This spreadsheet supports STUDENT analysis of the case,

"AMERICAN GREETINGS" (Case 43)

6-Feb-13
Copyright (C) 2012, by the University of Virginia Darden School Foundation.
Exhibit 1
AMERICAN GREETINGS
American Greetings Share Price (Monthly Close)

Closing Adjusted Price for American Greetings Shares

Dec-09 $21
$30 Jan-10 $17
Feb-10 $18
Mar-10 $20
Apr-10 $23
$25 May-10 $22
Jun-10 $18
Jul-10 $20
Aug-10 $18
$20 Sep-10 $18
Oct-10 $19
Nov-10 $19
Dec-10 $22
$15 Jan-11 $21
Feb-11 $21
Mar-11 $23
Apr-11 $24
$10 May-11 $23
Jun-11 $23
Jul-11 $22
Aug-11 $21
$5 Sep-11 $18
Oct-11 $16
Nov-11 $17
Dec-11 $13
$0
Dec-09 Feb-10 Apr-10 Jun-10 Aug-10 Oct-10 Dec-10 Feb-11 Apr-11 Jun-11 Aug-11 Oct-1
pr-11 Jun-11 Aug-11 Oct-11 Dec-11
Exhibit 2
AMERICAN GREETINGS
American Greetings Income Statement (USD millions; As of December 2011; Fiscal year ends February of subsequent year)

2008 2009 2010 2011 (Est)

(Ends Feb 2012)
Total American Greetings Figures
Total Revenue 1,691 1,636 1,593 1,677
Material, Labor, and Other Pruduction Costs 810 713 682 743
Selling, Distribution, and Marketing Expenses 619 508 478 526
Administrative and General Expenses 226 276 261 258
Goodwill and Other Intangible Asset Impairments 290 0 0 0
Other operating expenses 1 0 3 (6)
Operating Income (253) 139 175 157
Net Interest and Other Non Operating Expenses 22 18 19 28
Income Before Income Tax Expense (275) 121 156 129
Income Tax Expense (47) 39 69 47
Net Income (228) 82 87 82

Earnings Per Share (Basic) (4.89) 2.07 2.18 2.22

Dividends per Share 0.60 0.36 0.56 0.60
Average Number of Shares Outstanding (Millions) 46.5 39.5 40.0 38.50

By Business Unit
Operating Segment Net Sales
North American Social Expression Products 1,095 1,235 1,191 1,215
International Social Expression Products 271 254 262 344
Retail Operations 179 12
AG Interactive 83 80 78 68

Operating Segment Earnings

North American Social Expression Products 70 236 218 148
International Social Expression Products (78) 17 20 20
Retail Operations (19) (35)
AG Interactive (162) 11 14 14

Total Revenue by Product Category

Everyday Greeting Cards 704 764 753 823
Seasonal Greeting Cards 357 369 377 408
Gift Packaging 240 221 223 239
Other Revenue 44 38 32 32
All Other Products 345 244 207 176

Source: Company accounts; Management and case writer estimates

y of subsequent year)
 American Greetings Value and Stock Price

Year 2011 2012

FCF Forecast
Sales 1,677 1702
Growth 1.5%
EBIT 136
Less: Inc Tax (40%) 54
Plus: Depreciation 0
Less: Change in NWC (50)
Less: Change in Fixed Assests 14
FCF 118
Terminal Value
Total FCF 118

Operating Margin 8% 9.5%

Tax rate 40%
Terminal growth rate 1.5%
Shares outstanding 38.50
WACC 8.49%

Value of the Company 1041

Value of Debt 235
Value of Equity 806
Stock Price $ 20.94

Years 2009 2010

NWC (CA-CL) 311 358
Sales 1635.9 1592.6
NWC Turnover 5.26 4.44
Fixed Assets Turnover 1.92 1.91
Fixed Assets 850 832

Change in NWC 48
Change in FA -18
Greetings Value and Stock Price

2013 2014 2015 LT Growth

1728 1754 1780 1807

1.5% 1.5% 1.5% 1.5%
138 140 142 145
55 56 57 58
0 0 0 0
(18) (15) (13) 4
13 13 13 14
88 86 85 69
1009
88 86 1094

9.5% 10.0% 10.0%

2011 2012 2013 2014 2015 LT Growth

334 284 266 251 237 241
1677.1 1702 1728 1754 1780 1807
5.02 6 6.5 7 7.5 7.5
1.95 1.95 1.95 1.95 1.95 1.95
859 873 886 899 913 927

