Form DEFA14A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

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American Greetings Corporation

(Exact name of Registrant as specified in its charter)

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The following presentation was delivered to Institutional Shareholder Services today.

American Greetings

Investor Presentation

July 18, 2013

Transaction Summary

Strategic Rationale

Process

Valuation

Topics

Transaction Summary

Strategic Rationale

Process

Valuation

Transaction Summary

Merger Price:

Offer Premium:

Shareholder Meeting:

Required Vote:

On April 1, 2013, American Greetings Corporation announced that it had signed a definitive

agreement

under

which

the

Weiss

Family

would

acquire

the

Company

for

$18.20

cash.

July

2013,

announced

that

had

signed

amendment

the

merger

agreement

providing

for

increased per share price of $19.00 in cash

Funding:

•

$19.00 per share in cash for all shares not owned by the Family and related

entities

•

In addition, a regular quarterly dividend of $0.15 paid in July 2013

•

32.5%

the

9/25/12

stock

price

(unaffected

closing

price

prior

the

Family’s

initial offer); 33.1% to the average stock price for 45-days prior to initial offer

•

18.0%

the

3/28/13

stock

price

(last

trading

day

prior

the

public

announcement

of a definitive merger agreement)

•

26.5%

the

LTM

EBITDA

multiple

over

average

LTM

EBITDA

9/25/12

•

4.4%

to the $18.20 price per share under the original merger agreement

•

Transaction financed through:

–

Contributions of American Greetings shares owned by the Family

–

~$240 million non-voting preferred stock investment from Koch AG Investment

–

$600 million in committed debt financing ($350 million funded term loan and

$250 million partially funded revolving credit facility)

•

August 7, 2013

•

Affirmative vote of holders of a majority of the common stock not held by the

Family

and

entities

any

director

executive

officer

(“Majority

the

Minority”)

Transaction Summary

Strategic Rationale

Process

Valuation

Strategic Rationale

Executive Summary

•

American Greetings is at an inflection point

–

Paper greeting cards and gift packaging constitute ~88% of our business, and the

market is shrinking—we are experiencing persistent year-over-year declines in sales

of the core greeting card business, due to combination of a number of factors,

including:

•

A shrinking base of card and gift shops

•

Increasing distribution through the value channel

•

The effects of the explosion of social media

–

Opportunities in the electronic social expressions channel of distribution exist, but

require substantial investment and entail significant execution risk

–

Substantial

required

deferred

maintenance

spending

systems

and

new

substantially rehabilitated headquarters

–

Company requires capital investment at roughly 3x normal levels over next three

years

–

Transaction transfers all business risk to the Family; gives public shareholders

certainty of cash at a significant premium

Strategic Rationale

Executive Summary (cont’d)

•

The Company’s stock has consistently underperformed in trading markets

–

Strategy of returning cash to shareholders (over $1 billion to Class A public

shareholders

through

dividends

and

repurchases

since

FY2005)

has

not

been

successful in driving share price performance

–

The

following

are

likely

contributing

weak

stock

performance:

core

market

shrinking, revenue growth challenges, margin pressures, complex changes in

portfolio

businesses,

lack

comparable

companies,

virtually

analyst

coverage

and necessary investments

–

Many investors are under pressure to produce short-term and intermediate returns,

especially in today’s low-yield environment, making it difficult to hold shares through

business

transformations,

and

creating

further

downward

pressure

price

–

During this period, share prices will likely be put under pressure

–

Transformational expenses will detract from AG’s results of operations

•

The

Family

has

controlled

for

over

100

years,

and

wants

what

best

for

while being fair to public shareholders—the Family does not think the required

transformation can realistically be achieved as a public company

•

If the transaction is voted down, the capital that must be redeployed into the business for

the foreseeable future will not be available to shareholders

•

American Greetings engages in the design, manufacture and sale of greeting cards and

other social expression products in the United States and internationally

•

Segments include:

–

North American Social Expression Products (includes Cardstore.com)

–

International Social Expression Products

–

Interactive or internet brands (e.g., AmericanGreetings.com, BlueMountain.com,

egreetings.com)

–

UK Retail (Clintons)

–

Other, including in-store display fixture business and licensing of intellectual

properties (e.g., Care Bears and Strawberry Shortcake)

•

The Company distributes its greeting card products through mass merchandisers, dollar

stores, chain drug stores, supermarkets, card and gift shops

Business Overview

FY2013 Revenue Breakout by Segment / Product Category

74% of FY2013

Revenue came from

Core Paper Greeting

Card sales

2.6

2.5

2.4

2.3

2.0

2.2

2.4

2.6

2.8

3.0

CY07

CY08

CY09

CY10

CY11

CY12

6.2

6.1

6.0

5.9

5.7

5.8

5.9

6.0

6.1

6.2

6.3

CY07

CY08

CY09

CY10

CY11

CY12

Greeting Cards Industry Faces Persistent,

Accelerating Decline

•

Mature greeting cards industry experiencing long-term and accelerating unit decline (2%-4%

decline / year since CY 2007)

–

Pace of decline meaningfully accelerated in 2011 and 2012, despite improved economy

–

Most lucrative “heavy user”

customer base saw declining volume in 2012 (-1.5%)

•

Social media, including Facebook and other e-greeting technologies, have exerted competitive

pressure on American Greetings and the industry overall

•

While price increases have softened the revenue impact, sustainability is uncertain given

absolute prices, emergence of mass retailers/dollar stores and increasing electronic pressures

Source:

IRI

scan

data,

proprietary

consumer

surveys,

management

estimates.

Units

Dollars

U.S. Greeting Card Industry Units and Dollar Sales Trends

Billions

CY07-CY12 CAGR: (2.6%)

Billions

CY07-CY12 CAGR: (0.8%)

Declining Industry Trends

•

Consumer

purchases

driven

selection

and

convenience

than

brand

–

Adult participation in social networking and media has grown to ~52% in 2012 from

~11% in 2006

•

Retailer consolidation increases retailer purchasing power

•

Channel shift

Mass retailers and dollar stores growing share as card and gift shops

(specialty retail) decline

–

More volume sold at lower price points and lower margins

•

Electronic channels of social expression have emerged as potentially major disruptors to our

core industry

Source: IRI scan data, AG proprietary consumer surveys, management estimates.

