EVERY LIFE, EVERY DAY.

HALLMARK D IVERS ITY & INCLUS ION PROGRESS REPORT 2010

“Hallmark’s future success depends on Hallmarkers whose diverse experiences

and perspectives can help us create a more emotionally connected world...”

Don Hall, Jr.

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H allmark celebrated our company’s 100-year anniversary in 2010. Milestones of this magnitude

provide a wonderful opportunity to honor the past while imagining and building the future. Diversity has long been a business and moral imperative at Hallmark, but from the vantage point of our centennial, it’s clear Hallmark’s future success depends on Hallmarkers whose diverse experiences and perspectives can help us create a more emotionally connected world, making a genuine difference in every life, every day. So in 2010, we renewed and intensified our focus on diversity and inclusion which are embedded in our company’s beliefs and values, as well as in our corporate purpose of enriching lives. I want to thank Teri Ann Drake, senior vice president–creative, for bringing passion and commitment to her leadership of Hallmark’s diversity and inclusion efforts. This annual report summarizes corporate goals and efforts underway via our Corporate and Division Diversity & Inclusion Councils and Employee Resource Groups. But these activities just touch the surface of diversity. Diversity lies within each Hallmarker’s unique life experiences and the way we see things differently from one another. I encourage each of you to honor and share your individual perspectives, and those of others, to help our company solve problems, innovate and recognize new opportunities. As this progress report illustrates, there are a multitude of ways for each of us to celebrate our diverse cultures, foster connections between us, and see new possibilities to help our consumers. Please take advantage of as many opportunities as possible to embrace and engage our diversity.

DON HALL, JR.President–CEO

Diversity & Inclusion is an

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D iversity can’t be mandated, though it can be supported

through hiring, recruiting, inclusion training, mentoring and a multitude of other diversity programs. To be genuine and meaningful, diversity and inclusion must be valued, shared and embraced by all members within the community, at all levels of the organization. Thanks to the work and patience on the part of hundreds of Hallmarkers over the past decades, Diversity & Inclusion has evolved into an ecosystem within our company, supporting Hallmark’s culture and priorities. Hallmark’s Diversity & Inclusion ecosystem depends on interrelated groups and councils including the Corporate Diversity & Inclusion Council, Divisional Diversity and Inclusion Councils, Employee Resource Groups, subsidiary councils, platform and product teams and other groups with expertise in

understanding our consumers. This 2010 progress report details the roles and missions of each aspect of our Diversity & Inclusion ecosystem. Together, they are committed to expand Hallmark’s mindset in the areas of:• Marketplace(theproductswesell)• Workforce(thediversityofour

employees)• Workplace(ourinternalwork

environment) Hallmark’s vision to create products and services that emotionally connect our world is a direct reflection of Hallmarkers—our life experiences, and ability to connect with others in real, life-affirming ways. As we aim to fully embrace the rich diversity within our company, we will enhance our consumer relationships and brand reputation, as well. Please join me in bringing to life Hallmark’s vision of making a genuine difference in “every life, every day...”our future success depends on it.

TERI ANN DRAKESenior Vice President–Creative Chair of Hallmark’s Corporate Diversity & Inclusion Council

OUR ECOSYSTEM

• CORPORATE DIVERSITY & INCLUSION COUNCIL

• DIVISION DIVERSITY & INCLUSION COUNCILS

Creative, Crown Center/Facilities/Halls, Mass Customers

Team, Finance, Supply Chain, Information Technology

• EMPLOYEE RESOURCE GROUPS

AARCH, HEART, HERE, MERG, HAAL,

Sinceramente/Spanish Speaking COE

• SENIOR & MIDDLE LEADERS

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WhatexperiencesandperspectivesofHallmarkemployeesenableour company to sincerely and profoundly create an emotionally connected world? Differing perspectives based upon race, gender and age are among the visible differences within our workforce. The charts on the corresponding page provide some insight into our demographics…however, it’s not the whole story. Diversity of thought, Myers-Briggs type, disabilities, religious beliefs, and sexual orientation are a few other ways that represent how we are different. “Having a diverse workforce means providing an environment where each employee can bring their full self to work,” says KarleneWagner-Jackson,humanresourcesmanager–diversityand inclusion. “One of the best ways for us to ensure we have an inclusive culture is to celebrate the variety of differences each of us carries with us daily.”

