-----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, GLnKPQ+eEvpM9Zgj8n/dLPd4l36DH2cCdgUGEGGd0UdhgVeAL/16c3bSXyjS/gIr nCLPkOb1y/EwR6f+YZwocg== 0000005103-98-000048.txt : 19980629 0000005103-98-000048.hdr.sgml : 19980629 ACCESSION NUMBER: 0000005103-98-000048 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: 98655130 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: THE VARIABLE ANNUITY LIFE INSURANCE COMPANY AGENTS' AND MANAGERS' THRIFT PLAN Name of the issuer of the securities held pursuant to the Plan and the address of its principal executive office: AMERICAN GENERAL CORPORATION 2929 Allen Parkway Houston, Texas 77019 THE VARIABLE ANNUITY LIFE INSURANCE COMPANY AGENTS' AND MANAGERS' THRIFT PLAN AUDITED FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES DECEMBER 31, 1997 Report of Independent Auditors ........................................... 1 Audited Financial Statements Statements of Net Assets Available for Benefits With Fund Information .. 2 Statements of Changes in Net Assets Available for Benefits With Fund Information................................................... 6 Notes to Financial Statements .......................................... 10 Supplemental Schedules Item 27a - Schedule of Assets Held for Investment Purposes................ 15 Item 27d - Schedule of Reportable Transactions............................ 16 Report of Independent Auditors Administrative Board The Variable Annuity Life Insurance Company Agents' and Managers' Thrift Plan We have audited the accompanying statements of net assets available for benefits of the Variable Annuity Life Insurance Company Agents' and Managers' Thrift Plan as of December 31, 1997 and 1996, and the related statements of changes in net assets available for benefits for the years then ended. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above of The Variable Annuity Life Insurance Company Agents' and Managers' Thrift Plan as of December 31, 1997 and 1996, and for the years then ended present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 1997 and 1996, and the changes in net assets available for benefits for the years then ended, in conformity with generally accepted accounting principles. Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedules of assets held for investment as of December 31, 1997 and reportable transactions for the year then ended are presented for the purpose of additional analysis and are not a required part of the basic financial statements but are supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The Fund Information in the statements of net assets available for benefits and the statements of changes in net assets available for benefits is presented for purposes of additional analysis rather than to present the net assets available for benefits and changes in net assets available for benefits of each fund. The supplemental schedules and Fund Information have been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. ERNST & YOUNG LLP Houston, Texas May 20, 1998 1 THE VARIABLE ANNUITY LIFE INSURANCE COMPANY AGENTS' AND MANAGERS' THRIFT PLAN STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION DECEMBER 31, 1997 Participant Directed Stock Cash Mutual Fund Fund Fund A Assets Investments at fair value American General Corporation common stock (1,716,199 shares) ........ $35,998,503 $ - $ - The Variable Annuity Life Insurance Company group deposit administration contract................... - 2,081,554 - The Variable Annuity Life Insurance Company Mutual Fund A (296,591 shares).... - - 8,808,762 The Variable Annuity Life Insurance Company Foreign Fund (129,451 shares)...... - - - The Variable Annuity Life Insurance Company Small-Cap Fund (115,368 shares) - - - The Variable Annuity Life Insurance Company Large-Cap Fund (62,562 shares) ...... - - - The Variable Annuity Life Insurance Company Bond Fund (11,144 shares) ........... - - - Short-term investments ...... 124,339 2,316 32,124 Total investments ......... 36,122,842 2,083,870 8,840,886 Receivables Contributions Company's ................. - - - Participants'.............. 25,842 2,431 14,248 Interest..................... 953 53,185 219 Total receivables.......... 26,795 55,616 14,467 Total assets .............. 