-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, P6VB3Oq+Gsar9GtCOv+UUtZgzPwMf4u5IkhqS1VO2MdFuM7dAYFX10w4TE9Gyq61 XKRtQ38OcMB16gCcW4qPHw== 0000005103-98-000047.txt : 19980629 0000005103-98-000047.hdr.sgml : 19980629 ACCESSION NUMBER: 0000005103-98-000047 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980626 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN GENERAL CORP /TX/ CENTRAL INDEX KEY: 0000005103 STANDARD INDUSTRIAL CLASSIFICATION: LIFE INSURANCE [6311] IRS NUMBER: 740483432 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 11-K SEC ACT: SEC FILE NUMBER: 001-07981 FILM NUMBER: 98655124 BUSINESS ADDRESS: STREET 1: 2929 ALLEN PKWY CITY: HOUSTON STATE: TX ZIP: 77019 BUSINESS PHONE: 7135221111 11-K 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 _____________________ FORM 11-K ANNUAL REPORT Pursuant to Section 15(d) of the Securities Exchange Act of 1934 _____________________ [X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the fiscal year ended December 31, 1997 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the transition period from _______ to ______ Commission file number 1-7981 Full title of the Plan: AMERICAN GENERAL EMPLOYEES' THRIFT AND INCENTIVE PLAN Name of the issuer of the securities held pursuant to the Plan and the address of its principal executive office: AMERICAN GENERAL CORPORATION 2929 Allen Parkway Houston, Texas 77019 AMERICAN GENERAL EMPLOYEES' THRIFT AND INCENTIVE PLAN AUDITED FINANCIAL STATEMENTS AND SCHEDULES DECEMBER 31, 1997 Audited Financial Statements Report of Independent Auditors....................................... 1 Statements of Net Assets Available for Benefits .................... 2 Statements of Changes in Net Assets Available for Benefits ......... 6 Notes to Financial Statements ...................................... 10 Schedules Assets Held for Investment ......................................... 17 Reportable Transactions ............................................ 18 Loans in Default..................................................... 19 Report of Independent Auditors Administrative Board American General Employees' Thrift and Incentive Plan We have audited the accompanying statements of net assets available for benefits of the American General Employees' Thrift and Incentive Plan (the Plan) as of December 31, 1997 and 1996, and the related statements of changes in net assets available for benefits for the years then ended. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan at December 31, 1997 and 1996, and the changes in its net assets available for benefits for the years then ended, in conformity with generally accepted accounting principles. Our audits were performed for the purpose of forming an opinion on the financial statements taken as a whole. The accompanying supplemental schedules of assets held for investment as of December 31, 1997, reportable transactions, and loans in default 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, and are not a required part of the financial statements. The specific fund information in the statements of net assets available for benefits and the statements of changes in net assets available for benefits is presented for purposes of additional analysis rather than to present the net assets available for benefits and changes in net assets available for benefits of each fund. The supplemental schedules and specific fund information have been subjected to the auditing procedures applied in our audit of the financial statements and, in our opinion, are fairly stated in all material respects in relation to the financial statements taken as a whole. ERNST & YOUNG LLP Houston, Texas June 19, 1998 - 1 - AMERICAN GENERAL EMPLOYEES' THRIFT AND INCENTIVE PLAN STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS AT DECEMBER 31, 1997 In thousands, except share amounts Participant Directed Equity Stock Cash Index Fund Fund Fund Assets Investments American General Corporation common stock (3,938,492 shares) ....... $68,443 $ - $ - American General Life Insurance Company deposit administration group annuity contract ................ - 83,109 - American General Series Portfolio Company - Stock Index Fund (637,996 shares) ...................... - - 18,955 Putnam OTC & Emerging Growth Fund (271,891 shares) ...................... - - - American General Series Portfolio Company - Growth Fund (158,542 shares) ...................... - - - Templeton Foreign Fund (340,576 shares) ...................... - - - Vanguard Fixed Income Securities Fund (140,180 shares) ................. - - - Participant notes ....................... - - - Short-term investments .................. 56 495 36 Total investments ..................... 68,499 83,604 18,991 Receivables Contributions ........................... 8 20 14 Interfund transfers ..................... - - - Other ................................... 22 34 123 Total assets .......................... 68,529 83,658 19,128 Liabilities Payables Forfeitures ............................. - - - Excess contribution refunds ............. 88 114 51 Excess contribution forfeitures ......... - - - Interfund transfers ..................... 66 413 92 Other ................................... 22 1,774 16 Total liabilities ..................... 