DuringTable the current quarter, 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 November 28, 2014 includes: Contents

NoteTable 3of – Recent Accounting Pronouncements Contents

OnTable August 29, 2014, the Corporation completed the sale of its wholly-owned display fixtures business, A.G. Industries, Inc. (dba AGI In-Store “AGI In-Store”), to Rock-Tenn Company for $73.7 million in cash, subject to closing date working capital adjustments. A net gain of $38.7 million has been recognized from the sale during the nine month period ended November 28, 2014 and is included in “Other operating income – net” on the Consolidated Statement of Income. AGI In-Store, which is included in the non-reportable segment, had operating income of $0.1 million for the current fiscal year through the date of sale ($18.6 million of operating income for the nine month period ended November 29, 2013). Contents

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

DeferredTable costsof and future payment commitments for retail supply agreements are included in the following financial statement captions: Contents

AtTable November 28, 2014, the balances outstanding on the term loan facility, the revolving credit facility and accounts receivable facility bear interest at a rate of approximately 2.7%, 2.7% and 0.6%, respectively. The revolving credit facility and accounts receivable facility provide the Corporation with funding of up to $250 million and $50 million, respectively. Outstanding letters of credit, which reduce the total credit available under the revolving credit and the accounts receivable facilities, totaled $27.7 million at November 28, 2014. Contents

TheTable 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 nine months ended November 28, 2014 was $7.5 million, compared to $4.9 million in the prior year period. The Corporation also matches a portion of 401(k) employee contributions. The expenses recognized for the three and nine month periods ended November 28, 2014 were $0.9 million and $3.6 million ($1.3 million and $4.0 million for the three and nine month periods ended November 29, 2013), respectively. The profit-sharing plan and 401(k) matching expenses for the nine month periods are estimates as actual contributions are determined after fiscal year-end. Contents

TheTable deferred compensation plan includes investments in mutual funds and a money market fund. Assets held in mutual funds are recorded at fair value, which is considered a Level 1 valuation as it is based on each fund’s quoted market value per share in an active market. The money market fund is classified as Level 2 as substantially all of the fund’s investments are determined using amortized cost. The fair value of the deferred compensation plan liabilities is based on the fair value of: (i) the plan’s assets for invested deferrals and (ii) hypothetical investments for unfunded deferrals resulting from the conversion of deferred restricted stock units to future cash-settled obligations pursuant to the Merger. Prior to the Merger, the assets and related obligation associated with deferred restricted stock units were carried at cost in equity and offset each other. Contents

TheTable 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 35.7% and 27.6% for the three and nine months ended November 28, 2014, respectively, and 8.6% and 49.1% for the three and nine months ended November 29, 2013, respectively. The lower than statutory rate for the nine months ended November 28, 2014 was due to both the recording of a net $4.1 million federal tax refund and related interest attributable to fiscal 2000 and the error corrections identified in the current year first quarter and recorded in accordance with ASC Topic 250, Accounting Changes and Error Corrections. The net impact of the error corrections was a reduction to income tax expense of $4.1 million. During the first quarter of fiscal 2015, the Corporation identified and corrected errors in the accounting for income taxes that related to the year ended February 28, 2014. These errors primarily related to the Corporation’s failure to consider all sources of available taxable income when assessing the need for a valuation allowance against certain deferred tax assets and the recognition of a liability for an uncertain tax position. These errors were the result of the significant complexity created as a result of the Merger and related transactions in fiscal 2014. See Note 1 for further information. The lower than statutory rate for the three months ended November 29, 2013 was due primarily to the release of reserves upon lapse of the applicable statutes and related to positions that had been effectively settled under audit. The higher than statutory rate for the nine months ended November 29, 2013 was due primarily to the recording of an $8.0 million valuation allowance against certain net operating loss and foreign tax credit carryforwards which the Corporation believed at the time would expire unused as a result of the Merger. Contents

2013Table to resume the project and, on March 26, 2014, the Corporation purchased from Crocker Park, LLC, the owner of the Crocker Park Development, 14.48 acres of land at the south end of the Crocker Park Development (the “Crocker Park Site”) on which the new world headquarters will be built. The purchase price for the land was $7.4 million (based on a per acre price of $510 thousand). Morry Weiss, the Chairman of the board of the Corporation, Zev Weiss and Jeffrey Weiss, directors and the Co-Chief Executive Officers of the Corporation, and Gary and Elie Weiss, directors and non-executive officers of the Corporation, together with members of their family (collectively, the “Weiss Family”), indirectly own a minority stake in Crocker Park, LLC through their indirect ownership of approximately 37% of the membership interests in Crocker Park, LLC. In addition, Morry Weiss and other members of the Weiss Family have guaranteed certain of Crocker Park, LLC’s obligations, and are expected to guarantee additional obligations of Crocker Park, LLC, incurred in connection with the Crocker Park Development. The authority to conduct, manage and control the business of Crocker Park, LLC, including operating the Crocker Park Development and the decision whether to sell the Crocker Park Site to American Greetings, was reserved to the manager of Crocker Park, LLC, who is not an affiliate of the Weiss Family and that is an affiliate of Stark Enterprises, Inc. Contents

ForTable both the three and nine month periods ended November 28, 2014, “Corporate overhead expense” included interest income of $2.5 million related to the Clinton Cards liquidation. See Note 6 for further information. Contents

FromTable time to time the Corporation grants to third parties rights in its intellectual property, including rights to utilize intellectual property as well as rights to receive royalties and other revenue generated by the intellectual property. In order to secure complete control and ownership over the rights in certain character properties that the Corporation previously granted to a third party (the “Character Property Rights”), on December 18, 2014, the Corporation paid $37.7 million to purchase these Character Property Rights. In addition to the $37.7 million paid for these rights, in the event of a future sale of these Character Property Rights and the associated character properties, the Corporation may be required, depending on the proceeds of such sale, to pay up to an additional $4.0 million of the proceeds that it receives from any such sale. Contents

OtherTable current assets used $0.2 million of cash during the nine months ended November 28, 2014, compared to providing $14.8 million during the prior year nine months. The variance between years is due to the change in the balance of prepaid rents in our Retail Operations segment, primarily driven by year-over-year timing differences. Contents

ForTable further information, refer to our Annual Report on Form 10-K for the year ended February 28, 2014. There were no material changes in market risk, specifically interest rate and foreign currency exposure, for us from February 28, 2014, the end of our preceding fiscal year, to November 28, 2014, the end of our most recent fiscal quarter. Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

NoteTable 3of – Recent Accounting Pronouncements Contents

Table of Contents

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

DeferredTable costsof and future payment commitments for retail supply agreements are included in the following financial statement captions: Contents

Table of Contents

ForTable both the three and nine month periods ended November 28, 2014, “Corporate overhead expense” included interest income of $2.5 million related to the Clinton Cards liquidation. See Note 6 for further information. Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

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 ~~November~~May 2829, ~~2014~~2015

¨	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.)
(State or other jurisdiction ofincorporation or organization)		(I.R.S. EmployerIdentification No.)
One American Road, Cleveland, Ohio		44144
(Address of principal executive offices)		(Zip Code)

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 ¨ No x

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.

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

All of the outstanding capital stock of the registrant is held by Century Intermediate Holding Company. As of ~~January~~July 910, 2015, 100 shares of the registrant’s common stock, par value $0.01 per share, were outstanding.

AMERICAN GREETINGS CORPORATION

INDEX

	PageNumber			~~PageNumber~~
PART I - FINANCIAL INFORMATION
PART I — FINANCIAL INFORMATION
	Item 1.		Financial Statements		3
Item 1. Financial Statements		3
	Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations		21
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		21
	Item 3.		Quantitative and Qualitative Disclosures About Market Risk		33
Item 3. Quantitative and Qualitative Disclosures About Market Risk		30
	Item 4.		Controls and Procedures		34
Item 4. Controls and Procedures		30
PART II - OTHER INFORMATION
PART II — OTHER INFORMATION
	Item 1.		Legal Proceedings		36
Item 1. Legal Proceedings		31
	Item 6.		Exhibits		37
Item 6. Exhibits		32
SIGNATURES		33			38
EXHIBITS

PART I - —FINANCIAL INFORMATION

Item 1.

Financial Statements

AMERICAN GREETINGS CORPORATION

CONSOLIDATED STATEMENT OF INCOME

(Thousands of dollars)

	(Unaudited)
	(Unaudited)Three Months Ended
	Three Months Ended						Nine Months Ended
	May 29, 2015			May 30, 2014
	November 28,2014			November 29,2013			November 28,2014			November 29,2013
Net sales	$	471,892		$	497,274
Net sales	$	508,006		$	502,107		$	1,432,370		$	1,406,319
Other revenue		1,551			6,310
Other revenue		6,052			5,409			17,697			18,921
Total revenue		473,443			503,584
Total revenue		514,058			507,516			1,450,067			1,425,240
Material, labor and other production costs		195,474			200,786
Material, labor and other production costs		249,518			244,829			630,413			625,340
Selling, distribution and marketing expenses		163,759			172,259
Selling, distribution and marketing expenses		175,039			177,154			513,132			502,500
Administrative and general expenses		58,221			69,295
Administrative and general expenses		64,829			74,814			200,974			228,578
Other operating income – net		(62,420	)		(1,968	)
Other operating income – net		(699	)		(2,368	)		(26,495	)		(6,647	)
Operating income		118,409			63,212
Operating income		25,371			13,087			132,043			75,469
Interest expense		8,113			8,994
Interest expense		9,533			8,454			27,782			18,199
Interest income		(99	)		(111	)
Interest income		(2,517	)		(29	)		(2,658	)		(222	)
Other non-operating income – net		(938	)		(1,107	)
Other non-operating expense (income) – net		833			1,047			(546	)		(4,351	)
Income before income tax expense		111,333			55,436
Income before income tax expense		17,522			3,615			107,465			61,843
Income tax expense		38,569			11,697
Income tax expense		6,261			310			29,625			30,366
Net income	$	72,764		$	43,739
Net income	$	11,261		$	3,305		$	77,840		$	31,477

See notes to consolidated financial statements (unaudited).

AMERICAN GREETINGS CORPORATION

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME ~~(LOSS)~~

(Thousands of dollars)

	(Unaudited)
	(Unaudited)Three Months Ended
	Three Months Ended						Nine Months Ended
	May 29, 2015			May 30, 2014
	November 28,2014			November 29,2013			November 28,2014			November 29,2013
Net income	$	72,764		$	43,739
Net income	$	11,261		$	3,305		$	77,840		$	31,477
Other comprehensive income (loss), net of tax:
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments		(2,028	)		1,866
Foreign currency translation adjustments		(15,662	)		9,996			(15,917	)		8,336
Pension and postretirement benefit adjustments		216			(23	)
Pension and postretirement benefit adjustments		173			192			287			1,009
Unrealized gain on equity securities		44,610			—
Unrealized loss on securities		—			—			—			(4	)
Other comprehensive income, net of tax		42,798			1,843
Other comprehensive (loss) income, net of tax		(15,489	)		10,188			(15,630	)		9,341
Comprehensive income	$	115,562		$	45,582
Comprehensive (loss) income	$	(4,228	)	$	13,493		$	62,210		$	40,818

See notes to consolidated financial statements (unaudited).

AMERICAN GREETINGS CORPORATION

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

(Thousands of dollars except share and per share amounts)

	(Unaudited)			(Note 1)			(Unaudited)
	(Unaudited)May 29, 2015			(Note 1)February 28, 2015			(Unaudited)May 30, 2014
	November 28,2014			February 28,2014			November 29,2013
ASSETS
Current assets
Cash and cash equivalents	$	3142,~~431~~806		$	6343,~~963~~327		$	1564,~~775~~990
Trade accounts receivable, net		~~173~~124,~~691~~966			97102,~~925~~339			~~201~~134,~~392~~185
Inventories		~~286~~251,~~190~~122			~~254~~248,~~761~~577			~~291~~259,~~372~~837
Deferred and refundable income taxes		4644,~~247~~790			4645,~~996~~976			4743,~~252~~862
Prepaid expenses and other		144,086			146,164			151,277
Assets held for sale		—			35,529			—
Total current assets		681,645			609,809			707,068
Prepaid expenses and other		135,154			157,669			139,337
Other assets		501,392			542,766			421,326
Total current assets		598,838			633,417			642,211
Deferred and refundable income taxes		91,905			74,103			98,646
Other assets		575,673			431,838			537,453
Property, plant and equipment – at cost		810,526			855,141			848,233
Deferred and refundable income taxes		54,436			90,143			71,232
Less accumulated depreciation		443,761			479,376			468,015
Property, plant and equipment – at cost		845,777			828,028			876,634
Property, plant and equipment – net		366,765			375,765			380,218
Less accumulated depreciation		457,773			447,731			491,621
	$	1,641,707		$	1,602,443		$	1,607,258
Property, plant and equipment – net		388,004			380,297			385,013
	$	1,616,951		$	1,535,695		$	1,635,909
LIABILITIES AND SHAREHOLDER’S EQUITY
Current liabilities
Debt due within one year	$	~~23,800~~—		$	~~20,000~~—		$	20,000
Accounts payable		~~122~~103,~~637~~708			~~120~~133,~~568~~135			~~124~~103,~~163~~701
Accrued liabilities		6074,~~125~~448			6875,~~838~~992			6468,~~792~~012
Accrued compensation and benefits		6350,~~596~~962			7495,~~017~~193			6340,~~910~~514
Income taxes payable		2114,~~835~~655			1422,~~866~~512			23,~~745~~706
Deferred revenue		22,961			31,288			25,438
Liabilities held for sale		—			1,712			—
Other current liabilities		67,450			85,785			68,408
Deferred revenue		26,313			27,200			30,360
Total current liabilities		382,404			415,362			369,456
Other current liabilities		58,456			63,199			82,679
Long-term debt		570,232			539,114			622,328
Total current liabilities		328,542			418,943			348,972
Other liabilities		311,265			301,815			231,585
Long-term debt		463,469			472,729			596,702
Deferred income taxes and noncurrent income taxes payable		12,303			18,705			19,921
Other liabilities		365,467			303,231			303,937
Deferred income taxes and noncurrent income taxes payable		14,585			11,466			13,270
Shareholder’s equity
Common shares – par value $.01 per share:
Common shares – par value $.01 per share: 100 shares issued and outstanding		—			—			—
100 shares issued and outstanding		—			—			—
Capital in excess of par value		240,000			240,000			240,000
Accumulated other comprehensive (loss) income		(14,878	)		752			(7,792	)
Accumulated other comprehensive income (loss)		18,395			(24,403	)		2,595
Retained earnings		~~140~~186,~~381~~493			86113,~~695~~729			~~131~~130,~~760~~433
Total shareholder’s equity		~~365~~444,~~503~~888			~~327~~329,~~447~~326			~~363~~373,~~968~~028
	$	1,~~641~~616,~~707~~951		$	1,~~602~~535,~~443~~695		$	1,~~607~~635,~~258~~909

See notes to consolidated financial statements (unaudited).

AMERICAN GREETINGS CORPORATION

CONSOLIDATED STATEMENT OF CASH FLOWS

(Thousands of dollars)

	(Unaudited)
	(Unaudited)Three Months Ended
	Nine Months Ended
	May 29, 2015			May 30, 2014
	November 28, 2014			November 29, 2013
OPERATING ACTIVITIES:
Net income	$	7772,~~840~~764		$	3143,~~477~~739
Adjustments to reconcile net income to cash flows from operating activities:
Stock-based compensation		—			8,091
Gain on sale of Strawberry Shortcake		(61,666	)		—
Net gain on sale of AGI In-Store		(38,663	)		—
Net loss on disposal of fixed assets		9			23
Net loss on disposal of fixed assets		15,823			559
Depreciation and intangible assets amortization		13,993			15,222
Depreciation and intangible assets amortization		45,581			40,450
Clinton Cards secured debt recovery		—			(3,390	)
Clinton Cards secured debt recovery		(3,390	)		(4,232	)
Provision for doubtful accounts		30			233
Interest on Clinton Cards secured debt		(2,507	)		—
Deferred income taxes		6,951			(441	)
Provision for doubtful accounts		767			513
Other non-cash charges		2,744			1,063
Deferred income taxes		(15,716	)		10,988
Gain related to Party City investment		—			(3,262	)
Other non-cash charges		5,039			2,090
Changes in operating assets and liabilities, net of acquisitions and dispositions:
Trade accounts receivable		(8323,~~981~~034	)		(9432,~~636~~066	)
Inventories		(573,~~791~~473	)		(434,~~588~~596	)
Other current assets		(~~185~~2,306	)		142,~~817~~618
Receivable from parent and related parties		95			—
Net payable/receivable with related parties		(50	)		(76	)
Income taxes		~~886~~(2,584	)		6(8,~~465~~785	)
Deferred costs – net		(15,~~376~~276	)		156,~~021~~947
Accounts payable and other liabilities		(23104,~~688~~603	)		(2158,~~935~~499	)
Other – net		~~4,216~~(128	)		43,~~052~~081
Total Cash Flows From Operating Activities		(7796,~~050~~077	)		(3334,~~130~~927	)
INVESTING ACTIVITIES:
Property, plant and equipment additions		(7013,~~263~~392	)		(4522,~~336~~194	)
Proceeds from sale of fixed assets		23,811			1,630
Cash paid for acquired character property rights		(2,800	)		—
Proceeds from sale of AGI In-Store		73,659			—
Proceeds from sale of fixed assets		9			17
Proceeds from Clinton Cards administration		11,926			4,982
Adjustment to proceeds from sale of AGI In-Store		(3,200	)		—
Proceeds related to Party City investment		—			12,105
Proceeds from sale of Strawberry Shortcake		105,000			—
Total Cash Flows From Investing Activities		39,133			(26,619	)
Proceeds from surrender of corporate-owned life insurance policies		24,068			—
Net (borrowings)/repayments on loans to related parties		(2,479	)		—
Proceeds from Clinton Cards administration		—			582
Total Cash Flows From Investing Activities		107,206			(21,595	)
FINANCING ACTIVITIES:
Proceeds from revolving lines of credit		347,200			311,336
Proceeds from revolving line of credit		94,150			168,000
Repayments on revolving lines of credit		(299,900	)		(295,236	)
Repayments on revolving line of credit		(40,450	)		(105,900	)
Proceeds from term loan		—			339,250
Repayments on term loan		(65,000	)		(5,000	)
Repayments on term loan		(15,000	)		—
Total Cash Flows From Financing Activities		(11,300	)		57,100
Issuance, exercise or settlement of share-based payment awards		—			(4,487	)
EFFECT OF EXCHANGE RATE CHANGES ON CASH		(350	)		449
Tax benefit from share-based payment awards		—			279
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS		(521	)		1,027
Contribution from parent		—			240,000
Cash and Cash Equivalents at Beginning of Year		43,327			63,963
Payments to shareholders to effect merger		—			(568,303	)
Cash and Cash Equivalents at End of Period	$	42,806		$	64,990
Dividends to shareholders		(24,154	)		(27,809	)
Financing fees		(1,065	)		(6,545	)
Total Cash Flows From Financing Activities		7,081			(11,515	)
EFFECT OF EXCHANGE RATE CHANGES ON CASH		(1,696	)		980
DECREASE IN CASH AND CASH EQUIVALENTS		(32,532	)		(70,284	)
Cash and Cash Equivalents at Beginning of Year		63,963			86,059
Cash and Cash Equivalents at End of Period	$	31,431		$	15,775

See notes to consolidated financial statements (unaudited).

AMERICAN GREETINGS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Three ~~and Nine~~ Months Ended ~~November~~May 2829, ~~2014~~2015 and ~~November~~May 2930, ~~2013~~2014

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. On August 9, 2013, the Corporation completed a merger whereby the Corporation was acquired by Century Intermediate Holding Company, a company that was formed by the Chairman of the Board, the Co-Chief Executive Officers of the Corporation and certain other members of the Weiss family and related entities (the “Merger”). As a result of the Merger, the Corporation’s equity is no longer publicly traded. As such, earnings per share information is not required.

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, ~~2014~~2015 refers to the year ended February 28, ~~2014~~2015. The Corporation’s subsidiary, AG Retail Cards Limited is consolidated on a one-month lag corresponding with its fiscal year-end of January 3130 for ~~2015~~2016.

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 28, ~~2014~~2015, from which the Consolidated Statement of Financial Position at February 28, ~~2014~~2015, presented herein, has been derived.

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 but have a readily determinable fair value are measured at fair value with unrealized gains and losses reported in other comprehensive income. Such investments that do not have a readily determinable fair value are accounted for under ~~the~~ the cost method.