36,149,637 2,139,486 8,855,353 Liabilities Payables Excess contribution refunds.. 142,926 6,965 61,233 Forfeitures.................. - - - Total liabilities.......... 142,926 6,965 61,233 Net assets available for benefits....................... $36,006,711 $2,132,521 $8,794,120 2 The accompanying notes are an integral part of these financial statements. THE VARIABLE ANNUITY LIFE INSURANCE COMPANY AGENTS' AND MANAGERS' THRIFT PLAN STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION DECEMBER 31, 1997 Participant Directed Foreign Small-Cap Large-Cap Fund Fund Fund Assets Investments at fair value American General Corporation common stock (1,716,199 shares) ........ $ - $ - $ - The Variable Annuity Life Insurance Company group deposit administration contract................... - - - The Variable Annuity Life Insurance Company Mutual Fund A (296,591 shares).... - - - The Variable Annuity Life Insurance Company Foreign Fund (129,451 shares)...... 1,288,041 - - The Variable Annuity Life Insurance Company Small-Cap Fund (115,368 shares) - 1,858,573 - The Variable Annuity Life Insurance Company Large-Cap Fund (62,562 shares) ...... - - 1,264,994 The Variable Annuity Life Insurance Company Bond Fund (11,144 shares) ........... - - - Short-term investments ...... 16,007 24,780 19,726 Total investments ......... 1,304,048 1,883,353 1,284,720 Receivables Contributions Company's ................. - - - Participants'.............. 6,057 9,735 8,661 Interest..................... 74 94 73 Total receivables.......... 6,131 9,829 8,734 3 Total assets .............. 1,310,179 1,893,182 1,293,454 Liabilities Payables Excess contribution refunds.. 21,312 37,703 24,696 Forfeitures.................. - - - Total liabilities.......... 21,312 37,703 24,696 Net assets available for benefits....................... $1,288,867 $1,855,479 $1,268,758 The accompanying notes are an integral part of these financial statements. THE VARIABLE ANNUITY LIFE INSURANCE COMPANY AGENTS' AND MANAGERS' THRIFT PLAN STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION DECEMBER 31, 1997 Non- Participant Participant Directed Directed Bond Stock Fund Fund Total Assets Investments at fair value American General Corporation common stock (1,716,199 shares) ........ $ - $56,783,484 $92,781,987 The Variable Annuity Life Insurance Company group deposit administration contract................... - - 2,081,554 The Variable Annuity Life Insurance Company Mutual Fund A (296,591 shares).... - - 8,808,762 The Variable Annuity Life Insurance Company Foreign Fund (129,451 shares)...... - - 1,288,041 The Variable Annuity Life Insurance Company Small-Cap Fund (115,368 shares) - - 1,858,573 The Variable Annuity Life Insurance Company Large-Cap Fund (62,562 shares) ...... - - 1,264,994 4 The Variable Annuity Life Insurance Company Bond Fund (11,144 shares) ........... 103,194 - 103,194 Short-term investments ...... 1,274 - 220,566 Total investments ......... 104,468 56,783,484 108,407,671 Receivables Contributions Company's ................. - 46,003 46,003 Participants'.............. 469 - 67,443 Interest..................... 6 - 54,604 Total receivables.......... 475 46,003 168,050 Total assets .............. 104,943 56,829,487 108,575,721 Liabilities Payables Excess contribution refunds.. 4,603 788,900 1,088,338 Forfeitures.................. - 30,920 30,920 Total liabilities.......... 4,603 819,820 1,119,258 Net assets available for benefits....................... $100,340 $56,009,667 $107,456,463 The accompanying notes are an integral part of these financial statements. 5 THE VARIABLE ANNUITY LIFE INSURANCE COMPANY AGENTS' AND MANAGERS' THRIFT PLAN STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION (continued) DECEMBER 31, 1996 Participant Directed Stock Cash Mutual Fund Fund Fund A Assets Investments at fair value American General Corporation common stock (1,747,421 shares) .......... $29,046,224 $ - $ - The Variable Annuity Life Insurance Company group deposit administration contract .................. - 1,317,443 - The Variable Annuity Life Insurance Company Stock Index Fund (293,055 shares)........... - - 6,669,924 The Variable Annuity Life Insurance Company Timed Opportunity Fund (24,805 shares)............ - - - Short-term investments ...... 94,386 10,734 23,387 Total investments ......... 