Exhibit 1
FINANCIAL STATEMENTS AND SCHEDULES
FARM BUREAU 401(k) SAVINGS PLAN
YEARS ENDED DECEMBER 31, 1999 AND 1998
WITH REPORT OF INDEPENDENT AUDITORS
<PAGE>
Farm Bureau 401(k) Savings Plan
Financial Statements
and Schedules
Years ended December 31, 1999 and 1998
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 Schedules
Schedule H, Line 4(i) - Schedule of Assets Held for Investment
Purposes at End of Year..................................................9
Schedule H, Line 4(j) - Schedule of Reportable Transactions................10
<PAGE>
Report of Independent Auditors
The Board of Directors
Iowa Farm Bureau Federation
We have audited the accompanying statements of net assets available for benefits
of the Farm Bureau 401(k) 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 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 at end of year, and reportable transactions for the
year then ended, are presented for the purposes 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 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.
The information presented in the schedules of assets held for investment
purposes and schedule of reportable transactions assumes cost to be equal to
current value as historical cost information is not available. Disclosure of
cost information, which is not considered material to the financial statements
taken as a whole, is required by the Department of Labor's Rules and Regulations
for Reporting and Disclosure under the Employee Retirement Income Security Act
of 1974.
/s/ Ernst & Young LLP
Des Moines, Iowa
May 19, 2000
1
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Farm Bureau 401(k) Savings Plan
Statements of Net Assets Available for Benefits
<TABLE>
<CAPTION>
DECEMBER 31
1999 1998
------------------------------------
<S> <C> <C>
ASSETS
Investments:
Mutual funds, at fair value:
EquiTrust Series Fund, Inc.:
High Grade Bond Portfolio $ 526,610 $ 347,804
High Yield Bond Portfolio 596,843 413,173
Managed Portfolio 1,830,092 1,650,871
Money Market Portfolio 199,711 144,598
Blue Chip Portfolio 4,293,623 2,468,505
Value Growth Portfolio 2,957,296 2,514,378
------------------------------------
Total investments in mutual funds 10,404,175 7,539,329
Flexible premium deferred annuities 4,760,743 4,380,732
FBL Financial Group, Inc. common stock 7,340,539 5,902,070
Notes receivable from participants 989,227 820,749
------------------------------------
TOTAL INVESTMENTS AND NET ASSETS AVAILABLE FOR BENEFITS $23,494,684 $18,642,880
====================================
</TABLE>
SEE ACCOMPANYING NOTES.
2
<PAGE>
Farm Bureau 401(k) Savings Plan
Statements of Changes in Net Assets
Available for Benefits
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1999 1998
------------------------------------
<S> <C> <C>
Additions:
Investment income:
Interest $ 308,691 $ 279,466
Dividends 323,452 226,018
Net unrealized and realized gains (losses) on investments (658,772) (266,580)
------------------------------------
(26,629) 238,904
Contributions:
Employees 3,827,320 3,188,032
Employer 1,679,979 1,459,263
Rollovers from other plans 733,962 625,769
------------------------------------
Total additions 6,214,632 5,511,968
Deductions - benefits paid to participants (1,362,828) (671,751)
------------------------------------
Net additions 4,851,804 4,840,217
Net assets available for benefits at beginning of year 18,642,880 13,802,663
------------------------------------
Net assets available for benefits at
end of year $23,494,684 $18,642,880
====================================
</TABLE>
SEE ACCOMPANYING NOTES.
3
<PAGE>
Farm Bureau 401(k) Savings Plan
Notes to Financial Statements
December 31, 1999
1. SIGNIFICANT ACCOUNTING POLICIES
Investments in EquiTrust Series Fund, Inc. and common stock of FBL Financial
Group, Inc. are stated at fair market value, based on the latest quoted market
price. Investments in flexible premium deferred annuities, which are considered
fully benefit-responsive contracts, are valued at contract value (including
earnings attributed to the investment). Contract value approximates fair value.
Notes receivable from participants are stated at the unpaid principal balance
plus accrued interest, which approximate fair value. The interest rate is 1-1/2%
above the FBL Flexible Premium Deferred Annuity Rate and was 7.25% during 1999
and ranged from 7.50% to 7.75% during 1998.
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States 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.
During 1999, the American Institute of Certified Public Accountants issued
Statement of Position 99-3, ACCOUNTING FOR AND REPORTING OF CERTAIN DEFINED
CONTRIBUTION BENEFIT PLAN INVESTMENT AND OTHER DISCLOSURE MATTERS (SOP 99-3).
SOP 99-3, which was required to be adopted by the Plan during 1999, eliminated
the requirement to disclose in a separate columnar format the activity of each
participant directed investment option. Information for the Plan's
non-participant directed investment in FBL Financial Group, Inc. common stock
continues to be required to be reported separately. The adoption of SOP 99-3 had
no impact on net assets available for benefits.
