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(Mark One) | ||
x | ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the Fiscal Year Ended December 31, 2004 | ||
o | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 95-4527222 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
22619 Pacific Coast Highway Malibu, California | 90265 | |
(Address of principal executive offices) | (Zip Code) |
Name of each exchange | ||
Title of each class | on which registered | |
None |
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EXPLANATORY NOTE
On May 9, 2005, the Company was notified by Nasdaq that the wording used in Exhibits 31.1 and 31.2 (the “302 Certifications”) to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2004 (the “2004 10-K”) was inaccurate. As such, the Company is hereby amending the 2004 10-K to revise the introductory sentence of Section 4 of each of the 302 Certifications, so that such Section 4 now accurately reflects that the Company’s certifying officers are responsible for establishing and maintaining not only disclosure controls and procedures, but also internal control over financial reporting.
The balance of the 2004 10-K remains unchanged.
In its notice, Nasdaq did not state that the Company had failed to satisfy any specific rule or standard for continued listing, yet did state that the Company was obligated to file this Amendment No. 1.
Except for disclosures affected by the revisions to Exhibits 31.1 and 31.2, this Amendment No. 1 speaks as of the original filing date of the 2004 10-K on March 31, 2005, and does not modify or update disclosures in the 2004 10-K to reflect events occurring or items discovered after March 31, 2005. Accordingly, this Amendment No. 1 should be read in conjunction with the Company’s filings made with the Securities and Exchange Commission subsequent to March 31, 2005.
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Item 4. | Submission of Matters to a Vote of Security Holders | None | ||||||
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Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | None | ||||||
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Item 9B. | Other Information | |||||||
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Signatures | 86 | |||||||
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EXHIBIT 31.1 | ||||||||
EXHIBIT 31.2 | ||||||||
EXHIBIT 32.1 | ||||||||
EXHIBIT 32.2 |
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• | Action figures and accessories including licensed characters, principally based onWorld Wrestling Entertainmenttm (“WWE”) and theDragon Ball® franchise, and toy vehicles, includingRoad Champs® die-cast collectibles andRemco® toy vehicles and role-play toys and accessories; | |
• | Craft, activity and stationery products, includingFlying Colors Toys® activity sets, compounds, playsets and lunch boxes, and Colorworkshop® craft products such as theBlopen® andPentech® writing instruments, stationery and activity products; | |
• | Infant and pre-school electronic toys, TV activities, toy foam puzzle mats and blocks, activity sets, outdoor products, plush toys featuringCare Bears andTeletubbies, soft body dolls featuringCabbage Patch Kids and slumber bags; | |
• | Seasonal toys and leisure products, including kites,Funnoodle® pool toys, andStormtm water guns; | |
• | Electronics products, includingPlug it in & Play TV Gamestm andLaser Challengetm; | |
• | Junior sports, including Disney products,Gaksplattm andStormtm; and | |
• | Fashion and mini dolls and related accessories, includingDisney Princesses sold in The Disney Store chain. |
• | creating innovative products under established brand names; | |
• | focusing our marketing efforts to enhance consumer recognition and retailer interest; | |
• | linking them with our evergreen portfolio of brands; | |
• | adding new items to the branded product lines that we expect will enjoy greater popularity; and | |
• | adding new features and improving the functionality of products in the line. |
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• | Road Champs die-cast collectible and toy vehicles |
• | Extreme sports die-cast collectibles and toy vehicles and action figures |
• | Toy and activity vehicles |
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• | Child Guidance |
• | Foam puzzle mats and playsets |
• | Slumber bags |
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New Game Titles | ||||||||||||
Profit from Joint | ||||||||||||
Console Platforms | Hand-held Platforms | Venture(1) | ||||||||||
(In millions) | ||||||||||||
1999 | 1 | 1 | $ | 3.6 | ||||||||
2000 | 4 | 1 | 15.9 | |||||||||
2001 | 1 | 2 | 6.7 | |||||||||
2002 | 3 | 1 | 8.0 | |||||||||
2003 | 5 | — | 7.4 | |||||||||
2004 | 2 | 1 | 7.9 |
(1) | Profit from the joint venture reflects our preferred return on joint venture revenue less certain costs incurred directly by us. |
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• | engaged representatives to oversee sales in certain territories, | |
• | engaged distributors in certain territories, such as Vivid Imaginations Ltd. in England, | |
• | established direct relationships with retailers in certain territories, and | |
• | expanded in-house resources. |
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The outcome of litigation in which we have been named as a defendant is unpredictable and a materially adverse decision in any such matter could have a material adverse affect on our financial position and results of operations. |
Our inability to redesign, restyle and extend our existing core products and product lines as consumer preferences evolve, and to develop, introduce and gain customer acceptance of new products and product lines, may materially and adversely impact our business, financial condition and results of operations. |
• | The phenomenon of children outgrowing toys at younger ages, particularly in favor of interactive and high technology products; | |
• | Increasing use of technology; | |
• | Shorter life cycles for individual products; and | |
• | Higher consumer expectations for product quality, functionality and value. |
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• | our current products will continue to be popular with consumers; | |
• | the product lines or products that we introduce will achieve any significant degree of market acceptance; or | |
• | the life cycles of our products will be sufficient to permit us to recover licensing, design, manufacturing, marketing and other costs associated with those products. |
The failure of our character-related and theme-related products to become and/or remain popular with children may materially and adversely impact our business, financial condition and results of operations. |
• | media associated with our character-related and theme-related product lines will be released at the times we expect or will be successful; | |
• | the success of media associated with our existing character-related and theme-related product lines will result in substantial promotional value to our products; | |
• | we will be successful in renewing licenses upon expiration on terms that are favorable to us; or | |
• | we will be successful in obtaining licenses to produce new character-related and theme-related products in the future. |
There are risks associated with our license agreements. |
• | Our current licenses require us to pay minimum royalties |
• | Some of our licenses are restricted as to use |
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• | New licenses are difficult and expensive to obtain |
• | A limited number of licensors account for a large portion of our net sales |
The toy industry is highly competitive and our inability to compete effectively may materially and adversely impact our business, financial condition results of operations. |
• | greater financial resources; | |
• | larger sales, marketing and product development departments; | |
• | stronger name recognition; | |
• | longer operating histories; and | |
• | greater economies of scale. |
An adverse outcome in the litigation commenced against us by WWE or a decline in the popularity of WWE could adversely impact our video game joint venture with THQ. |
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The termination of THQ’s manufacturing licenses and the inability of the joint venture to otherwise obtain these licenses from other manufacturers would materially adversely affect the joint venture’s and our business, financial condition and results of operations. |
The failure of the joint venture or THQ to perform as anticipated could have a material adverse affect on our financial position and results of operations. |
We may not be able to sustain or manage our rapid growth, which may prevent us from continuing to increase our net revenues. |
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If we are unable to acquire and integrate companies and new product lines successfully we will be unable to implement our growth strategy. |
• | attractiveness of products; | |
• | suitability of distribution channels; | |
• | management ability; | |
• | financial condition and results of operations; and | |
• | the degree to which acquired operations can be integrated with our operations. |
• | difficulties in integrating acquired businesses or product lines, assimilating new facilities and personnel and harmonizing diverse business strategies and methods of operation; | |
• | diversion of management attention from operation of our existing business; | |
• | loss of key personnel from acquired companies; and | |
• | failure of an acquired business to achieve targeted financial results. |
