KDE 4Kids Entertainment Common Stock

4Kids Entertainment, Inc. (NYSE: KDE), the global children’s entertainment and merchandise licensing company, today announced financial results for the third quarter ended September 30, 2009.

Recent Company Highlights:

• Received $9.8 million from the sale of the Teenage Mutant Ninja Turtles property by Mirage Studios to Nickelodeon in October 2009
• Licensing agreement with NFL Properties and NFL Players to produce a football collectible trading card game with a digital card online component, to coincide with the 2010 NFL season
• Chaotic video game shipping on November 17, 2009 throughout North America and will be available for all major gaming consoles, including PlayStation 3, Nintendo Wii, and Microsoft Xbox

Net revenues for the three months ended September 30, 2009 totaled $7.3 million, compared to $17.8 million for the same period in 2008. The Company’s net loss attributable to 4Kids Entertainment for the three months ended September 30, 2009 was $(5.0) million, or $(0.37) per diluted share, as compared to a net loss of $(5.3) million, or $(0.40) per diluted share, for the same period in 2008. The Company’s results reflect the adoption of authoritative guidance from the FASB requiring losses attributable to non-controlling interests of the Company to be excluded in their entirety from the computation of the Company’s net losses beginning in 2009.

For the nine months ended September 30, 2009, net revenues totaled $21.9 million, compared to $49.4 million for the same period in 2008. The Company’s net loss attributable to 4Kids Entertainment for the nine months ended September 30, 2009 was $(20.8) million, or $(1.56) per diluted share, as compared to a net loss of $(17.2) million, or $(1.31) per diluted share, for the same period in 2008.

“Business conditions remained challenging for the company during the third quarter as reflected in our results. However, we closed on two deals over the last six weeks which we believe are big positives for 4Kids. The sale of the Teenage Mutant Ninja Turtles property to Nickelodeon not only compensated 4Kids for the early termination of its representation agreement but also provided the Company with a substantial infusion of cash. Our NFL trading card game license also provides the Company with an opportunity to use our online platform for a new trading card game," stated Alfred R. Kahn, Chairman and Chief Executive Officer, 4Kids Entertainment.

"We are encouraged by the increase in our television ratings thus far for the 2009-2010 broadcast season, compared with the same period during the 2008-2009 broadcast season. We are hopeful that sales of toys and games and licensed merchandise in the coming holiday season will be stronger than last year’s sales numbers and that the Company’s fourth quarter licensing revenue will likewise benefit," concluded Kahn.

About 4Kids Entertainment, Inc.

With U.S. headquarters in New York City, regional offices for its trading card business in San Diego, California and international offices in London, 4Kids Entertainment, Inc. (NYSE: KDE) 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, and produces and markets collectible trading card games. 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.

   

4KIDS ENTERTAINMENT, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

SEPTEMBER 30, 2009 and DECEMBER 31, 2008

(In thousands of dollars, except share data)

              ASSETS:

September 30, 2009

 

December 31, 2008

Current assets: (Unaudited) Cash and cash equivalents $ 3,573 $ 13,503 Accounts receivable - net 9,808 22,818 Inventories - net 5,153 4,241 Prepaid income taxes 127 137 Prepaid expenses and other current assets 3,807 1,876 Deferred income taxes 139 127 Total current assets 22,607 42,702   Property and equipment - net 3,402 4,287 Long term investments 14,179 21,617 Accounts receivable - noncurrent, net 255 655 Film and television costs - net 16,899 16,661 Other assets - net (includes related party amounts of $7,816 and $6,638, respectively) 17,370 14,652 Total assets $ 74,712 $ 100,574   LIABILITIES AND EQUITY: Current liabilities: Due to licensors $ 6,507 $ 5,651 Accounts payable and accrued expenses 13,618 16,202 Deferred revenue 1,551 3,270 Total current liabilities 21,676 25,123   Deferred rent 356 460 Total liabilities 22,032 25,583   Commitments and contingencies 4Kids Entertainment, Inc. shareholders’ equity Preferred stock, $.01 par value - authorized, 3,000,000 shares; none issued — — Common stock, $.01 par value - authorized, 40,000,000 shares;

issued, 15,411,099 and 15,246,579 shares; outstanding 13,352,053 and

13,227,019 shares in 2009 and 2008, respectively

154 152 Additional paid-in capital 66,991 65,107 Accumulated other comprehensive loss (14,237 ) (17,396 ) Retained earnings 42,711 63,504 95,619 111,367 Less cost of 2,059,046 and 2,019,560 treasury shares in 2009 and 2008, respectively 36,434 36,376 Total shareholders’ equity of 4Kids Entertainment, Inc. 59,185 74,991 Noncontrolling interests (6,505 ) — Total equity 52,680 74,991 Total liabilities and equity $ 74,712 $ 100,574    

4KIDS ENTERTAINMENT, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008

(In thousands of dollars, except share data)

                 

Three Months Ended

Nine Months Ended

September 30,

September 30,

2009

 

2008

2009

 

2008

  Net revenues: Service revenue $ 5,736 $ 10,534 $ 20,077 $ 34,620 Product revenue 1,534 7,250 1,786 14,743 Total net revenues 7,270 17,784 21,863 49,363   Costs and expenses: Selling, general and administrative 11,022 13,937 33,763 39,892 Production service costs 482 1,710 2,503 5,245 Cost of sales of trading cards 1,547 3,447 2,811 6,360 Amortization of television and film costs 1,438 1,864 3,695 5,269 Amortization of 4Kids TV broadcast fee — 3,041 — 12,150 Total costs and expenses 14,489 23,999 42,772 68,916   Loss from operations (7,219 ) (6,215 ) (20,909 ) (19,553 )   Interest income 178 689 925 2,096 Impairment on investment securities (71 ) — (169 ) — Loss on sale of investment securities — — (7,250 ) — Total other (expense) income 107 689 (6,494 ) 2,096   Loss before income taxes (7,112 ) (5,526 ) (27,403 ) (17,457 )   Benefit from income taxes — — — —   Noncontrolling interest — 251 — 251   Net loss (7,112 ) (5,275 ) (27,403 ) (17,206 )   Net loss attributable to noncontrolling interests 2,109 — 6,610 —   Net loss attributable to 4Kids Entertainment, Inc. $ (5,003 ) $ (5,275 ) $ (20,793) $ (17,206 )   Per share amounts:   Basic loss per share attributable to 4Kids Entertainment Inc. common shareholders $ (0.37 ) $ (0.40 ) $ (1.56 ) $ (1.31 )   Diluted loss per share attributable to 4Kids Entertainment Inc. common shareholders $ (0.37 ) $ (0.40 ) $ (1.56 ) $ (1.31 )   Weighted average common shares outstanding - basic 13,352,053 13,153,508 13,286,726 13,166,281   Weighted average common shares outstanding - diluted 13,352,053 13,153,508 13,286,726 13,166,281