Executives
Garth Russell – IR, KCSA Strategic Communications
Bruce Foster – EVP and CFO
Al Kahn – Chairman and CEO
4Kids Entertainment, Inc. (KDE) Q4 2009 Earnings Call March 16, 2010 9:00 AM ET
Operator
Good morning. My name is Kristy, and I will be your conference operator today. At this time, I would like to welcome everyone to the 4Kids Entertainment fourth quarter 2009 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks there will be a question-and-answer session.
(Operator Instructions) I would now like to turn the call over to Garth Russell of KCSA Strategic Communications. Please go ahead, sir.
Garth Russell
Thank you and good morning, everyone. Welcome to 4Kids Entertainment Fourth quarter and yearend 2009 conference call. Before we begin, I must state that the information contained in this conference call 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 and 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 that could cause actual results to differ materially from the company’s expectations.
At this time, I would like to now turn the call over to Bruce Foster, Chief Financial Officer of 4Kids Entertainment. Bruce, the floor is yours.
Bruce Foster
Thanks, Garth and good morning. I’d like to spend a few minutes reviewing with you the company’s fourth quarter of ‘09 financial results. Revenues by reportable segment for the company as a whole were as follows.
In the licensing segment revenue for the quarter ended 12/31/09 was approximately $12.8 million as compared to $4.4 million in the same period in ’08, an increase of approximately $8.4 million. Revenue for the year ended 12/31/09 was approximately $24.1 million, as compared to $7.1 million for the same period in ’08, an increase of approximately $7 million.
These increased revenues were permanently attributable to a one-time payment of 9.8 million received in consideration of the company’s agreement to terminate its right to service the merchandising licensing agent for the Teenage Mutant Ninja Turtles property, prior to the scheduled expiration of the rep agreement with the Mirage Group in 2012 as well as increased revenues attributable to the Monster Jam property domestically, approximately 0.7 million, partially offset by decreased licensing revenue on the TMNT, Wings Club and Shaman King properties worldwide of approximately 1.7, 0.5 and 0.4 million respectively.
In the advertising, media and broadcast segment, revenue for the quarter ended 12/31/09 was approximately 1.4 million, as compared to 6 million for the same period in ’08, a decrease of approximately 4.6 million. Revenue for the year ended 12/31/09 was approximately 2.8 million, as compared to 16.4 million for the same period in ’08, a decrease of approximately 13.6 million.
This decrease in revenues for 2009 compared with 2008 primarily results from the different accounting treatments with regard to advertising revenue under our agreement with the CW as compared with the accounting treatment for advertising revenue received on the agreement that the company had with Fox. Under the CW network agreement, the CW’s minimum guaranteed revenue share for the CW4Kids is offset against the company of network advertising revenues.
Under the accounting treatment for the Fox agreement, the company recorded the full amount of the advertising revenue received with respect to advertising sales on Fox, well at the same time amortizing of Fox broadcast fee as an expense rather than as an offset to network advertising revenue.
For the year ended 12/31/09, the company recognized 0.5 million of net advertising revenue attributable to the CW as compared to ’08 where the company recognized 0.4 million of advertising revenue attributable to the CW. Additionally in ’08, the company recorded $13.4 million of net advertising revenue attributable to Fox in 60 million of the Fox Broadcast fee for 4Kids TV which was amortized and classified as an expense rather as an offset in network advertising revenue.
In the television and film production and distribution segment, revenue of the quarter ended 12/31/09 was approximately $2 million as compared to $2.4 million for the same period in ’08, a decrease of approximately $0.4 million. Revenue for the year ended 12/31/09 was approximately $7.3 million as compared to $8.4 million for the same period in ’08, a decrease of approximately $1.1 million.
This decrease in revenue for ’09 as compared to ’08 was primarily attributable to decreased international broadcast sales from the Viva Piñata TMNT and Yu-Gi-Oh! Television Series of approximately $1.5 million and $0.5 million respectively, as well as decreased contract revenue from the Viva Piñata television series of approximately $0.6 million partially offset by increased international broadcast sales from the Dinosaur King television series of approximately $0.8 million.
An accounting change. The company has re-assessed the reimbursements of its production cost under representation contracts which no longer record these amounts -- and will no long record these amounts as revenue with a corresponding charge to production service cost.
In accordance with authoritative guidance issued by the FASB, the Company has retroactively adjusted revenue and production service costs for all periods presented. The company considered the qualitative aspect of these adjustments as well as the impact on the company’s operating losses and earnings per share calculations and terming that no further restatement of the company’s consolidated financial statements is necessitated by this accounting change as there was no effect on earnings or earning per share for the period.
