-----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, GpB2qXq2A0KoQqQ5B+Stk0rzcJcHbhxwy4egGo/0/4FHD73VgAyycKdWzOUMnf3a oPu2oHvyXaXCTGV/7tQ6AA== 0000950152-96-003169.txt : 19960629 0000950152-96-003169.hdr.sgml : 19960629 ACCESSION NUMBER: 0000950152-96-003169 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960627 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: 96586862 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 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, 1995. 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") filed herewith as Exhibit 13: 1. Audited statements of net assets available for benefits as of December 31, 1995 and 1994. 2 2. Audited statements of changes in net assets available for benefits for the years ended December 31, 1995 and 1994. 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 27, 1996 By: /s/ Harvey Levin ------------------------------ Name: Harvey Levin Title: Senior Vice-President -2- 3 EXHIBIT INDEX Exhibit - ------- 13 The following financial statements are being furnished for the American Greetings Retirement Profit Sharing and Savings Plan (the "Plan") filed herewith as Exhibit 13: 1. Audited statements of net assets available for benefits as of December 31, 1995 and 1994. 2. Audited statements of changes in net assets available for benefits for the years ended December 31, 1995 and 1994. 23 Consent of Independent Auditors EX-13 2 EXHIBIT 13 1 Audited Financial Statements and Supplemental Schedules AMERICAN GREETINGS RETIREMENT PROFIT SHARING AND SAVINGS PLAN Years ended December 31, 1995 and 1994 with Report of Independent Auditors 2 American Greetings Retirement Profit Sharing and Savings Plan Financial Statements and Supplemental Schedules Years Ended December 31, 1995 and 1994 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....................................... 4 Notes to the Financial Statements ............................................................... 6 Supplemental Schedules Form 5500, Item 27a - Schedule of Assets Held for Investment Purposes............................ 12 Form 5500, Item 27d - Schedule of Reportable Transactions ....................................... 13 Form 5500, Item 27b - Schedule of Loans or Fixed Income Obligations.............................. 14
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, 1995 and 1994, 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, 1995 and 1994, 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, 1995 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 financial statements and, in our opinion, are fairly stated in all material respects in relation to the financial statements taken as a whole. ERNST & YOUNG LLP June 21, 1996 Cleveland, Ohio 4 American Greetings Retirement Profit Sharing and Savings Plan Statement of Net Assets Available for Benefits
December 31, 1995 --------------------------------------------------------------------------------------- INDEX 500 MONEY MARKET PORTFOLIO PRIMECAP WELLINGTON RESERVES PRIME TOTAL FUND FUND FUND PORTFOLIO --------------------------------------------------------------------------------------- ASSETS Investments, at fair value: Index 500 Portfolio Fund $ 68,137,655 $ 68,137,655 PrimeCap Fund 84,509,585 $ 84,509,585 Wellington Fund 29,224,713 $ 29,224,713 Money Market Reserves Prime Portfolio 31,317,919 $ 31,201,217 Bond Index Fund 153,014,922 International Growth Portfolio 15,298 Common Stock of American Greetings Corporation 34,464,619 Participant notes receivable 640,082 --------------------------------------------------------------------------------------- Total investments 401,324,793 68,137,655 84,509,585 29,224,713 31,201,217 Deposits with insurance companies 35,916,718 Receivables: Employer's contribution 19,597,110 3,348,131 4,091,891 1,283,325 1,359,193 Participants' contributions 996,397 189,865 254,048 70,247 49,361 Other net receivables 40,568 Other 18,219 3,144 4,371 1,210 1,023 --------------------------------------------------------------------------------------- Total receivables 20,652,294 3,541,140 4,350,310 1,354,782 1,409,577 --------------------------------------------------------------------------------------- Total assets 457,893,805 71,678,795 88,859,895 30,579,495 32,610,794 --------------------------------------------------------------------------------------- NET ASSETS AVAILABLE FOR BENEFITS $ 457,893,805 $ 71,678,795 $ 88,859,895 $ 30,579,495 $ 32,610,794 =======================================================================================
