10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended November 30, 2004

OR

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

For the transition period from                                         to                                        

Commission file number 1-13859

AMERICAN GREETINGS CORPORATION

(Exact name of registrant as specified in its charter)

Ohio	34-0065325
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

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

(216) 252-7300

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes þ Noo

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes þ Noo

As of January 3, 2005, the number of shares outstanding of each of the issuer’s classes of common stock was:

Class A Common	64,815,448
Class B Common	4,160,806

AMERICAN GREETINGS CORPORATION
INDEX

	Page
	Number
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements		3
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		19
Item 3. Quantitative and Qualitative Disclosures About Market Risk		31
Item 4. Controls and Procedures		31
PART II — OTHER INFORMATION
Item 1. Legal Proceedings		32
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		32
Item 3. Defaults Upon Senior Securities		33
Item 4. Submission of Matters to a Vote of Security Holders		33
Item 5. Other Information		33
Item 6. Exhibits		33
SIGNATURES		34
EXHIBITS		40
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
CERTIFICATION OF CHIEF FINANCIAL OFFICER
CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

AMERICAN GREETINGS CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

(Thousands of dollars except share and per share amounts)

	(Unaudited)
	Three Months Ended						Nine Months Ended
	November 30,						November 30,
	2004			2003			2004			2003
Net sales	$	586,165		$	603,754		$	1,411,790		$	1,435,542
Costs and expenses:
Material, labor and other production costs		292,737			290,363			661,069			665,080
Selling, distribution and marketing		173,735			167,362			466,690			463,773
Administrative and general		64,476			55,564			186,118			174,511
Interest expense		8,744			30,587			70,601			70,924
Other (income) – net		(19,341	)		(13,459	)		(52,917	)		(25,576	)
Total costs and expenses		520,351			530,417			1,331,561			1,348,712
Income from continuing operations before income tax expense		65,814			73,337			80,229			86,830
Income tax expense		25,470			28,246			31,049			33,603
Income from continuing operations		40,344			45,091			49,180			53,227
Income from discontinued operations, net of tax		22,417			1,271			24,729			3,145
Net income	$	62,761		$	46,362		$	73,909		$	56,372
Earnings per share – basic:
Income from continuing operations	$	0.58		$	0.68		$	0.72		$	0.80
Income from discontinued operations		0.33			0.02			0.36			0.05
Net income	$	0.91		$	0.70		$	1.08		$	0.85
Earnings per share – assuming dilution:
Income from continuing operations	$	0.51		$	0.58		$	0.67		$	0.74
Income from discontinued operations		0.27			0.02			0.30			0.04
Net income	$	0.78		$	0.60		$	0.97		$	0.78
Average number of shares outstanding		68,753,922			66,699,848			68,391,128			66,309,827
Average number of shares outstanding – assuming dilution		82,397,633			80,478,413			81,874,590			79,817,702
Dividends declared per share	$	0.06		$	—		$	0.06		$	—

See notes to condensed consolidated financial statements (unaudited).

3

AMERICAN GREETINGS CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

(Thousands of dollars)

	(Unaudited)		(Note 1)		(Unaudited)
	November 30, 2004		February 29, 2004		November 30, 2003
ASSETS
Current assets
Cash and cash equivalents	$	221,744	$	285,450	$	51,694
Trade accounts receivable, less allowances for seasonal sales returns of $83,169, $85,638 and $91,271, respectively, and for doubtful accounts of $17,419, $17,871 and $23,519, respectively		415,113		238,473		453,374
Inventories		263,482		238,612		299,267
Deferred and refundable income taxes		165,810		157,886		181,029
Assets of businesses held for sale		—		40,815		39,204
Prepaid expenses and other		213,692		234,392		244,740
Total current assets		1,279,841		1,195,628		1,269,308
Goodwill		247,836		223,697		217,982
Other assets		606,985		706,898		696,236
Property, plant and equipment – at cost		981,814		993,024		1,042,239
Less accumulated depreciation		648,536		635,234		680,700
Property, plant and equipment – net		333,278		357,790		361,539
	$	2,467,940	$	2,484,013	$	2,545,065
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Debt due within one year	$	—	$	—	$	85,414
Accounts payable		138,073		125,816		138,179
Accrued liabilities		118,519		129,773		156,215
Accrued compensation and benefits		78,463		70,896		69,871
Income taxes		55,020		14,513		51,114
Liabilities of businesses held for sale		—		5,338		5,046
Other current liabilities		80,197		78,243		69,218
Total current liabilities		470,272		424,579		575,057
Long-term debt		483,988		665,874		665,554
Other liabilities		102,216		96,325		110,026
Deferred income taxes		26,963		29,695		8,434
Shareholders’ equity		1,384,501		1,267,540		1,185,994
	$	2,467,940	$	2,484,013	$	2,545,065

See notes to condensed consolidated financial statements (unaudited).

4

AMERICAN GREETINGS CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(Thousands of dollars)

	(Unaudited)
	Nine Months Ended
	November 30,
	2004			2003
OPERATING ACTIVITIES:
Net income	$	73,909		$	56,372
Income from discontinued operations		24,729			3,145
Income from continuing operations		49,180			53,227
Adjustments to reconcile to net cash provided (used) by operating activities:
Gain on sale of investment		(3,095	)		—
Loss on sale of fixed assets		1,817			1,191
Loss on extinguishment of debt		39,056			18,389
Depreciation and amortization		42,425			44,680
Deferred income taxes		(18,953	)		(8,110	)
Changes in operating assets and liabilities, net of acquisitions and divestitures:
Increase in trade accounts receivable		(169,293	)		(151,429	)
Increase in inventories		(19,852	)		(19,755	)
Decrease in other current assets		8,972			27,600
Decrease in deferred costs – net		98,314			25,718
Increase (decrease) in accounts payable and other liabilities		21,765			(28,829	)
Other – net		3,469			(12,751	)
Cash Provided (Used) by Operating Activities		53,805			(50,069	)
INVESTING ACTIVITIES:
Proceeds from the sale of discontinued operations		77,000			—
Property, plant & equipment additions		(25,745	)		(23,595	)
Proceeds from sale of fixed assets		3,545			2,140
Investment in corporate-owned life insurance		(2,142	)		8,943
Other – net		31,903			3,446
Cash Provided (Used) by Investing Activities		84,561			(9,066	)
FINANCING ACTIVITIES:
Reduction of long-term debt		(216,417	)		(68,673	)
Decrease in short-term debt		—			(47,135	)
Sale of stock under benefit plans		35,875			10,478
Purchase of treasury shares		(18,263	)		(439	)
Dividends to shareholders		(4,125	)		—
Cash Used by Financing Activities		(202,930	)		(105,769	)
CASH (USED) PROVIDED BY DISCONTINUED OPERATIONS		(2,395	)		4,046
EFFECT OF EXCHANGE RATE CHANGES ON CASH		3,253			4,089
DECREASE IN CASH AND CASH EQUIVALENTS		(63,706	)		(156,769	)
Cash and Cash Equivalents at Beginning of Year		285,450			208,463
Cash and Cash Equivalents at End of Period	$	221,744		$	51,694

See notes to condensed consolidated financial statements (unaudited).

5

AMERICAN GREETINGS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Three and Nine Months Ended November 30, 2004 and 2003

Note 1 – Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary to fairly present financial position, results of operations and cash flows for the period have been included.

These interim financial statements should be read in conjunction with the financial statements and notes thereto included in the Annual Report on Form 10-K for the year ended February 29, 2004 of American Greetings Corporation (the “Corporation”), from which the Condensed Consolidated Statement of Financial Position at February 29, 2004, presented herein, has been derived. Certain amounts in the prior year financial statements have been reclassified to conform to the 2005 presentation.

The Corporation’s fiscal year ends on February 28 or 29. References to a particular year refer to the fiscal year ending in February of that year. For example, 2004 refers to the year ended February 29, 2004. The Corporation’s subsidiary, AG Interactive (formerly AmericanGreetings.com), is consolidated on a two-month lag corresponding with its fiscal year-end of December 31.

During the quarter ended November 30, 2004, the Corporation incurred certain charges that do not have comparative charges in the prior year period. Net sales of the Social Expression Products segment were reduced approximately $13 million related to the implementation of a new merchandising strategy for seasonal space management. In addition, the quarter included pre-tax expenses of $16.6 million associated with an overhead reduction program that eliminated approximately 300 positions and $8.2 million related to a plant to be closed during the fourth quarter. Substantially all of the remaining plant closing costs of approximately $7 million will be recorded during the fourth quarter.

The current period expenses impacted the Condensed Consolidated Statement of Operations as follows:

(In millions)
Material, labor and other production costs	$	9.2
Selling, distribution and marketing		6.3
Administrative and general		9.3
	$	24.8

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The $24.8 million of current period expenses impacted the Corporation’s business segments as follows:

(In millions)
Social Expression Products	$	21.2
Retail Operations		0.5
Non-reportable		0.4
Unallocated		2.7
	$	24.8

Note 2 – Seasonal Nature of Business

A significant portion of the Corporation’s business is seasonal in nature. Therefore, the results of operations for interim periods are not necessarily indicative of the results for the fiscal year taken as a whole.

Note 3 – Recent Accounting Pronouncements

In January 2003, the Financial Accounting Standards Board (the “FASB”) issued Financial Interpretation No. 46 (“FIN 46”), “Consolidation of Variable Interest Entities.” FIN 46 provides guidance for identifying a controlling interest in a Variable Interest Entity (“VIE”) established by means other than voting interests. FIN 46 also requires consolidation of a VIE by an enterprise that holds such a controlling interest. On December 17, 2003, the FASB completed deliberations of the proposed modifications to FIN 46 (“Revised Interpretation”); the decisions reached include:

(1)	Deferral of the effective date;
(2)	Provisions for additional scope exceptions for certain other variable interests; and
(3)	Clarification of the impact of troubled debt restructurings on the requirement with respect to VIEs.

Based on the FASB’s decisions, all public companies must apply the provisions of the Interpretation or the Revised Interpretation to variable interests in a special purpose entity (“SPE”) created before February 1, 2003 no later than periods ending after December 15, 2003. Companies are required to apply the revised provisions to variable interests in non-SPEs held in the entity no later than the end of the first interim or annual reporting period ending after March 15, 2004. The Statement had no material impact on the consolidated financial statements of the Corporation relative to SPEs or non-SPEs.

On May 19, 2004, the FASB issued FASB Staff Position 106-2 (“FSP 106-2”), “Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003.” FSP 106-2, which requires measures of the Accumulated Postretirement Benefit Obligation (“APBO”) and net periodic postretirement benefit cost to reflect the effects of The Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the “Act”), supersedes FSP 106-1, “Accounting and Disclosure Requirements Related to the Medicare Prescription Drug,

7

Improvement and Modernization Act of 2003.” FSP 106-2 is effective for the first interim or annual period beginning after June 15, 2004. The Corporation adopted FSP 106-2 effective September 1, 2004. See Note 11 for further discussion.

In October 2004, the American Jobs Creation Act of 2004 was signed into law. The Corporation is in the process of evaluating the impact of the new law on the Corporation’s tax provision for the fiscal year ending February 28, 2005.

On November 24, 2004, the FASB issued Statement of Financial Accounting Standards (“SFAS”) No. 151, “Inventory Costs – an amendment of ARB No. 43, Chapter 4.” SFAS 151 seeks to clarify the accounting for abnormal amounts of idle facility expense, freight, handling costs and wasted material (spoilage) in the determination of inventory carrying costs. The statement requires such costs to be treated as a current period expense. This statement is effective for fiscal years beginning after July 15, 2005. The Corporation does not believe that the adoption of SFAS 151 will have a significant impact on the Corporation’s consolidated financial statements.

On December 16, 2004, the FASB issued SFAS No. 123 (revised 2004), “Share-Based Payment.” SFAS 123(R) requires that compensation cost relating to share-based payment transactions be recognized in financial statements. That cost will be measured based on the fair value of the equity or liability instruments issued. This statement eliminates the alternative to use the intrinsic value method of accounting per Accounting Principles Board (APB) Opinion No. 25, “Accounting for Stock Issued to Employees.” The Corporation is in the process of evaluating the impact adoption of this statement will have on the consolidated financial statements. This statement is effective for the first interim or annual period beginning after June 15, 2005. Refer to Note 12 for the Corporation’s current accounting for stock-based compensation.

Note 4 – Other (Income) – Net

During the three months ended November 30, 2004, “Other (income) – net” included $12.3 million of royalty revenue, $5.3 million of foreign exchange gain and $1.0 million of interest income. In the prior year third quarter, “Other (income) – net” included $8.4 million of royalty revenue and $2.0 million of foreign exchange gain.

During the nine months ended November 30, 2004, “Other (income) – net” included $24.2 million of royalty revenue, a $10.0 million one-time receipt related to licensing activities, $5.7 million of foreign exchange gain and $3.2 million of interest income. Income of $3.1 million on the sale of an equity investment was also recorded during the nine months ended November 30, 2004. The proceeds received from the sale of the investment totaled $19.1 million and are included in “Other - - net” investing activities in the Condensed Consolidated Statement of Cash Flows for the period. In the prior year nine months, “Other (income) – net” included $14.7 million of royalty revenue and $1.6 million of interest income. The agency fee expenses related to the royalty revenue are included in “Selling, distribution and marketing” on the Condensed Consolidated Statement of Operations. The agency fee expenses totaled $9.7 million and $5.0 million in the nine months ended November 30, 2004 and 2003, respectively.

8

Note 5 – Restructure Reserves

In Fiscal 2002, the Corporation undertook a restructure of the Corporation’s domestic and foreign manufacturing and distribution operations and recorded a charge of $56.7 million. All activities required to complete the restructure were substantially completed by February 28, 2002, with the exception of ongoing termination benefit payments, which will not be completed until 2007. The following table summarizes the remaining reserve associated with the 2002 restructure charge:

	Termination
(In thousands)	Benefits
Balance at March 1, 2004	$	1,504
Cash expenditures and other		(955	)
Balance at November 30, 2004	$	549

Included in “Accrued liabilities” at November 30, 2004 is $0.5 million, representing the portion of severance costs not yet disbursed.

Note 6 – Earnings Per Share

The following table sets forth the computation of earnings per share and earnings per share - assuming dilution:

	Three Months Ended				Nine Months Ended
	November 30,				November 30,
	2004		2003		2004		2003
Numerator (in thousands):
Income from continuing operations	$	40,344	$	45,091	$	49,180	$	53,227
Add-back – interest on convertible subordinated notes, net of tax		1,881		1,881		5,644		5,644
Income from continuing operations – assuming dilution	$	42,225	$	46,972	$	54,824	$	58,871
Denominator (in thousands):
Weighted average shares outstanding		68,754		66,700		68,391		66,310
Effect of dilutive securities:
Stock options		1,053		1,187		893		917
Convertible debt		12,591		12,591		12,591		12,591
Weighted average shares outstanding – assuming dilution		82,398		80,478		81,875		79,818
Income from continuing operations per share	$	0.58	$	0.68	$	0.72	$	0.80
Income from continuing operations per share – assuming dilution	$	0.51	$	0.58	$	0.67	$	0.74

Approximately 1.6 million and 3.2 million stock options outstanding in the three and nine month periods ended November 30, 2004, respectively, were excluded because the effect would have been antidilutive (4.0 million and 4.5 million stock options outstanding in the three and nine month periods ended November 30, 2003, respectively).

