<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, 1998.
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, 1998 and 1997.
<PAGE> 2
2. Audited statements of changes in net assets available for
benefits for the years ended December 31, 1998 and 1997.
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 29, 1999 By: /s/ Pat Papesh
------------------------------
Name: Pat Papesh
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, 1998 and 1997
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, 1998 and 1997
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
Report of Independent Auditors ............................................... 1
AUDITED FINANCIAL STATEMENTS
Statements of Net Assets Available for Benefits............................... 2
Statements of Changes in Net Assets Available for Benefits.................... 4
Notes to Financial Statements ................................................ 6
SUPPLEMENTAL SCHEDULES
Form 5500, Item 27a--Schedule of Assets Held for Investment Purposes.......... 12
Form 5500, Item 27d--Schedule of Reportable Transactions ..................... 13
</TABLE>
<PAGE> 6
Report of Independent Auditors
Administrative Committee of the American Greetings
Retirement Profit Sharing and Savings Plan
Cleveland, Ohio
We have audited the accompanying statements of net assets available for benefits
of American Greetings Retirement Profit Sharing and Savings Plan (the "Plan") as
of December 31, 1998 and 1997, 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, 1998 and 1997, 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, 1998, and reportable
transactions for the year then ended are presented for purpose of additional
analysis and are not a required part of the financial statements but are
supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. These supplemental schedules are the responsibility of the
Plan's management. 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.
Cleveland, Ohio
May 28, 1999
1
<PAGE> 7
American Greetings
Retirement Profit Sharing and Savings Plan
Statement of Net Assets Available for Benefits, With Fund Information
December 31, 1998
<TABLE>
<CAPTION>
GROWTH AND GROWTH AND BALANCED FUND BALANCED FUND
INCOME INCOME (STOCKS AND (STOCKS AND MONEY
STOCK FUND-- STOCK FUND-- GROWTH BONDS)-- BONDS)-- MARKET
INDEX TRUST WINDSOR II STOCK FUND WELLINGTON WELLESLEY FUND
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments, at fair value:
Shares in registered
investment companies:
Vanguard Index Trust--
500 Portfolio $ 178,738,479
Vanguard/PRIMECAP Fund $ 176,764,139
Vanguard/Wellington Fund $ 56,270,038
Vanguard Money Market
Reserves--Prime Portfolio $ 50,836,126
Bond Index/IC Fund
Vanguard/Windsor II $ 28,109,908
Vanguard/Wellesley Income
Fund $ 9,401,421
Vanguard International
Growth Portfolio
Common Stock of American
Greetings Corporation
Deposits with insurance companies
Participant notes receivable
------------------------------------------------------------------------------------
Total investments 178,738,479 28,109,908 176,764,139 56,270,038 9,401,421 50,836,126
Receivables:
Employer's contribution 5,937,070 1,110,249 6,446,039 1,967,918 320,434 3,246,860
Participants' contributions 289,975 71,932 301,960 102,385 22,326 86,006
------------------------------------------------------------------------------------
Total receivables 6,227,045 1,182,181 6,747,999 2,070,303 342,760 3,332,866
------------------------------------------------------------------------------------
Total assets 184,965,524 29,292,089 183,512,138 58,340,341 9,744,181 54,168,992
LIABILITIES
Accrued liabilities
------------------------------------------------------------------------------------
NET ASSETS AVAILABLE FOR BENEFITS $ 184,965,524 $ 29,292,089 $ 183,512,138 $ 58,340,341 $ 9,744,181 $ 54,168,992
====================================================================================
<CAPTION>
BOND INDEX/
INVESTMENT INTERNATIONAL COMPANY PARTICIPANT
CONTRACT FUND STOCK FUND STOCK FUND LOAN FUND TOTAL
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments, at fair value:
Shares in registered
investment companies:
Vanguard Index Trust-- $ 178,738,479
500 Portfolio 176,764,139
Vanguard/PRIMECAP Fund 56,270,038
Vanguard/Wellington Fund
Vanguard Money Market $ 52,867 50,888,993
Reserves--Prime Portfolio
Bond Index/IC Fund $ 160,585,592 160,585,592
Vanguard/Windsor II 28,109,908
