0000099189-95-000041.txt : 19950810 0000099189-95-000041.hdr.sgml : 19950810 ACCESSION NUMBER: 0000099189-95-000041 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950809 SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: TRANSAMERICA CORP CENTRAL INDEX KEY: 0000099189 STANDARD INDUSTRIAL CLASSIFICATION: FINANCE SERVICES [6199] IRS NUMBER: 940932740 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-02964 FILM NUMBER: 95559779 BUSINESS ADDRESS: STREET 1: 600 MONTGOMERY ST CITY: SAN FRANCISCO STATE: CA ZIP: 94111 BUSINESS PHONE: 4159834000 10-Q 1 Page 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 __________________ FORM 10-Q ( X ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarterly Period Ended June 30, 1995 Commission File Number 1-2964 __________________ TRANSAMERICA CORPORATION (Exact name of registrant as specified in its charter) Delaware 94-0932740 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 600 Montgomery Street San Francisco, California 94111 (Address of principal executive offices) (Zip Code) (4l5) 983-4000 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Number of shares of Common Stock, $1 par value, outstanding as of close of business on July 31, 1995: 68,617,614 shares, after deducting 11,120,848 shares in treasury. Page 2 TRANSAMERICA CORPORATION FORM 10-Q Part I. Financial Information Item 1. Financial Statements. The following unaudited consolidated financial statements of Transamerica Corporation and Subsidiaries, for the periods ended June 30, 1995 and 1994, do not include complete financial information and should be read in conjunction with the Consolidated Financial Statements filed with the Commission in Transamerica's Annual Report on Form 10-K for the year ended December 31, 1994. The financial information presented in the financial statements included in this report reflects all adjustments, consisting only of normal recurring accruals, which are, in the opinion of management, necessary for a fair statement of results for the interim periods presented. Results for the six months are not necessarily indicative of the results for the entire year for most of the Corporation's businesses. On March 31, 1995, Transamerica acquired a portfolio of approximately 40,000 home equity loans from ITT Consumer Financial Corporation (ITT) for $1,029.3 million in cash. For a discussion of this transaction see page 8 of this document. * * * * * The consolidated ratios of earnings to fixed charges were computed by dividing income from continuing operations before fixed charges and income taxes by the fixed charges. Fixed charges consist of interest and debt expense and one-third of rent expense, which approximates the interest factor. Page 3 TRANSAMERICA CORPORATION AND SUBSIDIARIES _____________ CONSOLIDATED BALANCE SHEET Assets June 30, December 31, 1995 1994 Investments, principally of life insurance subsidiaries: Fixed maturities $24,607.4 $21,037.0 Equity securities 599.4 427.2 Mortgage loans and real estate 448.7 455.5 Loans to life insurance policyholders 417.6 412.9 Short-term investments 159.5 163.7 _________ _________ 26,232.6 22,496.3 Finance receivables 8,326.9 7,426.1 Less unearned fees ($277.5 in 1995 and $248.2 in 1994) and allowance for losses 525.6 455.2 _________ _________ 7,801.3 6,970.9 Cash and cash equivalents 119.3 64.3 Trade and other accounts receivable 2,848.3 2,610.3 Property and equipment, less accumulated depreciation of $1,046.6 in 1995 and $974.9 in 1994: Land, buildings and equipment 379.9 360.7 Equipment held for lease 2,776.5 2,606.6 Deferred policy acquisition costs 2,024.3 2,480.5 Separate account assets 1,960.0 1,666.5 Goodwill, less accumulated amortization of $124.7 in 1995 and $123.2 in 1994 409.4 443.7 Other assets 796.8 694.0 _________ _________ $45,348.4 $40,393.8 ========= ========= (Amounts in millions) Page 4 TRANSAMERICA CORPORATION AND SUBSIDIARIES _________________ CONSOLIDATED BALANCE SHEET (Continued) Liabilities and Shareholders' Equity June 30, December 31, 1995 1994 Life insurance policy liabilities $26,176.9 $24,731.7 Notes and loans payable, principally of finance subsidiaries, of which $1,104 in 1995 and $1,684 in 1994 matures within one year 10,253.0 9,173.1 Accounts payable and other liabilities 1,991.2 1,627.5 Income taxes 829.6 259.2 Separate account liabilities 1,960.0 1,666.5 Minority interest in preferred securities of affiliate 200.0 200.0 Shareholders' equity: Preferred Stock ($100 par value): Authorized--1,200,000 shares; issuable in series, cumulative Outstanding--Dutch Auction Rate Trans- ferable Securities, 2,250 shares, at liquidation preference of $100,000 per share, weighted average dividend rate of 4.61% in 1995 and 3.58% in 1994 225.0 225.0 Outstanding--Series D, 180,091 shares in 1995 and 181,642 shares in 1994, at liquidation preference of $500 per share, cumulative dividend rate of 8.5% 90.1 90.8 Preference Stock (without par value)-- 5,000,000 shares authorized; none outstanding Common Stock ($1 par value): Authorized--150,000,000 shares Outstanding--68,749,158 shares in 1995 and 69,395,099 shares in 1994, after deducting 10,989,304 shares and 10,343,363 shares in treasury 68.7 69.4 Additional paid-in capital 48.7 96.5 Retained earnings 2,693.4 2,557.4 Net unrealized gain (loss) from investments marked to fair value 840.9 (265.1) Foreign currency translation adjustments (29.1) (38.2) _________ _________ 3,937.7 2,735.8 _________ _________ $45,348.4 $40,393.8 ========= ========= (Amounts in millions except for share data) Page 5 TRANSAMERICA CORPORATION AND SUBSIDIARIES _______________ CONSOLIDATED STATEMENT OF INCOME
Six months ended Three months ended June 30, June 30, 1995 1994 1995 1994 REVENUES Life insurance premiums and related income $ 930.6 $ 739.5 $ 505.1 $ 409.0 Investment income 975.2 864.0 495.5 432.0 Finance charges and other fees 571.5 508.0 301.4 261.7 Leasing revenues 343.0 278.2 174.0 164.6 Real estate and tax service revenues 93.6 149.3 50.6 67.1 Gain on investment transactions 13.3 7.4 10.2 4.8 Other 74.3 52.0 44.2 23.8 ________ ________ ________ ________ 3,001.5 2,598.4 1,581.0 1,363.0 EXPENSES Life insurance benefits 1,415.1 1,169.9 756.0 623.6 Life insurance underwriting, acquisition and other expenses 279.8 256.7 134.1 125.7 Leasing operating and maintenance costs 179.3 144.7 90.3 86.9 Interest and debt expense 354.1 265.1 185.8 142.5 Provision for losses on receivables 51.4 48.0 25.5 23.8 Other, including administrative and general expenses 371.8 378.6 190.0 190.3 ________ ________ ________ ________ 2,651.5 2,263.0 1,381.7 1,192.8 ________ ________ ________ ________ 350.0 335.4 199.3 170.2 Income taxes 135.9 126.0 81.5 64.5 ________ ________ ________ ________ Income from continuing operations 214.1 209.4 117.8 105.7 Loss from discontinued operations (0.7) ________ ________ ________ ________ Net income $ 214.1 $ 208.7 $ 117.8 $ 105.7 ======== ======== ======== ======== Earnings per share of common stock (based on weighted average number of shares outstanding of 69,146,000 in 1995 and 74,984,000 in 1994 after deduction of preferred dividends): Income from continuing operations before investment transactions $2.84 $2.57 $1.54 $1.30 Gain on investment transactions 0.12 0.06 0.09 0.04 _____ _____ _____ _____ Income from continuing operations 2.96 2.63 1.63 1.34 Loss from discontinued operations (0.01) _____ _____ _____ _____ Net income $2.96 $2.62 $1.63 $1.34 ===== ===== ===== ===== Dividends per share of common stock $1.00 $1.00 $0.50 $0.50 ===== ===== ===== ===== Ratio of earnings to fixed charges 1.95 2.19 (Dollar amounts in millions except for share data)
Page 6 TRANSAMERICA CORPORATION AND SUBSIDIARIES ____________ CONSOLIDATED STATEMENT OF RETAINED EARNINGS Six months ended June 30, 1995 1994 Balance at beginning of year $2,557.4 $2,297.9 Net income 214.1 208.7 Dividends on common stock (69.0) (72.9) Dividends on preferred stock (9.1) (11.9) ________ ________ Balance at end of period $2,693.4 $2,421.8 ======== ======== CONSOLIDATED STATEMENT OF CASH FLOWS Six months ended June 30, 1995 1994 OPERATING ACTIVITIES Income from continuing operations $ 214.1 $ 209.4 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 524.3 504.2 Amortization of policy acquisition costs 109.0 93.8 Policy acquisition costs deferred (201.0) (186.1) Depreciation and amortization 149.8 105.2 Other (67.6) (19.6) ________ ________ Net cash provided by continuing operations 728.6 706.9 INVESTING ACTIVITIES Finance receivables originated (9,166.7) (8,455.5) Finance receivables collected or sold 9,155.4 8,295.4 Purchase of investments (2,671.0) (3,986.5) Sales and maturities of investments 1,464.5 2,864.2 Purchase of the container division assets of Tiphook plc (1,061.4) Purchase of finance receivables and other assets from ITT Consumer Finance Corporation (1,029.3) Proceeds from disposition of discontinued operations 326.4 Cash transactions with discontinued operations 5.4 Other (261.8) (275.1) ________ ________ Net cash used by investing activities (2,508.9) (2,287.1) FINANCING ACTIVITIES Proceeds from debt financing 5,313.4 4,764.3 Payment of notes and loans (4,250.2) (3,728.2) Receipts from interest-sensitive policies credited to policyholder account balances 2,376.0 2,171.2 Return of policyholder balances on interest-sensitive policies (1,476.6) (1,180.8) Treasury stock purchases (71.3) (333.5) Other common stock transactions 22.9 4.4 Redemption of preferred stock (0.8) Dividends (78.1) (84.8) ________ ________ Net cash provided by financing activities 1,835.3 1,612.6 ________ ________ Increase in cash and cash equivalents 55.0 32.4 Cash and cash equivalents at beginning of year 64.3 92.7 ________ ________ Cash and cash equivalents at end of period $ 119.3 $ 125.1 ======== ======== (Amounts in millions) Page 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Consolidated Results Transamerica's income from continuing operations for the first half of 1995 increased $4.7 million (2%), compared to the first half of 1994. Income from continuing operations for the first half of 1995 included net after tax gains from investment transactions aggregating $8.6 million compared to $4.8 million in the first half of 1994. In the first half of 1995 Transamerica's income