In the trading card and game distribution segment, revenue for the quarter ended 12/31/09 remained relatively consistent approximately 0.8 million compared to 0.6 million for the same period in ’08. Revenue for the year ended 21/31/09 was approximately was $2.6 million as compared to $15.3 million for the same period in ’08, a decrease of approximately $12.7 million. The trading card game and distribution segment began to record significant revenues in ’08 as a result of the launch of the Chaotic Trading Card game to retail and mass market distribution.
For the year ended 12/31/09, retail sales were negatively impacted by diminished popularity of the Chaotic property accompanied by the continued global economic downturn. As a result, many retailers maintained reduced inventory levels and the company’s trading card and game distribution segment was negatively impacted by the result in cutback by the company’s distributors on orders placed with T.C. D Digital.
These reductions resulted in the company recording lower revenues and higher inventory levels for the year ended 12/31/09. Additionally, due to the overall lack of demand for the Chaotic property the company has granted allowance and promotional markdown fees for distributors equal to approximately $2.3 million for the year ended 12/31/09.
On a consolidated basis, net revenue for the fourth quarter of ’09 was approximately $17 million as compared to $12.8 million in ’08, an increase of approximately $4.2 million. On a consolidated basis, net revenue for the year ended 12/31/09 was approximately $36.7 million as compared to $57.2 million in ’08, a decrease of approximately $20.4 million.
Now turning to the expense side, selling, general and administrative expenses decreased approximately 3.1 million to approximately 16.5 million for the quarter ended 12/31/09 when compared to the same period in '08. Selling, general and administrative expenses decreased approximately $6.4 million to approximately $48.2 million for the year ended 12/31/09 when compared to the same period in '08.
The decrease was attributable to broad cost cutting initiatives implemented throughout the company and included decreased personnel related costs of approximately 3.1 million; decreased advertising and marketing costs of approximately $2.2 million; decreased international selling expenses of approximately 1 million, decreased travel and entertainment costs of approximately $0.9 million, and decreased website cost of approximately 0.7 million. Additionally in '09, the company recorded non-recurring severance expenses of approximately 2.4 million for terminated employees.
Cost of sales of trading cards represents finished goods inventory costs relating to the Chaotic trading card game. Cost of sales decreased approximately 2.5 million to 8.2 million for the year ended 12/31/09 when compared to the same period in '08. The decrease was primarily attributable to the overall decrease in trading card revenue.
Based on the diminished popularity of the Chaotic property, the company trading card game and distribution segment experienced a reduction in orders from T.C. Digital distributors. These reduced sales caused an overall surplus of trading card inventory, forcing the company to record significant reserve on the slower moving inventory of approximately 3.8 million based on the value of expected future trading card sales.
Amortization of film and television costs for the quarter ended 12/31/09 were approximately $17.8 million as compared to 2.4 million in ’08, an increase of approximately $15.4 million. Amortization of film and television costs for the year ended 12/31/09 were approximately $21.5 million compared to $7.7 million in ’08, an increase of approximately $13.8 million.
The increase in amortization of television and film costs for the year ended 12/31/09 as compared to the same period in ’08 is primarily due to increased amortization relating to the Chaotic television series based on significant reduction of estimated future revenues.
In addition, increased amortization was recorded for the TMNT property to an increase in revenue from a one-time payment to the company related to the termination of the company's right to serve as the merchandising licensing agent for the property prior to the scheduled expiration of the rep agreement in 2012.
Due to the termination of the Fox agreement on 12/31/08, the 4Kids TV broadcast fee has been fully amortized. The minimum guarantee obligations under the CW agreement are offset against the company’s revenue to the sales networking advertising time on the CW 4Kids rather than being amortized as a broadcast fee.
During the fourth quarter of '09, the company recorded approximately $20.2 million of charges to reduce the carrying value of certain Chaotic assets based on their revised estimated fair values. Such amounts include a reduction of the company’s film inventory of approximately $12.6 million through amortization based on a change in the overall expected future revenues for the property, including approximately $6.9 million owed to the company by CUSA and Apex collectively for their share production cost for television episodes of the Chaotic property under their rep agreement with 4Kids Entertainment.
A reduction of the company’s trading card inventory of approximately $3.8 million based on the value expected from future trading card sales an impairment charge with respect to the company’s investment T.C. Digital International Limited of approximately $2.4 million to reflect the decreased value of the non-performing international joint venture of the Chaotic trading card business and an impairment charge of $1.3 million relating to decreased value of the international subsidiaries investment and the percentage of domestic care trading card sales.
