PAGE
<PAGE>
                      SECURITIES AND EXCHANGE COMMISSION

                           Washington, D.C.   20549

                                   FORM 10-K

[ X ]           ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF

                        THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 1996

OR

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

For the transition period from                to

                         Commission File Number 0-11902

                             GIBSON GREETINGS, INC.

Incorporated under the laws                            IRS Employer
  of the State of Delaware                     Identification No. 52-1242761

                    2100 Section Road, Cincinnati, Ohio 45237
                    Telephone Number:  Area Code 513-841-6600

       Securities registered pursuant to Section 12(b) of the Act: None
         Securities registered pursuant to Section 12(g) of the Act:
        Common Stock, $.01 par value; Preferred Stock Purchase Rights

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

     Indicate by  check mark  if disclosure  of delinquent  filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the  best of  registrant's knowledge,  in definitive  proxy or  information
statements incorporated  by reference  in Part  III of  this Form  10-K or any
amendment to this Form 10-K.  [X]

     The aggregate market value  of the Common Stock,  $.01 par value, of  the
registrant held by non-affiliates of the  registrant as of March 21, 1997  was
approximately $341,048,000.

     Indicate the  number of  shares outstanding  of each  of the registrant's
classes of common stock, as of the latest practicable date:  16,260,506 shares
of Common Stock, $.01 par value, at March 21, 1997.

     Documents incorporated by reference:
        Portions of Gibson Greetings, Inc.'s Proxy Statement for the 1997
        Annual Meeting of Stockholders are incorporated by reference in
        Part III
                                     -1-
PAGE
<PAGE>

                            GIBSON GREETINGS, INC.

                         1996 FORM 10-K ANNUAL REPORT

                              TABLE OF CONTENTS

                                    PART I

                                                                           PAGE
                                                                           ----

Item  1.    Business                                                         3

Item  2.    Properties                                                       8

Item  3.    Legal Proceedings                                                9

Item  4.    Submission of Matters to a Vote of Security Holders             10


                                   PART II

Item  5.    Market For Registrant's Common Equity and Related
              Stockholder Matters                                           11

Item  6.    Selected Financial Data                                         12

Item  7.    Management's Discussion and Analysis of Financial Condition
              and Results of Operations                                     15

Item  8.    Financial Statements and Supplementary Data                     21

Item  9.    Changes in and Disagreements with Accountants on Accounting
              and Financial Disclosure                                      53

                                   PART III

Item 10.    Directors and Executive Officers of the Registrant              54

Item 11.    Executive Compensation                                          54

Item 12.    Security Ownership of Certain Beneficial Owners and Management  54

Item 13.    Certain Relationships and Related Transactions                  54


                                   PART IV

Item 14.    Exhibits, Financial Statement Schedules and
              Reports on Form 8-K                                           55






                                     -2-
PAGE
<PAGE>
                                    PART I

Item 1.  Business

     Gibson   Greetings,   Inc.   and   its  wholly-owned  and  majority-owned
subsidiaries  (the  "Company")  operate  in  a  single industry segment -- the
design, manufacture and  sale of everyday  and seasonal greeting  cards, paper
partywares, gift wrap and accessories and related specialty products.

     During 1991,  the Company  formed Gibson  Greeting International  Limited
("Gibson  International"),  a  Delaware  corporation.    Gibson  International
markets  the  Company's  products  through  both  independent and large retail
customers in the  United Kingdom and  other European countries.   In 1993,  in
order to strengthen the Company's  position in the rapidly-growing party  area
of the  industry, the  Company acquired  The Paper  Factory of Wisconsin, Inc.
("The Paper  Factory").   The Paper  Factory operates  retail stores under the
names  of  The  Paper  Factory,  Greetings  N'  More  and  Great Party located
primarily in manufacturers' outlet shopping centers.

     In  mid-November  1995,  the  Company  sold  Cleo,  Inc.    ("Cleo"), its
wholly-owned  gift  wrap  subsidiary,  to  CSS  Industries, Inc.  ("CSS").  In
addition to gift wrap and  related products, Cleo manufactured and  sold boxed
Christmas  cards  and  Valentines.    Net  sales  by  Cleo  included  in   the
consolidated financial statements for each of the two years ended December 31,
1995 were $151.9 million and $189.3 million, respectively.

     In view of the  poor economic conditions and  devaluation of the peso  in
Mexico, the Company liquidated its investment in Gibson de Mexico S.A. de C.V.
("Gibson de Mexico"), a majority-owned subsidiary, during 1996 resulting in  a
loss on liquidation of $2.1 million and an income tax benefit of $3.7  million
for a net increase in net income of $1.6million or $.10 per share.


Products

     The Company's major products are extensive lines of greeting cards  (both
everyday  and  seasonal).    Everyday  cards  are  categorized as conventional
greeting cards and  alternative market cards.   Seasonal cards  are devoted to
holiday seasons, which  include, in declining  order of net  sales, Christmas,
Valentine's  Day,   Mother's  Day,   Easter,  Father's   Day,  Graduation  and
Thanksgiving.  In 1996, approximately 68%  of net sales of cards were  derived
from everyday cards and approximately 32% from seasonal cards.  The  Company's
products also include  paper partywares, gift  wrap, candles, calendars,  gift
items and holiday decorations.   The following table sets forth,  in thousands
of dollars for  the years indicated,  the Company's net  sales attributable to
each of  the principal  classes of  the Company's  products(certain prior year
amounts have been reclassified to conform to the 1996 presentation):










                                     -3-
PAGE
<PAGE>
<TABLE>
<CAPTION>
                                     Years Ended December 31,
                            ---------------------------------------------
                                        Pro Forma
                                        ---------
                              1996        1995        1995*       1994*
                            --------    --------    --------    --------
     <S>                    <C>         <C>         <C>         <C>
     Greeting cards         $227,512    $237,160    $255,192    $250,891
     Partywares               48,386      40,891      40,939      34,282
     Gift wrap                42,812      45,194     172,893     202,439
     Other products           70,711      64,968      71,121      60,430
                            --------    --------    --------    --------
       Total net sales      $389,421    $388,213    $540,145    $548,042
                            ========    ========    ========    ========
</TABLE>
[FN]
     * Includes Cleo, Inc. which was sold effective November 15, 1995.

     Many  of  the  Company's  products  incorporate  well-known   proprietary
characters.    Net  sales  associated  with  licensed properties accounted for
approximately 13% of overall 1996 net sales.  The Company believes it benefits
from the  publication of  cartoon strips,  television programming, advertising
and other promotional activities by the creators of such licensed  characters.
The  Company  also  has  developed  proprietary  properties  of  its own.  See
"Trademarks, Copyrights and Licenses."

     Approximately 6% of the Company's  revenues in 1996 were attributable  to
sales and royalty income from foreign sources.


Sales and Marketing

     The  Company's  products  are  sold  in  more  than 25,000 retail outlets
worldwide.  The Company's current products are sold primarily under the Gibson
brand name and  are primarily distributed  to supermarkets, deep  discounters,
mass merchandisers, card  and specialty shops  and variety stores.   To market
effectively through these outlets, the Company has developed specific  product
programs and new product lines  and introduced new in-store displays.   During
1996, the Company's five largest customers accounted for approximately 32%  of
the Company's  net sales  and one  customer, Winn-Dixie  Stores, accounted for
more than 10% of the Company's net sales.

     The Company's  products are  usually stocked  in a  department where only
these products are displayed.  Product displays are expressly designed for the
presentation of greeting cards, gift wrap, paper partywares, candles and other
products.  The Company also supplies corrugated displays for seasonal  product
specialties.  The Company's method of selling greeting cards requires frequent
and  attentive  merchandising  service  and  fast  delivery  of reorders.  The
Company employs a direct field sales  force that regularly visits most of  the
Company's customers, supported by  a larger, nationwide merchandising  service
force.  In  order to properly  display and service  these products, a  sizable
initial investment is made in  store display fixtures, sometimes totaling  300
linear feet, and in the hiring and training of service associates.


                                     -4-
PAGE
<PAGE>
     Consistent with general industry  practice, the Company has  entered into
long-term sales  agreements with  certain retailers.   These  sales agreements
typically have terms ranging from three to five years, and generally specify a
minimum  sales  volume  commitment.    In  certain  of these sales agreements,
negotiated  cash  payments  or  credits  constitute  advance discounts against
future sales.  These payments  are capitalized and amortized over  the initial
term of the sales agreement.  The Company currently has sales agreements  with
a number of customers including four of its top five customers.

     It is characteristic of the  Company's business and of the  industry that
accounts receivable for seasonal  merchandise are carried for  relatively long
periods,  in  some  cases  as  long  as  six  months.  Consistent with general
industry practice, the Company allows  customers to return for credit  certain
seasonal greeting cards.


Design and Production

     The  Company  maintains  an  extensive  world-wide  free-lance pool and a
full-time staff of  artists, writers, art  directors and creative  planners at
the Company's headquarters who design the majority of the Company's  products.
Design  of  everyday  products  begins  approximately  9  months in advance of
shipment.  The Company's seasonal greeting cards and other items are  designed
and printed over longer periods  than the everyday cards.   Designing seasonal
products begins approximately 14 months  before the holiday date and  seasonal
designs go into production about 8 months before the holiday date.

     Most  of  the  Company's  products  are  printed  and  finished  at   its
Cincinnati,  Ohio  facility  and  then  sent  to  its  facilities  in Berea or
Covington, Kentucky for shipment directly to retail stores.  The Company  also
purchases for resale certain finished and semi-finished products, such as gift
items, from both domestic and foreign sources.

     The Company believes  that adequate quantities  of raw materials  used in
its business are and will continue to be available from many suppliers.  Paper
and other raw  materials are the  most significant component  of the Company's
product cost structure.


Competition

     The greeting card industry is highly competitive.  Based upon its general
knowledge of the industry and  the limited public information available  about
its competitors,  the Company  believes it  is the  third largest  producer of
greeting cards in the United States.  The Company's principal competitors  are
Hallmark Cards, Inc. and American Greetings Corporation, which are predominant
in the industry.  The  Company's competitors have greater financial  and other
resources than the Company.

     The Company believes that the principal areas of competition with respect
to its products are quality, design,  service to the retail outlet, price  and
terms, which may  include payments and  other concessions to  retail customers
under long-term sales agreements, and that  it is competitive in all of  these
areas.  See "Sales and Marketing."



                                     -5-
PAGE
<PAGE>
Trademarks, Copyrights and Licenses

     The Company currently has approximately 40 registrations of trademarks in
the United States and approximately 70 registrations of trademarks in  foreign
countries.   Although the  Company does  not generally  register its  creative
artwork and editorial  text with the  U.S.  Copyright  Office, it does  obtain
certain copyright protection by printing notice of a claim of copyright on its
products.   The Company  also has  rights under  various license agreements to
incorporate  well-known  proprietary  characters  into  its  products.   These
licenses, most of which are exclusive, are generally for terms of one to  four
years and are subject to certain  renewal options.  There can be  no assurance
that the Company will be able to renew license agreements as to any particular
proprietary  character.    The  Company  believes  that  its  business  is not
dependent upon any individual trademark, copyright or license.


Employees

     As of  December 31,  1996 and  1995, the  Company employed  approximately
2,300 and 2,500 persons on a  full-time basis, respectively.  In addition,  as
of December 31,  1996 and 1995,  the Company employed  approximately 7,400 and
7,100 persons on a part-time basis, respectively.



































                                     -6-
PAGE
<PAGE>
Environmental Issues

     The Company,  over the  past decade,  has taken  a proactive  approach to
environmental concerns.   In early 1990,  the Gibson Card  Division (the "Card
Division") converted its card  and related products production  to water-based
inks.    Previously,  the  Card  Division  had  its  Cincinnati-produced waste
solvents incinerated.  All but  one underground storage tank on  Company owned
and  leased  premises  were  removed  in  or  before  1988.  In 1990, the last
underground  storage  tank,  which  had  contained isopropyl alcohol, was also
removed in accordance  with governmental closure  regulations.  The  Company's
policy is to consult with  professional firms for environmental audits  before
entering into  potential long-term  real estate  transactions.   Historically,
expenditures  associated  with  managing  and  limiting pollution or hazardous
substances,  as  well  as  expenditures  to  remediate previously contaminated
sites, have  not been  material to  the Company's  financial statements.   The
Company is aware of one contingent environmental liability as discussed below:


Kirk Heathcott Site - Dyer County, Tennessee

     In December 1993, the Company was advised by the Tennessee Department  of
Environment and  Conservation that  Cleo had  been identified  by the State of
Tennessee  as  a  potentially  liable  party  for  reimbursement  of Superfund
expenditures  made  by  the  State  for  site  identification,  investigation,
containment  and  clean-up,  including  monitoring and maintenance activities.
The Company has ascertained that the State's claim is based on a third party's
alleged disposal at the site, during the period 1972-1977, of waste  allegedly
generated at Cleo  facilities.  The  State issued an  Order to Cleo  and three
other parties dated February 6, 1996 requiring the respondents to  investigate
the extent of contamination and to remediate the property.  The State issued a
similar Order to the Company on May 1,  1996.  The May 1, 1996 order will  not
affect  the  Company's  exposure  in  this  matter  because  Gibson  agreed to
indemnify  Cleo  against  this  liability  under  the  terms  of the agreement
pursuant to which Cleo was sold to CSS.

     Based  on  an  informal  estimate  provided  by  State authorities and on
currently  available  information  concerning  the  size  and condition of the
property, management  does not  believe that  the outcome  of this matter will
result in a  material adverse effect  on the Company's  total net worth,  cash
flows  or  operating  results.    The  Company  has  identified  two insurance
companies that issued policies to a predecessor company during the  applicable
time period.   These  companies have  been notified  of the  occurrence.   The
Company believes that  this insurance may  provide coverage for  the potential
liability of Cleo and/or  the Company at this  site.  The insurance  companies
have neither confirmed nor denied the coverage at this time.












