Stephen Berman - President and Chief Executive Officer Joel Bennett - Executive Vice President and Chief Financial Officer.

Stephanie Wissink - Piper Jaffray Edward Woo - Ascendiant Jeffrey Thomison - Hilliard Lyons Linda Bolton Weiser - B. Riley & Company.

Good morning ladies and gentlemen. Thank you for joining the JAKKS Pacific Second Quarter 2015 Earnings Call with management. Today, JAKKS will review the results for the second quarter ended June 30, 2015 which the company released earlier today.

Please note that presentation slides containing information covered in today's earnings release and call are available on the Investor section of our website. 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 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.

[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 2015, as well as any other forward-looking statements concerning 2015 and beyond, are subject to 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 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..

Good morning everyone and thank you for joining us today. We could not be more pleased with our strong second quarter 2015 financial performance. We grew sales, improved the EBITDA as well as improved the margins. We are on track for the year as well as looking forward and ahead to 2016.

We remain focused on the core aspects of our business strategies, concentrating on margins, leveraging our P&L, pursuing operational efficiencies, strategically growing international and emerging markets, while continuing to create consumer demand across our broad range of categories while always monitoring sell-throughs.

Benefiting the industry this year is the sale of the licensed toys which has accelerated around the globe and we have a strong license portfolio.

We believe that to have the best partners in the business, we have to be good partners first and as such, we have been successful in renewing important licenses in North America and on a global basis for existing properties and new ones with our key licensors, continuing to strengthen our relationships with existing entertainment companies while also securing new licenses.

Our international business had a record quarter with sales led by our Frozen, Disney Princess, Sofia The First and Star Wars items.

In addition, internationally we are tracking to our best year-to-date putting in place new initiatives in Europe, Latin America and emerging markets and a wonderful collaboration with Toys"R"Us Europe to create a new pricing structure and centralized shipping.

This collaboration will result in savings for both companies by consolidating shipments in China and shipments to central warehouse locations. We remain encouraged by the results of our Disney product lines in international as well as in North America.

Frozen's strength continues to be strong with POS nearly double that of the first six months of 2014. Frozen remains a strong profitable [ph] retail around the world and we love that every year there is a new audience of children three years and up to discover the magic of the movie and the franchise.

Domestically Marvel continues to performance well at the top three retailers. The Max Tow mini vehicles and playsets had a strong start out of the gate and are continuing to do well at retail and our Nintendo 2 1/2-inch figures made their way to a top side check lane item at Walmart.

With the summer kicking in our seasonal product lines such as Sky Riders, Sky Balls, Sky Bouncers, and Wave Hoops are doing very well this quarter. With the effective retail promotions at Target to support Gliders and the mega march [ph] new to water floats, outdoor continues to be a strong category.

Evergreen items such as ball pits, wagons and kids in and outdoor furniture continued to perform well in the second quarter, with licenses such as Paw Patrol, Minions, Mini Mouse, Frozen and Thomas the Train driving the performance. Overall we are enjoying the good momentum plus seeing double-digit growth in the first half of 2015.

We are encouraged by our product lines continuing to resonate with our target audience and performing well at retail. We are confident that we are well positioned for the second half of the year and are gearing up to launch our most innovative items this fall. Now I'd like to turn the call over to Mr.

Joel Bennett to review our financial results for the second quarter of 2015 and then I will give further updates of our business for the remainder of this year and an early look at 2016.

Joel?.

Thank you, Stephen and good morning everyone. We are very pleased to report that net sales for the second quarter 2015 increased 5.6% to $131.1 million up from net sales of $124.2 million reported in 2014. The reported net loss for the second quarter was $5.7 million or $0.30 per diluted share.

This compares to the 2014 reported net loss of $9.1 million or $0.43 per diluted share. Adjusted EBITDA for the quarter improved to $1.5 million up from $1.2 million in 2014. Net sales for the six months ending June 30, 2015 increased 18% to $245.3 million compared to $206.7 million in 2014.

The reported net loss for the six months period was $13.3 million or $0.69 per diluted share. This compares to a net loss for the first six months of 2014 of $25.4 million or $1.17 per diluted share. Adjusted EBITDA for the first six months of 2015 was $600,000 compared to negative EBITDA of $10.4 million in 2014.

