Asia PR News

CLEVELAND, Dec. 20 /PRNewswire-AsiaNet/ –

American Greetings Corporation (NYSE: AM) today announced its third quarter
results for the fiscal quarter ended November 23, 2007 and announced a 10 cent
per share cash dividend.
(Logo: http://www.newscom.com/cgi-bin/prnh/20060321/CLTU081LOGO )

Third Quarter Results
For the third quarter of fiscal 2008, the Company reported total revenue
of $485.7 million, pre-tax income from continuing operations of $44.5 million,
and income from continuing operations of $29.5 million or 53 cents per share
(all per-share amounts assume dilution).

In the prior year’s third fiscal quarter, the Company reported total
revenue of $521.2 million, pre-tax income from continuing operations of $68.1
million, and income from continuing operations of $47.0 million or 79 cents
per share. Included in the prior year’s results is a $20 million pre-tax gain
the Company recognized 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 prior year’s third quarter also
included approximately $14 million of revenue associated with product lines
that have since been divested.

Management Comments and Outlook
Chief Executive Officer Zev Weiss said, "During the third quarter, we
continued to see improved performance at retail as a result of our strategic
card initiative. We continue to receive positive feedback from our retail
partners regarding the improvements in cards and are pleased with the card
initiative."

During the third quarter, the Company also announced that it acquired
Webshots and that it entered into an agreement to acquire PhotoWorks, two
Internet based digital photo sharing businesses. Weiss said, "The acquisition
of Webshots gives us the opportunity to expand our current product offerings
of online social expressions into the adjacent area of online photo sharing,
while PhotoWorks is expected to bring together both the digital and physical
products that we believe consumers desire. These transactions provide the
opportunity to establish a leadership position in this growing channel of the
social expression industry."

Weiss affirmed the Company’s previously announced estimate of earnings per
share from continuing operations for fiscal 2008 to be between $1.35 to $1.55
per share. "While we believe that the earnings guidance provided in April of
this year is still appropriate, considering the balance of risks and
opportunities it is possible that we will perform around the higher end of the
range," added Weiss.

Investing and Financing Activities
The Company used $45.2 million of cash during the quarter to acquire
Webshots.

Under the Company’s $100 million share repurchase program, during the
third quarter, the Company purchased approximately 1.7 million shares of its
Class A common stock for about $41 million. The Company has reduced its
diluted share count by about 35% over the past 30 months.

The Company’s Board of Directors authorized a cash dividend of 10 cents
per share to be paid on January 14, 2008 to shareholders of record at the
close of business on January 4, 2008.

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 revenue 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" 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 timing and impact of converting customers to a scan-based trading
model;
— the ability to execute share repurchase programs or the ability to
achieve the desired accretive effect from such repurchases;
— the ability to successfully complete the proposed acquisition of
PhotoWorks and the ability to successfully integrate acquisitions;
— 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; 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
THIRD 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 Nine Months Ended
————————- ————————-
November 23, November 24, November 23, November 24,
2007 2006 2007 2006
———— ———— ———— ————

Net sales $474,995 $510,102 $1,258,829 $1,271,755
Other revenue 10,751 11,052 24,309 26,537
———— ———— ———— ————
Total revenue 485,746 521,154 1,283,138 1,298,292

Material, labor and other
production costs 223,329 245,187 547,509 593,232
Selling, distribution and
marketing expenses 159,420 157,364 444,695 451,419
Administrative and general
expenses 60,481 65,287 178,291 183,516
Other operating income -
net (127) (20,541) (807) (20,963)
———— ———— ———— ————

Operating income 42,643 73,857 113,450 91,088

Interest expense 4,835 6,951 14,431 27,024
Interest income (2,115) (1,258) (5,834) (6,716)
Other non-operating
(income) expense - net (4,582) 91 (7,478) (2,811)
———— ———— ———— ————

Income from continuing
operations before income
tax expense 44,505 68,073 112,331 73,591
Income tax expense 15,017 21,058 43,495 22,583
———— ———— ———— ————

Income from continuing
operations 29,488 47,015 68,836 51,008

(Loss) income from
discontinued
operations, net of tax (472) 2,692 (1,395) 3,593
———— ———— ———— ————

