8-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of Report (date of earliest event reported): April 22, 2010

American Greetings Corporation

(Exact Name of Registrant as Specified in its Charter)

Ohio	1-13859	34-0065325
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

One American Road Cleveland, Ohio	44144
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (216) 252-7300

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o      Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o      Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o      Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o      Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition.

On April 22, 2010, American Greetings issued a press release reporting its results for the quarter and year ended February 28, 2010. A copy of this press release is attached hereto as Exhibit 99.1.

The information in this Item 2.02 of this Current Report on Form 8-K (including the exhibit attached hereto) is being furnished under Item 2.02 and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of such section, or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

Item 9.01 Financial Statements and Exhibits.

d) Exhibits.

Exhibit	Description
Exhibit 99.1	Press Release — reporting results for the quarter and year ended February 28, 2010.

2

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

American Greetings Corporation (Registrant)
By:	/s/ Joseph B. Cipollone
	Joseph B. Cipollone, Vice President,
	Corporate Controller and Chief Accounting Officer

Date: April 22, 2010

3

EX-99.1

Exhibit 99.1

AMERICAN GREETINGS ANNOUNCES SIGNIFICANTLY IMPROVED
FOURTH QUARTER EARNINGS

• Earnings significantly improve over prior year

• Cash flow exceeds enhanced expectations

• Fiscal 2011 cash flow forecast provided

CLEVELAND (April 22, 2010) — American Greetings Corporation (NYSE: AM) today announced its financial results for both the fourth fiscal quarter and fiscal year ended February 28, 2010.

Fourth Quarter Results

For the fourth quarter of fiscal 2010, the Company reported total revenue of $426.4 million, pre-tax income of $31.8 million, and net income of $18.8 million or 46 cents per share (all per-share amounts assume dilution). The Company recorded pre-tax costs of $12.3 million (after-tax of approximately $8.6 million, reducing earnings per share by about 21 cents) related to the previously announced wind down of its operations in Mexico. Other pre-tax costs included $19.0 million for the settlement of a lawsuit (after-tax of about $11.6 million, reducing earnings per share by about 29 cents) and $5.9 million for severance (after-tax of about $3.6 million, reducing earnings per share by about 9 cents). These costs were partially offset by a $21.2 million pre-tax net benefit from the previously announced party goods transaction (after-tax of about $12.9 million, increasing earnings per share by about 33 cents). The $21.2 million net benefit included a $34.2 million gain and $13.0 million of impairments related to the exit of the party goods manufacturing facility. The Company also recognized a $3.3 million pre-tax gain related to the liquidation of a business in France (the after-tax amount was also about $3.3 million, increasing earnings per share by about 8 cents).

For the fourth quarter of fiscal 2009, the Company reported total revenue of $422.5 million, a pre-tax loss from continuing operations of $67.9 million, and a net loss of $50.1 million or $1.13 per share. During the fourth quarter of fiscal 2009, the Company recognized pre-tax goodwill impairment charges of $47.3 million (after-tax of approximately $42.6 million that reduced earnings per share by 97 cents). In addition, the Company recognized atypical expenses in its licensing business of $16.4 million (after-tax of approximately $10.0 million reducing earnings per share by 23 cents). The Company also recognized a pre-tax severance charge of $7.5 million (after-tax of about $4.6 million, decreasing earnings per share by about 10 cents).

Full Year Results

For the full year fiscal 2010, the Company reported total revenue of $1,635.9 million, pre-tax income of $121.0 million, and net income of $81.6 million or $2.03 per share. The Company recorded costs of approximately $18.2 million (after-tax of approximately $6.5 million reducing earnings per share by approximately 16 cents) related to the previously announced wind down of its operations in Mexico. The Company also incurred a $24.0 million pre-tax charge for the settlement of a lawsuit (after-tax of about $14.7 million, reducing earnings per share by about 37 cents), pre-tax severance expense of $9.4 million (after-tax of about $5.8 million, reducing earnings per share about 14 cents) and a $28.3 million pre-tax charge related to the divestiture of our retail business earlier in the year (after-tax of about $17.3 million, reducing earnings per share approximately by 43 cents). These costs were partially offset by a $21.2 million pre-tax net benefit related to the party goods transaction (after-tax of about $12.9 million, increasing earnings per share by about 33 cents), a $3.3 million pre-tax gain related to the liquidation of a business in France (the after-tax amount was also about $3.3 million, increasing earnings per share by about 8 cents) and a $7.9 million pre-tax benefit associated with a legacy insurance program (after-tax of about $7.6 million, increasing earnings per share about 19 cents).

