FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
For the Quarterly Period Ended September 30, 1999
-------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from______________to____________
COMMISSION FILE NO. 0-7843
4KIDS ENTERTAINMENT, INC.
(Exact name of registrant as specified in its Charter)
NEW YORK
------------------------
(State of Incorporation)
13-2691380
---------------------------------------
(I.R.S. Employer Identification Number)
1414 Avenue of the Americas, New York, New York
-----------------------------------------------
(Address of Principal Executive Offices)
10019
----------
(Zip Code)
(212) 758-7666
----------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
NOT APPLICABLE
- -------------------------------------------------------------------------------
(Former Name, Former Address and Former Fiscal Year if changed since last
report)
Indicate by a check mark whether the registrant: (1) has filed all annual,
quarterly and other reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or shorter
period that the registrant was required to file such reports); and (2) has been
subject to such filing requirements for the past 90 days.
YES X NO
------ ------
Indicate the number of shares outstanding of each of the Registrant's classes of
common stock, as of the close of the latest practicable date.
Class Outstanding at November 12, 1999
- -------------------------------------------------------------------------------
Common Stock, $.01 Par Value 11,602,155
<PAGE>
4KIDS ENTERTAINMENT, INC.
AND SUBSIDIARIES
INDEX
PAGE NUMBER
PART I: FINANCIAL INFORMATION
Item 1: Financial Statements
Consolidated Balance Sheets 1
September 30, 1999 (Unaudited) and
December 31, 1998.
Consolidated Statements of Income 2
Nine Months Ended September 30, 1999 and 1998 (Unaudited)
Consolidated Statements of Cash Flows 3
Nine Months Ended September 30, 1999 and 1998 (Unaudited)
Notes to Consolidated Financial 4
Statements (Unaudited)
Item 2: Management's Discussion and Analysis 8
of Financial Condition and Results of Operations
PART II: OTHER INFORMATION 12
<PAGE>
4KIDS ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1999 1998
----------------- -------------------
ASSETS (UNAUDITED)
- ------
CURRENT ASSETS:
<S> <C> <C>
Cash and cash equivalents $33,555,842 $ 9,749,956
Accounts receivable, net 19,658,039 17,694,262
Film inventory-net 1,397,134 1,079,677
Prepaid/refundable income taxes 7,580,267 324,864
Prepaid expenses and other current assets 1,247,521 1,151,974
----------------- -------------------
Total current assets 63,438,803 30,000,733
----------------- -------------------
FURNITURE, FIXTURES AND COMPUTER EQUIPMENT-(Net) 183,388 174,783
FILM INVENTORY - Noncurrent 1,875,000 1,875,000
ACCOUNTS RECEIVABLE - Noncurrent, net 2,310,132 2,627,680
SECURITY DEPOSITS AND OTHER ASSETS 332,955 282,959
================= ===================
TOTAL ASSETS $68,140,278 $34,961,155
================= ===================
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
CURRENT LIABILITIES:
Due to licensors $17,449,821 $3,690,582
Media payable 2,338,098 11,460,913
Accounts payable and accrued expenses 5,745,964 1,285,624
Taxes payable 0 1,750,799
Current Deferred Tax Liability 989,000 989,000
----------------- -------------------
Total current liabilities 26,522,883 19,176,918
NONCURRENT DEFERRED TAX LIABILITY 379,012 379,012
----------------- -------------------
Total liabilities 26,901,895 19,555,930
----------------- -------------------
STOCKHOLDERS' EQUITY
Preferred stock, $.01 par value - authorized,
3,000,000 shares; none issued
Common stock, $.01 par value - authorized, 20,000,000 shares;
issued, 11,592,155 and 9,188,205 shares 115,922 91,882
Additional paid-in capital 21,207,101 4,900,889
Retained earnings 19,915,360 10,412,454
----------------- -------------------
Total stockholders' equity 41,238,383 15,405,225
----------------- -------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $68,140,278 $34,961,155
================= ===================
</TABLE>
See notes to consolidated financial statements
-1-
<PAGE>
4KIDS ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1999 1998 1999 1998
---------------- ----------------- ----------------- ------------------
<S> <C> <C> <C> <C>
NET REVENUES: 16,833,357 2,756,488 $25,592,252 $7,357,997
COST AND EXPENSES:
Selling, general and administrative cost 4,034,272 1,953,682 8,423,777 5,161,452
Amortization of capitalized film cost 1,112,500 171,919 1,112,500 1,018,231