9

Note 7 – Comprehensive Income

The Corporation’s total comprehensive income is as follows:

	Three Months Ended					Nine Months Ended
	November 30,					November 30,
(In thousands)	2004			2003		2004		2003
Net income	$	62,761		$	46,362	$	73,909	$	56,372
Other comprehensive income (loss):
Foreign currency translation adjustments		32,612			28,184		22,046		39,540
Unrealized gains (losses) on securities		(134	)		—		119		—
Total comprehensive income	$	95,239		$	74,546	$	96,074	$	95,912

Note 8 – Inventories

(In thousands)	November 30, 2004		February 29, 2004		November 30, 2003
Raw materials	$	30,768	$	37,514	$	40,351
Work in process		22,201		30,047		27,308
Finished products		251,592		212,252		273,710
		304,561		279,813		341,369
Less LIFO reserve		70,297		73,213		75,656
		234,264		206,600		265,713
Display materials and factory supplies		29,218		32,012		33,554
Inventories	$	263,482	$	238,612	$	299,267

The valuation of inventory under the Last-In, First-Out (LIFO) method is made at the end of each fiscal year based on inventory levels and costs at that time. Accordingly, interim LIFO calculations, by necessity, are based on estimates of expected fiscal year-end inventory levels and costs and are subject to final fiscal year-end LIFO inventory calculations.

Note 9 – Deferred Costs

In the normal course of its business, the Corporation enters into agreements with certain customers for the supply of greeting cards and related products. Under these agreements, the customer typically receives from the Corporation a combination of cash payments, credits, discounts, allowances and other incentive considerations to be earned by the customer as product is purchased from the Corporation over the effective time period of the agreement to meet a minimum purchase volume commitment. The Corporation periodically reviews the progress toward the commitment and adjusts the estimated amortization period accordingly to match the costs with the revenue associated with the agreement. In the event a contract is not completed, the Corporation has a claim for unearned advances under the agreement. The agreements

10

may or may not specify the Corporation as the sole supplier of social expression products to the customer.

The Corporation classifies the total contractual amount of the incentive consideration committed to the customer but not yet earned as a deferred cost asset at the inception of an agreement, or any future amendments. Deferred costs estimated to be earned by the customer and charged to operations during the next twelve months are classified as “Prepaid expenses and other” in the Condensed Consolidated Statement of Financial Position, and the remaining amounts to be charged beyond the next twelve months are classified as “Other assets.”

A portion of the total consideration may be payable by the Corporation at the time the agreement is consummated. All future payment commitments are classified as liabilities at inception until paid. The payments that are expected to be made in the next twelve months are classified as “Other current liabilities” in the Condensed Consolidated Statement of Financial Position, and the remaining payment commitments beyond the next twelve months are classified as “Other liabilities.” The Corporation maintains adequate reserves for deferred costs related to supply agreements and does not expect that the non-completion of any particular contract would result in a material loss.

As of November 30, 2004, February 29, 2004 and November 30, 2003, deferred costs and future payment commitments are included in the following financial statement captions:

(In thousands)	November 30, 2004			February 29, 2004			November 30, 2003
Prepaid expenses and other	$	166,608		$	187,844		$	195,116
Other assets		547,393			630,445			629,549
Deferred cost assets		714,001			818,289			824,665
Other current liabilities		(58,833	)		(58,047	)		(48,650	)
Other liabilities		(62,944	)		(69,493	)		(78,514	)
Deferred cost liabilities		(121,777	)		(127,540	)		(127,164	)
Net deferred costs	$	592,224		$	690,749		$	697,501

Note 10 – Debt

On May 11, 2004, the Corporation amended and restated its senior secured credit facility. This facility was originally entered into on August 9, 2001, as a $350 million facility and was amended on July 22, 2002 to a $320 million facility. With the repayment of the term loan on April 7, 2003, the facility had a borrowing capacity of $195 million. At that date, the Corporation recorded a charge of $4.6 million for the write-off of the related deferred financing costs and a premium payment associated with the repayment of the term loan. The amended and restated senior secured credit facility consists of a $200 million revolving facility maturing on May 10, 2008. There were no outstanding balances under this facility at November 30, 2004, February 29, 2004 or November 30, 2003.

11

The amended facility is secured by the domestic assets of the Corporation and a 65% interest in the common stock of its foreign subsidiaries. The facility contains various restrictive covenants. Some of these restrictions require that the Corporation meet specified periodic financial ratios, minimum net worth, maximum leverage, and interest coverage. The credit facility places certain restrictions on the Corporation’s ability to incur additional indebtedness, to engage in acquisitions of other businesses, to repurchase its own capital stock and allows payments of shareholder dividends up to a maximum of $20 million per year. These covenants are less restrictive than the covenants previously in place.

The Corporation is also party to a three-year accounts receivable securitization financing agreement that provides for up to $200 million of financing and is secured by certain trade accounts receivable. Under the terms of the agreement, the Corporation transfers receivables to a wholly-owned consolidated subsidiary that in turn utilizes the receivables to secure borrowings through a credit facility with a financial institution. On August 2, 2004, the agreement was amended to extend the maturity date to August 1, 2007. There were no outstanding balances under this agreement at November 30, 2004, February 29, 2004 or November 30, 2003.

During the three months ended May 31, 2004, the Corporation commenced a cash tender offer for all of its outstanding 11.75% senior subordinated notes due July 15, 2008. As a result of this tender offer, a total of $186.2 million of these senior subordinated notes were repurchased and the Corporation recorded a charge of $39.1 million, included in “Interest expense” on the Condensed Consolidated Statement of Operations, for the payment of the premium and other fees associated with the notes repurchased as well as for the write-off of related deferred financing costs. At November 30, 2004, approximately $10 million of these notes remained outstanding. As part of this transaction, substantially all restrictive covenants were eliminated from the remaining outstanding notes.

At November 30, 2004, the Corporation was in compliance with its financial covenants.

At November 30, 2004, February 29, 2004 and November 30, 2003, debt due within one year consisted of the following:

(In thousands)	November 30, 2004		February 29, 2004		November 30, 2003
Current maturities of long-term debt	$	—	$	—	$	1,185
Other short-term debt		—		—		84,229
	$	—	$	—	$	85,414

12

At November 30, 2004, February 29, 2004 and November 30, 2003, long-term debt consisted of the following:

(In thousands)	November 30, 2004		February 29, 2004		November 30, 2003
6.10% Senior Notes, due July 2028	$	298,406	$	298,122	$	298,030
11.75% Senior Subordinated Notes, due July 2008		10,003		192,162		191,919
7.00% Convertible Subordinated Notes, due July 2006		175,000		175,000		175,000
Other		579		590		1,790
	$	483,988	$	665,874		666,739
Less Current Maturities		—		—		1,185
	$	483,988	$	665,874	$	665,554

The 7.00% convertible subordinated notes are convertible at the option of the holders into shares of the Corporation’s class A common stock at any time before the close of business on July 15, 2006, at a conversion rate of 71.9466 common shares per $1 thousand principal amount of notes.

Note 11 – Retirement Benefits

The components of periodic benefit cost for the Corporation’s defined benefit pension and postretirement benefit plans are as follows:

				Defined Benefit Pension
	Three Months Ended						Nine Months Ended
	November 30,						November 30,
(In thousands)	2004			2003			2004			2003
Service cost	$	185		$	97		$	409		$	292
Interest cost		1,865			2,204			5,557			5,614
Expected return on plan assets		(1,422	)		(1,322	)		(4,265	)		(3,962	)
Amortization of prior service cost		70			—			70			—
Amortization of actuarial loss		27			—			49			—
	$	725		$	979		$	1,820		$	1,944

				Postretirement Benefit
	Three Months Ended						Nine Months Ended
	November 30,						November 30,
(In thousands)	2004			2003			2004			2003
Service cost	$	572		$	575		$	1,828		$	1,525
Interest cost		1,474			1,900			5,916			5,450
Expected return on plan assets		(1,323	)		(1,125	)		(3,995	)		(3,375	)
Amortization of prior service cost		(1,656	)		(1,690	)		(4,774	)		(4,490	)
Amortization of actuarial loss		2,230			2,590			5,322			5,640
	$	1,297		$	2,250		$	4,297		$	4,750

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The Medicare Prescription Drug, Improvement and Modernization Act of 2003 was signed into law on December 8, 2003. The Act will provide plan sponsors a federal subsidy for certain qualifying prescription drug benefits covered under the sponsor’s postretirement health care plans. Under FSP 106-1 issued on January 12, 2004, the Corporation elected to defer accounting for the effects of the Act until further authoritative guidance was issued. On May 19, 2004, the FASB issued FSP 106-2. FSP 106-2, which requires measures of the APBO and net periodic postretirement benefit cost to reflect the effects of the Act, supersedes FSP 106-1. FSP 106-2 is effective for the first interim or annual period beginning after June 15, 2004.

The guidance in FSP 106-2 applies only to the sponsor of a single-employer defined benefit postretirement health plan for which the employer has concluded that prescription drug benefits under the plan are actuarially equivalent and thus qualify for the subsidy under the Act and the expected subsidy will offset or reduce the employer’s share of the costs of postretirement prescription drug coverage provided by the plan. The Corporation determined that the prescription drug benefits under its plan were actuarially equivalent and elected to adopt the provisions of FSP 106-2 at September 1, 2004. As a result, the Corporation’s APBO was reduced by approximately $6 million, the effects of which are being accounted for prospectively beginning September 1, 2004. The effect of the adoption of FSP 106-2 on the periodic postretirement benefit cost for the three and nine months ended November 30, 2004 was a reduction of $0.2 million. The total reduction of periodic postretirement benefit cost for the year ending February 28, 2005 is expected to be $0.4 million.

The Corporation has a non-contributory profit-sharing plan with a contributory 401(k) provision covering most of its United States employees. The profit-sharing plan expense for the nine months ended November 30, 2004 was $2.5 million, compared to $3.4 million in the prior year period. The profit-sharing plan expense for the nine month periods are estimates as actual contributions to the profit-sharing plan are made after fiscal year end and are contingent upon final year end results. The Corporation matches a portion of 401(k) employee contributions contingent upon meeting specified annual operating results goals. The expenses recognized for the three and nine month periods ended November 30, 2004 were $1.2 million and $3.5 million ($1.3 million and $3.9 million for the three and nine month periods ended November 30, 2003), respectively.

Note 12 – Stock-Based Compensation

The Corporation has elected to continue to follow APB Opinion No. 25 and related Interpretations in accounting for its stock options granted to employees and directors. Because the exercise price of the Corporation’s stock options equals the market price of the underlying stock on the date of grant, no compensation expense is recognized. The Corporation has adopted the disclosure-only provisions of SFAS No. 123, “Accounting for Stock-Based Compensation,” as amended by SFAS No. 148, “Accounting for Stock-Based Compensation — Transition and Disclosure.” Refer to Note 3 for information regarding recent changes to the accounting guidance for stock-based compensation.

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The following illustrates the pro forma effect on net income and earnings per share if the Corporation had applied the fair value recognition provisions of SFAS 123:

(In thousands, except per share amounts)	Three Months Ended				Nine Months Ended
	November 30,				November 30,
	2004		2003		2004		2003
Net income as reported	$	62,761	$	46,362	$	73,909	$	56,372
Deduct: Stock-based compensation expense determined under fair value based method, net of tax		1,533		1,527		4,598		4,502
Pro forma net income	$	61,228	$	44,835	$	69,311	$	51,870
Earnings per share:
As reported	$	0.91	$	0.70	$	1.08	$	0.85
Pro forma		0.89		0.67		1.01		0.78
Earnings per share – assuming dilution:
As reported	$	0.78	$	0.60	$	0.97	$	0.78
Pro forma		0.77		0.58		0.92		0.72

During the first quarter of fiscal 2005, shares held in trust related to a deferred compensation plan were withdrawn from the trust. This transaction had no impact on the Corporation’s results of operations during the nine months ended November 30, 2004.

Note 13 – Business Segment Information

The Social Expression Products segment primarily designs, manufactures and sells greeting cards and other related products through various channels of distribution, with mass retailers as the primary channel, and is managed by geographic location.

The Corporation owns and operates 583 card and gift retail stores in the United States and Canada through its Retail Operations segment. The stores are primarily located in malls and strip shopping centers. The stores sell products purchased from the Social Expression Products segment and products purchased from other vendors.

AG Interactive is an electronic provider of social expression content through the Internet and wireless platforms.

Non-reportable operating segments include the design, manufacture and sale of display fixtures.

Segment results are reported and evaluated at consistent exchange rates between years to isolate the impact of foreign currency fluctuations. An exchange rate adjustment is included in the reconciliation of the segment results to the consolidated results; this adjustment represents the impact on the segment results of the difference between the constant exchange rates used for segment reporting and evaluation and the actual exchange rates for the periods presented.

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Centrally-incurred and managed costs are not allocated to the operating segments. The unallocated items include interest expense on centrally-incurred debt and domestic profit-sharing expense. In addition, the costs associated with corporate operations including the senior management, corporate finance, legal and human resource functions, among other costs, are included in the unallocated items.

	Three Months Ended						Nine Months Ended
	November 30,						November 30,
(In thousands)	2004			2003			2004			2003
Net Sales:
Social Expression Products	$	521,861		$	548,563		$	1,232,587		$	1,274,370
Intersegment items		(18,868	)		(23,083	)		(51,016	)		(63,364	)
Exchange rate adjustment		9,306			168			21,089			(5,797	)
Net		512,299			525,648			1,202,660			1,205,209
Retail Operations		46,908			56,448			146,470			166,910
Exchange rate adjustment		1,531			359			2,148			(570	)
Net		48,439			56,807			148,618			166,340
AG Interactive		16,239			8,826			38,643			25,773
Exchange rate adjustment		133			—			133			—
Net		16,372			8,826			38,776			25,773
Non-reportable segments		9,004			12,421			22,582			39,171
Unallocated items - net		51			52			(846	)		(951	)
Consolidated Total	$	586,165		$	603,754		$	1,411,790		$	1,435,542
Segment Earnings:
Social Expression Products	$	106,330		$	136,429		$	260,889		$	263,053
Intersegment items		(13,926	)		(15,846	)		(37,157	)		(44,905	)
Exchange rate adjustment		2,118			(226	)		3,675			(1,042	)
Net		94,522			120,357			227,407			217,106
Retail Operations		(6,549	)		(4,290	)		(22,069	)		(13,806	)
Exchange rate adjustment		74			(5	)		85			(35	)
Net		(6,475	)		(4,295	)		(21,984	)		(13,841	)
AG Interactive		1			1,249			(1,682	)		3,379
Exchange rate adjustment		(53	)		—			(53	)		—
Net		(52	)		1,249			(1,735	)		3,379
Non-reportable segments		(1,863	)		265			(10,912	)		(1,733	)
Unallocated items - net		(20,259	)		(44,256	)		(112,503	)		(118,011	)
Exchange rate adjustment		(59	)		17			(44	)		(70	)
Net		(20,318	)		(44,239	)		(112,547	)		(118,081	)
Consolidated Total	$	65,814		$	73,337		$	80,229		$	86,830

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During the second quarter of 2005, the AG Interactive segment acquired 100% of the equity interests of MIDIRingTones, LLC and K-MOBILE S.A. The financial results of these two acquisitions are included in the Corporation’s consolidated results from their respective dates of acquisition. The pro forma results of operations have not been presented because the effects of these acquisitions were not deemed material.

