<PAGE>
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- --------------------------------------------------------------------------------
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 9, 1994
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 13E-4
ISSUER TENDER OFFER STATEMENT
(PURSUANT TO SECTION 13(E)(1) OF THE
SECURITIES EXCHANGE ACT OF 1934)
TRANSAMERICA CORPORATION
(NAME OF ISSUER AND PERSON FILING STATEMENT)
----------------
COMMON STOCK, PAR VALUE $1.00 PER SHARE
(TITLE OF CLASS OF SECURITIES)
----------------
893485 10-2
(CUSIP NUMBER OF CLASS OF SECURITIES)
----------------
CHRISTOPHER M. MCLAIN
SENIOR VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
TRANSAMERICA CORPORATION
600 MONTGOMERY STREET
SAN FRANCISCO, CALIFORNIA 94111
(415) 983-4000
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO
RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF THE PERSON FILING STATEMENT)
COPY TO:
DANA MURPHY KETCHAM
RICHARD V. SMITH
ORRICK, HERRINGTON & SUTCLIFFE
THE OLD FEDERAL RESERVE BANK BUILDING
400 SANSOME STREET
SAN FRANCISCO, CALIFORNIA 94111
(415) 392-1122
MAY 9, 1994
(DATE TENDER OFFER FIRST PUBLISHED,
SENT OR GIVEN TO SECURITY HOLDERS)
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Transaction Valuation* Amount of Filing Fee
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$247,500,000 $49,500
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(*) Determined pursuant to Rule O-11(b)(1). Assumes the purchase of 4,500,000
shares at $55 per share.
[_]Check box if any part of the fee is offset as provided by Rule O-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
Amount Previously Paid: Not applicable.
Form or Registration No.:Not applicable.
Filing Party: Not applicable.
Date Filed: Not applicable.
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<PAGE>
ITEM 1. SECURITY AND ISSUER.
(a) The name of the issuer is Transamerica Corporation, a Delaware
corporation (the "Company"), that has its principal executive offices at 600
Montgomery Street, San Francisco, California 94111. The information set forth
on page 1 and in "Certain Information Concerning the Company" in Section 10 of
the Offer to Purchase (as defined below) is incorporated herein by reference.
(b) This Schedule relates to the offer by the Company to purchase up to
4,500,000 outstanding shares of Common Stock, par value $1.00 per share (the
"Shares") (including the associated preference stock purchase rights issued
pursuant to the Rights Agreement, dated as of July 17, 1986, as amended,
between the Company and First Chicago Trust Company of New York, as the Rights
Agent), at a price not greater than $55 nor less than $48 per share, net to the
seller in cash, all upon the terms and subject to the conditions set forth in
the Offer to Purchase, dated May 9, 1994 (the "Offer to Purchase"), and related
Letter of Transmittal, copies of which are attached hereto as Exhibits (a)(1)
and (a)(2), respectively. The information set forth on pages 1 and 4, and in
"Number of Shares; Proration" in Section 1, of the Offer to Purchase is
incorporated herein by reference.
(c) The information set forth in "Price Range of Shares" in Section 8 of the
Offer to Purchase is incorporated herein by reference.
(d) Not applicable.
ITEM 2. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATIONS.
(a) The information set forth under "Source and Amount of Funds" in Section
11 of the Offer to Purchase is incorporated herein by reference.
(b) Not applicable.
ITEM 3. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE ISSUER OR
AFFILIATE.
(a) to (j) The information set forth under "Purpose of the Offer; Certain
Effects of the Offer" in Section 9 and "Certain Information Concerning the
Company" in Section 10 of the Offer to Purchase is incorporated herein by
reference.
ITEM 4. INTEREST IN SECURITIES OF THE ISSUER.
The information set forth under "Transactions and Agreements Concerning the
Shares" in Section 12 of the Offer to Purchase is incorporated herein by
reference.
ITEM 5. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE ISSUER'S SECURITIES.
The information set forth under "Transactions and Agreements Concerning the
Shares" in Section 12 of the Offer to Purchase is incorporated herein by
reference.
ITEM 6. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth under "Fees and Expenses" in Section 15 of the
Offer to Purchase is incorporated herein by reference.
ITEM 7. FINANCIAL INFORMATION.
(a) and (b) The information set forth under "Certain Information Concerning
the Company" in Section 10 of the Offer to Purchase is incorporated herein by
reference.
<PAGE>
ITEM 8. ADDITIONAL INFORMATION.
(a) to (d) None or not applicable.
(e) The information set forth in the Offer to Purchase and the Letter of
Transmittal is incorporated herein by reference.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<C> <S>
(a)(1) Form of Offer to Purchase, dated May 9, 1994.
(a)(2) Form of Letter of Transmittal, dated May 9, 1994, together with
Guidelines for Certification of Taxpayer I.D. Number on Substitute
Form W-9.
(a)(3) Form of Memorandum and Election Form, dated May 9, 1994, to
Participants in the Transamerica Corporation Employees Stock
Savings Plan.
(a)(4) Form of Letter to Stockholders from Frank C. Herringer, President
and Chief Executive Officer of the Registrant, dated May 9, 1994.
(a)(5) Form of Notice of Guaranteed Delivery.
(a)(6) Form of Letter to Brokers, Dealers, Commercial Banks and Trust
Companies, dated May 9, 1994.
(a)(7) Form of Letter to Clients, dated May 9, 1994.
(a)(8) Form of Summary Advertisement, dated May 9, 1994.
(a)(9) Form of Press Release, dated May 9, 1994.
(b) Not applicable.
(c) None.
(d) None.
(e) Not applicable.
(f) Not applicable.
(g)(1) Pages 37 to 70 of the Registrant's Annual Report to Stockholders
for the Year Ended December 31, 1993.
(g)(2) Registrant's Quarterly Report on Form 10-Q for the Quarter Ended
March 31, 1994 (other than the exhibits thereto).
</TABLE>
2
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct.
Transamerica Corporation
/s/ Frank C. Herringer
By __________________________________
Frank C. Herringer
President and Chief Executive
Officer
Dated: May 6, 1994
3
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S> <C>
(a)(1) Form of Offer to Purchase, dated May 9, 1994.
(a)(2) Form of Letter of Transmittal, dated May 9, 1994, together with
Guidelines for Certification of Taxpayer I.D. Number on
Substitute Form W-9.
(a)(3) Form of Memorandum and Election Form, dated May 9, 1994, to
Participants in the Transamerica Corporation Employees Stock
Savings Plan.
(a)(4) Form of Letter to Stockholders from Frank C. Herringer,
President and Chief Executive Officer of the Registrant, dated
May 9, 1994.
(a)(5) Form of Notice of Guaranteed Delivery.
(a)(6) Form of Letter to Brokers, Dealers, Commercial Banks and Trust
Companies, dated May 9, 1994.
(a)(7) Form of Letter to Clients, dated May 9, 1994.
(a)(8) Form of Summary Advertisement, dated May 9, 1994.
(a)(9) Form of Press Release, dated May 9, 1994.
(g)(1) Pages 37 to 70 of the Registrant's Annual Report to Stockholders
for the Year Ended December 31, 1993.
(g)(2) Registrant's Quarterly Report on Form 10-Q for the Quarter Ended
March 31, 1994 (other than the exhibits thereto).
</TABLE>
<PAGE>
Transamerica Corporation
Offer to Purchase for Cash
Up to 4,500,000 Shares of its Common Stock
(Including the Associated Preference Stock Purchase Rights)
At a Purchase Price Not Greater Than $55
Nor Less Than $48 Per Share
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE
AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON MONDAY, JUNE 6, 1994,
UNLESS THE OFFER IS EXTENDED.
----------------
Transamerica Corporation, a Delaware corporation (the "Company"), invites
its stockholders to tender shares of its Common Stock, par value $1.00 per
share (the "Shares") (including the associated preference stock purchase
rights (the "Rights") issued pursuant to the Rights Agreement, dated as of
July 17, 1986, as amended, between the Company and First Chicago Trust Company
of New York, as the Rights Agent), at prices not greater than $55 nor less
than $48 per Share, net to the seller in cash, specified by such stockholders,
upon the terms and subject to the conditions set forth herein and in the
related Letter of Transmittal (which together constitute the "Offer"). Unless
the context otherwise requires, all references to Shares shall include the
associated Rights. The Company will determine a single per Share price (not
greater than $55 nor less than $48 per Share) that it will pay for the Shares
validly tendered pursuant to the Offer and not withdrawn (the "Purchase
Price"), taking into account the number of Shares so tendered and the prices
specified by the tendering stockholders. The Company will select the Purchase
Price that will enable it to purchase 4,500,000 Shares (or such lesser number
of Shares as are validly tendered at prices not greater than $55 nor less than
$48 per Share) pursuant to the Offer. The Company will purchase all Shares
validly tendered at prices at or below the Purchase Price and not withdrawn,
upon the terms and subject to the conditions of the Offer, including the
provisions thereof relating to proration and conditional tenders described
herein. Shares tendered at prices in excess of the Purchase Price and Shares
not purchased because of proration and conditional tenders will be returned.
Stockholders must complete the section of the Letter of Transmittal relating
to the price at which they are tendering Shares in order to validly tender
Shares.
----------------
THE OFFER IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF SHARES BEING TENDERED.
THE OFFER IS, HOWEVER, SUBJECT TO OTHER CONDITIONS. SEE SECTION 7.
----------------
IMPORTANT
Any stockholder desiring to tender all or any portion of his or her Shares
should either (1) complete and sign the Letter of Transmittal or a facsimile
thereof in accordance with the instructions in the Letter of Transmittal, mail
or deliver it and any other required documents to the Depositary, and either
deliver the certificates for Shares to the Depositary along with the Letter of
Transmittal or deliver such Shares pursuant to the procedure for book-entry
transfer set forth in Section 3 hereof or (2) request his or her broker,
dealer, commercial bank, trust company or nominee to effect the transaction
for him or her. A stockholder whose Shares are registered in the name of a
broker, dealer, commercial bank, trust company or nominee must contact such
broker, dealer, commercial bank, trust company or nominee if he or she desires
to tender such Shares. Any stockholder who desires to tender Shares and whose
certificates for such Shares are not immediately available, or who cannot
comply in a timely manner with the procedure for book-entry transfer, should
tender such Shares by following the procedures for guaranteed delivery set
forth in Section 3 hereof.
----------------
NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO
ANY STOCKHOLDER AS TO WHETHER TO TENDER ALL OR ANY SHARES. EACH STOCK-
HOLDER MUST MAKE HIS OR HER OWN DECISION AS TO WHETHER TO TENDER SHARES
AND, IF SO, HOW MANY SHARES TO TENDER AND AT WHAT PRICE. THE COMPANY
HAS BEEN ADVISED THAT NO DIRECTOR OR EXECUTIVE OFFICER INTENDS TO
TENDER SHARES PURSUANT TO THE OFFER.
----------------
The Shares are listed and principally traded on the New York Stock Exchange
(the "NYSE"). On May 6, 1994, the last trading day prior to the commencement
of the Offer, the last reported sale price of the Shares on the NYSE Composite
Tape was $51 1/8 per Share. Stockholders are urged to obtain current market
quotations for the Shares.
Questions or requests for assistance or for additional copies of this Offer
to Purchase, the Letter of Transmittal or other tender offer materials may be
directed to the Information Agent or the Dealer Manager at their respective
addresses and telephone numbers set forth on the back cover of this Offer to
Purchase.
----------------
The Dealer Manager for the Offer is:
MORGAN STANLEY & CO.
Incorporated
May 9, 1994
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION ON BEHALF OF THE
COMPANY AS TO WHETHER STOCKHOLDERS SHOULD TENDER SHARES PURSUANT TO THE OFFER.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THE OFFER OTHER THAN THOSE CONTAINED HEREIN
OR IN THE LETTER OF TRANSMITTAL. IF GIVEN OR MADE, SUCH RECOMMENDATION AND SUCH
INFORMATION AND REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
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<C> <S> <C>
1. Number of Shares; Proration...................................... 4
2. Tenders by Holders of Fewer Than 100 Shares...................... 5
3. Procedure for Tendering Shares................................... 5
4. Withdrawal Rights................................................ 8
5. Acceptance for Payment of Shares and Payment of Purchase Price... 8
6. Conditional Tender of Shares..................................... 9
7. Certain Conditions of the Offer.................................. 10
8. Price Range of Shares; Dividends................................. 11
9. Purpose of the Offer; Certain Effects of the Offer............... 12
10. Certain Information Concerning the Company....................... 14
11. Source and Amount of Funds....................................... 17
12. Transactions and Agreements Concerning the Shares................ 17
13. Certain Federal Income Tax Consequences.......................... 17
14. Extension of Tender Period; Termination; Amendments.............. 20
15. Fees and Expenses................................................ 21
16. Miscellaneous.................................................... 22
</TABLE>
2
<PAGE>
To the Holders of Common Stock of
Transamerica Corporation:
Transamerica Corporation, a Delaware corporation (the "Company"), invites its
stockholders to tender shares of its Common Stock, par value $1.00 per share
(the "Shares") (including the associated preference stock purchase rights (the
"Rights"), issued pursuant to the Rights Agreement, dated as of July 17, 1986,
as amended, between the Company and First Chicago Trust Company of New York, as
the Rights Agent), at prices not greater than $55 nor less than $48 per Share,
net to the seller in cash, specified by such stockholders, upon the terms and
subject to the conditions set forth herein and in the related Letter of
Transmittal (which together constitute the "Offer"). Unless the context
otherwise requires, all references to Shares shall include the associated
Rights.
The Company will determine a single per Share price (not greater than $55 nor
less than $48 per Share) that it will pay for the Shares validly tendered
pursuant to the Offer and not withdrawn (the "Purchase Price"), taking into
account the number of Shares so tendered and the prices specified by tendering
stockholders. The Company will select the Purchase Price that will enable it to
purchase 4,500,000 Shares (or such lesser number of Shares as is validly
tendered at prices not greater than $55 nor less than $48 per Share) pursuant
to the Offer. The Company will purchase all Shares validly tendered at prices
at or below the Purchase Price and not withdrawn on or prior to the Expiration
Date (as defined in Section 1), upon the terms and subject to the conditions of
the Offer, including the provisions relating to proration and conditional
tenders described below. The Purchase Price will be paid in cash, net to the
seller, with respect to all Shares purchased. Shares tendered at prices in
excess of the Purchase Price and Shares not purchased because of proration or
conditional tenders will be returned.
THE OFFER IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF SHARES BEING
TENDERED. THE OFFER IS, HOWEVER, SUBJECT TO CERTAIN OTHER CONDITIONS. SEE
SECTION 7.
Tendering stockholders will not be obligated to pay brokerage commissions,
solicitation fees or, subject to the Instructions to the Letter of Transmittal,
stock transfer taxes on the purchase of Shares by the Company. The Company will
pay all charges and expenses of Morgan Stanley & Co. Incorporated (the "Dealer
Manager"), First Chicago Trust Company of New York (the "Depositary") and
Georgeson & Company Inc. (the "Information Agent") incurred in connection with
the Offer. See Section 15. HOWEVER, ANY TENDERING STOCKHOLDER OR OTHER PAYEE
WHO FAILS TO COMPLETE AND SIGN THE SUBSTITUTE FORM W-9 THAT IS INCLUDED IN THE
LETTER OF TRANSMITTAL MAY BE SUBJECT TO A REQUIRED FEDERAL INCOME TAX BACKUP
WITHHOLDING OF 31% OF THE GROSS PROCEEDS PAYABLE TO SUCH STOCKHOLDER OR OTHER
PAYEE PURSUANT TO THE OFFER. SEE SECTIONS 3 AND 13.
The Transamerica Corporation Employees Stock Savings Plan (the "Stock Savings
Plan") holds Shares in accounts for participants therein. Under the terms of
the Stock Savings Plan, a participant may instruct the trustee for the Stock
Savings Plan to tender Shares allocated to the participant's account as of May
6, 1994. See Section 3.
Stockholders who are participants in the Transamerica Corporation Dividend
Reinvestment Plan (the "Reinvestment Plan") may instruct First Chicago Trust
Company of New York, which administers the Reinvestment Plan, to tender part or
all of the Shares held in their accounts under the Reinvestment Plan. See
Section 3.
NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO
ANY STOCKHOLDER AS TO WHETHER TO TENDER ALL OR ANY SHARES. EACH STOCKHOLDER
MUST MAKE HIS OR HER OWN DECISION AS TO WHETHER TO TENDER SHARES AND, IF SO,
HOW MANY SHARES TO TENDER AND AT WHAT PRICE. THE COMPANY HAS BEEN ADVISED THAT
NO DIRECTOR OR EXECUTIVE OFFICER INTENDS TO TENDER SHARES PURSUANT TO THE
OFFER.
3
<PAGE>
As of May 6, 1994, the Company had issued and outstanding 74,865,973 Shares
and had reserved for issuance upon exercise of outstanding stock options
7,031,090 Shares. The 4,500,000 Shares that the Company is offering to purchase
represent approximately 6.0% of the Shares then outstanding, or approximately
5.5% of the Shares then outstanding on a fully diluted basis (assuming the
exercise of all outstanding stock options).
A tender of Shares pursuant to the Offer will include a tender of the
associated Rights. No separate consideration will be paid for such Rights. See
Section 8.
The Shares are listed and principally traded on the New York Stock Exchange
("NYSE"). The Shares are also listed and traded on the Pacific Stock Exchange.
The Shares trade under the symbol "TA." See Section 8. STOCKHOLDERS ARE URGED
TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE SHARES.
1.NUMBER OF SHARES; PRORATION
Upon the terms and subject to the conditions described herein and in the
Letter of Transmittal, the Company will purchase up to 4,500,000 Shares that
are validly tendered on or prior to the Expiration Date (and not properly
withdrawn in accordance with Section 4) at a price (determined in the manner
set forth below) not greater than $55 nor less than $48 per Share. The later of
12:00 midnight, New York City time, on Monday, June 6, 1994, or the latest time
and date to which the Offer is extended, is referred to herein as the
"Expiration Date." If the Offer is oversubscribed as described below, only
Shares tendered at or below the Purchase Price on or prior to the Expiration
Date will be eligible for proration.
The Company will determine the Purchase Price taking into account the number
of Shares so tendered and the prices specified by tendering stockholders. The
Company will select the Purchase Price that will enable it to purchase
4,500,000 Shares (or such lesser number of Shares as is validly tendered and
not withdrawn at prices not greater than $55 nor less than $48 per Share)
pursuant to the Offer. The Company reserves the right to purchase more than
4,500,000 Shares pursuant to the Offer, but does not currently plan to do so.
The Offer is not conditioned on any minimum number of Shares being tendered.
In accordance with Instruction 5 of the Letter of Transmittal, each
stockholder who wishes to tender Shares must specify the price (not greater
than $55 nor less than $48 per Share) at which such stockholder is willing to
have the Company purchase such Shares. As promptly as practicable following the
Expiration Date, the Company will determine the Purchase Price (not greater
than $55 nor less than $48 per Share) that it will pay for Shares validly
tendered pursuant to the Offer, taking into account the number of Shares so
tendered and the prices specified by tendering stockholders. All Shares not
purchased pursuant to the Offer, including Shares tendered at prices greater
than the Purchase Price and Shares not purchased because of proration or
conditional tender, will be returned to the tendering stockholders at the
Company's expense as promptly as practicable following the Expiration Date.
Upon the terms and subject to the conditions of the Offer, if 4,500,000 or
fewer Shares have been validly tendered at or below the Purchase Price and not
withdrawn on or prior to the Expiration Date, the Company will purchase all
such Shares (including fractional Shares). Upon the terms and subject to the
conditions of the Offer, if more than 4,500,000 Shares have been validly
tendered at or below the Purchase Price and not withdrawn on or prior to the
Expiration Date, the Company will purchase Shares in the following order of
priority:
(a) all Shares (other than Shares held in the Stock Savings Plan) validly
tendered at or below the Purchase Price and not withdrawn on or prior to
the Expiration Date by any stockholder who owned beneficially an aggregate
of fewer than 100 Shares (including any Shares held in the Stock Savings
Plan and the Reinvestment Plan) as of the close of business on May 6, 1994
and who validly tenders all of such Shares (partial and conditional tenders
will not qualify for this preference) and completes the box captioned "Odd
Lots" on the Letter of Transmittal and, if applicable, the Notice of
Guaranteed Delivery; and
4
<PAGE>
(b) after purchase of all of the foregoing Shares, subject to the
conditional tender provisions described in Section 6, all other Shares
(including Stock Savings Plan Shares) validly tendered at or below the
Purchase Price and not withdrawn on or prior to the Expiration Date on a
pro rata basis, if necessary (with appropriate adjustments to avoid
purchases of fractional Shares).
If proration of tendered Shares is required, because of the difficulty in
determining the number of Shares validly tendered (including Shares tendered by
the guaranteed delivery procedure described in Section 3) and as a result of
the "odd lot" procedure described in Section 2 and conditional tender procedure
described in Section 6, the Company does not expect that it would be able to
announce the final proration factor or to commence payment for any Shares
purchased pursuant to the Offer until approximately seven NYSE trading days
after the Expiration Date. Preliminary results of proration will be announced
by press release as promptly as practicable after the Expiration Date. Holders
of Shares may obtain such preliminary information from the Dealer Manager or
the Information Agent and may also be able to obtain such information from
their brokers.
The Company expressly reserves the right, in its sole discretion, at any time
or from time to time, to extend the period of time during which the Offer is
open by giving oral or written notice of such extension to the Depositary. See
Section 14. There can be no assurance, however, that the Company will exercise
its right to extend the Offer.
For purposes of the Offer, a "business day" means any day other than a
Saturday, Sunday or federal holiday and consists of the time period from 12:01
a.m. through 12:00 midnight, New York City time.
Copies of this Offer to Purchase and the Letter of Transmittal are being
mailed to record holders of Shares and will be furnished to brokers, banks and
similar persons whose names, or the names of whose nominees, appear on the
Company's stockholder list or, if applicable, who are listed as participants in
a clearing agency's security position listing for subsequent transmittal to
beneficial owners of Shares.
2.TENDERS BY HOLDERS OF FEWER THAN 100 SHARES
All Shares validly tendered at or below the Purchase Price and not withdrawn
on or prior to the Expiration Date by or on behalf of persons who each owned
beneficially an aggregate of fewer than 100 Shares (including Shares held in
the Stock Savings Plan and the Reinvestment Plan, and fractional Shares) as of
the close of business on May 6, 1994, will be accepted before proration, if
any, of the purchase of other tendered Shares; provided, however, that all
Shares held in the Stock Savings Plan will be subject to any proration, even if
owned by a person who beneficially owned fewer than 100 Shares as of the close
of business on such date. See Section 1. Partial or conditional tenders will
not qualify for this preference, and it is not available to beneficial holders
of 100 or more Shares, even if such holders have separate stock certificates
for fewer than 100 Shares. By accepting the Offer, a stockholder owning
beneficially fewer than 100 Shares will avoid the payment of brokerage
commissions and the applicable odd lot discount payable in a sale of such
Shares in a transaction effected on a securities exchange.
As of May 5, 1994, there were approximately 56,411 holders of record of
Shares. Approximately 53.1% of these holders of record held individually fewer
than 100 Shares and held in the aggregate approximately 824,549 Shares. Because
of the large number of Shares held in the names of brokers and nominees, the
Company is unable to estimate the number of beneficial owners of fewer than 100
Shares or the aggregate number of Shares they own. Any stockholder wishing to
tender all of his Shares pursuant to this Section should complete the box
captioned "Odd Lots" on the Letter of Transmittal and, if applicable, on the
Notice of Guaranteed Delivery.
3.PROCEDURE FOR TENDERING SHARES
To tender Shares validly pursuant to the Offer, either (a) a properly
completed and duly executed Letter of Transmittal or facsimile thereof,
together with any required signature guarantees and any other documents
required by the Letter of Transmittal, must be received by the Depositary at
one of its addresses set forth on
5
<PAGE>
the back cover of this Offer to Purchase and either (i) certificates for the
Shares to be tendered must be received by the Depositary at one of such
addresses or (ii) such Shares must be delivered pursuant to the procedures for
book-entry transfer described below (and a confirmation of such delivery
received by the Depositary), in each case on or prior to the Expiration Date,
or (b) the tendering holder of Shares must comply with the guaranteed delivery
procedure described below.
IN ACCORDANCE WITH INSTRUCTION 5 OF THE LETTER OF TRANSMITTAL, IN ORDER TO
TENDER SHARES PURSUANT TO THE OFFER, A STOCKHOLDER MUST INDICATE IN THE SECTION
CAPTIONED "PRICE (IN DOLLARS) PER SHARE AT WHICH SHARES ARE BEING TENDERED" ON
THE LETTER OF TRANSMITTAL THE PRICE (IN MULTIPLES OF $0.125) AT WHICH SUCH
SHARES ARE BEING TENDERED. Stockholders wishing to tender Shares at more than
one price must complete separate Letters of Transmittal for each price at which
such Shares are being tendered. The same Shares cannot be tendered at more than
one price. FOR A TENDER OF SHARES TO BE VALID, A PRICE BOX, BUT ONLY ONE PRICE
BOX, ON EACH LETTER OF TRANSMITTAL MUST BE CHECKED.
The Depositary will establish an account with respect to the Shares at The
Depository Trust Company, Midwest Securities Trust Company and Philadelphia
Depository Trust Company (collectively referred to as the "Book-Entry Transfer
Facilities") for purposes of the Offer within two business days after the date
of this Offer to Purchase, and any financial institution that is a participant
in the system of any Book-Entry Transfer Facility may make delivery of Shares
by causing such Book-Entry Transfer Facility to transfer such Shares into the
Depositary's account in accordance with the procedures of such Book-Entry
Transfer Facility. Although delivery of Shares may be effected through book-
entry transfer, a properly completed and duly executed Letter of Transmittal or
facsimile thereof, together with any required signature guarantees and any
other required documents, must, in any case, be received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase on
or prior to the Expiration Date, or the tendering holder of Shares must comply
with the guaranteed delivery procedure described below. Delivery of the Letter
of Transmittal and any other required documents to a Book-Entry Transfer
Facility does not constitute delivery to the Depositary.
Except as otherwise provided below, all signatures on a Letter of Transmittal
must be guaranteed by a firm that is a member of a registered national
securities exchange or the National Association of Securities Dealers, Inc., or
by a commercial bank or trust company having an office or correspondent in the
United States which is a participant in an approved Signature Guarantee
Medallion Program (each of the foregoing being referred to as an "Eligible
Institution"). Signatures on a Letter of Transmittal need not be guaranteed if
(a) the Letter of Transmittal is signed by the registered holder of the Shares
tendered therewith and such holder has not completed the box entitled "Special
Payment Instructions" or the box entitled "Special Delivery Instructions" on
the Letter of Transmittal or (b) such Shares are tendered for the account of an
Eligible Institution. See Instructions 1 and 6 of the Letter of Transmittal.
If a stockholder desires to tender Shares pursuant to the Offer and cannot
deliver certificates for such Shares and all other required documents to the
Depositary on or prior to the Expiration Date or the procedure for book-entry
transfer cannot be complied with in a timely manner, such Shares may
nevertheless be tendered if all of the following conditions are met:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed Delivery
substantially in the form provided by the Company (with any required
signature guarantees) is received by the Depositary as provided below on or
prior to the Expiration Date; and
(iii) the certificates for such Shares (or a confirmation of a book-entry
transfer of such Shares into the Depositary's account at one of the Book-
Entry Transfer Facilities), together with a properly completed and duly
executed Letter of Transmittal (or facsimile thereof) and any other
documents required by the Letter of Transmittal, are received by the
Depositary no later than 5:00 p.m., New York City time, on the fifth NYSE
trading day after the date of execution of the Notice of Guaranteed
Delivery.
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<PAGE>
The Notice of Guaranteed Delivery may be delivered by hand or transmitted by
facsimile transmission or mail to the Depositary and must include a guarantee
by an Eligible Institution in the form set forth in such Notice.
THE METHOD OF DELIVERY OF SHARES AND ALL OTHER REQUIRED DOCUMENTS IS AT THE
OPTION AND RISK OF THE TENDERING STOCKHOLDER. IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE TIMELY
DELIVERY.
TO AVOID FEDERAL INCOME TAX BACKUP WITHHOLDING EQUAL TO 31% OF THE GROSS
PAYMENTS MADE PURSUANT TO THE OFFER, EACH STOCKHOLDER MUST NOTIFY THE
DEPOSITARY OF SUCH STOCKHOLDER'S CORRECT TAXPAYER IDENTIFICATION NUMBER AND
PROVIDE CERTAIN OTHER INFORMATION BY PROPERLY COMPLETING THE SUBSTITUTE FORM W-
9 INCLUDED IN THE LETTER OF TRANSMITTAL. FOREIGN STOCKHOLDERS (AS DEFINED IN
SECTION 13) MUST SUBMIT A PROPERLY COMPLETED FORM W-8 IN ORDER TO AVOID THE
APPLICABLE BACKUP WITHHOLDING; PROVIDED, HOWEVER, THAT BACKUP WITHHOLDING WILL
NOT APPLY TO FOREIGN STOCKHOLDERS SUBJECT TO 30% (OR LOWER TREATY RATE)
WITHHOLDING ON GROSS PAYMENTS RECEIVED PURSUANT TO THE OFFER (AS DISCUSSED IN
SECTION 13). For a discussion of certain federal income tax consequences to
tendering stockholders, see Section 13. EACH STOCKHOLDER IS URGED TO CONSULT
WITH HIS OR HER OWN TAX ADVISOR.
It is a violation of Rule 14e-4 promulgated under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), for a person to tender Shares for his
or her own account unless the person so tendering (i) has a net long position
equal to or greater than the amount of (x) Shares tendered or (y) other
securities immediately convertible into, exercisable, or exchangeable for the
amount of Shares tendered and will acquire such Shares for tender by
conversion, exercise or exchange of such other securities and (ii) will cause
such Shares to be delivered in accordance with the terms of the Offer. Rule
14e-4 provides a similar restriction applicable to the tender or guarantee of a
tender on behalf of another person. The tender of Shares pursuant to any one of
the procedures described above will constitute the tendering stockholder's
representation and warranty that (i) such stockholder has a net long position
in the Shares being tendered within the meaning of Rule 14e-4 promulgated under
the Exchange Act, and (ii) the tender of such Shares complies with Rule 14e-4.
The Company's acceptance for payment of Shares tendered pursuant to the Offer
will constitute a binding agreement between the tendering stockholder and the
Company upon the terms and subject to the conditions of the Offer.
All questions as to the Purchase Price, the form of documents and the
validity, eligibility (including time of receipt) and acceptance for payment of
any tender of Shares will be determined by the Company, in its sole discretion,
and its determination shall be final and binding. The Company reserves the
absolute right to reject any or all tenders of Shares that it determines are
not in proper form or the acceptance for payment of or payment for Shares that
may, in the opinion of the Company's counsel, be unlawful. The Company also
reserves the absolute right to waive any defect or irregularity in any tender
of Shares. None of the Company, the Dealer Manager, the Depositary, the
Information Agent or any other person will be under any duty to give notice of
any defect or irregularity in tenders, nor shall any of them incur any
liability for failure to give any such notice.
Participants in the Stock Savings Plan who wish to tender Shares allocated to
their respective accounts should so indicate by completing, executing and
returning, to the trustee, the election form included with the memorandum
furnished to such participants. STOCK SAVINGS PLAN PARTICIPANTS MAY NOT USE THE
LETTER OF TRANSMITTAL TO TENDER THEIR STOCK SAVINGS PLAN SHARES, BUT MUST USE
THE SEPARATE ELECTION FORM REFERRED TO ABOVE. Participants in the Stock Savings
Plan are urged to read such separate memorandum and election form and related
materials carefully.
A stockholder participating in the Reinvestment Plan who wishes to have First
Chicago Trust Company of New York, which administers the Reinvestment Plan,
tender Shares held in such participant's account in the Reinvestment Plan
should so indicate by completing the box captioned "Transamerica Corporation
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<PAGE>
Dividend Reinvestment Plan Shares" in the Letter of Transmittal. Participants
in the Reinvestment Plan are urged to read Section 13 of the Letter of
Transmittal carefully. Any Reinvestment Plan Shares tendered but not purchased
will be returned to the participant's Reinvestment Plan account.
If a participant tenders all of his or her Reinvestment Plan Shares and all
such Shares are purchased by the Company pursuant to the Offer, such tender
will be deemed to be authorization and written notice to First Chicago Trust
Company of New York of termination of such stockholder's participation in the
Reinvestment Plan.
4.WITHDRAWAL RIGHTS
Tenders of Shares made pursuant to the Offer may be withdrawn at any time
prior to the Expiration Date. Thereafter, such tenders are irrevocable, except
that they may be withdrawn after July 5, 1994 unless theretofore accepted for
payment as provided in this Offer to Purchase. If the Company extends the
period of time during which the Offer is open, is delayed in accepting for
payment or paying for Shares or is unable to accept for payment or pay for
Shares pursuant to the Offer for any reason, then, without prejudice to the
Company's rights under the Offer, the Depositary may, on behalf of the Company,
retain all Shares tendered, and such Shares may not be withdrawn except as
otherwise provided in this Section 4, subject to Rule 13e-4(f)(5) under the
Exchange Act, which provides that the issuer making the tender offer shall
either pay the consideration offered, or return the tendered securities
promptly after the termination or withdrawal of the tender offer.
To be effective, a written or facsimile transmission notice of withdrawal
must be timely received by the Depositary at one of its addresses set forth on
the back cover of this Offer to Purchase and must specify the name of the
person who tendered the Shares to be withdrawn and the number of Shares to be
withdrawn. If the Shares to be withdrawn have been delivered to the Depositary,
a signed notice of withdrawal with signatures guaranteed by an Eligible
Institution (except in the case of Shares tendered by an Eligible Institution)
must be submitted prior to the release of such Shares. In addition, such notice
must specify, in the case of Shares tendered by delivery of certificates, the
name of the registered holder (if different from that of the tendering
stockholder) and the serial numbers shown on the particular certificates
evidencing the Shares to be withdrawn or, in the case of Shares tendered by
book-entry transfer, the name and number of the account at one of the Book-
Entry Transfer Facilities to be credited with the withdrawn Shares. Withdrawals
may not be rescinded, and Shares withdrawn will thereafter be deemed not
validly tendered for purposes of the Offer. However, withdrawn Shares may be
retendered by again following one of the procedures described in Section 3 at
any time prior to the Expiration Date.
All questions as to the form and validity (including time of receipt) of any
notice of withdrawal will be determined by the Company, in its sole discretion,
which determination shall be final and binding. None of the Company, the Dealer
Manager, the Depositary, the Information Agent or any other person will be
under any duty to give notification of any defect or irregularity in any notice
of withdrawal or incur any liability for failure to give any such notification.
Participants in the Stock Savings Plan should follow the procedures for
withdrawal included in the memorandum furnished to such participants.
5.ACCEPTANCE FOR PAYMENT OF SHARES AND PAYMENT OF PURCHASE PRICE
Upon the terms and subject to the conditions of the Offer and as promptly as
practicable after the Expiration Date, the Company will determine the Purchase
Price, taking into account the number of Shares tendered and the prices
specified by tendering stockholders, announce the Purchase Price, and will
(subject to the proration and conditional tender provisions of the Offer)
accept for payment and pay for Shares validly tendered at or below the Purchase
Price. Thereafter, payment for all Shares validly tendered on or prior to
8
<PAGE>
the Expiration Date and accepted for payment pursuant to the Offer will be made
by the Depositary by check as promptly as practicable. In all cases, payment
for Shares accepted for payment pursuant to the Offer will be made only after
timely receipt by the Depositary of certificates for Shares (or of a
confirmation of a book-entry transfer of such Shares into the Depositary's
account at one of the Book-Entry Transfer Facilities), a properly completed and
duly executed Letter of Transmittal or facsimile thereof, and any other
required documents.
For purposes of the Offer, the Company will be deemed to have accepted for
payment (and thereby purchased) Shares that are validly tendered and not
withdrawn as, if and when it gives oral or written notice to the Depositary of
its acceptance for payment of such Shares. The Company will pay for Shares that
it has purchased pursuant to the Offer by depositing the Purchase Price
therefor with the Depositary. The Depositary will act as agent for tendering
stockholders for the purpose of receiving payment from the Company and
transmitting payment to tendering stockholders. Under no circumstances will
interest be paid on amounts to be paid to tendering stockholders, regardless of
any delay in making such payment.
Certificates for all Shares not purchased will be returned (or, in the case
of Shares tendered by book-entry transfer, such Shares will be credited to an
account maintained with a Book-Entry Transfer Facility) as promptly as
practicable without expense to the tendering stockholder.
Payment for Shares may be delayed in the event of difficulty in determining
the number of Shares properly tendered or if proration is required. See Section
1. In addition, if certain events occur, the Company may not be obligated to
purchase Shares pursuant to the Offer. See Section 7.
The Company will pay or cause to be paid any stock transfer taxes with
respect to the sale and transfer of any Shares to it or its order pursuant to
the Offer. If, however, payment of the Purchase Price is to be made to, or
Shares not tendered or not purchased are to be registered in the name of, any
person other than the registered holder, or if tendered Shares are registered
in the name of any person other than the person signing the Letter of
Transmittal, the amount of any stock transfer taxes (whether imposed on the
registered holder, such other person or otherwise) payable on account of the
transfer to such person will be deducted from the Purchase Price unless
satisfactory evidence of the payment of such taxes, or exemption therefrom, is
submitted. See Instruction 7 to the Letter of Transmittal.
