4Kids Entertainment Reports 2010 Third Quarter Results
NEW YORK--([ BUSINESS WIRE ])--4Kids Entertainment, Inc. (Pink Sheets: KIDE), the global childrena™s entertainment and merchandise licensing company, today announced financial results for the third quarter ended September 30, 2010.
"4Kids had another tough quarter as the Company continues its efforts to rationalize its cost structure, rebuild revenues and execute its turnaround plan"
Net revenues for the three months ended September 30, 2010 totaled $3.0 million, compared to $5.3 million for the same period in 2009. The Companya™s net loss for the three months ended September 30, 2010 attributable to 4Kids Entertainment was $(9.8) million, or $(0.73) per diluted share (consisting of a net loss from continuing operations attributable to 4Kids Entertainment of $(8.4) million, or $(0.63) per diluted share and a net loss from discontinued operations attributable to 4Kids Entertainment of $(1.4) million, or $(0.10) per diluted share) as compared to a net loss for the three months ended September 30, 2009 of $(5.0) million, or $(0.37) per diluted share (consisting of a net loss from continuing operations attributable to 4Kids Entertainment of $(3.3) million, or $(0.25) per diluted share and a net loss from discontinued operations attributable to 4Kids Entertainment of $(1.7) million, or $(0.12) per diluted share).
For the nine months ended September 30, 2010, net revenues totaled $9.7 million, compared to $18.0 million for the same period in 2009. The Companya™s net loss attributable to 4Kids Entertainment for the nine months ended September 30, 2010 was $(19.8) million, or $(1.47) per diluted share (consisting of a net loss from continuing operations attributable to 4Kids Entertainment of $(17.4) million, or $(1.29) per diluted share and a net loss from discontinued operations attributable to 4Kids Entertainment of $(2.4) million, or $(0.18) per diluted share), as compared to a net loss of $(20.8) million, or $(1.56) per diluted share for the nine months ended September 30, 2009 (consisting of a net loss from continuing operations attributable to 4Kids Entertainment of $(14.7) million, or $(1.11) per diluted share and a net loss from discontinued operations attributable to 4Kids Entertainment of $(6.1) million, or $(0.45) per diluted share).
As of September 30, 2010, the Company had approximately $4.0 million in cash and $10.9 million in investment securities at their fair market value.
As previously announced, the Company is continuing to explore its strategic alternatives. The Special Committee of the Board of Directors consisting of the Companya™s four independent directors is presently in ongoing discussions with several companies which may be interested in investing in 4Kids or acquiring all or a portion of the Companya™s business. There can be no assurance that any transaction will result from these discussions.
a4Kids had another tough quarter as the Company continues its efforts to rationalize its cost structure, rebuild revenues and execute its turnaround plan,a said Alfred R. Kahn, Chairman and Chief Executive Officer, 4Kids Entertainment. aDespite the reported third quarter losses of $(.73) per share, the cash burn in the third quarter was approximately $700,000.
aAt the end of the third quarter, we discontinued the business operations of our majority-owned trading card subsidiary, TC Digital Games LLC, and our majority-owned Website company, TC Websites LLC, recording substantial write-offs in our financial statements. The cessation of the Chaotic related businesses should save approximately $1 million per quarter. In addition, the closing of the Chaotic business enables the Company to focus its resources on the Company's core merchandise licensing business,a said Kahn.
aOn September 18, 2010, we launched the new season of our five-hour Saturday morning block on The CW Network, which is called aToonzai on CW 4Kids.a™ Our network lineup includes new episodes of such leading Japanese animated series as Yu-Gi-Oh! 5D's and Dragon Ball Z Kai, as well as longtime favorites such as Sonic X, Dinosaur King and classic Yu-Gi-Oh! We also launched our new online video player called aToonzakia™ in the third quarter, which we are hopeful will attract additional Internet advertising revenues," concluded Kahn.
About 4Kids Entertainment, Inc.
With U.S. headquarters in New York City, and international offices in London, 4Kids Entertainment, Inc. (Pink Sheets: KIDE) is a global organization devoted to the creation, development, production, broadcasting, distribution, licensing and manufacturing of childrena™s entertainment products.
