Cover Page
Cover Page - shares | 3 Months Ended | |
Mar. 31, 2020 | May 15, 2020 | |
Cover [Abstract] | ||
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2020 | |
Document Transition Report | false | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 | |
Entity File Number | 0-28104 | |
Entity Registrant Name | JAKKS Pacific, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 95-4527222 | |
Entity Address, Address Line One | 2951 28th Street | |
Entity Address, City or Town | Santa Monica | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 90405 | |
City Area Code | 424 | |
Local Phone Number | 268-9444 | |
Entity Interactive Data Current | Yes | |
Entity Central Index Key | 0001009829 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Shell Company | false | |
Entity Current Reporting Status | Yes | |
Entity Emerging Growth Company | false | |
Entity Small Business | true | |
Entity Common Stock, Shares Outstanding | 35,548,456 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Current assets | ||
Cash and cash equivalents | $ 39,467 | $ 61,613 |
Restricted cash | 4,561 | 4,673 |
Accounts receivable, net of allowance for doubtful accounts of $3,156 and $3,394 at March 31, 2020 and December 31, 2019, respectively | 64,761 | 117,942 |
Inventory | 48,233 | 54,259 |
Prepaid expenses and other assets | 18,802 | 21,898 |
Total current assets | 175,824 | 260,385 |
Property and equipment | ||
Office furniture and equipment | 11,752 | 11,678 |
Molds and tooling | 103,491 | 103,335 |
Leasehold improvements | 6,852 | 6,808 |
Total | 122,095 | 121,821 |
Less accumulated depreciation and amortization | 106,696 | 106,562 |
Property and equipment, net | 15,399 | 15,259 |
Operating lease right-of-use assets, net | 29,824 | 32,081 |
Other long term assets | 17,691 | 18,926 |
Intangible assets, net | 2,792 | 3,188 |
Goodwill | 35,083 | 35,083 |
Trademarks | 300 | 300 |
Total assets | 276,913 | 365,222 |
Current liabilities | ||
Accounts payable | 22,785 | 61,196 |
Accrued expenses | 22,056 | 39,515 |
Reserve for sales returns and allowances | 31,743 | 38,365 |
Income taxes payable | 347 | 2,492 |
Short term operating lease liabilities | 9,592 | 9,451 |
Short term debt, net | 1,905 | 1,905 |
Total current liabilities | 88,428 | 152,924 |
Long term operating lease liabilities | 23,120 | 25,632 |
Debt, non-current portion, net of issuance costs and debt discounts | 169,397 | 174,962 |
Other liabilities | 3,319 | 5,409 |
Income taxes payable | 1,471 | 1,565 |
Deferred income taxes, net | 226 | 226 |
Total liabilities | 285,961 | 360,718 |
Preferred stock, $0.001 par value; 5,000,000 shares authorized; 200,000 shares issued and outstanding at March 31, 2020 and December 31, 2019 | 790 | 483 |
Stockholders' Equity (Deficit) | ||
Common stock, $0.001 par value; 100,000,000 shares authorized; 35,548,456 and 35,210,371 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively | 36 | 36 |
Additional paid-in capital | 200,248 | 200,475 |
Accumulated deficit | (195,187) | (183,149) |
Accumulated other comprehensive loss | (16,056) | (14,422) |
Total JAKKS Pacific, Inc. stockholders' equity (deficit) | (10,959) | 2,940 |
Non-controlling interests | 1,121 | 1,081 |
Total stockholders' equity (deficit) | (9,838) | 4,021 |
Total liabilities, preferred stock and stockholders' equity (deficit) | $ 276,913 | $ 365,222 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance for doubtful accounts | $ 3,156 | $ 3,394 |
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized (in shares) | 5,000,000 | 5,000,000 |
Preferred stock, shares issued (in shares) | 200,000 | 200,000 |
Preferred shares outstanding (in shares) | 200,000 | 200,000 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, shares issued (in shares) | 35,548,456 | 35,210,371 |
Common stock, shares outstanding (in shares) | 35,548,456 | 35,210,371 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Income Statement [Abstract] | ||
Net sales | $ 66,557 | $ 70,826 |
Cost of sales | 50,207 | 56,486 |
Gross profit | 16,350 | 14,340 |
Selling, general and administrative expenses | 32,336 | 35,266 |
Restructuring charge | 0 | 248 |
Acquisition related and other | 0 | 2,867 |
Loss from operations | (15,986) | (24,041) |
Income from joint ventures | 2 | 0 |
Other income (expense), net | 38 | 83 |
Change in fair value of preferred stock derivative liability | 2,082 | 0 |
Change in fair value of convertible senior notes | 7,675 | (2,423) |
Interest income | 14 | 27 |
Interest expense | (5,547) | (3,018) |
Loss before provision for (benefit from) income taxes | (11,722) | (29,372) |
Provision for (benefit from) income taxes | 276 | (245) |
Net loss | (11,998) | (29,127) |
Net income attributable to non-controlling interests | 40 | 31 |
Net loss attributable to JAKKS Pacific, Inc. | (12,038) | (29,158) |
Net loss attributable to common stockholders | $ (12,345) | $ (29,158) |
Loss per share - basic and filuted (in dollars per share) | $ (0.41) | $ (1.24) |
Shares used in net loss per share - basic and diluted (in shares) | 30,208 | 23,557 |
Comprehensive loss | $ (13,632) | $ (27,824) |
Comprehensive loss attributable to JAKKS Pacific, Inc. | $ (13,672) | $ (27,855) |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) - USD ($) $ in Thousands | Total | Common Stock | Treasury Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss | JAKKS Pacific, Inc. Stockholders’ Equity (Deficit) | Non- Controlling Interests |
Beginning balance at Dec. 31, 2018 | $ 51,649 | $ 30 | $ (24,000) | $ 218,155 | $ (127,601) | $ (15,847) | $ 50,737 | $ 912 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Stock-based compensation expense | 618 | 618 | 618 | |||||
Repurchase of common stock for employee tax withholding | (249) | (249) | (249) | |||||
Net income (loss) | (29,127) | (29,158) | (29,158) | 31 | ||||
Foreign currency translation adjustment | 1,303 | 1,303 | 1,303 | |||||
Ending balance at Mar. 31, 2019 | 24,194 | 30 | (24,000) | 218,524 | (156,759) | (14,544) | 23,251 | 943 |
Beginning balance at Dec. 31, 2019 | 4,021 | 36 | 0 | 200,475 | (183,149) | (14,422) | 2,940 | 1,081 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Stock-based compensation expense | 252 | 252 | 252 | |||||
Repurchase of common stock for employee tax withholding | (172) | (172) | (172) | |||||
Preferred stock accrued dividends | (307) | (307) | (307) | |||||
Net income (loss) | (11,998) | (12,038) | (12,038) | 40 | ||||
Foreign currency translation adjustment | (1,634) | (1,634) | (1,634) | |||||
Ending balance at Mar. 31, 2020 | $ (9,838) | $ 36 | $ 0 | $ 200,248 | $ (195,187) | $ (16,056) | $ (10,959) | $ 1,121 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Cash flows from operating activities | ||
Net loss | $ (11,998) | $ (29,127) |
Adjustments to reconcile net loss to net cash (used in) operating activities: | ||
Provision for doubtful accounts | (225) | (93) |
Depreciation and amortization | 1,882 | 3,234 |
Payment-in-kind interest | 1,155 | 0 |
Amortization of debt discount | 693 | 0 |
Write-off and amortization of debt issuance costs | 351 | 606 |
Share-based compensation expense | 252 | 618 |
Gain on disposal of property and equipment | 0 | (62) |
Change in fair value of convertible senior notes | (7,675) | 2,423 |
Change in fair value of preferred stock derivative liability | (2,082) | 0 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 53,406 | 54,578 |
Inventory | 6,026 | 9,195 |
Prepaid expenses and other assets | 4,242 | (11,592) |
Accounts payable | (38,452) | (28,436) |
Accrued expenses | (17,459) | 69 |
Reserve for sales returns and allowances | (6,622) | (3,394) |
Income taxes payable | (2,239) | 3 |
Other liabilities | (122) | 83 |
Total adjustments | (6,869) | 27,232 |
Net cash used in operating activities | (18,867) | (1,895) |
Cash flows from investing activities | ||
Purchases of property and equipment | (1,585) | (2,459) |
Net cash used in investing activities | (1,585) | (2,459) |
Cash flows from financing activities | ||
Repayment of credit facility borrowings | 0 | (7,500) |
Repurchase of common stock for employee tax withholding | (172) | (249) |
Net cash used in financing activities | (172) | (7,749) |
Net decrease in cash, cash equivalents and restricted cash | (20,624) | (12,103) |
Effect of foreign currency translation | (1,634) | 1,303 |
Cash, cash equivalents and restricted cash, beginning of period | 66,286 | 58,205 |
Cash, cash equivalents and restricted cash, end of period | 44,028 | 47,405 |
Cash paid during the period for: | ||
Income taxes | 2,567 | (61) |
Interest | $ 5,642 | $ 838 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Statement of Cash Flows [Abstract] | ||
Purchase of property and equipment incurred | $ 2.1 | $ 2.1 |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Mar. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | 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, 2019. 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 June 2016, the FASB issued ASU 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” which require a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. The new standard was initially effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. In November 2019, the FASB issued ASU 2019-10 which deferred the effective date of ASU 2016-13 by three years for Smaller Reporting Companies. As a result, the effective date for the standard is fiscal years beginning after December 15, 2022, and interim periods therein, and early adoption is permitted. The Company is currently evaluating the impact of the adoption of ASU 2016-13 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 adoption of this standard did not have an impact on the Company’s condensed consolidated financial statements. In October 2018, the FASB issued ASU 2018-17, "Consolidation: Targeted Improvements to Related Party Guidance for Variable Interest Entities," which improves the accounting for variable interest entities by considering indirect interests held through related parties under common control for determining whether fees paid to decision makers and service providers are variable interests. This new standard is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The amendments are required to be applied retrospectively with a cumulative-effect adjustment to retained earnings at the beginning of the earliest period presented. Early adoption is permitted. The adoption of this standard did not have an impact on the Company's condensed consolidated financial statements. In December 2019, the FASB issued ASU 2019-12, “Simplifying the Accounting for Income Taxes,” which simplifies the accounting for income taxes related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period, and the recognition of deferred tax assets for investments. The guidance also reduces complexity in certain areas, including the accounting for transactions that result in a step-up in the tax basis of goodwill and allocating taxes to members of a consolidated group. This new standard is effective for the Company for fiscal years beginning January 1, 2021, with early adoption permitted. The Company is currently evaluating the impact that the adoption of this new guidance will have on its condensed consolidated financial statements. Going Concern and Liquidity On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency because of a new strain of coronavirus originating in Wuhan, China (the “COVID-19 outbreak”) and the risks to the international community as the virus spreads globally beyond its point of origin. In March 2020, the WHO classified the COVID-19 outbreak as a pandemic, based on the rapid increase in exposure globally. The full impact of the COVID-19 outbreak continues to evolve as of the date of this report. As such, it is uncertain as to the full magnitude that the pandemic will have on the Company’s financial condition, liquidity, and future results of operations. Management is actively monitoring the global situation and the resulting impact on its financial condition, liquidity, operations, suppliers, industry, and workforce. Given the daily evolution of the COVID-19 outbreak and the global responses to curb its spread, it is extremely challenging for the Company to estimate the effects of the COVID-19 outbreak on its results of operations, financial condition, and liquidity for fiscal year 2020. March year-to-date syndicated market data for the United States shows a number of manufacturers’ sell-through at retail substantially up, and others down, vs. prior year. How long these trends continue, and whether they represent a pulling forward of future sales or a deferment of intended sales remains to be seen. Although the Company cannot estimate the length or gravity of the impact of the COVID-19 outbreak at this time, it is likely the pandemic will have a material adverse effect on the Company’s sales expectations for fiscal year 2020. The Company has embarked upon cost mitigating efforts. In mid-March 2020, the Company began migrating to a work-from-home model in compliance with local guidance. In early April 2020, the Company began to reassess its revenue and expense projections for the year in an attempt to anticipate decreases in customer and consumer demand based on the uncertainty associated with the economic impact of the pandemic. In parallel, the Company began a review of worldwide spending to identify both short-term and long-term cost savings measures to preserve both profitability and liquidity in light of the potential for decreased product demand. By late April 2020, the Company had identified new revenue and spending objectives for the year 2020 and synchronized those expectations across the senior leadership team. It is the Company’s intention to carefully monitor the pandemic’s impact across markets, channels and customers and strike the right balance of pursuing opportunity while minimizing risk to the Company’s long-term health. On March 27, 2020, President Trump signed into law the “Coronavirus Aid, Relief and Economic Security Act (“CARES Act”). The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer-side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. The Company continues to monitor and explore any relevant government assistance programs that could support either cash liquidity or operating results in the short-medium term. As of the filing of this document, the Company continues to have no draw down on its credit facility with Wells Fargo. The Company has applied for funds under the Paycheck Protection Program after the period end in the amount of $10.0 million. The application for these funds requires the Company to, in good faith, certify that the current economic uncertainty made the loan request necessary to support the ongoing operations of the Company. This certification further requires the Company to take into account its current business activity and its ability to access other sources of liquidity sufficient to support ongoing operations in a manner that is not significantly detrimental to the business. The receipt of these funds, and the forgiveness of the loan attendant to these funds, is dependent on the Company having initially qualified for the loan and qualifying for the forgiveness of such loan based on its future adherence to the forgiveness criteria. As of March 31, 2020 and December 31, 2019, the Company held cash and cash equivalents, including restricted cash, of $44.0 million and $66.3 million, respectively. Cash, and cash equivalents, including restricted cash held outside of the United States in various foreign subsidiaries totaled $29.3 million and $27.0 million as of March 31, 2020 and December 31, 2019, respectively. The cash and cash equivalents, including restricted cash balances in the Company's 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 March 31, 2020. The Company’s primary sources of working capital are cash flows from operations and borrowings under its credit facility (see Note 6 - Credit Facilities). 