December 31, 1995 ------------------------------------------------------------------------------------------- BOND INTERNATIONAL COMPANY INDEX/IC VANGUARD/WINDSOR WELLESLEY GROWTH STOCK PARTICIPANT FUND II FUND FUND PORTFOLIO FUND LOAN FUND ------------------------------------------------------------------------------------------- ASSETS Investments, at fair value: Index 500 Portfolio Fund PrimeCap Fund Wellington Fund Money Market Reserves Prime Portfolio $ 116,702 Bond Index Fund $ 153,014,922 International Growth Portfolio $ 15,298 Common Stock of American Greetings Corporation 34,464,619 Participant notes receivable $ 640,082 ------------------------------------------------------------------------------------------- Total investments 153,014,922 15,298 34,581,321 640,082 Deposits with insurance companies 35,916,718 Receivables: Employer's contribution 6,996,723 $ 204,247 $ 86,764 188,812 2,038,024 Participants' contributions 291,092 2,909 930 3,324 134,621 Other net receivables 40,568 Other 5,924 101 101 2,345 ------------------------------------------------------------------------------------------- Total receivables 7,293,739 207,257 87,795 192,136 2,215,558 ------------------------------------------------------------------------------------------- Total assets 196,225,379 207,257 87,795 207,434 36,796,879 640,082 ------------------------------------------------------------------------------------------- NET ASSETS AVAILABLE FOR BENEFITS $ 196,225,379 $ 207,257 $ 87,795 $ 207,434 $ 36,796,879 $ 640,082 ===========================================================================================
See notes to financial statements. 2 5 American Greetings Retirement Profit Sharing and Savings Plan Statement of Net Assets Available for Benefits
DECEMBER 31, 1994 ---------------------------------------------------------------------------------------- INDEX 500 MONEY MARKET PORTFOLIO PRIMECAP WELLINGTON RESERVES PRIME TOTAL FUND FUND FUND PORTFOLIO ---------------------------------------------------------------------------------------- ASSETS Investments, at fair value: Index 500 Portfolio Fund $ 40,255,607 $ 40,255,607 PrimeCap Fund 46,952,475 $ 46,952,475 Wellington Fund 13,979,573 $ 13,979,573 Money Market Reserves Prime Portfolio 25,626,952 $ 25,379,588 Bond Index Fund 128,290,532 Common Stock of American Greetings Corporation 42,646,797 Participant notes receivable 229,236 ---------------------------------------------------------------------------------------- Total investments 297,981,172 40,255,607 46,952,475 13,979,573 25,379,588 Deposits with insurance companies 55,949,482 Receivables: Employer's contribution 22,970,809 3,224,718 3,931,380 1,007,149 1,483,789 Participants' contributions 1,035,533 171,200 200,125 49,923 46,040 Accrued income 5,646 71 Other 7,201 956 1,338 178 408 ---------------------------------------------------------------------------------------- Total receivables 24,019,189 3,396,874 4,132,843 1,057,250 1,530,308 ---------------------------------------------------------------------------------------- Total assets 377,949,843 43,652,481 51,085,318 15,036,823 26,909,896 ---------------------------------------------------------------------------------------- NET ASSETS AVAILABLE FOR BENEFITS $ 377,949,843 $ 43,652,481 $ 51,085,318 $ 15,036,823 $ 26,909,896 ========================================================================================
DECEMBER 31, 1994 --------------------------------------------------- BOND COMPANY INDEX/IC STOCK PARTICIPANT FUND FUND LOAN FUND ---------------------------------------------------- ASSETS Investments, at fair value: Index 500 Portfolio Fund PrimeCap Fund Wellington Fund Money Market Reserves Prime Portfolio $ 247,364 Bond Index Fund $ 128,290,532 Common Stock of American Greetings Corporation 42,646,797 Participant notes receivable $ 229,236 ---------------------------------------------------- Total investments 128,290,532 42,894,161 229,236 Deposits with insurance companies 55,949,482 Receivables: Employer's contribution 9,826,757 3,497,016 Participants' contributions 367,794 200,451 Accrued income 5,575 Other 3,450 871 ---------------------------------------------------- Total receivables 10,203,576 3,698,338 ---------------------------------------------------- Total assets 194,443,590 46,592,499 229,236 ---------------------------------------------------- NET ASSETS AVAILABLE FOR BENEFITS $ 194,443,590 $ 46,592,499 $ 229,236 ====================================================
See notes to financial statements. 3 6 American Greetings Retirement Profit Sharing and Savings Plan Statement of Changes in Net Assets Available for Benefits