                                     -7-
PAGE
<PAGE>
Item 2. Properties

     The  following  is  a  summary  of the Company's principal manufacturing,
distribution and administrative facilities:
<TABLE>
<CAPTION>
                                                                Approximate
                                                                Floor Space
    Location                         Principal Use                (Sq Ft)
--------------------    -------------------------------------   -----------
<S>                     <S>                                      <C>
Cincinnati, Ohio        Corporate headquarters, manufacturing
                            and administration                     593,700

Berea, Kentucky         Manufacturing and distribution             597,100

Telford, England        Manufacturing, distribution and
                            administration                          58,800

Covington, Kentucky     Manufacturing and distribution             293,000

Florence, Kentucky      Manufacturing and distribution             110,700

Neenah, Wisconsin       Distribution                                50,000

Ranch Cucamonga,
   California           Distribution                                40,200
                                                                 ---------
                                    Total                        1,743,500
                                                                 =========
</TABLE>
     The first  two facilities  listed above  are currently  leased for a term
expiring in  2013.   The Company  has the  right to  renew the  lease for  one
additional period of ten  years.  The Company  also has an option  to purchase
these facilities in 2005 (and again in  2010) at the fair market value of  the
properties  at  these  dates.    For  accounting purposes, this lease has been
treated as  a capital  lease.   See Notes  6 and  11 of  Notes to Consolidated
Financial Statements set forth in Item 8 below.

     The Telford, England and Covington, Kentucky facilities are owned by  the
Company.    The  Covington,  Kentucky  facility  has been financed principally
through tax-exempt debt and is pledged  to secure the repayment of such  debt.
See Note 6 of Notes to  Consolidated Financial Statements set forth in  Item 8
below.

     The Florence, Kentucky facility, and the facilities at Neenah,  Wisconsin
and Rancho Cucamonga,  California are leased.   The Company  also leases sales
offices, other manufacturing, distribution and administrative facilities  and,
on a temporary basis, uses warehouse space in various locations throughout the
United States.   The Paper Factory  leases approximately 190  stores averaging
approximately 3,000 to 4,000 square feet  per store.  Certain of these  leases
contain contingent payments based upon individual store sales.  Leases for all
such facilities expire at various dates through 2006.  See Note 11 of Notes to
Consolidated Financial Statements set forth in Item 8 below.



                                     -8-
PAGE
<PAGE>
     The Company  believes that  its facilities  are adequate  for its present
needs  and  that  its  properties,  including  machinery  and  equipment,  are
generally in good condition, well  maintained and suitable for their  intended
uses.


Item 3.  Legal Proceedings

     In  July  1994,  immediately  following  the Company's announcement of an
inventory misstatement  at Cleo,  which resulted  in an  overstatement of  the
Company's previously  reported 1993  consolidated net  income, five  purported
class  actions  were  commenced  by  certain  stockholders.   These suits were
consolidated and  a Consolidated  Amended Class  Action Complaint  against the
Company, its then  Chairman, President and  Chief Executive Officer,  its then
Chief Financial Officer and the  former President and Chief Executive  Officer
of Cleo was filed in October 1994 in the United States District Court for  the
Southern District  of Ohio  (In Re  Gibson Securities  Litigation).  In August
1996 the  Court reconsidered  its prior  rulings and  certified the  case as a
class  action.    The  latest  Complaint  alleges  violations  of  the federal
securities  laws  and  seeks  unspecified  damages  for  an  asserted   public
disclosure of false information regarding the Company's earnings.  The Company
intends to defend the  suit vigorously and has  filed a motion to  dismiss the
latest complaint and  a Third Party  Complaint against its  former auditor for
contribution against any judgment adverse to the Company.  The case  currently
is scheduled to be tried in June 1997.

     The Company  presently is  unable to  predict the  effect of the ultimate
resolution  of  the  matter  described  above  upon  the  Company's results of
operations  and  cash  flows;  as  of  this date, however, Management does not
expect that such resolution would result in a material adverse effect upon the
Company's total net worth, although a substantially unfavorable outcome  could
be material to such net worth.

     On April  10, 1995,  two purported  class action  lawsuits were commenced
against the Company, its then Chairman, President and Chief Executive  Officer
and its then Chief Financial Officer  in the United States District Court  for
the  Southern  District  of  Ohio.    The Complaints alleged violations of the
federal securities law for an asserted failure to disclose allegedly  material
information regarding the Company's  financial performance.  The  two lawsuits
were consolidated and captioned  In Re Gibson Greetings  Securities Litigation
II.  This litigation has been concluded through the creation of a $1.6 million
settlement fund, most of which is covered by insurance.















                                     -9-
PAGE
<PAGE>
     On March  6, 1996,  two purported  class actions  were filed  against the
Company's directors (as well as  certain former directors) and the  Company in
the New Castle County, Delaware Court of Chancery (Crandon Capital Partners v.
Cooney, et al. and Weiss v. Lindberg, et al.).  The Complaints allege that the
individual defendants  breached their  fiduciary duties  to the  plaintiffs by
refusing to negotiate in response  to an acquisition proposal for  the Company
by  American  Greetings  Corporation.    The  Complaints  seek  to require the
directors to do a number  of things, including pursuing merger  or acquisition
discussions with  American Greetings  and others.   The  Complaints also  seek
unspecified  damages  against  those  directors.    On March 20, 1996, a third
action, Krim, et al. v. Pezzillo, et al., was filed in the same court.   While
it generally follows the allegations and demands of the other two  Complaints,
it  specifically  seeks  injunctive   relief  against  the  exercise   of  the
shareholder  rights  plan  that  has  been  a  part of the Company's corporate
governance for nearly ten  years.  While the  Company is a named  defendant in
all three actions, none of the  Complaints appears to seek any other  specific
relief  against  the  Company.    The  defendants  intend  to defend the suits
vigorously.

     In  addition,  the  Company  is  a  defendant  in  certain  other routine
litigation which is not expected to result in a material adverse effect on the
Company's net worth, total cash flows or operating results.


Item 4.  Submission of Matters to a Vote of Security Holders

     Not applicable.

Executive Officers of the Registrant

     See Item 10.  Directors and Executive Officers of the Registrant.


























                                     -10-
PAGE
<PAGE>
                                   PART II

Item  5.  Market  for  the  Registrant's  Common Stock and Related Stockholder
Matters

     The  Company's  debt  agreements  contain  certain  covenants   including
limitations on  dividends based  on a  formula related  to net  income (loss),
stock sales  and certain  restricted investments.   At  December 31, 1996, the
amount of  unrestricted retained  earnings available  for dividends  was $16.0
million, which includes a waiver in effect until June 1, 1997 on $7.0 million.
At December 31, 1995, primarily  as a result of the  loss on the sale of  Cleo
(see Note 13 of Notes to Consolidated Financial Statements set forth in Item 8
below), there were no unrestricted retained earnings available for  dividends.
No dividends  were declared  in or  paid in  either 1996  or 1995.  There were
approximately 7,800 beneficial owners of  the Company's common stock on  March
7, 1997.

     The following table presents  certain quarterly market price  information
for the years ended December 31, 1996 and 1995:

<TABLE>
<CAPTION>
                       First      Second       Third      Fourth
                      Quarter     Quarter     Quarter     Quarter       Year
                      --------    --------    --------    --------    --------
<S>                   <C>         <C>         <C>         <C>         <C>
1996
-------------------
Market price of
  common stock (1):
        Low           $13 3/8     $13 1/8     $11 3/4     $14         $11 3/4
        High           16 7/8      14 3/4      14 3/4      20 1/4      20 1/4

1995
-------------------
Market price of
   common stock (1):
        Low           $ 8 1/16    $ 9 3/8     $12 1/2     $13 1/4     $ 8 1/16
        High           15 3/32     14 1/8      15 1/2      16          16

</TABLE>
[FN]
        (1)  Per share prices are based on the closing price as quoted
             in the Nasdaq National Market.













                                     -11-
PAGE
<PAGE>
Item 6.  Selected Financial Data

     The following summaries set forth selected financial data for the Company
for each of the  five years in the  period ended December 31,  1996.  Selected
financial data should be read  in conjunction with the Consolidated  Financial
Statements set forth in Item 8 below.

<TABLE>
<CAPTION>

Statement of Operations Data
(Dollars and shares in thousands except per share amounts)


                                    Years Ended December 31,
                    ----------------------------------------------------------
                      1996         1995         1994       1993(1)      1992
                    --------     --------     --------    --------    --------
<S>                 <C>          <C>          <C>         <C>         <C>
Revenues:
 Net sales          $389,421     $540,145     $548,042    $546,165    $484,118
 Royalty income          825          676          753         761       1,705
                    --------     --------     --------    --------    --------
  Total revenues     390,246      540,821      548,795     546,926     485,823
                    --------     --------     --------    --------    --------
 Cost of products
  sold               152,229      268,702      310,039     277,109     247,340
 Selling,
  distribution and
  administrative
  expenses           199,490      239,922      276,147     227,863     218,642
 Loss on sale of
  Cleo, Inc.              -        83,012           -           -           -
                    --------     --------     --------    --------    --------
 Operating income
  (loss)              38,527      (50,815)     (37,391)     41,954      19,841
 Interest expense      8,822       13,178       10,599       7,737       7,803
 Interest income      (3,364)        (915)        (765)       (949)     (1,023)
 (Gain) loss on
  derivative
  transactions/
  settlement, net         -            -        (1,641)      5,689          -
                    --------     --------     --------    --------    --------
 Income (loss) before
  income taxes and
  cumulative effect
  of accounting
  changes             33,069      (63,078)     (45,584)     29,477      13,061
 Income taxes         11,107      (16,589)     (16,981)     14,209       5,076
                    --------     --------     --------    --------    --------
 Income (loss) before
  cumulative effect
  of accounting
  changes             21,962      (46,489)     (28,603)     15,268       7,985



                                     -12-
PAGE
<PAGE>
 Cumulative effect
  of accounting
  changes                 -            -            -           -       (1,449)
                    --------     --------     --------    --------    --------
 Net income (loss)  $ 21,962     $(46,489)    $(28,603)   $ 15,268    $  6,536
                    ========     ========     ========    ========    ========
 Income (loss)
  per share
  before cumulative
  effect of
  accounting
  changes           $   1.34     $  (2.86)    $  (1.77)   $   0.95    $   0.50
                    --------     --------     --------    --------    --------
 Net income (loss)
  per share         $   1.34     $  (2.86)    $  (1.77)   $   0.95    $   0.41
                    ========     ========     ========    ========    ========
 Dividends
  per share         $     -      $     -      $   0.40    $   0.40    $   0.39
                    ========     ========     ========    ========    ========
 Average common
  shares and
  equivalents         16,448       16,243       16,130      16,103      16,104
                    ========     ========     ========    ========    ========
</TABLE>

































                                     -13-
PAGE
<PAGE>
<TABLE>
<CAPTION>
Other Financial Data
(Dollars in thousands except per share amounts)

                                          December 31,
                    ----------------------------------------------------------
                      1996         1995         1994        1993        1992
                    --------     --------     --------    --------    --------
<S>                 <C>          <C>          <C>         <C>         <C>
Working capital     $134,628     $106,284     $151,128    $209,209    $224,261
Plant and
 equipment, net       92,649       90,813      119,491     116,900     112,712
Total assets         451,559      425,827      612,195     572,459     501,104
Debt due within
 one year (2)          7,901       28,894      117,114      66,187      31,911
Long-term debt        40,898       46,533       63,233      74,365      70,175
Stockholders'
 equity              256,316      230,242      277,500     313,097     303,341
Equity per share       15.81        14.31        17.24       19.50       18.92
Capital
 expenditures         26,507       19,872       35,396      31,049      30,970
</TABLE>
[FN]
     (1) The full year results for 1993 have been restated to correct the Cleo
inventory  overstatement  and  to  record  unrealized net losses on derivative
transactions.   The Cleo  inventory restatement  reduced income  before income
taxes for 1993 by $8,806.  The derivatives' net impact on income before income
taxes was  a reduction  of $5,689  for 1993.   The  aggregate effect  of these
changes was  to reduce  net income  by $10,584,  and to  reduce net income per
share by $.66.

     (2) Includes  the current  portion of  long-term debt  which consisted of
$7,901 in 1996, $9,894 in 1995, $11,164 in 1994, $3,917 in 1993, and $1,811 in
1992.






















                                     -14-
PAGE
<PAGE>
Item 7. Management's Discussion  and Analysis of Financial  Condition and
        Results of Operations


Results of Operations

     Effective August 31, 1996, the Company liquidated its Mexican  subsidiary
resulting in a one-time charge of $2.1 million and related income tax  benefit
of  $3.7  million.    The  net  effect  of the liquidation of Gibson de Mexico
increased net income by $1.6 million or $.10 per share.

     In mid-November 1995, the Company  sold Cleo, its wholly-owned gift  wrap
subsidiary.  In addition to gift wrap and related products, Cleo  manufactured
and sold Christmas cards and Valentines.  Net revenues by Cleo included in the
consolidated financial statements for each of the two years ended December 31,
1995 were  $151.9 million  and $189.4  million, respectively.   The results of
operations for 1995 include Cleo's  results of operations through the  date of
sale and reflect  the loss on  the sale of  Cleo of $54.5  million, net of tax
benefit of  $28.5 million.   For  comparative purposes,  the discussion  below
presents results of operations for the  year ended December 31, 1995 on  a pro
forma basis, excluding Cleo, as well as  on an historical basis.  See Note  14
of Notes to Consolidated  Financial Statements set forth  in Item 8 below  for
certain comparative pro forma and historical data for 1995.


Results of Operations  -  Year Ended December 31, 1996 Compared With Pro Forma
Year Ended December 31, 1995

     Revenues in 1996  increased .4% to  $390.2 million compared  to pro forma
revenues of $388.9 million in 1995.  The increase was largely attributable  to
continued  sales  growth  at  The  Paper  Factory, reflecting increased retail
locations, and Gibson International.  This increase was partially offset by  a
decline  in  the  Card  Division's  greeting  card  sales  reflecting a volume
decrease due in  part to the  loss of certain  customers combined with  higher
returns and allowances, partially offset by new rooftops and increased selling
prices.    Consistent  with  general  industry  practice,  the  Company allows
customers to return for credit  certain seasonal and everyday greeting  cards.
Also,  consistent  with  general  industry  practice,  the Company enters into
long-term  sales  agreements  with  certain  retailers,  some of which include
advance payments.  Returns and allowances  were 19.8% in 1996 compared to  pro
forma returns and allowances of 18.2% in 1995.  The increase in 1996  reflects
an increase in everyday returns  and customer allowances slightly offset  by a
decrease in seasonal returns.














