10-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)

þ	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the fiscal year ended February 28, 2005
	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 No. 1-13859

American Greetings Corporation

(Exact name of registrant as specified in its charter)

Ohio	34-0065325
(State or other jurisdiction	(I.R.S. Employer Identification No.)
of incorporation or organization)
One American Road, Cleveland, Ohio	44144
(Address of principal executive offices)	(Zip Code)
Registrant’s telephone number, including area code: (216) 252-7300
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class	Name of Each Exchange on Which Registered
Class A Common Shares, Par Value $1.00	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:

Class B Common Shares, Par Value $1.00

(Title of Class)

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 NO o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). YES þ
NO o

State the aggregate market value of the voting stock held by non-affiliates of the registrant as of the last business day of the registrant’s most recently completed second fiscal quarter, August 31, 2004 - $1,565,326,570.

Number of shares outstanding as of May 2, 2005:

CLASS A COMMON – 64,356,935
CLASS B COMMON – 4,163,102

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the American Greetings Corporation Definitive Proxy Statement for the Annual Meeting of Shareholders, to be filed with the Securities and Exchange Commission within 120 days after the close of the registrant’s fiscal year (incorporated into Part III). The Report of the Compensation Committee on Executive Compensation, the Report of the Audit Committee and the Performance Graph contained in the registrant’s Definitive Proxy Statement shall not be deemed incorporated by reference herein.

AMERICAN GREETINGS CORPORATION
INDEX

		Page
		Number
PART I
	Item 1. Business		1
	Item 2. Properties		7
	Item 3. Legal Proceedings		9
	Item 4. Submission of Matters to a Vote of Security Holders		9
PART II
	Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		12
	Item 6. Selected Financial Data		14
	Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations		15
	Item 7A. Quantitative and Qualitative Disclosures About Market Risks		37
	Item 8. Financial Statements and Supplementary Data		38
	Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		78
	Item 9A. Controls and Procedures		78
	Item 9B. Other Information		79
PART III
	Item 10. Directors and Executive Officers of the Registrant		79
	Item 11. Executive Compensation		79
	Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		80
	Item 13. Certain Relationships and Related Transactions		81
	Item 14. Principal Accounting Fees and Services		81
PART IV
	Item 15. Exhibits, Financial Statement Schedules		82
	SIGNATURES
EX-4.III Amendment No. 1 to Credit Agreement
EX-4.IV Amendment No. 2 to Credit Agreement
EX-4.IX 5th Amendment to Receivables Purchase Agreement
EX-10.XXII Retirement Agreement
EX-10.XXIII Severance Agreement
EX-10.XXIV Consulting Agreement
EX-10.XXV Severance Agreement and Mutual Release
EX-10.XXVII Key Management Annual Incentive Plan 2005
EX-10.XXVIII Key Management Annual Incentive Plan 2005
EX-10.XXX Form of Employee Stock Option Agreement
EX-10.XXXI Form of Director Stock Option Agreement
EX-10.XXXII Form of Restricted Shares Grant Agreement
EX-10.XXXIII Form of Deferred Shares Grant Agreement
EX-10.XXXIV Spira Employment Agreement
EX-10.XXXV Bonus Letter Dated October 4, 2000
EX-10.XXXVI Johnston Employment Agreement
EX-21 Subsidiaries of the Corporation
EX-23 Consent of Independent Registered Public Account Firm
EX-31(A) Certification of Principal Executive Officer
EX-31(B) Certification of Principal Financial Officer
EX-32(A) Certification Pursuant to 18 USC Sect 1350

PART I

Item 1. Business

OVERVIEW

Founded in 1906, American Greetings Corporation and its subsidiaries (the “Corporation” or “American Greetings”) operate predominantly in a single industry: the design, manufacture and sale of everyday and seasonal greeting cards and other social expression products. Greeting cards, gift wrap, party goods, candles, balloons, stationery and giftware are manufactured or sold by American Greetings and/or its subsidiaries in the United States and throughout the world, primarily in Canada, the United Kingdom, Mexico, Australia, New Zealand and South Africa. In addition, AG Interactive, Inc. (89.9% owned by the Corporation and formerly known as AmericanGreetings.com, Inc.) markets e-mail greetings, personalized printable greeting cards and other social expression products through the Corporation’s Web sites www.americangreetings.com, www.bluemountain.com, and www.egreetings.com; co-branded Web sites and on-line services. In 2005, AG Interactive launched its AG Mobile unit, which specializes in the distribution of ringtones for cellular telephones, graphics, games, alerts, and other social messaging products and applications to mobile devices. In connection with its May 2004 acquisition of Paris-based K-Mobile, S.A., AG Mobile has recently expanded its mobile content business to the European market. American Greetings’ subsidiary, Learning Horizons, Inc. distributes supplemental educational products. Design licensing and character licensing are done primarily by the Corporation’s subsidiaries, A.G.C. Inc. and Those Characters From Cleveland, Inc., respectively. The Hatchery, LLC (50% owned by the Corporation) also develops and produces original family and children’s entertainment for all media. The Corporation’s A.G. Industries, Inc. subsidiary manufactures custom display fixtures for the Corporation’s products and products of others. As of February 28, 2005, the Corporation also owned and operated 542 card and gift shops throughout North America.

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, 2005 refers to the year ended February 28, 2005. The Corporation’s AG Interactive subsidiary is consolidated on a two-month lag corresponding with its fiscal year-end of December 31. In fiscal 2006, AG Interactive is changing its year end to coincide with the Corporation’s fiscal year end. Fiscal 2006 will include fourteen months of AG Interactive’s operations as a result of the change. The Corporation does not expect this change to materially impact fiscal 2006 consolidated results of operations.

BUSINESS STRATEGY

In 2005, American Greetings continued to focus primarily on improving its core greeting card business by continuing its supply chain transformation, an initiative designed to improve the way it develops, manufactures, distributes and services

1

its products. The Corporation believes that this initiative, which it introduced in February 2003, has resulted in substantial annual benefits as of the end of 2005.

In addition to the transformation of its supply chain, three other initiatives that the Corporation introduced two years ago – category innovation, strategic account management, and human capital development – continue to provide focus for the Corporation’s efforts throughout 2006. Category innovation focuses on driving improvements in the core greeting card business, extending the Corporation’s existing competencies and evolving the Corporation’s product line beyond the core greeting card business to create new opportunities. Strategic account management will continue to focus on the most efficient alignment of the Corporation’s resources with the differentiated needs of customer accounts and their consumers. Finally, human capital development entails the continued training and development of associates in alignment with the Corporation’s operating objectives.

PRODUCTS

The Corporation creates, manufactures and distributes social expression products including greeting cards, gift wrap, party goods, calendars, candles, balloons, and stationery as well as educational products and custom display fixtures. Prior to the sale of its subsidiary, Magnivision, Inc. in October 2004, the Corporation also produced and sold prescription reading glasses and eyewear accessories. The Corporation’s major domestic greeting card brands are American Greetings, Carlton Cards, and Gibson, and other domestic products include DesignWare party goods, Guildhouse candles, Plus Mark gift wrap and boxed cards, DateWorks calendars, Learning Horizons educational products and AGI Schutz display fixtures. Online greeting card offerings and other digital content are available through the Corporation’s subsidiary, AG Interactive, Inc. Information concerning sales by major product classifications is included in Part II, Item 7.

BUSINESS SEGMENTS

At February 28, 2005, the Corporation operated in four business segments: Social Expression Products, Retail Operations, AG Interactive and non-reportable operating segments. For information regarding the various business segments comprising the Corporation’s business, see the discussion included in Part II, Item 7, and in Note 16 to the Consolidated Financial Statements included in Part II, Item 8.

CONCENTRATION OF CREDIT RISKS

Net sales to the Corporation’s five largest customers, which include mass merchandisers and major drug stores, accounted for approximately 30% of net sales in each of 2005, 2004 and 2003. Net sales to Wal-Mart Stores, Inc. accounted for approximately 13%, 11%, and 11% of net sales in 2005, 2004 and

2

2003, respectively. No other customer accounted for 10% or more of the Corporation’s net sales.

CONSUMERS

The Corporation believes that women purchase 89% of all greeting cards sold, that the median age of the Corporation’s consumers is approximately 54 and that women over the age of 35 account for approximately 84% of all greeting cards sold. The Corporation also believes that the average American household purchases about 17 greeting cards per year, the average number of greeting cards purchased per transaction is approximately two, and consumers make approximately seven card purchasing trips per year.

COMPETITION

The greeting card and gift wrap industry is intensely competitive. Competitive factors include quality, design, customer service and terms, which may include payments and other concessions to retail customers under long-term agreements. These agreements are discussed in greater detail below. There are an estimated 3,000 greeting card publishers in the United States, ranging from small family-run organizations to major corporations. The Corporation’s principal competitor is Hallmark Cards, Inc. Based upon its general familiarity with the greeting card and gift wrap industry and limited information as to its competitors, the Corporation believes that it is the second-largest company in the industry and the largest publicly owned greeting card company.

PRODUCTION AND DISTRIBUTION

In 2005, the Corporation’s major channel of distribution continued to be mass retail, which is comprised of mass merchandisers, chain drug stores and supermarkets. Other major channels of distribution included card and gift shops, department stores, military post exchanges, variety stores and combo stores (stores combining food, general merchandise and drug items). The Corporation also sells its products through its card and gift retail stores. As of February 28, 2005, the Corporation owned and operated 542 card and gift retail stores in the United States and Canada through its Retail Operations segment, which are primarily located in malls and strip shopping centers. From time to time, the Corporation also sells its products to independent, third-party distributors. The Corporation services more than 70,000 retail stores in the United States and more than 125,000 outlets worldwide. The Corporation’s distribution centers are located near its manufacturing facilities. The Corporation has developed an automated distribution system whereby it is able to replenish retailers’ shelves promptly following the initiation of a re-order.

Many of the Corporation’s products are manufactured at common production facilities and marketed by a common sales force. The Corporation’s manufacturing operations involve complex processes including printing, die

3

cutting, hot stamping and embossing. The Corporation employs modern printing techniques which allow it to perform short run, multi-color printing, have a quick changeover and utilize direct-to-plate technology, which minimizes time to market. The Corporation’s products are manufactured globally at facilities located in North America, the United Kingdom, Australia, and South Africa. The Corporation also sources products from domestic and foreign third party suppliers. Additionally, information by geographic area is included in Note 16 to the Consolidated Financial Statements included in Part II, Item 8.

Production of the Corporation’s products is generally on a level basis throughout the year. Everyday inventories (such as birthday and anniversary related products) remain relatively constant throughout the year, while seasonal inventories peak in advance of each major holiday season, including Christmas, Valentine’s Day, Easter, Mother’s Day, Father’s Day and Graduation. Payments for seasonal shipments are generally received during the month in which the major holiday occurs, or shortly thereafter. Extended payment terms may also be offered in response to competitive situations with individual customers. Payments for both everyday and seasonal sales from customers that have been converted to a scan-based trading model are received generally within 10 to 15 days of the product being sold by those customers at their retail locations. As of February 28, 2005, three of the Corporation’s five largest customers in 2005 have converted, or are in the process of converting, to a scan-based trading model. The core of this business model rests with the Corporation providing product to the customer on a consignment basis with the Corporation recording sales at the time a product is electronically scanned through the retailer’s cash register. The Corporation and many of its competitors sell seasonal greeting cards with the right of return. Sales credits for non-seasonal product are issued at the Corporation’s sole discretion for damaged, obsolete and outdated products. Sales of non-seasonal products are generally sold without the right of return. Information regarding the return of product is included in Note 1 to the Consolidated Financial Statements included in Part II, Item 8.

During the year, the Corporation experienced no material difficulties in obtaining raw materials from suppliers.

INTELLECTUAL PROPERTY RIGHTS

The Corporation has a number of copyrights, patents, trademarks and service marks, which are used in connection with its products and services. The Corporation’s designs, artwork and verse are protected by copyright. Although the licensing of intellectual property produces additional revenue, in the opinion of the Corporation, the Corporation’s operations are not dependent upon any individual patent, trademark, service mark, copyright or intellectual property license. The collective value of the Corporation’s intellectual property is substantial and the Corporation follows an aggressive policy of protecting its rights in all patents, copyrights, trademarks, service marks, and intellectual property licenses.

4

EMPLOYEES

At February 28, 2005, the Corporation employed approximately 8,300 full-time employees and approximately 18,600 part-time employees which, when jointly considered, equate to approximately 17,600 full-time equivalent employees. Approximately 3,200 of the Corporation’s hourly plant employees are unionized, of which approximately 2,600 are covered by the following collective bargaining agreements:

		Contract
Union	Plant Location	Expiration Date
International Brotherhood	Bardstown, Kentucky;	03/23/08
of Teamsters	Kalamazoo, Michigan;	04/30/10
	Cleveland, Ohio	03/31/10
Union of Needle Trades,	Greeneville, Tennessee	10/19/05
Industrial, & Textile	(Plus Mark)
Employees
Firemen & Oilers	Berea, Kentucky	08/31/06

Other locations with unions are the United Kingdom, Mexico, Australia, New Zealand, and South Africa. The Corporation’s headquarters and other manufacturing locations are not unionized. Labor relations at each location have generally been satisfactory.

SUPPLY AGREEMENTS

In the normal course of its business, the Corporation enters into agreements with certain customers for the supply of greeting cards and related products. The Corporation views the use of such agreements as advantageous in developing and maintaining business with its retail customers. 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 agreements are negotiated individually to meet competitive situations and, therefore, while some aspects of the agreements may be similar, important contractual terms vary. The agreements may or may not specify the Corporation as the sole supplier of social expression products to the customer. In the event an agreement is not completed, the Corporation has a claim for unearned advances under the agreement.

5

Although risk is inherent in the granting of advances, the Corporation subjects such customers to its normal credit review. The Corporation maintains a general reserve for deferred costs based on estimates developed by using standard quantitative measures incorporating historical write-offs. In instances where the Corporation is aware of a particular customer’s inability to meet its performance obligation, the Corporation records a specific reserve to reduce the deferred cost asset to the Corporation’s estimate of the value of future cash flows based upon expected performance. These agreements are accounted for as deferred costs. Losses attributed to these specific events have historically not been material. The balances and movement of the valuation reserve accounts are disclosed on Schedule II of this Annual Report on Form 10-K. See Note 10 to the Consolidated Financial Statements in Part II, Item 8, and the discussion under the “Deferred Costs” heading in the “Critical Accounting Policies” section of Item 7 for further information and discussion of deferred costs.

ENVIRONMENTAL REGULATIONS

The operations of the Corporation, like those of other companies in our industry, are subject to various federal, state and local environmental laws and regulations. These laws and regulations may give rise to claims, uncertainties or possible loss contingencies for future environmental remediation liabilities and costs. The Corporation has implemented various programs designed to protect the environment and comply with applicable environmental laws and regulations. The costs associated with these compliance and remediation efforts have not and are not expected to have a material adverse effect on the financial condition, cash flows, or operating results of the Corporation.

AVAILABLE INFORMATION

The Corporation makes available, free of charge, on or through its www.corporate.americangreetings.com, investor relations Web site, its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and, if applicable, amendments to those reports as soon as reasonably practicable after such material is electronically filed with or furnished to the Securities and Exchange Commission (“SEC”). Copies of the Corporation’s filings with the SEC also can be obtained at the SEC’s Internet site, www.sec.gov.

The Corporation’s Corporate Governance Guidelines, Code of Business Conduct and Ethics, and the charters of the Board’s Audit Committee, Compensation and Management Development Committee, and Nominating and Governance Committee are available on or through the Company’s www.corporate.americangreetings.com, investor relations Web site, and will be made available in print upon request by any shareholder to the Corporation’s Secretary.

6

Item 2. Properties

As of February 28, 2005, the Corporation owns or leases approximately 12.2 million square feet of plant, warehouse and office space, of which approximately 1.1 million square feet are leased. The Corporation believes its manufacturing and distribution facilities are well maintained and are suitable and adequate, and have sufficient productive capacity to meet its current needs.

The following table summarizes the principal plants and materially important physical properties of the Corporation. All of the Corporation’s domestic property secures indebtedness outstanding from time to time under its revolving credit facility and its 6.10% senior notes.

*     Indicates calendar year

					Expiration
	Approximate Square				Date of
	Feet Occupied				Material		Principal
Location	Owned		Leased		Leases*		Activity
							World Headquarters:
Cleveland, Ohio		1,700,000					General offices of North American Greeting Card Division, Plus Mark, Inc., Carlton Cards Retail, Inc., Learning Horizons, Inc., AG Interactive, Inc., and A.G.C., Inc.; creation and design of greeting cards, gift wrap, party goods, candles, stationery and giftware; marketing of electronic greetings
Bardstown, Kentucky		413,500					Cutting, folding, finishing, and packaging of greeting cards
Berea, Kentucky				552,000		2013	Production and distribution of candles
Danville, Kentucky		1,374,000					Distribution of everyday products including greeting cards
Lafayette, Tennessee		194,000					Manufacture of envelopes for greeting cards, cutting, folding, finishing and packaging of cellos and stationery cards
Burgaw, North Carolina				59,000		2006	Manufacture of plastic molded party ware
Osceola, Arkansas		2,552,000					Cutting, folding, finishing and packaging of greeting cards and warehousing; distribution of seasonal products

7

					Expiration
	Approximate Square				Date of
	Feet Occupied				Material		Principal
Location	Owned		Leased		Leases*		Activity
Philadelphia, Mississippi				120,000		2005	Hand finishing of greeting cards
Ripley, Tennessee		165,000					Greeting card printing (lithography)
Kalamazoo, Michigan		602,500					Manufacture and distribution of party goods
Forest City, North Carolina 2 Locations		498,000		262,500		2006	Manufacture of the Corporation’s display fixtures and other custom display fixtures by A.G. Industries, Inc.
Greeneville, Tennessee 2 Locations		1,410,000					Printing and packaging of seasonal greeting cards and wrapping items and order filling and shipping for Plus Mark, Inc.
Franklin, Tennessee		1,000,000					Manufacture of gift wrap and related items for Plus Mark, Inc. (operations were discontinued in 2005)
Toronto, Ontario Canada				87,000		2008	General office of Carlton Cards Limited (Canada)
Clayton, Australia		208,000					General offices of John Sands companies; manufacture greeting cards and related products
Dewsbury, England 2 Locations		394,000					General offices of Carlton Cards Limited (U.K.); manufacture greeting cards and related products
Croydon, Hull, Leicester and Oxford, England 3 Locations		116,500		31,000		2007	Manufacture and distribution of greeting cards and related products
Stafford Park, England 2 Locations		219,000		29,000		2010	General offices and warehouse for Gibson Hanson Graphics

8

				Expiration
	Approximate Square			Date of
	Feet Occupied			Material	Principal
Location	Owned		Leased	Leases*	Activity
Mexico City, Mexico		89,000			General offices of Carlton Mexico, S.A. de C.V. and distribution of greeting cards and related products
Johannesburg, Ladysmith and Durban, South Africa		166,000			General offices of S.A. Greetings Corporation (Pty.) Ltd; manufacture and distribution of greeting cards and related products

Item 3. Legal Proceedings

The Corporation is involved in certain legal proceedings arising in the ordinary course of business. The Corporation, however, 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 business, consolidated financial position or results of operations.

Item 4. Submission of Matters to Vote of Security Holders

         None

Executive Officers of the Registrant

The following is a list of the Corporation’s executive officers, their ages as of April 30, 2005, their positions and offices, and number of years in executive office:

			Years as
Name	Age		Executive Officer		Current Position and Office
Morry Weiss		64		32	Chairman
Zev Weiss		38		4	Chief Executive Officer
Jeffrey Weiss		41		7	President and Chief Operating Officer
Catherine M. Kilbane		42		1	Senior Vice President, General Counsel and Secretary
Michael L. Goulder		45		2	Senior Vice President, Executive Supply Chain Officer
Thomas H. Johnston		57		—	Senior Vice President, Creative and Merchandising; President, Carlton Cards Retail
William R. Mason		60		23	Senior Vice President, Wal-Mart Team

9

			Years as
Name	Age		Executive Officer		Current Position and Office
Erwin Weiss		56		15	Senior Vice President, Specialty Business
Steven S. Willensky		50		2	Senior Vice President, Executive Sales and Marketing Officer
Joseph B. Cipollone		46		4	Vice President, Corporate Controller
Brian T. McGrath		54		—	Vice President, Human Resources
Douglas W. Rommel		49		—	Vice President, Information Services
Stephen J. Smith		41		2	Vice President, Treasurer and Investor Relations

Morry Weiss and Erwin Weiss are brothers. Jeffrey Weiss and Zev Weiss are the sons of Morry Weiss. The Board of Directors annually elects all executive officers; however, executive officers are subject to removal, with or without cause, at any time; provided, however, that the removal of an executive officer would be subject to the terms of their respective employment agreements, if any.

Except as otherwise described below, all of the executive officers listed above have served in the capacity shown or similar capacities with the Corporation (or major subsidiary) over the past five years, with the following exceptions:

•   Zev Weiss was Regional Sales Director for the Corporation’s Carlton Cards Retail, Inc. unit from July 1994 to May 1995; Regional Sales Manager for the Corporation’s U.S. Greeting Card Division from May 1995 to May 1997; Executive Director of National Accounts for the Corporation’s U.S. Greeting Card Division from May 1997 until March 2000; Vice President, Strategic Business Units from March 2000 until March 2001; Senior Vice President from March 2001 until December 2001; and Executive Vice President from December 2001 until June 2003 when he was named Chief Executive Officer.

•   Jeffrey Weiss was Vice President, Materials Management of the Corporation’s U.S. Greeting Card Division from October 1996 until May 1997; Vice President, Product Management of the Corporation’s U.S. Greeting Card Division from May 1997 until January 1998; Senior Vice President from January 1998 until March 2000; and Executive Vice President, North American Greeting Card Division of the Corporation from March 2000 until June 2003 when he was named President and Chief Operating Officer.

•   Catherine M. Kilbane was a partner with the law firm of Baker & Hostetler LLP. She became Senior Vice President, General Counsel and Secretary in October 2003.

•   Michael L. Goulder was a Vice President in the management consulting firm of Booz Allen Hamilton from October 1998 until September 2002. He became a

10

	Senior Vice President of the Corporation in November 2002 and is currently the Senior Vice President, Executive Supply Chain Officer.
•	Thomas H. Johnston was Chairman, President and Chief Executive Officer of Sutton Place Gourmet, a Gourmet food retailer, from July 1995 until July 2000, where he remained as Chairman until February 2001. He was Managing Director of Gruppo, Levey & Co., an investment banking firm focused on the direct marketing and specialty retail industries, from November 2001 until May 2004, when he became Senior Vice President and President of Carlton Retail. Mr. Johnston became Senior Vice President, Creative & Merchandising in December 2004.
•	William R. Mason was Senior Vice President, General Sales Manager from June 1991 until becoming Senior Vice President, Wal-Mart Team in September 2002.
•	Steven S. Willensky was President of Medex, a medical products subsidiary of The Furon Company, from 1997 to 2000, and President and Chief Executive Officer of Westec Interactive, a provider of interactive security and remote monitoring systems, from 2000 to 2002. He became Senior Vice President, Executive Sales and Marketing Officer of the Corporation in September 2002.
•	Joseph B. Cipollone was Director, Corporate Financial Planning of the Corporation from July 1994 until December 1997; and Executive Director, International Finance of the Corporation from December 1997 until becoming Vice President and Corporate Controller in April 2001.
•	Douglas W. Rommel was Manager of Customer Support Services within the Information Services division until January 1996; Director of Applications Development within the Information Services division from January 1996 until July 2000; Executive Director of e-business within the Information Services division from July 2000 until becoming the Corporation’s Vice President of Information Services in November 2001.
•	Stephen J. Smith was Treasurer and Officer from 1998 to 1999 and Vice President, Treasurer and Assistant Secretary in 1999 of Insilco Holding Company, an industrial holding company. He was Vice President and Treasurer of General Cable Corporation, a wire and cable company, from 1999 to 2002. He became Vice President and Treasurer of the Corporation in April 2003.

11

PART II

Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

(a) Market Information. The Corporation’s Class A common shares are listed on the New York Stock Exchange under the symbol AM. The high and low sales prices, as reported in the New York Stock Exchange listing, for the years ended February 28, 2005 and February 29, 2004, were as follows:

	2005				2004
	High		Low		High		Low
1st Quarter	$	23.45	$	19.09	$	17.73	$	12.65
2nd Quarter		24.18		20.87		20.22		17.00
3rd Quarter		28.16		23.98		22.14		18.33
4th Quarter		27.92		23.19		23.00		20.19

There is no public market for the Class B common shares of the Corporation. Pursuant to the Corporation’s Amended Articles of Incorporation, a holder of Class B common shares may not transfer such Class B common shares (except to permitted transferees, a group that generally includes members of the holder’s extended family, family trusts and charities) unless such holder first offers such shares to the Corporation for purchase at the most recent closing price for the Corporation’s Class A common shares. If the Corporation does not purchase such Class B common shares, the holder must convert such shares, on a share for share basis, into Class A common shares prior to any transfer.

National City Bank, Cleveland, Ohio, is the Corporation’s registrar and transfer agent.

Shareholders. At February 28, 2005, there were approximately 44,000 holders of Class A common shares and 160 holders of Class B common shares of record and individual participants in security position listings.

Dividends. The following table sets forth the dividends paid by the Corporation in 2005 and 2004.

Dividends per share declared in	2005		2004
3rd Quarter (paid October 29, 2004)	$	0.06	—
4th Quarter (paid January 24, 2005)		0.06	—
	$	0.12	—

The Corporation did not pay cash dividends on its common shares during 2004, but began paying dividends again in the third quarter of 2005. Although the Corporation expects to continue paying dividends, payment of future dividends will be determined by the Board of Directors in light of appropriate business conditions. In addition, the

12

Corporation’s senior secured credit facility restricts the Corporation’s ability to incur additional indebtedness, to engage in acquisitions of other businesses and entities, and to pay shareholder dividends. These restrictions are subject to customary baskets and financial covenant tests. For a further description of the limitations imposed by the Corporation’s senior secured credit facility, see the discussion in Part II, Item 7, under the heading “Liquidity and Capital Resources,” and Note 11 to the Consolidated Financial Statements included in Part II, Item 8.

Securities Authorized for Issuance Under Equity Compensation Plans. Please refer to the information set forth under the heading “Equity Compensation Plan Information” included in Item 12 of this Annual Report on Form 10-K.

(b) Not Applicable

(c) The following table provides information with respect to the Corporation’s purchases of its common shares made during the three months ended February 28, 2005.

					Total Number of	Maximum
					Shares	Number of
					Purchased as	Shares that May
			Average		Part of Publicly	Yet Be
	Total Number of		Price Paid		Announced	Purchased
Period	Shares Repurchased		per Share		Plans	Under the Plans
December 2004	Class B – 207,653 (1)		$	27.91	—	—
January 2005	Class B – 882 (1)		$	24.05	—	—
February 2005		—		—	—	—
Total	Class B – 208,535 (1)		$	27.89	—	—

(1) There is no public market for the Class B common shares of the Corporation. Pursuant to the Corporation’s Amended Articles of Incorporation, all of the Class B common shares were repurchased by the Corporation for cash pursuant to its right of first refusal.

13

Item 6. Selected Financial Data

Thousands of dollars except share and per share amounts

	2005			2004			2003			2002			2001
Summary of Operations
Net sales	$	1,902,727		$	1,953,729		$	1,953,654		$	1,868,813		$	2,050,955
Gross profit		997,526			1,041,024			1,082,444			961,352			1,146,525
Restructure and other charges		—			—			—			56,715			—
Interest expense		79,526			85,828			79,095			78,599			55,387
Income (loss) from continuing operations		70,550			97,989			113,538			(126,761	)		(98,588	)
Income from discontinued operations, net of tax		24,729			6,682			7,568			4,451			5,915
Cumulative effect of accounting changes, net of tax		—			—			—			—			(21,141	)
Net income (loss)		95,279			104,670			121,106			(122,310	)		(113,814	)
Earnings (loss) per share:
Income (loss) from continuing operations		1.03			1.47			1.73			(1.99	)		(1.55	)
Income from discontinued operations, net of tax		0.36			0.10			0.12			0.07			0.09
Cumulative effect of accounting changes, net of tax		—			—			—			—			(0.33	)
Earnings (loss) per share		1.39			1.57			1.85			(1.92	)		(1.79	)
Earnings (loss) per share – assuming dilution		1.25			1.40			1.63			(1.92	)		(1.79	)
Cash dividends per share		0.12			—			—			0.20			0.62
Fiscal year end market price per share		24.63			22.67			13.12			13.77			13.06
Average number of shares outstanding		68,545,432			66,509,332			65,636,621			63,615,193			63,646,405
Financial Position
Accounts receivable — net	$	200,408		$	238,473		$	294,109		$	277,388		$	374,820
Inventories		222,874			238,612			271,187			280,805			356,705
Working capital		793,972			774,466			554,363			373,381			119,062
Total assets		2,535,628			2,484,013			2,584,120			2,614,995			2,712,074
Property, plant and equipment additions		47,497			32,544			28,053			24,436			69,743
Long-term debt		486,099			665,874			726,531			853,113			380,129
Shareholders’ equity		1,386,780			1,267,540			1,077,464			902,419			1,047,190
Shareholders’ equity per share		20.09			18.79			16.35			14.15			16.49
Net return on average shareholders’ equity from continuing operations		5.3	%		8.4	%		11.5	%		(13.0	)%		(8.6	)%

14

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The Corporation’s discussion and analysis of its financial condition and results of operations should be read in conjunction with the audited consolidated financial statements. This discussion and analysis, and other statements made in this Report, contain forward-looking statements, see “Factors That May Affect Future Results” at the end of this discussion and analysis for a discussion of the uncertainties, risks and assumptions associated with these statements.

OVERVIEW

Founded in 1906, the Corporation is the world’s largest publicly owned creator, manufacturer and distributor of social expression products. Headquartered in Cleveland, Ohio, the Corporation employs approximately 17,600 associates around the world, is home to one of the world’s largest creative studios and services more than 70,000 retail stores in the United States and more than 125,000 outlets worldwide.

The Corporation’s major domestic greeting card brands are American Greetings, Carlton Cards and Gibson and other domestic products include DesignWare party goods, GuildHouse candles, Plus Mark gift wrap and boxed cards, DateWorks calendars, Learning Horizons educational products and AGI Schutz display fixtures. The Internet and wireless business unit, AG Interactive, is a leading provider of electronic greetings, ringtones for cellular telephones and other content for the digital marketplace. As of February 28, 2005, the Retail Operations segment owned and operated 542 card and gift shops throughout North America.

The Corporation’s international operations include wholly owned subsidiaries in the United Kingdom, Canada, Australia, New Zealand, Mexico and South Africa as well as licensees in approximately 50 other countries.

The business exhibits seasonality, which is typical for most companies in the retail industry. Sales are much stronger in the second half of the year than the first half of the year due to the concentration of major holidays during the second half of the year. Net earnings are highest during the months of September through December when sales volumes provide significant operating leverage. Working capital requirements needed to finance operations fluctuate during the year and reach their highest levels during the second and third fiscal quarters as inventory is increased in preparation for the peak selling season.

The Corporation recognized net income of $95.3 million in 2005 compared to $104.7 million in 2004. Included in the results this year is the net income from discontinued operations of $24.7 million resulting primarily from the Corporation’s divestiture of its Magnivision reading glasses subsidiary completed in October 2004.

15

Despite the reduction in net income, the Corporation experienced a record year in the generation of cash as management remained focused on improving asset utilization and debt reduction to increase the combined balance of cash and cash equivalents and short-term investments to $459.0 million in 2005 compared to $285.5 million in 2004. In addition, the pre-tax contribution from outbound licensing activities nearly doubled over prior year to $43.3 million and management continues to explore opportunities for the Corporation to maximize the value of its intellectual property assets.

As part of an effort begun three years earlier, the current year operating results include certain costs to stabilize the infrastructure of the business and strengthen its financial position. The Corporation’s modifications to its infrastructure represent a proactive strategy to align its cost structure with significant changes taking place in the domestic markets. Strong acceptance of the Corporation’s scan-based trading business model, increased consumer preference for value, continued consolidation of retailers and expanded opportunities for store specific data mining have prompted the Corporation to modify its business processes relative to product development, sourcing, and delivery systems.

The current year results include the following costs as part of the above actions. 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 year net sales reduction represents the estimated expense for product currently in stores that may now be returned to the Corporation.

In addition, 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.

Finally, 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 $14.9 million was recorded for severance pay, asset disposals and other costs associated with this action. The Corporation expects approximately $3 million in additional charges during the first half of 2006 to complete this action.

The Corporation believes that the success of these and other efforts over the past three years has provided the Corporation with a sustainable business model to proactively identify and implement cost reduction projects for the rapidly changing marketplace.

16

Additionally, in the current year, the Corporation undertook a major initiative to address disappointing performance in its Retail Operations segment. With new divisional management in place, the Corporation executed initiatives to revise merchandising strategies, close underperforming stores and invest in point-of-sale (“POS”) infrastructure upgrades.

Results in 2005 also included the impact of the conversion of two accounts to scan-based trading, which reduced net sales by approximate $32 million and pre-tax income by approximately $30 million. In addition, the Retail Operations segment reviewed its accounting for leases and recorded a pre-tax charge of $4.9 million during the fourth quarter to correct certain errors that were identified. This correction relates solely to accounting treatment and did not impact historic or future cash flows and did not have a material impact on current or prior year consolidated financial statements.

RESULTS OF OPERATIONS

Comparison of the years ended February 28, 2005 and February 29, 2004

Net income was $95.3 million, or $1.25 per diluted share, in 2005 compared to net income of $104.7 million, or $1.40 per diluted share, in 2004.

The Corporation’s results for 2005 and 2004 are summarized below:

				% Net						% Net			Fav
(Dollars in thousands)	2005			Sales			2004			Sales			(Unfav)
Net sales	$	1,902,727			100.0	%	$	1,953,729			100.0	%		(2.6	%)
Material, labor and other production costs		905,201			47.5	%		912,705			46.7	%		0.8	%
Selling, distribution and marketing		654,402			34.4	%		635,224			32.5	%		(3.0	%)
Administrative and general		252,622			13.3	%		219,369			11.2	%		(15.2	%)
Interest expense		79,526			4.2	%		85,828			4.4	%		7.3	%
Other income — net		(97,272	)		(5.1	%)		(59,248	)		(3.0	%)		64.2	%
		1,794,479			94.3	%		1,793,878			91.8	%		(0.0	%)
Income from continuing operations before income tax expense		108,248			5.7	%		159,851			8.2	%		(32.3	%)
Income tax expense		37,698			2.0	%		61,862			3.2	%		39.1	%
Income from continuing operations		70,550			3.7	%		97,989			5.0	%		(28.0	%)
Income from discontinued operations, net of tax		24,729			1.3	%		6,681			0.3	%		270.1	%
Net income	$	95,279			5.0	%	$	104,670			5.3	%		(9.0	%)

17

Net Sales Overview

Consolidated net sales in 2005 were $1.90 billion, a decrease of $51 million from the prior year. This decrease includes $45 million of sales reductions associated with the scan-based trading buyback ($32 million) which occurred in the fourth quarter, as well as returns costs for a revised merchandising strategy ($13 million) implemented in the third quarter. The remaining decrease is the result of reduced sales in the Corporation’s Retail Operations segment ($35 million) approximately half of which is the result of reduced store count and half from declining same store sales, combined with reduced third party sales ($22 million) in the Corporation’s display fixture business, partially offset by favorable foreign currency translation ($38 million) and additional revenues from two acquisitions completed mid-year by AG Interactive ($16 million).

The contribution of each major product category as a percent of net sales for the past two fiscal years was as follows:

	2005			2004
Everyday greeting cards		36	%		38	%
Seasonal greeting cards		20	%		19	%
Gift wrapping and wrap accessories		17	%		17	%
All other products*		27	%		26	%

* The “all other products” classification includes giftware, party goods, candles, balloons, calendars, custom display fixtures, educational products, stickers, online greeting cards and other digital products.

Unit and Pricing Analysis

Unit and pricing comparisons for 2005 and 2004 are summarized below:

	Increase (Decrease)
	From the Prior Year
	Everyday Cards						Seasonal Cards						Total Greeting Cards
	2005			2004			2005			2004			2005			2004
Unit volume		(5.5	%)		1.5	%		4.6	%		(0.7	%)		(2.6	%)		0.9	%
Selling prices		(0.6	%)		(0.3	%)		(3.7	%)		(3.5	%)		(1.4	%)		(1.4	%)
Overall Increase / (Decrease)		(6.0	%)		1.2	%		0.7	%		(4.2	%)		(4.0	%)		(0.6	%)

During 2005, combined everyday and seasonal greeting card sales less returns fell 4.0% compared to 2004. The shortfall was heavily skewed toward everyday cards where the impact of the scan-based trading buyback and revised merchandising strategy drove net unit volume down 3.9%. The remaining everyday card business was down 2.1% to prior year. The entire decrease in average selling prices for everyday is the result of a shift in product mix driven by accelerated growth rates in the value card market.

18

Seasonal card sales less returns improved 0.7% over 2004 levels reflecting some success in the Corporation’s seasonal marketing initiatives. A combination of specific caption refinements by holiday combined with a broader offering of value priced products resulted in a strong unit volume increase of 4.6%. In addition, average return rates fell 0.6% driving additional benefits throughout the supply chain. The reduction in average selling price of 3.7% is entirely the result of expansion of value cards in the overall mix.

Expense Overview

Material, labor and other production costs for 2005 were 47.5% of net sales, an increase from 46.7% in 2004. Virtually the entire change, as a percentage of sales, is the result of the impact of the scan-based trading buyback and the implementation of a new merchandising strategy for seasonal space management. The decrease in dollars from the prior year was the result of reduced spending due to successful supply chain initiatives ($22 million) and overlapping prior year inventory costs ($13 million), partially offset by increased costs related primarily to a plant closure ($13 million), higher product content costs ($12 million) and incremental costs due to acquisitions ($5 million).

Selling, distribution and marketing expenses were 34.4% of net sales for 2005 compared to 32.5% in 2004, a 1.9 percentage point increase. Spending increases consisted of agency fees for licensing ($10 million), incremental costs due to acquisitions ($14 million), correction for operating lease accounting in the Retail Operations segment ($5 million) and severance ($6 million), partially offset by savings in supply chain initiatives ($6 million) and reduced store operating expenses in the Retail Operations segment ($9 million) as a result of fewer store locations.

Administrative and general expenses were $252.6 million in 2005, compared to $219.4 million in 2004. The $33.2 million increase in expense in 2005 is due primarily to increased employee-related costs ($20 million), severance charges ($9 million) and increased spending on systems development ($5 million).

Interest expense was $79.5 million in 2005, compared to $85.8 million in 2004. Interest expense over the two year period was impacted by interest savings from the extinguishment of the $118.0 million term loan in the first quarter of 2004 and the repurchase of $63.6 million and $186.2 million of 11.75% senior subordinated notes during the third quarter of 2004 and first quarter of 2005, respectively. The current year expense includes $39.1 million for the write-off of deferred financing fees and a premium payment and other fees associated with the notes repurchase. The prior year expense includes $18.4 million for the write-off of deferred financing fees and a premium payment associated with the term loan extinguishment and notes repurchase.

Other income — net was income of $97.3 million in 2005 compared to income of $59.2 million in 2004. The 2005 results were due to increased revenue from licensing royalties of “Care Bear” and “Strawberry Shortcake” products ($19 million), a one-time receipt related to royalty agreements ($10 million), increased interest income ($2 million) and a gain on the sale of an investment ($3 million).

19

The effective tax rates for 2005 and 2004 were 34.8% and 38.7%, respectively. These rates reflect the United States statutory rate of 35% combined with the additional net impact of the various foreign, state and local income tax rates. In 2005, the reduction in the effective tax rate is primarily the result of the favorable benefits associated with recent tax law changes, which allowed the Corporation to reduce valuation allowances against certain deferred tax assets. See Note 17 to the Consolidated Financial Statements for causes of the differences between tax expense at the federal statutory rate and actual tax expense.

Segment Results

The Corporation’s management reviews segment results using consistent exchange rates between years to eliminate the impact of foreign currency fluctuations. For additional segment information, see Note 16 to the Consolidated Financial Statements.

Social Expression Products Segment

(Dollars in thousands)	2005		2004		% Change
Net Sales	$	1,536,019	$	1,594,467		(3.7	%)
Segment Earnings		274,133		317,819		(13.8	%)

In 2005, net sales excluding the impact of foreign exchange and intersegment items of the Social Expression Products segment decreased $58.4 million, or 3.7%, from 2004. This decrease includes $44.6 million of sales reductions associated with the scan-based trading buyback at a major customer account ($31.6 million) which occurred in the fourth quarter, as well as returns costs for a revised merchandising strategy ($13.0 million) implemented in the third quarter. The remaining decrease was primarily due to reduced sales of everyday cards.

Segment earnings excluding the impact of foreign exchange and intersegment items decreased $43.7 million, or 13.8%, in 2005 compared to the prior year. This decrease is due to the scan-based trading buyback ($30 million), implementation of the new merchandising strategy ($13 million), severance costs ($13 million) and plant closure costs ($15 million), partially offset by lower field service costs related to the prior year integration of a new major customer ($9 million) and higher royalty income ($19 million).

