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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
( X ) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1993
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 Identification No.)
incorporation or organization)
600 Montgomery Street
San Francisco, California 94111
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (415) 983-4000
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
Common Stock--$1 Par Value New York Stock Exchange
Pacific Stock Exchange
Preference Stock Purchase Rights New York Stock Exchange
Pacific Stock Exchange
Depositary shares representing an New York Stock Exchange
interest in Preferred Stock - Series D
Securities registered pursuant to section 12(g) of the Act: None
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
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. ( X )
Aggregate market value of Common Stock, $1 par value, held by nonaffil-
iates of the registrant as of the close of business at March 4, 1994:
$3,899,847,696.
Number of shares of Common Stock, $1 par value, outstanding as of the
close of business on March 4, 1994: 75,568,523.
Documents incorporated by reference:
Portions of the Transamerica Corporation 1993 Annual Report to
Shareholders are incorporated by reference into Parts I and II. With the
exception of those portions which are incorporated by reference, the Trans-
america Corporation 1993 Annual Report is not deemed filed as part of this
Report.
Portions of the Proxy Statement of Transamerica Corporation dated
March 23, 1994 are incorporated by reference into Part III. (A definitive
proxy statement has been filed with the Commission since the close of the
fiscal year.)
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TABLE OF CONTENTS
Page
____
Part I:
Item 1. Business ................................................. 3
Item 2. Properties ............................................... 22
Item 3. Legal Proceedings ........................................ 22
Item 4. Submission of Matters to a Vote of Securities Holders .... 23
Item 4A. Executive Officers of the Registrant ..................... 23
Part II:
Item 5. Market for Registrant's Common Equity and Related Stock-
holder Matters ........................................... 23
Item 6. Selected Financial Data .................................. 23
Item 7. Management's Discussion and Analysis of Financial Condi-
tion and Results of Operations ........................... 24
Item 8. Financial Statements and Supplementary Data .............. 24
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure ...................... 24
Part III:
Item 10. Directors and Executive Officers of the Registrant ....... 25
Item 11. Executive Compensation ................................... 27
Item 12. Security Ownership of Certain Beneficial Owners and
Management ............................................... 27
Item 13. Certain Relationships and Related Transactions ........... 27
Part IV:
Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K ................................................. 27
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PART I
ITEM I. BUSINESS
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.
Transamerica was incorporated in Delaware in 1928.
On March 15, 1994, Transamerica completed the purchase of substantially
all of the assets of the container rental businesses of Tiphook plc for
$1,065,000,000 in cash. The transaction will be accounted for as a purchase
and the operations of the business acquired will be included in the
consolidated statement of income from the date of acquisition.
During 1993 Transamerica 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 $1,031,788,000. The proceeds were used to reduce
indebtedness, including $162,600,000 incurred to fund capital contributions
to, and $246,696,000 incurred to acquire certain assets from, 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 3,500,000 of its
common shares subject to acceptable market conditions. In December the
program was expanded to include an additional 2,500,000 shares. As of
December 31, 1993, Transamerica had purchased 3,560,000 million shares at a
cost of $197,894,200.
On July 17, 1990, Transamerica Corporation acquired FIFSI, Inc. (dba NOVA
Financial Services), a consumer lending subsidiary of First Interstate
Bancorp, for $117,455,000 in cash and the assumption of $445,400,000 of
liabilities. The transaction was accounted for as a purchase and the
operations of NOVA Financial Services have been included in the consolidated
statement of income from the date of acquisition.
On June 16, 1989, the outstanding common shares of Criterion Group, Inc.,
an independent asset management firm subsequently renamed Transamerica Asset
Management Group, Inc., were acquired for $95,723,000 in cash. The
transaction was accounted for as a purchase and the operations of Transamerica
Asset Management Group, Inc. included in the consolidated statement of income
from the date of acquisition.
Information concerning Transamerica's investment portfolio is
incorporated herein by reference to "Investment Portfolio" on page 38 and
"Note E. Investments" on pages 60 and 61 of the Transamerica Corporation 1993
Annual Report.
BUSINESS SEGMENT INFORMATION
Business segment data, as required by Statement of Financial Accounting
Standards No. 14, Financial Reporting for Segments of a Business Enterprise,
included in the tables in the Financial Review on pages 37 through 51 of the
Transamerica Corporation 1993 Annual Report are incorporated herein by
reference.
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The business activities of Transamerica's principal subsidiaries are
more fully described below.
FINANCE
The Corporation's finance services are provided by Transamerica Finance
Group, Inc. ("Transamerica Finance Group"), which conducts the consumer
lending, commercial lending and leasing operations, and by the Corporation's
real estate services operations.
During 1990 Transamerica Finance Group securitized $430,000,000 of
residential real estate secured consumer finance receivables and entered into
a five-year arrangement in which it securitized a $375,000,000 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, $375,000,000 of securitized insurance finance receivables
and $59,437,000 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. The term "owned and serviced" is used
herein to describe Transamerica Finance Group's receivables portfolio and the
securitized receivables which it still services.
Consumer Lending
Transamerica Finance Group's consumer lending services are provided by
Transamerica Financial Services, headquartered in Los Angeles, California,
which has 561 branch lending offices. Branch offices are located in the
United States (548 in 41 states), Canada (11) and the United Kingdom (2).
Transamerica Financial Services makes both real estate secured and unsecured
loans to individuals. The company's customers typically borrow to
consolidate debt, finance home remodeling, pay for their children's college
educations, make major purchases, take vacations, and for other personal uses.
Transamerica Financial Services offers three principal loan products:
fixed rate real estate secured loans, revolving real estate secured lines of
credit and personal loans. The company's primary business is making fixed
rate, home equity loans that generally range up to $200,000. Approximately
84% of all finance receivables currently owned or serviced by the company are
secured by residential properties. Of the company's real estate portfolio,
50% is secured by first mortgages. Since 1991, the company has continued to
broaden its receivable portfolio by expanding its revolving real estate
secured lines of credit, its unsecured personal loan business and its purchase
of retail finance contracts from dealers (i.e., appliances, furniture and
services).
The following table sets forth certain statistical information relating
to the consumer lending operation's finance receivables for the years
indicated.
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<TABLE>
<CAPTION>
Years Ended December 31,
______________________________________________________________
1993 1992 1991 1990 1989
(Dollar amounts in thousands)
<S> <C> <C> <C> <C> <C>
Volume of finance receivables
acquired:
Instalment loans:
Secured by residential
real estate(1) .............. $1,039,394 $1,120,549 $1,308,941 $1,800,204 $1,283,538
Other(1)(2) ................... 524,241 436,521 310,607 276,240 194,126
__________ __________ __________ __________ __________
1,563,635 1,557,070 1,619,548 2,076,444 1,477,664
Other finance receivables(3) .... 29,181 4,843 5,310 5,773 7,694
__________ __________ __________ __________ __________
Total ....................... $1,592,816 $1,561,913 $1,624,858 $2,082,217 $1,485,358
========== ========== ========== ========== ==========
Finance receivables outstanding
at end of year:
Instalment loans:
Secured by residential
real estate(4) .............. $3,295,346 $3,353,918 $3,357,842 $3,053,210 $2,836,152
Other(2) ...................... 595,284 482,819 334,304 291,248 229,218
__________ __________ __________ __________ __________
3,890,630 3,836,737 3,692,146 3,344,458 3,065,370
Other finance receivables(3) .... 22,276 6,355 7,503 9,193 10,230
__________ __________ __________ __________ __________
3,912,906 3,843,092 3,699,649 3,353,651 3,075,600
Less unearned finance charges
and insurance premiums ........ 185,150 181,554 170,135 156,798 150,214
__________ __________ __________ __________ __________
Net finance receivables - owned . 3,727,756 3,661,538 3,529,514 3,196,853 2,925,386
Net finance receivables securi-
tized, sold and serviced(4) ... 59,437 125,832 233,474 394,597
__________ __________ __________ __________ __________
Net finance receivables owned
and serviced .................. $3,787,193 $3,787,370 $3,762,988 $3,591,450 $2,925,386
========== ========== ========== ========== ==========
Allowance for losses at end of
year(5)(6) ...................... $ 107,175 $ 107,183 $ 107,235 $ 102,349 $ 79,379
Ratio to outstandings less
unearned finance charges and
insurance premiums:
Owned(7) ........................ 2.83% 2.83% 2.85% 2.85% 2.71%
Owned and serviced .............. 2.83% 2.83% 2.85% 2.85%
Provision for credit losses
charged to income ............... $ 63,946 $ 48,897 $ 42,214 $ 35,617 $ 32,820
Credit losses (net of recoveries)(8) $ 64,430 $ 45,674 $ 33,887 $ 25,785 $ 25,214
Ratio to average net finance
receivables outstanding(9):
Owned ........................... 1.68% 1.21% 0.98% 0.79% 0.91%
Owned and serviced .............. 1.69% 1.21% 0.92% 0.79%
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<FN>
_______
(1) The 1993 and 1992 decreases in the volume of loans secured by
residential real estate were mainly due to sluggishness in the domestic
economy and a weak real estate market, particularly in California. Includes
$491,236,000 in 1990 related to the purchase of NOVA Financial Services on
July 17, 1990 (real estate - $458,650,000, other - $32,586,000).
(2) The increase in 1990 includes unsecured loans to executives and
professionals related to the purchase of NOVA. Increases since 1990 reflect
general expansion in the company's program of non-real estate secured loans.
(3) The increase in 1993 resulted from expansion into the retail finance
contract business, purchasing principally contracts on appliances, furniture
and services.
(4) In December 1990, $430,000,000 of real estate secured receivables
were securitized and accounted for as a sale. The amounts of securitized
receivables outstanding at the end of 1993, 1992, 1991 and 1990 are shown in
the table under the caption "Net finance receivables securitized, sold and
serviced."
(5) In connection with the acquisition of NOVA Financial Services in
1990, the company established an allowance for losses of $13,138,000 as of
the date of purchase.
(6) The 1993, 1992, 1991 and 1990 amounts include an allowance for
losses of $1,680,000, $3,561,000, $6,654,000 and $11,239,000 on the
securitized, sold and serviced portfolio. These amounts are included in other
liabilities in the consolidated balance sheet. The decreases were due to
credit losses sustained and the run off of the securitized receivables.
(7) The allowance for losses, as a percentage of receivables
outstanding, at December 31, 1990 was increased in response to the economic
uncertainties due to the decline in the U.S. economy and the resulting
slowdown in the residential housing market.
(8) Credit losses increased $18,756,000 (41%) in 1993 due to increased
losses on real estate secured instalment loans of $15,979,000 (55%) and on
non-real estate secured receivables of $2,777,000 (17%). Credit losses
increased $11,787,000 (35%) in 1992 due to increased losses on real estate
secured instalment loans of $5,033,000 (21%) and on non-real estate secured
receivables of $6,754,000 (70%). Credit losses increased $8,102,000 (31%) in
1991 due to increased losses on real estate secured instalment loans of
$4,074,000 (20%) and on non-real estate secured receivables of $4,028,000
(71%). The increases since 1990 in credit losses on real estate secured loans
resulted mainly from the continuing weakening of the California real estate
market. The 1993, 1992 and 1991 increases in credit losses on non-real estate
secured loans was caused by growth in the related receivables outstanding and
sluggishness in the domestic economy. With the adoption in the fourth quarter
of 1992 of a required new accounting rule, losses on the disposal of
repossessed assets were classified as operating expenses rather than as credit
losses. Data for periods prior to the fourth quarter of 1992 have not been
reclassified.
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(9) The changes in ratios were due to corresponding fluctuations in
credit losses (see note 8 above).
</TABLE>
_____________________
Delinquent Receivables. The following table shows the ratio of finance
receivables which are contractually past due 60 days or more to finance
receivables outstanding for each category and in total for the years
indicated:
As of December 31,
_____________________________________
1993 1992 1991 1990 1989
Instalment loans:
Secured by residential real
estate ..................... 1.87% 1.85% 1.73% 1.48% 1.21%
Other ........................ 2.71 2.00 2.19 2.09 2.70
_____ _____ _____ _____ _____
2.00 1.87 1.77 1.53 1.32
Other finance receivables ...... 3.96 0.09 0.14
_____ _____ _____ _____ _____
Total - owned ................ 2.01 1.87 1.77 1.53 1.32
Securitized, sold and serviced . 2.47 2.15 1.95 1.17
_____ _____ _____ _____ _____
Total owned and serviced ..... 2.02% 1.87% 1.78% 1.49% 1.32%
===== ===== ===== ===== =====
The increasing delinquency through 1993 was principally due to the
sluggishness in the domestic economy and, in particular, the weakening in the
California real estate market.
Accounts in Foreclosure and Repossessed Assets. 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 $214,665,000 at December 31, 1993 compared to
$176,054,000 at December 31, 1992. The increase primarily reflects increased
repossessions in California and longer disposal times due to its weak real
estate market.
Commercial Lending
Transamerica Finance Group's commercial lending services are provided by
Transamerica Commercial Finance Corporation ("Transamerica Commercial
Finance"). Transamerica Commercial Finance operates from its executive
office in Chicago, Illinois, as well as from 88 branch lending offices.
Branch offices are located in the United States (58), Puerto Rico (16),
Canada (9) and Europe (5).
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Transamerica Commercial Finance made a decision late in the fourth
quarter of 1991 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. As a
result of this action the commercial lending operation recognized a special
after tax charge of $130,000,000.
In conjunction with the decision discussed above, Transamerica
Commercial Finance's operations were reorganized into three core business
units: inventory finance, insurance finance and business credit. The lending
activities of these core businesses are discussed below.
Inventory finance (also known as wholesale financing or floor plan
financing) consists principally of financing dealers' purchases from
distributors or manufacturers of goods for inventory. The products financed
primarily include boats and other recreational equipment, television and
stereo equipment, major appliances such as refrigerators, washers, dryers and
air conditioners, and manufactured housing. Loan terms typically provide for
repayment within 30 days following sale of the inventory by the borrower.
After initial review of a borrower's credit worthiness, the ongoing management
of credit risk in this area may include various monitoring techniques, such
as periodic physical inventory checks and review of the borrower's sales, as
well as maintenance of repurchase agreements with manufacturers which provides
a degree of security in the event of slow moving or obsolete inventory.
Insurance finance involves the financing of insurance premiums for
businesses, generally at fixed rates for terms of less than one year. The
receivables are secured by the company's right to cause the policies to be
canceled and receive the unearned premiums. Credit risk is managed by
requiring down payments from borrowers to mitigate the effects of possible
delays in receiving unearned premiums in the event of policy cancellation and
by monitoring the concentrations of potential return premiums among the
insurance carriers and their financial condition.
Business credit consists of secured loans, primarily revolving, to
manufacturers, distributors and selected service businesses, including
financial service companies. The loans are collateralized, with credit lines
typically from $5 million to $25 million and terms ranging from three to five
years. Actual borrowings are limited to specified percentages of the
borrower's inventory, receivables and other eligible collateral which are
regularly monitored to ascertain that receivables are within approved limits
and that the borrower is otherwise in compliance with the terms of the
arrangement. The loans to financial service companies are secured by their
respective finance receivable portfolios. The company manages its credit risk
in this area by monitoring the quality of the borrower's loan portfolio and
compliance with financial covenants.
As a result of the relatively short-term nature of the company's
financings, Transamerica Commercial Finance is able to adjust its finance
charges rather quickly in response to competitive factors and changes in its
costs. However, the interest rates at which Transamerica Commercial Finance
borrows funds for its businesses generally move more quickly than the rates
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at which it lends to customers. As a result, in rising interest rate
environments, margins are normally compressed until interest rates
restabilize. Conversely, in declining interest rate environments, margins
are generally enhanced.
In March 1992, the commercial lending operation purchased for cash a
business credit portfolio consisting of twelve manufacturer/distributor
accounts with a net outstanding balance of $134,000,000. In September 1991,
an inventory finance portfolio, which comprised lending arrangements with over
700 manufactured housing and recreational product dealers with a net balance
outstanding of $290,604,000, was purchased for cash. These transactions were
funded with short-term debt.
The commercial lending operation sold its automobile fleet leasing
operation in 1990 and its commercial leasing and wholesale automobile
financing operations in 1989. Finance receivables included in the assets sold
totaled $45,478,000 in 1990 and $534,734,000 in 1989. Also in 1990,
$375,000,000 of insurance finance receivables were securitized and accounted
for as a sale.
The following table sets forth certain statistical information relating
to the commercial lending operation's finance receivables for the years
indicated.
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<TABLE>
<CAPTION>
Years Ended December 31,
__________________________________________________________________
1993 1992 1991 1990 1989
(Dollar amounts in thousands)
<S> <C> <C> <C> <C> <C>
Volume of finance receivables
acquired:(1)
Inventory finance(2)............. $ 6,773,720 $ 6,225,899 $5,570,486 $ 6,029,587 $ 6,835,938
Insurance finance ............... 1,967,242 1,732,615 1,761,820 1,452,742 1,402,434
Business credit(3)............... 3,696,180 2,023,010 2,000,434 2,407,304 2,130,292
___________ ___________ __________ ___________ ___________
Core businesses ............... 12,437,142 9,981,524 9,332,740 9,889,633 10,368,664
Other(4) ........................ 170,705 427,909 84,139 194,338 907,468
___________ ___________ __________ ___________ ___________
Total ......................... $12,607,847 $10,409,433 $9,416,879 $10,083,971 $11,276,132
=========== =========== ========== =========== ===========
Finance receivables outstanding
at end of year:
Inventory finance(5) ............ $ 1,959,757 $ 1,873,895 $1,928,670 $ 1,872,191 $ 2,240,453
Insurance finance(6) ............ 354,322 284,738 323,958 218,622 560,728
Business credit(7)(8) ........... 553,859 575,984 288,776 968,216 897,128
___________ ___________ __________ ___________ ___________
Core businesses ............... 2,867,938 2,734,617 2,541,404 3,059,029 3,698,309
Other(9) ........................ 127,687 208,866 481,272 403,647 613,152
___________ ___________ __________ ___________ ___________
2,995,625 2,943,483 3,022,676 3,462,676 4,311,461
Less unearned finance charges ... 55,644 68,401 82,219 100,419 146,006
___________ ___________ __________ ___________ ___________
Net finance receivables - owned . 2,939,981 2,875,082 2,940,457 3,362,257 4,165,455
Net finance receivables securi-
tized, sold and serviced(6) ... 374,512 374,478 374,169 373,973
___________ ___________ __________ ___________ ___________
Net finance receivables owned
and serviced .................. $ 3,314,493 $ 3,249,560 $3,314,626 $ 3,736,230 $ 4,165,455
=========== =========== ========== =========== ===========
Allowance for losses at end of
year(10)(11)(12)............... $ 80,668 $ 91,263 $ 172,718 $ 102,748 $ 70,870
Ratio to outstandings less
unearned finance charges:(12)
Owned ........................... 2.71% 3.14% 5.84% 3.03% 1.70%
Owned and serviced .............. 2.43% 2.81% 5.21% 2.75%
Provision for credit losses
charged to income(11) ........... $ 33,098 $ 41,816 $ 248,472 $ 133,364 $ 51,078
Credit losses (net of
recoveries)(13) ................. $ 43,515 $ 121,137 $ 176,138 $ 100,638 $ 69,917
Ratio to average net finance
receivables outstanding:(14)
Owned ........................... 1.49% 4.18% 5.82% 2.68% 1.55%
Owned and serviced .............. 1.32% 3.71% 5.18% 2.57%
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<FN>
_______
(1) The volume increase in 1993 reflects the overall improvement in the
economy and increased sales and marketing programs in the core business
groups.
(2) Includes $290,604,000 in 1991 related to the purchase of lending
arrangements with manufactured housing and recreational products dealers.
(3) The volume increase in 1993 reflects a shift in focus from
participating in loans to directly originating loans. As a result, advances
and collections have increased. The 1992 amount includes $134,000,000 related
to the purchase of a portfolio of manufacturer/distributor business credit
arrangements.
(4) The 1993 decrease is due to reduced receivable levels in liquidating
portfolios. The 1992 increase mainly reflects additional borrowings by
customers in certain asset based lending lines, which were reclassified to the
"other" category in 1991 (see note 7), prior to implementation or completion
of work-out or liquidation arrangements. The declines in 1991 and 1990 were
due to the sale of the automobile fleet leasing operation in 1990 and the sale
of the commercial leasing and wholesale automobile financing operations in
1989.
(5) The 1993 increase was due to the increased volume primarily in home
and recreational products. The 1992 decrease was mainly due to faster paying
customers resulting from implementation of stronger portfolio management
procedures and efforts by certain borrowers to decrease the time that they
hold inventory by using "just in time" delivery arrangements.
(6) The 1993 increase was due to the increased volume. The 1992
decrease was due to a change in funding arrangements with one major customer.
In July 1990, $375,000,000 of insurance finance receivables were securitized
and accounted for as a sale. The amounts of securitized receivables
outstanding at the end of 1993, 1992, 1991 and 1990 are shown in the table
under the caption "Net finance receivables securitized, sold and serviced."
(7) The company's decision to exit the rent-to-own finance business and
reduce lending to certain asset based lending lines (formerly included in
business credit) resulted in the reclassification at December 31, 1991 of net
rent-to-own finance receivables totaling $221,247,000 to assets held for sale,
which are included in other assets in the consolidated balance sheet, and the
transfer of other receivables totaling $206,931,000 from business credit to
the "other" category set forth under finance receivables outstanding. Prior
year data has not been restated.
(8) The 1992 increase includes the purchase of a $134,000,000
manufacturer/distributor business credit portfolio. The 1991 decrease was
due principally to the reduction in rent-to-own finance receivables resulting
from the de-emphasis during the year, repossession of rent-to-own stores, and
the eventual decision to exit the business and the decision to reduce lending
to certain asset based lending lines (see note 7 regarding reclassification of
receivables outstanding at December 31, 1991). The 1990 increase was due to
increased financing of small consumer finance companies and domestic personal
computer retail stores.
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Page 12
(9) The 1993 and 1992 decreases primarily reflect the liquidation of
receivables from businesses being exited, including $18,403,000 and
$87,406,000 of write offs. The 1991 increase was due to the reclassification
of receivables to be liquidated resulting from the company's decision to
reduce lending to certain asset based lending lines (see notes 7 and 8). The
1990 decline was due to the liquidation and sale of receivables from
businesses being exited (see note 4).
(10) The allowance for losses on the securitized, sold and serviced
portfolio was $938,000 at December 31, 1993, 1992, 1991 and 1990. This amount
is included in other liabilities in the consolidated balance sheet.
(11) The 1991 provision and allowance for losses at December 31, 1991
included $62,816,000 recorded as part of the special charge recognized as a
result of the company's decision to reduce lending to certain asset based
lending lines and to liquidate receivables remaining from previously sold
businesses. The increased provisions in 1991, excluding the special charge,
and in 1990 were in response to increased credit losses and higher than normal
delinquencies and nonearning receivables associated with the weak U.S. and
Canadian economies.
(12) The 1993 and 1992 reductions in the allowance for losses as a
percentage of receivables outstanding were attributable primarily to the
writeoff of delinquent and nonearning receivables in 1993 and 1992, and to
lower levels of delinquent and nonearning accounts in the remaining portfolio
at December 31, 1993 and 1992. In 1991, the percentages were increased
principally due to the company's decision to reduce lending to certain asset
based lending lines and to liquidate receivables remaining from previously
sold businesses (see note 11). The 1990 increase was in response to the weak
U.S. and Canadian economies resulting in higher than normal delinquencies and
nonearning receivables.
(13) In 1993 and 1992, charges to the allowance for losses on finance
receivables due to credit losses sustained decreased $77,622,000 (64%) and
$55,001,000 (31%). These decreases were caused mainly by decreases in
delinquent and nonearning receivables resulting from improved economic
conditions, the reclassification of certain receivables to assets held for
sale and in 1992, implementation of stronger portfolio management procedures.
In 1991 and 1990, credit losses increased $75,500,000 (75%) and $30,721,000
(44%) principally as a result of the depressed appliance and furniture rental
and Canadian computer markets associated with the general downturn in the U.S.
and Canadian economies.
(14) The changes in ratios were due to corresponding fluctuations in
credit losses (see note 13).
</TABLE>
_____________________
Delinquent Receivables. Effective in 1993, the policy used for
determining delinquent receivables was 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 portfolios. Delinquent receivables 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.
Previously, delinquent receivables were generally defined as financed
<PAGE>
Page 13
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.
The following table shows the ratio of delinquent commercial finance
receivables to finance receivables outstanding for each category and in total
as of the end of each of the years indicated. Delinquency ratios for 1992 and
prior years have not been restated for the change in policy outlined above.
