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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 15, 1994
Transamerica Finance Corporation
(Exact name of registrant as specified in its charter)
Delaware 1-6798 95-1077235
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
1150 South Olive Street
Los Angeles, California 90015
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (213) 742-4321
Not applicable
(Former name or former address, if changed since last report.)
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Item 2. Acquisition of Assets
On February 13, 1994, Transamerica Container Acquisition Corporation
("Transamerica" or "Purchaser"), entered into an Asset Purchase Agreement
(the "Agreement") with Tiphook plc, a London-based transportation equipment
rental company, and certain of its affiliated companies ("Tiphook" or
"Sellers") pursuant to which Transamerica agreed to purchase certain dry cargo
containers, tank containers, chassis, operating leases and other assets of
Tiphook (collectively the "Container Operations"). Purchaser is a newly
formed subsidiary of Transamerica Finance Corporation ("Registrant").
On March 15, 1994, the transaction was completed and Transamerica
acquired substantially all the operating assets of the Container Operations of
Tiphook. Transamerica assumed certain specified liabilities of the Container
Operations including trade accounts payable. Transamerica did not assume any
borrowings, tax liabilities or contingent liabilities of the Sellers or the
Tiphook Group. In accordance with the Agreement, Transamerica paid to Tiphook
673 million pounds sterling, with further payments to be made upon release of
escrows, delivery of bills of sale and releases of liens, and delivered
34.5 million pounds sterling to escrow agents for the establishment of a
general escrow account (27.5 million pounds sterling) and a repairs escrow
account (7.0 million pounds sterling). When completed, payments to the
Sellers may total up to 722 million pounds sterling (about $1,065 million).
Claims may be made against the general escrow account by Transamerica for
any claim for indemnity (see below) including for breach of warranty. The
Agreement provides that any amounts owed to Transamerica by Tiphook in respect
of any purchase price adjustment shall be paid directly to Transamerica by
Tiphook rather than from the escrowed funds. Only if Tiphook is prohibited by
law from making the payment (or otherwise does not make the payment) will the
funds be paid from the general escrow account, in which case Tiphook is
required under the Agreement to replenish such account to the extent of any
funds so withdrawn by Transamerica. No amounts will be released from the
general escrow to the Sellers until March 31, 1995. The amount released on
March 31, 1995 will be minus (i) any purchase price adjustments (following the
examination of the net assets at closing) deducted from the general escrow and
not replenished; and (ii) any amounts paid to Transamerica in settlement of
any claim covered by the general escrow, and then only to the extent not
necessary to cover any pending claims lodged by Transamerica.
Claims may be made against the repairs escrow account to the extent that
the amounts required to repair certain containers exceed the amounts accrued
by the Sellers in respect of such repairs. Transamerica may also claim
against this escrow if any purchase price adjustment arising from the post-
closing audit is not paid directly by Tiphook. No amounts will be released to
Tiphook from the repairs escrow until the end of the six month anniversary of
the closing. The amount paid will be minus (i) any purchase price adjustments
(following the audit of the net assets at closing) deducted from the repairs
escrow and not replenished and (ii) any amount paid to Transamerica in
settlement of any claim covered by the repairs escrow and not replenished, and
then only to the extent not necessary to cover any pending repair claims
lodged by Transamerica. Fifty per cent of the amount remaining in the repairs
escrow (and not necessary to cover any pending claims) will be released
earlier than the six month anniversary if the net assets audit is completed
and agreed to before then and certain other conditions are satisfied.
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Adjustments to the purchase price, if any, will be determined on
completion of examination of the closing balance sheet of the Container
Operations as at the closing date by Transamerica's auditors and Tiphook's
auditors, respectively. Any unresolved dispute will be referred to an
independent auditor.
The Sellers have given representations and warranties as to the assets
including the contracts and operating leases sold and as to Tiphook's
container rental business and agreed to indemnify Transamerica for any
breaches of the Sellers' representations or warranties. Claims for breach of
representations or warranties must be brought within two years of closing
(other than those relating to taxation and environmental matters which survive
for the applicable statutes of limitation). The liability of the Sellers for
indemnification is limited to the purchase price paid by Transamerica to the
Sellers plus the amounts paid into the escrow accounts. The indemnification
provisions cover among other matters breaches of warranty, contingent
liabilities, if any, of the Container Operations, taxation liabilities, the
conduct of the business of the Container Operations prior to the closing and
environmental liabilities.
