EX-99.(A) 3 e173683x99a.txt PRESS RELEASE Exhibit 99(a) American Greetings Announces Earnings Per Share for Fiscal 2004 in Line with Projections * Cash flow from operating and investing activities of $259 million substantially exceeds estimate * Corporation announces intent to make tender offer for 11.75 percent notes * Including tender, debt reduction over 13 months expected to total nearly $400 million CLEVELAND, March 31 /PRNewswire-FirstCall/ -- American Greetings Corporation (NYSE: AM) today announced results in line with its December estimate for the fiscal year ended Feb. 29, 2004. The Corporation also announced its intent to make a tender offer for its 11.75 percent senior subordinated notes due 2008. American Greetings reported net income of $48.3 million, or 62 cents per share, on net sales of $535.0 million, for the fiscal 2004 fourth quarter ended Feb. 29, 2004 (all per-share amounts assume dilution). These results compare to net income of $45.4 million, or 60 cents per share, on net sales of $525.9 million in the fourth quarter last year. For the full year, the Corporation reported net income of $104.7 million, or $1.40 per share, on net sales of $2.0 billion. Included in the 2004 year- to-date results are $18.4 million in pretax costs ($10.4 after taxes) incurred in the first and third quarters for debt repurchases totaling $181.6 million. Excluding these costs, American Greetings realized earnings per share of $1.53 on net income of $112.2 million for the full year. The Corporation believes its results excluding these costs are useful for the purpose of providing a comparable analysis to the prior year. Last year, the Corporation reported net income of $121.1 million, or $1.63 per share, on net sales of $2.0 billion for the same period. Last year's results included a $12.0 million pretax gain from the sale of an equity investment. Tender offer American Greetings announced its intent to make a cash tender offer for all of its $196.4 million outstanding 11.75 percent senior subordinated notes due July 2008. The Corporation is undertaking this initiative in an effort to reduce its future interest expense and to increase its financial flexibility. The offer is subject to an amendment of the credit agreement for the Corporation's revolving credit facility. American Greetings anticipates receiving this amendment by the expiration date of the tender offer. The expected commencement date of this offer is April 14, 2004, and the expected expiration date is May 12, 2004. This press release constitutes neither an offer to purchase nor a solicitation of an offer to sell the notes. Additional details related to the intended tender offer are available in the Corporation's Form 8-K furnished on March 31, 2004. Management comments and fiscal year 2005 outlook Chief Executive Officer Zev Weiss said fiscal 2004 was a year in which American Greetings made substantial progress toward its long-term goals. "We are pleased that we achieved our revised earnings per share estimate and generated cash flow from operating and investing activities of $259 million," Weiss said. "Our exceptional cash flow enabled us to pay down $182 million of debt during fiscal 2004 and has left us with sufficient cash to eliminate our high-yield debt in the first quarter. With our tender offer, we expect to have reduced debt nearly $400 million within a 13-month period, which will result in long-term benefits in the form of interest expense savings." Weiss said the Company's focus on executing its strategic initiatives will remain its top priority. "While we have made meaningful improvements in our business over the past year, we will continue to focus on driving costs out of our supply chain in fiscal 2005," Weiss said. "We will also refine our longer- term strategy for growing our top line and will begin to implement some of our initial growth programs during the year." American Greetings anticipates its earnings per share for the first quarter of fiscal year 2005 will be between 29 and 34 cents. For the full year, the Corporation projects its earnings per share to be between $1.63 and $1.68. The Corporation has not included an estimate for the costs associated with its bond tender offer in its first-quarter or full-year projections. The Corporation also projects cash flow from operating and investing activities of approximately $200 million in fiscal year 2005. Planned stock sale by Chairman American Greetings announced that Morry Weiss, chairman of the board, has advised the Corporation that he may sell up to 800,000 shares of American Greetings class A and B stock, including shares subject to options, some of which the Corporation may buy back and place into treasury stock. Weiss, age 63, is considering these sales as part of a multiyear estate planning strategy. As reported in the Corporation's proxy, Weiss held 1.8 million shares and options in June of 2003. Weiss has also advised the Company that he may enter into a 10b5-1 plan to assist in the execution of this estate- planning strategy. 