MIDIRingTones is a mobile entertainment company that creates, licenses and sells mobile content for cellular phones including polyphonic ringtones and color graphics. AG Interactive acquired the net assets of MIDIRingTones valued at approximately $1 million and recorded goodwill of approximately $3 million. The purchase agreement also provides for an “Earn-Out Payment,” a contingent payment based on MIDIRingTones’ operating results for calendar year 2005. No liability for this contingent payment is included in the Corporation’s condensed consolidated financial statements. The Earn-Out Payment to be paid to the selling stockholders, which is estimated to be $0 to $10 million, will be treated as additional purchase price and recorded as goodwill.

K-MOBILE is an established European mobile content provider. AG Interactive issued shares to acquire the net assets of K-MOBILE valued at approximately $2 million and recorded goodwill of approximately $17 million. As the K-MOBILE acquisition was a non-cash transaction, it is not reflected in the Condensed Consolidated Statement of Cash Flows. As a result of AG Interactive’s acquisition of K-MOBILE, the Corporation’s ownership interest in AG Interactive decreased from 92% to 83%.

Note 14 – Discontinued Operations

On July 30, 2004, the Corporation announced it had signed a letter of agreement to sell its Magnivision nonprescription reading glasses business to AAiFosterGrant, a unit of sunglasses maker Foster Grant. The sale reflects the Corporation’s strategy to focus its resources on business units closely related to its core social expression business. The sale closed in the third quarter of fiscal 2005 although an additional amount may be recorded during the next six months based on closing balance sheet adjustments. This adjustment is not expected to exceed ten percent of the cash proceeds. During the third quarter, the Corporation received cash proceeds of $77.0 million and recorded a gain of $35.5 million for the sale of Magnivision.

Magnivision meets the definition of a “component of an entity” and has been accounted for as a discontinued operation under SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” Accordingly, the Corporation’s condensed consolidated financial statements and related notes have been presented to reflect Magnivision as a discontinued operation for all periods presented. Magnivision was previously included within the Corporation’s “non-reportable segments.”

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The following summarizes the results of discontinued operations for the periods presented:

	Three Months Ended				Nine Months Ended
	November 30,				November 30,
(In thousands)	2004		2003		2004		2003
Net sales	$	5,307	$	12,871	$	30,965	$	39,030
Pretax income from operations		1,045		2,023		4,816		5,131
Gain on sale		35,525		—		35,525		—
		36,570		2,023		40,341		5,131
Income tax expense		14,153		752		15,612		1,986
Income from discontinued operations	$	22,417	$	1,271	$	24,729	$	3,145

“Assets of businesses held for sale” and “Liabilities of businesses held for sale” in the Condensed Consolidated Statement of Financial Position include the following:

(In thousands)	February 29, 2004		November 30, 2003
Assets of businesses held for sale:
Current assets	$	22,154	$	19,436
Other assets		7,318		7,630
Fixed assets		11,343		12,138
	$	40,815	$	39,204
Liabilities of businesses held for sale:
Current liabilities	$	3,722	$	3,587
Noncurrent liabilities		1,616		1,459
	$	5,338	$	5,046

Note 15 – Termination Benefits

During the quarter ended November 30, 2004, the Corporation recorded a severance accrual of $18.5 million related to the overhead reduction program and the Franklin, Tennessee plant closure. Virtually all of the associates receiving payments will separate from the Corporation during the quarter ending February 28, 2005. Approximately 70% of the severance will be paid during the next 15 months with the remaining payments extending out an additional 21 months.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

During the three months ended November 30, 2004, the Corporation recognized net income of $62.8 million compared to $46.4 million in the prior year quarter. During the quarter, the Corporation incurred certain charges and recognized certain gains that do not have comparative charges and gains in the prior year period. First, net sales were reduced approximately $13 million to recognize the implementation of a new merchandising strategy for seasonal space management. In the past, the Corporation sold everyday card products on an outright basis to fill seasonal space during off-season periods. Going forward, the Corporation will improve the overall productivity of its display space and merchandising workforce by supplying a combination of various card and non-card programs, all sold with the right of return. The estimated returns will be recorded in conjunction with the sales recognition, consistent with the Corporation’s policy on seasonal sales with full return privileges. The current period net sales reduction represents the estimated expense for product currently in stores that may now be returned to the Corporation.

Second, the Corporation continued its ongoing efforts to reduce overhead costs and drive efficiencies with the elimination of approximately 300 positions throughout the business. As a result of this action, the Corporation recorded a charge of $16.6 million, primarily for severance costs.

Third, to leverage the fixed costs of seasonal gift wrap production, the Corporation is consolidating seasonal gift wrap production into one plant and eliminating approximately 250 full-time equivalent positions with the closure of the Corporation’s Franklin, Tennessee manufacturing facility. A charge of $8.2 million was recorded for severance pay, asset disposals and other costs associated with this action. The Corporation expects an additional $7 million in charges during the fourth quarter, primarily for the cost to move equipment.

The Condensed Consolidated Statement of Operations reflects the above items as follows:

(In millions)
Net sales (reduction)	$	13.0
Material, labor and other production costs		9.2
Selling, distribution and marketing		6.3
Administrative and general		9.3
Total reduction to pre-tax income	$	37.8

Included in the above charges is $18.5 million of severance costs, of which approximately 70% will be paid during the next fifteen months with the remaining payments extending out an additional 21 months.

The prior year quarter included a charge in interest expense of $13.8 million for costs associated with the repurchase of $63.3 million of 11.75% senior subordinated notes.

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During the third quarter, the Corporation sold its Magnivision nonprescription reading glasses business and recorded a pre-tax gain of $35.5 million. This transaction reflects the Corporation’s strategy to focus on resources closely related to its core social expression business. Accordingly, the results of Magnivision are presented as a discontinued operation for all periods presented in the Corporation’s condensed consolidated financial statements. For further information on the discontinued operations, refer to the notes to the condensed consolidated financial statements No.14, Discontinued Operations.

Cash flow generation remained strong during the third quarter with operating and investing activities providing $58.6 million. During the nine months ended November 30, 2004, cash flow provided by operating and investing activities was $138.4 million compared to a usage of $59.1 million in the prior year nine month period.

Results of Operations

Three months ended November 30, 2004 and 2003

Net income was $62.8 million, or $0.78 per share, in the quarter compared to $46.4 million, or $0.60 per share, in the prior year third quarter (all per-share amounts assume dilution).

The Corporation’s results for the three months ended November 30, 2004 and 2003 are summarized below:

				% Net						% Net			Fav
(Dollars in thousands)	2004			Sales			2003			Sales			(Unfav)
Net sales	$	586,165			100.0	%	$	603,754			100.0	%		(2.9	%)
Material, labor and other production costs		292,737			50.0	%		290,363			48.1	%		(0.8	%)
Selling, distribution and marketing		173,735			29.6	%		167,362			27.7	%		(3.8	%)
Administrative and general		64,476			11.0	%		55,564			9.2	%		(16.0	%)
Interest expense		8,744			1.5	%		30,587			5.0	%		71.4	%
Other (income) - net		(19,341	)		(3.3	%)		(13,459	)		(2.2	%)		43.7	%
Total costs and expenses		520,351			88.8	%		530,417			87.8	%		1.9	%
Income from continuing operations before income tax expense		65,814			11.2	%		73,337			12.2	%		(10.3	%)
Income tax expense		25,470			4.3	%		28,246			4.7	%		9.8	%
Income from continuing operations		40,344			6.9	%		45,091			7.5	%		(10.5	%)
Income from discontinued operations, net of tax		22,417			3.8	%		1,271			0.2	%		1,663.7	%
Net income	$	62,761			10.7	%	$	46,362			7.7	%		35.4	%

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For the three months ended November 30, 2004, consolidated net sales were $586.2 million, down from $603.8 million in the prior year third quarter. This 2.9% decrease was the result of a 4.6% decline in net sales from ongoing operations partially offset by foreign currency exchange fluctuations, which improved sales comparisons by 1.7%. The 4.6% decrease was due to the charge related to the implementation of a new merchandising strategy for seasonal space management, the continued downward trend in the retail business due to fewer stores and reduced comparative store sales and reduced sales in the seasonal gift wrap business due to lower Christmas reorder rates. These decreases were partially offset by growth in the AG Interactive business, formerly AmericanGreetings.com, due to the two acquisitions in the second quarter.

Unit and Pricing Analysis

Unit and pricing comparatives for the three months ended November 30, 2004 and 2003 are summarized below:

							Increase (Decrease)
							From the Prior Year
	Everyday Cards						Seasonal Cards						Total Greeting Cards
	2004			2003			2004			2003			2004			2003
Unit volume		(9.1	%)		14.3	%		9.4	%		9.6	%		(4.0	%)		9.4	%
Selling prices		0.4	%		(1.0	%)		(6.6	%)		(11.1	%)		(1.6	%)		(2.3	%)
Overall Increase / (Decrease)		(8.7	%)		13.3	%		2.3	%		(1.5	%)		(5.5	%)		7.1	%

The significant decrease in everyday card unit volume in the current year quarter is primarily due to the reduction of net sales related to the implementation of a new merchandising strategy, which resulted in the return of everyday product to the Corporation as well as overlapping the initial load of a new major account in the prior year period. The variances in seasonal card unit volume and selling prices reflect the impact of general timing differences and varying customer delivery date requests. As noted in the Corporation’s second quarter Form 10-Q, the increase in unit volume and the decrease in selling prices reflect the reversal of the second quarter timing variances for seasonal product.

Expense Overview

Material, labor and other production costs for the three months ended November 30, 2004 were $292.7 million, an increase from $290.4 million for the same period in the prior year. As a percentage of net sales, these costs were 50.0% in the current period compared to 48.1% for the three months ended November 30, 2003. The 190 basis point increase from the prior year is due to an approximate 240 basis point increase in costs, primarily related to plant closing and severance costs as previously discussed as well as creative content costs. A favorable business mix partially offset these increased costs by approximately 50 basis points due primarily to lower sales in the gift wrap and fixtures businesses and higher sales in the AG Interactive business.

Selling, distribution and marketing costs for the three months ended November 30, 2004 were $173.7 million, increasing from the $167.4 million for the same period in the prior year. As a

21

percentage of net sales, these costs increased from 27.7% for the three months ended November 30, 2003 to 29.6% for the three months ended November 30, 2004. Of the 190 basis point increase, approximately 230 basis points related to severance costs, increased costs due to the AG Interactive acquisitions and higher licensing fees (as a result of higher licensing revenue). These increases were partially offset by an approximately 40 basis point improvement due to reduced costs in the retail segment stores arising from fewer stores and reduced product merchandising costs.

Administrative and general expenses were $64.5 million for the three months ended November 30, 2004, an increase from $55.6 million for the same period in the prior year. The $8.9 million increase is due to $8.8 million of severance costs primarily related to the overhead reduction program that eliminated approximately 300 positions.

Interest expense decreased by $21.9 million to $8.7 million for the three months ended November 30, 2004 from $30.6 million for the same period in the prior year. This decrease is due to the interest savings from the repurchase of $186.2 million of the Corporation’s 11.75% senior subordinated notes during the quarter ended May 31, 2004 and the repurchase of $63.6 million of 11.75% senior subordinated notes during the quarter ended November 30, 2003. In addition, interest expense in the prior year quarter included $13.8 million for a premium payment and the write-off of deferred financing costs associated with the $63.6 million repurchase.

Other income – net increased to $19.3 million for the three months ended November 30, 2004, from $13.5 million in the same period in the prior year. The $5.8 million improvement included $3.9 million of incremental royalty revenue and a $3.3 million increase in foreign exchange gains.

The effective tax rates for the three months ended November 30, 2004 and 2003 were 38.7% and 38.5%, respectively. The prior year amount reflected a reduction in the effective tax rate, from 39.7% in the first six months, as a result of the utilization of net operating loss carryforwards and the settlement of the Corporation’s corporate-owned life insurance (COLI) obligations in the second half of fiscal 2004.

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Nine months ended November 30, 2004 and 2003

Net income was $73.9 million, or $0.97 per share, in the nine months ended November 30, 2004, compared to net income of $56.4 million, or $0.78 per share, in the prior year period.

The Corporation’s results for the nine months ended November 30, 2004 and 2003 are summarized below:

				% Net						% Net			Fav
(Dollars in thousands)	2004			Sales			2003			Sales			(Unfav)
Net sales	$	1,411,790			100.0	%	$	1,435,542			100.0	%		(1.7	%)
Material, labor and other production costs		661,069			46.8	%		665,080			46.3	%		0.6	%
Selling, distribution and marketing		466,690			33.1	%		463,773			32.3	%		(0.6	%)
Administrative and general		186,118			13.2	%		174,511			12.2	%		(6.7	%)
Interest expense		70,601			5.0	%		70,924			5.0	%		0.5	%
Other (income) - net		(52,917	)		(3.8	%)		(25,576	)		(1.8	%)		106.9	%
Total costs and deductions		1,331,561			94.3	%		1,348,712			94.0	%		1.3	%
Income from continuing operations before income tax expense		80,229			5.7	%		86,830			6.0	%		(7.6	%)
Income tax expense		31,049			2.2	%		33,603			2.3	%		7.6	%
Income from continuing operations		49,180			3.5	%		53,227			3.7	%		(7.6	%)
Income from discontinued operations, net of tax		24,729			1.7	%		3,145			0.2	%		686.3	%
Net income	$	73,909			5.2	%	$	56,372			3.9	%		31.1	%

For the nine months ended November 30, 2004, consolidated net sales were $1,412 million, down from $1,436 million in the same period in the prior year. This 1.7% decrease was the result of a 3.7% decline in net sales from ongoing operations offset by foreign currency exchange fluctuations, which improved sales comparisons by 2.1%. The 3.7% decrease was due to the reduction in net sales related to the implementation of a new merchandising strategy for seasonal space management, the continued downward trend in the retail business due to fewer stores and reduced comparative store sales, reduced order sales in the seasonal gift wrap business due to lower Christmas order rates, the decline in the display fixtures business due to lower sales to unrelated customers and decreased sales of everyday cards primarily due to the overlap of the gains from a new major customer acquired in the prior year third quarter. Sales in the AG Interactive segment increased due to the two acquisitions in the second quarter.