A limited number of customers account for a large portion of our net sales, so that if one or more of our major customers were to experience difficulties in fulfilling their obligations to us, cease doing business with us, significantly reduce the amount of their purchases from us or return substantial amounts of our products, it could have a material adverse effect on our business, financial condition and results of operations. |
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We depend on our key personnel and any loss or interruption of either of their services could adversely affect our business, financial condition and results of operations. |
We depend on third-party manufacturers, and if our relationship with any of them is harmed or if they independently encounter difficulties in their manufacturing processes, we could experience product defects, production delays, cost overruns or the inability to fulfill orders on a timely basis, any of which could adversely affect our business, financial condition and results of operations. |
We have substantial sales and manufacturing operations outside of the United States subjecting us to risks associated with the outbreak of SARS, as well as risks common to international operations. |
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• | currency conversion risks and currency fluctuations; | |
• | limitations, including taxes, on the repatriation of earnings; | |
• | political instability, civil unrest and economic instability; | |
• | greater difficulty enforcing intellectual property rights and weaker laws protecting such rights; | |
• | complications in complying with laws in varying jurisdictions and changes in governmental policies; | |
• | greater difficulty and expenses associated with recovering from natural disasters; | |
• | transportation delays and interruptions; and | |
• | the potential imposition of tariffs. |
Our business is subject to extensive government regulation and any violation by us of such regulations could result in product liability claims, loss of sales, diversion of resources, damage to our reputation, increased warranty costs or removal of our products from the market, and we cannot assure you that our product liability insurance for the foregoing will be sufficient. |
• | product liability claims; | |
• | loss of sales; |
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• | diversion of resources; | |
• | damage to our reputation; | |
• | increased warranty costs; and | |
• | removal of our products from the market. |
We depend on our proprietary rights and our inability to safeguard and maintain the same, or claims of third parties that we have violated their intellectual property rights, could have a material adverse effect on our business, financial condition and results of operations. |
Market conditions and other third-party conduct could negatively impact our margins and implementation of other business initiatives. |
We may not have the funds necessary to purchase our outstanding convertible senior notes upon a fundamental change or other purchase date, as required by the indenture governing the notes. |
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We have a material amount of goodwill which, if it becomes impaired, would result in a reduction in our net income. |
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Item 5. | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |
Price Range of | |||||||||
Common Stock | |||||||||
High | Low | ||||||||
2003: | |||||||||
First quarter | $ | 14.49 | $ | 9.50 | |||||
Second quarter | 14.49 | 10.22 | |||||||
Third quarter | 14.04 | 10.05 | |||||||
Fourth quarter | 13.77 | 11.74 | |||||||
2004: | |||||||||
First quarter | 16.25 | 12.72 | |||||||
Second quarter | 21.00 | 14.48 | |||||||
Third quarter | 23.22 | 18.71 | |||||||
Fourth quarter | 25.55 | 12.75 |
(a) the number of securities to be issued upon the exercise of outstanding options, warrants and rights; | |
(b) the weighted-average exercise price of such outstanding options, warrants and rights; | |
(c) other than securities to be issued upon the exercise of such outstanding options, warrants and rights, the number of securities remaining available for future issuance under the plans. |
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Number of Securities | ||||||||||||
Remaining Available | ||||||||||||
Number of | Weighted-Average | for | ||||||||||
Securities to be | Exercise Price of | Future Issuance Under | ||||||||||
Issued upon Exercise | Outstanding | Equity Compensation | ||||||||||
of Outstanding | Options, | Plans (Excluding | ||||||||||
Options, | Warrants and | Securities Reflected in | ||||||||||
Warrants and Rights | Rights | Column (a)) | ||||||||||
Plan Category | (a) | (b) | (c) | |||||||||
Equity compensation plans approved by security holders | 2,073,006 | $ | 13.22 | 1,728,523 | ||||||||
Equity compensation plans not approved by security holders | — | — | — | |||||||||
Total | 2,073,006 | $ | 13.22 | 1,728,523 | ||||||||
Year Ended December 31, | ||||||||||||||||||||
2000 | 2001 | 2002 | 2003 | 2004 | ||||||||||||||||
(In thousands, except per share data) | ||||||||||||||||||||
Consolidated Statement of Operations Data: | ||||||||||||||||||||
Net sales | $ | 252,288 | $ | 284,309 | $ | 310,016 | $ | 315,776 | $ | 574,266 | ||||||||||
Cost of sales | 149,881 | 164,222 | 180,173 | 189,334 | 348,259 | |||||||||||||||
Gross profit | 102,407 | 120,087 | 129,843 | 126,442 | 226,007 | |||||||||||||||
Selling, general and administrative expenses | 80,435 | 89,575 | 98,111 | 113,053 | 172,282 | |||||||||||||||
Acquisition shut-down and product recall costs | 1,469 | 1,214 | 6,718 | 2,000 | — | |||||||||||||||
Income from operations | 20,503 | 29,298 | 25,014 | 11,389 | 53,725 | |||||||||||||||
Profit from Joint Venture | (15,906 | ) | (6,675 | ) | (8,004 | ) | (7,351 | ) | (7,865 | ) | ||||||||||
Interest, net | (3,833 | ) | (2,057 | ) | (1,141 | ) | 1,405 | 2,498 | ||||||||||||
Other (income) expense, net | (92 | ) | — | — | — | — | ||||||||||||||
Income before provision for income taxes and minority interest | 40,334 | 38,030 | 34,159 | 17,335 | 59,092 | |||||||||||||||
Provision for income taxes | 11,697 | 9,797 | 6,466 | 1,440 | 15,533 | |||||||||||||||
Income before minority interest | 28,637 | 28,233 | 27,693 | 15,895 | 43,559 | |||||||||||||||
Minority interest | — | — | (237 | ) | — | — | ||||||||||||||
Net income | $ | 28,637 | $ | 28,233 | $ | 27,930 | $ | 15,895 | $ | 43,559 | ||||||||||
Basic earnings per share | $ | 1.50 | $ | 1.55 | $ | 1.27 | $ | 0.66 | $ | 1.69 | ||||||||||
Weighted average shares outstanding | 19,060 | 18,199 | 21,963 | 24,262 | 25,797 | |||||||||||||||
Diluted earnings per share | $ | 1.41 | $ | 1.45 | $ | 1.23 | $ | 0.66 | $ | 1.49 | ||||||||||
Weighted average shares and equivalents outstanding | 20,281 | 19,410 | 22,747 | 27,437 | 31,406 | |||||||||||||||
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At December 31, | ||||||||||||||||||||
2000 | 2001 | 2002 | 2003 | 2004 | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Consolidated Balance Sheet Data: | ||||||||||||||||||||
Cash and cash equivalents | $ | 29,275 | $ | 25,036 | $ | 68,413 | $ | 118,182 | $ | 176,544 | ||||||||||
Working capital | 86,897 | 116,492 | 129,183 | 232,601 | 229,543 | |||||||||||||||
Total assets | 248,722 | 284,041 | 408,916 | 529,997 | 696,762 | |||||||||||||||
Long-term debt, net of current portion | 1,000 | 77 | 60 | 98,042 | 98,000 | |||||||||||||||
Total stockholders’ equity | 204,530 | 244,404 | 357,236 | 377,900 | 451,485 |
Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
• | significant underperformance relative to expected historical or projected future operating results; | |
• | significant changes in the manner of our use of the acquired assets or the strategy for our overall business; and | |
• | significant negative industry or economic trends. |
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Years Ended December 31, | ||||||||||||||||||||
2000 | 2001 | 2002 | 2003 | 2004 | ||||||||||||||||
Net sales | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||||
Cost of sales | 59.4 | 57.8 | 58.1 | 60.0 | 60.6 | |||||||||||||||
Gross profit | 40.6 | 42.2 | 41.9 | 40.0 | 39.4 | |||||||||||||||
Selling, general and administrative expenses | 31.9 | 31.5 | 31.6 | 35.8 | 30.0 | |||||||||||||||
Acquisition shut-down and product recall costs | 0.5 | 0.4 | 2.2 | 0.6 | — | |||||||||||||||
Income from operations | 8.2 | 10.3 | 8.1 | 3.6 | 9.4 | |||||||||||||||
Profit from Joint Venture | (6.3 | ) | (2.3 | ) | (2.6 | ) | (2.3 | ) | (1.4 | ) | ||||||||||
Interest, net | (1.5 | ) | (0.7 | ) | (0.4 | ) | 0.4 | 0.4 | ||||||||||||
Income before income taxes and minority interest | 16.0 | 13.3 | 11.1 | 5.5 | 10.4 | |||||||||||||||
Provision for income taxes | 4.6 | 3.4 | 2.1 | 0.5 | 2.7 | |||||||||||||||
Income before minority interest | 11.4 | 9.9 | 9.0 | 5.0 | 7.7 | |||||||||||||||
Minority interest | — | — | — | — | — | |||||||||||||||
Net income | 11.4 | % | 9.9 | % | 9.0 | % | 5.0 | % | 7.7 | % | ||||||||||
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Accrued Balance | Accrued Balance | |||||||||||||||
December 31, 2003 | Accrual | Actual | December 31, 2004 | |||||||||||||
Product recall costs | $ | 490 | — | (490 | ) | $ | — |
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Accrued Balance | Accrued Balance | |||||||||||||||
December 31, 2002 | Accrual | Actual | December 31, 2003 | |||||||||||||
Lease abandonment costs | $ | 2,310 | $ | — | $ | (2,310 | ) | $ | — | |||||||
Product recall costs | — | 2,000 | (1,510 | ) | 490 | |||||||||||
