American Greetings Announces Fourth Quarter Results



    CLEVELAND, April 28 /CNW/ -- American Greetings Corporation (NYSE:   AM)
today announced its fourth quarter results for the fiscal quarter ended
February 28, 2009.
    

    Fourth Quarter Results
    
    For the fourth quarter of fiscal 2009, the Company reported total revenue
of $422.5 million, a pre-tax loss from continuing operations of $67.9 million,
and a loss from continuing operations of $50.1 million or $1.13 per share (all
per-share amounts assume dilution).  For the fourth quarter of fiscal 2008,
the Company reported total revenue of $493.2 million, pre-tax income from
continuing operations of $12.7 million, and income from continuing operations
of $15.6 million or 31 cents per share.
    

    
    During the fourth quarter of fiscal 2009, the Company recognized non-cash
pre-tax goodwill impairment charges of $47.3 million (after-tax of
approximately $42.6 million) that reduced earnings per share by 97 cents
during the quarter.
    

    
    In addition, the Company recognized expenses in its licensing business
primarily due to changes in market conditions that caused a change in ultimate
revenues related to animated video productions of $16.4 million (after-tax of
approximately $10.0 million) that reduced earnings per share by 23 cents
during the quarter.
    

    
    The Company recorded a non-cash pre-tax long-lived asset impairment
charge within the Retail Operations segment of $1.5 million (after-tax of
approximately $0.9 million) that reduced earnings per share by 2 cents during
the quarter.
    

    
    The Company also announced on December 9, 2008, the elimination of
approximately 275 positions as part of a cost reduction effort.  As a result
of those and other position eliminations during the quarter, the Company
recognized a pre-tax severance charge of $7.5 million (after-tax of
approximately $4.6 million) that reduced earnings per share by 10 cents.
    

    Management Comments and Outlook
    
    Chief Executive Officer Zev Weiss said, "This fiscal year we faced a
challenging retail environment as a result of the steep economic downturn.  We
will continue to be even more vigilant in managing our supply chain and
becoming more cost efficient.  Our focus on efficiency, we believe, will help
us drive a substantial improvement in cash flow next year and we are
projecting cash flow from operating activities less capital expenditures to be
at least $70 million.  We are also excited about the recent acquisitions of
Recycled Paper Greetings and the Papyrus brand, and satisfied that the sale of
our Carlton Retail stores best positions our Company and those stores for
success."
    

    Financing Activities
    
    Under the Company's $75 million share repurchase program, during the
fourth quarter the Company purchased approximately 4.9 million shares of its
common stock for $24.2 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 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 domestically and worldwide.  For
more information on the Company, visit http://corporate.americangreetings.com.
    

    
    Certain statements in this release 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:
    

    1. a weak retail environment and general economic conditions;
    2. the ability to successfully integrate acquisitions, including the
recent
       acquisitions of Recycled Paper Greetings and the Papyrus brand;
    3. the Company's ability to successfully complete the proposed sale of the
       Strawberry Shortcake and Care Bears properties;
    4. 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;
    5. retail consolidations, acquisitions and bankruptcies, including the
       possibility of resulting adverse changes to retail contract terms;
    6. the ability to achieve the desired benefits associated with its cost
       reduction efforts;
    7. competitive terms of sale offered to customers;
    8. the Company's ability to comply with its debt covenants;
    9. 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;
    10. consumer acceptance of products as priced and marketed;
    11. the impact of technology on core product sales;
    12. the timing and impact of converting customers to a scan-based trading
        model;
    13. escalation in the cost of providing employee health care;
    14. the ability to successfully implement, or achieve the desired benefits
        associated with, any information systems refresh the Company may
        implement;
    15. the Company's ability to achieve the desired accretive effect from any
        share repurchase programs;
    16. 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

    17. 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
             FOURTH QUARTER CONSOLIDATED STATEMENT OF OPERATIONS
                     FISCAL YEAR ENDED FEBRUARY 28, 2009
    


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

    
                                           (Unaudited)
                              Quarter Ended            Year Ended
                              -------------            ----------
                           Feb. 28,    Feb. 29,    Feb. 28,    Feb. 29,
                             2009        2008        2009        2008
                           ---------   ---------   ---------   ---------
    

