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
_____________________
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
For the fiscal year ended December 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
For the transition period from _______ to ______
Commission file number 1-7981
Full title of the Plan:
THE VARIABLE ANNUITY LIFE INSURANCE COMPANY AGENTS' AND MANAGERS'
THRIFT PLAN
Name of the issuer of the securities held pursuant to the Plan
and the address of its principal executive office:
AMERICAN GENERAL CORPORATION
2929 Allen Parkway
Houston, Texas 77019
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THE VARIABLE ANNUITY LIFE INSURANCE COMPANY AGENTS' AND MANAGERS' THRIFT PLAN
AUDITED FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES
DECEMBER 31, 1997
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................................................... 6
Notes to Financial Statements .......................................... 10
Supplemental Schedules
Item 27a - Schedule of Assets Held for Investment Purposes................ 15
Item 27d - Schedule of Reportable Transactions............................ 16
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Report of Independent Auditors
Administrative Board
The Variable Annuity Life Insurance Company Agents' and Managers' Thrift Plan
We have audited the accompanying statements of net assets available for
benefits of the Variable Annuity Life Insurance Company Agents' and Managers'
Thrift Plan as of December 31, 1997 and 1996, 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 of The Variable
Annuity Life Insurance Company Agents' and Managers' Thrift Plan as of
December 31, 1997 and 1996, and for the years then ended present fairly, in
all material respects, the net assets available for benefits of the Plan as of
December 31, 1997 and 1996, and the changes in 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 basic
financial statements taken as a whole. The supplemental schedules of assets
held for investment as of December 31, 1997 and reportable transactions for
the year then ended are presented for the purpose of additional analysis and
are not a required part of the basic 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. 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 the
audits of the basic financial statements and, in our opinion, are fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.
ERNST & YOUNG LLP
Houston, Texas
May 20, 1998
1
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THE VARIABLE ANNUITY LIFE INSURANCE COMPANY AGENTS' AND MANAGERS' THRIFT PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
DECEMBER 31, 1997
Participant Directed
Stock Cash Mutual
Fund Fund Fund A
Assets
Investments at fair value
American General
Corporation common stock
(1,716,199 shares) ........ $35,998,503 $ - $ -
The Variable Annuity Life
Insurance Company group
deposit administration
contract................... - 2,081,554 -
The Variable Annuity Life
Insurance Company Mutual
Fund A (296,591 shares).... - - 8,808,762
The Variable Annuity Life
Insurance Company Foreign
Fund (129,451 shares)...... - - -
The Variable Annuity Life
Insurance Company Small-Cap
Fund (115,368 shares) - - -
The Variable Annuity Life
Insurance Company Large-Cap
Fund (62,562 shares) ...... - - -
The Variable Annuity Life
Insurance Company Bond Fund
(11,144 shares) ........... - - -
Short-term investments ...... 124,339 2,316 32,124
Total investments ......... 36,122,842 2,083,870 8,840,886
Receivables
Contributions
Company's ................. - - -
Participants'.............. 25,842 2,431 14,248
Interest..................... 953 53,185 219
Total receivables.......... 26,795 55,616 14,467
Total assets .............. 36,149,637 2,139,486 8,855,353
Liabilities
Payables
Excess contribution refunds.. 142,926 6,965 61,233
Forfeitures.................. - - -
Total liabilities.......... 142,926 6,965 61,233
Net assets available for
benefits....................... $36,006,711 $2,132,521 $8,794,120
2
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The accompanying notes are an integral part of these financial statements.
