Asia PR News

CLEVELAND, Dec. 22/PRNewswire-AsiaNet/ –

- Earnings results include one time gain

- Company affirms EPS guidance with upside possible

- Company raises cash flow guidance

American Greetings Corporation (NYSE: AM) today announced its third quarter
results for the fiscal quarter ended November 24, 2006, and announced an 8 cent
per share cash dividend.
(Logo: http://www.newscom.com/cgi-bin/prnh/20060321/CLTU081LOGO)

Third Quarter Results
For the third quarter of fiscal 2007, the Company reported net sales of
$512.2 million, pre-tax income from continuing operations of $67.7 million, and
income from continuing operations of $46.6 million or 78 cents per share (all
per-share amounts assume dilution). As a result of retailer consolidations and
the effect the consolidations had on several long-term supply agreements
between the Company and the affected retailers, the Company recognized a $20
million pre-tax gain in the quarter.

In the prior year’s third fiscal quarter, the Company reported net sales of
$552.0 million, pre-tax income from continuing operations of $23.4 million, and
income from continuing operations of $8.8 million or 14 cents per share.
Included in the 14 cents of earnings per share was a non-cash pre-tax goodwill
impairment charge of $43.2 million (after-tax of approximately $33 million) as
previously disclosed.

Management Comments
Chief Executive Officer Zev Weiss said, "I am pleased with the card
investment strategy as both the investment and the results are in line with our
expectations. Our strategic card initiative is gaining momentum and both
retailers and consumers are delighted. Year-to-date, we are on track with our
rollout of changing product displays and the inventory in those displays. We
expect to continue to invest in this initiative this year and next."

Outlook
For the full fiscal year 2007, the Company continues to project earnings
per share between $0.80 and $1.00. The Company has included in its estimate
the completion of two small product line dispositions designed to improve the
Company’s return on capital as well as the completion of its $100 million share
repurchase program. Depending on the timing of these dispositions, the Company
may realize upside to earnings.

The Company is projecting cash flow from operating activities less capital
expenditures of approximately $200 million. This projection compares to the
Company’s earlier guidance of $100 to $130 million. This improved estimate
includes anticipated cash receipts associated with the effects of contract
terminations as well as lower than anticipated capital expenditures.

Financing Activities
The Company purchased 3.2 million shares of its common stock for $77.5
million during the third quarter of fiscal 2007. This included the purchase of
2.0 million shares under the $200 million share repurchase program announced in
February and 1.2 million shares under the $100 million share repurchase program
announced in October of this year.

The Company’s Board of Directors authorized a cash dividend of 8 cents per
share to be paid on January 16, 2007 to shareholders of record at the close of
business on January 5, 2007.

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, candles, stationery, calendars,
educational products, ornaments and electronic greetings. Located in Cleveland,
Ohio, American Greetings generates annual net sales of approximately $1.8
billion. For more information on the Company, visit
http://corporate.americangreetings.com.

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," "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 and the
ability of the mobile product group to compete effectively in the wireless
content aggregation market.

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,
2006.

AMERICAN GREETINGS CORPORATION
THIRD QUARTER CONSOLIDATED STATEMENT OF INCOME
FISCAL YEAR ENDING FEBRUARY 28, 2007

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

(Unaudited)
Three Months Ended Nine Months Ended
——————– ——————–
November November November November
24, 2006 25, 2005 24, 2006 25, 2005
——– ——– ———- ———-
Net sales $512,239 $551,991 $1,278,885 $1,376,425

Costs and expenses:
Material, labor and
other production costs 245,355 274,235 595,869 627,236
Selling, distribution
and marketing 159,192 165,124 455,800 464,904
Administrative and
general 65,849 57,438 185,351 178,452
Goodwill impairment - 43,153 - 43,153
Interest expense 6,951 8,401 27,024 26,664
Other income - net (32,793) (19,796) (57,082) (39,862)
——– ——– ———- ———-
444,554 528,555 1,206,962 1,300,547
——– ——– ———-
———-
Income from continuing
operations before income
tax expense 67,685 23,436 71,923 75,878
Income tax expense 21,078 14,653 22,523 36,383
——– ——– ———-
———-
Income from continuing
operations 46,607 8,783 49,400 39,495

Income from discontinued
operations, net of tax 3,100 4,144 5,201 3,087
——– ——– ———-
———-
Net income $49,707 $12,927 $54,601 $42,582
======== ======== ========== =========

Earnings per share - basic:
Income from continuing
operations $0.79 $0.14 $0.84 $0.59
Income from discontinued
operations 0.05 0.06 0.09 0.05
——– ——– ———- ———-
Net income $0.84 $0.20 $0.93 $0.64
======== ======== ========== =========
Earnings per share -
assuming dilution:
Income from continuing
operations $0.78 $0.14 $0.80 $0.56
Income from discontinued
operations 0.05 0.05 0.08 0.04
——– ——– ———- ———-
Net income $0.83 $0.19 $0.88 $0.60
======== ======== ========== =========

Average number of common
shares outstanding 59,502,276 65,425,537 58,590,857 67,041,089

Average number of common
shares outstanding -
assuming dilution 59,902,127 78,695,259 64,361,644 80,385,975

