10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended May 25, 2012

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission file number 1-13859

AMERICAN GREETINGS CORPORATION

(Exact name of registrant as specified in its charter)

Ohio	34-0065325
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
One American Road, Cleveland, Ohio	44144
(Address of principal executive offices)	(Zip Code)

(216) 252-7300

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	x	Accelerated filer	¨
Non-accelerated filer	¨  (Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

As of July 2, 2012, the number of shares outstanding of each of the issuer’s classes of common stock was:

Class A Common	30,946,627
Class B Common	2,858,712

AMERICAN GREETINGS CORPORATION

INDEX

		Page Number
PART I—FINANCIAL INFORMATION
Item 1.	Financial Statements		3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		27
Item 4.	Controls and Procedures		27
PART II—OTHER INFORMATION
Item 1.	Legal Proceedings		27
Item 1A.	Risk Factors		29
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		30
Item 6.	Exhibits		31
SIGNATURES			32
EXHIBITS

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

AMERICAN GREETINGS CORPORATION

CONSOLIDATED STATEMENT OF INCOME

(Thousands of dollars except share and per share amounts)

	(Unaudited) Three Months Ended
	May 25, 2012			May 27, 2011
Net sales	$	389,253		$	398,124
Other revenue		3,853			5,572
Total revenue		393,106			403,696
Material, labor and other production costs		163,864			157,929
Selling, distribution and marketing expenses		127,163			124,640
Administrative and general expenses		80,168			65,298
Other operating expense (income) – net		1,574			(923	)
Operating income		20,337			56,752
Interest expense		4,376			6,124
Interest income		(138	)		(321	)
Other non-operating expense – net		5,679			159
Income before income tax expense		10,420			50,790
Income tax expense		3,170			18,197
Net income	$	7,250		$	32,593
Earnings per share – basic	$	0.20		$	0.80
Earnings per share – assuming dilution	$	0.20		$	0.78
Average number of shares outstanding		35,505,749			40,500,357
Average number of shares outstanding – assuming dilution		36,154,078			41,799,366
Dividends declared per share	$	0.15		$	0.15

See notes to consolidated financial statements (unaudited).

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AMERICAN GREETINGS CORPORATION

CONSOLIDATED STATEMENT OF COMPREHENSIVE (LOSS) INCOME

(Thousands of dollars)

	(Unaudited) Three Months Ended
	May 25, 2012			May 27, 2011
Net income	$	7,250		$	32,593
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments		(8,400	)		4,482
Pension and postretirement benefit adjustments		475			(16	)
Unrealized gain on securities		—			1
Other comprehensive (loss) income, net of tax		(7,925	)		4,467
Comprehensive (loss) income	$	(675	)	$	37,060

See notes to consolidated financial statements (unaudited).

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AMERICAN GREETINGS CORPORATION

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

(Thousands of dollars)

	(Unaudited) May 25, 2012			(Note 1) February 29, 2012			(Unaudited) May 27, 2011
ASSETS
Current assets
Cash and cash equivalents	$	60,180		$	132,438		$	211,139
Trade accounts receivable, net		97,657			113,840			137,213
Inventories		214,588			208,945			203,346
Deferred and refundable income taxes		63,910			58,118			61,533
Assets held for sale		—			—			7,180
Prepaid expenses and other		110,482			123,419			113,744
Total current assets		546,817			636,760			734,155
Goodwill		—			—			29,701
Other assets		530,452			503,700			427,714
Deferred and refundable income taxes		118,385			121,228			127,731
Property, plant and equipment – at cost		933,328			924,512			880,496
Less accumulated depreciation		640,511			636,736			630,684
Property, plant and equipment – net		292,817			287,776			249,812
	$	1,488,471		$	1,549,464		$	1,569,113
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	99,872		$	86,166		$	98,641
Accrued liabilities		62,610			58,657			64,527
Accrued compensation and benefits		40,582			68,317			35,163
Income taxes payable		11,007			7,409			18,752
Deferred revenue		34,351			35,519			35,802
Other current liabilities		48,395			49,013			64,305
Total current liabilities		296,817			305,081			317,190
Long-term debt		225,181			225,181			233,298
Other liabilities		265,294			269,367			187,484
Deferred income taxes and noncurrent income taxes payable		21,745			22,377			32,132
Shareholders’ equity
Common shares – Class A		31,336			34,011			37,942
Common shares – Class B		2,860			2,842			2,803
Capital in excess of par value		513,917			513,163			502,131
Treasury stock		(1,060,244	)		(1,020,838	)		(951,643	)
Accumulated other comprehensive (loss) income		(19,755	)		(11,830	)		2,121
Retained earnings		1,211,320			1,210,110			1,205,655
Total shareholders’ equity		679,434			727,458			799,009
	$	1,488,471		$	1,549,464		$	1,569,113

See notes to consolidated financial statements (unaudited).

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AMERICAN GREETINGS CORPORATION

CONSOLIDATED STATEMENT OF CASH FLOWS

(Thousands of dollars)

	(Unaudited) Three Months Ended
	May 25, 2012			May 27, 2011
OPERATING ACTIVITIES:
Net income	$	7,250		$	32,593
Adjustments to reconcile net income to cash flows from operating activities:
Stock-based compensation		1,869			2,662
Net loss on disposal of fixed assets		156			86
Depreciation and intangible assets amortization		11,469			10,988
Provision for doubtful accounts		16,886			558
Deferred income taxes		(3,913	)		1,147
Other non-cash charges		8,085			872
Changes in operating assets and liabilities, net of acquisitions:
Trade accounts receivable		(2,176	)		(12,947	)
Inventories		(7,161	)		(18,750	)
Other current assets		4,093			2,378
Income taxes		3,445			7,596
Deferred costs – net		19,560			13,099
Accounts payable and other liabilities		(12,830	)		(27,922	)
Other – net		3,165			536
Total Cash Flows From Operating Activities		49,898			12,896
INVESTING ACTIVITIES:
Property, plant and equipment additions		(16,432	)		(9,825	)
Cash payments for business acquisitions, net of cash acquired		—			(5,992	)
Proceeds from sale of fixed assets		19			24
Purchase of Clinton Cards debt		(56,560	)		—
Total Cash Flows From Investing Activities		(72,973	)		(15,793	)
FINANCING ACTIVITIES:
Issuance or exercise of share-based payment awards		(728	)		10,061
Tax (deficiency) benefit from share-based payment awards		(421	)		1,939
Purchase of treasury shares		(40,542	)		(9,942	)
Dividends to shareholders		(5,369	)		(6,062	)
Total Cash Flows From Financing Activities		(47,060	)		(4,004	)
EFFECT OF EXCHANGE RATE CHANGES ON CASH		(2,123	)		2,202
DECREASE IN CASH AND CASH EQUIVALENTS		(72,258	)		(4,699	)
Cash and Cash Equivalents at Beginning of Year		132,438			215,838
Cash and Cash Equivalents at End of Period	$	60,180		$	211,139

See notes to consolidated financial statements (unaudited).

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AMERICAN GREETINGS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Three Months Ended May 25, 2012 and May 27, 2011

Note 1 – Basis of Presentation

The accompanying unaudited consolidated financial statements of American Greetings Corporation and its subsidiaries (the “Corporation”) have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary to fairly present financial position, results of operations and cash flows for the periods have been included.

The Corporation’s fiscal year ends on February 28 or 29. References to a particular year refer to the fiscal year ending in February of that year. For example, 2012 refers to the year ended February 29, 2012.

These interim financial statements should be read in conjunction with the Corporation’s financial statements and notes thereto included in its Annual Report on Form 10-K for the year ended February 29, 2012, from which the Consolidated Statement of Financial Position at February 29, 2012, presented herein, has been derived. Certain amounts in the prior year financial statements have been reclassified to conform to the 2013 presentation. These reclassifications had no material impact on financial position, earnings or cash flows.

The Corporation’s investments in less than majority-owned companies in which it has the ability to exercise significant influence over the operation and financial policies are accounted for using the equity method except when they qualify as variable interest entities (“VIE”) and the Corporation is the primary beneficiary, in which case, the investments are consolidated in accordance with Accounting Standards Codification (“ASC”) Topic 810 (“ASC 810”), “Consolidation.” Investments that do not meet the above criteria are accounted for under the cost method.

The Corporation holds an approximately 15% equity interest in Schurman Fine Papers (“Schurman”), which is a VIE as defined in ASC 810. Schurman owns and operates specialty card and gift retail stores in the United States and Canada. The stores are primarily located in malls and strip shopping centers. During the current period, the Corporation assessed the variable interests in Schurman and determined that a third party holder of variable interests has the controlling financial interest in the VIE and thus, the third party, not the Corporation, is the primary beneficiary. In completing this assessment, the Corporation identified the activities that it considers most significant to the future economic success of the VIE and determined that it does not have the power to direct those activities. As such, Schurman is not consolidated in the Corporation’s results. The Corporation’s maximum exposure to loss as it relates to Schurman as of May 25, 2012 includes:

• the investment in the equity of Schurman of $1.9 million;

• the limited guaranty (“Liquidity Guaranty”) of Schurman’s indebtedness of $12 million;

• normal course of business trade accounts receivable due from Schurman of $15.8 million, the balance of which fluctuates throughout the year due to the seasonal nature of the business;

• the operating leases currently subleased to Schurman, the aggregate lease payments for the remaining life of which was $19.0 million, $22.1 million and $32.0 million as of May 25, 2012, February 29, 2012 and May 27, 2011, respectively; and

• the subordinated credit facility (the “Subordinated Credit Facility”) that provides Schurman with up to $10 million of subordinated financing.

The Corporation provides Schurman limited credit support through the provision of a Liquidity Guaranty in favor of the lenders under Schurman’s senior revolving credit facility (the “Senior Credit Facility”). Pursuant to the terms of the Liquidity Guaranty, the Corporation has guaranteed the repayment of up to $12 million of Schurman’s borrowings under the Senior Credit Facility to help ensure that Schurman has sufficient borrowing availability

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under this facility. The Liquidity Guaranty is required to be backed by a letter of credit for the term of the Liquidity Guaranty, which is currently anticipated to end in January 2014. The Corporation’s obligations under the Liquidity Guaranty generally may not be triggered unless Schurman’s lenders under its Senior Credit Facility have substantially completed the liquidation of the collateral under Schurman’s Senior Credit Facility, or 91 days after the liquidation is started, whichever is earlier, and will be limited to the deficiency, if any, between the amount owed and the amount collected in connection with the liquidation. There was no triggering event or liquidation of collateral as of May 25, 2012 requiring the use of the guaranty.

The Subordinated Credit Facility that the Corporation provides to Schurman had an initial term of nineteen months expiring on November 17, 2010, however, unless either party provides the appropriate written notice prior to the expiration of the applicable term, the facility automatically renews for periods of one year, except in the case of the last renewal, in which case the facility can only renew for the partial year ending on the facility’s expiration date of June 25, 2013. Schurman can only borrow under the facility if it does not have other sources of financing available, and borrowings under the Subordinated Credit Facility may only be used for specified purposes. Borrowings under the Subordinated Credit Facility are subordinate to borrowings under Schurman’s Senior Credit Facility and the Subordinated Credit Facility includes affirmative and negative non-financial covenants and events of default customary for such financings. As of May 25, 2012, Schurman had not borrowed under the Subordinated Credit Facility.

In addition to the investment in the equity of Schurman, the Corporation holds an investment in the common stock of Party City Holdings, Inc. (formerly known as AAH Holdings Corporation). These two investments, totaling $12.5 million are accounted for under the cost method. The Corporation is not aware of any events or changes in circumstances that had occurred during the first quarter of 2013 that the Corporation believes are reasonably likely to have had a significant adverse effect on the carrying amount of these investments.

During the quarter ended May 25, 2012, the Corporation recorded certain charges associated with activities and transactions related to Clinton Cards PLC (“Clinton Cards”) that do not have comparative amounts in the prior year period. The impact to the current quarter was additional charges of $31.0 million. These activities and transactions include the purchase of $56.6 million of the senior secured debt of Clinton Cards, Clinton Cards being placed into administration (a procedure similar to Chapter 11 bankruptcy in the United States), and the Corporation’s subsequent purchase of approximately 400 Clinton Cards’ stores. See Note 15 for further information. These charges are reflected on the Consolidated Statement of Operations as follows:

(In millions)	Contract asset impairment		Bad debt expense		Legal and advisory fees		Impairment of debt purchased		Total
Net sales	$	4.0	$	—	$	—	$	—	$	4.0
Administrative and general expenses		—		17.2		2.0		—		19.2
Other non-operating expense		—		—		—		7.8		7.8
	$	4.0	$	17.2	$	2.0	$	7.8	$	31.0

These charges are reflected in the Corporation’s reportable segments as follows:

(In millions)	Contract asset impairment		Bad debt expense		Legal and advisory fees		Impairment of debt purchased		Total
International Social Expression Products	$	4.0	$	17.2	$	—	$	—	$	21.2
Unallocated		—		—		2.0		7.8		9.8
	$	4.0	$	17.2	$	2.0	$	7.8	$	31.0

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Note 2 – Seasonal Nature of Business

A significant portion of the Corporation’s business is seasonal in nature. Therefore, the results of operations for interim periods are not necessarily indicative of the results for the fiscal year taken as a whole.

Note 3 – Recent Accounting Pronouncements

In May 2011, the FASB issued ASU No. 2011-04 (“ASU 2011-04”), “Fair Value Measurement: Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs.” ASU 2011-04 improves comparability of fair value measurements presented and disclosed in financial statements prepared with U.S. generally accepted accounting principles and International Financial Reporting Standards. ASU 2011-04 clarifies the application of existing fair value measurement requirements including (1) the application of the highest and best use and valuation premise concepts, (2) measuring the fair value of an instrument classified in a reporting entity’s shareholders’ equity, and (3) quantitative information required for fair value measurements categorized within Level 3. ASU 2011-04 also provides guidance on measuring the fair value of financial instruments managed within a portfolio and application of premiums and discounts in a fair value measurement. In addition, ASU 2011-04 requires additional disclosure for Level 3 measurements regarding the sensitivity of fair value to changes in unobservable inputs and any interrelationships between those inputs. The amendments in this guidance are to be applied prospectively, and are effective for interim and annual periods beginning after December 15, 2011. The Corporation adopted this standard on March 1, 2012. The adoption of this standard did not have a material effect on the Corporation’s financial statements.

In June 2011, the FASB issued ASU No. 2011-05 (“ASU 2011-05”), “Comprehensive Income (Topic 220): Presentation of Comprehensive Income.” ASU 2011-05 eliminates the option to present components of other comprehensive income as part of the statement of changes in shareholders’ equity and requires the presentation of components of net income and other comprehensive income either in a single continuous statement or in two separate but consecutive statements. In addition, ASU 2011-05 requires presentation of reclassification adjustments for each component of accumulated other comprehensive income in both the statement in which net income is presented and the statement in which other comprehensive income is presented. In January 2012, the FASB issued ASU No. 2011-12 (“ASU 2011-12”), “Comprehensive Income (Topic 220): Deferral of the Effective Date for Amendments to the Presentation of Reclassification of Items out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05.” ASU 2011-12 defers the effective date of the requirements made in ASU 2011-05 pertaining to presentation of reclassification adjustments for each component of accumulated other comprehensive income in both net income and other comprehensive income on the face of the financial statements. ASU 2011-12 reinstates the previous requirements to present reclassification adjustments either on the face of the statement in which other comprehensive income is reported or to disclose them in the notes to the financial statements. The other requirements in ASU 2011-05 are not affected by ASU 2011-12. ASU 2011-05 and ASU 2011-12 are effective for interim and annual periods beginning after December 15, 2011. Effective March 1, 2012, the Corporation adopted the two consecutive statements approach for the presentation of components of net income and other comprehensive income and a total for comprehensive income. The Corporation’s Consolidated Financial Statements include the Consolidated Statement of Comprehensive (Loss) Income as a result of adopting this standard.

In September 2011, the FASB issued ASU No. 2011-08 (“ASU 2011-08”), “Testing Goodwill for Impairment.” ASU 2011-08 gives entities the option to perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. Only if an entity determines, on the basis of qualitative factors, that it is more likely than not that the fair value of a reporting entity is less than its carrying amount, would it be required to then perform the first step of the two-step quantitative impairment test. Otherwise, the two-step quantitative impairment testing is not required. ASU 2011-08 is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011, with early adoption permitted. The adoption of this standard did not have a material effect on the Corporation’s financial statements.

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Note 4 – Royalty Revenue and Related Expenses

The Corporation has agreements for licensing the Care Bears and Strawberry Shortcake characters and other intellectual property. These license agreements provide for royalty revenue to the Corporation, which is recorded in “Other revenue.” These license agreements may include the receipt of upfront advances, which are recorded as deferred revenue and earned during the period of the agreement. Revenues and expenses associated with the servicing of these agreements, primarily relating to the licensing activities included in non-reportable segments, are summarized as follows:

	Three Months Ended
(In thousands)	May 25, 2012		May 27, 2011
Royalty revenue	$	3,729	$	5,419
Royalty expenses
Material, labor and other production costs	$	2,328	$	2,426
Selling, distribution and marketing expenses		656		1,345
Administrative and general expenses		422		389
	$	3,406	$	4,160

In addition to the expenses disclosed above, the Corporation incurred charges of $2.1 million associated with our licensing business. See Note 5 for further information.

Note 5 – Other Income and Expense

During the three months ended May 25, 2012, the Corporation recorded expenses totaling $2.1 million related to the termination of certain agency agreements associated with our licensing business, which is included in “Other operating expense (income) – net” on the Consolidated Statement of Income.

	Three Months Ended
(In thousands)	May 25, 2012			May 27, 2011
Foreign exchange (gain) loss	$	(1,456	)	$	717
Rental income		(636	)		(471	)
Loss on asset disposal		156			86
Miscellaneous		7,615			(173	)
Other non-operating expense – net	$	5,679		$	159

“Miscellaneous” includes, among other things, income/loss from debt and equity securities. In the three months ended May 25, 2012, the Corporation recorded a loss of $7.8 million related to the senior secured debt of Clinton Cards that the Corporation acquired during the current quarter. See Note 15 for further information.

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Note 6 – Earnings Per Share

The following table sets forth the computation of earnings per share and earnings per share—assuming dilution:

	Three Months Ended
	May 25, 2012		May 27, 2011
Numerator (in thousands):
Net income	$	7,250	$	32,593
Denominator (in thousands):
Weighted average shares outstanding		35,506		40,500
Effect of dilutive securities:
Share-based payment awards		648		1,299
Weighted average shares outstanding – assuming dilution		36,154		41,799
Earnings per share	$	0.20	$	0.80
Earnings per share – assuming dilution	$	0.20	$	0.78

Approximately 3.7 million and 2.2 million stock options outstanding for the three month periods ended May 25, 2012 and May 27, 2011, respectively, were excluded from the computation of earnings per share–assuming dilution because the options’ exercise prices were greater than the average market price of the common shares during the respective periods.

The Corporation issued 0.1 million Class A common shares upon exercise of employee stock options and vesting of equity awards during the three months ended May 25, 2012. The Corporation issued 0.5 million and 0.3 million Class A common shares and Class B treasury shares, respectively, upon exercise of employee stock options and vesting of equity awards during the three months ended May 27, 2011.

Note 7 – Customer Allowances and Discounts

Trade accounts receivable are reported net of certain allowances and discounts. The most significant of these are as follows:

(In thousands)	May 25, 2012		February 29, 2012		May 27, 2011
Allowance for seasonal sales returns	$	36,719	$	34,285	$	36,098
Allowance for outdated products		15,355		10,976		8,207
Allowance for doubtful accounts		21,366		4,480		5,932
Allowance for marketing funds		28,987		26,679		29,432
Allowance for rebates		33,106		27,648		31,862
	$	135,533	$	104,068	$	111,531

Certain customer allowances and discounts are settled in cash. These accounts, primarily rebates, which are classified as “Accrued liabilities” on the Consolidated Statement of Financial Position, totaled $12.5 million, $13.7 million and $13.5 million as of May 25, 2012, February 29, 2012 and May 27, 2011, respectively.

During the three months ended May 25, 2012, the Corporation recorded an additional allowance for doubtful accounts of approximately $17 million related to its unsecured accounts receivable exposure to Clinton Cards. See Note 15 for further information.

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Note 8 – Inventories

(In thousands)	May 25, 2012		February 29, 2012		May 27, 2011
Raw materials	$	18,290	$	17,565	$	24,539
Work in process		13,070		9,452		13,091
Finished products		243,951		242,767		225,886
		275,311		269,784		263,516
Less LIFO reserve		82,192		81,077		79,465
		193,119		188,707		184,051
Display materials and factory supplies		21,469		20,238		19,295
	$	214,588	$	208,945	$	203,346

The valuation of inventory under the Last-In, First-Out (“LIFO”) method is made at the end of each fiscal year based on inventory levels and costs at that time. Accordingly, interim LIFO calculations, by necessity, are based on estimates of expected fiscal year-end inventory levels and costs, and are subject to final fiscal year-end LIFO inventory calculations.

Inventory held on location for retailers with scan-based trading arrangements, which is included in finished products, totaled $59.0 million, $52.0 million and $51.4 million as of May 25, 2012, February 29, 2012 and May 27, 2011, respectively.