Retail Operations Segment

(Dollars in thousands)	2005			2004		% Change
Net Sales	$	238,159		$	272,917		(12.7	%)
Segment Earnings (Loss)		(20,685	)		4,269		(584.5	%)

The Retail Operations segment exhibits considerable seasonality, which is typical for most retail store operations. A significant amount of the net sales and segment earnings occur during the fourth quarter in conjunction with the major holiday season.

20

Net sales excluding the impact of foreign exchange in the Retail Operations segment decreased $34.8 million, or 12.7%, in 2005 from 2004, as sales of both everyday and seasonal cards were lower. Net sales at stores open one year or more were down approximately 7.3% in 2005 from 2004 and the average number of stores decreased 5.7% compared to the prior year. In addition, the average number of transactions per store was down from the prior year by approximately 6%, in part a reflection of continued reduced overall consumer traffic in retail shopping malls.

Segment earnings excluding the impact of foreign exchange decreased $25.0 million in 2005 from the prior year. This decrease was due to lower net sales and a $4.9 million charge for a correction in the accounting treatment for certain operating leases. For the year, markdowns to reduce inventory levels were, as a percent of sales, 3.3 percentage points higher than in the prior year.

During 2005, the Corporation undertook a major initiative to address the disappointing performance in its retail operations. With new divisional management in place, the Corporation executed initiatives to revise merchandising strategies, close marginally performing stores and invest in POS infrastructure upgrades.

The Retail Operation segment is a reporting unit as defined by Statement of Financial Accounting Standards (“SFAS”) No. 142 (“SFAS 142”), “Goodwill and Other Intangible Assets,” and, as such, is the level that is tested for impairment of goodwill. Due primarily to declining results in the past two years, the fair value of the Retail Operations segment, determined for the purpose of testing goodwill for impairment, has declined. As a result, corporate management is closely monitoring the short-term performance of this segment. To enable this monitoring, the Corporation has established performance indicators within the Retail Operations segment in order to assess the progress of the business throughout 2006. Should the segment fail to meet the established performance indicators, the goodwill in the Retail Operations segment may require testing for impairment prior to the annual impairment test.

AG Interactive Segment

(Dollars in thousands)	2005			2004		% Change
Net Sales	$	57,514		$	36,427		57.9	%
Segment Earnings (Loss)		(955	)		4,540		(121.0	%)

Net sales excluding the impact of foreign exchange in the AG Interactive segment increased $21.1 million, or 57.9%, in 2005 over 2004. This substantial increase is the result of the business acquisitions of MIDIRingTones, LLC and K-Mobile S.A. ($16 million) and increased subscription revenue ($5 million). At the end of 2005, the Corporation had approximately 2.2 million paid subscribers versus 2.1 million in 2004.

Segment earnings excluding the impact of foreign exchange of $4.5 million in 2004 decreased to a loss of $1.0 million in 2005. This decrease is primarily the result of

21

acquisition costs, new business integration costs, higher technology costs and the cost of new business initiatives, which more than offset the benefits from increased sales.

Unallocated Items

Centrally incurred and managed costs are not allocated back to the operating segments. The unallocated items include interest expense of $79.5 million and $85.8 million in 2005 and 2004, respectively, for centrally incurred debt and domestic profit-sharing expense of $11.3 million and $7.1 million in 2005 and 2004, respectively. In addition, unallocated items include costs associated with corporate operations including the senior management staff, corporate finance, legal, and human resource functions, as well as insurance programs and other strategic costs. These costs totaled $48.9 million and $66.6 million in 2005 and 2004, respectively.

Comparison of the years ended February 29, 2004 and February 28, 2003

Net income was $104.7 million, or $1.40 per diluted share, in 2004 compared to net income of $121.1 million, or $1.63 per diluted share, in 2003.

The Corporation’s results for 2004 and 2003 are summarized below:

				% Net						% Net			Fav
(Dollars in thousands)	2004			Sales			2003			Sales			(Unfav)
Net sales	$	1,953,729			100.0	%	$	1,935,654			100.0	%		0.9	%
Material, labor and other production costs		912,705			46.7	%		853,210			44.1	%		(7.0	%)
Selling, distribution and marketing		635,224			32.5	%		607,031			31.4	%		(4.6	%)
Administrative and general		219,369			11.2	%		234,940			12.1	%		6.6	%
Interest expense		85,828			4.4	%		79,095			4.1	%		(8.5	%)
Other income — net		(59,248	)		(3.0	%)		(26,487	)		(1.4	%)		123.7	%
		1,793,878			91.8	%		1,747,789			90.3	%		(2.6	%)
Income from continuing operations before income tax expense		159,851			8.2	%		187,865			9.7	%		(14.9	%)
Income tax expense		61,862			3.2	%		74,327			3.8	%		16.8	%
Income from continuing operations		97,989			5.0	%		113,538			5.9	%		(13.7	%)
Income from discontinued operations, net of tax		6,681			0.3	%		7,568			0.4	%		(11.7	%)
Net income	$	104,670			5.3	%	$	121,106			6.3	%		(13.6	%)

22

Net Sales Overview

Consolidated net sales in 2004 were $1.95 billion, an increase of $18.1 million over the prior year. The year over year increase in net sales of 0.9% was primarily the result of foreign currency exchange fluctuations, which improved the sales comparisons by 2.5% while net sales from ongoing operations at constant exchange rates declined approximately 1.6%. The Corporation experienced strong sales growth in its U.K. business of 5.2% as well as significant growth in its domestic party goods and candle businesses. These gains were more than offset by downturns in the seasonal card and gift wrap offerings, the effects of increased customer incentives for greeting cards, and soft demand in its Retail Operation segment.

The contribution of each major product category as a percent of net sales for 2004 and 2003 was as follows:

	2004			2003
Everyday greeting cards		38	%		39	%
Seasonal greeting cards		19	%		18	%
Gift wrapping and wrap accessories		17	%		19	%
All other products*		26	%		24	%

* The “all other products” classification includes giftware, party goods, candles, balloons, calendars, custom display fixtures, educational products, stickers, online greeting cards and other digital products.

Unit and Pricing Analysis

During 2004, combined everyday and seasonal greeting card sales less returns fell by approximately 0.6% compared to 2003. Overall unit sales increased approximately 0.9% over the prior year, while average prices declined by approximately 1.4% for the same period.

Unit and pricing comparisons for 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		1.5	%		5.6	%		(0.7	%)		(2.5	%)		0.9	%		2.9	%
Selling prices		(0.3	%)		(2.1	%)		(3.5	%)		(2.8	%)		(1.4	%)		(2.3	%)
Overall Increase / (Decrease)		1.2	%		3.5	%		(4.2	%)		(5.3	%)		(0.6	%)		0.5	%

23

The Corporation had an increase in everyday card sales of approximately 1.2% during 2004 compared to 2003. Increased unit volume of approximately 1.5% was driven primarily by new business in the U.S. and U.K. markets, but was partially offset by a reduction in average selling prices of approximately 0.3%. The marginal reduction in average selling prices is indicative of a continuing shift in product mix to more value priced products.

In 2004, the Corporation’s seasonal card sales less returns declined approximately 4.2% from the prior year. Unit sales of seasonal greeting cards less returns were down approximately 0.7%. The unit volume decrease is due to a reduction in gross shipments in an effort to reduce return rates. The average selling price of seasonal cards declined approximately 3.5%, driven primarily by product mix.

Expense Overview

Material, labor and other production costs for 2004 were 46.7% of net sales, an increase from 44.1% in 2003. Of this 2.6 percentage point increase, approximately 1.5% reflects the write-down of inventories related to seasonal performance and product discontinuances with the remaining 1.1% cost increase split approximately equally between higher spending on material and creative greeting card content and a shift in mix to relatively higher cost products, including party goods and candles. These expense increases were partially offset by sustainable cost improvements from the supply chain transformation, which were mostly offset by implementation costs that occurred earlier in the year.

Selling, distribution and marketing expenses were 32.5% of net sales in 2004 compared to 31.4% in 2003, a 1.1 percentage point increase. Virtually all of the increase resulted from higher field service costs associated with the new account rollout and broker commission payments related to “Care Bear” and “Strawberry Shortcake” licensing.

Administrative and general expenses were $219.4 million in 2004, compared to $234.9 million in 2003. The $15.5 million decrease in expenses in 2004 compared to 2003 is due primarily to lower employee-related costs, including executive compensation and profit-sharing.

Interest expense was $85.8 million in 2004, compared to $79.1 million in 2003. The increase in interest expense from 2003 to 2004 was due to the accelerated write-down of deferred financing costs and premium charges from the repurchase of $63.6 million of 11.75% senior subordinated notes and costs related to the early retirement of the term loan of $118.0 million under the Corporation’s senior secured credit facility. The increase in interest expense, however, was partially offset by the savings from the early retirement of the term loan in April 2003.

Other income — net was income of $59.2 million in 2004 compared to income of $26.5 million in 2003. The 2004 results were due to income from licensing royalties of “Care

24

Bear” and “Strawberry Shortcake” products of $44.9 million, interest income of $2.7 million and foreign exchange gain of $5.2 million. The 2003 results included a pre-tax gain of $12.0 million (total proceeds of $17 million) on the sale of a marketable security investment held by the Corporation’s U.K. subsidiary, royalty income of $6.7 million and interest income of $4.8 million.

The effective tax rates for 2004 and 2003 were 38.7% and 39.6%, respectively. These rates reflect the United States statutory rate of 35% combined with the additional net impact of the various foreign, state and local income tax rates. In 2004, the reduction in the effective tax rate is the result of the utilization of net operating loss carryforwards and the settlement of the Corporation’s company owned life insurance (“COLI”) obligations in 2003. See Note 17 to the Consolidated Financial Statements for details of the differences between taxes at the federal statutory rate and actual tax expense.

Segment Results

The Corporation’s management reviews segment results using consistent exchange rates between years to eliminate the impact of foreign currency fluctuations. For additional segment information, see Note 16 to the Consolidated Financial Statements.

Social Expression Products Segment

(Dollars in thousands)	2004		2003		% Change
Net Sales	$	1,594,467	$	1,624,535		(1.9	%)
Segment Earnings		317,819		316,256		0.5	%

In 2004, net sales excluding the impact of foreign exchange and intersegment items of the Social Expression Products segment decreased $30.1 million, or 1.9%, from 2003. Sales benefited in the Corporation’s U.S. market due to the addition of a major mass retailer and strong performance from its candle and party goods businesses. The U.K. business experienced increased sales due to market share gains. However, these increases were more than offset by weak seasonal performance, primarily in the domestic greeting card and gift wrap businesses, and increased customer incentives.

During 2004, combined everyday and seasonal greeting card sales less returns fell by approximately 0.6% compared to 2003. Overall unit sales increased approximately 0.9% over the prior year, while average prices declined by approximately 1.4% for the same period.

In 2004, seasonal card sales less returns declined approximately 4.2% from the prior year. Unit sales of seasonal greeting cards less returns were down approximately 0.7% due to a reduction in gross shipments in an effort to reduce return rates. The average selling prices of seasonal cards declined approximately 3.5% driven primarily by product mix.

25

Segment earnings excluding the impact of foreign exchange increased $1.6 million in 2004 compared to 2003. Improvements in the U.K. and Australia were partially offset by a decline in the United States. In addition, costs of the Corporation’s supply chain transformation initiative continued, but were offset by expense savings during the year.

Retail Operations Segment

(Dollars in thousands)	2004		2003		% Change
Net Sales	$	272,917	$	275,296		(0.9	%)
Segment Earnings		4,269		19,128		(77.7	%)

The Retail Operations segment exhibits considerable seasonality, which is typical for most retail store operations. A significant amount of the net sales and segment earnings occur during the fourth quarter in conjunction with the major holiday season.

Net sales excluding the impact of foreign exchange in the Retail Operations segment decreased $2.4 million, or 0.9%, in 2004 from 2003, as sales of both everyday and seasonal cards were lower. The average number of transactions per store was down from the prior year by approximately 4%, reflecting reduced overall consumer traffic in retail shopping malls. Net sales at stores open one year or more were down approximately 4% in 2004 from 2003.

Segment earnings excluding the impact of foreign exchange were $4.3 million in 2004, a decrease of $14.9 million, or 77.7%, from the prior year. The decrease reflected increased promotional pricing and reduced sales as a result of reduced consumer traffic in retail shopping malls.

AG Interactive Segment

(Dollars in thousands)	2004		2003		% Change
Net Sales	$	36,427	$	34,615		5.2	%
Segment Earnings		4,540		477		851.8	%

Net sales of the AG Interactive segment increased $1.8 million, or 5.2%, in 2004 over 2003, reflecting an increase in advertising revenues and an approximately 10% rise in subscription membership. At the end of 2004, the Corporation had approximately 2.1 million paid subscribers versus 1.9 million in 2003.

In 2004, earnings increased to $4.5 million from $0.5 million in 2003, reflecting the increase in membership revenues as well as cost reductions implemented by the segment during the year.

Unallocated Items

Centrally incurred and managed costs are not allocated back to the operating segments. The unallocated items include interest expense of $85.8 million and

26

$79.1 million in 2004 and 2003, respectively, for centrally incurred debt and domestic profit-sharing expense of $7.1 million and $13.6 million in 2004 and 2003, respectively. In addition, unallocated items include costs associated with corporate operations including the senior management staff, corporate finance, legal, and human resource functions, as well as insurance programs and other strategic costs. These costs totaled $66.6 million and $55.2 million in 2004 and 2003, respectively.

Liquidity and Capital Resources

The Corporation experienced a record year in the generation of cash as management remained focused on improving asset utilization and debt reduction and also increased the combined balance of cash and cash equivalents and short-term investments to $459.0 million in 2005 compared to $285.5 million in 2004. In the past two years, the Corporation has reduced its debt by approximately $374 million, improving its debt to total capital ratio from 44.4% in 2003 to 26.0% in 2005. With the additional cash on hand, the Corporation announced a $200 million share repurchase program and an increase in its quarterly dividend.

Operating Activities

During the year, cash flow from operating activities provided cash of $358.4 million compared to $283.1 million in 2004, an improvement of $75.3 million. This improvement was primarily the result of the reduction of net deferred costs as amortization exceeded payments by approximately $73 million.

Cash flow from operating activities for 2004 compared to 2003 resulted in an improvement of $220.2 million, from $62.9 million in 2003. The overall increase reflects concentrated cash collection efforts on trade accounts receivable and reduced tax payments driven by the settlement of the Corporation’s COLI obligations in 2003, partially offset by reductions in trade and other payables.

Accounts receivable, net of the effect of acquisitions, provided a source of cash of $50.6 million in 2005, compared to $65.5 million in 2004 and a use of cash of $11.4 million in 2003. The decrease of $14.9 million in 2005 from the 2004 level relates to the strong collections during 2004, partially offset by the impact of converting a large customer to scan-based trading. The improvement of $76.9 million in 2004 over 2003 reflected a concentrated cash collection effort during 2004.

Inventories, net of the effect of acquisitions, provided a source of cash of $23.3 million in 2005, compared to $42.5 million in 2004 and $15.9 million in 2003. The decrease in inventory during 2005 was primarily related to lower inventory levels in the Retail Operations segment, due to fewer store locations and efforts to reduce average in-store inventory levels, and the display fixtures business primarily due to reduced levels of sales. The decrease in inventory during 2004 reflected the write-down of approximately $28 million in inventory for excess seasonal product and product discontinuances. The

27

2003 results reflect the favorable impacts of plant consolidations and SKU reductions undertaken in that year as well as reduced seasonal card production as gross outbound shipments were reduced in an effort to control return rates.

Other current assets, net of the effect of acquisitions, were a use of cash of $15.2 million in 2005 compared to a source of $6.6 million and $5.8 million in 2004 and 2003, respectively. The decrease in cash flow is the result of an increase in refundable taxes, related to current year estimated tax payments.

Deferred costs — net represents payments under agreements with retailers net of the related amortization of those payments. During 2005, 2004 and 2003, amortization exceeded payments by $107.7 million, $34.9 million and $39.5 million, respectively. These results reflect the success of the Corporation’s modified contract management strategies. None of the Corporation’s major customer agreements are set to expire in fiscal 2006.

Accounts payable and other liabilities, net of the effect of acquisitions, were a source of cash of $31.8 million in 2005 and a use of cash of $99.5 million and $124.9 million in 2004 and 2003, respectively. The increase in the liability balances in 2005 was primarily due to higher trade payables, severance and plant closing accruals and higher profit-sharing and executive compensation liabilities in the current year. The decrease in 2004 was due to reduced trade payables, continued reduction of acquisition liabilities and lower severance, profit-sharing and executive compensation liabilities. The decrease in 2003 was due primarily to payments to settle the income tax liability associated with the Corporation’s COLI program.

Investing Activities

Cash used in investing activities was $187.0 million during 2005, compared to $30.2 million in 2004 and a source of cash of $19.4 million in 2003. The current year usage included net outflows of $208.7 million for the purchase of short-term, highly liquid auction rate securities and $25.2 million related to the acquisitions of MIDIRingTones, LLC, Collage Designs Limited and The Hatchery, LLC and the buyout of a portion of the minority interest of AG Interactive. Inflows in the current year included $77.0 million of proceeds from the sale of Magnivision, $19.1 million of proceeds from the sale of an equity investment and $5.8 million proceeds from the sale of fixed assets.

Capital expenditures totaled $47.5 million, $32.5 million and $28.1 million in 2005, 2004 and 2003, respectively. The Corporation continues to limit capital expenditures only to projects with either a high internal rate of return or which are critical for operating activities.

Cash inflows in 2004 and 2003 also included the wind-down of the Corporation’s COLI program, which generated cash inflows of $7.8 million in 2004 and $10.0 million in 2003, and the sale of a marketable security in 2003, which generated proceeds of $17.0 million.

28

Financing Activities

In 2005, the Corporation used $208.6 million for financing activities including $216.4 million related to the repurchase of the Corporation’s 11.75% senior subordinated notes in the first quarter. In addition, stock activity provided and used a significant amount of cash during the current year. 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 exercise price on these options provided approximately $40 million during the year. In addition, in accordance with its Amended Articles of Incorporation, the Corporation repurchased shares into its Treasury, primarily Class B shares related to options that were exercised, at a cost of approximately $24 million. During 2005, the Corporation paid dividends totaling $8.3 million.

In 2004, cash used by financing activities was $192.0 million related primarily to the early retirement of the Corporation’s term loan in the first quarter and the repurchase of some of the Corporation’s 11.75% senior subordinated notes in the third quarter. Stock option activity generated cash of approximately $18 million during 2004.

Net cash provided by financing activities was $13.3 million in 2003, of which $21.5 million was provided by the exercise of stock options under employee stock option plans. The net increase of $116.7 million in short-term debt and the reduction of $124.8 million in long-term debt reflects the reclassification of the term loan.

Credit Sources

Substantial credit sources are available to the Corporation. In total, the Corporation had available sources of approximately $400 million at February 28, 2005. 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 February 28, 2005.

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. The amended and restated senior secured credit facility currently 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 Corporation pays an annual commitment fee of 25 basis points on the undrawn portion of the facility. 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 pay

29

shareholder dividends. These covenants are less restrictive than the covenants previously in place.

In April 2005, the Corporation amended its amended and restated senior secured credit facility dated May 11, 2004. The amendment, among other things, increases the maximum amount of dividends that the Corporation may pay to its shareholders, increases the maximum amount of its own capital stock that it may repurchase and extends the period during which the Corporation may repurchase its 11.75% senior subordinated notes.

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. The related interest rate is commercial paper-based. The Corporation pays an annual commitment fee of 25 basis points on the undrawn portion of the accounts receivable facility.

During 2005, the Corporation commenced a cash tender offer for all of its outstanding 11.75% senior subordinated notes. 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 February 28, 2005, approximately $10 million of these notes remained outstanding. As part of this transaction, substantially all restrictive covenants were eliminated from the remaining outstanding notes.

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. The seasonal nature of the business results in peak working capital requirements that may be financed through short-term borrowings. In an effort to return value to its shareholders, the Corporation announced on April 5, 2005, a program to repurchase up to $200 million of its Class A common shares over the subsequent twelve months. These repurchases will be made through a 10b5-1 program in open market or privately negotiated transactions in compliance with the Securities and Exchange Commission’s Rule 10b-18, subject to market conditions, applicable legal requirements and other factors.

30

Contractual Obligations

The following chart reflects the Corporation’s known contractual obligations as of February 28, 2005:

(Dollars in Thousands)

					Payment
					Commitments
					Under		Payment
Obligations	Long-				Agreements		Commitments
due by	Term		Operating		with		Under Royalty
Period	Debt		Leases		Customers		Agreements		Severance		Total
2006	$	—	$	45,508	$	65,944	$	15,131	$	12,316	$	138,899
2007		176,082		35,622		28,981		2,936		2,130		245,751
2008		335		29,156		24,357		1,494		1,200		56,542
2009		10,230		23,652		21,314		143		—		55,339
2010		183		17,974		20,800		—		—		38,957
Thereafter		299,269		33,433		—		—		—		332,702
	$	486,099	$	185,345	$	161,396	$	19,704	$	15,646	$	868,190

In addition to the contracts noted in the table, the Corporation issues purchase orders for products, materials and supplies used in the ordinary course of business. These purchase orders typically do not include long-term volume commitments, are based on pricing terms previously negotiated with vendors and are generally cancelable with the appropriate notice prior to receipt of the materials or supplies. Accordingly, the foregoing table excludes open purchase orders for such products, materials and supplies as of February 28, 2005.

Although the Corporation does not anticipate that contributions will be required in 2006 to the defined benefit pension plan that it assumed in connection with the Corporation’s acquisition of Gibson Greetings, Inc. in 2001, it may make contributions in excess of the legally required minimum contribution level. Refer to Note 12 to the Consolidated Financial Statements.

Critical Accounting Policies

The consolidated financial statements of the Corporation are prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the periods presented. Refer to Note 1 to the Consolidated Financial Statements. The following paragraphs include a discussion of the critical areas that required a higher degree of judgment or are considered complex.

31

Allowance for Doubtful Accounts

The Corporation evaluates the collectibility of its accounts receivable based on a combination of factors. In circumstances where the Corporation is aware of a customer’s inability to meet its financial obligations (evidenced by such events as bankruptcy or insolvency proceedings), a specific reserve for bad debts against amounts due is recorded to reduce the receivable to the amount the Corporation reasonably expects will be collected. In addition, the Corporation recognizes reserves for bad debts based on estimates developed by using standard quantitative measures incorporating historical write-offs and current economic conditions. The establishment of reserves requires the use of judgment and assumptions regarding the potential for losses on receivable balances. Although the Corporation considers these balances adequate and proper, changes in economic conditions in the retail markets in which the Corporation operates could have a material effect on the required reserve balances.

Goodwill

Goodwill represents the excess of purchase price over the estimated fair value of net assets acquired in business combinations accounted for by the purchase method. On March 1, 2002, the Corporation adopted SFAS 142. SFAS 142 presumes that goodwill and certain intangible assets have indefinite useful lives. Accordingly, goodwill and certain intangibles are not amortized, but subject to at least an annual review for impairment. Upon adoption, the Corporation ceased amortization of goodwill and performs an impairment test annually. To test for goodwill impairment, the Corporation is required to estimate the fair market value of each of its reporting units. The Corporation estimates future cash flows and allocations of certain assets using estimates for future growth rates and management’s judgment regarding the applicable discount rates. Changes to management’s judgments and estimates could result in a significantly different estimate of the fair market value of the reporting units, which could result in an impairment of goodwill. The annual review for goodwill impairment was completed in the fourth quarter of 2005 and resulted in no impairment.

The Retail Operations segment is a reporting unit as defined by SFAS 142 and, as such, is the level that is tested for impairment of goodwill. Due primarily to declining results and cash flows in the past two years, the fair value of the Retail Operations segment and one international reporting unit, determined for the purpose of testing goodwill for impairment, has declined. As a result, corporate management is closely monitoring the short-term performance of these businesses. To enable this monitoring, the Corporation has taken actions in these businesses to improve results of operations and cash flows, and established performance indicators within each of these businesses in order to assess the progress of the businesses throughout 2006. Should either of these businesses fail to meet the established performance indicators, the goodwill in these businesses may require testing for impairment prior to the annual impairment test.

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. The

32

Corporation views such agreements as advantageous in developing and maintaining business with its retail customers. The customer typically receives a combination of cash payments, credits, discounts, allowances and other incentive considerations to be earned as product is purchased from the Corporation over the stated time period of the agreement to meet a minimum purchase volume commitment. These agreements are negotiated individually to meet competitive situations and therefore, while some aspects of the agreements may be similar, important contractual terms may vary. In addition, the agreements may or may not specify the Corporation as the sole supplier of social expression products to the customer.

Although risk is inherent in the granting of advances, the Corporation subjects such customers to its normal credit review. The Corporation maintains a general reserve for deferred costs based on estimates developed by using standard quantitative measures incorporating historical write-offs. In instances where the Corporation is aware of a particular customer’s inability to meet its performance obligation, the Corporation records a specific reserve to reduce the deferred cost asset to an estimate of the value of future cash flows based upon expected performance. The Corporation maintains reserves for deferred costs related to these agreements of $37.5 million and $40.1 million at February 28, 2005 and February 29, 2004, respectively. Losses attributed to these specific events have historically not been material.

For contractual arrangements that are based upon a minimum purchase volume commitment, the Corporation periodically reviews the progress toward the volume commitment and estimates future sales expectations for each customer. Factors that can affect the Corporation’s estimate include store door openings and closings, retail industry consolidation, amendments to the agreements, consumer shopping trends, addition or deletion of participating products and product productivity. Based upon its review, the Corporation may modify the remaining amortization periods of individual agreements to reflect the changes in the estimates for the attainment of the minimum volume commitment in order to align amortization expense with the periods benefited. The Corporation does not make retroactive expense adjustments to prior fiscal years. The aggregate average remaining life of the Corporation’s contract base is 6.3 years.

The accuracy of the Corporation’s assessments of the performance-related value of a deferred cost asset related to a particular agreement and of the estimated time period of the completion of a volume commitment is based upon management’s ability to accurately predict certain key variables such as product demand at retail, product pricing, customer viability and other economic factors. Predicting these key variables involves uncertainty about future events; however, the assumptions used are consistent with the Corporation’s internal planning. If the deferred cost assets are assessed to be recoverable, they are amortized over the periods benefited. If the carrying value of these assets is considered to not be recoverable through performance, such assets are written down as appropriate.

33

Deferred Income Taxes

Deferred income taxes are recognized at currently enacted tax rates for temporary differences between the financial reporting and income tax bases of assets and liabilities and operating loss and tax credit carryforwards. As of February 28, 2005, the Corporation has approximately $154.0 million of deferred tax assets related to deductible temporary differences and tax loss and credit carryforwards, which will reduce taxable income in future years.

In assessing the realizability of deferred tax assets, the Corporation assesses whether it is more likely than not that a portion or all of the deferred tax assets will not be realized. The Corporation considers the scheduled reversal of deferred tax liabilities, tax planning strategies and projected future taxable income in making this assessment. At February 28, 2005, a valuation allowance of $49.3 million has been recorded against these deferred tax assets based on this assessment and is primarily against certain foreign net operating loss carryforwards. The Corporation believes it is more likely than not that the tax benefit of the remaining net deferred tax assets will be realized. The amount of net deferred tax assets considered realizable could be increased or decreased in the future if the Corporation’s assessment of future taxable income or tax planning strategies change.

Sales Returns

The Corporation provides for estimated returns of seasonal cards in the same period as the related revenues are recorded. These estimates are based upon historical sales returns, the amount of current year seasonal sales and other known factors. Estimated return rates utilized for establishing estimated returns reserves have approximated actual returns experience. However, actual returns may differ significantly, either favorably or unfavorably, from these estimates if factors such as the historical data the Corporation used to calculate these estimates do not properly reflect future returns or as a result of changes in economic conditions of the customer and/or its market. The Corporation regularly monitors its actual performance to estimated rates and the losses attributable to any changes have historically not been material.

New Accounting Pronouncements

On November 24, 2004, the Financial Accounting Standards Board, (“FASB”) issued SFAS No. 151 (“SFAS 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. SFAS 151 also establishes the concept of “normal capacity” and requires the allocation of fixed production overhead to inventory based on the normal capacity of the production facilities. Any unallocated overhead would be treated as a current period expense in the period incurred. This statement is effective for fiscal years beginning after July 15, 2005. The Corporation does not believe that the adoption

34

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) (“SFAS 123(R)”), “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. SFAS 123(R) eliminates the alternative to use the intrinsic value method of accounting in accordance with Accounting Principles Board 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 Corporation on March 1, 2006. Refer to Note 1 for the Corporation’s current accounting for stock-based compensation.

Factors That May Affect Future Results

The Corporation continually monitors its business environment and adjusts strategies to enable it to strengthen its position in the social expression industry. However, other potential challenges in the economic environment in which it operates may have negative consequences to the Corporation and its operating results in the future. These challenges include a potential decrease or deterioration of the sales levels of greeting cards, both in price and volume, purchased by the ultimate consumer at the Corporation’s customers’ retail locations.

The Corporation has maintained a strong customer base in a wide variety of distribution channels through, among other things, its investment in deferred costs related to agreements with certain retailers and other competitive arrangements. The agreements have mitigated the adverse impact to the Corporation from lost business from increased retailer consolidations in recent years. These agreements have been a strategic element of the Corporation’s growth and the financial condition of the Corporation’s retail customers is continually monitored and evaluated to reduce risk.

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

35

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; the Corporation’s ability to generate revenues from licensing activities and maximize the value of its intellectual property; the Corporation’s ability to comply with its debt covenants; fluctuations in the value of currencies in major areas where the Corporation operates, including the U.S. Dollar, Euro, U.K. Pound Sterling, and Canadian Dollar; escalation in the cost of providing employee health care; and the outcome of any legal claims known or unknown. Risks pertaining specifically to AG Interactive include the viability of online advertising and subscriptions as revenue generators, the public’s acceptance of online greetings and other social expression products, and the ability of the mobile division to compete effectively in the wireless content aggregation market.

The risks and uncertainties identified above are not the only risks the Corporation faces. Additional risks and uncertainties not presently known to the Corporation or that it believes to be immaterial also may adversely affect the Corporation. Should any known or unknown risks or uncertainties develop into actual events, or underlying assumptions prove inaccurate, these developments could have material adverse effects on the Corporation’s business, financial condition and results of operations.

36

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Derivative Financial Instruments — The Corporation does not hold or issue derivative financial instruments, other financial instruments or derivative commodity instruments for trading purposes.

Interest Rate Exposure — The Corporation manages interest rate exposure through a mix of fixed and floating rate debt. Currently, the majority of the Corporation’s debt is carried at fixed interest rates. Therefore, the Corporation’s overall interest rate exposure risk is minimal. Based on the Corporation’s interest rate exposure on its non-fixed rate debt as of and during the year ended February 28, 2005, a hypothetical 10% movement in interest rates would not have had a material impact on interest expense.

Foreign Currency Exposure — The Corporation’s international operations expose it to translation risk when the local currency financial statements are translated into U.S. dollars. As currency exchange rates fluctuate, translation of the statements of operations of international subsidiaries to U.S. dollars could affect comparability of results between years. Approximately 25%, 21% and 18% of the Corporation’s 2005, 2004 and 2003 net sales, respectively, were generated from operations outside the United States. Operations in Australasia, Canada, Mexico, South Africa and the United Kingdom are denominated in currencies other than United States dollars. No assurance can be given that future results will not be affected by significant changes in foreign currency exchange rates.

37

Item 8. Financial Statements and Supplementary Data

	Page
Index to Consolidated Financial Statements and Supplementary Financial Data	Number
Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting	39
Report of Independent Registered Public Accounting Firm	41
Consolidated Statement of Income — Years ended February 28, 2005, February 29, 2004, and February 28, 2003	42
Consolidated Statement of Financial Position — February 28, 2005 and February 29, 2004	43
Consolidated Statement of Cash Flows — Years ended February 28, 2005, February 29, 2004, and February 28, 2003	45
Consolidated Statement of Shareholders’ Equity — Years ended February 28, 2005, February 29, 2004, and February 28, 2003	46
Notes to Consolidated Financial Statements — Years ended February 28, 2005, February 29, 2004, and February 28, 2003	47
Supplementary Financial Data:
Quarterly Results of Operations (Unaudited)	76

38

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Board of Directors and Shareholders
American Greetings Corporation

We have audited management’s assessment, included in the accompanying Report of Management on Internal Control Over Financial Reporting, that American Greetings Corporation maintained effective internal control over financial reporting as of February 28, 2005, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). American Greetings Corporation’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on management’s assessment and an opinion on the effectiveness of the company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of

39

changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, management’s assessment that American Greetings Corporation maintained effective internal control over financial reporting as of February 28, 2005, is fairly stated, in all material respects, based on the COSO criteria. Also, in our opinion, American Greetings Corporation maintained, in all material respects, effective internal control over financial reporting as of February 28, 2005, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated statements of financial position of American Greetings Corporation as of February 28, 2005 and February 29, 2004, and the related consolidated statements of income, shareholders’ equity, and cash flows for each of the three years in the period ended February 28, 2005 of American Greetings Corporation and our report dated April 15, 2005 expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

Cleveland, Ohio
April 15, 2005

40

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Shareholders
American Greetings Corporation

We have audited the accompanying consolidated statements of financial position of American Greetings Corporation as of February 28, 2005 and February 29, 2004, and the related consolidated statements of income, shareholders’ equity, and cash flows for each of the three years in the period ended February 28, 2005. Our audits also included the financial statement schedule listed in the Index at Item 15. These financial statements and schedule are the responsibility of the Corporation’s management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of American Greetings Corporation at February 28, 2005 and February 29, 2004, and the consolidated results of their operations and their cash flows for each of the three years in the period ended February 28, 2005, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of American Greetings Corporation’s internal control over financial reporting as of February 28, 2005, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated April 15, 2005 expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP                                         

Cleveland, Ohio
April 15, 2005

41

CONSOLIDATED STATEMENT OF INCOME
Years ended February 28, 2005, February 29, 2004 and February 28, 2003

Thousands of dollars except share and per share amounts

	2005			2004			2003
Net sales	$	1,902,727		$	1,953,729		$	1,935,654
Costs and expenses:
Material, labor and other production costs		905,201			912,705			853,210
Selling, distribution and marketing		654,402			635,224			607,031
Administrative and general		252,622			219,369			234,940
Interest expense		79,526			85,828			79,095
Other income – net		(97,272	)		(59,248	)		(26,487	)
		1,794,479			1,793,878			1,747,789
Income from continuing operations before income tax expense		108,248			159,851			187,865
Income tax expense		37,698			61,862			74,327
Income from continuing operations		70,550			97,989			113,538
Income from discontinued operations, net of tax		24,729			6,681			7,568
Net income	$	95,279		$	104,670		$	121,106
Earnings per share – basic:
Income from continuing operations	$	1.03		$	1.47		$	1.73
Income from discontinued operations		0.36			0.10			0.12
Net income	$	1.39		$	1.57		$	1.85
Earnings per share – assuming dilution:
Income from continuing operations	$	0.95		$	1.32		$	1.53
Income from discontinued operations		0.30			0.08			0.10
Net income	$	1.25		$	1.40		$	1.63
Average number of shares outstanding		68,545,432			66,509,332			65,636,621
Average number of shares outstanding – assuming dilution		82,016,835			80,088,377			78,980,830
Dividends declared per share	$	0.12		$	—		$	—

See notes to consolidated financial statements.

42

CONSOLIDATED STATEMENT OF FINANCIAL POSITION
February 28, 2005 and February 29, 2004

Thousands of dollars except share and per share amounts

	2005		2004
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	250,267	$	285,450
Short-term investments		208,740		—
Trade accounts receivable, less allowances for seasonal sales returns of $94,672 ($85,638 in 2004) and for doubtful accounts of $16,684 ($17,871 in 2004)		200,408		238,473
Inventories		222,874		238,612
Deferred and refundable income taxes		193,497		157,886
Assets of businesses held for sale		—		40,815
Prepaid expenses and other		205,853		237,809
Total current assets		1,281,639		1,199,045
GOODWILL		270,057		223,697
OTHER ASSETS		644,140		706,898
PROPERTY, PLANT AND EQUIPMENT — NET		339,792		354,373
	$	2,535,628	$	2,484,013

43

	2005			2004
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable	$	143,041		$	125,816
Accrued liabilities		118,090			129,773
Accrued compensation and benefits		96,789			70,896
Income taxes		38,777			14,513
Liabilities of businesses held for sale		—			5,338
Other current liabilities		90,970			78,243
Total current liabilities		487,667			424,579
LONG-TERM DEBT		486,099			665,874
OTHER LIABILITIES		137,868			96,325
DEFERRED INCOME TAXES		37,214			29,695
SHAREHOLDERS’ EQUITY
Common shares — par value $1 per share:
Class A – 77,428,103 shares issued less 12,561,371 Treasury shares in 2005 and 75,452,637 shares issued less 12,571,924 Treasury shares in 2004		64,867			62,880
Class B – 6,066,092 shares issued less 1,906,172 Treasury shares in 2005 and 6,064,472 shares issued less 1,476,248 Treasury shares in 2004		4,160			4,588
Capital in excess of par value		368,777			331,765
Treasury stock		(445,618	)		(438,612	)
Accumulated other comprehensive income		29,039			20,638
Retained earnings		1,365,555			1,286,281
Total shareholders’ equity		1,386,780			1,267,540
	$	2,535,628		$	2,484,013

See notes to consolidated financial statements.

44

CONSOLIDATED STATEMENT OF CASH FLOWS
Years ended February 28, 2005, February 29, 2004 and February 28, 2003

Thousands of dollars

	2005			2004			2003
OPERATING ACTIVITIES:
Net income	$	95,279		$	104,670		$	121,106
Income from discontinued operations		24,729			6,681			7,568
Income from continuing operations		70,550			97,989			113,538
Adjustments to reconcile net income to net cash provided by operating activities:
Gain on sale of investment		(3,095	)		—			(12,027	)
Loss on fixed assets		7,544			4,455			(776	)
Loss on extinguishment of debt		39,056			18,389			—
Depreciation and amortization		57,045			59,600			60,602
Deferred income taxes		(9,454	)		56,853			(25,154	)
Changes in operating assets and liabilities, net of acquisitions:
Decrease (increase) in trade accounts receivable		50,581			65,507			(11,415	)
Decrease in inventories		23,311			42,461			15,870
(Increase) decrease in other current assets		(15,181	)		6,577			5,782
Decrease in deferred costs – net		107,660			34,875			39,546
Increase (decrease) in accounts payable and other liabilities		31,768			(99,474	)		(124,910	)
Other – net		(1,371	)		(4,109	)		1,882
Cash Provided by Operating Activities		358,414			283,123			62,938
INVESTING ACTIVITIES:
Proceeds from the sale of discontinued operations		77,000			—			—
Cash payments for business acquisitions		(25,178	)		—			—
Proceeds from the sale of short-term investments		297,660			—			—
Purchases of short-term investments		(506,400	)		—			—
Property, plant and equipment additions		(47,497	)		(32,544	)		(28,053	)
Proceeds from sale of fixed assets		5,848			198			1,613
Investment in corporate-owned life insurance		603			7,808			10,017
Other – net		10,934			(5,688	)		35,788
Cash (Used) Provided by Investing Activities		(187,030	)		(30,226	)		19,365
FINANCING ACTIVITIES:
Reduction of long-term debt		(216,417	)		(80,954	)		(124,833	)
(Decrease) increase in short-term debt		—			(128,693	)		116,747
Sale of stock under benefit plans		40,114			18,466			21,487
Purchase of treasury shares		(24,080	)		(828	)		(83	)
Dividends to shareholders		(8,264	)		—			—
Cash (Used) Provided by Financing Activities		(208,647	)		(192,009	)		13,318
Cash (Used) Provided by Discontinued Operations		(2,397	)		5,987			8,066
EFFECT OF EXCHANGE RATE CHANGES ON CASH		4,477			10,112			3,797
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS		(35,183	)		76,987			107,484
Cash and Cash Equivalents at Beginning of Year		285,450			208,463			100,979
Cash and Cash Equivalents at End of Year	$	250,267		$	285,450		$	208,463

See notes to consolidated financial statements.