Recruitment and retentionHallmark strives, through recruitment and hiring practices, to attract and retain more people of color and other aspects of diversity to our workforce. Hallmark’s recruiting staff is heavily involved in networking and relationship-building with local, regional and national diverse organizations and area Chambers of Commerce. Hallmark focuses its university recruitment efforts primarily on 11 college campuses, five of which provide access to African-American and Hispanic students. Dawn Harp, corporate recruiting manager, suggests Hallmark will know it has succeeded in attracting and retaining a diverse workforce when it more proportionally reflects the faces and perspectives of our customers. “It may start with managers deciding who to hire, and how to create and manage a diverse team. But the success of diversity and inclusion lies in the hands of every employee and our willingness to engage, accept and embrace our differences in appearance, life experiences and ideas.”

PEOPLE OF HALLMARK

62% 17%WOMEN PEOPLE OF COLOR

GENERATIONAL BREAKDOWNThis is the first time in American history that four different generations have worked side by side in the workplace.

THE MIXThere’s no magic formula or perfect number to define the ideal diverse workforce, but the CDIC acknowledges there’s much room to grow. Here’s a snapshot of Hallmark’s 2010 employee mix:

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A DEEPER DIVE WOMEN PEOPLE OF COLOR

SENIOR MANAGERSAll exempt managers in grades 15 and above

MIDDLE MANAGERSAll exempt managers and individual contributors in grade levels 11-14

CORPORATE OFFICERSAll officers or executives of Hallmark

CORPORATE STORES AND FIELD SALESAll part-time employees

UNITED STATES POPULATIONDemographics for women and people of color SOURCE: EEOC

55%48%40%

34%

10%

16%

93%

11% 12%8%

PEOPLE OF HALLMARK

All employees, excluding part-time employees in corporate stores and field mass customers

26% BABY BOOMERS

(1946–1964)

16% GENERATION X

(1965–1980)

13% MATURES

(1909–1945)

20% NOT IN THE

WORKFORCE

25% MILLENNIALS

(1981–1999)

50% BABY BOOMERS

(1946–1964)

9% MATURES

(1909–1945)

15% MILLENNIALS

(1981–1999)

26% GENERATION X

(1965–1980)

SOURCE: DIVERSITY INC.

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DIVERSITY IN PRODUCTSinceramenteBased in San Antonio, Texas, HEB is a premier, regional chain and one of the largest independent food retailers in the nation. The 265 HEB stores in Texas include Expressions From Hallmark departments. Like Hallmark, HEB is privately owned by its founding family who believes strongly in the value of customer loyalty. In its most recent greeting card contract renewal, HEB selected Hallmark over American Greetings. One of the reasons was the Hallmark Sinceramente offering. HEB felt the product spoke better to its Hispanic customers, and offered significantly more footage than our competitor. Since taking over their greeting card business, Hallmark increased HEB’s Hispanic greeting card footage more than 56%—to more than 30 feet of Sinceramente in some of HEB’s most dominant stores. In addition, Hallmark has grown their seasonal card business by aggressively outposting Sinceramente during major seasons. Their 2010 Christmas card sales were up more than 8% over the previous year. In addition, Hallmark’s Party Express stadium cups featuring licensed characters are highly successful with the Hispanic demographic. HEB sold more than 1.5 million cups in 2010.

Mahogany & Tree of LifeWithMahoganyandTreeofLife,diverseandinclusiveproducts begin with up-close-and-personal interactions with

focus groups and Facebook friends. The two lines are created and managed by one team. The intimacy of these focus groups creates pure Hallmark moments, allowing us to discuss life with consumers, resulting in authentic messages and images that resonate with their senders and recipients. “Wecombinefocusgroups,markettoursandstore visits into one three-day national visit to a target city each year,” explains Clarissa Crumpton, associate product manager III. “Our focus groups are typically held in homes of friends, churches, synagogues or community centers. And sometimes, participants at these events end up being cast in photo shoots.” Last year, a friend of a team member’s mother hosted a Mahogany focus group in her Miami, FL, church. A Father’s Day focus group in the Kansas City area drew together a few dozen African-American men with their children—several of whom were photographed and featured on Mahogany cards. To refresh outdated artwork for the Mahogany line, the team planned an illustration workshop. “It’s important to make sure we continue to have a range of ages, skin tones, hair styles,etc,”explainsJenWalker,artdirector.“Soweinvitedartists to sketch both men and women at the photo studio. Our only expense was food—all of our participants were volunteers. And from that workshop, we’ve placed 40 new illustrations in the Mahogany line.”

