-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, K8RQs1w/SuSKsrQ22InwZ9tztt6ncqCm+Vfq+JIfjUdqg3GltYnhojkWEaxM/ykk SEpE3+pFRCalJBDd5aZr/g== /in/edgar/work/20000628/0000950152-00-005003/0000950152-00-005003.txt : 20000920 0000950152-00-005003.hdr.sgml : 20000920 ACCESSION NUMBER: 0000950152-00-005003 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000628 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN GREETINGS CORP CENTRAL INDEX KEY: 0000005133 STANDARD INDUSTRIAL CLASSIFICATION: [2771 ] IRS NUMBER: 340065325 STATE OF INCORPORATION: OH FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: 11-K SEC ACT: SEC FILE NUMBER: 001-13859 FILM NUMBER: 663078 BUSINESS ADDRESS: STREET 1: ONE AMERICAN ROAD CITY: CLEVELAND STATE: OH ZIP: 44144 BUSINESS PHONE: 2162527300 MAIL ADDRESS: STREET 1: ONE AMERICAN ROAD CITY: CLEVELAND STATE: OH ZIP: 44144 11-K 1 e11-k.txt 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, 1999. 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 name 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, 1999 and 1998. 2 2. Audited statements of changes in net assets available for benefits for the years ended December 31, 1999 and 1998. EXHIBITS Exhibit No. 23 Consent of Independent Auditors SIGNATURES The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees 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 28, 2000 By: /s/ William S. Meyer ------------------------------ Name: William S. Meyer Title: Senior Vice-President and Chief Financial Officer -2- 3 EXHIBIT INDEX Exhibit No. 23 Consent of Independent Auditors 4 AUDITED FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE American Greetings Retirement Profit Sharing and Savings Plan Years Ended December 31, 1999 and 1998 with Report of Independent Auditors 5 American Greetings Retirement Profit Sharing and Savings Plan Audited Financial Statements and Supplemental Schedule Years Ended December 31, 1999 and 1998 TABLE OF CONTENTS Report of Independent Auditors ...................................... 1 AUDITED FINANCIAL STATEMENTS Statements of Net Assets Available for Benefits...................... 2 Statements of Changes in Net Assets Available for Benefits........... 3 Notes to Financial Statements ....................................... 4 SUPPLEMENTAL SCHEDULE Schedule H, Line 4(i)--Schedule of Assets Held for Investment Purposes at End of Year................................. 9 6 Report of Independent Auditors Administrative Committee of the American Greetings Retirement Profit Sharing and Savings Plan 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, 1999 and 1998, 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 auditing standards generally accepted in the United States. 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, 1999 and 1998, and the changes in its net assets available for benefits for the years then ended, in conformity with accounting principles generally accepted in the United States. Our audits were performed for the purpose of forming an opinion on the financial statements taken as a whole. The accompanying supplemental schedule of assets held for investment purposes at end of year as of December 31, 1999, is presented for purpose of additional analysis and is not a required part of the financial statements but is supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. This supplemental schedule is the responsibility of the Plan's management. The supplemental schedule has been subjected to the auditing procedures applied in our audits of the financial statements and, in our opinion, is fairly stated in all material respects in relation to the financial statements taken as a whole. Cleveland, Ohio June 22, 2000 1 7 American Greetings Retirement Profit Sharing and Savings Plan Statements of Net Assets Available for Benefits
DECEMBER 31 1999 1998 -------------------------------------------- ASSETS Investments $799,942,404 $711,367,494 Contribution receivables: Employer 16,374,521 27,308,874 Participants 1,063,261 1,193,008 -------------------------------------------- Total receivables 17,437,782 28,501,882 -------------------------------------------- Total assets 817,380,186 739,869,376 LIABILITIES Accrued liabilities -- 207,151 -------------------------------------------- NET ASSETS AVAILABLE FOR BENEFITS $817,380,186 $739,662,225 ============================================
See notes to financial statements. 2 8 American Greetings Retirement Profit Sharing and Savings Plan Statements of Changes in Net Assets Available for Benefits
