JAKKS Pacific Inc (JAKK) 2012 Q4 法說會逐字稿

Good morning, ladies and gentlemen. Thank you for joining the JAKKS Pacific fourth-quarter and full-year 2012 earnings call with Management. Today, JAKKS will review the results for the fourth quarter and full year ended December 31, 2012, which the Company released earlier this morning.

On the call today are Stephen Berman, President and Chief Executive Officer, and Joel Bennett, Executive Vice President and Chief Financial Officer. Mr. Berman will first provide an overview of the quarter and the full year, and then Mr. Bennett will provide detailed comments regarding JAKKS Pacific's financial and operational results. Mr. Berman will then conclude the prepared portion of the call with highlights of product lines and current business trends prior to opening up the call for your questions. Your line will be placed on mute for the first portion of the call. (Operator Instructions).

Before we begin, the Company would like to point out that any comments made about JAKKS Pacific's future performance, events, or circumstances, including the estimates of sales and earnings per share for 2012, as well as any other forward-looking statements concerning 2013 and beyond, are subject to the safe harbor protection under federal security laws. These statements reflect the Company's best judgment based on current market trends and conditions today and are subject to certain risks and uncertainties, which could cause actual results to differ materially from those projected in the forward-looking statements. For details concerning these and other such risks and uncertainties, you should consult JAKKS' most recent 10-K and 10-Q filings with the SEC, as well as the Company's other reports subsequently filed with the SEC from time to time.

With that, I will turn the call over to Mr. Berman.

Thank you for joining us today.

With the backdrop of a very challenging season for the toy industry and the global economy overall, weaker than expected product demand during the holidays led to a lower than expected results for fourth quarter and full year 2012. However, our core business remains strong. Our products in traditional toy segments such as infant, preschool, seasonal, dress-up and role play and Halloween continue to perform at retail and remain our areas of strength.

The world is changing and JAKKS is changing along with it. We have experienced such excitement and receptiveness on our DreamPlay technology initiative. What we have shown on the iD image recognition and DreamPlay technologies, combined with toys and kids' consumer products, has been nothing short of redefining the boundaries of the physical and digital toy play. From retail partners in the US and internationally, to our licensing partner Disney, as well as some of the biggest toy and consumer product companies and brands in the world, there is a strong belief in the long-term adoption by children and adults of this technology. We believe that toys and technology have to change to adapt to the way kids play today, as kids gain more and more access to smart devices.

By applying the technologies to a broad array of characters and play patterns we believe we will create a new consumer demand for our toy products. Through the DreamPlay venture we aim to achieve substantial long-range growth and profitability, warranting the investment in this technology and content that we are making.

2013 will be a period of focused transition as we build the infrastructure for our DreamPlay venture, while also continuing to execute on our core business strategy of organic and external growth. We have added to our core business a number of new brands and licenses that we are launching this year that we feel show great promise. We are keeping a tight rein on our operational expenses, starting with a meaningful internal restructuring. Our outlook for 2013 remains cautiously optimistic as we invest for the future and begin to roll out our plans for the exciting growth opportunities in 2014 and beyond with our DreamPlay initiatives, as well as our continued focus on capitalizing on our international distribution growth opportunities.

While we recognize that it is critical for us to provide new, exciting, and magical experiences for today's wired families, we will not deviate from our core business strategy to offer a diverse portfolio of evergreen products that support traditional play patterns and products that remain core to our business.

I would now like to turn the call over to Joel Bennett to review our financial results for the fourth quarter and full year of 2012. And then I will give a further update on our business this year and beyond. Joel.

Thank you, Stephen, and good morning, everyone.

Net sales for the fourth quarter of 2012 were $133.5 million, compared to $141.1 million reported in the comparable period in 2011. The reported net loss for the fourth quarter was $119.5 million, or $5.45 per diluted share, which includes $800,000 of pretax charges, or $0.03 per diluted share related to financial and legal advisory fees and expenses associated with the unsolicited indication of interest and activist shareholder activities and a one-time noncash charge of $91.7 million related to the impairment of deferred tax assets. This compares to a net loss of $20.0 million, or $0.77 per diluted share, reported in the comparable period in 2011, which included $1.9 million, or $0.05 per diluted share, of financial and legal advisory fees and expenses.