Vanguard/Wellesley Income 9,401,421
Fund
Vanguard International $ 6,601,072 6,601,072
Growth Portfolio
Common Stock of American $ 40,275,815 40,275,815
Greetings Corporation 2,370,196 2,370,196
Deposits with insurance company $ 1,361,841 1,361,841
Participant notes receivable ------------------------------------------------------------------------
162,955,788 6,601,072 40,328,682 1,361,841 711,367,494
Total investments
Receivables: 5,837,425 405,761 2,037,118 27,308,874
Employer's contribution 198,636 25,759 94,029 1,193,008
Participants' contributions ------------------------------------------------------------------------
6,036,061 431,520 2,131,147 28,501,882
Total receivables ------------------------------------------------------------------------
168,991,849 7,032,592 42,459,829 1,361,841 739,869,376
Total assets
LIABILITIES 207,151 207,151
Accrued liabilities ------------------------------------------------------------------------
$ 168,784,698 $ 7,032,592 $ 42,459,829 $ 1,361,841 $ 739,662,225
NET ASSETS AVAILABLE FOR BENEFIT ========================================================================
</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, 1997
<TABLE>
<CAPTION>
GROWTH AND GROWTH AND BALANCED FUND BALANCED FUND
INCOME INCOME (STOCKS AND (STOCKS AND MONEY
STOCK FUND-- STOCK FUND-- GROWTH BONDS)-- BONDS)-- MARKET
INDEX TRUST WINDSOR II STOCK FUND WELLINGTON WELLESLEY FUND
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments, at fair value:
Shares in registered investment
companies:
Vanguard Index Trust--
500 Portfolio $ 140,532,689
Vanguard/PRIMECAP Fund $ 152,439,572
Vanguard/Wellington Fund $ 50,755,741
Vanguard Money Market
Reserves--Prime Portfolio $ 39,473,598
Bond Index/IC Fund
Vanguard/Windsor II $ 23,566,591
Vanguard/Wellesley Income
Fund $ 4,919,816
Vanguard International
Growth Portfolio
Common Stock of American
Greetings Corporation
Deposits with insurance companies
Participant notes receivable
------------------------------------------------------------------------------------
Total investments 140,532,689 23,566,591 152,439,572 50,755,741 4,919,816 39,473,598
Receivables:
Employer's contribution 5,603,097 1,092,699 6,449,031 1,979,104 185,902 2,707,016
Participants' contributions 236,285 57,052 268,479 90,967 11,381 60,321
Other 9,056 1,211 11,231 2,798 144 2,595
------------------------------------------------------------------------------------
Total receivables 5,848,438 1,150,962 6,728,741 2,072,869 197,427 2,769,932
------------------------------------------------------------------------------------
Total assets 146,381,127 24,717,553 159,168,313 52,828,610 5,117,243 42,243,530
LIABILITIES
Accrued liabilities
------------------------------------------------------------------------------------
NET ASSETS AVAILABLE FOR BENEFITS $ 146,381,127 $24,717,553 $ 159,168,313 $ 52,828,610 $ 5,117,243 $ 42,243,530
====================================================================================
</TABLE>
<TABLE>
<CAPTION>
BOND INDEX/
INVESTMENT INTERNATIONAL COMPANY PARTICIPANT
CONTRACT FUND STOCK FUND STOCK FUND LOAN FUND TOTAL
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments, at fair value:
Shares in registered investment
companies:
Vanguard Index Trust--
500 Portfolio $ 140,532,689
Vanguard/PRIMECAP Fund 152,439,572
Vanguard/Wellington Fund 50,755,741
Vanguard Money Market
Reserves--Prime Portfolio $ 149,577 39,623,175
Bond Index/IC Fund $ 150,615,489 150,615,489
Vanguard/Windsor II 23,566,591
Vanguard/Wellesley Income
Fund 4,919,816
Vanguard International
Growth Portfolio $ 5,963,670 5,963,670
Common Stock of American
Greetings Corporation 38,448,858 38,448,858
Deposits with insurance companies 2,212,848 2,212,848
Participant notes receivable $ 1,306,194 1,306,194
----------------------------------------------------------------------
Total investments 152,828,337 5,963,670 38,598,435 1,306,194 610,384,643
Receivables:
Employer's contribution 6,299,284 420,844 2,023,706 26,760,683
Participants' contributions 175,243 25,295 81,319 1,006,342
Other 7,535 900 3,200 38,670
----------------------------------------------------------------------
Total receivables 6,482,062 447,039 2,108,225 27,805,695
----------------------------------------------------------------------
Total assets 159,310,399 6,410,709 40,706,660 1,306,194 638,190,338
LIABILITIES
Accrued liabilities 311,896 129,396 441,292