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. As of March 31, 2020, the Company has substantial indebtedness including $134.8 million of outstanding indebtedness under a First Lien Term Loan Facility Credit Agreement (the “New Term Loan Agreement”). As of March 31, 2020, the Company has no outstanding indebtedness under an amended and extended Credit Agreement (the “Amended ABL Credit Agreement” or “Amended Wells Fargo Credit Agreement”) with Wells Fargo Bank, National Association (“Wells Fargo”). The New Term Loan Agreement and Amended ABL each contain negative covenants that, subject to certain exceptions, limit the ability of the Company and its subsidiaries to, among other things, incur additional indebtedness, make restricted payments, pledge their assets as security, make investments, loans, advances, guarantees and acquisitions, undergo fundamental changes and enter into transactions with affiliates, as well as cross-default provisions. Commencing with the fiscal quarter ending September 30, 2020, the Company is also required to maintain a minimum Earnings Before Interest Tax Depreciation and Amortization (“EBITDA") of not less than $34.0 million over the previous twelve months and a minimum liquidity of not less than $10.0 million. The New Term Loan Agreement contains events of default that are customary for a facility of this nature, including nonpayment of principal, nonpayment of interest, fees or other amounts, material inaccuracy of representations and warranties, violation of covenants, cross-default to other material indebtedness, bankruptcy or insolvency events, material judgment defaults and a change of control as specified in the New Term Loan Agreement, and cross-default provisions with the Amended Wells Fargo Credit Agreement. If an event of default occurs under either Agreement, the maturity of the amounts owed under the New Term Loan Agreement and the Amended Wells Fargo Credit Agreement may be accelerated. The Company was in compliance with the financial covenants under the New Term Loan Agreement as of March 31, 2020. Given the current uncertainties created by the COVID-19 pandemic, there can be no assurance as to our ability to achieve the minimum EBITDA threshold required under the New Term Loan Agreement. Failure to satisfy such requirement would constitute an event of default under the New Term Loan Agreement and Amended ABL Credit Agreement unless the lenders agree to waive compliance with such requirement. The Company’s ability to fund operations and retire debt when due is dependent on a number of factors, some of which are beyond the Company's control and/or inherently difficult to estimate, including the Company's future operating performance and the factors mentioned above, among other risks and uncertainties. To the extent the Company is unable to fund its operations or retire debt when due, no assurances can be given that the Company will have the financial resources required to obtain, or that the conditions of the capital markets will support, any future debt or equity financings, which could have a material adverse impact on the Company’s business, results of operations and financial condition. These conditions raise substantial doubt about the Company’s ability to continue as a going concern for a period of one year from the date the financial statements are issued. The Company plans to negotiate waivers or obtain other accommodations to the satisfaction of its existing lenders, inclusive of Wells Fargo, the Term Loan group and the Company’s unsecured creditors. Although the lenders under the existing credit facilities may waive such covenants or provide other accommodations in event of default, they are not obligated to do so. The Company cannot make any assurances regarding the likelihood or certainty in being successful in obtaining these waivers in the event the Company is unable to achieve the minimum EBITDA threshold. Failure to obtain such a waiver would have a material adverse effect on the Company’s liquidity, financial condition and results of operations. |
Business Segments, Geographic D
Business Segments, Geographic Data, and Sales by Major Customers | 3 Months Ended |
Mar. 31, 2020 | |
Segment Reporting [Abstract] | |
Business Segments, Geographic Data, and Sales by Major Customers | 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 recently re-aligned its products into two reporting segments to better reflect the management and operation of the business. The Company’s segments are (i) Toys/Consumer Products and (ii) Halloween. Prior year’s segment reporting has been restated to reflect this change. The Toys/Consumer Products 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 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 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. 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 months ended March 31, 2020 and 2019 and as of March 31, 2020 and December 31, 2019 are as follows (in thousands): Three Months Ended 2020 2019 Net Sales Toys/Consumer Products $ 62,565 $ 67,186 Halloween 3,992 3,640 $ 66,557 $ 70,826 Three Months Ended 2020 2019 Loss from Operations Toys/Consumer Products $ (12,739) $ (19,877) Halloween (3,247) (4,164) $ (15,986) $ (24,041) Three Months Ended 2020 2019 Depreciation and Amortization Expense Toys/Consumer Products $ 1,824 $ 3,137 Halloween 58 97 $ 1,882 $ 3,234 March 31, December 31, Assets Toys/Consumer Products $ 266,365 $ 356,584 Halloween 10,548 8,638 $ 276,913 $ 365,222 The following tables present information about the Company by geographic area as of March 31, 2020 and December 31, 2019 and for the three months ended March 31, 2020 and 2019 (in thousands): March 31, December 31, Long-lived Assets China $ 11,846 $ 11,461 United States 3,329 3,556 Hong Kong 224 242 $ 15,399 $ 15,259 Three Months Ended 2020 2019 Net Sales by Customer Area United States $ 51,918 $ 57,558 Europe 7,618 7,191 Canada 2,348 2,560 Asia 1,770 1,591 Australia & New Zealand 1,531 906 Latin America 1,000 865 Middle East & Africa 372 155 $ 66,557 $ 70,826 Major Customers Net sales to major customers for the three months ended March 31, 2020 and 2019 were as follows (in thousands, except for percentages): Three Months Ended March 31, 2020 2019 Amount Percentage Amount Percentage Wal-Mart $ 18,510 27.8 % $ 22,109 31.2 % Target 14,615 22.0 12,179 17.2 $ 33,125 49.8 % $ 34,288 48.4 % No other customer accounted for more than 10% of the Company's total net sales. As of March 31, 2020 and December 31, 2019, the Company’s three largest customers accounted for approximately 76.7% and 56.9%, 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. |
Inventory
Inventory | 3 Months Ended |
Mar. 31, 2020 | |
Inventory Disclosure [Abstract] | |
Inventory | 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): March 31, December 31, Raw materials $ 48 $ 144 Finished goods 48,185 54,115 $ 48,233 $ 54,259 |
Revenue Recognition and Reserve
Revenue Recognition and Reserve for Sales Returns and Allowances | 3 Months Ended |
Mar. 31, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition and Reserve for Sales Returns and Allowances | 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: Toys/Consumer Products 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 20% 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 $31.7 million as of March 31, 2020, compared to $38.4 million as of December 31, 2019. |
Debt
Debt | 3 Months Ended |
Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
Debt | Debt Convertible senior notes Convertible senior notes consist of the following (in thousands): March 31, 2020 December 31, 2019 4.875% convertible senior notes due 2020 $ 1,905 $ 1,905 3.25% convertible senior notes due 2023* 43,745 50,753 Total convertible senior notes $ 45,650 $ 52,658 * The amounts presented for the 3.25% convertible senior notes due 2023 within the table represent the fair value as of March 31, 2020 and December 31, 2019 (see Note 16 - Fair Value Measurements). The principal amount of these notes totaled $37.6 million as of March 31, 2020 and December 31, 2019. 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 $21.6 million face amount of its 2018 Notes, 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 2018 Notes with convertible senior notes similar to those issued to Oasis in November 2017. The July 26, 2018 $8.0 million Oasis 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 an initial 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 due 2020 was reset on November 1, 2018 and November 1, 2019 (each, a “reset date”) to a price equal to 105% above the 5-day Volume Weighted Average Price ("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 of the 3.25% convertible senior notes due 2020 reset on November 1, 2018 to $2.54 per share and the conversion rate was increased to 393.7008 shares of the Company's common stock per $1,000 principal amount of notes. The remaining $13.2 million of 2018 Notes were redeemed at par at maturity on August 1, 2018. In August 2019, the Company entered into and consummated multiple, binding definitive agreements (collectively, the “Recapitalization Transaction”) among Wells Fargo Bank, National Association, Oasis Investments II Master Fund Ltd. and an ad hoc group of holders of the 4.875% convertible senior notes due 2020 ( the "Investor Parties") to recapitalize the Company’s balance sheet, including the extension to the Company of incremental liquidity and at least three-year extensions of substantially all of the Company’s outstanding convertible debt obligations and revolving credit facility. The Company’s term loan agreement entered into with Great American Capital Partners was paid in full and terminated in connection with the Recapitalization Transaction. In connection with the Recapitalization Transaction, the Company issued (i) amended and restated notes with respect to the $21.6 million Oasis Note issued on November 7, 2017, and the $8.0 million Oasis Note issued on July 26, 2018 (together, the “Existing Oasis Notes”), and (ii) a new $8.0 million convertible senior note having the same terms as such amended and restated notes (the "New $8.0 million Oasis Note" and collectively, the “New Oasis Notes” or the "3.25% convertible senior notes due 2023"). Interest on the New Oasis Notes is payable on each May 1 and November 1 until maturity and accrues at an annual rate of (i) 3.25% if paid in cash or 5.00% if paid in stock plus (ii) 2.75% payable in kind. The New Oasis Notes mature 91 days after the amounts outstanding under the New Term Loan are paid in full, and in no event later than July 3, 2023. The New Oasis Notes provide, among other things, that the initial conversion price is $1.00. The conversion price will be reset on each February 9 and August 9, starting on February 9, 2020 (each, a “reset date”) to a price equal to 105% of the 5-day VWAP preceding the applicable reset date. Under no circumstances shall the reset result in a conversion price be below the greater of (i) the closing price on the trading day immediately preceding the applicable reset date and (ii) 30% of the stock price as of the Transaction Agreement Date, or August 7, 2019, and will not be greater than the conversion price in effect immediately before such reset. The Company may trigger a mandatory conversion of the New Oasis Notes if the market price exceeds 150% of the conversion price under certain circumstances. The Company may redeem the New Oasis Notes in cash if a person, entity or group acquires shares of the Company’s Common Stock, par value $0.001 per share (the “Common Stock”), and as a result owns at least 49% of the Company’s issued and outstanding Common Stock. In connection with the issuance of the New Oasis Notes, the Company recognized a loss on extinguishment of the Existing Oasis Notes of approximately $10.4 million. The conversion price of the new Oasis Notes reset on February 9, 2020 to $1.00 per share. A director of the Company is a portfolio manager at Oasis Management. 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 $7.0 million (net of payment-in-kind interest of $0.7 million) for the three months ended March 31, 2020, related to changes in the fair value of the New Oasis Notes. At March 31, 2020 and December 31, 2019, the debt held by Oasis had a fair value of approximately $43.7 million and $50.8 million, respectively. The Company evaluated its credit risk as of March 31, 2020, and determined that there was no change from December 31, 2019. 