As of December 31,
_____________________________________
1993 1992 1991 1990 1989
Inventory finance(1) ........... 0.13% 0.82% 1.31% 3.42% 2.95%
Insurance finance .............. 0.54 0.57 1.03 2.02 1.78
Business credit(1)(2) .......... - 0.21 0.88 10.34 2.35
______ ______ ______ ______ _____
Core businesses .............. 0.15 0.66 1.22 5.51 2.63
Other(3) ....................... 19.14 22.42 25.84 12.79 9.54
______ ______ ______ ______ _____
Total - owned ............... 0.96% 2.21% 5.14% 6.36% 3.61%
====== ====== ====== ====== =====
Total owned and serviced ..... 0.86% 1.96% 4.57% 5.76% 3.61%
====== ====== ====== ====== =====
_______
(1) The decreases in 1992 and 1991 reflect write offs of delinquent
accounts (and accounting reclassifications - see note 2), implementation of
stronger portfolio management procedures and general improvement in the
economy. Increased delinquency in 1990 reflected the overall weak economy.
This trend began in 1989, when consumer spending, which supports these
businesses, began to decline. Particularly affected were the marine industry
(inventory finance), and the appliance and furniture rental and Canadian
computer markets (business credit).
(2) The decline in 1991 was due principally to rent-to-own finance
receivables being reclassified to assets held for sale, and certain finance
receivables being reclassified to the "other" category. These
reclassifications resulted from the company's decision to exit the rent-to-own
finance business and reduce its lending to certain asset based lending lines.
Prior year data have not been restated.
(3) Represents finance receivables retained from businesses sold or
exited which are being liquidated and receivables reclassified in 1991 due to
the company's decision to reduce lending to certain asset based lending lines
(see note 2).
_____________________
Nonearning Receivables. Effective in 1993, the policy used for
determining nonearning receivables was 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. Nonearning receivables are now defined as
balances from borrowers that are over 90 days delinquent or at such earlier
time as full collectibility becomes doubtful. Previously, nonearning
<PAGE>
Page 14
receivables were defined as balances from borrowers in bankruptcy or
litigation and other accounts for which full collectibility was doubtful.
Accrual of finance charges is suspended on nonearning receivables until such
time as past due amounts are collected. Nonearning receivables were
$33,617,000 (1.12% of receivables outstanding) and $92,548,000 (3.14%) of
receivables outstanding) at December 31, 1993 and 1992; the 1992 data has not
been restated. Those amounts exclude nonearning rent-to-own finance
receivables which have been reclassified to assets held for sale (see below).
Assets Held for Sale. Assets held for sale at December 31, 1993 totaled
$90,114,000, net of a $156,985,000 valuation allowance, and consisted of
rent-to-own finance receivables of $120,469,000, repossessed rent-to-own
stores of $107,227,000 and other repossessed assets of $19,403,000. Assets
held for sale at December 31, 1992 totaled $191,515,000, net of a
$121,549,000 valuation allowance, and comprised rent-to-own finance
receivables of $179,013,000, repossessed rent-to-own stores of $103,418,000
and other repossessed assets of $30,633,000. At December 31, 1993,
$27,489,000 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 $15,397,000 and nonearning rent-to-own finance
receivables were $32,615,000. Delinquent and nonearning receivables as of
December 31, 1992 have not been restated for the change in policies effective
in 1993 as outlined above.
Leasing
Transamerica Leasing Inc. ("Transamerica Leasing") leases, services and
manages containers, chassis and trailers around the world. The company is
based in Purchase, New York and maintains 386 offices, depots and other
facilities in 44 countries. The company specializes in intermodal
transportation equipment, which allows goods to travel by road, rail or ship.
The company's customers include railroads, steamship lines and motor carriers.
On March 15, 1994, Transamerica purchased substantially all of the assets
of the container rental businesses of Tiphook plc for $1,065,000,000. The
acquired fleet of standard containers and tank containers totaled 361,000
units.
As of December 31, 1993, Transamerica Leasing's fleet consisted of
standard containers, refrigerated containers, domestic containers, tank
containers and chassis totaling 316,000 units which are owned or managed, and
leased from 347 depots worldwide, 36,500 rail trailers leased to all major
United States railroads and to roll on/roll off steamship operators,
shippers, shippers' agents and regional truckers, and 3,800 over-the-road
trailers in Europe. Transamerica Leasing began leasing tank containers for
carrying bulk liquids in 1990 and had 1,900 tank containers in its fleet at
December 31, 1993.
In November 1992, the company sold its domestic over-the-road trailer
business. Proceeds from the sale totaled $191,000,000 and resulted in no gain
or loss.
<PAGE>
Page 15
Approximately 49% of the standard container, refrigerated container,
domestic container, tank container and chassis fleet is on term lease or
service contract minimum lease for periods of one to five years. Also, 34% of
the rail trailer fleet is on term lease or service contract minimum lease for
periods of one to five years.
The following table sets forth Transamerica Leasing's fleet size, in
units, for the years indicated:
As of December 31,
___________________________________________
1993 1992 1991 1990 1989
Containers and chassis ... 316,000 280,000 255,100 244,400 235,900
Rail trailers ............ 36,500 34,400 36,800 40,500 43,300
European trailers ........ 3,800 2,900 1,700 800
The following table sets forth Transamerica Leasing's fleet utilization
for the years indicated:
Years Ended December 31,
____________________________
1993 1992 1991 1990 1989
Containers and chassis(1) ..... 83% 85% 89% 90% 93%
Rail trailers(2) .............. 91% 84% 75% 79% 83%
European trailers ............. 89% 84% 83% 81%
_______
(1) The 1993 decline was due to slow economic growth in key European
economies and Japan; the 1992 decline was due to a higher than expected
industry-wide supply of equipment. The 1991 and 1990 reductions resulted from
a small decline in the rate of growth of world trade and a less favorable
geographic balance of business.
(2) The 1993 and 1992 increases were due to a smaller industry fleet,
higher domestic economic activity and because many shippers are moving from
trucks to rail transport for long-haul shipments; the 1991 and 1990 declines
were due to reduced domestic economic activity.
_____________________
Real Estate Services
Real estate services comprise real estate tax, realty and other services
and in 1989, title insurance.
Transamerica Real Estate Tax Service, a division of Transamerica
Corporation, prepares tax payments and reports and conducts tax searches with
respect to real property taxes and assessments, issues flood hazard
determinations in all 50 states, and provides real property information
services in several states. It also provides customers with on-line computer
system information. As of December 31, 1993, tax reports were generated for
<PAGE>
Page 16
more than 3,000 institutional mortgage servicers and their borrowers. The
company operates from 35 offices throughout the United States.
The following table sets forth the number of tax service contracts under
management at the end of the years indicated and new tax service contracts
written during those years:
1993 1992 1991 1990 1989
(Amounts in thousands)
Tax service contracts
under management ....... 15,496 14,751 13,712 12,835 11,876
New tax service contracts 5,103 3,870 2,668 2,544 2,583
Transamerica's title operations were conducted by Transamerica Title
Insurance Company ("Transamerica Title"). On March 30, 1990 the Corporation
sold Transamerica Title. The sales price was $67,502,000 in cash and notes
receivable, which approximated the book value of the operation.
Transamerica Realty Services, Inc. owns and manages real estate in
various communities. Transamerica Realty Services, Inc. also provides real
estate services to other subsidiaries of the Corporation, including asset and
property management of real estate held for investment principally by the
Corporation's life insurance subsidiaries.
INSURANCE
Life Insurance
The Corporation's life insurance business is conducted by Transamerica
Occidental Life Insurance Company, by Transamerica Life Insurance and Annuity
Company, and by other life insurance subsidiaries (hereinafter collectively
referred to as "Transamerica Life Companies"). The Transamerica Life
Companies are primarily engaged in the business of writing life insurance and
annuities in all states of the United States, the District of Columbia, Puerto
Rico, the Virgin Islands, Guam, Canada, Taiwan and Hong Kong.
The following table sets forth certain statistical information relating
to the Transamerica Life Companies' operations.
<PAGE>
Page 17
<TABLE>
<CAPTION>
Years Ended December 31,
____________________________________________________________________
1993 1992 1991 1990 1989
(Dollar amounts in thousands)
<S> <C> <C> <C> <C> <C>
Insurance in force at
end of period:(1)(2)
Whole life and endowment .... $150,151,065 $139,475,971 $126,118,638 $122,179,305 $114,487,924
Individual term life ........ 172,441,372 160,517,919 156,996,821 145,177,179 130,683,723
Group life(3) ............... 7,838,176 6,252,910 4,656,433 3,062,966 737,000
Credit life(4) .............. 200,787 521,645 1,080,571 2,237,421 5,814,672
____________ ____________ ____________ ____________ ____________
Total ..................... $330,631,400 $306,768,445 $288,852,463 $272,656,871 $251,723,319
============ ============ ============ ============ ============
New insurance written:(2)
Whole life and endowment(5) . $ 29,303,712 $ 28,265,139 $ 25,182,326 $ 25,679,301 $ 29,435,274
Individual term life(6) ..... 46,724,456 41,235,278 36,385,130 39,867,771 33,519,609
Group life(3) ............... 2,057,706 2,002,644 1,273,166 2,518,760 568,518
Credit life(4) .............. 449 1,462 5,276 83,394 144,222
____________ ____________ ____________ ____________ ____________
Total ..................... $ 78,086,323 $ 71,504,523 $ 62,845,898 $ 68,149,226 $ 63,667,623
============ ============ ============ ============ ============
Premium income:(7)
Individual life and annui-
ties(8) ................... $ 543,580 $ 490,357 $ 481,606 $ 524,630 $ 518,859
Group life and annuities(9) . 95,004 104,087 165,318 120,722 399,540
Credit life(4) .............. (3,201) 7,594
Accident and health (individ-
ual, group and credit)(10) 227,640 219,285 62,977 48,259 47,269
____________ ____________ ____________ ____________ ____________
Total ..................... $ 866,224 $ 813,729 $ 709,901 $ 690,410 $ 973,262
============ ============ ============ ============ ============
Average individual life policy
in force at end of year
(actual dollar amounts) ..... $ 144,050 $ 138,015 $ 129,141 $ 121,600 $ 114,261
Average individual life policy
issued during year (actual
dollar amounts)(11) ......... $ 247,944 $ 245,394 $ 217,637 $ 204,463 $ 195,367
Number of individual life
policies in force at end of
year ........................ 1,200,076 1,171,616 1,141,154 1,147,077 1,121,219
Ratio of underwriting expenses
to premiums and other consid-
erations(12) ................ 8.9% 9.2% 9.3% 9.1% 9.6%
Lapse ratio--adjusted for de-
creases and expiries of
term insurance and rein-
surance assumed:(13)
Transamerica Life Companies . 8.9% 9.2% 11.0% 11.9% 12.0%
All U.S. stock life insur-
ance companies(14) ........ (15) 9.9% 10.4% 11.0% 11.6%
<PAGE>
Page 18
<FN>
_______
(1) The annual change in insurance in force results from additions for
new insurance written less reductions from terminations. Approximately 70% to
80% of terminations in all years were voluntary (from lapse or surrender) with
the remaining amount caused by deaths and other decreases by contract.
(2) Reinsurance assumed has been included, except for intercompany
amounts. Reinsurance ceded has not been deducted.
(3) The increases through 1993 were due to sales of insurance through
salary deduction plans offered by employers.
(4) The company discontinued this line of business in 1988 causing the
large decreases in insurance in force and new insurance written since that
time. Insurance in force and new insurance written in 1989 to 1993 represents
business which is only cancelable at the policyholder's request. In 1990, the
company transferred the remaining operations of the credit insurance line to a
trust administered by an independent third party.
(5) The 1993 and 1992 increases were attributable to increased marketing
efforts. The 1990 decrease was due to reduced sales of Trendsetter policies.
Sales of Trendsetter have declined due to an increased emphasis on sales of
other life insurance products. In the first quarter of 1991, the company sold
its United Kingdom subsidiary which is the primary reason for the 1991
decrease.
(6) The 1993 and 1992 increases were due primarily to an increased level
of promotion efforts via direct marketing. The changes from 1989 to 1991 were
due primarily to changing levels of reinsurance assumed.
(7) Premiums on reinsurance assumed have been included; cancellations
and return premiums and premiums on reinsurance ceded have been deducted.
Considerations for supplementary contracts and deposit administration funds
received have not been included.
(8) The 1993, 1992, and 1990 increases were due primarily to increased
sales of individual annuity policies. In the first quarter of 1991, the
company sold its United Kingdom subsidiary which is the primary reason for the
1991 decrease.
(9) The changes were due primarily to changing levels of sales of group
annuity policies, principally single premium pension contracts.
(10) The 1993 and 1992 increases were due to an increased level of
reinsurance assumed.
(11) The 1993, 1992 and 1991 increases were primarily due to higher face
amounts of universal life products. The 1990 increase was primarily due to
higher face amounts for Trendsetter policies.
(12) The ratio is the percentage of salaries and other operating expenses
to premiums and other considerations.
<PAGE>
Page 19
(13) The lapse ratio is calculated in accordance with the A.M. Best
Company, Inc. formula. It is the ratio of amounts of ordinary life insurance
terminated during the year to ordinary life insurance in force at the
beginning of the year plus new business issued during the prior year.
(14) Industry median, as provided by A.M. Best Company, Inc.
(15) Information not yet available for 1993.
</TABLE>
_____________________
Transamerica Life Companies' individual life insurance business is
generated through a worldwide system of 619 field sales offices, 49 of which
are branch offices operated by employees and the remainder of which are
independent offices operated by independent general agents. These offices
house a sales force consisting of 68 employees of the Transamerica Life
Companies and approximately 2,500 independent agents operating under contract
on an exclusive or near exclusive basis, which together generated
approximately 41% of new premiums written in 1993. The remaining 59% of the
Transamerica Life Companies' individual life insurance business was generated
by more than 20,000 producing independent insurance brokers operating under
nonexclusive contracts.
In addition to its sales force, the Transamerica Life Companies have
approximately 2,300 home office employees in Los Angeles, California and
Charlotte, North Carolina who service outstanding policies and new business
submitted by agency offices, and more than 250 field sales office employees
serving its sales force.
Of life insurance in force at December 31, 1993, 21.4% was on residents
of California, followed by Texas (5.7%), Illinois (5.4%), Florida (3.4%) and
Pennsylvania (3.1%). No other state accounted for more than 3% of life
insurance in force. Canada accounted for 14.4% and all other foreign
operations accounted for 1.8% of life insurance in force.
Reinsurance. Portions of the Transamerica Life Companies' life insurance
risks are reinsured with other companies. The maximum amount of individual
insurance retained on any one life is $1,500,000 at ages 16 to 65 inclusive.
This maximum is reduced for health impairments, for other ages and for certain
other special classes of risks. The Transamerica Life Companies also reinsure
a minor part of their liability under accident and health policies.
For many years the Transamerica Life Companies have solicited life
reinsurance from other companies. As of December 31, 1993, the company was
accepting business from 473 companies under automatic reinsurance agreements
and from many other companies on a case by case basis.
Reserves. In accordance with the life insurance laws and regulations
under which they operate, the Transamerica Life Companies are required to
carry on their books as liabilities actuarial reserves to meet the obligations
on their various life insurance policies. Such life insurance reserves are
calculated pursuant to mortality and annuity tables in general use in the
United States and are the computed amounts which, with additions from premiums
to be received, and with interest on such reserves compounded annually at
certain assumed rates, will be sufficient to meet the Transamerica Life
Companies' policy obligations at their maturities if deaths occur in
accordance with mortality tables employed.
<PAGE>
Page 20
Investments. The Transamerica Life Companies' investments at
December 31, 1993 totaled $20,890,554,000 which was invested as follows:
93.1% in fixed maturities; 2.5% in mortgage loans and real estate; 1.9% in
policy loans; 1.0% in common stocks; 0.9% in short-term investments; 0.3% in
nonredeemable preferred stocks; 0.3% in other long-term investments; and less
than 0.1% in redeemable preferred stocks. Fixed maturities are invested as
follows: 42.8% in industrial and other non-government bonds; 38.2% in United
States government bonds; 17.6% in public utility bonds; 0.8% in foreign
government bonds; and 0.6% in municipal bonds.
The following table sets forth pretax mean investment yields, including
interest earned and dividends received, before (gross) and after (net)
deducting investment expenses for the Transamerica Life Companies' various
investments. The yields are computed based on the mean of beginning and end
of year assets, producing results which vary somewhat from the daily average
yield.
<TABLE>
<CAPTION>
Years Ended December 31,
____________________________________
1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C>
Fixed maturities, at amortized cost--gross(1) 9.16% 9.43% 9.91% 10.17% 10.35%
Equity securities, at market value--gross(2) 2.96 1.95 3.89 2.72 3.53
Mortgages--gross ............................ 10.53 9.50 9.86 9.96 10.01
Total invested assets:
Gross ..................................... 8.81 9.03 9.38 9.71 9.87
Net ....................................... 8.67% 8.87% 9.27% 9.53% 9.65%
<FN>
_______
(1) The decreases reflect the lower yields on new investments.
(2) The decreases in the 1992 and 1990 yields resulted from an increase
in the market value of the portfolio. The increase in 1991 was due to a shift
in mix to preferred stocks, which have higher returns.
</TABLE>
_____________________
Asset Management
In 1989, the Corporation acquired all the outstanding common shares of
Criterion Group, Inc. (renamed Transamerica Asset Management Group, Inc.,
"Transamerica Asset Management"), an independent asset management firm. The
purchase price for the company was $95,723,000 in cash. Transamerica Asset
Management operates through its two subsidiaries, Criterion Investment
Management Company and Transamerica Fund Management Company. Transamerica
Fund Management Company is the marketing and investment manager of 19
separate portfolios of ten registered open-end diversified management
investment companies, or "mutual funds." Criterion Investment Management
Company is an investment advisor to public and private retirement funds.
Assets under the management of Transamerica Asset Management's subsidiaries
comprise:
<PAGE>
Page 21
As of December 31,
__________________________
1993 1992 1991
(Amounts in millions)
Criterion Investment Management Company . $10,588 $ 9,990 $ 9,200
Transamerica Fund Management Company .... 3,137 2,768 2,530
_______ _______ _______
$13,725 $12,758 $11,730
======= ======= =======
Insurance Brokerage
On August 30, 1985, Fred. S. James & Co., Inc., the Corporation's former
insurance brokerage subsidiary, was exchanged for a 39% interest in Sedgwick
Group plc ("Sedgwick"), a London-based international insurance brokerage firm.
Prior to the events discussed below, the Corporation purchased an additional
24,415,000 shares to maintain its 39% equity interest.
On February 28, 1991, Transamerica sold 59,000,000 shares of Sedgwick for
cash, reducing its percentage ownership from 39% of Sedgwick's outstanding
shares to 25%.
During 1993, Transamerica's equity interest was reduced from 25% to 21%
due to a rights offering by Sedgwick.
REGULATION
Finance Activities
Transamerica Finance Group's consumer lending and commercial lending
operations are subject to various state and federal laws. Depending upon the
type of lending, these laws may require licensing and certain disclosures and
may limit the amounts, terms and interest rates that may be offered.
Insurance Activities
The Corporation's life insurance business, in common with those of other
companies in this industry, are subject to regulation and supervision in the
states, territories and countries in which they operate. Although the extent
of such regulation varies, in general state laws establish supervisory
agencies with broad powers relating to licensing of insurance companies and
their agents to transact business therein, supervising premium rates and forms
of policies used, and regulating the form and content of required financial
statements and the types of investments that may be made. Insurance companies
are also required to file annual reports with the supervisory agencies in
states in which they do business and are subject to periodic examination by
such agencies.
Other Regulations
A number of jurisdictions in which the Corporation's subsidiaries
operate, including California, have adopted laws and regulations imposing
environmental controls on the development of real estate and related business
activities.
<PAGE>
Page 22
EMPLOYEES
The Corporation and its subsidiaries employed approximately 10,700
persons at December 31, 1993.
COMPETITION
The Corporation's subsidiaries operate in highly competitive industries
in virtually all of their activities, in many cases competing with companies
with long established operating histories and substantial financial resources.
CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth the consolidated ratios of earnings from
continuing operations to fixed charges of Transamerica Corporation and its
subsidiaries for each of the five years ended December 31, 1993.
Years Ended December 31,
________________________________
1993 1992 1991 1990 1989
2.11 1.94 1.17 1.43 1.49
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. Excluding the effects of the
previously discussed special charge ($130,000,000 after tax) recorded by the
commercial lending operation, the earnings to fixed charges ratio would have
been 1.46 for 1991.
ITEM 2. PROPERTIES
The executive offices of Transamerica Corporation are located in the
Transamerica Pyramid in San Francisco, California, a 48-story office building
owned by a subsidiary of Transamerica. In 1986 the subsidiary borrowed
$85,000,000, secured by a deed of trust on the property for ten years.
Approximately 17% of the 450,000 square feet of rentable space is occupied by
Transamerica and its subsidiaries.
Transamerica Life Companies own the Transamerica Center in Los Angeles,
California, which consists of a 32-story building, an 11-story building and a
10-story building. Transamerica Center is the home office of Transamerica
Life Companies, Transamerica Finance Group and certain other subsidiaries of
Transamerica. Approximately 73% of the 1,295,000 square feet of rentable
space is occupied by Transamerica subsidiaries.
ITEM 3. LEGAL PROCEEDINGS
Various pending or threatened legal proceedings by or against the
Corporation or one or more of its subsidiaries involve tax matters, alleged
<PAGE>
Page 23
breaches of contract, torts, employment discrimination, violations of
antitrust laws and miscellaneous other causes of action arising in the course
of their businesses. Some of these proceedings involve claims for punitive or
treble damages in addition to other specific relief.
Based upon information presently available, and in light of legal and
other defenses and insurance coverage available to the Corporation and its
subsidiaries, contingent liabilities arising from threatened and pending
litigation, income taxes and other matters are not considered material in
relation to the consolidated financial position of the Corporation and its
subsidiaries.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
Not applicable.
ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT
See Item 10 in Part III of this Report.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The following information in the Transamerica Corporation 1993 Annual
Report is incorporated herein by reference:
Markets on which the Corporation's common stock is traded--"Common
Stock Listed and Traded," page 80.
High and low sale prices for the Corporation's common stock for each
quarter in 1993 and 1992--"Supplementary Financial Information,"
page 71.
Frequency and amount of cash dividends declared during 1993 and
1992--"Selected Eleven-Year Financial Data--Note C," page 72.
There were approximately 56,900 common stockholders of record as of the
close of business on March 4, 1994.
ITEM 6. SELECTED FINANCIAL DATA
The following items for each of the five years in the period ended
December 31, 1993, included in "Selected Eleven-Year Financial Data" on
pages 72 and 73 of the Transamerica Corporation 1993 Annual Report, are
incorporated herein by reference:
<PAGE>
Page 24
Revenues
Income from continuing operations
Earnings per share of common stock--Income from
continuing operations
Dividends declared per share of common stock
Total assets
Notes and loans payable: Long-term debt
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information set forth under the caption "Financial Review" on
pages 37 through 51 of the Transamerica Corporation 1993 Annual Report, is
incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following consolidated financial statements and supplementary
financial information of the Corporation and its subsidiaries in the
Transamerica Corporation 1993 Annual Report are incorporated herein by
reference:
Consolidated Balance Sheet--December 31, 1993 and 1992--pages 52 and
53.
Consolidated Statement of Income--Years ended December 31, 1993,
1992 and 1991--page 54.
Consolidated Statement of Cash Flows--Years ended December 31,
1993, 1992 and 1991--page 55.
Consolidated Statement of Shareholders' Equity--Years ended
December 31, 1993, 1992 and 1991--page 56.
Notes to Financial Statements--December 31, 1993--pages 57 through
69.
Supplementary Financial Information--Years ended December 31, 1993
and 1992--page 71.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
<PAGE>
Page 25
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information set forth under the caption "Information Concerning the
Nominees and Current Directors" in the Proxy Statement of Transamerica
Corporation dated March 23, 1994 is incorporated herein by reference.
The officers of the Corporation are listed below. Executive officers are
designated by an asterisk.
<TABLE>
<CAPTION>
Name Position Age Name Position Age
____ ________ ___ ____ ________ ___
<S> <C> <C> <S> <C> <C>
Frank C. Herringer* ..... President and Chief 51 Burton E. Broome* ....... Vice President and 58
Executive Officer Controller
David R. Carpenter* ..... Executive Vice President, 54 Kent L. Colwell* ........ Vice President--Real 63
Transamerica Corpor- Estate Services,
ation and Chairman, Transamerica Corpor-
President and Chief ation and President,
Executive Officer, Transamerica Realty
Transamerica Occidental Services, Inc.
Life Insurance Company James B. Dox ............ Vice President--Taxes 54
Richard H. Finn* ........ Executive Vice President, 59 David H. Hawkins ........ Vice President, Trans- 53
Transamerica Corpor- america Corporation
ation and President and Senior Vice Presi-
and Chief Executive dent and Treasurer,
Officer, Transamerica Transamerica Finance
Finance Group, Inc. Group, Inc.
