Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2018 | Nov. 09, 2018 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q3 | |
Trading Symbol | JAKK | |
Entity Registrant Name | JAKKS PACIFIC INC | |
Entity Central Index Key | 1,009,829 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Emerging Growth Company | false | |
Entity Small Business | false | |
Entity Common Stock, Shares Outstanding | 29,169,913 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Current assets | ||
Cash and cash equivalents | $ 52,177 | $ 64,977 |
Restricted cash | 4,967 | |
Accounts receivable, net of allowance for doubtful accounts of $22,419 and $10,940 at September 30, 2018 and December 31, 2017, respectively | 205,412 | 142,457 |
Inventory | 64,451 | 58,432 |
Prepaid expenses and other assets | 26,485 | 16,803 |
Total current assets | 353,492 | 282,669 |
Property and equipment | ||
Office furniture and equipment | 15,397 | 15,043 |
Molds and tooling | 115,816 | 115,378 |
Leasehold improvements | 10,776 | 10,936 |
Total | 141,989 | 141,357 |
Less accumulated depreciation and amortization | 120,802 | 118,130 |
Property and equipment, net | 21,187 | 23,227 |
Intangible assets, net | 18,477 | 22,190 |
Other long term assets | 18,938 | 6,579 |
Goodwill | 35,197 | 35,384 |
Trademarks | 300 | 300 |
Total assets | 447,591 | 370,349 |
Current liabilities | ||
Accounts payable | 142,612 | 49,916 |
Accrued expenses | 48,539 | 42,145 |
Reserve for sales returns and allowances | 30,270 | 17,622 |
Short term debt, net | 19,365 | 5,000 |
Convertible senior notes, net | 21,075 | |
Total current liabilities | 240,786 | 135,758 |
Convertible senior notes, net | 145,056 | 133,497 |
Other liabilities | 4,364 | 4,537 |
Income taxes payable | 994 | 1,261 |
Deferred income taxes, net | 787 | 783 |
Total liabilities | 391,987 | 275,836 |
Stockholders' equity | ||
Preferred stock, $.001 par value; 5,000,000 shares authorized; nil outstanding | ||
Common stock, $.001 par value; 100,000,000 shares authorized; 29,169,913 and 26,957,354 shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively | 30 | 27 |
Treasury stock, at cost; 3,112,840 shares | (24,000) | (24,000) |
Additional paid-in capital | 217,468 | 215,809 |
Accumulated deficit | (124,354) | (85,233) |
Accumulated other comprehensive loss | (14,548) | (13,059) |
Total JAKKS Pacific, Inc. stockholders' equity | 54,596 | 93,544 |
Non-controlling interests | 1,008 | 969 |
Total stockholders' equity | 55,604 | 94,513 |
Total liabilities and stockholders' equity | $ 447,591 | $ 370,349 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Accounts receivable, allowance for doubtful accounts | $ 22,419 | $ 10,940 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, outstanding | 0 | 0 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 29,169,913 | 26,957,354 |
Common stock, shares outstanding | 29,169,913 | 26,957,354 |
Treasury stock, shares | 3,112,840 | 3,112,840 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Net Sales | $ 236,699 | $ 262,413 | $ 435,484 | $ 476,483 |
Gross profit | 64,330 | 61,781 | 115,230 | 125,521 |
Selling, general and administrative expenses | 44,287 | 55,991 | 142,985 | 149,563 |
Goodwill and other intangibles impairment | 13,536 | 13,536 | ||
Income (loss) from operations | 20,043 | (7,746) | (27,755) | (37,578) |
Income from joint ventures | 227 | 105 | ||
Other income | 223 | 110 | 304 | 292 |
Loss on extinguishment of convertible senior notes | (453) | (453) | 114 | |
Change in fair value of convertible senior notes | 917 | (2,514) | ||
Write-off of investment in DreamPlay, LLC | (7,000) | (7,000) | ||
Interest income | 19 | 12 | 47 | 26 |
Interest expense | (3,097) | (2,027) | (7,230) | (7,496) |
Income (loss) before provision for (benefit from) income taxes | 17,652 | (16,651) | (37,374) | (51,651) |
Provision for (benefit from) income taxes | 1,953 | 918 | 1,708 | 890 |
Net income (loss) | 15,699 | (17,569) | (39,082) | (52,541) |
Net income (loss) attributable to non-controlling interests | 17 | 45 | 39 | 131 |
Net income (loss) attributable to JAKKS Pacific, Inc. | $ 15,682 | $ (17,614) | $ (39,121) | $ (52,672) |
Income (loss) per share - basic | $ 0.68 | $ (0.77) | $ (1.69) | $ (2.53) |
Shares used in income (loss) per share - basic | 23,106 | 22,772 | 23,104 | 20,848 |
Income (loss) per share - diluted | $ 0.38 | $ (0.77) | $ (1.69) | $ (2.53) |
Shares used in income (loss) per share - diluted | 45,686 | 22,772 | 23,104 | 20,848 |
Comprehensive income (loss) | $ 14,550 | $ (15,907) | $ (40,571) | $ (48,413) |
Comprehensive income (loss) attributable to JAKKS Pacific, Inc. | 14,533 | (15,952) | (40,610) | (48,544) |
Product | ||||
Cost of sales | $ 172,369 | $ 200,632 | $ 320,254 | $ 350,962 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Cash flows from operating activities | ||
Net Income (Loss) | $ (39,082) | $ (52,541) |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||
Provision for doubtful accounts | 11,530 | 11,018 |
Depreciation and amortization | 13,991 | 18,414 |
Write-off and amortization of debt issuance costs | 1,234 | 1,682 |
Share-based compensation expense | 1,747 | 2,253 |
Gain on disposal of property and equipment | (108) | (23) |
Intangibles impairment | 5,248 | |
Write-off of investment in DreamPlay, LLC | 7,000 | |
Goodwill impairment | 0 | 8,288 |
(Gain) loss on extinguishment of convertible senior notes | 453 | (114) |
Change in fair value of convertible senior notes | 2,514 | |
Deferred income taxes | 4 | (1) |
Changes in operating assets and liabilities: | ||
Accounts receivable | (74,485) | (61,522) |
Inventory | (6,019) | (4,709) |
Prepaid expenses and other assets | (21,767) | (108) |
Accounts payable | 94,011 | 47,518 |
Accrued expenses | 6,394 | 16,279 |
Reserve for sales returns and allowances | 12,648 | (3,449) |
Income taxes payable | (267) | (1,053) |
Other liabilities | (173) | (382) |
Total adjustments | 41,707 | 46,339 |
Net cash provided by (used in) operating activities | 2,625 | (6,202) |
Cash flows from investing activities | ||
Purchases of property and equipment | (9,552) | (10,464) |
Proceeds from sale of property and equipment | 108 | 24 |
Net cash provided by (used in) investing activities | (9,444) | (10,440) |
Cash flows from financing activities | ||
Retirement of convertible senior notes | (13,178) | |
Repayment of credit facility borrowings | (5,000) | (8,000) |
Repurchase of convertible senior notes | (35,614) | |
Deferred issuance costs | (1,449) | |
Proceeds from term loan facility | 20,000 | |
Proceeds from issuance of common stock | 19,311 | |
Repurchase of common stock for employee tax withholding | (85) | (12) |
Net cash provided by (used in) financing activities | 288 | (24,315) |
Net increase (decrease) in cash, cash equivalents and restricted cash | (6,531) | (40,957) |
Effect of foreign currency translation | (1,302) | 3,704 |
Cash, cash equivalents and restricted cash, beginning of period | 64,977 | 86,064 |
Cash, cash equivalents and restricted cash, end of period | 57,144 | 48,811 |
Cash paid during the period for: | ||
Income taxes | 1,009 | 1,669 |
Interest | $ 5,161 | $ 5,727 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($) $ in Millions | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Accounts Payable | ||
Purchase of property and equipment incurred | $ 3.9 | $ 5.2 |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Sep. 30, 2018 | |
Basis of Presentation | Note 1 — Basis of Presentation The accompanying unaudited interim condensed consolidated financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations. However, the Company believes that the disclosures are adequate to prevent the information presented from being misleading. These financial statements should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations and the financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K, which contains audited financial information for the three years in the period ended December 31, 2017. The information provided in this report reflects all adjustments (consisting solely of normal recurring items) that are, in the opinion of management, necessary to present fairly the financial position and the results of operations for the periods presented. Interim results are not necessarily, especially given seasonality, indicative of results to be expected for a full year. The condensed consolidated financial statements include the accounts of JAKKS Pacific, Inc. and its wholly-owned subsidiaries (collectively, “the Company”). The condensed consolidated financial statements also include the accounts of DreamPlay Toys, LLC, a joint venture with NantWorks LLC, JAKKS Meisheng Trading (Shanghai) Limited, a joint venture with Meisheng Cultural & Creative Corp., Ltd., and JAKKS Meisheng Animation (HK) Limited, a joint venture with Hong Kong Meisheng Cultural Company Limited. Certain prior period amounts have been reclassified for consistency with the current period presentation. In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606),” which supersedes the revenue recognition requirements in ASC 605, (Topic 605), and most industry-specific guidance. Under the new model, recognition of revenue occurs when a customer obtains control of promised goods or services in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, the new standard requires that reporting companies disclose the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. In August 2015, the FASB issued ASU 2015-14, “Revenue from Contracts with Customers – Deferral of the Effective Date,” which defers the effective date of ASU 2014-09 to annual reporting periods beginning after December 15, 2017, and interim periods therein. In 2016, the FASB issued ASU 2016-08, “Principal versus Agent Considerations (Reporting Revenue Gross versus Net),” ASU 2016-10, “Identifying Performance Obligations and Licensing,” and ASU 2016-12, “Revenue from Contracts with Customers - Narrow-Scope Improvements and Practical Expedients.” Entities have the choice to adopt these updates using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a modified retrospective approach with the cumulative effect of these standards recognized at the date of the adoption. On January 1, 2018, the Company adopted the new accounting standard ASC 606, (Topic 606), Revenue from Contracts with Customers and all the related amendments (“new revenue standard”) using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with the Company’s historic accounting under ASC 605, (Topic 605). There is no impact to the Company’s condensed consolidated financial statements resulting from the adoption of Topic 606 as the timing and measurement of revenue remained consistent with Topic 605, although the Company’s approach to revenue recognition is now based on the transfer of control. Further, there is no difference in the amounts of the revenue and cost of sales reported in the Company’s condensed consolidated statements of operations and comprehensive income (loss) for the quarter ended September 30, 2018 that were recognized pursuant to Topic 606 and those that would have been reported pursuant to Topic 605. In January 2016, the FASB issued ASU 2016-01, “Financial Instruments - Overall: Recognition and Measurement of Financial Assets and Financial Liabilities” (“ASU 2016-01”). The new guidance is intended to improve the recognition and measurement of financial instruments. The ASU is effective for fiscal years and interim periods within those years beginning after December 15, 2017. The adoption of this standard does not have an impact on the Company’s condensed consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, “Leases.” ASU 2016-02 establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is currently evaluating the impact of the pending adoption of this new standard on its condensed consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments.” The new guidance is intended to reduce diversity in practice in how transactions are classified in the statement of cash flows. This ASU is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2017. The Company early adopted this standard during the second quarter of 2017. The adoption of this standard does not have an impact on the Company’s condensed consolidated financial statements. In October 2016, the FASB issued ASU 2016-16, “Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other than Inventory.” The amendments in this ASU reduce the complexity in the accounting standards by allowing the recognition of current and deferred income taxes for an intra-entity asset transfer, other than inventory, when the transfer occurs. Historically, recognition of the income tax consequence was not recognized until the asset was sold to an outside party. This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. The adoption of this standard does not have an impact on the Company’s condensed consolidated financial statements. In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash.” The update requires that amounts generally described as restricted cash or restricted cash equivalents be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The new standard is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years, and early adoption is permitted. The Company early adopted this standard during the second quarter of 2017. In May 2017, the FASB issued ASU 2017-09, “Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting,” which clarifies when to account for a change to the terms or conditions of a share-based payment award as a modification. Under the new guidance, modification accounting is required only if the fair value, vesting conditions, or the classification of the award (as equity or liability) changes as a result of the change in terms or conditions. ASU 2017-09 is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The adoption of this standard does not have an impact on the Company’s condensed consolidated financial statements. In January 2018, the FASB issued ASU 2018-02, “Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income,” which gives entities the option to reclassify to retained earnings the tax effects resulting from the Act related to items in Accumulated Other Comprehensive Income (“AOCI”) that the FASB refers to as having been stranded in AOCI. The new guidance may be applied retrospectively to each period in which the effect of the Act is recognized in the period of adoption. The Company could adopt this guidance for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. Early adoption is permitted for periods for which financial statements have not yet been issued or made available for issuance, including the period the Act was enacted. The guidance, when adopted, will require new disclosures regarding a company’s accounting policy for releasing the tax effects in AOCI and permit the company the option to reclassify to retained earnings the tax effects resulting from the Act that are stranded in AOCI. The Company is not early adopting at this time and does not have plans to adopt this new guidance. In March 2018, the FASB issued ASU 2018-03, “Technical Corrections and Improvements to Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities,” which made targeted improvements to address certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. The ASU is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years beginning after June 15, 2018. The adoption of this standard does not have an impact on the Company’s condensed consolidated financial statements. In June 2018, the FASB issued ASU 2018-07, “Improvements to Nonemployee Share-Based Payment Accounting,” which supersedes most of the prior accounting guidance on nonemployee share-based payments, and instead aligns it with existing guidance on employee share-based payments in Topic 718. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, and early adoption is permitted. The Company is currently evaluating the impact of the pending adoption of this new standard on its condensed consolidated financial statements. In July 2018, the FASB issued ASU 2018-10, “Codification Improvements to Topic 842, Leases,” which affects narrow aspects of the guidance in ASU 2016-02, Leases (Topic 842). The amendments include sixteen narrow amendments to the leases standard resulting from implementation activities, such as discussions between the FASB and stakeholders, technical inquiries, and routine Codification feedback. This ASU is intended to clarify the intended application of certain aspects of the new leases guidance and correct cross-reference inconsistencies. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, and early adoption is permitted. The Company is currently evaluating the impact of the pending adoption of this new standard on its condensed consolidated financial statements. In July 2018, the FASB issued ASU 2018-11, “Leases (Topic 842): Targeted Improvements,” which provides entities with an additional (and optional) transition method to adopt the new leases standard. Under this new transition method, an entity initially applies the new leases standard at the adoption date and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, and early adoption is permitted. The Company is currently evaluating the impact of the pending adoption of this new standard on its condensed consolidated financial statements. In August 2018, the FASB issued ASU 2018-13, “Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement,” which improves the effectiveness of the disclosures required under ASC 820 and modifies the disclosure requirements on fair value measurements, including the consideration of costs and benefits. The new standard is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, and early adoption is permitted. The Company is currently evaluating the impact of the pending adoption of this new standard on its condensed consolidated financial statements. |
Business Segments, Geographic D
Business Segments, Geographic Data, and Sales by Major Customers | 9 Months Ended |
Sep. 30, 2018 | |
Business Segments, Geographic Data, and Sales by Major Customers | Note 2 — Business Segments, Geographic Data, and Sales by Major Customers The Company is a worldwide producer and marketer of children’s toys and other consumer products, principally engaged in the design, development, production, marketing and distribution of its diverse portfolio of products. The Company has aligned its operating segments into three reporting segments that reflect the management and operation of the business. The Company’s segments are (i) U.S. and Canada, (ii) International, and (iii) Halloween. The U.S. and Canada segment includes action figures, vehicles, play sets, plush products, dolls, electronic products, construction toys, infant and pre-school toys, role play and everyday costume play, foot to floor ride-on vehicles, wagons, novelty toys, seasonal and outdoor products, kids’ indoor and outdoor furniture, and related products. Within the International segment, the Company markets and sells its toy products in markets outside of the U.S. and Canada, primarily in the European, Asia Pacific, and Latin American regions. Within the Halloween segment, the Company markets and sells Halloween costumes and accessories and everyday costume play products, primarily in the U.S. and Canada. Segment performance is measured at the operating income (loss) level. All sales are made to external customers and general corporate expenses have been attributed to the various segments based upon relative sales volumes. Segment assets are primarily comprised of accounts receivable and inventories, net of applicable reserves and allowances, goodwill and other assets. Certain assets which are not tracked by operating segment and/or that benefit multiple operating segments have been allocated on the same basis. Results are not necessarily those which would be achieved if each segment was an unaffiliated business enterprise. Information by segment and a reconciliation to reported amounts for the three and nine months ended September 30, 2018 and 2017 and as of September 30, 2018 and December 31, 2017 are as follows (in thousands): Three Months Ended Nine Months Ended 2018 2017 2018 2017 Net Sales U.S. and Canada $ 133,481 $ 154,046 $ 263,397 $ 295,098 International 37,902 50,141 77,245 87,583 Halloween 65,316 58,226 94,842 93,802 $ 236,699 $ 262,413 $ 435,484 $ 476,483 Three Months Ended Nine Months Ended 2018 2017 2018 2017 Income (Loss) from Operations U.S. and Canada $ 12,029 $ (6,760 ) $ (17,373 ) $ (24,155 ) International 2,919 (735 ) (6,764 ) (3,986 ) Halloween 5,095 (251 ) (3,618 ) (9,437 ) $ 20,043 $ (7,746 ) $ (27,755 ) $ (37,578 ) Three Months Ended Nine Months Ended 2018 2017 2018 2017 Depreciation and Amortization Expense U.S. and Canada $ 4,823 $ 5,682 $ 10,125 $ 13,107 International 1,312 1,811 2,886 3,693 Halloween 428 808 980 1,614 $ 6,563 $ 8,301 $ 13,991 $ 18,414 September 30, December 31, Assets U.S. and Canada $ 271,100 $ 229,505 International 118,781 106,255 Halloween 57,710 34,589 $ 447,591 $ 370,349 The following tables present information about the Company by geographic area as of September 30, 2018 and December 31, 2017 and for the three and nine months ended September 30, 2018 and 2017 (in thousands): September 30, December 31, 2018 2017 Long-lived Assets China $ 15,867 $ 17,194 United States 5,113 5,755 Hong Kong 207 278 $ 21,187 $ 23,227 Three Months Ended Nine months ended September 30, September 30, 2018 2017 2018 2017 Net Sales by Customer Area United States $ 186,497 $ 199,064 $ 337,543 $ 367,694 Europe 25,606 33,640 49,542 56,537 Canada 11,091 11,062 18,663 18,086 Hong Kong 1,182 397 1,709 784 Other 12,323 18,250 28,027 33,382 $ 236,699 $ 262,413 $ 435,484 $ 476,483 Major Customers Net sales to major customers for the three and nine months ended September 30, 2018 and 2017 were as follows (in thousands, except for percentages): Three Months Ended September 30, Nine months ended September 30, 2018 2017 2018 2017 Amount Percentage of Net Sales Amount Percentage of Net Sales Amount Percentage of Net Sales Amount Percentage of Net Sales Wal-Mart $ 64,133 27.1 % $ 70,768 27.0 % $ 107,344 24.6 % $ 118,819 24.9 % Target 50,797 21.5 44,502 17.0 87,641 20.1 77,674 16.3 Toys ‘R’ Us * * 22,741 8.7 * * 49,760 10.4 * Sales to Toys ‘R’ Us in the applicable periods were less than 10% of total sales At September 30, 2018 and December 31, 2017, the Company’s three largest customers accounted for approximately 46.0% and 60.6%, respectively, of the Company’s gross accounts receivable. The concentration of the Company’s business with a relatively small number of customers may expose the Company to material adverse effects if one or more of its large customers were to experience financial difficulty. The Company performs ongoing credit evaluations of its top customers and maintains an allowance for potential credit losses. On March 15, 2018, Toys “R” Us (“TRU”) filed a motion to conduct an orderly wind down of its operations in the U.S. and commence store closing sales at all 735 U.S. stores. The total TRU worldwide pre and post-petition gross accounts receivable balance of $20.7 million as of September 30, 2018 has been fully reserved by the Company. At September 30, 2018 and December 31, 2017, the Company’s TRU consolidated accounts receivable balance represented 8.7% and 26.4%, respectively, of the Company’s gross accounts receivable. |
Inventory
Inventory | 9 Months Ended |
Sep. 30, 2018 | |
Inventory | Note 3 — Inventory Inventory, which includes the ex-factory cost of goods, in-bound freight, duty and capitalized warehouse costs, is valued at the lower of cost (first-in, first-out) or net realizable value, net of inventory obsolescence reserve, and consists of the following (in thousands): September 30, December 31, Raw materials $ 1,094 $ 1,596 Finished goods 63,357 56,836 $ 64,451 $ 58,432 During the first quarter of 2017, the Company adopted ASU 2015-11, “Simplifying the Measurement of Inventory (Topic 330).” The amendments, which apply to inventory that is measured using any method other than the last-in, first-out (LIFO) or retail inventory method, require that entities measure inventory at the lower of cost or net realizable value. ASU 2015-11 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016 and should be applied on a prospective basis. The adoption of ASU 2015-11 did not have an impact to the Company’s condensed consolidated financial statements. |
Revenue Recognition and Reserve
Revenue Recognition and Reserve for Sales Returns and Allowances | 9 Months Ended |
Sep. 30, 2018 | |
Revenue Recognition and Reserve for Sales Returns and Allowances | Note 4 — Revenue Recognition and Reserve for Sales Returns and Allowances The Company’s contracts with customers only include one performance obligation (i.e., sale of the Company’s products). Revenue is recognized in the gross amount at a point in time when delivery is completed and control of the promised goods is transferred to the customers. Revenue is measured as the amount of consideration the Company expects to be entitled to in exchange for those goods. The Company’s contracts do not involve financing elements as payment terms with customers are less than one year. Further, because revenue is recognized at the point in time goods are sold to customers, there are no contract assets or contract liability balances. The Company disaggregates its revenues from contracts with customers by reporting segment: U.S. and Canada, International, and Halloween. The Company further disaggregates revenues by major geographic region. See Note 2, Business Segments, Geographic Data, and Sales by Major Customers, for further information. The Company offers various discounts, pricing concessions, and other allowances to customers, all of which are considered in determining the transaction price. Certain discounts and allowances are fixed and determinable at the time of sale and are recorded at the time of sale as a reduction to revenue. Other discounts and allowances can vary and are determined at management’s discretion (variable consideration). Specifically, the Company occasionally grants discretionary credits to facilitate markdowns and sales of slow moving merchandise, and consequently accrues an allowance based on historic credits and management estimates. Further, while the Company generally does not allow product returns, the Company does make occasional exceptions to this policy, and consequently records a sales return allowance based upon historic return amounts and management estimates. These allowances (variable consideration) are estimated using the expected value method and are recorded at the time of sale as a reduction to revenue. The Company adjusts its estimate of variable consideration at least quarterly or when facts and circumstances used in the estimation process may change. The variable consideration is not constrained as the Company has sufficient history on the related estimates and does not believe there is a risk of significant revenue reversal. The Company also participates in cooperative advertising arrangements with some customers, whereby it allows a discount from invoiced product amounts in exchange for customer purchased advertising that features the Company’s products. Generally, these allowances range from 1% to 12% of gross sales, and are generally based upon product purchases or specific advertising campaigns. Such allowances are accrued when the related revenue is recognized. These cooperative advertising arrangements provide a distinct benefit at fair value, and are accounted for as direct selling expenses. Sales commissions are expensed when incurred as the related revenue is recognized at a point in time and therefore the amortization period is less than one year. As a result these costs are recorded as direct selling expenses, as incurred. Shipping and handling activities are considered part of the Company’s obligation to transfer the products and therefore are recorded as direct selling expenses, as incurred. The Company’s reserve for sales returns and allowances amounted to $30.3 million as of September 30, 2018, compared to $17.6 million as of December 31, 2017. |
Credit Facilities
Credit Facilities | 9 Months Ended |
Sep. 30, 2018 | |
