q4 and full year 2010 results
MEGA BRANDS REPORTS FOURTH QUARTER AND 2010 RESULTS (cnw)
MONTREAL, March 17 /CNW Telbec/ - MEGA Brands Inc. (TSX: MB) announced today its financial results for the fourth quarter and full year ended December 31, 2010. (All figures are expressed in US dollars.)
Consolidated net sales in the fourth quarter increased 4% to $111.8 million compared to $107.3 million in the corresponding 2009 period. Net earnings were $10.2 million or
.01 per diluted share compared to a net loss of $22.1 million or
.60 per share in the fourth quarter of 2009. Adjusted earnings from operations increased to $14.5 million compared to $4.9 million in the fourth quarter of 2009.
For 2010, consolidated net sales increased 9% to $368.0 million compared to $338.9 million in 2009. Net earnings were $125.9 million or
.28 per diluted share compared to $10.7 million or
.29 per diluted share in 2009. Net earnings in both years included gains from non-recurring items. Adjusted earnings from operations increased to $35.1 million compared to $21.8 million in 2009.
The improvement in the Corporation's 2010 results was led by its Toys segment which more than offset lower results in the Stationery and Activities segment. Consolidated 2010 net sales increased 3% in North America and 20% in international markets.
''We are pleased with our overall performance, with 20% growth in worldwide toy sales for the year driven by strong contributions from core MEGA BLOKS product lines and licenses such as Thomas & Friends and Halo,'' said Marc Bertrand, President and CEO. ''EBITDA was up 13% to $45.3 million and we ended the year in a sound financial position.''
For 2011, the Corporation is launching several new MEGA BLOKS product lines complemented by new licenses such as Hello Kitty in the Preschool category and Need for Speed in the Boys category. ''The construction category continues to outperform the toy industry and we entered the year with good momentum and a solid business plan to increase sales and profitability in 2011,'' concluded 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) 807-8791 or 1 (888) 731-5319. For those unable to participate, a replay will be available until March 23, 2011. The replay phone number is (416) 640-1917 or (877) 289-8525, access code 4421804.
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
https://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, 2010 and 2009. 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 Canadian Generally Accepted Accounting Principles (GAAP). However, the Corporation believes that certain non-GAAP measures provide useful information to investors regarding its financial condition and results of operations. A reconciliation of supplementary financial measures with GAAP financial statements is provided in the Corporation's MD&A for the year ended December 31, 2010, 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, 2010, 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.
Consolidated statements of earnings
(in thousands of US dollars, except per share data)
Three-month periods Twelve-month periods
ended December 31, ended December 31,
2010 2009 2010 2009
$ $ $ $
(Unaudited) (Unaudited) (Audited) (Audited)
Net sales 111,809 107,295 368,020 338,912
Cost of sales 66,657 73,612 221,692 219,069
Gross profit 45,152 33,683 146,328 119,843
Marketing and advertising expenses 8,177 6,524 19,360 14,208
Research and development expenses 3,555 2,827 12,300 11,370
Other selling, distribution and administrative expenses 21,088 25,295 93,855 99,806
Impairment of goodwill / recovery of purchase price - 2,039 900 (69,927)
Loss (gain) on foreign currency translation on debentures 4,275 1,424 4,096 8,089
Loss (gain) on foreign currency translation (2,125) (1,281) (906) (5,736)
Earnings from operations 10,182 (3,145) 16,723 62,033
Interest and other expenses
Interest on long-term debt 4,145 11,573 22,530 43,916
Settlement of debt - - (140,344) -
Change in fair value of interest rate swap - 5,982 - 4,185
Amortization of deferred financing costs 472 986 2,536 3,232
Other interest 320 219 576 263
4,937 18,760 (114,702) 51,596
Earnings before income taxes 5,245 (21,905) 131,425 10,437
Income taxes
Current (5,520) 1,775 3,185 5,555
Future 560 (1,627) 2,332 (5,844)
(4,960) 148 5,517 (289)
Net earnings 10,205 (22,053) 125,908 10,726
Earnings per share (Note 8)
Basic 0.03 (0.60) 0.49 0.29
Diluted1) 0.01 (0.60) 0.28 0.29
Consolidated statements of deficit
(in thousands of US dollars)
Three-month periods Twelve-month periods
ended December 31, ended December 31,
2010 2009 2010 2009
$ $ $ $
(Unaudited) (Unaudited) (Audited) (Audited)
Balance, beginning of period (413,616) (507,266) (529,319) (543,161)
Impact of the adoption of new abstract, Handbook EIC-173,
