MEGA BRANDS INC 
By • EBITDA of $29.2 million compared to $28.2 million
• Diluted EPS of $0.79 compared to $0.63
MONTREAL, October 31, 2013 - MEGA Brands Inc. (TSX: MB) announced its financial results today for the third quarter ended September 30, 2013. (All figures are expressed in US dollars.)Consolidated net sales in the third quarter were $140.9 million compared to $140.1 million in the corresponding 2012 period.
• Sales for the Toys segment increased 1% compared to the third quarter of 2012, with strong shipments of Preschool & Girls construction toys, offset by lower sales of Boys & Collectors construction toys.
• Sales for the Stationery & Activities segment were up 1%, the tenth consecutive quarter of year- over-year growth.
• On a geographical basis, North American sales were 1% higher and international sales were level.
Earnings before interest, taxes, depreciation and amortization (''EBITDA'') increased to $29.2 million compared to $28.2 million in the third quarter of 2012. EBITDA is a supplementary financial measure.
Net earnings were $22.6 million or $0.79 per diluted share ($0.99 per basic share) compared to
$19.5 million or $0.63 per diluted share ($1.19 per basic share) in the third quarter of 2012.
For the nine-month period ended September 30, 2013, consolidated net sales increased 4% to
$303.5 million compared to $292.7 million in the same period last year, with 4% growth in Toys, 2% in Stationery & Activities, 4% in North America and 2% in International. EBITDA increased to $38.1 million compared to $35.2 million in the corresponding period in 2012. Net earnings were $19.4 million or
$0.82 per diluted share ($0.94 per basic share) compared to $12.6 million or $0.64 per diluted share
($0.77 per basic share) in the same 2012 period.
''With our solid Preschool & Girls offering and recent traction in Boys & Collectors construction toys, including the launch of Call of Duty Collector Construction Sets, we continue to focus on sustaining our positive sales momentum through the balance of 2013,'' said Marc Bertrand, President and CEO. ''In addition, we are continuing to move forward with initiatives to improve our balance sheet, global manufacturing position and brand portfolio.
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 1 (888) 231-8191 or (514) 807-9895. For those unable to participate, a replay will be available until November 7, 2013. The replay phone number is (514) 807-9274 or
1 (855) 859-2056, access code 50752892.
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 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 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, 2013 and 2012. 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.
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- and nine-month periods ended September 30, 2013, which is available at www.sedar.comand 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, 2012, which are available at www.sedar.comand 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.
Investor Contact: Peter FerranteVice President and Chief Financial Officer
Tel: (514) 333-5555 ext. 2283
Unaudited Interim Consolidated Income Statements(in thousands of US dollars, except per share amounts)
Thre e -m onth pe riods e nde d Se pte m be r 30,
2013 2012
$ $Nine -m onth pe r iods
e nde d Se pte m be r 30,
2013 2012
$ $
Net sales 140,896 140,057 303,526 292,733
Cost of sales 86,704 84,076 190,217 183,056
Marketing and advertising expenses 3,265 3,358 11,872 9,234
Research and development expenses 3,679 3,754 11,572 11,813
Other selling, distribution and administrative expenses 21,224 23,533 62,790 62,646
Contingent consideration on business acquisition 87 95 260 287
Loss (gain) on f oreign currency translation 449 574 (842) 103
Financial expenses 2,119 4,419 8,596 13,131
