SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [FEE REQUIRED]
For the Fiscal Year Ended December 31, 1994
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [NO FEE REQUIRED]
For the Transition Period from to
Commission File Number 2-40764
KANSAS CITY LIFE INSURANCE COMPANY
(Exact Name of Registrant as Specified in its Charter)
Missouri 44-0308260
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
3520 Broadway, Kansas City, Missouri 64111-2565
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: 816-753-7000
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Name of Each Exchange on
Title of Each Class Which Registered
None None
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
None
(Title of Class)
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
Indicate by check mark whether the Registrant (1) has filed all reports re-
quired to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the Registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
As of February 28, 1995, 6,163,293 shares of the Company's capital stock
par value $2.50 were outstanding, and the aggregate market value of the common
stock (based upon the average bid and asked price according to Company records)
of Kansas City Life Insurance Company held by non-affiliates was approximately
$89,079,557.
(Continued)
(Page 1 Continued)
Part II
Documents Incorporated by Reference
Item 5: Market for Registrant's Common Page 32 of Annual Report to
Equity and Related Stockholder Shareholders for the year
Matters. ended December 31, 1994.
Item 6: Selected Financial Data. Page 1 of Annual Report to
Shareholders for the year
ended December 31, 1994.
Item 7: Management's Discussion Pages 12 and 13 of Annual
and Analysis of Financial Report to Shareholders for
Condition and Results of the year ended December 31,
Operations. 1994.
Item 8: Financial Statements and Pages 14 through 26 of Annual
Supplementary Data. Report to Shareholders for
the year ended December 31,
1994.
Part IV
Index to Exhibits Pages 18 and 19
PART I
Item 1. BUSINESS
(a) General Development of Business
Kansas City Life Insurance Company ("Kansas City Life") was originally
incorporated under the assessment laws of Missouri in 1895 as the Bankers Life
Association. In 1900, its present corporate title was adopted and it was
reorganized as a legal reserve company in 1903.
The Company offers a variety of individual life insurance and annuity
policies as well as group life insurance. In 1994, 79% of the Company's
statutory premium and deposit fund revenues were derived from individual life
insurance and annuities, including a small amount of assumed life reinsurance,
with the remainder derived from group insurance. Only non-participating
individual life policies are offered. The Company's life insurance in force is
distributed over all age groups,without an unusual concentration in either the
over 65 or under 20 age groups.
The Company is licensed to do business and operates in 46 states and the
District of Columbia. It is not licensed in New York or some of the New England
states. In 1994, the Company received $151,349,000 in direct statutory
insurance premiums. The distribution of its direct statutory insurance premiums
received in 1994 in those states from which the largest amount of its business
was produced is set forth in the following table, excluding life reinsurance
assumed and before deductions of life reinsurance ceded:
1994 Direct Statutory Percent of
Premiums Received Total
(000's omitted)
Missouri $23,381 15
Texas 13,552 9
Florida 9,802 7
Kansas 9,325 6
Colorado 8,294 6
California 8,233 5
Pennsylvania 5,452 4
Arkansas 4,670 3
Ohio 4,526 3
Wisconsin 4,458 3
TOTAL $91,693 61
The Company's sales operations are conducted through general agencies. As
of December 31, 1994, the Company was represented by 109 agencies, located
throughout the jurisdictions in which the Company is licensed to do business.
As of December 31, 1994, the Company was represented through its general
agencies by 1,547 producing part and full time sales agents.
Subsidiaries
In February of 1974, the Company purchased the majority of the shares of
Sunset Life Insurance Company of America ("Sunset"). In December, 1990, Sunset
became a wholly owned subsidiary of the Company. Only non-participating
policies are offered by Sunset. Sunset is licensed to do business and operates
in 21 states.
The distribution of its direct insurance premiums received in 1994 in
those states from which the largest amount of its business was produced is set
forth in the following table, excluding life reinsurance assumed and before
deductions of life reinsurance ceded:
1994 Direct Statutory Percent of
Premiums Received Total
(000's omitted)
California $13,130 35
Washington 7,595 21
Hawaii 2,726 7
TOTAL $23,451 63
Sunset's life insurance in force is distributed over all age groups,
without an unusual concentration in either the over 65 or under 20 age groups.
In 1994, Sunset's statutory premium income (including directly written in-
surance and assumed reinsurance) was almost entirely individual life insurance
and annuities. Total statutory direct premiums for 1994 were $37,420,000.
In October, 1991, the Company purchased 100% of the outstanding shares of
Old American Insurance Company ("Old American"). Old American is licensed to do
business and operates in 46 states and the District of Columbia.
The distribution of its direct insurance premiums received in 1994 in
those states from which the largest amount of its business was produced is set
forth in the following table, excluding reinsurance assumed and before
deductions of life reinsurance ceded:
1994 Direct Statutory Percent of
Premiums Received Total
(000's omitted)
Missouri $ 9,103 9
Texas 5,914 6
Illinois 5,779 6
Kansas 5,151 5
Tennessee 4,967 5
California 4,953 5
Kentucky 4,669 5
Indiana 3,689 4
Mississippi 3,466 4
Florida 3,417 4
TOTAL $51,108 53
Old American's business is distributed between whole life insurance and
supplementary accident and health coverages. Of $96,394,000 of 1994 statutory
premium income, 88% was individual life insurance. Life insurance is sold in
small amounts, generally on a standard basis, and primarily to insureds ages 50
to 80 to cover funeral and other final expenses. Old American ceased offering
its home health care product in 1993 due to adverse claim experience.
(b) Financial Information about Industry Segments
The Company is only in the life insurance business and therefore,
Paragraph (b) is deemed inapplicable.
See Selected Financial Data of the Company for five years ended December
31, 1994 on Page 1 of the Company's Annual Report to Shareholders.
(c) Narrative Description of Business
Universal life and flexible annuity products are the foundations for the
Company's sales and marketing efforts. These efforts are enhanced by a full
line of traditional and group life and disability products, and with the addi-
tion, in 1991, of Old American's senior oriented sales and marketing efforts,
the consolidated group of companies offer a wide variety of products that can be
tailored to fit most consumer needs.
New sales of universal life products accounted for 23% of consolidated new
statutory premiums and deposit funds and 31% of total statutory premiums and
deposit funds. New flexible annuity deposits totaled 46% of new statutory
premiums and 20% of total statutory premiums. Group products totaled 9% of new
statutory premiums and 12% of total statutory premiums. Old American does not
sell universal life, flexible annuity deposits or group products. Sales from
Old American totaled 12% of new premiums and 28% of total premiums. The Company
is preparing to introduce a variable annuity and variable universal life
insurance policy in late 1995.
(i) Principal Products
The following table sets forth pertinent information concerning Kansas
City Life Insurance Company and its subsidiaries for the past five years (in
thousands of dollars except number of policies in force, lapse ratio and net
investment yield.) Old American results are included for the last two months of
1991 and all of 1992, 1993 and 1994. On October 31, 1991, the purchase of Old
American included 254,339 policies with a face value of insurance in force
totaling $948,247,000, for an average of $3,728 per policy.
1990 1991 1992 1993 1994
Life Insurance in Force at the Beginning of Each Year:
$15,853,221 15,976,803 18,069,161 18,862,336 19,028,772
Life Insurance Written by Type of Policy at Face Amount:
Life and Endowment:
$ 1,823,780 1,849,657 1,831,916 1,615,723 1,596,909
Term:
$ 521,882 580,123 578,771 519,304 821,046
Group:
$ 230,486 583,277 399,188 264,589 552,937
(ii) Status of Products
Terminations as Reported in the Statutory Annual Statement at Face Amount:
Death:
$ 48,563 59,873 89,006 84,685 93,994
Maturity:
$ 1,407 1,161 1,193 1,272 2,619
Conversion:
$ 44,090 66,588 59,144 110,453 147,408
Expiry:
$ 18,264 24,554 22,531 28,485 23,895
1990 1991 1992 1993 1994
Surrender:
$ 701,376 1,092,310 882,075 1,130,064 1,135,425
Lapse:
$ 1,229,729 1,210,660 1,414,061 1,409,621 1,143,917
Insurance in Force at the End of the Year:
$15,976,803 18,069,161 18,862,336 19,028,772 20,023,820
Reinsurance Ceded at the End of the Year:
$ 829,769 1,281,785 1,544,061 1,616,049 2,072,447
Number of Ordinary Policies in Force at the End of the Year:
391,642 641,322 658,246 663,123 655,141
Average Face Amount per Ordinary Policy in Force:
$ 33,432 23,477 24,219 24,777 26,299
Ordinary Lapse Ratio:
10.29% 11.40 11.60 11.30 11.11
Lapse ratio is defined as:
Total Lapses and Surrenders of Ordinary Insurance divided by
Average Ordinary Insurance in Force for the Year
Cash and Invested Assets:
$ 1,786,917 2,009,541 2,158,250 2,266,726 2,258,669
Insurance Revenues:
Life and Accident and Health Premiums:
$ 52,009 61,163 125,290 129,929 134,220
Contract Charges: (arising from universal life-type contracts,
including flexible annuities)
$ 50,880 57,143 63,202 66,900 69,607
Total Insurance Revenues:
$ 102,889 118,306 188,492 196,829 203,827
Net Investment Income:
$ 162,043 170,523 171,581 163,237 173,388
Net Investment Yield on a GAAP basis:
9.53% 9.29 8.54 7.65 7.71
(iv) The Company does not have any material patents, licenses, franchises
or concessions; however, the Company is licensed to do business in 46 states and
the District of Columbia.
(vi) Please refer to Management's Discussion and Analysis of Financial
Condition and Results of Operations, which is incorporated by reference from
Pages 12 and 13 of the Annual Report to Shareholders for an analysis of
operating performance and liquidity position.
(x) An analysis of Best's Key Rating Guide, Life-Health Edition, 1994,
discloses that as of December 31, 1993, through consolidation of its
subsidiaries, the Company would rank among the 100 largest U. S.
stock life companies when measured by total admitted assets. The
Company is engaged in a highly competitive industry. It competes
with over 1,800 legal reserve life insurance companies. The
management of the companies believe that their policies and premium
rates are generally competitive with those issued by other insurers.
(xiii) As of December 31, 1994, Kansas City Life had 480 full time
employees, not including its sales representatives and general
agents. As of the same date, the Company was represented by
approximately 1,547 producing full and part time sales
representatives and general agents.
Sunset Life Insurance Company of America had 136 full time employees and
approximately 887 full and part time sales representatives as of December 31,
1994.
Old American Insurance Company had 105 full time employees and
approximately 1,328 full and part time sales representatives as of December 31,
1994.
(d) Financial Information about Foreign and Domestic Operations
and Export Sales
The Company does not engage in material operations in foreign countries or
derive a material portion of its revenue from customers in foreign countries.
Item 2. PROPERTIES
Kansas City Life's Home Office is located at 3520 Broadway, Kansas City,
Missouri 64111-2565, in two five story buildings which are owned and wholly
occupied by the Company. The main part of the complex was completed in 1924,
with a substantial addition being completed in 1957. An adjacent structure
of approximately 85,000 square feet was completed in 1985. The buildings are
connected with both above and underground walkways, are of steel and concrete
construction, are fully air-conditioned, and contain approximately 243,700
square feet of useable office space. As of December 31, 1994, the depreciated
cost of these buildings and the surrounding eight acre tract of landscaped land
owned by the Company was $8,743,000.
Sunset's Home Office property is located at 3200 Capitol Boulevard,
Olympia, Washington, 98501-3396. The main building is located on approximately
4.3 acres of land, is of reinforced concrete construction, one and one-half
story in height, with approximately 25,000 square feet of usable space. In
1981, the subsidiary constructed a separate building of reinforced concrete of a
similar design to the main office building. It is located adjacent to and
connects to the main office building. It is a one-story structure with a full
basement with a total of approximately 12,500 square feet. As of December 31,
1994, the depreciated cost of both of these buildings and the surrounding area
of land was $1,141,000.
Old American leased its Home Office facilities at 4900 Oak Street in
Kansas City, Missouri. The lease has 15 years remaining. The building has a
net rentable area of approximately 77,000 square feet and approximately 76,000
square feet of parking garage space. All of Old American's Home Office
operations have been relocated in Kansas City Life's Home Office. Old American
has subleased the 4900 Oak property and has two and one-half years remaining on
the original sublease. The sublease agreement provides for an option to renew
the lease term for five years under similar terms.
In addition to the property owned for the purpose of carrying on the
business of insurance, Kansas City Life and its subsidiaries also own property,
or an interest therein, for investment purposes or as the result of mortgage
foreclosures.
Item 3. LEGAL PROCEEDINGS
On April 8, 1994, a jury in the District Court of Woods County, Oklahoma
returned a verdict against the Company assessing (a) $25,000 of compensatory
damages, (b) $500,000 of actual damages and (c) $10,000,000 of punitive
damages. In addition to the judgment against the Company, the jury awarded a
separate verdict against Defendant Stearman for $1,000,000 actual damages
and $20,000,000 in punitive damages. The case, Nita Charlene Pelter Cox and
Verna Leanne Pelter Graybill, Personal Representatives of the Estate of Leora
Pearl Pelter, Deceased, Plaintiffs, vs. Kansas City Life Insurance Company and
Billy D. Stearman, Defendants, arose out of certain actions by one of the
Company's agents. The agent Stearman had taken a beneficiary designation form,
signed in blank by the policyowner, and subsequently named the agent's wife as
beneficiary for $25,000 of the $100,000 death benefit. The Company settled the
death claim on the insured's death by paying $25,000 to the agent's wife
(under her maiden name), with the balance of the proceeds to the policyowner/
beneficiary. Upon learning of this misappropriation over a year after the death
claim had been settled, the Company investigated the facts and tendered to the
policyowner/beneficiary the $25,000, plus interest, within 90 days. At
trial, Plaintiffs asserted the Company's tender of $25,000, plus interest, in
return for a release and the policyowner/beneficiary's agreement to testify
against the agent in any criminal indictment was oppressive and in bad faith.
The Company firmly believes that it committed no wrong in its handling of this
matter, and has appealed the jury verdict and intends to pursue its appeal
vigorously. The probability of a favorable or unfavorable outcome is difficult
to assess. Appellate courts are generally not disposed to reverse jury
verdicts. However, it is the Company's position that the trial court committed
numerous errors in the conduct of the trial, determination of issues of
evidence, rulings on dispositive motions, and instructing the jury. The most
significant error raised on appeal is the court's submission of the case to the
jury on the theory of intentional infliction of emotional distress based on
evidence which failed to meet the burden of proof under Oklahoma law with
respect to the conduct alleged against Kansas City Life, and with respect to the
alleged resulting distress to Mrs. Pelter.
In the ordinary course of operations the Company and its subsidiaries
are engaged in routine litigation which often includes claims seeking punitive
damages. Although recovery of such punitive damages is not probable in the
opinion of counsel, the frequency of awards for punitive damages has increased
in some jurisdictions. Management believes it is unlikely that the outcome of
any pending litigation will have a material adverse effect on the Company's
financial condition.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
Incorporated by Reference.
Item 6. SELECTED FINANCIAL DATA
Incorporated by Reference.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Incorporated by Reference.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Incorporated by Reference.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not Applicable.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following information, as of December 31, 1994, is provided with
respect to each Director:
Term as
Director Served as
Expires Other Positions Director
Name of Director Age in April with the Company From
W. E. Bixby (1)(2)(3) 63 1995 Vice Chairman of the 1966
Board and President
David D. Dysart 66 1995 None 1972
(2)(3)(6)
Francis P. Lemery 55 1995 Senior Vice President 1985
(1)(2)(3) and Actuary
Michael J. Ross 52 1995 None 1972
(2)(3)(4)(5)(6)
Wood Arnold, II (6) 59 1995 None 1980
Jack D. Hayes (3) 54 Nominee Senior Vice President, --
Marketing
Kathryn A. Bixby-Haddad 45 1996 None 1984
(6)
Daryl D. Jensen (6) 56 1996 None 1978
Ilus W. Davis (4)(5)(6) 77 1996 None 1985
Webb R. Gilmore (6) 50 1996 None 1990
C. John Malacarne 53 1996 Vice President, 1991
(1)(2) General Counsel
and Secretary
J. R. Bixby (1)(2) 69 1997 Chairman of the Board 1957
Robert Philip Bixby 41 1997 Senior Vice President, 1985
(1)(2) Operations
Larry Winn, Jr. 75 1997 None 1985
(2)(4)(5)(6)
Term as
Director Served as
Expires Other Positions Director
Name of Director Age in April with the Company From
Richard L. Finn 53 1997 Senior Vice President, 1983
(1)(2) Finance
Warren J. Hunzicker, M.D. 74 1997 None 1989
(5)(6)
(1) See below with respect to the business experience of executive officers of
the
Company.
(2) Member of Executive Committee.
(3) Subject to the approval of the shareholders at the annual meeting of
share-
holders to be held on April 20, 1995, will be elected for three year term
ending in 1998.
(4) Member of Audit Committee.
(5) Member of Compensation Committee.
(6) Mr. Arnold has been President and Chief Executive Officer of Package
Development Corporation since 1972. Mrs. Bixby-Haddad was elected
Assistant Vice President of the Company in 1980 and served as Vice
President, Compensation from 1981 until 1985. Mr. Davis is a partner in
the law firm of Armstrong, Teasdale, Schlafly and Davis, is a former Mayor
of Kansas City, Missouri, and also serves as a Director of Boatmen's
Bancshares, Inc., St. Louis, Missouri. Mr. Dysart served as Executive
Vice President from 1980 until he retired in January, 1987. Mr. Gilmore
is a partner in the law firm of Gilmore & Bell. Dr. Hunzicker was elected
by the Board of Directors to an unexpired term in 1989. Dr. Hunzicker
served as the Company's Medical Director from 1987 to 1989; he formerly
served as a member of the Company's Board of Directors from 1977 to 1980.
Mr. Jensen has been President of Sunset Life Insurance Company of
America, a subsidiary of Registrant, since 1973. Mr. Malacarne was
elected by the Board of Directors to fill an unexpired term in 1991. Mr.
Ross has been President of Jefferson Bank and Trust Company, St. Louis,
Missouri, since 1971 and was elected Chairman of the Board in 1983. Mr.
Winn is retired as the Kansas Third District Representative to the U.S.
Congress.
Name, Age and Business Experience
Position During Past 5 Years
Joseph R. Bixby, 69 Chairman since 1972; President from 1964 until he
Chairman of the Board retired in April, 1990; responsible for overall
corporate
policy. Director of Sunset Life, a subsidiary.
W. E. Bixby, 63 Vice Chairman of the Board since 1974; elected
Vice Chairman of the Executive Vice President in January, 1987 and
Board, President and CEO President and CEO in April, 1990; primarily
responsible for the operation of the Company.
Chairman of the Board of Sunset Life and President
and Chairman of the Board of Old American,
subsidiaries.
Robert Philip Bixby, 41 Elected Assistant Secretary in 1979; Assistant Vice
Senior Vice President, President in 1982; Vice President in 1984 and to
Operations present position in 1990; responsible for Customer
Services, Computer Services, Claims, New Business
Issue and Underwriting.
Name, Age and Business Experience
Position During Past 5 Years
Richard L. Finn, 53 Elected Vice President in 1976; Financial Vice
Senior Vice President, President in 1983 and to present position in 1984;
Finance chief financial officer and responsible for
investment of the Company's funds, accounting and
taxes. Director, Vice President and Chief
Financial Officer of Old American, a subsidiary.
Jack D. Hayes, 54 Elected Senior Vice President, Marketing in
Senior Vice President, February, 1994; responsible for Marketing,
Marketing Marketing Administration, Communications and Public
Relations. Served as Executive Vice President and
Chief Marketing Officer of Fidelity Union Life,
Dallas, Texas, from June, 1981 to January, 1994.
Francis P. Lemery, 55 Elected Vice President in 1979; Vice President and
Senior Vice President Actuary in 1980, and to present position in 1984;
Actuary responsible for Group Insurance Department,
Actuarial Services and State Compliance. Director
of Sunset Life and Old American, subsidiaries.
Robert C. Miller, 48 Elected Assistant Auditor in 1972; Auditor in 1973;
Senior Vice President, Vice President and Auditor in 1987; and to present
Administrative Services position in 1991. Responsible for Human Resources
and Home Office building and maintenance.
Charles R. Duffy, Jr., 47 Elected to present position in November, 1989;
Vice President, Insur- responsible for the Company's computer operations.
ance Administration Senior Account Executive, Cybertek Corporation,
January, 1989 to November, 1989. Director of Old
American, a subsidiary.
Michael P. Horton, 52 Elected to present position in July, 1984;
Vice President, Group responsible for the Company's group insurance
operations.
John K. Koetting, 49 Elected Assistant Controller in 1975 and to present
Vice President and position in 1980; chief accounting officer;
Controller responsible for all corporate accounting reports.
Director and Vice President and Controller of Old
American, a subsidiary.
C. John Malacarne, 53 Elected Associate General Counsel in 1976; General
Vice President, General Counsel in 1980; Vice President and General Counsel
Counsel and Secretary in 1981; and to present position in 1991.
Responsible for Legal Department, Office of the
Secretary and Stock Transfer Department. Director
of Sunset Life and Director and Secretary of Old
American, subsidiaries.
Walter E. Bixby, III, 36 Elected Assistant Vice President, Electronic Sales
Vice President, Support in 1985; Assistant Vice President,
Marketing Operations Marketing Operations in 1989; Vice President,
Marketing in 1990; and to present position in 1992.
Director of Sunset Life and Old American,
subsidiaries.
Ronald E. Hiatt, 58 Elected Assistant Treasurer in 1976 and to present
Treasurer position in 1983; responsible for cash management
and safeguarding of Company assets.
Name, Age and Business Experience
Position During Past 5 Years
Daryl D. Jensen, 56 Vice President, 1968; Executive Vice President,
Vice Chairman of the 1970; President, 1973; elected to present position
Board and President, in 1975.
Sunset Life Insurance
Company of America,
a subsidiary
Bret L. Benham, 35 Elected Assistant Vice President, Planning and
Vice President, Research in August, 1991; Vice President, Research
Agency Marketing Planning in May, 1993; and to present position in
June, 1994; responsible for directing the
development and execution of marketing plans and
programs and managing the agency force. Served as
a Consultant with Tillinghast from 1987 to August,
1991.
(d) Joseph R. Bixby, Chairman of the Board, and W. E. Bixby, Vice
Chairman of the Board and President, are brothers. Kathryn A. Bixby-
Haddad is the daughter of Joseph R. Bixby; Robert Philip Bixby and
Walter E. Bixby, III are brothers and the sons of W. E. Bixby.
(e) See Business Experience During Past 5 Years above.
(f) There have been no events under any bankruptcy act, no criminal pro-
ceedings and no judgments or injunctions material to the evaluation of the
ability and integrity of any director, nominee or executive officer during the
past five years.
Item 11. EXECUTIVE COMPENSATION
(a) Compensation
The following table sets forth information concerning cash compensation
paid or accrued by the Company and its subsidiaries to the Chief Executive
Officer and the other four most highly paid executive officers as of December
31, 1994 for the fiscal years ending December 31, 1994, 1993 and 1992.
SUMMARY COMPENSATION TABLE
Annual Compensation
Other All
Annual Other
Compen- Compen-
sation sation
Name and Principal Position Year Salary($) Bonus($) $ $
W. E. Bixby, Vice Chairman of the 1994 377,880 121,921 7,000 50,350
Board, President and CEO, Kansas 1993 356,460 71,692 7,000 47,360
City Life; Chairman of the Board, 1992 305,400 98,128 7,000 42,050
Sunset Life, and Chairman of the
Board and President, Old American,
subsidiaries.
R. L. Finn, Senior Vice President, 1994 184,140 43,672 5,000 20,778
Finance and Director, Kansas City 1993 174,120 22,145 5,000 19,611
Life; Director, Old American, a 1992 147,000 29,760 5,000 18,021
subsidiary.
F. P. Lemery, Senior Vice Presi- 1994 184,140 40,449 7,000 22,452
dent and Actuary and Director, 1993 174,120 22,165 7,000 19,508
Kansas City Life; Director, 1992 147,000 29,800 7,000 17,953
Sunset Life and Old American,
subsidiaries.
D. D. Jensen, Director, Kansas 1994 168,750 39,020 6,000 19,944
City Life; Vice Chairman of 1993 170,788 20,343 6,000 19,085
the Board and President, Sunset 1992 135,000 30,400 6,000 16,648
Life, a subsidiary.
R. P. Bixby, Senior Vice Presi- 1994 161,160 37,248 4,000 16,836
dent, Operations and Director, 1993 144,780 9,370 4,000 15,108
Kansas City Life. 1992 104,820 22,884 4,000 12,254
ALL OTHER COMPENSATION INCLUDES THE FOLLOWING:
The Company has an employee stock plan in the form of a profit sharing
plan which is commonly referred to as a PAYSOP or ESOP. Directors and officers
who are full time employees participate in the plan on the same basis as all
other employees. The total amount contributed to the plan for the accounts of
the named individuals for fiscal year 1992 are respectively as follows: W. E.
Bixby, $1,492; R. L. Finn, $1,492; F. P. Lemery, $1,492; D. D. Jensen, $1,492;
R. P. Bixby, $1,492. No contributions were made to the plan in 1993 or 1994.
The Company has a contributory Internal Revenue Code Section 401(k)
savings and investment plan. Directors and officers who are full time employees
of the Registrant or its subsidiaries participate in the plan on the same basis
as all other employees. Employees may contribute from 1% to 10% of their
monthly base salary. Highly compensated employees are limited to contributions
of 6%. The Company contributes an amount equal to the employee contributions in
the form of capital stock of the Company. The total amount contributed to the
plan for the accounts of the named individuals for fiscal years 1992, 1993 and
1994 are respectively as follows: W. E. Bixby, $8,728, $8,994, $9,000; R. L.
Finn, $7,350, $8,706, $9,000; F. P. Lemery, $7,350, $8,706, $9,000; D. D.
Jensen, $6,750, $8,537, $9,000; R. P. Bixby, $5,241, $7,239, $9,000.
The Company has adopted a nonqualified deferred compensation plan for
approximately 68 highly compensated officers and employees. It is similar to
the Company's 401(k) plan. Participants contribute amounts to this plan that
they cannot contribute to the 401(k) plan up to a total of 10% of their monthly
salary and the Company contributes an equal amount. The amount contributed to
the plan for fiscal years 1992, 1993 and 1994 respectively for the accounts of
the named individuals are as follows: W. E. Bixby, $21,812, $26,652, $28,788;
R. L. Finn, $7,350, $8,706, $9,414; F. P. Lemery, $7,350, $8,706, $9,414; D. D.
Jensen, $6,750, $8,537, $7,875; R. P. Bixby, $5,241, $7,239, $7,116.
The Company provides yearly renewable term insurance to its employees in
the amount of 2 1/2 times their annual salary. Directors and officers who are
full time employees participate in the program on the same basis as all other
employees. Premiums paid for the named individuals for fiscal years 1992, 1993
and 1994 respectively are as follows: W. E. Bixby, $10,018, $11,714, $12,562;
R. L. Finn, $1,829, $2,199, $2,364; F. P. Lemery, $1,741, $2,096, $4,038; D. D.
Jensen $1,656, $2,010, $3,069; R. P. Bixby $280, $630, $720.
(f) Defined Benefit or Actuarial Plan Disclosure
PENSION PLAN TABLE
The following table illustrates the possible annual pension benefits upon
completion of the indicated years of service with the five year average salary
for all officers and employees. Benefits are calculated on a straight life
annuity basis. The Social Security offset and benefit has been estimated.
Compensation Years of Service SS**
10 20 30 40
$ 75,000 $ 18,750 $ 37,500 $ 52,500 $ 53,027* $13,946
100,000 25,000 50,000 70,000 73,027* 13,946
125,000 31,250 62,500 87,500 93,027* 13,946
150,000 37,500 75,000 105,000 113,027* 13,946
200,000 50,000 100,000 140,000 153,027* 13,946
250,000 62,500 125,000 175,000 193,027* 13,946
300,000 75,000 150,000 210,000 233,027* 13,946
350,000 87,500 175,000 245,000 273,027* 13,946
400,000 100,000 200,000 280,000 313,027* 13,946
450,000 112,500 225,000 315,000 353,027* 13,946
500,000 125,000 250,000 350,000 393,027* 13,946
*Maximum pension based on an estimate of Social Security.
**Estimated annual Social Security benefit at age 65.
The Company has a noncontributory defined benefit pension plan which
covers all full time employees age 21 and over. A participant's retirement
benefit is determined by multiplying his or her highest average annual salary
for five consecutive years, from the last ten years of his or her employment, by
a percentage determined from the participant's total years of service from that
participant's 21st birthdate. The participant's percentage is determined by
multiplying 2 1/2% for each of the participant's years of service up to the
first twenty years, 2% for each year of service for the next ten years, and 1%
for each year of the next ten. A participant's benefit may not exceed 80% of
such average salary reduced by 1/2 of his or her Social Security benefit. Early
retirement benefits are available after age 55, depending upon years of service
and age. Benefits are fully vested after five years of service following a
participant's 18th birthdate.
A participant's base salary not to exceed $150,000 (as adjusted for cost
of living) commencing January 1, 1994, was used to determine compensation under
the plan. For the individuals named in the Cash Compensation Table, the years
of service covered by the plan for the year ended December 31, 1994, were: W.
E. Bixby, 37 years; R. L. Finn, 20 years; F. P. Lemery, 34 years; D. D. Jensen,
28 years; R. P. Bixby, 16 years.
The Company has adopted an unfunded excess benefit plan which covers any
employee who is an active participant in the noncontributory defined benefit
pension plan and whose pension benefit under that plan would exceed the maximum
benefit limited under Internal Revenue Code Section 415. A participant under
this plan is entitled to a monthly benefit of the difference between the maxi-
mum monthly normal, early, or deferred vested retirement benefit determined
without regard to the Internal Revenue Code Section 415 limitation and the
monthly equivalent of the maximum benefit permitted by Internal Revenue Code
Section 415.
(g) Compensation of Directors
Outside directors are paid $4,000 quarterly; $2,000 if they attend Special
Board Meetings; $1,000 if they attend Executive Committee Meetings; $500 if they
attend all other Committee Meetings. Inside directors are paid $1,000 quarterly
and $400 if they attend Special Board Meetings. J. R. Bixby, Chairman of the
Board, is paid $30,000 quarterly. Directors of Sunset Life, a subsidiary, are
paid $500 quarterly and directors of Old American are paid $250 quarterly.
Directors fees are included in the Compensation Table.
(h) Employment Contracts and Termination of Employment and Change in
Control Arrangements
There are no employment contracts between the Company and its executive
officers. The Company's benefit plans contain typical provisions applicable to
all employees for termination of employment.
(j) Additional Information with Respect to Compensation Committee
The members of the Compensation Committee are Ilus W. Davis, Michael J.
Ross and Larry Winn, Jr.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) Security Ownership of Certain Beneficial Owners
The following sets forth information as of February 28, 1995, concerning
holding of voting securities of the Company's $2.50 par value capital stock,
which is the Company's only class of voting stock.
Name and Address of Beneficial Owners:
John K. Koetting, Robert C. Miller
and Ronald E. Hiatt, Trustees of the
Kansas City Life Insurance Company
Savings and Investment Plan
3520 Broadway, Kansas City, MO 64111-2565
Amount and Nature of Ownership* Percent of Class
424,410 shares 6.9
John K. Koetting, Robert C. Miller
and Ronald E. Hiatt, Trustees of the
Kansas City Life Employee Stock Plan
3520 Broadway, Kansas City, MO 64111-2565
Amount and Nature of Ownership* Percent of Class
45,649 shares .7
*Trustees have the power to sell plan assets. Participants may instruct
the Trustees how to vote their shares. Angeline I. Oxler c/o William A.
Hirsch, Esq. Morrison & Hecker
2600 Grand Avenue, Kansas City, MO 64108
Amount and Nature of Ownership** Percent of Class
341,292 shares 5.5
Walter E. Bixby, III
Vice President, Marketing Operations
Kansas City Life Insurance Company
3520 Broadway, Kansas City, MO 64111-2565
Amount and Nature of Ownership** Percent of Class
344,315 shares 5.6
**Includes 165,035 shares in the Walter E. Bixby Descendants Trust.
Angeline I. Oxler, Robert Philip Bixby and Walter E. Bixby, III are Co-
Trustees. The Trustees share voting and investment power. The terms of
the Trust restrict the transfer of the shares. Also includes shares as to
which Mr. Bixby is Custodian for his nephew under the Missouri Uniform
Gift to Minors law and the approximate vested beneficial interest in
shares held by the Trustees of Kansas City Life Insurance Company employee
benefit plans. Participants in the plans may instruct the Trustees how to
vote those shares held in their account.
Angeline I. Oxler; Joseph R. Bixby; Margie Morris Bixby; Kathryn A. Bixby-
Haddad; Kathryn A. Bixby-Haddad as Custodian for Kellie S. Curtis; Sorouch
Haddad; Nancy Bixby Hudson; Robert Philip Bixby; Walter E. Bixby, III; James R.
Gammon as Trustee of the Walter E. Bixby Family Trust; Robert Philip Bixby,
Angeline I. Oxler, and Walter E. Bixby, III, as Co-Trustees of the Walter E.
Bixby Descendants Trust; W. E. Bixby; W. E. Bixby as Trustee for Trust B created
pursuant to the Will of Edwin Bixby and Trust B created pursuant to the Will of
Angeline Reynolds Bixby were members of a group that agreed to act together for
the purpose of holding Common Stock, and the Common Stock ownership of such
group was reflected in a Schedule 13D filed with the Commission on November 23,
1988 and subsequently amended. The agreement that documented the various rights
and obligations among all of the members of that group expired May 20, 1990.
Nonetheless, Mrs. Oxler and other former members of the Bixby Group in
subsequent filings with the Commission have indicated that they currently share
the expectation of many members of their extended family that a majority of the
Common Stock will continue to be beneficially owned by such individuals or be
under the control of trustees under certain testamentary or inter vivos trusts
for the benefit of such individuals.
(b) Security Ownership of Management
The names of the nominees proposed by management for election to three
year terms at the annual meeting to be held April 20, 1995 are set forth as
follows:
Served Shares of
as a Record and
Principal Director Beneficially Percent
Nominee Occupation Since Owned of Class
W. E. Bixby Vice Chairman of 1966 1,158,195 19.2
3520 Broadway the Board and 23,103(2)
Kansas City, MO President
David D. Dysart Director 1972 9,000 *
HCR 69, Box 395
Sunrise Beach, MO
Francis P. Lemery Senior Vice Presi- 1985 708 *
3520 Broadway dent and Actuary 5,620(2)
Kansas City, MO
Michael J. Ross Chairman of the 1972 300 *
12826 Dubon Lane Board and President,
St. Louis, MO Jefferson Bank and
Trust Company
St. Louis, MO
Jack D. Hayes Senior Vice Presi- -- 1,000 *
3520 Broadway dent, Marketing
Kansas City, MO
The following directors were elected April 22, 1993 for a three year term:
Kathryn A. Bixby-Haddad Investor 1984 170,776(1)
2517 W. 118th St. 30,000(4) 3.3
Leawood, KS
C. John Malacarne Vice President, 1991 10
3520 Broadway General Counsel 5,074(2) *
Kansas City, MO and Secretary
Daryl D. Jensen Vice Chairman of the 1978 24
2143 Old Port Dr. Board and President, 9,670(2) *
Olympia, WA Sunset Life Insurance
Company of America
Olympia, WA
Ilus W. Davis Partner - Armstrong, 1985 1,000 *
Attorney at Law Teasdale, et al.