Excluding the legal and financial advising fees and expenses and the deferred tax impairment charge, the 2012 fourth quarter loss would have totaled $27.2 million, or $1.24 per diluted share, compared to a loss of $18.8 million, or $0.72 per diluted share, in 2011.

Net sales for the full year of 2012 were $666.8 million compared to $677.8 million in 2011. The net loss reported for the full year was $104.8 million, or $4.37 per diluted share, which included $4.8 million of pretax charges, or $0.16 per diluted share, of financial and legal and advisory fees and expenses and the deferred tax impairment charge. This compares to net income for the full year of 2011 of $8.5 million, or $0.32 per diluted share, which included $3.8 million, $0.04 per diluted share, of financial and legal advisory fees and expenses.

Excluding the financial and legal advisory fees and expenses and the deferred tax impairment charge, the 2012 full-year loss would have totaled $9.3 million, or $0.39 per diluted share, compared to earnings of $10.9 million, or $0.41 per diluted share in 2011.

Worldwide sales of products in our traditional toys and electronics segment, which includes dolls, action figures, vehicles, electronics, plush, and pet products, were $78.5 million for the fourth quarter of 2012 compared to $79.8 million for the fourth quarter in 2011. And sales for traditional toys were $363.3 million for the full year of 2012 versus $348.9 million for the full year of 2011. Sales this quarter in this segment were led by Disney Princess dolls, Monsuno figures, and preschool toys.

Worldwide sales from our role play, novelty, and seasonal toy segment, which includes role-play products, novelty toys, Halloween costumes, indoor and outdoor kids furniture, and pool toys, were $55.0 million in the fourth quarter of 2012 compared to $61.3 million for the fourth quarter in 2011. And sales for role play, novelty, and seasonal toys were $303.5 million for the full year of 2012 versus $328.9 million for the full year of 2011. Disney Princess dress up and role play and children's furniture dominated sales in this category this quarter, though it was down overall from the previous year.

Included in the category numbers are international sales of $22.5 million for the fourth quarter of 2012 compared to $16 million for the fourth quarter of 2011. International sales for the full year of 2012 and 2011 were $132 million and $108 million, respectively. Our Monsuno product was a key driver in 2012 and performed above expectations in the international market.

Gross margin for the fourth quarter of 2012 and 2011 was 23.0% and 13.4% of net sales, respectively. And gross margin for the full year of 2012 was 29.7% of net sales compared to 28.6% of net sales in the full year last year. The increase as a percentage of net sales in 2012 was primarily due to lower markdowns and license guarantee shortfalls in 2012.

SG&A expenses in the fourth quarter of 2012 were $62 million, or 46.4% of net sales, as compared to $55 million, or 39% of net sales, in 2011. For the full year of 2012 SG&A expenses were $211.2 million, or 31.7% of net sales, compared to $192.7 million, or 28.4% of net sales, in the prior year. The increase as a percentage of net sales for the quarter is primarily attributable to the Maui acquisition overhead and amortization and DreamPlay startup expenses.

Depreciation and amortization was approximately $2.7 million in the fourth quarter of 2012 compared to $4.4 million for the fourth quarter of 2011. And for the full year of 2012 D&A was approximately $20.9 million compared to $22.5 million in 2011.

Accounts receivable as of December 31, 2012 were $105.5 million, up nominally from $103.6 million at the end of the fourth quarter of 2011 due to lower markdowns and allowances in 2012. DSOs increased modestly to 71 days in 2012 from 66 days in 2011. Inventory as of December 31, 2012 was $59.7 million, up from the December 31, 2011 level of $47 million to accommodate the anticipated higher proportion of domestic sales during the fourth quarter in 2012, which are now expected in 2013, resulting in DSIs of 66 days in 2012, up from 49 days in 2011.

Our balance sheet remains very strong. As of December 31, 2012 the Company's working capital was $179.5 million, including cash and equivalents and marketable securities of approximately $189.5 million. Using our disciplined approach we continue to look for accretive acquisitions to complement the growth of our business and effectively deploy our capital.

Turning to our 2013 guidance, the Company anticipates an increase in net sales of 4.0% to 5.0% to approximately $694 million to $700 million, with diluted earnings per share in the range of approximately $0.63 to $0.68 per diluted share.

