<PAGE>
SEPARATE ACCOUNT VA-K
EXECANNUITY PLUS
ALLMERICA FINANCIAL LIFE INSURANCE AND ANNUITY COMPANY
SUPPLEMENT DATED JANUARY 28, 1999 TO PROSPECTUS DATED MAY 1, 1998
THIS SUPPLEMENT SUPPLANTS THE SUPPLEMENT DATED DECEMBER 29, 1998
***
On March 15, 1999, an optional Minimum Guaranteed Annuity Payout
Rider will be available under the Policy.* The following information
supplements the corresponding sections of the Prospectus. Please consult the
Prospectus for the full text of each supplemented section.
*Please note, the Minimum Guaranteed Annuity Payout Rider is not available in
all states.
In the Table of Contents on page 3 of the Prospectus, the following is changed:
Under CHARGES AND DEDUCTIONS:
"B. Optional Minimum Guaranteed Annuity Payout Rider Charge" is added
"B. Premium Taxes" is changed to "C. Premium Taxes"
"C. Policy Fee" is changed to "D. Policy Fee"
"D. Annual Charges Against Separate Account Assets" is changed to "E.
Annual Charges Against Separate Account Assets"
Under THE VARIABLE ANNUITY POLICIES:
"L. Optional Minimum Guaranteed Annuity Payout Rider" is added
"L. NORRIS Decision" is changed to "M. NORRIS Decision"
"M. Computation of Values" is changed to "N. Computation of Values"
In the Summary on page 8 of the Prospectus, the following is added to the end of
the section entitled "Annuity Payments:"
An optional Minimum Guaranteed Annuity Payout Rider is available for a
separate monthly charge. See "N. Optional Minimum Guaranteed Annuity
Payout Rider" under "THE VARIABLE ANNUITY POLICIES." If elected, the
rider guarantees the Annuitant a minimum amount of fixed annuity lifetime
income during the annuity payout phase, subject to certain conditions. On
each Policy anniversary a Minimum Guaranteed Annuity Payout Benefit Base is
determined. The Minimum Guaranteed Annuity Payout Benefit Base is the
value that will be annuitized should you exercise the Rider. Annuitization
under this Rider will occur at the guaranteed annuity purchase rates listed
under the Annuity Option Tables in your Policy. The Minimum Guaranteed
Annuity Payout Benefit Base is equal to the greatest of:
(a) the Accumulated Value; or
(b) Accumulated Value on the effective date of the Rider compounded daily
at an annual rate of 5% plus gross payments made thereafter
compounded daily at an annual rate of 5%, starting on the date each
payment is applied, decreased proportionately to reflect withdrawals;
or
(c) the highest Accumulated Value of all Policy anniversaries since the
Rider effective date, as determined after the Accumulated Value of
each Policy anniversary is increased for subsequent payments and
decreased proportionately for subsequent withdrawals.
For each withdrawal described in (b) and (c) above, the proportionate reduction
is calculated by multiplying the (b) or (c) value determined immediately prior
to the withdrawal by the following fraction:
Amount of the Withdrawal
------------------------
the Accumulated Value determined immediately prior to the withdrawal.
<PAGE>
In the Summary on page 9 of the Prospectus, the following is added after the
section entitled "Charges and Deductions:"
G. OPTIONAL MINIMUM GURANTEED ANNUITY PAYOUT RIDER CHARGE
Subject to state availability, the Company offers the following Rider that
may be elected by the Owner. A separate monthly charge is made for the
Rider which is deducted from the Accumulated Value at the end of each month
within which the Rider has been in effect. The applicable charge is
assessed by multiplying the Accumulated Value on the last day of each month
and on the date the Rider is terminated by 1/12th of the following annual
percentage rates:
<TABLE>
<S> <C>
Minimum Guaranteed Annuity Payout Rider with a ten year waiting
period . . . . . . . . . . . . . . . . . . . . . . . . . . . . .0.25%
Minimum Guaranteed Annuity Payout Rider with a fifteen year waiting
period . . . . . . . . . . . . . . . . . . . . . . . . . . . . .0.15%
</TABLE>
For a description of this Rider, see "B. Optional Minimum Guaranteed
Annuity Payout Rider Charge" under "CHARGES AND DEDUCTIONS," and "L.
Optional Minimum Guaranteed Annuity Payout Rider" under "THE VARIABLE
ANNUITY POLICIES."
Under "ANNUAL AND TRANSACTION EXPENSES" on page 10 of the Prospectus, after
"Annual Policy Fee," the following is inserted:
<TABLE>
<S> <C>
OPTIONAL RIDER CHARGES:
(on an annual basis as a percentage of Accumulated Value)
Optional Minimum Guaranteed Annuity Payout Rider with a
ten-year waiting period: 0.25%*
Optional Minimum Guaranteed Annuity Payout Rider with a
fifteen-year waiting period: 0.15%*
</TABLE>
Under "ANNUAL AND TRANSACTION EXPENSES" on page 10 of the Prospectus, below
"Total Asset Charge," the following is inserted:
*if the rider is elected, this annual charge is deducted on a monthly basis
at the end of each month within which the rider was in effect.
