American Greetings Announces Fourth Quarter Results

CLEVELAND - American Greetings Corporation (NYSE: AM) today announced its fourth quarter results for the fiscal quarter ended February 28, 2009.

Fourth Quarter Results

For the fourth quarter of fiscal 2009, the Company reported total revenue of US$422.5 million, a pre-tax loss from continuing operations of US$67.9 million, and a loss from continuing operations of US$50.1 million or US$1.13 per share (all per-share amounts assume dilution). For the fourth quarter of fiscal 2008, the Company reported total revenue of US$493.2 million, pre-tax income from continuing operations of US$12.7 million, and income from continuing operations of US$15.6 million or 31 cents per share.

During the fourth quarter of fiscal 2009, the Company recognized non-cash pre-tax goodwill impairment charges of US$47.3 million (after-tax of approximately US$42.6 million) that reduced earnings per share by 97 cents during the quarter.

In addition, the Company recognized expenses in its licensing business primarily due to changes in market conditions that caused a change in ultimate revenues related to animated video productions of US$16.4 million (after-tax of approximately US$10.0 million) that reduced earnings per share by 23 cents during the quarter.

The Company recorded a non-cash pre-tax long-lived asset impairment charge within the Retail Operations segment of US$1.5 million (after-tax of approximately US$0.9 million) that reduced earnings per share by 2 cents during the quarter.

The Company also announced on December 9, 2008, the elimination of approximately 275 positions as part of a cost reduction effort. As a result of those and other position eliminations during the quarter, the Company recognized a pre-tax severance charge of US$7.5 million (after-tax of approximately US$4.6 million) that reduced earnings per share by 10 cents.

Management Comments and Outlook

Chief Executive Officer Zev Weiss said, “This fiscal year we faced a challenging retail environment as a result of the steep economic downturn. We will continue to be even more vigilant in managing our supply chain and becoming more cost efficient. Our focus on efficiency, we believe, will help us drive a substantial improvement in cash flow next year and we are projecting cash flow from operating activities less capital expenditures to be at least US$70 million. We are also excited about the recent acquisitions of Recycled Paper Greetings and the Papyrus brand, and satisfied that the sale of our Carlton Retail stores best positions our Company and those stores for success.”

Financing Activities

Under the Company’s US$75 million share repurchase program, during the fourth quarter the Company purchased approximately 4.9 million shares of its common stock for US$24.2 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 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, American Greetings and Plus Mark gift-wrap and boxed cards and DateWorks calendars. 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 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 US$1.7 billion, and its products can be found in retail outlets domestically and worldwide. For more information on the Company, visit corporate.americangreetings.com.

Certain statements in this release 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 proposed 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 public’s acceptance of online greetings and other social expression products, 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.

(All amounts in U.S. dollars unless otherwise noted) AMERICAN GREETINGS CORPORATION FOURTH QUARTER CONSOLIDATED STATEMENT OF OPERATIONS FISCAL YEAR ENDED FEBRUARY 28, 2009 (In thousands of dollars except share and per share amounts) (Unaudited) Quarter Ended Year Ended ————- ———- Feb. 28, Feb. 29, Feb. 28, Feb. 29, 2009 2008 2009 2008 ——— ——— ——— ——— Net sales $403,467 $471,875 $1,646,399 $1,730,784 Other revenue 19,052 21,358 44,339 45,667 —— —— —— —— Total revenue 422,519 493,233 1,690,738 1,776,451 Material, labor and other production costs 223,288 233,262 809,956 780,771 Selling, distribution and marketing expenses 153,818 176,778 618,899 621,478 Administrative and general expenses 55,753 67,261 226,317 246,722 Goodwill and other intangible assets impairment 47,277 - 290,166 - Other operating income - net (67) (518) (1,396) (1,325) — —- —— —— Operating (loss) income (57,550) 16,450 (253,204) 128,805 Interest expense 5,881 5,575 22,854 20,006 Interest income (447) (1,903) (3,282) (7,758) Other non-operating expense (income) - net 4,883 67 2,157 (7,411) —– — —– —— (Loss) income from continuing operations before income tax (benefit) expense (67,867) 12,711 (274,933) 123,968 Income tax (benefit) expense (17,789) (2,851) (47,174) 40,648 ——- —— ——- —— (Loss) income from continuing operations (50,078) 15,562 (227,759) 83,320 Loss from discontinued operations, net of tax - - - (317) —– —– —– —– Net (loss) income $(50,078) $15,562 $(227,759) $83,003 ======== ======= ========= ======= (Loss) earnings per share - basic: (Loss) income from continuing operations $(1.13) $0.31 $(4.89) $1.54 Loss from discontinued operations - - - (0.01) —– —– —– —– Net (loss) income $(1.13) $0.31 $(4.89) $1.53 ====== ===== ====== ===== (Loss) earnings per share - assuming dilution: (Loss) income from continuing operations $(1.13) $0.31 $(4.89) $1.53 Loss from discontinued operations - - - (0.01) —– —– —– —– Net (loss) income $(1.13) $0.31 $(4.89) $1.52 ====== ===== ====== ===== Average number of common shares outstanding 44,144,203 50,895,638 46,543,780 54,236,961 Average number of common shares outstanding - assuming dilution 44,144,203 50,972,834 46,543,780 54,506,048 Dividends declared per share $0.24 $0.10 $0.60 $0.40

