CLEVELAND, Sept. 24 /PRNewswire-FirstCall/ -- American Greetings
Corporation (NYSE:AM) today announced its second quarter results
for the quarter ended August 28, 2009. Second Quarter Results For
the second quarter of fiscal 2010, the Company reported total
revenue of $356.4 million, pre-tax income of $34.1 million, and net
income of $23.1 million or 59 cents per share (all per-share
amounts assume dilution). Included within these results was a
pre-tax benefit from an insurance program of $7.9 million (after
tax of approximately $7.6 million) or approximately 19 cents per
share. For the second quarter of fiscal 2009, the Company reported
total revenue of $385.8 million, pre-tax income of $2.4 million,
and net income of $2.3 million or 5 cents per share. Management
Comments and Outlook Chief Executive Officer Zev Weiss said, "I am
very pleased with our record earnings performance this quarter as
well as our strong cash flow. I believe the changes we have made to
our business over the last year are showing up in our results. We
could not have achieved these results without the teamwork and
coordination of all our associates." Weiss continued, "We have
devoted more time and effort to develop new products so that
consumers can find unique and fresh offerings in the greeting card
aisle. We have expanded our use of technology for both traditional
greeting cards as well as on-line applications including Facebook
and the iPhone. These examples of leadership in innovation are all
in addition to the recent enhancements we have made to our
portfolio, specifically the acquisitions of Recycled Paper
Greetings and Papyrus, which complement our innovation with
leadership in both humor and elegant design." As a result of the
strong cash flow performance during the first half of the fiscal
year, the Company raised its previously announced fiscal 2010 cash
flow estimate. Previously, the Company expected cash flow from
operating activities of approximately $105 million to $115 million
and capital expenditures of approximately $35 million to $45
million resulting in cash flow from operating activities minus
capital expenditures of approximately $70 million. The Company now
expects cash flow from operating activities of at least $160
million and capital expenditures of approximately $35 million
resulting in cash flow from operating activities minus capital
expenditures to be greater than $125 million. Conference Call on
the Web American Greetings will broadcast its conference call live
on the Internet at 9:00 a.m. Eastern time today. The conference
call will be accessible through the Investor Relations section of
the American Greetings Web site at
http://investors.americangreetings.com/. A replay of the call will
be available on the site. About American Greetings Corporation For
more than 100 years, American Greetings Corporation (NYSE:AM) has
been a manufacturer and retailer of innovative social expression
products that assist consumers in enhancing their relationships.
The Company's major greeting card brands are American Greetings,
Carlton Cards, Gibson, Recycled Paper Greetings and Papyrus, and
other paper product offerings include DesignWare party goods and
American Greetings and Plus Mark gift-wrap and boxed cards.
American Greetings also has the largest collection of electronic
greetings on the Web, including cards available at
AmericanGreetings.com through AG Interactive, Inc. (the Company's
online division). AG Interactive also offers digital photo sharing
and personal publishing at PhotoWorks.com and Webshots.com and
provides a one-stop source for online graphics and animations at
Kiwee.com. In addition to its product lines, American Greetings
also creates and licenses popular character brands through the
American Greetings Properties group. Headquartered in Cleveland,
Ohio, American Greetings generates annual revenue of approximately
$1.7 billion, and its products can be found in retail outlets
worldwide. For more information on the Company, visit
