CLEVELAND, June 25 /PRNewswire-FirstCall/ -- American Greetings
Corporation (NYSE: AM) today announced its first quarter results for the
fiscal quarter ended May 30, 2008.
First Quarter Results
For the first quarter of fiscal 2009, the Company reported total revenue
of $428.3 million, pre-tax income from continuing operations of $19.2 million,
and income from continuing operations of $13.3 million or 27 cents per share
(all per-share amounts assume dilution). For the first quarter of fiscal
2008, the Company reported total revenue of $420.0 million, pre-tax income
from continuing operations of $54.6 million, and income from continuing
operations of $30.3 million or 54 cents per share.
Management Comments and Outlook
Chief Executive Officer Zev Weiss said, I am pleased with our revenue
performance, particularly given current economic conditions. Our point of
sale performance is encouraging. One of the larger components that caused
lower margins in the quarter compared to last year was the rollout of a new
card line in Canada. As part of that process, we had additional activity and
recognized incremental expenses. While the costs associated with the new
Canadian card line are transitional in nature, we are focusing additional
efforts on redesigning supply chain processes in an effort to become more
efficient.
The Company reaffirmed its previously announced fiscal 2009 estimate of
earnings per share from continuing operations to be between $1.60 to $1.85 per
share and cash flow from operations minus capital expenditures to be between
$60 million and $80 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
American Greetings Corporation (NYSE: AM) is one of the world's largest
manufacturers of social expression products. Along with greeting cards, its
product lines include gift wrap, party goods, stationery, calendars, ornaments
and electronic greetings. Located in Cleveland, Ohio, American Greetings
generates annual revenue of approximately $1.8 billion. For more information
on the Company, visit http://corporate.americangreetings.com.
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;
-- retail consolidations, acquisitions and bankruptcies, including the
possibility of resulting adverse changes to retail contract terms;
-- competitive terms of sale offered to customers;
-- 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 integrate acquisitions;
-- the ability to successfully implement, or achieve the desired benefits
associated with any information systems refresh the Company may implement;
-- the ability to execute share repurchase programs or the ability to
achieve the desired accretive effect from such repurchases;
-- the Company's ability to comply with its debt covenants;
-- the Company's ability to successfully complete, or achieve the desired
benefits associated with, dispositions;
-- 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 public's
acceptance of online greetings and other social expression products, 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 for the fiscal year ended
February 29, 2008.
AMERICAN GREETINGS CORPORATION
FIRST QUARTER CONSOLIDATED STATEMENT OF INCOME
FISCAL YEAR ENDING FEBRUARY 28, 2009
(In thousands of dollars except share and per share amounts)
(Unaudited)
Three Months Ended
-----------------------------
May 30, 2008 May 25, 2007
------------ ------------
Net sales $425,463 $418,016
Other revenue 2,837 1,951
---------- ----------
Total revenue 428,300 419,967
Material, labor and other production costs 193,342 161,128
Selling, distribution and marketing expenses 150,875 140,694
Administrative and general expenses 62,561 62,235
Other operating income - net (727) (360)
---------- ----------
Operating income 22,249 56,270
Interest expense 4,905 4,757
Interest income (990) (1,499)
Other non-operating income - net (901) (1,543)
---------- ----------
Income from continuing operations before
income tax expense 19,235 54,555
Income tax expense 5,902 24,292
---------- ----------
Income from continuing operations 13,333 30,263
Loss from discontinued operations, net of tax - (213)
---------- ----------
Net income $13,333 $30,050
========== ==========
Earnings per share - basic:
Income from continuing operations $0.27 $0.54
Loss from discontinued operations - -
---------- ----------
Net income $0.27 $0.54
========== ==========
Earnings per share - assuming dilution:
Income from continuing operations $0.27 $0.54
Loss from discontinued operations - -
---------- ----------
Net income $0.27 $0.54
========== ==========
Average number of common shares outstanding 48,800,941 55,262,716
Average number of common shares outstanding
- assuming dilution 48,833,108 55,650,033
Dividends declared per share $0.12 $0.10
AMERICAN GREETINGS CORPORATION
FIRST QUARTER CONSOLIDATED STATEMENT OF FINANCIAL POSITION
FISCAL YEAR ENDING FEBRUARY 28, 2009
(In thousands of dollars)
(Unaudited)
-----------------------------
May 30, 2008 May 25, 2007
------------ ------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $108,192 $132,582
Short-term investments - 28,325
Trade accounts receivable, net 59,897 119,147
Inventories 212,032 192,399
Deferred and refundable income taxes 67,604 76,892
Prepaid expenses and other 186,977 215,983
---------- ----------
Total current assets 634,702 765,328
GOODWILL 300,323 225,318