Note 9 – Deferred Costs

Deferred costs and future payment commitments for retail supply agreements are included in the following financial statement captions:

(In thousands)	May 25, 2012			February 29, 2012			May 27, 2011
Prepaid expenses and other	$	85,622		$	94,071		$	78,366
Other assets		378,091			395,397			319,536
Deferred cost assets		463,713			489,468			397,902
Other current liabilities		(45,625	)		(45,891	)		(62,998	)
Other liabilities		(131,883	)		(137,360	)		(72,523	)
Deferred cost liabilities		(177,508	)		(183,251	)		(135,521	)
Net deferred costs	$	286,205		$	306,217		$	262,381

The Corporation maintains an allowance for deferred costs related to supply agreements of $9.2 million, $10.0 million and $10.4 million at May 25, 2012, February 29, 2012 and May 27, 2011, respectively. This allowance is included in “Other assets” on the Consolidated Statement of Financial Position.

Note 10 – Debt

As of May 25, 2012, the Corporation was a party to a $400 million credit agreement and to an accounts receivable facility that provides funding of up to $70 million. There were no balances outstanding under the Corporation’s credit agreement or accounts receivable facility at May 25, 2012, February 29, 2012 and May 27, 2011, respectively. The Corporation had, in the aggregate, $30.6 million outstanding under letters of credit under these borrowing agreements, which reduces the total credit available to the Corporation thereunder.

There was no debt due within one year as of May 25, 2012, February 29, 2012 and May 27, 2011, respectively.

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Long-term debt and their related calendar year due dates, net of unamortized discounts, which were zero as of May 25, 2012 and February 29, 2012, respectively, and $21.6 million as of May 27, 2011, were as follows:

(In thousands)	May 25, 2012		February 29, 2012		May 27, 2011
7.375% senior notes, due 2021	$	225,000	$	225,000	$	—
7.375% senior notes, due 2016		—		—		213,323
7.375% notes, due 2016		—		—		19,794
6.10% senior notes, due 2028		181		181		181
	$	225,181	$	225,181	$	233,298

The total fair value of the Corporation’s publicly traded debt, which was considered a Level 1 valuation as it was based on quoted market prices, was $229.1 million (at a carrying value of $225.2 million), $239.6 million (at a carrying value of $225.2 million) and $240.8 million (at a carrying value of $233.3 million) at May 25, 2012, February 29, 2012 and May 27, 2011, respectively.

At May 25, 2012, the Corporation was in compliance with the financial covenants under its borrowing agreements.

Note 11 – Retirement Benefits

The components of periodic benefit cost for the Corporation’s defined benefit pension and postretirement benefit plans are as follows:

	Defined Benefit Pension						Postretirement Benefit
	Three Months Ended						Three Months Ended
(In thousands)	May 25, 2012			May 27, 2011			May 25, 2012			May 27, 2011
Service cost	$	334		$	204		$	213		$	363
Interest cost		1,844			2,146			800			1,210
Expected return on plan assets		(1,613	)		(1,672	)		(840	)		(1,098	)
Amortization of prior service cost (credit)		61			59			(519	)		(638	)
Amortization of actuarial loss		816			569			—			—
	$	1,442		$	1,306		$	(346	)	$	(163	)

The Corporation has a discretionary profit-sharing plan with a 401(k) provision covering most of its United States employees. The profit-sharing plan expense for the three months ended May 25, 2012 was $3.0 million, compared to $3.7 million in the prior year period. The Corporation also matches a portion of 401(k) employee contributions. The expense recognized for the 401(k) match was $1.3 million and $1.4 million for the three months ended May 25, 2012 and May 27, 2011, respectively. The profit-sharing plan and 401(k) matching expenses for the three month periods are estimates as actual contributions are determined after fiscal year-end.

At May 25, 2012, February 29, 2012 and May 27, 2011, the liability for postretirement benefits other than pensions was $26.2 million, $24.8 million and $25.6 million, respectively, and is included in “Other liabilities” on the Consolidated Statement of Financial Position. At May 25, 2012, February 29, 2012 and May 27, 2011, the long-term liability for pension benefits was $75.6 million, $75.7 million and $59.9 million, respectively, and is included in “Other liabilities” on the Consolidated Statement of Financial Position.

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Note 12 – Fair Value Measurements

Assets and liabilities measured at fair value are classified using the fair value hierarchy based upon the transparency of inputs as of the measurement date. The classification of fair value measurements within the hierarchy is based upon the lowest level of input that is significant to the measurement. The three levels are defined as follows:

• Level 1 – Valuation is based upon quoted prices (unadjusted) in active markets for identical assets or liabilities.

• Level 2 – Valuation is based upon quoted prices for similar assets and liabilities in active markets, or other inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

• Level 3 – Valuation is based upon unobservable inputs that are significant to the fair value measurement.

The following table summarizes the financial assets measured at fair value as of May 25, 2012:

	May 25, 2012		Level 1		Level 2		Level 3
Assets measured on a recurring basis:
Deferred compensation plan assets (1)	$	9,505	$	9,505	$	—	$	—

The following table summarizes the financial assets measured at fair value as of February 29, 2012:

	February 29, 2012		Level 1		Level 2		Level 3
Assets measured on a recurring basis:
Deferred compensation plan assets (1)	$	9,198	$	9,198	$	—	$	—

The following table summarizes the financial assets measured at fair value as of May 27, 2011:

	May 27, 2011		Level 1		Level 2		Level 3
Assets measured on a recurring basis:
Active employees’ medical plan trust assets	$	3,277	$	3,277	$	—	$	—
Deferred compensation plan assets (1)		8,688		8,688		—		—
Total	$	11,965	$	11,965	$	—	$	—
Assets measured on a nonrecurring basis:
Assets held for sale	$	5,282	$	—	$	5,282	$	—
Total	$	5,282	$	—	$	5,282	$	—

(1) There is an offsetting liability for the obligation to its employees on the Corporation’s books.

As of February 29, 2012, the active employees’ medical plan trust was terminated. During the prior year, the fair value of the investments in the active employees’ medical plan trust was considered a Level 1 valuation as it was based on the quoted market value per share of each individual security investment in an active market.

The deferred compensation plan includes mutual fund assets. Assets held in mutual funds were recorded at fair value, which was considered a Level 1 valuation as it is based on each fund’s quoted market value per share in an active market. The fair value of the related non-qualified deferred compensation liability is based on the fair value of the mutual fund and the Corporation is under no obligation to fund employees’ nonqualified accounts.

Certain assets are measured at fair value on a nonrecurring basis and are subject to fair value adjustments only in certain circumstances. During the fourth quarter of 2010, assets held for sale relating to the Corporation’s party goods product lines, including land and buildings, were written down to fair value of $5.9 million, less cost to sell of $0.3 million, or $5.6 million. During the fourth quarter of 2011, these assets were subsequently re-measured and an additional impairment charge of $0.3 million was recorded. The fair value of the assets held for sale was considered a Level 2 valuation as it was based on observable selling prices for similar assets that were sold within

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the past twelve to eighteen months. These assets related to the party goods product lines were sold in the third quarter of 2012.

Note 13 – Income Taxes

The Corporation’s provision for income taxes in interim periods is computed by applying its estimated annual effective tax rate against income before income tax expense for the period. In addition, non-recurring or discrete items are recorded during the period in which they occur. The magnitude of the impact that discrete items have on the Corporation’s quarterly effective tax rate is dependent on the level of income in the period. The effective tax rate was 30.4% and 35.8% for the three month periods ended May 25, 2012 and May 27, 2011, respectively. The lower than statutory rate for the three months ended May 25, 2012 was due primarily to the release of reserves upon lapse of the applicable statutes.

At May 25, 2012, the Corporation had unrecognized tax benefits of $29.6 million that, if recognized, would have a favorable effect on the Corporation’s income tax expense of $18.6 million. During the first quarter of 2013, the Corporation’s unrecognized tax benefits decreased approximately $1 million primarily due to the release of reserves upon lapse of the applicable statutes. It is reasonably possible that the Corporation’s unrecognized tax positions as of May 25, 2012 could decrease approximately $11 million during the next twelve months due to anticipated settlements and resulting cash payments related to open years after 1996, which are currently under examination.

The Corporation recognizes interest and penalties accrued on unrecognized tax benefits and refundable income taxes as a component of income tax expense. During the first quarter of 2013, the Corporation recognized net expense of less than $0.1 million for interest and penalties on unrecognized tax benefits and refundable income taxes. As of May 25, 2012, the total amount of gross accrued interest and penalties related to unrecognized tax benefits less refundable income taxes was a net payable of $8.4 million.

The Corporation is subject to examination by the U.S. Internal Revenue Service and various U.S. state and local jurisdictions for tax years 1996 to the present. The Corporation is also subject to tax examination in various international tax jurisdictions, including Canada, the United Kingdom (“UK”), Australia, Italy, Mexico and New Zealand for tax years 2006 to the present.

Note 14 – Business Segment Information

The Corporation has North American Social Expression Products, International Social Expression Products, AG Interactive and non-reportable segments. The North American Social Expression Products and International Social Expression Products segments primarily design, manufacture and sell greeting cards and other related products through various channels of distribution with mass merchandising as the primary channel. AG Interactive distributes social expression products, including electronic greetings and a broad range of graphics and digital services and products, through a variety of electronic channels, including Web sites, Internet portals, instant messaging services and electronic mobile devices. The Corporation’s non-reportable operating segments primarily include licensing activities and the design, manufacture and sale of display fixtures.

(In thousands)	Three Months Ended
Total Revenue:	May 25, 2012		May 27, 2011
North American Social Expression Products	$	308,559	$	304,684
International Social Expression Products		62,680		70,205
AG Interactive		15,496		16,608
Non-reportable segments		6,371		12,199
	$	393,106	$	403,696

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(In thousands)	Three Months Ended
Segment Earnings (Loss) Before Tax:	May 25, 2012			May 27, 2011
North American Social Expression Products	$	56,218		$	59,294
International Social Expression Products		(22,557	)		3,303
AG Interactive		3,773			2,636
Non-reportable segments		(58	)		4,606
Unallocated
Interest expense		(4,376	)		(6,108	)
Profit sharing expense		(2,980	)		(3,687	)
Stock-based compensation expense		(1,869	)		(2,662	)
Corporate overhead expense		(17,731	)		(6,592	)
		(26,956	)		(19,049	)
	$	10,420		$	50,790

“Corporate overhead expense” includes costs associated with corporate operations including, among other costs, senior management, corporate finance, legal, and insurance programs.

Refer to Note 1 for segment information related to certain charges associated with activities and transactions in connection with Clinton Cards that do not have comparative amounts in the prior year.

Termination Benefits

Termination benefits are primarily considered part of an ongoing benefit arrangement, accounted for in accordance with ASC Topic 712, “Compensation – Nonretirement Postemployment Benefits,” and are recorded when payment of the benefits is probable and can be reasonably estimated.

The balance of the severance accrual was $5.0 million, $6.8 million and $5.8 million at May 25, 2012, February 29, 2012 and May 27, 2011, respectively. The payments expected within the next twelve months are included in “Accrued liabilities” while the remaining payments beyond the next twelve months are included in “Other liabilities” on the Consolidated Statement of Financial Position.

Note 15 – Subsequent Event

During the current quarter, the Corporation acquired all of the outstanding senior secured debt of Clinton Cards for $56.6 million (£35 million) through Lakeshore Lending Limited (“Lakeshore”), a wholly owned subsidiary of the Corporation organized under the laws of the UK. Subsequently, on May 9, 2012, Clinton Cards was placed into administration, a procedure similar to Chapter 11 bankruptcy in the United States. Prior to entering into administration, Clinton Cards had approximately 750 stores and annual revenues of approximately $600 million across its two primary retail brands, Clinton Cards and Birthdays. The legacy Clinton Cards business has been an important customer to the Corporation’s international business for approximately forty years and was one of the Corporation’s largest customers. The Corporation took this action in an effort to protect its interests and work more closely with all involved parties.

As part of the administration process, the administrators (“Administrators”) of Clinton Cards and certain of its subsidiaries (the “Sellers”) conducted an auction of the certain assets of the business of the Sellers that they believed constituted a viable ongoing business. Lakeshore bid $37.2 million (£23 million) for certain of these remaining assets. The bid took the form of a “credit bid,” where the Corporation uses a portion of the outstanding senior secured debt owed to Lakeshore by Clinton Cards to pay the purchase price for the assets. The bid was accepted by the Administrators and on June 6, 2012, through its wholly owned subsidiaries, UK Greetings Limited and Lakeshore, the Corporation entered into an agreement with the Sellers and the Administrators for the purchase of certain assets and the related business of the Sellers.

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Under the terms of the agreement, it is expected that the Corporation will acquire approximately 400 stores from the Sellers, together with related inventory and overhead, as well as the Clinton Cards and related brands. The asset acquisition is expected to result in a net increase in the Corporation’s annual revenues of approximately $265 million, although the final number will depend on the ultimate number of stores acquired, which is subject to further negotiations with landlords at each respective location. The landlords must generally consent to the assignment of the leases for such stores on terms that are acceptable to the Corporation. If the Corporation cannot negotiate acceptable lease assignments, or if the applicable landlord withholds consent to the assignment of its store lease, then the Corporation may close the store and the Sellers will be responsible for any further obligations under the store lease. The stores and assets not acquired by the Corporation remain part of the administration process. It is anticipated that these remaining assets not purchased by the Corporation will be liquidated and proceeds will be used to repay the creditors of the Sellers, including the Corporation. The Corporation will seek to recover the $19.4 million (£12 million) remaining senior secured debt claim held by it through the liquidation process. However, based on the estimated recovery information provided by the Administrators, the Corporation recorded a loss of $7.8 million relating to the senior secured debt it acquired in the current year first quarter. The liquidation process and the negotiations with landlords for stores included in the aforementioned acquisition, is expected to take approximately six to twelve months.

Separate from the acquired senior secured debt, the Corporation had unsecured accounts receivable exposure to Clinton Cards. Based on the expected recovery shortfall on the senior secured debt noted above, a majority of the unsecured accounts receivable is not expected to be collected. Accordingly, the Corporation recorded bad debt expense of $17.2 million relating to the unsecured accounts receivable during the three months ended May 25, 2012. In addition, with the May 2012 announcement by the Administrators that all of Clinton Cards’ Birthdays branded retail stores would be liquidated, the Corporation recorded an impairment charge of $4.0 million for the deferred costs related to the Birthdays stores.

The Corporation expects that the new retail operations will be reported as a separate reportable segment in the current year second quarter.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our unaudited consolidated financial statements. This discussion and analysis, and other statements made in this Report, contain forward-looking statements, see “Factors That May Affect Future Results” at the end of this discussion and analysis for a description of the uncertainties, risks and assumptions associated with these statements. Unless otherwise indicated or the context otherwise requires, the “Corporation,” “we,” “our,” “us” and “American Greetings” are used in this Report to refer to the businesses of American Greetings Corporation and its consolidated subsidiaries.

Overview

Our first quarter operating results were significantly impacted by certain charges associated with activities and transactions related to Clinton Cards PLC (“Clinton Cards”). Clinton Cards, one of the largest specialty retailers of greeting cards in the United Kingdom (“UK”), had been an important customer to our international business for approximately forty years and was one of our largest customers. The Clinton Cards business had been struggling and in an effort to protect our interest and work more closely with all involved parties, on May 9, 2012, we acquired all of Clinton Cards’ outstanding senior secured debt for $56.6 million. Clinton Cards was subsequently placed into administration, a procedure similar to Chapter 11 bankruptcy in the United States. As part of the administration process, an auction of the assets of the Clinton Cards business was conducted. We participated in the auction process and bid $37.2 million for certain of the assets. The bid took the form of a “credit bid,” where we used a portion of the outstanding senior secured debt owed to us by Clinton Cards to pay the purchase price for the assets.

Subsequent to the end of our first quarter, our bid was accepted on June 6, 2012, and we acquired approximately 400 stores, together with the related inventory and overhead, as well as the Clinton Cards and related brands. The final number of stores acquired will depend on negotiations with landlords at each respective location, who must generally consent to the assignment of the leases for such stores on terms that are acceptable to us. If we cannot negotiate acceptable lease assignments or if the applicable landlord withholds consent to the assignment of its store lease, then we may close the store and the store lease will be placed back into the administrative process. It is anticipated that the remaining assets not purchased by us will be liquidated and proceeds will be used to repay the creditors of Clinton Cards, including us as both the only senior secured lender and the largest unsecured lender. We will seek to recover our $19.4 million remaining senior secured debt claim through the liquidation process. However, based on the estimated recovery information provided by the administrators, we recorded a loss of $7.8 million relating to the senior secured debt we acquired in the first quarter. Both the liquidation process and the negotiations with landlords are expected to take approximately six to twelve months.

Separate from the acquired senior secured debt, we had unsecured accounts receivable exposure to Clinton Cards. Based on the expected recovery shortfall on the senior secured debt noted above, a majority of the unsecured accounts receivable is not expected to be collected. Accordingly, we recorded bad debt expense of $17.2 million relating to the unsecured accounts receivable during the three months ended May 25, 2012. In addition, with the May 2012 announcement by the administrators that all of Clinton Cards’ Birthdays branded retail stores would be liquidated, we recorded an impairment charge of $4.0 million for the deferred costs related to the supply agreement associated with the Birthdays stores. We also incurred $2.0 million of legal and advisory fees related to the Clinton Cards situation during the first quarter.

The table below summarizes the charges described above and their impact on our Consolidated Statement of Income during the first quarter:

(In millions)	Contract asset impairment		Bad debt expense		Legal and advisory fees		Impairment of debt purchased		Total
Net sales	$	4.0	$	—	$	—	$	—	$	4.0
Administrative and general expenses		—		17.2		2.0		—		19.2
Other non-operating expense		—		—		—		7.8		7.8
	$	4.0	$	17.2	$	2.0	$	7.8	$	31.0

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Total revenue in the first quarter decreased approximately $11 million, or 2.6% compared to the prior year period. The lower revenue was primarily due to the impairment of deferred costs related to the supply agreement associated with the Birthdays stores, lower sales in our fixtures business and the unfavorable impact of foreign exchange movements. Total revenue was favorably impacted by higher sales of greeting cards compared to the prior year quarter.

First quarter operating income was $20.3 million compared to $56.8 million in the prior year. Beyond the impact of the Clinton Cards charges, of which $23.2 million impacted operating income, the current quarter operating income performance was impacted by additional marketing expenses incurred to support our product leadership initiative, the impact of lower sales to Clinton Cards as their business struggled, and an approximately $2 million charge related to the termination of certain agency agreements associated with our intellectual property licensing business.

Results of Operations

Three months ended May 25, 2012 and May 27, 2011

Net income was $7.3 million, or $0.20 per share, in the first quarter compared to $32.6 million, or $0.78 per share, in the prior year first quarter (all per-share amounts assume dilution).

Our results for the three months ended May 25, 2012 and May 27, 2011 are summarized below:

(Dollars in thousands)	2012			% Total Revenue			2011			% Total Revenue
Net sales	$	389,253			99.0	%	$	398,124			98.6	%
Other revenue		3,853			1.0	%		5,572			1.4	%
Total revenue		393,106			100.0	%		403,696			100.0	%
Material, labor and other production costs		163,864			41.7	%		157,929			39.1	%
Selling, distribution and marketing expenses		127,163			32.3	%		124,640			30.9	%
Administrative and general expenses		80,168			20.4	%		65,298			16.2	%
Other operating expense (income) – net		1,574			0.4	%		(923	)		(0.2	%)
Operating income		20,337			5.2	%		56,752			14.0	%
Interest expense		4,376			1.1	%		6,124			1.5	%
Interest income		(138	)		(0.0	%)		(321	)		(0.1	%)
Other non-operating expense – net		5,679			1.5	%		159			0.0	%
Income before income tax expense		10,420			2.6	%		50,790			12.6	%
Income tax expense		3,170			0.8	%		18,197			4.5	%
Net income	$	7,250			1.8	%	$	32,593			8.1	%

For the three months ended May 25, 2012, consolidated net sales decreased 2.2%, or approximately $9 million, from $398.1 million in the prior year first quarter to $389.3 million in the current three months. This decrease was primarily due to lower net sales in our fixtures business of approximately $4 million and a $4 million impairment of deferred costs related to the supply agreement associated with Clinton Cards’ Birthdays stores. The current quarter also included reduced gift packaging product sales of approximately $1 million and decreased sales in our AG Interactive segment of approximately $1 million. Foreign currency translation unfavorably impacted net sales by approximately $3 million. Partially offsetting these decreases were improvements in greeting card sales of approximately $3 million. In addition, scan-based trading (“SBT”) implementations favorably impacted net sales by approximately $1 million, compared to the prior year first quarter.

Other revenue, primarily royalty revenue from our Strawberry Shortcake and Care Bears properties, decreased $1.7 million during the three months ended May 25, 2012.

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Wholesale Unit and Pricing Analysis for Greeting Cards

Unit and pricing comparatives (on a sales less returns basis) for the three months ended May 25, 2012 and May 27, 2011 are summarized below:

	Increase (Decrease) From the Prior Year
	Everyday Cards						Seasonal Cards						Total Greeting Cards
	2012			2011			2012			2011			2012			2011
Unit volume		2.5	%		2.6	%		1.8	%		(1.3	%)		2.2	%		1.2	%
Selling prices		(3.1	%)		(0.9	%)		3.7	%		2.1	%		(0.6	%)		0.2	%
Overall increase / (decrease)		(0.7	%)		1.7	%		5.6	%		0.8	%		1.6	%		1.4	%

During the first quarter, combined everyday and seasonal greeting card sales less returns increased 1.6% compared to the prior year quarter, including improvements in unit volume of 2.2% being partially offset by decreases in selling prices of 0.6%. The overall increase was driven by unit growth from both our everyday and seasonal greeting cards in our International Social Expression Products segment and unit improvement from seasonal greeting cards in our North American Social Expression Products segment.

