11-K 1 0001.txt 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, 1999 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, 1999 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 . . 3 Notes to Financial Statements . . . . . . . . . . . . . . . . . 4 Schedules Schedule H, Line 4 (i) - Schedule of Assets Held for Investment Purposes at End of Year . . . . . . . . . . . . . . . . . . . 12 Schedule H, Line 4 (j) - Schedule of Reportable Transactions . 13 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, 1999 and 1998, 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 auditing standards generally accepted in the United States. 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, 1999 and 1998, and the changes in its net assets available for benefits for the years then ended, in conformity with accounting principles generally accepted in the United States. 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 purposes at end of year as of December 31, 1999 and reportable transactions for the year then ended are presented for purposes of additional analysis and are not a required part of the 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. These supplemental schedules are the responsibility of the Plan's management. The supplemental schedules have been subjected to the auditing procedures applied in our audits 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. Houston, Texas June 9, 2000 AMERICAN GENERAL EMPLOYEES' THRIFT AND INCENTIVE PLAN STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS In thousands December 31, 1999 1998 Assets Investments (See Note C) . . . . . . . . . . . $554,966 $548,828 Receivables Employer contributions . . . . . . . . . . . 248 290 Participant contributions . . . . . . . . . . 286 1,157 Interfund transfers . . . . . . . . . . . . . 738 733 Other . . . . . . . . . . . . . . . . . . . . 140 170 Total receivables . . . . . . . . . . . . . 1,412 2,350 Total assets . . . . . . . . . . . . . . 556,378 551,178 Liabilities Payables Forfeitures . . . . . . . . . . . . . . . . . 463 182 Excess contribution refunds . . . . . . . . . - 891 Excess contribution forfeitures . . . . . . . - 76 Interfund tranfers . . . . . . . . . . . . . 738 733 Other . . . . . . . . . . . . . . . . . . . . 463 339 Total liabilities . . . . . . . . . . . . 1,664 2,221 Net assets available for benefits . . . . . . . $554,714 $548,957 The accompanying notes are an integral part of these financial statements. AMERICAN GENERAL EMPLOYEES' THRIFT AND INCENTIVE PLAN STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS In thousands Years Ended December 31, 1999 1998 Additions to net assets Investment income Dividends . . . . . . . . . . . . . . . $ 9,665 $ 9,072 Interest . . . . . . . . . . . . . . . . 6,549 7,187 Net appreciation in fair value of investments (See Note C) . . . . . . . 9,991 124,048 Total investment income . . . . . . 26,205 140,307 Contributions Companies' . . . . . . . . . . . . . . . 16,225 12,203 Participants' . . . . . . . . . . . . . 29,081 25,803 Total contributions . . . . . . . . 45,306 38,006 Merger of USLIFE SIP . . . . . . . . . . . - 85,788 Merger of WesternSave Plan . . . . . . . . - 6,375 Total additions . . . . . . . . 71,511 270,476 Deductions from net assets Benefits American General Corporation common stock . . . . . . . . . . . . . . . . 9,894 8,700 Cash . . . . . . . . . . . . . . . . . . 54,835 41,303 Forfeitures . . . . . . . . . . . . . . 991 864 Participant loan origination fees . . . 34 31 Total deductions . . . . . . . . 65,754 50,898 Net increase . . . . . . . . . . 5,757 219,578 Net assets available for benefits Beginning of year . . . . . . . . 548,957 329,379 End of year . . . . . . . . . . . $554,714 $548,957 The accompanying notes are an integral part of these financial statements. 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 accounting principles generally accepted in the United States. Investments in American General Corporation (American General or the Company) 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 E); 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 advisor 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 additions and deductions during the reporting periods. Actual results could differ from those estimates. Statement of Position ("SOP") 99-3, effective for plan years ending after December 15, 1999, was adopted by the Plan's management in 1999. SOP 99-3 required various changes to the reporting of certain defined contribution benefit plan investments and other financial disclosure matters; therefore, certain prior year amounts have been reclassified to conform with the current year presentation. 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. 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. Effective January 1, 1999, the Plan's eligibility requirements were changed from the earlier of completion of one year of service or attainment of age 35 to 30 days of service. Non-salaried employees who have completed 1,000 hours of service in one service year and have attained age 21 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 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 (Large-Cap Blend Fund, formally called Mid-Cap Fund); 6) shares of the Templeton Foreign Fund (International Fund); and 7) shares of the Vanguard Fixed Income Fund (Bond Fund). The Companies' contributions are invested soley in 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, Large-Cap Blend, 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 contributions. 