6.CONDITIONAL TENDER OF SHARES
Under certain circumstances and subject to the exceptions set forth in
Section 1, the Company may prorate the number of Shares purchased pursuant to
the Offer. As discussed in Section 13, the number of Shares to be purchased
from a particular stockholder might affect the tax treatment of such purchase
to such stockholder and such stockholder's decision whether to tender. EACH
STOCKHOLDER IS URGED TO CONSULT WITH HIS OR HER OWN TAX ADVISOR. Accordingly, a
stockholder may tender Shares subject to the condition that a specified minimum
number of such holder's Shares tendered pursuant to a Letter of Transmittal or
Notice of Guaranteed Delivery must be purchased if any such Shares so tendered
are purchased, and any stockholder desiring to make such a conditional tender
must so indicate in the box captioned "Conditional Tender" in such Letter of
Transmittal or, if applicable, the Notice of Guaranteed Delivery.
Any tendering stockholders wishing to make a conditional tender must
calculate and appropriately indicate such minimum number of Shares. If the
effect of accepting tenders on a pro rata basis would be to reduce the number
of Shares to be purchased from any stockholder (tendered pursuant to a Letter
of Transmittal or Notice of Guaranteed Delivery) below the minimum number so
specified, such tender will automatically be regarded as withdrawn (except as
provided in the next paragraph) and all Shares tendered by such stockholder
pursuant to such Letter of Transmittal or Notice of Guaranteed Delivery will be
returned as promptly as practicable thereafter.
9
<PAGE>
If conditional tenders would otherwise be so regarded as withdrawn and would
cause the total number of Shares to be purchased to fall below 4,500,000, then,
to the extent feasible, the Company will select enough of such conditional
tenders that would otherwise have been so withdrawn to permit the Company to
purchase 4,500,000 Shares. In selecting among such conditional tenders, the
Company will select by lot and will limit its purchase in each case to the
designated minimum number of Shares to be purchased.
7.CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other provision of the Offer, the Company will not be
required to accept for payment or pay for any Shares tendered, and may
terminate or amend and may postpone (subject to the requirements of the
Exchange Act for prompt payment for or return of Shares) the acceptance for
payment of Shares tendered, if at any time after May 6, 1994 and at or before
acceptance for payment of any Shares any of the following shall have occurred:
(a) there shall have been threatened, instituted or pending any action or
proceeding by any government or governmental, regulatory or administrative
agency or authority or tribunal or any other person, domestic or foreign,
or before any court, authority, agency or tribunal that (i) challenges the
acquisition of Shares pursuant to the Offer or otherwise in any manner
relates to or affects the Offer or (ii) in the sole judgment of the
Company, could materially and adversely affect the business, condition
(financial or other), income, operations or prospects of the Company and
its subsidiaries, taken as a whole, or otherwise materially impair in any
way the contemplated future conduct of the business of the Company or any
of its subsidiaries or materially impair the Offer's contemplated benefits
to the Company;
(b) there shall have been any action threatened, pending or taken, or
approval withheld, or any statute, rule, regulation judgment, order or
injunction threatened, proposed, sought, promulgated, enacted, entered,
amended, enforced or deemed to be applicable to the Offer or the Company or
any of its subsidiaries, by any legislative body, court, authority, agency
or tribunal which, in the Company's sole judgment, would or might directly
or indirectly (i) make the acceptance for payment of, or payment for, some
or all of the Shares illegal or otherwise restrict or prohibit consummation
of the Offer, (ii) delay or restrict the ability of the Company, or render
the Company unable, to accept for payment or pay for some or all of the
Shares, (iii) materially impair the contemplated benefits of the Offer to
the Company or (iv) materially affect the business, condition (financial or
other), income, operations or prospects of the Company and its
subsidiaries, taken as a whole, or otherwise materially impair in any way
the contemplated future conduct of the business of the Company or any if
its subsidiaries;
(c) it shall have been publicly disclosed or the Company shall have
learned that (i) any person or "group" (within the meaning of Section
13(d)(3) of the Exchange Act) has acquired or proposes to acquire
beneficial ownership of more than 5% of the outstanding Shares whether
through the acquisition of stock, the formation of a group, the grant of
any option or right, or otherwise (other than as disclosed in a Schedule
13D or 13G on file with the Securities and Exchange Commission (the
"Commission") on May 6, 1994) or (ii) any such person or group that on or
prior to May 6, 1994 had filed such a Schedule with the Commission
thereafter shall have acquired or shall propose to acquire whether through
the acquisition of stock, the formation of a group, the grant of any option
or right, or otherwise, beneficial ownership of additional Shares
representing 2% or more of the outstanding Shares;
(d) there shall have occurred (i) any general suspension of trading in,
or limitation on prices for, securities on any national securities exchange
or in the over-the-counter market, (ii) any significant decline in the
market price of the Shares, (iii) any change in the general political,
market, economic or financial condition in the United States or abroad that
could have a material adverse effect on the Company's business, operations,
prospects or ability to obtain financing generally or the trading in the
Shares, (iv) the declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States or any limitation on, or
any event which, in the Company's sole judgment, might affect, the
extension of credit by lending institutions in the United States, (v) the
commencement of a
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<PAGE>
war, armed hostilities or other international or national calamity directly
or indirectly involving the United States or (vi) in the case of any of the
foregoing existing at the time of the commencement of the Offer, in the
Company's sole judgment, a material acceleration or worsening thereof;
(e) a tender or exchange offer with respect to some or all of the Shares
(other than the Offer), or a merger, acquisition or other business
combination proposal for the Company, shall have been proposed, announced
or made by another person;
(f) there shall have occurred any event or events that has resulted, or
may in the sole judgment of the Company result, in an actual or threatened
change in the business, condition (financial or other), income, operations,
stock ownership or prospects of the Company and its subsidiaries; or
(g) there shall have occurred any decline in the Standard & Poor's
Composite 500 Stock Index (447.82 at the close of business on May 6, 1994)
by an amount in excess of 15% measured from the close of business on May 6,
1994;
and, in the sole judgment of the Company, such event or events make it
undesirable or inadvisable to proceed with the Offer or with such acceptance
for payment or payment.
The foregoing conditions are for the sole benefit of the Company and may be
asserted by the Company regardless of the circumstances (including any action
or inaction by the Company) giving rise to any such condition, and any such
condition may be waived by the Company, in whole or in part, at any time and
from time to time in its sole discretion. The failure by the Company at any
time to exercise any of the foregoing rights shall not be deemed a waiver of
any such right and each such right shall be deemed an ongoing right which may
be asserted at any time and from time to time. Any determination by the Company
concerning the events described above will be final and binding on all parties.
8.PRICE RANGE OF SHARES; DIVIDENDS
The Shares are listed and principally traded on the NYSE. The Shares are also
listed and traded on the PSE. The following table sets forth the high and low
closing sales prices of the Shares on the NYSE Composite Tape and the cash
dividends per Share for the fiscal quarters indicated.
<TABLE>
<CAPTION>
CASH DIVIDENDS
HIGH LOW PER SHARE
------- ------- --------------
<C> <S> <C> <C> <C>
1992: 1st Quarter............................ $43 7/8 $37 1/8 $0.50
2nd Quarter............................ 46 3/4 40 1/8 0.50
3rd Quarter............................ 46 1/4 40 0.50
4th Quarter............................ 50 1/2 41 3/8 0.50
1993: 1st Quarter............................ 53 7/8 45 5/8 0.50
2nd Quarter............................ 56 1/8 47 0.50
3rd Quarter............................ 61 3/8 52 1/2 0.50
4th Quarter............................ 62 3/8 53 5/8 0.50
1994: 1st Quarter............................ 57 5/8 49 1/4 0.50
2nd Quarter (to May 6, 1994)........... 51 3/4 49 3/8
</TABLE>
On May 6, 1994, the last full NYSE trading day prior to the commencement of
the Offer, the last reported sale price of the Shares on the NYSE Composite
Tape was $51 1/8 per Share. STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET
QUOTATIONS FOR THE SHARES.
Under a rights plan, every outstanding Share and every Share issuable by the
Company (until certain events occur) includes a Right. Pursuant to a Rights
Agreement, dated as of July 17, 1986, as amended (the "Rights Agreement"),
between the Company and First Chicago Trust Company of New York, as the Rights
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<PAGE>
Agent, each Right entitles the registered holder to purchase from the Company a
unit consisting of one one-hundredth of a share (a "Unit") of Series A
Participating Preference Stock, without par value (referred to herein as
"Preference Stock"), at a purchase price of $135 per Unit, subject to
adjustment.
The Rights are not exercisable until the Distribution Date (as defined below)
and will expire at the close of business on August 8, 1996, unless earlier
redeemed by the Company. Prior to a Distribution Date, the Rights will be
evidenced by the Shares and cannot be traded separately from such Shares. The
Rights will separate from the Shares and a Distribution Date (the "Distribution
Date") will occur upon the earlier of (a) 10 days following a public
announcement that a person or group of affiliated or associated persons (an
"Acquiring Person") has acquired, or obtained the right to acquire, beneficial
ownership of 20% or more of the outstanding Shares (the "Stock Acquisition
Date"), or (b) 10 business days following the commencement of a tender offer or
exchange offer that could result, if successful, in a person or group
beneficially owning 30% or more of such outstanding Shares. The Rights will not
become separately exercisable or separately tradeable as a result of the Offer.
In the event that (a) the Company is the surviving corporation in a merger
with an Acquiring Person and its Shares are not changed or exchanged (other
than a merger described in the subsequent paragraph), (b) a person becomes the
beneficial owner of more than 30% of the then outstanding Shares (except
pursuant to a cash tender offer for all Shares at a fair price), or (c) during
such time as there is an Acquiring Person an event involving the Company occurs
which results in such Acquiring Person's ownership interest being increased by
more than 1% (e.g., a reverse stock split), each holder of a Right will
thereafter have the right to receive, upon exercise of such Right, Shares (or,
in certain circumstances, cash, property or other securities of the Company)
having a value equal to two times the exercise price of the Right.
Notwithstanding any of the foregoing, following the occurrence of any of the
events set forth in this paragraph, all Rights that are, or (under certain
circumstances specified in the Rights Agreement) were, beneficially owned by
any Acquiring Person or certain transferees thereof will be null and void.
In the event that, at any time following the Stock Acquisition Date, (a) the
Company is acquired in a merger or other business combination transaction in
which the Company is not the surviving corporation (other than a merger at the
same price as a prior cash tender offer for all Shares at a fair price), (b) a
person consolidates or merges with or into the Company (other than a merger at
the same price as a prior cash tender offer for all Shares at a fair price) and
all or part of the Company's outstanding Shares are changed into or exchanged
for stock or securities of any other person or cash or other property, or (c)
50% or more of the assets or earning power of the Company and its subsidiaries,
taken as a whole, is sold or transferred, each holder of a Right shall
thereafter have the right to receive, upon exercise of such Right, common stock
of the acquiring company having a value equal to two times the exercise price
of the Right.
The foregoing description of the Rights is qualified in its entirety by
reference to the Rights Agreement, a copy of which has been included as an
exhibit to the Company's Current Report on Form 8-K, dated July 28, 1986, and a
copy of the amendment to which has been included as an exhibit to the Company's
Annual Report on Form 10-K for the year ended December 31, 1991, in each case
filed with the Commission. Such reports and exhibits may be obtained from the
Commission in the manner specified in Section 16.
9.PURPOSE OF THE OFFER; CERTAIN EFFECTS OF THE OFFER
The Company believes that the purchase of its Shares at this time represents
an attractive investment opportunity that will benefit the Company and its
stockholders. The Offer will afford to stockholders who are considering the
sale of all or a portion of their Shares the opportunity to determine the price
at which they are willing to sell their Shares and, in the event the Company
accepts such Shares, to dispose of Shares without the usual transaction costs
associated with a market sale. The Offer will also allow qualifying
stockholders owning beneficially fewer than 100 Shares to avoid the payment of
brokerage commissions and the applicable odd lot discount payable on a sale of
Shares in a transaction effected on a securities exchange. Correspondingly, the
costs to the Company for servicing the accounts of odd lot holders will be
reduced. See Section 2.
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<PAGE>
Stockholders who determine not to accept the Offer will obtain a
proportionate increase in their ownership interest in the Company. After
consummation of the Offer, increases or decreases in net income will likely be
reflected in greater increases or decreases in earnings per Share than is
presently the case because of the smaller number of Shares outstanding
thereafter.
If fewer than 4,500,000 Shares are purchased pursuant to the Offer, the
Company may repurchase the remainder of such Shares on the open market, in
privately negotiated transactions or otherwise. In the future, the Company may
determine to purchase additional Shares on the open market, in privately
negotiated transactions, through one or more tender offers or otherwise. Any
such purchases may be on the same terms as, or on terms which are more or less
favorable to stockholders than, the terms of the Offer. However, Rule 13e-4
under the Exchange Act prohibits the Company and its affiliates from purchasing
any Shares, other than pursuant to the Offer, until at least ten business days
after the Expiration Date. Any future purchases of Shares by the Company would
depend on many factors, including the market price of the Shares, the Company's
business and financial position, and general economic and market conditions.
Shares that the Company acquires pursuant to the Offer will become authorized
but unissued Shares and will be available for issuance by the Company without
further stockholder action (except as may be required by applicable law or the
rules of the securities exchanges on which the Shares are listed). Such Shares
could be issued without stockholder approval for, among other things,
acquisitions, the raising of additional capital for use in the Company's
business, stock dividends or in connection with employee stock, stock option
and other plans, or a combination thereof. The Company has no current plans for
the Shares it may acquire pursuant to the Offer or any other authorized but
unissued Shares.
As of May 6, 1994, the Company had issued and outstanding 74,865,973 Shares
and had reserved for issuance upon exercise of outstanding stock options
7,031,090 Shares. The 4,500,000 Shares that the Company is offering to purchase
represent approximately 6.0% of the Shares then outstanding. As of May 6, 1994,
all directors and executive officers of the Company as a group owned
beneficially an aggregate of 1,723,201 Shares (including an aggregate of
1,430,599 Shares that may be acquired pursuant to the exercise of outstanding
stock options exercisable within 60 days of the date hereof and 41,968 Shares
attributable to the accounts of all directors and executive officers as a group
under the Stock Savings Plan and the Reinvestment Plan). The Company has been
advised that no director or executive officer intends to tender Shares pursuant
to the Offer. If the Company purchases 4,500,000 Shares pursuant to the Offer
and no director or executive officer of the Company tenders Shares in the
Offer, the percentage of outstanding Shares owned beneficially by all of the
Company's directors and executive officers as a group would increase to
approximately 2.4% of the Shares then outstanding (including, for this purpose,
Shares that may be acquired by such directors and executive officers pursuant
to the exercise of outstanding stock options exercisable within 60 days of the
date hereof).
Except as disclosed in this Offer to Purchase, the Company has no plans or
proposals which relate to or would result in: (a) the acquisition by any person
of additional securities of the Company or the disposition of securities of the
Company; (b) an extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Company or any of its
subsidiaries; (c) a sale or transfer of a material amount of assets of the
Company or any of its subsidiaries; (d) any change in the present Board of
Directors or management of the Company; (e) any material change in the present
dividend rate or policy, or indebtedness or capitalization of the Company; (f)
any other material change in the Company's corporate structure or business; (g)
any change in the Company's Certificate of Incorporation or By-Laws or any
actions which may impede the acquisition of control of the Company by any
person; (h) a class of equity security of the Company being delisted from a
national securities exchange; (i) a class of equity security of the Company
becoming eligible for termination of registration pursuant to Section 12(g)(4)
of the Exchange Act; or (j) the suspension of the Company's obligation to file
reports pursuant to Section 15(d) of the Exchange Act.
The Company does not believe that the Offer will result in delisting of the
Shares on the NYSE or termination of registration of the Shares under the
Exchange Act.
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<PAGE>
NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO
ANY STOCKHOLDER AS TO WHETHER TO TENDER ALL OR ANY SHARES. EACH STOCKHOLDER
MUST MAKE HIS OR HER OWN DECISION WHETHER TO TENDER SHARES AND, IF SO, HOW MANY
SHARES TO TENDER AND AT WHAT PRICE. THE COMPANY HAS BEEN ADVISED THAT NO
DIRECTOR OR EXECUTIVE OFFICER INTENDS TO TENDER SHARES PURSUANT TO THE OFFER.
10.CERTAIN INFORMATION CONCERNING THE COMPANY
The Company is a financial services organization which engages through
subsidiaries in consumer lending, commercial lending, leasing, real estate
services, life insurance and asset management. The Company was incorporated in
Delaware in 1928.
The Company's principal executive offices are located at 600 Montgomery
Street, San Francisco, California 94111 and its telephone number is (415) 983-
4000.
Recent Development
On April 13, 1994, the Company sold all of its shares in the London-based
international insurance broker, Sedgwick Group plc ("Sedgwick"). The 114.5
million shares, representing a 21% equity interest in Sedgwick, were sold
through an underwritten offering. Total proceeds from the sale were
approximately $320 million. No gain or loss was recorded on the transaction.
The operating results from this former investment have been reclassified as a
discontinued operation.
Summary Consolidated Historical Financial Information
The following selected financial data for each of the three months ended
March 31, 1994 and March 31, 1993 (unaudited) are derived from the unaudited
consolidated financial statements of Transamerica Corporation and subsidiaries
set forth in the Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1994. In the opinion of management, all adjustments considered
necessary for a fair statement of the results for the periods, which consisted
only of normal recurring accruals, have been made. Results for the three months
are not necessarily indicative of the results for the entire year for most of
the Company's businesses. The following selected financial data for each of the
years ended December 31, 1993 and December 31, 1992 were derived from the
audited consolidated financial statements of Transamerica Corporation and
subsidiaries incorporated by reference in the Company's Annual Report on Form
10-K for the year ended December 31, 1993. The data should be read in
conjunction with, and is qualified in its entirety by reference to, such
audited consolidated financial statements and their related notes. The
foregoing reports may be obtained from the Commission in the manner specified
in Section 16.
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<PAGE>
SUMMARY HISTORICAL CONSOLIDATED FINANCIAL INFORMATION
(IN MILLIONS, EXCEPT RATIOS AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
UNAUDITED
THREE MONTHS YEAR ENDED
ENDED MARCH 31, DECEMBER 31,
-------------------- --------------------
1994 1993 1993 1992
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues........................... $ 1,235.4 $ 1,149.0 $ 4,813.3 $ 4,550.9
Income before taxes................ 165.2 147.9 588.2 538.4
Income from continuing operations.. 103.7 93.0 447.5 334.0
Loss from discontinued operations.. (0.7) (1.2) (47.0) (90.8)
Extraordinary loss on early
extinguishment of debt............ -- -- (23.1) --
--------- --------- --------- ---------
Net income......................... $ 103.0 $ 91.8 $ 377.4 $ 243.2
========= ========= ========= =========
Earnings per share of common stock:
Income from continuing
operations...................... $ 1.29 $ 1.10 $ 5.40 $ 3.99
Loss from discontinued
operations...................... (0.01) (0.02) (0.60) (1.16)
Extraordinary loss on early
extinguishment of debt.......... -- -- (0.29) --
--------- --------- --------- ---------
Net income....................... $ 1.28 $ 1.08 $ 4.51 $ 2.83
========= ========= ========= =========
Average number of common shares
outstanding (in thousands)........ 75,811 79,335 78,495 78,050
Ratio of earnings from continuing
operations to fixed charges(1).... 2.27 2.05 2.09 1.90
BALANCE SHEET DATA (AT PERIOD END):
Total assets....................... $38,699.5 $34,936.8 $36,050.5 $33,290.9
Total assets, less goodwill........ 38,207.8 34,430.2 35,555.1 32,780.0
Notes and loans payable............ 8,933.8 7,910.9 7,704.0 7,573.1
Shareholders' equity............... 3,516.1 3,395.6 3,363.5 3,300.1
Book value per common share........ $ 41.19 $ 37.33 $ 38.46 $ 36.31
</TABLE>
NOTE TO SUMMARY HISTORICAL CONSOLIDATED FINANCIAL INFORMATION
(1) The ratios of earnings from continuing operations to fixed charges were
computed by dividing earnings from continuing operations before fixed charges
and income taxes by the fixed charges. Earnings consist of income from
continuing operations, to which has been added fixed charges and income taxes.
Fixed charges consist of interest and debt expense and one-third of rent
expense, which approximates the interest factor.
Summary Unaudited Consolidated Pro Forma Financial Information
The following summary unaudited consolidated pro forma financial information
gives effect to the purchase of Shares pursuant to the Offer, based on certain
assumptions described in the Notes to Summary Unaudited Consolidated Pro Forma
Financial Information. The Consolidated Statement of Income gives effect to the
purchase of Shares pursuant to the Offer as if it had occurred on January 1,
1994 and January 1, 1993. The summary unaudited consolidated pro forma
financial information should be read in conjunction with the summary
consolidated historical financial information and does not purport to be
indicative of the results that would actually have been obtained had the
purchase of the Shares pursuant to the Offer been completed at the dates
indicated or that may be obtained in the future.
15
<PAGE>
SUMMARY UNAUDITED CONSOLIDATED PRO FORMA FINANCIAL INFORMATION
(IN MILLIONS, EXCEPT RATIOS AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, 1994 YEAR ENDED DECEMBER 31, 1993
---------------------------- -----------------------------
PRO FORMA PRO FORMA
----------------- ------------------
ASSUMED ASSUMED ASSUMED ASSUMED
$48 PER $55 PER $48 PER $55 PER
SHARE SHARE SHARE SHARE
UNAUDITED PURCHASE PURCHASE PURCHASE PURCHASE
HISTORICAL PRICE PRICE HISTORICAL PRICE PRICE
---------- -------- -------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues................ $1,235.4 $1,235.4 $1,235.4 $4,813.3 $4,813.3 $4,813.3
Income before taxes..... 165.2 165.2 165.2 588.2 588.2 588.2
Income from continuing
operations............. 103.7 103.7 103.7 447.5 447.5 447.5
Loss from discontinued
operations............. (0.7) -- -- (47.0) (50.0) (50.0)
Extraordinary loss on
early extinguishment of
debt................... -- -- -- (23.1) (23.1) (23.1)
-------- -------- -------- -------- -------- --------
Net income.............. $ 103.0 $ 103.7 $ 103.7 $ 377.4 $ 374.4 $ 374.4
======== ======== ======== ======== ======== ========
Earnings per share of
common stock:
Income from continuing
operations........... $ 1.29 $ 1.37 $ 1.37 $ 5.40 $ 5.73 $ 5.73
Loss from discontinued
operations........... (0.01) -- -- (0.60) (0.68) (0.68)
Extraordinary loss on
early extinguishment
of debt.............. -- -- -- (0.29) (0.31) (0.31)
-------- -------- -------- -------- -------- --------
Net income.......... $ 1.28 $ 1.37 $ 1.37 $ 4.51 $ 4.74 $ 4.74
======== ======== ======== ======== ======== ========
Average number of common
shares outstanding (in
thousands)............. 75,811 71,311 71,311 78,495 73,995 73,995
Ratio of earnings from
continuing operations
to fixed charges....... 2.27 2.27 2.27 2.09 2.09 2.09
</TABLE>
<TABLE>
<CAPTION>
AT MARCH 31, 1994 AT DECEMBER 31, 1993
------------------------------ ------------------------------
PRO FORMA PRO FORMA
------------------- -------------------
ASSUMED ASSUMED ASSUMED ASSUMED
$48 PER $55 PER $48 PER $55 PER
SHARE SHARE SHARE SHARE
UNAUDITED PURCHASE PURCHASE PURCHASE PURCHASE
HISTORICAL PRICE PRICE HISTORICAL PRICE PRICE
---------- --------- --------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total assets............ $38,699.5 $38,482.7 $38,451.2 $36,050.5 $35,830.5 $35,799.0
Total assets, less
goodwill............... 38,207.8 37,991.0 37,959.5 35,555.1 35,335.1 35,303.6
Notes and loans payable. 8,933.8 8,933.8 8,933.8 7,704.0 7,704.0 7,704.0
Shareholders' equity.... 3,516.1 3,301.5 3,270.0 3,363.5 3,152.0 3,120.5
Book value per common
share.................. $ 41.19 $ 40.77 $ 40.33 $ 38.46 $ 37.93 $ 37.49
</TABLE>
NOTES TO SUMMARY UNAUDITED CONSOLIDATED PRO FORMA FINANCIAL INFORMATION
The following assumptions regarding the Offer were made in determining the
pro forma financial information:
(1) The information assumes 4,500,000 Shares are purchased at $48 per
Share and at $55 per Share, with the purchase being financed with cash
proceeds from the sale of the Company's investment in Sedgwick, which sale
was assumed to have occurred at the beginning of the periods presented. The
Company received on May 3, 1994 proceeds of approximately $320 million from
the sale of its investment in Sedgwick. For purposes of the pro forma
financial information, the sale was assumed to
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<PAGE>
have produced no gain or loss. The information assumes no reinvestment of
the excess proceeds over the purchase price of the Shares. There can be no
assurance that the Company will purchase 4,500,000 Shares or the price at
which Shares will be purchased.
(2) Net income has been reduced by the Company's equity in the income of
Sedgwick net of related goodwill amortization and income taxes previously
reported as a discontinued operation.
(3) Expenses directly related to the Offer are assumed to be $1.5 million
and are charged against additional paid-in capital.
(4) The ratios of earnings from continuing operations to fixed charges
were computed by dividing earnings from continuing operations before fixed
charges and income taxes by the fixed charges. Earnings consist of income
from continuing operations, to which has been added fixed charges and
income taxes. Fixed charges consist of interest and debt expense and one
third of rent expense, which approximates the interest factor.
11.SOURCE AND AMOUNT OF FUNDS
Assuming that the Company purchases 4,500,000 Shares pursuant to the Offer at
a price of $55 per Share, the total amount required by the Company to purchase
such Shares will be $247,500,000, exclusive of fees and other expenses. The
Company will use a portion of the net proceeds from the sale of shares of
Sedgwick to purchase Shares pursuant to the Offer. See Section 10.
12.TRANSACTIONS AND AGREEMENTS CONCERNING THE SHARES
In May 1993, the Company announced its intention to repurchase, subject to
market conditions and corporate requirements, up to 1,500,000 Shares, such
repurchases to be effected on the open market, in privately negotiated
transactions or otherwise. In July 1993 and in December 1993, the Company
announced its intention to repurchase, subject to market conditions and
corporate requirements, an additional 2,000,000 Shares and 2,500,000 Shares,
respectively. Between May 10, 1993 and April 12, 1994, the Company purchased a
total of 5,172,100 Shares at prices ranging from a high of $62.375 to a low of
$47.00 per Share. The average price paid per Share was approximately $54.7346.
The Company has not acquired any Shares since April 12, 1994.
Except as set forth above and on Schedule A hereto, based upon the Company's
records and upon information provided to the Company by its directors and
executive officers, neither the Company nor, to the Company's knowledge, any of
its associates, subsidiaries, directors, executive officers or any associate of
any such director or executive officer has engaged in any transactions
involving the Shares during the 40 business days preceding the date hereof.
Neither the Company nor, to the Company's knowledge, any of its directors or
executive officers is a party to any contract, arrangement, understanding or
relationship relating directly or indirectly to the Offer with any other person
with respect to the Shares.
13.CERTAIN FEDERAL INCOME TAX CONSEQUENCES
In General. The following summary describes certain United States federal
income tax consequences relating to the Offer. The summary is based on the
Internal Revenue Code of 1986, as amended (the "Code"), and existing final,
temporary and proposed Treasury Regulations, Revenue Rulings and judicial
decisions, all of which are subject to prospective and retroactive changes. The
summary deals only with Shares held as capital assets within the meaning of
Section 1221 of the Code and does not address tax consequences that may be
relevant to investors in special tax situations, such as certain financial
institutions, tax-exempt organizations, life insurance companies, dealers in
securities or currencies, or stockholders holding the Shares as part of a
conversion transaction, as part of a hedge or hedging transaction, or as a
position in a straddle
17
<PAGE>
for tax purposes. The Company will not seek a ruling from the Internal Revenue
Service (the "IRS") with regard to the United States federal income tax
treatment of the Offer and, therefore, there can be no assurance that the IRS
will agree with the conclusions set forth below. Accordingly, each stockholder
should consult its own tax advisor with regard to the Offer and the application
of United States federal income tax laws, as well as the laws of any state,
local or foreign taxing jurisdiction, to its particular situation.
Characterization of the Sale. A sale of Shares by a stockholder of the
Company pursuant to the Offer will be a taxable transaction for United States
federal income tax purposes and may also be a taxable transaction under
applicable state, local and foreign tax laws. The United States federal income
tax consequences to a stockholder may vary depending upon the stockholder's
particular facts and circumstances. Under Section 302 of the Code, a sale of
Shares by a stockholder to the Company pursuant to the Offer will be treated as
a "sale or exchange" of such Shares for United States federal income tax
purposes (rather than as a distribution by the Company with respect to the
Shares held by the tendering stockholder) if the receipt of cash upon such sale
(i) is "substantially disproportionate" with respect to the stockholder, (ii)
results in a "complete redemption" of the Shares owned by the stockholder, or
(iii) is "not essentially equivalent to a dividend" with respect to the
stockholder (each as described below).
If any of the above three tests is satisfied, and the sale of the Shares is
therefore treated as a "sale or exchange" of such Shares for United States
federal income tax purposes, the tendering stockholder will recognize gain or
loss equal to the difference between the amount of cash received by the
stockholder pursuant to the Offer and the stockholder's tax basis in the Shares
sold pursuant to the Offer. Any such gain or loss will be capital gain or loss,
and will be long term capital gain or loss if the Shares have been held for
more than one year.
If none of the above three tests is satisfied, the tendering stockholder
would be treated as having received a dividend includible in gross income in an
amount equal to the entire amount of cash received by the stockholder pursuant
to the Offer (without reduction for the tax basis of the Shares sold pursuant
to the Offer), no loss would be recognized, and the tendering stockholder's
basis in the Shares sold pursuant to the Offer would be added to such
stockholder's basis in its remaining Shares, if any.
In determining whether any of the three tests under Section 302 of the Code
is satisfied, stockholders must take into account not only the Shares which are
actually owned by the stockholder, but also Shares which are constructively
owned by the stockholder within the meaning of Section 318 of the Code. Under
Section 318 of the Code, a stockholder may constructively own Shares actually
owned, and in some cases constructively owned, by certain related individuals
or entities and Shares which the stockholder has the right to acquire by
exercise of an option or by conversion. Contemporaneous dispositions or
acquisitions of Shares by a stockholder or related individuals or entities may
be deemed to be part of a single integrated transaction which will be taken
into account in determining whether any of the three tests under Section 302 of
the Code has been satisfied. Each stockholder should be aware that because
proration may occur in the Offer, even if all the Shares actually and
constructively owned by a stockholder are tendered pursuant to the Offer, fewer
than all of such Shares may be purchased by the Company. Thus, proration may
affect whether a sale by a stockholder pursuant to the Offer will meet any of
the three tests under Section 302 of the Code. See Section 6 for information
regarding each stockholder's option to make a conditional tender of a minimum
number of Shares. A stockholder should consult its own tax advisor regarding
whether to make a conditional tender of a minimum number of Shares, and the
appropriate calculation thereof.
Section 302 Tests. The receipt of cash by a stockholder will be
"substantially disproportionate" if the percentage of the outstanding Shares
actually and constructively owned by the stockholder immediately following the
sale of Shares pursuant to the Offer (treating as not outstanding all Shares
purchased pursuant to the Offer) is less than 80% of the percentage of the
outstanding Shares actually and constructively owned by such stockholder
immediately before the sale of Shares pursuant to the Offer (treating as
outstanding all Shares purchased pursuant to the Offer). Stockholders should
consult their tax advisors with respect to the application of the
"substantially disproportionate" test to their particular situation.
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<PAGE>
The receipt of cash by a stockholder will be a "complete redemption" of all
the Shares owned by the stockholder if either (i) all of the Shares actually
and constructively owned by the stockholder are sold pursuant to the Offer, or
(ii) all of the Shares actually owned by the stockholder are sold pursuant to
the Offer and, with respect to Shares constructively owned by the stockholder
which are not sold pursuant to the Offer, the stockholder is eligible to waive
(and effectively waives) constructive ownership of all such Shares under
procedures described in Section 302(c) of the Code.
Even if the receipt of cash by a stockholder fails to satisfy the
"substantially disproportionate" test or the "complete redemption" test, a
stockholder may nevertheless satisfy the "not essentially equivalent to a
dividend" test, if the stockholder's sale of Shares pursuant to the Offer
results in a "meaningful reduction" in the stockholder's interest in the
Company. Whether the receipt of cash by a stockholder will be "not essentially
equivalent to a dividend" will depend upon the individual stockholder's facts
and circumstances. The IRS has indicated in published rulings that even a small
reduction in the proportionate interest of a small minority stockholder in a
publicly held corporation who exercises no control over corporate affairs may
constitute such a "meaningful reduction." The IRS held in Rev. Rul. 76-385,
1976-2 C.B. 92, that a reduction in the percentage ownership interest of a
stockholder in a publicly held corporation from .0001118% to .0001081% (a
reduction to 96.7% of the stockholder's prior percentage ownership interest)
would constitute a "meaningful reduction." Under this ruling, it is likely that
a small minority stockholder who exercises no control over the Company, and all
of whose actual and constructively owned Shares are tendered at or below the
Purchase Price, would satisfy the "not essentially equivalent to a dividend"
test notwithstanding proration in the Offer. Stockholders expecting to rely
upon the "not essentially equivalent to a dividend" test should consult their
own tax advisors as to its application in their particular situation.
Corporate Stockholder Dividend Treatment. If a sale of Shares by a corporate
stockholder is treated as a dividend, the corporate stockholder may be entitled
to claim a deduction equal to 70% of the dividend under Section 243 of the
Code, subject to applicable limitations. Corporate stockholders should,
however, consider the effect of Section 246(c) of the Code, which disallows the
70% dividends-received deduction with respect to stock that is held for 45 days
or less. For this purpose, the length of time a taxpayer is deemed to have held
stock may be reduced by periods during which the taxpayer's risk of loss with
respect to the stock is diminished by reason of the existence of certain
options or other transactions. Moreover, under Section 246A of the Code, if a
corporate stockholder has incurred indebtedness directly attributable to an
investment in Shares, the 70% dividends-received deduction may be reduced by a
percentage generally computed based on the amount of such indebtedness and the
total adjusted tax basis in the Shares. In addition, in the likely event that
the Company does not purchase an equal percentage of each stockholder's Shares,
any amount received by a corporate stockholder pursuant to the Offer that is
treated as a dividend would constitute an "extraordinary dividend" under
Section 1059 of the Code. For this purpose, all dividends received by a
stockholder within, and having their ex-dividend date within, an 85-day period
(expanded to a 365-day period in the case of dividends received in such period
that in the aggregate exceed 20% of the stockholder's adjusted tax basis in the
Shares) are aggregated and also treated as extraordinary dividends.
Accordingly, a corporate stockholder would be required under Section 1059(a) of
the Code to reduce its basis (but not below zero) in its Shares by the non-
taxed portion of the dividend (i.e., the portion of the dividend for which a
deduction is allowed), and if such portion exceeds the stockholder's tax basis
for its Shares, to treat the excess as gain from the sale of such Shares in the
year in which a sale or disposition of such Shares occurs (which, in certain
circumstances, may be the year in which Shares are sold pursuant to the Offer).
Even if the purchase of Shares pursuant to the Offer is pro rata with respect
to all stockholders, however, any amount received by a corporate stockholder
could nevertheless be considered an "extraordinary dividend" under Section 1059
of the Code unless such corporation's stock has been held for more than two
years (excluding periods during which the corporation's risk of loss with
respect to the stock has been diminished by reason of the existence of certain
options or other transactions). Corporate stockholders should consult their own
tax advisors as to the application of Section 1059 of the Code to the Offer.
Additional Tax Considerations. The distinction between long-term capital
gains and ordinary income is relevant because certain individuals are subject
to taxation at a reduced rate on the excess of net long-term
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<PAGE>
capital gains over net short-term capital losses. Stockholders are urged to
consult their own tax advisors regarding any possible impact on their
obligation to make estimated tax payments as a result of the recognition of any
capital gain (or the receipt of any ordinary income) caused by the sale of any
Shares to the Company pursuant to the Offer.
Foreign Stockholders. The Company will withhold United States federal income
tax at a rate of 30% from gross proceeds paid pursuant to the Offer to a
foreign stockholder or his agent, unless the Company determines that a reduced
rate of withholding is applicable pursuant to a tax treaty or that an exemption
from withholding is applicable because such gross proceeds are effectively
connected with the conduct of a trade or business by the foreign stockholder
within the United States. For this purpose, a foreign stockholder is any
stockholder that is not (i) a citizen or resident of the United States, (ii) a
corporation, partnership or other entity created or organized in or under the
laws of the United States, or (iii) any estate or trust the income of which is
subject to United States federal income taxation regardless of its source.
Without definite knowledge to the contrary, the Company will determine whether
a stockholder is a foreign stockholder by reference to the stockholder's
address. A foreign stockholder may be eligible to file for a refund of such tax
or a portion of such tax if such stockholder (i) meets the "complete
redemption," "substantially disproportionate" or "not essentially equivalent to
a dividend" tests described above, (ii) is entitled to a reduced rate of
withholding pursuant to a treaty and the Company withheld at a higher rate, or
(iii) is otherwise able to establish that no tax or a reduced amount of tax was
due. In order to claim an exemption from withholding on the ground that gross
proceeds paid pursuant to the Offer are effectively connected with the conduct
of a trade or business by a foreign stockholder within the United States or
that the foreign stockholder is entitled to the benefits of a tax treaty, the
foreign stockholder must deliver to the Depositary (or other person who is
otherwise required to withhold United States tax) a properly executed statement
claiming such exemption or benefits. Such statements may be obtained from the
Depositary. Foreign stockholders are urged to consult their own tax advisors
regarding the application of United States federal income tax withholding,
including eligibility for a withholding tax reduction or exemption and the
refund procedures.