Credit Facilities | Note 5 — Credit Facilities Wells Fargo In March 2014, the Company and its domestic subsidiaries entered into a secured credit facility with General Electric Capital Corporation (“GECC”). The Credit Facility, as amended and subsequently assigned to Wells Fargo Bank, N.A. (“Wells Fargo”) pursuant to its acquisition of GECC, provides for a $75.0 million revolving credit facility subject to availability based on prescribed advance rates on certain domestic accounts receivable and inventory amounts used to compute the borrowing base (the “Credit Facility”). The Credit Facility includes a sub-limit of up to $35.0 million for the issuance of letters of credit. The amounts outstanding under the Credit Facility, as amended, are payable in full upon maturity of the facility on March 27, 2019, except that the Credit Facility would mature on June 15, 2018 if the Company does not refinance or extend the maturity of the convertible senior notes that mature in 2018, provided that any such refinancing or extension shall have a maturity date that is no sooner than six months after the stated maturity of the Credit Facility (i.e., on or about September 27, 2019). On June 14, 2018, the Company entered into a Term Loan Agreement with Great American Capital Partners to provide the necessary capital to refinance the 2018 convertible senior notes (see additional details regarding the Term Loan Agreement below). In addition, on June 14, 2018, the Company revised certain of the Credit Facility documents (and entered into new ones) so that certain of our Hong Kong based subsidiaries became additional parties to the Credit Facility. As a result, the receivables of these subsidiaries can now be included in the borrowing base computation, subject to certain limitations, thereby effectively increasing the amount of funds the Company can borrow under the Credit Facility. Any additional borrowings under the Credit Facility will be used for general working capital purposes. The Credit Facility is secured by a security interest in favor of Wells Fargo covering a substantial amount of the consolidated assets and a pledge of the majority of the capital stock of various of the Company’s subsidiaries. As of September 30, 2018, there were no outstanding borrowings and the amount of outstanding stand-by letters of credit totaled $12.8 million; the total excess availability under the Credit Facility was $34.7 million. As of December 31, 2017, the amount of outstanding borrowings was $5.0 million and outstanding stand-by letters of credit totaled $20.0 million; the total excess availability under the Credit Facility was $14.1 million. In October 2018, the Company borrowed $7.5 million under the Credit Facility. The Company’s ability to borrow under the Credit Facility is also subject to its ongoing compliance with certain financial covenants, including the maintenance by the Company of a fixed charge coverage ratio of at least 1.25:1.0 based on the trailing four fiscal quarters in the event minimum excess availability of $10.0 million under the Credit Facility is not maintained. As of September 30, 2018 and December 31, 2017, the Company was in compliance with the financial covenants under the Credit Facility. The Company may borrow funds at LIBOR or at a Base Rate, plus applicable margins of 225 basis point spread over LIBOR and 125 basis point spread on Base Rate loans. The Base Rate is the highest of (i) the Federal Funds Rate plus a margin of 0.50%, (ii) the rate last quoted by The Wall Street Journal as the “Prime Rate,” or (iii) the sum of a LIBOR rate plus 1.00%. In addition to standard fees, the Credit Facility has an unused credit line fee, which ranges from 25 to 50 basis points. For the three months ended September 30, 2018 and 2017, the weighted average interest rate on the Credit Facility was nil and approximately 3.49%, respectively. For the nine months ended September 30, 2018 and 2017, the weighted average interest rate on the Credit Facility was approximately 3.79% and 3.03%, respectively. The Credit Facility also contains customary events of default, including a cross default provision and a change of control provision. In the event of a default, all of the obligations of the Company and its subsidiaries under the Credit Facility may be declared immediately due and payable. For certain events of default relating to insolvency and receivership, all outstanding obligations become due and payable. Great American Capital Partners On June 14, 2018, the Company entered into a Term Loan Agreement, Term Note, Guaranty and Security Agreement and other ancillary documents and agreements (the “Term Loan”) with Great American Capital Partners Finance Co., LLC (“GACP”), for itself as a Lender (as defined below) and as the agent (in such capacity, “Agent”) for the Lenders from time to time party to the Term Loan (collectively, “Lenders”) and the other “Secured Parties” under and as defined therein, with respect to the issuance to the Company by Lenders of a $20.0 million term loan. To secure the Company’s obligations under the Term Loan, the Company granted to Agent, for the benefit of the Secured Parties, a security interest in a substantial amount of the Company’s consolidated assets and a pledge of the majority of the capital stock of various of its subsidiaries. The Term Loan is a secured obligation, second only to the Credit Facility with Wells Fargo, except with respect to certain of the Company’s inventory in which GACP has a priority secured position. The Company may use the funds from the Term Loan to repurchase or retire its outstanding convertible senior notes due August 2018, for working capital, capital expenditures and other general corporate purposes, subject to certain negative covenants set forth in the Term Loan. The Term Loan requires the repayment of principal in the amount of 10% of the outstanding Term Loan per year (payable monthly) beginning after the first anniversary. All then-outstanding borrowings under the Term Loan are due, and the Term Loan terminates, no later than June 14, 2021, unless sooner terminated in accordance with its terms, which includes the date of termination of the Wells Fargo Credit Facility and the date that is 91 days prior to the maturity of the Company’s various convertible senior notes due in 2020 (see Note 6). The Company is permitted, and may be required under certain circumstances as set forth in the Term Loan documents, to prepay the Term Loan, which would require a prepayment fee (i) in year one of up to any unearned and unpaid interest that would have become due and payable in year one had the prepayment not occurred plus 2% of the initial amount of the Term Loan (i.e., $20.0 million), (ii) in year two of 2% of the initial amount of the Term Loan and (iii) in year three of 1% of the initial amount of the Term Loan. The Company’s ability to continue to borrow the initial Term Loan amount of $20.0 million is based on certain accounts receivable and inventory amounts used to compute the borrowing base. In the event the Term Loan balance exceeds the borrowing base computation, the shortfall would be (i) applied to any excess availability under the Wells Fargo Credit Facility or (ii) prepaid. Similar to the Wells Fargo Credit Facility, the Company is subject to ongoing compliance with certain financial covenants, including the maintenance by the Company of a fixed charge coverage ratio of at least 1.25:1.0 based on the trailing four fiscal quarters in the event minimum excess availability of $10.0 million under the Wells Fargo Credit Facility is not maintained. The Company must also maintain a minimum amount of liquidity, as defined in the Term Loan, of $10.0 million. As of September 30, 2018, the Company was in compliance with the financial covenants under the Term Loan. The Term Loan is accelerated and becomes immediately due and payable (and the Term Loan terminates) in the event of a default under the Term Loan which includes, among other things, breach of certain covenants or representations contained in the Term Loan documents, defaults under other loans or obligations, involvement in bankruptcy proceedings or an occurrence of a change of control (as such terms are defined in the Term Loan). The Term Loan Documents also contain negative covenants which, during the life of the Term Loan, prohibit and/or limit the Company from, among other things, incurring certain types of other debt, acquiring other companies, making certain expenditures or investments and changing the character of its business. As of September 30, 2018, the amount outstanding under the Term Loan was $20.0 million. Borrowings under the Term Loan accrue interest at LIBOR plus 9.00% per annum. For the three and nine months ended September 30, 2018, the weighted average interest rate on the Term Loan was approximately 11.1%. Amortization expense classified as interest expense related to the $1.4 million debt issuance costs associated with the transactions that closed on June 14, 2018 (i.e., the amendment of the Wells Fargo Credit Facility and the GACP Term Loan) was $0.4 million and $0.5 million for the three and nine months ended September 30, 2018, respectively. |
Convertible Senior Notes
Convertible Senior Notes | 9 Months Ended |
Sep. 30, 2018 | |
Convertible Senior Notes | Note 6 — Convertible Senior Notes Convertible senior notes consist of the following (in thousands): September 30, 2018 December 31, 2017 Principal/ Debt Principal/ Debt Fair Value Issuance Net Fair Value Issuance Net Amount Costs Amount Amount Costs Amount 4.25% convertible senior notes (due 2018) $ ― $ ― $ ― $ 21,178 $ 103 $ 21,075 4.875% convertible senior notes (due 2020) 113,000 1,380 111,620 113,000 1,972 111,028 3.25% convertible senior notes (due 2020) * 33,436 ― 33,436 22,469 ― 22,469 Total convertible senior notes, net of debt issuance costs $ 146,436 $ 1,380 $ 145,056 $ 156,647 $ 2,075 $ 154,572 * The amount presented for the 3.25% 2020 convertible senior notes within the table represents the fair value as of September Amortization expense classified as interest expense related to debt issuance costs was $0.2 million and $0.4 million for the three months ended September 30, 2018 and 2017, respectively, and $0.7 million and $1.5 million for the nine months ended September 30, 2018 and 2017, respectively. In July 2013, the Company sold an aggregate of $100.0 million principal amount of 4.25% convertible senior notes due 2018 (the “2018 Notes”). The 2018 Notes, which were senior unsecured obligations of the Company, paid interest semi-annually in arrears on August 1 and February 1 of each year at a rate of 4.25% per annum and matured on August 1, 2018. The initial conversion rate for the 2018 Notes was 114.3674 shares of the Company’s common stock per $1,000 principal amount of notes, equivalent to an initial conversion price of approximately $8.74 per share of common stock, subject to adjustment in certain events. In 2016, the Company repurchased and retired an aggregate of approximately $6.1 million principal amount of the 2018 Notes. In addition, approximately $0.1 million of the unamortized debt issuance costs were written off and a nominal gain was recognized in conjunction with the retirement of the 2018 Notes. During the first quarter of 2017, the Company exchanged and retired $39.1 million principal amount of the 2018 Notes at par for $24.1 million in cash and approximately 2.9 million shares of its common stock. During the second quarter of 2017, the Company exchanged and retired $12.0 million principal amount of the 2018 Notes at par for $11.6 million in cash and 112,400 shares of its common stock, and approximately $0.1 million of the unamortized debt issuance costs were written off and a $0.1 million gain was recognized in conjunction with the exchange and retirement of the 2018 Notes. In August 2017, the Company agreed with Oasis Management and Oasis Investments II Master Fund Ltd., (collectively, “Oasis”) the holder of approximately $21.5 million face amount of its 4.25% convertible senior notes due in 2018, to extend the maturity date of these notes to November 1, 2020. In addition, the interest rate was reduced to 3.25% per annum and the conversion rate was increased to 328.0302 shares of the Company’s common stock per $1,000 principal amount of notes, among other things. After execution of a definitive agreement for the modification and final approval by the other members of the Company’s Board of Directors and Oasis’ Investment Committee the transaction closed on November 7, 2017. In connection with this transaction, the Company recognized a loss on extinguishment of the debt of approximately $0.6 million. On July 26, 2018, the Company closed a transaction with Oasis to exchange $8.0 million face amount of the 4.25% convertible senior notes due in August 2018 with convertible senior notes similar to those issued to Oasis in November 2017. The new notes mature on November 1, 2020, accrue interest at an annual rate of 3.25% and are convertible into shares of the Company’s common stock at a rate of 322.2688 shares per $1,000 principal amount of the new notes. In connection with this transaction, the Company recognized a loss on extinguishment of the debt of approximately $0.5 million. The conversion price for the 3.25% convertible senior notes will be reset on November 1, 2018 and November 1, 2019 (each, a “ ” The remaining $13.2 million of 2018 Notes were redeemed at par at maturity on August 1, 2018. The Company has elected to measure and present the debt held by Oasis at fair value using Level 3 inputs and as a result, recognized a gain of $0.9 million for the three months ended September 30, 2018 and a loss of $2.5 million for the nine months ended September 30, 2018 related to changes in the fair value of the 3.25% 2020 Notes. At September 30, 2018 and December 31, 2017, the 3.25% 2020 Notes had a fair value of approximately $33.4 million and $22.5 million, respectively. The Company evaluated its credit risk as of September 30, 2018, and determined that there was no change from December 31, 2017. In June 2014, the Company sold an aggregate of $115.0 million principal amount of 4.875% convertible senior notes due 2020 (the “2020 Notes”). The 2020 Notes are senior unsecured obligations of the Company paying interest semi-annually in arrears on June 1 and December 1 of each year at a rate of 4.875% per annum and will mature on June 1, 2020. The initial and still current conversion rate for the 2020 Notes is 103.7613 shares of the Company’s common stock per $1,000 principal amount of notes, equivalent to an initial conversion price of approximately $9.64 per share of common stock, subject to adjustment in certain events. Upon conversion, the 2020 Notes will be settled in shares of the Company’s common stock. Holders of the 2020 Notes may require that the Company repurchase for cash all or some of their notes upon the occurrence of a fundamental change (as defined in the 2020 Notes). In January 2016, the Company repurchased and retired an aggregate of $2.0 million principal amount of the 2020 Notes. In addition, approximately $0.1 million of the unamortized debt issuance costs were written off and a $0.1 million gain was recognized in conjunction with the retirement of the 2020 Notes. The fair value of the 4.875% convertible senior notes payable due 2020 as of September 30, 2018 and December 31, 2017 was $97.3 million and $89.7 million, respectively, based upon the most recent quoted market prices. The fair values of the convertible senior notes are considered to be Level 3 measurements on the fair value hierarchy. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2018 | |
