JAKKS Pacific Inc. (JAKK, Financial) filed Quarterly Report for the period ended 2010-09-30.
Jakks Pacific Inc. has a market cap of $547.3 million; its shares were traded at around $19.55 with a P/E ratio of 15 and P/S ratio of 0.7. JAKK is in the portfolios of David Dreman of Dreman Value Management, Third Avenue Management, Diamond Hill Capital of Diamond Hill Capital Management Inc, Charles Brandes of Brandes Investment, Kenneth Fisher of Fisher Asset Management, LLC, John Rogers of ARIEL CAPITAL MANAGEMENT LLC, Steven Cohen of SAC Capital Advisors, Chuck Royce of Royce& Associates.
In October 2008, the Company acquired all of the stock of Kids Only, Inc. and a related Hong Kong company, Kids Only Limited (collectively, “Kids Only”). The total initial consideration of $23.8 million consisted of $20.4 million in cash and the assumption of liabilities in the amount of $3.4 million, and resulted in goodwill of $13.2 million, of which $12.7 million has been determined to be impaired and was written off in the quarter ended June 30, 2009. In addition, the Company agreed to pay an earn-out of up to an aggregate amount of $5.6 million in cash over the three years following the acquisition based on the achievement of certain financial performance criteria, which will be recorded as goodwill when and if earned. The first earn-out period ended September 30, 2009 and the full earn-out amount of $1.9 million was paid in April 2010. The second earn-out period ended September 30, 2010. The company is evaluating the earn-out agreement to determine the amount of earn-out that will be paid related to the second earn-out period. Kids Only is a leading designer and producer of licensed indoor and outdoor kids furniture and children s toy products including baby dolls and accessories, activity trays and room décor, and was included in our results of operations from the date of acquisition.
In December 2008, the Company acquired certain assets of Disguise, Inc. and a related Hong Kong company, Disguise Limited (collectively, “Disguise”). The total initial consideration of $60.6 million consisted of $38.6 million in cash and the assumption of liabilities in the amount of $22.0 million, and resulted in goodwill of $30.6 million, all of which has been determined to be impaired and was written off in the quarter ended June 30, 2009. Disguise is a leading designer and producer of Halloween costumes and accessories, and was included in our results of operations from the date of acquisition.
In November 2009, we sold an aggregate of $100.0 million of 4.50% Convertible Senior Notes due 2014 (the “Notes”). These senior unsecured obligations of JAKKS, pay interest semi-annually at a rate of 4.50% per annum, mature on November 1, 2014. The conversion rate will initially be 63.2091 shares of our common stock per $1,000 principal amount of notes (equivalent to an initial conversion price of approximately $15.82 per share of common stock), subject to adjustment in certain circumstances. Prior to August 1, 2014, holders of the Notes may convert their Notes only upon specified events. Upon conversion, the Notes may be settled, at our election, in cash, shares of our common stock, or a combination of cash and shares of our common stock. Holders of the Notes may require us to repurchase for cash all or some of their Notes upon the occurrence of a fundamental change (as defined in the Notes). In November 2009, we used a portion of the net proceeds from the offering to repurchase $77.7 million of our 4.625% convertible senior notes due in 2023 and we redeemed all of the remaining $20.3 million of notes in June and August 2010.
In December 2009 we entered into a Settlement Agreement and Mutual Release pursuant to which our joint venture with THQ was terminated as of December 31, 2009 and we will receive fixed payments in the aggregate amount of $20.0 million from THQ payable $6.0 million on each of June 30, 2010 and 2011 and $4.0 million on each of June 30, 2012 and 2013 which we will record as income on a cash basis over the term. The $6.0 million payment due on June 30, 2010 was received by us in the second quarter of 2010.
Craft/Activity/Writing Product. Net sales of our Craft/Activity/Writing Products were $5.2 million in 2010, compared to $23.8 million in 2009, representing a decrease of $18.6 million, or 78.2%. The decrease in net sales was primarily due to decreases in unit sales of our Girl Gourmet™ and our Flying Colors® and Vivid Velvet® activities products, offset in part by increases in unit sales of Creepy Crawlers® activities products.
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Jakks Pacific Inc. has a market cap of $547.3 million; its shares were traded at around $19.55 with a P/E ratio of 15 and P/S ratio of 0.7. JAKK is in the portfolios of David Dreman of Dreman Value Management, Third Avenue Management, Diamond Hill Capital of Diamond Hill Capital Management Inc, Charles Brandes of Brandes Investment, Kenneth Fisher of Fisher Asset Management, LLC, John Rogers of ARIEL CAPITAL MANAGEMENT LLC, Steven Cohen of SAC Capital Advisors, Chuck Royce of Royce& Associates.