FOR THE YEAR ENDED DECEMBER 31, 1995 ----------------------------------------------------------------------------------------- INDEX 500 MONEY MARKET PORTFOLIO PRIMECAP WELLINGTON RESERVES PRIME TOTAL FUND FUND FUND PORTFOLIO ----------------------------------------------------------------------------------------- ADDITIONS TO NET ASSETS ATTRIBUTED TO Net realized and unrealized appreciation of investments $ 52,634,613 $ 15,393,719 $ 16,946,748 $ 4,601,252 Interest and dividend income 20,610,306 1,493,484 2,489,874 1,311,039 $ 1,722,083 Dividends from American Greetings Corporation common stock 817,365 Other receipts 20,690 4,663 67,300 62,289 487 Contributions: Participants 14,794,451 2,598,543 3,442,535 921,941 925,894 Rollover 591,048 123,367 152,426 97,641 97,275 Employer 19,604,565 3,348,869 4,093,099 1,284,211 1,360,701 ----------------------------------------------------------------------------------------- Total additions 109,073,038 22,962,645 27,191,982 8,278,373 4,106,440 DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO Benefits paid to participants 29,043,117 2,105,177 2,722,106 640,521 3,401,396 Administrative expenses 85,959 10,633 13,005 2,896 5,636 ----------------------------------------------------------------------------------------- Total deductions 29,129,076 2,115,810 2,735,111 643,417 3,407,032 ----------------------------------------------------------------------------------------- Net increase (decrease) prior to interfund transfers 79,943,962 20,846,835 24,456,871 7,634,956 699,408 Interfund transfers--net 7,179,479 13,317,706 7,907,716 5,001,490 ----------------------------------------------------------------------------------------- Net increase (decrease) 79,943,962 28,026,314 37,774,577 15,542,672 5,700,898 Net assets available for benefits at beginning of year 377,949,843 43,652,481 51,085,318 15,036,823 26,909,896 ----------------------------------------------------------------------------------------- NET ASSETS AVAILABLE FOR BENEFITS $ 457,893,805 $ 71,678,795 $ 88,859,895 $ 30,579,495 $ 32,610,794 =========================================================================================
FOR THE YEAR ENDED DECEMBER 31, 1995 ------------------------------------------------------------------------------------------ BOND COMPANY INDEX/IC VANGUARD/WINDSOR WELLESLEY INTERNATIONAL STOCK PARTICIPANT FUND II FUND FUND GROWTH PORT. FUND LOAN FUND ------------------------------------------------------------------------------------------ ADDITIONS TO NET ASSETS ATTRIBUTED TO Net realized and unrealized appreciation of investments $ 14,112,807 $ 1,580,087 Interest and dividend income 13,551,264 $ 2 8,527 $ 34,033 Dividends from American Greetings Corporation common stock 817,365 Other receipts (117,819) 3,770 Contributions: Participants 4,593,422 $ 2,909 $ 930 3,324 2,304,953 Rollover 56,947 63,392 Employer 6,999,081 204,247 86,764 188,812 2,038,781 ------------------------------------------------------------------------------------------ Total additions 39,195,702 207,156 87,694 192,138 6,816,875 34,033 DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO Benefits paid to participants 18,030,741 2,104,996 38,180 Administrative expenses 42,355 11,434 ------------------------------------------------------------------------------------------ Total deductions 18,073,096 2,116,430 38,180 ------------------------------------------------------------------------------------------ Net increase (decrease) prior to interfund transfers 21,122,606 207,156 87,694 192,138 4,700,445 (4,147) Interfund transfers--net (19,340,817) 101 101 15,296 (14,496,065) 414,993 ------------------------------------------------------------------------------------------ Net increase (decrease) 1,781,789 207,257 87,795 207,434 (9,795,620) 410,846 Net assets available for benefits at beginning of year 194,443,590 46,592,499 229,236 ------------------------------------------------------------------------------------------ NET ASSETS AVAILABLE FOR BENEFITS $196,225,379 $ 207,257 $ 87,795 $ 207,434 $ 36,796,879 $ 640,082 ==========================================================================================
See notes to financial statements. 4 7 American Greetings Retirement Profit Sharing and Savings Plan Statement of Changes in Net Assets Available for Benefits
FOR THE YEAR ENDED DECEMBER 31, 1994 ----------------------------------------------------------------------------------------- INDEX 500 MONEY MARKET PORTFOLIO PRIMECAP WELLINGTON RESERVES PRIME TOTAL FUND FUND FUND PORTFOLIO ----------------------------------------------------------------------------------------- ADDITIONS TO NET ASSETS ATTRIBUTED TO Net realized and unrealized (depreciation) appreciation of investments $ (20,695,241) $ 764,106 $ 2,564,675 $ (425,863) Interest and dividend income 16,216,606 757,037 1,056,245 250,808 $ 284,660 Dividends from American Greetings Corporation common stock 761,552 Contributions: Participants 14,640,336 1,285,153 1,385,914 207,995 190,913 Rollover 509,184 110,857 108,043 78,878 39,988 Employer 22,970,809 3,224,718 3,931,380 1,007,149 1,483,789 ----------------------------------------------------------------------------------------- Total additions 34,403,246 6,141,871 9,046,257 1,118,967 1,999,350 DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO Benefits paid to participants 24,748,586 643,897 671,415 44,542 1,675,175 Administrative expenses 1,062,477 4,705 5,049 539 701 ----------------------------------------------------------------------------------------- Total deductions 25,811,063 648,602 676,464 45,081 