from continuing operations before investment transactions increased $900,000, less than 1%, due primarily to increases in life insurance, commercial lending and leasing operating results. Partially offsetting these improvements were declines in real estate services and asset management, and consumer lending operating results, and higher unallocated interest and expenses. Transamerica's income from continuing operations for the second quarter of 1995 increased $12.1 million (11%) compared to the second quarter of 1994. Income from continuing operations for the second quarter of 1995 included net after tax gains from investment transactions aggregating $6.6 million compared to $3.1 million in the second quarter of 1994. In the second quarter of 1995 Transamerica's income from continuing operations before investment transactions increased $8.6 million (8%) due primarily to increases in life insurance, leasing and commercial lending operating results. Partially offsetting these improvements were declines in real estate services and asset management, and consumer lending operating results, and higher unallocated interest and expenses. Gain (loss) on investment transactions, pretax, included in consolidated revenues, comprises (amounts in millions): Six months ended Three months ended June 30, June 30, 1995 1994 1995 1994 Net gain on sale of investments $22.6 $23.3 $16.3 $10.4 Adjustment for impairment in value (6.7) (9.8) (2.7) (2.3) Accelerated amortization of deferred policy acquisition costs (2.6) (6.1) (3.4) (3.3) _____ _____ _____ _____ $13.3 $ 7.4 $10.2 $ 4.8 ===== ===== ===== ===== The amortization of deferred policy acquisition costs is adjusted due to losses or gains realized on the sale of certain investments. The adjustment to the amortization of deferred policy acquisition costs is included in investment transactions as an offset to the related gains or losses. Investment transactions also reflected downward adjustments primarily for impairment in the value of certain nonperforming fixed maturity investments, mortgage loans, real estate investments and real estate acquired through foreclosure. Page 8 Revenues and Income by Line of Business REVENUES AND INCOME BY LINE OF BUSINESS
Six months ended June 30, Second quarter Revenues Income Income 1995 1994 1995 1994 1995 1994 (Amounts in millions) Consumer lending $ 375.7 $ 338.4 $ 40.6 $ 45.7 $ 22.9 $ 24.3 Commercial lending 217.7 185.0 33.0 25.4 15.0 14.0 Leasing 357.8 285.2 35.1 28.7 18.8 15.7 Amortization of goodwill (6.5) (6.5) (3.2) (3.2) ________ ________ ______ ______ ______ ______ Finance 951.2 808.6 102.2 93.3 53.5 50.8 Life insurance 1,899.7 1,606.4 136.1 121.9 73.3 63.0 Real estate services and asset management 146.6 185.5 15.7 42.1 11.8 16.7 Amortization of goodwill (0.3) (0.9) (0.1) (0.5) ________ ________ ______ ______ ______ ______ Real estate services and asset management 146.6 185.5 15.4 41.2 11.7 16.2 Unallocated: Interest and other expenses (47.2) (44.8) (25.3) (23.7) Investment trans- actions 13.5 (2.1) 7.6 (2.2) 4.6 (0.6) ________ ________ ______ ______ ______ ______ Unallocated investment transactions, interest and other expenses 13.5 (2.1) (39.6) (47.0) (20.7) (24.3) Consolidation eliminations (9.5) ________ ________ ______ ______ ______ ______ Total revenues and income from continuing operations $3,001.5 $2,598.4 $214.1 $209.4 $117.8 $105.7 ======== ======== ====== ====== ====== ======
Consumer Lending On March 31, 1995, the consumer lending operation purchased from ITT net consumer finance receivables of $1,011 million with an estimated fair value of $955 million and repossessed assets with an estimated fair value of $28.7 million for $1,029.3 million in cash. The purchased receivables were all real estate secured, of which 14% were located in California. The $109.1 million excess of the cash purchase price over the estimated fair value of the Page 9 acquired tangible assets (net of assumed liabilities of $11 million associated with the portfolio) was included in other assets as customer renewal rights. The consumer lending operation did not assume any borrowings, tax liabilities or contingent liabilities of ITT. The purchase price has been allocated to the assets acquired based on the best information currently available as to the fair value of those assets. Pending completion of review the purchase price allocation may be revised. Consumer lending net income for the first half and second quarter of 1995 was $40.5 million and $22.9 million compared to $45.6 million and $24.2 million for the comparable periods of 1994. Consumer lending income, before the amortization of goodwill, for the first half and second quarter of 1995, decreased $5.1 million (11%) and $1.4 million (6%) from the first half and second quarter of 1994. Results include the effects of the acquisition from ITT. The declines were mainly due to reduced fee income and an increased provision for losses on receivables, partially offset by earnings from the additional receivables acquired from ITT. In 1994, increased competition (principally in California) produced a high level of refinancing activity. Consequently, prepayment fee income was greater in the second quarter and first half of 1994 in comparison to the second quarter and first half of 1995. In response to the competition, the company introduced lower rates in 1994 which produced a higher level of customer renewals and related fee income in 1994 but a lower level of interest income in 1995. Revenues increased $37.3 million (11%) and $28.8 million (16%) in the first half and second quarter of 1995 compared to 1994's first half and second quarter mainly due to the effects of the ITT acquisition. Higher interest income resulting from higher average finance receivables outstanding, which more than offset the effects of lower rates and fee income, also contributed to the 1995 revenue increases. Interest expense increased $33.8 million (28%) and $24.1 million (40%) in the first half and second quarter of 1995 over the comparable 1994 periods as a result of the higher levels of finance receivables outstanding and an increase in short-term interest rates. The provision for losses on receivables increased $5.3 million (14%) and $1.8 million (9%) in the first half and second quarter of 1995 over the comparable 1994 periods due to increases in credit losses that more than offset the effects of declines in receivable growth excluding the ITT acquisition. Credit losses, net of recoveries, on an annualized basis as a percentage of average consumer finance receivables outstanding, net of unearned finance charges, were 1.76% and 1.71% (1.95% and 2.08% excluding the effects of the ITT acquisition on the average receivables outstanding) for the first half and second quarter of 1995 compared to 1.84% and 1.75% for the comparable periods of 1994. Consumer lending receivables grew 23% in the first half of 1995 due principally to the portfolio purchased from ITT. Excluding the loans acquired from ITT, receivable growth was 1%. Net consumer finance receivables outstanding at June 30, 1995, including the receivables purchased from ITT, included $4.3 billion of real estate secured loans, principally first and second mortgages secured by residential properties, of which 38% are located in California. Real estate loans originated in the second quarter of 1995 were $236.7 million compared to $526.1 million in the second quarter of 1994, due to a decline in renewal volume (which was caused in part by a return to higher rates in 1995) and increased competition. Page 10 Delinquent finance receivables, which are defined as receivables contractually past due 60 days or more, were $197.4 million (3.71% of finance receivables outstanding) at June 30, 1995 compared to $201.1 million (3.73% of finance receivables outstanding) at March 31, 1995 and $90.2 million (2.08% of finance receivables outstanding) at December 31, 1994. The $107.2 million increase from December 31, 1994 to June 30, 1995 includes $94.2 million relating to the ITT portfolio. Excluding the effects of the ITT acquisition, delinquency at June 30, 1995 would have been approximately 2.35%. Management has established an allowance for losses equal to 3.37% of net consumer finance receivables outstanding at June 30, 1995 compared to 2.83% at December 31, 1994; the increase in the percentage is due to the acquisition of the ITT portfolio. The higher delinquency in the ITT portfolio reflects the seller's previous emphasis on managing cash collections on a recency of payments basis rather than emphasizing improvements in collections on a contractual basis. When foreclosure proceedings begin on an account secured with real estate, 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 $248.1 million at June 30, 1995, of which 71% pertains to California, compared to $226.1 million at December 31, 1994, of which 79% pertained to California. The $22 million increase includes $21.6 million relating to the ITT portfolio, of which 38% pertains to California. Because future improvements may be impacted by factors such as economic conditions and the state of the real estate market, particularly in California, the extent and timing of any change in the trend of foreclosures and repossessed assets remains uncertain. Commercial Lending Commercial lending net income for the first half and second quarter of 1995 was $27.6 million and $12.3 million compared to $20 million and $11.3 million for the comparable periods of 1994. Income, before the amortization of goodwill, for the first half and second quarter of 1995 increased $7.6 million (30%) and $1 million (7%) over 1994's first half and second quarter. The first half increase included a $2.8 million after tax gain from the sale of a portfolio of consumer rediscount loans in the first quarter of 1995. The increases for the first half and second quarter of 1995 resulted mainly from increased margins. Margins improved as a result of the greater spread between the indices at which the commercial lending operation loaned to customers and the indices at which funds were borrowed and higher average net receivables in the inventory finance group. Lower operating expenses and a lower provision for losses also contributed to higher