Anthony Gikas – Piper Jaffray Steve Epstein - Defiance Asset Management Todd Schwartzman - Sidoti & Company Edward Woo – Wedbush Morgan Securities Inc. Sean McGowan – Needham & Company Arvind Bhatia – Sterne, Agee & Leach Gerrick Johnson – BMO Capital Markets John Taylor – Arcadia Investment Corporation

Good morning, my name is Dawn and I will be conference operator today. At this time, I would like to welcome everyone to the Jakks Pacific First Quarter Earnings Call. (Operator Instructions) Ms. Rosenberg, you may begin your conference.

Thank you. Good morning everyone. This Genna Rosenberg, Senior Vice President of Communications and Investor Relations for Jakks Pacific. Thank you for joining our teleconference with Jakks’s management to review the results for the first quarter ended March 31, 2008. On the call today are Jack Friedman, Chairman and Chief Executive Officer of Jakks Pacific, Steven Berman, our President and Chief Operating Officer and Joel Benneht, our Executive Vice President and Chief Financial Officer. Mr. Friedman will first provide an overview of the quarter and our operational results and then Mr. Benneth will provide detailed comments regarding our financial results. Mr. Friedman will then conclude the prepared portion of the call with highlights of our product lines and current business trends prior to opening up the call for you one on one questions. Before we begin, I would like to point out that any comments made about our future performance, events or circumstances, including the estimates of sales and earnings per share for 2007, as well as any forward-looking statements, are subject to the Safe Harbor protection under federal securities laws. These statements reflect our 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 our forward-looking statements. For details concerning these and other such risks and uncertainties, you should consult our most recent 10-K and 10-Q filings with the SEC as well as our company's other reports subsequently filed with the SEC from time to time. With that, I will turn the call over to Mr. Friedman.

Thank you. Good morning ladies and gentleman. Thank you for joining us this morning to discuss our results for the first quarter of 2008. First quarter 2008 net sales for Jakks Pacific increased 5.5% to $130.9 million with traditional toy sales from our diverse product portfolio driving the business. As is typical of first quarter, it is expected to be our lowest sales volume quarter. We are quite optimistic that our 2008 product portfolio will continue to perform within our expectations and believe that we are on track to achieve our 2008 guidance and another record year for Jakks Pacific. We experienced a continued strong sales in the quarter in several traditional toy categories including action figures, dolls, plush, electronics and pretend play products with the largest contributions coming from those based on the Disney characters between pop-star Hannah Montana and classic princess as well as Puppy in Pocket, WWE, Chronicles of the Narnia, Prince Caspian and Pokemon. Disney recently picked up the third season of its top rated Hannah Montana television show earlier this month and the show star Miley Cyrus continues to dominate the tween markets with Miley having won two Nick Kids Choice Awards during the quarter. Our Hannah Montana line looks great with major Hannah Montana contributions coming from several Jakks division later this year and retail support for our line is extremely strong. Both Jakks and Disney are excited by the potential for a new Plug and Play Hannah Montana popular guitar video game developed for tween girls which allows Hannah fans to rock out on Hannah Montana guitar while playing the notes to her songs as they come up on the TV. In addition, new fashion dolls, play sets and role play products are all on track for later this year and we expect…

Thank you, Jack and good morning everyone. First quarter 2008 net sales were $130.9 million compared to $124.1 million in the same period of last year, an increase of 5.5%. Net income for the first quarter was $900,000.00 or $0.03 per diluted share compared to the first quarter of 2007 when we had net income of $3.2 million or $0.12 per diluted share. 2008 was impacted by higher litigation costs, product testing as well as restructuring costs which increased $3.2 million year-over-year to $4 million or $0.10 per diluted share. And now for our sales by product categories. Worldwide sales of traditional toys which include action figures, vehicles, electronic, plush, role play, dolls, kites, tool toys and outdoor and promotional products were $118.3 million for the first quarter of 2008 compared to $119.5 million in the first quarter of 2007 representing approximately 91.3% of overall sales in the first quarter of 2008 versus approximately 89.2% of overall sales in the first quarter of 2007. Sales in the quarter were driven by our action figures, dolls, electronic toys and pretend play products based on WWE, Hannah Montana, Pokemon, Disney Princesses and other popular licenses. Our craft activity writing products which consists primarily of our PenTech and Flying Colors product lines have worldwide sales of approximately $6.1 million in the first quarter of 2008 compared to approximately $9.2 million in the comparable period of 2007 representing 4.7% of total sales for the quarter versus 7.4% of total sales for the first quarter of 2007. Later in 2008, we have several new activities and writing products including our Spa Factory line, Gourmet cupcake maker and more, which we expect will increase sales in this category. Worldwide sales of our pet products were up to $5.3 million in the first quarter of 2008 compared…