Under "ANNUAL AND TRANSACTION EXPENSES" on page 12 of the Prospectus, table (1)
is renamed table (1)(a) and the following table is inserted following table
(1)(a):
(1)(b) If, at the end of the applicable time period, you surrender your
Contract or annuitize* under a commutable period certain option or a
non-commutable period certain option of less than ten years, you would pay
the following expenses on a $1,000 investment, assuming 5% annual return on
assets and election of a Minimum Guaranteed Annuity Payout Rider(1) with a
ten-year waiting period:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-----------------------------------
<S> <C> <C> <C> <C>
Select International Equity Fund $102 $ 155 $ 200 $ 316
DGPF International Equity Series $100 $ 149 $ 189 $ 295
Fidelity VIP Overseas Portfolio $100 $ 149 $ 190 $ 297
T. Rowe Price International Stock Portfolio $102 $ 153 $ 196 $ 309
Select Aggressive Growth Fund $101 $ 151 $ 193 $ 303
Select Capital Appreciation Fund $102 $ 155 $ 199 $ 314
Select Value Opportunity Fund $101 $ 153 $ 196 $ 308
Select Growth Fund $100 $ 150 $ 190 $ 298
Growth Fund $97 $ 138 $ 170 $ 257
Fidelity VIP Growth Portfolio $98 $ 143 $ 178 $ 274
Equity Index Fund $96 $ 136 $ 166 $ 249
Select Growth and Income Fund $99 $ 145 $ 182 $ 282
Fidelity VIP Equity-Income Portfolio $97 $ 140 $ 173 $ 263
Fidelity VIP II Asset Manager Portfolio $98 $ 142 $ 176 $ 270
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-----------------------------------
<S> <C> <C> <C> <C>
Fidelity VIP High Income Portfolio $98 $ 144 $ 179 $ 276
Investment Grade Income Fund $97 $ 139 $ 171 $ 259
Government Bond Fund $98 $ 142 $ 177 $ 272
Money Market Fund $95 $ 133 $ 161 $ 240
</TABLE>
Under "ANNUAL AND TRANSACTION EXPENSES" on page 13 of the Prospectus, table (2)
is renamed table (2)(a) and the following table is inserted following table
(2)(a):
(2)(b) If you annuitize* under a life option or any non-commutable period
certain option of ten years or more at the end of the applicable time
period, or if you do NOT surrender or annuitize the Contract you would pay
the following expenses on a $1,000 investment, assuming an annual 5% return
on assets and election of a Minimum Guaranteed Annuity Payout Rider(1) with
a ten-year waiting period:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------------------------------
<S> <C> <C> <C> <C>
Select International Equity Fund $29 $ 88 $ 150 $ 316
DGPF International Equity Series $27 $ 81 $ 139 $ 295
Fidelity VIP Overseas Portfolio $27 $ 82 $ 140 $ 297
T. Rowe Price International Stock Portfolio $28 $ 86 $ 146 $ 309
Select Aggressive Growth Fund $27 $ 84 $ 143 $ 303
Select Capital Appreciation Fund $29 $ 87 $ 149 $ 314
Select Value Opportunity Fund $28 $ 86 $ 146 $ 308
Select Growth Fund $27 $ 82 $ 140 $ 298
Growth Fund $23 $ 70 $ 120 $ 257
Fidelity VIP Growth Portfolio $24 $ 75 $ 128 $ 274
Equity Index Fund $22 $ 68 $ 116 $ 249
Select Growth and Income Fund $25 $ 77 $ 132 $ 282
Fidelity VIP Equity-Income Portfolio $23 $ 72 $ 123 $ 263
Fidelity VIP II Asset Manager Portfolio $24 $ 74 $ 126 $ 270
Fidelity VIP High Income Portfolio $25 $ 76 $ 129 $ 276
Investment Grade Income Fund $23 $ 71 $ 121 $ 259
Government Bond Fund $24 $ 74 $ 127 $ 272
Money Market Fund $21 $ 65 $ 111 $ 240
</TABLE>
(1) If the Minimum Guaranteed Annuity Payout Rider is exercised, you may
only annuitize under a fixed annuity payout option involving a life
contingency at the guaranteed annuity purchase rates listed under the
Annuity Option Tables in your Policy.
Under "PERFORMANCE INFORMATION" on page 17 of the Prospectus, between the second
and third sentences in the first paragraph, the following is inserted:
The calculation is not adjusted to reflect the deduction of a Minimum
Guaranteed Annuity Payout Rider charge.
Under "PERFORMANCE INFORMATION" on page 17 of the Prospectus, at the end of the
fifth paragraph, the following is inserted:
In addition, relevant broad-based indices and performance from independent
sources may be used to illustrate the performance of certain Policy
features.
Under "CHARGES AND DEDUCTIONS" on pages 29 and 30 of the Prospectus, "B. Premium
Taxes" is renamed "C. Premium Taxes," "C. Policy Fee" is renamed "D. Policy
Fee," "D. Annual Charges Against Separate Account Assets" is renamed "E. Annual
Charges Against Separate Account Assets" and the following is inserted:
<PAGE>
B. OPTIONAL MINIMUM GUARANTEED ANNUITY PAYOUT CHARGE
Subject to state availability, the Company offers an optional Minimum
Guaranteed Annuity Payout Rider that may be elected by the Owner. A
separate monthly charge is made for the Rider. On the last day of each
month and on the date the Rider is terminated, a charge equal to 1/12th of
an annual rate (see table below) is made against the Accumulated Value of
the Policy at that time. The charge is made through a pro-rata reduction
of the Accumulated Value of the Sub-Accounts, the Fixed Account and the
Guarantee Period Accounts (based on the relative value that the
Accumulation Units of the Sub-Accounts, the dollar amounts in the Fixed
Account and the dollar amounts in the Guarantee Period Accounts bear to the
total Accumulated Value).
The applicable charge is assessed on the Accumulated Value on the last day
of each month and on the date the Rider is terminated, multiplied by 1/12th
of the following annual percentage rates:
<TABLE>
<S> <C>
Minimum Guaranteed Annuity Payout Rider with ten-year waiting
period . . . . . . . . . . . . . . . . . . . . . . . . . . . . .0.25%
Minimum Guaranteed Annuity Payout Rider with fifteen-year waiting
period. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .0.15%
</TABLE>
For a description of the Rider, see "L. Optional Minimum Guaranteed Annuity
Payout Rider" under "THE VARIABLE ANNUITY POLICIES," above.
Under "J. Electing the Form of Annuity and the Annuity Date" on page 37 of the
Prospectus, the following is inserted above "K. Description of Variable Annuity
Payout Options:"
If the Owner exercises the Minimum Guaranteed Annuity Payout Rider, annuity
benefit payments must be made under a fixed annuity payout option involving
a life contingency and must occur at the guaranteed annuity purchase rates
listed under the Annuity Option Tables in the Policy.
Under "THE VARIABLE ANNUITY POLICIES" on page 38 of the Prospectus, "L. NORRIS
Decision" is changed to "M. NORRIS Decision" and "M. Computation of Policy
Values and Annuity Benefit Payments" is changed to "N. Computation of Policy
Values and Annuity Benefit Payments" and the following is inserted above "M.
