-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, PtOWqao5AEdKk5S3hgdWXHuSKkwaHKOo06ONyuc0VfU06sC7J8Hd0FPbMyb7vqfj eqQsD7RpMuy9Y8PUZUdl+A== 0000950152-95-001431.txt : 199506300000950152-95-001431.hdr.sgml : 19950630 ACCESSION NUMBER: 0000950152-95-001431 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19941231 FILED AS OF DATE: 19950629 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN GREETINGS CORP CENTRAL INDEX KEY: 0000005133 STANDARD INDUSTRIAL CLASSIFICATION: GREETING CARDS [2771] IRS NUMBER: 340065325 STATE OF INCORPORATION: OH FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: 11-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-01502 FILM NUMBER: 95551100 BUSINESS ADDRESS: STREET 1: 10500 AMERICAN RD CITY: CLEVELAND STATE: OH ZIP: 44144 BUSINESS PHONE: 2162527300 MAIL ADDRESS: STREET 1: 10500 AMERICAN ROAD CITY: CLEVELAND STATE: OH ZIP: 44144 11-K 1 AMERICAN GREETINGS CORPORATION 11-K 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 _________________________ FORM 11-K ANNUAL REPORT PURSUANT TO SECTION 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 _________________________ (Mark One): X ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF - --- 1934. For the fiscal year ended December 31, 1994. OR TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT - --- OF 1934. For the transition period from _______________ to _______________ Commission file number: 0-1502 A. Full title of the plan and the address of the plan, if different from that of the issuer named below: AMERICAN GREETINGS RETIREMENT PROFIT SHARING AND SAVINGS PLAN B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office: AMERICAN GREETINGS CORPORATION ONE AMERICAN ROAD CLEVELAND, OHIO 44144 _________________________ REQUIRED INFORMATION The following financial statements are being furnished for the American Greetings Retirement Profit Sharing and Savings Plan (the "Plan"): 1. Audited statements of net assets available for benefits as of December 31, 1994 and 1993. 2 2. Audited statements of changes in net assets available for benefits for the years ended December 31, 1994 and 1993. SIGNATURES The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized. AMERICAN GREETINGS RETIREMENT PROFIT SHARING AND SAVINGS PLAN June 29, 1995 By: /s/ Harvey Levin -------------------------------- Name: Harvey Levin Title: Senior Vice-President -2- 3 Report of Independent Auditors Administrative Committee of the Retirement Profit Sharing and Savings Plan American Greetings Corporation Cleveland, Ohio We have audited the accompanying statements of net assets available for benefits of American Greetings Retirement Profit Sharing and Savings Plan as of December 31, 1994 and 1993, and the related statements of changes in net assets available for benefits for the years then ended. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements 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 financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan at December 31, 1994 and 1993, and the changes in its net assets available for benefits for the years then ended, in conformity with generally accepted accounting principles. Our audits were made for the purpose of forming an opinion on the financial statements taken as a whole. The accompanying supplemental schedules of assets held for investment purposes as of December 31, 1994 and reportable transactions for the year then ended are presented for purposes of complying with the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974, and are not a required part of the financial statements. The Fund Information in the statement of net assets available for benefits and the statement of changes in net assets available for benefits is presented for purposes of additional analysis rather than to present the net assets available for benefits and changes in net assets available for benefits of each fund. The supplemental schedules and Fund Information have been subjected to the auditing procedures applied in our audits of the 1994 financial statements and, in our opinion, are fairly stated in all material respects in relation to the 1994 financial statements taken as a whole. Ernst & Young LLP Cleveland, Ohio June 23, 1995 2 4 THE TABLE CALLED AMERICAN GREETINGS RETIREMENT PROFIT SHARING AND SAVINGS PLAN STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS DECEMBER 31, 1994 AND 1993 WILL BE FILED IN A 11-K/A 5 THE TABLE CALLED AMERICAN GREETINGS RETIREMENT PROFIT SHARING AND SAVINGS PLAN STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1993 WILL BE FILED IN A 11-K/A 6 American Greetings Retirement Profit Sharing and Savings Plan Notes to Financial Statements Years Ended December 31, 1994 and 1993 A. DESCRIPTION OF THE PLAN The following description of the American Greetings Retirement Profit Sharing and Savings Plan (the "Plan") provides only general information. Participants should refer to the Plan agreement, copies of which are available from the Administrative Committee, for a more complete description of the Plan's provisions. GENERAL The Plan is a defined contribution plan covering substantially all full-time employees of American Greetings Corporation (the "Corporation") and domestic subsidiaries who are not covered under another defined contribution or defined benefit plan. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). CONTRIBUTIONS The Corporation contributes 8% of its consolidated domestic pretax profits, excluding dividends and gains and losses from capital asset and foreign currency transactions, to the Plan. Additional amounts may be contributed at the option of the Corporation's Board of Directors. Additionally, participants may contribute 2% to 15% of pretax annual compensation (401(k) contributions), as defined in the Plan. The Corporation may restrict individual contributions below 15% in order to meet certain governmental limitations. Prior to August 1993, participant contributions were limited to 8% of pretax annual compensation. The Corporation contributes 25% of the first 6% of annual compensation that a participant contributes to the Plan, provided that the Corporation achieves certain financial goals. Such contributions are invested in accordance with the participants' investment elections. The Plan was amended to permit rollover contributions effective June 30, 1994. PARTICIPANT ACCOUNTS Each participant's account is credited with the participant's 401(k) contributions and allocations of the Corporation's profit sharing contribution and 401(k) match, and Plan earnings; allocations are based on participant compensation, participant elections, and account balances, respectively. Individuals who have retired or terminated employment 5 7 American Greetings Retirement Profit Sharing and Savings Plan Notes to Financial Statements--Continued with the Corporation do not participate in the Corporation's contribution to the Plan. The benefit to which a participant is entitled is the benefit that can be provided from the participant's account. Participants are fully vested in their respective account balances. 6 8 American Greetings Retirement Profit Sharing and Savings Plan Notes to Financial Statements-Continued A. DESCRIPTION OF THE PLAN--CONTINUED INVESTMENT OPTIONS Participants direct the investment of their accounts, together with their share of the Corporation's annual contribution, in increments of 10% to any of the investment options offered under the Plan. Prior to June 30, 1994, the trustee of the Plan was National City Bank (NCB). Assets held by NCB were invested in the following funds: Common Fund -- Funds were invested in various stocks of U.S. companies to obtain long-term capital appreciation. Fixed Income Fund -- Funds were invested in a combination of contracts with banks and insurance companies that have a fixed rate of interest, U.S. Government Securities, and other investment grade securities. Company Stock Fund -- Funds were invested in Common Stock of American Greetings Corporation. Effective June 30, 1994, the trustee of the Plan was changed and assets were transferred to The Vanguard Group of Investment Companies (Vanguard). Further, the Plan was amended to change the investment options offered to Plan participants. Vanguard maintains the following investment options under the Plan: Index Trust 500 Portfolio Fund -- Funds are invested in stocks of companies that make up the Standard and Poor's Index. PrimeCap Fund -- Funds are invested primarily in equity securities. Wellington Fund -- Funds are invested in bonds and common stocks. Money Market Reserves Fund -- Funds are invested in short-term notes, negotiable certificates of deposit, bankers' acceptances and commercial paper that mature in one year or less. 7 9 American Greetings Retirement Profit Sharing and Savings Plan Notes to Financial Statements--Continued Bond Index/IC Fund -- Funds are invested in Shares of Vanguard Bond Index Fund and investment contracts with insurance companies previously held in the Fixed Income