Thank you, Joel. We are in full swing getting into production and on letting you keep on eyes on this for this year and are on track to begin to ship many of these new items late second quarter with the majority of the sales on our key new items shipping in the third quarter as is typical. As we mentioned, we are feeling extremely confident about our lineup for 2008 with several resonating as favorites amongst the buyers, analysts and media who have seen the lines. Some new products stem from organic non-licensed product innovation developed here at Jakks while others are innovative initiatives based on our stellar licensing portfolio. The bottom line is, there are new initiatives with great potential coming from every area at Jakks. In the pets, we showcased our 2008 line at the Global Pet Expo in the quarter and we are bombarded by the response to new lines including the US Army, a complete line of Hammer Oral Care products for dogs, an extension of our Right Price oral care dental chews, more new AKC and Cat Fancy and associated products and more. Expansion in to new drug and mass accounts has been progressing on plan and retailers are responding to the quality offering that is moving consumers in about every channel. In seasonal, we saw a modest improvement. Kite sales for the quarter with successful programs at Club Stores and other accounts as we approach summer and have been working on new seasonal and kite initiatives, we expect to bring to market in 2009. Our new PenTech, pen spinning product line called Spinz, which capitalizes on the popular sport of spinning pens through the fingers, they are sitting in retail shelves just about now and if it takes off in the US, as…

(Operator Instructions) Our first question comes from the line of Tony Gikas from Pipper Jaffray.

Good morning, Tony. Anthony Gikas – Piper Jaffray: Hey good morning, guys. A few questions, maybe just a little bit more color on the legal fees, how they are expected to progress through the year, also on the ad spending, it looks like that was higher as well as product development, how should we plan those line items through the balance of the year, and then maybe just a little bit of comment or color on the gross margin, how are input costs affecting you. Do you expect the gross margin to be flat on a year-over-year basis, and then I will have a follow up.

Okay, regarding the legal, within our original forecast that we reaffirmed today, we believe that we have the appropriate amount of legal fees reflected in there. The only thing that we do not control is the timing and then a low volume quarter, obviously, it is more prominent as it is this quarter. Anthony Gikas – Piper Jaffray: Was the timing for legal fees higher in this quarter or was it--? Jack Friedman?: Yes. Again, we believe we have enough in the forecast, as I said, in the lowest volume quarter, it stands out a bit more. Anthony Gikas – Piper Jaffray: Ad expense and product development then?

Product development increased, as we have indicated in prior calls, we increased activities in testing at the factories related to recalls within the industry. We have not had any problems, but we also have a lot of new products, so a portion of it was just increased normal testing, but we have also got a number of new initiatives, new licenses, non licensed products rather that we are introducing this year several of which incorporate adapting technology in to our products, including the Night Vision; we have also got a handful of other big key items, GirlGourmets, Spa Factory, the next generation, EyeClops, Ulti Motion et cetera. So all of this spending is in anticipation of the launches of some key items for this year. Margins, Q1, as mentioned in my portion; ordinarily we did close out at or above cost. We did have some that were below cost and adjusted for the close outs which were about $3 million this quarter. The gross margins would have been 37.6%. We do expect expansions for the year. Again, our forecast has not changed. It is more just the timing of the way things played out. Anthony Gikas – Piper Jaffray: And with the softening retail environment, do you anticipate taking ad spending up, is there anything there that we should be aware of, and then two, just housekeeping questions, amortization for tools and molds was up in the quarter, how do we plan that line item and depreciation was well below trends, maybe just a little help there.

Regarding depreciation and amortization, basically as more time passes from the last acquisition which was CDI, the limited life assets are quickly being fully depreciated, so we are expecting about a $4 million decrease year-over-year and then next year, it goes down another $3 million or $4 million, these are related to play along and the CDI. So we will see that continue to trend down as those assets get fully amortized. What was the other part, Tony? Anthony Gikas – Piper Jaffray: And the other part was ad spending, how do you feel about that?

