 |
 |
 |
 |
 |
 |
|
American Greetings Reports Financial Results in Line with First Quarter Projections CLEVELAND, June 19 /PRNewswire/ -- American Greetings Corporation
(NYSE: AM)
today reported operating results in line with its projections for
the first quarter of fiscal 2002. The $158.1 million in one-time charges consists of three previously
announced components:
Net sales for the quarter were $505.7 million, down 15.1 percent
from $595.7 million last year. Excluding the effect of the scan-based
trading implementation, sales for the first quarter were $562.2
million, down 5.6 percent from prior year. In addition to the impact
of scan-based trading, the sales results also reflect:
"We are happy to have met our earnings estimates for the first
quarter, but we are not satisfied with the results we have reported,"
said Morry Weiss, chairman and chief executive officer of American
Greetings. "We realize that fiscal 2002 is going to be a year of
great change for us, and we are pleased that we have already started
implementing the key areas of our restructuring, which we expect
will significantly improve profitability in fiscal 2003 and beyond."
"The progress we have already made with this reorganization demonstrates
our commitment to delivering the full amount of cost savings in
our plan," said Jim Spira, president and chief operating officer,
who is leading the restructuring effort. "When we have implemented
each one of the improvements that our plan calls for, our corporation
will emerge as a lower-cost, stronger, more streamlined operation
that is better positioned to meet the realities of doing business
today and in the future."
AMERICAN GREETINGS CORPORATION
FIRST QUARTER REPORT OF CONSOLIDATED SALES AND INCOME
FISCAL YEAR ENDING FEBRUARY 28, 2002
(In thousands of dollars except per share amounts)
(Unaudited)
Three Months Ended
May 31,
2001 2000
Net sales $ 505,740 $ 595,741
(Loss) income before income taxes
and cumulative effect of
accounting change (128,565) 60,544
Income taxes (48,469) 22,038
(Loss) income before cumulative
effect of accounting change (80,096) 38,506
Cumulative effect of accounting
change, net of tax -- (21,141)
Net (loss) income $(80,096) $17,365
(Loss) earnings per share:
Before cumulative effect of
accounting change $(1.26) $0.60
Cumulative effect of accounting
change, net of tax -- (0.33)
(Loss) earnings per share and
(loss) earnings per share
- assuming dilution $(1.26) $0.27
Average number of common
shares outstanding 63,498,724 64,503,935
AMERICAN GREETINGS CORPORATION
FIRST QUARTER REPORT OF CONSOLIDATED SALES AND INCOME
FISCAL YEAR ENDING FEBRUARY 28, 2002
(In thousands of dollars except per share amounts)
(Unaudited)
Three Months Ended
May 31,
2001 2000
Net sales $505,740 $595,741
Costs and expenses:
Material, labor and other
production costs 251,616 203,324
Selling, distribution
and marketing 254,899 263,557
Administrative and general 65,769 68,755
Non-recurring items 52,925 --
Interest 13,436 10,775
Other (income)-net (4,340) (11,214)
Total 634,305 535,197
(Loss) income before income
taxes and cumulative effect
of accounting change (128,565) 60,544
Income taxes (48,469) 22,038
(Loss) income before cumulative
effect of accounting change (80,096) 38,506
Cumulative effect of accounting
change, net of tax -- (21,141)
Net (loss) income $ (80,096) $ 17,365
(Loss) earnings per share:
Before cumulative effect of
accounting change $(1.26) $0.60
Cumulative effect of accounting
change, net of tax -- (0.33)
(Loss) earnings per share $(1.26) $0.27
(Loss) earnings per share
- assuming dilution $(1.26) $0.27
Average number of common
shares outstanding 63,498,724 64,503,935
AMERICAN GREETINGS CORPORATION
FIRST QUARTER REPORT OF CONSOLIDATED SALES AND INCOME
FISCAL YEAR ENDING FEBRUARY 28, 2002
(In thousands of dollars except per share amounts)
Note A: Seasonal Nature of Business: The Corporation's business is
seasonal in nature. Therefore, the results of operations for
interim periods are not necessarily indicative of the results
for the fiscal year taken as a whole.
Note B: Reclassifications: Certain amounts in the prior year financial
statements have been reclassified to conform to the 2001
presentation.
Note C: Cumulative Effect of Accounting Change: In December 1999, the
Securities and Exchange Commission issued Staff Accounting
Bulletin No. 101, "Revenue Recognition in Financial Statements"
(SAB 101), which among other guidance, clarifies the Staff's
views on various revenue recognition and reporting matters. As
a result, effective March 1, 2000, the Corporation adopted a
change in its method of accounting for certain shipments of
seasonal product. Under the new accounting method, the
Corporation recognizes revenue on these seasonal shipments at
the approximate date the merchandise is received by the
customer and not upon shipment from the distribution facility.
Customer receipt is a more preferable method of recording
revenue due to the large volumes of seasonal product shipment
activity and the time required to achieve customer requested
delivery dates. The implementation of this change was
accounted for as a change in accounting principle and applied
cumulatively as if the change occurred at March 1, 2000. The
effect of the change was a one-time reduction to the
Corporation's earnings of $21,141, which is included in
operations for the three months ended May 31, 2000.
Note D: Acquisitions: On March 9, 2000, the Corporation completed the
acquisition of all outstanding shares of Gibson Greetings, Inc.
("Gibson") in a cash transaction. The consolidated results
include the results of Gibson from the date of acquisition
forward.