176 2,301 159 Net assets available for benefits ........... $68,353 $81,357 $18,969 The accompanying notes are an integral part of these financial statements. - 2 - AMERICAN GENERAL EMPLOYEES' THRIFT AND INCENTIVE PLAN STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS AT DECEMBER 31, 1997 In thousands, except share amounts Participant Directed Inter- Small-Cap Mid-Cap national Fund Fund Fund Assets Investments American General Corporation common stock (3,938,492 shares) ....... $ - $ - $ - American General Life Insurance Company deposit administration group annuity contract ................ - - - American General Series Portfolio Company - Stock Index Fund (637,996 shares) ...................... - - - Putnam OTC & Emerging Growth Fund (271,891 shares) ...................... 4,380 - - American General Series Portfolio Company - Growth Fund (158,542 shares) ...................... - 3,179 - Templeton Foreign Fund (340,576 shares) ...................... - - 3,389 Vanguard Fixed Income Securities Fund (140,180 shares) ................. - - - Participant notes ....................... - - - Short-term investments .................. 22 19 19 Total investments ..................... 4,402 3,198 3,408 Receivables Contributions ........................... 20 20 13 Interfund transfers ..................... 19 85 394 Other ................................... 8 6 - Total assets .......................... 4,449 3,309 3,815 Liabilities Payables Forfeitures ............................. - - - Excess contribution refunds ............. 8 5 7 Excess contribution forfeitures ......... - - - Interfund transfers ..................... - - - Other ................................... 11 6 8 Total liabilities ..................... 19 11 15 Net assets available for benefits ........... $4,430 $3,298 $3,800 The accompanying notes are an integral part of these financial statements. - 3 - AMERICAN GENERAL EMPLOYEES' THRIFT AND INCENTIVE PLAN STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS AT DECEMBER 31, 1997 In thousands, except share amounts Participant Directed Bond Participant Fund Notes Assets Investments American General Corporation common stock (3,938,492 shares) ....... $ - $ - American General Life Insurance Company deposit administration group annuity contract ................ - - American General Series Portfolio Company - Stock Index Fund (637,996 shares) ...................... - - Putnam OTC & Emerging Growth Fund (271,891 shares) ...................... - - American General Series Portfolio Company - Growth Fund (158,542 shares) ...................... - - Templeton Foreign Fund (340,576 shares) ...................... - - Vanguard Fixed Income Securities Fund (140,180 shares) ................. 1,298 - Participant notes ....................... - 3,923 Short-term investments .................. 10 - Total investments ..................... 1,308 3,923 Receivables Contributions ........................... 7 - Interfund transfers ..................... 73 - Other ................................... - - Total assets .......................... 1,388 3,923 Liabilities Payables Forfeitures ............................. - - Excess contribution refunds ............. 2 - Excess contribution forfeitures ......... - - Interfund transfers ..................... - - Other ................................... 4 - Total liabilities ..................... 6 - Net assets available for benefits ........... $1,382 $3,923 The accompanying notes are an integral part of these financial statements. - 4 - AMERICAN GENERAL EMPLOYEES' THRIFT AND INCENTIVE PLAN STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS AT DECEMBER 31, 1997 In thousands, except share amounts Non- Participant Directed Stock Fund Total Assets Investments American General Corporation common stock (3,938,492 shares) ....... $144,482 $212,925 American General Life Insurance Company deposit administration group annuity contract ................ - 83,109 American General Series Portfolio Company - Stock Index Fund (637,996 shares) ...................... - 18,955 Putnam OTC & Emerging Growth Fund (271,891 shares) ...................... - 4,380 American General Series Portfolio Company - Growth Fund (158,542 shares) ...................... - 3,179 Templeton Foreign Fund (340,576 shares) ...................... - 3,389 Vanguard Fixed Income Securities Fund (140,180 shares) ................. - 1,298 Participant notes ....................... - 3,923 Short-term investments .................. 118 775 Total investments ..................... 144,600 331,933 Receivables Contributions ........................... 16 118 Interfund transfers ..................... - 571 Other ................................... 46 239 Total assets .......................... 144,662 332,861 Liabilities Payables Forfeitures ............................. 98 98 Excess contribution refunds ............. 612 887 Excess contribution forfeitures ......... 82 82 Interfund transfers ..................... - 571 Other ................................... 3 1,844 Total liabilities ..................... 795 3,482 Net assets available for benefits ........... $143,867 $329,379 The accompanying notes are an integral part of these financial statements. - 5 - AMERICAN GENERAL EMPLOYEES' THRIFT AND INCENTIVE PLAN STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS AT DECEMBER 31, 1996 In thousands, except share amounts Participant Directed Asset Stock Cash Allocation Fund Fund Fund Assets Investments American General Corporation common stock (3,959,169 shares) ..... $53,016 $ - $ - American General Life Insurance Company deposit administration group annuity contract .............. - 57,606 - American General Series Portfolio Company - Timed Opportunity Fund (702,080 shares) .................... - - 8,158 American General Series Portfolio Company - Stock Index Fund (509,096 shares)..................... - - - Putnam OTC & Emerging Growth Fund ..... - - - American General Series Portfolio Company - Growth Fund ............... - - - Templeton Foreign Fund ................ - - - Vanguard Fixed Income Securities Fund ..................... - - - Participant notes ..................... - - - Short-term investments ................ 335 603 171 Total investments ................... 53,351 58,209 8,329 Receivables Interfund transfers ................... - 8,179 - Other ................................. 1 2 1 Total assets ........................ 53,352 66,390 8,330 Liabilities Payables Forfeitures ........................... - - - Excess contribution refunds ........... 180 316 - Excess contribution forfeitures ....... - - - Interfund transfers ................... 302 - 8,330 Other ................................. 4 14 - Total liabilities ................... 486 330 8,330 Net assets available for benefits ......... $52,866 $66,060 $ - The accompanying notes are an integral part of these financial statements. - 6 - AMERICAN GENERAL EMPLOYEES' THRIFT AND INCENTIVE PLAN STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS AT DECEMBER 31, 1996 In thousands, except share amounts Non- Participant Participant Directed Directed Equity Index Stock Fund Fund Total Assets Investments American General Corporation common stock (3,959,169 shares) ..... $ - $108,815 $161,831 American General Life Insurance Company deposit administration group annuity contract .............. - - 57,606 American General Series Portfolio Company - Timed Opportunity Fund (702,080 shares) .................... - - 8,158 American General Series Portfolio Company - Stock Index Fund (509,096 shares)..................... 11,587 - 11,587 Putnam OTC & Emerging Growth Fund ..... - - - American General Series Portfolio Company - Growth Fund ............... - - - Templeton Foreign Fund ................ - - - Vanguard Fixed Income Securities Fund ..................... - - - Participant notes ..................... - - - Short-term investments ................ 366 687 2,162 Total investments ................... 11,953 109,502 241,344 Receivables Interfund transfers ................... 453 - 8,632 Other ................................. 1 3 8 Total assets ........................ 12,407 109,505 249,984 Liabilities Payables Forfeitures ........................... - 99 99 Excess contribution refunds ........... 93 639 1,228 Excess contribution forfeitures ....... - 67 67 Interfund transfers ................... - - 8,632 Other ................................. - 6 24 Total liabilities ................... 93 811 10,050 Net assets available for benefits ......... $12,314 $108,694 $239,934 The accompanying notes are an integral part of these financial statements. - 7 - AMERICAN GENERAL EMPLOYEES' THRIFT AND INCENTIVE PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS FOR THE YEAR ENDED DECEMBER 31, 1997 In thousands, except share amounts Participant Directed Equity Stock Cash Index Fund Fund Fund Addition to net assets Investment income Dividends ........................ $ 1,765 $ - $ 332 Interest ......................... 12 4,818 8 Net appreciation (depreciation) in fair value of investments ................. 19,943 - 4,036 Total investment income (loss) ............ 21,720 4,818 4,376 Contributions Companies' ....................... - 2 - Participants' .................... 4,297 7,191 2,747 Total contributions ............ 4,297 7,193 2,747 Merger of Franklin 401(k) Plan ...... - 11,147 - Merger of Home Beneficial Thrift Plan ....................... - 6,259 - Total additions ................ 26,017 29,417 7,123 Deductions from net assets Benefits American General Corporation common stock (40,650 shares) ... 616 - - Cash ............................. 3,562 6,204 1,278 Forfeitures ...................... - 3 - Participant loan origination fees .. 17 19 3 Total deductions ............. 4,195 6,226 1,281 Interfund transfers ................. (6,335) (7,894) 813 Net increase ................ 15,487 15,297 6,655 Net assets available for benefits Beginning of year ........... 52,866 66,060 12,314 End of year ................. $68,353 $81,357 $18,969 The accompanying notes are an integral part of these financial statements. - 8 - AMERICAN GENERAL EMPLOYEES' THRIFT AND INCENTIVE PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS FOR THE YEAR ENDED DECEMBER 31, 1997 In thousands, except share amounts Participant Directed Inter- Small-Cap Mid-Cap national Fund Fund Fund Addition to net assets Investment income Dividends ........................ $ - $ 52 $ 280 Interest ......................... 4 3 3 Net appreciation (depreciation) in fair value of investments ................. 491 305 (294) Total investment income (loss) ............ 495 360 (11) Contributions Companies' ....................... - - - Participants' .................... 999 798 550 Total contributions ............ 999 798 550 Merger of Franklin 401(k) Plan ...... - - - Merger of Home Beneficial Thrift Plan ....................... - - - Total additions ................ 1,494 1,158 539 Deductions from net assets Benefits American General Corporation common stock (40,650 shares) ... - - - Cash ............................. 