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Public and Investor Relations, Corporate and Marketing Communications
FOR: 4Kids Entertainment, Inc.
KCSA Todd Fromer /
4Kids Entertainment Reports Year-End 2006 Results
NEW YORK, March 16, 2007 4Kids Entertainment, Inc. (NYSE: KDE), a global provider of childrens entertainment and merchandise licensing, today announced financial results for the quarter and year ended December 31, 2006.
Net revenues in the fourth quarter of 2006 totaled $18.3 million, as compared to $23.5 million for the same period in 2005. The Companys net loss for the quarter ended December 31, 2006 was $(2.3) million, or $(0.18) per diluted share (consisting of a loss from continuing operations of $(2.5) million, or $(0.19) per diluted share and income from discontinued operations of $0.2 million or $0.01 per diluted share), as compared to net income of $0.5 million, or $0.04 per diluted share, for the fourth quarter of 2005 (consisting of a loss from continuing operations of $(1.2) million, or $(0.09) per diluted share and income from discontinued operations of $1.7 million, or $0.13 per diluted share). As of June 30, 2006 the Companys media buying subsidiary, The Summit Media Group, Inc., ceased operations and reports Summits results as a discontinued operation.
For the year ended December 31, 2006, net revenues totaled $71.8 million, as compared to $80.6 million for the year ended December 31, 2005. The Companys net loss for the year ended December 31, 2006 was $(1.0) million, or $(0.08) per diluted share (consisting of a loss from continuing operations of $(1.7) million, or $(0.13) per diluted share and income from discontinued operations of $0.7 million, or $0.05 per diluted share), compared to net income of $5.1 million, or $0.37 per diluted share for the year ended December 31, 2005 (consisting of income from continuing operations of $3.0 million, or $0.22 per diluted share and income from discontinued operations of $2.0 million, or $0.15 per diluted share). The diluted weighted average common shares outstanding for the year ended December 31, 2006 were 13,104,051 shares compared with 13,536,830 shares for the year ended December 31, 2005.
Alfred R. Kahn, 4Kids Entertainments Chairman and Chief Executive Officer, said, Our financial results for 2006 were disappointing with the Company losing $1.7 million from continuing operations. Net revenues were down for the year as a result of decreased licensing revenue from the Teenage Mutant Ninja Turtles and Yu-Gi-Oh! properties and a decline in ad sales revenues from 4Kids TV. We also incurred substantial severance and other related costs in 2006.
The Company started a number of important initiatives in 2006 that we are hopeful will benefit the Company beginning in 2007 said Kahn. We entered into a relationship with Microsoft and, in the fall of 2006, launched Viva Piñata, an animated series based on the Microsoft property. In December 2006, we started a trading card company, TC Digital Games LLC, and purchased a 50% interest in the Chaotic trading card game companion website which, when it goes live in May 2007, will enable kids to upload codes from the Chaotic trading cards to the website and play the Chaotic trading card game online. We believe that the trading card company and the Chaotic website will also provide the Company with platforms upon which to launch future properties and will enhance the Companys ability to compete in the digital universe.
We also implemented a number of cost-cutting initiatives aimed at reducing overall expenses including negotiating a multi-year extension of our agreement with Fox to broadcast 4Kids TV through the 2007-2008 season, Kahn continued.
We are excited about next weeks theatrical release by Warner Bros. and The Weinstein Company of TMNT, the new Teenage Mutant Ninja Turtles movie. We are hopeful that the movie will drive demand for Turtles merchandise, including the new TMNT video game from Ubisoft. We also look forward to the late May release of the Chaotic trading card game to comic and hobby stores and to the launch of its companion website, www.chaoticgame.com, at that time.
With cash and investments of $111.0 million and no debt at December 31, 2006, 4Kids remains well positioned for the future, concluded Kahn.
About 4Kids Entertainment
Headquartered in New York City with an international office in London, 4Kids Entertainment, Inc. (NYSE: KDE), is a global provider of childrens entertainment and merchandise licensing. 4Kids, through its wholly owned subsidiaries, provides domestic and international merchandise licensing; product development; television, film, music and home video production and distribution; and Web site development. For further information, please visit the Companys Web sites at www.4KidsEntertainment.com and www.4Kids.TV.
