American Greetings reports loss, gets going-private offer from execs

By Lisa Kerner

Charlotte, N.C., Sept. 28 - American Greetings Corp. received a going-private proposal on Wednesday from chief executive officer Zev Weiss and president and chief operating officer Jeffrey Weiss.

During American Greetings' earnings call for the second quarter of fiscal 2013 on Friday, chief financial officer Stephen Smith said he would not comment on the proposal nor on the balance of the company's fiscal year.

Zev Weiss did not participate on the call.

Under the nonbinding proposal, members of the Weiss family and related parties would acquire all of the outstanding class A and class B common shares of American Greetings not currently owned by them for $17.18 per share, according to a company news release.

The Cleveland-based greeting card company expects its board of directors to form a special committee to consider the proposal.

During the fiscal second quarter ended Aug. 24, American Greetings repurchased a total of 1.5 million shares for about $20.1 million.

American Greetings had long-term debt of $280.2 million at Aug. 24, an increase of $55 million from the prior-year period.

Cash and cash equivalents for the quarter totaled $61.7 million, a decrease of about $70 million from the beginning of the year. For the prior-year period, American Greetings reported cash and cash equivalents of $209.3 million.

The June acquisition of Clinton Cards impacted the second-quarter results, said Smith.

American Greetings recognized a revenue increase of about $39.9 million from the operations of the acquired Clinton Card retail stores. The increase was offset partially by the revenue reduction of about $13.5 million from inter-segment sales eliminations, reflected in the company's international segment, resulting in a net increase in consolidated revenue of about $26.3 million in the quarter.

Total revenue for the quarter was $393.8 million, compared with about $370.2 million for the prior-year period.

The company reported a net loss of $4.3 million, or 13 cents per share, versus net income of about $14.5 million, or 36 cents per share, for the second quarter of fiscal 2012.

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