Dividends declared per
share $0.08 $0.08 $0.24 $0.24

AMERICAN GREETINGS CORPORATION
THIRD QUARTER CONSOLIDATED STATEMENT OF FINANCIAL POSITION
FISCAL YEAR ENDING FEBRUARY 28, 2007

(In thousands of dollars)

(Unaudited)
November 24, November 25,
2006 2005
———-
———-
ASSETS
CURRENT ASSETS
Cash and cash equivalents $86,216 $75,805
Short-term investments - 208,740
Trade accounts receivable, net 236,834 310,003
Inventories 247,909 254,631
Deferred and refundable income taxes 162,156 167,151
Assets of businesses held for sale - 22,887
Prepaid expenses and other 296,218 220,290
———- ———-
Total current assets 1,029,333 1,259,507

GOODWILL 221,929 210,311
OTHER ASSETS 461,518 579,987

Property, plant and equipment - at cost 969,113 967,674
Less accumulated depreciation 668,693 658,259
———- ———-
PROPERTY, PLANT AND EQUIPMENT - NET 300,420 309,415
———- ———-
$2,013,200 $2,359,220
========== ==========

LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Debt due within one year $142,000 $-
Accounts payable 127,287 134,182
Accrued liabilities 91,241 111,132
Accrued compensation and benefits 58,848 62,007
Income taxes 15,303 23,873
Liabilities of businesses held for sale - 5,013
Other current liabilities 91,163 116,329
———- ———-
Total current liabilities 525,842 452,536

LONG-TERM DEBT 223,985 475,965
OTHER LIABILITIES 102,226 138,068
DEFERRED INCOME TAXES 25,420 24,584

SHAREHOLDERS’ EQUITY
Common shares - Class A 53,775 60,391
Common shares - Class B 4,224 4,220
Capital in excess of par value 417,444 397,208
Treasury stock (643,540) (586,834)
Accumulated other comprehensive income 36,067 2,045
Retained earnings 1,267,757 1,391,037
———- ———-
Total shareholders’ equity 1,135,727 1,268,067
———- ———-
$2,013,200 $2,359,220
========== ==========

AMERICAN GREETINGS CORPORATION
THIRD QUARTER CONSOLIDATED STATEMENT OF CASH FLOWS
FISCAL YEAR ENDING FEBRUARY 28, 2007

(In thousands of dollars)

(Unaudited)
Nine Months Ended
——————————
November 24, November 25,
2006 2005
———— ————
OPERATING ACTIVITIES:
Net income $54,601 $42,582
Income from discontinued operations (5,201) (3,087)
———— ————
Income from continuing operations 49,400 39,495
Adjustments to reconcile to net cash
(used) provided by operating activities:
Goodwill impairment - 43,153
Loss (gain) on disposal of fixed assets 754 (434)
Loss on extinguishment of debt 5,055 863
Depreciation and amortization 37,269 41,148
Deferred income taxes 5,714 (6,608)
Other non-cash charges 9,180 5,069
Changes in operating assets and
liabilities, net of acquisitions:
Increase in trade accounts receivable (87,745) (137,103)
Increase in inventories (26,721) (39,120)
(Increase) decrease in other
current assets (96,348) 9,109
Decrease in deferred costs - net 110,076 57,312
Decrease in accounts payable and
other liabilities (6,699) (10,819)
Other - net (11,217) 2,624
———— ————
Cash (Used) Provided by
Operating Activities (11,282) 4,689

INVESTING ACTIVITIES:
Proceeds from sale of short-term
investments 1,026,280 1,362,430
Purchases of short-term investments (817,540) (1,362,430)
Property, plant and equipment additions (29,590) (32,268)
Cash payments for business
acquisitions, net of cash acquired (11,154) -
Cash receipts related to
discontinued operations 12,559 -
Proceeds from sale of fixed assets 695 7,542
———— ————
Cash Provided (Used) by
Investing Activities 181,250 (24,726)

FINANCING ACTIVITIES:
Increase in long-term debt 200,000 -
Reduction of long-term debt (440,588) (10,782)
Increase in short-term debt 142,000 -
Sale of stock under benefit plans 5,630 26,408
Purchase of treasury shares (186,331) (150,705)
Dividends to shareholders (13,909) (16,141)
Debt issuance costs (8,344) -
———— ————
Cash Used by Financing Activities (301,542) (151,220)

DISCONTINUED OPERATIONS:
Cash (used) provided by operating
activities from discontinued operations (399) 557
Cash provided by investing activities
from discontinued operations 1,647 392
———— ————
Cash Provided by Discontinued
Operations 1,248 949

EFFECT OF EXCHANGE RATE CHANGES ON CASH 2,929 (1,686)
————
————
DECREASE IN CASH AND CASH EQUIVALENTS (127,397) (171,994)

Cash and Cash Equivalents at
Beginning of Year 213,613 247,799
———— ————
Cash and Cash Equivalents
at End of Period $86,216 $75,805
============ ============

SOURCE: American Greetings Corporation

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

Photo: NewsCom: http://www.newscom.com/cgi-bin/prnh/20060321/CLTU081LOGO
AP Archive: http://photoarchive.ap.org
PRN Photo Desk, photodesk@prnewswire.com
Company News On-Call: http://www.prnewswire.com/comp/044150.html

Web site: http://corporate.americangreetings.com