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Chaotic folds as trading card games deal 4Kids a bad hand
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Chaotic folds as trading card games deal 4Kids a bad hand


Chaotic folds as trading card games deal 4Kids a bad hand

Five or ten years ago, 4Kids was riding high. The Fox Box was a premiere showcase for toons like Sonic the Hedgehog, Teenage Mutant Ninja Turtles, Viva Pinata, Yu-Gi-Oh!, and Pokemon. More importantly, the company was dominating in the field of trading card games. At the height of TCGs, recess across the globe was owned by gauntlets of cards, with kids showing whose monster or dragon or beast or bot was superior. Today, 4Kids is a different story, with financial woes, a new program block called Toonzai, and a mighty blow to the TCG empire with the loss of TC Digital Games. 4Kids was majority owner of TCD which, along with TC Websites, was a major factor in the Chaotic line. With those pieces gone, the Chaotic brand is essentially all but dead – certainly bad news for animation and TCG fans. Check out the detailed press release

4Kids Entertainment, Inc. /quotes/comstock/11i!kide (KIDE 0.45, +0.02, +4.65%) , the global children’s entertainment and merchandise licensing company, today announced financial results for the third quarter ended September 30, 2010.

Net revenues for the three months ended September 30, 2010 totaled $3.0 million, compared to $5.3 million for the same period in 2009. The Company’s net loss for the three months ended September 30, 2010 attributable to 4Kids Entertainment was $(9.8) million, or $(0.73) per diluted share (consisting of a net loss from continuing operations attributable to 4Kids Entertainment of $(8.4) million, or $(0.63) per diluted share and a net loss from discontinued operations attributable to 4Kids Entertainment of $(1.4) million, or $(0.10) per diluted share) as compared to a net loss for the three months ended September 30, 2009 of $(5.0) million, or $(0.37) per diluted share (consisting of a net loss from continuing operations attributable to 4Kids Entertainment of $(3.3) million, or $(0.25) per diluted share and a net loss from discontinued operations attributable to 4Kids Entertainment of $(1.7) million, or $(0.12) per diluted share).

For the nine months ended September 30, 2010, net revenues totaled $9.7 million, compared to $18.0 million for the same period in 2009. The Company’s net loss attributable to 4Kids Entertainment for the nine months ended September 30, 2010 was $(19.8) million, or $(1.47) per diluted share (consisting of a net loss from continuing operations attributable to
4Kids Entertainment of $(17.4) million, or $(1.29) per diluted share and a net loss from discontinued operations attributable to 4Kids Entertainment of $(2.4) million, or $(0.18) per diluted share), as compared to a net loss of $(20.8) million, or $(1.56) per diluted share for the nine months ended September 30, 2009 (consisting of a net loss from continuing operations attributable to 4Kids Entertainment of $(14.7) million, or $(1.11) per diluted share and a net loss from discontinued operations attributable to 4Kids Entertainment of $(6.1) million, or $(0.45) per diluted share).

As of September 30, 2010, the Company had approximately $4.0 million in cash and $10.9 million in investment securities at their fair market value.

As previously announced, the Company is continuing to explore its strategic alternatives. The Special Committee of the Board of Directors consisting of the Company’s four independent directors is presently in ongoing discussions with several companies which may be interested in investing in 4Kids or acquiring all or a portion of the Company’s business. There can be no assurance that any transaction will result from these discussions.

“4Kids had another tough quarter as the Company continues its efforts to rationalize its cost structure, rebuild revenues and execute its turnaround plan,” said Alfred R. Kahn, Chairman and Chief Executive Officer, 4Kids Entertainment. “Despite the reported third quarter losses of $(.73) per share, the cash burn in the third quarter was approximately $700,000.

“At the end of the third quarter, we discontinued the business operations of our majority-owned trading card subsidiary, TC Digital Games LLC, and our majority-owned Website company, TC Websites LLC, recording substantial write-offs in our financial statements. The cessation of the Chaotic related businesses should save approximately $1 million per quarter. In addition, the closing of the Chaotic business enables the Company to focus its resources on the Company’s core merchandise licensing business,” said Kahn.

“On September 18, 2010, we launched the new season of our five-hour Saturday morning block on The CW Network, which is called ‘Toonzai on CW 4Kids.’ Our network lineup includes new episodes of such leading Japanese animated series as Yu-Gi-Oh! 5D’s and Dragon Ball Z Kai, as well as longtime favorites such as Sonic X, Dinosaur King and classic Yu-Gi-Oh! We also launched our new online video player called ‘Toonzaki’ in the third quarter, which we are hopeful will attract additional Internet advertising revenues,” concluded Kahn.

About 4Kids Entertainment, Inc.

With U.S. headquarters in New York City, and international offices in London, 4Kids Entertainment, Inc. /quotes/comstock/11i!kide (KIDE 0.45, +0.02, +4.65%) is a global organization devoted to the creation, development, production, broadcasting, distribution, licensing and manufacturing of children’s entertainment products.

Through its subsidiaries, 4Kids produces animated television series and films, distributes 4Kids’ produced or licensed animated television series for the domestic and international television and home video markets, licenses merchandising rights worldwide to 4Kids’ owned or represented properties, operates Websites to support 4Kids’ owned or represented properties. Additionally, the Company programs and sells the national advertising time in “TheCW4Kids” five-hour Saturday morning block on The CW television network.

Additional information is available on the www.4KidsEntertainment.com corporate Website and at the www.4Kids.tv game station site.

The information contained in this press release, 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 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 could cause actual results to differ materially from the Company’s expectations.

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