Worldwide sales of products in our traditional toys and electronics segment which includes dolls, action figures, vehicles, electronics, plush and pet products were $63.4 million for the second quarter of 2015 compared to $49.5 million for the second quarter of 2014.

And sales in this category were $128.4 million for the first six months of 2015 versus $85.2 million for the first six months of 2014. Sales this quarter in this segment were led by our Frozen and Disney Princess dolls, Funnoodle water toys and licensed with the floor write-ons and wagons.

Worldwide sales from our role-play novelty and seasonal toys segment which includes role-play products, novelty toys, Halloween costumes, indoor and outdoor kids furniture and outdoor activity and pool toys were $67.7 million in the second quarter of 2015 compared to $74.7 million in 2014.

And sales for this category were $116.9 million for the first six months of 2015 versus $121.5 million for the first six months of 2014.

Disney Princess dress-up and role-playing including Frozen and Sofia The First, Maui toys outdoor seasonal products and disguise Halloween costumes dominated sales in this category this quarter driving the category to an overall increase.

Included in the category numbers are international sales of approximately $28.7 million for the second quarter of 2015 compared to $17.5 million in 2014. International sales for the first six months of 2015 and 2014 were $71.1 million and $39.8 million respectively.

Disney Princess dolls including Frozen, Slugterra and Nintendo products drove segment quarter sales in the international markets. Gross margin for the second quarter of 2015 and 2014 were 30% and 30.5% of net sales respectively.

Adjusted for closeout sales in 2015 the gross margin was 30.7% within 30 basis points of our anticipated full-year gross margin target. And gross margin for the first half of 2015 was 30.4% of net sales compared with 29.7% of net sales in the first half of last year.

The increase as a percentage of net sales in 2015 is primarily due to higher competitively priced disguise sales in 2014. SG&A expenses in the second quarter of 2015 were $42.3 million or 32.3% of net sales as compared to $42.6 million or 34.3% of net sales in 2014.

SG&A for the first half of 2015 was $81.9 million or 33.4% of net sales compared to $81.1 million or 39.2% of net sales. SG&A in dollars are comparable with cost controls in place following the 2013 restructure and decrease to the percentage of net sales due to higher sales in the 2015 period.

Consistent with the seasonality of our business, operations provided cash of $11.3 million for the second quarter of 2015 compared to using cash of $21.6 million in 2014. As of June 30, 2015 the Company's working capital was $232 million including cash and equivalents and marketable securities of approximately $110.5 million.

Depreciation and amortization was approximately $4.1 million in the second quarter of 2015 compared to $4.5 million in 2014. Included in other income is $1.7 million recovered from the THQ bankruptcy related to amounts owed from our videogame joint venture.

As for our tax rate, the effective tax rate for 2015 is expected to be approximately 15% with quarterly variations based on the flow of taxable income by territory. The overall rate could change if there is a shift in sales and therefore taxable income between the U.S. and Hong Kong entities.

Capital expenditures were $4.8 million for the second quarter of 2015 net of tenant [ph] improvement reimbursements of $3.3 million compared to $5.7 million for the second quarter of 2014. For the full year we expect capital expenditures to be in the range of $13 million to $14 million.

Accounts receivable as of June 30, 2015 were $117.1 million up from the $109.3 million at the end of the second quarter of 2014 due to higher sales in 2015 resulting in DSOs in 2015 of 80 days comparable to the 79 days in 2014.

Inventory as of June 30, 2015 was $91.9 million up from $65.1 million in Q2 2014 due to the higher average sales price of new items launching in the second half resulting in 30% higher inventory item costs or approximately $19 million.

Also higher sales and continuing high demand for our products resulting in higher DSIs is 113 days in 2015 up from 85 days in 2014 as we head into our peak selling season. Overall unit quantities are down as expected from Q1 2015.

In June 2015 the Board of Directors authorized the Company to repurchase up to $30 million worth of its shares as well as convertible notes in the open market or through privately negotiated transactions from time to time through March 31, 2016. During the quarter no shares were repurchased.

Since the end of the second quarter, approximately 377,000 shares of common stock were repurchased at an aggregated cost of $3.4 million.

Finally, as per guidance, we are reiterating our previous forecast of net sales for the full year 2015 to be in the range of $730 million to $740 million with earnings in the range of $0.71 to $0.75 per diluted share and adjusted EBITDA in the range of $56 million to $58 million. And with that I will return the call back to Stephen..

