4Kids Posts Q3 Loss

NEW YORK, November 10: 4Kids Entertainment’s third-quarter
results show a net loss of $265,000, as compared with a $2 million profit in
the same period last year, with revenues down almost 10 percent to $17.6
million.

For the nine months ended September 30, 2006, net revenues
totaled $53.5 million, down from $57.1 million, while net income fell from $4.6
million to $1.3 million.

Chairman and CEO Alfred R. Kahn attributed the quarter’s
weaker results to a reduction in merchandise licensing revenues from Yu-Gi-Oh! and Teenage Mutant Ninja Turtles. “The company has not yet realized any of the
expected merchandise licensing revenues from its new properties, Viva
Pinata and Chaotic,” he said. “In addition, we did not realize any
revenues in the third quarter of 2006 from the long term extension of the
Cabbage Patch Kids master toy agreement
that was signed with Play Along, a division of Jakks Pacific, in October 2006.”

Kahn continued, "We look forward to 2007 when our
promising new properties, Viva Pinata
and Chaotic, are expected to be
among the significant contributors to the company's revenues. Next week,
Microsoft will release the first Viva Pinata video game exclusively for Xbox 360. In January
2007, Chaotic, our new animated
TV series featuring cards imprinted with codes that enable the cards to be
digitally uploaded to the Chaotic
website, returns to 4Kids TV with
new episodes. We also expect the Chaotic trading card game to be available at retail by late spring 2007 along
with the Chaotic website. The
Company should also benefit from the scheduled March 23, 2007 theatrical
release by Warner Bros. and The Weinstein Company of TMNT, the highly-anticipated CG-animated movie featuring
the Teenage Mutant Ninja Turtles. We further anticipate that significant
savings from our cost-cutting initiatives will begin to impact the bottom-line
beginning in the fourth quarter of 2006 and continuing into 2007.”