118 70 79 Forfeitures ...................... - - - Participant loan origination fees .. - - - Total deductions ............. 118 70 79 Interfund transfers ................. 3,054 2,210 3,340 Net increase ................ 4,430 3,298 3,800 Net assets available for benefits Beginning of year ........... - - - End of year ................. $4,430 $3,298 $3,800 The accompanying notes are an integral part of these financial statements. - 9 - AMERICAN GENERAL EMPLOYEES' THRIFT AND INCENTIVE PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS FOR THE YEAR ENDED DECEMBER 31, 1997 In thousands, except share amounts Participant Directed Bond Participant Fund Notes Addition to net assets Investment income Dividends ........................ $ 64 $ - Interest ......................... 2 120 Net appreciation (depreciation) in fair value of investments ................. 62 - Total investment income (loss) ............ 128 120 Contributions Companies' ....................... - - Participants' .................... 309 - Total contributions ............ 309 - Merger of Franklin 401(k) Plan ...... - 112 Merger of Home Beneficial Thrift Plan ....................... - - Total additions ................ 437 232 Deductions from net assets Benefits American General Corporation common stock (40,650 shares) ... - - Cash ............................. 42 134 Forfeitures ...................... - - Participant loan origination fees .. - - Total deductions ............. 42 134 Interfund transfers ................. 987 3,825 Net increase ................ 1,382 3,923 Net assets available for benefits Beginning of year ........... - - End of year ................. $1,382 $3,923 The accompanying notes are an integral part of these financial statements. - 10 - AMERICAN GENERAL EMPLOYEES' THRIFT AND INCENTIVE PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS FOR THE YEAR ENDED DECEMBER 31, 1997 In thousands, except share amounts Non- Participant Directed Stock Fund Total Addition to net assets Investment income Dividends ........................ $ 3,725 $ 6,218 Interest ......................... 26 4,996 Net appreciation (depreciation) in fair value of investments ................. 31,740 56,283 Total investment income (loss) ............ 35,491 67,497 Contributions Companies' ....................... 9,113 9,115 Participants' .................... - 16,891 Total contributions ............ 9,113 26,006 Merger of Franklin 401(k) Plan ...... - 11,259 Merger of Home Beneficial Thrift Plan ....................... - 6,259 Total additions ................ 44,604 111,021 Deductions from net assets Benefits American General Corporation common stock (40,650 shares) ... 1,301 1,917 Cash ............................. 7,517 19,004 Forfeitures ...................... 613 616 Participant loan origination fees .. - 39 Total deductions ............. 9,431 21,576 Interfund transfers ................. - - Net increase ................ 35,173 89,445 Net assets available for benefits Beginning of year ........... 108,694 239,934 End of year ................. $143,867 $329,379 The accompanying notes are an integral part of these financial statements. - 11 - AMERICAN GENERAL EMPLOYEES' THRIFT AND INCENTIVE PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS FOR THE YEAR ENDED DECEMBER 31, 1996 In thousands, except share amounts Participant Directed Asset Stock Cash Allocation Fund Fund Fund Addition to net assets Investment income Dividends ........................ $ 1,700 $ - $1,139 Interest ......................... 10 3,729 3 Net appreciation (depreciation) in fair value of investments ................. 5,796 47 (323) Total investment income ................... 7,506 3,776 819 Contributions Companies' ....................... - - - Participants' .................... 4,000 6,224 1,302 Total contributions ............ 4,000 6,224 1,302 Total additions .............. 11,506 10,000 2,121 Deductions from net assets Benefits American General Corporation common stock (108,178 shares) .. 1,277 - - Cash ............................. 1,647 5,913 714 Forfeitures ...................... - - - Total deductions ............. 2,924 5,913 714 Interfund transfers ................. (1,269) 7,895 (8,466) Net increase (decrease)...... 7,313 11,982 (7,059) Net assets available for benefits Beginning of year ........... 45,553 54,078 7,059 End of year ................. $52,866 $66,060 $ - The accompanying notes are an integral part of these financial statements. - 12 - AMERICAN GENERAL EMPLOYEES' THRIFT AND INCENTIVE PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS FOR THE YEAR ENDED DECEMBER 31, 1996 In thousands, except share amounts Non- Participant Participant Directed Directed Equity Index Stock Fund Fund Total Addition to net assets Investment income Dividends ........................ $ 256 $ 3,489 $6,584 Interest ......................... 6 21 3,769 Net appreciation (depreciation) in fair value of investments ................. 1,642 17,726 24,888 Total investment income ................... 1,904 21,236 35,241 Contributions Companies' ....................... - 7,651 7,651 Participants' .................... 2,259 - 13,785 Total contributions ............ 2,259 7,651 21,436 Total additions ................ 4,163 28,887 56,677 Deductions from net assets Benefits American General Corporation common stock (108,178 shares) ... - 2,621 3,898 Cash ............................. 