operating results. Revenues in the first half and second quarter of 1995 increased $32.7 million (18%) and $11.7 million (12%) over the corresponding periods of 1994 mainly due to a higher average portfolio yield attributable to higher interest rates. Interest expense increased $24.3 million (46%) and $11.1 million (39%) in the first half and second quarter of 1995 over the comparable 1994 periods due Page 11 to a higher average interest rate on borrowings. Operating expenses declined $1.5 million (2%) and $300,000 (1%) mainly as a result of the elimination of expenses incurred in the management of the rent-to-own receivables portfolio which was sold, at no gain or loss, in January 1995. The provision for losses on receivables declined $1.9 million (18%) and $100,000 (2%) in the first half and second quarter principally due to the sale of the consumer rediscount loan portfolio in the first quarter of 1995. Credit losses, net of recoveries, on an annualized basis as a percentage of average commercial finance receivables outstanding, net of unearned finance charges, were 0.34% and negative 0.03% for the first half and second quarter of 1995 compared to 0.26% and 0.60% for the comparable periods of 1994. During the second quarter of 1995, recoveries on previously recorded losses exceeded credit losses. Net commercial finance receivables outstanding decreased $74.8 million (2%) from December 31, 1994. The lower net receivables reflect the February 1995 sale of the consumer rediscount portfolio comprising $118 million of net outstanding receivables, the securitization of an additional $100 million of insurance premium finance receivables increasing the eligible pool from $375 million to $475 million for a three year term, and the reclassification of $47.5 million in net receivables outstanding to assets held for sale, which is included in other assets on the consolidated balance sheet, resulting from the commercial lending operation's decision in March 1995 to exit its operations in Puerto Rico. These decreases were offset in part by receivable growth in inventory finance due to increased volume. Management has established an allowance for losses equal to 2.59% of net commercial finance receivables outstanding as of June 30, 1995 compared to 2.96% at December 31, 1994. This decrease is primarily the result of reclassifying the Puerto Rico receivables, which had a larger percentage reserve requirement, to assets held for sale. Delinquent receivables, which are defined as the instalment balance for inventory finance and business credit receivables and the receivables balance for all other receivables over 60 days past due, were $10.6 million (0.35% of receivables outstanding) at June 30, 1995 compared to $19.1 million (0.62% of receivables outstanding) at December 31, 1994. Delinquent receivables declined primarily due to the reclassification of the Puerto Rico receivables portfolio to assets held for sale. Nonearning receivables, which are defined as balances from borrowers that are over 90 days delinquent or at such earlier time as full collectibility becomes doubtful, were $19.6 million (0.65% of receivables outstanding) at June 30, 1995 compared to $23.3 million (0.75% of receivables outstanding) at December 31, 1994. Nonearning receivables declined primarily due to the reclassification of the Puerto Rico receivables portfolio to assets held for sale. Assets held for sale as of June 30, 1995 totaled $24.8 million net of a $45.3 million valuation allowance, and consisted of Puerto Rico assets of $53.2 million, other assets of $11.1 million and rent-to-own receivables of $5.8 million. Assets held for sale at December 31, 1994 totaled $10.9 million, net of a $65.1 million valuation allowance, and consisted of rent-to- own finance receivables of $72.4 million and other assets of $3.6 million. Of the finance receivables held for sale at June 30, 1995, $6.2 million were classified as delinquent and $4.6 million were classified as nonearning compared to $24.5 million classified as both delinquent and nonearning at December 31, 1994. Page 12 Leasing Leasing net income for the first half and second quarter of 1995 was $34.1 million and $18.3 million compared to $27.7 million and $15.2 million for the first half and second quarter of 1994. Leasing income, before the amortization of goodwill, for the first half and second quarter of 1995, increased $6.4 million (22%) and $3.1 million (19%) over the first half and second quarter of 1994 mainly due to more on hire standard, tank and refrigerated containers and European trailers. In addition, higher gains were experienced on the sale of equipment and increased earnings in the finance lease business due to a larger lease portfolio. Partially offsetting these increases were lower earnings in the rail trailer business which experienced a downturn in utilization. Earnings also benefited from a $1.8 million after tax settlement of an outstanding state tax issue. Revenues for the first half and second quarter of 1995 increased $72.6 million (26%) and $13.6 million (8%) over the corresponding 1994 periods. The increases were primarily due to a larger standard and tank container fleet, principally as a result of the acquisition of the container division assets of Tiphook plc in March 1994 and more on hire standard, tank and refrigerated containers and European trailers. Partially offsetting these increases were lower revenues in the rail trailer business. Expenses increased $62.1 million (26%) in the first half of 1995 over 1994's first half mainly due to higher ownership and operating costs resulting from the acquisition in March 1994 of the Tiphook plc container and tank fleet. Expenses increased $8.9 million (6%) in the second quarter of 1995 over 1994's second quarter mainly due to ownership costs associated with a larger fleet than in the second quarter of 1994 and a higher effective interest rate, offset in part by lower operating and administrative expenses. The combined utilization of standard containers, refrigerated containers, domestic containers, tank containers and chassis averaged 85% for the first half and 86% for the second quarter of 1995 compared to 81% for the first half and 80% for the second quarter of 1994. Rail trailer utilization was 75% and 72% for the first half and second quarter of 1995 compared to 92% and 94% for the first half and second quarter of 1994. European trailer utilization was 96% for the first half and 95% for the second quarter of 1995 compared to 96% for both the first half and second quarter of 1994. Life Insurance Net income for the first half and second quarter of 1995 increased $14.2 million (12%) and $10.3 million (16%) over the corresponding periods of 1994. Net income included net after tax gains from investment transactions of $1 million and $2 million in the first half and second quarter of 1995 compared to $7.1 million and $3.8 million in the first half and second quarter of 1994. Income before investment transactions increased $20.3 million (18%) and $12.1 million (20%) in the first half and second quarter of 1995 over the comparable periods of 1994. The individual life insurance, structured settlements, living benefits, group pension, reinsurance and Canadian lines all experienced increases in income before investment transactions in the first half and second quarter of 1995 primarily as a result of stable interest Page 13 spreads on a growing asset base, increased charges on a larger base of interest-sensitive policies and favorable mortality experienced in the individual life insurance and reinsurance lines. Investment transactions for the first half and second quarter of 1995 included after tax gains of $7 million and $6 million realized on the sale of investments compared to $13.7 and $5.7 million for the corresponding periods of 1994. In the first half and second quarter of 1995 investment transactions related to interest-sensitive products resulted in gains, and the adjustment to the amortization of deferred policy acquisition costs reduced the gains by $1.7 million and $2.3 million after tax. In the first half and second quarter of 1994 investment transactions related to interest-sensitive products also resulted in gains, and the adjustment to the amortization of deferred policy acquisition costs reduced the gains by $4 million and $2.2 million after tax. Investment transactions in the first half and second quarter of 1995 also reflected downward adjustments of $4.3 million and $1.7 million after tax, primarily for impairment in the value of certain below investment grade fixed maturity investments. Such downward adjustment was $2.7 million in the first half of 1994. There was no such adjustment in the second quarter of 1994. Premiums and other income increased $191.1 million (26%) and $96.2 million (24%) for the first half and second quarter of 1995 compared to the corresponding periods in 1994 primarily due to higher sales of annuity products, an increase in reinsurance assumed and an increase in charges on interest-sensitive policies. Net investment income increased $102.3 million (12%) and $57.6 million (13%) for the first half and second quarter of 1995 compared to the corresponding periods in 1994, due primarily to increased investments. Net investment income for the first half and second quarter of 1995 included $1.5 million and $1.6 million related to the accelerated accretion of discounts on securities called or expected to be called compared to $5.6 million and $1 million for the corresponding periods of 1994. Life insurance benefit costs and expenses increased $268.2 million (19%) and $140.6 million (19%) for the first half and second quarter of 1995 compared to the corresponding periods in 1994 principally due to increases in benefits paid or provided attributable to the larger base of life insurance and annuities in force and higher amortization of deferred policy acquisition costs (exclusive of amortization adjustments related to investment gains or losses). Cash provided by operations for the first half and second quarter of 1995 increased $171.1 million (102%) and $97.7 million (137%) compared to the corresponding periods in 1994 principally due to the increased investment income