This guidance anticipates first-quarter 2013 net sales in the range of $70 million to $73 million, with a loss per share in the range of $0.83 to $0.85, which reflects fewer shares outstanding from the July 2012 self-tender of 4 million shares and includes incremental operating expenses associated with the recent acquisition of Maui Toys in a seasonally low sales volume quarter, and incremental operating and marketing expenses associated with the launch of our DreamPlay product lines. This is compared to net sales of $73.4 million and a loss per share of $0.62 per diluted share in the first quarter of 2012.

Lastly, our board of directors has declared a regular quarterly cash dividend of $0.07 per common share, payable on April 1, 2013 to shareholders of record at the close of business on March 15, 2013, reflecting a current annual yield of 2.1%.

We continue to have strong confidence in the future prospects for JAKKS Pacific and its shareholders.

And with that, I will return the call back to Stephen Berman.

Thank you, Joel.

Despite the challenging year we had, we are optimistic in the future of JAKKS. Our diverse product portfolio is built on core evergreen products that make up a large part of our business and remain solid with little fluctuation. Our toddler and baby dolls, dress up and role play, infant preschool products, such as our foot-to-floor ride-ons and activity tables, outdoor seasonal products, and Disguise Halloween costumes had terrific sales in 2012.

We also had nice success with a few of our own JAKKS brands, including Power Trains. These are examples of back-to-the-basic products that resonate with consumers every year and are less prey to age compression and to the rapid changes in children's play patterns.

We are also pleased with the success of our international business in 2012, with a record full-year sales. Securing license for international territories continue to be a priority. China represents a big growth opportunity and we recently met with one of the largest Chinese retailers to expand our distribution in this territory. There is a great incremental sales potential in this region in 2014 and beyond, and we are focused on expanding licensing rights where appropriate in Asia.

Again, 2013 will be a year of transition for JAKKS. We will continue to consolidate operations to gain efficiencies and lower occupancy costs and enhance profitability in the short term, with the closing of our New York office and moving our Maui division into our headquarters. We recently completed a meaningful internal restructuring and we believe our worldwide team today has the drive, passion, and creativity to move our business forward. We are optimistic that their efforts, aligned with our focused long-term strategy and investment discipline, will produce strong, creative product lines and financial results for our company.

We remain focused on our brand management and growing our core business and are looking forward to the new product launches targeted for extensive mass and specialty retail distribution networks. We plan to expand our long-term growth prospects with the introduction of several new [leading] licensed and nonlicensed products throughout the year.

We are launching new themes and toys to maintain the momentum of our Disney Princess and Disney Fairies in the categories of dolls and accessories, dress up and accessories, and role play. New licensed properties we're looking forward to in our preschool and seasonal lines for 2013 include Doc McStuffins, Sofia the First, and Daniel Tiger's Neighborhood. And we are launching a new line of collectible figures, plush, and play sets based on the highly anticipated live action film, The Smurfs 2, as well as for El Chavo, the highly popular comedy series that has an enormous fan base in the US and Spanish-speaking countries worldwide. We are also bringing the iconic Darth Vader into our line of 31-inch figures this fall through a licensing deal with Lucasfilm that will also include a number of preschool categories for Star Wars.

The toy industry is undergoing a challenging macroeconomic environment, including the rapid growth of mobile and smart device usage amongst children, that is competing with physical toys and changing how kids and parents play today. With a sharp eye on the future our DreamPlay initiative headlines our efforts to stay ahead of the evolving play patterns by developing a segment of our product portfolio focused on physical toys that can interact with smartphones and tablets in a compelling and revolutionary way. Using iD recognition technologies, we believe DreamPlay is the answer to the new hybrid model of smart device technology and toy interactive ecosystem, where merchandise becomes a full experience, interacting with both consumers and the other items in the [toy aisle] and/or at home.

With DreamPlay, we aim to revolutionize how kids play from content-based to contact-experiential toys. Families today are wired and technology is now a part of every child's toy box. Working with Disney to launch our Disney DreamPlay products this fall is a natural fit, one that marries the magic of Disney with the infinite possibilities of DreamPlay products. Our Disney DreamPlay toys will be the same great toys we have today, with rich play value all on their own. But now kids will be able to have an incredibly deep and rich in-home, story-and-content-driven experience by using a special, Disney-specific DreamPlay application, using the iD recognition technology that will take toy-based entertainment, gaming, and play to the next level.

Combining all the capabilities of the iD technology with amazing content, kids will be able to bring their toys to life from the physical world to the digital world, starting this fall with DreamPlay Little Mermaid products. This will give kids the best of both worlds, the toys they love and the smart devices and gaming that they increasingly spend more and more time, combined into one seamless experience.

