JAKKS Pacific® Reports Fourth Quarter and Year-End Results for 2012

  JAKKS Pacific® Reports Fourth Quarter and Year-End Results for 2012

                Declares Cash Dividend for First Quarter 2013

Business Wire

MALIBU, Calif. -- February 21, 2013

JAKKS Pacific, Inc. (NASDAQ: JAKK) reported results for the Company’s fourth
quarter and full year ended December 31, 2012.

Net sales for the fourth quarter of 2012 were $133.5 million, compared to
$141.1 million reported in the comparable period in 2011. The reported net
loss for the fourth quarter was $119.5 million, or $5.45 per diluted share,
which includes a one-time non-cash charge of $91.7 million or $4.18 per
diluted share, related to the impairment of deferred tax assets, and $0.8
million of pre-tax charges, or $0.03 per diluted share, related to legal and
financial advisory fees and expenses associated with the unsolicited
indication of interest and activist shareholder activities. This compares to a
net loss of $20.0 million, or $0.77 per diluted share, reported in the
comparable period in 2011, which included $1.9 million, or $0.05 per diluted
share, of legal and financial advisory fees and expenses. Excluding the legal
and financial advisory fees and expenses and the deferred tax asset impairment
charge, the fourth quarter net loss in 2012 would have totaled $27.2 million,
or $1.24 per diluted share, compared to a loss of $18.8 million, or $0.72 per
diluted share, in 2011.

Net sales for the full year of 2012 were $666.8 million compared to $677.8
million in 2011. The reported net loss for the full year was $104.8 million,
or $4.37 per diluted share, which included $4.8 million or $0.16 per diluted
share of pre-tax charges and legal and financial advisory fees and expenses,
and $91.7 million or $3.83 per diluted share, for the deferred tax asset
impairment charge. This compares to net income for the full year of 2011 of
$8.5 million, or $0.32 per diluted share, which included $3.8 million, or
$0.09 per diluted share, of legal and financial advisory fees and expenses.
Excluding the deferred tax asset impairment charge and legal and financial
advisory fees and expenses, the full year 2012 results would have been a loss
totaling $9.3 million, or $0.39 per diluted share, compared to earnings of
$10.9 million, or $0.41 per diluted share, in 2011.

Stephen Berman, President and CEO, JAKKS Pacific, Inc. stated, “We are
disappointed by our performance in the fourth quarter. The difficult and
challenging toy environment did not generate the sales that had been
anticipated, and several of our key products did not achieve the sales levels
that we had planned for, also resulting in license royalty minimum guarantee
shortfalls.”

“However, we are optimistic for our future growth and profitability. We
believe that our core business lead by our infant/preschool, seasonal and
Halloween segments, in conjunction with meaningful reductions in operating
costs, will return the Company to profitability in 2013.”

Berman continued, “We believe that the difficult environment for toys in 2012
resulted from rapid changes in children’s play patterns as tablet and
smartphone devices and interactive games and toys have more and more become
cornerstones of their play and fun experiences. We recognize that it is
critical for us to provide new, more exciting and magical experiences for
today’s child compatible with these new play patterns. We believe that our
partnership with NantWorks in creating our DreamPlay line of toys using
NantWorks proprietary iD recognition technology will place JAKKS in the
forefront of the play revolution we are witnessing.”

“We believe that applying this technology to a broad array of characters and
play patterns will create new consumer demand for JAKKS products and will help
JAKKS achieve substantial long range growth and profitability, warranting the
investment in technology and content that we are making.”

2013 Guidance & Dividend

For 2013, the Company anticipates an increase in net sales of 4.0% to 5.0% to
approximately $694 million to $700 million, with diluted earnings per share in
the range of approximately $0.63 to $0.68. This guidance anticipates
first-quarter 2013 net sales in the range of $70 to $73 million, with a loss
per share in the range of $0.83 to $0.85, which reflects 17.6% fewer common
shares outstanding primarily as a result of the July 2012 self-tender of 4.0
million shares and includes incremental operating expenses associated with the
recent acquisition of Maui Toys in a seasonally low sales volume quarter, and
incremental operating and marketing expenses associated with the launch of our
DreamPlay product lines. This is compared to net sales of $73.4 million and a
loss per share of $0.62 per diluted share in the first quarter of 2012.