Thank you, Joel. Looking ahead we continue to take a prudent and yet positive approach to the remainder of 2015 closely monitoring the market conditions and retail environment.

We are however, excited about our current portfolio of brands, licenses and categories for the second half of 2015 and how our spring and fall 2016 product line previews have been received by retail partners throughout the world. Last year we were challenging keeping up with high consumer demand for Frozen.

The year-over-year comps for the quarter were solid and per NPV it continues to be the top U.S. and global toy license for 2015 in terms of dollar volume for the 12 months ended April 2015.

As Frozen has become an extremely strong evergreen property, we have continued robust product development and are making a meaningful marketing investment for our fall key drivers.

Although our expectations for Frozen this fall is not at the same level of fall 2014, we have a media plan against two of our strong items, Sing-A-Long Elsa and Do You Want to Build a Snowman jewelry box. Sing-A-Long Elsa is the follow-up to last year's huge success, Snow Glow Elsa.

This year the feature Elsa doll comes with a microphone and interacts by singing with the girls or letting the girls have the stage and singing to her. The microphone has a unique trigger technology that recognizes when the girl is singing solo and when the girl and the doll sing together.

The jewelry box is a great keepsake toy complete with a glittery heart ring for the girl and features both Anna and Elsa moving to build Olaf while the song Do You Want to Build a Snowman plays. We are extremely excited with our new launch of figure makeup and glamour segment called Little Kingdom featuring Disney Princesses.

The line will feature mom-approved make-up such as lip gloss, nail polish, hair mascara and more. We also have a new feature doll line Colors of the Sea Ariel, which will be a TV promoted item. When placed in the water Ariel's magical tail creates a light show in the water and sings Part of Your World.

The doll also has 14 sounds and phrases in both English and Spanish. Finally our Cinderella live action movie product along with a new Cinderella live action toddler doll should receive more awareness when Disney releases the DVD this fall.

We will also be launching a line of collectible characters across Disney brands exclusively at Target late in the fall called Tsum Tsum, which means in Japanese Stack Stack. We are following the character launch strategy of the Plush that has been hugely successful in Japan and in the U.S.

since they launched first at Disney stores in late 2014 and at Target early 2015. We expect to be in full mass distribution by spring 2016 and will have more to report in the quarters to come. SKECHERS and JAKKS recently announced a partnership to launch a line of dolls based on their popular Twinkle Toes character and her friends.

Additionally we have also partnered to create original animated digital media content. Last week the first of 11 webisodes slated to be released bimonthly on Twinkle Toes USA.com premiered. As the girl product lines come in later this year include Jumpin Little Monkey a TV advertise plush toy and our JAKKS Animal Babies line.

In the second quarter our digital division released a new app called Animal Babies Nursery, a natural extension to the Animal Babies brand and which also extended the play for Jumpin Little Monkey.

In addition to simple gameplay for children five years and younger, it will also be able to bring Animal Babies to life virtually using their apps augmented reality feature. The bulk of our big news on the boy's side is coming in the second half of year.

Big Figs have a big product launch tied to major motion pictures including the successful Minions movie, Halo Master Chief and of course the much awaited new Star Wars movie. We are ready for the force to be with us on September 4, when we launch our Big Figs products. But with the movies December release date we are anticipating an even bigger 2016.

Extreme performance vehicles or XPV is our return to the radio controlled category. We are launching with Hulk Smash a feature figure power radio controlled vehicle and figure hybrid that spins 360 degrees, flips over and self rights. The reception to this Hulk Smash RC has been fantastic. This year marks Nintendo's 30th anniversary.

They are doing more to take advantage of their IP outside of video games and as previously reported Nintendo named JAKKS master worldwide toy licensee for toys and costumes excluding Japan. And the Mario action figures are already resonating with kids.

In the fall we will launch a TV promoted radio controlled vehicle called World of Nintendo Gravity RC racer that has the ability to rotate its wheels and drive in simulated anti-gravity mode to appear to be hovering as he does in the Mario Kart 8 game. We let you know last quarter about our proprietary dual gender lines of toys.

3DiT! Character Creator which gives boys a new way to create and customize their favorite characters and girls the ability to create pets. On shelves soon we are now shipping the boy's line which will feature some of the hottest licenses such as Marvel, Teenage Mutant Ninja Turtles and DC Superheroes.

