SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K Current Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): March 5, 2002 (February 9, 2002) JAKKS PACIFIC, INC. (Exact name of registrant as specified in its charter) Delaware 0-28104 95-4527222 (State or other jurisdiction of (Commission (I.R.S. Employer incorporation) File Number) Identification No.) 22619 Pacific Coast Highway Malibu, California 90265 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (310) 456-7799
JAKKS PACIFIC, INC. INDEX TO FORM 8-K FILED WITH THE SECURITIES AND EXCHANGE COMMISSION MARCH 5, 2002 ITEMS IN FORM 8-K Page ---- Facing page Item 5. Other Events and Regulation FD Disclosure 3 Item 7. Financial Statements and Exhibits 3 Signatures Exhibit Index 2
ITEM 5. OTHER EVENTS. On February 9, 2002, we announced in a press release our proposed acquisition of Toymax International, Inc. and on February 12, 2002, we announced in a press release our financial results for the fiscal year ended December 31, 2001. A copy of these press releases are attached to this Report as Exhibits 99.1 and 99.2, respectively, and are hereby incorporated herein by reference. For a more detailed discussion of the proposed Toymax International, Inc. acquisition, you are referred to the Current Report on Form 8-K filed by Toymax International, Inc. on February 22, 2002. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. (c) EXHIBITS EXHIBIT NUMBER DESCRIPTION - ------ ----------- 99.1* Press Release of the Company dated February 9, 2002 99.2* Press Release of the Company dated February 12, 2002 - ------------- * Filed herewith. 3
SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Dated: March 5, 2002 JAKKS PACIFIC, INC. By:/s/ Jack Friedman ------------------------------------ Jack Friedman Chairman and Chief Executive Officer 4
EXHIBIT INDEX EXHIBIT NUMBER DESCRIPTION - ------ ----------- 99.1* Press Release of the Company dated February 9, 2002 99.2* Press Release of the Company dated February 12, 2002 - ------------ * Filed herewith. 5
CONTACTS: Genna Goldberg Philip Bourdillon/Eugene Heller JAKKS Pacific, Inc. Silverman Heller Associates (310) 455-6235 (310) 208-2550 FOR IMMEDIATE RELEASE JAKKS Pacific, Inc. Announces Proposed Acquisition of Toymax International, Inc. MALIBU, CALIF. -- FEBRUARY 9, 2002 -- JAKKS PACIFIC, INC. (NASDAQ NM: JAKK) today announced that it has entered into definitive agreements to acquire TOYMAX INTERNATIONAL, INC. (NASDAQ: TMAX), in a two-step transaction. Toymax's principal stockholders have agreed, in the first phase, to sell all of their shares of Toymax's common stock, representing approximately 64% of Toymax's outstanding shares, to JAKKS for $4.50 per share payable $3.00 in cash and by delivery of JAKKS common stock having a value of $1.50. In the second step, Toymax's remaining stockholders will receive the same share price in a merger in which Toymax will become a wholly-owned subsidiary of JAKKS. The transaction is subject to customary closing conditions, including compliance with the Hart-Scott-Rodino waiting period and other regulatory approvals and, as to the merger, the approval of Toymax's stockholders. The parties expect to complete the first phase of the transaction in late February, at which point JAKKS will acquire operating control of Toymax, and to complete the second phase in the second quarter, 2002. "We are excited about this significant acquisition for JAKKS," said Jack Friedman, JAKKS Pacific's Chairman and Chief Executive Officer. "Toymax's business encompasses diverse product lines, with excellent brand recognition, which we expect will mesh well with our existing products. We believe that Toymax is the perfect fit for us -- the acquisition further solidifies our position as a leader in the industry and further enhances our growth prospects." Stephen Berman, JAKKS Pacific's President and Chief Operating Officer, added, "We expect the Toymax acquisition to help diversify JAKKS Pacific's business by adding new product categories, sales channels and manufacturing capabilities abroad. As we did with our Pentech acquisition, we plan to initially reduce Toymax's sales volume to focus on its proprietary and profitable lines, while at the same time integrating the company into JAKKS in order to increase operating efficiencies. Once the integration of the company into JAKKS is completed we will then focus on again growing sales with increased profitability. We expect the acquisition to be accretive to 2002 earnings and the result should be a far stronger company in all respects." Steve Lebensfield, Chief Executive Officer of Toymax said, "We believe JAKKS' acquisition of Toymax will create exciting opportunities and synergies. JAKKS' growth in the toy industry has been an enormous success, making it one of the largest and fastest growing in our industry. The addition of Toymax will contribute to its growth in JAKKS' future and make it even more of a force in our industry."
