4Kids Entertainment Reports 2009 Third Quarter Results

November 9, 2009 8:02 AM EST

NEW YORK--(BUSINESS WIRE)-- 4Kids Entertainment, Inc. (NYSE: KDE), the global children's entertainment and merchandise licensing company, today announced financial results for the third quarter ended September 30, 2009.

Recent Company Highlights:

    --  Received $9.8 million from the sale of the Teenage Mutant Ninja Turtles
        property by Mirage Studios to Nickelodeon in October 2009
    --  Licensing agreement with NFL Properties and NFL Players to produce a
        football collectible trading card game with a digital card online
        component, to coincide with the 2010 NFL season
    --  Chaotic video game shipping on November 17, 2009 throughout North
        America and will be available for all major gaming consoles, including
        PlayStation 3, Nintendo Wii, and Microsoft Xbox

Net revenues for the three months ended September 30, 2009 totaled $7.3 million, compared to $17.8 million for the same period in 2008. The Company's net loss attributable to 4Kids Entertainment for the three months ended September 30, 2009 was $(5.0) million, or $(0.37) per diluted share, as compared to a net loss of $(5.3) million, or $(0.40) per diluted share, for the same period in 2008. The Company's results reflect the adoption of authoritative guidance from the FASB requiring losses attributable to non-controlling interests of the Company to be excluded in their entirety from the computation of the Company's net losses beginning in 2009.

For the nine months ended September 30, 2009, net revenues totaled $21.9 million, compared to $49.4 million for the same period in 2008. The Company's net loss attributable to 4Kids Entertainment for the nine months ended September 30, 2009 was $(20.8) million, or $(1.56) per diluted share, as compared to a net loss of $(17.2) million, or $(1.31) per diluted share, for the same period in 2008.

"Business conditions remained challenging for the company during the third quarter as reflected in our results. However, we closed on two deals over the last six weeks which we believe are big positives for 4Kids. The sale of the Teenage Mutant Ninja Turtles property to Nickelodeon not only compensated 4Kids for the early termination of its representation agreement but also provided the Company with a substantial infusion of cash. Our NFL trading card game license also provides the Company with an opportunity to use our online platform for a new trading card game," stated Alfred R. Kahn, Chairman and Chief Executive Officer, 4Kids Entertainment.

"We are encouraged by the increase in our television ratings thus far for the 2009-2010 broadcast season, compared with the same period during the 2008-2009 broadcast season. We are hopeful that sales of toys and games and licensed merchandise in the coming holiday season will be stronger than last year's sales numbers and that the Company's fourth quarter licensing revenue will likewise benefit," concluded Kahn.

About 4Kids Entertainment, Inc.

With U.S. headquarters in New York City, regional offices for its trading card business in San Diego, California and international offices in London, 4Kids Entertainment, Inc. (NYSE: KDE) is a global organization devoted to the creation, development, production, broadcasting, distribution, licensing and manufacturing of children's entertainment products.

Through its subsidiaries, 4Kids produces animated television series and films, distributes 4Kids' produced or licensed animated television series for the domestic and international television and home video markets, licenses merchandising rights worldwide to 4Kids' owned or represented properties, operates Websites to support 4Kids' owned or represented properties, and produces and markets collectible trading card games. Additionally, the Company programs and sells the national advertising time in "TheCW4Kids" five-hour Saturday morning block on The CW television network.

Additional information is available on the www.4KidsEntertainment.com corporate Website and at the www.4Kids.tv game station site.

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 Company's 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 Company's properties and other factors could cause actual results to differ materially from the Company's expectations.