Total | $ | 2,310 | $ | 2,000 | $ | (3,820 | ) | $ | 490 | |||||||
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2002 | 2003 | 2004 | |||||||||||||||||||||||||||||||||||||||||||||||
First | Second | Third | Fourth | First | Second | Third | Fourth | First | Second | Third | Fourth | ||||||||||||||||||||||||||||||||||||||
Quarter | Quarter | Quarter | Quarter | Quarter | Quarter | Quarter | Quarter | Quarter | Quarter | Quarter | Quarter | ||||||||||||||||||||||||||||||||||||||
(In thousands, except per share data) | |||||||||||||||||||||||||||||||||||||||||||||||||
Net sales | 59,895 | 78,992 | 102,640 | 68,489 | 67,759 | 73,290 | 90,308 | 84,419 | 73,986 | 109,395 | 206,083 | 184,802 | |||||||||||||||||||||||||||||||||||||
As a % of full year | 19.3 | % | 25.5 | % | 33.1 | % | 22.1 | % | 21.5 | % | 23.2 | % | 28.6 | % | 26.7 | % | 12.9 | % | 19.0 | % | 35.9 | % | 32.2 | % | |||||||||||||||||||||||||
Gross profit | 26,470 | 35,192 | 41,812 | 26,369 | 27,442 | 27,906 | 36,226 | 34,868 | 30,466 | 41,281 | 81,801 | 72,459 | |||||||||||||||||||||||||||||||||||||
As a % of full year | 20.4 | % | 27.1 | % | 32.2 | % | 20.3 | % | 21.7 | % | 22.1 | % | 28.7 | % | 27.6 | % | 13.5 | % | 18.3 | % | 36.2 | % | 32.1 | % | |||||||||||||||||||||||||
As a % of net sales | 44.2 | % | 44.6 | % | 40.7 | % | 38.5 | % | 40.5 | % | 38.1 | % | 40.1 | % | 41.3 | % | 41.2 | % | 37.7 | % | 39.7 | % | 39.2 | % | |||||||||||||||||||||||||
Income (loss) from operations | 1,420 | 7,863 | 16,835 | (1,104 | ) | 5,960 | 2,522 | 10,480 | (7,573 | ) | 4,885 | 8,321 | 29,915 | 10,604 | |||||||||||||||||||||||||||||||||||
As a % of full year | 5.7 | % | 31.4 | % | 67.3 | % | -4.4 | % | 52.3 | % | 22.1 | % | 92.0 | % | -66.5 | % | 9.1 | % | 15.5 | % | 55.7 | % | 19.7 | % | |||||||||||||||||||||||||
As a % of net sales | 2.4 | % | 10.0 | % | 16.4 | % | -1.6 | % | 8.8 | % | 3.4 | % | 11.6 | % | -9.0 | % | 6.6 | % | 7.6 | % | 14.5 | % | 5.7 | % | |||||||||||||||||||||||||
Income before income taxes and minority interest | 2,985 | 8,800 | 17,884 | 4,490 | 6,299 | 2,679 | 10,495 | (2,138 | ) | 4,764 | 7,637 | 30,042 | 16,649 | ||||||||||||||||||||||||||||||||||||
As a % of net sales | 5.0 | % | 11.1 | % | 17.4 | % | 6.6 | % | 9.3 | % | 3.7 | % | 11.6 | % | -2.5 | % | 6.4 | % | 7.0 | % | 14.6 | % | 9.0 | % | |||||||||||||||||||||||||
Net income | 2,156 | 6,973 | 13,085 | 5,717 | 4,988 | 2,236 | 8,248 | 422 | 3,791 | 6,004 | 23,255 | 10,508 | |||||||||||||||||||||||||||||||||||||
As a % of net sales | 3.6 | % | 8.8 | % | 12.7 | % | 8.3 | % | 7.4 | % | 3.1 | % | 9.1 | % | 0.5 | % | 5.1 | % | 5.5 | % | 11.3 | % | 5.7 | % | |||||||||||||||||||||||||
Diluted earnings per share | $ | 0.11 | $ | 0.32 | $ | 0.54 | $ | 0.23 | $ | 0.20 | $ | 0.09 | $ | 0.33 | $ | 0.02 | $ | 0.15 | $ | 0.22 | $ | 0.75 | $ | 0.36 | |||||||||||||||||||||||||
Weighted average shares and equivalents outstanding | 20,236 | 21,953 | 24,059 | 24,800 | 24,917 | 24,683 | 24,629 | 24,642 | 30,676 | 31,123 | 31,919 | 31,855 |
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2005 | 2006 | 2007 | 2008 | 2009 | Thereafter | Total | ||||||||||||||||||||||
Long-term debt | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 98,000 | $ | 98,000 | ||||||||||||||
Operating leases | 6,543 | 5,714 | 4,723 | 2,819 | 2,804 | 6,603 | 29,206 | |||||||||||||||||||||
Minimum guaranteed license/royalty payments | 13,635 | 8,868 | 1,795 | 1,427 | 1,435 | — | 27,160 | |||||||||||||||||||||
Employment contracts | 5,069 | 4,557 | 4,248 | 2,180 | 2,230 | 2,280 | 20,564 | |||||||||||||||||||||
Total contractual cash obligations | $ | 25,247 | $ | 19,139 | $ | 10,766 | $ | 6,426 | $ | 6,469 | $ | 106,883 | $ | 174,930 | ||||||||||||||
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/s/PKF | |
PKF | |
Certified Public Accountants | |
A Professional Corporation |
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December 31, | ||||||||||
2003 | 2004 | |||||||||
(In thousands, except | ||||||||||
share data) | ||||||||||
Assets | ||||||||||
Current assets | ||||||||||
Cash and cash equivalents | $ | 118,182 | $ | 176,544 | ||||||
Marketable securities | 19,345 | 19,047 | ||||||||
Accounts receivable, net of allowance for uncollectible accounts of $7,877 and $7,058, respectively | 86,120 | 102,266 | ||||||||
Inventory, net of reserves of $5,025 and $8,042, respectively | 44,400 | 50,000 | ||||||||
Prepaid and other | 16,763 | 24,682 | ||||||||
Total current assets | 284,810 | 372,539 | ||||||||
Property and equipment | ||||||||||
Office furniture and equipment | 6,563 | 6,823 | ||||||||
Molds and tooling | 34,481 | 28,818 | ||||||||
Leasehold improvements | 2,429 | 2,572 | ||||||||
Total | 43,473 | 38,213 | ||||||||
Less accumulated depreciation and amortization | 31,751 | 27,273 | ||||||||
Property and equipment, net | 11,722 | 10,940 | ||||||||
Intangibles and other, net | 18,172 | 27,368 | ||||||||
Investment in joint venture | 9,097 | 9,816 | ||||||||
Goodwill, net | 190,728 | 258,331 | ||||||||
Trademarks, net | 15,468 | 17,768 | ||||||||
Total assets | $ | 529,997 | $ | 696,762 | ||||||
Liabilities and Stockholders’ Equity | ||||||||||
Current liabilities | ||||||||||
Accounts payable | $ | 31,610 | $ | 53,643 | ||||||
Accrued expenses | 10,805 | 55,333 | ||||||||
Reserve for sales returns and allowances | 7,753 | 23,173 | ||||||||
Current portion of long-term debt | 19 | — | ||||||||
Income taxes payable | 2,021 | 10,847 | ||||||||
Total current liabilities | 52,208 | 142,996 | ||||||||
Long-term debt, net of current portion | 98,042 | 98,000 | ||||||||
Deferred income taxes | 1,847 | 4,281 | ||||||||
Total liabilities | 152,097 | 245,277 | ||||||||
Commitments and contingencies | ||||||||||
Stockholders’ equity | ||||||||||
Preferred shares, $.001 par value; 5,000,000 shares authorized; nil outstanding | — | — | ||||||||
Common stock, $.001 par value; 100,000,000 shares authorized; 24,926,826 and 26,234,016 shares issued and outstanding, respectively | 25 | 26 | ||||||||
Additional paid-in capital | 246,008 | 276,642 | ||||||||
Retained earnings | 133,005 | 176,564 | ||||||||
Deferred compensation from restricted stock grants | (789 | ) | — | |||||||
Accumulated other comprehensive loss | (349 | ) | (1,747 | ) | ||||||
Total stockholders’ equity | 377,900 | 451,485 | ||||||||
Total liabilities and stockholders’ equity | $ | 529,997 | $ | 696,762 | ||||||
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Years Ended December 31, | ||||||||||||
2002 | 2003 | 2004 | ||||||||||
(In thousands, except per share amounts) | ||||||||||||
Net sales | $ | 310,016 | $ | 315,776 | $ | 574,266 | ||||||
Cost of sales | 180,173 | 189,334 | 348,259 | |||||||||
Gross profit | 129,843 | 126,442 | 226,007 | |||||||||
Selling, general and administrative expenses | 98,111 | 113,053 | 172,282 | |||||||||
Acquisition shut-down and product recall costs | 6,718 | 2,000 | — | |||||||||
Income from operations | 25,014 | 11,389 | 53,725 | |||||||||
Profit from Joint Venture | (8,004 | ) | (7,351 | ) | (7,865 | ) | ||||||
Interest, net | (1,141 | ) | 1,405 | 2,498 | ||||||||
Income before provision for income taxes and minority interest | 34,159 | 17,335 | 59,092 | |||||||||
Provision for income taxes | 6,466 | 1,440 | 15,533 | |||||||||
Income before minority interest | 27,693 | 15,895 | 43,559 | |||||||||
Minority interest | (237 | ) | — | — | ||||||||
Net income | $ | 27,930 | $ | 15,895 | $ | 43,559 | ||||||
Basic earnings per share | $ | 1.27 | $ | 0.66 | $ | 1.69 | ||||||
Diluted earnings per share | $ | 1.23 | $ | 0.64 | $ | 1.49 | ||||||
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Years Ended December 31, | ||||||||||||
2002 | 2003 | 2004 | ||||||||||
(In thousands) | ||||||||||||
Other comprehensive income: | ||||||||||||
Net income | $ | 27,930 | $ | 15,895 | $ | 43,559 | ||||||
Foreign currency translation adjustment | — | (349 | ) | (1,398 | ) | |||||||
Other comprehensive income | $ | 27,930 | $ | 15,546 | $ | 42,161 | ||||||
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Deferred | ||||||||||||||||||||||||||||||||
Common Stock | Compensation | Accumulated | ||||||||||||||||||||||||||||||
Additional | From | Other | Total | |||||||||||||||||||||||||||||
Number | Paid-in | Treasury | Retained | Restricted | Comprehensive | Stockholders’ | ||||||||||||||||||||||||||
of Shares | Amount | Capital | Stock | Earnings | Stock Grants | Loss | Equity | |||||||||||||||||||||||||
Balance, December 31, 2001 | 18,827 | $ | 20 | $ | 168,115 | $ | (12,911 | ) | $ | 89,180 | $ | — | $ | — | $ | 244,404 | ||||||||||||||||
Exercise of options and warrants | 955 | 1 | 5,883 | — | — | — | — | 5,884 | ||||||||||||||||||||||||
Compensation for fully vested stock options | — | — | (1,308 | ) | — | — | — | — | (1,308 | ) | ||||||||||||||||||||||
Retirement of treasury stock | — | (1 | ) | (12,910 | ) | 12,911 | — | — | — | — | ||||||||||||||||||||||
Fair value of outstanding stock options in acquisition | — | — | 3,151 | — | — | — | — | 3,151 | ||||||||||||||||||||||||
Issuance of common stock for cash | 3,525 | 3 | 59,091 | — | — | — | — | 59,094 | ||||||||||||||||||||||||
Issuance of common stock for Toymax | 1,166 | 1 | 18,080 | — | — | — | — | 18,081 | ||||||||||||||||||||||||
Net income | — | — | — | — | 27,930 | — | — | 27,930 | ||||||||||||||||||||||||
Balance, December 31, 2002 | 24,473 | 24 | 240,102 | — | 117,110 | — | — | 357,236 | ||||||||||||||||||||||||
Exercise of options | 312 | — | 1,777 | — | — | — | — | 1,777 | ||||||||||||||||||||||||
Restricted stock grants | 696 | 1 | 9,152 | — | — | (789 | ) | — | 8,364 | |||||||||||||||||||||||
Issuance of warrants | — | — | 1,057 | — | — | — | 1,057 | |||||||||||||||||||||||||