29,140,610 1,328,177 6,693,311 Receivables Interest..................... 988 51 128 Total receivables.......... 988 51 128 Total assets .............. 29,141,598 1,328,228 6,693,439 Liabilities Payables Excess contribution refunds.. 338,348 24,514 181,754 Forfeitures.................. - - - Total liabilities ......... 338,348 24,514 181,754 Net assets available for benefits ...................... $28,803,250 $1,303,714 $ 6,511,685 The accompanying notes are an integral part of these financial statements. 6 THE VARIABLE ANNUITY LIFE INSURANCE COMPANY AGENTS' AND MANAGERS' THRIFT PLAN STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION (continued) DECEMBER 31, 1996 Non- Participant Participant Directed Directed Mutual Stock Fund B Fund Total Assets Investments at fair value American General Corporation common stock (1,747,421 shares) .......... $ - $42,379,618 $71,425,842 The Variable Annuity Life Insurance Company group deposit administration contract .................. - - 1,317,443 The Variable Annuity Life Insurance Company Stock Index Fund (293,055 shares)........... - - 6,669,924 The Variable Annuity Life Insurance Company Timed Opportunity Fund (24,805 shares)............ 288,240 - 288,240 Short-term investments ...... 7,771 - 136,278 Total investments ......... 296,011 42,379,618 79,837,727 Receivables Interest..................... 41 - 1,208 Total receivables.......... 41 - 1,208 Total assets .............. 296,052 42,379,618 79,838,935 Liabilities Payables Excess contribution refunds.. - 606,965 1,151,581 Forfeitures.................. - 110,033 110,033 Total liabilities ......... - 716,998 1,261,614 Net assets available for benefits ...................... $ 296,052 $41,662,620 $78,577,321 The accompanying notes are an integral part of these financial statements. 7 THE VARIABLE ANNUITY LIFE INSURANCE COMPANY AGENTS' AND MANAGERS' THRIFT PLAN STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION YEAR ENDED DECEMBER 31, 1997 Participant Directed Stock Cash Mutual Fund Fund Fund A Additions to net assets Investment income Dividends ................... $ 934,576 $ - $ 158,766 Interest .................... 5,409 142,077 4,115 Net appreciation/ (depreciation) in fair value of investments ...... 8,861,685 - 2,020,074 Total investment income.... 9,801,670 142,077 2,182,955 Contributions Company's ................... - - - Participants' ............... 1,672,298 143,884 902,601 Total contributions ....... 1,672,298 143,884 902,601 Total additions ......... 11,473,968 285,961 3,085,556 Deductions from net assets Benefits paid to participants American General Corporation common stock (101,622 shares) .......... 1,669,635 - - Cash ........................ 53,193 142,054 326,405 Forfeitures ................... - - - Total deductions .......... 1,722,828 142,054 326,405 Net increase before interfund transfers ..................... 9,751,140 143,907 2,759,151 Interfund transfers, net ........ (2,547,679) 684,900 (476,716) Net increase(decrease) ........ 7,203,461 828,807 2,282,435 Net assets available for benefits Beginning of year ......... 28,803,250 1,303,714 6,511,685 End of year ............... $36,006,711 $2,132,521 $8,794,120 The accompanying notes are an integral part of these financial statements. 8 THE VARIABLE ANNUITY LIFE INSURANCE COMPANY AGENTS' AND MANAGERS' THRIFT PLAN STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION YEAR ENDED DECEMBER 31, 1997 Participant Directed Mutual Foreign Small-Cap Fund B Fund Fund Additions to net assets Investment income Dividends ................... $ - $120,702 $ - Interest .................... 1,925 2,002 2,548 Net appreciation/ (depreciation) in fair value of investments ...... - (119,162) 313,572 Total investment income.... 1,925 3,542 316,120 Contributions Company's ................... - - - Participants' ............... - 374,078 553,004 Total contributions ....... - 374,078 553,004 Total additions ......... 1,925 377,620 869,124 Deductions from net assets Benefits paid to participants American General Corporation common stock (101,622 shares) .......... - - - Cash ........................ - 18,501 17,399 Forfeitures ................... - - - Total deductions .......... - 18,501 17,399 Net increase before interfund transfers ..................... 