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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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):
February 14, 2006 (February 14, 2006)
JAKKS PACIFIC, INC.
(Exact Name of registrant as specified in its charter)
Delaware 0-28104 95-4527222
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer
incorporation) Identification No.)
22619 Pacific Coast Highway 90265
Malibu, California (Zip Code)
(Address of principal
executive offices)
Registrant's telephone number, including area code: (310) 456-7799
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
JAKKS PACIFIC, INC.
INDEX TO FORM 8-K
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
February 14, 2006
ITEMS IN FORM 8-K
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Page
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Facing Page 1
Item 2.02 Results of Operations and Financial Condition 3
Item 9.01 Financial Statements and Exhibits 3
Signatures 4
Exhibit Index 5
2
Item 2.02. Results of Operations and Financial Condition.
On February 14, 2006, we issued a press release announcing our results
of operations for the quarter ended December 31, 2005. A copy of such release is
annexed hereto as an exhibit.
Item 9.01. Financial Statements and Exhibits.
(c) Exhibits
Exhibit
Number Description
- ------- -----------
99.1* February 14, 2006 Press Release
- -----------------------------
* 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: February 14, 2006 JAKKS PACIFIC, INC.
By: /s/ Jack Friedman
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Jack Friedman
Chairman and Chief Executive Officer
4
Exhibit Index
Exhibit
Number Description
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99.1* February 14, 2006 Press Release
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* Filed herewith
5
Exhibit 99.1
JAKKS Pacific(R) Reports Fourth Quarter and Year-End Results for 2005;
Company Achieves 2005 Record Net Sales and Net Income; Company
Provides Guidance of Continued Growth in Fiscal 2006
MALIBU, Calif.--(BUSINESS WIRE)--Feb. 14, 2006--JAKKS Pacific,
Inc. (Nasdaq:JAKK), a leading multi-brand company that designs and
markets a broad range of toys, writing instruments and other consumer
products, today announced results for the fourth quarter and
year-ended December 31, 2005.
Fourth quarter net sales were $166.3 million in 2005, compared to
$184.8 million in the comparable period last year. Pro forma net
income for the fourth quarter of 2005 was $16.7 million, or $0.53 per
diluted share, excluding the tax impact of the repatriation of $175
million of undistributed earnings from the Company's international
subsidiaries under the American Jobs Creation Act of 2004 (AJC Act).
Under the AJC Act, U.S. corporations receive a one-time 85%
dividends-received deduction on the repatriation of undistributed
foreign earnings conditioned upon specified reinvestment in the U.S.
Reported net income for the fourth quarter of 2005, including the
repatriation taxes, was $9.0 million, or $0.30 per diluted share,
compared to $10.5 million, or $0.35 per diluted share, for the same
period last year.
The Company's net sales for the year ended December 31, 2005
increased 15.2% to $661.5 million, from $574.3 million in 2004. Pro
forma net income for 2005, excluding the tax impact of the AJC Act
repatriation noted above, was $71.2 million, or $2.30 per diluted
share. Reported net income for the year ended December 31, 2005,
including the repatriation taxes, was $63.5 million, or $2.07 per
diluted share, compared to 2004 earnings of $43.6 million, or $1.49
per diluted share.
"We are very pleased with our performance for the full year 2005,"
said Jack Friedman, Chairman and Chief Executive Officer, JAKKS
Pacific. "Our net sales grew 15% over 2004 with our success largely
attributable to our brand management skills, the strong performance of
our acquired lines, our ability to consistently expand and reinvent
our diverse portfolio of licensed and non-licensed products and our
continued strong relations with our licensors and retailers. The
Company enters 2006 with the most diversified product line in our
history and we expect to again achieve record revenue and earnings in
2006."