----------------------------------------------------------------------
NET ASSETS AVAILABLE FOR BENEFITS $ 158,998,503 $ 6,410,709 $ 40,577,264 $ 1,306,194 $ 637,749,046
======================================================================
</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, 1998
<TABLE>
<CAPTION>
GROWTH AND GROWTH AND BALANCED FUND BALANCED FUND
INCOME INCOME (STOCKS AND (STOCKS AND
STOCK FUND-- STOCK FUND-- GROWTH BONDS)-- BONDS)--
INDEX TRUST WINDSOR II STOCK FUND WELLINGTON WELLESLEY
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ADDITIONS TO NET ASSETS ATTRIBUTED TO:
Net appreciation (depreciation)
in fair value of investments $ 36,741,031 $ 684,315 $ 29,288,360 $ (199,965) $ (1,032)
Interest and dividend income 2,767,271 2,889,120 6,855,415 6,276,979 794,855
Dividends from American Greetings
Corporation common stock
Contributions:
Participants 3,943,268 1,044,436 4,338,893 1,481,659 245,375
Rollover 304,397 178,936 257,072 30,915 83,765
Employer 5,936,967 1,110,229 6,445,921 1,967,882 320,431
--------------------------------------------------------------------------------
Total additions 49,692,934 5,907,036 47,185,661 9,557,470 1,443,394
DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO:
Benefits paid to participants 9,531,566 1,747,792 9,872,130 3,232,673 203,063
Administrative expenses 100 230 1,670 800 110
--------------------------------------------------------------------------------
Total deductions 9,531,666 1,748,022 9,873,800 3,233,473 203,173
--------------------------------------------------------------------------------
Net increase (decrease) prior to interfund
transfers 40,161,268 4,159,014 37,311,861 6,323,997 1,240,221
Interfund transfers--net (1,576,871) 415,522 (12,968,036) (812,266) 3,386,717
--------------------------------------------------------------------------------
Net increase 38,584,397 4,574,536 24,343,825 5,511,731 4,626,938
Net assets available for benefits at
beginning of year 146,381,127 24,717,553 159,168,313 52,828,610 5,117,243
--------------------------------------------------------------------------------
NET ASSETS AVAILABLE FOR BENEFITS
AT END OF YEAR $ 184,965,524 $ 29,292,089 $ 183,512,138 $ 58,340,341 $ 9,744,181
================================================================================
</TABLE>
<TABLE>
<CAPTION>
MONEY BOND INDEX/
MARKET INVESTMENT INTERNATIONAL COMPANY PARTICIPANT
FUND CONTRACT FUND STOCK FUND STOCK FUND LOAN FUND TOTAL
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ADDITIONS TO NET ASSETS ATTRIBUTED TO:
Net appreciation (depreciation)
in fair value of investments $ 3,217,465 $ 766,368 $ 1,726,521 $ 72,223,063
Interest and dividend income $ 2,285,691 9,700,446 134,429 9,945 $ 103,133 31,817,284
Dividends from American Greetings
Corporation common stock 738,455 738,455
Contributions:
Participants 1,115,055 2,659,930 401,403 1,270,316 16,500,335
Rollover 172,404 3,585 72,362 20,694 1,124,130
Employer 3,247,301 5,837,309 405,753 2,037,081 27,308,874
----------------------------------------------------------------------------------------
Total additions 6,820,451 21,418,735 1,780,315 5,803,012 103,133 149,712,141
DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO:
Benefits paid to participants 6,355,098 13,357,664 510,502 2,805,281 136,030 47,751,799
Administrative expenses 500 90 43,663 47,163
----------------------------------------------------------------------------------------
Total deductions 6,355,598 13,357,664 510,592 2,848,944 136,030 47,798,962
----------------------------------------------------------------------------------------
Net increase (decrease) prior to interfund
transfers 464,853 8,061,071 1,269,723 2,954,068 (32,897) 101,913,179
Interfund transfers--net 11,460,609 1,725,124 (647,840) (1,071,503) 88,544 -
----------------------------------------------------------------------------------------
Net increase 11,925,462 9,786,195 621,883 1,882,565 55,647 101,913,179
Net assets available for benefits at
beginning of year 42,243,530 158,998,503 6,410,709 40,577,264 1,306,194 637,749,046
----------------------------------------------------------------------------------------
NET ASSETS AVAILABLE FOR BENEFITS
AT END OF YEAR $ 54,168,992 $ 168,784,698 $ 7,032,592 $ 42,459,829 $ 1,361,841 $ 739,662,225
========================================================================================
</TABLE>
See notes to financial statements.