----------------- ----------------- ----------------- ------------------
TOTAL COST AND EXPENSES 5,146,772 2,125,601 9,536,277 6,179,683
----------------- ----------------- ----------------- ------------------
11,686,585 630,887 16,055,975 1,178,314
INTEREST INCOME 297,554 81,665 615,931 224,973
----------------- ----------------- ----------------- ------------------
INCOME BEFORE INCOME
TAX PROVISION 11,984,139 712,552 16,671,906 1,403,287
INCOME TAX PROVISION 5,154,000 306,397 7,169,000 603,413
----------------- ----------------- ----------------- ------------------
NET INCOME $ 6,830,139 $ 406,155 $ 9,502,906 $ 799,874
================= ================= ================= ==================
PER SHARE AMOUNTS (Notes 3 and 5)
Basic Earnings per Common Share $0.61 $0.04 $0.91 $0.09
================= ================= ================= ==================
Diluted Earnings Per Common Share $0.54 $0.04 $0.78 $0.07
================= ================= ================= ==================
</TABLE>
See notes to consolidated financial statements.
-2-
<PAGE>
4KIDS ENTERTAINMENT, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED) NINE NINE
MONTHS ENDED MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1999 1998
---------------- ----------------
OPERATING ACTIVITIES:
<S> <C> <C>
Net income $ 9,502,906 $ 799,874
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 71,865 82,796
Amortization of capitalized film cost 1,112,500 1,018,231
Changes in assets and liabilities (using)/providing cash:
Accounts receivable, net (1,646,229) 19,560,945
Film inventory, net (1,429,957) 78,292
Prepaid expenses and other current assets (95,547) (323,493)
Prepaid/refundable income taxes (7,255,403) (217,550)
Security deposits and other assets (49,996) 7,815
Due to licensors 13,759,239 486,427
Media payable (9,122,815) (17,234,679)
Accounts payable and accrued expenses 4,460,340 (68,434)
Taxes payable (1,750,799) 552,332
----------------- ---------------
Net cash provided by operating activities 7,556,104 4,742,556
----------------- ---------------
INVESTING ACTIVITIES:
Purchase of furniture and fixtures (80,470) (105,186)
----------------- ---------------
Net cash used in investing activities (80,470) (105,186)
----------------- ---------------
FINANCING ACTIVITIES:
Proceeds from exercise of stock options
and related tax benefit 16,330,252 368,579
----------------- ---------------
Net cash provided by financing activities 16,330,252 368,579
----------------- ---------------
NET INCREASE IN CASH AND
CASH EQUIVALENTS 23,805,886 5,005,949
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 9,749,956 2,805,573
----------------- ---------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $33,555,842 $7,811,522
================= ===============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
CASH PAID FOR:
Interest $ - $ -
================= ===============
Income Taxes $ 3,003,721 $ 51,327
================= ===============
</TABLE>
See notes to consolidated financial statements.
-3-
<PAGE>
4KIDS ENTERTAINMENT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
September 30, 1999
Note 1
The accompanying consolidated financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Article 10 of Regulation
S-X. Accordingly, they do not include all of the information and footnotes as
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting only of
normal recurring adjustments) considered necessary for a fair presentation of
the interim financial information have been included. Operating results for nine
months ended September 30, 1999 are not necessarily indicative of the results
that may be expected for the year ending December 31, 1999. For further
information, refer to the consolidated financial statements and footnotes
thereto included in 4Kids Entertainment, Inc.'s (the "Company") Form 10-K for
the year ended December 31, 1998.
Note 2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
For a summary of significant accounting policies reference is made to the
Company's report on Form 10-K previously filed for the year ended December 31,
1998.
Note 3
NET INCOME PER SHARE:
The Company applies Statement of Accounting Standards("SFAS") No. 128 "Earnings
per Share" which requires the computation and presentation of earnings per share
("EPS") to include basic and diluted EPS. Basic EPS is computed based solely on
the weighted average number of common shares outstanding during the period.