(a) Does not include e-cards

Card Category History and Projections by Channel

Units

Dollars

Stock Price Performance

Source: Capital IQ as of 7/2/13.

(a) Represents closing price as of 9/25/12, unaffected for announcement of Initial Offer, which was made after the market close.

•

In the two years prior to the initial Family offer, AG’s stock price was down 30% despite having returned

over $180 million of capital to shareholders in that period

–

the

same

period,

the

S&P

400

Consumer

Discretionary

Index

was

40%

–

Correlation

between

AG’s

stock

price

and

the

broader

market

has

been

very

low

over

both

short-

and long-term periods

Trading Ranges Nearly Always Below Final Offer

30-Days

Between 9/25 Initial Proposal and 7/2 (191 Days)

180-Days

1-Year

Source: Capital IQ as of 7/2/13.

•

99% of shares traded over the one-year period prior to the Family’s initial proposal traded below $19.00

•

100% of shares traded below $16.50 in the six months prior to the initial proposal

(Period ending September 25, 2012, except where noted)

American Greetings 15-Year Stock Price Chart

Marked Decline in Equity Value

American Greetings 15-Year Total Shareholders' Equity Value History

Source: Capital IQ.

Lackluster Stock Price Performance Despite

Major Return of Capital to Shareholders

•

Since FY2005, AG has returned over $1 billion of capital to Class A public shareholders

through share repurchases and dividends

–

Despite major share repurchases and dividends, AG’s unaffected stock price has declined

38% since 2005 and 82% since 1997; the Company’s strategy of returning significant

capital to shareholders has not been successful

Deployment of Capital to Class A Shareholders ($ in millions)

Source: Company’s public filings. Class A dividends calculated by applying ratio of average Class A shares outstanding to average Class B shares outstanding in each fiscal year to total dividends paid in such year.

Limited Benefit to Being Public

Source: Bloomberg, Capital IQ, ThomsonOne

(a) ADTV calculated as averaged trading volume over 30 consecutive trading days

–

Lack

comparable

public

companies

discourages investment in equity research and

investor education

–

Largest competitor (Hallmark Cards) is privately

owned

–

Social expressions is an adjacent market to

consumer goods, limiting interest from institutions

focused on the consumer goods markets

•

Many of the standard benefits enjoyed by public

companies do not exist for American Greetings

–

Limited institutional support –

only one equity coverage

analyst

–

Industry fundamentals do not support future equity

research coverage or institutional investment

–

Average daily trading volume and declining public share

float further hinder liquidity and appetite for public

investment

–

On average over the six months prior to the Family’s

initial offer, short interest accounted for 40% of AG’s

share float –

investors have recognized that our core

market is shrinking

Shares Outstanding and Average Daily Trading Volume ("ADTV")

(a)

Industry Fundamentals

Limited

Institutional

Support

–

Equity

Coverage

Analysts

American Greetings is at a Significant Competitive

Disadvantage as Long as it is Publicly Traded

•

American Greetings’

largest competitor is privately held and able to invest and re-

invest in its business without the pressure to produce period-over-period revenue,

earnings and cash flow growth

–

Expanding business with retail customers can require significant upfront expenses

before revenue and profit are generated, thereby putting substantial pressure on

short-term results and causing earnings volatility

–

American

Greetings

recently

developed

significant

new

customer

relationship

with a national retailer; however, assuming a contract is signed, the relationship

would require substantial investment in the early years and has a negative NPV

over the first five years

–

After American Greetings publicly reports strong operating results, commercial

negotiations become more difficult as retail customers push contract terms

–

private

company,

American

Greetings

will

subject

less

commercial

negotiating stress, and be better able to optimize its retail partner negotiations

much like its largest competitor

Industry Challenges and Necessary Redirection of

Capital Increase Downside Risks for Public Holders

•

Persistent decline in the core paper greeting cards industry of 2%-4% unit volume

annually (including 3.7% decline in most recent year)

–

Intensifying risks to the core paper greeting cards industry posed by transition to the

use of social media, decrease in number of specialty retailers and growing

proportion of value channel sales

–

Material costs associated with investments in online/digital social expression

products with uncertain return

–

Increasing concentration of retailers exacerbates pressure on commercial terms

–

The Company will continue to support investment in the value channel as a source

of potential unit growth, despite negative implications on margins

•

Alternatives evaluated, such as a substantial special dividend or leveraged

recapitalization transaction, would reduce the Company’s flexibility and jeopardize the

equity value of the Company

•

Substantial investments required over the next several years (restructuring Clinton

Cards,

modernization

systems,

new

significant

rehabilitation

headquarters)

will adversely affect earnings and cash flow

•

These factors, taken collectively, evidence significant challenges facing the Company

were it to remain public, and support the recommendation to deliver certain value to

shareholders

Transaction Summary

Strategic Rationale

Process

Valuation

Process

Executive Summary

•

Fully independent Special Committee advised by nationally recognized independent

advisors

•

Financial advisor’s fees not conditioned on rendering a favorable opinion as to the

transaction

•

Special Committee empowered to consider/pursue alternatives and to reject any

proposed transaction

•

The Family did not participate in any board deliberations concerning the proposal

•

Transaction

conditioned

“majority

the

minority”

vote

•

Standstill after public announcement of Family proposal to ensure negotiating leverage

and

adequate

time

for

third

party

express

interest

(no

such

interest

was

expressed)

•

Special Committee negotiated a substantial increase in Family’s offer price

•

Special Committee continued to evaluate the Company after the March 28, 2013

agreement was reached, and extracted additional value for shareholders

Experienced / Independent Special Committee

and Independent Advisors

The Special Committee:

•

Dr.