1,925 359,119 851,725 Interfund transfers, net ........ (297,977) 929,748 1,003,754 Net increase(decrease) ........ (296,052) 1,288,867 1,855,479 Net assets available for benefits Beginning of year ......... 296,052 - - End of year ............... $ - $1,288,867 $1,855,479 The accompanying notes are an integral part of these financial statements. 9 THE VARIABLE ANNUITY LIFE INSURANCE COMPANY AGENTS' AND MANAGERS' THRIFT PLAN STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION YEAR ENDED DECEMBER 31, 1997 Participant Directed Large-Cap Bond Fund Fund Additions to net assets Investment income Dividends ................... $ 20,641 $ 4,791 Interest .................... 1,465 132 Net appreciation/ (depreciation) in fair value of investments ...... 187,853 6,903 Total investment income.... 209,959 11,826 Contributions Company's ................... - - Participants' ............... 435,488 22,494 Total contributions ....... 435,488 22,494 Total additions ......... 645,447 34,320 Deductions from net assets Benefits paid to participants American General Corporation common stock (101,622 shares) .......... - - Cash ........................ 14,263 376 Forfeitures ................... - - Total deductions .......... 14,263 376 Net increase before interfund transfers ..................... 631,184 33,944 Interfund transfers, net ........ 637,574 66,396 Net increase(decrease) ........ 1,268,758 100,340 Net assets available for benefits Beginning of year ......... - - End of year ............... $1,268,758 $100,340 The accompanying notes are an integral part of these financial statements. 10 THE VARIABLE ANNUITY LIFE INSURANCE COMPANY AGENTS' AND MANAGERS' THRIFT PLAN STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION YEAR ENDED DECEMBER 31, 1997 Non-Participant Directed Stock Fund Total Additions to net assets Investment income Dividends ................... $ 1,464,793 $ 2,704,269 Interest .................... 7,427 167,100 Net appreciation/ (depreciation) in fair value of investments ...... 14,011,784 25,282,709 Total investment income.... 15,484,004 28,154,078 Contributions Company's ................... 2,179,098 2,179,098 Participants' ............... - 4,103,847 Total contributions ....... 2,179,098 6,282,945 Total additions ......... 17,663,102 34,437,023 Deductions from net assets Benefits paid to participants American General Corporation common stock (101,622 shares) .......... 3,019,176 4,688,811 Cash ........................ 72,607 644,798 Forfeitures ................... 224,272 224,272 Total deductions .......... 3,316,055 5,557,881 Net increase before interfund transfers ..................... 14,347,047 28,879,142 Interfund transfers, net ........ - - Net increase(decrease) ........ 14,347,047 28,879,142 Net assets available for benefits Beginning of year ......... 41,662,620 78,577,321 End of year ............... $56,009,667 $107,456,463 The accompanying notes are an integral part of these financial statements. 11 THE VARIABLE ANNUITY LIFE INSURANCE COMPANY AGENTS' AND MANAGERS' THRIFT PLAN STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION (continued) YEAR ENDED DECEMBER 31, 1996 Participant Directed Stock Cash Mutual Fund Fund Fund A Additions to net assets Investment income Dividends ................... $ 893,360 $ - $ 150,680 Interest .................... 5,815 58,384 2,266 Net appreciation/ (depreciation)in fair value of investments ...... 4,144,014 - 969,034 Total investment income ... 5,043,189 58,384 1,121,980 Contributions Company's ................... - - - Participants' ............... 1,756,239 152,109 1,013,400 Total contributions ....... 1,756,239 152,109 1,013,400 Total additions ......... 6,799,428 210,493 2,135,380 Deductions from net assets Benefits paid to participants American General Corporation common stock (69,031 shares) ........... 952,558 - - Cash ........................ 6,457 173,224 104,458 Forfeitures ................... - - - Total deductions ........ 959,015 173,224 104,458 Net increase before interfund transfers.... 5,840,413 37,269 2,030,922 Interfund transfers, net......... (273,424) (24,401) 298,855 Net increase............. 5,566,989 12,868 2,329,777 Net assets available for benefits Beginning of year ....... 