Income Taxes | Note 7 — Income Taxes The Company’s income tax expense of $2.0 million for the three months ended September 30, 2018 reflects an effective tax rate of 11.1%. The Company’s income tax expense of $0.9 million for the three months ended September 30, 2017 reflects an effective tax rate of (5.5%). The majority of the tax expense for the three months ended September 30, 2018 relates to foreign income taxes and discrete items. The majority of the tax expense for the three months ended September 30, 2017 relates to foreign income taxes. The Company’s income tax expense of $1.7 million for the nine months ended September 30, 2018 reflects an effective tax rate of (4.6%). The majority of the tax expense for the nine months ended September 30, 2018 primarily relates to foreign income taxes, partially offset by discrete items. The Tax Cuts and Jobs Act was enacted on December 22, 2017. The Act reduces the U.S. federal corporate income tax rate from 35% to 21%, and requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred and creates new taxes on certain foreign sourced earnings. Due to the timing of the enactment and the complexity involved in applying the provisions of the Act, we made reasonable estimates of the effects and recorded provisional amounts in our financial statements as of December 31, 2017. As we collect and prepare necessary data, and interpret the Act and any additional guidance issued by the U.S. Treasury Department, the Internal Revenue Service (IRS), and other standard-setting bodies, we may make adjustments to the provisional amounts. Those adjustments may materially affect our provision for income taxes and effective tax rate in the period in which the adjustments are made. No adjustments were made in the third quarter of 2018 as the provisional amounts as of December 31, 2017 remain reasonable. We will continue to make and refine our calculations as additional analysis is completed in 2018. The Act subjects a U.S. shareholder to tax on Global intangible low-taxed income (GILTI) earned by certain foreign subsidiaries. The FASB Staff Q&A, Topic 740, No. 5, Accounting for Global Intangible Low-Taxed Income, states that an entity can make an accounting policy election to either recognize deferred taxes for temporary basis differences expected to reverse as GILTI in future years or provide for the tax expense related to GILTI in the year the tax is incurred as a period expense only. Given the complexity of the GILTI provisions, we are still evaluating the effects of the GILTI provisions and have not yet determined our accounting policy. At September 30, 2018, because we are still evaluating the GILTI provisions and our analysis of future taxable income that is subject to GILTI, we have included GILTI related to current-year operations only. The GILTI provision does not impact the 2018 third quarter tax expense due to the fully valued tax attributes carryforward. |
Income (Loss) Per Share
Income (Loss) Per Share | 9 Months Ended |
Sep. 30, 2018 | |
Income (Loss) Per Share | Note 8 — Income (Loss) Per Share The following table is a reconciliation of the weighted average shares used in the computation of income (loss) per share for the periods presented (in thousands, except per share data): Three Months Ended September 30, 2018 2017 Weighted Weighted Income Average Per- Income Average Per- (Loss) Shares Share (Loss) Shares Share Income (loss) per share — basic Net income (loss) available to common stockholders $ 15,682 23,106 $ 0.68 $ (17,614 ) 22,772 $ (0.77 ) Effect of dilutive securities: Convertible senior notes 1,487 21,426 — — Unvested performance stock grants — 832 — — Unvested restricted stock grants — 322 — — Income (loss) per share — diluted Net income (loss) available to common stockholders plus assumed exercises and conversion $ 17,169 45,686 $ 0.38 $ (17,614 ) 22,772 $ (0.77 ) Nine Months Ended September 30, 2018 2017 Weighted Weighted Income Average Per- Income Average Per- (Loss) Shares Share (Loss) Shares Share Income (loss) per share — basic Net income (loss) available to common stockholders $ (39,121 ) 23,104 $ (1.69 ) $ (52,672 ) 20,848 $ (2.53 ) Effect of dilutive securities: Convertible senior notes — — — — Unvested performance stock grants — — — — Unvested restricted stock grants — — — — Income (loss) per share — diluted Net income (loss) available to common stockholders plus assumed exercises and conversion $ (39,121 ) 23,104 $ (1.69 ) $ (52,672 ) 20,848 $ (2.53 ) Basic income (loss) per share is calculated using the weighted average number of common shares outstanding during the period. Diluted earnings per share is calculated using the weighted average number of common shares and common share equivalents outstanding during the period (which consist of warrants, options, restricted stock awards, restricted stock units and convertible debt to the extent they are dilutive). The weighted average number of common shares outstanding excludes shares repurchased pursuant to a prepaid forward share repurchase agreement associated with the issuance of the convertible senior notes due 2020. Common share equivalents that could potentially dilute basic earnings per share in the future, which were excluded from the computation of diluted earnings per share due to being anti-dilutive, totaled approximately 2,894,029 and 20,215,325 for the three months ended September 30, 2018 and 2017, respectively, and 25,332,390 and 21,502,935 for the nine months ended September 30, 2018 and 2017, respectively. |
Common Stock and Preferred Stoc
Common Stock and Preferred Stock | 9 Months Ended |
Sep. 30, 2018 | |
Common Stock and Preferred Stock | Note 9 — Common Stock and Preferred Stock In January and February 2017, the Company issued an aggregate of 873,787 shares of restricted stock at a value of approximately $4.5 million to two executive officers, which vest, subject to certain company financial performance criteria and market conditions, over a three year period. In addition, an aggregate of 94,102 shares of restricted stock at an aggregate value of approximately $0.5 million were issued to its five non-employee directors, which vested in January 2018. In January and February 2017, the Company issued an aggregate of 2,865,000 shares of its common stock at a value of $15.1 million to holders of its 2018 convertible senior notes as partial consideration for the exchange at par of $39.1 million principal amount of such notes. In March 2017, the Company entered into an agreement to issue 3,660,891 shares of its common stock at an aggregate price of $19.3 million to a Hong Kong affiliate of its China joint venture partner. After their shareholder and China regulatory approval, the transaction closed on April 27, 2017. Upon the closing, the Company added a representative of Meisheng as a non-employee director and issued 13,319 shares of restricted stock at a value of $0.1 million, which vested in January 2018. In June 2017, the Company issued an aggregate of 112,400 shares of its common stock at a value of approximately $0.4 million to holders of its 2018 convertible senior notes as partial consideration for the exchange at par of $11.6 million principal amount of such notes. In January 2018, the Company issued an aggregate of 1,914,894 shares of restricted stock at a value of approximately $4.5 million to two executive officers, which vest, subject to certain company financial performance criteria and market conditions, over a three year period. In addition, an aggregate of 249,480 shares of restricted stock at an aggregate value of approximately $0.6 million were issued to its six non-employee directors, which vest in January 2019. All issuances of common stock, including those issued pursuant to stock option and warrant exercises, restricted stock grants and acquisitions, are issued from the Company’s authorized but not issued and outstanding shares. No dividend was declared or paid in the nine months ended September 30, 2018 or 2017. |
Joint Ventures
Joint Ventures | 9 Months Ended |
Sep. 30, 2018 | |
Joint Ventures | Note 10 — Joint Ventures The Company owns a fifty percent interest in a joint venture (“Pacific Animation Partners”) with the U.S. entertainment subsidiary of a leading Japanese advertising and animation production company. The joint venture was created to develop and produce a boys’ animated television show, which it licensed worldwide for television broadcast as well as consumer products. The Company produced toys based upon the television program under a license from the joint venture which also licensed certain other merchandising rights to third parties. The joint venture completed and delivered 65 episodes of the show, which began airing in February 2012, and has since ceased production of the television show. For the three and nine months ended September 30, 2018, the Company recognized income from the joint venture of nil and $22,000, respectively. For the three and nine months ended September 30, 2017, the Company recognized nil for funds received related to the joint venture. As of September 30, 2018 and December 31, 2017, the balance of the investment in the Pacific Animation Partners joint venture is nil. For the three and nine months ended September 30, 2018, respectively, the Company recognized nil and $0.2 million of income for funds received related to a former video game joint venture in partial settlement of amounts owed to the Company when our joint venture partner was liquidated pursuant to their 2012 bankruptcy filing. For the three and nine months ended September 30, 2017, respectively, the Company recognized nil and $0.1 million of income for funds received related to a former video game joint venture in partial settlement of amounts owed to the Company when our joint venture partner was liquidated pursuant to their 2012 bankruptcy filing. In September 2012, the Company entered into a joint venture (“DreamPlay Toys”) with NantWorks LLC (“NantWorks”) in which it owns a fifty percent interest. Pursuant to the operating agreement of DreamPlay Toys, the Company paid to NantWorks cash in the amount of $8.0 million and issued NantWorks a warrant to purchase 1.5 million shares of the Company’s common stock at a value of $7.0 million in exchange for the exclusive right to arrange for the provision of the NantWorks recognition technology platform for toy products. The Company had classified these rights as an intangible asset, which was being amortized over the anticipated revenue stream from the exploitation of these rights. However, the Company has abandoned the use of the technology in connection with its toy products and no future sales are anticipated, and the Company recorded an impairment charge to income of $2.9 million to write off the remaining unamortized technology rights during the third quarter of 2017. The Company retains the financial risk of the joint venture and is responsible for the day-to-day operations, which are expected to be nominal in future periods. The results of operations of the joint venture are consolidated with the Company’s results. In addition, in 2012, the Company invested $7.0 million in cash in exchange for a five percent economic interest in a related entity, DreamPlay, LLC, that was expected to monetize the exploitation of the recognition technologies in non-toy consumer product categories. Adoption of the technology has been inadequate to establish a commercially viable market for the technology. NantWorks has the right to repurchase the Company’s interest for $7.0 million, but the Company does not anticipate that NantWorks will do so. As of September 30, 2017, the Company determined the value of this investment will not be realized and that full impairment of the value had occurred. Accordingly, the Company recorded an impairment charge of $7.0 million during the quarter ended September 30, 2017. In November 2014, the Company entered into a joint venture with Meisheng Culture & Creative Corp., for the purpose of providing certain JAKKS licensed and non-licensed toys and consumer products to agreed-upon territories of the People’s Republic of China. The joint venture includes a subsidiary in the Shanghai Free Trade Zone that sells, distributes and markets these products, which include dolls, plush, role play products, action figures, costumes, seasonal items, technology and app-enhanced toys, based on entertainment licenses and JAKKS’ own proprietary brands. The Company owns fifty-one percent of the joint venture and consolidates the joint venture since control rests with the Company. The non-controlling interest’s share of the income was $17,000 and $45,000 for the three months ended September 30, 2018 and 2017, respectively, and $39,000 and $131,000 for the nine months ended September 30, 2018 and 2017, respectively. In October 2016, the Company entered into a joint venture with Hong Kong Meisheng Cultural Company Limited, a Hong Kong-based subsidiary of Meisheng (“HK Meisheng”), for the purpose of creating and developing original, multiplatform content for children including new short-form series and original shows. JAKKS and HK Meisheng each own fifty percent of the joint venture and will jointly own the content. JAKKS will retain merchandising rights for kids’ consumer products in all markets except China, which Meisheng will oversee through the Company’s existing distribution joint venture. The non-controlling interest’s share of the loss from the joint venture for three and nine months ended September 30, 2018 and 2017 was nil. As of April 27, 2017, Hong Kong Meisheng Cultural Company Limited beneficially owns more than 10% of the Company’s outstanding common stock. |
Goodwill
Goodwill | 9 Months Ended |
Sep. 30, 2018 | |
Goodwill | Note 11 — Goodwill The changes to the carrying amount of goodwill as of September 30, 2018 are summarized as follows (in thousands): Total Balance, December 31, 2017 $ 35,384 Adjustments to goodwill for foreign currency translation (187 ) Balance, September 30, 2018 $ 35,197 The Company applies a fair value-based impairment test to the carrying value of goodwill and indefinite-lived intangible assets on an annual basis and, on an interim basis, if certain events or circumstances indicate that an impairment loss may have been incurred. Goodwill impairment exists when the estimated fair value of goodwill is less than its carrying value. Based on the Company’s April 1 annual assessment, it determined that the fair values of its reporting units were not less than the carrying amounts. No goodwill impairment was determined to have occurred for the nine months ended September 30, 2018. A charge of $8.3 million for goodwill impairment was recorded during the three and nine months ended September 30, 2017. |
Intangible Assets Other Than Go
Intangible Assets Other Than Goodwill | 9 Months Ended |
Sep. 30, 2018 | |