1001 W. 59th Terr.
Kansas City, MO
Webb R. Gilmore Partner - 1990 20 *
Attorney at Law Gilmore & Bell
833 Westover Rd.
Kansas City, MO
The following Directors were elected April 21, 1994 for a three year term:
Served Shares of
as a Record and
Principal Director Beneficially Percent
Nominee Occupation Since Owned of Class
Joseph R. Bixby Chairman of the 1957 1,484,989(1) 24.1
3520 Broadway Board
Kansas City, MO
Richard L. Finn Senior Vice Presi- 1983 12
3520 Broadway dent, Finance 5,600(2) *
Kansas City, MO
Robert Philip Bixby Senior Vice Presi- 1985 176,181
3520 Broadway dent, Operations 4,877(2) 5.7
Kansas City, MO 165,035(3)
7,080(5)
Larry Winn, Jr. Retired Represent- 1985 166 *
8420 Roe Ave. ative, U.S. Congress
Prairie Village, KS
Warren J. Hunzicker, M.D. Director 1989 150 *
1248 Stratford Rd.
Kansas City, MO
All directors, executive officers
and their spouses (also includes all
shares held by Trustees of Company
benefit plans and shares held by the
Bixby Family and related Trusts) 4,194,684 68.1
*Less than 1%.
(1) Includes shares owned by the spouses of these directors: Mr. Joseph R.
Bixby 900; Mrs. Bixby-Haddad 2,847. Beneficial ownership of these shares
is disclaimed.
(2) Approximate vested beneficial interest in shares held by the Trustees of
Kansas City Life Insurance Company employee benefit plans. Participants
in the plans may instruct the Trustees how to vote those shares held in
their account.
(3) Shares in the Walter E. Bixby Descendants Trust. Robert Philip Bixby,
Walter E. Bixby, III and Angeline Oxler are Co-Trustees. The Trustees
share voting and investment power. The terms of the trust restrict
transferring shares.
(4) Shares as to which Mrs. Kathryn A. Bixby-Haddad is Custodian for her
niece, Kellie Curtis, and has voting and investment power. The terms of
the deed of gift restrict the transfer of these shares.
(5) Shares as to which Robert Philip Bixby is Custodian for minor nieces and
nephews under the Missouri Uniform Gifts to Minors law.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
(c) Indebtedness of management
There is none, other than certain life insurance policy loans secured by
the cash value of insurance policies held by certain officers and directors of
the Company, and their associates. These loans were made on the same terms as
those available to holders of comparable policies. PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a)(1) Financial Statements
The following financial statements of Kansas City Life Insurance Company
are incorporated by reference from the Company's Annual Report to Shareholders
for the year ended December 31, 1994 at the following pages:
Page
Consolidated Income Statement - Years Ended
December 31, 1994, 1993 and 1992 . . . . . . . . . . . . . 14
Consolidated Balance Sheet -
December 31, 1994 and 1993 . . . . . . . . . . . . . . . . 15
Consolidated Statement of Stockholders' Equity -
Years Ended December 31, 1994, 1993 and 1992 . . . . . . . 16
Consolidated Statement of Cash Flows -
Years Ended December 31, 1994, 1993 and 1992 . . . . . . . 17
Notes to Consolidated Financial Statements . . . . . . . . . 18-25
Report of Independent Auditors . . . . . . . . . . . . . . . 26
(a)(2) Supplementary Data and Financial Statement Schedules
Schedules are attached hereto at the following pages:
Page
I - Summary of Investments - Other than Investments
in Related Parties, December 31, 1994 . . . . . . . 21
V - Supplementary Insurance Information, Years Ended
December 31, 1994, 1993 and 1992 . . . . . . . . . 22
VIII - Valuation and Qualifying Accounts, Years Ended
December 31, 1994, 1993 and 1992 . . . . . . . . . 22
All other schedules are omitted as the required information is inapplicable or
the information is presented in the financial statements or related notes.
(b) Reports on Form 8-K
None
(c) Exhibits
Exhibit
Number: Basic Documents:
3(a) 1986 Restatement of Articles of Incorporation. [Filed as
Exhibit 3(a) to the Company's 10-K Report for 1986 and
incorporated herein by reference]
3(b) Bylaws as amended October 26, 1986. [Filed as Exhibit
3(b) to the Company's 10-K Report for 1986 and
incorporated herein by reference]
3(c) Specimen copies of Capital Stock Certificates, (a) less
than 100 shares; (b) 100 shares; and (c) unlimited.
[Filed as Exhibit 3(d) to the Company's 10-K Report for
1985 and incorporated herein by reference]
10(a) Fourth Amendment, Kansas City Life Deferred Compensation
Plan. [Filed as Exhibit 10(a) to the Company's 10-K
Report for 1993 and incorporated herein by reference]
Exhibit
Number: Basic Documents:
10(a) Fourth Amendment, Kansas City Life Deferred Compensation
Plan. [Filed as Exhibit 10(a) to the Company's 10-K
Report for 1993 and incorporated herein by reference]
10(b) Twenty-first Amendment, Kansas City Life Insurance Company
Savings and Investment Plan.
10(c) Ninth Amendment, Kansas City Life Employee Stock Plan.
10(d) Kansas City Life Excess Benefit Plan. [Filed as Exhibit
10(e) to the Company's 10-K Report for 1990 and
incorporated herein by reference]
11 Statement re Computation of Per Share Earnings.
13 Annual Report to Shareholders for the year ended December
31, 1994.
21 Subsidiaries.
23(a) Consent of Independent Auditors.
23(b) Consent of Independent Auditors.
27 Financial Data Schedule.
99(a) Form 11-K for the Kansas City Life Insurance Company
Savings and Investment Plan for the year 1994 and filed as
a part hereof and incorporated herein by reference.
99(b) Prospectus for Kansas City Life Insurance Company Savings
and Investment Plan. [Filed as Exhibit 28(b) to the
Company's 10-K Report for 1991 and incorporated herein by
reference]
99(c) Summary of Modifications to the Prospectus and Summary
Plan Description dated December 1, 1992. [Filed as
Exhibit 99(c) to the Company's 10-K Report for 1993 and
incorporated herein by reference]
99(d) Summary of Modifications to the Prospectus and Summary
Plan Description dated September 1, 1993. [Filed as
Exhibit 99(d) to the Company's 10-K Report for 1993 and
incorporated herein by reference]
99(e) Summary of Modifications to the Prospectus and Summary
Plan Description dated January 1, 1994. [Filed as Exhibit
99(e) to the Company's 10-K Report for 1993 and
incorporated herein by reference]
99(f) Summary of Modifications to the Prospectus and Summary
Plan Description dated January 1, 1995. SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
KANSAS CITY LIFE INSURANCE COMPANY
By: /s/ John K. Koetting
John K. Koetting
Vice President and Controller
(Principal Accounting Officer)
Date: March 16, 1995
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the Regis-
trant and in the capacities and on the dates indicated.
By: /s/ W. E. Bixby By: /s/ Richard L. Finn
W. E. Bixby Richard L. Finn
Director; Vice Chairman of the Director; Senior Vice
Board and President President, Finance
(Principal Executive Officer) (Principal Financial Officer)
Date: March 16, 1995 Date: March 16, 1995
By: /s/ J. R. Bixby By: /s/ Francis P. Lemery
J. R. Bixby Francis P. Lemery
Director; Chairman of Director; Senior Vice
the Board President and Actuary
Date: March 16, 1995 Date: March 16, 1995
By: /s/ Warren J. Hunzicker By: /s/ Daryl D. Jensen
Warren J. Hunzicker Daryl D. Jensen
Director Director
Date: March 16, 1995 Date: March 16, 1995
By: /s/ C. John Malacarne By: /s/ R. Philip Bixby
C. John Malacarne R. Philip Bixby
Director; Vice President, Director; Senior Vice
General Counsel and Secretary President, Operations
Date: March 16, 1995 Date: March 16, 1995
<TABLE>
Schedule I
KANSAS CITY LIFE INSURANCE COMPANY AND SUBSIDIARIES
SUMMARY OF INVESTMENTS-OTHER THAN INVESTMENTS IN RELATED PARTIES
December 31, 1994
AMOUNT
AT
WHICH
SHOWN
FAIR IN BALANCE
TYPE OF INVESTMENT COST VALUE SHEET
(in thousands)
<S> <C> <C> <C>
Fixed maturity securities,
available-for-sale:
Bonds:
United States government and government
agencies and authorities $ 137 522 134 821 134 821
Mortgage-backed securities 263 824 252 062 252 062
States, municipalities and political
subdivisions 41 822 37 224 37 224
Public utilities 305 749 284 351 284 351
All other corporate bonds 626 513 576 303 576 303
Redeemable preferred stocks 25 186 24 536 24 536
Total 1 400 616 1 309 297 1 309 297
Equity securities, available-for-sale:
Common stocks 187 62 62
Non-redeemable preferred stocks 77 346 82 189 82 189
Total 77 533 82 251 82 251
Fixed maturity securities,
held-to-maturity:
Bonds:
United States government and government
agencies and authorities 3 948 3 911 3 948
States, municipalities and political
subdivisions 12 313 12 360 12 313
Public utilities 203 747 212 182 203 747
All other corporate bonds 175 878 170 283 175 878
Total 395 886 398 736 395 886
Mortgage loans on real estate 267 695 267 695
Real estate, net 54 976 54 976
Real estate joint ventures(1) 26 120 26 120
Policy loans 95 854 95 854
Other investments 19 340 19 340
Total investments $2 338 020 2 251 419
(1)The carrying value of the real estate joint ventures reflects adjustments for
the Company's equity in the results of the operations of the joint ventures.
</TABLE>
<TABLE>
Schedule V
KANSAS CITY LIFE INSURANCE COMPANY AND SUBSIDIARIES
SUPPLEMENTARY INSURANCE INFORMATION
Years Ended December 31, 1994, 1993 and 1992
The Company believes it operates in a single industry segment, that of providing
life and accident and health insurance coverage. Supplementary information for
this segment follows:
December 31
1994 1993
(in thousands)
<S> <C> <C>
Unearned premiums are included in $1 003 591
other policyowners' funds in the
accompanying Consolidated Balance
Sheet
All other information required by this Schedule is shown in the accompanying
Consolidated Income Statement and Consolidated Balance Sheet.
</TABLE>
<TABLE>
Schedule VIII
VALUATION AND QUALIFYING ACCOUNTS
1994 1993 1992
(in thousands)
<S> <C> <C> <C>
Real Estate Valuation Account
Beginning of year $11 113 10 743 9 020
Additions - 448 1 769
Deductions (1 171) (78) (46)
End of year $ 9 942 11 113 10 743
Mortgage Loan Valuation Account
Beginning of year $10 500 7 000 2 000
Additions - 3 500 5 000
End of year $10 500 10 500 7 000
Allowance for Uncollectible Accounts
Beginning of year $ 2 642 2 572 1 596
Additions 464 613 1 269
Deductions (374) (543) (293)
End of year $ 2 732 2 642 2 572
</TABLE>
Exhibit 10(b), Form 10-K
Kansas City Life
Insurance Company
TWENTY-FIRST AMENDMENT
KANSAS CITY LIFE INSURANCE COMPANY
SAVINGS AND INVESTMENT PLAN
THIS TWENTY-FIRST AMENDMENT, comprising the restated Kansas
City Life Insurance Company Savings and Investment Plan, except as
otherwise specifically stated in the Plan, is effective the lst day
of January, 1994, and is entered into by and between Kansas City
Life Insurance Company, a Corporation organized and existing under
the Laws of the State of Missouri, hereinafter called the
"Company", and Ronald E. Hiatt, John K. Koetting and Robert C.
Miller, hereinafter referred to as the "Trustees".
ARTICLE I
Creation and Purpose of Trust
1.1 Name. The Company hereby creates this Plan and Trust to
be known as the "Kansas City Life Insurance Company Savings and
Investment Plan", hereinafter sometimes referred to as the "Plan"
or "Trust".
1.2 Purpose. It is the purpose of this Plan to recognize the
contributions of its employees to the successful operation of the
Company and to reward such contributions by providing certain
savings and investment benefits for those who become participants
under the Plan, and for their beneficiaries.
1.3 Exclusive Benefit of Employees. This Agreement has been
made, and this Plan and Trust created, for the exclusive benefit of
the Company's full time employees and their beneficiaries. The
terms of this Plan are intended to comply with the provisions of
Sections 401(a), 501(a) and 401(k) of the Internal Revenue Code of
1954 as amended from time to time, and Treasury Department Regu-
lations in connection therewith in order that the Plan and Trust
may qualify for tax exemption. Under no circumstances shall any
part of the principal or income of the Plan and Trust be used for,
or revert to, the Company, or be used for, or diverted to, any pur-
poses other than for the exclusive benefit of the employees and
their beneficiaries. This Plan and Trust shall not be construed,
however, as giving any employee, or any other person, any right,
legal or equitable as against the Company, the Trustees, or the
principal or income of the Trust, except as specifically provided
for herein, nor shall it be construed as giving any employee the
right to remain with the Company or in the Company's employment.
ARTICLE II
Qualification and Eligibility
2.1 Qualification. The requirements of qualification for
employees are set forth hereinafter.
A. Employees. Each present and future employee shall be
qualified as a participant in this Plan,
(1) who shall have completed one (1) year of employment
with the Company during which he shall have com-
pleted one thousand (1,000) hours of employment
from date of hire, and
(2) who shall have attained the age of twenty-one (21)
years.
(3) With respect to this Plan, an "hour of employment"
shall mean:
(a) Each hour for which an employee is directly or
indirectly paid, or entitled to payment, by
the Company for the performance of duties.
These hours shall be credited to the employee
for the computation period or periods in which
the duties are performed; and
(b) Each hour for which back pay, irrespective of
mitigation of damages, has been either awarded
or agreed to by the Company. These ours shall
be credited to the employee for the computa-
tion period or periods to which the award or
agreement pertains rather than the computation
period in which the award, agreement or pay-
ment is made.
(c) Each hour for which an employee is directly or
indirectly paid, or entitled to payment, by
the Company for reasons such as vacation,
sickness, or disability in a period during
which no duties are performed. These hours
shall be credited to the employee for the
computation period or periods during which the
nonperformance of such duties occurs and shall
only be considered up to a maximum of five
hundred one (501) hours. Hours of service for
periods of time during which no duties are
performed shall be calculated and credited
according to Department of Labor Regulations
2530.200b-(b) and (c).
(d) In computing an employee's hours of employment
on a weekly or monthly basis, when a record of
hours of employment is not available, the
employee shall be assumed to have worked
thirty-eight and three quarter (38 3/4) hours
for each full five (5) day week of employment
and seven and three quarter (7 3/4) hours for
each day in less than a full five (5) day
week, or he shall be assumed to have worked
the full number of hours for the time period
for which he is employed if the Company's
normal employment period is other than a seven
and three quarter (7 3/4) hour day, five (5)
day a week period, regardless of whether the
employee has actually worked fewer hours.
(e) An "hour of employment" shall also include
time for which an employee is absent from work
either
(i) by reason of the pregnancy of
such employee,
(ii) by reason of the birth of a child of
the employee,
(iii) by reason of the placement of a
child in connection with the
adoption of the child by the
employee, or
(iv) for purposes of caring for the child
during the period immediately fol-
lowing the birth or placement for
adoption.
However, the total number of hours of such
service counted for any one (1) period shall
not exceed five hundred one (501) hours.
(4) For the purpose of computing continuous
employment, leaves of absence may be included
which have been authorized by the Company for
any of the following reasons:
(a) Sickness.
(b) Disability.
(c) Service with the armed forces of the
United States during any war or national
emergency declared by the President or
the Congress, or undeclared.
(d) Pregnancy, not to exceed twelve (12)
months.
(e) Public service, whether elected or
otherwise.
(f) Obtaining additional education, involving
periods of time not to exceed twelve (12)
months for each leave of absence granted,
but only after completion of one (1) full
year of full time employment.
(5) Such leaves of absence may be counted in
computing continuous employment provided the
employee returns to active employment on or
before the end of such leave of absence, and
when because of service in the armed forces as
stated above, provided the employee returns to
active employment with the Company within
ninety (90) days following his discharge from
such service, or such longer period during
which his re-employment rights are protected
by law.
(6) Any such employee who is not qualified as a
participant prior to the commencement of such
a leave of absence shall not be so qualified
until his return to active employment. The
provisions of this Section shall be applied in
a like manner to all employees under similar
circumstances.
2.2 Eligibility Date. Except as provided in the next
sentence, any employee of the Company who becomes qualified after
the effective date of this Agreement, shall be eligible to become
a participant as of the first (1st) business day of the month
coinciding with or next following the employee's qualification,
whichever first occurs. Any employee of Old American Insurance
Company shall be eligible to become a participant no earlier than
November 1, 1992 and in accordance with the terms of the Adoption
Agreement dated December 19, 1991.
2.3 Company to Furnish Eligibility Lists. Each month, the
Company shall transmit to the Committee the names of all employees
and such other information concerning them as the Committee may
request. The Committee shall then determine the employees who are
eligible, or who will be eligible as of the first (1st) business
day of each month to become participants and shall notify each such
employee in writing of the existence of this Trust and of its basic
provisions, and of the employee's eligibility, and shall provide a
form or application for participation, and such other forms, if
any, as may be required to effect participation.
2.4 Election to Participate. Any eligible employee who
desires to become a participant must execute and deliver to the
Committee an application for participation on the form provided by
the Committee and such other forms, if any, as may be required. In
such application for participation, the employee shall agree to be
bound by the terms of this Plan and Trust and of all amendments
hereafter adopted with the same force and effect as if the employee
had executed this Plan and Trust, and shall set forth such reason-
able information as may be required by the Committee to effect
participation and maintain the qualified status of this Plan and
Trust.
2.5 Failure to Elect. Any employee who fails to elect to
become a participant at the time of first becoming eligible, may
elect to commence participation on the first (1st) business day of
any succeeding month provided the employee shall then be eligible.
Any employee on a leave of absence authorized by the Company, as
defined in Subparagraph A(4) hereinabove, at a time when he or she
could otherwise be eligible to become a participant, shall be
eligible on the first (1st) business day of the first (1st) month
coinciding with or next following return to active employment with
the Company provided that on such date he shall meet the eligi-
bility requirements.
2.6 Participation and Service on Re-employment. Subject to
the provisions of this Plan, participation in the Plan by an
employee shall cease upon termination of employment with the
Company. Upon an employee's termination on or after January 1,
1976, any twelve (12) month employment period during which the
employee completes less than five hundred one (501) hours of
employment or work due to a termination shall constitute a break in
service.
Upon the re-employment by the Company of any person whose
participation has been terminated from January 1, 1976 through
December 31, 1984, the following rule shall apply in determining
his participation and vesting in the Plan:
(a) Participation - before a break in service: If the
employee is rehired before he has a one (1) year break in
service, he shall be eligible to participate in the plan
on the first (1st) business day of the month immediately
following the date of his re-employment if he shall be
otherwise qualified.
After a break in service: If an employee is rehired
after he has a one (1) year break in service, he shall be
eligible to participate in the Plan upon his completion
of the requirements set forth in Paragraph 2.1 herein.
(b) Service - for vested participants: In the case of a
person who was vested when his prior period of employment
terminated, any service attributable to his prior period
of employment shall be reinstated as of the date of his
reparticipation and he shall be vested immediately upon
his reparticipation.
For other persons: In the case of a re-employed employee
who was not a participant in the Plan during his prior
period of employment, or in the case of a participant who
was not vested when his prior period of employment
terminated, any service attributable to his prior period
of employment shall be restored only if the number of
consecutive years of his break in service was less than
the aggregate number of his years of prebreak service.
Upon the re-employment by the Company of any person who has
been terminated on or after January 1, 1985, the following rules
shall apply in determining his participation and vesting in the
Plan:
(a) Participation - before a break in service: If the
employee is rehired before the number of one (1) year
breaks in service equals or exceeds the greater of five
(5) consecutive years of service, or the aggregate number
of years of service earned before the consecutive breaks
in service, he shall be eligible to participate in the
Plan on the first (1st) business day of the month
immediately following the date of his re-employment if he
shall be otherwise qualified. This rule of parity will
apply to employees who had no vested interest on
separation of employment.
After a break in service: If an employee is re-hired and
he does not qualify for participation or vesting under
the rule in the above Paragraph, he shall be eligible to
participate in the Plan upon his completion of the
requirements set forth in Paragraph 2.1 herein.
(b) Service - for vested participants: In the case of a
person who was vested when his prior period of employment
terminated, any service attributable to his prior period
of employment shall be reinstated as of the date of his
reemployment and he shall participate immediately and
also be vested in accordance with prior years of service.
For other persons: In the case of a re-employed employee
who was not a participant in the Plan during his prior
period of employment, or in the case of a participant who
was not vested when his prior period of employment
terminated, any service attributable to his prior period
of employment shall be restored unless the number of one
(1) year breaks in service equals or exceeds the greater
of five (5) consecutive years of service, or the
aggregate number of years of service earned before the
consecutive breaks in service.
Sunset Life and Old American Insurance Company: If an
employee's employment with either Kansas City Life
Insurance Company, Sunset Life Insurance Company of
America, Old American Insurance Company, or any other
affiliated corporation of Kansas City Life Insurance
Company, shall be terminated and he is subsequently
employed by any other of the affiliated corporations, his
employment shall be treated as if under one (1) employer
for the purpose of this Plan.
2.7 In determining whether a break in service has occurred,
the hours described in Paragraph 2.1A(3)(e) above shall be treated
as hours of service (i) only in the year in which the absence from
work begins, if a participant would be prevented from incurring a
one (1) year break in service in such year solely because the
period of absence is treated as hours of service as provided in
Paragraph 2.1A(3)(e), or (ii) in any other case, in the immediately
following year. ARTICLE III
Member Contributions
3.1 Rate of Contribution. Commencing January 1, 1988, each
participant may elect to enter into a compensation reduction
agreement with the Company by which a contribution will be made for
his or her respective account in an amount equivalent to one
percent (1%) (commencing September 1, 1993) and two percent (2%),
three percent (3%), four percent (4%), five percent (5%), six
percent (6%), seven percent (7%), eight percent (8%), nine percent
(9%), or ten percent (10%) of his unreduced monthly salary or
earnings, whichever may be applicable; provided however, that no
contribution in excess of five percent (5%), and, commencing
January 1, 1994, six percent (6%), shall be made for any parti-
cipant who shall be classified as a highly compensated person. A
participant may elect to change his contribution percentage rate as
of the first (1st) day of any month, but not more than once in any
six (6) month period, by giving such written notice as shall be
prescribed by the Committee. However, this limitation shall not
apply to a change in contribution percentage rate effective January
1, 1994 made by a highly compensated person. The contribution for
each participant shall be paid to the Trustees not less often than
monthly and credited to the respective participant's accounts. No
contribution for a participant shall exceed seven thousand dollars
($7,000.00) each calendar year, subject to annual adjustments
pursuant to Internal Revenue Code Sections 415(d), 402(g) and
regulations. The contributions herein may sometimes be referred to
as the participant's "elective account".
3.2 Salary or Compensation Defined.
A. For the purposes of Paragraph 3.1 herein and with respect
to employees of the Company, the term "salary" or
"compensation", includes only the fixed amounts, weekly,
semi-monthly or monthly, due and payable to the employees
of the Company, not reduced by any salary reductions, but
not to exceed two hundred thousand dollars ($200,000.00)
commencing January 1, 1989, and, commencing January 1,
1994, one hundred fifty thousand dollars ($150,000.00),
for each calendar year, and does not include any bonuses,
overtime or other extraordinary payments by the Company.
B. The two hundred thousand dollar ($200,000.00) amount
shall be adjusted at the same time and in such manner as
permitted under Code Section 415(d) and regulations
thereunder. The one hundred fifty thousand dollar
($150,000.00) amount shall be adjusted at the same time
and in such manner as permitted under Code Sections
401(a)(17), 415(d) and regulations thereunder. For all
other purposes of this Plan, compensation shall be
defined by the provisions of Internal Revenue Code
Regulation 1.415-2(d), hereby incorporated by reference,
except that for purposes of the actual deferral per-
centage test and actual contribution percentage test,
compensation shall also include any amount not includible
in the gross income of an employee under Code Sections
125, 402(e)(3), 402(h) and 403(b).
C. The family aggregation rules of Section 414(q) of the
Internal Revenue Code, as modified by Section 401(a)(17),
apply with respect to the requirement that the Plan must
limit the amount of contributions taken into account in
determining contributions. That is, the Plan must treat
the following family unit as a single employee with one
compensation to which the annual compensation limit under
the plan applies:
An employee who is either a five percent (5%) owner or is
both a highly compensated employee and one of the ten
(10) most highly compensated employees, such employee's
spouse, and any lineal descendants of such employee who
have not attained age nineteen (19) before the close of
the year. If the compensation for the family unit
exceeds the annual compensation limit, then the Plan must
prorate the limit among the members of the family unit in
proportion to each individual's compensation.
3.3 Suspension of Contributions. A participant may suspend
his compensation reduction agreement as of the last day of any
month by giving such notice as shall be prescribed by the Com-
mittee, and no contribution shall be made during such suspension
period. Such suspension may last indefinitely. The participant
may resume his compensation reduction agreement on the first (1st)
day of any month following the expiration of six (6) months from
the date his agreement was suspended, providing he shall then be
eligible to participate, by giving such notice as shall be
prescribed by the Committee.
3.4 Distribution Conditions. The balance in each partici-
pant's elective account shall be fully vested at all times and
shall not be subject to forfeiture for any reason. Amounts held in
the participant's elective account may not be distributable prior
to the earlier of,
(1) his retirement, termination of employment or death;
(2) his attainment of age fifty-nine and one-half (59 1/2);
(3) termination of the Plan without establishment of a
successor Plan by the Company or an affiliated employer;
(4) the date of the sale by the Company to an entity that is
not an affiliated employer of substantially all the
assets, within the meaning of Code Section 409(d)(2),
with respect to a participant who continues employment
with the corporation acquiring such assets;
(5) the date of the sale by the Company or an affiliated
employer of its interest in a subsidiary to an entity
which is not an affiliated employer with respect to a
participant who continues employment with such sub-
sidiary; or
(6) proven financial hardship, subject to the limitations of
Section 3.5.
In the event that the dollar limitation provided for in Para-
graph 3.6 is exceeded, the Administrative Committee shall direct
the Trustees to distribute such excess amount, and any income
allocable to such amount, to the participant not later than April
15th following the close of the participant's taxable year. If
there is a loss allocable to such excess amount, the distribution
shall in no event be less than the lesser of the participant's
elective account or the amount of the contribution made for such
participant's elective account in the calendar year resulting from
his salary reduction agreement.
In the event that a participant is also a participant in
another qualified cash or deferred arrangement as defined in Code
Section 401(k), a simplified employee pension plan as defined in
Code Section 408(k), or a salary reduction arrangement within the
meaning of Code Section 3121(a)(5)(d), and the elective deferrals,
as defined in Code Section 402(g)(3), made under such other
arrangements and this Plan cumulatively exceed seven thousand
dollars ($7,000.00) or such amount adjusted annually as provided in
Code Section 415(d) and regulations for such participant's taxable
year, the participant may, not later than March 1st following the
close of his taxable year, notify the Administrative Committee in
writing of such excess and request that his deferred compensation
to this Plan be reduced by an amount specified by the participant.
Such amount shall then be distributed in the same manner as
provided in the previous Paragraph.
3.5 Withdrawal, Extreme Financial Necessity. The Adminis-
trative Committee, in its sole discretion, may direct the Trustees
to distribute to any participant or his beneficiary up to one
hundred percent (100%) of the participant's elective account,
valued as of the most recent valuation date, in the case of proven
extreme financial necessity. Commencing January 1, 1988, such
distribution shall be limited solely to the participant's deferred
compensation without regard to any earnings on such deferred com-
pensation. Withdrawal under this section shall only be authorized
in the event of financial hardship resulting from accident to or
sickness of a participant or his dependents; or financial hardship
resulting from the establishing or preserving of the home in which
the participant resides, provided funds are not reasonably avail-
able from other financial resources to the participant. Any
distribution made pursuant to this Paragraph will be subject to the
consent of the participant's spouse. Furthermore, any withdrawal
pursuant to the provisions of this section shall be governed by the
provisions of ARTICLE IX herein regarding suspension of partici-
pation and forfeitures, except that the period of suspension shall
be twelve (12) months, and the Administrative Committee's deter-
mination with respect to any question herein shall be final.
However, withdrawals pursuant to this Paragraph may not be made by
an individual who is an alternate payee under a Qualified Domestic
Relations Order and for whom an account is being separately
maintained.
The Company and the Administrative Committee shall adopt
procedures necessary to implement the compensation reduction
elections provided for herein.
3.6 Compensation Reduction Limitations. To insure continued
qualification of the Plan, a test sometimes referred to as the
"actual deferral percentage test" must be met for each Plan year.
In order to meet the ADP test, it may be necessary to adjust
contributions made by the Company resulting from the compensation
reduction agreements entered into by certain of the participants.
In the event that the contribution ratios of the Plan do not
satisfy the test, the Administrative Committee shall adjust the
contributions resulting from the compensation reduction agreements
in the following manner:
(a) On or before the fifteenth (15th) day of the third (3rd)
month following the end of the Plan year, but in no event
later than the close of the following Plan year, which in
this case is a calendar year, each highly compensated
participant, beginning with the participant having the
highest "actual deferral percentage", shall have his
portion of excess deferred compensation (and any income
allocable to such portion) distributed to him until the
ADP test is satisfied. Any dollar amount distributed to
such participant shall result in a reduction of the
number of units allocated to his respective account
equivalent to the dollars distributed based on the
valuation used.
(b) The determination and correction of excess contributions
of a highly compensated person whose actual deferral
ratio is determined under the family aggregation rule in
Paragraph 3.7(b) is accomplished by reducing the actual
deferral ratio as required under Paragraph 3.6(a) and
allocating the excess contributions for the family group
among the family members in proportion to the elective
contribution of each family member that is combined to
determine the actual deferral ratio. However, in
determining the amount of excess contributions to be
distributed with respect to a highly compensated person,
such amount shall be reduced by any excess deferred
compensation previously distributed to such employee for
his taxable year ending with or within such Plan year.
(c) For purposes of this Paragraph, income means the gain or
loss allocable to excess contributions which shall equal
the sum of the allocable gain or loss for the Plan year
and the allocable gain or loss for the period between the
end of the Plan year and the date of distribution (gap
period). The income or loss allocable for the Plan year
and the gap period is calculated separately and is
determined by multiplying the income or loss for the Plan
year and gap period by a fraction. The numerator of the
fraction is the excess contributions made by the employee
for the Plan year, and the denominator is the total
account balance of the employee attributable to elective
contributions as of the end of the Plan year, reduced by
the gain allocable to such total amount for the Plan year
and increased by the loss allocable to such total amount
for the Plan year. The income allocable to excess
contributions for the period between the end of the Plan
year and the date of distribution shall be calculated in
the same manner by substituting "gap period" for "Plan
year" in the fraction.
3.7 Deferral Percentage Test.
(a) Maximum annual allocation: For each Plan year, the
annual allocation derived from contributions to a par-
ticipant's individual account shall satisfy one of the
following tests:
1. The actual deferral percentage for the highly
compensated participant group shall not be more
than the actual deferral percentage of the
nonhighly compensated participant group multiplied
by 1.25, or
2. The excess of the actual deferral percentage for
the highly compensated participant group over the
actual deferral percentage for the nonhighly
compensated participant group shall not be more
than two (2) percentage points or such lesser
amount determined pursuant to regulations to
prevent the multiple use of this alternative
limitation with respect to any highly compensated
participant. Additionally, the actual deferral
percentage for the highly compensated participant
group shall not exceed the actual deferral per-
centage for the nonhighly compensated participant
group multipled by two (2).
(b) For the purposes of this section, actual deferral
percentage means, with respect to the highly compensated
participant group and nonhighly compensated participant
group for a Plan year the average of the ratio, cal-
culated separately for each participant in such group, of
the amount of contribution allocated to each partici-
pant's account resulting from compensation reduction
agreements, unreduced by distributions made pursuant to
Paragraph 3.5 for such Plan year, to such participant's
compensation for such Plan year. For the purpose of
determining the actual deferral percentage of a highly
compensated participant, the contributions and
compensation for such highly compensated participant
shall combine all elective contributions and compensation
of family members treated as a family group (and as one
highly compensated employee), and such affected family
members shall be disregarded in determining the actual
deferral percentage for nonhighly compensated participant
groups. In addition, for purposes of this section,
highly compensated participant and non-highly compensated
participant shall include any employee eligible to enter
into a compensation reduction agreement whether or not
such agreement was made, or suspended under the
provisions of this Plan.
(c) In the application of the tests referred to above, the
Plan shall take elective contributions into account for
the Plan year only if attributable to compensation that
would be received by the participant during the Plan
year, or earned during the Plan year and received within
two and one-half (2 1/2) months after the end of the Plan
year. Such contribution shall be taken into account for
a Plan year only if it is allocated to the participant's
account on a day within the Plan year.
3.8 Actual Contribution Percentage (ACP) Test. In addition
to the "actual deferred percentage test" referred to in Paragraph
3.6 above, the Plan must comply with the "actual contribution
percentage test" required by Section 401(m)(1) and (2) of the
Internal Revenue Code. Rather than stating the test in this Plan,
the test is adopted by incorporating by reference herein the
provisions of said Section 401(m)(1) and (2) and the regulations
issued thereunder by the Internal Revenue Service.
(a) In the event the actual contribution ratios of the Plan
do not satisfy the test, the Administrative Committee
shall distribute to the highly compensated participant
having the highest actual contribution ratio his portion
of the excess aggregate contributions (and income
allocable to such contribution) until the ACP test is
satisfied, or until his actual contribution ratio equals
the actual contribution ratio of the highly compensated
participant having the second highest actual contribution
ratio.
(b) The determination and correction of excess aggregate
contributions of a highly compensated person whose actual
contribution ratio is determined under the family
aggregation rules is accomplished by reducing the actual
contribution ratio as required under this Paragraph and
allocating the excess aggregate contributions for the
family group among the family members in proportion to
the employee contributions and matching contributions for
each family member that are combined to determine the
actual contribution ratio.
(c) For purposes of this Paragraph, income means the income
or loss allocable to excess aggregate contributions which
shall equal the sum of the allocable gain or loss for the
Plan year and the allocable gain or loss for the period
between the end of the Plan year and the date of distri-
bution (gap period). The income or loss allocable to
excess aggregate contributions for the Plan year and gap
period is calculated separately by multiplying the income
or loss allocable to matching contributions by a
fraction. The numerator of the fraction is the amount of
excess aggregate contributions made on behalf of the
employee for the Plan year or gap period. The denomi-
nator is the total account balance of the employee
attributable to matching contributions as of the end of
the Plan year or gap period reduced by the gain allocable
to such total amount for the Plan year or gap period and
increased by the loss allocable to such total amount for
the Plan year or gap period.