Compensation for fully vested stock options | — | — | 6 | — | — | — | — | 6 | ||||||||||||||||||||||||
Repurchase and retirement of common stock | (554 | ) | — | (6,086 | ) | — | — | — | — | (6,086 | ) | |||||||||||||||||||||
Net income | — | — | — | — | 15,895 | — | — | 15,895 | ||||||||||||||||||||||||
Foreign currency translation adjustment | — | — | — | — | — | — | (349 | ) | (349 | ) | ||||||||||||||||||||||
Balance, December 31, 2003 | 24,927 | 25 | 246,008 | — | 133,005 | (789 | ) | (349 | ) | 377,900 | ||||||||||||||||||||||
Exercise of options | 192 | — | 1,699 | — | — | — | — | 1,699 | ||||||||||||||||||||||||
Stock option income tax benefit | — | — | 739 | — | — | — | — | 739 | ||||||||||||||||||||||||
Restricted stock grants | 340 | — | 7,487 | — | — | 789 | — | 8,276 | ||||||||||||||||||||||||
Compensation for fully vested stock options | — | — | 5,365 | — | — | — | — | 5,365 | ||||||||||||||||||||||||
Issuance of common stock for Play Along | 749 | 1 | 14,850 | — | — | — | — | 14,851 | ||||||||||||||||||||||||
Issuance of common stock for Kidz Biz earn-out | 26 | — | 494 | — | — | — | — | 494 | ||||||||||||||||||||||||
Net income | — | — | — | — | 43,559 | — | — | 43,559 | ||||||||||||||||||||||||
Foreign currency translation adjustment | — | — | — | — | — | — | (1,398 | ) | (1,398 | ) | ||||||||||||||||||||||
Balance, December 31, 2004 | 26,234 | $ | 26 | $ | 276,642 | $ | — | $ | 176,564 | $ | — | $ | (1,747 | ) | $ | 451,485 | ||||||||||||||||
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Years Ended December 31, | ||||||||||||||||
2002 | 2003 | 2004 | ||||||||||||||
(In thousands) | ||||||||||||||||
Cash flows from operating activities | ||||||||||||||||
Net income | $ | 27,930 | $ | 15,895 | $ | 43,559 | ||||||||||
Adjustments to reconcile net income to net cash provided by operating activities | ||||||||||||||||
Depreciation and amortization | 15,456 | 16,029 | 21,518 | |||||||||||||
Compensation for fully vested stock options | (1,308 | ) | 6 | 5,365 | ||||||||||||
Acquisition Earn-out | — | — | 494 | |||||||||||||
Investment in joint venture | (225 | ) | 79 | (719 | ) | |||||||||||
Loss on disposal of property and equipment | — | — | 1,096 | |||||||||||||
Forgiveness of officer note receivable | 285 | — | — | |||||||||||||
Restricted stock compensation | — | 8,364 | 8,276 | |||||||||||||
Minority interest | (237 | ) | — | — | ||||||||||||
Changes in operating assets and liabilities | ||||||||||||||||
Net sale (purchase) of marketable securities | 37,119 | — | — | |||||||||||||
Accounts receivable | (3,307 | ) | (28,224 | ) | (4,333 | ) | ||||||||||
Inventory | (10,996 | ) | (2,654 | ) | 784 | |||||||||||
Prepaid expenses and other | 507 | (5,643 | ) | (3,613 | ) | |||||||||||
Accounts payable | (3,698 | ) | 16,264 | 19,192 | ||||||||||||
Accrued expenses | (9,534 | ) | (3,259 | ) | 19,742 | |||||||||||
Income taxes payable | 7,056 | (1,397 | ) | 5,945 | ||||||||||||
Reserve for sales returns and allowances | 8,626 | (5,827 | ) | 13,289 | ||||||||||||
Deferred income taxes | 3,879 | (2,240 | ) | 795 | ||||||||||||
Total adjustments | 43,623 | (8,502 | ) | 87,831 | ||||||||||||
Net cash provided by operating activities | 71,553 | 7,393 | 131,390 | |||||||||||||
Cash flows from investing activities | ||||||||||||||||
Purchases of property and equipment | (6,594 | ) | (4,472 | ) | (5,917 | ) | ||||||||||
Purchases of other assets | (21,159 | ) | (4,936 | ) | (26,863 | ) | ||||||||||
Cash paid for net assets | (66,232 | ) | (19,676 | ) | (41,438 | ) | ||||||||||
Net (purchases) sales of marketable securities | — | (19,345 | ) | 967 | ||||||||||||
Notes receivable — officers | 861 | 1,113 | — | |||||||||||||
Net cash used by investing activities | (93,124 | ) | (47,316 | ) | (73,251 | ) | ||||||||||
Cash flows from financing activities | ||||||||||||||||
Proceeds from sale of common stock | 59,094 | — | — | |||||||||||||
Repurchase of common stock | — | (6,086 | ) | — | ||||||||||||
Proceeds from stock options and warrants exercised | 5,884 | 1,777 | 1,682 | |||||||||||||
Net proceeds from sale of convertible notes | — | 94,366 | — | |||||||||||||
Repayments of debt | (30 | ) | (16 | ) | (61 | ) | ||||||||||
Net cash provided by financing activities | 64,948 | 90,041 | 1,621 | |||||||||||||
Foreign currency translation adjustment | — | (349 | ) | (1,398 | ) | |||||||||||
Net increase in cash and cash equivalents | 43,377 | 49,769 | 58,362 | |||||||||||||
Cash and cash equivalents, beginning of year | 25,036 | 68,413 | 118,182 | |||||||||||||
Cash and cash equivalents, end of year | $ | 68,413 | $ | 118,182 | $ | 176,544 | ||||||||||
Cash paid during the period for: | ||||||||||||||||
Interest | $ | 80 | $ | 2,375 | $ | 4,534 | ||||||||||
Income taxes | $ | 3,235 | $ | 9,694 | $ | 2,688 | ||||||||||
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December 31, | ||||||||
2003 | 2004 | |||||||
Raw materials | $ | 1,033 | $ | 1,557 | ||||
Finished goods | 43,367 | 48,443 | ||||||
$ | 44,400 | $ | 50,000 | |||||
Office equipment | 5 years | |||
Automobiles | 5 years | |||
Furniture and fixtures | 5 - 7 years | |||
Molds and tooling | 2 - 4 years | |||
Leasehold improvements | Shorter of length of lease or 10 years |
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Year Ended December 31, | ||||||||||||
2002 | 2003 | 2004 | ||||||||||
(In thousands, | ||||||||||||
except per share data) | ||||||||||||
Net income, as reported | $ | 27,930 | $ | 15,895 | $ | 43,559 | ||||||
Add (Deduct): Stock-based employee compensation expense (income) included in reported net income net of related tax effects | (1,061 | ) | 5 | 3,970 | ||||||||
Deduct: Total stock-based employee compensation expense determined under fair value method for all awards net of related tax effects | (2,034 | ) | (2,796 | ) | (2,999 | ) | ||||||
Pro forma net income | $ | 24,835 | $ | 13,104 | $ | 44,530 | ||||||
Earnings per share: | ||||||||||||
Basic — as reported | $ | 1.27 | $ | 0.66 | $ | 1.69 | ||||||
Basic — pro forma | $ | 1.13 | $ | 0.54 | $ | 1.73 | ||||||
Diluted — as reported | $ | 1.23 | $ | 0.66 | $ | 1.49 | ||||||
Diluted — pro forma | $ | 1.09 | $ | 0.55 | $ | 1.52 | ||||||
2002 | ||||||||||||
Weighted | ||||||||||||
Average | ||||||||||||
Income | Shares | Per Share | ||||||||||
Basic EPS | ||||||||||||
Income available to common stockholders | $ | 27,930 | 21,963 | $ | 1.27 | |||||||
Effect of dilutive securities | ||||||||||||
Options and warrants | — | 784 | ||||||||||
Diluted EPS | ||||||||||||
Income available to common stockholders plus assumed exercises | $ | 27,930 | 22,747 | $ | 1.23 | |||||||
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2003 | ||||||||||||
Weighted | ||||||||||||
Average | ||||||||||||
Income | Shares | Per Share | ||||||||||
Basic EPS | ||||||||||||
Income available to common stockholders | $ | 15,895 | 24,262 | $ | 0.66 | |||||||
Effect of dilutive securities | ||||||||||||
Convertible senior notes payable | 2,114 | 2,760 | ||||||||||
Options and warrants | — | 415 | ||||||||||
Diluted EPS | ||||||||||||
Income available to common stockholders plus assumed exercises | $ | 18,009 | 27,437 | $ | 0.66 | |||||||
2004 | ||||||||||||
Weighted | ||||||||||||
Average | ||||||||||||
Income | Shares | Per Share | ||||||||||
Basic EPS | ||||||||||||
Income available to common stockholders | $ | 43,559 | 25,797 | $ | 1.69 | |||||||
Effect of dilutive securities | ||||||||||||
Convertible senior notes payable | 3,354 | 4,900 | ||||||||||
Options and warrants | — | 709 | ||||||||||
Diluted EPS | ||||||||||||
Income available to common stockholders plus assumed exercises | $ | 46,913 | 31,406 | $ | 1.49 | |||||||
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Year Ended December 31, | ||||||||||||
2002 | 2003 | 2004 | ||||||||||
Net Sales | ||||||||||||
North America Toys | $ | 263,314 | $ | 272,317 | $ | 521,292 | ||||||
International | 46,251 | 43,424 | 52,805 | |||||||||
Other | 451 | 35 | 169 | |||||||||
$ | 310,016 | $ | 315,776 | $ | 574,266 | |||||||
Year Ended December 31, | ||||||||||||
2002 | 2003 | 2004 | ||||||||||
Operating Income | ||||||||||||
North America Toys | $ | 21,246 | $ | 9,821 | $ | 48,770 | ||||||
International | 3,732 | 1,566 | 4,940 | |||||||||
Other | 36 | 2 | 15 | |||||||||
$ | 25,014 | $ | 11,389 | $ | 53,725 | |||||||
December 31, | ||||||||
2003 | 2004 | |||||||
Assets | ||||||||
North America Toys | $ | 457,056 | $ | 632,489 | ||||
International | 72,884 | 64,069 | ||||||
Other | 57 | 204 | ||||||
$ | 529,997 | $ | 696,762 | |||||
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December 31, | ||||||||
2003 | 2004 | |||||||
Long-lived Assets | ||||||||
United States | $ | 197,751 | $ | 278,734 | ||||
Hong Kong | 32,382 | 30,484 | ||||||
Europe | 4,011 | 2,783 | ||||||
$ | 234,144 | $ | 312,001 | |||||
Year Ended December 31, | ||||||||||||
2002 | 2003 | 2004 | ||||||||||
Net Sales by Geographic Area | ||||||||||||
United States | $ | 256,799 | $ | 271,051 | $ | 505,803 | ||||||
Europe | 39,414 | 35,547 | 37,700 | |||||||||
Canada | 6,966 | 5,125 | 15,658 | |||||||||
Hong Kong | 324 | 1,275 | 4,410 | |||||||||
Other | 6,513 | 2,778 | 10,695 | |||||||||
$ | 310,016 | $ | 315,776 | $ | 574,266 | |||||||
Year Ended December 31, | ||||||||||||
2002 | 2003 | 2004 | ||||||||||
Net Sales by Product Group | ||||||||||||
Traditional Toys | $ | 103,429 | $ | 106,963 | $ | 406,023 | ||||||
Craft/Activities/Writing Products | 153,370 | 164,087 | 99,779 | |||||||||
Seasonal Products | 53,217 | 44,726 | 68,464 | |||||||||
$ | 310,016 | $ | 315,776 | $ | 574,266 | |||||||
2002 | 2003 | 2004 | ||||||||||||||||||||||
Percentage | Percentage | Percentage | ||||||||||||||||||||||