Backup Withholding. See Section 3 with respect to the application of the
United States federal income tax backup withholding.
THE TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION ONLY
AND MAY NOT APPLY TO SHARES ACQUIRED IN CONNECTION WITH THE EXERCISE OF STOCK
OPTIONS OR PURSUANT TO OTHER COMPENSATION ARRANGEMENTS WITH THE COMPANY. THE
TAX CONSEQUENCES OF A SALE PURSUANT TO THE OFFER MAY VARY DEPENDING UPON, AMONG
OTHER THINGS, THE PARTICULAR CIRCUMSTANCES OF THE TENDERING STOCKHOLDER. NO
INFORMATION IS PROVIDED HEREIN AS TO THE STATE, LOCAL OR FOREIGN TAX
CONSEQUENCES OF THE TRANSACTION CONTEMPLATED BY THE OFFER. STOCKHOLDERS ARE
URGED TO CONSULT THEIR OWN TAX ADVISORS TO DETERMINE THE PARTICULAR FEDERAL,
STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF SALES MADE BY THEM PURSUANT TO THE
OFFER AND THE EFFECT OF THE STOCK OWNERSHIP ATTRIBUTION RULES MENTIONED ABOVE.
14.EXTENSION OF TENDER PERIOD; TERMINATION; AMENDMENTS
The Company expressly reserves the right, in its sole discretion and at any
time or from time to time, to extend the period of time during which the Offer
is open by giving oral or written notice of such extension to the Depositary.
There can be no assurance, however, that the Company will exercise its right to
extend the Offer. During any such extension, all Shares previously tendered
will remain subject to the Offer, except to the extent that such Shares may be
withdrawn as set forth in Section 4. The Company also expressly reserves the
right, in its sole discretion, (i) to terminate the Offer and not accept for
payment any Shares not
20
<PAGE>
theretofore accepted for payment or, subject to Rule 13-4(f)(5) under the
Exchange Act, which requires the Company either to pay the consideration
offered or to return the Shares tendered promptly after the termination or
withdrawal of the Offer, to postpone payment for Shares upon the occurrence of
any of the conditions specified in Section 7 hereof by giving oral or written
notice of such termination to the Depositary and making a public announcement
thereof and (ii) at any time or from time to time amend the Offer in any
respect. Amendments to the Offer may be effected by public announcement.
Without limiting the manner in which the Company may choose to make public
announcement of any termination or amendment, the Company shall have no
obligation (except as otherwise required by applicable law) to publish,
advertise or otherwise communicate any such public announcement, other than by
making a release to the Dow Jones News Service, except in the case of an
announcement of an extension of the Offer, in which case the Company shall have
no obligation to publish, advertise or otherwise communicate such announcement
other than by issuing a notice of such extension by press release or other
public announcement, which notice shall be issued no later than 9:00 a.m., New
York City time, on the next business day after the previously scheduled
Expiration Date. Material changes to information previously provided to holders
of the Shares in this Offer or in documents furnished subsequent thereto will
be disseminated to holders of Shares in compliance with Rule 13e-4(e)(2)
promulgated by the Commission under the Exchange Act.
If the Company materially changes the terms of the Offer or the information
concerning the Offer, or if it waives a material condition of the Offer, the
Company will extend the Offer to the extent required by Rules 13e-4(d)(2) and
13e-4(e)(2) under the Exchange Act. Those rules require that the minimum period
during which an offer must remain open following material changes in the terms
of the offer or information concerning the offer (other than a change in price,
change in dealer's soliciting fee or change in percentage of securities sought)
will depend on the facts and circumstances, including the relative materiality
of such terms or information. In a published release, the Commission has stated
that in its view, an offer should remain open for a minimum of five business
days from the date that notice of such a material change is first published,
sent or given. The Offer will continue or be extended for at least ten business
days from the time the Company publishes, sends or gives to holders of Shares a
notice that it will (a) increase or decrease the price it will pay for Shares
or the amount of the Dealer Manager's soliciting fee or (b) increase (except
for an increase not exceeding 2% of the outstanding Shares) or decrease the
number of Shares it seeks.
15.FEES AND EXPENSES
Morgan Stanley & Co. Incorporated will act as Dealer Manager for the Company
in connection with the Offer. The Company has agreed to pay the Dealer Manager,
upon acceptance for payment of Shares pursuant to the Offer, a fee of 0.25% of
the Purchase Price of the aggregate number of Shares purchased by the Company
pursuant to the Offer. The Dealer Manager will also be reimbursed by the
Company for its reasonable out-of-pocket expenses, including attorneys' fees,
and will be indemnified against certain liabilities, including liabilities
under the federal securities laws, in connection with the Offer.
The Dealer Manager has rendered, is currently rendering and is expected to
continue to render various investment banking and other advisory services to
the Company. It has received, and will continue to receive, customary
compensation from the Company for such services.
The Company has retained First Chicago Trust Company of New York as
Depositary and Georgeson & Company Inc. as Information Agent in connection with
the Offer. The Information Agent may contact stockholders by mail, telephone,
telex, telegraph and personal interviews, and may request brokers, dealers and
other nominee stockholders to forward materials relating to the Offer to
beneficial owners. The Depositary and the Information Agent will receive
reasonable and customary compensation for their services and will also be
reimbursed for certain out-of-pocket expenses. The Company has agreed to
indemnify the Depositary and the Information Agent against certain liabilities,
including certain liabilities under the federal securities laws, in connection
with the Offer. Neither the Information Agent nor the Depositary has been
retained to make solicitations or recommendations in connection with the Offer.
21
<PAGE>
The Company will not pay any fees or commissions to any broker, dealer or
other person for soliciting tenders of Shares pursuant to the Offer (other than
the fee of the Dealer Manager). The Company will, upon request, reimburse
brokers, dealers, commercial banks and trust companies for reasonable and
customary handling and mailing expenses incurred by them in forwarding
materials relating to the Offer to their customers.
16.MISCELLANEOUS
The Company is subject to the informational requirements of the Exchange Act
and in accordance therewith files reports, proxy statements and other
information with the Commission relating to its business, financial condition
and other matters. Certain information as of particular dates concerning the
Company's directors and officers, their remuneration, options granted to them,
the principal holders of the Company's securities and any material interest of
such persons in transactions with the Company is filed with the Commission. The
Company has also filed an Issuer Tender Offer Statement on Schedule 13E-4 with
the Commission, which includes certain additional information relating to the
Offer. Such reports, as well as such other material, may be inspected and
copies may be obtained at the Commission's public reference facilities at 450
Fifth Street, N.W., Washington, D.C., and should also be available for
inspection and copying at the regional offices of the Commission located at 7
World Trade Center, 13th Floor, New York, New York 10048, and Suite 1400,
Northwestern Atrium Center, 500 West Madison Street, Chicago, Illinois 60661.
Copies of such material may be obtained by mail, upon payment of the
Commission's customary fees, from the Commission's Public Reference Section at
450 Fifth Street, N.W., Washington, D.C. 20549. Such reports, proxy statements
and other information also should be available for inspection at the offices of
the NYSE, 20 Broad Street, New York, New York and the Pacific Stock Exchange,
301 Pine Street, San Francisco, California. The Company's Schedule 13E-4 may
not be available at the Commission's regional offices.
The Offer is being made to all holders of Shares. The Company is not aware of
any state where the making of the Offer is prohibited by administrative or
judicial action pursuant to a valid state statute. If the Company becomes aware
of any valid state statute prohibiting the making of the Offer, the Company
will make a good faith effort to comply with such statute. If, after such good
faith effort, the Company cannot comply with such statute, the Offer will not
be made to, nor will tenders be accepted from or on behalf of, holders of
Shares in such state. In those jurisdictions whose securities, blue sky or
other laws require the Offer to be made by a licensed broker or dealer, the
Offer shall be deemed to be made on behalf of the Company by the Dealer Manager
or one or more registered brokers or dealers licensed under the laws of such
jurisdictions.
Transamerica Corporation
May 9, 1994
22
<PAGE>
SCHEDULE A
The Company has made the following purchases of Shares during the 40
business-day period preceding the commencement of the Offer on the dates, in
the amounts and at the prices indicated below. All such purchases were effected
on the NYSE.
<TABLE>
<CAPTION>
AVERAGE
PRICE
DATE PER SHARE NO. OF SHARES
---- --------- -------------
<S> <C> <C>
03/10/94 $51.8980 32,000
03/11/94 52.5523 32,000
03/14/94 52.3150 30,600
03/15/94 52.6225 30,600
03/16/94 52.5597 26,600
03/17/94 53.3840 30,600
03/18/94 53.6205 30,600
03/21/94 53.5143 18,400
03/22/94 53.6781 33,400
03/23/94 53.9083 33,400
03/24/94 53.0501 33,400
03/25/94 53.3221 13,700
03/28/94 52.6241 29,000
03/29/94 51.6707 29,000
03/30/94 51.4819 29,000
03/31/94 50.5388 29,000
04/04/94 50.2082 30,500
04/05/94 50.1873 30,500
04/06/94 50.1880 24,600
04/07/94 50.2238 30,500
04/08/94 49.9607 30,500
04/11/94 50.5986 19,900
04/12/94 50.5535 32,500
</TABLE>
<PAGE>
Facsimile copies of the Letter of Transmittal will be accepted. The Letter of
Transmittal and certificates for Shares should be sent or delivered by each
stockholder of the Company or his or her broker, dealer, bank or trust company
to the Depositary at one of its addresses set forth below.
The Depositary:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
By Mail: Facsimile Transmission: By Hand or by Overnight
P.O. Box 2560 (201) 222-4720 or Courier:
Mail Suite 4660 (201) 222-4721 14 Wall Street, 8th Floor
Jersey City, New Jersey Suite 4680
07303-2560 New York, New York 10005
Confirm by Telephone:
(201) 222-4707
Any questions or requests for assistance may be directed to the Information
Agent or the Dealer Manager at the respective telephone numbers and addresses
listed below. Requests for additional copies of this Offer to Purchase, the
Letter of Transmittal or other tender offer materials may be directed to the
Information Agent or the Dealer Manager, and such copies will be furnished
promptly at the Company's expense. Stockholders may also contact their local
broker, dealer, commercial bank or trust company for assistance concerning the
Offer.
The Information Agent:
[LOGO OF GEORGESON & COMPANY INC.]
Wall Street Plaza
New York, New York 10005
Banks and Brokers Call Collect:
(212) 440-9800
ALL OTHERS CALL TOLL FREE:
1-800-223-2064
The Dealer Manager:
MORGAN STANLEY & CO.
Incorporated
1251 Avenue of the Americas
New York, New York 10020
(415) 576-2247 (call collect)
<PAGE>
LETTER OF TRANSMITTAL
To Accompany Shares of Common Stock
(Including the Associated Preference Stock Purchase Rights)
of
Transamerica Corporation
Tendered Pursuant to the Offer to Purchase
Dated May 9, 1994
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON MONDAY, JUNE 6, 1994, UNLESS THE OFFER IS
EXTENDED.
To: FIRST CHICAGO TRUST COMPANY OF NEW YORK, Depositary
By Mail: By Hand or By Overnight Courier:
P.O. Box 2560 14 Wall Street, 8th Floor
Mail Suite 4660 Suite 4680
Jersey City, New Jersey 07303-2560 New York, New York 10005
DESCRIPTION OF SHARES TENDERED
- --------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF SHARES TENDERED
REGISTERED HOLDER(S) (ATTACH ADDITIONAL LIST IF NECESSARY)
(PLEASE FILL IN EXACTLY AS NAME(S)
APPEAR(S) ON CERTIFICATE(S))
- --------------------------------------------------------------------------------
CERTIFICATE TOTAL NUMBER NUMBER OF
NUMBER(S)* OF SHARES SHARES
REPRESENTED TENDERED**
BY
CERTIFICATE(S)*
--------------------------------------------
--------------------------------------------
--------------------------------------------
--------------------------------------------
--------------------------------------------
--------------------------------------------
TOTAL SHARES:
- --------------------------------------------------------------------------------
*Need not be completed by stockholders tendering by book-entry transfer.
**Unless otherwise indicated, it will be assumed that all Shares
represented by any certificates delivered to the Depository are being
tendered. See Instruction 4.
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN ONE LISTED ABOVE
WILL NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THE LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be used if certificates are to be forwarded
herewith or if delivery of Shares (as defined below) is to be made by book-
entry transfer to the Depositary's account at The Depository Trust Company
("DTC"), Midwest Securities Trust Company ("MSTC") or Philadelphia Depository
Trust Company ("PDTC") (hereinafter collectively referred to as the "Book-Entry
Transfer Facilities") pursuant to the procedures set forth in Section 3 of the
Offer to Purchase (as defined below).
Stockholders who cannot deliver their Shares and all other documents required
hereby to the Depositary by the Expiration Date (as defined in the Offer to
Purchase) must tender their Shares pursuant to the guaranteed delivery
procedure set forth in Section 3 of the Offer to Purchase. See Instruction 2.
Delivery of documents to the Company or to a Book-Entry Transfer Facility does
not constitute a valid delivery.
<PAGE>
(BOXES BELOW FOR USE BY ELIGIBLE INSTITUTIONS ONLY)
[_] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO
THE DEPOSITARY'S ACCOUNT AT ONE OF THE BOOK-ENTRY TRANSFER FACILITIES AND
COMPLETE THE FOLLOWING:
Name of Tendering Institution _______________________________________________
Check Applicable Box: [_] DTC [_] MSTC [_] PDTC
Account No. _________________________________________________________________
Transaction Code No. ________________________________________________________
[_] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of Tendering Stockholder(s) _________________________________________
Date of Execution of Notice of Guaranteed Delivery __________________________
Name of Institution that Guaranteed Delivery ________________________________
If delivery is by book-entry transfer:
Name of Tendering Institution _______________________________________________
Account No. at [_] DTC [_] MSTC [_] PDTC
Transaction Code No. ________________________________________________________
NOTE: SIGNATURES MUST BE PROVIDED ON PAGE 6 BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to Transamerica Corporation, a Delaware
corporation (the "Company"), the above-described shares of its Common Stock,
par value $1.00 per share (the "Shares") (including the associated preference
stock purchase rights (the "Rights") issued pursuant to the Rights Agreement,
dated as of July 17, 1986, as amended, between the Company and First Chicago
Trust Company of New York, as the Rights Agent), pursuant to the Company's
offer to purchase up to 4,500,000 Shares at a price per Share hereinafter set
forth, net to the seller in cash, upon the terms and subject to the conditions
set forth in the Offer to Purchase, dated May 9, 1994 (the "Offer to
Purchase"), receipt of which is hereby acknowledged, and in this Letter of
Transmittal (which together constitute the "Offer"). Unless the context
otherwise requires, all references to Shares shall include the associated
Rights.
Subject to, and effective upon, acceptance for payment of and payment for the
Shares tendered herewith in accordance with the terms and subject to the
conditions of the Offer (including, if the Offer is extended or amended, the
terms and conditions of any such extension or amendment), the undersigned
hereby sells, assigns and transfers to, or upon the order of, the Company all
right, title and interest in and to all the Shares that are being tendered
hereby (and any and all other Shares or other securities issued or issuable in
respect thereof on or after May 9, 1994 (collectively, "Distributions")) and
constitutes and appoints the Depositary the true and lawful agent and attorney-
in-fact of the undersigned with respect to such Shares and all Distributions,
with full power of substitution (such power of attorney being deemed to be an
irrevocable power coupled with an interest), to (a) deliver certificates for
such Shares and all Distributions, or transfer ownership of such Shares and all
Distributions on the account books maintained by any of the Book-Entry Transfer
Facilities, together, in any such case, with all accompanying evidences of
transfer and authenticity,
2
<PAGE>
to or upon the order of the Company, (b) present such Shares and all
Distributions for registration and transfer on the books of the Company and (c)
receive all benefits and otherwise exercise all rights of beneficial ownership
of such Shares and all Distributions, all in accordance with the terms of the
Offer.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Shares tendered
hereby and all Distributions and that, when and to the extent the same are
accepted for payment by the Company, the Company will acquire good, marketable
and unencumbered title thereto, free and clear of all liens, restrictions,
charges, encumbrances, conditional sales agreements or other obligations
relating to the sale or transfer thereof, and the same will not be subject to
any adverse claims. The undersigned will, upon request, execute and deliver any
additional documents deemed by the Depositary or the Company to be necessary or
desirable to complete the sale, assignment and transfer of the Shares tendered
hereby and all Distributions.
All authority herein conferred or agreed to be conferred shall not be
affected by, and shall survive the death or incapacity of the undersigned, and
any obligation of the undersigned hereunder shall be binding upon the heirs,
personal representatives, successors and assigns of the undersigned. Except as
stated in the Offer, this tender is irrevocable.
The undersigned understands that tenders of Shares pursuant to any one of the
procedures described in Section 3 of the Offer to Purchase and in the
instructions hereto will constitute the undersigned's acceptance of the terms
and conditions of the Offer, including the undersigned's representation and
warranty that (i) the undersigned has a net long position in the Shares being
tendered within the meaning of Rule 14e-4 promulgated under the Securities
Exchange Act of 1934, as amended, and (ii) the tender of such Shares complies
with Rule 14e-4. The Company's acceptance for payment of Shares tendered
pursuant to the Offer will constitute a binding agreement between the
undersigned and the Company upon the terms and subject to the conditions of the
Offer.
The undersigned understands that the Company will determine a single per
Share price (not greater than $55 nor less than $48 per Share) (the "Purchase
Price") that it will pay for Shares validly tendered and not withdrawn pursuant
to the Offer taking into account the number of Shares so tendered and the
prices specified by tendering stockholders. The undersigned understands that
the Company will select the Purchase Price that will enable it to purchase
4,500,000 Shares (or such lesser number of Shares as are validly tendered at
prices not greater than $55 nor less than $48 per Share) pursuant to the Offer.
The undersigned understands that tenders of Shares pursuant to any one of the
procedures described in Section 2 or 3 of the Offer to Purchase and in the
instructions hereto will constitute an agreement between the undersigned and
the Company upon the terms and subject to the conditions of the Offer. The
undersigned also understands that unless the Rights are redeemed or become
separately transferable in accordance with their terms, by tendering Shares the
undersigned will also be tendering the associated Rights and that no separate
consideration will be paid for such Rights.
Unless otherwise indicated under "Special Payment Instructions," please issue
the check for the purchase price of any Shares purchased, and/or return any
Shares not tendered or not purchased, in the name(s) of the undersigned (and,
in the case of Shares tendered by book-entry transfer, by credit to the account
at the Book-Entry Transfer Facility designated above). Similarly, unless
otherwise indicated under "Special Delivery Instructions," please mail the
check for the purchase price of any Shares purchased and/or any certificates
for Shares not tendered or not purchased (and accompanying documents, as
appropriate) to the undersigned at the address shown below the undersigned's
signature(s). In the event that both "Special Payment Instructions" and
"Special Delivery Instructions" are completed, please issue the check for the
purchase price of any Shares purchased and/or return any Shares not tendered or
not purchased in the name(s) of, and mail said check and/or any certificates
to, the person(s) so indicated. The undersigned recognizes that the Company has
no obligation, pursuant to the "Special Payment Institutions," to transfer any
Shares from the name of the registered holder(s) thereof if the Company does
not accept for payment any of the Shares so tendered.
3
<PAGE>
PRICE (IN DOLLARS) PER SHARE
AT WHICH SHARES ARE BEING TENDERED
(SEE INSTRUCTION 5)
- --------------------------------------------------------------------------------
CHECK ONLY ONE BOX. IF MORE THAN ONE BOX IS CHECKED, OR IF NO BOX IS CHECKED,
THERE IS NO VALID TENDER OF SHARES.
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
[_] $48.000 [_] $49.000 [_] $50.000 [_] $51.000 [_] $52.000 [_] $53.000 [_] $54.000
[_] $48.125 [_] $49.125 [_] $50.125 [_] $51.125 [_] $52.125 [_] $53.125 [_] $54.125
[_] $48.250 [_] $49.250 [_] $50.250 [_] $51.250 [_] $52.250 [_] $53.250 [_] $54.250
[_] $48.375 [_] $49.375 [_] $50.375 [_] $51.375 [_] $52.375 [_] $53.375 [_] $54.375
[_] $48.500 [_] $49.500 [_] $50.500 [_] $51.500 [_] $52.500 [_] $53.500 [_] $54.500
[_] $48.625 [_] $49.625 [_] $50.625 [_] $51.625 [_] $52.625 [_] $53.625 [_] $54.625
[_] $48.750 [_] $49.750 [_] $50.750 [_] $51.750 [_] $52.750 [_] $53.750 [_] $54.750
[_] $48.875 [_] $49.875 [_] $50.875 [_] $51.875 [_] $52.875 [_] $53.875 [_] $54.875
[_] $55.000
</TABLE>
ODD LOTS
(SEE INSTRUCTION 9)
This section is to be completed ONLY if Shares are being tendered by or on
behalf of a person owning beneficially an aggregate of fewer than 100 Shares
as of the close of business on May 6, 1994.
The undersigned either (check one box):
[_]was the beneficial owner of an aggregate of fewer than 100 Shares
(including Shares held in the Stock Savings Plan and the Reinvestment
Plan (as such terms are defined in the Offer to Purchase)) as of the
close of business on May 6, 1994, all of which are being tendered, or
[_]is a broker, dealer, commercial bank, trust company or other nominee that
(i) is tendering, for the beneficial owners thereof, Shares with respect
to which it is the record owner, and (ii) believes, based upon
representations made to it by each such beneficial owner, that such
beneficial owner owned beneficially an aggregate of fewer than 100 Shares
(including Shares held in the Stock Savings Plan and the Reinvestment
Plan) as of the close of business on May 6, 1994) and is tendering all of
such Shares.
4
<PAGE>
TRANSAMERICA CORPORATION DIVIDEND REINVESTMENT PLAN SHARES (SEE INSTRUCTION 13)
This section is to be completed ONLY if Shares held in the Reinvestment
Plan are to be tendered.
[_]By checking this box, the undersigned represents that the undersigned is
a participant in the Reinvestment Plan and hereby tenders the following
number of Shares held in the Reinvestment Plan account of the
undersigned:
____________ Shares*
* The undersigned understands and agrees that all Shares held in the
Reinvestment Plan account(s) of the undersigned will be tendered if the
above box is checked and the space above is left blank.
SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 6, 7 AND 8) (SEE INSTRUCTIONS 6, 7 AND 8)
To be completed ONLY if the check To be completed ONLY if the check
for the purchase price of Shares for the purchase price of Shares
purchased and/or certificates for purchased and/or certificates for
Shares not tendered or not Shares not tendered or not
purchased are to be issued in the purchased are to be mailed to
name of someone other than the someone other than the undersigned
undersigned. or to the undersigned at an
address other than that shown
Issue [_] check below the undersigned's
and/or [_] certificate(s) to: signature(s).
Name ______________________________ Mail [_] check
and/or [_] certificates to:
------------------------------
Name _____________________________
(Please Print)
-----------------------------
(Please Print)
Address ___________________________
----------------------------- Address __________________________
(Include Zip Code) ---------------------------
(Include Zip Code)
-----------------------------------
(Taxpayer Identification or Social
Security No.)
CONDITIONAL TENDER
A tendering stockholder may condition his or her tender of Shares upon the
purchase by the Company of a specified minimum number of the Shares tendered
hereby, all as described in the Offer to Purchase, particularly in Section 6
thereof. Unless at least such minimum number of Shares is purchased by the
Company pursuant to the terms of the Offer, none of the Shares tendered
hereby will be purchased. It is the tendering stockholder's responsibility
to calculate such minimum number of Shares, and each stockholder is urged to
consult his or her own tax advisor. Unless this box has been completed and a
minimum specified, the tender will be deemed unconditional.
Minimum number of Shares that must be purchased, if any are purchased:
____________ Shares
5
<PAGE>
SIGN HERE
(PLEASE COMPLETE SUBSTITUTE FORM W-9 ON PAGE 11 HEREOF)
++ ++
-----------------------------------------------------------------------
Signature(s) of Owner(s)
++ ++
-----------------------------------------------------------------------
Dated_______, 1994
Name(s) _____________________________________________________________________
-----------------------------------------------------------------------------
(Please Print)
-----------------------------------------------------------------------------
Capacity (full title) _______________________________________________________
Address _____________________________________________________________________
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
(Include Zip Code)
Area Code and Telephone No. _________________________________________________
(Must be signed by registered holder(s) exactly as name(s) appear(s) on
stock certificate(s) or on a security position listing or by person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, officer of a corporation or other person acting
in a fiduciary or representative capacity, please set forth full title and
see Instruction 6.)
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 6)
Name of Firm ________________________________________________________________
Authorized Signature ________________________________________________________
Dated_______, 1994
6
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. Except as otherwise provided below, all
signatures on this Letter of Transmittal must be guaranteed by a firm that is a
member of a registered national securities exchange or the National Association
of Securities Dealers, Inc., or by a commercial bank or trust company having an
office or correspondent in the United States which is a participant in an
approved Signature Guarantee Medallion Program (an "Eligible Institution").
Signatures on this Letter of Transmittal need not be guaranteed (a) if this
Letter of Transmittal is signed by the registered holder(s) of the Shares
(which term, for purposes of this document, shall include any participant in
one of the Book-Entry Transfer Facilities whose name appears on a security
position listing as the owner of Shares) tendered herewith and such holder(s)
have not completed the box entitled "Special Payment Instructions" or the box
entitled "Special Delivery Instructions" on this Letter of Transmittal or (b)
if such Shares are tendered for the account of an Eligible Institution. See
Instruction 6.
2. DELIVERY OF LETTER OF TRANSMITTAL AND SHARES. This Letter of Transmittal
is to be used either if certificates are to be forwarded herewith or if
delivery of Shares is to be made by book-entry transfer pursuant to the
procedures set forth in Section 3 of the Offer to Purchase. Certificates for
all physically delivered Shares, or a confirmation of a book-entry transfer
into the Depositary's account at one of the Book-Entry Transfer Facilities of
all Shares delivered electronically, as well as a properly completed and duly
executed Letter of Transmittal (or facsimile thereof) and any other documents
required by this Letter of Transmittal, must be received by the Depositary at
one of its addresses set forth on the front page of this Letter of Transmittal
on or prior to the Expiration Date (as defined in the Offer to Purchase).
Stockholders who cannot deliver their Shares and all other required documents
to the Depositary on or prior to the Expiration Date must tender their Shares
pursuant to the guaranteed delivery procedure set forth in Section 3 of the
Offer to Purchase. Pursuant to such procedure: (a) such tender must be made by
or through an Eligible Institution, (b) a properly completed and duly executed
Notice of Guaranteed Delivery substantially in the form provided by the Company
(with any required signature guarantees) must be received by the Depositary on
or prior to the Expiration Date and (c) the certificates for all physically
delivered Shares, or a confirmation of a book-entry transfer into the
Depositary's account at one of the Book-entry Transfer Facilities of all Shares
delivered electronically, as well as a properly completed and duly executed
Letter of Transmittal (or facsimile thereof) and any other documents required
by this Letter of Transmittal must be received by the Depositary within five
New York Stock Exchange, Inc. trading days after the date of execution of such
Notice of Guaranteed Delivery, all as provided in Section 3 of the Offer to
Purchase.
THE METHOD OF DELIVERY OF SHARES AND ALL OTHER REQUIRED DOCUMENTS IS AT THE
OPTION AND RISK OF THE TENDERING STOCKHOLDER. IF CERTIFICATES FOR SHARES ARE
SENT BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED,
IS RECOMMENDED.
Except as specifically permitted by Section 6 of the Offer to Purchase, no
alternative or contingent tenders will be accepted. Except for Shares held by
participants in the Stock Savings Plan and the Reinvestment Plan (as such terms
are defined in the Offer to Purchase), fractional Shares will be purchased,
unless proration of tendered Shares is required (in which event no fractional
Shares will be purchased). See Section 1 of the Offer to Purchase. By executing
this Letter of Transmittal (or facsimile thereof), the tendering stockholder
waives any right to receive any notice of the acceptance for payment of the
Shares.
3. INADEQUATE SPACE. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares should be listed on a separate
schedule attached hereto.
4. PARTIAL TENDERS (NOT APPLICABLE TO STOCKHOLDERS WHO TENDER BY BOOK-ENTRY
TRANSFER). If fewer than all the Shares represented by any certificate
delivered to the Depositary are to be tendered, fill in the number of Shares
that are to be tendered in the box entitled "Number of Shares Tendered." In
such case, a new certificate for the remainder of the Shares represented by the
old certificate will be sent to the person(s) signing this Letter of
Transmittal, unless otherwise provided in the "Special Payment Instructions" or
"Special
7
<PAGE>
Delivery Instructions" boxes on this Letter of Transmittal, as promptly as
practicable following the expiration or termination of the Offer. All Shares
represented by certificates delivered to the Depositary will be deemed to have
been tendered unless otherwise indicated.
5. INDICATION OF PRICE AT WHICH SHARES ARE BEING TENDERED. For Shares to be
validly tendered, the stockholder must check the box indicating the price per
Share at which he or she is tendering Shares under "Price (In Dollars) Per
Share at Which Shares Are Being Tendered" on this Letter of Transmittal. Only
one box may be checked. If more than one box is checked or if no box is
checked, there is no valid tender of Shares. A stockholder wishing to tender
portions of his or her Share holdings at different prices must complete a
separate Letter of Transmittal for each price at which he or she wishes to
tender each such portion of his or her Shares. The same Shares cannot be
tendered (unless previously validly withdrawn as provided in Section 4 of the
Offer to Purchase) at more than one price.
6. SIGNATURES ON LETTER OF TRANSMITTAL; STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
hereby, the signature(s) must correspond with the name(s) as written on the
face of the certificates without alteration, enlargement or any change
whatsoever.
If any of the Shares hereby is held of record by two or more persons, all
such persons must sign this Letter of Transmittal.
If any of the Shares tendered hereby are registered in different names on
different certificates, it will be necessary to complete, sign and submit as
many separate Letters of Transmittal as there are different registrations of
certificates.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares tendered hereby, no endorsements of certificates or separate stock
powers are required unless payment of the purchase price is to be made to, or
Shares not tendered or not purchased are to be registered in the name of, any
person other than the registered holder(s). Signatures on any such certificates
or stock powers must be guaranteed by an Eligible Institution. See Instruction
1.
If this Letter of Transmittal is signed by a person other than the registered
holder(s) of the Shares tendered hereby, certificates must be endorsed or
accompanied by appropriate stock powers, in either case, signed exactly as the
name(s) of the registered holder(s) appear(s) on the certificates for such
Shares. Signature(s) on any such certificates or stock powers must be
guaranteed by an Eligible Institution. See Instruction 1.
If this Letter of Transmittal or any certificate or stock power is signed by
a trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
such person should so indicate when signing, and proper evidence satisfactory
to the Company of the authority of such person so to act must be submitted.
7. STOCK TRANSFER TAXES. The Company will pay or cause to be paid any stock
transfer taxes with respect to the sale and transfer of any Shares to it or its
order pursuant to the Offer. If, however, payment of the purchase price is to
be made to, or Shares not tendered or not purchased are to be registered in the
name of, any person other than the registered holder(s), or if tendered Shares
are registered in the name of any person other than the person(s) signing this
Letter of Transmittal, the amount of any stock transfer taxes (whether imposed
on the registered holder(s), such other person or otherwise) payable on account
of the transfer to such person will be deducted from the purchase price unless
satisfactory evidence of the payment of such taxes, or exemption therefrom, is
submitted. See Section 5 of the Offer to Purchase. EXCEPT AS PROVIDED IN THIS
INSTRUCTION 7, IT WILL NOT BE NECESSARY TO AFFIX TRANSFER TAX STAMPS TO THE
CERTIFICATES REPRESENTING SHARES TENDERED HEREBY.
8. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If the check for the purchase
price of any Shares purchased is to be issued in the name of, and/or any Shares
not tendered or not purchased are to be returned
8
<PAGE>
to, a person other than the person(s) signing this Letter of Transmittal or if
the check and/or any certificates for Shares not tendered or not purchased are
to be mailed to someone other than the person(s) signing this Letter of
Transmittal or to an address other than that shown above in the box captioned
"Description of Shares Tendered," then the boxes captioned "Special Payment
Instructions" and/or "Special Delivery Instructions" on this Letter of
Transmittal should be completed. Stockholders tendering Shares by book-entry
transfer will have any Shares not accepted for payment returned by crediting
the account maintained by such stockholder at the Book-Entry Transfer Facility
from which such transfer was made.
9. ODD LOTS. As described in the Offer to Purchase, if fewer than all Shares
validly tendered at or below the Purchase Price and not withdrawn on or prior
to the Expiration Date are to be purchased, the Shares purchased first will
consist of all Shares (other than Stock Savings Plan Shares) tendered by any
stockholder who owned beneficially an aggregate of fewer than 100 Shares
(including Shares held in the Stock Savings Plan and the Reinvestment Plan) as
of the close of business on May 6, 1994 who validly and unconditionally
tendered all such Shares at or below the Purchase Price. (All Shares held in
the Stock Savings Plan will be subject to proration (if any), even if such
Shares are owned by a person who benefically owned fewer than 100 Shares as of
the close of business on such date.) Partial or conditional tenders of Shares
will not qualify for this preference. This preference will not be available
unless the box captioned "Odd Lots" in this Letter of Transmittal and the
Notice of Guaranteed Delivery, if any, is completed.
10. SUBSTITUTE FORM W-9 AND FORM W-8. The tendering stockholder is required
to provide the Depositary with either a correct Taxpayer Identification Number
("TIN") on Substitute Form W-9, which is provided under "Important Tax
Information" below, or a properly completed Form W-8. Failure to provide the
information on either Substitute Form W-9 or Form W-8 may subject the tendering
stockholder to 31% federal income tax backup withholding on the payment of the
purchase price. The box in Part 2 of Substitute Form W-9 may be checked if the
tendering stockholder has not been issued a TIN and has applied for a number or
intends to apply for a number in the near future. If the box in Part 2 is
checked and the Depositary is not provided with a TIN by the time of payment,
the Depositary will withhold 31% on all payments of the purchase price
thereafter until a TIN is provided to the Depositary.
11. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Any questions or requests
for assistance may be directed to the Information Agent or the Dealer Manager
at their respective telephone numbers and addresses listed below. Requests for
additional copies of the Offer to Purchase, this Letter of Transmittal or other
tender offer materials may be directed to the Information Agent or the Dealer
Manager and such copies will be furnished promptly at the Company's expense.
Stockholders may also contact their local broker, dealer, commercial bank or
trust company for assistance concerning the Offer.
12. IRREGULARITIES. All questions as to the Purchase Price, the form of
documents, and the validity, eligibility (including time of receipt) and
acceptance of any tender of Shares will be determined by the Company, in its
sole discretion, and its determination shall be final and binding. The Company
reserves the absolute right to reject any or all tenders of Shares that it
determines are not in proper form or the acceptance for payment of or payment
for Shares that may, in the opinion of the Company's counsel, be unlawful. The
Company also reserves the absolute right to waive any of the conditions to the
Offer or any defect or irregularity in any tender of Shares and the Company's
interpretation of the terms and conditions of the Offer (including these
instructions) shall be final and binding. Unless waived, any defects or
irregularities in connection with tenders must be cured within such time as the
Company shall determine. None of the Company, the Dealer Manager, the
Depositary, the Information Agent or any other person shall be under any duty
to give notice of any defect or irregularity in tenders, nor shall any of them
incur any liability for failure to give any such notice. Tenders will not be
deemed to have been made until all defects and irregularities have been cured
or waived.
13. REINVESTMENT PLAN. If a tendering stockholder desires to have tendered
pursuant to the Offer Shares which such stockholder has accumulated through May
6, 1994 under the Reinvestment Plan, the box captioned "Transamerica
Corporation Dividend Reinvestment Plan Shares" should be completed. A
participant in the Reinvestment Plan may complete such box on only one Letter
of Transmittal submitted by
9
<PAGE>
such participant. If a participant submits more than one Letter of Transmittal
and completes such box on more than one Letter of Transmittal, the participant
will be deemed to have elected to tender all Shares which such participant has
accumulated under the Reinvestment Plan through May 6, 1994 at the lowest of
the prices specified in such Letters of Transmittal.
If a stockholder authorizes a tender of his or her Shares held in the
Reinvestment Plan, all such Shares held in such stockholder's Reinvestment Plan
account(s), including fractional Shares, will be tendered, unless otherwise
specified in the appropriate space in the box captioned "Transamerica
Corporation Reinvestment Plan Shares."
In the event that the box captioned "Transamerica Corporation Reinvestment
Plan Shares" is not completed, no Shares held in the tendering stockholder's
Reinvestment Plan account will be tendered.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE COPY THEREOF) TOGETHER
WITH CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER REQUIRED
DOCUMENTS MUST BE RECEIVED BY THE DEPOSITARY, OR THE NOTICE OF GUARANTEED
DELIVERY MUST BE RECEIVED BY THE DEPOSITARY, ON OR PRIOR TO THE EXPIRATION DATE
(AS DEFINED IN THE OFFER TO PURCHASE).
IMPORTANT TAX INFORMATION
Under federal income tax law, a stockholder whose tendered Shares are
accepted for payment is required to provide the Depositary (as payer) with
either such stockholder's correct TIN on Substitute Form W-9 below or a
properly completed Form W-8. If such stockholder is an individual, the TIN is
his or her social security number. For businesses and other entities, the
number is the employer identification number. If the Depositary is not provided
with the correct TIN or properly completed Form W-8, the stockholder may be
subject to a $50 penalty imposed by the Internal Revenue Service. In addition,
payments that are made to such stockholder with respect to Shares purchased
pursuant to the Offer may be subject to backup withholding. The Form W-8 can be
obtained from the Depositary. See the enclosed Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9 for additional
instructions.