45

CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY
Years ended February 28, 2005, February 29, 2004 and February 28, 2003

																		Accumulated
							Capital in								Deferred			Other
	Common Shares						Excess of		Treasury			Shares Held			Compensation			Comprehensive			Retained
Thousands of dollars except per share amounts	Class A			Class B			Par Value		Stock			In Trust			Plans			Income (Loss)			Earnings			Total
BALANCE FEBRUARY 28, 2002	$	59,153		$	4,608		$	286,158	$	(438,824	)	$	(20,480	)	$	20,480		$	(69,614	)	$	1,060,938		$	902,419
Net income																						121,106			121,106
Other comprehensive income (loss):
Foreign currency translation adjustment																			33,171						33,171
Reclassification of realized gain on available-for-sale securities (net of tax of $3,040)																			(6,051	)					(6,051	)
Comprehensive income																									148,226
Exchange of shares		11			(11	)
Sale of shares under benefit plans, including tax benefits		2,133						24,714		40												(95	)		26,792
Purchase of treasury shares					(5	)				(78	)														(83	)
Sale of treasury shares										6												(4	)		2
Stock grants and other		2			8					152												(54	)		108
BALANCE FEBRUARY 28, 2003		61,299			4,600			310,872		(438,704	)		(20,480	)		20,480			(42,494	)		1,181,891			1,077,464
Net income																						104,670			104,670
Other comprehensive income (loss):
Foreign currency translation adjustment																			63,327						63,327
Unrealized loss on available-for-sale securities (net of tax benefit of $125)																			(195	)					(195	)
Comprehensive income																									167,802
Exchange of shares		14			(14	)
Sale of shares under benefit plans, including tax benefits		1,566			32			20,876		651												(245	)		22,880
Purchase of treasury shares					(41	)				(787	)														(828	)
Sale of treasury shares										7												(3	)		4
Stock grants and other		1			11			17		221												(32	)		218
BALANCE FEBRUARY 29, 2004		62,880			4,588			331,765		(438,612	)		(20,480	)		20,480			20,638			1,286,281			1,267,540
Net income																						95,279			95,279
Other comprehensive income (loss):
Foreign currency translation adjustment																			9,750						9,750
Minimum pension liability (net of tax of $417)																			(655	)					(655	)
Unrealized loss on available-for-sale securities (net of tax benefit of $23)																			(37	)					(37	)
Reclassification of realized loss on available-for-sale securities (net of tax of $84)																			(133	)					(133	)
Other																			(524	)					(524	)
Comprehensive income																									103,680
Cash dividends — $0.12 per share																						(8,264	)		(8,264	)
Exchange of shares		1			(1	)
Sale of shares under benefit plans, including tax benefits		2,041			489			33,555		15,861												(7,686	)		44,260
Purchase of treasury shares		(56	)		(925	)				(23,099	)														(24,080	)
Distribution of shares held in trust													20,480			(20,480	)
Stock grants and other		1			9			3,457		232												(55	)		3,644
BALANCE FEBRUARY 28, 2005	$	64,867		$	4,160		$	368,777	$	(445,618	)	$	—		$	—		$	29,039		$	1,365,555		$	1,386,780

See notes to consolidated financial statements.

46

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended February 28, 2005, February 29, 2004 and February 28, 2003

Thousands of dollars except per share amounts

NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES

Consolidation: The consolidated financial statements include the accounts of American Greetings Corporation and its subsidiaries (the “Corporation”). All significant intercompany accounts and transactions are eliminated. 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, 2005 refers to the year ended February 28, 2005. The Corporation’s subsidiary, AG Interactive (formerly known as AmericanGreetings.com, Inc.), is consolidated on a two-month lag corresponding with its fiscal year-end of December 31.

The Corporation’s investments in less than majority-owned companies in which it has the ability to exercise significant influence over operating and financial policies are accounted for using the equity method except when they qualify as variable interest entities in which case the investments are consolidated in accordance with Interpretation No. 46 (“FIN 46”), “Consolidation of Variable Interest Entities.”

Reclassifications: Certain amounts in the prior year financial statements have been reclassified to conform to the 2005 presentation. These reclassifications had no material impact on earnings or cash flows.

Use of Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. On an ongoing basis, management reviews its estimates, including those related to seasonal returns, allowance for doubtful accounts, recoverability of intangibles and other long-lived assets, deferred tax asset valuation allowances, deferred costs and various other operating allowances and accruals, based on currently available information. Changes in facts and circumstances may alter such estimates and affect results of operations and financial position in future periods.

Cash Equivalents: The Corporation considers all highly liquid instruments purchased with a maturity of less than three months to be cash equivalents.

Short-term Investments: During fiscal 2005, the Corporation began investing in auction rate securities, which are highly liquid, variable-rate debt securities associated with bond offerings. While the underlying security has a long-term nominal maturity, the interest rate is reset through Dutch auctions that are typically held every 7, 28 or 35 days, creating short-term liquidity for the Corporation. The securities trade at par and are callable at par on any interest payment date at the option of the issuer. Interest is paid at the end of each auction period. The investments are classified as available-for-sale and are recorded at cost, which approximates market value.

47

Allowance for Doubtful Accounts: The Corporation evaluates the collectibility of its accounts receivable based on a combination of factors. In circumstances where the Corporation is aware of a customer’s inability to meet its financial obligations (evidenced by such events as bankruptcy or insolvency proceedings), a specific reserve for bad debts against amounts due is recorded to reduce the receivable to the amount the Corporation reasonably expects will be collected. In addition, the Corporation recognizes reserves for bad debts based on estimates developed by using standard quantitative measures incorporating historical write-offs and current economic conditions.

Customer Allowances and Discounts: The Corporation offers certain of its customers allowances and discounts including cooperative advertising, rebates, marketing allowances and other various allowances and discounts. These amounts are recorded as a reduction of gross accounts receivable and are recognized as reductions of net sales when earned. In addition to the seasonal sales allowance and allowance for doubtful accounts shown on the Consolidated Statement of Financial Position, “Trade accounts receivable” includes allowances for cooperative advertising of $23,571 and $18,427 at February 28, 2005 and February 29, 2004, respectively, and rebate allowances of $36,819 and $26,929 at February 28, 2005 and February 29, 2004, respectively.

Financial Instruments: The carrying value of the Corporation’s financial instruments approximate their fair market values, other than the fair value of the Corporation’s publicly-traded debt. See Note 11 for further discussion.

Concentration of Credit Risks: The Corporation sells primarily to customers in the retail trade, including those in the mass merchandiser, drug store, supermarket and other channels of distribution. These customers are located throughout the United States, Canada, the United Kingdom, Australia, New Zealand, Mexico and South Africa. Net sales to the Corporation’s five largest customers accounted for approximately 30% of net sales in 2005, 2004 and 2003. Net sales to Wal-Mart Stores, Inc. accounted for approximately 13%, 11% and 11% of net sales in 2005, 2004 and 2003, respectively.

The Corporation conducts business based on periodic evaluations of its customers’ financial condition and generally does not require collateral. While the competitiveness of the retail industry presents an inherent uncertainty, the Corporation does not believe a significant risk of loss from a concentration of credit exists.

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. 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 Consolidated Statement of Financial Position, and the remaining amounts to be charged beyond the next twelve months are classified as “Other assets.” The periods of amortization are continually evaluated to determine if later circumstances warrant revisions of the estimated amortization periods. Such costs are capitalized as assets reflecting the probable future economic benefits obtained as a result of the transactions. Future economic benefit is further defined as cash inflow to the Corporation. The Corporation, by incurring these costs, is

48

ensuring the probability of future cash flows through sales to customers. The amortization of such deferred costs properly matches the cost of obtaining business over the periods to be benefited. The Corporation maintains adequate reserves for deferred contract costs related to supply agreements and does not expect that the non-completion of any particular contract would result in a material loss. See Note 10 for further discussion.

Inventories: Finished products, work in process and raw material inventories are carried at the lower of cost or market. The last-in, first-out (LIFO) cost method is used for approximately 65% of the domestic inventories in 2005 and approximately 50% in 2004. The foreign subsidiaries principally use the first-in, first-out method. Display material and factory supplies are carried at average cost. See Note 7 for further information.

In November 2004, the Financial Accounting Standards Board (the “FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 151 (“SFAS 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. SFAS 151 also establishes the concept of “normal capacity” and requires the allocation of fixed production overhead to inventory based on the normal capacity of the production facilities. Any unallocated overhead would be treated as a current period expense in the period incurred. 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.

Investment in Life Insurance: The Corporation’s investment in corporate-owned life insurance policies is recorded in “Other assets” net of policy loans. The net life insurance expense, including interest expense, is included in “Administrative and general” expenses in the Consolidated Statement of Income. The related interest expense, which approximates amounts paid, was $10,341, $12,798 and $25,453 in 2005, 2004 and 2003, respectively. In April 2003, as part of its settlement with the Internal Revenue Service (“IRS”), the Corporation agreed to surrender certain of its corporate-owned life insurance policies. See Note 17 for further discussion.

Goodwill: Goodwill represents the excess of purchase price over the estimated fair value of net assets acquired in business combinations accounted for by the purchase method. On March 1, 2002, the Corporation adopted SFAS No. 142 (“SFAS 142”), “Goodwill and Intangible Assets.” This Statement, which superseded SFAS No. 121, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of,” and Accounting Principles Board (“APB”) Opinion No. 17 (“APB 17”), “Intangible Assets,” eliminates the requirement to amortize goodwill and indefinite–lived intangible assets, addresses the amortization of intangible assets with a defined life and addresses the impairment testing and recognition for goodwill and intangible assets. While the Corporation uses a variety of methods to estimate fair value for the annual impairment test, its primary method is discounted cash flows. The Corporation completes the required annual impairment test of goodwill each year during the fourth quarter. See Note 9 for further discussion.

49

Translation of Foreign Currencies: Asset and liability accounts are translated into United States dollars using exchange rates in effect at the date of the Consolidated Statement of Financial Position; revenue and expense accounts are translated at average exchange rates during the related period. Translation adjustments are reflected as a component of shareholders’ equity. Gains and losses resulting from foreign currency transactions, including intercompany transactions that are not considered permanent investments, are included in net income as incurred.

Property and Depreciation: Property, plant and equipment are carried at cost. Depreciation and amortization of buildings, equipment and fixtures is computed principally by the straight-line method over the useful lives of the various assets. The cost of buildings is depreciated over 25 to 40 years; computer hardware and software over 3 to 7 years; machinery and equipment over 10 to 15 years; and furniture and fixtures over 20 years. Leasehold improvements are amortized over the lesser of the lease term or the estimated life of the leasehold improvement. Property, plant and equipment are reviewed for impairment in accordance with SFAS No. 144 (“SFAS 144”), “Accounting for the Impairment or Disposal of Long-Lived Assets,” which superseded SFAS 121. SFAS 144 also provides a single accounting model for the disposal of long-lived assets. In accordance with SFAS 144, assets held-for-sale are stated at the lower of their fair values or carrying amounts and depreciation is no longer recognized. See Note 8 for further information.

Revenue Recognition: Sales of seasonal product to unrelated, third party retailers are recognized at the approximate date the product is received by the customer, commonly referred to in the industry as the ship-to-arrive date (“STA”). The Corporation maintains STA data due to the large volumes of seasonal product shipment activity and the lead time required to achieve customer-requested delivery dates. Seasonal cards are sold with the right of return on unsold merchandise. In addition, the Corporation provides for estimated returns of seasonal cards when those sales to unrelated, third party retailers are recognized. Accrual rates utilized for establishing estimated returns reserves have approximated actual returns experience. At Corporation-owned retail locations, sales of seasonal product are recognized upon the sales of products to the consumer.

Except for seasonal products, sales are recognized by the Corporation upon shipment of products to unrelated, third party retailers and upon the sales of products to the consumer at Corporation-owned retail locations. Sales of these products are generally sold without the right of return. Sales credits for non-seasonal product are issued at the Corporation’s sole discretion for damaged, obsolete and outdated products.

Sales of both everyday and seasonal products to retailers with scan-based trading arrangements with the Corporation are recognized when the products are sold by those retailers to customers.

The Corporation has agreements for licensing the “Care Bear” and “Strawberry Shortcake” characters. These license agreements provide for royalty revenue to the Corporation based on a percentage of net sales and are subject to certain guaranteed minimum royalties. Certain of these agreements are managed by outside agents. All payments flow through the agents prior to being remitted to the Corporation. Typically, the Corporation receives quarterly payments from the agents. Royalty revenue is recognized upon receipt and recorded in

50

“Other income – net” and expenses associated with the servicing of these agreements are primarily recorded as “Selling, distribution and marketing.”

Shipping and Handling Fees: The Corporation classifies shipping and handling fees as part of “Selling, distribution and marketing” expenses. Shipping and handling costs were $140,039, $137,667 and $135,604 in 2005, 2004 and 2003, respectively.

Advertising Expense: Advertising costs are expensed as incurred. Advertising expense was $50,587, $48,847 and $48,039 in 2005, 2004 and 2003, respectively.

Income Taxes: Income tax expense includes both current and deferred taxes. Current tax expense represents the amount of income taxes paid or payable (or refundable) for the year, including interest. Deferred income taxes, net of appropriate valuation allowances, are provided for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and amounts used for income tax purposes. See Note 17 for further discussion.

Stock-Based Compensation: The Corporation follows APB Opinion No. 25 (“APB 25”), “Accounting for Stock Issued to Employees,” 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 (“SFAS 123”), “Accounting for Stock-Based Compensation,” as amended by SFAS No. 148 (“SFAS 148”), “Accounting for Stock-Based Compensation – Transition and Disclosure.”

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:

	2005		2004		2003
Net income as reported	$	95,279	$	104,670	$	121,106
Deduct: Stock-based compensation expense determined under fair value based method, net of tax		5,784		5,881		4,695
Pro forma net income	$	89,495	$	98,789	$	116,411
Earnings per share:
As reported	$	1.39	$	1.57	$	1.85
Pro forma		1.31		1.49		1.77
Earnings per share – assuming dilution:
As reported	$	1.25	$	1.40	$	1.63
Pro forma		1.18		1.33		1.57

51

The fair value of the options granted used to compute pro forma net income and pro forma earnings per share is the estimated present value at the grant date using the Black-Scholes option-pricing model with the following assumptions:

	2005			2004			2003
Risk-free interest rate		3.4	%		2.7	%		3.8	%
Dividend yield		0.01	%		0.00	%		0.00	%
Expected stock volatility		0.36			0.50			0.53
Expected life in years:
Grant date to exercise date		3.8			4.0			4.4
Vest date to exercise date		1.3			1.2			1.3

The weighted average fair value per share of options granted during 2005, 2004 and 2003 was $7.41, $6.09 and $5.96, respectively.

In December 2004, the FASB issued SFAS No. 123 (revised 2004) (“SFAS 123(R)”), “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. SFAS 123(R) eliminates the alternative to use the intrinsic value method of accounting in accordance with APB 25. The Corporation is in the process of evaluating the impact that the adoption of this statement will have on the consolidated financial statements. SFAS 123(R) is effective for the Corporation on March 1, 2006.

NOTE 2 – ACQUISITIONS

During the second quarter of 2005, the AG Interactive segment acquired 100% of the equity interests of MIDIRingTones, LLC (“MIDI”) and K-Mobile S.A. (“K-Mobile”). During the fourth quarter of 2005, the Social Expression Products segment acquired 100% of the equity interests of Collage Designs Limited (“Collage”) and 50% of the equity interests of The Hatchery, LLC (the “Hatchery”). The financial results of these acquisitions are included in the Corporation’s consolidated results from their respective dates of acquisition. Pro forma results of operations have not been presented because the effects of these acquisitions were not material.

MIDI is an entertainment company that creates, licenses and sells content for cellular phones including polyphonic ringtones and color graphics. AG Interactive acquired the net assets of MIDI valued at approximately $1,000 and recorded goodwill of approximately $3,000. The purchase agreement also provided for a contingent payment based on MIDI’s operating results for calendar year 2005. In February 2005, AG Interactive negotiated an early settlement of the contingent payment due under the purchase agreement. At that time, AG Interactive paid approximately $9,000 to the sellers, which it recorded as additional 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 $2,000, and recorded goodwill of approximately $17,000. As the K-Mobile acquisition was a non-cash

52

transaction, it is not reflected in the 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 approximately 92% to 83%.

During February 2005, the Corporation paid approximately $7,000 to acquire approximately 7% of the outstanding shares of AG Interactive held by certain minority shareholders. As a result of this transaction, the Corporation recorded additional goodwill of approximately $3,000 and its ownership interest in AG Interactive increased from approximately 83% to 90%.

The Hatchery develops and produces original family and children’s entertainment for all media. In accordance with FIN 46, the results of the Hatchery are consolidated. The Corporation acquired 50% of the net assets of the Hatchery which were valued at approximately $200 and recorded goodwill of approximately $2,200.

Collage is a European manufacturer of gift-wrap products. The Corporation acquired the net assets of Collage valued at approximately $300 and recorded goodwill of approximately $6,000. Approximately 45% of the acquisition price was paid at the closing and the remainder will be settled over the next two years.

The allocation of the purchase price has not yet been finalized for these acquisitions.

As part of the acquisition of Gibson Greetings, Inc. (“Gibson”) in March 2000, the Corporation incurred acquisition integration expenses for the incremental costs to exit and consolidate activities at Gibson locations, to involuntarily terminate Gibson employees, and for other costs to integrate operating locations and other activities of Gibson with the Corporation. As of March 1, 2002, all activities and cash payments were substantially completed with the exception of ongoing rent payments related to a closed distribution facility. The remaining balance of the facility obligation at February 28, 2005, February 29, 2004 and February 28, 2003, was $25,081, $26,561 and $31,420, respectively. The Corporation anticipates making payments on the facility obligations through 2013.

NOTE 3 – OTHER INCOME – NET

	2005			2004			2003
Royalty revenue	$	(63,761	)	$	(44,880	)	$	(6,670	)
Foreign exchange (gain) loss		(3,868	)		(5,236	)		1,028
Interest income		(5,175	)		(2,688	)		(4,824	)
Gain on sale of investments		(3,095	)		—			(12,027	)
Other		(21,373	)		(6,444	)		(3,994	)
	$	(97,272	)	$	(59,248	)	$	(26,487	)

In 2005, other included a $10,000 one-time receipt related to licensing activities. Other includes, among other things, gains and losses on asset disposals and rental income. The proceeds received from the sale of investments of $19,050 in 2005 and $16,964 in 2003 are included in “Other – net” investing activities in the Consolidated Statement of Cash Flows for the respective periods.

53

NOTE 4 – RESTRUCTURE RESERVES

In 2002, the Corporation undertook a restructure of its domestic and foreign manufacturing and distribution operations and recorded a charge of $56,715. 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 at February 28, 2005:

	Termination			All Other
	Benefits			Costs			Total
Balance February 28, 2002	$	17,977		$	1,806		$	19,783
Cash expenditures		(13,936	)		(1,667	)		(15,603	)
Balance February 28, 2003		4,041			139			4,180
Cash expenditures		(2,537	)		(139	)		(2,676	)
Balance February 29, 2004		1,504			—			1,504
Cash expenditures and other		(1,061	)		—			(1,061	)
Balance February 28, 2005	$	443		$	—		$	443

The above balance is included in “Accrued liabilities” at February 28, 2005.

NOTE 5 – EARNINGS PER SHARE

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

	2005		2004		2003
Numerator:
Income from continuing operations	$	70,550	$	97,989	$	113,538
Add-back – interest on convertible subordinated notes, net of tax		7,501		7,525		7,403
Income from continuing operations – assuming dilution	$	78,051	$	105,514	$	120,941
Denominator (thousands):
Weighted average shares outstanding		68,545		66,509		65,637
Effect of dilutive securities:
Stock options		881		988		753
Convertible debt		12,591		12,591		12,591
Weighted average shares outstanding – assuming dilution		82,017		80,088		78,981
Income from continuing operations per share	$	1.03	$	1.47	$	1.73
Income from continuing operations per share – assuming dilution	$	0.95	$	1.32	$	1.53

54

Approximately 2.5 million, 3.7 million and 4.6 million shares of exercisable stock options, in 2005, 2004 and 2003, respectively, were excluded from the computation of earnings per share – assuming dilution because the options’ exercise prices were greater than the average market price of the common shares during the respective years.

NOTE 6 – ACCUMULATED OTHER COMPREHENSIVE INCOME

At February 28, 2005 and February 29, 2004, the balance of accumulated other comprehensive income consisted of the following components:

	2005			2004
Foreign currency translation adjustment	$	30,583		$	20,833
Minimum pension liability adjustment		(655	)		—
Unrealized investment loss		(365	)		(195	)
Other		(524	)		—
	$	29,039		$	20,638

NOTE 7 – INVENTORIES

	2005		2004
Raw materials	$	23,241	$	37,514
Work in process		19,719		30,047
Finished products		228,088		212,252
		271,048		279,813
Less LIFO reserve		75,890		73,213
		195,158		206,600
Display material and factory supplies		27,716		32,012
	$	222,874	$	238,612

The Corporation experienced LIFO liquidations in 2004 and 2003, which increased Income from continuing operations before income tax expense by approximately $4,600 and $2,700, respectively.

NOTE 8 — PROPERTY, PLANT AND EQUIPMENT

	2005		2004
Land	$	13,397	$	14,200
Buildings		287,774		308,279
Equipment and fixtures		690,586		667,035
		991,757		989,514
Less accumulated depreciation		651,965		635,141
	$	339,792	$	354,373

55

During 2005, the Corporation disposed of approximately $73,000 of property, plant and equipment that included accumulated depreciation of approximately $60,000 compared to disposals in 2004 of approximately $88,000 with accumulated depreciation of approximately $83,000.

NOTE 9 – GOODWILL AND INTANGIBLE ASSETS

Effective March 1, 2002, the Corporation adopted SFAS 142 pursuant to which goodwill and indefinite-lived intangibles are no longer amortized but rather are reviewed for impairment annually or more frequently if impairment indicators arise. This Statement also addresses the amortization of intangible assets with defined lives.

At February 28, 2005 and February 29, 2004, intangible assets subject to the amortization provisions of SFAS 142, net of accumulated amortization, were $2,767 and $1,374, respectively. The Corporation does not have any indefinite-lived intangible assets.

The Corporation completed the first step of the transitional impairment test for goodwill during the second quarter of 2003 and determined there were no indicators of impairment as of March 1, 2002. In addition, the Corporation completed the required annual impairment test of goodwill, and based on the results of the testing, did not record a charge for impairment in 2005, 2004 or 2003.

A summary of the changes in the carrying amount of the Corporation’s goodwill during the years ended February 28, 2005 and February 29, 2004, by segment, is as follows:

	Social							Non-
	Expression			AG		Retail		reportable
	Products			Interactive		Operations		Segments		Total
Balance at February 28, 2003	$	147,350		$	42,669	$	14,306	$	81	$	204,406
Acquisition related		(2,120	)		—		3,331		—		1,211
Foreign currency translation		18,018			—		62		—		18,080
Balance at February 29, 2004		163,248			42,669		17,699		81		223,697
Acquisition related		8,674			32,485		—		—		41,159
Foreign currency translation		3,357			1,794		50		—		5,201
Balance at February 28, 2005	$	175,279		$	76,948	$	17,749	$	81	$	270,057

Included in the calculation of the 2005 gain on disposal of the Magnivision business was $5,258 of goodwill that was previously reported in non-reportable segments. See Note 18 for further discussion.

NOTE 10 – 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. In the event a contract is not completed, the Corporation has a claim for unearned advances under the agreement. The Corporation

56

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

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 Consolidated Statement of Financial Position, and the remaining payment commitments beyond the next twelve months are classified as “Other liabilities.” The Corporation maintains reserves for deferred costs related to supply agreements of $37,500 and $40,100 at February 28, 2005 and February 29, 2004, respectively. The Corporation does not expect that the non-completion of any particular contract would result in a material loss.

At February 28, 2005 and February 29, 2004, deferred costs and future payment commitments were as follows:

	2005			2004
Prepaid expenses and other	$	156,665		$	187,844
Other assets		582,401			630,445
Deferred cost assets		739,066			818,289
Other current liabilities		(65,944	)		(58,047	)
Other liabilities		(95,452	)		(69,493	)
Deferred cost liabilities		(161,396	)		(127,540	)
Net deferred costs	$	577,670		$	690,749

NOTE 11 – LONG AND SHORT-TERM DEBT

On June 29, 2001, the Corporation issued $260,000 of 11.75% senior subordinated notes, due on July 15, 2008. During 2004, the Corporation repurchased $63,630 of these notes and recorded a charge of $13,750 for the write-off of related deferred financing costs and the premium associated with the note repurchase. During 2005, the Corporation commenced a cash tender offer for all of its remaining outstanding 11.75% senior subordinated notes. As a result of this tender offer, a total of $186,186 of these notes were repurchased and the Corporation recorded a charge of $39,056, included in “Interest expense” on the Consolidated Statement of Income, 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 February 28, 2005, $10,016 of these notes remained outstanding. As part of this transaction, substantially all restrictive covenants were eliminated from the remaining outstanding notes.

On June 29, 2001, the Corporation issued $175,000 of 7.00% convertible subordinated notes, due on July 15, 2006. The notes are convertible at the option of the holders into

57

Class A common shares of the Corporation at any time before the close of business on July 15, 2006, at a conversion rate of 71.9466 common shares per $1 principal amount of notes. If converted in their entirety, the notes outstanding would result in the issuance of approximately 12,591,000 Class A common shares of the Corporation.

The total fair value of the Corporation’s publicly traded debt, based on quoted market prices, was $645,509 (at a carrying value of $483,519) and $845,791 (at a carrying value of $665,284) at February 28, 2005 and February 29, 2004, respectively.

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 $350,000 facility and was amended on July 22, 2002 to a $320,000 facility. The Corporation paid the remaining outstanding balance of $117,988 of the term loan on April 7, 2003. At that date, the Corporation recorded a charge of $4,639 for the write-off of related deferred financing costs and a premium associated with the early retirement of the loan. The amended and restated senior secured credit facility currently consists of a $200,000 revolving facility maturing on May 10, 2008. There were no outstanding balances under this facility at February 28, 2005 or February 29, 2004.

The amended and restated credit facility is secured by the domestic assets of the Corporation and a 65% interest in the common stock of its foreign subsidiaries. The Corporation pays an annual commitment fee of 25 basis points on the undrawn portion of the facility. 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 to pay shareholder dividends. These covenants are less restrictive than the covenants previously in place.

In April 2005, the Corporation amended its amended and restated senior secured credit facility dated May 11, 2004. The amendment, among other things, increases the maximum amount of dividends that the Corporation may pay to its shareholders, increases the maximum amount of its own capital stock that it may repurchase and extends the period during which the Corporation may repurchase its 11.75% senior subordinated notes due July 15, 2008.

The Corporation is also party to a three-year accounts receivable securitization financing agreement that provides for up to $200,000 of financing and is secured by certain trade accounts receivable. Under the terms of the agreement, the Corporation transfers trade 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. The related interest rate is commercial paper-based. The Corporation pays an annual commitment fee of 25 basis points on the undrawn portion of the accounts receivable facility. There were no outstanding balances under this agreement at February 28, 2005 or February 29, 2004.

At February 28, 2005, the Corporation was in compliance with its financial covenants under the borrowing agreements described above.

58

At February 28, 2005 and February 29, 2004, the Corporation had no debt due within one year.

At February 28, 2005 and February 29, 2004, long-term debt and their related calendar year due dates were as follows:

	2005		2004
6.10% Senior Notes, due 2028	$	298,503	$	298,122
11.75% Senior Subordinated Notes, due 2008		10,016		192,162
7.00% Convertible Subordinated Notes, due 2006		175,000		175,000
Other (due 2007-2011)		2,580		590
	$	486,099	$	665,874

The 6.10% senior notes due 2028 are secured by the domestic assets of the Corporation.

Aggregate maturities of long-term debt are as follows:

2006	$	—
2007		176,082
2008		335
2009		10,230
2010		183
Thereafter		299,269
	$	486,099

As part of its normal operations, the Corporation provides certain financing for some of its vendors, which includes a combination of various guarantees and letters of credit. At February 28, 2005, the Corporation had credit arrangements to support the guarantees and letters of credit in the amount of $75,500 with $36,384 of open guarantees and credit outstanding.

Interest paid in cash on short-term and long-term debt was $70,379 in 2005, $74,762 in 2004 and $71,092 in 2003. In 2005, interest expense included $39,056 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. In 2004, interest expense included the write-off of $18,389 in deferred financing costs and the premium associated with the note repurchase and term loan retirement.

NOTE 12 – RETIREMENT PLANS

The Corporation has a non-contributory profit-sharing plan with a contributory 401(k) provision covering most of its United States employees. Corporate contributions to the profit-sharing plan were $11,280, $7,122 and $13,637 for 2005, 2004 and 2003, respectively. In addition, the Corporation matches a portion of 401(k) employee contributions contingent upon meeting specified annual operating results goals. The Corporation’s matching contributions were $4,682, $4,778 and $4,896 for 2005, 2004 and 2003, respectively.

59

The Corporation also has several defined benefit and defined contribution pension plans covering certain employees in foreign countries. The cost of these plans was not material in any of the years presented. In the aggregate, the actuarially computed plan benefit obligation approximates the fair value of the plan assets.

In 2001, the Corporation assumed the obligations and assets of Gibson’s defined benefit pension plan (the “Retirement Plan”) that covered substantially all Gibson employees who met certain eligibility requirements. Benefits earned under the Retirement Plan have been frozen and participants no longer accrue benefits after December 31, 2000. The Retirement Plan has a measurement date of February 28 or 29. The Corporation made discretionary contributions of $6,500 and $9,000 to the plan assets in 2005 and 2004, respectively, amounts sufficient to fully fund the Retirement Plan at both February 28, 2005 and February 29, 2004.

The following table sets forth summarized information on the Retirement Plan:

	2005			2004
Change in benefit obligation:
Benefit obligation at beginning of year	$	96,012		$	90,822
Interest cost		5,832			5,944
Actuarial loss		6,125			5,577
Benefit payments		(6,453	)		(6,331	)
Benefit obligation at end of year		101,516			96,012
Change in plan assets:
Fair value of plan assets at beginning of year		98,174			91,352
Actual return on plan assets		4,180			4,153
Employer contributions		6,500			9,000
Benefit payments		(6,453	)		(6,331	)
Fair value of plan assets at end of year		102,401			98,174
Funded status at end of year		885			2,162
Unrecognized loss		16,950			9,363
Prepaid benefit cost	$	17,835		$	11,525

	2005			2004
Assumptions:
Weighted average discount rate used to determine:
Benefit obligations at measurement date		5.75	%		6.25	%
Net periodic benefit cost		6.25	%		6.75	%
Expected long-term return on plan assets		6.00	%		6.00	%
Rate of compensation increase		N/A			N/A

For 2005, the net periodic pension cost was based on a long-term asset rate of return of 6%. In developing the 6% expected long-term rate of return assumption, consideration was given

60

to expected returns based on the current investment policy and historical return for the asset classes.

A summary of the components of net periodic cost for the Retirement Plan for the years ended February 28, 2005, February 29, 2004 and February 28, 2003, is as follows:

	2005			2004			2003
Interest cost	$	5,832		$	5,944		$	6,045
Expected return on plan assets		(5,686	)		(5,283	)		(5,490	)
Recognized net actuarial loss		44			—			—
Net periodic benefit cost	$	190		$	661		$	555

At February 28, 2005 and February 29, 2004, the assets of the Retirement Plan are held in trust and allocated as follows:

	2005			2004
Equity securities		47	%		32	%
Debt securities		43	%		31	%
Cash and cash equivalents		10	%		37	%
		100	%		100	%

As of February 28, 2005, the investment policy for the Retirement Plan targets an approximately even distribution between equity securities and debt securities with a minimal level of cash maintained in order to meet obligations as they come due. At February 29, 2004, the investment policy for the Retirement Plan was to maintain an approximately even distribution among equity securities, debt securities and cash and cash equivalents. This policy continues to be subject to review and change.

Although the Corporation does not anticipate that contributions to the Retirement Plan will be required in 2006, it may make contributions in excess of the legally required minimum contribution level. Any voluntary contributions by the Corporation are not expected to exceed deductible limits in accordance with IRS regulations.

The benefits expected to be paid out under the Retirement Plan are as follows:

2006	$	6,260
2007		6,241
2008		6,343
2009		6,453
2010		6,578
2011 – 2015		34,874

The Corporation also has a defined benefit pension plan (the “Executive Plan”) covering certain management employees. The Executive Plan has a measurement date of February 28 or 29. The Executive Plan was amended in 2005 to change the twenty-year cliff vesting

61

period with no minimum Executive Plan service requirements to a ten-year cliff-vesting period with a requirement that at least five years of that service must be as an Executive Plan participant.

The following table sets forth summarized information on the Executive Plan:

	2005			2004
Change in benefit obligation:
Benefit obligation at beginning of year	$	26,140		$	23,719
Service cost		546			462
Interest cost		1,577			1,551
Plan amendments		872			—
Actuarial (gain) loss		(147	)		1,591
Benefit payments		(1,321	)		(1,183	)
Benefit obligation at end of year		27,667			26,140
Change in plan assets:
Fair value of plan assets at beginning of year		—			—
Employer contributions		1,321			1,183
Benefit payments		(1,321	)		(1,183	)
Fair value of plan assets at end of year		—			—
Underfunded status at end of year		(27,667	)		(26,140	)
Unrecognized prior service cost		779			—
Unrecognized loss		3,552			3,720
Accrued benefit cost	$	(23,336	)	$	(22,420	)

The accrued benefit cost is included in the Consolidated Statement of Financial Position in the following captions:

	2005			2004
Other liabilities	$	(25,187	)	$	(22,420	)
Other assets		779			—
Accumulated other comprehensive income		1,072			—
Accrued benefit cost	$	(23,336	)	$	(22,420	)

	2005			2004
Assumptions:
Weighted average discount rate used to determine:
Benefit obligations at measurement date		5.75	%		6.25	%
Net periodic benefit cost		6.25	%		6.75	%
Rate of compensation increase		6.50	%		6.50	%

62

A summary of the components of net periodic cost for the Executive Plan for the years ended February 28, 2005, February 29, 2004 and February 28, 2003, is as follows:

	2005		2004		2003
Service cost	$	546	$	462	$	390
Interest cost		1,577		1,551		1,541
Amortization of prior service cost		93		—		—
Recognized net actuarial loss		21		—		—
Net periodic benefit cost	$	2,237	$	2,013	$	1,931

Based on historic patterns and currently scheduled benefit payments, the Corporation expects to contribute approximately $1,620 to the Executive Plan in 2006.

The Executive Plan is a non-qualified and unfunded plan, and annual contributions, which are equal to benefit payments, are made from the Corporation’s general funds.

The benefits expected to be paid out under the Executive Plan are as follows:

2006	$	1,621
2007		1,672
2008		1,788
2009		1,820
2010		1,848
2011 – 2015		10,101

In addition, during 2005, the Corporation distributed shares held in a Rabbi Trust (see Consolidated Statement of Shareholders’ Equity) to its beneficiary.

NOTE 13 – POSTRETIREMENT BENEFITS OTHER THAN PENSIONS

The Corporation sponsors a defined benefit health care plan that provides postretirement medical benefits to full-time United States employees who meet certain age, service and other requirements. The plan is contributory; with retiree contributions adjusted periodically, and contains other cost-sharing features such as deductibles and coinsurance. The plan has a measurement date of February 28 or 29. The Corporation made significant changes to its retiree health care plan in 2002 by imposing dollar maximums on the per capita cost paid by the Corporation for future years. The Plan was amended in 2004 and 2005 to further limit the Corporation’s contributions at certain locations. The Corporation maintains a trust for the payment of retiree health care benefits. This trust is funded at the discretion of management.

63

Summarized information on the postretirement medical benefit plan follows:

	2005			2004
Change in benefit obligation:
Benefit obligation at beginning of year	$	121,696		$	110,323
Service cost		2,597			2,113
Interest cost		7,692			7,346
Participant contributions		4,290			4,092
Plan amendments		(9,264	)		(6,972	)
Actuarial losses		8,481			13,872
Benefit payments		(9,712	)		(9,078	)
Benefit obligation at end of year		125,780			121,696
Change in plan assets:
Fair value of plan assets at beginning of year		70,037			59,307
Actual return on plan assets		2,309			6,835
Employer contributions		5,422			8,881
Participant contributions		4,290			4,092
Benefit payments		(9,712	)		(9,078	)
Fair value of plan assets at end of year		72,346			70,037
Underfunded status at end of year		(53,434	)		(51,659	)
Unrecognized prior service (credit)		(48,621	)		(45,979	)
Unrecognized loss		90,671			85,938
Accrued benefit cost	$	(11,384	)	$	(11,700	)

	2005			2004			2003
Components of net periodic benefit cost:
Service cost	$	2,597		$	2,113		$	1,615
Interest cost		7,692			7,346			7,096
Expected return on plan assets		(5,327	)		(4,491	)		(4,376	)
Amortization of prior service cost		(6,623	)		(6,236	)		(5,655	)
Amortization of actuarial loss		6,767			7,186			5,831
Net periodic benefit cost	$	5,106		$	5,918		$	4,511

The weighted average assumptions used to determine benefit obligations as of February 28, 2005 and February 29, 2004, are as follows:

	2005			2004
Discount rate		5.75	%		6.25	%
Expected return on assets		8.00	%		8.00	%
Health care cost trend rates:
For year following February 28 or 29		10.5	%		11.0	%
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)		6.0	%		6.0	%
Year the rate reaches the ultimate trend rate		2014			2014

64

The weighted average assumptions used to determine net periodic benefit cost for years ended February 28, 2005 and February 29, 2004 are as follows:

	2005			2004
Discount rate		6.25	%		6.75	%
Expected return on assets		8.00	%		8.00	%
Health care cost trend rates:
For year ending February 28 or 29		11.0	%		11.5	%
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)		6.0	%		6.0	%
Year the rate reaches the ultimate trend rate		2014			2014

For 2005, the Corporation assumed a long-term asset rate of return of 8% to calculate the expected return for the plan. In developing the 8% expected long-term rate of return assumption, consideration was given to various factors, including a review of asset class return expectations based on historical 15-year compounded returns for such asset classes. This rate is also consistent with actual compounded returns earned by the plan over several years.

	2005			2004
Effect of a 1% increase in health care cost trend rate on:
Service cost plus interest cost	$	823		$	897
Accumulated postretirement benefit obligation		8,155			10,883
Effect of a 1% decrease in health care cost trend rate on:
Service cost plus interest cost	$	(450	)	$	(751	)
Accumulated postretirement benefit obligation		(7,075	)		(9,151	)

	2005		2004
Accumulated postretirement benefit obligation:
Retired	$	73,695	$	72,076
Active entitled to full benefits		10,435		11,847
Other active		41,650		37,773
	$	125,780	$	121,696

At February 28, 2005 and February 29, 2004, the assets of the plan are held in trust and allocated as follows:

							Target
	2005			2004			Allocation
Equity securities		30	%		31	%		15% - 35	%
Debt securities		66	%		59	%		55% - 75	%
Cash and cash equivalents		4	%		10	%		0% - 20	%
Total		100	%		100	%

The investment policy for the plan targets a distribution among equity securities, debt securities and cash and cash equivalents, as noted above. All investments are actively

65

managed, with debt securities averaging 2.5 years to maturity with a credit rating of ‘A’ or better. This policy is subject to review and change.

The Corporation anticipates contributing approximately $6,000 to the plan in 2006.

The benefits expected to be paid by the postretirement medical plan are as follows:

	Excluding Effect of		Including Effect of
	Medicare Part D Subsidy		Medicare Part D Subsidy
2006	$	7,820	$	7,820
2007		8,297		8,052
2008		8,726		8,456
2009		9,164		8,871
2010		9,469		9,148
2011-2015		52,457		50,523

On December 8, 2003, the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the “Act”) was signed into law. The Act provides plan sponsors a federal subsidy for certain qualifying prescription drug benefits covered under the sponsor’s postretirement health care plans. FASB Staff Position No. FAS 106-2, “Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003,” (“FSP 106-2”) was issued on May 19, 2004. FSP 106-2 provides guidance on accounting for the effects of the new Medicare prescription drug legislation by employers whose prescription drug benefits are actuarially equivalent to the drug benefit under Medicare Part D. FSP 106-2 also contains basic guidance on related income tax accounting and complex rules for transition that permit various alternative prospective and retroactive transition approaches. The effect of the adoption of FSP 106-2 was a reduction of the net periodic postretirement benefit cost in 2005 of approximately $390. The adoption of FSP 106-2 also reduced the accumulated postretirement benefit obligation by approximately $6,143 during 2005.

NOTE 14 – LONG-TERM LEASES AND COMMITMENTS

The Corporation is committed under noncancelable operating leases for commercial properties (certain of which have been subleased) and equipment, terms of which are generally less than 25 years. Rental expense under operating leases for the years ended February 28, 2005, February 29, 2004 and February 28, 2003, are as follows:

	2005			2004			2003
Gross rentals	$	67,926		$	72,699		$	70,253
Sublease rentals		(2,865	)		(2,115	)		(1,549	)
Net rental expense	$	65,061		$	70,584		$	68,704

66

At February 28, 2005, future minimum rental payments for noncancelable operating leases, net of aggregate future minimum noncancelable sublease rentals, are as follows:

Gross rentals:
2006	$	45,508
2007		35,622
2008		29,156
2009		23,652
2010		17,974
Later years		33,433
		185,345
Sublease rentals		(9,296	)
Net rentals	$	176,049

NOTE 15 – COMMON SHARES AND STOCK OPTIONS

At February 28, 2005 and February 29, 2004, common shares authorized consisted of 187,600,000 Class A and 15,832,968 Class B shares.

Class A shares have one vote per share and Class B shares have ten votes per share. There is no public market for the Class B common shares of the Corporation. Pursuant to the Corporation’s Amended Articles of Incorporation, a holder of Class B common shares may not transfer such Class B common shares (except to permitted transferees, a group that generally includes members of the holder’s extended family, family trusts and charities) unless such holder first offers such shares to the Corporation for purchase at the most recent closing price for the Corporation’s Class A common shares. If the Corporation does not purchase such Class B common shares, the holder must convert such shares, on a share for share basis, into Class A common shares prior to any transfer.

Under the Corporation’s Stock Option Plans, options to purchase Class A and/or Class B shares are granted to directors, officers and other key employees at the then-current market price. In general, subject to continuing service, options become exercisable commencing twelve months after date of grant in annual installments and expire over a period of not more than ten years from the date of grant. Under certain grants made in 2002, the exercise period has the potential to be accelerated if the market value of Class A shares reaches a specified share price. These options expire at the earlier of six months plus one day after a specified share price is reached or ten years from the date of grant. During 2005, a target share price was met and certain of these 2002 options became subject to expiration, unless exercised, in six months plus one day from the date the target share price was met.

