Thursday, American Greetings Corp. (AM), a manufacturer and seller of greeting cards, reported a surge in earnings for the second quarter helped by a gain from an insurance program, new product offerings and lower expenses. Quarterly revenues declined from the prior year. Further, the company boosted its fiscal 2010 cash flow estimate.
Net income for the quarter surged to $23.1 million or $0.59 per share from $2.3 million or $0.05 per share in the corresponding period last year. On average, two analysts polled by Thomson Reuters expected the company to earn $0.06 per share for the quarter. Analysts' estimates typically exclude special items.
Results for the quarter included benefit of approximately $7.6 million, after tax, or about $0.19 per share related to an insurance program.
Total revenue declined to $356.4 million from $385.84 million in the same period last year.
Operating income surged to $38.5 million from $4.3 million in the year-ago quarter. Material, Labor and other production costs declined to $153.2 million from $170.1 million a year earlier. Selling, distribution and marketing expenses fell to $117.5 million from $154.4 million in the prior year period. Administrative and general expenses declined to $48.5 million from $57.1 million in the same period last year.
Commenting on the results, Chief Executive Officer Zev Weiss said, " We have expanded our use of technology for both traditional greeting cards as well as on-line applications including Facebook and the iPhone. These examples of leadership in innovation are all in addition to the recent enhancements we have made to our portfolio, specifically the acquisitions of Recycled Paper Greetings and Papyrus, which complement our innovation with leadership in both humor and elegant design."
For the six-month period, net income rose to $33.08 million or $0.84 per share from $15.6 million or $0.32 per share in the year-ago period. Total revenue declined to $769.3 million from $814.1 million in the same period last year.
Looking ahead, the company raised its previously announced fiscal 2010 cash flow from operating activities estimate. American Greetings currently expects cash flow from operating activities of at least $160 million and capital expenditures of about $35 million resulting in cash flow from operating activities minus capital expenditures to exceed $125 million.
Previously, the company expected cash flow from operating activities of about $105 million to $115 million and capital expenditures of about $35 million to $45 million resulting in cash flow from operating activities minus capital expenditures of about $70 million.
AM closed Wednesday's regular trading session at $14.98.
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