Management Comments and Outlook

Chief Executive Officer Zev Weiss said, “I am delighted with our fourth quarter performance as it was the culmination of a successful year. During the year, we made both strategic and operational changes that improved our business model. Our portfolio changes as well as our operational execution, including our innovation in product content, have been large factors driving improved cash flow. We were able to generate cash flow from operations minus capital expenditures of $171 million, which exceeded our expectations. We could not have achieved these results without the unrelenting effort of all our associates and I am grateful for their commitment.”

For fiscal 2011, the Company expects revenue to decline approximately 1% to 2% compared to fiscal 2010. The decline is driven by the expectation of reduced sales of party goods products as a result of the transaction announced in December 2009. The Company expects cash flow from operating activities of about $165 million and capital expenditures of approximately $40 million resulting in cash flow from operating activities minus capital expenditures to be around $125 million.

Conference Call on the Web

American Greetings will broadcast its conference call live on the Internet at 9:00 a.m. Eastern time today. The conference call will be accessible through the Investor Relations section of the American Greetings Web site at http://investors.americangreetings.com. A replay of the call will be available on the site.

About American Greetings Corporation

For more than 100 years, American Greetings Corporation (NYSE: AM) has been a manufacturer and retailer of innovative social expression products that assist consumers in enhancing their relationships. The Company’s major greeting card lines are American Greetings, Carlton Cards, Gibson, Recycled Paper Greetings and Papyrus, and other paper product offerings include DesignWare party goods and American Greetings and Plus Mark gift-wrap and boxed cards. American Greetings also has the largest collection of electronic greetings on the Web, including cards available at AmericanGreetings.com through AG Interactive, Inc. (the Company’s online division). AG Interactive also offers digital photo sharing and personal publishing at PhotoWorks.com and Webshots.com and provides a one-stop source for online graphics and animations at Kiwee.com. In addition to its product lines,

American Greetings also creates and licenses popular character brands through the American Greetings Properties group. Headquartered in Cleveland, Ohio, American Greetings generates annual revenue of approximately $1.6 billion, and its products can be found in retail outlets worldwide. For more information on the Company, visit http://corporate.americangreetings.com.

###

CONTACT:

Gregory M. Steinberg
Treasurer and Director of Investor Relations
American Greetings Corporation
216-252-4864
investor.relations@amgreetings.com

Non-GAAP Measures

Certain after-tax and liquidity amounts included in this earnings release may be considered non-GAAP measures under the Securities and Exchange Commission’s Regulation G. The after-tax amounts were calculated based on the Company’s statutory tax rate of approximately 38.9% for U.S. based items (other than cumulative currency translation adjustments, for which a 0% tax rate is applied) and the appropriate rates for international jurisdictions. Management believes that after-tax information is useful in analyzing the Company’s results and that cash flow from operating activities minus capital expenditures provides a liquidity measure useful to investors in analyzing the cash generation of the Company.

Factors That May Affect Future Results

Certain statements in this release, including those under Management Comments and Outlook, may constitute forward-looking statements within the meaning of the Federal securities laws. These statements can be identified by the fact that they do not relate strictly to historic or current facts. They use such words as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” and other words and terms of similar meaning in connection with any discussion of future operating or financial performance. These forward-looking statements are based on currently available information, but are subject to a variety of uncertainties, unknown risks and other factors concerning the Company’s operations and business environment, which are difficult to predict and may be beyond the control of the Company. Important factors that could cause actual results to differ materially from those suggested by these forward-looking statements, and that could adversely affect the Company’s future financial performance, include, but are not limited to, the following:

• a weak retail environment and general economic conditions;

• the ability to achieve both the desired benefits from the transaction with Amscan as well as ensuring a seamless transition for affected retail customers and consumers;

• the ability to successfully integrate acquisitions, including the recent acquisitions of Recycled Paper Greetings and Papyrus;

• the Company’s ability to successfully complete the sale of the Strawberry Shortcake and Care Bears properties;

• the Company’s successful transition of the Retail Operations segment to its buyer, Schurman Fine Papers, and Schurman Fine Papers’ ability to successfully operate its retail operations and satisfy its obligations to the Company;

• retail consolidations, acquisitions and bankruptcies, including the possibility of resulting adverse changes to retail contract terms;

• the ability to achieve the desired benefits associated with it’s the Company’s cost reduction efforts;

• competitive terms of sale offered to customers;

• the Company’s ability to comply with its debt covenants and to refinance its debt on acceptable terms as the debt instruments mature;

• the timing and impact of investments in new retail or product strategies as well as new product introductions and achieving the desired benefits from those investments;

• consumer acceptance of products as priced and marketed;

• the impact of technology on core product sales;

• the timing and impact of converting customers to a scan-based trading model;

• escalation in the cost of providing employee health care;

• the ability to successfully implement, or achieve the desired benefits associated with, any information systems refresh the Company may implement;

• the Company’s ability to achieve the desired accretive effect from any share repurchase programs;

• fluctuations in the value of currencies in major areas where the Company operates, including the U.S. Dollar, Euro, U.K. Pound Sterling, and Canadian Dollar; and

• the outcome of any legal claims known or unknown.

