Business News

American Greetings Announces Second Quarter Earnings

Monday 01. October 2012 - American Greetings Corporation (NYSE: AM) today announced its results for the second fiscal quarter ended August 24, 2012.

Second Quarter Results
For the second quarter of fiscal 2013, the Company reported total revenue of $393.8 million, a pre-tax loss of $6.1 million and a net loss of $4.3 million or 13 cents per share (all per-share amounts assume dilution).
The Company announced, on June 7, 2012, the acquisition of assets of Clinton Cards, including approximately 400 stores and related overhead as well as the Clinton Cards and related brands. As a result of the acquisition, the Company recognized during the second quarter of fiscal 2013 a revenue increase of approximately $39.9 million from the operations of the Clintons retail stores, reflected in the Company’s new Retail Operations segment. This revenue increase was offset partially by the revenue reduction of approximately $13.5 million from inter-segment sales eliminations, reflected in the Company’s International Segment, resulting in a net increase in consolidated revenue of approximately $26.3 million in the quarter. The sales being eliminated would have been third party sales in the prior year quarter.
Also as a result of the acquisition, the Company incurred, during the second quarter, pre-tax transaction costs and fees of approximately $3.9 million (after-tax of approximately $2.4 million or 7 cents per share) and pre-tax costs of approximately $2.3 million (after-tax of approximately $1.4 million or 4 cents per share) associated with impairment of the acquired Clinton Cards senior secured debt. The Company also recognized a reduction in pre-tax income of approximately $7.4 million (after-tax of approximately $5.6 million or 16 cents per share) as a result of inter-segment profit eliminations. The Company recognized a loss of $5.1 million (after-tax of approximately $3.1 million or 9 cents per share) from the operation of its retail stores. The total consolidated net reduction in pre-tax income associated with the acquisition and operation of the Clintons retail stores was approximately $18.7 million (after-tax of approximately $12.4 million or 37 cents per share).
In addition, revenue was reduced by $4.4 million as a result of scan-based trading conversions that occurred during the current-year’s second quarter. The impact of scan-based trading conversions on pre-tax income was $3.6 million (after-tax of approximately $2.2 million or 7 cents per share). Also included within these results was a pre-tax benefit of $3.2 million (after-tax of approximately $1.9 million or 6 cents per share) from a gain on the sale of a portion of a legacy minority investment.
For the second quarter of the prior fiscal year 2012, the Company reported total revenue of approximately $370.2 million, pre-tax income of approximately $25.0 million, and net income of approximately $14.5 million or 35 cents per share. Revenue was reduced by approximately $0.6 million as a result of scan-based trading conversions that occurred during the quarter. The impact of scan-based trading conversions on pre-tax income was approximately $0.7 million (after-tax of approximately $0.4 million or 1 cent per share). Included within these results was a pre-tax benefit from the sale of certain minor characters in our intellectual property portfolio of approximately $4.5 million (after-tax of approximately $2.8 million or 7 cents per share).
Financing Activities
During the second quarter of fiscal 2013, under the Company’s previously authorized $75 million share repurchase program announced January 2012, the Company purchased approximately 0.3 million shares of its common stock for approximately $4.4 million and completed that repurchase program. Under the Company’s $75 million share repurchase program announced July 2012, the Company purchased approximately 1.2 million shares of its common stock for approximately $15.7 million during the second quarter of fiscal 2013. Total share repurchases during the second quarter of fiscal 2013 were 1.5 million shares for approximately $20.1 million.