Credit Risk and the Fair Value of Financial Assets and Financial Liabilities
Change in fair value of interest rate swap - - - 4,722
Income taxes - - - (1,606)
- - - 3,116
- - -
Balance, beginning of period as restated (413,616) (507,266) (529,319) (540,045)
Net earnings 10,205 (22,053) 125,908 10,726
Balance, end of period (403,411) (529,319) (403,411) (529,319)
Consolidated statements of comprehensive
income and Accumulated other
comprehensive income
(in thousands of US dollars)
Three-month periods Twelve-month periods
ended December 31, ended December 31,
2010 2009 2010 2009
$ $ $ $
(Unaudited) (Unaudited) (Audited) (Audited)
Net earnings for the period 10,205 (22,053) 125,908 10,726
Other comprehensive income, net of income taxes
Gain on derivatives designated as cash flow hedges - 4,037 - 5,105
Comprehensive income for the period 10,205 (18,016) 125,908 15,831
Accumulated other comprehensive loss
Balance, beginning of period
Gross - (6,521) - (8,246)
Income taxes - 2,484 - 3,141
- (4,037) - (5,105)
Other comprehensive income (loss)
Net change in losses on cash flow hedging items - - - -
Reclassification to income (loss) - 6,521 - 8,246
Income taxes - (2,484) - (3,141)
- 4,037 - 5,105
Balance, end of period
Gross - - - -
Income taxes - - - -
Balance, end of period - - - -
Consolidated balance sheets
(in thousands of US dollars)
December 31, December 31,
2010 2009
(Audited) (Audited)
$ $
Assets
Current assets
Cash and cash equivalents 5,277 26,763
Accounts receivable 123,194 112,517
Inventories 51,135 46,247
Future income taxes 4,954 4,197
Derivative financial instruments 414 -
Prepaid expenses 11,039 12,806
196,013 202,530
Property, plant and equipment 21,722 21,210
Intangible assets 23,615 24,278
Goodwill, net 30,000 30,000
Derivative financial instruments 309 -
Future income taxes 2,143 2,197
273,802 280,215
Liabilities
Current liabilities
Accounts payable and accrued liabilities 60,590 67,290
Income taxes 16,857 10,729
Derivative financial instruments 970 -
Current portion of long-term debt 35 944
78,452 78,963
Long-term debt 125,507 395,940
Derivative financial instruments 19 6,045
Future income taxes - 764
203,978 481,712
Shareholders' equity
Capital stock 429,007 308,678
Warrants 24,430 -
Contributed surplus 19,798 558
Equity component of convertible debentures - 18,586
Deficit (403,411) (529,319)
69,824 (201,497)
273,802 280,215
Consolidated statements of cash flows
(in thousands of US dollars)
Three-month periods Twelve-month periods
ended December 31, ended December 31,
2010 2009 2010 2009
$ $ $ $
(Unaudited) (Unaudited) (Audited) (Audited)
Cash flows from operating activities
Net earnings 10,205 (22,053) 125,908 10,726
Items not affecting cash and cash equivalents
Amortization of property, plant and equipment 2,323 7,543 9,469 17,612
Amortization of intangible assets 166 166 664 664
Settlement of debt - - (145,310) -
Impairment of goodwill / recovery of purchase price - 2,039 - (54,775)
Amortization of unrealized loss on swap derivative financial instruments - 6,520 - 8,246
Gain on swap derivative financial instruments - (539) - (4,062)
Stock-based compensation plans 726 340 1,302 368
Amortization of deferred financing costs 472 986 2,536 3,232
Accretion of interest on debentures 591 - 1,758 -
Writeoff deferred financing costs - - 2,967 -
Future income taxes 560 (1,627) 2,332 (5,844)
Accretion of interest on convertible debentures - 768 819 2,727
Loss (gain) on foreign currency 4,663 1,206 1,426 7,516
19,706 (4,651) 3,871 (13,590)
Changes in non-cash operating working
capital items (3,612) 20,262 (17,119) 5,658
16,094 15,611 (13,248) (7,932)
Cash flows from financing activities
Change in asset-based credit facility (17,887) - - -
Repayment of long-term debt (118) (707) (216,277) (4,440)
Issuance of debentures - - 120,733 -
Issuance of capital stock - - 85,859 -
Issuance of warrants - - 23,775 -
Addition to deferred financing costs - - (7,937) (3,254)
Share issue cost - - (3,399) -
Issue costs on warrants - - (965) -
(18,005) (707) 1,789 (7,694)
Cash flows from investing activities
Acquisition of property, plant and equipment (2,662) (1,629) (9,981) (7,096)
(2,662) (1,629) (9,981) (7,096)
Effect of changes in foreign exchange rates on cash and
cash equivalents 56
51
(46)
58
Increase (decrease) in cash and cash equivalents (4,517) 13,326 (21,486) (22,664)
Cash and cash equivalents, beginning of period 9,794 13,437 26,763 49,427
Cash and cash equivalents, end of period 5,277 26,763 5,277 26,763
Supplementary disclosure of cash flow information
Interest paid 6,967 12,811 27,488 42,535
Income taxes paid (recovery) (4,198) (661) (2,943) (817)
For further information:
Investor Contact:
Peter Ferrante
Chief Financial Officer
Tel: (514) 333-5555 ext. 2283