(d) All such distributions shall be made on or before the
fifteenth (15th) day of the third (3rd) month following
the end of the Plan year in which the excess aggregate
contributions were made, and no later than the end of the
following Plan year.
(e) Any distribution or forfeiture of excess aggregate
contributions for any Plan year shall be made on the
basis of the respective portions of such amounts
attributable to each highly compensated person.
(f) Matching contributions that are vested may not be
forfeited to correct excess aggregate contributions.
(g) Furthermore, with respect to the application of the
actual deferred percentage test and the actual
contribution percentage test, the multiple use of
alternative limitation rule may be applied. For this
purpose, proposed Regulation 1.401(m)-2 is hereby
incorporated by reference.
3.9 Combined Deferral Plans. For the purposes of this Plan,
a highly compensated participant and nonhighly compensated
participant shall include any employee eligible to participate in
this Plan whether or not such participation was elected, or any
eligible employee whose participation has been suspended pursuant
to Paragraphs 3.3 or 3.5.
For the purposes of this Plan, if two (2) or more plans which
include cash or deferred arrangements are considered one (1) plan
for the purposes of Internal Revenue Code Section 401(a)(4) or
Section 410(b), the cash or deferred arrangements included in such
plan shall be treated as one (1) arrangement.
For the purposes of this Plan, if a highly compensated
participant is a participant under two (2) or more cash or deferred
arrangements of the Company or an affiliated company, all such cash
or deferred arrangements shall be treated as one (1) cash or
deferred arrangement for the purpose of determining the deferral
percentage with respect to such highly compensated participant.
Notwithstanding the above, the determination and treatment of
elective contributions and "actual deferral percentage" of any
participant shall satisfy such other requirements as may be
prescribed by the Secretary of the Treasury.
ARTICLE IV
Matching Company Contributions
4.1 Rate of Contribution. The Company shall, with respect to
each participant, contribute to the Trustees as soon as practicable
after the end of each month, out of its current or accumulated
earnings and profits as shown on the books used in preparing its
annual reports, without regard to whether it has any current or
accumulated earnings and profits for federal income tax purposes,
a matching amount equal to one hundred percent (100%) of such
participant's contribution to the Trust resulting from his
compensation reduction agreement. Company contributions with
respect to a participant shall be paid into the Trust and credited
to such participant's account with respect to Fund III.
4.2 Form of Payment. The contributions of Kansas City Life
Insurance Company may be made in cash, in treasury stock or in
shares of authorized but unissued stock of Kansas City Life Insur-
ance Company. If the Company or any affiliated participating
company shall make its contribution in cash, the Trustees shall
have the authority to purchase shares, acting independently as to
when purchases are made, the number of shares to be purchased, the
prices to be paid, and the broker, if any employed, to effect the
purchases. The contributions of any participating affiliated
corporation shall be converted to stock in such manner as shall be
satisfactory to the Trustees and the respective companies from time
to time. For purposes of fixing the amount of contributions made
with shares of treasury stock, or shares of authorized but unissued
stock, and commencing with the valuation date of the Plan in June,
1982, such stock shall be valued at the average of its bid price on
the over-the-counter market for all business days following the
previous monthly valuation date. In the event the Company is
precluded from delivering such shares to the Trustees by law or
because of the unavailability of such shares, the Company's
contribution to the Trustees shall be in cash, and said cash shall
be invested until such time as shares of the Company stock shall be
available for purchase by the Trustees.
ARTICLE V
Investment of Contributions
5.1 Investment of Funds. Contributions to the Trust shall be
invested in accordance with the authority granted to the Trustees
pursuant to the provisions of this Plan and Trust. It is con-
templated that the contribution made by the Company from time to
time be in the form of shares of the Company stock, and that cash
contributions to the Trust, whether by the Company or the parti-
cipant, may be used for the purchase of Company stock.
5.2 Voting of Shares. The Trustees shall vote the shares of
stock of the Company for the respective accounts of the partici-
pants only in accordance with the directions of such participants,
which directions may be certified to the Trustees by the Committee,
or any agent designated thereby, provided such directions are
received by the Trustees at least five (5) days before the date set
for the meeting at which such shares are to be voted. Shares with
respect to which no such direction shall be received and the
fractional shares shall be voted by the Trustees in the same
proportions as are shares as to which voting instructions have been
received.
5.3 Tender Offer. Notwithstanding any language in this Plan
to the contrary, if the common capital stock of Kansas City Life
Insurance Company shall become the subject of a tender offer, the
Trustees may not take any action in response to such tender offer
except as otherwise provided herein.
Upon notice from the Trustees of the Plan, and subject to
their rules of procedure then issued, each participant may direct
the Trustees to sell, offer to sell, exchange or otherwise dispose
of the common capital stock of Kansas City Life Insurance Company
allocated to such participant in Fund II and Fund III. The
participant's direction may apply to either or both of said funds.
Any such action shall only be in accordance with the provisions,
conditions and terms of such tender offer and the provisions of
this Plan.
The Trustees shall sell, offer to sell, exchange or otherwise
dispose of the common stock allocated to Fund II and Fund III of
the participants with respect to which they have received
directions to do so pursuant to this ARTICLE.
To the extent to which participants do not instruct the
Trustees or do not issue valid directions to the Trustees to sell,
offer to sell, exchange or otherwise dispose of the common stock
allocated to their Fund II and/or Fund III, such participants shall
be deemed to have directed the Trustees that such shares shall
remain invested in said common capital stock.
If a participant's tender shall be accepted, the account or
accounts of the participant whose stock has been tendered shall be
reduced by the value of the stock so tendered. The date for
valuation shall be established by the Trustees, and in order to
facilitate such tender offers the Trustees may require special
valuation dates.
At such time as cash is received for the benefit of a
tendering participant, such cash shall be maintained in an escrow
account for the benefit of such participant until such time as the
Trustees shall determine that the reinvestment of the funds in the
accounts of Fund II and/or Fund III shall be appropriate. Interest
as earned by the Trustees in such escrow account shall be credited
to the accounts of those participants whose cash is held. The
availability of such cash for investment shall be the primary
objective of the Trustees in the selection of the escrow account.
ARTICLE VI
Allocation to and Evaluation of Participants' Accounts
6.1 Investment Funds. The value of all Trust assets shall be
determined on the basis of market values as of the last market
business day of each month, except that the Kansas City Life stock
shall be valued at the average of its bid price on the over-the-
counter market for all business days following the previous monthly
valuation date. Accounting procedures shall reflect the establish-
ment of at least four (4) separate funds, sometimes herein referred
to as Fund I, Fund II, Fund III and Fund IV, with the intent that
all participants' contributions, and any earnings thereon, will be
accounted for in Fund I, Fund II and Fund IV, and with the intent
that all Company contributions, and any earnings thereon, will be
accounted for in Fund III. Commencing January 1, 1988, the
Administrative Committee may elect to establish new or subaccounts
within the four (4) funds referred to herein for the purpose of
separately accounting for the participants' elective deferral
accounts and the Company's equivalent matching contributions.
Commencing September 1, 1993, five (5) additional Funds (and new or
subaccounts within them) shall be established, hereinafter called
Fund V, Fund VI, Fund VII, Fund VIII and Fund IX, for the purpose
of separately accounting for the participants' elective deferral
accounts and accounts attributable to the participants' contribu-
tions prior to January 1, 1988, and earnings thereon. Contributions
to Funds I, IV, V, VI, VII, VIII and IX shall be invested by the
Trustees in general investments pursuant to ARTICLE XIV. Contribu-
tions to Fund II shall be invested in shares of the Company stock
pursuant to Paragraph 6.5, and the contributions to Fund III shall
be in the form of shares of the Company stock pursuant to ARTICLE
IV. There shall be no guarantee regarding interest or gain, nor
shall there by an guarantee against loss of principal in any of
these Funds.
6.2 Participants' Accounts. An account shall be established
for each participant with respect to Fund I, Fund II and with
respect to Fund III, Fund IV, Fund V, Fund VI, Fund VII, Fund VIII
and Fund IX or any other such fund that reasonable accounting
practices shall require be established. All Funds shall be main-
tained in United States dollars. A determination shall be made on
each monthly valuation date of the value with respect to each fund,
and shall reflect contributions made by both the participant and
the Company and any gains or losses of the funds. Each participant
shall be provided a statement of his accounts, reflecting the value
thereof, not less often than annually. Notwithstanding the
foregoing, the Company shall have the right to change the method of
accounting from time to time except that no participant's account
balances shall be reduced because of such change.
6.3 Selected Investments. Each participant shall have the
right to require the Trustees to invest all or a portion of his
monthly contribution in either the assets of Fund I, Fund II or
Fund IV. He shall initially indicate his choice at the time he
commences his participation, in accordance with the requirements of
the Committee, and he may subsequently request changes in accord-
ance with the provisions of Paragraph 6.4 herein. His
contributions shall so be invested under one of the following
options:
(a) One hundred percent (100%) in Fund I, one hundred percent
(100%) in Fund II or one hundred percent (100%) in Fund
IV.
(b) Thirty-three and one-third percent (33 1/3%) in each of
Funds I, II and IV.
(c) Fifty percent (50%) in each of any two (2) of Funds I, II
and IV.
Commencing September 1, 1993, a participant may require the
Trustees to invest all or a portion of his monthly contribution in
either the assets of Fund I, Fund II, Fund IV, Fund V, Fund VI,
Fund VII, Fund VIII or Fund IX. His contributions may be invested
one hundred percent (100%) in any one of these Funds, or, if he
wishes to invest in more than one (1) Fund, he shall specify the
percentage to be invested in each Fund. However, such percentage
must be a whole percentage, for example, one percent (1%), twenty-
six percent (26%) or eighty percent (80%), and no fractional
percentages will be permitted.
Each participant may make new investment choices for his
monthly contribution to be effective September 1, 1993 notwith-
standing any changes made in the prior twelve (12) months.
Thereafter, a participant may request changes not more often than
once a month. However, if a participant is investing all or a
portion of his monthly contribution in Fund II and transfers all or
a part of his Fund II account to another fund (as described in
Paragraph 6.4), monthly contributions to Fund II must cease until
at least six (6) months after the date of said transfer from Fund
II.
6.4 Investment Changes. Any participant shall have the right
from time to time, although not more often than once within a
twelve (12) month period, to require that the value of any one (1)
or more of his accounts be transferred for investment for his
account in any of Funds I, II or IV, provided that this right shall
not apply to Fund III, and, commencing January 1, 1977, no such
transfers shall be permitted from Fund IV to any other fund, and no
such transfers shall be permitted from Fund I to Fund II. Such
transfer shall also be governed by reasonable rules of the Adminis-
trative Committee regarding the timeliness of notice.
Commencing September 1, 1993, a participant shall have the
right, not more often than once a month and not withstanding any
transfers made in the twelve (12) months prior to September 1,
1993, to require that the value of any one (1) or more of his
accounts be transferred for investment for his account in any of
Funds I, II, IV, V, VI, VII, VIII or IX provided that such transfer
shall be made in whole percentages. This right shall not apply to
Fund III, and a participant that transferred the value of his
account from Fund II to another fund in the six (6) months prior to
September 1, 1993 may not transfer any amount into Fund II until at
least six (6) months after the date of said transfer from Fund II.
Thereafter, transfers to or from Fund II may occur only once in a
six (6) month period. All transfers shall be governed by reason-
able rules of the Administrative Committee regarding the timeliness
of notice.
6.5 Fund II Assets. A participant's contributions allocated
to Fund II pursuant to Paragraph 6.3 herein shall be invested in
shares of the Company stock subject to the limitations herein.
Such shares shall be purchased by the Trustees, acting indepen-
dently as to when purchases are made, the number of shares to be
purchased, the prices to be paid, and the broker, if any employed
to effect the purchases; provided however, that during any period
during which the Company or the Trustees are precluded from making
purchases of Kansas City Life Insurance Company shares by law, or
at any other time the Trustees may elect and the Company shall
agree, if permitted by law, the Trustees may purchase shares of the
Company's treasury stock or shares of its authorized but unissued
stock. Such stock shall be valued in accordance with Paragraph 4.2
herein. In the event the Company does not agree to sell its
treasury stock or authorized but unissued stock, and if the
Trustees are precluded from buying or are unable to buy such stock
on the market, the Trustees shall invest such contributions until
such time as shares of the Company stock shall be available for
purchase by the Trustees.
6.6 Dividend Reinvestment. Dividends and any other distri-
butions received by the Trustees with respect to the investments
allocated to Fund II and Fund III shall be invested in shares of
the Company stock subject to the provisions of Paragraphs 4.2 and
6.5 herein.
6.7 Fund IV Account and Additional Fund Accounts. Commencing
with the first (1st) valuation date in January, 1977, Fund IV shall
then and thereafter be placed on the unit valuation system, as
prescribed by Paragraph 6.2 herein, and the following amended
provisions of this Paragraph 6.7 shall also then apply. This fund
shall now be maintained in United States dollars. Commencing
January 1, 1988, Fund IV and commencing September 1, 1993, Fund V,
Fund VI, Fund VII, Fund VIII and Fund IX shall be invested by the
Trustees in general investments pursuant to ARTICLE XIV. There
shall be no guarantee regarding interest, nor shall there be any
guarantee against loss of principal. All gains or losses, if any,
shall be allocated to the accounts of the participants in the Funds
when realized.
ARTICLE VII
Allocation of Fiduciary Responsibility
7.1 Fiduciaries. The fiduciaries shall have only those
specific powers, duties, responsibilities and obligations as are
specifically given them under this Plan. The Company shall have
the sole responsibility for making the contributions required by
the provisions of ARTICLE IV, shall have the sole authority to
appoint and remove the Trustees, members of the Administrative
Committee, and to amend or terminate, in whole or in part, this
Plan and Trust.
7.2 Administration. The Administrative Committee shall have
the sole responsibility for the administration of this Plan, which
responsibility is specifically described in ARTICLE XII herein.
7.3 Trustees. The Trustees shall have the sole responsi-
bility for the administration and management of the assets held
pursuant to this Plan and Trust, all as specifically provided for
herein.
7.4 Duties. Each fiduciary warrants that any direction
given, information furnished, or action taken by it shall be in
accordance with the provisions of the Plan and Trust, authorizing
or providing for such direction, information, or action. Further-
more, each fiduciary may rely upon any such direction, information,
or action of another fiduciary as being proper under this Plan, and
is not required herein to inquire into the propriety of any such
direction, information, or action. It is intended under this Plan
that each fiduciary shall be responsible for the proper exercise of
its own powers, duties, responsibilities, and obligations pursuant
to the Plan and shall not be responsible for any act or failure to
act of another fiduciary. No fiduciary guarantees the Trust fund
in any manner against investment loss or depreciation in asset
value.
ARTICLE VIII
Vesting
8.1 Vesting of Company Contributions. Commencing January 1,
1988, the value of a participant's account with respect to Company
contributions made for his benefit shall be vested, to the extent
of the percentage applicable, upon the valuation date of the month
in which the participant completes the years of employment with the
Company in accordance with the following schedule:
Years of Percentage
Employment Vested
1 0%
2 0%
3 30%
4 40%
5 60%
6 80%
7 100%
A "year of employment" shall be deemed to mean twelve (12) con-
secutive monthly periods of employment with the Company, dating
from the commencement of employment, during which he or she shall
complete at least one thousand (1,000) hours of employment.
However, years of employment of an employee of Old American
Insurance Company prior to November 1, 1991 shall not be taken into
account for purposes of this ARTICLE VIII. If an employee's
employment with either Kansas City Life Insurance Company or one of
its affiliated corporations shall be terminated, and he is
immediately employed by any other of such affiliated corporations,
his employment shall be regarded as continuous and treated as if
under one (1) employer for vesting purposes.
In the event a participant shall be terminated from employment
with the Company or any of its affiliated corporations, by reason
of death or retirement, the value of his or her account with
respect to Company contributions shall be one hundred percent
(100%) vested upon the valuation date of the month in which such
death or retirement occurs.
The value of a participant's account with respect to his or
her personal contributions, and accounted for in Fund I, Fund II,
Fund IV, Fund V, Fund VI, Fund VII, Fund VIII and Fund IX shall be
fully vested at all times.
8.2 Vesting of Company Contributions upon Termination of
Plan. Notwithstanding any other provision hereof, the full value
of a participant's account, including not only his own
contributions and the earnings thereon, but the contributions of
the Company, and any earnings thereon, shall be fully vested in him
when and if the Plan shall at any time be terminated for any
reason, or upon the complete discontinuance of Company
contributions hereunder, or upon termination of employment of a
group of participants constituting a partial termination of the
Plan.
ARTICLE IX
Account Withdrawals
9.1 Optional Withdrawals. Commencing January 1, 1988, a
participant may elect to withdraw at any time all or any part of
the value of his accounts with respect to Fund I, Fund II and Fund
IV attributable to the participant's contributions made prior to
January 1, 1988, and, commencing September 1, 1993, a participant
may also elect to withdraw at any time all or any part of the value
of his accounts with respect to Fund V, Fund VI, Fund VII, Fund
VIII or Fund IX attributable to the participant's contributions
made prior to January 1, 1988. However, no withdrawal of any part
of Company contributions allocated to his account with respect to
Fund III shall be permitted except as provided in Paragraph 9.2;
and further provided that any withdrawal of a participant's
"elective account" referred to in Paragraph 3.1 shall be subject to
the restrictions of Paragraph 3.5. However, withdrawals pursuant
to this Paragraph may not be made by an individual who is an
alternate payee under a Qualified Domestic Relations Order and for
whom an account is being separately maintained.
9.2 Withdrawals for Financial Need. Commencing January 1,
1988, no withdrawal of funds for financial need shall be made
except as permitted pursuant to Paragraph 3.5 herein.
9.3 Penalty for Withdrawal. Commencing January 1, 1985, any
participant who withdraws funds will not be permitted to make
contributions for a period of six (6) months from the date of
withdrawal. All amounts withdrawn may be replaced, but not less
than all, within five (5) years of the date of withdrawal. No
forfeiture from his account with respect to Fund III shall occur as
a result of any such withdrawals effected after January 1, 1976 if
he shall be at least fifty percent (50%) vested. If the partici-
pant who makes a withdrawal is less than fifty percent (50%) vested
at the time of such withdrawal, he shall he shall forfeit the
dollar amount from his account with respect to Fund III equivalent
to fifty percent (50%) of the dollar amount his accounts with
respect to Fund I, Fund II and Fund IV (and, commencing September
1, 1993, Fund V, Fund VI, Fund VII, Fund VIII and Fund IX) are
reduced by virtue of said withdrawal, provided however, the amount
so forfeited from Fund III shall not exceed the total dollar value
of said participant's nonvested funds determined pursuant to
Paragraph 8.1 herein. The amount subject to such forfeiture shall
be set aside by the Trustees in an interest bearing account. If
the participant returns the full amount of his withdrawal to the
Trustees within five (5) years of the date of withdrawal, the full
value of the amount initially set aside in the interest account
shall thereupon be reinvested and restored to his account in Fund
III. The interest earned on such amount shall be treated as
interest earnings of Fund III for the benefit of all participants
in such Fund. In the event the amount withdrawn is not returned
within the time period referred to herein, the amount subject to
forfeiture shall be treated as a forfeiture in accordance with
Paragraph 11.1 of this Plan.
9.4 Time and Method of Payment. All payments under this
ARTICLE shall be made as soon as practicable after the next monthly
valuation following the giving of such written notice as shall be
prescribed by the Committee with respect to withdrawals pursuant to
Paragraph 9.1, or a decision of the Committee as provided with
respect to withdrawals pursuant to Paragraph 3.5, and shall be paid
either in cash or in shares of Kansas City Life Insurance Company
stock pursuant to this Plan. The funds shall reflect the value of
any withdrawal pursuant to the provisions of this ARTICLE IX.
9.5 Elective Account Loans. Commencing January 1, 1988, a
participant may request a loan to be made from his or her elective
account or accounts under such conditions and terms as shall be
approved from time to time by the Adminstrative Committee. Any
loan made pursuant to this Paragraph, when added to the outstanding
balance of all other loans made to the participant, shall be
limited to the lesser of:
(a) Fifty thousand dollars ($50,000.00) reduced by the excess
of the highest outstanding balance of loans to the parti-
cipant during the twelve (12) month period ending on the
day before the date on which such loan is made, over the
outstanding balance of loans to the participant on the
date on which such loan is made, or
(b) The greater of ten thousand dollars ($10,000.00) or one-
half (1/2) of the value of the participant's elective
accounts as of the valuation date coincident with or next
preceding the date as of which the loan is calculated.
Any such loan shall be made for a period not to exceed five
(5) years, and shall provide for a level amortization with payments
to be made not less often than quarterly. However, loans used to
acquire a primary residence of the participant may provide for
periodic repayments over a reasonable period of time that may
exceed five (5) years.
No loan shall be granted to any participant or his beneficiary
that will provide for a repayment period extending beyond the
participant's normal retirement date. Any loan made pursuant to
this Paragraph shall result in the reduction of the participant's
accounts reflecting the dollar amount loaned based on the monthly
valuation on which such loan is effected. A reasonable rate of
interest may be charged, as established by the Administrative
Committee, and such interest payments shall be treated as earnings
of the borrower's account. Minimum loan repayments shall be made
by payroll deduction. The Administrative Committee shall have the
right to deny a participant's loan request. However, loans pur-
suant to this Paragraph will not be made to an individual who is an
alternate payee under a Qualified Domestic Relations Order and for
whom an account is being separately maintained.ARTICLE X
Distributions
10.1 Distribution of Full Value of Accounts. A participant
shall be entitled to the full value of all of his accounts in all
Funds upon termination of his employment by reason of death or
retirement, in which event such accounts of such participant shall
be fully vested in him.
10.2 Termination. If prior to the termination of the Plan or
the complete discontinuance of Company contributions hereunder, in
either of which event a participant's accounts shall be fully
vested, an employee participant's termination of employment occurs
for any reason other than one of the events specified in Paragraph
10.1, and if such employee shall not thereafter be employed by any
affiliated corporation of the Company, such participant shall then
be entitled to receive his or her one hundred percent (100%) vested
interest in the full value of his account with respect to Fund I,
Fund II, Fund IV, Fund V, Fund VI, Fund VII, Fund VIII and Fund IX
and that percentage of his or her vested interest in the value of
his account with respect to Fund III as authorized by Paragraph 8.1
herein.
Any amount not vested at the time of such termination shall
immediately be forfeited. Such forfeited amount shall then be used
to reduce the amount of Company contributions in accordance with
Paragraph 11.1 herein. If the terminated participant returns to
his status of employment with the Company or any of its affiliated
corporations, and is otherwise fully qualified to participate, and
if the terminated participant repays, before the earlier of five
(5) years after the first date on which the participant is re-
employed or the close of the first period of five (5) consecutive
one (1) year breaks in service commencing after the withdrawal, the
amount of the distribution, if any, he received from his account
with respect to Fund III at the time of his termination of
employment, the Company shall restore the forfeited amount, without
any gain or loss, to his Fund III account on the valuation date of
the month in which such repayment occurs. The repaid amount shall
also be similarly restored to an accounted for in Fund III.
10.3 Method of Distribution. All distributions provided
under this ARTICLE upon termination of employment, unless elected
otherwise pursuant to the written request of the participant, or
the written request of said participant's beneficiary if said
participant shall not be living, shall be in the form of a lump sum
payment. If the payment is made as a result of the death of the
participant, the payment shall be made to the surviving spouse of
the participant, if any, unless the participant and the spouse have
requested a distribution in any other form as to any other benefi-
ciary. Any such request shall be written and on forms prescribed
by the Administrative Committee and made within sixty (60) days of
termination of employment. Requests may be made for distribution
in one (1) of the following methods:
(a) By the purchase of a nontransferable annuity providing
for retirement payments to be made in equal monthly
installments for a period of one hundred twenty (120)
months certain and for the remainder of his lifetime. If
the annuity contract provides for the continuance of
annuity payments after the participant's death to a
beneficiary other than the participant's spouse, the
actuarial value of such death benefit at the time the
contract is purchased shall be less than the value of the
participant's annuity. If the annuity requested is for
the benefit of a spouse, it shall be a single premium
nontransferable annuity contract in the form of a fifty
percent (50%) contingent annuity under which the
participant's spouse is named as the contingent
annuitant.
(b) In the event that a lump sum payment shall be requested,
the party entitled thereto shall have the further right
to require that shares of Kansas City Life Insurance
Company stock be issued to him as a part of said payment,
in accordance with the following formula: He shall have
the right to withdraw the number of said shares equal to
the value that is derived by multiplying the percentage
that his account in Fund III divided by the total of all
accounts in Fund III equals, by the value of all Kansas
City Life Insurance Company stock in Fund III. He shall
also be entitled to any such stock purchased for his
account in Fund II, the amount thereof to be determined
in accordance with the above formula as applied to Fund
II. He shall also be entitled to receive the number of
shares of such stock which can be purchased with the
value of his account with respect to Fund I Fund IV, Fund
V, Fund VI, Fund VII, Fund VIII and Fund IX.
(c) The Administrative Committee of the Plan, or its
delegate, shall provide a participant who is entitled to
receive a joint and survivor annuity, the information in
nontechnical language, which will inform him of the
availability of the election and a general description of
the joint and survivor annuity, as well as an explanation
of the circumstances in which it will be provided if a
contrary election is not made. The eligible participant
shall also be advised of the dollar difference resulting
from his election and that he may obtain additional
information upon request. The participant shall be
permitted to make his election during a period of at
least ninety (90) days after he is furnished with the
necessary information and which ends prior to the
commencement of benefits. If the participant requests
additional information, the election period must include
at least ninety (90) days after such information is
furnished. The Committee, however, may provide that the
additional information must be requested within sixty
(60) days after the original information as to the
election is first furnished to the participant. The
election is to be witnessed by a plan representative or
notary public, acknowledging the effect of the election
and any specific non-spouse beneficiary, including any
class of beneficiary or any contingent beneficiary
designated under the form of benefit elected. Any
spousal consent shall be irrevocable unless revocation
shall be agreed to by the participant. It is intended
that no election period shall extend beyond the par-
ticipant's retirement date.
10.4 Commencement of Distribution. All distributions shall
be made or commenced to be made as soon as practicable and within
sixty (60) days after the valuation date coincident with or next
following the occurrence of one of the distribution events
described in this ARTICLE X. Upon written notice to the Committee
no later than the end of the calendar month following the month in
which termination occurs, a participant (or, in case of death, his
beneficiary), entitled to a lump sum payment may make an
irrevocable election to receive the value of his distribution on
January 31st of the next succeeding calendar year. Notwith-
standing, no distribution of three thousand five hundred dollars
($3,500.00) or more shall be made to a participant unless the
participant's spouse, if married, shall have consented in writing
to such distribution, all in accordance with the provisions of
I.R.C. Section 411 and related regulations.
10.5 Valuation. The value of a participant's accounts with
respect to Fund I, Fund II, Fund III, Fund IV, Fund V, Fund VI,
Fund VII, Fund VIII and Fund IX upon termination shall be the value
on the valuation date in January of the year elected pursuant to
Paragraph 10.4, except that the valuation of any shares of stock of
Kansas City Life Insurance Company shall be determined by the
provisions of Paragraph 4.2 herein. If such election is not so
made, such value shall be determined on the valuation date coin-
cident with or next following the date the participant (or, in case
of death, his beneficiary) elects, within the election period
specified in Paragraph 10.4 above, to receive his distribution, or
the receipt by the Trustees of notice of said participant's
termination, whichever shall occur later.
10.6 Facility of Payment. If the Committee shall receive
evidence satisfactory to it that a participant, retired participant
or beneficiary is physically or mentally incompetent to receive any
payment which shall be due hereunder and to give a valid release
therefor and that another person or an institution is then main-
taining or has custody of such participant, retired participant, or
beneficiary, and that no guardian, committee or other represen-
tative of the estate of such participant, retired participant or
beneficiary, shall have been duly appointed, the Committee may, at
its option, make payments otherwise payable to such participant,
retired participant or beneficiary, to such other person or
institution, and the release of such other person or institution
shall be valid and complete discharge for such payments.
10.7 Beneficial Designation. Any participant or retired
participant shall have the right to designate a new beneficiary at
any time by filing with the Committee a written request for such
change, but any such change shall become effective only upon
receipt of such request by the Committee, and provided that any
change of beneficiary to a person other than a surviving spouse
must be consented to in writing by said participant's spouse. Upon
receipt by the Committee of such request the change shall relate
back to and take effect as of the date such participant signs such
request whether or not such participant is living at the time the
Committee receives such request.
If there be no designated beneficiary living or in effect at
the death of such participant when any payment hereunder shall be
payable to the beneficiary, then such payment shall be made as
follows: To such participant's wife or husband, if living; if not
living, to such participant's then living lineal descendants, in
equal shares, per stirpes; if none survives, to such participant's
surviving parents, equally; if neither survives, to such partici-
pant's executors or administrators.
10.8 Fractional Shares. With respect to any distribution of
stock pursuant to the provisions of this Plan, a participant shall
be entitled to receive the number of whole shares which the value
of his account equals and the balance of said account value in
cash.
ARTICLE XI
Application of Forfeitures
11.1 Any of the assets attributable to Company contributions,
reflected in the value of Fund III, which shall be forfeited by a
participant with respect to his account in Fund III pursuant to the
provisions of Paragraphs 9.3 and 10.2 herein, shall be applied, as
soon as practicable, to reduce the amount of Company contributions
required by this Plan. Shares of Kansas City Life Insurance
Company stock applied to reduce the amount of any Company contri-
bution for any month shall be valued in accordance with the
procedures set forth hereinbefore on the date of such application.
ARTICLE XII
Administrative Committee
12.1 Membership. The Administrative Committee, sometimes
herein referred to as the "Committee", shall consist of a number of
persons, not less than three (3) nor more than five (5), designated
by the Executive Committee of the Company, who shall serve terms of
one (1) year or until their successors are designated, and said
Committee shall have the responsibility for the general adminis-
tration of the Plan and for carrying out the provisions of the Plan
in accordance with its terms. The Committee shall have absolute
discretion in carrying out its responsibilities.
12.2 The Committee may appoint from its members such com-
mittees with such powers as it shall determine; may authorize one
(1) or more of its number or any agent to execute or deliver any
instrument or make any payment on its behalf; and may utilize
counsel, employ agents and provide for such clerical and accounting
services as it may require in carrying out the provisions of the
Plan.
12.3 The Committee shall hold meetings upon such notice, at
such place or places, and at such time or times as it may from time
to time determine.
12.4 The action of a majority of the members expressed from
time to time by a vote in a meeting or in writing without a meeting
shall constitute the action of the Committee and shall have the
same effect for all purposes as if assented to by all members of
the Committee at the time in office.
12.5 No member of the Committee shall receive any compensa-
tion for his services as such, and, except as required by law, no
bond or other security shall be required of him in such capacity in
any jurisdiction.
12.6 Subject to the limitations of this Plan and Trust, the
Committee from time to time shall establish rules or regulations
for the administration of the Plan and the transaction of its
business. The Committee shall have full and complete discretionary
authority to construe and interpret the Plan and decide any and all
matters arising hereunder, except such matters which the Executive
Committee of the Company from time to time may reserve for itself,
including the right to remedy possible ambiguities, inconsistencies
or omissions. All interpretations, determinations and decisions of
the Committee or the Executive Committee of the Company in respect
of any matter hereunder shall be final, conclusive and binding on
all parties affected thereby. The Committee shall, when requested,
submit a report to the Executive Committee of the Company giving a
brief account of the operation of the Plan and the performance of
the various funds and accounts established pursuant to the Plan.
12.7 Claims Procedure. The Administrative Committee shall
have full and complete discretionary authority to make all
determinations as to the right of any person to a benefit. Any
denial by the Committee of a claim for benefits under this Plan by
a participant or a beneficiary shall be stated in writing by the
Committee and delivered or mailed to the participant or the
beneficiary, whichever is appropriate; and such notice shall set
forth the specific reason for the denial, written to the best of
the Committee's ability in a manner that may be understood without
legal or actuarial counsel. In addition, the Committee shall
provide a reasonable opportunity to any participant or beneficiary
whose claim for benefits has been denied for a review of the
decision denying the claim.
12.8 Any member of the Committee may resign by giving notice
to the Executive Committee at least fifteen (15) days before the
effective date of his resignation. Any Committee member shall
resign upon request of the Executive Committee. The Executive
Committee shall fill all vacancies on the Committee as soon as is
reasonably possible after a resignation takes place, and until a
new appointment takes place, the remaining members of the Committee
shall have authority to act, if approved by either a majority of
the remaining members or by two (2) members, whichever number is
lesser.
ARTICLE XIII
Amendment and Termination
13.1 Amendment. Kansas City Life Insurance Company reserves
the right at any time, and from time to time, and retroactively if
deemed necessary or appropriate to conform with governmental
regulations or other policies, to modify or amend, in whole or in
part, any or all of the provisions of this Plan and Trust by
adoption of a written resolution by the Board of Directors of
Kansas City Life Insurance Company, or the Executive Committee of
the Board of Directors; provided that no such modification or
amendment shall make it possible for any part of the contributions
of the Company, or any other funds of the Trust, to be used for, or
diverted to, purposes other than for the exclusive benefit of
participants, retired participants, or their beneficiaries. Except
as may be required to conform with governmental regulations, no
such amendment shall adversely affect the rights of any participant
with respect to contributions made by him prior to the date of such
amendment.
13.2 Termination. This Plan and Trust is purely voluntary on
the part of the Company, and Kansas City Life Insurance Company
reserves the right to terminate the Plan and the Trust provided
herein by adoption of a written resolution by the Board of
Directors of Kansas City Life Insurance Company, or the Executive
Committee of the Board of Directors. Upon termination of, or upon
the complete discontinuance of contributions within the meaning of
Section 401(a)(7) of the Internal Revenue Code, participant's
accounts shall become fully vested and nonforfeitable and distri-
bution shall be made as promptly as possible in accordance with the
directions of the Committee.
13.3 Merger. This Plan and Trust shall not be merged or
consolidated with, nor shall any assets or liabilities be
transferred to any other Plan or Trust, unless the accrued benefit
of each participant, if the Plan and Trust were terminated
immediately after such action, would be equal to or greater than
the accrued benefit to which such participant would have been
entitled if this Plan and Trust had been terminated immediately
before such action. ARTICLE XIV
The Trust
14.1 Number of Trustees. There shall be three (3) Trustees
for this Trust with the Trustees hereinbefore named being the
original Trustees.
14.2 Trustees shall Receive Sums Paid. The Trustees shall
accept and receive all sums of money paid to them from time to time
by the Company, and shall hold, invest, reinvest, manage and admin-
ister such monies and the increment, increase, earnings and income
thereof as a Trust for the exclusive benefit of the employees and
agents participating in the Plan, and their beneficiaries. All
income and earnings of the Trust shall be accumulated by the
Trustees and by them held, invested and reinvested as a part of the
principal of the said Trust.