Risks pertaining specifically to AG Interactive include the viability of online advertising, subscriptions as revenue generators, and the ability to adapt to rapidly changing social media and the digital photo sharing space.

In addition, this release contains time-sensitive information that reflects management’s best analysis as of the date of this release. American Greetings does not undertake any obligation to publicly update or revise any forward-looking statements to reflect future events, information or circumstances that arise after the date of this release. Further information concerning issues that could materially affect financial performance related to forward-looking statements can be found in the Company’s periodic filings with the Securities and Exchange Commission, including the “Risk Factors” section of the Company’s Annual Report on Form 10-K.

AMERICAN GREETINGS CORPORATION
FOURTH QUARTER CONSOLIDATED STATEMENT OF OPERATIONS
FISCAL YEAR ENDED FEBRUARY 28, 2010

(In thousands of dollars except share and per share amounts)

	(Unaudited)
	Quarter Ended						Year Ended
	February 28,			February 28,			February 28,			February 28,
	2010			2009			2010			2009
Net sales	$	408,864		$	403,467		$	1,598,292		$	1,646,399
Other revenue		17,556			19,052			37,566			44,339
Total revenue		426,420			422,519			1,635,858			1,690,738
Material, labor and other production costs		187,661			223,288			713,075			809,956
Selling, distribution and marketing expenses		134,045			153,818			507,960			618,899
Administrative and general expenses		95,164			55,753			276,031			226,317
Goodwill and other intangible assets impairment		—			47,277			—			290,166
Other operating income — net		(26,111	)		(67	)		(310	)		(1,396	)
Operating income (loss)		35,661			(57,550	)		139,102			(253,204	)
Interest expense		6,322			5,881			26,311			22,854
Interest income		(112	)		(447	)		(1,676	)		(3,282	)
Other non-operating (income) expense — net		(2,327	)		4,883			(6,487	)		2,157
Income (loss) before income tax expense (benefit)		31,778			(67,867	)		120,954			(274,933	)
Income tax expense (benefit)		12,982			(17,789	)		39,380			(47,174	)
Net income (loss)	$	18,796		$	(50,078	)	$	81,574		$	(227,759	)
Earnings (loss) per share — basic	$	0.48		$	(1.13	)	$	2.07		$	(4.89	)
Earnings (loss) per share — assuming dilution	$	0.46		$	(1.13	)	$	2.03		$	(4.89	)
Average number of common shares outstanding		39,463,368			44,144,203			39,467,811			46,543,780
Average number of common shares outstanding — assuming dilution		40,445,332			44,144,203			40,159,651			46,543,780
Dividends declared per share	$	0.12		$	0.24		$	0.36		$	0.60

AMERICAN GREETINGS CORPORATION
FOURTH QUARTER CONSOLIDATED STATEMENT OF FINANCIAL POSITION
FISCAL YEAR ENDED FEBRUARY 28, 2010

(In thousands of dollars)

	(Unaudited)
	February 28,			February 28,
	2010			2009
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	137,949		$	60,216
Trade accounts receivable, net		135,758			77,703
Inventories		163,956			194,945
Deferred and refundable income taxes		78,433			67,267
Assets held for sale		13,280			23,627
Prepaid expenses and other		148,048			162,125
Total current assets		677,424			585,883
GOODWILL		31,106			26,871
OTHER ASSETS		428,160			376,665
DEFERRED AND REFUNDABLE INCOME TAXES		148,210			183,066
Property, plant and equipment — at cost		840,696			922,613
Less accumulated depreciation		595,945			647,049
PROPERTY, PLANT AND EQUIPMENT — NET		244,751			275,564
	$	1,529,651		$	1,448,049
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Debt due within one year	$	1,000		$	750
Accounts payable		95,434			117,504
Accrued liabilities		79,478			90,236
Accrued compensation and benefits		85,092			32,198
Income taxes payable		13,901			11,743
Other current liabilities		97,138			105,537
Total current liabilities		372,043			357,968
LONG-TERM DEBT		328,723			389,473
OTHER LIABILITIES		164,642			149,820
DEFERRED INCOME TAXES AND NONCURRENT INCOME TAXES PAYABLE		28,179			21,599
SHAREHOLDERS’ EQUITY
Common shares — Class A		36,257			37,043
Common shares — Class B		3,223			3,499
Capital in excess of par value		461,076			449,085
Treasury stock		(946,724	)		(938,086	)
Accumulated other comprehensive loss		(29,815	)		(67,278	)
Retained earnings		1,112,047			1,044,926
Total shareholders’ equity		636,064			529,189
	$	1,529,651		$	1,448,049