67

Stock option transactions and prices are summarized as follows:

							Weighted-Average Exercise
	Number of Options						Price Per Share
	Class A			Class B			Class A		Class B
Options outstanding February 28, 2002		9,031,128			1,033,373		$	17.74	$	20.81
Granted		1,700,308			—			14.35		—
Exercised		(2,134,250	)		(10,400	)		10.05		9.95
Cancelled		(634,385	)		(5,000	)		22.33		27.25
Options outstanding February 28, 2003		7,962,801			1,017,973		$	18.76	$	20.89
Granted		1,551,718			—			14.31		—
Exercised		(1,566,499	)		(31,600	)		11.45		9.95
Cancelled		(518,810	)		(420	)		23.30		48.06
Options outstanding February 29, 2004		7,429,210			985,953		$	19.06	$	21.23
Granted		1,400,738			361,342			20.88		21.33
Exercised		(2,049,106	)		(489,080	)		14.93		12.31
Cancelled		(498,512	)		(38,000	)		22.09		26.33
Options outstanding February 28, 2005		6,282,330			820,215		$	20.57	$	26.36
Options exercisable at February 28/29:
2005		4,362,271			627,215		$	21.55	$	28.16
2004		5,299,372			985,953			20.94		21.23
2003		5,268,606			1,017,973			19.76		20.89

The weighted-average remaining contractual life of the options outstanding as of February 28, 2005 is 5.7 years.

68

The range of exercise prices for options outstanding is as follows:

	Outstanding				Exercisable
									Weighted-
			Weighted-				Weighted-		Average
			Average				Average		Remaining
Exercise Price	Optioned		Exercise		Optioned		Exercise		Contractual
Ranges	Shares		Price		Shares		Price		Life (Years)
$    8.50 - $13.01		534,808	$	11.62		534,808	$	11.62		6.32
13.10 -   13.15		840,940		13.15		276,926		13.15		8.01
13.19 -   18.10		826,323		14.84		728,873		14.72		6.99
18.40 -   19.81		151,393		19.69		141,718		19.71		8.34
20.02 -   20.51		1,286,570		20.51		400		20.51		9.18
20.87 -   22.26		181,952		21.85		143,852		21.94		7.16
22.30 -   23.57		1,555,883		23.53		1,503,433		23.55		4.18
23.68 -   29.44		594,350		26.68		529,150		26.86		2.81
29.50		919,200		29.50		919,200		29.50		1.90
30.12 -   51.63		211,126		39.75		211,126		39.75		2.74
$    8.50 - $51.63		7,102,545				4,989,486

The number of shares available for future grant at February 28, 2005 is 4,572,487 Class A and 1,210,283 Class B shares.

NOTE 16 – BUSINESS 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 SFAS 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.

At February 28, 2005, the Corporation owned and operated 542 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 as well as products purchased from other vendors.

AG Interactive (89.9% owned) is an electronic provider of social expression content through the Internet and wireless platforms.

The Corporation’s non-reportable operating segments primarily include the design, manufacture and sale of display fixtures.

69

The Corporation’s senior management evaluates segment performance based on earnings before foreign currency exchange gains or losses, interest income, interest expense, centrally-managed costs and income taxes. The accounting policies of the reportable segments are the same as those described in Note 1 – Significant Accounting Policies, except those that are related to LIFO or applicable to only corporate items.

Intersegment sales from the Social Expression Products segment to the Retail Operations segment are recorded at estimated arm’s-length prices. Intersegment sales and profits are eliminated in consolidation. All inventories resulting from intersegment sales are carried at cost. Accordingly, the Retail Operations segment records full profit upon its sales to consumers.

The reporting and evaluation of segment assets include net accounts receivable, inventory on a “first-in, first-out” basis, display materials and factory supplies, prepaid expenses, other assets (including net deferred costs), and net property, plant and equipment.

Segment results are internally reported and evaluated at consistent exchange rates between years to eliminate 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 exchange rates used for segment reporting and evaluation and the actual exchange rates for the periods presented.

Centrally incurred and managed costs are not allocated back 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.

Operating Segment Information

	Net Sales									Segment Earnings (Loss)
	2005			2004			2003			2005			2004			2003
Social Expression Products	$	1,599,642		$	1,671,927		$	1,705,130		$	320,763		$	372,909		$	374,489
Intersegment items		(63,623	)		(77,460	)		(80,595	)		(46,630	)		(55,090	)		(58,233	)
Exchange rate adjustment		34,152			995			(37,692	)		6,061			135			(5,376	)
Net		1,570,171			1,595,462			1,586,843			280,194			317,954			310,880
Retail Operations		238,159			272,917			275,296			(20,685	)		4,269			19,128
Exchange rate adjustment		4,759			126			(9,168	)		317			16			(1,200	)
Net		242,918			273,043			266,128			(20,368	)		4,285			17,928
AG Interactive		57,514			36,427			34,615			(955	)		4,540			477
Exchange rate adjustment		405			—			—			(121	)		—			—
Net		57,919			36,427			34,615			(1,076	)		4,540			477
Non-reportable segments		32,624			54,295			47,896			(10,824	)		(7,404	)		6,451
Unallocated items — net		(905	)		(5,498	)		172			(139,032	)		(159,529	)		(147,624	)
Exchange rate adjustment		—			—			—			(646	)		5			(247	)
Net		(905	)		(5,498	)		172			(139,678	)		(159,524	)		(147,871	)
Consolidated	$	1,902,727		$	1,953,729		$	1,935,654		$	108,248		$	159,851		$	187,865

70

	Assets
	2005		2004		2003
Social Expression Products	$	1,475,993	$	1,684,542	$	1,813,954
Exchange rate adjustment		57,560		37,291		(20,334	)
Net		1,533,553		1,721,833		1,793,620
Retail Operations		77,402		89,822		95,572
Exchange rate adjustment		1,936		431		(1,808	)
Net		79,338		90,253		93,764
AG Interactive		96,300		55,638		58,619
Exchange rate adjustment		2,590		—		—
Net		98,890		55,638		58,619
Non-reportable segments		21,058		47,504		64,725
Unallocated and intersegment items		797,634		564,945		591,617
Exchange rate adjustment		5,155		3,840		(18,225	)
Net		802,789		568,785		573,392
Consolidated	$	2,535,628	$	2,484,013	$	2,584,120

	Depreciation and Amortization							Capital Expenditures
	2005		2004		2003			2005		2004		2003
Social Expression Products	$	43,695	$	45,099	$	45,855		$	36,298	$	21,009	$	22,890
Exchange rate adjustment		723		32		(882	)		449		21		(506	)
Net		44,418		45,131		44,973			36,747		21,030		22,384
Retail Operations		6,511		7,678		9,243			8,638		8,959		3,589
Exchange rate adjustment		100		3		(242	)		174		2		(116	)
Net		6,611		7,681		9,001			8,812		8,961		3,473
AG Interactive		3,976		4,402		3,716			1,427		1,224		1,014
Exchange rate adjustment		11		—		—			—		—		—
Net		3,987		4,402		3,716			1,427		1,224		1,014
Non-reportable segments		1,023		1,073		1,015			343		1,329		1,182
Unallocated and intersegment items		1,006		1,313		1,897			168		—		—
Consolidated	$	57,045	$	59,600	$	60,602		$	47,497	$	32,544	$	28,053

Product Information

	Net Sales
	2005		2004		2003
Everyday greeting cards	$	690,897	$	750,219	$	743,805
Seasonal greeting cards		370,521		368,757		364,086
Gift wrapping and wrap accessories		331,218		323,779		364,961
All other		510,091		510,974		462,802
Consolidated	$	1,902,727	$	1,953,729	$	1,935,654

Geographic Information

	Net Sales						Fixed Assets - Net
	2005		2004		2003		2005		2004		2003
United States	$	1,432,578	$	1,543,202	$	1,580,063	$	272,170	$	296,760	$	326,799
Foreign		470,149		410,527		355,591		67,622		57,613		51,648
Consolidated	$	1,902,727	$	1,953,729	$	1,935,654	$	339,792	$	354,373	$	378,447

71

Other

Termination Benefits and Plant Closing

During 2005, the Corporation recorded a severance accrual of $18,333 related to an overhead reduction program that eliminated approximately 300 associates and the Franklin, Tennessee plant closure. The following table summarizes this charge by segment:

Social Expression Products	$	14,797
Retail Operations		496
Non-reportable		442
Unallocated		2,598
Total	$	18,333

Substantially all of the associates receiving payments separated from the Corporation on or prior to February 28, 2005, with the remaining to exit during the quarter ending May 31, 2005. Approximately 70% of the severance will be paid prior to February 28, 2006, with the remaining payments extending through 2008. The remaining balance of this severance accrual was $13,590 at February 28, 2005.

In connection with the plant closing, the Social Expression Products segment recorded an additional charge of $10,842 during 2005 for the write-down of the building, the write-off of equipment disposed, moving costs, and various other related expenses. The Corporation expects this action to be completed during the first half of 2006 at an additional cost of approximately $3,000.

Retail Leases

During 2005, the Retail Operations segment reviewed its accounting for leases and recorded a pre-tax charge of $4,883 during the fourth quarter to correct certain errors that were identified. This correction relates solely to accounting treatment and did not impact historic or future cash flows and did not have a material impact on current or prior year consolidated financial statements.

NOTE 17 — INCOME TAXES

Income from continuing operations before income tax expense:

	2005		2004		2003
United States	$	53,672	$	103,054	$	145,613
Foreign		54,576		56,797		42,252
	$	108,248	$	159,851	$	187,865

72

Income tax expense (benefit) from the Corporation’s continuing operations has been provided as follows:

	2005			2004			2003
Current:
Federal	$	10,784		$	(2,910	)	$	77,731
Foreign		31,576			9,994			9,017
State and local		4,928			574			13,808
		47,288			7,658			100,556
Deferred		(9,590	)		54,204			(26,229	)
	$	37,698		$	61,862		$	74,327

Significant components of the Corporation’s deferred tax assets and liabilities as reflected in the Consolidated Statement of Financial Position at February 28, 2005 and February 29, 2004 are as follows:

	2005			2004
Deferred tax assets:
Employee benefit and incentive plans	$	17,974		$	21,936
Net operating loss carryforwards		63,604			41,896
Deferred capital loss		5,608			5,608
Reserves not currently deductible		76,786			56,311
Charitable contributions carryforward		9,040			14,278
Foreign tax credit carryforward		17,702			14,691
Other		12,522			46,933
		203,236			201,653
Valuation allowance		(49,260	)		(51,827	)
Total deferred tax assets		153,976			149,826
Deferred tax liabilities:
Inventory costing		3,033			5,020
Depreciation		31,666			35,975
Other		18,405			18,180
Total deferred tax liabilities		53,104			59,175
Net deferred tax assets	$	100,872		$	90,651

Deferred income tax balances reflect the effects of temporary differences between the carrying amounts of assets and liabilities and their tax bases as well as from net operating loss and tax credit carryforwards, and are stated at tax rates expected to be in effect when taxes are actually paid or recovered. Deferred income tax assets represent amounts available to reduce income tax payments in future years. The Corporation’s deferred tax assets at February 28, 2005 include foreign tax credits that will be realized as a result of the American Jobs Creation Act of 2004 (the “Act”), which increased the foreign tax credit (“FTC”) carryover period from five years to ten years. Based on the carryforward period, the Corporation believes it is more likely than not that it will utilize the credits, allowing it to remove the valuation allowance previously recorded against the FTC carryforwards.

73

The Corporation periodically reviews the need for a valuation allowance against deferred tax assets and recognizes these deferred tax assets to the extent that realization is more likely than not. Based upon a review of earnings history and trends, forecasted earnings and the relevant expiration of carryforwards, the Corporation believes that the valuation allowances provided are appropriate. At February 28, 2005, the valuation allowance of $49,260 related principally to certain foreign and domestic net operating loss carryforwards and the deferred capital loss.

Reconciliation of the Corporation’s income tax expense from continuing operations from the U.S. statutory rate to the actual effective income tax rate is as follows:

	2005			2004			2003
Income tax expense at statutory rate	$	37,887		$	55,948		$	65,753
State and local income taxes, net of federal tax benefit		3,314			4,657			6,016
Canada income tax audit assessment		12,961			945			—
Foreign differences		(127	)		(2,888	)		(493	)
Foreign tax credit related matters		(12,358	)		3,401			—
Other		(3,979	)		(201	)		3,051
Income tax at effective tax rate	$	37,698		$	61,862		$	74,327

Income taxes paid from continuing operations were $50,760 in 2005, $34,702 in 2004, and $168,843 in 2003. As of February 28, 2005, the Corporation has projected income tax refunds of $55,410 related to federal amended returns filed and IRS exam adjustments for 2000 through 2003 and current year tax overpayments.

At February 28, 2005, the Corporation had deferred tax assets of approximately $30,181 related to foreign net operating loss carryforwards, of which $17,547 have no expiration dates and $12,634 have expiration dates ranging from 2006 through 2014. In addition, the Corporation had deferred tax assets related to domestic net operating loss, state net operating loss, charitable contribution and FTC carryforwards of approximately $10,500, $22,923, $9,040 and $17,702, respectively. The federal net operating loss carryforward expires in 2021. The state net operating loss carryforwards have expiration dates ranging from 2004 to 2024. The charitable contribution carryforwards have expiration dates ranging from 2006 to 2009. The FTC carryforwards have expiration dates ranging from 2010 to 2014.

During the fourth quarter of 2005, the Canada Customs and Revenue Agency issued a tax assessment to the Corporation for certain income tax issues related to years 2000 through 2002. The Corporation recorded a tax expense, including interest and penalties, of $12,961 in 2005 related to the assessment.

On October 22, 2004, the American Jobs Creation Act of 2004 was signed into law. The Act provides for a special one-time tax deduction of 85% of certain foreign earnings that are repatriated (as defined in the Act) in 2006. The Corporation has not fully evaluated the effect of the repatriation provision and, therefore, has not determined if the Act will materially change its foreign earnings reinvestment plan. A full evaluation of the plan is expected to be completed by November 30, 2005. As such, deferred taxes have not been provided on approximately

74

$118,833 of undistributed earnings of foreign subsidiaries since substantially all of these earnings are necessary to meet their business requirements. It is not practicable to calculate the deferred taxes associated with these earnings; however, foreign tax credits would be available to reduce federal income taxes in the event of distribution.

NOTE 18 – 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 first quarter of fiscal 2006 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 $77,000 and recorded a pre-tax gain of $35,525 on 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 144. Accordingly, the Corporation’s 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.”

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

	2005		2004		2003
Net sales	$	30,965	$	56,537	$	60,206
Pretax income from operations		4,816		10,900		12,973
Gain on sale		35,525		—		—
		40,341		10,900		12,973
Income tax expense		15,612		4,219		5,405
Income from discontinued operations	$	24,729	$	6,681	$	7,568

At February 29, 2004, “Assets of businesses held for sale” and “Liabilities of businesses held for sale” in the Consolidated Statement of Financial Position include the following:

Assets of businesses held for sale:
Current assets	$	22,154
Other assets		7,318
Fixed assets		11,343
	$	40,815
Liabilities of businesses held for sale:
Current liabilities	$	3,722
Noncurrent liabilities		1,616
	$	5,338

75

QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
Thousands of dollars except per share amounts

The following is a summary of the unaudited quarterly results of operations for the years ended February 28, 2005 and February 29, 2004:

	Quarter Ended
	May 31		Aug 31		Nov 30		Feb 28
Fiscal 2005
Net sales	$	433,541	$	392,084	$	586,165	$	490,937
Gross profit		251,926		205,367		293,428		246,805
Income from continuing operations		2,936		5,900		40,344		21,370
Discontinued operations		1,302		1,010		22,417		—
Net income		4,238		6,910		62,761		21,370
Earnings per share:
Continuing operations	$	0.04	$	0.09	$	0.58	$	0.31
Net income		0.06		0.10		0.91		0.31
Earnings per share – assuming dilution:
Continuing operations		0.04		0.09		0.51		0.28
Net income		0.06		0.10		0.78		0.28
Dividends declared per share		—		—		0.06		0.06

The first quarter included a pre-tax charge of $39,024 related to the repurchase of a portion of the Corporation’s 11.75% senior subordinated notes. The second quarter included a pre-tax gain of $10,000 resulting from the modification of certain agreements related to licensing activities. The third quarter included a pre-tax charge of $16,570 associated with an overhead reduction program, a pre-tax charge of $13,000 related to the implementation of a new merchandising strategy for seasonal space management, a pre-tax charge of $8,233 associated with a plant closure and a pre-tax gain of $35,525 on the sale of the discontinued operations. The fourth quarter included a pre-tax charge of $29,769 associated with scan based trading conversions, a pre-tax charge of $6,376 associated with a plant closure, a pre-tax charge of $4,883 for a correction in the accounting for certain operating leases and an after-tax benefit of $4,194 resulting primarily from changes in tax laws.

The previously reported net sales and gross profit amounts for the first and second quarters have been adjusted to include an amount that was previously classified as other income. Miscellaneous sales of $505 in the first quarter and $191 in the second quarter were reclassified from other income – net to net sales.

During the second quarter, the Corporation committed to a plan to sell the Magnivision business. Accordingly, the business was reclassified as discontinued operations and prior periods’ continuing operations were restated.

76

	Quarter Ended
	May 31		Aug 31			Nov 30		Feb 29
Fiscal 2004
Net sales	$	440,755	$	391,033		$	603,754	$	518,187
Gross profit		262,010		195,061			313,391		270,562
Income (loss) from continuing operations		18,745		(10,609	)		45,091		44,762
Discontinued operations		960		914			1,271		3,536
Net income (loss)		19,705		(9,695	)		46,362		48,298
Earnings (loss) per share:
Continuing operations	$	0.29	$	(0.16	)	$	0.68	$	0.67
Net income (loss)		0.30		(0.15	)		0.70		0.72
Earnings (loss) per share – assuming dilution:
Continuing operations		0.26		(0.16	)		0.58		0.58
Net income (loss)		0.27		(0.15	)		0.60		0.62

The first quarter included a pre-tax charge of $4,639 related to the repayment of a term loan. The third quarter included a pre-tax charge of $13,750 related to the repurchase of a portion of the Corporation’s 11.75% senior subordinated notes. The fourth quarter included a pre-tax charge of approximately $20,000 for the write down of inventories related to seasonal performance and product discontinuances.

The previously reported net sales and gross profit amounts for the second and fourth quarters have been adjusted to include an amount that was previously classified as other income. Miscellaneous sales of $96 in the second quarter and $649 in the fourth quarter were reclassified from other income – net to net sales.

During the second quarter of 2005, the Corporation committed to a plan to sell the Magnivision business. Accordingly, the business was reclassified as discontinued operations and 2004 periods’ continuing operations were restated.

In quarters where the Corporation incurs a net loss, the Corporation does not calculate a dilutive effect on earnings (loss) per share because the effect would be antidilutive. Therefore, the sum of the quarterly earnings (loss) per share – assuming dilution may not equal the annual totals.

The business exhibits seasonality, which is typical for most companies in the retail industry. Sales are much stronger in the second half of the year than the first half of the year due to the concentration of major holidays during the second half of the year. Net earnings are highest during the months of September through December when sales volumes provide significant operating leverage. Working capital requirements needed to finance operations fluctuate during the year and reach their highest levels during the second and third fiscal quarters as inventory is increased in preparation for the peak selling season.

77

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

There were no disagreements with the Corporation’s independent registered public accounting firm on accounting or financial disclosure matters within the three year period ended February 28, 2005, or in any period subsequent to such date.

Item 9A. Controls and Procedures

Evaluation of Disclosure 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 principal 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 principal 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 principal financial officer concluded that the Corporation’s disclosure controls and procedures were effective as of February 28, 2005.

Report of Management on Internal Control Over Financial Reporting. The management of American Greetings Corporation is responsible for establishing and maintaining adequate internal control over financial reporting for the Corporation. American Greetings’ internal control system was designed to provide reasonable assurance regarding the preparation and fair presentation of published financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

American Greetings’ management assessed the effectiveness of the Corporation’s internal control over financial reporting as of February 28, 2005. In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on management’s assessment under COSO’s “Internal Control-Integrated Framework,” management believes that as of February 28, 2005, American Greetings’ internal control over financial reporting is effective.

Ernst & Young LLP, independent registered public accounting firm, has issued an audit report on management’s assessment of American Greetings’ internal control over financial reporting

78

and on the effectiveness of internal control over financial reporting. This attestation report is included in Part II, Item 8, at page 39 of this Annual Report on Form 10-K.

Zev Weiss
Chief Executive Officer
(principal executive officer) Joseph B. Cipollone
Chief Accounting Officer
(principal accounting officer & interim principal financial officer)

Changes in Internal Controls. There has been no change in the Corporation’s internal control 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 control over financial reporting.

Item 9B. Other Information

Not applicable

PART III

Item 10. Directors and Executive Officers of the Registrant

The Corporation hereby incorporates by reference the information called for by this Item 10 from the information contained in (i) the Corporation’s Proxy Statement in connection with its Annual Meeting of Shareholders to be held on June 24, 2005 under the headings and with subheadings “Election of Directors,” “Security Ownership – Section 16(a) Beneficial Ownership Reporting Compliance,” “Corporate Governance” and (ii) for information regarding executive officers, Part I of this Annual Report on Form 10-K.

Item 11. Executive Compensation

The Corporation hereby incorporates by reference the information called for by this Item 11 from the information contained in the Corporation’s Proxy Statement in connection with its Annual Meeting of Shareholders to be held on June 24, 2005 under the heading “Information Concerning Executive Officers.”

79

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The Corporation hereby incorporates by reference the information called for by this Item 12 from the information contained in the Corporation’s Proxy Statement in connection with its Annual Meeting of Shareholders to be held on June 24, 2005 under the headings “Security Ownership – Security Ownership of Management” and “Security Ownership – Security Ownership of Certain Beneficial Owners.”

EQUITY COMPENSATION PLAN INFORMATION

The following table provides information about the Corporation’s common shares that may be issued under the Corporation’s equity compensation plans as of February 28, 2005.

					Number of
					securities
					remaining available
	Number of				for future issuance
	securities to be				under equity
	issued upon		Weighted-average		compensation plans
	exercise of		exercise price of		(excluding
	outstanding		outstanding		securities
	options, warrants		options, warrants		reflected in column
Plan category	and rights		and rights		(a))
	(a)		(b)		(c)
Equity compensation plans approved by security holders (1)		7,102,545	$	21.24		5,782,770
Equity compensation plans not approved by security holders		—		N/A		—
Total		7,102,545	$	21.24		5,782,770

(1)	Column (a) represents the number of common shares that may be issued in connection with the exercise of outstanding stock options granted under the Corporation’s equity compensation plans. The amount includes 6,282,330 Class A common shares and 820,215 Class B common shares.
	Column (b) is the weighted-average exercise price of outstanding stock options; excludes restricted stock and deferred compensation share units.
	Column (c) includes 4,572,487 Class A common shares and 1,210,283 Class B common shares, which shares may generally be issued under the Corporation’s equity compensation plans upon the exercise of stock options or stock appreciation rights and/or awards of deferred shares, performance shares or restricted stock.
	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

80

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. The amounts reflected in column (c) do not reflect the number of shares that may be issued from time to time under the 1995 Director Stock Plan as payment for Director fees because there is no maximum number of shares that may be so issued.

Item 13. Certain Relationships and Related Transactions

The Corporation hereby incorporates by reference the information called for by this Item 13 from the information contained in the Corporation’s Proxy Statement in connection with its Annual Meeting of Shareholders to be held on June 24, 2005 under the heading “Information Concerning Executive Officers – Certain Relationships and Related Transactions.”

Item 14. Principal Accounting Fees and Services

The Corporation hereby incorporates by reference the information called for by this Item 14 from the information contained in the Corporation’s Proxy Statement in connection with its Annual Meeting of Shareholders to be held on June 24, 2005 under the heading “Independent Registered Public Accounting Firm – Fees Paid to Ernst & Young LLP.”

(Next item is Part IV)

81

PART IV

Item 15. Exhibits, Financial Statement Schedules

(a) The following documents are filed as part of this Annual Report on Form 10-K

     1. Financial Statements

Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting

Report of Independent Registered Public Accounting Firm

Consolidated Statement of Income — Years ended February 28, 2005, February 29, 2004, and February 28, 2003

Consolidated Statement of Financial Position — February 28, 2005 and February 29, 2004

Consolidated Statement of Cash Flows – Years ended February 28, 2005, February 29, 2004, and February 28, 2003

Consolidated Statement of Shareholders’ Equity — Years ended February 28, 2005, February 29, 2004, and February 28, 2003

Notes to Consolidated Financial Statements — Years ended February 28, 2005, February 29, 2004, and February 28, 2003

Quarterly Results of Operations (Unaudited)

     2. Financial Statement Schedules

Schedule II – Valuation and Qualifying Accounts

     3. Exhibits required by Item 601 of Regulation S-K

Item	Description
3	Articles of Incorporation and By-laws
	(i)	Amended Articles of Incorporation of the Corporation
		This Exhibit has been previously filed as an Exhibit to the Corporation’s Annual Report on Form 10-K for the fiscal year ended February 28, 1999, and is incorporated herein by reference.

82

Item	Description
	(ii)	Amendment to Amended Articles of Incorporation of the Corporation
		This Exhibit has been previously filed as an Exhibit to the Corporation’s Annual Report on Form 10-K for the fiscal year ended February 29, 2004, and is incorporated herein by reference.
	(iii)	Amended Regulations of the Corporation
		This Exhibit has been previously filed as an Exhibit to the Corporation’s Annual Report on Form 10-K for the fiscal year ended February 28, 1999, and is incorporated herein by reference.
(4)	Instruments Defining the Rights of Security Holders, including indentures
	(i)	Trust Indenture, dated as of July 27, 1998.
		This Exhibit has been previously filed as an Exhibit to the Corporation’s Annual Report on Form 10-K for the fiscal year ended February 28, 1999, and is incorporated herein by reference.
	(ii)	Credit Agreement, dated May 11, 2004, among the following: (i) the Corporation, (ii) National City Bank, as an LC issuer, swing line lender and as the lead arranger and global agent, (iii) KeyBank National Association, as lender and syndication agent, (iv) LaSalle Bank National Association, as lender, LC issuer and documentation agent, and (v) certain named financial institutions as lenders (the “Credit Agreement”). Certain exhibits and schedules to the Credit Agreement have been excluded and will be furnished to the Securities and Exchange Commission upon request.
		This Exhibit has been previously filed as an Exhibit to the Corporation’s Quarterly Report on Form 10-Q for the quarter ended May 31, 2004, and is incorporated herein by reference.
	(iii)	Amendment No. 1 to the Credit Agreement and Waiver and Consent, dated as of January 28, 2005, among the Corporation, National City Bank as the Global Agent and as Collateral Agent, and certain named financial institutions as lenders. Certain exhibits and schedules to the Credit Agreement have been excluded and will be furnished to the Securities and Exchange Commission upon request. This Exhibit is filed herewith.
	(iv)	Amendment No. 2 to the Credit Agreement, dated as of April 1, 2005, among the Corporation, National City Bank as the Global Agent and as Collateral Agent, and certain named financial institutions as lenders. Certain exhibits and schedules to the Credit Agreement have been excluded and will be furnished to the Securities and Exchange Commission upon request.
		This Exhibit is filed herewith.

83

Item	Description
	(v)	Indenture, dated as of June 29, 2001, between the Corporation, as issuer, and The Huntington National Bank, as Trustee, with respect to the Corporation’s 11.75% Senior Subordinated Notes due 2008.
		This Exhibit has been previously filed as an Exhibit to the Corporation’s Registration Statement on Form S-4 (Registration No. 333-68536), dated August 28, 2001, and is incorporated herein by reference.
	(vi)	First Supplemental Indenture, dated May 12, 2004, to the Indenture dated June 29, 2001, with respect in the Corporation’s 11.75% Senior Subordinated Notes due 2008, between the Corporation, as issuer, and The Huntington National Bank, as Trustee.
		This Exhibit has been previously filed as an Exhibit to the Corporation’s Quarterly Report on Form 10-Q for the quarter ended May 31, 2004, and is incorporated herein by reference.
	(vii)	Indenture, dated as of June 29, 2001, between the Corporation, as issuer, and National City Bank, as Trustee, with respect to the Corporation’s 7.00% Convertible Subordinated Notes due July 15, 2006.
		This Exhibit has been previously filed as an Exhibit to the Corporation’s Registration Statement on Form S-3 (Registration No. 333-68526), dated August 28, 2001, and is incorporated herein by reference.
	(viii)	Receivables Purchase Agreement, dated as of August 7, 2001, among AGC Funding Corporation, the Corporation, Market Street Funding Corporation and PNC Bank, National Association.
		This Exhibit has been previously filed as an Exhibit to the Corporation’s Annual Report on Form 10-K for the fiscal year ended February 28, 2002, and is incorporated herein by reference.
	(ix)	Fifth Amendment to Receivables Purchase Agreement, dated as of August 2, 2004, among AGC Funding Corporation, the Corporation, Market Street Funding Corporation, PNC Bank, National Association, Fifth Third Bank, Liberty Street Funding Corp. and The Bank of Nova Scotia. This Exhibit is filed herewith.
10	Material Contracts
	(i)	Officers’ contracts.
		This Exhibit has been previously filed as an Exhibit to the Corporation’s Annual Report on Form 10-K for the fiscal year ended February 28, 1999, and is incorporated herein by reference.
	(ii)	Shareholders’ Agreement dated November 19, 1984.
		This Exhibit has been previously filed as an Exhibit to the Corporation’s Annual Report on Form 10-K for the fiscal year ended February 28, 2002, and is incorporated herein by reference.

84

Item	Description
	(iii)	Executive Deferred Compensation Plan.
		This Exhibit has been previously filed as an Exhibit to the Corporation’s Annual Report on Form 10-K for the fiscal year ended February 28, 1999, and is incorporated herein by reference.
	(iv)	1982 Incentive Stock Option Plan.
		This Exhibit has been previously filed as an Exhibit to the Corporation’s Registration Statement on Form S-8 (Registration No. 2-84911), dated July 1, 1983, and is incorporated herein by reference.
	(v)	1985 Incentive Stock Option Plan.
		This Exhibit has been previously filed as an Exhibit to the Corporation’s Registration Statement on Form S-8 (Registration No. 33-975), dated November 7, 1985, and is incorporated herein by reference.
	(vi)	1987 Class B Stock Option Plan.
		This Exhibit has been previously filed as an Exhibit to the Corporation’s Registration Statement on Form S-8 (Registration No. 33-16180), dated July 31, 1987, and is incorporated herein by reference.
	(vii)	Stock Option Agreement with Morry Weiss dated January 25, 1988.
		This Exhibit has been previously filed as an Exhibit to the Corporation’s Annual Report on Form 10-K for the fiscal year ended February 28, 2002, and is incorporated herein by reference.
	(viii)	1992 Stock Option Plan.
		This Exhibit has been previously filed as an Exhibit to the Corporation’s Registration Statement on Form S-8 (Registration No. 33-58582), dated February 22, 1993, and is incorporated herein by reference.
	(ix)	1995 Director Stock Plan.
		This Exhibit has been previously filed as an Exhibit to the Corporation’s Registration Statement on Form S-8 (Registration No. 33-61037), dated July 14, 1995, and is incorporated herein by reference.
	(x)	1996 Employee Stock Option Plan.
		This Exhibit has been previously filed as an Exhibit to the Corporation’s Registration Statement on Form S-8 (Registration No. 33-08123), dated July 15, 1996, and is incorporated herein by reference.

85

Item	Description
	(xi)	1997 Equity and Performance Incentive Plan (as amended on June 25, 2004).
		This Exhibit has been previously filed as an Exhibit to the Corporation’s Registration Statement on Form S-8 (Registration No. 333-121982), dated January 12, 2005, and is incorporated herein by reference.
	(xii)	CEO and Named Executive Officers Compensation Plan.
		This Exhibit has been previously filed as an Exhibit to the Corporation’s Annual Report on Form 10-K for the fiscal year ended February 28, 2001, and is incorporated herein by reference.
	(xiii)	Supplemental Executive Retirement Plan (as amended and restated effective March 1, 2004).
		This Exhibit has been previously filed as an Exhibit to the Corporation’s Quarterly Report on Form 10-Q for the quarter ended November 30, 2004, and is incorporated herein by reference.
	(xiv)	Employment Agreement, dated as of September 25, 2001, between James C. Spira and the Corporation.
		This Exhibit has been previously filed as an Exhibit to the Corporation’s Registration Statement on Form S-8 (Registration No. 333-75696), dated December 21, 2001, and is incorporated herein by reference.
	(xv)	Employment Agreement, dated as of March 1, 2001, between William R. Mason and the Corporation.
		This Exhibit has been previously filed as an Exhibit to the Corporation’s Annual Report on Form 10-K for the fiscal year ended February 28, 2002, and is incorporated herein by reference.
	(xvi)	Employment Agreement, dated as of October 17, 2002, between Michael Goulder and the Corporation.
		This Exhibit has been previously filed as an Exhibit to the Corporation’s Annual Report on Form 10-K for the fiscal year ended February 28, 2003, and is incorporated herein by reference.
	(xvii)	Employment Agreement, dated as of May 6, 2002, between Erwin Weiss and the Corporation.
		This Exhibit has been previously filed as an Exhibit to the Corporation’s Annual Report on Form 10-K for the fiscal year ended February 28, 2003, and is incorporated herein by reference.

86

Item	Description
	(xviii)	Employment Agreement, dated as of September 9, 2002, between Steven Willensky and the Corporation.
		This Exhibit has been previously filed as an Exhibit to the Corporation’s Annual Report on Form 10-K for the fiscal year ended February 28, 2003, and is incorporated herein by reference.
	(xix)	Employment Agreement, dated as of August 22, 2003, between Catherine M. Kilbane and the Corporation.
		This Exhibit has been previously filed as an Exhibit to the Corporation’s Annual Report on Form 10-K for the fiscal year ended February 29, 2004, and is incorporated herein by reference.
	(xx)	Employment Agreement, dated as of June 1, 1991, between Jeffrey M. Weiss and the Corporation.
		This Exhibit has been previously filed as an Exhibit to the Corporation’s Annual Report on Form 10-K for the fiscal year ended February 29, 2004, and is incorporated herein by reference.
	(xxi)	Employment Agreement, dated as of May 1, 1997, between Zev Weiss and the Corporation.
		This Exhibit has been previously filed as an Exhibit to the Corporation’s Annual Report on Form 10-K for the fiscal year ended February 29, 2004, and is incorporated herein by reference.
	(xxii)	Retirement Agreement, effective as of February 21, 2005, between David R. Beittel and the Corporation.
		This Exhibit is filed herewith.
	(xxiii)	Severance Agreement, effective as of February 28, 2005, between Pamela L. Linton and the Corporation.
		This Exhibit is filed herewith.
	(xxiv)	Consulting Agreement, effective as of March 1, 2005, between Pamela L. Linton and the Corporation.
		This Exhibit is filed herewith.
	(xxv)	Severance Agreement and Mutual Release, effective as of February 28, 2005, between Mary Ann Corrigan-Davis and the Corporation.
		This Exhibit is filed herewith.

87

Item	Description
	(xxvi)	Key Management Annual Incentive Plan (fiscal year 2004 Description)
		This Exhibit has been previously filed as an Exhibit to the Corporation’s Annual Report on Form 10-K for the fiscal year ended February 29, 2004, and is incorporated herein by reference.
	(xxvii)	Key Management Annual Incentive Plan (fiscal year 2005 Description)
		This Exhibit is filed herewith.
	(xxviii)	Key Management Annual Incentive Plan (fiscal year 2006 Description)
		This Exhibit is filed herewith.
	(xxix)	Agreement to defer stock option gains with Morry Weiss dated December 15, 1997
		This Exhibit has been previously filed as an Exhibit to the Corporation’s Annual Report on Form 10-K for the fiscal year ended February 28, 2003, and is incorporated herein by reference.
	(xxx)	Form of Employee Stock Option Agreement
		This Exhibit is filed herewith.
	(xxxi)	Form of Director Stock Option Agreement.
		This Exhibit is filed herewith.
	(xxxii)	Form of Restricted Shares Grant Agreement.
		This Exhibit is filed herewith.
	(xxxiii)	Form of Deferred Shares Grant Agreement.
		This Exhibit is filed herewith.
	(xxxiv)	Employment Agreement, dated June 26, 2003, between James C. Spira and the Corporation, as amended on June 24, 2004.
		This Exhibit is filed herewith.
	(xxxv)	Bonus Letter, dated October 4, 2000, to Erwin Weiss.
		This Exhibit is filed herewith.

88

Item		Description
		(xxxvi)	Employment Agreement, dated as of March 4, 2004, between Thomas H. Johnston and the Corporation, as amended on March 11, 2004.
			This Exhibit is filed herewith.
21		Subsidiaries of the Corporation
			This Exhibit is filed herewith.
23		Consent of Independent Registered Public Accounting Firm
			This Exhibit is filed herewith.
(31)a		Certification of Principal Executive Officer Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934
			This Exhibit is filed herewith.
(31)b		Certification of Principal Financial Officer Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934
			This Exhibit is filed herewith.
32(a)		Certification Pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
			This Exhibit is filed herewith.
(b)	Exhibits listed in Item 15(a) 3. are included herein or incorporated herein by reference.
(c)	Financial Statement Schedules
	The response to this portion of Item 15 is submitted below.
			3. Financial Statement Schedules
			Included in Part IV of the report:
			Schedule II — Valuation and Qualifying Accounts

All other schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions or are inapplicable, and therefore have been omitted.

89

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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                       (Registrant)
Date: May 11, 2005	By:	/s/ Catherine M. Kilbane
		Catherine M. Kilbane Senior Vice President, General Counsel and Secretary

Pursuant to the requirements of the Securities and Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:

SIGNATURE	TITLE		DATE
		)
/s/ Morry Weiss	Chairman of the Board;	)
Morry Weiss	Director	)
		)
		)
	Chief Executive Officer; (principal	)
/s/ Zev Weiss	executive officer)	)
Zev Weiss	Director	)
		)
		)
/s/ Jeffrey Weiss	President and Chief Operating Officer;	)
Jeffrey Weiss	Director	)
		)
		)
/s/ Scott S. Cowen	Director	)
Scott S. Cowen		)
		)
		)
/s/ Joseph S. Hardin Jr.	Director	)
Joseph S. Hardin, Jr.		)
		)
		)
/s/ Stephen R. Hardis	Director	)	May 11, 2005
Stephen R. Hardis		)
		)
		)
/s/ Harriet Mouchly-Weiss	Director	)
Harriet Mouchly-Weiss		)
		)
		)
/s/ Charles A. Ratner	Director	)
Charles A. Ratner		)
		)
/s/ James C. Spira	Director	)
James C. Spira		)
		)
		)
/s/ Jerry Sue Thornton	Director	)
Jerry Sue Thornton		)
		)
	Vice President and Corporate	)
/s/ Joseph B. Cipollone	Controller; Chief Accounting	)
Joseph B. Cipollone	Officer (principal accounting officer	)
	and interim principal financial
	officer)

SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS
AMERICAN GREETINGS CORPORATION AND SUBSIDIARIES
(In thousands of dollars)

COLUMN A	COLUMN B		COLUMN C					COLUMN D			COLUMN E
			ADDITIONS
	Balance		(1)		(2)						Balance
	at Beginning		Charged to Costs		Charged to Other						at End
Description	of Period		and Expenses		Accounts-Describe			Deductions-Describe			of Period
Year ended February 28, 2005:
Deduction from asset account:
Allowance for doubtful accounts	$	17,871	$	2,557	$	158	(A)	$	3,902	(B)	$	16,684
Allowance for sales returns	$	85,638	$	264,840	$	1,306	(A)	$	257,112	(C)	$	94,672
Allowance for other assets	$	40,100	$	11,800	$	0		$	14,400	(D)	$	37,500
Year ended February 29, 2004:
Deduction from asset account:
Allowance for doubtful accounts	$	34,825	$	5,119	$	547	(A)	$	22,620	(B)	$	17,871
Allowance for sales returns	$	86,318	$	288,874	$	3,316	(A)	$	292,870	(C)	$	85,638
Allowance for other assets	$	36,100	$	7,500	$	0		$	3,500	(D)	$	40,100
Year ended February 28, 2003:
Deduction from asset account:
Allowance for doubtful accounts	$	34,498	$	15,031	$	425	(A)	$	15,129	(B)	$	34,825
Allowance for sales returns	$	102,265	$	317,646	$	1,985	(A)	$	335,578	(C)	$	86,318
Allowance for other assets	$	34,900	$	32,500	$	0		$	31,300	(D)	$	36,100

Note A: Translation adjustment on foreign subsidiary balances.

Note B: Accounts charged off, less recoveries.

Note C: Sales returns charged to the allowance account for actual returns.

Note D: Deferred Contract costs charged to the allowance account.