    
    Net sales              $403,467    $471,875  $1,646,399  $1,730,784
    Other revenue            19,052      21,358      44,339      45,667
                             ------      ------      ------      ------
    Total revenue           422,519     493,233   1,690,738   1,776,451
    

    
    Material, labor and
     other production
     costs                  223,288     233,262     809,956     780,771
    Selling,
     distribution and
     marketing expenses     153,818     176,778     618,899     621,478
    Administrative and
     general expenses        55,753      67,261     226,317     246,722
    Goodwill and other
     intangible assets
     impairment              47,277           -     290,166           -
    Other operating
     income - net               (67)       (518)     (1,396)     (1,325)
                                ---        ----      ------      ------
    

    
    Operating (loss)
     income                 (57,550)     16,450    (253,204)    128,805
    

    
    Interest expense          5,881       5,575      22,854      20,006
    Interest income            (447)     (1,903)     (3,282)     (7,758)
    Other non-operating
     expense (income) -
     net                      4,883          67       2,157      (7,411)
                              -----          --       -----      ------
    

    
    (Loss) income from
     continuing operations
     before income tax
     (benefit) expense      (67,867)     12,711    (274,933)    123,968
    Income tax
     (benefit) expense      (17,789)     (2,851)    (47,174)     40,648
                            -------      ------     -------      ------
    

    
    (Loss) income from
     continuing
     operations             (50,078)     15,562    (227,759)     83,320
    

    
    Loss from
     discontinued
     operations, net of
     tax                          -           -           -        (317)
                              -----       -----       -----       -----
    

    
    Net (loss) income      $(50,078)    $15,562   $(227,759)    $83,003
                           ========     =======   =========     =======
    

    
    (Loss) earnings per
     share - basic:
       (Loss) income from
        continuing
        operations           $(1.13)      $0.31      $(4.89)      $1.54
       Loss from
        discontinued
        operations                -           -           -       (0.01)
                              -----       -----       -----       -----
       Net (loss) income     $(1.13)      $0.31      $(4.89)      $1.53
                             ======       =====      ======       =====
    

    
    (Loss) earnings per share
      - assuming dilution:
       (Loss) income from
        continuing
        operations           $(1.13)      $0.31      $(4.89)      $1.53
       Loss from
        discontinued
        operations                -           -           -       (0.01)
                              -----       -----       -----       -----
       Net (loss) income     $(1.13)      $0.31      $(4.89)      $1.52
                             ======       =====      ======       =====
    


    
    Average number of
     common shares
     outstanding         44,144,203  50,895,638  46,543,780  54,236,961
    

    
    Average number of
     common shares
     outstanding -
     assuming dilution   44,144,203  50,972,834  46,543,780  54,506,048
    

    
    Dividends declared
     per share                $0.24       $0.10       $0.60       $0.40
    





    
                  AMERICAN GREETINGS CORPORATION
     FOURTH QUARTER CONSOLIDATED STATEMENT OF FINANCIAL POSITION
                FISCAL YEAR ENDED FEBRUARY 28, 2009
    

    
                  (In thousands of dollars)
                                         (Unaudited)
                                         -----------
                                   February 28,  February 29,
                                      2009          2008
                                    --------      --------
    

    
    ASSETS
    CURRENT ASSETS
      Cash and cash equivalents      $60,216    $123,500
      Trade accounts receivable,
       net                            63,281      61,902
      Inventories                    203,873     216,671
      Deferred and refundable
       income taxes                   71,850      72,280
      Prepaid expenses and other     162,175     195,017
                                     -------     -------
        Total current assets         561,395     669,370
    

    
    GOODWILL                          26,871     285,072
    OTHER ASSETS                     368,958     420,219
    DEFERRED AND REFUNDABLE
     INCOME TAXES                    178,785     133,762
    

    
    Property, plant and
     equipment - at cost             958,081     974,073
    Less accumulated depreciation    660,302     678,068
                                     -------     -------
    PROPERTY, PLANT AND
     EQUIPMENT - NET                 297,779     296,005
                                  ----------  ----------
                                  $1,433,788  $1,804,428
                                  ==========  ==========
    


