Exhibit 99.1
JAKKS Pacific Reports First Quarter 2004 Financial Results; Record First Quarter
Sales; Proposed Acquisition Expected to Further Increase Sales and Earnings
MALIBU, Calif.--(BUSINESS WIRE)--April 20, 2004--JAKKS Pacific, Inc.
(Nasdaq:JAKK), a 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 months ending March 31, 2004.
First quarter net sales increased 9.2% to $74.0 million in 2004, from $67.8
million in the comparable period last year. Excluding the impact of non-cash
stock-based compensation, and additional bad debt related to the prior
bankruptcy filing of a major customer in 2004, net income for the period was
$6.0 million, or $0.23 per diluted share, compared to $5.2 million, or $0.21 per
diluted share for the first quarter of last year. Reported net income for first
quarter 2004, including pre-tax charges of $1.7 million for non-cash stock-based
compensation and $0.4 million for bad debt, was $4.3 million, or $0.17 per
diluted share, compared to $6.0 million, or $0.24 per diluted share in 2003.
"We are pleased with our first quarter results, and believe we are in a
solid position to achieve the upper end of our forecast range with our existing
business and before any acquisition, with revenue now anticipated to be in the
range of $340 million and earnings per share to be in the range of $1.30, before
non-cash stock-based compensation charges. Further, as we announced earlier
today, JAKKS Pacific has reached an agreement in principle to acquire
substantially all of the assets of the Play Along companies, privately-held toy
companies with licenses including Cabbage Patch Kids(R) for dolls, Care Bears(R)
for plush and preschool learning, Teletubbies(R) for preschool and playsets and
DC Comic's(R) Batman(R) and Justice League(R) for construction toys. We expect
this acquisition will further increase our sales and our earnings after its
consummation. We will provide updated guidance, taking into account the Play
Along acquisition, shortly after the consummation of this deal, which is
expected in the second quarter," said Jack Friedman, Chairman and Chief
Executive Officer of JAKKS Pacific.
"With regard to our current business, our increased advertising and
marketing efforts are beginning to produce the desired results," added Mr.
Friedman. "Our traditional toy lines performed particularly well, with increased
shelf space and sales across a diverse group of product lines. Especially
noteworthy is our line of TV Games(TM) products, which has quickly become the
industry leader in plug and play video games, with it's #1 ranking among all
Non-TV-Promoted Toys (The Toy Book April 2004). We believe we have secured the
top licenses with premiere companies such as Atari(R), Namco(R) for Pac-Man(TM)
and Ms.Pac-Man(R), Midway(R), Capcom(R), Activision(R), Nickelodeon(R),
Disney(R) and Marvel(R) and have alliances with top video game developers. We
have begun to expand our distribution of the games to international markets,
including Europe, Australia and New Zealand, and expect to announce several
additional significant TV Games licenses later this year."
Stephen Berman, President and Chief Operating Officer commented, "A number
of our seasonal products, including our Go Fly a Kite(R) and Funnoodle(R) lines,
were also strong performers, but these gains were offset by the temporary
withdrawal of The Storm(TM) water guns from the market in the first quarter,
which is set for relaunching in 2005. We are encouraged by the sell-in of a
number of lines in our crafts, stationery and writing instruments categories,
including our Flying Colors(R) lines for Dora the Explorer(TM) and SpongeBob
SquarePants(TM), as well as expanded offerings of our Hello Kitty(R) products
and traditional writing instruments.
"We are also pleased with sales of our World Wrestling Entertainment(TM),
Dragon Ball(R) and Mucha Lucha(TM) action figures and Road Champs(R) vehicles.
Some additions to our product offerings include toys based on Universal Studios'
Classic Monsters and new monsters based on the feature film Van Helsing(TM),
which is scheduled for a May release. We expect these new licenses, combined
with our core business, will contribute to our top and bottom line growth in
2004 and beyond."
Mr. Berman concluded, "Our financial position remains strong with $248.9
million of working capital, including cash of $156.6 million as of March 31,
2004. Given the strength of our balance sheet and positive cash flow, we remain
well positioned to continue to grow our business by actively pursuing additional
complementary and accretive acquisitions, executing on internal growth
initiatives and securing new licenses that provide both near term and long-term
growth potential and market share expansion opportunities."
Anyone interested will be able to listen to the teleconference, scheduled
to begin at 5:00 p.m. EDT (2:00 p.m. PDT) on April 20th, via the Internet at
www.jakkspacific.com, www.CompanyBoardroom.com, or www.StreetEvents.com . These
websites will host an archive of the teleconference for 30 days.
A telephonic playback will be available from 6:00 p.m. EDT on April 21st
through 12:00 a.m. EDT on May 5th. The playback can be accessed by calling
800-642-1687, or 706-645-9291 for international callers, pass code "6612214."
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
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
First Quarter Earnings Announcement, 2004
Condensed Statements of Operations (Unaudited)
Three Months
Ended March 31,
2004 2003
-------- --------
(In thousands,
expect per share
data)
Net sales $73,986 $67,759
Less cost of sales
Cost of goods 36,220 36,058
Royalty expense 5,824 2,715
Amortization of tools and molds 1,476 1,544
-------- --------
Cost of sales 43,520 40,317
-------- --------
Gross profit 30,466 27,442
Direct selling expenses 8,701 7,503
Selling, general and administrative expenses 15,392 11,834
Acquisition shut-down and recall costs - -
Depreciation and amortization 607 601
-------- --------
Income from operations 5,766 7,504
Other (income) expense:
Profit from Joint Venture (360) (176)
Interest, net 481 (162)
Other - -
-------- --------
Income before provision for income taxes 5,645 7,842
Provision for income taxes 1,298 1,882
-------- --------
Net income $4,347 $5,960
======== ========
Earnings per share - diluted $0.17 $0.24
Shares used in earnings per share - diluted 25,776 24,917
JAKKS Pacific, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
March 31, December 31,
2004 2003
----------- ------------
(In thousands)
ASSETS
Current assets:
Cash and cash equivalents $142,884 $118,182
Marketable Securities 13,746 19,345
Accounts receivable, net 76,462 86,119
Inventory, net 44,768 44,400
Prepaid expenses and other current assets 20,322 16,762
----------- ------------
Total current assets 298,182 284,808
----------- ------------
Property and equipment 44,562 43,473
Less accumulated depreciation and amortization 33,522 31,751
----------- ------------
Property and equipment, net 11,040 11,722
----------- ------------
Goodwill, net 207,469 206,952
Trademarks & other assets, net 25,041 24,785
Investment in joint venture 3,942 9,097
----------- ------------
Total assets $545,674 $537,364
=========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $46,167 $50,168
Current portion of long term debt 19 19
Income taxes payable 3,077 2,021
----------- ------------
Total current liabilities 49,263 52,208
----------- ------------
Long term debt, net of current portion 98,037 98,042
Deferred income taxes 1,164 1,164
----------- ------------
99,201 99,206
----------- ------------
Total liabilities 148,464 151,414
Stockholders' equity:
Common stock, $.001 par value 25 25
Additional paid-in capital 252,374 245,219
Retained earnings 145,402 141,055
Accumulated other comprehensive income
(loss) (591) (349)
----------- ------------
397,210 385,950
----------- ------------
Total liabilities and stockholders' equity $545,674 $537,364
=========== ============
CONTACT: JAKKS Pacific, Inc.
Genna Goldberg, 310-455-6235
or
Integrated Corporate Relations
John F. Mills, 310-395-2215
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