NORRIS Decision:"
L. OPTIONAL MINIMUM GUARANTEED ANNUITY PAYOUT RIDER
An optional Minimum Guaranteed Annuity Payout Rider is available for a
separate monthly charge. The Minimum Guaranteed Annuity Payout Rider
guarantees a minimum amount of fixed annuity lifetime income during the
annuity payout phase, subject to the conditions described below. On each
Policy anniversary a Minimum Guaranteed Annuity Payout Benefit Base is
determined. The Minimum Guaranteed Annuity Payout Benefit Base is the
value that will be annuitized if the Rider is exercised. Annuitization
under this Rider will occur at the guaranteed annuity purchase rates listed
under the Annuity Option Tables in the Policy. The Minimum Guaranteed
Annuity Payout Benefit Base is equal to the greatest of:
(a) the Accumulated Value; or
(b) Accumulated Value on the effective date of the Rider compounded daily
at an annual rate of 5% plus gross payments made thereafter
compounded daily at an annual rate of 5%, starting on the date each
payment is applied, decreased proportionately to reflect withdrawals;
or
(c) the highest Accumulated Value of all Policy anniversaries since the
Rider effective date, as determined after the Accumulated Value of
each Policy anniversary is increased for subsequent payments and
decreased proportionately for subsequent withdrawals.
For each withdrawal described in (b) and (c) above, the proportionate
reduction is calculated by multiplying the (b) or (c) value determined
immediately prior to the withdrawal by the following fraction:
Amount of the Withdrawal
------------------------
the Accumulated Value determined immediately prior to the withdrawal
<PAGE>
CONDITIONS OF ELECTION OF THE MINIMUM GUARANTEED ANNUITY PAYOUT RIDER.
-The Owner may elect the Minimum Guaranteed Annuity Payout Rider at Policy
issue or at any time thereafter, however, if the Rider is not elected
within thirty days after Policy issue or within thirty days after a Policy
anniversary date, the effective date of the Rider will be the following
Policy anniversary date.
-The Owner may not elect a Rider with a ten-year waiting period if at the
time of election the Annuitant has reached his or her 78th birthday. The
Owner may not elect a Rider with a fifteen-year waiting period if at the
time of election the Annuitant has reached his or her 73rd birthday.
CONDITIONS OF EXERCISE OF THE MINIMUM GUARANTEED ANNUITY PAYOUT RIDER.
-The Owner may only exercise the Minimum Guaranteed Annuity Payout Rider
within thirty days after any Policy anniversary following the expiration
of a ten or fifteen-year waiting period from the effective date of the
Rider.
-The Owner may only annuitize under a fixed annuity payout option involving
a life contingency as provided under "K. Description of Variable Annuity
Payout Options."
-The Owner may only annuitize at the guaranteed annuity purchase rates
listed under the Annuity Option Tables in the Policy.
TERMINATION OF THE MINIMUM GUARANTEED ANNUITY PAYOUT RIDER.
-The Owner may not terminate the Minimum Guaranteed Annuity Payout Rider
prior to the seventh Policy anniversary after the effective date of the
Rider, unless such termination occurs on or within thirty days after a
Policy anniversary and in conjunction with the purchase of a Minimum
Guaranteed Annuity Payout Rider with a waiting period of equal or greater
length at its then current price, if available.
-After the seventh Policy anniversary from the effective date of the Rider
the Owner may terminate the Rider at any time.
-The Owner may repurchase a Rider with a waiting period equal to or greater
than the Rider then in force at the new Rider's then current price, if
available, however, repurchase may only occur on or within thirty days of a
Policy anniversary.
- Other than in the event of a repurchase, once terminated the Rider may
not be purchased again.
-The Rider will terminate upon surrender of the Policy or the date that a
death benefit is payable if the Policy is not continued under "H. The
Spouse of the Owner as Beneficiary" (see "THE VARIABLE ANNUITY POLICIES").
From time to time the Company may illustrate minimum guaranteed income
amounts under the Minimum Guaranteed Annuity Payout Rider for individuals
based on a variety of assumptions, including varying rates of return on
the value of the Policy during the accumulation phase, annuity payout
periods, annuity payout options and Minimum Guaranteed Annuity Payout Rider
waiting periods. Any assumed rates of return are for purposes of
illustration only and are not intended as a representation of past or
future investment rates of return.
For example, the illustration below assumes an initial payment of $100,000
for an Annuitant age 60 (at issue) and exercise of a Minimum Guaranteed
Annuity Payout Rider with a ten-year waiting period. The illustration
assumes that no subsequent payments or withdrawals are made and that the
annuity payout option is a Life Annuity With 120 Monthly Payments
Guaranteed. The values below have been computed based on a 5% net rate
of return and are the guaranteed minimums that would be received
under the Minimum Guaranteed Annuity Payout Rider. The minimum
<PAGE>
guaranteed benefit base amounts are the values that will be annuitized.
Minimum guaranteed annual income values are based on a fixed annuity
payout.
<TABLE>
<CAPTION>
Minimum
Policy Minimum Guaranteed
Anniversary Guaranteed Annual
at Exercise Benefit Base Income (1)
----------- ------------ ----------
<S> <C> <C>
10 $162,889 $12,153
15 $207,892 $17,695
</TABLE>
(1) Other fixed annuity options involving a life contingency other than
Life Annuity With 120 Monthly Payments Guaranteed are available. See
"K. Description of Variable Annuity Payout Options."
The Minimum Guaranteed Annuity Payout Rider does not create Accumulated
Value or guarantee performance of any investment option. Because this
Rider is based on conservative actuarial factors, the level of lifetime
income that it guarantees may often be less than the level that would be
provided by application of Accumulated Value at current annuity factors.
Therefore, the Rider should be regarded as a safety net. As described
above, withdrawals will reduce the Benefit Base.
Under "N. Computation of Policy Values and Annuity Benefit Payments" on page 40
of the Prospectus, the following is inserted above "FEDERAL TAX CONSIDERATIONS:"
If the Owner elects the Minimum Guaranteed Annuity Payout Rider, at
annuitization the income provided under the Policy by applying the
Accumulated Value to the current annuity factors is compared to the
income provided under the Rider by applying the Minimum Guaranteed
Annuity Payout Benefit Base to the guaranteed annuity factors. If
annuity benefit payments under the Rider are higher, the Owner may
exercise the Rider. If annuity benefit payments under the Rider are
lower, the Owner may choose not to exercise the Rider and instead
annuitize under current annuity factors. See "M. Optional Minimum
Guaranteed Annuity Payout Rider" below.
