American Greetings Announces Significantly Improved Fourth Quarter Earnings


    
    - Earnings significantly improve over prior year

    - Cash flow exceeds enhanced expectations

    - Fiscal 2011 cash flow forecast provided







    
</pre>
<p><span class="xn-location">CLEVELAND</span>, <span class="xn-chron">April 22</span> /CNW/ -- American Greetings Corporation (NYSE:   AM) today announced its financial results for both the fourth fiscal quarter and fiscal year ended <span class="xn-chron">February 28, 2010</span>.</p>
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    Fourth Quarter Results
    
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<p>For the fourth quarter of fiscal 2010, the Company reported total revenue of <span class="xn-money">$426.4 million</span>, pre-tax income of <span class="xn-money">$31.8 million</span>, and net income of <span class="xn-money">$18.8 million</span> or 46 cents per share (all per-share amounts assume dilution).  The Company recorded pre-tax costs of <span class="xn-money">$12.3 million</span> (after-tax of approximately <span class="xn-money">$8.6 million</span>, reducing earnings per share by about 21 cents) related to the previously announced wind down of its operations in <span class="xn-location">Mexico</span>.  Other pre-tax costs included <span class="xn-money">$19.0 million</span> for the settlement of a lawsuit (after-tax of about <span class="xn-money">$11.6 million</span>, reducing earnings per share by about 29 cents) and <span class="xn-money">$5.9 million</span> for severance (after-tax of about <span class="xn-money">$3.6 million</span>, reducing earnings per share by about 9 cents). These costs were partially offset by a <span class="xn-money">$21.2 million</span> pre-tax net benefit from the previously announced party goods transaction (after-tax of about <span class="xn-money">$12.9 million</span>, increasing earnings per share by about 33 cents).  The <span class="xn-money">$21.2 million</span> net benefit included a <span class="xn-money">$34.2 million</span> gain and <span class="xn-money">$13.0 million</span> of impairments related to the exit of the party goods manufacturing facility.  The Company also recognized a <span class="xn-money">$3.3 million</span> pre-tax gain related to the liquidation of a business in <span class="xn-location">France</span> (the after-tax amount was also about <span class="xn-money">$3.3 million</span>, increasing earnings per share by about 8 cents).</p>
<p/>
<p>For the fourth quarter of fiscal 2009, the Company reported total revenue of <span class="xn-money">$422.5 million</span>, a pre-tax loss from continuing operations of <span class="xn-money">$67.9 million</span>, and a net loss of <span class="xn-money">$50.1 million</span> or <span class="xn-money">$1.13</span> per share.  During the fourth quarter of fiscal 2009, the Company recognized pre-tax goodwill impairment charges of <span class="xn-money">$47.3 million</span> (after-tax of approximately <span class="xn-money">$42.6 million</span> that reduced earnings per share by 97 cents).  In addition, the Company recognized atypical expenses in its licensing business of <span class="xn-money">$16.4 million</span> (after-tax of approximately <span class="xn-money">$10.0 million</span> reducing earnings per share by 23 cents).  The Company also recognized a pre-tax severance charge of <span class="xn-money">$7.5 million</span> (after-tax of about <span class="xn-money">$4.6 million</span>, decreasing earnings per share by about 10 cents).</p>
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    Full Year Results
    