Edgar H. Grubb* ......... Executive Vice President 54 Rona I. King ............ Vice President-- 46
and Chief Financial Human Resources
Officer Robert R. Lindberg* ..... Vice President and 53
Thomas J. Cusack* ....... Senior Vice President 38 Treasurer
Richard N. Latzer* ...... Senior Vice President 57 James B. Lockhart ....... Vice President-- 58
and Chief Investment Public Affairs
Officer, Transamerica Dennis W. Markus ........ Vice President-- 37
Corporation and Investor Relations
President and Chief William H. McClave ...... Vice President-- 50
Executive Officer, Corporate
Transamerica Invest- Communications
ment Services, Inc. Richard J. Olsen ........ Vice President-- 55
Christopher M. McLain* .. Senior Vice President, 50 Corporate Relations
General Counsel and James C. Peirano ........ Vice President 63
Secretary Judith M. Tornese ....... Vice President--Risk 51
Maureen Breakiron-Evans . Vice President and 39 Management
General Auditor
</TABLE>
<PAGE>
Page 26
Mr. Herringer was elected Chief Executive Officer in 1991. He has been
President of the Corporation since 1986.
Mr. Carpenter was elected Executive Vice President of the Corporation in
1993. He was Group Vice President of the Corporation from 1990 to 1993. He
has been Chairman, President and Chief Executive Officer of Transamerica
Occidental Life Insurance Company since 1985.
Mr. Finn was elected Executive Vice President of the Corporation in 1993.
He was Group Vice President of the Corporation from 1990 to 1993. He has been
President of Transamerica Finance Group, Inc. since 1988 and was elected its
Chief Executive Officer in 1990.
Mr. Grubb was elected Executive Vice President and Chief Financial
Officer of the Corporation in 1993. He was Senior Vice President of the
Corporation from 1989 to 1993. He was Senior Vice President and Chief
Financial Officer of Lucky Stores, Inc. from 1986 to 1989.
Mr. Cusack was elected Senior Vice President of the Corporation in 1993.
He was Vice President--Corporate Development of the Corporation from 1989 to
1993. He was Manager--Business Development and Strategy of General Electric
Company from 1987 to 1989.
Mr. Latzer was elected Senior Vice President and Chief Investment Officer
of the Corporation in 1988. Since 1988, he has been President and Chief
Executive Officer of Transamerica Investment Services, Inc.
Mr. McLain was elected Senior Vice President, General Counsel and
Secretary of the Corporation in 1990. He was previously a partner in the law
firm of Sonnenschein Nath & Rosenthal from 1989 to 1990, and was Vice
President, Secretary and General Counsel for Lucky Stores, Inc. from 1983 to
1989.
Ms. Breakiron-Evans was elected Vice President and General Auditor of the
Corporation in 1994. She was with Arthur Andersen & Co. from 1980 to 1994
where she served as an Audit Partner in the San Francisco office from 1990 to
1994.
Mr. Broome was elected Vice President and Controller of the Corporation
in 1979.
Mr. Colwell was elected Vice President--Real Estate Services of the
Corporation in 1977. Since 1972, he has been President of Transamerica Realty
Services, Inc., a subsidiary of the Corporation.
Mr. Dox was elected Vice President--Taxes of the Corporation in 1993. He
was a Tax Partner in the Los Angeles office of Ernst & Young from 1977 to
1993.
Mr. Hawkins was elected Vice President of the Corporation in 1993. He
has been Senior Vice President and Treasurer of Transamerica Finance Group,
Inc. since 1989.
<PAGE>
Page 27
Ms. King was elected Vice President--Human Resources of the Corporation
in 1989.
Mr. Lindberg was elected Vice President and Treasurer of the Corporation
in 1987.
Mr. Lockhart was elected Vice President--Public Affairs of the
Corporation in 1979.
Mr. Markus was elected Vice President--Investor Relations of the
Corporation in 1992. He was Vice President of Exergy Inc. from 1989 to 1992
and Assistant Vice President of Progressive Corporation from 1986 to 1989.
Mr. McClave was elected Vice President--Corporate Communications of the
Corporation in 1981.
Mr. Olsen was elected Vice President--Corporate Relations of the
Corporation in 1981.
Mr. Peirano was elected Vice President of the Corporation in 1993. He
was Vice President--Taxes of the Corporation from 1983 to 1993.
Ms. Tornese was elected Vice President--Risk Management of the
Corporation in 1987.
There is no family relationship among any of the foregoing officers or
between any of the foregoing officers and any director of the Corporation.
ITEM 11. EXECUTIVE COMPENSATION
The information set forth under the caption "Executive Compensation and
Other Information" in the Proxy Statement of Transamerica Corporation dated
March 23, 1994 is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information set forth under the captions "Principal Stockholders,"
"Information Concerning the Nominees and Current Directors" and "Stockholdings
of Directors and Executive Officers" in the Proxy Statement of Transamerica
Corporation dated March 23, 1994 is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The textual information set forth under the caption "Information
Concerning the Nominees and Current Directors" in the Proxy Statement of
Transamerica Corporation dated March 23, 1994 is incorporated herein by
reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a)(1) and (2) The response to this portion of Item 14 is submitted as a
separate section of this report.
<PAGE>
Page 28
(3) List of Exhibits:
EX-3(i) Transamerica Corporation Certificate of Incorporation,
as amended (incorporated by reference to Exhibit 4.5 of
the Registrant's Registration Statement on Form S-3
(File No. 33-43921) as filed with the Commission on
November 13, 1991 and to Exhibits 3 and 4 contained in
Form 8-A filed January 21, 1992, as amended by Form 8
filed January 27, 1992).
EX-3(ii) Transamerica Corporation By-Laws, as amended
(incorporated by reference to Exhibit 3 of the
Registrant's Quarterly Report on Form 10-Q (File No.
1-2964) for the quarter ended June 30, 1992).
EX-4.1 Stock Purchase Rights Agreement dated as of July 17,
1986 together with Amendment dated January 24, 1991
(incorporated by reference to Exhibit 4.1 of the
Registrant's Annual Report on Form 10-K (File No.
1-2964) for the year ended December 31, 1991).
EX-4.2*
EX-10.1 Form of Non-Qualified Stock Option Agreement under the
Registrant's 1971 and 1979 Non-Qualified Stock Option
Plan (incorporated by reference to Exhibit 10.4 of the
Registrant's Annual Report on Form 10-K (File No.
1-2964) for the year ended December 31, 1988).
EX-10.2 Executive Benefit Plan for Transamerica Corporation and
Affiliates, as amended (incorporated by reference to
Exhibit EX-10.2 of the Registrant's Annual Report on
Form 10-K (File No. 1-2964) for the year ended December
31, 1992).
EX-10.3 Form of Amended and Restated Consulting Agreement
effective January 1, 1994 between Transamerica
Airlines, Inc. and Glenn A. Cramer.
EX-10.4 Form of Consulting Agreement dated November 30, 1992,
between Transamerica Corporation and James R. Harvey
(incorporated by reference to Exhibit EX-10.4 of the
Registrant's Annual Report on Form 10-K (File No. 1-
2964) for the year ending December 31, 1992).
EX-10.5 Form of Amended and Restated Consulting Agreement dated
January 31, 1994 between Transamerica Corporation and
James R. Harvey.
_________
*Neither the Corporation nor its subsidiaries are
parties to any instrument with respect to long-term debt for
which securities authorized thereunder exceed 10% of the total
assets of the Corporation and its subsidiaries on a consolidated
basis. Copies of instruments with respect to long-term debt of
lesser amounts will be provided to the Commission upon request.
<PAGE>
Page 29
Ex-10.6 1992 Bonus Plan (incorporated by reference to
Exhibit 10.6 of the Registrant's Annual Report on Form
10-K (File No. 1-2964) for the year ending December 31,
1991).
EX-10.7 1993 Bonus Plan (incorporated by reference to
Exhibit EX-10.7 of the Registrant's Annual Report on
Form 10-K (File No. 1-2964) for the year ended December
31, 1992).
EX-10.8 1985 Stock Option and Award Plan, as amended,
(including Amendments No. 1 through 5) (incorporated by
reference to Post-Effective Amendment No. 3 of the
Registrant's Registration Statement on Form S-8 (File
No. 33-26317) as filed with the Commission on March 30,
1990, and to Exhibit 10.11 of the Registrant's Annual
Report on Form 10-K (File No. 1-2964) for the year
ended December 31, 1990).
EX-10.9 Form of Non-Qualified Stock Option Agreement under the
Registrant's 1985 Stock Option and Award Plan.
EX-10.10 Form of Incentive Stock Option Agreement under the
Registrant's 1985 Stock Option and Award Plan
(incorporated by reference to Exhibit 10.9 of the
Registrant's Annual Report on Form 10-K (File No.
1-2964) for the year ended December 31, 1990).
EX-10.11 Form of Restricted Stock Award Agreement under the 1985
Stock Option and Award Plan.
EX-10.12 Form of Non-Qualified Stock Option Agreement for
Nonemployee Directors under the 1985 Stock Option and
Award Plan.
EX-10.13 Deferred Compensation Policy for Transamerica
Corporation and Affiliates effective January 1, 1987
(incorporated by reference to Exhibit 10.12 of the
Registrant's Annual Report on Form 10-K (File No.
1-2964) for the year ended December 31, 1991).
EX-10.14 Deferred Compensation Policy for Transamerica
Corporation and Affiliates effective January 1, 1988
(incorporated by reference to Exhibit EX-10.14 of the
Registrant's Annual Report on Form 10-K (File No.
1-2964) for the year ended December 31, 1992).
EX-10.15 Deferred Compensation Policy for Transamerica
Corporation and Affiliates effective January 1, 1989
(incorporated by reference to Exhibit 10.17 of the
Registrant's Annual Report on Form 10-K (File No.
1-2964) for the year ended December 31, 1989).
<PAGE>
Page 30
EX-10.16 Deferred Compensation Policy for Transamerica
Corporation and Affiliates effective January 1, 1990
(incorporated by reference to Exhibit 10.18 of the
Registrant's Annual Report on Form 10-K (File No.
1-2964) for the year ended December 31, 1989).
EX-10.17 Deferred Compensation Policy for Transamerica
Corporation and Affiliates effective July 1, 1992
(incorporated by reference to Exhibit EX-10.17 of the
Registrant's Annual Report on Form 10-K (File No.
1-2964) for the year ended December 31, 1992).
EX-10.18 Deferred Compensation Policy for Transamerica
Corporation and Affiliates effective January 1, 1994.
EX-10.19 Form of Director Election to Defer 1994 Compensation.
EX-10.20 Form of Executive Election to Defer 1994 Compensation.
EX-10.21 1971 Non-Qualified Stock Option Plan of Transamerica
Corporation, as amended (including Amendment Nos. 1 and
2) (incorporated by reference to Exhibit EX-10.20 of
the Registrant's Annual Report on Form 10-K (File No.
1-2964) for the year ended December 31, 1992).
EX-10.22 1979 Stock Option Plan of Transamerica Corporation, as
amended (including Amendment Nos. 1 and 2)
(incorporated by reference to Exhibit EX-10.21 of the
Registrant's Annual Report on Form 10-K (File No.
1-2964) for the year ended December 31, 1992).
EX-10.23 Form of Termination Agreement between Transamerica
Corporation and certain of its executive officers
(incorporated by reference to Exhibit 10.23 of the
Registrant's Annual Report on Form 10-K (File No.
1-2964) for the year ended December 31, 1989).
EX-10.24 Form of Termination Agreement between Transamerica
Corporation and certain executive officers of certain
of its subsidiaries (incorporated by reference to
Exhibit 10.24 of the Registrant's Annual Report on
Form 10-K (File No. 1-2964) for the year ended
December 31, 1989).
EX-10.25 Public Offering Agreement (and Exhibits thereto) dated
January 28, 1993 by and among the Registrant, TIG
Holdings, Inc., and Jon W. Rotenstreich (incorporated
by reference to Exhibits 10.1, 10.2, 10.3, 10.4, 10.5
and 10.6 of the Registration Statement on Form S-1
(File No. 33-58122) as filed with the Commission on
February 10, 1993).
<PAGE>
Page 31
EX-10.26 Separation Agreement (and Exhibits thereto) dated
January 28, 1993 by and among the Registrant, TIG
Holdings, Inc., and Transamerica Insurance Group
(incorporated by reference to Exhibits 3.3, 3.4 and
10.2 of the Registration Statement on Form S-1 (File
No. 33-58122) as filed with the Commission on
February 10, 1993).
EX-10.27 Reinsurance Agreement dated December 31, 1992 by and
between ARC Reinsurance Corporation and Transamerica
Insurance Company, as amended (incorporated by
reference to Exhibit EX-10.26 of the Registrant's
Annual Report on Form 10-K (File No. 1-2964) for the
year ended December 31, 1992).
EX-10.28 Letter dated December 31, 1992 from the Registrant to
Transamerica Insurance Company regarding ARC
Reinsurance Corporation (incorporated by reference to
Exhibit EX-10.27 of the Registrant's Annual Report on
Form 10-K (File No. 1-2964) for the year ended
December 31, 1992).
EX-11 Statement Re: Computation of Per Share Earnings.
EX-12 Ratio of Earnings to Fixed Charges Calculation.
EX-13 Portions of the Transamerica Corporation 1993 Annual
Report (to the extent such portions are expressly
incorporated herein).
EX-21 List of Subsidiaries of Transamerica Corporation.
EX-23 Consent of Ernst & Young to the incorporation by
reference of their report dated February 22, 1994 in
the Registrant's Registration Statements on Form S-8
(File Nos. 2-80934, 2-83724, 33-3722, 33-12324,
33-13389, 33-18911, 33-26317, 33-38267 and 33-43927)
and on Form S-3 (File Nos. 33-32419, 33-37889 and
33-1008).
EX-24 Powers of Attorney executed by the directors of the
Registrant.
Exhibits will be furnished to shareholders of the
Corporation upon written request and, with the exception of
Exhibit EX-13, upon payment of a fee of 30 cents per page, which
fee covers the Corporation's reasonable expenses in furnishing
such exhibits.
(b) Reports on Form 8-K filed in the fourth quarter of 1993: During the
quarter ended December 31, 1993, the Registrant filed a Report on Form 8-K,
dated November 19, 1993, announcing that it had reached an agreement in
principle to acquire, for cash, the assets of the container division of
<PAGE>
Page 32
Tiphook plc, a London-based container, trailer and rail equipment lessor.
During such quarter, the Registrant also filed a Report on Form 8-K, dated
December 15, 1993, announcing that it had completed the public offering and
sale of its remaining 27% ownership interest in TIG Holdings, Inc., the
Registrant's former property and casualty insurance subsidiary.
(c) Exhibits: Certain of the exhibits listed in Item (a)(3) above have
been submitted under separate filings, as indicated.
(d) Financial Statement Schedules: The response to this portion of
Item 14 is submitted as a separate section of this report.
<PAGE>
Page 33
Signatures
Pursuant to the requirements of Section 13 or 15(d) 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
Burton E. Broome
Vice President and Controller
Date: March 25, 1994
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below on March 25, 1994 by the following persons on
behalf of the registrant and in the capacities indicated.
Signature Title
Principal Executive Officer:
FRANK C. HERRINGER* President and Chief Executive
Officer
Principal Financial Officer:
Edgar H. Grubb Executive Vice President and Chief Financial
Officer
Principal Accounting Officer:
Burton E. Broome Vice President and Controller
Directors:
GLENN A. CRAMER* Director
MYRON DU BAIN* Director
JAMES R. HARVEY* Chairman of the Board and Director
FRANK C. HERRINGER* Director
GORDON E. MOORE* Director
RAYMOND F. O'BRIEN* Director
CONDOLEEZZA RICE* Director
CHARLES R. SCHWAB* Director
FORREST N. SHUMWAY* Director
*Christopher M. McLain
Attorney-in-Fact
A majority of the members of the Board of Directors.
<PAGE>
Page 34
ANNUAL REPORT ON FORM 10-K
ITEM 14(a)(1) and (2) and ITEM 14(d)
LIST OF FINANCIAL STATEMENTS AND
FINANCIAL STATEMENT SCHEDULES
and
FINANCIAL STATEMENT SCHEDULES
Year Ended December 31, 1993
TRANSAMERICA CORPORATION AND SUBSIDIARIES
SAN FRANCISCO, CALIFORNIA
<PAGE>
Page 35
FORM 10-K--ITEM 14(a)(1) AND (2)
TRANSAMERICA CORPORATION AND SUBSIDIARIES
LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
Financial Statements:
The following consolidated financial statements of Transamerica Corpora-
tion and subsidiaries, included in the Transamerica Corporation 1993 Annual
Report, are incorporated by reference in Item 8:
Consolidated Balance Sheet--December 31, 1993 and 1992
Consolidated Statement of Income--Years ended December 31, 1993,
1992 and 1991
Consolidated Statement of Cash Flows--Years ended December 31, 1993,
1992 and 1991
Consolidated Statement of Shareholders' Equity--Years ended
December 31, 1993, 1992 and 1991
Notes to Financial Statements--December 31, 1993
Financial Statement Schedules:
The following consolidated financial statement schedules of Transamerica
Corporation and subsidiaries are included in Item 14(d).
I--Summary of Investments Other Than Investments in Related
Parties--December 31, 1993
III--Condensed Financial Information of Registrant--December 31,
1993 and 1992, and years ended December 31, 1993, 1992 and
1991
V--Supplementary Insurance Information--Years ended December 31,
1993, 1992 and 1991
VI--Reinsurance--Years ended December 31, 1993, 1992 and 1991
VIII--Valuation and Qualifying Accounts--Years ended December 31,
1993, 1992 and 1991
IX--Short-Term Borrowings--Years ended December 31, 1993, 1992 and
1991
X--Supplementary Income Statement Information--Years ended
December 31, 1993, 1992 and 1991
All other schedules provided for in the applicable accounting regulation
of the Securities and Exchange Commission pertain to items which do not appear
in the financial statements of Transamerica Corporation and subsidiaries or to
items which are not significant or to items as to which the required
disclosures have been made elsewhere in the financial statements and
supplementary notes, and such schedules have therefore been omitted.
<PAGE>
Page 36
REPORT OF ERNST & YOUNG, INDEPENDENT AUDITORS
Board of Directors and Shareholders
Transamerica Corporation
We have audited the consolidated financial statements of Transamerica
Corporation and subsidiaries listed in Item 14(a)(1) and (2) of the Annual
Report on Form 10-K of Transamerica Corporation for the year ended
December 31, 1993. Our audits also included the financial statement
schedules listed in the index at Item 14(a)(1) and (2). These financial
statements and schedules are the responsibility of Transamerica Corporation's
management. Our responsibility is to express an opinion on these financial
statements and schedules 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 and related
schedules are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements and related schedules. 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 consolidated 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. Also, in our opinion the related
financial statement schedules, when considered in relation to the basic
financial statements taken as a whole, present fairly, in all material
respects the information set forth therein.
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
<PAGE>
Page 37
<TABLE>
SCHEDULE I
TRANSAMERICA CORPORATION AND SUBSIDIARIES
_____________________
SCHEDULE I--SUMMARY OF INVESTMENTS OTHER
THAN INVESTMENTS IN RELATED PARTIES
DECEMBER 31, 1993
<CAPTION>
Column A Column B Column C Column D
_____________________________________________________________________________________________
Amount at
which shown in
Type of Investment Cost Value the balance sheet
_____________________________________________________________________________________________
(Amounts in thousands)
<S> <C> <C> <C>
Fixed maturities held for investment:
Bonds and notes:
U.S. Treasury securities and obligations of
U.S. government authorities and agencies . $ 205,322 $ 219,820 $ 205,322
Obligations of states and political
subdivisions ............................. 163,069 181,712 163,069
Foreign governments ........................ 144,880 157,339 144,880
Corporate securities ....................... 6,537,657 7,257,278 6,537,657
Mortgage-backed securities ................. 8,571,135 9,118,005 8,571,135
Public utilities ........................... 2,927,116 3,172,187 2,927,116
Redeemable preferred stocks .................. 3,792 3,616 3,792
___________ ___________ ___________
Total fixed maturities ............... 18,552,971 $20,109,957 18,552,971
===========
Fixed maturities available for sale ............ 872,384 $ 920,206 872,384
===========
Equity securities:
Common stocks:
Public utilities ........................... 4,769 $ 5,250 5,250
Banks, trust and insurance companies ....... 10,712 6,475 6,475
Industrial, miscellaneous and all other .... 206,845 390,461 390,461
Nonredeemable preferred stocks ............... 52,774 63,914 63,914
___________ ___________ ___________
Total equity securities .............. 275,100 $ 466,100 466,100
===========
Mortgage loans on real estate .................. 399,130 $ 402,443 368,879
===========
Real estate .................................... 164,563 124,137
Loans to life insurance policyholders .......... 396,480 $ 373,140 396,480
===========
Short-term investments ......................... 190,849 $ 190,849 190,849
___________ =========== ___________
Total investments .................... $20,851,477 $20,971,800
=========== ===========
<FN>
_______
The differences between Column B and Column D as to mortgage loans on real estate
and real estate represents write downs and allowances for possible permanent impairment
in value.
</TABLE>
<PAGE>
Page 38
<TABLE>
TRANSAMERICA CORPORATION AND SUBSIDIARIES SCHEDULE III
_____________________
SCHEDULE III--CONDENSED FINANCIAL INFORMATION OF REGISTRANT
TRANSAMERICA CORPORATION (PARENT COMPANY)
(Amounts in thousands except share data)
BALANCE SHEET
<CAPTION>
December 31,
1993 1992
<S> <C> <C>
Assets:
Investments in continuing operations ...................... $3,916,897 $3,417,735
Equity securities at market value (cost: $110,672) ........ 198,244
Notes and accounts receivable from continuing operations .. 508,611 359,031
Net assets of discontinued operations ..................... 1,103,907
Cash and cash equivalents ................................. 2,096 3,536
Other assets .............................................. 209,447 169,275
__________ __________
$4,835,295 $5,053,484
========== ==========
Liabilities and Shareholders' Equity:
Notes and loans payable ................................... $ 700,130 $ 861,197
Income taxes payable, net of deferred tax benefits of
$121,587 in 1993 and $11,476 in 1992 .................... 43,719 271,837
Income taxes due to subsidiaries .......................... 27,255 116,130
Notes and accounts payable to continuing operations ....... 346,014 134,301
Accounts payable and other liabilities .................... 354,681 369,961
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 ............................... 225,000 225,000
Outstanding--Series D, 400,000 shares, at liquidation
preference of $500 per share, cumulative dividend
rate of 8.5% ........................................ 200,000 200,000
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 .................................... 76,399 79,171
Additional paid-in capital .............................. 475,198 646,455
Retained earnings, including equity in undistributed net
income of subsidiaries of $1,831,159 in 1993 and
$1,594,607 in 1992 .................................... 2,297,883 2,100,236
Net unrealized gain on marketable equity securities ..... 124,082 83,496
Foreign currency translation adjustments ................ (35,066) (34,300)
__________ __________
3,363,496 3,300,058
__________ __________
$4,835,295 $5,053,484
========== ==========
NOTE TO BALANCE SHEET December 31,
1993 1992
<S> <C> <C>
Notes and loans payable comprise the following amounts:
Long-term debt due subsequent to one year:
Notes; interest at 8.32% to 10.0%; maturing through 2008 $445,600 $477,600
Commercial paper and other notes at various interest
rates and terms supported by credit agreements
expiring through 1996.................................. 254,530 383,597
________ ________
$700,130 $861,197
======== ========
<FN>
The aggregate annual maturities for the five years subsequent to December 31,
1993 are: 1994--None; 1995--$104,530; 1996--$285,000; 1997--$105,000; and 1998--
$100,000.
Transamerica hedges a portion of its variable interest rate obligations through
the use of interest rate exchange agreements which call for the payment of fixed rate
interest by Transamerica in return for the assumption by other contracting parties of
the variable rate cost. At December 31, 1993, exchange agreements covering the
notional amount of $110,000 at a weighted average fixed interest rate of 9.49%
expiring through 1996 were outstanding.
