Exhibit 99.1
JAKKS Pacific Reports Third Quarter 2003 Financial Results
MALIBU, Calif.--(BUSINESS WIRE)--Oct. 21, 2003--JAKKS Pacific,
Inc. (Nasdaq:JAKK), a leading multi-brand company that designs and
markets a broad range of toys, leisure products, crafts and writing
instruments, today announced its results for the three and nine-month
periods ended September 30, 2003.
Third quarter net sales were $90.3 million, compared to $102.6
million in the comparable period last year. Net income for the period
was $9.6 million, or $0.39 per diluted share, compared to $14.0
million, or $0.58 per diluted share, for the third quarter of last
year. Excluding a one-time gain, net income was $9.0 million, or $0.37
per diluted share in 2003. The Company recognized a pre-tax gain of
$0.7 million in the third quarter of 2003 relating to recoveries on a
recall of one of its products.
The Company's net sales for the nine months ended September 30,
2003 were $231.4 million, compared to $241.5 million during the same
period in 2002. Excluding one-time net charges, net income during the
period was $20.3 million, or $0.82 per diluted share, compared to
$29.9 million, or $1.35 per diluted share, for the comparable period
last year. Including the one-time net charges of $2.0 million for the
product recall in 2003, and the restructuring and recall charges of
$8.1 million in 2002, net income for the nine months of 2003 was $18.7
million, or $0.76 per diluted share, compared to $23.9 million, or
$1.09 per diluted share for the same period in 2002.
Mr. Jack Friedman, Chairman and Chief Executive Officer, stated:
"Sales declined in the third quarter from the 2002 third quarter
primarily due to the decline in the popularity of certain product
items such as our Singing Starz(TM) Karaoke Machine and Equalizer
Radio Controlled Vehicle, both of which were higher priced items. We
believe that these products are being replaced with new products such
as plug and play TV Games and the Road Champs NASCAR RC vehicle line,
which are being received well by our customers, and which we believe
may have better longevity and present better opportunities for growth
and expansion.
"Turning to the balance of the year, our booked orders for the
fourth quarter of this year so far are running more than 20% ahead of
the fourth quarter last year at this time, and we are pleased with our
line-up of products and the overall sell-through at retail. We
therefore believe that our fourth quarter sales will exceed last
year's fourth quarter and expect to wind-up the year with net sales to
be in the range of $300 to $310 million, with diluted earnings per
share, before one-time charges, of $1.20 to $1.30."
Mr. Friedman continued, "We remain committed to building long-term
growth and profitability for JAKKS Pacific. Looking ahead, we intend
to devote more attention and resources to internal development,
building evergreen lines, and building brand identity while providing
retailers and consumers with the high quality product lines at
reasonable prices they have come to expect from JAKKS since our
inception."
Stephen Berman, President and Chief Operating Officer, stated,
"Our objective for 2004 and 2005 is to devote more of our resources to
building and marketing a bigger and stronger JAKKS Pacific, and also
to explore new acquisition opportunities, with a hope that this will
bring a stronger value for our company in the long term.
"Because of our strong operating cash flow, working capital of
$229.6 million, including cash and cash equivalents and marketable
securities of $151.2 million, we believe we are well positioned to
execute on our strategy."
Anyone interested will be able to listen to the teleconference,
scheduled to begin at 8:30 a.m. EDT (5:30 a.m. PDT) on October 21, via
the Internet at www.jakkspacific.com. The webcast is also being
distributed over CCBN's Investor Distribution Network. Individual
investors can listen to the call at www.FullDisclosure.com.
Institutional investors can access the call via www.streetevents.com.
These websites will host an archive of the teleconference for 30 days.
A telephonic playback will be available from 9:30 a.m. Eastern on
October 21st through 12:00 a.m. Eastern on October 28th. The playback
can be accessed by calling 800-642-1687 or 706-645-9291 for
international callers, pass code is "3253794".
JAKKS Pacific, Inc. is a multi-brand company that designs and
markets a broad range of toys and leisure products. The product
categories include: Action Figures, Arts & Crafts Activity Kits,
Stationery, Writing Instruments, Performance Kites, Water Toys, Sports
Activity Toys, Vehicles, Infant/Pre-School, Plush and Dolls. The
products are sold under various brand names including Flying
Colors(R), Road Champs(R), Remco(R), Child Guidance(R), Pentech(R),
Trendmasters(R), Toymax(R), Funnoodle(R), Go Fly a Kite(R) and JPI
Color Workshop(TM). The Company also participates in a joint venture
with THQ Inc. that has exclusive worldwide rights to publish and
market World Wrestling Entertainment(TM) video games. For further
information, visit www.jakkspacific.com.