S - 1

EX-4.III

                                                                  Exhibit 4(iii)

================================================================================

                                 AMENDMENT NO. 1

                                       TO

                                CREDIT AGREEMENT
                             AND WAIVER AND CONSENT

                                      AMONG

                         AMERICAN GREETINGS CORPORATION,

                                 AS A BORROWER,

                     THE LENDING INSTITUTIONS NAMED HEREIN,
                                   AS LENDERS,

                                       AND

                               NATIONAL CITY BANK,
                  AS THE GLOBAL AGENT AND THE COLLATERAL AGENT

                           ---------------------------

                          DATED AS OF JANUARY 28, 2005

                          ----------------------------

================================================================================



      This AMENDMENT NO. 1 TO CREDIT AGREEMENT AND WAIVER AND CONSENT (this
"Amendment") is entered into as of January 28, 2005, by and among the following:
(i) AMERICAN GREETINGS CORPORATION, an Ohio corporation (the "Company"); (ii)
the Lenders, as defined in the Credit Agreement; and (iii) NATIONAL CITY BANK,
as Global Agent and as Collateral Agent, each as defined in the Credit
Agreement.

                                    RECITALS:

      A.    The Company, the Foreign Subsidiary Borrowers from time to time
party to the Credit Agreement referred to below, the Global Agent, the
Collateral Agent, the Lenders, KEYBANK NATIONAL ASSOCIATION, as Syndication
Agent, and LASALLE BANK NATIONAL ASSOCIATION, as Documentation Agent are parties
to an Amended and Restated Credit Agreement dated as of May 11, 2004 (as the
same may from time to time be amended, restated or otherwise modified, the
"Credit Agreement").

      B.    The Company has requested that the Global Agent, the Collateral
Agent, and the Lenders agree to waive and amend certain provisions of the Credit
Agreement, as set forth herein.

      C.    The Global Agent, the Collateral Agent, and the Lenders are willing
to agree to such waiver and amendment pursuant to the terms and subject to the
conditions set forth herein.

                                   AGREEMENT:

      In consideration of the premises and mutual covenants herein and for other
valuable consideration, the Company, the Global Agent, the Collateral Agent and
the Lenders agree as follows:

      Section 1. Definitions. Unless otherwise defined herein, each capitalized
term used in this Amendment and not defined herein shall have such meaning
ascribed to it in the Credit Agreement.

      Section 2. Waiver. The Company has maintained and permitted certain of its
Subsidiaries to maintain more than $100,000 of inventory on consignment in
violation of Section 4.3(b) of the Security Agreement. Such violation
constitutes a Default and would, with the passage of time, constitute an Event
of Default under Section 8.01(d) of the Credit Agreement (the "Current
Violation"). The Company has requested that the Lenders waive the Default that
has occurred and any Event of Default that may have occurred under Section
8.01(d) of the Credit Agreement as a result of the Current Violation. Effective
as of the Amendment Effective Date (as defined below), and subject to the terms
and conditions set forth in this Amendment, the Lenders hereby waive the Default
and the Event of Default under Section 8.01(d) of the Credit Agreement that has
occurred solely as a result of the Current Violation.

      Section 3. Consent.

      3.1 The parties hereto hereby consent to Amendment No. 1 to Amended and
Restated Pledge and Security Agreement, dated as of the date hereof, by and
among the Company, each Subsidiary Guarantor, and the Collateral Agent, on
behalf of the Lenders, a copy of which is attached hereto as Exhibit A (the
"Security Agreement Amendment").



      3.2 The Company has informed the Global Agent, the Collateral Agent and
the Lenders that AG Interactive, Inc. ("AG Interactive") desires to transfer all
of the equity interests of K-Mobile, S.A., a French societe anonyme, owned by AG
Interactive to A.G. Interactive, B.V., a Dutch company (the "Equity Transfer").
Section 7.02 of the Credit Agreement does not permit the Equity Transfer. The
Company has requested that the Global Agent, the Collateral Agent and the
Lenders consent to the Equity Transfer. Notwithstanding the restrictions set
forth in Section 7.02 of the Credit Agreement, effective on the Amendment
Effective Date (as defined below), the Global Agent, the Collateral Agent and
the Lenders consent to the Equity Transfer, so long as, after giving effect to
this Amendment, no Default or Event of Default shall exist at the time of or
immediately after giving effect to the Equity Transfer.

      Section 4. Release. Effective on the Amendment Effective Date, AG
Interactive shall be released from the Subsidiary Guaranty, the Security
Agreement and each other Loan Document to which AG Interactive is a party and,
solely as to AG Interactive, the Subsidiary Guaranty, the Security Agreement and
each other Loan Document to which AG Interactive is a party shall terminate and
have no further force or effect. In connection with the foregoing, the
Collateral Agent hereby releases any security interest or Lien that it may have
pursuant to any of the Security Documents on any of AG Interactive's property or
assets. Each of the Lenders hereby directs and authorizes the Collateral Agent
to take such action as the Collateral Agent shall deem necessary or appropriate
in connection with the foregoing releases, including, but not limited to, the
termination of any UCC financing statements that were filed by the Collateral
Agent with respect to AG Interactive.

      Section 5. Amendments.

      5.1 Amendment to Lien Covenant. Section 7.03 of the Credit Agreement is
hereby amended (i) to replace the period (.) at the end of subsection (e) with
the following: "; or", and (ii) to add the following new subsection (f) thereto:

      (f) Liens on consigned Scan-Based Inventory (as defined in the Security
      Agreement), but only to the extent a Grantor Customer (as defined in the
      Security Agreement) has a creditor that has a Lien on the inventory of
      such Grantor Customer.

      5.2 Replacement of Schedule 3. Schedule 3 to the Credit Agreement is
hereby replaced with Schedule 3 attached to this Amendment.

      Section 6. Effectiveness.

      6.1 Conditions Precedent. The waiver, consent and amendment set forth
above shall become effective as of the date first written above (the "Amendment
Effective Date") if on or before such date the following conditions have been
satisfied:

            (i) this Amendment shall have been executed by the Company, the
      Global Agent, the Collateral Agent and each Lender, and counterparts
      hereof as so executed shall have been delivered to the Global Agent;

            (ii) the Company shall have caused each Subsidiary Guarantor to
      consent and agree to and acknowledge the terms of this Amendment;

            (iii) the Security Agreement Amendment shall have been executed by
      the Company, each Subsidiary Guarantor, and the Collateral Agent, and
      counterparts thereof as so executed shall have been delivered to the
      Global Agent; and

                                      -2-


            (iv) the Company shall have provided such other items and shall have
      satisfied such other conditions as may be reasonably required by the
      Global Agent.

      6.2 Amendment Effective Date. The Global Agent shall provide the Company
and the Lenders written notice immediately upon the occurrence of the Amendment
Effective Date. Unless otherwise specifically set forth herein, each of the
waivers, consents, amendments and other modifications set forth in this
Amendment shall be effective on and after the Amendment Effective Date.

      Section 7. Miscellaneous.

      7.1 Representations and Warranties. The Company, by signing below, hereby
represents and warrants to the Global Agent, the Collateral Agent, and the
Lenders that:

            (i) the Company has the legal power and authority to execute and
      deliver this Amendment;

            (ii) the officers executing this Amendment on behalf of the Company
      have been duly authorized to execute and deliver the same and bind the
      Company with respect to the provisions hereof;

            (iii) the execution and delivery hereof by the Company and the
      performance and observance by the Company of the provisions hereof do not
      violate or conflict with the Organizational Documents of the Company or
      any law applicable to the Company or result in a breach of any provision
      of or constitute a default under any other agreement, instrument or
      document binding upon or enforceable against the Company;

            (iv) after giving effect to this Amendment, no Default or Event of
      Default exists under the Credit Agreement, nor will any occur immediately
      after the execution and delivery of this Amendment or by the performance
      or observance of any provision hereof;

            (v) upon the execution and delivery of this Amendment by the
      Company, this Amendment shall constitute a valid and binding obligation of
      the Company in every respect, enforceable in accordance with its terms,
      except as the enforceability thereof may be limited by bankruptcy,
      insolvency or other similar laws of general application affecting the
      enforcement of creditors' rights or by general principles of equity
      limiting the availability of equitable remedies; and

            (vi) each of the representations and warranties set forth in Article
      V of the Credit Agreement is true and correct in all material respects as
      of the date hereof, except to the extent that any thereof expressly relate
      to an earlier date.

      7.2 Waiver of Claims. The Company hereby waives and releases the Global
Agent, the Collateral Agent, and each of the Lenders and their respective
directors, officers, employees, attorneys, affiliates and subsidiaries from any
and all claims, offsets, defenses and counterclaims of which any of the
undersigned is aware arising out of or relating to the Credit Agreement and the
other Loan Documents, such waiver and release being with full knowledge and
understanding of the circumstances and effect thereof and after having consulted
legal counsel with respect thereto.

      7.3 Expenses. As provided in the Credit Agreement, but without limiting
any terms or provisions thereof, the Company agrees to pay on demand all
reasonable costs and expenses incurred by the Global Agent in connection with
the preparation, negotiation, and execution of this Amendment,

                                      -3-


including without limitation the reasonable costs and fees of the Global Agent's
special legal counsel, regardless of whether this Amendment becomes effective in
accordance with the terms hereof, and all costs and expenses incurred by the
Global Agent, the Collateral Agent or any Lender in connection with the
enforcement or preservation of any rights under the Credit Agreement, as amended
hereby.

      7.4 Credit Agreement Unaffected. Each reference to the Credit Agreement
herein or in any other Loan Document shall hereafter be construed as a reference
to the Credit Agreement as amended hereby. Except as herein otherwise
specifically provided, all provisions of the Credit Agreement shall remain in
full force and effect and be unaffected hereby. This Amendment is a Loan
Document.

      7.5 Entire Agreement. This Amendment, together with the Credit Agreement
and the other Loan Documents, integrates all the terms and conditions mentioned
herein or incidental hereto and supersedes all oral representations and
negotiations and prior writings with respect to the subject matter hereof.

      7.6 Counterparts. This Amendment may be executed in any number of
counterparts, by different parties hereto in separate counterparts and by
facsimile signature, each of which when so executed and delivered shall be
deemed to be an original and all of which taken together shall constitute but
one and the same agreement.

      7.7 Governing Law. THIS AMENDMENT AND THE OTHER LOAN DOCUMENTS AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE
CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF OHIO
WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES. TO THE FULLEST EXTENT PERMITTED
BY LAW, EACH CREDIT PARTY HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY
CLAIM TO ASSERT THAT THE LAW OF ANY JURISDICTION OTHER THAN THE STATE OF OHIO
GOVERNS THIS AMENDMENT OR ANY OF THE OTHER LOAN DOCUMENTS.

      7.8 JURY TRIAL WAIVER. EACH OF THE PARTIES TO THIS AMENDMENT HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AMENDMENT OR ANY OF THE OTHER
LOAN DOCUMENTS (INCLUDING, WITHOUT LIMITATION, ANY AMENDMENTS, WAIVERS OR OTHER
MODIFICATIONS RELATING TO ANY OF THE FOREGOING), OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.

                            [Signature pages follow.]

                                      -4-


      IN WITNESS WHEREOF, this Amendment has been duly executed and delivered as
of the date first above written.

                          AMERICAN GREETINGS CORPORATION

                          By: /s/ Stephen Smith
                             -----------------------------------
                              Name: Stephen Smith
                              Title: VP, Treasurer and Investor Relations

                          NATIONAL CITY BANK,
                          as the Global Agent, the Collateral Agent, the Swing
                            Line Lender, a LC Issuer, and a Lender

                          By: /s/ Robert S. Coleman
                             ------------------------------------
                              Name: Robert S. Coleman
                              Title: Senior Vice President



                                 Signature Page
                                       to
           Amendment No. 1 to Credit Agreement and Waiver and Consent,
                          dated as of January 28, 2005,
           by and among American Greetings Corporation, as a Borrower,
      National City Bank, as the Global Agent and the Collateral Agent, and
                            the Lenders party thereto

                          NAME OF INSTITUTION: National City Bank, Canada Branch

                                  By: /s/ Caroline M. Stade / G. William Hines
                                      ----------------------------------------
                                      Name: Caroline M. Stade / G. William Hines
                                      Title: VP / SVP



                                 Signature Page
                                       to
           Amendment No. 1 to Credit Agreement and Waiver and Consent,
                          dated as of January 28, 2005,
           by and among American Greetings Corporation, as a Borrower,
      National City Bank, as the Global Agent and the Collateral Agent, and
                            the Lenders party thereto

                          NAME OF INSTITUTION: LaSalle Bank National Association

                                          By: /s/ James P. Bahleda
                                             --------------------------
                                              Name: James P. Bahleda
                                              Title: AVP



                                 Signature Page
                                       to
           Amendment No. 1 to Credit Agreement and Waiver and Consent,
                          dated as of January 28, 2005,
           by and among American Greetings Corporation, as a Borrower,
      National City Bank, as the Global Agent and the Collateral Agent, and
                            the Lenders party thereto

                          NAME OF INSTITUTION: PNC Bank, National Association

                                         By: /s/ Joseph G. Moran
                                             ------------------------------
                                             Name: Joseph G. Moran
                                             Title: Managing Director



                                 Signature Page
                                       to
           Amendment No. 1 to Credit Agreement and Waiver and Consent,
                          dated as of January 28, 2005,
           by and among American Greetings Corporation, as a Borrower,
      National City Bank, as the Global Agent and the Collateral Agent, and
                            the Lenders party thereto

                          NAME OF INSTITUTION: JPMorgan Chase Bank, N.A.

                                         By: /s/ Lisa A. Whatley
                                            -------------------------------
                                             Name: Lisa A. Whatley
                                             Title: Managing Director



                                 Signature Page
                                       to
           Amendment No. 1 to Credit Agreement and Waiver and Consent,
                          dated as of January 28, 2005,
           by and among American Greetings Corporation, as a Borrower,
      National City Bank, as the Global Agent and the Collateral Agent, and
                            the Lenders party thereto

                          NAME OF INSTITUTION: The Bank of New York

                                         By: /s/ Kenneth R. McDonnell
                                            -------------------------------
                                             Name: Kenneth R. McDonnell
                                             Title: Vice President



                                 Signature Page
                                       to
           Amendment No. 1 to Credit Agreement and Waiver and Consent,
                          dated as of January 28, 2005,
           by and among American Greetings Corporation, as a Borrower,
      National City Bank, as the Global Agent and the Collateral Agent, and
                            the Lenders party thereto

                          NAME OF INSTITUTION: The Bank of Nova Scotia

                                         By: /s/ V. Gibson
                                            --------------------------
                                             Name: V. Gibson
                                             Title: Assistant Agent


                                 Signature Page
                                       to
          Amendment No. 1 to Credit Agreement and Waiver and Consent,
                          dated as of January 28, 2005,
           by and among American Greetings Corporation, as a Borrower,
      National City Bank, as the Global Agent and the Collateral Agent, and
                            the Lenders party thereto

                 NAME OF INSTITUTION: The Northern Trust Company

                                By: /s/ David J. Sullivan
                                    ------------------------------
                                    Name: David J. Sullivan
                                    Title: Vice President



                                 Signature Page
                                       to
           Amendment No. 1 to Credit Agreement and Waiver and Consent,
                          dated as of January 28, 2005,
           by and among American Greetings Corporation, as a Borrower,
      National City Bank, as the Global Agent and the Collateral Agent, and
                            the Lenders party thereto

                       NAME OF INSTITUTION: Barclays Bank PLC

                                By: /s/ Vince Muldoon
                                    --------------------
                                    Name: Vince Muldoon
                                    Title: Director



                     GUARANTOR ACKNOWLEDGMENT AND AGREEMENT

      Each of the undersigned consents and agrees to and acknowledges the terms
of the foregoing Amendment No. 1 to Credit Agreement and Waiver and Consent,
dated as of January 28, 2005 (the "Amendment"). Each of the undersigned
specifically acknowledges the terms of and consents to the waivers set forth
therein. Each of the undersigned further agrees that the obligations of each of
the undersigned pursuant to the Subsidiary Guaranty executed by each of the
undersigned shall remain in full force and effect and be unaffected hereby.
Unless otherwise defined herein, each capitalized term used in this Amendment
and not defined herein shall have such meaning ascribed to it in the Credit
Agreement (as defined in the Amendment).

      Each of the undersigned, by signing below, hereby waives and releases the
Global Agent, the Collateral Agent, and each of the Lenders and their respective
directors, officers, employees, attorneys, affiliates and subsidiaries from any
and all claims, offsets, defenses and counterclaims of which any of the
undersigned is aware arising out of or relating to the Subsidiary Guaranty and
the other Loan Documents, such waiver and release being with full knowledge and
understanding of the circumstances and effect thereof and after having consulted
legal counsel with respect thereto.

      EACH OF THE UNDERSIGNED HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY
JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THE
AMENDMENT, THIS GUARANTOR ACKNOWLEDGMENT AND AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS (INCLUDING, WITHOUT LIMITATION, ANY AMENDMENTS, WAIVERS OR OTHER
MODIFICATIONS RELATING TO ANY OF THE FOREGOING), OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.

      IN WITNESS WHEREOF, each of the undersigned has executed this Guarantor
Acknowledgment and Agreement as of January 28, 2005.

                                AGCM, INC.
                                AG.COM, INC.
                                EAGENTS, INC.
                                EGCB, INC.

                                By: /s/ Stephen Smith
                                    -------------------------------------
                                    Stephen Smith, Assistant Treasurer
                                    of each of the foregoing Subsidiary
                                    Guarantors

                                AGC HOLDINGS, INC.

                                By: /s/ Stephen Smith
                                    -------------------------------------
                                     Stephen Smith, Vice President

                                AGC, INC.
                                A.G.C. INVESTMENTS, INC.
                                A.G. EUROPE, INC.
                                A.G. (UK), INC.
                                A.G. INDUSTRIES, INC.
                                CARLTON CARDS RETAIL, INC.



                                CARLTON (U.K.) RETAIL, INC.
                                CREATACARD, INC.`
                                CREATACARD INTERNATIONAL
                                     LEASING, INC.
                                CUSTOM HOLDINGS, INC.
                                GIBSON GREETINGS, INC.
                                GIBSON GREETINGS INTERNATIONAL
                                LIMITED
                                JOHN SANDS (AUSTRALIA) LTD.
                                JOHN SANDS (N.Z.) LTD.
                                JOHN SANDS HOLDING CORPORATION
                                LEARNING HORIZONS, INC.
                                MAGARK LLC
                                MAGTENN LLC
                                MEMPHIS PROPERTY CORPORATION
                                PLUS MARK, INC.
                                QUALITY GREETING CARD
                                     DISTRIBUTING COMPANY, INC.
                                SUPERVEND, INC.
                                THOSE CHARACTERS FROM
                                     CLEVELAND, INC.

                                By: /s/ Stephen Smith
                                    -------------------------------------
                                    Stephen Smith, Treasurer of each of
                                    the foregoing Subsidiary Guarantors

                                BALLOON ZONE DISTRIBUTION, INC.

                                By: /s/ Michael Brown
                                    -------------------------------------
                                    Michael Brown, Vice President

EX-4.IV

                                                                   Exhibit 4(iv)

================================================================================

                                 AMENDMENT NO. 2

                                       TO

                                CREDIT AGREEMENT

                                      AMONG

                         AMERICAN GREETINGS CORPORATION,
                                 AS A BORROWER,

                     THE LENDING INSTITUTIONS NAMED HEREIN,
                                   AS LENDERS,

                                       AND

                               NATIONAL CITY BANK,
                  AS THE GLOBAL AGENT AND THE COLLATERAL AGENT

                           ---------------------------

                            DATED AS OF APRIL 1, 2005

                          ----------------------------

================================================================================



      This AMENDMENT NO. 2 TO CREDIT AGREEMENT (this "Amendment") is entered
into as of April 1, 2005, by and among the following: (i) AMERICAN GREETINGS
CORPORATION, an Ohio corporation (the "Company"); (ii) the Lenders, as defined
in the Credit Agreement referred to below; and (iii) NATIONAL CITY BANK, as
Global Agent and as Collateral Agent, each as defined in the Credit Agreement.

                                   RECITALS:

      A. The Company, the Foreign Subsidiary Borrowers from time to time party
to the Credit Agreement, the Global Agent, the Collateral Agent, the Lenders,
KEYBANK NATIONAL ASSOCIATION, as Syndication Agent, and LASALLE BANK NATIONAL
ASSOCIATION, as Documentation Agent, are parties to an Amended and Restated
Credit Agreement dated as of May 11, 2004 (as amended and as the same may from
time to time be further amended, restated or otherwise modified, the "Credit
Agreement").

      B. The Company has requested that the Global Agent, the Collateral Agent,
and the Lenders agree to amend certain provisions of the Credit Agreement, as
set forth herein.

      C. The Global Agent, the Collateral Agent, and the Lenders are willing to
agree to such amendments pursuant to the terms and subject to the conditions set
forth herein.

                                   AGREEMENT:

      In consideration of the premises and mutual covenants herein and for other
valuable consideration, the Company, the Global Agent, the Collateral Agent and
the Lenders agree as follows:

      Section 1. Amendments.

      1.1 Amendment to Definitions. Section 1.01 of the Credit Agreement is
hereby amended to delete the definition of "Permitted Subordinated Note
Repurchase" therefrom and insert in place thereof the following:

            "Permitted Subordinated Note Repurchase" means the repurchase by the
      Company of any notes or other securities issued by the Company pursuant to
      the Subordinated Indenture in accordance with the Consent Solicitation
      Documents or, in the case of any Permitted Subordinated Note Repurchase
      made on or after April 1, 2005, in accordance with the terms of the
      Subordinated Indenture.

      1.2 Amendment to Restricted Payments Covenant.

            (a) Section 7.06(c)(iii) of the Credit Agreement is hereby amended
by deleting it in its entirety and replacing it with the following:

                  "(c)(iii) the aggregate amount of all Cash Dividends made by
      the Company during any fiscal year shall not exceed the sum of $25,000,000
      plus the Maximum Dividend Amount (as defined in Schedule 2 hereto);"

            (b) Section 7.06(d)(iii) of the Credit Agreement is hereby amended
by deleting it in its entirety and replacing it with the following:



                  "(d)(iii) the aggregate amount of all Share Repurchases made
      by the Company during the term of this Agreement shall not exceed the sum
      of $200,000,000 plus the Maximum Share Repurchase Amount (as defined in
      Schedule 2 hereto); and"

            (c) Section 7.06(e) of the Credit Agreement is hereby amended to
delete the words "February 28, 2005" therefrom and to insert the words "February
28, 2006" in place thereof.

      1.3 Replacement of Schedule 2. The Credit Agreement is hereby amended to
replace Schedule 2 thereto with Schedule 2 attached to this Amendment.

      Section 2. Effectiveness.

      2.1 Conditions Precedent. The amendments set forth above shall become
effective as of the date first written above (the "Amendment Effective Date") if
on or before such date the following conditions have been satisfied:

            (i) this Amendment shall have been executed by the Company, the
      Global Agent, the Collateral Agent and the Required Lenders, and
      counterparts hereof as so executed shall have been delivered to the Global
      Agent;

            (ii) the Company shall have caused each Subsidiary Guarantor to
      consent and agree to and acknowledge the terms of this Amendment; and

            (iii) the Company shall have provided such other items and shall
      have satisfied such other conditions as may be reasonably required by the
      Global Agent.

      2.2 Amendment Effective Date. The Global Agent shall provide the Company
and the Lenders written notice immediately upon the occurrence of the Amendment
Effective Date. Unless otherwise specifically set forth herein, each of the
amendments and other modifications set forth in this Amendment shall be
effective on and after the Amendment Effective Date.

      Section 3. Miscellaneous.

      3.1 Representations and Warranties. The Company, by signing below, hereby
represents and warrants to the Global Agent, the Collateral Agent, and the
Lenders that:

            (i) the Company has the legal power and authority to execute and
      deliver this Amendment;

            (ii) the officers executing this Amendment on behalf of the Company
      have been duly authorized to execute and deliver the same and bind the
      Company with respect to the provisions hereof;

            (iii) the execution and delivery hereof by the Company and the
      performance and observance by the Company of the provisions hereof do not
      violate or conflict with the Organizational Documents of the Company or
      any law applicable to the Company or result in a breach of any provision
      of or constitute a default under any other agreement, instrument or
      document binding upon or enforceable against the Company;

                                      -2-



            (iv) no Default or Event of Default exists under the Credit
      Agreement, nor will any occur immediately after the execution and delivery
      of this Amendment or by the performance or observance of any provision
      hereof;

            (v) upon the execution and delivery of this Amendment by the
      Company, this Amendment shall constitute a valid and binding obligation of
      the Company in every respect, enforceable in accordance with its terms,
      except as the enforceability thereof may be limited by bankruptcy,
      insolvency or other similar laws of general application affecting the
      enforcement of creditors' rights or by general principles of equity
      limiting the availability of equitable remedies; and

            (vi) each of the representations and warranties set forth in Article
      V of the Credit Agreement is true and correct in all material respects as
      of the date hereof, except to the extent that any thereof expressly relate
      to an earlier date.

      3.2 Waiver of Claims. The Company hereby waives and releases the Global
Agent, the Collateral Agent, and each of the Lenders and their respective
directors, officers, employees, attorneys, affiliates and subsidiaries from any
and all claims, offsets, defenses and counterclaims of which any of the
undersigned is aware arising out of or relating to the Credit Agreement and the
other Loan Documents, such waiver and release being with full knowledge and
understanding of the circumstances and effect thereof and after having consulted
legal counsel with respect thereto.

      3.3 Expenses. As provided in the Credit Agreement, but without limiting
any terms or provisions thereof, the Company agrees to pay on demand all
reasonable costs and expenses incurred by the Global Agent in connection with
the preparation, negotiation, and execution of this Amendment, including without
limitation the reasonable costs and fees of the Global Agent's special legal
counsel, regardless of whether this Amendment becomes effective in accordance
with the terms hereof, and all costs and expenses incurred by the Global Agent,
the Collateral Agent or any Lender in connection with the enforcement or
preservation of any rights under the Credit Agreement, as amended hereby.

      3.4 Credit Agreement Unaffected. Each reference to the Credit Agreement
herein or in any other Loan Document shall hereafter be construed as a reference
to the Credit Agreement as amended hereby. Except as herein otherwise
specifically provided, all provisions of the Credit Agreement shall remain in
full force and effect and be unaffected hereby. This Amendment is a Loan
Document.

      3.5 Entire Agreement. This Amendment, together with the Credit Agreement
and the other Loan Documents, integrates all the terms and conditions mentioned
herein or incidental hereto and supersedes all oral representations and
negotiations and prior writings with respect to the subject matter hereof.

      3.6 Counterparts. This Amendment may be executed in any number of
counterparts, by different parties hereto in separate counterparts and by
facsimile signature, each of which when so executed and delivered shall be
deemed to be an original and all of which taken together shall constitute but
one and the same agreement.

      3.7 Governing Law. THIS AMENDMENT AND THE OTHER LOAN DOCUMENTS AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE
CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF OHIO
WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES. TO THE FULLEST EXTENT PERMITTED
BY LAW, EACH CREDIT PARTY HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY
CLAIM TO ASSERT THAT THE

                                      -3-



LAW OF ANY JURISDICTION OTHER THAN THE STATE OF OHIO GOVERNS THIS AMENDMENT OR
ANY OF THE OTHER LOAN DOCUMENTS.

      3.8 JURY TRIAL WAIVER. EACH OF THE PARTIES TO THIS AMENDMENT HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AMENDMENT OR ANY OF THE OTHER
LOAN DOCUMENTS (INCLUDING, WITHOUT LIMITATION, ANY AMENDMENTS, WAIVERS OR OTHER
MODIFICATIONS RELATING TO ANY OF THE FOREGOING), OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.

                            [Signature pages follow.]

                                      -4-



      IN WITNESS WHEREOF, this Amendment has been duly executed and delivered as
of the date first above written.

                                AMERICAN GREETINGS CORPORATION

                                By: /s/ Stephen J. Smith
                                    ------------------------------------
                                    Name:  Stephen J. Smith
                                    Title: VP, Treasurer and Investor Relations

                                NATIONAL CITY BANK,
                                as the Global Agent, the Collateral Agent, the
                                  Swing Line Lender, a LC Issuer, and a Lender

                                By: /s/ Robert  S. Coleman
                                    ----------------------------------
                                    Name: Robert S. Coleman
                                    Title: Senior Vice President



                                 Signature Page
                                       to
                      Amendment No. 2 to Credit Agreement,
                           dated as of April 1, 2005,
           by and among American Greetings Corporation, as a Borrower,
      National City Bank, as the Global Agent and the Collateral Agent, and
                            the Lenders party thereto

              NAME OF INSTITUTION: National City Bank, Canada Branch

                                By: /s/ Caroline Stade
                                    -----------------------------
                                    Name: Caroline Stade
                                    Title: Vice President



                                 Signature Page
                                       to
                      Amendment No. 2 to Credit Agreement,
                           dated as of April 1, 2005,
           by and among American Greetings Corporation, as a Borrower,
      National City Bank, as the Global Agent and the Collateral Agent, and
                            the Lenders party thereto

                NAME OF INSTITUTION: KeyBank National Association

                                By: /s/ Brendan A. Lawlor
                                   -------------------------------------
                                   Name: Brendan A. Lawlor
                                   Title: Senior Vice President



                                 Signature Page
                                       to
                      Amendment No. 2 to Credit Agreement,
                           dated as of April 1, 2005,
           by and among American Greetings Corporation, as a Borrower,
      National City Bank, as the Global Agent and the Collateral Agent, and
                            the Lenders party thereto

             NAME OF INSTITUTION: LaSalle Bank National Association

                                By: /s/ James P. Bahleda
                                    ------------------------------------
                                    Name: James P. Bahleda
                                    Title: Assistant Vice President



                                 Signature Page
                                       to
                      Amendment No. 2 to Credit Agreement,
                           dated as of April 1, 2005,
           by and among American Greetings Corporation, as a Borrower,
      National City Bank, as the Global Agent and the Collateral Agent, and
                            the Lenders party thereto

               NAME OF INSTITUTION: PNC Bank, National Association

                                By: /s/ Joseph G. Moran
                                    -----------------------------
                                    Name: Joseph G. Moran
                                    Title: Managing Director



                                 Signature Page
                                       to
                      Amendment No. 2 to Credit Agreement,
                           dated as of April 1, 2005,
           by and among American Greetings Corporation, as a Borrower,
      National City Bank, as the Global Agent and the Collateral Agent, and
                            the Lenders party thereto

                 NAME OF INSTITUTION: JPMorgan Chase Bank, N.A.

                                By: /s/ Jason A. Rastovski
                                    --------------------------------
                                    Name: Jason A. Rastovski
                                    Title: Vice President



                                 Signature Page
                                       to
                      Amendment No. 2 to Credit Agreement,
                           dated as of April 1, 2005,
           by and among American Greetings Corporation, as a Borrower,
      National City Bank, as the Global Agent and the Collateral Agent, and
                            the Lenders party thereto

                    NAME OF INSTITUTION: The Bank of New York

                                By: /s/ Kenneth R. McDonnell
                                    ---------------------------------
                                    Name: Kenneth R. McDonnell
                                    Title: Vice President



                                 Signature Page
                                       to
                      Amendment No. 2 to Credit Agreement,
                           dated as of April 1, 2005,
           by and among American Greetings Corporation, as a Borrower,
      National City Bank, as the Global Agent and the Collateral Agent, and
                            the Lenders party thereto

                  NAME OF INSTITUTION: The Bank of Nova Scotia

                                By: /s/ V. Gibson
                                    ----------------------------
                                    Name: V. Gibson
                                    Title: Assistant Agent



                                 Signature Page
                                       to
                      Amendment No. 2 to Credit Agreement,
                           dated as of April 1, 2005,
           by and among American Greetings Corporation, as a Borrower,
      National City Bank, as the Global Agent and the Collateral Agent, and
                            the Lenders party thereto

                 NAME OF INSTITUTION: The Northern Trust Company

                                By: /s/ David J. Sullivan
                                    ----------------------------
                                    Name: David J. Sullivan
                                    Title: Vice President



                                 Signature Page
                                       to
                      Amendment No. 2 to Credit Agreement,
                           dated as of April 1, 2005,
           by and among American Greetings Corporation, as a Borrower,
      National City Bank, as the Global Agent and the Collateral Agent, and
                            the Lenders party thereto

                     NAME OF INSTITUTION: Barclays Bank PLC

                                By: /s/ Danny Lopez
                                    --------------------------
                                    Name: Danny Lopez
                                    Title: Director



                     GUARANTOR ACKNOWLEDGMENT AND AGREEMENT

      Each of the undersigned consents and agrees to and acknowledges the terms
of the foregoing Amendment No. 2 to Credit Agreement, dated as of April 1, 2005
(the "Amendment"). Each of the undersigned further agrees that the obligations
of each of the undersigned pursuant to the Subsidiary Guaranty executed by each
of the undersigned shall remain in full force and effect and be unaffected
hereby. Unless otherwise defined herein, each capitalized term used in this
Amendment and not defined herein shall have such meaning ascribed to it in the
Credit Agreement (as defined in the Amendment).

      Each of the undersigned, by signing below, hereby waives and releases the
Global Agent, the Collateral Agent, and each of the Lenders and their respective
directors, officers, employees, attorneys, affiliates and subsidiaries from any
and all claims, offsets, defenses and counterclaims of which any of the
undersigned is aware arising out of or relating to the Subsidiary Guaranty and
the other Loan Documents, such waiver and release being with full knowledge and
understanding of the circumstances and effect thereof and after having consulted
legal counsel with respect thereto.

      EACH OF THE UNDERSIGNED HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY
JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THE
AMENDMENT, THIS GUARANTOR ACKNOWLEDGMENT AND AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS (INCLUDING, WITHOUT LIMITATION, ANY AMENDMENTS, WAIVERS OR OTHER
MODIFICATIONS RELATING TO ANY OF THE FOREGOING), OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.

      IN WITNESS WHEREOF, each of the undersigned has executed this Guarantor
Acknowledgment and Agreement as of April 1, 2005.

                              AGCM, INC.
                              AG.COM, INC.
                              EAGENTS, INC.
                              EGCB, INC.

                              By: /s/ Stephen J. Smith
                                  ----------------------------
                                  Stephen J. Smith, Assistant Treasurer
                                  of each of the foregoing Subsidiary Guarantors

                              AGC HOLDINGS, INC.

                              By: /s/ Stephen J. Smith
                                  -------------------------------
                                  Stephen J. Smith, Vice President



                             AGC, INC.
                             A.G.C. INVESTMENTS, INC.
                             A.G. EUROPE, INC.
                             A.G. (UK), INC.
                             A.G. INDUSTRIES, INC.
                             CARLTON CARDS RETAIL, INC.
                             CARLTON (U.K.) RETAIL, INC.
                             CREATACARD, INC.
                             CREATACARD INTERNATIONAL
                                  LEASING, INC.
                             CUSTOM HOLDINGS, INC.
                             GIBSON GREETINGS, INC.
                             GIBSON GREETINGS INTERNATIONAL
                             LIMITED
                             JOHN SANDS (AUSTRALIA) LTD.
                             JOHN SANDS (N.Z.) LTD.
                             JOHN SANDS HOLDING CORPORATION
                             LEARNING HORIZONS, INC.
                             MAGARK LLC
                             MAGTENN LLC
                             MEMPHIS PROPERTY CORPORATION
                             PLUS MARK, INC.
                             QUALITY GREETING CARD
                                  DISTRIBUTING COMPANY, INC.
                             SUPERVEND, INC.
                             THOSE CHARACTERS FROM
                                  CLEVELAND, INC.

                             By: /s/ Stephen J. Smith
                                 ------------------------
                                 Stephen J. Smith, Treasurer of each of
                                 the foregoing Subsidiary Guarantors

                             BALLOON ZONE DISTRIBUTION, INC.

                             By: /s/ Michael Brown
                                 ---------------------------
                                 Michael Brown, Vice President

EX-4.IX

                                                                   Exhibit 4(ix)

                                                               EXECUTION VERSION

                FIFTH AMENDMENT TO RECEIVABLES PURCHASE AGREEMENT

      THIS FIFTH AMENDMENT TO RECEIVABLES PURCHASE AGREEMENT (this "Amendment")
dated as of August 2, 2004 is entered into among AGC FUNDING CORPORATION (the
"Seller"), AMERICAN GREETINGS CORPORATION (in its individual capacity,
"Greetings"), in its capacity as Servicer (in such capacity, together with its
successors and permitted assigns in such capacity, the "Servicer"), PNC BANK,
NATIONAL ASSOCIATION (in its individual capacity, "PNC"), as purchaser agent for
Market Street Funding Corporation, PNC, as Administrator for each Purchaser
Group (in such capacity, the "Administrator"), MARKET STREET FUNDING CORPORATION
(in its individual capacity, "Market Street"), as a Conduit Purchaser and as a
Related Committed Purchaser, FIFTH THIRD BANK (in its individual capacity,
"Fifth Third"), as a Conduit Purchaser, as a Related Committed Purchaser and as
purchaser agent for itself, LIBERTY STREET FUNDING CORP. ("LSFC"), as a Conduit
Purchaser and THE BANK OF NOVA SCOTIA ("BNS"), as a Related Committed Purchaser
and as purchaser agent for itself and LSFC.

                                    RECITALS

      1. The Seller, the Servicer, the Administrator, PNC, Market Street, Fifth
Third, LSFC and BNS are parties to the Receivables Purchase Agreement dated as
of August 7, 2001 (as amended, restated, supplemented or otherwise modified from
time to time, the "Agreement"); and

      2. The parties hereto desire to amend the Agreement as set forth herein.

      NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:

      1. Certain Defined Terms. Capitalized terms that are used herein without
definition and that are defined in Exhibit I to the Agreement shall have the
same meanings herein as therein defined.

      2. Amendments to Agreement.

            2.1 The definition of "Facility Termination Date" contained in
      Exhibit I to the Agreement is hereby amended and restated in its entirety
      to read as follows:

               ""Facility Termination Date" means the earliest to occur of: (a)
      with respect to (i) each Purchaser other than the Purchasers in any
      Purchaser Group for which Fifth Third Bank is the Purchaser Agent, August
      1, 2007 and (ii) with respect to each Purchaser in any Purchaser Group for
      which Fifth Third Bank is the Purchaser Agent, August 1, 2005, in each
      case subject to any extension pursuant to Section 1.10 of the Agreement
      (it being understood that if any such Purchaser does not extend its
      Commitment hereunder then the Purchase Limit shall be reduced by an amount
      equal to the Commitment of such Exiting



      Purchaser and the Commitment Percentages of the Purchasers within each
      remaining Purchaser Group shall be appropriately adjusted), (b) the date
      determined pursuant to Section 2.2 of the Agreement, (c) the date the
      Purchase Limit reduces to zero pursuant to Section 1.1(b) of the
      Agreement, (d) with respect to each Purchaser Group, the date that the
      commitments of all of the Liquidity Providers terminate under the related
      Liquidity Agreements or the date one or more of such Purchaser Group's
      Program Support Agreements terminate and (e) with respect to each
      Purchaser Group, the date that the commitment, of all of the Related
      Committed Purchasers of such Purchaser Group terminate pursuant to Section
      1.10."

            2.2 Section 2(e) of Exhibit III to the Agreement is hereby amended
      by replacing each occurrence of the date "February 28, 2001" therein with
      the date "February 29, 2004".

            2.3 Clause (g) of Exhibit V to the Agreement is hereby amended and
      restated in its entirety to read as follows:

               "(g) (i) (A) the Everyday Default Ratio shall exceed 5.0%, (B)
      the Disputed Default Ratio shall exceed 3.0%, (C) the Seasonal Default
      Ratio shall exceed 3.0%, (D) the Delinquency Ratio shall exceed 38% or
      (ii) the average for three consecutive calendar months of (A) the Everyday
      Default Ratio shall exceed 4.0%, (B) the Disputed Default Ratio shall
      exceed 2.5%, (C) the Seasonal Default Ratio shall exceed 2.5%, (D) the
      Delinquency Ratio shall exceed 34%, or (E) the Dilution Ratio shall exceed
      7%; or (iii) Days Sales Outstanding shall exceed 100."

            2.4 Clause (j)(i) of Exhibit V to the Agreement is hereby amended by
      replacing the amount "$10,000,000" therein with the amount "$20,000,000".

            2.5 Schedule II to the Agreement is hereby amended and restated in
      its entirety by Schedule II to this Amendment.

      3. Agreements in respect of Allocations. Each Related Committed Purchaser
party hereto, by executing and delivering a counterpart to this Amendment,
hereby acknowledges and agrees that its respective "Commitment" is as set forth
beneath such Person's signature to this Amendment.

      4. Representations and Warranties. The Seller hereby represents and
warrants to each Purchaser and the Administrator as follows:

               (a) Representations and Warranties. The representations and
      warranties contained in Exhibit III of the Agreement are true and correct
      in all material respects as of the date hereof (except to the extent that
      such representations and warranties relate expressly to an earlier date,
      and in which case such representations and warranties shall be true and
      correct in all material respects as of such earlier date).



               (b) No Default. Both before and immediately after giving effect
      to this Amendment and the transactions contemplated hereby, no Termination
      Event or Unmatured Termination Event exists or shall exist.

      5. Effect of Amendment. All provisions of the Agreement, as expressly
amended and modified by this Amendment, shall remain in full force and effect.
After this Amendment becomes effective, all references in the Agreement (or in
any other Transaction Document) to "this Agreement", "hereof", "herein" or words
of similar effect referring to the Agreement shall be deemed to be references to
the Agreement as amended by this Amendment. This Amendment shall not be deemed,
either expressly or impliedly, to waive, amend or supplement any provision of
the Agreement other than as set forth herein.

