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4Kids Fiscal 2005 Results

posted on by Christopher Macdonald
Profit Down 60% Compared to 2004

4Kids Entertainment announced their fiscal 2005 year end results today. For the fiscal year ending December 31, 2005, 4Kids Entertainment reported $5.1 million in profit on $86.7 million in sales, compared to $12.7 million in profit on $103.3 million in sales in fiscal 2004.

Most of the shortfall came in the 4th quarter, where revenue was down $7.2 million to $26.9 million and profit down $4.5 million to $.5 million compared to 4th quarter 2004.

4Kids CEO Al Kahn said he was "Extraordinarily disappointed & furious at the results of this year.”

Most of the shortfall was blamed on decreased revenue from Yu-Gi-Oh! and Teenage Mutant Ninja Turtles and Pokémon, and was offset by increased revenue from Winx Club, One Piece and Cabbage Patch Kids. In regards to Yu-Gi-Oh!, Kahn stated that the decrease is sales was largely due a slower than expected transition to Yu-Gi-Oh! GX. While sales of older Yu-Gi-Oh! products have been tapering off, sales of GX products have been doing very well, but the products have been very slow to get to market.

Heading forwards, it was stressed that 4Kids wants to focus on properties it owns, as opposed to properties that it licenses. Fully owned properties and co-owned properties do not expire or have restrictions placed on them by licensors. New properties that 4Kids is committed to include "Viva Pinata," a game and TV series being produced with Microsoft, and Chaotic, a card game from Denmark for which 4Kids has purchased all rights.

4Kids TV ratings are up 16%, however revenue was down $0.6 million to $24.1 million. The decrease was due to a shortfall in advertising revenue. 4Kids expects broadcast profit to improve in 2006 because it expects increased advertising revenue due to the higher ratings, the revenue should increase in the 2006-2007 season. Also, 4Kids has renegotiated its deal with Fox for 2 more years (2006-2007 and 2007-2008) at $20 million per year, compared to $25 million for previous years.

4Kids sold all its shares in The Pokémon Company equally to the remaining shareholders for $1 million.

4Kids closed the year with $113.5 million in cash and investments, and $30.5 million in liabilities but no bank/loan debt.

4Kids Stock closed the day up $0.17 to $17.07 (1.01%) compared the the previous day.

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