Net income $29,016 $49,707 $67,441 $54,601
============ ============ ============ ============

Earnings per share -
basic:
Income from continuing
operations $0.54 $0.79 $1.25 $0.87
(Loss) income from
discontinued
operations (0.01) 0.05 (0.03) 0.06
———— ———— ———— ————
Net income $0.53 $0.84 $1.22 $0.93
============ ============ ============ ============

Earnings per share -
assuming dilution:
Income from continuing
operations $0.53 $0.79 $1.24 $0.82
(Loss) income from
discontinued
operations (0.01) 0.04 (0.03) 0.06
———— ———— ———— ————
Net income $0.52 $0.83 $1.21 $0.88
============ ============ ============ ============

Average number of common
shares outstanding 55,022,689 59,502,276 55,350,736 58,590,857

Average number of common
shares outstanding -
assuming dilution 55,466,351 59,902,127 55,726,990 64,361,644

Dividends declared per
share $0.10 $0.08 $0.30 $0.24

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

(In thousands of dollars)
(Unaudited)
——————————
November 23, November 24,
2007 2006
———— ————

ASSETS
CURRENT ASSETS
Cash and cash equivalents $71,117 $86,216
Trade accounts receivable, net 205,702 239,207
Inventories 239,209 244,181
Deferred and refundable income
taxes 76,568 160,983
Assets of businesses held for sale 2,216 13,310
Prepaid expenses and other 213,529 295,866
———— ————
Total current assets 808,341 1,039,763

GOODWILL 267,308 219,093
OTHER ASSETS 389,324 459,269
DEFERRED AND REFUNDABLE INCOME TAXES 111,959 -

Property, plant and equipment - at
cost 975,721 968,755
Less accumulated depreciation 684,170 668,524
———— ————
PROPERTY, PLANT AND EQUIPMENT - NET 291,551 300,231
———— ————
$1,868,483 $2,018,356
============ ============

LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Debt due within one year $46,490 $142,000
Accounts payable 131,099 126,956
Accrued liabilities 89,751 91,108
Accrued compensation and benefits 58,969 58,720
Income taxes 31,255 17,412
Liabilities of businesses held for
sale 1,383 1,629
Other current liabilities 96,896 91,162
———— ————
Total current liabilities 455,843 528,987

LONG-TERM DEBT 200,975 223,985
OTHER LIABILITIES 149,869 101,003
DEFERRED INCOME TAXES AND
NONCURRENT INCOME TAXES PAYABLE 31,877 25,306

SHAREHOLDERS’ EQUITY
Common shares - Class A 49,929 53,775
Common shares - Class B 3,442 4,224
Capital in excess of par value 443,326 417,444
Treasury stock (780,044) (643,540)
Accumulated other comprehensive
income 22,982 36,067
Retained earnings 1,290,284 1,271,105
———— ————
Total shareholders’ equity 1,029,919 1,139,075
———— ————
$1,868,483 $2,018,356
============ ============

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

(Unaudited)
Nine Months Ended
——————————-
November 23, November 24,
2007 2006
———— ————

OPERATING ACTIVITIES:
Net income $67,441 $54,601
Loss (income) from discontinued
operations 1,395 (3,593)
———— ————
Income from continuing operations 68,836 51,008
Adjustments to reconcile to net
cash provided (used) by
operating activities:
Net (gain) loss on disposal of
fixed assets (481) 754
Loss on extinguishment of debt - 5,055
Depreciation and amortization 36,002 37,229
Deferred income taxes (7,994) 5,827
Other non-cash charges 5,719 9,180
Changes in operating assets and
liabilities, net of acquisitions
and dispositions:
Increase in trade accounts
receivable (99,268) (92,821)
Increase in inventories (49,911) (27,202)
Decrease (increase) in other
current assets 18,090 (96,250)
Decrease in deferred costs -
net 29,338 110,076
Increase (decrease) in accounts
payable and other liabilities 38,295 (5,894)
Other - net 4,718 (6,265)
———— ————
Cash Provided (Used) by
Operating Activities 43,344 (9,303)