Intangible Assets Other Than Goodwill | Note 12 — Intangible Assets Other Than Goodwill Intangible assets other than goodwill consist primarily of licenses, product lines, customer relationships and trademarks. Amortized intangible assets are included in intangibles in the accompanying condensed consolidated balance sheets. Trademarks are disclosed separately in the accompanying condensed consolidated balance sheets. Intangible assets as of September 30, 2018 and December 31, 2017 include the following (in thousands, except for weighted useful lives): September 30, 2018 December 31, 2017 Weighted Useful Lives Gross Carrying Amount Accumulated Amortization Net Amount Gross Carrying Amount Accumulated Amortization Net Amount (Years) Amortized Intangible Assets: Licenses 5.81 $ 20,130 $ (19,228 ) $ 902 $ 20,130 $ (18,620 ) $ 1,510 Product lines 10.36 33,858 (16,283 ) 17,575 33,858 (13,178 ) 20,680 Customer relationships 4.90 3,152 (3,152 ) __ 3,152 (3,152 ) — Trade names 5.00 3,000 (3,000 ) — 3,000 (3,000 ) — Non-compete agreements 5.00 200 (200 ) — 200 (200 ) — Total amortized intangible assets $ 60,340 $ (41,863 ) $ 18,477 $ 60,340 $ (38,150 ) $ 22,190 Unamortized Intangible Assets: Trademarks $ 300 $ — $ 300 $ 300 $ — $ 300 |
Comprehensive Income (Loss)
Comprehensive Income (Loss) | 9 Months Ended |
Sep. 30, 2018 | |
Comprehensive Income (Loss) | Note 13 — Comprehensive Income (Loss) The table below presents the components of the Company’s comprehensive income (loss) for the three and nine months ended September 30, 2018 and 2017 (in thousands): Three Months Ended Nine Months Ended 2018 2017 2018 2017 Net Income (Loss) $ 15,699 $ (17,569 ) $ (39,082 ) $ (52,541 ) Other comprehensive income (loss): Foreign currency translation adjustment (1,149 ) 1,662 (1,489 ) 4,128 Comprehensive income (loss) 14,550 (15,907 ) (40,571 ) (48,413 ) Less: Comprehensive income (loss) attributable to non-controlling interests 17 45 39 131 Comprehensive income (loss) attributable to JAKKS Pacific, Inc. $ 14,533 $ (15,952 ) $ (40,610 ) $ (48,544 ) |
Litigation
Litigation | 9 Months Ended |
Sep. 30, 2018 | |
Litigation | Note 14 — Litigation The Company is a party to, and certain of its property is the subject of, various pending claims and legal proceedings that routinely arise in the ordinary course of its business, but the Company does not believe that any of these claims or proceedings will have a material effect on its business, financial condition or results of operations. |
Share-Based Payments
Share-Based Payments | 9 Months Ended |
Sep. 30, 2018 | |
Share-Based Payments | Note 15 — Share-Based Payments The Company’s 2002 Stock Award and Incentive Plan The following table summarizes the total share-based compensation expense and the related tax benefits recognized for the three and nine months ended September 30, 2018 and 2017 (in thousands): Three Months Ended Nine Months Ended 2018 2017 2018 2017 Restricted stock compensation expense $ 760 $ 793 $ 1,747 $ 2,253 Tax benefit related to restricted stock compensation — — — — Restricted Stock Awards Restricted stock award activity (including those with performance-based vesting criteria) for the nine months ended September 30, 2018 is summarized as follows: Restricted Stock Awards Number of Shares Weighted Average Grant Date Fair Value Outstanding, December 31, 2017 981,208 $ 4.12 Awarded 2,164,374 1.88 Released (194,800 ) 5.14 Forfeited — — Outstanding, September 30, 2018 2,950,782 2.41 As of September 30, 2018, there was $3.4 million of total unrecognized compensation cost related to non-vested restricted stock awards, which is expected to be recognized over a weighted-average period of 2.52 years. Restricted Stock Units Restricted stock unit activity (including those with performance-based vesting criteria) for the nine months ended September 30, 2018 is summarized as follows: Restricted Stock Units Number of Shares Weighted Average Grant Date Fair Value Outstanding, December 31, 2017 959,192 $ 4.68 Awarded 357,143 1.96 Released (125,290 ) 5.15 Forfeited (93,229 ) 4.52 Outstanding, September 30, 2018 1,097,816 3.76 As of September 30, 2018, there was $2.3 million of total unrecognized compensation cost related to non-vested restricted stock units, which is expected to be recognized over a weighted-average period of 2.05 years. Stock Options There has been no stock option activity pursuant to the Plan . |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2018 | |
Fair Value Measurements | Note 16 — Fair Value Measurements Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining fair value, the Company uses various methods including market, income and cost approaches. Based upon these approaches, the Company often utilizes certain assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and/or the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market-corroborated, or unobservable inputs. The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. Based upon observable inputs used in the valuation techniques, the Company is required to provide information according to the fair value hierarchy. The fair value hierarchy ranks the quality and reliability of the information used to determine fair values into three broad levels as follows: Level 1: Valuations for assets and liabilities traded in active markets from readily available pricing sources for market transactions involving identical assets or liabilities. Level 2: Valuations for assets and liabilities traded in less active dealer or broker markets. Valuations are obtained from third-party pricing services for identical or similar assets or liabilities. Level 3: Valuations incorporate certain assumptions and projections in determining the fair value assigned to such assets or liabilities. In instances where the determination of the fair value measurement is based upon inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based upon the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability. The following tables summarize our financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2018 and December 31, 2017 (in thousands): Carrying Amount as of Fair Value Measurements As of September 30, 2018 September 30, 2018 Level 1 Level 2 Level 3 Cash equivalents $ — $ — $ — $ — 3.25% convertible senior notes due in 2020 (33,436 ) — — (33,436 ) Carrying Amount as of Fair Value Measurements As of December 31, 2017 December 31, 2017 Level 1 Level 2 Level 3 Cash equivalents $ 13,718 $ 13,718 $ — $ — 3.25% convertible senior notes due in 2020 (22,469 ) — — (22,469 ) The following table provides a reconciliation of the beginning and ending balances of assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) (in thousands): 2018 Balance at January 1, 2018 $ (22,469 ) Issuance of 3.25% Convertible Senior Notes due in 2020 (8,453 ) Change in fair value (2,514 ) Balance at September 30, 2018 $ (33,436 ) |
Liquidity
Liquidity | 9 Months Ended |
Sep. 30, 2018 | |
Liquidity | Note 17 — Liquidity As of September 30, 2018 and December 31, 2017, the Company held cash and cash equivalents, including restricted cash, of $57.1 million and $65.0 million, respectively. Cash, and cash equivalents, including restricted cash held outside of the United States in various foreign subsidiaries totaled $37.3 million and $52.8 million as of September 30, 2018 and December 31, 2017, respectively. The cash and cash equivalents, including restricted cash balances in our foreign subsidiaries have either been fully taxed in the U.S. or tax has been accounted for in connection with the Tax Cuts and Jobs Act, or may be eligible for a full foreign dividends received deduction under such Act, and thus would not be subject to additional U.S. tax should such amounts be repatriated in the form of dividends or deemed distributions. Any such repatriation may result in foreign withholding taxes, which the Company expects would not be significant as of September 30, 2018. The Company’s primary sources of working capital are cash flows from operations and borrowings under its credit facility (see Note 5 - Credit Facilities in the accompanying notes to the condensed consolidated financial statements for additional information). Typically, cash flows from operations are impacted by the effect on sales of (1) the appeal of the Company’s products, (2) the success of its licensed brands, (3) the highly competitive conditions existing in the toy industry, (4) dependency on a limited set of large customers, and (5) general economic conditions. A downturn in any single factor or a combination of factors could have a material adverse impact upon the Company’s ability to generate sufficient cash flows to operate the business. In addition, the Company’s business and liquidity are dependent to a significant degree on its vendors and their financial health, as well as the ability to accurately forecast the demand for products. The loss of a key vendor, or material changes in support by them, or a significant variance in actual demand compared to the forecast, can have a material adverse impact on the Company’s cash flows and business. Given the conditions in the toy industry environment in general, vendors, including licensors, may seek further assurances or take actions to protect against non-payment of amounts due to them. Changes in this area could have a material adverse impact on the Company’s liquidity. Cash and cash equivalents, including restricted cash, projected cash flow from operations and borrowings under the Company’s credit facility should be sufficient to meet working capital and capital expenditure requirements, for the next 12 months with certain mitigating plans described herein. In October 2018, the Company initiated a global restructuring program (“Corporate Restructuring”) to adapt the Company’s cost structure and overhead to the evolving retail landscape. The Company believes the Corporate Restructuring will generate savings of between $10.0 million and $15.0 million on an annualized basis. On July 26, 2018, the Company exchanged $8.0 million of the 2018 convertible notes for convertible notes that mature in November 2020 with terms similar to the convertible notes issued in November 2017 (see Note 6 — Convertible Senior Notes in the accompanying notes to the condensed consolidated financial statements for additional information). On June 14, 2018, the Company secured a $20.0 million term loan from Great American Capital Partners Finance Co., LLC (“GACP”) with the amount advanced based primarily on certain types of inventory. In addition, on June 14, 2018, the Company expanded the credit facility with Wells Fargo to add certain of the Company’s Hong Kong based subsidiaries in order to include the receivables of these subsidiaries in the borrowing base computation, subject to certain limitations, thereby effectively increasing the amount of funds that the Company could borrow under the credit facility. The GACP term loan matures upon the earlier of (i) June 14, 2021, (ii) the termination date of the Wells Fargo credit facility, or March 27, 2019, and (iii) the date that is 91 days prior to the maturity of various of the Company’s convertible senior notes due in 2020. The Company is currently in the initial phases of negotiating to amend and extend the Wells Fargo credit facility, which would also effectively extend the GACP term loan. In addition, the Special Committee of the Board of Directors continues its discussions with Meisheng regarding negotiation of a definitive agreement for Meisheng’s Expression of Interest to acquire additional shares of the Company, which as currently proposed would involve restructuring or refinancing of the Company's outstanding convertible senior notes and other indebtedness. The Company cannot make assurances that it will be able to close the aforementioned amendment to the credit facility or a transaction with Meisheng (or another interested party), or that it will have the financial resources required to obtain, or that the conditions of the capital markets will support, any future debt or equity financings. In addition, the Company’s ability to fund operations and retire its debt when due is dependent on a number of factors, some of which are beyond its control and/or inherently difficult to estimate, including our future operating performance and the factors mentioned above and included in “Risk Factors” in Item 1A of this Form 10-Q. If the Company is unable to amend its credit facility to extend the term or secure another source of capital, such as the Meisheng transaction on commercially reasonable terms, the Company may be required to take additional measures, such as further reorganizations of cost structure and adjusting inventory purchases and/or payment terms with suppliers, which could have a material adverse impact on the Company’s revenues and business. As of September 30, 2018, the Company did not have any off-balance sheet arrangements. |
Subsequent Event
Subsequent Event | 9 Months Ended |
Sep. 30, 2018 | |
Subsequent Event | Note 18 — Subsequent Event In October 2018, our management approved, committed to and commenced the implementation of a Company-wide restructuring initiative (“Corporate Restructuring”) to adapt our cost structure and overhead to the evolving retail landscape. The Corporate Restructuring includes a reduction in force of approximately 12-15% of our global workforce, the consolidation of certain facilities, the reorganization of certain functions, and the reduction of outside temporary contractors and other discretionary spend. The Company expects to incur restructuring charges of approximately $2.0 million, including cash payments related to employee separation benefits. |
Business Segments, Geographic_2
Business Segments, Geographic Data, and Sales by Major Customers (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Information by Segment and Reconciliation to Reported Amounts | Information by segment and a reconciliation to reported amounts for the three and nine months ended September 30, 2018 and 2017 and as of September 30, 2018 and December 31, 2017 are as follows (in thousands): Three Months Ended Nine Months Ended 2018 2017 2018 2017 Net Sales U.S. and Canada $ 133,481 $ 154,046 $ 263,397 $ 295,098 International 37,902 50,141 77,245 87,583 Halloween 65,316 58,226 94,842 93,802 $ 236,699 $ 262,413 $ 435,484 $ 476,483 Three Months Ended Nine Months Ended 2018 2017 2018 2017 Income (Loss) from Operations U.S. and Canada $ 12,029 $ (6,760 ) $ (17,373 ) $ (24,155 ) International 2,919 (735 ) (6,764 ) (3,986 ) Halloween 5,095 (251 ) (3,618 ) (9,437 ) $ 20,043 $ (7,746 ) $ (27,755 ) $ (37,578 ) Three Months Ended Nine Months Ended 2018 2017 2018 2017 Depreciation and Amortization Expense U.S. and Canada $ 4,823 $ 5,682 $ 10,125 $ 13,107 International 1,312 1,811 2,886 3,693 Halloween 428 808 980 1,614 $ 6,563 $ 8,301 $ 13,991 $ 18,414 September 30, December 31, Assets U.S. and Canada $ 271,100 $ 229,505 International 118,781 106,255 Halloween 57,710 34,589 $ 447,591 $ 370,349 |
