4Kids Entertainment Reports First Quarter Results

May 10th 2005
May 10, 2005--4Kids Entertainment, Inc. (NYSE: KDE) today announced that net revenues for the first quarter ended March 31, 2005 were $20.3 million, compared to $22.5 million in the same period last year. Net income for the quarter was $2.0 million, or $0.14 per diluted share, compared to net income of $3.2 million, or $0.22 per diluted share, in the year-earlier period. The diluted weighted average common shares outstanding for the three months ended March 31, 2005 were 13,833,711 shares compared with 14,722,344 shares for the prior year.

Al Kahn, Chairman and Chief Executive Officer, said, "The Company's results in Q1 reflect an overall decrease in licensing revenue for 4Kids' properties and a decline in advertising revenue for 4Kids TV as compared to the first quarter of 2004. The decline in Yu-Gi-Oh!(TM) revenue after a strong fourth quarter in 2004 was only partially offset by increased licensing revenue for Winx Club(TM), Teenage Mutant Ninja Turtles(TM) and Cabbage Patch Kids(TM) and by Shaman King(TM) international sales."

The first quarter results also were impacted by increased advertising and promotional costs associated with the re-branding of the four hours of children's programming produced by 4Kids and broadcast on Saturday mornings on FOX as "4Kids TV" and with the upgrade and re-launch of the www.4Kids.TV website.

"We are very pleased with the initial results of our 4Kids TV re-branding campaign," Kahn said. "In the last few weeks of the first quarter and continuing into the second quarter, 4Kids TV ratings have shown significant improvement. Our decision to enter the girls' market has been validated by the initial broadcast and licensing success of Winx Club (TM). We plan to strengthen our position in the girls' market with the introduction of additional girls' properties to the 4Kids TV line up later this year. These properties will join the new G.I. Joe Sigma 6 (TM) series scheduled to debut on 4Kids TV this fall," stated Kahn.

"In addition to Yu-Gi-Oh! Season 5 scheduled to be broadcast on Kids' WB! in the fall of 2005, we will also be producing a new Yu-Gi-Oh! series called Yu-Gi-Oh! GX that will be broadcast this fall. The new GX series, set many generations in the future, will benefit from an expanded licensing program slated to begin in the second half of the year," said Kahn.

In the first quarter of 2005, 4Kids repurchased 350,000 shares out of the current authorization of 1 million shares authorized for repurchase by the Board of Directors in November 2004.

"We continue to be optimistic about 2005 and believe that investing in our shares is an excellent use of our cash at this time," Kahn said. "With no debt and cash and investments of $130.8 million at March 31, 2005, we have significant resources with which to develop our business. We remain keenly focused on identifying and capitalizing on new opportunities in content and distribution, the two areas of growth that we believe will drive shareholder value over the long term."

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