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): September 23, 2009

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 1.01 Entry into a Material Definitive Agreement.

On September 23, 2009, American Greetings Corporation (“American Greetings”) amended its Amended and Restated Receivables Purchase Agreement, dated as of October 24, 2006, among AGC Funding Corporation, a Delaware corporation and wholly-owned, consolidated subsidiary of American Greetings, American Greetings, as Servicer, members of the various Purchaser Groups from time to time party thereto (the “Purchasers”), and PNC Bank, National Association, as Administrator and LC Bank (the “Agreement”). The amendment decreases the amount of available financing under the Agreement from $90 million to $80 million and allows certain receivables to be excluded from the program in connection with the exercise of rights under insurance and other products that may be obtained from time to time by American Greetings or other originators that are designed to mitigate credit risks associated with the collection of accounts receivable. The amendment also extends the Agreement for an additional three years; provided, however, that in addition to customary termination provisions, the Agreement will terminate upon the termination of the liquidity commitments obtained by the Purchasers from third party liquidity providers. Such commitments may be made available to the Purchasers for 364-day periods only, and there can be no assurances that the third party liquidity providers will renew or extend their commitments to the Purchasers in which case the Agreement will terminate and American Greetings will not receive the benefit of the entire three year term of the Agreement.

The foregoing description of the amendment to the Amended and Restated Receivables Purchase Agreement is qualified in its entirety by reference to the copy of the amendment attached hereto as Exhibit 10.1, and incorporated herein by reference.

Item 2.02 Results of Operations and Financial Condition.

On September 24, 2009, American Greetings issued a press release reporting its results for the quarter ended August 28, 2009. 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 Exhibit 99.1 attached hereto) is being furnished under Item 2.02 and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of such section, or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

Item 9.01 Financial Statements and Exhibits.

d) Exhibits.

Exhibit	Description
Exhibit 10.1	Fourth Amendment to Amended and Restated Receivables Purchase Agreement, dated as of September 23, 2009, among AGC Funding Corporation, American Greetings Corporation, in its capacity as Servicer, PNC Bank, National Association, in its individual capacity, as purchaser agent for Market Street Funding LLC, as Administrator for each Purchaser Group and as issuer of Letters of Credit, and Market Street Funding LLC, as a Conduit Purchaser and as a Related Committed Purchaser.
Exhibit 99.1	Press Release - reporting results for the quarter ended August 28, 2009.

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SIGNATURES

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

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

Date: September 24, 2009

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EX-10.1

Exhibit 10.1

FOURTH AMENDMENT TO AMENDED AND RESTATED

RECEIVABLES PURCHASE AGREEMENT

THIS FOURTH AMENDMENT TO AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT (this “Amendment”) dated as of September 23, 2009 is entered into among AGC FUNDING CORPORATION (the “Seller”), AMERICAN GREETINGS CORPORATION, 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 LLC, as Administrator for each Purchaser Group (in such capacity, the “Administrator”) and as issuer of Letters of Credit (in such capacity, together with its successors and permitted assigns in such capacity, the “LC Bank”) and MARKET STREET FUNDING LLC (in its individual capacity, “Market Street”), as a Conduit Purchaser and as a Related Committed Purchaser.

RECITALS

1. The Seller, the Servicer, the Administrator, PNC, Market Street and the LC Bank are parties to the Amended and Restated Receivables Purchase Agreement dated as of October 24, 2006 (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.

(a) Section 1.2 of the Agreement is hereby amended by inserting in the appropriate order the following new clause (h):

(h) At any time and from time to time upon at least ten (10) Business Days written notice to the Administrator, the Seller may repurchase the Purchased Interest in any Triggered Receivables on the terms hereinafter set forth. Upon deposit to the applicable Lock-Box Account of an amount equal to the purchase price or other payment for such Triggered Receivables paid by the Credit Protection Provider pursuant to the applicable Credit Protection Agreement and satisfaction of the terms and conditions set forth herein, the Agent (on behalf of the Purchasers) shall be deemed to have reconveyed all of its right, title and interest in, to and under the Purchased Interest in such Triggered Receivables to the Seller without recourse, representation or warranty of any kind (except for a representation that the Purchased Interest in such Triggered Receivables assigned