1,675,876 ----------------------------------------------------------------------------------------- Net increase (decrease) prior to interfund transfers 8,592,183 5,493,269 8,369,793 1,073,886 323,474 Interfund transfers--net 6,307,799 10,864,175 13,962,937 26,586,422 Net assets transferred between trusts 31,851,413 31,851,350 ----------------------------------------------------------------------------------------- Net increase (decrease) 8,592,183 43,652,481 51,085,318 15,036,823 26,909,896 Net assets available for benefits at beginning of year 369,357,660 ----------------------------------------------------------------------------------------- NET ASSETS AVAILABLE FOR BENEFITS $ 377,949,843 $ 43,652,481 $ 51,085,318 $ 15,036,823 $ 26,909,896 =========================================================================================
FOR THE YEAR ENDED DECEMBER 31, 1994 ---------------------------------------------------------------------------------------- BOND COMPANY FIXED INDEX/IC STOCK PARTICIPANT COMMON INCOME FUND FUND LOAN FUND FUND FUND ---------------------------------------------------------------------------------------- ADDITIONS TO NET ASSETS ATTRIBUTED TO Net realized and unrealized (depreciation) appreciation of investments $ (4,039,357) $ (6,813,454) $ (4,808,344) $ (7,937,004) Interest and dividend income 8,319,620 34,380 $ 5,733 460,311 5,047,812 Dividends from American Greetings Corporation common stock 761,552 Contributions: Participants 3,722,748 2,891,598 1,722,683 3,233,332 Rollover 97,763 73,655 Employer 9,826,757 3,497,016 ---------------------------------------------------------------------------------------- Total additions 17,927,531 444,747 5,733 (2,625,350) 344,140 DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO Benefits paid to participants 10,787,147 1,558,982 7,745 1,496,481 7,863,202 Administrative expenses 27,397 19,321 500,300 504,465 ---------------------------------------------------------------------------------------- Total deductions 10,814,544 1,578,303 7,745 1,996,781 8,367,667 ---------------------------------------------------------------------------------------- Net increase (decrease) prior to interfund transfers 7,112,987 (1,133,556) (2,012) (4,622,131) (8,023,527) Interfund transfers--net (55,182,153) 5,791,045 163,082 2,812,690 (11,305,997) Net assets transferred between trusts 242,512,756 (63,702,763) (242,512,756) ---------------------------------------------------------------------------------------- Net increase (decrease) 194,443,590 4,657,489 161,070 (65,512,204) (261,842,280) Net assets available for benefits at beginning of year 41,935,010 68,166 65,512,204 261,842,280 ---------------------------------------------------------------------------------------- NET ASSETS AVAILABLE FOR BENEFITS $194,443,590 $ 46,592,499 $ 229,236 $ 0 $ 0 ========================================================================================
See notes to financial statements. 5 8 American Greetings Retirement Profit Sharing and Savings Plan Notes to Financial Statements Years Ended December 31, 1995 and 1994 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 assets 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. 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 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 9 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 - The assets of this fund were invested in various stocks of U.S. companies to obtain long-term capital appreciation. Fixed Income Fund - The assets of this fund 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 - The assets of this fund were invested in the 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. The Company maintains the following investment options under its Plan: Index Trust 500 Portfolio Fund - The assets of this fund are invested primarily in common stocks to reflect the compositions of Standard & Poor's 500 Composite Stock Price Index (Index). The fund holds virtually all of the 500 stocks in the Index in proportion to their relative weight in the index. PRIMECAP Fund - The assets of this fund are invested primarily in common stocks of less than 100 large, established companies. Wellington Fund - The assets of this fund are invested primarily in a diversified portfolio of equity securities and fixed income securities. 