Tiphook, at the closing, entered into a non-compete agreement with
Transamerica prohibiting Tiphook and its affiliates from competing with the
Container Operations for a period of seven years. After the closing, Sellers
are providing certain transitional services to Transamerica pursuant to the
terms of a transitional services agreement.
Tiphook has granted Transamerica an exclusive, perpetual license to the
name "Tiphook" in the business of leasing containers (on a worldwide basis)
and tank chassis (in the United States).
Item 7. Financial Statements, Pro forma Financial Information and Exhibits.
(a) Financial statements of Tiphook Container Rental Company Limited and
Tiphook Rentals Limited
The following audited combined financial statements of Tiphook Container
Rental Company Limited and Tiphook Rentals Limited (hereinafter referred
to as the Container Rental Businesses) prepared in conformity with United
Kingdom standard accounting practices are filed as Exhibit 28.1 hereto,
and are incorporated by reference in this report.
Independent Auditors' Report
Combined Profit and Loss Statement - Year
ended April 30, 1993
Combined Statement of Total Recognised Gains
and Losses - Year ended April 30, 1993
Combined Balance Sheet - April 30, 1993
Combined Cash Flow Statement - Year ended
April 30, 1993
Notes to the Combined Financial Statements -
Year ended April 30, 1993
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The following unaudited interim financial statements of the Container
Rental Businesses prepared in conformity with United Kingdom standard
accounting practices are filed as Exhibit 28.2 hereto, and are
incorporated by reference in this report.
Combined Profit and Loss Statement - Six months
ended October 31, 1993 and 1992
Combined Statement of Total Recognised Gains
and Losses - Six months ended October 31,
1993 and 1992
Combined Balance Sheet - October 31, 1993
Combined Cash Flow Statement - Six months ended
October 31, 1993 and 1992
Notes to the Unaudited Combined Interim Financial
Information - Six months ended October 31, 1993
(b) Pro forma Financial Information
The Pro forma Condensed Consolidated Balance Sheet of Transamerica
Finance Corporation as of December 31, 1993 reflects the financial
position of Transamerica Finance Corporation after giving effect to the
acquisition of the assets and assumption of the liabilities discussed in
Item 2. The pro forma consolidated balance sheet assumes the acquisition
took place on December 31, 1993 and is based upon the October 31, 1993
balance sheet of the Container Rental Businesses. The Pro forma
Condensed Consolidated Statement of Income for the year ended
December 31, 1993 reflects adjustments to the cost of borrowings at
Transamerica Finance Corporation and the Container Rental Businesses,
using rates in effect had the acquisition occurred December 31, 1993, as
if the acquisition had occurred on January 1, 1993 and based upon the
operations of the Container Rental Businesses for the twelve month period
ended October 31, 1993. No adjustments have been made to reflect
potential operating efficiencies from the consolidation of these
operations.
Pro forma Condensed Consolidated Balance
Sheet as of December 31, 1993 ............. Page F-1
Pro forma Condensed Consolidated Income
Statement - Year ended December 31, 1993 .. Page F-2
Notes to Pro forma Financial Information .... Page F-3
The unaudited pro forma financial statements and accompanying notes
reflect the purchase of assets and the assumption of certain liabilities
of the Container Rental Businesses. The purchase price will be allocated
to the Container Rental Businesses assets acquired and liabilities
assumed based on their relative estimated fair values at the closing
date. As described in the accompanying notes, the amounts allocated to
the Container Rental Businesses assets and liabilities have been
combined with the recorded values of the assets and liabilities of
Transamerica Finance Corporation. However, changes to the adjustments
already included in the unaudited pro forma financial statements are
expected as evaluations of assets and liabilities are completed and as
additional information becomes available. In addition, the results of
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operations of the Container Rental Businesses subsequent to October 31,
1993 will affect the allocation of the purchase price. Accordingly, the
final combined amounts will differ from those set forth in the unaudited
pro forma financial statements.
The unaudited pro forma financial statements have been prepared by
Transamerica Finance Corporation based upon assumptions deemed proper by
it. The unaudited pro forma financial statements presented herein are
shown for illustrative purposes only and are not necessarily indicative
of the future financial position or future results of operations of the
combined company, or of the financial position or results of operations
of the combined company that would have actually occurred had the
transaction been in effect as of the date or for the period presented.
In addition, it should be noted that Transamerica Finance Corporation's
financial statements will reflect the acquisition only from March 15,
1994, the closing date of the transaction.
The unaudited pro forma financial statements should be read in
conjunction with the historical financial statements of Transamerica
Finance Corporation and the Container Rental Businesses financial
statements and related notes.