is (or concurrently with receipt by the Administrator of evidence that such purchase price or other payment has been deposited to the applicable Lock-Box Account shall become) free of any Adverse Claim created by the Administrator for itself and on behalf of the Purchasers), and the security interest of the Administrator (for itself and on behalf of the Purchasers) in the affected Triggered Receivables and any Related Security, Collections and proceeds with respect thereto shall be automatically released, all without further action of the Administrator, the Purchasers or any other Person; provided, that the Administrator shall, if requested, execute and deliver, at the Seller’s expense, to the Seller such documents and instruments as are reasonably requested and authorize the filing of such UCC-3 termination or amendment statements as are appropriate to release its interest (for itself and on behalf of the Purchasers) in the affected Triggered Receivables and any Related Security, Collections and proceeds with respect thereto.

(b) Clause third of Section 1.4(d)(ii) of the Agreement is hereby amended and restated in its entirety as follows:

third to each Purchaser Agent ratably according to the aggregate of the Investment of each Purchaser in each such Purchaser Agent’s Purchaser Group (for the benefit of the relevant Purchasers within such Purchaser Agent’s Purchaser Group) in payment in full of each Purchaser’s Investment (or, if such day is not a Termination Day, the amount necessary to reduce the Purchased Interest to 100%) (determined as if such Collections had been applied to reduce the Aggregate Investment); it being understood that each Purchaser Agent shall distribute the amounts described in the second and third clauses of this Section 1.4(d)(ii) to the Purchasers within its Purchaser Group ratably according to Discount and Investment, respectively,

(c) Clause fourth of Section 1.4(d)(ii) of the Agreement is hereby amended and restated in its entirety as follows:

fourth to the LC Collateral Account for the benefit of the LC Bank, until the amount of cash collateral held in such LC Collateral Account equals the aggregate outstanding amount of the LC Amount (or, if such day is not a Termination Day, the amount necessary to reduce the Purchased Interest to 100%) (determined as if such Collections had been applied to reduce the aggregate outstanding amount of the LC Amount),

(d) Clause (b) of Section 1.12 of the Agreement is hereby amended and restated in its entirety as follows:

(b) Each Letter of Credit shall, among other things, (i) provide for the payment of sight drafts or other written demands for payment when presented for honor thereunder in accordance with the terms thereof and when accompanied by the documents described therein and (ii) have an expiry date not later than twelve (12) months after such Letter of Credit’s date of issuance, extension or renewal, as the case may be, and in no event later than twelve (12) months after the Facility Termination Date. Each

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Letter of Credit shall be subject either to the Uniform Customs and Practice for Documentary Credits (2007 Revision), International Chamber of Commerce Publication No. 600, and any amendments or revisions thereof adhered to by the LC Bank or the International Standby Practices (ISP98-International Chamber of Commerce Publication Number 590), and any amendments or revisions thereof adhered to by the LC Bank, as determined by the LC Bank.

(e) Section 4.2 of the Agreement is hereby amended by inserting, in the appropriate order, the following new clause (d):

(d) To effect the sale, assignment or other transfer of Triggered Receivables, Seller hereby grants to Servicer a power of attorney to execute in the name of Seller any writing or instrument in connection with any assignment of Triggered Receivables permitted herein to a Credit Protection Provider, including without limitation any sale, assignment or transfer agreements on behalf of Seller.

(f) The amount specified as the “Commitment” with respect to Market Street in its capacity as a Related Committed Purchaser and as set forth below its Purchaser Agent’s signature to the Agreement is hereby amended and restated in its entirety as set forth below its Purchaser Agent’s signature hereto.

(g) The amount specified as the “Commitment” for PNC Bank, National Association in its capacity as LC Bank and as set forth below its signature in such capacity to the Agreement is hereby amended and restated in its entirety as set forth below its signature in such capacity hereto.

(h) Exhibit I to the Agreement is hereby amended by inserting in the appropriate order the following new definitions:

“Adjusted LC Amount” means, at any time, the LC Amount less the amount of cash collateral held in the LC Collateral Account at such time.

