(Mark one)
|
|
☒
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2019 |
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 number:
0-28104
|
JAKKS Pacific, Inc.
(Exact Name of Registrant as Specified in Its Charter)
|
Delaware
(State or Other Jurisdiction of Incorporation or Organization)
|
95-4527222
(I.R.S. Employer Identification No.)
|
|
|
2951 28
th
Street
Santa Monica, California
(Address of Principal Executive Offices)
|
90405
(Zip Code)
|
|
Large accelerated filer ☐
|
Accelerated filer ☐
|
Non-accelerated filer ☒
|
Smaller reporting company ☒
|
Emerging growth company ☐
|
|
Title of each class
|
|
Trading
Symbol(s)
|
|
Name of each exchange on which registered
|
Common Stock $.001 Par Value
|
|
JAKK
|
|
The NASDAQ Global Select Market
|
Assets
|
June 30,
2019 |
|
December 31,
2018 |
||||
|
(Unaudited)
|
||||||
Current assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
32,125
|
|
|
$
|
53,282
|
|
Restricted cash
|
4,923
|
|
|
4,923
|
|
||
Accounts receivable, net of allowance for doubtful accounts of $1,613 and $2,149 at June 30, 2019 and December 31, 2018, respectively
|
85,119
|
|
|
122,278
|
|
||
Inventory
|
53,521
|
|
|
53,880
|
|
||
Prepaid expenses and other assets
|
28,523
|
|
|
15,780
|
|
||
Total current assets
|
204,211
|
|
|
250,143
|
|
||
Property and equipment
|
|
|
|
||||
Office furniture and equipment
|
11,876
|
|
|
11,999
|
|
||
Molds and tooling
|
108,250
|
|
|
108,315
|
|
||
Leasehold improvements
|
7,220
|
|
|
7,735
|
|
||
Total
|
127,346
|
|
|
128,049
|
|
||
Less accumulated depreciation and amortization
|
106,239
|
|
|
107,147
|
|
||
Property and equipment, net
|
21,107
|
|
|
20,902
|
|
||
Operating lease right-of-use assets
|
35,848
|
|
|
—
|
|
||
Intangible assets, net
|
14,931
|
|
|
17,312
|
|
||
Other long term assets
|
17,264
|
|
|
19,101
|
|
||
Goodwill
|
35,083
|
|
|
35,083
|
|
||
Trademarks
|
300
|
|
|
300
|
|
||
Total assets
|
$
|
328,744
|
|
|
$
|
342,841
|
|
Liabilities and Stockholders' Equity
|
|
|
|
||||
Current liabilities
|
|
|
|
||||
Accounts payable
|
$
|
64,388
|
|
|
$
|
57,574
|
|
Accrued expenses
|
33,628
|
|
|
29,914
|
|
||
Reserve for sales returns and allowances
|
24,498
|
|
|
29,403
|
|
||
Short term operating lease liabilities
|
9,182
|
|
|
—
|
|
||
Short term debt, net
|
1,892
|
|
|
27,211
|
|
||
Total current liabilities
|
133,588
|
|
|
144,102
|
|
||
Long term operating lease liabilities
|
29,829
|
|
|
—
|
|
||
Long term debt, net
|
160,656
|
|
|
139,792
|
|
||
Other liabilities
|
137
|
|
|
4,409
|
|
||
Income taxes payable
|
1,471
|
|
|
1,458
|
|
||
Deferred income taxes, net
|
1,431
|
|
|
1,431
|
|
||
Total liabilities
|
327,112
|
|
|
291,192
|
|
||
Stockholders' equity
|
|
|
|
||||
Preferred stock, $.001 par value; 5,000,000 shares authorized; nil outstanding
|
—
|
|
|
—
|
|
||
Common stock, $.001 par value; 100,000,000 shares authorized; 29,463,689 and 29,169,913 shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively
|
30
|
|
|
30
|
|
||
Treasury stock, at cost; 3,112,840 shares
|
(24,000
|
)
|
|
(24,000
|
)
|
||
Additional paid-in capital
|
218,897
|
|
|
218,155
|
|
||
Accumulated deficit
|
(179,301
|
)
|
|
(127,601
|
)
|
||
Accumulated other comprehensive loss
|
(14,994
|
)
|
|
(15,847
|
)
|
||
Total JAKKS Pacific, Inc. stockholders' equity
|
632
|
|
|
50,737
|
|
||
Non-controlling interests
|
1,000
|
|
|
912
|
|
||
Total stockholders' equity
|
1,632
|
|
|
51,649
|
|
||
Total liabilities and stockholders' equity
|
$
|
328,744
|
|
|
$
|
342,841
|
|
|
Three Months Ended June 30,
(Unaudited) |
|
Six Months Ended June 30,
(Unaudited) |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net sales
|
$
|
95,182
|
|
|
$
|
105,781
|
|
|
$
|
166,008
|
|
|
$
|
198,785
|
|
Cost of sales
|
77,436
|
|
|
77,840
|
|
|
133,922
|
|
|
147,885
|
|
||||
Gross profit
|
17,746
|
|
|
27,941
|
|
|
32,086
|
|
|
50,900
|
|
||||
Selling, general and administrative expenses
|
33,870
|
|
|
39,748
|
|
|
69,136
|
|
|
98,365
|
|
||||
Restructuring charge
|
22
|
|
|
—
|
|
|
270
|
|
|
—
|
|
||||
Acquisition related and other
|
2,503
|
|
|
333
|
|
|
5,370
|
|
|
333
|
|
||||
Loss from operations
|
(18,649
|
)
|
|
(12,140
|
)
|
|
(42,690
|
)
|
|
(47,798
|
)
|
||||
Income from joint ventures
|
—
|
|
|
205
|
|
|
—
|
|
|
227
|
|
||||
Other income (expense), net
|
(242
|
)
|
|
31
|
|
|
(159
|
)
|
|
81
|
|
||||
Change in fair value of convertible senior notes
|
(106
|
)
|
|
(2,410
|
)
|
|
(2,529
|
)
|
|
(3,431
|
)
|
||||
Interest income
|
20
|
|
|
14
|
|
|
47
|
|
|
28
|
|
||||
Interest expense
|
(2,919
|
)
|
|
(2,197
|
)
|
|
(5,937
|
)
|
|
(4,133
|
)
|
||||
Loss before provision for (benefit from) income taxes
|
(21,896
|
)
|
|
(16,497
|
)
|
|
(51,268
|
)
|
|
(55,026
|
)
|
||||
Provision for (benefit from) income taxes
|
589
|
|
|
2,091
|
|
|
344
|
|
|
(245
|
)
|
||||
Net loss
|
(22,485
|
)
|
|
(18,588
|
)
|
|
(51,612
|
)
|
|
(54,781
|
)
|
||||
Net income (loss) attributable to non-controlling interests
|
57
|
|
|
(29
|
)
|
|
88
|
|
|
22
|
|
||||
Net loss attributable to JAKKS Pacific, Inc.
|
$
|
(22,542
|
)
|
|
$
|
(18,559
|
)
|
|
$
|
(51,700
|
)
|
|
$
|
(54,803
|
)
|
Loss per share - basic and diluted
|
$
|
(0.96
|
)
|
|
$
|
(0.80
|
)
|
|
$
|
(2.19
|
)
|
|
$
|
(2.37
|
)
|
Shares used in loss per share - basic and diluted
|
23,600
|
|
|
23,106
|
|
|
23,578
|
|
|
23,103
|
|
||||
Comprehensive loss
|
$
|
(22,935
|
)
|
|
$
|
(19,978
|
)
|
|
$
|
(50,759
|
)
|
|
$
|
(55,121
|
)
|
Comprehensive loss attributable to JAKKS Pacific, Inc.
|
$
|
(22,992
|
)
|
|
$
|
(19,949
|
)
|
|
$
|
(50,847
|
)
|
|
$
|
(55,143
|
)
|
Three and Six Months Ended June 30, 2019
|
||||||||||||||||||||||||||||||||
(Unaudited)
|
||||||||||||||||||||||||||||||||
|
|
Common Stock
|
|
Treasury
Stock
|
|
Additional
Paid-in
Capital
|
|
Accumulated
Deficit
|
|
Accumulated
Other
Comprehensive
Loss
|
|
JAKKS
Pacific, Inc.