Diluted EPS reflects all potential dilution of common stock. The weighted
average number of common shares outstanding for basic EPS was 11,148,828 and
10,421,094 for the three and nine months ended September 30, 1999. The weighted
average number of common shares outstanding for diluted EPS was 12,684,357 and
12,119,254 for the three and nine months ended September 30, 1999. For the three
and nine months ended September 30,1998, the weighted average number of common
shares outstanding for basic EPS was 9,092,805 and 8,926,953 respectively. For
the three and nine months ended September 30,1998, the weighted average number
of common shares outstanding for diluted EPS was 11,546,070 and 10,963,716
respectively. The 1998 per share amounts have been restated to reflect the 3 for
2 stock split declared in March 1999 and the 2 for 1 stock split declared in
August 1999.
-4-
<PAGE>
Note 4
CREDIT FACILITY:
The Company renegotiated the terms of the its Credit Facility with Chase
Manhattan Bank on August 4, 1999. Under the renegotiated terms, the Company may
borrow, from time to time on an unsecured basis, up to $5 million for general
working capital purposes. The Credit Facility, which requires annual renewal,
provides for an interest rate equal to the bank's prime rate and an annual
commitment fee of 1/2%. The Company's line of credit expires on June 30, 2000.
As of November 12, 1999, the Company had no borrowings under the facility. Under
the prior terms with the Company's Credit Facility with Chase Manhattan Bank,
the Company could borrow, from time to time for general working capital
purposes, up to $2 million. Any borrowings under the prior credit facility would
be secured by the Company's receivables. The prior terms provided for an
interest rate of 1% over the bank's prime rate and an annual commitment fee of
3/4%.
Note 5
STOCK SPLITS
On March 29, 1999, the Company's Board of Directors approved the declaration of
a 3 for 2 stock split effective for shareholders of record on April 15, 1999. On
August 12, 1999, the Company's Board of Director's approved the declaration of a
2 for 1 stock split effective for shareholders of record on September 1, 1999.
The accompanying financial statements have been retroactively restated to
reflect the stock splits.
Note 6
SEGMENT AND RELATED INFORMATION
The Company applies Statement of Financial Accounting Standards No. 131 ("SFAS
No. 131"), "Disclosures About Segments of an Enterprise and Related
Information". The Company has three reportable segments; Licensing, Media Buying
Planning and Television Distribution and Television Production.
The accounting policies of the segments are the same as those described in the
summary of significant accounting policies. The Company does not have any
inter-segment sales or transfers.
-5-
<PAGE>
The Company's reportable segments are strategic business units which, while
managed separately, work together as a vertically integrated entertainment
company.
<TABLE>
<CAPTION>
MEDIA & TELEVISION
LICENSING TV DISTRIBUTION PRODUCTION TOTAL
Nine Months Ended ------------- --------------- ---------- -------------
September 30,
1999
<S> <C> <C> <C> <C>
Revenues $ 23,274,356 $ 1,861,697 $ 456,199 $ 25,592,252
Amortization - - 1,112,500 1,112,500
Segment Profit (Loss) 17,421,811 111,438 (861,343) 16,671,906
Segment Assets 59,165,631 5,825,032 3,149,615 68,140,278
1998
Revenues $ 6,384,353 $ 482,866 $ 490,778 $ 7,357,997
Amortization - - 1,018,231 1,018,231
Segment Profit (Loss) 3,270,714 (1,245,724) (621,703) 1,403,287
Segment Assets 13,084,686 7,094,010 4,044,480 24,223,176
</TABLE>
Note 7
COMMITMENTS AND CONTINGENCIES
The master toy licensee ("Licensee") for Nintendo's Pokemon property and
Nintendo of America Inc. ("Nintendo") have entered into an agreement (the
"Agreement") modifying certain terms of their Merchandise License Agreement,
dated as of May 14, 1998. Leisure Concepts, Incorporated, a wholly owned
subsidiary of the Company, is Nintendo's exclusive Merchandising Licensing Agent
for Pokemon outside of Asia.
