American Greetings Announces Improved First Quarter Results



    CLEVELAND, June 21 /CNW/ -- American Greetings Corporation (NYSE:   AM)
today announced its first quarter results for the fiscal quarter ended May 25,
2007.

    
    First Quarter Results
    
    For the first quarter of fiscal 2008, the Company reported net sales of
$418.0 million, pre-tax income from continuing operations of $54.9 million,
and income from continuing operations of $30.6 million or 55 cents per share
(all per-share amounts assume dilution).  For the first quarter of fiscal
2007, the Company reported net sales of $404.2 million, pre-tax income from
continuing operations of $19.4 million, and income from continuing operations
of $16.6 million or 26 cents per share.

    
    Management Comments and Outlook
    
    Chief Executive Officer Zev Weiss said, "I am pleased with our
performance this quarter as it was ahead of our expectations.  We had improved
performance of everyday cards within North America.  Our first quarter results
suggest that the improved performance is the result of the actions we have
taken over the past year."
    Weiss also reaffirmed the Corporation's previously announced estimate of
earnings per share from continuing operations to be between $1.35 to $1.55 per
share.  "While I am happy with our first quarter results, it is still early in
the year and as such, we remain comfortable with our earnings guidance for the
full year," added Weiss.

    
    Financing Activities
    
    The Company purchased 135,000 shares of its common stock, under its $100
million share repurchase program, for $3.4 million during the first quarter of
fiscal 2008.  Since February 2005, the Company has repurchased 21.5 million of
its shares for approximately $500 million.
    The Company's Board of Directors is scheduled to meet June 22, 2007 at
which time it will review the Company's quarterly cash dividend.  The Board of
Directors is expected to maintain the Company's dividend policy.  After the
Board has met, a press release will be issued regarding the status of the
dividend.

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

    
    About American Greetings Corporation
    
    American Greetings Corporation (NYSE:   AM) is one of the world's largest
manufacturers of social expression products.  Along with greeting cards, its
product lines include gift wrap, party goods, stationery, calendars, ornaments
and electronic greetings.  Located in Cleveland, Ohio, American Greetings
generates annual net sales of approximately $1.7 billion.  For more
information on the Company, visit http://corporate.americangreetings.com.

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

    
    -- retail consolidations, acquisitions and bankruptcies, including the
       possibility of resulting adverse changes to retail contract terms;
    -- the Company's ability to successfully implement its strategy to invest
       in its core greeting card business;
    -- the timing and impact of investments in new retail or product
       strategies as well as new product introductions and achieving the
       desired benefits from those investments;
    -- the ability to execute share repurchase programs or the ability to
       achieve the desired accretive effect from such repurchases;
    -- the Company's ability to successfully complete, or achieve the desired
       benefits associated with, dispositions;
    -- a weak retail environment;
    -- consumer acceptance of products as priced and marketed;
    -- the impact of technology on core product sales;
    -- competitive terms of sale offered to customers;
    -- successful implementation of supply chain improvements and achievement
       of projected cost savings from those improvements;
    -- increases in the cost of material, energy, freight, and other
       production costs;
    -- the Company's ability to comply with its debt covenants;
    -- fluctuations in the value of currencies in major areas where the
       Company operates, including the U.S. Dollar, Euro, U.K. Pound Sterling,
       and Canadian Dollar;
    -- escalation in the cost of providing employee health care;
    -- successful integration of acquisitions; and
    -- the outcome of any legal claims known or unknown.
    

    Risks pertaining specifically to AG Interactive include the viability of
online advertising, subscriptions as revenue generators and the public's
acceptance of online greetings and other social expression products.
    In addition, this release contains time-sensitive information that
reflects management's best analysis as of the date of this release. American
Greetings does not undertake any obligation to publicly update or revise any
forward-looking statements to reflect future events, information or
circumstances that arise after the date of this release. Further information
concerning issues that could materially affect financial performance related
to forward-looking statements can be found in the Company's periodic filings
with the Securities and Exchange Commission, including the "Risk Factors"
section of the Company's Annual Report on Form 10-K for the fiscal year ended
February 28, 2007.



    
                        AMERICAN GREETINGS CORPORATION
                FIRST QUARTER CONSOLIDATED STATEMENT OF INCOME
                     FISCAL YEAR ENDING FEBRUARY 29, 2008

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

                                                      (Unaudited)
                                                   Three Months Ended
                                             -------------------------------
                                              May 25, 2007     May 26, 2006
                                             --------------   --------------
    Net sales                                  $   418,013      $   404,170

    Costs and expenses:
      Material, labor and other
       production costs                            161,128          175,237
      Selling, distribution and marketing          140,691          142,580
      Administrative and general                    61,871           61,348
      Interest expense                               4,757           12,464
      Other income - net                            (5,347)          (6,860)
                                             --------------   --------------
                                                   363,100          384,769
                                             --------------   --------------
    Income from continuing operations
     before income tax expense                      54,913           19,401
    Income tax expense                              24,291            2,851
                                             --------------   --------------
    Income from continuing operations               30,622           16,550

