First Quarter Results

For the first quarter of fiscal 2010, the Company reported total revenue of $412.9 million, pre-tax income of $16.9 million, and net income of $10.0 million or 25 cents per share (all per-share amounts assume dilution).

As previously announced, during the first quarter of fiscal 2010, American Greetings sold its retail store operations to Schurman Fine Papers ("Schurman"), which operates card and gift retail stores under the name Papyrus. American Greetings recognized a preliminary non-cash loss on the disposition, recorded within the Retail Operations segment, of $28.3 million (after-tax of approximately $17.4 million) that reduced earnings per share by approximately 44 cents during the quarter. At the time of the sale of the retail stores, American Greetings also purchased the wholesale division of Schurman which supplies Papyrus brand greeting cards primarily to leading specialty, mass, grocery and drug store channels and purchased a fifteen percent equity interest in Schurman.

For the first quarter of fiscal 2009, the Company reported total revenue of $428.3 million, pre-tax income of $19.2 million, and net income of $13.3 million or 27 cents per share.

Management Comments and Outlook

Chief Executive Officer Zev Weiss said, "I am very pleased with our performance this quarter. Specifically, sales of greeting cards increased primarily as a result of the additions of Recycled Paper Greetings and Papyrus as well as strength in our overall North American business despite weak economic conditions. We also realized improved margins as a result of our cost reduction activities last year and we will continue to focus on efficiencies this year. We currently anticipate cash flow from operating activities less capital expenditures to be greater than $70 million this fiscal year. We are diligently working through the integration planning processes for Recycled Paper Greetings, the acquired Papyrus wholesale business, and the transition of our former retail operations to Schurman Fine Papers."

Financing Activities

Under the Company's $75 million share repurchase program, during the first fiscal quarter the Company purchased approximately 1.1 million shares of its common stock for $4.3 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, 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 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.

Non-GAAP Measures

Certain after-tax amounts included in this earnings release may be considered non-GAAP measures in accordance with Regulation G and were calculated based on the Company's statutory tax rate of approximately 38.7%. Management believes that after-tax information is useful in analyzing the Company's results.

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 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.

AMERICAN GREETINGS CORPORATION

FIRST 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

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

May 29, 2009 May 30, 2008

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

Net sales $409,277 $425,463

Other revenue 3,645 2,837

----- -----

Total revenue 412,922 428,300

Material, labor and other

production costs 167,169 193,342

Selling, distribution and marketing

expenses 132,217 150,875

Administrative and general expenses 63,151 62,561

Other operating expense (income) - net 27,773 (727)

------ ----

Operating income 22,612 22,249

Interest expense 6,987 4,905

Interest income (276) (990)

Other non-operating income - net (1,042) (901)

------ ----

Income before income tax expense 16,943 19,235

Income tax expense 6,982 5,902

----- -----

Net income $9,961 $13,333

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Earnings per share - basic $0.25 $0.27

Earnings per share - assuming dilution $0.25 $0.27

Average number of common shares

outstanding 39,608,947 48,800,941

Average number of common shares

outstanding - assuming dilution 39,608,947 48,833,108

Dividends declared per share $ - $0.12

AMERICAN GREETINGS CORPORATION

FIRST QUARTER CONSOLIDATED STATEMENT OF FINANCIAL POSITION

FISCAL YEAR ENDING FEBRUARY 28, 2010

(In thousands of dollars)

(Unaudited)

-----------

May 29, 2009 May 30, 2008

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

ASSETS

CURRENT ASSETS

Cash and cash equivalents $87,611 $108,192

Trade accounts receivable, net 110,743 59,789

Inventories 181,425 211,125

Deferred and refundable income taxes 69,800 67,604

Assets held for sale 1,515 2,483

Prepaid expenses and other 153,374 183,865

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

Total current assets 604,468 633,058

GOODWILL 25,921 300,323

OTHER ASSETS 373,622 408,228

DEFERRED AND REFUNDABLE INCOME TAXES 168,391 133,118

Property, plant and equipment - at cost 890,173 980,376

Less accumulated depreciation 601,251 683,192

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

PROPERTY, PLANT AND EQUIPMENT - NET 288,922 297,184

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

$1,461,324 $1,771,911

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LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES

Debt due within one year $27,325 $35,835

Accounts payable 85,483 110,394

Accrued liabilities 73,852 73,281

Accrued compensation and benefits 37,274 39,582

Income taxes payable 2,937 23,348

Other current liabilities 108,864 117,160

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

Total current liabilities 335,735 399,600

LONG-TERM DEBT 409,455 235,541

OTHER LIABILITIES 125,668 157,610

DEFERRED INCOME TAXES AND

NONCURRENT INCOME TAXES PAYABLE 30,594 26,986

SHAREHOLDERS' EQUITY

Common shares - Class A 35,921 45,345

Common shares - Class B 3,497 3,495

Capital in excess of par value 450,059 446,075

Treasury stock (941,063) (871,379)

Accumulated other comprehensive

(loss) income (43,276) 20,746

Retained earnings 1,054,734 1,307,892

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

Total shareholders' equity 559,872 952,174

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

$1,461,324 $1,771,911

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AMERICAN GREETINGS CORPORATION

FIRST QUARTER CONSOLIDATED STATEMENT OF CASH FLOWS

FISCAL YEAR ENDING FEBRUARY 28, 2010

(In thousands of dollars)

(Unaudited)

Three Months Ended

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

May 29, 2009 May 30, 2008

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

OPERATING ACTIVITIES:

Net income $9,961 $13,333

Adjustments to reconcile net income to

cash flows from operating activities:

Loss on disposition of retail stores 28,333 -

Net loss on disposal of fixed assets 199 168

Depreciation and amortization 12,393 12,785

Deferred income taxes 17,158 5,459

Other non-cash charges 2,657 1,718

Changes in operating assets and liabilities,

net of acquisitions and dispositions:

Trade accounts receivable (43,770) 5,186

Inventories 12,360 6,495

Other current assets 11,942 1,260

Deferred costs - net (2,846) 1,253

Accounts payable and other liabilities (43,494) (57,606)

Other - net 3,836 (1,938)

----- ------

Total Cash Flows From Operating Activities 8,729 (11,887)

INVESTING ACTIVITIES:

Property, plant and equipment additions (8,909) (10,088)

Cash payments for business acquisitions,

net of cash acquired (16,286) (15,625)

Proceeds from sale of fixed assets 113 265

--- ---

Total Cash Flows From Investing

Activities (25,082) (25,448)

FINANCING ACTIVITIES:

Net increase in long-term debt 19,800 14,900

Net increase in short-term debt 26,325 13,145

Sale of stock under benefit plans 30 363

Purchase of treasury shares (5,877) (38)

Dividends to shareholders (4,865) (5,852)

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

Total Cash Flows From

Financing Activities 35,413 22,518

EFFECT OF EXCHANGE RATE CHANGES ON CASH 8,335 (491)

----- ----

INCREASE (DECREASE) IN CASH AND CASH

EQUIVALENTS 27,395 (15,308)

Cash and Cash Equivalents at

Beginning of Year 60,216 123,500

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

Cash and Cash Equivalents at

End of Period $87,611 $108,192

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AMERICAN GREETINGS CORPORATION

FIRST QUARTER CONSOLIDATED SEGMENT DISCLOSURES

FISCAL YEAR ENDING FEBRUARY 28, 2010

(In thousands of dollars)

(Unaudited)

Three Months Ended

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

May 29, 2009 May 30, 2008

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

Total Revenue:

North American Social

Expression Products $323,884 $298,177

Intersegment items (5,104) (13,306)

Exchange rate adjustment 299 3,416

--- -----

Net 319,079 288,287

International Social

Expression Products 47,006 47,914

Exchange rate adjustment 5,756 23,046

----- ------

Net 52,762 70,960

Retail Operations 11,727 38,477

Exchange rate adjustment 112 3,506

--- -----

Net 11,839 41,983

AG Interactive 18,634 19,899

Exchange rate adjustment 211 662

--- ---

Net 18,845 20,561

Non-reportable segments 10,397 6,509

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

$412,922 $428,300

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Segment Earnings (Loss):

North American Social

Expression Products $77,877 $52,183

Intersegment items (3,511) (10,177)

Exchange rate adjustment 190 505

--- ---

Net 74,556 42,511

International Social

Expression Products 333 1,773

Exchange rate adjustment 6 1,032

- -----

Net 339 2,805

Retail Operations (34,830) (3,351)

Exchange rate adjustment (285) (62)

---- ---

Net (35,115) (3,413)

AG Interactive 1,652 (1,335)

Exchange rate adjustment 62 274

-- ---

Net 1,714 (1,061)

Non-reportable segments (129) (1,966)

Unallocated (24,311) (19,695)

Exchange rate adjustment (111) 54

---- --

Net (24,422) (19,641)

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$16,943 $19,235

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