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Exhibit 6 AMERICAN GREETINGS Comparable Firms, End of 2011 (in millions of dollars except share price) Share Price Shares Outstanding Total Cash Total Debt Enterprise
Exhibit 6 | ||||||||
AMERICAN GREETINGS | ||||||||
Comparable Firms, End of 2011 (in millions of dollars except share price) | ||||||||
Share Price | Shares Outstanding | Total Cash | Total Debt | Enterprise Value | Revenue | EBITDA | EBITDA Multiple* | |
American Greetings | 12.51 | 38.3 | 86 | 235 | 714 | 1,660 | 204 | 3.5 |
Blyth | 56.80 | 8.2 | 182 | 101 | 568 | 984 | 48 | 11.7 |
Consolidated Graphics | 48.28 | 10.2 | 7 | 197 | 692 | 1,050 | 122 | 5.6 |
CSS Industries | 19.92 | 9.7 | 10 | 0 | 194 | 453 | 30 | 6.5 |
Deluxe | 22.76 | 50.9 | 31 | 742 | 1,901 | 1,420 | 359 | 5.3 |
Hallmark | NA | NA | NA | NA | NA | 4,100 | NA | NA |
Lancaster Colony | 69.34 | 27.3 | 162 | 0 | 1,890 | 1,090 | 156 | 12.2 |
Meredith | 32.65 | 44.8 | 26 | 250 | 1,712 | 1,350 | 240 | 7.1 |
Scholastic | 29.97 | 31.1 | 114 | 215 | 1,145 | 1,950 | 189 | 6.0 |
ROA | ROE | Beta | Bond Rating** | |||||
American Greetings | 7% | 11% | 1.63 | BB+ | ||||
Blyth | 4% | 9% | 1.60 | B | ||||
Consolidated Graphics | 5% | 10% | 1.45 | BB | ||||
CSS Industries | 4% | 2% | 1.36 | |||||
Deluxe | 13% | 55% | 1.85 | B | ||||
Hallmark | NA | NA | NA | |||||
Lancaster Colony | 14% | 19% | 0.42 | |||||
Meredith | 7% | 15% | 1.75 | BB | ||||
Scholastic | 6% | 8% | 1.04 | BB- | ||||
Exhibit 3 | ||||
AMERICAN GREETINGS | ||||
American Greetings Balance Sheet (in millions of dollars) | ||||
2009 | 2010 | 2011E | ||
(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 | 72 | 54 | |
Total Current Assets | 679 | 716 | 677 | |
Net Property, Plant, and Equipment and Other Assets | 850 | 832 | 859 | |
Total Assets | 1,529 | 1,547 | 1,536 | |
Debt Due within One Year | 1 | 0 | 0 | |
Accounts Payable | 95 | 87 | 87 | |
Other Current Liabilities | 272 | 245 | 255 | |
Current Liabilities | 369 | 332 | 343 | |
Long-Term Debt | 329 | 233 | 235 | |
Other Liabilities | 196 | 219 | 206 | |
Shareholders Equity | 636 | 763 | 752 | |
Total Liabilities and Shareholders Equity | 1,529 | 1,547 | 1,536 |
Exhibit 2 | ||||
AMERICAN GREETINGS | ||||
American Greetings Income Statement, December 2011 (in millions of dollars) | ||||
2008 | 2009 | 2010 | 2011E | |
(Feb 2009) | (Feb 2010) | (Feb 2011) | (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 Nonoperating 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 |
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 |
1.Find the implied share price using what you believe is the most appropriate EBITDA multiple. 2.Estimate American Greetings weighted-average cost of capital. 3.Find the implied share price for American Greetings from the discounted cash flows for the two provided scenarios. 4. Discuss the key drivers of value in your model. 5. Based on the three estimates above, what do you think is the most appropriate share price? Do you recommend repurchasing shares?
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