The JAKKS Board of Directors has declared a regular quarterly cash dividend of
$0.07 per common share payable on April 1, 2013 to shareholders of record at
the close of business on March 15, 2013 reflecting a current annual yield of
2.1%.

As of December 31, 2012, the Company’s working capital was $179.5 million,
including cash and equivalents and marketable securities of $189.5 million,
compared to working capital of $374.7 million including cash and equivalents
and marketable securities of $257.5 million as of December 31, 2012.

Conference Call

JAKKS Pacific will webcast its fourth quarter earnings conference call today,
February 21, 2013, at 9:00 a.m. ET (6:00 a.m. PT). To listen to the live
webcast, go to www.jakks.com/investors, and click on the earnings webcast link
under Events and Presentations at least 10 minutes prior to register, download
and install any necessary audio software. A telephonic playback will be
available from 11:30 a.m. ET on February 21 through March 21, 2013. The
playback can be accessed by calling (888) 843-7419, or (630) 652-3042 for
international callers, pass code “34214746”.

About JAKKS Pacific, Inc.

JAKKS Pacific, Inc. (NASDAQ: JAKK) is a leading designer and marketer of toys
and consumer products with a wide range of products that feature popular
brands and children's toy licenses. JAKKS’ diverse portfolio includes Action
Figures, Electronics, Dolls, Dress-Up, Role Play, Halloween Costumes, Kids
Furniture, Vehicles, Plush, Art Activity Kits, Seasonal Products,
Infant/Pre-School, Construction Toys, Ride-On Vehicles, Wagons, Inflatable
Environments and Tents, Impulse Toys and Pet Products sold under various
proprietary brands including JAKKS Pacific®, Creative Designs International™,
Road Champs®, Funnoodle®, JAKKS Pets™, Plug It In & Play TV Games™, Kids
Only!®, Tollytots®, Disguise®, Moose Mountain® and Maui ®. JAKKS is also the
creator of the underlying Monsuno® property and toy line. JAKKS is an
award-winning licensee of several hundred nationally and internationally known
trademarks including Nickelodeon®, Warner Bros.®, Ultimate Fighting
Championship®, Hello Kitty®, Graco® and Cabbage Patch Kids®. www.jakks.com

This press release may contain forward-looking statements (within the meaning
of the Private Securities Litigation Reform Act of 1995) that are based on
current expectations, estimates and projections about JAKKS Pacific's business
based partly on assumptions made by its management. These statements are not
guarantees of future performance and involve risks, uncertainties and
assumptions that are difficult to predict. Therefore, actual outcomes and
results may differ materially from what is expressed or forecasted in such
statements due to numerous factors, including, but not limited to, those
described above, changes in demand for JAKKS' products, product mix, the
timing of customer orders and deliveries, the impact of competitive products
and pricing, and difficulties with integrating acquired businesses. Continued
payment of the quarterly cash dividend will depend on many factors, including,
but not limited to, JAKKS' earnings, financial condition, business development
needs, and is at the discretion of the Board of Directors. The forward-looking
statements contained herein speak only as of the date on which they are made,
and JAKKS undertakes no obligation to update any of them to reflect events or
circumstances after the date of this release.

© 2013 JAKKS Pacific, Inc. All rights reserved.

