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): June 24, 2011

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 June 29, 2011, American Greetings Corporation (the “Company”) issued a press release reporting its results for the quarter ended May 27, 2011. A copy of this press release is attached hereto as Exhibit 99.1.

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

At the Company’s Annual Meeting of Shareholders held on June 24, 2011 (the “Annual Meeting”), the shareholders approved an amendment to the American Greetings Corporation 2007 Omnibus Incentive Compensation Plan (the “Plan”), reserving an additional 1,200,000 Class A common shares and 100,000 Class B common shares for issuance under the Plan, bringing the total number of shares reserved for issuance thereunder to 6,800,000 (5,600,000 Class A common shares and 1,200,000 Class B common shares). The material terms of the Plan are summarized in the Company’s Definitive Proxy Statement for the 2011 Annual Meeting of Shareholders (the “Proxy Statement”), which was filed with the Securities and Exchange Commission on May 16, 2011 (No. 001-13859).

Item 5.07 Submission of Matters to a Vote of Security Holders.

The results of voting on each of the matters submitted to a vote of security holders at the Annual Meeting are as follows:

1. The three nominees for Class I directors named in the Company’s Proxy Statement were elected to serve on the Company’s board of directors until the 2014 Annual Meeting of Shareholders, or until his successor is duly elected and qualified. The voting results are set forth below.

Election of Directors	Votes “For”	Votes Withheld	Broker Non-Votes
Jeffrey D. Dunn	54,194,181	3,996,196	0
Michael J. Merriman, Jr.	43,062,741	15,127,636	0
Morry Weiss	57,207,797	982,580	0

2. As described in Item 5.02 above, the shareholders approved an amendment to the Plan. The voting results are set forth below.

Votes “For”	Votes “Against”	Abstentions	Broker Non-Votes
33,602,525	24,507,876	79,976	0

3. The shareholders approved, on an advisory basis, the compensation to be paid to the Company’s named executive officers, as disclosed in the Proxy Statement. The voting results are set forth below.

Votes “For”	Votes “Against”	Abstentions	Broker Non-Votes
55,689,792	2,400,937	99,648	0

4. The greatest number of votes of the shares entitled to vote and present were received for three years for the advisory vote on the frequency of shareholder votes on named executive officer compensation. The voting results are set forth below:

One Year	Two Years	Three Years	Abstentions	Broker Non-Votes
23,561,760	336,079	34,163,382	129,156	0

In accordance with the voting results concerning this proposal, the Company has determined that it will hold an advisory vote on named executive officer compensation every three years until the next advisory vote on the frequency of the advisory vote on named executive officer compensation.

Item 7.01 Regulation FD Disclosure.

The Company is organized and manages its business in three reportable segments: North American Social Expression Products, International Social Expression Products, and AG Interactive segments, and one non-reportable segment. During the first quarter ended May 27, 2011, certain items that were previously considered corporate expenses are now included in the calculation of segment earnings for the North American Social Expression Products segment. This change is the result of modifications to organizational structures, and is intended to better align the segment financial results with the responsibilities of segment management and the way management evaluates the Company’s operations. In addition, beginning with the first quarter ended May 27, 2011, segment results are now reported using actual foreign exchange rates for the periods presented. Previously, segment results were reported at constant exchange rates to eliminate the impact of foreign currency fluctuations. Attached as Exhibit 99.2 are the unaudited segment earnings (loss) for the quarterly periods in fiscal 2011, 2010 and 2009 calculated consistently with the current methodology that is used in fiscal 2012.

The information in Items 2.02 and 7.01 of this Current Report on Form 8-K (including the exhibits attached hereto) is being furnished under Item 2.02 and 7.01, as applicable, and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of such section, or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

Item 9.01 Financial Statements and Exhibits.

d) Exhibits.

Exhibit	Description
Exhibit 99.1	Press Release - reporting results for the quarter ended May 27, 2011.
Exhibit 99.2	Unaudited segment earnings (loss).

SIGNATURES

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

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

Date: June 29, 2011

EX-99.1

Exhibit 99.1

AMERICAN GREETINGS ANNOUNCES FIRST QUARTER EARNINGS

CLEVELAND (June 29, 2011)—American Greetings Corporation (NYSE: AM) today announced its results for the first fiscal quarter ended May 27, 2011.

