-----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, EBe6JndRT36rQRzMOx15GboobQZyRTP6lTyvN2buUPiK3yrTSBV6wn6pdWeSo3YG X+nb+CoFcsdyncNaeDM0YA== 0000950152-97-004796.txt : 19970630 0000950152-97-004796.hdr.sgml : 19970630 ACCESSION NUMBER: 0000950152-97-004796 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970627 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: 97630905 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 FORM 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, 1996. 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, 1996 and 1995. 2 2. Audited statements of shares in net assets available for benefits for the years ended December 31, 1996 and 1995. 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 27, 1997 By: /s/ Harvey Levin ------------------------------ Name: Harvey Levin Title: Senior Vice-President -2- 3 EXHIBIT INDEX Exhibit No. 23 Consent of Independent Auditors 4 Audited Financial Statements and Supplemental Schedules AMERICAN GREETINGS RETIREMENT PROFIT SHARING AND SAVINGS PLAN Years ended December 31, 1996 and 1995 with Report of Independent Auditors 5 American Greetings Retirement Profit Sharing and Savings Plan Audited Financial Statements and Supplemental Schedules Years Ended December 31, 1996 and 1995 CONTENTS Report of Independent Auditors .................................................... 1 Audited Financial Statements Statements of Net Assets Available for Benefits With Fund Information.............. 2 Statements of Changes in Net Assets Available for Benefits With Fund Information.......................................................... 4 Notes to Financial Statements ..................................................... 6 Supplemental Schedules Form 5500, Item 27a - Schedule of Assets Held for Investment Purposes.............. 13 Form 5500, Item 27d - Schedule of Reportable Transactions ......................... 14
6 Report of Independent Auditors Administrative Committee of the American Greetings 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, 1996 and 1995, 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, 1996 and 1995, 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 performed 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, 1996 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 statements of net assets available for benefits and the statements 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 20, 1997 Cleveland, Ohio 1 7 American Greetings Retirement Profit Sharing and Savings Plan Statement of Net Assets Available for Benefits With Fund Information December 31, 1996
GROWTH AND INCOME GROWTH AND BALANCED BALANCED BOND INDEX STOCK INCOME STOCK FUND (STOCKS FUND (STOCKS MONEY INVESTMENT FUND - INDEX FUND - GROWTH STOCK AND BONDS) - AND BONDS)- MARKET CONTRACT TRUST WINDSOR II FUND WELLINGTON WELLESLEY FUND FUND ------------------------------------------------------------------------------------------------- ASSETS Investments: Interest in registered investment companies, at fair value: Vanguard Index Trust-500 Portfolio $94,080,769 Vanguard / PRIMECAP Fund $ 99,286,904 Vanguard / Wellington Fund $ 38,026,710 Vanguard Money Market Reserves--Prime Portfolio $42,696,070 Bond Index / IC Fund $162,992,325 Vanguard / Windsor II $ 12,513,997 Vanguard / Wellesley Income Fund $ 2,382,901 Vanguard International Growth Fund Common Stock of American Greetings Corporation Deposits with insurance companies 2,085,286 Participant notes receivable ------------------------------------------------------------------------------------------------ Total investments 94,080,769 12,513,997 99,286,904 38,026,710 2,382,901 42,696,070 165,077,611 Receivables: Employer's contribution 4,951,704 912,619 5,507,077 1,784,152 115,331 2,359,458 7,588,594 Participants' 148,859 20,628 173,713 53,257 3,166 38,498 175,460 contributions Other 4,860 577 5,783 1,232 97 2,388 5,696 ------------------------------------------------------------------------------------------------ Total