...Chandler Loupe Oct. 13th, 2013 FIN 3717 Stephens American Greetings- Executive Summary On a warm New Years day in Cleveland, American Greetings management was reviewing its stock’s recent downward trend of being cut in half over the past several months. When faced with situations of low equity valuation, AG’s management team normally opted to buyback; and given the circumstances, they were considering a $75 million repurchase program. As the second largest greeting card publisher, they positioned themselves as a leader in social expression products through a number of new business facets such as: electronically selling greetings, owning a number of different brands aside from AG, and licensing popular characters they owned the rights to. Problem The biggest issue facing the company was the overall decline in the greeting card industry. Industry analysts had concluded that their market had contracted by 9% since 2005, and that the trend would continue. The Mintel industry analyst firm had a best-case scenario of a 4% decline over the next four years, and a worst-case scenario of 16%. Analysis Although their market appears to be at a steady decline, their 2011 fiscal year shows a few signs of improvement. As seen in Exhibit 2, their international social expression products net sales increased by 31%, greeting cards by 9%, and gift packaging by 7%. Aside from small gains in revenue, their weighted average cost of capital has been fairly steady the past 3 years. By using...
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...(http://www.thecasesolutions.com) >> Business Case Studies (http://www.thecasesolutions.com/business-case-solutions) >> American Greetings ← Previous Post (http://www.thecasesolutions.com/simons-hostile-tender-for-taubman-22197) Next Post→ (http://www.thecasesolutions.com/yokohama-corp-ltd-a-22201) American Greetings Harvard Case Solution & Analysis AN INDUSTRY IN DECLINE Greeting card industry was faced massive changes as it had attained maturity and was now in decline. Overall greeting card sales had been contracting in the U.S. for some years and negative growth was expected in the next five years to 2015 (Exhibit 4). Hallmark was the largest card company in the U.S. that was privately owned by the Hall family with $4 billion of revenues. The organization had expanded its operations in more than hundred nations and thus it was well-diversified geographically. Overall, the U.S. card industry was contracting with 9% reduction in last six years and the trend was expected to continue with a minimum of 4% decline over next 4 years and 16% in a worst case scenario. Major cause and diver of this decline in demand was changing social interaction norms and advent of alternative forms of communications through social networking and digital imaging. Increase in use of these alternatives by the populace to express their love and keep in touch with their close ones was reducing the need to send paper based greeting cards. As a result, greeting card companies were increasingly moving to electronic...
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...American Greetings Question 1: The shares of American Greetings are currently trading at an EBITDA multiple that is at the bottom of its peer group. Do you think a 3.5 times multiple is appropriate for American Greetings? If not, what multiple of EBITDA do you think is justified? What is the implied share price that corresponds to that multiple? * First I calculated the market value of common equity by multiplying the share price to the shares outstanding. * And to get the Enterprise Value, I added MV of common equity and total debt, then subtracting total cash. * Lastly, I divided enterprise value from EBITDA to achieve my multiple. * Therefore, multiple of 3.5 is fair for American Greetings. Question 2: Please model cash flows for American Greetings for fiscal years 2012 through 2015. Using a marginal tax rate of 40% and a market risk premium of 5%, what is your estimate of the appropriate discount rate for the free cash flow forecast? Based on a discounted cash flow model, what is your best estimate of the implied enterprise value of American Greetings and the corresponding share price? * American Greetings’ sales growth would be steady at 1.5% and their operating margin would be maintained at 8%. With a discount rate of 8.49%, the present value of the company is $1041 and has a stock price of $20.94. Question 3: What are THE KEY DRIVERS OF VALUE IN YOUR MODEL * The key drivers of value in my models are the free cash flow forecasts, the weighted...