If federal income tax backup withholding applies, the Depositary is required
to withhold 31% of any payments made to the stockholder. Backup withholding is
not an additional tax. Rather, the federal income tax liability of persons
subject to backup withholding will be reduced by the amount of the tax
withheld. If withholding results in an overpayment of taxes, a refund may be
obtained.
PURPOSE OF SUBSTITUTE FORM W-9 AND FORM W-8
To avoid backup withholding on payments that are made to a stockholder with
respect to Shares purchased pursuant to the Offer, the stockholder is required
to notify the Depositary of his or her correct TIN by completing the Substitute
Form W-9 on page 11 hereof certifying that the TIN provided on Substitute Form
W-9 is correct and that (1) the stockholder has not been notified by the
Internal Revenue Service that he or she is subject in federal income tax backup
withholding as a result of failure to report all interest or dividends or (2)
the Internal Revenue Service has notified the stockholder that he or she is no
longer subject to federal income tax backup withholding. Foreign stockholders
must submit a properly completed Form W-8 in order to avoid the applicable
backup withholding; provided, however, that backup withholding will not apply
to foreign stockholders subject to 30% (or lower treaty rate) withholding on
gross payments received pursuant to the Offer.
WHAT NUMBER TO GIVE THE DEPOSITARY
The stockholder is required to give the Depositary the social security number
or employer identification number of the registered owner of the Shares. If the
Shares are in more than one name or are not in the name of the actual owner,
consult the enclosed Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9 for additional guidance on which number to
report.
10
<PAGE>
PAYER'S NAME: FIRST CHICAGO TRUST COMPANY OF NEW YORK
PART 1-PLEASE PROVIDE YOUR TIN ___________________
SUBSTITUTE TIN IN THE BOX AT RIGHT Social Security Number
FORM W-9 AND CERTIFY BY SIGNING AND or
DATING BELOW. Employer
Identification Number
DEPARTMENT OF THE TREASURY
-------------------------------------------------------
INTERNAL REVENUE SERVICE
NAME (Please Print)
PAYOR'S REQUEST FOR TAXPAYER PART 2
-----------------------------
ADDRESS Awaiting
IDENTIFICATION NUMBER (TIN)
TIN [_]
AND CERTIFICATION
-----------------------------
CITY STATE ZIP CODE
-------------------------------------------------------
Part 3--CERTIFICATION-UNDER THE PENALTIES OF
PERJURY, I CERTIFY THAT (1) the number shown on
this form is my correct taxpayer identification
number (or a TIN has not been issued to me but I
have mailed or delivered an application to receive
a TIN or intend to do so in the near future), (2) I
am not subject to backup withholding either because
I have not been notified by the Internal Revenue
Service (the "IRS") that I am subject to backup
withholding as a result of a failure to report all
interest or dividends or the IRS has notified me
that I am no longer subject to backup withholding,
and (3) all other information provided on this form
is true, correct and complete.
SIGNATURE ___________________________________ DATE
You must cross out item (2) above if you have been
notified by the IRS that you are currently subject
to backup withholding because of underreporting
interest or dividends on your tax return.
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS. YOU MUST COMPLETE
THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 2 OF THE
SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me and either (1) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or
(2) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a taxpayer identification number by the
time of payment, 31% of all payments of the purchase price made to me
thereafter will be withheld until I provide a number.
Signature _________________________ Date: ____________ , 1994
11
<PAGE>
The Information Agent:
[LOGO OF GEORGESON & COMPANY INC.]
Wall Street Plaza
New York, New York 10005
Banks and Brokers Call Collect:
(212) 440-9800
ALL OTHERS CALL TOLL FREE:
1-800-223-2064
The Dealer Manager:
MORGAN STANLEY & CO.
Incorporated
1251 Avenue of the Americas
New York, New York 10020
(415) 576-2247 (call collect)
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER
ON SUBSTITUTE FORM W-9
SECTION REFERENCES ARE TO THE INTERNAL REVENUE CODE.
Purpose of Form.--A person who is required to file an information return with
the IRS must obtain your correct TIN to report income paid to you, real estate
transactions, mortgage interest you paid, the acquisition or abandonment of
secured property, or contributions you made to an IRA. Use Form W-9 to furnish
your correct TIN to the requester (the person asking you to furnish your TIN)
and, when applicable, (1) to certify that the TIN you are furnishing is correct
(or that you are waiting for a number to be issued), (2) to certify that you
are not subject to backup withholding, and (3) to claim exemption from backup
withholding if you are an exempt payee. Furnishing your correct TIN and making
the appropriate certifications will prevent certain payments from being subject
to backup withholding.
Note: If a requester gives you a form other than a W-9 to request your TIN,
you must use the requester's form.
How To Obtain a TIN.--If you do not have a TIN, apply for one immediately. To
apply, get Form SS-5, Application for a Social Security Card (for individuals),
from your local office of the Social Security Administration, or Form SS-4,
Application for Employer Identification Number (for businesses and all other
entities), from your local IRS office.
To complete Form W-9 if you do not have a TIN, write "Applied for" in the
space for the TIN in Part I (or check box 2 of Substitute Form W-9), sign and
date the form, and give it to the requester. Generally, you must obtain a TIN
and furnish it to the requester by the time of payment. If the requester does
not receive your TIN by the time of payment, backup withholding, if applicable,
will begin and continue until you furnish your TIN to the requester.
Note: Writing "Applied for" (or checking box 2 of the Substitute Form W-9) on
the form means that you have already applied for a TIN OR that you intend to
apply for one in the near future.
As soon as you receive your TIN, complete another Form W-9, include your TIN,
sign and date the form, and give it to the requester.
What Is Backup Withholding?--Persons making certain payments to you after
1992 are required to withhold and pay to the IRS 31% of such payments under
certain conditions. This is called "backup withholding". Payments that could be
subject to backup withholding include interest, dividends, broker and barter
exchange transactions, rents, royalties, nonemployee compensation, and certain
payments from fishing boat operators, but do not include real estate
transactions.
If you give the requester your correct TIN, make the appropriate
certifications, and report all your taxable interest and dividends on your tax
return, your payments will not be subject to backup withholding. Payments you
receive will be subject to backup withholding if:
1. You do not furnish your TIN to the requester, or
2. The IRS notifies the requester that you furnished an incorrect TIN, or
3. You are notified by the IRS that you are subject to backup withholding
because you failed to report all your interest and dividends on your tax
return (for reportable interest and dividends only), or
4. You do not certify to the requester that you are not subject to backup
withholding under 3 above (for reportable interest and dividend accounts
opened after 1983 only), or
5. You do not certify your TIN. This applies only to reportable interest,
dividend, broker, or barter exchange accounts opened after 1983, or broker
accounts considered inactive in 1983.
<PAGE>
Except as explained in 5 above, other reportable payments are subject to
backup withholding only if 1 or 2 above applies. Certain payees and payments
are exempt from backup withholding and information reporting. See Payees and
Payments Exempt From Backup Withholding, below, and Example Payees and Payments
under Specific Instructions, below, if you are an exempt payee.
Payees and Payments Exempt From Backup Withholding.--The following is a list
of payees exempt from backup withholding and for which no information reporting
is required. For interest and dividends, all listed payees are exempt except
item (9). For broker transactions, payees listed in (1) through (13) and a
person registered under the Investment Advisers Act of 1940 who regularly acts
as a broker are exempt. Payments subject to reporting under sections 6041 and
6041A are generally exempt from backup withholding only if made to payees
described in items (1) through (7), except a corporation that provides medical
and health care services or bills and collects payments for such services is
not exempt from backup withholding or information reporting. Only payees
described in items (2) through (6) are exempt from backup withholding for
barter exchange transactions, patronage dividends, and payments by certain
fishing boat operators.
(1) A corporation. (2) An organization exempt from tax under section 501(a),
or an IRA, or a custodial account under section 403(b)(7). (3) The United
States or any of its agencies or instrumentalities. (4) A state, the District
of Columbia, a possession of the United States, or any of their political
subdivisions or instrumentalities. (5) A foreign government or any of its
political subdivisions, agencies, or instrumentalities. (6) An international
organization or any of its agencies or instrumentalities. (7) A foreign central
bank of issue. (8) A dealer in securities or commodities required to register
in the United States or a possession of the United States. (9) A futures
commission merchant registered with the Commodity Futures Trading Commission.
(10) A real estate investment trust. (11) An entity registered at all times
during the tax year under the Investment Company Act of 1940. (12) A common
trust fund operated by a bank under section 584(a). (13) A financial
institution. (14) A middleman known in the investment community as a nominee or
listed in the most recent publication of the American Society of Corporate
Secretaries, Inc., Nominee List. (15) A trust exempt from tax under section 664
or described in section 4947.
Payments of dividend and patronage dividends generally not subject to backup
withholding include the following:
. Payments to nonresident aliens subject to withholding under section 1441.
. Payments to partnerships not engaged in a trade or business in the United
States and that have at least one nonresident partner.
. Payments of patronage dividends not paid in money.
. Payments made by certain foreign organizations.
Payments of interest generally not subject to backup withholding include the
following:
. Payments of interest on obligations issued by individuals.
Note: You may be subject to backup withholding if this interest is $600 or
more and is paid in the course of the payer's trade or business and you have
not provided your correct TIN to the payer.
. Payments of tax-exempt interest (including exempt-interest dividends
under section 852).
. Payments described in section 6049(b)(5) to nonresident aliens.
. Payments on tax-free covenant bonds under section 1451.
. Payments made by certain foreign organizations.
. Mortgage interest paid by you.
Payments that are not subject to information reporting are also not subject
to backup withholding. For details, see sections 6041, 6041A(a), 6042, 6044,
6045, 6049, 6050A, and 6050N, and their regulations.
2
<PAGE>
PENALTIES
Failure To Furnish TIN.--If you fail to furnish your correct TIN to a
requester, you are subject to a penalty of $50 for each such failure unless
your failure is due to reasonable cause and not to willful neglect.
Civil Penalty for False Information With Respect to Withholding.--If you make
a false statement with no reasonable basis that results in no backup
withholding, you are subject to a $500 penalty.
Criminal Penalty for Falsifying Information.--Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
Misuse of TINs.--If the requester discloses or uses TINs in violation of
Federal law, the requester may be subject to civil and criminal penalties.
SPECIFIC INSTRUCTIONS
Name.--If you are an individual, you must generally provide the name shown on
your social security card. However, if you have changed your last name, for
instance, due to marriage, without informing the Social Security Administration
of the name change, please enter your first name, the last name shown on your
social security card, and your new last name.
If you are a sole proprietor, you must furnish your individual name and
either your SSN or EIN. You may also enter your business name or "doing
business as" name on the business name line. Enter your name(s) as shown on
your social security card and/or as it was used to apply for your EIN on Form
SS-4.
SIGNING THE CERTIFICATION.
1. Interest, Dividend, and Barter Exchange Accounts Opened Before 1984 and
Broker Accounts Considered Active During 1983. You are required to furnish your
correct TIN, but you are not required to sign the certification.
2. Interest, Dividend, Broker, and Barter Exchange Accounts Opened After 1983
and Broker Accounts Considered Inactive During 1983. You must sign the
certification or backup withholding will apply. If you are subject to backup
withholding and you are merely providing your correct TIN to the requester, you
must cross out item 2 in the certification before signing the form.
3. Real Estate Transactions. You must sign the certification. You may cross
out item 2 of the certification.
4. Other Payments. You are required to furnish your correct TIN, but you are
not required to sign the certification unless you have been notified of an
incorrect TIN. Other payments include payments made in the course of the
requester's trade or business for rents, royalties, goods (other than bills for
merchandise), medical and health care services, payments to a nonemployee for
services (including attorney and accounting fees), and payments to certain
fishing boat crew members.
5. Mortgage Interest Paid by You, Acquisition or Abandonment of Secured
Property, or IRA Contributions. You are required to furnish your correct TIN,
but you are not required to sign the certification.
6. Exempt Payees and Payments. If you are exempt from backup withholding, you
should complete this form to avoid possible erroneous backup withholding. Enter
your correct TIN in Part I, write "EXEMPT" in the block in Part II, and sign
and date the form. If you are a nonresident alien or foreign entity not subject
to backup withholding, give the requester a complete Form W-8, Certificate of
Foreign Status.
7. TIN "Applied for." Follow the instructions under How To Obtain a TIN, on
page 1, and sign and date this form.
3
<PAGE>
Signature.--For a joint account, only the person whose TIN is shown in Part I
should sign.
Privacy Act Notice.--Section 6109 requires you to furnish your correct TIN to
persons who must file information returns with the IRS to report interest,
dividends, and certain other income paid to you, mortgage interest you paid,
the acquisition or abandonment of secured property, or contributions you made
to an IRA. The IRS uses the numbers for identification purposes and to help
verify the accuracy of your tax return. You must provide your TIN whether or
not you are required to file a tax return. Payers must generally withhold 31%
of taxable interest, dividend, and certain other payments to a payee who does
not furnish a TIN to a payer. Certain penalties may also apply.
WHAT NAME AND NUMBER TO GIVE THE REQUESTER
<TABLE>
<S> <C>
For this type of account: Give name and SSN of:
1.Individual The individual
2.Two or more individuals The actual owner of the account or, if
(joint account) combined funds, the first individual on the
account(1)
3. Custodian account of a The minor(2)
minor (Uniform Gift to
Minors Act)
4.a. The usual revocable The grantor-trustee(1)
savings trust (grantor
is also trustee)
b. So-called trust account The actual owner(1)
that is not a legal or
valid trust under state
law
5.Sole proprietorship The owner(3)
For this type of account: Give name and EIN of:
6.Sole proprietorship The owner(3)
7.A valid trust, estate, or Legal entity(4)
pension trust
8.Corporate The corporation
9. Association, club, The organization
religious, charitable,
educational, or other
tax-exempt organization
10. Partnership The partnership
11. A broker or registered The broker or nominee
nominee
12. Account with the The public entity
Department of
Agriculture in the name
of a public entity (such
as a state or local
government, school
district or prison) that
receives agriculture
program payments
</TABLE>
- --------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's SSN.
(3) Show your individual name. You may also enter your business name. You may
use your SSN or EIN.
(4) List first and circle the name of the legal trust, estate, or pension
trust. (Do not furnish the TIN of the personal representative or trustee
unless the legal entity itself is not designated in the account title.)
Note: If no name is circled when there is more than one name, the number
will be considered to be that of the first name listed.
4
<PAGE>
TRANSAMERICA CORPORATION
EMPLOYEES STOCK SAVINGS PLAN
To:Participants in the Transamerica Corporation Employees Stock Savings Plan
(the "Plan")
Re:Transamerica Corporation's Offer to Purchase for Cash Up to 4,500,000 Shares
of its Common Stock
Date:May 9, 1994
This memorandum is being sent to you because you are a participant in the
Transamerica Corporation Employees Stock Savings Plan (the "Plan"). The Plan is
described in the Summary Plan Description and Prospectus dated September 30,
1992, and the supplements thereto (the "SPD/Prospectus"). Please refer to your
SPD/Prospectus for more information on the Plan.
TRANSAMERICA CORPORATION IS OFFERING TO PURCHASE SHARES OF ITS COMMON STOCK
Transamerica Corporation (the "Company") currently is inviting its
stockholders to tender shares of the Company's common stock, $1.00 par value
(the "Shares"), for sale directly to the Company. Stockholders are being
invited to tender their shares at prices not greater than $55 per share nor
less than $48 per share. The details of the invitation are described in the
Company's Offer to Purchase dated May 9, 1994 (the "Offer to Purchase") and the
related Letter of Transmittal (which together constitute the "Offer"). Copies
of the Offer to Purchase and of the Letter of Transmittal, and related
materials, which are being sent to the Company's stockholders generally, are
enclosed for your review.
PLEASE NOTE THAT THE ENCLOSED LETTER OF TRANSMITTAL IS BEING FURNISHED TO YOU
FOR YOUR INFORMATION ONLY. The Letter of Transmittal cannot be used to tender
the Shares held in your Plan account. Also, please note that if you hold an
"odd lot" as described in Section 2 of the Offer to Purchase, the special odd
lot purchase rule will not apply to your Plan Shares. That is, proration (see
Section 1 of the Offer to Purchase) will apply to any Shares tendered from the
Plan, even if you are an odd lot holder.
YOUR DECISION WHETHER TO TENDER
As a participant in the Plan, you may direct the Plan's Trustee (Bank of
America NT&SA) to tender Shares allocated to your Plan account pursuant to the
Offer. HOWEVER, PLEASE BE AWARE THAT TENDERING SHARES FROM YOUR PLAN ACCOUNT
COULD HAVE NEGATIVE TAX CONSEQUENCES FOR YOU. (SEE "POTENTIAL NEGATIVE TAX
CONSEQUENCES OF TENDERING SHARES" BELOW.) ALSO, THE PROCEEDS FROM ANY SALE OF
SHARES FROM YOUR PLAN ACCOUNT WILL NOT BE DISTRIBUTED TO YOU. INSTEAD, ANY
PROCEEDS WILL CONTINUE TO BE HELD IN YOUR PLAN ACCOUNT, AND WILL BE REINVESTED
IN THE AVAILABLE PLAN INVESTMENT ALTERNATIVES. (See "Reinvestment of Sale
Proceeds" and "Company Matching Contribution Account" below.)
IF YOU DO NOT WISH TO TENDER YOUR SHARES, YOU DO NOT NEED TO TAKE ANY ACTION.
YOU MAY DISREGARD THE ENCLOSED ELECTION FORM.
HOW TO TENDER SHARES
If you wish to direct the Trustee to tender your Shares, you must complete
and return the enclosed Election Form in accordance with the instructions
specified on the Election Form. If you do not wish to tender your Shares, you
do not need to complete the Election Form, and you should not return the
Election Form. If you do not return the Election Form, the Trustee will NOT
tender your Shares.
Before deciding whether or not to tender your Shares, please carefully read
the enclosed materials. If you decide to tender some or all of your Shares,
please be aware that YOUR ELECTION TO TENDER WILL BE EFFECTIVE ONLY IF YOUR
PROPERLY COMPLETED ELECTION FORM IS RECEIVED BY THE STOCK SAVINGS PLAN
ADMINISTRATION DEPARTMENT AT ITS ADDRESS SET FORTH ON THE ELECTION FORM NO
LATER THAN 5:00 P.M., PACIFIC DAYLIGHT TIME, ON
<PAGE>
FRIDAY, MAY 27, 1994. Election Forms that are received after this deadline, and
Election Forms which are not properly completed, will not be accepted. Examples
of improperly completed Election Forms include Forms which are not signed, and
Forms which contain incorrect or incomplete information. Your decision to
tender (or not to tender) and reinvestment election will remain confidential.
REINVESTMENT OF SALE PROCEEDS
If you choose to tender any of your Shares, and the Shares actually are
purchased by the Company, the proceeds from the sale of Shares will NOT be
distributed to you. As required by the Internal Revenue Code and the Plan, the
sale proceeds will continue to be held under the Plan. All sale proceeds will
continue to be subject to all Plan rules. The sale proceeds will be reinvested
in the available Plan investment alternatives, in accordance with the following
rules.
EMPLOYEE CONTRIBUTION ACCOUNTS
If Shares attributable to your employee contribution account are tendered and
sold, the proceeds will be reinvested according to the instructions you enter
in Part 3 of the enclosed Election Form. You may elect to reinvest the sale
proceeds in any of the other investment alternatives listed in the enclosed
Election Form. Please refer to your SPD/Prospectus for more information on the
available investment alternatives. (Not all participants have shares of
Transamerica common stock credited to their Plan employee contribution
accounts. Please refer to your "SSP Account Summary" to determine if your
employee contribution accounts are credited with Shares.)
COMPANY MATCHING CONTRIBUTION ACCOUNT
PARTICIPANTS WHO ARE UNDER AGE 60: IF YOU ARE UNDER AGE 60, AND SHARES FROM
YOUR COMPANY MATCHING CONTRIBUTION ACCOUNT ARE TENDERED AND SOLD, THE PROCEEDS
WILL BE REINVESTED IN SHARES OF TRANSAMERICA COMMON STOCK, AS REQUIRED UNDER
THE TERMS OF THE PLAN.
PLEASE BE AWARE THAT THERE CAN BE NO ASSURANCE REGARDING THE SHARE PRICE WHEN
THE SALE PROCEEDS ARE REINVESTED. THE PRICE AT WHICH YOUR SHARES ARE SOLD MAY
BE HIGHER OR LOWER THAN THE PRICE AT WHICH THE PROCEEDS ARE REINVESTED IN
SHARES. THUS, IF YOU SELL SHARES TO THE COMPANY PURSUANT TO THE TENDER OFFER,
IT IS POSSIBLE THAT WHEN THE PROCEEDS ARE REINVESTED IN SHARES, THE
REINVESTMENT PURCHASE PRICE MAY BE HIGHER THAN THE SALE PRICE. THIS WOULD
RESULT IN A DECREASE IN THE NUMBER OF SHARES OF TRANSAMERICA COMMON STOCK
CREDITED TO YOUR COMPANY MATCHING CONTRIBUTION ACCOUNT. IT IS ALSO POSSIBLE
THAT THE REINVESTMENT PRICE WILL BE LOWER THAN THE TENDER OFFER SALE PRICE,
WHICH WOULD RESULT IN AN INCREASED NUMBER OF SHARES BEING CREDITED TO YOUR
ACCOUNT. THE KEY POINT IS THAT NO ONE CAN ASSURE YOU WHAT THE REINVESTMENT
PRICE WILL BE, SINCE IT IS DEPENDENT ON MARKET CONDITIONS AT THE TIME. ALSO, BE
SURE TO READ THE NEXT SECTION REGARDING POSSIBLE NEGATIVE TAX CONSEQUENCES OF
TENDERING SHARES FROM YOUR PLAN ACCOUNT.
PARTICIPANTS WHO ARE AGE 60 OR OVER: If you are at least age 60, and Shares
from your Company matching contribution account are tendered and sold, the
proceeds will be reinvested in accordance with the instructions that you enter
in Part 3 of the enclosed Election Form. That is, the investment election that
you enter in Part 3 of the Election Form will apply to both your employee and
Company matching contributions. (Since February 1993, Plan participants who are
age 60 and over have been eligible to reallocate the investment of their
Company matching contribution accounts.) HOWEVER, IF YOU ELECT TO REINVEST IN
SHARES OF TRANSAMERICA COMMON STOCK, PLEASE SEE THE PRECEDING PARAGRAPH
(REGARDING THE REINVESTMENT PRICE FOR SHARES OF TRANSAMERICA COMMON STOCK).
Also, be sure to read the next section regarding possible negative tax
consequences of tendering your Shares from your Plan account.
POTENTIAL NEGATIVE TAX CONSEQUENCES OF TENDERING SHARES
TENDERING AND SELLING SHARES FROM YOUR PLAN ACCOUNTS NOW COULD HAVE NEGATIVE
FUTURE TAX CONSEQUENCES FOR YOU WITH RESPECT TO ANY SHARES THAT EVENTUALLY ARE
DISTRIBUTED TO YOU FROM THE PLAN. As explained in your
2
<PAGE>
SPD/Prospectus, Shares that you receive in a distribution from the Plan
generally are eligible for favorable tax treatment. Specifically, any "net
unrealized appreciation" in the shares is not taxable to you until you sell the
shares. If you tender and sell shares from your Plan accounts, and the proceeds
are reinvested in Shares (for example, because you are under age 60 and have
Company matching contributions which are required under the Plan to be
reinvested in Shares), any net unrealized appreciation in the Shares that are
sold will be lost and the cost of the shares in your account will be
recalculated to reflect current market prices. If your net unrealized
appreciation is lost, the amount of tax that you owe immediately upon receipt
of a Plan distribution may be greater than if you had not tendered and sold
your Shares in the Offer.
IF YOU MAKE ANOTHER PLAN TRANSACTION
If you elect to tender Shares, you will not be permitted to make any other
Plan transactions for the month of June 1994. For example, if you tender
Shares, you will not be permitted to make an investment transfer, or take a
loan or hardship withdrawal during June 1994. This is necessary in order for
the Stock Savings Plan Administration Department to coordinate and complete the
tender process. The only exceptions are for distributions following termination
of employment and for qualified domestic relations orders ("QDROs"). If you are
scheduled to receive a distribution from the Plan during June, your
distribution will be processed and your tender election will not be accepted.
If a QDRO is pending against your account, your tender election will not be
accepted, and you will not be permitted to tender any Shares.
WITHDRAWING YOUR DECISION TO TENDER
As more fully described in Section 4 of the Offer to Purchase, tenders will
be deemed irrevocable unless withdrawn by the dates specified therein. If you
send in an Election Form to tender Shares, and you decide to withdraw your
election, you may do so by sending a notice of withdrawal to the Stock Savings
Plan Administration Department. The notice of withdrawal will be effective only
if it is in writing and is received by the Stock Savings Plan Administration
Department on or before 5:00 p.m. P.D.T. on May 27, 1994 at the following
address: Transamerica Systems & Administration, P.O. Box 3899, Los Angeles, CA
90051-1899. Any notice of withdrawal must specify your name, your social
security number, the name of the Plan, the percentage(s) of Shares tendered,
and the percentage(s) of Shares to be withdrawn. Upon receipt of a timely
written notice of withdrawal, previous instructions to tender with respect to
such Shares will be deemed cancelled and the Trustee will not tender such
Shares. If you later wish to retender Shares, you may call the Stock Savings
Plan Administration Department at 213/742-4430 to obtain a new Election Form.
Any new Election Form must be submitted to the Stock Savings Plan
Administration Department on or before 5:00 p.m., on May 27, 1994.
IF YOU HAVE QUESTIONS
If you have any questions about the Offer or any of the other matters
discussed above, please call the Stock Savings Plan Administration Department,
telephone number 213/742-4430. If you have questions about the Plan, please
refer to your SPD/Prospectus. Additional copies of the SPD/Prospectus may be
obtained from Human Resources/Benefits Department.
3
<PAGE>
TRANSAMERICA CORPORATION
EMPLOYEES STOCK SAVINGS PLAN
ELECTION FORM
TO TENDER SHARES OF TRANSAMERICA COMMON STOCK
Important Information about this Election Form:
(1) Before completing this Form, please carefully read all of the enclosed
documents.
(2) You do not need to complete this Form if you do not wish to tender any
shares.
(3) In order for your tender to be accepted, you must properly complete Parts
1, 2, 3, and 4 of this Election Form and the properly completed Form must
be received by the SSP Administration Department at Transamerica Systems &
Administration, P.O. Box 3899, Los Angeles, CA 90051-1899 by 5:00 p.m.,
Pacific Daylight Time, on Friday, May 27, 1994.
In accordance with the materials that were enclosed with this Election Form,
including the memorandum to participants in the Transamerica Corporation (the
"Company") Employees Stock Savings Plan (the "Plan") dated May 9, 1994, and
the Company's Offer to Purchase dated May 9, 1994, I hereby instruct Bank of
America, NT&SA, the Trustee of the Plan (the "Trustee"), to tender shares of
Common Stock of the Company, par value $1.00 per share (the "Shares"),
allocated to my Plan account prior to the expiration of such Offer to
Purchase, as follows:
PART 1: ELECTION TO TENDER SHARES
(If you wish to tender Shares from your employee contribution accounts,
insert the percentage of such shares that you wish to tender.)
EMPLOYEE CONTRIBUTION ACCOUNTS: I WISH TO TENDER % OF THE SHARES IN MY
EMPLOYEE CONTRIBUTION ACCOUNTS AT THE PRICE INDICATED BELOW IN "PART 2: PRICE
AT WHICH TO TENDER SHARES".
(If you wish to tender Shares from your Company matching contribution
account, insert the percentage of such shares that you wish to tender.)
COMPANY MATCHING CONTRIBUTION ACCOUNT: I WISH TO TENDER % OF THE SHARES IN
MY COMPANY MATCHING CONTRIBUTION ACCOUNT AT THE PRICE INDICATED BELOW IN "PART
2: PRICE AT WHICH TO TENDER SHARES".
PART 2: PRICE AT WHICH TO TENDER SHARES
(If you tendered Shares in Part 1 above, please check the box indicating the
price at which you wish to tender the Shares (from your employee contribution
accounts and/or Company matching accounts). Only one box may be checked. If
more than one box is checked, or if no box is checked, there is no valid
tender of Shares.)
I WISH MY SHARES TENDERED AT THE PRICE INDICATED BELOW:
[_] $48.000 [_] $49.000 [_] $50.000 [_] $51.000 [_] $52.000 [_] $53.000
[_] $54.000
[_] $48.125 [_] $49.125 [_] $50.125 [_] $51.125 [_] $52.125 [_] $53.125
[_] $54.125
[_] $48.250 [_] $49.250 [_] $50.250 [_] $51.250 [_] $52.250 [_] $53.250
[_] $54.250
[_] $48.375 [_] $49.375 [_] $50.375 [_] $51.375 [_] $52.375 [_] $53.375
[_] $54.375
[_] $48.500 [_] $49.500 [_] $50.500 [_] $51.500 [_] $52.500 [_] $53.500
[_] $54.500
[_] $48.625 [_] $49.625 [_] $50.625 [_] $51.625 [_] $52.625 [_] $53.625
[_] $54.625
[_] $48.750 [_] $49.750 [_] $50.750 [_] $51.750 [_] $52.750 [_] $53.750
[_] $54.750
[_] $48.875 [_] $49.875 [_] $50.875 [_] $51.875 [_] $52.875 [_] $53.875
[_] $54.875
[_] $55.000
<PAGE>
PART 3: REINVESTMENT OF SALE PROCEEDS
(Please list below how you wish to reinvest your sale proceeds (if any). Your
elections must be in multiples of 10% (for example, 10%, 20%, 30%, etc.), and
they must add to 100%. If your election does not meet these requirements, your
Election Form will not be accepted. Please refer to your SPD/Prospectus for
more information on the available investment funds.)
As explained in the enclosed memorandum to Plan participants, if you are
under age 60, your reinvestment election will apply only to proceeds from your
employee contribution accounts; any sale proceeds from your Company matching
contribution accounts will be reinvested in Shares. If you are age 60 or over,
your reinvestment election will apply to proceeds from both your employee
contribution accounts and Company matching contribution account.
I WANT ANY PROCEEDS FROM THE SALE OF MY SHARES REINVESTED AS FOLLOWS:
Transamerica T. Rowe Price
Cash Reserve Fund % Equity Income %
Fund
Transamerica
Transamerica Equity Index Fund %
Fixed Income %
Fund
Transamerica
Transamerica Equity Fund %
Bond Fund %
Transamerica
Dodge & Cox Common Stock %
Balanced Fund %
Add up all of the percentages in this section. THEY MUST TOTAL 100% %
TOTAL
PART 4: YOUR SIGNATURE AND ACKNOWLEDGEMENT
My signature below indicates that I have received and read the memorandum to
Plan participants dated May 9, 1994, and the Offer to Purchase dated May 9,
1994. I agree to all of the terms and conditions described in the enclosed
materials.
-------------------------------------
Signature
-------------------------------------
Please print name
-------------------------------------
Social Security Number
-------------------------------------
Work telephone number
-------------------------------------
Home telephone number
2
<PAGE>
LOGO
May 9, 1994
Dear Stockholder:
Transamerica Corporation is offering to purchase up to 4,500,000 shares of
its common stock (representing approximately 6.0% of the currently outstanding
shares), at prices not greater than $55 nor less than $48 per share. The
Company is conducting the Offer through a procedure commonly referred to as a
"Dutch Auction." This procedure allows you to select the price within that
price range at which you are willing to sell all or a portion of your shares to
the Company.
Based upon the number of shares tendered and the prices specified by the
tendering stockholders, the Company will determine the single per share price
within that price range that will allow it to buy 4,500,000 shares (or such
lesser number of shares that are properly tendered). All of the shares that are
properly tendered at prices at or below that purchase price (and are not
withdrawn) will, subject to possible proration, conditional tenders and
provisions relating the tender of "odd lots," be purchased for cash at that
purchase price, net to the selling stockholder. All other shares that have been
tendered and not purchased will be returned to the stockholder.
If you do not wish to participate in the Offer, you do not need to take any
action.
The Offer is explained in detail in the enclosed Offer to Purchase and Letter
of Transmittal. If you want to tender your shares, the instructions on how to
tender shares are also explained in detail in the enclosed materials. I
encourage you to read carefully these materials and the enclosed copy of the
Company's Form 10-Q for the first quarter of 1994 before making any decision
with respect to the Offer.
The Company believes that the purchase of its shares of common stock at this
time represents an attractive investment opportunity that will benefit the
Company and its stockholders.
Neither the Company nor its Board of Directors makes any recommendation to
any stockholder whether to tender all or any shares. Neither I nor any other
director or executive officer intends to tender shares pursuant to the Offer.
Sincerely,
/s/ FRANK C. HERRINGER
Frank C. Herringer
President and Chief Executive Officer
<PAGE>
TRANSAMERICA CORPORATION
Notice of Guaranteed Delivery
of Shares of Common Stock
(Including the Associated Preference Stock Purchase Rights)
This form, or a form substantially equivalent to this form, must be used to
accept the Offer (as defined below) if certificates for the shares of Common
Stock of Transamerica Corporation are not immediately available, if the
procedure for book-entry transfer cannot be completed on a timely basis, or if
time will not permit all other documents required by the Letter of Transmittal
to be delivered to the Depositary on or prior to the Expiration Date (as
defined in Section 1 of the Offer to Purchase defined below). Such form may be
delivered by hand or transmitted by mail, or (for Eligible Institutions only)
by facsimile transmission, to the Depositary. See Section 3 of the Offer to
Purchase. THE ELIGIBLE INSTITUTION, WHICH COMPLETES THIS FORM, MUST COMMUNICATE
THE GUARANTEE TO THE DEPOSITARY AND MUST DELIVER THE LETTER OF TRANSMITTAL AND
CERTIFICATES FOR SHARES TO THE DEPOSITARY WITHIN THE TIME SHOWN HEREIN. FAILURE
TO DO SO COULD RESULT IN A FINANCIAL LOSS TO SUCH ELIGIBLE INSTITUTION.
To: FIRST CHICAGO TRUST COMPANY OF NEW YORK, Depositary
By Mail: Facsimile Transmission: By Hand or By Overnight
Courier:
(201) 222-4720 14 Wall Street, 8th Floor
P.O. Box 2560 or Suite 4680
Mail Suite 4660 (201) 222-4721 New York, New York 10005
Jersey City, New Jersey
07303-2560
Confirm by Telephone:
(201) 222-4707
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN ONE LISTED ABOVE
WILL NOT CONSTITUTE A VALID DELIVERY.
THIS FORM IS NOT TO BE USED TO GUARANTEE SIGNATURES. IF A SIGNATURE ON A
LETTER OF TRANSMITTAL IS REQUIRED TO BE GUARANTEED BY AN ELIGIBLE INSTITUTION
UNDER THE INSTRUCTIONS THERETO, SUCH SIGNATURE GUARANTEE MUST APPEAR IN THE
APPLICABLE SPACE PROVIDED IN THE SIGNATURE BOX ON THE LETTER OF TRANSMITTAL.
Ladies and Gentlemen:
The undersigned hereby tenders to Transamerica Corporation, a Delaware
corporation (the "Company"), upon the terms and subject to the conditions set
forth in the Offer to Purchase, dated May 9, 1994 (the "Offer to Purchase"),
and the related Letter of Transmittal (which together constitute the "Offer"),
receipt of which is hereby acknowledged, the number of shares of Common Stock,
par value $1.00 per share (the "Shares") (including the associated preference
stock purchase rights (the "Rights") issued pursuant to the Rights Agreement,
dated as of July 17, 1986, as amended, between the Company and First Chicago
Trust Company of New York, as Rights Agent), of the Company listed below,
pursuant to the guaranteed delivery procedure set forth in Section 3 of the
Offer to Purchase.
Number of Shares:
- -------------------------------------
Certificate Nos.: (if available)
- ------------------------------------- -------------------------------------
- ------------------------------------- Signature(s)
If shares will be tendered by book- -------------------------------------
entry transfer: Name(s) (Please Print)
Name of Tendering Institution: -------------------------------------
- ------------------------------------- Address
-------------------------------------
Account No. __________ at (check one) -------------------------------------
[_] The Depository Trust Company Area Code and Telephone Number
[_] Midwest Securities Trust Company
[_] Philadelphia Depository Trust
Company
<PAGE>
PRICE (IN DOLLARS) PER SHARE
AT WHICH SHARES ARE BEING TENDERED
- --------------------------------------------------------------------------------
CHECK ONLY ONE BOX. IF MORE THAN ONE BOX IS CHECKED, OR IF NO BOX IS CHECKED,
THERE IS NO VALID TENDER OF SHARES.
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
[_] $48.000 [_] $49.000 [_] $50.000 [_] $51.000 [_] $52.000 [_] $53.000 [_] $54.000
[_] $48.125 [_] $49.125 [_] $50.125 [_] $51.125 [_] $52.125 [_] $53.125 [_] $54.125
[_] $48.250 [_] $49.250 [_] $50.250 [_] $51.250 [_] $52.250 [_] $53.250 [_] $54.250
[_] $48.375 [_] $49.375 [_] $50.375 [_] $51.375 [_] $52.375 [_] $53.375 [_] $54.375
[_] $48.500 [_] $49.500 [_] $50.500 [_] $51.500 [_] $52.500 [_] $53.500 [_] $54.500
[_] $48.625 [_] $49.625 [_] $50.625 [_] $51.625 [_] $52.625 [_] $53.625 [_] $54.625
[_] $48.750 [_] $49.750 [_] $50.750 [_] $51.750 [_] $52.750 [_] $53.750 [_] $54.750
[_] $48.875 [_] $49.875 [_] $50.875 [_] $51.875 [_] $52.875 [_] $53.875 [_] $54.875
[_] $55.000
</TABLE>
CONDITIONAL TENDER ODD LOTS
UNLESS THIS BOX HAS BEEN COM- To be completed ONLY if Shares
PLETED AND A MINIMUM SPECIFIED, are being tendered or on behalf of
THE TENDER WILL BE DEEMED UNCONDI- persons owning beneficially an ag-
TIONAL (see Sections 6 and 13 of gregate of fewer than 100 Shares
the Offer to Purchase). as of the close of business on May
6, 1994.
