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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):
October 19, 2006 (October 19, 2006)
JAKKS PACIFIC, INC.
(Exact Name of registrant as specified in its charter)
Delaware 0-28104 95-4527222
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of 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
October 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 October 19, 2006, we issued a press release announcing our results of
operations for the quarter ended September 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* October 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: October 19, 2006 JAKKS PACIFIC, INC.
By:/s/Jack Friedman
----------------
Jack Friedman
Chairman and Chief Executive Officer
4
Exhibit Index
Exhibit
Number Description
- ------- -----------
99.1* October 19, 2006 Press Release
- -----------------------------
* Filed herewith
5
Exhibit 99.1
JAKKS Pacific(R) Reports 2006 Third Quarter Results
--- Achieves Record Third Quarter Sales and Reiterates Guidance
for 2006 ---
MALIBU, Calif.--(BUSINESS WIRE)--Oct. 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 third quarter and nine
months ended September 30, 2006.
Third quarter 2006 net sales were $295.8 million, compared to
$233.5 million recorded in the comparable period last year. Net income
for the third quarter was $40.5 million, or $1.26 per diluted share,
compared to $32.8 million, or $1.05 per diluted share, reported in the
third quarter of 2005. Included in the results were non-cash charges
for stock-based compensation of $1.1 million and acquisition-related
amortization of $3.3 million in the third quarter of 2006, compared to
a credit of $0.6 million and charge of $1.8 million, respectively, in
the third quarter of 2005. Pro forma net income excluding these
non-cash charges was $43.6 million, or $1.35 per diluted share, in
2006 and $33.5 million, or $1.07 per diluted share, in 2005.
Net sales for the nine months ended September 30, 2006 were $527.1
million, compared to $495.3 million during the same period in 2005.
Net income for the first nine months of 2006 was $49.2 million, or
$1.57 per diluted share, compared to the first nine months 2005
earnings of $54.5 million, or $1.77 per diluted share. Included in the
results were non-cash charges for stock-based compensation of $4.8
million and acquisition-related amortization of $10.4 million in the
first nine months of 2006, compared to a credit of $0.8 million and
charge of $5.3 million, respectively, in the first nine months of
2005. Pro forma net income excluding these non-cash charges was $59.8
million, or $1.90 per diluted share, in 2006 and $57.7 million, or
$1.87 per diluted share, in 2006.
"The holiday season is officially underway," said Jack Friedman,
Chairman and Chief Executive Officer, JAKKS Pacific. "With strong
initial orders for the holidays, we achieved record third quarter
sales and have positive momentum heading into the fourth quarter. Many
of our core traditional toys continue to be solid contributors,
including our Doodle Bear(R) line, WWE(R) action figures, Cabbage
Patch Kids(R) and TV Games lines. In addition, we benefited from the
significant contribution from our Creative Designs International(TM)
division, which is new for us in 2006."
Stephen Berman, President and Chief Operating Officer, stated, "We
remain focused on traditional play patterns and basic fun in the toy
area, adding innovation and appropriate licenses, and continuously
enhancing our diverse portfolio of products. Our Fly Wheels XPV(TM)
(Xtreme Performance Vehicle(TM)), which soars up over 20 stories high,
Ariel(TM) Magical Beauty Salon and Speed Stacks(R) StackPack(R)
products appeal to even the most sophisticated of today's kids, who,
we believe, love vehicles, pretend play and active sports that
stimulate their minds and increase their activity levels.
"We are well into the final development stages of our 2007 product
lines, which will feature many well-known and established licensed
brands, such as Doodle Bear(R), WWE, Cabbage Patch Kids, Dora the
Explorer, Deal or No Deal, Barney(R) and Jelly Belly.
"We continue to strive to grow both organically and through
acquisitions, while simultaneously maximize synergies in meaningful
ways throughout our organization. We leverage our strong licensing
relationships and channel product categories to our various teams
based on expertise, which enables JAKKS to develop multi-category
merchandised lines across brands. This has been a key benefit of our
acquired portfolio of brands over the past 11 years and several of our
2007 introductions, such as Pokemon(R), Bratz(R) and multiple
Disney(R) initiatives, will involve numerous JAKKS divisions,
including CDI, Play Along, JPI Pets, Flying Colors, JAKKS Electronics
and Go Fly A Kite, working together.