After the section entitled "LEGAL MATTERS" on page 46 of the Prospectus, the
following is inserted:
YEAR 2000 COMPLIANCE
The Year 2000 issue is the result of computer programs being written using
two digits rather than four to define the applicable year. Any of the
Company's computer programs that have date-sensitive software may recognize
a date using "00" as the year 1900 rather than the year 2000. This could
result in a system failure or miscalculations causing disruptions of
operations, including, among other things, a temporary inability to process
transactions, send invoices or engage in similar normal business
activities.
Based on a third party assessment, the Company determined that significant
portions of its software required modification or replacement to enable its
computer systems to properly process dates beyond December 31, 1999. The
Company is presently completing the process of modifying or replacing
existing software and believes that this action will resolve the Year 2000
issue. However, if such modifications and conversions are not made, or are
not completed timely, or should there be serious unanticipated
interruptions from unknown sources, the Year 2000 issue could have a
material adverse impact on the
<PAGE>
operations of the Company. Specifically, the Company could experience,
among other things, an interruption in its ability to collect and process
premiums, process claim payments, safeguard and manage its invested assets,
accurately maintain policyholder information, accurately maintain
accounting records, and perform customer service. Any of these specific
events, depending on duration, could have a material adverse impact on the
results of operations and the financial position of the Company.
The Company has initiated formal communications with all of its significant
suppliers and large customers to determine the extent to which the Company
is vulnerable to those third parties' failure to remediate their own Year
2000 issue. The Company's total Year 2000 project cost and estimates to
complete the project include the estimated costs and time associated with
the impact of a third party's Year 2000 issue, and are based on presently
available information. However, there can be no guarantee that the systems
of other companies on which the Company's systems rely will be timely
converted, or that a failure to convert by another company, or a conversion
that is incompatible with the Company's systems, would not have material
adverse effect on the Company. The Company does not believe that it has
material exposure to contingencies related to the Year 2000 Issue for the
products it has sold. Although the Company does not believe that there is
a material contingency associated with the Year 2000 project, there can be
no assurance that exposure for material contingencies will not arise.
The Company will utilize both internal and external resources to reprogram
or replace, and test both information technology and embedded technology
systems for Year 2000 modifications. The Company plans to complete the
mission critical elements of the Year 2000 by December 31, 1998. The cost
of the Year 2000 project will be expensed as incurred over the next two
years and is being funded primarily through a reallocation of resources
from discretionary projects. Therefore, the Year 2000 project is not
expected to result in any significant incremental technology cost and is
not expected to have a material effect on the results of operations.
Through September 30, 1998, the Company and its subsidiaries and affiliates
have incurred and expensed approximately $47 million related to the
assessment of, and preliminary efforts in connection with, the project and
the development of a remediation plan. The total remaining cost of the
project is estimated at between $30-40 million.
The costs of the project and the date on which the Company plans to
complete the Year 2000 modifications are based on management's best
estimates, which were derived utilizing numerous assumptions of future
events including the continued availability of certain resources, third
party modification plans and other factors. However, there can be no
guarantee that these estimates will be achieved and actual results could
differ materially from those plans. Specific factors that might cause such
material differences include, but are not limited to, the availability and
cost of personnel trained in this area, the ability to locate and correct
all relevant computer codes, and similar uncertainties.
Under Appendix B on page B-1 of the Prospectus, the following is inserted:
4. Because of the differences in the amount of the free withdrawal (see 3.
above) in the new Policy and the original Policy, the following examples
(1)(a) and (1)(b) apply to Owners of the original Policy and should be
referred to rather than examples (1)(a) and (1)(b) on page 12 of this
Propsectus.
(1)(a) If, at the end of the applicable period, you surrender your Contract
or annuitize* under a commutable period certain option or a non-commutable
period certain option of less than ten years, you would pay the following
expenses on a $1,000 investment, assuming 5% annual return on assets:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------------------------------
<S> <C> <C> <C> <C>
Select International Equity Fund $98 $ 143 $ 182 $ 292
DGPF International Equity Series $96 $ 137 $ 171 $ 270
Fidelity VIP Overseas Portfolio $96 $ 137 $ 172 $ 272
T. Rowe Price International Stock Portfolio $98 $ 141 $ 178 $ 285
Select Aggressive Growth Fund $97 $ 139 $ 175 $ 278
Select Capital Appreciation Fund $98 $ 143 $ 181 $ 290
Select Value Opportunity Fund $97 $ 141 $ 178 $ 284
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------------------------------
<S> <C> <C> <C> <C>
Select Growth Fund $96 $ 137 $ 172 $ 273
Growth Fund $92 $ 125 $ 152 $ 231
Fidelity VIP Growth Portfolio $94 $ 130 $ 160 $ 249
Equity Index Fund $91 $ 123 $ 147 $ 223
Select Growth and Income Fund $95 $ 133 $ 164 $ 257
Fidelity VIP Equity-Income Portfolio $93 $ 127 $ 155 $ 238
Fidelity VIP II Asset Manager Portfolio $94 $ 129 $ 158 $ 245
Fidelity VIP High Income Portfolio $94 $ 131 $ 161 $ 251
Investment Grade Income Fund $92 $ 126 $ 153 $ 233
Government Bond Fund $94 $ 130 $ 159 $ 247
Money Market Fund $91 $ 120 $ 143 $ 214
</TABLE>
(1)(b) If, at the end of the applicable time period, you surrender your Contract
or annuitize* under a commutable period certain option or a non-commutable
period certain option of less than ten years, you would pay the following
expenses on a $1,000 investment, assuming 5% annual return on assets and
election of a Minimum Guaranteed Annuity Payout Rider(1) with a ten-year
waiting period:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-----------------------------------
<S> <C> <C> <C> <C>
Select International Equity Fund $101 $ 151 $ 194 $ 316
DGPF International Equity Series $99 $ 144 $ 183 $ 295
Fidelity VIP Overseas Portfolio $99 $ 145 $ 184 $ 297
T. Rowe Price International Stock Portfolio $100 $ 149 $ 191 $ 309
Select Aggressive Growth Fund $99 $ 146 $ 187 $ 303
Select Capital Appreciation Fund $101 $ 150 $ 193 $ 314
Select Value Opportunity Fund $100 $ 148 $ 190 $ 308
Select Growth Fund $99 $ 145 $ 185 $ 298
Growth Fund $95 $ 133 $ 164 $ 257
Fidelity VIP Growth Portfolio $96 $ 138 $ 173 $ 274
Equity Index Fund $94 $ 130 $ 160 $ 249
Select Growth and Income Fund $97 $ 140 $ 177 $ 282
Fidelity VIP Equity-Income Portfolio $95 $ 134 $ 167 $ 263
Fidelity VIP II Asset Manager Portfolio $96 $ 137 $ 171 $ 270
Fidelity VIP High Income Portfolio $97 $ 138 $ 174 $ 276
Investment Grade Income Fund $95 $ 133 $ 165 $ 259
Government Bond Fund $96 $ 137 $ 172 $ 272
Money Market Fund $93 $ 127 $ 156 $ 240
</TABLE>
(1) If the Minimum Guaranteed Annuity Payout Rider is exercised you may only
annuitize under a fixed annuity payout option involving a life contingency at
the guaranteed annuity purchase rates listed under the Annuity Option Tables
in your Contract.