14.3 Investment of Funds.
(a) Except as hereinafter provided with respect to the cash
reserve, the Trustees shall invest and reinvest the prin-
cipal and income of the Trust in their discretion in such
securities, common and preferred stocks, real estate
mortgages, debentures, bonds, promissory notes, real
estate, real estate improvements, leaseholds or any other
income-producing properties or securities, real or
personal, within or without the State of Missouri, and
other investments as the Trustees shall, after investi-
gation, believe to be sound and suitable investments for
this Trust, although the same may not be of the character
permitted for Trustee's investments by the Laws of the
State of Missouri. The Trustees are specifically
empowered to invest the Trust assets in the capital stock
of Kansas City Life Insurance Company, including but not
limited to, its treasury stock.
(b) The Trustees may retain in cash so much of the Trust
assets as they may deem advisable.
(c) The Trustees may sell property held by the Trust at
either public or private sale, for cash or on credit, at
such times as they may deem appropriate; they may
exchange such property, and they may grant options for
the purchase or exchange thereof.
(d) The Trustees may consent to and participate in any plan
of reorganization, consolidation, merger, extension or
other similar plan affecting property held by the Trust;
they may consent to any contract, lease, mortgage,
purchase, sale or other action by any corporation
pursuant to any such plan; they may accept and retain
property issued under any such plan, even though it would
not be eligible as a new investment under the provisions
of this Section.
(e) The Trustees may deposit property held in the Trust with
any protective, reorganization or similar committee, and
may delegate discretionary power thereto to pay its
reasonable share of such committee's expenses and com-
pensation and any assessments levied with respect to any
property so deposited.
(f) The Trustees may exercise all conversion and subscription
rights pertaining to property held in the Trust.
(g) The Trustees may exercise all voting rights with respect
to property held in the Trust, and in connection there-
with grant proxies discretionary or otherwise, all in
accordance with the provisions of this Plan and Trust.
(h) The Trustees may cause securities and other property to
be registered and held in their names, the name of any
one (1) of them, or in the name of their nominee.
(i) The Trustees may borrow money for the purposes of the
Trust, and pledge or mortgage securities or other assets
owned by the Trust as security for the payment thereof.
(j) The Trustees may compromise, compound and settle any debt
or obligation due to or from them as Trustee; they may
reduce the rate of interest on any obligation due them as
Trustee; they may extend the time of payment of both
interest and principal, or otherwise modify the terms of
any obligation due them as Trustee; upon default of any
obligation due them as Trustee, they may foreclose or
otherwise enforce any obligation belonging to the Trust.
(k) The Trustees may generally do all such acts, execute all
such instruments, take all such proceedings and exercise
all such rights and privileges with relation to property
belonging to the Trust as if the Trustees were the
absolute owners thereof.
14.4 Approval of Investments. Before making any new
investment or reinvestment of any funds of this Trust, the Trustees
shall submit to the Executive Committee of the Company, or its
designated subcommittee, a list of such securities in which it
proposes to invest such funds and the amount proposed to be
invested in each security, and the Trustees shall proceed to
purchase, or refrain from purchasing, such securities in accordance
with the acceptance or rejection, in whole or in part, of such
proposals by the Executive Committee of the Company, or its desig-
nated subcommittee. Acceptance or rejection of such proposals, or
any of them by the said Committee, shall be signified in writing
and delivered to the Trustees within thirty (30) days of the
submission of such proposals by the Trustees, provided however,
that if no written acceptance or rejection of such proposals, or
any of them, shall be so delivered by the said Committee within the
time herein limited therefor, the Trustees shall be warranted and
protected in assuming that all of the proposed investments which
have not been specifically rejected as aforesaid, meet with the
complete approval of said Executive Committee or its designated
subcommittee.
14.5 Cash Reserve. The Trustees may maintain a cash reserve
in such amount as to provide for current distribution of benefits
under the Plan. Such cash reserve may consist of uninvested
contributions of the Company and participants in the Plan, or of
the proceeds of the sale of investments of the Trust. All of the
funds held in such cash reserve as well as all funds and securities
and assets belonging to the Trust shall be safely kept by the
Trustees on deposit or in the vaults of a bank or trust company
selected and designated by the Board of Directors or the Executive
Committee of the Company.
14.6 Disbursement of Funds. Disbursement of the funds of
this Trust shall be made by the Trustees only to or for the benefit
of the participants in the Plan or their beneficiaries, and only at
the time, in the amount and in the manner prescribed in written
instructions of the Administrative Committee delivered by such
Committee to the Trustees. The Trustees are empowered to sell
securities belonging to the Trust to meet said disbursements when
the cash reserve is sufficient.
14.7 Instructions to Trustees. The Trustees shall not be
obligated or required to determine whether any instructions issued
to them by the Administrative Committee are in fact so issued in
accordance with the terms of the Plan or the powers and duties
thereunder of said Committee.
14.8 Fiduciary Insurance. The Trustees or the Administrative
Committee shall have the right to purchase insurance on behalf of
themselves or anyone acting in a fiduciary capacity with respect to
the Plan and Trust, to cover liability or losses occurring by
reason of the act or omission of a fiduciary, if such insurance
permits recourse by the insurer against the fiduciary in the case
of a breach of a fiduciary obligation by such fiduciary.
14.9 Accounting by Trustees. Each year the Trustees shall
render to the Company an account of their administration of the
Trust for the year ending on the preceding 31st of December. The
written approval of said account by the Board of Directors or the
Executive Committee of the Company shall, as to all matters and
transactions stated therein or shown thereby, be final and binding
upon all persons who are then or who may thereafter become
interested in this Plan and Trust.
14.10 Compensation. No Trustee shall receive any compensa-
tion for his services as such Trustee. In the administration of
said Trust the Trustees, if they deem it advisable, may employ an
executive director, secretary or treasurer and fix reasonable
compensation therefor, and a Trustee may act as such executive
director, secretary or treasurer and receive the compensation so
fixed. The Trustees may in their discretion employ clerical help,
actuaries, accountants, attorneys or other necessary personal
services of a person or corporation as may be necessary to properly
administer, defend and protect the Trust, and reasonable compensa-
tion for said services may be paid by the Trustees from the Trust
in the event the Company does not elect to pay for such services.
Any taxes that may be levied against said Trust shall be paid by
the Trustees from the Trust assets after liability for said taxes,
if any, has been established, and in determining the liability for
taxes the Trustees are specifically authorized to use their own
discretion in contesting taxes claimed to be due against said
Trust, and said Trustees may employ counsel for such purposes and
pay said counsel fees from the Trust assets in the event the
Company does not elect to pay said costs and fees.
14.11 Trustees and Vacancies. The Trustees administering
this Trust shall at all times be Officers of the Company, and any
Trustee may at any time be removed from the office of Trustee, with
or without cause, by the Board of Directors or the Executive
Committee of the Company. The Trustees named herein shall serve as
such Trustees until their resignation, death or removal by the
Board of Directors or the Executive Committee of the Company. When
any Trustee ceases to be an Officer of the Company he automatically
ceases to be a Trustee. Resignation of a Trustee shall be by
written notice given to the Board of Directors or the Executive
Committee of the Company. Whenever a vacancy occurs by resigna-
tion, death or removal of one (1) or more of the Trustees, the
Board of Directors or the Executive Committee shall promptly fill
said vacancy or vacancies so created by naming a successor Trustee
or successor Trustees possessing the qualifications herein
prescribed. All successor Trustees shall have the same powers in
connection with said Trust as the initial Trustees have, and they
shall be subject to the same limitations and directions as
prescribed herein for the initial Trustees.
14.12 Rules. The Trustees may make proper rules for carrying
out the purposes of the Trust, and may amend said rules from time
to time. A majority of the Trustees shall constitute a quorum, and
the action taken by a quorum shall be controlling and shall be
deemed the act of the Trustees. The Trustees may designate any one
(1) of their number to act as chairman or presiding officer. Any
one (1) of the Trustees shall be and is hereby authorized to affix
his signature as the signature of all of the Trustees when such may
be desirable in the performance of their duties pursuant hereto.
This Plan and Trust shall be construed and enforced according to
the Laws of the State of Missouri, and all provisions thereof shall
be administered according to the laws of such state. Any suit at
law or in equity brought against the Trustees or the Company by any
person, firm or corporation, including the participants in the
Plan, must be first instituted in Jackson County, Missouri, which
County and State is the situs of the parties hereto and the only
jurisdiction within which this Plan and Trust is to be administered
or located.
ARTICLE XV
General Provisions
15.1 Expenses. The Company shall pay all expenses incurred
in administering the Plan and managing the Trust assets. The
Company shall not pay any brokerage fees, commissions, stock
transfer taxes and other charges and expenses in connection with
the purchase and sale of securities under the Plan.
15.2 Source of Payment. Benefits pursuant to the Plan shall
be payable only out of the assets of the Trust or pursuant to any
qualified nontransferable annuity purchased pursuant to the
provisions of ARTICLE X. No person shall have any right under the
Plan with respect to the assets of the Trust, or against any
Trustee, insurance company, or the Company, except as specifically
provided for herein.
15.3 Inalienability of Benefits. The interest hereunder of
any participant, retired participant or beneficiary, except as may
be required by a Qualified Domestic Relations Order defined in
Section 414(p) of the Internal Revenue Code, shall not be
alienable, either by assignment or by any other method, and to the
maximum extent permissible by law, shall not be subject to being
taken, by any process whatever, by the creditors of such partici-
pant, retired participant or beneficiary.
15.4 No Right to Employment. Nothing herein contained nor
any action taken under the provisions hereof shall be construed as
giving any employee the right to be retained in the employment of
the Company.
15.5 Unknown Heirs. If within four (4) years after any
distribution becomes due to a participant, retired participant or
his beneficiary, the same shall not have been claimed, provided due
care shall have been exercised in attempting to make such distri-
bution, the amount thereof shall be treated as forfeited and
applied as provided for in ARTICLE XI.
15.6 Accrued Benefit. The term "accrued benefit" shall mean
the value of a participant's account or accounts with respect to
all funds in this Plan.
15.7 Uniform Administration. Whenever in the administration
of the Plan any action is required by the Committee, such action
shall be uniform in nature as applied to all persons similarly
situated and no such action shall be taken which will discriminate
in favor of shareholders of the Company, highly compensated
participants or participants whose principal duties consist of
supervising the work of others.
15.8 Beneficiary. The word "beneficiary" shall be deemed to
include the estate of the participant, dependents of the partici-
pant, persons who are the natural objects of the participant's
bounty, and any person designated by the participant to share in
the benefits of the Plan and Trust after the death of the
participant. Wherever the rights of participants are stated or
limited herein, their beneficiaries shall be bound thereby.
15.9 Severability. In the event that any provision of this
Plan and Trust shall be held invalid or illegal for any reason,
such determination shall not affect the remaining provisions of
this Plan, but this Plan shall be construed and enforced as if such
invalid or illegal provision had never been included in the Plan.
This Plan shall be construed in accordance with the Laws of the
State of Missouri.
15.10 Articles. Titles of Articles are for general infor-
mation only and this Plan shall not be construed by reference to
such titles.
15.11 Gender. Words used in the masculine gender shall be
read and construed to include the feminine gender.
15.12 Plural. Wherever required, the singular of any word in
this Plan and Trust shall include the plural and the plural may be
read in the singular.
15.13 Disability. The term "disability" as used in this
Plan means a physical or mental condition of a participant which
results in the receipt of benefits by such participant pursuant to
the provisions of either the Kansas City Life Disability Plan or
the Sunset Life Disability Plan.
15.14 Initial Participation Date. The "initial participation
date" shall mean the first (1st) day of the first (1st) month
designated by either the Board of Directors or the Executive
Committee of the Company for the commencement of contributions and
the administration of this Plan.
15.15 Retirement Dates.
(a) Commencing January 1, 1988, the normal retirement date
for all employees participating in this Plan shall be the
earlier of the first (1st) day of the month following
attainment of sixty (60) years of age, or the first (1st)
day of the month following attainment of fifty-five (55)
years of age and completion of five (5) years of service.
For purposes of determining the completion of five (5)
years of service, the years of service of an employee of
Old American Insurance Company prior to November 1, 1991
shall not be taken into account.
(b) For the purposes of this Plan, a participant who reaches
his normal retirement date shall be deemed to have
retired on such date and shall thereupon become entitled
to the retirement benefits herein, except as provided in
Subparagraph (c). The value of all contributions
allocated to his respective accounts shall be one hundred
percent (100%) vested.
(c) By mutual agreement of the participant and the Company,
a participant may continue his employment for purposes
herein beyond his normal retirement date, and the
participant will commence receiving benefits on his
actual retirement date; provided, however, distributions
to a five percent (5%) owner of the Company as defined in
the Internal Revenue Code shall commence no later than
April 1st of the calendar year following the calendar
year in which he attains age seventy and one-half (70 1/2),
and distributions to other participants shall commence no
later than April 1st of the year in which such other
participant attains the age of seventy and one-half
(70 1/2), unless such other participant shall have attained
age seventy and one-half (70 1/2) prior to January 1, 1988
and was not a five percent (5%) owner at any time during
the period beginning with the Plan year ending with the
year in which he attained age sixty-six and one-half
(66 1/2) and any subsequent year. Contributions may be
continued until such actual retirement date at the option
of the participant. Effective January 1, 1989, the
minimum distribution and the minimum distribution
incidental benefit requirements of Internal Revenue Code
Proposed Regulations 1.401(a)(9)-1 and 1.401(a)(9)-2 are
hereby incorporated by reference.
15.16 Initial Qualification. The Company reserves the right
to have all its contributions returned to it free of this Trust,
and to terminate said Plan and Trust, if the Trust does not
initially meet the qualification requirements of the Internal
Revenue Code.
15.17 Company. The term "Company" means Kansas City Life
Insurance Company, a Missouri Corporation, Sunset Life Insurance
Company of America, a Washington Corporation, Old American Insur-
ance Company, a Missouri Corporation, and any other subsidiary
corporation of Kansas City Life Insurance Company, any or all of
which may sometimes be referred to herein as affiliated corpora-
tions.
15.18 Employee. The term "employee" shall mean any person
employed by Kansas City Life Insurance Company or any subsidiary
corporation under the rules of common law, and shall not include
agents, general agents, consultants or other independent
contractors, or, effective January 1, 1989, leased employees as
defined in Section 414(n) or (o) of the Internal Revenue Code.
15.19 Agents. Commencing January 1, 1990, no life insurance
salesman of Kansas City Life Insurance Company, sometimes referred
to herein as "agent" shall be eligible to participate. Accounts of
all participating agents shall be finally valued on the last
business day of December, 1989, shall be one hundred percent (100%)
vested, and shall be paid to them in January, 1990 in such form as
permitted by the provisions of this Plan. No further deferral in
this Plan shall be permitted.
15.20 Company Stock. The term "Company stock" shall mean
shares of the common capital stock of Kansas City Life Insurance
Company.
15.21 Executive Committee. Wherever in the Plan and Trust
the term "Executive Committee" is used, it shall be taken to mean
only the Executive Committee of the Board of Directors of Kansas
City Life Insurance Company.
15.22 Board of Directors. Wherever in the Plan and Trust the
term "Board of Directors" is used, it shall be taken to mean only
the Board of Directors of Kansas City Life Insurance Company.
15.23 Maximum Limitation. Commencing January 1, 1983, in no
event shall the sum of the annual additions to a participant's
account for any Plan year exceed the lesser of:
(a) Thirty thousand dollars ($30,000.00) (or, if greater one
fourth (1/4) of the dollar limitation in effect under Sub-
section (b)(1)(A) of Section 415 of the Internal Revenue
Code), or
(b) Twenty-five percent (25%) of such participant's compen-
sation.
15.24 Annual Additions. For the purposes of this Plan,
"annual addition" shall be the sum for any year of the Company
contributions plus the amount of any employee contributions, plus
the forfeitures.
15.25 Annual Additions Reduction. If any participant is a
participant under any other defined contribution plan maintained by
the Company, the total of the annual additions to such partici-
pant's account from all such defined contribution plans shall not
exceed the limitations set forth in Paragraph 15.23. If it is
determined that as a result of the limitation set forth in the
preceding sentence, the annual additions to the participant's
account in this Plan are excessive, a reduction of such shall be
effected by a return to the participant of a dollar amount from his
elective accounts, which with an equal amount of the Company's
contributions accounted for in accordance with the following
formula, eliminates such excess: The excess amounts in the
participant's Company account (Fund III) must be used to reduce
Company contributions for the next limitation year (and succeeding
limitation years, as necessary) for that participant if that
participant is covered by the Plan as of the end of the limitation
year. However, if the participant is not covered by the Plan as of
the end of the limitation year, then the excess amounts must be
held in unallocated in a suspense account for the limitation year
and allocated and reallocated in the next limitation year to all of
the remaining participants in the Plan in accordance with the rules
set forth in Subparagraph (6)(i) of Regulation Section 1.415-6(b).
Furthermore, the excess amounts must be used to reduce the Company
contributions for the next limitation year (and succeeding limi-
tation years, as necessary) for all of the remaining participants
in the Plan. For purposes of this Paragraph, excess amounts may
not be distributed to participants or former participants.
15.26 Annual Additions Reduction. If any participant is a
participant under a defined benefit plan maintained by the Company,
the sum of the defined benefit plan fraction for a Plan year and
the defined contribution plan fraction for that year shall be no
greater than one (1.00). If it is determined that the limitation
set forth in the preceding sentence has been exceeded, the
numerator of the defined benefit plan fraction shall be adjusted by
freezing or adjusting the rate of benefit authorized by the defined
benefit plan so that the sum of both fractions shall not exceed one
(1) for the respective participant.
15.27 Retirement Plan. As used in this Section, the words
"retirement plan" shall mean:
(a) Any profit sharing, pension or stock bonus plan described
in Section 401(a) and 501(a) of the Internal Revenue
Code;
(b) Any annuity plan or annuity contract described in Section
403(a) or 403 (b) of the Internal Revenue Code;
(c) Any qualified bond purchase plan described in Section
405(a) of the Internal Revenue Code; and
(d) Any individual retirement account, individual retirement
annuity or retirement bond described in Section 408(a),
408(b) or 409 of the Internal Revenue Code.
15.28 Defined Contribution Plan. As used in this Section,
the words "defined contribution plan" shall mean a retirement plan
which provides for an individual account for each participant and
for benefits based solely on the amount contributed to the par-
ticipant's account and any income, expenses, gains and losses, and
any forfeitures of accounts of other participants which may be
allocated to such participant's accounts.
15.29 Defined Benefit Plan. As used in this Section, the
words "defined benefit plan" shall mean any retirement plan which
is not a defined contribution plan.
15.30 Defined Benefit Plan Factor. As used in this Section,
the words "defined benefit plan fraction" shall mean, for any Plan
year, a fraction,
(a) the numerator of which is the projected annual benefit of
the participant, that is, the annual benefit to which he
would be entitled under the terms of the defined benefit
plan on the assumptions that he continues employment
until his normal retirement date as determined under the
terms of the defined benefit plan, that his compensation
continues at the same rate as in effect in the Plan year
under consideration until his normal retirement date and
that all other relevant factors used to determine bene-
fits under such defined benefit plan remain constant as
of the current Plan year for all future Plan years, under
all defined benefit plans maintained by the Company,
determined as of the close of the Plan year; and,
(b) the denominator of which is the lesser of: (i) the
maximum dollar limit for such year (for example, ninety
thousand dollars ($90,000.00) for 1983) times 1.25, or
(ii) the percentage of compensation limit for such year
times 1.4.
15.31 Defined Contribution Plan Factor. As used in this
Section, the words "defined contribution plan fraction" shall mean,
for any Plan year, a fraction,
(a) the numerator of which is the sum of the annual additions
to the participant's account under all defined contribu-
tion plans maintained by the Company in that Plan year;
and,
(b) the denominator of which is the sum of the lesser of the
following amounts, determined for the year and for each
prior year of service with the Company: (i) the product
of 1.25 multiplied by the dollar limitation in effect for
the year, or (ii) the product of 1.4 multiplied by the
percentage of compensation limit (IRC 415(e)(3) as
amended).
(c) In computing the defined contribution plan fraction
above, for years ending after December 31, 1982, at the
election of the Company, the amount to be taken into
account for all years ending before January 1, 1983, may
be computed to be an amount equal to the denominator of
the fraction, as in effect for the year ending in 1982,
multiplied by a transition fraction,
1. the numerator of which is the lesser of (i) fifty-
one thousand eight hundred seventy-five dollars
($51,875.00), or (ii) 1.4 multiplied by twenty-five
percent (25%) of the participant's compensation for
the year ending in 1981; and,
2. the denominator of which is the lesser of (i)
forty-one thousand five hundred dollars
($41,500.00), or (ii) twenty-five percent (25%) of
the participant's compensation for the year ending
in 1981.
15.32 Affiliated Company Participation. Notwithstanding
anything in this Agreement to the contrary, no employee of any
subsidiary or affiliated corporation of Kansas City Life Insurance
Company shall have the right to make contributions to this Plan
unless such Plan shall have been adopted by the corporation for
which such employee is employed.
15.33 Highly Compensated Person. The term "highly compen-
sated person", for the purposes of this Plan, shall mean any
employee who at any time during the preceding year, or the lookback
year,
(a) was a five percent (5%) owner of the Company, or
(b) had compensation in excess of seventy-five thousand
dollars ($75,000.00) per year, or
(c) was in the highest paid twenty percent (20%) of the
employees of the Company (ranked on the basis of
compensation paid during such year) with compensation in
excess of fifty thousand dollars ($50,000.00) per year
(top-paid group), or
(d) was an officer with compensation in excess of fifty
percent (50%) of the amount in effect under IRC Section
415(b)(1)(A) for such year (counting at least one (1)
officer, regardless of compensation; but counting no more
than fifty (50), or if less, ten percent (10%) of all
employees or three (3) officers, whichever is greater).
In the case of the year for which the relevant determination
is being made, an employee not described in Subparagraph (b), (c)
or (d) for the preceding year (without regard to this Paragraph)
shall not be treated as described in Subparagraph (b), (c) or (d)
unless such employee is a member of the group consisting of the one
hundred (100) employees paid the greatest compensation during the
year for which such determination is being made.
The dollar amounts in Subparagraphs (b) and (c) shall be
adjusted at the same time and in such manner as permitted under
Code Section 415(d) and Regulations thereunder.
In determining who is a highly compensated person, all
employers required to be aggregated under Code Sections 414(b) (c),
(m) and (o) shall be taken into account as a single employer.
However, leased employees within the meaning of Code Sections
414(n) and (o) shall not be considered employees if these employees
are covered by a plan described in Code Section 414(n)(5) and are
not covered in any qualified plan maintained by the employer.
For purposes of this Paragraph, "lookback year" shall be the
twelve (12) month period immediately preceding the year for which
the relevant determination is being made, and the term "compensa-
tion" shall be compensation defined in Paragraph 3.2 including
additional amounts described in Code Sections 125, 402(e)(3),
402(h) and 403(b).
In addition, if a former employee separated from service prior
to the year for which the relevant determination is being made, and
was an active highly compensated person in the year of separation,
or in any year for which a relevant determination is made after
attaining fifty-five (55), the former employee was counted as a
highly compensated person, the former employee shall be treated as
an employee for purposes of determining the number of highly
compensated persons. However, if such former employee separated
from service prior to 1987, he will be treated as a highly
compensated person only if during the separation year (or the year
preceding the separation year) or any year after the employee
attained age fifty-five (55) (or the last year ending before the
employee's fifty-fifth (55th) birthday), he received compensation
in excess of fifty thousand dollars ($50,000.00) or was a five
percent (5%) owner.
For purposes of determining the number of employees in Sub-
paragraph (c), nonresident aliens shall not be treated as
employees. Employees who (1) have not completed six (6) months of
service, or (2) normally work less than seventeen and one-half
(17 1/2) hours per week, or (3) normally work less than six (6) months
during any year, or (4) have not attained age twenty-one (21) shall
also be excluded (but these latter employees will still be con-
sidered for purposes of identifying the particular employees in the
top-paid group).
If an employee is a "family member" of a five percent (5%)
owner or of a highly compensated employee who is one of the ten
(10) most highly compensated employees ranked on the basis of
compensation paid by the employer during such year, the employee
and the five percent (5%) owner or top ten (10) highly compensated
employees will be aggregated and treated as a single employee
receiving compensation and a plan contribution that is based on the
compensation or plan contribution of such employee and five percent
(5%) owner or top ten (10) highly compensated employee. For this
purpose, "family member" shall mean the employee's spouse and
lineal ascendants or descendants, and the spouses of the lineal
ascendants or descendants.
15.34 Direct Rollovers. The provisions of this Paragraph
shall be effective January 1, 1993 and apply to distributions after
January 1, 1993. Notwithstanding any provision of this Plan to the
contrary, a distributee may elect to have any portion of an
eligible rollover distribution paid directly to an eligible
retirement plan specified by the distributee in a direct rollover.
The Administrative Committee may prescribe the time and manner in
which this election is made.
As used in this Paragraph, "eligible rollover distribution",
"eligible retirement plan", "distributee", and "direct rollover"
shall mean:
(a) "Eligible rollover distribution" is any distribution of
all or any portion of the balance to the credit of the
distributee. However, an eligible rollover distribution
shall not include:
(i) any distribution that is one of a series of
substantially equal periodic payments (not
less frequently than annually) made for the
life (or life expectancy) of the distributee
or the joint lives (or joint life expec-
tancies) of the distributee and the
distributee's designated beneficiary, or for a
specified period of ten (10) years or more;
(ii) any distribution required under Code Section
401(a)(9); or
(iii) the portion of any distribution that is not
includible in gross income (determined without
regard to the exclusion for net unrealized
appreciation with respect to employer
securities.
(b) "Eligible retirement plan" is:
(i) an individual retirement account (described in
Code Section 408(a)) or individual retirement
annuity (described in Code Section 408(b)); or
(ii) an annuity plan (described in Code Section
403(a)); or
(iii) a qualified trust (described in Code Section
401(a)) that accepts the distributee's
eligible rollover distribution. However, in
the case of an eligible rollover distribution
to a surviving spouse, eligible retirement
plan shall mean only the items in (i) above.
(c) "Distributee" shall include an employee or former
employee. An employee's or former employee's surviving
spouse and the employee's or former employee's spouse or
former spouse who is an alternate payee under a qualified
domestic relations order (defined in Code Section 414(p))
are distributees with regard to the interest of the
spouse or former spouse.
(d) "Direct rollover" is a payment by the Plan to the
eligible retirement plan specified by the distributee.
ARTICLE XVI
Top Heavy Provisions
16.1 Compensation Limits. With respect to compensation as
defined in this Plan, for any Top Heavy Plan year, compensation in
excess of two hundred thousand dollars ($200,000.00), or such other
amount as the Secretary of the Treasury may designate, shall be
disregarded. Beginning January 1, 1989, compensation to be dis-
regarded shall be the amount stated in Paragraph 3.2. Furthermore,
for the purposes of this ARTICLE XVI, compensation is defined by
the provisions of Internal Revenue Code Regulation 1.415-2(d),
hereby incorporated by reference.
16.2 Key Employee. "Key employee" means any employee or
former employee (and his beneficiaries) who, at any time during the
Plan year or any of the preceding four (4) Plan years, is:
(a)An officer of the Company, as that term is defined within
the meaning of the regulations under Internal Revenue
Code Section 416. For the years 1984 through 1987, an
officer is not treated as a key employee if the officer
has an annual compensation of forty-five thousand dollars
($45,000.00) or less.
(b) One of the ten (10) employees owning (or considered as
owning within the meaning of Code Section 318) the
largest interests in all employers required to be aggre-
gated under Code Sections 414(b), (c), and (m). However,
an employee will not be considered a top ten (10) owner
for a Plan year if the employee earns less than thirty
thousand dollars ($30,000.00), or such other amount
adjusted in accordance with Code Section 415(c)(1)(A) as
in effect for the calendar year in which the determi-
nation date falls.
(c) A five percent (5%) owner of the Company. "Five percent
(5%) owner" means any person who owns (or is considered
as owning within the meaning of Code Section 318) more
than five percent (5%) of the total combined voting power
of all stock of the Company.
(d) A one percent (1%) owner of the Company having an annual
compensation from the Company of more than one hundred
fifty thousand dollars ($150,000.00). "One percent (1%)
owner" means any person who owns (or is considered as
owning within the meaning of Code Section 318) more than
one percent (1%) of the outstanding stock of the Company
or stock possessing more than one percent (1%) of the
total combined voting power of all stock of the Company.
In determining percentage ownership hereunder, employers
that would otherwise be aggregated under Code Sections
414(b), (c), and (m) shall be treated as separate
employers. However, in determining whether an individual
has compensation of more than one hundred fifty thousand
dollars ($150,000.00), compensation from each employer
required to be aggregated under Code Sections 414(b),
(c), and (m) shall be taken into account.
16.3 Non-Key Employee. "Non-key employee" means any employee
who is not a key employee.
16.4 Super Top Heavy Plan. "Super Top Heavy Plan" means, for
Plan years commencing after December 31, 1983, that, as of the
determination date, (1) the present value of accrued benefits of
key employees, or (2) the sum of the aggregate accounts of key
employees under this Plan and any Plan of the Company's aggregation
group, exceeds ninety percent (90%) of the present value of accrued
benefits or the aggregate accounts of all participants under this
Plan and any Plan of the Company's aggregation group.
16.5 Top Heavy Plan. "Top Heavy Plan" means, for Plan years
commencing after December 31, 1983, that, as of the determination
date, (1) the present value of accrued benefits of key employees,
or (2) the sum of the aggregate accounts of key employees under
this Plan and any Plan of the Company's aggregation group, exceeds
sixty percent (60%) of the present value of accrued benefits or the
aggregate accounts of all participants under this Plan and any Plan
of the Company's aggregation group.
16.6 Top Heavy Plan Year. "Top Heavy Plan year" means any
calendar year after December 31, 1983 in which the Plan is a top
heavy plan.
16.7 Top Heavy Plan Requirements.
(a) For any "Top Heavy Plan year", the following provisions
shall apply notwithstanding any other provision in this
Plan to the contrary:
1. Any person who is a participant in this Plan in any
year in which it shall be a "Top Heavy Plan" shall
have his or her benefits vested in accordance with
the following schedules: twenty percent (20%)
after two (2) years of service; forty percent (40%)
after three (3) years of service; sixty percent
(60%) after four (4) years of service; eighty
percent (80%) after five (5) years of service; and
one hundred percent (100%) after six (6) years of
service. Effective January 1, 1989, there shall be
no decrease in a participant's nonforfeitable
percentage in the event the Plan's status as top
heavy changes for any year. Further, if the
vesting schedule shifts in and out of the above
schedule for any year because the Plan's top heavy
status changes, such shift shall be considered an
amendment of the vesting schedule. If this occurs,
each participant with at least three (3) years of
service with the Company may elect to have his
nonforfeitable percentage determined without regard
to the shift. The election period will begin with
the date the deemed amendment is made and shall end
on the later of:
A. Sixty (60) days after the deemed amendment is
adopted;
B. Sixty (60) days after the deemed amendment is
effective; or
C. Sixty (60) days after the participant is
issued written notice of the deemed amendment
by the Administrative Committee.
2. Notwithstanding anything in this plan to the
contrary, for any Top Heavy Plan Year, the Company
shall make a minimum contribution for each non-key
employee equal to three percent (3%) of such non-
key employee's salary, which shall be invested and
accounted for in Fund III.
3. For any year in which this Plan is top heavy, each
non-key employee will receive a minimum contribu-
tion if the non-key employee has not separated from
service at the end of the top heavy year, regard-
less of whether the non-key employee has less than
one thousand (1,000) hours of service in such year.
Furthermore, such non-key employee shall receive
such minimum contribution regardless of his or her
level of compensation, and regardless of whether he
or she declines to make a mandatory personal
contribution. No such minimum contribution made by
the Company pursuant to these top heavy provisions
shall be subject to forfeiture if a non-key
employee withdraws his or her mandatory contri-
butions.
4. Notwithstanding the foregoing, so long as any non-
key employee is covered by both the Company's
Pension Plan and this Plan, the minimum
contribution required herein shall be satisfied by
the accrual of the defined benefit minimum by the
respective non-key employee for any top heavy year.
5. If the Company shall be maintaining both this Plan
and a defined benefit plan in any top heavy year, a
factor of 1.0 must be applied to the denominators
of the defined benefit and defined contribution
fractions.
16.8 Determination of Top Heavy Status.
(a) This Plan shall be a Top Heavy Plan for any Plan year
commencing after December 31, 1983, in which, as of the
determination date, (1) the present value of accrued
benefits of key employees, or (2) the sum of the
aggregate accounts of key employees under this Plan and
any Plan of an aggregation group, exceeds sixty percent
(60%) of the present value of accrued benefits or the
aggregate accounts of all participants under this Plan
and any Plan of an aggregation group.
If any participant is a non-key employee for any Plan
year, but such participant was a key employee for any
prior Plan year, such participant's present value of
accrued benefit and/or aggregate account balance shall
not be taken into account for purposes of determining
whether this Plan is a Top Heavy Plan (or whether any
aggregation group which includes this Plan is a Top Heavy
group).
(b) This Plan shall be a Super Top Heavy Plan for any Plan
year commencing after December 31, 1983, in which, as of
the determination date, (1) the present value of accrued
benefits of key employees, or (2) the sum of the aggre-
gate accounts of key employees under this Plan and any
Plan of an aggregation group, exceeds ninety percent
(90%) of the present value of accrued benefits or the
aggregate accounts of all participants under this Plan
and any Plan of an aggregation group.
(c) Aggregate account. A participant's aggregate account as
of the determination date is the sum of:
1. His participant's account balance as of the most
recent valuation occurring within a twelve (12)
month period ending on the determination date.
2. Contributions that would be allocated as of a date
not later than the determination date, even though
those amounts are not yet made or required to be
made.
3. Any Plan distributions made within the Plan year
that includes the determination date or within the
four (4) preceding Plan years. However, in the
case of distributions made after the valuation date
and prior to the determination date, such dis-
tributions are not included as distributions for
Top Heavy purposes to the extent that such
distributions are already included in the
participant's aggregate account balance as of the
valuation date. Notwithstanding anything herein to
the contrary, all distributions, including
distributions made prior to January 1, 1984, will
be counted.
4. Any employee contributions, whether voluntary or
mandatory. However, amounts attributable to tax
deductible qualified employee contributions shall
not be considered to be a part of the participants
aggregate account balance.
(d) "Aggregation group" means either a required aggregation
group or a permissive aggregation group as hereinafter
determined.
1. Required aggregation group. In determining a
required aggregation group hereunder, each Plan of
the Company in which a key employee is a parti-
cipant, and each other Plan of the Company which
enables any Plan in which a key employee
participates to meet the requirements of Code
Sections 401(a)(4) and 410, will be required to be
aggregated. Such group shall be known as a
required aggregation group, and shall include any
terminated plan which if it had not been terminated
would have been required to be included in the
aggregation group.
In the case of a required aggregation group, each
Plan in the group will be considered a Top Heavy
Plan if the required aggregation group is a Top
Heavy group. No Plan in the required aggregation
group will be considered a Top Heavy Plan if the
required aggregation group is not a Top Heavy
group.