Scott

Cowen:

President

Tulane

University,

former

Dean

Case

Western

Reserve

University,

former

Chairman

Special

Committee

for

Jo-Ann

Stores’

going-private

LBO

•

Jeffrey D. Dunn:

Former President and Chief Executive Officer and director of

HIT Entertainment Limited

•

William

MacDonald,

III:

Former

Vice

Chairman

National

City

Corporation

•

Michael

Merriman,

Jr.:

Former

CEO

Lamson

Sessions

Corporation

Advisors to the Special Committee:

•

Peter J. Solomon Company, financial advisor

•

Sullivan & Cromwell, legal advisor

Key Process and Proposal Highlights

•

American Greetings was founded by Jacob Sapirstein in 1906, and has remained

controlled by descendants of Jacob Sapirstein (now the Weiss Family) throughout the

Company’s existence

•

A/B voting structure in existence since 1955; public shareholders invested knowingly into

Family-controlled company with an A/B voting structure

•

During the six-month public process, prospective parties interested in contacting the

Special Committee or PJSC were able to do so

–

10/19/12,

the

Company

issued

press

release

stating

that

the

Special

Committee was authorized to review and evaluate other options, signaling openness

to third-party approaches

–

No third party expressed interest in acquiring or entering into any other transaction

with the Company during that six-month period (or to date)

–

standstill

provision

prohibited

the

Family

from

pursuing

bid

(or

taking

certain

other related actions) without the consent of the Special Committee

•

Record reflects extensive negotiation by the Special Committee

•

The

Family

did

not

participate

any

deliberations

American

Greetings’

Board

Directors regarding the proposal

•

Special Committee actively controlled Family access to company management

Robust Special Committee Process

•

Board of Directors delegated to the Special Committee the exclusive power and authority to

recommend what action, if any, should be taken with respect to the Family’s proposal

–

The Committee could have just said no, or approved a financial alternative

•

Counsel for Special Committee and Family negotiated confidentiality agreement with standstill

–

Contained 22-week standstill provision that limited the ability of the Family

to make a

proposal directly to the Company’s shareholders or to purchase shares

–

Special Committee also obtained a 12-month standstill from the Family’s potential

financing sources, effectively limiting the ability of the Family to acquire the Company

without Special Committee approval

•

Special Committee of four independent directors also empowered to consider and

recommend that the Board take action with respect to strategic alternatives, including the

ability to reject the Family’s proposal and remain a public company or pursue a financial

alternative

•

The Special Committee met 27 times between its formation and original announcement of the

transaction and evaluated alternatives, including:

–

Continuing as a stand-alone public company

–

Undertaking a recapitalization (including share repurchases and/or dividends)

–

Sale of Company to the Family

•

The Special Committee met an additional seven times between the original announcement of

the transaction and the announcement of the amendment to the merger agreement

Robust Special Committee Process (cont’d)

•

The Board fully considered and adopted the Special Committee’s recommendation in

making its decision to unanimously recommend the transaction to the shareholders

•

The

Special

Committee

demanded

and

secured

“Majority

the

Minority”

shareholder

approval requirement; shares beneficially owned by directors, officers and the Family not

counted in Majority of Minority vote

–

Negates voting interest of Family and other officers and directors

–

Remaining Class B shares receive only one vote

–

Enables public shareholders to determine whether transaction will occur

•

The Special Committee continued to evaluate the Company after the original merger

agreement

was

signed,

and

demanded

and

secured

enhancement

the

per

merger consideration

–

The Family Shareholders believe that the financial developments during the

Company’s first fiscal quarter of 2014 were neither material nor reflective of any

fundamental

improvement

the

trajectory

American

Greetings’

business;

nevertheless, the Special Committee was able to extract an additional 4.4% premium

($0.80 per share) for the public shareholders

Arm’s-Length Legal Negotiations

•

On behalf of the Family, Jones Day delivered the first draft of the Merger Agreement on

January 19, 2013, and the agreement was negotiated by Jones Day and Sullivan &

Cromwell until March 29, 2013. As compared to Jones Day’s initial draft of the

agreement, the final version reflects several key concessions secured by the Special

Committee, including:

–

The Majority of the Minority shareholder vote

–

A $7.3 million joint and several guaranty from the Family with respect to the obligations of the

purchasing entities

–

The

Special

Committee's

ability

change

its

recommendation

due

intervening

event

affecting AG’s prospects as a publicly traded company

–

The obligation of the Family Shareholders to deliver a fully executed preferred stock purchase

agreement for the preferred equity concurrently with the execution of the Merger Agreement, as

opposed to simply providing a commitment letter

–

More favorable language on customarily negotiated items such as representations, warranties,

covenants and other provisions affecting closing certainty

–

The cancellation, without consideration, of the various equity awards held by the Family

Shareholders with an aggregate value of over $9.3 million

Transaction Summary

Strategic Rationale

Process

Valuation

Valuation Overview

•

Special Committee believes that the $19.00 per share consideration (reached after

prolonged negotiations) represents the highest per share consideration it could obtain

from the Family

•

$19.00 proposal represents a 32.5% premium to the 9/25/12 unaffected closing price

prior to the Family’s initial proposal

•

Company’s financial results in recent years have been significantly affected by non-

recurring, one-time and other special items

–

~40% of FY2013E Adjusted EBIT was related to one-time adjustments

–

Makes it difficult to identify clear trends in the Company’s business and the

Company’s likely future financial performance

–

Results in inconsistent cash flows

–

Company’s EBIT has consistently underperformed relative to strategic plans, raising

concerns about certainty of future EBIT forecasts

$12.50

$15.25

$13.00

$16.00

$16.75

$17.00

$19.50

$25.00

$22.50

$23.25

$25.50

$23.00

$10.00

$12.50

$15.00

$17.50

$20.00

$22.50

$25.00

$27.50

52-Week Trading Range Prior

to 9/25/13 Offer

Comparable Companies

Precedent Transactions

Present Value of Future Share

Price (a)

Sum of the Parts

DCF

(a)

Includes

present

value

future

quarterly

dividend

payments

$0.15

per

share.

