JAKKS Pacific, Inc. Reports Third Quarter 2013 Financial Results

  JAKKS Pacific, Inc. Reports Third Quarter 2013 Financial Results

Business Wire

MALIBU, Calif. -- October 23, 2013

JAKKS Pacific, Inc. (NASDAQ: JAKK) reported results for the Company’s third
quarter ended September 30, 2013.

Net sales for the third quarter of 2013 were $310.9 million compared to net
sales of $314.5 million reported in the comparable period in 2012. The
reported net income for the third quarter was $36.6 million, or $1.11 per
diluted share, which reflects the net dilutive impact of $0.21 per diluted
share associated with the common shares underlying the $100.0 million
convertible senior notes recently issued and repurchased in July 2013. This
compares to net income of $30.4 million, or $1.10 per diluted share, reported
in the comparable period in 2012.

Net sales for the nine months ending September 30, 2013, were $495.2 million
compared to $533.3 million in 2012. The reported net loss for the nine month
period was $37.8 million, or $1.73 per diluted share, which includes charges
for license minimum guarantee shortfalls of $14.4 million and inventory
impairment of $14.9 million. This compares to net income for the first nine
months of 2012 of $14.7 million, or $0.59 per diluted share, which included
$4.1 million, or $0.10 per diluted share, of pre-tax financial and legal
advisory fees and expenses related to an unsolicited indication of interest
that ended.

Stephen Berman, President and CEO of JAKKS Pacific stated, “We are pleased
with our financial results for the third quarter during which we completed our
$100 million convertible senior note financing. During the quarter, we sold a
broad array of products including Disney Princess dolls, dress up and role
play, Sofia the First dress up and role play items, Disguise Halloween
costumes, 31” Giant Action Figures, foot-to-foot ride-ons and kids furniture.”

Mr. Berman continued, “We recently completed our Fall Toy Preview meetings and
are pleased with the enthusiastic response from retailers, licensors and other
industry partners to our 2014 product line-up, particularly the reaction to
our new line of technology-driven toys. We anticipate these toys will provide
children with a new and heightened play experience by combining our strong
line-up of physical toys with DreamPlay iD technology and enhanced augmented
reality content, all of which will come together in new and exciting Apps. Our
'Ariel’s Musical Surprise' app launched this month for iOS devices and is
ready for use with our Disney Little Mermaid products which are now available
at retail. In 2014, we will be rolling out additional innovative lines of toys
delivering this unique experience.

“Looking ahead to 2014, as JAKKS approaches its 20th year in business, we are
looking forward to returning JAKKS to profitability. We expect to achieve this
by continuing to offer new and exciting products, continuing to spend on
technology and content, and by realizing the benefits of our previously
announced restructuring plan, which has resulted in the reduction of our head
count of employees and will reduce leased space and other overhead expenses,”
Berman concluded.

2013 Guidance

The Company currently anticipates net sales for the full year of approximately
$620.0 million, with a loss per share, as previously announced, of
approximately $56.1 million, or $2.56 per diluted share.

Conference Call

JAKKS Pacific will webcast its third quarter earnings conference call today,
October 23, 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 11:00 a.m. ET on October 23 through November 22, 2013. The
playback can be accessed by calling 1 (888) 843-7419 or 1 (630) 652-3042 for
international callers, pass code “3587 3671”.

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®. DreamPlay Toys,
LLC is a joint venture between JAKKS Pacific, Inc. and NantWorks LLC to
develop, market and sell toys and related consumer products incorporating
NantWorks’ proprietary iD image recognition technology. www.jakks.com

About DreamPlay Toys, LLC

JAKKS Pacific, Inc. and NantWorks LLC formed DreamPlay Toys, LLC, a joint
venture company to develop, market and sell toys and related consumer products
incorporating NantWorks’ proprietary iD image recognition technology. This
noveltechnology enables the consumer to instantly link a physical toy to
interactive content, including video, animation and games using a smart phone
or tablet device to instantly bringing the toy to life. JAKKS Pacific plans to
introduce a broad product line, which will combine this revolutionary
technology with exciting new content, including augmented reality, leaving
consumers with a memorable and entertaining experience. JAKKS Pacific and
NantWorks have also formed DreamPlay LLC, in order to extend image recognition
technology to non-toy consumer products and applications.

