American Greetings Corporation

American Greetings Announces Record Cash Flow, US$200 Million Share Repurchase Program and Increase to Dividend

    Cleveland (ots/PRNewswire) -

@@start.t1@@      - Record Cash Flow highest in 98-year history
      - Share Repurchase program of US$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@@end@@

    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 US$200 million share repurchase program and a 33%  increase to its quarterly cash dividend.

    Fourth Quarter

    On net sales of US$490.9 million for the fiscal 2005 fourth quarter ended February 28, 2005, American Greetings reported pretax income of US$28.0 million and income from continuing operations of US$21.4 million or 28 cents per share (all per-share amounts assume dilution). Included in these results are US$6.4 million of pretax expense for a previously announced plant  closure, US$29.8 million of pretax expense related to the conversion of two accounts to scan based trading and a US$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 US$4.2 million that was primarily due to a change in tax laws. Without these expenses, American Greetings would have achieved pretax income of US$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 US$518.2 million, pretax income of US$73.0 million and income from continuing operations of US$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 US$57.2 million of pretax income.

    Full Year Results

    For the full year of fiscal 2005, on net sales of US$1.90 billion, the Corporation's continuing operations reported pretax income of US$108.2 million and income of US$70.6 million or 95 cents per share. Included in the 2005 results were US$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 US$4.2 million.

    In the prior fiscal year, the Corporation's continuing operations generated net sales of US$1.95 billion, pretax income of US$159.9 million and net income of US$98.0 million or US$1.32 per share. Included in the 2004 results were US$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 US$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 US$1.46 and US$1.51. The Corporation projects the combination of cash flow from operating activities and cash flow from investing activities to be approximately US$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 US$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 US$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.

@@start.t2@@      All Figures are in USD.
                                         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@@end@@

    Web site: http://corporate.americangreetings.com

ots Originaltext: American Greetings Corporation
Im Internet recherchierbar: http://www.presseportal.ch

Contact:
Stephen J. Smith, VP, Treasurer and Investor Relations of American
Greetings Corporation, +1-216-252-4864, or
investor.relations@amgreetings.com