Everyday card sales less returns for the first quarter was down 0.7%, compared to the prior year quarter, with an increase in unit volume of 2.5% more than offset by a decrease in selling prices of 3.1%. The unit volume improved as a result of additional distribution with existing customers within our International Social Expression Products segment. The selling price decline was a result of the continued shift to a higher proportion of our value cards sold in both of our greeting card segments driven primarily by our expanded distribution with existing customers and the continued shift in consumer behavior toward value shopping. The selling price decline within our International Social Expression Products segment was also driven by reduced sales to a larger customer that primarily purchases higher priced cards.

Compared to the prior year quarter, seasonal card sales less returns increased 5.6% with an increase in both unit volume and selling prices of 1.8% and 3.7%, respectively. The improvement in unit volume was a result of additional distribution with existing customers in both of our greeting card segments. Within our North American Social Expression Products segment, the unit volume improvement was driven primarily by our Mother’s Day and Graduation programs. The increase in selling prices was attributable to Mother’s Day, Father’s Day and Graduation programs within our North American Social Expression Products segment.

Expense Overview

Material, labor and other production costs (“MLOPC”) for the three months ended May 25, 2012 were $163.9 million, an increase of approximately $6 million from $157.9 million in the prior year first quarter. As a percentage of total revenue, these costs were 41.7% in the current period compared to 39.1% for the three months ended May 27, 2011, an increase of approximately 260 basis points or about $10 million. Approximately 80 percent of the basis point increase was primarily due to a change in sales mix, shifting toward a higher proportion of lower margin value cards and reduced sales to a larger customer that primarily purchases higher priced cards. The remaining 20 percent of the basis point increase was attributable to increased product display materials. These increases in MLOPC were partially offset by a decrease of approximately $4 million attributable to lower non-card product sales volume.

Selling, distribution and marketing (“SDM”) expenses for the three months ended May 25, 2012 were $127.2 million, increasing approximately $3 million from $124.6 million for the comparable period in the prior year. The increase was primarily driven by higher marketing expenses of approximately $4 million relating to Cardstore.com. Partially offsetting this increase was lower costs in our field service organization of approximately $2 million primarily related to prior year store setup activities for the value channel, which did not recur in the current period.

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Administrative and general expenses were $80.2 million for the three months ended May 25, 2012, an increase of approximately $15 million from $65.3 million in the prior year period. This increase was driven primarily by higher bad debt expense, where approximately $17 million was recorded in the UK relating to increased unsecured accounts receivable exposure as a result of Clinton Cards being placed into administration in the current quarter. This increase was partially offset by lower bad debt expense within our North American Social Expressions Products segment and decreased costs associated with our information technology systems refresh project of approximately $2 million each.

Other operating expense (income) – net was $1.6 million of expense during the current year quarter compared to $0.9 million of income in the prior year. The current year included an expense of $2.1 million related to the termination of certain agency agreements associated with our licensing business.

Other non-operating expense was $5.7 million for the three months ended May 25, 2012 compared to $0.2 million for the three months ended May 27, 2011. The current year quarter included a loss of $7.8 million related to the senior secured debt of Clinton Cards that we acquired on May 8, 2012.

Segment Information

Our operations are organized and managed according to a number of factors, including product categories, geographic locations and channels of distribution. Our North American Social Expression Products and our International Social Expression Products segments primarily design, manufacture and sell greeting cards and other related products through various channels of distribution, with mass merchandising as the primary channel. As permitted under Accounting Standards Codification Topic 280, “Segment Reporting,” certain operating segments have been aggregated into the International Social Expression Products segment. The aggregated operating segments have similar economic characteristics, products, production processes, types of customers and distribution methods. The AG Interactive segment distributes social expression products, including electronic greetings, and a broad range of graphics and digital services and products, through a variety of electronic channels, including Web sites, Internet portals, instant messaging services and electronic mobile devices.

Segment results are reported using actual foreign exchange rates for the periods presented. Refer to Note 14, “Business Segment Information,” to the Consolidated Financial Statements for further information and a reconciliation of total segment revenue to consolidated “Total revenue” and total segment earnings (loss) before tax to consolidated “Income before income tax expense.”

North American Social Expression Products Segment

	Three Months Ended
(Dollars in thousands)	May 25, 2012		May 27, 2011		% Change
Total revenue	$	308,559	$	304,684		1.3	%
Segment earnings		56,218		59,294		(5.2	%)

Total revenue of our North American Social Expression Products segment for the quarter ended May 25, 2012, increased $3.9 million, or 1.3%, compared to the prior year period. The increase was primarily driven by higher sales of greetings cards of approximately $3 million and increased sales of other ancillary products such as party goods of approximately $1 million. Compared to the prior year period, the current year quarter was favorably impacted by SBT implementations of approximately $2 million as there were less SBT implementation activities. Partially offsetting these increases were lower sales of gift packaging products and the impact of unfavorable foreign currency translation, which combined totaled approximately $2 million.

Segment earnings decreased $3.1 million in the current three months compared to the three months ended May 27, 2011. The decrease was driven by increased marketing expenses of approximately $4 million related to Cardstore.com and incremental product display costs of approximately $3 million. Also, gross margin declined by approximately $2 million due to higher sales volume being more than offset by unfavorable product mix as a result of a shift to a higher proportion of lower margin value cards. These unfavorable variances were partially offset by lower costs associated with our technology systems refresh project, decreased bad debt expense and favorable impact of SBT implementation of approximately $2 million each. Also, costs in our field service organization decreased approximately $1 million primarily related to prior year store setup activities for the value channel, which did not recur in the current period.

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International Social Expression Products Segment

	Three Months Ended
(Dollars in thousands)	May 25, 2012			May 27, 2011		% Change
Total revenue	$	62,680		$	70,205		(10.7	%)
Segment earnings		(22,557	)		3,303		(782.9	%)

Total revenue of our International Social Expression Products segment decreased $7.5 million, or 10.7% for the three months ended May 25, 2011, compared to the same period in the prior year. The decrease was primarily driven by a $4 million impairment of deferred costs related to the supply agreement associated with Clinton Cards’ Birthdays stores as all of the Birthdays stores are expected to be closed. Also, declined sales in non-card products, unfavorable foreign currency translation impacts and unfavorable SBT implementation impacted the lower revenue in the current quarter by approximately $1 million each.

Segment earnings decreased $25.9 million in the three months ended May 25, 2012 compared to the same period in the prior year. The decline in earnings was primarily driven by Clinton Cards being placed into administration, including approximately $17 million of bad debt expense and an approximate $4 million impairment of deferred costs related to the supply agreement associated with Clinton Cards’ Birthdays stores. In addition, compared to the prior year period, the gross margin percentage during the first quarter of 2013 declined 540 basis points, or $3 million, due to an unfavorable product mix as a result of a shift to a higher proportion of lower margin cards and reduced sales to a larger customer that primarily purchases higher priced cards.

AG Interactive Segment

	Three Months Ended
(Dollars in thousands)	May 25, 2012		May 27, 2011		% Change
Total revenue	$	15,496	$	16,608		(6.7	%)
Segment earnings		3,773		2,636		43.1	%

Total revenue of AG Interactive decreased $1.1 million compared to the prior year quarter. This decrease in revenue was driven primarily by lower advertising revenue and the impact of winding down the Photoworks website in the prior year first quarter. AG Interactive had approximately 3.8 million online paid subscriptions at the end of the first quarter of 2013 and 2012.

Segment earnings increased $1.1 million compared to the prior year quarter. The earnings impact of lower sales was more than offset by decreased marketing and product management costs and lower technology costs.

Unallocated Items

Centrally incurred and managed costs are not allocated back to the operating segments. The unallocated items include interest expense for centrally incurred debt, domestic profit sharing expense, and stock-based compensation expense. Unallocated items also included costs associated with corporate operations such as the senior management, corporate finance, legal and insurance programs. In the current year quarter, unallocated items included a loss of $7.8 million related to the senior secured debt of Clinton Cards that we acquired and legal and advisory fees of $2.0 million related to Clinton Cards transaction.

	Three Months Ended
(Dollars in thousands)	May 25, 2012			May 27, 2011
Interest expense	$	(4,376	)	$	(6,108	)
Profit sharing expense		(2,980	)		(3,687	)
Stock-based compensation expense		(1,869	)		(2,662	)
Corporate overhead expense		(17,731	)		(6,592	)
Total Unallocated	$	(26,956	)	$	(19,049	)

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Liquidity and Capital Resources

The seasonal nature of our business precludes a useful comparison of the current period and the fiscal year-end financial statements; therefore, a Consolidated Statement of Financial Position as of May 27, 2011 has been included.

Operating Activities

Operating activities provided $49.9 million of cash during the three months ended May 25, 2012, compared to $12.9 million in the prior year period.

Accounts receivable used $2.2 million of cash during the three months ended May 25, 2012, compared to $12.9 million of cash during the same period in the prior year. The cash inflow in the current year quarter was primarily due to the timing of collections from, or credits issued to, certain customers as well the implementation of the SBT model with certain retailers which generally accelerates the collection of accounts receivable due to shorter payment terms. The use of cash in the prior year first quarter was attributable to the timing of cash collections both prior to, and during, that quarter. Strong cash collections during the fourth quarter ended February 28, 2011 lead to a relatively lower accounts receivable balance at the beginning of the first quarter of 2012 while slower receipt of customer payment near the end of the prior year first quarter lead to a growth in the accounts receivable balance, and thus resulting in a use of cash during the prior year first quarter.

Inventory used $7.2 million of cash during the three months ended May 25, 2012, compared to using $18.8 million of cash during the prior year first quarter. The use of cash in the prior year quarter was primarily due to the inventory build of cards and fixtures associated with expanded distribution within the value channel.

Deferred costs—net generally represents payments under agreements with retailers, net of the related amortization of those payments. During the three months ended May 25, 2012, amortization plus the $4.0 million impairment of the deferred costs related to the supply agreement associated with the Clinton Cards’ Birthdays stores exceeded payments by $19.6 million. During the prior year first quarter, amortization exceeded payments by $13.1 million.

Accounts payable and other liabilities used $12.8 million of cash during the three months ended May 25, 2012, compared to using $27.9 million in the prior year first quarter. The year-over-year change in cash usage was attributable to both a growth in accounts payable, primarily due to timing of payments, and lower variable compensation payments during the current year first quarter compared to the prior year first quarter. Prior year first quarter included the payment of variable compensation from the year ended February 28, 2011, which was higher than for the year ended February 29, 2012, thus resulting in a larger use of cash in the prior year first quarter.

Investing Activities

Investing activities used $73.0 million of cash during the three months ended May 25, 2012, compared to $15.8 million of cash during the three months ended May 27, 2011. During the current year first quarter we paid $56.6 million of cash to acquire all of the outstanding senior secured debt of Clinton Cards. In addition, cash paid for capital expenditures was $16.4 million.

The use of cash in the prior year first three months was primarily related to cash payments for business acquisitions as well as capital expenditures of $9.8 million. During the prior year first quarter, cash paid for the Watermark acquisition, net of cash acquired, was $6.0 million.

Financing Activities

Financing activities used $47.1 million of cash during the three months ended May 25, 2012, compared to using $4.0 million during the three months ended May 27, 2011. During the current year first quarter, this use of cash was primarily related to share repurchases and cash paid for dividends of approximately $5.4 million. During the three months ended May 25, 2012, $40.5 million was paid to repurchase 2.7 million Class A common shares under our repurchase program in accordance with our Amended and Restated Articles of Incorporation. Repurchases of $2.1 million for approximately 0.1 million Class A common shares were not included in the above repurchases amount in the Consolidated Statement of Cash Flows because the cash settlement for these transactions occurred subsequent to May 25,2012 . However, this $2.1 million was included in “Shareholders’ equity” on our Consolidated Statement of Financial Position under Part I, Item 1 of this Quarterly Report.

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In the first quarter of fiscal 2012, the receipt of the exercise price on stock options and excess tax benefits from share-based payment awards provided $10.1 million and $1.9 million of cash, respectively. This source of cash was more than offset by cash used for share repurchases of $9.9 million and cash paid for dividends of approximately $6.1 million. During the prior year first quarter, $0.4 million was paid to repurchase approximately 0.1 million Class A common shares under our repurchase program and $9.5 million was paid to repurchase approximately 0.4 million Class B common shares in accordance with our Amended and Restated Articles of Incorporation.

Credit Sources

Substantial credit sources are available to us. In total, we had available sources of credit of approximately $470 million at May 25, 2012, which included our $400 million senior secured credit facility and our $70 million accounts receivable securitization facility. Borrowings under the accounts receivable securitization facility are limited based on our eligible receivables outstanding. At May 25, 2012, we had no borrowings outstanding under the accounts receivable securitization facility or the revolving credit facility. We had, in the aggregate, $30.6 million outstanding under letters of credit, which reduced the total credit availability thereunder as of May 25, 2012.

Please refer to the discussion of our borrowing arrangements as disclosed in the “Credit Sources” section under Part II, Item 7 of our Annual Report on Form 10-K for the year ended February 29, 2012 for further information.

At May 25, 2012, we were in compliance with our financial covenants under the borrowing agreements described above.

Capital Deployment and Investments

Throughout fiscal 2013 and thereafter, we will continue to consider all options for capital deployment including growth options, acquisitions and other investments in third parties, expanding customer relationships, expenditures or investments related to our current product leadership initiatives or other future strategic initiatives, capital expenditures including amounts to refresh the Clinton Cards’ stores acquired in June 2012, the information technology systems refresh, our new world headquarters project, the opportunity to repurchase our own shares, and, as appropriate, preserving cash.

As we have stated, our objective is to continue to expand our position as a leading creator, manufacturer and distributor of social expression products. As such, we have and expect to continue to focus our resources on our core greeting card business, developing new, and growing existing, business, including by expanding Internet and other channels of electronic distribution to make American Greetings the natural and preferred social expressions solution, as well as by capturing any shifts in consumer demand. For example, during fiscal 2012, we spent approximately $15 million on incremental marketing expenses in support of our product leadership strategy, primarily related to promotional efforts around our recently developed Web site Cardstore.com, which allows consumers to purchase paper greeting cards on the Internet and then have the physical cards delivered directly to the recipient. During the first quarter of fiscal 2013, we spent approximately $4 million on such marketing expenses. As we seek to develop this and other channels of distribution, during the second quarter of fiscal 2013 we expect that we will continue to incur additional expenses and make additional investments to support these efforts in amounts and at a pace that is similar to our spending on these efforts during the second half of 2012. We will likely continue this spending during the second half of 2013; however, the timing and amount will depend on consumer response. In addition, to the extent we are successful in expanding distribution and revenue in connection with expanding our leadership, additional capital may be deployed as we may incur incremental costs associated with this expanded distribution, including upfront costs prior to any incremental revenue being generated. If incurred, these costs may be material.

Over roughly the next five or six years, we expect to allocate resources, including capital, to refresh our information technology systems by modernizing our systems, redesigning and deploying new processes, and evolving new organization structures all intended to drive efficiencies within the business and add new capabilities. Amounts that we spend could be material in any given fiscal year and over the life of the project. During 2012, we spent approximately $25 million, including capital of approximately $19 million and expense of approximately $6 million,

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on these information technology systems. During the three months ended May 25, 2012, we spent approximately $9 million on these information technology systems, including capital of approximately $7 million and expense of approximately $2 million. In addition, over roughly the next five or six years, we currently expect to spend at least an aggregate of $150 million on these information technology systems, the majority of which we expect will be capital expenditures. We believe these investments are important to our business, help us drive further efficiencies and add new capabilities; however, there can be no assurance that we will not spend more or less than $150 million over the life of the project, or that we will achieve the associated efficiencies or any cost savings.

During fiscal 2012, we announced that we expect that we will begin to invest in the development of a world headquarters in the Northeast Ohio area. The state of Ohio has committed certain tax credits, loans and other incentives totaling up to $93.5 million to assist us in the development of a new headquarters in Ohio. We are required to make certain investments and meet other criteria to receive these incentives over time. We are currently in the preconstruction stages of the project and have not yet completed the architectural design for the new building. However, based on preliminary estimates, it is anticipated that the gross costs associated with a new world headquarters building, before any tax credit, loans or other incentives that we may receive, will be between approximately $150 million and $200 million over the next two to three years.

During the first quarter of fiscal 2013, we repurchased $42.6 million of our Class A common shares under the $75 million stock repurchase program announced on January 4, 2012. Under this program, the share repurchases may be made through open market purchases or privately negotiated transactions as market conditions warrant, at prices we deem appropriate, and subject to applicable legal requirements and other factors. There is no set expiration date for this program.

As disclosed in Note 1 to the Consolidated Financial Statements, we hold a minority investment in AAH Holding Corporation, now known as Party City Holdings, Inc. (“Party City”). On June 4, 2012, Party City announced that it entered into a definitive agreement to sell a majority stake of the company in a recapitalization transaction valued at $2.69 billion. In the event this transaction closes, we expect that the value of this investment will increase. However, at this time we are unable to quantify any such increase and there can be no assurance that the transaction will close.

Our future operating cash flow and borrowing availability under our credit agreement and our accounts receivable securitization facility are expected to meet currently anticipated funding requirements. The seasonal nature of our business results in peak working capital requirements that may be financed through short-term borrowings when cash on hand is insufficient.

Critical Accounting Policies

Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the periods presented. Please refer to the discussion of our Critical Accounting Policies under Part II, Item 7 of our Annual Report on Form 10-K for the year ended February 29, 2012.

Factors That May Affect Future Results

Certain statements in this report 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 our operations and business environment, which are difficult to predict and may be beyond our control. Important factors that could cause actual results to differ materially from those suggested by these forward-looking statements, and that could adversely affect our future financial performance, include, but are not limited to, the following:

• a weak retail environment and general economic conditions;

• the loss of one or more retail customers and/or retail consolidations, acquisitions and bankruptcies, including the possibility of resulting adverse changes to retail contract terms;

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• competitive terms of sale offered to customers, including costs and other terms associated with new and expanded customer relationships;

• the ability to successfully integrate Clinton Cards and achieve the anticipated revenue and operating profits, together with the outcome of negotiations with landlords and the ultimate number of stores acquired;

• the ability of the administrators to generate sufficient proceeds from the liquidation of the remaining Clinton Cards business to repay the remaining secured debt owed to us;

• the timing and impact of expenses incurred and investments made to support new retail or product strategies, including increased marketing expenses, as well as new product introductions and achieving the desired benefits from those investments;

• the timing of investments in, together with the ability to successfully implement or achieve the desired benefits and cost savings associated with, any information systems refresh we may implement;

• the timing and impact of converting customers to a scan-based trading model;

• the ability to achieve the desired benefits associated with our cost reduction efforts;

• Schurman Fine Papers’ ability to successfully operate its retail operations and satisfy its obligations to us;

• consumer demand for social expression products generally, shifts in consumer shopping behavior, and consumer acceptance of products as priced and marketed, including the success of new and expanded advertising and marketing efforts, such as our on-line efforts through Cardstore.com;

• the impact and availability of technology, including social media, on product sales;

• escalation in the cost of providing employee health care;

• the ability to achieve the desired accretive effect from any share repurchase programs;

• the ability to comply with our debt covenants;

• fluctuations in the value of currencies in major areas where we operate, including the U.S. Dollar, Euro, UK Pound Sterling and Canadian Dollar; and

• the outcome of any legal claims known or unknown.

Risks pertaining specifically to AG Interactive include the viability of online advertising, subscriptions as revenue generators, and the ability to adapt to rapidly changing social media and the digital photo sharing space.

The risks and uncertainties identified above are not the only risks we face. Additional risks and uncertainties not presently known to us or that we believe to be immaterial also may adversely affect us. Should any known or unknown risks or uncertainties develop into actual events, or underlying assumptions prove inaccurate, these developments could have material adverse effects on our business, financial condition and results of operations. For further information concerning the risks we face and issues that could materially affect our financial performance related to forward-looking statements, refer to our periodic filings with the Securities and Exchange Commission, including the “Risk Factors” section included in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended February 29, 2012 and included in Part II, Item 1A of this Quarterly Report on Form 10-Q.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

For further information, refer to our Annual Report on Form 10-K for the year ended February 29, 2012. There were no material changes in market risk, specifically interest rate and foreign currency exposure, for us from February 29, 2012, the end of our preceding fiscal year, to May 25, 2012, the end of our most recent fiscal quarter.

Item 4. Controls and Procedures

American Greetings maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in its reports under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to the Corporation’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

American Greetings carries out a variety of on-going procedures, under the supervision and with the participation of the Corporation’s management, including its Chief Executive Officer and Chief Financial Officer, to evaluate the effectiveness of the design and operation of the Corporation’s disclosure controls and procedures. Based on the foregoing, the Chief Executive Officer and Chief Financial Officer of American Greetings concluded that the Corporation’s disclosure controls and procedures were effective as of the end of the period covered by this report.