Fund. A. DESCRIPTION OF THE PLAN--CONTINUED Company Stock Fund -- Funds are invested in Common Stock of American Greetings Corporation. PARTICIPANT NOTES RECEIVABLE Effective June 30, 1994, the Plan was amended to permit Participants to borrow, against their elected deferred contributions or rollover contributions, a minimum of $1,000 up to a maximum of $50,000 or 50% of their account balance. Loan transactions are treated as a transfer from (to) the investment fund to (from) the loan fund. Loan terms range from six to sixty months. The loans are secured by the balance in the participant's account and bear interest at a rate of prime plus one percent at the time of the loan origination. Principal and interest are paid ratably through monthly payroll deductions. Participant loans outstanding prior to June 30, 1994 relate to loans granted before December 31, 1982. No new loans were granted under the Plan from December 31, 1982 to June 30, 1994. PAYMENT OF BENEFITS At the time of a participant's retirement or termination of service the participant may elect to purchase an annuity contract, receive a lump sum payment or be paid in installments. PLAN TERMINATION Although it has not expressed any intent to do so, the Corporation has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. In the event of Plan termination, the assets of the Plan will be distributed to the participants on the basis of individual account balances at the date of termination. Benefit payments within the Participant Loan Fund represent terminated employees' loan balances which are recognized as distributions at termination. 8 10 American Greetings Retirement Profit Sharing and Savings Plan Notes to Financial Statements--Continued B. SUMMARY OF ACCOUNTING POLICIES The financial statements of the Plan are presented on the accrual basis of accounting. All the funds of the Plan are accounted for by the Trustee. Securities traded on a national securities exchange are valued at the last reported sales price on the last business day of the Plan year. Securities traded in the over-the-counter market and listed securities for which no sale was reported on that date are valued at the last reported bid price. The value of deposits with insurance companies represents contributions made to deposit contracts plus interest at the contract rate, less funds transferred to the Trustee to pay retirement benefits and the insurance companies' administrative expenses. Audit and legal fees are paid by the Corporation. All other expenses of the Plan are paid by the Plan. Certain amounts from the 1993 financial statements have been reclassified to conform with the current year presentation. C. INVESTMENTS The fair value of individual investments that represented 5% or more of the fair value of Plan net assets are as follows:
1994 1993 ------------------------------- American Greetings Common Stock $ 42,646,797 $ 37,850,704 Vanguard Index 500 Portfolio Fund 40,255,607 Vanguard PrimeCap Fund 46,952,475 Vanguard Money Market Reserves Prime Portfolio 25,626,952 Vanguard Bond Index Fund 128,290,532 Freddie Gold ("FGLD"), 6.5%, 30 year TBA April 1994, due April 14, 2024 23,077,734 Metropolitan Life Insurance Company, May 22, 1995, 9.46% 22,761,666 20,635,480
9 11 American Greetings Retirement Profit Sharing and Savings Plan Notes to Financial Statements--Continued C. INVESTMENTS--CONTINUED During the years ended December 31, 1994 and 1993 the Plan's investments (including investments bought, sold and held during the year) appreciated (depreciated) in fair value as follows:
DECEMBER 31 1994 1993 --------------------------------- INVESTMENTS AT FAIR VALUE AS DETERMINED BY QUOTED MARKET PRICE Vanguard Index 500 Portfolio Fund $ 764,106 $ Vanguard PrimeCap Fund 2,564,675 Vanguard Wellington Fund (425,863) Vanguard Bond Index Fund (4,039,357) Common stock of American Greetings Corporation (6,813,454) 8,737,445 Common stocks (4,808,344) 5,429,489 US Government securities and corporate obligations (7,937,004) 2,860,677 ------------------------------------ $(20,695,241) $17,027,611 ====================================
