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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 11-K
ANNUAL REPORT
PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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(Mark One):
X ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
----- 1934.
For the fiscal year ended December 31, 1999.
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
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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, 1999 and 1998.
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2. Audited statements of changes in net assets available for
benefits for the years ended December 31, 1999 and 1998.
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 28, 2000 By: /s/ William S. Meyer
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Name: William S. Meyer
Title: Senior Vice-President
and Chief Financial Officer
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EXHIBIT INDEX
Exhibit No.
23 Consent of Independent Auditors
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AUDITED FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE
American Greetings Retirement Profit Sharing and Savings Plan
Years Ended December 31, 1999 and 1998
with Report of Independent Auditors
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American Greetings
Retirement Profit Sharing and Savings Plan
Audited Financial Statements and Supplemental Schedule
Years Ended December 31, 1999 and 1998
TABLE OF CONTENTS
Report of Independent Auditors ...................................... 1
AUDITED FINANCIAL STATEMENTS
Statements of Net Assets Available for Benefits...................... 2
Statements of Changes in Net Assets Available for Benefits........... 3
Notes to Financial Statements ....................................... 4
SUPPLEMENTAL SCHEDULE
Schedule H, Line 4(i)--Schedule of Assets Held for
Investment Purposes at End of Year................................. 9
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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 as of December
31, 1999 and 1998, 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 auditing standards generally accepted
in the United States. 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, 1999 and 1998, and the changes in its net assets available for
benefits for the years then ended, in conformity with accounting principles
generally accepted in the United States.
Our audits were performed for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental schedule of assets
held for investment purposes at end of year as of December 31, 1999, is
presented for purpose of additional analysis and is not a required part of the
financial statements but is 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. This supplemental schedule is the
responsibility of the Plan's management. The supplemental schedule has been
subjected to the auditing procedures applied in our audits of the financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the financial statements taken as a whole.
Cleveland, Ohio
June 22, 2000
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American Greetings
Retirement Profit Sharing and Savings Plan
Statements of Net Assets Available for Benefits
<TABLE>
<CAPTION>
DECEMBER 31
1999 1998
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<S> <C> <C>
ASSETS
Investments $799,942,404 $711,367,494
Contribution receivables:
Employer 16,374,521 27,308,874
Participants 1,063,261 1,193,008
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Total receivables 17,437,782 28,501,882
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Total assets 817,380,186 739,869,376
LIABILITIES
Accrued liabilities -- 207,151
--------------------------------------------
NET ASSETS AVAILABLE FOR BENEFITS $817,380,186 $739,662,225
============================================
</TABLE>
See notes to financial statements.
2
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American Greetings
Retirement Profit Sharing and Savings Plan
Statements of Changes in Net Assets Available for Benefits
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31
1999 1998
---------------------------------------
<S> <C> <C>
ADDITIONS
Investment income:
Net appreciation in fair value of investments $ 55,113,140 $ 72,223,063
Interest and dividends 43,604,537 31,817,284
Dividends from American Greetings
Corporation common stock 989,679 738,455
Contributions:
Participants 16,686,347 17,624,465
Employer 16,374,521 27,308,874
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Total additions 132,768,224 149,712,141
DEDUCTIONS
Benefits paid directly to participants 54,997,190 47,751,799
Administrative expenses 53,073 47,163
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Total deductions 55,050,263 47,798,962
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Net increase 77,717,961 101,913,179
Net assets available for benefits at
beginning of year 739,662,225 637,749,046
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NET ASSETS AVAILABLE FOR BENEFITS
AT END OF YEAR $817,380,186 $739,662,225
=======================================
</TABLE>
See notes to financial statements.
3
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American Greetings
Retirement Profit Sharing and Savings Plan
Notes to Financial Statements
Years Ended December 31, 1999 and 1998
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 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 1999 or 1998 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 40% of the first 6% of
pretax annual compensation that a participant contributes to the Plan, provided
that the Corporation achieves certain predetermined financial goals. All
contributions are invested in accordance with the participants' investment
elections.
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.
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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 and allocations of (a) the Corporation's profit sharing
contribution and 401(k) match and (b) Plan earnings. Allocations are based on
participant compensation, participant elections, or account balances, as
defined. 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, plus actual earnings thereon.