Information by Geographic Area | The following tables present information about the Company by geographic area as of September 30, 2018 and December 31, 2017 and for the three and nine months ended September 30, 2018 and 2017 (in thousands): September 30, December 31, 2018 2017 Long-lived Assets China $ 15,867 $ 17,194 United States 5,113 5,755 Hong Kong 207 278 $ 21,187 $ 23,227 Three Months Ended Nine months ended September 30, September 30, 2018 2017 2018 2017 Net Sales by Customer Area United States $ 186,497 $ 199,064 $ 337,543 $ 367,694 Europe 25,606 33,640 49,542 56,537 Canada 11,091 11,062 18,663 18,086 Hong Kong 1,182 397 1,709 784 Other 12,323 18,250 28,027 33,382 $ 236,699 $ 262,413 $ 435,484 $ 476,483 |
Net Sales to Major Customers | Net sales to major customers for the three and nine months ended September 30, 2018 and 2017 were as follows (in thousands, except for percentages): Three Months Ended September 30, Nine months ended September 30, 2018 2017 2018 2017 Amount Percentage of Net Sales Amount Percentage of Net Sales Amount Percentage of Net Sales Amount Percentage of Net Sales Wal-Mart $ 64,133 27.1 % $ 70,768 27.0 % $ 107,344 24.6 % $ 118,819 24.9 % Target 50,797 21.5 44,502 17.0 87,641 20.1 77,674 16.3 Toys ‘R’ Us * * 22,741 8.7 * * 49,760 10.4 * Sales to Toys ‘R’ Us in the applicable periods were less than 10% of total sales |
Inventory (Tables)
Inventory (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Net of Inventory Obsolescence Reserve | Inventory, which includes the ex-factory cost of goods, in-bound freight, duty and capitalized warehouse costs, is valued at the lower of cost (first-in, first-out) or net realizable value, net of inventory obsolescence reserve, and consists of the following (in thousands): September 30, December 31, Raw materials $ 1,094 $ 1,596 Finished goods 63,357 56,836 $ 64,451 $ 58,432 |
Convertible Senior Notes (Table
Convertible Senior Notes (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Convertible Senior Notes | Convertible senior notes consist of the following (in thousands): September 30, 2018 December 31, 2017 Principal/ Debt Principal/ Debt Fair Value Issuance Net Fair Value Issuance Net Amount Costs Amount Amount Costs Amount 4.25% convertible senior notes (due 2018) $ ― $ ― $ ― $ 21,178 $ 103 $ 21,075 4.875% convertible senior notes (due 2020) 113,000 1,380 111,620 113,000 1,972 111,028 3.25% convertible senior notes (due 2020) * 33,436 ― 33,436 22,469 ― 22,469 Total convertible senior notes, net of debt issuance costs $ 146,436 $ 1,380 $ 145,056 $ 156,647 $ 2,075 $ 154,572 * The amount presented for the 3.25% 2020 convertible senior notes within the table represents the fair value as of September |
Income (Loss) Per Share (Tables
Income (Loss) Per Share (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Reconciliation of Weighted Average Shares Used in Computation of Income (Loss) Per Share | The following table is a reconciliation of the weighted average shares used in the computation of income (loss) per share for the periods presented (in thousands, except per share data): Three Months Ended September 30, 2018 2017 Weighted Weighted Income Average Per- Income Average Per- (Loss) Shares Share (Loss) Shares Share Income (loss) per share — basic Net income (loss) available to common stockholders $ 15,682 23,106 $ 0.68 $ (17,614 ) 22,772 $ (0.77 ) Effect of dilutive securities: Convertible senior notes 1,487 21,426 — — Unvested performance stock grants — 832 — — Unvested restricted stock grants — 322 — — Income (loss) per share — diluted Net income (loss) available to common stockholders plus assumed exercises and conversion $ 17,169 45,686 $ 0.38 $ (17,614 ) 22,772 $ (0.77 ) Nine Months Ended September 30, 2018 2017 Weighted Weighted Income Average Per- Income Average Per- (Loss) Shares Share (Loss) Shares Share Income (loss) per share — basic Net income (loss) available to common stockholders $ (39,121 ) 23,104 $ (1.69 ) $ (52,672 ) 20,848 $ (2.53 ) Effect of dilutive securities: Convertible senior notes — — — — Unvested performance stock grants — — — — Unvested restricted stock grants — — — — Income (loss) per share — diluted Net income (loss) available to common stockholders plus assumed exercises and conversion $ (39,121 ) 23,104 $ (1.69 ) $ (52,672 ) 20,848 $ (2.53 ) |
Goodwill (Tables)
Goodwill (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Changes to Carrying Amount of Goodwill | The changes to the carrying amount of goodwill as of September 30, 2018 are summarized as follows (in thousands): Total Balance, December 31, 2017 $ 35,384 Adjustments to goodwill for foreign currency translation (187 ) Balance, September 30, 2018 $ 35,197 |
Intangible Assets Other Than _2
Intangible Assets Other Than Goodwill (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Intangible Assets | Intangible assets as of September 30, 2018 and December 31, 2017 include the following (in thousands, except for weighted useful lives): September 30, 2018 December 31, 2017 Weighted Useful Lives Gross Carrying Amount Accumulated Amortization Net Amount Gross Carrying Amount Accumulated Amortization Net Amount (Years) Amortized Intangible Assets: Licenses 5.81 $ 20,130 $ (19,228 ) $ 902 $ 20,130 $ (18,620 ) $ 1,510 Product lines 10.36 33,858 (16,283 ) 17,575 33,858 (13,178 ) 20,680 Customer relationships 4.90 3,152 (3,152 ) __ 3,152 (3,152 ) — Trade names 5.00 3,000 (3,000 ) — 3,000 (3,000 ) — Non-compete agreements 5.00 200 (200 ) — 200 (200 ) — Total amortized intangible assets $ 60,340 $ (41,863 ) $ 18,477 $ 60,340 $ (38,150 ) $ 22,190 Unamortized Intangible Assets: Trademarks $ 300 $ — $ 300 $ 300 $ — $ 300 |
Comprehensive Income (Loss) (Ta
Comprehensive Income (Loss) (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Components of Comprehensive Income (Loss) | Three Months Ended Nine Months Ended 2018 2017 2018 2017 Net Income (Loss) $ 15,699 $ (17,569 ) $ (39,082 ) $ (52,541 ) Other comprehensive income (loss): Foreign currency translation adjustment (1,149 ) 1,662 (1,489 ) 4,128 Comprehensive income (loss) 14,550 (15,907 ) (40,571 ) (48,413 ) Less: Comprehensive income (loss) attributable to non-controlling interests 17 45 39 131 Comprehensive income (loss) attributable to JAKKS Pacific, Inc. $ 14,533 $ (15,952 ) $ (40,610 ) $ (48,544 ) |
Share-Based Payments (Tables)
Share-Based Payments (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Total Share-Based Compensation Expense and Related Tax Benefits Recognized | The following table summarizes the total share-based compensation expense and the related tax benefits recognized for the three and nine months ended September 30, 2018 and 2017 (in thousands): Three Months Ended Nine Months Ended 2018 2017 2018 2017 Restricted stock compensation expense $ 760 $ 793 $ 1,747 $ 2,253 Tax benefit related to restricted stock compensation — — — — |
Restricted Stock Award Activity | Restricted stock award activity (including those with performance-based vesting criteria) for the nine months ended September 30, 2018 is summarized as follows: Restricted Stock Awards Number of Shares Weighted Average Grant Date Fair Value Outstanding, December 31, 2017 981,208 $ 4.12 Awarded 2,164,374 1.88 Released (194,800 ) 5.14 Forfeited — — Outstanding, September 30, 2018 2,950,782 2.41 |
Restricted Stock Unit Activity | Restricted stock unit activity (including those with performance-based vesting criteria) for the nine months ended September 30, 2018 is summarized as follows: Restricted Stock Units Number of Shares Weighted Average Grant Date Fair Value Outstanding, December 31, 2017 959,192 $ 4.68 Awarded 357,143 1.96 Released (125,290 ) 5.15 Forfeited (93,229 ) 4.52 Outstanding, September 30, 2018 1,097,816 3.76 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Financial Assets and Liabilities Measured at Fair Value on Recurring Basis | The following tables summarize our financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2018 and December 31, 2017 (in thousands): Carrying Amount as of Fair Value Measurements As of September 30, 2018 September 30, 2018 Level 1 Level 2 Level 3 Cash equivalents $ — $ — $ — $ — 3.25% convertible senior notes due in 2020 (33,436 ) — — (33,436 ) Carrying Amount as of Fair Value Measurements As of December 31, 2017 December 31, 2017 Level 1 Level 2 Level 3 Cash equivalents $ 13,718 $ 13,718 $ — $ — 3.25% convertible senior notes due in 2020 (22,469 ) — — (22,469 ) |
Reconciliation of Beginning and Ending Balances of Assets Measured at Fair Value on Recurring Basis Using Significant Unobservable Inputs (Level 3) | The following table provides a reconciliation of the beginning and ending balances of assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) (in thousands): 2018 Balance at January 1, 2018 $ (22,469 ) Issuance of 3.25% Convertible Senior Notes due in 2020 (8,453 ) Change in fair value (2,514 ) Balance at September 30, 2018 $ (33,436 ) |
Business Segments, Geographic_3
Business Segments, Geographic Data, and Sales by Major Customers - Additional Information (Detail) $ in Millions | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2018USD ($)SegmentCustomer | Dec. 31, 2017SegmentCustomer | Mar. 15, 2018Store | |
Segment Reporting Information [Line Items] | |||
Number of reporting segments | Segment | 3 | 3 | |
Toys "R" Us | |||
Segment Reporting Information [Line Items] | |||
Pre and post-petition gross accounts receivable | $ | $ 20.7 | ||
Toys "R" Us | United States | |||
Segment Reporting Information [Line Items] | |||
Number of stores | Store | 735 | ||
Net Accounts Receivable | Customer Concentration Risk | |||
Segment Reporting Information [Line Items] | |||
Number of major customers | Customer | 3 | 3 | |
Net Accounts Receivable | Toys "R" Us | Customer Concentration Risk | |||
Segment Reporting Information [Line Items] | |||
Concentration risk percentage | 8.70% | 26.40% | |
Net Accounts Receivable | Three Largest Customers | Customer Concentration Risk | |||
Segment Reporting Information [Line Items] | |||
Concentration risk percentage | 46.00% | 60.60% |
Information by Segment and Reco
Information by Segment and Reconciliation to Reported Amounts (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Segment Reporting Information [Line Items] | |||||
Net Sales | $ 236,699 | $ 262,413 | $ 435,484 | $ 476,483 | |
Income (Loss) from Operations | 20,043 | (7,746) | (27,755) | (37,578) | |
Depreciation and Amortization Expense | 6,563 | 8,301 | 13,991 | 18,414 | |
Assets | 447,591 | 447,591 | $ 370,349 | ||
U.S. and Canada | |||||
Segment Reporting Information [Line Items] | |||||
Net Sales | 133,481 | 154,046 | 263,397 | 295,098 | |
Income (Loss) from Operations | 12,029 | (6,760) | (17,373) | (24,155) | |
Depreciation and Amortization Expense | 4,823 | 5,682 | 10,125 | 13,107 | |
Assets | 271,100 | 271,100 | 229,505 | ||
International | |||||
Segment Reporting Information [Line Items] | |||||
Net Sales | 37,902 | 50,141 | 77,245 | 87,583 | |
Income (Loss) from Operations | 2,919 | (735) | (6,764) | (3,986) | |
Depreciation and Amortization Expense | 1,312 | 1,811 | 2,886 | 3,693 | |
Assets | 118,781 | 118,781 | 106,255 | ||
Halloween | |||||
Segment Reporting Information [Line Items] | |||||
Net Sales | 65,316 | 58,226 | 94,842 | 93,802 | |
Income (Loss) from Operations | 5,095 | (251) | (3,618) | (9,437) | |
Depreciation and Amortization Expense | 428 | $ 808 | 980 | $ 1,614 | |
Assets | $ 57,710 | $ 57,710 | $ 34,589 |
Information by Geographic Area
Information by Geographic Area (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Long-lived Assets | $ 21,187 | $ 21,187 | $ 23,227 | ||
Net Sales | 236,699 | $ 262,413 | 435,484 | $ 476,483 | |
China | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Long-lived Assets | 15,867 | 15,867 | 17,194 | ||
United States | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Long-lived Assets | 5,113 | 5,113 | 5,755 | ||
Net Sales | 186,497 | 199,064 | 337,543 | 367,694 | |
Hong Kong | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Long-lived Assets | 207 | 207 | $ 278 | ||
Net Sales | 1,182 | 397 | 1,709 | 784 | |
Europe | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Net Sales | 25,606 | 33,640 | 49,542 | 56,537 | |
Canada | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Net Sales | 11,091 | 11,062 | 18,663 | 18,086 | |
Other | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Net Sales | $ 12,323 | $ 18,250 | $ 28,027 | $ 33,382 |
Net Sales to Major Customers (D
Net Sales to Major Customers (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Revenue, Major Customer [Line Items] | ||||
Net Sales | $ 236,699 | $ 262,413 | $ 435,484 | $ 476,483 |
Wal-Mart | ||||
Revenue, Major Customer [Line Items] | ||||
Net Sales | 64,133 | 70,768 | 107,344 | 118,819 |
Target | ||||
Revenue, Major Customer [Line Items] | ||||
Net Sales | $ 50,797 | 44,502 | $ 87,641 | 77,674 |
Toys "R" Us | ||||
Revenue, Major Customer [Line Items] | ||||
Net Sales | $ 22,741 | $ 49,760 | ||
Net Sales | Wal-Mart | Customer Concentration Risk | ||||
Revenue, Major Customer [Line Items] | ||||
Percentage of Net Sales from major customer | 27.10% | 27.00% | 24.60% | 24.90% |
Net Sales | Target | Customer Concentration Risk | ||||
Revenue, Major Customer [Line Items] | ||||
Percentage of Net Sales from major customer | 21.50% | 17.00% | 20.10% | 16.30% |
Net Sales | Toys "R" Us | Customer Concentration Risk | ||||
Revenue, Major Customer [Line Items] | ||||
Percentage of Net Sales from major customer | 8.70% | 10.40% |
Net Sales to Major Customers (P
Net Sales to Major Customers (Parenthetical) (Detail) | 9 Months Ended |
Sep. 30, 2018 | |
Revenue, Major Customer [Line Items] | |
Concentration risk, benchmark description | Sales to Toys 'R' Us in the applicable periods were less than 10% of total sales |
Inventory Valued at Lower of Co
Inventory Valued at Lower of Cost (First-in, First-out) or Market, Net of Inventory Obsolescence Reserve (Detail) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Inventory [Line Items] | ||
Raw materials | $ 1,094 | $ 1,596 |
Finished goods | 63,357 | 56,836 |
Inventory, net | $ 64,451 | $ 58,432 |
Revenue Recognition and Reser_2
Revenue Recognition and Reserve for Sales Returns and Allowances - Additional Information (Detail) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2018 | Dec. 31, 2017 | |
Significant Accounting Policies [Line Items] | ||
Reserve for sales returns and allowances | $ 30,270 | $ 17,622 |
Minimum | ||
Significant Accounting Policies [Line Items] | ||
Discount on invoiced amount of products | 1.00% | |
Maximum | ||
Significant Accounting Policies [Line Items] | ||
Discount on invoiced amount of products | 12.00% |
Credit Facilities - Additional
Credit Facilities - Additional Information (Detail) - USD ($) | Jul. 26, 2018 | Mar. 31, 2014 | Jul. 31, 2013 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Oct. 31, 2018 | Jun. 14, 2018 |
Line of Credit Facility [Line Items] | ||||||||||