Easter came actually early. It was in March this year and ordinarily the spend usually occurs in April, so while we do have some key items that we expect to advertise that will hit more third and especially fourth quarter, so year-over-year, it was more of a shift as opposed to a need to push the sales at retail. Anthony Gikas – Piper Jaffray: Okay, and then the last one was the amortization of tools and molds?

$19 million in capex, most of the tools and molds will be brought on line at the end of the second quarter, beginning in the third quarter when we start shipping the big new items. So it should be about what it is, for Q2 and then probably up a few hundred thousand a quarter in the third and fourth quarter. Anthony Gikas – Piper Jaffray: Okay, thanks guys, good luck.

Thank you.

Your next question comes from the line of Steve Epstein with Defiance Asset Management.

Hi everybody. A couple of questions and some follow ups. On inventory levels, could you comment on inventory levels at retail for Jakks at the beginning of the first quarter and the end of the first quarter and just what their trends and behavior have been; it is well publicized that retailers have gotten much more conservative on the inventories occurring in this economic situation.

We are comfortable with our inventories with retail, it is something that we look at on a daily basis. I would say that some of the Hannah Montana products came in very, very late or into January, some of the retailers were expecting it to hit a week or two earlier in December that they would have sold it through, but the sell through from that inventory that has hit shelf are doing very, very well, so I would say that we basically had some closeouts that we needed to take care of that Joel mentioned and we are in great shape at retail. Retail as over the past years have been desirous for less weeks on hand and that varies by retailer by retailer. We think that we and our major retailers are quite sophisticated at handling those inventory situations and we do, and our retailers like to buy a lot of our products on a letter of credit basis. It is beneficial to them and to us as well.

So Jack, exiting Q1, your retailer weeks on hand inventory is appropriate for the current situation now?

Absolutely.

Okay, so coupling that, the retailer trends are being conservative on weeks on hand, you mentioned that the majority of new products will ship in Q3, I assume revenue growth should be higher in the second half than in the first half, is that fair?

Definitely.

Okay, and then could you quantify the operating efficiencies of integrating play along that you cited will begin in the second quarter?

Yes. And one thing more, our new items are beginning to ship out of the Far East late second quarter which we are very thrilled that we are shipping as early as we can, as early as we are including Night Vision, GirlGourmet, Spa Factory, our new iPops and our Ulti Motion and Spinz and some of our private label program. We are actually feeling very good about the shipping dates this year and we are, I would like to emphasize, given the opportunity now that we are very excited about Camp Rock. It was something we were not able to talk about until very recently and Jonas Brothers are hot as could be. They seem to be the equivalent of Hannah Montana.

Jack, are those shipments a little earlier then? I know it is a matter of weeks, I am sure, but a little earlier than last year?

Not so much in dollars but we are getting our new products and we have many more new products this year than last year out earlier, I guess, if you are asking, they tend to put Q2 is looking up, we do not want to comment on Q2, but we are very satisfied with our business. You know we are sorry some of the things, we are sorry for the shareholders and our sales and everybody that some of the things dropped into Q1 the way they did, sometimes that looked bad and I see that our stocks are down this morning, but everything is really on target for us.

Right, well, it is more of a timing issue with the way the analysts have spread out, the sell side has --

As Joel mentioned, we always do some advertising for Easter to get some things kicked off, and unfortunately Easter was in Q1 and we have spent it as it happened, so that was a swing of a couple of million dollars, from 07 to 08 because of when Easter was. Now unfortunately, that’s life and it is hard to do anything different about it. We are actually very well satisfied with our first quarter internally.

Is there a typical amount on new product launches, a typical percentage of orders that are in for a full year by this time, any idea of what you actually get to see?

It does not really work that way. What you get is your space allocation and some ad and other commitments for end caps and things of that nature. That becomes our guide. At this time of year, you are basically getting a forecast and our sales people work on a daily basis with our retailers working out when we can ship, how much to ship, how much they need, how much to launch. It is not as simplistic as you ask the question. It is very complex and interesting and I think, we and our retailer partners do a good job managing it.

And we are just looking for kind of evidence behind your sources of optimism if it is met with much related products?

They are from retailers and we do get forecasts, variable forecasts for many of our products and they are excellent.

Okay, one last question, the play along integration. Could you quantify those operating efficiencies?

I mean, basically what we did is we started or we finalized combining our operations in Hong Kong and also in Florida, so we have smaller space and fewer headcount, but we are expecting an upwards of a million dollars over the second and third and fourth quarter.

Okay, thanks guys.

