EX-99.A 2 ag1757ex99a.txt Exhibit 99(a) AMERICAN GREETINGS ANNOUNCES IMPROVED RESULTS - Company reports third quarter EPS of 78 cents versus 60 cents in prior year period - Continuing Operations exceeds Company's estimate - Announces sale of Magnivision for $77 million. Substantial gain boosts quarterly Net Income and EPS - Company declares quarterly cash dividend of 6 cents per share CLEVELAND, Dec. 23 /PRNewswire-FirstCall/ -- American Greetings Corporation (NYSE: AM) today announced its financial results for the third fiscal quarter ended November 30, 2004. The Corporation exceeded its prior year earnings per share results due primarily to a substantial gain on the sale of its Magnivision subsidiary. The Corporation declared a quarterly cash dividend of 6 cents per share. Third Quarter As a result of the announced sale of the Magnivision subsidiary, that business unit has been classified as a discontinued operation. The Corporation has presented financial results on continuing operations as well as net results of discontinued operations. For the fiscal 2005 third quarter ended November 30, 2004, the Corporation reported net income from continuing operations of $40.3 million or 51 cents per share compared to $45.1 million or 58 cents per share for continuing operations in the prior year (all per-share amounts assume dilution). Discontinued operations contributed $22.4 million of net income or 27 cents per share to the third quarter of fiscal 2005 primarily due to the gain on the sale of Magnivision. In the prior year's third quarter, discontinued operations contributed $1.3 million of net income or 2 cents per share. Within this year's third quarter, the Company realized a $35.5 million pre-tax gain on the sale of Magnivision. This gain was reflected in discontinued operations. The Company also recorded $16.6 million of expense associated with a 300 person overhead reduction program, $13.0 million of expense to reflect a change in timing for greeting card returns associated with a revised merchandising strategy and $8.2 million of expense associated with a plant closure. These expenses were all reflected in continuing operations for the third quarter. On a consolidated basis, for the third quarter of fiscal 2005, American Greetings reported net income of $62.8 million or 78 cents per share, on net sales of $586 million. In the third fiscal quarter of 2004, the Company reported net income of $46.4 million or 60 cents per share on net sales of $604 million. In the prior year's third fiscal quarter, the Company incurred $13.8 million of pre-tax costs associated with a repurchase of the Company's bonds and these costs were included in continuing operations. Net sales were down versus the prior period's third quarter as lower revenues in both the retail segment and seasonal gift wrap business were combined with the $13.0 million non-cash accrual to reflect an adjusted merchandising strategy for seasonal product. These reductions to sales were partially offset by incremental revenue from acquisitions in the AG Interactive segment and favorable foreign exchange movements. Year-to-Date Results The Corporation reported net income of $73.9 million or 97 cents per share, on net sales of $1.41 billion, for the first three quarters of fiscal 2005. Included in the year-to-date results are $39 million of pre-tax costs incurred (during the first quarter) for debt repurchases. In fiscal 2004, the Corporation reported net income of $56.4 million or 78 cents per share, on net sales of $1.44 billion. The prior year's results include $18.4 million of pre- tax costs incurred for debt repurchases (in both the first and third quarters). Management Comments and Outlook Zev Weiss, Chief Executive Officer said, "In the third quarter, we continued to focus on reducing our costs in both our supply chain and in our overhead structure. While never a pleasant task, we recognize the necessity of taking these actions due to the continuing changes in our business. The savings resulting from these actions will be reinvested into our business in fiscal 2006. Without these costs, we surpassed our estimate for the quarter." Weiss added, "Within the quarter, we closed on the Magnivision sale. We felt that our Magnivision subsidiary would be a better fit under an owner with a strategic focus on glasses. Given the sale price, we are pleased with the value provided to our shareholders." Weiss continued, "After quarter end, we entered into an agreement with The Hatchery, a family entertainment and property-development firm. Through continued investment, we are committed to enhancing the licensing business model that we have grown over the last few years." "For the full year, we are projecting our earnings per share from continuing operations to be between $1.02 and $1.07. This estimate is in line with previous guidance of $1.46 to $1.51 per share when adjusted for the full year impact of the three programs described above," Weiss said. Dividend Declaration The Corporation's Board of Directors authorized the declaration of a quarterly cash dividend of 6 cents per share for shareholders of record at the close of business on January 12, 2005, payable to those shareholders on January 24, 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. The statements contained in this release that are not historical facts, including statements regarding the Corporation's ability to reduce costs and estimates of results for future periods, are forward-looking statements. Forward-looking statements are generally identified by words such as "believes," "anticipates," "expects," "plans," "should," "estimates" and similar expressions. These forward-looking statements involve risks and uncertainties. Factors that could cause actual results to differ materially from those stated or implied in our forward-looking statements, include but are 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 THIRD QUARTER CONSOLIDATED STATEMENT OF OPERATIONS FISCAL YEAR ENDING FEBRUARY 28, 2005 (In thousands of dollars except share and per share amounts)