from asset growth and the timing in the settlement of certain receivables and payables, including reinsurance receivables and payables. The life insurance operation continues to maintain a sufficiently liquid portfolio to cover its operating requirements, with remaining funds being invested in longer term securities. Real Estate Services and Asset Management Real estate services comprise Transamerica's real estate tax, real estate investments, property management and other services. Asset management Page 14 comprised Criterion Investment Management Company (CIMC) which on May 2, 1995 sold substantially all of its assets for gross proceeds of $60 million and in 1994, Transamerica Fund Management Company which was sold on December 21, 1994. The CIMC transaction resulted in a $4.8 million after tax gain. Real estate services and asset management net income for the first half and second quarter of 1995 was $15.4 million and $11.7 million compared to $41.2 million and $16.2 million for the comparable periods of 1994. Income before the amortization of goodwill for the first half and second quarter of 1995 decreased $26.4 million (63%) and $4.9 million (29%) from the comparable 1994 periods, primarily due to a significant decline in real estate tax service revenues caused by lower mortgage refinancings resulting from higher interest rates, offset in part by the $4.8 million gain on the sale of the assets of Criterion Investment Management Company. Revenues for the first half and second quarter of 1995 decreased $38.9 million (21%) and $200,000 (less than 1%) from the comparable 1994 periods as a result of decreased business at the real estate tax service operation and the disposition of substantially all the asset management assets, offset in part by a $23.8 million pretax gain on the sale of CIMC. Unallocated Investment Transactions, Interest and Expenses Unallocated investment transactions, interest and expenses, after related income taxes, for the first half and second quarter of 1995 resulted in a $7.4 million (16%) and $3.6 million (15%) lower expense than in the comparable periods of 1994. The decreases were principally due to gains on investment transactions aggregating $7.6 million and $4.6 million in the first half and second quarter of 1995 compared to investment losses of $2.2 million and $600,000 in the comparable periods of 1994. Excluding investment transactions, unallocated interest and expenses increased $2.4 million and $1.6 million in the first half and second quarter of 1995 over the comparable 1994 periods primarily due to increased interest expense as a result of higher outstanding debt. Corporate Liquidity and Capital Requirements 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. On March 31, 1995, Transamerica acquired a portfolio of approximately 40,000 home equity loans from ITT for $1,029.3 million in cash which was funded primarily with long-term debt with the remainder funded by short-term Page 15 bank financing. For a discussion of this transaction see page 8 of this document. On June 16, 1995, Transamerica announced that its board of directors had authorized additional purchases of up to 2 million shares of the company's common stock of which 243,900 had been purchased as of June 30, 1995. As a result of this, and other previously announced share purchase programs, during the first half and second quarter of 1995 Transamerica purchased 1,185,100 shares and 851,900 shares for $67.1 million and $50.1 million respectively. Investment Portfolio Transamerica, principally through its life insurance subsidiaries, maintains an investment portfolio aggregating $26.2 billion at June 30, 1995, of which $24.6 billion was invested in fixed maturities. At June 30, 1995, 96.4% of the fixed maturities was rated as "investment grade" with an additional 2.6% in the BB category or its equivalent. The amortized cost of fixed maturities was $23.4 billion resulting in a net unrealized gain position, before the effects of income taxes, of $1.2 billion at June 30, 1995. Fixed maturity investments are generally held for long-term investment and used primarily to support life insurance policy liabilities. The amortized cost of delinquent below investment grade securities, before provision for impairment in value, was $3.4 million at June 30, 1995 compared to $12.4 million at December 31, 1994. Adjustment for impairment in value has been made to reduce the amortized cost of certain fixed maturity investments by $82.2 million at June 30, 1995 and $92.1 million at December 31, 1994. The net unrealized gain/loss from investments marked to fair value, after related taxes and deferred acquisition cost adjustments, which is included in shareholders' equity improved $1,106 million during the first half of 1995 and deteriorated $855.9 million in the comparable 1994 period. In addition to the investments in fixed maturities, $448.7 million (1.7% of the investment portfolio), net of allowance for losses of $49.4 million, was invested in mortgage loans and real estate including $368.7 million in commercial mortgage loans, $400,000 in residential mortgage loans, $108.8 million in real estate investments and $20.2 million in foreclosed real estate. Problem loans, defined as restructured loans yielding less than 8% and delinquent loans, totaled $5.8 million at June 30, 1995. Problem loans decreased $1.9 million from December 31, 1994 to June 30, 1995. Allowances for possible losses of $49.4 million at June 30, 1995 and $49.7 million at December 31, 1994 have been established to cover possible losses from mortgage loans and real estate investments. Derivatives The operations of Transamerica are subject to risk of interest rate fluctuations to the extent that there is a difference between the cash flows from Transamerica's interest-earning assets and the cash flows related to its liabilities that mature or are repriced in specified periods. In the normal course of its operations, Transamerica hedges some of its interest rate risk with derivative financial instruments. These derivatives comprise primarily interest rate swap agreements, interest rate floor agreements, interest rate cap agreements, warrants and options to enter into interest rate swap agreements (swaptions). Page 16 Derivative financial instruments with a notional amount of $994.1 million at June 30, 1995 and $835.3 million at December 31, 1994 and designated as hedges of Transamerica's investment portfolio were outstanding. In addition, derivative financial instruments with a notional amount of $2,270.5 million at June 30, 1995 and $1,800.6 million at December 31, 1994 and designated as hedges of Transamerica's liabilities were outstanding. The increase in the notional amount outstanding of both asset and liability hedges in the six months ended June 30, 1995 reflects additional derivative contracts entered into due to growth in the balances of the underlying hedged instruments. 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 counterparties. At June 30, 1995, the derivative financial instruments discussed above were issued by financial institutions rated A or better by one or more of the major credit rating agencies. At June 30, 1995 the fair value of Transamerica's derivative financial instruments was a net benefit of $30.3 million comprising agreements with aggregate gross benefits of $71.1 million and agreements with aggregate gross obligations of $40.8 million. Part II. Other Information Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits. EX-10.1 Amendment No. 7 to the Registrant's 1985 Stock Option and Award Plan. EX-10.2 Form of Nonqualified Stock Option Agreement under the Registrant's 1995 Performance Stock Option Plan. EX-10.3 Form of Nonqualified Stock Option Agreement granted with Tandem Limited Stock Appreciation Right under the Registrant's 1995 Performance Stock Option Plan. EX-10.4 Form of Tandem Limited Stock Appreciation Right under the Registrant's 1995 Performance Stock Option Plan. EX-11 Statement Re: Computation of Per Share Earnings. EX-12 Computation of Ratio of Earnings to Fixed Charges. EX-27 Financial Data Schedule. (b) Reports on Form 8-K. None. Signatures Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. TRANSAMERICA CORPORATION (Registrant) Burton E. Broome Vice President and Controller (Chief Accounting Officer) Date: August 8, 1995 EX-10.1 2 EXHIBIT EX-10.1 Page 1 AMENDMENT NO. 7 TO THE 1985 STOCK OPTION AND AWARD PLAN OF TRANSAMERICA CORPORATION TRANSAMERICA CORPORATION, having adopted the 1985 Stock Option and Award Plan of Transamerica Corporation (the "Plan"), and having amended the Plan on six prior occasions, hereby again amends the Plan as follows: 1. Effective as of May 5, 1994, Section 1(o) is amended in its entirety to read as follows: (o) CHANGE OF CONTROL "Change of Control" shall mean the occurrence of any of the following: (a) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the 1934 Act) (a "Person") of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended) of 20% or more of either (1) the then-outstanding shares of common stock of the Company (the "Outstanding Company Common Stock") or (2) the combined voting power of the then-outstanding voting securities of the Company entitled to vote generally in the election of directors (the "Outstanding Company Voting Securities"); provided, however, that for purposes of this paragraph (a) the following acquisitions shall not constitute, or be deemed to cause, a Change of Control: (i) any increase in such percentage ownership of a Person to 20% or more resulting solely from any acquisition of shares directly from the Company or any acquisition of shares by the Company, provided, however, that any subsequent acquisitions of shares by such Person that would add, in the aggregate, 2% or more (measured as of the date of each such subsequent acquisition) to such Person's beneficial ownership of Outstanding Company Common Stock or Outstanding Company Voting Securities shall be deemed to constitute a Change of Control, (ii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or (iii) any acquisition by any corporation pursuant to a transaction which complies with clauses (1), (2) and (3) of paragraph (c) below; or (b) individuals who, as of the date hereof, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company's stockholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents, by or on behalf of a Person other than the Board; or Page 2 (c) consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company (a "Business Combination"), in each case, unless, following such Business Combination, (1) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the then Outstanding Company Common Stock and Outstanding Company Voting Securities, immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of, respectively, the then- outstanding shares of common stock and the combined voting power of the then-outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company's assets either directly or through one or more subsidiaries) in the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (2) no Person (excluding any corporation resulting from such Business Combination or any employee benefit plan (or related trust) of the Company or of such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 20% or more of, respectively, the then-outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then- outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination and (3) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or (d) approval by the stockholders of the Company of a complete liquidation or dissolution of the Company. 