~~Prior~~The ~~to the fourth quarter of 2014, the~~ Corporation ~~held~~provides anlimited ~~approximate~~credit ~~15%~~support ~~equity~~to ~~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~~This limited credit support is provided through the ~~third~~provision of a liquidity ~~quarter~~guaranty (“Liquidity Guaranty”) in favor of ~~2014,~~the lenders under Schurman’s senior revolving credit facility (the ~~Corporation~~“Senior ~~determined~~Credit ~~that,~~Facility”). ~~due~~Pursuant to ~~continued~~the ~~operating~~terms ~~losses~~of the Liquidity Guaranty, ~~shareholders’~~the ~~deficit~~Corporation ~~and~~has ~~lack~~guaranteed the repayment of ~~return~~up onto ~~the~~$10.0 ~~Corporation~~million of Schurman’s ~~investment,~~borrowings under the ~~cost~~Senior ~~method~~Credit ~~investment~~Facility ~~was~~to ~~permanently~~help ~~impaired~~ensure that Schurman has sufficient borrowing availability under this facility. AsThe aLiquidity ~~result,~~Guaranty ~~the Corporation~~is ~~recorded~~required anto ~~impairment~~be ~~charge~~backed inby a letter of credit for the ~~amount~~term of ~~$1.9~~the ~~million~~Liquidity Guaranty, which ~~reduced~~expires in January 2019. The Corporation’s obligations under the ~~carrying~~Liquidity ~~amount~~Guaranty generally may not be triggered unless Schurman’s lenders under its Senior Credit Facility have substantially completed the liquidation of the ~~investment~~collateral tounder ~~zero.~~Schurman’s InSenior ~~addition~~Credit Facility, ~~during~~or ~~the~~91 ~~fourth~~days ~~quarter~~after ofthe ~~2014~~liquidation is started, inwhichever ~~order~~is toearlier, ~~mitigate~~and ~~ongoing~~will ~~risks~~be limited to the ~~Corporation~~deficiency, ~~that~~if ~~may~~any, ~~arise from~~between ~~retaining~~the anamount ~~equity~~owed ~~interest~~and the amount collected in ~~Schurman,~~connection with the ~~Corporation~~liquidation. ~~transferred~~There towas ~~Schurman~~no ~~its~~triggering ~~15%~~event ~~equity~~or ~~interest~~liquidation ~~and,~~of collateral as aof ~~result~~May 29, no2015 ~~longer~~requiring ~~has~~the anuse ~~equity~~of ~~interest~~the inLiquidity ~~Schurman~~Guaranty.

~~The~~During ~~Corporation~~the ~~provides~~current ~~Schurman~~period, ~~limited~~the ~~credit~~Corporation ~~support~~assessed ~~through~~ the ~~provision~~variable ofinterests ain ~~liquidity~~Schurman ~~guaranty~~and ~~(“Liquidity~~determined ~~Guaranty”)~~that ina ~~favor~~third ofparty ~~the lenders~~holder ~~under~~of ~~Schurman’s~~variable ~~senior~~interests ~~revolving~~has ~~credit facility (~~the controlling ~~“Senior~~financial ~~Credit~~interest ~~Facility”).~~in ~~Pursuant to~~ the ~~terms~~VIE ofand thus, the ~~Liquidity~~third ~~Guaranty~~party, not the Corporation, ~~has~~is ~~guaranteed~~ the ~~repayment~~primary ~~of up to $10~~beneficiary.0 ~~million~~In ofcompleting ~~Schurman’s borrowings~~this ~~under~~assessment, the ~~Senior~~Corporation ~~Credit~~identified ~~Facility~~the toactivities ~~help ensure~~ that ~~Schurman~~it ~~has~~considers ~~sufficient~~most ~~borrowing~~significant ~~availability under this facility. The Liquidity Guaranty is required~~ to bethe ~~backed~~future byeconomic success ~~a letter~~ of ~~credit for~~ the ~~term~~VIE ofand ~~the~~determined ~~Liquidity~~that ~~Guaranty,~~it ~~which expires~~does innot ~~July~~have ~~2016.~~the ~~The~~power ~~Corporation’s~~to ~~obligations~~direct ~~under~~those ~~the~~activities. ~~Liquidity~~As ~~Guaranty~~such, ~~generally~~Schurman ~~may~~is not beconsolidated ~~triggered~~in ~~unless~~the ~~Schurman~~Corporation’s ~~lenders~~results. ~~under~~The ~~its Senior Credit Facility have substantially completed the liquidation of the collateral under Schurman~~Corporation’s ~~Senior~~maximum ~~Credit~~exposure ~~Facility,~~to orloss 91as ~~days~~it ~~after~~relates ~~the liquidation is started, whichever is earlier, and will be limited~~ to ~~the~~Schurman ~~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 ~~November~~ May 2829, ~~2014~~2015 ~~requiring~~includes: ~~the use of the Liquidity Guaranty.~~

7• Liquidity Guaranty of Schurman’s indebtedness of $10.0 million;

~~Table~~7 ~~of Contents~~

• ~~Liquidity~~normal ~~Guaranty~~course of ~~Schurman’s~~business ~~indebtedness~~trade and other receivables due from Schurman of $1026.05 million, the balance of which fluctuates throughout the year due to the seasonal nature of the business; and

• ~~normal~~the ~~course~~retail ofstore ~~business~~operating ~~trade~~leases ~~and~~currently ~~other~~subleased ~~receivables~~to ~~due from~~ Schurman ~~of $33.8 million~~, the ~~balance~~aggregate oflease ~~which~~payments ~~fluctuates~~for ~~throughout~~ the ~~year~~remaining ~~due~~life toof ~~the~~which ~~seasonal~~was ~~nature~~$3.5 million as of ~~the~~May ~~business;~~29, ~~and~~2015.

•Prior ~~the~~Year ~~retail~~Correction ~~store operating leases currently subleased to Schurman, the aggregate lease payments for the remaining life~~ of ~~which~~Immaterial ~~was~~Errors ~~$5.1 million, $7.1 million and $8.5 million as of November 28, 2014, February 28, 2014 and November 29, 2013, respectively.~~

~~Correction~~During the prior year first quarter, the Corporation identified and corrected errors in the accounting for income taxes that related to the year ended February 28, 2014. These errors primarily related to the Corporation’s failure to consider all sources of ~~Immaterial~~available ~~Errors~~taxable income when assessing the need for a valuation allowance against certain deferred tax assets and the recognition of a liability for an uncertain tax position. These errors were the result of the significant complexity created as a result of the going private transaction. The impact of correcting these items had a non-cash effect, decreasing tax expense and increasing net income by $4.1 million. Based on its evaluation as discussed more fully below, the Corporation concluded that the corrections to the financial statements were immaterial to its financial results for the years ended February 28, 2014 and 2015.

~~During~~In ~~the~~accordance ~~first~~with ~~quarter~~ASC ofTopic ~~2015~~250, ~~the~~Accounting ~~Corporation~~Changes ~~identified~~ and ~~corrected~~Error ~~errors in the accounting for income taxes that related to the year ended February 28~~Corrections, ~~2014. These errors primarily related to~~ the Corporation’s ~~failure~~evaluated tothe ~~consider~~effects ~~all sources~~ of ~~available taxable income when assessing~~ the ~~need~~errors ~~for~~on aits ~~valuation~~financial ~~allowance against certain deferred tax assets and the recognition of~~statements ~~a liability~~ for ~~an uncertain tax position. These errors were~~ the ~~result~~years ofended ~~the~~February 28, ~~significant~~2014 ~~complexity~~and ~~created~~2015 asand aconcluded ~~result~~that of the ~~Merger~~results ~~and related transactions. The impact~~ of ~~correcting~~operations for these ~~items~~periods ~~had~~were anot ~~non-cash~~materially ~~effect, decreasing tax expense and increasing net income by $4~~misstated.1 ~~million.~~In ~~Based~~reaching on its ~~evaluation as discussed more fully below~~conclusion, the Corporation ~~concluded~~considered ~~that~~numerous ~~the~~qualitative ~~corrections~~and toquantitative ~~the financial statements were immaterial to its financial results for the year ended February 28~~factors, ~~2014~~including ~~and~~but ~~its~~not ~~expected~~limited ~~financial~~to ~~results for~~ the ~~year~~following: ~~ending February 28, 2015.~~

• In ~~accordance~~evaluating ~~with~~the ~~ASC~~financial ~~Topic 250, Accounting Changes~~ and ~~Error Corrections~~operational performance, the Corporation’s ~~evaluated~~shareholder ~~the~~and ~~effects~~debt ofholders ~~the~~focus ~~errors~~ on ~~its~~performance ~~financial~~metrics ~~statements~~such ~~for~~as ~~the~~earnings ~~year~~before ~~ended~~interest, ~~February 28~~taxes, ~~2014~~depreciation and ~~the~~amortization ~~expected~~(“EBITDA”), ~~full~~operating ~~year~~income ~~financial~~and ~~results~~cash ~~for~~flows ~~the~~from ~~year ending February 28~~operations, ~~2015~~none ~~and concluded that the results~~ of ~~operations~~which ~~for~~were ~~these~~impacted ~~periods~~by ~~are not materially misstated. In reaching its conclusion,~~ the ~~Corporation~~correction ~~considered~~of ~~numerous qualitative and quantitative factors, including but not limited to~~ the ~~following:~~ errors,

• InThe ~~evaluating~~numeric ~~the~~impact ~~financial~~of ~~and~~the ~~operational~~error ~~performance,~~on the Corporation’s ~~shareholder~~results ~~and~~of ~~debt~~operations, ~~holders~~including ~~focus~~the onnet ~~performance~~dollar ~~metrics~~impact, ~~such~~the impact as ~~earnings~~a ~~before~~percentage ~~interest,~~of ~~taxes~~period earnings, ~~depreciation~~the ~~and~~impact ~~amortization~~on ~~(“EBITDA”)~~financial trends, and the impact on non-GAAP measures such as adjusted operating income ~~and~~the ~~cash~~Corporation ~~flows~~presents ~~from~~in ~~operations,~~quarterly ~~none~~public ofdebt holder conference calls, which were ~~impacted~~deemed byimmaterial, ~~the~~particularly ~~correction~~in light of the ~~errors~~Corporation’s stakeholders’ focus on EBITDA, operating income and cash flows from operations, and

• The ~~numeric~~absence ~~impact~~ of ~~the~~any ~~error~~impact on the Corporation’s ~~results~~compliance ofwith ~~operations,~~its including the net dollar impact, the impact as a percentage of period earnings, the impact on financial trends, and the impact on non-GAAP measures such as adjusted operating income the Corporation presents in quarterly public debt ~~holder conference calls~~covenants, ~~which~~management ~~were~~compensation ~~deemed~~or ~~immaterial,~~segment ~~particularly in light of the Corporation’s stakeholders’ focus on EBITDA, operating income and cash flows from operations, and~~reporting.

•Based ~~The~~on ~~absence~~its evaluation, the Corporation concluded that it is not probable that the judgment of ~~any~~a ~~impact~~reasonable person relying on the ~~Corporation’s~~financial ~~compliance~~statements ~~with~~would have ~~its~~been ~~debt~~changed ~~covenants,~~or ~~management~~influenced ~~compensation~~by the error or ~~segment~~correction ~~reporting~~of the error.

~~Based~~Note on2 ~~its~~– ~~evaluation,~~Seasonal ~~the~~Nature ~~Corporation concluded that it is not probable that the judgment~~ of aBusiness ~~reasonable person relying on the financial statements would have been changed or influenced by the error or correction of the error.~~

8A 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.

~~Table~~Note of3 ~~Contents~~– Recent Accounting Pronouncements

~~Note~~In 2April –2015, ~~Seasonal~~the ~~Nature~~Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2015-03 (“ASU 2015-03”), “Simplifying the Presentation of ~~Business~~Debt Issuance Costs”. ASU 2015-03 requires that all costs incurred to issue debt be presented in the balance sheet as a direct reduction from the carrying value of the debt, similar to the presentation of debt discounts. ASU 2015-03 is effective for public business entities for fiscal years beginning after December 15, 2015 and interim periods within those fiscal years, with early adoption permitted. The Corporation does not expect that the adoption of this standards update will have a material impact on its consolidated financial statements.

A8 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.

In August 2014, the ~~Financial Accounting Standards Board (the “~~FASB”) issued ~~Accounting Standards Update (“~~ASU”) No. 2014-15, (“ASU 2014-15”), “Disclosure of Uncertainties About an Entity’s Ability to Continue as a Going Concern”. ASU 2014-15 requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date the financial statements are issued and provides guidance on determining when and how to disclose going concern uncertainties in the financial statements. Certain disclosures will be required if conditions give rise to substantial doubt about an entity’s ability to continue as a going concern. ASU 2014-15 applies to all entities and is effective for annual and interim reporting periods ending after December 15, 2016, with early adoption permitted. The Corporation does not expect that the adoption of this ~~standard~~standards update will ~~have~~impact ~~a material effect on~~ its consolidated financial statements.

In May 2014, the FASB issued ASU No. 2014-09, (“ASU 2014-09”), “Revenue from Contracts with Customers”. The objective of ASU 2014-19 is to establish a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and will supersede most of the existing revenue recognition guidance, including industry-specific guidance. The core principle of ASU 2014-09 is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ~~The~~In applying the new guidance, an entity will (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the contract’s performance obligations; and (5) recognize revenue when (or as) the entity satisfies a performance obligation. ASU 2014-09 applies to all contracts with customers except those that are within the scope of other topics in the FASB Accounting Standards Codification. On July 9, 2015, the FASB agreed to delay the effective date of ASU 2014-09 by one year. In accordance with the agreed upon delay the new guidance is effective for annual reporting periods (including interim periods within those periods) beginning after December 15, ~~2016~~2017 for public companies. Early adoption is permitted but not before annual periods beginning after ~~permitted.~~December ~~The~~15, ~~standard~~2016. ~~permits~~Entities have the ~~use~~option of using either a full retrospective or modified ~~retrospective~~approach ~~(cumulative~~to ~~effect)~~adopt ~~transition~~ASU ~~method~~2014-09. The Corporation is currently evaluating the new guidance and has not determined the impact this standard may have on ~~its~~ its financial statements nor decided upon the method of adoption.

In April 2014, the FASB issued ASU No. 2014-08 (“ASU 2014-08”), “Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity.” ASU 2014-08 changes the criteria for determining which disposals can be presented as discontinued operations and modifies the related disclosure requirements. Under the new guidance, a disposal of a component of an entity or a group of components of an entity is required to be reported in discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results and is disposed of or classified as held for sale. The standard also introduces several new disclosures. The guidance applies prospectively to new disposals and new classifications of disposal groups as held for sale after the effective date. ASU 2014-08 is effective for annual and interim periods beginning after December 15, 2014, with early adoption permitted. The Corporation adopted ASU 2014-08 on August 29, 2014 in connection with the disposition of A.G. Industries, Inc. See Note 4 ~~for~~– ~~further~~Acquisitions ~~information.~~and Dispositions

InSale ~~July 2013, the FASB issued ASU No. 2013-11 (“ASU 2013-11”), “Presentation~~ of anStrawberry ~~Unrecognized~~Shortcake Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists.” ASU 2013-11 requires an unrecognized tax benefit, or a portion of an unrecognized tax benefit, to be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except as follows. To the extent a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date, the unrecognized tax benefit should be presented in the financial statements as a liability and not combined with deferred tax assets. ASU 2013-11 is effective for annual and interim periods beginning after December 15, 2013 for public companies, with early adoption permitted. The Corporation adopted ASU 2013-11 on March 1, 2014.

9As reported in its Annual Report on Form 10-K for the year ended February 28, 2015, the Corporation entered into an agreement to sell its Strawberry Shortcake property and related intangible assets and licensing agreements (“Strawberry Shortcake”) on February 2, 2015. At February 28, 2015, the assets and liabilities related to the pending sale were classified as held for sale. In March 2015, the sale was completed and the Corporation received $105.0 million in cash and recognized a gain of $61.7 million, subject to finalization of certain closing date estimates. The proceeds are included in “Proceeds from sale of Strawberry Shortcake” within “Investing Activities” on the Consolidated Statement of Cash Flows.

~~Table~~Character ofProperty ~~Contents~~Rights Acquisition

~~Note~~As reported in its Annual Report on Form 10-K for the year ended February 28, 2015, in order to secure complete control and ownership over the rights in certain character properties, including the Strawberry Shortcake property, that the Corporation previously granted to a third party (the “Character Property Rights”), on December 18, 2014, the Corporation paid $37.7 million to purchase these rights, and recorded the rights as indefinite-lived intangible assets. At February 28, 2015, approximately $26 million of this amount was classified as held for sale related to the expected sale of Strawberry Shortcake. In addition, under the agreement by which it acquired these rights, the Corporation agreed that in the event of a future sale of these Character Property Rights and the associated character properties, the Corporation will, depending on the proceeds of such sale, pay up to an additional $4.0 –million ~~Dispositions~~of the proceeds that it receives from any such sale. Accordingly, as a result of the sale of the Strawberry Shortcake property described above, in March 2015, the Corporation made an additional payment in the amount of $2.8 million. This payment is included in “Cash paid for acquired character property rights” within “Investing Activities” on the Consolidated Statement of Cash Flows.

On9 July 1, 2014, the Corporation sold its current world headquarters location and entered into an operating lease arrangement with the new owner of the building. The Corporation expects to remain in this current location until the completion of the new world headquarters, which the Corporation anticipates will occur in calendar year 2016. Net of transaction costs, the Corporation received $13.5 million cash from the sale, and recorded a non-cash loss on disposal of $15.5 million in the Corporation’s second fiscal quarter, which loss is included in “Other operating income – net” on the Consolidated Statement of Income.

~~Note~~Sale 5of –AGI ~~Royalty~~In-Store ~~Revenue and Related Expenses~~

~~The~~As ~~Corporation~~reported ~~has~~in ~~agreements~~its ~~for~~Annual ~~licensing~~Report ~~the~~on ~~Care~~Form ~~Bears~~10-K ~~and~~for ~~Strawberry~~the ~~Shortcake~~year ~~characters~~ended ~~and~~February 28, ~~other~~2015, ~~intellectual~~the ~~property.~~Corporation ~~These license~~completed ~~agreements~~the ~~provide~~sale ~~for~~of ~~royalty~~its ~~revenue~~wholly-owned todisplay fixtures ~~the~~business, ~~Corporation~~AGI In-Store, ~~which~~on isAugust 29, ~~recorded~~2014 infor ~~“Other~~$73.7 ~~revenue”~~million onin ~~the~~cash, ~~Consolidated~~subject ~~Statement~~to ofclosing ~~Income.~~date ~~These~~working ~~license~~capital ~~agreements~~adjustments. ~~may~~In ~~include~~March 2015, the ~~receipt~~working ofcapital ~~upfront~~adjustments ~~advances,~~were ~~which~~finalized ~~are~~and ~~recorded~~a ~~as deferred~~payment ~~revenue~~of ~~and~~$3.2 ~~earned~~million ~~during~~was ~~the~~made ~~period~~to of the ~~agreement~~ buyer. ~~Revenues~~This ~~and~~payment ~~expenses~~is ~~associated~~included ~~with~~in ~~the~~“Adjustment ~~servicing~~to ofproceeds ~~these~~from ~~agreements,~~sale ~~primarily~~of ~~relating~~AGI toIn-Store” ~~the~~within ~~licensing~~“Investing ~~activities~~Activities” ~~included~~on in the ~~non-reportable~~Consolidated ~~segment,~~Statement ~~are~~of ~~summarized~~Cash ~~as follows:~~Flows.

	Three Months Ended					Nine Months Ended
(In thousands)	November 28,2014			November 29,2013		November 28,2014		November 29,2013
Royalty revenue	$	5,666		$	5,046	$	16,527	$	17,964
Royalty expenses
Material, labor and other production (credit) costs	$	(1,527	)	$	1,954	$	1,508	$	5,453
Selling, distribution and marketing expenses		1,562			1,431		4,837		4,615
Administrative and general expenses		447			421		1,228		1,322
	$	482		$	3,806	$	7,573	$	11,390

Surrender of Certain Corporate-Owned Life Insurance Policies

~~Note~~As 6reported –in ~~Other~~its ~~Income~~Annual ~~and~~Report ~~Expense~~on Form 10-K for the year ended February 28, 2015, the Corporation, in order to mitigate the ongoing risks to the Corporation that may arise from retaining certain corporate-owned life insurance policies, surrendered those policies during the prior year fourth quarter. In March 2015, in connection with the surrender of those policies, the Corporation received proceeds of $24.1 million. These proceeds are included in “Proceeds from surrender of corporate-owned life insurance policies” within “Investing Activities” on the Consolidated Statement of Cash Flows.

~~Other~~Note ~~Operating~~5 ~~Income~~ – ~~Net~~Royalty Revenue and Related Expenses

	Three Months Ended						Nine Months Ended
(In thousands)	November 28,2014			November 29,2013			November 28,2014			November 29,2013
Gain adjustment (gain) on sale of AGI In-Store	$	139		$	—		$	(38,663	)	$	—
Clinton Cards secured debt recovery		—			(1,804	)		(3,390	)		(4,232	)
Loss on asset disposal		90			672			15,823			559
Miscellaneous		(928	)		(1,236	)		(265	)		(2,974	)
Other operating income – net	$	(699	)	$	(2,368	)	$	(26,495	)	$	(6,647	)

The Corporation has agreements for licensing certain characters and other intellectual property. These license agreements provide for royalty revenue to the Corporation, which is recorded in “Other revenue” on the Consolidated Statement of Income. 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 the Non-reportable segment, are summarized as follows:

During the nine months ended November 28, 2014, the Corporation recognized a net gain of $38.7 million from the sale of AGI In-Store, which included a second quarter gain of $38.8 million and an adjustment to the gain in the third quarter of $0.1 million. The cash proceeds of $73.7 million from the sale are included in “Proceeds from sale of AGI In-Store” on the Consolidated Statement of Cash Flows. See Note 4 for further information.