http://corporate.americangreetings.com/. Non-GAAP Measures Certain
after-tax and liquidity amounts included in this earnings release
may be considered non-GAAP measures under the Securities and
Exchange Commission's Regulation G. The after-tax amounts were
calculated based on the Company's statutory tax rate of
approximately 38.9%. Management believes that after-tax information
is useful in analyzing the Company's results and that cash flow
from operating activities minus capital expenditures provides a
liquidity measure useful to investors in analyzing the cash
generation of the Company. Factors That May Affect Future Results
Certain statements in this release, including those under
Management Comments and Outlook, may constitute forward-looking
statements within the meaning of the Federal securities laws. These
statements can be identified by the fact that they do not relate
strictly to historic or current facts. They use such words as
"anticipate," "estimate," "expect," "project," "intend," "plan,"
"believe," and other words and terms of similar meaning in
connection with any discussion of future operating or financial
performance. These forward-looking statements are based on
currently available information, but are subject to a variety of
uncertainties, unknown risks and other factors concerning the
Company's operations and business environment, which are difficult
to predict and may be beyond the control of the Company. Important
factors that could cause actual results to differ materially from
those suggested by these forward-looking statements, and that could
adversely affect the Company's future financial performance,
include, but are not limited to, the following: -- a weak retail
environment and general economic conditions; -- the ability to
successfully integrate acquisitions, including the recent
acquisitions of Recycled Paper Greetings and the Papyrus brand; --
the Company's ability to successfully complete the sale of the
Strawberry Shortcake and Care Bears properties; -- the Company's
successful transition of the Retail Operations segment to its
buyer, Schurman Fine Papers, and the ability to achieve the desired
benefits associated with this and other dispositions; -- retail
consolidations, acquisitions and bankruptcies, including the
possibility of resulting adverse changes to retail contract terms;
-- the ability to achieve the desired benefits associated with its
cost reduction efforts; -- competitive terms of sale offered to
customers; -- the Company's ability to comply with its debt
covenants; -- the timing and impact of investments in new retail or
product strategies as well as new product introductions and
achieving the desired benefits from those investments; -- consumer
acceptance of products as priced and marketed; -- the impact of
technology on core product sales; -- the timing and impact of
converting customers to a scan-based trading model; -- escalation
in the cost of providing employee health care; -- the ability to
successfully implement, or achieve the desired benefits associated
with, any information systems refresh the Company may implement; --
the Company's ability to achieve the desired accretive effect from
any share repurchase programs; -- fluctuations in the value of
currencies in major areas where the Company operates, including the
U.S. Dollar, Euro, U.K. Pound Sterling, and Canadian Dollar; and --
the outcome of any legal claims known or unknown. Risks pertaining
specifically to AG Interactive include the viability of online
advertising, subscriptions as revenue generators, the ability to
adapt to rapidly changing social media, and the ability to gain a
leadership position in the digital photo sharing space. In
addition, this release contains time-sensitive information that
reflects management's best analysis as of the date of this release.
American Greetings does not undertake any obligation to publicly
update or revise any forward-looking statements to reflect future