      6. Effectiveness. This Amendment shall become effective as of the date
hereof upon receipt by (i) the Administrator of counterparts of this Amendment
(whether by facsimile or otherwise) executed by each of the other parties
hereto, in form and substance satisfactory to the Administrator in its sole
discretion and (ii) each Purchaser Agent, for itself and the related Conduit
Purchaser, of counterparts of an amendment and restatement of the Purchaser
Group Fee Letter, executed by each of the parties thereto and dated the date
hereof, and evidence of the performance by each of the parties thereto of its
respective obligations, if any, thereunder required to be performed on or prior
to the date hereof, including without limitation, payment of the "renewal fee"
referred to therein, in each case, in form and substance satisfactory to such
Purchaser Agent.

      7. Counterparts. This Amendment may be executed in any number of
counterparts and by different parties on separate counterparts, each of which
when so executed shall be deemed to be an original and all of which when taken
together shall constitute but one and the same instrument.

      8. Governing Law. This Amendment shall be governed by, and construed in
accordance with, the internal laws of the State of New York (without regard to
any otherwise applicable principles of conflicts of law).

      9. Section Headings. The various headings of this Amendment are included
for convenience only and shall not affect the meaning or interpretation of this
Amendment, the Agreement or any provision hereof or thereof.

                          (continued on following page)



      IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first written above.

                                           AGC FUNDING CORPORATION

                                           By: /s/ Stephen J. Smith
                                               --------------------------------
                                           Name: Stephen J. Smith
                                           Title: Vice President and Treasurer

                                           AMERICAN GREETINGS CORPORATION, as
                                           Servicer

                                           By: /s/ Stephen J. Smith
                                               --------------------------------
                                           Name: Stephen J. Smith
                                           Title: Vice President, Treasurer and
                                                  Investor Relations

                                       S-1        Fifth Amendment to Receivables
                                                  Purchase Agreement


                                         PNC BANK, NATIONAL ASSOCIATION,
                                         as Administrator and as Purchaser Agent
                                         for Market Street Funding Corporation

                                         By: /s/ John T. Smathers
                                             -----------------------------------
                                         Name: John T. Smathers
                                         Title: Vice President

                                         MARKET STREET FUNDING CORPORATION,
                                         as a Conduit Purchaser and as a Related
                                         Committed Purchaser

                                         By: /s/ EVELYN ECHEVARRIA
                                             -----------------------------------
                                         Name: EVELYN ECHEVARRIA
                                         Title: VICE PRESIDENT

                                         Commitment: $80,000,000

                                       S-2        Fifth Amendment to Receivables
                                                  Purchase Agreement


                                          FIFTH THIRD BANK,
                                          as Purchaser Agent for the Fifth Third
                                          Purchaser Group, as a Conduit
                                          Purchaser and as a Related Committed
                                          Purchaser

                                          By: /s/ BRIAN J. GARDNER
                                              ----------------------------------
                                          Name: BRIAN J. GARDNER
                                          Title: AVP

                                          Commitment: $40,000,000

                                       S-3        Fifth Amendment to Receivables
                                                  Purchase Agreement


                                          THE BANK OF NOVA SCOTIA,
                                          as a Related Committed Purchaser and
                                          as Purchaser Agent for itself and
                                          Liberty Street Funding Corp.

                                          By: /s/ NORMAN LAST
                                              ----------------------------------
                                          Name: NORMAN LAST
                                          Title: MANAGING DIRECTOR

                                          Commitment: $80,000,000

                                          LIBERTY STREET FUNDING CORP.,
                                          as a Conduit Purchaser

                                          By: /s/ Andrew L. Stidd
                                              ----------------------------------
                                          Name:  Andrew L. Stidd
                                          Title: President

                                       S-4        Fifth Amendment to Receivables
                                                  Purchase Agreement


                                                        SCHEDULE II TO AMENDMENT

                                   SCHEDULE II
                      LOCK-BOX BANKS AND LOCK-BOX ACCOUNTS

Lock-Box Bank                          Lock-Box                         Account

                                      Sch-1

EX-10.XXII

                                                                Exhibit 10(xxii)

                              RETIREMENT AGREEMENT

      This Retirement Agreement ("Agreement") is entered into between David
Beittel ("EMPLOYEE") and American Greetings Corporation, an Ohio corporation
("AG" or "Company"), on the date set forth at the signature lines below, arising
out of the employment relationship between EMPLOYEE and AG. This Agreement will
not become effective and irrevocably binding until seven (7) days after it is
signed by EMPLOYEE. EMPLOYEE may revoke this Agreement at any time prior to the
expiration of such seven (7) days. A revocation must be in writing and it must
be received by the Company by the close of business on the seventh day.

      In consideration of the mutual covenants and agreements hereinafter set
forth, and intending to be legally bound, the parties agree as follows:

      1. EMPLOYEE hereby acknowledges termination of employment with the Company
effective as of the close of business on February 28, 2005 ("Retirement Date").

      2. Commencing on the Retirement Date and upon EMPLOYEE signing a waiver
prepared by the Company in the form of paragraph 9, and provided that EMPLOYEE
has not resigned prior to the Retirement Date, EMPLOYEE will receive the
following benefits from the Company:

            a.    Retirement pay of an amount equal to 30 months base salary,
                  based on EMPLOYEE'S annual salary in effect at the Retirement
                  Date, payable in monthly installments beginning on March 15,
                  2005, less applicable deductions, including deductions for
                  health care coverage. Retirement payments shall be made even
                  if EMPLOYEE obtains non-competing employment as set forth
                  herein. Any payments due before the effective date of this
                  Agreement shall be payable within ten (10) days after the
                  effective date. In the event EMPLOYEE dies prior to payment of
                  all Retirement pay, any amounts remaining to be paid shall be
                  paid to EMPLOYEE's estate. Company reserves the right to pay
                  any portion of the Retirement pay in a lump sum, if both
                  Company and EMPLOYEE agree.

            b.    Continued health care coverage, concurrently with COBRA, in
                  the plan in which EMPLOYEE is enrolled at the Retirement Date,
                  at the Senior Vice President active employee payroll deduction
                  rate, as it may be changed from time-to-time, through August
                  31, 2007; and from September 1, 2007 through December 31,
                  2012, EMPLOYEE will continue to be eligible for health care
                  coverage at the Senior Vice President active employee rate on
                  a pre-tax basis, as it may be changed from time-to-time; and
                  thereafter, EMPLOYEE shall be eligible for retiree health care
                  coverage on the terms then in effect;

            c.    EMPLOYEE will be eligible to participate in the Key Management
                  Annual Incentive Plan for Fiscal Year 2005, at no less than a
                  "Meets Expectations" evaluation level;

            d.    AG will pay for up to 6 months of outplacement services to
                  assist EMPLOYEE in seeking employment. The service provider
                  shall be Lee Hecht Harrison and AG will make direct payments
                  to the service provider;

            e.    EMPLOYEE will cease to have use of EMPLOYEE's company car.
                  March 1, 2005, and shall return the car to the Company at that
                  time. Company shall pay EMPLOYEE the amount of $11,430.
                  EMPLOYEE will have the option to purchase said car from the
                  leasing company as and to the extent agreed to by the leasing
                  company. Such transaction shall be effected solely between
                  EMPLOYEE and the leasing company with no liability to AG.



            f.    EMPLOYEE will continue to be covered under the Company's
                  Executive Life Insurance Plan for 6 months past the Retirement
                  Date (coverage will continue through August 31, 2005); and

            g.    Stock options granted to EMPLOYEE prior to the Retirement Date
                  will continue to vest according to the terms of the stock
                  option plan(s) through August 31, 2007, as if EMPLOYEE were
                  actively employed. Vested stock options shall be exercisable
                  for 90 days after August 31, 2007.

            h.    EMPLOYEE shall be entitled to an executive physical to be
                  taken before July 1, 2005.

            i.    The Company shall pay Employee $10,000 for transition costs.

      3. Following the Retirement Date, EMPLOYEE and Company may enter into a
Consulting Agreement pursuant to which EMPLOYEE will consult with Company on
dates and terms that are mutually agreed upon. Company will pay EMPLOYEE $2,000
per day plus expenses for such consulting.

      4. If EMPLOYEE is re-employed by Company, in any capacity other than a
temporary, part-time or consulting assignment, prior to receipt of all the
Retirement benefits provided in paragraph 2., EMPLOYEE will forfeit any unpaid
Retirement benefits. In the event EMPLOYEE is paid Retirement in a lump sum,
s/he will pay back to COMPANY that amount EMPLOYEE would not have received had
Retirement been paid out in equal installments over time, pursuant to paragraph
2(a).

      5. EMPLOYEE acknowledges that as of the Retirement Date EMPLOYEE will
cease to be an employee of AG and thereafter will not be eligible for or receive
any benefits of employment and that the only benefits EMPLOYEE will receive from
AG are those benefits described herein ; provided, however, that this Agreement
does not waive any benefits EMPLOYEE may be eligible to receive under the
Company's Supplemental Executive Retirement Plan, any stock option plan,
deferred compensation plan, or the Retirement Profit Sharing and Savings Plan.

      6. Notwithstanding any other provision of this Agreement, EMPLOYEE
acknowledges that the benefits EMPLOYEE will receive under paragraph 2 above are
greater than those benefits EMPLOYEE would have been entitled to receive upon
termination in the absence of this Agreement.

      7. This Agreement is offered as part of an exit incentive or other
employment termination program (the "Program"). Information concerning
eligibility and selection for the Program that is required to be provided under
the federal age discrimination in employment laws is enclosed with this
Agreement. EMPLOYEE acknowledges receipt of the information.

                                      - 2 -


      8. It is agreed by EMPLOYEE that this Agreement, the benefits, including
all benefits set forth in paragraph 2 above, and all other terms of this
Agreement, are each confidential information and shall not be disclosed or
revealed to any person other than EMPLOYEE's attorneys, accountants, tax
advisors, and immediate family members (who must be informed of and agree to be
bound by the terms of this paragraph), and any governmental taxing authority;
provided however that Company may disclose the terms to comply with any
governmental or regulatory disclosure obligation.

      9. With respect to any and all events arising out of or related to the
employment relationship between EMPLOYEE and the Company occurring on or before
the Retirement Date, EMPLOYEE hereby releases and forever discharges Company and
its agents, officers, directors, employees, subsidiaries, divisions, affiliates,
successors and assigns, (collectively "AG Releasees") from any and all claims
and/or causes of action, known or unknown, arising (i) from or during EMPLOYEE's
employment with AG or (ii) as a result of the termination of that employment;
and EMPLOYEE hereby covenants and agrees that s/he will not assert any such
claims and/or causes of action against any AG Releasee, including but not
limited to, (i) claims and/or causes of action arising under the Age
Discrimination in Employment Act (29 U.S.C. Sec. 621 et seq.), (ii) claims
and/or causes of action arising under federal, state or local laws, including
but not limited to those prohibiting employment discrimination on the basis of
race, color, national origin, religion, sex, age, disability or otherwise; (iii)
claims and/or causes of action growing out of any legal restrictions on AG's
right to terminate its employees, including breach of contract, discharge in
violation of public policy, or promissory estoppel, or (iv) tort claims and/or
causes of action, including infliction of emotional distress, defamation, libel
or slander.

      10. EMPLOYEE represents and warrants that EMPLOYEE has no interest or
obligation that is inconsistent with or in conflict with this Agreement or that
would prevent, limit or impair Employee's performance of any part of this
Agreement.

      11. EMPLOYEE agrees that in the event that EMPLOYEE breaches any of the
terms of this agreement, EMPLOYEE will forfeit the benefits described in
paragraph 2, plus EMPLOYEE will pay any expenses or damages incurred by the AG
Releasees as a result of the breach, including reasonable attorneys' fees.

      12. EMPLOYEE acknowledges that EMPLOYEE has an obligation of confidence
and non-disclosure with respect to any and all confidential information and
trade secrets that EMPLOYEE acquired during the course of employment with
Company. Confidential information shall mean information not made public by the
Company. This obligation of confidence and non-disclosure extends to both
Company information and third-party information held by the Company in
confidence, and this obligation continues after the Retirement Date. EMPLOYEE is
prohibited from using or disclosing such information.

      13. EMPLOYEE agrees that from the Retirement Date through August 31, 2007,
EMPLOYEE shall not be employed directly or indirectly in any capacity or work as
a consultant or independent contractor for any person, firm or company in the
greeting card wrapping paper, stationery or party goods industry in any capacity
similar to that held by EMPLOYEE while employed with the Company.

                                      - 3 -


      14. Any dispute arising out of or relating to this Agreement or EMPLOYEE's
employment shall be resolved pursuant to the Company's alternative dispute
resolution program known as "Solutions", and the arbitration provided for under
the Solutions program shall be final and binding upon the parties, except for
any appeal permitted by law; provided however, that in the event that the
Company seeks injunctive relief to enforce its rights under Paragraphs 12 or 13
of this Agreement, the parties consent to the jurisdiction of the state or
federal court in Cuyahoga County, Ohio without regard to the mediation and
arbitration provisions of the Solutions program.

      15. For 90 days after the Retirement Date, EMPLOYEE agrees to provide and
cooperate promptly with any reasonable request by the Company to provide such
information, signatures, or certifications (as to matters upon which Employee
can truthfully certify) that may be required for, or otherwise relate to, the
Company's compliance with federal, state or local laws or regulatory
requirements. The Company shall reimburse EMPLOYEE for all reasonable expenses
related to compliance with this paragraph.

      16. EMPLOYEE agrees that he/she will not make any oral or written
statements that either generally or specifically disparage the Company, its
employment practices, business, products, conduct or policies, or its employees,
directors, or agents. AG agrees that it shall not make any oral or written
statements that either generally or specifically disparage EMPLOYEE or his/her
professional competence or employability.

      17. (a) This Agreement constitutes the entire understanding between
EMPLOYEE and the Company relating to the subject matter contained herein and
this Agreement supersedes any previous agreement(s) that may have been made in
connection with EMPLOYEE's employment with AG except insofar as such
agreement(s) concern EMPLOYEE's obligations with regard to competing with AG or
EMPLOYEE's obligations with regard to AG's trade secrets, proprietary or other
confidential information belonging to AG, which obligations are not modified,
amended or terminated by this Agreement and which continue after the Retirement
Date. This Agreement may not be changed, modified, or altered without the
express written consent of EMPLOYEE and an officer of AG.

          (b) AG's failure to insist upon strict adherence to any term of this
Agreement on any occasion shall not be considered a waiver of, or deprive AG of
its right thereafter to insist upon strict adherence to that term or any other
term of this Agreement. To be effective, any waiver must be in writing and
signed by an officer of AG.

          (c) This Agreement shall be construed in accordance with the laws of
the State of Ohio. If any part or section of this Agreement is found to be
contrary to law or unenforceable, the remainder shall remain in force and
effect.

                                      - 4 -


      18. EMPLOYEE is hereby advised and encouraged to consult an attorney prior
to executing this Agreement. EMPLOYEE acknowledges that if EMPLOYEE has executed
this Agreement without consulting an attorney EMPLOYEE has done so knowingly,
voluntarily and contrary to the express advice herein.

      19. EMPLOYEE acknowledges that EMPLOYEE has been given at least forty-five
(45) days from the date EMPLOYEE first received this Agreement, which date was
on or before December 10, 2004, during which to consider this Agreement.
EMPLOYEE understands that the offer made to EMPLOYEE by this Agreement remains
open for at least forty-five (45) days, and that EMPLOYEE may accept the offer
at any time through February 15, 2005. If EMPLOYEE does not accept this
Agreement on or before that date, the offer set forth in this Agreement is
automatically rescinded unless AG expressly notifies EMPLOYEE in writing
otherwise.

AMERICAN GREETINGS CORPORATION

By: /s/ Pamela Linton                             Date: 25 February 05
    -------------------------------
        Pamela Linton

Title: Sr. Vice President
       Human Resources

/s/ David R. Beittel                              Date: 2/15/05
- -----------------------------------
    David Beittel

                                     - 5 -

EX-10.XXIII

                                                               Exhibit 10(xxiii)

                               SEVERANCE AGREEMENT

      This Severance Agreement ("Agreement") is entered into between Pamela
Linton ("EMPLOYEE") and American Greetings Corporation, an Ohio corporation
("AG" or "Company"), on the date set forth at the signature lines below, arising
out of the employment relationship between EMPLOYEE and AG. This Agreement will
not become effective and irrevocably binding until seven (7) days after it is
signed by EMPLOYEE. EMPLOYEE may revoke this Agreement at any time prior to the
expiration of such seven (7) days. A revocation must be in writing and it must
be received by the Company by the close of business on the seventh day.

      In consideration of the mutual covenants and agreements hereinafter set
forth, and intending to be legally bound, the parties agree as follows:

      1. EMPLOYEE hereby acknowledges termination of employment with the
Company effective as of the close of business on February 28, 2005 ("Severance
Date").

      2. Commencing on the Severance Date and upon EMPLOYEE signing a waiver
prepared by the Company in the form of paragraph 8, and provided that EMPLOYEE
has not resigned prior to the Severance Date, EMPLOYEE will receive the
following benefits from the Company:

            a.    Severance pay of an amount equal to 30 months base salary,
                  based on EMPLOYEE'S annual salary in effect at the Severance
                  Date, payable in monthly installments beginning on March 15,
                  2005, less applicable deductions, including deductions for
                  health care coverage. Any payments due before the effective
                  date of this Agreement shall be payable within ten (10) days
                  after the effective date. Company reserves the right to pay
                  any portion of the severance pay in a lump sum, at Company's
                  discretion.

            b.    Continued health care coverage, concurrently with COBRA, in
                  the plan in which EMPLOYEE is enrolled at the Severance Date,
                  at the Senior Vice President active employee payroll deduction
                  rate, as it may be changed from time-to-time, through August
                  31, 2007; and from September 1, 2007 through August 31, 2014,
                  EMPLOYEE will continue to be eligible for health care coverage
                  at the Senior Vice President active employee rate on a pre-tax
                  basis, as it may be changed from time-to-time;

            c.    EMPLOYEE will be eligible to participate in the Key Management
                  Annual Incentive Plan for Fiscal Year 2005, at no less than a
                  "Meets Expectations" evaluation level;

            d.    AG will pay for up to 6 months of outplacement services to
                  assist EMPLOYEE in seeking employment. AG will select the
                  service provider and will make direct payments to the service
                  provider;

            e.    EMPLOYEE will have continued use of EMPLOYEE's company car
                  through August 31, 2007, at which time EMPLOYEE will return
                  the car to AG unless EMPLOYEE exercises the option to purchase
                  the car at a discount of $500 below the car's residual value;

            f.    EMPLOYEE will continue to be covered under the Company's
                  Executive Life Insurance Plan for 6 months past the Severance
                  Date (coverage will continue through August 31, 2005); and

            g.    Stock options granted to EMPLOYEE prior to the Severance Date
                  will continue to vest according to the terms of the stock
                  option plan(s) through August 31, 2007, as if EMPLOYEE were
                  actively employed. Vested stock options shall be exercisable
                  for 90 days after August 31, 2007.



            h.    If EMPLOYEE dies before all the benefits payable under this
                  paragraph 2 have been fully paid to EMPLOYEE: the remainder of
                  the benefits payable under subparagraphs a and c of this
                  paragraph shall be paid to EMPLOYEE's estate; EMPLOYEE's
                  dependents shall be eligible for the continued healthcare
                  coverage provided in subparagraph b as if EMPLOYEE were alive;
                  and the remainder of the benefits payable under subparagraphs
                  e and g shall continue for 90 days beyond EMPLOYEE's death, at
                  which time they shall terminate.

      3. Following the Severance Date, EMPLOYEE and Company will enter into a
Consulting Agreement (a copy of which is attached as Exhibit #1), pursuant to
which EMPLOYEE will consult with Company on dates that are mutually agreed upon.
Company will pay EMPLOYEE $2,000 per day plus expenses for such consulting.
Company agrees to engage EMPLOYEE's services for a minimum of 30 days per year
in each of the three 12 month periods that follow EMPLOYEE's Severance Date, or
such other schedule as EMPLOYEE and AG may mutually agree on.

      4. If EMPLOYEE is re-employed by Company, in any capacity other than a
temporary or part-time assignment, prior to receipt of all the severance
benefits provided in paragraph 2., EMPLOYEE will forfeit any unpaid severance
benefits. In the event EMPLOYEE is paid severance in a lump sum, s/he will pay
back to COMPANY that amount EMPLOYEE would not have received had severance been
paid out in equal installments over time, pursuant to paragraph 2(a).

      5. EMPLOYEE acknowledges that as of the Severance Date EMPLOYEE will cease
to be an employee of AG and thereafter will not be eligible for or receive any
benefits of employment and that the only benefits EMPLOYEE will receive from AG
are those benefits described in paragraph 2 above; provided, however, that this
Agreement does not waive any benefits EMPLOYEE may be eligible to receive under
the Company's Supplemental Executive Retirement Plan, any stock option plan,
deferred compensation plan, or the Retirement Profit Sharing and Savings Plan.

      6. Notwithstanding any other provision of this Agreement, EMPLOYEE
acknowledges that the benefits EMPLOYEE will receive under paragraph 2 above are
greater than those benefits EMPLOYEE would have been entitled to receive upon
termination in the absence of this Agreement.

      7. This Agreement is offered as part of an exit incentive or other
employment termination program (the "Program"). Information concerning
eligibility and selection for the Program that is required to be provided under
the federal age discrimination in employment laws is enclosed with this
Agreement. EMPLOYEE acknowledges receipt of the information.

      8. With respect to any and all events arising out of or related to the
employment relationship between EMPLOYEE and the Company occurring on or before
the Severance Date, EMPLOYEE hereby releases and forever discharges Company and
its agents, officers, directors, employees, subsidiaries, divisions, affiliates,
successors and assigns, (collectively "AG Releasees") from any and all claims
and/or causes of action, known or unknown, arising (i) from or during EMPLOYEE's
employment with AG or (ii) as a result of the termination of that employment;
and EMPLOYEE hereby covenants and agrees that s/he will not assert any such
claims and/or causes of action against any AG Releasee, including but not
limited to, (i) claims and/or causes of action arising under the Age
Discrimination in Employment Act (29 U.S.C. Sec. 621 et seq.), (ii) claims
and/or causes of action arising under federal, state or local laws, including
but not limited to those prohibiting employment discrimination on the basis of
race, color, national origin, religion, sex, age, disability or otherwise; (iii)
claims and/or causes of action growing out of any legal restrictions on AG's
right to

                                      - 2 -


terminate its employees, including breach of contract, discharge in violation of
public policy, or promissory estoppel, or (iv) tort claims and/or causes of
action, including infliction of emotional distress, defamation, libel or
slander.

      9. EMPLOYEE represents and warrants that EMPLOYEE has no interest or
obligation that is inconsistent with or in conflict with this Agreement or that
would prevent, limit or impair Employee's performance of any part of this
Agreement.

      10. EMPLOYEE agrees that in the event that EMPLOYEE breaches any of the
terms of this agreement, EMPLOYEE will forfeit the benefits described in
paragraph 2, plus EMPLOYEE will pay any expenses or damages incurred by the AG
Releasees as a result of the breach, including reasonable attorneys' fees.

      11. EMPLOYEE acknowledges that EMPLOYEE has an obligation of confidence
and non-disclosure with respect to any and all confidential information and
trade secrets that EMPLOYEE acquired during the course of employment with
Company. This obligation of confidence and non-disclosure extends to both
Company information and third-party information held by the Company in
confidence, and this obligation continues after the Severance Date. EMPLOYEE is
prohibited from using or disclosing such information.

      13. EMPLOYEE agrees that from the Severance Date through August 31, 2007,
EMPLOYEE shall not be employed directly or indirectly in any capacity or work as
a consultant or independent contractor for any person, firm or company in the
greeting card or social expressions industry in any capacity similar to that
held by EMPLOYEE while employed with the Company.

      14.   Any dispute arising out of or relating to this Agreement or
            EMPLOYEE's employment shall be resolved pursuant to the Company's
            alternative dispute resolution program known as "Solutions", and the
            arbitration provided for under the Solutions program shall be final
            and binding upon the parties, except for any appeal permitted by
            law; provided however, that in the event that the Company seeks
            injunctive relief to enforce its rights under Paragraphs 12 or 13 of
            this Agreement, the parties consent to the jurisdiction of the state
            or federal court in Cuyahoga County, Ohio without regard to the
            mediation and arbitration provisions of the Solutions program.

      15. For 90 days after the Severance Date, EMPLOYEE agrees to provide and
cooperate promptly with any reasonable request by the Company to provide such
information, signatures, or certifications (as to matters upon which Employee
can truthfully certify) that may be required for, or otherwise relate to, the
Company's compliance with federal, state or local laws or regulatory
requirements. The Company shall reimburse EMPLOYEE for all reasonable expenses
related to compliance with this paragraph.

      16. EMPLOYEE agrees that he/she will not make any oral or written
statements that either generally or specifically disparage the Company, its
employment practices, business, products, conduct or policies, or its employees,
directors, or agents. AG agrees that it shall not make any oral or written
statements that either generally or specifically disparage EMPLOYEE or his/her
professional competence or employability.

      17. (a) This Agreement constitutes the entire understanding between
EMPLOYEE and the Company relating to the subject matter contained herein and
this Agreement supersedes any previous agreement(s) that may have been made in
connection with EMPLOYEE's employment with AG except insofar as such
agreement(s) concern EMPLOYEE's obligations with regard to competing with AG or

                                      - 3 -


EMPLOYEE's obligations with regard to AG's trade secrets, proprietary or other
confidential information belonging to AG, which obligations are not modified,
amended or terminated by this Agreement and which continue after the Severance
Date. This Agreement may not be changed, modified, or altered without the
express written consent of EMPLOYEE and the Senior Vice President and General
Counsel of AG.

            (b) AG's failure to insist upon strict adherence to any term of this
Agreement on any occasion shall not be considered a waiver of, or deprive AG of
its right thereafter to insist upon strict adherence to that term or any other
term of this Agreement. To be effective, any waiver must be in writing and
signed by the Senior Vice President and General Counsel of AG..

            (c) This Agreement shall be construed in accordance with the laws of
the State of Ohio. If any part or section of this Agreement is found to be
contrary to law or unenforceable, the remainder shall remain in force and
effect.

      18. EMPLOYEE is hereby advised and encouraged to consult an attorney prior
to executing this Agreement. EMPLOYEE acknowledges that if EMPLOYEE has executed
this Agreement without consulting an attorney EMPLOYEE has done so knowingly,
voluntarily and contrary to the express advice herein.

      19. EMPLOYEE acknowledges that EMPLOYEE has been given at least forty-five
(45) days from the date EMPLOYEE first received this Agreement, which date was
on or before December 9, 2004, during which to consider this Agreement. EMPLOYEE
understands that the offer made to EMPLOYEE by this Agreement remains open for
at least forty-five (45) days, and that EMPLOYEE may accept the offer at any
time through February 28, 2005. If EMPLOYEE does not accept this Agreement on or
before that date, the offer set forth in this Agreement is automatically
rescinded unless AG expressly notifies EMPLOYEE in writing otherwise.

AMERICAN GREETINGS CORPORATION

By: /s/ Zev Weiss                                    Date: 28 Feb. 05
    --------------------------------
        Zev Weiss

Title: Chief Executive Officer

/s/ Pamela Linton                                    Date: 28 February 05
- ------------------------------------
    Pamela Linton

                                      - 4 -

EX-10.XXIV

                                                                Exhibit 10(xxiv)
                              CONSULTING AGREEMENT

      THIS CONSULTING AGREEMENT ("Agreement") is made as of the 1st day of
March, 2005 between Pamela Linton ("Consultant") and American Greetings
Corporation, an Ohio corporation ("AG").

      WHEREAS, AG wishes to procure and Consultant has agreed to provide
services in connection with certain human resources matters; and

      WHEREAS, the parties now wish to memorialize their agreement by the
execution of this Agreement,

      NOW, THEREFORE, in consideration of their mutual promises, the parties
hereto agree as follows:

      1.    TERM OF AGREEMENT. AG will retain Consultant as an independent
            contractor to provide certain Services (as defined below) commencing
            on March 1, 2005. This Agreement will expire on February 28, 2008.
            Notwithstanding the foregoing, this Agreement will terminate upon
            Consultant's death or her incapacity. Nothing in this Agreement, as
            written or as implemented, is intended to create an
            employer-employee, master-servant, or principal-agent relationship
            between AG and Consultant.

      2.    PERFORMANCE OF SERVICES. Consultant shall: (a) assist in the design,
            development, and presentation of programs at imAGineU; (b) provide
            executive coaching; (c) assist in organizational design and
            development, and employee assessment and development projects; and
            (d) respond to inquiries from AG employees regarding Consultant's
            work while employed by AG ("Services"). Consultant shall produce
            meeting summaries, reports, and other documentation reasonably
            requested by AG with regard to the Services. Consultant shall
            provide the Services when determined by AG and mutually agreed on.
            AG, through its Chief Executive Officer or his/her designee, will
            select at least 30 days in each 12-month period, beginning March 1
            of each year of this Agreement, on which Consultant will provide
            Services. If AG fails to assign at least 30 days annually that are
            mutually agreed on, and as a result, Consultant cannot provide 30
            days of Services, Consultant shall be entitled to receive the per
            day payment for a minimum of 30 days in each 12 month period,
            whether Consultant works the days or not. If Consultant fails to
            agree to at least 30 days in each 12 month period without
            satisfactory reason, Consultant shall only be entitled to
            compensation for those days actually worked.

      3.    DISCRETION. Consultant is expected to perform the Services in a
            competent, diligent and professional manner. Consultant shall
            exercise customary discretion in determining how the Services are
            performed.



      4.    AUTHORITY. Consultant shall have no authority to enter into any
            agreement with any person or entity on behalf of AG; nor shall
            Consultant represent to anyone that she possesses any such
            authority.

      5.    COMPENSATION AND EXPENSES. AG shall pay Consultant the sum of $2,000
            per day as outlined in Section 2 of this Agreement. AG shall also
            pay for Consultant's reasonable expenses incurred in the performance
            of the Services and consistent with the Corporate Business, Travel &
            Entertainment Expense Policy then in effect. Consultant shall submit
            Invoices, and AG shall pay such Invoices within ten (10) days of
            receipt.

      6.    CONFIDENTIALITY. Consultant shall not, either during the term of
            this Agreement or thereafter, disclose to any person or use any
            proprietary information, except as required in the rendering of
            Services hereunder. Such proprietary information includes, but is
            not limited to, trade secrets, business plans, designs,
            specifications, manufacturing, research and development data,
            marketing data, methods, sales and customer information, and
            financial data. Upon termination of this Agreement, Consultant will
            surrender to AG all assets, property and records of AG and all
            documents containing AG's proprietary information in Consultant's
            possession.

      7.    ACTS OF CONSULTANT. Consultant shall be solely responsible for any
            damage or injury caused by her acts or omissions arising out of the
            performance of Services.

      8.    PAYMENTS. Consultant shall be responsible for reporting any income
            and paying any income taxes, Social Security insurance payments or
            contributions, or other payments, if applicable, relating to the
            compensation received hereunder, and Consultant agrees to reimburse
            and indemnify with respect to any expenses, penalties, charges or
            liabilities incurred by AG as a result of the nonpayment of any such
            taxes or charges.

      9.    INSURANCE. Consultant acknowledges and accepts full responsibility
            for acquiring and maintaining current comprehensive general
            liability and automobile liability insurance policies covering
            liability to pay for any bodily injuries or death and all loss,
            damage and injury to property caused by, resulting from or incident
            to the acts or omissions of Consultant.

      10.   OTHER EMPLOYMENT. Consultant shall not during the term of this
            Agreement enter into the employment, directly or indirectly or in a
            consulting or free lance capacity, of any person, firm or
            corporation in the United States or Canada, that manufactures or
            sells products that are substantially similar in nature to the
            products being then manufactured or sold by AG or its subsidiaries.




      11.   GOVERNING LAW AND DISPUTE RESOLUTION. This Agreement shall be
            governed by and construed in accordance with the laws of the State
            of Ohio. Any disputes arising out of or relating to this Agreement,
            including the construction or application of this Agreement, shall
            be submitted to binding arbitration before one arbitrator in
            Cleveland, Ohio in accordance with the commercial arbitration rules
            of JAMS then in effect. The arbitrator may award reasonable attorney
            fees and arbitration costs to the prevailing party.

      12.   SEVERABILITY. The invalidity or unenforceability of any of the
            provisions of this Agreement shall not affect any other provisions
            hereof, and this Agreement shall be construed in all respects as if
            such invalid or unenforceable provisions were omitted herefrom.

      IN WITNESS WHEREOF, the parties have set their hands as of the day and
year first above written.

/s/ Pamela Linton                           AMERICAN GREETINGS CORPORATION
- ---------------------------
    Pamela Linton
                                            By: ___________________________

                                            Its: __________________________

EX-10.XXV

                                                                Exhibit 10 (xxv)

                     SEVERANCE AGREEMENT AND MUTUAL RELEASE

      This Severance Agreement and Mutual Release ("Agreement") is entered into
between MARY ANN CORRIGAN-DAVIS ("EMPLOYEE") and AMERICAN GREETINGS CORPORATION,
an Ohio corporation ("AG" or "Company"), on the date set forth at the signature
lines below, arising out of the employment relationship between EMPLOYEE and AG.
This Agreement will not become effective and irrevocably binding until seven (7)
days after it is signed by EMPLOYEE. EMPLOYEE may revoke this Agreement at any
time prior to the expiration of such seven (7) days. A revocation must be in
writing and it must be received by the Company by the close of business on the
seventh day.

      In consideration of the mutual covenants and agreements hereinafter set
forth, and intending to be legally bound, the parties agree as follows:

      1. EMPLOYEE hereby acknowledges termination of employment with the Company
effective as of the close of business on February 28, 2005 ("Severance Date").

      2. Commencing on the Severance Date and upon EMPLOYEE signing a release
prepared by the Company in the form of paragraph 8, and provided that EMPLOYEE
has not resigned prior to the Severance Date, EMPLOYEE will receive the
following benefits from the Company:

            a. Severance pay in the amount of $28,335.41 per month for 36 months
      beginning on March 15, 2005, and continuing on the 15th day of each month
      thereafter through February 15, 2008, less applicable deductions,
      including deductions for health care coverage. Any payments due before the
      effective date of this Agreement shall be payable within ten (10) days
      after the effective date. The Company reserves the right to pay any
      portion of the severance pay in a lump sum, at the Company's discretion.
      In the event the Company exercises its right to make a lump sum payment,
      such payment shall be increased ("grossed up") in the amount necessary to
      eliminate any adverse tax consequences to EMPLOYEE.

            b. Continued health care coverage, concurrently with COBRA, in the
      plan in which EMPLOYEE is enrolled at the Severance Date, at the Senior
      Vice President active employee payroll deduction rate, as it may be
      changed from time-to-time, through February 28, 2008; and from March 1,
      2008 through December 31, 2018, EMPLOYEE will continue to be eligible for
      health care coverage at the Senior Vice President active employee rate on
      a pre-tax basis, as it may be changed from time-to-time; and thereafter,
      EMPLOYEE shall be eligible for retiree health care coverage on the terms
      then in effect. The period through February 28, 2008, shall be considered
      as active employment for purposes of qualifying for retiree health care



            c. EMPLOYEE will be eligible to participate in the Key Management
      Annual Incentive Plan for Fiscal Year 2005, at no less than a "Meets
      Expectations" evaluation level.

            d. AG will pay for up to six (6) months of outplacement services to
      assist EMPLOYEE in seeking employment. The service provider will be
      mutually agreed upon by Company and EMPLOYEE. The Company will make direct
      payments to the service provider. EMPLOYEE may use, and the Company will
      pay for, these outplacement services anytime before February 28, 2008.

            e. EMPLOYEE will have continued use of EMPLOYEE's company car (or a
      replacement car in February 2005 pursuant to the Company's executive car
      policy) through February 28, 2008, at which time EMPLOYEE will return the
      car to AG unless EMPLOYEE exercises the option to purchase the car at a
      discount of $500 below the car's residual value;

            f. EMPLOYEE will continue to be covered under the Company's
      Executive Life Insurance Plan through February 28, 2008;

            g. Stock options granted to EMPLOYEE prior to the Severance Date
      will continue to vest according to the terms of the American Greetings
      Stock Option Plan(s) through February 28, 2008, as if EMPLOYEE were
      actively employed. Vested stock options shall be exercisable through May
      30, 2008. In the event of EMPLOYEE's death prior to February 28, 2008, all
      vested options of EMPLOYEE may be exercised by EMPLOYEE's
      beneficiary(ies), who may exercise such options for a period of one (1)
      year following EMPLOYEE's death.

            h. Company will pay EMPLOYEE $5000 for transition expenses.

            i. The Company agrees to remove EMPLOYEE as an officer and/or
      director of any subsidiary or affiliated company in which she held such a
      position. The Company agrees to continue to insure EMPLOYEE under its
      officers and directors liability insurance policy for any claim based on
      any act while she was an officer and/or director of the Company, and to
      indemnify, protect and defend any claim or lawsuit naming EMPLOYEE as a
      defendant arising from or related to her employment with the Company or
      her status as an officer or director of the Company or any of its
      subsidiaries, as provided in the Company's corporate regulations and
      bylaws, as they may be amended from time to time.

      3. If EMPLOYEE is re-employed by Company, in any capacity other than a
temporary or part time assignment, prior to receipt of all the severance
benefits provided in paragraph 2, EMPLOYEE will forfeit any unpaid severance
benefits.

      4. EMPLOYEE acknowledges that as of the Severance Date EMPLOYEE will cease
to be an employee of AG and thereafter will not be eligible for or receive any
benefits of employment from AG other than those benefits described in this
Agreement; provided, however,

                                       2


that this Agreement does not waive any benefits EMPLOYEE may be eligible to
receive under the Company's Supplemental Executive Retirement Plan ("SERP"), any
stock option plan, deferred compensation plan, health plan, or the Retirement
Profit Sharing and Savings Plan.

            a. For purposes of calculating "Final Average Compensation", as that
      term is used in paragraph 2.10 of the Company's SERP, the payments
      received under paragraph 2.a. of this Agreement during the period February
      15, 2005 through February 15, 2008 shall be considered "Compensation" for
      the purpose of determining EMPLOYEE's two calendar years which will afford
      the highest average compensation.

      5. Notwithstanding any other provision of this Agreement, EMPLOYEE
acknowledges that the benefits EMPLOYEE will receive under paragraph 2 above are
greater than those benefits EMPLOYEE would have been entitled to receive upon
termination in the absence of this Agreement.

      6. This Agreement is offered as part of an exit incentive or other
employment termination program (the "Program"). Information concerning
eligibility and selection for the Program that is required to be provided under
the federal age discrimination in employment laws is enclosed with this
Agreement. EMPLOYEE acknowledges receipt of the information.

      7. It is agreed by EMPLOYEE that this Agreement, the benefits, including
all benefits set forth in paragraph 2 above, and all other terms of this
Agreement, are each confidential information and shall not be disclosed or
revealed to any person other than EMPLOYEE's attorneys, accountants, tax
advisors, and immediate family members (who must be informed of and agree to be
bound by the terms of this paragraph), any governmental taxing authority, or
pursuant to subpoena, court order or as otherwise required by law; provided
however that Company may disclose the terms to comply with any governmental or
regulatory disclosure obligation.

      8. With respect to any and all events arising out of or related to the
employment relationship between EMPLOYEE and the Company occurring on or before
the Severance Date, EMPLOYEE hereby releases and forever discharges Company and
its agents, officers, directors, employees, subsidiaries, divisions, affiliates,
successors and assigns (collectively "AG Releasees") from any and all claims
and/or causes of action, known or unknown, arising (i) from or during EMPLOYEE
's employment with the Company or (ii) as a result of the termination of that
employment; and EMPLOYEE hereby covenants and agrees that she will not assert
any such claims and/or causes of action against any AG Releasee, including but
not limited to (i) claims and/or causes of action arising under the Age
Discrimination in Employment Act (29 U.S.C. Sec. 621 et seq.); (ii) claims
and/or causes of action arising under federal, state or local laws, including
but not limited to those prohibiting employment discrimination on the basis of
race, color, national origin, religion, sex, age, disability or otherwise; (iii)
claims and/or causes of action growing out of any legal restrictions on AG's
right to terminate its employees, including breach of contract, discharge in
violation of public policy, or promissory estoppel; or (iv) tort claims and/or
causes of action, including infliction of emotional distress, defamation, libel
or slander.

                                       3


      Likewise, with respect to any and all events arising out of or related to
the employment relationship between EMPLOYEE and the Company occurring on or
before the Severance Date, the Company hereby releases and forever discharges
EMPLOYEE, her heirs, administrators, executors, successors and assigns
(collectively, "Employee Releasees") from any and all claims and/or causes of
action, known or unknown, arising from or relating to EMPLOYEE'S employment with
AG, known or unknown, whether in tort, contract or any other legal theory.

      9. EMPLOYEE represents and warrants that EMPLOYEE has no interest or
obligation that is inconsistent with or in conflict with this Agreement or that
would prevent, limit or impair Employee's performance of any part of this
Agreement.

      10. EMPLOYEE agrees that in the event that EMPLOYEE breaches any of the
terms of this agreement, EMPLOYEE will be liable for any damages incurred by the
AG Releasees as a result of the breach. Additionally, in the event EMPLOYEE
breaches her obligations under paragraphs 11 and 12 of this Agreement, she will
forfeit any payments then remaining due to her under paragraph 2 of this
Agreement. In the event AG breaches any term of this Agreement, AG will be
liable for any damages incurred by Employee Releasees.