Debt instrument, face amount | $ 146,436,000 | $ 146,436,000 | $ 156,647,000 | |||||||
Debt issuance cost | $ 1,400,000 | |||||||||
Amortization expense debt issuance | 400,000 | $ 500,000 | ||||||||
Great American Capital Partners Finance Co LLC | ||||||||||
Line of Credit Facility [Line Items] | ||||||||||
Line of credit facility, maturity date description | The GACP term loan matures upon the earlier of (i) June 14, 2021, (ii) the termination date of the Wells Fargo credit facility, or March 27, 2019, and (iii) the date that is 91 days prior to the maturity of various of the Company’s convertible senior notes due in 2020. | |||||||||
Great American Capital Partners Finance Co LLC | Term Loan Agreement | ||||||||||
Line of Credit Facility [Line Items] | ||||||||||
Line of credit facility, maturity date description | All then-outstanding borrowings under the Term Loan are due, and the Term Loan terminates, no later than June 14, 2021, unless sooner terminated in accordance with its terms, which includes the date of termination of the Wells Fargo Credit Facility and the date that is 91 days prior to the maturity of the Company’s various convertible senior notes due in 2020. | |||||||||
Loan facility | 20,000,000 | $ 20,000,000 | $ 20,000,000 | |||||||
Percentage of principal amount redeemed | 10.00% | |||||||||
Debt instrument, face amount | $ 20,000,000 | $ 20,000,000 | ||||||||
Weighted average interest rate | 11.10% | 11.10% | ||||||||
Year One | Great American Capital Partners Finance Co LLC | Term Loan Agreement | ||||||||||
Line of Credit Facility [Line Items] | ||||||||||
Debt prepayment percentage | 2.00% | |||||||||
Year Two | Great American Capital Partners Finance Co LLC | Term Loan Agreement | ||||||||||
Line of Credit Facility [Line Items] | ||||||||||
Debt prepayment percentage | 2.00% | |||||||||
Year Three | Great American Capital Partners Finance Co LLC | Term Loan Agreement | ||||||||||
Line of Credit Facility [Line Items] | ||||||||||
Debt prepayment percentage | 1.00% | |||||||||
Debt instrument, face amount | $ 20,000,000 | $ 20,000,000 | ||||||||
London Interbank Offered Rate (LIBOR) | Great American Capital Partners Finance Co LLC | Term Loan Agreement | ||||||||||
Line of Credit Facility [Line Items] | ||||||||||
Additional basis spread | 9.00% | |||||||||
GECC | ||||||||||
Line of Credit Facility [Line Items] | ||||||||||
Line of credit facility maximum borrowing capacity | $ 75,000,000 | |||||||||
Line of credit facility, maturity date | Jun. 15, 2018 | Mar. 27, 2019 | ||||||||
Amount of credit facility outstanding | $ 5,000,000 | |||||||||
Stand by letters of credit outstanding amount | $ 12,800,000 | $ 12,800,000 | 20,000,000 | |||||||
Line of credit facility, maturity date description | The amounts outstanding under the Credit Facility, as amended, are payable in full upon maturity of the facility on March 27, 2019, except that the Credit Facility would mature on June 15, 2018 if the Company does not refinance or extend the maturity of the convertible senior notes that mature in 2018, provided that any such refinancing or extension shall have a maturity date that is no sooner than six months after the stated maturity of the Credit Facility (i.e., on or about September 27, 2019). | |||||||||
Rate of credit facility | 0.00% | 3.49% | 3.79% | 3.03% | ||||||
GECC | London Interbank Offered Rate (LIBOR) | ||||||||||
Line of Credit Facility [Line Items] | ||||||||||
Applicable margin spread over base rate | 2.25% | |||||||||
Additional basis spread | 1.00% | |||||||||
GECC | Base Rate | ||||||||||
Line of Credit Facility [Line Items] | ||||||||||
Applicable margin spread over base rate | 1.25% | |||||||||
GECC | Federal Funds Rate | ||||||||||
Line of Credit Facility [Line Items] | ||||||||||
Applicable margin spread over base rate | 0.50% | |||||||||
GECC | Minimum | ||||||||||
Line of Credit Facility [Line Items] | ||||||||||
Percentage of unused credit line fee | 0.25% | |||||||||
GECC | Maximum | ||||||||||
Line of Credit Facility [Line Items] | ||||||||||
Percentage of unused credit line fee | 0.50% | |||||||||
WF Loan Agreement | Minimum | ||||||||||
Line of Credit Facility [Line Items] | ||||||||||
Line of credit facility, total excess availability | $ 10,000,000 | $ 10,000,000 | ||||||||
Fixed charge coverage ratio | 125.00% | 125.00% | ||||||||
4.25% Convertible Senior Notes (due 2018) | ||||||||||
Line of Credit Facility [Line Items] | ||||||||||
Line of credit facility, maturity date | Aug. 1, 2018 | Aug. 1, 2018 | ||||||||
Debt instrument, face amount | $ 100,000,000 | 21,178,000 | ||||||||
4.25% Convertible Senior Notes (due 2018) | GECC | ||||||||||
Line of Credit Facility [Line Items] | ||||||||||
Line of credit facility, maturity date | Sep. 27, 2019 | |||||||||
Line of credit facility, total excess availability | $ 34,700,000 | $ 34,700,000 | $ 14,100,000 | |||||||
4.25% Convertible Senior Notes (due 2018) | GECC | Subsequent Event | ||||||||||
Line of Credit Facility [Line Items] | ||||||||||
Amount of credit facility outstanding | $ 7,500,000 | |||||||||
4.25% Convertible Senior Notes (due 2018) | GECC | Letter of Credit | ||||||||||
Line of Credit Facility [Line Items] | ||||||||||
Loan facility | $ 35,000,000 |
Convertible Senior Notes (Detai
Convertible Senior Notes (Detail) - USD ($) $ in Thousands | Sep. 30, 2018 | Jul. 26, 2018 | Dec. 31, 2017 | Jun. 30, 2014 | Jul. 31, 2013 |
Debt Instrument [Line Items] | |||||
Convertible senior notes, principal\ fair value amount | $ 146,436 | $ 156,647 | |||
Convertible senior notes, debt issuance costs | 1,380 | 2,075 | |||
Convertible senior notes, net of debt issuance costs | 145,056 | 154,572 | |||
4.25% Convertible Senior Notes (due 2018) | |||||
Debt Instrument [Line Items] | |||||
Convertible senior notes, principal\ fair value amount | 21,178 | $ 100,000 | |||
Convertible senior notes, debt issuance costs | 103 | ||||
Convertible senior notes, net of debt issuance costs | 21,075 | ||||
3.25% Convertible Senior Notes (due 2020) | |||||
Debt Instrument [Line Items] | |||||
Convertible senior notes, principal\ fair value amount | 33,436 | $ 8,000 | 22,469 | ||
Convertible senior notes, net of debt issuance costs | 33,436 | 22,469 | |||
4.875% Convertible Senior Notes (due 2020) | |||||
Debt Instrument [Line Items] | |||||
Convertible senior notes, principal\ fair value amount | 113,000 | 113,000 | $ 115,000 | ||
Convertible senior notes, debt issuance costs | 1,380 | 1,972 | |||
Convertible senior notes, net of debt issuance costs | $ 111,620 | $ 111,028 |
Convertible Senior Notes (Paren
Convertible Senior Notes (Parenthetical) (Detail) - USD ($) $ in Millions | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2018 | Dec. 31, 2017 | Jul. 26, 2018 | Jun. 30, 2014 | Jul. 31, 2013 | |
4.25% Convertible Senior Notes (due 2018) | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, maturity year | 2,018 | 2,018 | |||
Debt instrument, interest rate | 4.25% | 4.25% | 4.25% | 4.25% | |
3.25% Convertible Senior Notes (due 2020) | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, maturity year | 2,020 | 2,020 | |||
Debt instrument, interest rate | 3.25% | 3.25% | 3.25% | ||
Convertible notes , principal amount | $ 29.5 | $ 21.5 | |||
4.875% Convertible Senior Notes (due 2020) | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, maturity year | 2,020 | 2,020 | |||
Debt instrument, interest rate | 4.875% | 4.875% | 4.875% |
Convertible Senior Notes - Addi
Convertible Senior Notes - Additional Information (Detail) $ / shares in Units, $ in Thousands | Nov. 01, 2018$ / shares | Jul. 26, 2018USD ($) | Aug. 31, 2017USD ($)shares | Jun. 30, 2017USD ($)shares | Jan. 31, 2016USD ($) | Jun. 30, 2014USD ($)$ / sharesshares | Jul. 31, 2013USD ($)$ / sharesshares | Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($)shares | Mar. 31, 2017USD ($)shares | Sep. 30, 2018USD ($)shares | Sep. 30, 2017USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2018USD ($) | Aug. 01, 2018USD ($) | Dec. 31, 2017USD ($) |
Debt Instrument [Line Items] | ||||||||||||||||
Amortization of debt issuance costs recognized as interest expense | $ 200 | $ 400 | $ 700 | $ 1,500 | ||||||||||||
Long term debt, face amount | 146,436 | 146,436 | $ 156,647 | |||||||||||||
Gain recognized on retirement of debt | (453) | (453) | 114 | |||||||||||||
Payment for repurchase of convertible notes | 35,614 | |||||||||||||||
Unrealized loss related to a fair market value adjustment | 917 | (2,514) | ||||||||||||||
4.875% Convertible Senior Notes (due 2020) | ||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||
Long term debt, face amount | $ 115,000 | $ 113,000 | $ 113,000 | $ 113,000 | ||||||||||||
Debt instrument, interest rate | 4.875% | 4.875% | 4.875% | 4.875% | ||||||||||||
Debt instrument, maturity date | Jun. 1, 2020 | |||||||||||||||
Frequency of interest payment | semi-annually | |||||||||||||||
Conversion rate in share per $1000 principal amount of notes | shares | 103.7613 | |||||||||||||||
Debt instrument, conversion rate | $ / shares | $ 9.64 | |||||||||||||||
Write-off of debt issuance costs | $ 100 | |||||||||||||||
Debt instrument repurchase amount | 2,000 | |||||||||||||||
Gain recognized on retirement of debt | $ 100 | |||||||||||||||
Convertible senior note payable, fair value | $ 97,300 | $ 97,300 | $ 89,700 | |||||||||||||
4.25% Convertible Senior Notes (due 2018) | ||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||
Long term debt, face amount | $ 100,000 | $ 21,178 | ||||||||||||||
Debt instrument, interest rate | 4.25% | 4.25% | 4.25% | 4.25% | 4.25% | |||||||||||
Debt instrument, maturity date | Aug. 1, 2018 | Aug. 1, 2018 | ||||||||||||||
Frequency of interest payment | semi-annually | |||||||||||||||
Conversion rate in share per $1000 principal amount of notes | shares | 114.3674 | |||||||||||||||
Debt instrument, conversion rate | $ / shares | $ 8.74 | |||||||||||||||
Write-off of debt issuance costs | 100 | $ 100 | ||||||||||||||
Debt instrument repurchase amount | 12,000 | $ 39,100 | $ 12,000 | $ 6,100 | ||||||||||||
Gain recognized on retirement of debt | 100 | |||||||||||||||
Payment for repurchase of convertible notes | $ 11,600 | $ 24,100 | ||||||||||||||
Debt amount converted | $ 8,000 | |||||||||||||||
4.25% Convertible Senior Notes (due 2018) | Common Stock | ||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||
Debt instrument repurchase amount | $ 11,600 | $ 39,100 | $ 39,100 | |||||||||||||
Debt instrument shares common stock issued upon conversion | shares | 112,400 | 112,400 | 2,900,000 | 2,865,000 | ||||||||||||
3.25% Convertible Senior Notes (due 2020) | ||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||
Long term debt, face amount | $ 8,000 | $ 33,436 | $ 33,436 | $ 22,469 | ||||||||||||
Debt instrument, interest rate | 3.25% | 3.25% | 3.25% | 3.25% | ||||||||||||
Debt instrument, maturity date | Nov. 1, 2020 | |||||||||||||||
Gain recognized on retirement of debt | $ 500 | |||||||||||||||
Conversion rate in share per $1000 principal amount of notes | 322.2688 | |||||||||||||||
3.25% Convertible Senior Notes (due 2020) | Subsequent Event | ||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||
Debt instrument, conversion rate | $ / shares | $ 2.54 | |||||||||||||||
Debt conversion price, percentage | 105.00% | |||||||||||||||
Debt instrument, convertible, terms of conversion | The conversion price for the 3.25% convertible senior notes will be reset on November 1, 2018 and November 1, 2019 (each, a “reset date”) to a price equal to 105% above the 5-day VWAP preceding the reset date; provided, however, among other reset restrictions, that if the conversion price resulting from such reset is lower than 90 percent of the average VWAP during the 90 calendar days preceding the reset date, then the reset price shall be the 30-day VWAP preceding the reset date. The conversion price reset on November 1, 2018 to $2.54 per share. | |||||||||||||||
3.25% Convertible Senior Notes (due 2020) | Oasis Management and Oasis Investments ll Master Fund Ltd. | ||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||
Long term debt, face amount | $ 21,500 | |||||||||||||||
Debt instrument, interest rate | 3.25% | |||||||||||||||
Debt instrument, maturity date | Nov. 1, 2020 | |||||||||||||||
Conversion rate in share per $1000 principal amount of notes | shares | 328.0302 | |||||||||||||||
Gain recognized on retirement of debt | $ 600 | |||||||||||||||
Unrealized loss related to a fair market value adjustment | $ 900 | (2,500) | ||||||||||||||
Convertible senior note payable, fair value | $ 33,400 | $ 33,400 | $ 22,500 | |||||||||||||
Debt instrument, amount redeemed | $ 13,200 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Income Taxes [Line Items] | |||||
Provision for (benefit from) income taxes | $ 1,953 | $ 918 | $ 1,708 | $ 890 | |
Effective income tax rate | 11.10% | 5.50% | 4.60% | 1.70% | |
U.S. statutory tax rate | 21.00% | 35.00% |
Reconciliation of Weighted Aver
Reconciliation of Weighted Average Shares Used in Computation of Income (Loss) Per Share (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Earnings Per Share Disclosure [Line Items] | ||||
Income (loss) attributable to common stockholders | $ 15,682 | $ (17,614) | $ (39,121) | $ (52,672) |
Effect of dilutive securities, convertible senior notes | 1,487 | |||
Net income (loss) available to common stockholders plus assumed exercises and conversion | $ 17,169 | $ (17,614) | $ (39,121) | $ (52,672) |
Weighted Average Shares, attributable to common stockholders | 23,106 | 22,772 | 23,104 | 20,848 |
Effect of dilutive securitiess | ||||
Convertible senior notess | 21,426 | |||
Earnings per share - diluted, Weighted Average Shares | ||||
Net Income (loss) attributable to common stockholders plus assumed exercises and conversion, weighted average shares | 45,686 | 22,772 | 23,104 | 20,848 |
Income (loss) per share - basic | ||||
Net income (loss) available to common stockholders | $ 0.68 | $ (0.77) | $ (1.69) | $ (2.53) |
Income (loss) per share - diluted | ||||
Net Income (loss) attributable to common stockholders plus assumed exercises and conversion, per-share | $ 0.38 | $ (0.77) | $ (1.69) | $ (2.53) |
Performance Stock | ||||
Earnings Per Share Disclosure [Line Items] | ||||
Effect of dilutive securities, unvested restricted stock grants and unvested performance stock grants | $ 0 | $ 0 | $ 0 | $ 0 |
Effect of dilutive securitiess | ||||
Unvested stock grants | 832 | |||
Restricted Stock | ||||
Earnings Per Share Disclosure [Line Items] | ||||
Effect of dilutive securities, unvested restricted stock grants and unvested performance stock grants | $ 0 | $ 0 | $ 0 | $ 0 |
Effect of dilutive securitiess | ||||
Unvested stock grants | 322 |
Income (Loss) Per Share - Addit