23,236,261 1,290,846 4,181,908 End of year ............. $28,803,250 $1,303,714 $6,511,685 The accompanying notes are an integral part of these financial statements. 12 THE VARIABLE ANNUITY LIFE INSURANCE COMPANY AGENTS' AND MANAGERS' THRIFT PLAN STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION (continued) YEAR ENDED DECEMBER 31, 1996 Non- Participant Participant Directed Directed Mutual Stock Fund B Fund Total Additions to net assets Investment income Dividends ................... $ 39,529 $1,311,970 $2,395,539 Interest .................... 216 6,633 73,314 Net appreciation/ (depreciation)in fair value of investments ...... (13,093) 6,093,354 11,193,309 Total investment income ... 26,652 7,411,957 13,662,162 Contributions Company's ................... - 1,817,635 1,817,635 Participants' ............... 78,256 - 3,000,004 Total contributions ....... 78,256 1,817,635 4,817,639 Total additions ......... 104,908 9,229,592 18,479,801 Deductions from net assets Benefits paid to participants American General Corporation common stock (69,031 shares) ........... - 1,508,367 2,460,925 Cash ........................ 9,671 9,964 303,774 Forfeitures ................... - 26,898 26,898 Total deductions ........ 9,671 1,545,229 2,791,597 Net increase before interfund transfers.... 95,237 7,684,363 15,688,204 Interfund transfers, net......... (1,030) - - Net increase............. 94,207 7,684,363 15,688,204 Net assets available for benefits Beginning of year ....... 201,845 33,978,257 62,889,117 End of year ............. $296,052 $41,662,620 $78,577,321 The accompanying notes are an integral part of these financial statements. 13 THE VARIABLE ANNUITY LIFE INSURANCE COMPANY AGENTS' AND MANAGERS' THRIFT PLAN NOTES TO FINANCIAL STATEMENTS NOTE 1--SIGNIFICANT ACCOUNTING POLICIES The Variable Annuity Life Insurance Company Agents' and Managers' Thrift Plan (the Plan) financial statements are prepared in conformity with generally accepted accounting principles. The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities. Ultimate results could differ from those estimates. The fair value of investments in American General Corporation (American General) common stock is based on published market prices. Fair values of other investments not having an established market are reported as follows: 1) The Variable Annuity Life Insurance Company (VALIC, also referred to as the Company) group deposit administration contract (Cash Fund) at contract value (see Note 3), 2) investments in American General Series Portfolio Company (AGSPC) Stock Index and Growth Funds, the Putnam OTC & Emerging Growth Fund, the Templeton Foreign Fund, and the Vanguard Fixed Income Securities Fund, at net asset value, which is based on the market value of the underlying investments; and 3) short-term investments at cost which approximates fair value. The contract value of the group deposit administration contract approximates fair value because the interest crediting rate is reset annually. AGSPC is an open-end management investment company (mutual fund) whose investment adviser is VALIC. Dividends are recorded as income on ex-dividend dates and interest income is recorded using the accrual method of accounting. Participants' accounts are credited monthly with the number of shares of American General common stock or the number of shares of the AGSPC Stock Index and Growth Funds purchased and the cost thereof. Purchases under the VALIC group deposit administration contract are also credited to the participants' accounts at cost. Contributions are recorded as income on the date they become payable to the Plan. Interfund transfers are recorded at the fair value of the amount transferred. Benefits paid to participants and related forfeitures are recorded upon distribution at the fair value of the assets distributed or forfeited. Benefits payable to participants are not accrued as liabilities in the financial statements. 