This marks an effortless evolution in entertainment. The possibilities are endless. With the convergence of this historic technologies and expansive product line, we will be bringing a vast library of content to life in never before seen ways. We are building our DreamPlay infrastructure with talented individuals who have come to JAKKS from across content development, animation and technology companies. Our DreamPlay development team is working aggressively to create rich and compelling content, game features and more, to deliver genre-defining innovation this fall.

2013 is the year we lay down the foundation for our DreamPlay venture, and we expect to begin to see the fruits of our labor in 2014 with further consumer demand for our products. We expect DreamPlay to help JAKKS achieve substantial long-range growth and profitability, justifying the investment in the technology and content that we are making.

As we look to 2014, we will continue our focused investment in our established product lines, as well as several new properties and our DreamPlay joint venture. We expect these investments to drive our growth over the long term and to enable us to deliver profitability to our shareholders in the years to come.

In the short term, we expect to continue delivering on our core evergreen portfolio while keeping a tight rein on our operating costs.

And with that, we will wrap up the prepared portion of the call and open it up to Q&A. We appreciate your time and support. We are optimistic about our future business with our traditional toy business and with our new DreamPlay venture. And with this focus we will build a more profitable and successful JAKKS Pacific for our stockholders and employees. Thank you.

Thank you. We will now begin the question-and-answer session. (Operator Instructions) Ed Woo; Ascendiant Capital.

I had a question in terms of the holiday sales. Was it pretty much broad weaknesses in the US and international?

Ed, actually what occurred for us, actually it's been over the last two years. We've done some back-trailing of the data and for the last two fourth quarters over the last two years the trailing off of demand has been both in the US and, call it, Western European territories, but more so in the US. And what we've realized from 2011 and 2012, the holiday seasons are coming earlier, with the layaway programs and all the incentives that retailers are doing.

And then, there's a big break prior to the holiday period where the consumer comes in at the last week for the demand. And it's happened both -- not just in toys. It's happened in back-to-school, we've seen it, and in Halloween, people waiting until the last moment.

So, what we see is Christmas from years past, it's not the same anymore at retail. And we've seen it from our other competitors on the fourth quarter basis. So we've planned that going forward. That fourth quarter in this new environment isn't the same way fourth quarter used to be years past. With the layaway programs and the discounting, it's a different methodology that consumers are using for the fall period. And we are planning for that now. It's the new way of retail and shopping versus years past.

Okay. And then, also, in terms of -- it seems like Monsuno has performed a little bit better international. What about some of your other recent licenses? Do you think that there's any big differences between the performance of either your license properties or some of your own internal brands?

Great question. The two biggest components that did less than our expectations, and it was more for the US -- Monsuno performed terrific overseas. It did perform to our expectations in the US. The animated series, which was on Nickelodeon, was not stripped and ended up being on I think it was a Saturday morning time slot, which wasn't very conducive for kids to watch. So the expectations we had in the US weren't -- they didn't achieve our high-end goal.

And the same thing occurred with the Winx Club, that the immediate sales in spring, or the mid part of the year, were terrific, but the programming changed. And those were the two biggest areas that we spent the most amount of media. So those two areas are really the components of the lower sales. All of our normal -- not all -- the majority of our normal basic business is extremely solid from our foot-to-floor, which is a Moose area, from our Kids Only!, from our Tolly division, to Disguise, to CDI, to our basic business in Power Trains, MXS, our 31-inch figures.

But those are the two major areas that really affected us in fourth quarter. And what we realized is -- what we've always said in the past is going back to the basics of the singles and doubles, which has been the core asset of our business. Keeping that in mind, we do need to adapt our business to go into the areas of where children are playing -- and they're playing more and more, from a younger age, from 18 months -- which are smart devices. And the engagement and initiative that we're doing with NantWorks and DreamPlay is the direction we're going with our core business as well.

But we're not taking any big bets as we did last year by focusing on the Monsuno and/or Winx.