604 10,279 19,157 Forfeitures ...................... - 558 558 Total deductions ............. 604 13,458 23,613 Interfund transfers ................. 1,840 - - Net increase (decrease) ..... 5,399 15,429 33,064 Net assets available for benefits Beginning of year ........... 6,915 93,265 206,870 End of year ................. $12,314 $108,694 $239,934 The accompanying notes are an integral part of these financial statements. - 13 - AMERICAN GENERAL EMPLOYEES' THRIFT AND INCENTIVE PLAN NOTES TO FINANCIAL STATEMENTS NOTE A--SIGNIFICANT ACCOUNTING POLICIES The American General Employees' Thrift and Incentive Plan (the Plan) financial statements are prepared in conformity with generally accepted accounting principles. Investments in American General Corporation (American General) common stock are reported at fair value based on published market prices. Fair values of other investments are reported as follows: 1) investment in American General Life Insurance Company (American General Life) deposit administration group annuity contract, at contract value (see Note C); 2) investments in the American General Series Portfolio Company (AGSPC) Stock Index and Growth Funds, the Putnam OTC & Emerging Growth Fund, the Templeton Foreign Fund, and the Vanguard Fixed Income Securities Fund, at net asset value; and 3) short- term investments, at cost which approximates fair value. AGSPC is an open-end management investment company (mutual fund) whose investment adviser is The Variable Annuity Life Insurance Company (VALIC). VALIC and American General Life are wholly owned subsidiaries of American General. Participant notes are recorded as plan investments at amortized values. Purchases and sales of securities are recorded on a trade-date basis. Dividends are recorded as income on ex-dividend dates, and interest income is recorded using the accrual method of accounting. Contributions are recorded as additions to net assets on the date the contributions become payable to the Plan. Interfund transfers are recorded at the market value of the amount transferred. Benefits paid to participants are recorded upon distribution at the market value of the assets distributed. The preparation of financial statements requires management to make estimates and assumptions that affect (1) the reported amounts of assets and liabilities, (2) disclosures of contingent assets and liabilities, and (3) the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. NOTE B--DESCRIPTION OF THE PLAN The following description of the Plan provides only general information. Participants should refer to the Plan document for a more complete description of the Plan's provisions. - 14 - AMERICAN GENERAL EMPLOYEES' THRIFT AND INCENTIVE PLAN NOTES TO FINANCIAL STATEMENTS--Continued NOTE B--DESCRIPTION OF THE PLAN--Continued General The Plan, which is subject to certain provisions of the Employee Retirement Income Security Act of 1974 (ERISA), is a defined contribution plan offered to eligible employees of American General and certain of its subsidiaries (the Companies). Salaried and certain regular employees are eligible to participate in the Plan upon the earlier of completion of one year of service or attainment of age thirty-five. Non-salaried employees who have completed one thousand hours of service in one service year and have attained age twenty-one are eligible to participate in the Plan. The Plan provides for participant elective salary deferrals (participant pretax contributions) in accordance with Section 401(k) of the Internal Revenue Code of 1986, as amended (IRC). Substantially all of the costs of administering the Plan are paid by the Companies. The Plan's investments are held in a bank-administered trust fund. Investment Options Participants may direct their employee contributions in one of seven funds or a combination of each fund. These funds, designated on the financial statements as participant directed, invest in: 1) shares of American General common stock (Stock Fund); 2) a deposit administration group annuity contract issued by American General Life (Cash Fund); 3) shares of the AGSPC Stock Index Fund (Equity Index Fund); 4) shares of the Putnam OTC & Emerging Growth Fund (Small-Cap Fund); 5) shares of the AGSPC Growth Fund (Mid-Cap Fund); 6) shares of the Templeton Foreign Fund (International Fund); and 7) shares of the Vanguard Fixed Income Fund (Bond Fund). The AGSPC Timed Opportunity Fund (Asset Allocation Fund) was liquidated at December 31, 1996 and is no longer available as an investment option. The Companies' contributions are invested solely in the non-participant directed portion of the Stock Fund; however, participants age 60 or older can direct the investment of their employer matching contributions into any of the available funds. Amounts which have not yet been used to purchase investments in either the Stock, Cash, Equity Index, Small-Cap, Mid-Cap, International, or Bond Funds are temporarily invested in short-term investments. Income from these short- term investments is allocated to Plan participants based on current contribu- tions. Contributions Employees who elect to participate may contribute, on a pretax basis, a basic amount ranging from one to six percent of base pay and an additional amount ranging from one to ten percent of base pay, subject to the contribution limitations discussed below. The Companies contribute an amount ranging from 50 percent to 100 percent of the