Interest income decreased to $1.6 million to $1.1 million for the year ended 12/31/09, as compared to the same period in ’08, primarily as a result of lower cash balances and the company’s investments yielding lower interest rates in the prior period.
Impairment of the investment securities. As of 12/31/09, the company held investment securities having an accurate principal aggregate principal amount of approximately $35.6 million. The estimated fair market value of the investment securities held by company had declined by approximately $21.4 million, a decrease of approximately $22.1 million prior to '09 with in increase of value of approximately $0.8 million during '09, to approximately $14.2 million based upon an analysis of the current market conditions of the company’s securities made by the company in accordance with authoritative guidance issued by the FASB.
The company has included in '09 an approximately $6.2 million of the decline in the fair value of the investment securities held by the company were now other than temporarily impaired. The company’s determination ascertain of this long-term investments for other than temporary impaired were based on the fact that two of the company’s securities with an aggregate value per value of $8.7 million were sold subsequent to 12/31/09 for approximately $2.6 million resulting in a permanent impairment of their value and certain of the company’s other ARS fees to pay interest according to their stated terms and an underlying bond insurance of such securities elected to exercise their foot right against the trust thereby changing the investment credit collateral in the trust with preferred stock.
Accordingly during '09, the company recorded an impairment for approximately $6.2 million, a non-operating expense related to these securities, which the company had previously reported as other than temporary impairment of approximately $13.2 million in ’08.
During ’09, the company sold securities at a par value of approximately 11.4 million for approximately 3.7 million, in closing the company record a loss on the sale of investment securities of approximately 7.6 million.
The net tax benefit of approximately 3.8 million for the year ended 12/31/09 reflected a current tax benefit related to the utilization of the company’s net operating loss carrybacks. The net tax provision for the year ended 12/31/08 reflected a deferred tax expense of approximately 0.3 million related to taxable income from the company’s foreign subsidiary. As a result of the above, the company had a net loss for the quarter and year ended 12/31/09 of approximately 21.3 million and 42 million respectively, compared to a net loss of approximately 19.6 million and 36.8 million for the same periods in ’08.
Loss per share on a fully diluted basis was $1.59 and 3.16 per share for the quarter and year ended 12/31/09 respectively, as compared to a loss of $1.48 and $2.79 per share for the same periods in ’08. Diluted shares were approximately 13.3 million for the year ended 12/31/09 and approximately 13.2 million in ’08.
Now turning to the balance sheet, as of 12/31/09, the company’s cash and cash equivalents as well as its long-term investment balance was approximately 17.8 million. Of that total amount, the company had approximately 35.6 million in auction rate securities, which had been written down to approximately 14.2 million.
The decrease in cash and cash equivalents of approximately 9.9 million during the year was primarily attributable to the decrease in the company’s business performance as well as additional costs related to the purchase of film and television inventory, property equipment, partially offset by increased collections of the company’s accounts receivable and proceeds from the sale of certain company’s investment securities.
Based on the company’s projected cash flows, current cash and cash equivalents and its overall cash position, the company expects to have adequate liquidity to fund its day-to-day operations through 2010. Working capital consisting of current assets and current liabilities was approximately 4.8 million as of 12/31/09 as compared to approximately 17.6 million as of 12/31/08.
And now I’d like to turn the call over to our CEO and Chairman, Mr. Al Kahn.
Al Kahn
Thank you, Bruce. I guess there is no really covering up that this has been a hideous year for 4Kids and for our shareholders and for our employees. Let me talk about what we are doing, to not only ride this ship but bring 4Kids back to the glory days over the last 20 years.
Remember, the 20 years prior to the launch of Chaotic, 4Kids had been a very successful licensing and merchandizing company, was specialized in two major frames of business, taking Japanese properties and broadcasting and merchandizing them, and also taking toy based properties such as Cabbage Patch Kids and Ninja Turtles and making them into household brands and not only were successful with children but also created very much revenue opportunities for you and for the company.
Given the enormous upside after retaining all the success over the last 20 years, the company built up a cash balance of over $110 million and we brought -- and we had that cash balance being managed by Lehman Brothers which we assume was being very conservatively invested. And then given the upside in the successful trading card business, I thought that they were prudent business decision was to launch of Chaotic Trading Card game and companion website a few years ago.