	Three Months Ended
(In thousands)	May 29, 2015		May 30, 2014
Royalty revenue	$	1,129	$	5,938

Royalty expenses:
Material, labor and other production costs	$	934	$	1,544
Selling, distribution and marketing expenses		703		1,576
Administrative and general expenses		367		472

	$	2,004	$	3,592

10As disclosed in Note 4, the Corporation completed the sale of Strawberry Shortcake in March 2015. As such, royalty revenue and expenses related to Strawberry Shortcake for the prior year three month period do not have comparative amounts in the current year.

~~Table~~Note of6 ~~Contents~~– Other Income and Expense

~~“Loss~~Other onOperating ~~asset~~Income ~~disposal”~~– ~~during~~Net the nine month period ended November 28, 2014 included a non-cash loss of $15.5 million related to the sale of the Corporation’s current world headquarters location during the current year second quarter. The cash proceeds of $13.5 million are included in “Proceeds from sale of fixed assets” on the Consolidated Statement of Cash Flows. See Note 4 for further information.

During the first quarter of 2015, the Corporation recorded an impairment recovery of $3.4 million related to the senior secured debt of Clinton Cards that the Corporation acquired in May 2012 and subsequently impaired. This recovery, which was based on current estimated recovery information provided by the bankruptcy administrators of the Clinton Cards liquidation (“Administrators”), represented the final amount of a full recovery of the prior impairment. During the third quarter of 2015, as part of the liquidation process, the Corporation received a distribution of $11.3 million which included the full recovery of the remaining senior secured debt claim as well as accumulated interest that was previously not expected to be received. The interest of $2.5 million is included in “Interest income” on the Consolidated Statement of Income.


	Three Months Ended
(In thousands)	May 29, 2015			May 30, 2014
Gain on sale of Strawberry Shortcake	$	(61,666	)	$	—
Clinton Cards secured debt recovery		—			(3,390	)
Loss on asset disposal		9			23
Miscellaneous		(763	)		1,399

Other operating income – net	$	(62,420	)	$	(1,968	)

~~During~~In ~~the~~March ~~three and nine month periods ended November 29~~2015, ~~2013~~ the ~~impairment~~Corporation ofrecognized ~~the~~a ~~secured debt~~gain of ~~Clinton~~$61.7 ~~Cards,~~million ~~based~~in onconnection ~~updated~~with ~~recovery information provided by~~ the ~~Administrators,~~sale ~~was also adjusted, resulting in a gain~~ of $1Strawberry Shortcake.8 ~~million~~See Note ~~and $~~4.2 ~~million,~~for ~~respectively~~further information.

~~Other~~10 ~~Non-Operating Expense (Income) - Net~~

	Three Months Ended						Nine Months Ended
(In thousands)	November 28,2014			November 29,2013			November 28,2014			November 29,2013
Impairment of investment in Schurman	$	—		$	1,935		$	—		$	1,935
Gain related to Party City investment		—			—			—			(3,262	)
Foreign exchange loss (gain)		955			(454	)		432			(1,729	)
Rental income		(122	)		(408	)		(877	)		(1,294	)
Miscellaneous		—			(26	)		(101	)		(1	)
Other non-operating expense (income)– net	$	833		$	1,047		$	(546	)	$	(4,351	)

During the three months ended ~~November~~May 2930, ~~2013~~2014, the Corporation ~~recognized~~recorded an impairment ~~loss~~recovery of $13.94 million ~~associated~~ ~~with~~related ~~its~~to ~~investment~~the insenior ~~Schurman.~~secured ~~See~~debt ~~Note~~of 1Clinton ~~for~~Cards ~~further~~that ~~information~~the Corporation acquired in May 2012 and subsequently impaired.

InOther ~~July~~Non-Operating ~~2013, the Corporation recognized a gain totaling $3.3 million related to a~~Income ~~cash~~– ~~distribution~~Net ~~on its minority investment in the common stock of Party City Holdings, Inc. (“Party City”).~~

Note 7 – Accumulated Other Comprehensive (Loss) Income


	Three Months Ended
(In thousands)	May 29, 2015			May 30, 2014
Foreign exchange gain	$	(784	)	$	(460	)
Rental income		(152	)		(539	)
Miscellaneous		(2	)		(108	)

Other non-operating income – net	$	(938	)	$	(1,107	)

~~The~~Note ~~changes~~7 in– ~~accumulated~~Accumulated ~~other~~Other ~~comprehensive~~Comprehensive ~~income~~Income (~~loss~~Loss) ~~are as follows.~~

(In thousands)	ForeignCurrencyTranslationAdjustments			Pensions andOtherPostretirementBenefits			Total
Balance at February 28, 2014	$	25,139		$	(24,387	)	$	752
Other comprehensive loss before reclassifications		(15,917	)		(158	)		(16,075	)
Amounts reclassified from accumulated other comprehensive income (loss)		—			445			445
Net current period other comprehensive (loss) income		(15,917	)		287			(15,630	)
Balance at November 28, 2014	$	9,222		$	(24,100	)	$	(14,878	)

The changes in accumulated other comprehensive income (loss) are as follows.


(In thousands)	Foreign Currency Translation Adjustments			Pensions and Other Postretirement Benefits			Unrealized Investment Gain		Total
Balance at February 28, 2015	$	1,836		$	(26,239	)	$	—	$	(24,403	)
Other comprehensive income (loss) before reclassifications		(2,028	)		(22	)		44,610		42,560
Amounts reclassified from accumulated other comprehensive income (loss)		—			238			—		238

Net current period other comprehensive income (loss)		(2,028	)		216			44,610		42,798

Balance at May 29, 2015	$	(192	)	$	(26,023	)	$	44,610	$	18,395

~~Table~~The reclassifications out of ~~Contents~~accumulated other comprehensive income (loss) are as follows:

The reclassifications out of accumulated other comprehensive income (loss) are as follows.


(In thousands)	Three Months Ended May 29, 2015			Consolidated Statement of Income Classification
Pensions and Postretirement Benefits:
Amortization of pensions and other postretirement benefits items
Actuarial losses, net	$	(548	)	Administrative and general expenses
Prior service credit, net		174		Administrative and general expenses

		(374	)
Tax benefit		136		Income tax expense

Total, net of tax		(238	)

Total reclassifications	$	(238	)

(In thousands)	Nine Months EndedNovember 28, 2014			Consolidated Statement of Income Classification
Amortization of pension and other postretirement benefits items
Actuarial losses, net	$	(1,060	)	Administrative and general expenses
Prior service credit, net		394		Administrative and general expenses
		(666	)
Tax benefit		221		Income tax expense
Total, net of tax		(445	)
Total reclassifications	$	(445	)

As reported in its Annual Report on Form 10-K for the year ended February 28, 2015, the Corporation held a minority investment in the common stock of a privately held company which was classified as available for sale and accounted for under the cost method due to the Corporation’s inability to exercise significant influence over the investee’s operating and financial policies and the absence of a readily determinable fair value for its investment. At February 28, 2015, the carrying value of this investment was zero as a result of a cash distribution in 2014 that included a return of capital. During the three months ended May 29, 2015, the investee successfully completed an initial public offering of its common stock and thereby established a readily determinable fair value for the Corporation’s previously nonmarketable investment. In accordance with ASC Topic 320, “Investments – Debt and Equity Securities,” the investment is now reported at fair value and is included in “Other assets” on the Corporation’s Consolidated Statement of Financial Position. See Note 14 for further information. As a result of the initial fair value measurement at May 29, 2015, an unrealized gain, net of tax, of $44.6 million was recognized in other comprehensive income.

~~Note~~11 ~~8 – Customer Allowances and Discounts~~

(In thousands)	November 28, 2014		February 28, 2014		November 29, 2013
Allowance for seasonal sales returns	$	26,651	$	26,613	$	30,028
Allowance for outdated products		9,624		9,692		9,848
Allowance for doubtful accounts		1,752		2,488		3,934
Allowance for marketing funds		33,155		28,277		28,416
Allowance for rebates		31,987		27,369		29,191
	$	103,169	$	94,439	$	101,417

Note 8 – Customer Allowances and Discounts

~~Certain~~Trade ~~customer allowances and discounts are settled in cash. These~~ accounts, ~~primarily~~receivable ~~rebates, which~~ are ~~classified~~reported ~~as “Accrued~~net ~~liabilities” on the Consolidated Statement~~ of ~~Financial~~certain ~~Position,~~allowances ~~totaled~~and ~~$16~~discounts.1 ~~million,~~The ~~$16.5~~most ~~million~~significant ~~and~~of ~~$15.4~~these ~~million~~are as offollows: ~~November 28, 2014, February 28, 2014 and November 29, 2013, respectively.~~

Note 9 – Inventories


(In thousands)	May 29, 2015		February 28, 2015		May 30, 2014
Allowance for seasonal sales returns	$	20,026	$	18,895	$	23,214
Allowance for outdated products		10,547		11,074		10,313
Allowance for doubtful accounts		1,603		1,730		2,115
Allowance for marketing funds		26,373		26,841		33,027
Allowance for rebates		24,828		34,214		29,236

	$	83,377	$	92,754	$	97,905

(In thousands)	November 28, 2014		February 28, 2014		November 29, 2013
Raw materials	$	11,668	$	20,915	$	22,447
Work in process		6,404		8,093		8,178
Finished products		343,460		287,481		323,204
		361,532		316,489		353,829
Less LIFO reserve		84,132		82,140		85,617
		277,400		234,349		268,212
Display materials and factory supplies		8,790		20,412		23,160
	$	286,190	$	254,761	$	291,372

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 $14.6 million, $17.0 million and $14.6 million as of May 29, 2015, February 28, 2015 and May 30, 2014, respectively.

~~The~~Note ~~valuation~~9 of– ~~inventory~~Inventories 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.


(In thousands)	May 29, 2015		February 28, 2015		May 30, 2014
Raw materials	$	18,271	$	14,809	$	27,109
Work in process		11,310		7,578		12,774
Finished products		294,217		297,899		284,415

		323,798		320,286		324,298
Less LIFO reserve		81,314		80,755		82,746

		242,484		239,531		241,552
Display materials and factory supplies		8,638		9,046		18,285

	$	251,122	$	248,577	$	259,837

~~Table~~The valuation of ~~Contents~~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 $8871.58 million, $66.8 9 million and $8276.02 million as of ~~November~~May 2829, ~~2014~~2015, February 28, ~~2014~~2015 and ~~November~~May 2930, ~~2013~~2014, respectively.

~~Note~~12 ~~10 – Deferred Costs~~

(In thousands)	November 28, 2014			February 28, 2014			November 29, 2013
Prepaid expenses and other	$	107,729		$	100,282		$	103,173
Other assets		389,533			428,090			301,844
Deferred cost assets		497,262			528,372			405,017
Other current liabilities		(66,007	)		(84,860	)		(64,652	)
Other liabilities		(136,111	)		(149,190	)		(83,100	)
Deferred cost liabilities		(202,118	)		(234,050	)		(147,752	)
Net deferred costs	$	295,144		$	294,322		$	257,265

Note 10 – Deferred Costs

~~The~~Deferred ~~Corporation~~costs ~~maintains~~and anfuture ~~allowance~~payment commitments for ~~deferred~~retail ~~costs related to~~ supply agreements ofare ~~$2.6 million, $4.1 million and $5.6 million at November 28, 2014, February 28, 2014 and November 29, 2013, respectively. This allowance is~~ included in ~~“Other assets” on~~ the ~~Consolidated~~following ~~Statement~~financial ofstatement ~~Financial~~captions: ~~Position.~~

Note 11 – Other Liabilities


(In thousands)	May 29, 2015			February 28, 2015			May 30, 2014
Prepaid expenses and other	$	95,001		$	98,061		$	93,125
Other assets		429,532			364,311			420,358

Deferred cost assets		524,533			462,372			513,483
Other current liabilities		(53,530	)		(59,018	)		(81,154	)
Other liabilities		(177,133	)		(104,127	)		(144,762	)

Deferred cost liabilities		(230,663	)		(163,145	)		(225,916	)

Net deferred costs	$	293,870		$	299,227		$	287,567

~~Included~~The inCorporation ~~“Other~~maintains ~~liabilities”~~an onallowance ~~the~~for ~~Consolidated Statement of Financial Position is a~~ deferred ~~lease~~costs ~~obligation~~ related to ~~an operating~~supply ~~lease~~agreements ~~with~~of H$2.2 Lmillion, &$2.3 Lmillion ~~Property~~and ~~Company~~$3.6 million ~~(“H~~at LMay 29, ~~& L”)~~2015, February 28, ~~for~~2015 aand ~~building~~May 30, ~~that~~2014, ~~will function as the future American Greetings world headquarters~~respectively. ~~The~~This ~~building~~allowance is ~~currently~~included ~~being~~in ~~constructed~~“Other ~~and~~assets” ~~expected~~on tothe beConsolidated ~~available~~Statement ~~for occupancy~~of inFinancial ~~calendar year 2016~~Position.

HNote L11 &– LOther isLiabilities an indirect affiliate of American Greetings as it is indirectly owned by members of the Weiss family. Due to, among other things, the Corporation’s involvement in the construction of the building, the Corporation is required to be treated, for accounting purposes only, as the “deemed owner” of the new world headquarters building during the construction period. Accordingly, the Corporation has recorded an asset and associated offsetting liability during the construction of the building, even though the Corporation does not own the asset and is not the obligor on the corresponding construction debt. As of November 28, 2014, the asset and corresponding liability was $19.0 million.

~~Note~~Included 12in –“Other ~~Debt~~liabilities” on the Consolidated Statement of Financial Position is a deferred lease obligation related to an operating lease with H L & L Property Company (“H L & L”), for a building that will function as the Corporation’s world headquarters. The building is currently being constructed and expected to be available for occupancy in calendar year 2016.

~~Debt~~H ~~due~~L ~~within~~& ~~one~~L ~~year~~is an indirect affiliate of the Corporation as it is indirectly owned by members of the Weiss Family (as defined in Note 17). Due to, among other things, the Corporation’s involvement in the construction of the building, the Corporation is required to be treated, for accounting purposes only, as the “deemed owner” of the new world headquarters building during the construction period. Accordingly, the Corporation has recorded an asset and associated offsetting liability during the construction of the building, even though the Corporation does not own the asset and is not the obligor on the corresponding construction debt. The asset and corresponding liability was $39.3 million, $31.7 million and $0.9 million as ~~follows:~~of May 29, 2015, February 28, 2015 and May 30, 2014, respectively. See Note 17 for further information.

(In thousands)	November 28, 2014		February 28, 2014		November 29, 2013
Current portion of term loan	$	20,000	$	20,000	$	20,000
Accounts receivable facility		3,800		—		—
	$	23,800	$	20,000	$	20,000

Note 12 – Debt

~~Long-term~~There ~~debt~~was ~~and~~no ~~their~~debt ~~related~~due ~~calendar~~within one year as of May 29, 2015 and February 28, 2015. Debt due ~~dates~~within ~~were~~one year totaled $20,000 as ~~follows:~~of May 30, 2014, which represented the current maturity of the term loan.

(In thousands)	November 28, 2014			February 28, 2014			November 29, 2013
Term loan, due 2019	$	325,000		$	340,000		$	350,000
7.375% senior notes, due 2021		225,000			225,000			225,000
Revolving credit facility, due 2018		48,000			4,500			77,300
6.10% senior notes, due 2028		181			181			181
Unamortized financing fees		(7,949	)		(10,567	)		(10,153	)
		590,232			559,114			642,328
Current portion of term loan		(20,000	)		(20,000	)		(20,000	)
	$	570,232		$	539,114		$	622,328

Long-term debt and their related calendar year due dates as of May 29, 2015, February 28, 2015 and May 30, 2014, respectively, were as follows:


(In thousands)	May 29, 2015			February 28, 2015			May 30, 2014
Term loan, due 2019	$	185,000		$	250,000		$	335,000
7.375% senior notes, due 2021		225,000			225,000			225,000
Revolving credit facility, due 2018		58,000			4,300			66,600
6.10% senior notes, due 2028		181			181			181
Unamortized financing fees		(4,712	)		(6,752	)		(10,079	)

		463,469			472,729			616,702
Current portion of term loan		—			—			(20,000	)

	$	463,469		$	472,729		$	596,702

~~Table~~13 ~~of Contents~~

~~The~~At ~~total~~May 29, ~~fair~~2015, ~~value of~~ the ~~Corporation’s~~balances ~~publicly~~outstanding ~~traded~~on ~~debt,~~the ~~which~~term ~~was~~loan ~~considered~~facility aand ~~Level~~revolving 1credit ~~valuation~~facility asbear interest itat ~~was~~a ~~based~~rate onof ~~quoted~~approximately ~~market~~2.7% ~~prices~~and 2.9%, ~~was $238~~respectively.0 ~~million~~The ~~(at~~revolving acredit ~~carrying~~facility ~~value~~provides the Corporation with funding of ~~$225.2~~up ~~million),~~to $~~234.7~~250 million. ~~(at~~The aCorporation ~~carrying~~is ~~value~~also ofa ~~$225.2~~party ~~million)~~to ~~and~~an ~~$228.8~~accounts ~~million~~receivable ~~(at~~facility athat ~~carrying~~provides ~~value~~funding of up to $~~225.2~~50 million), atunder ~~November~~which there were no borrowings outstanding as of May 2829, ~~2014~~2015, February 28, ~~2014~~2015 and ~~November~~May 2930, ~~2013~~ 2014, respectively. Outstanding letters of credit, which reduce the total credit available under the revolving credit and the accounts receivable facilities, totaled $26.4 million at May 29, 2015.

~~The~~In ~~total~~March ~~fair~~2015 ~~value of~~ the Corporation’s ~~non-publicly~~made ~~traded debt, which was considered~~ a ~~Level~~voluntary 2prepayment ~~valuation~~of $65.0 asmillion ~~it was based~~ on ~~comparable~~ ~~privately~~the ~~traded~~term ~~debt~~loan ~~prices~~facility, ~~was~~thereby ~~$369.6~~eliminating ~~million~~all ~~(at~~future aquarterly ~~principal~~installment ~~carrying~~payments ~~value~~prior ofto ~~$373.0~~this ~~million)~~facility’s August 9, ~~$344.5~~2019 ~~million~~maturity ~~(at~~date. aDuring ~~principal~~the ~~carrying~~three ~~value~~months ofended ~~$344.5~~May 29, ~~million)~~2015, ~~and~~the Corporation expensed an additional $~~427~~1.38 million ~~(at a principal carrying value~~ of ~~$427.3~~unamortized ~~million)~~financing ~~at November 28,~~fees ~~2014, February 28,~~as ~~2014~~a ~~and~~result ~~November 29,~~of ~~2013,~~the ~~respectively~~prepayment.

~~On September 5, 2014, the Corporation amended the Credit Agreement which provides for the term loan facility and revolving credit facility.~~ The ~~amendment~~total ~~modifies~~fair ~~the~~value ~~Credit~~of ~~Agreement to, among other things: (i) reduce~~ the ~~interest~~Corporation’s ~~rates~~publicly ~~applicable~~traded ~~to the term loan and revolving loans~~debt, ~~(ii) eliminate~~which ~~the~~was ~~LIBOR~~considered ~~floor~~a ~~interest~~Level ~~rate~~1 ~~used~~valuation inas ~~the~~it ~~determination~~was ofbased ~~interest charged~~ on ~~Eurodollar~~quoted ~~revolving~~market ~~loans~~prices, ~~(iii) reduce~~was ~~the~~$238.6 ~~commitment~~million ~~fee applicable to unused revolving commitments and~~ (~~iv) reset~~at ~~the~~a ~~usage~~carrying ~~term~~value of ~~the general~~$225.2 ~~restricted payment basket with effect from September 5~~million), ~~2014~~$238.2 Asmillion (at a ~~result~~carrying value of ~~this~~$225.2 ~~amendment~~million) and ~~certain changes in the syndicated lending group, the Corporation expensed~~ $1236.94 million of(at ~~unamortized~~a ~~financing~~carrying ~~fees~~value ~~and~~of ~~capitalized~~ $1225.12 million) ofat ~~new~~May 29, ~~fees~~2015, February 28, in2015 ~~the~~and ~~quarter ended November~~May 2830, 2014, respectively.

