4Kids Entertainment, Inc. (NYSE: KDE), the global
children’s entertainment and merchandise licensing company, today
announced financial results for the fourth quarter and year ended
December 31, 2009.
Net revenues for the three months ended December 31, 2009
totaled $17.0 million, compared to $12.8 million for the same
period in 2008. Fourth quarter revenues included $9.8 million that
the Company received as part of its agreement to terminate its
right to serve as the merchandise licensing agent for the Teenage
Mutant Ninja Turtles property (“TMNT”). The Company’s net loss
attributable to 4Kids Entertainment for the three months ended
December 31, 2009 was $(21.3) million, or $(1.59) per diluted
share, as compared to a net loss of $(19.6) million, or $(1.48) per
diluted share, for the same period in 2008. Net loss for the fourth
quarter included $20.2 million in impairment charges attributable
to the Chaotic property. The Company's fourth quarter 2009 results
also included losses and impairment charges of $6.0 million
relating to the Company's portfolio of auction rate securities,
$2.9 million in severance costs relating to the reduction in force
and an additional $3.8 million in amortization of capitalized film
costs related to the fourth quarter 2009 sale of the TMNT
property.
For the year ended December 31, 2009, net revenues totaled $36.8
million, compared to $57.2 million for the same period in 2008. The
Company’s net loss attributable to 4Kids Entertainment for the year
ended December 31, 2009 was $(42.1) million, or $(3.16) per diluted
share, as compared to a net loss of $(36.8) million, or $(2.79) per
diluted share, for the same period in 2008. The Company’s results
reflect the adoption of authoritative guidance from the FASB
requiring losses attributable to non-controlling interests of the
Company to be excluded in their entirety from the computation of
the Company’s net losses beginning in 2009.
“In 2009 we looked to realign our business with current trends
in the market and made significant adjustments throughout our
operations,” said Alfred R. Kahn, Chairman and Chief Executive
Officer of 4Kids Entertainment. "We have substantially reduced our
cost structure and have revised the valuation or amortization of
certain assets on our balance sheet. With these financial hurdles
now behind us, we have entered 2010 with a much lower annual
expense base which is projected to be under $25 million for 2010,”
said Mr. Kahn.
"We believe that we have a stronger pipeline of new properties
than in recent years, which we hope will benefit the Company in the
years ahead. We are also working on a number of other deals which
we expect will result in additional licenses and opportunities for
4Kids in 2010. As of March 15, 2010, the Company had over $10.7
million in cash and an additional $14.1 million in investment
securities at their fair market value which we believe should
provide the Company with sufficient liquidity to run its business,
promote its current properties, invest in new properties and
generally rebuild the business of 4Kids. While working to
strengthen our business, the Company is also continuing to pursue
potential strategic transactions that could potentially have a
positive effect on shareholder value,” Kahn concluded.
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.
4KIDS ENTERTAINMENT, INC. AND
SUBSIDIARIES
CONSOLIDATED BALANCE
SHEETS
DECEMBER 31, 2009 AND
2008
(In thousands of dollars, except
share data)
ASSETS:
2009
2008
Current assets: Cash and cash equivalents $ 3,621 $ 13,503 Accounts
receivable - net 14,470 22,818 Inventories - net 1,273 4,241 Income
taxes receivable 4,044 137 Prepaid expenses and other current
assets 2,612 1,876 Deferred income taxes — 127
Total current assets 26,020 42,702 Property and equipment -
net 2,898 4,287 Long term investments 14,180 21,617 Accounts
receivable – noncurrent, net 153 655 Film and television costs -
net 6,832 16,661 Other assets - net (includes related party amounts
of $1,215 and $6,638, respectively) 6,570 14,652 Total assets $
56,653 $ 100,574
LIABILITIES AND STOCKHOLDERS’
EQUITY: Current liabilities: Due to licensors $ 6,578 $ 5,651
Accounts payable and accrued expenses 12,304 16,202 Deferred
revenue 2,279 3,270 Total current liabilities 21,161 25,123
Deferred rent 375 460 Total liabilities 21,536 25,583
Commitments and contingencies Stockholders’ 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 and 15,246,579
shares; outstanding 13,352,053 and
13,227,019 shares in 2009 and
2008, respectively
154 152 Additional paid-in capital 66,991 65,107 Accumulated other
comprehensive loss (4,644 ) (17,396 ) Retained earnings 19,298
63,504 81,799 111,367 Less cost of 2,059,046 and 2,019,560 treasury
shares in 2009 and 2008, respectively 36,434 36,376 Total
shareholders’ equity of 4Kids Entertainment, Inc. 45,365 74,991
Noncontrolling interests (10,248 ) — Total equity 35,117 74,991
Total liabilities and stockholders’ equity $ 56,653 $ 100,574
4KIDS ENTERTAINMENT, INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
OPERATIONS
YEARS ENDED DECEMBER 31, 2009,
2008 AND 2007
(In thousands of dollars, except
share data)
2009
2008
2007
Net revenues: Service revenue $ 24,394 $ 41,925 $ 48,428 Product
revenue 2,603 15,276 776 Other revenue 9,786 — — Total net revenues
36,783 57,201 49,204 Costs and expenses: Selling, general
and administrative 48,190 54,564 44,970 Cost of sales of trading
cards 8,167 10,625 352 Amortization of television and film costs
21,511 7,707 8,179 Amortization of 4Kids TV broadcast fee — 16,022
21,472 Impairment of investment in international trading card
subsidiary 2,430 — — Total costs and expenses 80,298 88,918 74,973
Loss from operations (43,515 ) (31,717 ) (25,769 )
Interest income 1,076 2,722 5,281 Impairment of investment
securities (6,175 ) (7,834 ) — Loss on sale of investment
securities (7,647 ) — — Total other (expense) income (12,746 )
(5,112 ) 5,281 Loss before income taxes (56,261 ) (36,829 )
(20,488 ) Benefit from (provision for) income taxes 3,805
(300 ) (2,436 ) Loss on previously unconsolidated affiliate
— — (498 ) Noncontrolling interest — 310 96 Net loss
(52,456 ) (36,819 ) (23,326 ) Net loss attributable to
noncontrolling interests 10,380 — — Net loss attributable to
4Kids Entertainment, Inc. $ (42,076 ) $ (36,819 ) $ (23,326 )
Basic loss per share attributable
to 4Kids
Entertainment, Inc. common
shareholders
$ (3.16 ) $ (2.79 ) $ (1.77 )
Diluted loss per share
attributable to 4Kids
Entertainment, Inc. common
shareholders
$ (3.16 ) $ (2.79 ) $ (1.77 ) Weighted average common shares
outstanding - basic 13,303,192 13,181,549 13,209,495 Weighted
average common shares outstanding - diluted 13,303,192 13,181,549
13,209,495
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