Exhibit 99.1
JAKKS Pacific Reports Fourth Quarter and Year-End Results for 2003;
Company Achieves Record Fourth Quarter Sales;
Sales and Earnings Growth Expected in 2004
MALIBU, Calif.--(BUSINESS WIRE)--Feb. 17, 2004--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 fourth quarter and
year ended December 31, 2003.
For the fourth quarter of 2003, net sales increased to $84.4
million from $68.5 million in the comparable period last year.
Excluding a pre-tax charge of $2.1 million, or $0.07 per diluted
share, for the accounts receivable write-offs attributable to recent
customer bankruptcies, net income for the fourth quarter of 2003 was
$8.9 million, or $0.36 per diluted share, as compared to net income of
$6.2 million, or $0.25 per diluted share, in the fourth quarter of
2002, which excludes a one-time pre-tax restructuring and recall
benefit of $1.4 million. Reported net income for the fourth quarter of
2003 was $7.1 million, or $0.29 per diluted share, as compared to $7.3
million, or $0.30 per diluted share, for the fourth quarter of last
year.
The Company's net sales for the year increased to $315.8 million,
as compared to $310.0 million in 2002. Excluding the one-time charge
of $2.0 million for a product recall earlier in the year, the $2.1
million charge for the customer bankruptcies in 2003, and the net
restructuring and recall charges of $6.7 million in 2002, net income
for the year was $29.2 million, or $1.18 per diluted share, as
compared to $36.5 million, or $1.61 per diluted share in 2002.
Reported net income for 2003 was $25.9 million, or $1.05 per diluted
share, as compared to $31.3 million, or $1.37 per diluted share in
2002.
Jack Friedman, Chairman and Chief Executive Officer, said, "We are
pleased to report another year of solid sales for 2003 including
robust growth in the fourth quarter, with strong sell-through in our
mass merchant and other retail distribution channels. While we
continue to be affected by a challenging industry environment,
including the recent bankruptcies of KB Toys, FAO Schwarz and others,
we believe that with our diverse product offerings and categories, we
are well positioned for growth in 2004. As the number of stores in our
primary channel base has declined, we are working to place more SKUs
on these shelves, while at the same time concentrating on expanding
sales of our products beyond traditional toy retailers to other retail
channels, including electronics, drug, convenience and office supply
stores.
"We were pleased with sales of our products featuring key licenses
during the quarter, including WWE and Dragon Ball figure assortments,
and our Atari and Namco TV Games. We have announced a number of new
key licenses that we are adding to our TV Games line of product,
including Ms. Pac-Man(R) and Spider-Man(R), and are pleased with
strong initial sales of our two newest titles: a relaunch of
Activision TV Games and a version based on SpongeBob SquarePants."
JAKKS Pacific is forecasting 2004 net sales, excluding
acquisitions, to be in the range of $330 to $340 million and diluted
earnings per share of $1.20 to $1.30, excluding non-cash stock-based
compensation expense of $9.3 million, of which $8.3 million is related
to restricted stock grants, which the Company expects to incur in the
first quarter.
Stephen Berman, President and Chief Operating Officer, said, "As
we look for additional ways to grow our business in 2004, we will
continue to focus on the internal development of new licensed and
proprietary concepts, as well as innovative extensions to product
lines based on our top licenses. We are particularly excited about
several new TV Games versions in the first half of the year, with many
more to follow in the second half, a new scrapbook line for teens
developed internally called My OverStuffed Life and the launch of our
Mucha Lucha product at retail. Other highlights include toys for
Universal Studios' Classic Monsters and new monsters based on their
feature film Van Helsing, and new products for our WWE and other boys
action product lines.
"Our strategy for 2004 will be to increase our marketing endeavors
to launch new and extend existing categories throughout the year,
while maximizing our operating efficiencies and further leveraging our
retail sales channels and international distribution efforts. In the
first quarter of 2004, we will see nominal sales growth in conjunction
with an increase in advertising and marketing spending, but expect to
see results from these efforts beginning in the second quarter and
moving forward with higher sales and profit growth. In addition, we
will continue to actively pursue complementary and accretive
acquisitions that provide both near and long-term growth potential and
market-share expansion opportunities.
"With our strong operating cash flow and working capital of $234.0
million, including cash and cash equivalents and marketable securities
of $137.5 million, we are well-positioned to maintain our status as a
leader in the toy, writing instruments and leisure products markets,
and also well-positioned to evaluate meaningful acquisition
opportunities," Mr. Berman concluded.