OnThe ~~August 8,~~total ~~2014,~~fair value of the Corporation’s non-publicly ~~amended~~traded ~~its~~debt, ~~accounts~~which ~~receivable~~was ~~facility.~~considered ~~The amendment~~a ~~modified~~Level ~~the~~2 ~~accounts~~valuation ~~receivable~~as ~~facility~~it towas based on comparable privately traded debt prices, ~~among~~was ~~other~~$242.5 ~~things:~~million (~~i) extend~~at ~~the~~a ~~scheduled~~principal ~~termination~~carrying ~~date~~value toof ~~August 7~~$243.0 million), ~~2015~~$251.8 million (at a principal carrying value of $254.3 million), and $401.6 million (iiat a carrying value of $401.6 million) at May ~~reduce~~29, ~~the~~2015, February 28, ~~fees~~2015 ~~associated~~and ~~with~~May 30, ~~this~~2014, ~~facility~~respectively.

At ~~November~~May 2829, ~~2014~~2015, the Corporation was in compliance with the financial covenants under its borrowing agreements.

Note 13 – Retirement Benefits

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

	Defined Benefit Pension Plans						Postretirement Benefits Plan
	Three Months Ended						~~Nine~~Three Months Ended
	November 28,			November 29,			November 28,			November 29,
(In thousands)	May 29, 2015			May 30, 2014			May 29, 2015			May 30, 2014
(In thousands)	2014			2013			2014			2013
Service cost	$	159		$	144		$	125		$	100
Service cost	$	144		$	315		$	433		$	955
Interest cost		1,558			1,837			525			675
Interest cost		1,833			1,766			5,516			5,244
Expected return on plan assets		(1,668	)		(1,623	)		(675	)		(700	)
Expected return on plan assets		(1,617	)		(1,577	)		(4,868	)		(4,718	)
Amortization of prior service cost (credit)		1			1			(175	)		(325	)
Amortization of prior service cost		582			68			584			170
Amortization of actuarial loss (gain)		848			706			(300	)		(225	)
Amortization of actuarial loss		710			871			2,136			2,701
	$	898		$	1,065		$	(500	)	$	(475	)
	$	1,652		$	1,443		$	3,801		$	4,352

14The 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 29, 2015 was $1.7 million, compared to $4.1 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 $1.2 million for the three month period ended May 29, 2015, compared to $1.3 million for the prior year period. 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.

~~Table~~At May 29, 2015, February 28, 2015 and May 30, 2014, the liability for postretirement benefits other than pensions was $18.5 million, $17.5 million and $18.7 million, respectively, and is included in “Other liabilities” on the Consolidated Statement of ~~Contents~~Financial Position. At May 29, 2015, February 28, 2015 and May 30, 2014, the long-term liability for pension benefits was $80.3 million, $81.9 million and $76.0 million, respectively, and is included in “Other liabilities” on the Consolidated Statement of Financial Position.

	Postretirement Benefits
	Three Months Ended						Nine Months Ended
	November 28,			November 29,			November 28,			November 29,
(In thousands)	2014			2013			2014			2013
Service cost	$	76		$	48		$	276		$	323
Interest cost		559			572			1,909			1,797
Expected return on plan assets		(762	)		(775	)		(2,162	)		(2,300	)
Amortization of prior service credit		(328	)		(327	)		(978	)		(977	)
Amortization of actuarial gain		(626	)		(357	)		(1,076	)		(782	)
	$	(1,081	)	$	(839	)	$	(2,031	)	$	(1,939	)

AtNote ~~November 28, 2014, February 28,~~14 ~~2014~~– ~~and~~Fair ~~November 29,~~Value ~~2013,~~Measurements the liability for postretirement benefits other than pensions was $20.6 million, $17.9 million and $18.6 million, respectively, and is included in “Other liabilities” on the Consolidated Statement of Financial Position. At November 28, 2014, February 28, 2014 and November 29, 2013, the long-term liability for pension benefits was $74.8 million, $77.3 million and $81.0 million, respectively, and is included in “Other liabilities” on the Consolidated Statement of Financial Position.

~~Note~~Assets 14and –liabilities ~~Fair~~measured ~~Value~~at ~~Measurements~~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:

~~Assets~~• ~~and~~Level ~~liabilities~~1 ~~measured~~– atValuation ~~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~~quoted ~~lowest~~prices ~~level~~(unadjusted) ofin ~~input~~active ~~that~~markets isfor ~~significant~~identical toassets ~~the~~or ~~measurement~~liabilities. ~~The three levels are defined as follows:~~

• Level 12 – Valuation is based upon quoted prices ~~(unadjusted)~~for similar assets and liabilities in active markets, or other inputs that are observable for ~~identical~~the ~~assets~~asset or ~~liabilities~~liability, either directly or indirectly, for substantially the full term of the financial instrument.

• Level 23 – Valuation is based upon ~~quoted~~unobservable ~~prices for similar assets and liabilities in active markets, or other~~ inputs that are ~~observable~~significant ~~for~~to the ~~asset~~fair orvalue ~~liability, either directly or indirectly, for substantially the full term of the financial instrument~~measurement.

•The ~~Level~~following 3table –summarizes ~~Valuation~~the isfinancial ~~based~~assets ~~upon~~and ~~unobservable~~liabilities ~~inputs~~measured ~~that~~at ~~are~~fair ~~significant~~value toas ~~the~~of ~~fair~~May 29, ~~value~~2015: ~~measurement.~~

The following table summarizes the assets and liabilities measured at fair value as of November 28, 2014:


(In thousands)	May 29, 2015		Level 1		Level 2		Level 3
Assets measured on a recurring basis:
Deferred compensation plan assets	$	12,484	$	11,035	$	1,449	$	—
Investment in equity securities		73,080		73,080		—		—

	$	85,564	$	84,115	$	1,449	$	—

Liabilities measured on a recurring basis:
Deferred compensation plan liabilities	$	13,448	$	11,035	$	2,413	$	—

(In thousands)	November 28, 2014		Level 1		Level 2		Level 3
Assets measured on a recurring basis:
Deferred compensation plan assets	$	12,840	$	10,932	$	1,908	$	—
Liabilities measured on a recurring basis:
Deferred compensation plan liabilities	$	13,783	$	10,932	$	2,851	$	—

The following table summarizes the assets and liabilities measured at fair value as of February 28, 2015:


(In thousands)	February 28, 2015		Level 1		Level 2		Level 3
Assets measured on a recurring basis:
Deferred compensation plan assets	$	12,745	$	10,997	$	1,748	$	—

Liabilities measured on a recurring basis:
Deferred compensation plan liabilities	$	13,412	$	10,997	$	2,415	$	—

~~Table~~The following table summarizes the assets and liabilities measured at fair value as of ~~Contents~~May 30, 2014:

The following table summarizes the assets and liabilities measured at fair value as of February 28, 2014:


(In thousands)	May 30, 2014		Level 1		Level 2		Level 3
Assets measured on a recurring basis:
Deferred compensation plan assets	$	12,218	$	10,243	$	1,975	$	—

Liabilities measured on a recurring basis:
Deferred compensation plan liabilities	$	13,214	$	10,243	$	2,971	$	—

(In thousands)	February 28, 2014		Level 1		Level 2		Level 3
Assets measured on a recurring basis:
Deferred compensation plan assets	$	12,285	$	10,289	$	1,996	$	—
Liabilities measured on a recurring basis:
Deferred compensation plan liabilities	$	13,230	$	10,289	$	2,941	$	—

The deferred compensation plan includes investments in mutual funds and a money market fund. Assets held in mutual funds are recorded at fair value, which is considered a Level 1 valuation as it is based on each fund’s quoted market value per share in an active market. The money market fund is classified as Level 2 as substantially all of the fund’s investments are determined using amortized cost. The fair value of the deferred compensation plan liabilities is based on the fair value of: (i) the plan’s assets for invested deferrals and (ii) hypothetical investments for unfunded deferrals.

The ~~following~~investment ~~table~~in ~~summarizes~~equity ~~the~~securities ~~assets~~is ~~and~~considered ~~liabilities~~a ~~measured~~Level at1 ~~fair~~valuation ~~value~~ as ofit ~~November 29,~~is ~~2013:~~based on a quoted price in an active market.

(In thousands)	November 29, 2013		Level 1		Level 2		Level 3
Assets measured on a recurring basis:
Deferred compensation plan assets	$	12,129	$	8,814	$	3,315	$	—
Liabilities measured on a recurring basis:
Deferred compensation plan liabilities	$	13,295	$	8,814	$	4,481	$	—

Note 15 – Contingency

The Corporation is presently involved in various judicial, administrative, regulatory and arbitration proceedings concerning matters arising in the ordinary course of business, including but not limited to, employment, commercial disputes and other contractual matters~~, one of which is described below~~. These matters are inherently subject to many uncertainties regarding the possibility of a loss to the Corporation. These uncertainties will ultimately be resolved when one or more future events occur or fail to occur, confirming the incurrence of a liability or reduction of a liability. In accordance with ASC Topic 450, “Contingencies,” the Corporation accrues for these contingencies by a charge to income when it is both probable that one or more future events will occur confirming the fact of a loss and the amount of the loss can be reasonably estimated. Due to this uncertainty, the actual amount of any loss may ultimately prove to be larger or smaller than the amounts reflected in the Corporation’s Consolidated Financial Statements. Some of these proceedings are at preliminary stages and some of these cases seek an indeterminate amount of damages.

~~Although~~ On January 20, 2015, the ~~proceeding~~parties isreached a settlement in principle that, if approved by the ~~early~~Court, ~~stages~~will fully and ~~there~~finally ~~are~~resolve ~~significant~~the ~~factual~~claims ~~issues~~brought toby Smith beand ~~resolved~~Hourcade, ~~management~~as ~~does~~well ~~not~~as ~~believe,~~the ~~based~~classes onthey ~~currently~~seek ~~available~~to ~~information,~~represent. ~~that~~The ~~the~~settlement ~~outcome~~was a product of ~~this~~extensive ~~proceeding~~negotiations ~~will~~and ~~have~~a private mediation, which was finalized and memorialized in a ~~material~~Stipulation ~~adverse~~and ~~effect~~Class onAction ~~the Corporation’s~~Settlement ~~financial~~Agreement ~~condition~~signed March 30, ~~although~~2015. ~~the~~The ~~outcome~~proposed ~~could~~settlement beestablishes ~~material~~a tosettlement ~~the~~fund ~~Corporation’s~~of ~~operating~~$4.0 ~~results~~million ~~for~~to ~~any~~pay ~~particular~~claims ~~period,~~from ~~depending,~~current inand ~~part,~~former ~~upon~~employees ~~the~~who ~~operating~~worked ~~results~~at least one day for ~~such~~American ~~period.~~Greetings ~~Please~~Corporation ~~refer~~and/or tocertain ~~Item 1.~~of ~~Legal Proceedings~~its ~~included~~subsidiaries in ~~Part~~any hourly IInon-exempt –position ~~Other~~in ~~Information~~California ofbetween ~~this~~June 4, ~~Form~~2010 ~~10-Q~~and ~~for~~the adate ~~description~~ of the ~~Smith~~Court’s ~~and~~preliminary ~~Hourcade~~approval ~~lawsuit~~of the settlement.

16On March 31, 2015, plaintiffs filed a Motion for Preliminary Approval of Class Action Settlement. On April 30, 2015, plaintiffs filed their Third Amended Complaint to which American Greetings Corporation filed its answer on May 19, 2015. On April 30, 2015, the Court held a preliminary approval hearing. If the settlement is preliminarily approved, notice and claim forms will be mailed to class members and class members will have an opportunity to submit claims, to opt-out of the settlement, and/or to object to the settlement. As part of a Preliminary Approval Order, the Court will set a Final Approval Hearing to occur after the notice process, at which point the Court will consider the notice process and results, any objections, and other relevant information. The Court will then decide whether to finally approve the class settlement. If the settlement is finally approved, American Greetings will fund the settlement within twenty (20) days after passage of all appeal periods. Thereafter, the settlement funds will be disbursed as provided in the settlement agreement and the Court’s orders.

~~Table~~Michael Ackerman v. American Greetings Corporation, et al. On March 6, 2015, plaintiff Michael Ackerman, individually and on behalf of others ~~Contents~~similarly situated, filed a putative class action lawsuit in the United States District Court of New Jersey alleging violation of the Telephone Consumer Protection Act (“TCPA”) by American Greetings Corporation and its subsidiary, AG Interactive, Inc. The plaintiff claims that defendants (1) sent plaintiff an unsolicited text message notifying plaintiff that he had received an ecard; and (2) knowingly and/or willfully violated the TCPA, which prohibits unsolicited automated or prerecorded telephone calls, including faxes and text messages, sent to cellular telephones. Plaintiff seeks to certify a nationwide class based on unsolicited text messages sent by defendants during the period February 8, 2011 through February 8, 2015. The plaintiff seeks damages in the statutory amount of $500 for each and every violation of the TCPA and $1,500 for each and every willful violation of the TCPA. The Corporation believes the plaintiff’s allegations in this lawsuit are without merit and intends to defend the action vigorously.

~~Note~~ 16 ~~– Income Taxes~~

AtWith ~~November 28,~~respect ~~2014,~~to the ~~Corporation~~Ackerman ~~had~~case, ~~unrecognized~~management ~~tax~~is ~~benefits~~unable ofto ~~$21.6~~estimate ~~million~~a ~~that,~~range ifof ~~recognized,~~reasonably ~~would~~possible ~~have~~losses aas (i) the ~~favorable~~aggregate ~~effect~~damages onhave ~~the Corporation’s~~not ~~income~~been ~~tax~~specified, ~~expense~~(ii) the ofproceeding ~~$19.1~~is ~~million.~~in ~~During~~ the ~~nine~~early ~~months~~stages, ~~ended November~~(iii) ~~28,~~there ~~2014,~~is ~~the~~uncertainty ~~Corporation’s~~as ~~unrecognized~~to ~~tax~~the ~~benefits~~outcome ~~increased~~of ~~$2.6~~anticipated ~~million~~motions, asand/or a(iv) there ~~result~~are ofsignificant ~~uncertain~~factual ~~tax~~issues ~~positions~~to ~~taken~~be ~~in the~~resolved. ~~Corporation’s~~However, ~~most~~management ~~recently~~does ~~filed~~not ~~tax~~believe, ~~returns~~based ~~and~~on ~~error~~currently ~~corrections~~available ~~related~~information, tothat the ~~uncertain~~outcome ~~tax~~of ~~position~~this asproceeding ~~discussed~~will ~~above.~~have Ita ismaterial ~~reasonably~~adverse ~~possible~~effect ~~that~~on the Corporation’s ~~unrecognized~~business, ~~tax~~consolidated ~~positions~~financial asposition or results of ~~November 28~~operations, although ~~2014~~the outcome could ~~decrease~~ ~~$3.0~~be ~~million~~material ~~during~~to the ~~next~~Corporation’s ~~twelve~~operating ~~months~~results ~~due~~for toany ~~anticipated~~particular ~~settlements~~period, ~~and~~depending, ~~resulting~~in ~~cash~~part, ~~payments~~upon ~~related~~the tooperating ~~tax~~results ~~years~~for ~~which~~such ~~are open to examination~~period.

~~The~~Note ~~Corporation~~16 ~~recognizes~~– ~~interest~~Income ~~and~~Taxes penalties accrued on unrecognized tax benefits and refundable income taxes as a component of income tax expense. During the nine months ended November 28, 2014, the Corporation recognized a net benefit of $3.8 million for interest and penalties on unrecognized tax benefits and refundable income taxes. As of November 28, 2014, the total amount of gross accrued interest and penalties related to unrecognized tax benefits less refundable income taxes was a net payable of $0.6 million.

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 ~~subject~~dependent toon ~~examination~~the bylevel of income in the ~~IRS~~period. ~~for~~The effective tax ~~years~~rate ~~2010~~was 34.6% and 21.1% for the three month periods ended May 29, 2015 and May 30, 2014, respectively. The lower than statutory rate for the three months ended May 29, 2015 is primarily related to the ~~present~~domestic production activities deduction, tax treatment of corporate-owned life insurance and ~~various~~lower tax rates in foreign jurisdictions partially offset by state income tax rates on U.S. ~~state~~income, ~~and~~net ~~local~~of federal ~~jurisdictions~~benefit. The lower than statutory rate for the three months ended May 30, 2014 was due primarily to the recording of a net $3.1 million federal tax ~~years~~refund ~~2001~~and related interest attributable to fiscal 2000 and the ~~present~~error corrections recorded in accordance with ASC Topic 250, Accounting Changes and Error Corrections. The ~~Corporation~~net isimpact ~~also~~of ~~subject~~the error corrections was a reduction to income tax ~~examination~~expense inof ~~various~~$4.1 ~~international~~million. ~~tax~~During ~~jurisdictions~~the three months ended May 30, ~~including~~ ~~Canada~~2014, the ~~United~~Corporation identified ~~Kingdom,~~and ~~Australia,~~corrected ~~Italy~~errors in the accounting for income taxes that related to the year ended February 28, ~~Mexico~~2014. These errors primarily related to the Corporation’s failure to consider all sources of available taxable income when assessing the need for a valuation allowance against certain deferred tax assets and ~~New~~the ~~Zealand~~recognition of a liability for an uncertain tax ~~years~~position. ~~2006~~These toerrors were the ~~present~~result of the significant complexity created as a result of the going private transaction in fiscal 2014.

As discussed in Note 177, –the ~~Related~~Corporation ~~Party~~recorded ~~Information~~an adjustment to mark to market the value of one of its investments as of May 29, 2015. As a result, a decrease in the Corporation’s deferred tax assets in the amount of $28.5 million was recognized in other comprehensive income during the quarter.

~~World~~At ~~headquarters~~May 29, ~~relocation~~2015, the Corporation had unrecognized tax benefits of $21.7 million that, if recognized, would have a favorable effect on the Corporation’s income tax expense of $19.5 million. It is reasonably possible that the Corporation’s unrecognized tax positions as of May 29, 2015 could decrease $2.3 million during the next twelve months due to anticipated settlements and resulting cash payments related to tax years which are open to examination.

InThe ~~May~~Corporation ~~2011,~~recognizes ~~the~~interest ~~Corporation~~and ~~announced~~penalties ~~that~~accrued iton ~~will~~unrecognized tax bebenefits ~~relocating~~and ~~its~~refundable ~~world~~income ~~headquarters~~taxes toas a ~~new~~component ~~location~~of inincome tax expense. During the ~~City~~three ofmonths ~~Westlake~~ended May 29, ~~Ohio~~2015, inthe aCorporation ~~mixed-use development~~recognized ~~known~~net asexpense ~~Crocker~~of ~~Park~~$0.2 ~~(the~~million ~~“Crocker~~for ~~Park~~interest ~~Development”),~~and ~~which~~penalties ~~offers~~on aunrecognized ~~vibrant~~tax ~~urban~~benefits ~~setting,~~and refundable ~~with~~income ~~retail~~taxes. ~~stores~~As ~~and~~of ~~restaurants~~May 29, ~~offices~~2015, ~~and~~the ~~apartments.~~total ~~After~~amount ~~putting~~of ~~the~~gross ~~project~~accrued oninterest ~~hold~~and ~~pending~~penalties ~~the~~related ~~outcome~~to ofunrecognized ~~the~~tax ~~going private~~benefits ~~transaction,~~less ~~the~~refundable ~~Corporation~~income ~~announced~~taxes ~~plans~~was ina ~~October~~net payable of $3.0 million.

17The Corporation is subject to examination by the Internal Revenue Service for tax years 2010 to the present and various U.S. state and local jurisdictions for tax years 2001 to the present. The Corporation is also subject to tax examination in various international tax jurisdictions, including Canada, the United Kingdom, Australia, Italy, Mexico and New Zealand for tax years 2006 to the present.

