Unassociated Document
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
FORM 10-Q
 
 
(Mark one)                                                                                        
x          QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2009

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
  
95-4527222
(State or Other Jurisdiction of Incorporation or Organization)
  
(I.R.S. Employer Identification No.)

22619 Pacific Coast Highway
Malibu, California
  
90265
(Address of Principal Executive Offices)
  
(Zip Code)

Registrant’s Telephone Number, Including Area Code: (310) 456-7799
 
 
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  x No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes  o No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,”  “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):  
Large accelerated filer
x
  
Accelerated filer
o
  
Non-accelerated filer
¨
(Do not check if a smaller
reporting company)
  
Smaller reporting company
¨
  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ¨ No x
 
  
The number of shares outstanding of the issuer’s common stock is 27,905,994 as of November 6, 2009.

 
 

JAKKS PACIFIC, INC. AND SUBSIDIARIES

INDEX TO QUARTERLY REPORT ON FORM 10-Q
Quarter Ended September 30, 2009

ITEMS IN FORM 10-Q
 
     
Page
       
Part I
FINANCIAL INFORMATION
    
Item 1.
Financial Statements
    
 
Condensed Consolidated Balance Sheets - December 31, 2008 and September 30, 2009 (unaudited)
  
2
 
Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2008 and 2009 (unaudited)
  
3
 
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2008 and 2009 (unaudited)
  
4
 
Notes to Condensed Consolidated Financial Statements (unaudited)
  
5
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
  
21
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
  
32
Item 4.
Controls and Procedures
  
32
       
Part II
OTHER INFORMATION
    
Item 1.
Legal Proceedings
  
33
Item 1A.
Risk Factors
  
36
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
  
None
Item 3.
Defaults Upon Senior Securities
  
None
Item 4.
Submission of Matters to a Vote of Security Holders
  
43
Item 5.
Other Information
  
None
Item 6.
Exhibits
  
44
       
Signatures      
    
45
Exhibit 31.1
      
Exhibit 31.2
      
Exhibit 31.3
      
Exhibit 32.1
      
Exhibit 32.2
      
Exhibit 32.3  
      

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

This report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. For example, statements included in this report regarding our financial position, business strategy and other plans and objectives for future operations, and assumptions and predictions about future product demand, supply, manufacturing, costs, marketing and pricing factors are all forward-looking statements. When we use words like “intend,” “anticipate,” “believe,” “estimate,” “plan”, “expect” or words of similar import, we are making forward-looking statements. We believe that the assumptions and expectations reflected in such forward-looking statements are reasonable and are based on information available to us on the date hereof, but we cannot assure you that these assumptions and expectations will prove to have been correct or that we will take any action that we may presently be planning. We are not undertaking to publicly update or revise any forward-looking statement if we obtain new information or upon the occurrence of future events or otherwise.

 
1
 

JAKKS PACIFIC, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
 
   
December 31,
2008
    
September 30,
2009
  
   
(*)
    
(Unaudited)
  
ASSETS
              
Current assets
              
Cash and cash equivalents
  
$
169,520
    
$
153,795
  
Marketable securities
    
195
      
201
  
Accounts receivable, net of allowances for uncollectible accounts of $2,005 and $2,599, respectively
    
147,587
      
251,631
  
Inventory
    
87,944
      
71,145
  
Prepaid expenses and other current assets
    
29,670
      
22,826
  
Income tax receivable
    
22,288
      
26,823
  
Deferred income taxes
    
17,993
      
83,884
  
Total current assets
    
475,197
      
610,305
  
Property and equipment
                
Office furniture and equipment
    
12,390
      
13,035
  
Molds and tooling
    
63,075
      
65,438
  
Leasehold improvements
    
5,947
      
7,383
  
Total
    
81,412
      
85,856
  
Less accumulated depreciation and amortization
    
52,914
      
60,117
  
Property and equipment, net
    
28,498
      
25,739
  
Investment in video game joint venture
    
53,184
      
527
  
Goodwill, net
    
427,693
      
—
  
Trademarks, net
    
10,491
      
2,308
  
Intangibles and other, net
    
33,061
      
42,727
  
Total assets
  
$
1,028,124
    
$
681,606
  
LIABILITIES AND STOCKHOLDERS’ EQUITY
                
Current liabilities
                
Accounts payable
  
$
57,432
    
$
91,307
  
Accrued expenses
    
61,780
      
62,793
  
Reserve for sales returns and allowances
    
23,317
      
35,503
  
Capital lease obligation
    
417
      
246
  
Income taxes payable
    
7,190
      
—
  
Convertible senior notes
    
—
      
98,000
  
Total current liabilities
    
150,136
      
287,849
  
Deferred income taxes
    
26,237
      
17,135
  
Income tax payable
    
4,686
      
4,686
  
Other liabilities
    
2,112
      
6,732
  
Convertible senior notes
    
98,000
      
—
  
Total liabilities
    
281,171
      
316,402
  
Stockholders’ equity
                
Preferred stock, $.001 par value; 5,000,000 shares authorized; nil outstanding
    
—
      
—
  
Common stock, $.001 par value; 100,000,000 shares authorized; 27,521,278 and 27,908,711 shares issued and outstanding, respectively
    
28
      
28
  
Additional paid-in capital
    
292,809
      
294,711
  
Retained earnings
    
458,345
      
74,693
  
Accumulated comprehensive loss
    
(4,229
)
    
(4,228
)
Total stockholders’ equity
    
746,953
      
365,204
  
Total liabilities and stockholders’ equity
  
$
1,028,124
    
$
681,606
  
 
 
(*)       Derived from audited financial statements

See notes to condensed consolidated financial statements.

