Attached files
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| 8-K - 8K DATED MARCH 31, 2011 - 4Licensing Corp | form8k3312011.htm |
INVESTOR CONTACT
Bruce Foster
4Kids Entertainment, Inc.
(212) 758 – 7666
bfoster@4kidsent.com
4Kids Entertainment Reports 2010 Fourth Quarter and Year End Results
NEW YORK (March 31, 2011) – 4Kids Entertainment, Inc. (Pink Sheets: KIDE), the global children’s entertainment and merchandise licensing company, today announced financial results for the fourth quarter and year ended December 31, 2010.
Net revenues for the three months ended December 31, 2010 totaled $4.8 million, compared to $16.2 million for the same period in 2009. The Company’s net loss for the three months ended December 31, 2010 attributable to 4Kids Entertainment was $(7.4) million, or $(0.54) per diluted share (consisting of a net loss from continuing operations attributable to 4Kids Entertainment of $(7.8) million, or $(0.57) per diluted share, and net income from discontinued operations attributable to 4Kids Entertainment of $0.4 million, or $0.03 per diluted share), as compared to a net loss for the three months ended December 31, 2009 of $(21.3) million, or $(1.59) per diluted share (consisting of a net loss from continuing operations attributable to 4Kids Entertainment of $(17.2) million, or $(1.28) per diluted share, and a net loss from discontinued operations attributable to 4Kids Entertainment of $(4.1) million, or $(0.31) per diluted share).
For the year ended December 31, 2010, net revenues totaled $14.5 million, compared to $34.2 million for the same period in 2009. The Company’s net loss attributable to 4Kids Entertainment for the year ended December 31, 2010 was $(27.2) million, or $(2.02) per diluted share (consisting of a net loss from continuing operations attributable to 4Kids Entertainment of $(25.2) million, or $(1.87) per diluted share, and a net loss from discontinued operations attributable to 4Kids Entertainment of $(2.0) million, or $(0.15) per diluted share), as compared to a net loss of $(42.1) million, or $(3.16) per diluted share for the year ended December 31, 2009 (consisting of a net loss from continuing operations attributable to 4Kids Entertainment of $(31.9) million, or $(2.40) per diluted share, and a net loss from discontinued operations attributable to 4Kids Entertainment of $(10.2) million, or $(0.76) per diluted share).
As of December 31, 2010, the Company had approximately $4.2 million in cash and $7.1 million in investment securities at their fair market value.
As previously reported by 4Kids on March 24, 2011, 4Kids received a letter from the licensors of the Yu-Gi-Oh! property, Asatsu-DK Inc (“ADK”) and TV Tokyo Corporation, (collectively, the “Licensors”) purporting to terminate the agreement dated July 1, 2008 (the “Yu-Gi-Oh! Agreement”) between 4Kids and Licensors due to alleged breaches of the Yu-Gi-Oh! Agreement by 4Kids. The purported termination letter did not comply with the 10 business day notice and cure provision in the Yu-Gi-Oh! Agreement. On March 24, 2011, the Licensors filed a lawsuit against the Company in the United States District Court for the Southern District of New York also claiming that 4Kids has breached the Yu-Gi-Oh! Agreement for failing to pay Licensors approximately $4.7 million with regard to certain audit claims asserted by Licensors.
"The Company believes that the claims made by ADK in its lawsuit are baseless and its attempt to terminate the agreement invalid,” said Michael Goldstein interim Chairman of the Board of 4Kids Entertainment, Inc. "4Kids will vigorously oppose the attempted termination of the Yu-Gi-Oh! Agreement and the audit claims. If the matter is not settled, 4Kids will, regretfully, be seeking to recover the full measure of damages from Licensors for wrongfully terminating the Yu-Gi-Oh! Agreement and causing significant injury to the business of 4Kids," said Goldstein.
4Kids intends to continue its attempts to resolve the dispute with the Licensors. If such attempts are unsuccessful, 4Kids intends to take all actions it deems necessary to preserve its business and assets, including the potential filing of a petition under Chapter 11 of the United States Bankruptcy Code.
About 4Kids Entertainment, Inc.
With U.S. headquarters in New York City, and international offices in London, 4Kids Entertainment, Inc. (Pink Sheets: KIDE) 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. 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.