The information contained in this press release, other than historical information, consists of forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may involve risks and uncertainties that could cause actual results to differ materially from those described in such statements. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Important factors beyond the Companys control, including general economic conditions, consumer spending levels, competition from toy companies, motion picture studios and other licensing companies, the uncertainty of public response to the Companys properties and other factors could cause actual results to differ materially from the Companys expectations.
4KIDS ENTERTAINMENT, INC. AND SUBSIDIARIES
|Cash and cash equivalents||$ 18,066||$ 35,142|
|Total cash and investments||110,976||113,525|
|Accounts receivable - net||30,498||32,193|
|Prepaid 4Kids TV broadcast fee, net of|
|Prepaid income taxes||5,924||2,312|
|Prepaid expenses and other current assets||3,916||1,683|
|Current assets from discontinued operations||326||2,316|
|Deferred income taxes||707||466|
|Total current assets||152,347||159,101|
|Property and equipment - net||2,126||2,853|
|Accounts receivable - non-current, net||138||891|
|Investment in unconsolidated affiliate||2,702||--|
|Film and television costs - net||14,827||12,208|
|Non-current assets from discontinued operations||1,333||--|
|Deferred income taxes, non-current||1,733||1,971|
|Other assets - net||6,189||6,914|
|Liabilities and stockholders' equity|
|Due to licensors||$ 6,536||$ 13,503|
|Accounts payable and accrued expenses||14,317||9,239|
|Current liabilities from discontinued operations||20||1,486|
|Total current liabilities||25,887||29,525|
|Commitments and contingencies|
|Preferred stock, $.01 par value - authorized, 3,000,000 shares; none issued||--||--|
|Common stock, $.01 par value - authorized, 40,000,000 shares;|
|issued, 14,933,218 and 14,826,643 shares; outstanding 13,183,218 and|
|13,076,643 shares in 2006 and 2005, respectively||149||148|
|Additional paid-in capital||62,859||61,415|
|Accumulated other comprehensive income||1,329||428|
|Less- cost of 1,750,000 treasury shares in 2006 and 2005||33,249||33,249|
|Total liabilities and stockholders' equity||$181,395||$183,938|
INC. AND SUBSIDIARIES
|Net revenues||$ 71,781||$ 80,607||$ 99,189|
|Cost and expenses:|
|Selling, general and administrative||39,155||33,835||33,437|
|Production service costs||11,259||8,851||10,029|
|Amortization of television and film costs||8,041||9,790||9,639|
|Amortization of 4Kids TV broadcast fee||22,462||26,408||27,859|
|Total costs and expenses||80,917||78,884||80,964|
|(Loss) income from operations||(9,136||)||1,723||18,225|
|Gain on sale of investment in equity securities||--||234||--|
|Total other income||4,143||3,068||1,469|
|(Loss) income before income taxes||(4,993||)||4,791||19,694|
|(Benefit from) provision for income taxes||(3,506||)||1,762||7,907|
|Loss from unconsolidated operations - net of a tax benefit of $218||(280||)||--||--|
|Minority interest - net of tax of $30|
|(Loss) income from continuing operations||(1,728||)||3,029||11,787|
|Income from discontinued|
|Net (loss) income||$ (1,006||)||$ 5,069||$ 12,730|
|Per share amounts:|
|Basic (loss) earnings per common share|
|Continuing operations||$ (0.13||)||$ 0.23||$ 0.86|
|Basic (loss) earnings per common share||(0.08||)||$ 0.39||$ 0.93|
|Diluted (loss) earnings per common share|
|Continuing operations||$ (0.13||)||$ 0.22||$ 0.82|
|Diluted (loss) earnings per common share||$ (0.08||)||$ 0.37||$ 0.89|
|Weighted average common|
|shares outstanding - basic||13,104,051||13,115,687||13,683,756|
|Weighted average common|
|shares outstanding - diluted||13,104,051||13,536,830||14,335,343|
The following information was filed by 4Licensing Corp on Friday, March 16, 2007 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.
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