Minimum number of Shares that
must be purchased, if any are The undersigned either (check
purchased: one):
Shares [_]was the beneficial owner of an
aggregate of fewer than 100
Shares (including Shares held
in the Transamerica Corporation
Employees Stock Savings Plan or
the Transamerica Corporation
Dividend Reinvestment Plan) as
of the close of business on May
6, 1994, all of which are ten-
dered, or
[_]is a broker, dealer, commercial
bank, trust company or other
nominee that (i) is tendering,
for the beneficial owners
thereof, Shares with respect to
which it is the record owner,
and (ii) believes, based upon
representations made to it by
each such beneficial owner,
that such beneficial owner
owned an aggregate of fewer
than 100 Shares (including
Shares held in the Transamerica
Corporation Employees Stock
Savings Plan or the Transamer-
ica Corporation Dividend Rein-
vestment Plan) as of the close
of business on May 6, 1994 and
is tendering all of such
Shares.
2
<PAGE>
GUARANTEE (NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm that is a member of a registered national securities
exchange or the National Association of Securities Dealers, Inc. or a
commercial bank or trust company having an office or correspondent in the
United States, guarantees (a) that the above-named person(s) has a net long
position in the Shares (and associated Rights) being tendered within the
meaning of Rule 14e-4 promulgated under the Securities Exchange Act of 1934, as
amended, (b) that such tender of Shares complies with Rule 14e-4 and (c) to
deliver to the Depositary at one of its addresses set forth above
certificate(s) for the Shares tendered hereby, in proper form for transfer, or
a confirmation of the book-entry transfer of the Shares tendered hereby into
the Depositary's account at The Depository Trust Company, Midwest Securities
Trust Company or Philadelphia Depository Trust Company, in each case together
with a properly completed and duly executed Letter(s) of Transmittal (or
facsimile(s) thereof), with any required signature guarantee(s) and any other
required documents, all within five New York Stock Exchange, Inc. trading days
after the date hereof.
- ------------------------------------- -------------------------------------
Name of Firm Authorized Signature
- ------------------------------------- -------------------------------------
Address Name
- ------------------------------------- -------------------------------------
City, State, Zip Code Title
- -------------------------------------
Area Code and Telephone Number
Dated: _______________________ , 1994
DO NOT SEND STOCK CERTIFICATES WITH THIS FORM.
YOUR STOCK CERTIFICATES MUST BE SENT WITH
THE LETTER OF TRANSMITTAL.
3
<PAGE>
MORGAN STANLEY & CO.
Incorporated
1251 Avenue of the Americas
New York, New York 10020
TRANSAMERICA CORPORATION
Offer to Purchase for Cash
Up to 4,500,000 Shares of its Common Stock
(Including the Associated Preference Stock Purchase Rights)
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON MONDAY, JUNE 6, 1994, UNLESS THE OFFER IS
EXTENDED.
May 9, 1994
To Brokers, Dealers, Commercial
Banks, Trust Companies and
Other Nominees:
In our capacity as Dealer Manager, we are enclosing the material listed below
relating to the offer of Transamerica Corporation, a Delaware corporation (the
"Company"), to purchase up to 4,500,000 shares of its Common Stock, par value
$1.00 per share (the "Shares") (including the associated preference stock
purchase rights issued pursuant to the Rights Agreement, dated as of July 17,
1986, as amended, between the Company and First Chicago Trust Company of New
York, as the Rights Agent), at prices not greater than $55 nor less than $48
per Share, net to the seller in cash, specified by tendering stockholders, upon
the terms and subject to the conditions set forth in the Offer to Purchase,
dated May 9, 1994 (the "Offer to Purchase"), and in the related Letter of
Transmittal (which together constitute the "Offer"). The Company will determine
a single price (not greater than $55 nor less than $48 per Share) that it will
pay for Shares validly tendered pursuant to the Offer (the "Purchase Price"),
taking into account the number of Shares so tendered and the prices specified
by tendering stockholders. The Company will select the Purchase Price that will
enable it to purchase 4,500,000 Shares (or such lesser number of Shares, as is
validly tendered at prices not greater than $55 nor less than $48 per Share)
pursuant to the Offer. The Company will purchase all Shares validly tendered at
prices at or below the Purchase Price and not withdrawn, upon the terms and
subject to the conditions of the Offer, including the provisions relating to
proration and conditional tenders described in the Offer to Purchase.
The Purchase Price will be paid in cash, net to the seller, with respect to
all Shares purchased. Shares tendered at prices in excess of the Purchase Price
and Shares not purchased because of proration and conditional tenders will be
returned.
THE OFFER IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF SHARES BEING
TENDERED. The Offer is, however, subject to other conditions. See Section 7 of
the Offer to Purchase.
We are asking you to contact your clients for whom you hold Shares registered
in your name (or in the name of your nominee) or who hold Shares registered in
their own names. Please bring the Offer to their attention as promptly as
possible. The Company will, upon request, reimburse you for reasonable and
customary handling and mailing expenses incurred by you in forwarding any of
the enclosed materials to your clients.
For your information and for forwarding to your clients, we are enclosing the
following documents:
1. The Offer to Purchase.
2. The Letter of Transmittal for your use and for the information of your
clients.
3. A letter to stockholders of the Company from the President and Chief
Executive Officer of the Company.
4. The Company's quarterly report on Form 10-Q for the first quarter of
1994.
<PAGE>
5. The Notice of Guaranteed Delivery to be used to accept the Offer if
the Shares and all other required documents cannot be delivered to the
Depositary by the Expiration Date (as defined in the Offer to Purchase).
6. A letter which may be sent to your clients for whose accounts you hold
Shares registered in your name or in the name of your nominee, with space
for obtaining such clients' instructions with regard to the Offer.
7. Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9 providing information
relating to backup federal income tax withholding.
8. A return envelope addressed to First Chicago Trust Company of New
York, the Depositary.
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE NOTE
THAT THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON MONDAY, JUNE 6, 1994, UNLESS THE OFFER IS
EXTENDED.
The Company will not pay any fees or commissions to any broker, dealer or
other person for soliciting tenders of Shares pursuant to the Offer (other
than the Dealer Manager). The Company will, upon request, reimburse brokers,
dealers, commercial banks and trust companies for reasonable and customary
handling and mailing expenses incurred by them in forwarding materials
relating to the Offer to their customers. The Company will pay all stock
transfer taxes applicable to its purchase of Shares pursuant to the Offer,
subject to Instruction 7 of the Letter of Transmittal.
As described in the Offer to Purchase, if more than 4,500,000 Shares have
been validly tendered at or below the Purchase Price and not withdrawn on or
prior to the Expiration Date, as defined in Section 1 of the Offer to
Purchase, the Company will purchase Shares in the following order of priority:
(a) all Shares validly tendered at or below the Purchase Price and not
withdrawn on or prior to the Expiration Date by any stockholder who owned
beneficially an aggregate of fewer than 100 Shares (including any Shares held
in the Transamerica Corporation Employees Stock Savings Plan (the "Stock
Savings Plan") and the Transamerica Corporation Dividend Reinvestment Plan
(the "Reinvestment Plan")) as of the close of business on May 6, 1994 and who
validly tenders all of such Shares (partial and conditional tenders will not
qualify for this preference) and completes the box captioned "Odd Lots" on the
Letter of Transmittal and, if applicable, the Notice of Guaranteed Delivery
(provided that all tendered Shares held in the Stock Savings Plan shall be
subject to proration as provided in clause (b) below); and (b) after purchase
of all the foregoing Shares, subject to the conditional tender provisions
described in Section 6 of the Offer to Purchase, all other Shares (including
Stock Savings Plan Shares) validly tendered at or below the Purchase Price and
not withdrawn on or prior to the Expiration Date on a pro rata basis, if
necessary (with appropriate adjustments to avoid purchases of fractional
Shares, other than Shares held in the Stock Savings Plan or the Reinvestment
Plan).
NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO
ANY STOCKHOLDER AS TO WHETHER TO TENDER ALL OR ANY SHARES. STOCKHOLDERS MUST
MAKE THEIR OWN DECISION AS TO WHETHER TO TENDER SHARES AND, IF SO, HOW MANY
SHARES TO TENDER. THE COMPANY HAS BEEN ADVISED THAT NO DIRECTOR OR EXECUTIVE
OFFICER INTENDS TO TENDER SHARES PURSUANT TO THE OFFER.
Any questions or requests for assistance or additional copies of the
enclosed materials may be directed to the Information Agent or the Dealer
Manager at their respective addresses and telephone numbers set forth on the
back cover of the enclosed Offer to Purchase.
Very truly yours,
MORGAN STANLEY & CO.
Incorporated
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
THE AGENT OF THE COMPANY, THE DEALER MANAGER, THE INFORMATION AGENT OR THE
DEPOSITARY, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE
ANY STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN
THE DOCUMENTS ENCLOSED HEREWITH AND THE STATEMENTS CONTAINED THEREIN.
2
<PAGE>
TRANSAMERICA CORPORATION
Offer to Purchase for Cash
Up to 4,500,000 Shares of its Common Stock
(Including the Associated Preference Stock Purchase Rights)
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON MONDAY JUNE 6, 1994, UNLESS THE OFFER IS
EXTENDED
To Our Clients:
Enclosed for your consideration are the Offer to Purchase, dated May 9, 1994
(the "Offer to Purchase"), and the related Letter of Transmittal (which
together constitute the "Offer") setting forth an offer by Transamerica
Corporation, a Delaware corporation (the "Company"), to purchase up to
4,500,000 shares of its Common Stock, par value $1.00 per share (the "Shares")
(including the associated preference stock purchase rights issued pursuant to
the Rights Agreement, dated as of July 17, 1986, as amended, between the
Company and First Chicago Trust Company of New York, as the Rights Agent), at
prices not greater than $55 nor less than $48 per Share, net to the seller in
cash, specified by tendering stockholders, upon the terms and subject to the
conditions of the Offer. The Company will determine a single per Share price
(not greater than $55 nor less than $48 per Share) that it will pay for the
Shares validly tendered pursuant to the Offer and not withdrawn (the "Purchase
Price"), taking into account the number of Shares so tendered and the prices
specified by tendering stockholders. The Company will select the Purchase Price
that will enable it to purchase 4,500,000 Shares (or such lesser number of
Shares as are validly tendered at prices not greater than $55 nor less than $48
per Share) pursuant to the Offer. The Company will purchase all Shares validly
tendered at prices at or below the Purchase Price and not withdrawn, upon the
terms and subject to the conditions of the Offer, including the provisions
thereof relating to proration and conditional tenders.
We are the holder of record of Shares held for your account. A tender of such
Shares can be made only by us as the holder of record and pursuant to your
instructions. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR
INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER SHARES HELD BY US FOR YOUR
ACCOUNT.
We request instructions as to whether you wish us to tender any or all of the
Shares held by us for your account, upon the terms and subject to the
conditions set forth in the Offer to Purchase and the Letter of Transmittal.
Your attention is invited to the following:
(1) You may tender Shares at prices (in multiples of $.125), not greater
than $55 nor less than $48 per Share, as indicated in the attached
instruction form, net to you in cash.
(2) The Offer is for up to 4,500,000 Shares, constituting approximately
6.0% of the total Shares outstanding as of May 6, 1994. Although it has no
present intention of so doing, the Company reserves the right to purchase
more than 4,500,000 Shares pursuant to the Offer. The Offer is not
conditioned upon any minimum number of Shares being tendered.
(3) The Offer, Proration Period and Withdrawal Rights will expire at
12:00 Midnight, New York City time, on Monday, June 6, 1994, unless the
Offer is extended. Your instructions to us should be forwarded to us in
ample time to permit us to submit a tender on your behalf. If you would
like to withdraw your Shares that we have tendered, you can withdraw them
so long as the Offer remains open or any time after the expiration of forty
business days from the commencement of the Offer if they have not been
accepted for payment.
(4) As described in the Offer to Purchase, if more than 4,500,000 Shares
have been validly tendered at or below the Purchase Price and not withdrawn
on or prior to the Expiration Date, as
<PAGE>
defined in Section 1 of the Offer to Purchase, the Company will purchase
Shares in the following order of priority:
(a) all Shares validly tendered at or below the Purchase Price and
not withdrawn on or prior to the Expiration Date by any stockholder who
owned beneficially an aggregate of fewer than 100 Shares (including any
Shares held in the Transamerica Corporation Employees Stock Savings
Plan (the "Stock Savings Plan") and the Transamerica Corporation
Dividend Reinvestment Plan (the "Reinvestment Plan")) as of the close
of business on May 6, 1994 and who validly tenders all of such Shares
(partial and conditional tenders will not qualify for this preference)
and completes the box captioned "Odd Lots" on the Letter of Transmittal
and, if applicable, the Notice of Guaranteed Delivery (provided that
all tendered Shares held in the Stock Savings Plan shall be subject to
proration as provided in clause (b) below); and (b) after purchase of
all the foregoing Shares, subject to the conditional tender provisions
described in Section 6 of the Offer to Purchase, all other Shares
(including Stock Savings Plan Shares) validly tendered at or below the
Purchase Price and not withdrawn on or prior to the Expiration Date on
a pro rata basis, if necessary (with appropriate adjustments to avoid
purchases of fractional Shares, other than Shares held in the Stock
Savings Plan or the Reinvestment Plan). See Section 1 of the Offer to
Purchase for a discussion of proration.
(5) Any stock transfer taxes applicable to the sale of Shares to the
Company pursuant to the Offer will be paid by the Company, except as
otherwise provided in Instruction 7 of the Letter of Transmittal.
(6) If you owned beneficially an aggregate of fewer than 100 Shares
(including Shares held in the Stock Savings Plan or the Reinvestment Plan)
as of the close of business on May 6, 1994, and you instruct us to tender
at or below the Purchase Price on your behalf all such Shares on or prior
to the Expiration Date and check the box captioned "Odd Lots" in the
instruction form, all such Shares will be accepted for purchase before
proration, if any, of the purchase of other tendered Shares.
NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO
ANY STOCKHOLDER AS TO WHETHER TO TENDER ALL OR ANY SHARES. STOCKHOLDERS MUST
MAKE THEIR OWN DECISION AS TO WHETHER TO TENDER SHARES AND, IF SO, HOW MANY
SHARES TO TENDER. THE COMPANY HAS BEEN ADVISED THAT NO DIRECTOR OR EXECUTIVE
OFFICER INTENDS TO TENDER SHARES PURSUANT TO THE OFFER.
If you wish to have us tender any or all of your Shares held by us for your
account upon the terms and subject to the conditions set forth in the Offer,
please so instruct us by completing, executing, detaching and returning to us
the instruction form on the detachable part hereof. An envelope to return your
instructions to us is enclosed. If you authorize tender of your Shares, all
such Shares will be tendered unless otherwise specified on the detachable part
hereof. Your instructions should be forwarded to us in ample time to permit us
to submit a tender on your behalf by the expiration of the Offer.
A tendering stockholder may condition the tender of Shares upon the purchase
by the Company of a specified minimum number of Shares tendered, all as
described in Section 6 of the Offer to Purchase. Unless such specified minimum
is purchased by the Company pursuant to the terms of the Offer to Purchase and
the related Letter of Transmittal, none of the Shares tendered by the
stockholder will be purchased. If you wish us to condition your tender upon the
purchase of a specified minimum number of Shares, please complete the box
entitled "Conditional Tender" on the instruction form. It is the tendering
stockholder's responsibility to calculate such minimum number of Shares, and
you are urged to consult your own tax advisor.
The Offer is being made to all holders of Shares. The Company is not aware of
any state where the making of the Offer is prohibited by administrative or
judicial action pursuant to a valid state statute. If the Company becomes aware
of any valid state statute prohibiting the making of the Offer, the Company
will make a good faith effort to comply with such statute. If, after such good
faith effort, the Company cannot comply with such statute, the Offer will not
be made to, nor will tenders be accepted from or on behalf of, holders of
Shares in such state. In those jurisdictions whose securities, blue sky or
other laws require the Offer to be made by a licensed broker or dealer, the
Offer shall be deemed to be made on behalf of the Company by the Dealer Manager
or one or more registered brokers or dealers licensed under the laws of such
jurisdictions.
2
<PAGE>
Instructions
With Respect to Offer to Purchase for Cash
Up to 4,500,000 Shares of Common Stock
(Including the Associated Preference Stock Purchase Rights)
of
Transamerica Corporation
The undersigned acknowledge(s) receipt of your letter and the enclosed Offer
to Purchase, dated May 9, 1994, and the related Letter of Transmittal (which
together constitute the "Offer") in connection with the Offer by Transamerica
Corporation (the "Company") to purchase up to 4,500,000 shares of its Common
Stock, par value $1.00 per share (the "Shares") (including the associated
preference stock purchase rights), at prices not greater than $55 nor less than
$48 per Share, net to the undersigned in cash, specified by the undersigned.
This will instruct you to tender to the Company the number of Shares
indicated below (or, if no number is indicated below, all Shares) which are
held by you for the account of the undersigned, at the price per Share
indicated below, upon the terms and subject to the conditions of the Offer.
CONDITIONAL TENDER
By completing this box, the undersigned conditions the tender authorized
hereby on the following minimum number of Shares being purchased if any are
purchased:
Shares
Unless this box is completed, the tender authorized hereby will be made
unconditionally.
PRICE (IN DOLLARS) PER SHARE
AT WHICH SHARES ARE BEING TENDERED
- --------------------------------------------------------------------------------
CHECK ONLY ONE BOX. IF MORE THAN ONE BOX IS CHECKED, OR
IF NO BOX IS CHECKED, THERE IS NO VALID TENDER OF SHARES.
- --------------------------------------------------------------------------------
[_] $48.000 [_] $49.000 [_] $50.000 [_] $51.000 [_] $52.000 [_] $53.000
[_] $54.000
[_] $48.125 [_] $49.125 [_] $50.125 [_] $51.125 [_] $52.125 [_] $53.125
[_] $54.125
[_] $48.250 [_] $49.250 [_] $50.250 [_] $51.250 [_] $52.250 [_] $53.250
[_] $54.250
[_] $48.375 [_] $49.375 [_] $50.375 [_] $51.375 [_] $52.375 [_] $53.375
[_] $54.375
[_] $48.500 [_] $49.500 [_] $50.500 [_] $51.500 [_] $52.500 [_] $53.500
[_] $54.500
[_] $48.625 [_] $49.625 [_] $50.625 [_] $51.625 [_] $52.625 [_] $53.625
[_] $54.625
[_] $48.750 [_] $49.750 [_] $50.750 [_] $51.750 [_] $52.750 [_] $53.750
[_] $54.750
[_] $48.875 [_] $49.875 [_] $50.875 [_] $51.875 [_] $52.875 [_] $53.875
[_] $54.875
[_] $55.000
ODD LOTS
[_] By checking this box, the undersigned represents that the undersigned
owned beneficially an aggregate of fewer than 100 Shares (including Shares
held in the Transamerica Corporation Employees Stock Savings Plan and the
Transamerica Corporation Dividend Reinvestment Plan) as of the close of
business on May 6, 1994 and is tendering all of such Shares.
Number of Shares to be Tendered: SIGN HERE
--------------------------------------------------
Shares* Signature(s)
Dated: ____________, 1994 Name _____________________________________________
Address __________________________________________
--------------------------------------------------
--------------------------------------------------
Social Security or Taxpayer ID No.
--------
*Unless otherwise indicated, it will be assumed that all Shares held by us
for your account are to be tendered.
<PAGE>
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares. The Offer is made solely by the Offer to Purchase, dated May 9,
1994, and the related Letter of Transmittal. The Offer is being made to all
holders of Shares; provided, that the Offer is not being made to, nor will
tenders be accepted from or on behalf of, holders of Shares in any
jurisdiction in which making or accepting the Offer would violate
that jurisdiction's laws. In those jurisdictions whose securities,
blue sky or other laws require the Offer to be made by a licensed
broker or dealer, the Offer shall be deemed to be made on behalf
of the Company by Morgan Stanley & Co. Incorporated or one or
more registered brokers or dealers licensed under the laws
of such jurisdictions.
Notice of Offer to Purchase for Cash
by
TRANSAMERICA CORPORATION
Up to 4,500,000 Shares of its Common Stock
(Including the Associated Preference Stock Purchase Rights)
at a Purchase Price Not Greater Than
$55 Nor Less Than $48 Per Share
Transamerica Corporation, a Delaware corporation (the "Company"), invites
its stockholders to tender shares of its Common Stock, par value $1.00 per share
(the "Shares") (including the associated preference stock purchase rights issued
pursuant to the Rights Agreement, dated as of July 17, 1986, as amended, between
the Company and First Chicago Trust Company of New York, as the Rights Agent),
at prices not greater than $55 nor less than $48 per Share, net to the seller in
cash, specified by such stockholders, upon the terms and subject to the
conditions set forth in the Offer to Purchase, dated May 9, 1994 (the "Offer to
Purchase"), and in the related Letter of Transmittal (which together constitute
the "Offer").
THE OFFER IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF SHARES BEING
TENDERED. The Offer is, however, subject to other conditions. See Section 7 of
the Offer to Purchase.
+++++++++++++++++++++++++++++++++++++++++++++++++++
+ THE OFFER, PRORATION PERIOD AND WITHDRAWAL +
+ RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK +
+ CITY TIME, ON MONDAY, JUNE 6, 1994, UNLESS THE +
+ OFFER IS EXTENDED. +
+++++++++++++++++++++++++++++++++++++++++++++++++++
The Company will determine a single per Share price (not greater than $55
nor less than $48 per Share) that it will pay for Shares validly tendered
pursuant to the Offer and not withdrawn (the "Purchase Price"), taking into
account the number of Shares so tendered and the prices specified by tendering
stockholders. The Company will select the Purchase Price that will enable it to
buy 4,500,000 Shares (or such lesser number of Shares as are validly tendered at
prices not greater than $55 nor less than $48 per Share) pursuant to the Offer.
The Company will purchase all Shares validly tendered at prices at or below the
Purchase Price and not withdrawn, upon the terms and subject to the conditions
of the Offer, including the provisions relating to proration and conditional
tenders described below. The Purchase Price will be paid in cash, net to the
seller, with respect to all Shares purchased. Shares tendered at prices in
excess of the Purchase Price and Shares not purchased because of proration and
conditional tender will be returned.
Upon the terms and subject to the conditions of the Offer, if more than
4,500,000 Shares have been validly tendered at or below the Purchase Price and
not withdrawn on or prior to the Expiration Date (as defined in the Offer to
Purchase), the Company will purchase Shares in the following order of priority:
(a) first, all Shares validly tendered at or below the Purchase Price and not
withdrawn on or prior to the Expiration Date by any stockholder who owned
beneficially an aggregate of fewer than 100 Shares (including any Shares held in
the Transamerica Corporation Employees Stock Savings Plan (the "Stock Savings
Plan") and the Transamerica Corporation Dividend
<PAGE>
Reinvestment Plan (the "Reinvestment Plan")) as of the close of business on May
6, 1994 and who validly tenders all of such Shares (partial and conditional
tenders will not qualify for this preference) and completes the box captioned
"Odd Lots" on the Letter of Transmittal and, if applicable, the Notice of
Guaranteed Delivery (provided that all tendered Shares held in the Stock Savings
Plan shall be subject to proration as provided in clause (b) below); and (b)
then, after purchase of all the foregoing Shares, subject to the conditional
tender provisions described in Section 6 of the Offer to Purchase, all other
Shares (including Stock Savings Plan Shares) validly tendered at or below the
Purchase Price and not withdrawn on or prior to the Expiration Date on a pro
rata basis, if necessary (with appropriate adjustments to avoid purchases of
fractional Shares).
The Company believes that the purchase of its Shares at this time
represents an attractive investment opportunity that will benefit the Company
and its remaining stockholders. The Offer will afford to stockholders who are
considering the sale of all or a portion of their Shares the opportunity to
determine the price (not greater than $55 nor less than $48 per Share) at which
they are willing to sell their Shares and, in the event the Company accepts such
Shares, to dispose of Shares without the usual transaction costs associated with
a market sale. The Offer will also allow qualifying stockholders owning
beneficially fewer than 100 Shares to avoid the payment of brokerage commissions
and the applicable odd lot discount payable on a sale of Shares in a transaction
effected on a securities exchange.
NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO
ANY STOCKHOLDER AS TO WHETHER TO TENDER ALL OR ANY SHARES. EACH STOCKHOLDER
MUST MAKE HIS OR HER OWN DECISION AS TO WHETHER TO TENDER SHARES AND, IF SO, HOW
MANY SHARES TO TENDER AND AT WHAT PRICE. THE COMPANY HAS BEEN INFORMED THAT NO
DIRECTOR OR EXECUTIVE OFFICER INTENDS TO TENDER SHARES PURSUANT TO THE OFFER.
The Company reserves the right, at any given time or from time to time, to
extend the period of time during which the Offer is open by giving oral or
written notice of such extenstion to the Depositary, followed by a public
announcement thereof no later than 9:00 a.m., New York City time, on the next
business day after the previously scheduled Expiration Date.
Tenders of Shares made pursuant to the Offer may be withdrawn at any time
prior to the Expiration Date. Thereafter, such tenders are irrevocable, except
that they may be withdrawn after July 5, 1994 unless theretofore accepted for
payment by the Company as provided in the Offer to Purchase. For a withdrawal
to be effective, a written or facsimile transmission notice of withdrawal must
be timely received by the Depositary at one of the addresses or facsimile
numbers set forth on the back cover of the Offer to Purchase and must specify
the name of the person who tendered the Shares to be withdrawn and the number of
Shares to be withdrawn. If the Shares to be withdrawn have been delivered to
the Depositary, a signed notice of withdrawal with signatures guaranteed by an
Eligible Institution (as defined in Section 3 of the Offer to Purchase) (except
in the case of Shares tendered by an Eligible Institution) must be submitted
prior to the release of such Shares. In addition, such notice must specify, in
the case of Shares tendered by delivery of certificates, the name of the
registered holder (if different from that of the tendering stockholder) and the
serial numbers shown on the particular certificates evidencing the Shares to be
withdrawn or, in the case of Shares tendered by book-entry transfer, the name
and number of the account at one of the Book-Entry Transfer Facilities (as
defined in the Offer to Purchase) to be credited with the withdrawn Shares.
Withdrawals may not be rescinded, and Shares withdrawn will thereafter be deemed
not validly tendered for purposes of the Offer. However, withdrawn Shares may
be retendered by again following one of the procedures described in Section 3 of
the Offer to Purchase at any time prior to the Expiration Date.
The Company will be deemed to have purchased tendered Shares as, if and
when it gives oral or written notice to the Depositary of its acceptance for
payment of Shares.
THE INFORMATION REQUIRED TO BE DISCLOSED BY RULE 13E-4(D)(1) OF THE GENERAL
RULES AND REGULATIONS UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, IS
CONTAINED IN THE OFFER TO PURCHASE AND IS INCORPORATED HEREIN BY REFERENCE.
Copies of the Offer to Purchase and the related Letter of Transmittal are
being mailed to record holders of Shares and will be furnished to brokers, banks
and similar persons whose names, or the names of whose
<PAGE>
nominees, appear on the Company's stockholder list or, if applicable, who are
listed as participants in a clearing agency's security position listing for
subsequent transmittal to beneficial owners of Shares.
THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION THAT SHOULD BE READ BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
Any questions or requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective telephone numbers and addresses
listed below. Requests for additional copies of the Offer to Purchase, the
Letter of Transmittal or other tender offer materials may be directed to the
Information Agent or the Dealer Manager, and such copies will be furnished
promptly at the Company's expense. Stockholders may also contact their local
broker, dealer, commercial bank or trust company for assistance concerning the
Offer.
The Information Agent for the Offer is:
GEORGESON
& COMPANY INC.
--------------
Wall Street Plaza
New York, New York 10005
Banks and Brokers Call Collect:
(212) 440-9800
All Others Call Toll Free:
1-800-223-2064
The Dealer Manager for the Offer is:
MORGAN STANLEY & CO.
INCORPORATED
1251 Avenue of the Americas
New York, New York 10020
(415) 576-2247 (collect)
May 9, 1994
<PAGE>
LOGO
For Release: IMMEDIATELY
Contacts:
Press--
Richard J. Olsen
(415) 983-4055
Investment Community--
Dennis W. Markus
(415) 983-5503
TRANSAMERICA'S BOARD AUTHORIZES DUTCH AUCTION
SELF TENDER FOR UP TO FOUR AND A HALF MILLION COMMON SHARES
SAN FRANCISCO, California--(May 9, 1994)--Transamerica Corporation today
announced a "Dutch Auction" self tender for up to 4.5 million shares of its
common stock. The offer will commence on May 9, 1994 and will expire at
midnight, Eastern Daylight Time, on June 6, 1994, unless the offer is extended.
Under the terms of the offer, the Company will invite stockholders to tender
shares at prices between $48 and $55 per share, as specified by the tendering
stockholders. Based upon the number of shares tendered and the prices specified
by the tendering stockholders, Transamerica will determine the single per share
price within that price range that will allow Transamerica to buy 4.5 million
shares or such lesser number of shares as are properly tendered. Transamerica
will use a portion of the net proceeds from its sale of shares of Sedgwick
Group plc to purchase shares pursuant to such offer. Transamerica's common
stock price closed at $51 1/8 on the New York Stock Exchange Composite Tape on
May 6, 1994.
Morgan Stanley & Co. Incorporated is acting as dealer manager for the offer.
Georgeson & Company Inc. is acting as the information agent for the offer.
San Francisco-based Transamerica Corporation is one of the world's largest
financial services companies, providing specialized financial and life
insurance products and services to individuals and organizations. Consolidated
assets were $38.7 billion at March 31, 1994.
* * *
<PAGE>
FINANCIAL REVIEW
Transamerica Corporation is a financial services organization which engages
through its subsidiaries in consumer lending, commercial lending, leasing,
real estate services, life insurance and asset management.
CORPORATE LIQUIDITY
Transamerica Corporation receives funds from its subsidiaries in the form of
dividends, income taxes and interest on loans. The Corporation uses these
funds to pay dividends to its shareholders, reinvest in the operations of its
subsidiaries and pay corporate interest, expenses and taxes. Reinvested funds
are allocated among subsidiaries on the basis of capital requirements and
expected returns. Reinvestment may be accomplished by allowing a subsidiary to
retain all or a portion of its earnings, or by making capital contributions or
loans.
The Corporation also borrows funds to finance acquisitions or to lend to
certain of its subsidiaries to finance their working capital needs.
Subsidiaries are required to maintain prudent financial ratios consistent with
other companies in their respective industries and retain the capacity through
committed credit lines to repay working capital loans from the Corporation. At
December 31, 1993, Transamerica and its subsidiaries had short-term
borrowings, principally commercial paper, totaling $3.7 billion, supported by
credit agreements with 60 banks. It is the policy of the Corporation to
maintain credit line coverage at least equal to 100% of short-term borrowings.
Availability under such lines at December 31, 1993, amounted to $4.1 billion
or 111% of these borrowings; credit support equal to 68% of the borrowings was
with banks rated AAA/AA or the equivalent by one or more of the major credit
rating agencies.
As discussed in the discontinued operations section on page 51, the
Corporation completed the sale of its former property and casualty insurance
subsidiary, Transamerica Insurance Group, through an initial public offering
in April 1993 and a secondary offering in December 1993. Proceeds from the
sales of stock, after underwriting discounts, totaled $1 billion. The proceeds
were used to reduce indebtedness, including $409.3 million incurred to fund
cash transactions with the property and casualty insurance operation in
connection with the initial public offering, and to commence a program of
repurchasing shares of its common stock. In May 1993 Transamerica announced
its intention to purchase up to 3.5 million of its common shares subject to
acceptable market conditions. In December the program was expanded to include
an additional 2.5 million shares. As of December 31, 1993, Transamerica had
purchased 3.6 million shares.
On January 23, 1992, the Corporation issued 400,000 shares of Series D
Preferred Stock ($100 par value, $500 liquidation preference) resulting in
proceeds of $193.2 million after underwriting discounts and issuance costs.
Dividends on these shares, which are cumulative, are at the rate of 8.5% of
the liquidation preference per annum. Proceeds from the issue were used to
fund a $100 million capital contribution to Transamerica Finance Group, a
wholly owned subsidiary of the Corporation which conducts Transamerica's
consumer lending, commercial lending and leasing operations, and to reduce
short-term indebtedness.
In August 1991, the Corporation established a new program to offer publicly,
from time to time, $200 million of its Medium-Term Notes, Series B. The notes
will be issued pursuant to a shelf registration filed in 1989 with the
Securities and Exchange Commission that enables the Corporation to offer
publicly up to $500 million of debt securities with varying terms. None of
these debt securities has been sold. The securities may be senior or
subordinated and, if subordinated, may be convertible into common stock. The
proceeds from the sale of the debt securities, including the notes, may be
used for general corporate purposes.
Transamerica Corporation and Subsidiaries 37
<PAGE>
INVESTMENT PORTFOLIO
Transamerica Corporation, principally through its life insurance subsidiaries,
maintains an investment portfolio aggregating $21 billion at December 31,
1993, of which $19.4 billion was invested in fixed maturities. At December 31,
1993, 96.6% of the fixed maturities was rated as ``investment grade,'' with an
additional 2.8% in the BB category or its equivalent. ``Investment grade'' is
defined as any issue rated above the Ba category by Moody's Investors Service
or above the BB category by Standard & Poor's Corporation. The fixed maturity
portfolio includes $74 million of private placement securities which have been
rated by analysts employed by Transamerica Investment Services. The market
value of fixed maturities was $21 billion resulting in a net unrealized gain
position, before the effects of income taxes, of $1.6 billion at December 31,
1993. Fixed maturity investments are generally held for long-term investment
and used primarily to support insurance reserves. Delinquent below investment
grade securities before provision for impairment in value were $31.1 million
at December 31, 1993 compared to $113.4 million at December 31, 1992.
Provision for impairment in value has been made to reduce certain fixed
maturity investments by $104 million at December 31, 1993 and $136.9 million
at December 31, 1992.
Fixed maturity securities which are expected to be called by the issuer or
sold in connection with Transamerica portfolio management strategies in the
next three months are classified as investments available for sale and carried
at the lower of amortized cost or estimated market value. Based on current
interest rate projections, fixed maturity securities with an amortized cost of
$872.4 million and an estimated value of $920.2 million were identified as
being subject to call or sale in the first quarter of 1994 and accordingly
have been classified in the December 31, 1993 financial statements as
investments available for sale.
Additionally, $493 million (2% of the investment portfolio) was invested in
mortgage loans and real estate including $356.8 million in commercial mortgage
loans, $42.4 million in residential mortgage loans, $111.3 million in real
estate investments and $53.2 million in foreclosed real estate. Problem loans,
defined as restructured loans yielding less than 8% and delinquent loans,
totaled $18.5 million at December 31, 1993 and $16.7 million at December 31,
1992. Allowances for possible losses of $70.7 million at December 31, 1993 and
$70.1 million at December 31, 1992 have been established to cover the possible
losses from mortgage loans and real estate investments.
CONSOLIDATED RESULTS
Operating income from continuing operations, which excludes investment
transactions and in 1993 an extraordinary loss on early extinguishment of
debt, increased $87.4 million (26%) in 1993 compared to 1992 due primarily to
increases in life insurance, real estate services and asset management
operating results and lower unallocated interest and other expenses. Partially
offsetting these improvements were declines in commercial lending, consumer
lending, insurance brokerage and leasing operating results. Operating income
from continuing operations for 1993 also includes a $36 million after tax
writedown of repossessed rent-to-own stores in commercial lending, charges
totaling $24.7 million after tax primarily for the restructuring of the
commercial lending and real estate services operations and for the realignment
of certain corporate-wide administrative functions and an $8.4 million
additional tax provision from the revaluation of the January 1, 1993 deferred
tax liability for the effect of the federal tax rate increase. These items
were offset by a $94.2 million tax benefit from the satisfactory resolution of
prior years' tax matters which made certain tax reserves no longer necessary.
Excluding the aforementioned 1993 items, operating income from continuing
operations for 1993 increased $62.3 million (18%) compared to 1992.
38 Transamerica Corporation and Subsidiaries
<PAGE>
In December 1993 the commercial lending operation redeemed $125 million of
deep discount, long-term debt with a book value of $90.7 million, which
resulted in a $23.1 million after tax extraordinary loss.
Investment transactions in 1993 included after tax gains of $102.2 million
realized on the sale of investments, less the required accelerated
amortization of deferred policy acquisition costs associated with
interest-sensitive products of $40.8 million after tax and loss provisions of
$36.1 million after tax for the impairment in value of investments. Investment
transactions in 1992 included after tax gains of $89.8 million realized on the
sale of investments, less accelerated amortization of deferred policy
acquisition costs associated with interest-sensitive products of $21.9 million
after tax and loss provisions of $62.8 million after tax for the impairment in
value of investments.
Operating income from continuing operations, which excludes investment
transactions and in 1991 the cumulative effect of the change in accounting for
post employment benefits other than pensions, in 1992 increased $290.7 million
compared to 1991 principally due to the return to profitability of the
commercial lending operation and improved real estate services operating
results. Life insurance, leasing and consumer lending operating results also
contributed to the improvement while unallocated interest and other expenses
decreased in 1992. These improvements were offset in part by decreased
operating results for insurance brokerage and asset management. In 1991
insurance brokerage results benefited from a gain on the sale of 59 million
shares of Sedgwick Group plc stock, which reduced Transamerica's equity
ownership from 39% to 25%.