2. Effective as of May 5, 1994, Section 4(b)(9) is amended in its entirety to read as follows: (9) EFFECT OF A CHANGE OF CONTROL Notwithstanding the provisions of Section 4(b)(4), but subject to the provisions of Section 1(o) (regarding Optionees who have incurred a Termination of Employment), immediately upon the occurrence of a Change of Control, the right to exercise each Option then outstanding shall accrue as to 100% of the shares then subject to such Option. 3. Effective as of October 1, 1994, Section 4(c)(1) is amended in its entirety to read as follows: (1) PERSONS ELIGIBLE TO EXERCISE During the lifetime of the Optionee, only he or she may exercise an Option granted to him or her or any portion thereof. After the death of the Optionee, any exercisable portion of an Option may be exercised by the Optionee's designated beneficiary (if beneficiary designations are permitted by the Committee), the person empowered to do so under the Optionee's will, or the appropriate person under applicable law. The Company may require appropriate proof from any such other person of his or her right or power to exercise the Option or any portion thereof. Page 3 4. Effective as of October 1, 1994, Section 6(a) is amended in its entirety to read as follows: (a) OPTIONS AND AWARDS NOT TRANSFERABLE All rights with respect to an Option or Award shall be available during the lifetime of the Optionee or Grantee only to him or her. No Option or Award may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will, by the laws of descent and distribution, or if permitted by the Committee, to the limited extent provided in the rest of this Section 6(a). Pursuant to such procedures as the Committee may designate from time to time, an Optionee or Grantee may name a beneficiary or beneficiaries to whom any vested but unpaid Option or Award shall be transferred in the event of the death of the Optionee or Grantee. Each beneficiary designation shall revoke all prior designations and shall be effective only if given in a form and manner acceptable to the Committee. A beneficiary designation shall not be effective unless it is a bona fide bequest which is not made for consideration. 5. Effective as of May 5, 1994, Section 6(d) is amended in its entirety to read as follows: (d) EFFECT OF A CHANGE OF CONTROL Notwithstanding the provisions of Sections 5(d)(1) and 5(f), but subject to the provisions of Section 1(o) (regarding Grantees who have incurred a Termination of Employment), immediately upon the occurrence of a Change of Control, each Award (or portion thereof) which is then outstanding but unvested, shall vest. IN WITNESS WHEREOF, Transamerica Corporation, by its duly authorized Chairman of its Management Development and Compensation Committee, and by its duly authorized officer, has executed this Amendment No. 7 on the date(s) indicated below. TRANSAMERICA CORPORATION Dated: _______________, 1995 By ________________________________ Peter V. Ueberroth, Chairman, Management Development and Compensation Committee Dated: ______________, 1995 And By ___________________________ Title: EX-10.2 3 EXHIBIT EX-10.2 Page 1 TRANSAMERICA CORPORATION NONQUALIFIED STOCK OPTION AGREEMENT Transamerica Corporation (the "Company") hereby grants you, [NAME] (the "Employee"), a nonqualified stock option under the Company's 1995 Performance Stock Option Plan (the "Plan"), to purchase shares of common stock of the Company ("Shares"). The date of this Agreement is [DATE] (the "Grant Date"). In general, the latest date this option is exercisable is [DATE] (the "Expiration Date"). However, as provided in Appendix A (attached hereto), this option may expire earlier than the Expiration Date. Subject to the provisions of Appendix A and of the Plan, the principal features of this option are as follows: Maximum Number of Shares Purchasable with this Option: [NUMBER] Purchase Price per Share: $[NUMBER] Scheduled Vesting Dates Number of Shares [DATE] [NUMBER] [DATE] [NUMBER] [DATE] [NUMBER] Event Triggering Maximum Time to Exercise Termination of Option After Triggering Event* Termination of Employment (except as shown below) 3 months Termination of Employment due to Disability 3 years Termination of Employment due to Early or Normal Retirement 5 years Death (prior to expiration of option) 3 years * However, in no event may this option be exercised after the Expiration Date (except in certain cases of the death of the Employee). Your signature below indicates your agreement and understanding that this option is subject to all of the terms and conditions contained in Appendix A and the Plan. For example, important additional information on vesting and termination of this option is contained in Paragraphs 4 through 7 of Appendix A. ACCORDINGLY, PLEASE BE SURE TO READ ALL OF APPENDIX A, WHICH CONTAINS THE SPECIFIC TERMS AND CONDITIONS OF THIS OPTION. TRANSAMERICA CORPORATION EMPLOYEE By Page 2 APPENDIX A TERMS AND CONDITIONS OF NONQUALIFIED STOCK OPTIONS 1. Grant of Option. The Company hereby grants to the Employee under 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 nonqualified 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 [NUMBER] Shares. The option granted hereby is not intended to be an Incentive Stock Option within the meaning of Section 422 of the Code. 2. Exercise Price. The purchase price per Share for this option (the "Exercise Price") shall be $[NUMBER]. 3. Number of Shares. The number and class of Shares specified in Paragraph 1 above, and/or the Exercise Price, are subject to appropriate adjustment in the event of any merger, reorganization, consolidation, recapitalization, separation, liquidation, stock dividend, split-up, Share combination, distribution or other change in the corporate structure of the Company affecting the Shares; provided, however, that the number of Shares subject to this option shall always be a whole number. Subject to any required action of the stockholders of the Company, if the Company is the surviving corporation in any merger or consolidation, this option (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 that are then subject to the option would have been entitled. 4. Vesting Schedule. This option is scheduled to become exercisable as to 33-1/3% of the shares subject to such option on the third anniversary date of the Grant Date, and as to an additional 33-1/3% on each succeeding anniversary date, until the right to exercise this option shall have accrued with respect to 100% of the Shares subject to this option. However, on any scheduled vesting date, vesting actually will occur only if the Employee is an Executive on such date. Notwithstanding the foregoing, in the event of the Employee's Termination of Employment due to Normal Retirement, Disability or death, (a) if the right to exercise any particular Shares would have vested within six (6) months after such Termination of Employment (had the Employee not incurred a Termination of Employment), then the right to exercise such Shares will vest on the date that such right otherwise would have vested, and (b) if the right to exercise any particular Shares would have vested more than six (6) months after such Termination of Employment (had the Employee not incurred a Termination of Employment), then the right to exercise a portion of such Shares will vest on the date that such right otherwise would have vested, as determined in the discretion of the Committee based on the time elapsed from the Grant Date to the Termination of Employment and the vesting date. 5. Change of Control. Notwithstanding any contrary provision of Paragraph 4 above, in the event a Change of Control occurs prior to the Employee's Termination of Employment, the right to exercise one hundred percent (100%) of the Shares subject to this option will vest on the date that the Change of Control occurs. 6. Termination of Option. In the event of the Employee's Termination of Employment for any reason other than Early or Normal Retirement, Disability or death, the Employee may, within three (3) months Page 3 after the date of such Termination, or prior to the Expiration Date, whichever shall first occur, exercise any vested but unexercised portion of this option. In the event of the Employee's Termination of Employment due to Disability, the Employee may, within three (3) years after the date of such Termination, or prior to the Expiration Date, whichever shall first occur, exercise any vested but unexercised portion of this option. In the event of the Employee's Termination of Employment due to Early or Normal Retirement, the Employee may, within five (5) years from the date of such Termination, or prior to the Expiration Date, whichever shall first occur, exercise any vested but unexercised portion of this option. 