THE VARIABLE ANNUITY LIFE INSURANCE COMPANY AGENTS' AND MANAGERS' THRIFT PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
DECEMBER 31, 1997
Participant Directed
Foreign Small-Cap Large-Cap
Fund Fund Fund
Assets
Investments at fair value
American General
Corporation common stock
(1,716,199 shares) ........ $ - $ - $ -
The Variable Annuity Life
Insurance Company group
deposit administration
contract................... - - -
The Variable Annuity Life
Insurance Company Mutual
Fund A (296,591 shares).... - - -
The Variable Annuity Life
Insurance Company Foreign
Fund (129,451 shares)...... 1,288,041 - -
The Variable Annuity Life
Insurance Company Small-Cap
Fund (115,368 shares) - 1,858,573 -
The Variable Annuity Life
Insurance Company Large-Cap
Fund (62,562 shares) ...... - - 1,264,994
The Variable Annuity Life
Insurance Company Bond Fund
(11,144 shares) ........... - - -
Short-term investments ...... 16,007 24,780 19,726
Total investments ......... 1,304,048 1,883,353 1,284,720
Receivables
Contributions
Company's ................. - - -
Participants'.............. 6,057 9,735 8,661
Interest..................... 74 94 73
Total receivables.......... 6,131 9,829 8,734
3
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Total assets .............. 1,310,179 1,893,182 1,293,454
Liabilities
Payables
Excess contribution refunds.. 21,312 37,703 24,696
Forfeitures.................. - - -
Total liabilities.......... 21,312 37,703 24,696
Net assets available for
benefits....................... $1,288,867 $1,855,479 $1,268,758
The accompanying notes are an integral part of these financial statements.
THE VARIABLE ANNUITY LIFE INSURANCE COMPANY AGENTS' AND MANAGERS' THRIFT PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
DECEMBER 31, 1997
Non-
Participant Participant
Directed Directed
Bond Stock
Fund Fund Total
Assets
Investments at fair value
American General
Corporation common stock
(1,716,199 shares) ........ $ - $56,783,484 $92,781,987
The Variable Annuity Life
Insurance Company group
deposit administration
contract................... - - 2,081,554
The Variable Annuity Life
Insurance Company Mutual
Fund A (296,591 shares).... - - 8,808,762
The Variable Annuity Life
Insurance Company Foreign
Fund (129,451 shares)...... - - 1,288,041
The Variable Annuity Life
Insurance Company Small-Cap
Fund (115,368 shares) - - 1,858,573
The Variable Annuity Life
Insurance Company Large-Cap
Fund (62,562 shares) ...... - - 1,264,994
4
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The Variable Annuity Life
Insurance Company Bond Fund
(11,144 shares) ........... 103,194 - 103,194
Short-term investments ...... 1,274 - 220,566
Total investments ......... 104,468 56,783,484 108,407,671
Receivables
Contributions
Company's ................. - 46,003 46,003
Participants'.............. 469 - 67,443
Interest..................... 6 - 54,604
Total receivables.......... 475 46,003 168,050
Total assets .............. 104,943 56,829,487 108,575,721
Liabilities
Payables
Excess contribution refunds.. 4,603 788,900 1,088,338
Forfeitures.................. - 30,920 30,920
Total liabilities.......... 4,603 819,820 1,119,258
Net assets available for
benefits....................... $100,340 $56,009,667 $107,456,463
The accompanying notes are an integral part of these financial statements.
5
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THE VARIABLE ANNUITY LIFE INSURANCE COMPANY AGENTS' AND MANAGERS' THRIFT PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
(continued)
DECEMBER 31, 1996
Participant Directed
Stock Cash Mutual
Fund Fund Fund A
Assets
Investments at fair value
American General
Corporation common stock
(1,747,421 shares) .......... $29,046,224 $ - $ -
The Variable Annuity Life
Insurance Company group
deposit administration
contract .................. - 1,317,443 -
The Variable Annuity Life
Insurance Company Stock
Index Fund
(293,055 shares)........... - - 6,669,924
The Variable Annuity Life
Insurance Company
Timed Opportunity Fund
(24,805 shares)............ - - -
Short-term investments ...... 94,386 10,734 23,387
Total investments ......... 29,140,610 1,328,177 6,693,311
Receivables
Interest..................... 988 51 128
Total receivables.......... 988 51 128
Total assets .............. 29,141,598 1,328,228 6,693,439
Liabilities
Payables
Excess contribution refunds.. 338,348 24,514 181,754
Forfeitures.................. - - -
Total liabilities ......... 338,348 24,514 181,754
Net assets available for
benefits ...................... $28,803,250 $1,303,714 $ 6,511,685
The accompanying notes are an integral part of these financial statements.