Stockholders’
Equity
|
|
Non-
Controlling
Interests
|
|
Total
Stockholders’
Equity
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Balance, December 31, 2018
|
|
$
|
30
|
|
|
$
|
(24,000
|
)
|
|
$
|
218,155
|
|
|
$
|
(127,601
|
)
|
|
$
|
(15,847
|
)
|
|
$
|
50,737
|
|
|
$
|
912
|
|
|
$
|
51,649
|
|
Stock-based compensation expense
|
|
—
|
|
|
—
|
|
|
618
|
|
|
—
|
|
|
—
|
|
|
618
|
|
|
—
|
|
|
618
|
|
||||||||
Repurchase of common stock for employee tax withholding
|
|
—
|
|
|
—
|
|
|
(249
|
)
|
|
—
|
|
|
—
|
|
|
(249
|
)
|
|
—
|
|
|
(249
|
)
|
||||||||
Net income (loss)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(29,158
|
)
|
|
—
|
|
|
(29,158
|
)
|
|
31
|
|
|
(29,127
|
)
|
||||||||
Foreign currency translation adjustment
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,303
|
|
|
1,303
|
|
|
—
|
|
|
1,303
|
|
||||||||
Balance, March 31, 2019
|
|
$
|
30
|
|
|
$
|
(24,000
|
)
|
|
$
|
218,524
|
|
|
$
|
(156,759
|
)
|
|
$
|
(14,544
|
)
|
|
$
|
23,251
|
|
|
$
|
943
|
|
|
$
|
24,194
|
|
Stock-based compensation expense
|
|
—
|
|
|
—
|
|
|
397
|
|
|
—
|
|
|
—
|
|
|
397
|
|
|
—
|
|
|
397
|
|
||||||||
Repurchase of common stock for employee tax withholding
|
|
—
|
|
|
—
|
|
|
(24
|
)
|
|
—
|
|
|
—
|
|
|
(24
|
)
|
|
—
|
|
|
(24
|
)
|
||||||||
Net income (loss)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(22,542
|
)
|
|
—
|
|
|
(22,542
|
)
|
|
57
|
|
|
(22,485
|
)
|
||||||||
Foreign currency translation adjustment
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(450
|
)
|
|
(450
|
)
|
|
—
|
|
|
(450
|
)
|
||||||||
Balance, June 30, 2019
|
|
$
|
30
|
|
|
$
|
(24,000
|
)
|
|
$
|
218,897
|
|
|
$
|
(179,301
|
)
|
|
$
|
(14,994
|
)
|
|
$
|
632
|
|
|
$
|
1,000
|
|
|
$
|
1,632
|
|
Three and Six Months Ended June 30, 2018
|
||||||||||||||||||||||||||||||||
(Unaudited)
|
||||||||||||||||||||||||||||||||
|
|
Common Stock
|
|
Treasury
Stock
|
|
Additional
Paid-in
Capital
|
|
Accumulated
Deficit
|
|
Accumulated
Other
Comprehensive
Loss
|
|
JAKKS
Pacific, Inc.
Stockholders’
Equity
|
|
Non-
Controlling
Interests
|
|
Total
Stockholders’
Equity
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Balance, December 31, 2017
|
|
$
|
27
|
|
|
$
|
(24,000
|
)
|
|
$
|
215,809
|
|
|
$
|
(85,233
|
)
|
|
$
|
(13,059
|
)
|
|
$
|
93,544
|
|
|
$
|
969
|
|
|
$
|
94,513
|
|
Restricted stock grants
|
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
3
|
|
||||||||
Stock-based compensation expense
|
|
—
|
|
|
—
|
|
|
674
|
|
|
—
|
|
|
—
|
|
|
674
|
|
|
—
|
|
|
674
|
|
||||||||
Repurchase of common stock for employee tax withholding
|
|
—
|
|
|
—
|
|
|
(85
|
)
|
|
—
|
|
|
—
|
|
|
(85
|
)
|
|
—
|
|
|
(85
|
)
|
||||||||
Net income (loss)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(36,244
|
)
|
|
—
|
|
|
(36,244
|
)
|
|
51
|
|
|
(36,193
|
)
|
||||||||
Foreign currency translation adjustment
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,050
|
|
|
1,050
|
|
|
—
|
|
|
1,050
|
|
||||||||
Balance, March 31, 2018
|
|
$
|
30
|
|
|
$
|
(24,000
|
)
|
|
$
|
216,398
|
|
|
$
|
(121,477
|
)
|
|
$
|
(12,009
|
)
|
|
$
|
58,942
|
|
|
$
|
1,020
|
|
|
$
|
59,962
|
|
Stock-based compensation expense
|
|
—
|
|
|
—
|
|
|
313
|
|
|
—
|
|
|
—
|
|
|
313
|
|
|
—
|
|
|
313
|
|
||||||||
Adjustment to additional paid in capital
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
(2
|
)
|
||||||||
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(18,559
