4Kids loss widens in Q1

CEO confident that development initiatives undertaken will be a main growth driver for next several years.
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4Kids Entertainment has reported a net loss for the first quarter ending March 31st 2008 of $6.4 million, as compared to a net loss of $0.2 million for the first quarter of 2007.

Net revenues for the quarter totaled $15.0 million, compared to $14.9 million in the same period in 2007.

Revenue included $2.4 million from the sale of Chaotic trading cards, which were rolled out to major retailers across the US and Canada throughout the quarter.

The firm's financial position was negatively affected by conditions in the market for auction rate securities (ARS). During the first three months of 2008, 4Kids recorded a reduction in its equity of $9.2 million due to the decline in market value of its portfolio of ARS.

At March 31st, the firm continued to hold ARS with a market value of approx $39.0 million.

"Our first quarter results reflect the continued investment in the development of our new initiatives, including a year-over-year increase of $3.6 million in selling, general and administrative expense and costs associated with our Chaotic trading card game and website subsidiaries, as well as decreased licensing revenues from some of our more established properties," said Alfred Kahn, chairman and CEO at 4Kids.

"We believe that the development initiatives undertaken over the last several quarters will be a main growth driver for the next several years."

Kahn said that he was pleased with the "traction" being gained by Chaotic at retail in the US, while the brand was also growing in popularity online. More than 15 million cards have been registered online and there has been over one million unique visitors to the game site.

Kahn also revealed that 4Kids will be introduce some new properties at next month's Licensing International expo.


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