6
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THE VARIABLE ANNUITY LIFE INSURANCE COMPANY AGENTS' AND MANAGERS' THRIFT PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
(continued)
DECEMBER 31, 1996
Non-
Participant Participant
Directed Directed
Mutual Stock
Fund B Fund Total
Assets
Investments at fair value
American General
Corporation common stock
(1,747,421 shares) .......... $ - $42,379,618 $71,425,842
The Variable Annuity Life
Insurance Company group
deposit administration
contract .................. - - 1,317,443
The Variable Annuity Life
Insurance Company Stock
Index Fund
(293,055 shares)........... - - 6,669,924
The Variable Annuity Life
Insurance Company
Timed Opportunity Fund
(24,805 shares)............ 288,240 - 288,240
Short-term investments ...... 7,771 - 136,278
Total investments ......... 296,011 42,379,618 79,837,727
Receivables
Interest..................... 41 - 1,208
Total receivables.......... 41 - 1,208
Total assets .............. 296,052 42,379,618 79,838,935
Liabilities
Payables
Excess contribution refunds.. - 606,965 1,151,581
Forfeitures.................. - 110,033 110,033
Total liabilities ......... - 716,998 1,261,614
Net assets available for
benefits ...................... $ 296,052 $41,662,620 $78,577,321
The accompanying notes are an integral part of these financial statements.
7
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THE VARIABLE ANNUITY LIFE INSURANCE COMPANY AGENTS' AND MANAGERS' THRIFT PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS WITH FUND
INFORMATION
YEAR ENDED DECEMBER 31, 1997
Participant Directed
Stock Cash Mutual
Fund Fund Fund A
Additions to net assets
Investment income
Dividends ................... $ 934,576 $ - $ 158,766
Interest .................... 5,409 142,077 4,115
Net appreciation/
(depreciation) in fair
value of investments ...... 8,861,685 - 2,020,074
Total investment income.... 9,801,670 142,077 2,182,955
Contributions
Company's ................... - - -
Participants' ............... 1,672,298 143,884 902,601
Total contributions ....... 1,672,298 143,884 902,601
Total additions ......... 11,473,968 285,961 3,085,556
Deductions from net assets
Benefits paid to participants
American General Corporation
common stock
(101,622 shares) .......... 1,669,635 - -
Cash ........................ 53,193 142,054 326,405
Forfeitures ................... - - -
Total deductions .......... 1,722,828 142,054 326,405
Net increase before interfund
transfers ..................... 9,751,140 143,907 2,759,151
Interfund transfers, net ........ (2,547,679) 684,900 (476,716)
Net increase(decrease) ........ 7,203,461 828,807 2,282,435
Net assets available for
benefits
Beginning of year ......... 28,803,250 1,303,714 6,511,685
End of year ............... $36,006,711 $2,132,521 $8,794,120
The accompanying notes are an integral part of these financial statements.
8
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THE VARIABLE ANNUITY LIFE INSURANCE COMPANY AGENTS' AND MANAGERS' THRIFT PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS WITH FUND
INFORMATION
YEAR ENDED DECEMBER 31, 1997
Participant Directed
Mutual Foreign Small-Cap
Fund B Fund Fund
Additions to net assets
Investment income
Dividends ................... $ - $120,702 $ -
Interest .................... 1,925 2,002 2,548
Net appreciation/
(depreciation) in fair
value of investments ...... - (119,162) 313,572
Total investment income.... 1,925 3,542 316,120
Contributions
Company's ................... - - -
Participants' ............... - 374,078 553,004
Total contributions ....... - 374,078 553,004
Total additions ......... 1,925 377,620 869,124
Deductions from net assets
Benefits paid to participants
American General Corporation
common stock
(101,622 shares) .......... - - -
Cash ........................ - 18,501 17,399
Forfeitures ................... - - -
Total deductions .......... - 18,501 17,399
Net increase before interfund
transfers ..................... 1,925 359,119 851,725
Interfund transfers, net ........ (297,977) 929,748 1,003,754
Net increase(decrease) ........ (296,052) 1,288,867 1,855,479
Net assets available for
benefits
Beginning of year ......... 296,052 - -
End of year ............... $ - $1,288,867 $1,855,479
The accompanying notes are an integral part of these financial statements.
