-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, VaharNSDaoO/j1V9vEzD8kOSBtJRdpFwfC+KXsnoFZT9mFwXlPEZn4zAzrIL87UQ er3o1c/35dggdxw06OsLBg== 0000950131-94-000603.txt : 19940510 0000950131-94-000603.hdr.sgml : 19940510 ACCESSION NUMBER: 0000950131-94-000603 CONFORMED SUBMISSION TYPE: SC 13E4 PUBLIC DOCUMENT COUNT: 12 FILED AS OF DATE: 19940509 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: TRANSAMERICA CORP CENTRAL INDEX KEY: 0000099189 STANDARD INDUSTRIAL CLASSIFICATION: 6199 IRS NUMBER: 940932740 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13E4 SEC ACT: 1934 Act SEC FILE NUMBER: 005-30191 FILM NUMBER: 94526631 BUSINESS ADDRESS: STREET 1: 600 MONTGOMERY ST CITY: SAN FRANCISCO STATE: CA ZIP: 94111 BUSINESS PHONE: 4159834000 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: TRANSAMERICA CORP CENTRAL INDEX KEY: 0000099189 STANDARD INDUSTRIAL CLASSIFICATION: 6199 IRS NUMBER: 940932740 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13E4 BUSINESS ADDRESS: STREET 1: 600 MONTGOMERY ST CITY: SAN FRANCISCO STATE: CA ZIP: 94111 BUSINESS PHONE: 4159834000 SC 13E4 1 SCHEDULE 13E-4 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 9, 1994 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------- SCHEDULE 13E-4 ISSUER TENDER OFFER STATEMENT (PURSUANT TO SECTION 13(E)(1) OF THE SECURITIES EXCHANGE ACT OF 1934) TRANSAMERICA CORPORATION (NAME OF ISSUER AND PERSON FILING STATEMENT) ---------------- COMMON STOCK, PAR VALUE $1.00 PER SHARE (TITLE OF CLASS OF SECURITIES) ---------------- 893485 10-2 (CUSIP NUMBER OF CLASS OF SECURITIES) ---------------- CHRISTOPHER M. MCLAIN SENIOR VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY TRANSAMERICA CORPORATION 600 MONTGOMERY STREET SAN FRANCISCO, CALIFORNIA 94111 (415) 983-4000 (NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF THE PERSON FILING STATEMENT) COPY TO: DANA MURPHY KETCHAM RICHARD V. SMITH ORRICK, HERRINGTON & SUTCLIFFE THE OLD FEDERAL RESERVE BANK BUILDING 400 SANSOME STREET SAN FRANCISCO, CALIFORNIA 94111 (415) 392-1122 MAY 9, 1994 (DATE TENDER OFFER FIRST PUBLISHED, SENT OR GIVEN TO SECURITY HOLDERS) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Transaction Valuation* Amount of Filing Fee - -------------------------------------------------------------------------------- $247,500,000 $49,500 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (*) Determined pursuant to Rule O-11(b)(1). Assumes the purchase of 4,500,000 shares at $55 per share. [_]Check box if any part of the fee is offset as provided by Rule O-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. Amount Previously Paid: Not applicable. Form or Registration No.:Not applicable. Filing Party: Not applicable. Date Filed: Not applicable. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ITEM 1. SECURITY AND ISSUER. (a) The name of the issuer is Transamerica Corporation, a Delaware corporation (the "Company"), that has its principal executive offices at 600 Montgomery Street, San Francisco, California 94111. The information set forth on page 1 and in "Certain Information Concerning the Company" in Section 10 of the Offer to Purchase (as defined below) is incorporated herein by reference. (b) This Schedule relates to the offer by the Company to purchase up to 4,500,000 outstanding shares of Common Stock, par value $1.00 per share (the "Shares") (including the associated preference stock purchase rights issued pursuant to the Rights Agreement, dated as of July 17, 1986, as amended, between the Company and First Chicago Trust Company of New York, as the Rights Agent), at a price not greater than $55 nor less than $48 per share, net to the seller in cash, all upon the terms and subject to the conditions set forth in the Offer to Purchase, dated May 9, 1994 (the "Offer to Purchase"), and related Letter of Transmittal, copies of which are attached hereto as Exhibits (a)(1) and (a)(2), respectively. The information set forth on pages 1 and 4, and in "Number of Shares; Proration" in Section 1, of the Offer to Purchase is incorporated herein by reference. (c) The information set forth in "Price Range of Shares" in Section 8 of the Offer to Purchase is incorporated herein by reference. (d) Not applicable. ITEM 2. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATIONS. (a) The information set forth under "Source and Amount of Funds" in Section 11 of the Offer to Purchase is incorporated herein by reference. (b) Not applicable. ITEM 3. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE ISSUER OR AFFILIATE. (a) to (j) The information set forth under "Purpose of the Offer; Certain Effects of the Offer" in Section 9 and "Certain Information Concerning the Company" in Section 10 of the Offer to Purchase is incorporated herein by reference. ITEM 4. INTEREST IN SECURITIES OF THE ISSUER. The information set forth under "Transactions and Agreements Concerning the Shares" in Section 12 of the Offer to Purchase is incorporated herein by reference. ITEM 5. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO THE ISSUER'S SECURITIES. The information set forth under "Transactions and Agreements Concerning the Shares" in Section 12 of the Offer to Purchase is incorporated herein by reference. ITEM 6. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED. The information set forth under "Fees and Expenses" in Section 15 of the Offer to Purchase is incorporated herein by reference. ITEM 7. FINANCIAL INFORMATION. (a) and (b) The information set forth under "Certain Information Concerning the Company" in Section 10 of the Offer to Purchase is incorporated herein by reference. ITEM 8. ADDITIONAL INFORMATION. (a) to (d) None or not applicable. (e) The information set forth in the Offer to Purchase and the Letter of Transmittal is incorporated herein by reference. ITEM 9. MATERIAL TO BE FILED AS EXHIBITS. (a)(1) Form of Offer to Purchase, dated May 9, 1994. (a)(2) Form of Letter of Transmittal, dated May 9, 1994, together with Guidelines for Certification of Taxpayer I.D. Number on Substitute Form W-9. (a)(3) Form of Memorandum and Election Form, dated May 9, 1994, to Participants in the Transamerica Corporation Employees Stock Savings Plan. (a)(4) Form of Letter to Stockholders from Frank C. Herringer, President and Chief Executive Officer of the Registrant, dated May 9, 1994. (a)(5) Form of Notice of Guaranteed Delivery. (a)(6) Form of Letter to Brokers, Dealers, Commercial Banks and Trust Companies, dated May 9, 1994. (a)(7) Form of Letter to Clients, dated May 9, 1994. (a)(8) Form of Summary Advertisement, dated May 9, 1994. (a)(9) Form of Press Release, dated May 9, 1994. (b) Not applicable. (c) None. (d) None. (e) Not applicable. (f) Not applicable. (g)(1) Pages 37 to 70 of the Registrant's Annual Report to Stockholders for the Year Ended December 31, 1993. (g)(2) Registrant's Quarterly Report on Form 10-Q for the Quarter Ended March 31, 1994 (other than the exhibits thereto).
2 SIGNATURE After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Transamerica Corporation /s/ Frank C. Herringer By __________________________________ Frank C. Herringer President and Chief Executive Officer Dated: May 6, 1994 3 INDEX TO EXHIBITS
EXHIBIT NUMBER DESCRIPTION ------- ----------- (a)(1) Form of Offer to Purchase, dated May 9, 1994. (a)(2) Form of Letter of Transmittal, dated May 9, 1994, together with Guidelines for Certification of Taxpayer I.D. Number on Substitute Form W-9. (a)(3) Form of Memorandum and Election Form, dated May 9, 1994, to Participants in the Transamerica Corporation Employees Stock Savings Plan. (a)(4) Form of Letter to Stockholders from Frank C. Herringer, President and Chief Executive Officer of the Registrant, dated May 9, 1994. (a)(5) Form of Notice of Guaranteed Delivery. (a)(6) Form of Letter to Brokers, Dealers, Commercial Banks and Trust Companies, dated May 9, 1994. (a)(7) Form of Letter to Clients, dated May 9, 1994. (a)(8) Form of Summary Advertisement, dated May 9, 1994. (a)(9) Form of Press Release, dated May 9, 1994. (g)(1) Pages 37 to 70 of the Registrant's Annual Report to Stockholders for the Year Ended December 31, 1993. (g)(2) Registrant's Quarterly Report on Form 10-Q for the Quarter Ended March 31, 1994 (other than the exhibits thereto).
EX-99.A1 2 OFFER TO PURCHASE Transamerica Corporation Offer to Purchase for Cash Up to 4,500,000 Shares of its Common Stock (Including the Associated Preference Stock Purchase Rights) At a Purchase Price Not Greater Than $55 Nor Less Than $48 Per Share THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON MONDAY, JUNE 6, 1994, UNLESS THE OFFER IS EXTENDED. ---------------- Transamerica Corporation, a Delaware corporation (the "Company"), invites its stockholders to tender shares of its Common Stock, par value $1.00 per share (the "Shares") (including the associated preference stock purchase rights (the "Rights") issued pursuant to the Rights Agreement, dated as of July 17, 1986, as amended, between the Company and First Chicago Trust Company of New York, as the Rights Agent), at prices not greater than $55 nor less than $48 per Share, net to the seller in cash, specified by such stockholders, upon the terms and subject to the conditions set forth herein and in the related Letter of Transmittal (which together constitute the "Offer"). Unless the context otherwise requires, all references to Shares shall include the associated Rights. The Company will determine a single per Share price (not greater than $55 nor less than $48 per Share) that it will pay for the Shares validly tendered pursuant to the Offer and not withdrawn (the "Purchase Price"), taking into account the number of Shares so tendered and the prices specified by the tendering stockholders. The Company will select the Purchase Price that will enable it to purchase 4,500,000 Shares (or such lesser number of Shares as are validly tendered at prices not greater than $55 nor less than $48 per Share) pursuant to the Offer. The Company will purchase all Shares validly tendered at prices at or below the Purchase Price and not withdrawn, upon the terms and subject to the conditions of the Offer, including the provisions thereof relating to proration and conditional tenders described herein. Shares tendered at prices in excess of the Purchase Price and Shares not purchased because of proration and conditional tenders will be returned. Stockholders must complete the section of the Letter of Transmittal relating to the price at which they are tendering Shares in order to validly tender Shares. ---------------- THE OFFER IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF SHARES BEING TENDERED. THE OFFER IS, HOWEVER, SUBJECT TO OTHER CONDITIONS. SEE SECTION 7. ---------------- IMPORTANT Any stockholder desiring to tender all or any portion of his or her Shares should either (1) complete and sign the Letter of Transmittal or a facsimile thereof in accordance with the instructions in the Letter of Transmittal, mail or deliver it and any other required documents to the Depositary, and either deliver the certificates for Shares to the Depositary along with the Letter of Transmittal or deliver such Shares pursuant to the procedure for book-entry transfer set forth in Section 3 hereof or (2) request his or her broker, dealer, commercial bank, trust company or nominee to effect the transaction for him or her. A stockholder whose Shares are registered in the name of a broker, dealer, commercial bank, trust company or nominee must contact such broker, dealer, commercial bank, trust company or nominee if he or she desires to tender such Shares. Any stockholder who desires to tender Shares and whose certificates for such Shares are not immediately available, or who cannot comply in a timely manner with the procedure for book-entry transfer, should tender such Shares by following the procedures for guaranteed delivery set forth in Section 3 hereof. ---------------- NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO ANY STOCKHOLDER AS TO WHETHER TO TENDER ALL OR ANY SHARES. EACH STOCK- HOLDER MUST MAKE HIS OR HER OWN DECISION AS TO WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES TO TENDER AND AT WHAT PRICE. THE COMPANY HAS BEEN ADVISED THAT NO DIRECTOR OR EXECUTIVE OFFICER INTENDS TO TENDER SHARES PURSUANT TO THE OFFER. ---------------- The Shares are listed and principally traded on the New York Stock Exchange (the "NYSE"). On May 6, 1994, the last trading day prior to the commencement of the Offer, the last reported sale price of the Shares on the NYSE Composite Tape was $51 1/8 per Share. Stockholders are urged to obtain current market quotations for the Shares. Questions or requests for assistance or for additional copies of this Offer to Purchase, the Letter of Transmittal or other tender offer materials may be directed to the Information Agent or the Dealer Manager at their respective addresses and telephone numbers set forth on the back cover of this Offer to Purchase. ---------------- The Dealer Manager for the Offer is: MORGAN STANLEY & CO. Incorporated May 9, 1994 NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION ON BEHALF OF THE COMPANY AS TO WHETHER STOCKHOLDERS SHOULD TENDER SHARES PURSUANT TO THE OFFER. NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE OFFER OTHER THAN THOSE CONTAINED HEREIN OR IN THE LETTER OF TRANSMITTAL. IF GIVEN OR MADE, SUCH RECOMMENDATION AND SUCH INFORMATION AND REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. TABLE OF CONTENTS
SECTION PAGE ------- ---- 1. Number of Shares; Proration...................................... 4 2. Tenders by Holders of Fewer Than 100 Shares...................... 5 3. Procedure for Tendering Shares................................... 5 4. Withdrawal Rights................................................ 8 5. Acceptance for Payment of Shares and Payment of Purchase Price... 8 6. Conditional Tender of Shares..................................... 9 7. Certain Conditions of the Offer.................................. 10 8. Price Range of Shares; Dividends................................. 11 9. Purpose of the Offer; Certain Effects of the Offer............... 12 10. Certain Information Concerning the Company....................... 14 11. Source and Amount of Funds....................................... 17 12. Transactions and Agreements Concerning the Shares................ 17 13. Certain Federal Income Tax Consequences.......................... 17 14. Extension of Tender Period; Termination; Amendments.............. 20 15. Fees and Expenses................................................ 21 16. Miscellaneous.................................................... 22
2 To the Holders of Common Stock of Transamerica Corporation: Transamerica Corporation, a Delaware corporation (the "Company"), invites its stockholders to tender shares of its Common Stock, par value $1.00 per share (the "Shares") (including the associated preference stock purchase rights (the "Rights"), issued pursuant to the Rights Agreement, dated as of July 17, 1986, as amended, between the Company and First Chicago Trust Company of New York, as the Rights Agent), at prices not greater than $55 nor less than $48 per Share, net to the seller in cash, specified by such stockholders, upon the terms and subject to the conditions set forth herein and in the related Letter of Transmittal (which together constitute the "Offer"). Unless the context otherwise requires, all references to Shares shall include the associated Rights. The Company will determine a single per Share price (not greater than $55 nor less than $48 per Share) that it will pay for the Shares validly tendered pursuant to the Offer and not withdrawn (the "Purchase Price"), taking into account the number of Shares so tendered and the prices specified by tendering stockholders. The Company will select the Purchase Price that will enable it to purchase 4,500,000 Shares (or such lesser number of Shares as is validly tendered at prices not greater than $55 nor less than $48 per Share) pursuant to the Offer. The Company will purchase all Shares validly tendered at prices at or below the Purchase Price and not withdrawn on or prior to the Expiration Date (as defined in Section 1), upon the terms and subject to the conditions of the Offer, including the provisions relating to proration and conditional tenders described below. The Purchase Price will be paid in cash, net to the seller, with respect to all Shares purchased. Shares tendered at prices in excess of the Purchase Price and Shares not purchased because of proration or conditional tenders will be returned. THE OFFER IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF SHARES BEING TENDERED. THE OFFER IS, HOWEVER, SUBJECT TO CERTAIN OTHER CONDITIONS. SEE SECTION 7. Tendering stockholders will not be obligated to pay brokerage commissions, solicitation fees or, subject to the Instructions to the Letter of Transmittal, stock transfer taxes on the purchase of Shares by the Company. The Company will pay all charges and expenses of Morgan Stanley & Co. Incorporated (the "Dealer Manager"), First Chicago Trust Company of New York (the "Depositary") and Georgeson & Company Inc. (the "Information Agent") incurred in connection with the Offer. See Section 15. HOWEVER, ANY TENDERING STOCKHOLDER OR OTHER PAYEE WHO FAILS TO COMPLETE AND SIGN THE SUBSTITUTE FORM W-9 THAT IS INCLUDED IN THE LETTER OF TRANSMITTAL MAY BE SUBJECT TO A REQUIRED FEDERAL INCOME TAX BACKUP WITHHOLDING OF 31% OF THE GROSS PROCEEDS PAYABLE TO SUCH STOCKHOLDER OR OTHER PAYEE PURSUANT TO THE OFFER. SEE SECTIONS 3 AND 13. The Transamerica Corporation Employees Stock Savings Plan (the "Stock Savings Plan") holds Shares in accounts for participants therein. Under the terms of the Stock Savings Plan, a participant may instruct the trustee for the Stock Savings Plan to tender Shares allocated to the participant's account as of May 6, 1994. See Section 3. Stockholders who are participants in the Transamerica Corporation Dividend Reinvestment Plan (the "Reinvestment Plan") may instruct First Chicago Trust Company of New York, which administers the Reinvestment Plan, to tender part or all of the Shares held in their accounts under the Reinvestment Plan. See Section 3. NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO ANY STOCKHOLDER AS TO WHETHER TO TENDER ALL OR ANY SHARES. EACH STOCKHOLDER MUST MAKE HIS OR HER OWN DECISION AS TO WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES TO TENDER AND AT WHAT PRICE. THE COMPANY HAS BEEN ADVISED THAT NO DIRECTOR OR EXECUTIVE OFFICER INTENDS TO TENDER SHARES PURSUANT TO THE OFFER. 3 As of May 6, 1994, the Company had issued and outstanding 74,865,973 Shares and had reserved for issuance upon exercise of outstanding stock options 7,031,090 Shares. The 4,500,000 Shares that the Company is offering to purchase represent approximately 6.0% of the Shares then outstanding, or approximately 5.5% of the Shares then outstanding on a fully diluted basis (assuming the exercise of all outstanding stock options). A tender of Shares pursuant to the Offer will include a tender of the associated Rights. No separate consideration will be paid for such Rights. See Section 8. The Shares are listed and principally traded on the New York Stock Exchange ("NYSE"). The Shares are also listed and traded on the Pacific Stock Exchange. The Shares trade under the symbol "TA." See Section 8. STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE SHARES. 1.NUMBER OF SHARES; PRORATION Upon the terms and subject to the conditions described herein and in the Letter of Transmittal, the Company will purchase up to 4,500,000 Shares that are validly tendered on or prior to the Expiration Date (and not properly withdrawn in accordance with Section 4) at a price (determined in the manner set forth below) not greater than $55 nor less than $48 per Share. The later of 12:00 midnight, New York City time, on Monday, June 6, 1994, or the latest time and date to which the Offer is extended, is referred to herein as the "Expiration Date." If the Offer is oversubscribed as described below, only Shares tendered at or below the Purchase Price on or prior to the Expiration Date will be eligible for proration. The Company will determine the Purchase Price taking into account the number of Shares so tendered and the prices specified by tendering stockholders. The Company will select the Purchase Price that will enable it to purchase 4,500,000 Shares (or such lesser number of Shares as is validly tendered and not withdrawn at prices not greater than $55 nor less than $48 per Share) pursuant to the Offer. The Company reserves the right to purchase more than 4,500,000 Shares pursuant to the Offer, but does not currently plan to do so. The Offer is not conditioned on any minimum number of Shares being tendered. In accordance with Instruction 5 of the Letter of Transmittal, each stockholder who wishes to tender Shares must specify the price (not greater than $55 nor less than $48 per Share) at which such stockholder is willing to have the Company purchase such Shares. As promptly as practicable following the Expiration Date, the Company will determine the Purchase Price (not greater than $55 nor less than $48 per Share) that it will pay for Shares validly tendered pursuant to the Offer, taking into account the number of Shares so tendered and the prices specified by tendering stockholders. All Shares not purchased pursuant to the Offer, including Shares tendered at prices greater than the Purchase Price and Shares not purchased because of proration or conditional tender, will be returned to the tendering stockholders at the Company's expense as promptly as practicable following the Expiration Date. Upon the terms and subject to the conditions of the Offer, if 4,500,000 or fewer Shares have been validly tendered at or below the Purchase Price and not withdrawn on or prior to the Expiration Date, the Company will purchase all such Shares (including fractional Shares). Upon the terms and subject to the conditions of the Offer, if more than 4,500,000 Shares have been validly tendered at or below the Purchase Price and not withdrawn on or prior to the Expiration Date, the Company will purchase Shares in the following order of priority: (a) all Shares (other than Shares held in the Stock Savings Plan) validly tendered at or below the Purchase Price and not withdrawn on or prior to the Expiration Date by any stockholder who owned beneficially an aggregate of fewer than 100 Shares (including any Shares held in the Stock Savings Plan and the Reinvestment Plan) as of the close of business on May 6, 1994 and who validly tenders all of such Shares (partial and conditional tenders will not qualify for this preference) and completes the box captioned "Odd Lots" on the Letter of Transmittal and, if applicable, the Notice of Guaranteed Delivery; and 4 (b) after purchase of all of the foregoing Shares, subject to the conditional tender provisions described in Section 6, all other Shares (including Stock Savings Plan Shares) validly tendered at or below the Purchase Price and not withdrawn on or prior to the Expiration Date on a pro rata basis, if necessary (with appropriate adjustments to avoid purchases of fractional Shares). If proration of tendered Shares is required, because of the difficulty in determining the number of Shares validly tendered (including Shares tendered by the guaranteed delivery procedure described in Section 3) and as a result of the "odd lot" procedure described in Section 2 and conditional tender procedure described in Section 6, the Company does not expect that it would be able to announce the final proration factor or to commence payment for any Shares purchased pursuant to the Offer until approximately seven NYSE trading days after the Expiration Date. Preliminary results of proration will be announced by press release as promptly as practicable after the Expiration Date. Holders of Shares may obtain such preliminary information from the Dealer Manager or the Information Agent and may also be able to obtain such information from their brokers. The Company expressly reserves the right, in its sole discretion, at any time or from time to time, to extend the period of time during which the Offer is open by giving oral or written notice of such extension to the Depositary. See Section 14. There can be no assurance, however, that the Company will exercise its right to extend the Offer. For purposes of the Offer, a "business day" means any day other than a Saturday, Sunday or federal holiday and consists of the time period from 12:01 a.m. through 12:00 midnight, New York City time. Copies of this Offer to Purchase and the Letter of Transmittal are being mailed to record holders of Shares and will be furnished to brokers, banks and similar persons whose names, or the names of whose nominees, appear on the Company's stockholder list or, if applicable, who are listed as participants in a clearing agency's security position listing for subsequent transmittal to beneficial owners of Shares. 2.TENDERS BY HOLDERS OF FEWER THAN 100 SHARES All Shares validly tendered at or below the Purchase Price and not withdrawn on or prior to the Expiration Date by or on behalf of persons who each owned beneficially an aggregate of fewer than 100 Shares (including Shares held in the Stock Savings Plan and the Reinvestment Plan, and fractional Shares) as of the close of business on May 6, 1994, will be accepted before proration, if any, of the purchase of other tendered Shares; provided, however, that all Shares held in the Stock Savings Plan will be subject to any proration, even if owned by a person who beneficially owned fewer than 100 Shares as of the close of business on such date. See Section 1. Partial or conditional tenders will not qualify for this preference, and it is not available to beneficial holders of 100 or more Shares, even if such holders have separate stock certificates for fewer than 100 Shares. By accepting the Offer, a stockholder owning beneficially fewer than 100 Shares will avoid the payment of brokerage commissions and the applicable odd lot discount payable in a sale of such Shares in a transaction effected on a securities exchange. As of May 5, 1994, there were approximately 56,411 holders of record of Shares. Approximately 53.1% of these holders of record held individually fewer than 100 Shares and held in the aggregate approximately 824,549 Shares. Because of the large number of Shares held in the names of brokers and nominees, the Company is unable to estimate the number of beneficial owners of fewer than 100 Shares or the aggregate number of Shares they own. Any stockholder wishing to tender all of his Shares pursuant to this Section should complete the box captioned "Odd Lots" on the Letter of Transmittal and, if applicable, on the Notice of Guaranteed Delivery. 3.PROCEDURE FOR TENDERING SHARES To tender Shares validly pursuant to the Offer, either (a) a properly completed and duly executed Letter of Transmittal or facsimile thereof, together with any required signature guarantees and any other documents required by the Letter of Transmittal, must be received by the Depositary at one of its addresses set forth on 5 the back cover of this Offer to Purchase and either (i) certificates for the Shares to be tendered must be received by the Depositary at one of such addresses or (ii) such Shares must be delivered pursuant to the procedures for book-entry transfer described below (and a confirmation of such delivery received by the Depositary), in each case on or prior to the Expiration Date, or (b) the tendering holder of Shares must comply with the guaranteed delivery procedure described below. IN ACCORDANCE WITH INSTRUCTION 5 OF THE LETTER OF TRANSMITTAL, IN ORDER TO TENDER SHARES PURSUANT TO THE OFFER, A STOCKHOLDER MUST INDICATE IN THE SECTION CAPTIONED "PRICE (IN DOLLARS) PER SHARE AT WHICH SHARES ARE BEING TENDERED" ON THE LETTER OF TRANSMITTAL THE PRICE (IN MULTIPLES OF $0.125) AT WHICH SUCH SHARES ARE BEING TENDERED. Stockholders wishing to tender Shares at more than one price must complete separate Letters of Transmittal for each price at which such Shares are being tendered. The same Shares cannot be tendered at more than one price. FOR A TENDER OF SHARES TO BE VALID, A PRICE BOX, BUT ONLY ONE PRICE BOX, ON EACH LETTER OF TRANSMITTAL MUST BE CHECKED. The Depositary will establish an account with respect to the Shares at The Depository Trust Company, Midwest Securities Trust Company and Philadelphia Depository Trust Company (collectively referred to as the "Book-Entry Transfer Facilities") for purposes of the Offer within two business days after the date of this Offer to Purchase, and any financial institution that is a participant in the system of any Book-Entry Transfer Facility may make delivery of Shares by causing such Book-Entry Transfer Facility to transfer such Shares into the Depositary's account in accordance with the procedures of such Book-Entry Transfer Facility. Although delivery of Shares may be effected through book- entry transfer, a properly completed and duly executed Letter of Transmittal or facsimile thereof, together with any required signature guarantees and any other required documents, must, in any case, be received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase on or prior to the Expiration Date, or the tendering holder of Shares must comply with the guaranteed delivery procedure described below. Delivery of the Letter of Transmittal and any other required documents to a Book-Entry Transfer Facility does not constitute delivery to the Depositary. Except as otherwise provided below, all signatures on a Letter of Transmittal must be guaranteed by a firm that is a member of a registered national securities exchange or the National Association of Securities Dealers, Inc., or by a commercial bank or trust company having an office or correspondent in the United States which is a participant in an approved Signature Guarantee Medallion Program (each of the foregoing being referred to as an "Eligible Institution"). Signatures on a Letter of Transmittal need not be guaranteed if (a) the Letter of Transmittal is signed by the registered holder of the Shares tendered therewith and such holder has not completed the box entitled "Special Payment Instructions" or the box entitled "Special Delivery Instructions" on the Letter of Transmittal or (b) such Shares are tendered for the account of an Eligible Institution. See Instructions 1 and 6 of the Letter of Transmittal. If a stockholder desires to tender Shares pursuant to the Offer and cannot deliver certificates for such Shares and all other required documents to the Depositary on or prior to the Expiration Date or the procedure for book-entry transfer cannot be complied with in a timely manner, such Shares may nevertheless be tendered if all of the following conditions are met: (i) such tender is made by or through an Eligible Institution; (ii) a properly completed and duly executed Notice of Guaranteed Delivery substantially in the form provided by the Company (with any required signature guarantees) is received by the Depositary as provided below on or prior to the Expiration Date; and (iii) the certificates for such Shares (or a confirmation of a book-entry transfer of such Shares into the Depositary's account at one of the Book- Entry Transfer Facilities), together with a properly completed and duly executed Letter of Transmittal (or facsimile thereof) and any other documents required by the Letter of Transmittal, are received by the Depositary no later than 5:00 p.m., New York City time, on the fifth NYSE trading day after the date of execution of the Notice of Guaranteed Delivery. 6 The Notice of Guaranteed Delivery may be delivered by hand or transmitted by facsimile transmission or mail to the Depositary and must include a guarantee by an Eligible Institution in the form set forth in such Notice. THE METHOD OF DELIVERY OF SHARES AND ALL OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY. TO AVOID FEDERAL INCOME TAX BACKUP WITHHOLDING EQUAL TO 31% OF THE GROSS PAYMENTS MADE PURSUANT TO THE OFFER, EACH STOCKHOLDER MUST NOTIFY THE DEPOSITARY OF SUCH STOCKHOLDER'S CORRECT TAXPAYER IDENTIFICATION NUMBER AND PROVIDE CERTAIN OTHER INFORMATION BY PROPERLY COMPLETING THE SUBSTITUTE FORM W- 9 INCLUDED IN THE LETTER OF TRANSMITTAL. FOREIGN STOCKHOLDERS (AS DEFINED IN SECTION 13) MUST SUBMIT A PROPERLY COMPLETED FORM W-8 IN ORDER TO AVOID THE APPLICABLE BACKUP WITHHOLDING; PROVIDED, HOWEVER, THAT BACKUP WITHHOLDING WILL NOT APPLY TO FOREIGN STOCKHOLDERS SUBJECT TO 30% (OR LOWER TREATY RATE) WITHHOLDING ON GROSS PAYMENTS RECEIVED PURSUANT TO THE OFFER (AS DISCUSSED IN SECTION 13). For a discussion of certain federal income tax consequences to tendering stockholders, see Section 13. EACH STOCKHOLDER IS URGED TO CONSULT WITH HIS OR HER OWN TAX ADVISOR. It is a violation of Rule 14e-4 promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), for a person to tender Shares for his or her own account unless the person so tendering (i) has a net long position equal to or greater than the amount of (x) Shares tendered or (y) other securities immediately convertible into, exercisable, or exchangeable for the amount of Shares tendered and will acquire such Shares for tender by conversion, exercise or exchange of such other securities and (ii) will cause such Shares to be delivered in accordance with the terms of the Offer. Rule 14e-4 provides a similar restriction applicable to the tender or guarantee of a tender on behalf of another person. The tender of Shares pursuant to any one of the procedures described above will constitute the tendering stockholder's representation and warranty that (i) such stockholder has a net long position in the Shares being tendered within the meaning of Rule 14e-4 promulgated under the Exchange Act, and (ii) the tender of such Shares complies with Rule 14e-4. The Company's acceptance for payment of Shares tendered pursuant to the Offer will constitute a binding agreement between the tendering stockholder and the Company upon the terms and subject to the conditions of the Offer. All questions as to the Purchase Price, the form of documents and the validity, eligibility (including time of receipt) and acceptance for payment of any tender of Shares will be determined by the Company, in its sole discretion, and its determination shall be final and binding. The Company reserves the absolute right to reject any or all tenders of Shares that it determines are not in proper form or the acceptance for payment of or payment for Shares that may, in the opinion of the Company's counsel, be unlawful. The Company also reserves the absolute right to waive any defect or irregularity in any tender of Shares. None of the Company, the Dealer Manager, the Depositary, the Information Agent or any other person will be under any duty to give notice of any defect or irregularity in tenders, nor shall any of them incur any liability for failure to give any such notice. Participants in the Stock Savings Plan who wish to tender Shares allocated to their respective accounts should so indicate by completing, executing and returning, to the trustee, the election form included with the memorandum furnished to such participants. STOCK SAVINGS PLAN PARTICIPANTS MAY NOT USE THE LETTER OF TRANSMITTAL TO TENDER THEIR STOCK SAVINGS PLAN SHARES, BUT MUST USE THE SEPARATE ELECTION FORM REFERRED TO ABOVE. Participants in the Stock Savings Plan are urged to read such separate memorandum and election form and related materials carefully. A stockholder participating in the Reinvestment Plan who wishes to have First Chicago Trust Company of New York, which administers the Reinvestment Plan, tender Shares held in such participant's account in the Reinvestment Plan should so indicate by completing the box captioned "Transamerica Corporation 7 Dividend Reinvestment Plan Shares" in the Letter of Transmittal. Participants in the Reinvestment Plan are urged to read Section 13 of the Letter of Transmittal carefully. Any Reinvestment Plan Shares tendered but not purchased will be returned to the participant's Reinvestment Plan account. If a participant tenders all of his or her Reinvestment Plan Shares and all such Shares are purchased by the Company pursuant to the Offer, such tender will be deemed to be authorization and written notice to First Chicago Trust Company of New York of termination of such stockholder's participation in the Reinvestment Plan. 4.WITHDRAWAL RIGHTS Tenders of Shares made pursuant to the Offer may be withdrawn at any time prior to the Expiration Date. Thereafter, such tenders are irrevocable, except that they may be withdrawn after July 5, 1994 unless theretofore accepted for payment as provided in this Offer to Purchase. If the Company extends the period of time during which the Offer is open, is delayed in accepting for payment or paying for Shares or is unable to accept for payment or pay for Shares pursuant to the Offer for any reason, then, without prejudice to the Company's rights under the Offer, the Depositary may, on behalf of the Company, retain all Shares tendered, and such Shares may not be withdrawn except as otherwise provided in this Section 4, subject to Rule 13e-4(f)(5) under the Exchange Act, which provides that the issuer making the tender offer shall either pay the consideration offered, or return the tendered securities promptly after the termination or withdrawal of the tender offer. To be effective, a written or facsimile transmission notice of withdrawal must be timely received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase and must specify the name of the person who tendered the Shares to be withdrawn and the number of Shares to be withdrawn. If the Shares to be withdrawn have been delivered to the Depositary, a signed notice of withdrawal with signatures guaranteed by an Eligible Institution (except in the case of Shares tendered by an Eligible Institution) must be submitted prior to the release of such Shares. In addition, such notice must specify, in the case of Shares tendered by delivery of certificates, the name of the registered holder (if different from that of the tendering stockholder) and the serial numbers shown on the particular certificates evidencing the Shares to be withdrawn or, in the case of Shares tendered by book-entry transfer, the name and number of the account at one of the Book- Entry Transfer Facilities to be credited with the withdrawn Shares. Withdrawals may not be rescinded, and Shares withdrawn will thereafter be deemed not validly tendered for purposes of the Offer. However, withdrawn Shares may be retendered by again following one of the procedures described in Section 3 at any time prior to the Expiration Date. All questions as to the form and validity (including time of receipt) of any notice of withdrawal will be determined by the Company, in its sole discretion, which determination shall be final and binding. None of the Company, the Dealer Manager, the Depositary, the Information Agent or any other person will be under any duty to give notification of any defect or irregularity in any notice of withdrawal or incur any liability for failure to give any such notification. Participants in the Stock Savings Plan should follow the procedures for withdrawal included in the memorandum furnished to such participants. 5.ACCEPTANCE FOR PAYMENT OF SHARES AND PAYMENT OF PURCHASE PRICE Upon the terms and subject to the conditions of the Offer and as promptly as practicable after the Expiration Date, the Company will determine the Purchase Price, taking into account the number of Shares tendered and the prices specified by tendering stockholders, announce the Purchase Price, and will (subject to the proration and conditional tender provisions of the Offer) accept for payment and pay for Shares validly tendered at or below the Purchase Price. Thereafter, payment for all Shares validly tendered on or prior to 8 the Expiration Date and accepted for payment pursuant to the Offer will be made by the Depositary by check as promptly as practicable. In all cases, payment for Shares accepted for payment pursuant to the Offer will be made only after timely receipt by the Depositary of certificates for Shares (or of a confirmation of a book-entry transfer of such Shares into the Depositary's account at one of the Book-Entry Transfer Facilities), a properly completed and duly executed Letter of Transmittal or facsimile thereof, and any other required documents. For purposes of the Offer, the Company will be deemed to have accepted for payment (and thereby purchased) Shares that are validly tendered and not withdrawn as, if and when it gives oral or written notice to the Depositary of its acceptance for payment of such Shares. The Company will pay for Shares that it has purchased pursuant to the Offer by depositing the Purchase Price therefor with the Depositary. The Depositary will act as agent for tendering stockholders for the purpose of receiving payment from the Company and transmitting payment to tendering stockholders. Under no circumstances will interest be paid on amounts to be paid to tendering stockholders, regardless of any delay in making such payment. Certificates for all Shares not purchased will be returned (or, in the case of Shares tendered by book-entry transfer, such Shares will be credited to an account maintained with a Book-Entry Transfer Facility) as promptly as practicable without expense to the tendering stockholder. Payment for Shares may be delayed in the event of difficulty in determining the number of Shares properly tendered or if proration is required. See Section 1. In addition, if certain events occur, the Company may not be obligated to purchase Shares pursuant to the Offer. See Section 7. The Company will pay or cause to be paid any stock transfer taxes with respect to the sale and transfer of any Shares to it or its order pursuant to the Offer. If, however, payment of the Purchase Price is to be made to, or Shares not tendered or not purchased are to be registered in the name of, any person other than the registered holder, or if tendered Shares are registered in the name of any person other than the person signing the Letter of Transmittal, the amount of any stock transfer taxes (whether imposed on the registered holder, such other person or otherwise) payable on account of the transfer to such person will be deducted from the Purchase Price unless satisfactory evidence of the payment of such taxes, or exemption therefrom, is submitted. See Instruction 7 to the Letter of Transmittal. 6.CONDITIONAL TENDER OF SHARES Under certain circumstances and subject to the exceptions set forth in Section 1, the Company may prorate the number of Shares purchased pursuant to the Offer. As discussed in Section 13, the number of Shares to be purchased from a particular stockholder might affect the tax treatment of such purchase to such stockholder and such stockholder's decision whether to tender. EACH STOCKHOLDER IS URGED TO CONSULT WITH HIS OR HER OWN TAX ADVISOR. Accordingly, a stockholder may tender Shares subject to the condition that a specified minimum number of such holder's Shares tendered pursuant to a Letter of Transmittal or Notice of Guaranteed Delivery must be purchased if any such Shares so tendered are purchased, and any stockholder desiring to make such a conditional tender must so indicate in the box captioned "Conditional Tender" in such Letter of Transmittal or, if applicable, the Notice of Guaranteed Delivery. Any tendering stockholders wishing to make a conditional tender must calculate and appropriately indicate such minimum number of Shares. If the effect of accepting tenders on a pro rata basis would be to reduce the number of Shares to be purchased from any stockholder (tendered pursuant to a Letter of Transmittal or Notice of Guaranteed Delivery) below the minimum number so specified, such tender will automatically be regarded as withdrawn (except as provided in the next paragraph) and all Shares tendered by such stockholder pursuant to such Letter of Transmittal or Notice of Guaranteed Delivery will be returned as promptly as practicable thereafter. 9 If conditional tenders would otherwise be so regarded as withdrawn and would cause the total number of Shares to be purchased to fall below 4,500,000, then, to the extent feasible, the Company will select enough of such conditional tenders that would otherwise have been so withdrawn to permit the Company to purchase 4,500,000 Shares. In selecting among such conditional tenders, the Company will select by lot and will limit its purchase in each case to the designated minimum number of Shares to be purchased. 7.CERTAIN CONDITIONS OF THE OFFER Notwithstanding any other provision of the Offer, the Company will not be required to accept for payment or pay for any Shares tendered, and may terminate or amend and may postpone (subject to the requirements of the Exchange Act for prompt payment for or return of Shares) the acceptance for payment of Shares tendered, if at any time after May 6, 1994 and at or before acceptance for payment of any Shares any of the following shall have occurred: (a) there shall have been threatened, instituted or pending any action or proceeding by any government or governmental, regulatory or administrative agency or authority or tribunal or any other person, domestic or foreign, or before any court, authority, agency or tribunal that (i) challenges the acquisition of Shares pursuant to the Offer or otherwise in any manner relates to or affects the Offer or (ii) in the sole judgment of the Company, could materially and adversely affect the business, condition (financial or other), income, operations or prospects of the Company and its subsidiaries, taken as a whole, or otherwise materially impair in any way the contemplated future conduct of the business of the Company or any of its subsidiaries or materially impair the Offer's contemplated benefits to the Company; (b) there shall have been any action threatened, pending or taken, or approval withheld, or any statute, rule, regulation judgment, order or injunction threatened, proposed, sought, promulgated, enacted, entered, amended, enforced or deemed to be applicable to the Offer or the Company or any of its subsidiaries, by any legislative body, court, authority, agency or tribunal which, in the Company's sole judgment, would or might directly or indirectly (i) make the acceptance for payment of, or payment for, some or all of the Shares illegal or otherwise restrict or prohibit consummation of the Offer, (ii) delay or restrict the ability of the Company, or render the Company unable, to accept for payment or pay for some or all of the Shares, (iii) materially impair the contemplated benefits of the Offer to the Company or (iv) materially affect the business, condition (financial or other), income, operations or prospects of the Company and its subsidiaries, taken as a whole, or otherwise materially impair in any way the contemplated future conduct of the business of the Company or any if its subsidiaries; (c) it shall have been publicly disclosed or the Company shall have learned that (i) any person or "group" (within the meaning of Section 13(d)(3) of the Exchange Act) has acquired or proposes to acquire beneficial ownership of more than 5% of the outstanding Shares whether through the acquisition of stock, the formation of a group, the grant of any option or right, or otherwise (other than as disclosed in a Schedule 13D or 13G on file with the Securities and Exchange Commission (the "Commission") on May 6, 1994) or (ii) any such person or group that on or prior to May 6, 1994 had filed such a Schedule with the Commission thereafter shall have acquired or shall propose to acquire whether through the acquisition of stock, the formation of a group, the grant of any option or right, or otherwise, beneficial ownership of additional Shares representing 2% or more of the outstanding Shares; (d) there shall have occurred (i) any general suspension of trading in, or limitation on prices for, securities on any national securities exchange or in the over-the-counter market, (ii) any significant decline in the market price of the Shares, (iii) any change in the general political, market, economic or financial condition in the United States or abroad that could have a material adverse effect on the Company's business, operations, prospects or ability to obtain financing generally or the trading in the Shares, (iv) the declaration of a banking moratorium or any suspension of payments in respect of banks in the United States or any limitation on, or any event which, in the Company's sole judgment, might affect, the extension of credit by lending institutions in the United States, (v) the commencement of a 10 war, armed hostilities or other international or national calamity directly or indirectly involving the United States or (vi) in the case of any of the foregoing existing at the time of the commencement of the Offer, in the Company's sole judgment, a material acceleration or worsening thereof; (e) a tender or exchange offer with respect to some or all of the Shares (other than the Offer), or a merger, acquisition or other business combination proposal for the Company, shall have been proposed, announced or made by another person; (f) there shall have occurred any event or events that has resulted, or may in the sole judgment of the Company result, in an actual or threatened change in the business, condition (financial or other), income, operations, stock ownership or prospects of the Company and its subsidiaries; or (g) there shall have occurred any decline in the Standard & Poor's Composite 500 Stock Index (447.82 at the close of business on May 6, 1994) by an amount in excess of 15% measured from the close of business on May 6, 1994; and, in the sole judgment of the Company, such event or events make it undesirable or inadvisable to proceed with the Offer or with such acceptance for payment or payment. The foregoing conditions are for the sole benefit of the Company and may be asserted by the Company regardless of the circumstances (including any action or inaction by the Company) giving rise to any such condition, and any such condition may be waived by the Company, in whole or in part, at any time and from time to time in its sole discretion. The failure by the Company at any time to exercise any of the foregoing rights shall not be deemed a waiver of any such right and each such right shall be deemed an ongoing right which may be asserted at any time and from time to time. Any determination by the Company concerning the events described above will be final and binding on all parties. 8.PRICE RANGE OF SHARES; DIVIDENDS The Shares are listed and principally traded on the NYSE. The Shares are also listed and traded on the PSE. The following table sets forth the high and low closing sales prices of the Shares on the NYSE Composite Tape and the cash dividends per Share for the fiscal quarters indicated.