Amount | of Net Sales | Amount | of Net Sales | Amount | of Net Sales | |||||||||||||||||||
Wal-Mart | $ | 46,396 | 15.0 | % | $ | 91,378 | 28.9 | % | $ | 193,776 | 33.7 | % | ||||||||||||
Target | 34,018 | 11.0 | 30,371 | 9.6 | 74,429 | 13.0 | ||||||||||||||||||
Toys ‘R’ Us | 41,506 | 13.4 | 30,009 | 9.5 | 68,279 | 11.9 | ||||||||||||||||||
Kmart | 34,773 | 11.2 | 17,996 | 5.7 | 27,274 | 4.8 | ||||||||||||||||||
Kay Bee Toys | 16,077 | 5.1 | 12,670 | 4.0 | 12,756 | 2.2 | ||||||||||||||||||
$ | 172,770 | 55.7 | % | $ | 182,424 | 57.7 | % | $ | 376,514 | 65.6 | % | |||||||||||||
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P&M | Play Along | Total | |||||||||||
Estimated fair value: | |||||||||||||
Current assets | $ | 5,616 | $ | 24,063 | $ | 29,679 | |||||||
Property and equipment, net | 17 | 546 | 563 | ||||||||||
Other assets | 11 | 3,184 | 3,195 | ||||||||||
Liabilities assumed | (1,378 | ) | (31,995 | ) | (33,373 | ) | |||||||
Intangible assets other than goodwill | 2,900 | 22,100 | 25,000 | ||||||||||
Goodwill | 13,541 | 67,788 | 81,329 | ||||||||||
$ | 20,707 | $ | 85,686 | $ | 106,393 | ||||||||
Year Ended | ||||||||||
December 31, | ||||||||||
2003 | 2004 | |||||||||
(In thousands, except per | ||||||||||
share data) | ||||||||||
Net Sales | $ | 326,105 | $ | 618,952 | ||||||
Net income | $ | 13,693 | $ | 44,391 | ||||||
Basic earnings per share | $ | 0.56 | $ | 1.69 | ||||||
Weighted average shares outstanding | 24,262 | 26,239 | ||||||||
Diluted earnings per share | $ | 0.55 | $ | 1.65 | ||||||
Weighted average shares and equivalents outstanding | 24,677 | 26,947 |
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2003 | 2004 | |||||||
Royalties and sales commissions | $ | 5,043 | $ | 20,527 | ||||
Bonuses | 1,357 | 9,720 | ||||||
Acquisition earnout | — | 10,000 | ||||||
Other | 4,405 | 15,086 | ||||||
$ | 10,805 | $ | 55,333 | |||||
2003 | 2004 | |||||||
Convertible senior notes(1) | $ | 98,000 | $ | 98,000 | ||||
Loan payable, due in sixty monthly payments with the final payment due December 4, 2006, with interest at 6.7% per annum | 61 | — | ||||||
98,061 | 98,000 | |||||||
Less current portion of long-term debt | (19 | ) | — | |||||
Long-term debt, net of current portion | $ | 98,042 | $ | 98,000 | ||||
(1) | Pursuant to the terms of a Purchase Agreement, dated June 9, 2003, the Company sold an aggregate of $98.0 million of 4.625% Convertible Senior Notes due June 15, 2023. The holders of the notes may convert the notes into shares of the Company’s common stock at any time at an initial conversion price of $20.00 per share, subject to certain circumstances described in the notes. The Company will pay cash interest on the notes at an annual rate of 4.625% of the principal amount at issuance, from the issue date to June 15, 2010, payable on June 15 and December 15 of each year, commencing on December 15, 2003. After June 15, 2010, the Company will not pay cash interest on the notes. At maturity, on June 15, 2023, the Company will redeem the notes at their accreted principal amount, which will be equal to $1,811.95 (181.195%) per $1,000 principal amount at issuance. |
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The Company may redeem the notes at its option in whole or in part beginning on June 15, 2010, at 100% of their accreted principal amount plus accrued and unpaid interest (including contingent interest and additional amounts), if any, payable in cash. Holders of the notes may also require the Company to repurchase all or part of their notes on June 15, 2010, for cash, at a repurchase price of 100% of the principal amount per note plus accrued and unpaid interest (including contingent interest and additional amounts), if any. Holders of the notes may also require the Company to repurchase all or part of their notes on June 15, 2013 and June 15, 2018 at a repurchase price of 100% of the accreted principal amount per note plus accrued and unpaid interest (including contingent interest and additional amounts), if any. Any repurchases at June 15, 2013 and June 15, 2018 may be paid in cash, in shares of common stock or a combination of cash and shares of common stock. |
2005 | $ | — | ||
2006 | — | |||
2007 | — | |||
2008 | — | |||
2009 | — | |||
Thereafter | 98,000 | |||
$ | 98,000 | |||
2002 | 2003 | 2004 | ||||||||||
Federal | $ | 2,241 | $ | 608 | $ | 696 | ||||||
State and local | 270 | 55 | 1,088 | |||||||||
Foreign | 6,105 | 3,017 | 12,954 | |||||||||
8,616 | 3,680 | 14,738 | ||||||||||
Deferred | (2,150 | ) | (2,240 | ) | 795 | |||||||
$ | 6,466 | $ | 1,440 | $ | 15,533 | |||||||
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2003 | 2004 | ||||||||
Net deferred tax assets/(liabilities): | |||||||||
Current: | |||||||||
Reserve for sales allowances and possible losses | $ | 1,114 | $ | 1,940 | |||||
Accrued expenses | 182 | 1,044 | |||||||
Restricted stock grant | 3,094 | 136 | |||||||
Foreign tax credit, net of valuation | — | 2,166 | |||||||
Other | 132 | 875 | |||||||
4,522 | 6,161 | ||||||||
Long Term: | |||||||||
Undistributed earnings | (7,191 | ) | (7,191 | ) | |||||
Property and equipment | (1,088 | ) | (983 | ) | |||||
Original issue discount interest | (925 | ) | (2,761 | ) | |||||
Deductible goodwill | (2,783 | ) | (2,004 | ) | |||||
Other | 2,152 | 242 | |||||||
Federal net operating loss carryforwards | 7,321 | 8,416 | |||||||
State net operating loss carryforwards | 667 | — | |||||||
(1,847 | ) | (4,281 | ) | ||||||
Total net deferred tax assets/(liabilities) | $ | 2,675 | $ | 1,880 | |||||
2002 | 2003 | 2004 | ||||||||||
Federal income tax expense | 35 | % | 35 | % | 35 | % | ||||||
State income tax expense, net of federal tax effect | 0.5 | 0.2 | 1.3 | |||||||||
Effect of differences in U.S. and Foreign statutory rates | (18.9 | ) | (30.6 | ) | (12.1 | ) | ||||||
Other | 2.3 | 3.7 | 1.8 | |||||||||
18.9 | % | 8.3 | % | 26 | % | |||||||
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2002 | 2003 | 2004 | ||||||||||
Domestic | $ | (3,433 | ) | $ | (5,255 | ) | $ | (22,669 | ) | |||
Foreign | 37,592 | 22,590 | 81,761 | |||||||||
$ | 34,159 | $ | 17,335 | $ | 59,092 | |||||||
2005 | $ | 6,543 | ||
2006 | 5,714 | |||
2007 | 4,723 | |||
2008 | 2,819 | |||
2009 | 2,804 | |||
Thereafter | 6,603 | |||
$ | 29,206 | |||
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Weighted | |||||||||
Average | |||||||||
Number | Exercise | ||||||||
of Shares | Price | ||||||||
Outstanding, December 31, 2001 | 166,875 | $ | 6.67 | ||||||
Exercised | (166,875 | ) | 6.67 | ||||||
Outstanding, December 31, 2002 | — | — | |||||||
Granted | 100,000 | 11.35 | |||||||
Exercised | — | — | |||||||
Outstanding, December 31, 2003 and 2004 | 100,000 | $ | 11.35 | ||||||
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2005 | $ | 13,635 | ||
2006 | 8,868 | |||
2007 | 1,795 | |||
2008 | 1,427 | |||
2009 | 1,435 | |||
Thereafter | — | |||
$ | 27,160 | |||
2005 | $ | 5,069 | ||
2006 | 4,557 | |||
2007 | 4,248 | |||
2008 | 2,180 | |||
2009 | 2,230 | |||
Thereafter | 2,280 | |||
$ | 20,564 | |||
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Weighted | |||||||||
Average | |||||||||
Number | Exercise | ||||||||
of Shares | Price | ||||||||
Outstanding, December 31, 2001 | 2,313,556 | $ | 9.97 | ||||||
Granted | 1,124,197 | 11.06 | |||||||
Exercised | (787,836 | ) | �� | 6.71 | |||||
Canceled | (42,030 | ) | 15.00 | ||||||
Outstanding, December 31, 2002 | 2,607,887 | 11.35 | |||||||
Granted | 184,500 | 13.31 | |||||||
Exercised | (312,491 | ) | 11.78 | ||||||
Canceled | (214,630 | ) | 12.71 | ||||||
Outstanding, December 31, 2003 | 2,265,266 | 12.15 | |||||||
Granted | 287,644 | 19.49 | |||||||
Exercised | (192,129 | ) | 8.89 | ||||||
Canceled | (287,775 | ) | 13.76 | ||||||
Outstanding, December 31, 2004 | 2,073,006 | $ | 13.22 | ||||||
Outstanding | Exercisable | |||||||||||||||||||
Weighted | Weighted | Weighted | ||||||||||||||||||
Average | Average | Average | ||||||||||||||||||
Number | Life | Exercise | Number | Exercise | ||||||||||||||||
Option Price Range | of Shares | in Years | Price | of Shares | Price | |||||||||||||||
$7.875 – $9.125 | 740,941 | 1.38 | $ | 7.92 | 658,903 | $ | 7.93 | |||||||||||||
$11.35 – $16.25 | 998,925 | 4.38 | $ | 14.29 | 489,600 | $ | 13.93 | |||||||||||||
$17.26 – $20.94 | 433,144 | 5.52 | $ | 19.52 | 164,044 | $ | 19.05 |
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2003 | 2004 | |||||||||||||||||||||||||||||||
First | Second | Third | Fourth | First | Second | Third | Fourth | |||||||||||||||||||||||||
Quarter | Quarter | Quarter | Quarter | Quarter | Quarter | Quarter | Quarter | |||||||||||||||||||||||||
(in thousands, except per share data) | ||||||||||||||||||||||||||||||||
Net sales | $ | 67,759 | $ | 73,290 | $ | 90,308 | $ | 84,419 | $ | 73,986 | $ | 109,395 | $ | 206,083 | $ | 184,802 | ||||||||||||||||
Gross profit | $ | 27,442 | $ | 27,906 | $ | 36,226 | $ | 34,868 | $ | 30,466 | $ | 41,281 | $ | 81,801 | $ | 72,459 | ||||||||||||||||
Income (loss) from operations | $ | 5,960 | $ | 2,522 | $ | 10,480 | $ | (7,573 | ) | $ | 4,885 | $ | 8,321 | $ | 29,915 | $ | 10,604 | |||||||||||||||
Income before income taxes and minority interest | $ | 6,299 | $ | 2,679 | $ | 10,495 | $ | (2,138 | ) | $ | 4,764 | $ | 7,637 | $ | 30,042 | $ | 16,649 | |||||||||||||||
Net income | $ | 4,988 | $ | 2,236 | $ | 8,248 | $ | 422 | $ | 3,791 | $ | 6,004 | $ | 23,255 | $ | 10,508 | ||||||||||||||||
Basic earnings per share | $ | 0.20 | $ | 0.09 | $ | 0.34 | $ | 0.02 | $ | 0.15 | $ | 0.24 | $ | 0.89 | $ | 0.40 | ||||||||||||||||
Weighted average shares outstanding | 24,430 | 24,175 | 24,177 | 24,304 | 25,276 | 25,502 | 26,167 | 26,232 | ||||||||||||||||||||||||