9
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THE VARIABLE ANNUITY LIFE INSURANCE COMPANY AGENTS' AND MANAGERS' THRIFT PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS WITH FUND
INFORMATION
YEAR ENDED DECEMBER 31, 1997
Participant Directed
Large-Cap Bond
Fund Fund
Additions to net assets
Investment income
Dividends ................... $ 20,641 $ 4,791
Interest .................... 1,465 132
Net appreciation/
(depreciation) in fair
value of investments ...... 187,853 6,903
Total investment income.... 209,959 11,826
Contributions
Company's ................... - -
Participants' ............... 435,488 22,494
Total contributions ....... 435,488 22,494
Total additions ......... 645,447 34,320
Deductions from net assets
Benefits paid to participants
American General Corporation
common stock
(101,622 shares) .......... - -
Cash ........................ 14,263 376
Forfeitures ................... - -
Total deductions .......... 14,263 376
Net increase before interfund
transfers ..................... 631,184 33,944
Interfund transfers, net ........ 637,574 66,396
Net increase(decrease) ........ 1,268,758 100,340
Net assets available for
benefits
Beginning of year ......... - -
End of year ............... $1,268,758 $100,340
The accompanying notes are an integral part of these financial statements.
10
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THE VARIABLE ANNUITY LIFE INSURANCE COMPANY AGENTS' AND MANAGERS' THRIFT PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS WITH FUND
INFORMATION
YEAR ENDED DECEMBER 31, 1997
Non-Participant
Directed
Stock
Fund Total
Additions to net assets
Investment income
Dividends ................... $ 1,464,793 $ 2,704,269
Interest .................... 7,427 167,100
Net appreciation/
(depreciation) in fair
value of investments ...... 14,011,784 25,282,709
Total investment income.... 15,484,004 28,154,078
Contributions
Company's ................... 2,179,098 2,179,098
Participants' ............... - 4,103,847
Total contributions ....... 2,179,098 6,282,945
Total additions ......... 17,663,102 34,437,023
Deductions from net assets
Benefits paid to participants
American General Corporation
common stock
(101,622 shares) .......... 3,019,176 4,688,811
Cash ........................ 72,607 644,798
Forfeitures ................... 224,272 224,272
Total deductions .......... 3,316,055 5,557,881
Net increase before interfund
transfers ..................... 14,347,047 28,879,142
Interfund transfers, net ........ - -
Net increase(decrease) ........ 14,347,047 28,879,142
Net assets available for
benefits
Beginning of year ......... 41,662,620 78,577,321
End of year ............... $56,009,667 $107,456,463
The accompanying notes are an integral part of these financial statements.
11
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THE VARIABLE ANNUITY LIFE INSURANCE COMPANY AGENTS' AND MANAGERS' THRIFT PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS WITH FUND
INFORMATION (continued)
YEAR ENDED DECEMBER 31, 1996
Participant Directed
Stock Cash Mutual
Fund Fund Fund A
Additions to net assets
Investment income
Dividends ................... $ 893,360 $ - $ 150,680
Interest .................... 5,815 58,384 2,266
Net appreciation/
(depreciation)in fair
value of investments ...... 4,144,014 - 969,034
Total investment income ... 5,043,189 58,384 1,121,980
Contributions
Company's ................... - - -
Participants' ............... 1,756,239 152,109 1,013,400
Total contributions ....... 1,756,239 152,109 1,013,400
Total additions ......... 6,799,428 210,493 2,135,380
Deductions from net assets
Benefits paid to participants
American General Corporation
common stock
(69,031 shares) ........... 952,558 - -
Cash ........................ 6,457 173,224 104,458
Forfeitures ................... - - -
Total deductions ........ 959,015 173,224 104,458
Net increase before
interfund transfers.... 5,840,413 37,269 2,030,922
Interfund transfers, net......... (273,424) (24,401) 298,855
Net increase............. 5,566,989 12,868 2,329,777
Net assets available for benefits
Beginning of year ....... 23,236,261 1,290,846 4,181,908
End of year ............. $28,803,250 $1,303,714 $6,511,685
The accompanying notes are an integral part of these financial statements.