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<p>For the full year fiscal 2010, the Company reported total revenue of <span class="xn-money">$1,635.9 million</span>, pre-tax income of <span class="xn-money">$121.0 million</span>, and net income of <span class="xn-money">$81.6 million</span> or <span class="xn-money">$2.03</span> per share.  The Company recorded costs of approximately <span class="xn-money">$18.2 million</span> (after-tax of approximately <span class="xn-money">$6.5 million</span> reducing earnings per share by approximately 16 cents) related to the previously announced wind down of its operations in <span class="xn-location">Mexico</span>.  The Company also incurred a <span class="xn-money">$24.0 million</span> pre-tax charge for the settlement of a lawsuit (after-tax of about <span class="xn-money">$14.7 million</span>, reducing earnings per share by about 37 cents), pre-tax severance expense of <span class="xn-money">$9.4 million</span> (after-tax of about <span class="xn-money">$5.8 million</span>, reducing earnings per share about 14 cents) and a <span class="xn-money">$28.3 million</span> pre-tax charge related to the divestiture of our retail business earlier in the year (after-tax of about <span class="xn-money">$17.3 million</span>, reducing earnings per share approximately by 43 cents).  These costs were partially offset by a  <span class="xn-money">$21.2 million</span> pre-tax net benefit related to the party goods transaction (after-tax of about <span class="xn-money">$12.9 million</span>, increasing earnings per share by about 33 cents), a <span class="xn-money">$3.3 million</span> pre-tax gain related to the liquidation of a business in <span class="xn-location">France</span> (the after-tax amount was also about <span class="xn-money">$3.3 million</span>, increasing earnings per share by about 8 cents) and a <span class="xn-money">$7.9 million</span> pre-tax benefit associated with a legacy insurance program (after-tax of about <span class="xn-money">$7.6 million</span>, increasing earnings per share about 19 cents).</p>
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    Management Comments and Outlook
    
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<p>Chief Executive Officer Zev Weiss said, "I am delighted with our fourth quarter performance as it was the culmination of a successful year.  During the year, we made both strategic and operational changes that improved our business model.  Our portfolio changes as well as our operational execution, including our innovation in product content, have been large factors driving improved cash flow.  We were able to generate cash flow from operations minus capital expenditures of <span class="xn-money">$171 million</span>, which exceeded our expectations.  We could not have achieved these results without the unrelenting effort of all our associates and I am grateful for their commitment."</p>
<p/>
<p>For fiscal 2011, the Company expects revenue to decline approximately 1% to 2% compared to fiscal 2010.  The decline is driven by the expectation of reduced sales of party goods products as a result of the transaction announced in <span class="xn-chron">December 2009</span>.  The Company expects cash flow from operating activities of about <span class="xn-money">$165 million</span> and capital expenditures of approximately <span class="xn-money">$40 million</span> resulting in cash flow from operating activities minus capital expenditures to be around <span class="xn-money">$125 million</span>.</p>
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    Conference Call on the Web
    
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<p>American Greetings will broadcast its conference call live on the Internet at <span class="xn-chron">9:00 a.m. Eastern time</span> today.  The conference call will be accessible through the Investor Relations section of the American Greetings Web site at <a href="http://investors.americangreetings.com">http://investors.americangreetings.com</a>.  A replay of the call will be available on the site.</p>
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    About American Greetings Corporation
    
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<p>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 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 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 <span class="xn-location">Cleveland</span>, Ohio, American Greetings generates annual revenue of approximately <span class="xn-money">$1.6 billion</span>, and its products can be found in retail outlets worldwide.  For more information on the Company, visit <a href="http://corporate.americangreetings.com">http://corporate.americangreetings.com</a>.</p>
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    Non-GAAP Measures
    
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<p>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% for U.S. based items (other than cumulative currency translation adjustments, for which a 0% tax rate is applied) and the appropriate rates for international jurisdictions.  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.</p>
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    Factors That May Affect Future Results
    
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<p>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:</p>
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    1. a weak retail environment and general economic conditions;
    2. the ability to achieve both the desired benefits from the transaction
       with Amscan as well as ensuring a seamless transition for affected
       retail customers and consumers;
    3. the ability to successfully integrate acquisitions, including the
recent
       acquisitions of Recycled Paper Greetings and Papyrus;
    4. the Company's ability to successfully complete the sale of the
       Strawberry Shortcake and Care Bears properties;
    5. the Company's successful transition of the Retail Operations segment to
       its buyer, Schurman Fine Papers, and Schurman Fine Papers' ability to
       successfully operate its retail operations and satisfy its obligations
       to the Company;
    6. retail consolidations, acquisitions and bankruptcies, including the
       possibility of resulting adverse changes to retail contract terms;
    7. the ability to achieve the desired benefits associated with it's the
       Company's cost reduction efforts;
    8. competitive terms of sale offered to customers;
    9. the Company's ability to comply with its debt covenants and to
refinance
       its debt on acceptable terms as the debt instruments mature;
    10. 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;
    11. consumer acceptance of products as priced and marketed;
    12. the impact of technology on core product sales;
    13. the timing and impact of converting customers to a scan-based trading
        model;
    14. escalation in the cost of providing employee health care;
    15. the ability to successfully implement, or achieve the desired benefits
        associated with, any information systems refresh the Company may
        implement;
    16. the Company's ability to achieve the desired accretive effect from any
        share repurchase programs;
    17. 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
    18. the outcome of any legal claims known or unknown.
    