Thank you.

Your next question comes from the line of Todd Schwartzman with Sidoti & Company. Todd Schwartzman - Sidoti & Company: Hi good morning. What are you seeing in terms of cost related to China compensation, insurance, occupancy and such utilities.

Our presence there, we do have testing office, a testing facility. We do not have a lot of space, so our employees are not subject to those same pressures. On the manufacturing side, we have been doing some opposites in production, you know working closely with the factories to manage or to help them manage their capacity, so they tend to absorb more of the increases in the inputs. In these development process we locate the margins that we need to make and again, work with the factories and re-design items to hit the margins. So while certain input costs are going down, a lot of our items are new each year, so we do not have any precedence in terms of pricing. With all new items, we have all new pricing. We have got more than 80 different factories that we deal with, so to some degree, there is some competitive aspects to where we place the orders. So while certain inputs are going up, we are taking advantage of different opportunities to keep a handle on things. One of which in the last year or so, we started combining all of the requirements of all of our divisions on some of the raw materials, namely the plastics, so instead of having three individual smaller companies purchasing raw materials, we make a commitment now across the company so we are able to extract cost that way and we bang out an upwards of 200 million units of products a year, so a penny here and a penny there really goes a long way.

On an apples to apples basis, we certainly have increased selling prices this year. When there is something to compare apples to apples, as well as virtually all of our competitors and some of those price increases at retail, we have not seen a decline in year unit sales so far. Todd Schwartzman - Sidoti & Company: So aside from commodity cost, there is no specific category of expense related to China that you are growing particularly concerned about, is that a fair assessment?

The Yuan has increased against the dollar, and raw materials, labor and transportation have all increased. Todd Schwartzman - Sidoti & Company: Jack, just some clarification on a statement you made before regarding revenue, you had mentioned that. You expect sales growth to be greater in the back half of the year versus first, that is even in light of the fact that your comps are going to be more difficult than the second half?

I do not know if they are more difficult. I do not have to say it that way. I mean, we have lots of good selling products and lots of new products coming out that we have great shelf space and various pangrams for and I do not know how to say it differently, sitting here today, and we do not think it will change. We are really feeling good about it.

The back half is really the median of the year for us, so although the comps especially in Q4 having been up so much. We do have a lot of new products coming out, so we really have the flow that will enable us to achieve the growth especially in light of the placements that we have on it. Todd Schwartzman - Sidoti & Company: Got you, and where are you with the PHQ arbitration?

This is Jack answering that one. We are still waiting for the California Judge to tell us which arbitrator we are going to use and as soon as it comes. We do not know when the Judge is going to do anything, but we do expect it very shortly and then probably about 60 days after that, we would probably go to arbitration. I am just guessing that is 60 days, but that would seem likely for both sides to be able to prepare the information or the arbitrator. Todd Schwartzman - Sidoti & Company: Also, can you talk a little bit more about distributions for Neopets. You mentioned, later this year, you are going to be, I do not know if it is penetrating some new categories of retailer, can you talk about which customer categories you would be further penetrating.

Initially, the deal that we had struck required us to ship target first and very shortly, we will be shipping all of our major retailers and specialty accounts, on a worldwide basis, not just in the US. Todd Schwartzman - Sidoti & Company: And when is that ramping up significantly domestically as well as abroad? Which quarter?

Probably the very end of second quarter getting into third quarter. Todd Schwartzman - Sidoti & Company: And what about the Camp Rock products? When did those launch? Let us just say in the next 30 to 50 days, we are very excited about that product line. Todd Schwartzman - Sidoti & Company: And then the movie is out in June, correct?

I am not sure if it is June or July. Todd Schwartzman - Sidoti & Company: Okay, final question, no buybacks during the quarter? What is holding you back?

That thing is really holding us back. We have sort of an informal threshold. The stock has been trading up and holding it pretty nicely. So it is sort of in that range, but just was not on us, although, today might be as good as any day. Not today, but once a window opens, it might be as good as any this week to commence that. Todd Schwartzman - Sidoti & Company: And when does that window open?

In like two or three days after the announcement of the earnings. Todd Schwartzman - Sidoti & Company: Great, thanks guys.

Welcome.

Your next question comes from the line of Edward Woo with Wedbush.

Good morning, Edward. Edward Woo – Wedbush Morgan Securities Inc.: Good morning. I had a question, you mentioned that you guys were implementing price increases. Have you guys already done that with your products and what is in the range of the increases?