5
<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, 1997
<TABLE>
<CAPTION>
GROWTH AND GROWTH AND BALANCED FUND BALANCED FUND
INCOME INCOME (STOCKS AND (STOCKS AND MONEY
STOCK FUND-- STOCK FUND-- GROWTH BONDS)-- BONDS)-- MARKET
INDEX TRUST WINDSOR II STOCK FUND WELLINGTON WELLESLEY FUND
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ADDITIONS TO NET ASSETS ATTRIBUTED TO:
Net appreciation (depreciation)
in fair value of investments $ 30,919,973 $ 2,981,694 $ 33,174,176 $ 4,975,296 $ 188,228
Interest and dividend income 2,886,203 2,116,092 5,511,784 4,290,550 494,992 $ 2,202,440
Dividends from American Greetings
Corporation common stock
Contributions:
Participants 3,503,156 841,654 3,990,917 1,340,217 132,086 968,533
Rollover 167,948 148,261 124,959 71,695 14,153 56,525
Employer 5,604,456 1,092,596 6,450,725 1,980,040 185,876 2,707,209
---------------------------------------------------------------------------------------
Total additions 43,081,736 7,180,297 49,252,561 12,657,798 1,015,335 5,934,707
DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO:
Benefits paid to participants 5,763,107 1,033,938 6,278,501 2,425,308 211,880 4,749,636
Administrative expenses 8,070 1,172 8,001 2,700 246 13,249
---------------------------------------------------------------------------------------
Total deductions 5,771,177 1,035,110 6,286,502 2,428,008 212,126 4,762,885
---------------------------------------------------------------------------------------
Net increase prior to interfund transfers 37,310,559 6,145,187 42,966,059 10,229,790 803,209 1,171,822
Interfund transfers--net 9,884,376 5,124,545 11,228,777 2,733,469 1,812,539 (4,024,706)
---------------------------------------------------------------------------------------
Net increase (decrease) 47,194,935 11,269,732 54,194,836 12,963,259 2,615,748 (2,852,884)
Net assets available for benefits at
beginning of year 99,186,192 13,447,821 104,973,477 39,865,351 2,501,495 45,096,414
---------------------------------------------------------------------------------------
NET ASSETS AVAILABLE FOR BENEFITS
AT END OF YEAR $ 146,381,127 $ 24,717,553 $ 159,168,313 $ 52,828,610 $ 5,117,243 $ 42,243,530
=======================================================================================
</TABLE>
<TABLE>
<CAPTION>
BOND INDEX/
INVESTMENT INTERNATIONAL COMPANY PARTICIPANT
CONTRACT FUND STOCK FUND STOCK FUND LOAN FUND TOTAL
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ADDITIONS TO NET ASSETS ATTRIBUTED TO:
Net appreciation (depreciation)
in fair value of investments $ 3,910,941 $ (56,611) $ 11,183,499 $ 87,277,196
Interest and dividend income 10,316,317 261,874 8,311 $ 87,239 28,175,802
Dividends from American Greetings
Corporation common stock 731,832 731,832
Contributions:
Participants 2,891,131 399,137 1,263,997 15,330,828
Rollover 38,129 34,008 29,841 685,519
Employer 6,296,215 420,814 2,022,752 26,760,683
---------------------------------------------------------------------
Total additions 23,452,733 1,059,222 15,240,232 87,239 158,961,860
DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO:
Benefits paid to participants 16,896,507 315,705 2,339,582 67,400 40,081,564
Administrative expenses 13,920 572 37,706 85,636
---------------------------------------------------------------------
Total deductions 16,910,427 316,277 2,377,288 67,400 40,167,200
---------------------------------------------------------------------
Net increase prior to interfund transfers 6,542,306 742,945 12,862,944 19,839 118,794,660
Interfund transfers--net (20,391,164) (421,598) (6,326,199) 379,961
---------------------------------------------------------------------
Net increase (decrease) (13,848,858) 321,347 6,536,745 399,800 118,794,660
Net assets available for benefits at
beginning of year 172,847,361 6,089,362 34,040,519 906,394 518,954,386
---------------------------------------------------------------------
NET ASSETS AVAILABLE FOR BENEFITS
AT END OF YEAR $ 158,998,503 $ 6,410,709 $ 40,577,264 $ 1,306,194 $ 637,749,046
=====================================================================
</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, 1998 and 1997
A. DESCRIPTION OF PLAN
The following description of the American Greetings Retirement Profit Sharing
and Savings Plan (the "Plan") provides only general information. Participants
should refer to the Plan agreement, copies of which are available from the
Administrative Committee of the Plan, for a more complete description of the
Plan's provisions.