Toymax (www.Toymax.com) is a children's consumer products company that creates, designs and markets innovative and technologically advanced toys and leisure products. Toymax products promote fun and creative play, and are available under several brands: Toymax(R) toys, such as R.A.D.(TM) Robot, Mighty Mo's(TM) vehicles, Laser Challenge(TM) gear, Creepy Crawlers(R) Bug Maker(TM) and the award winning TMX RC(TM) Dragonfly(TM) radio controlled vehicle; Funnoodle(R) pool and water toys and accessories; Go Fly a Kite(R) kites, lawn and home decor; Candy Planet(TM) candy products; and Monogram International gift, novelty and souvenir products. Toymax is headquartered in Plainview, N.Y. and its products are available at retailers worldwide. JAKKS Pacific, Inc. is a multi-brand toy company that designs, develops, produces and markets toys and related products under various brand names (including Flying Colors(R), Road Champs(R), Remco(R), Child Guidance(R), and Pentech(R)) in multiple product categories, including: Wheels; Action Figures; Art/Activities/Stationery; Infant/Pre-School; Writing Instruments; Plush; and Dolls. The Company also participates in a joint venture with THQ Inc. that has exclusive worldwide rights to publish and market World Wrestling Federation(R) video games. Additional information is available at www.jakkspacific.com. "Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: This news release contains forward-looking statements. Such statements reflect the current views of the company with respect to future events and are subject to certain risks, uncertainties and assumptions. Although the company believes that the expectations reflected in such forward-looking statements are reasonable, should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual future results or events may vary materially from those described herein. # # #
CONTACTS: Joel Bennett Philip Bourdillon/Eugene Heller Chief Financial Officer Silverman Heller Associates (310) 456-7799 (310) 208-2550 JAKKS PACIFIC REPORTS NET SALES AND INCOME FOR 2001 -- Further Growth Expected in 2002 -- MALIBU, CALIFORNIA -- FEBRUARY 12, 2002 -- JAKKS PACIFIC, INC. (NASDAQ NM: JAKK) today reported net sales and net income for its fiscal fourth quarter and year ended December 31, 2001. For the year, net sales were a record $284.4 million compared to $252.3 million in 2000, an increase of 12.7%. Net income on a pro forma basis increased 11.5% to $32.0 million, or $1.65 per diluted share, from $28.7 million, or $1.41 per diluted share, in the prior year. Including a special reserve of $5.0 million relating to Kmart Corporation's recent bankruptcy filing, net income was $28.2 million, or $1.45 per diluted share. Also included in the full year net income are non-cash charges of $2.6 million and $0.1 million for 2001 and 2000, respectively, relating to the 2000 price reset of certain of the Company's outstanding stock options. In 2001, the THQ/JAKKS joint venture contributed profit of $6.7 million compared to $15.9 million in 2000. Fully diluted shares outstanding were 19.4 million in 2001 and 20.3 million in 2000. Fourth-quarter net sales were $61.4 million compared to $59.1 million a year ago, and net income on a pro forma basis was $8.1 million, or $0.42 per diluted share, compared to net income of $6.0 million, or $0.32 per diluted share, in the fourth quarter of 2000. Including the special reserve of $5.0 million, net income was $4.4 million, or $0.22 per diluted share. Also included in the fourth quarter results were non-cash charges of $1.1 million and $0.1 million for 2001 and 2000, respectively, relating to the 2000 stock option price reset. In the fourth quarter of 2001, the THQ/JAKKS joint venture contributed profit of $5.7 million compared to $7.7 million in 2000. Fully diluted shares outstanding were 19.8 million in 2001 and 18.6 million in 2000. "While 2001 was clearly a challenging year for our economy and the retail industry, JAKKS nonetheless remained true to its core business model and was able to continue both internal and external growth," noted Jack Friedman, Chairman and Chief Executive Officer of JAKKS Pacific. "We are proud that despite a difficult year the retail sector has endured, we have continued our year-over-year growth, and kept tight reins on our operations both domestically and overseas. Now more than ever we are looking forward to aggressively looking to new distribution channels to further propel our position with the industry." At fiscal year-end, JAKKS Pacific had $115.1 million in working capital, including $62.2 million in cash and marketable securities, nominal debt, and shareholders' equity of approximately $244.4 million. "Given our exceptionally strong balance sheet, in addition to $50 million in available credit, we are in an excellent position to continue to execute on our strategy of internal and external growth in 2002," continued Friedman.