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. In connection with the Recapitalization Transaction, 2020 Notes outstanding with a face amount of $111.1 million of the total $113.0 million that were outstanding at the time of the Recapitalization Transaction were refinanced and the maturity dates effectively extended. Of the refinanced amount, $103.8 million was refinanced with the Investor Parties through the issuance of the New Common Equity (as defined below), the New Preferred Equity (as defined below) (see Note 9 - Common Stock and Preferred Stock) and new secured term debt that matures in February 2023 (see Term Loan section below). Additionally, $1.0 million of accrued interest was refinanced with the Investor Parties. The remaining refinanced amount of $7.3 million was exchanged into the New $8.0 million Oasis Note discussed above. In connection with the issuance of the new secured term loan, as well as the New Common Equity and the New Preferred Equity, the Company recognized a loss on extinguishment of the 2020 Notes refinanced with the Investor Parties of approximately $2.4 million, and wrote off $0.7 million of unamortized debt issuance costs related to the 2020 Notes. The Company classified the remaining $1.9 million of the 2020 Notes, which are due June 2020, as current liabilities on the Condensed Consolidated Balance Sheet. The fair value of the 4.875% convertible senior notes due 2020 as of March 31, 2020 and December 31, 2019 was $1.8 million and $1.7 million, respectively, based upon the most recent quoted market prices. The fair value of the convertible senior notes is considered to be Level 3 measurements on the fair value hierarchy. Amortization expense classified as interest expense related to debt issuance costs of the Company's convertible senior notes was nil and $0.2 million for the three months ended March 31, 2020 and 2019, respectively. Term Loan Term loan consists of the following (in thousands): March 31, 2020 December 31, 2019 Principal Amount** Debt Discount/ Net Principal Amount** Debt Discount/ Net Term Loan $ 134,801 $ (11,364) $ 123,437 $ 134,801 $ (12,319) $ 122,482 * The term loan was valued using the discounted cash flow method to determine the implied debt discount. The debt discount and issuance costs are being amortized over the life of the term loan. ** The amount presented excludes accrued, but unpaid, payment-in-kind interest of $2.2 million and $1.3 million of March 31, 2020 and December 31, 2019, respectively. In August 2019, in connection with the Recapitalization Transaction, the Company entered into a First Lien Term Loan Facility Credit Agreement (the “New Term Loan Agreement”), with certain of the Investor Parties, and Cortland Capital Market Services LLC, as agent, for a $134.8 million first-lien secured term loan (the “New Term Loan”). The Company also issued common stock and preferred stock (see Note 9 - Common Stock and Preferred Stock) to the Investor Parties. Amounts outstanding under the New Term Loan accrue interest at 10.50% per annum, payable semi-annually (with 8% per annum payable in cash and 2.5% per annum payable in kind). The New Term Loan matures on February 9, 2023. The New Term Loan Agreement contains negative covenants that, subject to certain exceptions, limit the ability of the Company and its subsidiaries to, among other things, incur additional indebtedness, make restricted payments, pledge their assets as security, make investments, loans, advances, guarantees and acquisitions, undergo fundamental changes and enter into transactions with affiliates. Commencing with the fiscal quarter ending September 30, 2020, the Company is also required to maintain a minimum EBITDA of not less than $34.0 million and a minimum liquidity of not less than $10.0 million. The New Term Loan Agreement contains events of default that are customary for a facility of this nature, including nonpayment of principal, nonpayment of interest, fees or other amounts, material inaccuracy of representations and warranties, violation of covenants, cross-default to other material indebtedness, bankruptcy or insolvency events, material judgment defaults and a change of control as specified in the New Term Loan Agreement. If an event of default occurs, the maturity of the amounts owed under the New Term Loan Agreement may be accelerated. The obligations under the New Term Loan Agreement are guaranteed by the Company, the subsidiary borrowers thereunder and certain of the other existing and future direct and indirect subsidiaries of the Company and are secured by substantially all of the assets of the Company, the subsidiary borrowers thereunder and such other subsidiary guarantors, in each case, subject to certain exceptions and permitted liens. Amortization expense classified as interest expense related to the $3.8 million of debt issuance costs associated with the issuance of the New Term Loan was $0.3 million for the three months ended March 31, 2020. Amortization expense classified as interest expense related to the $10.1 million debt discount associated with the issuance of the New Term Loan was $0.7 million for the three months ended March 31, 2020. The fair value of the New Term Loan as of March 31, 2020 and December 31, 2019 was $114.8 million and $123.4 million, respectively. The estimated fair value was calculated using a discounted cash flow method and is classified as Level 3 within the fair value hierarchy. |
Credit Facilities
Credit Facilities | 3 Months Ended |
Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
Credit Facilities | 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, were payable in full upon maturity of the facility on September 27, 2019, except that the Credit Facility would mature on June 15, 2018 if the Company did 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 its 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. In August 2019, in connection with the Recapitalization Transaction (See Note 5 - Debt), the Company entered into an amended and extended revolving credit facility with Wells Fargo (the “Amended ABL Credit Agreement”). The Amended ABL Credit Agreement, or Amended ABL facility, amends and restates the Company’s existing Credit Facility, dated as of March 27, 2014, as amended, with GECC and subsequently assigned to Wells Fargo, to, among other things, decrease the borrowing capacity from $75.0 million to $60.0 million and extend the maturity to August 9, 2022. The obligations under the Amended ABL Credit Agreement are guaranteed by the Company, the subsidiary borrowers thereunder and certain of the other existing and future direct and indirect subsidiaries of the Company and are secured by substantially all of the assets of the Company, the subsidiary borrowers thereunder and such other subsidiary guarantors, in each case, subject to certain exceptions and permitted liens. As of March 31, 2020, the amount of outstanding borrowings was nil, the amount of outstanding stand-by letters of credit totaled $9.8 million and the total excess borrowing capacity was $32.0 million. As of December 31, 2019, the amount of outstanding borrowings was nil, the amount of outstanding stand-by letters of credit totaled $9.2 million and the total excess borrowing capacity was $41.8 million. The Amended ABL Credit Agreement contains negative covenants that, subject to certain exceptions, limit the ability of the Company and its subsidiaries to, among other things, incur additional indebtedness, make restricted payments, pledge their assets as security, make investments, loans, advances, guarantees and acquisitions, undergo fundamental changes and enter into transactions with affiliates. The Company is also required to maintain a fixed charge coverage ratio of not less than 1.1 to 1.0 under certain circumstances, and a minimum liquidity of $25.0 million and a minimum availability of at least $9.0 million. As of March 31, 2020 and December 31, 2019, the Company was in compliance with the financial covenants under the Amended ABL Facility and the previous Credit Facility, as applicable. Any amounts borrowed under the Amended ABL Facility accrue interest, at either (i) LIBOR plus 1.50%-2.00% (determined by reference to a fixed charge coverage ratio-based pricing grid) or (ii) base rate plus 0.50%-1.00% (determined by reference to a fixed charge coverage ratio-based pricing grid). As of March 31, 2020, the weighted average interest rate on the credit facility with Wells Fargo was 0%. As of December 31, 2019, the weighted average interest rate on the credit facility with Wells Fargo was 4.53%. The Amended ABL 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 Amended ABL Facility may be declared immediately due and payable. For certain events of default relating to insolvency, all outstanding obligations become due and payable. As of March 31, 2020, off-balance sheet arrangements include letters of credit issued by Wells Fargo of $9.8 million. 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 was 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 Term Loan required 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 would be due, and the Term Loan would terminate, no later than June 14, 2021, unless sooner terminated in accordance with its terms, which included 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 5 - Debt). The Company was permitted to prepay the Term Loan, which would have required 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. In August 2019, in connection with the Recapitalization Transaction (See Note 5 - Debt), the Company repaid in full and terminated the Term Loan Agreement. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income TaxesThe Company’s income tax expense of $0.3 million for the three months ended March 31, 2020 reflects an effective tax rate of (2.4)%. The Company’s income tax benefit of $0.2 million for the three months ended March 31, 2019 reflects an effective tax rate of 0.8%. The tax expense for the three months ended March 31, 2020 relates to foreign income taxes partially offset by discrete items. The majority of the tax benefit for the three months ended March 31, 2019 relates to foreign income taxes partially offset by discrete items. The United States Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") was signed into federal law on March 27, 2020. The CARES Act is an emergency economic stimulus package in response to the Coronavirus outbreak, which among other things contains numerous income tax provisions. Some of these tax provisions are expected to be effective retroactively for years ending before the date of enactment. However, the Company does not anticipate these benefits will have a material financial impact. |
Loss Per Share
Loss Per Share | 3 Months Ended |
Mar. 31, 2020 | |
Earnings Per Share [Abstract] | |
Loss Per Share | 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 2020 2019 Net loss $ (11,998) $ (29,127) Net income attributable to non-controlling interests 40 31 Net loss attributable to JAKKS Pacific, Inc. (12,038) (29,158) Preferred stock dividend 307 — Net loss attributable to common stockholders $ (12,345) $ (29,158) Weighted average common shares outstanding - basic and diluted 30,208 23,557 Loss per share available to common stockholders - basic and diluted $ (0.41) $ (1.24) |
Common Stock and Preferred Stoc
Common Stock and Preferred Stock | 3 Months Ended |
Mar. 31, 2020 | |
Equity [Abstract] | |
Common Stock and Preferred Stock | Common Stock and Preferred Stock Common Stock In June 2014, the Company effectively repurchased 3,112,840 shares of its common stock at an average cost of $7.71 per share for an aggregate amount of $24.0 million pursuant to a prepaid forward share repurchase agreement entered into with Merrill Lynch International (“ML”). These repurchased shares are treated as retired for basic and diluted EPS purposes although they remain legally outstanding. The Company reflects the aggregate purchase price as a reduction to stockholders’ equity classified as Treasury Stock. The Company reflected the aggregate purchase price of its common shares repurchased as a reduction to stockholders’ equity allocated to treasury stock. On September 13, 2019, ML returned the shares to the Company. The Company subsequently retired the shares which had no impact to the Company’s stockholder’s equity. In January 2019, the Company was obligated to issue an aggregate of 3,061,224 shares of restricted stock at a value of approximately $4.5 million to two executive officers pursuant to the applicable employment contracts. The shares were not issued at that time due to insufficient shares available in the 2002 Stock Award and Incentive Plan. Such shares were subsequently approved by the Company's shareholders and issued in July 2019. In addition, an aggregate of 328,230 shares of restricted stock at an aggregate value of approximately $0.5 million were issued to its six non-employee directors. In August 2019, the Board resolved to accelerate and immediately vest upon closing of the Recapitalization Transaction, 164,166 shares of the annual stock compensation granted to resigning members of the Board on January 1, 2019. Each resigning Board member forfeited the remaining balance of the annual stock compensation granted on January 1, 2019, or an aggregate of 54,704 shares. The remaining 109,360 shares of restricted stock vested in January 2020. During the first quarter of 2019, certain employees, including two executive officers surrendered an aggregate of 166,699 shares of restricted stock for approximately $249,000 to cover income taxes due on the vesting of restricted shares. During the second quarter of 2019, an executive officer surrendered an aggregate of 24,281 shares of restricted stock for approximately $25,000 to cover income taxes due on the vesting of restricted stock units. On August 9, 2019, in connection with the Recapitalization Transaction (see Note 5 - Debt), the Company issued to the Investor Parties, in the aggregate, 5,853,002 shares of Common Stock valued at $4.2 million on the date of issuance. (the "New Common Equity"). In January 2020, the Company issued an aggregate of 704,208 shares of restricted stock at a value of approximately $0.7 million to two executive officers, which vest, in four equal annual installments over four years. During the first quarter of 2020, certain employees, including two executive officers surrendered an aggregate of 166,400 shares of restricted stock for $172,000 to cover income taxes due on the vesting of restricted shares. Additionally, an aggregate of 262,136 shares of restricted stock granted in 2017 was forfeited during the first quarter of 2020. 