Okay. Then one last question on DreamPlay. There's a lot of news about your partnership with Disney on DreamPlay. But what about using it for your own toys? Will it be as big this year or will (multiple speakers) --

This year is going to again, but it's a transitional year. We are developing a line with Disney. It's really exclusive to the products that we use with Disney. So they have a movie launch or DVD launch, which is The Little Mermaid, in which we're focusing the DreamPlay technology on. And, yes, we are working internally for 2014 on some beautiful, amazing segments of ours that will enhance the play pattern. As well as we're working with one or two of the top largest toy companies in the world to utilize our technology with them, as well as some very top 100 CPG companies.

But we are -- the 2013 is a year of building the content and focusing on the first launch, which is with three of the top retailers in the US and one abroad. And then we'll have a full launch in 2014 and '15.

Great. Well, thank you and good luck.

Drew Crum; Stifel Nicolaus.

So want to go back to DreamPlay. What's contemplated in guidance for 2013? Not specific numbers, but can you talk about what your expectations are? And who is taking on the cost of the content development? And if it's you, what type of investment does that entail?

Okay, so on the content development, we have a content development in-house team that is doing all the animation for the DreamPlay product. So for JAKKS and DreamPlay itself we'll utilize that content. And if anyone that is a licensing partner that needs to utilize that content, they'll end up paying for that content for the use on their product, and/or if we develop new content for a, call it, a licensee of the technology, we will create that content in house and charge them for that content.

It will be an annual licensing model and content development model. And fees and development costs and royalties will be all inclusive.

What was the first part of the question, Drew?

Just wanted to get a sense as to what you're contemplating as far as revenue contributions to guidance. And what's contemplated in guidance from DreamPlay?

As we're launching it this year, more so in the US and in one other territory, the amount of revenue is nominal. And it also is on a licensed product and we don't break out what that product category or value is, as we don't break out what each license does. But it is being launched in four areas during October [sets] and it is a launch all the way starting from October then ongoing and spreading through 2014. So it's not a dramatic -- it's not a small piece, but it's nominal to the overall number.

Okay. And, Stephen, if we go into Toys "R" Us or Target, where are we going to see DreamPlay? Where in the store will it be placed?

I won't use which stores, but on the stores it will end up having its own section with its own POP and displayed. And it will have the call to actions. And another exciting thing is regarding the actual iD app, which this is -- there's a lot that goes on with this. For iD, it actually is being placed on Verizon as a -- which we have a very strong partnership -- where it will be a iD featured in Verizon Android app store. We're anticipating that the iD app will be preloaded in the second half of 2013 with new features that combine a lot of new technologies being developed by NantWorks.

We also are in discussions with other US carriers to have this application ready for distribution for consumer adoption. So there's a lot that goes with this. It's not just a technology of augmented reality. That is actually just a small component of it. It's much different to other technologies. It's vastly different than our strong patented claims that have already been issued to the NantWorks group. The technology is significant. It goes beyond the world of augmented reality.

We developed a platform providing the variety of technologies, such as image recognition, video, audio, speech recognition, and working on 3D recognition with tracking systems. And this is all being combined in this powerful recognition technology that allows operators, brands, retailers, marketers and consumers to really engage with the physical and digital world seamlessly.

Okay. And, Joel, just wanted to ask a question about the internal restructuring you referenced. Can you put any numbers around that, what that entailed?

It was about a 10% headcount reduction that we implemented beginning in October, about 15% of overhead in terms of dollars.

Okay. And when will we begin to see that full impact? Did we see any in the fourth quarter? When do we start to see the impact?

It was neutral [for] last year. We'll see the biggest impact in March. With the layoffs we have severance and some other separation costs. So the initial impact, the annual effect was greater than the actual contribution in '12.

Okay. Thanks, guys.

Sean McGowan; Needham.

I also have a couple of questions. Let me start with some housekeeping. So, Joel, the bank line that you have in place, if I remember correctly that expires in April. Is there any news on extending that, or renewing it, or replacing it?

Yes. We're in the process of doing a renewal on that with Wells Fargo.

Okay. And where does that -- I would imagine that some of those receivables have been collected. Has that bank line been paid down from the level that it was at the end of December?

Yes. I think we paid in the low 20's. But basically, again, the line was obtained to balance the US cash demands in light of the fact that a lot of the cash is in Hong Kong to avoid the repatriation. So our overall liquidity is well over $100 million. But we do expect to use the line fully to manage the tax.

Okay. And should we expect the --

The point we're -- so it's probably a little less than $50 million at this point.

Okay. And would we expect that the line, if it's renewed or replaced or whatever, would be about the same size or larger?