7 10 American Greetings Retirement Profit Sharing and Savings Plan Notes to Financial Statements--Continued A. DESCRIPTION OF THE PLAN--CONTINUED Money Market Reserves Prime Portfolio - The assets of this fund are invested in high-quality money market instruments that mature in one year or less. These include negotiable certificates of deposit, banker's acceptance, commercial paper, and other short-term corporate obligations. Bond Index/IC Fund - The assets of this fund are invested primarily in shares of the Vanguard Bond Index Fund and investment contracts with insurance companies. The Vanguard Bond Index Fund invests in bonds from a variety of industries attempting to match the unmanaged Lehman Brothers Aggregate Bond Index. Vanguard Windsor II Fund - The assets of this fund are invested primarily in a diversified portfolio of common stocks of large, established companies. Wellesley Fund - The assets of this fund are invested primarily in a broadly diversified portfolio of U.S. Government Securities, high-quality corporate bonds and common stocks of large companies. International Growth Portfolio - The assets of this fund are invested in the common stocks of foreign companies. Company Stock Fund - The assets of this fund are invested in the 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. 8 11 American Greetings Retirement Profit Sharing and Savings Plan Notes to Financial Statements--Continued A. DESCRIPTION OF THE PLAN--CONTINUED 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. 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. Investment advisory fees for portfolio management of Vanguard Funds are paid directly from fund earnings. The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. 9 12 American Greetings Retirement Profit Sharing and Savings Plan Notes to Financial Statements--Continued C. INVESTMENTS The fair value of individual investments that represented 5% or more of the fair value of Plan net assets are as follows:
1995 1994 ------------------------------------------- Common Stock of American Greetings Corporation $ 34,464,619 $ 42,646,797 Vanguard Index 500 Portfolio Fund 68,137,655 40,255,607 Vanguard PrimeCap Fund 84,509,585 46,952,475 Vanguard Wellington Fund 29,224,713 13,979,573 Vanguard Money Market Reserves Prime Portfolio 31,317,919 25,626,952 Vanguard Bond Index Fund 153,014,922 128,290,532 Metropolitan Life Insurance Company, May 22, 1995, 9.46% 22,761,666
During the years ended December 31, 1995 and 1994 the Plan's investments (including investments bought, sold and held during the year) appreciated (depreciated) in fair value as follows:
DECEMBER 31 1995 1994 ------------------------------------------- Investments at fair value as determined by quoted market price: Vanguard Index 500 Portfolio Fund $ 15,393,719 $ 764,106 Vanguard PrimeCap Fund 16,946,748 2,564,675 Vanguard Wellington Fund 4,601,252 (425,863) Vanguard Bond Index Fund 14,112,807 (4,039,357) Common stock of American Greetings Corporation 1,580,087 (6,813,454) Common stocks (4,808,344) US Government securities and corporate obligations (7,937,004) ------------------------------------------- $ 52,634,613 $ (20,695,241) ===========================================
10 13 American Greetings Retirement Profit Sharing and Savings Plan Notes to Financial Statements--Continued C. INVESTMENTS--CONTINUED The Plan held 107,238 Class A shares and 1,140,350 Class B shares of American Greetings Corporation common stock at December 31, 1995 (439,161 and 1,140,350 shares, respectively at December 31, 1994). Class B shares are not publicly traded. 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. 11 14 American Greetings Corporation Employees' Retirement Profit Sharing Plan EIN: 34-0065325 Form 5500, Item 27a--Schedule of Assets Held for Investment Purposes December 31, 1995
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 1,182,945 shares $ 53,082,018 $ 68,137,655 *Vanguard PrimeCap Fund 3,221,868 shares 66,980,567 84,509,585 *Vanguard Wellington Fund 1,196,263 shares 25,215,064 29,224,713 *Vanguard Money Market Reserves Prime Portfolio 31,317,919 shares 31,317,919 31,317,919 *Vanguard Bond Index Fund 17,840,570 shares 142,654,328 153,014,922 *Vanguard International Growth Portfolio 1,018 shares 15,296 15,298 -------------------------------------- TOTAL ASSETS IN REGISTERED INVESTMENT COMPANIES $ 319,265,192 $ 366,220,092 ====================================== EMPLOYER-RELATED INVESTMENTS *American Greetings Corp. Class A 107,238 shares $ 2,557,845 $ 2,962,450 *American Greetings Corp. Class B 1,140,350 shares 22,976,475 31,502,169 -------------------------------------- TOTAL CORPORATE COMMON STOCK $ 25,534,320 $ 34,464,619 ====================================== INSURANCE CONTRACTS Pacific Mutual G-25755.02 9.40%, Matures 1-2-96 $ 15,347,945 $ 15,347,945 CNA Insurance Co. 9.85%, Matures 5-24-96 18,591,952 18,591,952 Mutual Benefit Life GA-4207 5.10%, Matures 12-31-03 1,306,468 1,306,468 Mutual Benefit Life GA-64207 3.55%, Matures 12-31-03 670,353 670,353 -------------------------------------- TOTAL INSURANCE CONTRACT ASSETS $ 35,916,718 $ 35,916,718 ====================================== *LOANS TO PARTICIPANTS 8.0% to 10.0%, matures 1 to 5 years $ 640,082 $ 640,082 ======================================
*Party in interest of the Plan. 12 15 American Greetings Retirement Profit Sharing and Savings Plan Form 5500, Item 27d--Schedule of Reportable Transactions Year Ended December 31, 1995 CATEGORY (iii) 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, 1995.