Supplement dated January 28, 1999.
<PAGE>
SEPARATE ACCOUNT VA-K
ALLMERICA ADVANTAGE
ALLMERICA FINANCIAL LIFE INSURANCE AND ANNUITY COMPANY
SUPPLEMENT DATED JANUARY 28, 1999 TO PROSPECTUS DATED MAY 1, 1998
THIS SUPPLEMENT SUPPLANTS THE SUPPLEMENT DATED DECEMBER 29, 1998
***
On March 15, 1999, an optional Minimum Guaranteed Annuity Payout Rider will
be available under the Contract.* The following information supplements the
corresponding sections of the Prospectus. Please consult the Prospectus for
the full text of each supplemented section.
*Please note, the Minimum Guaranteed Annuity Payout Rider is not available in
all states.
Under "5. Expenses" on page P-2 of the Profile, the following is inserted at the
end of the first paragraph:
In addition, if you elect an optional Minimum Guaranteed Annuity Payout
Rider, we will deduct a charge against the accumulated value of your
contract at an annual rate of 0.25% for a rider with a ten-year waiting
period and at an annual rate of 0.15% for a rider with a fifteen-year
waiting period.
Under "5. Expenses" on page P-3 of the Profile, the following is inserted at the
end of the sentence at the top of the page:
The following chart does not reflect the optional Minimum Guaranteed
Annuity Payout Rider which, if elected, would increase expenses.
Under "8. Performance" on page P-4 of the Profile, the following is inserted at
the end of the first paragraph:
The following chart does not reflect the optional Minimum Guaranteed
Annuity Payout Rider which, if elected, would reduce performance.
Under "10. Other Information" on page P-5 of the Profile, the following is
inserted above "Free Look Period:"
OPTIONAL MINIMUM GUARANTEED ANNUITY PAYOUT RIDER: This optional rider is
available for a separate monthly charge. This rider guarantees you a
minimum amount of fixed annuity lifetime income during the annuity payout
phase, subject to certain conditions. On each contract anniversary a
minimum guaranteed annuity payout benefit base is determined. This minimum
guaranteed annuity payout benefit base is the value that will be annuitized
should you exercise the rider. Annuitization under this rider will occur at
the guaranteed annuity purchase rates listed under the Annuity Option
Tables in your Contract. The minimum guaranteed annuity payout benefit base
is equal to the greatest of:
(a) the accumulated value increased by any positive market value
adjustment (the "accumulated value"); or
(b) accumulated value on the effective date of the rider compounded daily
at an annual rate of 5% plus gross payments made thereafter compounded
daily at an annual rate of 5%, starting on the date each payment is
applied, decreased proportionately to reflect withdrawals; or
(c) the highest accumulated value of all contract anniversaries since the
rider effective date, as determined after the accumulated value of
each contract anniversary is increased for subsequent payments and
decreased proportionately for subsequent withdrawals.
In the Table of Contents on page 3 of the Prospectus, the following is changed:
Under DESCRIPTION OF THE CONTRACT:
"M. Optional Minimum Guaranteed Annuity Payout Rider" is added
"M. NORRIS Decision" is changed to "N. NORRIS Decision"
"N. Computation of Values" is changed to "O. Computation of Values"
<PAGE>
Under CHARGES AND DEDUCTIONS:
"C. Optional Minimum Guaranteed Annuity Payout Rider Charge" is added
"C. Premium Taxes" is changed to "D. Premium Taxes"
"D. Contingent Deferred Sales Charge" is changed to "E. Contingent Deferred
Sales Charge"
"E. Transfer Charge" is changed to "F. Transfer Charge"
In the Summary on page 7 of the Prospectus, the following is added to the end of
the section entitled "What Happens In the Annuity Payout Phase?":
An optional Minimum Guaranteed Annuity Payout Rider is available for a
separate monthly charge. See "M. Optional Minimum Guaranteed Annuity
Payout Rider" under "DESCRIPTION OF THE CONTRACT." If elected, the rider
guarantees the Annuitant a minimum amount of fixed annuity lifetime income
during the annuity payout phase, subject to certain conditions. On each
Contract anniversary a Minimum Guaranteed Annuity Payout Benefit Base is
determined. The Minimum Guaranteed Annuity Payout Benefit Base is the
value that will be annuitized should you exercise the Rider. Annuitization
under this Rider will occur at the guaranteed annuity purchase rates listed
under the Annuity Option Tables in your Contract. The Minimum Guaranteed
Annuity Payout Benefit Base is equal to the greatest of:
(a) the Accumulated Value increased by any positive Market Value
Adjustment (the "Accumulated Value"); or
(b) Accumulated Value on the effective date of the Rider compounded daily
at an annual rate of 5% plus gross payments made thereafter
compounded daily at an annual rate of 5%, starting on the date each
payment is applied, decreased proportionately to reflect withdrawals;
or
(c) the highest Accumulated Value of all Contract anniversaries since the
Rider effective date, as determined after the Accumulated Value of
each Contract anniversary is increased for subsequent payments and
decreased proportionately for subsequent withdrawals.
For each withdrawal described in (b) and (c) above, the proportionate
reduction is calculated by multiplying the (b) or (c) value determined
immediately prior to the withdrawal by the following fraction:
amount of the withdrawal
------------------------
the Accumulated Value determined immediately prior to the withdrawal.