"We expect 2002 will be another record year for JAKKS, with new introductions expected in all segments," said Stephen Berman, President and Chief Operating Officer of JAKKS Pacific. "New introductions this year include new writing instruments using gel ink technologies, extensions to our extreme sports toy lines with gyros, and new World Wrestling Federation(R) action figures and accessories scheduled for release this year. Likewise, with the industry's transition to new video game hardware essentially complete, and with several exciting new titles due for release, we anticipate substantially higher profits from JAKKS' World Wrestling Federation video game joint venture with THQ Inc. In light of two recent announcements -- our distribution arrangement with Funtastic Limited in Australia, and our acquisition of Kidz Biz Ltd. in the UK -- international sales, which last year represented approximately 11.8% of total net sales, are expected to play an increasingly important role in top-line growth. "Also in 2002, with the inclusion of the Toymax acquisition, we expect to have record sales of $360 million to $380 million and diluted earnings per share of $1.90 to $2.01. These numbers reflect a substantial paring down of Toymax sales in order for us to focus on their more profitable products and streamline operations to increase overall profitability. We expect that Toymax operations will be fully integrated by the end of 2002. "Much of the growth we anticipate in 2002 will be based on relationships we recently initiated or extended," continued Berman. "Among the highlights was unquestionably our signing of a long-term master activity toy and stationery licensing agreement with Nickelodeon, under which our Flying Colors division will continue to develop a variety of products based on such popular properties as Dora The Explorer(TM), Jimmy Neutron Boy Genius(TM), and SpongeBob SquarePants(TM). Additionally, Flying Colors will introduce a number of new Nickelodeon-branded compound product lines, including Smatter(TM) and Skweeez(TM), and extensions for Goooze(R) and Crystal Zyrofoam(R). JAKKS also signed several other licensing agreements, covering a variety of properties and product categories, which will contribute to top- and bottom-line growth in 2002. Among these are the perennially popular Barney(R); The Scorpion King action-adventure film; Power Rangers(R) and Junkyard Wars television series; and Ice Age, an animated epic. And, we will be introducing lines of Disney art/activity and junior sports products based on classic characters as well as new filmed entertainment." JAKKS will conduct a teleconference in conjunction with today's release. The teleconference begins at 7:00 a.m. PST (10:00 a.m. EST) today, Tuesday, February 12, 2002. One may listen in via the Internet at www.jakkspacific.com. For those unable to attend, a playback of the call will be available from 9:00 a.m. PST (1:00 p.m. EST) on February 12, 2002 through 5:00 p.m. PST (8:00 p.m. EST) on February 13, 2002. You may access the playback by calling (800) 633-8284 (or for international callers 858-812-6440) and providing reservation number 18163171. JAKKS Pacific is a multi-brand toy company that designs, develops, produces and markets toys and related products under various brand names (including Flying Colors(R), Road Champs(R), Remco(R), Child Guidance(R) and Pentech(R)) in multiple product categories, including: Wheels; Action Figures; Art/Activities/Stationery; Infant/Pre-School; Writing Instruments; Plush; and Dolls. The Company also participates in a joint venture that has exclusive worldwide rights to publish and market World Wrestling Federation(R) video games. Additional information is available at www.jakkspacific.com. "Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: This press release contains forward-looking statements. Such statements reflect the current views of the Company with respect to future events and are subject to certain risks, uncertainties and assumptions. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual future results or events may vary materially from those described herein. (Financial Tables Follow)
