8-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 or 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (date of earliest event reported): December 21, 2006

American Greetings Corporation

(Exact Name of Registrant as Specified in its Charter)

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

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

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

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

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

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

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

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

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

Item 2.02 Results of Operations and Financial Condition.

On December 21, 2006, American Greetings issued a press release reporting its results for the third quarter ended November 24, 2006. A copy of this press release is attached hereto as Exhibit 99.1.

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

Item 9.01 Financial Statements and Exhibits.

c) Exhibits.

Exhibit	Description
Exhibit 99.1	Press Release - Reporting Results for the third quarter ended November 24, 2006.

2

SIGNATURES

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

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

Date: December 21, 2006

3

EX-99.1

Exhibit 99.1

AMERICAN GREETINGS ANNOUNCES THIRD QUARTER RESULTS

• Earnings results include one time gain

• Company affirms EPS guidance with upside possible

• Company raises cash flow guidance

CLEVELAND (December 21, 2006) – American Greetings Corporation (NYSE: AM) today announced its third quarter results for the fiscal quarter ended November 24, 2006, and announced an 8 cent per share cash dividend.

Third Quarter Results

For the third quarter of fiscal 2007, the Company reported net sales of $512.2 million, pre-tax income from continuing operations of $67.7 million, and income from continuing operations of $46.6 million or 78 cents per share (all per-share amounts assume dilution). As a result of retailer consolidations and the effect the consolidations had on several long-term supply agreements between the Company and the affected retailers, the Company recognized a $20 million pre-tax gain in the quarter.

In the prior year’s third fiscal quarter, the Company reported net sales of $552.0 million, pre-tax income from continuing operations of $23.4 million, and income from continuing operations of $8.8 million or 14 cents per share. Included in the 14 cents of earnings per share was a non-cash pre-tax goodwill impairment charge of $43.2 million (after-tax of approximately $33 million) as previously disclosed.

Management Comments

Chief Executive Officer Zev Weiss said, “I am pleased with the card investment strategy as both the investment and the results are in line with our expectations. Our strategic card initiative is gaining momentum and both retailers and consumers are delighted. Year-to-date, we are on track with our rollout of changing product displays and the inventory in those displays. We expect to continue to invest in this initiative this year and next.”

Outlook

For the full fiscal year 2007, the Company continues to project earnings per share between $0.80 and $1.00. The Company has included in its estimate the completion of two small product line dispositions designed to improve the Company’s return on capital as well as the completion of its $100 million share repurchase program. Depending on the timing of these dispositions, the Company may realize upside to earnings.

The Company is projecting cash flow from operating activities less capital expenditures of approximately $200 million. This projection compares to the Company’s earlier guidance of $100 to $130 million. This improved estimate includes anticipated cash receipts associated with the effects of contract terminations as well as lower than anticipated capital expenditures.

Financing Activities

The Company purchased 3.2 million shares of its common stock for $77.5 million during the third quarter of fiscal 2007. This included the purchase of 2.0 million shares under the $200 million share repurchase program announced in February and 1.2 million shares under the $100 million share repurchase program announced in October of this year.

The Company’s Board of Directors authorized a cash dividend of 8 cents per share to be paid on January 16, 2007 to shareholders of record at the close of business on January 5, 2007.

Conference call on the Web

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

About American Greetings Corporation

American Greetings Corporation (NYSE: AM) is one of the world’s largest manufacturers of social expression products. Along with greeting cards, its product lines include gift wrap, party goods, candles, stationery, calendars, educational products, ornaments and electronic greetings. Located in Cleveland, Ohio, American Greetings generates annual net sales of approximately $1.8 billion. For more information on the Company, visit http://corporate.americangreetings.com.