No, it should be about the same. Our needs were well sized in the original deal. I would expect it to be the same.

You mentioned, in the release and in the prepared comments, impact in the first quarter of extra expenses tied to Maui. Can you help us understand what the revenue contribution might be? I would imagine that Maui, being outside -- outdoor toys, would kind of have a pretty good contribution in the first half of the year. Can you talk a little bit about that?

Generally that will pick up in the second quarter. So we'll have the full-quarter effect of their overhead. And their biggest quarter is actually second and third (inaudible) order.

Okay. So not that much in the first quarter?

Correct.

Okay. And turning back to something that Stephen had said, it sounded like what you were saying was the weakness or the surprise, the negative surprise, was in Monsuno and Winx Club. And I can understand that. But your role-playing toys were actually down more than traditional. So can you talk a little bit about where the weakness is in the role-playing side?

Yes. That's right. If you go to the impact of Q4, that is where we got the biggest effect of, call it, the major impact. The part of the role play which was down was pretty much novelty, which was a result of, call it, the impulse purchases. That is where we felt it most in CDI. But the overall CDI role-play business is extremely strong.

Okay.

Novelty was part of the role-play business, so you know.

Got it. Again, jumping back to Joel for a second, so what happens in terms of the optics of how taxes get treated going forward? Is there basically no provision going forward? Or will you be --

Oh, no, no, no. We are, again, with the restructuring we will be profitable, beginning in the US. It was a fairly -- the decision to write off the DTA was based on recent historical results as well as the future forecasts. But all it does is clean up the balance sheet as far as that goes. But we will have a provision going forward. The tax rate, including adjustments, is expected to be about 18.5% in 2013.

Okay.

We are profitable. We're projecting profitability in US and Hong Kong in '13. So we will have a provision. But in terms of the write-off, we actually will still be benefiting from the cash flow of the deferred tax asset. It's just that in terms of balance sheet presentation we don't have it on the balance sheet (inaudible.)

Right. I would figure that. So it's really just getting a noncash asset off the balance sheet. Right?

Correct.

Okay. And last question, then, and back to Stephen on the DreamPlay products. I know you've described the technology itself, but not having been able to see any of these products, I still don't quite understand what the play is. I understand that it's not augmented reality, at least to the degree I can. But can you give us some examples of what the play is and how that's different? Because right now I'm sitting here thinking -- I've got a kid holding a tablet who looks at a toy through the tablet and he sees some animation going on. But I don't, I don't get a sense of what the play is.

Okay. That's a fair question. So the Dream- -- let me give you the experiences that it pretty much includes. And I'll give you some at-home and retail. And this is just hard description verbally, but I think you'll get a good understanding.

So at home the experience includes an ability to unlock and interact with a physical toy inside a digital game and inside a digital world. So, as an example, you use your smart device and you use the mobile camera using the iD image recognition technology. And I'll use an example, on the Mermaid you'll point it at a Mermaid doll, and having that it will unlock a total interactive inside a DreamPlay application. So the child can have enhanced game play that emerges in the physical and digital world. So there's various entertainment values from really wonderful gamification to values of education to values of a complete virtual world that a kid can actually have a virtual object and play with a bunch of different physical products in that digital world and be able to videotape it, share it socially, edit it, and so on.

So there's a whole platform that's developed. It's been developed for years and years through the NantWorks technology that we've actually created more of a real kid interactive ability. So what we've done -- and watching the kids play, it's magical. And the people that we've seen, Sean -- and I know from you, because I think you've said it's frustrating not to see it -- everyone that's seen this whole ecosystem has signed [NDAs,] from the largest retailers in the US and around the world, from some of the biggest consumer product companies in the world, the top 100 companies, from licensors, even from banks. So this is something that we are keeping very close. We don't just believe in it. The partners believe in it.

And then there's the in-store activity. So let's say you're shopping, a parent shopping with their child or not. The in-store activities include the ability to point at a DreamPlay product which will enable a signage called the POP in store, which will show you the whole try-me demonstration by video and/or by an animation if we so choose, which will overlay a rich interactive content for shoppers. So it can actually demonstrate what this product does at home. And it will show the value of the DreamPlay-enabled toys.

Okay. Sounds like everybody's seen it but us. So looking forward to seeing it.

Okay. Thank you.

And, everybody, we appreciate the time for the call today. And thank you very much.

Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating. You may now disconnect.