-----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, OoEJUCTsonpCHaYOd+kLf/dyYYxm4PrZa+LEnc3LUwAYXEXErXg1j3MJT4CISuVw eMTV0rSDhcyNMu/5Tg1uDA== 0001275287-05-001182.txt : 20050405 0001275287-05-001182.hdr.sgml : 20050405 20050405071915 ACCESSION NUMBER: 0001275287-05-001182 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20050401 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Regulation FD Disclosure ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050405 DATE AS OF CHANGE: 20050405 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 SEC ACT: 1934 Act SEC FILE NUMBER: 001-13859 FILM NUMBER: 05732207 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 1 ag2371.txt ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (date of earliest event reported): April 1, 2005 American Greetings Corporation ------------------------------------------------------ (Exact Name of Registrant as Specified in its Charter) Ohio 1-13859 34-0065325 - ------------------------------- ------------------------ -------------------- (State or other jurisdiction of (Commission File Number) (I.R.S. Employer incorporation) Identification No.) One American Road Cleveland, Ohio 44144 ---------------------------------------- ---------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (216) 252-7300 ------------------------------------------------------------------ (Former Name or Former Address, if Changed Since Last Report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) ================================================================================ ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT. On April 1, 2005, American Greetings Corporation ("American Greetings") entered into an amendment to its Credit Agreement dated May 11, 2004, among (i) American Greetings, (ii) National City Bank, as Global Agent and as Collateral Agent, and (iii) certain named financial institutions as lenders (the "Amendment"). The Amendment increases the maximum amount of dividends that American Greetings may pay to its shareholders and increases the maximum amount of American Greetings capital stock that it may repurchase, thereby enabling American Greetings to, among other things, increase dividends payable to its shareholders from $0.06 to $0.08 per share, per quarter, and implement its $200 million Class A Common Share repurchase program, each as described in the press release furnished under Item 2.02 of this Current Report on Form 8-K. The Amendment also extends the period during which American Greetings may repurchase its 11.75% Senior Subordinated Notes Due 2008 from any time prior to the last day of its fiscal year ending February 28, 2005 to any time prior to the last day of its fiscal year ending February 28, 2006. ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION. On April 5, 2005, American Greetings issued a press release reporting its results for the twelve months and fourth quarter ended February 28, 2005. A copy of this press release is attached hereto as Exhibit 99(a). The information in this Item 2.02 of this Current Report on Form 8-K (including the exhibit attached hereto) is being furnished under Item 2.02 and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liability of such section, or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing. ITEM 7.01 REGULATION FD DISCLOSURE. Unrelated to the recent announcement of Mr. Jack Kahl's decision to resign from the Board of Directors of American Greetings, James C. Spira, who has been a valuable member of the Board of Directors for the past seven years, will not continue as a director of American Greetings following the expiration of his current term at the Annual Meeting of Shareholders to be held on June 24, 2005. As a director of two other publicly traded companies and three privately held companies, not continuing as a director of American Greetings will enable Mr. Spira to become more active in Brulant, Inc., a technology company in which he has an equity stake and serves as the non-executive chairman, and direct a greater focus on his involvement in the community. The information in this Item 7.01 of this Current Report on Form 8-K is being furnished under Item 7.01 and shall not be deemed "filed" for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of such section, or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing. ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS. c) Exhibits. Exhibit 99(a) - Press Release - Reporting Results for the twelve months and fourth quarter ended February 28, 2005. SIGNATURES 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 hereto duly authorized. American Greetings Corporation (Registrant) By: /s/ Zev Weiss ---------------------------------- Zev Weiss, Chief Executive Officer Date: April 5, 2005 EX-99.A 2 ag2371ex99a.txt Exhibit 99(a) AMERICAN GREETINGS ANNOUNCES RECORD CASH FLOW, $200 MILLION SHARE REPURCHASE PROGRAM AND INCREASE TO DIVIDEND . Record Cash Flow highest in 98-year history . Share Repurchase program of $200 million to start immediately . Company increases quarterly cash dividend 33% to 8 cents per share . Continuing Operations exceed Company estimate for the fourth quarter CLEVELAND, April 5 /PRNewswire-FirstCall/ -- American Greetings Corporation (NYSE: AM) today announced its financial results for the fourth fiscal quarter and fiscal year ended February 28, 2005, the initiation of $200 million share repurchase program and a 33% increase to its quarterly cash dividend. Fourth Quarter On net sales of $490.9 million for the fiscal 2005 fourth quarter ended February 