###

CONTACT:

Gregory M. Steinberg

Treasurer and Director of Investor Relations

American Greetings Corporation

216-252-4864

investor.relations@amgreetings.com

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

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

• the Company’s ability to successfully implement its strategy to invest in its core greeting card business;

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

• the ability to execute share repurchase programs or the ability to achieve the desired accretive effect from such repurchases;

• the Company’s ability to successfully complete, or achieve the desired benefits associated with, dispositions;

• a weak retail environment;

• consumer acceptance of products as priced and marketed;

• the impact of technology on core product sales;

• competitive terms of sale offered to customers;

• successful implementation of supply chain improvements and achievement of projected cost savings from those improvements;

• increases in the cost of material, energy, freight and other production costs;

• the Company’s ability to comply with its debt covenants;

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

• escalation in the cost of providing employee health care;

• successful integration of acquisitions; and

• the outcome of any legal claims known or unknown.

Risks pertaining specifically to AG Interactive include the viability of online advertising, subscriptions as revenue generators and the public’s acceptance of online greetings and other social expression products and the ability of the mobile product group to compete effectively in the wireless content aggregation market.

In addition, this release contains time-sensitive information that reflects management’s best analysis as of the date of this release. American Greetings does not undertake any obligation to publicly update or revise any forward-looking statements to reflect future events, information or circumstances that arise after the date of this release. Further information concerning issues that could materially affect financial performance related to forward-looking statements can be found in the Company’s periodic filings with the Securities and Exchange Commission, including the “Risk Factors” section of the Company’s Annual Report on Form 10-K for the fiscal year ended February 28, 2006.

AMERICAN GREETINGS CORPORATION

THIRD QUARTER CONSOLIDATED STATEMENT OF INCOME

FISCAL YEAR ENDING FEBRUARY 28, 2007

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

	(Unaudited)
	Three Months Ended						Nine Months Ended
	November 24, 2006			November 25, 2005			November 24, 2006			November 25, 2005
Net sales	$	512,239		$	551,991		$	1,278,885		$	1,376,425
Costs and expenses:
Material, labor and other production costs		245,355			274,235			595,869			627,236
Selling, distribution and marketing		159,192			165,124			455,800			464,904
Administrative and general		65,849			57,438			185,351			178,452
Goodwill impairment		—			43,153			—			43,153
Interest expense		6,951			8,401			27,024			26,664
Other income - net		(32,793	)		(19,796	)		(57,082	)		(39,862	)
		444,554			528,555			1,206,962			1,300,547
Income from continuing operations before income tax expense		67,685			23,436			71,923			75,878
Income tax expense		21,078			14,653			22,523			36,383
Income from continuing operations		46,607			8,783			49,400			39,495
Income from discontinued operations, net of tax		3,100			4,144			5,201			3,087
Net income	$	49,707		$	12,927		$	54,601		$	42,582
Earnings per share - basic:
Income from continuing operations	$	0.79		$	0.14		$	0.84		$	0.59
Income from discontinued operations		0.05			0.06			0.09			0.05
Net income	$	0.84		$	0.20		$	0.93		$	0.64
Earnings per share - assuming dilution:
Income from continuing operations	$	0.78		$	0.14		$	0.80		$	0.56
Income from discontinued operations		0.05			0.05			0.08			0.04
Net income	$	0.83		$	0.19		$	0.88		$	0.60
Average number of common shares outstanding		59,502,276			65,425,537			58,590,857			67,041,089
Average number of common shares outstanding - assuming dilution		59,902,127			78,695,259			64,361,644			80,385,975
Dividends declared per share	$	0.08		$	0.08		$	0.24		$	0.24

AMERICAN GREETINGS CORPORATION

THIRD QUARTER CONSOLIDATED STATEMENT OF FINANCIAL POSITION

FISCAL YEAR ENDING FEBRUARY 28, 2007

(In thousands of dollars)