Stephen Berman, President and Chief Operating Officer, stated,
"Looking ahead to 2006, we believe our use of technology, coupled with
simple innovation, will give JAKKS Pacific new opportunities around
the globe. Our portfolio is full of many exciting new products and
line extensions we expect to roll-out during the year, including
Tele-Story, iPets and new TV Games. For TeleStory, which will be
launched simultaneously in North America and internationally, we have
licensing rights for the entire Disney portfolio, Clifford The Big Red
Dog(R), I SPY(TM) and the new animated "Curious George" television
series, to name just a few titles from our library of licenses. We're
quite optimistic about the response to iPets, which combines virtual
pets with a completely new play pattern by incorporating our plug and
play gaming technology. In addition, we are launching several new TV
Games titles targeted to our core kids market, which are based on most
of the popular children's entertainment properties of today, including
"Winnie the Pooh," "Scooby-Doo," "SpongeBob SquarePants," "Disney
Princesses" and "Thomas The Tank Engine."
Mr. Berman continued, "Our acquisition of Creative Designs
International, a leading manufacturer of girls' dress-up and role-play
toys, was recently completed, and we will immediately focus on
expanding their distribution both in North America and
internationally. CDI's license relationships include Disney and many
other household names, and we are extremely excited about the
potential of this complementary line.
"Play Along continues to contribute to the Company's rich
portfolio with exciting introductions as well. We are in the midst of
bringing back to the market a top-selling and well-known collectable
from the past, Classic Trolls, and in Spring of 2006, we will
introduce new "color change" cornsilk hair Cabbage Patch Kids, more
new Doodle Bear items and our new Speed Stacks(TM) line.
"We are showcasing these and other products this week at the
International Toy Fair in New York, and we have already received very
positive feedback from many of the large and small retailers
worldwide. With the first year of our fast growing Pet Division in
full swing, we are also excited with the new array of products and
expanded distribution through our existing retail partnerships, as
well as further expansion of new relationships for JAKKS with
retailers like PetCo and Pet Smart."
"Jakks Pacific, celebrating its tenth year in business, continues
to build off of a solid base of diverse product lines, which we
believe properly positions us for continued growth in 2006 and beyond.
Our financial position remains very strong, with excellent cash flow
from operations in 2005 of approximately $66.9 million. As of December
31, 2005, our working capital was approximately $300.7 million,
including cash and equivalents of $240.2 million, and after giving
effect to the CDI acquisition, our cash and equivalents is
approximately $135.7 million. We expect to continue to grow our
business by actively pursuing accretive and complementary acquisitions
and executing on internal growth initiatives, including creating new
products and securing new licenses, to provide continued growth for
JAKKS Pacific."
Friedman concluded, "Including CDI, we expect to increase net
sales to approximately $825 million in 2006, with net income of $82
million, or $2.63 per diluted share. This forecast anticipates first
quarter net sales in the range of $102 million to $110 million, and
diluted earnings per share of $0.13 to $0.18, which is less than first
quarter 2005 results. We anticipate more than making it up in the
balance of the year with the initiatives we have in place and based on
the response from the trade on our lines."
JAKKS Pacific is hosting a teleconference today at 8:30 a.m. PST
(11:30 a.m. EST) on February 15th, 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 10:30 a.m. EST on February 14th through 12 a.m. EST on February
28th. The playback can be accessed by calling 888-843-8996 or
630-652-3044 for international callers, passcode "13796912."
About JAKKS Pacific, Inc.:
JAKKS Pacific, Inc. is a multi-brand company that designs and
markets a broad range of toys and consumer products. The product
categories include: Action Figures, Art Activity Kits, Stationery,
Writing Instruments, Performance Kites, Water Toys, Sports Activity
Toys, Vehicles, Infant/Pre-School, Plush, Dress-up, Role-play,
Construction Toys, Electronics, Dolls and Pet Toys and Accessories.
The products are sold under various brand names, including JAKKS
Pacific(R), Play Along(R), Creative Designs International(TM), Flying
Colors(R), Road Champs(R), Child Guidance(R), Pentech(R),
Trendmasters(R), Toymax(R), Funnoodle(R), Go Fly a Kite(R), Color
Workshop(R), Pet Pal(TM) and Plug It In & Play TV Games(TM). The
Company also participates in a joint venture with THQ Inc. that has
exclusive worldwide rights to publish and market World Wrestling
Entertainment(R) video games. For further information, visit
www.jakkspacific.com or www.tvgames.com.