This press release contains statements that are forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. These statements are based on current
expectations, estimates and projections about JAKKS' business based,
in part, on assumptions made by its management. These statements are
not guarantees of JAKKS' future performance and involve risks,
uncertainties and assumptions that are difficult to predict.
Therefore, actual outcomes and results may differ materially from what
is expressed or forecasted in such forward-looking statements due to
numerous factors, including, but not limited to, those described above
and the following: changes in demand for JAKKS' products, product mix,
the timing of customer orders and deliveries, the impact of
competitive products and pricing and difficulties encountered in the
integration of acquired businesses. The forward-looking statements
contained herein speak only as of the date on which they are made, and
JAKKS does not undertake any obligation to update any forward-looking
statement to reflect events or circumstances after the date of this
release.
JAKKS Pacific, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
September 30, December 31,
2003 2002
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $132,833,696 $68,412,826
Marketable Securities 18,320,894 --
Accounts receivable, net 86,579,868 56,195,578
Inventory, net 43,510,656 38,009,747
Notes receivable - officers -- 1,113,000
Prepaid expenses and other current
assets 10,981,469 8,616,160
Deferred income taxes 4,445,658 4,445,658
Total current assets 296,672,241 176,792,969
Property and equipment 42,574,822 39,465,148
Less accumulated depreciation
and amortization 30,630,240 24,639,593
Property and equipment, net 11,944,582 14,825,555
Goodwill, net 205,176,652 189,335,933
Trademarks & other assets, net 23,357,061 19,736,847
Investment in joint venture 3,840,574 8,118,645
Total assets $540,991,110 $408,809,949
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $58,304,219 $41,967,851
Current portion of long term debt 18,720 17,805
Income taxes payable 8,780,842 5,624,532
Total current liabilities 67,103,781 47,610,188
Long term debt, net of current portion 98,039,020 59,683
Deferred income taxes 562,948 562,948
98,601,968 622,631
Total liabilities 165,705,749 48,232,819
Stockholders' equity:
Common stock, $.001 par value 24,591 24,473
Additional paid-in capital 236,229,874 240,101,458
Retained earnings 139,189,669 120,451,199
Accumulated other comprehensive
income (loss) (158,773) --
375,285,361 360,577,130
Total liabilities and
stockholders' equity $540,991,110 $408,809,949
JAKKS Pacific, Inc. and Subsidiaries
Third Quarter Earnings Announcement, 2003
Condensed Statements of Operations (Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
---- ---- ---- ----
Net sales $90,308,130 $102,639,835 $231,357,781 $241,526,804
Less cost of sales
Cost of goods 42,948,959 50,392,970 118,168,374 116,484,945
Royalty expense 9,740,674 8,570,732 16,950,989 15,979,051
Amortization of
tools and molds 1,392,753 1,863,839 4,664,351 5,589,060
Cost of sales 54,082,386 60,827,541 139,783,714 138,053,056
Gross profit 36,225,744 41,812,294 91,574,067 103,473,748
Direct selling
expenses 9,895,404 9,444,604 27,900,096 29,581,360
Selling, general
and administrative
expenses 13,878,856 12,936,091 35,909,309 33,988,241
Acquisition
shut-down and
recall costs (700,000) -- 2,000,000 8,121,497
Depreciation and
amortization 573,299 536,797 1,618,118 1,556,007
Income from
operations 12,578,185 18,894,802 24,146,544 30,226,643
Other (income) expense:
Profit from
Joint Venture (937,219) (611,774) (1,303,700) (2,580,639)
Interest, net 922,704 (437,098) 794,363 (970,039)
Income before provision
for income taxes
and minority
interest 12,592,700 19,943,674 24,655,881 33,777,321
Provision for
income taxes 3,022,248 5,384,792 5,917,411 9,119,877
Income before
minority
interest 9,570,452 14,558,882 18,738,470 24,657,444
Minority
interest -- 604,483 -- 715,145
Net income $9,570,452 $13,954,399 $18,738,470 $23,942,299
Earnings per share
- diluted $0.39 $0.58 $0.76 $1.09
Shares used in earnings
per share
- diluted 24,628,719 24,058,599 24,715,770 22,058,483
CONTACT: JAKKS Pacific, Inc.
Genna Goldberg, 310-455-6235
or
Integrated Corporate Relations
John F. Mills, 562-256-7051