OPERATING INCOME BY LINE OF BUSINESS
Changes in the earnings, capital requirements and liquidity of the
Corporation's consolidated operations are best understood by considering the
Corporation's separate business segments, which are shown below:
_____________________________________________________________________________
<TABLE>
<CAPTION>
(Amounts in millions) 1993 1992 1991
<S> <C> <C> <C>
FINANCE
Consumer lending $ 93.1 $101.2 $ 97.4
Commercial lending (4.0) 22.2 (217.0)
Leasing 53.6 58.1 48.0
Real estate services 84.3 73.2 30.1
Amortization of goodwill (13.0) (13.0) (13.8)
______ ______ ______
Total finance 214.0 241.7 (55.3)
INSURANCE
Life insurance 215.7 190.8 169.0
Insurance brokerage 10.2 16.1 47.3
Asset management 0.3 0.1 0.6
Amortization of goodwill (8.9) (8.9) (9.5)
______ ______ ______
Total insurance 217.3 198.1 207.4
Unallocated interest and other expenses (6.1) (102.0) (105.0)
______ ______ ______
Operating income from continuing operations 425.2 337.8 47.1
Investment transactions 25.3 5.1 (2.0)
______ ______ ______
Income from continuing operations 450.5 342.9 45.1
Income (loss) from discontinued operations (50.0) (99.7) 39.7
Extraordinary loss on early extinguishment of debt (23.1)
Cumulative effect of change in accounting for post
employment benefits other than pensions (34.7)
______ ______ ______
Net income $377.4 $243.2 $ 50.1
====== ====== ======
</TABLE>
Transamerica Corporation and Subsidiaries 39
<PAGE>
TRANSAMERICA FINANCE GROUP
Transamerica Finance Group comprises Transamerica's consumer lending,
commercial lending and leasing operations and provides funding for these
operations. Transamerica Finance Group's total notes and loans payable were $7
billion at December 31, 1993 and $6.6 billion at December 31, 1992. Variable
rate debt was $4 billion at December 31, 1993 compared to $3.5 billion at the
end of 1992. The ratio of debt to debt plus equity was 82.2% at December 31,
1993 and 81.4% at December 31, 1992.
Transamerica Finance Group, through its wholly owned subsidiary Transamerica
Finance Corporation, offers publicly, from time to time, senior or
subordinated debt securities. Public debt issued totaled $407 million in 1993,
$538.7 million in 1992 and $1.1 billion in 1991. Under a shelf registration
filed with the Securities and Exchange Commission in 1991 to offer publicly up
to $1.5 billion of senior or subordinated debt securities with varying terms,
debt securities totaling $1.4 billion had been sold through December 31, 1993.
In addition, under a registration statement filed in July 1993, a medium-term
note program was also established for $2 billion, of which $1.9 billion
remained unsold as of December 31, 1993.
During 1990 Transamerica Finance Group securitized $430 million of residential
real estate secured consumer finance receivables and entered into a 5-year
arrangement in which it securitized a $375 million participation interest in a
pool of its insurance finance receivables. These securitizations, which have
been accounted for as sales, allowed Transamerica Finance Group to improve its
capital management and liquidity. At December 31, 1993, $375 million of
securitized insurance finance receivables and $59.4 million of securitized
real estate secured consumer finance receivables remained outstanding. The
consumer and commercial lending operations continue to service these
portfolios and remain partially at risk through limited recourse provisions.
Proceeds from these transactions were used primarily to reduce debt.
Liquidity is a characteristic of these operations since the majority of the
assets consist of finance receivables. Principal cash collections of finance
receivables totaled $13.4 billion during 1993, $11.1 billion during 1992 and
$10 billion during 1991.
Page 40 Transamerica Corporation and Subsidiaries
<PAGE>
TRANSAMERICA FINANCE GROUP
______________________________________________________________________________
<TABLE>
<CAPTION>
(Amounts in millions) 1993 1992 1991
<S> <C> <C> <C>
ASSETS
Finance receivables less unearned fees
and allowance for losses:
Consumer $3,622 $3,558 $3,429
Commercial 2,860 2,785 2,769
______ ______ ______
6,482 6,343 6,198
Equipment held for lease 1,306 1,062 995
Goodwill 420 433 447
Assets held for sale 227 282 232
Other assets 722 712 815
______ ______ ______
$9,157 $8,832 $8,687
====== ====== ======
LIABILITIES AND EQUITY
Notes and loans payable $7,032 $6,590 $6,548
Other liabilities 599 739 704
Equity 1,526 1,503 1,435
______ ______ ______
$9,157 $8,832 $8,687
====== ====== ======
REVENUES $1,433 $1,473 $1,446
EXPENSES
Operating expenses 630 617 593
Interest 415 459 514
Provision for losses on receivables
and assets held for sale 147 91 432
Income taxes (benefit) 99 126 (21)
______ ______ ______
1,291 1,293 1,518
______ ______ ______
Income (loss) from operations 142 180 (72)
Amortization of goodwill (13) (13) (14)
Extraordinary loss on early extinguishment of debt (23)
Cumulative effect of change in accounting for post
employment benefits other than pensions (11)
______ ______ ______
Net income (loss) $ 106 $ 167 $ (97)
====== ====== ======
SOURCE OF CASH
Cash provided by operations $ 458 $ 344 $ 297
Proceeds from debt financing 5,501 4,100 4,494
Sale of trailer business 191
Other (53) 49 28
______ ______ ______
$5,906 $4,684 $4,819
====== ====== ======
APPLICATION OF CASH
Additions to equipment held for lease $ 405 $ 335 $ 198
Payments of notes and loans 5,112 4,108 4,235
Increase in finance receivables 289 266 368
Equity transactions 100 (25) 18
______ ______ ______
$5,906 $4,684 $4,819
====== ====== ======
</TABLE>
Transamerica Corporation and Subsidiaries 41
<PAGE>
CONSUMER LENDING
Consumer lending income from operations in 1993 decreased $8.1 million (8%)
from 1992. The decrease was principally due to increased operating expenses,
an increased provision for losses on receivables and lower revenues that more
than offset lower interest expense and a $5.3 million benefit included in
operating expenses from the reversal of reserves related to the 1990
securitization and sale of receivables. Revenues in 1993 decreased $5.8
million (1%) from 1992 principally because of lower servicing and other fees
on securitized receivables as a result of the runoff of the securitized
receivables and lower fees due to reduced volume of real estate secured loans.
Operating expenses increased in 1993 mainly due to investments in new branches
and losses on the disposal of repossessed assets. With the adoption in the
fourth quarter of 1992 of a required new accounting rule, losses on the
disposal of repossessed assets, which were $6 million for 1993 and $3 million
in the fourth quarter of 1992, were classified as operating expenses rather
than as credit losses. Data for periods prior to the fourth quarter of 1992
have not been reclassified.
The provision for losses on receivables increased $15 million (31%) in 1993
over 1992 due to increased credit losses. Credit losses, net of recoveries, as
a percentage of average consumer finance receivables outstanding, net of
unearned finance charges and insurance premiums, were 1.68% in 1993 compared
to 1.21% in 1992. Credit losses increased partly due to continued sluggishness
in the domestic economy and a weak California real estate market.
Interest expense declined $24.4 million (9%) in 1993 from 1992 due to a lower
average interest rate which more than offset the effect of higher borrowings
due to increased average receivables outstanding.
Consumer lending income from operations in 1992 increased $3.8 million (4%)
over 1991 principally due to an increase in consumer finance receivables
resulting from growth in the company's loan portfolio. Revenues in 1992
increased $27.7 million (4%) over 1991 principally because of higher average
receivables outstanding. Expenses increased in 1992 mainly due to increased
operating costs, primarily attributable to branch network expansion and a
higher level of receivables, and an increase in the provision for losses on
receivables offset in part by a reduction in interest expense. The provision
for losses on receivables increased due to higher credit losses sustained.
Credit losses, net of recoveries, as a percentage of average net consumer
finance receivables outstanding, were 1.21% for 1992 compared to 0.98% in
1991. Credit losses increased in 1992 due to sluggishness in the domestic
economy and a weak California real estate market. Interest expense declined in
1992 due to a lower average interest rate which more than offset the effect of
higher average borrowings resulting from the higher level of receivables.
Net consumer finance receivables increased $66.2 million (2%) in 1993 and $132
million (4%) in 1992.
Net consumer finance receivables at December 31, 1993 included $3.1 billion of
real estate secured loans, principally first and second mortgages secured by
residential properties, of which approximately 50% are located in California.
Company policy generally limits the amount of cash advanced
42 Transamerica Corporation and Subsidiaries
<PAGE>
on any one loan, plus any existing mortgage, to between 70% and 80% (depending
on location) of the appraised value of the mortgaged property, as determined by
qualified independent appraisers at the time of loan origination. Delinquent
real estate secured loans, which are defined as loans contractually past due 60
days or more, totaled $61.8 million (1.87% of total real estate secured loans
outstanding) at December 31, 1993 compared to $62.1 million (1.85% of total
real estate secured loans outstanding) at December 31, 1992.
Management has established an allowance for losses equal to 2.83% of net
consumer finance receivables outstanding at December 31, 1993 and 1992.
Generally, by the time an account secured by residential real estate becomes
past due 90 days, foreclosure proceedings have begun, at which time the
account is moved from finance receivables to other assets and is written down
to the estimated realizable value of the collateral if less than the account
balance. After foreclosure, repossessed assets are carried at the lower of
cost or fair value less estimated selling costs. Accounts in foreclosure and
repossessed assets held for sale totaled $214.7 million at December 31, 1993
compared to $176.1 million at December 31, 1992. The increase primarily
reflects increased repossessions in California and longer disposal times due
to its weak real estate market.
<TABLE>
<CAPTION>
CONSUMER LENDING
_____________________________________________________________________________
(Amounts in millions) 1993 1992 1991
<S> <C> <C> <C>
REVENUES
Finance charges and related income $ 654 $ 660 $ 632
EXPENSES
Interest 242 267 276
Operating expenses 189 172 153
Provision for losses on receivables 64 49 42
Income taxes 66 71 63
______ ______ ______
561 559 534
______ ______ ______
Income from operations 93 101 98
Amortization of goodwill (1)
Cumulative effect of change in accounting for
post employment benefits other than pensions (6)
______ ______ ______
Net income $ 93 $ 101 $ 91
====== ====== ======
ASSETS $3,946 $3,876 $3,675
====== ====== ======
</TABLE>
Transamerica Corporation and Subsidiaries 43
<PAGE>
COMMERCIAL LENDING
Commercial lending results, before the amortization of goodwill and a $23.1
million after tax extraordinary loss on the early extinguishment of $125
million deep discount long-term debt in 1993, were a loss of $4 million for
1993 compared to income in 1992 of $22.2 million. The 1993 loss was due
primarily to the inclusion of a $50 million ($36 million after tax) provision
to reduce the net carrying value of repossessed rent-to-own stores to their
estimated realizable value. Information received during the year from
prospective buyers of the repossessed rent-to-own stores held for sale
indicated that the realizable value of the business had declined below its
carrying value.
The 1993 results also included an $8.8 million after tax charge for the
restructuring of the commercial lending unit's infrastructure, a $4.2 million
after tax provision for anticipated legal and other costs associated with the
runoff of the liquidating portfolios and a $4.2 million tax benefit from the
resolution of prior years' tax matters. Excluding the aforementioned items,
commercial lending income, before the amortization of goodwill and the
extraordinary loss on the early extinguishment of debt, increased $18.6
million (83%) in 1993 over 1992. This improvement was primarily due to lower
operating expenses, a lower provision for losses on receivables and stronger
margins brought about by the declining interest rate environment. The interest
rates at which commercial lending borrows funds for its businesses have moved
more quickly than the rates at which it lends to its customers. As a result,
margins have been enhanced by the declining interest rate environment.
Commercial lending results, before the amortization of goodwill, were income
of $22.2 million compared to a loss of $217 million in 1991. The return to
profitability was principally due to lower provisions for losses on
receivables and assets held for sale. Results for 1991 included a special
pretax charge of $200.2 million ($130 million after tax) resulting from a
decision to exit the rent-to-own finance business, reduce lending to certain
asset based lending lines, accelerate disposal of repossessed assets and
liquidate receivables remaining from previously sold businesses.
Revenues decreased $22.1 million (6%) in 1993 and $25.6 million (6%) in 1992
primarily as a result of reduced yields attributable to the current low
interest rate environment.
Interest expense declined $25.5 million (19%) in 1993 and $48.1 million (26%)
in 1992 as a result of lower average interest rates. Operating expenses
increased $11.2 million (6%) during 1993 over 1992 due to the restructuring
charge and provision for anticipated legal and other costs associated with the
runoff of the liquidating portfolios described above, aggregating $21.5
million, partially offset by cost reduction efforts in the inventory finance,
business credit and insurance finance core businesses. The provision for
losses on receivables in 1993 was $8.7 million (21%) less than in 1992
primarily due to lower credit losses. Credit losses, net of recoveries, as a
percentage of average commercial finance receivables outstanding, net of
unearned finance charges, were 1.49% in 1993, 4.18% in 1992 and 5.82% in 1991.
Credit losses declined in 1993 primarily due to lower losses in the
liquidating portfolios. The commercial lending operation experienced
substantial credit losses in 1991 primarily due to severe financial problems
experienced by the company's customers resulting from the weak U.S. and
Canadian economies.
In March 1992, Transamerica's commercial lending operation purchased for cash
a business credit portfolio consisting of twelve manufacturer/distributor
accounts with a net outstanding balance of $134 million. In September 1991,
the operation purchased for cash an inventory financing portfolio, consisting
of lending arrangements with over 700 manufactured housing and recreational
product dealers with a net balance outstanding of $290.6 million. These
transactions were funded with short-term debt.
Net commercial finance receivables outstanding increased $64.9 million (2%) in
1993 and decreased $65.4 million (2%) in 1992. Both years experienced growth
in the inventory finance and insurance finance portfolios and declines in the
liquidating portfolios. Management has established an allowance for credit
losses equal to 2.71% of net commercial finance receivables outstanding as of
December 31, 1993 compared to 3.14% at December 31, 1992.
44 Transamerica Corporation and Subsidiaries
<PAGE>
Effective in 1993, the policies used for the determination of delinquent and
nonearning receivables have been revised to provide greater consistency among
the company's receivable portfolios. It is management's view that the new
methodology provides a better and more meaningful assessment of the condition
of the portfolio. Delinquent receivables, which were generally defined as
financed inventory sold but unpaid 30 days or more, the portion of business
credit loans in excess of the approved lending limit and all other receivable
balances contractually past due 60 days or more, are now defined as the
instalment balance for inventory finance and business credit receivables and
the receivable balance for all other receivables over 60 days past due.
Nonearning receivables, which were defined as receivables from borrowers in
bankruptcy or litigation and other accounts for which full collectibility was
doubtful, are now defined as receivables from borrowers that are over 90 days
delinquent or at such earlier time as full collectibility becomes doubtful. At
December 31, 1993, delinquent receivables were $28.9 million (0.96% of
receivables outstanding) and nonearning receivables were $33.6 million (1.12%
of receivables outstanding). At December 31, 1992, delinquent receivables were
$65 million (2.21% of receivables outstanding) and nonearning receivables were
$92.5 million (3.14% of receivables outstanding). Delinquency and nonearning
data as of December 31, 1992 has not been restated.
Assets held for sale as of December 31, 1993 totaled $90.1 million, net of a
$157 million valuation allowance, and consisted of rent-to-own finance
receivables of $120.5 million, repossessed rent-to-own stores of $107.2
million and other repossessed assets of $19.4 million. Assets held for sale at
December 31, 1992 totaled $191.5 million, net of a $121.5 million valuation
allowance, and comprised rent-to-own finance receivables of $179 million,
repossessed rent-to-own stores of $103.4 million and other repossessed assets
of $30.6 million. At December 31, 1993, $27.5 million of the rent-to-own
finance receivables were classified as both delinquent and nonearning. At
December 31, 1992, delinquent rent-to-own finance receivables were $15.4
million and nonearning rent-to-own finance receivables were $32.6 million.
Delinquency and nonearning data as of December 31, 1992 has not been restated.
<TABLE>
<CAPTION>
COMMERCIAL LENDING
_____________________________________________________________________________
(Amounts in millions) 1993 1992 1991
<S> <C> <C> <C>
REVENUES
Finance charges and related income $ 371 $ 393 $ 418
EXPENSES
Interest 109 135 183
Operating expenses 186 174 174
Provision for losses on receivables 33 42 248
Provision for losses on assets held for sale 50 141
Income taxes (benefit) (3) 20 (111)
______ ______ ______
375 371 635
______ ______ ______
Income (loss) from operations (4) 22 (217)
Amortization of goodwill (11) (11) (11)
Extraordinary loss from early extinguishment of
debt (23)
Cumulative effect of change in accounting for
post employment benefits other than pensions (3)
______ ______ ______
Net income (loss) $ (38) $ 11 $ (231)
====== ====== ======
ASSETS $3,508 $3,626 $3,780
====== ====== ======
</TABLE>
Transamerica Corporation and Subsidiaries 45
<PAGE>
LEASING
Income from operations decreased $4.5 million (8%) in 1993 and increased $10.1
million (21%) in 1992. The 1993 decrease was due primarily to an additional
income tax provision of $4.3 million caused by the revaluation of deferred
income tax liability for the 1993 federal tax rate increase. Excluding the
additional tax provision, results for 1993 were comparable to 1992 as higher
fleet utilization and per diem rates in the rail trailer business, a larger
finance lease portfolio and a larger fleet of refrigerated containers were
offset by a decline in standard container utilization. The 1992 increase was
principally due to higher fleet utilization and per diem rates in the rail
trailer business.
Revenues for 1993 decreased $12.7 million (3%) from 1992. The decline was
mainly due to the sale of the domestic over-the-road trailer business in
November 1992 and a decline in standard container utilization. The decrease
was partially offset by higher fleet utilization and per diem rates in the
rail trailer business, an increased finance lease portfolio, and a larger
fleet of standard containers, refrigerated containers and European trailers.
In November 1992, the company sold its domestic over-the-road trailer
business. Proceeds from the sale totaled $191 million and resulted in no gain
or loss.
Revenues increased $24.1 million (6%) in 1992 primarily due to higher fleet
utilization and per diem rates in the rail trailer business, a larger fleet of
refrigerated containers, and a larger fleet and higher per diem rates in the
standard container line, offset in part by lower standard container
utilization and decreased revenues as a result of the sale of the company's
remaining common carrier operations in July 1991.
Expenses decreased $12.1 million (4%) in 1993 from 1992 due to the sale of the
domestic over-the-road trailer business. The decrease was partially offset by
higher ownership costs due to a larger fleet.
Expenses increased $6.1 million (2%) in 1992 over 1991 mainly due to higher
depreciation expenses because of a larger fleet of standard and refrigerated
containers, and higher repair, storage and positioning expenses resulting from
lower utilization in the standard container business, partially offset by
lower operating expenses resulting from the sale of the common carrier
operations.
The combined utilization of standard containers, refrigerated containers,
domestic containers, tank containers and chassis averaged 83% in 1993, 85% in
1992 and 89% in 1991. Rail trailer utilization was 91% in 1993, 84% in 1992
and 75% in 1991. European trailer utilization was 89% in 1993, 84% in 1992 and
83% in 1991.
The company's standard container, refrigerated container, domestic container,
tank container and chassis fleet of 316,000 units increased by 36,000 units
(13%) in 1993, 24,900 units (10%) in 1992 and 10,700 units (4%) in 1991. The
rail trailer fleet of 36,500 units increased by 2,100 units (6%) in 1993, and
decreased by 2,400 units (7%) in 1992 and 3,700 units (9%) in 1991. The
company also operates a fleet of 3,800 over-the-road trailers in Europe.
<TABLE>
<CAPTION>
LEASING
_____________________________________________________________________________
(Amounts in millions) 1993 1992 1991
<S> <C> <C> <C>
REVENUES
Leasing revenues $ 408 $ 420 $ 396
EXPENSES
Operating expenses 82 96 103
Depreciation on equipment held for lease 102 99 91
Selling and administrative expenses 66 74 71
Interest 64 57 55
Income taxes 40 36 28
______ ______ ______
354 362 348
______ ______ ______
Income from operations 54 58 48
Amortization of goodwill (2) (2) (2)
Cumulative effect of change in accounting for
post employment benefits other than pensions (2)
______ ______ ______
Net income $ 52 $ 56 $ 44
====== ====== ======
ASSETS $1,697 $1,340 $1,258
====== ====== ======
</TABLE>
46 Transamerica Corporation and Subsidiaries
<PAGE>
REAL ESTATE SERVICES
Real estate services comprise Transamerica's real estate tax, property
management and other services.
Income from the real estate services' operations increased $11.1 million (15%)
in 1993 and $43.1 million (143%) in 1992, due principally to increased
revenues from continued high levels of mortgage loan refinancings resulting
from lower mortgage interest rates. The 1993 increase was offset in part by a
$3.7 million after tax provision for restructuring of certain functions.
Funds required for capital expenditures and working capital are generated by
operations. Cash, cash equivalents and accounts receivable, which totaled
$115.6 million at December 31, 1993 and $81.3 million at December 31, 1992 are
the real estate services' principal sources of liquidity.
<TABLE>
<CAPTION>
REAL ESTATE SERVICES
_____________________________________________________________________________
(Amounts in millions) 1993 1992 1991
<S> <C> <C> <C>
ASSETS
Cash, cash equivalents and accounts receivable $116 $ 81 $ 54
Investments 64 59 52
Land and buildings 166 156 130
Other assets 103 60 47
____ ____ ____
$449 $356 $283
==== ==== ====
LIABILITIES AND EQUITY
Loss and future service reserves $105 $ 68 $ 54
Notes and loans payable 97 82 78
Other liabilities 63 68 52
Equity 184 138 99
____ ____ ____
$449 $356 $283
==== ==== ====
REVENUES
Real estate services revenues $324 $269 $190
EXPENSES
Salaries and employee benefits 82 71 61
Other operating expenses 105 81 83
Income taxes 53 44 16
____ ____ ____
240 196 160
____ ____ ____
Income from operations 84 73 30
Cumulative effect of change in accounting for
post employment benefits other than pensions (2)
____ ____ ____
Net income $ 84 $ 73 $ 28
==== ==== ====
SOURCE OF CASH
Cash provided by operations $ 68 $ 76 $ 44
Proceeds from debt financing 13 16
____ ____ ____
$ 81 $ 92 $ 44
==== ==== ====
APPLICATION OF CASH
Equity transactions $ 55 $ 50 $ 19
Net purchases of investments 9 9
Payments of notes and loans 2 20 5
Other 24 13 11
____ ____ ____
$ 81 $ 92 $ 44
==== ==== ====
</TABLE>
Transamerica Corporation and Subsidiaries 47
<PAGE>
LIFE INSURANCE
Operating income from life insurance operations, which excludes investment
transactions, increased $24.9 million (13%) in 1993 and $21.8 million (13%) in
1992. The life insurance, structured settlements, living benefits, group
pension and reinsurance lines all experienced increases in earnings before
investment transactions, resulting primarily from increased charges on a
larger base of interest-sensitive policies, maintained investment spreads on a
larger base of assets and control of ongoing operating expenses.
In 1993, the structured settlements line, based on the determination that its
products had insignificant mortality risk, adopted Financial Accounting
Standards Board Statement No. 97 on accounting for interest-sensitive life
insurance products. Prior year financial statements have been reclassified
which reduced premium income and life insurance expenses by an equal amount.
This change in accounting reduced operating income by $11.9 million after tax
and net income by $39 million after tax due to the accelerated amortization of
deferred policy acquisition costs associated with investment income and gains
from investments called or sold.
Net income included after tax gains from investment transactions of $29.2
million in 1993, $5.1 million in 1992 and $600,000 in 1991.
Premiums and related income increased $73.3 million (6%) in 1993 and $180.5
million (18%) in 1992 primarily due to increased life insurance premiums and
charges on interest-sensitive policies attributable to a larger base of
insurance policies in force and an increase in reinsurance assumed.
Investment income increased $148.1 million (9%) in 1993 and $69.6 million (5%)
in 1992 due primarily to increased investments. Investment income includes
$55.7 million in 1993 and $9.4 million in 1992 related to the accelerated
amortization of discounts on securities called or expected to be called.
Investment income for 1992 also included a $10 million addition to investment
income to reflect actual prepayment experience on certain mortgage-backed
securities investments. Investment income for 1993 also included a $4.7
million charge related to the reversal of accrued investment income on
defaulted securities. The after tax yield on the investment portfolio was
5.74% in 1993, 5.98% in 1992 and 6.24% in 1991.
Life insurance benefits and expenses increased $168.5 million (7%) in 1993 and
$222.3 million (10%) in 1992 principally due to increases in benefits paid or
provided attributable to the larger base of life insurance and annuities in
force, higher commission expense on increased life insurance and annuity
sales, and higher amortization of deferred policy acquisition costs (exclusive
of accelerated amortization related to investment gains). Other expenses
include charges of $19.8 million in 1993 and $9.2 million in 1992 primarily
attributable to a provision for the realignment and relocation of certain back
office support functions and in 1993 anticipated guaranty fund assessments and
the establishment of an allowance for possible loss related to the 1991 sale
of a business unit.
Cash provided by operations for 1993 was $604.3 million which was $26.1
million (4%) below the 1992 amount primarily resulting from higher income
taxes paid during 1993 and timing of settlements of certain receivables. The
company continues to maintain a sufficiently liquid portfolio to cover its
operating requirements, with remaining funds being invested in longer term
securities.
48 Transamerica Corporation and Subsidiaries
<PAGE>
<TABLE>
<CAPTION>
LIFE INSURANCE
_____________________________________________________________________________
(Amounts in millions) 1993 1992 1991
<S> <C> <C> <C>
ASSETS
Investments $20,891 $18,205 $16,691
Deferred policy acquisition costs 1,929 1,812 1,691
Other assets 3,289 2,722 2,387
_______ _______ _______
$26,109 $22,739 $20,769
======= ======= =======
LIABILITIES AND EQUITY
Policy reserves and related items $21,952 $19,255 $17,459
Other liabilities 2,091 1,700 1,686
Equity 2,066 1,784 1,624
_______ _______ _______
$26,109 $22,739 $20,769
======= ======= =======
REVENUES
Premiums and related income $ 1,256 $ 1,183 $ 1,002
Investment income, net of expenses 1,726 1,578 1,508
Gain on investment transactions 45 7 1
_______ _______ _______
3,027 2,768 2,511
EXPENSES
Policyholder benefits 2,146 2,059 1,892
Commissions and other expenses 500 418 363
Income taxes 136 95 86
_______ _______ _______
2,782 2,572 2,341
_______ _______ _______
Income from operations 245 196 170
Cumulative effect of change in accounting for
post employment benefits other than pensions (12)
_______ _______ _______
Net income $ 245 $ 196 $ 158
======= ======= =======
SOURCE OF CASH
Cash provided by operations $ 604 $ 630 $ 639
Net receipts from interest-sensitive policies 1,853 884 677
_______ _______ _______
$ 2,457 $ 1,514 $ 1,316
======= ======= =======
APPLICATION OF CASH
Net purchases of investments $ 2,434 $ 1,424 $ 1,344
Equity transactions 19 22
Other 4 68 (28)
_______ _______ _______
$ 2,457 $ 1,514 $ 1,316
======= ======= =======
</TABLE>
Transamerica Corporation and Subsidiaries 49
<PAGE>
INSURANCE BROKERAGE
Income from insurance brokerage operations comprises Transamerica's equity
interest in Sedgwick Group plc's income, less a provision for income taxes and
the amortization of goodwill. In 1993 income, before the amortization of
goodwill, decreased $5.9 million (37%). Transamerica's equity interest was
reduced from 25% to 21% during 1993 due to a rights offering by Sedgwick which
resulted in a $2.6 million after tax loss to Transamerica. In addition, based
on figures reported by Sedgwick and included in Transamerica's results on a
one quarter lag, Transamerica's equity interest in Sedgwick's operating
results, before the amortization of goodwill, decreased $3.3 million below
1992 due primarily to lower operating profits reported by Sedgwick.
Operating income, before the amortization of goodwill, decreased $31.2 million
(66%) in 1992 principally because 1991 results included a $32.6 million after
tax gain from the sale by the Corporation of 59 million shares of Sedgwick
stock which reduced Transamerica's equity interest from 39% to 25%.
Goodwill amortization related to insurance brokerage operations amounted to
$7.2 million in 1993, $7.2 million in 1992 and $7.8 million in 1991.
ASSET MANAGEMENT
Income from asset management operations, before the amortization of goodwill,
increased $200,000 from 1992 primarily due to higher revenues from increased
assets under management which more than offset a $1 million after tax
provision for vacant office space. The principal business of the asset
management operations is the marketing and investment management of mutual
funds and serving as investment advisor to public and private retirement
funds. At December 31, 1993 the private account business had $10.6 billion and
the mutual fund business had $3.1 billion under management. Goodwill
amortization related to asset management operations was $1.7 million in 1993,
1992 and 1991.
UNALLOCATED INTEREST AND OTHER EXPENSES
Unallocated costs, after related income taxes, are summarized as follows:
<TABLE>
<CAPTION>
____________________________________________________________________________
(Amounts in millions) 1993 1992 1991
<S> <C> <C> <C>
Interest expense $54.1 $ 61.5 $ 66.1
Other expenses (income) (48.0) 40.5 38.9
_____ ______ ______
$ 6.1 $102.0 $105.0
===== ====== ======
</TABLE>
Interest expense, after related income taxes, decreased $7.4 million (12%) in
1993 and $4.6 million (7%) in 1992 due to a lower level of borrowings and
lower interest rates. The lower borrowing level in 1993 was primarily due to
the repayment of debt with proceeds from the sale of the discontinued property
and casualty insurance operation. Other expenses, after related income taxes,
in 1993 includes a tax benefit of $90 million from the reduction of tax
reserves principally for the resolution of prior years' tax matters.
Excluding the tax benefits of $90 million for the reversal of tax reserves,
other expenses, after related income taxes, for 1993 increased $1.5 million
(4%) compared to 1992. The increase was principally due to a $4 million after
tax provision for restructuring corporate-wide administrative functions, a $3
million additional after tax provision to increase the supplemental
(nonqualified) pension liability to reflect the shift toward lump sum
distributions which are calculated at the lower Pension Benefit Guaranty
Corporation interest rate, and an increase in advertising expenses, offset in
part by lower self insurance costs.
Other expenses, after related income taxes, increased $1.6 million (4%) in
1992 due primarily to higher self insurance and advertising expenses, offset
in part by adjustments in taxes allocated to the Corporation in accordance
with its usual procedures for allocating current consolidated income taxes.
50 Transamerica Corporation and Subsidiaries
<PAGE>
DISCONTINUED OPERATIONS
On July 20, 1992, Transamerica Corporation announced that its Board of
Directors approved a plan to withdraw from the property and casualty insurance
business. Transamerica Corporation sold 73% of TIG Holdings, Inc., a new
company which acquired Transamerica's former property and casualty insurance
subsidiary through an initial public offering in April 1993 and the balance in
a secondary public offering in December 1993. The net proceeds, after
underwriting discounts, totaled $1 billion in cash from the two offerings,
resulting in a $125 million after tax loss on the sale, of which $75 million
was recorded in 1992 on an estimated basis and $50 million in 1993 upon the
sale in the secondary offering of the remaining interest in TIG Holdings, Inc.
See Note N, Discontinued Operations, of the financial statements on page 68 of
this annual report for a discussion of Transamerica's remaining obligations
from the withdrawal from the property and casualty insurance business.
Results from discontinued operations for 1992 were a loss of $99.7 million.
This loss comprises the $75 million after tax provision for the estimated loss
from the ultimate disposition and a $24.7 million after tax loss from
operations incurred in the first half of 1992, which represents 1992 property
and casualty results prior to the date of adoption of the plan to withdraw
from the property and casualty insurance business.
NEW ACCOUNTING STANDARDS
See Note A, Significant Accounting Policies, on pages 57 and 58 of this annual
report for a discussion of the potential impact of new accounting standards
Transamerica will adopt in 1994 and 1995.
SUBSEQUENT EVENT
On February 13, 1994, Transamerica entered into an Asset Purchase Agreement to
purchase all the assets of the container division of Tiphook plc for up to
$1.1 billion in cash. Completion of the acquisition is subject to approval by
Tiphook's shareholders and successful completion of a consent solicitation and
bond tender by Tiphook.
Transamerica Corporation and Subsidiaries 51
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEET
______________________________________________________________________________
December 31 1993 1992
<S> <C> <C>
ASSETS
Investments, principally of life insurance subsidiaries:
Fixed maturities--held for investment $18,553.0 $16,111.1
Fixed maturities--available for sale 872.4 759.4
Mortgage loans and real estate 493.0 577.7
Equity securities 466.1 342.0
Loans to life insurance policyholders 396.5 370.5
Short-term investments 190.8 133.3
_________ _________
20,971.8 18,294.0
Finance receivables, of which $3,023.9 in 1993
and $2,806.4 in 1992 matures within one year 6,908.5 6,786.6
Less unearned fees ($240.8 in 1993 and $250 in
1992) and allowance for losses 426.0 443.9
_________ _________
6,482.5 6,342.7
Cash and cash equivalents 92.7 22.0
Trade and other accounts receivable 2,015.4 1,771.9
Net assets of discontinued operations 1,103.9
Property and equipment, less accumulated depreciation
of $831.6 in 1993 and $748.7 in 1992:
Land, buildings and equipment 345.7 325.4
Equipment held for lease 1,306.5 1,062.1
Deferred policy acquisition costs 1,929.3 1,812.0
Separate accounts administered by life insurance
subsidiaries 1,366.5 984.4
Investment in Sedgwick Group plc 310.2 298.3
Goodwill, less accumulated amortization of $113.4
in 1993 and $100.2 in 1992 495.4 510.8
Other assets 734.5 763.4
_________ _________
$36,050.5 $33,290.9
========= =========
</TABLE>
(Amounts in millions except for share data)
See notes to financial statements
52 Transamerica Corporation and Subsidiaries
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEET (CONTINUED)
______________________________________________________________________________
December 31 1993 1992
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Life insurance policy liabilities $21,951.8 $19,255.3
Notes and loans payable, principally of finance
subsidiaries, of which $2,023 in 1993 and
$1,062.6 in 1992 matures within one year 7,704.0 7,573.1
Accounts payable and other liabilities 1,352.4 1,547.0
Income taxes, of which $301.4 in 1993 and $354.1
in 1992 is deferred 312.3 631.0
Separate account liabilities 1,366.5 984.4
Shareholders' equity:
Preferred stock ($100 par value):
Authorized--1,200,000 shares; issuable in series,
cumulative
Outstanding--Dutch Auction Rate Transferable
Securities, 2,250 shares, at liquidation
preference of $100,000 per share 225.0 225.0
Outstanding--Series D, 400,000 shares, at
liquidation preference of $500 per share,
cumulative dividend rate of 8.5% 200.0 200.0
Common stock ($1 par value):
Authorized--150,000,000 shares
Outstanding--76,398,888 shares in 1993 and
79,170,880 shares in 1992, after deducting
3,339,574 shares in treasury in 1993 76.4 79.2
Additional paid-in capital 475.2 646.5
Retained earnings 2,297.9 2,100.2
Net unrealized gain on marketable equity securities 124.1 83.5
Foreign currency translation adjustments (35.1) (34.3)
_________ _________
3,363.5 3,300.1
_________ _________
$36,050.5 $33,290.9
========= =========
</TABLE>
Transamerica Corporation and Subsidiaries 53
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF INCOME
_____________________________________________________________________________
Year ended December 31 1993 1992 1991
<S> <C> <C> <C>
REVENUES
Life insurance premiums and related income $1,255.7 $1,182.3 $1,001.8
Investment income 1,749.9 1,600.0 1,529.9
Finance charges and other fees 990.1 1,013.9 1,040.7
Leasing revenues 388.3 402.2 381.4
Real estate and tax service revenues 293.3 249.6 168.2
Gain (loss) on investment transactions 39.0 7.7 (2.9)
Insurance brokerage 19.7 29.2 80.9
Other 97.0 95.2 56.1
________ ________ ________
4,833.0 4,580.1 4,256.1
EXPENSES
Life insurance benefits 2,145.9 2,059.2 1,892.3
Life insurance underwriting, acquisition
and other expenses 499.8 418.0 362.6
Leasing operating and maintenance costs 184.4 198.0 197.3
Interest and debt expense 511.6 568.9 631.1
Provision for losses on receivables
and assets held for sale 147.0 90.7 431.9
Other, including administrative and
general expenses 743.7 684.9 629.6
________ ________ ________
4,232.4 4,019.7 4,144.8
________ ________ ________
600.6 560.4 111.3
Income taxes 150.1 217.5 66.2
________ ________ ________
Income from continuing operations 450.5 342.9 45.1
Income (loss) from discontinued operations (50.0) (99.7) 39.7
Extraordinary loss on early extinguishment
of debt (23.1)
Cumulative effect of change in accounting for
post employment benefits other than pensions (34.7)
________ ________ ________
Net income $ 377.4 $ 243.2 $ 50.1
======== ======== ========
EARNINGS PER SHARE OF COMMON STOCK
Income from continuing operations $ 5.44 $ 4.11 $ 0.43
Income (loss) from discontinued operations (0.64) (1.28) 0.52
Extraordinary loss on early extinguishment
of debt (0.29)
Cumulative effect of change in accounting for
post employment benefits other than pensions (0.45)
________ ________ ________
Net income $ 4.51 $ 2.83 $ 0.50
======== ======== ========
</TABLE>
(Amounts in millions except for share data)
See notes to financial statements
54 Transamerica Corporation and Subsidiaries
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF CASH FLOWS
_____________________________________________________________________________
Year ended December 31 1993 1992 1991
<S> <C> <C> <C>
OPERATING ACTIVITIES
Income from continuing operations $ 450.5 $ 342.9 $ 45.1
Adjustments to reconcile income from
continuing operations to net cash
provided by operating activities:
Increase in life insurance policy
liabilities, excluding policyholder
balances on interest-sensitive
policies 927.3 912.5 829.6
Amortization of policy acquisition
costs 232.7 135.3 172.1
Policy acquisition costs deferred (350.0) (256.3) (226.8)
Depreciation and amortization 167.1 158.0 147.9
Other (328.1) (273.2) 71.5
_________ _________ _________
Net cash provided by continuing operations 1,099.5 1,019.2 1,039.4
INVESTING ACTIVITIES
Finance receivables originated (13,664.0) (11,388.0) (10,330.0)
Finance receivables collected 13,375.2 11,121.9 9,962.0
Purchase of investments (12,102.5) (6,527.2) (9,236.0)
Sales and maturities of investments 9,647.5 5,090.7 7,850.2
Proceeds from public offering of
discontinued operations 1,031.8
Cash transactions with discontinued
operations (409.3) 27.0 20.0
Other (475.5) (157.0) 7.1
_________ _________ _________
Net cash used by investing activities (2,596.8) (1,832.6) (1,726.7)
FINANCING ACTIVITIES
Proceeds from debt financing 5,308.2 4,100.9 4,563.2
Proceeds from sale of preferred stock 193.2
Payments of notes and loans (5,239.5) (4,276.4) (4,402.0)
Receipts from interest-sensitive policies
credited to policyholder account balances 4,166.3 2,572.0 1,977.7
Return of policyholder balances on
interest-sensitive policies (2,313.2) (1,688.5) (1,300.6)
Common stock transactions (174.1) 70.3 27.3
Dividends (179.7) (178.6) (164.0)
_________ _________ _________
Net cash provided by financing
activities 1,568.0 792.9 701.6
_________ _________ _________
Increase (decrease) in cash and
cash equivalents 70.7 (20.5) 14.3
Cash and cash equivalents at beginning
of year 22.0 42.5 28.2
_________ _________ _________
Cash and cash equivalents at end of year $ 92.7 $ 22.0 $ 42.5
========= ========= =========
</TABLE>
(Amounts in millions except for share data)
See notes to financial statements
Transamerica Corporation and Subsidiaries 55
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
__________________________________________________________________________________________________________
Net Unrealized Foreign
Additional Gain on Market- Currency
Preferred Common Paid-in Retained able Equity Translation
Stock Stock Capital Earnings Securities Adjustments
<S> <C> <C> <C> <C> <C> <C>
BALANCE AT JANUARY 1, 1991 $225.0 $76.4 $558.5 $2,149.5 $ 2.4 $ 4.9
Net income 50.1
Dividends declared:
On common stock (152.0)
On preferred stock (12.0)
Common stock issued 0.9 28.7
Treasury stock purchased (0.1) (2.2)
Other changes 98.4 (2.7)
______ _____ ______ ________ ______ ______
BALANCE AT DECEMBER 31, 1991 225.0 77.2 585.0 2,035.6 100.8 2.2
Net income 243.2
Dividends declared:
On common stock (156.7)
On preferred stock (21.9)
Common stock issued 2.0 68.3
Preferred stock issued 200.0 (6.8)
Other changes (17.3) (36.5)
______ _____ ______ ________ ______ ______
BALANCE AT DECEMBER 31, 1992 425.0 79.2 646.5 2,100.2 83.5 (34.3)
Net income 377.4
Dividends declared:
On common stock (156.1)
On preferred stock (23.6)
Common stock issued 0.9 32.6
Treasury stock purchased (3.7) (203.9)
Other changes 40.6 (0.8)
______ _____ ______ ________ ______ ______
BALANCE AT DECEMBER 31, 1993 $425.0 $76.4 $475.2 $2,297.9 $124.1 $(35.1)
====== ===== ====== ======== ====== ======
</TABLE>
[FN]
(Amounts in millions)
See notes to financial statements
56 Transamerica Corporation and Subsidiaries
<PAGE>
NOTES TO FINANCIAL STATEMENTS December 31, 1993
_____________________________________________________________________________
[A] SIGNIFICANT ACCOUNTING POLICIES
CONSOLIDATION
The consolidated financial statements include the accounts of Transamerica
Corporation and its subsidiaries. Transamerica's investment in Sedgwick Group
plc is carried at cost plus equity in undistributed earnings since the date of
acquisition.
