-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, U6kWB300uvPwny2/sRK+vgZLumYaV0wdE6PV4zAZ8SzXI50VorQ7l/5AHCtp5MOK OmDbS4o8/IHdUtDUeMFTew== 0000950152-01-502384.txt : 20010604 0000950152-01-502384.hdr.sgml : 20010604 ACCESSION NUMBER: 0000950152-01-502384 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20010319 ITEM INFORMATION: FILED AS OF DATE: 20010601 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN GREETINGS CORP CENTRAL INDEX KEY: 0000005133 STANDARD INDUSTRIAL CLASSIFICATION: GREETING CARDS [2771] IRS NUMBER: 340065325 STATE OF INCORPORATION: OH FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 001-13859 FILM NUMBER: 1652791 BUSINESS ADDRESS: STREET 1: ONE AMERICAN ROAD CITY: CLEVELAND STATE: OH ZIP: 44144 BUSINESS PHONE: 2162527300 MAIL ADDRESS: STREET 1: ONE AMERICAN ROAD CITY: CLEVELAND STATE: OH ZIP: 44144 8-K/A 1 l88751ae8-ka.txt AMERICAN GREETINGS CORP. 8-K/AMENDMENT 1 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K/A AMENDMENT NO. 1 TO CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported) March 19, 2001 -------------- AMERICAN GREETINGS CORPORATION ------------------------------ (Exact name of registrant as specified in Charter) 1-13859 ------- Commission File Number Ohio 34-0065325 ---- ---------- (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) One American Road, Cleveland, Ohio 44144 - -------------------------------------------------------------------------------- (Address of principal executive Offices) (Zip Code) (216) 252-7300 -------------- Registrant's telephone number, including area code 2 ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS This Current Report on Form 8-K/A (Amendment No. 1) amends the Current Report on Form 8-K previously filed with the Commission on April 3, 2001 relating to the acquisition by American Greetings Corporation, an Ohio corporation ("American Greetings") through its subsidiary AmericanGreetings.com, Inc., of Egreetings Network, Inc., a Delaware corporation ("Egreetings"), on March 19, 2001. The following documents are included as part of this report: (a) Financial Statements of Business Acquired The audited financial statements of Egreetings Network, Inc. as of and for the year ended December 31, 2000, together with the report of independent auditors are incorporated herein by reference from Exhibit 99.2 of Egreetings Network, Inc.'s Form 8-K received by the Commission on March 16, 2001, File Number 000-28479. (b) Unaudited Pro Forma Financial Information The accompanying unaudited pro forma financial information has been prepared to give effect to the acquisition of Egreetings by American Greetings. The unaudited pro forma combined statement of operations for the year ended February 28, 2001 gives effect to the acquisition as if the acquisition had occurred on March 1, 2000. The unaudited pro forma combined statement of operations presented for the year ended February 28, 2001 includes the historical financial results of American Greetings for the year ended February 28, 2001 and of Egreetings for the year ended December 31, 2000. Synergies and expected cost savings from the integration of Egreetings with American Greetings' existing businesses or any additional profitability resulting from the application of American Greetings revenue enhancement measures have not been included in the unaudited pro forma combined statement of operations. The unaudited pro forma combined statement of financial position as of February 28, 2001 gives effect to the acquisition as if the acquisition had occurred on that date. The unaudited pro forma combined statement of financial position includes the balance sheet of American Greetings as of February 28, 2001 and the balance sheet of Egreetings as of December 31, 2000. The unaudited pro forma financial information includes the adjustments that have a continuing impact to the combined company to reflect the transaction using purchase accounting. The pro forma adjustments are described in the notes to the unaudited pro forma financial information. The adjustments are based upon preliminary information and certain management judgments and estimates. The purchase accounting adjustments are subject to revisions which will be reflected in future periods. Revisions, if any, are not expected to have a material effect on the statement of operations or financial position of American Greetings. Certain reclassifications have been reflected to conform Egreetings' financial information to American Greetings' presentation. The unaudited pro forma financial information and accompanying notes are presented for