~~Table~~17 ~~of Contents~~

The Corporation is leasing a portion of the Crocker Park Site to H L & L, which will construct the new world headquarters on the Crocker Park Site and sublease the new world headquarters back to the Corporation. The Corporation has also entered into an operating lease with H L & L for the use of the new world headquarters building, anticipated to be available for occupancy in calendar year 2016. The initial lease term is fifteen years and will begin upon occupancy. The annual rent is expected to be approximately $9.5 million. See Note 1117 ~~for~~– ~~further~~Related ~~information. Please~~Party ~~refer~~Information ~~to the Corporation’s Annual Report on Form 10-K for the fiscal year ended February 28, 2014 for a description of the transactions associated with the world headquarters relocation.~~

~~Transactions~~World ~~with~~headquarters ~~Parent~~relocation ~~Companies and Other Affiliated Companies~~

~~From~~In ~~time~~May 2011, the Corporation announced that it will be relocating its world headquarters to ~~time~~a ~~employees~~new oflocation in the ~~Corporation~~City ~~may~~of ~~provide~~Westlake, ~~services~~Ohio, toin ~~its~~a ~~parent~~mixed-use development ~~companies~~known as ~~well~~Crocker asPark ~~companies~~(the ~~that~~“Crocker ~~are~~Park ~~owned~~Development”), orwhich ~~controlled~~offers bya ~~members~~vibrant urban setting, with retail stores and restaurants, offices and apartments. After putting the project on hold pending the outcome of the going ~~Weiss~~private ~~family~~transaction, the Corporation announced plans in ~~each~~October ~~case~~2013 ~~provided~~to ~~that~~resume ~~such~~the ~~services~~project doand, ~~not~~on ~~interfere~~March 26, ~~with~~2014, the Corporation’s ~~employees’~~purchased ~~ability~~from toCrocker ~~perform~~Park, ~~services~~LLC, the owner of the Crocker Park Development, 14.48 acres of land at the south end of the Crocker Park Development (the “Crocker Park Site”) on ~~its~~which ~~behalf~~the new world headquarters will be built. ~~When~~The ~~providing~~purchase ~~such~~price ~~services~~for the land was $7.4 million (based on a per acre price of $510 thousand). Morry Weiss, the ~~affiliated~~Chairman ~~companies~~of ~~reimburse~~the board of the Corporation, ~~for~~Zev ~~such services~~Weiss and Jeffrey Weiss, ~~based~~directors onand the ~~costs~~Co-Chief Executive Officers of ~~employing~~the Corporation, and Gary and Elie Weiss, directors and non-executive officers of the ~~individual~~Corporation, together with members of their family (~~including~~collectively, ~~salary~~the ~~and~~“Weiss ~~benefits~~Family”), indirectly own a minority stake in Crocker Park, LLC through their indirect ownership of approximately 37% of the membership interests in Crocker Park, LLC. In addition, Morry Weiss and other members of the ~~amount~~Weiss Family have guaranteed certain of ~~time~~Crocker ~~spent~~Park, byLLC’s ~~such~~obligations, ~~employee~~and are expected to guarantee additional obligations of Crocker Park, LLC, incurred in ~~providing~~connection ~~services~~with the Crocker Park Development. The authority to conduct, manage and control the ~~affiliated~~business ~~company~~of Crocker Park, LLC, including operating the Crocker Park Development and the decision whether to sell the Crocker Park Site to American Greetings, was reserved to the manager of Crocker Park, LLC, who is not an affiliate of the Weiss Family and who is an affiliate of Stark Enterprises, Inc.

~~During~~The ~~the~~Corporation ~~nine~~is ~~months~~leasing ~~ended~~a ~~November 28,~~portion ~~2014,~~of the ~~Corporation~~Crocker ~~paid~~Park ~~cash~~Site ~~dividends~~to inH ~~the~~L ~~aggregate~~& ~~amount~~L, which ofwill ~~$24.2~~construct ~~million~~the tonew ~~Century~~world ~~Intermediate Holding~~headquarters ~~Company,~~on ~~its~~the ~~parent~~Crocker Park Site and ~~sole~~sublease ~~shareholder,~~the ~~$14~~new world headquarters back to the Corporation.3 ~~million~~The ofCorporation ~~which~~has ~~was~~also ~~for~~entered ~~the~~into ~~purpose~~an ofoperating ~~paying~~lease ~~interest~~with onH L & L for the ~~$285.0~~use ~~million~~of ~~aggregate~~the ~~principal~~new ~~amount~~world headquarters ~~9.75%/10.50%~~building, ~~Senior~~anticipated ~~PIK~~to ~~Toggle~~be ~~Notes~~available ~~due~~for ~~2019,~~occupancy ~~which~~in ~~were~~calendar ~~issued~~year by2016. ~~Century~~The ~~Intermediate Holding~~initial ~~Company~~lease 2,term anis ~~indirect~~fifteen ~~parent~~years ofand ~~American~~will ~~Greetings~~begin upon occupancy. InThe ~~addition,~~annual Hrent Lis &expected Lto ~~paid~~be approximately $9.95 million. Furthermore, due to the Corporation’s toneed ~~acquire~~for ~~certain~~incremental ~~assets~~space, ~~previously~~H ~~purchased~~L by& ~~the~~L ~~Corporation~~is ~~related~~building toadditional space at the new world headquarters ~~project~~location, which ~~is included~~the inCorporation ~~“Proceeds~~expects ~~from~~will ~~sale~~increase ofthe ~~fixed~~annual ~~assets”~~rent onby ~~the~~approximately ~~Consolidated~~$1 ~~Statement~~million. ofSee ~~Cash~~Note ~~Flows~~11 for further information.

~~Note~~Although 18the –majority ~~Business~~of ~~Segment~~the ~~Information~~costs to construct the new world headquarters is expected to be financed through H L & L, due to the inherent difficulty in estimating costs associated with projects of this scale and nature, the costs associated with this project may be higher than expected and the Corporation may have to dedicate additional funds to the project, including providing additional funds to H L & L. As a result, effective as of December 1, 2014, the Corporation entered into a loan agreement with H L & L under which the Corporation may from time to time make revolving loans to H L & L. Loans made to H L & L under this agreement may only be used to fund construction costs associated with the world headquarters project and the maximum principal and market-rate interest that may be outstanding as of any given time under this loan agreement may not exceed $9 million. As of May 29, 2015, there was a balance of $2.5 million outstanding under this loan agreement. There were no borrowings outstanding as of February 28, 2015.

~~The~~Transactions Corporation has North American Social Expression Products, International Social Expression Products, Retail Operations, 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~~Parent ~~merchandising~~Companies ~~as the primary channel. At November 28, 2014, the Retail Operations segment operated 415 card~~ and ~~gift~~Other ~~retail~~Affiliated ~~stores~~Companies in the United Kingdom. The stores sell products purchased from the International Social Expression Products segment as well as products purchased from other vendors. 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 and electronic mobile devices. The Corporation’s non-reportable operating segment primarily includes licensing activities and the design, manufacture and sale of display fixtures. The display fixtures business was sold on the last day of the second quarter ended August 29, 2014. See Note 4 for further information.

18From time to time employees of the Corporation may provide services to its parent companies as well as companies that are owned or controlled by members of the Weiss Family, in each case provided that such services do not interfere with the Corporation’s employees’ ability to perform services on its behalf. When providing such services, the affiliated companies reimburse the Corporation for such services, based on the costs of employing the individual (including salary and benefits) and the amount of time spent by such employee in providing services to the affiliated company.

~~Table~~The Corporation, its parent and certain of ~~Contents~~their subsidiaries and affiliates file a consolidated U.S. federal income tax return. The Corporation pays all taxes on behalf of the group included in this consolidated federal income tax return. Pursuant to this tax sharing arrangement, amounts due to affiliates totaled $1.9 million as of May 29, 2015 and February 28, 2015.

	Three Months Ended						Nine Months Ended
(In thousands)	November 28,2014			November 29,2013			November 28,2014			November 29,2013
Total Revenue:
North American Social Expression Products	$	360,704		$	342,185		$	966,751		$	932,166
International Social Expression Products		96,424			94,639			239,914			228,812
Intersegment items		(28,234	)		(24,200	)		(49,533	)		(44,029	)
Net		68,190			70,439			190,381			184,783
Retail Operations		64,398			64,875			213,303			202,325
AG Interactive		15,149			15,935			44,093			45,139
Non-reportable segment		5,617			14,082			35,539			60,827
	$	514,058		$	507,516		$	1,450,067		$	1,425,240

	Three Months Ended						Nine Months Ended
(In thousands)	November 28,2014			November 29,2013			November 28,2014			November 29,2013
Segment Earnings (Loss):
North American Social Expression Products	$	37,613		$	22,894		$	134,807		$	124,286
International Social Expression Products		8,547			8,539			12,303			13,278
Intersegment items		(5,362	)		(2,297	)		(7,102	)		(6,022	)
Net		3,185			6,242			5,201			7,256
Retail Operations		(16,578	)		(12,825	)		(35,181	)		(25,261	)
AG Interactive		6,131			3,477			17,507			9,955
Non-reportable segment		5,080			5,710			7,789			23,151
Unallocated
Interest expense		(9,533	)		(8,454	)		(27,782	)		(18,199	)
Profit-sharing plan expense		(2,041	)		(407	)		(7,509	)		(4,872	)
Stock-based compensation expense		—			—			—			(13,596	)
Corporate overhead expense		(6,335	)		(13,022	)		12,633			(40,877	)
		(17,909	)		(21,883	)		(22,658	)		(77,544	)
	$	17,522		$	3,615		$	107,465		$	61,843

19Note 18 – Business Segment Information

~~Table~~The Corporation has North American Social Expression Products, International Social Expression Products, Retail Operations, 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 ~~Contents~~with mass merchandising as the primary channel. At May 29, 2015, the Retail Operations segment operated 410 card and gift retail stores in the United Kingdom. The stores sell products purchased from the International Social Expression Products segment as well as products purchased from other vendors. 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 and electronic mobile devices. For the three months ended May 29, 2015, the Corporation’s Non-reportable segment primarily includes licensing activities. For the three months ended May 30, 2014, the Non-reportable segment also included the design, manufacture and sale of display fixtures. The display fixtures business was sold on the last day of the prior year second quarter. See Note 4 for further information.

For the nine months ended November 29, 2013, stock-based compensation in the table above includes non-cash stock-based compensation prior to the Merger and the impact of the settlement of stock options and the cancellation or modification of outstanding restricted stock units and performance shares concurrent with the Merger, a portion of which was non-cash. There is no stock-based compensation subsequent to the Merger as these plans were converted into cash compensation plans at the time of the Merger.


(In thousands)	Three Months Ended
(In thousands)	May 29, 2015			May 30, 2014
Total Revenue:
North American Social Expression Products	$	335,604		$	329,057
International Social Expression Products		62,168			75,039
Intersegment items		(10,313	)		(10,065	)

Net		51,855			64,974
Retail Operations		71,808			79,164
AG Interactive		13,430			14,499
Non-reportable segment		746			15,890

	$	473,443		$	503,584

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


(In thousands)	Three Months Ended
(In thousands)	May 29, 2015			May 30, 2014
Segment Earnings (Loss) Before Tax:
North American Social Expression Products	$	73,127		$	69,364
International Social Expression Products		(5,010	)		3,762
Intersegment items		751			(2,310	)

Net		(4,259	)		1,452
Retail Operations		(8,143	)		(4,040	)
AG Interactive		4,871			5,412
Non-reportable segment		60,347			4,015
Unallocated
Interest expense		(8,113	)		(8,994	)
Profit-sharing plan expense		(1,675	)		(4,079	)
Corporate overhead expense		(4,822	)		(7,694	)

		(14,610	)		(20,767	)

	$	111,333		$	55,436

~~For~~19 ~~the nine months ended November 28, 2014, “Corporate overhead expense” included a net gain on sale of AGI In-Store of $38.7 million. See Note 4 for further information.~~

~~During~~“Corporate ~~the~~overhead ~~current~~expense” ~~year~~includes ~~second~~costs ~~quarter,~~associated ~~the~~with ~~Corporation~~corporate ~~sold~~operations ~~its~~including, ~~current~~among ~~world headquarters location and incurred a non-cash loss on disposal of $15.5~~other ~~million~~costs, ofsenior ~~which~~management, ~~$13.3~~corporate ~~million~~finance, ~~was~~legal, ~~recorded within the North American Social Expression Products segment~~ and ~~$2.2~~insurance ~~million was recorded in “Corporate overhead expense”~~programs. ~~See Note 4 for further information~~

For the ~~nine~~three months ended ~~November~~May 29, ~~2013~~2015, ~~“Corporate~~Non-reportable ~~overhead~~segment ~~expense” included non-recurring~~earnings ~~Merger-related~~includes ~~transaction costs of approximately $17.4 million and~~ a gain ~~totaling~~of $361.37 million ~~related~~from ~~to a cash distribution received in connection with~~ the ~~Corporation’s~~sale ~~minority~~of ~~investment~~Strawberry inShortcake. ~~the~~See ~~common~~Note ~~stock~~4 offor ~~Party~~further ~~City~~information.

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 $43.53 million, $4.03 million and $23.59 million at ~~November~~May 2829, ~~2014~~ 2015, February 28, ~~2014~~2015 and ~~November~~May 2930, ~~2013~~2014, 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~~20 ~~19 – Subsequent Event~~

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~~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

~~Third~~Total ~~Quarter~~revenue ~~Results~~for the current year first quarter was $473.4 million, a decrease of ~~Operations~~$30.1 million, or 6.0% compared to the prior year period. This decrease was primarily the result of foreign currency translation, which had an unfavorable impact of approximately $17 million, decreased sales of greeting cards and lower revenues from our Non-reportable segment due to the sale of our display fixtures business in the prior year second quarter and the sale of our Strawberry Shortcake property and related intangible assets and licensing agreements (“Strawberry Shortcake”) at the beginning of the current year first quarter. These decreases were partially offset by higher sales of gift packaging, party goods and other ancillary products and the year-over-year favorable impact of fewer scan-based trading (“SBT’) implementations in the current year, primarily within the North American Social Expression Products segment.

~~Total~~First ~~revenue~~quarter ~~for~~operating ~~the~~income ~~current year third quarter~~ was $~~514~~118.14 million, an increase of approximately $655.52 million, or 187.3% compared to the prior year period. ~~This~~ The current year ~~improvement~~includes a gain of $61.7 million related to the sale of Strawberry Shortcake, which was ~~primarily~~recorded within our Non-reportable segment, and the ~~result~~year-over year favorable impact of ~~increased~~approximately ~~sales~~$3 million related to fewer SBT implementations in the current year. The current quarter includes an unfavorable impact of ~~greeting~~less ~~cards~~than ~~and~~$0.5 ~~higher~~million ~~sales~~related to SBT implementations. Excluding the impact of ~~gift~~these ~~wrap~~items, ~~party~~operating ~~goods~~income ~~and~~was ~~other~~lower ~~ancillary~~in ~~product~~the current year compared to the prior year, ~~primarily~~driven by lower earnings within ~~the~~our ~~North~~Retail ~~American~~Operations and International Social Expression Products ~~segment.~~segments ~~These~~as ~~improvements~~well ~~were partially~~as ~~offset~~lower byearnings ~~lower~~within ~~revenues~~our ~~from~~Non-reportable segment, due to the sale of our fixtures business ~~which~~and ~~was~~Strawberry ~~sold~~Shortcake atas ~~the~~noted ~~end~~above. ofThese lower ~~the~~earnings ~~current~~were ~~year~~offset ~~second~~in ~~quarter~~part asby ~~well~~earnings aswithin the ~~impact~~North ofAmerican ~~unfavorable~~Social ~~foreign~~Expression ~~currency~~Products ~~movements~~segment, which improved compared to the prior year.

While Christmas seasonal cards sales within our third quarter results were down compared to the prior year, we are encouraged by positive trends that we are seeing from preliminary point of sale (“POS”) data that we are receiving subsequent to quarter end from some of our North American customers related to Christmas seasonal cards. Based on the preliminary POS data that we have received from customers representing approximately 90% of our North American greeting cards sales for Christmas as measured against prior year Christmas sales, we believe that our North American Christmas greeting card sales are trending favorably versus the prior Christmas season at about a 6% increase. While we are cautiously optimistic given this early information, these estimates of sales performance are based on preliminary POS data provided by our customers, which are not subject to accounting controls and are therefore subject to change based on our actual results for the 2014 Christmas seasonal card program.

Third quarter operating income was $25.4 million, an increase of $12.3 million compared to the prior period. The improvement was achieved within the North American Social Expression Products and AG Interactive segments, partially offset by lower earnings from the International Social Expression Products and Retail Operations segments.

The current year third quarter includes the unfavorable impact of approximately $1 million related to scan-based trading (“SBT”) implementations, which was flat compared to the prior year third quarter. The current year nine month period includes the unfavorable impact of approximately $6 million related to SBT implementations, which was approximately $2 million higher than the prior year.

Fiscal 2015 Transactions

Our financial results for the nine month period ended November 28, 2014 were significantly impacted by the following transactions.

On July 1, 2014, we sold our current world headquarters location and entered into an operating lease arrangement with the new owner of the building. We expect to remain in our current location until the completion of our new world headquarters, which we anticipate will occur in calendar year 2016. Net of transaction costs, we received $13.5 million cash from the sale, and recorded a non-cash loss on disposal of $15.5 million during our second fiscal quarter, of which $13.3 million was recorded within the North American Social Expression segment and $2.2 million was recorded within the Unallocated segment.

On August 29, 2014, we completed the sale of our wholly-owned display fixtures business, A.G. Industries, Inc. (dba AGI In-Store “AGI In-Store”), to Rock-Tenn Company for $73.7 million in cash, subject to closing date working capital adjustments. We recognized a net gain of $38.7 million from the sale, which was recorded within the Unallocated segment.

Results of Operations

Three months ended ~~November~~May 2829, ~~2014~~2015 and ~~November~~May 2930, ~~2013~~2014

Net income was $1172.38 million in the ~~third~~first quarter compared to $343.37 million in the prior year ~~period~~first quarter.

Our results for the three months ended ~~November~~May 2829, ~~2014~~2015 and ~~November~~May 2930, ~~2013~~2014 are summarized below:

(Dollars in thousands)	~~2014~~2015			% TotalRevenue			~~2013~~2014			% TotalRevenue
Net sales	$	~~508~~471,~~006~~892			9899.8%7	%	$	~~502~~497,~~107~~274			98.9%7	%
Other revenue		61,~~052~~551			10.2%3	%		56,~~409~~310			1.1%3	%
Total revenue		~~514~~473,~~058~~443			100.0%	%		~~507~~503,~~516~~584			100.0%	%
Material, labor and other production costs		~~249~~195,~~518~~474			4841.5%3	%		~~244~~200,~~829~~786			4839.2%9	%
Selling, distribution and marketing expenses		~~175~~163,~~039~~759			34.1%6	%		~~177~~172,~~154~~259			34.9%2	%
Administrative and general expenses		6458,~~829~~221			12.6%3	%		7469,~~814~~295			1413.7%8	%
Other operating income – net		(~~699~~62,420	)		(013.1%2	%)		(21,~~368~~968	)		(0.4%	%)
Operating income		25118,~~371~~409			425.9%0	%		1363,~~087~~212			212.6%5	%
Interest expense		98,~~533~~113			1.8%7	%		8,~~454~~994			1.7%8	%
Interest income		(~~2,517~~99	)		(0.5%0	%)		(29111	)		(0.0%	%)
Other non-operating expense – net		833			0.2%			1,047			0.2%
Other non-operating income – net		(938	)		(0.2	%)		(1,107	)		(0.3	%)
Income before income tax expense		17111,~~522~~333			323.4%5	%		355,~~615~~436			011.7%0	%
Income tax expense		638,~~261~~569			18.2%1	%		~~310~~11,697			02.0%3	%
Net income	$	1172,~~261~~764			215.2%4	%	$	343,~~305~~739			08.7%	%

For the three months ended ~~November~~May 2829, ~~2014~~2015, consolidated net sales were $~~508~~471.09 million, updown from $~~502~~497.13 million in the prior year ~~third~~first quarter. This 15.21%, or approximately $~~5.9~~25 million, ~~increase~~decrease was driven by ~~higher~~the ~~sales~~unfavorable impact of ~~greeting~~foreign ~~cards~~currency translation of approximately $1117 million, ~~increased~~and lower sales offrom ~~gift~~our ~~packaging~~display ~~and~~fixtures ~~party~~business ~~goods~~ of approximately $3 11 million ~~and~~due ~~higher~~to ~~sales~~the sale of ~~other ancillary~~that ~~products~~business in the prior year second quarter. In addition, sales of greeting cards decreased by approximately $410 million. These ~~increases~~decreases were partially offset by ~~lower~~increased sales of ~~fixtures~~gift packaging, party goods and other ancillary products of approximately $9 million ~~due~~and to the ~~sale~~favorable impact of ~~the~~fewer ~~display~~SBT ~~fixtures~~implementations ~~business~~during in the ~~current year second~~ quarter. ~~In addition, foreign currency translation had an unfavorable impact on net sales~~ of approximately $3 million.

Other revenue, primarily royalty revenue from ~~our~~certain ~~Strawberry Shortcake~~character ~~and Care Bears~~ properties, ~~increased~~decreased $04.68 million during the three months ended ~~November~~May 2829, ~~2014~~2015. In March 2015, we completed the sale of Strawberry Shortcake. As such, royalty revenue related to Strawberry Shortcake for the prior year three month period does not have a comparative amount in the current year.

Wholesale Unit and Pricing Analysis for Greeting Cards

Unit and pricing comparatives (on a sales less returns basis), ~~excluding intercompany eliminations,~~ for the three months ended ~~November~~ May 2829, ~~2014~~2015 and ~~November~~May 2930, ~~2013~~2014 are summarized below:

	Increase (Decrease) From the Prior Year
	Everyday Cards						Seasonal Cards						Total Greeting Cards
	2014			2013			2014			2013			2014			2013
	2015			2014			2015			2014			2015			2014
Unit volume		2(1.0%3	%)		(43.5%9	%)		(45.3%4	%)		86.2%9	%		0(2.5%8	%)		(10.7%3	%)
Selling prices		42.8%1	%		25.5%	%		(21.6%1	)%		0(1.0%5	%)		31.0%6	%		13.9%2	%
Overall increase / (decrease)		60.9%8	%		~~(2.~~1%.4	)%		(64.8%3	%)		85.2%4	%		3(1.6%2	%)		0.2%.9	%

During the ~~third~~first quarter, combined everyday and seasonal greeting card sales less returns ~~increased~~decreased 31.62% compared to the prior year quarter, ~~including~~as ~~increases~~a result of a decrease in ~~selling~~unit ~~prices~~volume of 32.08% ~~and~~partially ~~unit~~offset ~~volume~~by increases in selling prices of 01.56%. The overall ~~increase~~decrease ~~in selling price~~ was primarily driven by ~~everyday~~decreases in unit volume from our seasonal greeting cards in both our North American Social Expression Products and International Social Expression Products segments.