28, 2005, American Greetings reported pretax income of $28.0 million and income from continuing operations of $21.4 million or 28 cents per share (all per-share amounts assume dilution). Included in these results are $6.4 million of pretax expense for a previously announced plant closure, $29.8 million of pretax expense related to the conversion of two accounts to scan based trading and a $4.9 million pretax expense for a correction in the accounting treatment for certain operating leases. After-tax results were temporarily improved by a net tax benefit of $4.2 million that was primarily due to a change in tax laws. Without these expenses, American Greetings would have achieved pretax income of $69.0 million. The Company believes providing its results excluding these expenses is useful for investors who are calculating comparability to prior years and estimates. These results compare to fiscal 2004 fourth quarter net sales of $518.2 million, pretax income of $73.0 million and income from continuing operations of $44.8 million or 58 cents per share. The Company's December earnings per share estimate of 45 cents for the fourth quarter (which excluded only the plant closure charge) equated to $57.2 million of pretax income. Full Year Results For the full year of fiscal 2005, on net sales of $1.90 billion, the Corporation's continuing operations reported pretax income of $108.2 million and income of $70.6 million or 95 cents per share. Included in the 2005 results were $118.3 million of pretax expenses for the following activities: debt repurchases, the conversion of accounts to scan based trading, a 300 person overhead reduction program, a change in timing for certain greeting card terms associated with a revised merchandising strategy, a plant closure and a correction to accounting for leases. Also included in the 2005 results was a net tax benefit of $4.2 million. In the prior fiscal year, the Corporation's continuing operations generated net sales of $1.95 billion, pretax income of $159.9 million and net income of $98.0 million or $1.32 per share. Included in the 2004 results were $18.4 million of pretax expenses for debt repurchases. Management Comments Chief Executive Officer Zev Weiss said, "I am pleased with the exceptional cash flow we were able to generate this year. The cash flow from the past three years has allowed us to reduce our net debt by approximately $1 billion from its highest point in November 2001. Our significantly improved financial position permits us to not only return capital to our shareholders by repurchasing shares and increasing the dividend but also to support continued business development." Outlook For the first quarter of fiscal 2006, American Greetings anticipates its continuing operations' revenues will be flat to up slightly versus the prior year with earnings per share between 25 cents and 30 cents. For the full fiscal year 2006, the Corporation projects its revenues to be up approximately 1% with earnings per share to be between $1.46 and $1.51. The Corporation projects the combination of cash flow from operating activities and cash flow from investing activities to be approximately $200 million during fiscal year 2006 (excluding any net changes in short-term investments). The Corporation has not included in its estimate the effects of any share repurchase activity or the transitional effect of the adoption of Financial Accounting Standard 123R -- Share-Based Payment (but has included the effect of options granted after the adoption of 123R). Share Repurchase American Greetings announced that its Board of Directors has authorized a program to repurchase up to $200 million of the class A common shares of its stock over the next 12 months. These repurchases will be made through a 10b5-1 program in open market or privately negotiated transactions in compliance with the SEC's Rule 10b-18, subject to market conditions, applicable legal requirements and other factors. Dividend Declaration The Corporation's Board of Directors authorized an increase to the quarterly dividend. The Company announced an increase to the quarterly cash dividend of 2 cents per share. A cash dividend of 8 cents per share will be paid on May 5, 2005 to shareholders of record at the close of business on April 25, 2005. 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, 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 . Certain statements in this release, including those under "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 Corporation's operations and business environment, which are difficult to predict and may be beyond the control of the Corporation. Important factors that could cause actual results to differ materially from those suggested by these forward-looking statements, and that could adversely affect the Corporation's future financial performance, include, but are not limited to, the following: 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; the Corporation's ability to comply with its debt covenants; fluctuations in the value of currencies in major areas where the Corporation operates, including the U.S. Dollar, Euro, U.K. Pound Sterling, and Canadian Dollar; escalation in the cost of providing employee health care; 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 and the public's acceptance of online greetings and other social expression products and the ability of the mobile division to compete effectively in the wireless content aggregation market. 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 CONSOLIDATED STATEMENT OF INCOME FISCAL YEAR ENDED FEBRUARY 28, 2005 (In thousands of dollars except share and per share amounts)