Valuation Analysis Summary

1/17/13

Offer

Unaffected Share

9/25/12

$14.34

$17.18

9/25/12

Initial Offer

3/28/13

Offer

$18.20

7/1/13

Offer

$19.00

Compelling Offer to Shareholders

•

Attractive Premium

–

32.5% premium to unaffected share price prior to Family’s initial proposal (9/25/12)

–

33.1% premium to 45 trading day average prior to Family’s initial proposal

–

18.0% premium to closing stock price prior to announcement of original definitive merger

agreement (3/28/13)

–

4.4% premium to the price per share contained in the original March 29, 2013 merger agreement

•

Premium Multiple

–

4.0x FY13E EBITDA based on Management Treasury Model dated 11/30/12 with certain

adjustments based on Management guidance

•

Represents a 29.3% premium to the average LTM EBITDA multiple over American Greetings’

prior year average LTM EBITDA multiple

•

More favorable to the Company’s shareholders than the status quo or other strategic and financial

alternatives given the operational and/or financial risks associated with the status quo or other

alternatives

•

$19.00 per share compared to valuation methodologies

–

Discounted cash flow: $17.00 to $23.00

–

Selected public company analysis: $15.25 to $25.00

–

Precedent transactions: $13.00 to $22.50

–

Present value of future share price: $16.00 to $23.25

–

Sum of the parts: $16.75 to $25.50

•

Company shares have not historically correlated with broader equity markets and it cannot be assumed

that recent positive trends in overall market conditions would similarly affect the Company’s shares in

absence of an offer

Note:

American

Greetings

has

substantially

similar

publicly

traded

comparable

companies

Premium Valuation Achieved

$14.34

$17.18

$17.50

$18.20

$19.00

10.00

12.00

14.00

16.00

18.00

$20.00

$14.34

$17.18

$17.50

$18.20

$19.00

10.00

12.00

14.00

16.00

18.00

$20.00

8.6% premium to

Revised

Proposal on 1/17

(a)

Revised Proposal on 1/17/13 would eliminate regular quarterly dividends of $0.15 per share.

(b)

Revised Proposal on 3/28/13 also includes one regular quarterly dividend of $0.15 per share payable July 2013 (not included above).

Unaffected

Share Price

Initial

Proposal

On 9/25/12

Revised

Proposal on

1/17/13 (a)

Revised

Proposal on

3/28/13 (b)

10.6%

premium to

Initial Proposal

32.5%

premium to

unaffected

share price

Premium

Unaffected

Trading

Price

and

Earlier

Proposals

the

Family

Final Offer

4.4% premium to

Revised Proposal

on 3/28

Premium Valuation Achieved

$12.50

$14.25

$14.34

$16.10

$18.20

$19.00

10.00

12.00

14.00

16.00

18.00

$20.00

Unaffected

Share Price

18%

premium to

prior day

closing

stock price

(a) Revised Proposal on 3/28/13 also includes one regular quarterly dividend of $0.15 per share payable July 2013 (not included above).

52-Week

Low Prior to

Initial

Proposal

Closing

Stock Price

on 3/28/13

32.5%

premium to

unaffected

share price

33.3%

premium to 30

calendar days

prior to Initial

Proposal

30 Calendar

Days Prior

to Initial

Proposal

52.0%

premium to

52-week low

prior to Initial

Proposal

Revised

Proposal on

3/28/13 (a)

Premium to Various Historical Stock Prices

Final Offer

4.4% premium to

Revised Proposal

on 3/28

Offer Represents Significant Premium

Source:

Capital

IQ.

Capital

calculation

enterprise

value

does

not

include

restricted

stock

units

performance

and

may

have

different

adjustments

for

EBITDA

than

those

used

other

analyses

in this

presentation. Data as of 7/2/13.

(a) CapIQ calculates LTM EV/EBITDA multiple using EBITDA of $150.1mm for period ended 2/28/13 compared to adjusted EBITDA of $212.3mm for same period with adjustments per Management guidance.

(b)Current multiple assumes LTM EBITDA of $212.3mm and net debt of $200.3mm for the period ended 2/28/13 based on Company’s Form 10-K dated 5/9/13, with certain adjustments to EBITDA based on Management

guidance. Current multiple calculated using diluted share count including restricted stock units and performance shares and treasury stock method of options exercisable as of 5/31/13 per Management guidance.

EV / LTM EBITDA –

2 years prior to Initial Proposal

50%

75%

100%

125%

150%

175%

200%

Sep-09

Mar-10

Sep-10

Mar-11

Sep-11

Mar-12

Sep-12

American Greetings

S&P 400 Consumer Discretionary

25%

50%

75%

100%

125%

150%

Sep-07

Sep-08

Sep-09

Sep-10

Sep-11

Sep-12

American Greetings

S&P 400 Consumer Discretionary

50%

100%

150%

200%

250%

300%

Sep-97

Sep-00

Sep-03

Sep-06

Sep-09

Sep-12

American Greetings

S&P 400 Consumer Discretionary

50%

100%

150%

200%

250%

Sep-02

Sep-04

Sep-06

Sep-08

Sep-10

Sep-12

American Greetings

S&P 400 Consumer Discretionary

10-Year Relative Stock Chart

15-Year Relative Stock Chart

5-Year Relative Stock Chart

Comparative Stock Price Performance

3-Year Relative Stock Chart

Source: Capital IQ.

