American Greetings Announces Fourth Quarter Results



    
    - Earnings results include charges for actions designed to improve return
    on capital

    - Company announces $100 million share repurchase program

    - Company announces 25% increase in dividend
    

    CLEVELAND, April 17 /CNW/ -- American Greetings Corporation (NYSE:   AM)
today announced its results for the fourth quarter and fiscal year ended
February 28, 2007, a $100 million share repurchase program, and a 25% increase
to its quarterly cash dividend.

    
    Fourth Quarter Results
    
    For the fourth quarter of fiscal 2007, the Company reported net sales of
$472.8 million, pre-tax loss from continuing operations of $4.2 million, and a
loss from continuing operations of $7.7 million or 14 cents per share (all
per-share amounts assume dilution).
    During the quarter, the Company took a series of actions to improve its
long-term return on capital and to do so, incurred charges in both its
continuing as well as its discontinued operations.  Within the continuing
operations, the Company sold its candle product lines, and as a result,
recorded a pre-tax loss of $16 million or approximately 18 cents per share. In
addition, during the quarter, the Company also incurred exit costs in
connection with the closure of 60 of its retail stores resulting in a pre-tax
loss of $6.5 million or approximately 7 cents per share.
    In the prior year's fourth fiscal quarter, the Company reported net sales
of $507.4 million, pre-tax income from continuing operations of $63.6 million,
and income from continuing operations of $51.1 million or 70 cents per share.

    
    Full Year Results
    
    For the fiscal year ended February 28, 2007, the Company reported net
sales of $1,744.6 million, pre-tax income from continuing operations of $69.4
million, and income from continuing operations of $43.3 million or 72 cents
per share.  Included in these results are a pre-tax loss on the sale of the
Company's candle product lines of $16 million or approximately 16 cents per
share, a pre-tax loss associated with the closure of 60 stores within the
retail operations segment of $6.5 million or approximately 7 cents per share,
and a pre-tax gain of $20 million or approximately 20 cents per share as a
result of retailer consolidations and the effect the consolidations had on
several long-term supply agreements between the Company and the affected
retailers.

    
    Management Comments and Outlook
    
    Chief Executive Officer Zev Weiss said, "I am pleased that we continued
to execute against our goal of improving the return on capital employed and
generating strong cash flow.  We generated cash flow from operating activities
less capital expenditures of $225 million, well above our initial estimates
and even beyond our December guidance.  For fiscal year 2008, we are
projecting earnings per share between $1.35 and $1.55.  I am looking forward
to improved earnings as a large portion of the investments in our strategic
card initiative is now behind us.  In addition, we are able to continue
returning capital to our shareholders by repurchasing shares and increasing
the dividend."

    
    Financing Activities
    
    The Company purchased 3.0 million shares of its common stock for $71.3
million during the fourth quarter of fiscal 2007.  During the fiscal year, the
Company repurchased 11.1 million of its shares for $257.2 million and was not
required to issue approximately 7.1 million shares as a result of the
convertible notes exchange offer completed in the second quarter.
    The Company's Board of Directors authorized a new $100 million share
repurchase program as well as a 25% increase in its quarterly cash dividend
from 8 cents per share to 10 cents per share.  The share repurchases will be
made through a 10b5-1 program in open market or privately negotiated
transactions in compliance with the SEC's Rule 10b-18, subject to market
conditions, applicable legal requirements and other factors.  The increased
dividend will be paid on May 14, 2007 to shareholders of record at the close
of business on May 2, 2007.

    
    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 net sales of approximately $1.7 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:

    
    -- retail consolidations, acquisitions and bankruptcies, including the
       possibility of resulting adverse changes to retail contract terms;
    -- the Company's ability to successfully implement its strategy to invest
       in its core greeting card business;
    -- 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;
    -- the ability to execute share repurchase programs or the ability to
       achieve the desired accretive effect from such repurchases;
    -- the Company's ability to successfully complete, or achieve the desired
       benefits associated with, dispositions;
    -- 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;
    -- successful implementation of supply chain improvements and achievement
       of projected cost savings from those improvements;
    -- increases in the cost of material, energy, freight and other production
       costs;
    -- the Company's ability to comply with its debt covenants;
    -- 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;
    -- escalation in the cost of providing employee health care;
    -- successful integration of acquisitions; 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 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 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 28, 2006.



