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Company Overview
−Removed: We are a leading multi-line, multi-brand toy company that designs, produces, markets, sells and distributes toys and related products, kids indoor and outdoor furniture, and other consumer products.
+Added: We are a leading multi-product line, multi-brand toy company that designs, produces, markets, sells and distributes toys and related kid-targeted consumer products, inclusive of kids indoor and outdoor furniture, costumes and various product lines in the sporting goods and home furnishings space.
We focus our business on acquiring or licensing well-recognized intellectual property (“IP”), trademarks and/or brand names, most with long product histories (“evergreen brands”).
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Toy vehicles, including Xtreme Power Dozer®, Xtreme Power Dump Truck®, XPV®, Road Champs®, Fly Wheels® and AirTitans® inflatable remote-control dinosaur;
−Removed: Dolls and accessories, including small dolls, large dolls, fashion dolls and baby dolls based on licenses, including Disney Encanto®, Disney ILY 4EVER™, Disney Frozen®, Disney Princess® and Minnie Mouse®, and infant and pre-school toys based on TV shows like PBS’s Daniel Tiger’s Neighborhood® as well as in-house brands such as Perfectly Cute® and collectable plush Ami Amis™;
+Added: Dolls and accessories, including small dolls, large dolls, fashion dolls and baby dolls based on licenses, including Disney Wish®, Disney Encanto®, Disney ILY 4EVER™, Disney Frozen®, Disney Princess® and Minnie Mouse®, and infant and pre-school toys based on TV shows like PBS’s Daniel Tiger’s Neighborhood® as well as in-house brands such as Perfectly Cute® and collectable plush Ami Amis®;
Private label products developed exclusively for certain retail customers in various product categories;
−Removed: Foot-to-floor ride-on products, including those based on Fisher-Price®, Nickelodeon®, and Hasbro®/Entertainment One® licenses and inflatable play environments, tents and wagons;
+Added: Foot-to-floor ride-on products, including those based on Fisher-Price®, Nickelodeon®, and Hasbro® licenses and inflatable play environments, tents and wagons;
Role play, dress-up, pretend play and novelty products for boys and girls based on well-known brands and entertainment properties such as Disney Frozen® , Black & Decker® , Disney Princess®, and Disney Encanto®, as well as those based on our own proprietary brands;
Indoor and outdoor kids’ furniture, activity trays and tables and room décor;
−Removed: kiddie pools, seasonal and outdoor products, including those based on Disney® characters, Nickelodeon® , Hasbro® / Entertainment One® licenses;
+Added: seasonal and outdoor products, including those based on Disney® characters, Nickelodeon® and Hasbro® licenses;
Halloween and everyday costumes for all ages based on licensed and proprietary non-licensed brands, including Super Mario Bros.®, Microsoft’s Halo®, Disney-Pixar Toy Story®, Harry Potter®, Minions®, Sesame Street®, Power Rangers®¸ Hasbro® brands and Disney Frozen®, Disney Princess® and related Halloween accessories;
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In addition to developing our own proprietary brands, properties and marks, licensing popular IP enables us to use these high-profile marks at a lower cost than we would incur if we purchased these marks or funded the development of comparable marks on our own.
−Removed: Beyond the investment profile, we have an appreciation of the challenges and expertise required to break through the noise in a world filled with high-budget, content-centric consumer choices either based on well-known pre-existing IP or the even higher hurdle to launch new IP in the aforementioned marketplace.
+Added: Beyond the investment profile, we have an appreciation of the challenges and expertise required to break through the noise in a world filled with high-budget, content-centric consumer choices either based on well-known pre-existing IP or the even higher hurdle to launch new IP in the current marketplace.
By licensing IP and trademarks from world-class brand owners and content creators, we have access to a far greater range of marks than would be available for purchase.
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We sell our products through our in-house sales staff and independent sales representatives to toy and mass-market retail chain stores, department stores, office supply stores, drug and grocery store chains, club stores, value-oriented dollar stores, toy specialty stores and wholesalers.
−Removed: Our two largest customers are Walmart® and Target®, which accounted for 28.4% and 25.5%, respectively, of our net sales in 2022.
+Added: Our three largest customers are Target®, Walmart® and Amazon®, which accounted for 30.3%, 20.8% and 10.5%, respectively, of our net sales in 2023.
No other customer accounted for more than 10% of our net sales in 2023.
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We began marketing licensed classic video games for simple plug-in use with television sets and expanded into several related categories by infusing additional technologies such as motion gaming and through the licensing of this category from our current licensors, such as Disney.
−Removed: We recently entered the skateboard space at a retailer’s request and are now expanding into related protective gear and accessories.
+Added: In recent years, we entered the skateboard space at a retailer’s request and have since expanded into related protective gear and accessories.
●Pursue Strategic Acquisitions.