receivables 5,105,423 933,824 5,686,573 1,838,641 118,594 2,400,344 7,769,750 ------------------------------------------------------------------------------------------------ Total assets 99,186,192 13,447,821 104,973,477 39,865,351 2,501,495 45,096,414 172,847,361 LIABILITIES Accrued liabilities--net ------------------------------------------------------------------------------------------------ Net assets available for benefits $99,186,192 $13,447,821 $104,973,477 $ 39,865,351 $2,501,495 $45,096,414 $172,847,361 ================================================================================================ INTERNATIONAL COMPANY PARTICIPANT STOCK FUND STOCK FUND LOAN FUND TOTAL ---------------------------------------------------- ASSETS Investments: Interest in registered investment companies, at fair value: Vanguard Index Trust-500 Portfolio $ 94,080,769 Vanguard / PRIMECAP Fund 99,286,904 Vanguard / Wellington Fund 38,026,710 Vanguard Money Market Reserves--Prime Portfolio $ 111,973 42,808,043 Bond Index / IC Fund 162,992,325 Vanguard / Windsor II 12,513,997 Vanguard / Wellesley Income Fund 2,382,901 Vanguard International Growth Fund $5,712,024 5,712,024 Common Stock of American Greetings Corporation 31,785,930 31,785,930 Deposits with insurance companies 2,085,286 Participant notes receivable $ 906,394 906,394 ----------------------------------------------------- Total investments 5,712,024 31,897,903 906,394 492,581,283 Receivables: Employer's contribution 364,430 2,103,853 25,687,218 Participants' contributions 12,329 77,444 703,354 Other 579 2,777 23,989 ----------------------------------------------------- Total receivables 377,338 2,184,074 26,414,561 ----------------------------------------------------- Total assets 6,089,362 34,081,977 906,394 518,995,844 LIABILITIES Accrued liabilities--net 41,458 41,458 ----------------------------------------------------- Net assets available for benefits $6,089,362 $ 34,040,519 $ 906,394 $518,954,386 =====================================================
See notes to financial statements. 2 8 American Greetings Retirement Profit Sharing and Savings Plan Statement of Net Assets Available for Benefits With Fund Information December 31, 1995
GROWTH AND GROWTH AND BALANCED BALANCED INCOME STOCK INCOME STOCK FUND (STOCKS FUND (STOCKS MONEY BOND INDEX FUND - INDEX FUND - GROWTH STOCK AND BONDS) - AND BONDS)- MARKET INVESTMENT TRUST WINDSOR II FUND WELLINGTON WELLESLEY FUND CONTRACT FUND -------------------------------------------------------------------------------------------------- ASSETS Investments: Interest in registered investment companies, at fair value: Vanguard Index Trust-500 Portfolio $ 68,137,655 Vanguard / PRIMECAP Fund $ 84,509,585 Vanguard / Wellington Fund $ 29,224,713 Vanguard Money Market Reserves--Prime Portfolio $ 31,201,217 Bond Index / IC Fund $153,014,922 Vanguard International Growth Fund Common Stock of American Greetings Corporation Deposits with insurance companies 35,916,718 Participant notes receivable -------------------------------------------------------------------------------------------------- Total investments 68,137,655 84,509,585 29,224,713 31,201,217 188,931,640 Receivables: Employer's contribution 3,348,131 $ 204,247 4,091,891 1,283,325 $ 86,764 1,359,193 6,996,723 Participants' contributions 189,865 2,909 254,048 70,247 930 49,361 291,092 Other net receivables Other 3,144 101 4,371 1,210 101 1,023 5,924 -------------------------------------------------------------------------------------------------- Total receivables 3,541,140 207,257 4,350,310 1,354,782 87,795 1,409,577 7,293,739 -------------------------------------------------------------------------------------------------- Total assets 71,678,795 207,257 88,859,895 30,579,495 87,795 32,610,794 196,225,379 -------------------------------------------------------------------------------------------------- NET ASSETS AVAILABLE FOR BENEFITS $ 71,678,795 $ 207,257 $ 88,859,895 $ 30,579,495 $ 87,795 $ 32,610,794 $196,225,379 ================================================================================================== INTERNATIONAL COMPANY PARTICIPANT STOCK FUND STOCK FUND LOAN FUND TOTAL ------------------------------------------------------ ASSETS Investments: Interest in registered investment companies, at fair value: Vanguard Index Trust-500 Portfolio $ 68,137,655 Vanguard / PRIMECAP Fund 84,509,585 Vanguard / Wellington Fund 29,224,713 Vanguard Money Market Reserves--Prime Portfolio $ 116,702 31,317,919 Bond Index / IC Fund 153,014,922 Vanguard International Growth Fund $ 15,298 15,298 Common Stock of American Greetings Corporation 34,464,619 34,464,619 Deposits with insurance companies 35,916,718 Participant notes receivable $ 640,082 640,082 ------------------------------------------------------ Total investments 15,298 34,581,321 640,082 437,241,511 Receivables: Employer's contribution 188,812 2,038,024 19,597,110 Participants' contributions 3,324 134,621 996,397 Other net receivables 40,568 40,568 Other 2,345 18,219 ------------------------------------------------------ Total receivables 192,136 2,215,558 20,652,294 ------------------------------------------------------ Total assets 207,434 36,796,879 640,082 457,893,805 ------------------------------------------------------ NET ASSETS AVAILABLE FOR BENEFITS $ 207,434 $ 36,796,879 $ 640,082 $457,893,805 ======================================================
See notes to financial statements. 3 9 American Greetings Retirement Profit Sharing and Savings Plan Statement of Changes in Net Assets Available for Benefits With Fund Information For the Year Ended December 31, 1996
GROWTH AND GROWTH AND BALANCED BALANCED INCOME STOCK INCOME STOCK FUND (STOCKS FUND (STOCKS MONEY BOND INDEX FUND - INDEX FUND - GROWTH STOCK AND BONDS) - AND BONDS)- MARKET INVESTMENT TRUST WINDSOR II FUND WELLINGTON WELLESLEY FUND CONTRACT FUND --------------------------------------------------------------------------------------------------- ADDITIONS TO NET ASSETS ATTRIBUTED TO: Net appreciation (depreciation) in fair value of investments $ 15,045,831 $ 909,756 $ 12,500,466 $ 2,281,322 $ 8,233 $ (4,715,088) Interest and dividend income 2,016,535 846,276 2,984,590 2,963,921 214,290 $ 1,667,739 11,541,142 Dividends from American Greetings Corporation common stock Contributions: Participants 2,935,535 352,481 3,651,244 1,187,274 87,150 791,455 3,560,577 Rollover 91,156 25,863 76,972 63,049 11,892 17,623 16,530 Employer 4,963,804 912,619 5,521,871 1,785,305 115,331 2,359,642 7,593,657 ------------------------------------------------------------------------------------------------- Total additions 25,052,861 3,046,995 24,735,143 8,280,871 436,896 4,836,459 17,996,818 DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO: Benefits paid to participants 4,162,750 261,857 4,335,825 1,190,790 75,572 3,033,057 14,987,091 Administrative expenses 11,462 724 12,913 3,731 180 7,390 31,218 ------------------------------------------------------------------------------------------------- Total deductions 4,174,212 262,581 4,348,738 1,194,521 75,752 3,040,447 15,018,309 ------------------------------------------------------------------------------------------------- Net increase prior to interfund transfers 20,878,649 2,784,414 20,386,405 7,086,350 361,144 1,796,012 2,978,509 Interfund transfers--net 6,628,748 10,456,150 (4,272,823) 2,199,506 2,052,556 10,689,608 (26,356,527) ------------------------------------------------------------------------------------------------- Net increase (decrease) 27,507,397 13,240,564 16,113,582 9,285,856 2,413,700 12,485,620 (23,378,018) Net assets available for benefits at beginning of year 71,678,795 207,257 88,859,895 30,579,495 87,795 32,610,794 196,225,379 ------------------------------------------------------------------------------------------------- NET ASSETS AVAILABLE FOR BENEFITS AT END OF YEAR $ 