As I mentioned, at the end of the year 2006 when the decision was made to Greenlight Chaotic 4Kids and over $110 million in cash on the balance sheet, and again we thought that the amount that we've risked on Chaotic would by no means put the company in a jeopardy should Chaotic not perform to the levels that was expected.
As I’ve said before, if I had known that the Chaotic cited the company’s rock solid balance sheet, which means that dollars of cash was at risk due to Lehman Brothers I would not have invested in the Chaotic property or certainly would have invested a tremendous amount less than we currently did.
The first part of the year was extremely difficult as we along with other companies struggled to get through this stupid economic downturn over the last 50 years. Mid year we tried to re-launch the Chaotic property hoping that the increased exposure of the Chaotic television series on Cartoon Network and greater economic stability would increase trading card sales, and some initial encouraging months of sales increases ultimately sales of the Chaotic Trading Card game failed to approach the sales volume we experienced during the first three quarters in '08 before the recession hit.
We therefore decided to take some very painful and costly write-offs in the fourth quarter related to the Chaotic property totaling $20.2 million including a reduction in the company’s Chaotic film inventory of $12.6 million and additional Chaotic trading card inventory reserve of $3.8 and an additional charge of $3.7 million related to international joint venture from the sale of Chaotic Trading Cards.
The business reverses in the past few years have caused 4Kids to basically return to the very successfully business model that was used for 20 years prior to the launch of Chaotic. We have decided that 4Kids needs to return to its roots as a licensing and merchandising company and specializes in bringing wonderful Japanese programming and merchandizing to the rest of the world and to toy driven successes that we have currently been known for, and in building up for-site licensing on non-toy, non-kid licensing entity.
As parcels [ph] return to basics business model, we’ll be doing very little of any costly original production of animated series, for the license broadcast and merchandise rights to successful already produced Japanese content. If the content is not already dubbed into English, we’ll then adapt the episodes into English. Since the rights fees and adaptation costs in these original produced animated television series are far below the cost of original production, we feel that our overall risk reward ratio is much more favorable.
Over the last months – last actual year and half, I’ve spend much time with our Japanese partners and in Japan and Hong Kong formulating as we turn to the model that made us one of the most successful and fastest growing licensing and – basically companies in the United States.
Many of our most successful properties over the years fall within this model. For example, 4Kids adapted Japanese TV series, such as (inaudible) into English. 4Kids had successfully licensed merchandising rights and television broadcast rights of these series, both in the US and internationally. We paid rights fees and shouldered the English language adaption course for these series, but our investment was ultimately much less than the cost of funding original production.
Unfortunately for the last three years, we devoted a substantial amount of resources in management time to Chaotic and to managing the company during the financial crisis. With the Chaotic property receding in importance, we are again focusing on restocking the 4Kids pipeline with new properties, some of them not based on original television productions broadcast by 4Kids.
We also are doing more properties based on toy development and applying that creative skills and experience to make new concepts successful. For instance, we’re updating and reimagining some proven older concepts with engaging play patterns, like the Quiz, which is a huge hit in the 90s and with a doll line which originally came out in the early 90s and we are in the process of relicensing and expecting it offers on the toy line in the forthcoming weeks.
We’ve also made some very tough decisions, which were necessary to right size the business. Our headcount in December 2008 was 223 employees. Our current headcount today is 111, we have reduced our workforce by over 50%. We have challenged our staff to do more with less, and I am pleased to report that our people have responded favorably to the challenge. 4Kids in 2010 is a much smaller company with a much smaller expense base. We expect in total 4Kids overhead in 2010 not to exceed $25 million inclusive of amortization costs previously incurred. We believe that the 4Kids overhead for 2010 will be roughly in line with best base case expected 2010 revenues.
I will also like to respond to rumors that we’ve heard regarding the company’s finances. I am pleased to report that the company’s balance sheet as of March 15, 2010 reflects over $20 million in cash and securities. The December 31, ’09 balance sheet reflects 3.6 million in cash and cash equivalence of $4 million income tax receivable due to a tax refunds from the Federal Government and a $14.2 million of long-term investments representing the midpoint value assessed by the third party appraiser Houlihan Smith of our auction rate securities as of December 31, 2009.
Since December 31, 2009, we have collected $3.5 million of the $4 million of the tax refund. We have received $2.6 million on the sale of some of the auction rate securities, which were tendered by the issuers and collected some in the fourth quarter accounts receivable.