The Plan held 439,161 Class A shares and 1,140,350 Class B shares of American Greetings Corporation common stock at December 31, 1994 (36,912 and 1,076,344 at December 31, 1993). Class B shares are not publicly traded. 10 12 American Greetings Retirement Profit Sharing and Savings Plan Notes to Financial Statements--Continued D. INCOME TAX STATUS The Internal Revenue Service has issued a favorable determination letter indicating the Plan qualifies under Section 401(a) of the Internal Revenue Code (the "Code") and, therefore, is not subject to tax under present income tax laws. The Plan is required to operate in conformity with the Code to maintain its qualification. The Plan administrator is not aware of any course of action or series of events that might adversely affect the Plan's qualified status. The Company reapplied for a determination letter in March 1995. 11 13 American Greetings Corporation Employees' Retirement Profit Sharing Plan EIN: 34-0065325 Item 27a--Schedule of Assets Held for Investment Purposes Year Ended December 31, 1994
Col. (b) Col. (c) Col. (d) Col. (e) Description of Investment Including Identity of Issue, Borrower, Lessor or Maturity Date, Rate of Interest, Par or Similar Party Maturity Value Cost Current Value - -------------------------------------------------------------------------------------------------------------------------------- INTEREST IN REGISTERED INVESTMENT COMPANIES Vanguard Index 500 Portfolio Fund 936,831 shares $ 39,640,150 $ 40,255,607 Vanguard PrimeCap Fund 2,349,974 shares 44,593,195 46,952,475 Vanguard Wellington Fund 720,968 shares 14,388,725 13,979,573 Vanguard Money Market Reserves Prime Portfolio 25,626,952 shares 25,626,952 25,626,952 VanguardBond Index Fund 18,761,712 shares 131,575,721 128,290,532 ------------------------------- TOTAL ASSETS IN REGISTERED INVESTMENT COMPANIES $ 255,824,743 $ 255,105,139 =============================== EMPLOYER-RELATED INVESTMENTS American Greetings Corp. Class A 439,161 shares $ 9,285,879 $ 11,857,347 American Greetings Corp Class B 1,140,350 shares 22,976,475 30,789,450 ------------------------------- Total corporate common stock $ 32,262,354 $ 42,646,797 =============================== INSURANCE CONTRACTS Pacific Mutual G-25755.02 9.40%, Matures 12-31-95 $ 14,341,532 $ 14,341,532 CNA Insurance Co. 9.85%, Matures 5-25-96 16,927,473 16,927,473 Mutual Benefit Life GA-4207 Subject to rehabilitation program 1,918,811 1,918,811 Metropolitan Life GAC 11727 9.46%, Matures 5-22-95 22,761,666 22,761,666 ------------------------------- TOTAL INSURANCE CONTRACT ASSETS $ 55,949,482 $ 55,949,482 ===============================
12 14 Audited Financial Statements and Supplemental Schedules AMERICAN GREETINGS RETIREMENT PROFIT SHARING AND SAVINGS PLAN December 31, 1994 15 American Greetings Retirement Profit Sharing and Savings Plan Item 27d--Reportable Transactions Year Ended December 31, 1994 SECTION A Individual transactions which involve an amount in excess of 5% of the fair value of plan assets on January 1, 1994.
Fair Value on Description Purchase Price Selling Price Expenses Cost of Asset Transaction Date Gain (Loss) - ------------------------------------------------------------------------------------------------------------------------------------ Vanguard Bond Index Fund $186,115,460 $186,115,460 Vanguard PrimeCap Fund 31,851,350 31,851,350 Vanguard Index 500 Portfolio Fund 31,851,413 31,851,413 Vanguard Index 500 Portfolio Fund 18,376,481 18,376,481 NCC Government Portfolio 19,731,526 19,731,526 NCC Government Portfolio 64,078,511 64,078,511 NCC Government Portfolio 17,990,341 17,990,341 NCC Government Portfolio $42,092,124 $42,092,124 42,092,124 NCC Government Portfolio 20,925,503 20,925,503 20,925,503 NCC Government Portfolio 28,078,565 28,078,565 28,078,565
16 American Greetings Retirement Profit Sharing and Savings Plan Item 27d--Reportable Transactions--Continued SECTION A--CONTINUED
Fair Value on Description Purchase Price Selling Price Expenses Cost of Asset Transaction Date Gain (Loss) - ------------------------------------------------------------------------------------------------------------------------------------ NCC Government Portfolio 17,845,725 17,845,725 NCC Government Portfolio 18,208,156 18,208,156 18,208,156 FNMA 6.5% 30yr TBA due 3-14-24 21,566,875 21,566,875 United States Treas Bds Dtd Dtd 2-14-90 8.50% due 2-15-20 28,977,813 28,977,813 United States Treas Nts Dtd 2-16-93 6.25% due 2-15-03 18,956,250 18,956,250 FNMA 6.5% 30yr TBA due 3-14-24 21,539,375 21,566,875 21,539,375 (27,500)
17 American Greetings Retirement Profit Sharing and Savings Plan Item 27d--Reportable Transactions--Continued Year Ended December 31, 1994 SECTION B Transactions in a plan year concerning a series of the same issue which when sales and purchases are aggregated involve an amount in excess of 5% of the fair value of plan assets on January 1, 1994.