First Quarter Results

For the first quarter of fiscal 2012, the Company reported total revenue of $402.3 million, pre-tax income of $50.8 million, and net income of $32.6 million or 78 cents per share (all per-share amounts assume dilution). Revenue was reduced by $1.9 million as a result of scan-based trading conversions that occurred during the quarter. The pre-tax income impact of the scan-based trading conversions was $2.3 million (after-tax $1.4 million, reducing earnings per share by about 3 cents).

For the first quarter of fiscal 2011, the Company reported total revenue of $396.3 million, pre-tax income of $51.0 million, and net income of $30.8 million or 75 cents per share. The Company incurred pre-tax costs associated with the integrations of Papyrus and Recycled Paper Greetings of $3.4 million (after-tax of $2.1 million, reducing earnings per share by about 5 cents).

Management Comments and Outlook

Chief Executive Officer Zev Weiss said, “Despite the continuing erratic economic environment, we achieved a record level of earnings per share in the first quarter driven by the combination of the changes we made to our portfolio of businesses in recent years, our growing market share in North America, and the continuation of good expense management.”

For fiscal 2012, the Company expects revenue to grow approximately 5% compared to fiscal 2011. The Company expects cash flow from operating activities to fall within the range of $125 million to $145 million and capital expenditures between $45 million and $50 million, resulting in cash flow from operating activities minus capital expenditures of $80 million to $100 million. This cash flow estimate includes an aggregate use of cash of approximately $5 million to $15 million for the combination of working capital, deferred costs, and taxes.

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 creator and manufacturer of innovative social expression products that assist consumers in enhancing their relationships. The Company’s major greeting card lines are American Greetings, Carlton Cards, Gibson, Recycled Paper Greetings and Papyrus, and other paper product offerings include DesignWare party goods and American Greetings and Plus Mark gift-wrap and boxed cards. American Greetings also has one of the largest collections of electronic greetings on the Web, including cards available at AmericanGreetings.com through AG Interactive, Inc. (the Company’s online division). In addition to its product lines, American Greetings also creates and licenses popular character brands through the American Greetings Properties group. Headquartered in Cleveland, Ohio, American Greetings generates annual revenue of approximately $1.6 billion, and its products can be found in retail outlets worldwide. For more information on the Company, visit http://corporate.americangreetings.com.

###

CONTACT:

Gregory M. Steinberg

Treasurer and Executive 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;

• competitive terms of sale offered to customers;

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

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

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

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

• Schurman Fine Papers’ ability to successfully operate its retail operations and satisfy its obligations to the Company;

• consumer acceptance of products as priced and marketed;

• the impact of technology, including social media, on core product sales;

• escalation in the cost of providing employee health care;

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

• 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; and

• the outcome of any legal claims known or unknown.

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

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

AMERICAN GREETINGS CORPORATION

FIRST QUARTER CONSOLIDATED STATEMENT OF INCOME

FISCAL YEAR ENDING FEBRUARY 29, 2012

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

	(Unaudited) Three Months Ended
	May 27, 2011			May 28, 2010
Net sales	$	396,776		$	392,105
Other revenue		5,573			4,203
Total revenue		402,349			396,308
Material, labor and other production costs		157,929			158,013
Selling, distribution and marketing expenses		123,292			117,551
Administrative and general expenses		65,298			66,032
Other operating income - net		(923	)		(594	)
Operating income		56,753			55,306
Interest expense		6,124			6,202
Interest income		(321	)		(213	)
Other non-operating expense (income) - net		160			(1,700	)
Income before income tax expense		50,790			51,017
Income tax expense		18,197			20,178
Net income	$	32,593		$	30,839
Earnings per share - basic	$	0.80		$	0.78
Earnings per share - assuming dilution	$	0.78		$	0.75
Average number of common shares outstanding		40,500,357			39,638,568
Average number of common shares outstanding - assuming dilution		41,799,366			40,849,429
Dividends declared per share	$	0.15		$	0.14

AMERICAN GREETINGS CORPORATION

FIRST QUARTER CONSOLIDATED STATEMENT OF FINANCIAL POSITION

FISCAL YEAR ENDING FEBRUARY 29, 2012

(In thousands of dollars)