Diluted earnings per share | $ | 0.20 | $ | 0.09 | $ | 0.28 | $ | 0.01 | $ | 0.15 | $ | 0.22 | $ | 0.75 | $ | 0.36 | ||||||||||||||||
Weighted average shares and equivalents outstanding | 24,917 | 25,814 | 29,529 | 29,542 | 30,676 | 31,123 | 31,919 | 31,855 |
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Balance at | Charged to | Charged to | Balance | ||||||||||||||||||
Beginning of | Costs and | Other | at End | ||||||||||||||||||
Period | Expenses | Accounts | Deductions | of Period | |||||||||||||||||
(in thousands) | |||||||||||||||||||||
Year ended December 31, 2002: | |||||||||||||||||||||
Allowance for: | |||||||||||||||||||||
Uncollectible accounts | $ | 7,273 | $ | 2,373 | $ | — | $ | 2,865 | $ | 6,781 | |||||||||||
Reserve for potential product obsolescence | 2,590 | 4,085 | — | 1,893 | 4,782 | ||||||||||||||||
Reserve for sales returns and allowances | 4,953 | 31,917 | 7,500 | (a) | 30,790 | 13,580 | |||||||||||||||
$ | 14,816 | $ | 38,375 | $ | 7,500 | $ | 35,548 | $ | 25,143 | ||||||||||||
Year ended December 31, 2003: | |||||||||||||||||||||
Allowance for: | |||||||||||||||||||||
Uncollectible accounts | $ | 6,781 | $ | 2,896 | $ | — | $ | 1,800 | $ | 7,877 | |||||||||||
Reserve for potential product obsolescence | 4,782 | 4,288 | — | 4,045 | 5,025 | ||||||||||||||||
Reserve for sales returns and allowances | 13,580 | 27,064 | — | 32,891 | 7,753 | ||||||||||||||||
$ | 25,143 | $ | 34,248 | $ | 0 | $ | 38,736 | $ | 20,655 | ||||||||||||
Year ended December 31, 2004: | |||||||||||||||||||||
Allowance for: | |||||||||||||||||||||
Uncollectible accounts | $ | 7,877 | $ | 2,903 | $ | — | $ | 3,722 | $ | 7,058 | |||||||||||
Reserve for potential product obsolescence | 5,025 | 5,342 | — | 2,325 | 8,042 | ||||||||||||||||
Reserve for sales returns and allowances | 7,753 | 49,956 | — | 34,536 | 23,173 | ||||||||||||||||
$ | 20,655 | $ | 58,201 | $ | — | $ | 40,583 | $ | 38,273 | ||||||||||||
(a) | Obligations assumed in conjunction with the asset acquisitions of Trendmasters and Dragon Ball Franchise. |
Item 9A. | Controls and Procedures |
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Item 10. | Directors and Executive Officers of the Registrant |
Name | Age | Positions with the Company | ||||
Jack Friedman | 65 | Chairman and Chief Executive Officer | ||||
Stephen G. Berman | 40 | Chief Operating Officer, President, Secretary and Director | ||||
Joel M. Bennett | 43 | Executive Vice President and Chief Financial Officer | ||||
Dan Almagor | 51 | Director | ||||
David C. Blatte | 40 | Director | ||||
Robert E. Glick | 59 | Director | ||||
Michael G. Miller | 57 | Director | ||||
Murray L. Skala | 58 | Director |
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Long-Term Compensation | |||||||||||||||||||||||||
Annual Compensation | |||||||||||||||||||||||||
Restricted | Securities | ||||||||||||||||||||||||
Other Annual | Stock | Underlying | |||||||||||||||||||||||
Name and | Salary | Bonus | Compensation | Awards | Options | ||||||||||||||||||||
Principal Position | Year | ($) | ($) | ($) | ($)(*) | (#) | |||||||||||||||||||
Jack Friedman | 2004 | 990,000 | 1,980,000 | 9,750 | (5) | 1,578,000 | (6) | — | |||||||||||||||||
Chairman and Chief | 2003 | 965,000 | 1,327,140 | (3 | ) 9,000 | (5) | 2,524,800 | (7) | — | ||||||||||||||||
Executive Officer | 2002 | 846,000 | 1,429,696 | (3 | ) 8,250 | (5) | — | — | |||||||||||||||||
Stephen G. Berman | 2004 | 990,000 | 1,980,000 | 6,500 | (5) | 1,578,000 | (6) | — | |||||||||||||||||
Chief Operating Officer, | 2003 | 965,000 | 1,327,140 | (3 | ) 6,000 | (5) | 2,524,800 | (7) | — | ||||||||||||||||
President and Secretary | 2002 | 821,000 | 1,429,696 | (3 | ) 5,500 | (5) | — | — | |||||||||||||||||
Joel M. Bennett | 2004 | 320,000 | 300,000 | 6,500 | (5) | — | — | ||||||||||||||||||
Executive Vice President and | 2003 | 300,000 | — | 6,000 | (5) | 1,262,400 | (8) | — | |||||||||||||||||
Chief Financial Officer | 2002 | 272,500 | 495,000 | (4) | 5,500 | (5) | — | — | |||||||||||||||||
Michael Bianco, Jr.(1) | 2004 | 1,024,000 | (2) | — | 6,500 | (5) | 1,262,400 | (9) | — | ||||||||||||||||
Former Executive Vice President | 2003 | 700,000 | — | 6,000 | (5) | 1,009,920 | (10) | — | |||||||||||||||||
and Chief Merchandising Officer | 2002 | 575,000 | 600,000 | 5,500 | (5) | — | — |
* | The shares of restricted stock referenced in this column were all issued pursuant to the 2002 Plan. The total number of restricted shares issued under the 2002 Plan that were outstanding at December 31, 2004 was 1,236,630 shares. Such shares had an aggregate value of $27,341,890, representing the product of (a) 1,236,630 shares, multiplied by (b) $22.11, the closing price of our common stock on December 31, 2004, as reported by Nasdaq. |
(1) | Effective October 13, 2004, we entered into a Termination Agreement and General Release with Mr. Bianco (the “Bianco Agreement”), which had the effect of terminating Mr. Bianco’s employment with us. The Bianco Agreement further (i) canceled all of the 222,279 unexercised stock options (vested and unvested) held by Mr. Bianco, (ii) included the waiver by Mr. Bianco of all claims by him for future compensation under his prior employment agreement with us, including the right to receive 288,000 shares of restricted stock to which he was otherwise entitled to receive between now and January 2007, (iii) revised the vesting schedule of the 96,000 shares of restricted stock he received in January 2004 to delay the vesting of 24,000 of those shares from January 1, 2006 to January 1, 2007 and (iv) provided for mutual general releases between us and Mr. Bianco for all matters arising from his prior employment agreement. |
(2) | Consists of $544,000 in salary and $480,000 paid to Mr. Bianco under his consulting agreement with us, entered into simultaneously with the Bianco Agreement (the “Consulting Agreement”). Pursuant to the terms of the Consulting Agreement, which is effective until September 30, 2007, Mr. Bianco is to serve as a product development and marketing consultant for us, in particular with regard to our product and marketing activities at the |
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annual Toy Fair held in New York City, for which he will be compensated in the amount of $1,280,000 in the aggregate (including the $480,000 paid him in 2004). |
(3) | On March 31, 2005, we restated the financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2003, which included our financial statements for 2003 and 2002, to account for the acquisition of Toymax, Trendmasters and P&M Products in accordance with paragraph 39 of SFAS 141 (the “Restatement”). Specifically, a portion of the purchase price for each of these transactions has now been allocated to acquired product rights and other intangible assets other than goodwill. The Restatement had the effect of reducing our income before provision for income taxes and minority interest (“pre-tax income”) for both 2003 and 2002. The bonuses paid to Messrs. Friedman and Berman in 2003 and 2002 were determined based upon our pre-tax income for those periods. We are evaluating the impact that the Restatement and the attendant reduction in our pre-tax income for 2003 and 2002 may have on the bonuses paid to Messrs. Friedman and Berman for those years. |
(4) | Includes the forgiveness of a note receivable and accrued interest in the aggregate amount of $285,000. |
(5) | Represents matching contributions made by us to the Named Officer’s 401(k) defined contribution plan. See “— Employee Pension Plan,” infra. |
(6) | Represents the product of (a) 120,000 shares of restricted stock multiplied by (b) $13.15, the last sales price of our common stock, as reported by Nasdaq on January 1, 2004, the date the shares were granted, all of which vested on January 1, 2005. |
(7) | Represents the product of (a) 240,000 shares of restricted stock multiplied by (b) $10.52, the closing price of our common stock, as reported by Nasdaq, on March 27, 2003, the date the shares were granted, all of which vested on January 1, 2004. |
(8) | Represents the product of (a) 120,000 shares of restricted stock multiplied by (b) $10.52, the closing price of our common stock, as reported by Nasdaq, on March 27, 2003, the date the shares were granted, which vested as follows: 60,000 shares on each of January 1, 2004 and 2005. |
(9) | Represents the product of (a) 96,000 shares of restricted stock multiplied by (b) $13.15, the last sales price of our common stock, as reported by Nasdaq on January 1, 2004, the date the shares were granted, which vested or will vest as follows: 72,000 shares on January 1, 2005 and 24,000 shares on January 1, 2007 (see Note (1) to this table, above). |
(10) | Represents the product of (a) 96,000 shares of restricted stock multiplied by (b) $10.52, the closing price of our common stock, as reported by Nasdaq, on March 27, 2003, the date the shares were granted, all of which vested on January 1, 2004. |
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Number of Securities | Value of Unexercised | |||||||||||||||||||||||
Underlying Unexercised | In-the-Money | |||||||||||||||||||||||
Shares | Options/SARs | Options/SARs | ||||||||||||||||||||||
Acquired | at Fiscal Year End | at Fiscal Year End(1) | ||||||||||||||||||||||
on | Value | |||||||||||||||||||||||
Name | Exercise (#) | Realized ($) | Exercisable | Unexercisable | Exercisable | Unexercisable | ||||||||||||||||||
Jack Friedman | — | — | 255,318 | 101,936 | 2,974,920 | 644,965 | ||||||||||||||||||
Stephen G. Berman | — | — | 349,102 | 101,936 | 4,309,936 | 644,965 | ||||||||||||||||||