2. DESCRIPTION OF THE PLAN
Farm Bureau 401(k) Savings Plan (the Plan) is a defined contribution plan which
is designed to provide retirement benefits. The Plan covers substantially all
employees of the Iowa Farm Bureau Federation and affiliated companies (the
Companies) including, beginning January 1, 1998, employees of the Arizona Farm
Bureau Federation and the New Mexico Farm and Livestock Bureau and beginning
January 1, 1999, employees of the Minnesota Farm Bureau Federation, South Dakota
Farm Bureau Federation, and Utah Farm Bureau Federation. Effective January 1,
1998, the Plan was amended to discontinue 401(m) post-tax participant
contributions and implement a 401(k) feature which allows only before-tax
contributions. Under the amended plan, participants may contribute from 1% to
18% of their salaries, pre-tax, to the Plan, subject to certain limitations
described in the plan document. The Companies match 50% of participant
contributions up to 4% of eligible annual salary, excluding agency managers,
assistant agency managers and, effective October 1, 1998, office assistants, who
are employees of Farm Bureau Mutual
4
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Farm Bureau 401(k) Savings Plan
Notes to Financial Statements (continued)
2. DESCRIPTION OF THE PLAN (CONTINUED)
Insurance Company as well as participants who have accrued certain minimum
benefits under the Farm Bureau Retirement Plan. Company matching contributions
currently are in the form of common stock of FBL Financial Group, Inc., an
affiliate. Participants are immediately fully vested in the contributions they
make to the plan and, after three years of employment, contributions made on
their behalf through the Company match. Agency managers, assistant agency
managers and office assistants who are employees of Farm Bureau Mutual Insurance
Company are eligible for a non-elective Company cash contribution.
The Plan also allows for participants to borrow money from the Plan subject to
certain provisions.
On termination of service, the participant may elect to receive either a
lump-sum amount equal to the value of the account or equal installment payments
over a period of time not to exceed the life expectancy of the participant.
Although it has not expressed an intent to do so, the Company 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,
participants will become 100% vested in their accounts.
The foregoing description of the Plan provides only general information. A more
complete description of the Plan's provisions may be obtained from the plan
administrator.
3. INVESTMENTS
Contributions are invested in the mutual funds, flexible premium deferred
annuities sponsored by or offered by the Companies or common stock of FBL
Financial Group, Inc. Participants may elect in which portfolios of the mutual
funds to invest their contributions. The portfolios invest primarily in common
stocks, fixed income, high quality corporate bonds, debt securities of the
United States Government and short-term money market instruments. Participants
electing to have contributions deposited into the Flexible Premium Deferred
Annuities receive interest at a rate determined by the Board of Directors of
Farm Bureau Life Insurance Company, with a guaranteed minimum rate of 3%. These
rates vary based upon the investment experience of the general account of Farm
Bureau Life Insurance Company. The interest rate credited to these contributions
was 5.75% during 1999 and ranged from 6.0% to 6.25% during 1998. Participants
who elect to purchase stock in the Company do so at its market price when the
trade is executed.
5
<PAGE>
Farm Bureau 401(k) Savings Plan
Notes to Financial Statements (continued)
3. INVESTMENTS (CONTINUED)
Participants have no investment direction authority over that portion the FBL
Financial Group, Inc. common stock related to the non-vested Company matching
contributions. Accordingly, this investment is both participant and
non-participant directed. A summary of the significant components of the changes
in this investment is as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1999 1998
------------------ ------------------
<S> <C> <C>
FBL Financial Group, Inc. common stock,
beginning of year $5,902,070 $3,246,585
Dividend income 98,646 63,060
Net unrealized and realized gains (losses) on investments (874,738) 679,543
Contributions:
Employees 770,863 507,764
Employer 1,166,396 1,046,954
Rollovers from other plans 22,885 79,979
Benefits paid to participants (172,360) (33,236)
Net transfers from other investments 426,777 311,421
------------------ ------------------
FBL Financial Group, Inc. common stock,
end of year $7,340,539 $5,902,070
================== ==================
</TABLE>
The fair values of individual investments that represent 5% or more of the
Plan's net assets are as follows:
<TABLE>
<CAPTION>
DECEMBER 31
1999 1998
-----------------------------------
<S> <C> <C>
EquiTrust Series Fund, Inc.:
Managed Portfolio (184,671 shares in 1999 and 150,627 shares in
1998) $1,830,092 $1,650,871
Blue Chip Portfolio (86,339 shares in 1999 and 58,746 shares in
1998) 4,293,623 2,468,505
Value Growth Portfolio (345,883 shares in 1999 and 261,914 shares
in 1998) 2,957,296 2,514,378
Flexible premium deferred annuities 4,760,743 4,380,732
Common stock of FBL Financial Group, Inc.