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...investments risks’ and potential return is crucial for investors’ as a way of establishing the expected return for their portfolios. In that respect, the analysis has used the Darden Case on American Greetings and the analysis on the Company as an investment has been done with use of DCF model that uses the present value of the expected future cash-flows. In addition, the analysis has been done using the future cash-flows for the years 2012 to 2015. The company’s WACC has been established to be 0.11% given the risk-free rate of 0.05% and the Market rate of 11%. With that consideration, the enterprise values for the two scenarios including a bullish and bearish scenario have been calculated as $659.41 and $546.43 respectively, but which are identified as lower than the 2011 value of $714. However, the values still reflect a higher value for the company’s stock compared to the 2011 market price of $12.51. Thus, the company is undervalued by the market at the 2011 and has potential for a rise towards its fair price. In addition, the company has a relatively better credit rating by the credit rating agencies being an indication of its relative low risk. In conclusion, the company’s stock has been identified as a buy, and its fair price for the year 2011 has been estimated to be $18.64. American Greetings Analysis Company value depends on a number of factors. Those factors include the capital structure that determines its cost of resources as well as the market situation that defines...
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...Sonia Zahid Case 43 October 28, 2015 American Greetings Should American Greetings Repurchase its Shares? 1. Is 3.5x multiple appropriate for American Greetings? If not, what multiple of EBITDA to think is justified? Based on the information provided, I believe that the EBITDA Multiple of 3.5x is not justified. EBITDA Mutiple (or EV/EBITDA) is a better measure than P/E ratio because it is not affected by the changes in capital structure between debt and equity. And for this reason it also makes fair comparison to companies with different capital structures. It is also a pre-tax metric making it easier to compare across different companies preferably in the same industry. This metric is preferred over P/E ratio since it is not affected by mix of capital structure. It is also a better measure of the company’s takeover value. EBITDA Multiple is calculated: Enterprise Value/EBITDA =MV of Equity +MV of Debt – Cash/EBITDA =($920.38mill - $172mill)/$200.58mill EBITDA Multiple =3.73x (close to 3.5x) The reason why I do not feel is justified is based off of the projections, the implied enterprise value is $1.563mill. So the revised calculation would be: ($1.563mill - $172mill)/$200.58mill =6.93x The company has the ability to generate more returns on the investment than the current EBITDA multiple indicates. EBITDA Multiple for some of the industry competitors are calculated as follows based on given data: Comparable Firms (End of 2011, Millions Except Share Price) Shares Share Price...
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...not only bringing their families but also their traditions with them. “According to the 2000 U.S. Census, almost 16 million Italian Americans live in the United States” (Quagliata, 2011, p. 1). Most immigrants that come to America lose their heritage; however, that is not the case for the Italian culture. Not only did Italians incorporate a style of living in America, they also brought their traditions into the country as well. Some of the customs they brought with them include their food, their game of bocce ball, their religion, and their way of greeting one another. Italian Food When thinking of the Italian culture, the first thing that comes to mind is their food. Cinotto (2000) states, “Since food is a cultural artifact, imbued with meanings and values, the cross-cultural consumption of Italian cuisine is a significant marker of the way in which others see and imagine Italy and the Italians” (p. 1). Pasta, parmesan, and cannoli’s are probably the most popular and most known Italian foods. With the way many Americans fell in love with the Italian food, it soon became part of the American culture as well. The Italian immigrants brought over their historical foods and formed new eating habits for the Americans, and most of the Italian food was shaped in Little Italy where the immigrants resided. At one point in time, some of the Americans disagreed with the eating habits of the Italians and tried to bane it. Between the 1910s and 1920s, progressive reformers, equipped...
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...Difference between Thai and American culture Culture is a word for people's way of life, meaning the way groups do things; it depends upon the human capacity for learning and transmitting knowledge to succeeding generation. Different groups of people may have different cultures, same as Thailand and United State of America which are located in different continent. Their cultures are different in various ways. First of all is about greeting , Americans really like to greet each other even if one does not know each other before. When American walk pass the stranger, it is ok for them to say “hi” or “have a nice day” In Thailand, most Thais are shy, we usually do not talk to the stranger. Last year ago, I hung out with Vivi , my American friend. While we were walking pass a road sweeper, she smiled and said “have a nice day” to him. He walked away from us immediately. Vivi asked me why he reacted like that and I explained to her that may be he thought that we were crazy because Thais are quite not use to this greeting. Moreover, Americans always shake hands or hug when they greet someone. Americans often shake hands when being introduced to someone. Hug is a friendly way to the person they know well. But Thais use “Wai” to say hello, thank you and goodbye. We also use it as a sign of respect. In addition, the difference about family. American parents give a freedom to their children to make them being an independence person. Most American children speak what in their...