employee's basic contribution as determined annually by the Personnel Committee of the American General Board of Direc- tors. The Companies contributed 75 percent of the employee's basic contribution during 1997 and 1996. - 15 - AMERICAN GENERAL EMPLOYEES' THRIFT AND INCENTIVE PLAN NOTES TO FINANCIAL STATEMENTS--Continued NOTE B--DESCRIPTION OF THE PLAN--Continued Participants may change their contribution rate and investment election for future contributions, as well as transfer all or part of their employee account balances among funds, no more than once each month. All changes except transfers are effective on the first day of the first pay period of each month. Transfers are effective on the last business day of the month the request is received. Contribution Limitations For 1997 and 1996, the total amount of participant pretax contributions is limited to $9,500. Additionally, the total amount of annual participant and company contributions (including forfeitures) must not exceed the lesser of 25 percent of compensation or $30,000. During 1997 and 1996, the total amount of base pay that can be used in determining contributions under the Plan is $160,000 and $150,000, respectively. ERISA and the IRC provide that qualified plans, such as the American General Employees' Thrift and Incentive Plan, cannot discriminate in favor of highly compensated individuals. Certain highly compensated individuals may be required to receive refunds of any contributions in excess of the IRC Sections 401(k) and (m) limits and all earnings attributable to such contributions. Contributions from highly compensated individuals are limited to 6 percent of base pay. Amounts in excess of the limits discussed above are designated on the state- ment of net assets as "Payables - Excess contribution refunds" and were refunded within 2-1/2 months of the Plan's year end. "Payables - Excess contribution forfeitures" represent the nonvested excess contributions of the Companies and are available to reduce future company contributions. Participant Accounts Each participant's account is credited with the participant's and Company's contributions and an allocation of Plan earnings. Allocations of Plan earnings are based on participants' account balances. The benefit to which a participant is entitled is the benefit that can be provided from the particip- ant's vested account. Vesting Participants are immediately vested in their contributions plus the earnings thereon. Participants obtain a vested interest in the Companies' contribu- tions and the earnings thereon at the rate of two percent per month of plan participation after one year of service. In addition, participants will become 100 percent vested in the Companies' contributions upon their retirement, attainment of age 65, total disability, or death. - 16 - AMERICAN GENERAL EMPLOYEES' THRIFT AND INCENTIVE PLAN NOTES TO FINANCIAL STATEMENTS--Continued NOTE B--DESCRIPTION OF THE PLAN--Continued Payment of Benefits Upon termination of service, and if consented to by the participant (required only if the total value, both vested and nonvested, of the account exceeds $3,500 and the participant is under age 65), a participant will receive a distribution equal to the vested value of his or her account. For years beginning after December 31, 1996, distributions must begin by April 1 of the calendar year following the later of either the calendar year in which the employee reaches age 70-1/2, or the calendar year in which the employee retires. Participants Loans Receivable Beginning on January 1, 1997, participants may borrow from their fund accounts, in a single loan, a minimum of $1,000 and up to a maximum equal to the lesser of $50,000 or 50% of the participant's vested account balance. Loan terms range from 12 to 58 months. Loans are secured by the vested balance in the participant's account and bear interest at a rate commensurate with prevailing rates as determined from time to time. Principal and interest are paid to the participant's account through payroll deductions. Early loan payoff is allowed. Forfeitures Participants terminating employment forfeit their nonvested interest in the Companies' contributions on the earlier of (1) the distribution of the entire nonforfeitable portion of their account or (2) upon incurring a period of severance equal to five consecutive one-year breaks in service. Forfeitures are available to reduce the Companies' future contributions. Participants who terminate and are reemployed with a participating company before incurring five consecutive one-year breaks in service are entitled to their nonvested or forfeited amounts, subject to certain provisions as stated in the Plan document. Plan Members At December 31, 1997, 7,097 active employees were contributing to the Plan. NOTE C--INVESTMENT CONTRACT WITH INSURANCE COMPANY The Plan maintains an investment contract with American General Life, a wholly owned subsidiary of American General. The deposit administration group annuity contract is valued at contract value, which approximates fair value, and represents contributions under the contract, plus interest at the contract rate, less funds used to pay benefits. The guaranteed minimum rate of the contract is reset annually by American General Life, effective the first full pay period in April. The contract had a guaranteed minimum rate of 6.00% from April 13, 1996 through April 11, 1997; effective April 12, 