 
2
 
 
JAKKS PACIFIC, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)

   
Three Months Ended
September 30,
(Unaudited)
    
Nine Months Ended
September 30,
(Unaudited)
  
  
  
2008
    
2009
    
2008
    
2009
  
  
  
As Adjusted
(Note 13)
          
As Adjusted
(Note 13)
        
Net sales
  
$
357,824
    
$
351,438
    
$
634,050
    
$
604,932
  
 Cost of sales
    
231,145
      
235,729
      
405,949
      
458,318
  
Gross profit
    
126,679
      
115,709
      
228,101
      
146,614
  
Selling, general and administrative expenses
    
62,651
      
63,363
      
157,476
      
171,673
  
Write-down of intangible assets
    
9,076
      
—
      
9,076
      
8,221
  
Write-down of goodwill
    
—
      
—
      
—
      
407,125
  
Income (loss) from operations
    
54,952
      
52,346
      
61,549
      
(440,405
)
Profit (loss) from video game joint venture
    
743
      
(1,919
)
    
4,470
      
(21,924
)
Interest Income
    
709
      
28
      
2,802
      
277
  
Interest Expense, net of benefit
    
2,013
      
(1,267
) 
    
(1,187
)
    
(3,800
)
Income (loss) before provision (benefit) for income taxes
    
58,417
      
49,188
      
67,634
      
(465,852
)
Provision (benefit) for income taxes
    
5,879
      
15,480
      
8,737
      
(82,200
)
Net income (loss)
  
$
52,538
    
$
33,708
    
$
58,897
    
$
(383,652
)
Earnings (loss) per share – basic
  
$
1.95
    
$
1.24
    
$
2.14
    
$
(14.11
)
Earnings (loss) per share – diluted
  
$
1.65
    
$
1.06
    
$
1.87
    
$
(14.11
)
 
 
See notes to condensed consolidated financial statements.

 
3
 

JAKKS PACIFIC, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
 
   
Nine Months Ended
September 30,
(Unaudited)
  
   
2008
    
2009
  
   
As Adjusted
(Note 13)
        
CASH FLOWS FROM OPERATING ACTIVITIES  
                
Net income (loss)
  
$
58,897
    
$
(383,652
)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
                
Depreciation and amortization
    
19,670
      
27,026
  
Share-based compensation expense
    
6,026
      
3,302
  
(Profit) loss from video game joint venture
    
(4,801
)
    
52,403
  
Loss on disposal of property and equipment
    
51
      
2,377
  
Deferred income taxes
    
504
      
(74,993
)
Write-down of intangible assets
    
9,076
      
8,221
  
Write-down of goodwill
    
—
      
407,125
  
Changes in operating assets and liabilities:
                
Accounts receivable
    
(55,555
) 
    
(104,044
) 
Inventory
    
(35,342
)
    
14,160
  
Prepaid expenses and other current assets
    
(11,749
)
    
7,146
  
Income tax receivable
    
—
      
(4,535
)
Accounts payable
    
59,314
      
33,876
  
Accrued expenses
    
1,530
      
13,361
  
Income taxes payable
    
(20,832
)
    
(7,190
)
Reserve for sales returns and allowances
    
(8,555
)
    
12,186
  
Other liabilities
    
(4,380
) 
    
4,620
  
Total adjustments
    
(45,043
)
    
395,041
  
Net cash provided by operating activities
    
13,854
      
11,389
  
CASH FLOWS FROM INVESTING ACTIVITIES
                
Purchase of property and equipment
    
(17,608
)
    
(16,160
)
Change in other assets
    
143
      
2,876
  
Cash paid for net assets of business acquired
    
(15,193
)
    
(12,253
)
Net purchase of marketable securities
    
(5
)
    
(6
)
Net cash used in investing activities
    
(32,663
)
    
(25,543
)
CASH FLOWS FROM FINANCING ACTIVITIES
                
Net proceeds from stock options exercised
    
4,030
      
—
  
Common stock surrendered
    
(3,070
)
    
(1,400
)
Common stock repurchased
    
(30,002
)
    
—
  
Repayment of capital lease obligation
    
—
      
(171
) 
Net cash used in financing activities
    
(29,042
)
    
(1,571
)
Effect of exchange rate changes on cash
    
(792
)
    
—
  
Net decrease in cash and cash equivalents
    
(48,643
)
    
(15,725
)
Cash and cash equivalents, beginning of period
    
241,250
      
169,520
  
Cash and cash equivalents, end of period
  
$
192,607
    
$
153,795
  
                 
Cash paid during the period for:
                
Income taxes
  
$
31,719
    
$
4,875
  
Interest
  
$
2,342
    
$
2,825
  

Non cash investing and financing activity:

In January and March 2008, two executive officers surrendered an aggregate of 122,202 shares of restricted stock at a value of $3.0 million to cover their income taxes due on the 2008 vesting of restricted shares granted to them in 2006, 2007 and 2008. This restricted stock was subsequently retired by the Company.

In January 2009, two executive officers surrendered an aggregate of 74,836 shares of restricted stock at a value of $1.4 million to cover their income taxes due on the 2009 vesting of restricted shares granted to them in 2007 and 2008. This restricted stock was subsequently retired by the Company.  Also in January 2009, an employee surrendered 551 shares of restricted stock at a value of $11,367 to cover his income taxes due on the December 31, 2008 vested shares.  In August 2009, certain employees surrendered an aggregate of 920 shares of restricted stock at a value of $10,608 to cover their income taxes due on the 2009 vesting of the restricted shares granted to them in 2006.

See Notes 8 and 9 for additional supplemental information to the condensed consolidated statements of cash flows.

See notes to condensed consolidated financial statements.

 
4
 

JAKKS PACIFIC, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
September 30, 2009

Note 1 — Basis of Presentation

The accompanying unaudited interim condensed consolidated financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations. However, the Company believes that the disclosures are adequate to prevent the information presented from being misleading. These financial statements should be read in conjunction with Management’s Discussion and Analysis of financial condition and results of operations and the financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K, which contains audited financial information for the three years in the period ended December 31, 2008.