Everyday card sales less returns ~~for~~during the ~~third~~three ~~quarter~~months ended ~~increased~~May 29, 62015 were up 0.98%, ~~due~~compared to ~~increases~~the prior year quarter. Increases in selling prices of 42.81% ~~and improvement~~were partially offset by a decrease in unit volume of 21.03%. The selling price increase was ~~driven~~a byresult of general price increases ~~and favorable product mix within the core product line~~, which more than offset the continued unfavorable shift to a higher proportion of value cards. The unit volume ~~improvement~~decline ~~was~~occurred ~~primarily~~in ~~driven~~both byour ~~additional~~North ~~distribution~~American toSocial ~~new~~Expression ~~customers~~Products inand ~~our~~International ~~North American~~ Social Expression Products ~~segment~~segments.

Seasonal card sales less returns decreased 64.83% during the ~~third~~three ~~quarter~~months ended May 29, ~~including~~2015 acompared ~~2.6%~~to ~~decrease~~the inprior ~~selling~~year ~~prices~~quarter, ~~and~~with a decrease in unit volume of 5.4% partially offset by an increase in selling prices of 1.31%. The ~~decrease~~unit volume decline was driven by our Easter and Father’s Day programs in ~~both~~our ~~the~~North ~~selling~~American ~~prices~~Social Expression Products segment and ~~unit~~our ~~volume~~Easter, ~~for~~Mother’s ~~the~~Day ~~quarter~~and Father’s Day programs in our International Social Expression Products segment. The increase in selling prices was ~~driven~~primarily byattributable to our ~~Christmas~~Mother’s Day program in ~~both~~ our North American Social Expression Products segment and our Father’s Day program in our International Social Expression Products ~~segments~~segment.

Expense Overview

Material, labor and other production costs ~~(“MLOPC”)~~were $195.5 million for the three months ended ~~November~~May 2829, ~~2014~~2015, ~~were~~a decrease of $~~249.~~5.3 million, ~~compared~~from to $~~244~~200.8 million in the prior year ~~three~~first ~~months~~quarter. As a percentage of total revenue, these costs were 4841.53% in the current period compared to 48 39.29% for the three months ended ~~November~~May 2930, ~~2013~~2014. The ~~$4.7 million~~ dollar ~~increase~~decrease was primarily due to the favorable impact of ~~higher sales and unfavorable product mix in the current year third quarter. Partially offsetting these increases were lower~~foreign ~~costs~~currency ~~related~~translation toof ~~product~~approximately ~~display~~$8 ~~material~~million ~~costs~~ and the elimination of costs related to the display fixtures business that was sold in the ~~current~~prior year second quarter. Partially offsetting these decreases were higher production, product content and inventory scrap expenses.

Selling, distribution and marketing ~~(“SDM”)~~ expenses were $163.8 million for the three months ended ~~November~~May 2829, ~~2014 were $175.0 million~~2015, decreasing $28.~~2 million~~5 million from $~~177~~172.23 million in the prior year ~~third~~first quarter. As a percentage of total revenue, these costs were 34.16% in the current period compared to 34.92% for the prior year period. The dollar decrease in the current year ~~second~~first quarter was driven by by the favorable impact of foreign currency translation of approximately $8 million, lower supply chain costs of approximately $3 million and the elimination of approximately $1 million of costs related to the display fixtures business that was sold in the prior year second quarter. Partially offsetting these decreases were higher sales, marketing and product management expenses of approximately $12 million and ~~the~~higher ~~favorable~~retail ~~impact~~store ofexpenses ~~foreign currency translation~~ of approximately $12 million.

Administrative and general expenses were $6458.82 million for the three months ended ~~November~~May 2829, ~~2014~~2015, a decrease of $1011.01 million from $7469.83 million ~~for~~ in the prior ~~three~~year ~~months~~first ~~ended November 29, 2013~~quarter. This decrease was driven primarily by lower ~~variable~~retail ~~compensation~~expenses ~~expense.~~of ~~The prior year quarter included~~ approximately $102 million, ofdecreased ~~higher~~profit-sharing ~~variable compensation~~ expense ~~related to a combination~~ of an ~~adjustment~~approximately to$2 ~~the~~million, ~~prior year expected variable compensation program payout and~~ the ~~establishment~~elimination ~~during~~of ~~the~~approximately ~~prior~~$1 ~~year~~million ~~third quarter~~ of acosts ~~long-term~~related ~~incentive program~~ to ~~replace~~ the display ~~prior~~fixtures ~~stock-based~~business ~~compensation~~that ~~programs.~~was ~~The~~sold ~~adjustment~~in to the prior year ~~variable~~second ~~compensation program was necessary as it was probable~~quarter, ~~based on~~ the ~~year-to-date~~favorable ~~operating~~impact ~~results,~~of ~~that~~foreign wecurrency ~~would~~translation ~~exceed previously established performance targets. Higher technology costs~~ of approximately $2 million ~~were~~and ~~offset by~~ other general cost savings, of ~~which no items were individually significant, of~~ approximately $24 million.

Other operating income – net was $062.7 4 million ~~for~~during the ~~three~~current ~~months~~year ~~ended~~quarter ~~November 28, 2014~~ compared to $2.40 million ~~for~~in the prior year. ~~third~~In the current year first quarter, we recognized a gain of $61.7 million in connection with the sale of Strawberry Shortcake. See Note 4, “Acquisitions and Dispositions,” to the Consolidated Financial Statements for further information. In the prior year ~~third~~ first quarter, based on updated estimated recovery information provided in connection with the Clinton Cards bankruptcy administration, we recorded an ~~adjustment~~impairment recovery related to the senior secured debt of Clinton Cards ~~debt~~that ~~impairment~~we ~~resulting~~acquired in aMay ~~gain~~2012 ofand subsequently impaired. The recovery was $13.84 million for three months ended May 30, 2014.

Interest income was $2.5 million for the three months ended November 28, 2014 compared to $29.0 thousand for the quarter ended November 29, 2013. During the third quarter of the current year, as part of the Clinton Cards bankruptcy administration, we received a cash distribution as part of the liquidation process that included $2.5 million of interest on our senior secured debt of Clinton Cards that was previously not expected to be received.

The effective tax rate was 35.7% and 8.6% for the three months ended November 28, 2014 and November 29, 2013, respectively. The significantly lower than statutory rate for the prior year quarter was due primarily to the release of reserves upon lapse of the applicable statutes and related to positions that had been effectively settled under audit.

~~Results~~The effective tax rate was 34.6% and 21.1% for the three months ended May 29, 2015 and May 30, 2014, respectively. The lower than statutory rate for the three months ended May 29, 2015 is primarily related to the domestic production activities deduction, tax treatment of ~~Operations~~corporate-owned life insurance and lower tax rates in foreign jurisdictions partially offset by state income tax rates on U.S. income, net of federal benefit. The lower than statutory rate in the prior period is due primarily to the recording of a net $3.1 million federal tax refund and related interest attributable to fiscal 2000 and the error corrections recorded in accordance with Accounting Standards Codification (“ASC”) Topic 250, Accounting Changes and Error Corrections. The net impact of the error corrections was a reduction to income tax expense of $4.1 million. See Note 16, “Income Taxes,” to the Consolidated Financial Statements for further information.

Nine months ended November 28, 2014 and November 29, 2013

Net income was $77.8 million in the nine months ended November 28, 2014 compared to $31.5 million in the prior year nine months.

Our results for the nine months ended November 28, 2014 and November 29, 2013 are summarized below:

(Dollars in thousands)	2014			% TotalRevenue			2013			% TotalRevenue
Net sales	$	1,432,370			98.8%		$	1,406,319			98.7%
Other revenue		17,697			1.2%			18,921			1.3%
Total revenue		1,450,067			100.0%			1,425,240			100.0%
Material, labor and other production costs		630,413			43.5%			625,340			43.9%
Selling, distribution and marketing expenses		513,132			35.4%			502,500			35.3%
Administrative and general expenses		200,974			13.8%			228,578			16.0%
Other operating income – net		(26,495	)		(1.8%	)		(6,647	)		(0.5%	)
Operating income		132,043			9.1%			75,469			5.3%
Interest expense		27,782			1.9%			18,199			1.3%
Interest income		(2,658	)		(0.2%	)		(222	)		(0.0%	)
Other non-operating income – net		(546	)		(0.0%	)		(4,351	)		(0.3%	)
Income before income tax expense		107,465			7.4%			61,843			4.3%
Income tax expense		29,625			2.0%			30,366			2.1%
Net income	$	77,840			5.4%		$	31,477			2.2%

For the nine months ended November 28, 2014, consolidated net sales were $1.43 billion, up from $1.41 billion in the prior year nine months. This 1.9%, or $26.1 million, increase was driven by higher sales of greeting cards of approximately $37 million, increased sales of gift packaging and party goods of approximately $4 million and the favorable impact of foreign currency of approximately $15 million. These increases were partially offset by lower sales from our display fixtures business, which was sold in the current year second quarter, of approximately $24 million, decreased sales of other ancillary products of approximately $3 million and the unfavorable impact of SBT implementations of approximately $2 million.

Other revenue, primarily royalty revenue from our Strawberry Shortcake and Care Bears properties, decreased $1.2 million in the nine months ended November 28, 2014 compared to the same period in the prior year.

Wholesale Unit and Pricing Analysis for Greeting Cards

Unit and pricing comparatives (on a sales less returns basis), excluding intercompany eliminations, for the nine months ended November 28, 2014 and November 29, 2013 are summarized below:

	Increase (Decrease) From the Prior Year
	Everyday Cards						Seasonal Cards					Total Greeting Cards
	2014			2013			2014		2013			2014		2013
Unit volume		(0.3%	)		(1.0%	)		0.8%		3.7%			0.0%		0.2%
Selling prices		4.9%			2.6%			1.9%		(0.1%	)		4.1%		1.9%
Overall increase / (decrease)		4.5%			1.6%			2.7%		3.6%			4.0%		2.2%

During the nine months ended November 28, 2014, combined everyday and seasonal greeting card sales less returns increased 4.0% compared to the prior year nine months. The overall increase was primarily driven by increases in selling prices from our everyday and seasonal greeting cards in our North American Social Expression Products segment and everyday greeting cards in our International Social Expression Products segment.

Everyday card sales less returns were up 4.5% compared to the prior year nine months, as a result of increases in selling prices of 4.9%, partially offset by a decline in unit volume of 0.3%. The increase in selling prices was driven by general price increases and favorable product mix within the core product line, which more than offset the continued unfavorable shift to a higher proportion of value cards. The unit volume decline was primarily driven by soft sales within our International Social Expression Products segment.

Seasonal card sales less returns increased 2.7%, with unit volume growth of 0.8% and selling price increases of 1.9%. The increase in unit volume was attributable to our Mother’s Day program, partially offset by our Christmas program, in both our North American Social Expression Products and International Social Expression Products segments and our Easter program within our North American Social Expression Products segment. The increase in selling prices was driven by our Father’s Day and Graduation programs in our North American Social Expression Products segment.

Expense Overview

MLOPC for the nine months ended November 28, 2014 were $630.4 million, an increase of $5.1 million from $625.3 million for the comparable period in the prior year. As a percentage of total revenue, these costs were 43.5% in the current period compared to 43.9% for the nine months ended November 29, 2013. The dollar increase was primarily due to the impact of higher sales and unfavorable product mix in the current year nine months as well as the unfavorable impact of foreign currency translation of approximately $8 million. Partially offsetting these increases were lower product display material costs and the elimination of costs related to the display fixtures business that was sold in the current year second quarter.

SDM expenses for the nine months ended November 28, 2014 were $513.1 million, increasing $10.6 million from $502.5 million for the comparable period in the prior year. As a percentage of total revenue, these costs were 35.4% in the current period compared to 35.3% for the prior year period. The increase was primarily driven by higher supply chain costs of approximately $4 million, increased retail store expenses of approximately $2 million and the unfavorable impact of foreign currency translation of approximately $10 million. Partially offsetting these increases were lower sales, marketing and product management expenses of approximately $4 million.

Administrative and general expenses were $201.0 million for the nine months ended November 28, 2014, a decrease of $27.6 million from $228.6 million in the prior year period. This decrease was driven primarily by prior year costs and fees related to the going private transaction (See Note 1, “Basis of Presentation,” to the Consolidated Financial Statements for further information) of approximately $27 million that did not recur in the current year, lower costs in the AG Interactive segment driven by prior year cost savings initiatives and other general cost savings of approximately $2 million. In addition, the prior year included approximately $6 million of higher variable compensation expense primarily related to an adjustment to the prior year expected variable compensation program payout. The adjustment was necessary as it was probable, based on the year-to-date operating results, that we would exceed previously established performance targets. These decreases were partially offset by higher technology costs of approximately $6 million, increased costs in the Retail Operations segment and the unfavorable impact of foreign currency translation of approximately $2 million.

Other operating income – net was $26.5 million for the nine months ended November 28, 2014 compared to $6.6 million for the prior year nine month period. The increase was driven primarily by the net gain on the sale of AGI In-Store of $38.7 million, partially offset by a non-cash loss recorded upon sale of our current world headquarters location of $15.5 million, both of which occurred in the current year second quarter. In addition, in both the current year and prior year nine month periods, based on updated estimated recovery information provided in connection with the Clinton Cards bankruptcy administration, we recorded an impairment recovery related to the senior secured debt of Clinton Cards that we acquired in May 2012 and subsequently impaired. The recovery was $3.4 million for the nine months ended November 28, 2014 and $4.2 million for nine months ended November 29, 2013. The current year recovery represents the final amount of a full recovery of the impairment. The income related to the impairment recovery in the current year was partially offset by other expenses of $2.1 million related to the Clinton Cards bankruptcy administration.

Interest income was $2.7 million for the nine months ended November 28, 2014 compared to $0.2 million for the nine months ended November 29, 2013. During the third quarter of the current year, as part of the Clinton Cards bankruptcy administration, we received a cash distribution as part of the liquidation process that included $2.5 million of interest on our senior secured debt of Clinton Cards that was previously not expected to be received.

Other non-operating income – net for the nine months ended November 28, 2014 was $0.5 million, decreasing $3.9 million from $4.4 million in the prior year nine month period. The decrease was driven primarily by a gain of approximately $3.3 million in the prior year third quarter related to the Corporation’s investment in Party City that did not recur in the current year period.

The effective tax rate was 27.6% and 49.1% for the nine months ended November 28, 2014 and November 29, 2013, respectively. The lower than statutory rate in the current period is due to both the recording of a net $4.1 million federal tax refund and related interest attributable to fiscal 2000 and the error corrections identified in the current year first quarter and recorded in accordance with Accounting Standards Codification (“ASC”) Topic 250, Accounting Changes and Error Corrections. The net impact of the error corrections was a reduction to income tax expense of $4.1 million. During the first quarter of fiscal 2015, we identified and corrected errors in the accounting for income taxes that related primarily to the year ended February 28, 2014. These errors primarily related to our failure to consider all sources of available taxable income when assessing the need for a valuation allowance against certain deferred tax assets and the recognition of a liability for an uncertain tax position. These errors were the result of the significant complexity created as a result of the going private transaction in fiscal 2014. See Note 1, “Basis of Presentation,” to the Consolidated Financial Statements for further information. The higher than statutory rate in the prior period was due primarily to the recording of an $8.0 million valuation allowance against certain net operating loss and foreign tax credit carryforwards which we believed at the time would expire unused as a result of the going private transaction.

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 International Social Expression Products segments primarily design, manufacture and sell greeting cards and other related products through various channels of distribution, with mass retailers as the primary channel. As permitted under ASC Topic 280 (“ASC 280”), “Segment Reporting,” certain operating segments have been aggregated into the International Social Expression Products segment. The aggregated operating divisions have similar economic characteristics, products, production processes, types of customers and distribution methods. At ~~November~~May 2829, ~~2014~~2015, we operated ~~415~~410 card and gift retail stores in the United Kingdom (“UK”) through our Retail Operations segment. These stores sell products purchased from the International Social Expression Products segment as well as products purchased from other vendors. 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 and electronic mobile devices. ~~The~~For the three months ended May 29, 2015, the Non-reportable segment primarily includes licensing activities. ~~and~~For the three months ended May 30, 2014, the Non-reportable segment also included the design, manufacture and sales of display fixtures. The display fixtures business was sold on the last day of the ~~quarter~~prior ~~ended~~year ~~August 29,~~second ~~2014~~quarter. See Note 4, “Acquisitions and Dispositions,” to the Consolidated ~~Financial~~ Financial Statements for further information.

Segment results are reported using actual foreign exchange rates for the periods presented. Refer to Note 18, “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

(Dollars in thousands)

Three Months Ended November

%Change

Nine months Ended November

%Change

Three Months Ended

28, 2014

29, 2013

28, 2014

29, 2013

(Dollars in thousands)

May 29, 2015

May 30, 2014

% Change

Total revenue

~~360~~335,~~704~~604

~~342~~329,~~185~~057

52.40

~~966,751~~

~~932,166~~

~~3.7~~

Segment earnings

3773,~~613~~127

2269,~~894~~364

645.34

~~134,807~~

~~124,286~~

~~8.5~~

Total revenue of our North American Social Expression Products segment ~~increased $18.5 million~~ for the ~~three~~quarter ~~months~~ ended ~~November~~ May 2829, ~~2014~~2015, ~~and~~ increased $~~34.~~6 .5 million, ~~for~~or ~~the nine months ended November 28~~2.0%, ~~2014~~ compared to the prior year ~~periods~~period. The increase ~~during the current quarter~~ was primarily driven by higher sales of ~~greeting cards of approximately $11 million, higher sales of~~ gift packaging, ~~and~~ party goods ~~of approximately $3 million~~ and ~~increased sales of~~ other ancillary products of approximately $79 million. ~~These~~and ~~increases were partially offset by~~ the ~~unfavorable~~favorable impact of ~~foreign~~fewer ~~currency~~SBT implementations ~~translation~~during the quarter of approximately $23 million. ~~The~~These ~~increase~~increases inwere ~~total~~partially ~~revenue~~offset ~~for the nine months ended November 28, 2014 was primarily driven~~ by ~~higher~~lower sales of greeting cards of approximately $353 million, ~~higher sales of gift packaging~~ and ~~party goods of approximately $5 million and increased sales of other ancillary products of approximately $3 million. These increases for~~ the ~~nine month period were partially offset by the~~ unfavorable impacts of foreign currency translation ~~and SBT implementations~~ of approximately $~~5 million and $~~3 million~~, respectively~~.

Segment earnings increased $143.78 million in the current year three months compared to the three months ended ~~November~~May 2930, ~~2013~~2014. The increase was driven primarily by the impact of higher ~~revenue~~revenues, ~~partially~~including ~~offset~~the byfavorable ~~unfavorable~~impact ~~product~~of ~~mix~~fewer asSBT ~~well~~implementations. asIn ~~lower~~addition, ~~costs~~supply ~~related~~chain tocosts ~~variable~~were ~~compensation~~lower ~~expense~~by ~~(as noted above) of~~ approximately $73 million. InThese ~~addition,~~favorable items were partially offset by higher ~~technology~~production and product content costs ~~were~~of ~~offset~~approximately by$4 ~~lower~~million and higher sales, marketing and product management expenses of approximately $3 million.

~~Segment~~24 earnings increased $10.5 million in the nine month period ended November 28, 2014 compared to the prior year period. The increase was driven primarily by the impact of higher revenue as well as lower costs related to variable compensation expense (as noted above) of approximately $3 million. These increases were partially offset by a non-cash loss related to the sale of our current world headquarters location, of which approximately $13 million of the total loss of $15.5 million was recorded within the North American Social Expression Products segment, higher supply chain costs of approximately $5 million and increased technology costs of approximately $6 million.

International Social Expression Products Segment

(Dollars in thousands)	Three Months Ended November				%Change			Nine months Ended November				%Change
	28, 2014		29, 2013					28, 2014		29, 2013
Total revenue	$	68,190	$	70,439		(3.2	%)	$	190,381	$	184,783		3.0	%
Segment earnings		3,185		6,242		(49.0	%)		5,201		7,256		(28.3	%)

Total revenue of our International Social Expression Products segment decreased $2.2 million for the three months ended November 28, 2014 and increased $5.6 million for the nine months ended November 28, 2014, compared to the prior year periods. The decrease during the current quarter was due primarily to lower sales of greeting cards of approximately $2 million. The increase for the current year nine month period was primarily due to the favorable impact of foreign currency translation of approximately $7 million and the favorable impact of fewer SBT implementations of approximately $1 million. Partially offsetting these increases were lower sales of greeting cards of approximately $1 million and decreased sales of other ancillary products of approximately $1 million compared to the prior year.

