N@N

MEGA Brands reports first quarter 2010 results

^{Published on 2010-05-14 04:20:13 - Market Wire}
 

 - Debt is reduced by approximately $290 million compared to the level at the end of 2009. - Cash interest expenses, which reached $43.9 million in 2009, are expected to decline to approximately $20.5 million in 2010 and $14.0 million in 2011. This excludes interest expense related to utilization, if any, of the Corporation's new asset-based credit facility for working capital purposes. - The Corporation has no principal repayments until 2012, and no financial covenant restrictions. 

 Consolidated statements of earnings (loss) (in thousands of US dollars, except per share data) (Unaudited) Three-month periods ended March 31, 2010 2009 ------------------------------------------------------------------------- ------------------------------------------------------------------------- $ $ Net sales 49,145 43,533 ------------------------------------------------------------------------- Cost of sales 32,330 31,990 ------------------------------------------------------------------------- Gross profit 16,815 11,543 Marketing and advertising expenses 2,634 2,138 Research and development expenses 3,053 3,019 Other selling, distribution and administrative expenses 31,313 19,506 Impairment of goodwill 900 - Loss on foreign currency translation 673 1,245 ------------------------------------------------------------------------- Loss from operations (21,758) (14,365) ------------------------------------------------------------------------- Interest and other expenses Interest on long-term debt 10,051 9,984 Gain on settlement of debt (140,344) - Change in fair value of interest rate swap - 1 ,583 Amortization of deferred financing costs 1,130 306 Other interest 113 (40) ------------------------------------------------------------------------- (129,050) 11,833 ------------------------------------------------------------------------- Earnings (loss) before income taxes 107,292 (26,198) ------------------------------------------------------------------------- Income taxes Current (431) 433 Future 9,514 (713) ------------------------------------------------------------------------- 9,083 (280) ------------------------------------------------------------------------- Net earnings (loss) 98,209 (25,918) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Earnings (loss) per share Basic 2.28 (0.71) Diluted(1) 2.28 (0.71) ------------------------------------------------------------------------- ------------------------------------------------------------------------- 1) The dilutive effects of the outstanding options, warrants and debentures for the three-month periods ended March 31, 2010 and 2009 are nil as they are anti-dilutive. Consolidated statements of deficit (in thousands of US dollars) (Unaudited) Three-month periods ended March 31, 2010 2009 ------------------------------------------------------------------------- ------------------------------------------------------------------------- $ $ Balance, beginning of period (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 (529,319) (540,045) Net earnings (loss) 98,209 (25,918) ------------------------------------------------------------------------- Balance, end of period (431,110) (565,963) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Consolidated statements of comprehensive income (loss) and Accumulated other comprehensive income (loss) (in thousands of US dollars) Three-month periods ended March 31, 2010 2009 ------------------------------------------------------------------------- ------------------------------------------------------------------------- $ $ Net earnings (loss) for the period 98,209 (25,918) ------------------------------------------------------------------------- Other comprehensive income (loss), net of income taxes Gain (loss) on derivatives designated as cash flow hedges - 356 ------------------------------------------------------------------------- Comprehensive income (loss) for the period 98,209 (25,562) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Accumulated other comprehensive loss Balance, beginning of period Gross - (8,246) Income taxes - 3,141 ------------------------------------------------------------------------- - (5,105) Other comprehensive income (loss) Net change in losses on cash flow hedging items - - Reclassification to income (loss) - 575 Income taxes - (219) ------------------------------------------------------------------------- - 356 Balance, end of period Gross - (7,671) Income taxes - 2,922 ------------------------------------------------------------------------- Balance, end of period - (4,749) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Consolidated balance sheets (in thousands of US dollars) March 31, December 31, 2010 2009 (Unaudited) (Audited) ------------------------------------------------------------------------- ------------------------------------------------------------------------- $ $ Assets Current assets Cash and cash equivalents 24,816 26,763 Accounts receivable 64,475 112,517 Inventories 53,987 46,247 Income taxes 936 914 Future income taxes 3,416 4,197 Prepaid expenses 11,584 12,806 ------------------------------------------------------------------------- 159,214 203,444 Property, plant and equipment 20,954 21,210 Intangible assets 24,112 24,278 Goodwill, net 30,000 30,000 Future income taxes 2,330 2,197 ------------------------------------------------------------------------- 236,610 281,129 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Liabilities Current liabilities Accounts payable and accrued liabilities 55,952 67,290 Current portion of long-term debt 247 944 ------------------------------------------------------------------------- 56,199 68,234 Long-term debt 119,734 395,940 Derivative financial instruments - 6,045 Future income taxes 19,206 12,407 ------------------------------------------------------------------------- 195,139 482,626 ------------------------------------------------------------------------- Shareholders' equity Capital stock 429,007 308,678 Warrants 24,430 Contributed surplus 19,144 558 Equity component of convertible debentures - 18,586 Deficit (431,110) (529,319) ------------------------------------------------------------------------- 41,471 (201,497) ------------------------------------------------------------------------- 236,610 281,129 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Consolidated statements of cash flows (in thousands of US dollars) (Unaudited) Three-month periods ended March 31, 2010 2009 ------------------------------------------------------------------------- ------------------------------------------------------------------------- $ $ Cash flows from operating activities Net earnings (loss) 98,209 (25,918) Items not affecting cash and cash equivalents Amortization of property, plant and equipment 2,194 3,178 Amortization of intangible assets 166 166 Settlement of debt (145,310) - Impairment of goodwill / recovery of purchase price - (900) Amortization of unrealized loss on swap derivative financial instruments - 575 Loss (gain) on swap derivative financial instruments - 1,008 Stock-based compensation plans (295) 3 Amortization of deferred financing costs 991 306 Writeoff deferred financing costs 2,967 - Future income taxes 9,514 (713) Accretion of interest on convertible debentures 819 596 Loss (gain) on foreign currency 2,267 (382) ------------------------------------------------------------------------- (28,478) (22,081) Changes in non-cash operating working capital items 26,427 25,068 ------------------------------------------------------------------------- (2,051) 2,987 ------------------------------------------------------------------------- Cash flows from financing activities Repayment of long-term debt (216,024) (2,345) Issuance of debentures 120,732 - Issuance of capital stock 85,859 - Issuance of warrants 23,776 - Addition to deferred financing costs (7,937) - Share issue cost (3,399) - Issue costs on warrants (965) - ------------------------------------------------------------------------- 2,042 (2,345) ------------------------------------------------------------------------- Cash flows from investing activities Acquisition of property, plant and equipment (1,938) (1,951) ------------------------------------------------------------------------- (1,938) (1,951) ------------------------------------------------------------------------- Decrease in cash and cash equivalents (1,947) (1,309) Cash and cash equivalents, beginning of period 26,763 49,427 ------------------------------------------------------------------------- Cash and cash equivalents, end of period 24,816 48,118 ------------------------------------------------------------------------- -------------------------------------------------------------------------