1997, the rate changed to 6.25%, and will remain at 6.25% through April 10, 1999. Any earnings in excess of the guaranteed minimum rate are credited to the participants. - 17 - AMERICAN GENERAL EMPLOYEES' THRIFT AND INCENTIVE PLAN NOTES TO FINANCIAL STATEMENTS--Continued NOTE C--INVESTMENT CONTRACT WITH INSURANCE COMPANY--Continued The effective earned yield is calculated based on the calendar year. The effective earned yield of the investment contract for 1997 and 1996 was 6.47% and 6.87%, respectively. NOTE D--PLAN TERMINATION Although they have not expressed any intent to do so, the Companies have the right under the Plan to discontinue their contributions at any time and to withdraw from the Plan subject to the provisions of ERISA. In the event of Plan termination, participants will become 100 percent vested in their accounts. NOTE E--RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500 Benefits processed and approved for payment, but not paid as of December 31, are recorded on Form 5500 but not in the financial statements. The following is a reconciliation of net assets available for benefits per the financial statements to Form 5500: At December 31, In thousands 1997 1996 Net assets available for benefits per the financial statements ..................... $329,379 $239,934 Benefits payable to withdrawing participants ....... (2,452) (1,683) Net assets available for benefits per Form 5500 .. $326,927 $238,251 The following is a reconciliation of benefits paid to participants per the financial statements to Form 5500: In thousands Year Ended December 31, 1997 Benefits paid to participants per the financial statements American General Corporation common stock ...... $ 1,917 Cash ........................................... 19,004 Total benefits paid to participants per the financial statements ....................... 20,921 Benefits payable to withdrawing participants at year end ......................................... 2,452 Benefits payable to withdrawing participants at beginning of year ............................. (1,683) Benefits paid to participants per Form 5500 .. $21,690 - 18 - AMERICAN GENERAL EMPLOYEES' THRIFT AND INCENTIVE PLAN NOTES TO FINANCIAL STATEMENTS--Continued NOTE F--FEDERAL INCOME TAXES Based on a favorable determination letter dated August 3, 1995, the Internal Revenue Service has ruled that the Plan, as restated and amended, is qualified under Section 401(a) of the IRC and, therefore, exempt under Section 501(a) from federal income taxes. The Plan has been amended since receiving the determination letter. However, the Plan's administrators believe that the Plan is designed and is currently being operated in compliance with the applicable requirements of the IRC. NOTE G--PLAN MERGERS On January 1, 1997, the Franklin Life Insurance Company Employees' 401(k) Retirement Plan (the Franklin 401(k) Plan) was merged into the Plan. Assets from the Franklin 401(k) Plan totaling approximately $11.3 million were transferred to the Plan's trust. This plan merger was the result of the acquisition of The Franklin Life Insurance Company, made by American General through one of its wholly owned subsidiaries on January 31, 1995. Participants of the Franklin 401(k) Plan became eligible to participate in the Plan on January 1, 1997. Effective October 1, 1997, the Home Beneficial Thrift Plan was split into two identical plans: one covering home office and field clerical employees and the other covering agents. The Home Beneficial Thrift Plan covering home office and field clerical employees was merged into the Plan, and assets totaling approximately $6.3 million were transferred to the Plan's trust. This plan merger was the result of the acquisition of Home Beneficial Corporation, made by American General through one of its wholly owned subsidiaries on April 16, 1997. Participants of the Home Beneficial Thrift Plan became eligible to participate in the Plan on October 1, 1997. NOTE H--YEAR 2000 ISSUE (UNAUDITED) American General has developed a plan to modify its internal information technology to be ready for the year 2000 and has begun converting critical data processing systems. The project also includes determining whether third- party service providers have reasonable plans in place to become year 2000 compliant. American General currently expects the project to be substantially complete by December 31, 1998, and does not expect this project to have a significant effect on Plan operations. - 19 - AMERICAN GENERAL EMPLOYEES' THRIFT AND INCENTIVE PLAN NOTES TO FINANCIAL STATEMENTS--Continued NOTE I--SUBSEQUENT EVENTS Effective January 1, 1998, the USLIFE Corporation Employee Savings and Investment Plan (USLIFE SIP) was merged into the Plan. Assets totaling approximately $86 million, which includes 775,806 shares of American General Corporation common stock, were transferred to the Plan's trust in January 1998. This plan merger was the result of the acquisition of USLIFE Corporation, made by American General through one of its wholly owned subsidiaries on June 17, 1997. Participants of the USLIFE SIP are eligible to participate in the Plan as of January 1, 1998. Effective March 1, 1998, the Western National Corporation Employees' 401(k) Retirement Plan (the WesternSave Plan) was merged into the Plan. Assets totaling approximately $5.9 million, which includes 32,841 shares of American General Corporation common stock, were transferred to the