</TABLE>
<PAGE>
Page 39
<TABLE>
SCHEDULE III
(Continued)
TRANSAMERICA CORPORATION AND SUBSIDIARIES
_____________________
SCHEDULE III--CONDENSED FINANCIAL INFORMATION OF REGISTRANT
TRANSAMERICA CORPORATION (PARENT COMPANY)
STATEMENT OF INCOME
<CAPTION>
Years Ended December 31,
1993 1992 1991
(Amounts in thousands)
<S> <C> <C> <C>
Revenues:
Dividends from continuing operations ............. $115,350 $131,070 $272,470
Tax service fees ................................. 236,433 193,734 115,978
Interest, principally from continuing operations . 13,777 16,014 19,361
Loss on investment transactions .................. (5,909) (3,864)
________ ________ ________
359,651 340,818 403,945
Expenses:
Interest ......................................... 87,382 98,652 106,824
General and administrative ....................... 170,155 138,701 106,851
________ ________ ________
257,537 237,353 213,675
________ ________ ________
102,114 103,465 190,270
Income tax benefit ................................. 88,747 9,015 20,629
________ ________ ________
Income before equity in undistributed income of
continuing operations ............................ 190,861 112,480 210,899
Equity in undistributed income (loss) of
continuing operations ............................ 236,552 230,430 (189,856)
________ ________ ________
Income from continuing operations .................. 427,413 342,910 21,043
Income (loss) from discontinued operations ......... (50,000) (99,709) 39,726
Cumulative effect of change in accounting for
post employment benefits other than pensions ..... (10,633)
________ ________ ________
Net income ..................................... $377,413 $243,201 $ 50,136
======== ======== ========
NOTE TO STATEMENT OF INCOME
Transamerica has financed a portion of its investment in certain major operating
subsidiaries through borrowings by several other subsidiaries. In recognition of the
cost of these borrowings, unallocated interest, after taxes, discussed on page 50 of
the Transamerica Corporation 1993 Annual Report, comprises:
Years Ended December 31,
1993 1992 1991
(Amounts in thousands)
<S> <C> <C> <C>
Interest expense of Registrant ................... $(87,382) $(98,652) $(106,824)
Interest income of Registrant .................... 13,777 16,014 19,361
________ ________ _________
(73,605) (82,638) (87,463)
Income tax benefit ............................... 25,762 28,097 29,737
________ ________ _________
Net interest expense of Registrant, after taxes .. (47,843) (54,541) (57,726)
Net interest expense, after taxes, of certain
subsidiaries ................................... (6,257) (6,959) (8,363)
________ ________ _________
Unallocated interest, after taxes ............ $(54,100) $(61,500) $ (66,089)
======== ======== =========
</TABLE>
<PAGE>
Page 40
<TABLE>
SCHEDULE III
(Continued)
TRANSAMERICA CORPORATION AND SUBSIDIARIES
_____________________
SCHEDULE III--CONDENSED FINANCIAL INFORMATION OF REGISTRANT
TRANSAMERICA CORPORATION (PARENT COMPANY)
STATEMENT OF CASH FLOWS
<CAPTION>
Years Ended December 31,
1993 1992 1991
(Amounts in thousands)
<S> <C> <C> <C>
Operating activities:
Income from continuing operations ................. $ 427,413 $342,910 $ 21,043
Adjustments to reconcile income from continuing
operations to net cash provided by operating
activities:
Depreciation and amortization ................... 4,018 3,665 3,939
Accounts payable and other liabilities .......... 34,720 (24,850) (2,858)
Income taxes payable, including related accounts
with continuing operations .................... (120,424) 23,469 48,886
Equity in undistributed (income) loss of
continuing operations ......................... (236,552) (230,430) 189,856
Net losses on investment transactions ........... 5,909 3,864
_________ ________ ________
Net cash provided by continuing operations .... 115,084 114,764 264,730
Investing activities:
Capital contributions to continuing operations .... (54,200) (16,185) (27,639)
Proceeds from public offering of discontinued
operations ...................................... 1,031,788
Cash transactions with discontinued operations .... (409,296)
Decrease (increase) in accounts with continuing
operations ...................................... (137,867) (42,507) 13,606
Other ............................................. (32,087) 15,519 7,109
_________ ________ ________
Net cash provided (used) by investing
activities .................................. 398,338 (43,173) (6,924)
Financing activities:
Proceeds from sale of preferred stock ............. 193,187
Proceeds from debt financing ...................... 68,400
Payments of commercial paper and other notes
supported by long-term credit agreements ........ (161,067) (157,388) (186,109)
Common stock transactions ......................... (174,029) 70,182 27,340
Dividends ......................................... (179,766) (178,569) (164,041)
_________ ________ ________
Net cash used by financing activities ......... (514,862) (72,588) (254,410)
_________ ________ ________
Increase (decrease) in cash and cash equivalents .... (1,440) (997) 3,396
Cash and cash equivalents at beginning of year .... 3,536 4,533 1,137
_________ ________ ________
Cash and cash equivalents at end of year .......... $ 2,096 $ 3,536 $ 4,533
========= ======== ========
</TABLE>
<PAGE>
Page 41
<TABLE>
SCHEDULE V
TRANSAMERICA CORPORATION AND SUBSIDIARIES
_____________________
SCHEDULE V--SUPPLEMENTARY INSURANCE INFORMATION
<CAPTION>
Column A Column B Column C Column D Column E Column F
Future policy
Deferred benefits, Other policy
policy losses, claims and
acquisition claims and Unearned benefits Premium
Segment costs loss expenses premiums payable revenue
(Amounts in thousands)
<S> <C> <C> <C> <C> <C>
Life insurance:
Year ended December 31:
1993 ..................... $1,929,332 $4,925,855 $ 6,758 $17,019,213 $866,224
1992 ..................... $1,811,992 $4,609,664 $ 9,213 $14,636,379 $813,729
1991 ..................... $1,691,024 $4,680,918 $16,619 $12,761,676 $709,901
Column G Column H Column I Column J Column K
Benefits, Amortization
claims, of deferred
Net losses and policy Other
investment settlement acquisition operating Premiums
income expenses costs expenses written
(Amounts in thousands)
<S> <C> <C> <C> <C> <C>
Life insurance:
Year ended December 31:
1993 ..................... $1,725,760 $2,145,865 $232,659 (A) $330,007 $227,833 (B)
1992 ..................... $1,577,637 $2,059,243 $135,286 (A) $315,900 $226,381 (B)
1991 ..................... $1,508,039 $1,892,279 $172,139 $235,911 $ 54,808 (B)
<FN>
_______
(A) Includes required accelerated amortization of deferred policy acquisition costs associated
with interest-sensitive products due to realized investment gains of $62,852,000 in 1993 and
$33,208,000 in 1992.
(B) Health insurance premiums written.
</TABLE>
<PAGE>
Page 42
<TABLE>
SCHEDULE VI
TRANSAMERICA CORPORATION AND SUBSIDIARIES
_____________________
SCHEDULE VI--REINSURANCE
<CAPTION>
Column A Column B Column C Column D Column E Column F
Percentage
Ceded to Assumed of amount
Gross other from other Net assumed
Segment amount companies companies amount to net
(Dollar amounts in thousands)
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1993:
Life insurance in force ... $180,902,966 $95,719,350 $149,728,434 $234,912,050 63.7%
============ =========== ============ ============
Premium revenue:
Life insurance .......... $ 808,589 $ 663,959 $ 493,954 $ 638,584 77.4%
Accident and health
insurance ............. 80,469 251,685 398,856 227,640 175.2%
____________ ___________ ____________ ____________
$ 889,058 $ 915,644 $ 892,810 $ 866,224 103.1%
============ =========== ============ ============
Year ended December 31, 1992:
Life insurance in force ... $168,475,016 $92,052,408 $138,293,429 $214,716,037 64.4%
============ =========== ============ ============
Premium revenue:
Life insurance .......... $ 881,298 $ 928,817 $ 641,963 $ 594,444 108.0%
Accident and health
insurance ............. 39,633 173,492 353,144 219,285 161.0%
____________ ___________ ____________ ____________
$ 920,931 $ 1,102,309 $ 995,107 $ 813,729 122.3%
============ =========== ============ ============
Year ended December 31, 1991:
Life insurance in force ... $152,830,401 $88,424,013 $136,022,062 $200,428,450 67.9%
============ =========== ============ ============
Premium revenue:
Life insurance .......... $ 900,991 $ 806,135 $ 552,068 $ 646,924 85.3%
Accident and health
insurance ............. 51,639 56,373 67,711 62,977 107.5%
____________ ___________ ____________ ____________
$ 952,630 $ 862,508 $ 619,779 $ 709,901 87.3%
============ =========== ============ ============
</TABLE>
<PAGE>
Page 43
<TABLE>
SCHEDULE VIII
TRANSAMERICA CORPORATION AND SUBSIDIARIES
_____________________
SCHEDULE VIII--VALUATION AND QUALIFYING ACCOUNTS
<CAPTION>
Column A Column B Column C Column D Column E
--------Additions--------
Charged to
Balance at Charged to other Balance at
beginning costs and accounts - Deductions - end of
Description of period expenses describe describe period
(Amounts in thousands)
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1993:
Deducted from asset accounts:
Allowance for losses -
Mortgage loans on real estate ..... $ 25,940 $10,396 (B) $ 6,085 (F) $ 30,251
Real estate ....................... 44,134 9,455 (B) 13,163 (G) 40,426
Consumer:
Finance receivables ............. 107,183 $ 63,946 476 (C) 64,430 (H) 107,175 (J)
Other assets .................... 2,206 5,952 (A) 5,611 (I) 2,547
Commercial:
Finance receivables ............. 91,263 33,098 (178)(D) 43,515 (H) 80,668 (K)
Other assets .................... 121,549 50,000 365 (E) 14,929 (I) 156,985
________ ________ _______ ________ ________
$392,275 $152,996 $20,514 $147,733 $418,052
======== ======== ======= ======== ========
Year ended December 31, 1992:
Deducted from asset accounts:
Allowance for losses -
Mortgage loans on real estate ..... $ 26,643 $21,260 (B) $ 21,963 (F) $ 25,940
Real estate ....................... 18,143 29,088 (B) 3,097 (G) 44,134
Consumer:
Finance receivables ............. 107,235 $ 48,897 (3,275)(L) 45,674 (H) 107,183 (J)
Other assets .................... 3,021 (A) 1,200 (M) 2,015 (I) 2,206
Commercial:
Finance receivables ............. 172,718 41,816 (2,134)(D) 121,137 (H) 91,263 (K)
Other assets .................... 142,062 2,030 (E) 22,543 (I) 121,549
________ ________ _______ ________ ________
$466,801 $ 93,734 $48,169 $216,429 $392,275
======== ======== ======= ======== ========
Year ended December 31, 1991:
Deducted from asset accounts:
Allowance for losses -
Mortgage loans on real estate ..... $ 18,420 $12,510 (B) $ 4,287 (F) $ 26,643
Real estate ....................... 13,350 7,593 (B) 2,800 (G) 18,143
Consumer finance receivables ...... 102,349 $ 42,214 (3,441)(L) 33,887 (H) 107,235 (J)
Commercial:
Finance receivables ............. 102,748 248,472 (2,364)(D) 176,138 (H) 172,718 (K)
Other assets .................... 121,125 (N) 20,937 (E) 142,062
________ ________ _______ ________ ________
$236,867 $411,811 $35,235 $217,112 $466,801
======== ======== ======= ======== ========
<FN>
(A) Provision charged to operating expenses for losses on disposal of repossessed assets.
(B) Included in gains on investment transactions.
(C) Increase in connection with purchase of receivables and other adjustments.
(D) Decrease in 1993 and 1992 was due to foreign exchange and other adjustments. The decrease in 1991 was due to
reclassification of valuation allowance on receivables reclassified to assets held for sale of $(4,221,000);
increase in connection with purchase of receivables and foreign exchange and other adjustments of $1,857,000.
(E) Increase in 1993 and 1992 was due to recoveries on assets held for sale and in 1991 the increase was due to
reclassification of valuation allowance on assets held for sale from repossessed assets of $16,716,000 and
from the allowance for losses on finance receivables of $4,221,000.
(F) Reduction in reserves associated with the settlement of mortgage loan transactions.
(G) Reduction in reserves associated with the settlement of real estate transactions.
(H) Charges for net credit losses.
(I) Charges for losses on disposal of assets held for sale.
(J) Includes $1,680,000 in 1993, $3,561,000 in 1992 and $6,654,000 in 1991 related to securitized, sold and
serviced receivables included in other liabilities in the consolidated balance sheet.
(K) Includes $938,000 in 1993, 1992 and 1991 related to securitized, sold and serviced receivables included in
other liabilities in the consolidated balance sheet.
(L) Decrease in amount included in other liabilities for securitized, sold and serviced receivables related to the
run off of the securitized outstandings and other adjustments.
(M) Reclassification of allowance for losses on receivables in process of foreclosure.
(N) Includes special charge of $117,304,000 plus an additional provision of $3,821,000 for valuation allowance on
assets held for sale which are included in other assets in the consolidated balance sheet.
</TABLE>
<PAGE>
Page 44
<TABLE>
SCHEDULE IX
TRANSAMERICA CORPORATION AND SUBSIDIARIES
_____________________
SCHEDULE IX--SHORT-TERM BORROWINGS
<CAPTION>
Column A Column B Column C Column D Column E Column F
Maximum Average Weighted
Weighted amount amount average
Balance average outstanding outstanding interest rate
Category of aggregate at end of interest during the during the during the
short-term borrowings period rate(D)(E) period(F) period(G) period(D)(H)
(Dollar amounts in thousands)
<S> <C> <C> <C> <C> <C>
Year ended December 31,
1993:
Commercial paper(A) ... $1,080,249 3.17% $1,080,249 $493,264 3.41%
Bank loans(B)(C) ...... 84,644 84,644 57,598 3.56%
Year ended December 31,
1992:
Commercial paper(A) ... $ 853 $ 79 4.21%
Bank loans(B) ......... 7,000 5,583 4.82%
Year ended December 31,
1991:
Commercial paper(A) ... $ 38,560 $ 3,213 6.34%
Bank loans(B) ......... $ 7,000 6.13% 93,797 9,134 6.46%
<FN>
_______
(A) Commercial paper notes are issued for maturities up to 270 days in the United
States and 365 days in Canada. Commercial paper balances have been reclassified to
long-term debt to the extent of available noncancelable long-term lines of credit.
(B) Bank loans have been reclassified to long-term debt to the extent of available
noncancelable long-term lines of credit.
(C) All short-term bank loans outstanding were denominated in foreign currencies.
(D) Excludes interest rates on short-term borrowings denominated in foreign currencies.
(E) Computed by dividing the annualized interest expense on the debt outstanding at
year end by the amount outstanding at year end.
(F) The maximum amount outstanding during 1993, 1992 and 1991 for combined commercial
paper and bank loans was $1,164,893,000, $7,853,000 and $132,357,000.
(G) Computed by dividing the total of the month-end balances outstanding by the number
of months in the year.
(H) Computed by dividing the actual interest expense by the average debt outstanding.
</TABLE>
<PAGE>
Page 45
SCHEDULE X
TRANSAMERICA CORPORATION AND SUBSIDIARIES
_____________________
SCHEDULE X--SUPPLEMENTARY INCOME STATEMENT INFORMATION
Column A Column B
Item Charged to costs and expenses
1993 1992 1991
(Amounts in thousands)
Year ended December 31:
Taxes, other than payroll and income taxes:
Premium taxes .......................... $25,556 $ 21,192 $ 25,049
Real estate and other taxes ............ 26,198 25,633 23,968
Maintenance and repairs .................. 45,642 60,024 55,852
_______ ________ ________
$97,396 $106,849 $104,869
======= ======== ========
<PAGE>
Page 46
Differences Between the Circulated Document and the Electronically Filed
Document
1. The document which is filed with the New York and Pacific Stock Exchanges
will be a printed copy of the electronic document. However, the document
which will be mass produced for general distribution will have different
page numbering and page breaks than the electronically filed document.
<PAGE>
EXHIBIT EX-10.3
AMENDED AND RESTATED
CONSULTING AGREEMENT
THIS AMENDED AND RESTATED CONSULTING AGREEMENT ("Agreement"), is
made as of January 1, 1994 by and between Transamerica Airlines, Inc., a
Delaware corporation ("TAA"), and Glenn A. Cramer ("Cramer").
RECITALS
A. Cramer retired as an executive officer and employee of TAA on
January 1, 1981.
B. Transamerica recognizes the value of Cramer's services and has
determined that it is in its best interests that Cramer be available to
provide such consulting and advisory services to TAA as may be requested by
TAA from time to time, and Cramer is willing to make such services available
to TAA, on the terms and conditions hereinafter set forth.
C. TAA and Cramer have previously entered into a Consulting
Agreement dated January 1, 1981, as amended by Amendment No. 1 dated November
1, 1984 and Amendment No. 2 dated April 18, 1986 (as amended the "Prior
Agreement").
D. TAA and Cramer wish to amend and restate the Prior Agreement
effective January 1, 1994.
NOW THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, the parties agree as follows:
1. Commencing on January 1, 1994 and continuing until his death,
Cramer will render to TAA such consulting and advisory services concerning the
business of TAA as may be requested by TAA from time to time. For the year
commencing January 1, 1994 and each subsequent year until his death, Cramer
agrees to make 10% of his business time and attention available to TAA and
shall receive as a per annum fee for rendering such services an amount equal
to (i) $57,000 less (ii) any amount which Cramer shall receive in such year as
a distribution from the Retirement Plan for Salaried U.S. Employees of
Transamerica Airlines, Inc. (the "Retirement Plan"), payable in appropriate
installments to conform with payments made under the Retirement Plan. TAA
will reimburse Cramer for all reasonable costs incurred by him in rendering
such services, subject to the approval of the chief executive officer of TAA.
2. As further consideration for Cramer's consulting and advisory
services, TAA agrees that Cramer will also be included in TAA's
executive travel insurance policy with an insured amount of $300,000 so long
as he is required to travel on behalf of TAA or Transamerica Corporation or
any of its affiliated companies.
<PAGE>
Page 2 of 3
3. In rendering the services herein provided for, Cramer shall
act as an independent contractor and not as an agent for or an employee of TAA
and shall have exclusive discretion as to the time and manner and other
details of performing such services. Cramer shall cooperate with TAA to the
end that he will respond to all reasonable requests for such services and will
render to TAA the assistance herein contemplated.
4. The products of Cramer's work will become the property of TAA
and will not be made available to others during or following the term of this
Agreement without the advance written permission of TAA.
5. Cramer shall not, after the effective date of this Agreement,
without the prior written approval of TAA, consult with, advise or otherwise
participate or engage in any business which competes with the business now or
then being conducted or contemplated by TAA or Transamerica Corporation or any
of its affiliated companies (all of which are hereinafter collectively
referred to as the "Transamerica Companies") or in any manner interfere with
or obstruct the business relationship between any of the Transamerica
Companies, or any successor to any business of any of the Transamerica
Companies, and their respective accounts, clients, and customers, or attempt
to induce any employee of any of the Transamerica Companies to leave such
employ for any reason whatsoever.
6. TAA shall have the right to terminate the services of Cramer
hereunder only for breach of this Agreement, or his dishonesty, fraud or
deliberate injury or attempted injury to any of the Transamerica Companies or
on account of any unlawful or criminal activity of a serious nature. TAA
shall give to Cramer not less than ninety (90) days' written notice of any
termination hereunder. In the event of such termination, TAA shall continue
to pay Cramer as termination pay an amount per annum (to be prorated if such
termination is other than at year-end) equal to (i) $57,000 less (ii) any
amount which Cramer shall receive in such year as a distribution from the
Retirement Plan.
7. Neither this Agreement nor any of the rights of Cramer
hereunder or arising by virtue hereof shall be capable of assignment or
transfer by Cramer but shall be binding upon and inure to the benefit of the
successors and assigns of TAA.
8. This Agreement is made pursuant to and shall be construed,
interpreted and applied in accordance with the laws of the State of
California.
9. This Agreement sets forth the entire agreement and
understanding between the parties as to the subject matter of this Agreement
and supersedes and cancels any prior agreements and understandings between the
parties with respect thereto including the Prior Agreement. Any modification
of this Agreement will be effective only if it is in writing and signed by the
parties.
<PAGE>
Page 3 of 3
10. If any provision or any part thereof of this Agreement is held
by a court of competent jurisdiction to be invalid, void or unenforceable, the
remaining provisions or parts thereof shall nevertheless continue in full
force without being impaired or invalidated in any way.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
TRANSAMERICA AIRLINES, INC.
By: _________________________________
Title: ______________________________
_____________________________________
Glenn A. Cramer
<PAGE>
EXHIBIT EX-10.5
AMENDED AND RESTATED
CONSULTING AGREEMENT
THIS AMENDED AND RESTATED CONSULTING AGREEMENT ("Agreement") is made
as of the 31st day of January, 1994 by and between Transamerica Corporation, a
Delaware corporation ("Transamerica"), and James R. Harvey ("Harvey").
RECITALS
A. Harvey is presently the Chairman of the Board of Directors of
Transamerica and retired as an executive officer and employee of Transamerica
effective December 1, 1992.
B. Transamerica recognizes the value of Harvey's services and has
determined that it is in its best interests that Harvey be available to
provide such consulting and advisory services to Transamerica as may be
requested by Transamerica from time to time, and Harvey is willing to make
such services available to Transamerica, on the terms and conditions
hereinafter set forth.
C. Transamerica and Harvey previously entered into a Consulting
Agreement dated November 30, 1992 ("Prior Agreement").
D. Transamerica and Harvey wish to amend and restate the Prior
Agreement effective February 1, 1994.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, the parties agree as follows:
1. Term. The term of this Agreement shall commence on February 1,
1994 and shall continue through April 30, 1995.
2. Services. During the Term, Harvey agrees (i) to continue to
serve, at the pleasure of the Board of Directors, as Chairman of the Board of
Directors of Transamerica and (ii) to render to Transamerica such consulting
and advisory services and perform such special assignments in connection with
the business of Transamerica as may be requested from time to time by the
Board of Directors or the Chief Executive Officer of Transamerica (the
"Services"). Transamerica and Harvey agree that the performance of the
Services by Harvey is intended to require approximately 20% of Harvey's
normal business hours (assuming full-time employment) and Harvey agrees and
undertakes to devote such amount of time to the performance of the Services.
3. Compensation. In consideration of the performance of the
Services, Transamerica will pay to Harvey consulting fees in the amount of
$100,000 per annum. Such fees shall be payable quarterly in advance on the
first business day of each of February, May, August, and November.
<PAGE>
Page 2 of 5
4. Service on Board of Directors. In addition to the performance
of the Services, Harvey agrees to continue to serve as a member of the Board
of Directors of Transamerica and its committees, for which Harvey will be
compensated in the same manner as any other non-employee director.
5. Expenses; Office; Automobile.
(a) Harvey will be reimbursed for all out-of-pocket expenses
reasonably incurred by him in the performance of the Services, provided that
such expenses are properly documented and incurred in amounts and in a manner
consistent with Transamerica's expense reimbursement policies as they may from
time to time exist.
(b) During the Term, Transamerica shall maintain an office for
Harvey at its headquarters and shall provide Harvey with appropriate
secretarial and other assistance.
(c) During the Term, Harvey will be entitled to the use of a
company automobile and parking at Transamerica's headquarters, on terms
consistent with the terms on which automobiles and parking are provided to
Transamerica officers.
6. Other Benefits. Nothing contained in this Agreement shall
affect the benefits available now or in the future to Harvey as a retired
employee or as a director of Transamerica.
7. Conflict of Interest. Nothing contained in this Agreement
shall be deemed to preclude Harvey from engaging in other professional
endeavors or employment not inconsistent with the terms of this Agreement.
Harvey hereby represents that he is not, nor during the Term will he become,
bound by any agreements, commitments or obligations, nor involved with any
professional endeavors, which restrict or may restrict his ability to perform
the Services. Harvey shall adhere to the conflict of interest policy
promulgated by Transamerica and shall direct to Transamerica any business
opportunities in the fields in which Transamerica or its direct or indirect
subsidiaries ("Affiliates") operate.
8. Independent Contractor. It is expressly understood and agreed
that, in rendering the Services, Harvey is an independent contractor and is
not an employee or agent of Transamerica and shall have sole discretion to
determine the time, manner and other details of rendering the Services.
Transamerica shall not have the right to control the manner and detail of the
performance of the Services and, subject to such regulations as Transamerica
may from time to time promulgate, Harvey shall exercise independent judgment
as to such performance. Harvey shall be responsible for all federal, state
and local taxes of every kind in connection with payments hereunder, provided
that Transamerica may withhold such amounts if and as required by any
applicable taxing authority.
9. Termination. This Agreement shall terminate upon Harvey's
death, or "permanent disability." The term "permanent disability" shall mean
a disability by reason of any physical or mental incapacity which prevents
Harvey from rendering the Services for a period of more than 120 days in any
consecutive 180-day period.
<PAGE>
Page 3 of 5
10. Non-Competition and Non-Solicitation. Harvey covenants and
agrees that during the Term and for a period of two years following the
termination of this Agreement, he will not directly or indirectly without the
prior written consent of Transamerica:
(a) Consult with, advise or otherwise participate, render services
to or engage in any business similar to, or which competes with, the business
now or then being conducted by Transamerica or any of its Affiliates, or have
any interest (other than an interest of 1% or less of the stock of a publicly
traded corporation) or involvement in any such business, whether as an agent,
employee, consultant, advisor, creditor, proprietor, partner, stockholder,
officer, director or otherwise; notwithstanding the foregoing, Transamerica
acknowledges that Harvey currently serves, and will continue to serve, as a
director of The Charles Schwab Corporation and Transamerica hereby waives any
violation of Harvey's covenant set forth in this subparagraph (a) arising
from, and consents to, such service as a director.
