American Greetings Sales Rise, Net Falls
American Greetings Announces Second Quarter Results Including Printing Operations
-- Graphic Arts Online, 9/28/2008 9:25:00 AM
CLEVELAND, Sept. 26 /PRNewswire-FirstCall/ -- American Greetings Corporation (NYSE: AM) today announced its second quarter results for the fiscal quarter ended August 29, 2008.Second Quarter Results
For the second quarter of fiscal 2009, the Company reported total revenue of $385.8 million, pre-tax income from continuing operations of $2.4 million, and income from continuing operations of $2.3 million or 5 cents per share (all per-share amounts assume dilution). For the second quarter of fiscal 2008, the Company reported total revenue of $377.5 million, pre-tax income from continuing operations of $12.6 million, and income from continuing operations of $8.4 million or 15 cents per share.
Management Comments and Outlook
Chief Executive Officer Zev Weiss said, "I am pleased with our revenue performance, particularly given current economic conditions. We believe the changes we have made to our products the last couple of years are showing up in our revenue growth. Increasing the quality of our product to achieve that revenue growth has come at a cost, especially in this time of inflation. We remain committed to mitigating the increasing cost structure while simultaneously continuing to delight the consumer."
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The Company reaffirmed its previously announced fiscal 2009 estimate of earnings per share from continuing operations to be between $1.60 to $1.85 per share and cash flow from operations minus capital expenditures to be between $60 million and $80 million.
Weiss continued, "Due to the seasonality of our business, the majority of our earnings are typically earned in the second half of the fiscal year. During the second half, we are increasing our efforts on productivity improvement projects to help offset the margin pressure we experienced in the first half. The combination of both the challenging economic conditions and the risk inherent in a seasonal business could cause us to finish the year near the lower end of our earnings guidance." Financing Activities
Under the Company's $100 million share repurchase program, during the second quarter, the Company purchased approximately 3.1 million shares of its common stock for $46.0 million. The Company has reduced its diluted share count by forty two percent over the past three and one half years.
The Company's Board of Directors authorized a cash dividend of 12 cents per share to be paid on October 27, 2008 to shareholders of record at the close of business on October 15, 2008.
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 revenue of approximately $1.8 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:
-- a weak retail environment;
-- retail consolidations, acquisitions and bankruptcies, including the
possibility of resulting adverse changes to retail contract terms;
-- competitive terms of sale offered to customers;
-- 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 integrate acquisitions;
-- the ability to identify, complete, or achieve the desired benefits
associated with productivity improvement projects;
-- the ability to successfully implement, or achieve the desired benefits
associated with any information systems refresh the Company may
implement;
-- the ability to execute share repurchase programs or the ability to
achieve the desired accretive effect from such repurchases;
-- the Company's ability to comply with its debt covenants;
-- the Company's ability to successfully complete, or achieve the desired
benefits associated with, dispositions, including the sale of the
Strawberry Shortcake and Care Bears properties;
-- 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.
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