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Most of the product lines we market today were originally acquired via acquisition over the past 20+ years.
−Removed: In 2022, we evaluated several potential acquisitions although none resonated to the point of reaching an agreement.
●Acquire Additional Character and Product Licenses.
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Third-party distributors remain a core component of our international business, and we are constantly assessing how to expand our mutual businesses.
−Removed: Although the COVID-19 pandemic had a significantly negative impact on our international business, we remain focused on international being a source of revenue growth.
−Removed: We currently utilize one warehouse in the United Kingdom and another in the Netherlands to support sales expansion in that region.
+Added: We currently utilize warehouses in the United Kingdom, the Netherlands and Italy (opened in 2023) to support sales expansion in Europe.
+Added: We also have warehouse capacity in Mexico.
●Capitalize On Our Operating Efficiencies.
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In addition, hundreds of smaller companies compete in the design and development of new toys, the procurement of character and product licenses, and the improvement, expansion and re-introduction of previously established products and product lines.
−Removed: Over the years, the toy industry has experienced substantial consolidation among both toy companies and toy retailers.
+Added: Over the decades, the toy industry has experienced substantial consolidation among both toy companies and toy retailers.
We believe that the ongoing consolidation of toy companies provides us with increased growth opportunities due to retailers’ desire to not be entirely dependent upon a few dominant toy companies.
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We sell all of our products through our own in-house sales staff and independent sales representatives to toy and mass-market retail chain stores, department stores, office supply stores, drug and grocery store chains, club stores, dollar stores, toy specialty stores and wholesalers.
−Removed: In 2022, our two largest customers, Walmart and Target, accounted for 28.4% and 25.5%, respectively, of our net sales.
+Added: Our three largest customers are Target®, Walmart® and Amazon®, which accounted for 30.3%, 20.8% and 10.5%, respectively, of our net sales in 2023.
No other customer accounted for more than 10% of our net sales in 2023.
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These methods allow us to reduce certain operating costs and working capital requirements.
−Removed: We also contract the manufacture of certain products from Hong Kong Meisheng Cultural Company Limited (“Meisheng”), which involved payment to Meisheng of approximately $120.5 million and $77.7 million for the years ended December 31, 2022 and 2021, respectively.
+Added: We also contract the manufacture of certain products from Hong Kong Meisheng Cultural Company Limited (“Meisheng”), which involved payments to Meisheng of approximately $75.7 million and $120.5 million for the years ended December 31, 2023 and 2022, respectively.
As of December 31, 2023, Meisheng owns 5.2% of our outstanding common stock, and Zhao Xiaoqiang, one of our directors, is executive director of Meisheng.
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opened sales offices in Canada, Europe and Mexico;
−Removed: opened distribution centers in the UK and Netherlands.
+Added: opened distribution centers in the UK, Netherlands, Italy and Mexico.
Outside of the United States, we currently sell our products primarily in Europe, Australia, Canada, Latin America and Asia.
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In addition, our third-party manufacturers have seen increases in foreign exchange rate exposure during this time.
−Removed: Currently, we have ongoing relationships with over sixty different manufacturers.
+Added: Currently, we have ongoing relationships with over 50 different manufacturers.
We believe that alternative sources of supply are available to us although we cannot be assured that we can obtain adequate supplies of manufactured products on short notice.
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In areas where consumer demand subsequently cooled, a backlog of inventory accumulated both at retailers and in manufacturer distribution centers.
−Removed: These excesses in turn generated incremental costs as inventory levels exceeded normal capacity levels, and temporary price reductions were utilized to accelerated consumer demand.
+Added: These excesses in turn generated incremental costs as inventory levels exceeded normal capacity levels, and temporary price reductions were utilized to accelerate consumer demand.
Finally, the longer delivery time resulted in a slower cash conversion cycle for us as the net impact was a longer holding period for finished goods inventory between manufacture and sale to customer.
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We are committed to providing a safe, healthy and productive working environment for all of our employees globally.
−Removed: In 2022 with the impact of the COVID-19 pandemic, our number one priority was the health and safety of all of our employees, worldwide.
−Removed: The immediate and continuous response was to support a remote work environment for employees (when available and appropriate), implement enhanced protocols to provide a safe and sanitary working environment and offer on-site COVID-19 testing at no cost to employees and their dependents.
Environmental Issues
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We make available free of charge on or through our Internet website, www.jakks.com, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to these reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.
−Removed: The contents of our website are not incorporated in or deemed to be a part of any such report.
+Added: In addition, we have previously filed registration statements and other documents with the SEC.
+Added: Any document we file may be inspected without charge at the SEC’s website at www.sec.gov.
+Added: (These website addresses are not intended to function as hyperlinks, and the information contained in our website and in the SEC’s website is not intended to be a part of this filing.)
Our Corporate Information
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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.