Under the Agreement, the parties have agreed among other things that Licensee
will pay a revised minimum guaranteed royalty for the period starting January 1,
2000 and ending December 31, 2001. This revised minimum guaranteed royalty is
subject to reduction if certain conditions are not met. Because of the
conditions and contingencies contained in the Agreement, the Company will only
recognize revenue from the Agreement as royalties are earned and reported by
Licensee to the Company over the two year term beginning January 1, 2000.
Royalties reported by Licensee for the 1999 calendar year are unaffected by the
revised terms. Licensee will report all such royalties under the Agreement. If
all of the conditions under the Agreement are met and the full amount of the
minimum guaranteed royalty is paid by Licensee, the Company's share would be
approximately $30,000,000, which would be paid in two advances, one-half of
which would be received on or before April 1, 2000 and one-half of which would
be received on or before April 1, 2001.
-6-
<PAGE>
Note 8
LITIGATION
In September, the Company announced that it has been named as a defendant in a
lawsuit filed in the United States District Court for the Southern District of
California. Also named as defendants in this lawsuit are Nintendo of America,
Inc. and Wizards of the Coast, Inc. The lawsuit purportedly brought on behalf of
a class of all persons who purchased a package of Pokemon trading cards, seeks
to challenge longstanding practices in the trading card industry, including the
practice of randomly inserting premium cards in packages of Pokemon cards. The
lawsuit claims that these practices constitute illegal gambling activity in
violation of California and federal law, including the RICO Act, and seeks an
award of treble damages. The lawsuit has not specified the amount of damages
sought. The Company believes that the practices which are subject of this
lawsuit are well accepted business practices in the trading card industry and
intends to defend the lawsuit vigorously. Additionally, the Company is
indemnified by Wizards of the Coast under the Pokemon license Agreement.
Except for this lawsuit, as of November 12, 1999, there were no legal
proceedings pending against the Company other than routine litigation incidental
to its business.
-7-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
RESULTS OF OPERATIONS:
- ----------------------
The Company receives revenues from a number of sources, principally licensing,
media buying and television distribution. The Company typically derives a
substantial portion of its licensing revenues from a small number of properties,
which properties usually generate revenues only for a limited period of time.
Because the Company's licensing revenues are highly subject to changing fashion
in the toy and entertainment business, its licensing revenues from year to year
from particular sources are subject to dramatic increases and decreases. It is
not possible to precisely anticipate the length of time a project will be
commercially successful, if at all. Popularity of properties can vary from
months to years. As a result, the Company's revenues and net income may
fluctuate significantly between comparable periods. The Company's revenues have
historically been primarily derived from the license of toy, game and television
property concepts. Thus a substantial portion of the Company's revenues and net
income are subject to the seasonal variations of the toy and game industry.
Typically, a majority of toy orders are shipped in the third and fourth calendar
quarters. In addition the Company's media buying subsidiary concentrates its
activities on the youth oriented market. As a result, most of its revenue is
earned in the fourth quarter when the majority of toy and video game advertising
occurs. As a result, in the Company's usual experience, its net income during
the second half of the year will generally be greater than during the first half
of the year. However, the Company has little control over the timing of
guarantee and minimum royalty payments, some of which are made upon the
execution and delivery of license agreements.
Three and Nine Months Ended September 30, 1999 Compared to the three and Nine
Months Ended September 30, 1998
Consolidated net revenue increased 511% or $14,076,869 for the three month
period ended September 30, 1999 as compared to the same period in 1998. The nine
month period consolidated net revenue increased 248% or $18,234,255 as compared
to the nine month period ended September 30, 1998. The increase in net revenue
for the three and nine month periods was primarily due to significant growth in
licensing revenue from the "Pokemon" property. Additionally, increased licensing
revenue was earned from the World Championship Wrestling "WCW" property. The
Company's media buying and television distribution division recognized increased
revenue over the three and nine month periods due to an increase in television
distribution activities related to the "Pokemon" television program. The
increase was partially offset by a decrease in media buying activity due to the
loss of Tiger Electronics' media business, as a result of its acquisition by
Hasbro, which was partially offset by new clients' advertising spending.
