Mega Brands Reports 2011 Financial Results

Mega Brands reports fourth quarter and 2011 results

MONTREAL, March 14, 2012 - MEGA Brands Inc. (TSX: MB) announced today its financial results for the fourth quarter and full year ended December 31, 2011. (All figures are expressed in US dollars.)

Consolidated total net sales in 2011 increased 2% to $376.8 million compared to $368.0 million in 2010. Sales increased 2% in Toys product lines and 3% in the Stationery & Activities segment. On a geographic basis, sales were up 1% in North America and 5% in international markets.

Reported net earnings were $8.3 million in 2011 compared to $131.1 million in 2010. Reported earnings in 2011 include a $3.0 million loss on the settlement of debt in 2011 and, in 2010, a $144.3 million gain on the settlement of debt and transaction costs and other expenses of $13.4 million.

Adjusted net earnings increased to $12.3 million or $0.75 per share in 2011 compared to $0.9 million or $0.07 per share in 2010. The term "adjusted net earnings" does not have standardized meaning under IFRS and, consequently, is unlikely to be comparable to similar measures used by other issuers. A reconciliation of adjusted net earnings with IFRS financial statements is provided in the Corporation's Management's Discussion & Analysis for the year ended December 31, 2011.

Fourth quarter results
Fourth quarter 2011 consolidated net sales decreased 3% to $108.5 million compared to $111.8 million in the corresponding 2010 period. Sales decreased 8% in Toys product lines, after a string of eight consecutive quarters of year-over-year increases. Stationery & Activities sales increased 35%, the third consecutive quarter of year-over-year growth for this segment. On a geographical basis, sales declined 4% in North America and 1% in international markets.

Reported net earnings were $0.2 million compared to $11.3 million in the same 2010 period. Reported earnings include contingent consideration charges of $0.1 million in the 2011 period and $0.2 million in the 2010 period resulting from the transition to IFRS.

Adjusted net earnings were $0.3 million or $0.02 per share compared to $11.5 million or $0.70 per share in the 2010 fourth quarter.

Fourth quarter results were mainly impacted by lower than expected sales of Toys in the United States. However, retail sales of the Corporation's Toys during the quarter were higher than in the fourth quarter of 2010.

2012 Outlook
"MEGA Brands achieved important milestones in 2011, including sales growth in all of our operating segments," said Marc Bertrand, President and CEO. "The MEGA BLOKS and ROSE ART brands gained momentum at retail and we entered 2012 with a positive outlook thanks to a compelling offering for preschoolers, girls and boys of all ages, and collectors."

  • Our Preschool construction toys feature several innovations for toddlers and an appealing offering for girls led by our new MEGA BLOKS Lil' Princess assortment and popular licenses such as Hello Kitty and Moshi Monsters.

  • In the Boys construction category, major product launches for 2012 include Power Rangers Super Samurai in the first quarter, Spider-Man in the second quarter based on the new movie, and World of WarCraft in the third quarter. The popularity of MEGA BLOKS Halo continues to grow worldwide and we expect 2012 sales to be stimulated by the release of the Halo 4 video game by Microsoft Games Studios scheduled for the peak toy-selling season.

  • Stationery & Activities began 2012 with growth momentum following three consecutive quarters of year-over-year sales gains in 2011 and a return to profitability.

  • We invested in production equipment and tooling at our Montreal facility in 2011 to increase production efficiency and expect to benefit from this investment in 2012 and beyond.

"With innovative products in our Toys segment, sales momentum in Stationery & Activities, and investments in production efficiency, we are looking forward to a successful 2012," concluded Bertrand.

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 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.