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 fourth quarter and year ended December 31, 2009.

Net revenues for the three months ended December 31, 2009 totaled $17.0 million, compared to $12.8 million for the same period in 2008. Fourth quarter revenues included $9.8 million that the Company received as part of its agreement to terminate its right to serve as the merchandise licensing agent for the Teenage Mutant Ninja Turtles property (“TMNT”). The Company’s net loss attributable to 4Kids Entertainment for the three months ended December 31, 2009 was $(21.3) million, or $(1.59) per diluted share, as compared to a net loss of $(19.6) million, or $(1.48) per diluted share, for the same period in 2008. Net loss for the fourth quarter included $20.2 million in impairment charges attributable to the Chaotic property. The Company's fourth quarter 2009 results also included losses and impairment charges of $6.0 million relating to the Company's portfolio of auction rate securities, $2.9 million in severance costs relating to the reduction in force and an additional $3.8 million in amortization of capitalized film costs related to the fourth quarter 2009 sale of the TMNT property.

For the year ended December 31, 2009, net revenues totaled $36.8 million, compared to $57.2 million for the same period in 2008. The Company’s net loss attributable to 4Kids Entertainment for the year ended December 31, 2009 was $(42.1) million, or $(3.16) per diluted share, as compared to a net loss of $(36.8) million, or $(2.79) 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.

“In 2009 we looked to realign our business with current trends in the market and made significant adjustments throughout our operations,” said Alfred R. Kahn, Chairman and Chief Executive Officer of 4Kids Entertainment. "We have substantially reduced our cost structure and have revised the valuation or amortization of certain assets on our balance sheet. With these financial hurdles now behind us, we have entered 2010 with a much lower annual expense base which is projected to be under $25 million for 2010,” said Mr. Kahn.

"We believe that we have a stronger pipeline of new properties than in recent years, which we hope will benefit the Company in the years ahead. We are also working on a number of other deals which we expect will result in additional licenses and opportunities for 4Kids in 2010. As of March 15, 2010, the Company had over $10.7 million in cash and an additional $14.1 million in investment securities at their fair market value which we believe should provide the Company with sufficient liquidity to run its business, promote its current properties, invest in new properties and generally rebuild the business of 4Kids. While working to strengthen our business, the Company is also continuing to pursue potential strategic transactions that could potentially have a positive effect on shareholder value,” Kahn concluded.

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

DECEMBER 31, 2009 AND 2008

(In thousands of dollars, except share data)

          ASSETS:

2009

2008

Current assets: Cash and cash equivalents $ 3,621 $ 13,503 Accounts receivable - net 14,470 22,818 Inventories - net 1,273 4,241 Income taxes receivable 4,044 137 Prepaid expenses and other current assets 2,612 1,876 Deferred income taxes — 127

 

Total current assets 26,020 42,702   Property and equipment - net 2,898 4,287 Long term investments 14,180 21,617 Accounts receivable – noncurrent, net 153 655 Film and television costs - net 6,832 16,661 Other assets - net (includes related party amounts of $1,215 and $6,638, respectively) 6,570 14,652 Total assets $ 56,653 $ 100,574   LIABILITIES AND STOCKHOLDERS’ EQUITY: Current liabilities: Due to licensors $ 6,578 $ 5,651 Accounts payable and accrued expenses 12,304 16,202 Deferred revenue 2,279 3,270 Total current liabilities 21,161 25,123   Deferred rent 375 460 Total liabilities 21,536 25,583   Commitments and contingencies Stockholders’ 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 (4,644 ) (17,396 ) Retained earnings 19,298 63,504 81,799 111,367 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. 45,365 74,991 Noncontrolling interests (10,248 ) — Total equity 35,117 74,991 Total liabilities and stockholders’ equity $ 56,653 $ 100,574  

4KIDS ENTERTAINMENT, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

YEARS ENDED DECEMBER 31, 2009, 2008 AND 2007

(In thousands of dollars, except share data)

                     

2009

2008

2007

Net revenues: Service revenue $ 24,394 $ 41,925 $ 48,428 Product revenue 2,603 15,276 776 Other revenue 9,786 — — Total net revenues 36,783 57,201 49,204   Costs and expenses: Selling, general and administrative 48,190 54,564 44,970 Cost of sales of trading cards 8,167 10,625 352 Amortization of television and film costs 21,511 7,707 8,179 Amortization of 4Kids TV broadcast fee — 16,022 21,472 Impairment of investment in international trading card subsidiary 2,430 — — Total costs and expenses 80,298 88,918 74,973   Loss from operations (43,515 ) (31,717 ) (25,769 )   Interest income 1,076 2,722 5,281 Impairment of investment securities (6,175 ) (7,834 ) — Loss on sale of investment securities (7,647 ) — — Total other (expense) income (12,746 ) (5,112 ) 5,281   Loss before income taxes (56,261 ) (36,829 ) (20,488 )   Benefit from (provision for) income taxes 3,805 (300 ) (2,436 )   Loss on previously unconsolidated affiliate — — (498 )   Noncontrolling interest — 310 96   Net loss (52,456 ) (36,819 ) (23,326 )   Net loss attributable to noncontrolling interests 10,380 — —   Net loss attributable to 4Kids Entertainment, Inc. $ (42,076 ) $ (36,819 ) $ (23,326 )  

Basic loss per share attributable to 4Kids

Entertainment, Inc. common shareholders

$ (3.16 ) $ (2.79 ) $ (1.77 )  

Diluted loss per share attributable to 4Kids

Entertainment, Inc. common shareholders

$ (3.16 ) $ (2.79 ) $ (1.77 )   Weighted average common shares outstanding - basic 13,303,192 13,181,549 13,209,495 Weighted average common shares outstanding - diluted 13,303,192 13,181,549 13,209,495