      11. EMPLOYEE acknowledges that EMPLOYEE has an obligation of confidence
and nondisclosure with respect to any and all confidential information and trade
secrets that EMPLOYEE acquired during the course of employment with Company.
This obligation of confidence and non-disclosure extends to both Company
information and third-party information held by the Company in confidence, and
this obligation continues after the Severance Date. EMPLOYEE is prohibited from
using or disclosing such information.

      12. EMPLOYEE agrees that from the Severance Date through February 28,
2008, EMPLOYEE shall not be employed directly or indirectly in any capacity or
work as a consultant or independent contractor for any person, firm or company
in the greeting card, stationery, gift wrap or party goods industry in any
capacity similar to that held by EMPLOYEE while employed with the Company.

      13. Any dispute arising out of or relating to this Agreement or EMPLOYEE's
employment shall be resolved pursuant to the Company's alternative dispute
resolution program known as "Solutions" and the arbitration provided for under
the Solutions program shall be final and binding upon the parties, except for
any appeal permitted by law; provided however, that in the event that the
Company seeks injunctive relief to enforce its rights under paragraphs 11 or 12
of this Agreement, the parties consent to the jurisdiction of the state or
federal court in Cuyahoga County, Ohio without regard to the mediation and
arbitration provisions of the Solutions program.

      14. For 90 days after the Severance Date, EMPLOYEE agrees to provide and
cooperate promptly with any reasonable request by the Company to provide such
information, signatures, or certifications (as to matters upon which Employee
can truthfully certify) that may be required for, or otherwise relate to, the
Company's compliance with federal, state or local

                                       4


laws or regulatory requirements. The Company shall reimburse EMPLOYEE for all
reasonable expenses related to compliance with this paragraph.

      15. EMPLOYEE agrees that she will not make any oral or written statements
that either generally or specifically disparage the Company, its employment
practices, business, products, conduct or policies, or its employees, directors,
or agents. AG agrees that it shall not make any oral or written statements that
either generally or specifically disparage EMPLOYEE or her professional
competence or employability. In addition, the Company will provide EMPLOYEE with
twenty (20) original counterparts of a favorable letter of recommendation signed
by Zev Weiss in a form to be agreed upon by the parties within 30 days of the
Severance Date.

      16.   (a) This Agreement constitutes the entire understanding between
EMPLOYEE and the Company relating to the subject matter contained herein and
this Agreement supersedes any previous agreement(s) that may have been made in
connection with EMPLOYEE's employment with AG. This Agreement may not be
changed, modified, or altered without the express written consent of EMPLOYEE
and an officer of AG.

            (b) AG's or EMPLOYEE'S failure to insist upon strict adherence to
any term of this Agreement on any occasion shall not be considered a waiver of,
or deprive AG or EMPLOYEE of its or her right thereafter to insist upon strict
adherence to that term or any other term of this Agreement. To be effective, any
waiver must be in writing and signed by EMPLOYEE or by an officer of AG.

            (c) This Agreement shall be construed in accordance with the laws of
the State of Ohio. If any part or section of this Agreement is found to be
contrary to law or unenforceable, the remainder shall remain in force and
effect.

      17. EMPLOYEE is hereby advised and encouraged to consult an attorney prior
to executing this Agreement. EMPLOYEE acknowledges that if EMPLOYEE has executed
this Agreement without consulting an attorney, EMPLOYEE has done so knowingly,
voluntarily and contrary to the express advice herein.

      18. EMPLOYEE acknowledges that EMPLOYEE has been given at least forty-five
(45) days from the date EMPLOYEE first received this Agreement, which date was
on or before December 9, 2004, during which to consider this Agreement. EMPLOYEE
understands that the offer made to EMPLOYEE by this Agreement remains open for
at least forty-five (45) days, and that EMPLOYEE may accept the offer at any
time through February 28, 2005. If EMPLOYEE does not accept this Agreement on or
before that date, the offer set forth in this Agreement is automatically
rescinded unless AG expressly notifies EMPLOYEE in writing otherwise.

      19. The obligations of the Company to pay EMPLOYEE pursuant to paragraph
2(a) above shall, in the event of the death of EMPLOYEE prior to February 28,
2008 be payable to EMPLOYEE'S designated beneficiary, her husband, Edward J.
Davis, which designation may be changed from time to time by EMPLOYEE by written
notice to the Company.

                                       5


      20. Any notices required in the performance of this Agreement shall be
sent to the following persons by certified mail, return receipt requested:

      If to Company:                 American Greetings Corporation
                                     One American Road
                                     Cleveland, Ohio 44144
                                     Attn: Catherine Kilbane, General Counsel

      With a copy to:                American Greetings Corporation
                                     One American Road
                                     Cleveland, Ohio 44144
                                     Attn: Vice President/Human Resources

      If to EMPLOYEE:                Mary Ann Corrigan-Davis
                                     2373 Chapparal North
                                     Westlake, Ohio 44145

      With a copy to:                Robert J. Valerian, Esq.
                                     Kahn Kleinman, LPA
                                     2600 Erieview Tower
                                     Cleveland, Ohio 44114-1824

      21. All announcements by the Company regarding EMPLOYEE, both internal and
external, except for any filings made by the Company with any government or
regulatory agency shall be mutually agreed upon by the Company and EMPLOYEE
prior to distribution.

      22. After the Severance Date, for a period of 90 days, any telephone calls
received at the Company for EMPLOYEE will be referred to EMPLOYEE's current
assistant, who will then inform the caller that EMPLOYEE is no longer with the
Company and will offer a telephone number where EMPLOYEE may be reached.

      23. The Company warrants to Employee that the individual signing this
Agreement on behalf of the Company has full authority to do so.

AMERICAN GREETINGS CORPORATION

By: /s/ Catherine Kilbane                               Date: 2-28-05
    -------------------------------------

/s/ Mary Ann Corrigan-Davis                             Date: 28 Feb. 2005
- -----------------------------------------
      Mary Ann Corrigan-Davis

                                        6

EX-10.XXVII

Exhibit 10 (xxvii)

AMERICAN GREETINGS KEY MANAGEMENT ANNUAL INCENTIVE PLAN FISCAL YEAR 2005

AMERICAN GREETINGS
KEY MANAGEMENT
ANNUAL INCENTIVE PLAN

During Fiscal Year 2005, American Greetings must focus its efforts on growing revenue, improving profit margins and optimizing our assets.

To address these challenges, we must concentrate our efforts on achieving our 2005 business goals and reward performance that contributes to the Company’s success. And, we need to continue to create value for our shareholders. An important part of value creation is our ability to grow earnings and demonstrate to investors that we will continue to be a strong business. As a member of the American Greetings management team, you play an important role in meeting these goals. You have the potential to have an impact on our success. As a result, you have a financial stake in our ability to achieve these goals.

This brochure provides an overview of the Key Management Annual Incentive Plan — a valuable component of your total compensation package. In addition, your Fiscal Year 2005 Annual Incentive Plan Statement — located in the back pocket of this brochure — provides details about the Plan goals and targets for your position within your business unit. It also gives a detailed example of the incentive calculation. Together, these documents provide the information you need to understand the Plan so you can maximize your annual incentive.

TABLE OF CONTENTS
Eligibility	1
How the Plan Works	2
Your Individual Target Incentive	2
Business Unit Performance	3
Corporate Performance	5
How Awards Are Calculated	6
Individual Performance	7
Questions	8

AMERICAN GREETINGS KEY MANAGEMENT ANNUAL INCENTIVE PLAN
	1

n Eligibility

You are eligible to participate in the Annual Incentive Plan if you are a Key Manager or Officer in one of the following business units:

Business Units...	Includes Key Managers And Officers in...
Corporate Consolidated	Departments that support the entire organization (typically located at World Headquarters) such as Finance, Legal, Human Resources, ISD, etc.
North American Greeting Card Division (NAGCD)	The entire business unit
Carlton Retail	Carlton Cards Retail (U.S.) and Carlton Cards Retail (Canada)
AGI Schutz Celebrate It! Group    DesignWare    Learning Horizons Gift Wrap & Specialty GuildHouse Magnivision Plus Mark Carlton Mexico John Sands Group S.A. Greetings UK Greetings Ltd.	The entire business unit

If you participate in another Company-sponsored annual incentive plan, you are not eligible to participate in the Key Management Annual Incentive Plan.

Key Managers include individuals in Key Manager 1 and Key Manager 2 positions. Officers include Corporate-level Executive Directors, Vice Presidents, Senior Vice Presidents, President & Chief Operating Officer, Chief Executive Officer, Chairman of the Board and any other position(s) that may be designated.

If you are hired during the plan year — defined as the American Greetings fiscal year ending February 28, 2005 — and are eligible to participate in the Key Management Annual Incentive Plan, you will receive a prorated incentive payout based on the period of time you participated in the Plan. If you are promoted or you move from one business unit to another during the year, your individual target incentive, base earnings, business unit earnings goal and corresponding performance multiplier may change. If any of these do change, your incentive will be calculated based on the targets, base earnings, plan provisions and actual earnings performance for each business unit you participated in on a prorated basis and rounded to the nearest full month.

	AMERICAN GREETINGS KEY MANAGEMENT ANNUAL INCENTIVE PLAN
2

If you voluntarily or involuntarily leave American Greetings before the completion of the plan year, you will forfeit your Key Management Annual Incentive Plan award for that year. If your employment ends during the plan year because you elect to retire after age 60, take a leave of absence, suffer a permanent disability or die, your incentive payout will be prorated to the nearest full month based on the actual period you participated in the Plan during the year.

n HOW THE PLAN WORKS

The Key Management Annual Incentive Plan is designed to focus on those performance factors that will enable American Greetings to be successful. Two of the keys to our success are our earnings and stock performance. Earnings performance and value creation will ensure we remain a major competitor in our industry. The Key Management Annual Incentive Plan will measure each business unit’s earnings performance and our corporate earnings per share performance and will reward you for your performance when defined goals and objectives are achieved.

The actual incentive you receive will be based on your individual target incentive, your business unit’s achievement of its earnings goal, corporate earnings per share performance and your individual performance.

Let’s take a look at the components of the Plan and how it works.

YOUR INDIVIDUAL TARGET INCENTIVE

At the beginning of each fiscal year, an individual target incentive will be established for you based on your position. The target is a percentage of your base earnings. Your individual target incentive is shown on your Fiscal Year 2005 Annual Incentive Plan Statement.

For example, assume you are a Key Manager 1 with base earnings of $60,000. Your target incentive under the Plan is 10%, or $6,000 ($60,000 x 10%).

Your individual target is the incentive you will earn when both the business unit and the Corporation achieve their goals. This means that your incentive opportunity based on business unit performance is 50% of the target or $3,000 and your incentive opportunity based on the Corporation’s performance is 50% of the target or $3,000 — for a total individual target opportunity of 10% or $6,000.

If your business unit’s performance is above or below goal, the amount calculated for the business unit component will be increased or decreased. The resulting amount is used as the basis for calculating your corporate incentive opportunity based on corporate earnings per share performance.

DEFINING BASE EARNINGS

Your base earnings are referred to throughout this brochure and are defined as your base salary earnings during the fiscal year. Base earnings exclude health and welfare benefits, bonus and incentive payments, overtime and other indirect compensation. Base earnings for Plan participants outside the U.S. may be defined differently and may vary by country.

AMERICAN GREETINGS KEY MANAGEMENT ANNUAL INCENTIVE PLAN
	3

BUSINESS UNIT PERFORMANCE

At the beginning of each fiscal year, the American Greetings Board of Directors approves the corporate earnings goal for the fiscal year. This goal provides the context from which each business unit sets its earnings goal.

Your business unit’s actual earnings will be measured at the end of the fiscal year. Actual earnings results will be expressed as a percentage of the earnings goal. If your business unit’s results exceed or fall below the earnings goal, Plan payouts will be adjusted:

n	Below Target Performance. If your business unit’s earnings results do not meet a minimum level of performance — the performance threshold — no payouts will be made to participants in your unit. Actual performance between threshold and goal will result in a reduced payout.
n	Target Performance. When business unit results meet the earnings goal, you are eligible to receive 100% of the business unit incentive.
n	Above Target Performance. When business unit results exceed the earnings goal, you are eligible to receive up to 200% of the business unit incentive. This provides a significant opportunity for increased financial rewards.

EARNINGS GOALS FOR BUSINESS UNITS

The Board of Directors approves the earnings goal for the Corporation at the beginning of each year. Business unit earnings goals are based on the growth opportunities and challenges of each business unit. These goals support our business objectives. For example, some business units have high growth opportunities and low operating costs. As a result, their earnings goal may be higher than other business units. other units may have lower earnings goals.

Business unit earnings goals may change from year to year based on each unit’s performance challenges.

PERFORMANCE BELOW THRESHOLD

If your business unit’s actual earnings result falls below the earnings performance threshold for the fiscal year, no incentive payouts will be made. This plan feature is key to our performance-based compensation philosophy — ensuring that our incentive pay reflects the performance of our business units.

If your business unit has met or exceeded the performance threshold level of earnings, and actual performance is above or below goal, a business unit performance multiplier will be used to calculate your incentive.

	AMERICAN GREETINGS KEY MANAGEMENT ANNUAL INCENTIVE PLAN
4

BUSINESS UNIT PERFORMANCE MULTIPLIER

At the beginning of the fiscal year, each business unit is given a performance multiplier. This multiplier is used to calculate the incentive when performance is above or below goal, after the performance threshold has been achieved. The business unit performance multiplier supports our compensation philosophy of linking compensation to performance that contributes to our business objectives.

The business unit performance multiplier — shown on your Fiscal Year 2005 Annual Incentive Plan Statement —incrementally increases your individual target incentive opportunity for business unit performance above goal. It also incrementally decreases your target incentive opportunity for business unit performance below goal. The increments are based on the percentage that actual earnings results are above or below the earnings goal. Of course, the performance threshold must be achieved for any incentive to be earned.

HOW THE MULTIPLIER IS USED

Once each business unit’s fiscal year earnings performance has been measured, the performance multiplier will be applied based on the actual performance achieved, and will be used to help calculate your incentive opportunity.

For example, assume your business unit is given a performance multiplier of 4 at the beginning of the year, and the unit’s final fiscal year-end earnings result is 110% of the earnings goal.

The business unit performance multiplier adjusts your individual incentive opportunity based on your business unit’s performance:

100%	+ ( 4	X	10% )	=	140%
Earnings Goal	Business Unit Performance Multiplier		Earnings Above Goal		Business Unit Incentive Opportunity
YOUR PERFORMANCE MULTIPLIER
It’s important to note that performance multipliers vary by business unit. Details about your performance multiplier are shown on your Fiscal Year 2005 Annual Incentive Plan Statement.

The illustration on page 5 shows the potential business unit incentive opportunity for a participant under the Plan. This illustration assumes a business unit performance multiplier of 4 and a performance threshold of 90% of goal.

In this example, if actual earnings results are 90% of goal, the business unit incentive opportunity will be 60% [100% — (4 x 10%)]. Therefore, the business unit incentive opportunity for this individual will be 60% of his or her target business unit incentive.

However, if actual earnings results are 110% of goal, the business unit incentive opportunity will be 140% [100% + (4 x 10%)].

AMERICAN GREETINGS KEY MANAGEMENT ANNUAL INCENTIVE PLAN
	5

% OF BUSINESS            BUSINESS UNIT PAYOUT UNIT INCENTIVE            MAXIMUM (200%) —— — 200% 180% 140% 100% 60% NO PAYOUT BELOW THRESHOLD 0% % OF BUSINESS UNIT EARNINGS GOAL ACHIEVED 80% 90% 100% 110% 120% 125% (Threshold) (Above Goal)

Please note: The factors used are for illustrative purposes only. Your actual threshold performance level and business unit performance multiplier are shown on your Fiscal Year 2005 Annual Incentive Plan Statement.

CORPORATE PERFORMANCE

At the beginning of each fiscal year, the American Greetings Board of Directors will approve a corporate earnings per share goal for the year. Corporate earnings per share will be measured at the end of the year. You are eligible for additional incentive earnings based on the Corporation’s actual performance compared to this goal. Any such earnings are calculated as a multiple of your incentive opportunity calculated under the business unit component of this plan.

n If the actual corporate earnings per share performance is less than 90% of the goal, a corporate performance multiplier of 1 will be applied to your business unit incentive opportunity (i.e., there are no additional earnings under the corporate performance component).

n	If the actual corporate earnings per share performance is at least 90% of the goal — but not greater than 100% of the goal — a corporate performance multiplier of at least 1, but no more than 2, will be applied to your business unit incentive opportunity. The multiplier will be determined using this calculation: 1 + [100% — (4 x % below goal)].
	For example, if your business unit incentive opportunity is $3,000, and actual corporate earnings performance is 95% of goal, your total incentive opportunity will be:

Business Unit Incentive Opportunity =	$	3,000
Corporate Performance Multiplier [1+ (100% — (4 X 5%))] =		X 1.8
Total Incentive Opportunity =	$	5,400

n If the corporate earnings per share goal is reached or exceeded, a corporate performance multiplier of 2 will be applied to your business unit incentive opportunity. Based on the prior example, your total incentive opportunity will be $6,000 ($3,000 x 2).

CORPORATE EARNINGS PER SHARE

It’s critical that managers understand the importance of our earnings per share performance and how it leads to increased shareholder value. By delivering earnings per share at or above our fiscal year 2005 goal, we will build investor, shareholder and associate confidence.

Earnings per share is determined as income net of all interest and taxes divided by the total number of shares outstanding, as calculated on a fully diluted basis.

	AMERICAN GREETINGS KEY MANAGEMENT ANNUAL INCENTIVE PLAN
6

HOW AWARDS ARE CALCULATED

At the end of American Greetings fiscal year, your business unit’s actual earnings results will be measured and your incentive opportunity will be calculated. If American Greetings achieves at least 90% of our corporate earnings

per share goal, your business unit incentive opportunity will be increased. Your actual incentive will then be determined based on your individual performance.

The following examples show how an actual incentive opportunity is calculated under different performance scenarios. It assumes a business unit multiplier of 4.

		Performance Compared to Goal
	BUSINESS UNIT:		90% OF GOAL			95% OF GOAL			100% OF GOAL			110% OF GOAL
	CORPORATE:		85% OF GOAL			90% OF GOAL			100% OF GOAL			105% OF GOAL
ASSUMPTION:
Base Earnings			$	60,000		$	60,000		$	60,000		$	60,000
Individual Target Incentive				x 10	%		x 10	%		x 10	%		x 10	%
Individual Target Incentive Opportunity			$	6,000		$	6,000		$	6,000		$	6,000
(Individual Target Business Unit Opportunity = $3,000)
(Individual Target Corporate Opportunity = $3,000)
CALCULATION:
Business Unit Opportunity			$	3,000		$	3,000		$	3,000		$	3,000
Adjusted for business unit earnings performance				x 60	%		x 80	%		x 100	%		x 140	%
[100% +/- (4 x % above or below goal)]         =
Business Unit Incentive Opportunity			$	1,800		$	2,400		$	3,000		$	4,200
Corporate Opportunity
X
Corporate Performance Multiplier				X 1.0			X 1.6			X 2.0			X 2.0
1 + [100% — (4 x % below goal)]         =
TOTAL INCENTIVE OPPORTUNITY			$	1,800		$	3,840		$	6,000		$	8,400

       Actual Payout Adjusted Based
           on Individual Performance

AMERICAN GREETINGS KEY MANAGEMENT ANNUAL INCENTIVE PLAN
	7

INDIVIDUAL PERFORMANCE

At the end of the fiscal year, managers will assess each participant’s performance compared to other participants within their business unit. As part of the performance management process, managers will determine the degree to which the participants achieved their goals and job expectations defined at the start of the fiscal year. Using this assessment, managers will rank participants based on their relative performance and will adjust final Key Management Annual Incentive Plan incentive payouts. A certain percentage of participants will have their incentive increased while other participants will have their incentive reduced. However, most participants will receive 100% of their incentive payout.

The following schedule shows how final incentive awards will be adjusted based on individual performance within business units.

This adjustment supports our compensation philosophy of providing greater reward opportunities for associates who deliver higher levels of performance, enabling American Greetings to be successful. Paying for performance helps to reduce a sense of “entitlement” — that is, the expectation that when American Greetings does well, we will all be rewarded well, regardless of our own individual performance. Instead, the Plan provides a method for recognizing individuals based on relative contributions to American Greetings success.

PERFORMANCE            TARGET PERCENTAGE            WILL            PERCENTAGE RATING            OF PARTICIPANTS            RECEIVE            OF INCENTIVE Exceeds Expectations 30% 115%

Meets Expectations 60% PERFORMANCE 100% ADJUSTMENT

Improvement Expected/ 10% 0 TO 50% Performance Below Peer Level

	AMERICAN GREETINGS KEY MANAGEMENT ANNUAL INCENTIVE PLAN
8

SUMMARY: THREE PERFORMANCE ADJUSTMENTS
Your actual incentive payout under the Key Management Annual Incentive Plan will be adjusted based on performance in three areas:
n	Business Unit Performance Multiplier
	If your business unit’s performance is above or below its earnings goal, a business unit performance multiplier will be used to calculate your adjusted incentive opportunity.
n	Corporate Performance Multiplier
	If corporate earnings per share performance reaches or exceeds 90% of the goal, a corporate performance multiplier will be applied to your business unit incentive opportunity.
n	Individual Performance
	As part of the performance management process, managers assess performance and determine performance ratings. Once your incentive opportunity is calculated, your incentive may be adjusted — up or down — based on your performance rating.

n INCENTIVE PAYOUT

Incentive payouts earned in fiscal year 2005 will be distributed to participants within 60 days after the end of the fiscal year. Incentive payouts are subject to normal tax withholding at a standardized rate and will be deposited to a bank account of your choice.

CALCULATING PAYOUTS

For computation purposes, financial goals and actual performance results are rounded to the nearest $1,000. The percent of the financial goal achieved and the percent of target incentive earned is rounded to the nearest one-tenth of one percent. The actual incentive payout is rounded to the nearest dollar.

n QUESTIONS

If you have questions about the Key Management Annual Incentive Plan and how it works, please contact your manager. Your manager will work with you to ensure you understand the Plan so you can maximize your annual incentive.

Nothing in this brochure should be construed to create or imply any contract of employment between an employee and American Greetings and its subsidiaries. No employee, former employee or any beneficiary shall have any right to payments under the American Greetings Key Management Annual Incentive Plan, except as specifically provided in the Plan.

American Greetings reserves the right to make changes to the Plan without prior notice to any of the Plan’s participants. The Chief Executive Officer and Chairman are the only people who have the authority to alter or amend this Plan as is relates to any one participant. Any such alteration or amendment must be done in writing. No participant should rely on an alteration, amendment or modification to this Plan unless it is made in writing and is signed by the CEO or the Chairman.

For purposes of illustrating how the Plan works, hypothetical associates, target incentives, performance outcomes and incentive payments have been used in this brochure. The actual incentive, if any, will be based on the actual performance of American Greetings, its business units, and your individual performance.

This brochure and its contents are considered to be confidential and proprietary, and are for the sole use of current American Greetings employees.

EX-10.XXVIII

Exhibit 10(xxviii)

American Greetings

Key Management Annual Incentive Plan

     Fiscal Year 2006

American Greetings
Key Management Annual Incentive Plan 1

Table of Contents

Eligibility	2
How the Plan Works	3
Your Individual Target Incentive	4
Weighting the Measures	5
Measuring Performance	6
Performance Multipliers	7
Performance Measures	8
Corporate Performance	8
Business Unit Performance	9
Individual Performance	10
Summary – Total Award Calculation	11
Administrative Details	12
Definition of Common Terms	13

American Greetings
Key Management Annual Incentive Plan 2

American Greetings Key Management Annual Incentive Plan

This brochure provides an overview of the Key Management Annual Incentive Plan ¾ a valuable component of your total compensation package. It contains details about how the Plan rewards for Corporate, Business Unit and Individual performance results. In addition, your Incentive Compensation Statement ¾ provided separately ¾ includes information specific to your participation in the plan: your assigned business unit, your target incentive percentage, and detailed examples of the incentive calculation under different performance scenarios. Together, these documents provide the information you need to understand the Plan so you can maximize your annual incentive award.

Eligibility

You are eligible to participate in the Key Management Annual Incentive Plan if you are a Key Manager or Officer in one of the following business units and you do not participate in another Company-sponsored annual incentive plan:

§	Corporate Consolidated
§	Total Social Expressions Group
§	Cards & Wrap Group
§	Creative Products Group
§	Plus Mark
§	AG Interactive Entertainment Group
§	UK Greetings
§	John Sands Group
§	S.A. Greetings
§	Carlton Mexico

Key Managers include individuals in Key Manager 1 and Key Manager 2 job levels. Officers include Corporate-level Executive Directors, Vice Presidents, Senior Vice Presidents, President & Chief Operating Officer, Chief Executive Officer, Chairman of the Board and any other job level(s) that may be designated.

American Greetings
Key Management Annual Incentive Plan 3

How the Plan Works

The Key Management Annual Incentive Plan rewards participants for their contributions to American Greetings success over a twelve-month fiscal year. The Plan rewards for successful results in three key performance areas:

n	Corporate Performance. At the beginning of each fiscal year, the American Greetings Board of Directors approves the corporate earnings per share (EPS) goal for the year. Actual corporate results are compared to this goal at the end of the year.
n	Business Unit Performance. Every year, each business unit develops an earnings goal ¾ which is approved by the Board of Directors ¾ based on its strategic direction, business opportunities and growth projections. Business unit performance is based on actual earnings results for your assigned business unit compared to goal.
n	Individual Performance. Your manager will determine your individual performance compared to your objectives for the year. Your actual performance rating determines the percentage of the target individual incentive amount you earn.

At the end of each fiscal year, incentive amounts are determined based on performance in these three areas and are added together to determine your total Key Management Annual Incentive Plan award.

Corporate
Performance + Business Unit
Performance + Individual
Performance = Your
Incentive
Award

The total award ¾ which is paid in cash ¾ can range from 0% to 200% of your individual target incentive. This provides significant incentive earnings opportunity when performance in one or more of these performance areas exceeds expectations.

Let’s take a look at the components of the Plan and how they work.

American Greetings
Key Management Annual Incentive Plan 4

Your Individual Target Incentive

At the beginning of each fiscal year, an individual target incentive is established for you based on your job level. This target incentive is typically communicated as a percentage of your base earnings but may also be expressed as a dollar amount, determined by multiplying your base earnings by your target incentive percentage as follows:

Your Base Earnings

×

Your Target Incentive %

=

Your Target Incentive

The target incentive represents what you would earn if each performance measure in this incentive plan (Corporate, Business Unit, and Individual) were achieved at 100% of goal and you met all individual performance expectations (i.e., all components achieve their target performance).

Example: Joe

For example, assume Joe is a Key Manger 1 with base earnings of $60,000. His target incentive under the Plan is 10%, or $6,000 ($60,000 × 10% = $6,000).

We’ll refer to Joe throughout this brochure as we describe how the Plan works.

American Greetings
Key Management Annual Incentive Plan 5

Weighting the Measures

Performance measures are weighted by job level to reflect the degree to which positions within a job level can affect performance in each of the three performance measurement areas. Accordingly, associates at higher job levels ¾ who have more impact on the achievement of corporate objectives ¾ have more weight assigned to the corporate performance measure. Lower job levels, in contrast, have more weight assigned to the individual performance measure.

The following chart shows the specific weightings for each job level for fiscal year 2006.

	Fiscal Year 2006 Weightings
Job Level	Corporate		Business Unit		Individual
Chairman of the Board, CEO, President and COO, Senior Vice Presidents		30%		50%		20%
Vice Presidents, Executive Directors, Key Managers 2, Key Managers 1		20%		50%		30%

Example: Joe

Joe, a Key Manager 1 with base earnings of $60,000 and a 10% incentive target, would face the following set of performance measure weightings and target incentive awards:

Key Manager 1 Weightings

Corporate	Business Unit	Individual	Total
20%	50%	30%	100%

Joe’s Target Incentive (Percent of Base Earnings)

2%	5%	3%	10%
(10% × 20%)	(10% × 50%)	(10% × 30%)

Joe’s Target Incentive ($)

$1,200	$3,000	$1,800	$6,000
($60,000 × 2%)	($60,000 × 5%)	($60,000 × 3%)

American Greetings
Key Management Annual Incentive Plan 6

Measuring Performance

At the beginning of each fiscal year, the American Greetings Board of Directors approves the corporate earnings per share (EPS) goal for the coming year. This goal provides the context within which each business unit then sets its earnings goal.

Corporate and business unit actual earnings performance is determined at the end of the fiscal year and expressed as a percentage of the earnings goal. In contrast, individual results are evaluated by your manager and communicated as an individual performance rating. If the corporation’s or your business unit’s results exceed or fall below the earnings goal, Plan payouts are adjusted.

n	Below Target Performance. If actual earnings results do not meet a minimum level of performance ¾ the performance threshold ¾ no incentive award is earned for that performance measure. Earnings results that fall between threshold and goal result in a reduced incentive award.	Performance Threshold The corporate and business unit performance threshold is 90% of the fiscal year earnings goal.
n	Target Performance. When actual results meet the earnings goal, you receive 100% of the target incentive award for that performance measure.
n	Above Target Performance. When actual results exceed the earnings goal, you can receive up to 200% of the targeted incentive award for that performance measure.

As described above, there is a precise relationship between actual earnings results and the corresponding incentive award. As performance rises or falls, so does your incentive award. But how much your award changes as performance varies is determined by something called a performance multiplier which is discussed in the following section.

American Greetings
Key Management Annual Incentive Plan 7

Performance Multipliers

The performance multiplier is used to calculate the corporate and business unit incentive awards when performance is above or below goal, provided the performance thresholds have been achieved.

Corporate and business unit performance incrementally increase your incentive award for performance above goal. They also incrementally decrease your incentive award for performance below goal.

For example, a multiplier of 4 means that for every 1% increase or decrease in the percentage of goal achieved there is a corresponding 4% increase or decrease in the percentage of target incentive earned.

The formula below illustrates the role of the performance multiplier in determining the adjustment that is made to your incentive target based on actual performance achieved.

Example of a performance multiplier of 4 when the percent of goal
achieved is 105%
100%              +         (                  4                     ×                           5%           )         =          120%
Target Performance	Performance Multiplier	Results Above Goal	Performance Adjustment

Important Note: Business unit performance multipliers vary by business unit. The multiplier assigned to your business unit is provided in your fiscal year 2006 Incentive Plan Statement. A list of all business unit multipliers is provided in the Definition of Terms section of this document.

American Greetings
Key Management Annual Incentive Plan 8

Performance Measures

Corporate
Performance + Business Unit
Performance + Individual
Performance

Corporate Performance

Corporate performance is based on fiscal year-end corporate earnings per share compared to goal. Minimum performance of 90% of goal must be attained before any incentive is earned. From that point onward, incentive awards are determined using a performance multiplier of 4 as illustrated in the example below.

Example: Joe

Joe is a KM1 with $60,000 in base earnings. Let’s assume corporate EPS performance is 105% of goal. Joe’s corporate incentive award is calculated in three steps:

1.	Determine the corporate performance adjustment factor
2.	Apply the corporate performance adjustment to Joe’s target incentive percentage for the corporate component
3.	Multiply the result by Joe’s base earnings

100%              +         (               4                     ×                      5%           )         =                  120%
Target Performance	Corporate Performance Multiplier	Results Above Goal	Corporate Performance Adjustment

	Corporate Incentive
Joe’s Target Incentive				2	%
Performance Adjustment		×		120	%
Joe’s Base Earnings		×	$	60,000
Joe’s Incentive Earned		=	$	1,440

American Greetings
Key Management Annual Incentive Plan 9

Corporate
Performance + Business Unit
Performance + Individual
Performance

Business Unit Performance

Business unit performance measures vary by business unit, but your measure will be one of the following:

§	Business Unit Pro Forma Earnings Before Interest and Taxes (Business Unit EBIT),
§	Product Profit Contribution (PPC),
§	Net Operating Profit After Taxes (NOPAT), or
§	Corporate Pro Forma Earnings Before Interest and Taxes (Corporate EBIT).

Earnings are charged/credited for any variation from plan in Net Capital Employed at the weighted average cost of capital. Performance is based on fiscal year-end earnings compared to goal. Minimum performance of 90% of goal must be attained before any incentive is earned.

A listing of each business unit’s assigned earnings measure and performance multipliers are presented in the Business Unit table at the end of this brochure as well as in your Incentive Plan Statement, which is provided separately. An example of the calculation of this incentive follows.

Example: Joe

Joe is a KM1 with $60,000 in base earnings. Let’s assume his Business Unit has a performance multiplier of 3 and that its performance at year-end is 96% of goal. Joe’s business unit incentive award is calculated in three steps:

1.	Determine the business unit performance adjustment factor
2.	Apply the business unit performance adjustment to Joe’s target incentive percentage for the business unit component
3.	Multiply the result by Joe’s base earnings

100%              +         (              3                 ×              – 4%      )         =                             88%
Target Performance	Business Unit Performance Multiplier	Results       Below        Goal	Business Unit Performance Adjustment

	Business Unit Incentive
Joe’s Target Incentive				5	%
Performance Adjustment		×		88	%
Joe’s Base Earnings		×	$	60,000
Joe’s Incentive Earned		=	$	2,640

American Greetings
Key Management Annual Incentive Plan	10

Corporate
Performance + Business Unit
Performance + Individual
Performance

Individual Performance

At the end of the fiscal year, managers assess each participant’s performance compared to other participants within the business unit. Managers determine the degree to which the participants achieve the goals and job expectations defined at the beginning of the year.

Managers rank participants based on their relative performance and determine the actual performance rating based on these rankings and the targeted percentage of participants for each rating. Participants who receive an “Exceeds Expectations” performance rating receive the target incentive for the individual performance measure multiplied by 150% ¾ or 200% based on manager discretion¹. Participants who receive an “Improvement Expected / Performance Below Peer Level” rating will not receive an individual performance incentive. Individuals that receive a “Meets Expectations” rating will receive 100% of their target individual incentive.

If corporate earnings performance is below threshold, only 30% of the top performing participants may receive awards for individual performance. In these instances, individual awards may not exceed 50% of the target payable for the individual performance component.

The following schedule shows how individual amounts will be adjusted based on individual performance.

	Target Percentage					Individual Payout
Performance Rating	of Participants			Will Receive		Percentage
Exceeds Expectations1		30	%		®		150	%
Meets Expectations		60	%		®		100	%
Improvement Expected / Performance Below Peer Level		10	%		®		0	%

¹ Managers can, at their discretion, increase the Individual Payout Percentage to 200% for associates rated as “Exceeds Expectations” who demonstrate an extraordinary level of performance. Accomplishments must be the result of extraordinary effort and initiative that go well beyond the contributions of other associates rated as “Exceeds Expectations.” The number of persons eligible to receive an Individual Payout Percentage of 200% may not exceed one third of the total number of associates rated as “Exceeds Expectations.”

Example: Joe

For example, assume Joe receives a performance rating of “Exceeds Expectations.” His Individual incentive award would be calculated as follows:

	Individual Incentive
Joe’s Target Incentive		3	%
Payout Percentage	×	150	%
Joe’s Base Earnings	×	$60,000
Joe’s Incentive Earned	=	$2,700

American Greetings
Key Management Annual Incentive Plan	11

Summary – Total Award Calculation

At the end of American Greetings fiscal year, corporate, business unit and individual results are evaluated and your total incentive award is calculated.

Example: Joe

The following example shows how Joe’s actual incentive award is calculated based on the assumptions that were used throughout this brochure:

Joe’s Assumptions				Performance Assumptions
Base Earnings:	$	60,000		Corporate:	105% of Goal
Individual Target Percentage:		10	%	Business Unit:	96% of Goal
Individual Target Incentive:	$	6,000		Individual:	Exceeds Expectations

Incentive Calculation	Incentive %			Incentive $
Target Corporate Incentive (20% weight)		2	%
[100% + (4 × 5% above goal)]		× 120	%
Final Corporate Incentive		2.4	%	$	1,440
+
Target Business Unit Incentive (50% weight)		5	%
[100% + (3 × -4% above goal)]		× 88	%
Final Business Unit Incentive		4.4	%	$	2,640
+
Target Individual Incentive (30% weight)		3	%
Individual Payout Percentage (“Exceeds”)		× 150	%
Final Individual Incentive	4.5		%	$	2,700
=
TOTAL INCENTIVE EARNED		11.3	%	$	6,780

American Greetings
Key Management Annual Incentive Plan	12

Administrative Details

If your employment status changes, your Plan participation and any payouts may be affected as described below.

n	New Hires. If you are hired during the plan year ¾ defined as the American Greetings fiscal year ending February 28, 2006 ¾ and are eligible to participate in the Key Management Annual Incentive Plan, you will receive a prorated incentive payout based on the period of time you participated in the Plan and your base earnings during that time.
n	Promotions and Transfers. If you are promoted or you move from one business unit to another during the year, your individual target incentive, base earnings, business unit goal and corresponding performance multiplier may change. If any of these do change, your incentive will be calculated based on the targets, base earnings, plan provisions and actual performance for each business unit you participated in on a prorated basis and rounded to the nearest full month.
n	Termination. If you voluntarily or involuntarily leave American Greetings before the completion of the plan year, you will forfeit your Key Management Annual Incentive Plan award for that year.
n	Retirement, Leave of Absence, Disability, Death. If your employment ends during the plan year because you elect to retire after age 60, or if you take a leave of absence, suffer a permanent disability or die, your incentive payout will be prorated to the nearest full month based on the actual period you participated in the Plan during the year.
n	Incentive Payout. Incentive payouts earned in fiscal year 2006 will typically be paid to participants within 60 days after the end of the fiscal year. Incentive payouts are subject to normal tax withholding at a standardized rate and will be deposited to a bank account of your choice.
n	Calculating Payouts. For computation purposes, financial goals and actual performance results are rounded to the nearest $1,000. The percent of the financial goal achieved and the percent of target bonus earned is rounded to the nearest one-tenth of one percent. The actual incentive payout is rounded to the nearest dollar.
n	Questions. If you have questions about the Key Management Annual Incentive Plan and how it works, please contact your manager. Your manager will work with you to ensure you understand the Plan so you can maximize your annual incentive.

American Greetings
Key Management Annual Incentive Plan	13

Common Terms

The following provides detailed definitions of some common terms used throughout this brochure.

n	Base Earnings. Your base earnings are defined as your base salary earnings during the fiscal year. Base earnings exclude health and welfare benefits, bonus, commission, and incentive payments, overtime and other indirect compensation. Base earnings for Plan participants outside of the U.S. may be defined differently and may vary by country.
n	Business Unit

Business Unit	Earnings Measure	Performance Multiplier
Corporate Consolidated	Participant Specific:		4
	Corporate NOPAT (Section 16 officers only)
	Corporate pro forma EBIT (all others)
Total Social Expressions Group	Combination of...		4
	§ Cards & Wrap Group earnings
	§ Creative Products Group earnings
	§ Plus Mark pro forma EBIT
Cards & Wrap Group	Combination of...		4
	§ Cards PPC
	§ Gift Wrap PPC
	§ Carlton Cards Retail pro forma EBIT
	§ AGI Schutz pro forma EBIT
Creative Products Group	Combination of...		4
	§ DesignWare PPC
	§ GuildHouse PPC
	§ Learning Horizons pro forma EBIT
	§ Balloon Zone PPC
	§ Product Development PPC
Plus Mark	Plus Mark pro forma EBIT		4
AG Interactive Entertainment Group	Combination of...		4
	§ Outbound licensing pro forma EBIT
	§ AG Interactive entertainment pro forma EBIT
UK Greetings	UK Greetings pro forma EBIT		4
John Sands Group	John Sands Group pro forma EBIT		3
S.A. Greetings	S.A. Greetings pro forma EBIT		3
Carlton Mexico	Carlton Mexico pro forma EBIT		3

n	Business Unit Pro Forma EBIT. A business unit’s earnings before interest and taxes, charged/credited for any variation from plan in Net Capital Employed at the weighted average cost of capital.
n	Corporate Earnings Per Share (EPS). Corporate earnings per share is measured at the end of the fiscal year and is calculated as corporate pre-tax income minus interest and taxes divided by the total number of shares outstanding as calculated on a fully diluted basis.

American Greetings
Key Management Annual Incentive Plan 14

n	Corporate Pro Forma EBIT. Consolidated corporate earnings before interest and taxes, charged/credited for any variation from plan in Net Capital Employed at the weighted average cost of capital.
n	Corporate Net Operating Profit After Tax (NOPAT). Consolidated corporate earnings after taxes, charged/credited for any variation from plan in Net Capital Employed at the weighted average cost of capital.
n	Fiscal Year. March 1 through February 28 or 29 of the following year.
n	Net Capital Employed (NCE). Assets (minus cash and LIFO reserve) minus liabilities (not including long-term debt, inter-company payables, and taxes).
n	Product Profit Contribution (PPC). Earnings before interest and taxes but not including selling and general administration (SGA) allocations.

Nothing in this brochure should be construed to create or imply any contract of employment between an employee and American Greetings and its subsidiaries. Except as specifically provided in the Plan and subject to American Greetings right to amend or terminate the Plan, no employee, former employee or any beneficiary shall have any right to payments under the American Greetings Key Management Annual Incentive Plan.