(Unaudited) Three Months Ended Twelve Months Ended ----------------------------- ----------------------------- February 28, February 29, February 28, February 29, 2005 2004 2005 2004 ------------- ------------- ------------- ------------- Net sales $ 490,937 $ 518,187 $ 1,902,727 $ 1,953,729 Costs and expenses: Material, labor and other production costs 244,132 247,625 905,201 912,705 Selling, distribution and marketing 187,712 171,451 654,402 635,224 Administrative and general 66,504 44,858 252,622 219,369 Interest expense 8,925 14,904 79,526 85,828 Other (income) - net (44,355) (33,672) (97,272) (59,248) 462,918 445,166 1,794,479 1,793,878 Income before income tax expense 28,019 73,021 108,248 159,851 Income tax expense 6,649 28,259 37,698 61,862 Income from continuing operations 21,370 44,762 70,550 97,989 Income from discontinued operations, net of tax - 3,536 24,729 6,681 Net income $ 21,370 $ 48,298 $ 95,279 $ 104,670 Earnings per share - basic: Income from continuing operations $ 0.31 $ 0.67 $ 1.03 $ 1.47 Income from discontinued operations - 0.05 0.36 0.10 Net income $ 0.31 $ 0.72 $ 1.39 $ 1.57 Earnings per share - assuming dilution: Income from continuing operations $ 0.28 $ 0.58 $ 0.95 $ 1.32 Income from discontinued operations - 0.04 0.30 0.08 Net income $ 0.28 $ 0.62 $ 1.25 $ 1.40 Average number of common shares outstanding 69,008,342 67,107,847 68,545,432 66,509,332 Average number of common shares outstanding - assuming dilution 82,494,966 80,884,171 82,016,835 80,088,377
AMERICAN GREETINGS CORPORATION CONSOLIDATED STATEMENT OF FINANCIAL POSITION FISCAL YEAR ENDED FEBRUARY 28, 2005 (In thousands of dollars) February 28, February 29, 2005 2004 ------------ ------------ ASSETS CURRENT ASSETS Cash and cash equivalents $ 250,267 $ 285,450 Short-term investments 208,740 - Trade accounts receivable, less allowances for seasonal sales returns of $94,672 ($85,638 in 2004) and for doubtful accounts of $16,684 ($17,871 in 2004) 200,408 238,473 Inventories 222,874 238,612 Deferred and refundable income taxes 193,497 157,886 Assets of businesses held for sale - 40,815 Prepaid expenses and other 205,853 237,809 Total current assets 1,281,639 1,199,045 GOODWILL 270,057 223,697 OTHER ASSETS 644,140 706,898 PROPERTY, PLANT AND EQUIPMENT - NET 339,792 354,373 $ 2,535,628 $ 2,484,013 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 143,041 $ 125,816 Accrued liabilities 118,090 129,773 Accrued compensation and benefits 96,789 70,896 Income taxes 38,777 14,513 Liabilities of businesses held for sale - 5,338 Other current liabilities 90,970 78,243 Total current liabilities 487,667 424,579 LONG-TERM DEBT 486,099 665,874 OTHER LIABILITIES 137,868 96,325 DEFERRED INCOME TAXES 37,214 29,695 SHAREHOLDERS' EQUITY Common shares - Class A 64,867 62,880 Common shares - Class B 4,160 4,588 Capital in excess of par value 368,777 331,765 Treasury stock (445,618) (438,612) Accumulated other comprehensive income 29,039 20,638 Retained earnings 1,365,555 1,286,281 Total shareholders' equity 1,386,780 1,267,540 $ 2,535,628 $ 2,484,013 AMERICAN GREETINGS CORPORATION CONSOLIDATED STATEMENT OF CASH FLOWS FISCAL YEAR ENDED FEBRUARY 28, 2005 (In thousands of dollars) Twelve Months Ended --------------------------- February 28, February 29, 2005 2004 ------------ ------------ OPERATING ACTIVITIES: Net income $ 95,279 $ 104,670 Income from discontinued operations 24,729 6,681 Income from continuing operations 70,550 97,989 Adjustments to reconcile to net cash provided by operating activities: Gain on sale of investment (3,095) - Loss on sale of fixed assets 7,544 4,455 Loss on extinguishment of debt 39,056 18,389 Depreciation and amortization 57,045 59,600 Deferred income taxes (9,454) 56,853 Changes in operating assets and liabilities, net of acquisitions: Decrease in trade accounts receivable 50,581 65,507 Decrease in inventories 23,311 42,461 (Increase) decrease in other current assets (15,181) 6,577 Decrease in deferred costs - net 107,660 34,875 Increase (decrease) in accounts payable and other liabilities 31,768 (99,474) Other - net (1,371) (4,109) Cash Provided by Operating Activities 358,414 283,123 INVESTING ACTIVITIES: Proceeds from sale of discontinued operations 77,000 - Cash payments for business acquisitions (25,178) - Proceeds from sale of short-term investments 297,660 - Purchases of short-term investments (506,400) - Property, plant & equipment additions (47,497) (32,544) Proceeds from sale of fixed assets 5,848 198 Investment in corporate owned life insurance 603 7,808 Other - net 10,934 (5,688) Cash Used by Investing Activities (187,030) (30,226) FINANCING ACTIVITIES: Reduction of long-term debt (216,417) (80,954) Decrease in short-term debt - (128,693) Sale of stock under benefit plans 40,114 18,466 Purchase of treasury shares (24,080) (828) Dividends to shareholders (8,264) - Cash Used by Financing Activities (208,647) (192,009) Cash (Used) Provided by Discontinued Operations (2,397) 5,987 EFFECT OF EXCHANGE RATE CHANGES ON CASH 4,477 10,112 (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (35,183) 76,987 Cash and Cash Equivalents at Beginning of Year 285,450 208,463 Cash and Cash Equivalents at End of Year $ 250,267 $ 285,450 SOURCE American Greetings Corporation -0- 04/05/2005 /CONTACT: Stephen J. Smith, VP, Treasurer and Investor Relations of American Greetings Corporation, +1-216-252-4864, or investor.relations@amgreetings.com / /Web site: http://corporate.americangreetings.com / -----END PRIVACY-ENHANCED MESSAGE-----