|
)
|
|
—
|
|
|
(18,559
|
)
|
|
(29
|
)
|
|
(18,588
|
)
|
||||||||
Foreign currency translation adjustment
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,390
|
)
|
|
(1,390
|
)
|
|
—
|
|
|
(1,390
|
)
|
||||||||
Balance, June 30, 2018
|
|
$
|
30
|
|
|
$
|
(24,000
|
)
|
|
$
|
216,709
|
|
|
$
|
(140,036
|
)
|
|
$
|
(13,399
|
)
|
|
$
|
39,304
|
|
|
$
|
991
|
|
|
$
|
40,295
|
|
|
Six Months Ended June 30,
(Unaudited)
|
||||||
|
2019
|
|
2018
|
||||
Cash flows from operating activities
|
|
|
|
||||
Net loss
|
$
|
(51,612
|
)
|
|
$
|
(54,781
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
||||
Provision for doubtful accounts
|
(248
|
)
|
|
12,468
|
|
||
Depreciation and amortization
|
7,473
|
|
|
7,428
|
|
||
Write-off and amortization of debt issuance costs
|
803
|
|
|
556
|
|
||
Share-based compensation expense
|
1,015
|
|
|
987
|
|
||
Gain on disposal of property and equipment
|
(61
|
)
|
|
(28
|
)
|
||
Change in fair value of convertible senior notes
|
2,529
|
|
|
3,431
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
37,407
|
|
|
29,710
|
|
||
Inventory
|
359
|
|
|
(3,729
|
)
|
||
Prepaid expenses and other assets
|
(12,079
|
)
|
|
(19,840
|
)
|
||
Accounts payable
|
6,785
|
|
|
18,497
|
|
||
Accrued expenses
|
3,714
|
|
|
(6,675
|
)
|
||
Reserve for sales returns and allowances
|
(4,905
|
)
|
|
3,713
|
|
||
Income taxes payable
|
13
|
|
|
(267
|
)
|
||
Other liabilities
|
(58
|
)
|
|
(190
|
)
|
||
Total adjustments
|
42,747
|
|
|
46,061
|
|
||
Net cash used in operating activities
|
(8,865
|
)
|
|
(8,720
|
)
|
||
Cash flows from investing activities
|
|
|
|
||||
Purchases of property and equipment
|
(5,205
|
)
|
|
(6,510
|
)
|
||
Net cash used in investing activities
|
(5,205
|
)
|
|
(6,510
|
)
|
||
Cash flows from financing activities
|
|
|
|
||||
Repayment of credit facility borrowings
|
(7,500
|
)
|
|
(5,000
|
)
|
||
Deferred issuance costs
|
—
|
|
|
(1,447
|
)
|
||
Proceeds from term loan facility
|
—
|
|
|
20,000
|
|
||
Repayment of term loan
|
(167
|
)
|
|
—
|
|
||
Repurchase of common stock for employee tax withholding
|
(273
|
)
|
|
(85
|
)
|
||
Net cash (used in) provided by financing activities
|
(7,940
|
)
|
|
13,468
|
|
||
Net decrease in cash, cash equivalents and restricted cash
|
(22,010
|
)
|
|
(1,762
|
)
|
||
Effect of foreign currency translation
|
853
|
|
|
(224
|
)
|
||
Cash, cash equivalents and restricted cash, beginning of period
|
58,205
|
|
|
64,977
|
|
||
Cash, cash equivalents and restricted cash, end of period
|
$
|
37,048
|
|
|
$
|
62,991
|
|
Cash paid during the period for:
|
|
|
|
||||
Income taxes
|
$
|
68
|
|
|
$
|
712
|
|
Interest
|
$
|
5,063
|
|
|
$
|
3,592
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net Sales
|
|
|
|
|
|
|
|
||||||||
U.S. and Canada
|
$
|
48,502
|
|
|
$
|
59,381
|
|
|
$
|
105,935
|
|
|
$
|
129,916
|
|
International
|
10,293
|
|
|
22,044
|
|
|
20,046
|
|
|
39,343
|
|
||||
Halloween
|
36,387
|
|
|
24,356
|
|
|
40,027
|
|
|
29,526
|
|
||||
|
$
|
95,182
|
|
|
$
|
105,781
|
|
|
$
|
166,008
|
|
|
$
|
198,785
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Loss from Operations
|
|
|
|
|
|
|
|
||||||||
U.S. and Canada
|
$
|
(10,910
|
)
|
|
$
|
(6,423
|
)
|
|
$
|
(26,364
|
)
|
|
$
|
(29,402
|
)
|
International
|
(2,694
|
)
|
|
(2,744
|
)
|
|
(7,117
|
)
|
|
(9,683
|
)
|
||||
Halloween
|
(5,045
|
)
|
|
(2,973
|
)