(24) (50) (18) (15) (13) 4

27 14 13 13 13 14
 American Greetings Value and Stock Price

Year 2011 2012

FCF Forecast
Sales 1,677 1677
Growth 0.0%
EBIT 117
Less: Inc Tax (40%) 47
Plus: Depreciation 0
Less: Change in NWC (55)
Less: Change in Fixed Assests 1
FCF 124
Terminal Value
Total FCF 124

Operating Margin 7% 7%
Tax rate 40%
Terminal growth rate 0%
Shares outstanding 38.50
WACC 8.49%

Value of the Company 830

Value of Debt 235
Value of Equity 596
Stock Price $ 15.47

Years 2009 2010

NWC (CA-CL) 311 358
Sales 1635.9 1592.6
NWC Turnover 5.26 4.44
Fixed Assets Turnover 1.92 1.91
Fixed Assets 850 832

Change in NWC 48
Change in FA -18
Greetings Value and Stock Price

2013 2014 2015 LT Growth

1677 1677 1677 1677

0.0% 0.0% 0.0% 0.0%
117 109 109 101
47 44 44 40
0 0 0 0
(22) (18) (16) 0
0 0 0 0
92 84 81 60
711
92 84 793

6.5% 6.5% 6.0%

2011 2012 2013 2014 2015 LT Growth

334 280 258 240 224 224
1677.1 1677 1677 1677 1677 1677
5.02 6 6.5 7 7.5 7.5
1.95 1.95 1.95 1.95 1.95 1.95
859 860 860 860 860 860

(24) (55) (22) (18) (16) -

27 1 0 0 0 0
 American Greetings Value and Stock Price

Year 2011 2012

FCF Forecast
Sales 1,677 1694
Growth 1.0%
EBIT (9% of Sales) 152
Less: Inc Tax (40%) 61
Plus: Depreciation 0
Less: Change in NWC (52)
Less: Change in Fixed Assets 10
FCF 134
Terminal Value
Total FCF 134

Operating Margin 9%
Tax rate 40%
Terminal growth rate 3%
Shares outstanding 38.50
WACC 8.49%

Value of the Company 1222

Value of Debt 235
Value of Equity 987
Stock Price $ 25.64
Greetings Value and Stock Price

2013 2014 2015 LT Growth

1719 1754 1798 1851

1.5% 2.0% 2.5% 3.0%
155 158 162 167
62 63 65 67
0 0 0 0
(18) (14) (11) 7
13 18 22 28
98 91 85 65
1223
98 91 1308
Exhibit 3
AMERICAN GREETINGS
American Greetings Balance Sheet (USD millions; Fiscal year end Febraury 28 of subsequent year)

2009 2010 2011 (Est)

(Feb 2010) (Feb 2011) (Feb 2012)

Cash and Cash Equivalents 138 216 172

Trade Accounts Receivable 136 120 130
Inventories 164 180 190
Prepaid Expenses 148 128 131
Other Current Assets 94 57 54
Total Current Assets 679 701 677

Net Property, Plant and Equipment and Other Assets 850 832 859
Total Assets 1,529 1,533 1,536

Debt Due within One Year 1 - -

Accounts Payable 95 87 87
Other Current Liabilities 272 255 255
Current Liabilities 369 343 343

Long-term Debt and Other Liabilities 525 441 441

Shareholders' Equity 636 749 752
Total Liabilities and Shareholders' Equity 1,530 1,532 1,536

Source: Company accounts; Management and case writer estimates

Years 2009 2010 2011

NWC (CA-CL) 311 358 334
Sales 1635.9 1592.6 1,677
NWC Turnover 5.26 4.44 5.02
Fixed Assets Turnover 1.92 1.91 1.95
Fixed Assets 850 832 859

Change in NWC 48 (24)

Change in FA -18 27
2012 2013 2014 2015 LT Growth
282 265 251 240 247
1694 1719 1754 1798 1851
6 6.5 7 7.5 7.5
1.95 1.95 1.95 1.95 1.95
869 882 899 922 949

(52) (18) (14) (11) 7

10 13 18 22 28
Exhibit 4
AMERICAN GREETINGS
Total U.S. Greetiongs Cards Sales (Actual and forecast estimation)

Sales at current prices Index

$million % annual change 2005 = 100
2005 6,537 100
2006 6,420 -1.8 98
2007 6,285 -2.1 96
2008 6,266 -0.3 96
2009 6,149 -1.9 94
2010 5,935 -3.5 91
2011 (Est.) 5,838 -1.6 89
2012 Est.) 5,711 -2.2 87
2013 (Est.) 5,596 -2.0 86
2014 (Est.) 5,478 -2.1 84
2015 (Est.) 5,359 -2.2 82