2. Permissive aggregation group. The Company may also
include any other Plan not required to be included
in the required aggregation group, provided the
resulting group, taken as a whole, would continue
to satisfy the provisions of Internal Revenue Code
Sections 401(a) or 410. Such group shall be known
as a permissive aggregation group.
In the case of a permissive aggregation group, only
a Plan that is part of the required aggregation
group will be considered a Top Heavy Plan if the
permissive aggregation group is a Top Heavy group.
No Plan in the permissive aggregation group will be
considered a Top Heavy Plan if the permissive
aggregation group is not a Top Heavy Plan group.
3. Only those Plans of the Company in which the
determination dates fall within the same calendar
year shall be aggregated in order to determine
whether such Plans are Top Heavy Plans.
4. For purposes of determining the present value of
the cumulative accrued benefit for any employee, or
the amount of the account of any employee, the
value or amount shall be increased by the aggregate
distributions made with respect to such employee
under the plan during the five year period ending
on the determination date. The preceding sentence
also applies to distributions under a terminated
plan which if it had not been terminated would have
been required to be included in an aggregation
group. If any individual is a non-key employee
with respect to any plan for any plan year, but
such individual was a key employee with respect to
such plan for any prior plan year, any accrued
benefit for such employee (and the account of such
employee) shall not be taken into account. The
accrued benefit of an employee who has performed no
services for the Company during the five (5) year
period ending on the determination date will not be
taken into account.
(e) "Determination date" means (1) the last day of the
preceding Plan year, or (2) in the case of the first Plan
year, the last day of such Plan year.
(f) Present value of accrued benefit. In the case of a
defined benefit plan, a participant's present value of
accrued benefit shall be as determined under the
provisions of the applicable defined benefit plan.
(g) "Top Heavy group" means an aggregation group in which, as
of the determination date, the sum of:
1. The present value of accrued benefits of key
employees under all defined benefit plans included
in the group; and
2. The aggregate accounts of key employees under all
defined contribution plans included in the group,
exceeds sixty percent (60%) of a similar sum
determined for all participants.
(h) Notwithstanding anything herein to the contrary, the
effective date otherwise provided for herein for the
application of Code Section 416 to this Plan (Plan years
beginning after December 31, 1983) shall be extended in
accordance with any legislative act of Congress.
ARTICLE XVII
Disabled Employee Participants
17.1 Contributions Cease on Disability. Notwithstanding
anything in this Plan to the contrary, when an employee-participant
commences to receive benefits because of disability as defined in
this Plan, he shall not be permitted to continue contributions, and
all Company contributions for his benefit shall cease until such
time as he again qualifies as a full time active employee.
17.2 Vesting at Disability. During any period of time in
which a participant shall qualify for benefits because of
disability as defined in this Plan, he shall be treated as if his
employment is continuous for purposes of vesting and shall continue
to vest at the rate provided by ARTICLE VIII herein.
17.3 Distribution. At such time as a disabled participant
attains eligibility for retirement pursuant to Paragraph 15.15
herein, his or her fully vested accounts shall then be distributed
in accordance with Plan provisions.
IN WITNESS WHEREOF, the Company has caused this Twenty-first
Amendment to be executed by its authorized Officers and its Cor-
porate Seal to be hereunto affixed, and the Trustees have executed
this Trust, all on the 22nd day of November ,
1994 .
KANSAS CITY LIFE INSURANCE COMPANY
By:/s/ C. John Malacarne
Its: Vice President
ATTEST:
By:/s/ Sandra Kowalski
Its: Assistant Secretary
/s/John K. Koetting
/s/Ronald E. Hiatt
/s/Robert C. Miller
TRUSTEES
Exhibit 10(c), Form 10-K
Kansas City Life
Insurance Company
NINTH AMENDMENT
KANSAS CITY LIFE
EMPLOYEE STOCK PLAN
THIS NINTH AMENDMENT, comprising the restated Kansas City Life
Employee Stock Plan, is effective the 1st day of January, 1994, and
is entered into by and between Kansas City Life Insurance Company,
a Corporation organized and existing under the Laws of the State of
Missouri, hereinafter called the "Company", and Ronald E. Hiatt,
John K. Koetting and Robert C. Miller, hereinafter referred to as
the "Trustees".
ARTICLE I
Creation and Purpose of Trust
1.1 Name. The Company hereby creates this Plan and Trust to
be known as the "Kansas City Life Employee Tax Credit Stock Owner-
ship Plan", also sometimes referred to as the "Kansas City Life
Employee Stock Plan", or the "Kansas City Life ESOP", hereinafter
sometimes referred to as the "Plan" or "Trust".
1.2 Purpose. It is the purpose of this Plan to encourage the
contributions of its employees to the success of the Company and to
reward such contributions by providing the privileges of ownership
through stock acquisition, and it shall be qualified as an employee
stock ownership plan and as a payroll tax credit employee stock
ownership plan. It is designed to invest primarily in qualifying
Company stock.
1.3 Exclusive Benefit of Employees. This Agreement has been
made, and this Plan and Trust created, for the exclusive benefit of
the Company's full time employees and their beneficiaries. The
terms of this Plan are intended to comply with the present pro-
visions of Sections 401(a), 409A, 501(a) and 4975(d)(3) and (e)(7)
of the Internal Revenue Code, and as they may hereafter be amended,
and Treasury Department Regulations in connection therewith, in
order that the Plan and Trust may qualify for tax exemption. Under
no circumstances shall any part of the principal or income of the
Plan and Trust be used for, or revert to, the Company, or be used
for, or diverted to, any purposes other than for the exclusive
benefit of the employees and their beneficiaries. This Plan and
Trust shall not be construed, however, as giving any employee, or
any other person, any right, legal or equitable as against the
Company, the Trustees or the principal or income of the Trust,
except as specifically provided for herein, nor shall it be con-
strued as giving any employee the right to remain in the Company's
employment.
ARTICLE II
Eligibility
2.1 Commencing January 1, 1983, each present and future
employee shall be qualified as a participant in this Plan in
accordance with the following provisions:
(a) He shall have attained the age of twenty-one (21) years.
(b) Any employee whose employment commences prior to his
attainment of age twenty-one (21), shall become a
participant on the first (1st) day of the month following
his twenty-first (21st) birthday.
(c) Any employee whose employment commences after his
attainment of age twenty-one (21), shall become a par-
ticipant on the first (1st) day of the month following
his date of employment.
(d) Any employee of Old American Insurance Company who is age
twenty-one (21) on November 1, 1991 or becomes age
twenty-one (21) on or before December 31, 1991 shall
become a participant on January 1, 1992 in accordance
with the terms of the Adoption Agreement dated December
19, 1991. Thereafter, any employee of Old American
Insurance Company will become a participant in accordance
with subparagraphs (a), (b) and (c) of this section.
2.2 With respect to this Plan, an "hour of employment" shall
mean:
(a) Each hour for which an employee is directly or indirectly
paid, or entitled to payment, by the Company for the
performance of duties. These hours shall be credited to
the employee for the computation period or periods in
which the duties are performed; and
(b) Each hour for which back pay, irrespective of mitigation
of damages, has been either awarded or agreed to by the
Company. These hours shall be credited to the employee
for the computation period or periods to which the award
or agreement pertains rather than the computation period
in which the award, agreement or payment is made.
(c) Each hour for which an employee is directly or indirectly
paid, or entitled to payment, by the Company for reasons
such as vacation, sickness or disability in a period
during which no duties are performed. These hours shall
be credited to the employee for the computation period or
periods during which the nonperformance of such duties
occurs and shall only be considered up to a maximum of
five hundred one (501) hours.
(d) In computing an employee's hours of employment on a
weekly or monthly basis, when a record of hours of em-
ployment is not available, the employee shall be assumed
to have worked thirty-eight and three-quarter (38 3/4)
hours for each full five (5) day week of employment and
seven and three-quarter (7 3/4) hours for each day in
less than a full five (5) day week, or he shall be
assumed to have worked the full number of hours for the
time period for which he is employed if the Company's
normal employment period is other than a seven and three-
quarter (7 3/4) hour day, five (5) day a week period,
regardless of whether the employee has actually worked
fewer hours.
(e) An "hour of employment" shall also include time for which
an employee is absent from work either
(i) by reason of the pregnancy of such employee,
(ii) by reason of the birth of a child of the
employee,
(iii) by reason of the placement of a child in
connection with the adoption of the child by
the employee, or
(iv) for purposes of caring for the child during
the period immediately following the birth or
placement for adoption.
However, the total number of hours of such service
counted for any one (1) period shall not exceed five
hundred one (501) hours.
2.3 Leaves of Absence.
(a) For the purpose of computing continuous employment,
leaves of absence may be included which have been
authorized by the Company for any of the following
reasons:
(i) Sickness.
(ii) Disability.
(iii) Service with the armed forces of the United
States during any war or national emergency
declared by the President or the Congress, or
undeclared.
(iv) Pregnancy, not to exceed twelve (12) months.
(v) Public service, whether elected or otherwise.
(vi) Obtaining additional education, involving
periods of time not to exceed twelve (12)
months for each leave of absence granted, but
only after completion of one (1) full year of
full time employment.
(b) Such leaves of absence may be counted in computing
continuous employment provided the employee returns to
active employment on or before the end of such leave of
absence, and, when because of service in the armed forces
as stated above, provided the employee returns to active
employment with the Company within ninety (90) days
following his discharge from such service, or such longer
period during which his re-employment rights are pro-
tected by law.
(c) Any such employee who is not qualified as a participant
prior to the commencement of such a leave of absence
shall not be so qualified until his return to active
employment. The provisions of this Section shall be
applied in a like manner to all employees under similar
circumstances.
ARTICLE III
Company Contributions
3.1 Rate of Contribution. Commencing January 1, 1983, in the
discretion of the Executive Committee of the Company, or its
designated subcommittee, the Company will annually contribute to
the Plan an amount of common capital stock of the Company equal to
one-half of one percent (.5%) of the aggregate compensation of
participants in the Plan for compensation paid or accrued during
calendar years 1983 and 1984, and equal to such other percentage as
shall be permissible by law, currently one-half of one percent
(.5%), for compensation paid or accrued during calendar years 1985
through 1987.
No contribution will be made for a year for which the payroll
tax credit is not available. Notwithstanding the provisions of the
preceding sentence, the Company may, but shall not be required, to
make a contribution to the Plan for a Plan year in which the
payroll tax credit is not available. Any contribution made for a
Plan year in which the payroll tax credit is not available shall be
accounted for separately and shall be in accordance with the rules
and regulations pertaining to ESOPs then in effect.
3.2 No Employee Contribution. No contribution shall be
required of a participant, nor will any participant be eligible to
make a contribution.
3.3 Investment Credit Recapture. Amounts contributed to the
Plan attributable to all or a portion of the qualified investment
credit claimed by the Company shall remain in the Plan (and, if
allocated pursuant to the Plan, shall remain so allocated) even
though part or all of such ESOP credit is recaptured or redeter-
mined.
3.4 Form of Payment. The stock contributions of Kansas City
Life Insurance Company shall be made in treasury stock or in shares
of authorized but unissued stock of Kansas City Life Insurance
Company. For purposes of fixing the amount of contributions made
with shares of treasury stock, or shares of authorized but unissued
stock, such stock shall be valued at its bid price on the over-the-
counter market on the valuation day of the month in which the
Company's contribution becomes due, or if the market is closed on
that day then on the last preceding day during which it was open.
Effective January 1, 1995, such stock shall be valued at the
average of its bid price on the over-the-counter market for all
business days in the month of the valuation day. In the event the
Company is precluded from delivering such shares to the Trustees by
law or because of the unavailability of such shares, the Company's
contribution to the Trustees shall be in cash, and said cash shall
be invested until such time as shares of the Company stock shall be
available for purchase by the Trustees.
ARTICLE IV
Investment of Contributions
4.1 Investment of Funds. Contributions to the Trust shall be
invested in accordance with the authority granted to the Trustees
pursuant to the provisions of this Plan and Trust. It is contem-
plated that the contribution made by the Company from time to time
be in shares of the Company stock, or in cash if necessary to
implement the provision of the Plan.
4.2 Voting of Shares. The Trustees shall vote the shares of
stock of the Company for the respective accounts of the partici-
pants only in accordance with the direction of such participants,
which directions may be certified to the Trustees by the Committee,
or any agent designated thereby, provided such directions are
received by the Trustees at least five (5) days before the date set
for the meeting at which such shares are to be voted. Shares with
respect to which no such direction shall be received and the
fractional shares shall be voted by the Trustees in the same pro-
portions as are shares as to which voting instructions have been
received.
ARTICLE V
Allocation to and Evaluation of Participants Accounts
5.1 Allocation and Evaluation. The value of all Trust assets
shall be determined on the basis of market values as of the last
market business day of each calendar quarter. Effective January 1,
1995, the value of the Kansas City Life stock shall be determined
on the basis of the average of its bid price on the over-the-
counter market for all business days in the last month of each
calendar quarter.
All stock transferred to or purchased by the Trust with
respect to a Plan year shall be allocated among the accounts of
persons who were participants on the last day of the Plan year and
who completed at least one thousand (1,000) hours of employment
during such Plan year. The allocation to each participant shall be
an amount which bears the same proportion to the amount of such
securities allocated to all participants in the Plan for that Plan
year as the amount of each participant's compensation during the
entire year bears to total compensation paid to all participants
during the entire year. (Compensation in excess of one hundred
thousand dollars ($100,000.00) per year with respect to any
participant will be disregarded for this purpose.)
5.2 Dividends. Except for amounts needed to cover cash
distributions in place of distributions of fractional shares,divi-
dends on shares shall be reinvested in shares of common stock of
the Company. Such shares and uninvested dividends shall be allo-
cated quarterly among participants' accounts in proportion to the
value of each participant's account as of the end of the quarter.
5.3 Stock Fund. The Trustees shall maintain a "Stock Fund"
which shall cover the aggregate shares of capital stock contributed
to and purchased by the Plan and any uninvested cash. The Stock
Fund shall be valued as of each valuation date, which shall be the
last business day of each quarter or such other dates as the
Committee may establish, on the basis of the then current fair
market value of the assets held therein, as determined by the
Trustees. Effective January 1, 1995, the value of the Kansas City
Life stock shall be determined on the basis of the average of its
bid price on the over-the-counter market for all the business days
in the last month of the calendar quarter or in the month of such
other date as the Committee may establish. The Administrative
Committee shall maintain records reflecting the account of each
participant in the Stock Fund.
5.4 Annual Account. The Administrative Committee shall
furnish to each participant at least once each year a statement of
shares and uninvested cash in the Stock Fund allocated to the
participant's account as of a specified date.
ARTICLE VI
Allocation of Fiduciary Responsibility
6.1 Fiduciaries. The fiduciaries shall have only those
specific powers, duties, responsibilities and obligations as are
specifically given them under this Plan. The Company shall have
the sole responsibility for making the contributions required by
the Plan, shall have the sole authority to appoint and remove the
Trustees, members of the Administrative Committee, and to amend or
terminate, in whole or in part, this Plan and Trust.
6.2 Administration. The Administrative Committee shall have
the sole responsibility for the administration of this Plan, which
responsibility is specifically described in ARTICLE IX herein.
6.3 Trustees. The Trustees shall have such responsibility
for the administration and management of the assets held pursuant
to this Plan and Trust, as is specifically provided for in the
Plan.
6.4 Duties. Each fiduciary warrants that any direction
given, information furnished or action taken by it shall be in
accordance with the provisions of the Plan and Trust, authorizing
or providing for such direction, information or action. Further-
more, each fiduciary may rely upon any such direction, information
or action of another fiduciary as being proper under this Plan, and
is not required herein to inquire into the propriety of any such
direction, information or action. It is intended under this Plan
that each fiduciary shall be responsible for the proper exercise of
its own powers, duties, responsibilities and obligations pursuant
to the Plan and shall not be responsible for any act or failure to
act of another fiduciary. No fiduciary guarantees the Trust fund in
any manner against investment loss or depreciation in asset value.
ARTICLE VII
Vesting
7.1 Vesting of Company Contributions. Each participant shall
be one hundred per cent (100%) vested and shall have a nonfor-
feitable right to the full value of his or her account and to any
stock and uninvested cash allocated thereto.
ARTICLE VIII
Distributions
8.1 Seven (7) Year Retention. No stock or uninvested cash
allocated to a participant's account may be distributed from that
account before the end of eighty-four (84) months beginning after
the month in which the stock and uninvested cash is allocated to
the account, except in the case of separation from employment for
death or any other reason, or except in the case of a participant
who has become disabled and is receiving benefits from the Kansas
City Life or Sunset Life Disability Plans. Notwithstanding the
foregoing, commencing January 1, 1988, if an employee shall
continue in the Company's employment after his or her sixty-fifth
(65th) birthday, (normal retirement date), such employee shall
commence to receive distributions as defined in the Internal
Revenue Code on the earlier of his termination of employment with
the Company or April 1st of the year following the calendar year in
which he or she attains the age of seventy and one-half (70 1/2).
Effective January 1, 1989, the minimum distribution and the minimum
distribution incidental benefit requirements of Internal Revenue
Proposed Regulations 1.401(a)(9)-1 and 1.401(a)(9)-2 are hereby
incorporated by reference.
8.2 Separation from Employment. In the case of separation
from employment, whether by death or for any other reason, or in
the event a disabled participant so elects, the account of the
participant in the Stock Fund shall be determined as of the end of
the quarter in which such event occurs and shall be distributed to
the participant or beneficiary (in case of death) as soon there-
after as practicable. If separation from service, or if the
disabled participant's election occurs on or after the last day of
a Plan year, but prior to the date on which the Company makes its
contribution for the Plan year just ended, and if the participant
is entitled to share in such contribution, then such participant's
share shall be determined as of the end of the quarter in which the
Company's contribution is made and shall be distributed thereafter
as soon as practicable.
8.3 Pre-retirement Distribution. Any participant who remains
in the employ of the Company may request a distribution of stock
allocated to his or her account as of the end of any quarter next
following the expiration of eighty-four (84) months following the
month in which the stock was allocated to the account, but not more
often than once within any twelve (12) month period. Requests for
distribution must be in writing, filed with the Administrative
Committee at least fifteen (15) days prior to the end of any such
quarter. Distribution shall be made to such participant as soon as
practicable following the end of the quarter in which the request
is made. However, distributions pursuant to this Paragraph may not
be made to an individual who is an alternate payee under a Quali-
fied Domestic Relations Order and for whom an account is being
separately maintained.
8.4 Right to Stock. Any participant who shall be entitled to
a distribution from the Plan shall have the right to demand that
his benefits be distributed in the form of capital stock of the
Company. Notwithstanding the foregoing, any fractional share will
be converted to cash, at the valuation date as of which the
distribution is made based on the fair market value at that time as
determined by the Trustees.
8.5 Method of Distribution. All distributions provided pur-
suant to this Plan shall be by a lump sum payment.
8.6 Commencement of Distributions. All distributions shall
be made or commenced to be made as soon as practicable and within
sixty (60) days after the valuation date coincident with or next
following the occurrence of one of the distribution events
described in this ARTICLE VIII. Upon written notice to the
Committee no later than the end of the calendar month following the
month in which termination occurs, a participant (or, in the case
of death, his beneficiary) entitled to a lump sum payment may make
an irrevocable election to receive the value of his distribution on
January 31st of the next succeeding calendar year.
8.7 Valuation. The value of a participant's account upon
termination shall be the value on the most recent valuation date
preceding January of the year elected pursuant to Paragraph 8.6. If
such election is not so made, such value shall be determined on the
valuation date coincident with or next following the date the par-
ticipant (or, in case of death, his beneficiary) elects within the
election period specified in Paragraph 8.6 above, to receive his
distribution, or the receipt by the Trustees of notice of said
participant's termination, whichever shall occur later.
8.8 Facility of Payment. If the Committee shall receive
evidence satisfactory to it that a participant or beneficiary is
physically or mentally incompetent to receive any payment which
shall be due hereunder and to give a valid release therefor and
that another person or an institution is then maintaining or has
custody of such participant or beneficiary, and that no guardian,
committee or other representative of the estate of such participant
or beneficiary, shall have been duly appointed, the Committee may,
at its option, make payments otherwise payable to such participant
or beneficiary, to such other person or institution, and the
release of such other person or institution shall be a valid and
complete discharge for such payments.
8.9 Beneficial Designation. Any participant shall have the
right to designate a new beneficiary at any time by filing with the
Committee a written request for such change, but any such change
shall become effective only upon receipt of such request by the
Committee. If the payment is made as a result of the death of the
participant, the payment shall be made to the surviving spouse of
the participant, if any, unless the participant and the spouse have
requested a distribution to any other beneficiary. Any such
request shall be written and on forms prescribed by the Adminis-
trative Committee. Upon receipt by the Committee of such request,
the change shall relate back to and take effect as of the date such
participant signs such request whether or not such participant is
living at the time the Committee receives such request.
If there be no designated beneficiary living at the death of
such participant when any payment hereunder shall be payable to the
beneficiary, then such payment shall be made as follows: To such
participant's wife or husband, if living; if not living, to such
participant's then living lineal descendants, in equal shares,
per stirpes; if none survives, to such participant's surviving
parents, equally; if neither survives, to such participant's
executors or administrators.
8.10 Diversification of Investments.
(i) Each qualified participant in the plan may
elect within (90) ninety days after the close
of each calendar year in the qualified
election period to direct the Trustees as to
the investment of at least twenty-five percent
(25%) of his or her account in the plan (to
the extent such portion exceeds the amount to
which a prior election under this paragraph
applies). In the case of the election year in
which the participant can make his or her last
election, the preceeding sentence shall be
applied by substituting "fifty percent (50%)"
for "twenty-five percent (25%)".
(ii) If a participant makes an election, the
Trustees may either (a) distribute the portion
of the participant's account covered by the
election to him or her within ninety (90) days
after the period during which the election may
be made, or (b) offer at least three invest-
ment options (not inconsistent with
regulations prescribed by the Secretary of the
Treasury) to each participant making an
election.
(iii) For purposes of this paragraph, the term
"qualified participant" means any employee who
has completed at least ten (10) years of
participation under the plan and has attained
age fifty-five (55).
(iv) For purposes of this paragraph, the term
"qualified election period" means the five-
plan-year period beginning with the plan year
after the plan year in which the participant
attains age fifty-five (55) (or, if later,
beginning with the plan year after the first
plan year in which the individual first became
a qualified participant).
ARTICLE IX
Administrative Committee
9.1 Membership. The Administrative Committee, sometimes
herein referred to as the "Committee", shall consist of a number of
persons, not less than three (3) nor more than five (5), designated
by the Executive Committee of the Company, who shall serve terms of
one (1) year or until their successors are designated, and said
Committee shall have the responsibility for the general administra-
tion of the Plan and for carrying out the provisions of the Plan in
accordance with its terms. The Committee shall have absolute
discretion in carrying out its responsibilities.
9.2 Subcommittees. The Committee may appoint from its
members such committees with such powers as it shall determine; may
authorize one (1) or more of its number or any agent to execute or
deliver any instrument or make any payment on its behalf; and may
utilize counsel, employ agents and provide for such clerical and
accounting services as it may require in carrying out the pro-
visions of the Plan.
9.3 Meetings. The Committee shall hold meetings upon such
notice, at such place or places, and at such time or times as it
may from time to time determine.
9.4 Majority Action. The action of a majority of the members
expressed from time to time by a vote in a meeting or in writing
without a meeting shall constitute the action of the Committee and
shall have the same effect for all purposes as if assented to by
all members of the Committee at the time in office.
9.5 No Compensation. No member of the Committee shall
receive any compensation for his services as such, and, except as
required by law, no bond or other security shall be required of him
in such capacity in any jurisdiction.
9.6 Committee Rules. Subject to the limitations of this Plan
and Trust, the Committee from time to time shall establish rules or
regulations for the administration of the Plan and the transaction
of its business. The Committee shall have full and complete
discretionary authority to construe and interpret the Plan and
decide any and all matters rising hereunder, except such matters
which the Executive Committee of the Company from time to time may
reserve for itself, including the right to remedy possible
ambiguities, inconsistencies or omissions. All interpretations,
determinations and decisions of the Committee or the Executive
Committee of the Company in respect of any matter hereunder shall
be final, conclusive and binding on all parties affected thereby.
The Committee shall, when requested, submit a report to the
Executive Committee of the Company giving a brief account of the
operation of the Plan and the performance of the various accounts
established pursuant to the Plan.
9.7 Claims Procedure. The Administrative Committee shall
have full and complete discretionary authority to make all
determinations as to the right of any person to a benefit. Any
denial by the Committee of a claim for benefits under this Plan by
a participant or a beneficiary shall be stated in writing by the
Committee and delivered or mailed to the participant or the
beneficiary, whichever is appropriate; and such notice shall set
forth the specific reason for the denial, written to the best of
the Committee's ability in a manner that may be understood without
legal or actuarial counsel. In addition, the Committee shall
provide a reasonable opportunity to any participant or beneficiary
whose claim for benefits has been denied for a review of the
decision denying the claim.
9.8 Resignation of Member. Any member of the Committee may
resign by giving notice to the Executive Committee at least fifteen
(15) days before the effective date of his resignation. Any Com-
mittee member shall resign upon request of the Executive Committee.
The Executive Committee shall fill all vacancies on the Committee
as soon as is reasonably possible after a resignation takes place,
and until a new appointment takes place, the remaining members of
the Committee shall have authority to act, if approved by either a
majority of the remaining members or by two (2) members, whichever
number is lesser.
ARTICLE X
Amendment and Termination
10.1 Amendment. Kansas City Life Insurance Company reserves
the right at any time and from time to time, and retroactively if
deemed necessary or appropriate to conform with governmental regu-
lations or other policies, to modify or amend, in whole or in part,
any or all of the provisions of this Plan and Trust by adoption of
a written resolution by the Board of Directors of Kansas City Life
Insurance Company or the Executive Committee of the Board of
Directors; provided that no such modification or amendment shall
make it possible for any part of the contributions of the Company,
or any other funds of the Trust, to be used for, or diverted to,
purposes other than for the exclusive benefit of participants or
their beneficiaries.
10.2 Termination. This Plan and Trust is purely voluntary on
the part of the Company, and Kansas City Life Insurance Company
reserves the right to terminate the Plan and the Trust provided
herein by adoption of a written resolution by the Board of
Directors of Kansas City Life Insurance Company or the Executive
Committee of the Board of Directors. Upon termination of, or upon
the complete discontinuance of contributions within the meaning of
Section 401(a)(7) of the Internal Revenue Code, participants'
accounts shall become fully vested and nonforfeitable and
distribution shall be made as promptly as possible in accordance
with the directions of the Committee.
10.3 Merger. This Plan and Trust shall not be merged or
consolidated with, nor shall any assets or liabilities be
transferred to any other Plan or Trust, unless the accrued benefit
of each participant, if the Plan and Trust were terminated
immediately after such action, would be equal to or greater than
the accrued benefit to which such participant would have been
entitled if this Plan and Trust had been terminated immediately
before such action.
ARTICLE XI
The Trust
11.1 Number of Trustees. There shall be three (3) Trustees
for this Trust with the Trustees hereinbefore named being the
original Trustees.
11.2 Trustees shall Receive Sums Paid. The Trustees shall
accept and receive all sums of money paid to them from time to time
by the Company, and shall hold, invest, reinvest, manage and
administer such monies and the increment, increase, earnings and
income thereof as a Trust for the exclusive benefit of the
employees participating in the Plan, and their beneficiaries. All
income and earnings of the Trust shall be accumulated by the
Trustees and by them held, invested and reinvested as a part of the
principal of the said Trust.
11.3 Investment of Funds.
(a) Except as hereinafter provided with respect to the cash
reserve, the Trustees shall invest and reinvest the
principal and income of the Trust in the capital stock of
the Company. Income from investments and proceeds of the
sale of securities shall be reinvested in the same manner
as contributions received for investment. Any funds held
by the Trustees pending investment in the capital stock
of the Company may be invested temporarily in short-term
corporate or governmental debt securities, or in such
other investments as the Trustees shall, after investi-
gation, believe to be sound and suitable investments for
this Trust, although the same may not be of the character
permitted for Trustee's investments by the Laws of the
State of Missouri, all subject to the approval of the
Executive Committee, or its designated subcommittee, as
hereinafter provided.
(b) The Trustees may retain in cash so much of the Trust
assets as they may deem advisable.
(c) The Trustees may sell property held by the Trust at
either public or private sale, for cash or on credit, at
such times as they may deem appropriate; they may ex-
change such property, and they may grant options for the
purchase or exchange thereof.
(d) The Trustees may consent to and participate in any plan
of reorganization, consolidation, merger, extension or
other similar plan affecting property held by the Trust;
they may consent to any contract, lease, mortgage, pur-
chase, sale or other action by any corporation pursuant
to any such plan; they may accept and retain property
issued under any such plan, even though it would not be
eligible as a new investment under the provisions of this
Section.
(e) The Trustees may deposit property held in the Trust with
any protective, reorganization or similar committee, and
may delegate discretionary power thereto to pay its
reasonable share of such committee's expenses and com-
pensation and any assessments levied with respect to any
property so deposited.
(f) The Trustees may exercise all conversion and subscription
rights pertaining to property held in the Trust.
(g) The Trustees may exercise all voting rights with respect
to property held in the Trust, and in connection there-
with grant proxies discretionary or otherwise, all in
accordance with the provisions of this Plan and Trust.
(h) The Trustees may cause securities and other property to
be registered and held in their names, the name of any
one (1) of them, or in the name of their nominee.
(i) The Trustees may borrow money from others, including the
Company, for the purposes of the Trust, and issue their
promissory note or notes for the same, and pledge or
mortgage securities or other assets owned by the Trust as
security for the payment thereof. Any such loan shall be
subject to approval as required of investments herein,
and also to the provisions of Paragraph 11.4 herein.
(j) The Trustees may compromise, compound and settle any debt
or obligation due to or from them as Trustee; they may
reduce the rate of interest on any obligation due them as
Trustee; they may extend the time of payment of both
interest and principal, or otherwise modify the terms of
any obligation due them as Trustee; upon default of any
obligation due them as Trustee, they may foreclose or
otherwise enforce any obligation belonging to the Trust.
(k) The Trustees may generally do all such acts, execute all
such instruments, take all such proceedings and exercise
all such rights and privileges with relation to property
belonging to the Trust as if the Trustees were the
absolute owners thereof.
11.4 Loan Provisions. The following provisions shall apply
to any loan made to the Trust fund:
(a) The loan must be at a reasonable rate of interest, for a
specific period of time, and shall not be payable on
demand;
(b) Any collateral pledged to the creditor by the Trust shall
consist only of the assets purchased with the borrowed
funds (although in addition to such collateral, the
Company may guarantee repayment of the loan);
(c) Under the terms of the loan, the creditor shall have no
recourse against the Trust except with respect to such
collateral;
(d) The loan shall be repaid only from those amounts con-
tributed by the Company to the Trust and from amounts
earned on Trust investments;
(e) The Company must contribute to the Trust amounts suf-
ficient to enable the Trust to pay each installment of
principal and interest on the loan on or before the date
such installment is due, even if no tax benefit results
from such contribution; and
(f) Upon the repayment of any portion of the balance due on
the loan, the assets originally pledged as collateral for
such portion shall be released from encumbrance.
Released shares shall be allocated to the accounts of
participants during the fiscal year such portion is paid
off. Such allocation shall be made in the same manner
provided under the Plan for allocating shares when no
loan is involved.
(g) Any such loans shall be effected primarily in the
interest of participants and their beneficiaries.
(h) Notwithstanding the foregoing, in the event an exempt
loan is effected it shall be subject to the following
additional provisions and the proceeds thereof must be
used within a reasonable time after their receipt only
for any or all of the following purposes:
(i) To acquire qualifying Company securities.
(ii) To repay such loan.
(iii) To repay a prior exempt loan. A new loan, the
proceeds of which are so used, must satisfy
the provisions of this Subparagraph (h).
(i) Except as provided hereinafter or as otherwise required
by applicable law, no security acquired with the proceeds
of an exempt loan may be subject to a put, call or other
option, or buy-sell or similar arrangement while held by
and distributed from the Plan, whether or not the Plan is
then an ESOP.
(j) A qualifying Company security acquired with the proceeds
of an exempt loan by the Plan, must be subject to a put
option if it is not publicly traded when distributed or
if it is subject to a trading limitation when distrib-
uted. For purposes of this Subparagraph, a "trading
limitation" on a security is a restriction under any
federal or state securities law, any regulation there-
under or an agreement, not prohibited herein, affecting
the security which would make the security not as freely
tradable as one not subject to such restriction. The put
option must be exercisable only by a participant, by the
participant's donees or by a person (including an estate
or its distributee) to whom the security passes by reason
of a participant's death. (Under this Subparagraph (j),
"participant" means a participant and beneficiaries of
the participant under the ESOP.) The put option must
permit a participant to put the security to the Company.
Under no circumstances may the put option bind the Plan.
However, it may grant the Plan an option to assume the
rights and obligations of the Company at the time that
the put option is exercised. If it is known at the time
a loan is made that federal or state law will be violated
by the Company's honoring such put option, the put option
must permit the security to be put, in a manner con-
sistent with such law, to a third party (e.g., an
affiliate of the Company or a shareholder other than the
Plan) that has substantial net worth at the time the loan
is made and whose net worth is reasonably expected to
remain substantial. (k)General rule:
(i) A put option must last for a period of at
least sixty (60) days following the date of
distribution to the participant. If the put
option is not exercised during that period, it
must be available to the participant for a
period of at least sixty (60) days in the
following Plan year as provided in regulations
prescribed by the Internal Revenue Service.
(l) Other put option provisions:
(i) Manner of exercise. A put option is exercised
by the holder notifying the Company in writing
that the put option is being exercised.
(ii) Time excluded from duration of put option.
The period during which a put option is
exercisable does not include any time when a
distributee is unable to exercise it because
the party bound by the put option is
prohibited from honoring it by applicable
federal or state law.
(iii) Price. The price at which a put option must
be exercisable is the value of the security,
at its bid price on the over-the-counter
market on the day in which such put option may
and shall be exercised.
(iv) Payment terms. The provisions for payment
under a put option must be reasonable. The
deferral of payment is reasonable if adequate
security and a reasonable interest rate are
provided for any credit extended and if the
cumulative payments at any time are no less
than the aggregate of reasonable periodic
payments as of such time. Periodic payments
are reasonable if annual installments, be-
ginning with thirty (30) days after the date
the put option is exercised, are substantially
equal. Generally, the payment period may not
end more than five (5) years after the date
the put option is exercised. However, it may
be extended to a date no later than the
earlier of ten (10) years from the date the
put option is exercised or the date the
proceeds of the loan used by the Plan to
acquire the security subject to the put option
are entirely repaid.
(v) Payments restrictions. Payment under a put
option may be restricted by the terms of a
loan. Otherwise, payment under a put option
must not be restricted by the provisions of a
loan or any other arrangement, including the
terms of the Company's Articles of Incorpo-
ration, unless so required by applicable state
law.
