Business Segment Information

12 Months Ended

Feb. 29, 2012

Business Segment Information [Abstract]

BUSINESS SEGMENT INFORMATION

NOTE 16 – BUSINESS SEGMENT INFORMATION

The Corporation is organized and managed according to a number of factors, including product categories, geographic locations and channels of distribution.

The North American Social Expression Products and International Social Expression Products segments primarily design, manufacture and sell greeting cards and other related products through various channels of distribution with mass merchandising as the primary channel. As permitted under ASC Topic 280, “Segment Reporting,” certain operating segments have been aggregated into the International Social Expression Products segment. The aggregated operating segments have similar economic characteristics, products, production processes, types of customers and distribution methods. Approximately 55%, 54% and 51% of the North American Social Expression Products segment’s revenue in 2012, 2011 and 2010, respectively, is attributable to its top five customers. Approximately 48%, 44% and 45% of the International Social Expression Products segment’s revenue in 2012, 2011 and 2010, respectively, is attributable to its top three customers.

At February 28, 2009, the Corporation owned and operated 341 card and gift retail stores in the United States and Canada through its Retail Operations segment. The stores were primarily located in malls and strip shopping centers. The stores sold products purchased from the North American Social Expression Products segment as well as products purchased from other vendors. During the first quarter of 2010, the Corporation sold all of its card and gift retail store assets to Schurman, which operates stores under a variety of brands including the American Greetings, Carlton Cards and Papyrus brands. See Note 2 for further information.

AG Interactive distributes social expression products, including electronic greetings and a broad range of graphics and digital services and products, through a variety of electronic channels, including Web sites, Internet portals, instant messaging services and electronic mobile devices.

The Corporation’s non-reportable operating segments primarily include licensing activities and the design, manufacture and sale of display fixtures.

The Corporation’s senior management evaluates segment performance based on earnings before foreign currency exchange gains or losses, interest income, interest expense, centrally-managed costs and income taxes. The accounting policies of the reportable segments are the same as those described in Note 1 – Significant Accounting Policies, except those that are related to LIFO or applicable to only corporate items.

Prior to the sale of the Retail Operations segment, intersegment sales from the North American Social Expression Products segment to the Retail Operations segment were recorded at estimated arm’s-length prices. Intersegment sales and profits were eliminated in consolidation. All inventories resulting from intersegment sales were carried at cost. Accordingly, the Retail Operations segment recorded full profit upon its sales to consumers.

The reporting and evaluation of segment assets include net accounts receivable, inventory on a FIFO basis, display materials and factory supplies, prepaid expenses, other assets and net property, plant and equipment. Unallocated and intersegment items include primarily cash, taxes and LIFO.

During the current year, certain items that were previously considered corporate expenses are now included in the calculation of segment earnings for the North American Social Expression Products segment. This change is the result of modifications to organizational structures and is intended to better align the segment financial results with the responsibilities of segment management and the way management evaluates the Corporation’s operations. In addition, segment results are now reported using actual foreign exchange rates for the periods presented. Previously, segment results were reported at constant exchange rates to eliminate the impact of foreign currency fluctuations. Prior year segment results have been presented to be consistent with the current methodologies.

Centrally incurred and managed costs are not allocated back to the operating segments. The unallocated items include interest expense on centrally-incurred debt, domestic profit sharing expense, settlement charges and stock-based compensation expense. In addition, the costs associated with corporate operations including the senior management, corporate finance, legal and insurance programs, among other costs, are included in the unallocated items. In 2010, unallocated items included the negotiated settlement of a lawsuit totaling $24,000.

