with SG&A down
41%. Although our reported loss was $3.5 million, our cash loss
from operations in our traditionally weak first quarter without
giving effect to the $3.6 million tax refund we received, was
$400,000,” said Alfred R. Kahn, Chairman and Chief Executive
Officer of 4Kids Entertainment.
“Although 4Kids is a smaller, more streamlined company, we
continue to have the necessary skills, experience and liquidity to
promote our current properties, invest in new properties and
generally rebuild the business. We believe that we have a promising
pipeline of new properties, some of which will debut at next
month's Licensing Show in Las Vegas. With the dramatic reductions
to our cost structure, we can become profitable if any of our new
properties gain traction," concluded Mr. Kahn.
About 4Kids Entertainment, Inc.
With U.S. headquarters in New York City, regional offices for
its trading card business in San Diego, California and
international offices in London, 4Kids Entertainment, Inc. (NYSE:
KDE) is a global organization devoted to the creation, development,
production, broadcasting, distribution, licensing and manufacturing
of children’s entertainment products.
Through its subsidiaries, 4Kids produces animated television
series and films, distributes 4Kids’ produced or licensed animated
television series for the domestic and international television and
home video markets, licenses merchandising rights worldwide to
4Kids’ owned or represented properties, operates Websites to
support 4Kids’ owned or represented properties, and produces and
markets collectible trading card games. Additionally, the Company
programs and sells the national advertising time in “TheCW4Kids”
five-hour Saturday morning block on The CW television network.
Additional information is available on the
www.4KidsEntertainment.com corporate Website and at the
www.4Kids.tv game station site.
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.
(Financial tables below)
4KIDS ENTERTAINMENT, INC. AND
SUBSIDIARIES
CONSOLIDATED BALANCE
SHEETS
MARCH 31, 2010 and DECEMBER 31,
2009
(In thousands of dollars, except
share data)
March 31,
December 31,
ASSETS:
2010
2009
Current assets: (Unaudited) Cash and cash equivalents $ 9,299 $
3,621 Accounts receivable – net 9,560 14,470 Inventories – net
1,149 1,273 Income taxes receivable 447 4,044 Prepaid expenses and
other current assets 2,451 2,612 Total current assets 22,906 26,020
Property and equipment – net 2,546 2,898 Long term
investments 11,713 14,180 Accounts receivable - noncurrent, net 89
153 Film and television costs – net 6,381 6,832 Other assets - net
(includes related party amounts of $935 and $1,215, respectively)
6,189 6,570 Total assets $ 49,824 $ 56,653
LIABILITIES
AND EQUITY: Current liabilities: Due to licensors $ 6,108 $
6,578 Accounts payable and accrued expenses 10,752 12,304 Deferred
revenue 1,988 2,279 Total current liabilities 18,848 21,161
Deferred rent 378 375 Total liabilities 19,226 21,536
Commitments and contingencies 4Kids Entertainment, Inc.
shareholders’ equity Preferred stock, $.01 par value – authorized
3,000,000 shares; none issued — —
Common stock, $.01 par value -
authorized 40,000,000 shares; issued 15,411,099 shares; outstanding
13,352,053 shares; in both 2010 and 2009
154 154 Additional paid-in capital 66,991 66,991 Accumulated other
comprehensive loss (4,690 ) (4,644 ) Retained earnings 15,819
19,298 78,274 81,799 Less cost of 2,059,046 treasury shares in both
2010 and 2009 36,434 36,434 Total shareholders’ equity of 4Kids
Entertainment, Inc. 41,840 45,365 Noncontrolling interests (11,242
) (10,248 ) Total equity 30,598 35,117 Total liabilities and equity
$ 49,824 $ 56,653
4KIDS ENTERTAINMENT, INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
OPERATIONS (UNAUDITED)
THREE MONTHS ENDED MARCH 31,
2010 AND 2009
(In thousands of dollars, except
share data)
Three Months Ended
March 31,
2010
2009
Net revenues: Service revenue $ 4,230 $ 8,895 Product
revenue 7 437 Total net revenues 4,237 9,332 Costs and
expenses: Selling, general and administrative 7,097 12,031 Cost of
sales of trading cards 364 502 Amortization of television and film
costs 1,358 1,191 Total costs and expenses 8,819 13,724 Loss
from operations (4,582 ) (4,392 ) Interest income 105 401
Impairment of investment securities — (89 ) Total other income 105
312 Loss before income taxes (4,477 ) (4,080 )
Benefit from income taxes — — Net loss (4,477 ) (4,080 )
Net loss attributable to noncontrolling interests 998 2,040
Net loss attributable to 4Kids Entertainment, Inc. $ (3,479
) $ (2,040 ) Per share amounts: Basic loss per share
attributable to 4Kids Entertainment Inc. common shareholders $
(0.26 ) $ (0.15 ) Diluted loss per share attributable to
4Kids Entertainment Inc. common shareholders $ (0.26 ) $ (0.15 )
Weighted average common shares outstanding - basic
13,352,053 13,227,019 Weighted average common shares
outstanding - diluted 13,352,053 13,227,019
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