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Unit and Pricing Analysis

Unit and pricing comparatives for the nine months ended November 30, 2004 and 2003 are summarized below:

							Increase (Decrease)
							From the Prior Year
	Everyday Cards						Seasonal Cards						Total Greeting Cards
	2004			2003			2004			2003			2004			2003
Unit volume		(3.5	%)		4.9	%		1.5	%		(4.4	%)		(2.3	%)		1.3	%
Selling prices		(0.6	%)		(0.9	%)		(1.6	%)		(3.1	%)		(0.7	%)		(1.5	%)
Overall Increase / (Decrease)		(4.1	%)		4.0	%		(0.1	%)		(7.5	%)		(3.0	%)		(0.2	%)

Expense Overview

Material, labor and other production costs for the nine months ended November 30, 2004 were $661.1 million, a decrease from $665.1 million for the same period in the prior year. As a percentage of net sales, these costs were 46.8% in the current period and 46.3% for the nine months ended November 30, 2003. Of the 50 basis point increase, approximately 120 basis points related to an increase in costs, resulting primarily from plant closing and severance costs as previously discussed as well as creative content costs. A favorable business mix partially offset these increased costs by approximately 70 basis points due primarily to lower sales in the gift wrap and fixtures businesses and higher sales in the AG Interactive business.

Selling, distribution and marketing costs for the nine months ended November 30, 2004 were $466.7 million, up from the $463.8 million for the same period in the prior year. As a percentage of net sales, these costs increased from 32.3% for the nine months ended November 30, 2003 to 33.1% for the nine months ended November 30, 2004. Of the 80 basis point increase, approximately 150 basis points related to severance costs, increased costs due to AG Interactive acquisitions and higher licensing fees (as a result of higher licensing revenue). These increases were partially offset by an approximately 70 basis point improvement due to reduced costs in the retail segment stores arising from fewer stores and reduced product merchandising costs.

Administrative and general expenses were $186.1 million for the nine months ended November 30, 2004, an increase from $174.5 million for the same period in the prior year. The $11.6 million increase is due to severance expense and reduced benefits related to the wind-down of the COLI program.

Interest expense of $70.6 million for the nine months ended November 30, 2004 was flat compared to $70.9 million for the same period in the prior year. The prior year expense included $4.6 million for the write-off of deferred financing fees and a premium payment associated with the extinguishment of the $118.0 million term loan during the quarter ended May 31, 2003, and $13.8 million for a premium payment and the write-off of deferred financing costs associated with the repurchase of $63.6 million of 11.75% senior subordinated notes during the quarter ended November 30, 2003. The current year expense includes $39.1

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million associated with the repurchase of $186.2 million of the Corporation’s 11.75% senior subordinated notes during the quarter ended May 31, 2004, offset by interest savings of $19.0 million related to the debt reductions.

Other income – net increased to $52.9 million for the nine months ended November 30, 2004, from $25.6 million in the same period in the prior year. The $27.3 million improvement included the receipt of a one-time payment of $10.0 million as a result of the Corporation substantially modifying certain agreements related to its licensing activities, increased royalty revenue of $9.5 million, a foreign exchange improvement of $5.3 million and a $3.1 million gain on the sale of an investment in the current year.

The effective tax rate for the nine months ended November 30, 2004 and 2003 was 38.7%.

Segment Information

The Corporation is organized and managed according to a number of factors, including product categories, geographic locations and channels of distribution. The Social Expression Products segment primarily designs, manufactures and sells greeting cards and other related products through various channels of distribution with mass retailers as the primary channel and is managed by geographic location. As permitted under Statement of Financial Accounting Standards No. 131, “Disclosures about Segments of an Enterprise and Related Information,” certain operating divisions have been aggregated into the Social Expression Products segment. These operating divisions have similar economic characteristics, products, production processes, types of customers and distribution methods. The Corporation owns and operates 583 card and gift retail stores in the United States and Canada through its Retail Operations segment. The stores are primarily located in malls and strip shopping centers. The stores sell products purchased from the Social Expression Products segment and products purchased from other vendors. AG Interactive is an electronic provider of social expression content through the Internet and wireless platforms.

The Corporation reviews segment results using consistent exchange rates between periods to eliminate the impact of foreign currency fluctuations.

Social Expression Products Segment

	Three Months Ended							Nine Months Ended
	November 30,							November 30,
(Dollars in thousands)	2004		2003		% Change			2004		2003		% Change
Net sales	$	502,993	$	525,480		(4.3	%)	$	1,181,571	$	1,211,006		(2.4	%)
Segment earnings		92,404		120,583		(23.4	%)		223,732		218,148		2.6	%

Net sales of the Social Expression Products segment excluding the impact of foreign exchange and intersegment items, for the three months ended November 30, 2004, decreased $22.5 million or 4.3% from the same period in the prior year. This decrease was due to the reduction in net sales related to the implementation of a new merchandising strategy for seasonal space management, reduced sales in the seasonal gift wrap business due to lower Christmas order rates, and lower sales in the international greeting card businesses. For the nine months ended November 30, 2004, net sales decreased $29.4

25

million or 2.4% from the prior year period. This decrease is primarily related to reduced order rates in the seasonal gift wrap business, decreased sales of everyday cards primarily due to the overlap of the gains from a new major customer acquired in the prior year third quarter and the reduction in net sales related to the implementation of a new merchandising strategy for seasonal space management.

Segment earnings excluding the impact of foreign exchange and intersegment items for the three months ended November 30, 2004, decreased $28.2 million compared to the prior year period. These results include $32.3 million for the impact of the implementation of the new merchandising strategy for seasonal space management, severance costs and plant closure costs, partially offset by lower field service costs related to the prior year integration of a new major customer and higher royalty income. Segment earnings during the nine months ended November 30, 2004, improved $5.6 million compared to the prior year period. This improvement is primarily the result of higher licensing income, lower bad debt expense, reduced costs of implementing supply chain improvements, and lower field service costs related to the prior year integration of a new major customer, substantially offset by the impact of the implementation of the new merchandising strategy for seasonal space management, severance costs and plant closure costs.

Retail Operations Segment

	Three Months Ended									Nine Months Ended
	November 30,									November 30,
(Dollars in thousands)	2004			2003			% Change			2004			2003			% Change
Net sales	$	46,908		$	56,448			(16.9	%)	$	146,470		$	166,910			(12.2	%)
Segment earnings		(6,549	)		(4,290	)		(52.7	%)		(22,069	)		(13,806	)		(59.9	%)

Net sales excluding the impact of foreign exchange in the Retail Operations segment decreased $9.5 million or 16.9% as same-store sales decreased 10.4% for the three months ended November 30, 2004 compared to the same period in the prior year. The average number of stores was approximately 5.0% less than in the prior year quarter. For the nine months ended November 30, 2004, net sales decreased $20.4 million or 12.2% as same-store sales decreased 8.8% compared to the same period in the prior year. This decrease was due to decreased sales across product categories, particularly gifting product as this category was de-emphasized. The average number of stores during the nine month period ended November 30, 2004, was approximately 4.8% less than in the prior year period.

Segment earnings excluding the impact of foreign exchange was a loss of $6.5 million in the three months ended November 30, 2004, compared to a loss of $4.3 million in the three months ended November 30, 2003. For the nine months ended November 30, 2004, segment earnings was a loss of $22.1 million, compared to a loss of $13.8 million in the prior year period. The increased loss is mainly due to lower net sales, partially offset by savings in operating expenses, mainly store rent and payroll, due to operating efficiencies and fewer stores. For the nine month period, markdowns to reduce inventory levels were, as a percent to sales, 1.7 percentage points higher than in the prior year period.

26

AG Interactive Segment

	Three Months Ended							Nine Months Ended
	November 30,							November 30,
(Dollars in thousands)	2004		2003		% Change			2004			2003		% Change
Net sales	$	16,239	$	8,826		84.0	%	$	38,643		$	25,773		49.9	%
Segment earnings		1		1,249		(99.9	%)		(1,682	)		3,379		(149.8	%)

Net sales of AG Interactive increased $7.4 million for the three months ended November 30, 2004, compared to the same period in the prior year. For the nine months ended November 30, 2004, net sales increased $12.9 million compared to the same period in the prior year. These substantial increases are the result of business acquisitions within the AG Mobile wireless division during the second quarter and higher subscription revenue.

Segment earnings decreased $1.2 million and $5.1 million for the three months and nine months ended November 30, 2004, respectively, compared to the prior year periods as the impact of sales increases were offset by acquisition costs, higher technology costs and the cost of new business initiatives.

Liquidity and Capital Resources

The seasonal nature of the Corporation’s business precludes a useful comparison of the current period and the fiscal year-end financial statements; therefore, a Condensed Consolidated Statement of Financial Position for November 30, 2003 has been included.

During the nine months ended November 30, 2004, the Corporation continued its efforts to enhance its financial position and as a result, generated cash from operating and investing activities of $138.4 million, including $77.0 million for the sale of its Magnivision business. With the early retirement of $186.2 million of debt, the Corporation improved its debt to total capital ratio from 34.4% to 25.9% during the nine month period. Total debt less cash at November 30, 2004 was $262.2 million, compared to $699.3 million at November 30, 2003.

Operating Activities

Operating activities provided $53.8 million in cash during the nine months ended November 30, 2004, compared to using $50.1 million of cash in the same period in the prior year.

Accounts receivable used $169.3 million of cash from February 29, 2004, compared to a use of $151.4 million in the same period in the prior year. The prior year used less cash due to improvements in the cash collection process during fiscal 2004. As a percentage of the prior twelve months’ net sales, net accounts receivable were 21.5% at November 30, 2004, compared to 23.1% at November 30, 2003, reflecting continued improved collections.

Inventory was a use of $19.9 million from February 29, 2004, compared to a use of $19.8 million in the same period in the prior year. Compared to the prior year, higher inventories in the greeting card business, due to lower sales, were offset by lower display fixture inventory in the current year related to the integration of a new major customer in the prior year and lower inventory levels in the Retail Operations segment due to less stores.

27

Other current assets were a source of $9.0 million in cash from February 29, 2004, compared to a source of $27.6 million in the same period in the prior year. The difference relates to the prior year tax refund of estimated payments and COLI benefits due to policy surrenders made in the prior year.

Deferred costs - net represents payments under agreements with retailers net of the related amortization of those payments. During the nine months ended November 30, 2004, amortization exceeded payments by $98.3 million; in the nine months ended November 30, 2003, amortization exceeded payments by $25.7 million. The current year amount reflects a lower level of payments for new or amended contracts as well as a lower level of payments due on existing contracts compared to the prior year nine months. See Note 9 to the condensed consolidated financial statements for further discussion of deferred costs related to customer agreements.

Accounts payable and other liabilities were a source of $21.8 million during the nine months ended November 30, 2004, compared to a use of $28.8 million in the prior year period. The increase from the prior year is due to increased trade payables, severance and income tax accruals and approximately $24 million of state income tax payments related to the Corporation’s liability associated with its COLI program in the prior year.

Investing Activities

Investing activities provided $84.6 million in cash during the nine months ended November 30, 2004, compared to using $9.1 million in the same period in the prior year. The increase of $93.7 million is primarily due to the proceeds received from the sale of the Magnivision business of $77.0 million and the sale of the marketable security investment of $19.1 million. Included in investing activities in the current year is a payment of $3.8 million related to the MIDIRingTones, LLC acquisition. As the K-MOBILE acquisition was a non-cash transaction, it is not reflected in the Condensed Consolidated Statement of Cash Flows.

Financing Activities

Financing activities used $202.9 million of cash during the nine months ended November 30, 2004, compared to $105.8 million in the same period in the prior year. The current year amount relates primarily to the repurchase of the Corporation’s 11.75% senior subordinated notes in the first quarter and the prior year amount relates primarily to the early retirement of the Corporation’s term loan in the first quarter and the repurchase of the Corporation’s 11.75% senior subordinated notes in the third quarter.

Stock activity also provided and used a significant amount of cash during the current year nine months. There was a high amount of employee option exercises due to a tranche of options nearing their expiration date. The receipt by the Corporation of the strike price on these options provided approximately $36 million during the nine months. In addition, in accordance with its articles of incorporation, the Corporation repurchased shares, primarily B shares, at a cost of approximately $18 million into its Treasury.

28

During the quarter ended November 30, 2004, the Corporation paid a quarterly dividend of $0.06 per common share, which totaled $4.1 million.

Credit Sources

Substantial credit sources are available to the Corporation. In total, the Corporation had available sources of approximately $400 million at November 30, 2004. This includes the Corporation’s $200 million senior secured revolving credit facility and its $200 million accounts receivable securitization financing. There were no outstanding balances under either of these arrangements at November 30, 2004.

On May 11, 2004, the Corporation amended and restated its senior secured revolving credit facility. This facility was originally entered into on August 9, 2001, as a $350 million facility and was amended on July 22, 2002, to a $320 million facility. With the repayment of the term loan on April 7, 2003, the facility had a borrowing capacity of $195 million. At that date, the Corporation recorded a charge of $4.6 million for the write-off of the related deferred financing costs and a premium payment associated with the repayment of the term loan. The amended and restated senior secured revolving credit facility consists of a $200 million revolving facility maturing on May 10, 2008. The amended facility is secured by the domestic assets of the Corporation and a 65% interest in the common stock of its foreign subsidiaries. The facility contains various restrictive covenants. Some of these restrictions require that the Corporation meet specified periodic financial ratios, minimum net worth, maximum leverage, and interest coverage. The credit facility places certain restrictions on the Corporation’s ability to incur additional indebtedness, to engage in acquisitions of other businesses, to repurchase its own capital stock and allows payments of shareholder dividends up to a maximum of $20 million per year. These covenants are less restrictive than the covenants previously in place.

The accounts receivable securitization financing agreement was amended on August 2, 2004, to extend the maturity date to August 1, 2007.

During the three months ended May 31, 2004, the Corporation commenced a cash tender offer for all of its outstanding 11.75% senior subordinated notes due July 15, 2008. As a result of this tender offer, a total of $186.2 million of these senior subordinated notes were repurchased and the Corporation recorded a charge of $39.1 million for the payment of the premium and other fees associated with the notes repurchased as well as for the write-off of related deferred financing costs. At November 30, 2004, approximately $10 million of these notes remained outstanding. As part of this transaction, substantially all restrictive covenants were eliminated from the remaining outstanding notes.