7. Death of Employee. In the event that the Employee dies prior to the expiration of this option in accordance with the provisions of Paragraph 6 above, the Employee's designated beneficiary or beneficiaries, or if no beneficiary survives the Employee, the administrator or executor of the Employee's estate, may, within three (3) years after the date of death, exercise any vested but unexercised portion of this option. Any such transferee must furnish the Company (a) written notice of his or her status as a transferee, (b) evidence satisfactory to the Company to establish the validity of the transfer of this option and compliance with any laws or regulations pertaining to such transfer, and (c) written acceptance of the terms and conditions of this option as set forth in this Agreement. 8. Persons Eligible to Exercise Option. This option shall be exercisable during the Employee's lifetime only by the Employee. This option is not transferable, except that the Employee may transfer this option (a) by a valid beneficiary designation made in a form and manner acceptable to the Committee, or (b) by will or the applicable laws of descent and distribution. 9. Exercise of Option. This 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 Secretary of the Company (or his or her designee), specifying the number of full Shares to be purchased and accompanied by full payment of the Exercise Price (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. 10. Suspension of Exercisability. If at any time the Company shall determine, in its discretion, that the listing, registration or qualification of the Shares 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, this 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. Page 4 11. No Rights of Stockholder. Neither the Employee (nor any beneficiary) shall be or have any of the rights or privileges of a stockholder of the Company in respect of any of the Shares issuable pursuant to the exercise of this 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 the Employee (or beneficiary). 12. No Effect on Employment. The Employee's employment with the Company and its Affiliates is on an at-will basis only. Accordingly, the terms of the Employee's employment with the Company and its Affiliates shall be determined from time to time by the Company or the Affiliate employing the Employee (as the case may be), and the Company or the Affiliate shall have the right, which is hereby expressly reserved, to terminate or change the terms of the employment of the Employee at any time for any reason whatsoever, with or without good cause. For purposes of this Agreement, the transfer of employment of the Employee between the Company and any one of its Affiliates (or between Affiliates) shall not be deemed a Termination of Employment. 13. 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. 14. Option is Not Transferable. Except as otherwise provided in Paragraphs 7 and 8 above, this option and the rights and privileges conferred hereby may not be transferred, pledged, assigned or otherwise 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, pledge, assign, hypothecate or otherwise dispose of this option, or of any right or privilege conferred hereby, or upon any attempted sale under any execution, attachment or similar process, this option and the rights and privileges conferred hereby immediately shall become null and void. 15. Maximum Term of Option. Notwithstanding any other provision of this Agreement except Paragraph 7 above 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 Date. 16. Binding Agreement. Subject to the limitation on the transferability of this 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. Conditions to Exercise. The Exercise Price for this option must be paid in the legal tender of the United States or, in the Committee's sole discretion, in Shares. Exercise of this option will not be permitted until satisfactory arrangements have been made for the payment of the appropriate amount of withholding taxes (as determined by the Company). 18. 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. Capitalized terms and phrases used and not defined in this Agreement shall have the meaning set forth in the Plan. Page 5 19. Committee Authority. The Committee shall have all discretion, power, and authority 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. All actions taken and all interpretations and determinations made by the Committee in good faith shall be final and binding upon the Employee, the Company and all other interested persons, and shall be given the maximum deference permitted by law. 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. 20. Captions. The captions provided herein are for convenience only and are not to serve as a basis for the interpretation or construction of this Agreement. 21. Agreement Severable. 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. o O o EX-10.3 4 EXHIBIT EX-10.3 Page 1 TRANSAMERICA CORPORATION NONQUALIFIED STOCK OPTION AGREEMENT Transamerica Corporation (the "Company") hereby grants you, [NAME] (the "Employee"), a nonqualified stock option under the Company's 1995 Performance Stock Option Plan (the "Plan"), to purchase shares of common stock of the Company ("Shares"). The date of this Agreement is [DATE] (the "Grant Date"). In general, the latest date this option is exercisable is [DATE] (the "Expiration Date"). However, as provided in Appendix A (attached hereto), this option may expire earlier than the Expiration Date. Subject to the provisions of Appendix A and of the Plan, the principal features of this option are as follows: Maximum Number of Shares Purchasable with this Option: [NUMBER] Purchase Price per Share: $[NUMBER] Scheduled Vesting Date: [DATE] Event Triggering Maximum Time to Exercise Termination of Option After Triggering Event* Termination of Employment (except as shown below) 3 months Termination of Employment due to Disability 3 years Termination of Employment due to Early or Normal Retirement 5 years Death (prior to expiration of option) 3 years Failure of Option to Vest None * However, in no event may this option be exercised after the Expiration Date (except in certain cases of the death of the Employee). Your signature below indicates your agreement and understanding that this option is subject to all of the terms and conditions contained in Appendix A and the Plan. For example, important additional information on vesting and termination of this option is contained in Paragraphs 4 through 6 of Appendix A. ACCORDINGLY, PLEASE BE SURE TO READ ALL OF APPENDIX A, WHICH CONTAINS THE SPECIFIC TERMS AND CONDITIONS OF THIS OPTION. TRANSAMERICA CORPORATION EMPLOYEE By Page 2 APPENDIX A TERMS AND CONDITIONS OF NONQUALIFIED STOCK OPTIONS 1. Grant of Option. The Company hereby grants to the Employee under 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 nonqualified 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 [NUMBER] Shares. The option granted hereby is not intended to be an Incentive Stock Option within the meaning of Section 422 of the Code. 2. Exercise Price. The purchase price per Share for this option (the "Exercise Price") shall be $[NUMBER]. 3. Number of Shares. The number and class of Shares specified in Paragraph 1 above, and/or the Exercise Price, are subject to appropriate adjustment in the event of any merger, reorganization, consolidation, recapitalization, separation, liquidation, stock dividend, split-up, Share combination, distribution or other change in the corporate structure of the Company affecting the Shares; provided, however, that the number of Shares subject to this option shall always be a whole number. Subject to any required action of the stockholders of the Company, if the Company is the surviving corporation in any merger or consolidation, this option (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 that are then subject to the option would have been entitled. 4. Vesting Schedule. The right to exercise this option will vest as to 100% of the Shares specified in Paragraph 1 above on the tenth trading day (occurring within a period of thirty (30) consecutive trading days) on which the Fair Market Value of a Share is at least $[NUMBER], provided that vesting will occur only if both (a) such tenth trading day occurs on or before [DATE], and (b) the Employee is an Executive on each of such ten (10) trading days. Notwithstanding clause (b) of the preceding sentence, in the event of the Employee's Termination of Employment due to Normal Retirement, Disability or death, (i) if the right to exercise any particular Shares would have vested within six (6) months after such Termination of Employment (had the Employee not incurred a Termination of Employment), then the right to exercise such Shares will vest on the date that such right otherwise would have vested, and (ii) if the right to exercise any particular Shares would have vested more than six (6) months after such Termination of Employment (had the Employee not incurred a Termination of Employment), then the right to exercise a portion of such Shares will vest on the date that such right otherwise would have vested, as determined in the discretion of the Committee based on the time elapsed from the Grant Date to the Termination of Employment and the vesting date. 5. Termination of Option. In the event of the Employee's Termination of Employment for any reason other than Early or Normal Retirement, Disability or death, the Employee may, within three (3) months after the date of such Termination, or prior to the Expiration Date, whichever shall first occur, exercise any vested but unexercised portion of this option. In the event of the Employee's Termination of Employment due to Disability, the Employee may, within three (3) years after the date of such Termination, or prior to the Expiration Date, whichever shall first occur, exercise any vested but unexercised portion of this option. In the event of the Employee's Page 3 Termination of Employment due to Early or Normal Retirement, the Employee may, within five (5) years from the date of such Termination, or prior to the Expiration Date, whichever shall first occur, exercise any vested but unexercised portion of this option. In addition, this option shall terminate (a) on the first date on which the option no longer may become exercisable pursuant to Paragraph 4 above, or (b) upon exercise of the tandem limited stock appreciation right (the "TLSAR") granted with this option (but only to the extent provided in the following sentence). For each Share with respect to which the TLSAR is exercised, the right to exercise [NUMBER] of the Shares subject to this option shall immediately terminate, provided that the number of Shares which so terminate shall be rounded to the nearest whole number (or to such number as is appropriate to ensure that the total number of shares covered by this option does not exceed the number specified in Paragraph 1 above). 