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...approximately 2,100 stores throughout the United States and employed approximately 250,000 workers. Kmart's annual sales averaged $37 billion, and the company was the nation's second largest discount retailer and third largest general merchandise retailer. Its direct competitors were Wal-Mart and Target. This research paper will illustrate an accounting fraud committed by Kmart when improperly recognized as revenue a $42.3 million payment from American Greetings Corporation. Kmart negotiated a multi-year contract (5 years) for exclusivity rights and company’s policies and accounting procedures required that the $42.3 million be recognized over the term of the agreement. The litigation release No.18000, dated on February 26, 2003, states that the Securities and Exchange Commission (the SEC) filed a civil action against two former Officers of Kmart, Enio A. Mortini, Jr. Senior Vice President and General Merchandise Manager of Kmart’s Drug Store Division, and Joseph A. Hofmeister, divisional vice president of merchandising within the drug store division. The case was presented in the United States District Court for the Eastern District of...
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...in the culture difference. A serious question may therefore bring great laghter, while an innocuous statement horrible anger,which caused by culture difference. Experts in sociology claimed that every single culture is distinctive. The word 'culture' is defined as follow in Oxford Advanced Learner's English Chinese Dictionary: customs,arts, social institutions, etc of a particular group or people. Among all distinctions, difference in daily life plays a special role. More details of lifes oversees are shown with the rapid development of communication and media. Facing that very difference between the Chinese and the American however, seems to have led to confusion and even further, false and unscientific evaluation, thus the eventual cultural conflict and descrimination. This paper will therefore focus on the distinction of the Chinese and American culture from the aspect of daily communication . 2.The Importance of Cross-Cultural Communication Because of various reasons, there are a lot of cultural differences between China and the U.S. This creates a barrier for cross-cultural communications. Due to globalization and social development, all countries are essentially living in a "global village", and cross-cultural communications becomes an integral part for all people. For example, if a company wants to sell its product in the world market, it not only has to be of good quality, it also has to fit in with the cultures of individual countries, making the product...
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...non-theological situation, command, or principle which pertains to an individual’s specific circumstance that has been revoked or is no longer applicable to people in my culture. This is the compatible guideline with this passage due to the fact that slavery has been abolished and found to be illegal and indecent in the United States for quite some time. The Civil war brought about the turning point in which the government made the ownership of slaves illegal. Because slavery is now illegal, there is no principle base on which to establish a worthy context for that particular passage to relate to the American culture of today. The only other take on this passage is to research the original words used and in doing so one can see that in some versions the translation of slaves is actually commoners, and the translation of masters is actually to head of house. If this were the case, Peter was extending word to the people that were to deal with the hardships placed upon them with faith, because eventually through God they would be set free. The second passage of 1 Timothy 2:12 also falls under the guideline of a non-moral or non-theological situation, command, or principle which pertains to an individual’s specific circumstance that has been revoked or is no longer applicable to people in my culture. For a very long time women were held in a lower class...
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...Module 5: Customs Etiquette and Protocol In an era of globalization, understanding the basics of etiquette and protocol — that is, the type of behavior that others expect of you in both informal and formal settings — is an important skill. It can instill an individual with confidence to handle almost any situation in any culture and allow a businessperson to concentrate on the deal at hand rather than worrying about such peripheral distractions as which fork to use or which hand to use for passing food. Without an understanding of the basics of etiquette and protocol, you risk coming off as a boorish Neanderthal. You may even put your company's image at risk or risk potential failure in the formation of key business relationships that are vital to global success. Finally, a well-honed sense and appreciation of local customs, etiquette and protocol can make you stand out as a world-savvy individual in a competitive global market. The world may indeed be an oyster today for many businesses. The problem is that too many businesspeople are still, like Oscar Wilde, using the wrong fork. The Ancient Art of Protocol Etiquette — the codes and practices prescribed by social convention that govern correct behavior — and protocol — the form of etiquette and ceremony observed by diplomats and businesspeople during formal interaction — are really ancient arts. Ptahhotep, mayor of ancient Egypt's capital and vizier to Egyptian King Isesi around 2380–2340 B.C. (the vizier was ancient Egypt's...