                                     -15-
PAGE
<PAGE>
     Total operating expenses were $351.7  million or 90.1% of total  revenues
in 1996 compared to pro forma operating expenses of $350.4 million or 90.1% in
1995.  Cost of products sold was  39.0% of total revenues in 1996 compared  to
pro forma cost of products sold of 38.2% in 1995.  The increase was  primarily
due to a change  in product mix and  higher returns and allowances,  partially
offset  by  an  increase  in  selling  prices.    Selling,  distribution   and
administrative expenses were 51.1% of  total revenues in 1996 compared  to pro
forma selling, distribution and administrative expenses of 51.9% in 1995.  The
decrease in  1996 expenses,  as a  percentage of  total revenues,  reflected a
decline in selling and marketing expenses and reduced bad debt expense at  the
Card Division, and a foreign exchange gain at Gibson International,  partially
offset by increased expenses in  connection with various legal and  employment
matters, increased expenses at The  Paper Factory to support increased  retail
locations and a loss  on the liquidation of  Gibson de Mexico.   Excluding the
charge for Gibson de Mexico, selling, distribution and administrative expenses
as a percent of revenues would have been 50.6%.

     Income before  income taxes,  including the  loss on  the liquidation  of
Gibson de  Mexico, was  $33.1 million  in 1996  compared to  pro forma  income
before income taxes of $29.9 million  in 1995.  The effective income  tax rate
for 1996, excluding the pretax charge  of $2.1 million and related income  tax
benefit of  $3.7 million  on the  liquidation of  Gibson de  Mexico, was 42.0%
compared to the  pro forma effective  income tax rate  of 45.5% in  1995.  See
Notes 1 and 7 of Notes to Consolidated Financial Statements set forth in  Item
8 below.

     Net income was $22.0 million in 1996 compared to pro forma net income  of
$16.3 million in 1995.  The net effect of the liquidation of Gibson de  Mexico
increased net income $1.6 million or $.10 per share.


Results of Operations  - Year Ended December 31, 1996 Compared With Year Ended
December 31, 1995

     Revenues  in  1996  decreased  27.8%  to  $390.2 million from revenues of
$540.8 million in 1995 reflecting the reduction of revenue as a result of  the
sale  of  Cleo  and  a  decline  in  the  Card  Division's greeting card sales
reflecting a  volume decrease  due in  part to  the loss  of certain customers
combined  with  higher  returns  and  allowances.   This decline was partially
offset by new  rooftops, increased selling  prices, sales growth  at The Paper
Factory  reflecting  increased  retail  locations  and increased international
greeting card sales.   Returns and allowances were  19.8% in 1996 compared  to
14.4% in 1995.  The increase in 1996 reflects an increase in everyday  returns
and customer allowances, and the reduction in revenue as a result of the  sale
of Cleo slightly offset by a decrease in seasonal returns.

     Total operating expenses were $351.7  million or 90.1% of total  revenues
in 1996 compared to  operating expenses of $591.6  million or 109.4% of  total
revenues in 1995.  Cost of products  sold was 39.0% of total revenues in  1996
compared  to  cost  of  products  sold  of  49.7%  in  1995.  The decrease was
primarily due to the sale of Cleo which resulted in a change in the  Company's
product  mix  which  is  now  composed  of  higher  margin products.  Selling,
distribution and administrative expenses were 51.1% of total revenues in  1996
compared to 44.4% in 1995.  The increase was due to the reduction of  revenues
as a result of the sale of Cleo, increased expenses in connection with various
legal and employment matters, and  increased expenses at The Paper  Factory to
support increased retail locations.
                                     -16-
PAGE
<PAGE>
     Income  before  income  taxes,  including  the  liquidation  of Gibson de
Mexico, was $33.1 million  in 1996 compared to  a loss before income  taxes of
$63.1 million in 1995.  The effective income tax rate for 1996, excluding  the
pretax charge of $2.1 million and  related income tax benefit of $3.7  million
on the liquidation of  Gibson de Mexico, was  42.0% compared to the  effective
income tax rate of 26.3% in 1995.  See Notes 1 and 7 of Notes to  Consolidated
Financial Statements set forth in Item 8 below.

     Net income  was $22.0  million in  1996 compared  to a  net loss of $46.5
million  in  1995.    The  net  effect  of the liquidation of Gibson de Mexico
increased net income $1.6 million or $.10 per share.


Pro Forma Results of Operations - Year  Ended December 31, 1995 Compared With
Year Ended December 31, 1994

     Pro forma revenues increased 8.2% to $388.9 million compared to pro forma
revenues of $359.4 million  in 1994.  The  increase in pro forma  revenues was
largely attributable to  increased revenues at  the Card Division,  reflecting
increased average selling prices partially offset by a modest decline in units
sold.  Additionally,  revenues at The  Paper Factory and  Gibson International
increased  in  1995.    Pro  forma  returns  and allowances were 18.2% in 1995
compared to  22.7% in  1994.   The decrease  in 1995  reflected a  decrease in
customer  allowances,  seasonal  and  everyday  returns  and  long-term  sales
agreement amortization.  In 1994, $6.3 million of unamortized long-term  sales
agreements  were  charged  to  returns  and  allowances  as  a  result  of the
bankruptcy  of  F&M  Distributors  ("F&M").    There  were  no similar charges
incurred in 1995.  Pro forma  royalty income of $.7 million was  comparable to
1994.

     Total pro forma operating expenses were $350.4 million or 90.1% of  total
pro forma revenues in 1995 compared to $371.2 million or 103.3% in 1994.   Pro
forma cost  of products  sold was  38.2% of  total pro  forma revenues in 1995
compared to 41.6% in  1994.  The decrease  in 1995 compared to  1994 reflected
lower average unit cost.  Paper  price increases were offset by a  combination
of  supply  commitments,  increased   product  selling  prices  and   improved
productivity.   Pro forma  selling, distribution  and administrative  expenses
were 51.9% of total revenues in 1995 compared to 61.7% in 1994.  The  decrease
in 1995  pro forma  expenses, as  a percentage  of total  pro forma  revenues,
reflected  the  positive  results  from  the  implementation  of  cost cutting
measures and other initiatives at the  end of 1994.  Decreases were  reflected
in lower  selling and  marketing costs  ($15.2 million),  transportation costs
($1.7 million), and shipping costs ($.9 million) as well as a decrease in  bad
debts expense ($6.0  million).  Additionally,  the pro forma  expenses in 1994
included  the  write-off  of  trade  receivables  and  fixtures due to the F&M
bankruptcy as well as workforce reduction costs at the Card Division  totaling
$11.6 million.  There were  no similar charges in 1995.   In view of the  poor
economic  conditions  and  devaluation  of  the  peso  in  Mexico, the Company
recorded a full reserve against  its Mexican subsidiary totaling $2.0  million
during the fourth quarter of 1995.

     Pro forma financing and derivative transaction expenses were $8.6 million
in 1995 compared to $4.8 million in 1994.  Included in 1994 pro forma expenses
was a derivative gain of $1.6 million.



                                     -17-
PAGE
<PAGE>
     Pro forma income before income  taxes was $29.9 million in  1995 compared
to a pro  forma loss of  $16.6 million in  1994 while the  pro forma effective
income tax rate for 1995 was 45.5% compared to 41.7% in 1994.  See Notes 1 and
7 of Notes to Consolidated Financial Statements set forth in Item 8 below.

     Pro forma net income  was $16.3 million in  1995 compared to a  pro forma
net loss of $9.7 million in 1994.


Results of Operations - Year  Ended December 31, 1995 Compared With Year Ended
December 31, 1994

     Revenues decreased 1.5% to $540.8  million compared to $548.8 million  in
1995.    The  decrease  was  principally  attributable  to  Cleo's  results of
operations through November 14, 1995 partially offset by increases in revenues
at the Card Division, The Paper Factory and Gibson International.  Returns and
allowances were 14.4% in 1995 compared to 17.3% in 1994.  The decline reflects
a decrease in customer allowances, seasonal and everyday returns and long-term
sales agreement amortization.  In 1994, $6.3 million of unamortized  long-term
sales agreements were  charged to returns  and allowances as  a result of  the
bankruptcy of F&M.  There were no similar charges incurred in 1995.

     Total operating expenses were $591.6 million or 109.4% of total  revenues
in  1995  compared  to  $586.2  million  or  106.8%  in 1994.  Total operating
expenses for 1995 include the pretax loss on the sale of Cleo of $83.0 million
($54.5 million net of tax benefit).  Cost of products sold was 49.7% of  total
revenues in 1995 compared to 56.5% in 1994.  The decrease in 1995 compared  to
1994 was  primarily due  to a  one-time charge  in 1994  of approximately $8.0
million as a result of extensive  review of inventory at Cleo.   Additionally,
the  decrease  reflected  lower  average  unit  cost  of  product  at the Card
Division.   Selling, distribution  and administrative  expenses were  44.4% of
total revenues in  1995 compared to  50.3% in 1994.   The decline  in the 1995
expenses, as a  percentage of total  revenues, reflected the  positive results
from the implementation of cost cutting measures and other initiatives at  the
end of 1994.   Decreases are  reflected in lower  selling and marketing  costs
($19.6 million),  transportation costs  ($7.1 million),  shipping costs  ($5.9
million) and pension expense ($1.3 million).  These were slightly offset by an
increase in administrative expenses ($3.3 million).  Bad debt expense in  1995
decreased $7.3  million.   Bad debt  expense in  1994 included  a write-off of
trade receivables of  $7.3 million due  to the F&M  bankruptcy.  Additionally,
the write-off  of fixtures  of $2.6  million due  to the  F&M bankruptcy,  and
workforce reduction costs of $1.7 million at the Card Division were  reflected
as one-time charges  in selling, distribution  and administrative expenses  in
1994.  In view of the poor economic conditions and devaluation of the peso  in
Mexico, the  Company recorded  a full  reserve against  its Mexican subsidiary
totaling $2.0 million during the fourth quarter of 1995.

     The Company adopted Statement of Financial Accounting Standards  ("SFAS")
No.  121  -  "Accounting  for  the  Impairment  of  Long-Lived  Assets and for
Long-Lived Assets to be  Disposed Of " for  the year ended December  31, 1995.
The effect  of the  adoption of  this standard  on the  consolidated financial
statements was not material.





                                     -18-
PAGE
<PAGE>
     Financing and derivative transaction expenses were $12.3 million in  1995
compared to $8.2 million in 1994.  Included in 1994 expenses was a  derivative
gain of $1.6 million.

     Loss before income taxes was $63.1 million in 1995 compared to a loss  of
$45.6 million in 1994 while the  effective income tax rate for 1995  was 26.3%
compared  to  37.2%  in  1994.    See  Notes  1 and 7 of Notes to Consolidated
Financial Statements set forth in Item 8 below.

     Net  loss  was  $46.5  million  in  1995  compared to a net loss of $28.6
million in  1994.   The 1995  net loss  includes an  after-tax charge of $54.5
million related to the sale of Cleo.


Liquidity and Capital Resources

     Cash flows  from operating  activities for  1996 increased  $62.1 million
from 1995 to $107.2 million, compared to an increase of $51.6 million in  1995
from 1994 and a decrease of $38.0 million in 1994 from 1993.  The increase  in
1996 was primarily the result of improved cash flow from on-going  operations,
tax benefits  associated with  the loss  on the  sale of  Cleo and  lower cash
requirements for sales agreement payments.   The reduction in the use of  cash
for other assets  reflects a decrease  in the number  of new sales  agreements
while the reduction in  the use of cash  for other liabilities reflects  fewer
payments to customers under sales agreements.

Cash used in  investing activities for  plant and equipment  purchases totaled
$26.5 million in 1996 compared to $19.9 million and $35.4 million in 1995  and
1994, respectively.  Reduced levels of spending in 1996 and 1995 for plant and
equipment purchases are the  result of the decision  to delay the purchase  of
certain machinery  for manufacturing  as well  as the  delay of  certain other
capital projects at the Card Division.   Plant and equipment purchases do  not
include assets  acquired under  capital lease  obligations.   During 1995, the
Company  renegotiated  its  long-term  lease  agreement  for  certain  of  its
principal facilities resulting in the recording of a capital lease.  See  Note
11 of Notes to  Consolidated Financial Statements set  forth in Item 8  below.
Cash provided by investing activities  in 1996 included the collection  of the
note receivable of $24.6 million for the sale of Cleo.

     Cash used in financing activities  in 1996 was $25.2 million  compared to
cash used in financing activities of $109.1 million in 1995 and cash  provided
by  financing  activities  of  $34.1  million  in  1994.  The 1996 decrease in
short-term borrowings resulted from the collection of the note receivable from
the sale of Cleo and from  improved cash flow from operations eliminating  the
need for  short-term financing.   The  1995 decrease  in short-term borrowings
resulted from the repayment of short-term debt with the proceeds from the sale
of Cleo as well as improved cash flow from operations resulting in a  decrease
in  the  need  for  short-term  financing.    The  1994 increase in short-term
borrowings  reflected  higher  working  capital  requirements  combined   with
payments under customer  sales agreements.   Long-term debt decreased  in 1996
reflecting current year debt payments.   Long-term debt payments increased  in
1995 primarily  reflecting the  partial redemption  of senior  notes with  the
proceeds from the sale of Cleo.   The decrease in 1994 reflected  current year
debt payments.



                                     -19-
PAGE
<PAGE>
     Management will seek to extend the existing revolving credit facility due
to expire in  late April 1997.   Management believes  that it will  be able to
extend this facility.  When consummated, Management expects that the  facility
will have a duration of 364 days and will provide for borrowings in an  amount
adequate  for  the  Company's  needs  over  the term of the facility.

     Capital  expenditures  for  1997  are  expected  to be comparable to 1996
levels.   At February  28, 1997,  the Company  held short-term  investments in
excess  of  normal  operating  cash  needs  of  approximately  $111.0 million.
Management believes  that its  cash flows  from operations  and credit sources
will provide adequate funds,  both on a short-term  and on a long-term  basis,
for currently foreseeable debt payments, lease commitments and payments  under
existing sales agreements, all of  which total approximately $11.1 million  to
$33.6 million  per year  for the  next five  years, as  well as  for financing
existing  operations,  currently  projected  capital expenditures, anticipated
long-term  sales  agreements  consistent  with  industry  practices  and other
contingencies.

     Management  does  not  believe   that  there  are  any   trends,  events,
commitments or uncertainties, except for previously disclosed items (see  Note
12 of Notes to Consolidated Financial  Statements set forth in Item 8  below),
and aside from normal  seasonal fluctuations and general  industry competitive
conditions, that should be expected to  have a material effect on the  results
of  operations,  financial  condition,  liquidity  or capital resources of the
Company.