12
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THE VARIABLE ANNUITY LIFE INSURANCE COMPANY AGENTS' AND MANAGERS' THRIFT PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS WITH FUND
INFORMATION (continued)
YEAR ENDED DECEMBER 31, 1996
Non-
Participant Participant
Directed Directed
Mutual Stock
Fund B Fund Total
Additions to net assets
Investment income
Dividends ................... $ 39,529 $1,311,970 $2,395,539
Interest .................... 216 6,633 73,314
Net appreciation/
(depreciation)in fair
value of investments ...... (13,093) 6,093,354 11,193,309
Total investment income ... 26,652 7,411,957 13,662,162
Contributions
Company's ................... - 1,817,635 1,817,635
Participants' ............... 78,256 - 3,000,004
Total contributions ....... 78,256 1,817,635 4,817,639
Total additions ......... 104,908 9,229,592 18,479,801
Deductions from net assets
Benefits paid to participants
American General Corporation
common stock
(69,031 shares) ........... - 1,508,367 2,460,925
Cash ........................ 9,671 9,964 303,774
Forfeitures ................... - 26,898 26,898
Total deductions ........ 9,671 1,545,229 2,791,597
Net increase before
interfund transfers.... 95,237 7,684,363 15,688,204
Interfund transfers, net......... (1,030) - -
Net increase............. 94,207 7,684,363 15,688,204
Net assets available for benefits
Beginning of year ....... 201,845 33,978,257 62,889,117
End of year ............. $296,052 $41,662,620 $78,577,321
The accompanying notes are an integral part of these financial statements.
13
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THE VARIABLE ANNUITY LIFE INSURANCE COMPANY AGENTS' AND MANAGERS' THRIFT PLAN
NOTES TO FINANCIAL STATEMENTS
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
The Variable Annuity Life Insurance Company Agents' and Managers' Thrift Plan
(the Plan) financial statements are prepared in conformity with generally
accepted accounting principles. The preparation of financial statements in
accordance with generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts of assets
and liabilities. Ultimate results could differ from those estimates.
The fair value of investments in American General Corporation (American
General) common stock is based on published market prices. Fair values of
other investments not having an established market are reported as follows:
1) The Variable Annuity Life Insurance Company (VALIC, also referred to as the
Company) group deposit administration contract (Cash Fund) at contract value
(see Note 3), 2) investments in American General Series Portfolio Company
(AGSPC) Stock Index and Growth Funds, the Putnam OTC & Emerging Growth Fund,
the Templeton Foreign Fund, and the Vanguard Fixed Income Securities Fund, at
net asset value, which is based on the market value of the underlying
investments; and 3) short-term investments at cost which approximates fair
value. The contract value of the group deposit administration contract
approximates fair value because the interest crediting rate is reset annually.
AGSPC is an open-end management investment company (mutual fund) whose
investment adviser is VALIC.
Dividends are recorded as income on ex-dividend dates and interest income is
recorded using the accrual method of accounting.
Participants' accounts are credited monthly with the number of shares of
American General common stock or the number of shares of the AGSPC Stock Index
and Growth Funds purchased and the cost thereof. Purchases under the VALIC
group deposit administration contract are also credited to the participants'
accounts at cost.
Contributions are recorded as income on the date they become payable to the
Plan.
Interfund transfers are recorded at the fair value of the amount transferred.
Benefits paid to participants and related forfeitures are recorded upon
distribution at the fair value of the assets distributed or forfeited.
Benefits payable to participants are not accrued as liabilities in the
financial statements.
14
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THE VARIABLE ANNUITY LIFE INSURANCE COMPANY AGENTS' AND MANAGERS' THRIFT PLAN
NOTES TO FINANCIAL STATEMENTS--Continued
NOTE 2--DESCRIPTION OF THE PLAN
The following description of the Plan provides only general information. The
Plan document provides more complete descriptions of the Plan's provisions.
