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Press release from PR Newswire

MEGA Brands Reports Fourth Quarter and 2012 Results

Friday, March 01, 2013

MEGA Brands Reports Fourth Quarter and 2012 Results01:10 EST Friday, March 01, 2013 Consolidated net sales up 18% in Q4 and 12% full year Toys net sales up 21% in Q4 and 12% full year EBITDA up 33% in Q4 and 25% full year MONTREAL, March 1, 2013 /PRNewswire/ - MEGA Brands Inc. (TSX: MB) announced today its financial results for the fourth quarter and full year ended December 31, 2012. (All figures are expressed in US dollars.) Fourth quarter 2012 consolidated net sales increased 18% to $127.5 million compared to $108.5 million in the corresponding 2011 period. Sales were up 21% in Toys product lines and 1% in Stationery & Activities. On a geographic segment basis, North American sales rose 22 % and International sales were up 7%. Earnings before interest, taxes, depreciation and amortization (''EBITDA'') increased 33% to $13.9 million compared to $10.4 million in the fourth quarter of 2011. EBITDA is a supplementary financial measure. Net earnings were $4.0 million or $0.24 per basic share ($0.01 per diluted share), compared to $0.2 million or $0.01 per basic share (loss of $0.21 per diluted share) in the same 2011 period. Full year 2012 For 2012, consolidated net sales increased 12% to $420.3 million compared to $376.8 million in 2011. Sales increased 12% in Toys product lines and 9% for Stationery & Activities. On a geographic segment basis, sales were up 20% in North America and down 4% in international markets. EBITDA increased 25% to $49.2 million compared to $39.2 million in 2011. Net earnings were $16.6 million or $1.01 per basic share ($0.84 per diluted share), compared to $8.3 million or $0.51 per basic share ($0.46 per diluted share) in 2011. Management's comments ''MEGA Brands achieved a solid fourth quarter in 2012, with higher sales, gross margin, profitability and cash flow compared to the same period in 2011,'' said Marc Bertrand, President and Chief Executive Officer. ''Our brands and our financial position continue to strengthen, and we will continue to invest in product development and to increase efficiency and manufacturing capacity at our Montreal facility.'' ''Looking ahead, we expect continued sales growth based on our momentum in the marketplace and positive feedback on our product lines at recent toy fairs in Asia, Europe and North America,'' concluded Marc Bertrand. Conference Call A 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) 807-9895 or 1 (888) 231-8191. For those unable to participate, a replay will be available until March 8, 2013. The replay phone number is (514) 807-9274 or 1 (855) 859-2056, access code 87704752. About MEGA Brands MEGA 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 http://www.megabrands.com 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 Filing This press release should be read in conjunction with the Corporation's Management's Discussion and Analysis (the ''MD&A'') as well as the audited consolidated financial statements and notes for the years ended December 31, 2012 and 2011. 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 Measures The 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 year ended December 31, 2012, which is available at www.sedar.com and on the Corporation's Web site. Forward-Looking Statements All 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, 2012, which are available at www.sedar.com 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. MEGA Brands Inc.               Consolidated Income Statements               (in thousands of US dollars, except per share amounts)                                 Three-month periods ended December 31,   Twelve-month periods ended December 31,   2012 2011 2012 2011   (Unaudited) (Unaudited) (Audited) (Audited)   $ $ $ $                 Net sales 127,538   108,495   420,271   376,827 Cost of sales 79,396   68,575   262,452   235,649 Gross profit 48,142   39,920   157,819   141,178                 Marketing and advertising expenses 7,703   7,808   16,937   17,027 Research and development expenses 4,405   4,491   16,218   14,456 Other selling, distribution and administrative expenses 25,184   21,596   87,830   82,540 Contingent consideration on business acquisition 96   110   383   994 Loss on foreign currency translation 473   801   576   1,421                 Earnings from operations 10,281   5,114   35,875   24,740                 Financial expenses 4,516   4,604   17,647   18,666 Loss on settlement of debt -   -   -   2,984   4,516   4,604   17,647   21,650                 Earnings before income taxes 5,765   510   18,228   3,090                 Income taxes                  Current 1,755   (7,369)   1,642   (12,337)   Government loans -   7,645   -   7,097   1,755   276   1,642   (5,240)                 Net earnings 4,010   234   16,586   8,330                 Earnings per share                 Basic 0.24   0.01   1.01   0.51   Diluted 0.01   (0.21)   0.84   0.46 MEGA Brands Inc.               