(b) Solicit from any present or past customer, client or vendor of
Transamerica or any of its Affiliates any business similar to that now or then
being conducted by Transamerica or any of its Affiliates;
(c) Request or advise any present or future customer, client or
vendor of Transamerica or any of its Affiliates to withdraw, curtail or cancel
its business dealings with Transamerica or any of its Affiliates; or
(d) Solicit, suggest to or encourage any present or future employee
of Transamerica or any of its Affiliates to leave such employ for any reason
whatsoever.
Should any portion of this Section 10 be deemed unenforceable
because of its scope, duration or territory, and only in such event, then the
parties consent and agree to such limitation on scope, duration or territory
as may be finally adjudicated as enforceable in such jurisdiction by a court
of competent jurisdiction after exhaustion of all appeals, to give this
Section 10 its maximum permissible scope, duration and territory. It is
hereby agreed that each breach of this Section 10 is a distinct and material
breach of this Agreement and that solely a monetary remedy will be inadequate,
impractical and extremely difficult to prove, and that each such breach will
cause Transamerica irreparable harm. It is further agreed that, in addition
to any and all remedies available at law or equity (including monetary damages
and Transamerica's right to cease payments under this Agreement), Transamerica
shall be entitled to temporary and permanent injunctive relief to enforce the
provisions of this Section 10 without the necessity of proving actual damages.
Transamerica may pursue any of the remedies described in this Section 10
concurrently or consecutively in any order as to any such breach or violation,
and the pursuit of one of such remedies at any time will not be deemed an
election of remedies or waiver of the right to pursue any of the other of such
remedies.
11. Applicable Law. This Agreement shall be governed by, and
interpreted and enforced in accordance with, the substantive laws of the State
of California.
<PAGE>
Page 4 of 5
12. Binding Agreement. This Agreement shall be binding upon the
parties hereto, their heirs, personal representatives, successors, transferees
and assigns; provided that Harvey may not assign any of his rights, duties or
obligations hereunder.
13. Notices. All notices given or made pursuant hereto shall be in
writing and shall be deemed to have been given or made if in writing and
delivered personally or sent by registered or certified mail (postage prepaid,
return receipt requested), Federal Express or equivalent courier service (by
next day service), or facsimile transmission to the parties at the following
addresses:
To Harvey at his home address shown in the records of Transamerica.
To Transamerica at: Transamerica Corporation
600 Montgomery Street
San Francisco, CA 94111
Attention: General Counsel
Telecopier No. (415) 983-4164
or to such other address as shall be furnished by either party by like notice
to the other. Such notice or communication shall be deemed to have been given
or made (i) if personally delivered, on the date so delivered, (ii) if sent by
registered or certified mail, on the third business day after mailing, (iii)
if sent by Federal Express or equivalent courier service, on the next business
day following delivery to the courier service within its business hours
provided for next day delivery, or (iv) if sent by facsimile transmission, on
the date of confirmation.
14. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
15. Waiver. No waiver of any of the provisions of this Agreement
shall constitute a continuing waiver of such provision or a waiver of any
other provision hereof. No waiver shall be binding unless executed in writing
by the party making the waiver.
16. Entire Agreement. This Agreement sets forth the entire
understanding between the parties hereto with respect to the subject matter
hereof and supersedes all other understandings and agreements relating
thereto, whether written or oral, including the Prior Agreement. This
Agreement cannot be changed, modified or terminated except by a written
agreement duly executed by the parties.
17. Severability. If any provision of this Agreement or
application thereof to any person or under any circumstances is adjudicated to
be invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect any other provisions or applications of this
Agreement that can be given effect without the invalid or unenforceable
provision or application and shall not invalidate or render unenforceable such
provision in any other jurisdiction or under any other circumstance.
<PAGE>
Page 5 of 5
18. Remedies Cumulative. No remedy conferred by this Agreement is
intended to be exclusive of any other remedy, and each and every such remedy
shall be cumulative and shall be in addition to any other remedy given
hereunder or now or hereafter existing at law or in equity.
19. Titles. Titles of the sections of this Agreement are intended
solely for convenience and no provision of this Agreement is to be construed
by reference to the title of any section.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first written above.
TRANSAMERICA CORPORATION,
a Delaware corporation
By: _________________________________
Title: ______________________________
_____________________________________
James R. Harvey
<PAGE>
EXHIBIT EX-10.9
TRANSAMERICA CORPORATION
NON-QUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT, made as of this 3rd day of March, 1993, between
TRANSAMERICA CORPORATION, a Delaware corporation (the "Company") and
__________________________________ (the "Employee").
W I T N E S S E T H :
WHEREAS, the Company has adopted The 1985 Stock Option and Award Plan of
Transamerica Corporation (the "Plan"), providing for the granting of certain
stock options to key employees of the Company and its Affiliates, which
options ("non-qualified stock options") are not intended to be incentive stock
options within the meaning of section 422A, or successor provisions, of the
Internal Revenue Code of 1986, as amended (the "Code"), to purchase shares of
the common stock of the Company (the "Common Stock"); and
WHEREAS, the Management Development and Compensation Committee (the
"Committee"), which is responsible for administration of the Plan, has
authorized the granting of an option to the Employee on the date of this
Agreement, thereby allowing the Employee to acquire a proprietary interest in
the Company in order that said Employee will have a further incentive for
remaining with and increasing his or her efforts on behalf of the Company or
one of its Affiliates; and
WHEREAS, this Agreement is prepared in conjunction with and under the
terms of the Plan; although all of the terms of the Plan and the definitions
used in the Plan have not been set forth herein, such terms and definitions
are incorporated herein and made a part hereof by reference; the provisions of
the Plan shall govern any interpretation of this Agreement; and
WHEREAS, the Employee has accepted the grant of stock options hereunder
and agreed to the terms and conditions hereinafter stated;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants hereinafter set forth and other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereto
hereby agree as follows:
1. The Company hereby grants to the Employee under the non-qualified
stock option provisions of the Plan, as a separate incentive in connection
with his or her employment and not in lieu of any salary or other
compensation for his or her services, a non-qualified stock option to
purchase, on the terms and conditions set forth in this Agreement and the
Plan, all or any part of an aggregate of ____________ shares of authorized but
unissued or reacquired shares of the Common Stock, at the purchase price set
forth in paragraph 2 of this Agreement. The option granted hereby is not
intended to be an Incentive Stock Option within the meaning of Section 422A of
the Code.
2. The purchase price per share (the "Option Price") shall be $48.25,
which is the fair market value per share of the Common Stock on the date of
this Agreement. The Option Price shall be payable in the legal tender of the
United States or, in the discretion of the Committee, in shares of the Common
Stock of the Company or in a combination of such legal tender and such
shares.
<PAGE>
3. The number and class of shares specified in paragraph 1 above,
and/or the Option Price, are subject to appropriate adjustment in the event of
changes in the capital stock of the Company by reason of stock dividends,
split-ups or combinations of shares, reclassifications, mergers,
consolidations, reorganizations or liquidations. Subject to any required
action of the stockholders of the Company, if the Company shall be the
surviving corporation in any merger or consolidation, the option granted
hereunder (to the extent that it is still outstanding) shall pertain to and
apply to the securities to which a holder of the same number of shares of
Common Stock that are then subject to the option would have been entitled. A
dissolution or liquidation of the Company, or a merger or consolidation in
which the Company is not the surviving corporation, will cause the option
granted hereunder to terminate, unless the agreement of merger or
consolidation shall otherwise provide, provided that the Employee shall in
such event have the right immediately prior to such dissolution or
liquidation, or merger or consolidation, to exercise the option in whole or
part, without regard to the provisions of paragraph 4 or 5 of this Agreement.
To the extent that the foregoing adjustments relate to stock or securities of
the Company, such adjustments shall be made by the Committee, whose
determination in that respect shall be final, binding and conclusive.
4. The option may not be exercised as to any shares unless and until
the Employee remains in the employ of the Company and/or an Affiliate, for a
period of at least twelve (12) months after the date of this Agreement. In
the event of termination of the Employee's employment for any reason whatever
within this twelve (12) month period, the Employee's option shall terminate
and all rights hereunder shall cease.
5. Except as otherwise provided in this Agreement, the right to
exercise the option awarded by this Agreement shall accrue as to 25% of the
shares subject to such option on the first anniversary date of the date of
this Agreement and as to an additional 25% on each succeeding anniversary
date, until the right to exercise this option shall have accrued with respect
to 100% of the shares subject to such option.
Immediately upon the determination of the Committee that a Change in
Control of the Company has occurred, or in the event of the liquidation or
dissolution of the Company, the right to exercise the option awarded by this
Agreement shall accrue as to 100% of the shares subject to such option,
notwithstanding the provisions of the foregoing paragraph or paragraph 4 of
this Agreement.
6. In the event of the Employee's termination of Employment for any
reason except Retirement, Total Disability or death, the Employee may, within
three (3) months after the date of such termination or within ten (10) years
from the date of this Agreement, whichever shall first occur, exercise the
option to the extent the right to exercise the option had accrued as of the
date of such termination. In the event of the Employees's Retirement or
Termination of Employment by reason of his or her Total Disability, the
Employee may, within three (3) years after the date of such Termination of
Employment or within ten (10) years from the date of this Agreement, whichever
shall first occur, exercise the option to the extent the Employee could have
exercised the option on the date of such termination. In the event the
Employee shall die within such three (3) month period or such three (3) year
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<PAGE>
period, whichever is applicable, or shall die while in the employ of the
Company or an Affiliate, the option may be exercised by the Employee's
transferee, as hereinafter provided, to the same extent the right to exercise
the option had accrued immediately prior to his or her death, for a period of
one (1) year after the date of the Employee's death.
7. The option shall be exercisable during the Employee's lifetime only
by the Employee. The option shall be non-transferable by the Employee
otherwise than by will or the applicable laws of descent and distribution.
8. To the extent exercisable after the Employee's death, the option
shall be exercised only by the Employee's transferee who shall be the person
or persons entitled to the option under the Employee's will, or if the
Employee shall fail to make testamentary disposition of the option, his or her
legal representative. Any transferee exercising the option must furnish the
Company (a) written notice of his or her status as transferee, (b) evidence
satisfactory to the Company to establish the validity of the transfer of the
option and compliance with any laws or regulations pertaining to said
transfer, and (c) written acceptance of the terms and conditions of the option
as prescribed in this Agreement.
9. The option may be exercised by the person then entitled to do so as
to any shares which may then be purchased (a) by giving written notice of
exercise to the Company, specifying the number of full shares to be purchased
and accompanied by full payment of the purchase price thereof (and the amount
of any income tax the Company is required by law to withhold by reason of such
exercise), and (b) by giving satisfactory assurances in writing if requested
by the Company, signed by the person exercising the option, that the shares to
be purchased upon such exercise are being purchased for investment and not
with a view to the distribution thereof. At the absolute discretion of the
Committee, the person entitled to exercise the option may elect to satisfy the
income tax withholding requirement described in subparagraph (a) above by
having the Company withhold shares of Common Stock or by delivering to the
Company already-owned shares of Common Stock. No partial exercise of this
option may be for less than ten (10) share lots or multiples thereof.
10. The Committee, in its absolute discretion, may elect (in lieu of
accepting the exercise price tendered for, and delivering, all or a portion of
the shares of Common Stock as to which the option has been exercised) if the
fair market value of the Common Stock exceeds the exercise price of the option
(the "Appreciation Value") to pay the Employee in cash or in shares of the
Common Stock, or a combination of cash and Common Stock, an amount equal to
the Appreciation Value. The Committee's election pursuant to this paragraph
10 shall be made by giving written notice to the Employee (or other person
exercising the option). The Committee may not permit an Employee who is
subject to Section 16(b) of the Securities Exchange Act of 1934 to receive a
cash payment equal to all or any portion of the Appreciation Value unless the
option is exercised during a ten-day "window" period defined in Rule 16b-3(e)
under such Act. If the Employee is subject to such section and exercises the
option awarded by this Agreement during such a "window" period, for purposes
of this paragraph 10 the Fair Market Value of the Company's Common Stock on
the exercise date shall be deemed to equal that value determined by the
Committee in its discretion which is not less than the lowest fair market
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<PAGE>
value, nor more than the highest fair market value, of a share of the
Company's Common Stock on any day during the ten-day "window" period including
the exercise date. Shares of the Company's Common Stock paid pursuant to this
paragraph will be valued at their Fair Market Value on the exercise date.
11. If at any time the Company shall determine, in its discretion, that
the listing, registration or qualification of the shares covered by the
option upon any securities exchange or under any state or federal law, or the
consent or approval of any governmental regulatory authority, is necessary or
desirable as a condition of the purchase of shares hereunder, the option may
not be exercised, in whole or in part, unless and until such listing,
registration, qualification, consent or approval shall have been effected or
obtained free of any conditions not acceptable to the Company. The Company
shall make reasonable efforts to meet the requirements of any such state or
federal law or securities exchange and to obtain any such consent or approval
of any such governmental authority.
12. Neither the Employee nor any person claiming under or through said
Employee shall be or have any of the rights or privileges of a stockholder of
the Company in respect of any of the shares issuable upon the exercise of the
option, unless and until certificates representing such shares shall have been
issued, recorded on the records of the Company or its transfer agents or
registrars, and delivered to Employee.
13. The Employee agrees to remain in the employ of the Company and/or an
Affiliate for at least one (1) year after the date of this Agreement. Subject
to any written, express employment contract with the Employee, nothing in this
Agreement or the Plan shall confer upon the Employee any right to continue to
be employed by the Company or the Affiliate or shall interfere with or
restrict in any way the rights of the Company or the Affiliate, which are
hereby expressly reserved, to terminate the employment of the Employee at any
time for any reason whatsoever, with or without good cause. Such reservation
of rights can be modified only in an express written contract executed by a
duly authorized officer of the Company or the Affiliate. A leave of absence
or an interruption in service (including an interruption during military
service) authorized or acknowledged by the Company, or the Affiliate employing
the Employee, as the case may be, shall not be deemed a Termination of
Employment for the purposes of this Agreement.
14. Any notice to be given to the Company under the terms of this
Agreement shall be addressed to the Company, in care of its Secretary, at 600
Montgomery Street, San Francisco, California 94111, or at such other address
as the Company may hereafter designate in writing. Any notice to be given to
the Employee shall be addressed to the Employee at the address set forth
beneath the Employee's signature hereto, or at such other address as the
Employee may hereafter designate in writing. Any such notice shall be deemed
to have been duly given if and when enclosed in a properly sealed envelope,
addressed as aforesaid, registered or certified and deposited, postage and
registry fee prepaid, in a United States post office.
15. Except as provided in paragraph 17, nothing herein contained shall
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<PAGE>
affect the Employee's right to participate in and receive benefits under and
in accordance with the then current provisions of any pension, insurance or
other employee welfare plan or program of the Company or any Affiliate.
16. Except as otherwise herein provided, the option herein granted and
the rights and privileges conferred hereby shall not be transferred,
assigned, pledged or hypothecated in any way (whether by operation of law or
otherwise) and shall not be subject to sale under execution, attachment or
similar process. Upon any attempt to transfer, assign, pledge, hypothecate or
otherwise dispose of said option, or of any right or privilege conferred
hereby, contrary to the provisions hereof, or upon any attempted sale under
any execution, attachment or similar process upon the rights and privileges
conferred hereby, said option and the rights and privileges conferred hereby
shall immediately become null and void.
17. Notwithstanding any other provision of this Agreement except the
third sentence of paragraph 6 hereof relating to the death of the Employee (in
which case this option is exercisable to the extent set forth therein), this
option is not exercisable after the expiration of ten (10) years from the date
of this Agreement. In no event is this option exercisable after the
expiration of eleven (11) years from the date of this Agreement.
Notwithstanding any other provision of this Agreement, effective as of
April 1, 1989, in the event that the Employee receives a hardship withdrawal
from his or her pre-tax account under the Transamerica Corporation Employees
Stock Savings Plan (the "SSP"), this option may not be exercised during the
twelve (12) month period following the receipt of such withdrawal, unless the
Committee determines that (a) such exercise (or a particular manner of
exercise) would be consistent with the requirements of Treasury Regulation
section 1.401(k)-1(d)(2)(iii)(B), as amended from time to time (the "safe
harbor" rule for determining an employee's financial need for a hardship
withdrawal), or (b) under the circumstances then prevailing, satisfaction of
the requirements of said "safe harbor" rule no longer is necessary to assure
the continued tax qualification of the SSP.
18. Subject to the limitation on the transferability of the option
contained herein, this Agreement shall be binding upon and inure to the
benefit of the heirs, legatees, legal representatives, successors and assigns
of the parties hereto.
19. This Agreement is subject to all terms and provisions of the Plan.
In the event of a conflict between one or more provisions of this Agreement
and one or more provisions of the Plan, the provisions of the Plan shall
govern. Terms used and not defined in this Agreement shall have the meaning
set forth in the Plan.
20. The Committee shall have the power to interpret the Plan and this
Agreement and to adopt such rules for the administration, interpretation and
application of the Plan as are consistent therewith and to interpret or
revoke any such rules. All actions taken and all interpretations and
determinations made by the Committee in good faith shall be final and binding
upon Employee, the Company and all other interested persons. No member of the
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<PAGE>
Committee shall be personally liable for any action, determination or
interpretation made in good faith with respect to the Plan or this Agreement.
In its absolute discretion, the Board may at any time and from time to time
exercise any and all rights and duties of the Committee under the Plan and
this Agreement.
21. In the event that any provision in this Agreement shall be held
invalid or unenforceable, such provision shall be severable from, and such
invalidity or unenforceability shall not be construed to have any effect on,
the remaining provisions of this Agreement.
22. This Agreement constitutes the entire understanding of the parties
on the subjects covered. The Employee expressly warrants that he or she is
not executing this Agreement in reliance on any promises, representations, or
inducements other than those contained herein, and that he or she is executing
this Agreement voluntarily, free of any duress or coercion. Modifications to
this Agreement or the Plan can be made only in an express written contract
executed by a duly authorized officer of the Company.
IN WITNESS WHEREOF, the parties have executed this Agreement, in
duplicate, the day and year first above written.
TRANSAMERICA CORPORATION
By ___________________________________
________________________________
Employee Signature
________________________________
Print Name
________________________________
Address
________________________________
________________________________
Social Security Number
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<PAGE>
EXHIBIT EX-10.11
TRANSAMERICA CORPORATION
RESTRICTED STOCK AWARD AGREEMENT
THIS AGREEMENT, made as of this 27th day of April, 1993, between
TRANSAMERICA CORPORATION, a Delaware corporation (the "Company") and
_______________________________ ("Employee").
W I T N E S S E T H:
WHEREAS, the Company has adopted The 1985 Stock Option and Award Plan of
Transamerica Corporation (the "Plan"), providing for the granting of
restricted shares of Common Stock of the Company ("Restricted Stock") to key
employees of the Company and its Affiliates; and
WHEREAS, the Management Development and Compensation Committee (the
"Committee"), which is responsible for administration of the Plan, has
authorized the granting of a Restricted Stock Award to Employee on the date of
this Agreement, thereby allowing Employee to acquire a proprietary interest in
the Company in order that Employee will have a further incentive for remaining
with and increasing his or her efforts on behalf of the Company or one of its
Affiliates; and
WHEREAS, this Agreement is prepared in conjunction with and under the
terms of the Plan; although all of the terms of the Plan and the definitions
used in the Plan have not been set forth herein, such terms and definitions
are incorporated herein and made a part hereof by reference; the provisions of
the Plan shall govern any interpretation of this Agreement; and
WHEREAS, Employee has accepted the grant of Restricted Stock and agreed
to the terms and conditions stated herein.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants set forth herein and other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereto
hereby agree as follows:
1. Grant of Award. The Company hereby grants to Employee as a
separate incentive in connection with his or her employment and not in lieu of
any salary or other compensation for his or her services, an award of ______
shares of Restricted Stock on the date hereof, subject to all of the terms and
conditions in this Agreement and the Plan.
2. Shares Held in Escrow. Unless and until the shares of Restricted
Stock shall have vested in the manner set forth in paragraph 3, 4 or 5, such
shares shall be issued in the name of Employee and held by the Secretary of
the Company as escrow agent (the "Escrow Agent"), and shall not be sold,
transferred or otherwise disposed of and shall not be pledged or otherwise
hypothecated. The Company may instruct the transfer agent for its Common
Stock to place a legend on the certificates representing the Restricted Stock
or otherwise note its records as to the restrictions on transfer set forth in
this Agreement and the Plan. The certificate or certificates representing
such shares shall be delivered by the Escrow Agent to Employee only after the
shares have vested and all other terms and conditions in this Agreement have
been satisfied; at such times, certificates so delivered shall be free of any
such legends regarding restrictions on transfer.
<PAGE>
3. Vesting. Except as provided in paragraphs 4 and 5, the shares of
Restricted Stock awarded by this Agreement shall vest in Employee, as to 25%
of such shares on the first anniversary of the date of the award and as to an
additional 25% on each succeeding anniversary date, until 100% of such shares
shall have been vested.
4. Acceleration of Vesting. In the event of (a) Employee's
involuntary Termination of Employment by reason of action by the Company and
its Affiliates for any reason other than Cause (as defined below), (b) the
determination of the Committee that a Change in Control of the Company has
occurred, (c) the liquidation or dissolution of the Company, or (d) Employee's
Termination of Employment due to Total Disability or death, the balance of
unvested shares of Restricted Stock shall thereupon immediately vest. "Cause"
shall mean the willful and continued failure to observe or perform (other than
by reason of illness, injury or incapacity) any of the material services and
duties of the position held by Employee, provided that written notice of such
failure has been given and such failure has continued for sixty (60) days
thereafter. Cause shall also include conviction of a felony or other crime
involving moral turpitude, misappropriation of funds, or any other action that
is demonstratively and materially injurious to the Company or any of its
Affiliates.
5. Committee Discretion. The Committee may decide, in its absolute
discretion, to accelerate vesting of the balance, or some lesser portion of
the balance, of unvested shares of Restricted Stock at any time. If so
accelerated, such shares of Restricted Stock shall be considered as having
vested as of the date specified by the Committee.
6. Forfeiture. Except as provided in paragraphs 4 and 5, the balance
of the shares of Restricted Stock which have not vested at the time of
Employee's Termination of Employment shall thereupon be forfeited and
automatically transferred to and reacquired by the Company at no cost to the
Company. Employee hereby appoints the Escrow Agent with full power of
substitution, as Employee's true and lawful attorney-in-fact with irrevocable
power and authority in the name and on behalf of Employee to take any action
and execute all documents and instruments, including, without limitation,
stock powers which may be necessary to transfer the certificate or
certificates evidencing such unvested shares to the Company upon such
Termination of Employment.
7. Continuous Employment Required. Shares of Restricted Stock shall
not vest in Employee in accordance with any of the provisions of this
Agreement unless Employee shall have been continuously employed by the Company
or by one of its Affiliates from the date of the award until the date such
vesting is deemed to have occurred.
8. Withholding for Income Taxes. Notwithstanding anything in this
Agreement to the contrary, no certificate representing Restricted Stock may be
released from the escrow established pursuant to paragraph 2 of this Agreement
unless and until Employee shall have delivered to the Company or its
designated Affiliate the full amount of any federal, state or local income or
other taxes which the Company or such Affiliate may be required by law to
withhold with respect to such shares. Pursuant to such procedures as may be
adopted by the Committee from time to time, Employee may elect to satisfy any
such income tax withholding requirement by having the Company withhold shares
of Common Stock otherwise deliverable to Employee or by delivering to the
Company already-owned shares of Common Stock, subject to the absolute
discretion of the Committee to disallow Employee's election.
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<PAGE>
9. Delivery of Shares After Death. Any distribution or delivery to be
made to Employee under this Agreement shall, if Employee is then deceased, be
made to Employee's transferee who shall be the person or persons entitled to
such distribution or delivery under Employee's will or, if Employee shall fail
to make testamentary disposition of such property, his or her legal
representative. Any transferee must furnish the Company with (a) written
notice of his or her status as transferee, and (b) evidence satisfactory to
the Company to establish the validity of the transfer and compliance with any
laws or regulations pertaining to such transfer.
10. Conditions to Delivery of Shares. The shares of stock issued
pursuant to paragraph 1 may be either previously authorized but unissued
shares or issued shares which have been reacquired by the Company. The
Company shall not be required to issue any certificate or certificates for
shares of stock hereunder prior to fulfillment of all of the following
conditions:
(a) The admission of such shares to listing on all stock
exchanges on which such class of stock is then listed; and
(b) The completion of any registration or other qualification of
such shares under any State or Federal law or under the rulings or regulations
of the Securities and Exchange Commission or any other governmental regulatory
body, which the Committee shall, in its absolute discretion, deem necessary or
advisable; and
(c) The obtaining of any approval or other clearance from any
State or Federal governmental agency, which the Committee shall, in its
absolute discretion, determine to be necessary or advisable; and
(d) The lapse of such reasonable period of time following the
date of grant of the Restricted Stock as the Committee may establish from time
to time for reasons of administrative convenience.