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 three months ended March 31, 2020 or 2019. Preferred Stock On August 9, 2019, in connection with the Recapitalization Transaction (see Note 5 - Debt), the Company issued 200,000 shares of Series A Senior Preferred Stock (the “Series A Preferred Stock”), $0.001 par value per share, to the Investor Parties (the “New Preferred Equity”). As of March 31, 2020 and December 31, 2019, 200,000 shares of Series A Preferred Stock were outstanding. Each share of Series A Preferred Stock has an initial value of $100 per share, which is automatically increased for any accrued and unpaid dividends (the “Accreted Value”). The Series A Preferred Stock has the right to receive dividends on a quarterly basis equal to 6.0% per annum, payable in cash or, if not paid in cash, by an automatic accretion of the Series A Preferred Stock. No dividends have been declared or paid. For the three months ended March 31, 2020, the Company recorded $307,000 of preferred stock dividends as an increase in the value of the Series A Preferred Stock. The Series A Preferred Stock has no stated maturity, however, the Company has the right to redeem all or a portion of the Series A Preferred Stock at its Liquidation Preference (as defined below) at any time after payment in full of the New Term Loan. In addition, upon the occurrence of certain change of control type events, holders of the Series A Preferred Stock are entitled to receive an amount (the “Liquidation Preference”), in preference to holders of Common Stock or other junior stock, equal to (i) 20% of the Accreted Value in the case of a certain specified transaction, or (ii) otherwise, 150% of the Accreted value, plus any accrued and unpaid dividends. The Company has the right, but is not required, to repurchase all or a portion of the Series A Preferred Stock at its Liquidation Preference at any time after payment in full of the New Term Loan (see Note 5 - Debt). The Series A Preferred Stock does not have any voting rights, except to the extent required by the Delaware General Corporation Law, except for the exclusive right to elect the Series A Preferred Directors (as described below) and except for certain approval rights over certain transactions (as described below). These approval rights require the prior consent of specified percentages of holders (or in certain cases, all holders) of the Series A Preferred Stock in order for the Company to take certain actions, including the issuance of additional shares of Series A Preferred Stock or parity stock, the issuance of senior stock, certain amendments to the Amended and Restated Certificate of Incorporation, the Certificate of Designations of the Series A Preferred Stock (the “Certificate of Designations”), the Second Amended and Restated By-laws or the Amended and Restated Nominating and Corporate Governance Committee Charter, material changes in the Company’s line of business and certain change of control type transactions. In addition, the Certificate of Designations provides that the approval of at least six directors is required for any related person transaction within the meaning of Item 404 of Regulation S-K under the Securities Act of 1933, as amended, including, without limitation, the adoption of, or any amendment, modification or waiver of, any agreement or arrangement related to any such transaction. The Certificate of Designations also includes restrictions on the ability of the Company to pay dividends on or make distributions with respect to, or redeem or repurchase, shares of Common Stock or other junior stock. In addition, holders of the Series A Preferred Stock have preemptive rights regarding future issuance of Series A Preferred Stock or parity stock. In addition, the Certificate of Designations provides the holders of Series A Preferred Stock certain board representation rights. The Certificate of Designations provides, among other things, that, for so long as at least 50,000 shares of Series A Preferred Stock remain outstanding, (i) the holders of a majority of the outstanding shares of Series A Preferred Stock have the sole right to nominate candidates to serve as the Series A Preferred Directors and (ii) the holders of shares of Series A Preferred Stock, voting as a separate class, have the right to elect two individuals to serve as the Series A Preferred Directors. From and after (i) the first annual meeting of stockholders occurring after less than 50,000 shares of Series A Preferred Stock remain outstanding, the holders of Series A Preferred Stock will only have the right to nominate and elect one Series A Preferred Director, and (ii) the time no shares of Series A Preferred Stock remain outstanding, the holders of Series A Preferred Stock will no longer have the right to nominate or elect any Series A Preferred Directors. The Series A Preferred Directors will serve for terms ending at the annual meeting of stockholders in 2023 and for successive three-year terms thereafter (until no shares of Series A Preferred Stock remain outstanding), and as of such time as the proposal to amend the Certificate of Incorporation to classify the Board into three classes, designated Class I, Class II and Class III, with staggered three-year terms, the Series A Preferred Directors shall be deemed to serve in Class III. The number of directors elected by the holders of the Company’s Common Stock and the number of Series A Preferred Directors is fixed and cannot be amended without the approval of holders of a majority of the outstanding Common Stock and holders of at least 80% of the outstanding shares of Series A Preferred Stock, each voting as a separate class. The Series A Preferred Stock redemption amount is contingent upon certain events with no stated redemption date as of the reporting date, although may become redeemable in the future. In accordance with the SEC guidance within ASC Topic 480, Distinguishing Liabilities from Equity: Classification and Measurement of Redeemable Securities , the Company classified the Series A Preferred Stock as temporary equity as the Series A Preferred Stock contains a redemption feature which is contingent upon certain deemed liquidation events, the occurrence of which may not solely be within the control of the Company. Under ASC 815, “Derivatives and Hedging” , certain contractual terms that meet the accounting definition of a derivative must be accounted for separately from the financial instrument in which they are embedded. The Company has concluded that the redemption upon a change of control and the repurchase option by the Company constitute embedded derivatives. The embedded redemption upon a change of control must be accounted for separately from the Series A Preferred Stock. The redemption provision specifies if certain events that constitute a change of control occur; the Company may be required to settle the Series A Preferred Stock at 150% of its accreted amount. Accordingly, the redemption provision meets the definition of a derivative, and its economic characteristics are not considered clearly and closely related to the economic characteristics of the Series A Preferred Stock, which is considered more akin to a debt instrument than equity. Accordingly, these two embedded derivatives are required to be bundled into a single derivative instrument and accounted for separately from the Series A Preferred Stock at fair value. The Company considers the repurchase option to have no value as the likelihood is remote that this event, within the Company’s control, would ever occur. On August 9, 2019 the Company determined that the fair value of the redemption provision upon a change of control was $4.9 million and recorded as a long term liability. In subsequent periods, the liability is accounted for at fair value, with changes in fair value recognized as other income (expense) on the Company's condensed consolidated statements of operations. The value of the redemption provision explicitly considered the present value of the potential premium that would be paid related to, and the probability of, an event that would trigger its payment. The probability of a triggering event was based on management’s estimates of the probability of a change of control event occurring. As of March 31, 2020, the Series A Preferred Stock is recorded in temporary equity at the amount of accrued, but unpaid dividends of $790,000, and the redemption provision, as a bifurcated derivative, is recorded as a long term liability with an estimated value of $3.2 million. The following table provides a reconciliation of the beginning and ending balances of the Series A Preferred Stock, which is recorded in temporary equity: 2020 Balance, January 1, $ 483 Preferred stock accrued dividends 307 Balance, March 31, $ 790 |
Joint Ventures
Joint Ventures | 3 Months Ended |
Mar. 31, 2020 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Joint Ventures | 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 months ended March 31, 2020 and 2019, the Company recognized income from the joint venture of $2,000 and nil, respectively. As of March 31, 2020 and December 31, 2019, the balance of the investment in the Pacific Animation Partners joint venture is nil. 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 $40,000 and $31,000 for the three months ended March 31, 2020 and 2019, respectively. In October 2016, the Company entered into a joint venture with Hong Kong Meisheng Cultural Company Limited ("Meisheng"), a Hong Kong-based subsidiary of Meisheng Culture & Creative Corp., for the purpose of creating and developing original, multiplatform content for children including new short-form series and original shows. JAKKS and 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 Culture & Creative Corp. will oversee through the Company’s existing distribution joint venture. The results of operations of the joint venture are consolidated with the Company's results. The non-controlling interest’s share of the income from the joint venture for the three months ended March 31, 2020 and 2019 was nil. As of March 31, 2019, Meisheng beneficially owns more than 10% of the Company’s outstanding common stock. In March 2017, the Company entered into an equity purchase agreement with Meisheng which provided, among other things, that as long as Meisheng and its affiliates hold 10% or more of the issued and outstanding shares of common stock of the Company, Meisheng shall have the right from time to time to designate a nominee (who currently is Mr. Xiaoqiang Zhao) for election to the Company’s board of directors. Meisheng also serves as a significant manufacturer of the Company. In the first quarter of 2019, Meisheng acquired New Time Group, which was a third-party manufacturer of the Company. For the three months ended March 31, 2020 and 2019, the Company made inventory-related payments to Meisheng of approximately $9.0 million and $2.2 million, respectively. As of March 31, 2020 and 2019, amounts due Meisheng for inventory received by the Company, but not paid totaled $8.4 million and $0.6 million, respectively. |
Goodwill
Goodwill | 3 Months Ended |
Mar. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill | GoodwillThe 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 several factors that occurred during the quarters ended March 31, 2020 and March 31, 2019, the Company determined the fair value of its reporting units should be retested for potential impairment. As a result of the retesting performed, no goodwill impairment was determined to have occurred for the three months ended March 31, 2020 and 2019.As of March 31, 2020, $35.1Â million |
Intangible Assets Other Than Go
Intangible Assets Other Than Goodwill | 3 Months Ended |
Mar. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets Other Than Goodwill | 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 March 31, 2020 and December 31, 2019 include the following (in thousands, except for weighted useful lives): March 31, 2020 December 31, 2019 Weighted Gross Accumulated Net Gross Accumulated Net (Years) Amortized Intangible Assets: Licenses 5.81 $ 20,130 $ (20,130) $ — $ 20,130 $ (19,988) $ 142 Product lines 10.36 4,846 (2,054) 2,792 4,846 (1,800) 3,046 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 $ 31,328 $ (28,536) $ 2,792 $ 31,328 $ (28,140) $ 3,188 Unamortized Intangible Assets: Trademarks $ 300 $ — $ 300 $ 300 $ — $ 300 |
Comprehensive Loss
Comprehensive Loss | 3 Months Ended |
Mar. 31, 2020 | |
Equity [Abstract] | |
Comprehensive Loss | Comprehensive Loss The table below presents the components of the Company’s comprehensive loss for the three months ended March 31, 2020 and 2019 (in thousands): Three Months Ended 2020 2019 Net Loss $ (11,998) $ (29,127) Other comprehensive income (loss): Foreign currency translation adjustment (1,634) 1,303 Comprehensive loss (13,632) (27,824) Less: Comprehensive income attributable to non-controlling interests 40 31 Comprehensive loss attributable to JAKKS Pacific, Inc. $ (13,672) $ (27,855) |
Litigation and Contingencies
Litigation and Contingencies | 3 Months Ended |
Mar. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Litigation and Contingencies | Litigation and Contingencies 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. The Company accrues for losses when the loss is deemed probable and the liability can reasonably be estimated. Where a liability is probable and there is a range of estimated loss with no best estimate in the range, the Company records the minimum estimated liability related to the claim. As additional information becomes available, the Company assesses the potential liability related to its pending litigation and revises its estimates. In the normal course of business, the Company may provide certain indemnifications and/or other commitments of varying scope to a) its licensors, customers and certain other parties, including against third party claims of intellectual property infringement, and b) its officers, directors and employees, including against third party claims regarding the periods in which they serve in such capacities with the Company. The duration and amount of such obligations is, in certain cases, indefinite. The Company's director’s and officer’s liability insurance policy may, however, enable it to recover a portion of any future payments related to its officer, director or employee indemnifications. For the past five years, costs related to director and officer indemnifications have not been significant. Other than certain liabilities recorded in the normal course of business related to royalty payments due the Company's licensors, no liabilities have been recorded for indemnifications and/or other commitments. |