6. Death of Employee. In the event that the Employee dies prior to the expiration of this option in accordance with the provisions of Paragraph 5 above, the Employee's designated beneficiary, or if no beneficiary survives the Employee, the administrator or executor of the Employee's estate, may, within three (3) years after the date of death, exercise any vested but unexercised portion of the option. Any such transferee must furnish the Company (a) written notice of his or her status as a transferee, (b) evidence satisfactory to the Company to establish the validity of the transfer of this option and compliance with any laws or regulations pertaining to such transfer, and (c) written acceptance of the terms and conditions of this option as set forth in this Agreement. 7. Persons Eligible to Exercise Option. This option shall be exercisable during the Employee's lifetime only by the Employee. This option is not transferable, except that the Employee may transfer this option (a) by a valid beneficiary designation made in a form and manner acceptable to the Committee, or (b) by will or the applicable laws of descent and distribution. 8. Exercise of Option. This 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 Secretary of the Company (or his or her designee), specifying the number of full Shares to be purchased and accompanied by full payment of the Exercise Price (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. 9. Suspension of Exercisability. If at any time the Company shall determine, in its discretion, that the listing, registration or qualification of the Shares 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, this 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. Page 4 10. No Rights of Stockholder. Neither the Employee (nor any beneficiary) shall be or have any of the rights or privileges of a stockholder of the Company in respect of any of the Shares issuable pursuant to the exercise of this 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 the Employee (or beneficiary). 11. No Effect on Employment. The Employee's employment with the Company and its Affiliates is on an at-will basis only. Accordingly, the terms of the Employee's employment with the Company and its Affiliates shall be determined from time to time by the Company or the Affiliate employing the Employee (as the case may be), and the Company or the Affiliate shall have the right, which is hereby expressly reserved, to terminate or change the terms of the employment of the Employee at any time for any reason whatsoever, with or without good cause. For purposes of this Agreement, the transfer of employment of the Employee between the Company and any one of its Affiliates (or between Affiliates) shall not be deemed a Termination of Employment. 12. 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. 13. Option is Not Transferable. Except as otherwise provided in Paragraphs 6 and 7 above, this option and the rights and privileges conferred hereby may not be transferred, pledged, assigned or otherwise 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, pledge, assign, hypothecate or otherwise dispose of this option, or of any right or privilege conferred hereby, or upon any attempted sale under any execution, attachment or similar process, this option and the rights and privileges conferred hereby immediately shall become null and void. 14. Maximum Term of Option. Notwithstanding any other provision of this Agreement except Paragraph 6 above 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 Date. 15. Binding Agreement. Subject to the limitation on the transferability of this 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. 16. Conditions to Exercise. The Exercise Price for this option must be paid in the legal tender of the United States or, in the Committee's sole discretion, in Shares. Exercise of this option will not be permitted until satisfactory arrangements have been made for the payment of the appropriate amount of withholding taxes (as determined by the Company). 17. 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. Capitalized terms and phrases used and not defined in this Agreement shall have the meaning set forth in the Plan. Page 5 18. Committee Authority. The Committee shall have all discretion, power, and authority 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. All actions taken and all interpretations and determinations made by the Committee in good faith shall be final and binding upon the Employee, the Company and all other interested persons, and shall be given the maximum deference permitted by law. 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. 19. Captions. The captions provided herein are for convenience only and are not to serve as a basis for the interpretation or construction of this Agreement. 20. Agreement Severable. 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. o O o EX-10.4 5 EXHIBIT EX-10.4 Page 1 TRANSAMERICA CORPORATION TANDEM LIMITED STOCK APPRECIATION RIGHT AGREEMENT In connection with the grant under the Transamerica Corporation 1995 Performance Stock Option Plan (the "Plan") of a nonqualified stock option to purchase shares of common stock of Transamerica Corporation ("Shares") at a purchase price per Share of $[NUMBER] (the "Related Option"), Transamerica Corporation (the "Company") hereby grants you, [NAME] (the "Employee"), a tandem limited stock appreciation right (a "TLSAR") under the Plan, to surrender all or part of the unexercised portion of the Related Option in exchange for a payment from the Company pursuant to this TLSAR. The date of this Agreement is [DATE] (the "Grant Date"). In general, the latest date this TLSAR is exercisable is [DATE] (the "Expiration Date"). However, as provided in Appendix A (attached hereto), this TLSAR may expire earlier than the Expiration Date. Subject to the provisions of Appendix A and of the Plan, the principal features of this TLSAR are as follows: Number of Shares to Which this TLSAR Pertains: [NUMBER] Exercise Price per Share: $[NUMBER] Scheduled Vesting Date: The date on which a Change of Control occurs. Event Triggering Maximum Time to Exercise Termination of TLSAR After Triggering Event* Termination of Employment (except as shown below) 3 months Termination of Employment due to Disability 3 years Termination of Employment due to Early or Normal Retirement 5 years Death (prior to expiration of option) 3 years Change of Control 60 days Failure of the Related Option to Vest None Exercise of the Related Option None * However, in no event may this TLSAR be exercised after the Expiration Date (except in certain cases of the death of the Employee). Your signature below indicates your agreement and understanding that this TLSAR is subject to all of the terms and conditions contained in Appendix A and the Plan. For example, important additional information on vesting and termination of this TLSAR is contained in Paragraphs 4 through 6 of Appendix A. ACCORDINGLY, PLEASE BE SURE TO READ ALL OF APPENDIX A, WHICH CONTAINS THE SPECIFIC TERMS AND CONDITIONS OF THIS TLSAR. TRANSAMERICA CORPORATION EMPLOYEE By Page 2 APPENDIX A TERMS AND CONDITIONS OF TANDEM LIMITED STOCK APPRECIATION RIGHTS 1. Grant of TLSAR. The Company hereby grants to the Employee under the Plan, in connection with the grant of the Related Option, and 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 TLSAR pertaining to all or any part of an aggregate of [NUMBER] Shares, which TLSAR entitles the Employee to surrender, on the terms and conditions set forth in this Agreement and the Plan, all or part of the Related Option in exchange for a payment from the Company in the amount determined under Paragraph 9 below. 2. Exercise Price. The exercise price per Share for this TLSAR (the "Exercise Price") shall be $[NUMBER], which is equal to the Fair Market Value per Share on the Grant Date. 3. Number of Shares. The number and class of Shares specified in Paragraph 1 above, and/or the Exercise Price, are subject to appropriate adjustment in the event of any merger, reorganization, consolidation, recapitalization, separation, liquidation, stock dividend, split-up, Share combination, distribution or other change in the corporate structure of the Company affecting the Shares; provided, however, that the number of Shares subject to this TLSAR shall always be a whole number. Subject to any required action of the stockholders of the Company, if the Company is the surviving corporation in any merger or consolidation, this TLSAR (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 that are then subject to the TLSAR would have been entitled. 