(Unaudited) (Unaudited) Three Months Ended Nine Months Ended November 30, November 30, ----------------------------- ----------------------------- 2004 2003 2004 2003 ------------- ------------- ------------- ------------- Net sales $ 586,165 $ 603,754 $ 1,411,790 $ 1,435,542 Costs and expenses: Material, labor and other production costs 292,737 290,363 661,069 665,080 Selling, distribution and marketing 173,735 167,362 466,690 463,773 Administrative and general 64,476 55,564 186,118 174,511 Interest expense 8,744 30,587 70,601 70,924 Other (income) - net (19,341) (13,459) (52,917) (25,576) 520,351 530,417 1,331,561 1,348,712 Income before income tax expense 65,814 73,337 80,229 86,830 Income tax expense 25,470 28,246 31,049 33,603 Income from continuing operations 40,344 45,091 49,180 53,227 Income from discontinued operations, net of tax 22,417 1,271 24,729 3,145 Net income $ 62,761 $ 46,362 $ 73,909 $ 56,372 Earnings per share - basic: Income from continuing operations 0.58 0.68 0.72 0.80 Income from discontinued operations 0.33 0.02 0.36 0.05 Net income $ 0.91 $ 0.70 $ 1.08 $ 0.85 Earnings per share - assuming dilution: Income from continuing operations 0.51 0.58 0.67 0.74 Income from discontinued operations 0.27 0.02 0.30 0.04 Net income $ 0.78 $ 0.60 $ 0.97 $ 0.78 Average number of common shares outstanding 68,753,922 66,699,848 68,391,128 66,309,827 Average number of common shares outstanding - assuming dilution 82,397,633 80,478,413 81,874,590 79,817,702

AMERICAN GREETINGS CORPORATION THIRD QUARTER CONSOLIDATED STATEMENT OF FINANCIAL POSITION FISCAL YEAR ENDING FEBRUARY 28, 2005 (In thousands of dollars) (Unaudited) November 30, --------------------------- 2004 2003 ------------ ------------ ASSETS CURRENT ASSETS Cash and cash equivalents $ 221,744 $ 51,694 Trade accounts receivable, less allowances for seasonal sales returns of $83,169 ($91,271 in 2003) and for doubtful accounts of $17,419 ($23,519 in 2003) 415,113 453,374 Inventories 263,482 299,267 Deferred and refundable income taxes 165,810 181,029 Assets of businesses held for sale - 39,204 Prepaid expenses and other 213,692 244,740 Total current assets 1,279,841 1,269,308 GOODWILL 247,836 217,982 OTHER ASSETS 606,985 696,236 PROPERTY, PLANT AND EQUIPMENT - NET 333,278 361,539 $ 2,467,940 $ 2,545,065 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Debt due within one year $ - $ 85,414 Accounts payable 138,073 138,179 Accrued liabilities 118,519 156,215 Accrued compensation and benefits 78,463 69,871 Income taxes 55,020 51,114 Liabilities of businesses held for sale - 5,046 Other current liabilities 80,197 69,218 Total current liabilities 470,272 575,057 LONG-TERM DEBT 483,988 665,554 OTHER LIABILITIES 102,216 110,026 DEFERRED INCOME TAXES 26,963 8,434 SHAREHOLDERS' EQUITY Common shares - Class A 64,663 62,241 Common shares - Class B 4,366 4,592 Capital in excess of par value 364,423 322,643 Treasury stock (440,101) (438,655) Accumulated other comprehensive income (loss) 42,803 (2,954) Retained earnings 1,348,347 1,238,127 Total shareholders' equity 1,384,501 1,185,994 $ 2,467,940 $ 2,545,065 AMERICAN GREETINGS CORPORATION THIRD QUARTER CONSOLIDATED STATEMENT OF CASH FLOWS FISCAL YEAR ENDING FEBRUARY 28, 2005 (In thousands of dollars) (Unaudited) Nine Months Ended November 30, --------------------------- 2004 2003 ------------ ------------ OPERATING ACTIVITIES: Net income $ 73,909 $ 56,372 Income from discontinued operations 24,729 3,145 Income from continuing operations 49,180 53,227 Adjustments to reconcile to net cash provided (used) by operating activities: Gain on sale of investment (3,095) - Loss on sale of fixed assets 1,817 1,191 Loss on extinguishment of debt 39,056 18,389 Depreciation and amortization 42,425 44,680 Deferred income taxes (18,953) (8,110) Changes in operating assets and liabilities, net of acquisitions: Increase in trade accounts receivable (169,293) (151,429) Increase in inventories (19,852) (19,755) Decrease in other current assets 8,972 27,600 Decrease in deferred costs - net 98,314 25,718 Increase (decrease) in accounts payable and other liabilities 21,765 (28,829) Other - net 3,469 (12,751) Cash Provided (used) by Operating Activities 53,805 (50,069) INVESTING ACTIVITIES: Proceeds from the sale of discontinued operations 77,000 - Property, plant & equipment additions (25,745) (23,595) Proceeds from sale of fixed assets 3,545 2,140 Investment in corporate owned life insurance (2,142) 8,943 Other - net 31,903 3,446 Cash Provided (used) by Investing Activities 84,561 (9,066) FINANCING ACTIVITIES: Reduction of long-term debt (216,417) (68,673) Decrease in short-term debt - (47,135) Sale of stock under benefit plans 35,875 10,478 Purchase of treasury shares (18,263) (439) Dividends to shareholders (4,125) - Cash Used by Financing Activities (202,930) (105,769) Cash (Used) provided by Discontinued Operations (2,395) 4,046 EFFECT OF EXCHANGE RATE CHANGES ON CASH 3,253 4,089 DECREASE IN CASH AND CASH EQUIVALENTS (63,706) (156,769) Cash and Cash Equivalents at Beginning of Year 285,450 208,463 Cash and Cash Equivalents at End of Period $ 221,744 $ 51,694 SOURCE American Greetings Corporation -0- 12/23/2004 /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 /