Income (Loss) Per Share - Additional Information (Detail) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Common Stock Equivalents | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Potentially dilutive securities excluded from computation of diluted earnings per common share | 2,894,029 | 20,215,325 | 25,332,390 | 21,502,935 |
Common Stock and Preferred St_2
Common Stock and Preferred Stock - Additional Information (Detail) | Apr. 27, 2017USD ($)shares | Jan. 31, 2018USD ($)ExecutiveOfficersDirectorshares | Jun. 30, 2017USD ($)shares | Sep. 30, 2017USD ($)shares | Mar. 31, 2017USD ($)shares | Sep. 30, 2018USD ($)ExecutiveOfficersDirectorshares | Sep. 30, 2017USD ($) | Dec. 31, 2016USD ($) |
Class of Stock [Line Items] | ||||||||
Cash dividend paid | $ 0 | $ 0 | ||||||
4.25% Convertible Senior Notes (due 2018) | ||||||||
Class of Stock [Line Items] | ||||||||
Amount of convertible notes repurchased and retired | $ 12,000,000 | $ 39,100,000 | $ 12,000,000 | $ 6,100,000 | ||||
Common Stock | 4.25% Convertible Senior Notes (due 2018) | ||||||||
Class of Stock [Line Items] | ||||||||
Common stock shares issued upon conversion of debt instrument | shares | 112,400 | 112,400 | 2,900,000 | 2,865,000 | ||||
Common stock shares issued upon conversion of debt instrument, value | $ 400,000 | $ 15,100,000 | ||||||
Amount of convertible notes repurchased and retired | $ 11,600,000 | $ 39,100,000 | ||||||
Common Stock | Hong Kong Meisheng Cultural Co | ||||||||
Class of Stock [Line Items] | ||||||||
Common stock issued, shares | shares | 3,660,891 | |||||||
Common stock issued, value | $ 19,300,000 | |||||||
Executive officer | ||||||||
Class of Stock [Line Items] | ||||||||
Restricted stock issued, shares | shares | 1,914,894 | 873,787 | ||||||
Restricted stock issued, value | $ 4,500,000 | $ 4,500,000 | ||||||
Number of executive officers | ExecutiveOfficers | 2 | 2 | ||||||
Executive officer | Restricted Stock | ||||||||
Class of Stock [Line Items] | ||||||||
Vesting period | 3 years | |||||||
Non-employee directors | ||||||||
Class of Stock [Line Items] | ||||||||
Restricted stock issued, shares | shares | 249,480 | 94,102 | ||||||
Restricted stock issued, value | $ 600,000 | $ 500,000 | ||||||
Number of non-employee directors | Director | 6 | 5 | ||||||
Non-employee directors | Hong Kong Meisheng Cultural Co | ||||||||
Class of Stock [Line Items] | ||||||||
Restricted stock issued, shares | shares | 13,319 | |||||||
Restricted stock issued, value | $ 100,000 | |||||||
Non-employee directors | Restricted Stock | ||||||||
Class of Stock [Line Items] | ||||||||
Shares of restricted stock, vesting date | 2019-01 | 2018-01 | ||||||
Non-employee directors | Restricted Stock | Hong Kong Meisheng Cultural Co | ||||||||
Class of Stock [Line Items] | ||||||||
Shares of restricted stock, vesting date | 2018-01 |
Joint Ventures - Additional Inf
Joint Ventures - Additional Information (Detail) shares in Millions | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2012USD ($)shares | Sep. 30, 2018USD ($)Project | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Apr. 27, 2017 | Oct. 31, 2016 | Dec. 31, 2012USD ($) | |
Schedule of Equity Method Investments [Line Items] | ||||||||
Equity in net income/(loss) of joint venture | $ 0 | $ 0 | $ 22,000 | $ 0 | ||||
Impairment charge | 7,000,000 | 7,000,000 | ||||||
Net income (loss) attributable to non-controlling interests | $ 17,000 | 45,000 | $ 39,000 | 131,000 | ||||
Pacific Animation Partners Joint Venture | ||||||||
Schedule of Equity Method Investments [Line Items] | ||||||||
Percentage of ownership interest in joint venture | 50.00% | 50.00% | ||||||
Number of episodes for which production completed | Project | 65 | |||||||
Episode show airing beginning date | 2012-02 | |||||||
DreamPlay Toys | ||||||||
Schedule of Equity Method Investments [Line Items] | ||||||||
Percentage of ownership interest in joint venture | 50.00% | |||||||
Cash paid to Nant Works for joint venture | $ 8,000,000 | |||||||
Impairment charge | 7,000,000 | |||||||
Issue of warrants (in shares) | shares | 1.5 | |||||||
Issue of warrants | $ 7,000,000 | |||||||
Investment in DreamPlay LLC | $ 7,000,000 | |||||||
Percentage of ownership interest in joint venture | 5.00% | |||||||
DreamPlay Toys | Technology Rights | ||||||||
Schedule of Equity Method Investments [Line Items] | ||||||||
Impairment charge | 2,900,000 | |||||||
China Joint Venture | ||||||||
Schedule of Equity Method Investments [Line Items] | ||||||||
Percentage of ownership interest in joint venture | 51.00% | 51.00% | ||||||
Net income (loss) attributable to non-controlling interests | $ 17,000 | 45,000 | $ 39,000 | 131,000 | ||||
Hong Kong Meisheng Cultural Co | ||||||||
Schedule of Equity Method Investments [Line Items] | ||||||||
Percentage of ownership interest in joint venture | 50.00% | |||||||
Net income (loss) attributable to non-controlling interests | 0 | 0 | 0 | 0 | ||||
Hong Kong Meisheng Cultural Co | Minimum | ||||||||
Schedule of Equity Method Investments [Line Items] | ||||||||
Ownership percentage | 10.00% | |||||||
Video Game | ||||||||
Schedule of Equity Method Investments [Line Items] | ||||||||
Equity in net income/(loss) of joint venture | $ 0 | $ 0 | $ 200,000 | $ 100,000 |
Changes in Carrying Amount of G
Changes in Carrying Amount of Goodwill (Detail) $ in Thousands | 9 Months Ended |
Sep. 30, 2018USD ($) | |
Goodwill [Line Items] | |
Balance at beginning of the period | $ 35,384 |
Adjustments to goodwill for foreign currency translation | (187) |
Goodwill Ending Balance | $ 35,197 |
Goodwill - Additional Informati
Goodwill - Additional Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Goodwill [Line Items] | |||
Goodwill impairment | $ 8,288 | $ 0 | $ 8,288 |
Intangible Assets (Detail)
Intangible Assets (Detail) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2018 | Dec. 31, 2017 | |
Acquired Intangible Assets by Major Class [Line Items] | ||
Trademarks, net | $ 300 | $ 300 |
Amortized Intangible Assets, Gross Carrying Amount | 60,340 | 60,340 |
Amortized Intangible Assets, Accumulated Amortization | (41,863) | (38,150) |
Amortized Intangible Assets, Net Amount | $ 18,477 | 22,190 |
Licenses | ||
Acquired Intangible Assets by Major Class [Line Items] | ||
Weighted Useful Lives (Years) | 5 years 9 months 22 days | |
Amortized Intangible Assets, Gross Carrying Amount | $ 20,130 | 20,130 |
Amortized Intangible Assets, Accumulated Amortization | (19,228) | (18,620) |
Amortized Intangible Assets, Net Amount | $ 902 | 1,510 |
Product Lines | ||
Acquired Intangible Assets by Major Class [Line Items] | ||
Weighted Useful Lives (Years) | 10 years 4 months 9 days | |
Amortized Intangible Assets, Gross Carrying Amount | $ 33,858 | 33,858 |
Amortized Intangible Assets, Accumulated Amortization | (16,283) | (13,178) |
Amortized Intangible Assets, Net Amount | $ 17,575 | 20,680 |
Customer relationships | ||
Acquired Intangible Assets by Major Class [Line Items] | ||
Weighted Useful Lives (Years) | 4 years 10 months 25 days | |
Amortized Intangible Assets, Gross Carrying Amount | $ 3,152 | 3,152 |
Amortized Intangible Assets, Accumulated Amortization | $ (3,152) | (3,152) |
Trade Name | ||
Acquired Intangible Assets by Major Class [Line Items] | ||
Weighted Useful Lives (Years) | 5 years | |
Amortized Intangible Assets, Gross Carrying Amount | $ 3,000 | 3,000 |
Amortized Intangible Assets, Accumulated Amortization | $ (3,000) | (3,000) |
Non-compete/Employment contracts | ||
Acquired Intangible Assets by Major Class [Line Items] | ||
Weighted Useful Lives (Years) | 5 years | |
Amortized Intangible Assets, Gross Carrying Amount | $ 200 | 200 |
Amortized Intangible Assets, Accumulated Amortization | $ (200) | $ (200) |
Components of Comprehensive Inc
Components of Comprehensive Income (Loss) (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Condensed Statement of Income Captions [Line Items] | ||||
Net Income (Loss) | $ 15,699 | $ (17,569) | $ (39,082) | $ (52,541) |
Other comprehensive income (loss): | ||||
Foreign currency translation adjustment | (1,149) | 1,662 | (1,489) | 4,128 |
Comprehensive income (loss) | 14,550 | (15,907) | (40,571) | (48,413) |
Less: Comprehensive income (loss) attributable to non-controlling interests | 17 | 45 | 39 | 131 |
Comprehensive income (loss) attributable to JAKKS Pacific, Inc. | $ 14,533 | $ (15,952) | $ (40,610) | $ (48,544) |
Share-Based Payments - Addition
Share-Based Payments - Additional Information (Detail) $ in Millions | 9 Months Ended |
Sep. 30, 2018USD ($) | |
Restricted Stock | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Unrecognized compensation, non-vested restricted stock awards | $ 3.4 |
Unrecognized compensation, non-vested restricted stock awards expected recognized period | 2 years 6 months 7 days |
Restricted Stock | Minimum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Vesting period | 1 year |
Restricted Stock | Maximum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Vesting period | 5 years |
Restricted Stock Units (RSUs) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Unrecognized compensation, non-vested restricted stock awards | $ 2.3 |
Unrecognized compensation, non-vested restricted stock awards expected recognized period | 2 years 18 days |
Total Share-Based Compensation
Total Share-Based Compensation Expense and Related Tax Benefits Recognized (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Restricted stock compensation expense | $ 760 | $ 793 | $ 1,747 | $ 2,253 |
Restricted Stock | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Tax benefit related to restricted stock compensation | $ 0 | $ 0 | $ 0 | $ 0 |
Summary of Restricted Stock Awa
Summary of Restricted Stock Award Activity (Detail) - Restricted Stock | 9 Months Ended |
Sep. 30, 2018$ / sharesshares | |
Number of Shares | |
Outstanding at beginning of period | shares | 981,208 |
Awarded | shares | 2,164,374 |
Released | shares | (194,800) |
Forfeited | shares | 0 |
Outstanding at end of period | shares | 2,950,782 |
Weighted Average Grant Date Fair Value | |
Outstanding at beginning of period | $ / shares | $ 4.12 |
Awarded | $ / shares | 1.88 |
Released | $ / shares | 5.14 |
Forfeited | $ / shares | 0 |
Outstanding at end of period | $ / shares | $ 2.41 |
Summary of Restricted Stock Uni
Summary of Restricted Stock Unit Activity (Detail) - Restricted Stock Units (RSUs) | 9 Months Ended |
Sep. 30, 2018$ / sharesshares | |
Number of Shares | |
Outstanding at beginning of period | shares | 959,192 |
Awarded | shares | 357,143 |
Released | shares | (125,290) |
Forfeited | shares | (93,229) |
Outstanding at end of period | shares | 1,097,816 |
Weighted Average Fair Value | |
Outstanding at beginning of period | $ / shares | $ 4.68 |
Awarded | $ / shares | 1.96 |
Released | $ / shares | 5.15 |
Forfeited | $ / shares | 4.52 |
Outstanding at end of period | $ / shares | $ 3.76 |
Financial Assets Measured at Fa
Financial Assets Measured at Fair Value on Recurring Basis (Detail) - Fair Value Measurements, Recurring - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Fair Value Measurements, Level 3 | 3.25% Convertible Senior Notes (due 2020) | ||
Schedule Of Servicing Assets At Fair Value And Amortized Value [Line Items] | ||
Convertible senior notes | $ (33,436) | $ (22,469) |
Cash Equivalents | Fair Value Measurements, Level 1 | ||
Schedule Of Servicing Assets At Fair Value And Amortized Value [Line Items] | ||
Assets measured at fair value on recurring basis | 13,718 | |
Carrying Amount | 3.25% Convertible Senior Notes (due 2020) | ||
Schedule Of Servicing Assets At Fair Value And Amortized Value [Line Items] | ||
Convertible senior notes | $ (33,436) | (22,469) |
Carrying Amount | Cash Equivalents | ||
Schedule Of Servicing Assets At Fair Value And Amortized Value [Line Items] | ||
Assets measured at fair value on recurring basis | $ 13,718 |
Reconciliation of Beginning and
Reconciliation of Beginning and Ending Balances of Assets Measured at Fair Value on Recurring Basis Using Significant Unobservable Inputs (Level 3) (Detail) - Fair Value Measurements, Level 3 - Fair Value Measurements, Recurring $ in Thousands | 9 Months Ended |
Sep. 30, 2018USD ($) | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |
Beginning Balance | $ (22,469) |
Change in fair value | (2,514) |
Ending Balance | (33,436) |
3.25% Convertible Senior Notes (due 2020) | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |
Convertible senior notes | $ (8,453) |
Liquidity - Additional Informat
Liquidity - Additional Information (Detail) - USD ($) | 1 Months Ended | 9 Months Ended | ||||
Oct. 31, 2018 | Sep. 30, 2018 | Jun. 14, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Dec. 31, 2016 | |
Cash and Cash Equivalents [Line Items] | ||||||
Cash and cash equivalents including restricted cash | $ 57,144,000 | $ 64,977,000 | $ 48,811,000 | $ 86,064,000 | ||
Great American Capital Partners Finance Co LLC | ||||||
Cash and Cash Equivalents [Line Items] | ||||||
Term loan matures description | The GACP term loan matures upon the earlier of (i) June 14, 2021, (ii) the termination date of the Wells Fargo credit facility, or March 27, 2019, and (iii) the date that is 91 days prior to the maturity of various of the Company’s convertible senior notes due in 2020. | |||||
Great American Capital Partners Finance Co LLC | Term Loan Agreement | ||||||
Cash and Cash Equivalents [Line Items] | ||||||
Secured term loan | $ 20,000,000 | $ 20,000,000 | ||||
Term loan matures description | All then-outstanding borrowings under the Term Loan are due, and the Term Loan terminates, no later than June 14, 2021, unless sooner terminated in accordance with its terms, which includes the date of termination of the Wells Fargo Credit Facility and the date that is 91 days prior to the maturity of the Company’s various convertible senior notes due in 2020. | |||||
Subsequent Event | Corporate Restructuring [Member] | Minimum | ||||||
Cash and Cash Equivalents [Line Items] | ||||||
Savings from restructuring | $ 10,000,000 | |||||
Subsequent Event | Corporate Restructuring [Member] | Maximum | ||||||
Cash and Cash Equivalents [Line Items] | ||||||
Savings from restructuring | $ 15,000,000 | |||||
Foreign Subsidiaries | ||||||
Cash and Cash Equivalents [Line Items] | ||||||
Cash and cash equivalents including restricted cash | $ 37,300,000 | $ 52,800,000 |
Subsequent Event - Additional I
Subsequent Event - Additional Information (Detail) - Subsequent Event - Corporate Restructuring [Member] $ in Millions | 1 Months Ended |
Oct. 31, 2018USD ($) | |
Subsequent Event [Line Items] | |
Restructuring charges | $ 2 |
Minimum | |
Subsequent Event [Line Items] | |
Percentage of global workforce reduction in restructuring | 12.00% |
Maximum | |
Subsequent Event [Line Items] | |
Percentage of global workforce reduction in restructuring | 15.00% |