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American Greetings buys U.K. company debt for $57 million in fiscal Q1
By Lisa Kerner
Charlotte, N.C., June 28 - American Greetings Corp. acquired the senior secured debt of U.K. specialty card retailer Clinton Cards plc in May for about $57 million, the impact of which is reflected in the results of American Greetings' first quarter of fiscal 2013, which ended May 25.
Revenue was reduced by $4 million as the result of the noncash impairment of the supply agreement with the birthdays subsidiary of Clinton Cards, according to an American Greetings news release.
As a result of the debt purchase, Clinton Cards was placed into administration, a procedure similar to Chapter 11 bankruptcy in the United States.
On June 7, American Greetings acquired the assets of Clinton Cards. The impact of this transaction will be reflected in the fiscal second quarter, the company said.
During an earnings call on Thursday, chief executive Zev Weiss said the company guided for between $45 million and $65 million of cash for the fiscal year and is "on pace" to reach that level, not including the effects of the Clinton transaction.
Weiss said there were no updates to the sale of American Greetings' headquarters building or the construction of its new facility.
Also on the call, chief financial officer Stephen J. Smith said there is about $5 million remaining of the company's previously authorized $75 million share repurchase program. American Greetings purchased about 2.8 million shares of its common stock for about $42.6 million during the first quarter of fiscal 2013, said Smith.
Weiss said that in the past 12 months, about $140 million has been given back to shareholders.
"We continue to believe our stock is of value, and that is going to be a consideration going forward," said Weiss in regards to the use of excess cash.
Financial highlights
American Greetings reported first quarter revenue of $393.1 million, compared with $403.7 million for the prior-year period.
Net income for the period was $7.3 million, or 20 cents per share. For the first quarter of fiscal 2012, the Cleveland-based greeting card company reported net income of $32.6 million, or 78 cents per share.
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