The information provided in this report reflects all adjustments (consisting solely of normal recurring items) that are, in the opinion of management, necessary to present fairly the financial position and the results of operations for the periods presented. Interim results are not necessarily indicative of results to be expected for a full year.

Certain reclassifications have been made to prior year balances in order to conform to the current year presentation.

The condensed consolidated financial statements include the accounts of JAKKS Pacific, Inc. and its wholly-owned subsidiaries (collectively “the Company”).

Note 2 — Business Segments, Geographic Data, Sales by Product Group, and Major Customers

The Company is a worldwide producer and marketer of children’s toys and other consumer products, principally engaged in the design, development, production, marketing and distribution of its diverse portfolio. The Company’s reportable segments are Traditional Toys, Craft/Activity/Writing Products, and Pet Products, each of which includes worldwide sales.

The Traditional Toys segment includes action figures, vehicles, playsets, plush products, dolls, accessories, pretend play products including Halloween costumes and accessories, dress-up costumes and accessories, electronic products, novelty toys, collectibles, construction toys, compounds, infant and pre-school toys, water toys, kites, and related products.

Craft/Activity/Writing Products include do-it-yourself kits, pens, pencils, stationery products, crayons, markers, paints, and other related craft and activity products.

Pet Products include pet toys, treats, apparel and related pet products.

Segment performance is measured at the operating income level. All sales are made to external customers, and general corporate expenses have been attributed to the various segments based on sales volumes. Segment assets are comprised of accounts receivable and inventories, net of applicable reserves and allowances, goodwill and other assets.

 
5
 

JAKKS PACIFIC, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 2 — Business Segments, Geographic Data, Sales by Product Group, and Major Customers - (continued)

Results are not necessarily those that would be achieved were each segment an unaffiliated business enterprise. Information by segment and a reconciliation to reported amounts as of December 31, 2008 and September 30, 2009 and for the three and nine months ended September 30, 2008 and 2009 are as follows (in thousands):

   
Three Months Ended
September 30,
    
Nine Months Ended 
September  30,
  
   
2008
    
2009
    
2008
    
2009
  
Net Sales
                        
Traditional Toys
  
$
332,395
    
$
324,092
    
$
583,040
    
$
548,142
  
Craft/Activity/Writing Products
    
20,616
      
23,787
      
37,274
      
46,165
  
Pet Products
    
4,813
      
3,559
      
13,736
      
10,625
  
   
$
357,824
    
$
351,438
    
$
634,050
    
$
604,932
  
 
   
Three Months Ended
September 30,
    
Nine Months Ended
September 30,
  
  
  
2008
As Adjusted
(Note 13)
    
2009
    
2008
As Adjusted
(Note 13)
    
2009
  
Operating Income (Loss)
                        
Traditional Toys
  
$
50,877
    
 $
48,273
    
$
57,009
    
$
(341,451
)
Craft/Activity/Writing Products
    
3,304
      
3,543
      
3,667
      
(87,469
)
Pet Products
    
771
      
530
      
873
      
(11,485
)
   
$
54,952
    
 $
52,346
    
$
61,549
    
$
(440,405
)

   
Three Months Ended
September 30,
    
Nine Months Ended 
September 30,
  
  
  
2008
As Adjusted
(Note 13)
    
2009
    
2008 As
Adjusted
(Note 13)
    
2009
  
Depreciation and Amortization Expense
                        
Traditional Toys
  
$
9,010
    
$
14,133
    
$
18,665
    
 $
24,577
  
Craft/Activity/Writing Products
    
351
      
1,247
      
844
      
1,998
  
Pet Products
    
26
      
229
      
161
      
451
  
   
$
9,387
    
$
15,609
    
$
19,670
    
$
27,026
  
 
   
December 31,
    
September 30,
  
   
2008
    
2009
  
Assets
            
Traditional Toys
  
$
877,606
    
$
633,147
  
Craft/Activity/Writing Products
    
128,036
      
40,245
  
Pet Products
    
22,482
      
8,214
  
   
$
1,028,124
    
$
681,606
  
 
 
6
 

JAKKS PACIFIC, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 2 — Business Segments, Geographic Data, Sales by Product Group, and Major Customers - (continued)

The following tables present information about the Company by geographic area as of December 31, 2008 and September 30, 2009 and for the three and nine months ended September 30, 2008 and 2009 (in thousands):
  
   
December 31,
2008
    
September 30,
2009
  
Long-lived Assets
            
United States
   $ 26,179     $ 23,350  
Hong Kong
     2,319       2,389  
    $ 28,498     $ 25,739  

   
Three Months Ended
September 30,
    
Nine Months Ended 
September 30,
  
   
2008
    
2009
    
2008
    
2009
  
Net Sales by Geographic Area
                        
United States
  
$
280,523
    
$
288,320
    
$
500,775
      
499,199
  
Europe
    
22,383
      
16,473
      
38,825
      
28,761
  
Canada
    
19,495
      
15,732
      
28,783
      
25,700
  
Hong Kong
    
15,835
      
18,193
      
32,435
      
27,732
  
Other
    
19,588
      
12,720
      
33,232
      
23,540
  
   
$
357,824
    
$
351,438
    
$
634,050
    
$
604,932
  
 
Major Customers

Net sales to major customers for the three and nine months ended September 30, 2008 and 2009 were as follows (in thousands, except for percentages):

   
Three Months Ended September 30,
    
Nine Months Ended September 30,
  
   
2008
    
2009
    
2008
    
2009
  
  
  
Amount
    
Percentage of
Net Sales
    
Amount
    
Percentage of
Net Sales
    
Amount
    
Percentage of 
Net Sales
    
Amount
    
Percentage
of
Net Sales
  
                                                                 
Wal-Mart
  
$
90,733
      
25.4
%  
  
$
93,521
      
26.6
%  
  
$
171,670
      
27.0
%  
  
$
152,074
      
25.1
%
Toys ‘R’ Us 
    
50,612
      
14.1
      
39,111
      
11.1
      
72,933
      
11.5
      
64,945
      
10.7
  
Target
    
29,617
      
8.3
      
50,956
      
14.5
      
75,234
      
11.9
      
100,888
      
16.7
  
                                                                 
   
$
170,962
      
47.8
%
  
$
183,588
      
52.2
%
  
$
319,837
      
50.4
%
  
$
317,907
      
52.5
%

No other customer accounted for more than 10% of the Company’s total net sales.