     Except  for  the  historical  information  contained  herein, the matters
discussed in this annual  report are forward-looking statements  which involve
risks and uncertainties, including  but not limited to  economic, competitive,
governmental  and  technological  factors  affecting the Company's operations,
markets, products, services and prices.

     For   additional   financial   information   see  Consolidated  Financial
Statements and Notes to Consolidated Financial Statements set forth in Item  8
below.






















                                     -20-
PAGE
<PAGE>
Item 8.  Financial Statements and Supplementary Data
<TABLE>
<CAPTION>
Gibson Greetings, Inc.
Consolidated Statements of Operations
Years Ended December 31, 1996, 1995 and 1994
(Dollars in thousands except per share amounts)


                                           1996         1995         1994
                                         ---------    ---------    ---------
<S>                                      <C>          <C>          <C>
Revenues:
    Net sales                            $ 389,421    $ 540,145    $ 548,042
    Royalty income                             825          676          753
                                         ---------    ---------    ---------
        Total revenues                     390,246      540,821      548,795
                                         ---------    ---------    ---------
Costs and expenses:

  Operating expenses:

    Cost of products sold                  152,229      268,702      310,039
    Selling, distribution and
     administrative expenses               199,490      239,922      276,147
    Loss on sale of Cleo, Inc.                  -        83,012           -
                                         ---------    ---------    ---------
        Total operating expenses           351,719      591,636      586,186
                                         ---------    ---------    ---------

Operating income (loss)                     38,527      (50,815)     (37,391)
                                         ---------    ---------    ---------
   Financing expenses, net:

    Interest expense                         8,822       13,178       10,599
    Interest income                         (3,364)        (915)        (765)
    Gain on derivative
      transactions/settlement, net              -            -        (1,641)
                                         ---------    ---------    ---------

        Total financing expenses, net        5,458       12,263        8,193
                                         ---------    ---------    ---------
Income (loss) before income taxes           33,069      (63,078)     (45,584)

    Income tax provision (benefit)          11,107      (16,589)     (16,981)
                                         ---------    ---------     ---------
Net income (loss)                        $  21,962    $ (46,489)    $(28,603)
                                         =========    =========     =========

Net income (loss) per share              $    1.34    $   (2.86)    $  (1.77)
                                         =========    =========     =========

</TABLE>
[FN]

See accompanying notes to consolidated financial statements.

                                     -21-
PAGE
<PAGE>
<TABLE>
<CAPTION>
Gibson Greetings, Inc.
Consolidated Balance Sheets
December 31, 1996 and 1995
(Dollars in thousands except per share amounts)

                                                1996        1995
                                             ---------   ---------
<S>                                          <C>         <C>
Assets
Current assets:
    Cash and equivalents                     $  98,155   $  15,555
    Note receivable                                 -       24,574
    Trade receivables, net                      42,423      46,620
    Inventories                                 65,069      68,303
    Income taxes receivable                         -       10,698
    Prepaid expenses                             2,958       4,054
    Deferred income taxes                       44,598      45,011
                                             ---------   ---------
        Total current assets                   253,203     214,815

Plant and equipment, net                        92,649      90,813

Deferred income taxes                           16,592      14,745

Other assets, net                               89,115     105,454
                                             ---------   ---------
                                             $ 451,559   $ 425,827
                                             =========   =========
Liabilities and Stockholders' Equity

Current liabilities:
    Debt due within one year                 $   7,901   $  28,894
    Accounts payable                            13,420       7,995
    Income taxes payable                        15,816          -
    Other current liabilities                   81,438      71,642
                                             ---------   ---------
        Total current liabilities              118,575     108,531

Long-term debt                                  40,898      46,533

Sales agreement payments due
  after one year                                14,274      18,564

Other liabilities                               21,496      21,957
                                             ---------   ---------
        Total liabilities                      195,243     195,585
                                             ---------   ---------








                                     -22-
PAGE
<PAGE>
Commitments and contingencies
   (Notes 11 and 12)

Stockholders' Equity:

    Preferred stock, par value $1.00;
      5,000,000 shares authorized,
      none issued                                   -           -

    Preferred stock, Series A, par
      value $1.00; 300,000 shares
      authorized, none issued                       -           -

    Common stock, par value $.01;
      50,000,000 shares authorized,
      16,708,059 and 16,585,130
      shares issued, respectively                  167         166


    Paid-in capital                             47,474      46,041

    Retained earnings                          213,755     191,793

    Foreign currency translation
      adjustment                                   871      (1,807)
                                             ---------   ---------
                                               262,267     236,193
                                             ---------   ---------
    Less treasury stock, at cost,
      494,601 shares                             5,951       5,951
                                             ---------   ---------
        Total stockholders' equity             256,316     230,242
                                             ---------   ---------
                                             $ 451,559   $ 425,827
                                             =========   =========

</TABLE>
[FN]

See accompanying notes to consolidated financial statements.

















                                     -23-
PAGE
<PAGE>
<TABLE>
<CAPTION>
Gibson Greetings, Inc.
Consolidated Statements of Cash Flows
Years Ended December 31, 1996, 1995 and 1994
(Dollars in thousands)

                                            1996         1995         1994
                                         ---------    ---------    ---------
<S>                                      <C>          <C>          <C>
Cash flows from operating activities:
  Net income (loss)                      $  21,962    $ (46,489)   $ (28,603)
  Adjustments to reconcile net income
    (loss) to net cash provided by
    (used in) operating activities:
     Depreciation including write-down
       of display fixtures                  22,774       26,896       26,150
     (Gain) loss on disposal of plant
       and equipment                          (123)       5,492        5,957
     Loss on sale of Cleo, Inc.                 -        83,012           -
     Gain on derivative transactions/
       settlement, net                          -            -        (1,641)
     Deferred income taxes                  (1,434)      (2,901)     (19,205)
     Amortization of deferred costs
       and intangibles and write-
       down of deferred costs               24,121       23,590       31,155
     Change in assets and liabilities:
       (Increase) decrease in trade
          receivables, net                   4,197       17,820       (5,636)
       (Increase) decrease in inventories    3,234        2,821       (2,322)
       (Increase) decrease in income taxes
          receivable                        10,698      (10,698)          -
       (Increase) decrease in
          prepaid expenses                   1,096          221       (1,512)
       Increase in other assets,
          net of amortization               (7,782)     (27,260)     (47,102)
       Increase (decrease) in
          accounts payable                   5,425       (2,617)       2,944
       Increase (decrease) in
          income taxes payable              15,816       (4,742)      (8,329)
       Increase (decrease) in other
          current liabilities                9,796      (19,267)      26,511
       Increase (decrease)
          in other liabilities              (4,751)        (316)      16,053
     All other, net                          2,218         (379)        (850)
                                         ---------    ---------    ---------
         Total adjustments                  85,285       91,672       22,173
                                         ---------    ---------    ---------
       Net cash provided by (used in)
         operating activities              107,247       45,183       (6,430)
                                         ---------    ---------    ---------






                                     -24-
PAGE
<PAGE>
Cash flows from investing activities:
  Purchase of plant and equipment          (26,507)     (19,872)     (35,396)
  Proceeds from sale of
    plant and equipment                      2,480          926          289
  Proceeds from sale of Cleo, Inc.
    net of escrow amount                        -        96,437           -
  Collection of note receivable
    from sale of Cleo, Inc.                 24,574           -            -
                                         ---------    ---------    ---------
       Net cash provided by (used in)
         investing activities                  547       77,491      (35,107)
                                         ---------    ---------    ---------
Cash flows from financing activities:
  Net increase (decrease) in
    short-term borrowings                  (19,000)     (86,950)      43,680
  Payments on long-term debt                (7,628)     (22,207)      (3,917)
  Issuance of common stock                   1,434           49          784
  Acquisition of common stock
    for treasury                                -           (11)         (52)
  Dividends paid                                -            -        (6,435)
                                         ---------    ---------    ---------
       Net cash provided by (used in)
         financing activities              (25,194)    (109,119)      34,060
                                         ---------    ---------    ---------
Net increase (decrease) in
 cash and equivalents                       82,600       13,555       (7,477)

Cash and equivalents at beginning of year   15,555        2,000        9,477
                                         ---------    ---------    ---------
Cash and equivalents at end of year      $  98,155    $  15,555    $   2,000
                                         =========    =========    =========
Supplemental disclosure of
 cash flow information:
  Cash paid during the year for:
    Interest                             $   3,455    $  10,489    $   9,325
    Income taxes                           (13,973)       1,751       10,240

  Noncash investing and
   financing activities:
    Purchase of plant and equipment
      through capital lease obligation          -        19,160           -
    Note received in connection with
      the sale of Cleo, Inc.                    -        24,574           -

</TABLE>
[FN]

See accompanying notes to consolidated financial statements.









                                     -25-
PAGE
<PAGE>
<TABLE>
<CAPTION>
Gibson Greetings, Inc.
Consolidated Statements of Changes in Stockholders' Equity
Years Ended December 31, 1996, 1995 and 1994
(Dollars in thousands except per share amounts)


                                            1996         1995         1994
                                         ---------    ---------    ---------
<S>                                      <C>          <C>          <C>
Common stock, par value $.01:
    Balance at beginning of year         $     166    $     166    $     165
    Exercise of stock options                    1           -             1
                                         ---------    ---------    ---------
                                               167          166          166
                                         ---------    ---------    ---------
Paid-in capital:
    Balance at beginning of year            46,041       45,992       45,209
    Exercise of stock options                1,433           49          783
                                         ---------    ---------    ---------
                                            47,474       46,041       45,992
                                         ---------    ---------    ---------
Retained earnings:
    Balance at beginning of year           191,793      238,282      273,320
    Net income (loss)                       21,962      (46,489)     (28,603)
    Cash dividends paid ($.40
      per share in 1994)                        -            -        (6,435)
                                         ---------    ---------    ---------
                                           213,755      191,793      238,282
                                         ---------    ---------    ---------
Foreign currency translation adjustment:
    Balance at beginning of year            (1,807)      (1,000)         291
    Aggregate adjustments resulting from:
      Translation of financial statements
      into U.S. dollars                        513         (807)      (1,291)
      Liquidation of Gibson de Mexico
      S.A. de C.V.                           2,165           -            -
                                         ---------    ---------    ---------
                                               871       (1,807)      (1,000)
                                         ---------    ---------    ---------
Less treasury stock, at cost:
    Balance at beginning of year             5,951        5,940        5,888
    Common stock acquired                       -            11           52
                                         ---------    ---------    ---------
                                             5,951        5,951        5,940
                                         ---------    ---------    ---------
        Total stockholders' equity       $ 256,316    $ 230,242    $ 277,500
                                         =========    =========    =========

</TABLE>
[FN]
See accompanying notes to consolidated financial statements.




                                     -26-
PAGE
<PAGE>
                            Gibson Greetings, Inc.
                  Notes to Consolidated Financial Statements
                 Years Ended December 31, 1996, 1995, and 1994
                (Dollars in thousands except per share amounts)


Note 1--Nature of Business and Statement of Accounting Policies

Principles of consolidation

     The  consolidated  financial  statements  include  the accounts of Gibson
Greetings,  Inc.  and  its  wholly-owned  and majority-owned subsidiaries (the
Company).  All material intercompany transactions have been eliminated.


Nature of business

     The  Company  operates  in  a  single  industry  segment:    the  design,
manufacture and sale of greeting cards,  gift wrap and related products.   The
Company sells to customers in several channels of the retail trade principally
located in the  United States.   The Company recognizes  sales at the  time of
shipment from its  facilities.  Provisions  for sales returns  are recorded at
the time of the sale, based upon current conditions and the Company's historic
experience.

     Consistent with general industry  practice, the Company has  entered into
long-term sales  agreements with  certain retailers.   These  sales agreements
typically  have  terms  ranging  from  3  to  5 years, and generally specify a
minimum  sales  volume  commitment.    In  certain  of these sales agreements,
negotiated  cash  payments  or  credits  constitute  advance discounts against
future sales.  These payments  are capitalized and amortized over  the initial
term of the sales agreement.  In  the event of default by a retailer,  such as
bankruptcy  or  liquidation,  a  sales  agreement  may  be deemed impaired and
unamortized amounts  may be  charged against  operations immediately following
the  default.    The  Company  conducts  business  based  upon periodic credit
evaluations  of  its  customers'  financial  condition  and generally does not
require collateral.  The Company does not believe a concentration of  business
risk exists due  to the diversity  of channels of  distribution and geographic
location of  its retail  customers; however,  the Company  does believe it has
certain  risks  related  to  up-front  payments  on  long-term  customer sales
agreements.

     As further discussed in Note 13, the Company sold Cleo, Inc.  (Cleo), its
wholly-owned gift  wrap subsidiary,  to CSS  Industries, Inc.  in mid-November
1995.  In addition  to gift wrap and  related products, Cleo manufactured  and
sold boxed  Christmas cards  and Valentines.   In  view of  the poor  economic
conditions and devaluation of the  peso in Mexico, the Company  liquidated its
investment  in  Gibson  de  Mexico  S.A.  de  C.V.    (Gibson  de  Mexico),  a
majority-owned subsidiary, during 1996 resulting  in a loss on liquidation  of
$2,107 and an income tax benefit of $3,673 for a net increase in net income of
$1,566 or $.10 per share.

     One customer in 1996 accounted for approximately 16% of net sales.  Prior
to the sale of Cleo, one  customer in 1995 accounted for approximately  12% of
net sales; however, on a pro forma basis, without Cleo, the Company's  largest
customer  accounted  for  approximately  13%  of  net sales.  During 1994, the
Company's largest customer accounted for approximately 12% of net sales.
                                     -27-
PAGE
<PAGE>
Retail operations

     The Paper Factory of Wisconsin, Inc.  (The Paper Factory) operates retail
stores located primarily in manufacturers' outlet shopping centers.  The Paper
Factory offers broad product  assortments of nationally recognized  brand gift
wrap,  greeting  cards,  paper  decorations,  wedding supplies and other paper
products.


International operations

     Gibson Greetings International Limited (Gibson International) markets the
Company's  products  primarily  in  the  United  Kingdom  and  other  European
countries.  The  minority stockholders of  Gibson International are  principal
officers of Gibson International.

     The  activities  of  this  subsidiary  were  not material to consolidated
operations in 1996, 1995 and 1994.