There were no material changes in the financial condition, liquidity or capital resources of the Corporation from February 29, 2004, the end of its preceding fiscal year, to November 30, 2004, the end of its latest fiscal quarter and the date of the most recent balance sheet included in this report, nor from November 30, 2003, the end of the corresponding fiscal quarter last year, to November 30, 2004, except for the changes discussed above and aside from normal seasonal fluctuations. The Corporation’s future operating cash flow and borrowing availability under existing credit facilities and its accounts receivable securitization financing program are expected to meet currently anticipated funding requirements.

29

Critical Accounting Policies

Please refer to the discussion of the Corporation’s Critical Accounting Policies as disclosed in the Corporation’s Form 10-K for the year ended February 29, 2004.

Prospective Information

The statements contained in this document that are not historical facts are forward-looking statements. Forward-looking statements are generally identified by words such as “believes,” “anticipates,” “expects,” “plans,” “should,” “estimates” and similar expressions. These forward-looking statements involve risks and uncertainties. Actual results may differ materially from those projected in the forward-looking statements. Factors that could cause actual results to differ materially from those stated or implied in the Corporation’s forward-looking statements, include but are not limited to: retail bankruptcies and consolidations, successful integration of acquisitions, successful transition of management, a weak retail environment, consumer acceptance of products as priced and marketed, the impact of technology on core product sales, competitive terms of sale offered to customers, successfully implementing supply chain improvements and achieving projected cost savings from those improvements and the Corporation’s ability to comply with its debt covenants. Risks pertaining specifically to the Corporation’s AG Interactive business segment include the viability of online advertising and subscriptions as revenue generators and the public’s acceptance of online greetings and other social expression products.

30

Item 3. Quantitative and Qualitative Disclosures About Market Risk

For further information, refer to the Corporation’s annual report on Form 10-K for the year ended February 29, 2004. There were no material changes in market risk, specifically interest rate and foreign currency exposure, for the Corporation from February 29, 2004, the end of its preceding fiscal year, to November 30, 2004, the end of its most recent fiscal quarter except for the repurchase of $186.2 million in 11.75% senior subordinated notes during the fiscal quarter ended May 31, 2004.

Item 4. Controls and Procedures

The Corporation maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Corporation’s reports under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms and that such information is accumulated and communicated to the Corporation’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

The Corporation carries out a variety of on-going procedures, under the supervision and with the participation of the Corporation’s management, including the Corporation’s Chief Executive Officer and Chief Financial Officer, to evaluate the effectiveness of the design and operation of the Corporation’s disclosure controls and procedures. Based on the foregoing, the Corporation’s Chief Executive Officer and Chief Financial Officer concluded that the Corporation’s disclosure controls and procedures were effective at a reasonable assurance level as of the end of the period covered by this report.

There has been no change in the Corporation’s internal controls over financial reporting during the Corporation’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Corporation’s internal controls over financial reporting.

31

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

The Corporation is involved in certain legal actions and claims arising in the ordinary course of business. The Corporation does not believe that any of the litigation in which it is currently engaged, either individually or in the aggregate, will have a material adverse effect on its consolidated financial condition or results of operations.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(a) Non-employee directors of the Corporation receive annual retainer fees together with fees for each Board or committee meeting attended. Pursuant to the 1995 Director Stock Plan, non-employee directors may make an election prior to the beginning of each fiscal year to receive the Corporation’s Class A and/or Class B common shares in lieu of all or a portion of the fees due to such Director as compensation for serving on the Corporation’s Board of Directors. For purposes of determining the number of shares to be issued in lieu of such fees, the shares are valued based on the closing price of the Class A common shares on the last trading day of the calendar quarter prior to the payment of such fees.

On September 3, 2004, the Corporation issued an aggregate of 253 Class A common shares and 2,796 Class B common shares from treasury in lieu of approximately $70,676 in cash fees due to six of the Corporation’s non-employee directors who previously elected to receive shares in lieu of cash fees. The shares were issued at a price of $23.18 per share, the closing price of the Class A common shares as of June 30, 2004. During the three year period ended November 30, 2004, the Corporation issued an aggregate of 1,815 Class A common shares and 31,271 Class B common shares from treasury in lieu of approximately $584,300 in cash fees due to those non-employee directors who previously elected to receive shares in lieu of cash fees.

There is no public market for the Class B common shares of the Corporation. Pursuant to the Corporation’s Amended Articles of Incorporation, each Class B common share is convertible at the option of the holder to one Class A common share; provided, however, that the holder must first tender the Class B common share to the Corporation pursuant to its right of first refusal to repurchase the share at the then market value for the Class A common shares. Class B common shares may only be transferred by the holder to the Corporation or certain permitted transferees, a group which generally includes members of the holder’s extended family, family trusts and certain charities.

The foregoing transactions were exempt from registration pursuant to Section 4(2) of the Securities Act of 1933 in that the transactions were not conducted for the purpose of raising capital and involved private placements of securities solely to directors of the Corporation who are accredited investors.

(b) Not applicable

32

(c) The following table provides information with respect to purchases of common stock of the Corporation made during the three months ended November 30, 2004, by American Greetings Corporation.

					Total
					Number of	Maximum
					Shares	Number of
					Purchased	Shares that
					as Part of	May Yet Be
				Average Price	Publicly	Purchased
	Total Number of			Paid per	Announced	Under the
Period	Shares Repurchased			Share	Plans	Plans
September 2004	Class B –	307,776	(1)	$25.32	—	—
October 2004	Class B –	4,500	(1)	$25.54	—	—
November 2004	Class B –	36,336	(1)	$27.28	—	—
Total	Class B –	348,612	(1)	$25.53	—	—

(1) All of the Class B common shares were repurchased by the Corporation for cash pursuant to its right of first refusal to repurchase Class B common shares set forth in the Corporation’s Amended Articles of Incorporation.

The Corporation’s senior secured revolving credit facility allows payments of shareholder dividends up to a maximum of $20 million per year.

Item 3. Defaults Upon Senior Securities

Not applicable

Item 4. Submission of Matters to a Vote of Security Holders

Not applicable

Item 5. Other Information

Not applicable

Item 6. Exhibits

     Exhibits required by Item 601 of Regulation S-K

(10) — Supplemental Executive Retirement Plan (As Amended and Restated Effective March 1, 2004)

(31) a — Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

(31) b — Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

(32) — Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

33

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 thereunto duly authorized.

AMERICAN GREETINGS CORPORATION
By:	/s/ Joseph B. Cipollone
	Joseph B. Cipollone
	Vice President Corporate Controller Chief Accounting Officer

January 7, 2005

(Signing on behalf of Registrant as a duly authorized officer of Registrant and signing as the principal accounting officer of Registrant.)

34

EX-10

                                                                      EXHIBIT 10

                         AMERICAN GREETINGS CORPORATION

                     SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

                (As Amended and Restated Effective March 1, 2004)



                                TABLE OF CONTENTS
                                                                                 
ARTICLE I     INTRODUCTION......................................................     1

ARTICLE II    DEFINITIONS.......................................................     2

ARTICLE III   PLAN PARTICIPATION................................................     7

ARTICLE IV    CALCULATION, FORM OF A PARTICIPANT'S ACCRUED BENEFIT..............     9

ARTICLE V     FORMS OF RETIREMENT; ELIGIBILITY CONDITIONS.......................    10

ARTICLE VI    DISTRIBUTION OF BENEFITS; LIMITATIONS.............................    13

ARTICLE VII   DEATH BENEFIT.....................................................    19

ARTICLE VIII  ADMINISTRATION; PLAN MODIFICATION.................................    21

ARTICLE IX    GENERAL PROVISIONS................................................    25



                                       -i-



                                    ARTICLE I

                                  INTRODUCTION

1.1      NAME OF PLAN. This Plan shall be known as the American Greetings
         Corporation Supplemental Executive Retirement Plan (as amended and
         restated effective March 1, 2004). It constitutes a full and complete
         amendment and restatement of, and continuation of, the American
         Greetings Corporation Supplemental Executive Retirement Plan, effective
         as of March 1, 1986.

1.2      PURPOSE. The purpose of the Plan is to provide any Executive designated
         to participate in the Plan with a retirement benefit that supplements
         those benefits provided under any other pension, retirement or
         profit-sharing plan maintained by American Greetings Corporation (the
         "Company"). The Plan is being maintained primarily for the purpose of
         providing deferred compensation for a select group of management or
         highly compensated Company employees on an unfunded basis, within the
         meaning of section 201(2) of the Employee Retirement Income Security
         Act, as amended ("ERISA").

1.3      RIGHTS OF FORMER EMPLOYEES. The terms of the Plan, as in effect
         immediately prior to this amendment and restatement, shall control and
         be used exclusively to determine the rights and duties of any Executive
         or former Executive who separated from employment by the Company and
         all Company subsidiaries and affiliates prior to the March 1, 2004
         effective date of this amendment and restatement.

                                     - 1 -



                                   ARTICLE II

                                   DEFINITIONS

         The following words and phrases, where used in the Plan, shall have the
following meanings, unless a different meaning is plainly required by the
context.

2.1      ACCRUED BENEFIT shall have the meaning set forth in Article IV hereof.

2.2      AFFILIATE means any limited liability company, general partnership,
         limited partnership, business trust, or other non-corporate
         organization with respect to which American Greetings Corporation
         directly or indirectly owns at least fifty percent (50%) of either the
         capital or profits interest therein, and directly or indirectly has the
         power and authority to select and appoint, and where applicable remove,
         such organization's managers, general partner(s) and/or trustees (as
         applicable).

2.3      ASSUMED BONUS PERCENTAGE shall mean, for any Fiscal Year, the assumed
         bonus award percentage to which an Executive is entitled under the
         corporate component of the Company's key management incentive plan,
         earned while a Participant, based on his job classification and
         assuming a one hundred percent (100%) of target bonus award is payable
         for said Fiscal Year. For this purpose, the schedule set forth by the
         Company's Board for the various levels of job classifications covered
         by the Company's key management incentive plan shall be used to
         calculate such awards.

2.4      BENEFICIARY shall mean any person or persons designated by the
         Executive to receive payments hereunder in the event of such
         Executive's death. If an Executive fails to designate one or more
         persons as his Beneficiary, or no such "beneficiary" designation is
         held to be lawful and in effect, any Plan benefit becoming due and
         payable to a Participant's Beneficiary hereunder shall be paid over to
         such Participant's estate.

2.5      BOARD shall mean the board of directors of the Company; provided, that
         if the Board by resolution designates a person or a committee to act
         specifically on matters relevant to this Plan, such person or committee
         shall act (and, have the power and authority to act) as the Board with
         respect to such matters.

                                     - 2 -



2.6      CHANGE IN CONTROL shall mean an event, shall mean the occurrence of any
         of the following events, individually or in combination:

         (a)      American Greetings Corporation, an Ohio corporation ("AGCorp")
                  is merged or consolidated or reorganized into or with another
                  corporation or other legal person, and as a result of such
                  merger, consolidation or reorganization less than a majority
                  of the combined voting power of the then-outstanding
                  securities of such corporation or person immediately after
                  such transition is held in the aggregate by the holders of
                  AGCorp's common shares immediately prior to such transaction;

         (b)      AGCorp sells or otherwise transfers all or substantially all
                  of its assets to any other corporation or other legal person,
                  and less than a majority of the combined voting power of the
                  then-outstanding securities of such corporation or person
                  immediately after such sale or transfer is held in the
                  aggregate by the holders of AGCorp's common shares immediately
                  prior to such sale or transfer;

         (c)      There is a report filed on Schedule 13D or Schedule 14D-1 (or
                  any successor schedule, form or report), each as promulgated
                  pursuant to the Securities Exchange Act of 1934 (the "Exchange
                  Act"), disclosing that any person (as the term "person" is
                  used in Section 13(d)(3) or Section 14(d)(2) of the Exchange
                  Act) has become the beneficial owner (as the term "beneficial
                  owner" is defined under Rule 13d-3 or any successor rule or
                  regulation promulgated under the Exchange Act) of securities
                  representing 20% or more of the voting power of AGCorp's
                  common shares;

         (d)      AGCorp files a report or proxy statement with the Securities
                  and Exchange Commission pursuant to the Exchange Act
                  disclosing in response to Form 8-K or Schedule 14A (or any
                  successor schedule, form or report or item therein) that a
                  change in control of AGCorp has or may have occurred or will
                  or may occur in the future pursuant to any then-existing
                  contract or transaction; or

         (e)      If during any period of two consecutive years, individuals who
                  at the beginning of any such period constitute the directors
                  of AGCorp cease for any reason to constitute at least a
                  majority thereof, unless the election, or the nomination for
                  election by AGCorp's shareholders, of each director of AGCorp
                  first elected during such period was approved by a vote of at
                  least two-thirds of the directors

                                     - 3 -



                  of AGCorp then still in office who were directors of AGCorp at
                  the beginning of any such period.

         Notwithstanding the foregoing provisions of Section 12c and (d) above,
         a "Change in Control" shall not be deemed to have occurred for purposes
         of this Plan (i) solely because (A) AGCorp; (B) a Subsidiary; (C) any
         AGCorp-sponsored employee stock ownership plan or other employee
         benefit plan of AGCorp; or (D) any family member of Jacob Sapirstein
         (including lineal descendants, spouses of such descendants, the lineal
         descendants of any such spouses, the spouse of any such spouses' lineal
         descendants and trusts (including voting trusts) either files or
         becomes obligated to file a report or proxy statement under or in
         responses to Schedule 13D, Schedule 14D-1, Form 8-K or Schedule 14A (or
         any successor schedule, form or report or item therein) under the
         Exchange Act, disclosing beneficial ownership by it of shares, whether
         in excess of 20% of the voting power of AGCorp's common shares or
         otherwise, or because AGCorp reports that a Change in Control of AGCorp
         has or may have occurred or will or may occur in the future by reason
         of such beneficial ownership or (ii) solely because of a Change in
         Control of any Subsidiary.

2.7      COMMITTEE shall mean the Compensation & Management Development
         Committee of the Board.

2.8      COMPANY shall mean AGCorp, together with any successor thereto that
         specifically assumes sponsorship of the Plan by written action taken by
         its board of directors (or comparable governing body). Such term also
         shall include any Subsidiary, or Affiliate (both, as herein defined)
         that adopts the Plan in a written instrument that (a) is signed by such
         Subsidiary or Affiliate (as applicable) and by AGCorp, (b) delegates to
         AGCorp all right, power and authority to act as the "Company" with
         respect to the Plan as the agent and attorney-in-fact for such
         Subsidiary or Affiliate (as applicable), and (c) obligates such
         Subsidiary or Affiliate (as applicable) to reimburse AGCorp for the
         direct and indirect cost of providing benefits to those employees of
         such Subsidiary or Affiliate who participate herein.

