Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Liam Burke of Ferris, Baker Watts.
Liam Burke – Ferris, Baker Watts, Inc.
Could you help me on the long term investments? You said you reclassified the cash and short term investments of $20.4 million.
Bruce R. Foster
That’s correct.
Liam Burke – Ferris, Baker Watts, Inc.
On the balance sheet you’re showing $31.8, what is the difference there?
Bruce R. Foster
$31.8? I believe that’s a range note that comes due in 12 months.
Liam Burke – Ferris, Baker Watts, Inc.
I’m sorry?
Bruce R. Foster
It’s a range note that comes due in more than 12 months.
Liam Burke – Ferris, Baker Watts, Inc.
Okay. Then, on the $11.9 million on the reclassification on the deferred tax, where does that run through on the income statement?
Bruce R. Foster
Well actually it goes through income tax expense. So, what happens is we would really have had a benefit of $9.5 million at 12/31/07. We’re showing a $2.4 million expense.
Liam Burke – Ferris, Baker Watts, Inc.
Okay. Then, if I look at your SG&A of $44.2, is that an accurate run rate for 08? Or, are there any one times in there that we can back out?
Bruce R. Foster
That should be pretty accurate total. There might be some one times but I don’t think there’s many.
Alfred R. Kahn
Well, I would say yes there are a number that certain things will fluctuate relative to revenues. You know, cost of goods obviously would go up.
Liam Burke – Ferris, Baker Watts, Inc.
Right. That’s also in the cost of sales of the trading card line. I was just looking on the G&A side.
Alfred R. Kahn
As I told you we hope that’s going to be getting bigger. It will get much bigger because you’re going to end up selling and shipping more cards.
Liam Burke – Ferris, Baker Watts, Inc.
Okay. The last thing Al, can you just give us a sense to what the outlook is for the license revenues outside of Chaotic?
Alfred R. Kahn
I think that – for Chaotic or generally speaking?
Liam Burke – Ferris, Baker Watts, Inc.
Generally speaking, without Chaotic in the mix.
Alfred R. Kahn
I think that what has happened to the company, as you can probably imagine is we took two very, very extreme hits in the licensing business over the last couple of years. We lost Pokemon completely, remember Pokemon use to generate $80 million to us in sales. We lost it completely and obviously we’ve been struggling to replace that for the years that we lost it. We also started seeing decreases in Yu-Gi-Oh which have been the two biggest properties that the company has ever had. We expect that the revenues for licensing should, and again I say should somewhat stop hemorrhaging because again, as these big properties have gotten to a point where we think we can hold on to what we have and we can start rebuilding the licensing business with some of the new concepts that we have as well as sustaining the ones we currently have as well. So, I think that the hemorrhaging in licensing is probably going to be lessened and obviously we’re going to be looking at many, many new things to bring into this mix because it would certainly probably continually help to put more programming on which is certainly a way of driving properties. So, I think licensing and I think Chaotic licensing you certainly negate that, the non-trading card licensing side of the equation, we’re obviously selling licensing for Chaotic and they’ll be some Chaotic licenses out this year and certainly more in 2009. So, I think all told the licensing business will get better relatively to what we’ve been but certainly it’s going to take a long time to get back to the Pokemon era in terms of licensing.
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