(m) The provisions of Subparagraphs (j), (k) and (l)
hereinabove are nonterminable. If the Plan holds or has
distributed securities acquired with the proceeds of an
exempt loan and either the loan is repaid or the Plan
ceases to be an ESOP, these protections and rights shall
continue to exist. However, the protections and rights
will not fail to be nonterminable merely because they are
not exercisable under Subparagraphs (k) and (l).
(n) All assets acquired by the Plan with the proceeds of an
exempt loan referred to hereinabove must be added to and
maintained in a suspense account. Such assets are to be
withdrawn from the suspense account only in accordance
with rules and regulations of the Internal Revenue Ser-
vice and as if all securities in the suspense account
were encumbered. Assets in such suspense account are
assets of this ESOP Plan.
11.5 Approval of Investments. Before obtaining any loan or
making any new investment or reinvestment of any funds of this
Trust, the Trustees shall submit to the Executive Committee of the
Company, or its designated subcommittee, a proposal of the terms of
any such loan, or a list of any such securities in which it pro-
poses to invest such funds and the amount proposed to be invested
in each security, the Trustees shall proceed to act on such loan,
to purchase, or refrain from purchasing, such securities in
accordance with the acceptance or rejection, in whole or in part,
of such proposals by the Executive Committee of the Company, or its
designated subcommittee. Acceptance or rejection of such pro-
posals, or any modification thereof, or any of them by the said
Committee, shall be signified in writing and delivered to the
Trustees within thirty (30) days of the submission of such
proposals by the Trustees, provided however, that if no written
modification, acceptance or rejection of such proposals, or any of
them, shall be so delivered by the said Committee within the time
herein limited therefor, the Trustees shall be warranted and
protected in assuming that all of the proposed loans or investments
which have not been specifically modified or rejected as aforesaid,
meet with the complete approval of said Executive Committee, or its
designated subcommittee.
11.6 Cash Reserve. The Trustees may maintain a cash reserve
in such amount as to provide for current distribution of benefits
under the Plan. Such cash reserve may consist of uninvested con-
tributions of the Company, or of the proceeds of the sale of
investments of the Trust. All of the funds held in such cash
reserve as well as all funds and securities and assets belonging to
the Trust shall be safely kept by the Trustees on deposit or in the
vaults of a bank or trust company selected and designated by the
Board of Directors or the Executive Committee of the Company.
11.7 Disbursement of Funds. Disbursement of the assets of
this Trust shall be made by the Trustees only to or for the benefit
of the participants in the Plan or their beneficiaries, and only at
the time, in the amount and in the manner prescribed in written
instructions of the Administrative Committee delivered by such
Committee to the Trustees.
11.8 Instructions to Trustees. The Trustees shall not be
obligated or required to determine whether any instructions issued
to them by the Administrative Committee are in fact so issued in
accordance with the terms of the Plan or the powers and duties
thereunder of said Committee.
11.9 Fiduciary Insurance. The Trustees or the Administrative
Committee shall have the right to purchase insurance on behalf of
themselves or anyone acting in a fiduciary capacity with respect to
the Plan and Trust, to cover liability or losses occurring by
reason of the act or omission of a fiduciary, if such insurance
permits recourse by the insurer against the fiduciary in the case
of a breach of a fiduciary obligation by such fiduciary.
11.10 Accounting by Trustees. Each year the Trustees shall
render to the Company an account of their administration of the
Trust for the year ending on the preceding 31st of December. The
written approval of said account by the Board of Directors or the
Executive Committee of the Company shall, as to all matters and
transactions stated therein or shown thereby, be final and binding
upon all persons who are then or who may thereafter become
interested in this Plan and Trust.
11.11 Compensation. No Trustee shall receive any compensa-
tion for his services as such Trustee. In the administration of
said Trust, the Trustees, if they deem it advisable, may employ an
executive director, secretary or treasurer and fix reasonable
compensation therefor, and a Trustee may act as such executive
director, secretary or treasurer and receive the compensation so
fixed. The Trustees may in their discretion employ clerical help,
actuaries, accountants, attorneys or other necessary personal
services of a person or corporation as may be necessary to properly
administer, defend and protect the Trust, and reasonable compensa-
tion for said services may be paid by the Trustees from the Trust
in the event the Company does not elect to pay for such services.
Any taxes that may be levied against said Trust shall be paid by
the Trustees from the Trust assets after liability for said taxes,
if any, has been established, and in determining the liability for
taxes the Trustees are specifically authorized to use their own
discretion in contesting taxes claimed to be due against said
Trust, and said Trustees may employ counsel for such purposes and
pay said counsel fees from the Trust assets in the event the
Company does not elect to pay said costs and fees.
11.12 Trustees and Vacancies. The Trustees administering
this Trust shall at all times be Officers of the Company, and any
Trustee may at any time be removed from the office of Trustee, with
or without cause, by the Board of Directors or the Executive Com-
mittee of the Company. The Trustees named herein shall serve as
such Trustees until their resignation, death or removal by the
Board of Directors or the Executive Committee of the Company. When
any Trustee ceases to be an Officer of the Company, he automati-
cally ceases to be a Trustee. Resignation of a Trustee shall be by
written notice given to the Board of Directors or the Executive
Committee of the Company. Whenever a vacancy occurs by resigna-
tion, death or removal of one (1) or more of the Trustees, the
Board of Directors or the Executive Committee shall promptly fill
said vacancy or vacancies so created by naming a successor Trustee
or successor Trustees possessing the qualifications herein
prescribed. All successor Trustees shall have the same powers in
connection with said Trust as the initial Trustees have, and they
shall be subject to the same limitations and directions as
prescribed herein for the initial Trustees.
11.13 Rules. The Trustees may make proper rules for carrying
out the purposes of the Trust, and may amend said rules from time
to time. A majority of the Trustees shall constitute a quorum, and
the action taken by a quorum shall be controlling and shall be
deemed the act of the Trustees. The Trustees may designate any one
(1) of their number to act as chairman or presiding officer. Any
one (1) of the Trustees shall be and is hereby authorized to affix
his signature as the signature of all the Trustees when such may be
desirable in the performance of their duties pursuant hereto. This
Plan and Trust shall be construed and enforced according to the
Laws of the State of Missouri, and all provisions thereof shall be
administered according to the laws of such state. Any suit at law
or in equity brought against the Trustees or the Company by any
person, firm or corporation, including the participants in the
Plan, must be first instituted in Jackson County, Missouri, which
County and State is the situs of the parties hereto and the only
jurisdiction within which this Plan and Trust is to be administered
or located. ARTICLE XII
Allocations Limitations
12.1 Maximum Limitation. Commencing January 1, 1983, in no
event shall the sum of the annual additions to a participant's
account for any Plan year exceed the lesser of:
(a) (i) Thirty thousand dollars ($30,000.00) or such higher
amount as may be prescribed by regulations issued pur-
suant to Section 415(d) of the Internal Revenue Code to
reflect increases in the cost of living; plus (ii) the
lesser of thirty thousand dollars ($30,000.00) (as
adjusted for cost of living increases) or the amount of
Company stock contributed to the Plan; [Effective January
1, 1989, Subparagraph (ii) is deleted] or
(b) Twenty-five percent (25%) of such participant's comnpen-
sation for the Plan year.
No more than one-third (1/3) of the Company contributions for a
year shall be allocated to the group of "highly compensated
employees" defined as follows:
An employee who, during the year or the preceding year:
(1) Was at any time a five percent (5%) owner of the company,
(2) Received compensation from the company in excess of
seventy-five thousand dollars ($75,000.00),
(3) Received compensation from the company in excess of fifty
thousand dollars ($50,000.00) and was in the top-paid
group of employees for such year, or
(4) Was at any time an officer and received compensation
greater than fifty percent (50%) of the amount in effect
under Section 415(b)(1)(A) of the Internal Revenue Code
for such year.
Annual additions to a participant's account for a Plan year shall
be the sum for any year of the Company's contributions plus the
amount of any employee contributions plus the forfeitures.
12.2 Reallocation. If, but for the limitations set forth in
Paragraph 12.1, the annual additions to a participant's account for
any Plan year would exceed the limitation set forth in that Para-
graph, such annual additions shall be reduced to the extent
necessary to comply with the requirements of Paragraph 12.1. Any
portion of the Company's contribution which must be reallocated as
a result of the requirements of Paragraph 12.1 shall be reallocated
among the accounts of the remaining active participants in the same
manner as the initial allocation was made.
12.3 Annual Additions Reduction. If any participant is a
participant under any other Defined Contribution Plan maintained by
the Company, the total of the annual additions to such partici-
pant's account from all such Defined Contribution Plans shall not
exceed the limitations set forth in Paragraph 12.1. If it is
determined that as a result of the limitation set forth in the
preceding sentence, the annual additions to the participant's
account in this Plan must be reduced, such reduction shall be
accomplished in accordance with the provisions of Paragraph 12.2.
12.4 Annual Additions Reduction. If any participant is a
participant under a Defined Benefit Plan maintained by the Company,
the sum of the Defined Benefit Plan fraction for a Plan year and
the Defined Contribution Plan fraction for that year shall be no
greater than one (1.00). If it is determined that as a result of
the limitation set forth in the preceding sentence, the annual
additions to a participant's account in this Plan must be reduced,
such reduction shall be accomplished in accordance with the pro-
visions of Paragraph 12.2.
12.5 Retirement Plan. As used in this Section, the words
"retirement plan" shall mean:
(a) Any profit sharing, pension or stock bonus plan described
in Section 401(a) and 501(a) of the Internal Revenue
Code;
(b) Any annuity plan or annuity contract described in Section
403(a) or 403(b) of the Internal Revenue Code;
(c) Any qualified bond purchase plan described in Section
405(a) of the Internal Revenue Code; and
(d) Any individual retirement account, individual retirement
annuity or retirement bond described in Section 408(a),
408(b) or 409 of the Internal Revenue Code.
12.6 Defined Contribution Plan. As used in this Section, the
words "Defined Contribution Plan" shall mean a retirement plan
which provides for an individual account for each participant and
for benefits based solely on the amount contributed to the par-
ticipant's account and any income, expenses, gains and losses, and
any forfeitures of accounts of other participants which may be
allocated to such participant's accounts.
12.7 Defined Benefit Plan. As used in this Section, the
words "Defined Benefit Plan" shall mean any retirement plan which
is not a Defined Contribution Plan.
12.8 Defined Benefit Plan Factor. As used in this Section,
the words "Defined Benefit Plan fraction" shall mean, for any Plan
year, a fraction,
(a) the numerator of which is the projected annual benefit of
the participant, that is, the annual benefit to which he
would be entitled under the terms of the Defined Benefit
Plan on the assumptions that he continues employment
until his normal retirement date as determined under the
terms of the Defined Benefit Plan, that his compensation
continues at the same rate as in effect in the Plan year
under consideration until his normal retirement date and
that all other relevant factors used to determine bene-
fits under such Defined Benefit Plan remain constant as
of the current Plan year for all future Plan years, under
all Defined Benefit Plans maintained by the Company
determined as of the close of the Plan year, and
(b) the denominator of which is the lesser of: (i) the
maximum dollar limit for such year (for example, ninety
thousand dollars ($90,000.00) for 1983) times 1.25, or
(ii) the percentage of compensation limit for such year
times 1.4.
12.9 Defined Contribution Plan Factor. As used in this
Section, the words "Defined Contribution Plan fraction" shall mean,
for any Plan year, a fraction,
(a) the numerator of which is the sum of the annual additions
to the participant's account under all Defined Contri-
bution Plans maintained by the Company in that Plan year,
and
(b) the denominator of which is the sum of the lesser of the
following amounts, determined for the year and for each
prior year of service with the Company: (i) the product
of 1.25 multiplied by the dollar limitation in effect for
the year, or (ii) the product of 1.4 multiplied by the
percentage of compensation limit (IRC Section 415 (e)(3) as
amended).
(c) In computing the defined contribution plan fraction
above, for years ending after December 31, 1982, at the
election of the Company, the amount to be taken into
account for all years ending before January 1, 1983, may
be computed to be an amount equal to the denominator of
the fraction, as in effect for the year ending in 1982,
multiplied by a transition fraction,
1. the numerator of which is the lesser of (i) fifty-
one thousand eight hundred seventy-five dollars
($51,875.00), or (ii) 1.4 multiplied by twenty-five
per cent (25%) of the participant's compensation
for the year ending in 1981, and
2. the denominator of which is the lesser of (i)
forty-one thousand five hundred dollars
($41,500.00), or (ii) twenty-five per cent (25%) of
the participant's compensation for the year ending
in 1981.
ARTICLE XIII
General Provisions
13.1 Expenses. The Company shall pay all expenses incurred
in administering the Plan and managing the Trust assets. The
Company shall not pay any brokerage fees, commissions, stock
transfer taxes and other charges and expenses in connection with
the purchase and sale of securities under the Plan, unless
specifically approved by the Executive Committee, or its designated
subcommittee.
13.2 Source of Payment. Benefits pursuant to the Plan shall
be payable only out of the assets of the Trust. No person shall
have any right under the Plan with respect to the assets of the
Trust, or against any Trustee, insurance company or the Company,
except as specifically provided for herein.
13.3 Inalienability of Benefits. The interest hereunder of
any participant or beneficiary except as may be required by a
Qualified Domestic Relations Order defined in Section 414(p) of the
Internal Revenue Code, shall not be alienable, either by assignment
or by any other method, and to the maximum extent permissible by
law, shall not be subject to being taken, by any process whatever,
by the creditors of such participant or beneficiary.
13.4 No Right to Employment. Nothing herein contained nor
any action taken under the provisions hereof shall be construed as
giving any employee the right to be retained in the employment of
the Company.
13.5 Accrued Benefit. The term "accrued benefit" shall mean
the value of a participant's account or accounts with respect to
all funds in this Plan.
13.6 Uniform Administration. Whenever in the administration
of the Plan any action is required by the Committee, such action
shall be uniform in nature as applied to all persons similarly
situated and no such action shall be taken which will discriminate
in favor of shareholders of the Company, highly compensated par-
ticipants or participants whose principal duties consist of
supervising the work of others.
13.7 Beneficiary. The word "beneficiary" shall be deemed to
include the estate of the participant, dependents of the partici-
pant, persons who are the natural objects of the participant's
bounty, and any person designated by the participant to share in
the benefits of the Plan and Trust after the death of the
participant. Wherever the rights of participants are stated or
limited herein, their beneficiaries shall be bound thereby.
13.8 Severability. In the event that any provision of this
Plan and Trust shall be held invalid or illegal for any reason,
such determination shall not affect the remaining provisions of
this Plan, but this Plan shall be construed and enforced as if such
invalid or illegal provision had never been included in the Plan.
This Plan shall be construed in accordance with the Laws of the
State of Missouri.
13.9 Articles. Titles of Articles are for general
information only and this Plan shall not be construed by reference
to such titles.
13.10 Gender. Words used in the masculine gender shall be
read and construed to include the feminine gender.
13.11 Plural. Wherever required, the singular of any word in
this Plan and Trust shall include the plural and the plural may be
read in the singular.
13.12 Disability. The term "disability" as used in this Plan
means a physical or mental condition of a participant which results
in the receipt of benefits by such participant pursuant to the
provisions of either the Kansas City Life Disability Plan or the
Sunset Life Disability Plan.
13.13 Compensation. For the purposes herein, the term
"compensation" shall include all compensation, as defined in
Regulation 1.415-2 of the Internal Revenue Code, due and payable
to an employee by the Company.
13.14 Initial Qualifications. The Company reserves the right
to have all its contributions returned to it free of this Trust,
and to terminate said Plan and Trust, if the Trust does not
initially meet the qualification requirements of the Internal
Revenue Code for an employee stock option plan.
13.15 Company. The term "Company" means Kansas City Life
Insurance Company, a Missouri Corporation, Sunset Life Insurance
Company of America, a Washington Corporation, and Old American
Insurance Company, a Missouri Corporation, and any other subsidiary
corporation of Kansas City Life Insurance Company, any or all of
which may sometimes be referred to herein as affiliated corpora-
tions.
13.16 Employee. The term "employee" shall mean any person
employed by Kansas City Life Insurance Company or any subsidiary
corporation under the rules of common law, and shall not include
agents, general agents, consultants or other independent con-
tractors, or, effective January 1, 1989, leased employees as
defined in Section 414(n) and (o) of the Internal Revenue Code.
13.17 Company Stock. The term "Company stock" shall mean
shares of the common capital stock of Kansas City Life Insurance
Company.
13.18 Executive Committee. Wherever in the Plan and Trust
the term "Executive Committee" is used, it shall be taken to mean
only the Executive Committee of the Board of Directors of Kansas
City Life Insurance Company.
13.19 Board of Directors. Wherever in the Plan and Trust the
term "Board of Directors" is used, it shall be taken to mean only
the Board of Directors of Kansas City Life Insurance Company.
13.20 Affiliated Company Participation. Notwithstanding any-
thing in this Agreement to the contrary, no employee of any
subsidiary or affiliated corporation of Kansas City Life Insurance
Company shall have the right to participate in this Plan unless
such Plan shall have been adopted by the corporation for which such
employee is employed.
13.21 Direct Rollovers. The provisions of this Paragraph
shall be effective January 1, 1993 and apply to distributions after
January 1, 1993. Notwithstanding any provision of this Plan to the
contrary, a distributee may elect to have any portion of an
eligible rollover distribution paid directly to an eligible retire-
ment plan specified by the distributee in a direct rollover. The
Administrative Committee may prescribe the time and manner in which
this election is made.
As used in this Paragraph, "eligible rollover distribution",
"eligible retirement plan", "distributee" and "direct rollover"
shall mean:
(a) "Eligible rollover distribution" is any distribution of
all or any portion of the balance to the credit of the
distributee. However, an eligible rollover distribution
shall not include:
(i) Any distribution that is one of a series of
substantially equal periodic payments (not
less frequently than annually) made for the
life (or life expectancy) of the distributee
or the joint lives (or joint life expec-
tancies) of the distributee and the
distributee's designated beneficiary, or for a
specified period of ten (10) years or more;
(ii) Any distribution required under Code Section
401(a)(9); or
(iii) The portion of any distribution that is not
includible in gross income (determined without
regard to the exclusion for net unrealized
appreciation with respect to employer
securities.
(b) "Eligible retirement plan" is:
(i) An individual retirement account (described in
Code Section 408(a)) or individual retirement
annuity (described in Code Section 408(b)); or
(ii) An annuity plan (described in Code Section
403(a)); or
(iii) A qualified trust (described in Code Section
401(a)) that accepts the distributee's
eligible rollover distribution. However, in
the case of an eligible rollover distribution
to a surviving spouse, eligible retirement
plan shall mean only the items in (i) above.
(c) "Distributee" shall include an employee or former em-
ployee. An employee's or former employee's surviving
spouse and the employee's or former employee's spouse or
former spouse who is an alternate payee under a Qualified
Domestic Relations Order (defined in Code Section 414(p))
are distributees with regard to the interest of the
spouse or former spouse.
(d) "Direct rollover" is a payment by the Plan to the
eligible retirement plan specified by the distributee.
The Plan shall withhold twenty percent (20%) of an
eligible rollover distribution which is not paid to an
eligible retirement plan.
ARTICLE XIV
Top Heavy Provisions
14.1 Compensation Limits. With respect to compensation as
defined in this Plan, for any Top Heavy Plan year, compensation in
excess of two hundred thousand dollars ($200,000.00), or such other
amount as the Secretary of the Treasury may designate, shall be
disregarded. Effective January 1, 1994, one hundred fifty thousand
dollars ($150,000.00) is the maximum compensation. This amount
will be adjusted in accordance with Internal Revenue Code Section
401(a)(17)(B).
14.2 Key Employee. "Key employee" means any employee or
former employee (and his beneficiaries) who, at any time during the
Plan year or any of the preceding four (4) Plan years, is:
(a) An officer of the Company, as that term is defined within
the meaning of the regulations under Internal Revenue
Code Section 416. For the years 1984 through 1987, an
officer is not treated as a key employee if the officer
has an annual compensation of forty-five thousand dollars
($45,000.00) or less.
(b) One of the ten (10) employees owning (or considered as
owning within the meaning of Code Section 318) the
largest interests in all employers required to be
aggregated under Code Sections 414(b), (c), and (m).
However, an employee will not be considered a top ten
(10) owner for a Plan year if the employee earns less
than thirty thousand dollars ($30,000.00), or such other
amount adjusted in accordance with Code Section
415(c)(1)(A) as in effect for the calendar year in which
the determination date falls.
(c) A five percent (5%) owner of the Company. "Five percent
(5%) owner" means any person who owns (or is considered
as owning within the meaning of Code Section 318) more
than five percent (5%) of the outstanding stock of the
Company or stock possessing more than five percent (5%)
of the total combined voting power of all stock of the
Company.
(d) A one percent (1%) owner of the Company having an annual
compensation from the Company of more than one hundred
fifty thousand dollars ($150,000.00). "One percent (1%)
owner" means any person who owns (or is considered as
owning within the meaning of Code Section 318) more than
one percent (1%) of the outstanding stock of the Company
or stock possessing more than one percent (1%) of the
total combined voting power of all stock of the Company.
In determining percentage ownership hereunder, employers
that would otherwise be aggregated under Code Sections
414(b), (c), and (m) shall be treated as separate em-
ployers. However, in determining whether an individual
has compensation of more than one hundred fifty thousand
dollars ($150,000.00) compensation from each employer
required to be aggregated under Code Sections 414(b),
(c), and (m) shall be taken into account.
14.3 Non-Key Employee. "Non-key employee" means any employee
who is not a key employee.
14.4 Super Top Heavy Plan. "Super Top Heavy Plan" means, for
Plan years commencing after December 31, 1983, that, as of the
determination date, (1) the present value of accrued benefits of
key employees, or (2) the sum of the aggregate accounts of key
employees under this Plan and any Plan of the Company's aggregation
group, exceeds ninety percent (90%) of the present value of accrued
benefits or the aggregate accounts of all participants under this
Plan and any Plan of the Company's aggregation group.
14.5 Top Heavy Plan. "Top Heavy Plan" means, for Plan years
commencing after December 31, 1983, that, as of the determination
date, (1) the present value of accrued benefits of key employees,
or (2) the sum of the aggregate accounts of key employees under
this Plan and any Plan of the Company's aggregation group, exceeds
sixty percent (60%) of the present value of accrued benefits or the
aggregate accounts of all participants under this Plan and any Plan
of the Company's aggregation group.
14.6 Top Heavy Plan Year. "Top Heavy Plan Year" means any
calendar year after December 31, 1983 in which the Plan is a top
heavy plan.
14.7 Top Heavy Plan Requirements.
(a) For any "Top Heavy Plan Year", the following provisions
shall apply notwithstanding any other provision in this
Plan to the contrary:
1. Any person who is a participant in this Plan in any
year in which it shall be a "Top Heavy Plan" shall
have his or her benefits vested in accordance with
the following schedules: Twenty Percent (20%) after
two (2) years of service; Forty percent (40%) after
three (3) years of service; Sixty percent (60%)
after four (4) years of service; Eighty per-cent
(80%) after five (5) years of service; One hundred
percent (100%) after six (6) years of service.
Effective January 1, 1989, there shall be no
decrease in a participant's nonforfeitable
percentage in the event the Plan's status as top
heavy changes for any year. Further, if the
vesting schedule shifts in and out of the above
schedule for any year because the Plan's top heavy
status changes, such shift shall be considered an
amendment of the vesting schedule. If this occurs,
each participant with at least three (3) years of
service with the Company may elect to have his
nonforfeitable percentage determined without regard
to the shift. The election period will begin with
the date the deemed amendment is made and shall end
on the later of:
A. Sixty (60) days after the deemed amendment is
adopted;
B. Sixty (60) days after the deemed amendment is
effective; or
C. Sixty (60) days after the participant is
issued written notice of the deemed amendment
by the Administrative Committee.
2. Notwithstanding anything in this Plan to the
contrary for any Top Heavy Plan Year, the Company
shall make a minimum contribution for each non-key
employee equal to three percent (3%) of such non-
key employee's salary.
3. For any year in which this Plan is top heavy, each
non-key employee will receive a minimum contribu-
tion if the non-key employee has not separated from
service at the end of the top heavy year, regard-
less of whether the non-key employee has less than
one thousand (1,000) hours of service in such year.
Furthermore, such non-key employee shall receive
such minimum contribution regardless of his or her
level of compensation, and regardless of whether he
or she declines to make a mandatory personal con-
tribution.
4. Notwithstanding the foregoing, so long as any non-
key employee is covered by both the Company's
Pension Plan and this Plan, the minimum contribu-
tion required herein shall be satisfied by the
accrual of the defined benefit by the respective
non-key employee for any top heavy year.
5. If the Company shall be maintaining both this Plan
and a defined benefit plan in any top heavy year, a
factor of 1.0 must be applied to the dollar limits
when the top heavy ratio exceeds ninety percent
(90%).
14.8 Determination of Top Heavy Status.
(a) This Plan shall be a Top Heavy Plan for any Plan year
commencing after December 31, 1983, in which, as of the
determination date, (1) the present value of accrued
benefits of key employees, or (2) the sum of the
aggregate accounts of key employees under this Plan and
any Plan of an aggregation group exceeds sixty percent
(60%) of the present value of accrued benefits or the
aggregate accounts of all participants under this Plan
and any Plan of an aggregation group.
If any participant is a non-key employee for any Plan
year, but such participant was a key employee for any
prior Plan year, such participant's present value of
accrued benefit and/or aggregate account balance shall
not be taken into account for purposes of determining
whether this Plan is a Top Heavy Plan (or whether any
aggregation group which includes this Plan is a Top Heavy
group).
(b) This Plan shall be a Super Top Heavy Plan for any Plan
year commencing after December 31, 1983, in which, as of
the determination date, (1) the present value of accrued
benefits of key employees, or (2) the sum of the
aggregate accounts of key employees under this Plan and
any Plan of an aggregation group, exceeds ninety percent
(90%) of the present value of accrued benefits or the
aggregate accounts of all participants under this Plan
and any Plan of an aggregation group.
(c) Aggregate account. A participant's aggregate account as
of the determination date is the sum of:
1. His participant's account balance as of the most
recent valuation occurring within a twelve (12)
month period ending on the determination date.
2. Contributions that would be allocated as of a date
not later than the determination date, even though
those amounts are not yet made or required to be
made.
3. Any Plan distributions made within the Plan year
that includes the determination date or within the
four (4) preceding Plan years. However, in the
case of distributions made after the valuation date
and prior to the determination date, such distri-
butions are not included as distributions for Top
Heavy purposes to the extent that such distribu-
tions are already included in the participant's
aggregate account balance as of the valuation date.
Notwithstanding anything herein to the contrary,
all distributions, including distributions made
prior to January 1, 1984, will be counted.
4. Any employee contributions, whether voluntary or
mandatory. However, amounts attributable to tax
deductible qualified employee contributions shall
not be considered to be a part of the participant's
aggregate account balance. (d)"Aggregation group"
means either a required aggregation group or a
permissive aggregation group as hereinafter determined.
1. Required aggregation group. In determining a re-
quired aggregation group hereunder, each Plan of
the Company in which a key employee is a parti-
cipant, and each other Plan of the Company which
enables any Plan in which a key employee
participates to meet the requirements of Code
Sections 401(a)(4) and 410, will be required to be
aggregated. Such group shall be known as a
required aggregation group.
In the case of a required aggregation group, each
Plan in the group will be considered a Top Heavy
Plan if the required aggregation group is a Top
Heavy group. No Plan in the required aggregation
group will be considered a Top Heavy Plan if the
required aggregation group is not a Top Heavy
group.
2. Permissive aggregation group. The Company may also
include any other Plan not required to be included
in the required aggregation group, provided the
resulting group, taken as whole, would continue to
satisfy the provisions of Internal Revenue Code
Sections 401(a) or 410. Such group shall be known
as a permissive aggregation group.
In the case of a permissive aggregation group, only
a Plan that is part of the required aggregation
group will be considered a Top Heavy Plan if the
permissive aggregation group is a Top Heavy group.
No Plan in the permissive aggregation group will be
considered a Top Heavy Plan if the permissive
aggregation group is not a Top Heavy Plan group.
3. Only those Plans of the Company in which the
determination dates fall within the same calendar
year shall be aggregated in order to determine
whether such Plans are Top Heavy Plans.
(e) "Determination date" means (1) the last day of the
preceding Plan year, or (2) in the case of the first Plan
year, the last day of such Plan year.
(f) Present value of accrued benefit. In the case of a
defined benefit plan, a participant's present value of
accrued benefit shall be as determined under the
provisions of the applicable defined benefit plan.
(g) "Top Heavy group" means an aggregation group in which,
as of the determination date, the sum of:
1. The present value of accrued benefits of key
employees under all defined benefit plans included
in the group; and
2. The aggregate accounts of key employees under all
defined contribution plans included in the group,
exceeds sixty percent (60%) of a similar sum
determined for all participants.
(h) "Top Heavy Plan year" means that, for a particular Plan
year commencing after December 31, 1983, the Plan is a
Top Heavy Plan.
(i) Notwithstanding anything herein to the contrary, the
effective date otherwise provided for herein for the
application of Code Section 416 to this Plan (Plan years
beginning after December 31, 1983) shall be extended in
accordance with any legislative act of Congress.
IN WITNESS WHEREOF, the Company has caused this Ninth Amendment
to be executed by its authorized Officers and its Corporate
Seal to be hereunto affixed, and the Trustees have executed this
Trust, all on the 22nd day of November , 19 94.
KANSAS CITY LIFE INSURANCE COMPANY
By: /s/C. John Malacarne
Its: Vice President
ATTEST:
By: /s/Sandra Kowalski
Its: Assistant Secretary
/s/John K. Koetting
/s/Ronald E. Hiatt
/s/Robert C. Miller
TRUSTEES
Exhibit 11, Form 10-K
Kansas City Life
Insurance Company
<TABLE>
KANSAS CITY LIFE INSURANCE COMPANY
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
Years Ended December 31, 1994, 1993 and 1992
1994 1993 1992
<S> <C> <C> <C>
Shares outstanding
at the end of:
January 6 146 912 6 142 432 6 115 583
February 6 149 595 6 142 616 6 115 696
March 6 152 038 6 142 979 6 122 112
April 6 148 472 6 144 893 6 119 966
May 6 153 712 6 150 295 6 126 421
June 6 154 480 6 153 021 6 129 041
July 6 150 730 6 153 737 6 131 714
August 6 146 180 6 159 390 6 137 067
September 6 154 427 6 143 140 6 138 547
October 6 154 517 6 142 316 6 139 644
November 6 160 637 6 140 715 6 145 257
December 6 162 436 6 143 875 6 146 168
Weighted average
number of shares
outstanding for
the year 6 152 155 6 146 583 6 129 494
Income before
nonrecurring items $38 858 000 42 054 000 36 650 000
Nonrecurring
expenses, net 1 481 000 - 5 592 000
Net income $37 377 000 42 054 000 31 058 000
Per common share:
Income before
nonrecurring items $ 6.32 6.84 5.98
Nonrecurring
expenses, net .24 - .91
Net income $ 6.08 6.84 5.07
</TABLE>
Selected Financial Data
(Thousands, except per share data)
1994 1993 1992 1991 1990
Revenues:
Insurance $ 203 827 196 829 188 492 118 306 102 889
Investment
income, net 173 388 163 237 171 581 170 523 162 043
Realized gains 6 060 24 648 8 273 1 006 1 682
Other 10 179 9 609 9 742 9 631 11 927
$ 393 454 394 323 378 088 299 466 278 541
Operating income $ 34 919 26 033 31 190 26 204 24 056
Realized gains, net 3 939 16 021 5 460 664 1 110
Income before
nonrecurring item $ 38 858 42 054 36 650 26 868 25 166
Nonrecurring
expenses, net $ 1 481 - 5 592 - -
Net income $ 37 377 42 054 31 058 26 868 25 166
Per common share:
Operating income $ 5.68 4.24 5.09 4.28 3.75
Realized gains, net .64 2.60 .89 .11 .17
Income before non-
recurring items $ 6.32 6.84 5.98 4.39 3.92
Nonrecurring
expenses, net .24 - .91 - -
Net income $ 6.08 6.84 5.07 4.39 3.92
Cash dividends $ 1.40 1.36 1.28 1.20 1.12
Stockholders'equity:
As reported 55.78 61.68 56.49 52.28 46.53
Excluding unrealized
gains and losses 64.11 59.48 54.00 50.27 46.82
Assets $ 2 663 753 2 651 430 2 510 662 2 331 487 1 976 186
Net return on
invested assets 7.71% 7.65 8.54 9.29 9.53
Life insurance
in force $20 023 820 19 028 772 18 862 336 18 069 161 15 976 803
Old American Insurance Company is included since 1991.
(The above is not covered by the report of independent auditors)
Management's Discussion
and analysis of financial condition and results of operations
Operating Results
Operating earnings per share in 1994 were a record, 34 percent
above 1993 and 12 percent above the previous high in 1992.
Earnings per share grew at an 11 percent compound rate over the
past five years.
Operating earnings were impacted by several key events.
Earnings benefited from declining home office expenses the past
three years. Interest spreads narrowed in 1993 adversely
impacting earnings, but interest margins were restored to prior
levels in 1994. Finally, mortality experience, which fluctuates
by its nature, has been less favorable the past two years.
Net earnings per share, impacted by historically high investment
gains in 1993 and a nonrecurring charge for postemployment
benefits in 1994, rose 35 percent in 1993 but then declined 11
percent in 1994.
Insurance Revenues
Sales were restrained the past two years partially by decisions to
improve profitability at the expense of short-term sales results.
Unprofitable agents were pared at each of the companies.
Additionally, marketing allowances were restructured at Old American
to enhance recovery of agent advances to the detriment of sales
growth. Finally, Old American's home health product was pulled from
the market in early 1993. Thus new annualized premiums declined
3 percent in 1993 and 13 percent in 1994 excluding Old American.
Clearly sales have not met our expectations. In response to
this lack of "forward marketing momentum," A. M. Best Company
lowered Kansas City Life and Sunset Life's ratings from "A+"
(Superior) to "A" (Excellent) in late 1994. While nearly 70 other
companies were also downgraded during the year, the new rating
still leaves the Company ranked among the top 23 percent of the
1,400 companies rated by A. M. Best.
Additionally, the Company has been advised that Standard & Poor's intends to
lower its rating. While stating the Company's earnings are considered excellent
and its Capital Adequacy Ratio superior, S & P feels sales are below their
expectations and have expressed concerns regarding the Latin American bonds
discussed below and the ultimate outcome of the appeal of a $10.5 million
judgement against the Company. S & P indicates that Kansas City Life and
Sunset Life's ratings will be lowered from AA to A+, while Old American's
rating will be lowered from A+ to A.
Kansas City Life had become concerned about marketing progress
in early 1993, and aggressively moved to address it. An
extensive search for a new chief marketing officer culminated
with his hiring in early 1994. Over the remainder of the year
he brought in several seasoned marketing professionals and
streamlined the marketing organization. Significant new markets
were targeted; the Asian-American market and variable insurance,
the fastest growing segment of the life insurance market.
Variable universal life and annuity products will be introduced
in late 1995. The Company expects these measures to have a
positive effect on sales in 1995 and beyond.
Insurance revenues rose 4 percent in both 1993 and 1994.