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<TABLE>
Page F-1
PRO FORMA FINANCIAL INFORMATION
TRANSAMERICA FINANCE CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET*
December 31, 1993
(Unaudited)
<CAPTION>
Transamerica Container
Finance Rental
Corporation Businesses
Historical Historical Pro forma Pro forma
Amounts Amounts Adjustments Consolidated
<S> <C> <C> <C> <C>
ASSETS
Finance receivables, net
of allowance for losses
and unearned fees $6,071,578 $ 6,071,578
Equipment held for lease, net
of accumulated depreciation 1,306,458 $ 929,294 $ 104,083 -C 2,339,835
Other 1,653,334 282,623 (195,299)-B 1,724,422
(16,236)-B
__________ __________ __________ ___________
$9,031,370 $1,211,917 $ (107,452) $10,135,835
========== ========== ========== ===========
LIABILITIES AND SHAREHOLDER'S EQUITY
Notes payable $7,031,503 $ 872,865 $ (872,865)-B $ 8,016,503
985,000 -D
Other liabilities 550,246 123,691 (84,226)-B 589,711
__________ __________ __________ ___________
7,581,749 996,556 27,909 8,606,214
Shareholder's equity 1,449,621 215,361 80,000 -A 1,529,621
(215,361)-B
__________ __________ __________ ___________
$9,031,370 $1,211,917 $ (107,452) $10,135,835
========== ========== ========== ===========
<FN>
(Amounts in thousands)
*Assuming the acquisition had been consummated on December 31, 1993.
See notes on Page F-3.
</TABLE>
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<TABLE>
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PRO FORMA FINANCIAL INFORMATION
TRANSAMERICA FINANCE CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED INCOME STATEMENT*
Year ended December 31, 1993
(Unaudited)
<CAPTION>
Transamerica Container
Finance Rental
Corporation Businesses
Historical Historical Pro forma Pro forma
Amounts Amounts Adjustments Consolidated
<S> <C> <C> <C> <C>
REVENUES
Finance charges $ 929,464 $ 929,464
Leasing revenues 388,327 $250,172 638,499
Other 74,335 74,335
__________ ________ __________
1,392,126 250,172 1,642,298
EXPENSES
Interest and debt expense 414,556 55,168 $ 53,559 -D 468,115
(55,168)-D
Depreciation on equipment held
for lease 102,538 67,116 30,576 -C 200,230
Salaries and other operating
expenses 512,652 109,450 622,102
Other 144,142 5,310 (5,310)-F 144,142
__________ ________ ________ __________
1,173,888 237,044 23,657 1,434,589
__________ ________ ________ __________
Income before income taxes 218,238 13,128 (23,657) 207,709
Income taxes 95,357 13,571 (17,783)-E 91,145
__________ ________ ________ __________
Income before extraordinary item $ 122,881 $ (443) $ (5,874) $ 116,564
========== ======== ======== ==========
<FN>
(Amounts in thousands)
*Assuming the acquisition had been consummated on January 1, 1993.
See notes on Page F-3.
</TABLE>
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Page F-3
PRO FORMA FINANCIAL INFORMATION
TRANSAMERICA FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO PRO FORMA FINANCIAL INFORMATION
December 31, 1993
(Unaudited)
Note A - Basis of Presentation
The pro forma financial information was prepared using the Container
Rental Businesses balance sheet as of October 31, 1993 and income
statement for the year ended October 31, 1993 converted at an
exchange rate of 1.0 pound sterling = $1.475. The income statement
was prepared by combining the interim period results for the six
month periods ended April 30, 1993 and October 31, 1993.
The following adjustments have been made to convert the Container
Rental Businesses financial statements, which are prepared in
conformity with United Kingdom standard accounting practices, to a
basis in conformity with accounting principles generally accepted in
the United States:
October 31, 1993 balance sheet:
Goodwill $195,299
========
Deferred income tax liability $ 84,226
========
Year ended October 31, 1993 income statement:
Foreign currency translation expense $ 2,212
========
Goodwill amortization $ 5,310
========
Deferred income tax provision $ 13,571
========
(Amounts in thousands)
The following summarizes the total purchase price:
Cash purchase price $1,065,000
==========
Cash purchase price obtained through:
Issuance of notes payable $ 985,000
Capital contribution from
Transamerica Corporation 80,000
__________
$1,065,000
==========
(Amounts in thousands)
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PRO FORMA FINANCIAL INFORMATION
TRANSAMERICA FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO PRO FORMA FINANCIAL INFORMATION (Continued)
December 31, 1993
(Unaudited)
Note A - Basis of Presentation (Continued)
Under purchase accounting, the assets purchased and liabilities
assumed in the transaction, as described in item 2, are required to
be adjusted to estimated fair values based upon an allocation of the
purchase price. For the purposes of preparing the December 31, 1993
pro forma balance sheet, the assets of the Container Rental
Businesses as of October 31, 1993 were valued based on the
information obtained during due diligence conducted by Transamerica
prior to execution of the Asset Purchase Agreement. The Container
Rental Businesses assets acquired and liabilities assumed will be
recorded based upon fair values as of March 15, 1994, the actual date
of acquisition.
