4Kids' revenue spikes, losses continue in Q3
By Staff -- Gifts and Dec, 11/10/2008 8:54:00 AM
NEW YORK—4Kids Entertainment today reported a 46 percent jump in third quarter net revenue, fueled by sales of the company’s Chaotic trading cards, but also recorded a wider loss, based in part on the costs associated with the Choatic game and its online efforts.
Net revenues for the three months ended September 30 totaled $17.8 million, up from $12.2 million for the same period in 2007. Revenue for the third quarter of 2008 included approximately $7.3 million from the sale of Chaotic trading cards at major retailers and comic and hobby stores across the U.S. and Canada.
Despite the revenue gain, SG&A expenses and cost of goods sold for 4Kids’ trading card and game distribution segment, coupled with decreased licensing and broadcast revenues resulted in a net loss for quarter of $5.3 million, or $0.40 per diluted share, as compared to a net loss of $4.2 million, or $0.31 per diluted share, for the same period in 2007.
Year-to-date through September 30, 4Kids’ net revenues totaled $49.4 million, up from $39.1 million for the same period in 2007. The 2008 tally includes approximately $14.7 million from sales of Chaotic trading cards. The company’s net loss for the nine month period was $17.2 million, or $1.31 per diluted share, up from $6.6 million, or $0.50 per diluted, share for the same period in 2007.
“Although we are continuing to invest significantly in content creation and our digital platforms, 4Kids.tv and Chaoticgame.com, we currently expect to return to profitability in the fourth quarter of this year,” said 4Kids Chairman and CEO Al Kahn. “We are hopeful that some of our newer properties, including Dinosaur King, RollBots and GoGoRiki will help strengthen our licensing business in 2009 and that the momentum behind Chaotic will continue.”
In the third quarter, the company tapped Playmates to serve as the master toy licensee for its new Yu-Gi-Oh! series, Yu-Gi-Oh! 5Ds, and completed the negotiation of an extension of the term of its Yu-Gi-Oh! representation agreement to 2015.
“Yu-Gi-Oh! should continue to be a mainstay for our company in the years ahead,” said 4Kids Chairman and CEO Al Kahn.
One thing that won’t continue is 4Kids’ relationship with broadcaster Fox. The companies have settled their litigation, according to Kahn, agreeing to end their broadcasting agreement—and related financial obligations—on Dec. 31, 2008, nine months earlier than originally stipulated. “We believe the settlement is favorable for both companies and enables 4Kids, beginning in early 2009, to focus resources on our five-hour block of children’s Saturday morning television on The CW Network,” Kahn said.
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