We are lunching it with an app to extend the play online so that the kids can also create virtual characters while they wait for the off-line character molds to be finished and sent. The girls line will launch as an exclusive to Toys "R" Us in spring 2016 before going to mass.

In our preschool business we have a new breed of radio control with Street Dogs, a pup full of personality and RC performance, shipping now and expected to be in stores soon.

Also exciting to us is PBS just announced that they are renewing Daniel the Tiger's Neighborhood for another two years and our line of Daniel the Tiger toys will be shipping into Wal-Mart this fall.

Our Disguise division is gearing up for Halloween and beginning to ship new products featuring key licenses such as Disney Princess, Cinderella movie, Frozen, My Little Pony, Super Mario Brothers, Power Rangers, Microsoft's Halo, Disney's, Descendant as well as many others. More to come on that business next quarter.

We have recently completed a restructure of our Pet division which has resulted in some very strong development of house brands such as tennis dog, burbark [ph] and sticks. We also signed a licensing agreement with Rachael Ray for pet toys, treats and accessories and we are very excited to be launching that product shortly.

Lastly, this year celebrates JAKKS' 20-year anniversary and I couldn't be more proud of where we are today. We are continuing to invest in the future of the company and moved into a new corporate office at the beginning of July in Santa Monica consolidating many of our various offices throughout the U.S.

Our new headquarters along with our new on-site permanent showroom will allow for a better collaboration and efficiencies that we believe will generate new opportunities for JAKKS. With that, we will end the prepared portion of the call. Thank you for your time this morning and we will now open it up to Q&A. Thank you..

Thank you. [Operator Instructions] From Piper Jaffray we have Stephanie Wissink on line. Please go ahead..

Thank you. Good morning everyone. Gentlemen, two questions, the first is with respect to the product initiatives that you have in the back half.

Can you talk a little bit about the conservatism in your guidance and where you think there maybe some upside potential? And then Joel, just a question and clarification on the inventory, I think you walked through there was a unit versus pricing also, but could you just walk through that one more time so that we are on the same page with respect to the balance or the qualitative side of the inventory balance at the end of the quarter? Thank you..

Hello Steff, I'll answer the first question and I'll let Joel answer the second question. For the remainder part of the year we're actually extremely excited where we're booked ahead of where we were last year for the full year internationally up about I think 10% book to what we shipped. So we are excited about that.

We have a very large line up of I'd say great products, besides the basic everyday products of Moose Mountain and Kids Only! and Maui and so on, we have a Hulk Smash which has been extremely well received, a 3DiT! line, a Nintendo line, a broad line of Star Wars, Big Figs.

In our girl line we have Animal Babies, a private label business which we don’t really talk much about, has increased and it has done extremely well at some of our major customers.

My World, so we have a lot of great second-half products, one of which was brand new that came up which is Tsum-Tsum, which means Stack-Stack in Japan and is probably one of the hottest categories in Japan and has sold extremely well, one of the top sellers of the Disney Stores and at Target through Disney this year we have Minions, Paw Patrol, Frozen in our seasonal area.

So in many of our segments we got some get products. We do have a conservatism of just to wait and see for the fall with the retail environment.

There is inventory out there not from JAKKS, but from some other competitors that does slowdown open to buys, but all-in-all we are extremely comfortable going into fall and then really extremely are excited into 2016, but we do take a cautious approach. We are up 18% for the first half which is exciting and strong.

We have been managing our business tightly. We've just brought in inventory in the U.K and China and the U.S. to help the growth for the second half. But I tend and the company tends to try to take a conservative approach for the unknowns, but we are really confident with the year as we see it today..

As far as the inventory level dollar-wise we are up year-to-date and also year-over-year, but included in those numbers is an increase in the unit cost reflective of some of the initiatives that Stephen had mentioned, some higher price points which will help drive the volume in the back half. Those include 3DiT! and Hulk Smash just to name the two.

If you were to normalize the unit cost and also factoring in about $10 million in the UK and 1 million in inventory related to our new China joint venture, we're actually within 5% or 10% of last year's balance. In general we are very comfortable with the level of inventory that we're at.

It's all fresh, current products and we expect that to ship in the back half. Our back half is based on the seasonality is expect to be in the neighborhood of $500 million in the inventory level would equate to approximately 180 in sales. So, given all of that, we are very comfortable with the levels..

Thanks guys. Good quarter. I am looking forward to the back half..