GENERAL
The Plan is a defined contribution plan covering substantially all full-time
non-union employees and certain union employees of American Greetings
Corporation (the "Corporation") and domestic subsidiaries. The Plan is subject
to the provisions of the Employee Retirement Income Security Act of 1974
(ERISA).
CONTRIBUTIONS
The Corporation contributes 8% of its consolidated domestic pretax profits,
excluding dividends and gains and losses from capital assets and foreign
currency transactions, to the Plan. Additional amounts may be contributed at the
option of the Corporation's Board of Directors. No additional contributions were
made in either the 1998 or 1997 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
pretax annual compensation that a participant contributes to the Plan, provided
that the Corporation achieves certain predetermined financial goals. In 1998,
the Corporation amended the Plan to increase its contribution to 40% of the
first 6% for all full-time non-union employees and certain union employees. All
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 AND VESTING
Each participant's account is credited with the participant's 401(k)
contributions, 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 contributions, in increments of 10% to any of the
investment options offered under the Plan
PARTICIPANT LOANS
Participants may borrow against their elected deferred contributions or rollover
contributions, a minimum of $1,000 up to a maximum equal to the lesser of
$50,000 or 50% of their vested account balance. Loan 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 receive a lump sum payment or to be paid in monthly,
quarterly or annual installments over a period not to exceed the life expectancy
of the participant.
7
<PAGE> 13
American Greetings
Retirement Profit Sharing and Savings Plan
Notes to Financial Statements--Continued
A. DESCRIPTION OF THE PLAN--CONTINUED
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 ACCOUNTING POLICIES
INVESTMENT VALUATION AND INCOME RECOGNITION
The Plan's investments are stated at fair value except for its deposits with an
insurance company (see below). The shares of registered investment companies are
valued at quoted market prices which represent the net asset values of shares
held by the Plan at the Plan's year-end. The common stock of the Corporation is
valued at the last reported sales price on the last business day of the plan
year. The participant loans are valued at their outstanding balances, which
approximate fair value.
The value of deposits with an insurance company represents contributions made to
deposit contracts plus interest at the contract rate, less funds transferred to
Vanguard Fiduciary Trust Company (the "Trustee") to pay retirement benefits and
the insurance companies' administrative expenses.
The cost of the deposits approximate their fair value.
Purchases and sales of investments are recorded on a trade-date basis. Interest
income is recorded on the accrual basis. Dividend income is recorded on the
ex-dividend date.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates that affect the
amounts reported in the financial statements and accompanying notes. Actual
results could differ from those estimates.
