Profits, Revenues Drop at 4Kids Entertainment

NEW YORK, August 10: 4Kids
Entertainment’s second quarter saw revenues fall 9 percent to $16.7 million,
while profits fell 94 percent to $34,000.

For the six months ended
June 30, 2006, net revenues totaled $35.9 million compared to $37.6 million
from the same period last year. Net income was $1.6 million versus $2.6 million
last year.

Alfred R. Kahn, 4Kids
Entertainment's chairman and CEO, said, "We had mixed results in the
second quarter. While we experienced gains in revenues attributable to our
Yu-Gi-Oh!, Cabbage Patch Kids and The Winx Club brands, these gains were offset
by declines in revenues from the Teenage Mutant Ninja Turtles and the American
Kennel Club properties.”

Kahn noted that the
quarter’s results were hurt by $1.7 million in severance costs and
approximately $0.5 million in a write off of software development costs.

He continued, "We
look forward to the introduction of our promising new properties, Viva
Pinata and Chaotic, as part of our exciting new fall lineup for 4Kids
TV. Viva Pinata, our first
collaboration with Microsoft, will be supported by Microsoft's planned fourth
quarter, 2006 release of the initial Viva Pinata videogame exclusively for Xbox
360. Chaotic, the series based
on the trading card game featuring cards imprinted with codes that enable the
cards to be digitally uploaded to the Chaotic website, also will debut on 4Kids
TV in late September. The Chaotic website will launch late in the year with the
introduction of the Chaotic trading card game at retail expected to take place
in spring 2007.”

Kahn concluded, "We
look forward to improved future performance stemming from the introduction of
some exciting, new properties and the re-invigoration of some of our older properties.
We anticipate that our cost-cutting initiatives will result in significant
savings beginning in the fourth quarter of 2006 and continuing into 2007. With
more than $113.5 million in total cash and investments and no long-term debt,
we continue to evaluate opportunities to expand our content and distribution
and build shareholder value."