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 Directors. The Companies contributed 75 percent of employee's basic contributions during 1998. Effective January 1, 1999, the Companies contributed an amount equal to 100 percent of the first three percent of the participant's basic contribution, plus 50 percent of the next three percent of the participant's basic contribution. These changes were made to allow the plan to meet the safe harbor provisions of IRC 401(k)(12). 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 1999 and 1998, the total amount of participant pretax contributions is limited to $10,000. 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 1999 and 1998, the total amount of base pay that can be used in determining contributions under the Plan is $160,000. 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. Effective January 1, 1999, the nondiscrimination testing and refunds of excess contributions are no longer required under the safe harbor provisions of the IRC. These changes were made to allow the plan to meet the safe harbor provisions of IRC 401(k)(12). For 1998, pre safe harbor, certain highly compensated individuals may have been 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 for 1998 were limited to 6 percent of base pay. Amounts in excess of the limits discussed above are designated on the statement 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 the Companies' contributions and an allocation of Plan earnings. Allocation 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 vested account. Vesting Participants are immediately vested in their contributions plus the earnings thereon. Effective January 1, 1999, the participants immediately become 100 percent vested in the Companies' contributions made in 1999 and subsequent years. These changes were made to allow the plan to meet the safe harbor provisions of IRC 401(k)(12). Prior to January 1, 1999, participants obtained a vested interest in the Companies' contributions and the earnings thereon at the rate of two percent per month of plan participation after one year of service. AMERICAN GENERAL EMPLOYEES' THRIFT AND INCENTIVE PLAN NOTES TO FINANCIAL STATEMENTS--Continued NOTE B--DESCRIPTION OF THE PLAN--Continued Any non-vested portion of the Companies' contributions made prior to January 1, 1999 will become 100 percent vested upon retirement, attainment of age 65, total disability, or death. These changes were made to allow the plan to meet the safe harbor provisions of IRC 401(k)(12). 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 exceeded $5,000 and the participant is under age 65), a participant will receive a distribution equal to the vested value of his or her account. 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. Participant Loans 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. Due to the adoption of safe harbor, for years beginning after December 31, 1998, the Companies' contributions are immediately fully vested and nonforfeitable. NOTE C--INVESTMENTS The following presents investments that represent 5 percent or more of the Plan's net assets. AMERICAN GENERAL EMPLOYEES' THRIFT AND INCENTIVE PLAN NOTES TO FINANCIAL STATEMENTS--Continued NOTE C--INVESTMENTS--Continued In thousands December 31, 1999 1998 American General Corporation common stock . . . . . . . . . . . . . . . $343,327* $365,932* American General Life Insurance Company deposit administration group annuity contract . . . . . . . . . . . . . 94,861 95,742 American General Series Portfolio Company Stock Index Fund . . . . . . . . . . . . . 51,150 38,581 *Nonparticipant-directed (See Note D) The Plan's investments (including gains and losses on investments bought and sold as well as held during the years) appreciated (depreciated) in value as follows: In thousands Years Ended December 31, 1999 1998 Mutual funds . . . . . . . . . . . . . $21,258 $ 11,381 Common stock . . . . . . . . . . . . . (10,558) 112,520 Corporate bonds . . . . . . . . . . . (709) 147 $ 9,991 $124,048 NOTE D--NONPARTICIANT-DIRECTED INVESTMENTS Information about the net assets and the significant components of the changes in net assets relating to the nonparticipant-directed investments is as follows: In thousands December 31, 1999 1998 Net assets AGC common stock fund . . . . . . . . . $344,003 $365,002 AMERICAN GENERAL EMPLOYEES' THRIFT AND INCENTIVE PLAN NOTES TO FINANCIAL STATEMENTS--Continued NOTE D--NONPARTICIPANT-DIRECTED INVESTMENTS--Continued Years Ended December 31, 1999 1998 Changes in net assets Contributions . . . . . . . . . . . . . . . . . $ 23,925 $ 19,133 Dividends . . . . . . . . . . . . . . . . . . . 7,298 7,148 Interest . . . . . . . . . . . . . . . . . . . 