8
<PAGE> 14
C. INVESTMENTS
The Plan's investments are held by Vanguard Fiduciary Trust Company, Trustee of
the Plan. The fair value of individual investments that represent 5% or more of
the fair value of the Plan's net assets are as follows:
<TABLE>
<CAPTION>
DECEMBER 31
1998 1997
-------------------------------
<S> <C> <C>
Vanguard Index Trust--500 Portfolio $ 178,738,479 $ 140,532,689
Vanguard/PRIMECAP Fund 176,764,139 152,439,572
Vanguard/Wellington Fund 56,270,038 50,755,741
Vanguard Money Market Reserves--
Prime Portfolio 50,888,993 39,623,175
Bond Index/IC Fund 160,585,592 150,615,489
Common Stock of American Greetings
Corporation 40,275,815 38,448,858
</TABLE>
During the years ended December 31, 1998 and 1997, the Plan's investments
(including investments bought, sold and held during the year) appreciated
(depreciated) in fair value as follows:
<TABLE>
<CAPTION>
1998 1997
-----------------------------
<S> <C> <C>
Investments at fair value as determined
by quoted market price:
Vanguard Index Trust--500 Portfolio $ 36,741,031 $ 30,919,973
Vanguard/PRIMECAP Fund 29,288,360 33,174,176
Vanguard/Wellington Fund (199,965) 4,975,296
Bond Index/IC Fund 3,217,465 3,910,941
Vanguard/Windsor II 684,315 2,981,694
Vanguard/Wellesley Income Fund (1,032) 188,228
Vanguard International Growth
Portfolio 766,368 (56,611)
Common Stock of American
Greetings Corporation 1,726,521 11,183,499
-------------------------------
$ 72,223,063 $ 87,277,196
===============================
</TABLE>
9
<PAGE> 15
American Greetings
Retirement Profit Sharing and Savings Plan
Notes to Financial Statements--Continued
D. INCOME TAX STATUS
The Plan has received a determination letter from the Internal Revenue Service
dated August 24, 1995, stating that the Plan is qualifies under Section 401(a)
of the Internal Revenue Code (the "Code") and, therefore, the related trust is
not subject to tax under present income tax laws. Once qualified, the Plan is
required to operate in conformity with the Code to maintain its qualification.
The Plan's Administrative Committee believes the Plan is being operated in
compliance with the applicable requirements of the Code and, therefore, believes
that the Plan is qualified and the related trust is tax exempt.
E. TRANSACTIONS WITH PARTIES-IN-INTEREST
The Plan held 77,418 Class A shares and 900,000 Class B shares of American
Greetings Corporation common stock at December 31, 1998 (34,737 and 950,000
shares, respectively, at December 31, 1997). The Plan received dividends from
the Corporation's stock of $738,455 and $731,832 in 1998 and 1997, respectively.
Class B shares are not publicly traded. The Plan invests in shares of mutual
funds managed by an affiliate of the Trustee. Accounting, legal and certain
other administrative fees are paid by the Corporation. All other expenses of the
Plan are paid by the Plan. Investment advisory fees for portfolio management of
Vanguard Funds are paid directly from fund earnings.
F. NUMBER OF PARTICIPANTS (UNAUDITED)
The following are the number of participants contributing to the Plan's
investment options:
<TABLE>
<CAPTION>
DECEMBER 31
1998 1997
--------------------
<S> <C> <C>
Growth and Income Stock Fund--Index Trust 6,230 6,250
Growth and Income Stock Fund--Windsor II 1,726 1,486
Growth Stock Fund (PRIMECAP Fund) 6,116 6,328
Balanced Fund (Stocks and Bonds)--Wellington 2,553 2,475
Balanced Fund (Stocks and Bonds)--Wellesley 584 382
Money Market Fund 2,268 2,017
Bond Index--Investment Contact Fund 5,522 5,993
</TABLE>
10
<PAGE> 16
American Greetings
Retirement Profit Sharing and Savings Plan
Notes to Financial Statements--Continued
<TABLE>
<CAPTION>
<S> <C> <C>
International Stock Fund 801 800
Company Stock Fund 3,244 3,249
</TABLE>
F. NUMBER OF PARTICIPANTS (UNAUDITED)--CONTINUED
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.
G. YEAR 2000 ISSUE (UNAUDITED)
The Plan Sponsor has determined that it will be necessary to take certain steps
in order to ensure that the Plan's information systems are prepared to handle
year 2000 dates. The Plan Sponsor is taking a two phase approach. The first
phase addresses internal systems that must be modified or replaced to function
properly. Both internal and external resources are being utilized to replace or
modify existing software applications, and test the software and equipment for
the year 2000 modifications. The Plan Sponsor anticipates substantially
completing this phase of the project by August 1999. Costs associated with
modifying software and equipment are not estimated to be significant and will be
paid by the Plan Sponsor.