Cash and equivalents

     Cash and equivalents are stated  at cost.  Cash equivalents  include time
deposits,  money  market  instruments  and  short-term  debt  obligations with
original maturities of three months or less.  The carrying amount approximates
fair value because of the short maturity of these instruments.


Inventories

     Inventories are  stated at  the lower  of cost  (first-in, first-out)  or
market.


Plant and equipment

     Plant and equipment are stated at cost.  Plant and equipment, except  for
leasehold improvements,  are depreciated  over their  related estimated useful
lives, using the straight-line  method.  Generally, buildings  are depreciated
over 40 years; machinery and equipment are depreciated over 3 to 11 years; and
display fixtures are  depreciated over 3  to 5 years.   Leasehold improvements
are amortized over the terms of the respective leases (see Note 11), using the
straight-line method.  Expenditures for maintenance and repairs are charged to
operations currently; renewals and betterments are capitalized.


Other assets

     Other  assets  include  deferred  and  prepaid  costs, goodwill and other
intangibles.  Deferred and prepaid costs principally represent costs  incurred
relating to long-term customer sales  agreements.  Deferred and prepaid  costs
are amortized  ratably over  the terms  of the  agreements, generally  3 to  5
years.




                                     -28-
PAGE
<PAGE>
     Goodwill, principally from the acquisition of The Paper Factory in  1993,
represents  the  excess  of  cost  over  fair  value  of  net assets acquired.
Goodwill and other intangibles are amortized over periods ranging from 3 to 20
years, using the straight-line  method.  Accumulated goodwill  amortization at
December  31,  1996  and  1995  was  $4,687  and  $4,367,  respectively.   The
realizability of goodwill and  other intangibles is evaluated  periodically as
events  or  circumstances  indicate  a  possible  inability  to  recover their
carrying amount.


Accounting for long-lived assets

     Impairment losses are  recorded on long-lived  assets used in  operations
when indicators  of impairment  are present  and the  undiscounted cash  flows
estimated to be generated by those  assets are less than the assets'  carrying
amount.  During 1996, the carrying value of certain long-term sales agreements
and related display fixtures  exceeded the fair value  of the assets based  on
current and estimated future cash flows.   The effect on the 1996  results was
not material.


Income taxes

     Deferred taxes are determined based  on the estimated future tax  effects
of differences  between the  financial statement  and tax  bases of assets and
liabilities given the  provisions of currently  enacted tax laws.   Investment
tax credits are amortized to income over the lives of the related assets.


Interest rate swap agreements

     The difference between the amount of  interest to be paid and the  amount
of  interest  to  be  received  under  interest rate swap agreements (used for
hedging purposes)  due to  changing interest  rates is  charged or credited to
interest expense  over the  life of  the agreements.


Computation of net income (loss) per share

     The computation of net income (loss) per share is based upon the weighted
average number of  shares of common  stock and equivalents  outstanding during
the  year:    16,447,993  shares  for  1996,  16,243,483  shares for 1995, and
16,130,140 shares for 1994.














                                     -29-
PAGE
<PAGE>
Restatements and reclassifications

     In  an  institution  and  settlement  of administrative proceedings dated
December  22,  1994  against  Bankers  Trust  (the  Bankers  Trust Order), the
Securities  and  Exchange  Commission  alleged  that  Bankers Trust misled the
Company about the value of  the Company's derivative positions.   During 1995,
the Company  restated the  accompanying 1994  year-end consolidated  financial
statements  to  reflect  derivative  values  based on Bankers Trust's computer
model as set forth in the Bankers Trust Order.  Such restatement resulted in a
$4,571 reduction in previously reported 1994 consolidated net loss or $.28 per
share.    This  restatement,  coupled  with  the  November 23, 1994 settlement
between the Company and Bankers Trust,  as discussed in Note 6, resulted  in a
net gain on derivative transactions and  settlement in 1994 of $1,641 or  $.06
per share as shown in the accompanying consolidated statements of operations.


Use of estimates

     The preparation of the financial statements in conformity with  generally
accepted  accounting  principles  requires  management  to  make estimates and
assumptions that  affect the  reported amounts  of assets  and liabilities and
disclosure of contingent assets and  liabilities at the date of  the financial
statements  and  the  reported  amounts  of  revenues  and expenses during the
reporting period.  Actual amounts could differ from those estimates.


Note 2--Trade Receivables

     Trade  receivables  at  December  31,  1996  and  1995,  consist  of  the
following:

<TABLE>
<CAPTION>
                                                1996        1995
                                             ---------   ---------
         <S>                                 <C>         <C>
         Trade receivables                   $ 101,712   $ 105,898
         Less reserve for returns,
          allowances, cash discounts
          and doubtful accounts                 59,289      59,278
                                             ---------   ---------
                                             $  42,423   $  46,620
                                             =========   =========

</TABLE>












                                     -30-
PAGE
<PAGE>
Note 3--Inventories

     Inventories at December 31, 1996 and 1995, consist of the following:

<TABLE>
<CAPTION>
                                                1996        1995
                                             ---------   ---------
        <S>                                  <C>         <C>
        Finished goods                       $  47,666   $  47,967
        Work-in-process                         11,710      12,409
        Raw materials and supplies               5,693       7,927
                                             ---------   ---------
                                             $  65,069   $  68,303
                                             =========   =========

</TABLE>


Note 4--Plant and Equipment

     Plant  and  equipment  at  December  31,  1996  and  1995, consist of the
following:

<TABLE>
<CAPTION>
                                                1996        1995
                                             ---------   ---------
        <S>                                  <C>         <C>
        Land and buildings                   $  32,155   $  32,800
        Machinery and equipment                 52,948      44,437
        Display fixtures                        81,480      83,784
        Leasehold improvements                  11,700      10,484
        Construction in progress                 3,257       1,598
                                             ---------   ---------
                                               181,540     173,103
        Less accumulated depreciation           88,891      82,290
                                             ---------   ---------
                                             $  92,649   $  90,813
                                             =========   =========
</TABLE>

     At December 31, 1996 and  1995, buildings included assets acquired  under
capital lease obligations of $19,135.  Accumulated depreciation on such assets
totaled $1,190 and $132 at December 31, 1996 and 1995, respectively.












                                     -31-
PAGE
<PAGE>
Note 5--Other Assets

     Other assets at December 31, 1996 and 1995, consist of the following:

<TABLE>
<CAPTION>
                                                1996        1995
                                             ---------   ---------
        <S>                                  <C>         <C>
        Deferred and prepaid costs           $ 131,656   $ 138,114
        Goodwill and other intangibles          26,160      27,148
                                             ---------   ---------
                                               157,816     165,262
        Less accumulated amortization           68,701      59,808
                                             ---------   ---------
                                             $  89,115   $ 105,454
                                             =========   =========

</TABLE>






































                                     -32-
PAGE
<PAGE>
Note 6--Debt

     Debt at December 31, 1996 and 1995, consists of the following:
<TABLE>
<CAPTION>
                                                1996        1995
                                             ---------   ---------
        <S>                                  <C>         <C>
        Debt due within one year:
        Current portion of long-term
          debt                               $   7,901   $   9,894
        Loans payable to banks
          under a revolving credit
          agreement bearing interest
          at a weighted average rate
          of 6.57% in 1995                   $      -    $  19,000
                                             ---------   ---------
                                             $   7,901   $  28,894
                                             =========   =========
        Long-term debt:
        Senior notes bearing interest
          at 9.33%, with annual serial
          maturities through 2001            $  25,714   $  30,857
        Notes payable to former
          shareholders of The Paper
          Factory bearing interest
          at 5.01%, payable in annual
          installments of $2,019                 2,019       4,037
        Industrial revenue bonds bearing
          interest at 9.25%, payable in
          semi-annual installments of $300,
          secured by plant and equipment
          with a carrying value of $8,664
          and $5,712 at December 31, 1996
          and 1995, respectively                 1,200       1,800
        Other notes bearing interest at a
          weighted average rate of 5.20%,
          payable in quarterly
          installments, secured by the
          same assets securing
          the industrial revenue bonds             441         573
                                             ---------   ---------
                                                29,374      37,267
        Capital lease obligations payable
          in monthly installments through
          2013 (see Note 11)                    19,425      19,160
                                             ---------   ---------
                                                48,799      56,427
        Less portion due within one year         7,901       9,894
                                             ---------   ---------
                                             $  40,898   $  46,533
                                             =========   =========
</TABLE>




                                     -33-
PAGE
<PAGE>
     The Company has  a 364-day revolving  credit agreement providing  $40,000
for  general  corporate  purposes  which  expires  in  late  April  1997.   No
borrowings  were  outstanding  under  the  agreement  at  December  31,  1996.
Management  believes  that  it  will  be  able  to extend this facility.  When
consummated, Management expects that the facility will have a duration of  364
days and will provide for borrowings  in an amount adequate for the  Company's
needs over the term of the facility.

     The fair value of the  Company's long-term debt (excluding capital  lease
obligations) is estimated based  on the quoted market  prices for the same  or
similar issues or on the current rates offered to the Company for debt of  the
same remaining maturities.   The estimated  fair value of  the Company's gross
long-term debt at December 31, 1996 was $30,145.

     The annual principal payments due on long-term debt for each of the years
in the five-year period ended  December 31, 2001, are $7,901,  $5,890, $5,299,
$5,142 and $5,142, respectively.

     No interest was capitalized for  the years ended December 31,  1996, 1995
and 1994.

     Certain of  the Company's  debt agreements  contain covenants,  including
limitations on  dividends based  on a  formula related  to net  income (loss),
stock sales  and certain  restricted investments.   At  December 31,  1996 the
amount of unrestricted retained earnings available for dividends was  $16,007,
which includes a waiver in effect until  June 1, 1997 on $7,000.  At  December
31,  1995,  there  were  no  unrestricted  retained  earnings  available   for
dividends.

     The  Company  periodically  has  entered  into  interest  rate  swap   or
derivative  transactions  with  the   intent  to  manage  the   interest  rate
sensitivity of  portions of  its debt.   On  March 4,  1994, the  Company felt
compelled to enter into two  interest rate derivative transactions to  cap its
exposure on two prior uncapped interest rate derivative transactions that  had
a negative  market value  in excess  of $17,000.   These  two new transactions
imposed  caps  on  the  Company's  total  exposure  and  replaced the previous
uncapped positions that were entered  into subsequent to December 31,  1993 in
an attempt to limit the Company's exposure against rising short-term  interest
rates.

     In September 1994, the Company  filed suit against Bankers Trust  Company
and its affiliate  BT Securities (Bankers  Trust) alleging that  in connection
with the sale of these and  earlier derivatives to the Company, Bankers  Trust
had breached fiduciary duties, made fraudulent representations, and failed  to
make  adequate  disclosures,  in   violation  of  common  law   and  statutory
obligations to the Company.  The suit  was settled on November 23, 1994.   The
Company  agreed  to  pay  Bankers  Trust  $6,180 which included $3,344 of cash
payments made to the Company which had been recorded as gains with respect  to
a number of earlier transactions.  In return, the remaining transactions  were
terminated with no further liability to the Company.

     At December 31, 1996 and  1995, the Company had two  outstanding interest
rate  swap  positions  with  a  total  notional  amount  of $2,400.  These two
agreements, with terms  similar to the  related industrial revenue  bonds, are
constituted as  hedges and  effectively reduce  the Company's  interest on the
bonds from 9.25% to 6.67% through February 1998.  The estimated fair value  of
these two agreements at December 31, 1995 was $28.
                                     -34-
PAGE
<PAGE>
Note 7--Income Taxes

     The income tax provision (benefit) for the years ended December 31, 1996,
1995, and 1994 consists of the following:

<TABLE>
<CAPTION>

                                            1996         1995         1994
                                         ---------    ---------    ---------
        <S>                              <C>          <C>          <C>
        Federal:
          Current                        $  10,216    $ (19,093)   $   1,574
          Deferred                          (1,251)      (2,252)     (14,530)
          Change in valuation allowance         -            -          (924)
          Alternative minimum tax
           credit carryforward                 200           -          (200)
          Deferred investment
           tax credits, net                    (64)         (79)        (100)
                                         ---------    ---------    ---------

                                             9,101      (21,424)     (14,180)
                                         ---------    ---------    ---------
        State and local:
          Current                            2,325        5,405          649
          Deferred                            (319)        (570)      (3,239)
          Change in valuation allowance         -            -          (211)
                                         ---------    ---------    ---------
                                             2,006        4,835       (2,801)
                                         ---------    ---------    ---------
                                         $  11,107    $ (16,589)   $ (16,981)
                                         =========    =========    =========
</TABLE>

     The effective income tax rate for the years ended December 31, 1996, 1995
and 1994, varied from the statutory federal income tax rate as follows:

<TABLE>
<CAPTION>

                                            1996         1995         1994
                                         ---------    ---------    ---------
        <S>                              <C>          <C>          <C>
        Statutory federal
          income tax rate                    35.0%        35.0%        35.0%
        State and local income taxes,
          net of federal income tax
          benefit                             3.9          3.2          4.0
        Liquidity of subsidiary              (7.4)          -            -
        Nondeductible losses                  0.3         (8.5)        (2.6)
        Other                                 1.8         (3.4)         0.8
                                         ---------    ---------    ---------
                                             33.6%        26.3%        37.2%
                                         =========    =========    =========
</TABLE>


                                     -35-
PAGE
<PAGE>
     The above schedule includes the effect of state and foreign net operating
losses for which no benefits have been provided.

     Deferred taxes are determined based  on the estimated future tax  effects
of differences  between the  financial statement  and tax  bases of assets and
liabilities given the provisions of currently enacted tax laws.

     The net deferred  taxes for the  years ended December  31, 1996 and  1995
consist of the following:

<TABLE>
<CAPTION>
                                                1996        1995
                                             ---------   ---------
        <S>                                  <C>         <C>
        Current deferred taxes:
                Gross assets                 $  44,852   $  45,275
                Alternative minimum
                 tax carryforward                   -          200
                Gross liabilities                 (254)       (464)
                                             ---------   ---------
                                                44,598      45,011
                                             ---------   ---------
        Noncurrent deferred taxes:
                Gross assets                    23,854      21,573
                Valuation allowance               (830)       (830)
                Gross liabilities               (6,304)     (5,806)
                Deferred investment
                  tax credits                     (128)       (192)
                                             ---------   ---------
                                                16,592      14,745
                                             ---------   ---------
                                             $  61,190   $  59,756
                                             =========   =========
</TABLE>

     The  Company  has  recorded  a  valuation  allowance  with respect to the
deferred tax assets  reflected in the  following table as  a result of  recent
capital losses and uncertainties with respect to the amount of taxable capital
gain income which will be generated in future years.

