	(Unaudited)
	May 27, 2011			May 28, 2010
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	211,139		$	186,775
Trade accounts receivable, net		137,213			110,085
Inventories		203,346			157,913
Deferred and refundable income taxes		46,686			74,951
Assets held for sale		7,180			14,680
Prepaid expenses and other		117,315			118,046
Total current assets		722,879			662,450
GOODWILL		29,701			30,238
OTHER ASSETS		431,472			413,237
DEFERRED AND REFUNDABLE INCOME TAXES		127,731			150,207
Property, plant and equipment - at cost		859,189			835,707
Less accumulated depreciation		616,706			597,610
PROPERTY, PLANT AND EQUIPMENT - NET		242,483			238,097
	$	1,554,266		$	1,494,229
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Debt due within one year	$	—		$	99,000
Accounts payable		98,641			80,205
Accrued liabilities		65,527			61,425
Accrued compensation and benefits		35,163			35,472
Income taxes payable		18,752			25,390
Other current liabilities		100,107			91,878
Total current liabilities		318,190			393,370
LONG-TERM DEBT		233,298			230,973
OTHER LIABILITIES		186,484			179,643
DEFERRED INCOME TAXES AND NONCURRENT INCOME TAXES PAYABLE		32,132			30,548
SHAREHOLDERS’ EQUITY
Common shares - Class A		37,942			37,064
Common shares - Class B		2,803			2,926
Capital in excess of par value		502,131			478,676
Treasury stock		(951,643	)		(951,830	)
Accumulated other comprehensive income (loss)		2,121			(40,257	)
Retained earnings		1,190,808			1,133,116
Total shareholders’ equity		784,162			659,695
	$	1,554,266		$	1,494,229

AMERICAN GREETINGS CORPORATION

FIRST QUARTER CONSOLIDATED STATEMENT OF CASH FLOWS

FISCAL YEAR ENDING FEBRUARY 29, 2012

(In thousands of dollars)

	(Unaudited) Three Months Ended
	May 27, 2011			May 28, 2010
OPERATING ACTIVITIES:
Net income	$	32,593		$	30,839
Adjustments to reconcile net income to cash flows from operating activities:
Stock-based compensation		2,662			2,650
Net loss (gain) on disposal of fixed assets		86			(151	)
Depreciation and amortization		9,929			10,294
Deferred income taxes		1,147			(535	)
Other non-cash charges		872			735
Changes in operating assets and liabilities, net of acquisitions and dispositions:
Trade accounts receivable		(12,389	)		19,576
Inventories		(18,750	)		4,483
Other current assets		2,442			(2,878	)
Income taxes		7,596			15,830
Deferred costs - net		13,099			13,802
Accounts payable and other liabilities		(27,922	)		(66,362	)
Other - net		597			4,256
Total Cash Flows From Operating Activities		11,962			32,539
INVESTING ACTIVITIES:
Property, plant and equipment additions		(8,891	)		(5,965	)
Cash payments for business acquisitions, net of cash acquired		(5,992	)		—
Proceeds from sale of fixed assets		24			555
Proceeds from escrow related to party goods transaction		0			24,523
Total Cash Flows From Investing Activities		(14,859	)		19,113
FINANCING ACTIVITIES:
Net decrease in long-term debt		—			(250	)
Sale of stock under benefit plans		12,000			19,087
Purchase of treasury shares		(9,942	)		(12,979	)
Dividends to shareholders		(6,062	)		(5,525	)
Total Cash Flows From Financing Activities		(4,004	)		333
EFFECT OF EXCHANGE RATE CHANGES ON CASH		2,202			(3,159	)
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS		(4,699	)		48,826
Cash and Cash Equivalents at Beginning of Year		215,838			137,949
Cash and Cash Equivalents at End of Period	$	211,139		$	186,775

AMERICAN GREETINGS CORPORATION

FIRST QUARTER CONSOLIDATED SEGMENT DISCLOSURES

FISCAL YEAR ENDING FEBRUARY 29, 2012

(In thousands of dollars)

	(Unaudited) Three Months  Ended
	May 27, 2011			May 28, 2010
Total Revenue:
North American Social Expression Products	$	303,228		$	308,309
International Social Expression Products		70,205			57,573
AG Interactive		16,717			18,554
Non-reportable segments		12,199			11,872
	$	402,349		$	396,308
Segment Earnings (Loss):
North American Social Expression Products	$	59,618		$	64,063
International Social Expression Products		3,303			2,834
AG Interactive		2,312			2,372
Non-reportable segments		4,606			2,152
Unallocated		(19,049	)		(20,404	)
	$	50,790		$	51,017