Segment earnings decreased $3.1 million in the three months ended November 28, 2014 compared to the prior year period. The decreased earnings were primarily driven by the impact on earnings from decreased greeting card sales, unfavorable product mix and upfront expenses related to cost savings initiatives.

~~Segment~~International ~~earnings~~Social ~~decreased~~Expression ~~$2.1~~Products ~~million~~Segment in the nine months ended November 28, 2014, compared to the nine months ended November 29, 2013. The decreased earnings were primarily driven by the impact on earnings from unfavorable product mix and upfront expenses related to cost savings initiatives, partially offset by slightly lower supply chain and general and administrative costs.


	Three Months Ended
(Dollars in thousands)	May 29, 2015			May 30, 2014		% Change
Total revenue	$	51,855		$	64,974		(20.2	%)
Segment (loss) earnings		(4,259	)		1,452		N/A

Total revenue of our International Social Expression Products segment decreased $13.1 million, or 20.2% for the three months ended May 29, 2015, compared to the same period in the prior year. The decrease was primarily driven by decreased sales of greeting cards of approximately $7 million and the unfavorable impact of foreign currency translation of approximately $6 million.

Segment earnings decreased $5.7 million in the three months ended May 29, 2015 compared to the same period in the prior year. The decreased earnings were primarily driven by the impact of lower sales volume as well as higher production and scrap expense of approximately $5 million. These unfavorable items were partially offset by the favorable impact of lower elimination of profit in inventory related to sales from the International Social Expression Products segment to the Retail Operations segment of approximately $3 million.

Retail Operations Segment

(Dollars in thousands)	Three Months Ended November						%Change			Nine months Ended November						%Change
	Three Months Ended
	28, 2014			29, 2013						28, 2014			29, 2013
(Dollars in thousands)	May 29, 2015			May 30, 2014			% Change
Total revenue	$	6471,~~398~~808		$	6479,~~875~~164			(09.73	%)	$	~~213,303~~		$	~~202,325~~			~~5.4~~	%
Segment loss		(168,~~578~~143	)		(124,~~825~~040	)		(29101.36	%)		~~(35,181~~	)		~~(25,261~~	)		~~(39.3~~	%)

Total revenue of our Retail Operations segment decreased ~~slightly for the three months ended November 28, 2014. For the nine month period ended November 28, 2014, revenue increased~~ $117.04 million compared to the prior year, ~~period. The increase was~~ driven by the impact of unfavorable ~~favorable~~ foreign exchange translation of approximately $138 million ~~for the nine month period~~. During the ~~three~~first ~~and~~quarter ~~nine~~of ~~month~~the ~~periods~~current ~~ended November 28~~year, ~~2014,~~ net sales at stores open one year or more were down approximately 0.74% ~~and 1.7%, respectively,~~ compared to the ~~same periods in the~~ prior year period.

Segment ~~earnings~~loss ~~decreased~~increased $34.81 million ~~and~~compared ~~$9.9~~to ~~million~~the inprior ~~the~~year. The ~~three~~higher ~~and~~segment ~~nine~~loss ~~months~~was ~~ended~~the ~~November 28,~~result ~~2014,~~of ~~respectively,~~lower ~~compared~~gross tomargins ~~the~~and ~~prior~~higher ~~year~~store operating ~~periods~~expenses. The lower ~~segment~~gross ~~earnings~~margins were the result of ~~lower~~increased ~~gross~~promotional ~~margins~~pricing ~~driven~~activities byand ~~promotional~~increased ~~pricing~~inventory ~~activities~~shrink and scrap expense. The majority of the higher store operating ~~costs~~expenses was the result of new store openings.

AG Interactive Segment

(Dollars in thousands)

Three Months Ended November

%Change

Nine months Ended November

%Change

Three Months Ended

28, 2014

29, 2013

28, 2014

29, 2013

(Dollars in thousands)

May 29, 2015

May 30, 2014

% Change

Total revenue

1513,~~149~~430

1514,~~935~~499

(47.94

~~44,093~~

~~45,139~~

~~(2.3~~

Segment earnings

64,~~131~~871

35,~~477~~412

76(10.30

~~17,507~~

~~9,955~~

~~75.9~~

Total revenue of AG Interactive decreased ~~slightly~~$1.1 ~~for~~million ~~both~~compared to the ~~three~~prior ~~and~~year ~~nine months ended November 28, 2014~~quarter. This decrease in revenue was driven primarily by lower subscription revenue compared to the prior year. AtAs ~~the end~~ of ~~the~~May 29, ~~third quarter of fiscal~~ 2015, AG Interactive had approximately 3.5 million online paid subscriptions as compared to approximately 3.7 million at ~~the~~May 30, ~~end of the same period in the prior year~~2014.

Segment earnings ~~increased~~decreased $20.75 million ~~and~~compared ~~$7.6~~to ~~million for~~ the ~~three~~prior ~~and~~year ~~nine~~quarter ~~months ended November 28, 2014, respectively,~~ primarily due to ~~cost~~the ~~savings~~impact ~~initiatives~~of ~~initiated~~lower ~~in the prior year~~revenue.

~~Non-reportable~~25 ~~Segment~~

(Dollars in thousands)	Three Months Ended November				%Change			Nine months Ended November				%Change
	28, 2014		29, 2013					28, 2014		29, 2013
Total revenue	$	5,617	$	14,082		(60.1	%)	$	35,539	$	60,827		(41.6	%)
Segment earnings		5,080		5,710		(11.0	%)		7,789		23,151		(66.4	%)

Total revenue from our Non-reportable segment decreased $8.5 million and $25.3 million for the three and nine months ended November 28, 2014, respectively, compared to the prior year periods. The decrease in revenue for the current year third quarter was due primarily to the sale of the display fixtures business in the current year second quarter. Revenue in the prior year third quarter for the fixtures business was $9.5 million. For the nine months ended November 28, 2014, in addition to the impact on revenue from the sale of our fixtures business, revenue decreased due to a prior year contract to supply fixtures to a large consumer electronics company that did not recur in the current year. This contract, which was completed during the second quarter of the prior year, contributed approximately $26 million of revenue in the prior year. This decrease in revenue for the nine month period was partially offset by other fixtures business revenue growth prior to the sale.

Non-reportable Segment earnings decreased $0.6 million and $15.4 million for the three and nine months ended November 28, 2014, respectively, compared to the prior year periods. This decrease for the nine month period was primarily driven by the display fixtures business, due to lower sales volume, unfavorable product mix and higher operating costs during the first half of the year. As noted above, the fixtures business was sold in the current year second quarter.


	Three Months Ended
(Dollars in thousands)	May 29, 2015		May 30, 2014		% Change
Total revenue	$	746	$	15,890		(95.3	%)
Segment earnings		60,347		4,015		N/A

Total revenue from our Non-reportable segment decreased $15.1 million compared to the prior year quarter. The decrease in revenue for the current year first quarter was due primarily to the sale of our display fixtures business in the prior year second quarter and the sale of Strawberry Shortcake at the beginning of the current year first quarter. Revenue in the prior year first quarter for the fixtures business was $10.5 million. The remaining decrease in revenue was due primarily to the sale of Strawberry Shortcake.

Segment earnings increased $56.3 million compared to the prior year quarter. This increase was primarily due to the gain of $61.7 million in connection with the sale of Strawberry Shortcake. This increase was partially offset by the impact to earnings from the sale of our display fixtures business and Strawberry Shortcake as noted above.

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, and domestic profit-sharing expense~~, and for the nine months ended November 29, 2013, stock-based compensation expense~~. Unallocated items also ~~included~~include costs associated with corporate operations such as the senior management, corporate finance, legal and insurance programs.

	Three Months Ended November						Nine months Ended November
	Three Months Ended
(Dollars in thousands)	28May 29, ~~2014~~2015			29May 30, ~~2013~~2014			~~28, 2014~~			~~29, 2013~~
Interest expense	$	(98,~~533~~113	)	$	(8,~~454~~994	)	$	~~(27,782~~	)	$	~~(18,199~~	)
Profit-sharing expense		(21,~~041~~675	)		(~~407~~4,079	)		~~(7,509~~	)		~~(4,872~~	)
Stock-based compensation expense		—			—			—			(13,596	)
Corporate overhead expense		(4,822	)		(7,694	)
Corporate overhead expense		(6,335	)		(13,022	)		12,633			(40,877	)
Total Unallocated	$	(14,610	)	$	(20,767	)
Total Unallocated	($	17,909	)	$	(21,883	)	$	(22,658	)	$	(77,544	)

~~For~~Our ~~the~~profit-sharing ~~nine~~plan ~~months~~includes ~~ended~~a ~~November 29, 2013, stock~~profit-~~based~~sharing ~~compensation~~component inand ~~the~~a ~~table~~401(k) ~~above~~component. ~~includes~~The ~~non-cash~~401(k) ~~stock-based compensation~~component ~~prior~~is toincluded ~~closing~~in corporate ofoverhead ~~the~~expense. ~~going~~While ~~private transaction and~~ the ~~impact~~current ofyear ~~the~~quarterly ~~settlement~~expense ofwill ~~stock~~vary ~~options~~from ~~and~~ the ~~cancellation~~prior oryear ~~modification~~expense ofpattern, ~~outstanding~~we ~~restricted~~expect ~~stock~~the ~~units~~full ~~and~~year ~~performance~~2016 ~~shares~~expense ~~concurrent with the closing~~ of the ~~going~~ ~~private~~combined ~~transaction,~~components ato ~~portion~~be ofconsistent ~~which~~with ~~was~~the ~~non-cash~~prior year. ~~There~~The islower nocorporate ~~stock-based~~overhead expense ~~compensation~~in ~~subsequent to~~ the ~~closing~~current ofyear ~~the~~was ~~going~~primarily ~~private~~due ~~transaction~~to aslower ~~these~~health ~~plans~~care ~~were converted into cash compensation plans~~claims.

For the nine months ended November 28, 2014, “Corporate overhead expense” included the net gain on sale of AGI In-Store of $38.7 million. See Note 4, “Dispositions,” to the Consolidated Financial Statements for further information.

For both the three and nine month periods ended November 28, 2014, “Corporate overhead expense” included interest income of $2.5 million related to the Clinton Cards liquidation. See Note 6, “Other Income and Expense,” to the Consolidated Financial Statements for further information.

During the current year second quarter, we sold our world headquarters location and incurred a non-cash loss on disposal of $15.5 million, of which $2.2 million was recorded within the Unallocated segment. See Note 4, “Dispositions,” to the Consolidated Financial Statements for further information.

For the nine months ended November 29, 2013, “Corporate overhead expense” included non-recurring costs related to the going private transaction of approximately $17.4 million and a gain totaling $3.3 million related to a cash distribution received in connection with our minority investment in the common stock of Party City.

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 ~~November~~May 2930, ~~2013,~~2014 has been included.

Operating Activities

Operating activities used $7796.1 million of cash during the ~~nine~~three months ended ~~November~~May 2829, ~~2014~~2015, compared to using $3334.19 million in the prior year period.

Accounts receivable used $8423.0 million of cash during the ~~nine~~three months ended ~~November~~May 2829, ~~2014~~2015, compared to ~~using~~ $9432.61 million of cash used during the same period in the prior year ~~period~~. The year-over-year ~~increase~~change in cash flow of $109.61 million occurred primarily within our North American Social Expression ~~segment~~and ~~due~~International ~~primarily~~Social Expression Products segments and was due to the timing of collections from, or credits issued to, certain customers occurring in a different pattern in the current year period compared to the prior year period.

~~Inventory~~26 used $57.8 million of cash during the nine months ended November 28, 2014, compared to using $43.6 million in the prior year nine months. Historically, the first nine months of our fiscal year is a period of inventory build, and thus a use of cash, in preparation for the winter seasonal holidays. In addition to the normal seasonal inventory build, the current year includes an inventory increase related to a new party goods product launch and inventory growth in our Retail Operations segment to align inventory to more normalized levels.

Deferred costs -– net generally represents payments under agreements with retailers, net of the related amortization of those payments. During the ~~nine~~three months ended ~~November~~May 2829, ~~2014~~2015, ~~payments~~amortization exceeded ~~amortization~~payments by $15.43 million. During the ~~nine~~three months ended ~~November~~May 2930, ~~2013~~2014, amortization exceeded payments by $156.09 million. See Note 10, “Deferred Costs,” to the Consolidated Financial Statements for further detail of deferred costs related to customer agreements.

Accounts payable and other liabilities used $23104.76 million of cash during the ~~nine~~three months ended ~~November~~May 2829, ~~2014~~2015, compared to using $2158.95 million in the prior year ~~period~~first quarter. The year-over-year change in cash usage was attributable to higher variable compensation payments during the current year first quarter compared to the prior year first quarter and an increase in accounts payable payments due to normal year-over-year timing of business transactions.

Investing Activities

Investing activities provided $39107.12 million of cash during the ~~nine~~three months ended ~~November~~May 2829, ~~2014~~2015, compared to using $2621.6 million inof cash during the ~~prior~~three ~~year period~~months ended May 30, 2014. The current year includes proceeds of $105.0 million received from the sale of Strawberry ~~AGI~~Shortcake ~~In-Store~~ and ~~the~~proceeds ~~sale~~ of ~~our current world headquarters of~~ $7324.71 million ~~and~~received ~~$13.5~~from ~~million,~~the ~~respectively.~~surrender ~~See~~of ~~Note~~certain 4,corporate-owned ~~“Dispositions,”~~life toinsurance ~~the Consolidated Financial Statements for further information~~policies. InThese ~~addition,~~cash ~~the~~inflows ~~current~~were ~~year~~partially ~~includes~~offset ~~proceeds~~by ~~received~~cash ~~from~~paid Hfor Lcapital &expenditures Lof ~~Property~~$13.4 ~~Company~~million, ancash ~~indirect~~paid ~~affiliate~~for acquired ofcharacter ~~American~~property ~~Greetings~~rights ~~(“H L & L”)~~ of $92.98 million, ~~related~~a topayment ~~the sale~~ of ~~certain assets~~$3.2 ~~previously~~million ~~purchased by us~~ related to the ~~new~~final ~~world~~working ~~headquarters.~~capital ~~The~~adjustments ~~current~~in ~~year~~connection ~~also~~with ~~includes~~the ~~proceeds~~sale ~~from~~of ~~Clinton~~AGI ~~Cards~~In-Store ~~administration~~and of $112.95 million. ~~Partially~~of ~~offsetting~~loans, ~~these~~net ~~cash inflows was cash paid for capital expenditures~~ of ~~$70.3~~ ~~million~~repayments, ~~during~~made ~~the~~to ~~current~~related ~~year nine month period~~parties.

In the prior year ~~period~~first quarter, the cash usage was primarily driven by $4522.32 million of cash paid for capital expenditures. ~~The prior year also included the receipt of a cash distribution of $12.1 million related to our investment in Party City.~~

Financing Activities

Financing activities ~~provided~~used $711.13 million of cash during the ~~current~~three ~~year~~months ~~nine~~ended ~~months~~May 29, 2015, compared to ~~using~~providing $1157.51 million induring the ~~prior~~three ~~year~~months ~~nine~~ended ~~month~~May 30, ~~period~~2014. During the current year first quarter, this ~~source~~use of cash was primarily driven by a voluntary prepayment on our term loan of $65.0 million, partially offset by borrowings, net of repayments, under our revolving credit ~~facility~~ ~~and accounts receivable securitization~~ facility of $4753.37 million. ~~Partially~~In ~~offsetting~~the ~~these~~first ~~cash~~quarter ~~inflows~~of ~~were~~the prior year, the source of cash ~~dividend~~was ~~payments~~primarily driven by borrowings, net of repayments, under our revolving credit facility of $2462.21 million. ~~and~~In ~~payments~~addition, inwe ~~the~~made ~~aggregate~~a payment of $155.0 million on our term loan in the first quarter of the prior year.

The primary net use of cash in the prior year was in connection with activities related to the going private transaction. These activities included borrowings under our new credit agreement, net of repayments and debt issuance costs, which provided cash of $348.8 million, the contribution from Century Intermediate Holding Company (“CIHC”), our parent and sole shareholder, which provided cash of $240.0 million and payment of cash of $568.3 million to complete the going private transaction and cancel outstanding shares. In addition, we paid cash dividends of $27.8 million, of which $9.6 million was paid to common shareholders prior to the going private transaction and $18.2 million was paid to CIHC after the going private transaction.

Credit Sources

Substantial credit sources are available to us. In total, we had available sources of credit of approximately $~~625~~485 million at ~~November~~May 2829, ~~2014~~2015, which included $~~325~~185 million outstanding on our term loan facility, a $250 million revolving credit facility and a $50 million accounts ~~receivable~~ receivable securitization facility, of which $~~220~~215.56 million in the aggregate was unused as of ~~November~~May 2829, ~~2014~~2015. Borrowings under the accounts receivable securitization facility are limited based on our eligible receivables outstanding. At ~~November~~ May 2829, ~~2014~~2015, we had $~~48.0~~58 million of borrowings outstanding under our revolving credit facility and we had ~~$3.8~~no ~~million of~~ borrowings outstanding under our accounts receivable securitization facility. We had, in the aggregate, $2726.7 4 million outstanding under letters of credit, which reduced the total credit availability thereunder as of ~~November~~May 2829, ~~2014~~2015.

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 28, ~~2014~~2015 for further information.

At ~~November~~May 2829, ~~2014~~2015, we were in compliance with our financial covenants under the borrowing agreements described above.

Capital Deployment and Investments

On February 10, 2014, Century Intermediate Holding Company 2 (“CIHC2”), an indirect parent of American Greetings, issued $285 million aggregate principal amount of 9.75%/10.50% Senior PIK Toggle Notes due 2019 (the “PIK Notes”). Excluding the first and last interest payment periods, which must be paid in cash, CIHC2 may elect to either accrue or pay cash interest on the PIK Notes. The PIK Notes carry a cash interest rate of 9.75%. Prior to the payment of interest by CIHC2, it is expected that we will provide CIHC2 with the cash flow for CHIC2 to pay interest on the PIK Notes. Assuming interest is paid regularly in cash, rather than accrued, the annual cash required to pay the interest is expected to be approximately $27.8 million while the entire issuance of PIK Notes are outstanding. For further information, refer to the discussion of the PIK Notes as disclosed in “Transactions with Parent Companies and Other Affiliated Companies” in Note 18, “Related Party Information,” to the Consolidated Financial Statements under Part II, Item 8 of our Annual Report on Form 10-K for the fiscal year ended February 28, 2014.

~~Throughout~~27 fiscal 2015 and thereafter, we will continue to consider all options for capital deployment including growth opportunities, 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, the information technology systems refresh project, paying down debt, paying dividends and, as appropriate, preserving cash. Our future operating cash flow and borrowing availability under our credit agreement and our accounts receivable securitization facility are expected to meet these and other 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.

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 of which are intended to drive efficiencies within the business and add new capabilities. Amounts that we spend could be material in any fiscal year and over the life of the project. The total amount spent through fiscal 2014 on this project was approximately $109 million. During the nine months ended November 28, 2014, we spent approximately $15 million, including capital of approximately $11 million and expense of approximately $4 million, on these information technology systems. We currently expect to spend a total of at least

(the “PIK Notes”). Excluding the first and last interest payment periods, which must be paid in cash, anCIHC2 ~~additional~~may ~~$150~~elect ~~million~~to oneither ~~these~~accrue ~~information~~or ~~technology~~pay ~~systems~~cash ~~over~~interest on the ~~remaining~~PIK ~~life~~Notes. The PIK Notes carry a cash interest rate of ~~the~~9.75%. ~~project,~~Prior to the ~~majority~~payment of ~~which~~interest weby ~~expect~~CIHC2, it is expected that we will beprovide ~~capital~~CIHC2 ~~expenditures.~~with Wethe ~~believe~~cash ~~these investments~~flow ~~are~~for ~~important~~CIHC2 to ~~our~~pay interest ~~business,~~on ~~helping~~the usPIK ~~drive~~Notes. ~~further~~Assuming ~~efficiencies~~interest ~~and~~is ~~add~~paid ~~new~~regularly ~~capabilities;~~in ~~however~~cash, ~~there~~rather ~~can~~than beaccrued, nothe ~~assurance~~annual ~~that~~cash werequired ~~will~~to ~~not~~pay ~~spend~~the ~~more~~interest oris ~~less~~expected ~~than~~to be approximately $~~150~~27.8 million ~~over~~while the ~~remaining~~entire ~~life~~issuance of PIK Notes are outstanding. For further information, refer to the ~~project~~discussion of the PIK Notes as disclosed in “Transactions with Parent Companies and Other Affiliated Companies” in Note 18, or“Related ~~that~~Party ~~we will~~Information,” ~~achieve~~to the ~~anticipated~~Consolidated ~~efficiencies~~Financial Statements orunder ~~any~~Part ~~cost~~II, ~~savings~~Item 8 of our Annual Report on Form 10-K for the fiscal year ended February 28, 2015.