Great. Thank you, Steff..

From Ascendiant we have Ed Woo on line. Please go ahead..

Good morning Ed..

Yes, thanks for taking my question.

In terms of the working capital, in terms of the receivables and inventory do you think that the amount of investments we have seen in second quarter first half is going to be reflective in the second half particularly with your expectations for inventory levels?.

Actually you cutout a little bit.

Sorry Ed, could you repeat that question?.

Yes, I guess well, just a follow up on the prior question.

You did mention that you have higher unit costs in some of your inventory which was driving at higher level, do you think that that's going to persist through the rest of this year? And then also on your cash balance as well as this seems as if your cash is a little bit lighter than I expected and it seemed like your receivables were a little bit higher.

I am not sure if that trend will continue or whether you could provide any color on what your cash balance will be for the second half?.

In the year both in accounts receivable and inventory at seasonal lows. So from the 2015 operations we expect free cash flow of about $30 million in that ballpark and then we expect working capital to decline in upwards of a $100 million based off of the level of AR that we ended the year at.

So as far as the interim quarters where we expected to be and the biggest difference is in I think the cash flow was based off was the higher sales we had – we were up 28% in Q1 and about 6% in Q2, but basically the DSOs were comparable at 80 days. We were at 79 this time last year.

So we are very comfortable with where the balances are and expect them to be down again based off of the seasonality of the business..

Great.

I just want to clarify, do you say the free cash flow for the year is expected to be $30 million?.

No, that’s from currently, what I am saying from current year operations the other $100 million which will be reflected in our free cash flow is coming from the working capital that we have built up at the end of 2014.

Does that make sense?.

A little bit, maybe I’ll take it offline and then the other question I had is, congratulations on a great quarter for international.

Do you think that that’s going to be driving most of your growth in the back half?.

No, it will be driving growth as we said for the next three years with the strategic plans that we have implemented..

Great. Well, thank you and good luck..

Good that we are achieving, so from Latin America, China, the emerging markets to expanding many more rates with our licensing partners in EMEA, that’s one of our biggest initiatives for growth.

But we're also getting growth, we see growth happen in just North America, one is by getting more shelf space at retail, there is less competition, there is less rate product coming from the marketplace. We see dotcom which has increased for the first half up 23%. So there is a lot of different areas that we see growth. We have the Dollar chain.

We are now as I mentioned earlier, we realigned our Pet business which we are looking very much forward to seeing at the back half or early next year growth and there is a lot of movie lineups for the following years which Star Wars we believe is going to do great this year, but phenomenal next year.

We have Batman versus Superman next year, Warcraft. We also have Nintendo which has aligned themselves with a great mobile company that’s going to bring their content really much more to today’s children.

So there is a lot of other areas that we've seen growth, in addition to we are still very active in the acquisition mode, even though we announced a buyback just a while back.

It’s been part of our DNA since inception over 20 years to grow through organically, grow through international, grow with licenses, grow with our own IP and at the same using our capital allocation when needed to buy back stock at the same time when there is an acquisition that’s appropriate and is accretive to the Company, that gives us areas of growth.

And the acquisition doesn’t necessary have to be in our kids' consumer product area of business, just like our Halloween business, or our Pet company. So there is lot of the strategy things out there that we see for the next few years..

Great. Thank you..

From Hilliard Lyons, we have Jeffrey Thomison on line. Please go ahead..

Thanks, good morning gentlemen. I have several questions. You touched on these topics in your comments, but I wondered if you'd make a few additional comments. First of all, congrats on a satisfying quarter. By my count that makes several quarters in a row where you beat expectations, so good luck on continuing doing that..

Thank you..

The questions first, can you give a little more detail on the evolution of the share count including the actual shares outstanding at the end of the quarter and/or currently and then the actual and/or fully diluted share count expectations for the back half or for the fiscal year that, the more information on share count, they are happy, the happier I am.

And then the second question probably for you Stephen, can you elaborate a little bit more on the potential for and the expectations for Sing Along Elsa relative to those tough comps that we mentioned on Snow Glow Elsa.

I'm just curious what distribution and marketing spend might look like for the products on your part and/or Disney’s part? And on an unrelated note, do you have any assumptions regarding the time frame for the full length sequel to Frozen that there is going to be development?.

Okay, I'll let Joel, are you ready Joel?.