“Credit Protection Agreement” means, with respect to an Obligor listed on Schedule IV hereto (as such Schedule IV may be updated from time to time in accordance with clause (o) of Section 1 of Exhibit IV), any trade put agreement, credit default swap, credit insurance arrangement or other arrangement entered into by an Originator and a third party credit protection provider (the “Credit Protection Provider”) pursuant to which (a) such Originator has obtained credit protection with respect to all or a portion of the Receivables of such Obligor and has assigned its rights with respect thereto to the Seller and (b) the terms thereof require the Receivables of such Obligor to be assigned to the applicable Credit Protection Provider against payment for such Receivables upon the occurrence of a credit event or other triggering event set forth therein, in each case in form and substance reasonably satisfactory to the Administrator.

“Credit Protection Provider” has the meaning set forth in the definition of “Credit Protection Agreement”.

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“Excluded Obligor” means any Obligor with respect to which any Receivable has become a Triggered Receivable.

“Triggered Receivable” means any Receivable that is subject to a Credit Protection Agreement approved in writing by the Administrator (which approval shall not be unreasonably withheld or delayed) and for which (a) a credit event or other triggering event (in each case, as defined therein) has occurred under the related Credit Protection Agreement and (b) the Servicer, on behalf of the Seller, has exercised its right to require the Credit Protection Provider to make payment against the assignment of such Receivable.

(i) The definition of “Concentration Percentage” set forth in Exhibit I to the Agreement is hereby amended and restated in its entirety as follows:

“Concentration Percentage” means, at any time, the percentages set forth below:

Obligor	Concentration Percentage
Target Corporation, so long as it is a Group A Obligor	40.0%
Any Group A Obligor other than Target	23.0%
Any Group B Obligor	11.5%
Any Group C Obligor	8.0%
Sum of the five (5) largest Group D Obligors	23.0%
Any other Group D Obligor	5.0%

(j) The definition of “Dilution Reserve Percentage” set forth in Exhibit I to the Agreement is hereby amended by deleting the number “2.0” therein and substituting the number “2.25” therefor.

(k) Clause (a) of the definition of “Eligible Receivables” set forth in Exhibit I to the Agreement is hereby amended by renumbering sub-clause (iii) as “(iv)” and by inserting, immediately prior to the word “and” prior to the renumbered sub-clause (iv), the following new sub-clause (iii):

(iii) not an Excluded Obligor

(l) Clause (ii) of the definition of “Excess Concentration” set forth in Exhibit I to the Agreement is hereby amended and restated in its entirety as follows:

(ii) the amount by which the Outstanding Balance of all Eligible Receivables of the largest Group D Obligor exceeds 40% of the sum of the Outstanding Balance of all Eligible Receivables of the five largest Group D Obligors (in each case after taking into account any deduction for amounts relating to clause (i) of this definition), plus

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(m) Clause (a) of the definition of “Facility Termination Date” set forth in Exhibit I to the Agreement is hereby amended by deleting the date “October 23, 2009” therein and substituting the date “September 21, 2012” therefor.

(n) The parenthetical in clause (d) of the definition of “Facility Termination Date” set forth in Exhibit I to the Agreement is hereby deleted in its entirety.

(o) The definition of “ISP98 Rules” set forth in Exhibit I to the Agreement is hereby deleted in its entirety.

(p) The definition of “Loss Reserve Percentage” set forth in Exhibit I to the Agreement is hereby amended by deleting the percentage “15%” therein and substituting the percentage “23%” therefor.

(q) The definition of “Market Street Yield Rate” set forth in Exhibit I to the Agreement is hereby amended and restated in its entirety as follows:

“Market Street Yield Rate” for any Yield Period for any Portion of Investment of the Purchased Interest in the case of Market Street or any Purchaser in its Purchaser Group, means an interest rate per annum equal to, at the option of Market Street or any such Purchaser: (a) the rate set forth as the “Applicable Margin” in the Purchaser Group Fee Letter relating to Market Street above the Euro-Rate for such Yield Period, or (b) the Base Rate for such Yield Period; provided, that the “Market Street Yield Rate” for any day while a Termination Event exists shall be an interest rate equal to the greater of (i) 2% per annum above the applicable Base Rate in effect on such day and (ii) the “Market Street Yield Rate” as calculated in clause (a) above.