illustrative purposes only and do not purport to be indicative of and should not be relied upon as indicative of the financial position or operating results which may occur in the future, or that would have occurred if the acquisition had been consummated on March 1, 2000. The unaudited pro forma financial information should be read in conjunction with American Greetings' consolidated financial statements and notes thereto and management's discussion and analysis for the year ended February 28, 2001 filed as part of American Greetings' Form 10-K and Egreetings' financial statements and notes thereto for the year ended December 31, 2000 filed as part of Egreetings' Form 8-K. 3 Unaudited Pro Forma Combined Statement of Operations For the Year Ended February 28, 2001 Thousands of dollars except per share amounts
Historical -------------------------------- American Egreetings Greetings Network, Pro Forma Pro Forma Corporation Inc. Adjustments Combined --------------- -------------- ----------------- --------------- Net sales $2,518,814 $10,437 $2,529,251 Costs and expenses: Material, labor and other production costs 999,271 11,609 $ (456) (1) 1,011,447 (1,063) (2) 4,220 (4) (3,528) (5) (437) (6) 1,831 (7) Selling, distribution and marketing 1,068,543 16,438 1,063 (2) 1,083,291 (1,300) (3) (467) (4) (986) (6) Administrative and general 280,202 27,121 1,300 (3) 303,580 (3,753) (4) (882) (5) 1,423 (6) (1,831) (7) Non-recurring items - 24,856 24,856 Interest expense 55,387 747 56,134 Other expense (income) -net 16,778 (3,763) 456 (1) 13,471 --------------- -------------- ----------------- --------------- 2,420,181 77,008 (4,410) 2,492,779 --------------- -------------- ----------------- --------------- Income (loss) before income taxes and cumulative effect of accounting change 98,633 (66,571) 4,410 36,472 Income tax provision (benefit) 191,306 - (23,000) (8) 168,306 --------------- -------------- ----------------- --------------- Net (loss) income before cumulative effect of accounting change $ (92,673) $(66,571) $ 27,410 $(131,834) =============== ============== ================= =============== Loss per share and loss per share assuming dilution before cumulative effect of accounting change $ (1.46) $ (2.07) Weighted average number of shares outstanding for loss per share and loss per share assuming dilution 63,646,405 63,646,405
See notes to Unaudited Pro Forma Combined Statement of Operations 4 Notes to Unaudited Pro Forma Combined Statement of Operations - ------------------------------------------------------------- (1) Elimination of royalties paid by Egreetings to American Greetings for online card content. (2) Costs related to marketing are included in selling, distribution and marketing by American Greetings. Certain of these costs are classified as product costs by Egreetings. This adjustment conforms the classification of these costs to that of American Greetings. (3) Costs related to bad debt expense are included in administrative and general expenses by American Greetings. These costs are classified as selling costs by Egreetings. This adjustment conforms the classification of these costs to that of American Greetings. (4) Reclassification of depreciation expense as reported by Egreetings to conform the classification of these costs to that of American Greetings (5) Represents reduction of depreciation expense reflecting write-down of property, plant and equipment to fair value. (6) Reclassification of occupancy costs as reported by Egreetings to conform the classification of these costs to that of American Greetings. (7) Costs related to Internet web monitoring and maintenance are included in material, labor and other production costs by American Greetings. These costs are classified as administrative and general costs by Egreetings. This adjustment conforms the classification of these costs to that of American Greetings. (8) Income tax benefit at statutory rate of 37% for loss incurred by Egreetings (but for which no benefit was available to Egreetings due to its having no operating profits in any of its periods), including pro forma adjustments. 5 Unaudited Pro Forma Combined Statement of Financial Position February 28, 2001 Thousands of dollars except per share amounts