In the Summary on page 10 of the Prospectus, the following is added between the
fourth and fifth paragraphs of the section entitled "What Charges Will I Incur
Under My Contract?":
Subject to state availability, the Company offers the following Rider that
may be elected by the Owner. A separate monthly charge is made for the
Rider which is deducted from the Accumulated Value at the end of each month
within which the Rider has been in effect. The applicable charge is
assessed by multiplying the Accumulated Value on the last day of each month
and on the date the Rider is terminated by 1/12th of the following annual
percentage rates:
<TABLE>
<S> <C>
Minimum Guaranteed Annuity Payout Rider with a ten-year waiting
period.....................................................................0.25%
Minimum Guaranteed Annuity Payout Rider with a fifteen-year waiting
period.....................................................................0.15%
</TABLE>
For a description of this Rider, see "C. Optional Minimum Guaranteed
Annuity Payout Rider Charge" under "CHARGES AND DEDUCTIONS," and "M.
Optional Minimum Guaranteed Annuity Payout Rider" under "DESCRIPTION OF
THE CONTRACT."
Under "ANNUAL AND TRANSACTION EXPENSES" on page 12 of the Prospectus, after
"Contract Fee," the following is inserted:
<TABLE>
<S> <C>
OPTIONAL RIDER CHARGES:
(on an annual basis as a percentage of Accumulated Value)
Minimum Optional Guaranteed Annuity Payout Rider with a ten-year waiting period: 0.25%*
Minimum Optional Guaranteed Annuity Payout Rider with a fifteen-year waiting period: 0.15%*
</TABLE>
<PAGE>
Under "ANNUAL AND TRANSACTION EXPENSES" on page 12 of the Prospectus, below
"Total Asset Charge," the following is inserted:
*if the rider is elected, this annual charge is deducted on a monthly basis
at the end of each month within which the rider was in effect.
Under "ANNUAL AND TRANSACTION EXPENSES" on page 14 of the Prospectus,
table (1) is renamed table (1)(a) and the following table is inserted following
table (1)(a):
(1)(b) If, at the end of the applicable time period, you surrender the
Contract or annuitize* under a commutable period certain option or a
non-commutable period certain option of less than ten years, you would pay
the following expenses on a $1,000 investment, assuming 5% annual return on
assets and election of a Minimum Guaranteed Annuity Payout Rider(1) with
a ten-year waiting period:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------------------------------------------
<S> <C> <C> <C> <C>
Select International Equity Fund $ 102 $ 155 $ 200 $ 316
DGPF International Equity Series $ 100 $ 149 $ 189 $ 295
Fidelity VIP Overseas Portfolio $ 100 $ 149 $ 190 $ 297
T. Rowe Price International Stock Portfolio $ 102 $ 153 $ 196 $ 309
Select Aggressive Growth Fund $ 101 $ 151 $ 193 $ 303
Select Capital Appreciation Fund $ 102 $ 155 $ 199 $ 314
Select Value Opportunity Fund $ 101 $ 153 $ 196 $ 308
Select Growth Fund $ 100 $ 150 $ 190 $ 298
Growth Fund $ 97 $ 138 $ 170 $ 257
Fidelity VIP Growth Portfolio $ 98 $ 143 $ 178 $ 274
Equity Index Fund $ 96 $ 136 $ 166 $ 249
Select Growth and Income Fund $ 99 $ 145 $ 182 $ 282
Fidelity VIP Equity-Income Portfolio $ 97 $ 140 $ 173 $ 263
Fidelity VIP II Asset Manager Portfolio $ 98 $ 142 $ 176 $ 270
Fidelity VIP High Income Portfolio $ 98 $ 144 $ 179 $ 276
Investment Grade Income Fund $ 97 $ 139 $ 171 $ 259
Government Bond Fund $ 98 $ 142 $ 177 $ 272
Money Market Fund $ 95 $ 133 $ 161 $ 240
</TABLE>
Under "ANNUAL AND TRANSACTION EXPENSES" on page 15 of the Prospectus, table (2)
is renamed table (2)(a) and the following table is inserted following table
(2)(a):
(2)(b) If you annuitize* under a life option or any non-commutable period
certain option of ten years or more at the end of the applicable time
period, or if you do NOT surrender or annuitize the Contract, you would pay
the following expenses on a $1,000 investment, assuming an annual 5% return
on assets and election of a Minimum Guaranteed Annuity Payout Rider(1)
with a ten-year waiting period:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------------------------------------------
<S> <C> <C> <C> <C>
Select International Equity Fund $ 29 $ 88 $ 150 $ 316
DGPF International Equity Series $ 27 $ 81 $ 139 $ 295
Fidelity VIP Overseas Portfolio $ 27 $ 82 $ 140 $ 297
T. Rowe Price International Stock Portfolio $ 28 $ 86 $ 146 $ 309
Select Aggressive Growth Fund $ 27 $ 84 $ 143 $ 303
Select Capital Appreciation Fund $ 29 $ 87 $ 149 $ 314
Select Value Opportunity Fund $ 28 $ 86 $ 146 $ 308
Select Growth Fund $ 27 $ 82 $ 140 $ 298
Growth Fund $ 23 $ 70 $ 120 $ 257
Fidelity VIP Growth Portfolio $ 24 $ 75 $ 128 $ 274
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------------------------------------------
<S> <C> <C> <C> <C>
Equity Index Fund $ 22 $ 68 $ 116 $ 249
Select Growth and Income Fund $ 25 $ 77 $ 132 $ 282
Fidelity VIP Equity-Income Portfolio $ 23 $ 72 $ 123 $ 263
Fidelity VIP II Asset Manager Portfolio $ 24 $ 74 $ 126 $ 270
Fidelity VIP High Income Portfolio $ 25 $ 76 $ 129 $ 276
Investment Grade Income Fund $ 23 $ 71 $ 121 $ 259
Government Bond Fund $ 24 $ 74 $ 127 $ 272
Money Market Fund $ 21 $ 65 $ 111 $ 240
</TABLE>
(1) If the Minimum Guaranteed Annuity Payout Rider is exercised, you may only
annuitize under a fixed annuity payout option involving a life contingency
at the guaranteed annuity purchase rates listed under the Annuity Option
Tables in your Contract.