2.9      COMPENSATION shall mean, for any calendar year preceding the calendar
         year in which an Executive who is a Participant attains Normal
         Retirement Date (or Late Retirement Date,

                                     - 4 -



         where applicable), the annual base pay received by such Participant
         from the Company while a Participant. In the event an Executive who is
         also a Participant becomes disabled and is eligible for and receiving
         benefits under the Long Term Disability Plan, such Participant's
         participation in the Plan shall be deemed to continue and, for Plan
         purposes, the "Compensation" attributable to such Participant shall be
         deemed to continue until the close of the calendar year coincident with
         or next preceding the date such Participant no longer receives such
         disability income benefits.

2.10     EFFECTIVE DATE shall mean March 1, 2004. The effective date of the
         Plan, in effect prior to this amendment and restatement, was March 1,
         1986.

2.11     EXECUTIVE shall mean an employee of the Company, or of a Subsidiary, or
         of an Affiliate, who is either a named executive officer, a senior vice
         president, or a vice president, of such Company; provided, that such
         term shall specifically exclude any individual who is (or, is
         classified as) a non-resident alien of the United States during any
         period(s) such individual performs services outside of the United
         States.

2.12     FINAL AVERAGE COMPENSATION shall mean an amount, expressed in dollars
         and cents, determined by the sum of (a) and (b), where: (a) is the
         average of a Participant's two (2) calendar years of Compensation that
         provide the highest average, and (b) is the product derived from
         multiplying (i) that amount determined in part (a) hereof, by (ii) that
         average of such Participant's two (2) Fiscal Year Assumed Bonus
         Percentages which provide the highest average; provided, that for this
         purpose, if a Participant has only one Assumed Bonus Percentage, such
         Percentage will be considered to be the average.

2.13     FISCAL YEAR shall mean that period which begins on March 1 of each year
         and ends on the last day of February of the ensuing year.

2.14     LONG TERM DISABILITY PLAN shall mean the American Greetings Corporation
         Long Term Disability Plan, an employee welfare benefit plan sponsored
         and maintained by the Company to provide long-term disability income
         benefits to plan-covered employees.

2.15     PARTICIPANT shall mean any Executive who is, or becomes, eligible to
         participate in the Plan in accordance with the provisions of Sections
         3.1 or 3.2 hereof; provided, that such

                                     - 5 -



         Executive shall continue as a Participant hereunder only so long as
         such Executive remains eligible to participate in the Plan and has not
         had such participation terminated or suspended in accordance with
         Section 3.3 hereof. An Executive, or other individual, who was a
         Participant shall remain a Participant so long as such Executive or
         individual has a vested interest in the Plan, without regard to whether
         such Executive or individual is then employed by the Company, or a
         Subsidiary, or an Affiliate.

2.16     PLAN shall mean the American Greetings Corporation Supplemental
         Executive Retirement Plan, as amended and restated effective March 1,
         2004, as set forth in this instrument and as further amended from time
         to time.

2.17     PLAN ADMINISTRATOR shall mean that person identified in Section 8.1
         hereof.

2.18     PLAN BENEFIT shall mean the monthly benefit amount a Participant is
         eligible to receive pursuant to Article IV, calculated in accordance
         with Article V, and payable in the form of a monthly annuity for life
         (with 180 months, guaranteed) in accordance with (and limited by)
         Article VI and the remaining provisions of the Plan.

2.19     SERVICE shall mean that period of time an Executive is in the employ of
         the Company, commencing with such Executive's date of hire and ending
         with the date such Executive separates from Company employment, as
         further determined in accordance with the following rules:

         (a)      Service shall specifically exclude any period(s) when an
                  Executive is employed by a Subsidiary or an Affiliate, unless
                  such Subsidiary or Affiliate participates in the Plan as part
                  of the "Company" in accordance with Section 2.8 hereof, or the
                  Committee by written action specifically recognizes such
                  period(s) of service as Service for Plan purposes.

         (b)      Service shall specifically include any period(s) when an
                  Executive is on a medical, military, family or personal leave
                  of absence that either has been approved by the Company or is
                  required by law to be recognized as employment service for
                  seniority and benefit plan purposes.

                                     - 6 -



         (c)      Service shall specifically include any period(s) of time an
                  Executive (who is also a Plan Participant) is disabled and
                  receiving benefits under the Long Term Disability Plan, even
                  though no longer classified as a Company employee.

         (d)      Periods of employment by a predecessor-in-interest to the
                  Company or by a predecessor-in-interest to a Subsidiary or an
                  Affiliate, and any periods of employment by a Subsidiary or an
                  Affiliate during which such Subsidiary or Affiliate has not
                  adopted the Plan, shall be recognized as Service only where
                  (and, to the extent) recognized by the Board by written
                  action.

2.20     SUBSIDIARY shall mean any corporation at least eighty percent (80%) of
         whose equity securities (determined either by voting power or by
         interest in profits) are directly or indirectly owned by American
         Greetings Corporation.

         In this document, unless the context clearly requires otherwise, the
singular shall include the plural and the masculine gender shall include the
feminine.

                                     - 7 -



                                   ARTICLE III

                               PLAN PARTICIPATION

3.1      AUTOMATIC PARTICIPATION, AS OF THE EFFECTIVE DATE. Each Executive who
         was a Participant in the Plan on the day before the Effective Date of
         this amendment and restatement shall automatically continue as a
         Participant, as of the Effective Date.

3.2      PARTICIPATION AFTER THE EFFECTIVE DATE; NEW ENTRANTS. Any Executive who
         does not automatically become a Participant as of the Effective Date
         shall become a Participant on any date, subsequent to the Effective
         Date, that such Executive is designated as eligible to participate in a
         written action taken by the Board. Where a written Board action
         designates an Executive as eligible to participate in the Plan without
         also specifying a date for commencing such participation, the date such
         Board action was taken shall constitute the commencement date.

3.3      TERMINATION OR SUSPENSION OF PARTICIPATION; RENEWED PARTICIPATION. A
         Participant's continued participation in the Plan may be discontinued
         at any time by the Board by written action, in accordance with and
         subject to the following rules:

         (a)      In the event a Participant's participation herein is
                  discontinued, the terms of such discontinuation shall be set
                  forth in writing and a copy of such terms shall be provided to
                  such Participant, the Plan Administrator, and the Committee.

         (b)      Subject to the provisions of Article VI hereof, if at the time
                  a Participant discontinues participation hereunder such
                  Participant has a right to a Plan benefit based on the term of
                  the Plan then in effect, said right shall not be forfeitable
                  and such Participant shall be entitled to receive such Plan
                  benefit, based on and in accordance with the terms of the Plan
                  in effect at the time of such discontinuation.

         (c)      In the event a Participant whose Plan participation has been
                  discontinued is again designated for participation in the Plan
                  in accordance with Section 3.2 hereof, the Board by written
                  action may specify the terms and conditions under which such
                  Participant's Compensation and Service (and
                  previously-determined Plan benefit, if any) are to be taken
                  into account when determining such Participant's Plan

                                     - 8 -



                  rights hereunder. In the absence of any direction from the
                  Board, such Participant shall be considered a newly-eligible
                  Participant for all Plan purposes (other than with respect to
                  any Plan benefit such Participant already has qualified to
                  receive); provided, that such Participant's Service shall only
                  be used once.

                                     - 9 -



                                   ARTICLE IV

               CALCULATION, FORM OF PARTICIPANT'S ACCRUED BENEFIT

4.1      FORM OF ACCRUED BENEFIT. A Participant's accrued benefit hereunder
         shall consist of a monthly benefit, commencing on the first day of the
         calendar month coincident with or next following the date such
         Participant attains such Participant's Normal Retirement Date, and
         payable thereafter to such Participant as an annuity for life (with 180
         monthly payments, guaranteed) (the "Accrued Benefit").

4.2      CALCULATION OF ACCRUED BENEFIT. A Participant's Accrued Benefit, when
         payable in its normal form and commencing as provided in Section 4.1
         hereof, is equal in amount to one-twelfth (1/12th) of the product of
         (a) times (b), where:

         (a)      is equal to one percent (1%) of such Participant's Final
                  Average Compensation; and

         (b)      consists of such Participant's years of Service, calculated to
                  the nearest attained calendar month, but in any event subject
                  to a maximum of twenty (20) years of Service.

4.3      CERTAIN COMPENSATION, SERVICE TO BE DISREGARDED. Notwithstanding any
         contrary Plan provision, when calculating a Participant's Accrued
         Benefit there shall be disregarded (a) any Compensation paid to such
         Participant and any Service rendered by such Participant for any Fiscal
         Year (or, fraction thereof) in which such Participant is determined by
         the Committee (acting in its reasonable discretion, following
         consultation with legal counsel) to have violated Section 304 or
         Section 306 of the Sarbanes-Oxley Act (15 U.S.C. Sections 7243, 7244),
         or other applicable law (including, without limitation, any
         otherwise-applicable faithless servant doctrine), and (b) any
         Compensation received by such Participant that is attributable to any
         period prior to the date such Participant first commences participation
         hereunder as a Participant.

                                     - 10 -



                                    ARTICLE V

                   FORMS OF RETIREMENT; ELIGIBILITY CONDITIONS

5.1      NORMAL/LATE RETIREMENT BENEFIT. A Participant shall be entitled to
         receive a Normal Retirement benefit as of the first day of the calendar
         month coinciding with or next following the date such Participant
         attains age 65. If a Participant retires after attaining age 65, such
         Participant shall qualify to receive a Late Retirement benefit. The
         Normal/Late Plan Benefit payable to a Participant who retires on such
         Participant's Normal/Late Retirement Date shall consist of such
         Participant's Accrued Benefit, determined as of the later of such
         Normal Retirement Date or Late Retirement Date (as applicable).

5.2      EARLY RETIREMENT BENEFIT.

                  A Participant who has not attained age 65 but nevertheless has
         a vested interest in the Plan may retire on the first day of any
         calendar month coinciding with or next following:

         (a)      the date such Participant attains age 55 and completes ten
                  (10) years of Service (at least five (5) of which must be
                  completed while a Participant); or

         (b)      any date certain designated by the Board in writing, acting in
                  its sole discretion or by agreement with said Participant,
                  irrespective of said Participant's age and years of Service.

                  The Early Retirement Benefit payable to a Participant who
         retires under this Section 5.2 shall be in an amount equal to such
         Participant's Accrued Benefit, determined as of the date such Benefit
         commences payment hereunder, but reduced by the appropriate reduction
         factor specified in Schedule A (attached hereto). A Participant seeking
         to receive an Early Retirement Benefit shall otherwise apply for it, as
         provided in Section 6.1 hereof, but shall specify the date such
         Participant wishes to have such Benefit commence; provided, that such
         Benefit can commence no earlier than the latest to occur of: (a)
         (above); or (b) (above); or the first day of the calendar month next
         following the date the Plan Administrator receives such application.

                                     - 11 -



5.3      DEFERRED VESTED BENEFIT.

                  A Participant's right to an Accrued Benefit shall vest after
         completing ten (10) years of Service (at least five (5) of which is
         completed while a Participant), even though such Participant separates
         from Company employment prior to attaining age 55, but only if one (1)
         or more of the following events occur(s) after such Participant's 45th
         birthday:

         (a)      Such Participant's Company employment is terminated
                  unilaterally by the Company; or

         (b)      Such Participant is a member of a class of Company executives
                  (or where applicable, Subsidiary or Affiliate executives)
                  declared by written Board action to be ineligible to
                  participate further in the Plan; or

         (c)      Such Participant is demoted to non-Executive status by the
                  Company; or

         (d)      A Change in Control occurs.

                  Any Participant who vests hereunder (as provided above) but
         separates from Company employment prior to attaining age 55
         nevertheless shall be eligible to commence receiving a Plan Benefit
         either on such Participant's 65th birthday or on the first of any
         calendar month between such Participant's 55th birthday and his or her
         65th birthday (as such Participant may elect); however, the Accrued
         Benefit of a Participant who separates from Company employment prior to
         attaining age 55 shall be computed and frozen as of the date such
         Participant separates from Company employment.

                  The Plan Benefit actually payable to a Participant whose
         Accrued Benefit vests hereunder shall be determined in accordance with
         (i) Section 5.1 hereof, if such Participant commences receiving such
         Plan Benefit on or after attaining age 65; or (ii) Section 5.2 hereof,
         if such Participant commences receiving such Plan Benefit prior to
         attaining age 65 but on or after the date such Participant attains age
         55 (but based on the above determination of such Participant's Accrued
         Benefit).

                  A Participant wishing to commence receiving a Plan Benefit in
         any event shall be required to submit a written request at least sixty
         (60) days before the date on which such

                                     - 12 -



         Participant wishes to commence receiving such Benefit. Such Benefit
         shall commence the first day of the calendar month so selected.

5.4      DISABILITY RETIREMENT BENEFIT.

                  A Participant who becomes disabled and who is eligible for and
         receiving benefits under the Long Term Disability Plan may retire on
         the later of the first day of the month coinciding with or next
         following:

         (a)      The date such Participant attains age 65, or

         (b)      The date such Participant ceases to receive benefit payments
                  under the Long Term Disability Plan.

                  The Plan Benefit payable to a Participant who retires on a
         Disability Retirement Date shall consist of such Participant's Accrued
         Benefit, determined as of the date such Participant commenced receiving
         benefits under the Disability Retirement Plan. Notwithstanding any
         contrary Plan provision, a Participant who becomes disabled on or after
         attaining age 55 but ceases to be disabled before such Participant's
         Disability Plan Benefit would have otherwise commenced shall be
         eligible to receive an Early Retirement Benefit as provided in Section
         5.2 hereof.

                                     - 13 -



                                   ARTICLE VI

                      DISTRIBUTION OF BENEFITS; LIMITATIONS

6.1      COMMENCING PAYMENT. A Participant shall initiate the process of
         receiving a Plan Benefit by applying for it, in a writing dated and
         signed by such Participant and mailed or otherwise delivered to the
         Plan Administrator. Such application, when made, shall thereupon be
         treated as a claim for benefits made in accordance with Section 8.2
         hereof.

6.2      DELAY OF DISTRIBUTION TO PRESERVE ALLOWABLE DEDUCTION. In the event the
         Plan Administrator, after consultation with the Committee but otherwise
         acting in its sole and absolute discretion, determines that one (1) or
         more of the payments to be made to a Participant hereunder cannot be
         claimed by the Company as an allowable federal income tax deduction
         (whether on account of the limitations imposed by Section 162(m) or
         Section 280G of the Code, or otherwise), the Plan Administrator shall
         cause such payment(s) to be suspended and deferred, and paid as such
         time and in such manner so as to permit the Company to claim such
         payment(s) as an allowable deduction for federal income tax purposes.
         In the event any such payment is suspended or deferred hereunder to
         avoid the limitations imposed by Section 162(m) of the Code, and such
         period of suspension or deferment exceeds thirty-six (36) months,
         interest shall accrue on such payment at the rate of one percent (1%)
         per month, simple interest, for each month or fraction thereof; such
         interest shall accrue from the date of initial suspension or deferment
         and shall be paid with such payment, when made to or in respect of such
         Participant.