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In addition to Sinceramente, Mahogany and Tree of Life product lines, Hallmark creates a diverse range of product offerings that authentically address the unique lives and needs of each consumer.

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DIVERSITY IN MARKETING

In television commercials—as well as in print advertising, direct mail, online presence and in-store merchandising—we tell compelling stories filled with the genuine emotion consumers expect from Hallmark. Over the course of the year and through various marketing tactics, our goal is to make casting choices that feel balanced and representative of our diverse consumer base. Workingwithouradvertisingagenciesandinternalstudios, Hallmark’s marketing organization spent 2010

laying the groundwork for our new brand campaign: Life is a specialoccasion.We’llshowconsumershowourbrandandproducts can help them recognize and celebrate the kind of perfectly imperfect, unplanned moments that don’t happen every day—but could happen any day. The creative direction for the new work includes words like expressive, playful, casual, handcrafted, real—and inclusive. More than ever, our marketing and merchandising will reflect the diverse backgrounds and relationships of our consumers.

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One of the most visible expressions of Hallmark’s commitment to diversity is in our advertising.

FROM LEFT TO RIGHT: Holiday Print Ad 2010, Mother's Day Catalog 2010, Spring Mailer 2010

Television Ad, Holiday 2010

DEAN ERLANDSONSenior Vice President– Mass Customers

ELIZABETH RIVERAVice President–Retail Stores

MIKE GOODWINSenior Vice President– Information Technology

KARLENE WAGNER-JACKSONHuman Resources Manager– Diversity & Inclusion

CAROL HALLQUISTVice President–Hallmark Corporate Foundation

DAN STIFTERVice President–Party Express

ELLEN KARPCorporate Project Consultant

BETH WARDDirector Logistic Services– Supply Chain

PATTI STREEPERVice President– Corporate Innovation

CHUCK LLOYD Human Resources Director– Employee Relations & Diversity

FRED WISEHuman Resources Director– Recruiting & Talent Management

TERI ANN DRAKESenior Vice President–Creative Chair–CDIC

LISA MACPHERSONSenior Vice President–Marketing

STEVE DIGIACINTODirector–Risk Management Services

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Workplace OBJECTIVE: Wecreateaworkplaceenvironment that embraces diversity and inclusion of all.

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This council of mostly senior leaders influences management across our company to actively

engage in and act as conduits of change. Half of the members focus on delivering more inclusive

products and marketing messages to the marketplace. The others work with division councils

and employee groups to create a more inclusive work environment and diverse workforce.

CORPORATE DIVERSITY & INCLUSION COUNCIL

MarketplaceOBJECTIVE: Wedriveamarketplacefocus that delivers more solutions for “every life, every day” among diverse audiences in their flow of life.

WorkforceOBJECTIVE: Weareacompanythat attracts, develops and retains a diverse, skilled, innovative and productive workforce.

GOALS:

•Increasebrandrelevanceandengagement with more high-connecting consumers

• EstablishKPIbrandmeasuresand comparisons for Hispanic and Millennial consumers

MEASURES OF SUCCESS:

• Qualitativesurveyofactiveleaderand ERG joint engagement

• Creationandexecutionofmarketing plans in 2011 and 2012

• ConducttradesurveysforMass and Gold Crown Retail

• Assessmentandannual reporting of product pipeline and marketing tactics

• Useofnewinsightstoengage new consumers

GOALS:

• Increasediversityandinclusionpresence, voice and accountability of senior leaders

• Leadersunderstandandarticulatethe business case for diversity and use stories to build diversity and inclusion understanding

• Integratediversityandinclusionasacomponent of staff discussion topics and create an environment that promotes courageous discussion

MEASURES OF SUCCESS:

• Leaderscommitmenttoparticipation in local diversity and inclusion activities

• Useofblogstosharediversityandinclusion stories and experiences

GOALS:

• Increaseseniorleaderparticipationin diversity and inclusion activities

• Integratediversityandinclusionobjectives in HR business processes

• Complywithexistingpolicies

MEASURES OF SUCCESS:

• Leader participation in various events, including volunteer opportunities, networking and mentoring programs

• CoordinationofERGswithConsumerUnderstanding& Insight to develop immersive consumer experiences

• On-goingreviewofourHRprocesses and practices to ensure we are inclusive

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DIVISION DIVERSITY & INCLUSION COUNCILSThese councils advocate for a diverse and inclusive workplace within each

division via employee education and interactions. The Division chairs meet

bi-monthly to share information and best practices across the company.

In 2010, some Division Diversity & Inclusion Councils’ activities included:

• A“DiversityofThought”DayfortheMass Customers team with senior leaders presenting the significance of diversity to their business decision-making model.

• Continuedmaintenanceof“OneDiversity Place,” a high-traffic hallway the Finance team updates with rotating displays and educational information regarding diversity and inclusion throughout the year.

• Continuedgrowthofmentoringprogram(PATHS)inCreativethatfosters a two-way exchange of ideas and experiences to support leadership development and engagement at

all levels. More than 15% of the Creative division's employees were involved by conclusion of the program’s second year.

• Councilmembersrepresentingthesupplychain(manufacturing,distributionandfixtures)organized a myriad of cultural events and celebrations in their locations. Events included Cinco de Mayo, Black History Month, Independence Day and Ramadan activities. Their overarching focus for 2010 was to educate, communicate and leverage. Enfield hosted an international beverage

tasting day, featuring non-alcoholic specialties such as Russian Kvass (sodamadefromryebread);BirchSapfromBelarus;BitaCocofromBrazil;GingerBeerfromJamaicaandCocaColafromtheUS.

• CrownCenterRedevelopmentawarded nearly 20% of its construction projects and budget to minority firms in 2010.

• IT’sdivisioncouncil(UnITe)is a mainstay at IT’s Town Halls, where division members have learned to expect diversity education with entertainment.

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CHAIRS FROM LEFT TO RIGHT: Kim Tapscott Information Technology, Simmie Clincy Crown Center, Melissa Bolden CreativeWilliam Godwin Mass Customers, Cindy Chang Finance, Matthew Harkins Information Technology (Not featured: Bonnie Heenan Supply Chain)

▲ HAAL networking event

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EMPLOYEE RESOURCE GROUPSThe mission of Hallmark’s Employee Resource Groups (ERGs) is to help our employee community

recognize, embrace and learn from our differences—and to share, understand and work together more

cohesively. Membership is open to all employees who have a sincere interest in the mission of the ERG.

In 2010, the ERGs enriched diversity and inclusion efforts in these ways:

Hallmark African-American Leadership (HAAL)• OneofHAAL’smostimportantprioritiesistohelp

recruit and retain top talent from among the African-American workforce. Its members actively engage in community outreach and networking to increase the prominence and reputation of Hallmark as an employer.

• In2010HAALheldajointmeetingwithmembersofSprint and Blue Cross and Blue Shield employee resource

groups to share successes and challenges, and create synergies to improve the effectiveness of their education and outreach during Black History Month.

• ByreachingouttoHallmark’ssummerinterns,HAALmembers identified community and social concerns that hadn’t been addressed in their internship experience. As a result, future African-American interns moving to Kansas City for the summer will be assigned a mentor from HAAL to provide additional counsel and guidance to help them adjust to the community and social scene.

• HAALislookeduponasoneofthecity’ssuccessstories,and is commonly approached by other companies seeking to effectively create and manage employee resource groups.

“Wemadealotofconnectionsin2010,andexpandedourvisibility in the Kansas City area,” says HAAL chair Damon Lewis. “Doing things like Christmas in October, attending NAACP events and representing Hallmark at city and regional events has helped improve our company’s visibility as a diverse and inclusive employer.”

