CLEVELAND, June 24 /PRNewswire-FirstCall/ -- American Greetings
Corporation (NYSE: AM) today announced its results for the first fiscal
quarter ended May 29, 2009.
First Quarter Results
For the first quarter of fiscal 2010, the Company reported total revenue
of $412.9 million, pre-tax income of $16.9 million, and net income of $10.0
million or 25 cents per share (all per-share amounts assume dilution).
As previously announced, during the first quarter of fiscal 2010, American
Greetings sold its retail store operations to Schurman Fine Papers
("Schurman"), which operates card and gift retail stores under the name
Papyrus. American Greetings recognized a preliminary non-cash loss on the
disposition, recorded within the Retail Operations segment, of $28.3 million
(after-tax of approximately $17.4 million) that reduced earnings per share by
approximately 44 cents during the quarter. At the time of the sale of the
retail stores, American Greetings also purchased the wholesale division of
Schurman which supplies Papyrus brand greeting cards primarily to leading
specialty, mass, grocery and drug store channels and purchased a fifteen
percent equity interest in Schurman.
For the first quarter of fiscal 2009, the Company reported total revenue
of $428.3 million, pre-tax income of $19.2 million, and net income of $13.3
million or 27 cents per share.
Management Comments and Outlook
Chief Executive Officer Zev Weiss said, "I am very pleased with our
performance this quarter. Specifically, sales of greeting cards increased
primarily as a result of the additions of Recycled Paper Greetings and Papyrus
as well as strength in our overall North American business despite weak
economic conditions. We also realized improved margins as a result of our
cost reduction activities last year and we will continue to focus on
efficiencies this year. We currently anticipate cash flow from operating
activities less capital expenditures to be greater than $70 million this
fiscal year. We are diligently working through the integration planning
processes for Recycled Paper Greetings, the acquired Papyrus wholesale
business, and the transition of our former retail operations to Schurman Fine
Papers."
Financing Activities
Under the Company's $75 million share repurchase program, during the first
fiscal quarter the Company purchased approximately 1.1 million shares of its
common stock for $4.3 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, American Greetings and Plus Mark gift-wrap and boxed
cards and DateWorks calendars. 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 amounts included in this earnings release may be
considered non-GAAP measures in accordance with Regulation G and were
calculated based on the Company's statutory tax rate of approximately 38.7%.
Management believes that after-tax information is useful in analyzing the
Company's results.
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 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.
AMERICAN GREETINGS CORPORATION
FIRST 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
------------------
May 29, 2009 May 30, 2008
------------ ------------
Net sales $409,277 $425,463
Other revenue 3,645 2,837
----- -----
Total revenue 412,922 428,300
Material, labor and other
production costs 167,169 193,342
Selling, distribution and marketing
expenses 132,217 150,875
Administrative and general expenses 63,151 62,561
Other operating expense (income) - net 27,773 (727)
------ ----
Operating income 22,612 22,249
Interest expense 6,987 4,905
Interest income (276) (990)
Other non-operating income - net (1,042) (901)
------ ----
Income before income tax expense 16,943 19,235
Income tax expense 6,982 5,902
----- -----
Net income $9,961 $13,333
====== =======
Earnings per share - basic $0.25 $0.27
Earnings per share - assuming dilution $0.25 $0.27
Average number of common shares
outstanding 39,608,947 48,800,941
Average number of common shares
outstanding - assuming dilution 39,608,947 48,833,108
Dividends declared per share $ - $0.12
AMERICAN GREETINGS CORPORATION
FIRST QUARTER CONSOLIDATED STATEMENT OF FINANCIAL POSITION
FISCAL YEAR ENDING FEBRUARY 28, 2010
(In thousands of dollars)
(Unaudited)
-----------
May 29, 2009 May 30, 2008
------------ ------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $87,611 $108,192
Trade accounts receivable, net 110,743 59,789
Inventories 181,425 211,125
Deferred and refundable income taxes 69,800 67,604
Assets held for sale 1,515 2,483
Prepaid expenses and other 153,374 183,865
------- -------