Share-Based Payments
Share-Based Payments | 3 Months Ended |
Mar. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Share-Based Payments | Share-Based Payments The Company’s 2002 Stock Award and Incentive Plan (the “Plan”), as amended, provides for the awarding of stock options, restricted stock and restricted stock units to certain key employees, executive officers and non-employee directors. Current awards under the Plan include grants to directors, executive officers and certain key employees of restricted stock awards and units, with vesting contingent upon (a) the completion of specified service periods ranging from one five The following table summarizes the total share-based compensation expense recognized for the three months ended March 31, 2020 and 2019 (in thousands): Three Months Ended 2020 2019 Share-based compensation expense $ 252 $ 618 Restricted Stock Awards Restricted stock award activity (including those with performance-based vesting criteria) for the three months ended March 31, 2020 is summarized as follows: Restricted Stock Awards Number of Shares Weighted Average Outstanding, December 31, 2019 5,593,069 $ 1.60 Awarded 704,208 1.03 Vested (694,402) 2.18 Forfeited (262,136) 1.29 Outstanding, March 31, 2020 5,340,739 1.47 As of March 31, 2020, there was $3.5 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 2.35 years. Restricted Stock Units Restricted stock unit activity (including those with performance-based vesting criteria) for the three months ended March 31, 2020 is summarized as follows: Restricted Stock Units Number of Shares Weighted Average Outstanding, December 31, 2019 1,027,183 $ 2.34 Awarded — — Vested (67,678) 5.15 Forfeited (134,770) 3.51 Outstanding, March 31, 2020 824,735 1.92 As of March 31, 2020, there was $0.5 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 1.11 years. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 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 the Company's financial liabilities measured at fair value on a recurring basis as of March 31, 2020 and December 31, 2019 (in thousands): Carrying Amount as of March 31, 2020 Fair Value Measurements Level 1 Level 2 Level 3 3.25% convertible senior notes due in 2023 $ 43,745 $ — $ — $ 43,745 Preferred stock derivative liability 3,165 — — 3,165 Carrying Amount as of December 31, 2019 Fair Value Measurements Level 1 Level 2 Level 3 3.25% convertible senior notes due in 2023 $ 50,753 $ — $ — $ 50,753 Preferred stock derivative liability 5,247 — — 5,247 The following tables provide a reconciliation of the beginning and ending balances of liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) (in thousands): 3.25% convertible senior notes due in 2023 2020 Balance, January 1, $ 50,753 Change in fair value (7,675) Payment-in-kind interest 667 Balance, March 31, $ 43,745 Preferred stock derivative liability 2020 Balance, January 1, $ 5,247 Change in fair value (2,082) Balance, March 31, $ 3,165 The Company’s derivative liability is classified within Level 3 of the fair value hierarchy because unobservable inputs were used in estimating the fair value. The fair value of the redemption provision embedded in the Series A Preferred Stock is estimated based on a discounted cash flow model and probability assumptions based on management’s estimates of a change of control event occurring. In subsequent periods, the derivative liability is accounted for at fair value, with changes in fair value recognized as other income (expense) on the Company's condensed consolidated statements of operations. The Company’s accounts receivable, accounts payable, and accrued expenses represent financial instruments. The carrying value of these financial instruments is a reasonable approximation of fair value. |
Subsequent Event
Subsequent Event | 3 Months Ended |
Mar. 31, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Event | Subsequent Event On March 27, 2020, President Trump signed into law the “Coronavirus Aid, Relief and Economic Security Act (“CARES Act”). The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer-side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. The Company continues to monitor and explore any relevant government assistance programs that could support either cash liquidity or operating results in the short-medium term. As of the filing of this document, the Company continues to have no draw down on its credit facility with Wells Fargo. The Company has applied for funds under the Paycheck Protection Program after the period end in the amount of $10.0 million. The application for these funds requires the Company to, in good faith, certify that the current economic uncertainty made the loan request necessary to support the ongoing operations of the Company. This certification further requires the Company to take into account its current business activity and its ability to access other sources of liquidity sufficient to support ongoing operations in a manner that is not significantly detrimental to the business. The receipt of these funds, and the forgiveness of the loan attendant to these funds, is dependent on the Company having initially qualified for the loan and qualifying for the forgiveness of such loan based on its future adherence to the forgiveness criteria. In connection with the Company’s continued efforts to restore profitability, on April 17, 2020, the Company commenced a planned 26% reduction in its workforce. The Company expects to incur severance and restructuring charges of approximately $1.7 million, consisting solely of cash expenditures for employee termination and severance costs, starting in the second quarter of 2020 through the end of 2020. |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Principles of Consolidation | 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, 2019. 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. |
Reclassification | Certain prior period amounts have been reclassified for consistency with the current period presentation. |
Recent Accounting Pronouncements | In June 2016, the FASB issued ASU 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” which require a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. The new standard was initially effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. In November 2019, the FASB issued ASU 2019-10 which deferred the effective date of ASU 2016-13 by three years for Smaller Reporting Companies. As a result, the effective date for the standard is fiscal years beginning after December 15, 2022, and interim periods therein, and early adoption is permitted. The Company is currently evaluating the impact of the adoption of ASU 2016-13 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 adoption of this standard did not have an impact on the Company’s condensed consolidated financial statements. In October 2018, the FASB issued ASU 2018-17, "Consolidation: Targeted Improvements to Related Party Guidance for Variable Interest Entities," which improves the accounting for variable interest entities by considering indirect interests held through related parties under common control for determining whether fees paid to decision makers and service providers are variable interests. This new standard is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The amendments are required to be applied retrospectively with a cumulative-effect adjustment to retained earnings at the beginning of the earliest period presented. Early adoption is permitted. The adoption of this standard did not have an impact on the Company's condensed consolidated financial statements. |
Going Concern and Liquidity | Going Concern and Liquidity On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency because of a new strain of coronavirus originating in Wuhan, China (the “COVID-19 outbreak”) and the risks to the international community as the virus spreads globally beyond its point of origin. In March 2020, the WHO classified the COVID-19 outbreak as a pandemic, based on the rapid increase in exposure globally. The full impact of the COVID-19 outbreak continues to evolve as of the date of this report. As such, it is uncertain as to the full magnitude that the pandemic will have on the Company’s financial condition, liquidity, and future results of operations. Management is actively monitoring the global situation and the resulting impact on its financial condition, liquidity, operations, suppliers, industry, and workforce. Given the daily evolution of the COVID-19 outbreak and the global responses to curb its spread, it is extremely challenging for the Company to estimate the effects of the COVID-19 outbreak on its results of operations, financial condition, and liquidity for fiscal year 2020. March year-to-date syndicated market data for the United States shows a number of manufacturers’ sell-through at retail substantially up, and others down, vs. prior year. How long these trends continue, and whether they represent a pulling forward of future sales or a deferment of intended sales remains to be seen. Although the Company cannot estimate the length or gravity of the impact of the COVID-19 outbreak at this time, it is likely the pandemic will have a material adverse effect on the Company’s sales expectations for fiscal year 2020. The Company has embarked upon cost mitigating efforts. In mid-March 2020, the Company began migrating to a work-from-home model in compliance with local guidance. In early April 2020, the Company began to reassess its revenue and expense projections for the year in an attempt to anticipate decreases in customer and consumer demand based on the uncertainty associated with the economic impact of the pandemic. In parallel, the Company began a review of worldwide spending to identify both short-term and long-term cost savings measures to preserve both profitability and liquidity in light of the potential for decreased product demand. By late April 2020, the Company had identified new revenue and spending objectives for the year 2020 and synchronized those expectations across the senior leadership team. It is the Company’s intention to carefully monitor the pandemic’s impact across markets, channels and customers and strike the right balance of pursuing opportunity while minimizing risk to the Company’s long-term health. On March 27, 2020, President Trump signed into law the “Coronavirus Aid, Relief and Economic Security Act (“CARES Act”). The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer-side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. The Company continues to monitor and explore any relevant government assistance programs that could support either cash liquidity or operating results in the short-medium term. As of the filing of this document, the Company continues to have no draw down on its credit facility with Wells Fargo. The Company has applied for funds under the Paycheck Protection Program after the period end in the amount of $10.0 million. The application for these funds requires the Company to, in good faith, certify that the current economic uncertainty made the loan request necessary to support the ongoing operations of the Company. This certification further requires the Company to take into account its current business activity and its ability to access other sources of liquidity sufficient to support ongoing operations in a manner that is not significantly detrimental to the business. The receipt of these funds, and the forgiveness of the loan attendant to these funds, is dependent on the Company having initially qualified for the loan and qualifying for the forgiveness of such loan based on its future adherence to the forgiveness criteria. As of March 31, 2020 and December 31, 2019, the Company held cash and cash equivalents, including restricted cash, of $44.0 million and $66.3 million, respectively. Cash, and cash equivalents, including restricted cash held outside of the United States in various foreign subsidiaries totaled $29.3 million and $27.0 million as of March 31, 2020 and December 31, 2019, respectively. The cash and cash equivalents, including restricted cash balances in the Company's 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 March 31, 2020. The Company’s primary sources of working capital are cash flows from operations and borrowings under its credit facility (see Note 6 - Credit Facilities). 