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Press release from CNW Group

/C O R R E C T I O N from source -- Mega Brands Inc./

Wednesday, November 02, 2011

/C O R R E C T I O N from source -- Mega Brands Inc./07:00 EDT Wednesday, November 02, 2011In c9684 transmitted at 07:00e today, an error occurred in the fourth paragraph. We should have read "...compared to $17.2 million..." instead of "...compared to $17.4 million...". Corrected copy follows.MEGA Brands reports third quarter 2011 resultsEighth consecutive quarter of year-over-year sales growthGrowth in Toys and Stationery & ActivitiesDiluted EPS of $0.51 compared to $0.36MONTREAL, Nov. 2, 2011 /CNW Telbec/ - MEGA Brands Inc. (TSX: MB) announced its financial results today for the third quarter ended September 30, 2011. The Corporation adopted International Financial Reporting Standards effective January 1, 2011 and all comparative 2010 figures have been restated. (All figures are expressed in US dollars.)Consolidated net sales in the third quarter increased 4% to $133.4 million compared to $128.3 million in the corresponding 2010 period. This is the eighth consecutive quarter of higher year-over-year consolidated sales since the fourth quarter of 2009.Toy and Stationery & Activities sales were both up 4% compared to the third quarter of 2011. On a geographical basis, North American sales were up 6% and International sales 2%. The Corporation's overall sales performance compares favorably to its peers in light of the cautious mood of retailers who are managing inventories tightly due to economic uncertainty.Net earnings were $17.1 million or $0.51 per diluted share, compared to $17.2 million or $0.36 per diluted share in the third quarter of 2010.''We continue to build momentum in our toy business with retail sales running ahead of shipments and positive movement at retail for our 2011 products, while seeing clear signs that the recovery in Stationery & Activities is firmly on track,'' said Marc Bertrand, President and CEO. ''We are focused on a strong finish to 2011 and creating an even more exciting product portfolio for 2012 based on great innovation and a compelling array of licenses.''Conference CallA conference call will be held at 9:00 a.m. today to discuss the results and business outlook. Participants may listen to the call by dialing (514) 807-8791 or 1 (800) 731-5319. For those unable to participate, a replay will be available until November 9, 2011. The replay phone number is (416) 640-1917 or 1 (877) 289-8525, access code 4477050.About MEGA BrandsMEGA Brands Inc. is a trusted family of leading global brands in construction toys, games & puzzles, arts & crafts and stationery. They offer engaging creative experiences for children and families through innovative, well-designed, affordable and high-quality products. Visit for more information.The MEGA logo, Mega Bloks, Rose Art, MEGA Puzzles, MEGA Games and Board Dudes are trademarks of MEGA Brands Inc. or its affiliates.MD&A FilingThis press release should be read in conjunction with the Corporation's Management's Discussion and Analysis (the ''MD&A'') as well as the unaudited consolidated financial statements and notes for the three- and nine-month periods ended September 30, 2011 and 2010. The Corporation will file these documents today via SEDAR. The MD&A, financial statements and notes will be posted today on the Corporation's Web site.Use of Supplementary Financial MeasuresThe Corporation reports its financial results in accordance with International Financial Reporting Standards (''IFRS''). However, the Corporation believes that certain non-IFRS measures provide useful information to investors regarding its financial condition and results of operations. A reconciliation of supplementary financial measures with IFRS financial statements is provided in the Corporation's MD&A for the three-month period ended September 30, 2011, which is available at and on the Corporation's Web site.Forward-Looking StatementsAll statements in this press release that do not directly and exclusively relate to historical facts constitute "forward-looking information" within the meaning of applicable Canadian securities laws These statements represent the Corporation's intentions, plans, expectations and beliefs. Readers are cautioned not to place undue reliance on these forward-looking statements. Forward-looking information and statements are based on a number of assumptions and involve risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied by them, including, but not limited to risks, assumptions and uncertainties described in the Corporation's MD&A for the year ended December 31, 2010, which are available at and on the Corporation's Web site. The Corporation disclaims any intention or obligation to publicly update or revise any forward-looking information, whether as a result of new information, future events or otherwise, other than as required by applicable law.Unaudited Interim Consolidated Income Statements        (in thousands of US dollars, except per share amounts)                   Three-month periodsended September 30, Nine-month periodsended September 30,  2011 2010 2011 2010 Note$ $ $ $         Net sales 133,354 128,291 268,332 256,211Cost of sales 80,958 74,676 167,074 155,719Gross profit 52,396 53,615 101,258 100,492         Marketing and advertising expenses 3,721 5,505 9,219 11,183Research and