4KIDS ENTERTAINMENT, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

SEPTEMBER 30, 2009 and DECEMBER 31, 2008

(In thousands of dollars, except share data)

ASSETS:                                    September 30, 2009  December 31, 2008

Current assets:                            (Unaudited)

Cash and cash equivalents                  $ 3,573             $ 13,503

Accounts receivable - net                    9,808               22,818

Inventories - net                            5,153               4,241

Prepaid income taxes                         127                 137

Prepaid expenses and other current assets    3,807               1,876

Deferred income taxes                        139                 127

Total current assets                         22,607              42,702

Property and equipment - net                 3,402               4,287

Long term investments                        14,179              21,617

Accounts receivable - noncurrent, net        255                 655

Film and television costs - net              16,899              16,661

Other assets - net (includes related
party amounts of $7,816 and $6,638,          17,370              14,652
respectively)

Total assets                               $ 74,712            $ 100,574

LIABILITIES AND EQUITY:

Current liabilities:

Due to licensors                           $ 6,507             $ 5,651

Accounts payable and accrued expenses        13,618              16,202

Deferred revenue                             1,551               3,270

Total current liabilities                    21,676              25,123

Deferred rent                                356                 460

Total liabilities                            22,032              25,583

Commitments and contingencies

4Kids Entertainment, Inc. shareholders'
equity

Preferred stock, $.01 par value -            --                  --
authorized, 3,000,000 shares; none issued

Common stock, $.01 par value -
authorized, 40,000,000 shares;

issued, 15,411,099 and 15,246,579 shares;    154                 152
outstanding 13,352,053 and

13,227,019 shares in 2009 and 2008,
respectively

Additional paid-in capital                   66,991              65,107

Accumulated other comprehensive loss         (14,237   )         (17,396 )

Retained earnings                            42,711              63,504

                                             95,619              111,367

Less cost of 2,059,046 and 2,019,560
treasury shares in 2009 and 2008,            36,434              36,376
respectively

Total shareholders' equity of 4Kids          59,185              74,991
Entertainment, Inc.

Noncontrolling interests                     (6,505    )         --

Total equity                                 52,680              74,991

Total liabilities and equity               $ 74,712            $ 100,574

4KIDS ENTERTAINMENT, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008

(In thousands of dollars, except share data)

                    Three Months Ended              Nine Months Ended

                    September 30,                   September 30,

                    2009            2008            2009            2008

Net revenues:

Service revenue   $ 5,736         $ 10,534        $ 20,077        $ 34,620

Product revenue     1,534           7,250           1,786           14,743

Total net           7,270           17,784          21,863          49,363
revenues

Costs and
expenses:

Selling, general
and                 11,022          13,937          33,763          39,892
administrative

Production          482             1,710           2,503           5,245
service costs

Cost of sales of    1,547           3,447           2,811           6,360
trading cards

Amortization of
television and      1,438           1,864           3,695           5,269
film costs

Amortization of
4Kids TV            --              3,041           --              12,150
broadcast fee

Total costs and     14,489          23,999          42,772          68,916
expenses

Loss from           (7,219     )    (6,215     )    (20,909    )    (19,553    )
operations

Interest income     178             689             925             2,096

Impairment on
investment          (71        )    --              (169       )    --
securities

Loss on sale of
investment          --              --              (7,250     )    --
securities

Total other         107             689             (6,494     )    2,096
(expense) income

Loss before         (7,112     )    (5,526     )    (27,403    )    (17,457    )
income taxes

Benefit from        --              --              --              --
income taxes

Noncontrolling      --              251             --              251
interest

Net loss            (7,112     )    (5,275     )    (27,403    )    (17,206    )

Net loss
attributable to     2,109           --              6,610           --
noncontrolling
interests

Net loss
attributable to
4Kids             $ (5,003     )  $ (5,275     )  $ (20,793)      $ (17,206    )
Entertainment,
Inc.

Per share
amounts:

Basic loss per
share
attributable to
4Kids             $ (0.37      )  $ (0.40      )  $ (1.56      )  $ (1.31      )
Entertainment
Inc. common
shareholders

Diluted loss per
share
attributable to
4Kids             $ (0.37      )  $ (0.40      )  $ (1.56      )  $ (1.31      )
Entertainment
Inc. common
shareholders

Weighted average
common shares

outstanding -       13,352,053      13,153,508      13,286,726      13,166,281
basic

Weighted average
common shares

outstanding -       13,352,053      13,153,508      13,286,726      13,166,281
diluted

    Source: 4Kids Entertainment, Inc.

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