<PAGE> 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.
<PAGE> 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-
<PAGE> 3
EXHIBIT INDEX
Exhibit No.
23 Consent of Independent Auditors
<PAGE> 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
<PAGE> 5
American Greetings Retirement
Profit Sharing and Savings Plan
Audited Financial Statements
and Supplemental Schedules
Years Ended December 31, 1996 and 1995
CONTENTS
<TABLE>
<S> <C>
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
</TABLE>
<PAGE> 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
<PAGE> 7
American Greetings Retirement Profit Sharing and Savings Plan
Statement of Net Assets Available for Benefits With Fund Information
December 31, 1996
<TABLE>
<CAPTION>
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
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
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
================================================================================================
<CAPTION>
INTERNATIONAL COMPANY PARTICIPANT
STOCK FUND STOCK FUND LOAN FUND TOTAL
----------------------------------------------------
<C> <C> <C> <C>
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
=====================================================
</TABLE>
See notes to financial statements.
2
<PAGE> 8
American Greetings Retirement Profit Sharing and Savings Plan
Statement of Net Assets Available for Benefits With Fund Information
December 31, 1995
<TABLE>
<CAPTION>
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
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
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
==================================================================================================
<CAPTION>
INTERNATIONAL COMPANY PARTICIPANT
STOCK FUND STOCK FUND LOAN FUND TOTAL
------------------------------------------------------
<S> <C> <C> <C> <C>
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
======================================================
</TABLE>
See notes to financial statements.
3
<PAGE> 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
<TABLE>
<CAPTION>
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
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
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
=================================================================================================
<CAPTION>
INTERNATIONAL COMPANY PARTICIPANT
STOCK FUND STOCK FUND LOAN FUND TOTAL
-----------------------------------------------------
<S> <C> <C> <C> <C>
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
====================================================
</TABLE>
See notes to financial statements.
4
<PAGE> 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
<TABLE>
<CAPTION>
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
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
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
===================================================================================================
<CAPTION>
INTERNATIONAL COMPANY PARTICIPANT
STOCK FUND STOCK FUND LOAN FUND TOTAL
-----------------------------------------------------
<S> <C> <C> <C> <C>
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
=====================================================
</TABLE>
See notes to financial statements.
5
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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:
<TABLE>
<CAPTION>
1996 1995
-------------------------------------------
<S> <C> <C>
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
</TABLE>
10
<PAGE> 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:
<TABLE>
<CAPTION>
DECEMBER 31
1996 1995
-------------------------------------------
<S> <C> <C>
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
===========================================
</TABLE>
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
<PAGE> 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:
<TABLE>
<CAPTION>
DECEMBER 31,
1996 1995
------ ------
<S> <C> <C>
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
</TABLE>
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
<PAGE> 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
<TABLE>
<CAPTION>
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
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
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
================ =================
<FN>
* Indicates party-in-interest to the Plan.
</TABLE>
13
<PAGE> 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.
<TABLE>
<CAPTION>
PURCHASES SALES
-------------------------------------------------------------
DESCRIPTION NO. AMOUNT NO. AMOUNT GAIN
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
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
</TABLE>
There were no category (i), (ii) or (iv) reportable transactions during the year
ended December 31, 1996.
14
<PAGE> 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