•

While the broader market has provided significant returns on equity investments over time, American

Greetings

has

significantly

underperformed

and,

most

periods,

has

not

provided

positive

return

•

Furthermore, in all observed time periods, American Greetings has demonstrated a lack of correlation

with the broader consumer discretionary market

41.9%

253.9%

87.4%

223.6%

55.0%

134.0%

75.6%

168.1%

(Period ending September 25, 2012)

: 0.213

: 0.292

: 0.322

: 0.068

0.172

0.026

0.029

0.021

0.106

0.016

0.126

0.012

0.022

0.051

0.033

0.084

0.097

0.076

0.288

0.304

0.155

0.178

0.202

0.217

0.144

0.098

0.212

0.088

0.138

0.076

0.176

0.070

0.100

0.200

0.300

0.400

0.500

0.600

0.700

0.800

0.900

1.000

BTH

CSS

SCHL

MDP

ICON

CHKE

FLWS

SFLY

RRD

QUAD

HGG

GME

BBY

BKS

Low Trading Price Correlation to Comparables

Source: Bloomberg. R-squared is calculated as the weekly correlation between week over week change of the stock and American Greetings.

•

In addition to the lack of correlation between AG’s stock price and the S&P 400 Consumer

Discretionary Index, movement in AG’s stock price has a very low correlation with the selected

comparable public companies

–

While we believe the selected group of comparable companies is as similar as possible to AG,

there simply are not substantially similar comparable companies in the public market

1-Year (9/26/11 - 9/25/12)

5-Year (9/25/07 - 9/25/12)

Short Interest

•

Prior to the announcement of the Family’s initial proposal, approximately 44% of AG’s

float was short

•

Similarly high short interest likely to return if transaction not consummated

AG Short Interest as Percent of Float –

May 2012 to June 2013

Source: Short interest data from NYSE; float number from FactSet

A Leveraged Recap is Not a Viable Alternative

•

The Special Committee, after careful consideration, concluded that a leveraged recapitalization

was not likely to lead to superior value.

–

Substantially greater debt levels would significantly increase AG’s business risks by

reducing (1) the Company’s flexibility, (2) its ability to respond to adverse business

developments, and (3) its ability to fund necessary deferred capital expenditures—all of

which is likely to jeopardize the equity value of the Company

–

The common equity of a recapitalized, more indebted Company might trade at lower

multiples of EBITDA than it has traded in the recent past

–

The Company’s resulting small equity capitalization could impair the liquidity and trading

value of the Company’s publicly held Class

A common shares

–

The potential economic benefits of such a dividend/recapitalization transaction are not likely

to provide a value superior to the $19.00 per share merger consideration and the risks to

realizing any superior value are considerable

–

AG’s track record of substantial capital return to shareholders has

not been correlated with

creation of value in the stock price (over $1bn returned since FY2005; stock price down

35%); there is no reason to believe that markets would react differently to further capital

return

–

It is likely that the very high level of short interest in AG (44% of share float prior to the

Family’s offer) would return

•

A leveraged recapitalization would not address the basic challenges of reshaping our business

for the future as a public company

Future Stock Price Analysis Based on Illustrative

Levered Recap

Source:

count

for

LTM

based

diluted

outstanding

5/31/13

per

Management;

FY14-FY18

based

diluted

outstanding

from

Updated

Management

Treasury

Model

dated

6/23/13.

(Amounts in Millions, Except Per Share Data)

Fiscal Year

LTM

2014E

2015E

2016E

2017E

2018E

Adjusted EBITDA (c)

$216.9

$218.8

$230.9

$238.7

$245.5

% Growth

4.4%

(1.2%)

5.5%

3.4%

2.8%

Net Debt

461.6

475.5

423.6

391.1

268.4

116.0

Total Debt / EBITDA

2.4 x

2.1 x

1.9 x

1.7 x

1.1 x

0.5 x

Adj. EBITDA

Stock Price at End of Fiscal Year

Multiple

LTM

2014E

2015E

2016E

2017E

2018E

Projected Stock Price at Illustrative EV/Adjusted EBITDA Multiples:

3.4

$8.32

$8.42

$9.58

$11.60

$15.76

$20.56

3.6

9.63

9.77

10.88

12.96

17.15

21.96

3.8

10.94

11.11

12.19

14.32

18.53

23.37

4.0

12.24

12.46

13.50

15.68

19.92

24.77

4.2

13.55

13.80

14.81

17.04

21.30

26.18

4.4

14.86

15.14

16.12

18.40

22.69

27.58

4.6

16.17

16.49

17.42

19.76

24.07

28.98

4.8

17.48

17.83

18.73

21.11

25.46

30.39

Present Value at May 31, 2013

Present Value of Stock Price Assuming 13.5% Cost of Equity:

3.4

$8.32

$7.66

$7.67

$8.19

$9.81

$11.27

3.6

9.63

8.88

8.72

9.15

10.67

12.04

3.8

10.94

10.11

9.77

10.11

11.53

12.81

4.0

12.24

11.33

10.82

11.07

12.39

13.58

4.2

13.55

12.55

11.87

12.03

13.25

14.35

4.4

14.86

13.77

12.92

12.99

14.12

15.12

4.6

16.17

15.00

13.96

13.95

14.98

15.89

4.8

17.48

16.22

15.01

14.91

15.84

16.66

Present Value at May 31, 2013

Total Shareholder Value Including Present Value of Stock Price and

3.4

$16.32

$15.66

$15.68

$16.19

$17.81

$19.27

$8.00 Dividend, Assuming 13.5% Cost of Equity:

3.6

17.63

16.89

16.72

17.15

18.67

20.04

Assuming 100.0% Cost of Equity:

3.8

18.94

18.11

17.77

18.11

19.53

20.81

4.0

20.25

19.33

18.82

19.07

20.39

21.58

$221.5(d)

4.2

21.55

20.55

19.87

20.03

21.25

22.35

4.4

22.86

21.78

20.92

20.99

22.12

23.12

4.6

24.17

23.00

21.96

21.95

22.98

23.89

4.8

25.48

24.22

23.01

22.91

23.84

24.66

•

Assumes

$8.00

dividend

paid

5/31/13,

(a)

using

incremental

borrowing

$265

million,

resulting

2.4x

Debt / LTM EBITDA

•

Assumes

make-whole

payment

existing

7.375%

Senior

Notes

(b)

•

Assumes suspension of regular $0.15 / quarter dividend

(a) Assumes $265mm of incremental leverage using Term Loan B at L + 450bps with 125bps floor (2.4x Total Debt / LTM EBITDA).