At December 31, 2008 and September 30, 2009, the Company’s three largest customers accounted for approximately 74.0% and 49.8%, respectively, of net accounts receivable. The concentration of the Company’s business with a relatively small number of customers may expose the Company to material adverse effects if one or more of its large customers were to experience financial difficulty. The Company performs ongoing credit evaluations of its top customers and maintains an allowance for potential credit losses.

 
7
 

JAKKS PACIFIC, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 3 — Inventory

Inventory, which includes the ex-factory cost of goods, in-bound freight, duty and warehouse costs, is stated at the lower of cost (first-in, first-out) or market and consists of the following (in thousands):
 
   
December 31,
2008
    
September 30,
2009
  
             
Raw materials
  
$
3,778
    
$
6,035
  
Finished goods
    
  84,166
      
65,110
  
   
$
87,944
    
$
71,145
  

Note 4 — Revenue Recognition and Reserve for Sales Returns and Allowances

Revenue is recognized upon the shipment of goods to customers or their agents, depending on terms, provided that there are no uncertainties regarding customer acceptance, the sales price is fixed or determinable, and collectability is reasonably assured and not contingent upon resale.

Generally, the Company does not allow for product returns. It provides a negotiated allowance for breakage or defects to its customers, which is recorded when the related revenue is recognized. However, the Company does make occasional exceptions to this policy and consequently accrues a return allowance in gross sales based on historic return amounts and management estimates. The Company also will occasionally grant credits to facilitate markdowns and sales of slow moving merchandise. These credits are recorded as a reduction of gross sales at the time of occurrence.

The Company also participates in cooperative advertising arrangements with some customers, whereby it allows a discount from invoiced product amounts in exchange for customer purchased advertising that features the Company’s products. Typically, these discounts range from 1% to 6% of gross sales, and are generally based on product purchases or on specific advertising campaigns. Such amounts are accrued when the related revenue is recognized or when the advertising campaign is initiated. These cooperative advertising arrangements are accounted for as direct selling expenses.

The Company’s reserve for sales returns and allowances amounted to $23.3 million as of December 31, 2008, compared to $35.5 million as of September 30, 2009. This increase was primarily due to additional allowances booked for returns and markdowns for certain products and the timing of when deductions are taken by customers.

Note 5 — Convertible Senior Notes

In June 2003, the Company sold an aggregate of $98.0 million of 4.625% Convertible Senior Notes due June 15, 2023 and received net proceeds of approximately $94.4 million. The notes are convertible into shares of the Company’s common stock at an initial conversion price of $20.00 per share, or 50 shares per note, subject to certain circumstances. The notes may be converted in each quarter subsequent to any quarter in which the closing price of the Company’s common stock is at or above a prescribed price for at least 20 trading days in the last 30 trading day period of the quarter. The prescribed price for the conversion trigger is $24.00 through June 30, 2010, and increases nominally each quarter thereafter. Cash interest is payable at an annual rate of 4.625% of the principal amount at issuance, from the issue date to June 15, 2010, payable on June 15 and December 15 of each year. After June 15, 2010, interest will accrue on the outstanding notes until maturity. At maturity, the Company will redeem the notes at their accreted principal amount, which will be equal to $1,811.95 (181.195%) per $1,000 principal amount at issuance, unless redeemed or converted earlier. The notes were not convertible as of September 30, 2009 and are not convertible during the fourth quarter of 2009.

 
8
 

JAKKS PACIFIC, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 5 — Convertible Senior Notes (continued)

The Company may redeem the notes at its option in whole or in part beginning on June 15, 2010, at 100% of their accreted principal amount plus accrued and unpaid interest, if any, payable in cash. Holders of the notes may also require the Company to repurchase all or part of their notes on June 15, 2010, for cash, at a repurchase price of 100% of the principal amount per note plus accrued and unpaid interest, if any.  Accordingly, the notes have been reclassified as a short-term liability as of September 30, 2009.  Holders of the notes may also require the Company to repurchase all or part of their notes on June 15, 2013 and June 15, 2018 at a repurchase price of 100% of the accreted principal amount per note plus accrued and unpaid interest, if any, and may be paid in cash, in shares of common stock or a combination of cash and shares of common stock. See Note 17 – Subsequent Events for additional information on the Company’s convertible senior notes.

  Note 6 — Income Taxes

The Company’s income tax benefit, which includes federal, state and foreign income taxes, and discrete items, was $82.2 million, or an effective tax benefit rate of 17.6% for the nine months ended September 30, 2009. During the comparable period in 2008, the income tax provision was $8.7 million, or an effective tax provision rate of 12.9%.  

In 2009, the impairment of goodwill and trademarks, totaling $64.5 million, the THQ/Jakks joint venture settlement of $9.1 million, and uncertain tax positions, were reductions to the tax benefit rate realized.    Exclusive of the discrete items, the third quarter 2009 effective tax benefit rate would be 57.4%. In 2008, the discrete adjustments were mainly the 2007 income tax provision to the actual income tax liability of $4.0 million, and the recognition of a previously recorded potential income tax liability of $9.3 million for uncertain tax positions that are no longer subject to audit due to the closure of the audit period.  Exclusive of the discrete items, the third quarter 2008 effective tax provision rate would be 35.4%.