14 THE VARIABLE ANNUITY LIFE INSURANCE COMPANY AGENTS' AND MANAGERS' THRIFT PLAN NOTES TO FINANCIAL STATEMENTS--Continued NOTE 2--DESCRIPTION OF THE PLAN The following description of the Plan provides only general information. The Plan document provides more complete descriptions of the Plan's provisions. General The Plan, which is subject to certain provisions of the Employee Retirement Income Security Act of 1974, as amended (ERISA), is a defined contribution plan offered to eligible agents and managers of VALIC who have completed at least one year of service and have reached age twenty-one. The Plan provides for participant elective salary deferrals (participant pretax contributions) in accordance with Section 401(k) of the Internal Revenue Code of 1986, as amended (IRC). The cost of administering the Plan is paid by VALIC. Investment Options Participants may elect to have their contributions invested in one of seven funds or a combination of each fund. The funds invest in: 1) shares of American General common stock (Stock Fund); 2) a group deposit administration contract issued by VALIC (Cash Fund); 3) the AGSPC Stock Index Fund (Mutual Fund A); 4) shares of the Templeton Foreign Fund (Foreign Fund); 5) shares of the Putnam OTC & Emerging Growth Fund (Small-Cap Fund); 6) shares of the AGSPC Growth Fund (Large-Cap Fund) and 7) shares of the Vanguard Fixed Income Securities Fund (Bond Fund). Contributions which have not been used to purchase investments in either the Stock, Cash, or Mutual Funds are temporarily invested in money-market fund investments. These investments are held in a bank-administered trust fund and income from these investments is allocated to Plan participants based on current contributions. Contributions Participants may contribute, on a pretax basis, a basic amount ranging from one to six percent of base pay and an additional amount ranging from one to four percent of base pay subject to the contribution limitations discussed below. The Company contributes an amount ranging from 50 percent to 100 percent of the participants' basic contributions. The Plan allows participants to change their contribution rate and investment elections for future contributions, as well as transfer all or part of their account balances from one fund to another once a month. 15 THE VARIABLE ANNUITY LIFE INSURANCE COMPANY AGENTS' AND MANAGERS' THRIFT PLAN NOTES TO FINANCIAL STATEMENTS--Continued NOTE 2--DESCRIPTION OF THE PLAN--Continued Contribution Limitations For 1997 and 1996, the total amount of participant pretax contributions is limited to $9,500 for all plans. Additionally, the total amount of annual participant and Company contributions (including forfeitures) to all company sponsored defined contribution plans must not exceed the lesser of 25 percent of compensation or $30,000. During 1997 and 1996, the total amount of base pay that can be considered under the Plan is $160,000 and $150,000, respectively. The IRC provides that plans such as the Plan cannot discriminate in favor of highly compensated individuals. To comply with these laws, certain highly compensated individuals in the Plan may receive refunds of contributions in excess of IRC Sections 401(k)(3) and 401(m) limits for employee pretax contributions and employer matching contributions, respectively, and all earnings attributable to such contributions. Refunds will be made from the VALIC Agents' and Managers' Thrift Plan. Amounts in excess of the limits discussed above are designated on the Statements of Net Assets Available for Benefits as Payables -Excess contribution refunds. These amounts will be refunded to the affected highly compensated participants on or before the last day of the subsequent plan year to ensure the tax qualified status of the Plan. Participant Accounts Each participant's account is credited with the participant's contributions and an allocation of the Company's contributions and Plan earnings. Allocations of Plan earnings are based on participants' account balances. The benefit to which a participant is entitled is the benefit that can be provided from the participant's account. Vesting Participants are immediately vested in their contributions plus the earnings thereon. A participant obtains a vested interest in the Company's contributions and the earnings thereon at the rate determined by years of service. The vesting schedule is provided below: Years of Service Nonforfeitable Percentages 0 - 3 0 3 20 4 40 5 60 6 80 7 100 Vesting of Company contributions shall be 100 percent upon death, disability, or the attainment of normal retirement age. 16 THE VARIABLE ANNUITY LIFE INSURANCE COMPANY AGENTS' AND MANAGERS' THRIFT