(r) The definition of “Purchase Limit” set forth in Exhibit I to the Agreement is hereby amended by deleting the amount “$90,000,000” therein and substituting the amount “$80,000,000” therefor.

(s) The definition of “Purchased Interest” set forth in Exhibit I to the Agreement is hereby amended by deleting the reference to “LC Amount” therein and substituting a reference to “Adjusted LC Amount” therefor.

(t) The definition of “Receivables” set forth in Exhibit I to the Agreement is hereby amended by inserting at the end thereof the following new sentence:

Notwithstanding the foregoing, once any Receivable of an Obligor becomes a Triggered Receivable pursuant to Section 1.2(h), then, on and after the date that any such Triggered Receivable shall have been assigned to a Credit Protection Provider, all Receivables of such Obligor (whether Triggered Receivables or not) shall no longer constitute Receivables hereunder.

(u) The definition of “Receivables Based Loss Reserve Percentage” set forth in Exhibit I to the Agreement is hereby amended by deleting the number “2.0” therein and substituting the number “2.25” therefor.

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(v) The definition of “Sales Based Loss Reserve Percentage” set forth in Exhibit I to the Agreement is hereby amended by deleting the number “2.0” therein and substituting the number “2.25” therefor.

(w) Clause (e) of Section 1 of Exhibit IV to the Agreement is hereby amended by inserting, immediately prior to the period at the end of such clause, the following phrase:

; provided, that, subject to Section 1.2(h), the Servicer, on behalf of the Seller, may sell or otherwise assign Triggered Receivables and the Related Security, Collections and proceeds with respect thereto in accordance with a Credit Protection Agreement.

(x) Clause (o) of Section 1 of Exhibit IV to the Agreement is hereby amended and restated in its entirety as follows:

(o) The Seller shall not purchase any Receivable that is the subject of a Credit Protection Agreement unless the Administrator shall have approved in writing the form and substance of such Credit Protection Agreement (such approval not to be unreasonably withheld or delayed). Upon any such approval, the Servicer shall promptly deliver to the Administrator a revised Schedule IV which sets forth each Obligor the Receivables of which are subject to a Credit Protection Agreement that has been so approved by the Administrator.

(y) Clause (c) of Section 3 of Exhibit IV to the Agreement is hereby amended and restated in its entirety as follows:

(c) Not less than one member of the Seller’s Board of Directors shall be an individual (i) who has (A) prior experience as an Independent Director for a corporation or limited liability company whose charter documents require the unanimous consent of all Independent Directors thereof before such corporation or limited liability company could consent to the institution of bankruptcy or insolvency proceedings against it or could file a petition seeking relief under any applicable federal or state law relating to bankruptcy and (B) at least three years of employment experience with one or more entities that provide, in the ordinary course of their respective businesses, advisory, management or placement services to issuers of securitization or structured finance instruments, agreements or securities, (ii) who is reasonably acceptable to the Administrator and each Purchaser Agent as evidenced in a writing executed by the Administrator and each Purchaser Agent and (iii) who is not, and has not been for a period of five years prior to his or her appointment as an Independent Director of the Seller: (A) a direct, indirect or beneficial stockholder, affiliate, associate, customer, advisor or supplier of Greetings or any of its Affiliates (provided that indirect stock ownership of Greetings or of any Affiliate thereof by any person through a mutual fund or similar diversified investment pool shall not disqualify such person from being an Independent Director of the Seller unless such person maintains direct or indirect control of the investment decisions of such mutual fund or similar diversified investment pool), (B) a director, officer, employee, partner, attorney or