	(Unaudited)
	November 24, 2006			November 25, 2005
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	86,216		$	75,805
Short-term investments		—			208,740
Trade accounts receivable, net		236,834			310,003
Inventories		247,909			254,631
Deferred and refundable income taxes		162,156			167,151
Assets of businesses held for sale		—			22,887
Prepaid expenses and other		296,218			220,290
Total current assets		1,029,333			1,259,507
GOODWILL		221,929			210,311
OTHER ASSETS		461,518			579,987
Property, plant and equipment - at cost		969,113			967,674
Less accumulated depreciation		668,693			658,259
PROPERTY, PLANT AND EQUIPMENT - NET		300,420			309,415
	$	2,013,200		$	2,359,220
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Debt due within one year	$	142,000		$	—
Accounts payable		127,287			134,182
Accrued liabilities		91,241			111,132
Accrued compensation and benefits		58,848			62,007
Income taxes		15,303			23,873
Liabilities of businesses held for sale		—			5,013
Other current liabilities		91,163			116,329
Total current liabilities		525,842			452,536
LONG-TERM DEBT		223,985			475,965
OTHER LIABILITIES		102,226			138,068
DEFERRED INCOME TAXES		25,420			24,584
SHAREHOLDERS’ EQUITY
Common shares - Class A		53,775			60,391
Common shares - Class B		4,224			4,220
Capital in excess of par value		417,444			397,208
Treasury stock		(643,540	)		(586,834	)
Accumulated other comprehensive income		36,067			2,045
Retained earnings		1,267,757			1,391,037
Total shareholders’ equity		1,135,727			1,268,067
	$	2,013,200		$	2,359,220

AMERICAN GREETINGS CORPORATION

THIRD QUARTER CONSOLIDATED STATEMENT OF CASH FLOWS

FISCAL YEAR ENDING FEBRUARY 28, 2007

(In thousands of dollars)

	(Unaudited) Nine Months Ended
	November 24, 2006			November 25, 2005
OPERATING ACTIVITIES:
Net income	$	54,601		$	42,582
Income from discontinued operations		(5,201	)		(3,087	)
Income from continuing operations		49,400			39,495
Adjustments to reconcile to net cash (used) provided by operating activities:
Goodwill impairment		—			43,153
Loss (gain) on disposal of fixed assets		754			(434	)
Loss on extinguishment of debt		5,055			863
Depreciation and amortization		37,269			41,148
Deferred income taxes		5,714			(6,608	)
Other non-cash charges		9,180			5,069
Changes in operating assets and liabilities, net of acquisitions:
Increase in trade accounts receivable		(87,745	)		(137,103	)
Increase in inventories		(26,721	)		(39,120	)
(Increase) decrease in other current assets		(96,348	)		9,109
Decrease in deferred costs - net		110,076			57,312
Decrease in accounts payable and other liabilities		(6,699	)		(10,819	)
Other - net		(11,217	)		2,624
Cash (Used) Provided by Operating Activities		(11,282	)		4,689
INVESTING ACTIVITIES:
Proceeds from sale of short-term investments		1,026,280			1,362,430
Purchases of short-term investments		(817,540	)		(1,362,430	)
Property, plant and equipment additions		(29,590	)		(32,268	)
Cash payments for business acquisitions, net of cash acquired		(11,154	)		—
Cash receipts related to discontinued operations		12,559			—
Proceeds from sale of fixed assets		695			7,542
Cash Provided (Used) by Investing Activities		181,250			(24,726	)
FINANCING ACTIVITIES:
Increase in long-term debt		200,000			—
Reduction of long-term debt		(440,588	)		(10,782	)
Increase in short-term debt		142,000			—
Sale of stock under benefit plans		5,630			26,408
Purchase of treasury shares		(186,331	)		(150,705	)
Dividends to shareholders		(13,909	)		(16,141	)
Debt issuance costs		(8,344	)		—
Cash Used by Financing Activities		(301,542	)		(151,220	)
DISCONTINUED OPERATIONS:
Cash (used) provided by operating activities from discontinued operations		(399	)		557
Cash provided by investing activities from discontinued operations		1,647			392
Cash Provided by Discontinued Operations		1,248			949
EFFECT OF EXCHANGE RATE CHANGES ON CASH		2,929			(1,686	)
DECREASE IN CASH AND CASH EQUIVALENTS		(127,397	)		(171,994	)
Cash and Cash Equivalents at Beginning of Year		213,613			247,799
Cash and Cash Equivalents at End of Period	$	86,216		$	75,805