Note 18 – Business Segment Information

The Corporation operates in five business segments: North American Social Expression Products, International Social Expression Products, Retail Operations, AG Interactive and Non-reportable. The North American Social Expression Products segment primarily designs, manufactures and sells greeting cards and other related products through various channels of distribution with mass merchandising as the primary channel. The International Social Expression Products segment primarily designs and sells greeting cards and other related products through various channels of distribution and is located principally in the United Kingdom, Australia and New Zealand. At May 27, 2016, the Retail Operations segment operated 395 card and gift retail stores in the United Kingdom. The stores sell products purchased from the International Social Expression Products segment as well as products purchased from other vendors. AG Interactive distributes social expression products, including electronic greetings and a broad range of graphics and digital services and products, through a variety of electronic channels, including Web sites, Internet portals and electronic mobile devices. The Corporation’s Non-reportable operating segment primarily includes licensing activities.

 

(In thousands)		Three Months Ended
Total Revenue:		May 27, 2016				May 29, 2015
North American Social Expression Products		$	322,460			$	335,604
International Social Expression Products			50,586				62,168
Intersegment items			(13,581	)			(10,313	)
Net			37,005				51,855
Retail Operations			65,412				71,808
AG Interactive			12,931				13,430
Non-reportable segment			1,500				746
		$	439,308			$	473,443

 

(In thousands)		Three Months Ended
Segment Earnings (Loss) Before Tax:		May 27, 2016				May 29, 2015
North American Social Expression Products		$	60,145			$	73,127
International Social Expression Products			(1,111	)			(5,010	)
Intersegment items			(674	)			751
Net			(1,785	)			(4,259	)
Retail Operations			(7,462	)			(8,143	)
AG Interactive			4,208				4,871
Non-reportable segment			64				60,347
Unallocated
Interest expense			(5,597	)			(8,113	)
401(k) match and profit-sharing expense			(5,061	)			(2,911	)
Corporate overhead expense			(5,264	)			(3,586	)
			(15,922	)			(14,610	)
		$	39,248			$	111,333

“Corporate overhead expense” includes costs associated with corporate operations including, among other costs, senior management, corporate finance, legal, and insurance programs.

For the three months ended May 29, 2015, earnings for the Corporation’s Non-reportable segment included a preliminary gain, subject to finalization of certain closing date estimates, of $61.7 million from the sale of Strawberry Shortcake. See Note 4 for further information.

Termination Benefits

Termination benefits are primarily considered part of an ongoing benefit arrangement, accounted for in accordance with ASC Topic 712, “Compensation – Nonretirement Postemployment Benefits,” and are recorded when payment of the benefits is probable and can be reasonably estimated.

The balance of the severance accrual was $3.1 million, $3.5 million and $3.3 million at May 27, 2016, February 29, 2016 and May 29, 2015, respectively. The payments expected within the next twelve months are included in “Accrued liabilities” while the remaining payments beyond the next twelve months are included in “Other liabilities” on the Consolidated Statement of Financial Position.