|
|
(9,209
|
)
|
|
(8,713
|
)
|
||||
|
$
|
(18,649
|
)
|
|
$
|
(12,140
|
)
|
|
$
|
(42,690
|
)
|
|
$
|
(47,798
|
)
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Depreciation and Amortization Expense
|
|
|
|
|
|
|
|
||||||||
U.S. and Canada
|
$
|
2,625
|
|
|
$
|
2,886
|
|
|
$
|
5,312
|
|
|
$
|
5,302
|
|
International
|
566
|
|
|
993
|
|
|
1,016
|
|
|
1,574
|
|
||||
Halloween
|
1,048
|
|
|
453
|
|
|
1,145
|
|
|
552
|
|
||||
|
$
|
4,239
|
|
|
$
|
4,332
|
|
|
$
|
7,473
|
|
|
$
|
7,428
|
|
|
June 30,
2019 |
|
December 31,
2018 |
||||
Assets
|
|
|
|
||||
U.S. and Canada
|
$
|
200,748
|
|
|
$
|
223,877
|
|
International
|
82,876
|
|
|
108,669
|
|
||
Halloween
|
45,120
|
|
|
10,295
|
|
||
|
$
|
328,744
|
|
|
$
|
342,841
|
|
|
June 30,
2019 |
|
December 31,
2018 |
||||
Long-lived Assets
|
|
|
|
||||
China
|
$
|
16,758
|
|
|
$
|
15,825
|
|
United States
|
4,121
|
|
|
4,920
|
|
||
Hong Kong
|
228
|
|
|
157
|
|
||
|
$
|
21,107
|
|
|
$
|
20,902
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net Sales by Customer Area
|
|
|
|
|
|
|
|
||||||||
United States
|
$
|
82,409
|
|
|
$
|
79,673
|
|
|
$
|
139,967
|
|
|
$
|
151,046
|
|
Europe
|
6,546
|
|
|
15,307
|
|
|
13,737
|
|
|
23,936
|
|
||||
Canada
|
2,182
|
|
|
3,811
|
|
|
4,742
|
|
|
7,572
|
|
||||
Hong Kong
|
937
|
|
|
300
|
|
|
1,192
|
|
|
527
|
|
||||
Other
|
3,108
|
|
|
6,690
|
|
|
6,370
|
|
|
15,704
|
|
||||
|
$
|
95,182
|
|
|
$
|
105,781
|
|
|
$
|
166,008
|
|
|
$
|
198,785
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||||||||||||||
|
Amount
|
|
Percentage
of Net Sales
|
|
Amount
|
|
Percentage
of Net Sales
|
|
Amount
|
|
Percentage
of Net Sales
|
|
Amount
|
|
Percentage
of Net Sales
|
||||||||||||
Wal-Mart
|
$
|
29,709
|
|
|
31.2
|
%
|
|
$
|
18,454
|
|
|
17.4
|
%
|
|
$
|
51,818
|
|
|
31.2
|
%
|
|
$
|
43,211
|
|
|
21.7
|
%
|
Target
|
14,016
|
|
|
14.7
|
|
|
21,532
|
|
|
20.4
|
|
|
26,195
|
|
|
15.8
|
|
|
36,844
|
|
|
18.5
|
|
||||
|
$
|
43,725
|
|
|
45.9
|
%
|
|
$
|
39,986
|
|
|
37.8
|
%
|
|
$
|
78,013
|
|
|
47.0
|
%
|
|
$
|
80,055
|
|
|
40.2
|
%
|
|
June 30,
2019 |
|
December 31,
2018 |
||||
Raw materials
|
$
|
288
|
|
|
$
|
311
|
|
Finished goods
|
53,233
|
|
|
53,569
|
|
||
|
$
|
53,521
|
|
|
$
|
53,880
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||||||||||||||||||
|
Principal/
Fair Value
Amount
|
|
Debt
Issuance
Costs
|
|
Net
Amount
|
|
Principal/
Fair Value
Amount
|
|
Debt
Issuance
Costs
|
|
Net
Amount
|
||||||||||||
4.875% convertible senior notes (due 2020)
|
$
|
113,000
|
|
|
$
|
788
|
|
|
$
|
112,212
|
|
|
$
|
113,000
|
|
|
$
|
1,182
|
|
|
$
|
111,818
|
|
3.25% convertible senior notes (due 2020) *
|
30,503
|
|
|
—
|
|
|
30,503
|
|
|
27,974
|
|
|
—
|
|
|
27,974
|
|
||||||
Total convertible senior notes, net of debt issuance costs
|
$
|
143,503
|
|
|
$
|
788
|
|
|
$
|
142,715
|
|
|
$
|
140,974
|
|
|
$
|
1,182
|
|
|
$
|
139,792
|
|
|
|
Three Months Ended June 30,
|
||||||||||||||||||||
|
|
2019
|
|
2018
|
||||||||||||||||||
|
|
Loss
|
|
Weighted
Average
Shares
|
|
Per-
Share
|
|
Loss
|
|
Weighted
Average
Shares
|
|
Per-
Share
|
||||||||||
Loss per share - basic and diluted
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net loss available to common stockholders
|
|
$
|
(22,542
|
)
|
|
23,600
|
|
|
$
|
(0.96
|
)
|
|
$
|
(18,559
|
)
|
|
23,106
|
|
|
$
|
(0.80
|
)
|
|
|
Six Months Ended June 30,
|
||||||||||||||||||||
|
|
2019
|
|
2018