General
The Plan, which is subject to certain provisions of the Employee Retirement
Income Security Act of 1974, as amended (ERISA), is a defined contribution
plan offered to eligible agents and managers of VALIC who have completed at
least one year of service and have reached age twenty-one. The Plan provides
for participant elective salary deferrals (participant pretax contributions)
in accordance with Section 401(k) of the Internal Revenue Code of 1986, as
amended (IRC).
The cost of administering the Plan is paid by VALIC.
Investment Options
Participants may elect to have their contributions invested in one of seven
funds or a combination of each fund. The funds invest in: 1) shares of
American General common stock (Stock Fund); 2) a group deposit administration
contract issued by VALIC (Cash Fund); 3) the AGSPC Stock Index Fund (Mutual
Fund A); 4) shares of the Templeton Foreign Fund (Foreign Fund); 5) shares of
the Putnam OTC & Emerging Growth Fund (Small-Cap Fund); 6) shares of the AGSPC
Growth Fund (Large-Cap Fund) and 7) shares of the Vanguard Fixed Income
Securities Fund (Bond Fund).
Contributions which have not been used to purchase investments in either the
Stock, Cash, or Mutual Funds are temporarily invested in money-market fund
investments. These investments are held in a bank-administered trust fund and
income from these investments is allocated to Plan participants based on
current contributions.
Contributions
Participants may contribute, on a pretax basis, a basic amount ranging from
one to six percent of base pay and an additional amount ranging from one to
four percent of base pay subject to the contribution limitations discussed
below. The Company contributes an amount ranging from 50 percent to 100
percent of the participants' basic contributions.
The Plan allows participants to change their contribution rate and investment
elections for future contributions, as well as transfer all or part of their
account balances from one fund to another once a month.
15
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THE VARIABLE ANNUITY LIFE INSURANCE COMPANY AGENTS' AND MANAGERS' THRIFT PLAN
NOTES TO FINANCIAL STATEMENTS--Continued
NOTE 2--DESCRIPTION OF THE PLAN--Continued
Contribution Limitations
For 1997 and 1996, the total amount of participant pretax contributions is
limited to $9,500 for all plans. Additionally, the total amount of annual
participant and Company contributions (including forfeitures) to all company
sponsored defined contribution plans must not exceed the lesser of 25 percent
of compensation or $30,000. During 1997 and 1996, the total amount of base
pay that can be considered under the Plan is $160,000 and $150,000,
respectively.
The IRC provides that plans such as the Plan cannot discriminate in favor of
highly compensated individuals. To comply with these laws, certain highly
compensated individuals in the Plan may receive refunds of contributions in
excess of IRC Sections 401(k)(3) and 401(m) limits for employee pretax
contributions and employer matching contributions, respectively, and all
earnings attributable to such contributions. Refunds will be made from the
VALIC Agents' and Managers' Thrift Plan. Amounts in excess of the limits
discussed above are designated on the Statements of Net Assets Available for
Benefits as Payables -Excess contribution refunds. These amounts will be
refunded to the affected
highly compensated participants on or before the last day of the subsequent
plan year to ensure the tax qualified status of the Plan.
Participant Accounts
Each participant's account is credited with the participant's contributions
and an allocation of the Company's contributions and Plan earnings.
Allocations of Plan earnings are based on participants' account balances. The
benefit to which a participant is entitled is the benefit that can be provided
from the participant's account.
Vesting
Participants are immediately vested in their contributions plus the earnings
thereon. A participant obtains a vested interest in the Company's
contributions and the earnings thereon at the rate determined by years of
service. The vesting schedule is provided below:
Years of Service Nonforfeitable Percentages
0 - 3 0
3 20
4 40
5 60
6 80
7 100
Vesting of Company contributions shall be 100 percent upon death, disability,
or the attainment of normal retirement age.