(b) Does not factor in potential consent fees or changes to interest rate.

(c) Source: LTM EBITDA as of 5/31/13 per Management on 6/25/13, with certain adjustments, including normalizing for 365-day period, based on Management guidance. FY2014-FY2018 per Updated Management Treasury

Model dated 6/26/13, with certain adjustments to FY2014E EBITDA based on Management guidance.

(d) FY2014E Adjusted EBITDA includes $8.0 million of additional adjustments made in connection with the analyses performed by the Special Committee and its advisors

Pro Forma Effect of Special Dividend

Mkt Cap Post Dividend

Stock Price Post Dividend

Proforma 5/31/13 Stock

Price Plus Dividend

(Amounts in Millions, Except Per Share Data)

Special

Dividend

Total $

Pro Forma

EV / Adj. LTM EBITDA Multiple (a)

Per Share

Distributed

Debt / EBITDA

3.4 x

3.6 x

3.8 x

4.0 x

4.2 x

4.4 x

4.6 x

4.8 x

$16.32

$17.63

$18.94

$20.25

$21.55

$22.86

$24.17

$25.48

$2.00

$66.3

1.5 x

$474.9

$518.2

$561.6

$605.0

$648.4

$691.7

$735.1

$778.5

$14.32

$15.63

$16.94

$18.25

$19.55

$20.86

$22.17

$23.48

$4.00

132.6

1.8 x

$408.5

$451.9

$495.3

$538.7

$582.1

$625.4

$668.8

$712.2

$12.32

$13.63

$14.94

$16.25

$17.55

$18.86

$20.17

$21.48

$6.00

199.0

2.1 x

$342.2

$385.6

$429.0

$472.4

$515.7

$559.1

$602.5

$645.9

$10.32

$11.63

$12.94

$14.25

$15.55

$16.86

$18.17

$19.48

$8.00

265.3

2.4 x

$275.9

$319.3

$362.6

$406.0

$449.4

$492.8

$536.2

$579.5

$8.32

$9.63

$10.94

$12.24

$13.55

$14.86

$16.17

$17.48

$10.00

331.6

2.7 x

$209.6

$253.0

$296.3

$339.7

$383.1

$426.5

$469.9

$513.2

$6.32

$7.63

$8.94

$10.25

$11.55

$12.86

$14.17

$15.48

Source: Share count based on diluted shares outstanding as of 5/31/13 per Management guidance.

Calendar Days

Prior to Initial Offer

Mean

Median

30 Days

3.2 x

60 Days

3.1 x

90 Days

3.1 x

6 Months

3.0 x

12 Months

3.1 x

18 Months

3.4 x

3.3 x

24 Months

3.5 x

•

In the 24 months preceding the Family’s initial offer, the average EV/Adjusted LTM

EBITDA multiple was 3.5x

EV / LTM EBITDA –

2 years prior to Initial Proposal

Note: Market capitalization calculated using the enterprise value based on LTM EBITDA of $216.9mm multiplied by the adjusted LTM EBITDA multiple, less net debt of $196.3mm as of 5/31/13,

per Management on 6/25/13, less cash used to issue dividends.

(a) Source: LTM EBITDA as of 5/31/13 from Management, with certain adjustments, including normalizing for 365-day period, based on Management guidance.

Conclusion

•

Growth in the paper greeting card space has been negative and this trend is likely to

continue

–

Growth in electronic channels may increase rapidly

•

American Greetings is at an inflection point; capital will be dramatically redirected

–

Capital must be redirected from a focus on returning capital to shareholders to

investments in the core business including information technology and the electronic

channel of distribution

–

AG’s normal capital expenditures are approximately $50 million per year. In light of

the conditions faced by the Company, up to $446 million (over 1.75x historical

patterns) is estimated to be required over the next five years for:

•

Deferred expenditures in information systems technology;

•

Substantial rehabilitation of the current headquarters or investment in a new

headquarters (current facility ~60 years old);

•

Investment in emerging channels of distribution for social expressions products

(through Cardstore or other emerging channels of distribution)

–

A substantial portion of this required capex is not growth-focused, but rather is

deferred maintenance necessary to support the Company’s core business in the

declining paper greeting card industry

–

The proposed transaction transfers all business risk to the Family, giving public

shareholders certainty of cash at a significant premium

Conclusion (cont’d)

•

A premium cash offer at a time when industry trends show declining sales

–

Significant premium above stock’s trading levels over the months leading up to

announcement and premium multiple

•

More favorable to the Company’s shareholders than the status quo or other strategic and

financial alternatives available

•

No third party has provided any indication of interest in pursuing a transaction involving

the Company

•

The proposal is the culmination of a process that ultimately leaves shareholders with the

decision:

–

The

merger

agreement

must

approved

“Majority

the

Minority”

vote

$19.00

per

cash

fair

and

the

best

interests

the

Company

and

its

unaffiliated shareholders based on:

Appendix

•

Chronology of Negotiation Process

•

Special Committee Qualifications

•

Forward-Looking Statements

•

Additional Information and Where to Find It

•

Participants in the Solicitation

12/7/12

•

Special Committee told the Family that it would only negotiate if and when

the Family presented a firmer and more detailed financing structure

•

Special Committee communicated to the Family the possibility of pursuing

alternative transactions (e.g., recapitalization) to enhance value

•

Special

Committee

also

communicated

the

Family

that

sought

bid in

the $20’s

Chronology of Special Committee’s Efforts to

Maximize Shareholder Value

•

Family submitted Initial Proposal of $17.18 to acquire all Class

A and Class

B common shares not owned by the Family

9/25/12

9/30/12

•

Special Committee formed by the Company’s Board of Directors

10/7/12 -

10/14/12

•

Special Committee appointed Sullivan & Cromwell as its legal advisor and

Peter J. Solomon Company as its financial advisor

Chronology of Special Committee’s Efforts to

Maximize Shareholder Value (cont’d)