|
||||||||||||||||||
|
|
Loss
|
|
Weighted
Average
Shares
|
|
Per-
Share
|
|
Loss
|
|
Weighted
Average
Shares
|
|
Per-
Share
|
||||||||||
Loss per share - basic and diluted
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net loss available to common stockholders
|
|
$
|
(51,700
|
)
|
|
23,578
|
|
|
$
|
(2.19
|
)
|
|
$
|
(54,803
|
)
|
|
23,103
|
|
|
$
|
(2.37
|
)
|
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||||||||||||||||||
|
Weighted
Useful
Lives
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
Amount
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
Amount
|
||||||||||||
|
(Years)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Amortized Intangible Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Licenses
|
5.81
|
|
$
|
20,130
|
|
|
$
|
(19,694
|
)
|
|
$
|
436
|
|
|
$
|
20,130
|
|
|
$
|
(19,383
|
)
|
|
$
|
747
|
|
Product lines
|
10.36
|
|
33,858
|
|
|
(19,363
|
)
|
|
14,495
|
|
|
33,858
|
|
|
(17,293
|
)
|
|
16,565
|
|
||||||
Customer relationships
|
4.90
|
|
3,152
|
|
|
(3,152
|
)
|
|
—
|
|
|
3,152
|
|
|
(3,152
|
)
|
|
—
|
|
||||||
Trade names
|
5.00
|
|
3,000
|
|
|
(3,000
|
)
|
|
—
|
|
|
3,000
|
|
|
(3,000
|
)
|
|
—
|
|
||||||
Non-compete agreements
|
5.00
|
|
200
|
|
|
(200
|
)
|
|
—
|
|
|
200
|
|
|
(200
|
)
|
|
—
|
|
||||||
Total amortized intangible assets
|
|
|
$
|
60,340
|
|
|
$
|
(45,409
|
)
|
|
$
|
14,931
|
|
|
$
|
60,340
|
|
|
$
|
(43,028
|
)
|
|
$
|
17,312
|
|
Unamortized Intangible Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Trademarks
|
|
|
$
|
300
|
|
|
$
|
—
|
|
|
$
|
300
|
|
|
$
|
300
|
|
|
$
|
—
|
|
|
$
|
300
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net Loss
|
$
|
(22,485
|
)
|
|
$
|
(18,588
|
)
|
|
$
|
(51,612
|
)
|
|
$
|
(54,781
|
)
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustment
|
(450
|
)
|
|
(1,390
|
)
|
|
853
|
|
|
(340
|
)
|
||||
Comprehensive loss
|
(22,935
|
)
|
|
(19,978
|
)
|
|
(50,759
|
)
|
|
(55,121
|
)
|
||||
Less: Comprehensive income (loss) attributable to non-controlling interests
|
57
|
|
|
(29
|
)
|
|
88
|
|
|
22
|
|
||||
Comprehensive loss attributable to JAKKS Pacific, Inc.
|
$
|
(22,992
|
)
|
|
$
|
(19,949
|
)
|
|
$
|
(50,847
|
)
|
|
$
|
(55,143
|
)
|
|
Restricted Stock Awards
|
|||||
|
Number of Shares
|
|
Weighted Average
Grant Date Fair Value
|
|||
Outstanding, December 31, 2018
|
2,950,782
|
|
|
$
|
2.41
|
|
Awarded
|
328,230
|
|
|
1.47
|
|
|
Released
|
(528,348
|
)
|
|
2.81
|
|
|
Forfeited
|
—
|
|
|
—
|
|
|
Outstanding, June 30, 2019
|
2,750,664
|
|
|
2.22
|
|
|
Restricted Stock Units
|
|||||
|
Number of Shares
|
|
Weighted Average
Grant Date Fair Value
|
|||
Outstanding, December 31, 2018
|
1,052,166
|
|
|
$
|
3.72
|
|
Awarded
|
742,574
|
|
|
0.81
|
|
|
Released
|
(161,486
|
)
|
|
3.80
|
|
|
Forfeited
|
(65,166
|
)
|
|
4.51
|
|
|
Outstanding, June 30, 2019
|
1,568,088
|
|
|
2.30
|
|
Level 1:
|
Valuations for assets and liabilities traded in active markets from readily available pricing sources for market transactions involving identical assets or liabilities.
|
Level 2:
|
Valuations for assets and liabilities traded in less active dealer or broker markets. Valuations are obtained from third-party pricing services for identical or similar assets or liabilities.
|
Level 3:
|
Valuations incorporate certain assumptions and projections in determining the fair value assigned to such assets or liabilities.
