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