CASH DIVIDENDS HIGH LOW PER SHARE ------- ------- -------------- 1992: 1st Quarter............................ $43 7/8 $37 1/8 $0.50 2nd Quarter............................ 46 3/4 40 1/8 0.50 3rd Quarter............................ 46 1/4 40 0.50 4th Quarter............................ 50 1/2 41 3/8 0.50 1993: 1st Quarter............................ 53 7/8 45 5/8 0.50 2nd Quarter............................ 56 1/8 47 0.50 3rd Quarter............................ 61 3/8 52 1/2 0.50 4th Quarter............................ 62 3/8 53 5/8 0.50 1994: 1st Quarter............................ 57 5/8 49 1/4 0.50 2nd Quarter (to May 6, 1994)........... 51 3/4 49 3/8
On May 6, 1994, the last full NYSE trading day prior to the commencement of the Offer, the last reported sale price of the Shares on the NYSE Composite Tape was $51 1/8 per Share. STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE SHARES. Under a rights plan, every outstanding Share and every Share issuable by the Company (until certain events occur) includes a Right. Pursuant to a Rights Agreement, dated as of July 17, 1986, as amended (the "Rights Agreement"), between the Company and First Chicago Trust Company of New York, as the Rights 11 Agent, each Right entitles the registered holder to purchase from the Company a unit consisting of one one-hundredth of a share (a "Unit") of Series A Participating Preference Stock, without par value (referred to herein as "Preference Stock"), at a purchase price of $135 per Unit, subject to adjustment. The Rights are not exercisable until the Distribution Date (as defined below) and will expire at the close of business on August 8, 1996, unless earlier redeemed by the Company. Prior to a Distribution Date, the Rights will be evidenced by the Shares and cannot be traded separately from such Shares. The Rights will separate from the Shares and a Distribution Date (the "Distribution Date") will occur upon the earlier of (a) 10 days following a public announcement that a person or group of affiliated or associated persons (an "Acquiring Person") has acquired, or obtained the right to acquire, beneficial ownership of 20% or more of the outstanding Shares (the "Stock Acquisition Date"), or (b) 10 business days following the commencement of a tender offer or exchange offer that could result, if successful, in a person or group beneficially owning 30% or more of such outstanding Shares. The Rights will not become separately exercisable or separately tradeable as a result of the Offer. In the event that (a) the Company is the surviving corporation in a merger with an Acquiring Person and its Shares are not changed or exchanged (other than a merger described in the subsequent paragraph), (b) a person becomes the beneficial owner of more than 30% of the then outstanding Shares (except pursuant to a cash tender offer for all Shares at a fair price), or (c) during such time as there is an Acquiring Person an event involving the Company occurs which results in such Acquiring Person's ownership interest being increased by more than 1% (e.g., a reverse stock split), each holder of a Right will thereafter have the right to receive, upon exercise of such Right, Shares (or, in certain circumstances, cash, property or other securities of the Company) having a value equal to two times the exercise price of the Right. Notwithstanding any of the foregoing, following the occurrence of any of the events set forth in this paragraph, all Rights that are, or (under certain circumstances specified in the Rights Agreement) were, beneficially owned by any Acquiring Person or certain transferees thereof will be null and void. In the event that, at any time following the Stock Acquisition Date, (a) the Company is acquired in a merger or other business combination transaction in which the Company is not the surviving corporation (other than a merger at the same price as a prior cash tender offer for all Shares at a fair price), (b) a person consolidates or merges with or into the Company (other than a merger at the same price as a prior cash tender offer for all Shares at a fair price) and all or part of the Company's outstanding Shares are changed into or exchanged for stock or securities of any other person or cash or other property, or (c) 50% or more of the assets or earning power of the Company and its subsidiaries, taken as a whole, is sold or transferred, each holder of a Right shall thereafter have the right to receive, upon exercise of such Right, common stock of the acquiring company having a value equal to two times the exercise price of the Right. The foregoing description of the Rights is qualified in its entirety by reference to the Rights Agreement, a copy of which has been included as an exhibit to the Company's Current Report on Form 8-K, dated July 28, 1986, and a copy of the amendment to which has been included as an exhibit to the Company's Annual Report on Form 10-K for the year ended December 31, 1991, in each case filed with the Commission. Such reports and exhibits may be obtained from the Commission in the manner specified in Section 16. 9.PURPOSE OF THE OFFER; CERTAIN EFFECTS OF THE OFFER The Company believes that the purchase of its Shares at this time represents an attractive investment opportunity that will benefit the Company and its stockholders. The Offer will afford to stockholders who are considering the sale of all or a portion of their Shares the opportunity to determine the price at which they are willing to sell their Shares and, in the event the Company accepts such Shares, to dispose of Shares without the usual transaction costs associated with a market sale. The Offer will also allow qualifying stockholders owning beneficially fewer than 100 Shares to avoid the payment of brokerage commissions and the applicable odd lot discount payable on a sale of Shares in a transaction effected on a securities exchange. Correspondingly, the costs to the Company for servicing the accounts of odd lot holders will be reduced. See Section 2. 12 Stockholders who determine not to accept the Offer will obtain a proportionate increase in their ownership interest in the Company. After consummation of the Offer, increases or decreases in net income will likely be reflected in greater increases or decreases in earnings per Share than is presently the case because of the smaller number of Shares outstanding thereafter. If fewer than 4,500,000 Shares are purchased pursuant to the Offer, the Company may repurchase the remainder of such Shares on the open market, in privately negotiated transactions or otherwise. In the future, the Company may determine to purchase additional Shares on the open market, in privately negotiated transactions, through one or more tender offers or otherwise. Any such purchases may be on the same terms as, or on terms which are more or less favorable to stockholders than, the terms of the Offer. However, Rule 13e-4 under the Exchange Act prohibits the Company and its affiliates from purchasing any Shares, other than pursuant to the Offer, until at least ten business days after the Expiration Date. Any future purchases of Shares by the Company would depend on many factors, including the market price of the Shares, the Company's business and financial position, and general economic and market conditions. Shares that the Company acquires pursuant to the Offer will become authorized but unissued Shares and will be available for issuance by the Company without further stockholder action (except as may be required by applicable law or the rules of the securities exchanges on which the Shares are listed). Such Shares could be issued without stockholder approval for, among other things, acquisitions, the raising of additional capital for use in the Company's business, stock dividends or in connection with employee stock, stock option and other plans, or a combination thereof. The Company has no current plans for the Shares it may acquire pursuant to the Offer or any other authorized but unissued Shares. As of May 6, 1994, the Company had issued and outstanding 74,865,973 Shares and had reserved for issuance upon exercise of outstanding stock options 7,031,090 Shares. The 4,500,000 Shares that the Company is offering to purchase represent approximately 6.0% of the Shares then outstanding. As of May 6, 1994, all directors and executive officers of the Company as a group owned beneficially an aggregate of 1,723,201 Shares (including an aggregate of 1,430,599 Shares that may be acquired pursuant to the exercise of outstanding stock options exercisable within 60 days of the date hereof and 41,968 Shares attributable to the accounts of all directors and executive officers as a group under the Stock Savings Plan and the Reinvestment Plan). The Company has been advised that no director or executive officer intends to tender Shares pursuant to the Offer. If the Company purchases 4,500,000 Shares pursuant to the Offer and no director or executive officer of the Company tenders Shares in the Offer, the percentage of outstanding Shares owned beneficially by all of the Company's directors and executive officers as a group would increase to approximately 2.4% of the Shares then outstanding (including, for this purpose, Shares that may be acquired by such directors and executive officers pursuant to the exercise of outstanding stock options exercisable within 60 days of the date hereof). Except as disclosed in this Offer to Purchase, the Company has no plans or proposals which relate to or would result in: (a) the acquisition by any person of additional securities of the Company or the disposition of securities of the Company; (b) an extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving the Company or any of its subsidiaries; (c) a sale or transfer of a material amount of assets of the Company or any of its subsidiaries; (d) any change in the present Board of Directors or management of the Company; (e) any material change in the present dividend rate or policy, or indebtedness or capitalization of the Company; (f) any other material change in the Company's corporate structure or business; (g) any change in the Company's Certificate of Incorporation or By-Laws or any actions which may impede the acquisition of control of the Company by any person; (h) a class of equity security of the Company being delisted from a national securities exchange; (i) a class of equity security of the Company becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Exchange Act; or (j) the suspension of the Company's obligation to file reports pursuant to Section 15(d) of the Exchange Act. The Company does not believe that the Offer will result in delisting of the Shares on the NYSE or termination of registration of the Shares under the Exchange Act. 13 NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO ANY STOCKHOLDER AS TO WHETHER TO TENDER ALL OR ANY SHARES. EACH STOCKHOLDER MUST MAKE HIS OR HER OWN DECISION WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES TO TENDER AND AT WHAT PRICE. THE COMPANY HAS BEEN ADVISED THAT NO DIRECTOR OR EXECUTIVE OFFICER INTENDS TO TENDER SHARES PURSUANT TO THE OFFER. 10.CERTAIN INFORMATION CONCERNING THE COMPANY The Company is a financial services organization which engages through subsidiaries in consumer lending, commercial lending, leasing, real estate services, life insurance and asset management. The Company was incorporated in Delaware in 1928. The Company's principal executive offices are located at 600 Montgomery Street, San Francisco, California 94111 and its telephone number is (415) 983- 4000. Recent Development On April 13, 1994, the Company sold all of its shares in the London-based international insurance broker, Sedgwick Group plc ("Sedgwick"). The 114.5 million shares, representing a 21% equity interest in Sedgwick, were sold through an underwritten offering. Total proceeds from the sale were approximately $320 million. No gain or loss was recorded on the transaction. The operating results from this former investment have been reclassified as a discontinued operation. Summary Consolidated Historical Financial Information The following selected financial data for each of the three months ended March 31, 1994 and March 31, 1993 (unaudited) are derived from the unaudited consolidated financial statements of Transamerica Corporation and subsidiaries set forth in the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1994. In the opinion of management, all adjustments considered necessary for a fair statement of the results for the periods, which consisted only of normal recurring accruals, have been made. Results for the three months are not necessarily indicative of the results for the entire year for most of the Company's businesses. The following selected financial data for each of the years ended December 31, 1993 and December 31, 1992 were derived from the audited consolidated financial statements of Transamerica Corporation and subsidiaries incorporated by reference in the Company's Annual Report on Form 10-K for the year ended December 31, 1993. The data should be read in conjunction with, and is qualified in its entirety by reference to, such audited consolidated financial statements and their related notes. The foregoing reports may be obtained from the Commission in the manner specified in Section 16. 14 SUMMARY HISTORICAL CONSOLIDATED FINANCIAL INFORMATION (IN MILLIONS, EXCEPT RATIOS AND PER SHARE AMOUNTS)
UNAUDITED THREE MONTHS YEAR ENDED ENDED MARCH 31, DECEMBER 31, -------------------- -------------------- 1994 1993 1993 1992 --------- --------- --------- --------- INCOME STATEMENT DATA: Revenues........................... $ 1,235.4 $ 1,149.0 $ 4,813.3 $ 4,550.9 Income before taxes................ 165.2 147.9 588.2 538.4 Income from continuing operations.. 103.7 93.0 447.5 334.0 Loss from discontinued operations.. (0.7) (1.2) (47.0) (90.8) Extraordinary loss on early extinguishment of debt............ -- -- (23.1) -- --------- --------- --------- --------- Net income......................... $ 103.0 $ 91.8 $ 377.4 $ 243.2 ========= ========= ========= ========= Earnings per share of common stock: Income from continuing operations...................... $ 1.29 $ 1.10 $ 5.40 $ 3.99 Loss from discontinued operations...................... (0.01) (0.02) (0.60) (1.16) Extraordinary loss on early extinguishment of debt.......... -- -- (0.29) -- --------- --------- --------- --------- Net income....................... $ 1.28 $ 1.08 $ 4.51 $ 2.83 ========= ========= ========= ========= Average number of common shares outstanding (in thousands)........ 75,811 79,335 78,495 78,050 Ratio of earnings from continuing operations to fixed charges(1).... 2.27 2.05 2.09 1.90 BALANCE SHEET DATA (AT PERIOD END): Total assets....................... $38,699.5 $34,936.8 $36,050.5 $33,290.9 Total assets, less goodwill........ 38,207.8 34,430.2 35,555.1 32,780.0 Notes and loans payable............ 8,933.8 7,910.9 7,704.0 7,573.1 Shareholders' equity............... 3,516.1 3,395.6 3,363.5 3,300.1 Book value per common share........ $ 41.19 $ 37.33 $ 38.46 $ 36.31
NOTE TO SUMMARY HISTORICAL CONSOLIDATED FINANCIAL INFORMATION (1) The ratios of earnings from continuing operations to fixed charges were computed by dividing earnings from continuing operations before fixed charges and income taxes by the fixed charges. Earnings consist of income from continuing operations, to which has been added fixed charges and income taxes. Fixed charges consist of interest and debt expense and one-third of rent expense, which approximates the interest factor. Summary Unaudited Consolidated Pro Forma Financial Information The following summary unaudited consolidated pro forma financial information gives effect to the purchase of Shares pursuant to the Offer, based on certain assumptions described in the Notes to Summary Unaudited Consolidated Pro Forma Financial Information. The Consolidated Statement of Income gives effect to the purchase of Shares pursuant to the Offer as if it had occurred on January 1, 1994 and January 1, 1993. The summary unaudited consolidated pro forma financial information should be read in conjunction with the summary consolidated historical financial information and does not purport to be indicative of the results that would actually have been obtained had the purchase of the Shares pursuant to the Offer been completed at the dates indicated or that may be obtained in the future. 15 SUMMARY UNAUDITED CONSOLIDATED PRO FORMA FINANCIAL INFORMATION (IN MILLIONS, EXCEPT RATIOS AND PER SHARE AMOUNTS)
THREE MONTHS ENDED MARCH 31, 1994 YEAR ENDED DECEMBER 31, 1993 ---------------------------- ----------------------------- PRO FORMA PRO FORMA ----------------- ------------------ ASSUMED ASSUMED ASSUMED ASSUMED $48 PER $55 PER $48 PER $55 PER SHARE SHARE SHARE SHARE UNAUDITED PURCHASE PURCHASE PURCHASE PURCHASE HISTORICAL PRICE PRICE HISTORICAL PRICE PRICE ---------- -------- -------- ---------- -------- -------- INCOME STATEMENT DATA: Revenues................ $1,235.4 $1,235.4 $1,235.4 $4,813.3 $4,813.3 $4,813.3 Income before taxes..... 165.2 165.2 165.2 588.2 588.2 588.2 Income from continuing operations............. 103.7 103.7 103.7 447.5 447.5 447.5 Loss from discontinued operations............. (0.7) -- -- (47.0) (50.0) (50.0) Extraordinary loss on early extinguishment of debt................... -- -- -- (23.1) (23.1) (23.1) -------- -------- -------- -------- -------- -------- Net income.............. $ 103.0 $ 103.7 $ 103.7 $ 377.4 $ 374.4 $ 374.4 ======== ======== ======== ======== ======== ======== Earnings per share of common stock: Income from continuing operations........... $ 1.29 $ 1.37 $ 1.37 $ 5.40 $ 5.73 $ 5.73 Loss from discontinued operations........... (0.01) -- -- (0.60) (0.68) (0.68) Extraordinary loss on early extinguishment of debt.............. -- -- -- (0.29) (0.31) (0.31) -------- -------- -------- -------- -------- -------- Net income.......... $ 1.28 $ 1.37 $ 1.37 $ 4.51 $ 4.74 $ 4.74 ======== ======== ======== ======== ======== ======== Average number of common shares outstanding (in thousands)............. 75,811 71,311 71,311 78,495 73,995 73,995 Ratio of earnings from continuing operations to fixed charges....... 2.27 2.27 2.27 2.09 2.09 2.09
AT MARCH 31, 1994 AT DECEMBER 31, 1993 ------------------------------ ------------------------------ PRO FORMA PRO FORMA ------------------- ------------------- ASSUMED ASSUMED ASSUMED ASSUMED $48 PER $55 PER $48 PER $55 PER SHARE SHARE SHARE SHARE UNAUDITED PURCHASE PURCHASE PURCHASE PURCHASE HISTORICAL PRICE PRICE HISTORICAL PRICE PRICE ---------- --------- --------- ---------- --------- --------- BALANCE SHEET DATA: Total assets............ $38,699.5 $38,482.7 $38,451.2 $36,050.5 $35,830.5 $35,799.0 Total assets, less goodwill............... 38,207.8 37,991.0 37,959.5 35,555.1 35,335.1 35,303.6 Notes and loans payable. 8,933.8 8,933.8 8,933.8 7,704.0 7,704.0 7,704.0 Shareholders' equity.... 3,516.1 3,301.5 3,270.0 3,363.5 3,152.0 3,120.5 Book value per common share.................. $ 41.19 $ 40.77 $ 40.33 $ 38.46 $ 37.93 $ 37.49
NOTES TO SUMMARY UNAUDITED CONSOLIDATED PRO FORMA FINANCIAL INFORMATION The following assumptions regarding the Offer were made in determining the pro forma financial information: (1) The information assumes 4,500,000 Shares are purchased at $48 per Share and at $55 per Share, with the purchase being financed with cash proceeds from the sale of the Company's investment in Sedgwick, which sale was assumed to have occurred at the beginning of the periods presented. The Company received on May 3, 1994 proceeds of approximately $320 million from the sale of its investment in Sedgwick. For purposes of the pro forma financial information, the sale was assumed to 16 have produced no gain or loss. The information assumes no reinvestment of the excess proceeds over the purchase price of the Shares. There can be no assurance that the Company will purchase 4,500,000 Shares or the price at which Shares will be purchased. (2) Net income has been reduced by the Company's equity in the income of Sedgwick net of related goodwill amortization and income taxes previously reported as a discontinued operation. (3) Expenses directly related to the Offer are assumed to be $1.5 million and are charged against additional paid-in capital. (4) The ratios of earnings from continuing operations to fixed charges were computed by dividing earnings from continuing operations before fixed charges and income taxes by the fixed charges. Earnings consist of income from continuing operations, to which has been added fixed charges and income taxes. Fixed charges consist of interest and debt expense and one third of rent expense, which approximates the interest factor. 11.SOURCE AND AMOUNT OF FUNDS Assuming that the Company purchases 4,500,000 Shares pursuant to the Offer at a price of $55 per Share, the total amount required by the Company to purchase such Shares will be $247,500,000, exclusive of fees and other expenses. The Company will use a portion of the net proceeds from the sale of shares of Sedgwick to purchase Shares pursuant to the Offer. See Section 10. 12.TRANSACTIONS AND AGREEMENTS CONCERNING THE SHARES In May 1993, the Company announced its intention to repurchase, subject to market conditions and corporate requirements, up to 1,500,000 Shares, such repurchases to be effected on the open market, in privately negotiated transactions or otherwise. In July 1993 and in December 1993, the Company announced its intention to repurchase, subject to market conditions and corporate requirements, an additional 2,000,000 Shares and 2,500,000 Shares, respectively. Between May 10, 1993 and April 12, 1994, the Company purchased a total of 5,172,100 Shares at prices ranging from a high of $62.375 to a low of $47.00 per Share. The average price paid per Share was approximately $54.7346. The Company has not acquired any Shares since April 12, 1994. Except as set forth above and on Schedule A hereto, based upon the Company's records and upon information provided to the Company by its directors and executive officers, neither the Company nor, to the Company's knowledge, any of its associates, subsidiaries, directors, executive officers or any associate of any such director or executive officer has engaged in any transactions involving the Shares during the 40 business days preceding the date hereof. Neither the Company nor, to the Company's knowledge, any of its directors or executive officers is a party to any contract, arrangement, understanding or relationship relating directly or indirectly to the Offer with any other person with respect to the Shares. 13.CERTAIN FEDERAL INCOME TAX CONSEQUENCES In General. The following summary describes certain United States federal income tax consequences relating to the Offer. The summary is based on the Internal Revenue Code of 1986, as amended (the "Code"), and existing final, temporary and proposed Treasury Regulations, Revenue Rulings and judicial decisions, all of which are subject to prospective and retroactive changes. The summary deals only with Shares held as capital assets within the meaning of Section 1221 of the Code and does not address tax consequences that may be relevant to investors in special tax situations, such as certain financial institutions, tax-exempt organizations, life insurance companies, dealers in securities or currencies, or stockholders holding the Shares as part of a conversion transaction, as part of a hedge or hedging transaction, or as a position in a straddle 17 for tax purposes. The Company will not seek a ruling from the Internal Revenue Service (the "IRS") with regard to the United States federal income tax treatment of the Offer and, therefore, there can be no assurance that the IRS will agree with the conclusions set forth below. Accordingly, each stockholder should consult its own tax advisor with regard to the Offer and the application of United States federal income tax laws, as well as the laws of any state, local or foreign taxing jurisdiction, to its particular situation. Characterization of the Sale. A sale of Shares by a stockholder of the Company pursuant to the Offer will be a taxable transaction for United States federal income tax purposes and may also be a taxable transaction under applicable state, local and foreign tax laws. The United States federal income tax consequences to a stockholder may vary depending upon the stockholder's particular facts and circumstances. Under Section 302 of the Code, a sale of Shares by a stockholder to the Company pursuant to the Offer will be treated as a "sale or exchange" of such Shares for United States federal income tax purposes (rather than as a distribution by the Company with respect to the Shares held by the tendering stockholder) if the receipt of cash upon such sale (i) is "substantially disproportionate" with respect to the stockholder, (ii) results in a "complete redemption" of the Shares owned by the stockholder, or (iii) is "not essentially equivalent to a dividend" with respect to the stockholder (each as described below). If any of the above three tests is satisfied, and the sale of the Shares is therefore treated as a "sale or exchange" of such Shares for United States federal income tax purposes, the tendering stockholder will recognize gain or loss equal to the difference between the amount of cash received by the stockholder pursuant to the Offer and the stockholder's tax basis in the Shares sold pursuant to the Offer. Any such gain or loss will be capital gain or loss, and will be long term capital gain or loss if the Shares have been held for more than one year. If none of the above three tests is satisfied, the tendering stockholder would be treated as having received a dividend includible in gross income in an amount equal to the entire amount of cash received by the stockholder pursuant to the Offer (without reduction for the tax basis of the Shares sold pursuant to the Offer), no loss would be recognized, and the tendering stockholder's basis in the Shares sold pursuant to the Offer would be added to such stockholder's basis in its remaining Shares, if any. In determining whether any of the three tests under Section 302 of the Code is satisfied, stockholders must take into account not only the Shares which are actually owned by the stockholder, but also Shares which are constructively owned by the stockholder within the meaning of Section 318 of the Code. Under Section 318 of the Code, a stockholder may constructively own Shares actually owned, and in some cases constructively owned, by certain related individuals or entities and Shares which the stockholder has the right to acquire by exercise of an option or by conversion. Contemporaneous dispositions or acquisitions of Shares by a stockholder or related individuals or entities may be deemed to be part of a single integrated transaction which will be taken into account in determining whether any of the three tests under Section 302 of the Code has been satisfied. Each stockholder should be aware that because proration may occur in the Offer, even if all the Shares actually and constructively owned by a stockholder are tendered pursuant to the Offer, fewer than all of such Shares may be purchased by the Company. Thus, proration may affect whether a sale by a stockholder pursuant to the Offer will meet any of the three tests under Section 302 of the Code. See Section 6 for information regarding each stockholder's option to make a conditional tender of a minimum number of Shares. A stockholder should consult its own tax advisor regarding whether to make a conditional tender of a minimum number of Shares, and the appropriate calculation thereof. Section 302 Tests. The receipt of cash by a stockholder will be "substantially disproportionate" if the percentage of the outstanding Shares actually and constructively owned by the stockholder immediately following the sale of Shares pursuant to the Offer (treating as not outstanding all Shares purchased pursuant to the Offer) is less than 80% of the percentage of the outstanding Shares actually and constructively owned by such stockholder immediately before the sale of Shares pursuant to the Offer (treating as outstanding all Shares purchased pursuant to the Offer). Stockholders should consult their tax advisors with respect to the application of the "substantially disproportionate" test to their particular situation. 18 The receipt of cash by a stockholder will be a "complete redemption" of all the Shares owned by the stockholder if either (i) all of the Shares actually and constructively owned by the stockholder are sold pursuant to the Offer, or (ii) all of the Shares actually owned by the stockholder are sold pursuant to the Offer and, with respect to Shares constructively owned by the stockholder which are not sold pursuant to the Offer, the stockholder is eligible to waive (and effectively waives) constructive ownership of all such Shares under procedures described in Section 302(c) of the Code. Even if the receipt of cash by a stockholder fails to satisfy the "substantially disproportionate" test or the "complete redemption" test, a stockholder may nevertheless satisfy the "not essentially equivalent to a dividend" test, if the stockholder's sale of Shares pursuant to the Offer results in a "meaningful reduction" in the stockholder's interest in the Company. Whether the receipt of cash by a stockholder will be "not essentially equivalent to a dividend" will depend upon the individual stockholder's facts and circumstances. The IRS has indicated in published rulings that even a small reduction in the proportionate interest of a small minority stockholder in a publicly held corporation who exercises no control over corporate affairs may constitute such a "meaningful reduction." The IRS held in Rev. Rul. 76-385, 1976-2 C.B. 92, that a reduction in the percentage ownership interest of a stockholder in a publicly held corporation from .0001118% to .0001081% (a reduction to 96.7% of the stockholder's prior percentage ownership interest) would constitute a "meaningful reduction." Under this ruling, it is likely that a small minority stockholder who exercises no control over the Company, and all of whose actual and constructively owned Shares are tendered at or below the Purchase Price, would satisfy the "not essentially equivalent to a dividend" test notwithstanding proration in the Offer. Stockholders expecting to rely upon the "not essentially equivalent to a dividend" test should consult their own tax advisors as to its application in their particular situation. Corporate Stockholder Dividend Treatment. If a sale of Shares by a corporate stockholder is treated as a dividend, the corporate stockholder may be entitled to claim a deduction equal to 70% of the dividend under Section 243 of the Code, subject to applicable limitations. Corporate stockholders should, however, consider the effect of Section 246(c) of the Code, which disallows the 70% dividends-received deduction with respect to stock that is held for 45 days or less. For this purpose, the length of time a taxpayer is deemed to have held stock may be reduced by periods during which the taxpayer's risk of loss with respect to the stock is diminished by reason of the existence of certain options or other transactions. Moreover, under Section 246A of the Code, if a corporate stockholder has incurred indebtedness directly attributable to an investment in Shares, the 70% dividends-received deduction may be reduced by a percentage generally computed based on the amount of such indebtedness and the total adjusted tax basis in the Shares. In addition, in the likely event that the Company does not purchase an equal percentage of each stockholder's Shares, any amount received by a corporate stockholder pursuant to the Offer that is treated as a dividend would constitute an "extraordinary dividend" under Section 1059 of the Code. For this purpose, all dividends received by a stockholder within, and having their ex-dividend date within, an 85-day period (expanded to a 365-day period in the case of dividends received in such period that in the aggregate exceed 20% of the stockholder's adjusted tax basis in the Shares) are aggregated and also treated as extraordinary dividends. Accordingly, a corporate stockholder would be required under Section 1059(a) of the Code to reduce its basis (but not below zero) in its Shares by the non- taxed portion of the dividend (i.e., the portion of the dividend for which a deduction is allowed), and if such portion exceeds the stockholder's tax basis for its Shares, to treat the excess as gain from the sale of such Shares in the year in which a sale or disposition of such Shares occurs (which, in certain circumstances, may be the year in which Shares are sold pursuant to the Offer). Even if the purchase of Shares pursuant to the Offer is pro rata with respect to all stockholders, however, any amount received by a corporate stockholder could nevertheless be considered an "extraordinary dividend" under Section 1059 of the Code unless such corporation's stock has been held for more than two years (excluding periods during which the corporation's risk of loss with respect to the stock has been diminished by reason of the existence of certain options or other transactions). Corporate stockholders should consult their own tax advisors as to the application of Section 1059 of the Code to the Offer. Additional Tax Considerations. The distinction between long-term capital gains and ordinary income is relevant because certain individuals are subject to taxation at a reduced rate on the excess of net long-term 19 capital gains over net short-term capital losses. Stockholders are urged to consult their own tax advisors regarding any possible impact on their obligation to make estimated tax payments as a result of the recognition of any capital gain (or the receipt of any ordinary income) caused by the sale of any Shares to the Company pursuant to the Offer. Foreign Stockholders. The Company will withhold United States federal income tax at a rate of 30% from gross proceeds paid pursuant to the Offer to a foreign stockholder or his agent, unless the Company determines that a reduced rate of withholding is applicable pursuant to a tax treaty or that an exemption from withholding is applicable because such gross proceeds are effectively connected with the conduct of a trade or business by the foreign stockholder within the United States. For this purpose, a foreign stockholder is any stockholder that is not (i) a citizen or resident of the United States, (ii) a corporation, partnership or other entity created or organized in or under the laws of the United States, or (iii) any estate or trust the income of which is subject to United States federal income taxation regardless of its source. Without definite knowledge to the contrary, the Company will determine whether a stockholder is a foreign stockholder by reference to the stockholder's address. A foreign stockholder may be eligible to file for a refund of such tax or a portion of such tax if such stockholder (i) meets the "complete redemption," "substantially disproportionate" or "not essentially equivalent to a dividend" tests described above, (ii) is entitled to a reduced rate of withholding pursuant to a treaty and the Company withheld at a higher rate, or (iii) is otherwise able to establish that no tax or a reduced amount of tax was due. In order to claim an exemption from withholding on the ground that gross proceeds paid pursuant to the Offer are effectively connected with the conduct of a trade or business by a foreign stockholder within the United States or that the foreign stockholder is entitled to the benefits of a tax treaty, the foreign stockholder must deliver to the Depositary (or other person who is otherwise required to withhold United States tax) a properly executed statement claiming such exemption or benefits. Such statements may be obtained from the Depositary. Foreign stockholders are urged to consult their own tax advisors regarding the application of United States federal income tax withholding, including eligibility for a withholding tax reduction or exemption and the refund procedures. Backup Withholding. See Section 3 with respect to the application of the United States federal income tax backup withholding. THE TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION ONLY AND MAY NOT APPLY TO SHARES ACQUIRED IN CONNECTION WITH THE EXERCISE OF STOCK OPTIONS OR PURSUANT TO OTHER COMPENSATION ARRANGEMENTS WITH THE COMPANY. THE TAX CONSEQUENCES OF A SALE PURSUANT TO THE OFFER MAY VARY DEPENDING UPON, AMONG OTHER THINGS, THE PARTICULAR CIRCUMSTANCES OF THE TENDERING STOCKHOLDER. NO INFORMATION IS PROVIDED HEREIN AS TO THE STATE, LOCAL OR FOREIGN TAX CONSEQUENCES OF THE TRANSACTION CONTEMPLATED BY THE OFFER. STOCKHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS TO DETERMINE THE PARTICULAR FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF SALES MADE BY THEM PURSUANT TO THE OFFER AND THE EFFECT OF THE STOCK OWNERSHIP ATTRIBUTION RULES MENTIONED ABOVE. 