Consolidated Statements of Comprehensive Income               (in thousands of US dollars, except per share amounts)                                 Three-month periods ended December 31,   Twelve-month periods ended December 31,   2012 2011 2012 2011   (Unaudited) (Unaudited) (Audited) (Audited)   $ $  $ $                 Net earnings 4,010   234   16,586   8,330                 Other comprehensive income (loss):                 Cumulative translation adjustment (258)   479   1,099   (1,584)                 Other comprehensive income (loss) (258)   479   1,099   (1,584)                 Comprehensive income 3,752   713   17,685   6,746 MEGA Brands Inc.         Consolidated Statements of Financial Position         (in thousands of US dollars)                     December 31, December 31,   2012 2011   (Audited)   (Audited)     $ $           Assets         Current assets         Cash and cash equivalents 8,018   6,745   Trade and other receivables 130,541   126,359   Inventories 45,779   69,560   Derivative financial instruments 113   904   Prepaid expenses  9,370   13,760   Total current assets 193,821   217,328             Non-current assets         Property, plant and equipment 39,817   32,172   Intangible assets 22,771   23,193   Goodwill 30,000   30,000   Derivative financial instruments -   231   Total assets 286,409   302,924             Liabilities                   Current liabilities         Government loans -   37,279   Trade and other payables 62,638   71,762   Income taxes 5,631   5,832   Current portion of long-term debt 8,023   7,013     76,292   121,886   Non-current liabilities         Long-term debt 112,992   105,275   Derivative financial instruments 206   -     113,198   105,275   Equity         Share capital 431,893   429,007   Warrants 24,029   24,430   Contributed surplus 4,478   3,492   Deficit (357,736)   (374,322)   Accumulated other comprehensive loss (5,745)   (6,844)   Total equity 96,919   75,763   Total liabilities and equity 286,409   302,924   MEGA Brands Inc.               Consolidated Statement of Changes in Equity               (in thousands of US dollars)                                   Share capital Warrants Contributed surplus Deficit Accumulated other comprehensive loss Total equity (Audited)   $ $ $ $ $ $ Balance - December 31, 2010   429,007 24,430 1,982 (382,652) (5,260) 67,507 Net earnings   - - - 8,330 - 8,330 Other comprehensive loss   - - - - (1,584) (1,584) Stock-based compensation   - - 1,510 - - 1,510 Balance - December 31, 2011   429,007 24,430 3,492 (374,322) (6,844) 75,763                 Net earnings   - - - 16,586 - 16,586 Other comprehensive income   - - - - 1,099 1,099 Options exercised   472 - (148)     324 Warrants exercised   2,414 (401) - - - 2,013 Stock-based compensation   - - 1,134 - - 1,134 Balance - December 31, 2012   431,893 24,029 4,478 (357,736) (5,745) 96,919 MEGA Brands Inc.       Consolidated Statements of Cash Flows       (in thousands of US dollars)                 Twelve-month periods, ended December 31   2012 2011   (Audited) (Audited)   $ $         Operating activities       Net earnings 16,586   8,330 Adjustments for:         Depreciation of property, plant and equipment 12,476   13,074   Amortization of intangible assets 422   422   Loss on settlement of debt -   1,236   Stock-based compensation 1,134   1,511   Financial expenses 17,647   18,666   Writeoff deferred financing costs -   1,748   Income taxes 1,642   (5,240)   Loss (gain) on foreign currency 2,316   (374)     52,223   39,373   Net change in non-cash working capital balances 14,406   (24,011)   Income taxes paid (recovered) (1,473)   1,312   Interest paid (13,158)   (13,755) Cash flows provided by operating activities 51,998   2,919         Financing activities       Repayment of debentures (7,411)   (20,678) Change in asset-based credit facility (37,279)   37,279 Government loans 6,591   5,065 Issuance of long-term debt 4,524   32 Repayment of long-term debt (220)   - Issuance of capital stock 2,337   - Cash flows provided by (used in) financing activities (31,458)   21,698         Investing activities       Acquisition of property, plant and equipment (19,234)   (23,248) Cash flows used in investing activities (19,234)   (23,248)         Effect of changes in foreign exchange rates on cash and cash equivalents (33)   99         Increase in cash and cash equivalents 1,273   1,468 Cash and cash equivalents ? Beginning of year 6,745   5,277         Cash and cash equivalents ? End of year 8,018   6,745       SOURCE MEGA BRANDS INC.For further information: <p> </p> <p> <b>Investor Contact</b>: </p> <p> Peter Ferrante<br/> Chief Financial Officer<br/> Tel: (514) 333-5555 ext. 2283 </p>