    
                          AMERICAN GREETINGS CORPORATION
               FOURTH QUARTER CONSOLIDATED STATEMENT OF OPERATIONS
                       FISCAL YEAR ENDED FEBRUARY 28, 2007

           (In thousands of dollars except share and per share amounts)

                                                  (Unaudited)
                                     Quarter Ended          Year Ended
                                      February 28,          February 28,
                                   ----------------       ----------------
                                  2007        2006        2007        2006
                                 ------      ------      ------      ------

    Net sales                    $472,848    $507,413  $1,744,603  $1,875,104

    Costs and expenses:
      Material, labor and
       other production costs     233,559     222,549     826,791     846,958
      Selling, distribution
       and marketing              176,487     171,296     627,906     631,943
      Administrative and
       general                     67,573      66,440     251,089     242,727
      Goodwill impairment               -           -           -      43,153
      Interest expense              7,962       8,460      34,986      35,124
      Other income - net           (8,503)    (24,896)    (65,530)    (64,676)
                                   -------    -------     -------      -------
                                  477,078     443,849   1,675,242   1,735,229
                                   -------    -------     -------      -------

    (Loss) income from
     continuing operations
     before income tax
     expense                       (4,230)     63,564      69,361     139,875
    Income tax expense              3,513      12,498      26,096      48,879
                                   -------    -------     -------      -------
    (Loss) income from
     continuing operations         (7,743)     51,066      43,265      90,996

    Loss from discontinued
     operations, net of tax        (4,480)     (9,272)       (887)     (6,620)
                                   -------    -------     -------      -------
    Net (loss) income            $(12,223)    $41,794     $42,378     $84,376
                                   =======    =======     =======      =======


    Earnings (loss) per share
     - basic:
       (Loss) income from
        continuing operations      $(0.14)      $0.82       $0.75       $1.38
       Loss from discontinued
        operations                  (0.08)      (0.15)      (0.02)      (0.10)
                                   -------    -------     -------      -------
       Net (loss) income           $(0.22)      $0.67       $0.73       $1.28
                                   =======    =======     =======      =======

    Earnings (loss) per share
     - assuming dilution:
       (Loss) income from
        continuing operations      $(0.14)      $0.70       $0.72       $1.24
       Loss from discontinued
        operations                  (0.08)      (0.12)      (0.01)      (0.08)
                                   -------    -------     -------      -------
       Net (loss) income           $(0.22)      $0.58       $0.71       $1.16
                                   =======    =======     =======      =======


    Average number of common
     shares outstanding        56,035,238  62,736,831  57,951,952  65,965,024

    Average number of common
     shares outstanding -
     assuming dilution         56,035,238  75,681,656  62,362,794  79,226,384

    Dividends declared per
     share                          $0.08       $0.08       $0.32       $0.32



                          AMERICAN GREETINGS CORPORATION
           FOURTH QUARTER CONSOLIDATED STATEMENT OF FINANCIAL POSITION
                       FISCAL YEAR ENDED FEBRUARY 28, 2007

                            (In thousands of dollars)

                                                          (Unaudited)
                                                          February 28,
                                                         --------------
                                                     2007              2006
                                                    ------            ------
    ASSETS
    CURRENT ASSETS
      Cash and cash equivalents                    $144,713          $213,613
      Short-term investments                              -           208,740
      Trade accounts receivable, net                 98,837           139,384
      Inventories                                   182,618           213,109
      Deferred and refundable income taxes          135,379           153,282
      Assets of businesses held for sale              5,199            24,903
      Prepaid expenses and other                    227,380           212,814
                                                   ---------         ---------
        Total current assets                        794,126         1,165,845

    GOODWILL                                        224,105           200,763
    OTHER ASSETS                                    416,887           548,514
    DEFERRED INCOME TAXES                            52,869                 -


    Property, plant and equipment - at
     cost                                           944,534           953,634
    Less accumulated depreciation                   659,462           649,794
                                                   ---------         ---------
    PROPERTY, PLANT AND EQUIPMENT - NET             285,072           303,840
                                                   ---------         ---------
                                                 $1,773,059        $2,218,962
                                                   =========         =========


    LIABILITIES AND SHAREHOLDERS' EQUITY
    CURRENT LIABILITIES
      Debt due within one year                           $-          $174,792
      Accounts payable                              118,204           123,757
      Accrued liabilities                            80,389            73,532
      Accrued compensation and benefits              61,192            68,864
      Income taxes                                   24,578            17,240
      Liabilities of businesses held for
       sale                                           1,932             3,627
      Other current liabilities                      84,898            97,270
                                                   ---------         ---------
        Total current liabilities                   371,193           559,082