52 42 Net appreciation (depreciation) . . . . . . . . (10,558) 112,520 Merger of USLIFE SIP . . . . . . . . . . . . . . . - 43,052 Merger of WesternSave Plan . . . . . . . . . . . . - 3,461 Benefits paid to participants . . . . . . . . . . (40,179) (29,572) Interfund transfers . . . . . . . . . . . . . . . (543) (2,136) Other expenses . . . . . . . . . . . . . . . . . . (994) (866) $(20,999) $152,782 The Stock Fund contains both participant and nonparticipant-directed contributions with earnings not separately determinable; therefore, the Stock Fund is considered a total nonparticipant-directed investment option. NOTE E--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. The contract had a guaranteed minimum rate of 6.25%, for 1999 and 1998. Any earnings in excess of the guaranteed minimum rate are credited to the participants. The effective earned yield is calculated based on the calendar year. The effective earned yield of the investment contract for 1999 and 1998 was 6.48% and 6.49%, respectively. NOTE F--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 G--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. AMERICAN GENERAL EMPLOYEES' THRIFT AND INCENTIVE PLAN NOTES TO FINANCIAL STATEMENTS--Continued NOTE G--RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500--Continued The following is a reconciliation of net assets available for benefits per the financial statements to Form 5500: In thousands December 31, 1999 1998 Net assets available for benefits per the financial statements . . . . . . . . . . . $554,714 $548,957 Benefits payable to withdrawing participants . . . . (4,353) (7,599) Net assets available for benefits per Form 5500 . . . . . . . . . . . . . . . . . . $550,361 $541,358 The following is a reconciliation of benefits paid to participants per the financial statements to Form 5500: In thousands Year Ended December 31, 1999 Benefits paid to participants per the financial statements American General Corporation common stock . . . . $ 9,894 Cash . . . . . . . . . . . . . . . . . . . . . . 54,835 Total benefits paid to participants per the financial statements . . . . . . . . . . 64,729 Benefits payable to withdrawing participants at year end . . . . . . . . . . . . . . . . . . . . . 4,353 Benefits payable to withdrawing participants at beginning of year . . . . . . . . . . . . . . . . . (7,599) Benefits paid to participants per Form 5500 . . . . . . . . . . . . . . . . . . $61,483 NOTE H--FEDERAL INCOME TAXES Based on a favorable determination letter dated July 14, 1999, the Internal Revenue Service has ruled 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. AMERICAN GENERAL EMPLOYEES' THRIFT AND INCENTIVE PLAN NOTES TO FINANCIAL STATEMENTS--Continued NOTE I--PLAN MERGERS 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 included 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 were 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 $6 million, which included 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 were eligible to participate in the Plan as of March 1, 1998. AMERICAN GENERAL EMPLOYEES' THRIFT AND INCENTIVE PLAN SCHEDULE H, Line 4 (i) - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES AT END OF YEAR AT DECEMBER 31, 1999 EIN: 74-0483432 PN: 001 In thousands, except share amounts Fair Issuer Description Cost Value American General 4,524,900 shares of $153,631 $343,327 Corporation* common stock American General Life Deposit administration ** 94,861 Insurance Company* group annuity contract American General Series 1,150,978 shares of AGSPC ** 51,150 Portfolio Company* Stock Index Fund American General Series 1,001,591 shares of AGSPC ** 23,537 Porfolio Company* Growth Fund Putnam 527,743 shares of Putnam OTC ** 19,532 & Emerging Growth Fund Participant Notes* Loans issued at interest ** 7,458 rates between 8.25% and 11.25% Templeton 654,040 shares of Templeton ** 7,338 Foreign Fund Vanguard 650,974 shares of Vanguard ** 5,279 Fixed Income Securities Fund State Street Bank Short-term investments & Trust Company* in money-market fund ** 2,484 $153,631 $554,966 *Party in interest **Cost not required for participant-directed investments AMERICAN GENERAL EMPLOYEES' THRIFT AND INCENTIVE PLAN SCHEDULE H, LINE 4 (j) - SCHEDULE OF REPORTABLE TRANSACTIONS FOR THE YEAR ENDED DECEMBER 31, 1999 EIN: 74-0483432 PN: 001 In thousands Current Value of Identity of Cost Asset on Net Party Purchase Selling of Transaction Gain Involved Description Price Price Asset Date (Loss) Category (iii) - Series of non-participant directed transactions in excess of 5% of net assets available for benefits State Street Bank & Trust Company S/T Investments $43,336 $ - $43,336 $43,336 $ - State Street Bank & Trust Company S/T Investment - 42,987 42,987 42,987 - (A) Company Stock 26,511 - 26,511 26,511 - (A) Company Stock - 38,557 15,090 38,557 23,467 (A) Parties involved are not presented, as permitted by Section 25250.103-6 (d)(1)(i) of the Department of Labor's Rules and Regulations. Note: Includes both participant-directed and nonparticipant-directed transactions. 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 22, 2000 ELIZABETH A. DOBBS Elizabeth A. Dobbs, Vice President-Benefits & Payroll Consent of Independent Auditors We consent to the incorporation by reference in the Registration Statement (Form S-8 No. 333-13407) pertaining to the American General Employees' Thrift and Incentive Plan of our report dated June 9, 2000, 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, 1999. ERNST & YOUNG LLP Houston, Texas June 22, 2000