Saban Partners with Cirque du Soleil Média
Saban Brands announced a new partnership with Cirque du Soleil Média that has the companies developing an original kids property inspired by the Cirque du Soleil brand. The deal includes a new television series, web content, interactive content, and merchandise.
“At Saban Brands, we are constantly striving to deliver high-quality entertainment brands and experiences. It’s thrilling for us to partner with the creative innovators at Cirque du Soleil Média,” said Elie Dekel, president of Saban Brands. “This new project promises to be a groundbreaking new kids’ property with worldwide appeal and numerous off-screen extensions. We look forward to sharing additional details in the coming months.”
Creative Artists Agency (CAA) brokered the deal with Saban Brands on behalf of its client Cirque du Soleil Média.
Toy Fair 2014 Poster Now Available
This year’s Toy Fair poster, created by Design Edge, is now available for pick up at aNb Media’s booth 601 in the Javits Center. Shown here is this year’s poster.
LeapFrog Reports Q4, 2013 Results
LeapFrog Enterprises, Inc., announced financial results for the fourth quarter and year ended December 31, 2013. Highlights of full-year 2013 results compared to full-year 2012 results as follows:
• Consolidated net sales were $553.6 million, down 5 percent.
• U.S. segment net sales were down 9 percent, while international segment net sales were up 6 percent.
• Net income per diluted share was $1.19, down 4 percent.
• Normalized net income per diluted share, which reflects an effective 37.5 percent tax rate and excludes actual tax benefits and tax expenses, was $0.30, down 46 percent.
• Operating cash flow was $78.9 million, up 16 percent.
• Cash and cash equivalents were $168.1 million as of December 31, 2013, up 40 percent compared to the balance as of December 31, 2012.
“The holiday retail environment was very challenging,” said John Barbour, CEO of LeapFrog. “In the U.S., consumers shopped later expecting better deals and with six fewer days between Thanksgiving and Christmas, consumer demand was compressed in the peak shopping weeks, resulting in a decline in retailers’ ability to keep our key products stocked on shelves. Retailers’ retail price discounting on the LeapPad2 tablet to drive traffic to their stores negatively affected the value proposition of our tablet line including our LeapPad2 Power tablet and our traditionally strong exclusive value-bundle program. Additionally, our handheld gaming business declined significantly as more consumers played games on tablets.”
Financial Overview for Q4:
Fourth quarter 2013 net sales were $186.7 million, down 24 percent compared to $244.7 million last year, and were not materially impacted by changes in currency exchange rates. Net sales declined primarily due to lower sales of the multimedia product line given the very challenging retail, promotional, and competitive environment. In the U.S. segment, net sales were $123.7 million, down 30 percent compared to $177.8 million last year. In the International segment, net sales were $63 million, down 6 percent compared to $67 million last year, and included a 1 percent negative impact from changes in currency exchange rates.
Income from operations for the fourth quarter of 2013 was $1.5 million compared to $43.2 million reported a year ago. Income from operations as a percentage of net sales was 0.8 percent compared to 17.7 percent a year ago.
Net income for the fourth quarter of 2013 was $63.9 million, up 3 percent compared to $62.3 million a year ago. Net income for the fourth quarter of 2013 reflects a $63.6 million net benefit from income taxes including a $62.8 million benefit related to a release of valuation allowance previously set against deferred tax assets, a $0.4 million benefit related to the expiration of statues of limitations in foreign jurisdictions, and a $1.7 million tax adjustment attributable to U.S. operations, partially offset by $1.3 million of tax expenses primarily related to international operations. Net income for the fourth quarter of 2012 reflects a $19.3 million net benefit from income taxes including a $20.3 million benefit due to adjustments related to deferred tax asset valuation allowances, partially offset by $1 million of tax expenses primarily related to international operations.
Net income per diluted share for the fourth quarter of 2013 was $0.90, up 1 percent compared to $0.89 a year ago.