Highlight of Business Operations:
In October 2008, the Company acquired substantially all of the assets of Tollytots Limited (“Tollytots”). The total initial consideration of $26.8 million consisted of $12.0 million in cash and the assumption of liabilities in the amount of $14.8 million, and resulted in goodwill of $4.1 million, of which $3.1 million has been determined to be impaired and was written off in the quarter ended June 30, 2009. In addition, the Company agreed to pay an earn-out of up to an aggregate amount of $5.0 million in cash over the three calendar years following the acquisition based on the achievement of certain financial performance criteria, which will be recorded as goodwill when and if earned. In the first earn-out period ended December 31, 2009, no portion of the earn-out was earned. Tollytots is a leading designer and producer of licensed baby dolls and baby doll pretend play accessories based on well-known brands, and was included in our results of operations from the date of acquisition.In October 2008, the Company acquired all of the stock of Kids Only, Inc. and a related Hong Kong company, Kids Only Limited (collectively, “Kids Only”). The total initial consideration of $23.8 million consisted of $20.4 million in cash and the assumption of liabilities in the amount of $3.4 million, and resulted in goodwill of $13.2 million, of which $12.7 million has been determined to be impaired and was written off in the quarter ended June 30, 2009. In addition, the Company agreed to pay an earn-out of up to an aggregate amount of $5.6 million in cash over the three years following the acquisition based on the achievement of certain financial performance criteria, which will be recorded as goodwill when and if earned. The first earn-out period ended September 30, 2009 and the full earn-out amount of $1.9 million was paid in April 2010. The second earn-out period ended September 30, 2010. The company is evaluating the earn-out agreement to determine the amount of earn-out that will be paid related to the second earn-out period. Kids Only is a leading designer and producer of licensed indoor and outdoor kids furniture and children s toy products including baby dolls and accessories, activity trays and room décor, and was included in our results of operations from the date of acquisition.
In December 2008, the Company acquired certain assets of Disguise, Inc. and a related Hong Kong company, Disguise Limited (collectively, “Disguise”). The total initial consideration of $60.6 million consisted of $38.6 million in cash and the assumption of liabilities in the amount of $22.0 million, and resulted in goodwill of $30.6 million, all of which has been determined to be impaired and was written off in the quarter ended June 30, 2009. Disguise is a leading designer and producer of Halloween costumes and accessories, and was included in our results of operations from the date of acquisition.
In November 2009, we sold an aggregate of $100.0 million of 4.50% Convertible Senior Notes due 2014 (the “Notes”). These senior unsecured obligations of JAKKS, pay interest semi-annually at a rate of 4.50% per annum, mature on November 1, 2014. The conversion rate will initially be 63.2091 shares of our common stock per $1,000 principal amount of notes (equivalent to an initial conversion price of approximately $15.82 per share of common stock), subject to adjustment in certain circumstances. Prior to August 1, 2014, holders of the Notes may convert their Notes only upon specified events. Upon conversion, the Notes may be settled, at our election, in cash, shares of our common stock, or a combination of cash and shares of our common stock. Holders of the Notes may require us to repurchase for cash all or some of their Notes upon the occurrence of a fundamental change (as defined in the Notes). In November 2009, we used a portion of the net proceeds from the offering to repurchase $77.7 million of our 4.625% convertible senior notes due in 2023 and we redeemed all of the remaining $20.3 million of notes in June and August 2010.
In December 2009 we entered into a Settlement Agreement and Mutual Release pursuant to which our joint venture with THQ was terminated as of December 31, 2009 and we will receive fixed payments in the aggregate amount of $20.0 million from THQ payable $6.0 million on each of June 30, 2010 and 2011 and $4.0 million on each of June 30, 2012 and 2013 which we will record as income on a cash basis over the term. The $6.0 million payment due on June 30, 2010 was received by us in the second quarter of 2010.
Craft/Activity/Writing Product. Net sales of our Craft/Activity/Writing Products were $5.2 million in 2010, compared to $23.8 million in 2009, representing a decrease of $18.6 million, or 78.2%. The decrease in net sales was primarily due to decreases in unit sales of our Girl Gourmet™ and our Flying Colors® and Vivid Velvet® activities products, offset in part by increases in unit sales of Creepy Crawlers® activities products.
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