As of March 15, 2010, we have $10.7 million in cash, about $4 million in bonds and $8 million in auction rate securities using the mid-value range of Houlihan Smith. While there is still accounts receivables to be collected and accounts payables and liabilities to be discharged we believe that our liquidity is sufficient to run the company, promote our current properties, invest in new properties and generally build the business of 4Kids.
It’s interesting to note I think that we have no debt. The company is fully liquid and that the return to our business model with a decreased expense base will be very, very positive as we continue forward. 4Kids has emerged from a perfect storm, a smaller leaner and more focused company. I am extraordinarily excited about our prospects in 2010 going forward. We have cleaned up a substantial number of problems and can now focus on the future of this company.
Let me again just briefly review the fourth quarter and 2009. As I mentioned in November 2009 third quarter earnings conference call regard to licensing, the owner of the Teenage Mutant Ninja Turtles property, our client, decided to sell the property to Nickelodeon. Although, we had three years left in our Teenage Ninja Turtles property representation we told Mirage that we would work with them to make the deal Nickelodeon.
We said to Mirage that in addition to receiving compensation or present value of the royalty income we’ll be giving up by virtually a deal, we also wanted some compensation for the eight years of hard work and investment during which we helped Mirage re-launch the Turtle brand worldwide, which included producing over a 150 episodes of television. After lengthy negotiations the Turtles transaction closed on October 20, '09 and 4Kids received about $9.75 million. The payment not only compensates thus for the royalty income we will have received but also recognized the contribution investment made by 4Kids to the relaunch of the Turtles brand.
While we are sorry that our business relationship with our partners at Mirage has come to an end, we clearly did what was best for our client and our company since the deal provided us with additional liquidity at a crucial time. And I want to go on record in thanking Mirage, both Peter, and of course our other members of the Mirage team for really, really being great partners, and really being honest and ethical people as the relationship came to an end.
At the end of the fourth quarter, the company decided that based upon Chaotic trading card revenues for the fourth quarter and for the year in projected sales momentum, we’ll just say to impaired value of various Chaotic related assets on the balance sheet. As I indicated previously in the fourth quarter, the company recorded $20.2 million in losses and charges relating to the Chaotic in the US and Europe.
In '09 the company also recorded 13.8 million of actual losses and impairment charges relating to the auction rate securities portfolio that was managed by Lehman Brothers. We sold a number of auction rate securities during the year, principally in response to tender offers received from the issuers of such securities.
I think this you should note is one of the biggest scams that I have ever seen in the sense that these people will then tender, issue bonds at 100% par, and then make tender offers of 20% , 25% with the underlying implied situation that he didn’t tender these things will go down in value overtime. A complete and unbelievable utter scam public traded on us, and not only us but many many companies by these bond issuers, but also by Lehman Brothers themselves.
The tenders orders were at prices that are less than par resulting in the loss to your company, and these tender offers provided immediate liquidity and pricing, so we decided to bite the bullet and tendered the securities, as they really gave us no choice in terms of how these securities are being handled.
There were some other charges taken by the company in '09 as a result of the Turtles transaction, we accelerated the write-off of the Turtles film inventory as we are no longer able to use it to generate revenues, so accelerated off $3.57 million of capitalized film cost, these will be based on the, again, episodes produced by us and Mirage. Also as a result of substantial reduction in force in '09 to keep -- we took roughly about a $3 million charge in severance charges in ‘09.
To sum up, while the company is suffering significant operating losses in ‘09 about $37 million of the total loss of $42 million relates to Chaotic auction rates securities and severance cost. The company had about $7 million of pretax loss if you take away all these other charges but it’s still hitting us an unsatisfactory, but obviously so that we can change relatively quickly.
With our projected 2010 expenses down to $25 million or less and I stress to less because there are things we are currently doing to try and get those expense based down, and I will give you one example of that in a minute, the company’s projected 2010 revenues and expenses are more or less in balance. We have also of no longer doing original capital intensive production. If we decide to invest in these series, the production will be done by a third party offshore and we’ll not incorporate any of 4Kids’ personnel. So, therefore, overhead costs of the studio has been greatly diminished and that will continue.
Our capital intensive trading card business has been scaled back, our staff has been reduced by more than 50%, as a result on the amortization of Chaotic internal’s capitalized film course, our remaining capitalized film course of the balance sheet as of December 31, 2009 is roughly $6.8 million, down from $16.7 million at the end of ‘08. Therefore, our annual film amortization costs in the 2010 and beyond should therefore be much less in the film amortization cost that we have experienced over the last number of years, another example of a reduction in overheads even though basically a non-cash -cash reduction but it is P&L positive.