Early redemption of debentures - - 2,869 -
Income taxes
Current 793 725 (3,170) (113) Def erred - - - -
Basic 0.99 1.19 0.94 0.77
Diluted 0.79 0.63 0.82 0.64
Unaudited Interim Consolidated Statements of Comprehensive Income
(in thousands of US dollars, except per share amounts)
Thre e -m onth pe r iods e nde d Se pte m be r 30,
2013 2012
$ $Nine -m onth pe riods
e nde d Se pte m be r 30,
2013 2012
$ $ Ne t e arnings 22,576 19,523 19,362 12,576Other comprehensive income (loss):
Items that may be reclassif ied subsequently to income or loss
Cumulative translation adjustment (8) 244 (551) 1,053
Items that w ill not be reclassif ied subsequently to income or loss
Cumulative translation adjustment (494) (1,169) 2,250 304
Othe r com pre he ns ive incom e (los s ): (502) (925) 1,699 1,357 Com pr e he ns ive incom e 22,074 18,598 21,061 13,933 Unaudited Consolidated Statements of Financial Position(in thousands of US dollars)
Se pte m be r 30,
2013
$De ce m be r 31,
2012
$
Cash and cash equivalents 4,038 8,018
Trade and other receivables 146,201 130,541
Inventories 69,909 45,779
Derivative f inancial instruments - 113
Prepaid expenses 7,105 9,370
Total current assets 227,253 193,821
Property, plant and equipment 46,329 39,817
Intangible assets 22,455 22,771
Goodw ill 30,000 30,000
Asset-based credit f acility 8,816 - Trade and other payables 75,488 62,638
Income taxes 3,774 5,631
Derivative f inancial instruments 472 - Current portion of long-term debt 1,888 8,023
Long-term debt 62,150 112,992
Derivative f inancial instruments 72 206
Share capital 501,851 431,893
Warrants 8,486 24,029
Contributed surplus 5,460 4,478
Def icit (338,374) (357,736) Accumulated other comprehensive loss (4,046) (5,745) Total e quity 173,377 96,919
Unaudited Consolidated Statement of Changes in Equity
(in thousands of US dollars)
Shar e capital Warr ants
Contribute d
s urplus De ficit
Accum ulate d othe r
com pre he ns ive los s
Total e quity
$ $ $ $ $ $ Balance - De ce m be r 31, 2011 429,007 24,430 3,492 (374,322) (6,844) 75,763Net earnings - - - 12,576 - 12,576
Options exercised 316 (100) 216
Other comprehensive income - - - - 1,357 1,357
Stock-based compensation - - 692 - - 692
Balance - Se pte m be r 30, 2012 429,323 24,430 4,084 (361,746) (5,487) 90,604 Balance - De ce m be r 31, 2012 431,893 24,029 4,478 (357,736) (5,745) 96,919Net earnings - - - 19,362 - 19,362
Options exercised 1,679 - (518) - - 1,161
Warrants exercised 68,279 (15,543) - - - 52,736
Other comprehensive income - - - - 1,699 1,699
Stock-based compensation - - 1,500 - - 1,500
Balance - Se pte m be r 30, 2013 501,851 8,486 5,460 (338,374) (4,046) 173,377 Unaudited Consolidated Statements of Cash Flows(in thousands of US dollars)
Nine -m onth pe riods
e nde d Se pte m be r 30,
2013
2012
Net earnings 19,362 12,576
Adjustments f or:
Depreciation of property, plant and equipment 9,817 9,045
Amortization of intangible assets 316 316
Stock-based compensation 1,500 692
Financial expenses 8,596 13,131
Early redemption of debentures 2,869 - Income taxes (3,170) (113) Loss (gain) on f oreign currency (634) 2,849
Net change in non-cash w orking capital balances (26,390) (13,640) Income taxes recovered (paid) 1,701 (472) Interest paid (4,875) (7,055)
Cash f low s provided by operating activities 9,092 17,329
Repayment of debentures (60,368) (7,411) Change in asset-based credit f acility 8,816 (4,018) Government loan - 6,591
Issuance of capital stock 53,899 217
Issuance (repayment) of long-term debt (317) 24
Cash f low s provided (used) in f inancing activities 2,030 (4,597)
Acquisition of property, plant and equipment (15,024) (15,765) Cash f low s used in investing activities (15,024) (15,765)
Ef f ect of changes in f oreign exchange rates on cash and cash equivalents (78) (58)
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