Purchases Sales Total ------------------------------------------------------------ Gain Description No. Amount No. Amount No. Amount (Loss) - -------------------------------------------------- ------------------------------------------------------------ --------------- American Greetings Company Stock Fund 140 $ 9,161,481 241 $ 19,027,244 381 $ 28,188,725 $ 4,399,084 Vanguard Bond Index Fund 245 34,136,989 252 43,476,711 497 77,613,700 808,716 Vanguard Money Market Reserves Prime Portfolio 226 19,890,547 206 14,339,998 432 34,230,545 Vanguard Index 500 Portfolio 238 19,033,615 217 6,407,807 455 25,441,422 953,539 Vanguard Prime Cap Fund 248 29,815,917 207 9,098,851 455 38,914,768 1,777,011 There were no category (i), (ii) or (iv) reportable transactions during the year ended December 31, 1995.
13 16 American Greetings Corp. Retirement Profit Sharing and Savings Plan Form 5500, Item 27b--Schedule of Loans or Fixed Income Obligations
Amount Received Original During Reported Year Unpaid Identity and Address Amount --------------------------- Balance at of Obligor of Loan Principal Interest End of Year - ------------------------------------------------------------------------------------------------------------------- Douglas, Lola $ 1,530.00 $ $ $ 1,530.00 303 E. Hale Avenue Osceola, AR 72370 Emrich, Kimberly $ 1,469.34 $ $ $ 1,469.34 1229 Forest Circle Drive Corbin, KY 40701 Griffin, Sharlene $ 1,045.95 $ $ $ 1,045.95 PO Box 152 McKinney, KY 40448 Lambert, Alan $ 1,886.36 $ $ $ 1,886.36 PO Box 496 Keiser, AR 72351
Detailed Description of Loan Including Rate, Type, and Value Amount Overdue Identity and Address Of Collateral, and Other -------------------------------- of Obligor Material Items Principal Interest - --------------------------------------------------------------------------------------------------------------------------------- Douglas, Lola Issue Date: 6/27/95 $ 175.01 $ 36.24 303 E. Hale Avenue Maturity Date: 9/13/97 Osceola, AR 72370 Rate: 10.0% Colateral: Participant account balance Emrich, Kimberly Issue Date: 8/7/95 $ 97.98 $ 60.20 1229 Forest Circle Drive Maturity Date: 7/30/2000 Corbin, KY 40701 Rate: 10.0% Collateral: Participant account balance Griffin, Sharlene Issue Date: 9/8/95 $ 119.66 $ 24.77 PO Box 152 Maturity Date: 9/27/97 McKinney, KY 40448 Rate: 10.0% Collateral: Participant account balance Lambert, Alan Issue Date: 9/1/95 $ 454.14 $ 41.94 PO Box 496 Maturity Date: 9/21/96 Keiser, AR 72351 Rate: 10.0% Collateral: Participant account balance
The above loans were deemed delinquent by the Plan as of December 31, 1995 14 EX-23 3 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 our report dated June 21, 1996, 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, 1995. /s/ ERNST & YOUNG LLP Cleveland, Ohio June 25, 1996 -----END PRIVACY-ENHANCED MESSAGE-----