American Greetings (NYSE: AM) today released its second quarter financial results for fiscal 2000, which reflect recent restructuring efforts, its initiative to improve the productivity of its retail partners, and the impact of its electronic marketing group. For the quarter ended Aug. 31, 1999, American Greetings reported a pre-tax loss of $718,000 before special charges. However, those results were impacted by a $4.4 million pre-tax loss incurred by the Company's electronic marketing unit. When excluding that issue, American Greetings had a pre-tax profit during the quarter of $3.7 million. Additionally, the Company reported $40.4 million of special charges during the quarter related to the consolidation of Canadian manufacturing and distribution into the US. That total was comprised of a $32.7 million restructuring charge and a $7.7 million charge for a write down of Canadian inventory. Those charges resulted in a net loss for the quarter of $26.3 million, or 39 cents per share assuming dilution. For the second quarter last year, American Greetings reported net income of $13.9 million, or 20 cents per share. Revenues in the quarter were $477.8 million, compared with $479.7 million for the same period a year earlier. As expected, revenues were impacted by the Company's productivity initiative, which will result in about a $100 million reduction in shipments to retailers during fiscal 2000. "We remain on track with our productivity initiatives and expect to complete the program in the second half of this year," said Morry Weiss, chairman and chief executive of American Greetings. "By lowering the inventory of card departments while introducing exciting new greeting card designs, many of our accounts are beginning to see the positive impact of our efforts to further improve their productivity." Weiss said American Greetings still expects earnings for the year between $2 and $2.10 per share. That guidance does not include the impact of restructuring charges or the impact of expected results in the electronic marketing unit. For the first six months of fiscal 2000, American Greetings had pre-tax profits of $16.2 million before special charges. When also excluding the results of the electronic marketing unit, the Company reported a pre-tax profit of $20.3 million. When including all factors, the Company reported a net loss of $15.5 million, or 23 cents per share, during the six-month period. A year earlier, the Company reported net income of $47.8 million, or 67 cents per share. Last year's results included a one-time gain of 5 cents per share from the sale of the company's investment in Artistic Greetings. Revenue during the first six months was $936.5 million, compared with $967.6 million for the same period of fiscal 1999, reflecting, as anticipated, the impact of fewer shipments to retailers. Consumer and retailer response to new greeting card programs remained strong throughout the first six months. "Intuitions," a provocative new card line, continued to see strong response and has become one of the industry's top-selling everyday card lines. American Greetings has seen strong results from its international operations, especially the UK where sales and operating profits both showed double-digit gains from last year. Plus Mark and Magnivision also showed gains during the quarter over last year. During the quarter, the Company's strategic business units also continued to show double-digit growth. The Company completed its acquisition of Contempo Colours, a Michigan-based party goods company. Contempo will complement DesignWare, the party goods unit of American Greetings formed in 1997. Together, Contempo and DesignWare will give American Greetings a double-digit share of the party goods industry. "The acquisition of Contempo is the latest step in implementing our long- term strategic plan," said Ed Fruchtenbaum, president and chief operating officer. "We continue to explore several other acquisition opportunities while pursuing strong internal growth." American Greetings is the world's largest publicly held creator, manufacturer and distributor of greeting cards and social expression products. With headquarters in Cleveland, Ohio, American Greetings employs more than 21,000 associates around the world and has one of the largest creative studios in the world. For more information on the Company, visit our site on the World Wide Web at www.americangreetings.com . The statements contained in this release that are not historical facts are forward-looking statements. Actual results may differ materially from those projected in the forward-looking statements. These forward-looking statements involve risks and uncertainties, including but not limited to, the following risks: retail bankruptcies and consolidations, a weak retail environment, competitive terms of sale offered to customers to expand or maintain business. Please see the Company's Form 10K for the year ended February 28, 1999, for other risks and uncertainties that may affect future results.
AMERICAN GREETINGS CORPORATION
SECOND QUARTER REPORT OF CONSOLIDATED SALES AND INCOME
FISCAL YEAR ENDING FEBRUARY 29, 2000
(In thousands of dollars except per share amounts)
(Unaudited)
Three Months Ended Percent
August 31, Change
1999 1998 Net sales $477,783 $479,733 (0.4)% Income (loss) before special
charges and income taxes (718) 21,342 Income (loss) before income taxes (41,091) 21,342 Income taxes (14,793) 7,417 Net income (loss) (26,298) 13,925 Earnings (loss) per share (.39) .20 Earnings (loss) per share
- assuming dilution (.39) .20 Average number of common
shares outstanding 65,948,721 70,524,337
(Unaudited)
Six Months Ended Percent
August 31, Change
1999 1998 Net sales $936,540 $967,641 (3.2)% Income before special charges
and income taxes 16,230 74,619 Income (loss) before income taxes (24,143) 74,619 Income taxes (8,692) 26,863 Net income (loss) (15,451) 47,756 Earnings (loss) per share (.23) .67 Earnings (loss) per share
- assuming dilution (.23) .67 Average number of common
shares outstanding 66,663,719 70,862,530
AMERICAN GREETINGS CORPORATION
CONSOLIDATED STATEMENT OF INCOME
(In thousands of dollars except per share amounts)
(Unaudited) (Unaudited)
Three Months Ended Six Months Ended
August 31, August 31,
1999 1998 1999 1998 Net sales $477,783 $479,733 $936,540 $967,641 Costs and expenses: Material, labor
and other
production costs 188,821 170,487 348,586 330,206 Selling, distribution
and marketing 234,709 226,032 454,031 440,916 Administrative
and general 54,235 51,342 108,838 109,506 Restructuring charge 32,747 - 32,747 - Interest 7,970 7,345 15,110 13,918 Other expense (income) 392 3,185 1,371 (1,524)
Total 518,874 458,391 960,683 893,022 Income (loss) before
income taxes (41,091) 21,342 (24,143) 74,619 Income taxes (14,793) 7,417 (8,692) 26,863 Net income (loss) $(26,298) $13,925 $(15,451) $47,756 Earnings (loss)
per share $(.39) $.20 $(.23) $.67 Earnings (loss) per share -
assuming dilution $(.39) $.20 $(.23) $.67 Average number of
common shares
outstanding 65,948,721 70,524,337 66,663,719 70,862,530 ots Original Text Service: American Greetings Corporation Internet: http://www.newsaktuell.de Contact: Dale A. Cable, Vice President, Treasurer, (USA) 216-252-7300, or Jim King, Manager, Investor & Media Relations, (USA) 216-252-4864, both of American Greetings Company News On-Call: http://www.prnewswire.com/comp/044150.html or fax, (USA) 800-758- 5804, ext. 044150 Web site: http://www.americangreetings.com