INVESTMENTS
Investments in fixed maturities, comprising bonds, notes and redeemable
preferred stocks, are carried at amortized cost and generally held to
maturity. Fixed maturity securities which are expected to be called by the
issuer or sold in the next three months are classified as available for sale
and carried at the lower of amortized cost or market value. Market value is
based on quoted market prices. For fixed maturity securities not actively
traded, including private placements, market value is estimated using value
obtained from independent pricing services. Changes to the carrying amount of
securities available for sale, if any, are included in shareholders' equity.
Investments in equity securities, comprising corporate common and
nonredeemable preferred stocks, are carried at fair value based on quoted
market prices. Realized gains and losses on investment transactions are
determined generally on a specific identification basis and included in income
on the trade date.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include money market funds and marketable securities
with original maturities of three months or less except for such securities
held by the life insurance operation which are included in short-term
investments.
DEPRECIATION AND AMORTIZATION
Property and equipment, which are stated on the basis of cost, are depreciated
by use of the straight-line method over their estimated useful lives. Goodwill
is amortized over 40 years.
INCOME TAXES
Transamerica provides deferred taxes based on enacted tax rates in effect on
the dates temporary differences between the book and tax bases of assets and
liabilities reverse.
FINANCE
Finance charges are generally recognized as earned on an effective yield
method. An allowance for losses is provided in an amount sufficient to cover
estimated uncollectible receivables.
Leasing revenues are recognized as rentals become due.
Tax service revenues are recognized as income generally when contracts are
executed with a portion of the revenues amortized over the estimated lives of
the contracts.
INSURANCE
The accounts of the life insurance operation have been included in the
consolidated financial statements on the basis of generally accepted
accounting principles which differ in some respects from those followed in
reports to regulatory authorities.
Life insurance premiums are generally recognized as earned over the premium
paying periods, with reserves for future benefits established from such
premiums on a net-level premium method based upon estimated investment yields,
withdrawals, mortality and other assumptions which were appropriate at the
time the policies were issued. Premiums and deposits for universal life and
other interest-sensitive life insurance products that do not involve
significant mortality or morbidity risk are recorded as liabilities. In 1993
Transamerica adopted this method of accounting for its structured settlement
products based on the determination that there is insignificant mortality risk
from these products. Prior year financial statements have been reclassified
which reduced premium income and life insurance related expenses by an equal
amount. Costs of acquiring new life insurance business, principally
commissions and certain variable underwriting and field office expenses, all
of which vary with and are primarily related to the production of new business,
are deferred and amortized in proportion to gross profit. The aforementioned
change in accounting for the structured settlement products increased
amortization of deferred policy acquisition costs and reduced net income $39
million including an immaterial amount related to prior years. Adequate
provision is made for reported and unreported claims and related expenses.
Asset management and advisory fees are recorded in revenue during the period
such services are performed.
NEW ACCOUNTING STANDARDS
In 1993, Transamerica adopted the Financial Accounting Standards Board's new
standard on accounting for reinsurance ceded under reinsurance contracts. The
new standard requires reinsurance receivables under reinsurance agreements,
which totaled $990.5 million at December 31, 1993 and $886.8 million at
December 31, 1992 and are included in the balance sheet caption trade and
other receivables, to be reported as assets instead
Transamerica Corporation and Subsidiaries 57
<PAGE>
[A] SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
of the previous practice of netting the receivable against the related
liability. The new standard also precludes immediate gain recognition on
retroactive reinsurance agreements which does not impact Transamerica.
In May 1993, the Financial Accounting Standards Board issued a new standard on
accounting for impairment of loans which Transamerica must adopt by the first
quarter of 1995. The new standard requires that impaired loans be measured
based on either the fair value of the loan, if discernible, the present value
of expected cash flows discounted at the loan's effective interest rate or the
fair value of the collateral if the loan is collateral dependent. When
adopted, the new standard is not expected to have a material effect on the
consolidated financial statements of Transamerica.
Also in May 1993, the Financial Accounting Standards Board issued a new
standard on accounting for certain investments in debt and equity securities
which Transamerica will adopt in the first quarter of 1994. Under the new
standard Transamerica will report at fair value its investments in debt
securities for which Transamerica does not have the positive intent and
ability to hold to maturity. Unrealized gains and losses will be reported on
an after tax basis in a separate component of shareholders' equity. In
connection with the adjustment to fair value of investments associated with
interest-sensitive products, Transamerica will also adjust deferred policy
acquisition costs equivalent to the amount that would be required upon
realization of such gains or losses. The deferred policy acquisition
adjustment will also be included with the unrealized gains and losses
component of shareholders' equity on an after tax basis. Had the new standard
been adopted at December 31, 1993 and had all debt securities held for
investment been reported at fair value, the impact on the consolidated
financial statements of Transamerica would have been an $804.5 million
increase in shareholders' equity with no effect on income.
EARNINGS PER SHARE OF COMMON STOCK
Earnings per share of common stock are based on the weighted average number of
shares outstanding (78,495,000 in 1993, 78,050,000 in 1992 and 76,676,000 in
1991) after deduction of preferred dividends.
[B] CAPITAL STOCK
Transamerica has outstanding 2,250 shares of Dutch Auction Rate Transferable
Securities Preferred Stock (DARTS) ($100 par value, $100,000 liquidation
value) in Series A-1, B-1 and C-1 of 750 shares each. Dividends, which are
cumulative, are normally determined every 49 days through auction procedures.
The dividend rates for Series A-1, B-1 and C-1 shares were 3.15%, 2.90% and
3.09% at December 31, 1993 and 3.79%, 3.85% and 3.64% at December 31, 1992.
In January 1992 Transamerica issued 400,000 shares of Series D Preferred Stock
($100 par value, $500 liquidation value) resulting in proceeds of $200 million
before underwriting discounts and issuance costs. Dividends, which are
cumulative, are at the rate of 8.5% of the liquidation preference per annum.
One preference stock purchase right accompanies each share of common stock
outstanding. Each right will entitle the holder to buy from Transamerica a
unit consisting of 1/100 of a share of Series A Participating Preference Stock
at an exercise price of $135 per unit. The rights become exercisable ten days
after a public announcement that a person or group has acquired 20% or more of
Transamerica's common stock or has commenced a tender offer for 30% or more of
the common stock. The rights may be redeemed prior to becoming exercisable by
action of the Board of Directors at a redemption price of $0.05 per right. If
Transamerica is acquired by any person after the rights become exercisable,
each right will entitle its holder to purchase stock of the acquiring company
having a market value of twice the exercise price of each right. The rights
expire on August 8, 1996.
At December 31, 1993, 5,000,000 shares of preference stock (without par value)
were authorized but unissued.
[C] STOCK OPTION PLANS
At December 31, 1993, under Transamerica's stock option plans, 11,660,839
shares of common stock (12,690,920 shares at December 31, 1992) were reserved
principally for sale to key employees of the Corporation and subsidiaries at
market value on the date options are granted. During 1993, options for
1,670,700 shares were granted, and options for 640,918 shares were cancelled
due to forfeiture. Options were exercised for 1,019,081 shares in 1993,
1,567,553 shares in 1992 and 300,223 shares in 1991, at aggregate option
prices of $36 million, $52.1 million and $8.1 million. Of the options for
5,557,097 shares outstanding at December 31, 1993 (5,546,396 shares at
December 31, 1992) at an aggregate option price of $225.9 million, options for
2,352,722 shares were exercisable. In February 1994, options for 1,541,850
shares were granted at an option price equal to market value on the date
granted.
Page 58 Transamerica Corporation and Subsidiaries
<PAGE>
[D] INCOME TAXES
The provision for income taxes on income from continuing operations comprises:
<TABLE>
<CAPTION>
_____________________________________________________________________________
(Amounts in millions) 1993 1992 1991
<S> <C> <C> <C>
Federal current $213.0 $225.7 $131.7
Federal deferred tax benefits (104.1) (42.5) (102.8)
State 27.1 28.7 23.5
Foreign 14.1 5.6 13.8
______ ______ ______
$150.1 $217.5 $ 66.2
====== ====== ======
</TABLE>
The 1993 provision for income taxes on income from continuing operations
includes $8.4 million from the revaluation of the deferred tax liability for
the effect of the federal tax rate increase.
Deferred income taxes for continuing operations reflect the net tax effects of
temporary differences between the carrying amounts of assets and liabilities
for financial reporting purposes and the amounts used for income tax purposes.
Significant components of the deferred tax assets and liabilities as of
December 31, 1993 and 1992 are as follows:
<TABLE>
<CAPTION>
_____________________________________________________________________________
(Amounts in millions) 1993 1992
<S> <C> <C>
Deferred tax assets:
Allowance for losses $120.6 $131.8
Impairment of investments 36.2 46.5
Post employment benefits other than pensions 20.1 18.7
Life insurance policy liabilities 453.8 330.2
Capital loss carryforward 41.1
______ ______
671.8 527.2
Deferred tax liabilities:
Deferred policy acquisition costs 609.2 534.1
Accelerated depreciation 196.6 200.9
Unrealized gains on equity securities 66.9 38.5
Discount amortization on notes and loans payable 55.8 64.1
Other 44.7 43.7
______ ______
973.2 881.3
______ ______
Net deferred tax liability $301.4 $354.1
====== ======
</TABLE>
The difference between federal income taxes on income from continuing
operations computed at the statutory rate and the provision for income taxes
is:
<TABLE>
<CAPTION>
_____________________________________________________________________________
(Amounts in millions) 1993 1992 1991
<S> <C> <C> <C>
Federal income taxes at statutory rate $210.2 $190.5 $ 37.8
State income taxes 17.6 15.9 15.0
Amortization of goodwill 7.7 7.5 8.0
Prior year items (94.2) 2.6
Tax rate change 8.4
Other 0.4 3.6 2.8
______ ______ ______
$150.1 $217.5 $ 66.2
====== ====== ======
</TABLE>
Pretax income from foreign operations totaled $30 million in 1993, $25 million
in 1992 and $30 million in 1991. Income tax payments totaled $135.5 million in
1993, $174.8 million in 1992 and $127.2 million in 1991.
Transamerica Corporation and Subsidiaries 59
<PAGE>
[E] INVESTMENTS
The amortized cost and market value of fixed maturities held for investment at
December 31, 1993 and 1992 are as follows:
<TABLE>
<CAPTION>
______________________________________________________________________________
(Amounts in millions) Gross Gross
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
<S> <C> <C> <C> <C>
DECEMBER 31, 1993
U.S. Treasury securities and
obligations of U.S.
government authorities and
agencies $ 205.3 $ 15.3 $ 0.8 $ 219.8
Obligations of states and
political subdivisions 163.1 18.8 0.2 181.7
Foreign governments 144.9 12.5 157.4
Corporate securities 6,537.6 738.3 18.6 7,257.3
Mortgage-backed securities 8,571.2 571.2 24.4 9,118.0
Public utilities 2,927.1 253.5 8.4 3,172.2
Redeemable preferred stock 3.8 0.2 3.6
_________ ________ ______ _________
$18,553.0 $1,609.6 $ 52.6 $20,110.0
========= ======== ====== =========
DECEMBER 31, 1992
U.S. Treasury securities and
obligations of U.S.
government authorities and
agencies $ 188.7 $ 6.3 $ 0.3 $ 194.7
Obligations of states and
political subdivisions 116.3 16.3 9.3 123.3
Foreign governments 309.5 24.6 0.4 333.7
Corporate securities 5,447.7 522.4 81.4 5,888.7
Mortgage-backed securities 6,909.6 427.9 39.4 7,298.1
Public utilities 3,127.4 207.5 4.9 3,330.0
Redeemable preferred stock 11.9 5.0 6.9
_________ ________ ______ _________
$16,111.1 $1,205.0 $140.7 $17,175.4
========= ======== ====== =========
</TABLE>
Fixed maturity securities which are expected to be called by the issuer or
sold in the next three months are classified as available for sale and carried
at the lower of amortized cost or market value. At December 31, 1993 the fair
value of the fixed maturities available for sale portfolio based upon quoted
market prices was $920.2 million with gross unrealized gains of $47.8 million
and no unrealized losses. At December 31, 1992 the fair value of the fixed
maturities available for sale portfolio was $799.3 million with gross
unrealized gains of $39.9 million and no unrealized losses.
The cost of equity securities was $275.1 million at December 31, 1993 and
$228.5 million at December 31, 1992. The net unrealized gain on marketable
equity securities, after related income taxes, is included in shareholders'
equity. Gross unrealized gains and gross unrealized losses at December 31,
1993 amounted to $194.5 million and $3.5 million resulting in net unrealized
gains before taxes of $191 million.
60 Transamerica Corporation and Subsidiaries
<PAGE>
[E] INVESTMENTS (CONTINUED)
The amortized cost and market value of fixed maturities at December 31, 1993
by contractual maturity, are shown below. Expected maturities will differ from
contractual maturities because borrowers may have the right to call or prepay
obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
______________________________________________________________________________
(Amounts in millions) Amortized Market
Cost Value
<S> <C> <C>
Due in one year or less $ 270.8 $ 276.6
Due after one year through five years 1,224.0 1,315.8
Due after five years through ten years 1,513.9 1,634.7
Due after ten years 6,973.1 7,764.9
_________ _________
9,981.8 10,992.0
Mortgage-backed securities 8,571.2 9,118.0
_________ _________
$18,553.0 $20,110.0
========= =========
</TABLE>
The carrying values and estimated fair values of investments in mortgage loans
on real estate and loans to life insurance policyholders at December 31, 1993
and 1992 are as follows:
<TABLE>
<CAPTION>
______________________________________________________________________________
(Amounts in millions) Carrying Estimated
Value Fair Value
<S> <C> <C>
DECEMBER 31, 1993
Mortgage loans on real estate $368.9 $402.4
====== ======
Loans to life insurance policyholders $396.5 $373.1
====== ======
DECEMBER 31, 1992
Mortgage loans on real estate $447.6 $475.2
====== ======
Loans to life insurance policyholders $370.5 $365.2
====== ======
</TABLE>
The fair values for mortgage loans on real estate and policyholder loans are
estimated using discounted cash flow calculations, using interest rates
currently being offered for similar loans to borrowers with similar credit
ratings. Loans with similar characteristics are aggregated for calculation
purposes.
Gain (loss) on investment transactions, included in consolidated revenues,
comprises:
<TABLE>
<CAPTION>
_____________________________________________________________________________
(Amounts in millions) 1993 1992 1991
<S> <C> <C> <C>
Net gain on sale of investments $157.3 $136.1 $134.7
Provision for impairment in value (55.5) (95.2) (81.0)
Accelerated amortization of deferred policy
acquisition costs (62.8) (33.2) (56.6)
______ ______ ______
$ 39.0 $ 7.7 $ (2.9)
====== ====== ======
</TABLE>
Proceeds from sales of fixed maturities were $4.9 billion in 1993, $2.6
billion in 1992 and $4.1 billion in 1991. Gross gains of $212.7 million in
1993, $170.5 million in 1992 and $141.3 million in 1991, and gross losses of
$63.5 million in 1993, $65 million in 1992 and $18.1 million in 1991 were
realized on those sales.
Transamerica Corporation and Subsidiaries 61
<PAGE>
[F] NOTES AND LOANS PAYABLE
<TABLE>
<CAPTION>
_____________________________________________________________________________
(Amounts in millions) 1993 1992
<S> <C> <C>
TRANSAMERICA FINANCE GROUP, INC.:
Short-term bank loans, commercial paper and current
portion of long-term debt $1,910.8 $1,062.4
Long-term debt due subsequent to one year:
Notes and debentures; interest at 4.48% to 9.1%;
maturing through 2002 1,618.6 1,927.1
Notes and debentures; interest at 13.80% to
13.88%; maturity value of $582.8 million;
maturing through 2012 146.8 340.9
Commercial paper and other notes at various
interest rates and terms supported by credit
agreements expiring through 1997 2,505.0 2,813.1
Subordinated notes and debentures; interest at
6.75% to 11%; maturing through 2003 582.8 344.7
Loans due to parent company and other subsidiaries 267.5 101.4
________ ________
7,031.5 6,589.6
PARENT COMPANY AND OTHER SUBSIDIARIES:
Short-term bank loans, commercial paper and
current portion of long-term debt 112.2 0.2
Long-term debt due subsequent to one year:
Notes and debentures; interest at 6.50% to 10%;
maturing through 2016 458.6 588.3
Commercial paper and other notes at various
interest rates and terms supported by credit
agreements expiring through 1996 254.5 383.6
Notes at variable interest rates; maturing
through 1997 114.7 112.8
Less loans to Transamerica Finance Group, Inc. (267.5) (101.4)
________ ________
672.5 983.5
________ ________
$7,704.0 $7,573.1
======== ========
</TABLE>
The estimated fair value of notes and loans payable, using rates currently
available for debt with similar terms and maturities, is $8,141.3 million at
December 31, 1993 and $7,845.2 million at December 31, 1992.
Assets with a net book value of $113.9 million at December 31, 1993, consisting
primarily of land, buildings and equipment, are collateral for certain of the
above debt.
The aggregate annual maturities for the four years subsequent to December 31,
1994 are $1.1 billion in 1995, $2.5 billion in 1996, $1.1 billion in 1997 and
$0.5 billion in 1998.
In 1993 Transamerica Finance Group redeemed $125 million of deep discount
long-term debt with a book value of $90.7 million, which resulted in a $23.1
million extraordinary loss, after related taxes of $11.4 million.
62 Transamerica Corporation and Subsidiaries
<PAGE>
[F] NOTES AND LOANS PAYABLE (CONTINUED)
Under credit agreements with various banks, Transamerica and its subsidiaries
had the ability to borrow up to $4.1 billion with interest at variable rates
at December 31, 1993. There were no borrowings outstanding under these credit
lines at that date. These credit agreements, which expire through 1997,
require a fee on the unused commitment.
Transamerica and its subsidiaries use interest rate exchange agreements to
hedge the interest rate sensitivity of their outstanding indebtedness. Certain
of these agreements call for the payment of fixed rate interest by
Transamerica and its subsidiaries in return for the assumption by other
contracting parties of the variable rate cost. At December 31, 1993, such
agreements covering the notional amount of $380 million at a weighted average
fixed interest rate of 8.46% expiring through 2000 and $840 million of one
year agreements expiring in 1994 with an average interest rate of 3.78% were
outstanding. Additionally at December 31, 1993, exchange agreements covering
the notional amount of $266 million expiring through 1997 were outstanding, in
which Transamerica and its subsidiaries receive interest from other
contracting parties at a weighted average fixed interest rate of 7.22% and pay
interest at variable rates to those parties. While Transamerica is exposed to
credit risk in the event of nonperformance by the other party, nonperformance
is not anticipated due to the credit rating of the counter parties. At
December 31, 1993 the interest rate exchange agreements are with banks rated A
or better by one or more of the major credit rating agencies.
The estimated fair value of the interest rate exchange agreements, determined
on a net present value basis, was a negative $28.6 million at December 31,
1993 and a negative $37.8 million at December 31, 1992. The fair value
represents the estimated amounts that Transamerica and its subsidiaries would
be required to pay to terminate the exchange agreements, taking into account
current interest rates.
Interest payments, net of amounts received from interest rate exchange
agreements, totaled $623.4 million in 1993, $661 million in 1992 and $578.9
million in 1991.
[G] FAIR VALUE OF INVESTMENT CONTRACTS
Investment-type contracts are included in life insurance policy liabilities.
Fair value of investment-type contracts is estimated using discounted cash
flow calculations, based on interest rates currently being offered for similar
contracts with maturities consistent with those remaining for the contracts
being valued. The carrying amounts and estimated fair values of the
liabilities for investment-type contracts at December 31, 1993 and 1992 are as
follows:
<TABLE>
<CAPTION>
______________________________________________________________________________
(Amounts in millions) Carrying Estimated
Value Fair Value
<S> <C> <C>
DECEMBER 31, 1993
Single and flexible premium deferred annuities $ 6,630.9 $ 6,378.2
Single premium immediate annuities 3,354.6 3,796.9
Guaranteed investment contracts 1,994.5 2,093.9
Other deposit contracts 1,544.4 1,584.4
_________ _________
$13,524.4 $13,853.4
========= =========
DECEMBER 31, 1992
Single and flexible premium deferred annuities $ 5,748.4 $ 5,526.8
Single premium immediate annuities 2,856.1 3,043.7
Guaranteed investment contracts 1,777.2 1,867.5
Other deposit contracts 960.0 979.8
_________ _________
$11,341.7 $11,417.8
========= =========
</TABLE>
Investment-type contracts and other life insurance policy reserves generally
provide a natural hedge against fair value changes in the investments held to
fund those reserves.
Transamerica Corporation and Subsidiaries 63
<PAGE>
[H] CONCENTRATION OF RISK, SECURITIZATION AND FAIR VALUE OF RECEIVABLES
During the normal conduct of its operations, Transamerica engages in the
extension of credit to homeowners, electronics and appliance dealers, retail
recreational products and computer stores and others. The risk associated with
that credit is subject to economic, competitive and other influences. While a
substantial portion of the risk is diversified, certain operations are
concentrated in one industry or geographic area.
Transamerica's finance receivables include $3.1 billion, net of unearned
finance charges and insurance premiums, of real estate secured loans,
principally first and second mortgages secured by residential properties of
which approximately 50% is located in California. The commercial finance
receivables portfolio represents lending arrangements with over 200,000
customers. At December 31, 1993, the portfolio included 13 customers with
individual balances in excess of $15 million. These accounts represented 10%
of total commercial net finance receivables outstanding at December 31, 1993.
In July 1990, Transamerica entered into a 5-year arrangement under which it
securitized and sold, with limited recourse, a $375 million participation
interest in a pool of its eligible insurance finance receivables, which
Transamerica continues to service. Newly originated eligible receivables are
added to the pool. Collection of receivables are reinvested in the pool to
maintain an aggregate outstanding balance of approximately $375 million.
The carrying amounts and estimated fair values of the finance receivable
portfolio at December 31, 1993 and 1992 are as follows:
<TABLE>
<CAPTION>
______________________________________________________________________________
(Amounts in millions) Carrying Estimated
Value Fair Value
<S> <C> <C>
DECEMBER 31, 1993
Fixed rate receivables--
Consumer $3,622.3 $4,391.2
Commercial 469.9 478.3
Variable rate receivables--
Commercial 2,390.3 2,390.3
________ ________
$6,482.5 $7,259.8
======== ========
DECEMBER 31, 1992
Fixed rate receivables--
Consumer $3,557.9 $4,320.4
Commercial 413.3 424.9
Variable rate receivables--
Commercial 2,371.5 2,371.5
________ ________
$6,342.7 $7,116.8
======== ========
</TABLE>
The estimated fair values of consumer finance receivables, substantially all
of which are fixed rate instalment loans collateralized by residential real
estate, and the fixed rate commercial finance loans are based on the
discounted value of the future cash flows expected to be received using
available secondary market prices for securities backed by similar loans after
adjustment for differences in loan characteristics. In the absence of readily
available market prices, the expected future cash flows are discounted at
effective rates currently offered by Transamerica for similar loans. For
variable rate commercial loans, which comprise the majority of the commercial
loan portfolio, the carrying amount represents a reasonable estimate of fair
value.
64 Transamerica Corporation and Subsidiaries
<PAGE>
[I] INVESTMENT IN SEDGWICK GROUP PLC
In 1985 Transamerica Corporation exchanged Fred. S. James & Co., Inc. for a
39% interest in Sedgwick Group plc, a London-based international insurance
brokerage firm. On February 28, 1991 Transamerica sold 59 million shares,
resulting in a $54.3 million pretax gain which is included in consolidated
insurance brokerage revenues. In 1993, Transamerica's equity interest was
reduced from 25% to 21% due to a rights offering by Sedgwick which resulted in
a $2.6 million after tax loss to Transamerica. At December 31, 1993, the
aggregate quoted market price of the 114,524,000 shares owned was $307.1
million.
The consolidated statement of income includes Transamerica's equity in the
earnings of Sedgwick. Amounts included for Sedgwick are reported on a one
quarter lag and based upon Sedgwick's most recent published financial
statements. These statements were prepared by Sedgwick in pounds sterling in
accordance with accounting principles generally accepted in the United Kingdom
and translated by Transamerica into U.S. dollars in accordance with foreign
exchange translation practices prescribed in the United States, and are
summarized below:
<TABLE>
<CAPTION>
______________________________________________________________________________
September 30 (Amounts in millions) 1993 1992
<S> <C> <C>
ASSETS
Cash and temporary investments $1,256.3 $1,115.8
Premiums, fees and other receivables 2,336.5 2,116.7
Other assets 917.6 860.9
________ ________
$4,510.4 $4,093.4
======== ========
LIABILITIES AND CAPITAL
Accounts payable and other liabilities $3,262.5 $3,169.3
Long-term liabilities 769.9 578.6
Capital 478.0 345.5
________ ________
$4,510.4 $4,093.4
======== ========
</TABLE>
<TABLE>
<CAPTION>
______________________________________________________________________________
Year Ended September 30 (Amounts in millions) 1993 1992 1991
<S> <C> <C> <C>
REVENUES $1,173.1 $1,211.9 $1,133.6
EXPENSES
Salaries and employee benefits 666.5 676.2 621.0
Other operating expenses 405.5 420.0 405.0
Income taxes 38.3 43.8 37.5
________ ________ ________
1,110.3 1,140.0 1,063.5
________ ________ ________
Net income $ 62.8 $ 71.9 $ 70.1
======== ======== ========
</TABLE>
The principal differences between U.K. accounting principles and those
generally accepted in the United States are primarily due to differences in
accounting for business combinations. Sedgwick, in accounting for its
acquisition of James, wrote off all goodwill immediately against capital. Had
Sedgwick followed U.S. accounting principles and accounted for the acquisition
as a purchase transaction it would have recognized goodwill as an asset to be
amortized over a period not to exceed 40 years, and its capital would have
been greater by the amount of that goodwill. These differences do not affect
the consolidated financial statements, because the goodwill and related
amortization are included in Transamerica's financial statements. Goodwill
amounts to $268.6 million and is being amortized over a 40-year period.
Transamerica's share of Sedgwick's net income, after the amortization of
goodwill and the provision for U.S. taxes on Sedgwick's distributed and
undistributed income, amounted to $5.6 million in 1993, $8.9 million in 1992
and $6.9 million in 1991.
Transamerica Corporation and Subsidiaries 65
<PAGE>
[J] PENSION PLANS
Transamerica Corporation and its subsidiaries, including discontinued
operations, have a number of noncontributory defined benefit pension plans
covering substantially all employees. Plans covering salaried employees provide
pension benefits that are based on the employee's compensation during the
highest paid 60 consecutive months during the 120 months before retirement. The
general policy is to fund current service costs currently and prior pension
service costs over periods ranging from 10 to 30 years.
A summary of the components of net periodic pension cost follows:
_____________________________________________________________________________
<TABLE>
<CAPTION>
(Amounts in millions) 1993 1992 1991
<S> <C> <C> <C>
Service cost--benefits earned during the period $ 15.6 $ 17.7 $ 20.1
Interest cost on projected benefit obligation 43.6 39.2 37.6
Actual return on plan assets (145.7) (100.4) (86.4)
Deferral of current gains in excess of
expected return 97.7 55.1 45.5
Amortization of prior service costs 5.0 3.5 3.4
______ ______ ______
Total pension cost $ 16.2 $ 15.1 $ 20.2
====== ====== ======
</TABLE>
The following table sets forth the amounts recognized in the consolidated
statement of financial position for the pension plans:
_____________________________________________________________________________
<TABLE>
<CAPTION>
(Amounts in millions) 1993 1992
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested benefit obligation* $601.0 $493.9
====== ======
Accumulated benefit obligation $609.1 $503.8
====== ======
Projected benefit obligation, including effects of
future salary increases $651.9 $574.0
Plan assets at fair value 777.2 639.0
______ ______
Excess of plan assets over projected benefit obligation $125.3 $ 65.0
====== ======
The excess of plan assets over projected benefit
obligation comprises:
Net pension liability $ (2.3) $ (2.4)
Unrecognized net gain arising since January 1, 1986 146.0 80.3
Unrecognized prior service cost (20.6) (14.3)
Unrecognized net obligation at January 1, 1986 net
of amortization (8.3) (9.7)
Adjustment required to recognize minimum liability 10.5 11.1
______ ______
$125.3 $ 65.0
====== ======
</TABLE>
*A portion of the vested benefit obligation is unconditionally guaranteed by
Transamerica Occidental Life Insurance Company, a subsidiary of Transamerica.
The projected benefit obligation was determined using a weighted average
discount rate of 7.25% (7.75% in 1992) and an assumed rate of compensation
increase of 5.5%. The expected long-term rate of return on plan assets was
8.0% (8.5% in 1992 and 9.0% in 1991).
66 Transamerica Corporation and Subsidiaries
<PAGE>
[K] OTHER POST EMPLOYMENT BENEFIT PLANS
Transamerica Corporation and its subsidiaries sponsor a defined benefit health
care plan and a defined life insurance plan that provides post employment
benefits to eligible retirees. The plans are contributory, with retiree
contributions adjusted annually, and contain other cost-sharing features such
as deductibles and coinsurance. Medical and life insurance benefits are based
on the employee's length of service and age at retirement from Transamerica
Corporation. The general policy is to fund these benefits on a pay-as-you-go
basis.
In 1991, Transamerica Corporation elected early adoption of Statement of
Financial Accounting Standards No. 106 on accounting for post employment
benefits other than pensions. Adoption of the statement effective January 1,
1991 resulted in a reduction of net income for the year ended December 31,
1991 of $37.5 million, including a $34.7 million after tax cumulative charge
for the accumulated post employment benefit obligation ($52.6 million) accrued
as of January 1, 1991 which Transamerica Corporation elected to recognize upon
adoption.
A summary of the components of net periodic other post employment benefit cost
follows:
______________________________________________________________________________
<TABLE>
<CAPTION>
(Amounts in millions) 1993 1992 1991
<S> <C> <C> <C>
Service cost--benefits earned during the period $1.3 $1.1 $1.3
Interest cost on projected benefit obligation 5.1 4.5 4.2
Amortization of unrecognized net loss 0.3
____ ____ ____
Total other post employment benefit cost $6.7 $5.6 $5.5
==== ==== ====
</TABLE>
The following table sets forth the amounts recognized in the consolidated
statement of financial position for other post employment benefit plans:
______________________________________________________________________________
<TABLE>
<CAPTION>
(Amounts in millions) 1993 1992
<S> <C> <C>
Actuarial present value of other post employment
benefit obligations:
Retirees $51.7 $41.5
Active plan participants 22.5 19.3
Unrecognized net loss (16.9) (5.7)
_____ _____
Unfunded accrued projected benefit obligation $57.3 $55.1
===== =====
</TABLE>
The weighted average annual assumed rate of increase in the health care cost
trend rate is 12.7% for 1994 and is assumed to decrease gradually to 7.8% in
1999 and remain at that level thereafter. The health care cost trend rate
assumption has a significant effect on the amounts reported. Increasing the
trend rate by one percentage point in each year would increase the actuarial
present value obligation for post employment medical benefits as of December
31, 1993 and 1992 by $8.3 million and $6.8 million and the aggregate of the
service and interest cost components of net periodic post employment benefit
costs by $0.9 million in 1993 and $0.6 million in 1992 and 1991. The weighted
average discount rate used in determining the post employment benefit
obligation was 7.25% at December 31, 1993 and 7.75% at December 31, 1992. The
portion of the unrecognized net loss in excess of 10% of the actuarial present
value of other post employment benefit obligations is amortized over the
average remaining service period of active plan participants.
Transamerica Corporation and Subsidiaries 67
<PAGE>
[L] RETAINED EARNINGS RESTRICTIONS
Under certain circumstances, the provisions of loan agreements and statutory
requirements place limitations on the amount of funds which can be remitted to
Transamerica by its consolidated subsidiaries. Of the net assets of
Transamerica's consolidated subsidiaries, as adjusted for intercompany account
balances, at December 31, 1993, approximately $3.6 billion is so restricted,
and $1.1 billion is free for remittance to Transamerica subject to investment
and operating requirements.
[M] BUSINESS SEGMENT INFORMATION
Business segment data, as required by Statement of Financial Accounting
Standards No. 14, Financial Reporting for Segments of a Business Enterprise,
for each of the years in the three year period ended December 31, 1993
included in the tables in the Financial Review on pages 37 to 51 of this
annual report are an integral part of these financial statements.
[N] DISCONTINUED 0PERATIONS
On July 20, 1992, Transamerica Corporation announced that its Board of
Directors approved a plan to withdraw from the property and casualty insurance
business. Transamerica sold its property and casualty insurance subsidiary,
Transamerica Insurance Group, through an initial public offering in April 1993
and a secondary offering in December 1993. The net proceeds, after
underwriting discounts, totaled $1 billion in cash from the two offerings,
resulting in a $125 million after tax loss on the sale of which $75 million
was recorded in 1992 on an estimated basis and $50 million in 1993 upon the
completion of the secondary offering.