14.EXTENSION OF TENDER PERIOD; TERMINATION; AMENDMENTS The Company expressly reserves the right, in its sole discretion and at any time or from time to time, to extend the period of time during which the Offer is open by giving oral or written notice of such extension to the Depositary. There can be no assurance, however, that the Company will exercise its right to extend the Offer. During any such extension, all Shares previously tendered will remain subject to the Offer, except to the extent that such Shares may be withdrawn as set forth in Section 4. The Company also expressly reserves the right, in its sole discretion, (i) to terminate the Offer and not accept for payment any Shares not 20 theretofore accepted for payment or, subject to Rule 13-4(f)(5) under the Exchange Act, which requires the Company either to pay the consideration offered or to return the Shares tendered promptly after the termination or withdrawal of the Offer, to postpone payment for Shares upon the occurrence of any of the conditions specified in Section 7 hereof by giving oral or written notice of such termination to the Depositary and making a public announcement thereof and (ii) at any time or from time to time amend the Offer in any respect. Amendments to the Offer may be effected by public announcement. Without limiting the manner in which the Company may choose to make public announcement of any termination or amendment, the Company shall have no obligation (except as otherwise required by applicable law) to publish, advertise or otherwise communicate any such public announcement, other than by making a release to the Dow Jones News Service, except in the case of an announcement of an extension of the Offer, in which case the Company shall have no obligation to publish, advertise or otherwise communicate such announcement other than by issuing a notice of such extension by press release or other public announcement, which notice shall be issued no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date. Material changes to information previously provided to holders of the Shares in this Offer or in documents furnished subsequent thereto will be disseminated to holders of Shares in compliance with Rule 13e-4(e)(2) promulgated by the Commission under the Exchange Act. If the Company materially changes the terms of the Offer or the information concerning the Offer, or if it waives a material condition of the Offer, the Company will extend the Offer to the extent required by Rules 13e-4(d)(2) and 13e-4(e)(2) under the Exchange Act. Those rules require that the minimum period during which an offer must remain open following material changes in the terms of the offer or information concerning the offer (other than a change in price, change in dealer's soliciting fee or change in percentage of securities sought) will depend on the facts and circumstances, including the relative materiality of such terms or information. In a published release, the Commission has stated that in its view, an offer should remain open for a minimum of five business days from the date that notice of such a material change is first published, sent or given. The Offer will continue or be extended for at least ten business days from the time the Company publishes, sends or gives to holders of Shares a notice that it will (a) increase or decrease the price it will pay for Shares or the amount of the Dealer Manager's soliciting fee or (b) increase (except for an increase not exceeding 2% of the outstanding Shares) or decrease the number of Shares it seeks. 15.FEES AND EXPENSES Morgan Stanley & Co. Incorporated will act as Dealer Manager for the Company in connection with the Offer. The Company has agreed to pay the Dealer Manager, upon acceptance for payment of Shares pursuant to the Offer, a fee of 0.25% of the Purchase Price of the aggregate number of Shares purchased by the Company pursuant to the Offer. The Dealer Manager will also be reimbursed by the Company for its reasonable out-of-pocket expenses, including attorneys' fees, and will be indemnified against certain liabilities, including liabilities under the federal securities laws, in connection with the Offer. The Dealer Manager has rendered, is currently rendering and is expected to continue to render various investment banking and other advisory services to the Company. It has received, and will continue to receive, customary compensation from the Company for such services. The Company has retained First Chicago Trust Company of New York as Depositary and Georgeson & Company Inc. as Information Agent in connection with the Offer. The Information Agent may contact stockholders by mail, telephone, telex, telegraph and personal interviews, and may request brokers, dealers and other nominee stockholders to forward materials relating to the Offer to beneficial owners. The Depositary and the Information Agent will receive reasonable and customary compensation for their services and will also be reimbursed for certain out-of-pocket expenses. The Company has agreed to indemnify the Depositary and the Information Agent against certain liabilities, including certain liabilities under the federal securities laws, in connection with the Offer. Neither the Information Agent nor the Depositary has been retained to make solicitations or recommendations in connection with the Offer. 21 The Company will not pay any fees or commissions to any broker, dealer or other person for soliciting tenders of Shares pursuant to the Offer (other than the fee of the Dealer Manager). The Company will, upon request, reimburse brokers, dealers, commercial banks and trust companies for reasonable and customary handling and mailing expenses incurred by them in forwarding materials relating to the Offer to their customers. 16.MISCELLANEOUS The Company is subject to the informational requirements of the Exchange Act and in accordance therewith files reports, proxy statements and other information with the Commission relating to its business, financial condition and other matters. Certain information as of particular dates concerning the Company's directors and officers, their remuneration, options granted to them, the principal holders of the Company's securities and any material interest of such persons in transactions with the Company is filed with the Commission. The Company has also filed an Issuer Tender Offer Statement on Schedule 13E-4 with the Commission, which includes certain additional information relating to the Offer. Such reports, as well as such other material, may be inspected and copies may be obtained at the Commission's public reference facilities at 450 Fifth Street, N.W., Washington, D.C., and should also be available for inspection and copying at the regional offices of the Commission located at 7 World Trade Center, 13th Floor, New York, New York 10048, and Suite 1400, Northwestern Atrium Center, 500 West Madison Street, Chicago, Illinois 60661. Copies of such material may be obtained by mail, upon payment of the Commission's customary fees, from the Commission's Public Reference Section at 450 Fifth Street, N.W., Washington, D.C. 20549. Such reports, proxy statements and other information also should be available for inspection at the offices of the NYSE, 20 Broad Street, New York, New York and the Pacific Stock Exchange, 301 Pine Street, San Francisco, California. The Company's Schedule 13E-4 may not be available at the Commission's regional offices. The Offer is being made to all holders of Shares. The Company is not aware of any state where the making of the Offer is prohibited by administrative or judicial action pursuant to a valid state statute. If the Company becomes aware of any valid state statute prohibiting the making of the Offer, the Company will make a good faith effort to comply with such statute. If, after such good faith effort, the Company cannot comply with such statute, the Offer will not be made to, nor will tenders be accepted from or on behalf of, holders of Shares in such state. In those jurisdictions whose securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer shall be deemed to be made on behalf of the Company by the Dealer Manager or one or more registered brokers or dealers licensed under the laws of such jurisdictions. Transamerica Corporation May 9, 1994 22 SCHEDULE A The Company has made the following purchases of Shares during the 40 business-day period preceding the commencement of the Offer on the dates, in the amounts and at the prices indicated below. All such purchases were effected on the NYSE.
AVERAGE PRICE DATE PER SHARE NO. OF SHARES ---- --------- ------------- 03/10/94 $51.8980 32,000 03/11/94 52.5523 32,000 03/14/94 52.3150 30,600 03/15/94 52.6225 30,600 03/16/94 52.5597 26,600 03/17/94 53.3840 30,600 03/18/94 53.6205 30,600 03/21/94 53.5143 18,400 03/22/94 53.6781 33,400 03/23/94 53.9083 33,400 03/24/94 53.0501 33,400 03/25/94 53.3221 13,700 03/28/94 52.6241 29,000 03/29/94 51.6707 29,000 03/30/94 51.4819 29,000 03/31/94 50.5388 29,000 04/04/94 50.2082 30,500 04/05/94 50.1873 30,500 04/06/94 50.1880 24,600 04/07/94 50.2238 30,500 04/08/94 49.9607 30,500 04/11/94 50.5986 19,900 04/12/94 50.5535 32,500
Facsimile copies of the Letter of Transmittal will be accepted. The Letter of Transmittal and certificates for Shares should be sent or delivered by each stockholder of the Company or his or her broker, dealer, bank or trust company to the Depositary at one of its addresses set forth below. The Depositary: FIRST CHICAGO TRUST COMPANY OF NEW YORK By Mail: Facsimile Transmission: By Hand or by Overnight P.O. Box 2560 (201) 222-4720 or Courier: Mail Suite 4660 (201) 222-4721 14 Wall Street, 8th Floor Jersey City, New Jersey Suite 4680 07303-2560 New York, New York 10005 Confirm by Telephone: (201) 222-4707 Any questions or requests for assistance may be directed to the Information Agent or the Dealer Manager at the respective telephone numbers and addresses listed below. Requests for additional copies of this Offer to Purchase, the Letter of Transmittal or other tender offer materials may be directed to the Information Agent or the Dealer Manager, and such copies will be furnished promptly at the Company's expense. Stockholders may also contact their local broker, dealer, commercial bank or trust company for assistance concerning the Offer. The Information Agent: [LOGO OF GEORGESON & COMPANY INC.] Wall Street Plaza New York, New York 10005 Banks and Brokers Call Collect: (212) 440-9800 ALL OTHERS CALL TOLL FREE: 1-800-223-2064 The Dealer Manager: MORGAN STANLEY & CO. Incorporated 1251 Avenue of the Americas New York, New York 10020 (415) 576-2247 (call collect) EX-99.A2 3 LETTER OF TRANSMITTAL LETTER OF TRANSMITTAL To Accompany Shares of Common Stock (Including the Associated Preference Stock Purchase Rights) of Transamerica Corporation Tendered Pursuant to the Offer to Purchase Dated May 9, 1994 THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON MONDAY, JUNE 6, 1994, UNLESS THE OFFER IS EXTENDED. To: FIRST CHICAGO TRUST COMPANY OF NEW YORK, Depositary By Mail: By Hand or By Overnight Courier: P.O. Box 2560 14 Wall Street, 8th Floor Mail Suite 4660 Suite 4680 Jersey City, New Jersey 07303-2560 New York, New York 10005 DESCRIPTION OF SHARES TENDERED - -------------------------------------------------------------------------------- NAME(S) AND ADDRESS(ES) OF SHARES TENDERED REGISTERED HOLDER(S) (ATTACH ADDITIONAL LIST IF NECESSARY) (PLEASE FILL IN EXACTLY AS NAME(S) APPEAR(S) ON CERTIFICATE(S)) - -------------------------------------------------------------------------------- CERTIFICATE TOTAL NUMBER NUMBER OF NUMBER(S)* OF SHARES SHARES REPRESENTED TENDERED** BY CERTIFICATE(S)* -------------------------------------------- -------------------------------------------- -------------------------------------------- -------------------------------------------- -------------------------------------------- -------------------------------------------- TOTAL SHARES: - -------------------------------------------------------------------------------- *Need not be completed by stockholders tendering by book-entry transfer. **Unless otherwise indicated, it will be assumed that all Shares represented by any certificates delivered to the Depository are being tendered. See Instruction 4. DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN ONE LISTED ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THE LETTER OF TRANSMITTAL IS COMPLETED. This Letter of Transmittal is to be used if certificates are to be forwarded herewith or if delivery of Shares (as defined below) is to be made by book- entry transfer to the Depositary's account at The Depository Trust Company ("DTC"), Midwest Securities Trust Company ("MSTC") or Philadelphia Depository Trust Company ("PDTC") (hereinafter collectively referred to as the "Book-Entry Transfer Facilities") pursuant to the procedures set forth in Section 3 of the Offer to Purchase (as defined below). Stockholders who cannot deliver their Shares and all other documents required hereby to the Depositary by the Expiration Date (as defined in the Offer to Purchase) must tender their Shares pursuant to the guaranteed delivery procedure set forth in Section 3 of the Offer to Purchase. See Instruction 2. Delivery of documents to the Company or to a Book-Entry Transfer Facility does not constitute a valid delivery. (BOXES BELOW FOR USE BY ELIGIBLE INSTITUTIONS ONLY) [_] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO THE DEPOSITARY'S ACCOUNT AT ONE OF THE BOOK-ENTRY TRANSFER FACILITIES AND COMPLETE THE FOLLOWING: Name of Tendering Institution _______________________________________________ Check Applicable Box: [_] DTC [_] MSTC [_] PDTC Account No. _________________________________________________________________ Transaction Code No. ________________________________________________________ [_] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING: Name(s) of Tendering Stockholder(s) _________________________________________ Date of Execution of Notice of Guaranteed Delivery __________________________ Name of Institution that Guaranteed Delivery ________________________________ If delivery is by book-entry transfer: Name of Tendering Institution _______________________________________________ Account No. at [_] DTC [_] MSTC [_] PDTC Transaction Code No. ________________________________________________________ NOTE: SIGNATURES MUST BE PROVIDED ON PAGE 6 BELOW. PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY Ladies and Gentlemen: The undersigned hereby tenders to Transamerica Corporation, a Delaware corporation (the "Company"), the above-described shares of its Common Stock, par value $1.00 per share (the "Shares") (including the associated preference stock purchase rights (the "Rights") issued pursuant to the Rights Agreement, dated as of July 17, 1986, as amended, between the Company and First Chicago Trust Company of New York, as the Rights Agent), pursuant to the Company's offer to purchase up to 4,500,000 Shares at a price per Share hereinafter set forth, net to the seller in cash, upon the terms and subject to the conditions set forth in the Offer to Purchase, dated May 9, 1994 (the "Offer to Purchase"), receipt of which is hereby acknowledged, and in this Letter of Transmittal (which together constitute the "Offer"). Unless the context otherwise requires, all references to Shares shall include the associated Rights. Subject to, and effective upon, acceptance for payment of and payment for the Shares tendered herewith in accordance with the terms and subject to the conditions of the Offer (including, if the Offer is extended or amended, the terms and conditions of any such extension or amendment), the undersigned hereby sells, assigns and transfers to, or upon the order of, the Company all right, title and interest in and to all the Shares that are being tendered hereby (and any and all other Shares or other securities issued or issuable in respect thereof on or after May 9, 1994 (collectively, "Distributions")) and constitutes and appoints the Depositary the true and lawful agent and attorney- in-fact of the undersigned with respect to such Shares and all Distributions, with full power of substitution (such power of attorney being deemed to be an irrevocable power coupled with an interest), to (a) deliver certificates for such Shares and all Distributions, or transfer ownership of such Shares and all Distributions on the account books maintained by any of the Book-Entry Transfer Facilities, together, in any such case, with all accompanying evidences of transfer and authenticity, 2 to or upon the order of the Company, (b) present such Shares and all Distributions for registration and transfer on the books of the Company and (c) receive all benefits and otherwise exercise all rights of beneficial ownership of such Shares and all Distributions, all in accordance with the terms of the Offer. The undersigned hereby represents and warrants that the undersigned has full power and authority to tender, sell, assign and transfer the Shares tendered hereby and all Distributions and that, when and to the extent the same are accepted for payment by the Company, the Company will acquire good, marketable and unencumbered title thereto, free and clear of all liens, restrictions, charges, encumbrances, conditional sales agreements or other obligations relating to the sale or transfer thereof, and the same will not be subject to any adverse claims. The undersigned will, upon request, execute and deliver any additional documents deemed by the Depositary or the Company to be necessary or desirable to complete the sale, assignment and transfer of the Shares tendered hereby and all Distributions. All authority herein conferred or agreed to be conferred shall not be affected by, and shall survive the death or incapacity of the undersigned, and any obligation of the undersigned hereunder shall be binding upon the heirs, personal representatives, successors and assigns of the undersigned. Except as stated in the Offer, this tender is irrevocable. The undersigned understands that tenders of Shares pursuant to any one of the procedures described in Section 3 of the Offer to Purchase and in the instructions hereto will constitute the undersigned's acceptance of the terms and conditions of the Offer, including the undersigned's representation and warranty that (i) the undersigned has a net long position in the Shares being tendered within the meaning of Rule 14e-4 promulgated under the Securities Exchange Act of 1934, as amended, and (ii) the tender of such Shares complies with Rule 14e-4. The Company's acceptance for payment of Shares tendered pursuant to the Offer will constitute a binding agreement between the undersigned and the Company upon the terms and subject to the conditions of the Offer. The undersigned understands that the Company will determine a single per Share price (not greater than $55 nor less than $48 per Share) (the "Purchase Price") that it will pay for Shares validly tendered and not withdrawn pursuant to the Offer taking into account the number of Shares so tendered and the prices specified by tendering stockholders. The undersigned understands that the Company will select the Purchase Price that will enable it to purchase 4,500,000 Shares (or such lesser number of Shares as are validly tendered at prices not greater than $55 nor less than $48 per Share) pursuant to the Offer. The undersigned understands that tenders of Shares pursuant to any one of the procedures described in Section 2 or 3 of the Offer to Purchase and in the instructions hereto will constitute an agreement between the undersigned and the Company upon the terms and subject to the conditions of the Offer. The undersigned also understands that unless the Rights are redeemed or become separately transferable in accordance with their terms, by tendering Shares the undersigned will also be tendering the associated Rights and that no separate consideration will be paid for such Rights. Unless otherwise indicated under "Special Payment Instructions," please issue the check for the purchase price of any Shares purchased, and/or return any Shares not tendered or not purchased, in the name(s) of the undersigned (and, in the case of Shares tendered by book-entry transfer, by credit to the account at the Book-Entry Transfer Facility designated above). Similarly, unless otherwise indicated under "Special Delivery Instructions," please mail the check for the purchase price of any Shares purchased and/or any certificates for Shares not tendered or not purchased (and accompanying documents, as appropriate) to the undersigned at the address shown below the undersigned's signature(s). In the event that both "Special Payment Instructions" and "Special Delivery Instructions" are completed, please issue the check for the purchase price of any Shares purchased and/or return any Shares not tendered or not purchased in the name(s) of, and mail said check and/or any certificates to, the person(s) so indicated. The undersigned recognizes that the Company has no obligation, pursuant to the "Special Payment Institutions," to transfer any Shares from the name of the registered holder(s) thereof if the Company does not accept for payment any of the Shares so tendered. 3 PRICE (IN DOLLARS) PER SHARE AT WHICH SHARES ARE BEING TENDERED (SEE INSTRUCTION 5) - -------------------------------------------------------------------------------- CHECK ONLY ONE BOX. IF MORE THAN ONE BOX IS CHECKED, OR IF NO BOX IS CHECKED, THERE IS NO VALID TENDER OF SHARES. - -------------------------------------------------------------------------------- [_] $48.000 [_] $49.000 [_] $50.000 [_] $51.000 [_] $52.000 [_] $53.000 [_] $54.000 [_] $48.125 [_] $49.125 [_] $50.125 [_] $51.125 [_] $52.125 [_] $53.125 [_] $54.125 [_] $48.250 [_] $49.250 [_] $50.250 [_] $51.250 [_] $52.250 [_] $53.250 [_] $54.250 [_] $48.375 [_] $49.375 [_] $50.375 [_] $51.375 [_] $52.375 [_] $53.375 [_] $54.375 [_] $48.500 [_] $49.500 [_] $50.500 [_] $51.500 [_] $52.500 [_] $53.500 [_] $54.500 [_] $48.625 [_] $49.625 [_] $50.625 [_] $51.625 [_] $52.625 [_] $53.625 [_] $54.625 [_] $48.750 [_] $49.750 [_] $50.750 [_] $51.750 [_] $52.750 [_] $53.750 [_] $54.750 [_] $48.875 [_] $49.875 [_] $50.875 [_] $51.875 [_] $52.875 [_] $53.875 [_] $54.875 [_] $55.000
ODD LOTS (SEE INSTRUCTION 9) This section is to be completed ONLY if Shares are being tendered by or on behalf of a person owning beneficially an aggregate of fewer than 100 Shares as of the close of business on May 6, 1994. The undersigned either (check one box): [_]was the beneficial owner of an aggregate of fewer than 100 Shares (including Shares held in the Stock Savings Plan and the Reinvestment Plan (as such terms are defined in the Offer to Purchase)) as of the close of business on May 6, 1994, all of which are being tendered, or [_]is a broker, dealer, commercial bank, trust company or other nominee that (i) is tendering, for the beneficial owners thereof, Shares with respect to which it is the record owner, and (ii) believes, based upon representations made to it by each such beneficial owner, that such beneficial owner owned beneficially an aggregate of fewer than 100 Shares (including Shares held in the Stock Savings Plan and the Reinvestment Plan) as of the close of business on May 6, 1994) and is tendering all of such Shares. 4 TRANSAMERICA CORPORATION DIVIDEND REINVESTMENT PLAN SHARES (SEE INSTRUCTION 13) This section is to be completed ONLY if Shares held in the Reinvestment Plan are to be tendered. [_]By checking this box, the undersigned represents that the undersigned is a participant in the Reinvestment Plan and hereby tenders the following number of Shares held in the Reinvestment Plan account of the undersigned: ____________ Shares* * The undersigned understands and agrees that all Shares held in the Reinvestment Plan account(s) of the undersigned will be tendered if the above box is checked and the space above is left blank. SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS (SEE INSTRUCTIONS 6, 7 AND 8) (SEE INSTRUCTIONS 6, 7 AND 8) To be completed ONLY if the check To be completed ONLY if the check for the purchase price of Shares for the purchase price of Shares purchased and/or certificates for purchased and/or certificates for Shares not tendered or not Shares not tendered or not purchased are to be issued in the purchased are to be mailed to name of someone other than the someone other than the undersigned undersigned. or to the undersigned at an address other than that shown Issue [_] check below the undersigned's and/or [_] certificate(s) to: signature(s). Name ______________________________ Mail [_] check and/or [_] certificates to: ------------------------------ Name _____________________________ (Please Print) ----------------------------- (Please Print) Address ___________________________ ----------------------------- Address __________________________ (Include Zip Code) --------------------------- (Include Zip Code) ----------------------------------- (Taxpayer Identification or Social Security No.) CONDITIONAL TENDER A tendering stockholder may condition his or her tender of Shares upon the purchase by the Company of a specified minimum number of the Shares tendered hereby, all as described in the Offer to Purchase, particularly in Section 6 thereof. Unless at least such minimum number of Shares is purchased by the Company pursuant to the terms of the Offer, none of the Shares tendered hereby will be purchased. It is the tendering stockholder's responsibility to calculate such minimum number of Shares, and each stockholder is urged to consult his or her own tax advisor. Unless this box has been completed and a minimum specified, the tender will be deemed unconditional. Minimum number of Shares that must be purchased, if any are purchased: ____________ Shares 5 SIGN HERE (PLEASE COMPLETE SUBSTITUTE FORM W-9 ON PAGE 11 HEREOF) ++ ++ ----------------------------------------------------------------------- Signature(s) of Owner(s) ++ ++ ----------------------------------------------------------------------- Dated_______, 1994 Name(s) _____________________________________________________________________ ----------------------------------------------------------------------------- (Please Print) ----------------------------------------------------------------------------- Capacity (full title) _______________________________________________________ Address _____________________________________________________________________ ----------------------------------------------------------------------------- ----------------------------------------------------------------------------- (Include Zip Code) Area Code and Telephone No. _________________________________________________ (Must be signed by registered holder(s) exactly as name(s) appear(s) on stock certificate(s) or on a security position listing or by person(s) authorized to become registered holder(s) by certificates and documents transmitted herewith. If signature is by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity, please set forth full title and see Instruction 6.) GUARANTEE OF SIGNATURE(S) (SEE INSTRUCTIONS 1 AND 6) Name of Firm ________________________________________________________________ Authorized Signature ________________________________________________________ Dated_______, 1994 6 INSTRUCTIONS FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER 1. GUARANTEE OF SIGNATURES. Except as otherwise provided below, all signatures on this Letter of Transmittal must be guaranteed by a firm that is a member of a registered national securities exchange or the National Association of Securities Dealers, Inc., or by a commercial bank or trust company having an office or correspondent in the United States which is a participant in an approved Signature Guarantee Medallion Program (an "Eligible Institution"). Signatures on this Letter of Transmittal need not be guaranteed (a) if this Letter of Transmittal is signed by the registered holder(s) of the Shares (which term, for purposes of this document, shall include any participant in one of the Book-Entry Transfer Facilities whose name appears on a security position listing as the owner of Shares) tendered herewith and such holder(s) have not completed the box entitled "Special Payment Instructions" or the box entitled "Special Delivery Instructions" on this Letter of Transmittal or (b) if such Shares are tendered for the account of an Eligible Institution. See Instruction 6. 2. DELIVERY OF LETTER OF TRANSMITTAL AND SHARES. This Letter of Transmittal is to be used either if certificates are to be forwarded herewith or if delivery of Shares is to be made by book-entry transfer pursuant to the procedures set forth in Section 3 of the Offer to Purchase. Certificates for all physically delivered Shares, or a confirmation of a book-entry transfer into the Depositary's account at one of the Book-Entry Transfer Facilities of all Shares delivered electronically, as well as a properly completed and duly executed Letter of Transmittal (or facsimile thereof) and any other documents required by this Letter of Transmittal, must be received by the Depositary at one of its addresses set forth on the front page of this Letter of Transmittal on or prior to the Expiration Date (as defined in the Offer to Purchase). Stockholders who cannot deliver their Shares and all other required documents to the Depositary on or prior to the Expiration Date must tender their Shares pursuant to the guaranteed delivery procedure set forth in Section 3 of the Offer to Purchase. Pursuant to such procedure: (a) such tender must be made by or through an Eligible Institution, (b) a properly completed and duly executed Notice of Guaranteed Delivery substantially in the form provided by the Company (with any required signature guarantees) must be received by the Depositary on or prior to the Expiration Date and (c) the certificates for all physically delivered Shares, or a confirmation of a book-entry transfer into the Depositary's account at one of the Book-entry Transfer Facilities of all Shares delivered electronically, as well as a properly completed and duly executed Letter of Transmittal (or facsimile thereof) and any other documents required by this Letter of Transmittal must be received by the Depositary within five New York Stock Exchange, Inc. trading days after the date of execution of such Notice of Guaranteed Delivery, all as provided in Section 3 of the Offer to Purchase. THE METHOD OF DELIVERY OF SHARES AND ALL OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER. IF CERTIFICATES FOR SHARES ARE SENT BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. Except as specifically permitted by Section 6 of the Offer to Purchase, no alternative or contingent tenders will be accepted. Except for Shares held by participants in the Stock Savings Plan and the Reinvestment Plan (as such terms are defined in the Offer to Purchase), fractional Shares will be purchased, unless proration of tendered Shares is required (in which event no fractional Shares will be purchased). See Section 1 of the Offer to Purchase. By executing this Letter of Transmittal (or facsimile thereof), the tendering stockholder waives any right to receive any notice of the acceptance for payment of the Shares. 3. INADEQUATE SPACE. If the space provided herein is inadequate, the certificate numbers and/or the number of Shares should be listed on a separate schedule attached hereto. 4. PARTIAL TENDERS (NOT APPLICABLE TO STOCKHOLDERS WHO TENDER BY BOOK-ENTRY TRANSFER). If fewer than all the Shares represented by any certificate delivered to the Depositary are to be tendered, fill in the number of Shares that are to be tendered in the box entitled "Number of Shares Tendered." In such case, a new certificate for the remainder of the Shares represented by the old certificate will be sent to the person(s) signing this Letter of Transmittal, unless otherwise provided in the "Special Payment Instructions" or "Special 7 Delivery Instructions" boxes on this Letter of Transmittal, as promptly as practicable following the expiration or termination of the Offer. All Shares represented by certificates delivered to the Depositary will be deemed to have been tendered unless otherwise indicated. 5. INDICATION OF PRICE AT WHICH SHARES ARE BEING TENDERED. For Shares to be validly tendered, the stockholder must check the box indicating the price per Share at which he or she is tendering Shares under "Price (In Dollars) Per Share at Which Shares Are Being Tendered" on this Letter of Transmittal. Only one box may be checked. If more than one box is checked or if no box is checked, there is no valid tender of Shares. A stockholder wishing to tender portions of his or her Share holdings at different prices must complete a separate Letter of Transmittal for each price at which he or she wishes to tender each such portion of his or her Shares. The same Shares cannot be tendered (unless previously validly withdrawn as provided in Section 4 of the Offer to Purchase) at more than one price. 6. SIGNATURES ON LETTER OF TRANSMITTAL; STOCK POWERS AND ENDORSEMENTS. If this Letter of Transmittal is signed by the registered holder(s) of the Shares hereby, the signature(s) must correspond with the name(s) as written on the face of the certificates without alteration, enlargement or any change whatsoever. If any of the Shares hereby is held of record by two or more persons, all such persons must sign this Letter of Transmittal. If any of the Shares tendered hereby are registered in different names on different certificates, it will be necessary to complete, sign and submit as many separate Letters of Transmittal as there are different registrations of certificates. If this Letter of Transmittal is signed by the registered holder(s) of the Shares tendered hereby, no endorsements of certificates or separate stock powers are required unless payment of the purchase price is to be made to, or Shares not tendered or not purchased are to be registered in the name of, any person other than the registered holder(s). Signatures on any such certificates or stock powers must be guaranteed by an Eligible Institution. See Instruction 1. If this Letter of Transmittal is signed by a person other than the registered holder(s) of the Shares tendered hereby, certificates must be endorsed or accompanied by appropriate stock powers, in either case, signed exactly as the name(s) of the registered holder(s) appear(s) on the certificates for such Shares. Signature(s) on any such certificates or stock powers must be guaranteed by an Eligible Institution. See Instruction 1. If this Letter of Transmittal or any certificate or stock power is signed by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity, such person should so indicate when signing, and proper evidence satisfactory to the Company of the authority of such person so to act must be submitted. 7. STOCK TRANSFER TAXES. The Company will pay or cause to be paid any stock transfer taxes with respect to the sale and transfer of any Shares to it or its order pursuant to the Offer. If, however, payment of the purchase price is to be made to, or Shares not tendered or not purchased are to be registered in the name of, any person other than the registered holder(s), or if tendered Shares are registered in the name of any person other than the person(s) signing this Letter of Transmittal, the amount of any stock transfer taxes (whether imposed on the registered holder(s), such other person or otherwise) payable on account of the transfer to such person will be deducted from the purchase price unless satisfactory evidence of the payment of such taxes, or exemption therefrom, is submitted. See Section 5 of the Offer to Purchase. EXCEPT AS PROVIDED IN THIS INSTRUCTION 7, IT WILL NOT BE NECESSARY TO AFFIX TRANSFER TAX STAMPS TO THE CERTIFICATES REPRESENTING SHARES TENDERED HEREBY. 8. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If the check for the purchase price of any Shares purchased is to be issued in the name of, and/or any Shares not tendered or not purchased are to be returned 8 to, a person other than the person(s) signing this Letter of Transmittal or if the check and/or any certificates for Shares not tendered or not purchased are to be mailed to someone other than the person(s) signing this Letter of Transmittal or to an address other than that shown above in the box captioned "Description of Shares Tendered," then the boxes captioned "Special Payment Instructions" and/or "Special Delivery Instructions" on this Letter of Transmittal should be completed. Stockholders tendering Shares by book-entry transfer will have any Shares not accepted for payment returned by crediting the account maintained by such stockholder at the Book-Entry Transfer Facility from which such transfer was made. 9. ODD LOTS. As described in the Offer to Purchase, if fewer than all Shares validly tendered at or below the Purchase Price and not withdrawn on or prior to the Expiration Date are to be purchased, the Shares purchased first will consist of all Shares (other than Stock Savings Plan Shares) tendered by any stockholder who owned beneficially an aggregate of fewer than 100 Shares (including Shares held in the Stock Savings Plan and the Reinvestment Plan) as of the close of business on May 6, 1994 who validly and unconditionally tendered all such Shares at or below the Purchase Price. (All Shares held in the Stock Savings Plan will be subject to proration (if any), even if such Shares are owned by a person who benefically owned fewer than 100 Shares as of the close of business on such date.) Partial or conditional tenders of Shares will not qualify for this preference. This preference will not be available unless the box captioned "Odd Lots" in this Letter of Transmittal and the Notice of Guaranteed Delivery, if any, is completed. 