AMERICAN GREETINGS CORPORATION FOURTH QUARTER CONSOLIDATED STATEMENT OF FINANCIAL POSITION FISCAL YEAR ENDED FEBRUARY 28, 2009 (In thousands of dollars) (Unaudited) ———– February 28, February 29, 2009 2008 ——– ——– ASSETS CURRENT ASSETS Cash and cash equivalents $60,216 $123,500 Trade accounts receivable, net 63,281 61,902 Inventories 203,873 216,671 Deferred and refundable income taxes 71,850 72,280 Prepaid expenses and other 162,175 195,017 ——- ——- Total current assets 561,395 669,370 GOODWILL 26,871 285,072 OTHER ASSETS 368,958 420,219 DEFERRED AND REFUNDABLE INCOME TAXES 178,785 133,762 Property, plant and equipment - at cost 958,081 974,073 Less accumulated depreciation 660,302 678,068 ——- ——- PROPERTY, PLANT AND EQUIPMENT - NET 297,779 296,005 ———- ———- $1,433,788 $1,804,428 ========== ========== LIABILITIES AND SHAREHOLDERS’ EQUITY CURRENT LIABILITIES Debt due within one year $750 $22,690 Accounts payable 117,504 123,713 Accrued liabilities 75,673 79,345 Accrued compensation and benefits 32,198 68,669 Income taxes payable 11,743 29,037 Other current liabilities 105,537 108,867 ——- ——- Total current liabilities 343,405 432,321 LONG-TERM DEBT 389,473 220,618 OTHER LIABILITIES 149,820 181,720 DEFERRED INCOME TAXES AND NONCURRENT INCOME TAXES PAYABLE 21,901 26,358 SHAREHOLDERS’ EQUITY Common shares - Class A 37,043 45,324 Common shares - Class B 3,499 3,434 Capital in excess of par value 449,085 445,696 Treasury stock (938,086) (872,949) Accumulated other comprehensive (loss) income (67,278) 21,244 Retained earnings 1,044,926 1,300,662 ———- ———- Total shareholders’ equity 529,189 943,411 ———- ———- $1,433,788 $1,804,428 ========== ==========