INVESTING ACTIVITIES:
Proceeds from sale of short-term
investments 692,985 1,026,280
Purchases of short-term investments (692,985) (817,540)
Property, plant and equipment
additions (37,394) (29,600)
Cash payments for business
acquisitions, net of cash acquired (51,256) (11,154)
Cash receipts related to
discontinued operations 4,283 12,559
Proceeds from sale of fixed assets 2,656 695
———— ————
Cash (Used) Provided by
Investing Activities (81,711) 181,240

FINANCING ACTIVITIES:
Increase in long-term debt - 200,000
Reduction of long-term debt - (440,588)
Increase in short-term debt 23,800 142,000
Sale of stock under benefit plans 26,198 5,630
Purchase of treasury shares (74,572) (186,331)
Dividends to shareholders (16,657) (13,909)
Debt issuance costs - (8,344)
———— ————
Cash Used by Financing Activities (41,231) (301,542)

DISCONTINUED OPERATIONS:
Cash used by operating activities
from discontinued operations (839) (2,377)
Cash provided by investing
activities from discontinued
operations - 1,656
———— ————
Cash Used by Discontinued
Operations (839) (721)

EFFECT OF EXCHANGE RATE CHANGES ON
CASH 6,841 2,929
———— ————

DECREASE IN CASH AND CASH EQUIVALENTS (73,596) (127,397)

Cash and Cash Equivalents at
Beginning of Year 144,713 213,613
———— ————
Cash and Cash Equivalents at End
of Period $71,117 $86,216
============ ============

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

(Unaudited)
Three Months Ended Nine Months Ended
————————- ————————-
November 23, November 24, November 23, November 24,
2007 2006 2007 2006
———— ———— ———— ————
Total Revenue:
North American Social
Expression Products $339,543 $371,726 $892,518 $908,909
Intersegment items (19,423) (14,953) (41,532) (47,811)
Exchange rate adjustment 2,972 218 4,318 325
———— ———— ———— ————
Net 323,092 356,991 855,304 861,423

International Social
Expression Products 80,604 82,526 199,648 209,019
Exchange rate adjustment 8,606 794 17,958 (1,527)
———— ———— ———— ————
Net 89,210 83,320 217,606 207,492

Retail Operations 39,550 42,252 115,856 125,206
Exchange rate adjustment 2,467 178 3,540 299
———— ———— ———— ————
Net 42,017 42,430 119,396 125,505

AG Interactive 18,912 21,663 55,964 62,151
Exchange rate adjustment (2) 31 (1) 76
———— ———— ———— ————
Net 18,910 21,694 55,963 62,227

Non-reportable segments 12,486 16,679 34,754 41,510

Unallocated 31 40 115 135
———— ———— ———— ————

$485,746 $521,154 $1,283,138 $1,298,292
============ ============ ============ ============

Segment Earnings (Loss):
North American Social
Expression Products $64,549 $98,533 $192,288 $182,111
Intersegment items (14,481) (10,296) (31,203) (34,125)
Exchange rate adjustment 1,557 80 2,360 129
———— ———— ———— ————
Net 51,625 88,317 163,445 148,115

International Social
Expression Products 10,037 6,092 11,470 7,148
Exchange rate adjustment 1,117 (30) 1,464 34
———— ———— ———— ————
Net 11,154 6,062 12,934 7,182

Retail Operations (5,833) (5,056) (15,098) (21,428)
Exchange rate adjustment 86 4 83 1
———— ———— ———— ————
Net (5,747) (5,052) (15,015) (21,427)

AG Interactive 2,194 2,249 8,667 5,498
Exchange rate adjustment 15 (18) (2) (17)
———— ———— ———— ————
Net 2,209 2,231 8,665 5,481

Non-reportable segments 636 3,668 3,598 8,308

Unallocated (15,312) (27,157) (61,161) (73,919)
Exchange rate adjustment (60) 4 (135) (149)
———— ———— ———— ————
Net (15,372) (27,153) (61,296) (74,068)
———— ———— ———— ————

$44,505 $68,073 $112,331 $73,591
============ ============ ============ ============

SOURCE American Greetings Corporation

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

Photo: http://www.newscom.com/cgi-bin/prnh/20060321/CLTU081LOGO
AP Archive: http://photoarchive.ap.org
PRN Photo Desk, photodesk@prnewswire.com
Web site: http://corporate.americangreetings.com
(AM)