events, information or circumstances that arise after the date of
this release. Further information concerning issues that could
materially affect financial performance related to forward-looking
statements can be found in the Company's periodic filings with the
Securities and Exchange Commission, including the "Risk Factors"
section of the Company's Annual Report on Form 10-K. AMERICAN
GREETINGS CORPORATION SECOND QUARTER CONSOLIDATED STATEMENT OF
INCOME FISCAL YEAR ENDING FEBRUARY 28, 2010 (In thousands of
dollars except share and per share amounts) (Unaudited) Three
Months Ended Six Months Ended ------------------ ----------------
August 28, August 29, August 28, August 29, 2009 2008 2009 2008
---------- ---------- ---------- ---------- Net sales $348,639
$372,942 $757,916 $798,405 Other revenue 7,711 12,893 11,356 15,730
----- ------ ------ ------ Total revenue 356,350 385,835 769,272
814,135 Material, labor and other production costs 153,248 170,112
320,417 363,454 Selling, distribution and marketing expenses
117,531 154,387 249,748 305,262 Administrative and general expenses
48,483 57,162 111,634 119,723 Other operating (income) expense -
net (1,397) (111) 26,376 (838) ------ ---- ------ ---- Operating
income 38,485 4,285 61,097 26,534 Interest expense 6,671 5,434
13,658 10,339 Interest income (989) (898) (1,265) (1,888) Other
non-operating income - net (1,291) (2,617) (2,333) (3,518) ------
------ ------ ------ Income before income tax expense 34,094 2,366
51,037 21,601 Income tax expense 10,972 69 17,954 5,971 ------ ---
------ ----- Net income $23,122 $2,297 $33,083 $15,630 =======
====== ======= ======= Earnings per share - basic $0.59 $0.05 $0.84
$0.32 Earnings per share - assuming dilution $0.59 $0.05 $0.84
$0.32 Average number of common shares outstanding 39,407,532
47,769,594 39,508,240 48,285,267 Average number of common shares
outstanding - assuming dilution 39,407,532 47,807,313 39,508,240
48,328,659 Dividends declared per share $0.12 $0.12 $0.12 $0.24
AMERICAN GREETINGS CORPORATION SECOND QUARTER CONSOLIDATED
STATEMENT OF FINANCIAL POSITION FISCAL YEAR ENDING FEBRUARY 28,
2010 (In thousands of dollars) (Unaudited) ----------- August 28,
2009 August 29, 2008 --------------- --------------- ASSETS CURRENT
ASSETS Cash and cash equivalents $49,903 $84,040 Trade accounts
receivable, net 78,070 62,826 Inventories 208,130 259,789 Deferred
and refundable income taxes 63,665 54,149 Assets held for sale
1,423 2,604 Prepaid expenses and other 144,773 179,571 -------
------- Total current assets 545,964 642,979 GOODWILL 26,393
289,662 OTHER ASSETS 363,480 440,589 DEFERRED AND REFUNDABLE INCOME
TAXES 167,138 133,827 Property, plant and equipment - at cost
893,554 980,103 Less accumulated depreciation 607,851 679,862
------- ------- PROPERTY, PLANT AND EQUIPMENT - NET 285,703 300,241
------- ------- $1,388,678 $1,807,298 ========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Debt due
within one year $1,000 $18,445 Accounts payable 96,279 125,648
Accrued liabilities 67,985 66,007 Accrued compensation and benefits
50,925 39,378 Income taxes payable 2,856 7,729 Other current
liabilities 94,462 113,379 ------ ------- Total current liabilities
313,507 370,586 LONG-TERM DEBT 335,372 391,889 OTHER LIABILITIES
127,066 147,906 DEFERRED INCOME TAXES AND NONCURRENT INCOME TAXES
PAYABLE 30,736 23,343 SHAREHOLDERS' EQUITY Common shares - Class A
35,923 42,208 Common shares - Class B 3,477 3,494 Capital in excess
of par value 451,328 447,502 Treasury stock (941,198) (914,262)
Accumulated other comprehensive loss (40,562) (9,711) Retained
earnings 1,073,029 1,304,343 --------- --------- Total
shareholders' equity 581,997 873,574 ------- ------- $1,388,678
$1,807,298 ========== ========== AMERICAN GREETINGS CORPORATION
SECOND QUARTER CONSOLIDATED STATEMENT OF CASH FLOWS FISCAL YEAR
ENDING FEBRUARY 28, 2010 (In thousands of dollars) (Unaudited) Six
Months Ended ---------------- August 28, 2009 August 29, 2008
--------------- --------------- OPERATING ACTIVITIES: Net income