We have implemented that. That is a hard question to answer and we would rather not get to far until we have our strategy and in some cases, we have changed certain things and certain products. I could answer that the other way, I think you will see price increases in the toy industry, anywhere from 5% to 15% this year, depending on the products and that would probably not be any different than our competitors in that. Edward Woo – Wedbush Morgan Securities Inc.: Great, the other question I have is, has there been any change in the outlook for a possible acquisitions emanating in this industry?

Yes, there has been. Since our last significant acquisition which was CDI, we got into a period from our point of view that people were asking a lot of money for their companies. I guess there was a lot of M&A and private equity stocks going on, and bobbing going back to about last November, forcing to our side to change dramatically. Some of that is recalls, scared particularly the smaller guys that could put them out of business. It scared some of the retailers that the supplier might not be able to back up a recall and both of those have been coming down and we have much more activity going on right now than we have had probably in the last three years combined. So we cannot promise anything until the deal is done, but we are very active in the category and of course, we have the balance sheet to support. Edward Woo – Wedbush Morgan Securities Inc.: Great, and one last question, is there any update to the WWE litigation?

Only in the sense that it is processing and we did spend money in the first quarter in the Connecticut court. Our attorneys are moving to have the case dismissed in Connecticut and we will see what happens. We hope for what we are hoping for and not hope against hope, but we are hoping for early dismissal and finally put the whole thing to an end. Edward Woo – Wedbush Morgan Securities Inc.: Great and good luck.

Thank you.

Thanks, Edward.

Your next question comes from the line of Sean McGowan from Needham & Company.

Good morning, Sean. Sean McGowan – Needham & Company: Thanks guys. Thank you. These areas are follow ups, but one with more detail. Regarding the legal expense increase in the first quarter, why would those expenses not have been accrued in the fourth quarter when the activity around the dismissal was most heavy? Why would there be an increase in the first quarter, a weight over 2007. Maybe, you did not get the bill, but would the accrual not have matched better in the fourth quarter?

We do record the expenses in the period where the services have been rendered. Initially, the Judge’s one page dismissal came at the end of November. The more complete opinion did not get completed until I believe the end of December, so most of the work actually, the activity surrounding it, actually started in January. So, we do again record the expenses in the period where the services have been rendered. It is just that the reconsideration motion, the response to WWE appeal both in the Federal Court plus the activities increasing in Connecticut actually that one is proceeding on a new track.

Fast track.

Fast track rather and so they are up in the quarter. Sean McGowan – Needham & Company: Would you expect this level to be sustained then?

There are absolute flaws to it. Again, we believe that we have enough in the forecast to accommodate where we will be by the end of the year. But the flow of it is there is a fluid activity and drafting motions and presenting motions and then you wait for the Judges to read and consider. So there could be a two or three-month low in between significant upticks in activity.

The best thing that can happen, Sean would be the Connecticut Judge to throw everything out shortly and the expense will come down below what we have anticipated for the year. Sean McGowan – Needham & Company: Okay.

Certainly, within our lowest volume quarter, I would take out a lot more commonly than it would if we have the same sense in Q3 or Q4.

And lastly on that Sean, we have had, which is an unthinkable sum, colleting from our insurance company and we do not calculate any of that until we receive it. So we are in the process of cutting papers back and forth to find out what we will get, but we pay it and when we get the money from the insurance, we collect it. We would accrue any of that anticipation from the insurance company. Sean McGowan – Needham & Company: You mean, the legal fees are covered by insurance?

Some of it, yes.

We have a policy that covers the directors. Sean McGowan – Needham & Company: Okay, that is helpful. Regarding closeouts. I mean, closeouts are common and normal part of the business and I seem to remember last year in the first quarter that you had some of these closeouts. Is it a factor affecting margins in the first quarter, so what specifically was there in the first quarter of 2008 that would have resulted in an unusual shift in margin?

So ordinarily, we aim to get certainly above cost. We did have a few items that were in need of greater price reduction. Sean McGowan – Needham & Company: Were these items that were launched in 2007?

I believe 2006, now Speed Stacks was one of them and Doodle Bears and Trolls. We are saying the inventory certainly does not appreciate and I think Speed Stacks was actually the biggest. In this particular case, on the $3 million in closeouts, we had about $600,000.00 loss on that which is more unusual. Usually, it is either neutral to the gross margin, but as I have mentioned, adjustment for those sales, the gross margins would have been 37.6%. Sean McGowan – Needham & Company: Were there any product categories that were significant in the first quarter of 2007 that were way down in the first quarter of 2008?