As of September 30, 2009, the Company had net deferred tax assets of approximately $66.7 million for which an allowance of $3.6 million has been provided since, in the opinion of management, realization of the future benefit is uncertain.
 
Approximately $2.1 million of United States based and $0.8 million of Hong Kong based unrecognized tax positions (UTPs) were recognized in the quarter ended September 30, 2009. These UTPs are primarily a result of the ongoing audits.  The Company has also recognized an additional liability of $1.1 million for penalties and $0.5 million for interest on the potential tax liability.  The tax years 2000 through 2006 are still subject to examination in Hong Kong. Tax years 2003 and 2005 through 2008 are still subject to examination in the United States and tax years 2005 through 2008 are still subject to examination in California.

Current interest on previously booked uncertain income tax liabilities is recognized as interest expense in the consolidated statement of operations. During the nine months ended September 30, 2009, the Company recognized $0.4 million of current year interest expense.

 
9
 

JAKKS PACIFIC, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 7 — Earnings Per Share

The following table is a reconciliation of the weighted average shares used in the computation of basic and diluted earnings per share for the periods presented (in thousands, except per share data):
 
   
Three Months Ended September 30,
  
  
  
2008 As Adjusted (Note 13)
  
  
2009
  
  
  
Income
  
  
Weighted
Average
Shares
  
  
Per-Share
  
  
Income /
(Loss)
  
  
Weighted
Average
Shares
  
  
Per-Share
  
                                     
Earnings per share - basic
                                    
Income available to common stockholders
  
$
52,538
      
26,981
    
$
1.95
    
$
33,708
      
27,183
    
$
1.24
  
Effect of dilutive securities:
                                                
Convertible senior notes
    
737
      
4,900
              
  737
      
4,900
          
Options and warrants
    
  —
      
119
              
—
      
14
          
Unvested restricted stock grants
    
  —
      
257
              
—
      
408
          
Earnings per share - diluted
                                                
Income available to common stockholders plus assumed exercises and conversion
  
$
53,275
      
32,257
    
$
1.65
    
$
34,445
      
32,505
    
$
1.06
  
 
   
Nine Months Ended September 30,
  
  
  
2008 As Adjusted (Note 13)
    
2009
  
  
  
Income
    
Weighted
Average
Shares
    
Per-Share
    
Income /
(Loss)
    
Weighted
Average
Shares
    
Per-Share
  
                                     
Earnings (loss) per share - basic
                                    
Income available to common stockholders
  
$
58,897
      
27,465
    
$
2.14
    
$
(383,652
)
    
27,193
    
$
(14.11
)
Effect of dilutive securities:
                                                
Convertible senior notes
    
2,210
      
4,900
              
—
      
—
          
Options and warrants
    
—
      
161
              
—
      
—
          
Unvested restricted stock grants
    
—
      
202
              
—
      
—
          
Earnings (loss) per share - diluted
                                                
Income available to common stockholders plus assumed exercises and conversion
  
$
61,107
      
32,728
    
$
1.87
    
$
(383,652
)
    
27,193
    
$
(14.11
)

 
10
 

JAKKS PACIFIC, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 7 — Earnings Per Share (continued)

Basic earnings per share has been computed using the weighted average number of common shares outstanding. Diluted earnings per share has been computed using the weighted average number of common shares and common share equivalents outstanding (which consist of warrants, options and convertible debt to the extent they are dilutive). For the nine months ended September 30, 2009, the convertible notes interest and related common share equivalent of 4,900,000, diluted options and warrants of 26,121 and unvested restricted stock grants outstanding of 352,315 were excluded from the diluted earnings per share calculation because they were anti-dilutive.  Potentially dilutive stock options of 12,250 and 439,792 for the three months ended September 30, 2008 and 2009, respectively, were excluded from the computation of diluted earning per share as the average market price of the Company’s common stock did not exceed the weighted average exercise price of such options and to have included them would have been anti-dilutive.  Potentially dilutive stock options of 3,257 and 397,780 for the nine months ended September 30, 2008 and 2009, respectively, were excluded from the computation of diluted earning per share as the average market price of the Company’s common stock did not exceed the weighted average exercise price of such options and to have included them would have been anti-dilutive.

Note 8 — Common Stock and Preferred Stock

The Company has 105,000,000 authorized shares of stock consisting of 100,000,000 shares of $.001 par value common stock and 5,000,000 shares of $.001 par value preferred stock.

In January 2009, the Company issued an aggregate of 240,000 shares of restricted stock at an aggregate value of approximately $5.0 million to two of its executive officers, which vest, subject to certain Company financial performance criteria,  in January 2010, an aggregate of 30,340 shares of restricted stock to its five non-employee directors, which vest in January 2010, at an aggregate value of approximately $0.6 million, and an aggregate of 206,500 shares of restricted stock to its employees at an aggregate value of approximately $3.8 million, which vest over a three to five-year period. Additionally, 74,836 shares of restricted stock previously received by two executive officers were surrendered at a value of $1.4 million to cover their income taxes due on the 2009 vesting of the restricted stock granted to them in 2007 and 2008.  This restricted stock was subsequently retired by the Company.  Also, in January 2009, an employee surrendered 551 shares of restricted stock at a value of $11,367 to cover his income taxes due on the December 31, 2008 vested shares.  In February 2009, the Company issued 3,000 shares of restricted stock at a value of approximately $0.05 million to an employee, which vest over a five-year period. In June 2009, the Company issued 2,500 shares of restricted stock at a value of approximately $0.03 million to an employee, which vest over a five-year period.  In August 2009, certain employees surrendered an aggregate of 920 shares of restricted stock at a value of $10,608 to cover their income taxes due on the 2009 vesting of the restricted shares granted to them in 2006.