Under "PERFORMANCE INFORMATION" on page 19 of the Prospectus, between the second
and third sentences in the second full paragraph, the following is inserted:
The calculation is not adjusted to reflect the deduction of a Minimum
Guaranteed Annuity Payout Rider charge.
Under "PERFORMANCE INFORMATION" on page 19 of the Prospectus, at the end of the
sixth full paragraph, the following is inserted:
In addition, relevant broad-based indices and performance from independent
sources may be used to illustrate the performance of certain Contract
features.
Under "J. Electing the Form of Annuity and the Annuity Date" on page 34 of the
Prospectus, the following is inserted above "K. Description of Variable Annuity
Payout Options:"
If the Owner exercises the Minimum Guaranteed Annuity Payout Rider,
annuity benefit payments must be made under a fixed annuity payout
option involving a life contingency and must occur at the guaranteed
annuity purchase rates listed under the Annuity Option Tables in the
Contract.
Under "L. Annuity Benefit Payments" on page 36 of the Prospectus, the following
is inserted above "M. NORRIS Decision:"
If the Owner elects the Minimum Guaranteed Annuity Payout Rider, at
annuitization the income provided under the Contract by applying the
Accumulated Value to the current annuity factors is compared to the income
provided under the Rider by applying the Minimum Guaranteed Annuity Payout
Benefit Base to the guaranteed annuity factors. If annuity benefit
payments under the Rider are higher, the Owner may exercise the Rider. If
annuity benefit payments under the Rider are lower, the Owner may choose
not to exercise the Rider and instead annuitize under current annuity
factors. See "M. Optional Minimum Guaranteed Annuity Payout Rider" below.
On page 36 and 37 of the Prospectus, "M. NORRIS Decision" is renamed "N. NORRIS
Decision," "N. Computation of Values" is renamed "O. Computation of Values" and
the following is inserted:
M. OPTIONAL MINIMUM GUARANTEED ANNUITY PAYOUT RIDER
An optional Minimum Guaranteed Annuity Payout Rider is available for a
separate monthly charge. The Minimum Guaranteed Annuity Payout Rider
guarantees a minimum amount of fixed annuity lifetime income during the
annuity payout phase, subject to the conditions described below. On each
Contract anniversary a Minimum Guaranteed Annuity Payout Benefit Base is
determined. The Minimum Guaranteed Annuity Payout Benefit Base is the value
that will be annuitized if the Rider is exercised. Annuitization under this
Rider will occur at the guaranteed annuity purchase rates listed under the
Annuity Option Tables in the Contract. The Minimum Guaranteed Annuity
Payout Benefit Base is equal to the greatest of:
<PAGE>
(a) the Accumulated Value increased by any positive Market Value
Adjustment (the "Accumulated Value"); or
(b) Accumulated Value on the effective date of the Rider compounded daily
at an annual rate of 5% plus gross payments made thereafter
compounded daily at an annual rate of 5%, starting on the date each
payment is applied, decreased proportionately to reflect withdrawals;
or
(c) the highest Accumulated Value of all Contract anniversaries since the
Rider effective date, as determined after the Accumulated Value of
each Contract anniversary is increased for subsequent payments and
decreased proportionately for subsequent withdrawals.
For each withdrawal described in (b) and (c) above, the proportionate
reduction is calculated by multiplying the (b) or (c) value determined
immediately prior to the withdrawal by the following fraction:
amount of the withdrawal
------------------------
the Accumulated Value determined immediately prior to the withdrawal
CONDITIONS OF ELECTION OF THE MINIMUM GUARANTEED ANNUITY PAYOUT RIDER.
- The Owner may elect the Minimum Guaranteed Annuity Payout Rider at
Contract issue or at any time thereafter, however, if the Rider is not
elected within thirty days after Contract issue or within thirty days
after a Contract anniversary date, the effective date of the Rider will
be the following Contract anniversary date.
- The Owner may not elect a Rider with a ten-year waiting period if at the
time of election the Annuitant has reached his or her 78th birthday. The
Owner may not elect a Rider with a fifteen-year waiting period if at the
time of election the Annuitant has reached his or her 73rd birthday.
CONDITIONS OF EXERCISE OF THE MINIMUM GUARANTEED ANNUITY PAYOUT RIDER.
- The Owner may only exercise the Minimum Guaranteed Annuity Payout Rider
within thirty days after any Contract anniversary following the expiration
of a ten or fifteen-year waiting period from the effective date of the
Rider.
- The Owner may only annuitize under a fixed annuity payout option
involving a life contingency as provided under "K. Description of Variable
Annuity Payout Options."
- The Owner may only annuitize at the guaranteed annuity purchase rates
listed under the Annuity Option Tables in the Contract.
TERMINATION OF THE MINIMUM GUARANTEED ANNUITY PAYOUT RIDER.
- The Owner may not terminate the Minimum Guaranteed Annuity Payout
Rider prior to the seventh Contract anniversary after the effective date of
the Rider, unless such termination occurs on or within thirty days after a
Contract anniversary and in conjunction with the purchase of a Minimum
Guaranteed Annuity Payout Rider with a waiting period of equal or greater
length at its then current price, if available.
- After the seventh Contract anniversary from the effective date of the
Rider the Owner may terminate the Rider at any time.
- The Owner may repurchase a Rider with a waiting period equal to or
greater than the Rider then in force at the new Rider's then current price,
if available, however, repurchase may only occur on or within thirty days
of a Contract anniversary.
- Other than in the event of a repurchase, once terminated the Rider may
not be purchased again.
<PAGE>
- The Rider will terminate upon surrender of the Contract or the date that
a death benefit is payable if the Contract is not continued under "H. The
Spouse of the Owner as Beneficiary" (see "DESCRIPTION OF THE CONTRACT").
From time to time the Company may illustrate minimum guaranteed income
amounts under the Minimum Guaranteed Annuity Payout Rider for individuals
based on a variety of assumptions, including varying rates of return on the
value of the Contract during the accumulation phase, annuity payout
periods, annuity payout options and Minimum Guaranteed Annuity Payout Rider
waiting periods. Any assumed rates of return are for purposes of
illustration only and are not intended as a representation of past or
future investment rates of return.