16
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THE VARIABLE ANNUITY LIFE INSURANCE COMPANY AGENTS' AND MANAGERS' THRIFT PLAN
NOTES TO FINANCIAL STATEMENTS--Continued
NOTE 2--DESCRIPTION OF THE PLAN--Continued
Payment of Benefits
Upon termination of service, and if consented to by the participant (consent
only required if the total value, both vested and nonvested, of their account
exceeds $3,500 and the participant is under the age of 65), a participant will
receive a distribution equal to the vested value of his or her account. For
tax years prior to January 1, 1997, a distribution must be made after a
participant reaches age 70 1/2, regardless of whether service has been
terminated. Effective for tax years beginning after December 31, 1996,
distributions must begin by April 1st of the calendar year following the later
of the calendar year in which the employee either reaches ages 70 1/2 or
retires.
Direct Rollover
A participant may elect, at the time and in the manner prescribed by the Plan
Administrator, to have any portion of an eligible rollover distribution paid
directly to an eligible retirement plan specified by the participant in a
direct rollover.
Forfeitures
Participants terminating employment shall forfeit their nonvested interest in
the Company's contributions on the earlier of (1) the distribution of the
entire nonforfeitable portion of their account or (2) upon incurring a period
of severance equal to five consecutive one-year breaks in service.
Forfeitures are available to reduce future Company contributions.
Participants who terminate and are re-employed with the Company before
incurring five consecutive one-year breaks in service are entitled to their
nonvested or forfeited amounts subject to certain provisions as stated in the
Plan document.
NOTE 3--INVESTMENT CONTRACT WITH INSURANCE COMPANY
The Plan maintains an investment contract with VALIC, a wholly owned
subsidiary of American General Corporation. The group deposit administration
contract is valued at contract value which represents contributions and
transfers under
the contract, plus income earned, less funds used to pay benefits.
The contract had a guaranteed rate of 5.5% through March 31, 1996; effective
April 1, 1996 the rate changed to 6%. This rate is declared annually and was
changed to 6.25% on April 1, 1997. Any earnings in excess of the guaranteed
minimum rate are credited to the participants' accounts.
The effective earned yield is calculated based on the calendar year. The
effective earned yield of the investment contract was 7.79% for 1997 and 7.78%
for 1996.
17
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THE VARIABLE ANNUITY LIFE INSURANCE COMPANY AGENTS' AND MANAGERS' THRIFT PLAN
NOTES TO FINANCIAL STATEMENTS--Continued
NOTE 4--PLAN TERMINATION
Although it has not expressed any intent to do so, the Company has the right
under the Plan to discontinue its contributions at any time and to terminate
from the Plan subject to the provisions of ERISA. In the event of Plan
termination, participants will become 100 percent vested in their accounts.
NOTE 5--RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
The following is a reconciliation of net assets available for benefits per the
financial statements to the Form 5500:
December 31,
1997 1996
Net assets available for benefits per the
financial statements $107,456,463 $78,577,321
Benefits payable to withdrawing participants (789,778) (374,110)
Net assets available for benefits per
the Form 5500 $106,666,685 $ 78,203,211
The following is a reconciliation of benefits paid to participants per the
financial statements to the Form 5500:
Year Ended
December 31, 1997
Benefits paid to participants per the financial statements
American General Corporation common stock $4,688,811
Cash 644,798
Total benefits paid to participants per the financial
statements 5,333,609
Add: Amounts allocated to withdrawing participants at
December 31, 1997 789,778
Less: Amounts allocated to withdrawing participants at
December 31, 1996 (374,110)
Benefits paid to participants per the Form 5500 $5,749,277
Amounts allocated to withdrawing participants are recorded on the Form 5500
for benefit claims that have been processed and approved for payment prior to
December 31 but not yet paid as of that date.
18
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THE VARIABLE ANNUITY LIFE INSURANCE COMPANY AGENTS' AND MANAGERS' THRIFT PLAN
NOTES TO FINANCIAL STATEMENTS--Continued
NOTE 6--FEDERAL INCOME TAXES
Based on a favorable determination letter dated December 8, 1995, the Internal
Revenue Service (IRS) has ruled that the Plan, as restated and amended
effective August 31, 1990, December 6, 1991, March 4, 1992, May 26, 1993,
December 6, 1993, and August 25, 1995, is qualified under Section 401(a) of
the IRC and, therefore, exempt under Section 501(a) from federal income taxes.