-8-
<PAGE>
Selling, general and administrative expenses increased 106% or $2,080,590 and
63% or $3,262,325 for the three and nine month periods ended September 30, 1999
when compared to the prior year periods. These increases were primarily due to
contractually based bonus accruals calculated on the Company's pre-tax income
levels, which were higher in 1999 as a result of higher pre-tax income.
Additionally, the Company incurred increased payroll and marketing costs
associated with the Company's expanded licensing activities.
At September 30, 1999 there were approximately $3,272,000 of capitalized film
production costs. These costs are primarily related to episodes of "WMAC
Masters" and work related to the adaptation of episodes 53 to 104 of the
"Pokemon" television series and the "Pokemon" feature film, "Mewtwo Strikes
Back" coupled with a twenty minute short film entitled "Pikachu's Vacation", set
for theatrical release November 10, 1999. "WMAC Masters" is a series of 26 half
hour television programs produced by the Company's 4Kids Productions subsidiary.
Amortization of capitalized film cost increased $940,581 and $94,269 for the
three and nine months ended September 30, 1999 when compared to 1998. The 1999
amortization relates to the "WMAC Masters" television program. The 1999 charges
occurred as a result of the Company's periodic evaluation of net realizable
value of its capitalized costs. Amortization rates may change as a result of
changes in estimated future revenue. The 1998 amortization relates to the "WMAC
Masters" television program. At September 30, 1999 the percentage of total
unamortized film cost expected to be amortized within the next three years
exceeds 70%.
Interest income increased by approximately $216,000 and $391,000 for the three
and nine month periods ending September 30, 1999 as compared to the same periods
in 1998. This increase is attributable to higher levels of invested cash
compared to the same periods in 1998.
LIQUIDITY AND CAPITAL RESOURCES:
- --------------------------------
At September 30, 1999 the Company had working capital of $36,915,920 as compared
to working capital of $10,823,815 at December 31, 1998, or an increase in
working capital of $26,092,105. Cash and cash equivalents increased by
$23,805,886 to $33,555,842 from December 31, 1998. The increase in cash and cash
equivalents is due primarily to the strength of the Company's licensing business
and the timing of advance payments and royalties due on licensing agreements.
Additionally, cash also increased due to proceeds from the exercise of stock
options during the nine month period ended September 30, 1999.
-9-
<PAGE>
Accounts receivable, net (current and noncurrent) increased from $20,321,942 at
December 31, 1998 to $21,968,171 at September 30, 1999. The increase is
primarily due to the Company's licensing activities. The increase in licensing
receivables was offset by a significant decrease in receivables from the
Company's media buying activities. When the Company assumes payment obligation
for the media it places on behalf of its clients, the Company records a
receivable from its clients and a corresponding media payable for the gross
amount of the media due. The seasonality of the Company's media business tends
to generate higher receivables in the fourth quarter which are generally
collected in the first quarter. There was a corresponding decrease in media
payable of $9,122,815 for the nine month period ended September 30, 1999.
Amounts due to licensors, which represents the owner's share of royalties
collected, increased by $13,759,239 to $17,449,821 from December 31, 1998. The
increase is due to higher amounts of royalties and advances collected during the
quarter which are payable to licensors after the close of the quarter.
In the opinion of management, the Company will be able to satisfy its
foreseeable financial obligations from its current working capital. As described
in Note 4 to the financial statements, the Company has established a $5,000,000
credit facility with Chase Manhattan Bank for general working capital purposes.
As of November 12, 1999, there were no borrowings under this facility.
Year 2000 Compliance
Overview
- --------
The Year 2000 issue is primarily the result of computer programs only accepting
a two digit date code, as opposed to four digits, to indicate the year.
Beginning in the Year 2000, and in certain instances prior to the Year 2000,
these date code fields will need to accept four digit entries to distinguish
21st century dates from 20th century dates. As a result, the Company's date
critical functions may be adversely affected unless these computer systems and
software products are, or become, able to accept four digit entries.
Internal systems and equipment
- ------------------------------
The Company has commenced a comprehensive program consisting of identifying,
assessing and if necessary, upgrading and/or replacing its systems and equipment
that may be vulnerable to Year 2000 problems. The first stage of this program,
identifying the systems and equipment, has been substantially completed. The
Company has prioritized the identified items as either critical or non-critical
to the operations of the Company. The Company has made substantial progress
through the final stages of this program, assessing and upgrading and/or
replacing the equipment it has deemed to be non-compliant. The Company believes
that it has completed all of its necessary upgrades and/or replacements and the
testing of its systems as of September 1999.