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. As of March 31, 2020, the Company has substantial indebtedness including $134.8 million of outstanding indebtedness under a First Lien Term Loan Facility Credit Agreement (the “New Term Loan Agreement”). As of March 31, 2020, the Company has no outstanding indebtedness under an amended and extended Credit Agreement (the “Amended ABL Credit Agreement” or “Amended Wells Fargo Credit Agreement”) with Wells Fargo Bank, National Association (“Wells Fargo”). The New Term Loan Agreement and Amended ABL each contain negative covenants that, subject to certain exceptions, limit the ability of the Company and its subsidiaries to, among other things, incur additional indebtedness, make restricted payments, pledge their assets as security, make investments, loans, advances, guarantees and acquisitions, undergo fundamental changes and enter into transactions with affiliates, as well as cross-default provisions. Commencing with the fiscal quarter ending September 30, 2020, the Company is also required to maintain a minimum Earnings Before Interest Tax Depreciation and Amortization (“EBITDA") of not less than $34.0 million over the previous twelve months and a minimum liquidity of not less than $10.0 million. The New Term Loan Agreement contains events of default that are customary for a facility of this nature, including nonpayment of principal, nonpayment of interest, fees or other amounts, material inaccuracy of representations and warranties, violation of covenants, cross-default to other material indebtedness, bankruptcy or insolvency events, material judgment defaults and a change of control as specified in the New Term Loan Agreement, and cross-default provisions with the Amended Wells Fargo Credit Agreement. If an event of default occurs under either Agreement, the maturity of the amounts owed under the New Term Loan Agreement and the Amended Wells Fargo Credit Agreement may be accelerated. The Company was in compliance with the financial covenants under the New Term Loan Agreement as of March 31, 2020. Given the current uncertainties created by the COVID-19 pandemic, there can be no assurance as to our ability to achieve the minimum EBITDA threshold required under the New Term Loan Agreement. Failure to satisfy such requirement would constitute an event of default under the New Term Loan Agreement and Amended ABL Credit Agreement unless the lenders agree to waive compliance with such requirement. The Company’s ability to fund operations and retire debt when due is dependent on a number of factors, some of which are beyond the Company's control and/or inherently difficult to estimate, including the Company's future operating performance and the factors mentioned above, among other risks and uncertainties. To the extent the Company is unable to fund its operations or retire debt when due, no assurances can be given that the Company will have the financial resources required to obtain, or that the conditions of the capital markets will support, any future debt or equity financings, which could have a material adverse impact on the Company’s business, results of operations and financial condition. These conditions raise substantial doubt about the Company’s ability to continue as a going concern for a period of one year from the date the financial statements are issued. The Company plans to negotiate waivers or obtain other accommodations to the satisfaction of its existing lenders, inclusive of Wells Fargo, the Term Loan group and the Company’s unsecured creditors. Although the lenders under the existing credit facilities may waive such covenants or provide other accommodations in event of default, they are not obligated to do so. The Company cannot make any assurances regarding the likelihood or certainty in being successful in obtaining these waivers in the event the Company is unable to achieve the minimum EBITDA threshold. Failure to obtain such a waiver would have a material adverse effect on the Company’s liquidity, financial condition and results of operations. |
Revenue Recognition | 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: Toys/Consumer Products 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 20% 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. |
Business Segments, Geographic_2
Business Segments, Geographic Data, and Sales by Major Customers (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Segment Reporting [Abstract] | |
Information by Segment and Reconciliation to Reported Amounts | Information by segment and a reconciliation to reported amounts for the three months ended March 31, 2020 and 2019 and as of March 31, 2020 and December 31, 2019 are as follows (in thousands): Three Months Ended 2020 2019 Net Sales Toys/Consumer Products $ 62,565 $ 67,186 Halloween 3,992 3,640 $ 66,557 $ 70,826 Three Months Ended 2020 2019 Loss from Operations Toys/Consumer Products $ (12,739) $ (19,877) Halloween (3,247) (4,164) $ (15,986) $ (24,041) Three Months Ended 2020 2019 Depreciation and Amortization Expense Toys/Consumer Products $ 1,824 $ 3,137 Halloween 58 97 $ 1,882 $ 3,234 March 31, December 31, Assets Toys/Consumer Products $ 266,365 $ 356,584 Halloween 10,548 8,638 $ 276,913 $ 365,222 |
Information by Geographic Area | The following tables present information about the Company by geographic area as of March 31, 2020 and December 31, 2019 and for the three months ended March 31, 2020 and 2019 (in thousands): March 31, December 31, Long-lived Assets China $ 11,846 $ 11,461 United States 3,329 3,556 Hong Kong 224 242 $ 15,399 $ 15,259 Three Months Ended 2020 2019 Net Sales by Customer Area United States $ 51,918 $ 57,558 Europe 7,618 7,191 Canada 2,348 2,560 Asia 1,770 1,591 Australia & New Zealand 1,531 906 Latin America 1,000 865 Middle East & Africa 372 155 $ 66,557 $ 70,826 |
Net Sales to Major Customers | Net sales to major customers for the three months ended March 31, 2020 and 2019 were as follows (in thousands, except for percentages): Three Months Ended March 31, 2020 2019 Amount Percentage Amount Percentage Wal-Mart $ 18,510 27.8 % $ 22,109 31.2 % Target 14,615 22.0 12,179 17.2 $ 33,125 49.8 % $ 34,288 48.4 % |
Inventory (Tables)
Inventory (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Inventory Disclosure [Abstract] | |
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): March 31, December 31, Raw materials $ 48 $ 144 Finished goods 48,185 54,115 $ 48,233 $ 54,259 |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
Summary of Debt Outstanding | Convertible senior notes consist of the following (in thousands): March 31, 2020 December 31, 2019 4.875% convertible senior notes due 2020 $ 1,905 $ 1,905 3.25% convertible senior notes due 2023* 43,745 50,753 Total convertible senior notes $ 45,650 $ 52,658 * The amounts presented for the 3.25% convertible senior notes due 2023 within the table represent the fair value as of March 31, 2020 and December 31, 2019 (see Note 16 - Fair Value Measurements). The principal amount of these notes totaled $37.6 million as of March 31, 2020 and December 31, 2019. Term loan consists of the following (in thousands): March 31, 2020 December 31, 2019 Principal Amount** Debt Discount/ Net Principal Amount** Debt Discount/ Net Term Loan $ 134,801 $ (11,364) $ 123,437 $ 134,801 $ (12,319) $ 122,482 * The term loan was valued using the discounted cash flow method to determine the implied debt discount. The debt discount and issuance costs are being amortized over the life of the term loan. |
Loss Per Share (Tables)
Loss Per Share (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Earnings Per Share [Abstract] | |
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 2020 2019 Net loss $ (11,998) $ (29,127) Net income attributable to non-controlling interests 40 31 Net loss attributable to JAKKS Pacific, Inc. (12,038) (29,158) Preferred stock dividend 307 — Net loss attributable to common stockholders $ (12,345) $ (29,158) Weighted average common shares outstanding - basic and diluted 30,208 23,557 Loss per share available to common stockholders - basic and diluted $ (0.41) $ (1.24) |
Common Stock and Preferred St_2
Common Stock and Preferred Stock (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Equity [Abstract] | |
Schedule of Series A Preferred Stock | The following table provides a reconciliation of the beginning and ending balances of the Series A Preferred Stock, which is recorded in temporary equity: 2020 Balance, January 1, $ 483 Preferred stock accrued dividends 307 Balance, March 31, $ 790 |
Intangible Assets Other Than _2
Intangible Assets Other Than Goodwill (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Indefinite-Lived Intangible Assets | Intangible assets as of March 31, 2020 and December 31, 2019 include the following (in thousands, except for weighted useful lives): March 31, 2020 December 31, 2019 Weighted Gross Accumulated Net Gross Accumulated Net (Years) Amortized Intangible Assets: Licenses 5.81 $ 20,130 $ (20,130) $ — $ 20,130 $ (19,988) $ 142 Product lines 10.36 4,846 (2,054) 2,792 4,846 (1,800) 3,046 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 $ 31,328 $ (28,536) $ 2,792 $ 31,328 $ (28,140) $ 3,188 Unamortized Intangible Assets: Trademarks $ 300 $ — $ 300 $ 300 $ — $ 300 |
Schedule of Finite-Lived Intangible Assets | Intangible assets as of March 31, 2020 and December 31, 2019 include the following (in thousands, except for weighted useful lives): March 31, 2020 December 31, 2019 Weighted Gross Accumulated Net Gross Accumulated Net (Years) Amortized Intangible Assets: Licenses 5.81 $ 20,130 $ (20,130) $ — $ 20,130 $ (19,988) $ 142 Product lines 10.36 4,846 (2,054) 2,792 4,846 (1,800) 3,046 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 $ 31,328 $ (28,536) $ 2,792 $ 31,328 $ (28,140) $ 3,188 Unamortized Intangible Assets: Trademarks $ 300 $ — $ 300 $ 300 $ — $ 300 |
Comprehensive Loss (Tables)
Comprehensive Loss (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Equity [Abstract] | |
Components of Comprehensive Income (Loss) | The table below presents the components of the Company’s comprehensive loss for the three months ended March 31, 2020 and 2019 (in thousands): Three Months Ended 2020 2019 Net Loss $ (11,998) $ (29,127) Other comprehensive income (loss): Foreign currency translation adjustment (1,634) 1,303 Comprehensive loss (13,632) (27,824) Less: Comprehensive income attributable to non-controlling interests 40 31 Comprehensive loss attributable to JAKKS Pacific, Inc. $ (13,672) $ (27,855) |
Share-Based Payments (Tables)
Share-Based Payments (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Total Share-Based Compensation Expense and Related Tax Benefits Recognized | The following table summarizes the total share-based compensation expense recognized for the three months ended March 31, 2020 and 2019 (in thousands): Three Months Ended 2020 2019 Share-based compensation expense $ 252 $ 618 |
Restricted Stock Award Activity | Restricted stock award activity (including those with performance-based vesting criteria) for the three months ended March 31, 2020 is summarized as follows: Restricted Stock Awards Number of Shares Weighted Average Outstanding, December 31, 2019 5,593,069 $ 1.60 Awarded 704,208 1.03 Vested (694,402) 2.18 Forfeited (262,136) 1.29 Outstanding, March 31, 2020 5,340,739 1.47 |
Restricted Stock Unit Activity | Restricted stock unit activity (including those with performance-based vesting criteria) for the three months ended March 31, 2020 is summarized as follows: Restricted Stock Units Number of Shares Weighted Average Outstanding, December 31, 2019 1,027,183 $ 2.34 Awarded — — Vested (67,678) 5.15 Forfeited (134,770) 3.51 Outstanding, March 31, 2020 824,735 1.92 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Financial Instruments Measured at Fair Value on Recurring Basis | The following tables summarize the Company's financial liabilities measured at fair value on a recurring basis as of March 31, 2020 and December 31, 2019 (in thousands): Carrying Amount as of March 31, 2020 Fair Value Measurements Level 1 Level 2 Level 3 3.25% convertible senior notes due in 2023 $ 43,745 $ — $ — $ 43,745 Preferred stock derivative liability 3,165 — — 3,165 Carrying Amount as of December 31, 2019 Fair Value Measurements Level 1 Level 2 Level 3 3.25% convertible senior notes due in 2023 $ 50,753 $ — $ — $ 50,753 Preferred stock derivative liability 5,247 — — 5,247 |
Reconciliation of Beginning and Ending Balances of Assets Measured at Fair Value on Recurring Basis Using Significant Unobservable Inputs (Level 3) | The following tables provide a reconciliation of the beginning and ending balances of liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) (in thousands): 3.25% convertible senior notes due in 2023 2020 Balance, January 1, $ 50,753 Change in fair value (7,675) Payment-in-kind interest 667 Balance, March 31, $ 43,745 Preferred stock derivative liability 2020 Balance, January 1, $ 5,247 Change in fair value (2,082) Balance, March 31, $ 3,165 |
Basis of Presentation (Details)
Basis of Presentation (Details) - USD ($) | 1 Months Ended | 3 Months Ended | |||||
Aug. 31, 2019 | Sep. 30, 2020 | May 15, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Cash and cash equivalents including restricted cash | $ 44,028,000 | $ 66,286,000 | $ 47,405,000 | $ 58,205,000 | |||
Value of debt outstanding | 45,650,000 | 52,658,000 | |||||
PPP Loan | Subsequent Event | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Debt instrument, face amount | $ 10,000,000 | ||||||
Amended ABL Credit Agreement | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Value of debt outstanding | 0 | ||||||
Minimum liquidity requirement | $ 25,000,000 | ||||||
Secured Debt | New Term Loan Agreement | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Value of debt outstanding | 134,801,000 | 134,801,000 | |||||
Secured Debt | New Term Loan Agreement | Forecast | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Covenant, EBITDA requirement | $ 34,000,000 | ||||||
Minimum liquidity requirement | $ 10,000,000 | ||||||
Outside the United States | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Cash and cash equivalents including restricted cash | $ 29,300,000 | $ 27,000,000 |
Business Segments, Geographic_3
Business Segments, Geographic Data, and Sales by Major Customers - Additional Information (Detail) - Segment | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Dec. 31, 2019 | |
Segment Reporting Information [Line Items] | ||
Number of reporting segments | 2 | |
Net Accounts Receivable | Three Largest Customers | Customer Concentration Risk | ||
Segment Reporting Information [Line Items] | ||
Concentration risk percentage | 76.70% | 56.90% |
Business Segments, Geographic_4
Business Segments, Geographic Data, and Sales by Major Customers - Information by Segment and Reconciliation to Reported Amounts (Detail) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Segment Reporting Information [Line Items] | |||
Net sales | $ 66,557 | $ 70,826 | |
Loss from Operations | (15,986) | (24,041) | |
Depreciation and Amortization Expense | 1,882 | 3,234 | |
Assets | 276,913 | $ 365,222 | |
Toys/Consumer Products | |||
Segment Reporting Information [Line Items] | |||
Net sales | 62,565 | 67,186 | |
Loss from Operations | (12,739) | (19,877) | |
Depreciation and Amortization Expense | 1,824 | 3,137 | |
Assets | 266,365 | 356,584 | |
Halloween | |||
Segment Reporting Information [Line Items] | |||
Net sales | 3,992 | 3,640 | |
Loss from Operations | (3,247) | (4,164) | |
Depreciation and Amortization Expense | 58 | $ 97 | |
Assets | $ 10,548 | $ 8,638 |
Business Segments, Geographic_5