AMERICAN GREETINGS CORPORATION FOURTH QUARTER CONSOLIDATED STATEMENT OF CASH FLOWS FISCAL YEAR ENDED FEBRUARY 28, 2009 (In thousands of dollars) (Unaudited) Year Ended ———- February February 28, 29, 2009 2008 ——– ——– OPERATING ACTIVITIES: Net (loss) income $(227,759) $83,003 Loss from discontinued operations - 317 ——- —— (Loss) income from continuing operations (227,759) 83,320 Adjustments to reconcile (loss) income from continuing operations to cash flows from operating activities: Goodwill and other intangible assets impairment 290,166 - Net loss on disposal of fixed assets 1,215 961 Depreciation and intangible assets amortization 50,016 48,535 Deferred income taxes (29,438) (7,562) Other non-cash charges 13,735 9,303 Changes in operating assets and liabilities, net of acquisitions and dispositions: Trade accounts receivable (6,413) 41,758 Inventories 924 (28,456) Other current assets 17,986 27,970 Deferred costs - net 27,596 53,438 Accounts payable and other liabilities (67,542) 18,934 Other - net 2,554 (4,664) —— —— Total Cash Flows From Operating Activities 73,040 243,537 INVESTING ACTIVITIES: Proceeds from sale of short- term investments - 692,985 Purchases of short-term investments - (692,985) Property, plant and equipment additions (55,733) (56,623) Cash payments for business acquisitions, net of cash acquired (37,882) (76,338) Cash receipts related to discontinued operations - 4,283 Proceeds from sale of fixed assets 433 3,104 Other - net (44,153) - ——- ——- Total Cash Flows From Investing Activities (137,335) (125,574) FINANCING ACTIVITIES: Increase in long-term debt 141,500 20,100 Reduction of long-term debt (22,509) - Sale of stock under benefit plans 525 27,156 Purchase of treasury shares (73,983) (172,328) Dividends to shareholders (22,566) (21,803) ——- ——- Total Cash Flows From Financing Activities 22,967 (146,875) DISCONTINUED OPERATIONS: Operating cash flows from discontinued operations - (59) ——- ——- Total Cash Flows from Discontinued Operations - (59) EFFECT OF EXCHANGE RATE CHANGES ON CASH (21,956) 7,758 ——- ——- DECREASE IN CASH AND CASH EQUIVALENTS (63,284) (21,213) Cash and Cash Equivalents at Beginning of Year 123,500 144,713 ——- ——- Cash and Cash Equivalents at End of Year $60,216 $123,500 ======= ========

AMERICAN GREETINGS CORPORATION FOURTH QUARTER CONSOLIDATED SEGMENT DISCLOSURES FISCAL YEAR ENDED FEBRUARY 28, 2009 (In thousands of dollars) (Unaudited) Quarter Ended Year Ended ————- ———- February February February February 28, 29, 28, 29, 2009 2008 2009 2008 ——– ——– ——– ——– Total Revenue: North American Social Expression Products $272,595 $286,948 $1,159,162 $1,187,520 Intersegment items (9,136) (13,788) (57,547) (57,210) Exchange rate adjustment (4,281) 1,178 (6,167) (668) ——- ——- ——— ——— Net 259,178 274,338 1,095,448 1,129,642 International Social Expression Products 77,401 92,520 299,830 307,959 Exchange rate adjustment (19,526) 1,200 (29,103) 3,367 ——- —— ——- ——- Net 57,875 93,720 270,727 311,326 Retail Operations 64,879 77,348 183,913 198,271 Exchange rate adjustment (3,813) 605 (5,101) (922) —— —— —— ——- Net 61,066 77,953 178,812 197,349 AG Interactive 21,756 22,690 84,254 78,652 Exchange rate adjustment (551) 62 (841) 63 —— —— —— —— Net 21,205 22,752 83,413 78,715 Non-reportable segments 23,195 24,522 62,338 59,356 Unallocated - (52) - 63 ——– ——– ———- ———- $422,519 $493,233 $1,690,738 $1,776,451 ======== ======== ========== ========== Segment (Loss) Earnings: North American Social Expression Products $(22,160) $23,417 $114,395 $220,285 Intersegment items (6,821) (10,304) (42,535) (42,953) Exchange rate adjustment (732) 670 (1,909) (104) —— —— —— ——- Net (29,713) 13,783 69,951 177,228 International Social Expression Products (1,866) 11,569 (81,616) 24,223 Exchange rate adjustment (855) 233 3,947 513 —— —— —— —— Net (2,721) 11,802 (77,669) 24,736 Retail Operations 549 11,372 (19,123) (3,772) Exchange rate adjustment (148) (10) (108) 119 —- —— —— —– Net 401 11,362 (19,231) (3,653) AG Interactive (259) (1,909) (161,503) 6,755 Exchange rate adjustment (318) (301) (188) (300) —- —– ——- —– Net (577) (2,210) (161,691) 6,455 Non-reportable segments (9,816) 1,181 (7,627) 3,779 Unallocated (24,473) (23,372) (76,590) (84,183) Exchange rate adjustment (968) 165 (2,076) (394) —— —— —— —— Net (25,441) (23,207) (78,666) (84,577) ——– ——- ——— ——– $(67,867) $12,711 $(274,933) $123,968 ======== ======= ========= ========

Source: American Greetings Corporation

Gregory M. Steinberg, Treasurer and Director of Investor Relations of American Greetings Corporation, +1-216-252-4864, investor.relations at amgreetings.com