CHAIRS FROM LEFT TO RIGHT: Andre du Broc HERE, Diane Goode AARCH, Kimberly Brown HAAL, Anita Ranhotra AARCH, Katie Seymour MERG, Marcia Kenny HEART, Damon Lewis HAAL, Andrea Gomez HEART, Johnnie Weathersby MERG (Not featured: Michelle Steiner HERE)

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Hallmark Employees Reaching Equality (HERE)• HEREcreatedacompellingstoryboardfeaturinggroup

members, family members and friends telling stories of how inclusion impacts the Lesbian, Gay, Bisexual and Transgender population. Initially displayed in the headquarters Crown Commons area, the storyboard traveled to the Leavenworth and Topeka plants in 2010. TheLeavenworthpresentationincludedaQ&Asession that drew more than 80 employees before and after their work shifts.

• HEREwasonceagainatopfund-raiserintheannualKansas City AIDS walk, involving 30 walkers who collectively raised more than $6,000.

• HEREalsohostedalunchtimepresentation,attracting60 Hallmarkers, to hear three prominent Kansas Citians speak about how it feels to be openly gay in the public eye—and how they deal with perceptions and gain acceptance from the public and their peers.

“One thing we’ve learned over our ERG’s 13-year history is we’re not just a resource for our own members,” says Andre duBroc,2010Chair.“Weserveasconnectors—withinourcompany and our community—helping to influence how our company interacts and communicates authentically with the gay population.”

Millennials Employee Resource Group (MERG)• Lessthan15%ofHallmarkemployeesareyoungerthan

30. They are a workplace minority whose views and expectations differ from those of their co-workers. As an ERG, the group has helped develop and deliver internship and employee orientation programs to identify and address “generational” differences in cell phone and texting use, meeting etiquette and business dress variations for young employees working in the various areas of our company.

• MERGmembersprovidehelpfulinsightfordevelopmentof products and services aimed at younger demographics. Their input was especially helpful with the revision of an everyday love and anniversary card line in 2010, and with the creation of a significant sales presentation for Hallmark Business Expressions that involved client communication recommendations for the Millennial demographic.

• MERGputitsyouthfulenergytogooduse.DuringHallmark’s Christmas in October community service drive, 40 MERG volunteers and their friends captained 3 homes, and an additional 30 volunteers took part in service projects at the Kansas City Zoo.

“Some of our younger employees had worked here for years, but for the longest time, hadn’t met anyone near their age,” saysMERGchair,JohnnieWeathersby.“Oneofourmostimportant roles for our group is to provide a place to meet and network with other young people so they feel more connected at Hallmark and within the community.”

▲ Crown Commons display of the LBGT story ▲ MERG captained 3 homes for Christmas in October

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Asian-American Resource Group at Hallmark (AARCH)• It’sthegoalofAARCHtohelpbringmoreawarenessof

the value of Asian-American employees and consumers. The group sponsored three annual cultural celebrations atHallmark:ChineseNewYearcelebrationinFebruary;Asian-Pacific American Heritage Month performances and activities including popular Karaoke contests and hennapaintinginMay;andtheIndianinfluencesofDiwali and the recognition of Eid each fall.

• AARCHhostedabout40HallmarkemployeesataChinese Calligraphy lunch-and-learn in 2010, providing an opportunity to learn about the characters and practice calligraphy with traditional tools.

• AARCHreceiveda2010CEOWalkingtheTalkAwardforDiversity, a recognition of its efforts to help many product and work teams become more emotionally connected to the growing Asian-American consumer and employee base.

• Groupmembersassistedwithrecruitingandcampusevents,and presented a workshop at the Asian-American Student UnionConference.

“Asian-Americans are described as the forgotten minority,” says AARCH Chair Anita Ranhotra.“Our group’s objective is to educate Hallmarkers about this ethnic group and potential market. If you believe the exchange is valuable, and you’ve learned something new, then we’ve accomplished our goal.”

Hispanic Education Awareness Resource Team (HEART)• HEARTisheavilyinvolvedinMattieRhodes,aKansas

City-based nonprofit that provides mental health counseling and family services to a growing Hispanic population. Mattie Rhodes bridges cultures and communities through the arts. So it’s an especially compelling organization to donate the creative services and time of Hallmark volunteers.

• Morethan20HallmarkersattendedMattieRhodes’annualfund-raising luncheon in 2010, and extended hundreds of hours of personal volunteer time and financial support through Hallmark’s Volunteer Involvement Pays program. They also organized two employee arts supply drives to benefit the organization.