•

Special Committee, upon review of 1/17/13 Revised Proposal, informed the

Family that the updated proposal remained insufficient

–

Special Committee also emphasized that any proposal must include

quarterly dividends, reverse break-fees and majority of minority

shareholder approval condition

1/30/13

1/17/13

•

Family sent a letter to the Special Committee increasing its merger price to

$17.50

–

Draft merger agreement included suspension of $0.15 quarterly

dividends

•

Dr. Cowen and Zev Weiss met to discuss price; Mr. Weiss indicated that the

Family may be willing to consider $18.00 per share plus regular quarterly

dividend, but no such proposal was made

–

Dr. Cowen stated that he did not believe that price would be acceptable

to the Special Committee

2/27/13

12/19/12

•

Zev Weiss stated that the Family had significant concerns about obtaining

financing on terms acceptable to them that would support the proposed

$17.18 per share price

Chronology of Special Committee’s Efforts to

Maximize Shareholder Value (cont’d)

•

Special

Committee

and

representatives

Sullivan

Cromwell

and

PJSC

negotiated

price

and

transaction

agreements

with

the

Family

and its

advisors

•

Zev Weiss indicated that the Family had no ability and no intention to pay

more than $18.00 per share, plus regular quarterly dividends

•

Dr. Cowen, on behalf of the Special Committee, indicated that the Special

Committee’s desired that shareholders receive $18.75 per share plus

ordinary course dividends

•

Zev Weiss indicated the Family could pay $18.25 per share with no

dividend

•

Dr. Cowen communicated a proposal of $18.20 plus one quarterly

dividend, which was accepted by the Family

3/2/13 -

3/28/13

•

Parties executed the merger agreement and related agreements

3/29/13

Chronology of Special Committee’s Efforts to

Maximize Shareholder Value (cont’d)

•

Zev Weiss indicated that the Family would be willing to consider

raising the price to $19.00 per share, with an increase in the cap on

expenses payable to the Family if the merger were not approved by

shareholders

6/23/13

•

Dr. Cowen, on behalf of the Special Committee, communicated to Zev

Weiss that the Special Committee had received new financial information

pertaining to AG’s operating results, and was therefore revisiting its

recommendation of the deal at $18.20 per share

–

The Special Committee did not make any decision to modify or

withdraw its recommendation

–

Mr. Weiss communicates to Dr. Cowen that the financial

improvements cited by the Special Committee were neither material

nor reflective of any fundamental improvement in the trajectory of

AG’s business

6/26/13

Chronology of Special Committee’s Efforts to

Maximize Shareholder Value (cont’d)

•

The

Family

obtained

all

required

consents

from

financing

sources

raise

offer

price

•

The Family delivered a letter to the Special Committee offer to $19.00 per

share, with an increase in the cap on payable expenses

6/27/13

•

Dr. Cowen, on behalf of the Special Committee, reiterated the Special

Committee’s position of $19.50 per share

•

Zev Weiss reiterated that the Family would not pay additional consideration

above $19.00 per share, but indicated that it would be willing to keep the payable

expenses cap unchanged from the original maximum amount, if the Special

Committee agreed to consider in its sole discretion expense reimbursements in

excess of that amount for documented expenses

7/1/13

•

Dr.

Cowen,

behalf

the

Special

Committee,

communicated

Zev

Weiss

that

the

Special

Committee

would

willing

recommend

price

increase

$19.50

per

and

reciprocal,

proportionate

increase

the

amount

the

expense reimbursement cap

–

Zev Weiss indicated that the Family would not be supportive of an increase

to $19.50

7/2/13

Chronology of Special Committee’s Efforts to

Maximize Shareholder Value (cont’d)

7/3/13

•

PJSC gave the Special Committee an oral fairness opinion

(subsequently confirmed in writing) as to the price of $19.00 per

share, and the Special Committee accepted the Family’s proposal

(including the unchanged expense reimbursement cap with excess

amounts reimbursed at the Special Committee’s sole discretion)

•

Parties executed the amendment to the merger agreement

Special Committee Qualifications

•

Dr. Scott S. Cowen –

Dr. Cowen has been a director since 1989. Dr. Cowen is President

and Seymour S Goodman Professor of Management and Professor of Economics,

Tulane University, a position he has held since 1998. Prior to that, Dr. Cowen served as

Dean and Albert J. Weatherhead, III Professor of Management, Weatherhead School of

Management at Case Western Reserve University. Dr. Cowen has served as a director

of Forest City Enterprises, Inc. since 1989 and Newell Rubbermaid Inc. (a publicly-held

consumer

home

products

company)

since

1999.

was

director

Jo-Ann

Stores,

Inc.

publicly-held

specialty

store

retailer)

from

1987

until

its

sale

2011.

Dr.

Cowen

has

been a member of the Board of Overseers of TIAA-CREF (a private financial services

company) since 2010. Dr. Cowen participates as a board member of

a number of civic

organizations, including as Chair of the Southeast Louisiana Regional Airport Authority,

and

member

the

New

Orleans

Business

Council,

New

Orleans

Public

Belt

Railroad and Greater New Orleans Inc.

Special Committee Qualifications (cont’d)

•

William E. MacDonald, III –

Mr. MacDonald has been a director since 2007. Mr.