10. SUBSTITUTE FORM W-9 AND FORM W-8. The tendering stockholder is required to provide the Depositary with either a correct Taxpayer Identification Number ("TIN") on Substitute Form W-9, which is provided under "Important Tax Information" below, or a properly completed Form W-8. Failure to provide the information on either Substitute Form W-9 or Form W-8 may subject the tendering stockholder to 31% federal income tax backup withholding on the payment of the purchase price. The box in Part 2 of Substitute Form W-9 may be checked if the tendering stockholder has not been issued a TIN and has applied for a number or intends to apply for a number in the near future. If the box in Part 2 is checked and the Depositary is not provided with a TIN by the time of payment, the Depositary will withhold 31% on all payments of the purchase price thereafter until a TIN is provided to the Depositary. 11. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Any questions or requests for assistance may be directed to the Information Agent or the Dealer Manager at their respective telephone numbers and addresses listed below. Requests for additional copies of the Offer to Purchase, this Letter of Transmittal or other tender offer materials may be directed to the Information Agent or the Dealer Manager and such copies will be furnished promptly at the Company's expense. Stockholders may also contact their local broker, dealer, commercial bank or trust company for assistance concerning the Offer. 12. IRREGULARITIES. All questions as to the Purchase Price, the form of documents, and the validity, eligibility (including time of receipt) and acceptance of any tender of Shares will be determined by the Company, in its sole discretion, and its determination shall be final and binding. The Company reserves the absolute right to reject any or all tenders of Shares that it determines are not in proper form or the acceptance for payment of or payment for Shares that may, in the opinion of the Company's counsel, be unlawful. The Company also reserves the absolute right to waive any of the conditions to the Offer or any defect or irregularity in any tender of Shares and the Company's interpretation of the terms and conditions of the Offer (including these instructions) shall be final and binding. Unless waived, any defects or irregularities in connection with tenders must be cured within such time as the Company shall determine. None of the Company, the Dealer Manager, the Depositary, the Information Agent or any other person shall be under any duty to give notice of any defect or irregularity in tenders, nor shall any of them incur any liability for failure to give any such notice. Tenders will not be deemed to have been made until all defects and irregularities have been cured or waived. 13. REINVESTMENT PLAN. If a tendering stockholder desires to have tendered pursuant to the Offer Shares which such stockholder has accumulated through May 6, 1994 under the Reinvestment Plan, the box captioned "Transamerica Corporation Dividend Reinvestment Plan Shares" should be completed. A participant in the Reinvestment Plan may complete such box on only one Letter of Transmittal submitted by 9 such participant. If a participant submits more than one Letter of Transmittal and completes such box on more than one Letter of Transmittal, the participant will be deemed to have elected to tender all Shares which such participant has accumulated under the Reinvestment Plan through May 6, 1994 at the lowest of the prices specified in such Letters of Transmittal. If a stockholder authorizes a tender of his or her Shares held in the Reinvestment Plan, all such Shares held in such stockholder's Reinvestment Plan account(s), including fractional Shares, will be tendered, unless otherwise specified in the appropriate space in the box captioned "Transamerica Corporation Reinvestment Plan Shares." In the event that the box captioned "Transamerica Corporation Reinvestment Plan Shares" is not completed, no Shares held in the tendering stockholder's Reinvestment Plan account will be tendered. IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE COPY THEREOF) TOGETHER WITH CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER REQUIRED DOCUMENTS MUST BE RECEIVED BY THE DEPOSITARY, OR THE NOTICE OF GUARANTEED DELIVERY MUST BE RECEIVED BY THE DEPOSITARY, ON OR PRIOR TO THE EXPIRATION DATE (AS DEFINED IN THE OFFER TO PURCHASE). IMPORTANT TAX INFORMATION Under federal income tax law, a stockholder whose tendered Shares are accepted for payment is required to provide the Depositary (as payer) with either such stockholder's correct TIN on Substitute Form W-9 below or a properly completed Form W-8. If such stockholder is an individual, the TIN is his or her social security number. For businesses and other entities, the number is the employer identification number. If the Depositary is not provided with the correct TIN or properly completed Form W-8, the stockholder may be subject to a $50 penalty imposed by the Internal Revenue Service. In addition, payments that are made to such stockholder with respect to Shares purchased pursuant to the Offer may be subject to backup withholding. The Form W-8 can be obtained from the Depositary. See the enclosed Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 for additional instructions. If federal income tax backup withholding applies, the Depositary is required to withhold 31% of any payments made to the stockholder. Backup withholding is not an additional tax. Rather, the federal income tax liability of persons subject to backup withholding will be reduced by the amount of the tax withheld. If withholding results in an overpayment of taxes, a refund may be obtained. PURPOSE OF SUBSTITUTE FORM W-9 AND FORM W-8 To avoid backup withholding on payments that are made to a stockholder with respect to Shares purchased pursuant to the Offer, the stockholder is required to notify the Depositary of his or her correct TIN by completing the Substitute Form W-9 on page 11 hereof certifying that the TIN provided on Substitute Form W-9 is correct and that (1) the stockholder has not been notified by the Internal Revenue Service that he or she is subject in federal income tax backup withholding as a result of failure to report all interest or dividends or (2) the Internal Revenue Service has notified the stockholder that he or she is no longer subject to federal income tax backup withholding. Foreign stockholders must submit a properly completed Form W-8 in order to avoid the applicable backup withholding; provided, however, that backup withholding will not apply to foreign stockholders subject to 30% (or lower treaty rate) withholding on gross payments received pursuant to the Offer. WHAT NUMBER TO GIVE THE DEPOSITARY The stockholder is required to give the Depositary the social security number or employer identification number of the registered owner of the Shares. If the Shares are in more than one name or are not in the name of the actual owner, consult the enclosed Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 for additional guidance on which number to report. 10 PAYER'S NAME: FIRST CHICAGO TRUST COMPANY OF NEW YORK PART 1-PLEASE PROVIDE YOUR TIN ___________________ SUBSTITUTE TIN IN THE BOX AT RIGHT Social Security Number FORM W-9 AND CERTIFY BY SIGNING AND or DATING BELOW. Employer Identification Number DEPARTMENT OF THE TREASURY ------------------------------------------------------- INTERNAL REVENUE SERVICE NAME (Please Print) PAYOR'S REQUEST FOR TAXPAYER PART 2 ----------------------------- ADDRESS Awaiting IDENTIFICATION NUMBER (TIN) TIN [_] AND CERTIFICATION ----------------------------- CITY STATE ZIP CODE ------------------------------------------------------- Part 3--CERTIFICATION-UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT (1) the number shown on this form is my correct taxpayer identification number (or a TIN has not been issued to me but I have mailed or delivered an application to receive a TIN or intend to do so in the near future), (2) I am not subject to backup withholding either because I have not been notified by the Internal Revenue Service (the "IRS") that I am subject to backup withholding as a result of a failure to report all interest or dividends or the IRS has notified me that I am no longer subject to backup withholding, and (3) all other information provided on this form is true, correct and complete. SIGNATURE ___________________________________ DATE You must cross out item (2) above if you have been notified by the IRS that you are currently subject to backup withholding because of underreporting interest or dividends on your tax return. NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS. YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 2 OF THE SUBSTITUTE FORM W-9. CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER I certify under penalties of perjury that a taxpayer identification number has not been issued to me and either (1) I have mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal Revenue Service Center or Social Security Administration Office or (2) I intend to mail or deliver an application in the near future. I understand that if I do not provide a taxpayer identification number by the time of payment, 31% of all payments of the purchase price made to me thereafter will be withheld until I provide a number. Signature _________________________ Date: ____________ , 1994 11 The Information Agent: [LOGO OF GEORGESON & COMPANY INC.] Wall Street Plaza New York, New York 10005 Banks and Brokers Call Collect: (212) 440-9800 ALL OTHERS CALL TOLL FREE: 1-800-223-2064 The Dealer Manager: MORGAN STANLEY & CO. Incorporated 1251 Avenue of the Americas New York, New York 10020 (415) 576-2247 (call collect) GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 SECTION REFERENCES ARE TO THE INTERNAL REVENUE CODE. Purpose of Form.--A person who is required to file an information return with the IRS must obtain your correct TIN to report income paid to you, real estate transactions, mortgage interest you paid, the acquisition or abandonment of secured property, or contributions you made to an IRA. Use Form W-9 to furnish your correct TIN to the requester (the person asking you to furnish your TIN) and, when applicable, (1) to certify that the TIN you are furnishing is correct (or that you are waiting for a number to be issued), (2) to certify that you are not subject to backup withholding, and (3) to claim exemption from backup withholding if you are an exempt payee. Furnishing your correct TIN and making the appropriate certifications will prevent certain payments from being subject to backup withholding. Note: If a requester gives you a form other than a W-9 to request your TIN, you must use the requester's form. How To Obtain a TIN.--If you do not have a TIN, apply for one immediately. To apply, get Form SS-5, Application for a Social Security Card (for individuals), from your local office of the Social Security Administration, or Form SS-4, Application for Employer Identification Number (for businesses and all other entities), from your local IRS office. To complete Form W-9 if you do not have a TIN, write "Applied for" in the space for the TIN in Part I (or check box 2 of Substitute Form W-9), sign and date the form, and give it to the requester. Generally, you must obtain a TIN and furnish it to the requester by the time of payment. If the requester does not receive your TIN by the time of payment, backup withholding, if applicable, will begin and continue until you furnish your TIN to the requester. Note: Writing "Applied for" (or checking box 2 of the Substitute Form W-9) on the form means that you have already applied for a TIN OR that you intend to apply for one in the near future. As soon as you receive your TIN, complete another Form W-9, include your TIN, sign and date the form, and give it to the requester. What Is Backup Withholding?--Persons making certain payments to you after 1992 are required to withhold and pay to the IRS 31% of such payments under certain conditions. This is called "backup withholding". Payments that could be subject to backup withholding include interest, dividends, broker and barter exchange transactions, rents, royalties, nonemployee compensation, and certain payments from fishing boat operators, but do not include real estate transactions. If you give the requester your correct TIN, make the appropriate certifications, and report all your taxable interest and dividends on your tax return, your payments will not be subject to backup withholding. Payments you receive will be subject to backup withholding if: 1. You do not furnish your TIN to the requester, or 2. The IRS notifies the requester that you furnished an incorrect TIN, or 3. You are notified by the IRS that you are subject to backup withholding because you failed to report all your interest and dividends on your tax return (for reportable interest and dividends only), or 4. You do not certify to the requester that you are not subject to backup withholding under 3 above (for reportable interest and dividend accounts opened after 1983 only), or 5. You do not certify your TIN. This applies only to reportable interest, dividend, broker, or barter exchange accounts opened after 1983, or broker accounts considered inactive in 1983. Except as explained in 5 above, other reportable payments are subject to backup withholding only if 1 or 2 above applies. Certain payees and payments are exempt from backup withholding and information reporting. See Payees and Payments Exempt From Backup Withholding, below, and Example Payees and Payments under Specific Instructions, below, if you are an exempt payee. Payees and Payments Exempt From Backup Withholding.--The following is a list of payees exempt from backup withholding and for which no information reporting is required. For interest and dividends, all listed payees are exempt except item (9). For broker transactions, payees listed in (1) through (13) and a person registered under the Investment Advisers Act of 1940 who regularly acts as a broker are exempt. Payments subject to reporting under sections 6041 and 6041A are generally exempt from backup withholding only if made to payees described in items (1) through (7), except a corporation that provides medical and health care services or bills and collects payments for such services is not exempt from backup withholding or information reporting. Only payees described in items (2) through (6) are exempt from backup withholding for barter exchange transactions, patronage dividends, and payments by certain fishing boat operators. (1) A corporation. (2) An organization exempt from tax under section 501(a), or an IRA, or a custodial account under section 403(b)(7). (3) The United States or any of its agencies or instrumentalities. (4) A state, the District of Columbia, a possession of the United States, or any of their political subdivisions or instrumentalities. (5) A foreign government or any of its political subdivisions, agencies, or instrumentalities. (6) An international organization or any of its agencies or instrumentalities. (7) A foreign central bank of issue. (8) A dealer in securities or commodities required to register in the United States or a possession of the United States. (9) A futures commission merchant registered with the Commodity Futures Trading Commission. (10) A real estate investment trust. (11) An entity registered at all times during the tax year under the Investment Company Act of 1940. (12) A common trust fund operated by a bank under section 584(a). (13) A financial institution. (14) A middleman known in the investment community as a nominee or listed in the most recent publication of the American Society of Corporate Secretaries, Inc., Nominee List. (15) A trust exempt from tax under section 664 or described in section 4947. Payments of dividend and patronage dividends generally not subject to backup withholding include the following: . Payments to nonresident aliens subject to withholding under section 1441. . Payments to partnerships not engaged in a trade or business in the United States and that have at least one nonresident partner. . Payments of patronage dividends not paid in money. . Payments made by certain foreign organizations. Payments of interest generally not subject to backup withholding include the following: . Payments of interest on obligations issued by individuals. Note: You may be subject to backup withholding if this interest is $600 or more and is paid in the course of the payer's trade or business and you have not provided your correct TIN to the payer. . Payments of tax-exempt interest (including exempt-interest dividends under section 852). . Payments described in section 6049(b)(5) to nonresident aliens. . Payments on tax-free covenant bonds under section 1451. . Payments made by certain foreign organizations. . Mortgage interest paid by you. Payments that are not subject to information reporting are also not subject to backup withholding. For details, see sections 6041, 6041A(a), 6042, 6044, 6045, 6049, 6050A, and 6050N, and their regulations. 2 PENALTIES Failure To Furnish TIN.--If you fail to furnish your correct TIN to a requester, you are subject to a penalty of $50 for each such failure unless your failure is due to reasonable cause and not to willful neglect. Civil Penalty for False Information With Respect to Withholding.--If you make a false statement with no reasonable basis that results in no backup withholding, you are subject to a $500 penalty. Criminal Penalty for Falsifying Information.--Willfully falsifying certifications or affirmations may subject you to criminal penalties including fines and/or imprisonment. Misuse of TINs.--If the requester discloses or uses TINs in violation of Federal law, the requester may be subject to civil and criminal penalties. SPECIFIC INSTRUCTIONS Name.--If you are an individual, you must generally provide the name shown on your social security card. However, if you have changed your last name, for instance, due to marriage, without informing the Social Security Administration of the name change, please enter your first name, the last name shown on your social security card, and your new last name. If you are a sole proprietor, you must furnish your individual name and either your SSN or EIN. You may also enter your business name or "doing business as" name on the business name line. Enter your name(s) as shown on your social security card and/or as it was used to apply for your EIN on Form SS-4. SIGNING THE CERTIFICATION. 1. Interest, Dividend, and Barter Exchange Accounts Opened Before 1984 and Broker Accounts Considered Active During 1983. You are required to furnish your correct TIN, but you are not required to sign the certification. 2. Interest, Dividend, Broker, and Barter Exchange Accounts Opened After 1983 and Broker Accounts Considered Inactive During 1983. You must sign the certification or backup withholding will apply. If you are subject to backup withholding and you are merely providing your correct TIN to the requester, you must cross out item 2 in the certification before signing the form. 3. Real Estate Transactions. You must sign the certification. You may cross out item 2 of the certification. 4. Other Payments. You are required to furnish your correct TIN, but you are not required to sign the certification unless you have been notified of an incorrect TIN. Other payments include payments made in the course of the requester's trade or business for rents, royalties, goods (other than bills for merchandise), medical and health care services, payments to a nonemployee for services (including attorney and accounting fees), and payments to certain fishing boat crew members. 5. Mortgage Interest Paid by You, Acquisition or Abandonment of Secured Property, or IRA Contributions. You are required to furnish your correct TIN, but you are not required to sign the certification. 6. Exempt Payees and Payments. If you are exempt from backup withholding, you should complete this form to avoid possible erroneous backup withholding. Enter your correct TIN in Part I, write "EXEMPT" in the block in Part II, and sign and date the form. If you are a nonresident alien or foreign entity not subject to backup withholding, give the requester a complete Form W-8, Certificate of Foreign Status. 7. TIN "Applied for." Follow the instructions under How To Obtain a TIN, on page 1, and sign and date this form. 3 Signature.--For a joint account, only the person whose TIN is shown in Part I should sign. Privacy Act Notice.--Section 6109 requires you to furnish your correct TIN to persons who must file information returns with the IRS to report interest, dividends, and certain other income paid to you, mortgage interest you paid, the acquisition or abandonment of secured property, or contributions you made to an IRA. The IRS uses the numbers for identification purposes and to help verify the accuracy of your tax return. You must provide your TIN whether or not you are required to file a tax return. Payers must generally withhold 31% of taxable interest, dividend, and certain other payments to a payee who does not furnish a TIN to a payer. Certain penalties may also apply. WHAT NAME AND NUMBER TO GIVE THE REQUESTER For this type of account: Give name and SSN of: 1.Individual The individual 2.Two or more individuals The actual owner of the account or, if (joint account) combined funds, the first individual on the account(1) 3. Custodian account of a The minor(2) minor (Uniform Gift to Minors Act) 4.a. The usual revocable The grantor-trustee(1) savings trust (grantor is also trustee) b. So-called trust account The actual owner(1) that is not a legal or valid trust under state law 5.Sole proprietorship The owner(3) For this type of account: Give name and EIN of: 6.Sole proprietorship The owner(3) 7.A valid trust, estate, or Legal entity(4) pension trust 8.Corporate The corporation 9. Association, club, The organization religious, charitable, educational, or other tax-exempt organization 10. Partnership The partnership 11. A broker or registered The broker or nominee nominee 12. Account with the The public entity Department of Agriculture in the name of a public entity (such as a state or local government, school district or prison) that receives agriculture program payments
- -------- (1) List first and circle the name of the person whose number you furnish. (2) Circle the minor's name and furnish the minor's SSN. (3) Show your individual name. You may also enter your business name. You may use your SSN or EIN. (4) List first and circle the name of the legal trust, estate, or pension trust. (Do not furnish the TIN of the personal representative or trustee unless the legal entity itself is not designated in the account title.) Note: If no name is circled when there is more than one name, the number will be considered to be that of the first name listed. 4 EX-99.A3 4 STOCK PLAN MEMO AND FORM TRANSAMERICA CORPORATION EMPLOYEES STOCK SAVINGS PLAN To:Participants in the Transamerica Corporation Employees Stock Savings Plan (the "Plan") Re:Transamerica Corporation's Offer to Purchase for Cash Up to 4,500,000 Shares of its Common Stock Date:May 9, 1994 This memorandum is being sent to you because you are a participant in the Transamerica Corporation Employees Stock Savings Plan (the "Plan"). The Plan is described in the Summary Plan Description and Prospectus dated September 30, 1992, and the supplements thereto (the "SPD/Prospectus"). Please refer to your SPD/Prospectus for more information on the Plan. TRANSAMERICA CORPORATION IS OFFERING TO PURCHASE SHARES OF ITS COMMON STOCK Transamerica Corporation (the "Company") currently is inviting its stockholders to tender shares of the Company's common stock, $1.00 par value (the "Shares"), for sale directly to the Company. Stockholders are being invited to tender their shares at prices not greater than $55 per share nor less than $48 per share. The details of the invitation are described in the Company's Offer to Purchase dated May 9, 1994 (the "Offer to Purchase") and the related Letter of Transmittal (which together constitute the "Offer"). Copies of the Offer to Purchase and of the Letter of Transmittal, and related materials, which are being sent to the Company's stockholders generally, are enclosed for your review. PLEASE NOTE THAT THE ENCLOSED LETTER OF TRANSMITTAL IS BEING FURNISHED TO YOU FOR YOUR INFORMATION ONLY. The Letter of Transmittal cannot be used to tender the Shares held in your Plan account. Also, please note that if you hold an "odd lot" as described in Section 2 of the Offer to Purchase, the special odd lot purchase rule will not apply to your Plan Shares. That is, proration (see Section 1 of the Offer to Purchase) will apply to any Shares tendered from the Plan, even if you are an odd lot holder. YOUR DECISION WHETHER TO TENDER As a participant in the Plan, you may direct the Plan's Trustee (Bank of America NT&SA) to tender Shares allocated to your Plan account pursuant to the Offer. HOWEVER, PLEASE BE AWARE THAT TENDERING SHARES FROM YOUR PLAN ACCOUNT COULD HAVE NEGATIVE TAX CONSEQUENCES FOR YOU. (SEE "POTENTIAL NEGATIVE TAX CONSEQUENCES OF TENDERING SHARES" BELOW.) ALSO, THE PROCEEDS FROM ANY SALE OF SHARES FROM YOUR PLAN ACCOUNT WILL NOT BE DISTRIBUTED TO YOU. INSTEAD, ANY PROCEEDS WILL CONTINUE TO BE HELD IN YOUR PLAN ACCOUNT, AND WILL BE REINVESTED IN THE AVAILABLE PLAN INVESTMENT ALTERNATIVES. (See "Reinvestment of Sale Proceeds" and "Company Matching Contribution Account" below.) IF YOU DO NOT WISH TO TENDER YOUR SHARES, YOU DO NOT NEED TO TAKE ANY ACTION. YOU MAY DISREGARD THE ENCLOSED ELECTION FORM. HOW TO TENDER SHARES If you wish to direct the Trustee to tender your Shares, you must complete and return the enclosed Election Form in accordance with the instructions specified on the Election Form. If you do not wish to tender your Shares, you do not need to complete the Election Form, and you should not return the Election Form. If you do not return the Election Form, the Trustee will NOT tender your Shares. Before deciding whether or not to tender your Shares, please carefully read the enclosed materials. If you decide to tender some or all of your Shares, please be aware that YOUR ELECTION TO TENDER WILL BE EFFECTIVE ONLY IF YOUR PROPERLY COMPLETED ELECTION FORM IS RECEIVED BY THE STOCK SAVINGS PLAN ADMINISTRATION DEPARTMENT AT ITS ADDRESS SET FORTH ON THE ELECTION FORM NO LATER THAN 5:00 P.M., PACIFIC DAYLIGHT TIME, ON FRIDAY, MAY 27, 1994. Election Forms that are received after this deadline, and Election Forms which are not properly completed, will not be accepted. Examples of improperly completed Election Forms include Forms which are not signed, and Forms which contain incorrect or incomplete information. Your decision to tender (or not to tender) and reinvestment election will remain confidential. REINVESTMENT OF SALE PROCEEDS If you choose to tender any of your Shares, and the Shares actually are purchased by the Company, the proceeds from the sale of Shares will NOT be distributed to you. As required by the Internal Revenue Code and the Plan, the sale proceeds will continue to be held under the Plan. All sale proceeds will continue to be subject to all Plan rules. The sale proceeds will be reinvested in the available Plan investment alternatives, in accordance with the following rules. EMPLOYEE CONTRIBUTION ACCOUNTS If Shares attributable to your employee contribution account are tendered and sold, the proceeds will be reinvested according to the instructions you enter in Part 3 of the enclosed Election Form. You may elect to reinvest the sale proceeds in any of the other investment alternatives listed in the enclosed Election Form. Please refer to your SPD/Prospectus for more information on the available investment alternatives. (Not all participants have shares of Transamerica common stock credited to their Plan employee contribution accounts. Please refer to your "SSP Account Summary" to determine if your employee contribution accounts are credited with Shares.) COMPANY MATCHING CONTRIBUTION ACCOUNT PARTICIPANTS WHO ARE UNDER AGE 60: IF YOU ARE UNDER AGE 60, AND SHARES FROM YOUR COMPANY MATCHING CONTRIBUTION ACCOUNT ARE TENDERED AND SOLD, THE PROCEEDS WILL BE REINVESTED IN SHARES OF TRANSAMERICA COMMON STOCK, AS REQUIRED UNDER THE TERMS OF THE PLAN. PLEASE BE AWARE THAT THERE CAN BE NO ASSURANCE REGARDING THE SHARE PRICE WHEN THE SALE PROCEEDS ARE REINVESTED. THE PRICE AT WHICH YOUR SHARES ARE SOLD MAY BE HIGHER OR LOWER THAN THE PRICE AT WHICH THE PROCEEDS ARE REINVESTED IN SHARES. THUS, IF YOU SELL SHARES TO THE COMPANY PURSUANT TO THE TENDER OFFER, IT IS POSSIBLE THAT WHEN THE PROCEEDS ARE REINVESTED IN SHARES, THE REINVESTMENT PURCHASE PRICE MAY BE HIGHER THAN THE SALE PRICE. THIS WOULD RESULT IN A DECREASE IN THE NUMBER OF SHARES OF TRANSAMERICA COMMON STOCK CREDITED TO YOUR COMPANY MATCHING CONTRIBUTION ACCOUNT. IT IS ALSO POSSIBLE THAT THE REINVESTMENT PRICE WILL BE LOWER THAN THE TENDER OFFER SALE PRICE, WHICH WOULD RESULT IN AN INCREASED NUMBER OF SHARES BEING CREDITED TO YOUR ACCOUNT. THE KEY POINT IS THAT NO ONE CAN ASSURE YOU WHAT THE REINVESTMENT PRICE WILL BE, SINCE IT IS DEPENDENT ON MARKET CONDITIONS AT THE TIME. ALSO, BE SURE TO READ THE NEXT SECTION REGARDING POSSIBLE NEGATIVE TAX CONSEQUENCES OF TENDERING SHARES FROM YOUR PLAN ACCOUNT. PARTICIPANTS WHO ARE AGE 60 OR OVER: If you are at least age 60, and Shares from your Company matching contribution account are tendered and sold, the proceeds will be reinvested in accordance with the instructions that you enter in Part 3 of the enclosed Election Form. That is, the investment election that you enter in Part 3 of the Election Form will apply to both your employee and Company matching contributions. (Since February 1993, Plan participants who are age 60 and over have been eligible to reallocate the investment of their Company matching contribution accounts.) HOWEVER, IF YOU ELECT TO REINVEST IN SHARES OF TRANSAMERICA COMMON STOCK, PLEASE SEE THE PRECEDING PARAGRAPH (REGARDING THE REINVESTMENT PRICE FOR SHARES OF TRANSAMERICA COMMON STOCK). Also, be sure to read the next section regarding possible negative tax consequences of tendering your Shares from your Plan account. POTENTIAL NEGATIVE TAX CONSEQUENCES OF TENDERING SHARES TENDERING AND SELLING SHARES FROM YOUR PLAN ACCOUNTS NOW COULD HAVE NEGATIVE FUTURE TAX CONSEQUENCES FOR YOU WITH RESPECT TO ANY SHARES THAT EVENTUALLY ARE DISTRIBUTED TO YOU FROM THE PLAN. As explained in your 2 SPD/Prospectus, Shares that you receive in a distribution from the Plan generally are eligible for favorable tax treatment. Specifically, any "net unrealized appreciation" in the shares is not taxable to you until you sell the shares. If you tender and sell shares from your Plan accounts, and the proceeds are reinvested in Shares (for example, because you are under age 60 and have Company matching contributions which are required under the Plan to be reinvested in Shares), any net unrealized appreciation in the Shares that are sold will be lost and the cost of the shares in your account will be recalculated to reflect current market prices. If your net unrealized appreciation is lost, the amount of tax that you owe immediately upon receipt of a Plan distribution may be greater than if you had not tendered and sold your Shares in the Offer. IF YOU MAKE ANOTHER PLAN TRANSACTION If you elect to tender Shares, you will not be permitted to make any other Plan transactions for the month of June 1994. For example, if you tender Shares, you will not be permitted to make an investment transfer, or take a loan or hardship withdrawal during June 1994. This is necessary in order for the Stock Savings Plan Administration Department to coordinate and complete the tender process. The only exceptions are for distributions following termination of employment and for qualified domestic relations orders ("QDROs"). If you are scheduled to receive a distribution from the Plan during June, your distribution will be processed and your tender election will not be accepted. If a QDRO is pending against your account, your tender election will not be accepted, and you will not be permitted to tender any Shares. WITHDRAWING YOUR DECISION TO TENDER As more fully described in Section 4 of the Offer to Purchase, tenders will be deemed irrevocable unless withdrawn by the dates specified therein. If you send in an Election Form to tender Shares, and you decide to withdraw your election, you may do so by sending a notice of withdrawal to the Stock Savings Plan Administration Department. The notice of withdrawal will be effective only if it is in writing and is received by the Stock Savings Plan Administration Department on or before 5:00 p.m. P.D.T. on May 27, 1994 at the following address: Transamerica Systems & Administration, P.O. Box 3899, Los Angeles, CA 90051-1899. Any notice of withdrawal must specify your name, your social security number, the name of the Plan, the percentage(s) of Shares tendered, and the percentage(s) of Shares to be withdrawn. Upon receipt of a timely written notice of withdrawal, previous instructions to tender with respect to such Shares will be deemed cancelled and the Trustee will not tender such Shares. If you later wish to retender Shares, you may call the Stock Savings Plan Administration Department at 213/742-4430 to obtain a new Election Form. Any new Election Form must be submitted to the Stock Savings Plan Administration Department on or before 5:00 p.m., on May 27, 1994. IF YOU HAVE QUESTIONS If you have any questions about the Offer or any of the other matters discussed above, please call the Stock Savings Plan Administration Department, telephone number 213/742-4430. If you have questions about the Plan, please refer to your SPD/Prospectus. Additional copies of the SPD/Prospectus may be obtained from Human Resources/Benefits Department. 