JAKKS PACIFIC INC Segments Disclosure

Note 3—Business Segments, Geographic Data and Sales by 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 of products. The Company’s segments are (i) Toys/Consumer Products and (ii) Costumes.

 

The Toys/Consumer Products (“TCP”) segment includes action figures, vehicles, play sets, plush products, dolls, electronic products, construction toys, infant and pre-school toys, child-sized and hand-held role play toys and everyday costume play, foot-to-floor ride-on vehicles, wagons, novelty toys, seasonal and outdoor products, kids’ indoor and outdoor furniture, and related products.

 

The Costumes segment, under its Disguise branding, designs, develops, markets and sells a wide range of every-day and special occasion dress-up costumes and related accessories in support of Halloween, Carnival, Children’s Day, Book Day/Week, and every-day/any-day costume play.

 

The Company’s Chief Executive Officer and Chief Financial Officer have been identified jointly as the chief operating decision maker (“CODM”). The CODM manages and allocates resources on a segment basis. The determination of the two segments is consistent with the financial information regularly reviewed by the CODM for purposes of evaluating performance. Results are regularly reviewed in comparison with current budget, prior forecast, prior year and recent years’ performance in that quarter.

 

Segment performance is measured at the operating income (loss) level. All sales are made to external customers and general corporate expenses have been attributed to the segments based upon relative sales volumes. Segment assets are primarily comprised of accounts receivable and inventories, net of applicable reserves and allowances, goodwill and other assets. Certain assets which are not tracked by operating segment and/or that benefit multiple operating segments have been allocated on the same basis.

 Results are not necessarily those which would be achieved if each segment was an unaffiliated business enterprise. Information by segment and a reconciliation to reported amounts as of December 31, 2024 and 2023 and for the three years in the period ended December 31, 2024 are as follows (in thousands):

 

		Year Ended December 31,
		2024												2023												2022
		TCP				Costumes				Total				TCP				Costumes				Total				TCP				Costumes				Total
Net Sales		$	570,018			$	121,024			$	691,042			$	580,686			S	130,871			$	711,557			$	647,317			$	148,870			$	796,187
Cost of Sales (A)			389,534				88,487				478,021				388,260				99,944				488,204				465,405				119,496				584,901
Gross Profit			180,484				32,537				213,021				192,426				30,927				223,353				181,912				29,374				211,286
Direct selling expenses			33,255				6,850				40,105				33,604				3,383				36,987				28,790				4,500				33,290
Product development and testing expenses			8,059				2,838				10,897				6,740				2,564				9,304				7,432				2,356				9,788
Divisional general and administrative expenses (A), (B)			28,539				12,341				40,880				23,746				13,495				37,241				21,493				11,429				32,922
Allocated headquarter general & administrative expenses (A), (C)			67,810				13,645				81,455				67,409				13,305				80,714				61,499				12,817				74,316
Income (loss) from operations			42,821				(3,137	)			39,684				60,927				(1,820	)			59,107				62,698				(1,728	)			60,970
Income (loss) from joint venture																							(565	)											-
Other income (expense), net											302												563												797
Change in fair value of preferred stock derivative liability																							(8,029	)											(636	)
Loss on debt extinguishment																							(1,023	)											-
Interest income											841												1,344												127
Interest expense											(1,095	)											(6,451	)											(11,183	)
Income before provision for (benefit from) income taxes										$	39,732											$	44,946											$	50,075

 

(A) Includes depreciation and amortization

$

9,925

$

121

$

10,046

$

8,409

$

176

$

8,585

$

10,182

$

396

$

10,578

 

(B)

Consist mainly of payroll and related expenses, rent, depreciation and other general and administrative expenses.

(C)

Consist mainly of payroll related expenses, rent, depreciation and other general and administrative expenses.

 

		December 31,
		2024				2023
Assets
Toys/Consumer Products		$	429,254			$	383,812
Costumes			15,615				15,139
		$	444,869			$	398,951

Net revenues are categorized based upon location of the customer, while long-lived assets are categorized based upon the location of the Company’s assets. The following tables present information about the Company by geographic area as of December 31, 2024 and 2023 and for each of the three years in the period ended December 31, 2024 (in thousands):

 

		Year Ended December 31,
		2024				2023				2022
Net Sales by Customer Area
United States		$	545,013			$	557,865			$	644,295
Europe			71,392				76,464				85,348
Latin America			38,159				32,024				18,338
Canada			20,983				26,992				26,515
Australia and New Zealand			7,409				7,542				8,836
Asia			6,101				8,543				10,431
Middle East and Africa			1,985				2,127				2,424
		$	691,042			$	711,557			$	796,187

 

		December 31,
		2024				2023
Long-lived Assets
United States		$	53,020			$	21,206
China			13,553				13,794
United Kingdom			808				892
Italy			754				811
Hong Kong			582				1,410
Canada			107				23
France			41				—
Mexico			31				55
		$	68,896			$	38,191

 

Major Customers

 

Net sales to major customers globally were as follows (in thousands, except for percentages):

 

		2024								2023								2022
						Percentage of								Percentage of								Percentage of
		Amount				Net Sales				Amount				Net Sales				Amount				Net Sales
Target®		$	204,396				29.6	%		$	215,211				30.3	%		$	203,200				25.5	%
Walmart®			166,943				24.2				148,354				20.8				226,318				28.4
Amazon®			73,149				10.6				74,878				10.5				66,393				8.3
		$	444,488				64.4	%		$	438,443				61.6	%		$	495,911				62.2	%

 

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

 

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.