This press release contains forward-looking statements (within the
meaning of the Private Securities Litigation Reform Act of 1995) that
are based on current expectations, estimates and projections about
JAKKS Pacific's business based partly on assumptions made by its
management. These statements are not guarantees of 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 statements due to
numerous factors, including, but not limited to, those described
above, changes in demand for JAKKS' products, product mix, the timing
of customer orders and deliveries, the impact of competitive products
and pricing, and difficulties with integrating acquired businesses.
The forward-looking statements contained herein speak only as of the
date on which they are made, and JAKKS undertakes no obligation to
update any of them to reflect events or circumstances after the date
of this release.
JAKKS Pacific, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
December December
31, 2005 31, 2004
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(In thousands)
ASSETS
Current assets:
Cash and cash equivalents $240,238 $176,544
Marketable Securities - 19,047
Accounts receivable, net 87,200 102,266
Inventory, net 66,730 50,000
Prepaid expenses and other current assets 26,603 24,682
-------- --------
Total current assets 420,771 372,539
-------- --------
Property and equipment 38,088 38,213
Less accumulated depreciation and amortization 25,394 27,273
-------- --------
Property and equipment, net 12,694 10,940
-------- --------
Goodwill, net 269,298 258,331
Trademarks & other assets, net 36,279 45,136
Investment in joint venture 10,365 9,816
-------- --------
Total assets $749,407 $696,762
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $94,948 $108,976
Reserve for sales returns and allowances 25,123 23,173
Income taxes payable - 10,847
-------- --------
Total current liabilities 120,071 142,996
-------- --------
Long term debt 98,000 98,000
Deferred rent liability 994 -
Deferred income taxes 5,690 4,281
-------- --------
104,684 102,281
-------- --------
Total liabilities 224,755 245,277
Stockholders' equity:
Common stock, $.001 par value 27 26
Additional paid-in capital 287,355 276,642
Retained earnings 240,058 176,564
Accumulated other comprehensive income (loss) (2,788) (1,747)
-------- --------
524,652 451,485
-------- --------
Total liabilities and stockholders' equity $749,407 $696,762
JAKKS Pacific, Inc. and Subsidiaries
Fourth Quarter Earnings Announcement, 2005
Condensed Statements of Income (Unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
2005 2004 2005 2004
---- ---- ---- ----
(In thousands, except per share data)
Net sales $166,270 $184,802 $661,537 $574,266
Less cost of sales
Cost of goods 77,128 92,835 323,303 286,955
Royalty expense 16,834 18,478 67,069 56,491
Amortization of tools and
molds 1,337 1,030 4,457 4,813
-------- -------- -------- --------
Cost of sales 95,299 112,343 394,829 348,259
-------- -------- -------- --------
Gross profit 70,971 72,459 266,708 226,007
Direct selling expenses 26,031 22,154 78,982 61,732
Selling, general and
administrative expenses 29,859 29,316 89,638 95,480
Depreciation and amortization 2,602 10,386 10,102 15,070
-------- -------- -------- --------
Income from operations 12,479 10,603 87,986 53,725
Other income (expense):
Profit from Joint Venture 7,873 6,590 9,414 7,865
Other expense - - (1,401) -
Interest, net 621 (544) 639 (2,498)
-------- -------- -------- --------
Income before provision for
income taxes 20,973 16,649 96,638 59,092
Provision for income taxes 11,958 6,140 33,144 15,533
-------- -------- -------- --------
Net income $9,015 $10,509 $63,494 $43,559
======== ======== ======== ========
Earnings per share -- diluted $0.30 $0.35 $2.07 $1.49
Shares used in earnings per
share -- diluted 32,197 31,855 32,193 31,406
CONTACT: JAKKS Pacific, Inc.
Genna Rosenberg, 310-455-6235
or
Integrated Corporate Relations
John Mills, 310-395-2215