Operating Segment Information

	Total Revenue
	2012		2011		2010
North American Social Expression Products	$	1,228,548	$	1,196,809	$	1,245,211
Intersegment items		–		–		(5,039)
Net		1,228,548		1,196,809		1,240,172
International Social Expression Products		347,866		261,712		254,032
Retail Operations		–		–		11,839
AG Interactive		68,514		78,206		80,446
Non-reportable segments		50,216		61,167		53,975
Unallocated		–		–		387
	$	1,695,144	$	1,597,894	$	1,640,851

	Segment Earnings (Loss) Before Tax
	2012		2011		2010
North American Social Expression Products	$	149,655	$	194,199	$	217,244
Intersegment items		-		-		(3,465)
Net		149,655		194,199		213,779
International Social Expression Products		20,276		19,572		16,846
Retail Operations		-		-		(35,115)
AG Interactive		13,942		13,991		11,419
Non-reportable segments		17,034		9,477		7,634
Unallocated:
Interest expense		(53,073)		(25,304)		(26,246)
Profit sharing expense		(9,401)		(9,759)		(9,338)
Stock-based compensation expense		(10,982)		(13,017)		(5,819)
Corporate overhead expense		(29,636)		(33,152)		(52,206)
		(103,092)		(81,232)		(93,609)
	$	97,815	$	156,007	$	120,954

	Depreciation and Intangible Assets Amortization						Capital Expenditures
	2012		2011		2010		2012		2011		2010
North American Social Expression Products	$	29,382	$	30,065	$	32,515	$	49,452	$	28,880	$	22,152
International Social Expression Products		4,771		4,431		4,659		5,561		3,502		1,293
Retail Operations		-		-		413		-		-		27
AG Interactive		2,622		4,143		5,122		1,949		2,762		2,611
Non-reportable segments		1,661		1,701		1,820		2,223		1,130		260
Unallocated		789		708		636		11,758		72		207
	$	39,225	$	41,048	$	45,165	$	70,943	$	36,346	$	26,550

	Assets
	2012		2011
North American Social Expression Products	$	1,032,326	$	961,045
International Social Expression Products		155,530		124,862
AG Interactive		10,799		18,039
Non-reportable segments		36,251		39,204
Unallocated and intersegment items		314,558		404,099
	$	1,549,464	$	1,547,249

Geographical Information

	Total Revenue						Fixed Assets - Net
	2012		2011		2010		2012		2011
United States	$	1,214,715	$	1,207,072	$	1,267,837	$	252,945	$	218,354
United Kingdom		296,472		216,309		209,059		21,136		21,099
Other international		183,957		174,513		163,955		3,516		2,196
	$	1,695,144	$	1,597,894	$	1,640,851	$	277,597	$	241,649

Product Information

	Total Revenue
	2012		2011		2010
Everyday greeting cards	$	832,454	$	755,799	$	767,062
Seasonal greeting cards		411,605		377,831		369,325
Gift packaging		241,641		223,093		221,489
Other revenue		31,863		32,355		37,566
All other products		177,581		208,816		245,409
	$	1,695,144	$	1,597,894	$	1,640,851

The “All other products” classification includes, among other things, giftware, party goods, ornaments, calendars, custom display fixtures, stickers, online greeting cards and other digital products.

Termination Benefits and Facility Closings

Termination benefits are primarily considered part of an ongoing benefit arrangement, accounted for in accordance with ASC Topic 712, “Compensation – Nonretirement Postemployment Benefits,” and are recorded when payment of the benefits is probable and can be reasonably estimated.

The Corporation recorded severance charges of $5,247, $6,944 and $10,814 in 2012, 2011 and 2010, respectively, related to headcount reductions and facility closures at several locations. During 2010, severance charges totaling $1,397 and $2,798 were recorded in the North American Social Expression Products segment related to the planned facility closures in Mexico City, Mexico and Kalamazoo, Michigan, respectively. See Note 2 for further information.

The following table summarizes the severance charges by segment:

	2012		2011		2010
North American Social Expression Products	$	4,610	$	4,737	$	8,517
International Social Expression Products		162		773		263
Retail Operations		-		-		618
AG Interactive		381		900		802
Non-reportable		94		37		232
Unallocated		-		497		382
Total	$	5,247	$	6,944	$	10,814

The remaining balance of the severance accrual was $6,761 and $8,002 at February 29, 2012 and February 28, 2011, respectively. The payments expected within the next twelve months are included in “Accrued liabilities” while the remaining payments beyond the next twelve months are included in “Other liabilities” on the Consolidated Statement of Financial Position.