Once qualified, the Plan is required to operate in conformity with the IRC to
maintain its qualification. The Plan 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.
NOTE 7--YEAR 2000 ISSUE (UNAUDITED)
The Plan Sponsor has developed a plan to modify its internal information
technology to be ready for the year 2000 and has completed converting critical
data processing systems. The project also included determining whether third
party service providers have reasonable plans in place to become year 2000
compliant. The Plan Sponsor does not expect this project to have a
significant effect on plan operations.
NOTE 8--SUBSEQUENT EVENTS
Effective January 1, 1998, the Plan was amended to allow VALIC Investment
Services Company ("VISCO") to become a participating employer under the Plan
for the benefit of sales representatives who are employees of VISCO.
Effective April 1, 1998, the Plan was amended to make loans available to
participants.
Effective April 1, 1998, Valic Trust Company became the trustee of the Plan
assets.
19
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THE VARIABLE ANNUITY LIFE INSURANCE COMPANY AGENTS' AND MANAGERS' THRIFT PLAN
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1997
Identity of Description
Issue of Investment Shares or Units Cost Current Value
*American General Common stock 1,716,199 shares $40,798,450 $92,781,987
Corporation
*The Variable Group deposit 2,081,554 2,081,554
Annuity Life administration
Insurance Company contract
*American General Mutual fund 296,591 shares 5,296,388 8,808,762
Series Portfolio
Company Stock
Index Fund
*Templeton Foreign Mutual fund 129,451 shares 1,412,632 1,288,041
Fund
*Putnam OTC & Mutual fund 115,368 shares 1,556,496 1,858,573
Emerging Growth Fund
*American General Mutual fund 62,562 shares 1,078,881 1,264,994
Series Portfolio
Company Growth Fund
*Vanguard Fixed Mutual fund 11,144 shares 96,291 103,194
Income Securities
Fund
*State Street Bank Short-term investment
& Trust Company money-market fund 220,566 220,566
$52,541,258 $108,407,671
*Party-in-interest
20
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THE VARIABLE ANNUITY LIFE INSURANCE COMPANY AGENTS' AND MANAGERS' THRIFT PLAN
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
YEAR ENDED DECEMBER 31, 1997
Current Value
of Asset on
Identity of Purchase Selling Cost of Transaction
Party Involved Description Price Price Asset Sold Date
Category (iii) - series of transactions in excess of 5% of Plan assets
State Street Purchase of $12,315,545 $ - $ - $12,315,545
Bank and money market
Trust Company fund investments
in 417
transactions
State Street Sales of money - 12,231,257 12,231,257 12,231,257
Bank and market fund
Trust Company investments in
235 transactions
American Purchase of 5,294,929 - - 5,294,929
General American General
Corporation Corporation
common stock in
28 transactions
American Sale of - 6,508,736 3,273,727 3,273,727
General American General
Corporation Corporation
common stock in
28 transactions
at a gain of
$3,235,009
21
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, The
Variable Annuity Life Insurance Company Agents' and Managers' Thrift Plan
Administrative Board has duly caused this annual report to be signed on its
behalf by the undersigned hereunto duly authorized.
THE VARIABLE ANNUITY LIFE
INSURANCE COMPANY
AGENTS' AND MANAGERS'
THRIFT PLAN
June 26, 1998 ELLEN H. MASTERSON
Ellen H. Masterson, Member of
the Administrative Board
22
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Appendix
23
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Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statement
(Form S-8 No. 333-13395) pertaining to The Variable Annuity Life Insurance
Company Agents' and Managers' Thrift Plan and in the related prospectus of our
report date May 20, 1998, with respect to the financial statements and
supplemental schedules of The Variable Annuity Life Insurance Company Agents'
and Managers' Thrift Plan included in this Annual Report (Form 11-K) for the
year ended December 31, 1997.
ERNST & YOUNG LLP
Houston, Texas
June 26, 1998
24
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