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<p>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.</p>
<p/>
<p>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.</p>
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<p> </p>
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                              AMERICAN GREETINGS CORPORATION
                    FOURTH QUARTER CONSOLIDATED STATEMENT OF OPERATIONS
                            FISCAL YEAR ENDED FEBRUARY 28, 2010
    
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<p> </p>
<p>           (In thousands of dollars except share and per share amounts)</p>
<p> </p>
<p> </p>
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                                         (Unaudited)
                                              Quarter Ended
                                              -------------
                                        February        February
                                        28, 2010        28, 2009
                                       ---------       ---------
    
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<p> </p>
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    Net sales                            $408,864        $403,467
    Other revenue                          17,556          19,052
                                           ------          ------
    Total revenue                         426,420         422,519
    
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<p> </p>
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    Material, labor and other
     production costs                     187,661         223,288
    Selling, distribution and
     marketing expenses                   134,045         153,818
    Administrative and general
     expenses                              95,164          55,753
    Goodwill and other intangible
     assets impairment                          -          47,277
    Other operating income - net          (26,111)            (67)
                                          -------             ---
    
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<p> </p>
<p>Operating income (loss)                35,661         (57,550)</p>
<p> </p>
<pre>
    
    Interest expense                        6,322           5,881
    Interest income                          (112)           (447)
    Other non-operating (income)
     expense - net                         (2,327)          4,883
                                           ------           -----
    
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<p> </p>
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    Income (loss) before income tax
     expense (benefit)                     31,778         (67,867)
    Income tax expense (benefit)           12,982         (17,789)
                                           ------         -------
    
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<p> </p>
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    Net income (loss)                     $18,796        $(50,078)
                                          =======        ========
    
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<p> </p>
<p> </p>
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    Earnings (loss) per share -
     basic                                  $0.48          $(1.13)
    
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<p> </p>
<p> </p>
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    Earnings (loss) per share -
     assuming dilution                      $0.46          $(1.13)
    
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<p> </p>
<p> </p>
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    Average number of common shares
     outstanding                       39,463,368      44,144,203
    
</pre>
<p> </p>
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    Average number of common shares
     outstanding -
      assuming dilution                40,445,332      44,144,203
    
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<p> </p>
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    Dividends declared per share            $0.12           $0.24



    
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<p> </p>
<p> </p>
<p> </p>
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                                          (Unaudited)
                                                  Year Ended
                                                  ----------
                                           February       February
                                           28, 2010       28, 2009
                                          ---------      ---------
    
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<p> </p>
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    Net sales                             $1,598,292     $1,646,399
    Other revenue                             37,566         44,339
                                              ------         ------
    Total revenue                          1,635,858      1,690,738
    
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<p> </p>
<pre>
    
    Material, labor and other
     production costs                        713,075        809,956
    Selling, distribution and
     marketing expenses                      507,960        618,899
    Administrative and general
     expenses                                276,031        226,317
    Goodwill and other intangible
     assets impairment                             -        290,166
    Other operating income - net                (310)        (1,396)
                                                ----         ------
    
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<p> </p>
<p>Operating income (loss)                  139,102       (253,204)</p>
<p> </p>
<pre>
    
    Interest expense                          26,311         22,854
    Interest income                           (1,676)        (3,282)
    Other non-operating (income)
     expense - net                            (6,487)         2,157
                                              ------          -----
    
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<p> </p>
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    Income (loss) before income tax
     expense (benefit)                       120,954       (274,933)
    Income tax expense (benefit)              39,380        (47,174)
                                              ------        -------
    
</pre>
<p> </p>
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    Net income (loss)                        $81,574      $(227,759)
                                             =======      =========
    