There has been no change in the Corporation’s internal control over financial reporting during the Corporation’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Corporation’s internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

Baker/Collier Litigation. American Greetings Corporation is a defendant in two putative class action lawsuits involving corporate-owned life insurance policies (the “Insurance Policies”): one filed in the Northern District of Ohio on January 11, 2012 by Theresa Baker as the personal representative of the estate of Richard Charles Wolfe (the “Baker Litigation”); and the other filed in the Northern District of Oklahoma on October 1, 2010 by Keith Collier as the personal representative of the estate of Ruthie Collier (the “Collier Litigation”).

In the Baker Litigation, the plaintiff claims that American Greetings Corporation (1) misappropriated its employees’ names and identities to benefit itself; (2) breached its fiduciary duty by using its employees’ identities and personal information to benefit itself; (3) unjustly enriched itself through the receipt of corporate-owned life insurance policy benefits, interest and investment returns; and (4) improperly received insurance policy benefits for the insurable interest in Mr. Wolfe’s life. The plaintiff seeks damages in the amount of all pecuniary benefits associated with the subject Insurance Policies, including investment returns, interest and life insurance policy benefits that American Greetings Corporation received from the deaths of the former employees whose estates form the putative class. The plaintiff also seeks punitive damages, pre- and post-judgment interest, costs and attorney’s fees. American Greetings Corporation filed a Motion to Dismiss on April 30, 2012, which is pending with the court.

In the Collier Litigation, the plaintiff claims that American Greetings Corporation did not have an insurable interest when it obtained the subject Insurance Policies and wrongfully received the benefits from those policies. The plaintiff seeks damages in the amount of policy benefits received by American Greetings Corporation from the subject Insurance Policies, as well as attorney’s fees and costs and interest. On April 2, 2012, Plaintiff filed its First Amended Complaint, adding misappropriation of employee information and breach of fiduciary duty claims as well as seeking punitive damages. On April 20, 2012, American Greetings Corporation moved to transfer the Collier Litigation to the Northern District of Ohio, where the Baker Litigation is pending. On June 19, 2012, the magistrate issued his Report and Recommendation that American Greetings’ Motion to Transfer the case to the Northern District of Ohio be granted.

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Class certification has not been decided in either of these cases. We believe the plaintiffs’ allegations in these lawsuits are without merit and intend to continue to defend the actions vigorously. We currently do not believe that the impact of the lawsuit, if any, will have a material adverse effect on our financial position, liquidity or results of operations.

Cookie Jar/MoonScoop Litigation. As previously disclosed, on May 6, 2009, American Greetings Corporation and its subsidiary, Those Characters From Cleveland, Inc. (“TCFC”), filed an action in the Cuyahoga County (Ohio) Court of Common Pleas against Cookie Jar Entertainment Inc. (“Cookie Jar”) and its affiliates, Cookie Jar Entertainment (USA) Inc. (formerly known as DIC Entertainment Corporation) (“DIC”) and Cookie Jar Entertainment Holdings (USA) Inc. (formerly known as DIC Entertainment Holdings, Inc.) relating to the July 20, 2008 Binding Letter Agreement between American Greetings Corporation and Cookie Jar (the “Cookie Jar Agreement”) for the sale of the Strawberry Shortcake and Care Bears properties (the “Properties”). On May 7, 2009, Cookie Jar removed the case to the United States District Court for the Northern District of Ohio. Simultaneously, Cookie Jar filed an action against American Greetings Corporation, TCFC, Mike Young Productions, LLC (“Mike Young Productions”) and MoonScoop SAS (“MoonScoop”) in the Supreme Court of the State of New York, County of New York. Mike Young Productions and MoonScoop were named as defendants in the action in connection with the binding term sheet between American Greetings Corporation and MoonScoop dated March 24, 2009 (the “MoonScoop Binding Agreement”), providing for the sale to MoonScoop of the Properties.

On May 7, 2010, the legal proceedings involving American Greetings Corporation, TCFC, Cookie Jar and DIC were settled, without a payment to any of the parties. As part of the settlement, on May 7, 2010, the Cookie Jar Agreement was amended to, among other things, terminate American Greetings Corporation’s obligation to sell to Cookie Jar, and Cookie Jar’s obligation to purchase, the Properties. As part of the settlement, Cookie Jar Entertainment (USA) Inc. will continue to represent the Strawberry Shortcake property on behalf of American Greetings Corporation and will become an international agent for the Care Bears property. On May 19, 2010, the Northern District of Ohio court granted the parties’ joint motion to dismiss all claims and counterclaims without prejudice.

On August 11, 2009, MoonScoop filed an action against American Greetings Corporation and TCFC in the United States District Court for the Northern District of Ohio, alleging breach of contract and promissory estoppel relating to the MoonScoop Binding Agreement. On MoonScoop’s request, the court agreed to consolidate this lawsuit with the first Ohio lawsuit (described above) for all pretrial purposes. The parties filed motions for summary judgment on various claims. On April 27, 2010, the court granted American Greetings Corporation’s motion for summary judgment on MoonScoop’s breach of contract and promissory estoppel claims, dismissing these claims with prejudice. On the same day, the court also ruled that American Greetings Corporation must indemnify MoonScoop against Cookie Jar’s claims in this lawsuit. On May 21, 2010, MoonScoop appealed the court’s summary judgment ruling to the United States Court of Appeals for the Sixth Circuit. On June 4, 2010, American Greetings Corporation and TCFC appealed to the United States Court of Appeals for the Sixth Circuit the court’s ruling that it must indemnify MoonScoop against the cross claims asserted against it. The appeal has been briefed and oral arguments were held on October 4, 2011. We believe that the allegations in the lawsuit against American Greetings Corporation and TCFC are without merit and intend to continue to defend the actions vigorously. We currently do not believe that the impact of the lawsuit against American Greetings Corporation and TCFC, if any, will have a material adverse effect on our financial position, liquidity or results of operations.

In addition to the foregoing, we are involved in various judicial, administrative, regulatory and arbitration proceedings concerning matters arising in the ordinary course of business operations, including, but not limited to, employment, commercial disputes and other contractual matters. We, however, do not believe that any of the other litigation in which we are currently engaged, either individually or in the aggregate, will have a material adverse effect on our business, consolidated financial position or results of operations.

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Item 1A. Risk Factors.

The information presented below updates and supplements the risk factors contained in our Annual Report on Form 10-K for the year ended February 29, 2012. The risks described herein and in our Annual Report on Form 10-K are not the only risks facing our company. Additional risks and uncertainties, which we do not presently consider material or of which we are not currently aware, may also have an adverse impact on us.

The size of, and lease terms for stores in, our retail store portfolio cannot be determined at this time.

As described in Note 15 of our Notes to Consolidated Financial Statements included in Item 1 of Part I to this Quarterly Report on Form 10-Q, in connection with our acquisition of assets from Clinton Cards and certain of its subsidiaries, we anticipate acquiring approximately 400 retail stores together with related inventory and overhead, as well as the Clinton Cards and related brands. The total number of stores that we acquire, however, depends on our ability to negotiate acceptable lease terms with the applicable landlords and to obtain consents from the applicable landlords where necessary. If we cannot negotiate lease assignments that are acceptable or if landlords’ consents are withheld, the applicable stores will be closed and the Clinton Cards estate will be responsible for any further obligations under the leases. Our purchase price for the agreed upon assets of Clinton Cards, however, will remain unchanged, without reduction for the loss of any retail space where the lease was not acceptably renegotiated. The profitability of the portfolio of stores acquired will be heavily dependent on our ability to negotiate acceptable lease terms in the majority of those stores, including but not limited to, rent reductions. We cannot guarantee that preferred store sites will be available to us or that the terms for the leases at those preferred sites will be acceptable to us.

We may not be successful in operating a direct retail business in a foreign country.

We face a number of challenges to successfully expanding into the operations of a retail business in a foreign country. For example, we have no recent experience operating retail stores, particularly outside of North America. Although we have engaged a team of advisors to run the Clinton Cards stores that has extensive specialty retail channel experience, the team consists of employees of Schurman Fine Papers (“Schurman”), which has limited operating experience in the UK. In addition, although we have a minority ownership interest in Schurman, and Schurman continues to be an important customer, this arrangement may be temporary, in which case we would need to put in place a long-term management team to run the Clinton Cards stores. There are also many factors outside of our control that could adversely affect our ability to operate the Clinton Cards retail stores profitably, including factors that may affect the consumer spending on our products, such as negative consumer perception resulting from a US company owning the Clinton Stores, recessionary economic conditions in the UK, availability of consumer credit, taxation, weather, fuel prices and consumer confidence.

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(a) Not applicable.

(b) Not applicable.

(c) The following table provides information with respect to our purchases of our common shares during the three months ended May 25, 2012.

Period	Total Number of Shares Repurchased			Average Price Paid per Share			Total Number of Shares Purchased as Part of Publicly Announced Plans			Maximum Number of Shares (or Approximate Dollar Value) that May Yet Be Purchased Under the Plans
March 2012	Class A –	890,000		$	15.60	(2)		890,000		$	33,156,329
	Class B –	408	(1)	$	15.19			—
April 2012	Class A –	950,000		$	15.07	(2)		950,000		$	18,840,624
	Class B –	—	(1)		—			—
May 2012	Class A –	970,000		$	14.87	(2)		970,000	(3)	$	4,416,736
	Class B –	—	(1)		—			—
Total	Class A –	2,810,000						2,810,000	(3)
	Class B –	408	(1)					—

(1) There is no public market for our Class B common shares. Pursuant to our Articles of Incorporation, a holder of Class B common shares may not transfer such Class B common shares (except to permitted transferees, a group that generally includes members of the holder’s extended family, family trusts and charities) unless such holder first offers such shares to the Corporation for purchase at the most recent closing price for the Corporation’s Class A common shares. If the Corporation does not purchase such Class B common shares, the holder must convert such shares, on a share for share basis, into Class A common shares prior to any transfer. It is the Corporation’s general policy to repurchase Class B common shares, in accordance with the terms set forth in our Amended and Restated Articles of Incorporation, whenever they are offered by a holder, unless such repurchase is not otherwise permitted under agreements to which the Corporation is a party. All of the shares were repurchased by American Greetings for cash pursuant to this right of first refusal.

(2) Excludes commissions paid, if any, related to the share repurchase transactions.

(3) On January 4, 2012, American Greetings announced that its Board of Directors authorized a program to repurchase up to $75 million of its Class A common shares. Under this program, the share repurchases may be made through open market purchases or privately negotiated transactions as market conditions warrant, at prices the Corporation deems appropriate, and subject to applicable legal requirements and other factors. There is no set expiration date for this program.

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Item 6. Exhibits

Exhibits required by Item 601 of Regulation S-K

Exhibit Number	Description
10.1	Executive Annual Incentive Plan (Fiscal Year 2013 Description).
10.2	Form of Performance Share Award Agreement (for Fiscal 2013 Awards).
31 (a)	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31 (b)	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32	Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	The following materials from the Corporation’s Quarterly Report on Form 10-Q for the quarter ended May 25, 2012, formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Statement of Operations for the quarters ended May 25, 2012 and May 27, 2011, (ii) Consolidated Statement of Comprehensive (Loss) Income for the quarters ended May 25, 2012 and May 27, 2011, (iii) Consolidated Statement of Financial Position at May 25, 2012, February 29, 2012 and May 27, 2011, (iv) Consolidated Statement of Cash Flows for the quarters ended May 25, 2012 and May 27, 2011, and (v) Notes to the Consolidated Financial Statements for the quarter ended May 25, 2012. In accordance with Rule 406T of Regulation S-T, the XBRL related information in Exhibit 101 to this Quarterly Report on Form 10-Q shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”), or otherwise subject to the liability of that section, and shall not be part of any registration statement or other document filed under the Securities Act of 1933 or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

AMERICAN GREETINGS CORPORATION
By:	/s/ Robert D. Tyler
	Robert D. Tyler
	Corporate Controller and
	Chief Accounting Officer *

July 5, 2012

* (Signing on behalf of Registrant as a duly authorized officer of the Registrant and signing as the chief accounting officer of the Registrant.)

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EX-10.1

Exhibit 10.1

Rewards for your Contributions to Our Success

AMERICAN GREETINGS

Executive Incentive Plan Fiscal Year 2013

Creativity…Innovation…

Collaboration…

Our commitment to these ideals has allowed us to become one of the world’s largest publicly owned developers, producers and distributors of social expressions products. As a leader at American Greetings, you have a unique opportunity to focus our associates on these key areas and to cultivate a work environment that is stimulating, productive and rewarding.

In addition, the decisions you make and the things you do every day have a direct and meaningful impact both within your department and across the company. We have designed the Executive Incentive Plan to reward you for the critical role you play. As a leader, you help foster and channel your energy and the energy of those around you into building on our business principles, strengthening our marketplace position and generating value for our shareholders.

Table of Contents

Plan Objectives and Who is Eligible 2

How the Plan Works 3

Emphasis of Each Plan Component 4

Measuring Performance 5

Corporate Component 6

Individual Component 8

Example Calculation 9

Important Administrative Plan Details 11

Key Terms 12

Plan Objectives

Focuses on shareholder value and profitable revenue growth | Our shareholders expect us to evaluate our results in the same way they do

Emphasizes teamwork and mutual cooperation | Our success depends on the collaborative effort within each of our business units

Demonstrates the importance of personal drive and commitment to quality | Individual contributions are the foundation of our collective accomplishments

Rewards leaders for success | Award opportunity is greatest when attention is given to the achievement of objectives in each of the two performance areas

Who Is Eligible

You are eligible to participate in the Plan if you are a Senior Executive Officer (Chairman, CEO, President and COO, Corporate-level Senior Vice Presidents) or a Section 16 Executive Officer.

Refer to the sections entitled Important Administrative Plan Details and Key Terms for additional details on eligibility for participation in the Plan.

Watch for Your Participant Letter

You will receive a Participant Letter that outlines information specific to your participation in the Plan:

• Your total target award

How the Plan Works

The Plan provides a cash award for the achievement of goals in two key performance areas measured over a 12-month fiscal year. Success in these key areas helps American Greetings create shareholder value and ensure profitable growth over the long term.

Your Award Opportunity

Your total target award is established at the beginning of each fiscal year and will be communicated

to you at that time.

Your total target award is:

A percentage of your base earnings based on your job level

The award you would earn if each goal is achieved in each performance area

The amount of the award you receive will increase or decrease based on actual performance in these two key areas:

American Greetings will establish goals at the beginning of each fiscal year:

Corporate goals are developed by management and approved by the Board of Directors.

Individual performance goals are established through the Performance Management Process.

At the end of the fiscal year, American Greetings determines the extent to which each goal has been met.MPLE

If base earnings are $200,000 and target award percentage is 70% of base earnings, total target award is $140,000.

Base Earnings ($200,000)

x

Target Award % (70%)

=

Target Award ($140,000)

Emphasis of Each Plan Component

For all plan participants, the corporate component is 80% of your total target award.

The individual component is 20% of your total target award.

COMPONENT WEIGHTINGS

Corporate Individual

80% 20%

EXAMPLE

Dan:

Senior Vice President,

$200,000 base earnings

$140,000 total target award (70% of base earnings)

$112,000 = Corporate ($140,000 x 80%)

$28,100 = Individual ($140,000 x 20%)

Measuring Performance

When results for the fiscal year are final, the company assesses achievement of goals in each performance area. Performance in each area will determine your actual Plan award.

Awards for the corporate component is based on the financial performance award scale. Individual awards are based on your performance rating.

Financial Performance Award Scale

Your actual award is based on fiscal year-end performance results using the award scale shown at right for corporate financial measures. (See Measuring Performance table on page 6 for details.)

To earn an award, performance in each area must at least reach threshold. There is no award for below-threshold performance.

Achieving goal means American Greetings

pays awards at target levels.

Performance above goal will result in an increased award up to a maximum level. The award range for the corporate financial measures is 0%—200% of target award.

Performance Multiplier —How It’s Used in the Award Scale

Performance multipliers are another way to think about the award scale. There is a relationship between performance and your actual award. For example, there is a 4:1 multiplier for the Corporate EPS measure. This means that for every 1% increase or decrease in the percentage of goal achieved, the Corporate EPS target award will be adjusted up or down by 4% to determine the actual award.

Corporate Component

The corporate component consists of two parts:

Corporate Earnings per Share (EPS)

Corporate Total Revenue (Total Revenue)

Each of these parts is weighted. The Plan is designed to emphasize the importance of our leaders’ abilities to influence EPS, while paying attention to how they can affect Total Revenue. The weighting applied to the total target award for the corporate component is:

80% for EPS

20% for Total Revenue

The potential award under the corporate component ranges from 0% to 200% of target award. Performance has a direct impact on actual award. For every 1% increase or decrease in the percentage of goal achieved:

EPS target award will be adjusted up or down by 4% to determine the actual award for this part of the corporate component. (Total EPS goal is defined as a range between 97% and 103% of goal).

Total Revenue target award will be adjusted up or down by 4% to determine the actual award (Total Revenue goal is defined as a range between 97% and 103% of goal).

Performance Measures

METRIC WHY IT’S IMPORTANT

Corporate Earnings per Share (EPS) EPS shows how much profit was generated on a per share basis. It communicates to the investment community the power the company has to make money. The higher our EPS, the greater value the company is able to provide its shareholders.

Corporate Total Revenue(Total Revenue) When investing in a company, an investor wants to see it grow or improve over time. Management sets a Corporate Total Revenue goal each year to keep activities focused on growing the business year-over-year.

Refer to the section entitled Key Terms of definitions for these financial measures.

EPS and Total Revenue Goal Is a Range

The EPS and Total Revenue portion of the corporate component have a goal defined as a range. That’s because American Greetings believes we have met our EPS and Total Revenue objectives if we perform between 97% and 103% of goal.

Corporate Component

EXAMPLE

Dan, Senior Vice President$140,000 total target award

$112,000 corporate component (80% of total target award)

• $89,600 Corporate EPS (80% of total corporate component)

• $22,400 Corporate Total Revenue (20% of total corporate component)

Corporate Performance Threshold

Each part of the corporate component has its own performance threshold:

• EPS: 80% of goal

• Total Revenue: 80% of goal

The performance threshold must be met to earn an actual award for that measure. Additionally, if the Corporate EPS threshold is not met, then Corporate Total Revenue will not be paid

CORPORATE EPS

Award Scale (4:1) Performance as % of Goal Actual Award as a % of Target Actual Award in Dollars

Maximum 128% 200% $179,200

120.5% 170% $152,320

113% 140% $125,440

Goal 97% – 103% 100% $89,600

92% 80% $71,680

Threshold 80% 32% $28,672

HOW IT’S CALCULATED

The formula to calculate your actual award as a percent of target is:

(Actual Performance – Goal) x 4 + 90% = Actual Award as a % of Target Award

Performance Above Goal: (105%—103%) x 4 + 100% = 108% of Target Award

Performance Below Goal: (95%—97%) x 4 + 100% = 92% of Target Award

CORPORATE TOTAL REVENUE

Award Scale (4:1) Performance as % of Goal Actual Award as a % of Target Actual Award in Dollars

Maximum 128% 200% $44,800

120.5% 170% $38,080

113% 140% $31,360

Goal 97% – 103% 100% $22,400

92% 80% $17,920

Threshold 80% 32% $7,168

HOW IT’S CALCULATED

The formula to calculate your actual award as a percent of target is:

(Actual Performance – Goal) x 4 + 100% = Actual Award as a % of Target Award

Performance Above Goal: (105%—103%) x 4 + 100% = 108% of Target Award

Performance Below Goal: (95%—97%) x 4 + 100% = 92% of Target Award

DAN’S ACTUAL AWARD FOR CORPORATE COMPONENT

EPS Actual Performance: 113% of goal = actual award of 140% of target ($125,440)

Total Revenue Actual Performance: 92% of goal = actual award of 80% of target ($17,920)

Total Award: $125,440 + $17,920 = $143,360

Example Calculation

Here is an example of how your actual award is determined.

EXAMPLE

Dan, Senior Vice President

Base Earnings: $200,000

Total Target Award: $140,000(70% of base earnings)

ACTUAL PERFORMANCE

The chart below outlines the performance goals and actual performance in the three categories — American Greetings corporate component and Ben’s individual performance.

To illustrate how awards are calculated, examples of performance goals are provided in this brochure. Performance is included in the examples to calculate example awards. These are examples only; performance goals will be different and may be higher or lower than the examples provided.

* Goal is a range from 97%—103% of the target goal reflected above.

Dan’s Total Award Example:

Here’s a look at Dan’s total award based on the performance shown on the previous page.

160,000

CORPORATE COMPONENT

Target Award x Award as % of Target = Actual Award

Corporate EPS

$89,600 x 140% = $125,440

Corporate Total Revenue

$22,400 x 80% = $17,920

Total = $143,360

$143,360

$112,000

INDIVIDUAL COMPONENT

Target Award x Award as % of Target = Actual Award

$28,000 x 100% = $28,000

$28,000

$28,000

Total Actual Award $159,120

Total Target Award $130,000

Important Administrative Plan Details

If your employment status changes, your Plan participation and any payouts may be affected as described below:

New Hires

If you are hired during the Plan year — defined as the American Greetings fiscal year ending February 28, 2013 — and are eligible to participate in the Executive Incentive Plan, you will receive a prorated incentive award based on the period of time you participated in the Plan and your base earnings during that time.

Promotions and Transfers

If you are promoted during the Plan year, your individual target award, and base earnings, may change. If any of these do change, your award will be calculated based on the targets, base earnings, plan provisions and actual performance on a prorated basis and rounded to the nearest full month.