InThroughout ~~May~~fiscal ~~2011~~2016 and thereafter, we ~~announced~~will ~~plans~~continue to ~~relocate~~consider ~~our~~all ~~world~~options ~~headquarters~~for tocapital ~~the~~deployment ~~Crocker~~including ~~Park mixed~~growth ~~use development in Westlake~~opportunities, ~~Ohio,~~acquisitions ~~which~~and ~~offers~~other ainvestments ~~vibrant~~in ~~urban~~third ~~setting~~parties, ~~with~~expanding ~~retail~~customer ~~stores and restaurants~~relationships, ~~offices~~expenditures ~~and~~or ~~apartments.~~investments ~~After~~related ~~putting~~to ~~the~~our ~~project~~current product onleadership ~~hold~~initiatives ~~pending~~or ~~the~~other ~~outcome~~future ofstrategic ~~the~~initiatives, ~~going~~capital ~~private transaction~~expenditures, wethe ~~announced~~information ~~plans~~technology ~~in October~~systems ~~2013~~refresh ~~to resume the~~ project, ~~and~~paying ondown ~~March 26~~debt, ~~2014,~~paying wedividends ~~purchased~~and, ~~the~~as ~~land on which the new world headquarters will be built. We are leasing a portion of the real property to H L & L~~appropriate, ~~which~~preserving ~~will build the new world headquarters on the site~~cash. WeOur ~~have~~future ~~also entered into an~~ operating ~~lease~~cash ~~with~~flow and Hborrowing Lavailability &under Lour ~~for~~credit ~~the~~agreement ~~use~~and ofour ~~the~~accounts ~~new~~receivable ~~world~~securitization ~~headquarters~~facility ~~building,~~are ~~which~~expected ~~we expect~~ to bemeet ~~ready~~these ~~for~~and ~~occupancy~~other incurrently ~~calendar~~anticipated ~~year~~funding ~~2016~~requirements. The ~~initial~~seasonal ~~lease~~nature ~~term is fifteen years and will begin upon occupancy. The annual rent is expected to be approximately $9.5 million. Further details~~ of ~~the~~our ~~relocation~~business ~~undertaking~~results ~~are provided~~ in ~~Note~~peak ~~18, “Related Party Information,” to the Consolidated Financial Statements under Part II,~~working ~~Item 8~~capital ofrequirements ~~our~~that ~~Annual~~may ~~Report~~be onfinanced ~~Form~~through 10short-Kterm ~~for~~borrowings ~~the~~when ~~fiscal~~cash ~~year~~on ~~ended~~hand ~~February 28,~~is ~~2014 and Note 17, “Related Party Information,” to the Consolidated Financial Statements of this Form 10-Q~~insufficient.

~~During~~Over the ~~nine~~next ~~months~~several ~~ended~~years, ~~November 28~~we expect to allocate resources, ~~2014~~including capital, to refresh our information technology systems by modernizing our systems, redesigning and deploying new processes, and evolving new organization structures, all of which are intended to drive efficiencies within the business and add new capabilities. Amounts that we ~~paid~~spend ~~cash~~could ~~dividends~~be material in any fiscal year and over the ~~aggregate~~life of the project. The total amount ofspent through fiscal 2015 on this project was approximately $~~24.2~~132 million. toDuring ~~CIHC~~the three months ended May 29, ~~our~~2015, ~~parent~~we ~~and~~spent ~~sole~~approximately ~~shareholder~~$9 million, including capital of approximately $~~14.3~~8 million and expense of ~~which~~approximately ~~was~~$1 ~~for~~million, on these information technology systems. Based on the ~~purpose~~current scope of ~~paying~~the ~~interest~~project, we currently expect to spend approximately $180 million on these information technology systems over the ~~PIK~~remaining ~~Notes.~~life Inof ~~addition~~the project, Hthe Lmajority &of Lwhich ~~paid~~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 $~~9.9~~180 million toover ~~acquire~~the ~~certain~~remaining ~~assets~~life ~~previously~~of ~~purchased~~the byproject, usor ~~related~~that towe will achieve the ~~new~~anticipated efficiencies ~~world~~or ~~headquarters~~any ~~project~~cost savings.

~~Contractual~~In ~~Purchase~~May ~~Obligations~~2011, we announced plans to relocate our world headquarters to the Crocker Park mixed use development in Westlake, Ohio, which offers a vibrant urban setting, with retail stores and restaurants, offices and apartments. After putting the project on hold pending the outcome of the going private transaction, we announced plans in October 2013 to resume the project and on March 26, 2014, we purchased the land on which the new world headquarters will be built. We are leasing a portion of the real property to H L & L Property Company, an indirect affiliate of American Greetings (“H L & L”), that will build the new world headquarters on the site. We have also entered into an operating lease with H L & L for the use of the new world headquarters building, which we expect to be ready for occupancy in calendar year 2016. The initial lease term is fifteen years and will begin upon occupancy. The annual rent is expected to be approximately $9.5 million. Furthermore, due to our need for incremental space, H L & L is building additional space at the new world headquarters location, which we expect will increase the annual rent by approximately $1 million. Further details of the relocation undertaking are provided in Note 18, “Related Party Information,” to the Consolidated Financial Statements under Part II, Item 8 of our Annual Report on Form 10-K for the fiscal year ended February 28, 2015 and Note 17, “Related Party Information,” to the Consolidated Financial Statements of this Form 10-Q.

InCritical ~~connection with~~Accounting ~~the~~Estimates sale of AGI In-Store, effective August 29, 2014, we entered into a long-term supply agreement whereby we are committed to purchase a significant portion of our North American display fixtures requirements from Rock-Tenn Company. The supply agreement has an initial term of five years. The Corporation is committed to purchase $180 million of display fixture related products, accessories and/or services over the initial term of the agreement.

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~~Estimates under Part II, Item 7 of our Annual Report on Form 10-K for the year ended February 28, 2015.

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 28, ~~2014.~~

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;

•

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

•

risks associated with leasing substantial amounts of space for our retail stores;

•

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

• the potential impact of any working capital adjustment associated with the sale of AGI In-Store;

•

unanticipated expenses we may be required to incur relating to our world headquarters project;

•

our ability to qualify for state and local incentives offered to assist us in the development of a new world headquarters;

•

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;

• our inability to remediate the material weakness related to our internal control over the accounting for income taxes;

•

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

• Schurman Fine ~~Papers~~Paper’s 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 advertising and marketing efforts~~, such as our online 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 comply with our debt covenants;

•

our ability to adequately maintain the security of our electronic and other confidential information;

•

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.

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 28, ~~2014~~2015.

~~Item~~29 ~~3. Quantitative and Qualitative Disclosures about Market Risk~~

33Item 3. Quantitative and Qualitative Disclosures About Market Risk

~~Table~~For further information, refer to our Annual Report on Form 10-K for the year ended February 28, 2015. There were no material changes in market risk, specifically interest rate and foreign currency exposure, for us from February 28, 2015, the end of ~~Contents~~our preceding fiscal year, to May 29, 2015, the end of our most recent fiscal quarter.

Item 4. Controls and Procedures

~~Evaluation~~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 ~~Disclosure~~1934, ~~Controls~~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 Co-Chief Executive Officers 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 ~~maintains~~ ~~disclosure~~carries ~~controls~~out ~~and~~a ~~procedures~~variety ~~that~~of ~~are~~on-going ~~designed~~procedures, tounder ~~ensure~~the ~~that~~supervision ~~information~~and ~~required~~with tothe beparticipation ~~disclosed~~of ~~in its reports under~~ the ~~Securities~~Corporation’s ~~Exchange~~management, including ~~Act~~its ofCo-Chief ~~1934,~~Executive asOfficers ~~amended~~and ~~(the~~Chief ~~“Exchange~~Financial ~~Act”)~~Officer, isto ~~recorded,~~evaluate ~~processed, summarized~~the ~~and~~effectiveness ~~reported~~of ~~within~~ the ~~time~~design ~~periods~~and ~~specified~~operation inof the ~~Commission~~Corporation’s ~~rules~~disclosure ~~and~~controls ~~forms~~ and ~~that~~procedures. ~~such~~Based ~~information~~on ~~is accumulated and communicated to~~ the ~~Corporation’s management~~foregoing, ~~including~~the ~~its~~ Co-Chief Executive Officers and Chief Financial Officer, asof ~~appropriate,~~American toGreetings ~~allow~~concluded ~~for~~that ~~timely~~the ~~decisions~~Corporation’s ~~regarding required~~ disclosure. ~~In designing and evaluating the disclosure~~ controls and procedures, ~~management~~were ~~recognizes~~effective ~~that~~as ~~any~~of ~~controls~~the ~~and~~end ~~procedures, no matter how well designed and operated, can provide only reasonable assurance~~ of ~~achieving~~ the ~~desired~~period ~~control~~covered ~~objectives~~by this report.

~~American~~There ~~Greetings~~has ~~carries~~been ~~out~~no achange ~~variety~~in ~~of on-going procedures, under~~ the ~~supervision and with the participation of the~~ Corporation’s ~~management,~~internal ~~including~~control ~~its~~over ~~Co-Chief~~financial ~~Executive~~reporting ~~Officers~~during ~~and Chief Financial Officer, to evaluate~~ the ~~effectiveness of the design and operation of the~~ Corporation’s ~~disclosure~~most ~~controls~~recent ~~and procedures. Based upon the procedures performed during the current~~ fiscal quarter, ~~our Co-Chief Executive Officers and Chief Financial Officer concluded~~ that ~~our disclosure controls and procedures were not~~has ~~effective~~materially asaffected, ofor ~~the~~is ~~end~~reasonably oflikely ~~the~~to ~~period~~materially ~~covered~~affect, ~~by this report because of~~ the ~~material~~Corporation’s ~~weakness~~internal ~~described~~control ~~below,~~over ~~which~~financial ~~has not been remediated as of such date~~reporting.

As30 previously reported in the “Controls and Procedures” section included in Part II, Item 9A of our Annual Report on Form 10-K for the fiscal year ended February 28, 2014, we identified a material weakness in internal control over financial reporting surrounding our accounting for income taxes. The principal factors contributing to the material weakness in accounting for income taxes were as follows:

• the significant complexity created as a result of the going private transaction;

• insufficient tax resources to properly execute the Corporation’s review procedures required to maintain effective controls and ensure complete and accurate tax accounting, which was caused by staff turnover including during the year-end closing cycle.

Planned Remediation Efforts to Address Material Weakness

In order to remediate this material weakness and further strengthen the overall controls surrounding our accounting for income taxes, the following steps have been or will be taken to improve the overall processes and controls in our tax function:

• review tax procedures and make recommendations to improve processes;

• add tax resources to facilitate the execution of the Corporation’s review procedures;

• utilize external advisors regarding complex tax issues to supplement knowledge that may not be available internally.

Specifically related to the preparation of the tax accounts for the quarters ended May 30, 2014, August 29, 2014 and November 28, 2014 and to ensure that the consolidated financial statements filed with those quarterly reports on Form 10-Q are presented fairly in accordance with U.S. generally accepted accounting principles, we utilized external resources and advisors as discussed above. In utilizing the external resources and advisors, we identified additional errors which were corrected during the quarter ended May 30, 2014. See Note 1, “Basis of Presentation,” to the Consolidated Financial Statements for further information.

WePART ~~intend~~II—OTHER ~~that~~INFORMATION the remediation of the material weakness related to controls over the accounting for income taxes will be completed as of the end of fiscal 2015, however, it will not be considered remediated until the remedial controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively. We cannot make any assurances that we will successfully remediate this material weakness within the anticipated timeframe and thus reduce to remote the likelihood that material misstatements concerning accounting for income taxes will not be prevented or detected in a timely manner.

Changes in Internal Control over Financial Reporting

Except for the remedial actions taken to date with respect to the material weakness described above, 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

Al Smith et al. v. American Greetings Corporation. On June 4, 2014, Al Smith and Jeffrey Hourcade, former fixture installation crew members for special projects, individually and on behalf of those similarly situated, filed a putative class action lawsuit against American Greetings Corporation in the U.S. District Court for the Northern District of California, San Francisco Division. Plaintiffs claim that the Corporation ~~(1) failed~~violated tocertain ~~pay~~rules ~~overtime~~under ~~wages and minimum wages in violation of~~ the Fair Labor Standards Act ~~(“FLSA”)~~ and ~~the~~ California ~~Labor Code~~law, ~~Industrial~~including ~~Welfare Commission Wage Orders (“California Law”); (2) failed to make payments within~~ the ~~required time in violation of~~ California ~~Law;~~Labor ~~(3) failed to provide properly itemized wage statements in violation of the California law; and (4) engaged in unfair competition in violation of California’s Business and Professions~~ Code. ~~Plaintiffs claim to represent a class of all persons who, at any time since June 4, 2010, were employed by the Corporation in California as non-exempt employees~~ and ~~certify~~Industrial ~~subclasses~~Welfare ~~therein~~Commission ~~with~~Wage ~~respect to the California Law violations detailed above~~Orders. In ~~addition, plaintiffs claim to assert a nationwide collective action under the FLSA.~~ For themselves and the proposed classes, plaintiffs seek an unspecified amount of general and special damages, including but not limited to minimum wages, agreed upon wages and overtime wages, statutory liquidated damages, statutory penalties (including penalties under the California Labor Code Private Attorney General Act of 2004 (“PAGA”), unpaid benefits, reasonable attorneys’ fees and costs, and interest). In addition, plaintiffs request disgorgement of all funds the Corporation acquired by means of any act or practice that constitutes unfair competition and restoration of such funds to the plaintiffs and the proposed classes. On November 6, 2014, plaintiffs filed a Second Amended Complaint to add claims for reimbursement of business expenses and failure to provide meal periods in violation of California Law and on December 12, 2014, amended their PAGA notice to include the newly added claims.

~~The~~On ~~Corporation~~January 20, ~~was~~2015, ~~served~~the ~~with~~parties ~~the~~reached ~~Complaint~~a onsettlement ~~July 16~~in principle that, ~~2014~~if ~~and~~approved onby ~~July 31,~~the ~~2014~~Court, ~~the~~will ~~Corporation~~fully ~~filed~~and afinally ~~Motion~~resolve tothe ~~Dismiss.~~claims Onbrought by ~~August 3,~~Smith ~~2014~~and Hourcade, ~~prior~~as towell as the ~~Court~~classes ~~ruling~~they onseek ~~the~~to ~~defendant’s~~represent. ~~Motion~~The tosettlement ~~Dismiss,~~was ~~plaintiffs~~a ~~filed~~product ~~their~~of ~~First~~extensive ~~Amended~~negotiations ~~Complaint.~~and ~~The~~a ~~Corporation~~private ~~vacated~~mediation, ~~its~~which ~~Motion~~was tofinalized ~~Dismiss~~ and ~~filed~~memorialized ~~its~~in ~~answer~~a toStipulation ~~the~~and ~~First~~Class ~~Amended~~Action ~~Complaint~~Settlement onAgreement signed ~~August~~March 2130, ~~2014~~2015. OnThe ~~November 6,~~proposed ~~2014,~~settlement ~~plaintiffs~~establishes ~~filed~~ a ~~Second~~settlement ~~Amended~~fund ~~Complaint~~of $4.0 million to ~~add~~pay claims ~~for~~from ~~reimbursement~~current ofand ~~business~~former ~~expenses~~employees ~~and~~who ~~failure~~worked toat ~~provide~~least ~~meal~~one ~~periods~~day infor ~~violation~~American Greetings Corporation and/or certain of ~~California~~its ~~Law~~subsidiaries ~~and~~in onany hourly ~~December~~non-exempt position in California between June 124, ~~2014, amended~~2010 ~~their~~and ~~PAGA~~the ~~notice~~date toof ~~include~~ the ~~newly~~Court’s ~~added~~preliminary ~~claims~~approval of the settlement.

InOn March 31, ~~addition~~2015, toplaintiffs ~~the~~filed ~~foregoing,~~a weMotion ~~are~~for ~~involved~~Preliminary inApproval ~~various~~of ~~judicial~~Class Action Settlement. On April 30, ~~administrative~~2015, ~~regulatory~~ ~~and~~plaintiffs ~~arbitration~~filed ~~proceedings~~their ~~concerning~~Third ~~matters~~Amended ~~arising~~Complaint into ~~the~~which ~~ordinary~~American ~~course~~Greetings ofCorporation ~~business~~filed ~~operations,~~its ~~including,~~answer ~~but~~on ~~not~~May 19, 2015. ~~limited~~On toApril 30, ~~employment~~2015, ~~commercial~~the ~~disputes~~Court ~~and~~held ~~other~~a ~~contractual~~preliminary ~~matters~~approval hearing. If ~~We,~~the ~~however~~settlement is preliminarily approved, donotice ~~not~~and ~~believe~~claim ~~that~~forms ~~based~~will ~~on currently~~be ~~available~~mailed ~~information~~to ~~any~~class ofmembers ~~the~~and ~~litigation~~class inmembers ~~which~~will wehave ~~are~~an ~~currently~~opportunity ~~engaged~~to submit claims, ~~either~~to opt-out ~~individually~~of the settlement, and/or into object to the ~~aggregate~~settlement. As part of a Preliminary Approval Order, the Court will ~~have~~set a ~~material~~Final ~~adverse~~Approval ~~effect~~Hearing onto ~~the~~occur ~~Corporation’s~~after ~~financial~~the ~~condition~~notice process, ~~although~~at which point the ~~outcome~~Court ~~could~~will beconsider the notice process and ~~material~~results, any objections, and other relevant information. The Court will then decide whether to finally approve the ~~Corporation’s~~class ~~operating~~settlement. If ~~results~~the ~~for~~settlement ~~any~~is ~~particular~~finally ~~period~~approved, ~~depending,~~American inGreetings ~~part~~will fund the settlement within twenty (20) days after passage of all appeal periods. Thereafter, ~~upon~~the settlement funds will be disbursed as provided in the ~~operating~~settlement ~~results~~agreement ~~for~~and ~~such~~the ~~period~~Court’s orders.

36Michael Ackerman v. American Greetings Corporation, et al. On March 6, 2015, plaintiff Michael Ackerman, individually and on behalf of others similarly situated, filed a putative class action lawsuit in the United States District Court of New Jersey alleging violation of the Telephone Consumer Protection Act (“TCPA”) by American Greetings Corporation and its subsidiary, AG Interactive, Inc. The plaintiff claims that defendants (1) sent plaintiff an unsolicited text message notifying plaintiff that he had received an ecard; and (2) knowingly and/or willfully violated the TCPA, which prohibits unsolicited automated or prerecorded telephone calls, including faxes and text messages, sent to cellular telephones. Plaintiff seeks to certify a nationwide class based on unsolicited text messages sent by defendants during the period February 8, 2011 through February 8, 2015. The plaintiff seeks damages in the statutory amount of $500 for each and every violation of the TCPA and $1,500 for each and every willful violation of the TCPA. We believe the plaintiff’s allegations in this lawsuit are without merit and intend to defend the action vigorously.

Management does not believe, based on currently available information, that the outcome of these proceedings will have a material adverse effect on the Corporation’s business, consolidated financial position or results of operations, although the outcomes could be material to the Corporation’s operating results for any particular period, depending, in part, upon the operating results for such period.

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.

Item 6. Exhibits

Exhibits required by Item 601 of Regulation S-K

Exhibit Number		Description
ExhibitNumber		Description
10.1		Letter from American Greetings Corporation to Jeffrey Weiss, dated October 7, 2014 regarding Modification of Supplemental Executive Retirement Plan Benefit
31(a)		Certification of Co-Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31(b)		Certification of Co-Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31(c)		Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32		Certification of Co-Chief Executive Officers 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 ~~November~~May 2829, ~~2014~~2015, formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Statement of Income for the quarters ended ~~November~~May 2829, ~~2014,~~2015 and ~~November~~May 2930, ~~2013~~2014, (ii) Consolidated Statement of Comprehensive Income ~~(Loss)~~ for the quarters ended ~~November~~May 2829, ~~2014,~~2015 and ~~November~~May 2930, ~~2013~~2014, (iii) Consolidated Statement of Financial Position at ~~November~~May 2829, ~~2014~~2015, February 28, ~~2014~~2015 and ~~November~~May 2930, ~~2013~~2014, (iv) Consolidated Statement of Cash Flows for the ~~nine~~quarters ~~months~~ ended ~~November~~May 2829, ~~2014~~2015 and ~~November~~May 2930, ~~2013~~2014, and (v) Notes to the Consolidated Financial Statements for the quarter ended ~~November~~May 2829, ~~2014~~2015.

3732

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 *

~~January~~July 910, 2015

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

3833

Large accelerated filer

Accelerated filer

Non-accelerated filer

x (Do not check if a smaller reporting company)

Smaller reporting company

Filing Compare · AMERICAN GREETINGS CORP