American Greetings reserves the right to terminate or make changes to the Plan at any time without prior notice to any of the Plan’s participants. The Chief Executive Officer and Chairman are the only people who have the authority to alter or amend this Plan as it relates to any one participant. Any such alteration or amendment must be done in writing. No participant should rely on an alteration, amendment or modification to this Plan unless it is made in writing and is signed by the CEO or Chairman.

For the purposes of illustrating how the Plan works, hypothetical associates, target incentives, performance outcomes and incentive payments have been used in this brochure. The actual incentive, if any, will be based on the actual performance of American Greetings, its business units, and your individual performance.

This brochure and its contents, including your incentive plan statement, are considered to be confidential and proprietary and are for the sole use of current American Greetings employees.

EX-10.XXX

                                                                 Exhibit 10(xxx)

                         AMERICAN GREETINGS CORPORATION
                             STOCK OPTION AGREEMENT
                   1997 EQUITY AND PERFORMANCE INCENTIVE PLAN

Cleveland, Ohio



              WHEREAS, the Associate identified on the attached form, (the
"Optionee") is an employee of American Greetings Corporation or one of its
subsidiaries (the "Company"); and

              WHEREAS, the Company is authorized under the attached 1997 Equity
and Performance Incentive Plan ("Plan") to grant stock options to certain
employees including the optionee;

              NOW, THEREFORE, in consideration of their mutual promises herein,
the Company and the Optionee agree as follows:

              Subject to the terms and conditions set forth in the Plan:

     (1) The Company hereby grants to the Optionee options ("Options") to
purchase the Class of Common Shares, par value $1 per Share ("Shares"), of the
Company in the amount and at the price indicated on the attached form, the
option price being the market price of the Company's Class A Common Shares
quoted by the New York Stock Exchange ("NYSE") on the day on which these Options
are granted, and agrees to cause certificates for any Shares purchased hereunder
(or other evidence of share ownership selected by the Company) to be delivered
to the Optionee upon receipt of the purchase price either (i) in cash or check;
(ii) in whole or in part, Class A and/or Class B Common Shares of the Company
valued (in the case of both Class A and/or Class B Common Shares) at the time of
exercise at least equal to the option price; (iii) by surrender of any other
award or grant under the Plan valued at the time of exercise at least equal to
the option price; or (iv) a combination of such payment methods.

     (2) The Options shall become exercisable, from time to time, in whole or in
part, according to the attached schedule, as long as the Optionee remains
employed with the Company. Once the Options have become exercisable, all or any
part of the Options shall be exercisable during the balance of the option
period; provided, however, if the Optionee shall die, become permanently
disabled or incompetent, or has ten (10) or more years of continuous service
with the Company and shall terminate employment at age 65 (and on such other
grounds as the Compensation Committee of the Board may hereafter determine in
its sole discretion), all Options represented by this Stock Option Agreement
that have not vested shall become immediately exercisable in full.

     (3) The Options shall terminate on the earliest of the following dates:

         (a)  Ten years from the date on which they were granted; or
         (b)  Nine months from the date of permanent disability or incompetence
              of the Optionee if the same was the cause of, or occurred within
              three months after, termination of the Optionee's employment with
              the Company; or

         (c)  Three months from the date of  termination of employment in all
               other cases.

     In the event the Compensation Committee determines that the Optionee has
intentionally committed an act materially inimical to the interests of the
Company, this Stock Option Agreement shall terminate at the date of such act,
notwithstanding any other provision hereof. Nothing in this Section (3) shall be
construed to modify or enlarge the rights of the Optionee as set forth in
Section (2) hereof. Nothing contained in this Stock Option Agreement shall limit
whatever right the Company might otherwise have to terminate the employment of
the Optionee and the terms hereof shall not be affected in any manner by any
employment or other agreement between the Optionee and the Company.

     (4) Persons receiving Options by will or by the laws of descent and
distribution may exercise the Options upon the terms provided for in the Plan
and this Stock Option Agreement.

     (5) The Options shall not be exercisable if at the time of exercise such
exercise would require registration of the Class A or Class B Common Shares or
other securities to be purchased hereunder under the Securities Act of 1933, as
amended, or under any similar federal securities law then in effect and such
registration shall not then be effective. The Company shall register the Class A
or Class B Common Shares or other securities covered by this Stock Option
Agreement under any such law if such registration shall be necessary to the
exercise of the Options and the Compensation Committee in its sole discretion
determines that such registration would not result in undue expense, hardship to
the Company and that such registration is desirable to effect the purposes for
which the Options are granted.

     (6) The Options may be exercised by the Optionee by (a) delivering to the
Company (Attention of the Director - Retirement & Payroll or successor to such
job title) written notice of the number and class of Shares with respect to
which the Options are being exercised, and (b) in those cases where the Optionee
does not intend to immediately sell the Shares covered by the Options, paying
the purchase price of the Shares being acquired plus any required withholdings.
The Optionee shall have no rights as a shareholder with respect to any Shares
covered by the Options evidenced by this Stock Option Agreement until such time
that the Option is exercised and the Optionee pays the full purchase price for
the underlying Shares. In those cases where the Optionee intends to immediately
sell Shares covered by the Options, after notifying the Company of his or her
intention to sell, the Optionee will receive the amount by which the sale price
exceeds the grant price for such shares, after deducting applicable taxes and
brokerage fees, but not interest that might otherwise be paid on an advance of
moneys to the Optionee between the exercise and settlement dates. The sale price
for both Class A and Class B Common Shares shall be the price of Class A Common
Shares as quoted by NYSE as of the close of business on the date of exercise.

     (7) Upon the exercise of Options or Reload Options (as defined below)
through the delivery of any class of the Company's Common Shares or other grants
or awards under paragraph 4.(d) of the Plan held by an Optionee for at least six
months, an Optionee who is in the active employ of the Company shall receive
replacement Options equal in number to the number of Common Shares and/or other
grants or awards surrendered in order to exercise the Options and on the same
terms as the Options or Reload Options surrendered, except that Reload Options
shall not be exercisable more than ten (10) years from the date of grant of the
initial Options ("Reload Options"). The Reload Options themselves may not be
reloaded, and may not be exercised after the date on which the Options in
respect of which such Reload Options were granted, expire, are canceled or
terminate.

     (8) If any provision of this Stock Option Agreement conflicts with any
provision in the 1997 Equity and Performance Incentive Plan, the provisions of
the 1997 Equity and Performance Incentive Plan shall govern.

AMERICAN GREETINGS CORPORATION

EX-10.XXXI

                                                                Exhibit 10(xxxi)

                         AMERICAN GREETINGS CORPORATION
                             STOCK OPTION AGREEMENT
                   1997 EQUITY AND PERFORMANCE INCENTIVE PLAN

Cleveland, Ohio




              WHEREAS, the individual identified on the attached form, (the
"Optionee") is a director of American Greetings Corporation (the "Company"); and

              WHEREAS, the Company is authorized under the attached 1997 Equity
and Performance Incentive Plan ("Plan") to grant stock options to directors
including the Optionee;

              NOW, THEREFORE, in consideration of their mutual promises herein,
the Company and the Optionee agree as follows:

              Subject to the terms and conditions set forth in the Plan:

     (1) The Company hereby grants to the Optionee options ("Options") to
purchase the Class of Common Shares, par value $1 per share ("Shares"), of the
Company in the amount and at the price indicated on the attached form, the
option price being the market price of the Company's Class A Common Shares
quoted by the New York Stock Exchange ("NYSE") on the day on which these Options
are granted, and agrees to cause certificates for any Shares purchased hereunder
(or other evidence of share ownership selected by the Company) to be delivered
to the Optionee upon receipt of the purchase price either (i) in cash or check;
(ii) in whole or in part, Class A and/or Class B Common Shares of the Company
valued (in the case of both Class A and/or Class B Common Shares) at the time of
exercise at least equal to the option price; (iii) by surrender of any other
award or grant under the Plan valued at the time of exercise at least equal to
the option price; or (iv) a combination of such payment methods.

     (2) The Options shall become exercisable, from time to time, in whole or in
part, according to the attached schedule, as long as the Optionee remains a
director of the Company. Once the Options have become exercisable, all or any
part of the Options shall be exercisable during the balance of the option
period; provided, however, if the Optionee shall die, become permanently
disabled or incompetent, or has ten (10) or more years of continuous service
with the Company and shall terminate as a director at age 65 (and on such other
grounds as the Compensation Committee of the Board may hereafter determine in
its sole discretion), all Options represented by this Stock Option Agreement
that have not vested shall become immediately exercisable in full.

     (3) The Options shall terminate on the earliest of the following dates:

         (a)  Ten years from the date on which they were granted; or
         (b)  One year from the date of death or permanent disability or
              incompetence of the Optionee if the same was the cause of, or
              occurred within three months after, termination of the Optionee's
              service as a director of the Company; or
         (c)  Six months and one day from the date of termination of service as
              a director in all other cases.

     In the event the Compensation Committee determines that the Optionee has
intentionally committed an act materially inimical to the interests of the
Company, this Stock Option Agreement shall terminate at the date of such act,
notwithstanding any other provision hereof. Nothing in this Section (3) shall be
construed to modify or enlarge the rights of the Optionee as set forth in
Section (2) hereof. Nothing contained in this Stock Option Agreement shall limit
whatever right the Company might otherwise have to terminate the service of the
Optionee and the terms hereof shall not be affected in any manner by any
agreement between the Optionee and the Company.

     (4) Persons receiving Options by will or by the laws of descent and
distribution may exercise the Options upon the terms provided for in the Plan
and this Stock Option Agreement.

     (5) The Options shall not be exercisable if at the time of exercise such
exercise would require registration of the Class A or Class B Common Shares or
other securities to be purchased hereunder under the Securities Act of 1933, as
amended, or under any similar federal securities law then in effect and such
registration shall not then be effective. The Company shall register the Class A
or Class B Common Shares or other securities covered by this Stock Option
Agreement under any such law if such registration shall be necessary to the
exercise of the Options and the Compensation Committee in its sole discretion
determines that such registration would not result in undue expense or hardship
to the Company and that such registration is desirable to effect the purposes
for which the Options are granted.

     (6) The Options may be exercised by the Optionee by (a) delivering to the
Company (Attention of the Director - Retirement & Payroll or successor to such
job title) written notice of the number and class of Shares with respect to
which the Options are being exercised, and (b) in those cases where the Optionee
does not intend to immediately sell the Shares covered by the Options, paying
the purchase price of the Shares being acquired plus any required withholdings.
The Optionee shall have no rights as a shareholder with respect to any Shares
covered by the Options evidenced by this Stock Option Agreement until such time
that the Option is exercised and the Optionee pays the full purchase price for
the underlying Shares. In those cases where the Optionee intends to immediately
sell Shares covered by the Options, after notifying the Company of his or her
intention to sell, the Optionee will receive the amount by which the sale price
exceeds the grant price for such Shares, after deducting applicable taxes and
brokerage fees, but not interest that might otherwise be paid on an advance of
moneys to the Optionee between the exercise and settlement dates. The sale price
for both Class A and Class B Common Shares shall be the price of Class A Common
Shares as quoted by NYSE as of the close of business on the date of exercise.

     (7) Upon the exercise of Options or Reload Options (as defined below)
through the delivery of any class of the Company's Common Shares or other grants
or awards under paragraph 4.(d) of the Plan held by an Optionee for at least six
months, an Optionee who is an active director of the Company shall receive
replacement Options equal in number to the number of Common Shares and/or other
grants or awards surrendered in order to exercise the Options and on the same
terms as the Options or Reload Options surrendered, except that Reload Options
shall not be exercisable more than ten (10) years from the date of grant of the
initial Options ("Reload Options"). The Reload Options themselves may not be
reloaded, and may not be exercised after the date on which the Options in
respect of which such Reload Options were granted, expire, are canceled or
terminate.

     (8) If any provision of this Stock Option Agreement conflicts with any
provision in the 1997 Equity and Performance Incentive Plan, the provisions of
the 1997 Equity and Performance Incentive Plan shall govern.

                                       AMERICAN GREETINGS CORPORATION
















                                                 [Non-Employee Director Form]

EX-10.XXXII

                                                              Exhibit 10 (xxxii)

                         AMERICAN GREETINGS CORPORATION
                        RESTRICTED SHARES GRANT AGREEMENT

      American Greetings Corporation, an Ohio corporation (the "Company"),
pursuant to the terms and conditions hereof, hereby grants to __________________
(the "Grantee") ________________ Class ____ Common Shares, $1 par value, of the
Company (the "Restricted Shares").

      1.    The Restricted Shares are in all respects subject to the terms,
conditions and provisions of this Agreement and the Company's 1997 Equity and
Performance Incentive Plan (the "Plan").

      2.    Until vested the Restricted Shares may not be sold, transferred,
pledged, assigned or otherwise encumbered, whether voluntarily, involuntarily or
by operation of law, and will be forfeited to the Company if the Grantee
voluntarily terminates his employment with the Company unless such termination
is deemed to be a termination by the Company "without cause"; provided, however,
notwithstanding anything contained herein to the contrary, that the Grantee's
rights with respect to Restricted Shares may be transferred by will or pursuant
to the laws of descent and distribution. The certificate or certificates
representing the Restricted Shares will bear a legend evidencing the
restrictions contained herein. The substantial risk of forfeiture and
restrictions on transfer imposed on the Restricted Shares shall lapse, and the
Restricted Shares shall vest, on the third anniversary of the date hereof.

      3.    The Restricted Shares will be issued in the name of the Grantee. The
Company's transfer agent and/or share transfer records will show the Grantee as
the owner of record of the Restricted Shares. Except as otherwise provided in
this Agreement, the Grantee will have all the rights of a shareholder of the
Company, including the right to vote and receive dividends.

      4.    The Company or the Company's agent will hold the Restricted Shares
for the period of time that the Restricted Shares are subject to forfeiture
(until vested) and the certificate or certificates representing the Restricted
Shares will be delivered to the Grantee after the Restricted Shares are no
longer subject to forfeiture. The Grantee shall execute and deliver to the
Company one or more blank stock powers so that the Restricted Shares that may be
forfeited can be canceled or transferred to the Company.

      5.    Notwithstanding anything to the contrary in this Agreement, the
Restricted Shares awarded to the Grantee hereunder shall immediately vest (no
longer be subject to the substantial risk of forfeiture and no longer be subject
to restriction on transfer) in the Grantee and a certificate or certificates
representing the Restricted Shares shall be delivered to the Grantee or the
Grantee's estate, as the case may be, upon (i) the Grantee's death or
disability, (ii) a Change in Control of the Company (as defined in the Plan), or
(iii) the termination "without cause" of the Grantee's employment by the
Company. Termination shall be deemed to be "without cause" unless the Board of
Directors of the Company, or its designee, in good faith determines that
termination is because of any one or more of the following:



      The Grantee's:

      (a)   fraud;

      (b)   misappropriation of funds;

      (c)   commission of a felony or of an act or series of acts which result
            in material injury to the business reputation of the Company;

      (d)   commission of a crime or act or series of acts involving moral
            turpitude;

      (e)   commission of an act or series of repeated acts of dishonesty that
            are materially inimical to the best interests of the Company;

      (f)   willful and repeated failure to perform his duties, which failure
            has not been cured in all substantial respects within fifteen (15)
            days after the Company gives written notice thereof to the Grantee;
            or

      (g)   material breach of any material provision of any employment
            agreement with the Company, which breach has not been cured in all
            substantial respects within ten (10) days after the Company gives
            written notice thereof to the Grantee.

      In addition, the Grantee may terminate his employment with the Company,
and such termination shall be deemed a termination by the Company "without
cause" if:

      (a)   the Company reduces the Grantee's title, responsibilities, power or
            authority in comparison with his title, responsibilities, power or
            authority on the date hereof;

      (b)   the Company assigns the Grantee duties which are inconsistent with
            the duties assigned to the Grantee on the date hereof and which
            duties the Company persists in assigning to the Grantee despite the
            prior written objection of the Grantee; or

      (c)   the Company reduces the Grantee's annual base compensation (unless
            such decrease is proportionate with a decrease in the base
            compensation of the executive officers of the Company as a group),
            or materially reduces his group health, life, disability or other
            insurance programs (including any such benefits provided to the
            Grantee's family), his pension, retirement or profit-sharing
            benefits or any benefits provided by the Company, or excludes him
            from any plan, program or arrangement, including but not limited to
            bonus or incentive plans, in which the other executive officers of
            the Company are included.

      6.    For purposes of this Agreement the Grantee shall be considered
"disabled" if the Grantee is unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment,
which can be expected to result in death or can be expected to last for a
continuous period of not less than twelve (12) months. All determinations of
whether the Grantee is disabled shall be made in accordance with Internal
Revenue Code Section 409A.

                                      -2-


      7.    On any change in the number or kind of outstanding common shares of
the Company by reason of a recapitalization, merger, consolidation,
reorganization, separation, liquidation, share split, share dividend,
combination of shares or any other change in the corporate structure or common
shares of the Company, the Company, by action of the Compensation and Management
Development Committee (the "Committee"), is empowered to make such adjustment,
if any, in the number and kind of Restricted Shares subject to this agreement as
it considers appropriate for the protection of the Company and of the Grantee.

      8.    No later than the date as of which an amount first becomes
includable in the gross income of the Grantee for federal income tax purposes
with respect to the Restricted Shares granted hereunder, the Grantee shall pay
to the Company, or make arrangements satisfactory to the Committee regarding the
payment of, any federal, state or local taxes of any kind required by law to be
withheld with respect to that amount. Unless otherwise determined by the
Committee, withholding obligations may be settled with previously owned common
shares or Restricted Shares that have vested. The making of that payment or
those arrangements is a condition to the obligations of the Company under the
Plan, and the Company may, to the extent permitted by law, deduct any taxes from
any payment of any kind otherwise payable to the Grantee or the Company may
retain such number of the Restricted Shares covered by the grant evidenced by
this Agreement as shall be equal in value to the amount of the remaining
withholding obligation.

      9.    Nothing in this Agreement shall affect in any manner any conflicting
or other provision of any other agreement between the Grantee and the Company.
Nothing contained in this Agreement shall limit whatever right the Company might
otherwise have to terminate the employment of the Grantee.

      10.   The laws of the State of Ohio govern this Agreement, the Plan and
the Restricted Shares granted hereunder. If any provision of this Agreement
conflicts with any provision in the Plan, the provisions of the Plan shall
govern.

      IN WITNESS WHEREOF, the Company has caused its corporate name to be
subscribed by its duly authorized officer as of the __ day of ____, 20__.

                                                  AMERICAN GREETINGS CORPORATION

                                                  By ___________________________

The foregoing is hereby accepted.

_________________________________
(Signature)

                                      -3-

EX-10.XXXIII

                                                             Exhibit 10 (xxxiii)

                         AMERICAN GREETINGS CORPORATION
                         DEFERRED SHARES GRANT AGREEMENT

      American Greetings Corporation, an Ohio corporation (the "Company"),
pursuant to the terms and conditions hereof, hereby agrees to issue ____________
Class ___ Common Shares, $1 par value (the "Deferred Shares"), on the first
anniversary of the date hereof (the "Issuance Date"), to ___________________ or
his estate (the "Grantee").

      1.    The Deferred Shares are in all respects subject to the terms,
conditions and provisions of this Agreement and the Company's 1997 Equity and
Performance Incentive Plan (the "Plan").

      2.    Except as otherwise provided herein if the Grantee voluntarily
terminates his employment with the Company, unless such termination is deemed to
be a termination by the Company "without cause," the Company will no longer be
obligated to issue the Deferred Shares to the Grantee and the Deferred Shares
shall be forfeited.

      3.    Except as otherwise provided herein, the Grantee will not have the
rights of a shareholder of the Company with respect to the Deferred Shares until
issued; provided, however, the Company shall pay the Grantee the equivalent of
the per share dividend paid on each Class ____ Common Share for each Deferred
Share.

      4.    Notwithstanding anything to the contrary in this Agreement, the
Deferred Shares awarded to the Grantee hereunder shall be immediately issued to
the Grantee and a certificate or certificates representing the Deferred Shares
shall be delivered to the Grantee or the Grantee's estate, as the case may be,
upon (i) the Grantee's death or disability (as defined below), (ii) a Change in
Control of the Company (as defined in the Plan), or (iii) the termination
"without cause" of the Grantee's employment by the Company. Termination by the
Company shall be deemed to be "without cause" unless the Board of Directors of
the Company, or its designee, in good faith determines that termination is
because of any one or more of the following:

      The Grantee's:

      (a)   fraud;

      (b)   misappropriation of funds;

      (c)   commission of a felony or of an act or series of acts which result
            in material injury to the business reputation of the Company;

      (d)   commission of a crime or act or series of acts involving moral
            turpitude;

      (e)   commission of an act or series of repeated acts of dishonesty that
            are materially inimical to the best interests of the Company;



      (f)   willful and repeated failure to perform his duties, which failure
            has not been cured in all substantial respects within fifteen (15)
            days after the Company gives written notice thereof to the Grantee;
            or

      (g)   material breach of any material provision of any employment
            agreement with the Company, which breach has not been cured in all
            substantial respects within ten (10) days after the Company gives
            written notice thereof to the Grantee.

In addition, the Grantee may terminate his employment with the Company, and such
termination shall be deemed a termination by the Company "without cause" if:

      (a)   the Company reduces the Grantee's title, responsibilities, power or
            authority in comparison with his title, responsibilities, power or
            authority on the date hereof;

      (b)   the Company assigns the Grantee duties which are inconsistent with
            the duties assigned to the Grantee on the date hereof and which
            duties the Company persists in assigning to the Grantee despite the
            prior written objection of the Grantee; or

      (c)   the Company reduces the Grantee's annual base compensation (unless
            such decrease is proportionate with a decrease in the base
            compensation of the executive officers of the Company as a group),
            or materially reduces his group health, life, disability or other
            insurance programs (including any such benefits provided to the
            Grantee's family), his pension, retirement or profit-sharing
            benefits or any benefits provided by the Company, or excludes him
            from any plan, program or arrangement, including but not limited to
            bonus or incentive plans, in which the other executive officers of
            the Company are included.

      5.    For purposes of this Agreement the Grantee shall be considered
"disabled" if the Grantee is unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment,
which can be expected to result in death or can be expected to last for a
continuous period of not less than twelve (12) months. All determinations of
whether the Grantee is disabled shall be made in accordance with Internal
Revenue Code Section 409A ("Section 409A").

      6.    Unless specifically permitted by the Compensation and Management
Development Committee (the "Committee"), prior to the issuance of the Deferred
Shares pursuant to this Agreement the Grantee may not transfer, assign, pledge
or hypothecate the right to receive the Deferred Shares, and the right to
receive the Deferred Shares may not be transferred or assigned by operation of
law, or be subject to execution, attachment or similar process other than by
will or the laws of descent and distribution.

      7.    On any change in the number or kind of outstanding common shares of
the Company by reason of a recapitalization, merger, consolidation,
reorganization, separation, liquidation, share split, share dividend,
combination of shares or any other change in the corporate structure or common
shares of the Company, the Company, by action of the Committee, is empowered to
make such adjustment, if any, in the number and kind of Deferred Shares subject
to this agreement as it considers appropriate for the protection of the Company
and of the Grantee.

                                       2


      8.    No later than the date as of which an amount first becomes
includable in the gross income of the Grantee for federal income tax purposes
with respect to the Deferred Shares granted hereunder, the Grantee shall pay to
the Company, or make arrangements satisfactory to the Committee regarding the
payment of, any federal, state or local taxes of any kind required by law to be
withheld with respect to that amount. Unless otherwise determined by the
Committee, withholding obligations may be settled with previously owned common
shares or Deferred Shares. The making of that payment or those arrangements is a
condition to the obligations of the Company under the Plan, and the Company may,
to the extent permitted by law, deduct any taxes from any payment of any kind
otherwise payable to the Grantee or the Company may retain such number of the
Deferred Shares covered by the grant evidenced by this Agreement as shall be
equal in value to the amount of the remaining withholding obligation.

      9.    The obligations of the Company under this Agreement are unfunded and
unsecured. The Grantee shall have the status of a general creditor of the
Company with respect to amounts due, if any, under this Agreement.

      10.   Nothing in this Agreement shall affect in any manner any conflicting
or other provision of any other agreement between the Grantee and the Company.
Nothing contained in this Agreement shall limit whatever right the Company might
otherwise have to terminate the employment of the Grantee.

      11.   The laws of the State of Ohio govern this Agreement, the Plan and
the Deferred Shares granted hereunder. If any provision of this Agreement
conflicts with any provision in the Plan, the provisions of the Plan shall
govern.

      12.   The provisions set forth in this Agreement are subject to the
restrictions and other requirements of Section 409A and related regulations and
rulings. Without limiting the generality of the preceding sentence, such
provisions shall be modified and amended, as and where necessary, to bring such
provisions into compliance with the requirements set forth in Section 409A and
related regulations and rulings. This Agreement shall be interpreted to comply
with Section 409A and to the extent any provision of this Agreement is
inconsistent with Section 409A, said Section 409A shall control.

      IN WITNESS WHEREOF, the Company has caused its corporate name to be
subscribed by its duly authorized officer as of the __ day of _____________,
20____.

                                                  AMERICAN GREETINGS CORPORATION

                                                  By ___________________________

The foregoing is hereby accepted.

_________________________________
(Signature)

                                       3

EX-10.XXXIV

                                                               EXHIBIT 10(xxxiv)

                                                       (AMERICAN GREETINGS LOGO)

ONE AMERICAN ROAD
CLEVELAND, OHIO 44144-2398
216/252-7300 o FAX 216/252-6778


                                                         June 24, 2004


James C. Spira
American Greetings Corp.
One American Road
Cleveland, OH 44144

Dear Jim,

I would like to confirm with you our agreement concerning your ongoing work for
American Greetings. We agreed that all the terms of the June 26, 2003 employment
agreement will continue, with these changes:

     o    you will continue part-time until June 25, 2005, working 3 days every
          two months.

     o    your focus will be on four major initiatives:

               1.   supply chain transformation

               2.   growth initiatives

               3.   redesign of the information technology infra-structure

               4.   Wal-Mart business model

     o    your pay will be $4,500 every month

If there are any other projects that require more than the three days every two
months, we will discuss and agree on the additional amount of time and pay.

All the other benefits and provisions in that June 26 letter will continue.

Jim, thanks very much for your continued support, your expertise and your
wisdom. I truly appreciate your efforts.

If you agree with these changes, please sign a copy of this letter and return it
to me.

                                             Sincerely,

                                             /s/ Zev Weiss
                                             -------------------------------
                                             Zev Weiss

I agree to these employment terms.

/s/ James C. Spira
- ----------------------------------
James C. Spira




                                                       (AMERICAN GREETINGS LOGO)

ONE AMERICAN ROAD
CLEVELAND, OHIO 44144-2398
216/252-7300 o FAX 216/252-6778



                                  June 26, 2003



James C. Spira
American Greetings Corporation
One American Road
Cleveland, OH 44144

Dear Jim,

         This letter confirms the terms your employment with American Greetings
after the expiration on June 25, 2003 of your Employment Agreement dated
September 25, 2001. Your employment with American Greetings will continue on a
part-time basis from June 26, 2003 through June 25, 2004 (the "Term"). We have
agreed that you will work approximately 100 days during the Term. You and I will
mutually schedule the actual dates.

         Your annual base salary during the Term will be $300,000, payable in
semi-monthly installments, less payroll taxes and other withholdings. You will
be eligible for those benefit programs normally offered to part-time employees,
which include the following:

         A.       The healthcare plan of your choice (from among those plans
                  American Greetings provides to employees), with coverage for
                  you and your spouse, receiving 80% of the allowance normally
                  given to a full-time employee at your level;

         B.       Group life insurance of $5,000;

         C.       Group accidental death and dismemberment insurance of $5,000;

         D.       Temporary disability benefits;

         E.       Flexible spending account; and

         F.       Retirement Profit Sharing and Savings Plan.

         You will not be eligible for any long-term disability coverage.
Similarly, you will not participate in any stock option plan (other than for
those options and shares granted to you under the terms of the September 25,
2001 agreement) or any cash incentive plan. You will not be eligible to receive
a car, a car allowance or any payments related to the use and maintenance of a
car.




June 26, 2003
James C. Spira


         During the Term, your employment with American Greetings is terminable
at will. It may be terminated by either you or the Company at any time for any
reason or for no reason. Upon expiration of the Term, your active employment
will end. If you initiate the termination your employment prior to completion of
the Term, American Greetings shall end all salary and benefits payments granted
to you under this letter agreement as of the day of the termination. If American
Greetings initiates the termination of your employment prior to the end of the
Term, it shall continue to pay to you all salary and benefits described above
through the end of the Term, as though you had continued your employment through
the end of the Term.

         If you complete your employment through the end of the Term (or you are
deemed to have completed it because American Greetings has terminated your
employment prior to the end of the Term), in addition to the salary and benefits
described above, you will be considered to be an active part-time employee until
the later of the end of the month in which you or your spouse turns 65. Until
the end of the month in which both you and your spouse are age 65, the Company
will make available to you healthcare benefit alternatives comparable to those
made available to active part-time associates in Cleveland. You will pay the
full premium that would be paid by an active part-time associate at the senior
officer level for such coverage. After both you and your spouse reach age 65,
you will not be eligible for any Company provided healthcare benefits.

         During the Term you will continue to be bound by paragraph 4 of the
Employment Agreement dealing with confidential and trade secret information,
paragraph 5 dealing with non-competition and non-disparagement, and paragraph
8.d. dealing with resolution of disputes.

         Please indicate your agreement by signing a copy of this letter and
returning it to me.

                                    Sincerely,


                                    /s/ Zev Weiss
                                    --------------------------------
                                    Zev Weiss


I agree to employment on the terms stated in this letter.


/s/ James C. Spira
- ------------------------------------------------------
James C. Spira

EX-10.XXXV

                                                               EXHIBIT 10(xxxv)

CONFIDENTIAL                                           [AMERICAN GREETINGS LOGO]
- ------------
- --------------------------------------------------------------------------------



DATE:        October 4, 2000

TO:          Erwin Weiss

SUBJECT:     SPECIAL BONUS

In recognition of your leadership in the successful accomplishments of the
Gibson and CPS integration plans, American Greetings will implement the
following special bonus:

     ON MARCH 1, 2005, AMERICAN GREETINGS WILL PLACE IN YOUR DEFERRED
     COMPENSATION PLAN A SUM OF $250,000.

The only condition I place on the above commitment is that you must be employed
by the company throughout the period ending February 28, 2005. Should you
voluntarily separate for whatever reason prior to February 28, 2005, you will
forfeit the entire $250,000 benefit. Should you be terminated, you will receive
your pro-rata share.

Throughout these years, you will be reviewed annually with every consideration
for merit review commensurate with your annual achievement.

Effective March 1, 2005, we will increase your base compensation by $50,000, and
that base will be used for all future bonus calculations.

I trust the above is consistent with our discussion.

I wish you all the best.



/s/ Morry Weiss
Morry Weiss

EX-10.XXXVI

                                                               EXHIBIT 10(xxxvi)

                                                     March 11, 2004


Mr. Tom Johnston
1683 34th Street, N.W.
Washington, D.C.  20007

Dear Tom,

This letter modifies and amends the employment offer letter to you from me dated
March 4, 2004:

     1. We have agreed that you will begin working for us on or about May 1,
        2004;

     2. If your employment is terminated by American Greeting for reasons other
        than for cause:

        a.  within the first 18 months of your employment with American
            Greetings, you will be granted 24 months of severance pay;

        b.  within the second 18 months of your employment with American
            Greetings, you will be granted 18 months of severance pay.

        Thereafter, you will be eligible for severance pay as determined by
        your officer employment contract and the policy in effect at that time
        (a copy of our standard employment contract, and our current severance
        policy are enclosed for your reference). Severance pay is defined as
        your base salary, but excluding all incentive plans and benefits,
        (except for health care continuation) in effect at the time of
        termination, and is contingent on your executing a waiver and release.

     3. In addition to the housing allowance described in the March 4 letter, we
        will grant you an additional 12 months housing allowance of $2,500 per
        month, net of all applicable taxes;

     4. We will pay for (or reimburse you for) the move of your household goods
        from New York to the Cleveland area (we have an arrangement with a
        moving firm - please let us know the timing for this move, and we can
        initiate the necessary arrangements).

Note that our employment contract contains a non-disclosure provision (paragraph
6), and a non-compete provision (paragraph 3).

Tom, we are excited about your joining our team. We look forward to your
arrival.

Very truly yours,


/s/ Jeffrey Weiss

Jeffrey Weiss
President and Chief Operating Officer
American Greetings

enclosures

cc:      Morry Weiss
         Zev Weiss
         Pam Linton





                                                 March 4, 2004


Mr. Tom Johnston
1683 34th Street, N.W.
Washington, D.C.  20007

Dear Tom,

We are pleased to extend to you an offer of employment with American Greetings
as Senior Vice President and President, Carlton Retail, reporting to me. We have
agreed that, if you accept this offer, you will begin with us on a date that we
will mutually determine.

The terms of this offer are that you will:

1. receive a base salary of $350,000 annually (less appropriate withholdings and
   deductions); your salary will be reviewed in May 2005 as part of the annual
   officer performance and salary review process; thereafter, it will be
   reviewed annually, and may be increased based on your performance;

2. participate in the Key Management Annual Incentive Plan at the Senior Vice
   President level (70% target payout, with the payouts increased or decreased
   from target based on actual business unit, corporate and individual
   performance); the payout from this Plan for this fiscal year, if any, will be
   based on your actual base salary earnings for the fiscal year and the
   performance of the Consolidated Corporate business unit;

   (Note that this Plan will be modified slightly for Fiscal Year 2005.
   Attached is a Fiscal Year 2004 summary Plan booklet for your reference).

3. participate in the American Greetings Stock Option Plan at the Senior Vice
   President level:

         a) 22,000 options on American Greetings Class A Common Stock will be
            granted on the date of the corporation's annual grant (approximately
            May 1, 2004); the grant price will be the closing price of the stock
            on the date of grant:

            - 11,000 of these options shall vest one year from the date of
              grant;

            - 11,000 of these options shall vest two years from the date of
              grant.

         b) the details of this Plan are described in the enclosed booklet.

4. be eligible to participate in the American Greetings flexible benefits
   program, which includes such benefits as health care, disability and life
   insurance; an overview of this program is described in the enclosed
   Benefits-at-a-Glance booklet;

5. be eligible to participate in the American Greetings Retirement Profit
   Sharing and Savings Plan;



6. receive other benefits normally provided to Senior Vice Presidents, such as
   the personal use of a company automobile, and additional company paid life,
   AD&D and personal liability insurances; the details of these benefits as
   currently provided are described in the enclosed Executive Benefits booklet;

7. in the event you will not be relocating to Cleveland and will instead
   maintain your existing residence:

            - 90 days of temporary housing expense for you and your spouse in
              the Cleveland area, if necessary;

            - a monthly housing allowance of $5,000, net of all applicable
              taxes, for 24 months.

8. Upon your acceptance of this offer, we will provide an employment contract,
   including a non-compete and a non-disclosure agreement that must be signed.

Tom, congratulations. We believe that you can make significant contributions to
our efforts. We look forward to your acceptance of this offer.

Very truly yours,


/s/ Jeffrey Weiss

Jeffrey Weiss
President and Chief Operating Officer
American Greetings

encls.

cc:      Morry Weiss
         Zev Weiss
         Pam Linton

EX-21

                                                                               .
                                                                               .
                                                                               .

                                                                      EXHIBIT 21

                         AMERICAN GREETINGS CORPORATION
                         Subsidiaries of the Registrant



                                             State / Jurisdiction
           Subsidiary                          of Incorporation
- -------------------------------------        --------------------
                                          
A.G. Industries, Inc.                            North Carolina
A.G. (U.K.), Inc.                                Ohio
AGC Funding Corporation                          Delaware
AGC Holdings, Inc.                               Delaware
A.G.C. Investments, Inc.                         Delaware
AG Interactive, Inc.                             Delaware
Carlton Cards Limited                            Canada
Carlton Cards Limited                            United Kingdom
Carlton Cards Retail, Inc.                       Connecticut
Gibson Greetings, Inc.                           Delaware
Gibson Hanson Graphics Ltd.                      United Kingdom
John Sands (N.Z.) Ltd.                           Delaware
Learning Horizons, Inc.                          Ohio
Plus Mark, Inc.                                  Ohio
Those Characters From Cleveland, Inc.            Ohio

EX-23

                                                                      EXHIBIT 23

            Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the Registration Statements of
American Greetings Corporation listed below of our reports dated April 15, 2005,
with respect to the consolidated financial statements and schedule of American
Greetings Corporation, American Greetings Corporation management's assessment of
the effectiveness of internal control over financial reporting, and the
effectiveness of internal control over financial reporting of American Greetings
Corporation included in this Annual Report (Form 10-K) for the year ended
February 28, 2005.



REGISTRATION
   NUMBER                                       DESCRIPTION                                                 FILING DATE
   ------                                       -----------                                                 -----------
                                                                                                    
   2-89471                   Post-Effective Amendment No. 1 to Form S-3 Registration Statement            May 27, 1986

   2-84911                   Post-Effective Amendment No. 1 to Form S-8 Registration Statement            May 31, 1984

   33-975                    American Greetings Corporation 1985 Incentive Stock Option Plan - Form       November 7, 1985
                             S-8 Registration Statement

   33-16180                  American Greetings Corporation 1987 Class B Stock Option Plan - Form         July 31, 1987
                             S-8 Registration Statement

   33-45673                  American Greetings Corporation Employees' Retirement Profit Sharing          February 4, 1992
                             Plan - Form S-8 Registration Statement

   33-58582                  American Greetings Corporation 1992 Stock Option Plan - Form S-8             February 22, 1993
                             Registration Statement

   33-61037                  American Greetings Corporation 1995 Director Stock Plan - Form S-8           July 14, 1995
                             Registration Statement

   33-08123                  American Greetings Corporation 1996 Employee Stock Option Plan - Form        July 15, 1996
                             S-8 Registration Statement

   333-41912                 American Greetings Corporation 1997 Equity and Performance Incentive         July 21, 2000
                             Plan (as amended June 24, 2000) - Form S-8 Registration Statement

   333-65534                 American Greetings Corporation 1997 Equity and Performance Incentive         July 20, 2001
                             Plan (as amended June 22, 2001) - Form S-8 Registration Statement

   333-68526                 Amendment No. 1 to Form S-3 Registration Statement                           October 19, 2001

   333-75696                 American Greetings Employment Agreement with Selling Shareholder - Form      December 21, 2001
                             S-8 Registration Statement

   333-121982                American Greetings Corporation 1997 Equity and Performance Incentive         January 12, 2005
                             Plan (as amended June 25, 2004) - Form S-8 Registration Statement

   333-123041                American Greetings Corporation 1995 Director Stock Plan - Form S-8           February 28, 2005
                             Registration Statement


                                       /s/ Ernst & Young LLP

        Cleveland, Ohio
        May 6, 2005

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 Annual Report on Form 10-K 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)) and
      internal control over financial reporting (as defined in Exchange Act
      Rules 13a-15(f) and 15d-15(f)) for American Greetings Corporation and
      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)    Designed such internal control over financial reporting, or
                  caused such internal control over financial reporting to be
                  designed under our supervision, to provide reasonable
                  assurance regarding the reliability of financial reporting and
                  the preparation of financial statements for external purposes
                  in accordance with generally accepted accounting principles;

            c)    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

            d)    Disclosed in this report any change in American Greetings
                  Corporation's internal control over financial reporting that
                  occurred during the fourth quarter that has materially
                  affected, or is reasonably likely to materially affect,
                  American Greetings Corporation's internal control over
                  financial reporting;

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 control 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.

May 11, 2005                                /s/ Zev Weiss
                                            ----------------------------
                                            Zev Weiss
                                            Chief Executive Officer
                                            (principal executive officer)

EX-31.B

                                                                   EXHIBIT (31)b

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

I, Joseph B. Cipollone, certify that:

1.    I have reviewed this Annual Report on Form 10-K 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)) and
      internal control over financial reporting (as defined in Exchange Act
      Rules 13a-15(f) and 15d-15(f)) for American Greetings Corporation and
      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)    Designed such internal control over financial reporting, or
                  caused such internal control over financial reporting to be
                  designed under our supervision, to provide reasonable
                  assurance regarding the reliability of financial reporting and
                  the preparation of financial statements for external purposes
                  in accordance with generally accepted accounting principles;

            c)    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

            d)    Disclosed in this report any change in American Greetings
                  Corporation's internal control over financial reporting that
                  occurred during the fourth quarter that has materially
                  affected, or is reasonably likely to materially affect,
                  American Greetings Corporation's internal control over
                  financial reporting;

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 control 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.

May 11, 2005                            /s/ Joseph B. Cipollone
                                        ------------------------------------
                                        Joseph B. Cipollone
                                          Vice President and Corporate
                                          Controller, Chief Accounting Officer
                                          (interim principal financial officer)

EX-32.A

                                                                   EXHIBIT 32(a)

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION
906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of American Greetings Corporation (the
"Corporation") on Form 10-K for the fiscal year ended February 28, 2005 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 the
      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.

Date: May 11, 2005

/s/ Zev Weiss
- ----------------------------
Zev Weiss

Chief Executive Officer,
(principal executive officer)

/s/ Joseph B. Cipollone
- -----------------------------
Joseph B. Cipollone

Vice President and Corporate
Controller; Chief Accounting Officer
(interim principal financial officer)