Termination or Retirement

If you voluntarily or involuntarily leave American Greetings, including for reason of retirement, before the completion of the Plan year, you will forfeit your Executive Incentive Plan award for that fiscal year.

Leave of Absence, Disability, Death

If you take a leave of absence, suffer a permanent disability or die, your actual award will be prorated to the nearest full month based on the actual period you participated in the Plan during the year.

An associate will be deemed to suffer a permanent disability only in the following circumstances: (A) where an associate is absent from employment with American Greetings due to his or her inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment, which either can be expected to result in death, or can be expected to last for a continuous period of not less than 12 months; or (B) where an associate is scheduled to receive income replacement benefits for a period of not less than 3 months under an accident and health plan covering American Greetings associate on account of a medically determinable physical or mental impairment that can be expected to result in death or last for a continuous period of not less than 12 months.

Incentive Award

Incentive awards earned in fiscal year 2013 will be paid to participants within two and one-half months following the end of fiscal 2013, typically within 60 days after the end of the fiscal year. Plan awards are subject to normal tax withholding at a standardized rate and will be deposited to a bank account of your choice.

It is the intent that incentive awards fall under the short-term deferral rules of Section 409A of the Internal Revenue Code to exempt the payment of such Executive Incentive Plan benefits from the requirements of Section 409A.

Calculating Payouts

For computation purposes, financial goals and actual performance results are rounded to the nearest $1,000. The percent of the financial goal achieved and the percent of target award earned is rounded to the nearest one-tenth of one percent. The actual incentive award is rounded to the nearest dollar.

Omnibus Incentive Plan

The Executive Incentive Plan is governed by the American Greetings Corporation 2007 Omnibus Incentive Compensation Plan, as such plan may be amended from time to time. In the event of a conflict between the Executive Incentive Plan and the Omnibus Incentive Compensation Plan, the terms of the Omnibus Incentive Compensation Plan will govern.

Questions

If you have questions about the Executive Incentive Plan and how it works, please contact your manager. Your manager will work with you to ensure you understand the Plan so you can maximize your annual award.

Key Terms

The following provides definitions of some common terms used throughout this brochure. Capitalized terms used herein that are not defined will have the meaning set forth in the Omnibus Incentive Compensation Plan.

Base Earnings. Your base earnings are defined as your base salary earned during the fiscal year. Base earnings exclude health and welfare benefits, bonus, commission, and incentive payments, overtime and other direct or indirect compensation. Base earnings for Plan participants outside of the U.S. may be defined differently and may vary by country.

Corporate Earnings Per Share (EPS). Corporate earnings per share is measured at the end of the fiscal year and is calculated as corporate net income divided by the total number of planned shares outstanding as calculated on a fully diluted basis.

Corporate Total Revenue. Consolidated corporate net sales and other revenues, including but not limited to royalties, advertising, subscriptions and other revenue streams directly related to the conduct of our principal business.

Eligibility. You are eligible to participate in the Executive Incentive Plan if you are a Senior Executive (Chairman, CEO, President and COO, Corporate-level Senior Vice Presidents) or other Section 16 Executive Officer.

Fiscal Year. March 1 through February 28 or 29 of the following calendar year.

Nothing in this brochure or in any Participant Letter should be construed to create or imply any contract of employment between an associate and American Greetings and its subsidiaries or to create any binding contractual right to payment of any specific amount under the American Greetings Executive Incentive Plan. The provisions of this brochure describe the general guidelines used by American Greetings in determining the benefits payable to Plan participants; however, in every case, American Greetings reserves the right to reduce or eliminate the amount that would otherwise be payable to a participant or participants under such guidelines where it determines, in its discretion, that such a reduction is necessary or appropriate, in light of the participant’s performance or other relevant business circumstances.

Any award earned under this Executive Incentive Plan shall be subject to rescission, cancellation or recoupment, in whole or part, if and to the extent so provided under any “clawback” or similar policy of American Greetings in effect on the date of payment or that may be established thereafter, including, without limitation, any “clawback” or recoupment policy of American Greetings as may be adopted by American Greetings from time to time as required by Section 304 of the Sarbanes-Oxley Act of 2002, Section 954 of the h Wall Street Reform and Consumer Protection Act, or as otherwise required by applicable law.

American Greetings reserves the right to terminate or make changes to the Program, including retroactively, at any time without prior notice to any of the Program’s participants (provided that no amendment to the Program adopted more than 90 days after the beginning of the applicable fiscal year may have the effect of increasing the amount that is or could be payable under the guidelines set forth herein for such fiscal year to any participant who is a “covered employee” of American Greetings as defined in section 162(m)(3) of the Internal Revenue Code). The Board of Directors (or committee thereof), are the only persons who have the authority to alter or amend this Program. Any such alteration or amendment must be done in writing. No participant should rely on an alteration or amendment to this Program unless it is made in writing and signed by the Chief Executive Officer or the Chairman.

Notes

Notes

g

AMERICAN GREETINGS

EX-10.2

Exhibit 10.2

AMERICAN GREETINGS CORPORATION 2007 OMNIBUS

INCENTIVE COMPENSATION PLAN

PERFORMANCE SHARE GRANT AGREEMENT

Grant Size:
Target Grant	[Number] Class [    ] Common Shares (the “Shares”)
Maximum Grant	[Number] Shares
Performance Period	March 1, 2012 through February 28, 201     (the “Performance Period”)
Grant Date	, 201

THIS AGREEMENT (the “Agreement”), dated as of the Grant Date stated above, is delivered by American Greetings Corporation (the “Company” or “American Greetings”) to the individual employee of the Company (the “Grantee”) identified in the notice of performance share award grant (the “Notice of Grant”) delivered to Grantee.

RECITALS

WHEREAS, the Company wishes to give Grantee an opportunity to enlarge Grantee’s equity ownership in the Company for the purpose of augmenting Grantee’s proprietary interest in the success of American Greetings and thereby focusing Grantee’s efforts on increasing shareholder value.

AGREEMENT

NOW, THEREFORE, Grantee has received or will receive a Notice of Grant, which, if not rejected in accordance with the instructions in such notice, will constitute Grantee’s binding agreement with the following terms:

1.            Performance Share Grant. Subject to the terms and conditions of this Agreement, the Company hereby grants to Grantee performance shares (the “Performance Shares”) representing the right to receive up to the Maximum Grant of Shares as specified above. Each Performance Share represents the right to receive one Share, up to the Maximum Grant of Shares, upon the Company’s achievement of certain performance goals specified herein during the Performance Period and the Grantee’s satisfaction of any vesting requirements set forth in this Agreement. Except as contemplated by Section 6(g), in no event may Grantee be credited under this Agreement with more than the Maximum Grant of Performance Shares specified above. The Performance Shares described in this Agreement are in all respects subject to the terms, conditions and provisions of this Agreement and the Company’s 2007 Omnibus Incentive Compensation Plan (as amended, the “Plan”).

2.            Award of Performance Shares.

(a) The number of Performance Shares, if any, credited to Grantee at the end of the Performance Period will be based on the Company’s achievement of the performance goals (the “Performance Goals”) established for each performance measure set forth in Annex A to this Agreement and calculated in accordance with Section 2(b) of this Agreement.

(b) Subject to the certification of the Company’s Compensation and Management Development Committee (the “Committee”) and any subcommittee of outside directors, as required under Section [2(c), Grantee will be credited with all or a portion of the Maximum Grant of Performance Shares as calculated in this Section 2(b) if the Company achieves the specified Performance Goals for each performance measure

during the Performance Period. Any Performance Shares credited in accordance with this Section 2 will then be subject to the vesting requirements, if any, as set forth in Section 3. With respect to each performance measure, the Grantee will be credited with a number of Performance Shares, if any, based on performance between the Threshold Goal and the Target Goal, or between the Target Goal and the Maximum Goal as set forth for each performance measure in Annex A as follows:

(i) Except as set forth in Section 2(b)(vi) below, if the Company’s performance is at or in excess of the Maximum Goal with respect to a given performance measure, the Grantee will be credited with a number of Performance Shares for such performance measure equal to the product of the measurement weight factor for such performance measure (the “Measurement Weight Factor”) and the Maximum Grant.

(ii) If the Company’s performance with respect to a given performance measure is less than the Threshold Goal, no Performance Shares will be credited with respect to such performance measure.

(iii) Except as set forth in Section 2(b)(vi) below, if the Company’s performance is at the Target Goal with respect to a given performance measure, the Grantee will be credited with a number of Performance Shares for such performance measure equal to the product of the Measurement Weight Factor and the Target Grant.

(iv) Except as set forth in Section 2(b)(vi) below, if the Company’s performance with respect to a given performance measure is equal to or greater than the

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Threshold Goal but less than or equal to the Target Goal, the number of Performance Shares credited with respect to such performance measure will be equal to the product of (x) the Target Grant, (y) the Measurement Weight Factor, and (z) an “Achievement Percentage” that is equal to fifty percent (50%) multiplied by the quotient of (q) the difference between actual performance and the Threshold Goal and (r) the difference between the Target Goal and Threshold Goal, plus fifty percent (50%).

(v) Except as set forth in Section 2(b)(vi) below, if the Company’s performance with respect to a given performance measure is greater than the Target Goal but less than the Maximum Goal, the number of Performance Shares credited with respect to such performance measure will be equal to the product of (x) the Target Grant, (y) the Measurement Weight Factor, and (z) an “Achievement Percentage” that is equal to the quotient of (q) the difference between actual performance and the Target Goal and (r) the difference between the Maximum Goal and the Target Goal, plus one hundred percent (100%).

(vi) Notwithstanding anything herein to the contrary, if the Company’s performance with respect to a given performance measure that is specified in Annex A as a “Baseline Goal” is less than the Threshold Goal, no performance shares will be credited with respect to any performance goal that is linked to that Baseline Goal (a “Linked Performance Goal”) as may be specified in Annex A even if the Company’s performance with respect to the Linked Performance Goal meets or exceeds the Threshold Goal with respect to that Linked Performance Goal.

Any portion of the Performance Shares granted under this Agreement that are not credited as of the end of the Performance Period will be forfeited and Grantee shall have no right to receive such Performance Shares or any Shares that may be issued upon vesting.

(c) If Grantee is credited with any of the Performance Shares as of the end of the Performance Period as set forth in Section 2(b), following any vesting in accordance with Section 3(a), the Company will pay Grantee in accordance with Section 3(c) an award of Shares equal to the number of Performance Shares so credited, where each credited Performance Share is equal to one Share; provided, however, that prior to crediting or payment of Shares pursuant to this Agreement, the Committee and any subcommittee of “outside directors” as may be required pursuant to Section 162(m) of the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder (“Code”), must certify that the Company’s performance establishing entitlement to the payment of Shares have been achieved.

3.            Vesting or Forfeiture of Performance Shares; Payment of Award.

(a) Except as set forth herein, any Performance Shares credited to Grantee pursuant to Section 2 will vest as of the close of business on the later of (i) the date upon which the certification contemplated by Section 2(c) is made and (ii) February 28, 2015 (the “Vest Date”). For purposes of clarity, if before the Vest Date but on or after any Performance Shares have been credited pursuant to Section 2, Grantee Separates from Service for any reason other than as set forth in Section 3(b) below, including a Separation from Service initiated by the Company other than for Cause, or as the result of Grantee’s Retirement, death or Disability, any Performance Shares

credited to Grantee pursuant to Section 2 but not yet vested will continue to vest in accordance with this Agreement and shall vest as of the Vest Date.

(b) Notwithstanding anything herein to the contrary, Performance Shares, and Shares issued upon vesting of Performance Shares, are subject to the following forfeiture rules:

(i) Separation Prior to Crediting of Performance Shares: Upon Grantee’s Separation from Service for any reason, any Performance Shares not deemed credited pursuant to Section 2 are forfeited.

(ii) Separation Initiated by the Company for Cause or Initiated by Grantee: Upon Grantee’s Separation from Service that is initiated by the Company for Cause, or by the Grantee (other than for Retirement), any Performance Shares credited to Grantee and not otherwise vested pursuant to Section 3(a) on the Grantee’s date of Separation from Service are forfeited. In addition, if Grantee’s Separation from Service is initiated by the Company for Cause, or if and to the extent required by applicable law, then any Performance Shares credited to Grantee and vested pursuant to Section 3(a), but not yet delivered to Grantee, shall also be forfeited and shall not be delivered.

(iii) Breach of Post-Separation Obligations: If following Grantee’s Separation from Service, Grantee breaches any material provision of any employment, separation or severance agreement or arrangement with the Company (including, without limitation, any supplemental executive retirement plan in which with the Grantee participates), the Company may, in its sole discretion, deem any Performance Shares credited to Grantee and not otherwise vested pursuant to Section 3(a), or vested pursuant to Section 3(a) but not yet delivered to Grantee, to be forfeited.

(iv) Clawback: The Performance Shares, and the right to receive and retain any Shares issued upon the vesting of the Performance Shares, together with any proceeds received in connection with the subsequent sale of such Shares, shall be subject to rescission, cancellation or recoupment, in whole or part, if and to the extent so provided under any “clawback” or similar policy of the Company in effect on the Grant Date or that may be established thereafter, including, without limitation, any “clawback” or recoupment policy of the Company as may be adopted by the Company from time to time as required by Section 304 of the Sarbanes-Oxley Act of 2002, Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, or as otherwise required by applicable law or agreement. In the event any such clawback or similar policy is deemed unenforceable with respect to the Performance Shares, or with respect to the Shares issued upon the vesting of the Performance Shares or proceeds received in connection with the subsequent sale of such Shares, then the award of Performance Shares subject to this Agreement shall be deemed unenforceable due to lack of adequate consideration.

For purposes of this Agreement:

“Cause” has such meaning as may be defined in any agreement between Grantee and the Company and, if none, will mean any one or more of the following: Grantee’s (i) fraud; (ii) misappropriation of funds; (iii) commission of a felony or of an act or series of acts which results in material injury to the business or reputation of the Company; (iv) commission of a crime or act or series of acts involving moral turpitude; (v) commission of an act or series of repeated acts of dishonesty

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that are materially inimical to the best interests of the Company; (vi) willful and repeated failure to perform his or her duties, which failure has not been cured in all substantial respects within fifteen (15) days after the Company gives written notice thereof to Grantee; or (vii) breach of any material provision of any employment agreement between the Company and Grantee, which breach has not been cured in all substantial respects within ten (10) days after the Company gives written notice thereof to Grantee.

“Disability” shall mean that Grantee is “disabled” as such term is defined in Code Section 409A(a)(2).

“Retirement” shall mean Grantee’s Separation from Service after completing ten (10) or more years of continuous service and attaining age sixty-five (65).

“Separation from Service” shall mean a separation from service as defined in Code Section 409A.

(c) Within 90 days after any Performance Shares are deemed both credited to Grantee pursuant to Section 2 and vested pursuant to Section 3(a), but in no event longer than the maximum time period permitted under Code Section 409A to qualify as a short-term deferral, such Performance Shares shall be issued to Grantee in the form of Shares. At such time, Grantee shall enjoy full shareholder and ownership rights with respect to such Shares. Shares shall be delivered to Grantee either through book-entry transfer of beneficial ownership of the Shares or through delivery of a stock certificate representing all such Shares and registered in his or her name. The method of delivery shall be selected by the Company, in its sole discretion. In the case of Grantee’s death, payment of Shares that Grantee has been credited with and in which Grantee is vested will be made to the beneficiary designated by Grantee in a writing filed with the Company or, if none, to Grantee’s estate.

4.            Ownership Rights. Except as otherwise provided herein, Grantee will not have the rights of a shareholder of the Company with respect to any Shares issuable upon the crediting or vesting of any Performance Shares. Upon receipt of any portion of Shares issued pursuant to Performance Shares awarded and vested hereunder, Grantee shall be entitled to exercise all ownership rights (including, without limitation, the right to vote and the right to receive dividends) with respect to such Shares, provided that voting and dividend rights with respect to the Shares will be exercisable only if the record date for determining shareholders entitled to vote and receive dividends, as the case may be, falls on or after the date as of which Shares are issued to Grantee pursuant to this Agreement.

5.            Deferral of Delivery of Shares. Notwithstanding any provision in this Agreement to the contrary, if any law or regulation of any governmental authority having jurisdiction in the matter requires the Company, the Board of Directors of American Greetings (the “Board”), the Committee or Grantee to take any action or refrain from action in connection with the award or delivery of Shares under this Agreement, or to delay such award or delivery, then the award or delivery of such Shares shall be deferred until such action has been taken or such restriction on action has been removed, subject to any applicable requirements under Code Section 409A. In addition, if and to the extent required under Code Section 409A, delivery of shares hereunder to Grantee shall be made no earlier than six months after Grantee’s Separation from Service if Grantee is a “specified employee” on such date.

6.            General Provisions. Grantee acknowledges that Grantee has read, understands and agrees with all of the

provisions in this Agreement and the Plan, including, but not limited to, the following:

(a) Administration. The interpretation and construction by the Board and/or the Committee of any provision of this Agreement, the Plan or any notification or document evidencing the grant of Performance Shares and that any determination by the Board or such Committee pursuant to any provision of this Agreement or the Plan or of any such agreement, notification or document shall be final and conclusive.

(b) Notices. Any notice that is required or permitted under this Agreement shall be in writing (unless otherwise specified in the Agreement or in writing from the Company to Grantee), and delivered personally or by mail, postage prepaid, addressed as follows: (i) if to the Company, at One American Road, Cleveland, Ohio 44144, Attention: Human Resources Department, or at such other address as the Company by notice to Grantee may have designated from time to time; (ii) if to Grantee, at the address indicated in Grantee’s then-current personnel records, or at such other address as Grantee by notice to the Company may have designated from time to time. Such notice shall be deemed given upon receipt. From time to time, the Company may also authorize communications and any notice that is required or permitted under this Agreement to be provided electronically either through the Company’s email or other systems or through third parties, including any administrator of the Company’s performance share or other equity programs, as designated from time to time by the Company.

(c) Compliance with Securities Laws. Grantee acknowledges that the Performance Shares are intended to conform to the extent necessary with all provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934 and any and all regulations and rules promulgated by the Securities and Exchange Commission thereunder, including without limitation Rule 144 under the Securities Act of 1933 and Rule 16b-3 under the Securities Exchange Act of 1934. Notwithstanding anything herein to the contrary, the Performance Shares are granted only in such a manner as to conform to such laws, rules and regulations. To the extent permitted by applicable law, this Agreement will be deemed amended to the extent necessary to conform to such laws, rules and regulations.

(d) Taxation. Grantee shall be responsible for all applicable income and withholding taxes and the employee share of FICA taxes with respect to any compensation income generated upon the vesting, crediting or otherwise in connection with the issuance of any Performance Shares under this Agreement. No later than the date as of which an amount first becomes subject to applicable federal, state, or local income, wage or employment tax withholding (including employee share of FICA) with respect to the Performance Shares awarded hereunder, Grantee shall pay to the Company, or make arrangements satisfactory to the Committee regarding the payment of, any federal, state or local income, wage or employment taxes of any kind required by law to be withheld with respect to that amount. Unless otherwise determined by the Committee, withholding obligations may be settled (i) with previously owned common shares or (ii) Shares that have been earned or otherwise credited and that are issuable hereunder (in the minimum amount necessary to satisfy any applicable withholding requirements). The making of that payment or those arrangements is a condition to the obligations of the Company under the Plan, and the Company may, to the extent permitted by law, deduct any taxes from any payment of any kind otherwise payable to Grantee or the Company may retain such number of the Shares issuable upon the earning of Performance

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Shares covered by the grant evidenced by this Agreement as shall be equal in value to the amount of the remaining withholding obligation.

(e) Nontransferability. This Agreement and the Performance Shares granted to Grantee shall be nontransferable and shall not be sold, hypothecated or otherwise assigned or conveyed by Grantee to any other person, except as specifically permitted in this Agreement. No assignment or transfer of this Agreement or the rights represented thereby, whether voluntary or involuntary, or by operation of law or otherwise, shall vest in the assignee or transferee any interest or right whatsoever, except as specifically permitted in this Agreement. The Agreement shall terminate, and be of no force or effect, immediately upon any attempt to assign or transfer the Agreement or any of the Performance Shares to which the Agreement applies.

(f) Not an Employment Contract. This Agreement shall not be deemed to limit or restrict the right of the Company to terminate Grantee’s employment at any time, for any reason, with or without Cause, or to limit or restrict the right of Grantee to terminate his employment with the Company at any time.

(g) Adjustments. On any change in the number or kind of outstanding common shares of the Company by reason of a recapitalization, merger, consolidation, reorganization, separation, liquidation, share split, share dividend, combination of shares or any other change in the corporate structure or common shares of the Company, the Company, by action of the Board or the Committee shall make such adjustment, if any, in the number and kind of Performance Shares subject to this agreement as it considers appropriate in order that the rights of Grantee hereunder are neither enlarged nor diminished.

(h) Unsecured Creditor Status. This grant of Performance Shares constitutes a mere promise by the Company to pay Grantee the benefits described in this grant (to the extent credited and vested). Grantee shall have the status of a general unsecured creditor of the Company with respect to the benefits payable under this Agreement. Grantee’s right to receive credited and vested shares shall not be subject to any assignment, pledge, levy, garnishment, attachment or other attempt to assign or alienate such shares prior to their delivery to Grantee, including, without limitation, under any domestic relations order, and any such attempted assignment or alienation shall be null, void and of no effect.