MacDonald was Vice Chairman and member of the Office of the Chairman of National

City Corporation from 2001 until his retirement in 2006. Prior to that, Mr. MacDonald held

various

management

positions

within

National

City

over

than

years

including

Senior

Executive

Vice

President

National

City

Corporation

and

President

and

Chief

Executive Officer of National City’s Ohio Bank. Mr. MacDonald has served as a director

of Lincoln Electric Holdings, Inc. (a publicly-held manufacturer and reseller of welding

and cutting products) since 2007. He was a director of The Lamson & Sessions Co. (a

publicly-held manufacturer of thermoplastic conduit, fittings and electrical switch and

outlet boxes) from 2006 to 2007 and MTC Technologies, Inc. (a publicly-held provider of

technical and professional services and equipment integration for the U.S. military and

intelligence agencies) from 2002 to 2007, when in each case the boards were dismantled

as a result of divestiture. Mr. MacDonald has served as a director of Segmint Inc. (a

privately held technology-based company helping financial institutions and their

marketing partners build digital customer relationships) since 2008. Mr. MacDonald

participates

board

member

number

civic,

health

care

and

other

non-profit

organizations including The Cleveland Clinic Foundation and is Trustee Emeritus of The

Diversity Center and WVIZ/PBS and 90.3 Ideastream.

Special Committee Qualifications (cont’d)

•

Jeffrey D. Dunn –

Mr. Dunn has been a director since 2007. Mr. Dunn served as

president and chief executive officer and was a director of HIT Entertainment Limited (a

children’s entertainment company), from 2008 until the company was sold in February

2012. Before that, Mr. Dunn was a private investor, and was employed by MTV Networks

(an entertainment company and a division of Viacom, Inc., a publicly-held company) as

Chief Operating Officer of the Nickelodeon Networks Group and the President of

Nickelodeon Film Enterprises from 1993 to 2006. Prior to that time, Mr. Dunn was

employed as Director of Marketing, Arthur D. Little (a publicly-held management

consulting

firm),

from

1991

1993,

Director

Marketing,

Bank

Boston

Boston,

Massachusetts banking institution) from 1986 to 1991, and Associate International

Director, Time Magazine (a weekly news magazine) and General Manager, Discover

Magazine (monthly general science magazine) from 1977 to 1986.

Special Committee Qualifications (cont’d)

•

Michael J. Merriman, Jr. –

Mr. Merriman has been a director since 2006. Mr. Merriman

has been an operating advisor with Resilience Capital Partners, LLC (a private equity

firm)

since

2008.

From

2006

until

its

sale

2007,

Mr.

Merriman

served

Chief

Executive Officer of The Lamson & Sessions Co. Prior to joining Lamson & Sessions, Mr.

Merriman

served

the

Senior

Vice

President

and

Chief

Financial

Officer

American

Greetings from 2005 until 2006. He served as the President and Chief Executive Officer

of Royal Appliance Mfg. Co. (a publicly-held manufacturer and marketer of Dirt Devil

vacuum cleaners) from 1995 until 2004, was its Chief Financial Officer from 1992 to

1995, and served on the board of directors from 1993 to 2004. Mr. Merriman served as a

director of RC2 Corporation (a publicly-held manufacturer of pre-school toys and infant

products) from 2004 until its sale in 2011. Mr. Merriman has served as a director of

Nordson Corporation (a publicly-held manufacturer of equipment used for precision

dispensing, testing and inspection, surface preparation and curing) since 2008;

OMNOVA Solutions Inc. (a publicly-held innovator of emulsion polymers, specialty

chemicals, and decorative and functional surfaces) since 2008; and Regis Corporation (a

publicly-held operator of beauty salons in North America and Europe, including

Supercuts, Smart Style Salons in Wal-Mart stores and Regis Salons in malls) since 2011.

Mr. Merriman is also a director of Boys Hope Girls Hope of Northeast Ohio, True Hero,

Inc. and John Carroll University.

Forward-Looking Statements

•

Statements about the expected timing, completion and effects of the proposed

transaction and all other statements in this communication, other than historical facts,

constitute forward-looking statements within the meaning of the safe harbor provisions of

the Private Securities Litigation Reform Act of 1995. Readers are cautioned not to place

undue reliance on these forward-looking statements and any such forward-looking

statements are qualified in their entirety by reference to the following cautionary

statements. All forward-looking statements speak only as of the date hereof and are

based on current expectations and involve a number of assumptions, risks and

uncertainties that could cause the actual results to differ materially from such forward-

looking statements. The Company may not be able to complete the proposed transaction

on the terms described above or other acceptable terms or at all

because of a number of

factors, including the failure to obtain shareholder approval or

the failure to satisfy other

closing conditions. Factors that may affect the business or financial results of the

Company are described in the risk factors included in the Company’s filings with the

SEC, including the Company’s 2013 Annual Report on Form 10-K. The Company

expressly disclaims a duty to provide updates to forward-looking statements, whether as

a result of new information, future events or other occurrences.

Additional Information and Where to Find It

•

In connection with the proposed merger transaction, the Company filed with the SEC a

definitive proxy statement and other relevant documents, including a form of proxy card,

on July 10, 2013. The definitive proxy statement and a form of proxy card have been

mailed to the Company's shareholders. This investor presentation does not constitute a

solicitation of any vote or approval. Shareholders are urged to read the proxy statement

and any other documents filed with the SEC in connection with the proposed merger or

incorporated by reference in the proxy statement because they contain important

information about the proposed merger.

•

Investors will be able to obtain a free copy of documents filed with the SEC at the SEC’s

website

http://www.sec.gov.

addition,

investors

may

obtain

free

copy

the

Company’s filings with the SEC from the Company’s website at

http://investors.americangreetings.com

directing

request

the

Company’s

Corporate Secretary at our World Headquarters at One American Road, Cleveland, Ohio

44144-2398, or via email to investor.relations@amgreetings.com.

Participants in the Solicitation

•

The Company and its directors, executive officers and certain other members of

management

and

employees

the

Company

may

deemed

“participants”

the

solicitation of proxies from shareholders of the Company in favor of the proposed

merger. Information regarding the persons who may, under the rules of the SEC, be

considered participants in the solicitation of the shareholders of the Company in

connection with the proposed merger is set forth in the definitive proxy statement and the

other relevant documents filed with the SEC. You can find information about certain of

the Company’s executive officers and its directors in its Annual Report on Form 10-K for

the fiscal year ended February

28, 2013.