    Loss from discontinued operations,
     net of tax                                       (572)          (1,158)
                                             --------------   --------------
    Net income                                 $    30,050      $    15,392
                                             ==============   ==============
    Earnings per share - basic:
      Income from continuing operations        $      0.55      $      0.28
      Loss from discontinued operations              (0.01)           (0.02)
                                             --------------   --------------
      Net income                               $      0.54      $      0.26
                                             ==============   ==============
    Earnings per share - assuming dilution:
      Income from continuing operations        $      0.55      $      0.26
      Loss from discontinued operations              (0.01)           (0.02)
                                             --------------   --------------
      Net income                               $      0.54      $      0.24
                                             ==============   ==============

    Average number of common shares
     outstanding                                55,262,716       58,137,230

    Average number of common shares
     outstanding - assuming dilution            55,650,033       71,077,312

    Dividends declared per share               $      0.10      $      0.08



                        AMERICAN GREETINGS CORPORATION
          FIRST QUARTER CONSOLIDATED STATEMENT OF FINANCIAL POSITION
                     FISCAL YEAR ENDING FEBRUARY 29, 2008

                          (In thousands of dollars)
                                                      (Unaudited)
                                             -------------------------------
                                              May 25, 2007     May 26, 2006
                                             --------------   --------------
    ASSETS
    CURRENT ASSETS
      Cash and cash equivalents                $   132,582      $   205,468
      Short-term investments                        28,325           83,100
      Trade accounts receivable, net               119,145          119,729
      Inventories                                  192,399          233,155
      Deferred and refundable income taxes          76,892          163,051
      Assets of businesses held for sale             2,507           23,621
      Prepaid expenses and other                   215,867          211,354
                                             --------------   --------------
        Total current assets                       767,717        1,039,478

    GOODWILL                                       225,318          206,137
    OTHER ASSETS                                   397,567          527,630
    DEFERRED AND REFUNDABLE INCOME TAXES           102,060               --

    Property, plant and equipment - at cost        947,156          965,588
    Less accumulated depreciation                  666,651          661,383
                                             --------------   --------------
    PROPERTY, PLANT AND EQUIPMENT - NET            280,505          304,205
                                             --------------   --------------
                                               $ 1,773,167      $ 2,077,450
                                             ==============   ==============
    LIABILITIES AND SHAREHOLDERS' EQUITY
    CURRENT LIABILITIES
      Debt due within one year                 $        --      $   159,122
      Accounts payable                             100,914          124,789
      Accrued liabilities                           77,837           72,781
      Accrued compensation and benefits             43,656           45,056
      Income taxes                                  29,878           25,228
      Liabilities of businesses held for
       sale                                          1,253            3,697
      Other current liabilities                     84,622           94,324
                                             --------------   --------------
        Total current liabilities                  338,160          524,997

    LONG-TERM DEBT                                 223,800          239,838
    OTHER LIABILITIES                              146,384           98,729
    DEFERRED INCOME TAXES AND
     NONCURRENT INCOME TAXES PAYABLE                27,184           25,041

    SHAREHOLDERS' EQUITY
      Common shares - Class A                       51,148           53,386
      Common shares - Class B                        4,340            4,225
      Capital in excess of par value               424,201          401,644
      Treasury stock                              (712,147)        (732,890)
      Accumulated other comprehensive
       income                                        6,030           23,952
      Retained earnings                          1,264,067        1,438,528
                                             --------------   --------------
        Total shareholders' equity               1,037,639        1,188,845
                                             --------------   --------------
                                               $ 1,773,167      $ 2,077,450
                                             ==============   ==============



                        AMERICAN GREETINGS CORPORATION
              FIRST QUARTER CONSOLIDATED STATEMENT OF CASH FLOWS
                     FISCAL YEAR ENDING FEBRUARY 29, 2008
                          (In thousands of dollars)

                                                      (Unaudited)
                                                   Three Months Ended
                                             -------------------------------
                                              May 25, 2007     May 26, 2006
                                             -------------   ---------------
    OPERATING ACTIVITIES:
      Net income                               $    30,050      $    15,392
      Loss from discontinued operations                572            1,158
                                             --------------    -------------
      Income from continuing operations             30,622           16,550
      Adjustments to reconcile to net cash
       provided by operating activities:
        Net gain on disposal of fixed assets          (116)             (79)
        Loss on extinguishment of debt                  --            4,963
        Depreciation and amortization               11,989           11,764
        Deferred income taxes                        4,466           (1,934)
        Other non-cash charges                       1,979            3,926
        Changes in operating assets and
         liabilities, net of acquisitions
         and dispositions:
          (Increase) decrease in trade
           accounts receivable                     (14,750)          22,579
          Increase in inventories                   (7,389)         (17,313)
          Decrease (increase) in other
           current assets                              646           (8,708)
          Decrease in deferred costs - net          11,691           12,722
          Decrease in accounts payable and
           other liabilities                       (21,753)         (24,245)
          Other - net                                4,236            5,575
                                             --------------    -------------
          Cash Provided by Operating
           Activities                               21,621           25,800