|
|
Carrying Amount as of
December 31, 2018 |
|
Fair Value Measurements
As of December 31, 2018 |
||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|||||||||
3.25% convertible senior notes due in 2020
|
$
|
27,974
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
27,974
|
|
|
2019
|
||
Balance at January 1, 2019
|
$
|
27,974
|
|
Change in fair value
|
2,529
|
|
|
Balance at June 30, 2019
|
$
|
30,503
|
|
Year ending December 31,
|
|
|||
2019 (excluding the 6 months ended June 30, 2019)
|
|
$
|
5,756
|
|
2020
|
|
10,905
|
|
|
2021
|
|
10,598
|
|
|
2022
|
|
9,966
|
|
|
2023
|
|
5,499
|
|
|
Thereafter
|
|
773
|
|
|
Total lease payments
|
|
43,497
|
|
|
Less imputed interest
|
|
(4,486
|
)
|
|
Total
|
|
$
|
39,011
|
|
Level 1:
|
Valuations for assets and liabilities traded in active markets from readily available pricing sources for market transactions involving identical assets or liabilities.
|
Level 2:
|
Valuations for assets and liabilities traded in less active dealer or broker markets. Valuations are obtained from third-party pricing services for identical or similar assets or liabilities.
|
Level 3:
|
Valuations incorporate certain assumptions and projections in determining the fair value assigned to such assets or liabilities.
|
|
Carrying Amount as of
June 30, 2019
|
|
Fair Value Measurements
As of June 30, 2019
|
||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|||||||||
3.25% convertible senior notes due in 2020
|
$
|
30,503
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
30,503
|
|
|
Carrying Amount as of
December 31, 2018
|
|
Fair Value Measurements
As of December 31, 2018
|
||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|||||||||
3.25% convertible senior notes due in 2020
|
$
|
27,974
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
27,974
|
|
|
2019
|
||
Balance at January 1, 2019
|
$
|
27,974
|
|
Change in fair value
|
2,529
|
|
|
Balance at June 30, 2019
|
$
|
30,503
|
|
•
|
significant underperformance relative to expected historical or projected future operating results;
|
•
|
significant changes in the manner of our use of the acquired assets or the strategy for our overall business; and
|
•
|
significant negative industry or economic trends.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||
Net sales
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
Cost of sales
|
81.4
|
|
|
73.6
|
|
|
80.7
|
|
|
74.4
|
|
Gross profit
|
18.6
|
|
|
26.4
|
|
|
19.3
|
|
|
25.6
|
|
Selling, general and administrative expenses
|
35.6
|
|
|
37.6
|
|
|
41.6
|
|
|
49.4
|
|
Restructuring charge
|
—
|
|
|
—
|
|
|
0.2
|
|
|
—
|
|
Acquisition related and other
|
2.6
|
|
|
0.3
|
|
|
3.2
|
|
|
0.2
|
|
Loss from operations
|
(19.6
|
)
|
|
(11.5
|
)
|
|
(25.7
|
)
|
|
(24.0
|
)
|
Income from joint ventures
|
—
|
|
|
0.3
|
|
|
—
|
|
|
0.1
|
|
Other income (expense), net
|
(0.3
|
)
|
|
—
|
|
|
(0.1
|
)
|
|
—
|
|
Change in fair value of convertible senior notes
|
(0.1
|
)
|
|
(2.3
|
)
|
|
(1.5
|
)
|
|
(1.7
|
)
|
Interest income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Interest expense
|
(3.0
|
)
|
|
(2.1
|
)
|
|
(3.6
|
)
|
|
(2.1
|
)
|
Loss before provision for (benefit from) income taxes
|
(23.0
|
)
|
|
(15.6
|
)
|
|
(30.9
|
)
|
|
(27.7
|
)
|
Provision for (benefit from) income taxes
|
0.6
|
|
|
2.0
|
|
|
0.2
|
|
|
(0.1
|
)
|
Net loss
|
(23.6
|
)
|
|
(17.6
|
)
|
|
(31.1
|
)
|
|
(27.6
|
)
|
Net income (loss) attributable to non-controlling interests
|
0.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Net loss attributable to JAKKS Pacific, Inc.
|
(23.7
|
)%
|
|
(17.6
|
)%
|
|
(31.1
|
)%
|
|
(27.6
|
)%
|
|
●
|
the phenomenon of children outgrowing toys at younger ages, particularly in favor of interactive and high
technology products;
|
|
●
|
increasing use of technology;
|
|
●
|
shorter life cycles for individual products; and
|
|
●
|
higher consumer expectations for product quality, functionality and value.