We have emerged from an enormously difficult ‘09 with a solid foundation upon which to rebuild, now I want to rebuild our business to return our business, to its height of profitability and success that we have had 20 years prior to the three-year Chaotic debacle.
Assuming our existing properties continue to perform as expected and so the new probably would gain traction do not need mega hits to return to the profitability of our projected expense base. Also, that means that we don’t need to hit homeruns every time that we go out of the box because as we knew previously in order to sustain the overheads that we had, our licensing business had to be really, really almost completely 100% hits.
In the future -- we are now working on a number of deals that I believe will have a positive effect on the company. Since it is our policy to only announce completed transaction, I’d only briefly outline some of the things which we have been working on and should be happening over the next few months.
We signed yesterday a very important Japanese property that we will be announcing in the next couple of days that we will be handled under our for-site licensing unit. We expect to have received several on this toy office on some of new properties, we expect to rely on [ph] based on these new properties to come out both in 2011 and 2012.
As we also discussed in the 10-K to be filed later today, in December 2009 we advised to CW that under terms of our agreement with the CW, we believe that we are entitled to both a reduction in the $15 million fee that we pay to CW and an improvement in the split of advertising proceeds.
We are now in the discussions with the CW to resolve this matter, if these negotiations can be successfully concluded, the business terms and the CW agreement applicable to 2009, 2010 broadcast season would be more favorable to the company. That’s why I suggested that these $25 million in cost could come down substantially further. If we do not reach agreement with the CW we’ll go to the arbitration with the CW, which if we win will also result in better deal for 4Kids.
We also are going to totally rebranding the 4Kids TV network for the coming fall season. We also are in process of signing up some exciting new series, which have substantial awareness of one-stop target audiences. As I mentioned, our Japanese trips and our Japanese forays have not gone in vain, and a number of these new things that we will be announcing are substantial Japanese hits that we will making available to kids in the United States on the 4Kids TV network.
We believe that these new series will improve our ratings, which ultimately bolster our TV ad revenues and TV related website revenues. So you could see that by reducing the CW fee hopefully, adding more shows of hit status to the mix the ultimate end result is that we could have a very substantial increase in profitability for the network and its corresponding websites.
We are also marking on marketing Yu-Gi-Oh!’s10th anniversary and we have a brand new 3D movie to participate in, and Yu-Gi-Oh! continues to be a mainstream of our licensing business, and we are pleased to report that Yu-Gi-Oh!’s sales remain firm.
We are continuing to work on the development of our NFL trading card game. If and when that game goes forward it will be with different additional group of partners which could fund the transaction and not leave the transaction funding on the doorsteps of 4Kids and any way shape reform.
In summary, 4Kids is to going through some very difficult time this past several years. We have now emerged as a smaller more focused company. We have sufficient liquidity and capital to rebuild our business and get it back to the glory years prior to the launch of Chaotic. I believe we have a number of interesting, as I mentioned, I am very optimistic about 4Kids’ future and its prospects, but I don’t want to minimize the pain for these three years that have caused the shareholders and obviously we as a company continue to work on strategic opportunities that may lead to additional opportunities for the company, in other words, obviously, we have hired an investment banker. That investment banker has been working in different areas and whether any of those areas will become solution, we don’t know, but again, we are analyzing and investing any potential that could lead to greater shareholder value.
We are doing, again, two thing to that point. One, going back to the way that 4Kids was very profitable and very, very healthy for you and our shareholders – for us and the shareholders. And two, looking at strategic opportunities for the company, which could incorporate a number of variables, including capital infusion certainly could be a takeover or a sale or some types of mergers, all that is being equated to us well because now the game is to get 4Kids shareholders back in the place that it deserved to be, and which I had been patiently awaiting to be over these last couple of years.
I want to personally apologize for the last three years. I wish that I had known some of the things that I know now, referencing not only the economy but also the – if you will, Lehman Brothers situation, and also certainly the Chaotic trading card results.
I hope that you can see that the business plan and the roadmap that’s been layout currently will get us back to where we need to be both as a company but also as an institution that’s dedicated to returning significant value to its shareholders.
With that, I’ll answer any questions.
Question-and-Answer Session
Operator
Thank you. (Operator Instructions) And at this time, there are no questions.
Al Kahn
Well again, thank you for your attention and let me just say that better days are to come, and that we’re confident that the corner has been turned, and the results of this will be result in a higher and much better positioned for you and for us and for the company in the whole. Thank you.
Operator
Thank you. This concludes today's conference call. You may now disconnect.
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