PLAN NOTES TO FINANCIAL STATEMENTS--Continued NOTE 2--DESCRIPTION OF THE PLAN--Continued Payment of Benefits Upon termination of service, and if consented to by the participant (consent only required if the total value, both vested and nonvested, of their account exceeds $3,500 and the participant is under the age of 65), a participant will receive a distribution equal to the vested value of his or her account. For tax years prior to January 1, 1997, a distribution must be made after a participant reaches age 70 1/2, regardless of whether service has been terminated. Effective for tax years beginning after December 31, 1996, distributions must begin by April 1st of the calendar year following the later of the calendar year in which the employee either reaches ages 70 1/2 or retires. Direct Rollover A participant may elect, at the time and in the manner prescribed by the Plan Administrator, to have any portion of an eligible rollover distribution paid directly to an eligible retirement plan specified by the participant in a direct rollover. Forfeitures Participants terminating employment shall forfeit their nonvested interest in the Company's contributions on the earlier of (1) the distribution of the entire nonforfeitable portion of their account or (2) upon incurring a period of severance equal to five consecutive one-year breaks in service. Forfeitures are available to reduce future Company contributions. Participants who terminate and are re-employed with the Company before incurring five consecutive one-year breaks in service are entitled to their nonvested or forfeited amounts subject to certain provisions as stated in the Plan document. NOTE 3--INVESTMENT CONTRACT WITH INSURANCE COMPANY The Plan maintains an investment contract with VALIC, a wholly owned subsidiary of American General Corporation. The group deposit administration contract is valued at contract value which represents contributions and transfers under the contract, plus income earned, less funds used to pay benefits. The contract had a guaranteed rate of 5.5% through March 31, 1996; effective April 1, 1996 the rate changed to 6%. This rate is declared annually and was changed to 6.25% on April 1, 1997. Any earnings in excess of the guaranteed minimum rate are credited to the participants' accounts. The effective earned yield is calculated based on the calendar year. The effective earned yield of the investment contract was 7.79% for 1997 and 7.78% for 1996. 17 THE VARIABLE ANNUITY LIFE INSURANCE COMPANY AGENTS' AND MANAGERS' THRIFT PLAN NOTES TO FINANCIAL STATEMENTS--Continued NOTE 4--PLAN TERMINATION Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate from the Plan subject to the provisions of ERISA. In the event of Plan termination, participants will become 100 percent vested in their accounts. NOTE 5--RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500 The following is a reconciliation of net assets available for benefits per the financial statements to the Form 5500: December 31, 1997 1996 Net assets available for benefits per the financial statements $107,456,463 $78,577,321 Benefits payable to withdrawing participants (789,778) (374,110) Net assets available for benefits per the Form 5500 $106,666,685 $ 78,203,211 The following is a reconciliation of benefits paid to participants per the financial statements to the Form 5500: Year Ended December 31, 1997 Benefits paid to participants per the financial statements American General Corporation common stock $4,688,811 Cash 644,798 Total benefits paid to participants per the financial statements 5,333,609 Add: Amounts allocated to withdrawing participants at December 31, 1997 789,778 Less: Amounts allocated to withdrawing participants at December 31, 1996 (374,110) Benefits paid to participants per the Form 5500 $5,749,277 Amounts allocated to withdrawing participants are recorded on the Form 5500 for benefit claims that have been processed and approved for payment prior to December 31 but not yet paid as of that date. 18 THE VARIABLE ANNUITY LIFE INSURANCE COMPANY AGENTS' AND MANAGERS' THRIFT PLAN NOTES TO FINANCIAL STATEMENTS--Continued NOTE 6--FEDERAL INCOME TAXES Based on a favorable determination letter dated December 8, 1995, the Internal Revenue Service (IRS) has ruled that the