Toy Company RC2 announced Friday that it was selling all of the issued and outstanding capital of RC2 South, Inc., its collectible trading card business and substantially all of the assets relating to its die-cast sports collectibles business to FCS Enterprises, a newly formed Delaware-based holding company.
The key element in this deal for game retailers is that Charlotte-based Joyride Entertainment, publishers of the Full Metal Alchemist Trading Card Game, although not mentioned specifically in the press release announcing the sale, is geographically linked to RC2 South. According to a statement released by the FCS Management Committee, the intent of the new owners 'is to continue RC2 South, Inc. business under its present structure.'
These sentiments were mirrored in a statement from Bob Bove Managing Director of RC2 South, who told ICv2, 'Our
Joyride Studios, the action figure division, operates out of Iowa, and is distinct from Joyride Entertainment and RC2 South.
RC2 plans to use the $7 million profit from the sale to pay down company debt. The RC2 South companies managed to generate nearly $16 million in sales for the 12 month period that ended on October 31st, 2006. RC2 indicated that the sale would have a negative impact on earnings of 8 cents for the year and revised its earnings forecast from its original range of $2.60 to $2.70 to $2.52 to $2.62 per share -- and its stock was down slightly (about half a percent) in the wake of the sale's announcement.
In selling its collectible businesses RC2 has evidently decided to concentrate on the elements of its business that are the strongest at this time. In its most recently quarterly statement RC2 reported increased sales driven by expanding sales of its children's toy and infant product categories, though the substantial increases in those categories was partially offset by declines in the company's collectible products category, which includes NASCAR trading cards and die cast NASCAR cars as well as Joyride's video game-based action figures and FMA TCG, were down (year-over-year) by 13.6% for the most recent quarter and 22.8% for the first three quarters of the year. Given the number of releases for Joyrides FMA TCG in 2006 versus 2005, it would appear that the game likely contributed more sales this year, though figures for Joyride Entertainment are not broken out in the RC2 statement.
