JAKKS Pacific, Inc. Q4 2008 Earnings Call Transcript

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2009-02-22 21:47:14.0

Tags: Acquisition, Jakks Pacific Inc., Call Transcript, Earnings, Sidoti, Mergers & Acquisitions, Corporate Law, Product Development, Investment, Finance, Business Operations, Research & Development, Seeking Alpha

Question-and-Answer Session

Operator

Thank you. (Operator instructions) Our first question comes from Luke Shagets from Sterne Agee. Please go ahead.

Luke Shagets – Sterne Agee

Thank you. Good morning.

Jack Friedman

Good morning.

Luke Shagets – Sterne Agee

Yes, just real quick, what is your expectations in terms of full year impact on the increase in amortization charges related to the new acquisitions? I know it’s $0.27 in the quarter, but what’s your full year expectation?

Joel Bennett

Incrementally about $5.5 million.

Luke Shagets – Sterne Agee

Okay. All right. That’s all I have right now. Thank you.

Operator

Our next question comes from Todd Schwartzman from Sidoti. Please go ahead.

Todd Schwartzman – Sidoti

Hi, good morning, folks. Could you first maybe just speak briefly to the rationale for the creation of the co-CEO position for you guys?

Jack Friedman

We think with the growth that we’ve had at JAKKS and we expect to continue growing, and we believe strongly there are opportunities out there for addition – accretive acquisitions. And this is Jack speaking. I’m a sales – or [ph] more involved in that area than the day-to-day business at JAKKS. And we think it’s a proper rationale for the type of business in the environment we are dealing with.

Todd Schwartzman – Sidoti

Okay. And Steve, you had mentioned the increase in product testing cost for the quarter. I missed that. Could you repeat it please?

Stephen Berman

That was probably – that was probably in the – one moment. Yes. We had higher product development cost, which includes the testing in the quarter of $3.8 million and $11.6 million for the year. And for 2009 we are expecting additional testing cost in the range of $8 million to $10 million.

Todd Schwartzman – Sidoti

So the $3.8 million, was that the year-over-year increase or was that the total for the quarter?

Stephen Berman

That was the year-over-year increase.

Todd Schwartzman – Sidoti

Great. And how much did the three acquisitions increase SG&A?

Stephen Berman

Their run rate is about $27 million.

Jack Friedman

That’s before synergies, which take time to integrate into our operation. That’s – the $27 million is based on their 2008 SG&A.

Todd Schwartzman – Sidoti

And that’s the three of them in the aggregate?

Stephen Berman

Yes, correct.

Todd Schwartzman – Sidoti

And in terms of accretion, again, in the aggregate, can you give us a sense of what the bottom line contribution will be for full-year ’09?

 

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