Income Statement JAKKS PACIFIC, INC. AND SUBSIDIARIES FOURTH QUARTER EARNINGS ANNOUNCEMENT, 2001 CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED) THREE MONTHS ENDED DECEMBER 31, TWELVE MONTHS ENDED DECEMBER 31, ------------------------------- -------------------------------- 2001 2000 2001 2000 ------------- ------------- ------------- ------------- Net sales $ 61,437,819 $ 59,090,061 $ 284,309,021 $ 252,287,943 Less cost of sales Cost of goods 31,406,527 30,137,625 134,009,863 120,880,712 Royalty expense 4,322,192 3,701,909 23,045,209 23,254,482 Amortization of tools and molds 1,755,817 2,367,208 7,167,189 5,745,610 ------------- ------------- ------------- ------------- Cost of sales 37,484,536 36,206,742 164,222,261 149,880,804 ------------- ------------- ------------- ------------- Gross profit 23,953,283 22,883,319 120,086,760 102,407,139 Direct selling expenses 11,012,546 13,341,891 39,674,382 40,356,329 Selling, general and administrative expenses 12,706,101 8,414,450 44,847,765 36,551,236 Acquisition shut-down and recall costs 175,264 396,423 1,214,101 1,468,798 Depreciation and amortization 1,469,703 1,075,683 5,052,356 3,527,307 ------------- ------------- ------------- ------------- Income from operations (1,410,331) (345,128) 29,298,156 20,503,469 Profit from Joint Venture (5,708,198) (7,738,184) (6,675,428) (15,905,860) Interest, net (524,399) (733,998) (2,056,526) (3,833,359) Other -- -- -- (91,670) ------------- ------------- ------------- ------------- Income before provision for income taxes 4,822,266 8,127,054 38,030,110 40,334,358 Provision for income taxes 432,597 2,098,400 9,797,209 11,696,963 ------------- ------------- ------------- ------------- Net income $ 4,389,669 $ 6,028,654 $ 28,232,901 $ 28,637,395 ============= ============= ============= ============= Earnings per share - diluted $ 0.22 $ 0.32 $ 1.45 $ 1.41 Shares used in earnings per share - diluted 19,762,655 18,621,239 19,409,925 20,281,475
JAKKS PACIFIC, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS DECEMBER 31, DECEMBER 31, 2001 2000 ------------- ------------- ASSETS Current assets: Cash and cash equivalents $ 25,036,203 $ 29,275,424 Marketable securities 37,119,071 13,617,912 Accounts receivable, net 52,888,452 47,053,699 Inventory, net 32,023,960 30,534,826 Prepaid expenses and other current assets 11,108,075 8,150,507 ------------- ------------- Total current assets 158,175,761 128,632,368 ------------- ------------- working capital 115,121,728 86,896,973 Property and equipment 33,515,575 29,636,719 Less accumulated depreciation and amortization 17,762,905 10,653,467 ------------- ------------- Property and equipment, net 15,752,670 18,983,252 ------------- ------------- Notes receivable - officers 2,224,000 2,450,000 Goodwill, net 89,863,415 74,590,189 Trademarks & other intangibles, net 11,567,679 12,104,546 Investment in joint venture 7,893,312 9,758,359 Other assets 2,945,076 2,203,679 ------------- ------------- Total assets $ 288,421,913 $ 248,722,393 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued expenses $ 35,602,252 $ 33,712,040 Current portion of long term debt 22,560 400,000 Income taxes payable 7,429,221 7,623,355 ------------- ------------- Total current liabilities 43,054,033 41,735,395 ------------- ------------- Long term debt 72,510 1,000,000 Deposits held 135,160 -- Deferred income taxes 756,817 1,456,817 ------------- ------------- 964,487 2,456,817 ------------- ------------- Total liabilities 44,018,520 44,192,212 Stockholders' equity: Common stock, $.001 par value 20,320 19,485 Additional paid-in capital 168,114,819 156,475,343 Treasury Stock, at cost (12,911,483) (12,911,483) Retained earnings 89,179,737 60,946,836 ------------- ------------- 244,403,393 204,530,181 ------------- ------------- Total liabilities and stockholders' equity $ 288,421,913 $ 248,722,393 ============= ============= -- --