In January 2008, the Company issued an aggregate of 240,000 shares of restricted stock at an aggregate value of approximately $5.7 million to two of its executive officers, which vested 50% in each of January 2009 and 2010 and an aggregate of 25,340 shares of restricted stock to its five non-employee directors, which vested in January 2009, at an aggregate value of approximately $0.6 million. In February 2008, the Company issued an aggregate of 41,134 shares of restricted stock as 2007 bonus compensation to two of its executive officers, which vested immediately, at an aggregate value of approximately $1.0 million. In February 2008, the Company issued 3,593 shares of restricted stock as 2007 bonus compensation at a value of approximately $0.1 million to an executive officer, which vests 50% on each of March 1, 2009 and 2010. During the nine months ended June 30, 2008, the Company also issued 208,871 shares of common stock on the exercise of options at a value of $2.8 million, and 122,202 shares of restricted stock previously received by two executive officers were surrendered at a value of $3.0 million to cover their income taxes due on the 2008 vesting of the restricted shares granted to them in 2006, 2007 and 2008. This surrendered restricted stock was subsequently retired by the Company. In February 2008, the Company’s Board of Directors authorized it to repurchase up to $30.0 million of its common stock. In April and May 2008, the Company repurchased an aggregate of 1,259,300 shares of its common stock at an average price of $23.82 per share for a total cost of $30.0 million. The repurchased stock represented approximately 4.4% of the Company’s then outstanding shares of common stock at the time of the repurchase and was subsequently retired by the Company.  In July 2008, the Company issued 7,500 shares of restricted stock at a value of $0.2 million to an employee, which vests 15% on July 1, 2008, 15% on each of December 2008 and 2009, 25% on December 31, 2010, and 30% on December 2011. This employee surrendered 489 shares at a value of $10,484 to cover his income taxes due on the July 1, 2008 vested shares. In August 2008, certain employees surrendered an aggregate of 2,299 shares of restricted stock at a value of $54,854 to cover their income taxes due on the 2008 vesting of the restricted shares granted to them in 2006.

 All issuances of common stock, including those issued pursuant to stock option and warrant exercises, restricted stock grants and acquisitions, are issued from the Company’s authorized but not issued and outstanding shares.

 
11
 

JAKKS PACIFIC, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 9 — Business Combinations

The Company acquired the following entities to further enhance its existing product lines and to continue diversification into other toy categories and seasonal businesses:

In October 2008, the Company acquired substantially all of the assets of Tollytots Limited.  The total initial consideration of $25.7 million consisted of $12.0 million in cash and the assumption of liabilities in the amount of $13.7 million, and resulted in goodwill of $3.1 million. In addition, the Company agreed to pay an earn-out of up to an aggregate amount of $5.0 million in cash over the three calendar years following the acquisition based on the achievement of certain financial performance criteria, which will be recorded as goodwill when and if earned.  Tollytots is a leading designer and producer of licensed baby dolls and baby doll pretend play accessories based on well-known brands, and was included in its results of operations from the date of acquisition.  Pro forma results of operations are not provided since the amounts are not material to the consolidated results of operations.

In October 2008, the Company acquired all of the stock of Kids Only, Inc. and a related Hong Kong company, Kids Only Limited (collectively, “Kids Only”).  The total initial consideration of $23.3 million consisted of $20.4 million in cash and the assumption of liabilities in the amount of $2.9 million, and resulted in goodwill of $12.7 million. In addition, the Company agreed to pay an earn-out of up to an aggregate amount of $5.6 million in cash over the three calendar years following the acquisition based on the achievement of certain financial performance criteria, which will be recorded as goodwill when and if earned.  Kids Only is a leading designer and producer of licensed indoor and outdoor kids’ furniture, and has an extensive portfolio which also includes baby dolls and accessories, room décor and a myriad of other children’s toy products, and was included in its results of operations from the date of acquisition.  Pro forma results of operations are not provided since the amounts are not material to the consolidated results of operations.

In December 2008, the Company acquired certain assets of Disguise, Inc. and a related Hong Kong company, Disguise Limited (collectively, “Disguise”).  The total initial consideration of $60.6 million consisted of $38.6 million in cash and the assumption of liabilities in the amount of $22.0 million, and resulted in goodwill of $30.6 million. The Company has not finalized its purchase price allocation for Disguise and has engaged a third party to perform studies and valuations of the estimated fair value of assets and liabilities assumed.  Disguise is a leading designer and producer of Halloween and everyday costume play and was included in our results of operations from the date of acquisition.  Pro forma results of operations are not provided since the amounts are not material to the consolidated results of operations.

Refer to Note 11 for information on the write-down of goodwill.