3 TRANSAMERICA CORPORATION EMPLOYEES STOCK SAVINGS PLAN ELECTION FORM TO TENDER SHARES OF TRANSAMERICA COMMON STOCK Important Information about this Election Form: (1) Before completing this Form, please carefully read all of the enclosed documents. (2) You do not need to complete this Form if you do not wish to tender any shares. (3) In order for your tender to be accepted, you must properly complete Parts 1, 2, 3, and 4 of this Election Form and the properly completed Form must be received by the SSP Administration Department at Transamerica Systems & Administration, P.O. Box 3899, Los Angeles, CA 90051-1899 by 5:00 p.m., Pacific Daylight Time, on Friday, May 27, 1994. In accordance with the materials that were enclosed with this Election Form, including the memorandum to participants in the Transamerica Corporation (the "Company") Employees Stock Savings Plan (the "Plan") dated May 9, 1994, and the Company's Offer to Purchase dated May 9, 1994, I hereby instruct Bank of America, NT&SA, the Trustee of the Plan (the "Trustee"), to tender shares of Common Stock of the Company, par value $1.00 per share (the "Shares"), allocated to my Plan account prior to the expiration of such Offer to Purchase, as follows: PART 1: ELECTION TO TENDER SHARES (If you wish to tender Shares from your employee contribution accounts, insert the percentage of such shares that you wish to tender.) EMPLOYEE CONTRIBUTION ACCOUNTS: I WISH TO TENDER % OF THE SHARES IN MY EMPLOYEE CONTRIBUTION ACCOUNTS AT THE PRICE INDICATED BELOW IN "PART 2: PRICE AT WHICH TO TENDER SHARES". (If you wish to tender Shares from your Company matching contribution account, insert the percentage of such shares that you wish to tender.) COMPANY MATCHING CONTRIBUTION ACCOUNT: I WISH TO TENDER % OF THE SHARES IN MY COMPANY MATCHING CONTRIBUTION ACCOUNT AT THE PRICE INDICATED BELOW IN "PART 2: PRICE AT WHICH TO TENDER SHARES". PART 2: PRICE AT WHICH TO TENDER SHARES (If you tendered Shares in Part 1 above, please check the box indicating the price at which you wish to tender the Shares (from your employee contribution accounts and/or Company matching accounts). Only one box may be checked. If more than one box is checked, or if no box is checked, there is no valid tender of Shares.) I WISH MY SHARES TENDERED AT THE PRICE INDICATED BELOW: [_] $48.000 [_] $49.000 [_] $50.000 [_] $51.000 [_] $52.000 [_] $53.000 [_] $54.000 [_] $48.125 [_] $49.125 [_] $50.125 [_] $51.125 [_] $52.125 [_] $53.125 [_] $54.125 [_] $48.250 [_] $49.250 [_] $50.250 [_] $51.250 [_] $52.250 [_] $53.250 [_] $54.250 [_] $48.375 [_] $49.375 [_] $50.375 [_] $51.375 [_] $52.375 [_] $53.375 [_] $54.375 [_] $48.500 [_] $49.500 [_] $50.500 [_] $51.500 [_] $52.500 [_] $53.500 [_] $54.500 [_] $48.625 [_] $49.625 [_] $50.625 [_] $51.625 [_] $52.625 [_] $53.625 [_] $54.625 [_] $48.750 [_] $49.750 [_] $50.750 [_] $51.750 [_] $52.750 [_] $53.750 [_] $54.750 [_] $48.875 [_] $49.875 [_] $50.875 [_] $51.875 [_] $52.875 [_] $53.875 [_] $54.875 [_] $55.000 PART 3: REINVESTMENT OF SALE PROCEEDS (Please list below how you wish to reinvest your sale proceeds (if any). Your elections must be in multiples of 10% (for example, 10%, 20%, 30%, etc.), and they must add to 100%. If your election does not meet these requirements, your Election Form will not be accepted. Please refer to your SPD/Prospectus for more information on the available investment funds.) As explained in the enclosed memorandum to Plan participants, if you are under age 60, your reinvestment election will apply only to proceeds from your employee contribution accounts; any sale proceeds from your Company matching contribution accounts will be reinvested in Shares. If you are age 60 or over, your reinvestment election will apply to proceeds from both your employee contribution accounts and Company matching contribution account. I WANT ANY PROCEEDS FROM THE SALE OF MY SHARES REINVESTED AS FOLLOWS: Transamerica T. Rowe Price Cash Reserve Fund % Equity Income % Fund Transamerica Transamerica Equity Index Fund % Fixed Income % Fund Transamerica Transamerica Equity Fund % Bond Fund % Transamerica Dodge & Cox Common Stock % Balanced Fund % Add up all of the percentages in this section. THEY MUST TOTAL 100% % TOTAL PART 4: YOUR SIGNATURE AND ACKNOWLEDGEMENT My signature below indicates that I have received and read the memorandum to Plan participants dated May 9, 1994, and the Offer to Purchase dated May 9, 1994. I agree to all of the terms and conditions described in the enclosed materials. ------------------------------------- Signature ------------------------------------- Please print name ------------------------------------- Social Security Number ------------------------------------- Work telephone number ------------------------------------- Home telephone number 2 EX-99.A4 5 LETTER TO STOCKHOLDERS LOGO May 9, 1994 Dear Stockholder: Transamerica Corporation is offering to purchase up to 4,500,000 shares of its common stock (representing approximately 6.0% of the currently outstanding shares), at prices not greater than $55 nor less than $48 per share. The Company is conducting the Offer through a procedure commonly referred to as a "Dutch Auction." This procedure allows you to select the price within that price range at which you are willing to sell all or a portion of your shares to the Company. Based upon the number of shares tendered and the prices specified by the tendering stockholders, the Company will determine the single per share price within that price range that will allow it to buy 4,500,000 shares (or such lesser number of shares that are properly tendered). All of the shares that are properly tendered at prices at or below that purchase price (and are not withdrawn) will, subject to possible proration, conditional tenders and provisions relating the tender of "odd lots," be purchased for cash at that purchase price, net to the selling stockholder. All other shares that have been tendered and not purchased will be returned to the stockholder. If you do not wish to participate in the Offer, you do not need to take any action. The Offer is explained in detail in the enclosed Offer to Purchase and Letter of Transmittal. If you want to tender your shares, the instructions on how to tender shares are also explained in detail in the enclosed materials. I encourage you to read carefully these materials and the enclosed copy of the Company's Form 10-Q for the first quarter of 1994 before making any decision with respect to the Offer. The Company believes that the purchase of its shares of common stock at this time represents an attractive investment opportunity that will benefit the Company and its stockholders. Neither the Company nor its Board of Directors makes any recommendation to any stockholder whether to tender all or any shares. Neither I nor any other director or executive officer intends to tender shares pursuant to the Offer. Sincerely, /s/ FRANK C. HERRINGER Frank C. Herringer President and Chief Executive Officer EX-99.A5 6 NOTICE OF GUARANTEED DEL TRANSAMERICA CORPORATION Notice of Guaranteed Delivery of Shares of Common Stock (Including the Associated Preference Stock Purchase Rights) This form, or a form substantially equivalent to this form, must be used to accept the Offer (as defined below) if certificates for the shares of Common Stock of Transamerica Corporation are not immediately available, if the procedure for book-entry transfer cannot be completed on a timely basis, or if time will not permit all other documents required by the Letter of Transmittal to be delivered to the Depositary on or prior to the Expiration Date (as defined in Section 1 of the Offer to Purchase defined below). Such form may be delivered by hand or transmitted by mail, or (for Eligible Institutions only) by facsimile transmission, to the Depositary. See Section 3 of the Offer to Purchase. THE ELIGIBLE INSTITUTION, WHICH COMPLETES THIS FORM, MUST COMMUNICATE THE GUARANTEE TO THE DEPOSITARY AND MUST DELIVER THE LETTER OF TRANSMITTAL AND CERTIFICATES FOR SHARES TO THE DEPOSITARY WITHIN THE TIME SHOWN HEREIN. FAILURE TO DO SO COULD RESULT IN A FINANCIAL LOSS TO SUCH ELIGIBLE INSTITUTION. To: FIRST CHICAGO TRUST COMPANY OF NEW YORK, Depositary By Mail: Facsimile Transmission: By Hand or By Overnight Courier: (201) 222-4720 14 Wall Street, 8th Floor P.O. Box 2560 or Suite 4680 Mail Suite 4660 (201) 222-4721 New York, New York 10005 Jersey City, New Jersey 07303-2560 Confirm by Telephone: (201) 222-4707 DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN ONE LISTED ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THIS FORM IS NOT TO BE USED TO GUARANTEE SIGNATURES. IF A SIGNATURE ON A LETTER OF TRANSMITTAL IS REQUIRED TO BE GUARANTEED BY AN ELIGIBLE INSTITUTION UNDER THE INSTRUCTIONS THERETO, SUCH SIGNATURE GUARANTEE MUST APPEAR IN THE APPLICABLE SPACE PROVIDED IN THE SIGNATURE BOX ON THE LETTER OF TRANSMITTAL. Ladies and Gentlemen: The undersigned hereby tenders to Transamerica Corporation, a Delaware corporation (the "Company"), upon the terms and subject to the conditions set forth in the Offer to Purchase, dated May 9, 1994 (the "Offer to Purchase"), and the related Letter of Transmittal (which together constitute the "Offer"), receipt of which is hereby acknowledged, the number of shares of Common Stock, par value $1.00 per share (the "Shares") (including the associated preference stock purchase rights (the "Rights") issued pursuant to the Rights Agreement, dated as of July 17, 1986, as amended, between the Company and First Chicago Trust Company of New York, as Rights Agent), of the Company listed below, pursuant to the guaranteed delivery procedure set forth in Section 3 of the Offer to Purchase. Number of Shares: - ------------------------------------- Certificate Nos.: (if available) - ------------------------------------- ------------------------------------- - ------------------------------------- Signature(s) If shares will be tendered by book- ------------------------------------- entry transfer: Name(s) (Please Print) Name of Tendering Institution: ------------------------------------- - ------------------------------------- Address ------------------------------------- Account No. __________ at (check one) ------------------------------------- [_] The Depository Trust Company Area Code and Telephone Number [_] Midwest Securities Trust Company [_] Philadelphia Depository Trust Company PRICE (IN DOLLARS) PER SHARE AT WHICH SHARES ARE BEING TENDERED - -------------------------------------------------------------------------------- CHECK ONLY ONE BOX. IF MORE THAN ONE BOX IS CHECKED, OR IF NO BOX IS CHECKED, THERE IS NO VALID TENDER OF SHARES. - -------------------------------------------------------------------------------- [_] $48.000 [_] $49.000 [_] $50.000 [_] $51.000 [_] $52.000 [_] $53.000 [_] $54.000 [_] $48.125 [_] $49.125 [_] $50.125 [_] $51.125 [_] $52.125 [_] $53.125 [_] $54.125 [_] $48.250 [_] $49.250 [_] $50.250 [_] $51.250 [_] $52.250 [_] $53.250 [_] $54.250 [_] $48.375 [_] $49.375 [_] $50.375 [_] $51.375 [_] $52.375 [_] $53.375 [_] $54.375 [_] $48.500 [_] $49.500 [_] $50.500 [_] $51.500 [_] $52.500 [_] $53.500 [_] $54.500 [_] $48.625 [_] $49.625 [_] $50.625 [_] $51.625 [_] $52.625 [_] $53.625 [_] $54.625 [_] $48.750 [_] $49.750 [_] $50.750 [_] $51.750 [_] $52.750 [_] $53.750 [_] $54.750 [_] $48.875 [_] $49.875 [_] $50.875 [_] $51.875 [_] $52.875 [_] $53.875 [_] $54.875 [_] $55.000
CONDITIONAL TENDER ODD LOTS UNLESS THIS BOX HAS BEEN COM- To be completed ONLY if Shares PLETED AND A MINIMUM SPECIFIED, are being tendered or on behalf of THE TENDER WILL BE DEEMED UNCONDI- persons owning beneficially an ag- TIONAL (see Sections 6 and 13 of gregate of fewer than 100 Shares the Offer to Purchase). as of the close of business on May 6, 1994. Minimum number of Shares that must be purchased, if any are The undersigned either (check purchased: one): Shares [_]was the beneficial owner of an aggregate of fewer than 100 Shares (including Shares held in the Transamerica Corporation Employees Stock Savings Plan or the Transamerica Corporation Dividend Reinvestment Plan) as of the close of business on May 6, 1994, all of which are ten- dered, or [_]is a broker, dealer, commercial bank, trust company or other nominee that (i) is tendering, for the beneficial owners thereof, Shares with respect to which it is the record owner, and (ii) believes, based upon representations made to it by each such beneficial owner, that such beneficial owner owned an aggregate of fewer than 100 Shares (including Shares held in the Transamerica Corporation Employees Stock Savings Plan or the Transamer- ica Corporation Dividend Rein- vestment Plan) as of the close of business on May 6, 1994 and is tendering all of such Shares. 2 GUARANTEE (NOT TO BE USED FOR SIGNATURE GUARANTEE) The undersigned, a firm that is a member of a registered national securities exchange or the National Association of Securities Dealers, Inc. or a commercial bank or trust company having an office or correspondent in the United States, guarantees (a) that the above-named person(s) has a net long position in the Shares (and associated Rights) being tendered within the meaning of Rule 14e-4 promulgated under the Securities Exchange Act of 1934, as amended, (b) that such tender of Shares complies with Rule 14e-4 and (c) to deliver to the Depositary at one of its addresses set forth above certificate(s) for the Shares tendered hereby, in proper form for transfer, or a confirmation of the book-entry transfer of the Shares tendered hereby into the Depositary's account at The Depository Trust Company, Midwest Securities Trust Company or Philadelphia Depository Trust Company, in each case together with a properly completed and duly executed Letter(s) of Transmittal (or facsimile(s) thereof), with any required signature guarantee(s) and any other required documents, all within five New York Stock Exchange, Inc. trading days after the date hereof. - ------------------------------------- ------------------------------------- Name of Firm Authorized Signature - ------------------------------------- ------------------------------------- Address Name - ------------------------------------- ------------------------------------- City, State, Zip Code Title - ------------------------------------- Area Code and Telephone Number Dated: _______________________ , 1994 DO NOT SEND STOCK CERTIFICATES WITH THIS FORM. YOUR STOCK CERTIFICATES MUST BE SENT WITH THE LETTER OF TRANSMITTAL. 3 EX-99.A6 7 LETTER TO BROKER, DEALERS MORGAN STANLEY & CO. Incorporated 1251 Avenue of the Americas New York, New York 10020 TRANSAMERICA CORPORATION Offer to Purchase for Cash Up to 4,500,000 Shares of its Common Stock (Including the Associated Preference Stock Purchase Rights) THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON MONDAY, JUNE 6, 1994, UNLESS THE OFFER IS EXTENDED. May 9, 1994 To Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees: In our capacity as Dealer Manager, we are enclosing the material listed below relating to the offer of Transamerica Corporation, a Delaware corporation (the "Company"), to purchase up to 4,500,000 shares of its Common Stock, par value $1.00 per share (the "Shares") (including the associated preference stock purchase rights issued pursuant to the Rights Agreement, dated as of July 17, 1986, as amended, between the Company and First Chicago Trust Company of New York, as the Rights Agent), at prices not greater than $55 nor less than $48 per Share, net to the seller in cash, specified by tendering stockholders, upon the terms and subject to the conditions set forth in the Offer to Purchase, dated May 9, 1994 (the "Offer to Purchase"), and in the related Letter of Transmittal (which together constitute the "Offer"). The Company will determine a single price (not greater than $55 nor less than $48 per Share) that it will pay for Shares validly tendered pursuant to the Offer (the "Purchase Price"), taking into account the number of Shares so tendered and the prices specified by tendering stockholders. The Company will select the Purchase Price that will enable it to purchase 4,500,000 Shares (or such lesser number of Shares, as is validly tendered at prices not greater than $55 nor less than $48 per Share) pursuant to the Offer. The Company will purchase all Shares validly tendered at prices at or below the Purchase Price and not withdrawn, upon the terms and subject to the conditions of the Offer, including the provisions relating to proration and conditional tenders described in the Offer to Purchase. The Purchase Price will be paid in cash, net to the seller, with respect to all Shares purchased. Shares tendered at prices in excess of the Purchase Price and Shares not purchased because of proration and conditional tenders will be returned. THE OFFER IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF SHARES BEING TENDERED. The Offer is, however, subject to other conditions. See Section 7 of the Offer to Purchase. We are asking you to contact your clients for whom you hold Shares registered in your name (or in the name of your nominee) or who hold Shares registered in their own names. Please bring the Offer to their attention as promptly as possible. The Company will, upon request, reimburse you for reasonable and customary handling and mailing expenses incurred by you in forwarding any of the enclosed materials to your clients. For your information and for forwarding to your clients, we are enclosing the following documents: 1. The Offer to Purchase. 2. The Letter of Transmittal for your use and for the information of your clients. 3. A letter to stockholders of the Company from the President and Chief Executive Officer of the Company. 4. The Company's quarterly report on Form 10-Q for the first quarter of 1994. 5. The Notice of Guaranteed Delivery to be used to accept the Offer if the Shares and all other required documents cannot be delivered to the Depositary by the Expiration Date (as defined in the Offer to Purchase). 6. A letter which may be sent to your clients for whose accounts you hold Shares registered in your name or in the name of your nominee, with space for obtaining such clients' instructions with regard to the Offer. 7. Guidelines of the Internal Revenue Service for Certification of Taxpayer Identification Number on Substitute Form W-9 providing information relating to backup federal income tax withholding. 8. A return envelope addressed to First Chicago Trust Company of New York, the Depositary. WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON MONDAY, JUNE 6, 1994, UNLESS THE OFFER IS EXTENDED. The Company will not pay any fees or commissions to any broker, dealer or other person for soliciting tenders of Shares pursuant to the Offer (other than the Dealer Manager). The Company will, upon request, reimburse brokers, dealers, commercial banks and trust companies for reasonable and customary handling and mailing expenses incurred by them in forwarding materials relating to the Offer to their customers. The Company will pay all stock transfer taxes applicable to its purchase of Shares pursuant to the Offer, subject to Instruction 7 of the Letter of Transmittal. As described in the Offer to Purchase, if more than 4,500,000 Shares have been validly tendered at or below the Purchase Price and not withdrawn on or prior to the Expiration Date, as defined in Section 1 of the Offer to Purchase, the Company will purchase Shares in the following order of priority: (a) all Shares validly tendered at or below the Purchase Price and not withdrawn on or prior to the Expiration Date by any stockholder who owned beneficially an aggregate of fewer than 100 Shares (including any Shares held in the Transamerica Corporation Employees Stock Savings Plan (the "Stock Savings Plan") and the Transamerica Corporation Dividend Reinvestment Plan (the "Reinvestment Plan")) as of the close of business on May 6, 1994 and who validly tenders all of such Shares (partial and conditional tenders will not qualify for this preference) and completes the box captioned "Odd Lots" on the Letter of Transmittal and, if applicable, the Notice of Guaranteed Delivery (provided that all tendered Shares held in the Stock Savings Plan shall be subject to proration as provided in clause (b) below); and (b) after purchase of all the foregoing Shares, subject to the conditional tender provisions described in Section 6 of the Offer to Purchase, all other Shares (including Stock Savings Plan Shares) validly tendered at or below the Purchase Price and not withdrawn on or prior to the Expiration Date on a pro rata basis, if necessary (with appropriate adjustments to avoid purchases of fractional Shares, other than Shares held in the Stock Savings Plan or the Reinvestment Plan). NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO ANY STOCKHOLDER AS TO WHETHER TO TENDER ALL OR ANY SHARES. STOCKHOLDERS MUST MAKE THEIR OWN DECISION AS TO WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES TO TENDER. THE COMPANY HAS BEEN ADVISED THAT NO DIRECTOR OR EXECUTIVE OFFICER INTENDS TO TENDER SHARES PURSUANT TO THE OFFER. Any questions or requests for assistance or additional copies of the enclosed materials may be directed to the Information Agent or the Dealer Manager at their respective addresses and telephone numbers set forth on the back cover of the enclosed Offer to Purchase. Very truly yours, MORGAN STANLEY & CO. Incorporated NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU THE AGENT OF THE COMPANY, THE DEALER MANAGER, THE INFORMATION AGENT OR THE DEPOSITARY, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE DOCUMENTS ENCLOSED HEREWITH AND THE STATEMENTS CONTAINED THEREIN. 2 EX-99.A7 8 LETTER TO CLIENTS TRANSAMERICA CORPORATION Offer to Purchase for Cash Up to 4,500,000 Shares of its Common Stock (Including the Associated Preference Stock Purchase Rights) THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON MONDAY JUNE 6, 1994, UNLESS THE OFFER IS EXTENDED To Our Clients: Enclosed for your consideration are the Offer to Purchase, dated May 9, 1994 (the "Offer to Purchase"), and the related Letter of Transmittal (which together constitute the "Offer") setting forth an offer by Transamerica Corporation, a Delaware corporation (the "Company"), to purchase up to 4,500,000 shares of its Common Stock, par value $1.00 per share (the "Shares") (including the associated preference stock purchase rights issued pursuant to the Rights Agreement, dated as of July 17, 1986, as amended, between the Company and First Chicago Trust Company of New York, as the Rights Agent), at prices not greater than $55 nor less than $48 per Share, net to the seller in cash, specified by tendering stockholders, upon the terms and subject to the conditions of the Offer. The Company will determine a single per Share price (not greater than $55 nor less than $48 per Share) that it will pay for the Shares validly tendered pursuant to the Offer and not withdrawn (the "Purchase Price"), taking into account the number of Shares so tendered and the prices specified by tendering stockholders. The Company will select the Purchase Price that will enable it to purchase 4,500,000 Shares (or such lesser number of Shares as are validly tendered at prices not greater than $55 nor less than $48 per Share) pursuant to the Offer. The Company will purchase all Shares validly tendered at prices at or below the Purchase Price and not withdrawn, upon the terms and subject to the conditions of the Offer, including the provisions thereof relating to proration and conditional tenders. We are the holder of record of Shares held for your account. A tender of such Shares can be made only by us as the holder of record and pursuant to your instructions. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER SHARES HELD BY US FOR YOUR ACCOUNT. We request instructions as to whether you wish us to tender any or all of the Shares held by us for your account, upon the terms and subject to the conditions set forth in the Offer to Purchase and the Letter of Transmittal. Your attention is invited to the following: (1) You may tender Shares at prices (in multiples of $.125), not greater than $55 nor less than $48 per Share, as indicated in the attached instruction form, net to you in cash. (2) The Offer is for up to 4,500,000 Shares, constituting approximately 6.0% of the total Shares outstanding as of May 6, 1994. Although it has no present intention of so doing, the Company reserves the right to purchase more than 4,500,000 Shares pursuant to the Offer. The Offer is not conditioned upon any minimum number of Shares being tendered. (3) The Offer, Proration Period and Withdrawal Rights will expire at 12:00 Midnight, New York City time, on Monday, June 6, 1994, unless the Offer is extended. Your instructions to us should be forwarded to us in ample time to permit us to submit a tender on your behalf. If you would like to withdraw your Shares that we have tendered, you can withdraw them so long as the Offer remains open or any time after the expiration of forty business days from the commencement of the Offer if they have not been accepted for payment. (4) As described in the Offer to Purchase, if more than 4,500,000 Shares have been validly tendered at or below the Purchase Price and not withdrawn on or prior to the Expiration Date, as defined in Section 1 of the Offer to Purchase, the Company will purchase Shares in the following order of priority: (a) all Shares validly tendered at or below the Purchase Price and not withdrawn on or prior to the Expiration Date by any stockholder who owned beneficially an aggregate of fewer than 100 Shares (including any Shares held in the Transamerica Corporation Employees Stock Savings Plan (the "Stock Savings Plan") and the Transamerica Corporation Dividend Reinvestment Plan (the "Reinvestment Plan")) as of the close of business on May 6, 1994 and who validly tenders all of such Shares (partial and conditional tenders will not qualify for this preference) and completes the box captioned "Odd Lots" on the Letter of Transmittal and, if applicable, the Notice of Guaranteed Delivery (provided that all tendered Shares held in the Stock Savings Plan shall be subject to proration as provided in clause (b) below); and (b) after purchase of all the foregoing Shares, subject to the conditional tender provisions described in Section 6 of the Offer to Purchase, all other Shares (including Stock Savings Plan Shares) validly tendered at or below the Purchase Price and not withdrawn on or prior to the Expiration Date on a pro rata basis, if necessary (with appropriate adjustments to avoid purchases of fractional Shares, other than Shares held in the Stock Savings Plan or the Reinvestment Plan). See Section 1 of the Offer to Purchase for a discussion of proration. (5) Any stock transfer taxes applicable to the sale of Shares to the Company pursuant to the Offer will be paid by the Company, except as otherwise provided in Instruction 7 of the Letter of Transmittal. (6) If you owned beneficially an aggregate of fewer than 100 Shares (including Shares held in the Stock Savings Plan or the Reinvestment Plan) as of the close of business on May 6, 1994, and you instruct us to tender at or below the Purchase Price on your behalf all such Shares on or prior to the Expiration Date and check the box captioned "Odd Lots" in the instruction form, all such Shares will be accepted for purchase before proration, if any, of the purchase of other tendered Shares. NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO ANY STOCKHOLDER AS TO WHETHER TO TENDER ALL OR ANY SHARES. STOCKHOLDERS MUST MAKE THEIR OWN DECISION AS TO WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES TO TENDER. THE COMPANY HAS BEEN ADVISED THAT NO DIRECTOR OR EXECUTIVE OFFICER INTENDS TO TENDER SHARES PURSUANT TO THE OFFER. If you wish to have us tender any or all of your Shares held by us for your account upon the terms and subject to the conditions set forth in the Offer, please so instruct us by completing, executing, detaching and returning to us the instruction form on the detachable part hereof. An envelope to return your instructions to us is enclosed. If you authorize tender of your Shares, all such Shares will be tendered unless otherwise specified on the detachable part hereof. Your instructions should be forwarded to us in ample time to permit us to submit a tender on your behalf by the expiration of the Offer. A tendering stockholder may condition the tender of Shares upon the purchase by the Company of a specified minimum number of Shares tendered, all as described in Section 6 of the Offer to Purchase. Unless such specified minimum is purchased by the Company pursuant to the terms of the Offer to Purchase and the related Letter of Transmittal, none of the Shares tendered by the stockholder will be purchased. If you wish us to condition your tender upon the purchase of a specified minimum number of Shares, please complete the box entitled "Conditional Tender" on the instruction form. It is the tendering stockholder's responsibility to calculate such minimum number of Shares, and you are urged to consult your own tax advisor. The Offer is being made to all holders of Shares. The Company is not aware of any state where the making of the Offer is prohibited by administrative or judicial action pursuant to a valid state statute. If the Company becomes aware of any valid state statute prohibiting the making of the Offer, the Company will make a good faith effort to comply with such statute. If, after such good faith effort, the Company cannot comply with such statute, the Offer will not be made to, nor will tenders be accepted from or on behalf of, holders of Shares in such state. In those jurisdictions whose securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer shall be deemed to be made on behalf of the Company by the Dealer Manager or one or more registered brokers or dealers licensed under the laws of such jurisdictions. 2 Instructions With Respect to Offer to Purchase for Cash Up to 4,500,000 Shares of Common Stock (Including the Associated Preference Stock Purchase Rights) of Transamerica Corporation The undersigned acknowledge(s) receipt of your letter and the enclosed Offer to Purchase, dated May 9, 1994, and the related Letter of Transmittal (which together constitute the "Offer") in connection with the Offer by Transamerica Corporation (the "Company") to purchase up to 4,500,000 shares of its Common Stock, par value $1.00 per share (the "Shares") (including the associated preference stock purchase rights), at prices not greater than $55 nor less than $48 per Share, net to the undersigned in cash, specified by the undersigned. This will instruct you to tender to the Company the number of Shares indicated below (or, if no number is indicated below, all Shares) which are held by you for the account of the undersigned, at the price per Share indicated below, upon the terms and subject to the conditions of the Offer. CONDITIONAL TENDER By completing this box, the undersigned conditions the tender authorized hereby on the following minimum number of Shares being purchased if any are purchased: Shares Unless this box is completed, the tender authorized hereby will be made unconditionally. PRICE (IN DOLLARS) PER SHARE AT WHICH SHARES ARE BEING TENDERED - -------------------------------------------------------------------------------- CHECK ONLY ONE BOX. IF MORE THAN ONE BOX IS CHECKED, OR IF NO BOX IS CHECKED, THERE IS NO VALID TENDER OF SHARES. - -------------------------------------------------------------------------------- [_] $48.000 [_] $49.000 [_] $50.000 [_] $51.000 [_] $52.000 [_] $53.000 [_] $54.000 [_] $48.125 [_] $49.125 [_] $50.125 [_] $51.125 [_] $52.125 [_] $53.125 [_] $54.125 [_] $48.250 [_] $49.250 [_] $50.250 [_] $51.250 [_] $52.250 [_] $53.250 [_] $54.250 [_] $48.375 [_] $49.375 [_] $50.375 [_] $51.375 [_] $52.375 [_] $53.375 [_] $54.375 [_] $48.500 [_] $49.500 [_] $50.500 [_] $51.500 [_] $52.500 [_] $53.500 [_] $54.500 [_] $48.625 [_] $49.625 [_] $50.625 [_] $51.625 [_] $52.625 [_] $53.625 [_] $54.625 [_] $48.750 [_] $49.750 [_] $50.750 [_] $51.750 [_] $52.750 [_] $53.750 [_] $54.750 [_] $48.875 [_] $49.875 [_] $50.875 [_] $51.875 [_] $52.875 [_] $53.875 [_] $54.875 [_] $55.000 ODD LOTS [_] By checking this box, the undersigned represents that the undersigned owned beneficially an aggregate of fewer than 100 Shares (including Shares held in the Transamerica Corporation Employees Stock Savings Plan and the Transamerica Corporation Dividend Reinvestment Plan) as of the close of business on May 6, 1994 and is tendering all of such Shares. Number of Shares to be Tendered: SIGN HERE -------------------------------------------------- Shares* Signature(s) Dated: ____________, 1994 Name _____________________________________________ Address __________________________________________ -------------------------------------------------- -------------------------------------------------- Social Security or Taxpayer ID No. -------- *Unless otherwise indicated, it will be assumed that all Shares held by us for your account are to be tendered. EX-99.A8 9 SUMMARY ADVERTISEMENT This announcement is neither an offer to purchase nor a solicitation of an offer to sell Shares. The Offer is made solely by the Offer to Purchase, dated May 9, 1994, and the related Letter of Transmittal. The Offer is being made to all holders of Shares; provided, that the Offer is not being made to, nor will tenders be accepted from or on behalf of, holders of Shares in any jurisdiction in which making or accepting the Offer would violate that jurisdiction's laws. In those jurisdictions whose securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer shall be deemed to be made on behalf of the Company by Morgan Stanley & Co. Incorporated or one or more registered brokers or dealers licensed under the laws of such jurisdictions. Notice of Offer to Purchase for Cash by TRANSAMERICA CORPORATION Up to 4,500,000 Shares of its Common Stock (Including the Associated Preference Stock Purchase Rights) at a Purchase Price Not Greater Than $55 Nor Less Than $48 Per Share Transamerica Corporation, a Delaware corporation (the "Company"), invites its stockholders to tender shares of its Common Stock, par value $1.00 per share (the "Shares") (including the associated preference stock purchase rights issued pursuant to the Rights Agreement, dated as of July 17, 1986, as amended, between the Company and First Chicago Trust Company of New York, as the Rights Agent), at prices not greater than $55 nor less than $48 per Share, net to the seller in cash, specified by such stockholders, upon the terms and subject to the conditions set forth in the Offer to Purchase, dated May 9, 1994 (the "Offer to Purchase"), and in the related Letter of Transmittal (which together constitute the "Offer"). THE OFFER IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF SHARES BEING TENDERED. The Offer is, however, subject to other conditions. See Section 7 of the Offer to Purchase. +++++++++++++++++++++++++++++++++++++++++++++++++++ + THE OFFER, PRORATION PERIOD AND WITHDRAWAL + + RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK + + CITY TIME, ON MONDAY, JUNE 6, 1994, UNLESS THE + + OFFER IS EXTENDED. + +++++++++++++++++++++++++++++++++++++++++++++++++++ The Company will determine a single per Share price (not greater than $55 nor less than $48 per Share) that it will pay for Shares validly tendered pursuant to the Offer and not withdrawn (the "Purchase Price"), taking into account the number of Shares so tendered and the prices specified by tendering stockholders. The Company will select the Purchase Price that will enable it to buy 4,500,000 Shares (or such lesser number of Shares as are validly tendered at prices not greater than $55 nor less than $48 per Share) pursuant to the Offer. The Company will purchase all Shares validly tendered at prices at or below the Purchase Price and not withdrawn, upon the terms and subject to the conditions of the Offer, including the provisions relating to proration and conditional tenders described below. The Purchase Price will be paid in cash, net to the seller, with respect to all Shares purchased. Shares tendered at prices in excess of the Purchase Price and Shares not purchased because of proration and conditional tender will be returned. Upon the terms and subject to the conditions of the Offer, if more than 4,500,000 Shares have been validly tendered at or below the Purchase Price and not withdrawn on or prior to the Expiration Date (as defined in the Offer to Purchase), the Company will purchase Shares in the following order of priority: (a) first, all Shares validly tendered at or below the Purchase Price and not withdrawn on or prior to the Expiration Date by any stockholder who owned beneficially an aggregate of fewer than 100 Shares (including any Shares held in the Transamerica Corporation Employees Stock Savings Plan (the "Stock Savings Plan") and the Transamerica Corporation Dividend Reinvestment Plan (the "Reinvestment Plan")) as of the close of business on May 6, 1994 and who validly tenders all of such Shares (partial and conditional tenders will not qualify for this preference) and completes the box captioned "Odd Lots" on the Letter of Transmittal and, if applicable, the Notice of Guaranteed Delivery (provided that all tendered Shares held in the Stock Savings Plan shall be subject to proration as provided in clause (b) below); and (b) then, after purchase of all the foregoing Shares, subject to the conditional tender provisions described in Section 6 of the Offer to Purchase, all other Shares (including Stock Savings Plan Shares) validly tendered at or below the Purchase Price and not withdrawn on or prior to the Expiration Date on a pro rata basis, if necessary (with appropriate adjustments to avoid purchases of fractional Shares). The Company believes that the purchase of its Shares at this time represents an attractive investment opportunity that will benefit the Company and its remaining stockholders. The Offer will afford to stockholders who are considering the sale of all or a portion of their Shares the opportunity to determine the price (not greater than $55 nor less than $48 per Share) at which they are willing to sell their Shares and, in the event the Company accepts such Shares, to dispose of Shares without the usual transaction costs associated with a market sale. The Offer will also allow qualifying stockholders owning beneficially fewer than 100 Shares to avoid the payment of brokerage commissions and the applicable odd lot discount payable on a sale of Shares in a transaction effected on a securities exchange. NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO ANY STOCKHOLDER AS TO WHETHER TO TENDER ALL OR ANY SHARES. EACH STOCKHOLDER MUST MAKE HIS OR HER OWN DECISION AS TO WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES TO TENDER AND AT WHAT PRICE. THE COMPANY HAS BEEN INFORMED THAT NO DIRECTOR OR EXECUTIVE OFFICER INTENDS TO TENDER SHARES PURSUANT TO THE OFFER. The Company reserves the right, at any given time or from time to time, to extend the period of time during which the Offer is open by giving oral or written notice of such extenstion to the Depositary, followed by a public announcement thereof no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date. Tenders of Shares made pursuant to the Offer may be withdrawn at any time prior to the Expiration Date. Thereafter, such tenders are irrevocable, except that they may be withdrawn after July 5, 1994 unless theretofore accepted for payment by the Company as provided in the Offer to Purchase. For a withdrawal to be effective, a written or facsimile transmission notice of withdrawal must be timely received by the Depositary at one of the addresses or facsimile numbers set forth on the back cover of the Offer to Purchase and must specify the name of the person who tendered the Shares to be withdrawn and the number of Shares to be withdrawn. If the Shares to be withdrawn have been delivered to the Depositary, a signed notice of withdrawal with signatures guaranteed by an Eligible Institution (as defined in Section 3 of the Offer to Purchase) (except in the case of Shares tendered by an Eligible Institution) must be submitted prior to the release of such Shares. In addition, such notice must specify, in the case of Shares tendered by delivery of