Contract charges on interest sensitive products increased 6
percent in 1993 and 4 percent in 1994. Traditional life
premiums were up 5 percent in 1993 and 3 percent in 1994.
Accident and health premiums essentially were level over the
three years as declining home health premiums were offset by
increasing group disability premiums. We reached $19 billion of
insurance in force in 1993 and passed $20 billion in 1994.
Investment Revenues
Investment earnings rose 6 percent in 1994. Rising market yields
contributed to the increase and stemmed calls on the securities
portfolio. A steep decline in market yields during 1992 and 1993
depressed investment earnings in 1993 and triggered significant
calls on the securities portfolio. The calls generated sizable
realized gains but, when combined with the declining market yields,
accelerated the decline in the portfolio's yield. Realized gains
peaked at $24.6 million in 1993, declining to $6.1 million in 1994.
The investment portfolio's yield declined from 8.54 percent in 1992
to 7.65 percent in 1993, but rose to 7.71 percent in 1994.
A key measure of investment success is the spread earned between
interest rates credited on interest sensitive products and
interest rates earned. This margin narrowed during the latter
half of 1993 due to the calls discussed above. However, the
spread widened in 1994 as crediting rates were lowered in
response to market conditions.
Quality and security also remain key components of Kansas City
Life's investment strategies.
Bonds and preferred stocks comprise 80 percent of investments
and 97 percent of 1994's investment purchases. Delinquencies
and defaults have been minimal historically. Over 93 percent of
the securities are investment grade.
The Company has invested $80.4 million in U.S. dollar-denominated
sovereign and corporate debt of Argentina and Mexico. This represents
3.4 percent of the Company's investments. These securities have been
buffeted by developments arising out of the Mexican peso devaluation in
late 1994. The devaluation has had a major impact on the Mexican
economy and has heightened concerns over the stability of Argentina's
currency. As a result of market uncertainties, these securities'
indicated market value declined to $68.2 million at year end 1994, and
declined further to $53.2 million by March 13, 1995. The market for
these securities is thin and volatile. Our strategy is to avoid taking
losses unless it appears an issuer will be unable to meet its
contractual principal and interest payments. Following a thorough
review of each of these securities in February 1995, losses totaling
$2.7 million, net of taxes, were realized on three securities with an
amortized cost of $8.3 million. The unrealized depreciation in these
securities' indicated market value since year end 1994 has been more
than offset by unrealized appreciation in the remainder of the
investment portfolio over this same period. Likewise, investment gains
are expected to be realized in the first quarter of 1995 offsetting the
losses realized above. The Company will continue to monitor
developments and adjust its strategy as conditions suggest.
Kansas City Life also has a $121.1 million investment in
collateralized mortgage obligations (CMO), representing 5 percent of
investments. These are primarily planned amortization class (PAC)
obligations of Federal agencies backed by 15-year mortgage pools
rated "AAA," with interest rates ranging from 6 to 7 percent. The
CMO's market value equaled $113.5 million at year end 1994.
Mortgage loans represent 11 percent of investments compared with
16 percent two years ago. Delinquent mortgages and those being
foreclosed equal 3 percent of the portfolio versus 4 percent for
the industry. Foreclosures totaled $3.7 million in 1994,
resulting in a $0.7 million loss. Restructured loans comprise 4
percent of the portfolio. Valuation reserves equal $10.5
million or 4 percent of the portfolio. These reserves were
increased $5.0 million in 1992 and $3.5 million in 1993, but no
addition was considered necessary in 1994.
Real estate and real estate joint ventures are 3 percent of the
investment portfolio. Over half of the real estate was obtained
through mortgage foreclosures and is carried at the lower of its
current fair value or its value at the date it was foreclosed.
Several of these properties were disposed of over the past three
years at little additional gain or loss. The valuation reserve on
these properties increased $1.7 million in 1992 and $0.4 million in
1993. The reserve declined $1.2 million during 1994 principally
due to improving real estate markets. The real estate and real
estate joint ventures' market value exceeds their carrying
value.
Benefits and Expenses
Mortality experience dampened earnings comparisons in both 1993 and
1994. While mortality experience was quite good in 1992 and less
favorable in 1993 and 1994, the experience was within normal ranges
all three years. Surrenders of traditional life business rose
slightly in dollar terms in 1994 following a decline in 1993.
However, surrenders, as a percent of cash values which could be
surrendered, declined in 1993 and remained unchanged in 1994. Other
benefits rose in 1993 and 1994 due to the growth of the group
disability lines and adverse claims experience in the home health
line. As noted earlier, this product was pulled from the market in
early 1993 and rate relief is being sought.
Amortization of deferred acquisition costs fluctuates since
amortization schedules are adjusted quarterly as gross profit
streams are reassessed based upon actual experience.
Home office expenses, which comprise much of the insurance
operating expenses, declined 4 percent in both 1992 and 1993,
and 2 percent in 1994. The Company's ongoing effort to improve
productivity focuses on two fronts: process business more
efficiently and expand the block of business administered. This
effort started eight years ago and previous annual reports have
chronicled these efforts; ranging from computer system
conversions to merging affiliate processing into the home
office. The result has been that both premium dollars and the
number of policies administered per home office employee have
doubled over the past eight years. However, further improvement
is vital in these competitive times. In 1995 the reengineering
of the new business process will be completed, and the
reengineering of the policy administration process will begin.
These efforts are expected to further enhance our competitive
position both in terms of costs and service capabilities.
Finally, the quest for efficiency is intertwined with a
long-term commitment to service and quality. Over the past year
standards in these areas have been formalized. Ongoing feedback
from policyowners, agents and employees is being initiated to
ensure these standards are maintained.
Kansas City Life's effective tax rate was 33 percent in both
1992 and 1993, and declined slightly to 32 percent in 1994.
Accounting Changes
The Company adopted FASB Statement No. 115, "Accounting for Certain
Investments in Debt and Equity Securities" at the beginning of 1994.
In adopting this standard, three-quarters of the securities
portfolio is designated as "available for sale" and shown in the
financials at market value. The remainder of the securities
portfolio is considered to be "held to maturity" and is carried at
amortized cost. Changes in market value, net of related taxes and
deferred acquisition cost impacts, are reflected in stockholders'
equity as unrealized gains or losses. Unfortunately the standard
does not require the corresponding liabilities to be similarly
marked-to-market, which would have offset the fluctuations in the
investments' market value. Therefore, equity, and calculations
dependent on equity including return on equity and book value, will
likely be volatile in the years ahead, as was the case in 1994. Due
largely to rising interest rates, the market value of the
available for sale securities declined during 1994, resulting in
a $51.3 million net unrealized loss at year end.
A second guideline was adopted in 1994, FASB Statement No. 112,
"Employers' Accounting for Postemployment Benefits." This
guideline requires changing from cash-basis to accrual-basis
accounting for benefits that will become payable to former or
inactive employees. The establishment of the transition
liability resulted in a $1.5 million nonrecurring charge to
earnings, net of applicable taxes. The effect on operating
expenses was not significant.
Kansas City Life will adopt FASB Statement No. 114, "Accounting
by Creditors for Impairment of a Loan," as amended by FASB
Statement No. 118, "Accounting by Creditors for Impairment of a
Loan_Income Recognition and Disclosures," in the first quarter
of 1995, but no impact to the financial statements is expected.
Liquidity and Capital Resources
Kansas City Life, as part of the life insurance industry, plays
a vital role in society as a provider of capital for investment
and expansion. As such, Kansas City Life historically has had
few liquidity concerns. Cash provided by operations and
contract deposits averaged $126.4 million a year over the past
three years. The Company has invested, on average, $870.8
million each of the past three years. Forward investment
commitments are minimal. Kansas City Life had no debt
outstanding at year end 1994, but may borrow against a $40.0
million bank credit line to purchase securities if market
conditions suggest that long-term interest rates have peaked for
this cycle. The Company matches its assets and liabilities and
performs cash flow testing as added assurance cash needs will be
met in the coming years.
<TABLE>
Consolidated Income Statement
(Thousands, except per share data)
1994 1993 1992
<S> <C> <C> <C>
Revenues
Insurance revenues:
Premiums:
Life insurance $103 324 99 941 94 945
Accident and health 30 896 29 988 30 345
Contract charges 69 607 66 900 63 202
Investment revenues:
Investment income, net 173 388 163 237 171 581
Realized gains, net 6 060 24 648 8 273
Other 10 179 9 609 9 742
Total revenues 393 454 394 323 378 088
Benefits and Expenses
Policy benefits:
Death benefits 79 829 72 128 67 444
Surrenders of life insurance 16 490 15 525 19 430
Other benefits 54 146 50 680 45 667
Increase in benefit and contract reserves 83 158 96 188 90 658
Amortization of policy acquisition costs 29 370 22 350 21 758
Insurance operating expenses 73 043 73 990 76 635
Interest expense 444 926 1 416
Total benefits and expenses 336 480 331 787 323 008
Income before Federal income taxes 56 974 62 536 55 080
Federal income taxes:
Current 22 845 27 772 16 349
Deferred (4 729) (7 290) 2 081
18 116 20 482 18 430
Income before nonrecurring items 38 858 42 054 36 650
Nonrecurring expenses, net 1 481 - 5 592
Net income $ 37 377 42 054 31 058
Per common share:
Income before nonrecurring items $6.32 6.84 5.98
Nonrecurring expenses, net .24 - .91
Net income $6.08 6.84 5.07
See accompanying Notes to Consolidated Financial Statements.
</TABLE>
<TABLE>
Consolidated Balance Sheet
1994 1993
<S> <C> <C>
Assets
Investments:
Fixed maturities:
Available for sale, at fair value
(cost $1,400,616,000) $1 309 297 -
Held to maturity, at amortized cost
(fair value $398,736,000;
$1,593,056,000 -1993) 395 886 1 524 387
Equity securities available for sale,
at fair value (cost $77,533,000;
$99,915,000 - 1993) 82 251 120 686
Mortgage loans on real estate, net 267 695 296 243
Real estate, net 54 976 51 987
Real estate joint ventures 26 120 20 385
Policy loans 95 854 97 783
Short-term 19 340 139 482
Other - 4 000
Total investments 2 251 419 2 254 953
Cash 7 250 11 773
Accrued investment income 39 480 36 869
Receivables, net 9 088 9 705
Property and equipment, net 28 805 31 069
Deferred acquisition costs 193 667 172 294
Value of purchased insurance in force 40 015 41 341
Reinsurance assets 88 887 85 362
Other 5 142 8 064
$2 663 753 2 651 430
Liabilities and Stockholders' Equity
Future policy benefits:
Life insurance $ 643 672 627 856
Accident and health 26 986 27 055
Accumulated contract values 1 459 045 1 378 543
Policy and contract claims 32 548 29 433
Other policyowners' funds:
Dividend and coupon accumulations 42 737 42 298
Other 52 228 53 081
Income taxes:
Current 538 593
Deferred 3 608 43 761
Other 58 696 69 853
Total liabilities 2 320 058 2 272 473
Stockholders' equity:
Common stock, par value $2.50 per share
Authorized 18,000,000 shares, issued
9,248,340 shares 23 121 23 121
Paid-in capital 11 847 10 597
Unrealized gains (losses on
securities available for sale
and equity securities, net (51 345) 13 501
Retained earnings 446 149 417 381
Less treasury stock, at cost
(3,085,904 shares;
3,104,465 shares -1993) (86 077) (85 643)
Total stockholders' equity 343 695 378 957
$2 663 753 2 651 430
See accompanying Notes to Consolidated Financial Statements.
</TABLE>
<TABLE>
Consolidated Statement of Stockholders' Equity
1994 1993 1992
<S> <C> <C> <C>
Common stock, beginning and end of year $ 23 121 23 121 23 121
Paid-in-capital:
Beginning of year 10 597 9 342 8 290
Excess of proceeds over cost of
treasury stock sold 1 250 1 255 1 052
End of year 11 847 10 597 9 342
Unrealized gains (losses) on securities:
Beginning of year 13 501 15 298 12 301
Unrealized appreciation on cumulative
effect of accounting change, net 14 627 - -
Unrealized appreciation (depreciation)
on securities available for sale
and equity securities, net (79 473) (1 797) 2 997
End of year (51 345) 13 501 15 298
Retained earnings:
Beginning of year 417 381 383 685 360 471
Net income 37 377 42 054 31 058
Stockholder dividends of $1.40 per share
($1.36 - 1993 and $1.28 - 1992) (8 609) (8 358) (7 844)
End of year 446 149 417 381 383 685
Treasury stock, at cost:
Beginning of year (85 643)(84 258)(84 426)
Cost of 17,329 shares acquired (31,594
shares - 1993 and 3,754 shares - 1992) (771) (1 661) (149)
Cost of 35,890 shares sold (29,301
shares - 1993 and 33,722 shares - 1992) 337 276 317
End of year (86 077)(85 643)(84 258)
Total stockholders' equity $343 695 378 957 347 188
See accompanying Notes to Consolidated Financial Statements.
</TABLE>
<TABLE>
Consolidated Statement of Cash Flows
1994 1993 1992
<S> <C> <C> <C>
Operating Activities
Net income $ 37 377 42 054 31 058
Adjustments to reconcile net income to
net cash from operating activities:
Amortization of investment
discount, net (3 882) (5 590) (10 468)
Depreciation 5 165 4 638 5 335
Policy acquisition costs capitalized (43 952) (50 574) (50 551)
Amortization of deferred
policy acquisition costs 29 370 22 350 21 758
Realized gains (6 060) (24 648) (8 273)
Changes in assets and liabilities:
Future policy benefits 15 747 22 793 6 691
Accumulated contract values 8 445 19 822 35 152
Accrued investment income (2 611) (1 705) (2 366)
Income taxes payable and deferred (4 784) (12 295) 1 828
Nonrecurring items 1 481 - 5 592
Other, net 5 456 6 166 10 748
Net cash from operating activities 41 752 23 011 46 504
Investing Activities
Investments called, matured or repaid:
Fixed maturities available for sale 203 640 - -
Fixed maturities held to maturity 75 060 809 347 414 130
Equity securities available for sale 27 876 55 026 34 825
Mortgage loans on real estate 35 311 49 151 45 255
Decrease in policy loans, net 1 929 4 927 323
Decrease (increase in short-term
investments, net 120 142 29 425 (12 025)
Other 540 2 899 1 387
Investments sold:
Fixed maturities available for sale 51 124 - -
Fixed maturities held to maturity - 206 923 96 058
Equity securities available for sale 3 488 36 236 12 149
Investments purchased or originated:
Fixed maturities available for sale (574 667) - -
Fixed maturities held to maturity (21 533)(1 221 873)(657 919)
Equity securities available for sale (5 566) (25 425) (38 737)
Real estate joint ventures (5 707) (10 661) (1 084)
Mortgage loans on real estate (8 192) (6 468) (24 585)
Other (1 789) (5 762) (2 446)
Net additions to property and equipment (1 640) (11 370) (3 353)
Net cash used in investing activities (99 984) (87 625)(136 022)
Financing Activities
Proceeds from borrowings 891 2 586 20 685
Repayment of borrowings (11 446) (27 994) (27 402)
Policyowner contract deposits 179 411 167 979 169 439
Withdrawals of policyowner
contract deposits (107 354) (70 258) (71 420)
Cash dividends to stockholders (8 609) (8 358) (7 844)
Disposition (acquisition) of
treasury stock, net 816 (130) 1 220
Net cash from financing activities 53 709 63 825 84 678
Decrease in cash (4 523) (789) (4 840)
Cash at beginning of year 11 773 12 562 17 402
Cash at end of year $ 7 250 11 773 12 562
See accompanying Notes to Consolidated Financial Statements.
</TABLE>
Notes to Consolidated Financial Statements
(Amounts in tables are generally stated in thousands,
except per share data)
Significant Accounting Policies
Basis of Presentation
The accompanying consolidated financial statements have been prepared
on the basis of generally accepted accounting principles (GAAP).
Certain reclassifications have been made to 1993 and 1992 results to
conform with the 1994 presentation.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts
of Kansas City Life Insurance Company and its sub-sidiaries.
Significant intercompany transactions have been eliminated in
consolidation.
Recognition of Revenues
Traditional life insurance products include whole life insurance, term
life insurance and certain annuities. Premiums for these products are
recognized as revenues when due. Accident and health insurance
premiums are recognized as revenues over the terms of the policies.
Universal life-type products include universal life insurance and
flexible annuities. Revenues for these products are amounts assessed
against contract values for cost of insurance, policy administration
and surrenders, as well as amortization of deferred front-end contract
charges.
Future Policy Benefits
For traditional life insurance products, reserves have been computed by
a net level premium method based upon estimates at the time of issue
for investment yields, mortality and withdrawals. These estimates
include provisions for experience less favorable than actually
expected. Investment yield assumptions for new issues are graded and
range from 7.75 percent to 5.75 percent. Mortality assumptions are
based on standard mortality tables. The 1965-70 Select and Ultimate
Basic Table is used for business issued since 1977. Reserves and claim
liabilities for accident and health insurance include estimated unpaid
claims and claims incurred but not reported. For traditional life and
accident and health insurance, benefits and claims are charged to
expense in the period incurred.
Liabilities for universal life-type products represent accumulated
contract values, without reduction for potential surrender charges, and
deferred front-end contract charges which are amortized over the term
of the policies. Benef its and claims are charged to expense in the
period incurred net of related accumulated contract values. Interest
on accumulated contract values is credited to contracts as earned.
Crediting rates for universal life insurance and flexible annuity
products ranged from 4.50 percent to 7.50 percent during 1994.
Withdrawal assumptions for all products are based on corporate
experience.
Policy Acquisition Costs
The costs of acquiring new business, principally commissions, certain
policy issue and underwriting expenses and certain variable agency
expenses, are deferred. For traditional life products, deferred
acquisition costs are amortized in proportion to premium revenues over
the premium-paying period of related policies, using assumptions
consistent with those used in computing benefit reserves. Acquisition
costs for universal life-type products are amortized over a period not
exceeding 30 years in proportion to estimated gross profits arising
from interest spreads and mortality, expense and surrender charges
expected to be realized over the term of the contracts.
Calls in the securities portfolio resulted in realized gains in
1994 and 1993 which increased gross profits above those originally
estimated. In accordance with Financial Accounting Standards Board
(FASB) Statement No. 97, these higher than expected gross profits
required the Company to recompute its amortization of deferred
acquisition costs retrospectively to the date the amortization was
originally determined. This increased the amortization of deferred
acquisition costs $804,000, ($3,030,000 - 1993) or $.08 a share ($.32
a share - 1993) after taxes. This increased amortization was netted
against realized investment gains in the accompanying income
statement.
Value of Purchased Insurance in Force
The value of Old American's purchased insurance in force was
capitalized and is being amortized in proportion to projected future
gross profits. This asset was increased $5,310,000 ($5,513,000 - 1993
and $5,632,000 - 1992) for accrual of interest and reduced $6,636,000
($7,217,000 - 1993 and $6,074,000 - 1992) for amortization. A 13
percent interest rate was used. The percentage of the asset's current
carrying amount which will be amortized in each of the next five years
is 2.3 percent - 1995, 2.6 percent - 1996, 7.0 percent -1997, 6.9
percent - 1998 and 7.1 percent - 1999.
Investments
Prior to January 1, 1994, the Company classified fixed maturities in
accordance with the then existing accounting standards. Such
securities were carried at cost, adjusted for amortization of premium
or discount since the Company had both the ability and intent to hold
those securities until maturity. Equity securities were carried at
fair value.
Effective January 1, 1994, securities held to maturity and short-term
investments are stated at cost adjusted for amortization of premium
and accrual of discount. Securities available for sale are stated at
fair value. Unrealized gains and losses on securities available for
sale are reduced by deferred income taxes and related adjustments in
deferred acquisition costs, and are included in a separate
stockholders' equity account. Mortgage loans are stated at cost
adjusted for amortization of premium and accrual of discount less an
allowance for possible losses. Foreclosed real estate is stated at
fair value at the date of foreclosure (cost or net realizable value,
whichever is lower.
Other real estate investments are carried at depreciated cost.
Real estate joint ventures are valued at cost adjusted for the
Company's equity in earnings since acquisition. Policy loans are
carried at cost less payments received. Realized gains and losses on
disposals of investments, determined by the specific identification
method, are included in investment revenues.
Fair Value of Financial Instruments
The carrying amounts for cash, short-term investments and policy loans
as reported in the accompanying balance sheet approximate their fair
values. The fair values for securities held to maturity are based on
quoted market prices, where available. For those securities not
actively traded, fair values are estimated using values obtained from
independent pricing services or, in the case of private placements,
are estimated by discounting expected future cash flows using a current
market rate applicable to the yield, credit quality and maturity of the
investments. The fair values for securities available for sale are
based on quoted market prices. Fair values for mortgage loans are
based upon discounted cash flow analyses using an interest rate
assumption of 10 percent.
Fair values for the Company's liabilities under investment-type
insurance contracts, included with accumulated contract values for
flexible annuities, and with other policyholder funds for supplementary
contracts without life contingencies, are estimated to be their cash
surrender values.
Fair values for the Company's insurance contracts other than investment
contracts are not required to be disclosed. However, the fair values
of liabilities under all insurance contracts are taken into
consideration in the Company's overall management of interest rate
risk, which minimizes exposure to changing interest rates through the
matching of investment maturities with amounts due under insurance
contracts.
The carrying amounts and fair values of the financial instruments
follow.
1994 1993
Carrying Fair Carrying Fair
Amount Value Amount Value
Investments:
Securities available
for sale $1 391 548 1 391 548 120 686 120 686
Securities held
to maturity 395 886 398 736 1 524 387 1 593 056
Mortgage loans 267 695 265 199 296 243 295 672
Liabilities:
Individual and
group annuities 851 847 822 946 816 324 788 212
Supplementary
contracts without
life contingencies 22 403 22 403 22 303 22 303
The Investments note provides further details regarding the investments
above.
Federal Income Taxes
Income taxes have been provided using the liability method in
accordance with FASB Statement No. 109, "Accounting for Income Taxes."
Under that method, deferred tax assets and liabilities are determined
based on the differences between their financial reporting and their
tax bases and are measured using the enacted tax rates.
Income Per Common Share
Income per common share is based upon the weighted average number of
shares outstanding during the year, 6,152,155 shares (6,146,583 shares
- - 1993 and 6,129,494 shares - 1992).
Statutory Information and Stockholder Dividends Restriction
The Company's earnings, unassigned surplus (retained earnings and
stockholders' equity, on the statutory basis used to report to
regulatory authorities, follow.
1994 1993 1992
Net gain from operations
for the year $ 29 151 20 685 23 392
Net income for the year 28 324 24 035 25 395
Unassigned surplus
at December 31 235 226 202 538 202 549
Stockholders' equity
at December 31 184 117 150 613 150 754
Stockholder dividends may not exceed statutory unassigned surplus.
Additionally, under Missouri law, the Company must have the prior
approval of the Missouri Director of Insurance in order to pay a
dividend exceeding the greater of statutory net gain from operations
for the preceding year or 10 percent of statutory stockholders' equity
at the end of the preceding year. The maximum payable in 1995 without
prior approval is $29,151,000. The Company believes these statutory
limitations impose no practical restrictions on its dividend payment
plans.
The Company is required to deposit a defined amount of assets with
state regulatory authorities. Such assets had an aggregate carrying
value of $102,381,000 ($70,874,000 - 1993).
Investments
Accounting Change
FASB Statement No. 115, "Accounting for Certain Investments in Debt
and Equity Securities," categorizes debt securities into three
classifications. Securities classified as held to maturity are carried
at amortized cost and include only those securities which the Company
has the positive intent and ability to hold to maturity. Trading
securities are those purchased for the purpose of realizing a trading
profit. These securities are valued at market with the changes in
market value recognized through the income statement. Securities
available for sale include securities which may be sold but which are
not considered trading securities. These securities are carried at
market, but the changes in market value are reflected in equity.
Kansas City Life adopted this statement on January 1, 1994, and
classified 73 percent of its securities as available for sale, with the
balance classified as held to maturity. In accordance with this
statement, the prior year financial statements have not been restated
to reflect this change in accounting principle. Prior to 1994 fixed
maturities were carried at amortized cost and equity securities were
carried at their market value. Valuing securities available for sale
at market increased stockholders' equity $14,627,000 at January 1,
1994, net of related deferred acquisition costs of $5,068,000 and
taxes of $7,876,000.
Currently 79 percent of the Company's securities are categorized as
available for sale and are valued at market. The resulting adjustment
causes significant volatility in these securities' carrying values, and
will affect various calculations which are dependent on stockholders'
equity, such as return on equity.
FASB Statement No. 119, "Disclosure about Derivative Financial
Instruments and Fair Value of Financial Instruments," requires
additional disclosures concerning derivative financial instruments
which have off-balance sheet risk. Kansas City Life employs no
instruments which fall within this Statement's scope.
Investment Revenues
Major categories of investment revenues are summarized as follows.
1994 1993 1992
Investment Income:
Fixed maturities $127 806 107 880 107 635
Equity securities 7 563 11 971 14 095
Mortgage loans 29 118 33 337 38 472
Real estate 11 732 10 106 8 621
Policy loans 6 295 6 524 6 599
Short-term 4 437 8 192 7 875
Other 2 433 1 785 2 413
189 384 179 795 185 710
Less investment expenses (15 996) (16 558) (14 129)
$173 388 163 237 171 581
1994 1993 1992
Realized Gains (Losses):
Fixed maturities $ 1 995 19 087 9 876
Equity securities 4 568 11 433 5 362
Mortgage loans - (3 500) (5 271)
Real estate 300 875 (2 671)
Other 1 (217) 977
Deferred acquisition cost
amortization for realized gains (804) (3 030) -
$ 6 060 24 648 8 273
Unrealized Gains and Losses
Unrealized gains (losses on the Company's securities follow. Held to
maturity and available for sale securities relate only to 1994, while
fixed maturities relate to 1993 and 1992.
1994 1993 1992
Held to maturity and fixed maturities $ 2 850 68 670 76 148
Available for sale and equity securities $(86 601) 20 771 23 179
Deferred income taxes 27 661 (7 270) (7 881)
Effect on deferred acquisition costs 7 595 - -
$(51 345) 13 501 15 298
Increase (decrease in
net unrealized gains:
Held to maturity and fixed maturities $(65 820) (7 478) 2 815
Available for sale fixed maturities $(55 150) - -
Available for sale equity securities (9 696) (1 797) 2 997
$(64 846) (1 797) 2 997
Securities
The amortized cost and fair value of investments in securities at
December 31, 1994, follow.
Gross
Amortized Unrealized Fair
Cost Gains Losses Value
Available for sale:
U.S. government bonds $ 137 522 567 3 268 134 821
Public utility bonds 305 749 439 21 837 284 351
Corporate bonds 583 648 684 47 437 536 895
Mortgage-backed bonds 263 824 2 683 14 445 252 062
Other bonds 84 687 268 8 323 76 632
Redeemable preferred stocks 25 186 495 1 145 24 536
Total fixed maturities 1 400 616 5 136 96 455 1 309 297
Equity securities 77 533 6 846 2 128 82 251
1 478 149 11 982 98 583 1 391 548
Held to maturity:
U.S. government bonds 3 948 66 103 3 911
Public utility bonds 203 747 10 079 1 644 212 182
Corporate bonds 174 879 3 285 8 899 169 265
Other bonds 13 312 331 265 13 378
395 886 13 761 10 911 398 736
$1 874 035 25 743 109 494 1 790 284
The amortized cost and fair value of investments in fixed maturity
and equity securities at December 31, 1993, follow.
Gross
Amortized Unrealized Fair
Cost Gains Losses Value
U.S. government bonds $ 100 658 7 354 1 108 011
Public utility securities 444 743 35 276 846 479 172
Corporate securities 741 343 19 672 3 922 757 093
Mortgage-backed bonds 174 299 7 760 1 788 180 272
Other bonds 63 344 5 618 454 68 508
Total fixed maturities 1 524 387 75 680 7 011 1 593 056
Equity securities 99 915 20 995 224 120 686
$1 624 302 96 675 7 235 1 713 742
All fixed maturity securities produced income in 1994.
The distribution of the fixed maturity securities' contractual
maturities follows. However, expected maturities may differ from
these contractual maturities since borrowers may have the right to
call or prepay obligations.
Amortized Fair
Cost Value
Available for sale:
Due in one year or less $ 51 069 50 913
Due after one year through five years 349 276 336 595
Due after five years through ten years 559 026 502 156
Due after ten years 177 421 167 571
Mortgage-backed securities 263 824 252 062
$1 400 616 1 309 297
Held to maturity:
Due in one year or less $ 49 947 50 351
Due after one year through five years 167 528 176 330
Due after five years through ten years 78 075 75 643
Due after ten years 100 336 96 412
$ 395 886 398 736
Sales of investments in securities available for sale in 1994 and
fixed maturity securities in 1993 and 1992, excluding normal
maturities and calls, follow.
1994 1993 1992
Proceeds $54 612 206 923 96 058
Gross realized gains 1 065 2 480 1 547
Gross realized losses 377 241 2 781
At December 31, 1994, the Company held securities of one
corporation and its affiliates which exceeded 10 percent of
stockholders' equity. Entergy Corporation securities were held
with a carrying value of $34,789,000 and an amortized cost of
$34,534,000.
Mortgage Loans
The Company held non-income producing mortgage loans equaling
$3,040,000 ($2,536,000 - 1993). Mortgage loans are carried net of a
valuation reserve of $10,500,000 in 1994 and 1993.
At December 31, 1994, the mortgage portfolio is diversified
geographically and by property type as follows.
Carrying Fair
Amount Value
Geographic Region:
Mountain $102 673 101 589
Pacific 84 617 84 509
West South Central 38 573 38 252
West North Central 28 272 27 778
Other 24 060 23 571
Valuation reserve (10 500) (10 500)
$267 695 265 199
Property Type:
Industrial $111 946 111 608
Retail 64 464 63 631
Office 62 496 62 117
Other 39 289 38 343
Valuation reserve (10 500) (10 500)
$267 695 265 199
Real Estate
Detail concerning the Company's real estate investments follows.
1994 1993
Penntower office building, at cost:
Land $ 1 106 1 106
Building 17 254 16 900
Less accumulated depreciation (8 134) (7 593)
Foreclosed real estate, at lower of
cost or net realizable value 28 904 25 606
Other investment properties, at cost:
Land 3 560 4 419
Buildings 23 875 22 447
Less accumulated depreciation (11 589) (10 898)
$ 54 976 51 987
Investment real estate, other than foreclosed properties, is
depreciated on a straight-line basis. Penntower office building
is depreciated over 60 years and all other properties from 10 to
35 years. Foreclosed real estate is carried net of a valuation
allowance of $9,942,000 ($11,113,000 - 1993) to reflect net
realizable value.
The Company held non-income producing real estate equaling
$931,000 in 1994 and 1993.
Mortgage loans foreclosed upon and transferred to real estate
investments during the year equaled $3,391,000 ($4,466,000 -
1993 and $7,873,000 - 1992).
Subsequent Event
The Company held U.S. dollar-denominated Mexican and Argentinean
corporate and sovereign debt with an amortized cost of $80.4 million at
year end 1994, representing 3.4 percent of Company investments.
Uncertainty in the economies of both countries has led to a market
value decline of these investments.
The market for these securities is volatile and illiquid. Their
indicated market value declined to $68.2 million at year end 1994, and
to $53.2 million at March 13, 1995. Thus the securities' indicated
market value declined $15.0 million, or 22 percent, thus far in 1995.
This additional unrealized loss in 1995, net of related income taxes
and deferred acquisition costs, would have reduced stockholders' equity
$9.3 million below year end 1994's level. However, this unrealized
loss was more than offset by unrealized appreciation in the remainder
of the investment portfolio.
Following a detailed analysis of the Latin American bonds in late
February 1995, certain of the above unrealized losses were realized.
Losses totaling $2.7 million, net of taxes, were taken on three
securities with an amortized cost of $8.3 million. These investment
losses were recorded in the first quarter of 1995 and are expected to
be offset during the quarter by investment gains realized elsewhere in
the investment portfolio.
Postretirement Benefit Plans
The Company has defined benefit postretirement plans providing
medical benefits for substantially all its employees, full-time
agents, and their dependents, and life insurance coverage for
its employees. The Company and retirees share the cost of the
postretirement medical plan which incorporates cost-sharing
features such as annually adjusted contributions, deductibles
and coinsurance. The medical benefits for agents are
contributory, incorporating cost-sharing features similar to the
retired employees' medical plan. The life insurance benefit is non-
contributory. The Company pays the cost of the postretirement health
care benefits as they occur. The Company makes level annual
contributions to its life insurance plan over the plan participants'
expected service periods.
The plans' funded status, reconciled with the amounts recognized
in the Company's statement of financial position, follows.
1994 1993
Life Life
Medical Insurance MedicaI Insurance
Plans Plan Plans Plan
Accumulated postretirement
benefit obligation:
Retirees $ 4 172 1 923 3 524 1 938
Fully eligible active
plan participants 796 306 785 415
Other active plan
participants 3 105 537 3 492 753
8 073 2 766 7 801 3 106
Unrecognized net gain 2 298 306 2 181 5
$10 371 3 072 9 982 3 111
The net periodic postretirement benefit cost included the
following components by plan.
1994 1993 1992
Medical plans:
Service cost $ 305 434 426
Interest cost 535 658 599
Net amortization of
experience gains (87) - -
$ 753 1 092 1 025
Life insurance plan:
Service cost $ 74 81 113
Interest cost - - -
$ 74 81 113
The weighted average annual assumed rate of increase in the per
capita cost of covered benefits for the medical plans is 12
percent for 1995, compared with 13 percent for 1994, and is
assumed to decrease gradually to 6 percent in 2003. Increasing
the assumed health care cost growth rates by one percentage
point increases the accrued postretirement benefit costs
$1,119,000 and $1,205,000 as of December 31, 1994 and 1993,
respectively. The aggregate service and interest cost
components of the net periodic postretirement benefit cost for
1994 would increase $168,000. The weighted average discount
rate used in determining the accumulated postretirement benefit
obligation was 8.5 percent and 7.0 percent at December 31, 1994
and 1993, respectively.
The Company adopted FASB Statement No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions," in
1992, resulting in a nonrecurring charge to earnings of
$5,592,000, net of taxes. This one-time charge reflected
accrued retiree benefits as of the beginning of 1992, arising
from the switch from the previous pay-as-you-go method to the
required accrual method.
Property and Equipment
1994 1993
Land $ 1 029 1 029
Home office buildings 23 262 23 208
Furniture and equipment 23 552 32 933
47 843 57 170
Less accumulated depreciation (19 038) (26 101)
$28 805 31 069
Property and equipment are stated at cost. Depreciation is
provided using the straight-line method. Home office buildings
are depreciated over 25 to 50 years and furniture and equipment
over 3 to 10 years, their estimated useful lives.
Employee Benefit Plans
The Company has a defined benefit pension plan covering substantially
all its employees. The benefits are based on years of service and the
employee's compensation during the last five years of employment. The
Company annually funds an amount greater than the minimum required by
ERISA but no more than the maximum deductible for Federal income tax
purposes. Contributions provide not only for benefits attributed to
service to date, but also for those expected to be earned in the
future. The table below states the plan's funded status and those
amounts recognized in the Company's financial statements.