The following results of the discounted property and casualty insurance
business are included in income from discontinued operations for the years
ended December 31, 1992 and 1991:
<TABLE>
<CAPTION>
_____________________________________________________________________________
(Amounts in millions) 1992 1991
<S> <C> <C>
Revenues $2,122.9 $2,143.9
Costs and expenses 2,345.3 2,112.1
________ ________
Income (loss) before tax benefits (222.4) 31.8
Income tax benefits 104.3 22.5
________ ________
Operating income (loss) (118.1) 54.3
Provision for estimated loss on disposition,
net tax benefit of $172.6 million (75.0)
Cumulative effect of change in accounting for
post employment benefits other than pensions (14.6)
Operating losses for the period subsequent to
July 1, 1992 which are included in the
provision for estimated loss on disposition 93.4
________ ________
Income (loss) from discontinued operations $ (99.7) $ 39.7
======== ========
</TABLE>
68 Transamerica Corporation and Subsidiaries
<PAGE>
[N] DISCONTINUED OPERATIONS (CONTINUED)
In connection with the offering a subsidiary of Transamerica, in 1992, assumed
responsibility by means of a reinsurance agreement for certain assumed treaty
reinsurance business written prior to 1986 for which it received assets which
are expected to be sufficient to fund the liquidation of the business.
Transamerica has collateralized the estimated ultimate obligation of $361
million at December 31, 1993 by providing letters of credit aggregating $150
million and by placing $213 million of its assets in a trust. Additionally
Transamerica agreed to pay up to $89.3 million in adverse loss development on
certain paid environmental losses.
In addition, prior to the initial public offering Transamerica received a
dividend from Transamerica Insurance Group comprising its 51% equity interest
in River Thames Insurance Company Limited, a London-based reinsurance
operation.
[O] COMMITMENTS AND CONTINGENCIES
Substantially all leases of Transamerica and its subsidiaries are operating
leases principally for the rental of real estate. Total rental expense
amounted to $88.1 million in 1993, $89.4 million in 1992 and $93.2 million in
1991.
Contingent liabilities arising from litigation, income taxes and other matters
are not considered material in relation to the consolidated financial position
of Transamerica and subsidiaries.
[P] SUBSEQUENT EVENT
On February 13, 1994, Transamerica entered into an Asset Purchase Agreement to
purchase all the assets of the container division of Tiphook plc for up to
$1.1 billion in cash. Completion of the acquisition is subject to approval by
Tiphook's shareholders and successful completion of a consent solicitation and
bond tender by Tiphook.
Transamerica Corporation and Subsidiaries 69
<PAGE>
REPORT OF MANAGEMENT
The management of Transamerica Corporation is responsible for the financial
information appearing in this Annual Report. The consolidated financial
statements were prepared by management in accordance with generally accepted
accounting principles, and include amounts which are based on the best
information currently available. The financial statements are audited by Ernst
& Young, independent auditors, through the application of generally accepted
auditing standards which include a study and evaluation of Transamerica's
internal accounting control system.
Transamerica maintains a system of internal accounting controls designed to
provide reasonable assurance that assets are safeguarded against loss, that
the financial records reflect fairly the transactions of the Company, and that
established policies and procedures are followed. The concept of reasonable
assurance is based on the recognition that the cost of a system of internal
accounting controls must be related to the benefits derived and that the
balancing of those factors requires estimates and judgments. The internal
accounting control system includes the selection, training and development of
qualified personnel, organizational arrangements that provide for an
appropriate division of responsibilities and the communication of Company
policies and procedures throughout the organization. The system is reviewed
and evaluated by a program of internal audits.
The Board of Directors, acting through its audit committee composed of outside
directors, reviews and monitors Transamerica's accounting principles and
internal accounting controls. The audit committee meets periodically with
management, the internal auditors and the independent auditors. The
independent auditors and internal auditors have full and free access to the
audit committee to discuss the results of their audit work and their views on
accounting policies, the adequacy of internal accounting controls and the
quality of financial reporting.
REPORT OF ERNST & YOUNG INDEPENDENT AUDITORS
BOARD OF DIRECTORS AND SHAREHOLDERS OF TRANSAMERICA CORPORATION
We have audited the consolidated balance sheet of Transamerica Corporation and
subsidiaries as of December 31, 1993 and 1992, and the related consolidated
statements of income, shareholders' equity and cash flows for each of the
three years in the period ended December 31, 1993. These financial statements
are the responsibility of Transamerica Corporation's management. Our
responsibility is to express an opinion on these financial statements based on
our audits. The financial statements of Sedgwick Group plc, used as the basis
for recording the equity in net income of that corporation, were audited by
other auditors whose reports have been furnished to us. Our opinion, insofar
as it relates to the amounts of equity in net income included for Sedgwick
Group plc, is based solely on the reports of other auditors.
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 and the reports of other
auditors provide a reasonable basis for our opinion.
In our opinion, based on our audits and the reports of other auditors, the
financial statements referred to above present fairly, in all material
respects, the consolidated financial position of Transamerica Corporation and
subsidiaries at December 31, 1993 and 1992, and the consolidated results of
their operations and their cash flows for each of the three years in the
period ended December 31, 1993, in conformity with generally accepted
accounting principles.
In 1991, Transamerica Corporation changed its method of accounting for post
employment benefits other than pensions effective January 1, 1991.
ERNST & YOUNG
San Francisco, California
February 22, 1994
70 Transamerica Corporation and Subsidiaries
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For Quarterly Period Ended March 31, 1994 Commission File Number 1-2964
TRANSAMERICA CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 94-0932740
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
600 MONTGOMERY STREET
SAN FRANCISCO, CALIFORNIA 94111
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(ZIP CODE)
(415) 983-4000
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
----- -----
Number of shares of Common Stock, $1 par value, outstanding as of close of
business on April 29, 1994: 74,864,848 shares.
<PAGE>
TRANSAMERICA CORPORATION
FORM 10-Q
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
The following unaudited consolidated financial statements of Transamerica
Corporation and Subsidiaries, for the periods ended March 31, 1994 and 1993, do
not include complete financial information and should be read in conjunction
with the Consolidated Financial Statements filed with the Commission in
Transamerica's Annual Report on Form 10-K for the year ended December 31, 1993.
The financial information presented in the financial statements included in
this report reflects all adjustments, consisting only of normal recurring
accruals, which are, in the opinion of management, necessary for a fair
statement of results for the interim periods presented.
In the first quarter of 1994 Transamerica adopted Statement of Financial
Accounting Standards No. 115, Accounting for Certain Investments in Debt and
Equity Securities. This new standard requires Transamerica to report at fair
value those investments which it does not have the positive intent and ability
to hold to maturity. There is no effect on the income statement. To the extent
the securities marked to fair value relate to interest sensitive insurance
products an adjustment to deferred policy acquisition costs is also made. The
effect of these adjustments, net of federal income taxes, is recorded in a
separate component of shareholders' equity. All of Transamerica's investments
in debt securities have been classified as available for sale at March 31,
1994. As of that date the unrealized gain included in shareholders' equity as a
result of adopting this new accounting standard was $201.2 million.
On March 15, 1994, Transamerica acquired substantially all the operating
assets of the Container Operations of Tiphook plc ("Tiphook"), a London-based
transportation equipment rental company, including certain dry cargo
containers, tank containers, tank chassis, operating leases and other assets of
Tiphook for $1,065 million in cash. For a discussion of this transaction see
Item 2 on Page 6 of this document.
On April 13, 1994, Transamerica sold its remaining 21% ownership interest in
Sedgwick Group plc. Proceeds from the sale approximated $320 million and
resulted in no gain or loss. Transamerica's investment in Sedgwick and its
share of Sedgwick's operating results and related goodwill amortization have
been separated from those of Transamerica's continuing operations and are
classified as discontinued operations. Prior period financial statements have
been reclassified accordingly.
On May 9, 1994, Transamerica commenced a tender offer to purchase up to
4,500,000 shares of its common stock, at prices not greater than $55 nor less
than $48 per share, as set forth in the Offer to Purchase dated May 9, 1994.
Transamerica will determine a single price (not greater than $55 nor less than
$48 per share) that it will pay for shares validly tendered, taking into
account the number of shares tendered and the prices specified by tendering
stockholders. Transamerica will select the Purchase Price that will enable it
to purchase up to 4,500,000 shares pursuant to the Offer. The Offer will expire
on June 6, 1994, unless extended. Transamerica will use a portion of the net
proceeds from the sale of its remaining 21% ownership interest in Sedgwick
Group plc to purchase such shares.
* * * * *
The consolidated ratios of earnings to fixed charges were computed by
dividing income from continuing operations before fixed charges and income
taxes by the fixed charges. Fixed charges consist of interest and debt expense
and one-third of rent expense, which approximates the interest factor.
Results for the three months are not necessarily indicative of the results
for the entire year for most of the Corporation's businesses. This is
particularly true in the life insurance field, where mortality results in
interim periods may vary substantially from such results over a longer period.
2
<PAGE>
TRANSAMERICA CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
ASSETS
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1994 1993
--------- ------------
(AMOUNTS IN MILLIONS
EXCEPT FOR SHARE DATA)
<S> <C> <C>
Investments, principally of life insurance subsidiaries:
Fixed maturities--held for investment................. $18,553.0
Fixed maturities--available for sale.................. $20,513.3 872.4
Mortgage loans and real estate........................ 480.5 493.0
Equity securities, at fair value...................... 449.2 466.1
Loans to life insurance policyholders................. 396.5 396.5
Short-term investments................................ 301.7 190.8
--------- ---------
22,141.2 20,971.8
Finance receivables..................................... 7,108.6 6,908.5
Less unearned fees ($236.6 in 1994 and $240.8 in 1993)
and allowance for losses............................... 428.8 426.0
--------- ---------
6,679.8 6,482.5
Cash and cash equivalents............................... 100.8 92.7
Trade and other accounts receivable..................... 2,339.7 2,015.4
Net assets of discontinued operations................... 304.8 310.2
Property and equipment, less accumulated depreciation of
$849.3 in 1994 and $831.6 in 1993:
Land, buildings and equipment......................... 347.3 345.7
Equipment held for lease.............................. 2,477.8 1,306.5
Deferred policy acquisition costs....................... 1,664.4 1,929.3
Separate accounts administered by life insurance
subsidiaries........................................... 1,398.2 1,366.5
Goodwill, less accumulated amortization of $117.1 in
1994 and $113.4 in 1993................................ 491.7 495.4
Other assets............................................ 753.8 734.5
--------- ---------
$38,699.5 $36,050.5
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Life insurance policy liabilities....................... $22,452.6 $21,951.8
Notes and loans payable, principally of finance
subsidiaries, of which $2,414 in 1994 and $2,023 in
1993 matures within one year........................... 8,933.8 7,704.0
Accounts payable and other liabilities.................. 1,965.5 1,352.4
Income taxes............................................ 433.3 312.3
Separate account liabilities............................ 1,398.2 1,366.5
Shareholders' equity:
Preferred Stock ($100 par value):
Authorized--1,200,000 shares; issuable in series,
cumulative
Outstanding--Dutch Auction Rate Transferable
Securities, 2,250 shares, at liquidation preference
of $100,000 per share, weighted average dividend
rate of 3.02% in 1994 and 3.05% in 1993............ 225.0 225.0
Outstanding--Series D, 400,000 shares, at
liquidation preference of $500 per share,
cumulative dividend rate of 8.5%................... 200.0 200.0
Preference Stock (without par value)--5,000,000 shares
authorized; none outstanding
Common Stock ($1 par value):
Authorized--150,000,000 shares
Outstanding--75,053,015 shares in 1994 and 76,398,888
shares in 1993, after deducting 4,685,447 shares and
3,339,574 shares in treasury......................... 75.0 76.4
Additional paid-in capital.............................. 403.9 475.2
Retained earnings....................................... 2,357.1 2,297.9
Net unrealized gain from investments marked to fair
value.................................................. 298.8 124.1
Foreign currency translation adjustments................ (43.7) (35.1)
--------- ---------
3,516.1 3,363.5
--------- ---------
$38,699.5 $36,050.5
========= =========
</TABLE>
3
<PAGE>
TRANSAMERICA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31,
------------------
1994 1993
-------- --------
(DOLLAR AMOUNTS
IN MILLIONS
EXCEPT FOR SHARE
DATA)
<S> <C> <C>
REVENUES
Life insurance premiums and related income................ $ 330.5 $ 292.2
Investment income......................................... 432.0 425.4
Finance charges and other fees............................ 246.3 246.3
Leasing revenues.......................................... 113.6 89.7
Real estate and tax service revenues...................... 82.2 67.2
Gain on investment transactions........................... 2.6 4.3
Other..................................................... 28.2 23.9
-------- --------
1,235.4 1,149.0
EXPENSES
Life insurance benefits................................... 546.3 511.3
Life insurance underwriting, acquisition and other ex-
penses................................................... 131.0 122.4
Leasing operating and maintenance costs................... 57.8 42.9
Interest and debt expense................................. 122.6 133.1
Provision for losses on receivables....................... 24.2 21.1
Other, including administrative and general expenses...... 188.3 170.3
-------- --------
1,070.2 1,001.1
-------- --------
165.2 147.9
Income taxes.............................................. 61.5 54.9
-------- --------
Income from continuing operations......................... 103.7 93.0
Loss from discontinued operations......................... (0.7) (1.2)
-------- --------
Net income................................................ $ 103.0 $ 91.8
======== ========
Earnings per share of common stock (based on weighted
average number of shares outstanding of 75,811,000 in
1994 and 79,335,000 in 1993 after deduction of preferred
dividends):
Income from continuing operations before investment
transactions........................................... $ 1.27 $ 1.07
Gain on investment transactions......................... 0.02 0.03
-------- --------
Income from continuing operations....................... 1.29 1.10
Loss from discontinued operations....................... (0.01) (0.02)
-------- --------
Net income.............................................. $ 1.28 $ 1.08
======== ========
Dividends per share of common stock....................... $ 0.50 $ 0.50
======== ========
Ratio of earnings to fixed charges........................ 2.27 2.05
</TABLE>
4
<PAGE>
TRANSAMERICA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF RETAINED EARNINGS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
--------------------
1994 1993
--------- ---------
(AMOUNTS IN
MILLIONS)
<S> <C> <C>
Balance at beginning of year.............................. $ 2,297.9 $ 2,100.2
Net income................................................ 103.0 91.8
Dividends on common stock................................. (37.9) (39.8)
Dividends on preferred stock.............................. (5.9) (6.0)
--------- ---------
Balance at end of period.................................. $ 2,357.1 $ 2,146.2
========= =========
</TABLE>
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
--------------------
1994 1993
--------- ---------
(AMOUNTS IN
MILLIONS)
<S> <C> <C>
OPERATING ACTIVITIES
Income from continuing operations....................... $ 103.7 $ 93.0
Adjustments to reconcile income from continuing
operations to net cash provided by operating
activities:
Increase in life insurance policy liabilities, exclud-
ing policyholder balances on interest-sensitive poli-
cies................................................. 257.4 321.8
Amortization of policy acquisition costs.............. 53.6 42.6
Policy acquisition costs deferred..................... (81.8) (82.6)
Other................................................. 93.3 102.4
--------- ---------
Net cash provided by operating activities............. 426.2 477.2
INVESTING ACTIVITIES
Finance receivables originated.......................... (4,135.0) (3,073.8)
Finance receivables collected........................... 3,893.2 2,880.1
Purchase of investments................................. (2,156.3) (1,872.8)
Sales or maturities of investments...................... 1,852.3 1,132.7
Purchase of the container division assets of Tiphook
plc.................................................... (1,065.0)
Cash transactions with discontinued operations.......... (162.6)
Other................................................... (155.5) (90.0)
--------- ---------
Net cash used by investing activities................. (1,766.3) (1,186.4)
FINANCING ACTIVITIES
Receipts from interest-sensitive policies credited to
policyholder account balances.......................... 965.8 948.7
Return of policyholder account balances on interest-
sensitive policies..................................... (722.4) (521.8)
Proceeds from debt financing............................ 2,831.6 1,677.1
Payment of notes and loans.............................. (1,610.3) (1,349.9)
Dividends............................................... (43.8) (45.8)
Common stock transactions............................... (72.7) 15.2
--------- ---------
Net cash provided by financing activities............. 1,348.2 723.5
--------- ---------
Increase in cash and cash equivalents................... 8.1 14.3
Cash and cash equivalents at beginning of year.......... 92.7 22.0
--------- ---------
Cash and cash equivalents at end of period.............. $ 100.8 $ 36.3
========= =========
</TABLE>
5
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
Transamerica Corporation receives funds from its subsidiaries in the form of
dividends, income taxes and interest on loans. The Corporation uses these funds
to pay dividends to its shareholders, reinvest in the operations of its
subsidiaries and pay corporate interest, expenses and taxes. Reinvested funds
are allocated among subsidiaries on the basis of profitability and capital
requirements. Reinvestment may be accomplished by allowing a subsidiary to
retain all or a portion of its earnings, or by making capital contributions or
loans.
The Corporation also borrows funds to finance acquisitions or to lend to
certain of its subsidiaries to finance their working capital needs.
Subsidiaries are required to maintain prudent financial ratios consistent with
other companies in their respective industries and retain the capacity through
committed credit lines to repay working capital loans from the Corporation.
On March 15, 1994, Transamerica acquired substantially all the operating
assets of the Container Operations of Tiphook plc ("Tiphook"), a London-based
transportation equipment rental company, including certain dry cargo
containers, tank containers, tank chassis, operating leases and other assets of
Tiphook (collectively the "Container Operations"). Transamerica assumed certain
specified liabilities of the Container Operations including trade accounts
payable. Transamerica did not assume any borrowings, tax liabilities or
contingent liabilities of Tiphook. Transamerica paid to Tiphook $1 billion,
with further payments of $14.3 million to be made upon delivery of bills of
sale and releases of liens, and delivered $50.7 million to escrow agents for
the establishment of a general escrow account ($40.4 million) and a repairs
escrow account ($10.3 million).
Adjustments to the purchase price, if any, will be determined on completion
of examination of the closing balance sheet of the Container Operations as of
March 15, 1994 by Transamerica's auditors and Tiphook's auditors. Unresolved
disputes, if any, will be referred to a third independent auditor.
Tiphook, at the closing, entered into a non-compete agreement with
Transamerica prohibiting Tiphook and its affiliates from competing with the
Container Operations for a period of seven years. After the closing, Tiphook is
providing certain transitional services to Transamerica pursuant to the terms
of a transitional services agreement. Tiphook has granted Transamerica an
exclusive, perpetual license to the name "Tiphook" in the business of leasing
containers (on a worldwide basis) and tank chassis (in the United States). The
transaction was accounted for as a purchase and the operations of the business
included in the consolidated statement of income from the date of acquisition.
On April 13, 1994, Transamerica sold its remaining 21% ownership interest in
Sedgwick Group plc. Proceeds from the sale approximated $320 million and
resulted in no gain or loss. Transamerica's investment in Sedgwick and its
share of Sedgwick's operating results and related goodwill amortization have
been separated from those of Transamerica's continuing operations and are
classified as discontinued operations. Prior period financial statements have
been reclassified accordingly.
On May 9, 1994, Transamerica commenced a tender offer to purchase up to
4,500,000 shares of its common stock, at prices not greater than $55 nor less
than $48 per share, as set forth in the Offer to Purchase dated May 9, 1994.
Transamerica will determine a single price (not greater than $55 nor less than
$48 per share) that it will pay for shares validly tendered, taking into
account the number of shares tendered and the prices specified by tendering
stockholders. Transamerica will select the Purchase Price that will enable it
to purchase up to 4,500,000 shares pursuant to the Offer. The Offer will expire
on June 6, 1994, unless extended. Transamerica will use a portion of the net
proceeds from the sale of its remaining 21% ownership interest in Sedgwick
Group plc to purchase such shares.
6
<PAGE>
Transamerica's income from continuing operations for the first quarter of
1994 increased $10.7 million (11%) compared to the first quarter of 1993.
Income from continuing operations for the first quarter of 1994 included net
after tax gains from investment transactions aggregating $1.7 million compared
to $2.8 million in the first quarter of 1993. Income from continuing operations
before investment transactions increased $11.8 million (13%) due primarily to
increases in real estate services, life insurance, commercial lending and asset
management operating results and lower unallocated expenses. Partially
offsetting these improvements were declines in consumer lending and leasing
operating results.
Gain (loss) on investment transactions, pretax, included in consolidated
revenues, comprises (amounts in millions):
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
MARCH 31,
-------------
1994 1993
----- ------
<S> <C> <C>
Net gain on sale of investments........................... $12.9 $ 40.2
Adjustment for impairment in value........................ (7.5) (30.9)
Accelerated amortization of deferred policy acquisition
costs.................................................... (2.8) (5.0)
----- ------
$ 2.6 $ 4.3
===== ======
</TABLE>
As required by generally accepted accounting principles, the amortization of
deferred policy acquisition costs was accelerated due to gains realized on the
sale of certain investments. The accelerated amortization of deferred policy
acquisition costs has been included in investment transactions as an offset to
the related gain. Investment transactions also reflected loss provisions
primarily for impairment in the value of certain nonperforming fixed maturity
investments, mortgage loans, real estate investments and real estate acquired
through foreclosure.
Transamerica Corporation's continuing operations, principally through its
life insurance subsidiaries, maintain an investment portfolio which aggregated
$22.1 billion at March 31, 1994. Of this amount $20.5 billion was invested in
fixed maturities. At March 31, 1994, 96.6% of the fixed maturities was rated as
"investment grade" with an additional 2.4% rated in the BB category or its
equivalent. Fixed maturity investments are generally held for long-term
investment and used primarily to support life insurance policy liabilities. The
amortized cost of delinquent below investment grade securities, before
provision for impairment in value, was $29.4 million at March 31, 1994 compared
to $31.1 million at December 31, 1993. Provision for impairment in value has
been made to reduce the amortized cost of certain fixed maturity investments by
$103.8 million at March 31, 1994 and $104 million at December 31, 1993.
Additionally, $480.5 million (2.2% of the investment portfolio), net of
allowance for losses of $65.3 million, was invested in mortgage loans and real
estate including $349.3 million in commercial mortgage loans, $37.8 million in
residential mortgage loans, $113.8 million in real estate investments and $44.9
million in foreclosed real estate. Foreclosed commercial real estate decreased
$8.3 million (15.7%) from December 31, 1993 to March 31, 1994 due primarily to
the sale of foreclosed properties. Problem loans, defined as delinquent loans
and restructured loans yielding less than 8%, totaled $12.3 million at March
31, 1994. Problem loans decreased $6.2 million from December 31, 1993 to March
31, 1994. Allowances for possible losses of $65.3 million at March 31, 1994 and
$70.7 million at December 31, 1993 have been established to cover possible
losses from mortgage loans and real estate investments.
The net unrealized gain on marketable equity securities, after related taxes,
which is included in shareholders' equity decreased $26.5 million during the
quarter ended March 31, 1994 and increased $13.7 million during the first
quarter of 1993.
7
<PAGE>
In the first quarter of 1994 Transamerica adopted Statement of Financial
Accounting Standards No. 115, Accounting for Certain Investments in Debt and
Equity Securities. This new standard requires Transamerica to report at fair
value those investments which it does not have the positive intent and ability
to hold to maturity. There is no effect on the income statement. To the extent
the securities marked to fair value relate to interest sensitive insurance
products an adjustment to deferred policy acquisition costs is also made. The
effect of these adjustments, net of federal income taxes, is recorded in a
separate component of shareholders' equity. All of Transamerica's investments
in debt securities have been classified as available for sale at March 31,
1994. As of that date the unrealized gain included in shareholders' equity as a
result of adopting this new accounting standard was $201.2 million.
Changes in the earnings, capital requirements and liquidity of the
Corporation's consolidated operations are best understood by considering the
Corporation's separate business segments, which are discussed below.
REVENUES AND INCOME BY LINE OF BUSINESS
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
----------------------------------
REVENUES INCOME
------------------ --------------
1994 1993 1994 1993
-------- -------- ------ ------
(AMOUNTS IN MILLIONS)
<S> <C> <C> <C> <C>
Consumer lending........................... $ 163.3 $ 160.2 $ 21.4 $ 24.2
Commercial lending......................... 89.9 94.2 11.4 7.6
Leasing.................................... 116.7 94.9 13.0 13.2
Real estate services....................... 89.0 72.7 24.6 19.6
Amortization of goodwill................... (3.3) (3.2)
-------- -------- ------ ------
Finance.................................... 458.9 422.0 67.1 61.4
Life insurance............................. 767.6 722.2 58.9 58.5
Asset management........................... 10.7 10.7 0.8 (0.2)
Amortization of goodwill................... (0.4) (0.4)
-------- -------- ------ ------
Insurance.................................. 778.3 732.9 59.3 57.9
Unallocated investment transactions,
interest and expenses, less related income
taxes..................................... (1.8) (5.9) (22.7) (26.3)
-------- -------- ------ ------
Total revenues and income from continuing
operations................................ $1,235.4 $1,149.0 $103.7 $ 93.0
======== ======== ====== ======
</TABLE>
CONSUMER LENDING
Consumer lending income, before the amortization of goodwill, for the first
quarter of 1994 decreased $2.8 million (11%) from the first quarter of 1993 due
to increased operating expenses and an increased provision for losses on
receivables that more than offset higher revenues and lower interest expense.
Revenues increased $3.1 million (2%) in the first quarter of 1994 compared to
1993's first quarter mainly due to increased finance charges resulting from
slightly higher average owned finance receivables outstanding.
Operating expenses for the first quarter of 1994 increased $6 million (13%)
over the first quarter of 1993 mainly due to an increase in the number of
branches, from 515 at March 31, 1993 to 570 at March 31, 1994, and new loan
products, which are intended to stimulate future growth. The provision for
losses on receivables increased $5.4 million (46%) due to increased credit
losses. Credit losses, net
8
<PAGE>
of recoveries, on an annualized basis as a percentage of average consumer
finance receivables outstanding, net of unearned finance charges and insurance
premiums, were 1.93% for the first quarter of 1994 compared to 1.25% for the
first quarter of 1993. Credit losses increased mainly due to continued
sluggishness in the California economy and a continued weak California real
estate market. Interest expense declined $3.1 million (5%) due to a lower
average interest rate.
Net consumer finance receivables at March 31, 1994 included $3.1 billion of
real estate secured loans, principally first and second mortgages secured by
residential properties, of which approximately 49% are located in California.
Company policy generally limits the amount of cash advanced on any one loan,
plus any existing mortgage, to between 70% and 80% (depending on location) of
the appraised value of the mortgaged property, as determined by qualified
independent appraisers at the time of loan origination.
Delinquent finance receivables, which are defined as receivables
contractually past due 60 days or more, were $86.8 million (2.24% of finance
receivables outstanding) at March 31, 1994 compared to $78.8 million (2.01% of
finance receivables outstanding) at December 31, 1993 and $69.6 million (1.80%
of finance receivables outstanding) at March 31, 1993. Management has
established an allowance for losses equal to 2.83% of net consumer finance
receivables outstanding at March 31, 1994, December 31, 1993 and March 31,
1993.
Generally, by the time an account secured by residential real estate becomes
past due 90 days, foreclosure proceedings have begun, at which time the account
is moved from finance receivables to other assets and is written down to the
estimated realizable value of the collateral if less than the account balance.
After foreclosure, repossessed assets are carried at the lower of cost or fair
value less estimated selling costs. Accounts in foreclosure and repossessed
assets held for sale totaled $233.6 million at March 31, 1994 compared to
$214.7 million at December 31, 1993 and $200.1 million at March 31, 1993. The
increase primarily reflects a higher number of units in inventory in
California, due to its continuing weak real estate market.
COMMERCIAL LENDING
Commercial lending income, before the amortization of goodwill, for the first
quarter of 1994 increased $3.8 million (49%) over the first quarter of 1993.
The increase was primarily due to stronger margins brought about by the
declining interest rate environment. The interest rates at which the commercial
lending operation borrows funds for its businesses have moved more quickly than
the rates at which it lends to its customers. As a result, margins have been
enhanced by the declining interest rate environment. Lower operating expenses
and a lower provision for losses also contributed to the increase.
Revenues in the first quarter of 1994 decreased $4.3 million (5%) from the
first quarter of 1993 mainly as a result of lower finance charges in the
liquidating portfolio and slightly reduced yields attributable to the current
low interest rate environment.
Expenses decreased in the first quarter of 1994 by $9.6 million (12%) from
the first quarter of 1993. Interest expense declined $5.3 million (18%) due to
a lower average interest rate. The provision for losses on receivables declined
$2.2 million (24%) principally due to lower credit losses. Credit losses, on an
annualized basis as a percentage of average commercial finance receivables
outstanding, net of unearned finance charges, were a negative 0.08% as
recoveries on previously recorded losses exceeded credit losses for the first
quarter of 1994 compared to 1.57% in 1993's first quarter. Operating expenses
declined $2.1 million (5%) mainly as a result of reduced expenses incurred
relating to the management of the liquidating portfolio and restructuring of
the commercial lending unit's infrastructure.
9
<PAGE>
Net commercial finance receivables outstanding increased $228.8 million (8%)
from December 31, 1993 to March 31, 1994 due to growth in the inventory finance
and business credit portfolios. Management has established an allowance for
losses equal to 2.76% of net commercial finance receivables outstanding as of
March 31, 1994 compared to 2.71% at December 31, 1993 and 2.92% at March 31,
1993.
Delinquent receivables, which are defined as the instalment balance for
inventory finance and business credit receivables and the receivable balance
for all other receivables over 60 days past due, were $25.6 million (0.80% of
receivables outstanding) at March 31, 1994 compared to $28.9 million (0.96% of
receivables outstanding) at December 31, 1993 and $56.8 million (1.84% of
receivables outstanding) at March 31, 1993.
Nonearning receivables, which are defined as balances from borrowers that are
over 90 days delinquent or at such earlier time as full collectibility becomes
doubtful, were $34.4 million (1.07% of receivables outstanding) at March 31,
1994 compared to $33.6 million (1.12% of receivables outstanding) at December
31, 1993 and $73.7 million (2.38% of receivables outstanding) at March 31,
1993.
Assets held for sale as of March 31, 1994 totaled $79.8 million, net of a
$155.3 million valuation allowance, and consisted of rent-to-own finance
receivables of $111.3 million, repossessed rent-to-own stores of $104.9 million
and other repossessed assets of $18.9 million. Assets held for sale at December
31, 1993 totaled $90.1 million, net of a $157 million valuation allowance, and
comprised rent-to-own finance receivables of $120.5 million, repossessed rent-
to-own stores of $107.2 million and other repossessed assets of $19.4 million.
Assets held for sale at March 31, 1993 totaled $175.4 million, net of a $119.9
million valuation allowance, and comprised rent-to-own finance receivables of
$161.5 million, repossessed rent-to-own stores of $103.6 million and other
repossessed assets of $30.2 million. Of the rent-to-own finance receivables,
$26.8 million were classified as both delinquent and nonearning at March 31,
1994 compared to $27.5 million at December 31, 1993 and $35.6 million at March
31, 1993.
LEASING
As previously discussed on Page 6, on March 15, 1994, the leasing operation
purchased substantially all of the assets of the container rental businesses of
Tiphook plc for $1,065 million in cash. The acquired fleet of standard
containers and tank containers totaled 363,000 units. The transaction has been
accounted for as a purchase and the operations of the business acquired have
been included in the results of the leasing operation from the date of
acquisition. Results for the first quarter include the sixteen days of
operations subsequent to the acquisition and reduced net income for the quarter
by $300,000.
Leasing income, excluding the effect of Tiphook discussed above and before
the amortization of goodwill, for the first quarter of 1994 increased $100,000
(1%) from the first quarter of 1993 mainly as a result of higher utilization in
the rail trailer business.
Revenues, including $8.8 million from the Tiphook operation, for the first
quarter of 1994 increased $21.8 million (23%) over the first quarter of 1993.
The increase was mainly due to a larger standard and refrigerated container
fleet, higher utilization in the rail trailer and European trailer product
lines and a larger finance lease portfolio.
Expenses, including $9.3 million from the Tiphook operation, for the first
quarter of 1994 increased $21.9 million (30%) over the first quarter of 1993
mainly due to higher ownership and operating costs due to a larger fleet.
The combined utilization (including Tiphook) of standard containers,
refrigerated containers, domestic containers, tank containers and chassis
averaged 82% for the first quarter of 1994 compared
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<PAGE>
to 81% during the first quarter of 1993. Rail trailer utilization was 90% for
the first quarter of 1994 compared to 86% in the first quarter of 1993.
European over-the-road trailer utilization was 96% during the 1994 first
quarter compared to 86% during the comparable 1993 period.
REAL ESTATE SERVICES
Real estate services comprise Transamerica's real estate tax, property
management and other services.
Income for the first quarter of 1994 increased $5 million (25%) over the
first quarter of 1993 primarily due to continued high levels of mortgage
refinancings and higher levels of home sales.
Revenues for the first quarter of 1994 increased $16.3 million over the first
quarter of 1993 as a result of increased business at the real estate tax
service operation where new life of loan tax service contracts written were 1
million in the first quarter of 1994 compared to 677,000 in the first quarter
of 1993.
LIFE INSURANCE
Income for the first quarter of 1994 increased $400,000 (0.6%) over the first
quarter of 1993. Income for the first quarter of 1994 and 1993 includes $3.3
million and $6.7 million net after tax gains from investment transactions. The
life insurance, structured settlements, living benefits and group pension lines
in 1994 all experienced increases in income over the first quarter of 1993,
excluding net gains from investment transactions, resulting primarily from
asset growth, increased charges on a larger base of interest-sensitive
policies, improved or maintained interest spreads and expense control.
Investment transactions in the first quarter of 1994 included after tax gains
of $8 million realized on the sale of investments compared to $22.4 million in
the first quarter of 1993. As required by generally accepted accounting
principles, the amortization of deferred policy acquisition costs was
accelerated by $1.8 million in 1994 and $3.3 million in 1993 due to the
investment gains. The accelerated amortization of deferred policy acquisition
costs has been included in investment transactions as an offset to the related
gains. Investment transactions in the first quarter of 1994 also reflected a
downward adjustment of $2.9 million after tax, compared to $12.4 million in the
first quarter of 1993, primarily for impairment in the value of certain
nonperforming fixed maturity investments.
Premiums and related income increased $38.4 million (13%) in the first
quarter of 1994 compared to the first quarter of 1993 primarily due to higher
policy charges on interest-sensitive policies and increased income from
reinsurance assumed, partially offset by an increase in reinsurance premiums
ceded.
Net investment income for the first quarter of 1994 increased $12.2 million
(3%) over the comparable 1993 period due primarily to increased investments.
Net investment income for the first quarter of 1994 included a $4.6 million
addition to investment income from the accretion of discounts on securities
called or expected to be called. Net investment income for the first quarter of
1993 included a $15.6 million addition to investment income from such accretion
of discounts.
Life insurance benefits and expenses increased $43.5 million (7%) in the
first quarter of 1994 over the first quarter of 1993 principally due to
increased benefits attributable to the larger base of life insurance and
annuities in force, higher benefit payments for reinsurance assumed and
increased amortization of deferred policy acquisition costs (exclusive of
accelerated amortization related to investment gains). Other expenses in the
first quarter of 1993 included charges of $8.5 million primarily attributable
to the establishment of an allowance for possible loss related to a receivable
from the sale of a business unit in 1991 and anticipated guaranty fund
assessments.
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<PAGE>
Cash provided by operations for the first quarter of 1994 was $96.8 million
which was $273.7 million (74%) below the 1993 amount primarily as a result of
the timing in the settlement of certain receivables and payables, including
reinsurance receivables and payables. The company continues to maintain a
sufficiently liquid portfolio to cover its operating requirements, with the
remaining funds invested in longer term securities.
ASSET MANAGEMENT
Asset management results, before goodwill amortization, for the first quarter
of 1994 were income of $800,000 compared to a loss of $200,000 for the
comparable period of 1993. The improvement was due primarily to higher revenues
from increased assets under management.
UNALLOCATED INVESTMENT TRANSACTIONS, INTEREST AND EXPENSES
Unallocated investment transactions, interest and expenses, after related
income taxes, for the first quarter of 1994 decreased $3.6 million (14%) from
the first quarter of 1993. The decrease was principally due to lower interest
expense on lower outstanding debt.
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
At the Corporation's Annual Meeting of Stockholders held on April 28, 1994,
its stockholders approved a number of proposals and nominations. Results of
these proposals and nominations were:
<TABLE>
<CAPTION>
VOTES VOTES BROKER
VOTES FOR AGAINST WITHHELD ABSTENTIONS NON-VOTES
---------- ---------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Nomination for director:
Forrest N. Shumway..... 64,711,147 -- 744,164 -- --
Peter V. Ueberroth..... 63,406,537 -- 2,048,774 -- --
Ratification of auditors. 64,717,756 396,621 -- 340,933 --
Ratifying an amendment to
the 1985 Stock Option
and Award Plan.......... 47,224,056 11,742,760 -- 1,040,113 5,448,381
Approving the adoption of
the Value Added
Incentive Plan.......... 59,494,828 4,906,908 -- 1,053,575 --
</TABLE>
A total of 65,455,311 shares were present in person or by proxy at the Annual
Meeting.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
<TABLE>
<S> <C>
EX-10.1 1994 Corporate Bonus Plan.
EX-10.2 Value Added Incentive Plan.
EX-10.3 Form of Non-qualified Stock Option Agreement under the 1985 Stock Option
and Award Plan.
EX-10.4 Form of Non-qualified Stock Option Agreement for Nonemployee Directors
under the 1985 Stock Option and Award Plan.
EX-10.5 Form of Amendment No. 6 to the 1985 Stock Option and Award Plan.
EX-11 Statement Re: Computation of Per Share Earnings.
EX-12 Computation of Ratio of Earnings to Fixed Charges.
</TABLE>
(b) Reports on Form 8-K. None
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<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE
REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED THEREUNTO DULY AUTHORIZED.
TRANSAMERICA CORPORATION
(Registrant)
/s/ Burton E. Broome
By: _________________________________
Burton E. Broome
Vice President and Controller
(Chief Accounting Officer)
Date: May 9, 1994
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