Jakks Pacific Reports Third Quarter Results
Jakks Pacific, Inc., reported its third quarter results. Net sales for the third quarter of 2010 were $348.7 million compared to $351.4 million reported in the comparable period last year; and net sales for the nine months were $549.3 million compared to $604.9 million in 2009. Reported net income for the third quarter was $40.4 million, or $1.23 per diluted share, including tax benefits of $5.9 million, or $0.17 per diluted share, compared to $33.7 million, or $1.06 per diluted share, in the third quarter of 2009. Reported net income for the nine month period was $38.2 million, or $1.26 per diluted share, which includes a one-time pre-tax charge relating to the benefit payment of $2.8 million, or $0.06 per diluted share, to the estate of Jack Friedman pursuant to his employment agreement and tax benefits of $10.8 million, or $0.31 per diluted share, compared to a loss of $383.7 million, or $14.11 per diluted share, reported in 2009.
Third quarter and nine month GAAP results include the following, which were excluded in the non-GAAP results above for 2009. There were no adjustments to the 2010 GAAP results.
• Pre-tax charge to cost of goods of $23.3 million was taken in the second quarter and $2.9 million in the third quarter related to the impairment of inventory.
• Pre-tax charge to royalty expense of $33.2 million was taken in the second quarter and $0.2 million in the third quarter related to abandoned or underperforming licenses.
• Pre-tax non-cash goodwill and other intangible asset impairment charges of $415.3 million taken in the second quarter.
• Pre-tax non-cash charge of $2.3 million related to the write-off of obsolete tools and molds taken in the second quarter.
• Pre-tax charge of $1.3 million related to a product recall taken in the second quarter.
• Pre-tax non-cash charge of $23.5 million related to the reduction of preferred return from the company’s video game joint venture with THQ as a result of the arbitration decision, of which $22.5 million was taken in the second quarter and $1.0 million was taken in the third quarter.
“We have been focused on maximizing opportunities for this holiday season, while closely managing our supply chain and developing our lines for 2011 and beyond, and we are extremely pleased that we were able to achieve better-than-expected results,” said Stephen Berman, president and CEO, Jakks Pacific, in a statement. “Barring any adverse circumstances such as capacity issues in Asia and shipping delays, we are optimistic that we will finish the year ahead of expectations given our results to date and the early momentum we have been seeing at retail.”
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