Anyone interested will be able to listen to the teleconference,
scheduled to begin at 8:30 a.m. EST (5:30 a.m. PST) on February 17th,
via the Internet at www.jakkspacific.com. This website will host an
archive of the teleconference for 30 days.
A telephonic playback will be available from 9:30 a.m. EST on
February 17th through 12:00 a.m. EST on February 24th. The playback
can be accessed by calling 800-642-1687 or 706-645-9291 for
international callers, passcode "5141623."
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
ColorWorkshop(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
December 31, December 31,
2003 2002
---- ----
ASSETS
Current assets:
Cash and cash equivalents $118,182,099 $68,412,826
Marketable Securities 19,344,691 --
Accounts receivable, net 86,119,572 56,195,578
Inventory, net 44,399,886 38,009,747
Notes receivable - officers -- 1,113,000
Prepaid expenses and other
current assets 12,240,167 8,616,160
Deferred income taxes 6,131,634 4,445,658
Total current assets 286,418,049 176,792,969
Property and equipment 43,685,401 39,465,148
Less accumulated depreciation and
amortization 31,750,638 24,639,593
Property and equipment, net 11,934,763 14,825,555
Goodwill, net 206,951,576 189,335,933
Trademarks & other assets, net 24,793,330 19,736,847
Investment in joint venture 8,039,887 8,118,645
Total assets $538,137,605 $408,809,949
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $50,382,331 $41,967,851
Current portion of long term debt 19,036 17,805
Income taxes payable 2,021,437 5,624,532
Total current liabilities 52,422,804 47,610,188
Long term debt, net of current portion 98,042,108 59,683
Deferred income taxes 5,868,398 562,948
103,910,506 622,631
Total liabilities 156,333,310 48,232,819
Stockholders' equity:
Common stock, $.001 par value 24,231 24,473
Additional paid-in capital 235,798,746 240,101,458
Retained earnings 146,330,441 120,451,199
Accumulated other comprehensive
income (loss) (349,123) --
381,804,295 360,577,130
Total liabilities and
stockholders' equity $538,137,605 $408,809,949
JAKKS Pacific, Inc. and Subsidiaries
Fourth Quarter Earnings Announcement, 2003
Condensed Statements of Operations (Unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
2003 2002 2003 2002
---- ---- ---- ----
Net sales $84,418,626 $68,477,943 $315,776,407 $310,004,747
Less cost of sales
Cost of goods 42,349,604 35,431,358 160,517,978 151,916,303
Royalty expense 5,577,578 4,352,481 22,528,567 20,331,532
Amortization of
tools and molds 1,430,886 1,628,332 6,095,237 7,217,392
Cost of sales 49,358,068 41,412,171 189,141,782 179,465,227
Gross profit 35,060,558 27,065,772 126,634,625 130,539,520
Direct selling
expenses 14,496,461 12,435,069 42,396,557 42,016,429
Selling, general
and administrative
expenses 14,920,421 13,856,604 50,829,730 47,844,845
Acquisition shut-down
and recall costs 2,091,986 (1,403,792) 4,091,986 6,717,705
Depreciation and
amortization 465,572 419,930 2,083,690 1,975,937
Income from
operations 3,086,118 1,757,961 27,232,662 31,984,604
Other (income) expense:
Profit from
Joint Venture (6,047,624) (5,423,286) (7,351,324) (8,003,925)
Interest, net 611,108 (171,152) 1,405,471 (1,141,191)
Other -- -- -- --
Income before provision
for income taxes
and minority
interest 8,522,634 7,352,399 33,178,515 41,129,720
Provision for
income taxes 1,381,862 (71,339) 7,299,273 9,048,538
Income before
minority interest 7,140,772 7,423,738 25,879,242 32,081,182
Minority interest -- 94,573 -- 809,718
Net income $7,140,772 $7,329,165 $25,879,242 $31,271,464
Earnings per share
- diluted $0.29 $0.30 $1.05 $1.37
Shares used in
earnings per share
- diluted 24,642,210 24,800,461 24,677,333 22,746,507
CONTACT: JAKKS Pacific, Inc.
Genna Goldberg, 310-455-6235
or
Integrated Corporate Relations
John F. Mills, 310-395-2215