Jakks’ Sales Rise but Profit Falls 27% in Quarter

Toy company Jakks Pacific Inc. said Tuesday that its first-quarter earnings fell 27% as expenses related to a customer’s bankruptcy and other charges offset a 9% increase in sales.

Malibu-based Jakks reported net income of $4.43 million, or 17 cents a share, compared with $5.96 million, or 24 cents, a year ago. Sales climbed to $73.9 million.

Excluding one-time items, earnings rose 15% to $6 million, or 23 cents a share, from $5.2 million, or 21 cents, last year.

The latest results beat Thomson First Call’s projection of 22 cents a share, excluding charges.

Jakks’ stock fell 2 cents to $15.12 on Nasdaq.

For the year, Jakks said it expected to reach the upper end of a range of $1.20 to $1.30 a share forecast in February, and reiterated expectation for revenue of $340 million.

Wall Street expects the company to earn $1.25 a share, compared with $1.05 earned in 2003.

The company generated $315.7 million in revenue last year.

The updated earnings and revenue forecast excludes the potential effect of Jakks’ proposed acquisition of Play Along Inc. for as much as $116 million.

In a separate statement Tuesday, Jakks said that it reached an agreement in principle to buy the Deerfield Beach, Fla.-based company, which holds the licenses for Care Bear, Cabbage Patch Kids and Teletubbies toys.

If the agreement becomes definitive, Jakks would pay Play Along about $75 million in cash, $11 million in stock and a so-called earn-out of as much as $30 million over the next three years, based on the company’s financial performance.

The proposed acquisition is expected to close in the second quarter. Play Along would become a unit of Jakks.

Privately held Play Along had about $160 million in revenue in 2003, and earnings of about $30 million before taxes.