Business Segments, Geographic Data, and Sales by Major Customers - Information by Geographic Area (Detail) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Long-lived Assets | $ 15,399 | $ 15,259 | |
Net sales | 66,557 | $ 70,826 | |
China | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Long-lived Assets | 11,846 | 11,461 | |
United States | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Long-lived Assets | 3,329 | 3,556 | |
Net sales | 51,918 | 57,558 | |
Hong Kong | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Long-lived Assets | 224 | $ 242 | |
Europe | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Net sales | 7,618 | 7,191 | |
Canada | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Net sales | 2,348 | 2,560 | |
Asia | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Net sales | 1,770 | 1,591 | |
Australia & New Zealand | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Net sales | 1,531 | 906 | |
Latin America | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Net sales | 1,000 | 865 | |
Middle East & Africa | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Net sales | $ 372 | $ 155 |
Business Segments, Geographic_6
Business Segments, Geographic Data, and Sales by Major Customers - Net Sales to Major Customers (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Revenue, Major Customer [Line Items] | ||
Net sales | $ 66,557 | $ 70,826 |
Net Sales | Customer Concentration Risk | ||
Revenue, Major Customer [Line Items] | ||
Net sales | $ 33,125 | $ 34,288 |
Percentage of Net Sales | 49.80% | 48.40% |
Net Sales | Customer Concentration Risk | Wal-Mart | ||
Revenue, Major Customer [Line Items] | ||
Net sales | $ 18,510 | $ 22,109 |
Percentage of Net Sales | 27.80% | 31.20% |
Net Sales | Customer Concentration Risk | Target | ||
Revenue, Major Customer [Line Items] | ||
Net sales | $ 14,615 | $ 12,179 |
Percentage of Net Sales | 22.00% | 17.20% |
Inventory (Detail)
Inventory (Detail) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 48 | $ 144 |
Finished goods | 48,185 | 54,115 |
Inventory, net | $ 48,233 | $ 54,259 |
Revenue Recognition and Reser_2
Revenue Recognition and Reserve for Sales Returns and Allowances (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Dec. 31, 2019 | |
Significant Accounting Policies [Line Items] | ||
Reserve for sales returns and allowances | $ 31,743 | $ 38,365 |
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 | 20.00% |
Debt - Summary of Convertible S
Debt - Summary of Convertible Senior Notes (Detail) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 | Aug. 31, 2019 | Aug. 31, 2017 | Jun. 30, 2014 |
Debt Instrument [Line Items] | |||||
Value of debt outstanding | $ 45,650 | $ 52,658 | |||
4.875% convertible senior notes due 2020 | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, interest rate | 4.875% | 4.875% | |||
Value of debt outstanding | $ 1,905 | $ 1,905 | $ 111,100 | ||
3.25% convertible senior notes due 2023 | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, interest rate | 3.25% | 3.25% | 3.25% | ||
Value of debt outstanding | $ 43,745 | $ 50,753 | |||
Carrying Amount | 3.25% convertible senior notes due 2023 | |||||
Debt Instrument [Line Items] | |||||
Value of debt outstanding | $ 37,600 | $ 37,600 |
Debt - Additional Information (
Debt - Additional Information (Detail) | Nov. 01, 2019 | Aug. 09, 2019USD ($) | Feb. 09, 2019 | Nov. 01, 2018$ / shares | Jul. 26, 2018USD ($) | Nov. 07, 2017USD ($) | Aug. 31, 2019USD ($)$ / shares | Aug. 31, 2017USD ($) | Jan. 31, 2016USD ($) | Jun. 30, 2014USD ($)$ / shares | Jul. 31, 2013USD ($)$ / shares | Sep. 30, 2020USD ($) | Mar. 31, 2020USD ($)$ / shares | Mar. 31, 2019USD ($) | Jun. 30, 2017USD ($)shares | Mar. 31, 2017USD ($)shares | Dec. 31, 2016USD ($) | Dec. 31, 2019USD ($)$ / shares | Aug. 01, 2018USD ($) | Jun. 14, 2018USD ($) |
Debt Instrument [Line Items] | ||||||||||||||||||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.001 | $ 0.001 | ||||||||||||||||||
Unrealized loss (gain) on fair value adjustment | $ 7,675,000 | $ (2,423,000) | ||||||||||||||||||
Payment-in-kind interest | 1,155,000 | 0 | ||||||||||||||||||
Value of debt outstanding | 45,650,000 | $ 52,658,000 | ||||||||||||||||||
Debt issuance cost | $ 1,300,000 | |||||||||||||||||||
Amortization of debt discount | $ 693,000 | 0 | ||||||||||||||||||
4.25% Convertible Senior Notes (due 2018) | ||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||
Debt instrument, face amount | $ 100,000,000 | |||||||||||||||||||
Debt instrument, interest rate | 4.25% | |||||||||||||||||||
Debt instrument, conversion rate (in dollars per share) | $ / shares | $ 8.74 | |||||||||||||||||||
Debt instrument repurchase amount | $ 12,000,000 | $ 39,100,000 | $ 6,100,000 | |||||||||||||||||
Write-off of debt issuance costs | 100,000 | $ 100,000 | ||||||||||||||||||
Payment for repurchase of convertible notes | $ 24,100,000 | |||||||||||||||||||
Debt instrument shares common stock issued upon conversion (in shares) | shares | 2,900,000 | |||||||||||||||||||
Gain recognized on retirement of debt | 100,000 | |||||||||||||||||||
Conversion rate | 0.1143674 | |||||||||||||||||||
4.25% Convertible Senior Notes (due 2018) | Common Stock | ||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||
Debt instrument repurchase amount | $ 11,600,000 | |||||||||||||||||||
Debt instrument shares common stock issued upon conversion (in shares) | shares | 112,400 | |||||||||||||||||||
3.25% Convertible Senior Notes (due 2020) | ||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||
Debt instrument, face amount | $ 8,000,000 | |||||||||||||||||||
Debt instrument, interest rate | 3.25% | 3.25% | ||||||||||||||||||
Debt conversion price, percentage | 105.00% | 105.00% | ||||||||||||||||||
4.875% convertible senior notes due 2020 | ||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||
Debt instrument, face amount | $ 113,000,000 | $ 115,000,000 | ||||||||||||||||||
Debt instrument, interest rate | 4.875% | 4.875% | ||||||||||||||||||
Debt instrument, conversion rate (in dollars per share) | $ / shares | $ 9.64 | |||||||||||||||||||
Debt instrument repurchase amount | $ 2,000,000 | |||||||||||||||||||
Write-off of debt issuance costs | $ 700,000 | 100,000 | ||||||||||||||||||
Gain recognized on retirement of debt | (2,400,000) | $ 100,000 | ||||||||||||||||||
Conversion rate | 0.1037613 | |||||||||||||||||||
Value of debt outstanding | 111,100,000 | $ 1,905,000 | 1,905,000 | |||||||||||||||||
Debt refinanced, exchanged into similar debt instruments | 103,800,000 | |||||||||||||||||||
Amount of accrued interest refinanced | 1,000,000 | |||||||||||||||||||
Amount of debt exchanged into a new debt instrument | $ 7,300,000 | |||||||||||||||||||
Convertible senior notes, net of debt issuance costs | 1,900,000 | |||||||||||||||||||
Convertible senior note payable, fair value | $ 1,800,000 | $ 1,700,000 | ||||||||||||||||||
3.25% convertible senior notes due 2023 | ||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||
Debt instrument, interest rate | 3.25% | 3.25% | 3.25% | |||||||||||||||||
Debt conversion price, percentage | 105.00% | |||||||||||||||||||
Interest rate if paid in cash | 3.25% | |||||||||||||||||||
Interest rate if paid in stock | 5.00% | |||||||||||||||||||
Paid in kind interest rate | 2.75% | |||||||||||||||||||
Conversion rate | 1 | 1 | ||||||||||||||||||
Threshold percentage of stock price trigger | 30.00% | |||||||||||||||||||
Threshold percentage of market price trigger | 150.00% | |||||||||||||||||||
Equity method investment, ownership percentage | 49.00% | |||||||||||||||||||
Value of debt outstanding | $ 43,745,000 | $ 50,753,000 | ||||||||||||||||||
Convertible Senior Notes | ||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||
Amortization of debt discount | 0 | $ 200,000 | ||||||||||||||||||
Oasis Management and Oasis Investments ll Master Fund Ltd. | ||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.001 | |||||||||||||||||||
Oasis Management and Oasis Investments ll Master Fund Ltd. | 3.25% Convertible Senior Notes (due 2020) | ||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||
Debt instrument, face amount | $ 21,600,000 | |||||||||||||||||||
Debt instrument, interest rate | 3.25% | |||||||||||||||||||
Debt instrument, conversion rate (in dollars per share) | $ / shares | $ 2.54 | |||||||||||||||||||
Gain recognized on retirement of debt | $ (500,000) | $ (600,000) | $ (10,400,000) | |||||||||||||||||
Debt instrument, amount redeemed | $ 13,200,000 | |||||||||||||||||||
Conversion rate | 0.3937008 | 0.3222688 | 0.3280302 | |||||||||||||||||
Unrealized loss (gain) on fair value adjustment | (7,000,000) | |||||||||||||||||||
Payment-in-kind interest | 700,000 | |||||||||||||||||||
Oasis Management and Oasis Investments ll Master Fund Ltd. | 3.25% convertible senior notes due 2023 | ||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||
Debt instrument, face amount | $ 8,000,000 | |||||||||||||||||||
Secured Debt | New Term Loan Agreement | ||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||
Debt instrument, interest rate | 10.50% | |||||||||||||||||||
Interest rate if paid in cash | 8.00% | |||||||||||||||||||
Paid in kind interest rate | 2.50% | |||||||||||||||||||
Value of debt outstanding | 134,801,000 | 134,801,000 | ||||||||||||||||||
Debt issuance cost | 3,800,000 | |||||||||||||||||||
Amortization expense debt issuance | 300,000 | |||||||||||||||||||
Debt discount | $ 10,100,000 | |||||||||||||||||||
Amortization of debt discount | 700,000 | |||||||||||||||||||
Line of credit facility maximum borrowing capacity | $ 134,800,000 | |||||||||||||||||||
Long term debt | $ 114,800,000 | $ 123,400,000 | ||||||||||||||||||
Secured Debt | New Term Loan Agreement | Forecast | ||||||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||||||
Covenant, EBITDA requirement | $ 34,000,000 | |||||||||||||||||||
Minimum liquidity requirement | $ 10,000,000 |
Debt - Schedule of Term Loans (
Debt - Schedule of Term Loans (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Line of Credit Facility [Line Items] | ||
Principal/ Fair Value Amount | $ 45,650 | $ 52,658 |
New Term Loan Agreement | Secured Debt | ||
Line of Credit Facility [Line Items] | ||
Principal/ Fair Value Amount | 134,801 | 134,801 |
Debt Issuance Costs | (11,364) | (12,319) |
Net Amount | 123,437 | 122,482 |
Accrued paid-in-kind interest | $ 2,200 | $ 1,300 |
Credit Facilities (Detail)
Credit Facilities (Detail) - USD ($) | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||||
Aug. 31, 2019 | Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | Aug. 09, 2019 | Jun. 14, 2018 | Mar. 31, 2014 | |
Line of Credit Facility [Line Items] | |||||||
Debt issuance cost | $ 1,300,000 | ||||||
GECC | |||||||
Line of Credit Facility [Line Items] | |||||||
Line of credit facility maximum borrowing capacity | $ 75,000,000 | ||||||
Amount of credit facility outstanding | $ 0 | $ 0 | |||||
Stand by letters of credit outstanding amount | 9,800,000 | 9,200,000 | |||||
Line of credit facility, total excess availability | $ 32,000,000 | $ 41,800,000 | |||||
Rate of credit facility | 0.00% | 4.53% | |||||
Amended ABL Credit Agreement | |||||||
Line of Credit Facility [Line Items] | |||||||
Line of credit facility maximum borrowing capacity | $ 60,000,000 | ||||||
Fixed charge coverage ratio | 110.00% | ||||||
Minimum liquidity requirement | $ 25,000,000 | ||||||
Minimum availability | $ 9,000,000 | ||||||
Amortization expense debt issuance | $ 100,000 | $ 400,000 | |||||
Amended ABL Credit Agreement | Minimum | London Interbank Offered Rate (LIBOR) | |||||||
Line of Credit Facility [Line Items] | |||||||
Applicable margin spread over base rate | 1.50% | ||||||
Amended ABL Credit Agreement | Minimum | Base Rate [Member] | |||||||
Line of Credit Facility [Line Items] | |||||||
Applicable margin spread over base rate | 0.50% | ||||||
Amended ABL Credit Agreement | Maximum | London Interbank Offered Rate (LIBOR) | |||||||
Line of Credit Facility [Line Items] | |||||||
Applicable margin spread over base rate | 2.00% | ||||||
Amended ABL Credit Agreement | Maximum | Base Rate [Member] | |||||||
Line of Credit Facility [Line Items] | |||||||
Applicable margin spread over base rate | 1.00% | ||||||
Term Loan Agreement | Great American Capital Partners Finance Co LLC | |||||||
Line of Credit Facility [Line Items] | |||||||
Debt, net amount | $ 20,000,000 | $ 20,000,000 | |||||
Percentage of principal amount redeemed | 10.00% | ||||||
Debt issuance cost | $ 1,100,000 | ||||||
Term Loan Agreement | Year One | Great American Capital Partners Finance Co LLC | |||||||
Line of Credit Facility [Line Items] | |||||||
Debt prepayment percentage | 2.00% | ||||||
Term Loan Agreement | Year Two | Great American Capital Partners Finance Co LLC | |||||||
Line of Credit Facility [Line Items] | |||||||
Debt prepayment percentage | 2.00% | ||||||
Term Loan Agreement | Year Three | Great American Capital Partners Finance Co LLC | |||||||
Line of Credit Facility [Line Items] | |||||||
Debt prepayment percentage | 1.00% | ||||||
4.25% Convertible Senior Notes (due 2018) | GECC | Letter of Credit | |||||||
Line of Credit Facility [Line Items] | |||||||
Line of credit facility maximum borrowing capacity | $ 35,000,000 |
Income Taxes (Detail)
Income Taxes (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Income Tax Disclosure [Abstract] | ||
Provision for (benefit from) income taxes | $ 276 | $ (245) |
Effective income tax rate | (2.40%) | 0.80% |
Loss Per Share - Reconciliation
Loss Per Share - Reconciliation of Weighted Average Shares (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Earnings Per Share [Abstract] | ||
Net income (loss) | $ (11,998) | $ (29,127) |
Net income attributable to non-controlling interests | 40 | 31 |
Net loss attributable to JAKKS Pacific, Inc. | (12,038) | (29,158) |
Preferred stock dividend | 307 | 0 |
Net loss attributable to common stockholders | $ (12,345) | $ (29,158) |
Shares used in net loss per share - basic and diluted (in shares) | 30,208 | 23,557 |
Loss per share - basic and filuted (in dollars per share) | $ (0.41) | $ (1.24) |
Loss Per Share - Additional Inf
Loss Per Share - Additional Information (Detail) - shares | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Convertible Debt Securities | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Potentially dilutive securities excluded from computation of diluted earnings per common share (in shares) | 3,112,840 | |