4. Vesting Schedule. The right to exercise this TLSAR will vest as to 100% of the Shares subject to the TLSAR upon the occurrence of a Change of Control, provided that (a) vesting will occur only if the Employee is an Executive on the date of the Change of Controls, and (b) if the Employee is a Section 16 Person, the right to exercise this TLSAR may not become vested until at least six (6) months after the Grant Date. Notwithstanding clause (b) of the preceding sentence, in the event of the Employee's Termination of Employment due to Normal Retirement, Disability or death, (i) if the right to exercise this TLSAR would have vested within six (6) months after such Termination of Employment (had the Employee not incurred a Termination of Employment), then the right to exercise this TLSAR will vest on the date that such right otherwise would have vested, and (ii) if the right to exercise this TLSAR would have vested more than six (6) months after such Termination of Employment (had the Employee not incurred a Termination of Employment), then the right to exercise this TLSAR will vest on the date that such right otherwise would have vested, as determined in the discretion of the Committee based on the time elapsed from the Grant Date to the Termination of Employment and the vesting date. 5. Termination of TLSAR. In the event of the Employee's Termination of Employment for any reason other than Early or Normal Retirement, Disability or death, the Employee may, within three (3) months after the date of such Termination, or prior to the Expiration Date, whichever shall first occur, exercise this TLSAR (if then vested). In the event of the Employee's Termination of Employment due to Disability, the Employee may, within three (3) years after the date of such Termination, or prior to the Expiration Date, whichever shall first occur, exercise this Page 3 TLSAR (if then vested). In the event of the Employee's Termination of Employment due to Early or Normal Retirement, the Employee may, within five (5) years from the date of such Termination, or prior to the Expiration Date, whichever shall first occur, exercise this TLSAR (if then vested). In addition, this TLSAR shall terminate on the first to occur of the following: (a) the first date on which the Related Option no longer may become exercisable, (b) the last day of the period of sixty (60) consecutive days which begins on the date of a Change of Control, or (c) upon exercise of the Related Option (but only to the extent provided in the following sentence). For each Share with respect to which the Related Option is exercised, the right to exercise [NUMBER] of the Shares subject to this TLSAR shall immediately terminate, provided that the number of Shares which so terminate shall be rounded to the nearest whole number (or to such number as is appropriate to ensure that the total number of shares covered by this TLSAR does not exceed the number specified in Paragraph 1 above). 6. Death of Employee. In the event that the Employee dies prior to the expiration of this TLSAR in accordance with the provisions of Paragraph 5 above, the Employee's designated beneficiary or beneficiaries, or if no beneficiary survives the Employee, the administrator or executor of the Employee's estate, nevertheless may, within three (3) years after the date of death, exercise any vested but unexercised portion of the TLSAR, but only to the extent that such right was transferred with respect to the Related Option. Any such transferee must furnish the Company (a) written notice of his or her status as a transferee of this TLSAR, (b) evidence satisfactory to the Company to establish the validity of the transfer of this TLSAR and compliance with any laws or regulations pertaining to such transfer, and (c) written acceptance of the terms and conditions of this TLSAR as set forth in this Agreement. 7. Persons Eligible to Exercise TLSAR. This TLSAR shall be exercisable during the Employee's lifetime only by the Employee. This TLSAR is not transferable, except that the Employee may transfer this TLSAR (a) by a valid beneficiary designation made in a form and manner acceptable to the Committee, or (b) by will or the applicable laws of descent and distribution, in which case this TLSAR shall be transferred to the same extent. Any such transfer shall be effective only if the Related Option also is transferred to the same transferee. 8. Notice of Exercise of TLSAR. This TLSAR may be exercised by the person then entitled to do so as to any portion of the TLSAR which may then be exercised by giving written notice of exercise to the Secretary of the Company (or his or her designee) specifying the number of full Shares with respect to which the TLSAR is to be exercised. 9. Payment of TLSAR Amount. Upon exercise of this TLSAR, the Employee shall be entitled to receive payment from the Company in an amount (the "TLSAR Amount") determined by multiplying: (a) The amount by which the Change of Control Value (as defined below) of a Share on the date of exercise exceeds the Exercise Price, times (b) The number of Shares with respect to which the TLSAR is exercised. Page 4 For this purpose, the "Change of Control Value" of a Share shall mean the greater of (i) the highest Fair Market Value of a Share during the period of 60 consecutive days which ends on the date of a Change of Control, or (ii) the highest price per Share paid in the transaction which gives rise to the Change of Control. 10. Form of Payment of TLSAR Amount. The TLSAR Amount shall be paid in cash, unless the Committee determines that such payment (or portion thereof) would cause a transaction which gives rise to the Change of Control to be ineligible for pooling of interests accounting under APB No. 16, which transaction (but for such payment) otherwise would have been eligible for such accounting treatment, in which case the Committee may determine that the TLSAR Amount shall be paid in Shares of equivalent value. Prior to any payment of the TLSAR Amount, the Company shall deduct or withhold, or require the Employee to remit to the Company, an amount sufficient to satisfy any withholding taxes required to be withheld with respect to the payment. 11. No Rights of Stockholder. Neither the Employee (nor any beneficiary) shall be or have any of the rights or privileges of a stockholder of the Company in respect of any of the Shares issuable pursuant to the exercise of this TLSAR, 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 the Employee (or beneficiary). 12. No Effect on Employment. The Employee's employment with the Company and its Affiliates is on an at-will basis only. Accordingly, the terms of the Employee's employment with the Company and its Affiliates shall be determined from time to time by the Company or the Affiliate employing the Employee (as the case may be), and the Company or the Affiliate shall have the right, which is hereby expressly reserved, to terminate or change the terms of the employment of the Employee at any time for any reason whatsoever, with or without good cause. For purposes of this Agreement, the transfer of employment of the Employee between the Company and any one of its Affiliates (or between Affiliates) shall not be deemed a Termination of Employment. 13. 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. 14. TLSAR is Not Transferable. Except as otherwise provided in Paragraphs 6 and 7 above, this TLSAR and the rights and privileges conferred hereby may not be transferred, pledged, assigned or otherwise 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, pledge, assign, hypothecate or otherwise dispose of this TLSAR, or of any right or privilege conferred hereby, or upon any attempted sale under any execution, attachment or similar process, this TLSAR and the rights and privileges conferred hereby immediately shall become null and void. 15. Maximum Term of TLSAR. Notwithstanding any other provision of this Agreement except Paragraph 6 above relating to the death of the Employee (in which case the TLSAR is exercisable to the extent set forth therein), this TLSAR is not exercisable after the Expiration Date. Page 5 16. Binding Agreement. 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. Conditions to Exercise. Exercise of this TLSAR will not be permitted until arrangements (satisfactory to the Company) have been made by the Employee for the payment of the amount of taxes required (as determined by the Company) to be withheld by reason of such exercise. 18. 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. Capitalized terms and phrases used and not defined in this Agreement shall have the meaning set forth in the Plan. 19. Committee Authority. The Committee shall have all discretion, power, and authority 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. All actions taken and all interpretations and determinations made by the Committee in good faith shall be final and binding upon the Employee, the Company and all other interested persons, and shall be given the maximum deference permitted by law. 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. 20. Captions. The captions provided herein are for convenience only and are not to serve as a basis for the interpretation or construction of this Agreement. 21. Agreement Severable. 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. o O o EX-11 6 EXHIBIT EX-11 STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS TRANSAMERICA CORPORATION Six months ended June 30, 1995 1994 (Dollar amounts in millions, except for share data) Primary Average shares outstanding 69.1 75.0 Net effect of dilutive stock options-- based on the treasury stock method using average market price 1.4* 1.4* ____ ____ TOTAL 70.5 76.4 ==== ==== Net income $214.1 $208.7 Preferred dividends (9.1) (11.9) ______ ______ Net income to common $205.0 $196.8 ====== ====== Per share amount $2.96 $2.62 ===== ===== Fully Diluted Average shares outstanding 69.1 75.0 Net effect of dilutive stock options-- based on the treasury stock method using the market price at quarter end if higher than the average market price for three months 1.8* 1.4* ____ ____ TOTAL 70.9 76.4 ==== ==== Net income $214.1 $208.7 Preferred dividends (9.1) (11.9) ______ ______ Net income to common $205.0 $196.8 ====== ====== Per share amount $2.96 $2.62 ===== ===== *Not included in per share calculation because effect is less than 3%. EX-12 7 EXHIBIT EX-12 TRANSAMERICA CORPORATION AND SUBSIDIARIES COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES Six Months Ended June 30, 1995 1994 (Dollar amounts in millions) Fixed charges: Interest and debt expense $354.1 $265.1 One-third of rental expense 12.7 15.6 ______ ______ Total $366.8 $280.7 ====== ====== Earnings: Consolidated income from continuing operations $214.1 $209.4 Provision for income taxes 135.9 126.0 Fixed charges 366.8 280.7 ______ ______ Total $716.8 $616.1 ====== ====== Ratio of earnings from continuing operations to fixed charges 1.95 2.19 ==== ==== EX-27 8 ART. 5 FDS FOR 2ND QUARTER 10-Q
5 1,000,000 6-MOS DEC-31-1995 JUN-30-1995 119 599 2,848 0 0 0 3,156 1,047 45,348 0 0 69 0 315 3,554 45,348 0 3,001 0 0 2,246 51 354 350 136 214 0 0 0 214 2.96 2.96