(i) Fractional Shares. Notwithstanding anything in this Agreement to the contrary, in the event that any adjustment to the Performance Shares or an award of Shares or the calculation of an award pursuant to this Agreement would otherwise result in the creation of a fractional share interest, the affected award shall be rounded up to the nearest whole share.

(j) Amendment or Termination. This Agreement may be amended or terminated at any time by the mutual agreement and written consent of Grantee and the Company, but only to the extent permitted under the Plan. The provisions set forth in this Agreement are subject to the restrictions and other requirements of Code Section 409A and related regulations and rulings. Without limiting the generality of the preceding sentence, such provisions shall be modified and amended, as and where necessary, to bring such provisions into compliance with the requirements set forth in Code Section 409A and related regulations and rulings. This Agreement shall be interpreted (and if necessary, amended) to comply with Code Section 409A and to the extent any provision of this Agreement is inconsistent with Code Section 409A, said Code Section 409A shall control

even if such action may reduce or diminish the value of Grantee’s award.

(k) Severability. If any provision of this Agreement should be held illegal or invalid for any reason, such determination shall not affect the other provisions of this Agreement, and it shall be construed as if such provision had never been included herein.

(l) Headings/Gender. Headings in this Agreement are for convenience only and shall not be construed to be part of this Agreement. Any reference to the masculine, feminine or neuter gender shall be a reference to other genders as appropriate.

(m) Governing Law and Disputes. This Agreement shall be construed, and its provisions enforced and administered, in accordance with the laws of the State of Ohio and, where applicable, federal law. All disputes, claims, or controversies arising out of or in connection with this Agreement shall exclusively be submitted to and determined by final and binding arbitration before a single arbitrator (“Arbitrator”) of the American Arbitration Association (“AAA”) in accordance with AAA’s then-current rules for the resolution of employment disputes (“the Rules”). The Arbitrator shall be selected in accordance with the Rules. The parties consent to the authority of the arbitrator, if the arbitrator so determines, to award fees and expenses (including attorneys’ fees) to the prevailing party in the arbitration.

(n) Definitions. Initial capitalized terms used in this Agreement that are not otherwise defined herein shall have the meaning set forth in the Plan.

(o) Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed original, but all of which taken together shall constitute one and the same instrument. Grantee’s acceptance of this agreement in accordance with the instructions in the Notice of Grant will constitute Grantee’s binding agreement with the terms hereof.

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer, and unless Grantee rejects the Notice of Grant in accordance with the instructions in such notice, Grantee will be deemed a party to, and legally bound by the terms of, this Agreement.

AMERICAN GREETINGS CORPORATION
By:
	Brian McGrath, Senior Vice President, Human Resources

GRANTEE

Unless the Grantee rejects Notice of Grant in accordance with the instructions in such notice, Grantee will be deemed a party to, and legally bound by the terms of, this Agreement.

- 4 -

ANNEX A

Performance Measures

	0000000000	0000000000	0000000000	0000000000
	Performance Goals
Performance Measures	Threshold     Goal	Target     Goal	Maximum     Goal	Measurement     Weight Factor

- 5 -

EX-31.(A)

Exhibit 31 (a)

Certification of Chief Executive Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Zev Weiss, certify that:

1. I have reviewed this quarterly report on Form 10-Q of American Greetings Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of American Greetings Corporation as of, and for, the periods presented in this report;

4. American Greetings Corporation’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for American Greetings Corporation and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to American Greetings Corporation, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of American Greetings Corporation’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in American Greetings Corporation’s internal control over financial reporting that occurred during American Greetings Corporation’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, American Greetings Corporation’s internal control over financial reporting; and

5. American Greetings Corporation’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to American Greetings Corporation’s auditors and the audit committee of American Greetings Corporation’s board of directors:

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect American Greetings Corporation’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in American Greetings Corporation’s internal control over financial reporting.

July 5, 2012	/s/ Zev Weiss
	Zev Weiss
	Chief Executive Officer
	(principal executive officer)

EX-31.(B)

Exhibit 31 (b)

Certification of Chief Financial Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Stephen J. Smith, certify that:

1. I have reviewed this quarterly report on Form 10-Q of American Greetings Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of American Greetings Corporation as of, and for, the periods presented in this report;

4. American Greetings Corporation’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for American Greetings Corporation and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to American Greetings Corporation, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of American Greetings Corporation’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in American Greetings Corporation’s internal control over financial reporting that occurred during American Greetings Corporation’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, American Greetings Corporation’s internal control over financial reporting; and

5. American Greetings Corporation’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to American Greetings Corporation’s auditors and the audit committee of American Greetings Corporation’s board of directors:

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect American Greetings Corporation’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in American Greetings Corporation’s internal control over financial reporting.

July 5, 2012	/s/ Stephen J. Smith
	Stephen J. Smith
	Senior Vice President and
	Chief Financial Officer (principal financial officer)

EX-32

Exhibit 32

Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with this quarterly report of American Greetings Corporation on Form 10-Q as filed with the Securities and Exchange Commission on the date therein specified (the “Report”), each of the undersigned certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of American Greetings Corporation.

July 5, 2012

/s/ Zev Weiss

Zev Weiss

Chief Executive Officer (principal executive officer)

/s/ Stephen J. Smith

Stephen J. Smith

Senior Vice President and

Chief Financial Officer (principal financial officer)

XML

Earnings Per Share (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended
	May 25, 2012	May 27, 2011
Numerator:
Net income	$ 7,250	$ 32,593
Denominator:
Weighted average shares outstanding	35,505,749	40,500,357
Effect of dilutive securities:
Share-based payment awards	648,000	1,299,000
Weighted average shares outstanding - assuming dilution	36,154,078	41,799,366
Earnings per share - basic	$ 0.20	$ 0.80
Earnings per share - assuming dilution	$ 0.20	$ 0.78

XML

Business Segment Information (Details Textual) (USD $) In Millions, unless otherwise specified	May 25, 2012	Feb. 29, 2012	May 27, 2011
Business Segment Information (Textual) [Abstract]
Severance accrual	$ 5.0	$ 6.8	$ 5.8

XML

Retirement Benefits (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	May 25, 2012	May 27, 2011
Defined Benefit Pension [Member]
Components of periodic benefit cost for defined benefit pension and postretirement benefit plans
Service cost	$ 334	$ 204
Interest cost	1,844	2,146
Expected return on plan assets	(1,613)	(1,672)
Amortization of prior service cost (credit)	61	59
Amortization of actuarial loss	816	569
Net periodic benefit cost	1,442	1,306
Postretirement benefit plan [Member]
Components of periodic benefit cost for defined benefit pension and postretirement benefit plans
Service cost	213	363
Interest cost	800	1,210
Expected return on plan assets	(840)	(1,098)
Amortization of prior service cost (credit)	(519)	(638)
Net periodic benefit cost	$ (346)	$ (163)

XML

Subsequent Event (Details)	3 Months Ended
	May 25, 2012 USD ($)	May 27, 2011 USD ($)	May 25, 2012 Clinton Cards [Member] USD ($) Brand Store	May 25, 2012 Clinton Cards [Member] GBP (£)	May 25, 2012 Clinton Cards [Member] Maximum [Member]	May 25, 2012 Clinton Cards [Member] Minimum [Member]
Subsequent Event (Textual) [Abstract]
Purchase of outstanding senior secured debt	$ (56,560,000)		$ 56,600,000	£ 35,000,000
Number of stores owned clinton			750	750
Annual Revenues Clinton			600,000,000
Number of stores purchased by lakeshore from clinton			400	400
Asset impairment charges			4,000,000
Purchase of debt clinton cards bid for assets			37,200,000	23,000,000
Purchase of debt clinton cards remaining			19,400,000	12,000,000
Expenses related to senior secured debt			7,800,000
Provision for doubtful accounts	16,886,000	558,000	17,200,000
Number of retail brands of acquiree company			2	2
Liquidation process and negotiations period with landlords for stores to be acquired					12 months	6 months
Proforma revenue			$ 265,000,000

XML

Debt (Details) (USD $) In Thousands, unless otherwise specified	May 25, 2012	Feb. 29, 2012	May 27, 2011
Long-term debt and net of unamortized discounts
Long-term debt	$ 225,181	$ 225,181	$ 233,298
7.375% senior notes, due 2021 [Member]
Long-term debt and net of unamortized discounts
Long-term debt	225,000	225,000
7.375% senior notes, due 2016 [Member]
Long-term debt and net of unamortized discounts
Long-term debt			213,323
7.375% notes, due 2016 [Member]
Long-term debt and net of unamortized discounts
Long-term debt			19,794
6.10% senior notes, due 2028 [Member]
Long-term debt and net of unamortized discounts
Long-term debt	$ 181	$ 181	$ 181

XML

Basis of Presentation (Details) (USD $)	3 Months Ended
	May 25, 2012	May 27, 2011
Comparative amounts in the prior year period
Bad debt expense	$ 16,886,000	$ 558,000
Clinton Cards [Member]
Comparative amounts in the prior year period
Contract asset impairment	4,000,000
Bad debt expense	17,200,000
Legal and advisory fees	2,000,000
Impairment of debt purchased	7,800,000
Total	31,000,000
Net sales [Member] | Clinton Cards [Member]
Comparative amounts in the prior year period
Contract asset impairment	4,000,000
Total	4,000,000
Administrative and general expenses [Member] | Clinton Cards [Member]
Comparative amounts in the prior year period
Bad debt expense	17,200,000
Legal and advisory fees	2,000,000
Total	19,200,000
Other non-operating expense [Member] | Clinton Cards [Member]
Comparative amounts in the prior year period
Impairment of debt purchased	7,800,000
Total	$ 7,800,000

XML

Earnings Per Share (Tables)	3 Months Ended
	May 25, 2012
Earnings Per Share [Abstract]
Computation of earnings per share and earnings per share-assuming dilution	Computation of earnings per share and earnings per share-assuming dilution

XML

Fair Value Measurements (Details) (USD $) In Thousands, unless otherwise specified	May 25, 2012	Feb. 29, 2012	May 27, 2011
Recurring [Member]
Assets measured on a recurring and non-recurring basis:
Total			$ 11,965
Nonrecurring [Member]
Assets measured on a recurring and non-recurring basis:
Assets held for sale			5,282
Total			5,282
Level 1 [Member] | Recurring [Member]
Assets measured on a recurring and non-recurring basis:
Total			11,965
Level 2 [Member] | Nonrecurring [Member]
Assets measured on a recurring and non-recurring basis:
Assets held for sale			5,282
Total			5,282
Level 3 [Member] | Recurring [Member]
Assets measured on a recurring and non-recurring basis:
Total
Level 3 [Member] | Nonrecurring [Member]
Assets measured on a recurring and non-recurring basis:
Assets held for sale
Total
Active employees' medical plan trust assets [Member] | Recurring [Member]
Assets measured on a recurring and non-recurring basis:
Assets measured on a recurring basis			3,277
Active employees' medical plan trust assets [Member] | Level 1 [Member] | Recurring [Member]
Assets measured on a recurring and non-recurring basis:
Assets measured on a recurring basis			3,277
Active employees' medical plan trust assets [Member] | Level 3 [Member] | Recurring [Member]
Assets measured on a recurring and non-recurring basis:
Assets measured on a recurring basis
Deferred Compensation plan assets [Member] | Recurring [Member]
Assets measured on a recurring and non-recurring basis:
Assets measured on a recurring basis	9,505	9,198	8,688
Deferred Compensation plan assets [Member] | Level 1 [Member] | Recurring [Member]
Assets measured on a recurring and non-recurring basis:
Assets measured on a recurring basis	9,505	9,198	8,688
Deferred Compensation plan assets [Member] | Level 3 [Member] | Recurring [Member]
Assets measured on a recurring and non-recurring basis:
Assets measured on a recurring basis

XML

Customer Allowances and Discounts (Details Textual) (USD $)	May 25, 2012	Feb. 29, 2012	May 27, 2011
Customer Allowances and Discounts (Textual) [Abstract]
Allowances and discounts on trade accounts receivables	$ 135,533,000	$ 104,068,000	$ 111,531,000
Allowance for doubtful accounts [Member]
Customer Allowances and Discounts (Textual) [Abstract]
Trade allowances and discounts settled in cash	12,500,000	13,700,000	13,500,000
Allowances and discounts on trade accounts receivables	21,366,000	4,480,000	5,932,000
Clinton Cards [Member] | Allowance for doubtful accounts [Member]
Customer Allowances and Discounts (Textual) [Abstract]
Allowances and discounts on trade accounts receivables	$ 17,000,000

XML

Other Income and Expense (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	May 25, 2012	May 27, 2011
Other non-operating income and expenses
Foreign exchange (gain) loss	$ (1,456)	$ 717
Rental income	(636)	(471)
Net loss on disposal of fixed assets	156	86
Miscellaneous	7,615	(173)
Other non-operating expense - net	$ 5,679	$ 159

XML

Income Taxes (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		12 Months Ended
	May 25, 2012	May 27, 2011	May 31, 2013
Income Taxes (Textual) [Abstract]
Effective tax rate	30.40%	35.80%
Unrecognized tax benefits	$ 29.6
Income tax expenses affected by unrecognized tax benefits if recognized	18.6
Decreased unrecognized tax benefit			11.0
Reductions in unrecognized tax benefits resulting from lapse of statute	1
Accrued Interest and penalties on unrecognized tax benefit	8.4
Open tax years by major tax jurisdiction	The Corporation is subject to examination by the U.S. Internal Revenue Service and various U.S. state and local Jurisdictions for tax years 1996 to the present.
Maximum [Member]
Deferred Tax Liability Not Recognized [Line Items]
Interest and penalties on unrecognized tax benefit	$ 0.1

XML

Debt (Details Textual) (USD $)	May 25, 2012	Feb. 29, 2012	May 27, 2011
Debt Instrument [Line Items]
Quoted market prices of Corporation's publicly traded debt, carrying value	$ 225,181,000	$ 225,181,000	$ 233,298,000
Long and Short Term Debt (Textual) [Abstract]
Letters of credit outstanding	30,600,000
Debt due within one year	0	0	0
Long-term debt net of unamortized discounts	0	0	21,600,000
Credit Agreement [Member]
Debt Instrument [Line Items]
Line of credit facility potential maximum borrowing capacity	400,000,000
Balances outstanding under the revolving credit facility	0	0	0
Accounts Receivable Facility [Member]
Debt Instrument [Line Items]
Available financing of receivables purchase agreement	70,000,000
Receivables Purchase Facility Amount Outstanding	0	0	0
7.375% senior notes, due 2021 [Member]
Debt Instrument [Line Items]
Quoted market prices of Corporation's publicly traded debt, carrying value	225,000,000	225,000,000
Interest rate of debt	7.375%
7.375% senior notes, due 2016 [Member]
Debt Instrument [Line Items]
Quoted market prices of Corporation's publicly traded debt, carrying value			213,323,000
Interest rate of debt	7.375%
7.375% notes, due 2016 [Member]
Debt Instrument [Line Items]
Quoted market prices of Corporation's publicly traded debt, carrying value			19,794,000
Interest rate of debt	7.375%
6.10% senior notes, due 2028 [Member]
Debt Instrument [Line Items]
Quoted market prices of Corporation's publicly traded debt, carrying value	181,000	181,000	181,000
Interest rate of debt	6.10%
Publicly Traded [Member]
Debt Instrument [Line Items]
Fair value of the traded debt	229,100,000	239,600,000	240,800,000
Quoted market prices of Corporation's publicly traded debt, carrying value	$ 225,200,000	$ 225,200,000	$ 233,300,000

XML

Royalty Revenue and Related Expenses

3 Months Ended

May 25, 2012

Royalty Revenue and Related Expenses [Abstract]

Royalty Revenue and Related Expenses

Note 4 – Royalty Revenue and Related Expenses

The Corporation has agreements for licensing the Care Bears and Strawberry Shortcake characters and other intellectual property. These license agreements provide for royalty revenue to the Corporation, which is recorded in “Other revenue.” These license agreements may include the receipt of upfront advances, which are recorded as deferred revenue and earned during the period of the agreement. Revenues and expenses associated with the servicing of these agreements, primarily relating to the licensing activities included in non-reportable segments, are summarized as follows:

	Three Months Ended
(In thousands)	May 25, 2012		May 27, 2011
Royalty revenue	$	3,729	$	5,419
Royalty expenses
Material, labor and other production costs	$	2,328	$	2,426
Selling, distribution and marketing expenses		656		1,345
Administrative and general expenses		422		389
	$	3,406	$	4,160

In addition to the expenses disclosed above, the Corporation incurred charges of $2.1 million associated with our licensing business. See Note 5 for further information.

XML

Inventories (Details) (USD $)	May 25, 2012	Feb. 29, 2012	May 27, 2011
Inventories
Raw materials	$ 18,290,000	$ 17,565,000	$ 24,539,000
Work in process	13,070,000	9,452,000	13,091,000
Finished products	243,951,000	242,767,000	225,886,000
Inventory, Gross	275,311,000	269,784,000	263,516,000
Less LIFO reserve	82,192,000	81,077,000	79,465,000
Inventory, net of LIFO	193,119,000	188,707,000	184,051,000
Display materials and factory supplies	21,469,000	20,238,000	19,295,000
Inventory, net	214,588,000	208,945,000	203,346,000
Inventories (Textual) [Abstract]
Inventory held on location for retailers with SBT arrangements, which is included in finished products	$ 59,000,000	$ 52,000,000	$ 51,400,000

XML

Debt (Tables)	3 Months Ended
	May 25, 2012
Debt [Abstract]
Long-term debt and net of unamortized discounts	Long-term debt and net of unamortized discounts

XML

Deferred Costs (Tables)	3 Months Ended
	May 25, 2012
Deferred Cost [Abstract]
Deferred costs and future payment commitments	Deferred costs and future payment commitments

XML

Deferred Costs (Details) (USD $) In Thousands, unless otherwise specified	May 25, 2012	Feb. 29, 2012	May 27, 2011
Deferred costs and future payment commitments
Prepaid expenses and other	$ 85,622	$ 94,071	$ 78,366
Other assets	378,091	395,397	319,536
Deferred cost assets	463,713	489,468	397,902
Other current liabilities	(45,625)	(45,891)	(62,998)
Other liabilities	(131,883)	(137,360)	(72,523)
Deferred cost liabilities	(177,508)	(183,251)	(135,521)
Net deferred costs	$ 286,205	$ 306,217	$ 262,381

XML

Retirement Benefits (Tables)	3 Months Ended
	May 25, 2012
Retirement and Postretirement Benefit Plans [Abstract]
Components of periodic benefit cost for defined benefit pension and postretirement benefit plans	Components of periodic benefit cost for defined benefit pension and postretirement benefit plans

XML

Fair Value Measurements (Tables)	3 Months Ended
	May 25, 2012
Fair Value Measurements [Abstract]
Assets and liabilities measured at fair value as of the measurement date	Assets and liabilities measured at fair value as of the measurement date

XML

Recent Accounting Pronouncements

3 Months Ended

May 25, 2012

Recent Accounting Pronouncements [Abstract]

Recent Accounting Pronouncements

Note 3 – Recent Accounting Pronouncements

In May 2011, the FASB issued ASU No. 2011-04 (“ASU 2011-04”), “Fair Value Measurement: Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs.” ASU 2011-04 improves comparability of fair value measurements presented and disclosed in financial statements prepared with U.S. generally accepted accounting principles and International Financial Reporting Standards. ASU 2011-04 clarifies the application of existing fair value measurement requirements including (1) the application of the highest and best use and valuation premise concepts, (2) measuring the fair value of an instrument classified in a reporting entity’s shareholders’ equity, and (3) quantitative information required for fair value measurements categorized within Level 3. ASU 2011-04 also provides guidance on measuring the fair value of financial instruments managed within a portfolio and application of premiums and discounts in a fair value measurement. In addition, ASU 2011-04 requires additional disclosure for Level 3 measurements regarding the sensitivity of fair value to changes in unobservable inputs and any interrelationships between those inputs. The amendments in this guidance are to be applied prospectively, and are effective for interim and annual periods beginning after December 15, 2011. The Corporation adopted this standard on March 1, 2012. The adoption of this standard did not have a material effect on the Corporation’s financial statements.

In June 2011, the FASB issued ASU No. 2011-05 (“ASU 2011-05”), “Comprehensive Income (Topic 220): Presentation of Comprehensive Income.” ASU 2011-05 eliminates the option to present components of other comprehensive income as part of the statement of changes in shareholders’ equity and requires the presentation of components of net income and other comprehensive income either in a single continuous statement or in two separate but consecutive statements. In addition, ASU 2011-05 requires presentation of reclassification adjustments for each component of accumulated other comprehensive income in both the statement in which net income is presented and the statement in which other comprehensive income is presented. In January 2012, the FASB issued ASU No. 2011-12 (“ASU 2011-12”), “Comprehensive Income (Topic 220): Deferral of the Effective Date for Amendments to the Presentation of Reclassification of Items out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05.” ASU 2011-12 defers the effective date of the requirements made in ASU 2011-05 pertaining to presentation of reclassification adjustments for each component of accumulated other comprehensive income in both net income and other comprehensive income on the face of the financial statements. ASU 2011-12 reinstates the previous requirements to present reclassification adjustments either on the face of the statement in which other comprehensive income is reported or to disclose them in the notes to the financial statements. The other requirements in ASU 2011-05 are not affected by ASU 2011-12. ASU 2011-05 and ASU 2011-12 are effective for interim and annual periods beginning after December 15, 2011. Effective March 1, 2012, the Corporation adopted the two consecutive statements approach for the presentation of components of net income and other comprehensive income and a total for comprehensive income. The Corporation’s Consolidated Financial Statements include the Consolidated Statement of Comprehensive (Loss) Income as a result of adopting this standard.