                                     -36-
PAGE
<PAGE>
     The  tax  balances  of  significant  temporary  differences  representing
deferred tax assets and liabilities for the years ended December 31, 1996  and
1995, consist of the following:

<TABLE>
<CAPTION>
                                                1996        1995
                                             ---------   ---------
        <S>                                  <C>         <C>
        Reserve for returns, allowances,
          cash discounts and doubtful
          accounts                           $  24,911   $  25,390
        Reserve for inventories
          and related items                      6,103       6,222
        Postretirement benefits                  2,238       2,251
        Depreciation of plant
          and equipment                         (6,188)     (5,713)
        Reserve for display fixtures             1,006       1,628
        Accrued compensation and benefits       17,802      17,223
        Sales agreement payments due             7,697       4,067
        Other accruals and reserves, net         8,579       9,510
        Alternative minimum tax
          carryforward                              -          200
        Deferred investment tax credits           (128)       (192)
                                             ---------   ---------
                                                62,020      60,586
        Valuation allowance                       (830)       (830)
                                             ---------   ---------
                                             $  61,190   $  59,756
                                             =========   =========
</TABLE>


Note 8--Other Current Liabilities

     Other current liabilities at December  31, 1996 and 1995, consist  of the
following:

<TABLE>
<CAPTION>
                                                1996        1995
                                             ---------   ---------
        <S>                                  <C>         <C>
        Compensation, payroll taxes
          and related withholdings           $  18,074   $  16,584
        Customer allowances                     14,525      12,963
        Accrued insurance                       10,810      10,029
        Sales agreement payments due
          within one year                        8,592       7,628
        Accrued interest                         8,189       6,221
        Property and other taxes                 4,259       4,397
        Other                                   16,989      13,820
                                             ---------   ---------
                                             $  81,438   $  71,642
                                             =========   =========
</TABLE>

                                     -37-
PAGE
<PAGE>
Note 9--Employee and Retirement Benefit Plans

     The Company sponsors a defined benefit pension plan (the Retirement Plan)
covering   substantially   all   employees   who   meet   certain  eligibility
requirements.    Benefits  are  based  upon  years  of  service  and   average
compensation levels.   The Company's general  funding policy is  to contribute
amounts  deductible  for  federal  income  tax  purposes.    Contributions are
intended  to  provide  not  only  for  benefits  earned  to date, but also for
benefits expected to be earned in the future.

     The following table sets forth the Retirement Plan's funded status on the
measurement dates,  December 31,  1996 and  1995, and  a reconciliation of the
funded status to the amounts recognized in the Company's consolidated  balance
sheets at December 31, 1996 and 1995:

<TABLE>
<CAPTION>
                                                1996        1995
                                             ---------   ---------
        <S>                                  <C>         <C>
        Actuarial present value of
          benefit obligations:
             Vested benefit obligation       $  60,741   $  61,449
                                             =========   =========
             Accumulated benefit
               obligation                    $  64,152   $  65,247
                                             =========   =========
             Projected benefit
               obligation for services
               rendered to date              $  71,117   $  74,779
        Plan assets at fair market value        78,656      68,068
                                             ---------   ---------
        Projected benefit obligation
          greater than (less than)
          plan assets                           (7,539)      6,711
        Unrecognized prior service cost           (837)     (1,174)
        Unrecognized net gain resulting
          from experience different from
          assumed and effects of changes
          in assumptions                        19,858       6,454
                                             ---------   ---------
        Accrued pension expense included
          in other liabilities               $  11,482   $  11,991
                                             =========   =========

</TABLE>

     The market value  of the Retirement  Plan assets exceeded  assumed market
value by  $5,946.   The changes  in asset  values relative  to the measurement
dates are primarily due to fluctuations in the market value of the  Retirement
Plan's equity investments.






                                     -38-
PAGE
<PAGE>
     In  addition  to  the  Retirement  Plan,  the Company has established the
following plans:   a  nonqualified defined  benefit plan  for employees  whose
benefits under the Retirement Plan  are limited by provisions of  the Internal
Revenue  Code;  a  nonqualified  defined  benefit plan to provide supplemental
retirement benefits for selected  executives in addition to  benefits provided
under  other  Company  plans;  and  a  nonqualified plan to provide retirement
benefits for members of the Company's  Board of Directors who are not  covered
under any of the Company's other plans.  These plans were unfunded at December
31, 1996 and 1995, although assets for these plans are held in certain grantor
tax trusts known as "Rabbi" trusts.  These assets are subject to claims of the
Company's creditors, but otherwise must be used only for purposes of providing
benefits under the plans.

     The following table  sets forth the  nonqualified defined benefit  plans'
benefit obligations on the measurement  dates, December 31, 1996 and  December
31, 1995, and a reconciliation of those obligations to the amounts  recognized
in the Company's consolidated balance sheets at December 31, 1996 and 1995:

<TABLE>
<CAPTION>
                                                1996        1995
                                             ---------   ---------
        <S>                                  <C>         <C>
        Actuarial present value of
          benefit obligations:
             Vested benefit obligation       $   4,263   $   4,039
                                             =========   =========
             Accumulated benefit
               obligation                    $   4,840   $   4,763
                                             =========   =========
             Projected benefit
               obligation for services
               rendered to date              $   5,081   $   5,452
        Unrecognized prior service cost         (1,414)     (1,657)
        Unrecognized net gain (loss)
          resulting from experience
          different from assumed and
          effects of changes in
          assumptions                              248        (306)
                                             ---------   ---------
        Accrued pension expense included
          in other liabilities               $   3,915   $   3,489
                                             =========   =========

</TABLE>

     The assumed weighted average discount rate and rate of increase in future
compensation levels  used in  determining the  actuarial present  value of the
projected benefit obligation  for the plans  was 7.75% and  4.50% in 1996  and
7.25% and 4.50% in 1995, respectively.   The change in the discount  rate from
7.25% to 7.75% reduced the  Retirement Plan's projected benefit obligation  by
$4,564.    The  assumed  long-term  rate  of  return  on  plan assets used for
valuation purposes was 9.0% for 1996 and 1995.




                                     -39-
PAGE
<PAGE>
     A  summary  of  the  components  of  net  pension  expense for all of the
Company's defined benefit  plans for the  years ended December  31, 1996, 1995
and 1994, is as follows:

<TABLE>
<CAPTION>

                                            1996         1995         1994
                                         ---------    ---------    ---------
        <S>                              <C>          <C>          <C>
        Service cost-benefits earned
          during the period              $   2,158    $   2,652    $   3,285
        Interest cost on projected
          benefit obligation                 5,635        5,833        5,339
        Net amortization and deferral        6,494        7,409       (6,103)
        Actual return on plan assets       (11,744)     (13,178)         902
        Other                                   -            -           284
                                         ---------     --------    ---------
                                         $   2,543     $  2,716    $   3,707
                                         =========     ========    =========
</TABLE>

     The Company has two defined contribution plans pursuant to Section 401(k)
of  the  Internal  Revenue  Code.    The  plans provide that employees meeting
certain eligibility requirements may defer  a portion of their salary  subject
to certain limitations.  The Company pays certain administrative costs of  the
plans and contributes to the plans  based upon a percentage of the  employee's
salary deferral and an annual additional contribution at the discretion of the
Board of Directors.  Eligible employees  of Cleo participated in one of  these
defined contribution plans through  the date of the  sale of Cleo on  November
14, 1995.  The total expense for these plans for the years ended December  31,
1996, 1995 and 1994, was $752, $452 and $550, respectively.

     The Company had a defined  contribution plan for Cleo employees  who were
members  of  a  collective  bargaining  unit.    Benefits under this plan were
determined  based  upon  years  of  service  and  an hourly contribution rate.
Pension expense for this plan for the years ended December 31, 1995 and  1994,
was $218 and $409, respectively.  As a result of the sale of Cleo, the Company
has no further obligations to the plan.

     In addition to providing  pension benefits, the Company  provides medical
and life  insurance benefits  for certain  eligible employees  upon retirement
from the Company.   Substantially all  employees may become  eligible for such
benefits upon  retiring from  active employment  of the  Company.  Medical and
life insurance benefits for employees  and retirees are paid by  a combination
of company and employee or retiree contributions.  Retiree insurance  benefits
are provided by  insurance companies whose  premiums are based  on claims paid
during the year.









                                     -40-
PAGE
<PAGE>
     A  reconciliation  of  the  accumulated postretirement benefit obligation
(APBO) measured as of December 31, 1996 and 1995 to the amounts recognized  in
the Company's consolidated balance sheets at December 31, 1996 and 1995, is as
follows:

<TABLE>
<CAPTION>
                                                1996        1995
                                             ---------   ---------
        <S>                                  <C>         <C>
        Retirees                             $     930   $   1,475
        Fully eligible active employees          1,030         997
        Other active employees                   1,020       1,117
                                             ---------   ---------
        Accumulated benefit obligation
          (unfunded)                             2,980       3,589
        Unrecognized prior service cost             89         100
        Unrecognized net gain                    2,042       1,475
                                             ---------   ---------
        Accrued APBO included in
          other liabilities                  $   5,111   $   5,164
                                             =========   =========

</TABLE>

     The accumulated benefit obligation for 1996 and 1995 was determined using
the following assumptions:
                                1995                    1995
                         ------------------      ----------------
     Discount rate             7.75%                   7.25%
     Health care cost    8.5% for 1997           9% for 1996
     trend rate          graded down per         graded down per
                         year to 6% in the       year to 6% in the
                         year 2002, 5.5%         year 2002, 5.5%
                         thereafter              thereafter

     Net periodic  cost of  these benefits  for the  years ended  December 31,
1996, 1995 and 1994 is as follows:

<TABLE>
<CAPTION>
                                            1996          1995          1994
                                         ---------     ---------     ---------
        <S>                              <C>           <C>           <C>
        Service cost-benefits earned
          during the period              $     152     $     161     $     171
        Interest cost on
          accumulated benefits                 219           349           363
        Net amortization                      (142)          (70)           42
        Other                                   -             -             68
                                         ---------     ---------     ---------
                                         $     229     $     440     $     644
                                         =========     =========     =========
</TABLE>



                                     -41-
PAGE
<PAGE>
     The health care  cost trend rate  assumption does not  have a significant
effect on the amounts reported.  For example, a 1% increase in the health care
cost  trend  rate  would  increase  the  accumulated  postretirement   benefit
obligation as of  December 31, 1996,  and the net  periodic cost for  the year
then ended, by approximately 4% each.


Note 10--Stockholders' Equity

Employee stock plans

     Under various  stock option  and incentive  plans, the  Company may grant
incentive and nonqualified stock options to purchase up to 3,342,500 shares of
common stock.  All incentive options were granted at the fair market value  on
the date of grant.   Incentive stock options generally become  exercisable one
year after the date  granted and expire ten  years after the date  granted, if
not earlier  expired due  to termination  of employment.   Nonqualified  stock
options become exercisable according to  a vesting schedule determined at  the
date granted and expire on the date set forth in the option agreement, if  not
earlier expired due to termination of employment.  Certain nonqualified  stock
options were granted at exercise prices in excess of the fair market value  on
the date of grant.  Under certain stock incentive plans, the Company may grant
the right to purchase restricted shares of its common stock.  Such shares  are
subject to restriction  on transfer and  to repurchase by  the Company at  the
original  purchase  price.    The  purchase  price  of  restricted  shares  is
determined by  the Company  and may  be nominal.   No  restricted shares  were
granted in 1996, 1995 or 1994.






























                                     -42-
PAGE
<PAGE>
     A summary of  stock option activity  during the years  ended December 31,
1996, 1995 and 1994, is as follows:

<TABLE>
<CAPTION>

                       1996                 1995                  1994
               -------------------   -------------------   -------------------
                          Weighted              Weighted              Weighted
                           Average               Average               Average
                          Exercise              Exercise              Exercise
                Shares      Price     Shares      Price     Shares      Price
               ---------  --------   ---------  --------   ---------  --------
<S>            <C>        <C>        <C>        <C>        <C>        <C>
Outstanding
beginning
of year        1,033,166  $ 14.58    1,321,619  $ 18.79    1,063,042  $ 19.75
 Granted -
 exercise
 price on
 date of
 grant:
  Equal to
  market price
  of stock       445,750    12.57       65,900    10.99      597,500    17.24
  Greater than
  market price
  of stock       350,000    14.64           -        -            -        -
 Effect of
 cancelled and
 reissued
 stock options        -        -            -     (8.43)          -        -
 Exercised      (119,077)   10.16       (5,600)   13.16      (46,263)   17.70
 Forfeited      (285,566)   19.81     (340,503)   18.04     (291,140)   19.43
 Expired              -        -        (8,250)   20.00       (1,520)   16.42
               ---------  --------   ---------  --------   ---------  --------
Outstanding
end of year    1,424,273  $ 13.29    1,033,166  $ 14.58    1,321,619  $ 18.79
               =========  ========   =========  ========   =========  ========
Exercisable
end of year      694,694  $ 14.07      388,999  $ 20.47      641,408  $ 20.00
               =========  ========   =========  ========   =========  ========

</TABLE>













                                     -43-
PAGE
<PAGE>
     The range  of exercise  prices on  shares outstanding  as of December 31,
1996 is as follows:

<TABLE>
<CAPTION>

                                           Weighted
                              Weighted      Average                   Weighted
   Range of                    Average     Remaining                   Average
   Exercise       Shares      Exercise    Contractual     Shares      Exercise
    Prices      Outstanding     Price        Life       Exercisable     Price
-------------   -----------   --------    -----------   -----------   --------
<C>             <C>           <C>         <C>           <C>           <C>
$  9.75-14.50    1,162,273    $ 12.07         6.82         514,994    $ 12.07
  14.63-18.38      162,800      16.76         5.38          85,500      17.53
  19.63-28.00       99,200      21.84         4.42          94,200      21.88

</TABLE>

     For the years ended 1996, 1995 and 1994, compensation expense  recognized
under  stock-based  employee  compensation  was  not  material.   During 1995,
476,600 options  outstanding at  the beginning  of the  year were canceled and
reissued at $9.75.