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. 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
                                            September 30,         December 31,
                                              2013                2012    
                                            (In thousands)
Current assets:
  Cash and cash equivalents                 $  51,519             $  189,321
  Marketable securities                        220                   218
  Accounts receivable, net                     257,965               105,455
  Inventory, net                               59,119                59,690
  Income taxes receivable                      24,008                24,008
  Deferred income taxes                        7,058                 7,058
  Prepaid expenses and other                  23,650              20,306  
  current assets
      Total current assets                    423,539             406,056 
Property and equipment                         97,643                94,799
Less accumulated depreciation and             85,549              78,973  
  Property and equipment, net                 12,094              15,826  
Goodwill                                       44,735                48,836
Trademarks & other assets, net                 68,297                73,946
Investment in joint venture                    1,429                 3,161
Investment in DreamPlay                       7,000               7,000   
      Total assets                          $  557,094           $  554,825 
Current liabilities:
  Accounts payable and accrued              $  175,015            $  101,470
  Reserve for sales returns and                35,307                34,373
  Income taxes payable                         17,972                12,922
  Short term debt, net of current             -                   70,710  
      Total current liabilities               228,294             219,475 
Long term debt                                 137,826               94,918
Other liabilities                              13,182                18,345
Income taxes payable                           3,259                 4,687
Deferred tax liability                        10,180              10,180  
      Total liabilities                       392,741             347,605 
Stockholders' equity:
  Common stock, $.001 par value                22                    22
  Additional paid-in capital                   200,305               202,577
  Retained earnings (Accumulated               (32,086  )            8,836
  Accumulated other comprehensive             (3,888   )           (4,215  )
  income (loss)
      Total stockholders' equity              164,353             207,220 
      Total liabilities and                 $  557,094           $  554,825 
      stockholders' equity
Working Capital                             $  195,245            $  186,581

JAKKS Pacific, Inc. and Subsidiaries
Third Quarter Earnings Announcement, 2013
Condensed Statements of Income (Unaudited)
                     Three Months Ended September          Nine Months Ended September
                     30,                                   30,
                      2013            2012              2013            2012    
                     (In thousands, expect per             (In thousands, expect per
                     share data)                           share data)
Net sales            $ 310,894         $ 314,491           $ 495,195         $ 533,255
Less cost of
  Cost of              179,218           174,180             299,751           292,897
  Royalty              35,822            36,908              70,398            62,702
  of tools and        4,459           6,691             8,034           10,485  
  Cost of             219,499         217,779           378,183         366,084 
    Gross              91,395            96,712              117,012           167,171
Direct selling         13,015            19,526              30,487            38,811
general and            33,873            35,404              106,137           102,711
and                   4,854           4,486             8,868           7,656   
    (loss)             39,653            37,296              (28,480 )         17,993
Other income
  Income from
  video game           -                 1,000               -                 3,000
  Equity in
  (loss) net
  income of            (572    )         48                  (2,024  )         4
  Interest             92                97                  301               610
  expense, net        (2,298  )        (2,015  )          (7,202  )        (6,085  )
  of benefit
Income (loss)
before                 36,875            36,426              (37,405 )         15,522
provision for
income taxes
Provision for         278             5,983             433             865     
income taxes
Net income           $ 36,597         $ 30,443           $ (37,838 )       $ 14,657  
  (loss) per         $ 1.11            $ 1.10              $ (1.73   )       $ 0.59
  Shares used
  in earnings          34,283            28,933              21,922            31,274
  (loss) per


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