4Kids CEO Discusses Q2 2010 Results - Earnings Call Transcript

4Kids CEO Discusses Q2 2010 Results - Earnings Call Transcript
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4Kids Entertainment, Inc. (KDE)

Q2 2010 Earnings Call Transcript

August 16, 2010 9:00 am ET

Executives

Garth Russell – IR, KCSA Strategic Communications

Bruce Foster – EVP and CFO

Al Kahn – Chairman and CEO

Presentation

Operator

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Previous Statements by KDE
» 4Kids Entertainment, Inc. Q1 2010 Earnings Call Transcript
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» 4Kids Entertainment Q3 2009 Earnings Call Transcript

Good morning. My name is Christie, and I will be your conference operator today. At this time, I would like to welcome everyone to the 4Kids Entertainment second quarter 2010 earnings conference call. All lines have been placed on mute to prevent any background noise. (Operator instructions) Thank you. It is my pleasure to turn the call over to Garth Russell, KCSA Strategic Communications.

Garth Russell

Thank you, Christie. And good morning, everyone. Welcome to 4Kids Entertainment 2010 second quarter conference call. Before we begin, I must state that the information contained in this conference call other than historical information consists of forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may involve risks and uncertainties that could cause actual results to differ materially from those described in such statements.

Although the company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Important factors beyond the company’s control, including general and economic conditions, consumer spending levels, competition from toy companies, motion picture studios and other licensing companies, the uncertainty of public response to the company’s properties and other factors that could cause actual results to differ materially from the company’s expectations.

It is now my pleasure to turn the call over to Bruce Foster, Chief Financial Officer of 4Kids Entertainment. Bruce, the floor is yours.

Bruce Foster

Thanks, Garth. Thank you, and good morning. I’d like to spend a few minutes reviewing with you the company’s second quarter of 2010 financial results. Revenues by reportable segment for the company as a whole were as follows. In the licensing segment, revenue for the three months ended June 30, 2010 was approximately $1.9 million as compared to approximately $2.3 million in ‘09, a decrease of approximately $0.4 million. Revenue for the six months ended June 30, 2010 was approximately $5.2 million as compared to $7.9 million in ’09, a decrease of approximately $2.7 million.

In the licensing segment, decreased revenues for the three months ended June 30, 2010 were primarily attributable to reduced licensing revenue on the Teenage Mutant Ninja Turtles property worldwide of approximately $0.4 million as well as reduced licensing revenue on the Dinosaur King property internationally of approximately $0.3 million, partially offset by increased licensing revenue on the Yu-Gi-Oh! property worldwide of approximately $0.2 million.

In the licensing segment, decreased revenues for the six months ended June 30, 2010 were primarily attributable to reduced licensing revenues on the Monster Jam and American Kennel Club properties domestically of approximately $1.5 million and $0.3 million respectively, as well as reduced licensing revenues on the Teenage Mutant Ninja Turtles and Dinosaur King properties worldwide of approximately $0.7 million and $0.2 million respectively.

In the advertising, media, and broadcast segment, revenues for the three months ended June 30, 2010 was approximately negative $0.3 million as compared to approximately $0.2 million in ’09, a decrease of approximately $0.5 million. Revenue for the six months ended June 30, 2010 was approximately negative $0.3 million as compared to approximately $0.1 million in ’09, a decrease of approximately $1.3 million.

The significant decrease in revenues for the three and six months ended June 30, 2010 as compared to the same periods in ’09 was primarily attributable to decreased revenue from the sale of Internet advertising on the company’s websites of approximately $0.5 million and $1.0 million respectively.

In the television and film production and distribution segment, revenue for the three months ended June 30, 2010 was approximately $0.9 million as compared to approximately $1.3 million in ’09, a decrease of approximately $0.4 million. Revenue for the six months ended June 30, 2010 was approximately $1.8 million as compared to approximately $2 million. The decrease in revenues for the three months ended June 30, 2010 as compared to the same period in ’09 was primarily attributable to the decreased broadcast sales in the Chaotic television series of approximately $0.4 million.

The decrease in revenue for the six months ended June 30, 2010 as compared to the same period in ’09 was primarily attributable to decreased international broadcast sales from the Dinosaur King television series of approximately $0.8 million, decreased broadcast sales in the Chaotic television series of approximately $0.4 million and decreased contract revenue from the Pat & Stan television series of approximately $0.2 million.

In the trading card and games distribution segment, revenues for the three months ended June 30, 2010 was approximately $0.1 million as compared to approximately negative $0.2 million in ’09, an increase of approximately $0.3 million . Revenue for the six months ended June 30, 2010 was approximately $0.1 million as compared to $0.3 million in ’09, a decrease of approximately $0.2 million.

The change in revenue for the trading card and games distribution segment for the three months ended June 30, 2010 when compared to the same period in ’09 was primarily attributable to many of the company’s larger trading card distributors migrating to point-of-sales model in the second quarter of ’09. In anticipation of this migration, certain of the company’s retailers and distributors significantly reduced inventory levels and granted additional allowances and promotional markdowns exceeding actual product sales in the second quarter of ’09.

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