CONTACT: W. L. Flaherty
Vice President - Finance
(513) 841-6675
FOR IMMEDIATE RELEASE
Karen Durand
Director - Investor Relations
(513) 841-6986
GIBSON GREETINGS, INC. ANNOUNCES YEAR-END RESULTS;
Company Announces: Strong Earnings Turnaround; Decision to Remain
Independent; and Decision to Seek Replacement for Chairman and CEO
CINCINNATI, OHIO, February 14, 1996 -- Gibson Greetings, Inc. (NASDAQ: GIBG)
today reported a strong improvement in operating income in the fourth quarter
and fiscal year ended December 31, 1995. These results reflect the impact of
the previously announced sale of Cleo Inc. (Cleo), the Company's wholly-owned
gift wrap subsidiary, to CSS Industries, Inc., which was completed in November
1995.
On a pro forma basis excluding Cleo, Gibson had operating income of $11.3
million on revenues of $119.2 million for the fourth quarter of 1995, compared
with an operating loss of $18.9 million on revenues of $93.7 million in the
same period a year ago. The Company's pro forma net income for the fourth
quarter 1995 was $4.8 million, or $0.29 per share, compared with a net income
of $3.3 million, or $0.20 per share, in the 1994 fourth quarter.
Gibson's Board of Directors also announced that it has decided to terminate
the previously announced process of exploring possible expressions of interest
in the Company as it had not received an appropriate offer. The Board
believes that Gibson is well positioned to move forward as an independent
company in view of the successful efforts to control costs and improve the
profitability of the greeting card business in 1995, as well as the Company's
healthy year-end financial position, due in part to the sale of Cleo, and that
the conclusion of the process will eliminate any uncertainties on the part of
our customers and associates.
In addition, the Board determined that this was an appropriate time to seek
new management direction for the Company and announced the severance of
Benjamin J. Sottile as Chairman of the Board and Chief Executive Officer. A
search will commence immediately both within and outside the Company for a new
Chief Executive. In the interim, the Board has established an office of the
Chairman with Mr. Albert R. Pezzillo, current Chairman of the Executive
Committee, serving as Chairman and Chief Executive and Board members Frank
Stanton and C. Anthony Wainwright serving as members of the Chairman's office.
For the full year of 1995 on a pro forma basis excluding Cleo, Gibson had
operating income of $38.4 million on revenues of $388.9 million, compared with
an operating loss of $11.8 million on revenues of $359.4 million in the same
period last year. The Company's pro forma net income for the full year,
excluding Cleo, was $16.3 million, or $1.00 per share, compared with a net
loss of $9.7 million, or $0.60 per share in 1994.
The Company's increase in revenues for the full year, excluding Cleo,
reflected higher domestic and international greeting card revenues, as well as
higher revenues from The Paper Factory of Wisconsin, Inc. (The Paper
Factory). Additionally, the increase in operating income for the year
reflects the positive impact of an improved gross margin for greeting cards,
as well as cost reduction efforts which resulted in lower selling and
marketing expenses.
For the fourth quarter of 1995, including Cleo, Gibson reported net income of
$7.8 million, or $0.49 per share, on revenues of $198.7 million, compared with
a net loss of $1.2 million, or $0.07 per share, on revenues of $211.7 million
in the same period a year ago. The 1995 fourth quarter results include Cleo's
operations through November 14, 1995.
For the year ended December 31, 1995, including Cleo, Gibson reported a net
loss of $46.5 million, or $2.86 per share, on revenues of $540.8 million,
compared with a net loss of $28.6 million, or $1.77 per share, on revenues of
$548.8 million in the same period a year ago. The 1995 results include a loss
from Cleo's operations through November 14, 1995 and a charge of
$54.5 million, or $3.35 per share, after-tax, for the disposition of Cleo.
The 1994 results included a $1.6 million gain, net of taxes, associated with
derivative transactions, significant charges for inventory obsolescence and
sales returns and allowances at Cleo, a pretax charge of $16.2 million from
write-offs associated with the Chapter 11 bankruptcy filing of F & M
Distributors, Inc., and a $1.7 million pretax charge for severance costs.
The Paper Factory recorded a modest profit for the year. Gibson's operations
in the United Kingdom experienced a modest loss and continued to grow as a
result of increased distribution which, coupled with cost reduction efforts,
resulted in a narrower loss than a year earlier. In view of the continuing
poor economic conditions and devaluation of the peso in Mexico, the Company
recorded a full reserve against its Mexican subsidiary.
Stockholders' equity at year-end was $230.2 million, while the ratio of
long-term debt to total capitalization was 17.4 percent. Book value per share
was $14.31.