AMERICAN GREETINGS CORPORATION
FOURTH QUARTER CONSOLIDATED STATEMENT OF CASH FLOWS
FISCAL YEAR ENDED FEBRUARY 28, 2010

(In thousands of dollars)

	(Unaudited)
	Year Ended
	February 28,			February 28,
	2010			2009
OPERATING ACTIVITIES:
Net income (loss)	$	81,574		$	(227,759	)
Adjustments to reconcile net income (loss) to cash flows from operating activities:
Goodwill and other intangible assets impairment		—			290,166
Net gain on dispositions		(6,507	)		—
Net loss on disposal of fixed assets		59			1,215
Depreciation and intangible assets amortization		45,165			50,016
Deferred income taxes		25,268			(29,438	)
Fixed assets impairment		13,005			5,465
Other non-cash charges		18,289			8,270
Changes in operating assets and liabilities, net of acquisitions and dispositions:
Trade accounts receivable		(56,105	)		(6,504	)
Inventories		14,923			2,877
Other current assets		16,962			17,585
Deferred costs — net		18,405			27,596
Accounts payable and other liabilities		14,193			(67,542	)
Other — net		12,259			1,093
Total Cash Flows From Operating Activities		197,490			73,040
INVESTING ACTIVITIES:
Property, plant and equipment additions		(26,550	)		(55,733	)
Cash payments for business acquisitions, net of cash acquired		(19,300	)		(37,882	)
Proceeds from sale of fixed assets		1,124			433
Other — net		4,713			(44,153	)
Total Cash Flows From Investing Activities		(40,013	)		(137,335	)
FINANCING ACTIVITIES:
Net (decrease) increase in long-term debt		(62,350	)		118,991
Sale of stock under benefit plans		6,705			525
Purchase of treasury shares		(11,848	)		(73,983	)
Dividends to shareholders		(19,049	)		(22,566	)
Total Cash Flows From Financing Activities		(86,542	)		22,967
EFFECT OF EXCHANGE RATE CHANGES ON CASH		6,798			(21,956	)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		77,733			(63,284	)
Cash and Cash Equivalents at Beginning of Year		60,216			123,500
Cash and Cash Equivalents at End of Year	$	137,949		$	60,216

AMERICAN GREETINGS CORPORATION
FOURTH QUARTER CONSOLIDATED SEGMENT DISCLOSURES
FISCAL YEAR ENDED FEBRUARY 28, 2010

(In thousands of dollars)

	(Unaudited)
	Quarter Ended						Year Ended
	February 28,			February 28,			February 28,			February 28,
	2010			2009			2010			2009
Total Revenue:
North American Social Expression Products	$	311,079		$	267,449		$	1,231,850		$	1,139,745
Intersegment items		—			(8,325	)		(5,104	)		(52,805	)
Exchange rate adjustment		3,462			54			8,433			8,508
Net		314,541			259,178			1,235,179			1,095,448
International Social Expression Products		55,148			53,083			209,974			205,687
Exchange rate adjustment		12,674			4,792			44,058			65,040
Net		67,822			57,875			254,032			270,727
Retail Operations		—			60,237			11,727			170,066
Exchange rate adjustment		—			829			112			8,746
Net		—			61,066			11,839			178,812
AG Interactive		23,176			21,050			78,955			81,615
Exchange rate adjustment		451			155			1,491			1,798
Net		23,627			21,205			80,446			83,413
Non-reportable segments		20,429			23,195			53,975			62,338
Unallocated		1			—			387			—
	$	426,420		$	422,519		$	1,635,858		$	1,690,738
Segment Earnings (Loss):
North American Social Expression Products	$	69,545		$	(24,539	)	$	236,305		$	106,006
Intersegment items		—			(6,195	)		(3,511	)		(38,899	)
Exchange rate adjustment		621			1,021			3,620			2,844
Net		70,166			(29,713	)		236,414			69,951
International Social Expression Products		3,793			(6,045	)		13,778			(60,206	)
Exchange rate adjustment		841			3,324			3,068			(17,463	)
Net		4,634			(2,721	)		16,846			(77,669	)
Retail Operations		—			(164	)		(34,830	)		(19,727	)
Exchange rate adjustment		—			565			(285	)		496
Net		—			401			(35,115	)		(19,231	)
AG Interactive		6,036			(1,461	)		10,586			(156,325	)
Exchange rate adjustment		167			884			833			(5,366	)
Net		6,203			(577	)		11,419			(161,691	)
Non-reportable segments		5,762			(9,816	)		7,634			(7,627	)
Unallocated		(55,061	)		(24,961	)		(116,103	)		(83,966	)
Exchange rate adjustment		74			(480	)		(141	)		5,300
Net		(54,987	)		(25,441	)		(116,244	)		(78,666	)
	$	31,778		$	(67,867	)	$	120,954		$	(274,933	)