"We are showcasing our 2007 product line-up this week at the Fall
International Toy Show in New York, and we are confident in our
established product formula and that our new offerings will be
well-received by both retailers and today's kids."
At September 30, 2006, JAKKS Pacific had approximately $133.0
million in cash and cash equivalents and $284.0 million in working
capital.
The Company is reiterating its 2006 guidance of net sales of
approximately $775 million and fully diluted earnings per share of
approximately $2.32, which represents 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.
Conference Call
JAKKS Pacific is hosting a teleconference today at 6:00 a.m. PDT
(9:00 a.m. EDT) on October 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.
You can also listen to the call live via the Internet at
www.jakkspacific.com, www.CompanyBoardroom.com or
www.StreetEvents.com, where the call will be archived for 30 days. A
telephone playback will be available from 7:00 a.m. Pacific on October
19th through 12:00 a.m. Pacific on November 2nd. The playback can be
accessed by calling 888-266-2081 or 703-925-2533 for international
callers, passcode "984333".
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 may contain 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
September 30, December 31,
2006 2005
------------- ------------
(In thousands)
ASSETS
Current assets:
Cash and cash equivalents $132,966 $240,238
Accounts receivable, net 182,818 87,199
Inventory, net 86,676 66,729
Deferred income taxes 12,315 13,618
Prepaid expenses and other current assets 32,515 17,533
------------- ------------
Total current assets 447,290 425,317
------------- ------------
Property and equipment 46,869 38,089
Less accumulated depreciation and
amortization 31,136 25,394
------------- ------------
Property and equipment, net 15,733 12,695
------------- ------------
Goodwill, net 315,315 269,298
Trademarks & other assets, net 74,255 36,280
Investment in video game joint venture 1,936 10,365
------------- ------------
Total assets $854,529 $753,955
============= ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $134,058 $94,948
Reserve for sales returns and allowances 24,838 25,123
Income taxes payable 4,441 3,792
------------- ------------
Total current liabilities 163,337 123,863
------------- ------------
Long term debt 98,000 98,000
Deferred rent liability 889 995
Deferred income taxes 7,358 6,446
------------- ------------
106,247 105,441
------------- ------------
Total liabilities 269,584 229,304
Stockholders' equity:
Common stock, $.001 par value 28 27
Additional paid-in capital 298,190 287,356
Retained earnings 289,247 240,057
Accumulated other comprehensive income
(loss) (2,520) (2,789)
------------- ------------
584,945 524,651
------------- ------------
Total liabilities and stockholders' equity $854,529 $753,955
============= ============
JAKKS Pacific, Inc. and Subsidiaries
Third Quarter Earnings Announcement, 2006
Condensed Statements of Income (Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2006 2005 2006 2005
--------- --------- --------- ---------
(In thousands, expect per share data)
Net sales $295,789 $233,500 $527,074 $495,266
Less cost of sales
Cost of goods 155,467 115,823 269,546 246,175
Royalty expense 25,793 23,105 46,877 50,234
Amortization of tools and
molds 1,647 1,120 4,326 3,120
--------- --------- --------- ---------
Cost of sales 182,907 140,048 320,749 299,529
--------- --------- --------- ---------
Gross profit 112,882 93,452 206,325 195,737
Direct selling expenses 21,908 20,082 48,132 52,951
Selling, general and
administrative expenses 28,496 23,595 75,796 59,779
Depreciation and amortization 4,275 2,557 12,987 7,499
--------- --------- --------- ---------
Income from operations 58,203 47,218 69,410 75,508
Other income (expense):
Profit (loss) from video game
joint venture (245) 238 732 1,541
Interest income 1,030 1,387 3,530 3,419
Interest expense (1,133) (1,136) (3,399) (3,402)
Other expense - (1,401) - (1,401)
--------- --------- --------- ---------
Income before provision for
income taxes 57,855 46,306 70,273 75,665
Provision for income taxes 17,357 13,553 21,083 21,186
--------- --------- --------- ---------
Net income $40,498 $32,753 $49,190 $54,479
========= ========= ========= =========
Earnings per share - diluted $1.26 $1.05 $1.57 $1.77
Shares used in earnings per
share - diluted 32,736 32,088 32,731 32,182
CONTACT: JAKKS Pacific, Inc.
Genna Rosenberg, 310-455-6235
or
Integrated Corporate Relations
John Mills, 310-954-1105