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 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.
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.
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American Greetings
Retirement Profit Sharing and Savings Plan
Notes to Financial Statements--Continued
B. SUMMARY OF ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The financial statements have been prepared on the accrual basis of accounting.
INVESTMENT VALUATION AND INCOME RECOGNITION
Except for deposits with an insurance company, the Plan's investments are stated
at fair value which equals the quoted market price on the last business day of
the plan year (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 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 accounting principles
generally accepted in the United States requires management to make estimates
that affect the amounts reported in the financial statements and accompanying
notes. Actual results could differ from those estimates.
RECLASSIFICATION
Certain amounts in the 1998 financial statements have been reclassified to
conform to the 1999 presentation.
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American Greetings
Retirement Profit Sharing and Savings Plan
Notes to Financial Statements--Continued
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
1999 1998
--------------------------------
<S> <C> <C>
Vanguard Index Trust--500 Portfolio $ 207,526,458 $ 178,738,479
Vanguard/PRIMECAP Fund 251,154,480 176,764,139
Vanguard/Wellington Fund 52,122,652 56,270,038
Vanguard Money Market Reserves
Prime Portfolio 77,209,264 50,888,993
Vanguard Total Bond Market Index Fund 139,497,281 160,585,592
Common Stock of American Greetings Corporation 33,148,209 40,275,815
</TABLE>
During the years ended December 31, 1999 and 1998, the Plan's investments
(including investments purchased, sold as well as held during the year)
appreciated (depreciated) in fair value as determined by quoted market prices as
follows:
<TABLE>
<CAPTION>
1999 1998
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<S> <C> <C>
Registered Investment Companies $ 72,115,878 $ 70,496,542
Common Stock of American
Greetings Corporation (17,002,738) 1,726,521
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TOTAL NET APPRECIATION IN FAIR VALUE
OF INVESTMENTS $ 55,113,140 $ 72,223,063
==============================
</TABLE>
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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 qualified under Section 401(a)
of the Internal Revenue Code (the "Code") and, therefore, the related trust is
exempt from taxation. 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 520,601 Class A shares and 900,000 Class B shares of American
Greetings Corporation common stock at December 31, 1999 (77,418 and 900,000
shares, respectively, at December 31, 1998). The Plan received dividends from
the Corporation's stock of $989,679 and $738,455 in 1999 and 1998, 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.
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American Greetings
Retirement Profit Sharing and Savings Plan
EIN: 34-0065325 Plan #001
Schedule H, Line 4(i)--Schedule of Assets Held for
Investment Purposes at End of Year
December 31, 1999
<TABLE>
<CAPTION>
DESCRIPTION OF INVESTMENT
INCLUDING MATURITY DATE,
IDENTITY OF ISSUE, BORROWER, LESSOR OR RATE OF INTEREST,
SIMILAR PARTY PAR OR MATURITY VALUE CURRENT VALUE
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VALUE OF INTEREST IN REGISTERED INVESTMENT COMPANIES
<S> <C> <C>
*Vanguard Index Trust--500 Portfolio 1,533,485 shares $207,526,458
*Vanguard/PRIMECAP Fund 4,046,310 shares 251,154,480
*Vanguard/Wellington Fund 1,864,186 shares 52,122,652
*Vanguard Money Market Reserves Prime Portfolio 77,209,264 shares 77,209,264
*Vanguard Total Bond Market Index Fund 14,591,766 shares 139,497,281
*Vanguard/Windsor II 825,072 shares 20,602,052
*Vanguard/Wellesley Income Fund 371,059 shares 6,994,464
*Vanguard International Growth Portfolio 348,225 shares 7,831,580
*Vanguard Extended Market Index Fund 66,228 shares 2,455,066
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Total value of interest in registered investment companies
765,393,297
EMPLOYER-RELATED INVESTMENTS
*American Greetings Corp. Class A Common Stock 520,601 shares 12,299,198
*American Greetings Corp. Class B Common Stock 900,000 shares 20,849,011
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Total employer-related investments 33,148,209
*LOANS TO PARTICIPANTS 8 % to 10%, Matures 1-5 years 1,400,898
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$799,942,404
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</TABLE>
* Indicates party-in-interest to the Plan.
9