(Financial tables below)
4KIDS ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2010 AND 2009
(In thousands of dollars, except share data)
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December 31, 2010
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December 31, 2009
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ASSETS:
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Current assets:
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Cash and cash equivalents
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$ | 4,195 | $ | 3,621 | ||||
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Investments
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7,126 | — | ||||||
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Accounts receivable - net
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7,818 | 13,843 | ||||||
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Income taxes receivable
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30 | 4,044 | ||||||
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Prepaid expenses and other current assets
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1,185 | 2,111 | ||||||
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Current assets of discontinued operations
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39 | 2,401 | ||||||
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Total current assets
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20,393 | 26,020 | ||||||
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Property and equipment - net
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1,197 | 1,663 | ||||||
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Long-term investments
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— | 14,180 | ||||||
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Accounts receivable - noncurrent, net
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59 | 153 | ||||||
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Film and television costs - net
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3,668 | 6,832 | ||||||
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Non-current assets of discontinued operations
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— | 1,721 | ||||||
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Other assets - net (includes related party amounts of $195 and $1,215, respectively)
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3,753 | 6,084 | ||||||
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Total assets
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$ | 29,070 | $ | 56,653 | ||||
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LIABILITIES AND EQUITY:
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Current liabilities:
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Due to licensors
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$ | 2,501 | $ | 6,578 | ||||
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Accounts payable and accrued expenses
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12,517 | 9,566 | ||||||
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Current liabilities of discontinued operations
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1,753 | 2,738 | ||||||
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Deferred revenue
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1,570 | 2,279 | ||||||
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Total current liabilities
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18,341 | 21,161 | ||||||
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Deferred rent
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471 | 375 | ||||||
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Total liabilities
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18,812 | 21,536 | ||||||
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Commitments and contingencies
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4Kids Entertainment, Inc. shareholders’ equity
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Preferred stock, $.01 par value – authorized 3,000,000 shares; none issued
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— | — | ||||||
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Common stock, $.01 par value - authorized 40,000,000 shares;
issued 15,652,845 and 15,411,099 shares; outstanding
13,528,958 and 13,352,053 shares in 2010 and 2009, respectively
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157 | 154 | ||||||
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Additional paid-in capital
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68,699 | 66,991 | ||||||
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Accumulated other comprehensive income (loss)
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470 | (4,644 | ) | |||||
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Retained (deficit) earnings
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(7,863 | ) | 19,298 | |||||
| 61,463 | 81,799 | |||||||
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Less cost of 2,123,887 and 2,059,046 treasury shares in 2010 and 2009, respectively
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(36,488 | ) | (36,434 | ) | ||||
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Total shareholders’ equity of 4Kids Entertainment, Inc.
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24,975 | 45,365 | ||||||
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Noncontrolling interests related to discontinued operations
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(14,717 | ) | (10,248 | ) | ||||
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Total equity
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10,258 | 35,117 | ||||||
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Total liabilities and equity
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$ | 29,070 | $ | 56,653 | ||||
4KIDS ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 2010, 2009 AND 2008
(In thousands of dollars, except share data)
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2010
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2009
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2008
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Net revenues:
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Service revenue
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$ | 14,478 | $ | 24,394 | $ | 41,925 | ||||||
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Other revenue
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— | 9,786 | — | |||||||||
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Total net revenues
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14,478 | 34,180 | 41,925 | |||||||||
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Costs and expenses:
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Selling, general and administrative
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28,011 | 33,175 | 36,966 | |||||||||
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Amortization of television and film costs
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6,827 | 21,511 | 7,707 | |||||||||
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Amortization of 4Kids TV broadcast fee
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— | — | 16,022 | |||||||||
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Impairment of investment in international
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trading card subsidiary
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— | 2,430 | — | |||||||||
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Total costs and expenses
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34,838 | 57,116 | 60,695 | |||||||||
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Loss from operations
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(20,360 | ) | (22,936 | ) | (18,770 | ) | ||||||
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Other income (expense)
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Interest income
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403 | 1,076 | 2,722 | |||||||||
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Impairment of investment securities
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(3,578 | ) | (6,175 | ) | (7,834 | ) | ||||||
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Loss on sale of investment securities
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(1,616 | ) | (7,647 | ) | — | |||||||
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Total other expense
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(4,791 | ) | (12,746 | ) | (5,112 | ) | ||||||
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Loss before income taxes
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(25,151 | ) | (35,682 | ) | (23,882 | ) | ||||||
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Benefit from (provision for) income taxes
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— | 3,805 | (300 | ) | ||||||||
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Loss from continuing operations
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(25,151 | ) | (31,877 | ) | (24,182 | ) | ||||||
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Loss from discontinued operations
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(6,489 | ) | (20,579 | ) | (12,637 | ) | ||||||
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Net loss
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(31,640 | ) | (52,456 | ) | (36,819 | ) | ||||||
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Loss attributable to noncontrolling interests
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4,479 | 10,380 | — | |||||||||
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Net loss attributable to 4Kids Entertainment, Inc.
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$ | (27,161 | ) | $ | (42,076 | ) | $ | (36,819 | ) | |||
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Per share amounts:
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Basic and diluted loss per share attributable to
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4Kids Entertainment, Inc. common shareholders
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Continuing operations
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$ | (1.87 | ) | $ | (2.40 | ) | $ | (1.81 | ) | |||
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Discontinued operations
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(0.15 | ) | (0.76 | ) | (0.98 | ) | ||||||
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Basic and diluted loss per share attributable to
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4Kids Entertainment, Inc. common shareholders
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$ | (2.02 | ) | $ | (3.16 | ) | $ | (2.79 | ) | |||
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Weighted average common shares
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outstanding – basic and diluted
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13,460,214 | 13,303,192 | 13,181,549 | |||||||||
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Net loss attributable to 4Kids Entertainment, Inc.:
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Loss from continuing operations
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$ | (25,151 | ) | $ | (31,877 | ) | $ | (24,182 | ) | |||
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Loss from discontinued operations
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(6,489 | ) | (20,579 | ) | (12,637 | ) | ||||||
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Loss attributable to noncontrolling interests
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4,479 | 10,380 | — | |||||||||
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Net loss from discontinued operations
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(2,010 | ) | (10,199 | ) | (12,637 | ) | ||||||
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Net loss attributable to 4Kids Entertainment, Inc.
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$ | (27,161 | ) | $ | (42,076 | ) | $ | (36,819 | ) | |||