 |
 |
 |
 |
 |
 |
|
American Greetings announces improved results and initiates dividend
CLEVELAND, Sept. 29 /PRNewswire-FirstCall/ -- American Greetings Corporation (NYSE: AM) today announced its financial results for the second fiscal quarter ended August 31, 2004. Despite flat net sales in the second quarter, the Corporation exceeded its prior year earnings per share results due primarily to increased licensing income, reduced supply chain costs and lower interest expense. The Corporation's Board of Directors authorized the initiation of a quarterly cash dividend of 6 cents per share. Second Quarter As a result of the letter of agreement announced on July 30th to sell the Magnivision subsidiary, the Corporation has classified its Magnivision subsidiary as a discontinued operation. The Corporation has provided financial results on continuing operations as well as net results of discontinued operations (the assets held for sale). The Corporation reported net income from continuing operations of $5.9 million, or 9 cents per share, on net sales of $391.9 million, for the fiscal 2005 second quarter ended August 31, 2004 (all per-share amounts assume dilution). This compares to a reported net loss from continuing operations of $10.6 million, or 16 cents per share, on net sales of $390.9 million, for the year earlier period. Discontinued operations contributed approximately $1 million of net income or 1 cent per share to both the second quarter of fiscal 2005 as well as the second quarter of fiscal 2004. Net sales were flat compared to the prior period as incremental revenue from acquisitions in the AG Interactive segment and favorable foreign exchange movements were offset by lower revenues in both the retail segment and the fixtures business. Pretax income increased $27.2 million from a loss of $17.6 million in the second quarter of fiscal 2004 to $9.6 million of income in the second quarter of fiscal 2005. Management Comments Zev Weiss, Chief Executive Officer said, "In the second quarter, we were able to generate much improved performance over last year for both earnings and cash flow. The earnings improvement was due primarily to increased income from licensing, reduced implementation costs related to our ongoing supply chain transformation and lower interest expense because of our prepayment of debt. We were also very pleased by our cash flow results which were driven by increased earnings and a continued focus on improving our balance sheet." Third Quarter and Full Year Estimates "For the third fiscal quarter, we are projecting our earnings per share to be between 67 cents and 72 cents," Weiss said. Last year, the Corporation reported earnings per share of 60 cents for the third quarter. "Our initial fiscal year 2005 earnings estimate of $1.63 to $1.68 per share was adjusted last quarter to earnings of $1.46 to $1.51 per share to take into account the costs and benefits from our tender offer," Weiss continued. "We are not changing the adjusted EPS estimate. However, because our cash flow was so strong in our first half, we are raising the estimate for fiscal 2005 cash flow from operating and investing activities by 25% from $200 million to $250 million." Dividend Initiated The Corporation's Board of Directors has authorized the initiation of a quarterly cash dividend of 6 cents per share for shareholders of record at the close of business on October 19, 2004, payable on October 29, 2004. Weiss said, "We previously stated that we would announce our plans on ways to enhance shareholder value in the second fiscal half. Now, we have taken the first step in returning capital to shareholders by initiating a dividend." Conference call on the Web American Greetings will broadcast its conference call live on the Internet at 9:30 a.m. Eastern time today. The conference call will be accessible through the Investor Relations section of the American Greetings Web site at http://corporate.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, reading glasses, candles, stationery, calendars, educational products, ornaments and electronic greetings. Located in Cleveland, Ohio, American Greetings generates annual net sales of approximately $2 billion. For more information on the Corporation, visit http://corporate.americangreetings.com . The statements contained in this release that are not historical facts, including statements regarding expected savings from debt-reduction initiatives and estimates of results for future periods, are forward-looking statements. Forward-looking statements are generally identified by words such as "believes," "anticipates," "expects," "plans," "should," "estimates" and similar expressions. These forward-looking statements involve risks and uncertainties. Factors that could cause actual results to differ materially from those stated or implied in our forward-looking statements, include but are not limited to: retail bankruptcies and consolidations, successful integration of acquisitions, successful transition of management, a weak retail environment, consumer acceptance of products as priced and marketed, the impact of technology on core product sales, competitive terms of sale offered to customers, successfully implementing supply chain improvements and achieving projected cost savings from those improvements, and the Corporation's ability to comply with its debt covenants. Risks pertaining specifically to the Corporation's interactive business segment include the viability of online advertising and subscriptions as revenue generators and the public's acceptance of online greetings and other social expression products. 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 Corporation's periodic filings with the Securities and Exchange Commission.
