Common Stock, Preferred Stock and Warrants

12 Months Ended

Dec. 31, 2012

Common Stock, Preferred Stock and Warrants

Note 15—Common Stock, Preferred Stock and Warrants

The Company has 105,000,000 authorized shares of stock consisting of 100,000,000 shares of $.001 par value common stock and 5,000,000 shares of $.001 par value preferred stock.  On December 31, 2012, shares issued and outstanding were 21,969,355. On December 31, 2011 shares issued and outstanding were 25,943,214.

All issuances of common stock, including those issued pursuant to stock option and warrant exercises, restricted stock grants and acquisitions, are issued from the Company’s authorized but not issued and outstanding shares.

On September 12, 2012, the Company entered into a joint venture (“DreamPlay Toys”) with NantWorks LLC (“NantWorks”) in which it owns a fifty percent interest. Pursuant to the operating agreement of DreamPlay Toys, the Company paid to NantWorks cash in the amount of $8.0 million and issued NantWorks a warrant to purchase 1.5 million shares of the Company’s common stock at an exercise price of $16.2823 per share at a value of $7.0 million in exchange for the exclusive right to arrange for the provision of the NantWorks platform for toy products.  The fair value of the warrant was estimated using the Black-Scholes method, using assumptions consistent with our application of ASC 505-50,  Equity-Based Payments to Non-Employees  (“ASC 505-50”), which are as follows:

	September 12,
	2012
Risk-free interest rate		0.70	%
Expected volatility		42.28	%
Expected life (years)		5.0
Expected dividend yield		2.5	%

The Company’s computation of expected volatility is based upon the historical daily volatility of its publicly traded stock.  The Company used the warrant’s contracted life for the expected life.  The dividend yield assumption is based upon the Company’s annualized dividend yield at the time of issuance.  The risk-free interest rate is equal to the U.S. Treasury rate in effect at the time of the grant for instruments with a similar expected life.

On July 5, 2012, the Company completed a self-tender offer to its shareholders and purchased 4 million shares of its common stock at a price of $20.00 per share for a total of $80.0 million, excluding offering costs of approximately $0.6 million.  The tendered shares were immediately retired.

During 2012, the company declared a cash dividend of $0.10 per share to shareholders of record as of market close on March 15, 2012, June 15, 2012, September 14, 2012 and December 14, 2012.  Cash paid for these dividends were approximately $2.6 million, $2.6 million, $2.2 million and $2.2 million, respectively.

During 2011, the Company declared a cash dividend of $0.10 per share to shareholders of record as of market close on September 12, 2011 and December 12, 2011.  Cash paid for these dividends were approximately $2.6 million and $2.6 million, respectively.

In October 2010, the Company’s Board of Directors authorized the repurchase of up to $30.0 million of its common stock.  As of December 31, 2011, 1,771,633 shares at a value of $30.0 million were repurchased.  The repurchased stock represented approximately 6.8% of the company’s outstanding shares of common stock at the time of the repurchase, and were subsequently retired by the company.