JAKKS Pacific, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
                                                       
                                                                  
                                             December 31,         December 31,
                                               2012               2011    
                                             (In thousands)
                                                                  
ASSETS
                                                                  
Current assets:
  Cash and cash equivalents                  $  189,321           $  257,258
  Marketable securities                         218                  214
  Accounts receivable, net                      105,455              103,637
  Inventory, net                                59,690               47,019
  Income taxes receivable                       24,008               24,166
  Deferred income taxes                         -                    34,505
  Prepaid expenses and other current           20,306             30,686  
  assets
     Total current assets                      398,998            497,485 
                                                                  
Property and equipment                          94,799               81,399
Less accumulated depreciation and              78,973             65,213  
amortization
  Property and equipment, net                  15,826             16,186  
                                                                  
Goodwill                                        48,836               24,015
Trademarks & other assets, net                  73,946               27,731
Deferred income taxes                           -                    47,081
Investment in joint venture                     3,161                2,736
Investment in DreamPlay                        7,000              -       
     Total assets                            $  547,767          $  615,234 
                                                                  
                                                                  
LIABILITIES AND STOCKHOLDERS' EQUITY
                                                                  
Current liabilities:
  Accounts payable and accrued               $  101,470           $  77,210
  expenses
  Reserve for sales returns and                 34,373               43,440
  allowances
  Income taxes payable                          12,922               2,183
  Short term debt, net of current              70,710             -       
  portion
     Total current liabilities                 219,475            122,833 
                                                                  
Long term debt                                  94,918               92,188
Other liabilities                               18,345               1,630
Income taxes payable                            4,687                4,992
Deferred tax liability                         3,122              -       
     Total liabilities                         340,547            221,643 
                                                                  
Stockholders' equity:
  Common stock, $.001 par value                 22                   26
  Additional paid-in capital                    202,577              274,532
  Retained earnings                             8,836                123,174
  Accumulated other comprehensive              (4,215  )           (4,141  )
  loss
     Total stockholders' equity                207,220            393,591 
     Total liabilities and                   $  547,767          $  615,234 
     stockholders' equity
                                                                             

JAKKS Pacific, Inc. and Subsidiaries
Fourth Quarter Earnings Announcement, 2012
Condensed Statements of Income (Unaudited)
                                                              
                                                                             
                       Three Months Ended December          Twelve Months Ended December
                       31,                                  31,
                                                                             
                        2012           2011              2012           2011    
                       (In thousands, expect per            (In thousands, expect per
                       share data)                          share data)
                                                                             
Net sales              $ 133,507        $ 141,079           $ 666,762        $ 677,751
Less cost of
sales
  Cost of                81,652           86,878              374,549          379,573
  goods
  Royalty                20,172           32,920              82,874           92,830
  expense
  Amortization
  of tools and          917            2,324             11,402         11,358  
  molds
  Cost of               102,741        122,122           468,825        483,761 
  sales
    Gross                30,766           18,957              197,937          193,990
    profit
Direct selling           25,555           20,639              64,366           53,078
expenses
Selling,
general and              34,602           32,189              137,313          128,525
administrative
expenses
Depreciation
and                     1,824          2,125             9,480          11,107  
amortization
    Income
    (loss)               (31,215  )       (35,996 )           (13,222  )       1,280
    from
    operations
Other income
(expense):
  Income from
  video game             -                -                   3,000            6,000
  joint
  venture
  Equity in
  net income
  (loss) of              126              (9      )           130              (34     )
  joint
  venture
  Interest               61               83                  671              412
  income
  Interest
  expense, net          (3,143   )      (2,068  )          (9,228   )      (8,196  )
  of benefit
Income (loss)
before
provision                (34,171  )       (37,990 )           (18,649  )       (538    )
(benefit) for
income taxes
Provision
(benefit) for           85,286         (17,972 )          86,151         (9,010  )
income taxes
Net income             $ (119,457 )     $ (20,018 )         $ (104,800 )     $ 8,472   
(loss)
  Earnings
  (loss) per           $ (5.45    )     $ (0.77   )         $ (4.37    )     $ 0.32
  share
  Shares used
  in earnings            21,923           25,839              23,963           26,893
  (loss) per
  share

Contact:

JAKKS Pacific, Inc.
Joel Bennett, 310-455-6210
or
Anne-Marie Feliciano, 310-455-6245
 
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