For the second phase of the project, Plan management established formal
communications with its third party service providers to determine that they
have developed plans to address their own year 2000 problems as they relate to
the Plan's operations. All third party service providers have indicated that
they will be year 2000 compliant by early 1999. If modification of data
processing systems of either the Plan, the Plan Sponsor, or its service
providers are not completed timely, the year 2000 problem could have a material
impact on the operations of the Plan. Although the Plan Sponsor is confident
that all systems will be year 2000 ready, they have developed a contingency plan
which is expected to be completed by November 1999.
11
<PAGE> 17
American Greetings
Retirement Profit Sharing and Savings Plan
EIN: 34-0065325 Plan #001
Form 5500, Item 27a--Schedule of Assets Held for Investment Purposes
December 31, 1998
<TABLE>
<CAPTION>
DESCRIPTION OF INVESTMENT
INCLUDING MATURITY DATE,
IDENTITY OF ISSUE, BORROWER, LESSOR OR RATE OF INTEREST,
SIMILAR PARTY PAR OR MATURITY VALUE COST CURRENT VALUE
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
VALUE OF INTEREST IN REGISTERED INVESTMENT
COMPANIES
*Vanguard Index Trust--500 Portfolio 1,568,569 shares $ 98,017,890 $ 178,738,479
*Vanguard/PRIMECAP Fund 3,708,857 shares 102,957,606 176,764,139
*Vanguard/Wellington Fund 1,917,207 shares 49,255,609 56,270,038
*Vanguard Money Market Reserves Prime Portfolio 50,888,993 shares 50,888,993 50,888,993
*Bond Index/IC Fund 15,636,378 shares 160,585,592 160,585,592
*Vanguard/Windsor II 941,705 shares 25,488,168 28,109,908
*Vanguard/Wellesley Income Fund 425,019 shares 9,284,761 9,401,421
*Vanguard International Growth Portfolio 351,682 shares 6,026,767 6,601,072
------------------------------------
Total value of interest in registered investment
companies 502,505,386 667,359,642
EMPLOYER-RELATED INVESTMENTS
*American Greetings Corp. Class A Common Stock 77,418 shares 3,441,473 3,178,977
*American Greetings Corp. Class B Common Stock 900,000 shares 18,108,312 37,096,838
------------------------------------
Total employer-related investments 21,549,785 40,275,815
INSURANCE COMPANY GENERAL ACCOUNTS
Mutual Benefit Life GA-4207C 5.10%, Matures 12-31-99 1,511,171 1,511,171
Mutual Benefit Life GA-4207W 14.4%, Matures 12-31-99 859,025 859,025
------------------------------------
TOTAL INSURANCE COMPANY GENERAL ACCOUNTS 2,370,196 2,370,196
*LOANS TO PARTICIPANTS 8 % to 10%, Matures 1-5 years - 1,361,841
------------------------------------
$ 526,253,367 $ 711,367,494
====================================
</TABLE>
* Indicates party-in-interest to the Plan.
12
<PAGE> 18
American Greetings
Retirement Profit Sharing and Savings Plan
EIN: 34-0065325 Plan #001
Form 5500, Item 27d--Schedule of Reportable Transactions
Year Ended December 31, 1998
CATEGORY (III)--SERIES OF TRANSACTIONS IN EXCESS OF 5% OF PLAN ASSETS
<TABLE>
<CAPTION>
PURCHASES SALES
-------------------------------------------------------------
DESCRIPTION OF ASSETS NO. AMOUNT NO. AMOUNT GAIN
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
*Vanguard Index Trust-500 Portfolio 233 $ 35,084,950 244 $ 33,620,191 $ 9,549,435
*Vanguard Prime Money Market Fund 236 41,631,726 229 30,365,908 -
*Vanguard/PRIMECAP Fund 220 31,266,343 246 36,230,136 9,547,609
*Bond Index/IC Fund 241 37,526,736 247 30,626,750 1,136,843
</TABLE>
There were no category (i), (ii) or (iv) reportable transactions during the year
ended December 31, 1998.
* Indicates party-in-interest to the Plan.
13
<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 the American Greetings Retirement Profit
Sharing and Savings Plan of our report dated May 28, 1999, with respect to the
financial statements and supplemental 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, 1998.
Ernst & Young LLP
Cleveland, Ohio
June 25, 1999