|
|
●
|
our current products will continue to be popular with consumers;
|
|
●
|
the products that we introduce will achieve any significant degree of market acceptance;
|
|
●
|
the life cycles of our products will be sufficient to permit us to recover our inventory costs, and licensing, design, manufacturing, marketing and other costs associated with those products; or
|
|
●
|
our inclusion of new technology will result in higher sales or increased profits.
|
|
●
|
Our current licenses require us to pay minimum royalties
|
|
●
|
Some of our licenses are restricted as to use and include other restrictive provisions
|
|
●
|
New licenses are difficult and expensive to obtain
|
|
●
|
A limited number of licensors account for a large portion of our net sales
|
|
●
|
media associated with our character-related and theme-related product lines will be released at the times we expect or will be successful;
|
|
●
|
the success of media associated with our existing character-related and theme-related product lines will result in substantial promotional value to our products;
|
|
●
|
we will be successful in renewing licenses upon expiration of terms that are favorable to us; or
|
|
●
|
we will be successful in obtaining licenses to produce new character-related and theme-related products in the future.
|
|
●
|
greater financial resources;
|
|
●
|
larger sales, marketing and product development departments;
|
|
●
|
stronger name recognition;
|
|
●
|
longer operating histories; and
|
|
●
|
greater economies of scale.
|
|
●
|
currency conversion risks and currency fluctuations;
|
|
●
|
limitations, including taxes, on the repatriation of earnings;
|
|
●
|
political instability, civil unrest and economic instability;
|
|
●
|
greater difficulty enforcing intellectual property rights and weaker laws protecting such rights;
|
|
●
|
complications in complying with laws in varying jurisdictions and changes in governmental policies;
|
|
●
|
greater difficulty and expenses associated with recovering from natural disasters, such as earthquakes,
hurricanes and floods;
|
|
●
|
transportation delays and interruption;
|
|
●
|
work stoppages;
|
|
●
|
the potential imposition of tariffs; and
|
|
●
|
the pricing of intercompany transactions may be challenged by taxing authorities in both foreign jurisdictions
and the United States, with potential increases in income and other taxes.
|
|
●
|
product liability claims;
|
|
●
|
loss of sales;
|
|
●
|
diversion of resources;
|
|
●
|
damage to our reputation;
|
|
●
|
increased warranty and insurance costs; and
|
|
●
|
removal of our products from the market.
|
|
●
|
attractiveness of products;
|
|
●
|
suitability of distribution channels;
|
|
●
|
management ability;
|
|
●
|
financial condition and results of operations; and
|
|
●
|
the degree to which acquired operations can be integrated with our operations.
|
|
●
|
difficulties in integrating acquired businesses or product lines, assimilating new facilities and personnel
and harmonizing diverse business strategies and methods of operation;
|
|
●
|
diversion of management attention from operation of our existing business;
|
|
●
|
loss of key personnel from acquired companies;
|
|
●
|
failure of an acquired business to achieve targeted financial results; and
|
|
●
|
limited capital to finance acquisitions.
|
Number
|
|
Description
|
|
|
|
|
||
|
||
|
||
|
||
|
||
|
||
|
||
101.INS
|
|
XBRL Instance Document
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
(1)
|
Filed previously as Appendix 2 to the Company’s Schedule 14A Proxy Statement filed August 23, 2002 and incorporated herein by reference.
|
|
|
|
|
(2)
|
Filed previously as an exhibit to the Company’s Current Report on Form 8-K filed August 9, 2019 and incorporated herein by reference.
|
|
|
|
|
(3)
|
Filed herewith.
|
|
JAKKS PACIFIC, INC.
|
|
|
|
|
|
|
Date: August 9, 2019
|
By:
|
/s/ Brent Novak
|
|
|
|
Brent Novak
|
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
|
(Duly Authorized Officer and Principal Financial Officer)
|
|
Number
|
|
Description
|
|
|
|
|
||
|
||
|
||
|
||
|
||
|
||
|
||
101.INS
|
|
XBRL Instance Document
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
(1)
|
Filed previously as Appendix 2 to the Company’s Schedule 14A Proxy Statement filed August 23, 2002 and incorporated herein by reference.
|
|
|
|
|
(2)
|
Filed previously as an exhibit to the Company’s Current Report on Form 8-K filed August 9, 2019 and incorporated herein by reference.
|
|
|
|
|
(3)
|
Filed herewith.
|
|
By:
|
/s/ Stephen G. Berman
|
|
|
Stephen G. Berman
|
|
|
Chief Executive Officer
|
|
By:
|
/s/ Brent Novak
|
|
|
Brent Novak
|
|
|
Chief Financial Officer
|
|
/s/ Stephen G. Berman
|
|
Stephen G. Berman
|
|
Chief Executive Officer
|
|
/s/ Brent Novak
|
|
Brent Novak
|
|
Chief Financial Officer
|