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consultant of Greetings or any of its Affiliates (other than the Seller) (Greetings and its Affiliates (other than the Seller) being hereinafter referred to as the “Parent Group”), (C) a person related to any person referred to in clauses (iii)(A) and (B) above, (D) a person controlling or under common control with any stockholder, partner, officer, director, employee, affiliate, associate, customer, advisor or supplier of Greetings or any of its Affiliates (other than, in the case of a director, officer, employee or partner, the Seller) or (E) a trustee, conservator or receiver for any member of the Parent Group (such an individual meeting the requirements set forth above, the “Independent Director”). The certificate of incorporation of the Seller shall provide that: (i) at least one member of the Seller’s Board of Directors shall be an Independent Director, (ii) the Seller’s Board of Directors shall not approve, or take any other action to cause the filing of, a voluntary bankruptcy petition with respect to the Seller unless the Independent Director shall approve the taking of such action in writing before the taking of such action, (iii) the Seller’s Board of Directors shall not vote on any matter requiring the vote of its Independent Director under its certificate of incorporation unless and until at least one Independent Director is then serving on the Seller’s Board of Directors, and (iv) the provisions requiring an Independent Director and the provisions described in clauses (ii) and (iii) of this sentence cannot be amended without the prior written consent of each Independent Director. As used in this clause (c), “control” means the possession directly or indirectly of the power to direct or cause the direction of management policies or activities of a person or entity whether through ownership of voting securities, by contract or otherwise.

(z) The Agreement is hereby amended by inserting in the appropriate order a new Schedule IV as Schedule IV attached hereto.

3. Representations and Warranties. Each of the Seller and the Servicer hereby represents and warrants to each Purchaser and the Administrator as follows:

(a) Representations and Warranties. The representations and warranties of such Person 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) Enforceability. The execution and delivery by such Person of this Amendment, and the performance of each of its obligations under this Amendment and the Agreement, as amended hereby, are within each of its organizational powers and have been duly authorized by all necessary organizational action on its part. This Amendment and the Agreement, as amended hereby, are such Person’s valid and legally binding obligations, enforceable in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization or other similar laws from time to time in effect affecting the enforcement of creditors’ rights generally and by general principles of equity, regardless of whether such enforceability is considered in a proceeding in equity or at law.

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(c) 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.

4. 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.

5. Effectiveness. This Amendment shall become effective as of the date hereof upon receipt by the Administrator of (i) counterparts of this Amendment executed by each of the other parties hereto, (ii) counterparts of that certain amended and restated Purchaser Group Fee Letter, dated as of the date hereof, executed by the Seller, the Servicer, PNC and Market Street and (iii) executed copies of that certain amendment to the Seller’s certificate of incorporation, dated as of the date hereof, in each case in form and substance satisfactory to the Administrator in its sole discretion.

6. 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. Delivery of an executed counterpart hereof by facsimile or by email of a .pdf copy thereof shall be effective as delivery of an originally executed counterpart hereof.

7. Governing Law. This Amendment shall be governed by, and construed in accordance with, the internal laws of the State of New York (including for such purpose Sections 5-1401 and 5-1402 of the general obligations law of the State of New York).

8. 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)

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

AGC FUNDING CORPORATION, as Seller
By:	/s/ Gregory M. Steinberg
Name: Gregory M. Steinberg Title:    Vice President and Treasurer
AMERICAN GREETINGS CORPORATION, as Servicer
By:	/s/ Gregory M. Steinberg
Name: Gregory M. Steinberg Title:    Treasurer

S-1

PNC BANK, NATIONAL ASSOCIATION, as Administrator
By:	/s/ William P. Falcon
Name: William P. Falcon Title:    Vice President
PNC BANK, NATIONAL ASSOCIATION, as Purchaser Agent for Market Street Funding LLC
By:	/s/ William P. Falcon
Name: William P. Falcon Title:    Vice President
Commitment: $80,000,000
PNC BANK, NATIONAL ASSOCIATION, as LC Bank
By:	/s/ Joseph G. Moran
Name: Joseph G. Moran Title:    Senior Vice President
Commitment: $80,000,000

S-2

MARKET STREET FUNDING LLC, as a Conduit Purchaser and as a Related Committed Purchaser
By:	/s/ Doris J. Hearn
Name: Doris J. Hearn Title:    Vice President

S-3

SCHEDULE IV

TRIGGERED RECEIVABLE OBLIGORS AND RELATED CREDIT

PROTECTION AGREEMENTS

None

IV-1

EX-99.1

Exhibit 99.1

AMERICAN GREETINGS ANNOUNCES RECORD SECOND QUARTER EARNINGS

CLEVELAND (September 24, 2009) – American Greetings Corporation (NYSE: AM) today announced its second quarter results for the quarter ended August 28, 2009.