Normalized net income for the fourth quarter of 2013, which reflects an effective 37.5 percent tax rate and excludes actual tax benefits and tax expenses, was $0.2 million compared to $26.8 million a year ago. Normalized net income per diluted share was $0.00 compared to $0.38 a year ago. (The company says it provide normalized net income measures, which are non-GAAP measures, to help investors review the company’s performance and performance trends excluding discrete tax items, which have historically been significant. Adjusted EBITDA for the fourth quarter was $9.9 million, down 80 percent compared to $50.4 million a year ago.)
Financial Overview for the Full Year
Full-year 2013 net sales were $553.6 million, down 5 percent compared to $581.3 million last year, and were not materially impacted by changes in currency exchange rates. Net sales declined primarily due to lower sales of the multimedia product line, led by the decline in handheld gaming systems and their associated content and accessories. Net sales were also impacted by the very challenging retail, promotional, and competitive environment. In the U.S. segment, net sales were $387 million, down 9 percent compared to $424.8 million last year. In the International segment, net sales were $166.6 million, up 6 percent compared to $156.5 million last year, and included a 1 percent negative impact from changes in currency exchange rates.
Income from operations was $34.9 million for the full-year 2013, down 45 percent compared to $64.1 million in 2012. Income from operations as a percentage of net sales was 6.3 percent compared to 11 percent a year ago.
Net income was $84 million for the full-year 2013, down 3 percent compared to $86.5 million in 2012. Net income for the full-year 2013 reflects a $50.2 million net benefit from income taxes, which includes a $62.8 million benefit related to a release of valuation allowance previously set against deferred tax assets and a $0.7 million benefit related to the expiration of statues of limitations in foreign jurisdictions, partially offset by $10.5 million of tax expenses attributable to U.S. operations, which were excluded in the prior year due to the full valuation allowance recorded against the company’s domestic deferred tax assets, and $2.8 million of tax expenses primarily related to international operations. Net income for the full-year 2012 reflects a $24.5 million net benefit from income taxes which includes $20.3 million benefit due to adjustments to deferred tax asset valuation allowance and a $6.4 million benefit related to the expiration of statues of limitations in foreign jurisdictions, partially offset by $2.2 million of tax expenses primarily related to international operations.
Net income per diluted share for the full-year 2013 was $1.19, down 4 percent compared to $1.24 in 2012.
Normalized net income for the full-year 2013, which reflects an effective 37.5 percent tax rate and excludes actual tax benefits and tax expenses, was $21.2 million, down 45 percent compared to $38.7 million a year ago.
Normalized net income per diluted share for the full-year 2013 was $0.30, down 46 percent compared to $0.56 a year ago.
Adjusted EBITDA for the full-year 2013 was $65.8 million, down 29 percent compared to $93.1 million a year ago.
Share Repurchase Program
The board of directors has approved a stock repurchase program authorizing LeapFrog to repurchase up to an aggregate of $30 million of its common stock through December 31, 2014. LeapFrog currently have approximately 70 million outstanding shares of common stock.
Guidance
“In 2014, we plan to continue to invest in our business to expand our product portfolio, extend our reach internationally, better connect with consumers, and improve our business processes,” says Ray Arthur, CFO. “Some of these investments are substantial, such as our investments in an improved web experience and new information technology systems. As a result, these investments will reduce our profitability in 2014 but position us for growth in the years ahead. We believe these investments we are making today will help us strengthen our leadership in educational entertainment around the world and provide long-term sales, earnings, and cash flow growth, which will drive shareholder value.”
For the full-year 2014, LeapFrog expects:
• Net sales to be in a range of $554 million to $580 million compared to $554 million in 2013.
• Net income per diluted share to be in the range of $0.18 to $0.25. For the full-year 2013, net income per diluted share was $1.19 and normalized net income per diluted share was $0.30.
• Capital expenditures to be in the range of $35 million to $45 million, compared to $35 million in 2013, as it makes long-term, strategic investments in the business, particularly in information technology systems. Capital expenditures include purchases of property and equipment and capitalization of product costs.