• HEARTvolunteersconvergedonMattieRhodes’annual“Dia de las Muertas” celebration to man art booths and sell concessions. In return, Mattie Rhodes staff members visited Hallmark during Hispanic Heritage month to teach employees how to make traditional tissue flowers.

“Mattie Rhodes provides a great way to connect our employees to the Hispanic Community, and help them learn more about the culture,” says HEART Chair Andrea Gomez. In 2010, Andrea was invited to join the Board at Mattie Rhodes, and serves on its Executive Committee. “As much as we’re able to help a wonderful nonprofit, our involvement with Mattie Rhodes has helped increase the connection and visibility of our Hispanic employees within our own company and our community—it’s a wonderful relationship.”

▲ AARCH received a 2010 CEO Walking the Talk Award ▲ Andrea Gomez and members of the Mattie Rhodes Board at the annual meeting

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Hallmark honored 13 employees May 4 at its annual diversity awardsceremony.TheCEOWalkingtheTalkAwardspaytributetoHallmarkers by recognizing employees' efforts related to diversity that have a favorable impact on Hallmark's workplace, workforce or position in the marketplace. In addition, Hallmark presented five Supplier Diversity Awards to suppliers and Hallmarkers who partner with them. Hallmark recipients were honored for reflecting Hallmark's commitment to building mutually beneficial business relationships.

Working MotherHallmark was again named to the list of 100 best companies for family-friendlybenefitsbyWorkingMothermagazine.“Hallmarkscored highest in the areas of benefits programs, women’s issues and advancement, paid time off and leaves, flexible work, and child care support and services,” says Christine Rankin, corporate services manager-food services, work-life and fitness.

Corporate Equality IndexHallmarkwasamong337majorU.S.businessestoachieveaperfectscore on the Human Rights Campaign’s Corporate Equality Index (CEI)survey.Asaresult,thecompanywasrecognizedasoneofthe“BestPlacestoWork,”forsupportofequalityforlesbian,gay,bisexualandtransgender(LGBT)employees.

Supplier DiversityBuilding relationships with diverse suppliers results in a unique multicultural marketing opportunity. “By supporting diverse businesses, Hallmark Cards, Inc. has the opportunity to develop connections with growing economic groups which have become our best advocates,” says Mary Shannon, supplier diversity manager. In comparison to the industry standard of 4-7%, Hallmark’s supplier diversity program expenditures for minority and women-owned businesses represented 5.2% in 2010.

AWARDS RECOGNIZE DIVERSITY EFFORTS

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CEO Walking the Talk Awards

KARYN EPPLEROrder Operations Group Manager

BILL LUCAS President–Crown Center

RALPH SAUCEDASection Manager–Leavenworth

JOHNNIE WEATHERSBY IIIAssociate Consumer Understanding and Insight Analyst

AARCHAsian-American Resource Community at Hallmark

Lifetime Achievement AwardMARGARET KEATINGVice President of Operations

Hallmark Supplier Diversity Awards

New Supplier Development AwardCATHY MULLENSenior Strategic Buyer–Retail Technology Services and Stratix Corporation

Existing Supplier Development Award KIM LEWISInternational Transportation Modal Consultant and Pilot Freight Services.

EMILY EMERSONStrategic Buyer–Visual Merchandising and Creative Printing Company

Second Tier Spend Award DAVE ROESLERFacilities Design Manager

DON HEROLDFacilities Project Manager, Turner Construction and Luevano Hart Construction

Special Recognition Leadership AwardGREG RUSSELLLeasing Director

PAT MONSONRetail Office Leasing Manager

SPECIAL THANKS

KARLENE WAGNER-JACKSON CoordinatorBOB COMIRE DesignBONNIE SMITH EditorialUNION HILL PHOTOGRAPHY PhotographyKATHLEEN MORAST Print Production Manager

This publication was printed by local Women-Owned Business, COLORMARK

Learn more about diversity and inclusion at home.hallmark.com/Company-Information/Diversity-and-Inclusion

“Unity, not uniformity, must be our aim. We attain

unity only through variety. Differences must be

integrated, not annihilated, not absorbed.”

Mary Parker Follett

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