Second Quarter Results

For the second quarter of fiscal 2010, the Company reported total revenue of $356.4 million, pre-tax income of $34.1 million, and net income of $23.1 million or 59 cents per share (all per-share amounts assume dilution). Included within these results was a pre-tax benefit from an insurance program of $7.9 million (after tax of approximately $7.6 million) or approximately 19 cents per share.

For the second quarter of fiscal 2009, the Company reported total revenue of $385.8 million, pre-tax income of $2.4 million, and net income of $2.3 million or 5 cents per share.

Management Comments and Outlook

Chief Executive Officer Zev Weiss said, “I am very pleased with our record earnings performance this quarter as well as our strong cash flow. I believe the changes we have made to our business over the last year are showing up in our results. We could not have achieved these results without the teamwork and coordination of all our associates.”

Weiss continued, “We have devoted more time and effort to develop new products so that consumers can find unique and fresh offerings in the greeting card aisle. We have expanded our use of technology for both traditional greeting cards as well as on-line applications including Facebook and the iPhone. These examples of leadership in innovation are all in addition to the recent enhancements we have made to our portfolio, specifically the acquisitions of Recycled Paper Greetings and Papyrus, which complement our innovation with leadership in both humor and elegant design.”

As a result of the strong cash flow performance during the first half of the fiscal year, the Company raised its previously announced fiscal 2010 cash flow estimate. Previously, the Company expected cash flow from operating activities of approximately $105 million to $115 million and capital expenditures of approximately $35 million to $45 million resulting in cash flow from operating activities minus capital expenditures of approximately $70 million. The Company now expects cash flow from operating activities of at least $160 million and capital expenditures of approximately $35 million resulting in cash flow from operating activities minus capital expenditures to be greater than $125 million.

Conference Call on the Web

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

About American Greetings Corporation

For more than 100 years, American Greetings Corporation (NYSE: AM) has been a manufacturer and retailer of innovative social expression products that assist consumers in enhancing their relationships. The Company’s major greeting card brands are American Greetings, Carlton Cards, Gibson, Recycled Paper Greetings and Papyrus, and other paper product offerings include DesignWare party goods and American Greetings and Plus Mark gift-wrap and boxed cards. American Greetings also has the largest collection of electronic greetings on the Web, including cards available at AmericanGreetings.com through AG Interactive, Inc. (the Company’s online division). AG Interactive also offers digital photo sharing and personal publishing at PhotoWorks.com and Webshots.com and provides a one-stop source for online graphics and animations at Kiwee.com. In addition to its product lines, American Greetings also creates and licenses popular character brands through the American Greetings Properties group. Headquartered in Cleveland, Ohio, American Greetings generates annual revenue of approximately $1.7 billion, and its products can be found in retail outlets worldwide. For more information on the Company, visit http://corporate.americangreetings.com.

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CONTACT:

Gregory M. Steinberg

Treasurer and Director of Investor Relations

American Greetings Corporation

216-252-4864

investor.relations@amgreetings.com

Non-GAAP Measures

Certain after-tax and liquidity amounts included in this earnings release may be considered non-GAAP measures under the Securities and Exchange Commission’s Regulation G. The after-tax amounts were calculated based on the Company’s statutory tax rate of approximately 38.9%. Management believes that after-tax information is useful in analyzing the Company’s results and that cash flow from operating activities minus capital expenditures provides a liquidity measure useful to investors in analyzing the cash generation of the Company.

Factors That May Affect Future Results

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

• a weak retail environment and general economic conditions;

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

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

• the Company’s successful transition of the Retail Operations segment to its buyer, Schurman Fine Papers, and the ability to achieve the desired benefits associated with this and other dispositions;

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

• the ability to achieve the desired benefits associated with its cost reduction efforts;

• competitive terms of sale offered to customers;

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

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

• consumer acceptance of products as priced and marketed;

• the impact of technology on core product sales;

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

• escalation in the cost of providing employee health care;

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

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

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

• the outcome of any legal claims known or unknown.