Joel M. Bennett | — | — | 57,176 | 33,894 | 738,525 | 390,356 | ||||||||||||||||||
Michael Bianco, Jr. | — | — | — | — | — | — |
(1) | The product of (x) the difference between $22.11 (the closing sale price of the common stock on December 31, 2004) and the aggregate exercise price of such options, multiplied by (y) the number of unexercised options. |
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Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
Amount and | ||||||||
Nature of | Percent of | |||||||
Name and Address of | Beneficial | Outstanding | ||||||
Beneficial Owner(1)(2) | Ownership(s)(3) | Shares(4) | ||||||
Third Avenue Management LLC | 3,685,321 | (5) | 13.8 | % | ||||
Dimensional Fund Advisors, Inc. | 2,050,711 | (6) | 7.7 | |||||
FMR Corp. | 1,800,238 | (7) | 6.8 | |||||
Barclays Global Investors, N.A. | 1,437,196 | (8) | 5.4 | |||||
Jack Friedman | 960,776 | (9) | 3.6 | |||||
Stephen G. Berman | 829,102 | (10) | 3.1 | |||||
Michael Bianco, Jr. | 232,050 | (11) | * | |||||
Joel M. Bennett | 174,937 | (12) | * | |||||
Dan Almagor | 23,454 | (13) | * | |||||
David C. Blatte | 77,000 | (14) | * | |||||
Robert E. Glick | 93,519 | (15) | * | |||||
Michael G. Miller | 84,144 | (16) | * | |||||
Murray L. Skala | 95,457 | (17) | * | |||||
All directors and executive officers as a group (8 persons) | 2,335,203 | (18) | 8.5 | % |
* | Less than 1% of our outstanding shares. |
(1) | Unless otherwise indicated, such person’s address is c/o JAKKS Pacific, Inc., 22619 Pacific Coast Highway, Malibu, California 90265. | |
(2) | The number of shares of common stock beneficially owned by each person or entity is determined under the rules promulgated by the Securities and Exchange Commission. Under such rules, beneficial ownership includes any shares as to which the person or entity has sole or shared voting power or investment power. The percentage of our outstanding shares is |
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calculated by including among the shares owned by such person any shares which such person or entity has the right to acquire within 60 days after March 28, 2005. The inclusion herein of any shares deemed beneficially owned does not constitute an admission of beneficial ownership of such shares. | ||
(3) | Except as otherwise indicated, exercises sole voting power and sole investment power with respect to such shares. | |
(4) | Does not include any shares of common stock issuable upon the conversion of $98 million of our 4.625% convertible senior notes due 2023, initially convertible at the rate of 50 shares of common stock per $1,000 principal amount at issuance of the notes (but subject to adjustment under certain circumstances as described in the notes). | |
(5) | The address of Third Avenue Management LLC is 622 Third Avenue, New York, NY 10017. Possesses sole voting power with respect to 3,587,152 of such shares and sole dispositive power with respect to all of such 3,685,321 shares. All the information presented in this Item with respect to this beneficial owner was extracted solely from the Schedule 13G/ A filed on February 16, 2005. | |
(6) | The address of Dimensional Fund Advisors, Inc. is 1299 Ocean Avenue, 11th Floor, Santa Monica, CA 90401. All the information presented in this Item with respect to this beneficial owner was extracted solely from the Schedule 13G/ A filed on February 9, 2005. | |
(7) | The address of FMR Corp. is 82 Devonshire Street, Boston, Massachusetts 02109. All the information with respect to this beneficial owner was extracted solely from its Schedule 13G/A filed on March 10, 2005. | |
(8) | The address of Barclays Global Investors, N.A. is 45 Fremont Street, San Francisco, CA 94105. Possesses sole voting power with respect to 1,308,390 of such shares and sole dispositive power with respect to all of such 1,437,196 shares. All the information presented in this Item with respect to this beneficial owner was extracted solely from the Schedule 13G filed on February 14, 2005. | |
(9) | Includes 3,186 shares held in trusts for the benefit of children of Mr. Friedman. Also includes 255,318 shares of common stock issuable upon the conversion of options held by Mr. Friedman. Also includes 120,000 shares of common stock issued on January 1, 2005 pursuant to the terms of Mr. Friedman’s January 1, 2003 Employment Agreement, which shares are further subject to the terms of our January 1, 2005 Restricted Stock Award Agreement with Mr. Friedman (the “Friedman Agreement”). The Friedman Agreement provides that Mr. Friedman will forfeit his rights to all 120,000 shares unless certain conditions precedent are met prior to January 1, 2006, including the condition that our Pre-Tax Income (as defined in the Friedman Agreement) for 2005 exceeds $2,000,000, whereupon the forfeited shares will become authorized but unissued shares of our common stock. The Friedman Agreement further prohibits Mr. Friedman from selling, assigning, transferring, pledging or otherwise encumbering (a) 60,000 of the 120,000 shares prior to January 1, 2006 and (b) the remaining 60,000 shares prior to January 1, 2007; provided, however, that if our Pre-Tax Income for 2005 exceeds $2,000,000 and our Adjusted EPS Growth (as defined in the Friedman Agreement) for 2005 increases by certain percentages as set forth in the Friedman Agreement, the vesting of some or all of the 60,000 shares that would otherwise vest on January 1, 2007 will be accelerated to the date the Adjusted EPS Growth is determined. |
(10) | Includes 255,318 shares of common stock issuable upon the conversion of options held by Mr. Berman. Also includes 120,000 shares of common stock issued on January 1, 2005 pursuant to the terms of Mr. Berman’s January 1, 2003 Employment Agreement, which shares |
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are further subject to the terms of our January 1, 2005 Restricted Stock Award Agreement with Mr. Berman (the “Berman Agreement”). The Berman Agreement provides that Mr. Berman will forfeit his rights to all 120,000 shares unless certain conditions precedent are met prior to January 1, 2006, including the condition that our Pre-Tax Income (as defined in the Berman Agreement) for 2005 exceeds $2,000,000, whereupon the forfeited shares will become authorized but unissued shares of our common stock. The Berman Agreement further prohibits Mr. Berman from selling, assigning, transferring, pledging or otherwise encumbering (a) 60,000 of the 120,000 shares prior to January 1, 2006 and (b) the remaining 60,000 shares prior to January 1, 2007; provided, however, that if our Pre-Tax Income for 2005 exceeds $2,000,000 and our Adjusted EPS Growth (as defined in the Berman Agreement) for 2005 increases by certain percentages as set forth in the Berman Agreement, the vesting of some or all of the 60,000 shares that would otherwise vest on January 1, 2007 will be accelerated to the date the Adjusted EPS Growth is determined. | |
(11) | Such information was derived exclusively from Mr. Bianco’s most recently filed Form 4. Includes 48,000 shares of common stock, 50% of which vest on each of January 1, 2006 and 2007, all in accordance with the terms of that October 13, 2004 Termination Agreement and October 13, 2004 Consulting Agreement by and between Mr. Bianco and us. |
(12) | Includes 58,234 shares which Mr. Bennett may purchase upon the exercise of certain stock options. |
(13) | Includes 22,144 shares which Mr. Almagor may purchase upon the exercise of certain stock options and 1,310 shares of common stock issued on January 1, 2004, to all of our non-employee directors pursuant to our 2002 Stock Award and Incentive Plan, pursuant to which such 310 and 1,000 shares may not be sold, mortgaged, transferred or otherwise encumbered prior to December 20, 2005 and January 1, 2006, respectively. |
(14) | Includes 75,000 shares which Mr. Blatte may purchase upon the exercise of certain stock options and 2,000 shares of common stock issued pursuant to our 2002 Stock Award and Incentive Plan, pursuant to which 1,000 of such shares may not be sold, mortgaged, transferred or otherwise encumbered prior to January 1, 2006. |
(15) | Includes 91,519 shares which Mr. Glick may purchase upon the exercise of certain stock options and 2,000 shares of Common Stock issued pursuant to our 2002 Stock Award and Incentive Plan, pursuant to which 1,000 of such shares may not be sold, mortgaged, transferred or otherwise encumbered prior to January 1, 2006. |
(16) | Includes 82,144 shares which Mr. Miller may purchase upon the exercise of certain stock options and 2,000 shares of Common Stock issued pursuant to our 2002 Stock Award and Incentive Plan, pursuant to which 1,000 of such shares may not be sold, mortgaged, transferred or otherwise encumbered prior to January 1, 2006. |
(17) | Includes 90,271 shares which Mr. Skala may purchase upon the exercise of certain stock options, 3,186 shares held by Mr. Skala as trustee under a trust for the benefit of Mr. Friedman’s minor child and 2,000 shares of common stock issued pursuant to our 2002 Stock Award and Incentive Plan, pursuant to which 1,000 of such shares may not be sold, mortgaged, transferred or otherwise encumbered prior to January 1, 2006. |
(18) | Includes 3,186 shares held in a trust for the benefit of Mr. Friedman’s minor child and an aggregate of 929,948 shares which the directors and executive officers may purchase upon the exercise of certain stock options. |
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Item 14. | Principal Accountant Fees and Services. |
2003 | 2004 | |||||||
Audit Fees | $ | 656,792 | $ | 415,635 | ||||
Audit Related Fees | $ | 85,185 | $ | 122,483 | ||||