11. Rights as Stockholder. Neither Employee nor any person claiming
under or through Employee shall be, or have any of the rights or privileges
of, a shareholder of the Company in respect of any shares deliverable
hereunder unless and until certificates representing such shares shall have
been issued, recorded on the records of the Company or its transfer agents or
registrars, and delivered to Employee or the Escrow Agent. Except as provided
in paragraph 12, after such issuance, recordation and delivery, Employee shall
have all rights of a stockholder of the Company with respect to voting such
shares and receipt of dividends and distributions on such shares.
12. Changes in Stock. In the event that as a result of a stock
dividend, stock split, reclassification, recapitalization, combination of
shares or the adjustment in capital stock of the Company or otherwise, or as a
result of a merger, consolidation, spin-off or other reorganization, the
Company's Common Stock shall be increased, reduced or otherwise changed, and
by virtue of any such change Employee shall in his or her capacity as owner of
unvested shares of Restricted Stock which have been awarded to him or her (the
"Prior Shares") be entitled to new or additional or different shares of stock
or securities (other than rights or warrants to purchase securities); such new
or additional or different shares or securities shall thereupon be considered
to be unvested Restricted Stock and shall be subject to all of the conditions
and restrictions which were applicable to the Prior Shares pursuant to the
Plan. If an Employee receives rights or warrants with respect to any Prior
Shares, such rights or warrants may be held or exercised by Employee, provided
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<PAGE>
that until such exercise any such rights or warrants and after such exercise
any shares or other securities acquired by the exercise of such rights or
warrants shall be considered to be unvested Restricted Stock and shall be
subject to all of the conditions and restrictions which were applicable to the
Prior Shares pursuant to the Plan. The Committee in its absolute discretion
at any time may accelerate the vesting of all or any portion of such new or
additional shares of stock or securities, rights or warrants to purchase
securities or shares or other securities acquired by the exercise of such
rights or warrants.
13. Plan Governs. This Agreement is subject to all of the terms and
provisions of the Plan. In the event of a conflict between one or more
provisions of this Agreement and one or more provisions of the Plan, the
provisions of the Plan shall govern. Terms used in this Agreement that are
not defined in this Agreement shall have the meaning set forth in the Plan.
14. Committee Authority. The Committee shall have all power and
discretion necessary or appropriate to interpret the Plan and this Agreement
and to adopt such rules for the administration, interpretation and application
of the Plan as are consistent therewith and to interpret or revoke any such
rules. All actions taken and all interpretations and determinations made by
the Committee in good faith shall be final and binding upon Employee, the
Company and all other interested persons. No member of the Committee shall be
personally liable for any action, determination or interpretation made in good
faith with respect to the Plan or this Agreement, and shall be given the
maximum deference permitted by law. In its absolute discretion, the Board may
at any time and from time to time exercise any and all rights and duties of
the Committee under the Plan and this Agreement.
15. No Effect on Employment. Employee agrees to remain in the employ
of the Company and/or an Affiliate for at least one (1) year after the date of
this Agreement. Subject to any written, express employment contract with
Employee, nothing in this Agreement or the Plan shall confer upon Employee any
right to continue to be employed by the Company or the Affiliate or shall
interfere with or restrict in any way the rights of the Company or the
Affiliate, which are hereby expressly reserved, to terminate the employment of
Employee at any time for any reason whatsoever, with or without good cause.
Such reservation of rights can be modified only in a written, express contract
executed by a duly authorized officer of the Company or Affiliate. A leave of
absence or an interruption in service (including an interruption during
military service) authorized or acknowledged by the Company, or the Affiliate
employing Employee, as the case may be, shall not be deemed a Termination of
Employment for the purposes of this Agreement.
16. Effect on Other Employee Benefit Plans. Nothing herein contained
shall affect Employee's right to participate in and receive benefits under and
in accordance with the then current provisions of any pension, insurance or
other employee welfare plan or program of the Company or any Affiliate.
17. Award Not Transferable. Except as otherwise herein provided, the
Restricted Stock Award herein granted and the rights and privileges conferred
hereby shall not be transferred, assigned, pledged or hypothecated in any way
(whether by operation of law or otherwise) and shall not be subject to sale
under execution, attachment or similar process. Upon any attempt to transfer,
assign, pledge, hypothecate or otherwise dispose of such Award, or of any
right or privilege conferred hereby, contrary to the provisions hereof, or
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<PAGE>
upon any attempted sale under any execution, attachment or similar process
upon the rights and privileges conferred hereby, such Award and the rights and
privileges conferred hereby shall immediately become null and void.
18. Binding Agreement. Subject to the limitation on the
transferability of the Restricted Stock contained herein, this Agreement shall
be binding upon and inure to the benefit of the heirs, legatees, legal
representatives, successors and assigns of Employee and the Company.
19. Address for Notices. Any notice to be given to the Company under
the terms of this Agreement shall be addressed to the Company, in care of its
Secretary, at 600 Montgomery Street, San Francisco, California 94111, or at
such other address as the Company may hereafter designate in writing. Any
notice to be given to Employee shall be addressed to Employee at the address
set forth beneath Employee's signature hereto, or at such other address as
Employee may hereafter designate in writing. Any such notice shall be deemed
to have been duly given if and when enclosed in a properly sealed envelope,
addressed as aforesaid, registered or certified and deposited, postage and
registry fee prepaid, in a United States post office.
20. Captions. The captions used in this Agreement are for convenience
only, and shall in no way serve as a basis for interpretation or construction
of this Agreement.
21. Severability. In the event that any provision in this Agreement
shall be held invalid or unenforceable, such provision shall be severable
from, and such invalidity or unenforceability shall not be construed to have
any effect on, the remaining provisions of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement, in
duplicate, the day and year first above written.
TRANSAMERICA CORPORATION
By ___________________________________
Assistant Secretary
_________________________________________
Employee Signature
_________________________________________
Address
_________________________________________
_________________________________________
Social Security Number
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<PAGE>
EXHIBIT EX-10.12
TRANSAMERICA CORPORATION
NON-QUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT, made as of this 3rd day of March, 1993, between
TRANSAMERICA CORPORATION, a Delaware corporation (the "Company") and
_____________________________ (the "Director").
W I T N E S S E T H:
WHEREAS, the Company has adopted the 1985 Stock Option and Award Plan of
Transamerica Corporation (the "Plan"), providing for the granting of certain
stock options to Nonemployee Directors of the Company and its Affiliates,
which options ("non-qualified stock options") are not intended to be incentive
stock options within the meaning of section 422A, or successor provisions, of
the Internal Revenue Code of 1986, as amended (the "Code"), to purchase shares
of common stock of the Company (the "Common Stock"); and
WHEREAS, the Plan authorizes the grant of an option to the Director on
the date of this Agreement, thereby allowing the Director to acquire or
increase his or her proprietary interest in the Company in order that said
Director will have a further incentive for remaining with and increasing his
or her efforts on behalf of the Company; and
WHEREAS, this Agreement is prepared in conjunction with and under the
terms of the Plan; although all of the terms of the Plan and the definitions
used in the Plan have not been set forth herein, such terms and definitions
are incorporated herein and made a part hereof by reference; and the
provisions of the Plan shall govern any interpretation of this Agreement; and
WHEREAS, the Director has accepted the grant of stock options hereunder
and agreed to the terms and conditions hereinafter stated;
NOW THEREFORE, in consideration of the foregoing and of the mutual
covenants hereinafter set forth and other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereto
hereby agree as follows:
1. The Company hereby grants to the Director under Section 7 of the
Plan, as a separate incentive in connection with his or her service on the
Board and not in lieu of any fees or other compensation for his or her
services, a non-qualified stock option to purchase, on the terms and
conditions set forth in this Agreement and the Plan, all or any part of an
aggregate of 1,000 shares of authorized but unissued or reacquired shares of
the Common Stock, at the purchase price set forth in paragraph 2 of this
Agreement. The option granted hereby is not intended to be an Incentive Stock
Option within the meaning of section 422 of the Code.
2. The purchase price per share (the "Option Price") shall be
$48.25, which is the fair market value per share of the Common Stock on the
date of this Agreement. The Option Price shall be payable in the legal
tender of the United States, in shares of the Common Stock of the Company, or
in a combination of such legal tender and such shares.
<PAGE>
3. The number and class of shares specified in paragraph 1 above,
and/or the Option Price, shall be proportionately adjusted for any increase or
decrease in the number of issued and outstanding shares of Common Stock
resulting from a subdivision or consolidation of shares or the payment of a
stock dividend or any other increase or decrease in the number of issued and
outstanding shares of Common Stock effected without receipt of consideration
by the Company. If the Company shall be the surviving corporation in any
merger or consolidation, the option shall pertain to and apply to the
securities to which a holder of the same number of shares of Common Stock that
are subject to the option would have been entitled. A dissolution or
liquidation of the Company, or a merger or consolidation in which the Company
is not the surviving corporation, shall cause the option to terminate, unless
the agreement of merger or consolidation shall otherwise provide.
4. The right to exercise the option awarded by this Agreement is
exercisable immediately.
5. Subject to the provisions of this paragraph 5, the right to
exercise the option awarded by this Agreement shall expire on the date which
is one month after the fifth anniversary of the date of this Agreement (the
"Normal Expiration Date"). In the event of the termination of the Director's
service on the Board for any reason except Retirement, Total Disability or
death, the right to exercise the option awarded by this Agreement shall expire
three (3) months after the date of such termination or upon the Normal
Expiration Date, whichever shall first occur. In the event of the Director's
termination of service on the Board on account of his or her Retirement or
Total Disability, the right to exercise the option awarded by this Agreement
shall expire three (3) years after the date of such termination or upon the
Normal Expiration Date, whichever shall first occur. In the event the
Director shall die within such three (3) month or three (3) year period,
whichever is applicable, or shall die while a Director, the option may be
exercised by the Director's transferee, as hereinafter provided, for a period
of one (1) year after the date of the Director's death.
6. The option shall be exercisable during the Director's lifetime only
by the Director. The option shall be non-transferable by the Director
otherwise than by will or the applicable laws of descent and distribution.
7. To the extent exercisable after the Director's death, the option
shall be exercised only by the Director's transferee who shall be the person
or persons entitled to the option under the Director's will, or if the
Director shall fail to make testamentary disposition of the option, his or her
legal representative. Any transferee exercising the option must furnish the
Company (a) written notice of his or her status as transferee, (b) evidence
satisfactory to the Company to establish the validity of the transfer of the
option and compliance with any laws or regulations pertaining to said
transfer, and (c) written acceptance of the terms and conditions of the option
as prescribed in this Agreement.
8. The option may be exercised by the person then entitled to do so as
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<PAGE>
to any shares which may then be purchased (a) by giving written notice of
exercise to the Company, specifying the number of full shares to be purchased
and accompanied by full payment of the purchase price thereof (and the amount
of any income tax the Company is required by law to withhold by reason of such
exercise), and (b) by giving satisfactory assurances in writing if requested
by the Company, signed by the person exercising the option, that the shares to
be purchased upon such exercise are being purchased for investment and not
with a view to the distribution thereof. No partial exercise of this option
may be for less than ten (10) share lots or multiples thereof. Unless
otherwise specified by the Director, a partial exercise of the option shall be
deemed to be an exercise of the portion of the option with the earliest Normal
Expiration Date(s).
9. If at any time the Company shall determine, in its discretion, that
the listing, registration or qualification of the shares covered by the option
upon any securities exchange or under any state or federal law, or the
consent or approval of any governmental regulatory authority, is necessary or
desirable as a condition of the purchase of shares hereunder, the option may
not be exercised, in whole or in part, unless and until such listing,
registration, qualification, consent or approval shall have been effected or
obtained free of any conditions not acceptable to the Company. The Company
shall make reasonable efforts to meet the requirements of any such state or
federal law or securities exchange and to obtain any such consent or approval
of any such governmental authority.
10. Neither the Director nor any person claiming under or through said
Director shall be or have any of the rights or privileges of a stockholder of
the Company in respect of any of the shares issuable upon the exercise of the
option, unless and until certificates representing such shares shall have been
issued, recorded on the records of the Company or its transfer agents or
registrars, and delivered to Director.
11. A leave of absence or an interruption in service (including an
interruption during military service) authorized or acknowledged by the
Company shall not be deemed a termination of service for the purposes of this
Agreement.
12. Any notice to be given to the Company under the terms of this
Agreement shall be addressed to the Company, in care of its Secretary, at 600
Montgomery Street, San Francisco, California 94111, or at such other address
as the Company may hereafter designate in writing. Any notice to be given to
the Director shall be addressed to the Director at the address set forth
beneath the Director's signature hereto, or at such other address as the
Director may hereafter designate in writing. Any such notice shall be deemed
to have been duly given if and when enclosed in a properly sealed envelope,
addressed as aforesaid, registered or certified and deposited, postage and
registry fee prepaid, in a United States post office.
13. Nothing herein contained shall affect the Director's right to
participate in and receive benefits under and in accordance with the then
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<PAGE>
current provisions of any pension, insurance or other employee welfare plan or
program of the Company or any Affiliate.
14. Except as otherwise herein provided, the option herein granted and
the rights and privileges conferred hereby shall not be transferred, assigned,
pledged or hypothecated in any way (whether by operation of law or otherwise)
and shall not be subject to sale under execution, attachment or similar
process. Upon any attempt to transfer, assign, pledge, hypothecate or
otherwise dispose of said option, or of any right or privilege conferred
hereby, contrary to the provisions hereof, or upon any attempted sale under
any execution, attachment or similar process upon the rights and privileges
conferred hereby, said option and the rights and privileges conferred hereby
shall immediately become null and void.
15. Notwithstanding any other provision of this Agreement except the
last sentence of paragraph 5 hereof relating to the death of the Director (in
which case this option is exercisable to the extent set forth therein), this
option is not exercisable after the expiration of five (5) years and one (1)
month from the date of this Agreement. In no event is this option exercisable
after the expiration of six (6) years and one (1) month from the date of this
Agreement.
16. Subject to the limitation on the transferability of the option
contained herein, this Agreement shall be binding upon and inure to the
benefit of the heirs, legatees, legal representatives, successors and assigns
of the parties hereto.
17. This Agreement is subject to all the terms and provisions of the
Plan. In the event of a conflict between one or more provisions of this
Agreement and one or more provisions of the Plan, the provisions of the Plan
shall govern. Terms used and not defined in this Agreement shall have the
meaning set forth in the Plan.
18. Notwithstanding the provisions of Section 2 of the Plan, the
Committee shall exercise no discretion with respect to the interpretation or
administration of this option. The Board shall have the power to construe the
Plan and the option, to determine all questions arising thereunder, and to
adopt and amend such rules and regulations for the administration thereof as
it may deem desirable. The interpretation and construction by the Board of
any provision of the Plan or of the option shall be final. No member of the
Board shall be liable for any action or determination made in good faith with
respect to the Plan or the option.
19. In the event that any provision in this Agreement shall be held
invalid or unenforceable, such provision shall be severable from, and such
invalidity or unenforceability shall not be construed to have any effect on,
the remaining provisions of this Agreement.
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<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement, in
duplicate, the day and year first above written.
TRANSAMERICA CORPORATION
By _________________________________
________________________________________
Director Signature
________________________________________
________________________________________
Address
________________________________________
Social Security Number
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<PAGE>
EXHIBIT EX-10.18
TRANSAMERICA DEFERRED COMPENSATION POLICY
(January 1, 1994 Restatement)
1. Adoption
Transamerica Corporation, having adopted a Deferred Compensation
Policy for the deferral of compensation earned in 1989 and later years, and
having restated the Policy effective as of January 1, 1990, January 1, 1992,
and July 1, 1992, hereby amends and restates the Policy effective as of
January 1, 1994. The Policy permits the deferral of compensation by the
members of the Board of Directors and eligible employees of Transamerica
Corporation, and permits the deferral of compensation by eligible employees of
subsidiaries that adopted the Policy, and of subsidiaries that adopt the
Policy in the future, in accordance with the terms set forth herein. An
individual's employer becomes obligated to pay deferred compensation to a
particular individual only upon the employer's acceptance of such individual's
executed election to defer compensation.
The Policy as restated herein applies to the deferral of
compensation earned in 1994 and later years. Prior versions of the Policy
continue to be applicable to and to govern deferrals of compensation earned in
the years 1989 through 1993, inclusive. The individual policies of deferred
compensation adopted by Transamerica Corporation and each electing subsidiary
for years prior to 1989 shall continue to be applicable to and govern
deferrals of compensation earned in such prior years.
2. Eligibility and Amount
(a) Employees. Any employee whose total compensation (i.e., base
salary rate plus bonus (if any), before reduction for deferrals under this
Policy and contributions to other employee benefit plans or programs) for a
calendar year meets or exceeds the Eligibility Amount (as defined below), may
elect to defer the receipt of up to 100% of his or her salary and/or bonus
(if any), less required deductions for welfare plans and statutory benefits,
for the following calendar year. The only bonuses which may be deferred under
the Policy are annual management incentive bonuses and production bonuses
(without regard to the frequency with which any such incentive or production
bonuses are paid). An individual employed at an annual base salary rate that
meets or exceeds the Eligibility Amount, shall be eligible to make a deferral
election in his or her year of hire. The "Eligibility Amount" shall be
determined annually by the Chief Executive Officer of Transamerica Corpora-
tion. For example, for 1994, the Eligibility Amount is $150,000. Also, any
employee (a) whose total compensation (i.e., base salary rate plus bonus, if
any, before reduction for deferrals under this Policy and contributions to
other employee benefit plans or programs) for a calendar year is $122,000 or
more, and (b) who prior to 1989, deferred compensation under the Policy or a
prior policy for a term which, when added to the number of years over which
the deferral account was scheduled to be paid, exceeded five years, may elect
to defer the receipt of up to 100% of his or her salary and/or bonus (if any),
less required deductions for welfare plans and statutory benefits, for the
following calendar year.
<PAGE>
(b) Directors. Any member of the Board of Directors of
Transamerica Corporation (a "director") may elect to defer the receipt of up
to 100% of his or her annual retainer, up to 100% of his or her retainer for
serving as a committee chairman, and either 0% or 100% of his or her meeting
fees, less any required statutory deductions.
(c) $5,000 Minimum. The minimum amount which an employee or
director may elect to defer is $5,000.
3. Election to Defer
Each individual's deferred compensation election must be executed by
both the individual and the employer on or prior to December 31 of the
preceding year (or such earlier date as may be designated by the Director of
Compensation of Transamerica Corporation) and an executed copy of any such
deferral election must be received by the Director of Compensation at
Transamerica Corporation within such time as he or she may designate.
However, if an individual commences employment or is elected a director after
December 31, his or her deferred compensation election must be executed within
30 days after the date on which his or her employment commences or, in the
case of a director, within 30 days after the date on which he or she is
elected a director (as to either an employee or a director, the "Compensation
Commencement Date"). Any deferral election executed after the Compensation
Commencement Date (i.e., during the 30 day grace period) shall apply only to
compensation attributable to services performed in any pay period commencing
after the date of execution. An executed copy of any such deferral election
must be received by the Director of Compensation of Transamerica Corporation
within such time period after the Compensation Commencement Date as the
Director shall specify from time to time. For example, a copy of the executed
election to defer 1994 compensation of an individual hired after December 31,
1993 must be received by the Director of Compensation at Transamerica
Corporation on or before the fifth business day after the election is executed
(the deadline specified by the Director of Compensation for 1994 deferral
elections).
Each employee shall make a separate deferral election with respect
to the bonus portion (if any) of his or her compensation. All such elections
shall be subject to the general rules for elections that are specified in the
preceding paragraph.
Employees and directors are permitted to defer income for any
number of years, but this choice must be made at the time of the election.
The term of deferral is measured in calendar years only. For example, an
election to defer amounts from 1994 salary for 8 years will result in a term
of deferral that ends on December 31, 2001, and payment will be made or
commenced on the first business day of January 2002. Any individual executing
a deferral election in his or her year of hire shall be deemed to have
completed a one-year term of deferral as of the December 31 of his or her year
of hire. The rate of interest applied to the deferred income will depend on
the length of time chosen for deferral (as described in paragraph 4 below).
Once an election is made, the terms and conditions for that year's deferral
are fixed and may not be changed at a later time.
2
<PAGE>
Each deferred compensation election will apply only to compensation
earned in a single calendar year. (Such election applies to all compensation
earned in such single calendar year, including compensation, such as certain
bonuses, which ordinarily would not be payable until after the end of the year
in which it was earned.) For example, a deferred compensation election
executed in December of 1993 will apply to only to compensation earned in
1994. Thus, future deferral elections, if any, will be independent of prior
elections and can be for whatever amount or time period seems appropriate to
the individual at that time.
4. Credited Interest Rates
Subject to the special rules in paragraph 5(a) relating to
termination of employment, amounts deferred for 8 years or more will be
credited at the end of each month with interest at a rate (which rate shall be
adjusted annually) equal to the Moody's A Rated Corporate Bond Yield average
for November of the year preceding the year in which such interest is to be
credited plus 3%. Amounts deferred for 5, 6 or 7 years will be credited at
the end of each month with interest at a rate (which rate shall be adjusted
annually) equal to the Moody's A Rated Corporate Bond Yield average for
November of the year preceding the year in which such interest is to be
credited plus 2%. Amounts deferred for less than 5 years will be credited at
the end of each month with interest at a rate equal to the average rate paid
by 10-year U.S. Treasury Notes during that month, provided, that for the month
of deferral which immediately precedes payout of amounts deferred for less
than 5 years (the "Last Month"), interest will be credited at the rate in
effect for the month which immediately precedes the Last Month. The Last
Month rule can be illustrated with the following example: amounts deferred
for two years which are payable on the first business day of 1996 will be
credited in December of 1995 with interest at a rate equivalent to the average
rate paid by 10-year U.S. Treasury Notes during November of 1995. Interest
will be calculated using a 360-day year and will be compounded on a monthly
basis.
Unless otherwise specified in a deferral election, amounts deferred
shall reduce each payment of salary (or fees, in the case of a director) as
ratably as practicable during the year. The amount deferred from each payment
shall be credited to the individual's deferral account as of the last day of
the month of deferral, and interest shall begin to accrue on amounts so
credited as of the beginning of the next month. For example, amounts deferred
by an employee from salary payments to be made on January 15 and 31, 1994,
will be credited to his or her deferral account on January 31, 1994, and will
begin to accrue interest as of February 1, 1994. On February 28, 1994,
(a) the amounts deferred from the employee's February 15 and 28, 1994 salary
payments will be credited, and (b) interest will be credited with respect to
the account balance as of January 31, 1994 (i.e., exclusive of the February
deferrals).
The management of Transamerica Corporation will review these rates
each year, taking into account future tax legislation and other factors.
Upon the recommendation of management, the Management Development and
Compensation Committee of the Board of Directors of Transamerica Corporation
may modify the rates each year with respect to any future deferral elections.
3
<PAGE>
5. Termination
(a) If, for any reason other than death, permanent and total
disability, or early or normal retirement, employment with the employee's
employer is terminated or a director ceases to be a director prior to the
payment of all deferred amounts, payment (in the form of a lump sum) of the
undistributed amount will be made as soon as practicable after such
termination or cessation. If payment of the deferred amounts has commenced
(in accordance with the individual's original election) prior to the date of
such a termination or cessation, interest on the amount of compensation which
has been deferred shall be computed and credited (in the manner described in
paragraph 4) prior to any such accelerated payment in accordance with the
original election. If (a) payment of the deferred amounts has not commenced
(in accordance with the individual's original election) prior to the date of
such a termination or cessation, and (b) the individual's employment was
terminated by his or her employer for a reason other than "cause", interest on
the amount of compensation which has been deferred shall be computed and
credited (in the manner described in paragraph 4) prior to any such
accelerated payment in accordance with the original election. If (a) payment
of the deferred amounts has not commenced (in accordance with the individual's
original election) prior to the date of such a termination or cessation, and
(b)(i) the individual voluntarily terminated employment or (ii) the
individual's employment was terminated by his or her employer for "cause",
interest on the amount of compensation which has been deferred shall be
recomputed and credited (in the manner described in paragraph 4) prior to any
such accelerated payment based on the average 10-year U.S. Treasury Note rate.
Termination of employment for "cause" shall mean termination on account of
(a) the individual's commission of any criminal act (other than minor traffic
violations), and/or (b) gross negligence or willful misconduct in the
performance of his or her duties of employment.
A transfer of employment between any two corporations within the
group of corporations including Transamerica Corporation and its 50% or more
owned affiliates (the "Transamerica Group") shall not be deemed to be a
termination of employment for purposes of this paragraph 5(a). For this
purpose, a transfer of employment shall include a transfer on account of the
sale of assets by one member of the Transamerica Group to another member of
the Transamerica Group. In the event that an individual's employer ceases to
be a member of the Transamerica Group by reason of the sale (or spin-off) of
the stock of such corporation by Transamerica Corporation, such cessation
shall not in itself be deemed to constitute a termination of employment for
purposes of this paragraph 5(a), since the contract is between the employee
and his or her employer.