6.3      PROTECTION OF COMPANY INTERESTS. A Participant's right to receive a
         Plan Benefit hereunder is conditioned upon such Participant engaging in
         conduct (or where applicable, refraining from conduct) so as to
         protect, and not impair, the Company's interests while covered by and
         benefiting from the Plan. Each Participant accordingly shall observe
         and comply with the following rules, covenants and restrictions,
         commencing with the date such Participant first commences participation
         hereunder and ending with the second (2nd) anniversary of the date such
         Participant separates from employment with the Company and all
         Subsidiaries and Affiliates (the "Restricted Period"):

                                     - 14 -



         (a)      Disclosure of Confidential Information. A Participant shall
                  keep in strict confidence and not directly or indirectly make
                  known, divulge, reveal, furnish, make available or use (except
                  for use in the regular course of such Participant's duties on
                  behalf of the Company) any "Confidential Information," as
                  herein defined, and shall return to the Company any Company
                  property or documents and any other documents or property
                  containing or constituting Confidential Information in such
                  Participant's possession, custody or control as and when such
                  Participant separates from Company employment or ceases to
                  perform any personal services therefor. For this purpose, the
                  term "Confidential Information" shall mean that non-public
                  data and other information (regardless of the form such
                  Information takes) which the Company determines to be a
                  strategic asset of the Company (specifically including,
                  without limitation, customer and personnel lists, licensing
                  agreements, materials sources and costs, and delivery and
                  distribution sources, methods and costs) the disclosure or
                  release of which would financially harm or impair the Company.

         (b)      Solicitation of Workforce. A Participant will not directly or
                  indirectly solicit, encourage, or otherwise attempt to
                  influence, any employee or representative of the Company or
                  consultant to the Company, or of or to any Subsidiary or
                  Affiliate, to terminate his or her relationship, employment or
                  other association with the Company or such Subsidiary or
                  Affiliate (whether or not the purpose of such solicitation,
                  encouragement or attempt at influence is to become an
                  employee, representative or consultant of such Participant or
                  any organization employing, owned by or associated with such
                  Participant).

         (c)      Solicitation of Customers. A Participant will not directly or
                  indirectly, on his or her own behalf or on the behalf of any
                  other person, firm or entity, solicit or attempt to solicit,
                  or attempt to divert the patronage or business of, any current
                  customer of the Company, any customer that has engaged in
                  business with the Company during the Restricted Period, or any
                  prospective customer to whom (or, to which) the Company has
                  presented a proposal to provide goods or services during the
                  Restricted Period, or any party or entity related to any such
                  customer or

                                     - 15 -



                  prospective customer (including but not limited to any
                  employees or agents of any such customer or prospective
                  customer).

         (d)      Disparagement of Company, Officers and Directors. Other than
                  with the prior consent of the Company, a Participant will not
                  communicate any false, critical, disparaging or otherwise
                  negative comment(s), statement(s) or information of and
                  concerning the Company, or any of its directors, officers,
                  employees or shareholders, or which could reasonably be
                  perceived or construed as critical, disparaging or otherwise
                  negative, other than comments, statements and information made
                  and published to an individual who is (at the time of such
                  communication) then a Company director, officer, employee or
                  shareholder; provided, that this provision shall not preclude
                  a Participant from testifying under oath in a legal or
                  comparable administrative proceeding.

         (e)      Appropriation of Business Opportunities. A Participant will
                  promptly disclose and report to Company superiors (and where
                  applicable, the Board) any and all business opportunities
                  brought to such Participant (whether internal to the Company,
                  or from persons or parties not associated or affiliated with
                  the Company) or of which such Participant is made or becomes
                  aware, which directly or indirectly relate to or have any
                  commercial, artistic, or conceptual connection to any of the
                  Company's current or contemplated businesses (as discussed or
                  described in any of the Company's strategic or business
                  plans).

         (f)      Sanctioned Personal Conduct. A Participant will refrain from
                  committing, or attempting to commit, any felony; and refrain
                  from taking any other action or engaging in any other conduct
                  that results in the forfeiture of property or a property
                  interest (regardless whether imposed upon such Participant, or
                  the Company, or both).

         In the event the Committee, in its sole and absolute discretion,
         determines that a Participant has violated one (1) or more of the
         covenants and restrictions set forth in this Section 6.3, then except
         as provided in Section 6.6 herein, such Participant shall immediately
         forfeit any and all right to any Plan Benefit for which such
         Participant

                                     - 16 -



         otherwise would qualify hereunder; provided, that no Participant shall
         forfeit a Plan Benefit hereunder, or any part thereof, on account of
         having engaged in (or, agreed to engage in) conduct protected by
         Section 806 of the Sarbanes-Oxley Act (18 U.S.C. Section 1541A, et
         seq.) and related rulings and regulations.

6.4      POST-EMPLOYMENT PROHIBITIONS. In addition to the restrictions set forth
         in Sections 6.3 hereof and the obligations imposed under Section 6.5
         hereof, a Participant's right to receive a Plan Benefit hereunder is
         conditioned upon such Participant refraining from any of the following
         conduct, following the termination of such Participant's employment by
         the Company (and all Subsidiaries and Affiliates) and for period of ten
         (10) years thereafter:

         (a)      Acquires five percent (5%) or more of the voting stock in a
                  corporation (or a comparable capital and profits interest in
                  an organization that is not a corporation) that competes with
                  the Company, or, without the written consent of the Company,
                  provides personal services to such corporation or other
                  organization as a director, officer, employee, consultant,
                  advisor, agent, member, partner or owner thereof; provided,
                  that for purposes of this provision, a corporation or other
                  organization will be considered to "compete" with the Company
                  if, at the time of such Participant's retirement or separation
                  from Company employment and as determined by the Committee,
                  such corporation or other organization is substantially
                  engaged in any one (1) or more of the production,
                  merchandising, marketing, e-commerce or other business
                  activities in which the Company is then engaged; and

         (b)      Fails or refuses to provide personal services, as a
                  compensated consultant to the Company upon the Company's
                  reasonable written request; and

         (c)      Commences, or threatens to commence, an action seeking
                  recovery of a Plan Benefit that has been completely or
                  partially denied hereunder or to enforce the terms of the
                  Plan, without first signing a binding confidentiality and
                  nondisclosure agreement that commits such Participant to not
                  disclose, publish or otherwise

                                     - 17 -



                  reveal (other than pursuant to court order, or under oath) any
                  financial, business or personnel information of and regarding
                  the Company, or any Subsidiary or Affiliate thereof, or any of
                  their respective directors, officers, agents and employees, or
                  the fact of any dispute involving such Participant's claim to
                  a Plan Benefit.

         In the event the Committee, in its sole and absolute discretion,
         determines that the Participant has violated any or all of the above
         conditions, then except as specifically provided in Section 6.6 hereof,
         the Company shall be relieved of any and all obligation to pay, or
         continue payment of, any Plan Benefits to or on behalf of such
         Participant.

6.5      OWNERSHIP OF INTELLECTUAL PROPERTY; ASSIGNMENT OF CERTAIN RIGHTS. So
         long as an Executive remains a Participant in the Plan and remains
         employed by the Company or a Subsidiary or Affiliate thereof, such
         Participant shall assign and transfer to the Company (or such
         Subsidiary or Affiliate, where applicable law so requires or permits)
         any and all discoveries, inventions and improvements, whether or not
         patentable, which such Participant at any time during such
         Participant's employment by the Company has made or has conceived, or
         may make, conceive, acquire or suggest, whether solely or jointly with
         others, and which (i) relates to any subject matter within the field in
         which such Participant provided personal services to the Company or
         such Subsidiary or Affiliate, and involved the use of resources
         belonging to the Company (or Subsidiary or Affiliate, as applicable).
         Such Participant also shall promptly disclose to the Company (or such
         Subsidiary or Affiliate, where applicable) any and all such
         discoveries, inventions and improvements; and, without charge to the
         Company (or such Subsidiary or Affiliate) but at its expense, shall
         execute, acknowledge and deliver all documents and information
         (including applications for patents) necessary to obtain patents for
         such inventions in any and all countries, and to vest title thereto in
         the Company (or such Subsidiary or Affiliate).

         In the event a Participant is determined by the Committee, in its sole
         and absolute discretion, to have violated any of the above conditions,
         then except as specifically provided in Section 6.6 hereof, the Company
         shall be relieved of any and all obligation to

                                     - 18 -



         pay, or continue payment of, any Plan Benefits to or on behalf of such
         Participant.

6.6      CONSTRUING FORFEITURE PROVISIONS; DISCRETION TO IMPOSE LESSER SANCTION.
         The Committee, acting in its sole and absolute discretion (but
         otherwise in accordance with the provisions of this Section 6.6), shall
         determine whether (and, to what extent) a Participant has violated any
         or all of the provisions of Section 6.3, Section 6.4 and/or Section 6.5
         hereof, and if so, whether such conduct warrants imposition of a
         limited monetary sanction, equal in amount to the lesser of (a)
         one-half (1/2) of the present value of the Participant's Plan Benefit
         (determined as of the date of the violation(s)), or (b) one hundred
         thousand dollars ($100,000), as a set off against the Plan Benefit
         otherwise payable and in lieu of the complete forfeiture of such
         Participant's interest (as otherwise prescribed in Sections 6.3, 6.4
         and 6.5 herein, as applicable). Notwithstanding the generality of the
         preceding sentence, the Committee shall be entitled to impose the
         limited monetary sanction described herein only if the Committee,
         acting in consultation with counsel, determines that the financial
         impact on the Company from such violation(s) can be expected to be less
         than two hundred fifty thousand dollars ($250,000) in the aggregate.

                                     - 19 -



                                   ARTICLE VII

                                  DEATH BENEFIT

7.1      ELIGIBILITY FOR DEATH BENEFIT. A death benefit shall be paid to the
         Beneficiary of any Participant who dies under the following
         circumstances:

         (a)      A Participant then eligible to elect to retire and receive an
                  Early or Normal/Late Retirement Benefit (including a
                  Participant receiving benefits under the Long Term Disability
                  Plan who had attained age 55 on or prior to the date of his or
                  her disability); or

         (b)      A Participant who has retired with an Early Retirement Benefit
                  but has not yet commenced receiving a Plan Benefit; or

         (c)      A former Executive with a vested interest in the Plan
                  (determined in accordance with Section 5.3 hereof), who dies
                  on or after attaining age 55; or

         (d)      A Participant who has retired and commenced receiving a Plan
                  Benefit, but dies before a total of one hundred eighty (180)
                  monthly payments have been made.

                  Where a Participant dies before payment of such Participant's
         Plan Benefit has commenced, payment of a death benefit (as prescribed
         in this Section) shall commence as of the first day of the calendar
         month coincident with or next following the date such Participant dies;
         provided, that if such Participant dies before attaining age 55,
         payment of such death benefit shall commence as of the first day of the
         calendar month coincident with or next following the date such
         Participant would have attained age 55 (had such Participant survived
         until their 55th birthday).

7.2      AMOUNT OF DEATH BENEFIT. The death benefit payable to the Beneficiary
         of a deceased Participant shall consist of one hundred eighty (180)
         monthly payments, commencing with the first day of the calendar month
         next following the date application is made for a death benefit
         hereunder, less any payments made while such deceased Participant was
         still alive (per Section 7.1(d), above). For death benefits not payable
         under the circumstances described in Section 7.1(d) hereof, the monthly
         amount payable shall be

                                     - 20 -



         calculated as of the date payment of such death benefit commences, as
         if the deceased Participant had retired (or, commenced receiving his
         Plan Benefit) on such date and had then died, based on whichever
         benefit described in Article V would have then applied.

7.3      DISCRETION TO ACCELERATE. The Plan Administrator, after consulting with
         the Committee but otherwise acting in its sole and absolute discretion,
         may accelerate and pay any Death Benefit becoming payable hereunder, in
         a single lump sum representing the present value of such Death Benefit,
         less applicable withholding. When determining the present value of a
         Participant's Death benefit for this purpose, the Plan Administrator
         shall use the interest rate in effect for United States Treasury
         Department debt securities having a maturity of ten (10) years, based
         on the auction of Treasury securities held on the date coincident with
         or next preceding the date of such Participant's death.

                                     - 21 -



                                  ARTICLE VIII

                        ADMINISTRATION; PLAN MODIFICATION

8.1      PLAN ADMINISTRATOR.

         (a)      The Company's Senior Vice President - Human Resources shall
                  act as the Plan Administrator; provided, that if no individual
                  holds such position within the Company, or in the absence of
                  such a position within the Company, such other Company officer
                  as the Committee shall in writing direct.

         (b)      The Plan Administrator shall be responsible for the Plan's
                  general administration and for carrying out the provisions
                  hereof. The Plan Administrator shall have all needed
                  discretionary power, authority and control to carry out the
                  Plan's provisions, including the power and authority to (i)
                  determine all questions relating to whether an individual
                  qualifies as a Participant hereunder, and whether any person
                  found to be a Participant or a Beneficiary hereunder qualifies
                  for or is otherwise entitled to a benefit hereunder
                  (including, without limitation, deciding any and all questions
                  pertaining to claims for benefits made in accordance with
                  Section 8.2 hereof), (ii) resolve any and all questions
                  arising under the Plan, including any questions of
                  construction, and (iii) take such further action as the Plan
                  Administrator deems advisable in the administration of the
                  Plan. Except as specifically provided in Section 8.2 hereof
                  (relating to the appeal of adverse benefit determinations),
                  decisions by the Plan Administrator, made in good faith, shall
                  be final, conclusive and binding upon all parties.

         (c)      In the event the Plan Administrator qualifies as a Participant
                  hereunder, the Plan Administrator shall not make or
                  participate in any decision affecting the Administrator as a
                  Participant; rather, the Committee shall make all
                  determinations with regard to such Participant, as though the
                  Committee were the Plan Administrator, and any appeal or the
                  Committee's decisions shall be reviewed (if at all) by the
                  Board.

                                     - 22 -



         (d)      The Plan Administrator from time to time may allocate or
                  delegate to any other persons or organizations any or all of
                  its rights, powers, duties and responsibilities with respect
                  to the operation and administration of the Plan. Any such
                  allocation or delegation shall be made in writing and shall be
                  terminable upon such notice as the Plan Administrator deems
                  reasonable and proper under the circumstances.

8.2      CLAIMS PROCEDURES. Any application for benefits made under the Plan
         (whether by or on behalf of a Participant or by a Beneficiary) shall
         strictly comply with the following procedures:

         (a)      Making A Claim. Any application for benefits made by a
                  claimant shall be made by sending a letter to the Plan
                  Administrator by first-class mail, identifying the benefit(s)
                  being sought, the terms of the Plan that entitle the claimant
                  to apply for such benefit(s), and such other information as
                  may be reasonably needed to confirm the identity of the
                  claimant and such claimant's eligibility for said benefit.
                  Within ninety (90) days following receipt, the Plan
                  Administrator shall respond to such application letter either
                  (i) by complying with the terms set forth in the application,
                  in their entirety, or (ii) by requesting a sixty (60)-day
                  extension to further consider such application, or (iii) by
                  sending a letter denying some or all of the application, in
                  the manner described in subparagraph (b) hereof. Any claimant
                  whose application has been wholly or partly denied, or
                  believes that such application has been wholly or partly
                  denied, may file an appeal in the manner described in
                  subparagraph (c) hereof.

