View:
================================================================================
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):
July 19, 2006 (July 19, 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
July 19, 2006
ITEMS IN FORM 8-K
Page
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 July 19, 2006, we issued a press release announcing our results of
operations for the quarter ended June 30, 2006. 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* July 19, 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: July 19, 2006 JAKKS PACIFIC, INC.
By: /s/ Jack Friedman
------------------------------
Jack Friedman
Chairman and Chief Executive Officer
4
Exhibit Index
Exhibit
Number Description
- ------ -----------
99.1* July 19, 2006 Press Release
- -----------------------------
* Filed herewith
5
Exhibit 99.1
JAKKS Pacific(R) Reports 2006 Second Quarter Results;
Revises 2006 Sales and Earnings Guidance
MALIBU, Calif.--(BUSINESS WIRE)--July 19, 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 second quarter and first six
months ended June 30, 2006.
Second quarter 2006 net sales were $124.0 million, compared to
$127.1 million recorded in the comparable period last year. Net income
for the second quarter was $6.4 million, or $0.22 per diluted share,
compared to $11.6 million, or $0.38 per diluted share, reported in the
second quarter of 2005. Included in the results were non-cash, stock
based compensation charges of $1.4 million in the second quarter of
2006 compared to a credit of $0.6 million in the second quarter of
2005 and incremental overhead and acquisition amortization charges of
$5.4 million in the second quarter 2006 relating to the acquisition of
Creative Designs International.
The Company's net sales for the six months ended June 30, 2006
were $231.3 million, compared to $261.8 million during the same period
in 2005. Net income for the first six months of 2006 was $8.7 million,
or $0.31 per diluted share, compared to the first six months 2005
earnings of $21.7 million or $0.72 per diluted share. Included in the
results were non-cash, stock based compensation charges of $3.7
million in the first six months of 2006 compared to a credit of $0.2
million in the first six months of 2005 and incremental overhead and
acquisition amortization charges of $9.5 million in the first six
months of 2006 relating to the acquisition of Creative Designs
International.
"During the second quarter we continued to successfully integrate
our recently acquired Creative Designs(TM) product line, which
contributed to the second quarter's sales, offsetting certain
shortfalls in international sales and sales in our Fly Wheels(TM) and
TV Games(TM) lines," said Jack Friedman, Chairman and Chief Executive
Officer, JAKKS Pacific. "We will be introducing several new products
at retail during the second half of the year to complement our rich
portfolio of items, and we anticipate they will be favorably received
by retailers and customers this holiday season and beyond. We continue
to be pleased with our growth and accomplishments over our ten year
history and believe that our ability to adapt and consistently
cultivate our product portfolio with a compelling and diversified
product mix will enable us to build long-term value for our
shareholders."
Stephen Berman, President and Chief Operating Officer, stated, "We
began shipping our TeleStory(TM), Tuta Bella(TM) and Speed Stacks(TM)
product lines at the end of the second quarter and worked diligently
to complete the development of our flying XPV(TM) (Xtreme Performance
Vehicle(TM)), which we began shipping at the very end of the quarter.
We also shipped new TV Games titles, including Super Pac-Man(R), Power
Rangers(R) and Superman(R), and started shipping classic Trolls
figures to mass market accounts. As our pet product line continues to
gain momentum in the marketplace, we began a soft launch of our new
White Bites(TM) oral care treats for dogs, and our American Kennel
Club(R) licensed dog products are strong sellers at an increasing
number of retailers.
"Our Vmigo virtual pet gaming system will begin to ship to
retailers around the world in the third quarter, and TeleStory(TM),
our interactive plug and play reading system for preschoolers, will
continue to ship to new retailers in the third quarter. New role play
items from our Creative Designs International division, highlighted by
the Disney Ariel Underwater Beauty Salon and Black & Decker(R) Power
Tool Workshop for boys, which ships in the fourth quarter, have been
sold in to many major retail outlets. Our collectible line of
Rocky(TM) action figures join our line-up in late 2006, with a launch
event in the city of Philadelphia with Sylvester Stallone planned for
September to help build awareness. We will be rolling out a number of
new pet items to various retail channels, including drug, pet
specialty, mass and club stores, and will ship a Meow Mix(R) line,
created especially for grocers to merchandise with cat food, later
this year, all of which position us favorably for the second half of
the year."
Berman continued, "We also announced new master toy licenses for
Pokemon(R) and Barney(R) in the quarter, both of which were the most
comprehensive rights each property had ever granted to one U.S.
company, which we believe is a testament to our overall product
development and marketing strength. Both of these lines, along with
many others, are being developed for spring 2007, and the initial
retailer response to JAKKS'(TM) toys created for both Pokemon and
Barney has been excellent, as a whole new generation is discovering
the magic of these two distinct properties."
At June 30, 2006, JAKKS Pacific had approximately $110.3 million
in cash and cash equivalents and $239.4 million in working capital.