Through its subsidiaries, 4Kids produces animated television series and films, distributes 4Kidsa™ produced or licensed animated television series for the domestic and international television and home video markets, licenses merchandising rights worldwide to 4Kidsa™ owned or represented properties, operates Websites to support 4Kidsa™ owned or represented properties. Additionally, the Company programs and sells the national advertising time in aTheCW4Kidsa 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 | ||||||||
SEPTEMBER 30, 2010 and DECEMBER 31, 2009 | ||||||||
(In thousands of dollars, except share data) | ||||||||
September 30, | December 31, | |||||||
2010 | 2009 | |||||||
ASSETS: | (Unaudited) | |||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 3,977 | $ | 3,621 | ||||
Accounts receivable - net | 5,773 | 13,843 | ||||||
Income taxes receivable | 414 | 4,044 | ||||||
Prepaid expenses and other current assets | 2,066 | 2,111 | ||||||
Current assets of discontinued operations | 65 | 2,401 | ||||||
Total current assets | 12,295 | 26,020 | ||||||
Property and equipment - net | 1,384 | 1,663 | ||||||
Long term investments | 10,936 | 14,180 | ||||||
Accounts receivable - noncurrent, net | 82 | 153 | ||||||
Film and television costs - net | 4,970 | 6,832 | ||||||
Non-current assets of discontinued operations | a" | 1,721 | ||||||
Other assets - net (includes related party amounts of $679 and $1,215, respectively) | 4,860 | 6,084 | ||||||
Total assets | $ | 34,527 | $ | 56,653 | ||||
LIABILITIES AND EQUITY: | ||||||||
Current liabilities: | ||||||||
Due to licensors | $ | 5,249 | $ | 6,578 | ||||
Accounts payable and accrued expenses | 10,081 | 9,566 | ||||||
Current liabilities of discontinued operations | 2,272 | 2,738 | ||||||
Deferred revenue | 1,632 | 2,279 | ||||||
Total current liabilities | 19,234 | 21,161 | ||||||
Deferred rent | 396 | 375 | ||||||
Total liabilities | 19,630 | 21,536 | ||||||
Commitments and contingencies | ||||||||
4Kids Entertainment, Inc. shareholdersa™ equity | ||||||||
Preferred stock, $.01 par value a" authorized 3,000,000 shares; none issued | a" | a" | ||||||
Common stock, $.01 par value - authorized 40,000,000 shares; issued 15,652,845 and 15,411,099 shares; outstanding 13,528,958 and 13,352,053 shares in 2010 and 2009, respectively | 157 | 154 | ||||||
Additional paid-in capital | 68,699 | 66,991 | ||||||
Accumulated other comprehensive loss | (2,730 | ) | (4,644 | ) | ||||
Retained (deficit) earnings | (491 | ) | 19,298 | |||||
65,635 | 81,799 | |||||||
Less cost of 2,123,887 and 2,059,046 treasury shares in 2010 and 2009, respectively | (36,488 | ) | (36,434 | ) | ||||
Total shareholdersa™ equity of 4Kids Entertainment, Inc. | 29,147 | 45,365 | ||||||
Noncontrolling interests related to discontinued operations | (14,250 | ) | (10,248 | ) | ||||
Total equity | 14,897 | 35,117 | ||||||
Total liabilities and equity | $ | 34,527 | $ | 56,653 | ||||
4KIDS ENTERTAINMENT, INC. AND SUBSIDIARIES | ||||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) | ||||||||||||||||
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009 | ||||||||||||||||
(In thousands of dollars, except share data) | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Net revenues: | ||||||||||||||||
Service revenue | $ | 2,986 | $ | 5,312 | $ | 9,672 | $ | 17,989 | ||||||||
Total net revenues | 2,986 | 5,312 | 9,672 | 17,989 | ||||||||||||
Costs and expenses: | ||||||||||||||||
Selling, general and administrative | 7,086 | 7,329 | 20,362 | 22,531 | ||||||||||||
Amortization of television and film costs | 2,719 | 1,438 | 4,804 | 3,695 | ||||||||||||
Total costs and expenses | 9,805 | 8,767 | 25,166 | 26,226 | ||||||||||||
Loss from operations | (6,819 | ) | (3,455 | ) | (15,494 | ) | (8,237 | ) | ||||||||
Interest income | 95 | 178 | 288 | 925 | ||||||||||||
Impairment of investment securities | (1,552 | ) | (71 | ) | (1,973 | ) | (169 | ) | ||||||||
Loss on sale of investment securities | (212 | ) | a" | (212 | ) | (7,250 | ) | |||||||||
Total other expense | (1,669 | ) | 107 | (1,897 | ) | (6,494 | ) | |||||||||
Loss before income taxes | (8,488 | ) | (3,348 | ) | (17,391 | ) | (14,731 | ) | ||||||||
Benefit from income taxes | a" | a" | a" | a" | ||||||||||||
Loss from continuing operations | (8,488 | ) | (3,348 | ) | (17,391 | ) | (14,731 | ) | ||||||||
Loss from discontinued operations | (3,162 | ) | (3,764 | ) | (6,410 | ) | (12,672 | ) | ||||||||
Net Loss | (11,650 | ) | (7,112 | ) | (23,801 | ) | (27,403 | ) | ||||||||
Loss attributable to noncontrolling interests | 1,806 | 2,109 | 4,012 | 6,610 | ||||||||||||
Net loss attributable to 4Kids Entertainment, Inc. | $ | (9,844 | ) | $ | (5,003 | ) | $ | (19,789 | ) | $ | (20,793 | ) | ||||
Per share amounts: | ||||||||||||||||
Basic and diluted loss per share attributable to | ||||||||||||||||
Continuing operations | $ | (0.63 | ) | $ | (0.25 | ) | $ | (1.29 | ) | $ | (1.11 | ) | ||||
Discontinued operations | (0.10 | ) | (0.12 | ) | (0.18 | ) | (0.45 | ) | ||||||||
Basic and diluted loss per share attributable to | $ | (0.73 | ) | $ | (0.37 | ) | $ | (1.47 | ) | $ | (1.56 | ) | ||||
Weighted average common shares outstanding a" basic and diluted | 13,528,958 | 13,352,053 | 13,437,048 | 13,286,726 | ||||||||||||
Net loss attributable to 4Kids Entertainment, Inc.: | ||||||||||||||||
Loss from continuing operations | $ | (8,488 | ) | $ | (3,348 | ) | $ | (17,391 | ) | $ | (14,731 | ) | ||||
Loss from discontinued operations | (3,162 | ) | (3,764 | ) | (6,410 | ) | (12,672 | ) | ||||||||
Loss attributable to noncontrolling interests | 1,806 | 2,109 | 4,012 | 6,610 | ||||||||||||
Net loss from discontinued operations | (1,356 | ) | (1,655 | ) | (2,398 | ) | (6,062 | ) | ||||||||
Net loss attributable to 4Kids Entertainment, Inc. | $ | (9,844 | ) | $ | (5,003 | ) | $ | (19,789 | ) | $ | (20,793 | ) |