development expenses 3,172 2,737 9,965 8,745Other selling, distribution and administrative expenses 22,281 21,471 60,944 73,758Contingent consideration on business acquisition4110 168 884 503Loss (gain) on foreign currency translation 1,162 655 620 (462)         Earnings from operations 21,950 23,079 19,626 6,765         Financial expenses 4,552 4,771 14,062 20,816Loss (gain) on settlement of debt7- - 2,984 (144,338)  4,552 4,771 17,046 (123,522)         Earnings before income taxes  17,398 18,308 2,580 130,287         Income taxes          Current 487 1,068 (4,968) 8,705 Deferred (139) 23 (548) 1,772  348 1,091 (5,516) 10,477         Net earnings 17,050 17,217 8,096 119,810         Earnings per share          Basic61.04 1.05 0.49 10.26 Diluted60.51 0.36 0.40 5.97  Unaudited Interim Consolidated Statements of Comprehensive Income(in thousands of US dollars, except per share amounts)           Three-month periodsended September 30, Nine-month periodsended September 30,  2011 2010 2011 2010 Note$ $ $ $         Net earnings 17,050 17,217 8,096 119,810         Other comprehensive loss:         Cumulative translation adjustment4(1,182) (541) (2,063) (3,216)         Other comprehensive loss: (1,182) (541) (2,063) (3,216)         Comprehensive income 15,868 16,676 6,033 116,594     Unaudited Consolidated Statements of Financial Position    (in thousands of US dollars)           September 30, December 31,  2011 2010 Note$ $     Assets    Current assets    Cash and cash equivalents 2,801 5,277Trade and other receivables 137,223 123,194Inventories 70,824 51,135Derivative financial instruments1148 414Prepaid expenses  12,415 11,039Total current assets 223,311 191,059     Non-current assets    Property, plant and equipment 30,587 21,501Intangible assets 23,298 23,615Goodwill 30,000 30,000Derivative financial instruments11116 309Deferred income tax assets 5,935 7,097Total assets 313,247 273,581          Liabilities         Current liabilities    Asset-based credit facility740,154 -Trade and other payables 74,195 62,686Income taxes 12,610 16,857Derivative financial instruments11289 970Current portion of long-term debt76,848 35  134,096 80,548Non-current liabilities    Long-term debt7104,219 125,507Derivative financial instruments11129 19  104,348 125,526Equity    Share capital8429,007 429,007Warrants824,430 24,430Contributed surplus 3,245 1,982Deficit4(374,556) (382,652)Accumulated other comprehensive loss4(7,323) (5,260)Total equity 74,803 67,507Total liabilities and equity 313,247 273,581         Unaudited Consolidated Statement of Changes in Equity        (in thousands of US dollars)                   Share capitalWarrantsContributedsurplus  DeficitAccumulatedothercomprehensivelossTotal equity Note$$$ $$$Balance - January 1, 2010 308,678-558 (513,754)-(204,518)Net earnings for the period --- 119,810-119,810Other comprehensive loss4--- -(3,216)(3,216)Shares issued in settlement of debt837,869-- --37,869Shares issued for cash885,859-- --85,859Share issuance expense8(3,399)-- --(3,399)Issuance of warrants8-25,395- --25,395Warrant issuance expense8-(965)- --(965)Stock-based compensation --916 --916Balance - September 30, 2010 429,00724,4301,474 (393,944)(3,216)57,751         Net earnings for the period --- 11,292-11,292Other comprehensive loss4--- -(2,044)(2,044)Stock-based compensation --508 -- 508Balance - December 31, 2010 429,00724,4301,982 (382,652)(5,260)67,507         Net earnings for the period --- 8,096-8,096Other comprehensive loss --- -(2,063)(2,063)Stock-based compensation --1,263 --1,263Balance - September 30, 2011 429,00724,4303,245 (374,556)(7,323)74,803     Unaudited Consolidated Statements of Cash Flows    (in thousands of US dollars)           Nine-month periods, ended September 30  2011 2010 Note$ $     Operating activities    Net earnings 8,096 119,810Items not affecting cash and cash equivalents     Depreciation of property, plant and equipment 7,960 8,043 Amortization of intangible assets 316 498 Loss (gain) on settlement of debt71,236 (149,304) Stock-based compensation 1,263 916 Financial expenses 14,062 20,816 Writeoff deferred financing costs71,748 2,967 Income taxes (5,516) 10,477 Gain on foreign currency (3,331) (4,739)  25,834 9,484 Net change in non-cash working capital balances10(27,851) (16,684) Income taxes recovered (paid) 706 (1,255) Interest paid (6,827) (20,887)Cash flows used by operating activities (8,138) (29,342)     Financing activities    Repurchase of debentures7(20,644) -Change in asset-based credit facility740,154 17,887Government loan74,152 -Issuance of long-term debt732 -Repayment of long-term debt7- (216,159)Issuance of debentures7- 120,732Issuance of capital stock8- 85,859Issurance of warrants8- 23,776Addition to deferred financing costs7- (7,937)Share issue cost8- (3,399)Issue costs on warrants8- (965)Cash flows provided by financing activities 23,694 19,794     Investing activities    Acquisition of property, plant and equipment (18,145) (7,319)Cash flows used by investing activities (18,145) (7,319)     Effect of changes in foreign exchange rates on cash and cash equivalents 113 (102)     Decrease in cash and cash equivalents (2,476) (16,969)Cash and cash equivalents — Beginning of period 5,277 26,763     Cash and cash equivalents — End of period 2,801 9,794   For further information: Peter Ferrante Vice President and Chief Financial Officer MEGA Brands Inc. Tel: (514) 333-5555 ext. 2283