Historical ----------------------------- American Egreetings Greetings Network, Pro Forma Pro Forma ASSETS Corporation Inc. Adjustments Combined ------------ ------------ ------------ --------------- CURRENT ASSETS Cash and cash equivalents $ 51,691 $ 3,841 $ (24,552) (3) $ 30,980 Marketable securities 36,535 43 (1) 36,578 Trade accounts receivable, less allowances for sales returns and for doubtful accounts 387,534 2,635 (88) (1) 390,081 Inventories 365,221 59 (54) (1) 365,226 Deferred and refundable income taxes 190,241 10,982 (2) 201,223 Prepaid expenses and other 211,049 802 (464) (1) 211,387 ------------ ------------ ------------ --------------- Total current assets 1,205,736 43,872 (14,133) 1,235,475 GOODWILL 229,802 229,802 OTHER ASSETS 799,348 825 (651) (4) 793,765 (5,757) (9) PROPERTY, PLANT AND EQUIPMENT-NET 477,188 10,365 (7,826) (5) 479,727 ------------ ------------ ------------ --------------- $ 2,712,074 $ 55,062 $ (28,367) $ 2,738,769 ============ ============ ============ =============== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Debt due within one year $ 378,904 $ 1,994 $ 380,898 Accounts payable and accrued liabilities 304,063 3,467 $ (167) (1) 315,451 8,088 (6) Accrued compensation and benefits 89,936 1,807 (40) (1) 91,703 Dividends payable 12,732 12,732 Income taxes 192,936 192,936 Other current liabilities 132,710 1,612 (56) (1) 134,266 ------------ ------------ ------------ --------------- Total current liabilities 1,111,281 8,880 7,825 1,127,986 LONG-TERM DEBT 380,124 1,759 (171) (1) 381,712 OTHER LIABILITIES 146,187 146,187 DEFERRED INCOME TAXES 27,292 27,292 SHAREHOLDERS' EQUITY Common shares - par value $1 Class A 58,860 160,971 (160,971) (7) 58,860 Class B 4,629 4,629 Capital in excess of par value 286,054 (266) 266 (7) 286,054 Treasury stock (447,127) (447,127) Accumulated other comprehensive loss (58,179) (58,179) Retained earnings 1,202,953 (116,282) 116,282 (7) 1,211,355 8,402 (8) ------------ ------------ ------------ --------------- Total shareholders' equity 1,047,190 44,423 (36,021) 1,055,592 ------------ ------------ ------------ --------------- $ 2,712,074 $ 55,062 $ (28,367) $2,738,769 ============ ============ ============ ===============
See Notes to Unaudited Pro Forma Combined Statement of Financial Position 6 Notes to Unaudited Pro Forma Combined Statement of Financial Position - --------------------------------------------------------------------- (1) Certain items included in Egreetings' balance sheet have been adjusted to reflect their fair value. (2) Represents deferred tax asset established in purchase accounting. (3) Represents net cash paid for acquisition of Egreetings shares. (4) Write off deferred financing costs, security deposits and other assets. (5) Net write down of leasehold improvements, furniture and fixtures, software and hardware computer equipment, net of related accumulated depreciation, to estimated fair values. (6) Represents accruals for costs related to the assumptions and cancellation of facility leases and the related exit costs for the closure of those facilities and the related termination of employees in connection with redundant activities and operations. (7) Represents the elimination of the shareholders' equity related to Egreetings. (8) Difference in acquisition date net book value as compared to December 31, 2000 net book value. (9) Elimination of book value of Egreetings shares held by American Greetings at February 28, 2001. 7 (c) Exhibits: Page Number ----------- Exhibit 23.1 Consent of Ernst & Young LLP A-1 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. AMERICAN GREETINGS CORPORATION By: /s/ Joseph B. Cipollone ------------------------------- Joseph B. Cipollone Vice President-Controller June 1, 2001 EX-23.1 2 l88751aex23-1.txt EXHIBIT 23.1 1 Exhibit 23.1 Consent of Independent Auditors We consent to the incorporation by reference in (i) Post-Effective Amendment Number 1 dated May 27, 1986 to Registration Statement No. 2-89471 on Form S-3, (ii) Post-Effective Amendment Number 1 dated May 31, 1984 to Registration Statement No. 2-84911 on Form S-8, (iii) Registration Statement No. 33-975 on Form S-8 dated November 7, 1985, (iv) Registration Statement No. 33-16180 on Form S-8 dated July 31, 1987, (v) Registration Statement No. 33-45673 on Form S-8 dated February 4, 1992, (vi) Registration Statement No. 33-58582 on Form S-8 dated February 22, 1993, (vii) Registration Statement No. 33-61037 on Form S-8 dated July 14, 1995, (viii) Registration Statement No. 33-08123 on Form S-8 dated July 15, 1996, and (ix) Registration Statement No. 333-41912 on Form S-8 dated July 21, 2000 of American Greetings Corporation of our report dated February 16, 2001 with respect to the financial statements of Egreetings Network, Inc. incorporated by reference in the Current Report on Form 8-K/A of American Greetings Corporation dated June 1, 2001. Cleveland, Ohio May 30, 2001 A-1 -----END PRIVACY-ENHANCED MESSAGE-----