certificates, the name of the registered holder (if different from that of the tendering stockholder) and the serial numbers shown on the particular certificates evidencing the Shares to be withdrawn or, in the case of Shares tendered by book-entry transfer, the name and number of the account at one of the Book-Entry Transfer Facilities (as defined in the Offer to Purchase) to be credited with the withdrawn Shares. Withdrawals may not be rescinded, and Shares withdrawn will thereafter be deemed not validly tendered for purposes of the Offer. However, withdrawn Shares may be retendered by again following one of the procedures described in Section 3 of the Offer to Purchase at any time prior to the Expiration Date. The Company will be deemed to have purchased tendered Shares as, if and when it gives oral or written notice to the Depositary of its acceptance for payment of Shares. THE INFORMATION REQUIRED TO BE DISCLOSED BY RULE 13E-4(D)(1) OF THE GENERAL RULES AND REGULATIONS UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, IS CONTAINED IN THE OFFER TO PURCHASE AND IS INCORPORATED HEREIN BY REFERENCE. Copies of the Offer to Purchase and the related Letter of Transmittal are being mailed to record holders of Shares and will be furnished to brokers, banks and similar persons whose names, or the names of whose nominees, appear on the Company's stockholder list or, if applicable, who are listed as participants in a clearing agency's security position listing for subsequent transmittal to beneficial owners of Shares. THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT INFORMATION THAT SHOULD BE READ BEFORE ANY DECISION IS MADE WITH RESPECT TO THE OFFER. Any questions or requests for assistance may be directed to the Information Agent or the Dealer Manager at their respective telephone numbers and addresses listed below. Requests for additional copies of the Offer to Purchase, the Letter of Transmittal or other tender offer materials may be directed to the Information Agent or the Dealer Manager, and such copies will be furnished promptly at the Company's expense. Stockholders may also contact their local broker, dealer, commercial bank or trust company for assistance concerning the Offer. The Information Agent for the Offer is: GEORGESON & COMPANY INC. -------------- Wall Street Plaza New York, New York 10005 Banks and Brokers Call Collect: (212) 440-9800 All Others Call Toll Free: 1-800-223-2064 The Dealer Manager for the Offer is: MORGAN STANLEY & CO. INCORPORATED 1251 Avenue of the Americas New York, New York 10020 (415) 576-2247 (collect) May 9, 1994 EX-99.A9 10 PRESS RELEASE LOGO For Release: IMMEDIATELY Contacts: Press-- Richard J. Olsen (415) 983-4055 Investment Community-- Dennis W. Markus (415) 983-5503 TRANSAMERICA'S BOARD AUTHORIZES DUTCH AUCTION SELF TENDER FOR UP TO FOUR AND A HALF MILLION COMMON SHARES SAN FRANCISCO, California--(May 9, 1994)--Transamerica Corporation today announced a "Dutch Auction" self tender for up to 4.5 million shares of its common stock. The offer will commence on May 9, 1994 and will expire at midnight, Eastern Daylight Time, on June 6, 1994, unless the offer is extended. Under the terms of the offer, the Company will invite stockholders to tender shares at prices between $48 and $55 per share, as specified by the tendering stockholders. Based upon the number of shares tendered and the prices specified by the tendering stockholders, Transamerica will determine the single per share price within that price range that will allow Transamerica to buy 4.5 million shares or such lesser number of shares as are properly tendered. Transamerica will use a portion of the net proceeds from its sale of shares of Sedgwick Group plc to purchase shares pursuant to such offer. Transamerica's common stock price closed at $51 1/8 on the New York Stock Exchange Composite Tape on May 6, 1994. Morgan Stanley & Co. Incorporated is acting as dealer manager for the offer. Georgeson & Company Inc. is acting as the information agent for the offer. San Francisco-based Transamerica Corporation is one of the world's largest financial services companies, providing specialized financial and life insurance products and services to individuals and organizations. Consolidated assets were $38.7 billion at March 31, 1994. * * * EX-99.G1 11 ANNUAL REPORT FINANCIAL REVIEW Transamerica Corporation is a financial services organization which engages through its subsidiaries in consumer lending, commercial lending, leasing, real estate services, life insurance and asset management. CORPORATE LIQUIDITY Transamerica Corporation receives funds from its subsidiaries in the form of dividends, income taxes and interest on loans. The Corporation uses these funds to pay dividends to its shareholders, reinvest in the operations of its subsidiaries and pay corporate interest, expenses and taxes. Reinvested funds are allocated among subsidiaries on the basis of capital requirements and expected returns. Reinvestment may be accomplished by allowing a subsidiary to retain all or a portion of its earnings, or by making capital contributions or loans. The Corporation also borrows funds to finance acquisitions or to lend to certain of its subsidiaries to finance their working capital needs. Subsidiaries are required to maintain prudent financial ratios consistent with other companies in their respective industries and retain the capacity through committed credit lines to repay working capital loans from the Corporation. At December 31, 1993, Transamerica and its subsidiaries had short-term borrowings, principally commercial paper, totaling $3.7 billion, supported by credit agreements with 60 banks. It is the policy of the Corporation to maintain credit line coverage at least equal to 100% of short-term borrowings. Availability under such lines at December 31, 1993, amounted to $4.1 billion or 111% of these borrowings; credit support equal to 68% of the borrowings was with banks rated AAA/AA or the equivalent by one or more of the major credit rating agencies. As discussed in the discontinued operations section on page 51, the Corporation completed the sale of its former property and casualty insurance subsidiary, Transamerica Insurance Group, through an initial public offering in April 1993 and a secondary offering in December 1993. Proceeds from the sales of stock, after underwriting discounts, totaled $1 billion. The proceeds were used to reduce indebtedness, including $409.3 million incurred to fund cash transactions with the property and casualty insurance operation in connection with the initial public offering, and to commence a program of repurchasing shares of its common stock. In May 1993 Transamerica announced its intention to purchase up to 3.5 million of its common shares subject to acceptable market conditions. In December the program was expanded to include an additional 2.5 million shares. As of December 31, 1993, Transamerica had purchased 3.6 million shares. On January 23, 1992, the Corporation issued 400,000 shares of Series D Preferred Stock ($100 par value, $500 liquidation preference) resulting in proceeds of $193.2 million after underwriting discounts and issuance costs. Dividends on these shares, which are cumulative, are at the rate of 8.5% of the liquidation preference per annum. Proceeds from the issue were used to fund a $100 million capital contribution to Transamerica Finance Group, a wholly owned subsidiary of the Corporation which conducts Transamerica's consumer lending, commercial lending and leasing operations, and to reduce short-term indebtedness. In August 1991, the Corporation established a new program to offer publicly, from time to time, $200 million of its Medium-Term Notes, Series B. The notes will be issued pursuant to a shelf registration filed in 1989 with the Securities and Exchange Commission that enables the Corporation to offer publicly up to $500 million of debt securities with varying terms. None of these debt securities has been sold. The securities may be senior or subordinated and, if subordinated, may be convertible into common stock. The proceeds from the sale of the debt securities, including the notes, may be used for general corporate purposes. Transamerica Corporation and Subsidiaries 37 INVESTMENT PORTFOLIO Transamerica Corporation, principally through its life insurance subsidiaries, maintains an investment portfolio aggregating $21 billion at December 31, 1993, of which $19.4 billion was invested in fixed maturities. At December 31, 1993, 96.6% of the fixed maturities was rated as ``investment grade,'' with an additional 2.8% in the BB category or its equivalent. ``Investment grade'' is defined as any issue rated above the Ba category by Moody's Investors Service or above the BB category by Standard & Poor's Corporation. The fixed maturity portfolio includes $74 million of private placement securities which have been rated by analysts employed by Transamerica Investment Services. The market value of fixed maturities was $21 billion resulting in a net unrealized gain position, before the effects of income taxes, of $1.6 billion at December 31, 1993. Fixed maturity investments are generally held for long-term investment and used primarily to support insurance reserves. Delinquent below investment grade securities before provision for impairment in value were $31.1 million at December 31, 1993 compared to $113.4 million at December 31, 1992. Provision for impairment in value has been made to reduce certain fixed maturity investments by $104 million at December 31, 1993 and $136.9 million at December 31, 1992. Fixed maturity securities which are expected to be called by the issuer or sold in connection with Transamerica portfolio management strategies in the next three months are classified as investments available for sale and carried at the lower of amortized cost or estimated market value. Based on current interest rate projections, fixed maturity securities with an amortized cost of $872.4 million and an estimated value of $920.2 million were identified as being subject to call or sale in the first quarter of 1994 and accordingly have been classified in the December 31, 1993 financial statements as investments available for sale. Additionally, $493 million (2% of the investment portfolio) was invested in mortgage loans and real estate including $356.8 million in commercial mortgage loans, $42.4 million in residential mortgage loans, $111.3 million in real estate investments and $53.2 million in foreclosed real estate. Problem loans, defined as restructured loans yielding less than 8% and delinquent loans, totaled $18.5 million at December 31, 1993 and $16.7 million at December 31, 1992. Allowances for possible losses of $70.7 million at December 31, 1993 and $70.1 million at December 31, 1992 have been established to cover the possible losses from mortgage loans and real estate investments. CONSOLIDATED RESULTS Operating income from continuing operations, which excludes investment transactions and in 1993 an extraordinary loss on early extinguishment of debt, increased $87.4 million (26%) in 1993 compared to 1992 due primarily to increases in life insurance, real estate services and asset management operating results and lower unallocated interest and other expenses. Partially offsetting these improvements were declines in commercial lending, consumer lending, insurance brokerage and leasing operating results. Operating income from continuing operations for 1993 also includes a $36 million after tax writedown of repossessed rent-to-own stores in commercial lending, charges totaling $24.7 million after tax primarily for the restructuring of the commercial lending and real estate services operations and for the realignment of certain corporate-wide administrative functions and an $8.4 million additional tax provision from the revaluation of the January 1, 1993 deferred tax liability for the effect of the federal tax rate increase. These items were offset by a $94.2 million tax benefit from the satisfactory resolution of prior years' tax matters which made certain tax reserves no longer necessary. Excluding the aforementioned 1993 items, operating income from continuing operations for 1993 increased $62.3 million (18%) compared to 1992. 38 Transamerica Corporation and Subsidiaries In December 1993 the commercial lending operation redeemed $125 million of deep discount, long-term debt with a book value of $90.7 million, which resulted in a $23.1 million after tax extraordinary loss. Investment transactions in 1993 included after tax gains of $102.2 million realized on the sale of investments, less the required accelerated amortization of deferred policy acquisition costs associated with interest-sensitive products of $40.8 million after tax and loss provisions of $36.1 million after tax for the impairment in value of investments. Investment transactions in 1992 included after tax gains of $89.8 million realized on the sale of investments, less accelerated amortization of deferred policy acquisition costs associated with interest-sensitive products of $21.9 million after tax and loss provisions of $62.8 million after tax for the impairment in value of investments. Operating income from continuing operations, which excludes investment transactions and in 1991 the cumulative effect of the change in accounting for post employment benefits other than pensions, in 1992 increased $290.7 million compared to 1991 principally due to the return to profitability of the commercial lending operation and improved real estate services operating results. Life insurance, leasing and consumer lending operating results also contributed to the improvement while unallocated interest and other expenses decreased in 1992. These improvements were offset in part by decreased operating results for insurance brokerage and asset management. In 1991 insurance brokerage results benefited from a gain on the sale of 59 million shares of Sedgwick Group plc stock, which reduced Transamerica's equity ownership from 39% to 25%. OPERATING INCOME BY LINE OF BUSINESS Changes in the earnings, capital requirements and liquidity of the Corporation's consolidated operations are best understood by considering the Corporation's separate business segments, which are shown below: _____________________________________________________________________________
(Amounts in millions) 1993 1992 1991 FINANCE Consumer lending $ 93.1 $101.2 $ 97.4 Commercial lending (4.0) 22.2 (217.0) Leasing 53.6 58.1 48.0 Real estate services 84.3 73.2 30.1 Amortization of goodwill (13.0) (13.0) (13.8) ______ ______ ______ Total finance 214.0 241.7 (55.3) INSURANCE Life insurance 215.7 190.8 169.0 Insurance brokerage 10.2 16.1 47.3 Asset management 0.3 0.1 0.6 Amortization of goodwill (8.9) (8.9) (9.5) ______ ______ ______ Total insurance 217.3 198.1 207.4 Unallocated interest and other expenses (6.1) (102.0) (105.0) ______ ______ ______ Operating income from continuing operations 425.2 337.8 47.1 Investment transactions 25.3 5.1 (2.0) ______ ______ ______ Income from continuing operations 450.5 342.9 45.1 Income (loss) from discontinued operations (50.0) (99.7) 39.7 Extraordinary loss on early extinguishment of debt (23.1) Cumulative effect of change in accounting for post employment benefits other than pensions (34.7) ______ ______ ______ Net income $377.4 $243.2 $ 50.1 ====== ====== ======
Transamerica Corporation and Subsidiaries 39 TRANSAMERICA FINANCE GROUP Transamerica Finance Group comprises Transamerica's consumer lending, commercial lending and leasing operations and provides funding for these operations. Transamerica Finance Group's total notes and loans payable were $7 billion at December 31, 1993 and $6.6 billion at December 31, 1992. Variable rate debt was $4 billion at December 31, 1993 compared to $3.5 billion at the end of 1992. The ratio of debt to debt plus equity was 82.2% at December 31, 1993 and 81.4% at December 31, 1992. Transamerica Finance Group, through its wholly owned subsidiary Transamerica Finance Corporation, offers publicly, from time to time, senior or subordinated debt securities. Public debt issued totaled $407 million in 1993, $538.7 million in 1992 and $1.1 billion in 1991. Under a shelf registration filed with the Securities and Exchange Commission in 1991 to offer publicly up to $1.5 billion of senior or subordinated debt securities with varying terms, debt securities totaling $1.4 billion had been sold through December 31, 1993. In addition, under a registration statement filed in July 1993, a medium-term note program was also established for $2 billion, of which $1.9 billion remained unsold as of December 31, 1993. During 1990 Transamerica Finance Group securitized $430 million of residential real estate secured consumer finance receivables and entered into a 5-year arrangement in which it securitized a $375 million participation interest in a pool of its insurance finance receivables. These securitizations, which have been accounted for as sales, allowed Transamerica Finance Group to improve its capital management and liquidity. At December 31, 1993, $375 million of securitized insurance finance receivables and $59.4 million of securitized real estate secured consumer finance receivables remained outstanding. The consumer and commercial lending operations continue to service these portfolios and remain partially at risk through limited recourse provisions. Proceeds from these transactions were used primarily to reduce debt. Liquidity is a characteristic of these operations since the majority of the assets consist of finance receivables. Principal cash collections of finance receivables totaled $13.4 billion during 1993, $11.1 billion during 1992 and $10 billion during 1991. Page 40 Transamerica Corporation and Subsidiaries TRANSAMERICA FINANCE GROUP ______________________________________________________________________________
(Amounts in millions) 1993 1992 1991 ASSETS Finance receivables less unearned fees and allowance for losses: Consumer $3,622 $3,558 $3,429 Commercial 2,860 2,785 2,769 ______ ______ ______ 6,482 6,343 6,198 Equipment held for lease 1,306 1,062 995 Goodwill 420 433 447 Assets held for sale 227 282 232 Other assets 722 712 815 ______ ______ ______ $9,157 $8,832 $8,687 ====== ====== ====== LIABILITIES AND EQUITY Notes and loans payable $7,032 $6,590 $6,548 Other liabilities 599 739 704 Equity 1,526 1,503 1,435 ______ ______ ______ $9,157 $8,832 $8,687 ====== ====== ====== REVENUES $1,433 $1,473 $1,446 EXPENSES Operating expenses 630 617 593 Interest 415 459 514 Provision for losses on receivables and assets held for sale 147 91 432 Income taxes (benefit) 99 126 (21) ______ ______ ______ 1,291 1,293 1,518 ______ ______ ______ Income (loss) from operations 142 180 (72) Amortization of goodwill (13) (13) (14) Extraordinary loss on early extinguishment of debt (23) Cumulative effect of change in accounting for post employment benefits other than pensions (11) ______ ______ ______ Net income (loss) $ 106 $ 167 $ (97) ====== ====== ====== SOURCE OF CASH Cash provided by operations $ 458 $ 344 $ 297 Proceeds from debt financing 5,501 4,100 4,494 Sale of trailer business 191 Other (53) 49 28 ______ ______ ______ $5,906 $4,684 $4,819 ====== ====== ====== APPLICATION OF CASH Additions to equipment held for lease $ 405 $ 335 $ 198 Payments of notes and loans 5,112 4,108 4,235 Increase in finance receivables 289 266 368 Equity transactions 100 (25) 18 ______ ______ ______ $5,906 $4,684 $4,819 ====== ====== ======
Transamerica Corporation and Subsidiaries 41 CONSUMER LENDING Consumer lending income from operations in 1993 decreased $8.1 million (8%) from 1992. The decrease was principally due to increased operating expenses, an increased provision for losses on receivables and lower revenues that more than offset lower interest expense and a $5.3 million benefit included in operating expenses from the reversal of reserves related to the 1990 securitization and sale of receivables. Revenues in 1993 decreased $5.8 million (1%) from 1992 principally because of lower servicing and other fees on securitized receivables as a result of the runoff of the securitized receivables and lower fees due to reduced volume of real estate secured loans. Operating expenses increased in 1993 mainly due to investments in new branches and losses on the disposal of repossessed assets. With the adoption in the fourth quarter of 1992 of a required new accounting rule, losses on the disposal of repossessed assets, which were $6 million for 1993 and $3 million in the fourth quarter of 1992, were classified as operating expenses rather than as credit losses. Data for periods prior to the fourth quarter of 1992 have not been reclassified. The provision for losses on receivables increased $15 million (31%) in 1993 over 1992 due to increased credit losses. Credit losses, net of recoveries, as a percentage of average consumer finance receivables outstanding, net of unearned finance charges and insurance premiums, were 1.68% in 1993 compared to 1.21% in 1992. Credit losses increased partly due to continued sluggishness in the domestic economy and a weak California real estate market. Interest expense declined $24.4 million (9%) in 1993 from 1992 due to a lower average interest rate which more than offset the effect of higher borrowings due to increased average receivables outstanding. Consumer lending income from operations in 1992 increased $3.8 million (4%) over 1991 principally due to an increase in consumer finance receivables resulting from growth in the company's loan portfolio. Revenues in 1992 increased $27.7 million (4%) over 1991 principally because of higher average receivables outstanding. Expenses increased in 1992 mainly due to increased operating costs, primarily attributable to branch network expansion and a higher level of receivables, and an increase in the provision for losses on receivables offset in part by a reduction in interest expense. The provision for losses on receivables increased due to higher credit losses sustained. Credit losses, net of recoveries, as a percentage of average net consumer finance receivables outstanding, were 1.21% for 1992 compared to 0.98% in 1991. Credit losses increased in 1992 due to sluggishness in the domestic economy and a weak California real estate market. Interest expense declined in 1992 due to a lower average interest rate which more than offset the effect of higher average borrowings resulting from the higher level of receivables. Net consumer finance receivables increased $66.2 million (2%) in 1993 and $132 million (4%) in 1992. Net consumer finance receivables at December 31, 1993 included $3.1 billion of real estate secured loans, principally first and second mortgages secured by residential properties, of which approximately 50% are located in California. Company policy generally limits the amount of cash advanced 42 Transamerica Corporation and Subsidiaries on any one loan, plus any existing mortgage, to between 70% and 80% (depending on location) of the appraised value of the mortgaged property, as determined by qualified independent appraisers at the time of loan origination. Delinquent real estate secured loans, which are defined as loans contractually past due 60 days or more, totaled $61.8 million (1.87% of total real estate secured loans outstanding) at December 31, 1993 compared to $62.1 million (1.85% of total real estate secured loans outstanding) at December 31, 1992. Management has established an allowance for losses equal to 2.83% of net consumer finance receivables outstanding at December 31, 1993 and 1992. Generally, by the time an account secured by residential real estate becomes past due 90 days, foreclosure proceedings have begun, at which time the account is moved from finance receivables to other assets and is written down to the estimated realizable value of the collateral if less than the account balance. After foreclosure, repossessed assets are carried at the lower of cost or fair value less estimated selling costs. Accounts in foreclosure and repossessed assets held for sale totaled $214.7 million at December 31, 1993 compared to $176.1 million at December 31, 1992. The increase primarily reflects increased repossessions in California and longer disposal times due to its weak real estate market.
CONSUMER LENDING _____________________________________________________________________________ (Amounts in millions) 1993 1992 1991 REVENUES Finance charges and related income $ 654 $ 660 $ 632 EXPENSES Interest 242 267 276 Operating expenses 189 172 153 Provision for losses on receivables 64 49 42 Income taxes 66 71 63 ______ ______ ______ 561 559 534 ______ ______ ______ Income from operations 93 101 98 Amortization of goodwill (1) Cumulative effect of change in accounting for post employment benefits other than pensions (6) ______ ______ ______ Net income $ 93 $ 101 $ 91 ====== ====== ====== ASSETS $3,946 $3,876 $3,675 ====== ====== ======
Transamerica Corporation and Subsidiaries 43 COMMERCIAL LENDING Commercial lending results, before the amortization of goodwill and a $23.1 million after tax extraordinary loss on the early extinguishment of $125 million deep discount long-term debt in 1993, were a loss of $4 million for 1993 compared to income in 1992 of $22.2 million. The 1993 loss was due primarily to the inclusion of a $50 million ($36 million after tax) provision to reduce the net carrying value of repossessed rent-to-own stores to their estimated realizable value. Information received during the year from prospective buyers of the repossessed rent-to-own stores held for sale indicated that the realizable value of the business had declined below its carrying value. The 1993 results also included an $8.8 million after tax charge for the restructuring of the commercial lending unit's infrastructure, a $4.2 million after tax provision for anticipated legal and other costs associated with the runoff of the liquidating portfolios and a $4.2 million tax benefit from the resolution of prior years' tax matters. Excluding the aforementioned items, commercial lending income, before the amortization of goodwill and the extraordinary loss on the early extinguishment of debt, increased $18.6 million (83%) in 1993 over 1992. This improvement was primarily due to lower operating expenses, a lower provision for losses on receivables and stronger margins brought about by the declining interest rate environment. The interest rates at which commercial lending borrows funds for its businesses have moved more quickly than the rates at which it lends to its customers. As a result, margins have been enhanced by the declining interest rate environment. Commercial lending results, before the amortization of goodwill, were income of $22.2 million compared to a loss of $217 million in 1991. The return to profitability was principally due to lower provisions for losses on receivables and assets held for sale. Results for 1991 included a special pretax charge of $200.2 million ($130 million after tax) resulting from a decision to exit the rent-to-own finance business, reduce lending to certain asset based lending lines, accelerate disposal of repossessed assets and liquidate receivables remaining from previously sold businesses. Revenues decreased $22.1 million (6%) in 1993 and $25.6 million (6%) in 1992 primarily as a result of reduced yields attributable to the current low interest rate environment. Interest expense declined $25.5 million (19%) in 1993 and $48.1 million (26%) in 1992 as a result of lower average interest rates. Operating expenses increased $11.2 million (6%) during 1993 over 1992 due to the restructuring charge and provision for anticipated legal and other costs associated with the runoff of the liquidating portfolios described above, aggregating $21.5 million, partially offset by cost reduction efforts in the inventory finance, business credit and insurance finance core businesses. The provision for losses on receivables in 1993 was $8.7 million (21%) less than in 1992 primarily due to lower credit losses. Credit losses, net of recoveries, as a percentage of average commercial finance receivables outstanding, net of unearned finance charges, were 1.49% in 1993, 4.18% in 1992 and 5.82% in 1991. Credit losses declined in 1993 primarily due to lower losses in the liquidating portfolios. The commercial lending operation experienced substantial credit losses in 1991 primarily due to severe financial problems experienced by the company's customers resulting from the weak U.S. and Canadian economies. In March 1992, Transamerica's commercial lending operation purchased for cash a business credit portfolio consisting of twelve manufacturer/distributor accounts with a net outstanding balance of $134 million. In September 1991, the operation purchased for cash an inventory financing portfolio, consisting of lending arrangements with over 700 manufactured housing and recreational product dealers with a net balance outstanding of $290.6 million. These transactions were funded with short-term debt. Net commercial finance receivables outstanding increased $64.9 million (2%) in 1993 and decreased $65.4 million (2%) in 1992. Both years experienced growth in the inventory finance and insurance finance portfolios and declines in the liquidating portfolios. Management has established an allowance for credit losses equal to 2.71% of net commercial finance receivables outstanding as of December 31, 1993 compared to 3.14% at December 31, 1992. 44 Transamerica Corporation and Subsidiaries Effective in 1993, the policies used for the determination of delinquent and nonearning receivables have been revised to provide greater consistency among the company's receivable portfolios. It is management's view that the new methodology provides a better and more meaningful assessment of the condition of the portfolio. Delinquent receivables, which were generally defined as financed inventory sold but unpaid 30 days or more, the portion of business credit loans in excess of the approved lending limit and all other receivable balances contractually past due 60 days or more, are now defined as the instalment balance for inventory finance and business credit receivables and the receivable balance for all other receivables over 60 days past due. Nonearning receivables, which were defined as receivables from borrowers in bankruptcy or litigation and other accounts for which full collectibility was doubtful, are now defined as receivables from borrowers that are over 90 days delinquent or at such earlier time as full collectibility becomes doubtful. At December 31, 1993, delinquent receivables were $28.9 million (0.96% of receivables outstanding) and nonearning receivables were $33.6 million (1.12% of receivables outstanding). At December 31, 1992, delinquent receivables were $65 million (2.21% of receivables outstanding) and nonearning receivables were $92.5 million (3.14% of receivables outstanding). Delinquency and nonearning data as of December 31, 1992 has not been restated. Assets held for sale as of December 31, 1993 totaled $90.1 million, net of a $157 million valuation allowance, and consisted of rent-to-own finance receivables of $120.5 million, repossessed rent-to-own stores of $107.2 million and other repossessed assets of $19.4 million. Assets held for sale at December 31, 1992 totaled $191.5 million, net of a $121.5 million valuation allowance, and comprised rent-to-own finance receivables of $179 million, repossessed rent-to-own stores of $103.4 million and other repossessed assets of $30.6 million. At December 31, 1993, $27.5 million of the rent-to-own finance receivables were classified as both delinquent and nonearning. At December 31, 1992, delinquent rent-to-own finance receivables were $15.4 million and nonearning rent-to-own finance receivables were $32.6 million. Delinquency and nonearning data as of December 31, 1992 has not been restated.
COMMERCIAL LENDING _____________________________________________________________________________ (Amounts in millions) 1993 1992 1991 REVENUES Finance charges and related income $ 371 $ 393 $ 418 EXPENSES Interest 109 135 183 Operating expenses 186 174 174 Provision for losses on receivables 33 42 248 Provision for losses on assets held for sale 50 141 Income taxes (benefit) (3) 20 (111) ______ ______ ______ 375 371 635 ______ ______ ______ Income (loss) from operations (4) 22 (217) Amortization of goodwill (11) (11) (11) Extraordinary loss from early extinguishment of debt (23) Cumulative effect of change in accounting for post employment benefits other than pensions (3) ______ ______ ______ Net income (loss) $ (38) $ 11 $ (231) ====== ====== ====== ASSETS $3,508 $3,626 $3,780 ====== ====== ======
Transamerica Corporation and Subsidiaries 45 LEASING Income from operations decreased $4.5 million (8%) in 1993 and increased $10.1 million (21%) in 1992. The 1993 decrease was due primarily to an additional income tax provision of $4.3 million caused by the revaluation of deferred income tax liability for the 1993 federal tax rate increase. Excluding the additional tax provision, results for 1993 were comparable to 1992 as higher fleet utilization and per diem rates in the rail trailer business, a larger finance lease portfolio and a larger fleet of refrigerated containers were offset by a decline in standard container utilization. The 1992 increase was principally due to higher fleet utilization and per diem rates in the rail trailer business. Revenues for 1993 decreased $12.7 million (3%) from 1992. The decline was mainly due to the sale of the domestic over-the-road trailer business in November 1992 and a decline in standard container utilization. The decrease was partially offset by higher fleet utilization and per diem rates in the rail trailer business, an increased finance lease portfolio, and a larger fleet of standard containers, refrigerated containers and European trailers. In November 1992, the company sold its domestic over-the-road trailer business. Proceeds from the sale totaled $191 million and resulted in no gain or loss. Revenues increased $24.1 million (6%) in 1992 primarily due to higher fleet utilization and per diem rates in the rail trailer business, a larger fleet of refrigerated containers, and a larger fleet and higher per diem rates in the standard container line, offset in part by lower standard container utilization and decreased revenues as a result of the sale of the company's remaining common carrier operations in July 1991. Expenses decreased $12.1 million (4%) in 1993 from 1992 due to the sale of the domestic over-the-road trailer business. The decrease was partially offset by higher ownership costs due to a larger fleet. Expenses increased $6.1 million (2%) in 1992 over 1991 mainly due to higher depreciation expenses because of a larger fleet of standard and refrigerated containers, and higher repair, storage and positioning expenses resulting from lower utilization in the standard container business, partially offset by lower operating expenses resulting from the sale of the common carrier operations. The combined utilization of standard containers, refrigerated containers, domestic containers, tank containers and chassis averaged 83% in 1993, 85% in 1992 and 89% in 1991. Rail trailer utilization was 91% in 1993, 84% in 1992 and 75% in 1991. European trailer utilization was 89% in 1993, 84% in 1992 and 83% in 1991. The company's standard container, refrigerated container, domestic container, tank container and chassis fleet of 316,000 units increased by 36,000 units (13%) in 1993, 24,900 units (10%) in 1992 and 10,700 units (4%) in 1991. The rail trailer fleet of 36,500 units increased by 2,100 units (6%) in 1993, and decreased by 2,400 units (7%) in 1992 and 3,700 units (9%) in 1991. The company also operates a fleet of 3,800 over-the-road trailers in Europe.
LEASING _____________________________________________________________________________ (Amounts in millions) 1993 1992 1991 REVENUES Leasing revenues $ 408 $ 420 $ 396 EXPENSES Operating expenses 82 96 103 Depreciation on equipment held for lease 102 99 91 Selling and administrative expenses 66 74 71 Interest 64 57 55 Income taxes 40 36 28 ______ ______ ______ 354 362 348 ______ ______ ______ Income from operations 54 58 48 Amortization of goodwill (2) (2) (2) Cumulative effect of change in accounting for post employment benefits other than pensions (2) ______ ______ ______ Net income $ 52 $ 56 $ 44 ====== ====== ====== ASSETS $1,697 $1,340 $1,258 ====== ====== ======
46 Transamerica Corporation and Subsidiaries REAL ESTATE SERVICES Real estate services comprise Transamerica's real estate tax, property management and other services. Income from the real estate services' operations increased $11.1 million (15%) in 1993 and $43.1 million (143%) in 1992, due principally to increased revenues from continued high levels of mortgage loan refinancings resulting from lower mortgage interest rates. The 1993 increase was offset in part by a $3.7 million after tax provision for restructuring of certain functions. Funds required for capital expenditures and working capital are generated by operations. Cash, cash equivalents and accounts receivable, which totaled $115.6 million at December 31, 1993 and $81.3 million at December 31, 1992 are the real estate services' principal sources of liquidity.