Plan, as restated and amended effective August 31, 1990, December 6, 1991, March 4, 1992, May 26, 1993, December 6, 1993, and August 25, 1995, is qualified under Section 401(a) of the IRC and, therefore, exempt under Section 501(a) from federal income taxes. Once qualified, the Plan is required to operate in conformity with the IRC to maintain its qualification. The Plan Administrator is not aware of any course of action or series of events that have occurred that might adversely affect the Plan's qualified status. NOTE 7--YEAR 2000 ISSUE (UNAUDITED) The Plan Sponsor has developed a plan to modify its internal information technology to be ready for the year 2000 and has completed converting critical data processing systems. The project also included determining whether third party service providers have reasonable plans in place to become year 2000 compliant. The Plan Sponsor does not expect this project to have a significant effect on plan operations. NOTE 8--SUBSEQUENT EVENTS Effective January 1, 1998, the Plan was amended to allow VALIC Investment Services Company ("VISCO") to become a participating employer under the Plan for the benefit of sales representatives who are employees of VISCO. Effective April 1, 1998, the Plan was amended to make loans available to participants. Effective April 1, 1998, Valic Trust Company became the trustee of the Plan assets. 19 THE VARIABLE ANNUITY LIFE INSURANCE COMPANY AGENTS' AND MANAGERS' THRIFT PLAN ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES DECEMBER 31, 1997 Identity of Description Issue of Investment Shares or Units Cost Current Value *American General Common stock 1,716,199 shares $40,798,450 $92,781,987 Corporation *The Variable Group deposit 2,081,554 2,081,554 Annuity Life administration Insurance Company contract *American General Mutual fund 296,591 shares 5,296,388 8,808,762 Series Portfolio Company Stock Index Fund *Templeton Foreign Mutual fund 129,451 shares 1,412,632 1,288,041 Fund *Putnam OTC & Mutual fund 115,368 shares 1,556,496 1,858,573 Emerging Growth Fund *American General Mutual fund 62,562 shares 1,078,881 1,264,994 Series Portfolio Company Growth Fund *Vanguard Fixed Mutual fund 11,144 shares 96,291 103,194 Income Securities Fund *State Street Bank Short-term investment & Trust Company money-market fund 220,566 220,566 $52,541,258 $108,407,671 *Party-in-interest 20 THE VARIABLE ANNUITY LIFE INSURANCE COMPANY AGENTS' AND MANAGERS' THRIFT PLAN ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS YEAR ENDED DECEMBER 31, 1997 Current Value of Asset on Identity of Purchase Selling Cost of Transaction Party Involved Description Price Price Asset Sold Date Category (iii) - series of transactions in excess of 5% of Plan assets State Street Purchase of $12,315,545 $ - $ - $12,315,545 Bank and money market Trust Company fund investments in 417 transactions State Street Sales of money - 12,231,257 12,231,257 12,231,257 Bank and market fund Trust Company investments in 235 transactions American Purchase of 5,294,929 - - 5,294,929 General American General Corporation Corporation common stock in 28 transactions American Sale of - 6,508,736 3,273,727 3,273,727 General American General Corporation Corporation common stock in 28 transactions at a gain of $3,235,009 21 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, The Variable Annuity Life Insurance Company Agents' and Managers' Thrift Plan Administrative Board has duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized. THE VARIABLE ANNUITY LIFE INSURANCE COMPANY AGENTS' AND MANAGERS' THRIFT PLAN June 26, 1998 ELLEN H. MASTERSON Ellen H. Masterson, Member of the Administrative Board 22 Appendix 23 Consent of Independent Auditors We consent to the incorporation by reference in the Registration Statement (Form S-8 No. 333-13395) pertaining to The Variable Annuity Life Insurance Company Agents' and Managers' Thrift Plan and in the related prospectus of our report date May 20, 1998, with respect to the financial statements and supplemental schedules of The Variable Annuity Life Insurance Company Agents' and Managers' Thrift Plan included in this Annual Report (Form 11-K) for the year ended December 31, 1997. ERNST & YOUNG LLP Houston, Texas June 26, 1998 24 -----END PRIVACY-ENHANCED MESSAGE-----