Tax Fees | $ | 205,673 | $ | 260,949 | ||||
All Other Fees | $ | 56,811 | $ | 191,778 |
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• | Report of Independent Registered Public Accounting Firm | |
• | Consolidated Balance Sheets as of December 31, 2003 and 2004 | |
• | Consolidated Statements of Operations for the years ended December 31, 2002, 2003 and 2004 | |
• | Consolidated Statements of Other Comprehensive Income for the years ended December 31, 2002, 2003 and 2004 | |
• | Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2002, 2003 and 2004 | |
• | Consolidated Statements of Cash Flows for the years ended December 31, 2002, 2003 and 2004 | |
• | Notes to Consolidated Financial Statements |
• | Schedule II — Valuation and Qualifying Accounts |
Exhibit | ||
Number | Description | |
3.1 | Amended and Restated Certificate of Incorporation of the Company (1) | |
3.2.1 | By-Laws of the Company (2) | |
3.2.2 | Amendment to By-Laws of the Company (3) | |
10.1.1 | Third Amended and Restated 1995 Stock Option Plan (4) | |
10.1.2 | 1999 Amendment to Third Amended and Restated 1995 Stock Option Plan (5) | |
10.1.3 | 2000 Amendment to Third Amended and Restated 1995 Stock Option Plan (6) | |
10.1.4 | 2001 Amendment to Third Amended and Restated 1995 Stock Option Plan (7) | |
10.2 | 2002 Stock Award and Incentive Plan (8) | |
10.3 | Amended and Restated Employment Agreement between the Company and Jack Friedman, dated as of March 26, 2003 (9) | |
10.4 | Amended and Restated Employment Agreement between the Company and Stephen G. Berman dated as of March 26, 2003 (9) | |
10.5 | Amended and Restated Employment Agreement between the Company and Joel M. Bennet, dated March 26, 2003 (9) | |
10.6.1 | October 13, 2004 Termination Agreement and General Release between the Company and Michael Bianco (10) | |
10.6.2 | October 13, 2004 Consulting Agreement between the Company and Michael Bianco (10) | |
10.7 | Office Lease dated November 18, 1999 between the Company and Winco Maliview Partners (11) | |
10.8 | Lease dated as of November 21, 2000 between Grand Avenue Venture, LLC and JP Ferrero Parkway, Inc. (12) | |
10.9 | Form of Restricted Stock Agreement (9) |
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Exhibit | ||
Number | Description | |
14 | Code of Ethics (13) | |
21 | Subsidiaries of the Company (*) | |
31.1 | Rule 13a-14(a)/15d-14(a) Certification of Jack Friedman (*) | |
31.2 | Rule 13a-14(a)/15d-14(a) Certification of Joel Bennett (*) | |
32.1 | Section 1350 Certification of Jack Friedman (*) | |
32.2 | Section 1350 Certification of Joel Bennett (*) |
(1) | Filed previously as Appendix 2 to the Company’s Schedule 14A Proxy Statement, filed August 23, 2002, and incorporated herein by reference. |
(2) | Filed previously as an exhibit to the Company’s Registration Statement on Form SB-2 (Reg. No. 333-2048-LA), effective May 1, 1996, and incorporated herein by reference. |
(3) | Filed previously as an exhibit to the Company’s Registration Statement on Form SB-2 (Reg. No. 333-22583), effective May 1, 1997, and incorporated herein by reference. |
(4) | Filed previously as Appendix A to the Company’s Schedule 14A Proxy Statement, filed June 23, 1998, and incorporated herein by reference. |
(5) | Filed previously as an exhibit to the Company’s Registration Statement on Form S-8 (Reg. No. 333-90055), filed November 1, 1999, and incorporated herein by reference. |
(6) | Filed previously as an exhibit to the Company’s Registration Statement on Form S-8 (Reg. No. 333-40392), filed June 29, 2000, and incorporated herein by reference. |
(7) | Filed previously as Appendix B to the Company’s Schedule 14A Proxy Statement, filed June 11, 2001, and incorporated herein by reference. |
(8) | Filed previously as an exhibit to the Company’s Registration Statement on Form S-8 (Reg. No. 333-101665), filed December 5, 2002, and incorporated herein by reference. |
(9) | Filed previously as an exhibit to the Company’s Annual Report on Form 10-K for its fiscal year ended December 31, 2002, filed March 31, 2003, and incorporated herein by reference. |
(10) | Filed previously as an exhibit to the Company’s Current Report on Form 8-K, filed on October 15, 2004, and incorporated herein by reference. |
(11) | Filed previously as an exhibit to the Company’s Annual Report on Form 10-K for its fiscal year ended December 31, 1999, filed March 30, 2000, and incorporated herein by reference. |
(12) | Filed previously as an exhibit to the Company’s Annual Report on Form 10-K for its fiscal year ended December 31, 2000, filed April 2, 2001, and incorporated herein by reference. |
(13) | Filed previously as an exhibit to the Company’s Annual Report on Form 10-K for its fiscal year ended December 31, 2003, filed March 15, 2004, and incorporated herein by reference. |
(*) | Filed herewith. |
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JAKKS PACIFIC, INC. |
By: | /s/JACK FRIEDMAN |
Jack Friedman | |
Chairman and | |
Chief Executive Officer |
Signature | Title | Date | ||||
/s/JACK FRIEDMAN | Chairman of the Board of Directors and Chief Executive Officer (Principal Executive Officer) | May 12, 2005 | ||||
/s/JOEL M. BENNETT | Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) | May 12, 2005 | ||||
/s/STEPHEN G. BERMAN | Director | May 12, 2005 | ||||
/s/DAN ALMAGOR | Director | May 12, 2005 | ||||
/s/DAVID C. BLATTE | Director | May 12, 2005 | ||||
/s/ROBERT E. GLICK | Director | May 12, 2005 | ||||
/s/MICHAEL G. MILLER | Director | May 12, 2005 | ||||
/s/MURRAY L. SKALA | Director | May 12, 2005 |
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Exhibit | ||
Number | Description | |
3.1 | Amended and Restated Certificate of Incorporation of the Company (1) | |
3.2.1 | By-Laws of the Company (2) | |
3.2.2 | Amendment to By-Laws of the Company (3) | |
10.1.1 | Third Amended and Restated 1995 Stock Option Plan (4) | |
10.1.2 | 1999 Amendment to Third Amended and Restated 1995 Stock Option Plan (5) | |
10.1.3 | 2000 Amendment to Third Amended and Restated 1995 Stock Option Plan (6) | |
10.1.4 | 2001 Amendment to Third Amended and Restated 1995 Stock Option Plan (7) | |
10.2 | 2002 Stock Award and Incentive Plan (8) | |
10.3 | Amended and Restated Employment Agreement between the Company and Jack Friedman, dated as of March 26, 2003 (9) | |
10.4 | Amended and Restated Employment Agreement between the Company and Stephen G. Berman dated as of March 26, 2003 (9) | |
10.5 | Amended and Restated Employment Agreement between the Company and Joel M. Bennet, dated March 26, 2003 (9) | |
10.6.1 | October 13, 2004 Termination Agreement and General Release between the Company and Michael Bianco (10) | |
10.6.2 | October 13, 2004 Consulting Agreement between the Company and Michael Bianco (10) | |
10.7 | Office Lease dated November 18, 1999 between the Company and Winco Maliview Partners (11) | |
10.8 | Lease dated as of November 21, 2000 between Grand Avenue Venture, LLC and JP Ferrero Parkway, Inc. (12) | |
10.9 | Form of Restricted Stock Agreement (9) | |
14 | Code of Ethics (13) | |
21 | Subsidiaries of the Company (*) | |
31.1 | Rule 13a-14(a)/15d-14(a) Certification of Jack Friedman (*) | |
31.2 | Rule 13a-14(a)/15d-14(a) Certification of Joel Bennett (*) | |
32.1 | Section 1350 Certification of Jack Friedman (*) | |
32.2 | Section 1350 Certification of Joel Bennett (*) |
(1) | Filed previously as Appendix 2 to the Company’s Schedule 14A Proxy Statement, filed August 23, 2002, and incorporated herein by reference. |
(2) | Filed previously as an exhibit to the Company’s Registration Statement on Form SB-2 (Reg. No. 333-2048-LA), effective May 1, 1996, and incorporated herein by reference. |
(3) | Filed previously as an exhibit to the Company’s Registration Statement on Form SB-2 (Reg. No. 333-22583), effective May 1, 1997, and incorporated herein by reference. |
(4) | Filed previously as Appendix A to the Company’s Schedule 14A Proxy Statement, filed June 23, 1998, and incorporated herein by reference. |
(5) | Filed previously as an exhibit to the Company’s Registration Statement on Form S-8 (Reg. No. 333-90055), filed November 1, 1999, and incorporated herein by reference. |
(6) | Filed previously as an exhibit to the Company’s Registration Statement on Form S-8 (Reg. No. 333-40392), filed June 29, 2000, and incorporated herein by reference. |
(7) | Filed previously as Appendix B to the Company’s Schedule 14A Proxy Statement, filed June 11, 2001, and incorporated herein by reference. |
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(8) | Filed previously as an exhibit to the Company’s Registration Statement on Form S-8 (Reg. No. 333-101665), filed December 5, 2002, and incorporated herein by reference. |
(9) | Filed previously as an exhibit to the Company’s Annual Report on Form 10-K for its fiscal year ended December 31, 2002, filed March 31, 2003, and incorporated herein by reference. |
(10) | Filed previously as an exhibit to the Company’s Current Report on Form 8-K, filed on October 15, 2004, and incorporated herein by reference. |
(11) | Filed previously as an exhibit to the Company’s Annual Report on Form 10-K for its fiscal year ended December 31, 1999, filed March 30, 2000, and incorporated herein by reference. |
(12) | Filed previously as an exhibit to the Company’s Annual Report on Form 10-K for its fiscal year ended December 31, 2000, filed April 2, 2001, and incorporated herein by reference. |
(13) | Filed previously as an exhibit to the Company’s Annual Report on Form 10-K for its fiscal year ended December 31, 2003, filed March 15, 2004, and incorporated herein by reference. |
(*) | Filed herewith. |
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