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

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

AMERICAN GREETINGS CORPORATION

SECOND QUARTER CONSOLIDATED STATEMENT OF INCOME

FISCAL YEAR ENDING FEBRUARY 28, 2010

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

	(Unaudited)
	Three Months Ended						Six Months Ended
	August 28, 2009			August 29, 2008			August 28, 2009			August 29, 2008
Net sales	$	348,639		$	372,942		$	757,916		$	798,405
Other revenue		7,711			12,893			11,356			15,730
Total revenue		356,350			385,835			769,272			814,135
Material, labor and other production costs		153,248			170,112			320,417			363,454
Selling, distribution and marketing expenses		117,531			154,387			249,748			305,262
Administrative and general expenses		48,483			57,162			111,634			119,723
Other operating (income) expense - net		(1,397	)		(111	)		26,376			(838	)
Operating income		38,485			4,285			61,097			26,534
Interest expense		6,671			5,434			13,658			10,339
Interest income		(989	)		(898	)		(1,265	)		(1,888	)
Other non-operating income - net		(1,291	)		(2,617	)		(2,333	)		(3,518	)
Income before income tax expense		34,094			2,366			51,037			21,601
Income tax expense		10,972			69			17,954			5,971
Net income	$	23,122		$	2,297		$	33,083		$	15,630
Earnings per share - basic	$	0.59		$	0.05		$	0.84		$	0.32
Earnings per share - assuming dilution	$	0.59		$	0.05		$	0.84		$	0.32
Average number of common shares outstanding		39,407,532			47,769,594			39,508,240			48,285,267
Average number of common shares outstanding - assuming dilution		39,407,532			47,807,313			39,508,240			48,328,659
Dividends declared per share	$	0.12		$	0.12		$	0.12		$	0.24

AMERICAN GREETINGS CORPORATION

SECOND QUARTER CONSOLIDATED STATEMENT OF FINANCIAL POSITION

FISCAL YEAR ENDING FEBRUARY 28, 2010

(In thousands of dollars)

	(Unaudited)
	August 28, 2009			August 29, 2008
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	49,903		$	84,040
Trade accounts receivable, net		78,070			62,826
Inventories		208,130			259,789
Deferred and refundable income taxes		63,665			54,149
Assets held for sale		1,423			2,604
Prepaid expenses and other		144,773			179,571
Total current assets		545,964			642,979
GOODWILL		26,393			289,662
OTHER ASSETS		363,480			440,589
DEFERRED AND REFUNDABLE INCOME TAXES		167,138			133,827
Property, plant and equipment - at cost		893,554			980,103
Less accumulated depreciation		607,851			679,862
PROPERTY, PLANT AND EQUIPMENT - NET		285,703			300,241
	$	1,388,678		$	1,807,298
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Debt due within one year	$	1,000		$	18,445
Accounts payable		96,279			125,648
Accrued liabilities		67,985			66,007
Accrued compensation and benefits		50,925			39,378
Income taxes payable		2,856			7,729
Other current liabilities		94,462			113,379
Total current liabilities		313,507			370,586
LONG-TERM DEBT		335,372			391,889
OTHER LIABILITIES		127,066			147,906
DEFERRED INCOME TAXES AND NONCURRENT INCOME TAXES PAYABLE		30,736			23,343
SHAREHOLDERS’ EQUITY
Common shares - Class A		35,923			42,208
Common shares - Class B		3,477			3,494
Capital in excess of par value		451,328			447,502
Treasury stock		(941,198	)		(914,262	)
Accumulated other comprehensive loss		(40,562	)		(9,711	)
Retained earnings		1,073,029			1,304,343
Total shareholders’ equity		581,997			873,574
	$	1,388,678		$	1,807,298

AMERICAN GREETINGS CORPORATION

SECOND QUARTER CONSOLIDATED STATEMENT OF CASH FLOWS

FISCAL YEAR ENDING FEBRUARY 28, 2010

(In thousands of dollars)