AMERICAN GREETINGS CORPORATION
SECOND QUARTER STATEMENT OF CONSOLIDATED OPERATIONS
FISCAL YEAR ENDING FEBRUARY 28, 2005
(In thousands of dollars except share and per share amounts)
(Unaudited) (Unaudited)
Three Months Ended Six Months Ended
August 31, August 31,
2004 2003 2004 2003
Net sales $391,893 $390,937 $824,929 $831,692
Costs and expenses:
Material, labor and other
production costs 186,717 195,972 368,332 374,717
Selling, distribution and
marketing 146,303 150,221 292,955 296,411
Administrative and general 57,505 54,427 121,642 118,947
Interest expense 9,163 17,537 61,857 40,337
Other (income) - net (17,421) (9,627) (34,272) (12,213)
382,267 408,530 810,514 818,199
Income (loss) before
income tax expense (benefit) 9,626 (17,593) 14,415 13,493
Income tax expense (benefit) 3,726 (6,984) 5,579 5,357
Income (loss) from
continuing operations 5,900 (10,609) 8,836 8,136
Income from discontinued
operations, net of tax 1,010 914 2,312 1,874
Net income (loss) $6,910 $(9,695) $11,148 $10,010
Earnings (loss) per share
- basic:
Income (loss) from
continuing operations 0.09 (0.16) 0.13 0.12
Income from discontinued
operations 0.01 0.01 0.03 0.03
Net income (loss) $0.10 $(0.15) $0.16 $0.15
Earnings (loss) per share
- assuming dilution:
Income (loss) from
continuing operations 0.09 (0.16) 0.13 0.12
Income from discontinued
operations 0.01 0.01 0.03 0.03
Net income (loss) $0.10 $(0.15) $0.16 $0.15
Average number of common
shares outstanding 68,418,773 66,315,954 68,209,732 66,114,817
Average number of common
shares outstanding -
assuming dilution 69,265,799 66,315,954 69,057,063 66,872,327
AMERICAN GREETINGS CORPORATION
SECOND QUARTER STATEMENT OF FINANCIAL POSITION
FISCAL YEAR ENDING FEBRUARY 28, 2005
(In thousands of dollars)
(Unaudited)
August 31,
2004 2003
ASSETS
CURRENT ASSETS
Cash and cash equivalents $152,763 $40,494
Trade accounts receivable, less allowances
for sales returns of $39,329
($40,812 in 2003) and for doubtful
accounts of $17,398 ($23,987 in 2003) 240,684 277,909
Inventories 308,977 362,946
Deferred and refundable income taxes 152,143 157,284
Assets of businesses held for sale 40,390 41,467
Prepaid expenses and other 218,930 238,150
Total current assets 1,113,887 1,118,250
GOODWILL 231,886 209,166
OTHER ASSETS 628,620 726,891
PROPERTY, PLANT AND EQUIPMENT - NET 340,299 363,882
$2,314,692 $2,418,189
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Debt due within one year $- $13,082
Accounts payable 150,513 142,979
Accrued liabilities 101,951 136,329
Accrued compensation and benefits 65,891 62,357
Income taxes 15,012 9,288
Liabilities of businesses held for sale 4,462 4,456
Other current liabilities 76,831 95,358
Total current liabilities 414,660 463,849
LONG-TERM DEBT 483,876 727,331
OTHER LIABILITIES 105,480 111,336
DEFERRED INCOME TAXES 27,427 9,566
SHAREHOLDERS' EQUITY
Common shares - Class A 64,022 61,866
Common shares - Class B 4,603 4,596
Capital in excess of par value 348,474 317,679
Treasury stock (435,107) (438,717)
Accumulated other comprehensive
income (loss) 10,325 (31,138)
Retained earnings 1,290,932 1,191,821
Total shareholders' equity 1,283,249 1,106,107
$2,314,692 $2,418,189
AMERICAN GREETINGS CORPORATION
SECOND QUARTER STATEMENT OF CASH FLOWS
FISCAL YEAR ENDING FEBRUARY 28, 2005
(In thousands of dollars)
(Unaudited)
Six Months Ended
August 31,
2004 2003
OPERATING ACTIVITIES:
Net income $11,148 $10,010
Income from discontinued operations 2,312 1,874
Income from continuing operations 8,836 8,136
Adjustments to reconcile to net cash
(used) provided by operating activities:
Restructure charges (384) (1,547)
Gain on sale of investment (3,095) -
Loss (gain) on sale of fixed assets 1,127 (1,173)
Loss on extinguishment of debt 39,056 4,639
Depreciation and amortization 28,321 29,911
Deferred income taxes (5,787) 15,097
Changes in operating assets and liabilities:
(Increase) decrease in trade accounts
receivable (390) 16,940
Increase in inventories (72,229) (89,192)
Decrease in other current assets 6,734 34,594
Decrease in deferred costs - net 71,006 21,625
Decrease in accounts payable and
other liabilities (968) (75,023)
Other - net (3,876) 562
Cash Provided (used) by Operating
Activities 68,351 (35,431)
INVESTING ACTIVITIES:
Property, plant & equipment additions (15,019) (17,123)
Proceeds from sale of fixed assets 115 2,106
Investment in corporate owned life insurance (1,005) 6,072
Other - net 27,337 (2,787)
Cash Used by Investing Activities 11,428 (11,732)
FINANCING ACTIVITIES:
Reduction of long-term debt (216,417) (3,313)
Decrease in short-term debt - (118,233)
Sale of stock under benefit plans 18,739 6,106
Purchase of treasury shares (9,363) (266)
Cash Used by Financing Activities (207,041) (115,706)
Cash Used by Discontinued
Operations (2,789) (6,363)
EFFECT OF EXCHANGE RATE CHANGES ON CASH (2,636) 1,263
DECREASE IN CASH AND CASH EQUIVALENTS (132,687) (167,969)
Cash and Cash Equivalents at
Beginning of Year 285,450 208,463
Cash and Cash Equivalents at
End of Period $152,763 $40,494
CONTACT: Stephen J. Smith, VP, Treasurer and Investor Relations of American Greetings Corporation, +1-216-252-4864, or investor.relations@amgreetings.com |