1994 1993
Actuarial present value of
accumulated benefit obligation,
including vested benefits of
$63,829,000 ($71,496,000 - 1993) $64 979 73 011
Projected benefit obligation for
service rendered to date $74 093 84 935
Plan assets at fair value, primarily
listed corporate and U.S. bonds 74 098 79 272
Plan assets in excess of (less than)
projected benefit obligation 5 (5 663)
Items not yet recognized in earnings:
Net loss from past experience 3 733 11 474
Prior service costs 18 21
Net asset at January 1, 1987,
being recognized over 16 years (1 648) (1 854)
Net prepaid pension costs $ 2 108 3 978
1994 1993 1992
Net pension cost includes:
Service costs - benefits earned
during the period $ 3 178 3 156 2 571
Interest cost on projected
benefit obligation 5 835 5 367 4 956
Actual return on plan assets 1 907 (7 631) (5 529)
Net amortization and deferral (8 923) 1 047 (1 049)
Net periodic pension cost $ 1 997 1 939 949
Assumptions were as follows:
Weighted average discount rate 8.5% 7.0 7.0
Weighted average
compensation increase 5.5 5.5 5.5
Weighted average expected
long-term return on plan assets 9.0 9.0 9.0
The Company made no pension contributions from 1992 through 1994.
Non-contributory defined contribution retirement plans are offered
for general agents and eligible sales agents which provide
supplemental payments based upon earned agency first-year individual
life and annuity commissions. Contributions to these plans were
$111,000 ($114,000 - 1993 and $130,000 - 1992). The Company also
sponsors a non-contributory deferred compensation plan for eligible
agents based upon earned first-year commissions. Contributions to
this plan were $377,000 ($370,000 -1993 and $464,000 -1992).
Savings plans for eligible employees and agents are sponsored in
which the Company matches employee contributions up to 10 percent of
salary and agent contributions up to 2.5 percent of prior year paid
commissions. Contributions to the plans were $1,898,000 ($1,839,000
- -1993 and $1,467,000 - 1992).
The Company also has a non-contributory trusteed employee stock
ownership plan covering substantially all salaried employees.
The Company made no contributions to this plan in 1994 and 1993,
but contributed $186,000 in 1992.
Kansas City Life adopted FASB Statement No. 112, "Employers'
Accounting for Postemployment Benefits," on January 1, 1994.
This statement generally requires the accrual of liabilities for
providing benefits, such as severance and disability, to former
or inactive employees whose employment ended before becoming
eligible for retirement. This accounting change resulted in the
immediate recognition of a $1,481,000 transition liability, net
of applicable income taxes, reported as a 1994 nonrecurring
expense. Statement No. 112 did not materially effect current
year operating expenses.
Contingent Liability
In April 1994 a jury rendered a verdict against the Company
related to an agent's misappropriation of a portion of the death
benefit payable to a beneficiary. The verdict called for
compensatory damages of $25,000, actual damages of $500,000, and
punitive damages of $10 million. It is the Company's position
that the trial court committed numerous errors in the conduct of
the trial, determination of issues of evidence and rulings on
dispositive motions, and in instructing the jury. Management
believes the Company's loss, if any, related to this matter
should be significantly less than the amounts awarded. However,
the ultimate outcome cannot be presently determined.
Accordingly, these damages have not been provided for in the
accompanying financial statements.
Federal Income Taxes
Effective January 1, 1993, the Company adopted FASB Statement
No. 109, "Accounting for Income Taxes," which requires income
taxes be accounted for by the "liability method" rather than the
"deferred method" which had been in effect.
The Company elected to recognize the adjustment required by this
standard by means of restatement of previous years' financial
statements. As permitted, the Company retroactively adopted
this statement as of January 1, 1988. The cumulative effect of
this change resulted in a $7.7 million reduction to retained
earnings and a corresponding increase to the deferred tax
liability. Since the required adjustment arises primarily from
differing effective tax rates prior to 1988, the accounting
change had no material impact on reported net income for any of
the years presented. With the exception of changes in Federal
income tax rates, on an ongoing basis, the new accounting method
is expected to produce a financial statement impact that is
generally similar to the impact under previous accounting
principles.
As tax rates change, the Company will recognize the impact by a
charge or credit to the income statement. Due to a Federal
income tax rate change from 34 percent to 35 percent during
1993, the Company had a charge of $900,000 to 1993 earnings.
There were no such tax rate changes in 1994. Assets and
liabilities of Old American also have been restated to their
pretax values in accordance with the guideline for treatment of
prior business combinations. This increased assets and the
deferred tax liability $13.3 million each at January 1, 1993.
A reconciliation of the Federal income tax rate and the actual
tax rate experienced is shown below.
1994 1993 1992
Federal income tax rate 35% 35 34
Tax exempt income, dividends and credits (3) (2) (1)
Actual income tax rate 32% 33 33
The tax effects of temporary differences that give rise to
significant portions of the deferred tax assets and deferred tax
liabilities are presented below.
1994 1993
Deferred tax assets:
Future policy benefits $41 118 36 692
Basis differences between tax and
GAAP accounting for investments 9 580 -
Employee retirement benefits 10 753 9 058
Other 3 286 3 510
Gross deferred tax assets 64 737 49 260
Deferred tax liabilities:
Capitalization of policy acquisition
costs, net of amortization 51 151 46 257
Basis differences between tax and
GAAP accounting for investments - 28 178
Property and equipment, net 2 167 1 549
Value of insurance in force 12 405 12 816
Other 2 622 4 221
Gross deferred tax liabilities 68 345 93 021
Net deferred tax liability $ 3 608 43 761
Federal income taxes paid for the year were $22,684,000
($33,191,000 - 1993 and $18,644,000 - 1992).
Prior to 1984, the Life Insurance Company Income Tax Act of 1959
permitted deferring a portion of statutory income to
"policyowners' surplus" without taxation, subject to certain
limitations on distributions to stockholders. Policyowners'
surplus, which is frozen under the Deficit Reduction Act of
1984, is $40,500,000 for Kansas City Life, $2,800,000 for Sunset
Life and $13,700,000 for Old American. The companies do not
plan to distribute their policyowners' surplus. Consequently,
the possibility of such surplus becoming subject to tax is
remote, and no provision has been made in the financial
statements for taxes thereon. Should the balance in
policyowners' surplus become taxable, the tax computed at
current rates would approximate $19,950,000.
Under current and prior law, income taxed on a current basis is
accumulated in "shareholders' surplus" and can be distributed to
stockholders without tax to the Company. At year end 1994, this
shareholders' surplus was $276,251,000 for Kansas City Life,
$57,977,000 for Sunset Life and $24,734,000 for Old American.
Reinsurance
1994 1993 1992
Life Insurance in Force (in millions:
Direct $19 987 18 990 18 824
Ceded (2 072) (1 616) (1 544)
Assumed 36 39 38
Net $17 951 17 413 17 318
Percentage of assumed to net 0% 0 0
Premiums:
Life insurance:
Direct $126 652 121 577 117 421
Ceded (23 538) (21 829) (22 717)
Assumed 210 193 241
Net $103 324 99 941 94 945
Percentage of assumed to net 0% 0 0
Accident and health:
Direct $ 42 709 41 529 41 233
Ceded (11 956) (11 788) (11 094)
Assumed 143 247 206
Net $ 30 896 29 988 30 345
Percentage of assumed to net 0% 1 1
Contract charges arise generally from directly issued business.
Ceded benefit recoveries were $27,365,000 ($30,487,000 - 1993 and
$17,186,000 - 1992).
Old American has a coinsurance agreement with Employers
Reassurance Corporation which reinsures certain whole life
policies issued by Old American prior to December 1, 1986. As
of December 31, 1994, these policies had a face value of
$175,071,000. The reserve for future policy benefits ceded
under this agreement was $54,686,000 ($55,153,000 - 1993).
The maximum retention on any one life is $350,000. A contingent
liability exists with respect to reinsurance, which may become a
liability of the Company in the unlikely event that the
reinsurers should be unable to meet obligations assumed under
reinsurance contracts.
Quarterly Consolidated
Financial Data (unaudited)
First Second Third Fourth
1994:
Total revenues $98 478 98 688 98 174 98 114
Operating income $ 8 978 9 381 9 855 6 705
Realized gains, net 1 020 1 504 1 383 32
Income before
nonrecurring item 9 998 10 885 11 238 6 737
Postemployment
benefits, net 1 481 - - -
Net income $ 8 517 10 885 11 238 6 737
Per common share:
Operating income $ 1.46 1.53 1.60 1.09
Realized gains, net .17 .23 .23 .01
Income before
nonrecurring item 1.63 1.76 1.83 1.10
Postemployment
benefits, net .24 - - -
Net income $ 1.39 1.76 1.83 1.10
1993:
Total revenues $98 293 96 292 101 366 98 372
Operating income $ 7 441 9 491 6 332 2 769
Realized gains, net 2 712 3 915 4 519 4 875
Net income $10 153 13 406 10 851 7 644
Per common share:
Operating income $ 1.20 1.54 1.04 .46
Realized gains, net .45 .64 .73 .78
Net income $ 1.65 2.18 1.77 1.24
Report of Independent Auditors
To the Board of Directors and Stockholders
of Kansas City Life Insurance Company
We have audited the accompanying consolidated balance sheets of
Kansas City Life Insurance Company (the Company as of December
31, 1994 and 1993 and the related consolidated statements of
income, stockholders' equity and cash flows for each of the
three years in the period ended December 31, 1994. These
consolidated financial statements are the responsibility of the
Company'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 consolidated financial statements referred to
above present fairly, in all material aspects, the consolidated
financial position of Kansas City Life Insurance Company at
December 31, 1994 and 1993 and the consolidated results of its
operations and its cash flows for each of the three years in the
period ended December 31, 1994, in conformity with generally
accepted accounting principles.
As discussed in the Notes to the financial statements, the Company
changed its method of accounting for investments and postemployment
benefits in 1994, and postretirement benefits in 1992.
s/ Ernst & Young LLP
Kansas City, Missouri
January 27, 1995, except for the
Subsequent Event note, as to which
the date is March 13, 1995
Stockholder Information
Corporate Headquarters
Kansas City Life Insurance Company
3520 Broadway
Post Office Box 419139
Kansas City, Missouri 64141-6139
Telephone: (816 753-7000 Fax: (816 753-4902
Notice of Annual Meeting
The annual meeting of stockholders will be held at 9 a.m.
Thursday, April 20, 1995, at Kansas City Life's corporate
headquarters.
Transfer Agent
Sherri Morehead, Assistant Secretary
Kansas City Life Insurance Company
Post Office Box 419139
Kansas City, Missouri 64141-6139
10-K Request
Stockholders may request a free copy of Kansas City Life's
Form 10-K, as filed with the Securities and Exchange
Commission, by writing to Secretary, Kansas City Life
Insurance Company.
Security Holders
As of February 7, 1995, Kansas City Life had approximately
966 security holders, including individual participants in
security position listings.
Stock Quotation Symbol Over-the-Counter_KCLI
Quarterly Stock and Dividend Information
Dividend
Bid Paid
High Low (per share)
1994:
First Quarter $49.00 46.00 $ .34
Second Quarter 49.25 42.00 .34
Third Quarter 43.00 39.50 .36
Fourth Quarter 43.00 40.00 .36
$1.40
1993:
First Quarter $56.00 46.75 $ .34
Second Quarter 56.50 51.50 .34
Third Quarter 55.50 50.00 .34
Fourth Quarter 52.50 48.00 .34
$1.36
A quarterly dividend of $.36 per share was paid February 21, 1995.
Over-the-counter market quotations are compiled according to
Company records and may reflect inter-dealer prices, without
mark-up, mark-down or commission and may not necessarily
represent actual transactions.
Dividend Restrictions
Refer to the first Note to the Consolidated Financial Statements.
Exhibit 21, Form 10-K
Kansas City Life
Insurance Company
SUBSIDIARIES
Kansas City Life Insurance Company's significant insurance
subsidiaries are:
1. Sunset Life Insurance Company of America, a corporation
organized under the laws of the State of Washington.
2. Old American Insurance Company, a corporation organized
under the laws of the State of Missouri.
The Company's other insurance and non-insurance subsidiaries
are not significant individually or in the aggregate.
Exhibit 23(a), Form 10-K
Kansas City Life
Insurance Company
Consent of Independent Auditors
We consent to the incorporation by reference in this Annual Report (Form 10-K)
of Kansas City Life Insurance Company (the Company) of our report dated
January 27, 1995, except for the Subsequent Event note as to which the date is
March 13, 1995 included in the 1994 Annual Report to Shareholders of Kansas City
Life Insurance Company.
Our audits also included the financial statement schedules of Kansas City Life
Insurance Company listed in Item 14(a). These schedules are the responsibility
of the Company's management. Our responsibility is to express an opinion based
on our audits. In our opinion, with respect to which the date is January 27,
1995, except for the Subsequent Event note as to which the date is March 13,
1995, the financial statement schedules referred to above, when considered in
relation to the basic financial statements taken as a whole, present fairly in
all material respects the information set forth therein.
We also consent to the incorporation by reference in the Registration Statement
(Form S-8 No. 2-97351) pertaining to the Savings and Investment Plan of Kansas
City Life Insurance Company of our report dated January 27, 1995, except for the
Subsequent Event note as to which the date is March 13, 1995, with respect to
the consolidated financial statements incorporated herein by reference, and our
report included in the preceding paragraph with respect to the financial
statement schedules included in this Annual Report (Form 10-K) of Kansas City
Life Insurance Company.
/s/ Ernst & Young LLP
Ernst & Young LLP
Kansas City, Missouri
March 15, 1995
Exhibit 23(b), Form 10-K
Kansas City Life
Insurance Company
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statement (Form
S-8 No. 2-97351) pertaining to the Savings and Investment Plan of Kansas City
Life Insurance Company of our report dated February 13, 1995, with respect to
the financial statements and schedules of the Kansas City Life Insurance Company
Savings and Investment Plan included in this Annual Report (Form 11-K) for the
year ended December 31, 1994.
/s/ Ernst & Young LLP
Ernst & Young LLP
Kansas City, Missouri
March 15, 1995
<TABLE> <S> <C>
<ARTICLE> 7
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<DEBT-HELD-FOR-SALE> 1,309,297<F1>
<DEBT-CARRYING-VALUE> 395,886<F2>
<DEBT-MARKET-VALUE> 398,736<F2>
<EQUITIES> 82,251<F3>
<MORTGAGE> 267,695
<REAL-ESTATE> 81,096<F4>
<TOTAL-INVEST> 2,232,079
<CASH> 26,590
<RECOVER-REINSURE> 88,887
<DEFERRED-ACQUISITION> 193,667
<TOTAL-ASSETS> 2,663,753
<POLICY-LOSSES> 670,658
<UNEARNED-PREMIUMS> 0
<POLICY-OTHER> 32,548
<POLICY-HOLDER-FUNDS> 1,554,010<F5>
<NOTES-PAYABLE> 0
<COMMON> 23,121
0
0
<OTHER-SE> 320,574
<TOTAL-LIABILITY-AND-EQUITY> 2,663,753
134,220
<INVESTMENT-INCOME> 173,388
<INVESTMENT-GAINS> 6,060
<OTHER-INCOME> 79,786
<BENEFITS> 233,623
<UNDERWRITING-AMORTIZATION> 29,370
<UNDERWRITING-OTHER> 1,326<F6>
<INCOME-PRETAX> 59,974
<INCOME-TAX> 18,116
<INCOME-CONTINUING> 38,858
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 1,481<F7>
<NET-INCOME> 37,377
<EPS-PRIMARY> 6.08
<EPS-DILUTED> 6.08
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
<FN>
<F1>REPRESENTS FASB 115 AVAILABLE FOR SALE FIXED MATURITY SECURITIES REPORTED ON A
CURRENT VALUE BASIS, AND DOES NOT INCLUDE TRADING SECURITIES OR SECURITIES HELD
TO MATURITY.
<F2>REPRESENTS FASB 115 HELD TO MATURITY FIXES MATURITY SECURITIES, AND DOES NOT
INCLUDE TRADING SECURITIES OR SECURITIES AVAILABLE FOR SALE.
<F3>INCLUDES EQUITY SECURITIES THAT ARE AVAILABLE FOR SALE, PER FASB 115.
<F4>INCLUDES REAL ESTATE JOINT VENTURES.
<F5>INCLUDES ACCUMULATED CONTRACT VALUES AS DEFINED BY FASB 97, DIVIDEND AND COUPON
ACCUMULATIONS AND OTHER POLICYOWNER FUNDS.
<F6>REPRESENTS AMORTIZATION FOR VALUE OF PURCHASED INSURANCE IN FORCE.
<F7>REPRESENTS NONRECURRING EXPENSE FOR POSTEMPLOYMENT BENEFITS.
</FN>
</TABLE>
Exhibit 99(a), Form
10-K Kansas City Life
Insurance Company
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 [FEE REQUIRED]
For the fiscal year ended December 31, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from __________ to ___________
Commission File Number 2-40764
A. Kansas City Life Insurance Company Savings and Investment Plan
3520 Broadway
Kansas City, Missouri 64111-2565
B. Kansas City Life Insurance Company
3520 Broadway
Kansas City, Missouri 64111-2565
<TABLE>
Kansas City Life Insurance Company
Savings and Investment Plan
Statement of Net Assets Available for Plan Benefits
December 31, 1994
Fund I Fund II Fund III Fund IV Fund V Fund VI Fund VII Fund VIII Fund IX Loans Total
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
20th Century 1875864 - - - - - - - - - 1875864
KCL stock - 3230170 14265203 - - - - - - - 17495373
Met Life GIC - - - 4272044 - - - - - - 4272044
Vang Bond - - - - 432890 - - - - - 432890
Tpleton Fore - - - - - 1572520 - - - - 1572520
Vang Bal - - - - - - 238403 - - - 238403
Fide Value - - - - - - - 1481087 - - 1481087
Vang Ext - - - - - - - - 227234 - 227234
Loans - - - - - - - - - 750614 750614
Total Invest 1875864 3230170 14265203 4272044 432890 1572520 238403 1481087 227234 750614 28346029
Restr cash - - 2516 - - - - - - - 2516
Cash -4105 2693 38816 -174087 58016 17491 9065 28357 21861 - -1893
Int rec - - - 16848 - - - - - - 16848
Contr rec 4204 3396 17572 4428 1033 3486 636 2671 650 - 38076
1875963 3236259 14324107 4119233 491939 1593497 248104 1512115 249745 750614 28401576
Forf escr - - 2516 - - - - - - - 2516
Net assets avail
for plan benef 1875963 3236259 14321591 4119233 491939 1593497 248104 1512115 249745 750614 28399060
</TABLE>
<TABLE>
Kansas City Life Insurance Company
Savings and Investment Plan
Statement of Net Assets Available for Plan Benefits
December 31, 1993
Fund I Fund II Fund III Fund IV Fund V Fund VI Fund VIIFund VIII Fund IX Loans Total
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
20th Century 1978932 - - - - - - - - - 1978932
KCL stock - 3731015 16250627 - - - - - - - 19981642
Met Life GIC - - - 4487870 - - - - - - 4487870
Vang Bond - - - - 366501 - - - - - 366501
Tpleton Fore - - - - - 1127238 - - - - 1127238
Vang Bal - - - - - - 219481 - - - 219481
Fide Value - - - - - - - 1133812 - - 1133812
Vang Ext - - - - - - - - 185182 - 185182
Loans - - - - - - - - - 593428 593428
Total Invest 1978932 3731015 16250627 4487870 366501 1127238 219481 1133812 185182 593428 30074086
Restr cash - - 7246 - - - - - - - 7246
Cash -78551 18812 102559 11484 22018 80398 1035 29650 -18034 - 169371
Int rec - - - 18000 - - - - - - 18000
Contr rec 3744 5044 20130 4425 791 3601 598 2983 675 - 41991
1904125 3754871 16380562 4521779 389310 1211237 221114 1166445 167823 593428 30310694
Forf pay - - 1216 - - - - - - - 1216
Forf escr - - 7246 - - - - - - - 7246
- - 8462 - - - - - - - 8462
Net assets avail
for plan benef 1904125 3754871 16372100 4521779 389310 1211237 221114 1166445 167823 593428 30302232
</TABLE>
<TABLE>
Kansas City Life Insurance Company
Savings and Investment Plan
Statement of Changes in Net Assets Available for Plan Benefits
Year ended December 31, 1994
Fund I Fund II Fund III Fund IV Fund V Fund VI Fund VII Fund VIII Fund IX Loans Total
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Contributions:
Employer - - 1620969 - - - - - - - 1620969
Employee 270734 287032 - 323503 78804 280045 55049 268743 57059 - 1620969
270734 287032 1620969 323503 78804 280045 55049 268743 57059 - 3241938
Invest income, net:
Interest - - 1183 197275 - - - - - - 198458
Int on parti loans 8358 7054 - 8828 2120 6037 1308 7036 1221 - 41962
Dividends 4293 106698 468571 - 27171 25606 8758 5663 3357 - 650117
Net appr (depre)
on investments -29274 -613765 -2694895 - -37771 -36302 -12407 85924 -7845 - -3346335
Net investment income -16623 -500013 -2225141 206103 -8480 -4659 -2341 98623 -3267 - -2455798
Total incr (decr) 254111 -212981 -604172 529606 70324 275386 52708 367366 53792 - 786140
Employee withd -112905 -256975 -1381214 -551601 -39830 -57580 -10941 -197292 -15851 - -2624189
Forfeitures - - -65123 - - - - - - - -65123
Loans: Made -128458 -103018 - -117830 -8055 -37698 -5265 -32709 -1857 434890 -
Repaid 52996 50010 - 66301 13051 35408 7371 46210 6357 -277704 -
Transfers -93906 4352 - -329022 67139 166744 -16883 162095 39481 - -
Total decr -282273 -305631 -1446337 -932152 32305 106874 -25718 -21696 28130 157186 -2689312
Net assets avail for plan benef:
Net incr (decr) -28162 -518612 -2050509 -402546 102629 382260 26990 345670 81922 157186 -1903172
Begin of year 1904125 3754871 16372100 4521779 389310 1211237 221114 1166445 167823 593428 30302232
End of year 1875963 3236259 14321591 4119233 491939 1593497 248104 1512115 249745 750614 28399060
</TABLE>
<TABLE>
Kansas City Life Insurance Company
Savings and Investment Plan
Statement of Changes in Net Assets Available for Plan Benefits
Year ended December 31, 1993
Fund I Fund II Fund III Fund IV Fund V Fund VI Fund VII Fund VIII Fund IX Loans Total
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Contributions:
Employer - - 1505520 - - - - - - - 1505520
Employee 447025 345407 - 491439 27233 75900 17031 83104 18381 - 1505520
447025 345407 1505520 491439 27233 75900 17031 83104 18381 - 3011040
Invest income, net:
Interest - - 1842 294190 - - - - - - 296032
Int on parti loans 10977 6204 - 12898 589 1900 429 2094 326 - 35417
Dividends 4416 115066 436947 - 6928 14630 4461 8737 2145 - 593330
Net appr (depre)
on investments 96948 190064 401820 -82648 -6523 98434 -1767 44984 1211 - 742523
Net invest income 112341 311334 840609 224440 994 114964 3123 55815 3682 - 1667302
Total increase 559366 656741 2346129 715879 28227 190864 20154 138919 22063 - 4678342
Employee withd -138143 -253657 -1051890 -555744 -10219 -4815 -675 -5717 -1854 - -2022714
Forfeitures - - -65820 - - - - - - - -65820
Loans: Made -86910 -118063 - -155155 -3397 -7893 -100 -7118 -952 379588 -
Repaid 72811 49367 - 94005 4530 9792 2404 11626 1630 -246165 -
Transfers -1161657 -842621 - -764182 370169 1023289 199331 1028735 146936 - -
Total decr -1313899 -1164974 -1117710 -1381076 361083 1020373 200960 1027526 145760 133423 -2088534
Net assets avail for plan benef:
Net inc (dec) -754533 -508233 1228419 -665197 389310 1211237 221114 1166445 167823 133423 2589808
Beginning of yr 2658658 4263104 15143681 5186976 - - - - - 460005 27712424
End of year 1904125 3754871 16372100 4521779 389310 1211237 221114 1166445 167823 593428 30302232
</TABLE>
Kansas City Life Insurance Company
Savings and Investment Plan
Notes To Financial Statements
ORGANIZATION
The Kansas City Life Insurance Company Savings and Investment Plan (the Plan)
is a defined contribution benefit plan sponsored by Kansas City Life
Insurance Company (the Company) and is subject to the provisions of the
Employee Retirement Income Security Act of 1974 (ERISA). The Plan is
administered by a committee appointed by the Executive Committee of the
Company. On January 1, 1988, the original plan was revised to incorporate
the provisions of Section 401(k) of the Internal Revenue Code. The cash and
investments of the Plan are in the custody of three trustees who are also
officers of the Company. On September 1, 1993, the Plan was revised to
increase the number of investment funds from four to nine. Funds I, II, and
III were unchanged. Fund IV was changed from fixed income investments to a
Guaranteed Interest Contract (GIC). Funds V through IX were added. Fund I
invests in a growth stock fund. Funds II and III invest in the Company's
common stock. All Company contributions and earnings thereon are included in
Fund III. Fund V invests in an investment grade bond fund. Fund VI invests
in a managed global common stock fund. Fund VII invests in a balanced index
fund. Fund VIII invests in a capital appreciation stock fund. Fund IX
invests in a small capitalization stock index fund.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying financial statements of the Plan have been prepared on the
basis of generally accepted accounting principles.
Valuation of Investments
The investments of the Plan in Funds I and V through IX are reported at fair
value based upon quoted market prices. The investments in Funds II and III
are reported at fair value based upon December's average bid price.
Investments in Fund IV are reported at the contract value as stated in the
guaranteed interest contract. The cost of investments sold is determined on
the specific identification basis.
Expenses
All costs associated with the administration of the Plan are borne by the
Company.
ELIGIBILITY
Each employee, who is at least 21 years of age and has completed one year of
employment, with a minimum of 1,000 hours of employment from date of hire is
qualified to participate in the Plan.
NOTES TO FINANCIAL STATEMENTS (continued)
CONTRIBUTIONS
The participant may elect to enter into a compensation reduction agreement
with the Company by which a contribution will be made in an amount equal to
one to ten percent of his or her unreduced monthly base salary. The maximum
participant contribution for 1994 could not exceed $9,240, with cost of
living increases in future years. Effective January 1, 1994, the maximum
contribution made for any participant who is classified as highly compensated
was changed from five to six percent. The contribution rate can be changed
only once in any six month period.
The Company, with respect to each participant, contributes to the Plan as
soon as practicable after the end of each month, out of its current or
accumulated earnings and profits, an amount equal to 100 percent of such
participant's contribution to the Plan. The Company's contributions are made
in common stock of the Company, which may be either treasury or authorized
and unissued stock. Treasury Stock or shares of authorized but unissued stock
are valued at the average of its bid price on the over-the-counter market for
all business days following the previous monthly valuation date.
WITHDRAWALS AND LOANS
The Plan allows a participant to withdraw all or a part of the value of his
or her account which was contributed prior to January 1, 1988. The value of
a participant account attributable to contributions after that date may not
be withdrawn except in cases of extreme financial hardship. Hardship
withdrawals are subject to the approval of the Administrative Committee, and
any such withdrawal will be limited to the amount of actual contributions
made to the Plan. Gains associated with the contributions or any of the
matching Fund III amounts may not be withdrawn for any reason.
A participant may request a loan from the 401(k) portion of their elective
accounts under the terms and conditions established by the Administrative
Committee. The amount that may be borrowed is limited in accordance with the
Internal Revenue Code Section 72(p). Loans will be made for a period no
longer than five years, except for a loan used to acquire a primary
residence, which may be for up to ten years.
VESTING
Company contributions vest to the participant 30 percent after three years of
employment, 40 percent after four years and an additional 20 percent each
year thereafter until the participant is fully vested in Company
contributions after seven years.
NOTES TO FINANCIAL STATEMENTS (continued)
TAX STATUS
The Internal Revenue Service has issued a determination letter dated June 12,
1991 that, in form, the Plan and Trust forming a part thereof, meet the
requirements of the Internal Revenue Code Section 401(a) as a qualified plan
and trust. A request for a new determination letter was filed December 22,
1994. The plan administrator believes the Plan, as amended, will constitute a
qualified plan under the Internal Revenue Code. In the event the IRS
determines that the revised Plan does not qualify, the Plan will be further
amended, retroactively, in order to obtain a favorable determination letter
as to its qualified status. The plan administrator does not expect that such
an additional amendment, if any, would have a material effect on the
financial position or changes in net assets of the Plan. If the Plan
qualifies in operation, the Trust's earnings will be exempt from taxation,
the Company's contributions will be deductible, and each participant will
incur no current tax liability on either the Company's contributions or any
earnings of the trust credited to the participant's account prior to the time
that such contributions or earnings are withdrawn or made available to the
participant. At the time a distribution occurs, whether because of
retirement, termination, death, disability or voluntary withdrawal of funds,
any amounts distributed comprised of Company contributions, employee pretax
contributions, and earnings on contributions of the Company or the
participant shall be taxed to the participant at the tax rate then in effect.
The Plan administrator is not aware of any series of events or course of
actions that could adversely affect the Plan's qualified status.
RESTRICTED CASH AND INVESTMENTS
Participants under the original provision of the savings and investment plan,
who are less than 50 percent vested in Fund III and who elect to withdraw
proceeds from their accounts will forfeit an amount equal to 50 percent of
the withdrawal, but the dollar amount forfeited cannot exceed their non-
vested funds.
Such forfeitures are to be held in escrow for a period not to exceed five
years. If the full amount withdrawn by the employee is repaid to the Plan,
amounts held in escrow will be restored for the benefit of the participant.
Amounts which are not repaid within five years are used to reduce future
employer contributions.
All forfeitures resulting from a termination of employment will be
immediately reallocated to reduce future employer contributions.
NOTES TO FINANCIAL STATEMENTS (continued)
INVESTMENTS
The fair value of individual investments that represent 5 percent or more of
the Plan's participating employees' net assets available for plan benefits
follows.
1994 1993
20th Century Growth Fund,
100,099 shares-1994, and 88,345 shares-1993. $ 1,875,864 $ 1,978,932
Kansas City Life Insurance Company Common Stock,
422,900 shares-1994, and 403,996 shares-1993. 17,495,373 19,981,642
Met Life Guaranteed Interest Contract Account 4,272,044 4,487,870
Templeton Foreign Fund
178,290 shares - 1994, and 39,831 shares - 1993. 1,572,520 1,127,238
The fair value of the Plan's investments has changed as follows.
1994 1993
Net Net
Appreciation Appreciation
(Depreciation) (Depreciation)
Fair Value In Fair Value Fair Value In Fair Value
Fund I $1,875,864 $(29,274) $1,978,932 $96,948
II 3,230,170 (613,765) 3,731,015 190,064
III 14,265,203 (2,694,895) 16,250,627 401,820
IV 4,272,044 - 4,487,870 (82,648)
V 432,890 (37,771) 366,501 (6,523)
VI 1,572,520 (36,302) 1,127,238 98,434
VII 238,403 (12,407) 219,481 (1,767)
VIII 1,481,087 85,924 1,133,812 44,984
IX 227,234 (7,845) 185,182 1,211
Total $27,595,415 $(3,346,335) $29,480,658 $742,523
Kansas City Life Insurance Company
Savings and Investment Plan
Assets Held for Investment
December 31, 1994
Number of
Shares or
Description of Invest Par Value Cost Fair Value
Common Stock:
Kansas City Life Ins Co 422,900 shs $13,250,760 $17,495,373
Mutual funds:
20th Century Growth Fund 100,099 shs 1,361,835 1,875,864
Met Life GIC Account $4,272,044 4,272,044 4,272,044
Vanguard Bond Index Fund 47,207 shs 472,000 432,890
Templeton Foreign Fund 178,290 shs 1,515,673 1,572,520
Vanguard Bal Index Fund 23,056 shs 251,602 238,403
Fidelity Value Fund 36,292 shs 1,359,143 1,481,087
Vanguard Ext Fund 12,269 shs 233,981 227,234
Total mutual funds 9,466,278 10,100,042
Loans:
Loans to participants (interest rates range from
6.5% to 10.0%) - 750,614 750,614
$23,467,652 $28,346,029
Kansas City Life Insurance Company
Savings and Investment Plan
Transactions in Excess of
Five Percent of the Current Value of the Plan Assets
Year ended December 31, 1994
Party Involved and
Description of Asset Transactions Shares Cost Consider Net Gain
Category (iii)--series of transactions in excess of 5 percent of plan
assets:
Kansas City Life
Common Stock 14 buys 28,695 1,273,791 - -
Kansas City Life
Common Stock 8 sells 12,436 384,974 564,319 179,345
There were no category (i), (ii), or (iv) reportable transactions during
1994.
Report of Independent Auditors
The Board of Trustees
Kansas City Life Insurance Company
Savings and Investment Plan
We have audited the accompanying statements of net assets available for plan
benefits of the Kansas City Life Insurance Company Savings and Investment Plan
(the Plan) as of December 31, 1994 and 1993, and the related statements of
changes in net assets available for plan 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 financial position of the Plan at December 31, 1994
and 1993, and the changes in its financial position for the years then ended in
conformity with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental schedules
of assets held for investment as of December 31, 1994 and transactions or series
of transactions in excess of 5% of the current value of plan assets for the year
then ended are presented for purposes of complying with the Department of
Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. The fund information in the statement
of net assets available for plan benefits and the statement of changes in net
assets available for plan benefits is presented for additional analysis rather
than to present the net assets available for plan benefits and changes in net
assets available for plan benefits of each fund. The supplemental schedules and
fund information have been subjected to the auditing procedures applied in our
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.
/s/ Ernst & Young LLP
Ernst & Young LLP
Kansas City, Missouri
February 13, 1995
Exhibit 99(f), Form 10-K
Kansas City Life
Insurance Company
RETAIN THIS DOCUMENT
It is a Summary of Modifications to the Prospectus and Summary Plan
Description of the Kansas City Life Insurance Company Savings and
Investment Plan [401(k)].
THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS
COVERING SECURITIES THAT HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933.
The following changes have been made in the Kansas City Life Insurance
Company Savings and Investment Plan [401(k)].
A leased employee [as defined in Internal Revenue Code Section
414(n) or (o)] will not be considered an "employee" for Plan
purposes.
The Plan was also changed to provide that the amendment or
termination of the Plan will be done by the adoption of a written
resolution by the Board of Directors or the Executive Committee of
the Board of Directors. This amendment is effective January 1,
1994. This change in the Plan was made only to clarify the entity
with the authority to amend or terminate the Plan. Prior Plan
amendments have been adopted by written resolution of the Executive
Committee of the Board of Directors.
Clarifying changes were made to other sections of the Plan. They
included amendments made to bring the Plan into compliance with
changes in the Internal Revenue Code since 1986.
In addition to the amendments, Robert E. Janes, Assistant Vice
President and Assistant Controller, has replaced John K. Koetting
as a member of the Administrative Committee.
The date of this Summary of Modifications to the Prospectus and Summary
Plan Description is January 1, 1995.