99,186,192 $ 13,447,821 $104,973,477 $ 39,865,351 $ 2,501,495 $ 45,096,414 $172,847,361 ================================================================================================= INTERNATIONAL COMPANY PARTICIPANT STOCK FUND STOCK FUND LOAN FUND TOTAL ----------------------------------------------------- ADDITIONS TO NET ASSETS ATTRIBUTED TO: Net appreciation (depreciation) in fair value of investments $ 315,267 $ 853,481 $27,199,268 Interest and dividend income 243,968 8,724 $ 63,639 22,550,824 Dividends from American Greetings Corporation common stock 731,026 731,026 Contributions: Participants 266,566 1,500,313 14,332,595 Rollover 43,876 20,234 367,195 Employer 365,217 2,113,548 25,730,994 ---------------------------------------------------- Total additions 1,234,894 5,227,326 63,639 90,911,902 DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO: Benefits paid to participants 116,366 1,556,988 55,638 29,775,934 Administrative expenses 506 7,263 75,387 ---------------------------------------------------- Total deductions 116,872 1,564,251 55,638 29,851,321 ---------------------------------------------------- Net increase prior to interfund transfers 1,118,022 3,663,075 8,001 61,060,581 Interfund transfers--net 4,763,906 (6,419,435) 258,311 ---------------------------------------------------- Net increase (decrease) 5,881,928 (2,756,360) 266,312 61,060,581 Net assets available for benefits at beginning of year 207,434 36,796,879 640,082 457,893,805 ---------------------------------------------------- NET ASSETS AVAILABLE FOR BENEFITS AT END OF YEAR $ 6,089,362 $ 34,040,519 $ 906,394 $518,954,386 ====================================================
See notes to financial statements. 4 10 American Greetings Retirement Profit Sharing and Savings Plan Statement of Changes in Net Assets Available for Benefits With Fund Information For the Year Ended December 31, 1995
GROWTH AND GROWTH AND BALANCED BALANCED INCOME STOCK INCOME STOCK FUND (STOCKS FUND (STOCKS MONEY BOND INDEX FUND - INDEX FUND - GROWTH STOCK AND BONDS) - AND BONDS)- MARKET INVESTMENT TRUST WINDSOR II FUND WELLINGTON WELLESLEY FUND CONTRACT FUND --------------------------------------------------------------------------------------------------- ADDITIONS TO NET ASSETS ATTRIBUTED TO: Net appreciation in fair value of investments $ 15,393,719 $ 16,946,748 $ 4,601,252 $ 14,112,807 Interest and dividend income 1,493,484 2,489,874 1,311,039 $ 1,722,083 13,551,264 Dividends from American Greetings Corporation common stock Other receipts 4,663 67,300 62,289 487 (117,819) Contributions: Participants 2,598,543 $ 2,909 3,442,535 921,941 $ 930 925,894 4,593,422 Rollover 123,367 152,426 97,641 97,275 56,947 Employer 3,348,869 204,247 4,093,099 1,284,211 86,764 1,360,701 6,999,081 --------------------------------------------------------------------------------------------------- Total additions 22,962,645 207,156 27,191,982 8,278,373 87,694 4,106,440 39,195,702 DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO: Benefits paid to participants 2,105,177 2,722,106 640,521 3,401,396 18,030,741 Administrative expenses 10,633 13,005 2,896 5,636 42,355 --------------------------------------------------------------------------------------------------- Total deductions 2,115,810 2,735,111 643,417 3,407,032 18,073,096 --------------------------------------------------------------------------------------------------- Net increase (decrease) prior to interfund 20,846,835 207,156 24,456,871 7,634,956 87,694 699,408 21,122,606 transfers Interfund transfers--net 7,179,479 101 13,317,706 7,907,716 101 5,001,490 (19,340,817) --------------------------------------------------------------------------------------------------- Net increase (decrease) 28,026,314 207,257 37,774,577 15,542,672 87,795 5,700,898 1,781,789 Net assets available for benefits at beginning of year 43,652,481 51,085,318 15,036,823 26,909,896 194,443,590 --------------------------------------------------------------------------------------------------- NET ASSETS AVAILABLE FOR BENEFITS AT END OF YEAR $ 71,678,795 $ 207,257 $ 88,859,895 $ 30,579,495 $ 87,795 $ 32,610,794 $196,225,379 =================================================================================================== INTERNATIONAL COMPANY PARTICIPANT STOCK FUND STOCK FUND LOAN FUND TOTAL ----------------------------------------------------- ADDITIONS TO NET ASSETS ATTRIBUTED TO: Net appreciation in fair value of investments $ 1,580,087 $ 52,634,613 Interest and dividend income $ 2 8,527 $ 34,033 20,610,306 Dividends from American Greetings Corporation common stock 817,365 817,365 Other receipts 3,770 20,690 Contributions: Participants 3,324 2,304,953 14,794,451 Rollover 63,392 591,048 Employer 188,812 2,038,781 19,604,565 ----------------------------------------------------- Total additions 192,138 6,816,875 34,033 109,073,038 DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO: Benefits paid to participants 2,104,996 38,180 29,043,117 Administrative expenses 11,434 85,959 ----------------------------------------------------- Total deductions 2,116,430 38,180 29,129,076 ----------------------------------------------------- Net increase (decrease) prior to interfund transfers 192,138 4,700,445 (4,147) 79,943,962 Interfund transfers--net 15,296 (14,496,065) 414,993 ----------------------------------------------------- Net increase (decrease) 207,434 (9,795,620) 410,846 79,943,962 Net assets available for benefits at beginning of year 46,592,499 229,236 377,949,843 ----------------------------------------------------- NET ASSETS AVAILABLE FOR BENEFITS AT END OF YEAR $ 207,434 $ 36,796,879 $ 640,082 $457,893,805 =====================================================
See notes to financial statements. 5 11 American Greetings Retirement Profit Sharing and Savings Plan Notes to Financial Statements Years Ended December 31, 1996 and 1995 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. 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 1996 or 1995 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 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. 6 12 American Greetings Retirement Profit Sharing and Savings Plan Notes to Financial Statements--Continued A. DESCRIPTION OF THE PLAN--CONTINUED 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 immediately vested in both their and the Corporation's contributions. 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. The Company maintains the following investment options under its Plan: GROWTH AND INCOME STOCK FUNDS-- Vanguard Index Trust-500 Portfolio - 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 Standard & Poor's 500 stocks in the Index in proportion to their relative weight in the index. Vanguard/Windsor II - The assets of this fund are invested primarily in a diversified portfolio of common stocks of large, established companies. GROWTH STOCK FUND--The assets of this fund are invested primarily in common stocks of less than 100 large, established companies (Vanguard/PRIMECAP). 7 13 American Greetings Retirement Profit Sharing and Savings Plan Notes to Financial Statements--Continued A. DESCRIPTION OF THE PLAN--CONTINUED BALANCED FUNDS (STOCKS AND BONDS)-- Vanguard/Wellington Fund - The assets of this fund are invested primarily in a diversified portfolio of equity securities and fixed income securities. Vanguard/Wellesley Income 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. MONEY MARKET FUND--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, bankers' acceptances, commercial paper, and other short-term corporate obligations (Vanguard Money Market Reserves- Prime Portfolio). BOND INDEX - INVESTMENT CONTRACT FUND--The assets of this fund are invested primarily in shares of the Vanguard Bond Index Fund - Total Bond Market Portfolio. The Vanguard Bond Index Fund invests in bonds from a variety of industries attempting to match the unmanaged Lehman Brothers Aggregate Bond Index. In addition, the fund's investments include investment contracts of $2,085,286 at December 31, 1996. As these investment contracts mature, the proceeds will be invested in the Vanguard Bond Index Fund - Total Bond Market Portfolio. INTERNATIONAL STOCK FUND--The assets of this fund are invested in the common stocks of about 200 companies located in up to 30 countries around the world (Vanguard International Growth Portfolio). COMPANY STOCK FUND--The assets of this fund are invested in the common stock of American Greetings (American Greetings Company Stock Fund). 