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<p> </p>
<p> </p>
<pre>
    
    Earnings (loss) per share -
     basic                                     $2.07         $(4.89)
    
</pre>
<p> </p>
<p> </p>
<pre>
    
    Earnings (loss) per share -
     assuming dilution                         $2.03         $(4.89)
    
</pre>
<p> </p>
<p> </p>
<pre>
    
    Average number of common shares
     outstanding                          39,467,811     46,543,780
    
</pre>
<p> </p>
<pre>
    
    Average number of common shares
     outstanding -
      assuming dilution                   40,159,651     46,543,780
    
</pre>
<p> </p>
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    Dividends declared per share               $0.36          $0.60




    
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<p> </p>
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                    AMERICAN GREETINGS CORPORATION
     FOURTH QUARTER CONSOLIDATED STATEMENT OF FINANCIAL POSITION
                 FISCAL YEAR ENDED FEBRUARY 28, 2010
    
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<p> </p>
<p> </p>
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                         (In thousands of dollars)
                                                  (Unaudited)
                                                  -----------
                                        February 28,      February 28,
                                            2010              2009
                                       -------------     -------------
    
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<p> </p>
<pre>
    
    ASSETS
    CURRENT ASSETS
      Cash and cash equivalents             $137,949           $60,216
      Trade accounts receivable, net         135,758            77,703
      Inventories                            163,956           194,945
      Deferred and refundable income
       taxes                                  78,433            67,267
      Assets held for sale                    13,280            23,627
      Prepaid expenses and other             148,048           162,125
                                             -------           -------
        Total current assets                 677,424           585,883
    
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<p> </p>
<pre>
    
    GOODWILL                                  31,106            26,871
    OTHER ASSETS                             428,160           376,665
    DEFERRED AND REFUNDABLE INCOME
     TAXES                                   148,210           183,066
    
</pre>
<p> </p>
<pre>
    
    Property, plant and equipment -
     at cost                                 840,696           922,613
    Less accumulated depreciation            595,945           647,049
                                             -------           -------
    PROPERTY, PLANT AND EQUIPMENT -
     NET                                     244,751           275,564
                                             -------           -------
                                          $1,529,651        $1,448,049
                                          ==========        ==========
    
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<p> </p>
<p> </p>
<pre>
    
    LIABILITIES AND SHAREHOLDERS'
     EQUITY
    CURRENT LIABILITIES
      Debt due within one year                $1,000              $750
      Accounts payable                        95,434           117,504
      Accrued liabilities                     79,478            90,236
      Accrued compensation and
       benefits                               85,092            32,198
      Income taxes payable                    13,901            11,743
      Other current liabilities               97,138           105,537
                                              ------           -------
        Total current liabilities            372,043           357,968
    
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<p> </p>
<pre>
    
    LONG-TERM DEBT                           328,723           389,473
    OTHER LIABILITIES                        164,642           149,820
    DEFERRED INCOME TAXES AND
      NONCURRENT INCOME TAXES PAYABLE         28,179            21,599
    
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<p> </p>
<pre>
    
    SHAREHOLDERS' EQUITY
      Common shares - Class A                 36,257            37,043
      Common shares - Class B                  3,223             3,499
      Capital in excess of par value         461,076           449,085
      Treasury stock                        (946,724)         (938,086)
      Accumulated other comprehensive
       loss                                  (29,815)          (67,278)
      Retained earnings                    1,112,047         1,044,926
                                           ---------         ---------
        Total shareholders' equity           636,064           529,189
                                             -------           -------
                                          $1,529,651        $1,448,049
                                          ==========        ==========




    
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<p> </p>
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                        AMERICAN GREETINGS CORPORATION
              FOURTH QUARTER CONSOLIDATED STATEMENT OF CASH FLOWS
                      FISCAL YEAR ENDED FEBRUARY 28, 2010
                           (In thousands of dollars)
    
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<p> </p>
<p> </p>
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                                                  (Unaudited)
                                                   Year Ended
                                                   ----------
                                        February 28,      February 28,
                                            2010              2009
                                       -------------     -------------
    