    
    LIABILITIES AND SHAREHOLDERS' EQUITY
    CURRENT LIABILITIES
      Debt due within one year          $750     $22,690
      Accounts payable               117,504     123,713
      Accrued liabilities             75,673      79,345
      Accrued compensation and
       benefits                       32,198      68,669
      Income taxes payable            11,743      29,037
      Other current liabilities      105,537     108,867
                                     -------     -------
        Total current liabilities    343,405     432,321
    

    
    LONG-TERM DEBT                   389,473     220,618
    OTHER LIABILITIES                149,820     181,720
    DEFERRED INCOME TAXES AND
      NONCURRENT INCOME TAXES
       PAYABLE                        21,901      26,358
    

    
    SHAREHOLDERS' EQUITY
      Common shares - Class A         37,043      45,324
      Common shares - Class B          3,499       3,434
      Capital in excess of par
       value                         449,085     445,696
      Treasury stock                (938,086)   (872,949)
      Accumulated other
       comprehensive (loss)
       income                        (67,278)     21,244
      Retained earnings            1,044,926   1,300,662
                                  ----------  ----------
        Total shareholders'
         equity                      529,189     943,411
                                  ----------  ----------
                                  $1,433,788  $1,804,428
                                  ==========  ==========
    



    
                 AMERICAN GREETINGS CORPORATION
       FOURTH QUARTER CONSOLIDATED STATEMENT OF CASH FLOWS
               FISCAL YEAR ENDED FEBRUARY 28, 2009
                    (In thousands of dollars)
    

    
                                            (Unaudited)
                                            Year Ended
                                            ----------
                                       February   February
                                       28,        29,
                                       2009       2008
                                       --------   --------
    

    
    OPERATING ACTIVITIES:
      Net (loss) income                $(227,759)   $83,003
      Loss from discontinued
       operations                              -        317
                                         -------     ------
      (Loss) income from continuing
       operations                       (227,759)    83,320
      Adjustments to reconcile (loss)
       income from continuing
       operations to cash flows
       from operating activities:
        Goodwill and other intangible
         assets impairment               290,166          -
        Net loss on disposal of fixed
         assets                            1,215        961
        Depreciation and intangible
         assets amortization              50,016     48,535
        Deferred income taxes            (29,438)    (7,562)
        Other non-cash charges            13,735      9,303
        Changes in operating assets
         and liabilities, net of
         acquisitions and dispositions:
          Trade accounts receivable       (6,413)    41,758
          Inventories                        924    (28,456)
          Other current assets            17,986     27,970
          Deferred costs - net            27,596     53,438
          Accounts payable and other
           liabilities                   (67,542)    18,934
          Other - net                      2,554     (4,664)
                                          ------     ------
        Total Cash Flows From
         Operating Activities             73,040    243,537
    

    
    INVESTING ACTIVITIES:
      Proceeds from sale of short-
       term investments                        -    692,985
      Purchases of short-term
       investments                             -   (692,985)
      Property, plant and equipment
       additions                         (55,733)   (56,623)
      Cash payments for business
       acquisitions, net of cash
       acquired                          (37,882)   (76,338)
      Cash receipts related to
       discontinued operations                 -      4,283
      Proceeds from sale of fixed
       assets                                433      3,104
      Other - net                        (44,153)         -
                                         -------    -------
        Total Cash Flows From
         Investing Activities           (137,335)  (125,574)
    

    
    FINANCING ACTIVITIES:
      Increase in long-term debt         141,500     20,100
      Reduction of long-term debt        (22,509)         -
      Sale of stock under benefit
       plans                                 525     27,156
      Purchase of treasury shares        (73,983)  (172,328)
      Dividends to shareholders          (22,566)   (21,803)
                                         -------    -------
        Total Cash Flows From
         Financing Activities             22,967   (146,875)
    

    
    DISCONTINUED OPERATIONS:
      Operating cash flows from
       discontinued operations                 -        (59)
                                         -------    -------
        Total Cash Flows from
         Discontinued Operations               -        (59)
    