8 14 American Greetings Retirement Profit Sharing and Savings Plan Notes to Financial Statements--Continued A. DESCRIPTION OF THE PLAN--CONTINUED PARTICIPANT NOTES RECEIVABLE The Plan permits participants to borrow, against their elected deferred contributions or rollover contributions, a minimum of $1,000 up to a maximum of the lesser 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. PAYMENT OF BENEFITS At the time of a participant's retirement or termination of service, the participant may elect to purchase an annuity contract, to receive a lump sum payment or to 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. B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF ACCOUNTING The financial statements of the Plan are presented on the accrual basis of accounting. All the funds of the Plan are accounted for by Vanguard Fiduciary Trust Company (the Trustee). 9 15 American Greetings Retirement Profit Sharing and Savings Plan Notes to Financial Statements--Continued B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--CONTINUED INVESTMENT VALUATION The Plan's investments are stated at fair value. 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 notes receivable are valued at cost which approximates fair value. 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. The cost of the deposits approximate their fair value. 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 amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. C. INVESTMENTS The fair value of individual investments that represented 5% or more of the fair value of Plan net assets are as follows:
1996 1995 ------------------------------------------- Vanguard Index Trust-500 Portfolio $ 94,080,769 $ 68,137,655 Vanguard / PRIMECAP Fund 99,286,904 84,509,585 Vanguard / Wellington Fund 38,026,710 29,224,713 Vanguard Money Market Reserves Prime Portfolio 42,808,043 31,317,919 Bond Index/IC Fund 162,992,325 153,014,922 Common Stock of American Greetings Corporation 31,785,930 34,464,619
10 16 American Greetings Retirement Profit Sharing and Savings Plan Notes to Financial Statements--Continued C. INVESTMENTS--CONTINUED During the years ended December 31, 1996 and 1995 the Plan's investments (including investments bought, sold and held during the year) appreciated (depreciated) in fair value as follows:
DECEMBER 31 1996 1995 ------------------------------------------- Investments at fair value as determined by quoted market price: Vanguard Index Trust -500 Portfolio $ 15,045,831 $ 15,393,719 Vanguard PRIMECAP Fund 12,500,466 16,946,748 Vanguard / Wellington Fund 2,281,322 4,601,252 Bond Index / IC Fund (4,715,088) 14,112,807 Vanguard / Windsor II 909,756 Vanguard / Wellesley Income Fund 8,233 Vanguard International Growth Portfolio 315,267 Common Stock of American Greetings Corporation 853,481 1,580,087 --------------------- --------------------- $ 27,199,268 $ 52,634,613 ===========================================
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 17 American Greetings Retirement Profit Sharing and Savings Plan Notes to Financial Statements--Continued E. TRANSACTIONS WITH PARTIES-IN-INTEREST The Plan held 79,859 Class A shares and 1,040,350 Class B shares of American Greetings Corporation common stock at December 31, 1996 (107,238 and 1,140,350 shares, respectively at December 31, 1995). Class B shares are not publicly traded. Accounting 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. F. NUMBER OF PARTICIPANTS (UNAUDITED) The following are the number of participants contributing to the Plan's investment options:
DECEMBER 31, 1996 1995 ------ ------ Growth and Income Stock Fund - Index Trust 5,892 5,658 Growth and Income Stock Fund - Windsor II 825 0 Growth Stock Fund 5,999 5,945 Balanced Fund (Stocks and Bonds) - Wellington 2,171 1,744 Balanced Fund (Stocks and Bonds) - Wellesley 182 0 Money Market Fund 1,825 1,384 Bond Index Investment Contract Fund 7,201 8,233 International Stock Fund 593 3 Company Stock Fund 3,542 4,109
The total number of participants in the Plan is less than the sum of the above number of participants because many are participating in more than one investment option. 12 18 American Greetings Corporation Employees' Retirement Profit Sharing Plan EIN: 34-0065325 Form 5500, Item 27a--Schedule of Assets Held for Investment Purposes December 31, 1996
COL. (b) COL. (c) COL. (d) COL. (e) DESCRIPTION OF INVESTMENT INCLUDING IDENTITY OF ISSUE, BORROWER, LESSOR OR MATURITY DATE, RATE OF INTEREST, SIMILAR PARTY PAR OR MATURITY VALUE COST CURRENT VALUE - -------------------------------------------------------------------------------------------------------------------------------- INTEREST IN REGISTERED INVESTMENT COMPANIES *Vanguard Index Trust - 500 Portfolio 1,360,335 shares $ 66,790,430 $ 94,080,769 *Vanguard / PRIMECAP Fund 3,300,761 shares 72,987,675 99,286,904 *Vanguard / Wellington Fund 1,454,176 shares 32,802,164 38,026,710 *Vanguard Money Market Reserves Prime Portfolio 42,808,043 shares 42,808,043 42,808,043 *Bond Index / IC Fund 15,980,408 shares 158,663,628 162,992,325 *Vanguard / Windsor II 525,136 shares 11,849,548 12,513,997 *Vanguard / Wellesley Income Fund 116,182 shares 2,369,997 2,382,901 *Vanguard International Growth Portfolio 347,024 shares 5,511,670 5,712,024 ---------------- -------------- TOTAL INTEREST IN REGISTERED INVESTMENT COMPANIES $ 393,783,155 $ 457,803,673 ================ ================= EMPLOYER-RELATED INVESTMENTS *American Greetings Corp. Class A 79,859 shares $ 2,227,802 $ 2,265,999 *American Greetings Corp. Class B 1,040,350 shares 20,932,203 29,519,931 ---------------- ----------------- TOTAL EMPLOYER-RELATED INVESTMENTS $ 23,160,005 $ 31,785,930 ================ ================= INSURANCE CONTRACTS Mutual Benefit Life GA - 4207C 5.10% Matures 12/31/99 $ 1,368,023 $ 1,368,023 Mutual Benefit Life GA - 4207W 9.25% Matures 12/31/99 717,263 717,263 ---------------- ----------------- TOTAL INSURANCE CONTRACTS $ 2,085,286 $ 2,085,286 ================ ================= *LOANS TO PARTICIPANTS 8% to 10%, Matures 1-5 years $ 906,394 $ 906,394 ================ ================= * Indicates party-in-interest to the Plan.
13 19 American Greetings Retirement Profit Sharing and Savings Plan Form 5500, Item 27d--Schedule of Reportable Transactions Year Ended December 31, 1996 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, 1996.
PURCHASES SALES ------------------------------------------------------------- DESCRIPTION NO. AMOUNT NO. AMOUNT GAIN - ---------------------------------------------------------------------------------------------------------------------------------- Vanguard Index Trust - 500 Portfolio 245 $ 25,600,762 240 $ 14,659,857 $ 2,723,102 Vanguard / PRIMECAP Fund 241 23,903,216 245 21,554,878 3,653,696 Vanguard / Wellington Fund 222 15,704,237 218 9,179,069 956,567 Vanguard Money Market Reserves Prime Portfolio 235 32,834,848 220 21,575,277 Bond Index / IC Fund 241 27,494,209 252 46,520,072 932,724
There were no category (i), (ii) or (iv) reportable transactions during the year ended December 31, 1996. 14 EX-23 2 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 American Greetings Retirement Profit Sharing and Savings Plan of our report dated June 20, 1997, 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, 1996. Cleveland, Ohio June 20, 1997 -----END PRIVACY-ENHANCED MESSAGE-----