OTHER ASSETS 405,116 399,880
DEFERRED AND REFUNDABLE INCOME TAXES 133,118 102,060
Property, plant and equipment - at cost 983,988 947,268
Less accumulated depreciation 685,336 666,687
---------- ----------
PROPERTY, PLANT AND EQUIPMENT - NET 298,652 280,581
---------- ----------
$1,771,911 $1,773,167
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Debt due within one year $70,835 $ -
Accounts payable 110,394 100,955
Accrued liabilities 73,281 77,837
Accrued compensation and benefits 39,582 43,656
Income taxes payable 23,348 29,878
Other current liabilities 117,160 84,621
---------- ----------
Total current liabilities 434,600 336,947
LONG-TERM DEBT 200,541 223,800
OTHER LIABILITIES 157,610 147,597
DEFERRED INCOME TAXES AND
NONCURRENT INCOME TAXES PAYABLE 26,986 27,184
SHAREHOLDERS' EQUITY
Common shares - Class A 45,345 51,148
Common shares - Class B 3,495 4,340
Capital in excess of par value 446,075 424,201
Treasury stock (871,379) (712,147)
Accumulated other comprehensive income 20,746 6,030
Retained earnings 1,307,892 1,264,067
---------- ----------
Total shareholders' equity 952,174 1,037,639
---------- ----------
$1,771,911 $1,773,167
========== ==========
AMERICAN GREETINGS CORPORATION
FIRST QUARTER CONSOLIDATED STATEMENT OF CASH FLOWS
FISCAL YEAR ENDING FEBRUARY 28, 2009
(In thousands of dollars)
(Unaudited)
Three Months Ended
-----------------------------
May 30, 2008 May 25, 2007
------------ ------------
OPERATING ACTIVITIES:
Net income $13,333 $30,050
Loss from discontinued operations - 213
---------- ----------
Income from continuing operations 13,333 30,263
Adjustments to reconcile to net cash
(used) provided by operating activities:
Net loss (gain) on disposal of fixed
assets 168 (116)
Depreciation and amortization 12,785 11,995
Deferred income taxes 5,459 4,466
Other non-cash charges 1,718 1,979
Changes in operating assets and liabilities,
net of acquisitions and dispositions:
Decrease (increase) in trade accounts
receivable 5,310 (14,745)
Decrease (increase) in inventories 6,463 (7,389)
Decrease in other current assets 2,001 646
Decrease in deferred costs - net 1,253 11,691
Decrease in accounts payable and
other liabilities (57,606) (21,759)
Other - net (2,771) 4,107
---------- ----------
Cash (Used) Provided by Operating
Activities (11,887) 21,138
INVESTING ACTIVITIES:
Proceeds from sale of short-term
investments - 134,900
Purchases of short-term investments - (163,225)
Property, plant and equipment additions (10,088) (5,875)
Cash payments for business acquisitions,
net of cash acquired (15,625) (6,056)
Cash receipts related to discontinued
operations - 2,344
Proceeds from sale of fixed assets 265 890
---------- ----------
Cash Used by Investing Activities (25,448) (37,022)
FINANCING ACTIVITIES:
Net increase in short-term debt 28,045 -
Sale of stock under benefit plans 363 9,358
Purchase of treasury shares (38) (3,568)
Dividends to shareholders (5,852) (5,536)
---------- ----------
Cash Provided by Financing Activities 22,518 254
DISCONTINUED OPERATIONS:
Cash used by operating activities from
discontinued operations - (59)
---------- ----------
Cash Used by Discontinued Operations - (59)
EFFECT OF EXCHANGE RATE CHANGES ON CASH (491) 3,558
---------- ----------
DECREASE IN CASH AND CASH EQUIVALENTS (15,308) (12,131)
Cash and Cash Equivalents at Beginning
of Year 123,500 144,713
---------- ----------
Cash and Cash Equivalents at End
of Period $108,192 $132,582
========== ==========
AMERICAN GREETINGS CORPORATION
FIRST QUARTER CONSOLIDATED SEGMENT DISCLOSURES
FISCAL YEAR ENDING FEBRUARY 28, 2009
(In thousands of dollars)
(Unaudited)
Three Months Ended
-----------------------------
May 30, 2008 May 25, 2007
------------ ------------
Total Revenue:
North American Social Expression Products $302,418 $299,944
Intersegment items (14,644) (8,503)
Exchange rate adjustment 513 (2,509)
---------- ----------
Net 288,287 288,932
International Social Expression Products 69,873 64,417
Exchange rate adjustment 1,087 (668)
---------- ----------
Net 70,960 63,749
Retail Operations 41,493 40,539
Exchange rate adjustment 490 (1,611)
---------- ----------
Net 41,983 38,928
AG Interactive 20,527 19,899
Exchange rate adjustment 34 (3)
---------- ----------
Net 20,561 19,896
Non-reportable segments 6,509 8,385
Unallocated - 77
---------- ----------
$428,300 $419,967
========== ==========
Segment Earnings (Loss):
North American Social Expression Products $53,695 $88,862
Intersegment items (11,243) (6,522)
Exchange rate adjustment 59 (1,650)
---------- ----------
Net 42,511 80,690
International Social Expression Products 2,862 176
Exchange rate adjustment (57) 11
---------- ----------
Net 2,805 187
Retail Operations (3,407) (2,769)
Exchange rate adjustment (6) (12)
---------- ----------
Net (3,413) (2,781)
AG Interactive (1,096) 3,279
Exchange rate adjustment 35 8
---------- ----------
Net (1,061) 3,287
Non-reportable segments (1,966) 563
Unallocated (19,633) (27,352)
Exchange rate adjustment (8) (39)
---------- ----------
Net (19,641) (27,391)
---------- ----------
$19,235 $54,555
========== ==========
SOURCE American Greetings Corporation
CONTACT: Gregory M. Steinberg, Treasurer and Director of Investor
Relations, American Greetings Corporation, +1-216-252-4864,
investor.relations@amgreetings.com
Web site: http://corporate.americangreetings.com
(AM)