    INVESTING ACTIVITIES:
      Proceeds from sale of short-term
       investments                                 134,900          448,320
      Purchases of short-term investments         (163,225)        (322,680)
      Property, plant and equipment
       additions                                    (5,875)          (9,591)
      Cash payments for business
       acquisitions, net of cash acquired           (6,056)              --
      Cash receipts related to
       discontinued operations                       2,344               --
      Proceeds from sale of fixed assets               890              182
                                             --------------    -------------
          Cash (Used) Provided by
           Investing Activities                    (37,022)         116,231

    FINANCING ACTIVITIES:
      Increase in long-term debt                        --          200,000
      Reduction of long-term debt                       --         (281,363)
      Sale of stock under benefit plans              9,358            1,052
      Purchase of treasury shares                   (3,568)         (59,529)
      Dividends to shareholders                     (5,536)          (4,605)
      Debt issuance costs                               --           (7,276)
                                             --------------    -------------
        Cash Provided (Used) by Financing
         Activities                                    254         (151,721)

    DISCONTINUED OPERATIONS:
      Cash used by operating activities
       from discontinued operations                   (542)          (2,540)
      Cash provided by investing
       activities from discontinued
       operations                                       --            1,644
                                             --------------    -------------
        Cash Used by Discontinued
         Operations                                   (542)            (896)

    EFFECT OF EXCHANGE RATE CHANGES ON
     CASH                                            3,558            2,441
                                             --------------    -------------
    DECREASE IN CASH AND CASH EQUIVALENTS          (12,131)          (8,145)

        Cash and Cash Equivalents at
         Beginning of Year                         144,713          213,613
                                             --------------    -------------
        Cash and Cash Equivalents at End
         of Period                             $   132,582      $   205,468
                                             ==============    =============



                        AMERICAN GREETINGS CORPORATION
                FIRST QUARTER CONSOLIDATED SEGMENT DISCLOSURES
                     FISCAL YEAR ENDING FEBRUARY 29, 2008
                          (In thousands of dollars)

                                                      (Unaudited)
                                                   Three Months Ended
                                             -------------------------------
                                              May 25, 2007     May 26, 2006
                                             --------------   --------------
    Net Sales:
    North American Social Expression
     Products                                  $   297,066      $   292,950
    Intersegment items                              (8,167)         (17,548)
    Exchange rate adjustment                             5              (63)
                                             --------------   --------------
    Net                                            288,904          275,339

    International Social Expression
     Products                                       59,145           63,865
    Exchange rate adjustment                         4,057           (2,251)
                                             --------------   --------------
    Net                                             63,202           61,614

    Retail Operations                               38,924           43,501
    Exchange rate adjustment                             4              (62)
                                             --------------   --------------
    Net                                             38,928           43,439

    AG Interactive                                  19,894           19,960
    Exchange rate adjustment                             3                5
                                             --------------   --------------
    Net                                             19,897           19,965

    Non-reportable segments                          7,082            3,813
                                             --------------   --------------
    Consolidated                               $   418,013      $   404,170
                                             ==============   ==============

    Segment Earnings (Loss):
    North American Social Expression
     Products                                  $    86,940      $    68,161
    Intersegment items                              (6,255)         (12,910)
    Exchange rate adjustment                             5              (33)
                                             --------------   --------------
    Net                                             80,690           55,218

    International Social Expression
     Products                                           40              497
    Exchange rate adjustment                           147               46
                                             --------------   --------------
    Net                                                187              543

    Retail Operations                               (2,781)          (7,301)
    Exchange rate adjustment                            --                2
                                             --------------   --------------
    Net                                             (2,781)          (7,299)

    AG Interactive                                   3,296            2,041
    Exchange rate adjustment                            (9)              (1)
                                             --------------   --------------
    Net                                              3,287            2,040

    Non-reportable segments                            927           (2,095)

    Unallocated                                    (27,393)         (28,906)
    Exchange rate adjustment                            (4)            (100)
                                             --------------   --------------
    Net                                            (27,397)         (29,006)
                                             --------------   --------------
    Consolidated                               $    54,913      $    19,401
                                             ==============   ==============

    




For further information:

For further information: Gregory M. Steinberg, Treasurer and Director of
 Investor Relations of American Greetings Corporation, +1-216-252-4864, or 
investor.relations@amgreetings.com Web Site:
http://corporate.americangreetings.com                 
http://investors.americangreetings.com

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