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...aside from others, making us unique. “Culture is a way of life, the behaviors, beliefs, values, and symbols that they accept, generally without thinking about them, and that are passed along by communication and imitation from one generation to the next” (Culture). Argentina’s culture is a unique blend of European and Southern American influences. Spanish is spoken mainly in Argentina, Argentinian Spanish is different from the Spanish spoken in Spain. In some ways it sounds more like Italian than Spanish. There are also many other languages spoken in Argentina, including Italian, German, English, and French (Language in Argentina). The predominant religion of Argentina is Roman Catholic. Although Roman Catholic is the well-known religion, it is not the only religion practiced in Argentina. The country is also home to religions such as Protestants, Muslims, Jews, and other religious groups (Argentina). Visiting or conducting business internationally means mixing with new cultures. Every culture has its own etiquette and customs which if not researched or understood can cause offense or embarrassment. Meetings, gift giving, dress and appearance, greeting, names and titles, personal space and touching, taboos, and negotiations are important key areas for consideration when doing business in Argentina. Meetings When doing business in Argentina one should make an appointment to meet 1-3 weeks beforehand. You should expect to wait at least 10 to 15 minutes for any appointment...
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...lifestyle. While we may feel that Japanese cultural and lifestyle seems strange, they likewise look at Americans as being different. It is important to realize that Japanese and American culture is swayed by the society of people. Americans belong to a number of subcultures due to immigration, while Japanese society has less immigration and is not as diverse when it comes to subcultures. Since there are so many cultural differences between Japan and the U.S., we cannot discuss its entirety but review a few differences as it relates to the family, greeting, business, and government. First, the family structure is much different. In the Japanese culture, the man is the head and the wife services all of his needs first. While in American culture, the husband and wife are equal partners and share in responsibilities. The family structure in Japan is defined by tradition while the American family structure is free and family roles are chosen according to likes and dislikes of the family member. Japanese traditionally feel that a married woman’s place, especially older women, should be at home taking care of her husband and children. However, Americans feel that a woman can do both home and career and she is free to chose, especially since both partners are equal and share in responsibilities. Japanese are also known to take care of extended family and aging parents more so than Americans. They are less likely to place aging parents in Nursing homes. The role of a Japanese mother is...
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...October 15, 2009 1.) A: “One is that Germany was too "green" for a slash-and-burn outfit like Wal-mart, with its plastic bags and plastic junk Another is that Wal-mart couldn't hack the pro-labor union culture of Germany. Another is that Germany is anti-American when it comes to name-brand retailers (even though Dunkin' Donuts and Starbucks are popular there).” B: Wal-mart failed because of their lack of knowledge, of foreign countries. In order for Wal-mart to have a successful business over seas, is to do research about the particular country that they want their cultural business to be located. “There are many reasons why Wal- Mart’s business model failed in Germany, such as Cultural attitudes, Customer Service, and Cultural arrogance all contributed to what one economist referred to as a failure. But under these basic economic decisions were a host of basic cross- cultural mistakes that fuelled the company’s poor strategic planning.” They had the right idea on how to approach Germany, but they didn‘t do their research on the country it‘s self. “Wal-Mart failed to take into account Germany’s cultural attitudes, especially with regard to such matters as labor law and the role of unions.” Wal-mart’s guide lines are focusing on just the company and not about the different countries values. “Wal-Mart also runs afoul of requirements that workers‟ representatives be consulted before introducing changes in working conditions.” If Wal-mart would have did more research on...
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...matter, however their attire must maintain a conservative image. * English are slow decision makers. Hence, they must be given time to think and decide. * Punctuality is very important for the English. Hence, reaching early or late is not well accepted. * While greeting someone, a firm and confident handshake is a must. * Privacy is very important for the English. Hence, never delve in asking personal questions. * Never make an intense eye contact or physically touch a person in public. It is considered inappropriate. Even during conversations, seldom have eye contacts. * To signal that something must be kept a secret or confidential, always tap your nose. * Gift giving is generally not part of English business. US/Canada office etiquette Office etiquette varies from country to country. Get to know some office do's and don'ts you need to follow in the US and Canada * The first office etiquette mistake that you can make in the US is not to say "Good Morning and Good Bye." While the rule is to work as quietly and unconstructively as possible, being friendly matters and it starts with wishing your fellow workers a pleasant "Good Morning." * In both American and Canadian business culture "time...
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