     At December 31, 1996, 73,238 shares were available under the stock option
and incentive  plans, of  which 32,838  shares could  be issued  as restricted
shares.    Of  the  total  shares  available,  29,000 shares were reserved for
issuance  pursuant  to  the  Company's  Stock  Option  Plan  for  Non-Employee
Directors.

     During 1996,  the Company  granted options  for 300,000  shares of common
stock in  excess of  those available  under its  existing stock  option plans,
including options for 250,000 shares to the Company's Chief Executive Officer.
Stockholder approval  of these  options will  be requested  at the 1997 Annual
Meeting.   Options for  150,000 shares  have an  exercise price  of $15.50 per
share, options for 100,000 shares have  an exercise price of $16.50 per  share
and options for 50,000 shares have an exercise price of $19.00 per share.   At
the time of approval,  the amount by which  the market value of  the Company's
common stock exceeds the exercise price of these options will be recognized as
compensation expense and amortized over  the vesting period of these  options.
In  the  event  stockholder  approval  is  not  received,  the Company's Chief
Executive Officer has  the right to  terminate his employment  contract during
the following 60-day period.

     Effective January 1, 1996, the Company adopted SFAS No. 123 - "Accounting
for  Stock-Based  Compensation."    This  statement  encourages,  but does not
require,  adoption  of  a  fair-value-based  accounting  method  for  employee
stock-based compensation  arrangements.   As permitted  by the  statement, the
Company elected to only disclose pro forma net income and net income per share
as if the fair-value-based method  had been applied in measuring  compensation
costs.






                                     -44-
PAGE
<PAGE>
     Pro forma information for the years ended December 31, 1996 and 1995,  is
as follows:

<TABLE>
<CAPTION>
                                                  1996           1995
                                                ---------      ---------
      <S>                                       <C>            <C>
      Pro forma net income (loss)               $ 20,264       $ (46,748)
                                                =========      =========
      Pro forma net income (loss) per share     $   1.23       $   (2.88)
                                                =========      =========
</TABLE>

     Compensation  expense  reflected  in  the  pro  forma  disclosures is not
indicative of  future amounts  when the  SFAS No.  123 prescribed  method will
apply to all outstanding nonvested awards.

     The weighted average fair value of options granted was $2,689 in 1996 and
$1,952 in 1995.  The fair value of each option grant is estimated on the  date
of  grant  using  the  Black-Scholes  option-pricing  model with the following
assumptions used for grants in 1996 and 1995:  expected dividend yield of .94%
to 2.02%; expected option lives of five years; expected volatility of .2840 to
 .3962; and risk-free interest rates of 6.25% to 7.50%, for both years.


Stock rights

     On December 4, 1987, the Company's Board of Directors declared a dividend
distribution of one right for  each outstanding share of the  Company's common
stock to stockholders of record on December 21, 1987.  Each right entitles the
holder to  purchase, for  the exercise  price of  $40 per  share, 1/100th of a
share of Series A Preferred Stock.  Until exercisable, the rights are attached
to all shares of the Company's common stock outstanding.

     The rights are exercisable  only in the event  that a person or  group of
persons (i) acquires 20% or more of the Company's common stock and there is  a
public announcement to that effect, (ii) announces an intention to commence or
commences a  tender or  exchange offer  which would  result in  that person or
group owning 30% or more of the Company's common stock, or (iii)  beneficially
owns a substantial amount (at least 15%) of the Company's common stock and  is
declared to be an Adverse Person  (as defined in the Rights Agreement)  by the
Company's Board  of Directors.   Upon  a merger  or other business combination
transaction, each right may entitle the holder to purchase common stock of the
acquiring company  worth two  times the  exercise price  of the  right.  Under
certain other circumstances (defined in  the Rights Agreement) each right  may
entitle the holder (with certain  exceptions) to purchase common stock,  or in
certain  circumstances,  cash,  property  or  other securities of the Company,
having a value worth two times the exercise price of the right.

     The rights are redeemable  at one cent per  right at anytime prior  to 20
days after the public announcement that a person or group has acquired 20%  of
the  Company's  common  stock.    Unless  exercised or redeemed earlier by the
Company, the rights expire on December 28, 1997.



                                     -45-
PAGE
<PAGE>
Note 11--Commitments

Lease commitments

     In  connection  with  the  sale  of  Cleo,  the  Company renegotiated its
long-term agreement  for certain  of its  principal facilities.   The  initial
lease term of this amended agreement runs through November 30, 2013, with  one
10-year renewal  option available.   The basic rent  under the lease  contains
scheduled rent increases every five years, including the renewal period.   The
lease contains  a purchase  option in  2005 (and  again in  2010) at  the fair
market value of the properties at the date of exercise.  As a condition of the
lease, all property  taxes, insurance costs  and operating expenses  are to be
paid by the Company.  For accounting purposes, this lease has been treated  as
a capital lease.

     The  Company  also  leases  additional  manufacturing,  distribution  and
administrative  facilities,   sales  offices   and  personal   property  under
noncancelable operating  leases which  expire on  various dates  through 2006.
Certain  of  these  leases  contain  renewal  and  escalating  rental  payment
provisions as well as contingent payments based upon individual store sales.

     Rental expense for the years ended  December 31, 1996, 1995 and 1994,  on
all  real   and  personal   property,  was   $15,292,  $23,663   and  $24,493,
respectively.

     Minimum rental commitments under noncancelable leases as of December  31,
1996 are as follows:

<TABLE>
<CAPTION>
                                           Capital    Operating
        Year ending December 31:            Lease       Lease
        -------------------------------   ---------   ---------
        <S>                               <C>         <C>
        1997                              $   3,100   $  13,976
        1998                                  3,100      12,408
        1999                                  3,100       6,347
        2000                                  3,152       4,280
        2001                                  3,720       2,215
        Thereafter                           52,960       1,771
                                          ---------   ---------
        Net minimum commitments              69,132   $  40,997
                                                      =========
            Less amount representing
              interest                       49,707
                                          ---------
        Present value of net minimum
          lease commitments               $  19,425
                                          =========

</TABLE>






                                     -46-
PAGE
<PAGE>
Contract commitments

     The Company has several long-term customer sales agreements which require
payments and  credits for  each of  the years  in the  four-year period  ended
December 31, 2000, of $8,592, $6,269, $4,466, and $3,539, respectively, and no
payments and credits thereafter.  These amounts are included as other  current
liabilities  or  other  liabilities  in  the accompanying consolidated balance
sheet as of December 31, 1996.


Employment agreements

     The  Company  has  employment  agreements  with  certain executives which
provide  for,  among  other  things,  minimum  annual  salaries  adjusted  for
cost-of-living changes, continued payment of salaries in certain circumstances
and  incentive  bonuses.    Certain  agreements further provide for employment
termination payments, including payments  contingent upon any person  becoming
the beneficial owner of 50% or greater of the Company's outstanding stock.


Note 12--Legal Proceedings

     In  July  1994,  immediately  following  the Company's announcement of an
inventory misstatement  at Cleo,  which resulted  in an  overstatement of  the
Company's previously  reported 1993  consolidated net  income, five  purported
class  actions  were  commenced  by  certain  stockholders.   These suits were
consolidated and  a Consolidated  Amended Class  Action Complaint  against the
Company, its then  Chairman, President and  Chief Executive Officer,  its then
Chief Financial Officer and the  former President and Chief Executive  Officer
of Cleo was filed in October 1994 in the United States District Court for  the
Southern District  of Ohio  (In Re  Gibson Securities  Litigation).  In August
1996, the Court  reconsidered its prior  rulings and certified  the case as  a
class  action.    The  latest  Complaint  alleges  violations  of  the federal
securities  laws  and  seeks  unspecified  damages  for  an  asserted   public
disclosure of false information regarding the Company's earnings.  The Company
intends to defend the  suit vigorously and has  filed a motion to  dismiss the
latest complaint and  a Third Party  Complaint against its  former auditor for
contribution against any judgment adverse to the Company.  The case  currently
is scheduled to be tried in June 1997.

     The Company  presently is  unable to  predict the  effect of the ultimate
resolutions  of  the  matter  described  above  upon  the Company's results of
operations  and  cash  flows;  as  of  this date, however, Management does not
expect that such resolution would result in a material adverse effect upon the
Company's total net worth, although a substantially unfavorable outcome  could
be material to such net worth.

     On April  10, 1995,  two purported  class action  lawsuits were commenced
against the Company, its then Chairman, President and Chief Executive  Officer
and its then Chief Financial Officer  in the United States District Court  for
the  Southern  District  of  Ohio.    The Complaints alleged violations of the
federal securities law for an asserted failure to disclose allegedly  material
information regarding the Company's  financial performance.  The  two lawsuits
were consolidated and captioned  In Re Gibson Greetings  Securities Litigation
II.   This litigation  has been  concluded through  the creation  of a  $1,600
settlement fund, most of which is covered by insurance.

                                     -47-
PAGE
<PAGE>
     On March  6, 1996,  two purported  class actions  were filed  against the
Company's directors (as well as  certain former directors) and the  Company in
the New Castle County, Delaware Court of Chancery (Crandon Capital Partners v.
Cooney, et al. and Weiss v. Lindberg, et al.).  The Complaints allege that the
individual defendants  breached their  fiduciary duties  to the  plaintiffs by
refusing to negotiate in response  to an acquisition proposal for  the Company
by  American  Greetings  Corporation.    The  Complaints  seek  to require the
directors to do a number  of things, including pursuing merger  or acquisition
discussions with  American Greetings  and others.   The  Complaints also  seek
unspecified  damages  against  those  directors.    On March 20, 1996, a third
action, Krim, et al. v. Pezzillo, et al., was filed in the same court.   While
it generally follows the allegations and demands of the other two  Complaints,
it  specifically  seeks  injunctive   relief  against  the  exercise   of  the
shareholder  rights  plan  that  has  been  a  part of the Company's corporate
governance for nearly ten  years.  While the  Company is a named  defendant in
all three actions, none of the  Complaints appears to seek any other  specific
relief  against  the  Company.    The  defendants  intend  to defend the suits
vigorously.

     In  addition,  the  Company  is  a  defendant  in  certain  other routine
litigation which is not expected to result in a material adverse effect on the
Company's net worth, total cash flows or operating results.



































                                     -48-
PAGE
<PAGE>
Note 13--Sale of Cleo, Inc.

     Effective November  15, 1995,  the Company  consummated its  agreement to
sell Cleo to CSS Industries, Inc.  Total consideration to the Company amounted
to approximately $133,074, consisting of $96,500 in cash, a note due and  paid
on  January  29,  1996  for  $24,574  and  $12,000 which is held in escrow for
certain  post-closing  adjustments   and  indemnification  obligations.     In
addition, the Company was  released from approximately $14,956  of third-party
debt  which  was  retained  by  Cleo  under  its  new owner.  This transaction
resulted  in  a  loss  of  $54,471,  net  of  taxes of $28,541, which has been
included in operations for the year ended December 31, 1995.

     The following is a summary of  Cleo's net assets as of November  14, 1995
and results of operations of Cleo  for the period ended November 14,  1995 and
for the year ended December 31, 1994:

<TABLE>
<CAPTION>
                                            As of
                                      November 14, 1995
                                      -----------------
        <S>                               <C>                  <C>
        Current assets                    $ 191,203
        Property and equipment, net          33,999
        Other assets, net                     1,087
                                          ---------
            Total assets                    226,289

        Current liabilities                  22,803
        Long-term debt, including
          current portion                    14,956
                                          ---------
        Net assets                        $ 188,530
                                          =========


                                        Period Ended          Year Ended
                                      November 14, 1995    December 31, 1994
                                      -----------------    -----------------
        Revenues                          $ 151,937            $ 189,387
                                          =========            =========
        Loss before income taxes          $ (17,110)           $ (36,922)
                                          =========            =========
        Net loss                          $ (12,446)           $ (22,646)
                                          =========            =========


</TABLE>









                                     -49-
PAGE
<PAGE>
Note 14--Quarterly Financial Data - Actual and Pro Forma (Unaudited)

<TABLE>
<CAPTION>
(Dollars in
thousands except       First      Second       Third      Fourth
per share amounts)    Quarter     Quarter     Quarter     Quarter     Year
                     --------    --------    --------    --------    --------
<S>                  <C>         <C>         <C>         <C>         <C>

1996 Actual
-------------------
Net sales            $ 97,572    $ 88,397    $ 92,369    $111,083    $389,421
Total revenues         97,779      88,585      92,551     111,331     390,246
Cost of products
  sold                 39,338      31,106      38,721      48,064     152,229
Other operating
  expenses             52,207      46,082      50,710      50,491     199,490
Interest expense, net   1,489       1,090         902       1,977       5,458
Net income              5,596       5,869       4,054       6,443      21,962
Net income per share     0.34        0.36        0.25        0.39        1.34

1995 Actual (1)
-------------------
Net sales            $100,164    $ 97,323    $144,121    $198,537    $540,145
Total revenues        100,287      97,470     144,323     198,741     540,821
Cost of products
  sold                 39,168      37,520      82,520     109,494     268,702
Other operating
  expenses             56,774      55,264     140,437      70,459     322,934
Interest expense, net   3,045       2,873       3,254       3,091      12,263
Net income (loss)         271         641     (55,208)      7,807     (46,489)
Net income
  (loss) per share       0.02        0.04       (3.41)       0.49       (2.86)

1995 Pro Forma (1)(2)
-------------------
Net sales            $ 92,554    $ 87,369    $ 89,343    $118,947    $388,213
Total revenues         92,671      87,516      89,546     119,151     388,884
Cost of products
  sold                 32,943      29,059      38,383      48,149     148,534
Other operating
  expenses             49,306      47,467      45,463      59,678     201,914
Interest expense, net   2,253       2,185       2,216       1,918       8,572
Net income              4,582       4,940       1,937       4,817      16,276
Net income per share     0.28        0.31        0.12        0.29        1.00

</TABLE>

     (1) The 1995  fourth quarter included  a reduction in  expenses resulting
from an adjustment  to customer returns  and allowances increasing  net income
(loss) by $2,545 or $.16 per  share and an increase in expenses  attributed to
the full reserve  of the Company's  investment in Gibson  de Mexico decreasing
net income (loss) by $1,157 or $.07 per share.