Note E: Deferred Costs: The major components of prepaid expenses and
other and other assets are deferred costs relating to
agreements with certain customers. Total commitments under the
agreements are capitalized as deferred costs and future payment
commitments, if any, are recorded as liabilities when the
agreements are consummated. Deferred costs are charged to
operations on a straight-line basis over the effective period
of each agreement, generally three to six years. Deferred
costs estimated to be charged to operations during the next
twelve months are classified with prepaid expenses and other.
Note F: Special Charges: During the three months ended May 31, 2001,
the Corporation recorded a pre-tax restructuring charge of
$52,925. The primary components of this charge were costs
associated with the shutdown of certain of the Corporation's
domestic and foreign manufacturing and distribution operations,
including employee severance and benefit termination costs. The
Corporation's internet unit also recorded a pre-tax charge to
write off the value of a partner contract in the amount of
$17,727. In addition, the Corporation recorded a charge of
$53,550 during the period to write down inventory in its
domestic operations to net realizable value associated with its
previously-announced one-time efforts. This amount is
classified as material, labor, and other production costs. The
total impact of the restructuring and inventory charges net of
tax was $66,331, or $1.05 per share.
Also during the period, the Corporation began implementing its
scan-based trading business model with certain of its
retailers. The impact of its implementation were reductions in
its net sales and material, labor and other production costs of
approximately $56,500 and $9,900, respectively, as well as non-
recurring administrative costs of approximately $3,900, for a
net pre-tax impact of approximately $50,500 or a net of tax
impact of $0.50 per share.
AMERICAN GREETINGS CORPORATION
FIRST QUARTER REPORT OF CONSOLIDATED FINANCIAL POSITION
FISCAL YEAR ENDING FEBRUARY 28, 2002
(In thousands of dollars except per share amounts)
(Unaudited)
May 31,
ASSETS 2001 2000
CURRENT ASSETS
Cash and cash equivalents $115,012 $71,293
Accounts receivable, less allowances of
$213,813 and $152,444 respectively
(principally for sales returns) 352,217 428,630
Inventories 358,884 312,124
Deferred and refundable income taxes 196,669 223,615
Prepaid expenses and other 198,672 214,007
Total current assets 1,221,454 1,249,669
GOODWILL - NET 227,957 177,439
OTHER ASSETS 831,874 891,246
PROPERTY, PLANT AND EQUIPMENT - NET 469,674 449,734
Total $2,750,959 $2,768,088
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Debt due within one year $507,482 $310,284
Accounts payable and accrued liabilities 314,189 272,979
Accrued compensation and benefits 81,137 69,780
Dividends payable 6,371 12,904
Income taxes 146,363 23,562
Other current liabilities 137,906 153,719
Total current liabilities 1,193,448 843,228
LONG-TERM DEBT 367,416 414,120
OTHER LIABILITIES 194,318 223,400
DEFERRED INCOME TAXES 27,999 47,415
SHAREHOLDERS' EQUITY
Common shares - Class A 58,865 59,767
Common shares - Class B 4,635 4,651
Capital in excess of par value 286,054 304,957
Treasury stock (447,192) (447,433)
Accumulated other comprehensive loss (58,270) (55,626)
Retained earnings 1,123,686 1,373,609
Total shareholders' equity 967,778 1,239,925
Total $2,750,959 $2,768,088
AMERICAN GREETINGS CORPORATION
FIRST QUARTER REPORT OF CONSOLIDATED CASH FLOW
FISCAL YEAR ENDING FEBRUARY 28, 2002
(In thousands of dollars except per share amounts)
(Unaudited)
Three Months Ended
May 31,
2001 2000
OPERATING ACTIVITIES:
Net (loss) income $(80,096) $17,365
Adjustments to reconcile to net cash
provided by operating activities:
Cumulative effect of accounting change,
net of tax -- 21,141
Non-recurring items 52,925 --
Depreciation and amortization 21,431 18,161
Deferred income taxes 475 8,884
Changes in operating assets and liabilities,
net of effects from acquisitions:
Decrease (increase) in trade accounts
receivable 35,291 (12,107)
Decrease (increase) in inventories 5,582 (13,953)
Decrease (increase) in other current assets 6,016 (3,178)
Decrease in deferred cost - net 6,464 15,234
Increase in accounts payable and other
liabilities (91,663) (41,158)
Other - net 214 (3,531)
Cash (Used) Provided by Operating Activities (43,361) 6,858
INVESTING ACTIVITIES:
Business acquisitions -- (137,575)
Property, plant & equipment additions (6,679) (11,477)
Proceeds from sale of fixed assets 61 22,024
Investment in corporate owned life insurance 4,610 3,697
Other - net 1,958 (17,354)
Cash Used by Investing Activities (50) (140,685)
FINANCING ACTIVITIES:
Increase in long-term debt -- 1,016
Reduction of long-term debt (13,996) (12,863)
Increase in short-term debt 127,064 170,627
Sale of stock under benefit plans -- 31
Purchase of treasury shares -- (1,797)
Dividends to shareholders (6,336) (12,904)
Cash Provided by Financing Activities 106,732 144,110
INCREASE IN CASH AND EQUIVALENTS 63,321 10,283
Cash and Equivalents at Beginning of Year 51,691 61,010
Cash and Equivalents at End of Period $115,012 $ 71,293
SOURCE American Greetings Corporation
|