Mr. Friedman said that, "We are revising our guidance to reflect
an increase in net sales of approximately 17.2% and an increase in
diluted earnings per share of approximately 12.7% for the current
fiscal year versus 2005. The Company's forecast for net sales is now
approximately $775 million, down from approximately $825 million, and
the earnings per share target is now approximately $2.32 down from
approximately $2.63. The decrease in projected sales is attributable
to several factors, including delays in production and shipment
relating to several of the Company's products and a shortfall in sales
of several items in our Fly Wheels category as well as in our
international business."
Conference Call
JAKKS Pacific is hosting a teleconference today at 6 a.m. PDT (9
a.m. EDT) on July 19th, 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 9 a.m. PDT on July
19th through 11:59 p.m. PDT on August 18th. The playback can be
accessed by calling 888-266-2081 or 703-925-2533 for International
callers, and entering passcode "937169."
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, Construction Toys,
Electronics, Dolls, Dress-Up, Role Play, and Pet Toys and Accessories.
The products are sold under various brand names, including JAKKS
Pacific(R), Play Along(R), Flying Colors(R), Creative Designs
International(TM), Road Champs(R), Child Guidance(R), Pentech(R),
Trendmasters(R), Toymax(R), Funnoodle(R), Go Fly a Kite(R), Color
Workshop(R), JPI(TM) and Plug It In & Play TV Games(TM). JAKKS and THQ
Inc. participate in a joint venture that has worldwide rights to
publish and market World Wrestling Entertainment video games. For
further information, visit www.jakkspacific.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
June December
30, 31,
2006 2005
-------- --------
(In thousands)
ASSETS
Current assets:
Cash and cash equivalents $110,289 $240,238
Accounts receivable, net 85,483 87,199
Inventory, net 76,834 66,729
Deferred income taxes 14,609 13,618
Prepaid expenses and other current assets 43,671 17,533
-------- --------
Total current assets 330,886 425,317
-------- --------
Property and equipment 43,317 38,089
Less accumulated depreciation and amortization 28,842 25,394
-------- --------
Property and equipment, net 14,475 12,695
-------- --------
Goodwill, net 314,957 269,298
Trademarks & other assets, net 78,207 36,280
Investment in video game joint venture 2,376 10,365
-------- --------
Total assets $740,901 $753,955
-------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $70,147 $94,948
Reserve for sales returns and allowances 21,339 25,123
Income taxes payable - 3,792
-------- --------
Total current liabilities 91,486 123,863
-------- --------
Long term debt 98,000 98,000
Deferred rent liability 924 995
Deferred income taxes 7,241 6,446
-------- --------
106,165 105,441
-------- --------
Total liabilities 197,651 229,304
Stockholders' equity:
Common stock, $.001 par value 28 27
Additional paid-in capital 299,822 287,356
Retained earnings 248,749 240,057
Deferred compensation from restricted stock
grants (2,699) -
Accumulated other comprehensive income (loss) (2,650) (2,789)
-------- --------
543,250 524,651
-------- --------
Total liabilities and stockholders' equity $740,901 $753,955
======== ========
- -
Working capital 239,400 301,454
JAKKS Pacific, Inc. and Subsidiaries
Second Quarter Earnings Announcement, 2006
Condensed Statements of Income (Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2006 2005 2006 2005
-------- -------- -------- --------
(In thousands, expect per share data)
Net sales $124,041 $127,091 $231,285 $261,767
Less cost of sales
Cost of goods 61,872 66,521 114,079 130,352
Royalty expense 11,469 11,589 21,084 27,130
Amortization of tools and
molds 1,420 908 2,679 2,000
-------- -------- -------- --------
Cost of sales 74,761 79,018 137,842 159,482
-------- -------- -------- --------
Gross profit 49,280 48,073 93,443 102,285
Direct selling expenses 12,093 13,807 26,224 32,869
Selling, general and
administrative expenses 24,036 17,055 47,300 36,184
Depreciation and amortization 4,188 2,597 8,712 4,943
-------- -------- -------- --------
Income from operations 8,963 14,614 11,207 28,289
Other income (expense):
Profit from video game joint
venture 220 1,153 977 1,303
Other expense - - - -
Interest, net (48) (35) 234 (233)
-------- -------- -------- --------
Income before provision for
income taxes 9,135 15,732 12,418 29,359
Provision for income taxes 2,774 4,090 3,726 7,633
-------- -------- -------- --------
Net income $6,361 $11,642 $8,692 $21,726
======== ======== ======== ========
Earnings per share -- diluted $0.22 $0.38 $0.31 $0.72
Shares used in earnings per
share -- diluted 32,789 32,229 32,753 32,239
CONTACT: JAKKS Pacific, Inc.
Genna Rosenberg, 310-455-6235
or
Integrated Corporate Relations
John Mills, 310-954-1105