Not particularly, I think that Doodle has kind of slowed down. I mean, significant maybe percentage wise, but not in terms of dollar contributions, but the big year for Doodle was 2006. Sean McGowan – Needham & Company: And I have got one more question and regarding kind of how things look at retail because I would have guessed, I did guess that given that Hannah being incremental over a year ago, Pokemon being incremental over a year ago, most of EyeClops incremental, Neopets incremental, huge increases in the pet line, all of which you could observe at the end of the first quarter at retail, seems to suggest a healthier than 5% increase in sales, should we conclude that most of that stuff actually shipped in the fourth quarter?

Some of it shipped in the fourth quarter and there is this desire that we have been discussing as it carries, and Neopets launched.

None of our new initiatives shipped in Q1 at all. Sean McGowan – Needham & Company: Right, I know, but Hannah was certainly not there a year ago and it had a huge sale space, I think the pet supplies stuff was there at the very end of the first quarter, it would have shipped in the first quarter, right?

I think pets moved along as it moved along. It is a steady lower business. I did say and I do not want to get stuck in anything and make a big thing out of it, Sean, but the excitement of the retailers to get those in, there are a couple of our retailers that both said that got on their shelf later than anticipated some of the Hannah Montana stuff and therefore had it in January and worked off those inventories before buying new inventories. There is nothing dramatic in that, just a comment on it. There is nothing to read between the lines in that comment.

And then lastly, Neopets line launched as an exclusive target initially, the roll out to other retailers later in the year. Sean McGowan – Needham & Company: I would have thought that the increase in Toys R Us is pet line alone would account for the entire increase in the pet line. It just looked like there was a lot more shipment than in fact occurred, anyway, go ahead with the next question.

Thank you.

Your next question comes from the line of Arvin Bhatia from Sterne, Agee. Arvind Bhatia – Sterne, Agee & Leach: Good morning, thanks for taking the question. I just want to make clear in terms of your EPS guidance for the year, so in the 291 that you are guiding, you are using Q1 reported EPS of $0.03, you are not adding back the $0.10. Is that right?

Correct. Arvind Bhatia – Sterne, Agee & Leach: Okay, so you are guiding for the balance of the year for EPS to be at least $2.88.

You are good. Arvind Bhatia – Sterne, Agee & Leach: And the street, I guess, before the wave, the South sided model was nine months that are roughly $2.78 based on the consensus of $2.97 for the year and $0.19, so I guess what you are implying is, a lot of it is timing and the way the people had modeled et cetera and you are not seeing anything to suggest softness in your business despite the economy. I just want to be absolutely clear.

And again, we did not got out with the lofty forecast taking into account the economy and everything else. We do have a lot of initiatives that are going to result in launch of some key items that we have mentioned a number of times, so we definitely have the product flow to achieve the forecast. Arvind Bhatia – Sterne, Agee & Leach: And then also, last quarter, I believe, you had indicated that you were expecting contribution from WWE to be down having you set 20%, is that still how you are looking at it, or has that changed?

No, the 20% down is what we are forecasting for the JB. Arvind Bhatia – Sterne, Agee & Leach: That is what I meant.

I think that, last year, I think it was $21 million since she was I think only forecasting a little bit down and sales for the WWE video games were in excess of $230 million or $240 million. We are just being conservative with the new competition from leaving their own portfolio licenses. They have UFC coming out, so out of an abundance of conservatism we just forecast it down. Arvind Bhatia – Sterne, Agee & Leach: So, similar with your model now is that saying what you had indicated last quarter.

There has been no change. These are things that there is a lot of time spent in drafting and following motions and responding to each other’s motions. Then there is a law while the judge contemplates every fair judges, since we have got the suits going. So it is really a timely thing and considering that the federal case has been going on for almost four years. You can imagine that there are a number of months where they are low also. It is more of a timing thing. Arvind Bhatia – Sterne, Agee & Leach: And then with the Olympics this year, I am wondering, should we be building any extra cost or have you built any extra cost in the event of any kind of distraction during that time from China shipment wise, as any extra cost that you are looking at this year?