Long-term debt was $48.5 million at December 31, 1995, down from $63.2 million
at December 31, 1994, due to the sale of Cleo. Debt due within one year
decreased $90.2 million to $26.9 million at year-end compared to the same
period in 1994, reflecting in part proceeds from the sale of Cleo. At
December 31, 1995, the Company's cash and equivalents totaled $15.6 million.
In January 1996, Gibson received the proceeds of a note from the sale of Cleo
which, coupled with holiday collections, brought the Company's short-term
marketable securities to $41.4 million at January 31, 1996.
Gibson Greetings, Inc. is the world's second largest publicly owned
manufacturer and distributor of everyday and seasonal greeting cards, gift
wrap and related social expression products.
- -- TABLES FOLLOWS --
Gibson Greetings, Inc.
Pro Forma Condensed Consolidated Statements of Operations
(Amounts in thousands except per share amounts - Unaudited)
Three Months Year
Ended December 31, Ended December 31,
1995 1994 1995 1994
--------- --------- --------- ---------
REVENUES $ 119,151 $ 93,673 $ 388,884 $ 359,408
--------- --------- --------- ---------
COSTS AND EXPENSES:
Operating Expenses:
Cost of products sold 48,149 47,283 148,534 149,619
Selling, distribution
and administrative expenses 59,678 65,250 201,914 221,606
--------- --------- --------- ---------
Total operating expenses 107,827 112,533 350,448 371,225
--------- --------- --------- ---------
Operating income (loss) before financing
and derivative transaction expenses 11,324 (18,860) 38,436 (11,817)
Financing and derivative transaction
expenses:
Interest expense, net 1,918 2,126 8,572 6,441
Gain on derivative transactions - (14,888) - (1,641)
--------- --------- --------- ---------
Total financing and derivative
transaction expenses, net 1,918 (12,762) 8,572 4,800
--------- --------- --------- ---------
INCOME (LOSS) BEFORE INCOME TAXES 9,406 (6,098) 29,864 (16,617)
Income taxes/benefit 4,589 (9,399) 13,588 (6,937)
--------- --------- --------- ---------
NET INCOME (LOSS) $ 4,817 $ 3,301 $ 16,276 $ (9,680)
========= ========= ========= =========
NET INCOME (LOSS) PER SHARE $ 0.29 $ 0.20 $ 1.00 $ (0.60)
========= ========= ========= =========
Average common shares and
equivalents outstanding 16,306 16,111 16,243 16,130
========= ========= ========= =========
PAGE
Gibson Greetings, Inc.
Condensed Consolidated Statements of Operations
(Amounts in thousands except per share amounts - Unaudited)
Three Months Year
Ended December 31, Ended December 31,
1995 1994 1995 1994
--------- --------- --------- ---------
REVENUES $ 198,741 $ 211,692 $ 540,821 $ 548,795
--------- --------- --------- ---------
COSTS AND EXPENSES:
Operating Expenses:
Cost of products sold 109,494 143,993 268,702 310,039
Selling, distribution
and administrative expenses 70,205 90,359 239,922 276,147
Loss on sale of Cleo, Inc. 254 - 83,012 -
--------- --------- --------- ---------
Total operating expenses 179,953 234,352 591,636 586,186
--------- --------- --------- ---------
Operating income (loss) before financing
and derivative transaction expenses 18,788 (22,660) (50,815) (37,391)
Financing and derivative transaction
expenses:
Interest expense, net 3,091 3,800 12,263 9,834
Gain on derivative transactions - (14,888) - (1,641)
--------- --------- --------- ---------
Total financing and derivative
transaction expenses, net 3,091 (11,088) 12,263 8,193
--------- --------- --------- ---------
INCOME (LOSS) BEFORE INCOME TAXES 15,697 (11,572) (63,078) (45,584)
Income taxes/benefit 7,890 (10,386) (16,589) (16,981)
--------- --------- --------- ---------
NET INCOME (LOSS) $ 7,807 $ (1,186) $ (46,489) $ (28,603)
========= ========= ========= =========
NET INCOME (LOSS) PER SHARE $ 0.49 $ (0.07) $ (2.86) $ (1.77)
========= ========= ========= =========
Average common shares and
equivalents outstanding 16,306 16,111 16,243 16,130
========= ========= ========= =========
SELECTED BALANCE SHEET DATA
December 31, December 31,
1995 1994
--------- ---------
Current Assets $ 204,117 $ 381,753
========= =========
Current Liabilities $ 95,833 $ 230,625
========= =========
Long-Term Debt $ 48,533 $ 63,233
========= =========
Equity $ 230,242 $ 277,500
========= =========
PAGE