Source: Mintel/based on U.S. Census Bureau, Economic Census

Exhibit 6
AMERICAN GREETINGS
Comparable Firms (End of 2011, Millions Except Share Price)

Mkt
Shares Total Capitalizatio Weight of EV/
Share Price Outstanding Cash Total Debt Revenue EBITDA n Total Capital Debt Weight of Equity EBITDA

American Greetings 12.51 38.32 86 235 1,660 204 479.38 714.02 33% 67% 3.50
Blyth 56.80 8.22 182 101 984 48 466.90 567.96 11.73
Central Garden & Pet 8.16 48.04 28 461 1,650 109 392.01 852.68 7.80
Consolidated Graphics 48.28 10.24 7 197 1,050 122 494.39 691.72 5.65
CSS Industries 19.92 9.73 10 0 453 30 193.82 193.82 6.51
Deluxe 22.76 50.93 31 742 1,420 359 1159.17 1,900.88 5.29
Fossil 79.36 61.79 288 15 2,570 525 4903.65 4,918.89 9.37
Lancaster Colony 69.34 27.26 162 0 1,090 156 1890.21 1,890.21 12.15
McCormick & Company 50.42 133.05 73 1,250 3,700 650 6708.38 7,958.38 12.25
McGraw-Hill 44.97 278.00 973 1,200 6,250 1,670 12501.66 13,701.66 8.20
Meredith 32.65 44.79 26 250 1,350 240 1462.39 1,712.39 7.14
RR Donnelley & Sons 14.43 178.50 450 345 10,610 1,290 2575.76 2,920.36 2.26
Scholastic 29.97 31.05 114 215 1,950 189 930.57 1,145.07 6.05
Scotts Miracle-Gro 46.69 60.83 128 1,060 2,820 391 2840.15 3,900.15 9.99
Tupperware Brands 55.97 56.13 138 621 2,580 431 3141.60 3,762.70 8.73
Industry's Average
EV/ EBITDA Ratio 8.08

Moody's
S&P Bond Bond
ROA ROE Beta Rating Rating
American GreetingsEstimate
American Greetings 7% 11% 1.63 BB+ Ba2 Enterprise Value 1,651
Blyth 4% 9% 1.60 Estimate Equity Valu 1,416
Central Garden & Pet 5% 5% 1.55 B3 Estimate Share Price $ 36.95
Consolidated Graphics 5% 10% 1.45
CSS Industries 4% 2% 1.36
Deluxe 13% 55% 1.85 B B1 Marginal Tax (given) 0.4
Fossil 19% 28% 1.62 Mkt Premium (given) 5%
Lancaster Colony 14% 19% 0.42 10 year Treasury Bond 2.8%
McCormick & Company 9% 24% 0.24 A- A2 BB+ 5.8%
McGraw-Hill 14% 44% 0.99 CAPM Re = Rf + b x (Rm - Rf) 10.95%
Meredith 7% 15% 1.75
RR Donnelley & Sons 5% -7% 2.02 WACC = Re*(E/V) + Rd*(D/V)*(1-T)
Scholastic 6% 8% 1.04 BB- 8.49%
Scotts Miracle-Gro 10% 20% 0.96
Tupperware Brands 12% 34% 1.52 Baa3

Source: Yahoo! Finance

Exhibit7
AMERICAN GREETINGS
American Greetings Operating Performance (For fiscal year end February 28 of subsequent year)

2005 2006 2007 2008 2009 2010 2011

Revenue growth 0% -7% -1% -5% -3% -2% 7%
Operating margin 8% 2% 5% -1% 6% 9% 9%

10%

8%

6%

4%

2%

0%

-2%

-4%

-6%

-8%
2005 2006 2007 2008 2009 2010 2011
Revenue growth Operating margin
0%

-2%

-4%

-6%

-8%
2005 2006 2007 2008 2009 2010 2011
Revenue growth Operating margin
2011
2011
Exhibit 8
AMERICAN GREETINGS
Capital Markets Data

Yield
30-day Treasury Bill 0.1%
10 year Treasury Bond 2.8%

10-year Corporate Bonds of Industrial Companies

AAA 2.8%
AA 2.9%
A+ 3.2%
A 3.3%
A- 3.5%
BBB+ 3.8%
BBB 4.1%
BBB- 4.6%
BB+ 5.8%
BB 6.5%
BB- 6.5%
B+ 6.8%
B 8.4%
B- 9.0%

5-year forecast
U.S. Real GDP annual growth rate 3.3%
U.S. GDP annual deflator rate 1.8%
Consumer Price Index annual rate 2.2%

Source: Bloomberg; Value Line Investment Survey