(366,931 shares in 1999 and 243,014 shares in 1998) 7,340,539 5,902,070
</TABLE>
Net unrealized gains (losses) by investment type were as follows during the
years ended December 31, 1999 and 1998:
<TABLE>
<CAPTION>
1999 1998
-----------------------------------
<S> <C> <C>
Mutual funds $ 215,966 $(946,123)
FBL Financial Group common stock (874,738) 679,543
-----------------------------------
$(658,772) $(266,580)
===================================
</TABLE>
6
<PAGE>
Farm Bureau 401(k) Savings Plan
Notes to Financial Statements (continued)
4. INCOME TAX STATUS
The Plan has received a determination letter from the Internal Revenue Service
dated April 30, 1998, stating that the Plan is qualified under Section 401(a) of
the Internal Revenue Code of 1986 (the "Code") and, therefore, is exempt from
taxation. Once qualified, the Plan is required to operate in conformity with the
Code and ERISA to maintain its tax-exempt status. The administrator is not aware
of any course of action or series of events that have occurred that might
adversely affect the Plan's qualified status.
5. ADMINISTRATIVE AND OPERATING EXPENSES
The Companies pay all administrative and operating expenses of the Plan.
6. SUBSEQUENT EVENTS
Effective January 1, 2000, the Plan document was amended to allow the Nebraska
Farm Bureau 401(k) Savings Plan to merge into the Plan. The merger resulted in a
transfer of approximately 100 additional participants and $1.5 million in
investments into the Plan. The amendment also eliminated the three year vesting
period for Company matching contributions.
Additionally, on January 1, 2000, the Plan added four new investment options and
changed recordkeeper from DST Systems, Inc. to Wells Fargo & Company. Wells
Fargo & Company was also named trustee of the Plan. These changes had no impact
on net assets available for benefits.
7
<PAGE>
Supplemental Schedules
8
<PAGE>
Farm Bureau 401(k) Savings Plan
E.I.N. 42-0331840
Plan #004
Schedule H, Line 4(i) - Schedule of Assets Held
for Investment Purposes at End of Year
December 31, 1999
<TABLE>
<CAPTION>
DESCRIPTION OF INVESTMENT
IDENTITY OF ISSUE, INCLUDING MATURITY DATE,
BORROWER, LESSOR, RATE OF INTEREST, COLLATERAL, PAR OR CURRENT
OR SIMILAR PARTY MATURITY VALUE COST VALUE
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Participant directed:
EquiTrust Series Fund, Inc. Investments in mutual fund as
follows:
High Grade Bond Portfolio $ 526,610
High Yield Bond Portfolio 596,843
Managed Portfolio 1,830,092
Money Market Portfolio 199,711
Blue Chip Portfolio 4,293,623
Value Growth Portfolio 2,957,296
Farm Bureau Life Insurance Company Flexible premium deferred annuities 4,760,743
Various participants Notes receivable, 7.25% to 8.60%,
due through December 2003 989,227
------------------
16,154,145
Non-participant directed:
FBL Financial Group, Inc. Class A common stock $ 7,340,539* 7,340,539
====================
------------------
Total investments $ 23,494,684
==================
</TABLE>
The issuers of all of the investments above are considered as
parties-in-interest to the Plan.
* Cost is assumed to equal current value as historical cost information is not
available for this investment.
9
<PAGE>
Farm Bureau 401(k) Savings Plan
E.I.N. 42-0331840
Plan #004
Schedule H, Line 4(j) - Schedule of Reportable Transactions
Year ended December 31, 1999
<TABLE>
<CAPTION>
NUMBER OF TRANSACTIONS IDENTITY OF PARTY INVOLVED DESCRIPTION OF ASSET
----------------------- ------------------------------------ -----------------------------------------------
CATEGORY (iii) - SERIES OF TRANSACTIONS IN EXCESS OF 5 PERCENT OF PLAN ASSETS
FOR INVESTMENTS WITH NON-PARTICIPANT-DIRECTED ACTIVITY.
<S> <C> <C>
99 FBL Financial Group, Inc.* Purchases of FBL Financial Group common stock
83 FBL Financial Group, Inc.* Sales of FBL Financial Group common stock
</TABLE>
THERE WERE NO CATEGORY (i), (ii) or (iv) TRANSACTIONS DURING THE YEAR ENDED
DECEMBER 31, 1999.
* Indicates party-in-interest to the Plan.
Cost information is not available. Purchases include expenditures for securities
and realized and unrealized gains/losses during the year. Sales represent
proceeds received upon sale of securities.
10
<PAGE>
<TABLE>
<CAPTION>
CURRENT VALUE OF ASSET
PURCHASE PRICE SELLING PRICE COST OF ASSET ON TRANSACTION DATE NET GAIN (LOSS)
----------------------- --------------- --------------------- ------------------------ ----------------------
<S> <C> <C> <C> <C>
$1,659,729 $ - $1,659,729 $1,659,729 $ -
- 221,260 221,260 221,260 -
</TABLE>
11