$33,083 $15,630 Adjustments to reconcile net income to cash flows
from operating activities: Net loss on dispositions 27,696 - Net
loss on disposal of fixed assets 9 385 Depreciation and intangible
assets amortization 23,466 25,324 Deferred income taxes 26,708
15,394 Other non-cash charges 4,622 3,379 Changes in operating
assets and liabilities, net of acquisitions and dispositions: Trade
accounts receivable (10,877) (725) Inventories (15,022) (47,426)
Other current assets 12,347 (952) Deferred costs - net 11,885
14,654 Accounts payable and other liabilities (22,190) (69,511)
Other - net (7,561) (9,826) ------ ------ Total Cash Flows From
Operating Activities 84,166 (53,674) INVESTING ACTIVITIES:
Property, plant and equipment additions (15,447) (28,545) Cash
payments for business acquisitions, net of cash acquired (19,300)
(15,625) Proceeds from sale of fixed assets 729 275 Other - net
3,063 (44,153) ----- ------- Total Cash Flows From Investing
Activities (30,955) (88,048) FINANCING ACTIVITIES: Net (decrease)
increase in long-term debt (54,750) 148,591 Increase in short-term
debt - 18,445 Sale of stock under benefit plans 91 434 Purchase of
treasury shares (6,176) (46,137) Dividends to shareholders (9,593)
(11,667) ------ ------- Total Cash Flows From Financing Activities
(70,428) 109,666 EFFECT OF EXCHANGE RATE CHANGES ON CASH 6,904
(7,404) ----- ------ DECREASE IN CASH AND CASH EQUIVALENTS (10,313)
(39,460) Cash and Cash Equivalents at Beginning of Year 60,216
123,500 ------ ------- Cash and Cash Equivalents at End of Period
$49,903 $84,040 ======= ======= AMERICAN GREETINGS CORPORATION
SECOND QUARTER CONSOLIDATED SEGMENT DISCLOSURES FISCAL YEAR ENDING
FEBRUARY 28, 2010 (In thousands of dollars) (Unaudited) Three
Months Six Months Ended Ended ------------- ----------- August 28,
August 29, August 28, August 29, 2009 2008 2009 2008 ----------
---------- --------- --------- Total Revenue: North American Social
Expression Products $266,934 $256,756 $590,818 $554,933
Intersegment items - (13,720) (5,104) (27,026) Exchange rate
adjustment 1,995 3,786 2,294 7,202 ----- ----- ----- ----- Net
268,929 246,822 588,008 535,109 International Social Expression
Products 45,754 43,374 92,760 91,288 Exchange rate adjustment
10,986 19,950 16,742 42,996 ------ ------ ------ ------ Net 56,740
63,324 109,502 134,284 Retail Operations - 34,586 11,727 73,063
Exchange rate adjustment - 3,078 112 6,584 --- ----- --- ----- Net
- 37,664 11,839 79,647 AG Interactive 18,075 20,334 36,709 40,233
Exchange rate adjustment 422 638 633 1,300 --- --- --- ----- Net
18,497 20,972 37,342 41,533 Non-reportable segments 11,964 17,053
22,361 23,562 Unallocated 220 - 220 - -------- -------- --------
-------- $356,350 $385,835 $769,272 $814,135 ======== ========
======== ======== Segment Earnings (Loss): North American Social
Expression Products $42,679 $32,248 $120,556 $84,431 Intersegment
items - (9,973) (3,511) (20,150) Exchange rate adjustment 1,092
1,325 1,282 1,830 ----- ----- ----- ----- Net 43,771 23,600 118,327
66,111 International Social Expression Products 1,887 (1,569) 2,220
204 Exchange rate adjustment 428 (589) 434 443 --- ---- --- --- Net
2,315 (2,158) 2,654 647 Retail Operations - (6,588) (34,830)
(9,939) Exchange rate adjustment - (88) (285) (150) --- --- ----
---- Net - (6,676) (35,115) (10,089) AG Interactive 1,644 456 3,296
(879) Exchange rate adjustment 287 305 349 579 --- --- --- --- Net
1,931 761 3,645 (300) Non-reportable segments 367 2,541 238 575
Unallocated (14,209) (19,415) (38,520) (39,110) Exchange rate
adjustment (81) 3,713 (192) 3,767 --- ----- ---- ----- Net (14,290)
(15,702) (38,712) (35,343) ------- ------ ------- ------- $34,094
$2,366 $51,037 $21,601 ======= ====== ======= ======= DATASOURCE:
American Greetings Corporation CONTACT: Gregory M. Steinberg,
Treasurer and Director of Investor Relations, American Greetings
Corporation, +1-216-252-4864, Web Site:
http://corporate.americangreetings.com/
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