         (b)      Denying A Claim. Unless an application for benefits is allowed
                  in total by the Plan Administrator, the Plan Administrator
                  shall, within ninety (90) days after such claim is filed (plus
                  an additional period of sixty (60) days, if required for due
                  consideration, so long as notice of such extension is provided
                  within the initial ninety (90)-day period), provide a letter
                  to the claimant, by first class mail, totally or partially
                  denying such application. Such notice shall be written in a
                  manner calculated to be understood by the claimant and shall
                  include (i) the specific reasons for denying the application,
                  (ii) specific reference to the Plan provisions

                                     - 23 -



                  upon which the denial of the application is based, (iii) a
                  description of any additional materials or information needed
                  to perfect the application and an explanation why such
                  material or information is necessary, and (iv) an explanation
                  of the review procedure specified in subparagraph (c) hereof.
                  A claimant who does not receive any such notice from the Plan
                  Administrator within one hundred (100) days after post-marking
                  such application letter is entitled to conclude that such
                  application has been denied.

         (c)      Appeals. Within sixty (60) days after a claimant's application
                  is denied, such claimant may appeal such denial by filing with
                  the Committee (as a whole) a written request for review of
                  that denial. In the event of such an appeal, such claimant
                  shall be entitled to submit written comments, documents,
                  records and other information pertinent to such claimant's
                  claim(s), and have a reasonable opportunity to examine (free
                  of charge) all documents, records and other information relied
                  upon by the Plan Administrator when considering such claim(s).
                  If a claimant files an appeal within such sixty (60)-day
                  period, the Committee shall conduct a full and fair review of
                  such appeal and mail or deliver to such claimant a written
                  decision on the matter, based on the facts and the Plan's
                  pertinent provisions within sixty (60) days after receiving
                  the request for review (unless special circumstances require
                  an extension of up to sixty (60) additional days, in which
                  case the Committee shall provide written notice of such
                  extension prior to the commencement of such extension). Any
                  adverse decision of an appeal shall be written in a manner
                  calculated to be understood by the claimant, shall state the
                  specific reasons for the decision and the specific Plan
                  provisions on which the decision is based and shall, to the
                  extent permitted by law, be final and binding on all
                  interested persons. During any such review, an appealing
                  claimant shall be given the opportunity to review those files
                  and documents pertinent such claimant's application, and be
                  entitled to submit comments and argument in writing. If a
                  decision on review is not furnished within such sixty (60) day
                  or such one hundred-twenty (120)-day period, as the case may
                  be, such claimant is entitled to conclude that the decision by
                  the Plan Administrator has been upheld by the Committee,
                  following its review.

                                     - 24 -



8.3      INDEMNIFICATION. The Company shall defend, indemnify and hold harmless
         the Board and its constituent members, and the Committee and its
         constituent members, and the Plan Administrator (and its delegatee(s),
         if any) from and against any and all liabilities, claims, demands,
         judgments, tax liens, settlement payments, losses, costs, damages, and
         expenses whatsoever (including reasonable attorneys', consultants' and
         other professional fees and disbursements of every kind, nature and
         description) that such indemnified party may sustain, suffer, or incur
         in connection with, or that may result from, the administration of the
         Plan (including participation in tax liens and levies, bankruptcy
         proceedings, garnishment actions, and foreclosures and other
         creditor-initiated proceedings), so long as such liability, claim,
         demand, judgment, settlement expense, loss, cost, damage or expense
         does not involve bad faith or gross neglect of duty on the part of the
         indemnified party. The Company may, but shall not be required to,
         provide such indemnification through the purchase of fiduciary or
         comparable errors and omissions insurance.

8.4      TERMINATION, SUSPENSION OR AMENDMENT OF THE PLAN. The Board may, in its
         sole discretion, amend, suspend, modify, discontinue or terminate this
         Plan at any time. No such amendment, suspension, modification,
         discontinuation, or amendment shall adversely affect:

         (a)      The benefits or rights thereto of any Participant that
                  retired, whether or not such Participant has commenced to
                  receive a Plan Benefit; or

         (b)      The right of any Participant to receive the amount, on an
                  immediate or deferred basis, computed under Article V to which
                  such Participant would be entitled under this Plan prior to
                  its suspension, termination or amendment taking into account
                  such person's age, Service and Final Average Compensation as
                  of the date of such termination, suspension or amendment:

         provided, that subsections (a) and (b) above shall not apply to any
         such termination, suspension or amendment if a change has occurred in
         the law (or in its interpretation) which would adversely affect the
         Company or such Participant if this Plan were to remain in effect and
         unamended in its form immediately prior to such occurrence.

                                     - 25 -



                                   ARTICLE IX

                               GENERAL PROVISIONS

9.1      PLAN IS UNFUNDED; COMPANY HAS NO PREFUNDING OBLIGATION. All interests
         in the Plan are unfunded. Neither the Company nor any Subsidiary or
         Affiliate has any obligation to establish any special or separate fund,
         or segregate any of its assets in order to assure the payment of any
         amounts due or becoming due and payable under the Plan. However, to
         provide for the discharge of its obligations under the Plan, the
         Company in its sole discretion may settle and establish a trust or
         other fund in its name, or acquire property or contract rights in its
         name. The right of a Participant or a Beneficiary to receive a Plan
         distribution hereunder shall constitute an unsecured claim against the
         Company's general assets, and no Participant or Beneficiary shall have
         any right in or against any specific Company assets.

9.2      EXPENSES. All costs and expenses incurred in the administration of this
         Plan shall be paid by the Company, except as specifically provided in
         Section 9.3 hereof.

9.3      NON-ALIENABILITY OF PLAN INTERESTS.

         (a)      In General. Except as specifically provided in this Section
                  9.3, no Participant or Beneficiary shall have any right,
                  directly or indirectly, to alienate, assign, anticipate or
                  encumber any Plan interest or amount that may be payable
                  hereunder, and no amount or Plan interest shall be subject to
                  voluntary or involuntary alienation, assignment, encumbrance
                  or garnishment, whether by process of law, in equity, or
                  otherwise. Any such attempted alienation, assignment,
                  encumbrance, or garnishment shall be null and void and of no
                  effect. In the event any attempt by a Participant or
                  Beneficiary is made to alienate, pledge or charge any such
                  interest of any such benefit for any debt, liabilities in tort
                  or contract, or otherwise, contrary to the prohibitions of
                  this Section, the Plan Administrator in its discretion may
                  suspend or forfeit the interest of such person and during the
                  period of such suspension, or in the case of forfeiture, the
                  Plan Administrator shall hold such interest for the benefit
                  of, or shall make the benefit payments to which such
                  Participant would otherwise be entitled to, to the

                                     - 26 -



                  Beneficiary or to some member of the Participant's or
                  Beneficiary's family, acting in its sole and exclusive
                  discretion.

         (b)      Domestic Relations Orders. Notwithstanding the provisions of
                  subsection (a) hereof, a Participant's Plan benefit shall be
                  subject to division and partition in accordance with the terms
                  of a domestic relations order satisfying the requirements of a
                  "qualified domestic relations order" ("QDRO"), as defined in
                  Section 414(p) of the Code and related regulations; provided,
                  that (i) a separate benefit shall be recognized and maintained
                  for any spouse or former spouse determined to have an interest
                  in the Plan as a result of a QDRO; and (ii) all costs and
                  expenses incurred by the Company or the Plan Administrator in
                  connection with such QDRO shall be charged against such
                  Participant's Plan benefit, as an offset in accordance with
                  the provisions of subsection (c) hereof, prior to effecting
                  any such division or partition.

         (c)      Set Off Rights. Notwithstanding the generality of the
                  foregoing, the Company shall have the unrestricted right to
                  set off against or recover out of any payments or benefits
                  becoming payable to or for the benefit of a Participant, at
                  the time such payments or benefits otherwise become payable
                  hereunder, any and all amounts owed to the Company, or any
                  Subsidiary or Affiliate, by such Participant. Any and all
                  amounts that the Company recovers or withholds as a set off
                  hereunder, which are attributable to amounts owed (or, claimed
                  to be owed) to a Subsidiary or an Affiliate, shall be received
                  and held by the Company as agent for such Subsidiary or
                  Affiliate (as applicable).

9.4      NO IMPLIED RIGHTS. No Participant or any other person shall have any
         legal or equitable right or interest in the Plan not expressly provided
         for hereunder.

9.5      NO CONTRACT OF EMPLOYMENT. The Plan does not constitute a contract of
         employment, nor is it evidence of the existence of any contract of
         employment, or any contractual or other right to continued employment,
         between an individual and the Company (or where applicable, a
         Subsidiary or Affiliate). In addition, the Plan (including specifically
         and without limitation, any participation agreement that an eligible
         Executive signs when

                                     - 27 -



         commencing participation) shall not be held to have created, or
         evidenced, any right on the part of any such Executive (whether or not
         then a Participant) to be employed, or to continue to be employed, by
         the Company or by any Affiliate or Subsidiary thereof. Rather, the
         Company (or where relevant, the actual employer of any individual,
         whether or not then an Executive) has the right to terminate the
         employment or personal services of such individual (whether or not then
         or at any time an Executive, and whether or not then a Participant) at
         any time, and for any reason or no reason, in the absence of a written
         agreement expressly providing to the contrary.

9.6      GOVERNING LAW. The provisions of this Plan shall be interpreted and
         construed in accordance with the laws of the State of Ohio without
         regard to conflicts of laws, but only to the extent not preempted by
         relevant federal law.

9.7      TAX WITHHOLDING. Where and to the extent the accrual of Plan benefits
         by or for a Participant, and/or the payment and distribution of Plan
         rights or interests to a Participant or Beneficiary, causes a federal,
         state or local tax withholding obligation to be imposed upon the
         Company or the Plan Administrator, or some other party (including
         without limitation, a participating Subsidiary or Affiliate), the
         Company (or such other party) shall have the right to withhold such
         amounts from any Plan benefit(s) due or becoming due and payable to
         such Participant or Beneficiary, and to the extent not unlawful, from
         any regular remuneration paid by the Company to a Participant.

9.8      SEVERABILITY. In the event that any one or more of the Plan provisions
         is held to be invalid, illegal, or unenforceable, such invalidity,
         illegality or unenforceability shall not affect any other Plan
         provision, and the Plan thereafter shall be construed as if such
         invalid, illegal, or unenforceable provisions had never been contained
         herein. In such event, the Committee will designate and substitute a
         lawful provision that most nearly accomplishes the Company's intent.

9.9      NO TAX GUARANTEES. While the Plan is designed to provide deferred
         compensation to Executives who qualify as Participants hereunder, the
         Company makes no representation, warranty or guarantee of any federal,
         state or local tax consequences of participation in the Plan to any
         Participant or designated Beneficiary.

                                     - 28 -



         IN WITNESS WHEREOF, the undersigned, a duly elected officer of American
Greetings Corporation, has executed his Plan as of the first (1st) day of March,
2004, by the authority and at the direction of the Board of Directors of
American Greetings Corporation.

                                           /s/ PAMELA L. LINTON
                                     -------------------------------------------
                                     Name PAMELA L. LINTON

                                     Title SENIOR VICE PRESIDENT-HUMAN RESOURCES

                                     - 29 -



                         AMERICAN GREETINGS CORPORATION

                     SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

                                   SCHEDULE A

                         REDUCTION FACTORS FOR BENEFITS
                             PAYABLE PRIOR TO AGE 65



AGE* AT WHICH                                                           REDUCTION
BENEFITS BEGIN                                                           FACTOR
- --------------                                                           ------
                                                                     
     65                                                                   0.00%
     64                                                                   2.88
     63                                                                   5.76
     62                                                                   8.64
     61                                                                  11.52
     60                                                                  14.40
     59                                                                  17.28
     58                                                                  20.16
     57                                                                  23.04
     56                                                                  25.92
     55                                                                  28.80


- -        For completed months of age, straight line interpolation shall be used.

EX-31.A

Exhibit (31)a

Certification of Chief Executive Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Zev Weiss, certify that:

1.	I have reviewed this report on Form 10-Q of American Greetings Corporation;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of American Greetings Corporation as of, and for, the periods presented in this report;
4.	American Greetings Corporation’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for American Greetings Corporation and we have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to American Greetings Corporation, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Evaluated the effectiveness of American Greetings Corporation’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
c)	Disclosed in this report any change in American Greetings Corporation’s internal control over financial reporting that occurred during the third quarter that has materially affected, or is reasonably likely to materially affect, American Greetings Corporation’s internal control over financial reporting;

35

5.   American Greetings Corporation’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to American Greetings Corporation’s auditors and the audit committee of American Greetings Corporation’s board of directors:

a)	All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect American Greetings Corporation’s ability to record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in American Greetings Corporation’s internal control over financial reporting.

January 7, 2005	/s/ Zev Weiss
	Zev Weiss
	Chief Executive Officer

36

EX-31.B

Exhibit (31)b

Certification of Chief Financial Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Robert P. Ryder, certify that:

1.	I have reviewed this report on Form 10-Q of American Greetings Corporation;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of American Greetings Corporation as of, and for, the periods presented in this report;
4.	American Greetings Corporation’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for American Greetings Corporation and we have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to American Greetings Corporation, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Evaluated the effectiveness of American Greetings Corporation’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
c)	Disclosed in this report any change in American Greetings Corporation’s internal control over financial reporting that occurred during the third quarter that has materially affected, or is reasonably likely to materially affect, American Greetings Corporation’s internal control over financial reporting;

37

5.   American Greetings Corporation’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to American Greetings Corporation’s auditors and the audit committee of American Greetings Corporation’s board of directors:

a)	All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect American Greetings Corporation’s ability to record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in American Greetings Corporation’s internal control over financial reporting.

January 7, 2005	/s/ Robert P. Ryder
	Robert P. Ryder
	Senior Vice President
	Chief Financial Officer

38

EX-32

Exhibit (32)

Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with this quarterly report of American Greetings Corporation on Form 10-Q as filed with the Securities and Exchange Commission on the date therein specified (the “Report”), each of the undersigned certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.   The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.   The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of American Greetings Corporation.

A signed original of this written statement required by Section 906 has been provided to American Greetings Corporation and will be retained by American Greetings Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

January 7, 2005

/s/ Zev Weiss

Zev Weiss

Chief Executive Officer

/s/ Robert P. Ryder

Robert P. Ryder

Senior Vice President and Chief Financial Officer

39