	(Unaudited) Six Months Ended
	August 28, 2009			August 29, 2008
OPERATING ACTIVITIES:
Net income	$	33,083		$	15,630
Adjustments to reconcile net income to cash flows from operating activities:
Net loss on dispositions		27,696			—
Net loss on disposal of fixed assets		9			385
Depreciation and intangible assets amortization		23,466			25,324
Deferred income taxes		26,708			15,394
Other non-cash charges		4,622			3,379
Changes in operating assets and liabilities, net of acquisitions and dispositions:
Trade accounts receivable		(10,877	)		(725	)
Inventories		(15,022	)		(47,426	)
Other current assets		12,347			(952	)
Deferred costs - net		11,885			14,654
Accounts payable and other liabilities		(22,190	)		(69,511	)
Other - net		(7,561	)		(9,826	)
Total Cash Flows From Operating Activities		84,166			(53,674	)
INVESTING ACTIVITIES:
Property, plant and equipment additions		(15,447	)		(28,545	)
Cash payments for business acquisitions, net of cash acquired		(19,300	)		(15,625	)
Proceeds from sale of fixed assets		729			275
Other - net		3,063			(44,153	)
Total Cash Flows From Investing Activities		(30,955	)		(88,048	)
FINANCING ACTIVITIES:
Net (decrease) increase in long-term debt		(54,750	)		148,591
Increase in short-term debt		—			18,445
Sale of stock under benefit plans		91			434
Purchase of treasury shares		(6,176	)		(46,137	)
Dividends to shareholders		(9,593	)		(11,667	)
Total Cash Flows From Financing Activities		(70,428	)		109,666
EFFECT OF EXCHANGE RATE CHANGES ON CASH		6,904			(7,404	)
DECREASE IN CASH AND CASH EQUIVALENTS		(10,313	)		(39,460	)
Cash and Cash Equivalents at Beginning of Year		60,216			123,500
Cash and Cash Equivalents at End of Period	$	49,903		$	84,040

AMERICAN GREETINGS CORPORATION

SECOND QUARTER CONSOLIDATED SEGMENT DISCLOSURES

FISCAL YEAR ENDING FEBRUARY 28, 2010

(In thousands of dollars)

	(Unaudited)
	Three Months Ended						Six Months Ended
	August 28, 2009			August 29, 2008			August 28, 2009			August 29, 2008
Total Revenue:
North American Social Expression Products	$	266,934		$	256,756		$	590,818		$	554,933
Intersegment items		—			(13,720	)		(5,104	)		(27,026	)
Exchange rate adjustment		1,995			3,786			2,294			7,202
Net		268,929			246,822			588,008			535,109
International Social Expression Products		45,754			43,374			92,760			91,288
Exchange rate adjustment		10,986			19,950			16,742			42,996
Net		56,740			63,324			109,502			134,284
Retail Operations		—			34,586			11,727			73,063
Exchange rate adjustment		—			3,078			112			6,584
Net		—			37,664			11,839			79,647
AG Interactive		18,075			20,334			36,709			40,233
Exchange rate adjustment		422			638			633			1,300
Net		18,497			20,972			37,342			41,533
Non-reportable segments		11,964			17,053			22,361			23,562
Unallocated		220			—			220			—
	$	356,350		$	385,835		$	769,272		$	814,135
Segment Earnings (Loss):
North American Social Expression Products	$	42,679		$	32,248		$	120,556		$	84,431
Intersegment items		—			(9,973	)		(3,511	)		(20,150	)
Exchange rate adjustment		1,092			1,325			1,282			1,830
Net		43,771			23,600			118,327			66,111
International Social Expression Products		1,887			(1,569	)		2,220			204
Exchange rate adjustment		428			(589	)		434			443
Net		2,315			(2,158	)		2,654			647
Retail Operations		—			(6,588	)		(34,830	)		(9,939	)
Exchange rate adjustment		—			(88	)		(285	)		(150	)
Net		—			(6,676	)		(35,115	)		(10,089	)
AG Interactive		1,644			456			3,296			(879	)
Exchange rate adjustment		287			305			349			579
Net		1,931			761			3,645			(300	)
Non-reportable segments		367			2,541			238			575
Unallocated		(14,209	)		(19,415	)		(38,520	)		(39,110	)
Exchange rate adjustment		(81	)		3,713			(192	)		3,767
Net		(14,290	)		(15,702	)		(38,712	)		(35,343	)
	$	34,094		$	2,366		$	51,037		$	21,601