</pre>
<p> </p>
<pre>
    
    OPERATING ACTIVITIES:
      Net income (loss)                      $81,574         $(227,759)
      Adjustments to reconcile net
       income (loss)
          to cash flows from operating
           activities:
        Goodwill and other intangible
         assets impairment                         -           290,166
        Net gain on dispositions              (6,507)                -
        Net loss on disposal of fixed
         assets                                   59             1,215
        Depreciation and intangible
         assets amortization                  45,165            50,016
        Deferred income taxes                 25,268           (29,438)
        Fixed assets impairment               13,005             5,465
        Other non-cash charges                18,289             8,270
        Changes in operating assets
         and liabilities,
              net of acquisitions and
               dispositions:
          Trade accounts receivable          (56,105)           (6,504)
          Inventories                         14,923             2,877
          Other current assets                16,962            17,585
          Deferred costs - net                18,405            27,596
          Accounts payable and other
           liabilities                        14,193           (67,542)
          Other - net                         12,259             1,093
                                              ------             -----
        Total Cash Flows From
         Operating Activities                197,490            73,040
    
</pre>
<p> </p>
<pre>
    
    INVESTING ACTIVITIES:
      Property, plant and equipment
       additions                             (26,550)          (55,733)
      Cash payments for business
       acquisitions, net of cash
       acquired                              (19,300)          (37,882)
      Proceeds from sale of fixed
       assets                                  1,124               433
      Other - net                              4,713           (44,153)
                                               -----           -------
        Total Cash Flows From
         Investing Activities                (40,013)         (137,335)
    
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<p> </p>
<pre>
    
    FINANCING ACTIVITIES:
      Net (decrease) increase in
       long-term debt                        (62,350)          118,991
      Sale of stock under benefit
       plans                                   6,705               525
      Purchase of treasury shares            (11,848)          (73,983)
      Dividends to shareholders              (19,049)          (22,566)
                                             -------           -------
        Total Cash Flows From
         Financing Activities                (86,542)           22,967
    
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<p> </p>
<pre>
    
    EFFECT OF EXCHANGE RATE
     CHANGES ON CASH                           6,798           (21,956)
                                               -----           -------
    
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<p> </p>
<pre>
    
    INCREASE (DECREASE) IN CASH
     AND CASH EQUIVALENTS                     77,733           (63,284)
    
</pre>
<p> </p>
<pre>
    
        Cash and Cash Equivalents at
         Beginning of Year                    60,216           123,500
                                              ------           -------
        Cash and Cash Equivalents at
         End of Year                        $137,949           $60,216
                                            ========           =======




    
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<p> </p>
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                                  AMERICAN GREETINGS CORPORATION
                         FOURTH QUARTER CONSOLIDATED SEGMENT DISCLOSURES
                               FISCAL YEAR ENDED FEBRUARY 28, 2010
                                    (In thousands of dollars)
    
</pre>
<p> </p>
<p>                                                         (Unaudited)</p>
<p> </p>
<pre>
    
                                      Quarter Ended
                                      -------------
                            February 28,        February 28,
                                2010                2009
                           -------------       -------------
    Total Revenue:
    North American
     Social
      Expression Products       $311,079            $267,449
    Intersegment items                 -              (8,325)
    Exchange rate
     adjustment                    3,462                  54
                                   -----                 ---
    Net                          314,541             259,178
    
</pre>
<p> </p>
<pre>
    
    International
     Social
      Expression Products         55,148              53,083
    Exchange rate
     adjustment                   12,674               4,792
                                  ------               -----
    Net                           67,822              57,875
    
</pre>
<p> </p>
<pre>
    
    Retail Operations                  -              60,237
    Exchange rate
     adjustment                        -                 829
                                     ---                 ---
    Net                                -              61,066
    
</pre>
<p> </p>
<pre>
    
    AG Interactive                23,176              21,050
    Exchange rate
     adjustment                      451                 155
                                     ---                 ---
    Net                           23,627              21,205
    
</pre>
<p> </p>
<pre>
    
    Non-reportable
     segments                     20,429              23,195
    
</pre>
<p> </p>
<p>Unallocated                        1                   -</p>
<p> </p>
<pre>
    
                                $426,420            $422,519
                                ========            ========
    