Plan's trust in March 1998. The plan merger was the result of American General completing the acquisition of Western National Corporation on February 25, 1998. Participants of the WesternSave Plan are eligible to participate in the Plan as of February 28, 1998. - 20 - AMERICAN GENERAL EMPLOYEES' THRIFT AND INCENTIVE PLAN ASSETS HELD FOR INVESTMENT AT DECEMBER 31, 1997 In thousands, except share amounts Fair Issuer Description Cost Value American General 3,938,492 shares of $ 98,620 $212,925 Corporation* common stock American General Life Deposit administration 83,109 83,109 Insurance Company* group annuity contract American General Series 637,996 shares of AGSPC 12,240 18,955 Portfolio Company* Stock Index Fund Putnam 271,891 shares of Putnam OTC 3,890 4,380 & Emerging Growth Fund American General Series 158,542 shares of AGSPC 2,875 3,179 Portfolio Company* Growth Fund Templeton 340,576 shares of Templeton 3,682 3,389 Foreign Fund Vanguard 140,180 shares of Vanguard 1,237 1,298 Fixed Income Securities Fund Participant Notes* Loans issued at interest - 3,923 rates between 9.00% and 11.25% State Street Bank Short-term investments & Trust Company* in money-market fund 775 775 $206,428 $331,933 *Party in interest - 21 - AMERICAN GENERAL EMPLOYEES' THRIFT AND INCENTIVE PLAN REPORTABLE TRANSACTIONS (A) FOR THE YEAR ENDED DECEMBER 31, 1997 In thousands, except share amounts and transaction counts Amount of Party Involved Description Transaction Category (iii) - Series of transactions in excess of 5% of Plan assets State Street Bank Purchases of short-term investments in $41,843 & Trust Company 721 transactions State Street Bank Sales of short-term investments in 43,230 & Trust Company 335 transactions (B) Purchases of American General Life 36,153 Insurance Company deposit administration group annuity contract in 30 transactions (B) Sales of American General Life 10,650 Insurance Company deposit administration group annuity contract in 18 transactions (B) Purchases of 197,160 shares of American 9,551 General Corporation common stock in 16 transactions (B) Sales of 177,187 shares of American 8,214 General Corporation common stock in 13 transactions at a gain of $4,247 (B) Distributions of 40,650 shares of 1,917 American General Corporation common stock to various individuals who withdrew from or terminated participation in the Plan in 14 transactions at a gain of $992 (A) Reportable transactions are transactions or series of transactions in excess of five percent of the current value of Plan assets at the beginning of the year and are defined in Section 2520.103-6 of the Department of Labor's Rules and Regulations. (B) Parties involved are not presented, as permitted by Section 2520.103-6 (d)(1)(i) of the Department of Labor's Rules and Regulations. - 22 - AMERICAN GENERAL EMPLOYEES' THRIFT AND INCENTIVE PLAN LOANS IN DEFAULT FOR THE YEAR ENDED DECEMBER 31, 1997 In whole dollars Original Amount Received Unpaid Indentity Amount of during Reporting Year: Balance at Of obligor* Loan Principal Interest End of Year Beatty, Brian $ 1,400 $ - $ - $ 1,069 Brown, Jody 3,700 - - 3,388 Browning, Carl 1,000 - - 816 Campbell, Cheryl 1,000 - - 667 Carlen, Beverly 1,252 - - 1,140 Coleman, Leslie 1,500 26 6 1,474 Eagan, Kevin 29,464 381 93 29,083 Gantt, Susanne 1,900 - - 1,579 Gudgel, Hazel 1,000 - - 145 Ivandick, Deloris 1,140 - - 793 Langenfield, Mark 7,214 - - 689 Large, Kelly 1,245 - - 1,202 McLaughlin, Susan 1,300 - - 54 Peters, James 1,000 - - 298 Phillips, Margaret 3,150 - - 2,900 Rainford, Eleanor 1,000 - - 597 Romanski, Deborah 2,200 - - 1,770 Steckel, Suzanne 1,175 - - 1,134 Watson, Karen 1,500 198 29 1,302 Webb, Lisa 992 83 12 909 *Tax statements to be issued to participants with loans in default - 23 - AMERICAN GENERAL EMPLOYEES' THRIFT AND INCENTIVE PLAN LOANS IN DEFAULT FOR THE YEAR ENDED DECEMBER 31, 1997 In whole dollars Loan Interest Amount Overdue: Issued Rate Defaulted Principal Interest 7/31/94 9.00% 3/31/97 $ 1,069 $ 24 11/30/95 10.50 3/31/97 3,388 89 5/31/93 9.50 3/31/97 816 19 8/31/94 9.00 3/31/97 667 15 2/28/96 11.09 3/31/97 1,140 32 3/28/97 9.25 8/15/97 1,474 34 1/31/97 9.25 6/15/97 29,083 673 9/30/94 9.00 3/31/97 1,579 36 11/30/93 9.00 3/31/97 145 3 3/31/94 9.00 3/31/97 793 18 8/31/95 10.29 6/15/97 689 18 7/31/96 11.25 3/31/97 1,202 34 1/31/95 10.00 4/15/97 54 1 6/30/93 9.50 3/31/97 298 7 8/31/93 11.25 3/31/97 2,900 82 2/28/94 9.00 3/31/97 597 13 10/31/94 9.00 3/31/97 1,770 40 4/30/96 11.15 3/31/97 1,134 32 1/31/97 9.25 10/15/97 1,302 30 1/31/97 9.25 8/15/97 909 21 - 24 - SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the American General Employees' Thrift and Incentive Plan Administrative Board has duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized. AMERICAN GENERAL EMPLOYEES' THRIFT AND INCENTIVE PLAN June 26, 1998 ELLEN H. MASTERSON Ellen H. Masterson, Member of the Administrative Board - 25 - Appendix - 26 - Consent of Independent Auditors We consent to the incorporation by reference in the Registration Statements (Nos. 33-39200 and 333-13407) pertaining to the American General Employees' Thrift and Incentive Plan of our report dated June 19, 1998, with respect to the financial statements and schedules of the American General Employees' Thrift and Incentive Plan included in this Annual Report (Form 11-K) for the year ended December 31, 1997. ERNST & YOUNG LLP Houston, Texas June 26, 1998 - 27 - -----END PRIVACY-ENHANCED MESSAGE-----