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 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 that could cause actual results to differ materially from the forward-looking statements, including but 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 FOURTH QUARTER REPORT OF CONSOLIDATED OPERATIONS (In thousands of dollars except share and per share amounts) (Unaudited) Three Months Ended Twelve Months Ended Feb. 29, Feb. 28, Feb. 29, Feb. 28, 2004 2003 2004 2003 Net sales $535,045 $525,906 $2,008,943 $1,995,860 Costs and expenses: Material, labor and other production costs 254,870 216,386 937,619 881,771 Selling, distribution and marketing 174,982 162,914 649,679 620,885 Administrative and general 45,870 59,352 225,400 240,129 Interest expense 14,904 19,731 85,828 79,095 Other (income) - net (34,371) (7,763) (60,334) (26,858) 456,255 450,620 1,838,192 1,795,022 Income before income tax expense 78,790 75,286 170,751 200,838 Income tax expense 30,492 29,888 66,081 79,732 Net income $48,298 $45,398 $104,670 $121,106 Earnings per share $0.72 $0.70 $1.57 $1.85 Earnings per share - assuming dilution $0.62 $0.60 $1.40 $1.63 Average number of common shares outstanding 67,107,847 65,882,451 66,509,332 65,636,621 Average number of common shares outstanding - assuming dilution 80,884,171 79,268,277 80,088,377 78,980,830 AMERICAN GREETINGS CORPORATION STATEMENT OF FINANCIAL POSITION (In thousands of dollars) February 29, February 28, 2004 2003 ASSETS CURRENT ASSETS Cash and cash equivalents $285,450 $208,463 Trade accounts receivable, less allowances for sales returns of $85,638 ($86,318 in 2003) and for doubtful accounts of $18,183 ($35,595 in 2003) 250,554 309,967 Inventories 246,171 278,807 Deferred and refundable income taxes 158,689 202,485 Prepaid expenses and other 236,104 234,766 Total current assets 1,176,968 1,234,488 GOODWILL 228,955 209,664 OTHER ASSETS 708,957 748,540 PROPERTY, PLANT AND EQUIPMENT - NET 369,133 391,428 $2,484,013 $2,584,120 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Debt due within one year $ - $133,180 Accounts payable 129,362 167,195 Accrued liabilities 129,785 146,050 Accrued compensation and benefits 70,896 82,782 Income taxes 14,513 57,813 Other current liabilities 78,407 112,377 Total current liabilities 422,963 699,397 LONG-TERM DEBT 665,874 726,531 OTHER LIABILITIES 96,325 66,379 DEFERRED INCOME TAXES 31,311 14,349 SHAREHOLDERS' EQUITY Common shares - Class A 62,880 61,299 Common shares - Class B 4,588 4,600 Capital in excess of par value 331,765 310,872 Treasury stock (438,612) (438,704) Accumulated other comprehensive income (loss) 20,638 (42,494) Retained earnings 1,286,281 1,181,891 Total shareholders' equity 1,267,540 1,077,464 $2,484,013 $2,584,120 AMERICAN GREETINGS CORPORATION STATEMENT OF CASH FLOWS (In thousands of dollars) Twelve Months Ended February 29, February 28, 2004 2003 OPERATING ACTIVITIES: Net income $104,670 $121,106 Adjustments to reconcile net income to net cash provided by operating activities: Restructure charges (2,676) (15,603) Gain on sale of marketable security - (12,027) Loss on sale of fixed assets 4,943 776 Loss on extinguishment of debt 18,389 - Depreciation and amortization 64,069 64,810 Deferred income taxes 57,159 (24,519) Changes in operating assets and liabilities: Decrease (increase) in trade accounts receivable 69,329 (15,636) Decrease in inventories 42,536 18,260 Decrease in other current assets 10,387 5,933 Decrease in deferred costs - net 34,356 39,741 Decrease in accounts payable and other liabilities (107,174) (106,133) Other - net (4,109) 330 Cash Provided by Operating Activities 291,879 77,038 INVESTING ACTIVITIES: Property, plant & equipment additions (35,826) (31,299) Proceeds from sale of fixed assets 198 1,613 Investment in corporate owned life insurance 7,808 10,017 Other - net (5,274) 32,940 Cash (Used) Provided by Investing Activities (33,094) 13,271 FINANCING ACTIVITIES: Reduction of long-term debt (80,954) (124,833) (Decrease) increase in short-term debt (128,693) 116,747 Sale of stock under benefit plans 18,466 21,487 Purchase of treasury shares (828) (83) Cash (Used) Provided by Financing Activities (192,009) 13,318 EFFECT OF EXCHANGE RATE CHANGES ON CASH 10,211 3,857 INCREASE IN CASH AND CASH EQUIVALENTS 76,987 107,484 Cash and Cash Equivalents at Beginning of Year 208,463 100,979 Cash and Cash Equivalents at End of Period $285,450 $208,463 SOURCE American Greetings Corporation -0- 03/31/2004 /CONTACT: David D. Poplar, Investor Relations Manager of American Greetings Corporation, +1-216-252-4864, or david.poplar@amgreetings.com/ /Company News On-Call: http://www.prnewswire.com/comp/044150.html/ /Web site: http://corporate.americangreetings.com/ (AM) CO: American Greetings Corporation ST: Ohio IN: HOU REA SU: ERN CCA MAV ERP