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<p> </p>
<p> </p>
<pre>
    
    Segment Earnings
     (Loss):
    North American
     Social
      Expression Products        $69,545            $(24,539)
    Intersegment items                 -              (6,195)
    Exchange rate
     adjustment                      621               1,021
                                     ---               -----
    Net                           70,166             (29,713)
    
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<p> </p>
<pre>
    
    International
     Social
      Expression Products          3,793              (6,045)
    Exchange rate
     adjustment                      841               3,324
                                     ---               -----
    Net                            4,634              (2,721)
    
</pre>
<p> </p>
<pre>
    
    Retail Operations                  -                (164)
    Exchange rate
     adjustment                        -                 565
                                     ---                 ---
    Net                                -                 401
    
</pre>
<p> </p>
<pre>
    
    AG Interactive                 6,036              (1,461)
    Exchange rate
     adjustment                      167                 884
                                     ---                 ---
    Net                            6,203                (577)
    
</pre>
<p> </p>
<pre>
    
    Non-reportable
     segments                      5,762              (9,816)
    
</pre>
<p> </p>
<pre>
    
    Unallocated                  (55,061)            (24,961)
    Exchange rate
     adjustment                       74                (480)
    Net                          (54,987)            (25,441)
    
</pre>
<p> </p>
<pre>
    
                                 $31,778            $(67,867)
                                 =======            ========



    
</pre>
<p> </p>
<p> </p>
<pre>
    
                                            Year Ended
                                            ----------
                                 February 28,       February 28,
                                     2010               2009
                                -------------      -------------
    Total Revenue:
    North American
     Social
      Expression Products          $1,231,850         $1,139,745
    Intersegment items                 (5,104)           (52,805)
    Exchange rate
     adjustment                         8,433              8,508
                                        -----              -----
    Net                             1,235,179          1,095,448
    
</pre>
<p> </p>
<pre>
    
    International
     Social
      Expression Products             209,974            205,687
    Exchange rate
     adjustment                        44,058             65,040
                                       ------             ------
    Net                               254,032            270,727
    
</pre>
<p> </p>
<pre>
    
    Retail Operations                  11,727            170,066
    Exchange rate
     adjustment                           112              8,746
                                          ---              -----
    Net                                11,839            178,812
    
</pre>
<p> </p>
<pre>
    
    AG Interactive                     78,955             81,615
    Exchange rate
     adjustment                         1,491              1,798
                                        -----              -----
    Net                                80,446             83,413
    
</pre>
<p> </p>
<pre>
    
    Non-reportable
     segments                          53,975             62,338
    
</pre>
<p> </p>
<p>Unallocated                           387                  -</p>
<p> </p>
<pre>
    
                                   $1,635,858         $1,690,738
                                   ==========         ==========
    
</pre>
<p> </p>
<p> </p>
<pre>
    
    Segment Earnings
     (Loss):
    North American
     Social
      Expression Products            $236,305           $106,006
    Intersegment items                 (3,511)           (38,899)
    Exchange rate
     adjustment                         3,620              2,844
                                        -----              -----
    Net                               236,414             69,951
    
</pre>
<p> </p>
<pre>
    
    International
     Social
      Expression Products              13,778            (60,206)
    Exchange rate
     adjustment                         3,068            (17,463)
                                        -----            -------
    Net                                16,846            (77,669)
    
</pre>
<p> </p>
<pre>
    
    Retail Operations                 (34,830)           (19,727)
    Exchange rate
     adjustment                          (285)               496
                                         ----                ---
    Net                               (35,115)           (19,231)
    
</pre>
<p> </p>
<pre>
    
    AG Interactive                     10,586           (156,325)
    Exchange rate
     adjustment                           833             (5,366)
                                          ---             ------
    Net                                11,419           (161,691)
    
</pre>
<p> </p>
<pre>
    
    Non-reportable
     segments                           7,634             (7,627)
    
</pre>
<p> </p>
<pre>
    
    Unallocated                      (116,103)           (83,966)
    Exchange rate
     adjustment                          (141)             5,300
    Net                              (116,244)           (78,666)
    
</pre>
<p> </p>
<pre>
    
                                     $120,954          $(274,933)
                                     ========          =========






    

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

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