(b) In the event of an individual's death or total and permanent
disability, payment shall nevertheless be made at the time and in the form
originally elected by the individual; provided, however, that the contracting
corporation (in its sole discretion) may instead elect to make an accelerated
lump sum payment. Interest shall be credited prior to any such accelerated
payment in accordance with the terms of the individual's original deferral
election.
In the event of an individual's termination on account of early or
normal retirement, interest shall be credited, and payment shall be made, in
accordance with the terms of the individual's original deferral election.
4
<PAGE>
Each individual may designate, in writing and on such form as each
contracting corporation may prescribe, one or more beneficiaries to receive
any amount that is payable after the individual's death. If an individual is
married at the time of his or her death and has designated a person other than
his or her spouse as a primary beneficiary, the designation shall be
ineffective unless the individual's spouse consents in writing to the
designation. Notwithstanding this consent requirement, if the individual
establishes to the satisfaction of the contracting corporation that such
written consent may not be obtained because there is no spouse or the spouse
cannot be located, his or her designation shall be effective without spousal
consent. Any spousal consent shall be valid only with respect to the spouse
who signs the consent. An individual may designate different beneficiaries at
any time by delivering a new designation in the manner described above. Any
designation shall become effective only upon its receipt by the contracting
corporation, and the last effective designation received by the contracting
corporation shall supersede all prior designations. If an individual dies
without having designated a beneficiary, or his or her beneficiary designation
is ineffective, or if no beneficiary survives the individual, payment shall be
made (a) to his or her surviving spouse, (b) if the individual is not survived
by his or her spouse, to his or her beneficiary under his or her employer's
group-term life insurance program (if any), or (c) if none survives or no such
program exists, to his or her estate.
The amount of any accelerated lump sum payment made in accordance
with this paragraph 5 shall be the aggregate amount of compensation deferred
by the individual, together with interest computed or recomputed in
accordance with this paragraph 5 and credited (in the manner described in
paragraph 4) prior to any such accelerated payment to the end of the month
next preceding the month in which payment is made.
6. Change in Control
In the event of a change in control of Transamerica Corporation
prior to payment of all deferred amounts and interest credited thereon,
payment of the undistributed amount shall be made to the individual as soon as
practicable. Interest shall be credited prior to any such accelerated payment
in accordance with the terms of the individual's original deferral election.
The amount of any accelerated lump sum payment made in accordance with this
paragraph 6 shall be an amount equal to the value of the individual's deferral
account as of the end of the month next preceding the month in which payment
is made plus an amount, if any, equal to the individual's deferral for the
month during which payment is made which has not yet been credited to the
deferral account.
For purposes of this Policy, a "change in control" of Transamerica
Corporation shall be deemed to have occurred if (a) any "person" (as defined
in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act")) is or becomes "the beneficial owner" as defined in Rule
13d-3 under the Exchange Act, directly or indirectly, of securities of
Transamerica Corporation representing 35%, or more of the combined voting
power of Transamerica Corporation's then outstanding securities; (b) during
the term of any deferral pursuant to an individual deferred compensation
election entered into pursuant to this Policy, individuals who at the
beginning of such term constitute the Board of Directors of Transamerica
Corporation, including for this purpose any new director whose election, or
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<PAGE>
nomination for election by Transamerica Corporation's stockholders was
approved by a vote of at least two-thirds of the directors still in office who
were directors at the beginning of such term, cease, for any reason to
constitute a majority thereof; or (c) more than 50% of the assets of
Transamerica Corporation, including the business or businesses for which the
individual's services are principally performed, is disposed of by
Transamerica Corporation pursuant to a partial or complete liquidation of
Transamerica Corporation, the sale of assets (including stock of a subsidiary
or subsidiaries) of Transamerica Corporation or otherwise.
7. Payment Options
In addition to the amount and time period of deferral, the ultimate
mode of payment must be chosen at the time the election is made, in order to
avoid undesirable tax consequences. The following modes of payment are
available:
(a) Lump sum payment; or
(b) Fixed number of annual payments (over a maximum period of 20
years)
If a lump sum is elected, the payment will be made on the first business day
of the calendar year next following the end of the term of deferral. The
amount of the lump sum payment shall be an amount equal to the value of the
individual's deferral account as of the end of the term of deferral. If
installments are elected, the first installment will be paid on the first
business day of the calendar year next following the end of the term of
deferral, and subsequent installments also will be paid on the first business
day of each following calendar year, until the installments are completed.
The amount of each installment shall be an amount equal to the value of the
individual's deferral account as of the December 31 next preceding the date of
payment, divided by the number of installments remaining to be made.
8. Financial Hardship
(a) Suspension of Deferrals After SSP Hardship Withdrawal. An
individual may not receive a hardship withdrawal from his or her pre-tax
account under the Transamerica Corporation Employees Stock Savings Plan (the
"SSP") or any other plan qualified under section 401(a) of the Internal
Revenue Code of 1986, as amended (the "Code"), which contains a qualified cash
or deferred arrangement under section 401(k) of the Code and which is
maintained by one or more members of the Transamerica Group (collectively, the
"Plans"), unless all deferrals under this Policy are suspended during the
12-month period following such withdrawal.
Accordingly, in the event that an individual receives a hardship
withdrawal from his or her pre-tax account under one or more of the Plans, all
of the individual's deferral elections automatically shall be cancelled (as to
amounts not yet deferred), and such individual shall not be permitted to elect
to defer any amount from his or her compensation that would otherwise be paid
during the portion of the 12-month suspension period that falls in the next
calendar year.
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(b) Hardship Suspensions and Withdrawals Under this Policy. In the
event that an individual incurs a "financial hardship" as defined below,
the contracting corporation, in its sole discretion, may discontinue the
deferrals under any deferral election then in effect and/or may distribute all
or part of the individual's deferred compensation account; provided, however,
that a discontinuance of deferrals or a distribution under this paragraph 8(b)
may not be effected by any contracting corporation without the prior approval
of the Management Development and Compensation Committee of the Board of
Directors of Transamerica Corporation. The amount of any distribution under
this paragraph 8(b) shall be limited to the amount necessary to alleviate the
financial hardship. A suspension of deferrals or payment made due to
financial hardship shall not affect the rate at which interest is credited on
the deferred amount, and interest shall be credited in accordance with the
terms of the individual's original deferral election. A "financial hardship"
for purposes of this Policy shall mean a financial emergency which is caused
by accident, illness or other event beyond the control of the individual which
would, if no suspension of deferrals or accelerated distribution were made,
result in severe financial hardship to the individual or a member of his or
her immediate family.
9. Impact on Pension, Stock Savings and SSP+ Plans
Compensation deferred under this Policy will not be considered for
purposes of benefits under the Retirement Plan for Salaried U.S. Employees of
Transamerica Corporation and Affiliates, nor for purposes of determining an
individual's maximum permissible salary deferral contributions under the SSP
and the Stock Savings Plan Plus ("SSP+"). However, compensation deferred
under this Policy will be considered for purposes of determining an
individual's benefit under the Transamerica Corporation Supplemental Pension
Plan. Also, as provided in the SSP+, compensation deferred under this Policy
will be credited with SSP+ employer matching contributions at the rate then in
effect under the SSP+, to the extent of the individual's elected matched
contribution percentage under the SSP/SSP+. For example, suppose an eligible
employee has elected to defer $20,000 under this Policy, and 6% of eligible
compensation under the SSP/SSP+. In this example, the individual would
receive SSP+ employer matching contributions (at the then applicable rate,
currently 75%) on $1,200 (6% of $20,000). Thus, the individual's SSP+
employer matching contribution on the compensation deferred under this Policy
would be $900 (75% of $1,200). Notwithstanding the preceding, an individual's
bonus deferral (if any) will be credited with additional SSP+ matching
contributions only if he or she elected under the SSP/SSP+ to have his or her
bonus included in eligible SSP/SSP+ compensation.
10. Miscellaneous Provisions
(a) All amounts credited to individuals' deferral accounts pursuant
to this Policy shall continue for all purposes to be a part of the general
assets of the contracting corporation, and the individual's interest in his or
her deferral account, including his or her right to payment thereof, shall be
an unsecured claim against the general assets of the contracting corporation.
(b) The contracting corporation shall have the right to terminate
the employment of any employee at any time, with or without cause, and to
enter into any other agreement with any employee as to the terms of his or her
employment, and nothing in this Policy or any deferral election hereunder
shall qualify or otherwise affect such rights.
7
<PAGE>
(c) An individual's interest in his or her deferral account shall
not be assignable, either by voluntary or involuntary assignment or by
operation of law, including (without limitation) bankruptcy, garnishment,
attachment or other creditor's process, except by will or the laws of descent
and distribution.
(d) The Management Development and Compensation Committee of the
Board of Directors of Transamerica Corporation has the authority to interpret,
construe and administer this Policy in its sole discretion, and its
interpretations and constructions, and actions thereunder, shall be binding
and conclusive on all persons for all purposes.
(e) Any deferral elections agreed to under this Policy shall be
binding upon and inure to the benefit of the contracting corporation, its
successors and assigns, as well as the individual's heirs, executors,
administrators and legal representatives.
(f) Amounts deferred under this Policy shall be taken into account
for purposes of the withholding and contribution requirements of FICA, FUTA
and SECA (as applicable) in the year of initial deferral rather than in the
year of payment.
11. Future of Policy
It is currently intended that this deferred compensation policy will
remain in effect for future years, but Transamerica Corporation retains the
right to amend or terminate the Policy at any time; provided, however, that
any electing subsidiary may terminate its participation in this Policy at any
time by resolution of its board of directors. Moreover, the participation of
an electing subsidiary will be deemed terminated if it ceases to be a member
of the Transamerica Group. However, the cessation of participation by an
electing subsidiary shall not have any effect on compensation previously
deferred under the Policy. Such deferrals shall continue to be governed by
the provisions of the Policy and of the individual's election or elections to
defer compensation.
8
<PAGE>
EXHIBIT EX-10.19
__________________________
TRANSAMERICA DEFERRED COMPENSATION PROGRAM
DIRECTOR ELECTION TO DEFER 1994 COMPENSATION
Please complete the following. If you desire more than one term of deferral
or more than one payment option, separate election forms and special
administration are required. Please request an additional form or make a
copy of this form and complete and return the two forms at the same time.
Thank you.
(Must be completed and signed by both director and company on or
before December 30, 1993. For individuals first elected to the
Board after January 1, 1994, must be completed and signed by both
director and company on or before the 30th calendar day after the
date of election to the Board. A copy of the fully executed
election must be received by the Director of Compensation of
Transamerica Corporation by December 30, 1993, or, in the case of
new directors, by the fifth business day after the election form
is executed.)
I. 1994 DEFERRAL AMOUNT
I elect to defer the following in accordance with the Transamerica
Deferred Compensation Policy (attached):
____ A. 100% of my 1994 annual retainer, less any required statutory
deductions, or
____ B. 100% of my 1994 retainer for serving as a committee chairman, or
____ C. 100% of my 1994 meeting fees, or
____ D. All of those marked, above, or
____ E. $____________ of my 1994 annual retainer.
1
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If you participate in the Transamerica Health Care Plan for Outside
Directors and have elected to defer all or most of your retainer, please
complete the following:
____ I elect to have my health care contributions (if any) deducted
before my deferral, and wish the net amount of my retainer to be
deferred.
____ I elect to pay my health care contributions (if any) by check each
quarter, and wish the full amount of my retainer to be deferred.
I understand that the minimum dollar amount that may be deferred is
$5,000, and that if my election above would result in less than this
amount being deferred, my election shall be null and void.
II. 1994 DEFERRAL PERIOD
I wish my deferral to be withheld from my retainer and/or fees during
the following months (all periods begin on the first and end on the last
day of the month specified):
____ A. Between January and December (inclusive)
____ B. Between _______________ and ______________ (inclusive)
(month) (month)
I understand that the amount that I have elected to defer will be
deferred ratably during 1994 or during the months specified above.
Each amount deferred will be credited to my deferral account as of
the last day of each month.
III. TERM OF DEFERRAL
I elect to defer the amount stated in Section I, above, for
__________________ years.
(enter # of years)
In accordance with the terms of the Policy, the term of deferral will
determine the interest rate at which earnings will be credited to the
deferral account. The term of deferral is measured in calendar years
only (in the case of new directors, the December 31 of the individual's
year of election is deemed to be the end of his or her first calendar
2
<PAGE>
year). Examples of terms of deferral and interest rates for deferrals
for 1994 are shown in the table below.
Term of
Deferral Interest Earliest
in Years Rate* Distribution Date
________ ________ _____________________
3 10-year 1st business day 1997
Treasury Note
5 Moody's +2% 1st business day 1999
8 Moody's +3% 1st business day 2002
10 Moody's +3% 1st business day 2004
Note: There is no limitation on the term of deferral you may
elect.
*See Section 4 of the attached policy for specific rules
regarding credited interest rates.
IV. PAYMENT OPTIONS
I elect to have my deferral account payable as follows. Payment will be
made or commenced on the first business day of the calendar year
following the end of the term of deferral. If an installment method of
payment is selected, each annual installment payment will be made on the
first business day of the calendar year.
____ A. Lump sum
____ B. _________________________ annual payments
(# of payments, up to 20)
V. BENEFICIARY DESIGNATION
I hereby designate the following as my beneficiary to whom my deferral
account shall be paid in the event of my death. (If you want to
designate more than one beneficiary, or secondary beneficiar(ies) as
well as primary beneficiar(ies), please attach an additional page to
this election form.)
Name of Beneficiary: _________________________________________
Relationship to you: _________________________________________
Social Security No.: _________________________________________
3
<PAGE>
Address: _____________________________________________________
_____________________________________________________
(If you are married at the time of your death and you have designated
someone other than your spouse as your beneficiary, your beneficiary
designation will be ineffective (and your deferral account will instead
be paid to your spouse upon your death) unless your spouse consents to
the designation by signing and dating below.)
Spousal consent:
I agree to the beneficiary designation above. I understand that
my spouse's designation of someone else as a beneficiary means
that I will not be entitled to receive any payment of my spouse's
deferral account upon my spouse's death, and I hereby relinquish
any interest I have in the account.
Date: ________________ ____________________________________
Spouse's signature
____________________________________
Print Spouse's name
I, the undersigned director, hereby agree to all of the terms and conditions
of the Transamerica Deferred Compensation Policy.
Signed: _______________________________ __________________
(director) (date)
Agreed to and accepted:
TRANSAMERICA CORPORATION
By:______________________________ __________________
(date)
Title: __________________________
4
<PAGE>
EXHIBIT EX-10.20
Name: _______________________________________ SS #: ______________________
(Please print)
Company: __________________________________________________________________
TRANSAMERICA DEFERRED COMPENSATION
EXECUTIVE ELECTION TO DEFER 1994 COMPENSATION
Please complete the following. If you desire more than one term of deferral
or more than one payment option, separate election forms and special
administration are required. Please request an additional form and complete
and return the two forms at the same time. Thank you.
This election must be completed and signed by both executive and company
on or before December 30, 1993. For individuals first employed after
January 1, 1994, this form must be completed and signed by both
executive and company on or before the 30th calendar day after the date
of hire. A copy of the fully executed election must be received by the
Director of Compensation of Transamerica Corporation by the fifth
business day of 1994 or, in the case of new employees, by the fifth
business day after the election form is executed.
SECTION I: 1994 SALARY DEFERRAL (For deferral of bonus, see
Section II, below.)
Amount of Deferral:
From my 1994 salary, I elect to defer the following in accordance with the
Transamerica Deferred Compensation Policy (attached):
____ A. $ __________________, or
____ B. An amount equal to __________________% of my 1994 salary increase
(if any), rounded to the next highest dollar amount, or
____ C. Both A and B, above.
I understand that the minimum total dollar amount that may be deferred from
any combination of salary and bonus is $5,000, and that if my election above
would result in less than this amount being deferred, my election shall be
null and void.
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Salary Deferral Period:
I wish my salary deferral to be withheld from my salary during the following
months (all periods begin on the first and end on the last day of the month
specified):
____ A. Between January and December (inclusive)
____ B. Between ______________ and ______________ (inclusive)
(month) (month)
I understand that the amount that I have elected to defer will be deferred
ratably from my salary during 1994 or during the months specified above. Each
amount deferred will be credited to my deferral account as of the last day of
each month.
SECTION II: 1994 BONUS DEFERRAL (For deferral of salary, see
Section I above.)
Amount of Deferral:
From my 1994 bonus (that is, bonus earned in 1994 that would normally be paid
in early 1995), I elect to defer the following amount:
____ A. $_______________ , or
____ B. An amount equal to _______________% of my 1994 bonus, rounded to the
next highest dollar amount, or
____ C. An amount equal to _______________% of the amount (if any) by which
my 1994 bonus exceeds $_______________, rounded to the next highest
dollar amount.
I understand that the minimum total dollar amount that may be deferred from
any combination of salary and bonus is $5,000, and that if my election above
would result in less than this amount being deferred, my election shall be
null and void. Any deferral of bonus will occur when the bonus otherwise
would be paid.
SECTION III: TERM OF DEFERRAL
I elect to defer the amount(s) stated above for __________________ years.
(enter # of years)
2
<PAGE>
In accordance with the terms of the Policy, the term of deferral will
determine the interest rate at which earnings will be credited to the deferral
account. The term of deferral is measured in calendar years only beginning
with 1994. Note that 1994 is counted as the first year of deferral for both
salary and bonus deferrals even though 1994 bonuses are not scheduled to be
paid until 1995. Bonuses will continue to be paid at the time they would in
absence of any deferral, and the actual deferral will take place at the time
of payment. In the case of new hires, the December 31 of the individual's
year of hire is deemed to be the end of his or her first calendar year.
Examples of terms of deferral and interest rates for deferrals for 1994 are
shown in the table below.
Term of
Deferral Interest Earliest
in Years Rate* Distribution Date
________ ________ _____________________
3 10-year 1st business day 1997
Treasury Note
5 Moody's + 2% 1st business day 1999
8 Moody's + 3% 1st business day 2002
10 Moody's + 3% 1st business day 2004
Note: there is no limitation on the term of deferral you may elect.
*See Section 4 of the attached policy for specific rules regarding
credited interest rates.
SECTION IV: PAYMENT OPTIONS
I elect to have my deferral account payable as follows. Payment will be made
or commenced on the first business day of the calendar year following the end
of the term of deferral. If an installment method of payment is selected,
each annual installment payment will be made on the first business day of the
calendar year.
____ A. Lump sum
____ B. _________________________ annual payments
(# of payments, up to 20)
SECTION V: SSP+ DISTRIBUTION ELECTION
If you participate in the Employees Stock Savings Plan (SSP) for 1994 and you
make a deferral under the Policy, you will be credited with additional
employer matching contributions under the Stock Savings Plan Plus ("SSP+") due
to your deferral under the Policy. These matching contributions are in
addition to any SSP+ matching contributions which you may receive on any
matched SSP+ employee contributions that you make. These additional SSP+
3
<PAGE>
employer matching contributions will be credited to an SSP+ account created
for you even if you have never participated in the SSP+.
The amount of your additional SSP+ matching contributions will equal 75% of
your deferral under the Policy times your elected SSP/SSP+ matched
contribution percentage. For example, if your SSP/SSP+ matched contribution
percentage is 6% (the maximum currently permitted), and your deferral under
the Policy is $40,000, your additional SSP+ matching contribution would be
$1,800 (75% times 6% times $40,000).
Please note that you will receive additional SSP+ matching contributions based
on your Section II bonus deferral (if any) only if you elected under the
SSP/SSP+ to have your bonus included in your eligible SSP/SSP+ compensation.
If you participate in the SSP but are not participating in SSP+ for 1994, an
SSP+ account will be established for you. Please complete the following
Distribution Election to indicate when your SSP+ employer matching
contributions should be distributed. (Do not complete this section if you are
already participating in SSP+ for 1994.)
I elect the following distribution option for the amounts credited to my SSP+
as a result of my compensation deferral:
____ A. Lump sum payable within 90 days after I terminate or retire.
____ B. Lump sum in the year following the year in which I retire, payable
by the last working day in February (or within 90 days of
retirement, if later). (If you leave the company for any reason
other than retirement or disability and you have chosen this option,
you will receive a lump sum payment within 90 days after
termination.)
____ C. 10-year installments starting within 90 days after the date I retire
(or, if earlier, on the last working day in February in the year
following the year I retire) and payable in each succeeding year
thereafter by the last working day in February. (If you leave the
company for any reason other than retirement or disability and you
have chosen this option, or your account balance is less than
$10,000, you will receive a lump sum payment within 90 days after
termination.)
I understand that the above Distribution Election applies only to any SSP+
matching contributions I receive in 1994 or later years, and that once made,
my election can be changed only for future (not past) employer matching
contributions. I further understand that if I am participating in SSP+ for
1994, my current SSP+ distribution election governs and the above election (if
any) is null and void.
Note: Please refer to your SSP+ Summary Plan Description (SPD) for
complete details regarding the SSP+. If you need another copy of
the SPD, please contact your HR/benefits department.
4
<PAGE>
SECTION VI: BENEFICIARY DESIGNATION
I hereby designate the following as my beneficiary to whom my deferral account
shall be paid in the event of my death. (If you want to designate more than
one beneficiary, or secondary beneficiar(ies) as well as primary
beneficiar(ies), please attach an additional page to this election form.)
Name of Beneficiary: _______________________________________________
Relationship to you: _______________________________________________
Social Security No.: _______________________________________________
Address: ___________________________________________________________
___________________________________________________________
If you are married at the time of your death and you have designated someone
other than your spouse as your beneficiary, your beneficiary designation will
be ineffective (and your deferral account will instead be paid to your spouse
upon your death) unless your spouse consents to the designation by signing
and dating below.
Spousal consent:
I agree to the beneficiary designation above. I understand that my
spouse's designation of someone else as a beneficiary means that I will
not be entitled to receive any payment of my spouse's deferral account
upon my spouse's death, and I hereby relinquish any interest I have in
the account.
Date: ___________________ ________________________________________
Spouse's signature
________________________________________
Print Spouse's name
I, the undersigned employee, hereby agree to all of the terms and conditions
of the Transamerica Deferred Compensation Policy.
Signed: ________________________________________ ______________________
(employee) (date)
Agreed to and accepted:
NAME OF COMPANY: ________________________________________________________
By: __________________________________ _____________________
(company officer) (date)
(must be other than above)
Title: ________________________________________________________
5
<PAGE>
EXHIBIT EX-11
STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
TRANSAMERICA CORPORATION
Year ended December 31
1993 1992 1991
(Amounts in thousands,
except per share data)
Primary
Average shares outstanding ................ 78,495 78,050 76,676
Net effect of dilutive stock options--
based on the treasury stock method
using average market price .............. 1,788* 1,721* 718*
______ ______ ______
TOTAL ......... 80,283 79,771 77,394
====== ====== ======
Net income ................................ $377,413 $243,201 $50,136
Preferred dividends ....................... (23,629) (21,949) (11,992)
________ ________ _______
Net income to common ...................... $353,784 $221,252 $38,144
======== ======== =======
Per share amount .......................... $4.51 $2.83 $0.50
===== ===== =====
Fully Diluted
Average shares outstanding ................ 78,495 78,050 76,676
Net effect of dilutive stock options--
based on the treasury stock method
using the year-end market price, if
higher than average market price ........ 2,000* 2,176* 892*
______ _______ ______
TOTAL ......... 80,495 80,226 77,568
====== ======= ======
Net income ................................ $377,413 $243,201 $50,136
Preferred dividends ....................... (23,629) (21,949) (11,992)
________ ________ _______
Net income to common ...................... $353,784 $221,252 $38,144
======== ======== =======
Per share amount .......................... $4.51 $2.83 $0.50
===== ===== =====
*Not included in per share calculation because effect is less than 3%.
<PAGE>
<TABLE>
EXHIBIT EX-12
TRANSAMERICA CORPORATION AND SUBSIDIARIES
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
(Dollar amounts in thousands)
<CAPTION>
Year Ended December 31,
________________________________________________________
1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C>
Fixed charges:
Interest and debt expense $ 511,649 $ 568,887 $631,106 $ 751,808 $ 798,347
One-third of rental
expense ................ 29,073 29,788 31,052 28,096 30,670
__________ __________ ________ __________ __________
Total ................. $ 540,722 $ 598,675 $662,158 $ 779,904 $ 829,017
========== ========== ======== ========== ==========
Earnings:
Consolidated operating
income from continuing
operations ............. $ 450,497 $ 342,910 $ 45,099 $ 212,709 $ 264,608
Provision for income
taxes .................. 150,141 217,477 66,226 123,979 141,666
Fixed charges ........... 540,722 598,675 662,158 779,904 829,017
__________ __________ ________ __________ __________
Total ................. $1,141,360 $1,159,062 $773,483 $1,116,592 $1,235,291
========== ========== ======== ========== ==========
Ratio of earnings from con-
tinuing operations to
fixed charges ........... 2.11 1.94 1.17 1.43 1.49
==== ==== ==== ==== ====
</TABLE>
<PAGE>
EXHIBIT EX-13
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:
_____________________________________________________________________________
(Amounts in millions) 1993 1992 1991
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
====== ====== ======
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
______________________________________________________________________________
(Amounts in millions) 1993 1992 1991
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
====== ====== ======
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.