Note 10 — Joint Venture

The Company owns a fifty percent interest in a joint venture with THQ Inc. (“THQ”) which develops, publishes and distributes interactive entertainment software for the leading hardware game platforms in the home video game market. The joint venture has entered into a license agreement with an initial license period expiring December 31, 2009 and a renewal period at the option of the joint venture expiring December 31, 2014 under which it acquired the exclusive worldwide right to publish video games based on the WWE franchise on all hardware platforms. The Company’s investment is accounted for using the cost method due to the financial and operating structure of the venture and its lack of significant influence over the joint venture. The Company’s basis consists primarily of organizational costs, license costs and recoupable advances and is being amortized over the term of the initial license period. The joint venture agreement provides for the Company to receive guaranteed preferred returns through June 30, 2006 at varying rates of the joint venture’s net sales depending on the cumulative unit sales and platform of each particular game. The preferred return is accrued in the quarter in which the licensed games are sold and the preferred return is earned.  The preferred return was subject to change after June 30, 2006 and was to be set for the distribution period beginning July 1, 2006 and ending December 31, 2009 (the “Next Distribution Period”). The agreement provides that the parties will negotiate in good faith and agree to the preferred return not less than 180 days prior to the start of the Next Distribution Period. It further provides that if the parties are unable to agree on a preferred return, the preferred return will be determined by arbitration. The parties did not reach an agreement with respect to the preferred return for the Next Distribution Period and the preferred return for the Next Distribution Period was determined through arbitration (see Note 16).  On July 24, 2009 a decision was rendered by the arbitrator setting the preferred return rate at 6 %.  Based on this lower rate, a cumulative adjustment in the amount of $23.5 million was made and $33.5 million was paid by THQ for the cumulative preferred return for the period from July 1, 2006 to June 30, 2009. As of December 31, 2008 and September 30, 2009, the balance of the investment in the video game joint venture includes the following components (in thousands):
 
 
12
 

JAKKS PACIFIC, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 10 — Joint Venture (continued)

   
December 31,
    
September 30,
  
   
2008
    
2009
  
Preferred return receivable
  
$
52,845
    
$
442
  
Investment costs, net
    
339
      
85
  
   
$
53,184
    
$
527
  

The Company’s joint venture partner retains the financial risk of the joint venture and is responsible for the day-to-day operations, including development, sales and distribution, for which they are entitled to any remaining profits. During the three months ended September 30, 2008 and 2009, the Company earned a profit of $0.7 million and incurred a loss of $1.9 million, respectively, from the joint venture.  During the nine months ended September 30, 2008 and 2009, the Company earned a profit of $4.5 million and incurred a loss of $21.9 million, respectively, from the joint venture.  The losses in 2009 were due to the reduction from approximately $56.2 million to approximately $32.7 million in the accrual of the receivable from the joint venture that resulted from the arbitration setting the preferred return rate at 6%, instead of the 10% rate that had been accrued.

Note 11 — Goodwill

The changes in the carrying amount of goodwill for the nine months ended September 30, 2009 are as follows (in thousands):

  
  
Traditional
Toys
  
  
Craft/Activity/
Writing Products
  
  
Pet
Products
  
Total
  
Balance at beginning of the period
  
$
335,083
    
$
82,826
    
$
9,784
    
$
427,693
  
Adjustments to goodwill during the period
    
(20,568
)
    
—
      
—
      
(20,568
)
Write-down of goodwill
    
(314,515
)
    
(82,826
)
    
(9,784
)
    
(407,125
)
Balance at end of the period
  
$
—
    
$
—
    
$
—
    
$
—
  

As of June 30, 2009, the Company reclassified $21.0 million from goodwill to intangibles and other assets for its Disguise acquisition.  The Company is in the process of finalizing its purchase price allocation for its Disguise Acquisition and is working with a third party to perform studies and valuations to the estimated fair value of assets and liabilities assumed.  Furthermore, the Company paid out an additional working capital adjustment of $0.9 million for its Disguise acquisition.
 
The Company applies a fair value-based impairment test to the net book value of goodwill and indefinite-lived intangible assets on an annual basis and, if certain events or circumstances indicate that an impairment loss may have been incurred, on an interim basis. The analysis of potential impairment of goodwill requires a two-step process. The first step is the estimation of fair value. If step one indicates that an impairment potentially exists, the second step is performed to measure the amount of impairment, if any. Goodwill impairment exists when the estimated fair value of goodwill is less than its carrying value.
 
As of June 30, 2009, the Company determined that the significant decline in its market capitalization is likely to be sustained.   The Company’s market capitalization was not significantly affected by the dismissals subject to appeal of the WWE lawsuit, and the lower revenue expectations for 2009 versus 2008 were factors that indicated that an interim goodwill impairment test was required. As a result, the Company determined that $407.1 million, or all of the goodwill related to previous acquisitions, including the acquisition of Disguise in December 2008, was impaired. This amount is included in “Write-down of Goodwill” in the accompanying condensed consolidated statements of operations.

 
13
 
 
JAKKS PACIFIC, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 
Note 12 — Intangible Assets Other Than Goodwill

Intangible assets consist primarily of licenses, product lines, customer relationships, debt offering costs from the issuance of the Company’s convertible senior notes and trademarks. Amortized intangible assets are included in the Intangibles and other, net, in the accompanying balance sheets. Trademarks are disclosed separately in the accompanying balance sheets. Intangible assets are as follows (in thousands, except for weighted useful lives):
 
         
December 31, 2008
  
  
September 30, 2009
  
  
  
Weighted
Useful
Lives
  
  
Gross
Carrying
Amount
  
  
Accumulated
Amortization
  
  
Net
Amount
  
  
Gross
Carrying
Amount
  
  
Accumulated
Amortization
  
  
Net
Amount
  
   
(Years)
                                      
                                           
Amortized Intangible Assets:
  
 
          
 
    
 
    
 
    
 
    
 
  
Acquired order backlog
    
0.50
    
$
2,393
    
$
(2,165
)
  
$
228
    
$
2,393
    
$
(2,393
)
  
$
—
  
Licenses
    
4.84
      
67,088
      
(46,638
)
    
20,450
      
85,788
      
(55,090
)
    
30,698
  
Product lines
    
3.62
      
17,700
      
(17,700
)
    
—
      
19,100
      
(18,267
)
    
833
  
Customer relationships
    
5.33
      
4,096
      
(2,301
)
    
1,795
      
6,796
      
(3,258
)
    
3,538
  
Non-compete/Employment contracts
    
4.56
      
2,748
      
(2,703
)
    
45
      
3,133
      
(2,789
)
    
344
  
Debt offering costs
    
20.00
      
3,705
      
(1,033
)
    
2,672
      
3,705
      
(1,172
)
    
2,533
  
Total amortized intangible assets
            
97,730
      
(72,540
)
    
25,190
      
120,915
      
(82,969
)
    
37,946
  
Unamortized Intangible Assets:
                                                        
Trademarks
  
indefinite
      
10,491
      
—
      
10,491
      
2,308
      
—
      
2,308
  
           
$
108,221
    
$
(72,540
)
  
$
35,681
    
$
123,223
    
$
(82,969
)
  
$
40,254
  

Amortization expense related to limited life intangible assets was $2.1 million and $6.5 million for the three months ended September 30, 2008 and 2009, respectively.  Amortization expense related to limited life intangible assets was $6.4 million and $10.4 million for the nine months ended September 30, 2008 and 2009, respectively.