Total current assets 604,468 633,058
GOODWILL 25,921 300,323
OTHER ASSETS 373,622 408,228
DEFERRED AND REFUNDABLE INCOME TAXES 168,391 133,118
Property, plant and equipment - at cost 890,173 980,376
Less accumulated depreciation 601,251 683,192
------- -------
PROPERTY, PLANT AND EQUIPMENT - NET 288,922 297,184
------- -------
$1,461,324 $1,771,911
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Debt due within one year $27,325 $35,835
Accounts payable 85,483 110,394
Accrued liabilities 73,852 73,281
Accrued compensation and benefits 37,274 39,582
Income taxes payable 2,937 23,348
Other current liabilities 108,864 117,160
------- -------
Total current liabilities 335,735 399,600
LONG-TERM DEBT 409,455 235,541
OTHER LIABILITIES 125,668 157,610
DEFERRED INCOME TAXES AND
NONCURRENT INCOME TAXES PAYABLE 30,594 26,986
SHAREHOLDERS' EQUITY
Common shares - Class A 35,921 45,345
Common shares - Class B 3,497 3,495
Capital in excess of par value 450,059 446,075
Treasury stock (941,063) (871,379)
Accumulated other comprehensive
(loss) income (43,276) 20,746
Retained earnings 1,054,734 1,307,892
--------- ---------
Total shareholders' equity 559,872 952,174
------- -------
$1,461,324 $1,771,911
========== ==========
AMERICAN GREETINGS CORPORATION
FIRST QUARTER CONSOLIDATED STATEMENT OF CASH FLOWS
FISCAL YEAR ENDING FEBRUARY 28, 2010
(In thousands of dollars)
(Unaudited)
Three Months Ended
------------------
May 29, 2009 May 30, 2008
------------ ------------
OPERATING ACTIVITIES:
Net income $9,961 $13,333
Adjustments to reconcile net income to
cash flows from operating activities:
Loss on disposition of retail stores 28,333 -
Net loss on disposal of fixed assets 199 168
Depreciation and amortization 12,393 12,785
Deferred income taxes 17,158 5,459
Other non-cash charges 2,657 1,718
Changes in operating assets and liabilities,
net of acquisitions and dispositions:
Trade accounts receivable (43,770) 5,186
Inventories 12,360 6,495
Other current assets 11,942 1,260
Deferred costs - net (2,846) 1,253
Accounts payable and other liabilities (43,494) (57,606)
Other - net 3,836 (1,938)
----- ------
Total Cash Flows From Operating Activities 8,729 (11,887)
INVESTING ACTIVITIES:
Property, plant and equipment additions (8,909) (10,088)
Cash payments for business acquisitions,
net of cash acquired (16,286) (15,625)
Proceeds from sale of fixed assets 113 265
--- ---
Total Cash Flows From Investing
Activities (25,082) (25,448)
FINANCING ACTIVITIES:
Net increase in long-term debt 19,800 14,900
Net increase in short-term debt 26,325 13,145
Sale of stock under benefit plans 30 363
Purchase of treasury shares (5,877) (38)
Dividends to shareholders (4,865) (5,852)
------ ------
Total Cash Flows From
Financing Activities 35,413 22,518
EFFECT OF EXCHANGE RATE CHANGES ON CASH 8,335 (491)
----- ----
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 27,395 (15,308)
Cash and Cash Equivalents at
Beginning of Year 60,216 123,500
------ -------
Cash and Cash Equivalents at
End of Period $87,611 $108,192
======= ========
AMERICAN GREETINGS CORPORATION
FIRST QUARTER CONSOLIDATED SEGMENT DISCLOSURES
FISCAL YEAR ENDING FEBRUARY 28, 2010
(In thousands of dollars)
(Unaudited)
Three Months Ended
------------------
May 29, 2009 May 30, 2008
------------ ------------
Total Revenue:
North American Social
Expression Products $323,884 $298,177
Intersegment items (5,104) (13,306)
Exchange rate adjustment 299 3,416
--- -----
Net 319,079 288,287
International Social
Expression Products 47,006 47,914
Exchange rate adjustment 5,756 23,046
----- ------
Net 52,762 70,960
Retail Operations 11,727 38,477
Exchange rate adjustment 112 3,506
--- -----
Net 11,839 41,983
AG Interactive 18,634 19,899
Exchange rate adjustment 211 662
--- ---
Net 18,845 20,561
Non-reportable segments 10,397 6,509
-------- --------
$412,922 $428,300
======== ========
Segment Earnings (Loss):
North American Social
Expression Products $77,877 $52,183
Intersegment items (3,511) (10,177)
Exchange rate adjustment 190 505
--- ---
Net 74,556 42,511
International Social
Expression Products 333 1,773
Exchange rate adjustment 6 1,032
- -----
Net 339 2,805
Retail Operations (34,830) (3,351)
Exchange rate adjustment (285) (62)
---- ---
Net (35,115) (3,413)
AG Interactive 1,652 (1,335)
Exchange rate adjustment 62 274
-- ---
Net 1,714 (1,061)
Non-reportable segments (129) (1,966)
Unallocated (24,311) (19,695)
Exchange rate adjustment (111) 54
---- --
Net (24,422) (19,641)
------- -------
$16,943 $19,235
======= =======
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)