CONSUMER LENDING
_____________________________________________________________________________
(Amounts in millions) 1993 1992 1991
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
====== ====== ======
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.
COMMERCIAL LENDING
_____________________________________________________________________________
(Amounts in millions) 1993 1992 1991
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
====== ====== ======
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.
LEASING
_____________________________________________________________________________
(Amounts in millions) 1993 1992 1991
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
====== ====== ======
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.
REAL ESTATE SERVICES
_____________________________________________________________________________
(Amounts in millions) 1993 1992 1991
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
==== ==== ====
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>
LIFE INSURANCE
_____________________________________________________________________________
(Amounts in millions) 1993 1992 1991
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
======= ======= =======
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:
____________________________________________________________________________
(Amounts in millions) 1993 1992 1991
Interest expense $54.1 $ 61.5 $ 66.1
Other expenses (income) (48.0) 40.5 38.9
_____ ______ ______
$ 6.1 $102.0 $105.0
===== ====== ======
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>
CONSOLIDATED BALANCE SHEET
______________________________________________________________________________
December 31 1993 1992
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
========= =========
(Amounts in millions except for share data)
See notes to financial statements
52 Transamerica Corporation and Subsidiaries
<PAGE>
CONSOLIDATED BALANCE SHEET (CONTINUED)
______________________________________________________________________________
December 31 1993 1992
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
========= =========
Transamerica Corporation and Subsidiaries 53
<PAGE>
CONSOLIDATED STATEMENT OF INCOME
_____________________________________________________________________________
Year ended December 31 1993 1992 1991
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
======== ======== ========
(Amounts in millions except for share data)
See notes to financial statements
54 Transamerica Corporation and Subsidiaries
<PAGE>
CONSOLIDATED STATEMENT OF CASH FLOWS
_____________________________________________________________________________
Year ended December 31 1993 1992 1991
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
========= ========= =========
(Amounts in millions except for share data)
See notes to financial statements
Transamerica Corporation and Subsidiaries 55
<PAGE>
<TABLE>
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
__________________________________________________________________________________________________________
<CAPTION>
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)
====== ===== ====== ======== ====== ======
<FN>
(Amounts in millions)
See notes to financial statements
</TABLE>
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:
_____________________________________________________________________________
(Amounts in millions) 1993 1992 1991
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
====== ====== ======
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:
_____________________________________________________________________________
(Amounts in millions) 1993 1992
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
====== ======
The difference between federal income taxes on income from continuing
operations computed at the statutory rate and the provision for income taxes
is:
_____________________________________________________________________________
(Amounts in millions) 1993 1992 1991
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
====== ====== ======
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:
______________________________________________________________________________
(Amounts in millions) Gross Gross
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
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
========= ======== ====== =========
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.
______________________________________________________________________________
(Amounts in millions) Amortized Market
Cost Value
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
========= =========
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:
______________________________________________________________________________
(Amounts in millions) Carrying Estimated
Value Fair Value
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
====== ======
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:
_____________________________________________________________________________
(Amounts in millions) 1993 1992 1991
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)
====== ====== ======
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
_____________________________________________________________________________
(Amounts in millions) 1993 1992
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
======== ========
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:
______________________________________________________________________________
(Amounts in millions) Carrying Estimated
Value Fair Value
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
========= =========
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:
______________________________________________________________________________
(Amounts in millions) Carrying Estimated
Value Fair Value
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
======== ========
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:
______________________________________________________________________________
September 30 (Amounts in millions) 1993 1992
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
======== ========
______________________________________________________________________________
Year Ended September 30 (Amounts in millions) 1993 1992 1991
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
======== ======== ========
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:
_____________________________________________________________________________
(Amounts in millions) 1993 1992 1991
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
====== ====== ======
The following table sets forth the amounts recognized in the consolidated
statement of financial position for the pension plans:
_____________________________________________________________________________
(Amounts in millions) 1993 1992
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
====== ======
*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:
______________________________________________________________________________
(Amounts in millions) 1993 1992 1991
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
==== ==== ====
The following table sets forth the amounts recognized in the consolidated
statement of financial position for other post employment benefit plans:
______________________________________________________________________________
(Amounts in millions) 1993 1992
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
===== =====
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:
_____________________________________________________________________________
(Amounts in millions) 1992 1991
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
======== ========
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>
<TABLE>
SUPPLEMENTARY FINANCIAL INFORMATION
_________________________________________________________________________________________________________________
<CAPTION>
March 31 June 30 September 30 December 31 1993 Total
<S> <C> <C> <C> <C> <C>
SELECTED QUARTERLY
FINANCIAL DATA
1993
Revenues $1,149.9 $1,228.9 $1,209.5 $1,244.7 $4,833.0
======== ======== ======== ======== ========
Income from
continuing operations $ 91.8 $ 123.9 $ 138.9 $ 95.9 $ 450.5
Loss from
discontinued operations (50.0) (50.0)
Extraordinary loss on early
extinguishment of debt (23.1) (23.1)
________ ________ ________ ________ ________
Net income $ 91.8 $ 123.9 $ 138.9 $ 22.8 $ 377.4
======== ======== ======== ======== ========
Earnings per share of
common stock:
Income from
continuing operations $ 1.08 $ 1.49 $ 1.70 $ 1.17 $ 5.44
Loss from
discontinued operations (0.64) (0.64)
Extraordinary loss on early
extinguishment of debt (0.29) (0.29)
________ ________ ________ ________ ________
Net income $ 1.08 $ 1.49 $ 1.70 $ 0.24 $ 4.51
======== ======== ======== ======== ========
High and low sales prices
for common shares $53 7/8-45 5/8 $ 56 1/8-47 $61 3/8-52 1/2 $61 3/4-53 5/8 $61 3/4-45 5/8
_________________________________________________________________________________________________________________
March 31 June 30 September 30 December 31 1992 Total
<S> <C> <C> <C> <C> <C>
1992
Revenues $1,083.6 $1,127.6 $1,148.6 $1,220.3 $4,580.1
======== ======== ======== ======== ========
Income from
continuing operations $ 71.1 $ 97.5 $ 87.4 $ 86.9 $ 342.9
Income (loss) from
discontinued operations 12.5 (37.2) (75.0) (99.7)
________ ________ ________ ________ ________
Net income $ 83.6 $ 60.3 $ 87.4 $ 11.9 $ 243.2
======== ======== ======== ======== ========
Earnings per share of
common stock:
Income from
continuing operations $ 0.88 $ 1.17 $ 1.04 $ 1.02 $ 4.11
Income (loss) from
discontinued operations 0.16 (0.48) (0.96) (1.28)
________ ________ ________ ________ ________
Net income $ 1.04 $ 0.69 $ 1.04 $ 0.06 $ 2.83
======== ======== ======== ======== ========
High and low sales prices
for common shares $43 7/8-37 1/8 $46 3/4-40 1/8 $ 46 1/4-40 $50 1/2-41 3/8 $50 1/2-37 1/8
<FN>
(Dollar amounts in millions except for share data)
Note A. The closing sales price for Transamerica common shares on February 28, 1994 was $50 3/4.
</TABLE>
Transamerica Corporation and Subsidiaries 71
<PAGE>
<TABLE>
SELECTED ELEVEN-YEAR FINANCIAL DATA
_______________________________________________________________________________________________________
<CAPTION>
(Dollar amounts in millions except
for share data) 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C>
EARNINGS
Revenues $ 4,833.0 $ 4,580.1 $ 4,256.1 $ 4,157.1 $ 4,516.5
Net income:
Income from continuing operations:
Income before investment transactions $ 425.2 $ 337.8 $ 47.1 $ 209.7 $ 240.4
Gain on investment transactions 25.3 5.1 (2.0) 3.0 24.2
_________ _________ _________ _________ _________
Income from continuing operations 450.5 342.9 45.1 212.7 264.6
Income (loss) from discontinued
operations (50.0) (99.7) 39.7 53.6 67.6
Extraordinary loss on early
extinguishment of debt (23.1)
Cumulative effect of accounting changes (34.7)
_________ _________ _________ _________ _________
Net income $ 377.4 $ 243.2 $ 50.1 $ 266.3 $ 332.2
========= ========= ========= ========= =========
Earnings per share of common stock (Note A):
Income from continuing operations:
Income before investment transactions $ 5.12 $ 4.05 $ 0.46 $ 2.55 $ 2.97
Gain on investment transactions 0.32 0.06 (0.03) 0.04 0.32
_________ _________ _________ _________ _________
Income from continuing operations 5.44 4.11 0.43 2.59 3.29
Income (loss) from discontinued
operations (0.64) (1.28) 0.52 0.70 0.89
Extraordinary loss on early
extinguishment of debt (0.29)
Cumulative effect of accounting changes (0.45)
_________ _________ _________ _________ _________
Total $ 4.51 $ 2.83 $ 0.50 $ 3.29 $ 4.18
========= ========= ========= ========= =========
Average number of common shares
outstanding (in thousands) 78,495 78,050 76,676 76,229 75,510
Return on average common
shareholders' equity (Note B) 12.2% 7.8% 3.1% 9.1% 12.2%
FINANCIAL POSITION
Total assets $36,050.5 $33,290.9 $31,133.6 $29,260.9 $27,357.1
Notes and loans payable:
Short-term debt and current
portion of long-term debt $ 2,023.0 $ 1,062.6 $ 715.4 $ 869.1 $ 1,038.2
Long-term debt 5,681.0 6,510.5 6,975.6 6,602.5 6,897.2
Shareholders' equity 3,363.5 3,300.1 3,025.8 3,016.7 2,928.7
Ratio of debt to debt plus equity:
Consolidated 69.6% 69.6% 71.8% 71.2% 73.0%
Consolidated, excluding debt
of financing subsidiaries 16.7% 23.0% 27.4% 29.0% 30.7%
OTHER DATA
Per share of common stock:
Dividends declared (Note C) $ 2.00 $ 2.00 $ 1.98 $ 1.94 $ 1.90
Book value $ 38.46 $ 36.31 $ 36.28 $ 36.56 $ 35.63
Market price at year end $ 56.75 $ 48.00 $ 39.88 $ 32.63 $ 44.25
Number of common shareholders of record 57,200 61,100 64,800 78,100 81,900
Number of employees (continuing operations) 10,700 10,700 10,600 10,700 12,400
========= ========= ========= ========= =========
<FN>
Note A. Earnings per share of common stock are based on the weighted average number of shares
outstanding in each year after deduction of preferred dividends in 1985-1993.
Note B. Computed on income before cumulative effect of accounting changes.
Note C. Quarterly dividends per share were 50 cents in 1993 and 1992.
</TABLE>
72 Transamerica Corporation and Subsidiaries
<PAGE>
<TABLE>
SELECTED ELEVEN-YEAR FINANCIAL DATA (CONTINUED)
___________________________________________________________________________________________________________________
<CAPTION>
(Dollar amounts in millions except
for share data) 1988 1987 1986 1985 1984 1983
<S> <C> <C> <C> <C> <C> <C>
EARNINGS
Revenues $ 4,068.1 $ 3,930.8 $ 3,791.1 $ 3,366.0 $ 2,880.9 $ 3,059.4
Net income:
Income from continuing operations:
Income before investment transactions $ 223.8 $ 232.0 $ 184.9 $ 186.0 $ 148.9 $ 108.7
Gain on investment transactions 7.7 24.2 45.8 (19.1) (18.2) 18.9
_________ _________ _________ _________ _________ _________
Income from continuing operations 231.5 256.2 230.7 166.9 130.7 127.6
Income (loss) from discontinued
operations 111.5 177.4 59.4 (22.0) 35.0 68.4
Extraordinary loss on early
extinguishment of debt (3.2) (27.9)
Cumulative effect of accounting changes (80.9)
_________ _________ _________ _________ _________ _________
Net income $ 262.1 $ 430.4 $ 262.2 $ 144.9 $ 165.7 $ 196.0
========= ========= ========= ========= ========= =========
Earnings per share of common stock (Note A):
Income from continuing operations:
Income before investment transactions $ 2.79 $ 2.90 $ 2.32 $ 2.64 $ 2.20 $ 1.62
Gain on investment transactions 0.10 0.32 0.61 (0.28) (0.27) 0.28
_________ _________ _________ _________ _________ _________
Income from continuing operations 2.89 3.22 2.93 2.36 1.93 1.90
Income (loss) from discontinued
operations 1.48 2.33 0.80 (0.32) 0.51 1.02
Extraordinary loss on early
extinguishment of debt (0.04) (0.37)
Cumulative effect of accounting changes (1.07)
_________ _________ _________ _________ _________ _________
Total $ 3.30 $ 5.51 $ 3.36 $ 2.04 $ 2.44 $ 2.92
========= ========= ========= ========= ========= =========
Average number of common shares
outstanding (in thousands) 75,327 75,973 74,750 68,630 68,019 67,100
Return on average common
shareholders' equity (Note B) 11.8% 18.8% 12.5% 7.4% 8.9% 11.1%
FINANCIAL POSITION
Total assets $24,702.3 $21,273.8 $14,745.1 $12,420.0 $10,787.0 $ 9,422.1
Notes and loans payable:
Short-term debt and current
portion of long-term debt $ 2,024.8 $ 1,553.3 $ 370.8 $ 260.7 $ 195.2 $ 283.7
Long-term debt 5,780.2 5,238.2 2,533.4 2,559.7 2,476.7 1,873.6
Shareholders' equity 2,711.7 2,591.2 2,309.3 2,154.9 1,868.7 1,828.9
Ratio of debt to debt plus equity:
Consolidated 74.2% 72.4% 55.7% 56.7% 58.8% 54.1%
Consolidated, excluding debt
of financing subsidiaries 30.6% 30.6% 9.8% 13.2% 22.9% 13.6%
OTHER DATA
Per share of common stock:
Dividends declared (Note C) $ 1.86 $ 1.80 $ 1.72 $ 1.66 $ 1.60 $ 1.53
Book value $ 33.06 $ 31.40 $ 27.65 $ 27.99 $ 27.38 $ 26.97
Market price at year end $ 33.88 $ 29.88 $ 32.63 $ 33.75 $ 23.13 $ 31.13
Number of common shareholders of record 87,800 91,400 95,800 101,100 108,000 113,400
Number of employees (continuing operations) 12,400 12,800 11,200 11,400 17,100 16,700
========= ========= ========= ========= ========= =========
<FN>
Note A. Earnings per share of common stock are based on the weighted average number of shares
outstanding in each year after deduction of preferred dividends in 1985-1993.
Note B. Computed on income before cumulative effect of accounting changes.
Note C. Quarterly dividends per share were 50 cents in 1993 and 1992.
</TABLE>
Transamerica Corporation and Subsidiaries 73
<PAGE>
COMMON STOCK LISTED AND TRADED
Transamerica's common stock (symbol: TA) is listed and traded in the U.S. on
the New York and Pacific Stock Exchanges and outside the U.S. on the following
exchanges: Amsterdam, Basel, Frankfurt, Geneva, London, Paris, Tokyo and
Zurich.
80 Transamerica Corporation and Subsidiaries
<PAGE>
EXHIBIT EX-21
LIST OF SUBSIDIARIES OF TRANSAMERICA CORPORATION
All majority owned subsidiaries are included in the consolidated
financial statements of the Corporation (all voting securities owned 100%
directly or indirectly by the Corporation).
Jurisdiction of
Organization
of Named
Subsidiary
_______________
ARC Reinsurance Corporation Hawaii
Coast Service Company California
Inter-America Corporation California
Mortgage Corporation of America California
Pyramid Insurance Company, Ltd. Hawaii
Pacific Cable Ltd. Bermuda
TC Cable, Inc. (25% ownership) Delaware
River Thames Insurance Company Ltd. (51% ownership) United Kingdom
RTI Holdings, Inc. Delaware
TCS Inc. Delaware
Trans International Entities Inc. Delaware
Transamerica Airlines, Inc. Delaware
Transamerica Asset Management Group, Inc. Delaware
Transamerica Fund Management Company Delaware
Transamerica Fund Distributors, Inc. Maryland
Inserco, Inc. Texas
Criterion Investment Management Company Texas
Criterion Rogge Global Advisers, Inc. (50% ownership) Texas
Transamerica Corporation (Oregon) Oregon
-1-
<PAGE>
Jurisdiction of
Organization
of Named
Subsidiary
_______________
Transamerica Finance Group, Inc. Delaware
BWAC Twelve, Inc. Delaware
Transamerica Insurance Finance Corporation Maryland
Transamerica Insurance Finance Corporation,
California California
Transamerica Insurance Finance Corporation, Canada Canada
Transamerica Insurance Finance Company (U.K.) Maryland
Transamerica Financial Services Finance Company Delaware
Transamerica HomeFirst, Inc. California
Transamerica Finance Corporation Delaware
Arcadia General Insurance Company Arizona
Arcadia National Life Insurance Company Arizona
First Credit Corporation (Delaware) Delaware
Pacific Finance Loans California
Pacific Service Escrow Inc. Delaware
Transamerica Acceptance Corporation Delaware
Transamerica Automobile Leasing Nevada
Transamerica Credit Corporation Washington
Transamerica Financial Consumer Discount Company Pennsylvania
Transamerica Financial Corporation Nevada
Transamerica Financial Professional Services, Inc. California
Transamerica Financial Services, Inc. British Columbia
Transamerica Financial Services California
Transamerica Servicing, Inc. California
Transamerica Financial Services Wyoming
Transamerica Financial Services Company Ohio
Transamerica Financial Services, Inc. Alabama
Transamerica Financial Services, Inc. Arizona
Transamerica Financial Services, Inc. Kansas
Transamerica Financial Services Inc. Minnesota
Transamerica Financial Services, Inc. New Jersey
Transamerica Financial Services, Inc. Texas
Transamerica Financial Services (Inc.) Oklahoma
Transamerica Financial Services of Dover, Inc. Delaware
Transamerica Insurance Administrators, Inc.
(Delaware) Delaware
TELCO Holding Co., Inc. Delaware
Transamerica Commercial Finance Corporation, I Delaware
Transamerica Inventory Finance Corporation Delaware
Transamerica Commercial Finance Corporation Delaware
TCF Asset Management Corporation Colorado
Transamerica Business Credit Corporation Delaware
BWAC Credit Corporation Delaware
BWAC International Corporation Delaware
-2-
<PAGE>
Jurisdiction of
Organization
of Named
Subsidiary
_______________
BWAC Seventeen, Inc. Delaware
Transamerica Commercial Finance Corporation,
Canada Canada
TCF Asset Management Corporation, Canada Canada
Macey (North) Limited Ontario
TCF Commercial Leasing Corporation, Canada Ontario
Transamerica Commercial Finance Canada, Limited Ontario
Transamerica Commercial Finance France S.A. France
BWAC Twenty-One, Inc. Delaware
Transamerica Commercial Holdings Limited United Kingdom
Transamerica Trailer Leasing Limited (51%) United Kingdom
Transamerica Commercial Finance Limited United Kingdom
Transamerica GmbH Inc. Delaware
Transamerica Financieringsmattschappij B.V. Netherlands
Transamerica Finanzierungs GmbH Germany
Transamerica Rental Finance Corporation Delaware
TA Leasing Holding Co., Inc. Delaware
Transamerica Leasing Inc. Delaware
Transamerica Leasing Holdings, Inc. Delaware
Intermodal Equipment, Inc. Delaware
Transamerica Leasing N.V. Belgium
Transamerica Leasing Srl. Italy
Transamerica Container Acquisition
Corporation Delaware
Transamerica Container Acquisition II
Corporation Delaware
Transamerica Distribution Services Inc. Delaware
Transamerica Leasing AB Sweden
Transamerica Leasing Coordination Center Belgium
Transamerica Leasing do Brasil S/C Ltda. Brazil
Transamerica Leasing GmbH Germany
Transamerica Leasing (HK) Ltd. Hong Kong
Transamerica Leasing Limited United Kingdom
ICS Terminals (U.K.) Limited United Kingdom
Transamerica Leasing Pty. Ltd. Australia
Transamerica Leasing (Canada) Inc. Canada
Transamerica Trailer Holdings I Inc. Delaware
Transamerica Trailer Holdings II Inc. Delaware
Transamerica Trailer Leasing (Belgium) N.V. Belgium
Transamerica Trailer Leasing
(Netherlands) B.V. Netherlands
Transamerica Trailer Leasing A/S Denmark
Transamerica Trailer Leasing GmbH Germany
Transamerica Trailer Leasing S.A. France
Transamerica Trailer Leasing S.p.A. Italy
Transamerica Trailer Spain, S.A. Spain
Transamerica Transport Inc. New Jersey
-3-
<PAGE>
Jurisdiction of
Organization
of Named
Subsidiary
_______________
Transamerica Homes, Inc. Delaware
Transamerica Information Management Services, Inc. Delaware
Transamerica Insurance Corporation of California California
Arbor Life Insurance Company Arizona
Plaza Insurance Sales, Inc. California
Transamerica Advisors, Inc. California
Transamerica Annuity Service Corporation New Mexico
Transamerica Financial Resources, Inc. Delaware
Transamerica Insurance Securities Sales Corporation Maryland
Transamerica International Insurance Services, Inc. Delaware
Transamerica Occidental Life Insurance Company California
First Transamerica Life Insurance Company New York
NEF Investment Company Delaware
Transamerica Life Insurance and Annuity Company California
Transamerica Assurance Company Colorado
Transamerica Occidental Life Insurance Company
of Illinois Illinois
Transamerica Life Insurance Company of Canada Canada
Transamerica Products, Inc. California
Transamerica Leasing Ventures, Inc. California
Transamerica Products I, Inc. California
Transamerica Products II, Inc. California
Transamerica Products IV, Inc. California
Transamerica Service Company Delaware
Transamerica International Holdings, Inc. Delaware
TC Cable, Inc. (75% ownership)
Transamerica International Limited Canada
Transamerica Investment Services, Inc. Delaware
Transamerica Land Capital, Inc. California
Bankers Mortgage Company of California California
Transamerica Overseas Finance Corporation N.V. Netherlands
Antilles
Transamerica Properties, Inc. Delaware
-4-
<PAGE>
Jurisdiction of
Organization
of Named
Subsidiary
_______________
Transamerica Realty Services, Inc. Delaware
The Gilwell Company California
Pyramid Investment Corporation Delaware
Transamerica Minerals Company California
Transamerica Oakmont Corporation California
Transamerica Real Estate Management Co. California
Transamerica Retirement Management Corporation Delaware
Ventana Inn, Inc. California
Transamerica Systems Corporation Delaware
Transamerica Telecommunications Corporation Delaware
-5-
<PAGE>
EXHIBIT EX-23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statements
(Form S-8 Nos. 2-80934, 2-83724, 33-3722, 33-12324, 33-13389, 33-18911,
33-26317, 33-38267 and 33-43927 and Form S-3 Nos. 33-32419, 33-37889 and
33-41008) and related Prospectuses, of Transamerica Corporation of our report
dated February 22, 1994 with respect to the consolidated financial statements
and schedules of Transamerica Corporation included or incorporated by
reference in this Annual Report (Form 10-K) for the year ended December 31,
1993.
ERNST & YOUNG
San Francisco, California
March 25, 1994
<PAGE>
EXHIBIT EX-24
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
Each of the undersigned hereby constitutes and appoints BURTON E.
BROOME, CHRISTOPHER M. McLAIN and ROBERT D. MYERS and each of them with power
to act alone, his or her true and lawful attorney-in-fact and agent, with full
power of substitution and resubstitution, for him or her and in his or her
name, place and stead, in any and all capacities, to sign (either manually or
electronically through the EDGAR System of the United States Securities and
Exchange Commission) the 1993 Annual Report on Form 10-K for Transamerica
Corporation and any and all amendments thereto, and to file the same, together
with exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto such attorney-in-fact full
power and authority to do and perform each and every act and thing requisite
and necessary to be done in and about the premises hereof, as fully to all
intents and purposes as he or she might do or could do in person, hereby
ratifying and confirming all that said attorney-in-fact or his substitutes may
lawfully do or cause to be done by virtue hereof.
Executed on the 17th day of March, 1994.
GLENN A. CRAMER R. F. O'BRIEN
__________________________ ______________________________
Glenn A. Cramer Raymond F. O'Brien
MYRON DU BAIN CONDOLEEZZA RICE
__________________________ ______________________________
Myron Du Bain Condoleezza Rice
CHARLES R. SCHWAB
__________________________ ______________________________
Sam Ginn Charles R. Schwab
J. R. HARVEY FORREST N. SHUMWAY
_________________________ _______________________________
James R. Harvey Forrest N. Shumway
FRANK C. HERRINGER
_________________________ _______________________________
Frank C. Herringer Peter V. Ueberroth
G. E. MOORE
____________________________
Gordon E. Moore