    LONG-TERM DEBT                                  223,915           300,516
    OTHER LIABILITIES                               162,410           116,554
    DEFERRED INCOME TAXES                             6,315            22,785

    SHAREHOLDERS' EQUITY
      Common shares - Class A                        50,839            56,130
      Common shares - Class B                         4,283             4,218
      Capital in excess of par value                414,859           398,505
      Treasury stock                               (710,414)         (676,436)
      Accumulated other comprehensive
       (loss) income                                 (1,013)            9,823
      Retained earnings                           1,250,672         1,427,785
                                                   ---------         ---------
        Total shareholders' equity                1,009,226         1,220,025
                                                   ---------         ---------
                                                 $1,773,059        $2,218,962
                                                   =========         =========



                          AMERICAN GREETINGS CORPORATION
               FOURTH QUARTER CONSOLIDATED STATEMENT OF CASH FLOWS
                       FISCAL YEAR ENDED FEBRUARY 28, 2007
                            (In thousands of dollars)

                                                         (Unaudited)
                                                    Year Ended February 28,
                                                   -------------------------
                                                     2007              2006
                                                    ------            ------
    OPERATING ACTIVITIES:
      Net income                                    $42,378           $84,376
      Loss from discontinued operations                 887             6,620
                                                   ---------         ---------
      Income from continuing operations              43,265            90,996
      Adjustments to reconcile to net cash
       provided by operating activities:
       Goodwill impairment                                -            43,153
       Loss on disposal of fixed assets               1,726             4,355
       Loss on extinguishment of debt                 5,055               863
       Loss on disposal of product lines             15,969                 -
       Depreciation and amortization                 49,380            54,202
       Deferred income taxes                        (16,277)           23,225
       Other non-cash charges                        13,891             7,219
       Changes in operating assets and
        liabilities, net of acquisitions
        and dispositions:
        Decrease in trade accounts
         receivable                                  47,369            33,850
        Decrease in inventories                      22,227             1,541
        Increase in other current assets            (35,973)          (13,371)
        Decrease in deferred costs - net            128,752            56,610
        Decrease in accounts payable and
         other liabilities                           (1,763)          (33,374)
        Other - net                                  (6,646)              123
                                                   ---------         ---------
          Cash Provided by Operating
           Activities                               266,975           269,392

    INVESTING ACTIVITIES:
      Proceeds from sale of short-term
       investments                                1,026,280         1,733,470
      Purchases of short-term investments          (817,540)       (1,733,470)
      Property, plant and equipment
       additions                                    (41,726)          (46,056)
      Cash payments for business
       acquisitions, net of cash acquired           (13,122)          (15,315)
      Cash receipts related to discontinued
       operations                                    12,559                 -
      Proceeds from sale of fixed assets              4,847            11,416
      Other - net                                     6,160                 -
                                                   ---------         ---------
          Cash Provided (Used) by Investing
           Activities                               177,458           (49,955)

    FINANCING ACTIVITIES:
      Increase in long-term debt                    200,000                 -
      Reduction of long-term debt                  (440,588)          (10,782)
      Sale of stock under benefit plans               6,834            27,068
      Purchase of treasury shares                  (257,817)         (244,642)
      Dividends to shareholders                     (18,418)          (21,184)
      Debt issuance costs                            (8,533)                -
                                                   ---------         ---------
          Cash Used by Financing Activities        (518,522)         (249,540)

    DISCONTINUED OPERATIONS:
      Cash used by operating activities
       from discontinued operations                    (961)           (2,725)
      Cash provided by investing activities
       from discontinued operations                   1,643               566
                                                   ---------         ---------
          Cash Provided (Used) by
           Discontinued Operations                      682            (2,159)

    EFFECT OF EXCHANGE RATE CHANGES ON CASH           4,507            (1,924)
                                                   ---------         ---------

    DECREASE IN CASH AND CASH EQUIVALENTS           (68,900)          (34,186)

       Cash and Cash Equivalents at
        Beginning of Year                           213,613           247,799
                                                   ---------         ---------
       Cash and Cash Equivalents at End of
        Year                                       $144,713          $213,613
                                                   =========         =========

    




For further information:

For further information: Gregory M. Steinberg, Treasurer and Director of
 Investor Relations of American Greetings Corporation, +1-216-252-4864, or 
investor.relations@amgreetings.com Web Site:
http://corporate.americangreetings.com                 
http://investors.americangreetings.com

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