KDE 4Kids Entertainment Common Stock

4Kids Entertainment, Inc. (NYSE: KDE), the global children’s entertainment and merchandise licensing company, today announced financial results for the second quarter ended June 30, 2009.

Net revenues for the three months ended June 30, 2009 totaled $4.4 million, compared to $16.5 million for the same period in 2008. The Company’s net loss attributable to 4Kids Entertainment for the three months ended June 30, 2009 was $(13.8) million, or $(1.04) per diluted share, as compared to a net loss of $(5.5) million, or $(0.42) per diluted share, for the same period in 2008. The Company’s results reflect the adoption of SFAS No. 160 requiring losses attributable to non-controlling interests of the Company to be excluded in their entirety from the computation of the Company’s net losses beginning in 2009.

For the six months ended June 30, 2009, net revenues totaled $14.6 million, compared to $31.6 million for the same period in 2008. The Company’s net loss attributable to 4Kids Entertainment for the six months ended June 30, 2009 was $(15.8) million, or $(1.18) per diluted share, as compared to a net loss of $(11.9) million, or $(0.91) per diluted share, for the same period in 2008.

“Our second-quarter results were negatively impacted by a number of factors,” stated Alfred R. Kahn, Chairman and Chief Executive Officer, 4Kids Entertainment. "First, the Company realized a non-recurring loss of $(7.25) million or $(0.55) per diluted share on the sale of one of its auction rate securities. Second, Chaotic trading card sales contributed no revenue in the second quarter. Although we shipped $2.6 million of Chaotic trading card sales in the second quarter, we were unable to recognize the majority of those sales as second quarter revenue as we would have in past quarters. Rather 'pay on scan' sales are recorded as revenue when the cards are purchased by the consumer not when the cards are shipped to the distributor. We, therefore, expect to record revenue on these sales later in the year," said Kahn.

"While we are disappointed in the results for this quarter, I am pleased to report that sales of Chaotic trading cards in the US have steadily increased since the debut of the Chaotic television series on Cartoon Network in June. Over the past eight weeks, Chaotic trading card sales in the US have more than doubled. We are also receiving orders from 'pay on scan' distributors who are seeking to restock lean inventories. We look forward to Chaotic trading card sales making a substantial contribution to 4Kids revenue in the second half of the year," commented Kahn.

"As we announced on August 5, the Board of Directors has retained Montgomery & Co. to evaluate its strategic alternatives. The Company remains committed to taking the necessary steps to build shareholder value," concluded Kahn.

About 4Kids Entertainment, Inc.

With U.S. headquarters in New York City, regional offices for its trading card business in San Diego, California and international offices in London, 4Kids Entertainment, Inc. (NYSE: KDE) is a global organization devoted to the creation, development, production, broadcasting, distribution, licensing and manufacturing of children’s entertainment products.

Through its subsidiaries, 4Kids produces animated television series and films, distributes 4Kids’ produced or licensed animated television series for the domestic and international television and home video markets, licenses merchandising rights worldwide to 4Kids’ owned or represented properties, operates Websites to support 4Kids’ owned or represented properties, and produces and markets collectible trading card games. Additionally, the Company programs and sells the national advertising time in “TheCW4Kids” five-hour Saturday morning block on The CW television network.

Additional information is available on the www.4KidsEntertainment.com corporate Website and at the www.4Kids.tv game station site.

The information contained in this press release, 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 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 could cause actual results to differ materially from the Company's expectations.

(Financial tables below)

4KIDS ENTERTAINMENT, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

JUNE 30, 2009 and DECEMBER 31, 2008

(In thousands of dollars, except share data)

          ASSETS:

June 30,2009

December 31,2008

Current assets: (Unaudited) Cash and cash equivalents $ 6,971 $ 13,503 Accounts receivable - net 11,999 22,818 Inventories - net 5,410 4,241 Prepaid income taxes 87 137 Prepaid expenses and other current assets 3,163 1,876 Deferred income taxes 142 127 Total current assets 27,772 42,702   Property and equipment - net 3,746 4,287 Long term investments 13,773 21,617 Accounts receivable - noncurrent, net 195 655 Film and television costs - net 17,586 16,661

Other assets - net (includes related party amounts of $7,625 and $6,638,respectively)

17,403 14,652 Total assets $ 80,475 $ 100,574   LIABILITIES AND EQUITY: Current liabilities: Due to licensors $ 4,479 $ 5,651 Accounts payable and accrued expenses 14,190 16,202 Deferred revenue 2,042 3,270 Total current liabilities 20,711 25,123   Deferred rent 375 460 Total liabilities 21,086 25,583   Commitments and contingencies 4Kids Entertainment, Inc. shareholders’ equity

Preferred stock, $.01 par value - authorized, 3,000,000 shares; none issued

— —

Common stock, $.01 par value - authorized, 40,000,000 shares;issued, 15,411,099 and 15,246,579 shares; outstanding 13,352,053 and13,227,019 shares in 2009 and 2008, respectively

154 152 Additional paid-in capital 66,991 65,107 Accumulated other comprehensive loss (14,589 ) (17,396 ) Retained earnings 47,714 63,504 100,270 111,367 Less cost of 2,059,046 and 2,019,560 treasury shares in 2009 and 2008, respectively 36,434 36,376 Total shareholders’ equity of 4Kids Entertainment, Inc. 63,836 74,991 Noncontrolling interests (4,447 ) — Total equity 59,389 74,991 Total liabilities and equity $ 80,475 $ 100,574

4KIDS ENTERTAINMENT, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

THREE AND SIX MONTHS ENDED JUNE 30, 2009 AND 2008

(In thousands of dollars, except share data)

       

Three Months Ended

Six Months Ended

June 30,

June 30,

2009

2008

2009

2008

  Net revenues: Service revenue $ 4,586 $ 11,475 $ 14,341 $ 24,086 Product revenue (185 ) 5,065 252 7,493 Total net revenues 4,401 16,540 14,593 31,579   Costs and expenses: Selling, general and administrative 10,942 13,347 22,741 25,955 Production service costs 929 1,990 2,021 3,535 Cost of sales of trading cards 762 1,897 1,264 2,913 Amortization of television and film costs 1,066 1,697 2,257 3,405 Amortization of 4Kids TV broadcast fee — 3,906 — 9,109 Total costs and expenses 13,699 22,837 28,283 44,917   Loss from operations (9,298 ) (6,297 ) (13,690 ) (13,338 )   Interest income 346 737 747 1,407 Impairment on investment securities (9 ) — (98 ) — Loss on sale of investment securities (7,250 ) — (7,250 ) — Total other (expense) income (6,913 ) 737 (6,601 ) 1,407   Loss before income taxes (16,211 ) (5,560 ) (20,291 ) (11,931 )   Benefit from income taxes — 28 — —   Net loss (16,211 ) (5,532 ) (20,291 ) (11,931 )   Net loss attributable to noncontrolling interests 2,461 — 4,501 —  

Net loss attributable to 4Kids Entertainment,Inc.

$ (13,750 ) $ (5,532 ) $ (15,790 ) $ (11,931 )   Per share amounts:  

Basic loss per share attributable to 4KidsEntertainment Inc. common shareholders

$ (1.04 ) $ (0.42 ) $ (1.19 ) $ (0.91 )  

Diluted loss per share attributable to 4KidsEntertainment Inc. common shareholders

$ (1.04 ) $ (0.42 ) $ (1.19 ) $ (0.91 )   Weighted average common shares outstanding - basic 13,279,733 13,119,718 13,253,522 13,172,738   Weighted average common shares outstanding - diluted 13,279,733 13,119,718 13,253,522 13,172,738