Yes. Hi Jeff, on the share count we have 23 million shares in the flow and from that we deduct about a million unvested restricted shares and 3 million from the prepaid forward of 3.1 million shares that we did conjunction with the convert in 2014.

So for basic EPS calculations, we use approximately 19 million shares and for fully diluted they were about 23 million shares underlying the 2018 and 2020 converts which brings the full year diluted share count to 42.4 million.

And an update on the buyback, we've purchased just under a half a million shares to date and since that we will have been, the weighting of that will be 50% since it was about half way through the year, that would reduce the fully diluted for the year by two hundred and fifty thousand which is negligible in terms of the full year count.

Did that make sense?.

Yes, it does, but is there any, I guess I know your answer on this anyway, but I will ask, but I am just curious the buyback authorization goes through March 2016, anything that we should think about in terms of how you are going to spend the remainder of the $30 million or the timeframe of that?.

The date on that was simply the window that GE Capital which is the financial institution that we have our credit facility with, they did want opened ended repurchase, so this gives them the flexibility to extend it or what not based off of what’s going on in March. So the only reason why there is the time limitation was more of a back stop for GE.

They have been great partner of ours and we have no expectation that they wouldn’t go along with whatever management considers appropriate at the time. As far as the buyback, the general parameters are that as from time to time in open market, so it’s something that's assessed.

We have a committee, a board of independent board members that are overseeing the process. So it’s still authorized and being executed on..

It is just interesting that just doing the math, from your press release your average cost through that July 20 period this has been around $9 whereas the share price as you know has been below $9 during much of the year or I guess perhaps since you launched the authorization..

I think Jeffrey on that when we announce the initial buyback, the prices fluctuated from around high $8 to $10 and the buyback has been done through a bank itself.

So first I am happy what we bought it at, but it goes through a committee, but I believe we bought it in the period in which we, I think the last couple of weeks at around the figure is 8.90 I think that’s been some of the lows over that period of time..

Okay, fair enough..

And, is that your last question for Joel? I'll answer….

Yes, it is..

So, this thing around the Elsa has, I'll use almost on a full worldwide basis has been beyond well received, the receptiveness from every major retailer from the test goes to places in Brazil to the U.S. market is terrific and that has caused the Snow Glow Elsa 2.0. We also are selling still the Snow Glow Elsa in the market at the same time.

So we have that going until we launch the Sing Along with Elsa and we have a wonderful campaign of marketing, both digitally as well as we have the normal TV marketing campaign. So that is the achievement of the Sing Along with Elsa last year was on the frenzy, this will be a great product line.

But we also not just have the Sing Along with Elsa we have do you want to build the snowman junior box which is an addition item and which we didn’t have last year. Excuse me, we also have the Ariel Color Under The Sea which is another TV item which is promoting Ariel which is a very successful Disney Princess.

And then lastly, we have the DVD release of Cinderella live action which will be in the fall this year. So a lot of that all comes together and we have many new items actually I won’t go through all the new shows [ph] that we've developed for Frozen.

So the items that you saw last year, you have some carry over, but many of the items that you have this year are new items. But some of the perennials that we have that we believe will go on, not obviously for a lifetime, but will go because Disney is keeping a huge amount of that book behind Frozen I think for generations to come.

We have the Frozen dress-up, we have the seasonal areas of Frozen in the Moose Mountain and kid’s only. So we have a huge breath of Frozen products and these are I think it is under Disney’s financials. If you look at cars that hasn’t had true content for many years, it still does well over $1 billion or $2 billion at retail sales.

Toy Story still does and there hasn’t been really any real content. So, Frozen has been a great run for the Disney Company and many people as clothing companies, food companies. So it really is still strong, we are booked more for Frozen this year than what we shipped all through last year.

So it does show the strength of Frozen, so on that side of it, we’re really happy. I’ll call it the frenzy has subsided, but the excitement is still there.

So and then Disney also tentatively announced their movie release in 2017 for Frozen 2 and they also have tentatively announced Frozen will be going on national network next year and they have done a huge amount of build quicker than any property of Disney On Ice I think or Frozen On Ice, there is Frozen Broadway they have across the majority of their products they have built in the frenzy fashion the whole area of Frozen which is and Elsa now out just at Disney two months ago and they had it set up.

And there are some things that we are unaware of that they have planned. So they are backing the Frozen isn’t going away. They believe it is their new Perennial, it is a Princess and which they own, they've developed, they've created.