In September 2011, the FASB issued ASU No. 2011-08 (“ASU 2011-08”), “Testing Goodwill for Impairment.” ASU 2011-08 gives entities the option to perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. Only if an entity determines, on the basis of qualitative factors, that it is more likely than not that the fair value of a reporting entity is less than its carrying amount, would it be required to then perform the first step of the two-step quantitative impairment test. Otherwise, the two-step quantitative impairment testing is not required. ASU 2011-08 is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011, with early adoption permitted. The adoption of this standard did not have a material effect on the Corporation’s financial statements.

XML

Business Segment Information (Tables)	3 Months Ended
	May 25, 2012
Business Segment Information [Abstract]
Business Segment Information	Business Segment Information

XML

Earnings Per Share (Details Textual) In Millions, unless otherwise specified	3 Months Ended
	May 25, 2012	May 27, 2011
Earnings Per Share (Textual) [Abstract]
Stock option excluded from Earnings per share Computation	3.7	2.2
Common shares - Class A [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Exercise of employee stock options	0.1	0.5
Treasury shares - Class B [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Exercise of employee stock options		0.3

XML

Business Segment Information (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	May 25, 2012	May 27, 2011
Total Revenue:
Net	$ 393,106	$ 403,696
Segment Earnings (Loss) Before Tax:
Segment Earnings (Loss)	10,420	50,790
North American Social Expression Products [Member]
Total Revenue:
Net	308,559	304,684
Segment Earnings (Loss) Before Tax:
Segment Earnings (Loss)	56,218	59,294
International Social Expression Products [Member]
Total Revenue:
Net	62,680	70,205
Segment Earnings (Loss) Before Tax:
Segment Earnings (Loss)	(22,557)	3,303
AG Interactive [Member]
Total Revenue:
Net	15,496	16,608
Segment Earnings (Loss) Before Tax:
Segment Earnings (Loss)	3,773	2,636
Non-reportable segments [Member]
Total Revenue:
Net	6,371	12,199
Segment Earnings (Loss) Before Tax:
Segment Earnings (Loss)	(58)	4,606
Unallocated [Member]
Segment Earnings (Loss) Before Tax:
Segment Earnings (Loss)	(26,956)	(19,049)
Interest expense [Member] | Unallocated [Member]
Segment Earnings (Loss) Before Tax:
Segment Earnings (Loss)	(4,376)	(6,108)
Profit sharing expense [Member] | Unallocated [Member]
Segment Earnings (Loss) Before Tax:
Segment Earnings (Loss)	(2,980)	(3,687)
Stock-based compensation expense [Member] | Unallocated [Member]
Segment Earnings (Loss) Before Tax:
Segment Earnings (Loss)	(1,869)	(2,662)
Corporate overhead expense [Member] | Unallocated [Member]
Segment Earnings (Loss) Before Tax:
Segment Earnings (Loss)	$ (17,731)	$ (6,592)

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Consolidated Statement of Income (Unaudited) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended
	May 25, 2012	May 27, 2011
Consolidated Statement of Income [Abstract]
Net sales	$ 389,253	$ 398,124
Other revenue	3,853	5,572
Total revenue	393,106	403,696
Material, labor and other production costs	163,864	157,929
Selling, distribution and marketing expenses	127,163	124,640
Administrative and general expenses	80,168	65,298
Other operating expense (income) - net	1,574	(923)
Operating income	20,337	56,752
Interest expense	4,376	6,124
Interest income	(138)	(321)
Other non-operating expense - net	5,679	159
Income before income tax expense	10,420	50,790
Income tax expense	3,170	18,197
Net income	$ 7,250	$ 32,593
Earnings per share - basic	$ 0.20	$ 0.80
Earnings per share - assuming dilution	$ 0.20	$ 0.78
Average number of shares outstanding	35,505,749	40,500,357
Average number of shares outstanding - assuming dilution	36,154,078	41,799,366
Dividends declared per share	$ 0.15	$ 0.15

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Deferred Costs (Details Textual) (USD $) In Millions, unless otherwise specified	May 25, 2012	Feb. 29, 2012	May 27, 2011
Deferred Costs (Textual) [Abstract]
Allowance for deferred costs related to supply agreements	$ 9.2	$ 10.0	$ 10.4

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Basis of Presentation

3 Months Ended

May 25, 2012

Basis of Presentation [Abstract]

Basis of Presentation

Note 1 – Basis of Presentation

The accompanying unaudited consolidated financial statements of American Greetings Corporation and its subsidiaries (the “Corporation”) have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary to fairly present financial position, results of operations and cash flows for the periods have been included.

The Corporation’s fiscal year ends on February 28 or 29. References to a particular year refer to the fiscal year ending in February of that year. For example, 2012 refers to the year ended February 29, 2012.

These interim financial statements should be read in conjunction with the Corporation’s financial statements and notes thereto included in its Annual Report on Form 10-K for the year ended February 29, 2012, from which the Consolidated Statement of Financial Position at February 29, 2012, presented herein, has been derived. Certain amounts in the prior year financial statements have been reclassified to conform to the 2013 presentation. These reclassifications had no material impact on financial position, earnings or cash flows.

The Corporation’s investments in less than majority-owned companies in which it has the ability to exercise significant influence over the operation and financial policies are accounted for using the equity method except when they qualify as variable interest entities (“VIE”) and the Corporation is the primary beneficiary, in which case, the investments are consolidated in accordance with Accounting Standards Codification (“ASC”) Topic 810 (“ASC 810”), “Consolidation.” Investments that do not meet the above criteria are accounted for under the cost method.

The Corporation holds an approximately 15% equity interest in Schurman Fine Papers (“Schurman”), which is a VIE as defined in ASC 810. Schurman owns and operates specialty card and gift retail stores in the United States and Canada. The stores are primarily located in malls and strip shopping centers. During the current period, the Corporation assessed the variable interests in Schurman and determined that a third party holder of variable interests has the controlling financial interest in the VIE and thus, the third party, not the Corporation, is the primary beneficiary. In completing this assessment, the Corporation identified the activities that it considers most significant to the future economic success of the VIE and determined that it does not have the power to direct those activities. As such, Schurman is not consolidated in the Corporation’s results. The Corporation’s maximum exposure to loss as it relates to Schurman as of May 25, 2012 includes:

• the investment in the equity of Schurman of $1.9 million;

• the limited guaranty (“Liquidity Guaranty”) of Schurman’s indebtedness of $12 million;

• normal course of business trade accounts receivable due from Schurman of $15.8 million, the balance of which fluctuates throughout the year due to the seasonal nature of the business;

• the operating leases currently subleased to Schurman, the aggregate lease payments for the remaining life of which was $19.0 million, $22.1 million and $32.0 million as of May 25, 2012, February 29, 2012 and May 27, 2011, respectively; and

• the subordinated credit facility (the “Subordinated Credit Facility”) that provides Schurman with up to $10 million of subordinated financing.

The Corporation provides Schurman limited credit support through the provision of a Liquidity Guaranty in favor of the lenders under Schurman’s senior revolving credit facility (the “Senior Credit Facility”). Pursuant to the terms of the Liquidity Guaranty, the Corporation has guaranteed the repayment of up to $12 million of Schurman’s borrowings under the Senior Credit Facility to help ensure that Schurman has sufficient borrowing availability under this facility. The Liquidity Guaranty is required to be backed by a letter of credit for the term of the Liquidity Guaranty, which is currently anticipated to end in January 2014. The Corporation’s obligations under the Liquidity Guaranty generally may not be triggered unless Schurman’s lenders under its Senior Credit Facility have substantially completed the liquidation of the collateral under Schurman’s Senior Credit Facility, or 91 days after the liquidation is started, whichever is earlier, and will be limited to the deficiency, if any, between the amount owed and the amount collected in connection with the liquidation. There was no triggering event or liquidation of collateral as of May 25, 2012 requiring the use of the guaranty.

The Subordinated Credit Facility that the Corporation provides to Schurman had an initial term of nineteen months expiring on November 17, 2010, however, unless either party provides the appropriate written notice prior to the expiration of the applicable term, the facility automatically renews for periods of one year, except in the case of the last renewal, in which case the facility can only renew for the partial year ending on the facility’s expiration date of June 25, 2013. Schurman can only borrow under the facility if it does not have other sources of financing available, and borrowings under the Subordinated Credit Facility may only be used for specified purposes. Borrowings under the Subordinated Credit Facility are subordinate to borrowings under Schurman’s Senior Credit Facility and the Subordinated Credit Facility includes affirmative and negative non-financial covenants and events of default customary for such financings. As of May 25, 2012, Schurman had not borrowed under the Subordinated Credit Facility.

In addition to the investment in the equity of Schurman, the Corporation holds an investment in the common stock of Party City Holdings, Inc. (formerly known as AAH Holdings Corporation). These two investments, totaling $12.5 million are accounted for under the cost method. The Corporation is not aware of any events or changes in circumstances that had occurred during the first quarter of 2013 that the Corporation believes are reasonably likely to have had a significant adverse effect on the carrying amount of these investments.

During the quarter ended May 25, 2012, the Corporation recorded certain charges associated with activities and transactions related to Clinton Cards PLC (“Clinton Cards”) that do not have comparative amounts in the prior year period. The impact to the current quarter was additional charges of $31.0 million. These activities and transactions include the purchase of $56.6 million of the senior secured debt of Clinton Cards, Clinton Cards being placed into administration (a procedure similar to Chapter 11 bankruptcy in the United States), and the Corporation’s subsequent purchase of approximately 400 Clinton Cards’ stores. See Note 15 for further information. These charges are reflected on the Consolidated Statement of Operations as follows:

(In millions)	Contract asset impairment		Bad debt expense		Legal and advisory fees		Impairment of debt purchased		Total
Net sales	$	4.0	$	—	$	—	$	—	$	4.0
Administrative and general expenses		—		17.2		2.0		—		19.2
Other non-operating expense		—		—		—		7.8		7.8
	$	4.0	$	17.2	$	2.0	$	7.8	$	31.0

These charges are reflected in the Corporation’s reportable segments as follows:

(In millions)	Contract asset impairment		Bad debt expense		Legal and advisory fees		Impairment of debt purchased		Total
International Social Expression Products	$	4.0	$	17.2	$	—	$	—	$	21.2
Unallocated		—		—		2.0		7.8		9.8
	$	4.0	$	17.2	$	2.0	$	7.8	$	31.0

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Basis of Presentation (Details Textual) (USD $) In Millions, unless otherwise specified	3 Months Ended						3 Months Ended
	May 25, 2012 Investment	May 25, 2012 Clinton Cards [Member] Store	May 25, 2012 Schurman [Member]	May 25, 2012 Schurman [Member] Subordinated Credit Facility [Member]	May 25, 2012 Schurman [Member] Collectibility of Receivables [Member]	May 25, 2012 Investment in Equity [Member] Schurman [Member]	May 25, 2012 Liquidity Guaranty [Member] Schurman [Member]	May 25, 2012 Operating Lease Sublease to Schurman [Member]	Feb. 29, 2012 Operating Lease Sublease to Schurman [Member]	May 27, 2011 Operating Lease Sublease to Schurman [Member]
Variable Interest Entity [Line Items]
Equity Interest of Variable Interest Entity			15.00%
Maximum exposure to loss, Amount				$ 10.0	$ 15.8	$ 1.9	$ 12.0	$ 19.0	$ 22.1	$ 32.0
Number of days under liquidity guaranty							91 days
Initial term of Subordinated Credit Facility				19 months
End Period of Subordinated Credit Facility				November 17, 2010
Renewal Period of Subordinated Credit Facility				1 year
End period of Liquidity Guaranty							January 2014
Activities and transactions related to Clinton Cards PLC		31.0
Purchase of senior secured debt		56.6
Number of stores		400
Basis of Presentation (Textual) [Abstract]
Total investments	$ 12.5
Number of investments	2

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Basis of Presentation (Tables)	3 Months Ended
	May 25, 2012
Basis of Presentation [Abstract]
Schedule of charges with no comparative amounts in prior year	Schedule of charges with no comparative amounts in prior year
Charges reflected in the reportable segment	Charges reflected in the reportable segment

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Royalty Revenue and Related Expenses (Details) (USD $)	3 Months Ended
	May 25, 2012	May 27, 2011
Royalty expenses:
Material, labor and other production costs	$ 163,864,000	$ 157,929,000
Selling, distribution and marketing expenses	127,163,000	124,640,000
Administrative and general expenses	80,168,000	65,298,000
AG Intellectual Properties [Member]
Royalty revenue and related royalty expense
Royalty revenue	3,729,000	5,419,000
Royalty expenses:
Material, labor and other production costs	2,328,000	2,426,000
Selling, distribution and marketing expenses	656,000	1,345,000
Administrative and general expenses	422,000	389,000
Total expenses associated with royalty revenue	3,406,000	4,160,000
Intellectual Properties [Member]
Royalty revenue and related expense (Textual) [Abstract]
License charges	$ 2,100,000

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Other Income and Expense (Tables)	3 Months Ended
	May 25, 2012
Other Income and Expense [Abstract]
Other non-operating expense - net	Other operating expense (income) – net

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Seasonal Nature of Business

3 Months Ended

May 25, 2012

Seasonal Nature of Business [Abstract]

Seasonal Nature of Business

Note 2 – Seasonal Nature of Business

A significant portion of the Corporation’s business is seasonal in nature. Therefore, the results of operations for interim periods are not necessarily indicative of the results for the fiscal year taken as a whole.

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Consolidated Statement of Comprehensive (Loss) Income (Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	May 25, 2012	May 27, 2011
Consolidated Statement of Comprehensive (Loss) Income [Abstract]
Net income	$ 7,250	$ 32,593
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments	(8,400)	4,482
Pension and postretirement benefit adjustments	475	(16)
Unrealized gain on securities		1
Other comprehensive (loss) income, net of tax	(7,925)	4,467
Comprehensive (loss) income	$ (675)	$ 37,060

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Fair Value Measurements

3 Months Ended

May 25, 2012

Fair Value Measurements [Abstract]

Fair Value Measurements

Note 12 – Fair Value Measurements

Assets and liabilities measured at fair value are classified using the fair value hierarchy based upon the transparency of inputs as of the measurement date. The classification of fair value measurements within the hierarchy is based upon the lowest level of input that is significant to the measurement. The three levels are defined as follows:

• Level 1 – Valuation is based upon quoted prices (unadjusted) in active markets for identical assets or liabilities.

• Level 2 – Valuation is based upon quoted prices for similar assets and liabilities in active markets, or other inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

• Level 3 – Valuation is based upon unobservable inputs that are significant to the fair value measurement.

The following table summarizes the financial assets measured at fair value as of May 25, 2012:

	May 25, 2012		Level 1		Level 2		Level 3
Assets measured on a recurring basis:
Deferred compensation plan assets (1)	$	9,505	$	9,505	$	—	$	—

The following table summarizes the financial assets measured at fair value as of February 29, 2012:

	February 29, 2012		Level 1		Level 2		Level 3
Assets measured on a recurring basis:
Deferred compensation plan assets (1)	$	9,198	$	9,198	$	—	$	—

The following table summarizes the financial assets measured at fair value as of May 27, 2011:

	May 27, 2011		Level 1		Level 2		Level 3
Assets measured on a recurring basis:
Active employees’ medical plan trust assets	$	3,277	$	3,277	$	—	$	—
Deferred compensation plan assets (1)		8,688		8,688		—		—
Total	$	11,965	$	11,965	$	—	$	—
Assets measured on a nonrecurring basis:
Assets held for sale	$	5,282	$	—	$	5,282	$	—
Total	$	5,282	$	—	$	5,282	$	—

(1) There is an offsetting liability for the obligation to its employees on the Corporation’s books.

As of February 29, 2012, the active employees’ medical plan trust was terminated. During the prior year, the fair value of the investments in the active employees’ medical plan trust was considered a Level 1 valuation as it was based on the quoted market value per share of each individual security investment in an active market.

The deferred compensation plan includes mutual fund assets. Assets held in mutual funds were recorded at fair value, which was considered a Level 1 valuation as it is based on each fund’s quoted market value per share in an active market. The fair value of the related non-qualified deferred compensation liability is based on the fair value of the mutual fund and the Corporation is under no obligation to fund employees’ nonqualified accounts.

Certain assets are measured at fair value on a nonrecurring basis and are subject to fair value adjustments only in certain circumstances. During the fourth quarter of 2010, assets held for sale relating to the Corporation’s party goods product lines, including land and buildings, were written down to fair value of $5.9 million, less cost to sell of $0.3 million, or $5.6 million. During the fourth quarter of 2011, these assets were subsequently re-measured and an additional impairment charge of $0.3 million was recorded. The fair value of the assets held for sale was considered a Level 2 valuation as it was based on observable selling prices for similar assets that were sold within the past twelve to eighteen months. These assets related to the party goods product lines were sold in the third quarter of 2012.

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Document and Entity Information	3 Months Ended
	May 25, 2012	Jul. 02, 2012 Class A	Jul. 02, 2012 Class B
Entity Registrant Name	AMERICAN GREETINGS CORP
Entity Central Index Key	0000005133
Document Type	10-Q
Document Period End Date	May 25, 2012
Amendment Flag	false
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q1
Current Fiscal Year End Date	--02-28
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		30,946,627	2,858,712

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Income Taxes

3 Months Ended

May 25, 2012

Income Taxes [Abstract]

Income Taxes

Note 13 – Income Taxes

The Corporation’s provision for income taxes in interim periods is computed by applying its estimated annual effective tax rate against income before income tax expense for the period. In addition, non-recurring or discrete items are recorded during the period in which they occur. The magnitude of the impact that discrete items have on the Corporation’s quarterly effective tax rate is dependent on the level of income in the period. The effective tax rate was 30.4% and 35.8% for the three month periods ended May 25, 2012 and May 27, 2011, respectively. The lower than statutory rate for the three months ended May 25, 2012 was due primarily to the release of reserves upon lapse of the applicable statutes.

At May 25, 2012, the Corporation had unrecognized tax benefits of $29.6 million that, if recognized, would have a favorable effect on the Corporation’s income tax expense of $18.6 million. During the first quarter of 2013, the Corporation’s unrecognized tax benefits decreased approximately $1 million primarily due to the release of reserves upon lapse of the applicable statutes. It is reasonably possible that the Corporation’s unrecognized tax positions as of May 25, 2012 could decrease approximately $11 million during the next twelve months due to anticipated settlements and resulting cash payments related to open years after 1996, which are currently under examination.

The Corporation recognizes interest and penalties accrued on unrecognized tax benefits and refundable income taxes as a component of income tax expense. During the first quarter of 2013, the Corporation recognized net expense of less than $0.1 million for interest and penalties on unrecognized tax benefits and refundable income taxes. As of May 25, 2012, the total amount of gross accrued interest and penalties related to unrecognized tax benefits less refundable income taxes was a net payable of $8.4 million.

The Corporation is subject to examination by the U.S. Internal Revenue Service and various U.S. state and local jurisdictions for tax years 1996 to the present. The Corporation is also subject to tax examination in various international tax jurisdictions, including Canada, the United Kingdom (“UK”), Australia, Italy, Mexico and New Zealand for tax years 2006 to the present.

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Consolidated Statement of Financial Position (USD $) In Thousands, unless otherwise specified	May 25, 2012	Feb. 29, 2012	May 27, 2011
Current assets
Cash and cash equivalents	$ 60,180	$ 132,438	$ 211,139
Trade accounts receivable, net	97,657	113,840	137,213
Inventories	214,588	208,945	203,346
Deferred and refundable income taxes	63,910	58,118	61,533
Assets held for sale			7,180
Prepaid expenses and other	110,482	123,419	113,744
Total current assets	546,817	636,760	734,155
Goodwill			29,701
Other assets	530,452	503,700	427,714
Deferred and refundable income taxes	118,385	121,228	127,731
Property, plant and equipment - at cost	933,328	924,512	880,496
Less accumulated depreciation	640,511	636,736	630,684
Property, plant and equipment - net	292,817	287,776	249,812
Total assets	1,488,471	1,549,464	1,569,113
Current liabilities
Accounts payable	99,872	86,166	98,641
Accrued liabilities	62,610	58,657	64,527
Accrued compensation and benefits	40,582	68,317	35,163
Income taxes payable	11,007	7,409	18,752
Deferred revenue	34,351	35,519	35,802
Other current liabilities	48,395	49,013	64,305
Total current liabilities	296,817	305,081	317,190
Long-term debt	225,181	225,181	233,298
Other liabilities	265,294	269,367	187,484
Deferred income taxes and noncurrent income taxes payable	21,745	22,377	32,132
Shareholders' equity
Capital in excess of par value	513,917	513,163	502,131
Treasury stock	(1,060,244)	(1,020,838)	(951,643)
Accumulated other comprehensive (loss) income	(19,755)	(11,830)	2,121
Retained earnings	1,211,320	1,210,110	1,205,655
Total shareholders' equity	679,434	727,458	799,009
Total liabilities and stockholders' equity	1,488,471	1,549,464	1,569,113
Class A
Shareholders' equity
Common shares	31,336	34,011	37,942
Class B
Shareholders' equity
Common shares	$ 2,860	$ 2,842	$ 2,803

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Customer Allowances and Discounts

3 Months Ended

May 25, 2012

Customer Allowances and Discounts [Abstract]

Customer Allowances and Discounts

Note 7 – Customer Allowances and Discounts

Trade accounts receivable are reported net of certain allowances and discounts. The most significant of these are as follows:

(In thousands)	May 25, 2012		February 29, 2012		May 27, 2011
Allowance for seasonal sales returns	$	36,719	$	34,285	$	36,098
Allowance for outdated products		15,355		10,976		8,207
Allowance for doubtful accounts		21,366		4,480		5,932
Allowance for marketing funds		28,987		26,679		29,432
Allowance for rebates		33,106		27,648		31,862
	$	135,533	$	104,068	$	111,531

Certain customer allowances and discounts are settled in cash. These accounts, primarily rebates, which are classified as “Accrued liabilities” on the Consolidated Statement of Financial Position, totaled $12.5 million, $13.7 million and $13.5 million as of May 25, 2012, February 29, 2012 and May 27, 2011, respectively.