During the third quarter of 2008, the Company discontinued the use of the “Toymax” and “Trendmaster” tradenames on products and market these products under the JAKKS Pacific trademark. Consequently, the intangible assets associated with these tradenames were written off to Write-down of Intangible Assets, resulting in a charge of $3.5 million. Also, the Company adjusted the value of the Child Guidance trademark to reflect lower sales expectations for this tradename, resulting in a charge to Write-down of Intangible Assets of $5.6 million.

As of June 30, 2009, the Company determined that the tradenames “Child Guidance” and “Play Along” and certain tradenames associated with its Craft and Activity product lines would either be discontinued, or were under-performing.   Consequently, the intangible assets associated with these tradenames were written off to “Write-down of Intangible Assets,” resulting in a non-cash charge of $8.2 million.

Note 13 — Property and Equipment

Property and equipment have historically been stated at cost and are being depreciated using the straight-line method over their estimated useful lives as follows:

Office equipment
5 years
Automobiles
5 years
Furniture and fixtures
5 - 7 years
Molds and tooling
2  years
Leasehold improvements
Shorter of length of lease or 10 years

 
14
 
 
JAKKS PACIFIC, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 13 — Property and Equipment (continued)

Effective January 1, 2009, the Company changed its depreciation methodology for molds and tools used in the manufacturing of its products from a straight-line basis to a usage basis, which is more closely correlated to production of goods.  While both methods of depreciation allocation are acceptable, the Company believes that the usage method more accurately matches costs with revenues.  Furthermore, the useful estimated life of molds and tools was maintained at two years.  The following financial statement line items for the three and nine months ended September 30, 2008 were affected by the change in accounting principle:

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
 
   
Three Months Ended
September 30, 2008
    
Nine Months Ended
September 30, 2008
  
  
  
As
Computed
under
usage
method
    
As
Reported
under
Straight-
line method
    
Effect of
Change
    
As
Computed
under
usage
method
    
As
Reported
under
Straight-
line method
    
Effect of
Change
  
Net sales
  
$
357,824
    
$
357,824
    
$
—
    
$
634,050
    
$
634,050
    
$
—
  
Cost of sales
    
231,145
      
228,759
      
2,386
      
405,949
      
405,486
      
463
  
Gross Margin
  
$
126,679
    
$
129,065
    
$
(2,386
)
  
$
228,101
    
$
228,564
    
$
(463
)
Income from operations
  
$
54,952
    
$
57,338
    
$
(2,386
)
  
$
61,549
    
$
62,012
    
$
(463
)
Income before provision for income taxes
  
$
58,417
    
$
60,803
    
$
(2,386
)
  
$
67,634
    
$
68,097
    
$
(463
)
Provision for income taxes
    
5,879
      
6,658
      
(779
)
    
8,737
      
8,919
      
(182
)
Net income
  
$
52,538
    
$
54,145
    
$
(1,607
)
  
$
58,897
    
$
59,178
    
$
(281
)
Earnings per share – basic
  
$
1.95
    
$
2.01
    
$
(0.06
)
  
$
2.14
    
$
2.15
    
$
(0.01
)
Earnings per share - diluted
  
$
1.65
    
$
1.70
    
$
(0.05
)
  
$
1.87
    
$
1.88
    
$
(0.01
)
 
15
 
JAKKS PACIFIC, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 13 — Property and Equipment (continued)

CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)

   
As of September 30, 2008
  
  
  
As
Computed
under
usage
method
  
  
As
Reported
under
Straight-
line method
  
  
Effect of
Change
  
Property and Equipment
                        
Office furniture and equipment
  
$
10,953
    
$
10,953
    
$
—
  
Molds and tooling
    
59,293
      
59,293
      
—
  
Leasehold improvements
    
5,298
      
5,298
      
—
  
Total
    
75,544
      
75,544
      
—
  
Less accumulated depreciation and amortization
    
49,364
      
48,901
      
463
  
Property and equipment, net
  
$
26,180
    
 $
26,643
    
$
(463
) 
Income taxes payable
  
$
1,164
    
$
1,346
    
$
(182
)
Retained earnings
  
$
441,185
    
$
441,466
    
$
(281
) 

As a result of the accounting method change, there was a minimal cumulative effect to the Company’s retained earnings as of January 1, 2009.

 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

   
Nine Months Ended
September 30, 2008
  
  
  
As
Computed
under usage
method
  
  
As
Reported
under
Straight-
line method
  
  
Effect of
Change
  
Cash flow provided in operations
  
$
13,854
    
$
13,854
    
$
—
  
Cash Flow items impacted by change:
                        
Net income
    
58,897
      
59,178
      
(281
) 
Depreciation and amortization
    
19,670
      
19,207
      
463
  
Income tax payable
    
(20,832
)
    
(20,650
)
    
(182
) 
Total adjustments
    
57,735
      
57,735
      
—
  
Net cash provided by operating activities
    
13,854
      
13,854