EX-99.2

Exhibit 99.2

AMERICAN GREETINGS CORPORATION

UNAUDITED SEGMENT EARNINGS (LOSS)

(RECALCULATED TO BE CONSISTENT WITH FISCAL 2012 METHODOLOGY)

(In thousands of dollars)

	Three Months Ended
	May 28, 2010			May 29, 2009			May 30, 2008
North American Social Expression Products	$	64,063		$	72,018		$	48,063
Intersegment items		—			(3,465	)		(11,416	)
		64,063			68,553			36,647
International Social Expression Products		2,834			339			2,805
Retail Operations		—			(35,115	)		(3,413	)
AG Interactive		2,372			1,714			(1,061	)
Non-reportable segments		2,152			(129	)		(1,966	)
Unallocated		(20,404	)		(18,419	)		(13,777	)
	$	51,017		$	16,943		$	19,235

	Three Months Ended									Six Months Ended
	August 27, 2010			August 28, 2009			August 29, 2008			August 27, 2010			August 28, 2009			August 29, 2008
North American Social Expression Products	$	28,627		$	38,730		$	27,766		$	92,690		$	110,748		$	75,829
Intersegment items		—			—			(10,764	)		—			(3,465	)		(22,180	)
		28,627			38,730			17,002			92,690			107,283			53,649
International Social Expression Products		1,325			2,315			(2,158	)		4,159			2,654			647
Retail Operations		—			—			(6,676	)		—			(35,115	)		(10,089	)
AG Interactive		2,886			1,931			761			5,258			3,645			(300	)
Non-reportable segments		3,317			367			2,541			5,469			238			575
Unallocated		(19,142	)		(9,249	)		(9,104	)		(39,546	)		(27,668	)		(22,881	)
	$	17,013		$	34,094		$	2,366		$	68,030		$	51,037		$	21,601

AMERICAN GREETINGS CORPORATION

UNAUDITED SEGMENT EARNINGS (LOSS)

(RECALCULATED TO BE CONSISTENT WITH FISCAL 2012 METHODOLOGY)

(In thousands of dollars)

	Three Months Ended									Nine Months Ended
	November 26, 2010			November 27, 2009			November 28, 2008			November 26, 2010			November 27, 2009			November 28, 2008
North American Social Expression Products	$	51,098		$	43,136		$	40,705		$	143,788		$	153,884		$	116,534
Intersegment items		—			—			(13,113	)		—			(3,465	)		(35,293	)
		51,098			43,136			27,592			143,788			150,419			81,241
International Social Expression Products		9,982			9,558			(75,595	)		14,141			12,212			(74,948	)
Retail Operations		—			—			(9,543	)		—			(35,115	)		(19,632	)
AG Interactive		5,135			1,571			(160,814	)		10,393			5,216			(161,114	)
Non-reportable segments		1,438			1,634			1,614			6,907			1,872			2,189
Unallocated		(16,110	)		(17,760	)		(11,921	)		(55,656	)		(45,428	)		(34,802	)
	$	51,543		$	38,139		$	(228,667	)	$	119,573		$	89,176		$	(207,066	)
	Three Months Ended									Year Ended
	February 28, 2011			February 28, 2010			February 28, 2009			February 28, 2011			February 28, 2010			February 28, 2009
North American Social Expression Products	$	50,411		$	63,360		$	(29,883	)	$	194,199		$	217,244		$	86,651
Intersegment items		—			—			(5,902	)		—			(3,465	)		(41,195	)
		50,411			63,360			(35,785	)		194,199			213,779			45,456
International Social Expression Products		5,431			4,634			(2,721	)		19,572			16,846			(77,669	)
Retail Operations		—			—			401			—			(35,115	)		(19,231	)
AG Interactive		3,598			6,203			(577	)		13,991			11,419			(161,691	)
Non-reportable segments		2,570			5,762			(9,816	)		9,477			7,634			(7,627	)
Unallocated		(25,576	)		(48,181	)		(19,369	)		(81,232	)		(93,609	)		(54,171	)
	$	36,434		$	31,778		$	(67,867	)	$	156,007		$	120,954		$	(274,933	)