                                     -50-
PAGE
<PAGE>
     (2) The unaudited Quarterly Financial Data - Pro Forma is based upon  the
Statements of Operations of the Company for each of the four quarters and year
ended December 31,  1995 and gives  effect to the  sale of Cleo  as if it  had
occurred  as  of  January  1,  1995  after  giving  effect  to  the  pro forma
adjustments.    Pro  forma  adjustments  represent  management fee allocations
including legal, tax and administrative expenses that were not expected to  be
eliminated,  reduction  in  interest  expense  as  a  result  of prepayment of
short-term  debt  with  sale  proceeds  and  additional commitment fees on the
unused portion of the revolving credit facility and an increase in income  tax
resulting from the income tax on reversal  of loss on sale of Cleo net  of pro
forma expenses.  Senior notes were assumed  not to be prepaid.  The pro  forma
quarterly financial data referred to above does not purport to represent  what
the Company's financial position or results of operations actually would  have
been if  the sale,  in fact,  occurred on  the dates  referred to  above or to
project the Company's results  of operations for any  period.  This pro  forma
quarterly financial data should be  read in conjunction with the  consolidated
financial statements and notes thereto.








































                                     -51-
PAGE
<PAGE>
Independent Auditors' Report





To the Board of Directors and
Stockholders of Gibson Greetings, Inc.
Cincinnati, Ohio



     We have audited  the accompanying consolidated  balance sheets of  Gibson
Greetings, Inc. and  subsidiaries as of  December 31, 1996  and 1995, and  the
related consolidated statements of operations, stockholders' equity, and  cash
flows for each of the three years in the period ended December 31, 1996.   Our
audits also included the financial  statement schedule listed in the  Index at
Item 14.  These financial statements and the financial statement schedule  are
the responsibility  of the  Company's management.   Our  responsibility is  to
express an opinion on these  financial statements and the financial  statement
schedule based on our audits.

     We conducted our  audits in accordance  with generally accepted  auditing
standards.   Those standards  require that  we plan  and perform  the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement.  An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements.  An  audit
also  includes  assessing  the  accounting  principles  used  and  significant
estimates made  by management,  as well  as evaluating  the overall  financial
statement presentation.  We believe that our audits provide a reasonable basis
for our opinion.

     In our opinion, the  consolidated financial statements referred  to above
present  fairly,  in  all  material  respects,  the  financial position of the
Companies at December 31, 1996 and  1995, and the results of their  operations
and their cash flows for each of the three years in the period ended  December
31, 1996 in conformity with  generally accepted accounting principles.   Also,
in our opinion, such financial statement schedule, when considered in relation
to the  basic consolidated  financial statements  taken as  a whole,  presents
fairly in all material respects the information set forth therein.





DELOITTE & TOUCHE LLP


/s/ Deloitte & Touche LLP
--------------------------

Cincinnati, Ohio
February 12, 1997




                                     -52-
PAGE
<PAGE>
Item 9. Changes in and Disagreements with Accountants on Accounting  and
Financial Disclosure

 Not Applicable.





















































                                     -53-
PAGE
<PAGE>
                             PART III

     Except  as  set  forth  below,  the  information required by this Part is
included in  the Company's  definitive Proxy  Statement to  be filed  with the
Securities  and  Exchange  Commission  in  connection  with the Company's 1997
Annual Meeting of Stockholders, and is incorporated by reference herein.


Item 10.  Directors and Executive Officers of the Registrant

 The Executive Officers of the Company (at March 1, 1997) are as
follows:

        Name                      Age           Title
        -------------------       ---           ----------------------------
        Frank J. O'Connell         53           President and
                                                  Chief Executive Officer

        Paul W. Farley             52           Assistant Treasurer and
                                                  Principal Accounting Officer

        Gregory Ionna              45           Executive Vice President -
                                                  Gibson Card Division


     FRANK J. O'CONNELL.  Mr. O'Connell has been the Company's Chief Executive
Officer and President since  August 1996.  He  was a business consultant  from
May 1995  to August  1996.   He served  as the  President and  Chief Executive
Officer of Skybox International, Inc.  (Skybox), a trading card  manufacturer,
from July 1991 to May 1995.  Prior to joining Skybox, he was a venture capital
consultant from February 1990 to July  1991 and served as President of  Reebok
Brands,  North  America  from  February  1989  to  February 1990.  He became a
director of the Company in August 1996.

     PAUL  W.  FARLEY.    Mr.  Farley  has  served as the Principal Accounting
Officer since September 1996.  In  1992, he became Vice President, Finance  of
the Gibson Card Division.  Previously, he served as Corporate Controller  from
1986 to 1992.  He was appointed Assistant Treasurer in 1981.

     GREGORY IONNA.  Mr. Ionna has been Executive Vice President - Gibson Card
Division since September 1993.  Prior to that he served in various  capacities
within the Sales and Marketing functions of the Company .

     Officers serve with the approval of the Board of Directors.













                                     -54-
PAGE
<PAGE>
                              PART IV

Item 14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K

     a) The following documents are filed as part of this report:


     1. Financial Statements:

    Page
   Herein  Financial Statement
   ------  --------------------------------------------------------------
     21    Consolidated Statements of Operations for the years ended
            December 31, 1996, 1995 and 1994

     22    Consolidated Balance Sheets as of December 31, 1996 and 1995

     24    Consolidated Statements of Cash Flows for the years ended
            December 31, 1996, 1995 and 1994

     26    Consolidated  Statements of  Changes in  Stockholders' Equity
            for the years ended December 31, 1996, 1995 and 1994

     27    Notes to Consolidated Financial Statements

     52    Independent Auditors' Report



     2. Financial Statement Schedules required to  be filed by Item 8 of
         this Form 10-K:

    Page
   Herein  Schedule
   ------  --------------------------------------------------------------
     57    Valuation and Qualifying Accounts



     3. Exhibits:    See  Index  of  Exhibits  (page 36) for a listing
         of all exhibits filed with this annual report on Form 10-K


     b) Reports on Form 8-K:   The Company filed no reports on Form 8-K
                                   with the  Securities  and  Exchange
                                   Commission during the quarter ended
                                   December 31, 1996.










                                     -55-
PAGE
<PAGE>
                               SIGNATURES

     Pursuant to  the requirements  of Section  13 or  15(d) 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, as of the  27th
day of March 1997.
                                Gibson Greetings, Inc.

                                By      /s/ Frank J. O'Connell
                                        -----------------------
                                        Frank J. O'Connell
                                        President and Chief Executive Officer

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed  by the following persons  on behalf of the  registrant
and in the capacities indicated as of the 27th day of March 1997.

             Signature                  Title
            ----------                  -----
            /s/ Albert R. Pezzillo
            -------------------------
            Albert R. Pezzillo           Chairman of the Board


            /s/ Frank J. O'Connell       President and
            -------------------------    Chief Executive Officer
            Frank J. O'Connell           (principal executive officer)


            /s/ Paul W. Farley
            -------------------------    Assistant Treasurer
            Paul W. Farley               (principal accounting officer)


            /s/ George M. Gibson
            -------------------------
            George M. Gibson             Director


            /s/ Charles D. Lindberg
            -------------------------
            Charles D. Lindberg          Director


            /s/ Frank Stanton
            -------------------------
            Frank Stanton                Director


            /s/ Charlotte St. Martin
            -------------------------
            Charlotte St. Martin         Director


            /s/ C. Anthony Wainwright
            -------------------------
            C. Anthony Wainwright        Director
                                     -56-
PAGE
<PAGE>
<TABLE>
<CAPTION>
GIBSON GREETINGS, INC.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(Thousands of dollars)


     Column A         Column B          Column C         Column D    Column E
-------------------  ----------  ---------------------  ----------   ---------
                                       Additions
                                 ---------------------
                     Balance at  Charged to   Charged                 Balance
                      Beginning  Costs and    to Other               at End of
   Description        of Period   Expenses    Accounts  Deductions    Period
-------------------  ----------  ----------  ---------  ----------   ---------
<S>                  <C>         <C>         <C>        <C>          <C>
Deducted from
 trade receivables

Allowance for
 doubtful accounts:
  Twelve months
   ended 12/31/96    $ 12,305    $  2,086    $      -   $    737(A)  $ 13,654
  Twelve months
   ended 12/31/95      12,653       6,606           -      6,954(A)    12,305
  Twelve months
   ended 12/31/94      10,601      13,886           -     11,834(A)    12,653
Allowance for sales
 returns, allowances
 and cash discounts:
  Twelve months
   ended 12/31/96      46,973     101,815           -    103,153(B)    45,635
  Twelve months
   ended 12/31/95      54,742      97,445           -    105,214(B)    46,973
  Twelve months
   ended 12/31/94      42,918     121,450           -    109,626(B)    54,742

</TABLE>
[FN]
--------------------

     (A)   Accounts judged to be uncollectible and charged to reserve, net  of
           recoveries (including  Cleo through  November 14,  1995) which were
           charged to  the reserve,  and the  reduction in  the allowance as a
           result of the sale of Cleo effective November 15, 1995 of $1,917.


     (B)   Includes actual cash discounts taken by customers and sales returns
           and  allowances  granted  to  customers  (including  Cleo   through
           November 14, 1995)  all of which  were charged to  the reserve, and
           the reduction  in the  allowance as  a result  of the  sale of Cleo
           effective November 15, 1995 of $5,495.





                                     -57-
PAGE
<PAGE>
Index of Exhibits

 Exhibit
 Number      Description
 -------     -----------------------------------------------------------------

   3(a)      Restated Certificate of Incorporation as amended (*1)

   3(b)      Bylaws (*2)

   4(a)      Article 4.01 of Restated Certificate of Incorporation (included in
             Exhibit 3(a))

   4(b)      Rights Agreement dated as of December 4, 1987, between
             Gibson Greetings, Inc. and The First National Bank of Boston,
             Rights Agent, including Certificate of Designation, Preferences
             and Rights of Series A Preferred Stock (*3)

  10(a)      Lease Agreement dated January 25, 1982 between Corporate
             Property Associates 2 and Corporate Property Associates 3 and
             Gibson Greeting Cards, Inc.  (*4)

  10(b)      Amendment dated June 25, 1985, to Lease Agreement, dated
             January 25, 1982, by and between Corporate Property Associates 2
             and Corporate Property Associates 3 and Gibson Greeting Cards,
             Inc.  (*5)

  10(c)      Credit Agreement, dated as of April 26, 1996, by and among
             Gibson Greetings, Inc.; The Bank of New York; The Fifth Third
             Bank; Harris Trust and Savings Bank; NBD Bank, N.A.; The Sanwa
             Bank, Ltd.; The Sumitomo Bank, Ltd.; and The Bank of New York,
             as agent (*6)

  10(d)      Form of Note Agreement between Gibson Greetings, Inc. and
             Connecticut Mutual Life, The Minnesota Mutual Life Insurance
             Company, The Reliable Life Insurance Company, Federated Life
             Insurance Company, The Variable Annuity Life Insurance Company
             and Nationwide Life Insurance Company, dated May 15, 1991 (*7)

  10(e)      Executive Compensation Plans and Arrangements

             (i)    1983 Stock Option Plan (*2)

             (ii)   1985 Stock Option Plan (*2)

             (iii)  1987 Stock Option Plan (*2)

             (iv)   1989 Stock Option Plan (*2)

             (v)    1989 Stock Option Plan for Nonemployee Directors (*2)

             (vi)   1996 Nonemployee Director Stock Plan (*8)

             (vii)  1991 Stock Option Plan (*9)



                                     -58-
PAGE
<PAGE>
 Exhibit
 Number      Description
 -------     -----------------------------------------------------------------
             (viii) Employment Agreement between Gibson Greetings, Inc. and
                    Benjamin J. Sottile, dated April 1, 1993 (*10)

             (ix)   ERISA Makeup Plan (*11)

             (x)    Supplemental Executive Retirement Plan (*11)

             (xi)   Agreements dated January 2, 1991 and December 10, 1993
                    between Gibson Greetings, Inc. and Stephen M. Sweeney
                    (*2)

             (xii)  Agreement dated November 17, 1995 between Gibson
                    Greetings, Inc. and Stephen M. Sweeney (*12)

             (xiii) Agreement dated August 25, 1996 between Gibson Greetings,
                    Inc. and Frank J. O'Connell (*13)

             (xiv)  Agreement dated December 28, 1996 between Gibson
                    Greetings, Inc. and Gregory Ionna

             (xv)   Agreements dated January 24, 1991 and December 10, 1993
                    between Gibson Greetings, Inc. and Paul W. Farley

             (xvi)  Agreement dated September 3, 1996 between Gibson
                    Greetings, Inc. and William L. Flaherty

             (xvii) Settlement Agreement dated February 18,1997 between
                    Gibson Greetings, Inc. and Benjamin J. Sottile

  10(f)      Stock Purchase Agreement (*14)

  10(g)      Amendment dated November 15, 1995, to Lease Agreement,
             dated January 25, 1982, by and between Corporate Property
             Associates 2 and Corporate Associates 3 and Gibson Greetings,
             Inc. (*12)

  11         Computation of Income (Loss) per Share

  21         Subsidiaries of the Registrant

  23         Independent Auditors' Consent

  27         Financial Data Schedule (contained in EDGAR filing only)











                                     -59-
PAGE
<PAGE>
----------------------

    *  Filed as an Exhibit to the document indicated and incorporated
       herein by reference:

       (1) The Company's Report on Form 10-K for the year ended December
           31, 1988.

       (2) The Company's Report on Form 10-K/A (Amendment No. 1) for the
           year ended December 31, 1993.

       (3) The Company's Report on Form 8-K dated December 28, 1987,
           filed January 4, 1988.

       (4) The Company's Registration Statement on Form S-1 (No.
           2-82990).

       (5) The Company's Report on Form 10-K for the year ended December
           31, 1985.

       (6) The Company's Report on Form 10-Q for the quarter ended June
           30, 1996.

       (7) The Company's Report on Form 10-Q for the quarter ended June
           30, 1991.

       (8) The Company's definitive Proxy Statement dated April 24, 1996.

       (9) The Company's definitive Proxy Statement dated March 17, 1997.

      (10) The Company's Report on Form 10-Q for the quarter ended June 30,
            1993.

      (11) The Company's Report on Form 10-K for the year ended December
           31, 1992.

      (12) The Company's Report on Form 10-K for the year ended December
           31, 1995.

      (13) The Company's Report on Form 10-Q for the quarter ended September
           30, 1996.

      (14) The Company's Report on Form 8-K dated November 15, 1995, filed
           November 30, 1995.

----------------------

The Company will furnish to the Commission upon request its
long-term debt instruments not listed above.








                                     -60-
PAGE
<PAGE>