For example, the illustration below assumes an initial payment of $100,000
for an Annuitant age 60 (at issue) and exercise of a Minimum Guaranteed
Annuity Payout Rider with a ten-year waiting period. The illustration
assumes that no subsequent payments or withdrawals are made and that the
annuity payout option is a Life Annuity With Payments Guaranteed For 10
Years. The values below have been computed based on a 5% net rate of
return and are the guaranteed minimums that would be received under
the Minimum Guaranteed Annuity Payout Rider. The minimum guaranteed
benefit base amounts are the values that will be annuitized. Minimum
guaranteed annual income values are based on a fixed annuity payout.
<TABLE>
<CAPTION>
Minimum
Contract Minimum Guaranteed
Anniversary Guaranteed Annual
at Exercise Benefit Base Income (1)
----------- ------------ --------------
<S> <C> <C>
10 $162,889 $12,153
15 $207,892 $17,695
</TABLE>
(1) Other fixed annuity options involving a life contingency other than
Life Annuity With Payments Guaranteed for 10 Years are available. See
"K. Description of Variable Annuity Payout Options."
The Minimum Guaranteed Annuity Payout Rider does not create Accumulated
Value or guarantee performance of any investment option. Because this
Rider is based on conservative actuarial factors, the level of lifetime
income that it guarantees may often be less than the level that would be
provided by application of Accumulated Value at current annuity factors.
Therefore, the Rider should be regarded as a safety net. As described
above, withdrawals will reduce the Benefit Base.
Under "CHARGES AND DEDUCTIONS" on page 39 of the Prospectus, "C. Premium Taxes"
is renamed "D. Premium Taxes," "D. Contingent Deferred Sales Charge" is renamed
"E. Contingent Deferred Sales Charge" and the following is inserted:
C. OPTIONAL MINIMUM GUARANTEED ANNUITY PAYOUT CHARGE.
Subject to state availability, the Company offers an optional Minimum
Guaranteed Annuity Payout Rider that may be elected by the Owner. A
separate monthly charge is made for the Rider. On the last day of each
month and on the date the Rider is terminated, a charge equal to 1/12th of
an annual rate (see table below) is made against the Accumulated Value of
the Contract at that time. The charge is made through a pro-rata
<PAGE>
reduction of the Accumulated Value of the Sub-Accounts, the Fixed Account
and the Guarantee Period Accounts (based on the relative value that the
Accumulation Units of the Sub-Accounts, the dollar amounts in the Fixed
Account and the dollar amounts in the Guarantee Period Accounts bear to the
total Accumulated Value).
The applicable charge is assessed on the Accumulated Value on the last day
of each month and on the date the Rider is terminated, multiplied by 1/12th
of the following annual percentage rates:
<TABLE>
<S> <C>
Minimum Guaranteed Annuity Payout Rider with ten-year waiting
period.................................................................... 0.25%
Minimum Guaranteed Annuity Payout Rider with fifteen-year waiting
period.................................................................... 0.15%
</TABLE>
For a description of the Rider, see "M. Optional Minimum Guaranteed Annuity
Payout Rider" under "DESCRIPTION OF THE CONTRACT," above.
After the section entitled "LEGAL MATTERS" on page 51 of the Prospectus, the
following is inserted:
YEAR 2000 COMPLIANCE
The Year 2000 issue is the result of computer programs being written using
two digits rather than four to define the applicable year. Any of the
Company's computer programs that have date-sensitive software may recognize
a date using "00" as the year 1900 rather than the year 2000. This could
result in a system failure or miscalculations causing disruptions of
operations, including, among other things, a temporary inability to process
transactions, send invoices or engage in similar normal business
activities.
Based on a third party assessment, the Company determined that significant
portions of its software required modification or replacement to enable its
computer systems to properly process dates beyond December 31, 1999. The
Company is presently completing the process of modifying or replacing
existing software and believes that this action will resolve the Year 2000
issue. However, if such modifications and conversions are not made, or are
not completed timely, or should there be serious unanticipated
interruptions from unknown sources, the Year 2000 issue could have a
material adverse impact on the operations of the Company. Specifically, the
Company could experience, among other things, an interruption in its
ability to collect and process premiums, process claim payments, safeguard
and manage its invested assets, accurately maintain policyholder
information, accurately maintain accounting records, and perform customer
service. Any of these specific events, depending on duration, could have a
material adverse impact on the results of operations and the financial
position of the Company.
The Company has initiated formal communications with all of its significant
suppliers and large customers to determine the extent to which the Company
is vulnerable to those third parties' failure to remediate their own Year
2000 issue. The Company's total Year 2000 project cost and estimates to
complete the project include the estimated costs and time associated with
the impact of a third party's Year 2000 issue, and are based on presently
available information. However, there can be no guarantee that the systems
of other companies on which the Company's systems rely will be timely
converted, or that a failure to convert by another company, or a conversion
that is incompatible with the Company's systems, would not have material
adverse effect on the Company. The Company does not believe that it has
material exposure to contingencies related to the Year 2000 Issue for the
products it has sold. Although the Company does not believe that there is
a material contingency associated with the Year 2000 project, there can be
no assurance that exposure for material contingencies will not arise.
The Company will utilize both internal and external resources to reprogram
or replace, and test both information technology and embedded technology
systems for Year 2000 modifications. The Company plans to complete the
mission critical elements of the Year 2000 by December 31, 1998. The cost
of the Year 2000 project will be expensed as incurred over the next two
years and is being funded primarily through a reallocation of resources
from discretionary projects. Therefore, the Year 2000 project is not
expected to result in any significant incremental technology cost and is
not expected to have a material effect on the results of operations.
Through September 30, 1998, the Company and its subsidiaries and affiliates
have incurred and expensed approximately $47 million related to the
assessment of, and
<PAGE>
preliminary efforts in connection with, the project and the development of
a remediation plan. The total remaining cost of the project is estimated
at between $30-40 million.
The costs of the project and the date on which the Company plans to
complete the Year 2000 modifications are based on management's best
estimates, which were derived utilizing numerous assumptions of future
events including the continued availability of certain resources, third
party modification plans and other factors. However, there can be no
guarantee that these estimates will be achieved and actual results could
differ materially from those plans. Specific factors that might cause such
material differences include, but are not limited to, the availability and
cost of personnel trained in this area, the ability to locate and correct
all relevant computer codes, and similar uncertainties.
Supplement dated January 28, 1999.