Purchases Sales Total Gain ---------------------------------------------------------------------- Description No. Amount No. Amount No. Amount (Loss) - --------------------------------------------- --------------------------------------------------------------------- ------------ American Greetings Company Stock Fund 82 $ 6,063,038 76 $ 7,582,865 158 $ 13,645,903 $ 2,111,254 Vanguard Bond Index Fund 95 199,425,867 79 67,095,978 174 266,521,845 (754,167) Vanguard Money Market Reserves Prime Portfolio 87 27,473,188 38 2,093,600 125 29,566,788 Vanguard Index 500 Portfolio 89 61,788,584 72 3,920,604 161 65,709,188 148,649 Vanguard PrimeCap Fund 91 47,177,805 69 2,790,004 160 49,967,809 205,394 FGLD 6.5% 30yr TBA Apr 94 due 04/14/24 2 22,978,594 2 22,978,594 (99,141) FNMA 6.5% 30yr TBA 1 10,903,750 1 10,006,563 2 20,910,313 (897,187) due 5/12/24 FNMA 6.5% 30yr TBA 1 21,566,875 1 21,539,375 2 43,106,250 (27,500) due 03/14/24 FNMA 6.5% 30yr TBA 1 10,637,344 1 9,996,250 2 20,633,594 (641,094) due 06/13/24 FGLD 7.0% 30yr TBA 1 12,078,750 1 11,283,750 2 23,362,500 (795,000) due 05/15/24
18
Purchases Sales Total Gain ----------------------------------------------------------------- Description No. Amount No. Amount No. Amount (Loss) - ----------------------------------------- ----------------------------------------------------------------- ------------ Federal Home Ln Mtg Corp Multiclass Mtg Part Ctf Gtd Gold 30 Yr TBA 7.0% due 2/14/24 1 11,116,875 1 11,213,125 2 22,330,000 96,250 Federal Home Ln Mtg CorpMulticlass Mtg Part Ctf Gtd Gold 30 Yr TBA 7.0% due 2/14/24 1 12,123,750 1 12,185,625 2 24,309,375 61,875
19 American Greetings Retirement Profit Sharing and Savings Plan Item 27d--Reportable Transactions--Continued SECTION B--CONTINUED
Purchases Sales Total ------------------------------------------------------------------------- Gain Description No. Amount No. Amount No. Amount (Loss) - ---------------------------------- ------------------------------------------------------------------------- ------------ United States Treas Bds Dtd 2-14-90 8.50% due 2-15-20 4 38,961,938 4 19,650,625 8 58,612,563 (133,815) United States Treas Nts Dtd 5-15-92 7.50% due 5-15-02 2 11,137,422 1 7,078,204 3 18,215,626 12,032 United States Treas Nts Dtd 2-16-93 6.25% due 2-15-03 1 18,956,250 3 16,456,172 4 35,412,422 (130,547) Unites States Treas Nts Dtd 3-31-93 3.875% due 3-31-95 2 11,697,810 1 5,970,000 3 17,667,810 (46,360) United States Treas Nts Dtd 2-15-89 8.875% due 2-15-99 3 15,247,032 1 8,601,250 4 23,848,282 (122,500) NCC Money Market Portfolio 93 88,898,982 99 93,400,173 192 182,299,155 NCC Government Portfolio 96 201,641,932 57 8,294,138 153 209,936,070
EX-23 2 EXHIBIT 23 1 CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in the Registration Statement No. 33-45673 on Form S-8 pertaining to the American Greetings Retirement Profit Sharing and Savings Plan of our report dated June 23, 1995, with respect to the financial statements and schedules of the American Greetings Retirement Profit Sharing and Savings Plan included in this Annual Report on Form 11-K for the year ended December 31, 1994. Ernst & Young LLP Cleveland, Ohio June 26, 1995 -----END PRIVACY-ENHANCED MESSAGE-----