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 (in shares) | 43,911,044 | 27,048,339 |
Common Stock and Preferred St_3
Common Stock and Preferred Stock - Additional Information (Detail) | Aug. 09, 2019USD ($)$ / sharesshares | Jan. 01, 2019shares | Jan. 31, 2020USD ($)ExecutiveOfficersshares | Aug. 31, 2019shares | Jan. 31, 2019USD ($)ExecutiveOfficersdirectorshares | Jun. 30, 2014USD ($)$ / sharesshares | Mar. 31, 2020USD ($)$ / sharesshares | Jun. 30, 2019USD ($)shares | Mar. 31, 2019USD ($)ExecutiveOfficersshares | Dec. 31, 2019USD ($)$ / sharesshares |
Class of Stock [Line Items] | ||||||||||
Common stock issued in the period (in shares) | 5,853,002 | |||||||||
Dividends | $ | $ 0 | $ 0 | ||||||||
Stock issuance and grants | $ | $ 4,200,000 | |||||||||
Shares vested | 164,166 | |||||||||
Preferred stock, shares issued (in shares) | 200,000 | 200,000 | 200,000 | |||||||
Preferred stock, par value (in dollars per share) | $ / shares | $ 0.001 | $ 0.001 | $ 0.001 | |||||||
Preferred shares outstanding (in shares) | 200,000 | 200,000 | ||||||||
Initial value per share (USD per share) | $ / shares | $ 100 | |||||||||
Preferred stock quarterly dividend rate | 6.00% | |||||||||
Preferred stock dividend | $ | $ 307,000 | $ 0 | ||||||||
Number of shares outstanding in which, one director may be elected | 50,000 | |||||||||
Voting percentage required to change number of directors | 80.00% | |||||||||
Restricted Stock | ||||||||||
Class of Stock [Line Items] | ||||||||||
Shares vested (in shares) | 109,360 | 694,402 | ||||||||
Executive officer | ||||||||||
Class of Stock [Line Items] | ||||||||||
Restricted stock issued (in shares) | 3,061,224 | |||||||||
Restricted stock issued, value | $ | $ 4,500,000 | |||||||||
Number of executive officers | ExecutiveOfficers | 2 | 2 | ||||||||
Executive officer | Restricted Stock | ||||||||||
Class of Stock [Line Items] | ||||||||||
Restricted stock issued (in shares) | 704,208 | |||||||||
Restricted stock issued, value | $ | $ 700,000 | |||||||||
Number of executive officers | ExecutiveOfficers | 2 | |||||||||
Vesting period | 4 years | |||||||||
Shares surrendered (in shares) | 166,400 | 24,281 | 166,699 | |||||||
Value of shares surrendered | $ | $ 172,000 | $ 25,000 | $ 249,000 | |||||||
Stock forfeited (in shares) | 262,136 | |||||||||
Non-employee directors | ||||||||||
Class of Stock [Line Items] | ||||||||||
Restricted stock issued (in shares) | 328,230 | |||||||||
Restricted stock issued, value | $ | $ 500,000 | |||||||||
Number of non-employee directors | director | 6 | |||||||||
Non-employee directors | Restricted Stock | ||||||||||
Class of Stock [Line Items] | ||||||||||
Restricted stock issued (in shares) | 54,704 | |||||||||
Redeemable Preferred Stock | ||||||||||
Class of Stock [Line Items] | ||||||||||
Dividends | $ | $ 0 | |||||||||
Dividends payable | $ | $ 790,000 | |||||||||
Minimum | ||||||||||
Class of Stock [Line Items] | ||||||||||
Preferred stock, liquidation preference percent | 20.00% | |||||||||
Minimum | Restricted Stock | ||||||||||
Class of Stock [Line Items] | ||||||||||
Vesting period | 1 year | |||||||||
Maximum | ||||||||||
Class of Stock [Line Items] | ||||||||||
Preferred stock, liquidation preference percent | 150.00% | |||||||||
Maximum | Restricted Stock | ||||||||||
Class of Stock [Line Items] | ||||||||||
Vesting period | 5 years | |||||||||
Fair Value Measurements, Recurring | Redeemable Preferred Stock | Level 3 | ||||||||||
Class of Stock [Line Items] | ||||||||||
Estimated fair value of liability | $ | $ 4,900,000 | $ 3,165,000 | $ 5,247,000 | |||||||
Common Stock | ||||||||||
Class of Stock [Line Items] | ||||||||||
Stock repurchased (in shares) | 3,112,840 | |||||||||
Share price (in dollars per share) | $ / shares | $ 7.71 | |||||||||
Stock repurchased | $ | $ 24,000,000 |
Common Stock and Preferred St_4
Common Stock and Preferred Stock - Series A Preferred Stock (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Equity [Abstract] | |
Balance, January 1, | $ 483 |
Preferred stock accrued dividends | 307 |
Balance, March 31, | $ 790 |
Joint Ventures (Detail)
Joint Ventures (Detail) shares in Millions | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||||
Sep. 30, 2012USD ($)shares | Mar. 31, 2020USD ($)episode | Mar. 31, 2019USD ($) | Sep. 30, 2017USD ($) | Dec. 31, 2012USD ($) | Dec. 31, 2019USD ($) | Oct. 31, 2016 | |
Schedule of Equity Method Investments [Line Items] | |||||||
Net income (loss) attributable to non-controlling interests | $ 40,000 | $ 31,000 | |||||
Pacific Animation Partners Joint Venture | |||||||
Schedule of Equity Method Investments [Line Items] | |||||||
Equity method investment, ownership percentage | 50.00% | ||||||
Number of episodes for which production completed | episode | 65 | ||||||
Equity in net income/(loss) of joint venture | $ 2,000 | 0 | |||||
Equity method investments | $ 0 | $ 0 | |||||
DreamPlay Toys | |||||||
Schedule of Equity Method Investments [Line Items] | |||||||
Equity method investment, ownership percentage | 50.00% | ||||||
Cash paid to Nant Works for joint venture | $ 8,000,000 | ||||||
DreamPlay Toys | Technology Rights | |||||||
Schedule of Equity Method Investments [Line Items] | |||||||
Impairment charge | $ 2,900,000 | ||||||
DreamPlay, LLC | |||||||
Schedule of Equity Method Investments [Line Items] | |||||||
Equity method investment, ownership percentage | 5.00% | ||||||
Cash paid to Nant Works for joint venture | $ 7,000,000 | ||||||
Impairment charge | $ 7,000,000 | ||||||
Joint Venture With Meisheng Culture & Creative Corp. | |||||||
Schedule of Equity Method Investments [Line Items] | |||||||
Equity method investment, ownership percentage | 51.00% | ||||||
Net income (loss) attributable to non-controlling interests | $ 40,000 | 31,000 | |||||
Hong Kong Meisheng Cultural Co | |||||||
Schedule of Equity Method Investments [Line Items] | |||||||
Purchases from related party | 9,000,000 | 2,200,000 | |||||
Due to related parties | $ 8,400,000 | 600,000 | |||||
Hong Kong Meisheng Cultural Co | Minimum | JAKKS Pacific | |||||||
Schedule of Equity Method Investments [Line Items] | |||||||
Ownership percentage | 10.00% | ||||||
Hong Kong Meisheng Cultural Co | |||||||
Schedule of Equity Method Investments [Line Items] | |||||||
Equity method investment, ownership percentage | 50.00% | ||||||
Net income (loss) attributable to non-controlling interests | $ 0 | $ 0 | |||||
Hong Kong Meisheng Cultural Co | Minimum | JAKKS Pacific | |||||||
Schedule of Equity Method Investments [Line Items] | |||||||
Ownership percentage | 10.00% | ||||||
NantWorks | DreamPlay Toys | |||||||
Schedule of Equity Method Investments [Line Items] | |||||||
Issue of warrants (in shares) | shares | 1.5 | ||||||
Investment in DreamPlay LLC | $ 7,000,000 |
Goodwill (Detail)
Goodwill (Detail) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Goodwill impairment | $ 0 | $ 0 |
Intangible Assets Other Than _3
Intangible Assets Other Than Goodwill (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Dec. 31, 2019 | |
Acquired Intangible Assets by Major Class [Line Items] | ||
Gross Carrying Amount | $ 31,328 | $ 31,328 |
Accumulated Amortization | (28,536) | (28,140) |
Net Amount | 2,792 | 3,188 |
Trademarks | $ 300 | 300 |
Licenses | ||
Acquired Intangible Assets by Major Class [Line Items] | ||
Weighted Useful Lives | 5 years 9 months 21 days | |
Gross Carrying Amount | $ 20,130 | 20,130 |
Accumulated Amortization | (20,130) | (19,988) |
Net Amount | $ 0 | 142 |
Product lines | ||
Acquired Intangible Assets by Major Class [Line Items] | ||
Weighted Useful Lives | 10 years 4 months 9 days | |
Gross Carrying Amount | $ 4,846 | 4,846 |
Accumulated Amortization | (2,054) | (1,800) |
Net Amount | $ 2,792 | 3,046 |
Customer relationships | ||
Acquired Intangible Assets by Major Class [Line Items] | ||
Weighted Useful Lives | 4 years 10 months 24 days | |
Gross Carrying Amount | $ 3,152 | 3,152 |
Accumulated Amortization | (3,152) | (3,152) |
Net Amount | $ 0 | 0 |
Trade names | ||
Acquired Intangible Assets by Major Class [Line Items] | ||
Weighted Useful Lives | 5 years | |
Gross Carrying Amount | $ 3,000 | 3,000 |
Accumulated Amortization | (3,000) | (3,000) |
Net Amount | $ 0 | 0 |
Non-compete agreements | ||
Acquired Intangible Assets by Major Class [Line Items] | ||
Weighted Useful Lives | 5 years | |
Gross Carrying Amount | $ 200 | 200 |
Accumulated Amortization | (200) | (200) |
Net Amount | $ 0 | $ 0 |
Comprehensive Loss (Detail)
Comprehensive Loss (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Equity [Abstract] | ||
Net Loss | $ (11,998) | $ (29,127) |
Other comprehensive income (loss): | ||
Foreign currency translation adjustment | (1,634) | 1,303 |
Comprehensive loss | (13,632) | (27,824) |
Less: Comprehensive income attributable to non-controlling interests | 40 | 31 |
Comprehensive loss attributable to JAKKS Pacific, Inc. | $ (13,672) | $ (27,855) |
Share-Based Payments - Addition
Share-Based Payments - Additional Information (Detail) $ in Millions | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Restricted Stock | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Unrecognized compensation | $ 3.5 |
Unrecognized compensation, expected recognized period | 2 years 4 months 6 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 | $ 0.5 |
Unrecognized compensation, expected recognized period | 1 year 1 month 9 days |
Share-Based Payments - Compensa
Share-Based Payments - Compensation Expense (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Share-based Payment Arrangement [Abstract] | ||
Share-based compensation expense | $ 252 | $ 618 |
Share-Based Payments - Summary
Share-Based Payments - Summary of Restricted Stock Award Activity (Detail) - Restricted Stock - $ / shares | 1 Months Ended | 3 Months Ended |
Jan. 31, 2020 | Mar. 31, 2020 | |
Number of Shares | ||
Outstanding at beginning of period (in shares) | 5,593,069 | 5,593,069 |
Awarded (in shares) | 704,208 | |
Released (in shares) | (109,360) | (694,402) |
Forfeited (in shares) | (262,136) | |
Outstanding at end of period (in shares) | 5,340,739 | |
Weighted Average Grant Date Fair Value | ||
Outstanding at beginning of period (USD per share) | $ 1.60 | $ 1.60 |
Awarded (USD per share) | 1.03 | |
Released (USD per share) | 2.18 | |
Forfeited (USD per share) | 1.29 | |
Outstanding at end of period (USD per share) | $ 1.47 |
Share-Based Payments - Summar_2
Share-Based Payments - Summary of Restricted Stock Unit Activity (Detail) - Restricted Stock Units (RSUs) | 3 Months Ended |
Mar. 31, 2020$ / sharesshares | |
Number of Shares | |
Outstanding at beginning of period (in shares) | shares | 1,027,183 |
Awarded (in shares) | shares | 0 |
Released (in shares) | shares | (67,678) |
Forfeited (in shares) | shares | (134,770) |
Outstanding at end of period (in shares) | shares | 824,735 |
Weighted Average Fair Value | |
Outstanding at beginning of period (USD per share) | $ / shares | $ 2.34 |
Awarded (USD per share) | $ / shares | 0 |
Released (USD per share) | $ / shares | 5.15 |
Forfeited (USD per share) | $ / shares | 3.51 |
Outstanding at end of period (USD per share) | $ / shares | $ 1.92 |
Fair Value Measurements - Finan
Fair Value Measurements - Financial Instruments Measured on Recurring Basis (Detail) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 | Aug. 31, 2017 |
Fair Value Measurements, Recurring | Redeemable Preferred Stock | Level 1 | |||
Schedule Of Servicing Assets At Fair Value And Amortized Value [Line Items] | |||
Financial liability | $ 0 | $ 0 | |
Fair Value Measurements, Recurring | Redeemable Preferred Stock | Level 2 | |||
Schedule Of Servicing Assets At Fair Value And Amortized Value [Line Items] | |||
Financial liability | 0 | 0 | |
Fair Value Measurements, Recurring | Redeemable Preferred Stock | Level 3 | |||
Schedule Of Servicing Assets At Fair Value And Amortized Value [Line Items] | |||
Financial liability | 3,165 | 5,247 | |
Fair Value Measurements, Recurring | Redeemable Preferred Stock | Carrying Amount | |||
Schedule Of Servicing Assets At Fair Value And Amortized Value [Line Items] | |||
Financial liability | $ 3,165 | $ 5,247 | |
3.25% convertible senior notes due 2023 | |||
Schedule Of Servicing Assets At Fair Value And Amortized Value [Line Items] | |||
Debt instrument, interest rate | 3.25% | 3.25% | 3.25% |
3.25% convertible senior notes due 2023 | Fair Value Measurements, Recurring | Level 1 | |||
Schedule Of Servicing Assets At Fair Value And Amortized Value [Line Items] | |||
Financial liability | $ 0 | $ 0 | |
3.25% convertible senior notes due 2023 | Fair Value Measurements, Recurring | Level 2 | |||
Schedule Of Servicing Assets At Fair Value And Amortized Value [Line Items] | |||
Financial liability | 0 | 0 | |
3.25% convertible senior notes due 2023 | Fair Value Measurements, Recurring | Level 3 | |||
Schedule Of Servicing Assets At Fair Value And Amortized Value [Line Items] | |||
Financial liability | 43,745 | 50,753 | |
3.25% convertible senior notes due 2023 | Fair Value Measurements, Recurring | Carrying Amount | |||
Schedule Of Servicing Assets At Fair Value And Amortized Value [Line Items] | |||
Financial liability | $ 43,745 | $ 50,753 |
Fair Value Measurements - Recon
Fair Value Measurements - Reconciliation of Level 3 Instruments (Detail) - Level 3 - Fair Value Measurements, Recurring $ in Thousands | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Redeemable Preferred Stock | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Beginning Balance | $ 5,247 |
Change in fair value | (2,082) |
Ending Balance | 3,165 |
3.25% convertible senior notes due 2023 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Beginning Balance | 50,753 |
Change in fair value | (7,675) |
Payment-in-kind interest | 667 |
Ending Balance | $ 43,745 |
Subsequent Event (Detail)
Subsequent Event (Detail) - USD ($) $ in Thousands | Apr. 17, 2020 | Mar. 31, 2020 | Mar. 31, 2019 | May 15, 2020 |
Subsequent Event [Line Items] | ||||
Restructuring charge | $ 0 | $ 248 | ||
Subsequent Event | ||||
Subsequent Event [Line Items] | ||||
Percentage of workforce reduction | 26.00% | |||
Restructuring charge | $ 1,700 | |||
PPP Loan | Subsequent Event | ||||
Subsequent Event [Line Items] | ||||
Debt instrument, face amount | $ 10,000 |