Note B - Allocation of Purchase Price
The purchase price has been allocated as described in the table
below:
Increase (decrease) to the Container
Rental Businesses net asset value at
October 31, 1993 as a result of
estimated fair value adjustments:
Equipment held for lease $ 104,083
Other assets (16,236)
__________
Total estimated fair value
adjustments 87,847
Net assets of Container Rental
Businesses at October 31, 1993 215,361
Elimination of goodwill not acquired (195,299)
Elimination of notes payable not assumed 872,865
Elimination of deferred taxes not assumed 84,226
__________
$1,065,000
==========
(Amounts in thousands)
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PRO FORMA FINANCIAL INFORMATION
TRANSAMERICA FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO PRO FORMA FINANCIAL INFORMATION (Continued)
December 31, 1993
(Unaudited)
Note C - Equipment Held for Lease
Equipment held for lease has been adjusted to reflect the allocation
of the purchase price not otherwise allocated to the fair value of
nonlease assets. Depreciation expense has been adjusted to reflect
depreciation of the allocated balance using the methodology followed
by Transamerica Finance Corporation.
Note D - Notes Payable
Notes payable have been adjusted to eliminate the Container Rental
Businesses notes payable not assumed and to reflect the debt to be
issued by Transamerica Finance Corporation in connection with the
acquisition. Interest expense has been adjusted to reflect current
interest rates on the related Transamerica Finance Corporation notes.
Note E - Income Tax Expense
Income taxes have been calculated based on the effective income tax
rate for Transamerica Finance Corporation's leasing operations.
Note F - Goodwill Amortization
The Container Rental Businesses financial statements include
goodwill amortization. The goodwill was not included in the assets
acquired and accordingly the associated expense has been eliminated.
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(c) Exhibits
EX-2 Asset Purchase Agreement dated as of February 13, 1994
between Transamerica Container Acquisition Corporation
and Tiphook plc and certain of its affiliated companies
(incorporated by reference to Exhibit EX-2 of the
Registrant's Annual Report on Form 10-K (File
No. 1-6798) for the year ended December 31, 1993).
EX-2.1 Amendment and Supplement to Asset Purchase Agreement
dated as of March 15, 1994 between Transamerica Container
Acquisition Corporation and Tiphook plc and certain of
its affiliated companies (incorporated by reference to
Exhibit EX-2.1 of the Registrant's Annual Report on
Form 10-K (File No. 1-6798) for the year ended
December 31, 1993).
EX-23 Consent of Touche Ross & Co. to the incorporation by
reference of their report dated February 14, 1994
(March 23, 1994 as to certain post balance sheet events)
on the Tiphook plc Container Rental Businesses financial
statements for the year ended April 30, 1993 in the
Registrant's Registration Statement on Form S-3 (File
Nos. 33-40236 and 33-49763).
EX-28.1 Tiphook plc Container Rental Businesses audited financial
statements for the year ended April 30, 1993
(incorporated by reference to Exhibit EX-28.1 of the
Registrant's Form SE dated March 23, 1994).
EX-28.2 Tiphook plc Container Rental Businesses unaudited
financial statements as of October 31, 1993 and for the
six month periods ended October 31, 1993 and 1992
(incorporated by reference to Exhibit EX-28.2 of the
Registrant's Form SE dated March 23, 1994).
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
TRANSAMERICA FINANCE CORPORATION
(Registrant)
David H. Hawkins
Senior Vice President and Treasurer
Date: March 24, 1994
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EXHIBIT EX-23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in Registration Statements Nos.
33-40236 and 33-49763 on Form S-3 of Transamerica Finance Corporation of our
report dated February 14, 1994 (March 23, 1994 as to certain post balance
sheet events) with respect to the combined financial statements of the Tiphook
plc Container Rental Businesses appearing in this Form 8-K of Transamerica
Finance Corporation.
TOUCHE ROSS & CO.
London, England
March 24, 1994