During the three months ended May 25, 2012, the Corporation recorded an additional allowance for doubtful accounts of approximately $17 million related to its unsecured accounts receivable exposure to Clinton Cards. See Note 15 for further information.

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Earnings Per Share

3 Months Ended

May 25, 2012

Earnings Per Share [Abstract]

Earnings Per Share

Note 6 – Earnings Per Share

The following table sets forth the computation of earnings per share and earnings per share—assuming dilution:

	Three Months Ended
	May 25, 2012		May 27, 2011
Numerator (in thousands):
Net income	$	7,250	$	32,593
Denominator (in thousands):
Weighted average shares outstanding		35,506		40,500
Effect of dilutive securities:
Share-based payment awards		648		1,299
Weighted average shares outstanding – assuming dilution		36,154		41,799
Earnings per share	$	0.20	$	0.80
Earnings per share – assuming dilution	$	0.20	$	0.78

Approximately 3.7 million and 2.2 million stock options outstanding for the three month periods ended May 25, 2012 and May 27, 2011, respectively, were excluded from the computation of earnings per share–assuming dilution because the options’ exercise prices were greater than the average market price of the common shares during the respective periods.

The Corporation issued 0.1 million Class A common shares upon exercise of employee stock options and vesting of equity awards during the three months ended May 25, 2012. The Corporation issued 0.5 million and 0.3 million Class A common shares and Class B treasury shares, respectively, upon exercise of employee stock options and vesting of equity awards during the three months ended May 27, 2011.

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Royalty Revenue and Related Expenses (Tables)	3 Months Ended
	May 25, 2012
Royalty Revenue and Related Expenses [Abstract]
Royalty revenue and related expenses	Royalty revenue and related expenses

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Business Segment Information

3 Months Ended

May 25, 2012

Business Segment Information [Abstract]

Business Segment Information

Note 14 – Business Segment Information

The Corporation has North American Social Expression Products, International Social Expression Products, AG Interactive and non-reportable segments. The North American Social Expression Products and International Social Expression Products segments primarily design, manufacture and sell greeting cards and other related products through various channels of distribution with mass merchandising as the primary channel. AG Interactive distributes social expression products, including electronic greetings and a broad range of graphics and digital services and products, through a variety of electronic channels, including Web sites, Internet portals, instant messaging services and electronic mobile devices. The Corporation’s non-reportable operating segments primarily include licensing activities and the design, manufacture and sale of display fixtures.

(In thousands)	Three Months Ended
Total Revenue:	May 25, 2012		May 27, 2011
North American Social Expression Products	$	308,559	$	304,684
International Social Expression Products		62,680		70,205
AG Interactive		15,496		16,608
Non-reportable segments		6,371		12,199
	$	393,106	$	403,696

(In thousands)	Three Months Ended
Segment Earnings (Loss) Before Tax:	May 25, 2012			May 27, 2011
North American Social Expression Products	$	56,218		$	59,294
International Social Expression Products		(22,557	)		3,303
AG Interactive		3,773			2,636
Non-reportable segments		(58	)		4,606
Unallocated
Interest expense		(4,376	)		(6,108	)
Profit sharing expense		(2,980	)		(3,687	)
Stock-based compensation expense		(1,869	)		(2,662	)
Corporate overhead expense		(17,731	)		(6,592	)
		(26,956	)		(19,049	)
	$	10,420		$	50,790

“Corporate overhead expense” includes costs associated with corporate operations including, among other costs, senior management, corporate finance, legal, and insurance programs.

Refer to Note 1 for segment information related to certain charges associated with activities and transactions in connection with Clinton Cards that do not have comparative amounts in the prior year.

Termination Benefits

Termination benefits are primarily considered part of an ongoing benefit arrangement, accounted for in accordance with ASC Topic 712, “Compensation – Nonretirement Postemployment Benefits,” and are recorded when payment of the benefits is probable and can be reasonably estimated.

The balance of the severance accrual was $5.0 million, $6.8 million and $5.8 million at May 25, 2012, February 29, 2012 and May 27, 2011, respectively. The payments expected within the next twelve months are included in “Accrued liabilities” while the remaining payments beyond the next twelve months are included in “Other liabilities” on the Consolidated Statement of Financial Position.

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Debt

3 Months Ended

May 25, 2012

Debt [Abstract]

Debt

Note 10 – Debt

As of May 25, 2012, the Corporation was a party to a $400 million credit agreement and to an accounts receivable facility that provides funding of up to $70 million. There were no balances outstanding under the Corporation’s credit agreement or accounts receivable facility at May 25, 2012, February 29, 2012 and May 27, 2011, respectively. The Corporation had, in the aggregate, $30.6 million outstanding under letters of credit under these borrowing agreements, which reduces the total credit available to the Corporation thereunder.

There was no debt due within one year as of May 25, 2012, February 29, 2012 and May 27, 2011, respectively.

Long-term debt and their related calendar year due dates, net of unamortized discounts, which were zero as of May 25, 2012 and February 29, 2012, respectively, and $21.6 million as of May 27, 2011, were as follows:

(In thousands)	May 25, 2012		February 29, 2012		May 27, 2011
7.375% senior notes, due 2021	$	225,000	$	225,000	$	—
7.375% senior notes, due 2016		—		—		213,323
7.375% notes, due 2016		—		—		19,794
6.10% senior notes, due 2028		181		181		181
	$	225,181	$	225,181	$	233,298

The total fair value of the Corporation’s publicly traded debt, which was considered a Level 1 valuation as it was based on quoted market prices, was $229.1 million (at a carrying value of $225.2 million), $239.6 million (at a carrying value of $225.2 million) and $240.8 million (at a carrying value of $233.3 million) at May 25, 2012, February 29, 2012 and May 27, 2011, respectively.

At May 25, 2012, the Corporation was in compliance with the financial covenants under its borrowing agreements.

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Inventories

3 Months Ended

May 25, 2012

Inventories [Abstract]

Inventories

Note 8 – Inventories

(In thousands)	May 25, 2012		February 29, 2012		May 27, 2011
Raw materials	$	18,290	$	17,565	$	24,539
Work in process		13,070		9,452		13,091
Finished products		243,951		242,767		225,886
		275,311		269,784		263,516
Less LIFO reserve		82,192		81,077		79,465
		193,119		188,707		184,051
Display materials and factory supplies		21,469		20,238		19,295
	$	214,588	$	208,945	$	203,346

The valuation of inventory under the Last-In, First-Out (“LIFO”) method is made at the end of each fiscal year based on inventory levels and costs at that time. Accordingly, interim LIFO calculations, by necessity, are based on estimates of expected fiscal year-end inventory levels and costs, and are subject to final fiscal year-end LIFO inventory calculations.

Inventory held on location for retailers with scan-based trading arrangements, which is included in finished products, totaled $59.0 million, $52.0 million and $51.4 million as of May 25, 2012, February 29, 2012 and May 27, 2011, respectively.

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Deferred Costs

3 Months Ended

May 25, 2012

Deferred Cost [Abstract]

Deferred Costs

Note 9 – Deferred Costs

Deferred costs and future payment commitments for retail supply agreements are included in the following financial statement captions:

(In thousands)	May 25, 2012			February 29, 2012			May 27, 2011
Prepaid expenses and other	$	85,622		$	94,071		$	78,366
Other assets		378,091			395,397			319,536
Deferred cost assets		463,713			489,468			397,902
Other current liabilities		(45,625	)		(45,891	)		(62,998	)
Other liabilities		(131,883	)		(137,360	)		(72,523	)
Deferred cost liabilities		(177,508	)		(183,251	)		(135,521	)
Net deferred costs	$	286,205		$	306,217		$	262,381

The Corporation maintains an allowance for deferred costs related to supply agreements of $9.2 million, $10.0 million and $10.4 million at May 25, 2012, February 29, 2012 and May 27, 2011, respectively. This allowance is included in “Other assets” on the Consolidated Statement of Financial Position.

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Retirement Benefit

3 Months Ended

May 25, 2012

Retirement and Postretirement Benefit Plans [Abstract]

Retirement Benefits

Note 11 – Retirement Benefits

The components of periodic benefit cost for the Corporation’s defined benefit pension and postretirement benefit plans are as follows:

	Defined Benefit Pension						Postretirement Benefit
	Three Months Ended						Three Months Ended
(In thousands)	May 25, 2012			May 27, 2011			May 25, 2012			May 27, 2011
Service cost	$	334		$	204		$	213		$	363
Interest cost		1,844			2,146			800			1,210
Expected return on plan assets		(1,613	)		(1,672	)		(840	)		(1,098	)
Amortization of prior service cost (credit)		61			59			(519	)		(638	)
Amortization of actuarial loss		816			569			—			—
	$	1,442		$	1,306		$	(346	)	$	(163	)

The Corporation has a discretionary profit-sharing plan with a 401(k) provision covering most of its United States employees. The profit-sharing plan expense for the three months ended May 25, 2012 was $3.0 million, compared to $3.7 million in the prior year period. The Corporation also matches a portion of 401(k) employee contributions. The expense recognized for the 401(k) match was $1.3 million and $1.4 million for the three months ended May 25, 2012 and May 27, 2011, respectively. The profit-sharing plan and 401(k) matching expenses for the three month periods are estimates as actual contributions are determined after fiscal year-end.

At May 25, 2012, February 29, 2012 and May 27, 2011, the liability for postretirement benefits other than pensions was $26.2 million, $24.8 million and $25.6 million, respectively, and is included in “Other liabilities” on the Consolidated Statement of Financial Position. At May 25, 2012, February 29, 2012 and May 27, 2011, the long-term liability for pension benefits was $75.6 million, $75.7 million and $59.9 million, respectively, and is included in “Other liabilities” on the Consolidated Statement of Financial Position.

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Basis of Presentation (Details 1) (USD $)	3 Months Ended
	May 25, 2012	May 27, 2011
Charges reflected in the reportable segment
Bad debt expense	$ 16,886,000	$ 558,000
Clinton Cards [Member]
Charges reflected in the reportable segment
Contract asset impairment	4,000,000
Bad debt expense	17,200,000
Legal and advisory fees	2,000,000
Impairment of debt purchased	7,800,000
Total	31,000,000
International Social Expression Products [Member] | Clinton Cards [Member]
Charges reflected in the reportable segment
Contract asset impairment	4,000,000
Bad debt expense	17,200,000
Total	21,200,000
Unallocated [Member] | Clinton Cards [Member]
Charges reflected in the reportable segment
Legal and advisory fees	2,000,000
Impairment of debt purchased	7,800,000
Total	$ 9,800,000

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Fair Value Measurements (Details Textual) (USD $)	May 27, 2011 Nonrecurring [Member]	Feb. 28, 2011 Party Goods Product Line [Member]	Feb. 28, 2010 Party Goods Product Line [Member]
Fair Value Measurements (Textual) [Abstract]
Assets held for sale fair value before cost of sell			$ 5,900,000
Assets held for sale cost to sell			300,000
Assets held for sale	5,282,000		5,600,000
Impairment charge		$ 300,000
Selling period of assets valued based on observable selling prices		past twelve to eighteen months

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Significant Accounting Policies (Policies)	3 Months Ended
	May 25, 2012
Significant Accounting Policies [Abstract]
Fair Value Measurement	Fair Value Measurement
Comprehensive Income	Comprehensive Income
Testing Goodwill for Impairment	Testing Goodwill for Impairment

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Customer Allowances and Discounts (Tables)	3 Months Ended
	May 25, 2012
Customer Allowances and Discounts [Abstract]
Allowances and discounts on trade accounts receivable	Allowances and discounts on trade accounts receivable

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Retirement Benefits (Details Textual) (USD $) In Millions, unless otherwise specified				3 Months Ended
	May 25, 2012	Feb. 29, 2012	May 27, 2011	May 25, 2012 Profit Sharing [Member] Domestic [Member]	May 27, 2011 Profit Sharing [Member] Domestic [Member]	May 25, 2012 Defined Contribution Plan [Member] Domestic [Member]	May 27, 2011 Defined Contribution Plan [Member] Domestic [Member]
Defined Benefit Plan Disclosure [Line Items]
Corporate contributions to the profit sharing plan				$ 3.0	$ 3.7	$ 1.3	$ 1.4
Retirement Benefits (Textual) [Abstract]
Liability for postretirement benefits other than pensions	26.2	24.8	25.6
Long-term liability for pension benefits	$ 75.6	$ 75.7	$ 59.9

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Customer Allowances and Discounts (Details) (USD $) In Thousands, unless otherwise specified	May 25, 2012	Feb. 29, 2012	May 27, 2011
Allowances and discounts on trade accounts receivable
Allowances and discounts on trade accounts receivables	$ 135,533	$ 104,068	$ 111,531
Allowance for seasonal sales returns [Member]
Allowances and discounts on trade accounts receivable
Allowances and discounts on trade accounts receivables	36,719	34,285	36,098
Allowance for outdated products [Member]
Allowances and discounts on trade accounts receivable
Allowances and discounts on trade accounts receivables	15,355	10,976	8,207
Allowance for doubtful accounts [Member]
Allowances and discounts on trade accounts receivable
Allowances and discounts on trade accounts receivables	21,366	4,480	5,932
Allowance for doubtful accounts [Member] | Clinton Cards [Member]
Allowances and discounts on trade accounts receivable
Allowances and discounts on trade accounts receivables	17,000
Allowance for marketing funds [Member]
Allowances and discounts on trade accounts receivable
Allowances and discounts on trade accounts receivables	28,987	26,679	29,432
Allowance for rebates [Member]
Allowances and discounts on trade accounts receivable
Allowances and discounts on trade accounts receivables	$ 33,106	$ 27,648	$ 31,862

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Consolidated Statement of Cash Flows (Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	May 25, 2012	May 27, 2011
OPERATING ACTIVITIES:
Net income	$ 7,250	$ 32,593
Adjustments to reconcile net income to cash flows from operating activities:
Stock-based compensation	1,869	2,662
Net loss on disposal of fixed assets	156	86
Depreciation and intangible assets amortization	11,469	10,988
Provision for doubtful accounts	16,886	558
Deferred income taxes	(3,913)	1,147
Other non-cash charges	8,085	872
Changes in operating assets and liabilities, net of acquisitions:
Trade accounts receivable	(2,176)	(12,947)
Inventories	(7,161)	(18,750)
Other current assets	4,093	2,378
Income taxes	3,445	7,596
Deferred costs - net	19,560	13,099
Accounts payable and other liabilities	(12,830)	(27,922)
Other - net	3,165	536
Total Cash Flows From Operating Activities	49,898	12,896
INVESTING ACTIVITIES:
Property, plant and equipment additions	(16,432)	(9,825)
Cash payments for business acquisitions, net of cash acquired		(5,992)
Proceeds from sale of fixed assets	19	24
Purchase of Clinton Cards debt	(56,560)
Total Cash Flows From Investing Activities	(72,973)	(15,793)
FINANCING ACTIVITIES:
Issuance or exercise of share-based payment awards	(728)	10,061
Tax (deficiency) benefit from share-based payment awards	(421)	1,939
Purchase of treasury shares	(40,542)	(9,942)
Dividends to shareholders	(5,369)	(6,062)
Total Cash Flows From Financing Activities	(47,060)	(4,004)
EFFECT OF EXCHANGE RATE CHANGES ON CASH	(2,123)	2,202
DECREASE IN CASH AND CASH EQUIVALENTS	(72,258)	(4,699)
Cash and Cash Equivalents at Beginning of Year	132,438	215,838
Cash and Cash Equivalents at End of Period	$ 60,180	$ 211,139

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Other Income and Expense

3 Months Ended

May 25, 2012

Other Income and Expense [Abstract]

Other Income and Expense

Note 5 – Other Income and Expense

During the three months ended May 25, 2012, the Corporation recorded expenses totaling $2.1 million related to the termination of certain agency agreements associated with our licensing business, which is included in “Other operating expense (income) – net” on the Consolidated Statement of Income.

	Three Months Ended
(In thousands)	May 25, 2012			May 27, 2011
Foreign exchange (gain) loss	$	(1,456	)	$	717
Rental income		(636	)		(471	)
Loss on asset disposal		156			86
Miscellaneous		7,615			(173	)
Other non-operating expense – net	$	5,679		$	159

“Miscellaneous” includes, among other things, income/loss from debt and equity securities. In the three months ended May 25, 2012, the Corporation recorded a loss of $7.8 million related to the senior secured debt of Clinton Cards that the Corporation acquired during the current quarter. See Note 15 for further information.

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Inventories (Tables)	3 Months Ended
	May 25, 2012
Inventories [Abstract]
Inventories	Inventories

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Other Income and Expense (Details Textual) (USD $) In Millions, unless otherwise specified	3 Months Ended
	May 25, 2012
Intellectual Properties [Member]
Other Income and Expense (Textual) [Abstract]
Contract Termination	$ 2.1
Clinton Cards [Member]
Other Income and Expense (Textual) [Abstract]
Expenses related to senior secured debt	$ 7.8

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Subsequent Event

3 Months Ended

May 25, 2012

Subsequent Event [Abstract]

Subsequent Event

Note 15 – Subsequent Event

During the current quarter, the Corporation acquired all of the outstanding senior secured debt of Clinton Cards for $56.6 million (£35 million) through Lakeshore Lending Limited (“Lakeshore”), a wholly owned subsidiary of the Corporation organized under the laws of the UK. Subsequently, on May 9, 2012, Clinton Cards was placed into administration, a procedure similar to Chapter 11 bankruptcy in the United States. Prior to entering into administration, Clinton Cards had approximately 750 stores and annual revenues of approximately $600 million across its two primary retail brands, Clinton Cards and Birthdays. The legacy Clinton Cards business has been an important customer to the Corporation’s international business for approximately forty years and was one of the Corporation’s largest customers. The Corporation took this action in an effort to protect its interests and work more closely with all involved parties.

As part of the administration process, the administrators (“Administrators”) of Clinton Cards and certain of its subsidiaries (the “Sellers”) conducted an auction of the certain assets of the business of the Sellers that they believed constituted a viable ongoing business. Lakeshore bid $37.2 million (£23 million) for certain of these remaining assets. The bid took the form of a “credit bid,” where the Corporation uses a portion of the outstanding senior secured debt owed to Lakeshore by Clinton Cards to pay the purchase price for the assets. The bid was accepted by the Administrators and on June 6, 2012, through its wholly owned subsidiaries, UK Greetings Limited and Lakeshore, the Corporation entered into an agreement with the Sellers and the Administrators for the purchase of certain assets and the related business of the Sellers.

Under the terms of the agreement, it is expected that the Corporation will acquire approximately 400 stores from the Sellers, together with related inventory and overhead, as well as the Clinton Cards and related brands. The asset acquisition is expected to result in a net increase in the Corporation’s annual revenues of approximately $265 million, although the final number will depend on the ultimate number of stores acquired, which is subject to further negotiations with landlords at each respective location. The landlords must generally consent to the assignment of the leases for such stores on terms that are acceptable to the Corporation. If the Corporation cannot negotiate acceptable lease assignments, or if the applicable landlord withholds consent to the assignment of its store lease, then the Corporation may close the store and the Sellers will be responsible for any further obligations under the store lease. The stores and assets not acquired by the Corporation remain part of the administration process. It is anticipated that these remaining assets not purchased by the Corporation will be liquidated and proceeds will be used to repay the creditors of the Sellers, including the Corporation. The Corporation will seek to recover the $19.4 million (£12 million) remaining senior secured debt claim held by it through the liquidation process. However, based on the estimated recovery information provided by the Administrators, the Corporation recorded a loss of $7.8 million relating to the senior secured debt it acquired in the current year first quarter. The liquidation process and the negotiations with landlords for stores included in the aforementioned acquisition, is expected to take approximately six to twelve months.

Separate from the acquired senior secured debt, the Corporation had unsecured accounts receivable exposure to Clinton Cards. Based on the expected recovery shortfall on the senior secured debt noted above, a majority of the unsecured accounts receivable is not expected to be collected. Accordingly, the Corporation recorded bad debt expense of $17.2 million relating to the unsecured accounts receivable during the three months ended May 25, 2012. In addition, with the May 2012 announcement by the Administrators that all of Clinton Cards’ Birthdays branded retail stores would be liquidated, the Corporation recorded an impairment charge of $4.0 million for the deferred costs related to the Birthdays stores.

The Corporation expects that the new retail operations will be reported as a separate reportable segment in the current year second quarter.