FOR THE YEAR ENDED DECEMBER 31 1999 1998 --------------------------------------- ADDITIONS Investment income: Net appreciation in fair value of investments $ 55,113,140 $ 72,223,063 Interest and dividends 43,604,537 31,817,284 Dividends from American Greetings Corporation common stock 989,679 738,455 Contributions: Participants 16,686,347 17,624,465 Employer 16,374,521 27,308,874 --------------------------------------- Total additions 132,768,224 149,712,141 DEDUCTIONS Benefits paid directly to participants 54,997,190 47,751,799 Administrative expenses 53,073 47,163 --------------------------------------- Total deductions 55,050,263 47,798,962 --------------------------------------- Net increase 77,717,961 101,913,179 Net assets available for benefits at beginning of year 739,662,225 637,749,046 --------------------------------------- NET ASSETS AVAILABLE FOR BENEFITS AT END OF YEAR $817,380,186 $739,662,225 =======================================
See notes to financial statements. 3 9 American Greetings Retirement Profit Sharing and Savings Plan Notes to Financial Statements Years Ended December 31, 1999 and 1998 A. DESCRIPTION OF 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 for a more complete description of the Plan's provisions. GENERAL The Plan is a defined contribution plan covering substantially all full-time non-union employees and certain union employees of American Greetings Corporation (the "Corporation") and domestic subsidiaries. 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 assets and foreign currency transactions, to the Plan. Additional amounts may be contributed at the option of the Corporation's Board of Directors. No additional contributions were made in either the 1999 or 1998 plan years. 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. The Corporation contributes 40% of the first 6% of pretax annual compensation that a participant contributes to the Plan, provided that the Corporation achieves certain predetermined financial goals. All contributions are invested in accordance with the participants' investment elections. Participants direct the investment of their accounts, together with their share of the Corporation's annual contributions, in increments of 10% to any of the investment options offered under the Plan. 4 10 American Greetings Retirement Profit Sharing and Savings Plan Notes to Financial Statements--Continued A. DESCRIPTION OF THE PLAN--CONTINUED PARTICIPANT ACCOUNTS AND VESTING Each participant's account is credited with the participant's 401(k) contributions and allocations of (a) the Corporation's profit sharing contribution and 401(k) match and (b) Plan earnings. Allocations are based on participant compensation, participant elections, or account balances, as defined. Individuals who have retired or terminated employment 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 immediately vested in both their and the Corporation's contributions, plus actual earnings thereon. PARTICIPANT LOANS Participants may borrow against their elected deferred contributions or rollover contributions, a minimum of $1,000 up to a maximum equal to the lesser of $50,000 or 50% of their vested account balance. 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. PAYMENT OF BENEFITS At the time of a participant's retirement or termination of service, the participant may elect to receive a lump sum payment or to be paid in monthly, quarterly or annual 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. 5 11 American Greetings Retirement Profit Sharing and Savings Plan Notes to Financial Statements--Continued B. SUMMARY OF ACCOUNTING POLICIES BASIS OF ACCOUNTING The financial statements have been prepared on the accrual basis of accounting. INVESTMENT VALUATION AND INCOME RECOGNITION Except for deposits with an insurance company, the Plan's investments are stated at fair value which equals the quoted market price on the last business day of the plan year (see below). The shares of registered investment companies are valued at quoted market prices which represent the net asset values of shares held by the Plan at year-end. The common stock of the Corporation is valued at the last reported sales price on the last business day of the plan year. The participant loans are valued at their outstanding balances, which approximate fair value. The value of deposits with an insurance company represents contributions made to deposit contracts plus interest at the contract rate, less funds transferred to Vanguard Fiduciary Trust Company (the "Trustee") to pay retirement benefits and the insurance companies' administrative expenses. The cost of the deposits approximate their fair value. Purchases and sales of investments are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividend income is recorded on the ex-dividend date. USE OF ESTIMATES The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. RECLASSIFICATION Certain amounts in the 1998 financial statements have been reclassified to conform to the 1999 presentation. 6 12 American Greetings Retirement Profit Sharing and Savings Plan Notes to Financial Statements--Continued C. INVESTMENTS The Plan's investments are held by Vanguard Fiduciary Trust Company, Trustee of the Plan. The fair value of individual investments that represent 5% or more of the fair value of the Plan's net assets are as follows:
DECEMBER 31 1999 1998 -------------------------------- Vanguard Index Trust--500 Portfolio $ 207,526,458 $ 178,738,479 Vanguard/PRIMECAP Fund 251,154,480 176,764,139 Vanguard/Wellington Fund 52,122,652 56,270,038 Vanguard Money Market Reserves Prime Portfolio 77,209,264 50,888,993 Vanguard Total Bond Market Index Fund 139,497,281 160,585,592 Common Stock of American Greetings Corporation 33,148,209 40,275,815
During the years ended December 31, 1999 and 1998, the Plan's investments (including investments purchased, sold as well as held during the year) appreciated (depreciated) in fair value as determined by quoted market prices as follows:
1999 1998 ------------------------------ Registered Investment Companies $ 72,115,878 $ 70,496,542 Common Stock of American Greetings Corporation (17,002,738) 1,726,521 ------------------------------ TOTAL NET APPRECIATION IN FAIR VALUE OF INVESTMENTS $ 55,113,140 $ 72,223,063 ==============================
7 13 American Greetings Retirement Profit Sharing and Savings Plan Notes to Financial Statements--Continued D. INCOME TAX STATUS The Plan has received a determination letter from the Internal Revenue Service dated August 24, 1995, stating that the Plan is qualified under Section 401(a) of the Internal Revenue Code (the "Code") and, therefore, the related trust is exempt from taxation. Once qualified, the Plan is required to operate in conformity with the Code to maintain its qualification. The Plan's Administrative Committee believes the Plan is being operated in compliance with the applicable requirements of the Code and, therefore, believes that the Plan is qualified and the related trust is tax exempt. E. TRANSACTIONS WITH PARTIES-IN-INTEREST The Plan held 520,601 Class A shares and 900,000 Class B shares of American Greetings Corporation common stock at December 31, 1999 (77,418 and 900,000 shares, respectively, at December 31, 1998). The Plan received dividends from the Corporation's stock of $989,679 and $738,455 in 1999 and 1998, respectively. Class B shares are not publicly traded. The Plan invests in shares of mutual funds managed by an affiliate of the Trustee. Accounting, legal and certain other administrative fees are paid by the Corporation. All other expenses of the Plan are paid by the Plan. Investment advisory fees for portfolio management of Vanguard Funds are paid directly from fund earnings. 8 14 American Greetings Retirement Profit Sharing and Savings Plan EIN: 34-0065325 Plan #001 Schedule H, Line 4(i)--Schedule of Assets Held for Investment Purposes at End of Year December 31, 1999
DESCRIPTION OF INVESTMENT INCLUDING MATURITY DATE, IDENTITY OF ISSUE, BORROWER, LESSOR OR RATE OF INTEREST, SIMILAR PARTY PAR OR MATURITY VALUE CURRENT VALUE - ----------------------------------------------------------------------------------------------------------------------------------- VALUE OF INTEREST IN REGISTERED INVESTMENT COMPANIES *Vanguard Index Trust--500 Portfolio 1,533,485 shares $207,526,458 *Vanguard/PRIMECAP Fund 4,046,310 shares 251,154,480 *Vanguard/Wellington Fund 1,864,186 shares 52,122,652 *Vanguard Money Market Reserves Prime Portfolio 77,209,264 shares 77,209,264 *Vanguard Total Bond Market Index Fund 14,591,766 shares 139,497,281 *Vanguard/Windsor II 825,072 shares 20,602,052 *Vanguard/Wellesley Income Fund 371,059 shares 6,994,464 *Vanguard International Growth Portfolio 348,225 shares 7,831,580 *Vanguard Extended Market Index Fund 66,228 shares 2,455,066 ------------ Total value of interest in registered investment companies 765,393,297 EMPLOYER-RELATED INVESTMENTS *American Greetings Corp. Class A Common Stock 520,601 shares 12,299,198 *American Greetings Corp. Class B Common Stock 900,000 shares 20,849,011 ------------ Total employer-related investments 33,148,209 *LOANS TO PARTICIPANTS 8 % to 10%, Matures 1-5 years 1,400,898 ------------ $799,942,404 ============
* Indicates party-in-interest to the Plan. 9 EX-23 2 ex23.txt EXHIBIT 23 1 Exhibit 23 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 American Greetings Corporation of our report dated June 22, 2000, with respect to the financial statements and supplemental schedule 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, 1999. /s/ Ernst & Young LLP ---------------------------- Cleveland, Ohio June 22, 2000 -----END PRIVACY-ENHANCED MESSAGE-----