A lot of our production is done in the South and the Olympics are in the North. I think this conclusion concerns, plus the manufacturing that we have is pretty clean. We are not involved in dirty manufacturing so any limitations on production should not really affect those factories in the South. Arvind Bhatia – Sterne, Agee & Leach: Going back to the guidance thing a little bit, you know you guys always stay up in giving annual guidance, is there any thought or consideration that perhaps one, you know, could you be giving guidance one quarter out, because I think it would help analyst models, the shipment, et cetera much better?

I think the problem is JAKK, and I think the problem with that particularly is certain products get ready for shipment near the end of the quarter or miss the end of the quarter or retailers shift it, at first they wanted it June 20th and then they do not want it until July 10th and those millions of dollars that come close to the end or beginning of a quarter could affect it too much in our opinion for us to give guidance by the quarter. Arvind Bhatia – Sterne, Agee & Leach: Well, I think, I just feel like your business from retail things and you know, I hate to see the stock being affected just because of the timing issues but if you can maybe quantify the best you can and then whatever is on the cost can be also talked about a little bit so we can have a better idea. I am just giving my sense on that.

I think the best answer we can give you for that is, you have asked the question is the $0.10 that was missing from the quarter, we anticipate picking that up to still meet our forecast for the year, so confidence in that. There are also two things going on. If you look at the increase in sales, there was 5.5%. We had a 4% forecast, what we could not have anticipated is the timing of the legal so if just hypothetical so you increase sales each quarter by the 4%, you would actually been pretty close but we never would have forecasted legal to maybe way up in Q1 and down in Q2, that becomes too arbitrary. Arvind Bhatia – Sterne, Agee & Leach: Great! Can you tell us what price point your Ulti-Motion Product will be coming out at?

Yes, the Ulti-Motion will retail probably in the$59.00 to $69.00. I guess, safer if we would say $79.00. We might see it on ad and certain places lower but $79.00 would be the initial target price worth. Arvind Bhatia – Sterne, Agee & Leach: Okay great, those are my questions, thank you guys.

Your next question comes from the line of Gerrick Johnson with BMO Capital Markets Gerrick Johnson – BMO Capital Markets: Hi good morning. Can you discuss your retail take-away, at your expectations for the quarter ahead below?

We are pretty well on target for the quarter. There are a little bit of ups and a little bit of downs but overall on target. Gerrick Johnson – BMO Capital Markets: Okay, and historically, you do most of your shipping FOB, so I was wondering if your order flow has been affected by any changes and perhaps the way retailers are choosing to be fulfilled this year.

No, I would say it is similar to the last couple of years and I do not know if I have used the word majority on LC, probably closer to 50/50. Gerrick Johnson – BMO Capital Markets: Okay, so thank you.

Your next question comes from the line of John Taylor with Arcadia Investment Corporation. John Taylor – Arcadia Investment Corporation: Good morning. I have got a couple of questions, mostly kind of focused on the supply side of things rather than on retail, so with all the quality concerns, there have been some cut backs and excess capacity out there, particularly in China and I am wondering if how you guys are thinking about potential upside. A lot of your key products are shipping relatively early and if you get positive reads, I am interested in whether you think you can capitalize on that with getting production above sort of where you put it in your plan, so that is one side of the question and the other side of the question is, are you having any trouble in China getting all your items manufactured, there has been some comments that the factories are in a position to pick and choose which ones they want to do? So I wonder if you could just talk about that a little bit.

I will answer the second one first. We are not having difficulty on that. Over the years we spent a great deal of time cultivating our relationships with factories. I think Joel mentioned we used over 80 factories to produce our goods on the important products, our potential important products, this first quality of question John, what we do is we look at the overall situation if there are chips as example necessary and that has been quite a long time. We will take some risks on the items that have upside potential and thank those and it is built into our numbers if we need to eventually throw them away. Hopefully that does not happen but all of those things are built in. We will double and triple tuning on the slower components. It is something that I think we do quite sophisticated but the overall answer to your question is, yes we are in a decision to jump on upside potential and we work extremely hard and we will then decide through this conversation and other conversation of this conference call that we are shipping our new products earlier than ever because we do want to get those reasons and see what the velocities are and try to grab an upside. But for our overall forecast to the year. They are reasonably conservative forecasts. John Taylor – Arcadia Investment Corporation: So, if you get in the position where the conservative forecast go up, you are feeling like you have got some flexibility and can monetize some of that.

Absolutely.

There are no further questions at this time.

Okay, thank you all very, very much. I appreciate your time this morning and we look forward to giving you great numbers in the future. Goodbye.

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