-10-
<PAGE>
Third party relationships
- -------------------------
The Company has formally communicated with substantially all of its significant
suppliers and customers to ascertain if those parties had appropriate plans to
remedy Year 2000 issues as their systems may impact the operations of the
Company. There can be no assurance, however, that the systems of other companies
on which the Company's processes rely will be timely converted, or that a
failure to successfully convert by another company, or a conversion that is
incompatible with the Company's systems, would not have an impact on the
Company's operations. The Company believes it has substantially completed its
assessment of the status of its significant customers' and suppliers' compliance
with the Year 2000 issues as of September 1999.
Contingency plans
- -----------------
Based on the assessment effort to date, the Company has focused on three
separate contingency plans (1) if the Company's systems are non-compliant (2) if
the Company's customers are non-compliant and (3) if the Company's suppliers are
non-compliant. However, there can be no assurance that the Company will be able
to have an effective contingency plan in place in the event a significant
supplier and/or customer does not become Year 2000 compliant.
Costs/Risks
- -----------
The Company has incurred approximately $75,000 in both hardware and software
upgrade expenditures in connection with bringing its own systems and equipment
into compliance for the Year 2000. The Company expects no material costs to be
incurred in the fourth quarter. Although the Company is not aware of any
material operational issues or costs associated with preparing its internal
systems for the Year 2000, there can be no assurance that there will not be a
delay in, or increased costs associated with, the implementation of the
necessary systems and changes to address the Year 2000.
Potential sources of risk include but are not limited to (1) the inability of
principal clients and licensees to be Year 2000 compliant, which could result in
delays in product deliveries from such clients and licensees, (2) the inability
of the Company's clients and licensees to become compliant, which could impact
their ability to sell product or report royalties in a timely manner resulting
in a disruption of the Company's cash flow, and (3) disruption of television
broadcast signals, including satellite distribution and commercial integration
vendors as a result of the general failure of systems and necessary
infrastructure such as electrical supply.
Forward-looking Statements
- --------------------------
This quarterly report contains forward-looking statements. Due to the fact that
the Company faces competition from toy companies, motion picture studios and
other licensing companies, and the uncertainty of public's response to the
Company's properties, actual results or outcomes may differ materially from any
such forward-looking statements.
-11-
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Not Applicable
Item 2. Changes in Securities and Use of Proceeds
Not Applicable
Item 3. Defaults upon Senior Securities
Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
Not Applicable
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit
Number Description
------- -----------
27 Financial Data Schedule
(b) Reports on Form 8-K
Form 8-K filed October 22, 1999
-12-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Dated: November 12, 1999
4KIDS ENTERTAINMENT, INC.
By: /s/ Alfred R. Kahn
Alfred R. Kahn
Chairman of the Board and
Chief Executive Officer
By: /s/ Joseph P. Garrity
Joseph P. Garrity
Executive Vice President
Chief Financial Officer
-13-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE COMPANYS UNAUDITED
FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> Dec-31-1999
<PERIOD-START> Jan-1-1999
<PERIOD-END> Sep-30-1999
<CASH> 33,555,842
<SECURITIES> 0
<RECEIVABLES> 22,734,842
<ALLOWANCES> 766,671
<INVENTORY> 0
<CURRENT-ASSETS> 63,438,803
<PP&E> 1,634,376
<DEPRECIATION> 1,450,988
<TOTAL-ASSETS> 68,140,278
<CURRENT-LIABILITIES> 26,522,883
<BONDS> 0
0
0
<COMMON> 115,922
<OTHER-SE> 41,122,461
<TOTAL-LIABILITY-AND-EQUITY> 68,140,278
<SALES> 0
<TOTAL-REVENUES> 25,592,252
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 16,671,906
<INCOME-TAX> 7,169,000
<INCOME-CONTINUING> 9,502,906
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,502,906
<EPS-BASIC> 0.91
<EPS-DILUTED> 0.78
</TABLE>