So it is their baby, so we are excited to be partner with them for their baby and in fact we extended many of our licenses over the last few months. So it is something where we are really excited about..

Stephen, do you think the 2017 date for that [indiscernible] is pretty firm?.

I don’t know the month, but I do think from only, again from what we have elicited and they said it publicly that it is firm. Things do change. You see it change all the time, but they have announced that publicly that it in 2017 and then they announced a lot of different things that they are doing for fall this year and through 2016.

So I feel pretty confident myself..

Okay. Great, thank you very much..

Thank you..

[Operator Instructions] And from B. Riley, we have Linda Bolton Weiser online. Please go ahead..

Hi..

Good morning, Linda..

Hi, Joel can you just repeat, I think you said on the gross margins, did you say adjusted for close out an adjusted number would be like 30.7% in the quarter, is that correct?.

Yes, we had some sales, lower margin sales on some discontinued licenses, there was about 70 basis point drag..

So, it’s seems to be that things like that that kind of impact the gross margin occur periodically, quarters here and there. So I guess, I am just kind of wondering is it something you can project and I guess that’s related to my question on the year’s guidance.

I calculated the repurchase was a little bit accretive like maybe as much as $0.5 to the year’s EPS.

So, I am curious why you wouldn’t raise guidance for that or is it that you are just kind of trying to be conservative because of things like close out hits or maybe you can just explain kind of your guidance thoughts for the year and why you wouldn’t raise?.

Sure, I will break it into two parts, one being in the buyback because we are half way through the year the weighting of the shares as I have mentioned when I walked through the share count, the half a million today is only 250,000 shares on 42.4 million so it’s negligible.

As far as the close outs we still have about two thirds of the sales yet to ship in the back half. So one, we are comfortable with the 31%. There you know the normal course of business we do have things that you know is likely at its end and what not, it added modest sales, but contributed no profit.

So while we are still very excited about the year and we've got a lot of great initiatives a lot of the year has yet to play out, so we are just being conservative..

Okay, great. And then, can I ask you about, you said the number and I just didn’t catch it.

Did you say operating cash flow for the six months for the quarter?.

Well, it was $12 million for the quarter..

Okay..

So, it was $38 million in Q1 and $12 million approximately in the second quarter, $50 million year-to-date..

And then, sorry to ask about it again, but when you said the $30 million did you mean $30 million operating cash flow for the year including working capital changes or can you just clarify one more time what you meant by the $30 million cash flow?.

The $30 million would be free cash flow from 2015 operation.

I was breaking it out, so we'll have approximately a $100 million from the reduction of working capital since we ended 2014 with inventories that are high and also accounts receivable that are high because sales were up 82%, so I was just breaking down the 2015 cash flow between the two pieces..

So, that’s before CapEx or after CapEx?.

It's after CapEx, it’s after taxes, cash interest and CapEx..

Okay, free cash flow got you..

Correct..

Right and then just the next couple of quarters, I guess if we kind of take your guidance on sales for the year and kind of plug in some numbers for the third and fourth quarter, just roughly I have got third quarter up about the same as this quarter about 5% and then a big double digit decline in the fourth quarter.

Can you give – I know you don’t want to give guidance, but do you think the third quarter is actually going be higher growth based on the shipment pattern, like maybe close to the 10% or do you think it’s similar to this 5% we saw this quarter just based on your shipment expectations?.

I think it is closer to the latter. It is our biggest quarter and in terms of the cadence it was the biggest decline was forecast in the fourth quarter, so it's closer to the 5% and that will be on the high side..

Okay, and then finally, just I think you said the role-play segment in the quarter was down 68 million versus 75 million what was the reason for the decline in the quarter in that segment?.

The disguise in 2014 we had a lot of competitively priced products that drove both volume and if you remember second and third quarter margins were lower because of those sales..

Okay. Okay, I think that's it from me. Thank you so much..

Thank you, Linda..

Thank you. We have no further questions at this time. Mr. Berman, I will turn it back to you for closing remarks..

Everybody thank you very much for attending the call. We've had earlier calls with analysts and we will be speaking to investors and analysts throughout today. So if there are any follow up calls or questions, please feel free to get on our schedule and thank you very much for attending our call..

Thank you..

Thank you. Ladies and gentlemen this concludes today's conference. Thank you for joining. You may now disconnect..