    
    EFFECT OF EXCHANGE RATE CHANGES
     ON CASH                             (21,956)     7,758
                                         -------    -------
    

    
    DECREASE IN CASH AND CASH
     EQUIVALENTS                         (63,284)   (21,213)
    

    
        Cash and Cash Equivalents at
         Beginning of Year               123,500    144,713
                                         -------    -------
        Cash and Cash Equivalents at
         End of Year                     $60,216   $123,500
                                         =======   ========
    



    
                     AMERICAN GREETINGS CORPORATION
             FOURTH QUARTER CONSOLIDATED SEGMENT DISCLOSURES
                   FISCAL YEAR ENDED FEBRUARY 28, 2009
                        (In thousands of dollars)
    

    
                                        (Unaudited)
                           Quarter Ended           Year Ended
                           -------------           ----------
                        February   February  February    February
                        28,        29,       28,         29,
                        2009       2008      2009        2008
                        --------   --------  --------    --------
    

    
    Total Revenue:
    North American Social
      Expression
       Products         $272,595   $286,948  $1,159,162  $1,187,520
    Intersegment items    (9,136)   (13,788)    (57,547)    (57,210)
    Exchange rate
     adjustment           (4,281)     1,178      (6,167)       (668)
                         -------    -------   ---------   ---------
    Net                  259,178    274,338   1,095,448   1,129,642
    

    
    International Social
      Expression
       Products           77,401     92,520     299,830     307,959
    Exchange rate
     adjustment          (19,526)     1,200     (29,103)      3,367
                         -------     ------     -------     -------
    Net                   57,875     93,720     270,727     311,326
    

    
    Retail Operations     64,879     77,348     183,913     198,271
    Exchange rate
     adjustment           (3,813)       605      (5,101)       (922)
                          ------     ------      ------     -------
    Net                   61,066     77,953     178,812     197,349
    

    
    AG Interactive        21,756     22,690      84,254      78,652
    Exchange rate
     adjustment             (551)        62        (841)         63
                          ------     ------      ------      ------
    Net                   21,205     22,752      83,413      78,715
    

    
    Non-reportable
     segments             23,195     24,522      62,338      59,356
    

    
    Unallocated                -        (52)          -          63
    

    
                        --------   --------  ----------  ----------
                        $422,519   $493,233  $1,690,738  $1,776,451
                        ========   ========  ==========  ==========
    


    
    Segment (Loss) Earnings:
    North American Social
      Expression
       Products         $(22,160)   $23,417    $114,395    $220,285
    Intersegment items    (6,821)   (10,304)    (42,535)    (42,953)
    Exchange rate
     adjustment             (732)       670      (1,909)       (104)
                          ------     ------      ------     -------
    Net                  (29,713)    13,783      69,951     177,228
    

    
    International Social
      Expression
       Products           (1,866)    11,569     (81,616)     24,223
    Exchange rate
     adjustment             (855)       233       3,947         513
                          ------     ------      ------      ------
    Net                   (2,721)    11,802     (77,669)     24,736
    

    
    Retail Operations        549     11,372     (19,123)     (3,772)
    Exchange rate
     adjustment             (148)       (10)       (108)        119
                            ----     ------      ------       -----
    Net                      401     11,362     (19,231)     (3,653)
    

    
    AG Interactive          (259)    (1,909)   (161,503)      6,755
    Exchange rate
     adjustment             (318)      (301)       (188)       (300)
                            ----      -----     -------       -----
    Net                     (577)    (2,210)   (161,691)      6,455
    

    
    Non-reportable
     segments             (9,816)     1,181      (7,627)      3,779
    

    
    Unallocated          (24,473)   (23,372)    (76,590)    (84,183)
    Exchange rate
     adjustment             (968)       165      (2,076)       (394)
                          ------     ------      ------      ------
    Net                  (25,441)   (23,207)    (78,666)    (84,577)
    

    
                        --------    -------   ---------    --------
                        $(67,867)   $12,711   $(274,933)   $123,968
                        ========    =======   =========    ========


    




For further information:

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

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