REAL ESTATE SERVICES _____________________________________________________________________________ (Amounts in millions) 1993 1992 1991 ASSETS Cash, cash equivalents and accounts receivable $116 $ 81 $ 54 Investments 64 59 52 Land and buildings 166 156 130 Other assets 103 60 47 ____ ____ ____ $449 $356 $283 ==== ==== ==== LIABILITIES AND EQUITY Loss and future service reserves $105 $ 68 $ 54 Notes and loans payable 97 82 78 Other liabilities 63 68 52 Equity 184 138 99 ____ ____ ____ $449 $356 $283 ==== ==== ==== REVENUES Real estate services revenues $324 $269 $190 EXPENSES Salaries and employee benefits 82 71 61 Other operating expenses 105 81 83 Income taxes 53 44 16 ____ ____ ____ 240 196 160 ____ ____ ____ Income from operations 84 73 30 Cumulative effect of change in accounting for post employment benefits other than pensions (2) ____ ____ ____ Net income $ 84 $ 73 $ 28 ==== ==== ==== SOURCE OF CASH Cash provided by operations $ 68 $ 76 $ 44 Proceeds from debt financing 13 16 ____ ____ ____ $ 81 $ 92 $ 44 ==== ==== ==== APPLICATION OF CASH Equity transactions $ 55 $ 50 $ 19 Net purchases of investments 9 9 Payments of notes and loans 2 20 5 Other 24 13 11 ____ ____ ____ $ 81 $ 92 $ 44 ==== ==== ====
Transamerica Corporation and Subsidiaries 47 LIFE INSURANCE Operating income from life insurance operations, which excludes investment transactions, increased $24.9 million (13%) in 1993 and $21.8 million (13%) in 1992. The life insurance, structured settlements, living benefits, group pension and reinsurance lines all experienced increases in earnings before investment transactions, resulting primarily from increased charges on a larger base of interest-sensitive policies, maintained investment spreads on a larger base of assets and control of ongoing operating expenses. In 1993, the structured settlements line, based on the determination that its products had insignificant mortality risk, adopted Financial Accounting Standards Board Statement No. 97 on accounting for interest-sensitive life insurance products. Prior year financial statements have been reclassified which reduced premium income and life insurance expenses by an equal amount. This change in accounting reduced operating income by $11.9 million after tax and net income by $39 million after tax due to the accelerated amortization of deferred policy acquisition costs associated with investment income and gains from investments called or sold. Net income included after tax gains from investment transactions of $29.2 million in 1993, $5.1 million in 1992 and $600,000 in 1991. Premiums and related income increased $73.3 million (6%) in 1993 and $180.5 million (18%) in 1992 primarily due to increased life insurance premiums and charges on interest-sensitive policies attributable to a larger base of insurance policies in force and an increase in reinsurance assumed. Investment income increased $148.1 million (9%) in 1993 and $69.6 million (5%) in 1992 due primarily to increased investments. Investment income includes $55.7 million in 1993 and $9.4 million in 1992 related to the accelerated amortization of discounts on securities called or expected to be called. Investment income for 1992 also included a $10 million addition to investment income to reflect actual prepayment experience on certain mortgage-backed securities investments. Investment income for 1993 also included a $4.7 million charge related to the reversal of accrued investment income on defaulted securities. The after tax yield on the investment portfolio was 5.74% in 1993, 5.98% in 1992 and 6.24% in 1991. Life insurance benefits and expenses increased $168.5 million (7%) in 1993 and $222.3 million (10%) in 1992 principally due to increases in benefits paid or provided attributable to the larger base of life insurance and annuities in force, higher commission expense on increased life insurance and annuity sales, and higher amortization of deferred policy acquisition costs (exclusive of accelerated amortization related to investment gains). Other expenses include charges of $19.8 million in 1993 and $9.2 million in 1992 primarily attributable to a provision for the realignment and relocation of certain back office support functions and in 1993 anticipated guaranty fund assessments and the establishment of an allowance for possible loss related to the 1991 sale of a business unit. Cash provided by operations for 1993 was $604.3 million which was $26.1 million (4%) below the 1992 amount primarily resulting from higher income taxes paid during 1993 and timing of settlements of certain receivables. The company continues to maintain a sufficiently liquid portfolio to cover its operating requirements, with remaining funds being invested in longer term securities. 48 Transamerica Corporation and Subsidiaries
LIFE INSURANCE _____________________________________________________________________________ (Amounts in millions) 1993 1992 1991 ASSETS Investments $20,891 $18,205 $16,691 Deferred policy acquisition costs 1,929 1,812 1,691 Other assets 3,289 2,722 2,387 _______ _______ _______ $26,109 $22,739 $20,769 ======= ======= ======= LIABILITIES AND EQUITY Policy reserves and related items $21,952 $19,255 $17,459 Other liabilities 2,091 1,700 1,686 Equity 2,066 1,784 1,624 _______ _______ _______ $26,109 $22,739 $20,769 ======= ======= ======= REVENUES Premiums and related income $ 1,256 $ 1,183 $ 1,002 Investment income, net of expenses 1,726 1,578 1,508 Gain on investment transactions 45 7 1 _______ _______ _______ 3,027 2,768 2,511 EXPENSES Policyholder benefits 2,146 2,059 1,892 Commissions and other expenses 500 418 363 Income taxes 136 95 86 _______ _______ _______ 2,782 2,572 2,341 _______ _______ _______ Income from operations 245 196 170 Cumulative effect of change in accounting for post employment benefits other than pensions (12) _______ _______ _______ Net income $ 245 $ 196 $ 158 ======= ======= ======= SOURCE OF CASH Cash provided by operations $ 604 $ 630 $ 639 Net receipts from interest-sensitive policies 1,853 884 677 _______ _______ _______ $ 2,457 $ 1,514 $ 1,316 ======= ======= ======= APPLICATION OF CASH Net purchases of investments $ 2,434 $ 1,424 $ 1,344 Equity transactions 19 22 Other 4 68 (28) _______ _______ _______ $ 2,457 $ 1,514 $ 1,316 ======= ======= =======
Transamerica Corporation and Subsidiaries 49 INSURANCE BROKERAGE Income from insurance brokerage operations comprises Transamerica's equity interest in Sedgwick Group plc's income, less a provision for income taxes and the amortization of goodwill. In 1993 income, before the amortization of goodwill, decreased $5.9 million (37%). Transamerica's equity interest was reduced from 25% to 21% during 1993 due to a rights offering by Sedgwick which resulted in a $2.6 million after tax loss to Transamerica. In addition, based on figures reported by Sedgwick and included in Transamerica's results on a one quarter lag, Transamerica's equity interest in Sedgwick's operating results, before the amortization of goodwill, decreased $3.3 million below 1992 due primarily to lower operating profits reported by Sedgwick. Operating income, before the amortization of goodwill, decreased $31.2 million (66%) in 1992 principally because 1991 results included a $32.6 million after tax gain from the sale by the Corporation of 59 million shares of Sedgwick stock which reduced Transamerica's equity interest from 39% to 25%. Goodwill amortization related to insurance brokerage operations amounted to $7.2 million in 1993, $7.2 million in 1992 and $7.8 million in 1991. ASSET MANAGEMENT Income from asset management operations, before the amortization of goodwill, increased $200,000 from 1992 primarily due to higher revenues from increased assets under management which more than offset a $1 million after tax provision for vacant office space. The principal business of the asset management operations is the marketing and investment management of mutual funds and serving as investment advisor to public and private retirement funds. At December 31, 1993 the private account business had $10.6 billion and the mutual fund business had $3.1 billion under management. Goodwill amortization related to asset management operations was $1.7 million in 1993, 1992 and 1991. UNALLOCATED INTEREST AND OTHER EXPENSES Unallocated costs, after related income taxes, are summarized as follows:
____________________________________________________________________________ (Amounts in millions) 1993 1992 1991 Interest expense $54.1 $ 61.5 $ 66.1 Other expenses (income) (48.0) 40.5 38.9 _____ ______ ______ $ 6.1 $102.0 $105.0 ===== ====== ======
Interest expense, after related income taxes, decreased $7.4 million (12%) in 1993 and $4.6 million (7%) in 1992 due to a lower level of borrowings and lower interest rates. The lower borrowing level in 1993 was primarily due to the repayment of debt with proceeds from the sale of the discontinued property and casualty insurance operation. Other expenses, after related income taxes, in 1993 includes a tax benefit of $90 million from the reduction of tax reserves principally for the resolution of prior years' tax matters. Excluding the tax benefits of $90 million for the reversal of tax reserves, other expenses, after related income taxes, for 1993 increased $1.5 million (4%) compared to 1992. The increase was principally due to a $4 million after tax provision for restructuring corporate-wide administrative functions, a $3 million additional after tax provision to increase the supplemental (nonqualified) pension liability to reflect the shift toward lump sum distributions which are calculated at the lower Pension Benefit Guaranty Corporation interest rate, and an increase in advertising expenses, offset in part by lower self insurance costs. Other expenses, after related income taxes, increased $1.6 million (4%) in 1992 due primarily to higher self insurance and advertising expenses, offset in part by adjustments in taxes allocated to the Corporation in accordance with its usual procedures for allocating current consolidated income taxes. 50 Transamerica Corporation and Subsidiaries DISCONTINUED OPERATIONS On July 20, 1992, Transamerica Corporation announced that its Board of Directors approved a plan to withdraw from the property and casualty insurance business. Transamerica Corporation sold 73% of TIG Holdings, Inc., a new company which acquired Transamerica's former property and casualty insurance subsidiary through an initial public offering in April 1993 and the balance in a secondary public offering in December 1993. The net proceeds, after underwriting discounts, totaled $1 billion in cash from the two offerings, resulting in a $125 million after tax loss on the sale, of which $75 million was recorded in 1992 on an estimated basis and $50 million in 1993 upon the sale in the secondary offering of the remaining interest in TIG Holdings, Inc. See Note N, Discontinued Operations, of the financial statements on page 68 of this annual report for a discussion of Transamerica's remaining obligations from the withdrawal from the property and casualty insurance business. Results from discontinued operations for 1992 were a loss of $99.7 million. This loss comprises the $75 million after tax provision for the estimated loss from the ultimate disposition and a $24.7 million after tax loss from operations incurred in the first half of 1992, which represents 1992 property and casualty results prior to the date of adoption of the plan to withdraw from the property and casualty insurance business. NEW ACCOUNTING STANDARDS See Note A, Significant Accounting Policies, on pages 57 and 58 of this annual report for a discussion of the potential impact of new accounting standards Transamerica will adopt in 1994 and 1995. SUBSEQUENT EVENT On February 13, 1994, Transamerica entered into an Asset Purchase Agreement to purchase all the assets of the container division of Tiphook plc for up to $1.1 billion in cash. Completion of the acquisition is subject to approval by Tiphook's shareholders and successful completion of a consent solicitation and bond tender by Tiphook. Transamerica Corporation and Subsidiaries 51
CONSOLIDATED BALANCE SHEET ______________________________________________________________________________ December 31 1993 1992 ASSETS Investments, principally of life insurance subsidiaries: Fixed maturities--held for investment $18,553.0 $16,111.1 Fixed maturities--available for sale 872.4 759.4 Mortgage loans and real estate 493.0 577.7 Equity securities 466.1 342.0 Loans to life insurance policyholders 396.5 370.5 Short-term investments 190.8 133.3 _________ _________ 20,971.8 18,294.0 Finance receivables, of which $3,023.9 in 1993 and $2,806.4 in 1992 matures within one year 6,908.5 6,786.6 Less unearned fees ($240.8 in 1993 and $250 in 1992) and allowance for losses 426.0 443.9 _________ _________ 6,482.5 6,342.7 Cash and cash equivalents 92.7 22.0 Trade and other accounts receivable 2,015.4 1,771.9 Net assets of discontinued operations 1,103.9 Property and equipment, less accumulated depreciation of $831.6 in 1993 and $748.7 in 1992: Land, buildings and equipment 345.7 325.4 Equipment held for lease 1,306.5 1,062.1 Deferred policy acquisition costs 1,929.3 1,812.0 Separate accounts administered by life insurance subsidiaries 1,366.5 984.4 Investment in Sedgwick Group plc 310.2 298.3 Goodwill, less accumulated amortization of $113.4 in 1993 and $100.2 in 1992 495.4 510.8 Other assets 734.5 763.4 _________ _________ $36,050.5 $33,290.9 ========= =========
(Amounts in millions except for share data) See notes to financial statements 52 Transamerica Corporation and Subsidiaries
CONSOLIDATED BALANCE SHEET (CONTINUED) ______________________________________________________________________________ December 31 1993 1992 LIABILITIES AND SHAREHOLDERS' EQUITY Life insurance policy liabilities $21,951.8 $19,255.3 Notes and loans payable, principally of finance subsidiaries, of which $2,023 in 1993 and $1,062.6 in 1992 matures within one year 7,704.0 7,573.1 Accounts payable and other liabilities 1,352.4 1,547.0 Income taxes, of which $301.4 in 1993 and $354.1 in 1992 is deferred 312.3 631.0 Separate account liabilities 1,366.5 984.4 Shareholders' equity: Preferred stock ($100 par value): Authorized--1,200,000 shares; issuable in series, cumulative Outstanding--Dutch Auction Rate Transferable Securities, 2,250 shares, at liquidation preference of $100,000 per share 225.0 225.0 Outstanding--Series D, 400,000 shares, at liquidation preference of $500 per share, cumulative dividend rate of 8.5% 200.0 200.0 Common stock ($1 par value): Authorized--150,000,000 shares Outstanding--76,398,888 shares in 1993 and 79,170,880 shares in 1992, after deducting 3,339,574 shares in treasury in 1993 76.4 79.2 Additional paid-in capital 475.2 646.5 Retained earnings 2,297.9 2,100.2 Net unrealized gain on marketable equity securities 124.1 83.5 Foreign currency translation adjustments (35.1) (34.3) _________ _________ 3,363.5 3,300.1 _________ _________ $36,050.5 $33,290.9 ========= =========
Transamerica Corporation and Subsidiaries 53
CONSOLIDATED STATEMENT OF INCOME _____________________________________________________________________________ Year ended December 31 1993 1992 1991 REVENUES Life insurance premiums and related income $1,255.7 $1,182.3 $1,001.8 Investment income 1,749.9 1,600.0 1,529.9 Finance charges and other fees 990.1 1,013.9 1,040.7 Leasing revenues 388.3 402.2 381.4 Real estate and tax service revenues 293.3 249.6 168.2 Gain (loss) on investment transactions 39.0 7.7 (2.9) Insurance brokerage 19.7 29.2 80.9 Other 97.0 95.2 56.1 ________ ________ ________ 4,833.0 4,580.1 4,256.1 EXPENSES Life insurance benefits 2,145.9 2,059.2 1,892.3 Life insurance underwriting, acquisition and other expenses 499.8 418.0 362.6 Leasing operating and maintenance costs 184.4 198.0 197.3 Interest and debt expense 511.6 568.9 631.1 Provision for losses on receivables and assets held for sale 147.0 90.7 431.9 Other, including administrative and general expenses 743.7 684.9 629.6 ________ ________ ________ 4,232.4 4,019.7 4,144.8 ________ ________ ________ 600.6 560.4 111.3 Income taxes 150.1 217.5 66.2 ________ ________ ________ Income from continuing operations 450.5 342.9 45.1 Income (loss) from discontinued operations (50.0) (99.7) 39.7 Extraordinary loss on early extinguishment of debt (23.1) Cumulative effect of change in accounting for post employment benefits other than pensions (34.7) ________ ________ ________ Net income $ 377.4 $ 243.2 $ 50.1 ======== ======== ======== EARNINGS PER SHARE OF COMMON STOCK Income from continuing operations $ 5.44 $ 4.11 $ 0.43 Income (loss) from discontinued operations (0.64) (1.28) 0.52 Extraordinary loss on early extinguishment of debt (0.29) Cumulative effect of change in accounting for post employment benefits other than pensions (0.45) ________ ________ ________ Net income $ 4.51 $ 2.83 $ 0.50 ======== ======== ========
(Amounts in millions except for share data) See notes to financial statements 54 Transamerica Corporation and Subsidiaries
CONSOLIDATED STATEMENT OF CASH FLOWS _____________________________________________________________________________ Year ended December 31 1993 1992 1991 OPERATING ACTIVITIES Income from continuing operations $ 450.5 $ 342.9 $ 45.1 Adjustments to reconcile income from continuing operations to net cash provided by operating activities: Increase in life insurance policy liabilities, excluding policyholder balances on interest-sensitive policies 927.3 912.5 829.6 Amortization of policy acquisition costs 232.7 135.3 172.1 Policy acquisition costs deferred (350.0) (256.3) (226.8) Depreciation and amortization 167.1 158.0 147.9 Other (328.1) (273.2) 71.5 _________ _________ _________ Net cash provided by continuing operations 1,099.5 1,019.2 1,039.4 INVESTING ACTIVITIES Finance receivables originated (13,664.0) (11,388.0) (10,330.0) Finance receivables collected 13,375.2 11,121.9 9,962.0 Purchase of investments (12,102.5) (6,527.2) (9,236.0) Sales and maturities of investments 9,647.5 5,090.7 7,850.2 Proceeds from public offering of discontinued operations 1,031.8 Cash transactions with discontinued operations (409.3) 27.0 20.0 Other (475.5) (157.0) 7.1 _________ _________ _________ Net cash used by investing activities (2,596.8) (1,832.6) (1,726.7) FINANCING ACTIVITIES Proceeds from debt financing 5,308.2 4,100.9 4,563.2 Proceeds from sale of preferred stock 193.2 Payments of notes and loans (5,239.5) (4,276.4) (4,402.0) Receipts from interest-sensitive policies credited to policyholder account balances 4,166.3 2,572.0 1,977.7 Return of policyholder balances on interest-sensitive policies (2,313.2) (1,688.5) (1,300.6) Common stock transactions (174.1) 70.3 27.3 Dividends (179.7) (178.6) (164.0) _________ _________ _________ Net cash provided by financing activities 1,568.0 792.9 701.6 _________ _________ _________ Increase (decrease) in cash and cash equivalents 70.7 (20.5) 14.3 Cash and cash equivalents at beginning of year 22.0 42.5 28.2 _________ _________ _________ Cash and cash equivalents at end of year $ 92.7 $ 22.0 $ 42.5 ========= ========= =========
(Amounts in millions except for share data) See notes to financial statements Transamerica Corporation and Subsidiaries 55
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY __________________________________________________________________________________________________________ Net Unrealized Foreign Additional Gain on Market- Currency Preferred Common Paid-in Retained able Equity Translation Stock Stock Capital Earnings Securities Adjustments BALANCE AT JANUARY 1, 1991 $225.0 $76.4 $558.5 $2,149.5 $ 2.4 $ 4.9 Net income 50.1 Dividends declared: On common stock (152.0) On preferred stock (12.0) Common stock issued 0.9 28.7 Treasury stock purchased (0.1) (2.2) Other changes 98.4 (2.7) ______ _____ ______ ________ ______ ______ BALANCE AT DECEMBER 31, 1991 225.0 77.2 585.0 2,035.6 100.8 2.2 Net income 243.2 Dividends declared: On common stock (156.7) On preferred stock (21.9) Common stock issued 2.0 68.3 Preferred stock issued 200.0 (6.8) Other changes (17.3) (36.5) ______ _____ ______ ________ ______ ______ BALANCE AT DECEMBER 31, 1992 425.0 79.2 646.5 2,100.2 83.5 (34.3) Net income 377.4 Dividends declared: On common stock (156.1) On preferred stock (23.6) Common stock issued 0.9 32.6 Treasury stock purchased (3.7) (203.9) Other changes 40.6 (0.8) ______ _____ ______ ________ ______ ______ BALANCE AT DECEMBER 31, 1993 $425.0 $76.4 $475.2 $2,297.9 $124.1 $(35.1) ====== ===== ====== ======== ====== ======
[FN] (Amounts in millions) See notes to financial statements 56 Transamerica Corporation and Subsidiaries NOTES TO FINANCIAL STATEMENTS December 31, 1993 _____________________________________________________________________________ [A] SIGNIFICANT ACCOUNTING POLICIES CONSOLIDATION The consolidated financial statements include the accounts of Transamerica Corporation and its subsidiaries. Transamerica's investment in Sedgwick Group plc is carried at cost plus equity in undistributed earnings since the date of acquisition. INVESTMENTS Investments in fixed maturities, comprising bonds, notes and redeemable preferred stocks, are carried at amortized cost and generally held to maturity. Fixed maturity securities which are expected to be called by the issuer or sold in the next three months are classified as available for sale and carried at the lower of amortized cost or market value. Market value is based on quoted market prices. For fixed maturity securities not actively traded, including private placements, market value is estimated using value obtained from independent pricing services. Changes to the carrying amount of securities available for sale, if any, are included in shareholders' equity. Investments in equity securities, comprising corporate common and nonredeemable preferred stocks, are carried at fair value based on quoted market prices. Realized gains and losses on investment transactions are determined generally on a specific identification basis and included in income on the trade date. CASH AND CASH EQUIVALENTS Cash and cash equivalents include money market funds and marketable securities with original maturities of three months or less except for such securities held by the life insurance operation which are included in short-term investments. DEPRECIATION AND AMORTIZATION Property and equipment, which are stated on the basis of cost, are depreciated by use of the straight-line method over their estimated useful lives. Goodwill is amortized over 40 years. INCOME TAXES Transamerica provides deferred taxes based on enacted tax rates in effect on the dates temporary differences between the book and tax bases of assets and liabilities reverse. FINANCE Finance charges are generally recognized as earned on an effective yield method. An allowance for losses is provided in an amount sufficient to cover estimated uncollectible receivables. Leasing revenues are recognized as rentals become due. Tax service revenues are recognized as income generally when contracts are executed with a portion of the revenues amortized over the estimated lives of the contracts. INSURANCE The accounts of the life insurance operation have been included in the consolidated financial statements on the basis of generally accepted accounting principles which differ in some respects from those followed in reports to regulatory authorities. Life insurance premiums are generally recognized as earned over the premium paying periods, with reserves for future benefits established from such premiums on a net-level premium method based upon estimated investment yields, withdrawals, mortality and other assumptions which were appropriate at the time the policies were issued. Premiums and deposits for universal life and other interest-sensitive life insurance products that do not involve significant mortality or morbidity risk are recorded as liabilities. In 1993 Transamerica adopted this method of accounting for its structured settlement products based on the determination that there is insignificant mortality risk from these products. Prior year financial statements have been reclassified which reduced premium income and life insurance related expenses by an equal amount. Costs of acquiring new life insurance business, principally commissions and certain variable underwriting and field office expenses, all of which vary with and are primarily related to the production of new business, are deferred and amortized in proportion to gross profit. The aforementioned change in accounting for the structured settlement products increased amortization of deferred policy acquisition costs and reduced net income $39 million including an immaterial amount related to prior years. Adequate provision is made for reported and unreported claims and related expenses. Asset management and advisory fees are recorded in revenue during the period such services are performed. NEW ACCOUNTING STANDARDS In 1993, Transamerica adopted the Financial Accounting Standards Board's new standard on accounting for reinsurance ceded under reinsurance contracts. The new standard requires reinsurance receivables under reinsurance agreements, which totaled $990.5 million at December 31, 1993 and $886.8 million at December 31, 1992 and are included in the balance sheet caption trade and other receivables, to be reported as assets instead Transamerica Corporation and Subsidiaries 57 [A] SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) of the previous practice of netting the receivable against the related liability. The new standard also precludes immediate gain recognition on retroactive reinsurance agreements which does not impact Transamerica. In May 1993, the Financial Accounting Standards Board issued a new standard on accounting for impairment of loans which Transamerica must adopt by the first quarter of 1995. The new standard requires that impaired loans be measured based on either the fair value of the loan, if discernible, the present value of expected cash flows discounted at the loan's effective interest rate or the fair value of the collateral if the loan is collateral dependent. When adopted, the new standard is not expected to have a material effect on the consolidated financial statements of Transamerica. Also in May 1993, the Financial Accounting Standards Board issued a new standard on accounting for certain investments in debt and equity securities which Transamerica will adopt in the first quarter of 1994. Under the new standard Transamerica will report at fair value its investments in debt securities for which Transamerica does not have the positive intent and ability to hold to maturity. Unrealized gains and losses will be reported on an after tax basis in a separate component of shareholders' equity. In connection with the adjustment to fair value of investments associated with interest-sensitive products, Transamerica will also adjust deferred policy acquisition costs equivalent to the amount that would be required upon realization of such gains or losses. The deferred policy acquisition adjustment will also be included with the unrealized gains and losses component of shareholders' equity on an after tax basis. Had the new standard been adopted at December 31, 1993 and had all debt securities held for investment been reported at fair value, the impact on the consolidated financial statements of Transamerica would have been an $804.5 million increase in shareholders' equity with no effect on income. EARNINGS PER SHARE OF COMMON STOCK Earnings per share of common stock are based on the weighted average number of shares outstanding (78,495,000 in 1993, 78,050,000 in 1992 and 76,676,000 in 1991) after deduction of preferred dividends. [B] CAPITAL STOCK Transamerica has outstanding 2,250 shares of Dutch Auction Rate Transferable Securities Preferred Stock (DARTS) ($100 par value, $100,000 liquidation value) in Series A-1, B-1 and C-1 of 750 shares each. Dividends, which are cumulative, are normally determined every 49 days through auction procedures. The dividend rates for Series A-1, B-1 and C-1 shares were 3.15%, 2.90% and 3.09% at December 31, 1993 and 3.79%, 3.85% and 3.64% at December 31, 1992. In January 1992 Transamerica issued 400,000 shares of Series D Preferred Stock ($100 par value, $500 liquidation value) resulting in proceeds of $200 million before underwriting discounts and issuance costs. Dividends, which are cumulative, are at the rate of 8.5% of the liquidation preference per annum. One preference stock purchase right accompanies each share of common stock outstanding. Each right will entitle the holder to buy from Transamerica a unit consisting of 1/100 of a share of Series A Participating Preference Stock at an exercise price of $135 per unit. The rights become exercisable ten days after a public announcement that a person or group has acquired 20% or more of Transamerica's common stock or has commenced a tender offer for 30% or more of the common stock. The rights may be redeemed prior to becoming exercisable by action of the Board of Directors at a redemption price of $0.05 per right. If Transamerica is acquired by any person after the rights become exercisable, each right will entitle its holder to purchase stock of the acquiring company having a market value of twice the exercise price of each right. The rights expire on August 8, 1996. At December 31, 1993, 5,000,000 shares of preference stock (without par value) were authorized but unissued. [C] STOCK OPTION PLANS At December 31, 1993, under Transamerica's stock option plans, 11,660,839 shares of common stock (12,690,920 shares at December 31, 1992) were reserved principally for sale to key employees of the Corporation and subsidiaries at market value on the date options are granted. During 1993, options for 1,670,700 shares were granted, and options for 640,918 shares were cancelled due to forfeiture. Options were exercised for 1,019,081 shares in 1993, 1,567,553 shares in 1992 and 300,223 shares in 1991, at aggregate option prices of $36 million, $52.1 million and $8.1 million. Of the options for 5,557,097 shares outstanding at December 31, 1993 (5,546,396 shares at December 31, 1992) at an aggregate option price of $225.9 million, options for 2,352,722 shares were exercisable. In February 1994, options for 1,541,850 shares were granted at an option price equal to market value on the date granted. Page 58 Transamerica Corporation and Subsidiaries [D] INCOME TAXES The provision for income taxes on income from continuing operations comprises:
_____________________________________________________________________________ (Amounts in millions) 1993 1992 1991 Federal current $213.0 $225.7 $131.7 Federal deferred tax benefits (104.1) (42.5) (102.8) State 27.1 28.7 23.5 Foreign 14.1 5.6 13.8 ______ ______ ______ $150.1 $217.5 $ 66.2 ====== ====== ======
The 1993 provision for income taxes on income from continuing operations includes $8.4 million from the revaluation of the deferred tax liability for the effect of the federal tax rate increase. Deferred income taxes for continuing operations reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the deferred tax assets and liabilities as of December 31, 1993 and 1992 are as follows:
_____________________________________________________________________________ (Amounts in millions) 1993 1992 Deferred tax assets: Allowance for losses $120.6 $131.8 Impairment of investments 36.2 46.5 Post employment benefits other than pensions 20.1 18.7 Life insurance policy liabilities 453.8 330.2 Capital loss carryforward 41.1 ______ ______ 671.8 527.2 Deferred tax liabilities: Deferred policy acquisition costs 609.2 534.1 Accelerated depreciation 196.6 200.9 Unrealized gains on equity securities 66.9 38.5 Discount amortization on notes and loans payable 55.8 64.1 Other 44.7 43.7 ______ ______ 973.2 881.3 ______ ______ Net deferred tax liability $301.4 $354.1 ====== ======
The difference between federal income taxes on income from continuing operations computed at the statutory rate and the provision for income taxes is:
_____________________________________________________________________________ (Amounts in millions) 1993 1992 1991 Federal income taxes at statutory rate $210.2 $190.5 $ 37.8 State income taxes 17.6 15.9 15.0 Amortization of goodwill 7.7 7.5 8.0 Prior year items (94.2) 2.6 Tax rate change 8.4 Other 0.4 3.6 2.8 ______ ______ ______ $150.1 $217.5 $ 66.2 ====== ====== ======
Pretax income from foreign operations totaled $30 million in 1993, $25 million in 1992 and $30 million in 1991. Income tax payments totaled $135.5 million in 1993, $174.8 million in 1992 and $127.2 million in 1991. Transamerica Corporation and Subsidiaries 59 [E] INVESTMENTS The amortized cost and market value of fixed maturities held for investment at December 31, 1993 and 1992 are as follows:
______________________________________________________________________________ (Amounts in millions) Gross Gross Amortized Unrealized Unrealized Market Cost Gains Losses Value DECEMBER 31, 1993 U.S. Treasury securities and obligations of U.S. government authorities and agencies $ 205.3 $ 15.3 $ 0.8 $ 219.8 Obligations of states and political subdivisions 163.1 18.8 0.2 181.7 Foreign governments 144.9 12.5 157.4 Corporate securities 6,537.6 738.3 18.6 7,257.3 Mortgage-backed securities 8,571.2 571.2 24.4 9,118.0 Public utilities 2,927.1 253.5 8.4 3,172.2 Redeemable preferred stock 3.8 0.2 3.6 _________ ________ ______ _________ $18,553.0 $1,609.6 $ 52.6 $20,110.0 ========= ======== ====== ========= DECEMBER 31, 1992 U.S. Treasury securities and obligations of U.S. government authorities and agencies $ 188.7 $ 6.3 $ 0.3 $ 194.7 Obligations of states and political subdivisions 116.3 16.3 9.3 123.3 Foreign governments 309.5 24.6 0.4 333.7 Corporate securities 5,447.7 522.4 81.4 5,888.7 Mortgage-backed securities 6,909.6 427.9 39.4 7,298.1 Public utilities 3,127.4 207.5 4.9 3,330.0 Redeemable preferred stock 11.9 5.0 6.9 _________ ________ ______ _________ $16,111.1 $1,205.0 $140.7 $17,175.4 ========= ======== ====== =========
Fixed maturity securities which are expected to be called by the issuer or sold in the next three months are classified as available for sale and carried at the lower of amortized cost or market value. At December 31, 1993 the fair value of the fixed maturities available for sale portfolio based upon quoted market prices was $920.2 million with gross unrealized gains of $47.8 million and no unrealized losses. At December 31, 1992 the fair value of the fixed maturities available for sale portfolio was $799.3 million with gross unrealized gains of $39.9 million and no unrealized losses. The cost of equity securities was $275.1 million at December 31, 1993 and $228.5 million at December 31, 1992. The net unrealized gain on marketable equity securities, after related income taxes, is included in shareholders' equity. Gross unrealized gains and gross unrealized losses at December 31, 1993 amounted to $194.5 million and $3.5 million resulting in net unrealized gains before taxes of $191 million. 60 Transamerica Corporation and Subsidiaries [E] INVESTMENTS (CONTINUED) The amortized cost and market value of fixed maturities at December 31, 1993 by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
______________________________________________________________________________ (Amounts in millions) Amortized Market Cost Value Due in one year or less $ 270.8 $ 276.6 Due after one year through five years 1,224.0 1,315.8 Due after five years through ten years 1,513.9 1,634.7 Due after ten years 6,973.1 7,764.9 _________ _________ 9,981.8 10,992.0 Mortgage-backed securities 8,571.2 9,118.0 _________ _________ $18,553.0 $20,110.0 ========= =========
The carrying values and estimated fair values of investments in mortgage loans on real estate and loans to life insurance policyholders at December 31, 1993 and 1992 are as follows:
______________________________________________________________________________ (Amounts in millions) Carrying Estimated Value Fair Value DECEMBER 31, 1993 Mortgage loans on real estate $368.9 $402.4 ====== ====== Loans to life insurance policyholders $396.5 $373.1 ====== ====== DECEMBER 31, 1992 Mortgage loans on real estate $447.6 $475.2 ====== ====== Loans to life insurance policyholders $370.5 $365.2 ====== ======
The fair values for mortgage loans on real estate and policyholder loans are estimated using discounted cash flow calculations, using interest rates currently being offered for similar loans to borrowers with similar credit ratings. Loans with similar characteristics are aggregated for calculation purposes. Gain (loss) on investment transactions, included in consolidated revenues, comprises:
_____________________________________________________________________________ (Amounts in millions) 1993 1992 1991 Net gain on sale of investments $157.3 $136.1 $134.7 Provision for impairment in value (55.5) (95.2) (81.0) Accelerated amortization of deferred policy acquisition costs (62.8) (33.2) (56.6) ______ ______ ______ $ 39.0 $ 7.7 $ (2.9) ====== ====== ======
Proceeds from sales of fixed maturities were $4.9 billion in 1993, $2.6 billion in 1992 and $4.1 billion in 1991. Gross gains of $212.7 million in 1993, $170.5 million in 1992 and $141.3 million in 1991, and gross losses of $63.5 million in 1993, $65 million in 1992 and $18.1 million in 1991 were realized on those sales. Transamerica Corporation and Subsidiaries 61 [F] NOTES AND LOANS PAYABLE
_____________________________________________________________________________ (Amounts in millions) 1993 1992 TRANSAMERICA FINANCE GROUP, INC.: Short-term bank loans, commercial paper and current portion of long-term debt $1,910.8 $1,062.4 Long-term debt due subsequent to one year: Notes and debentures; interest at 4.48% to 9.1%; maturing through 2002 1,618.6 1,927.1 Notes and debentures; interest at 13.80% to 13.88%; maturity value of $582.8 million; maturing through 2012 146.8 340.9 Commercial paper and other notes at various interest rates and terms supported by credit agreements expiring through 1997 2,505.0 2,813.1 Subordinated notes and debentures; interest at 6.75% to 11%; maturing through 2003 582.8 344.7 Loans due to parent company and other subsidiaries 267.5 101.4 ________ ________ 7,031.5 6,589.6 PARENT COMPANY AND OTHER SUBSIDIARIES: Short-term bank loans, commercial paper and current portion of long-term debt 112.2 0.2 Long-term debt due subsequent to one year: Notes and debentures; interest at 6.50% to 10%; maturing through 2016 458.6 588.3 Commercial paper and other notes at various interest rates and terms supported by credit agreements expiring through 1996 254.5 383.6 Notes at variable interest rates; maturing through 1997 114.7 112.8 Less loans to Transamerica Finance Group, Inc. (267.5) (101.4) ________ ________ 672.5 983.5 ________ ________ $7,704.0 $7,573.1 ======== ========
The estimated fair value of notes and loans payable, using rates currently available for debt with similar terms and maturities, is $8,141.3 million at December 31, 1993 and $7,845.2 million at December 31, 1992. Assets with a net book value of $113.9 million at December 31, 1993, consisting primarily of land, buildings and equipment, are collateral for certain of the above debt. The aggregate annual maturities for the four years subsequent to December 31, 1994 are $1.1 billion in 1995, $2.5 billion in 1996, $1.1 billion in 1997 and $0.5 billion in 1998. In 1993 Transamerica Finance Group redeemed $125 million of deep discount long-term debt with a book value of $90.7 million, which resulted in a $23.1 million extraordinary loss, after related taxes of $11.4 million. 62 Transamerica Corporation and Subsidiaries [F] NOTES AND LOANS PAYABLE (CONTINUED) Under credit agreements with various banks, Transamerica and its subsidiaries had the ability to borrow up to $4.1 billion with interest at variable rates at December 31, 1993. There were no borrowings outstanding under these credit lines at that date. These credit agreements, which expire through 1997, require a fee on the unused commitment. Transamerica and its subsidiaries use interest rate exchange agreements to hedge the interest rate sensitivity of their outstanding indebtedness. Certain of these agreements call for the payment of fixed rate interest by Transamerica and its subsidiaries in return for the assumption by other contracting parties of the variable rate cost. At December 31, 1993, such agreements covering the notional amount of $380 million at a weighted average fixed interest rate of 8.46% expiring through 2000 and $840 million of one year agreements expiring in 1994 with an average interest rate of 3.78% were outstanding. Additionally at December 31, 1993, exchange agreements covering the notional amount of $266 million expiring through 1997 were outstanding, in which Transamerica and its subsidiaries receive interest from other contracting parties at a weighted average fixed interest rate of 7.22% and pay interest at variable rates to those parties. While Transamerica is exposed to credit risk in the event of nonperformance by the other party, nonperformance is not anticipated due to the credit rating of the counter parties. At December 31, 1993 the interest rate exchange agreements are with banks rated A or better by one or more of the major credit rating agencies. The estimated fair value of the interest rate exchange agreements, determined on a net present value basis, was a negative $28.6 million at December 31, 1993 and a negative $37.8 million at December 31, 1992. The fair value represents the estimated amounts that Transamerica and its subsidiaries would be required to pay to terminate the exchange agreements, taking into account current interest rates. Interest payments, net of amounts received from interest rate exchange agreements, totaled $623.4 million in 1993, $661 million in 1992 and $578.9 million in 1991. [G] FAIR VALUE OF INVESTMENT CONTRACTS Investment-type contracts are included in life insurance policy liabilities. Fair value of investment-type contracts is estimated using discounted cash flow calculations, based on interest rates currently being offered for similar contracts with maturities consistent with those remaining for the contracts being valued. The carrying amounts and estimated fair values of the liabilities for investment-type contracts at December 31, 1993 and 1992 are as follows:
______________________________________________________________________________ (Amounts in millions) Carrying Estimated Value Fair Value DECEMBER 31, 1993 Single and flexible premium deferred annuities $ 6,630.9 $ 6,378.2 Single premium immediate annuities 3,354.6 3,796.9 Guaranteed investment contracts 1,994.5 2,093.9 Other deposit contracts 1,544.4 1,584.4 _________ _________ $13,524.4 $13,853.4 ========= ========= DECEMBER 31, 1992 Single and flexible premium deferred annuities $ 5,748.4 $ 5,526.8 Single premium immediate annuities 2,856.1 3,043.7 Guaranteed investment contracts 1,777.2 1,867.5 Other deposit contracts 960.0 979.8 _________ _________ $11,341.7 $11,417.8 ========= =========
Investment-type contracts and other life insurance policy reserves generally provide a natural hedge against fair value changes in the investments held to fund those reserves. Transamerica Corporation and Subsidiaries 63 [H] CONCENTRATION OF RISK, SECURITIZATION AND FAIR VALUE OF RECEIVABLES During the normal conduct of its operations, Transamerica engages in the extension of credit to homeowners, electronics and appliance dealers, retail recreational products and computer stores and others. The risk associated with that credit is subject to economic, competitive and other influences. While a substantial portion of the risk is diversified, certain operations are concentrated in one industry or geographic area. Transamerica's finance receivables include $3.1 billion, net of unearned finance charges and insurance premiums, of real estate secured loans, principally first and second mortgages secured by residential properties of which approximately 50% is located in California. The commercial finance receivables portfolio represents lending arrangements with over 200,000 customers. At December 31, 1993, the portfolio included 13 customers with individual balances in excess of $15 million. These accounts represented 10% of total commercial net finance receivables outstanding at December 31, 1993. In July 1990, Transamerica entered into a 5-year arrangement under which it securitized and sold, with limited recourse, a $375 million participation interest in a pool of its eligible insurance finance receivables, which Transamerica continues to service. Newly originated eligible receivables are added to the pool. Collection of receivables are reinvested in the pool to maintain an aggregate outstanding balance of approximately $375 million. The carrying amounts and estimated fair values of the finance receivable portfolio at December 31, 1993 and 1992 are as follows:
______________________________________________________________________________ (Amounts in millions) Carrying Estimated Value Fair Value DECEMBER 31, 1993 Fixed rate receivables-- Consumer $3,622.3 $4,391.2 Commercial 469.9 478.3 Variable rate receivables-- Commercial 2,390.3 2,390.3 ________ ________ $6,482.5 $7,259.8 ======== ======== DECEMBER 31, 1992 Fixed rate receivables-- Consumer $3,557.9 $4,320.4 Commercial 413.3 424.9 Variable rate receivables-- Commercial 2,371.5 2,371.5 ________ ________ $6,342.7 $7,116.8 ======== ========
The estimated fair values of consumer finance receivables, substantially all of which are fixed rate instalment loans collateralized by residential real estate, and the fixed rate commercial finance loans are based on the discounted value of the future cash flows expected to be received using available secondary market prices for securities backed by similar loans after adjustment for differences in loan characteristics. In the absence of readily available market prices, the expected future cash flows are discounted at effective rates currently offered by Transamerica for similar loans. For variable rate commercial loans, which comprise the majority of the commercial loan portfolio, the carrying amount represents a reasonable estimate of fair value. 64 Transamerica Corporation and Subsidiaries [I] INVESTMENT IN SEDGWICK GROUP PLC In 1985 Transamerica Corporation exchanged Fred. S. James & Co., Inc. for a 39% interest in Sedgwick Group plc, a London-based international insurance brokerage firm. On February 28, 1991 Transamerica sold 59 million shares, resulting in a $54.3 million pretax gain which is included in consolidated insurance brokerage revenues. In 1993, Transamerica's equity interest was reduced from 25% to 21% due to a rights offering by Sedgwick which resulted in a $2.6 million after tax loss to Transamerica. At December 31, 1993, the aggregate quoted market price of the 114,524,000 shares owned was $307.1 million. The consolidated statement of income includes Transamerica's equity in the earnings of Sedgwick. Amounts included for Sedgwick are reported on a one quarter lag and based upon Sedgwick's most recent published financial statements. These statements were prepared by Sedgwick in pounds sterling in accordance with accounting principles generally accepted in the United Kingdom and translated by Transamerica into U.S. dollars in accordance with foreign exchange translation practices prescribed in the United States, and are summarized below:
______________________________________________________________________________ September 30 (Amounts in millions) 1993 1992 ASSETS Cash and temporary investments $1,256.3 $1,115.8 Premiums, fees and other receivables 2,336.5 2,116.7 Other assets 917.6 860.9 ________ ________ $4,510.4 $4,093.4 ======== ======== LIABILITIES AND CAPITAL Accounts payable and other liabilities $3,262.5 $3,169.3 Long-term liabilities 769.9 578.6 Capital 478.0 345.5 ________ ________ $4,510.4 $4,093.4 ======== ========
______________________________________________________________________________ Year Ended September 30 (Amounts in millions) 1993 1992 1991 REVENUES $1,173.1 $1,211.9 $1,133.6 EXPENSES Salaries and employee benefits 666.5 676.2 621.0 Other operating expenses 405.5 420.0 405.0 Income taxes 38.3 43.8 37.5 ________ ________ ________ 1,110.3 1,140.0 1,063.5 ________ ________ ________ Net income $ 62.8 $ 71.9 $ 70.1 ======== ======== ========
The principal differences between U.K. accounting principles and those generally accepted in the United States are primarily due to differences in accounting for business combinations. Sedgwick, in accounting for its acquisition of James, wrote off all goodwill immediately against capital. Had Sedgwick followed U.S. accounting principles and accounted for the acquisition as a purchase transaction it would have recognized goodwill as an asset to be amortized over a period not to exceed 40 years, and its capital would have been greater by the amount of that goodwill. These differences do not affect the consolidated financial statements, because the goodwill and related amortization are included in Transamerica's financial statements. Goodwill amounts to $268.6 million and is being amortized over a 40-year period. Transamerica's share of Sedgwick's net income, after the amortization of goodwill and the provision for U.S. taxes on Sedgwick's distributed and undistributed income, amounted to $5.6 million in 1993, $8.9 million in 1992 and $6.9 million in 1991. Transamerica Corporation and Subsidiaries 65 [J] PENSION PLANS Transamerica Corporation and its subsidiaries, including discontinued operations, have a number of noncontributory defined benefit pension plans covering substantially all employees. Plans covering salaried employees provide pension benefits that are based on the employee's compensation during the highest paid 60 consecutive months during the 120 months before retirement. The general policy is to fund current service costs currently and prior pension service costs over periods ranging from 10 to 30 years. A summary of the components of net periodic pension cost follows: _____________________________________________________________________________
(Amounts in millions) 1993 1992 1991 Service cost--benefits earned during the period $ 15.6 $ 17.7 $ 20.1 Interest cost on projected benefit obligation 43.6 39.2 37.6 Actual return on plan assets (145.7) (100.4) (86.4) Deferral of current gains in excess of expected return 97.7 55.1 45.5 Amortization of prior service costs 5.0 3.5 3.4 ______ ______ ______ Total pension cost $ 16.2 $ 15.1 $ 20.2 ====== ====== ======
The following table sets forth the amounts recognized in the consolidated statement of financial position for the pension plans: _____________________________________________________________________________
(Amounts in millions) 1993 1992 Actuarial present value of benefit obligations: Vested benefit obligation* $601.0 $493.9 ====== ====== Accumulated benefit obligation $609.1 $503.8 ====== ====== Projected benefit obligation, including effects of future salary increases $651.9 $574.0 Plan assets at fair value 777.2 639.0 ______ ______ Excess of plan assets over projected benefit obligation $125.3 $ 65.0 ====== ====== The excess of plan assets over projected benefit obligation comprises: Net pension liability $ (2.3) $ (2.4) Unrecognized net gain arising since January 1, 1986 146.0 80.3 Unrecognized prior service cost (20.6) (14.3) Unrecognized net obligation at January 1, 1986 net of amortization (8.3) (9.7) Adjustment required to recognize minimum liability 10.5 11.1 ______ ______ $125.3 $ 65.0 ====== ======
*A portion of the vested benefit obligation is unconditionally guaranteed by Transamerica Occidental Life Insurance Company, a subsidiary of Transamerica. The projected benefit obligation was determined using a weighted average discount rate of 7.25% (7.75% in 1992) and an assumed rate of compensation increase of 5.5%. The expected long-term rate of return on plan assets was 8.0% (8.5% in 1992 and 9.0% in 1991). 66 Transamerica Corporation and Subsidiaries [K] OTHER POST EMPLOYMENT BENEFIT PLANS Transamerica Corporation and its subsidiaries sponsor a defined benefit health care plan and a defined life insurance plan that provides post employment benefits to eligible retirees. The plans are contributory, with retiree contributions adjusted annually, and contain other cost-sharing features such as deductibles and coinsurance. Medical and life insurance benefits are based on the employee's length of service and age at retirement from Transamerica Corporation. The general policy is to fund these benefits on a pay-as-you-go basis. In 1991, Transamerica Corporation elected early adoption of Statement of Financial Accounting Standards No. 106 on accounting for post employment benefits other than pensions. Adoption of the statement effective January 1, 1991 resulted in a reduction of net income for the year ended December 31, 1991 of $37.5 million, including a $34.7 million after tax cumulative charge for the accumulated post employment benefit obligation ($52.6 million) accrued as of January 1, 1991 which Transamerica Corporation elected to recognize upon adoption. A summary of the components of net periodic other post employment benefit cost follows: ______________________________________________________________________________
(Amounts in millions) 1993 1992 1991 Service cost--benefits earned during the period $1.3 $1.1 $1.3 Interest cost on projected benefit obligation 5.1 4.5 4.2 Amortization of unrecognized net loss 0.3 ____ ____ ____ Total other post employment benefit cost $6.7 $5.6 $5.5 ==== ==== ====
The following table sets forth the amounts recognized in the consolidated statement of financial position for other post employment benefit plans: ______________________________________________________________________________
(Amounts in millions) 1993 1992 Actuarial present value of other post employment benefit obligations: Retirees $51.7 $41.5 Active plan participants 22.5 19.3 Unrecognized net loss (16.9) (5.7) _____ _____ Unfunded accrued projected benefit obligation $57.3 $55.1 ===== =====
The weighted average annual assumed rate of increase in the health care cost trend rate is 12.7% for 1994 and is assumed to decrease gradually to 7.8% in 1999 and remain at that level thereafter. The health care cost trend rate assumption has a significant effect on the amounts reported. Increasing the trend rate by one percentage point in each year would increase the actuarial present value obligation for post employment medical benefits as of December 31, 1993 and 1992 by $8.3 million and $6.8 million and the aggregate of the service and interest cost components of net periodic post employment benefit costs by $0.9 million in 1993 and $0.6 million in 1992 and 1991. The weighted average discount rate used in determining the post employment benefit obligation was 7.25% at December 31, 1993 and 7.75% at December 31, 1992. The portion of the unrecognized net loss in excess of 10% of the actuarial present value of other post employment benefit obligations is amortized over the average remaining service period of active plan participants. Transamerica Corporation and Subsidiaries 67 [L] RETAINED EARNINGS RESTRICTIONS Under certain circumstances, the provisions of loan agreements and statutory requirements place limitations on the amount of funds which can be remitted to Transamerica by its consolidated subsidiaries. Of the net assets of Transamerica's consolidated subsidiaries, as adjusted for intercompany account balances, at December 31, 1993, approximately $3.6 billion is so restricted, and $1.1 billion is free for remittance to Transamerica subject to investment and operating requirements. [M] BUSINESS SEGMENT INFORMATION Business segment data, as required by Statement of Financial Accounting Standards No. 14, Financial Reporting for Segments of a Business Enterprise, for each of the years in the three year period ended December 31, 1993 included in the tables in the Financial Review on pages 37 to 51 of this annual report are an integral part of these financial statements. [N] DISCONTINUED 0PERATIONS On July 20, 1992, Transamerica Corporation announced that its Board of Directors approved a plan to withdraw from the property and casualty insurance business. Transamerica sold its property and casualty insurance subsidiary, Transamerica Insurance Group, through an initial public offering in April 1993 and a secondary offering in December 1993. The net proceeds, after underwriting discounts, totaled $1 billion in cash from the two offerings, resulting in a $125 million after tax loss on the sale of which $75 million was recorded in 1992 on an estimated basis and $50 million in 1993 upon the completion of the secondary offering. The following results of the discounted property and casualty insurance business are included in income from discontinued operations for the years ended December 31, 1992 and 1991:
_____________________________________________________________________________ (Amounts in millions) 1992 1991 Revenues $2,122.9 $2,143.9 Costs and expenses 2,345.3 2,112.1 ________ ________ Income (loss) before tax benefits (222.4) 31.8 Income tax benefits 104.3 22.5 ________ ________ Operating income (loss) (118.1) 54.3 Provision for estimated loss on disposition, net tax benefit of $172.6 million (75.0) Cumulative effect of change in accounting for post employment benefits other than pensions (14.6) Operating losses for the period subsequent to July 1, 1992 which are included in the provision for estimated loss on disposition 93.4 ________ ________ Income (loss) from discontinued operations $ (99.7) $ 39.7 ======== ========
68 Transamerica Corporation and Subsidiaries [N] DISCONTINUED OPERATIONS (CONTINUED) In connection with the offering a subsidiary of Transamerica, in 1992, assumed responsibility by means of a reinsurance agreement for certain assumed treaty reinsurance business written prior to 1986 for which it received assets which are expected to be sufficient to fund the liquidation of the business. Transamerica has collateralized the estimated ultimate obligation of $361 million at December 31, 1993 by providing letters of credit aggregating $150 million and by placing $213 million of its assets in a trust. Additionally Transamerica agreed to pay up to $89.3 million in adverse loss development on certain paid environmental losses. In addition, prior to the initial public offering Transamerica received a dividend from Transamerica Insurance Group comprising its 51% equity interest in River Thames Insurance Company Limited, a London-based reinsurance operation. [O] COMMITMENTS AND CONTINGENCIES Substantially all leases of Transamerica and its subsidiaries are operating leases principally for the rental of real estate. Total rental expense amounted to $88.1 million in 1993, $89.4 million in 1992 and $93.2 million in 1991. Contingent liabilities arising from litigation, income taxes and other matters are not considered material in relation to the consolidated financial position of Transamerica and subsidiaries. [P] SUBSEQUENT EVENT On February 13, 1994, Transamerica entered into an Asset Purchase Agreement to purchase all the assets of the container division of Tiphook plc for up to $1.1 billion in cash. Completion of the acquisition is subject to approval by Tiphook's shareholders and successful completion of a consent solicitation and bond tender by Tiphook. Transamerica Corporation and Subsidiaries 69 REPORT OF MANAGEMENT The management of Transamerica Corporation is responsible for the financial information appearing in this Annual Report. The consolidated financial statements were prepared by management in accordance with generally accepted accounting principles, and include amounts which are based on the best information currently available. The financial statements are audited by Ernst & Young, independent auditors, through the application of generally accepted auditing standards which include a study and evaluation of Transamerica's internal accounting control system. Transamerica maintains a system of internal accounting controls designed to provide reasonable assurance that assets are safeguarded against loss, that the financial records reflect fairly the transactions of the Company, and that established policies and procedures are followed. The concept of reasonable assurance is based on the recognition that the cost of a system of internal accounting controls must be related to the benefits derived and that the balancing of those factors requires estimates and judgments. The internal accounting control system includes the selection, training and development of qualified personnel, organizational arrangements that provide for an appropriate division of responsibilities and the communication of Company policies and procedures throughout the organization. The system is reviewed and evaluated by a program of internal audits. The Board of Directors, acting through its audit committee composed of outside directors, reviews and monitors Transamerica's accounting principles and internal accounting controls. The audit committee meets periodically with management, the internal auditors and the independent auditors. The independent auditors and internal auditors have full and free access to the audit committee to discuss the results of their audit work and their views on accounting policies, the adequacy of internal accounting controls and the quality of financial reporting. REPORT OF ERNST & YOUNG INDEPENDENT AUDITORS BOARD OF DIRECTORS AND SHAREHOLDERS OF TRANSAMERICA CORPORATION We have audited the consolidated balance sheet of Transamerica Corporation and subsidiaries as of December 31, 1993 and 1992, and the related consolidated statements of income, shareholders' equity and cash flows for each of the three years in the period ended December 31, 1993. These financial statements are the responsibility of Transamerica Corporation's management. Our responsibility is to express an opinion on these financial statements based on our audits. The financial statements of Sedgwick Group plc, used as the basis for recording the equity in net income of that corporation, were audited by other auditors whose reports have been furnished to us. Our opinion, insofar as it relates to the amounts of equity in net income included for Sedgwick Group plc, is based solely on the reports of other auditors. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits and the reports of other auditors provide a reasonable basis for our opinion. In our opinion, based on our audits and the reports of other auditors, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Transamerica Corporation and subsidiaries at December 31, 1993 and 1992, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 1993, in conformity with generally accepted accounting principles. In 1991, Transamerica Corporation changed its method of accounting for post employment benefits other than pensions effective January 1, 1991. ERNST & YOUNG San Francisco, California February 22, 1994 70 Transamerica Corporation and Subsidiaries EX-99.G2 12 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarterly Period Ended March 31, 1994 Commission File Number 1-2964 TRANSAMERICA CORPORATION (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 94-0932740 (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.) 600 MONTGOMERY STREET SAN FRANCISCO, CALIFORNIA 94111 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) (415) 983-4000 (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ----- Number of shares of Common Stock, $1 par value, outstanding as of close of business on April 29, 1994: 74,864,848 shares. TRANSAMERICA CORPORATION FORM 10-Q PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS. The following unaudited consolidated financial statements of Transamerica Corporation and Subsidiaries, for the periods ended March 31, 1994 and 1993, do not include complete financial information and should be read in conjunction with the Consolidated Financial Statements filed with the Commission in Transamerica's Annual Report on Form 10-K for the year ended December 31, 1993. The financial information presented in the financial statements included in this report reflects all adjustments, consisting only of normal recurring accruals, which are, in the opinion of management, necessary for a fair statement of results for the interim periods presented. In the first quarter of 1994 Transamerica adopted Statement of Financial Accounting Standards No. 115, Accounting for Certain Investments in Debt and Equity Securities. This new standard requires Transamerica to report at fair value those investments which it does not have the positive intent and ability to hold to maturity. There is no effect on the income statement. To the extent the securities marked to fair value relate to interest sensitive insurance products an adjustment to deferred policy acquisition costs is also made. The effect of these adjustments, net of federal income taxes, is recorded in a separate component of shareholders' equity. All of Transamerica's investments in debt securities have been classified as available for sale at March 31, 1994. As of that date the unrealized gain included in shareholders' equity as a result of adopting this new accounting standard was $201.2 million. On March 15, 1994, Transamerica acquired substantially all the operating assets of the Container Operations of Tiphook plc ("Tiphook"), a London-based transportation equipment rental company, including certain dry cargo containers, tank containers, tank chassis, operating leases and other assets of Tiphook for $1,065 million in cash. For a discussion of this transaction see Item 2 on Page 6 of this document. On April 13, 1994, Transamerica sold its remaining 21% ownership interest in Sedgwick Group plc. Proceeds from the sale approximated $320 million and resulted in no gain or loss. Transamerica's investment in Sedgwick and its share of Sedgwick's operating results and related goodwill amortization have been separated from those of Transamerica's continuing operations and are classified as discontinued operations. Prior period financial statements have been reclassified accordingly. On May 9, 1994, Transamerica commenced a tender offer to purchase up to 4,500,000 shares of its common stock, at prices not greater than $55 nor less than $48 per share, as set forth in the Offer to Purchase dated May 9, 1994. Transamerica will determine a single price (not greater than $55 nor less than $48 per share) that it will pay for shares validly tendered, taking into account the number of shares tendered and the prices specified by tendering stockholders. Transamerica will select the Purchase Price that will enable it to purchase up to 4,500,000 shares pursuant to the Offer. The Offer will expire on June 6, 1994, unless extended. Transamerica will use a portion of the net proceeds from the sale of its remaining 21% ownership interest in Sedgwick Group plc to purchase such shares. * * * * * The consolidated ratios of earnings to fixed charges were computed by dividing income from continuing operations before fixed charges and income taxes by the fixed charges. Fixed charges consist of interest and debt expense and one-third of rent expense, which approximates the interest factor. Results for the three months are not necessarily indicative of the results for the entire year for most of the Corporation's businesses. This is particularly true in the life insurance field, where mortality results in interim periods may vary substantially from such results over a longer period. 2 TRANSAMERICA CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET ASSETS
MARCH 31, DECEMBER 31, 1994 1993 --------- ------------ (AMOUNTS IN MILLIONS EXCEPT FOR SHARE DATA) Investments, principally of life insurance subsidiaries: Fixed maturities--held for investment................. $18,553.0 Fixed maturities--available for sale.................. $20,513.3 872.4 Mortgage loans and real estate........................ 480.5 493.0 Equity securities, at fair value...................... 449.2 466.1 Loans to life insurance policyholders................. 396.5 396.5 Short-term investments................................ 301.7 190.8 --------- --------- 22,141.2 20,971.8 Finance receivables..................................... 7,108.6 6,908.5 Less unearned fees ($236.6 in 1994 and $240.8 in 1993) and allowance for losses............................... 428.8 426.0 --------- --------- 6,679.8 6,482.5 Cash and cash equivalents............................... 100.8 92.7 Trade and other accounts receivable..................... 2,339.7 2,015.4 Net assets of discontinued operations................... 304.8 310.2 Property and equipment, less accumulated depreciation of $849.3 in 1994 and $831.6 in 1993: Land, buildings and equipment......................... 347.3 345.7 Equipment held for lease.............................. 2,477.8 1,306.5 Deferred policy acquisition costs....................... 1,664.4 1,929.3 Separate accounts administered by life insurance subsidiaries........................................... 1,398.2 1,366.5 Goodwill, less accumulated amortization of $117.1 in 1994 and $113.4 in 1993................................ 491.7 495.4 Other assets............................................ 753.8 734.5 --------- --------- $38,699.5 $36,050.5 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY Life insurance policy liabilities....................... $22,452.6 $21,951.8 Notes and loans payable, principally of finance subsidiaries, of which $2,414 in 1994 and $2,023 in 1993 matures within one year........................... 8,933.8 7,704.0 Accounts payable and other liabilities.................. 1,965.5 1,352.4 Income taxes............................................ 433.3 312.3 Separate account liabilities............................ 1,398.2 1,366.5 Shareholders' equity: Preferred Stock ($100 par value): Authorized--1,200,000 shares; issuable in series, cumulative Outstanding--Dutch Auction Rate Transferable Securities, 2,250 shares, at liquidation preference of $100,000 per share, weighted average dividend rate of 3.02% in 1994 and 3.05% in 1993............ 225.0 225.0 Outstanding--Series D, 400,000 shares, at liquidation preference of $500 per share, cumulative dividend rate of 8.5%................... 200.0 200.0 Preference Stock (without par value)--5,000,000 shares authorized; none outstanding Common Stock ($1 par value): Authorized--150,000,000 shares Outstanding--75,053,015 shares in 1994 and 76,398,888 shares in 1993, after deducting 4,685,447 shares and 3,339,574 shares in treasury......................... 75.0 76.4 Additional paid-in capital.............................. 403.9 475.2 Retained earnings....................................... 2,357.1 2,297.9 Net unrealized gain from investments marked to fair value.................................................. 298.8 124.1 Foreign currency translation adjustments................ (43.7) (35.1) --------- --------- 3,516.1 3,363.5 --------- --------- $38,699.5 $36,050.5 ========= =========
3 TRANSAMERICA CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF INCOME
THREE MONTHS ENDED MARCH 31, ------------------ 1994 1993 -------- -------- (DOLLAR AMOUNTS IN MILLIONS EXCEPT FOR SHARE DATA) REVENUES Life insurance premiums and related income................ $ 330.5 $ 292.2 Investment income......................................... 432.0 425.4 Finance charges and other fees............................ 246.3 246.3 Leasing revenues.......................................... 113.6 89.7 Real estate and tax service revenues...................... 82.2 67.2 Gain on investment transactions........................... 2.6 4.3 Other..................................................... 28.2 23.9 -------- -------- 1,235.4 1,149.0 EXPENSES Life insurance benefits................................... 546.3 511.3 Life insurance underwriting, acquisition and other ex- penses................................................... 131.0 122.4 Leasing operating and maintenance costs................... 57.8 42.9 Interest and debt expense................................. 122.6 133.1 Provision for losses on receivables....................... 24.2 21.1 Other, including administrative and general expenses...... 188.3 170.3 -------- -------- 1,070.2 1,001.1 -------- -------- 165.2 147.9 Income taxes.............................................. 61.5 54.9 -------- -------- Income from continuing operations......................... 103.7 93.0 Loss from discontinued operations......................... (0.7) (1.2) -------- -------- Net income................................................ $ 103.0 $ 91.8 ======== ======== Earnings per share of common stock (based on weighted average number of shares outstanding of 75,811,000 in 1994 and 79,335,000 in 1993 after deduction of preferred dividends): Income from continuing operations before investment transactions........................................... $ 1.27 $ 1.07 Gain on investment transactions......................... 0.02 0.03 -------- -------- Income from continuing operations....................... 1.29 1.10 Loss from discontinued operations....................... (0.01) (0.02) -------- -------- Net income.............................................. $ 1.28 $ 1.08 ======== ======== Dividends per share of common stock....................... $ 0.50 $ 0.50 ======== ======== Ratio of earnings to fixed charges........................ 2.27 2.05
4 TRANSAMERICA CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF RETAINED EARNINGS
THREE MONTHS ENDED MARCH 31, -------------------- 1994 1993 --------- --------- (AMOUNTS IN MILLIONS) Balance at beginning of year.............................. $ 2,297.9 $ 2,100.2 Net income................................................ 103.0 91.8 Dividends on common stock................................. (37.9) (39.8) Dividends on preferred stock.............................. (5.9) (6.0) --------- --------- Balance at end of period.................................. $ 2,357.1 $ 2,146.2 ========= =========
CONSOLIDATED STATEMENT OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, -------------------- 1994 1993 --------- --------- (AMOUNTS IN MILLIONS) OPERATING ACTIVITIES Income from continuing operations....................... $ 103.7 $ 93.0 Adjustments to reconcile income from continuing operations to net cash provided by operating activities: Increase in life insurance policy liabilities, exclud- ing policyholder balances on interest-sensitive poli- cies................................................. 257.4 321.8 Amortization of policy acquisition costs.............. 53.6 42.6 Policy acquisition costs deferred..................... (81.8) (82.6) Other................................................. 93.3 102.4 --------- --------- Net cash provided by operating activities............. 426.2 477.2 INVESTING ACTIVITIES Finance receivables originated.......................... (4,135.0) (3,073.8) Finance receivables collected........................... 3,893.2 2,880.1 Purchase of investments................................. (2,156.3) (1,872.8) Sales or maturities of investments...................... 1,852.3 1,132.7 Purchase of the container division assets of Tiphook plc.................................................... (1,065.0) Cash transactions with discontinued operations.......... (162.6) Other................................................... (155.5) (90.0) --------- --------- Net cash used by investing activities................. (1,766.3) (1,186.4) FINANCING ACTIVITIES Receipts from interest-sensitive policies credited to policyholder account balances.......................... 965.8 948.7 Return of policyholder account balances on interest- sensitive policies..................................... (722.4) (521.8) Proceeds from debt financing............................ 2,831.6 1,677.1 Payment of notes and loans.............................. (1,610.3) (1,349.9) Dividends............................................... (43.8) (45.8) Common stock transactions............................... (72.7) 15.2 --------- --------- Net cash provided by financing activities............. 1,348.2 723.5 --------- --------- Increase in cash and cash equivalents................... 8.1 14.3 Cash and cash equivalents at beginning of year.......... 92.7 22.0 --------- --------- Cash and cash equivalents at end of period.............. $ 100.8 $ 36.3 ========= =========
5 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. Transamerica Corporation receives funds from its subsidiaries in the form of dividends, income taxes and interest on loans. The Corporation uses these funds to pay dividends to its shareholders, reinvest in the operations of its subsidiaries and pay corporate interest, expenses and taxes. Reinvested funds are allocated among subsidiaries on the basis of profitability and capital requirements. Reinvestment may be accomplished by allowing a subsidiary to retain all or a portion of its earnings, or by making capital contributions or loans. The Corporation also borrows funds to finance acquisitions or to lend to certain of its subsidiaries to finance their working capital needs. Subsidiaries are required to maintain prudent financial ratios consistent with other companies in their respective industries and retain the capacity through committed credit lines to repay working capital loans from the Corporation. On March 15, 1994, Transamerica acquired substantially all the operating assets of the Container Operations of Tiphook plc ("Tiphook"), a London-based transportation equipment rental company, including certain dry cargo containers, tank containers, tank chassis, operating leases and other assets of Tiphook (collectively the "Container Operations"). Transamerica assumed certain specified liabilities of the Container Operations including trade accounts payable. Transamerica did not assume any borrowings, tax liabilities or contingent liabilities of Tiphook. Transamerica paid to Tiphook $1 billion, with further payments of $14.3 million to be made upon delivery of bills of sale and releases of liens, and delivered $50.7 million to escrow agents for the establishment of a general escrow account ($40.4 million) and a repairs escrow account ($10.3 million). Adjustments to the purchase price, if any, will be determined on completion of examination of the closing balance sheet of the Container Operations as of March 15, 1994 by Transamerica's auditors and Tiphook's auditors. Unresolved disputes, if any, will be referred to a third independent auditor. Tiphook, at the closing, entered into a non-compete agreement with Transamerica prohibiting Tiphook and its affiliates from competing with the Container Operations for a period of seven years. After the closing, Tiphook is providing certain transitional services to Transamerica pursuant to the terms of a transitional services agreement. Tiphook has granted Transamerica an exclusive, perpetual license to the name "Tiphook" in the business of leasing containers (on a worldwide basis) and tank chassis (in the United States). The transaction was accounted for as a purchase and the operations of the business included in the consolidated statement of income from the date of acquisition. On April 13, 1994, Transamerica sold its remaining 21% ownership interest in Sedgwick Group plc. Proceeds from the sale approximated $320 million and resulted in no gain or loss. Transamerica's investment in Sedgwick and its share of Sedgwick's operating results and related goodwill amortization have been separated from those of Transamerica's continuing operations and are classified as discontinued operations. Prior period financial statements have been reclassified accordingly. On May 9, 1994, Transamerica commenced a tender offer to purchase up to 4,500,000 shares of its common stock, at prices not greater than $55 nor less than $48 per share, as set forth in the Offer to Purchase dated May 9, 1994. Transamerica will determine a single price (not greater than $55 nor less than $48 per share) that it will pay for shares validly tendered, taking into account the number of shares tendered and the prices specified by tendering stockholders. Transamerica will select the Purchase Price that will enable it to purchase up to 4,500,000 shares pursuant to the Offer. The Offer will expire on June 6, 1994, unless extended. Transamerica will use a portion of the net proceeds from the sale of its remaining 21% ownership interest in Sedgwick Group plc to purchase such shares. 6 Transamerica's income from continuing operations for the first quarter of 1994 increased $10.7 million (11%) compared to the first quarter of 1993. Income from continuing operations for the first quarter of 1994 included net after tax gains from investment transactions aggregating $1.7 million compared to $2.8 million in the first quarter of 1993. Income from continuing operations before investment transactions increased $11.8 million (13%) due primarily to increases in real estate services, life insurance, commercial lending and asset management operating results and lower unallocated expenses. Partially offsetting these improvements were declines in consumer lending and leasing operating results. Gain (loss) on investment transactions, pretax, included in consolidated revenues, comprises (amounts in millions):
THREE MONTHS ENDED MARCH 31, ------------- 1994 1993 ----- ------ Net gain on sale of investments........................... $12.9 $ 40.2 Adjustment for impairment in value........................ (7.5) (30.9) Accelerated amortization of deferred policy acquisition costs.................................................... (2.8) (5.0) ----- ------ $ 2.6 $ 4.3 ===== ======
As required by generally accepted accounting principles, the amortization of deferred policy acquisition costs was accelerated due to gains realized on the sale of certain investments. The accelerated amortization of deferred policy acquisition costs has been included in investment transactions as an offset to the related gain. Investment transactions also reflected loss provisions primarily for impairment in the value of certain nonperforming fixed maturity investments, mortgage loans, real estate investments and real estate acquired through foreclosure. Transamerica Corporation's continuing operations, principally through its life insurance subsidiaries, maintain an investment portfolio which aggregated $22.1 billion at March 31, 1994. Of this amount $20.5 billion was invested in fixed maturities. At March 31, 1994, 96.6% of the fixed maturities was rated as "investment grade" with an additional 2.4% rated in the BB category or its equivalent. Fixed maturity investments are generally held for long-term investment and used primarily to support life insurance policy liabilities. The amortized cost of delinquent below investment grade securities, before provision for impairment in value, was $29.4 million at March 31, 1994 compared to $31.1 million at December 31, 1993. Provision for impairment in value has been made to reduce the amortized cost of certain fixed maturity investments by $103.8 million at March 31, 1994 and $104 million at December 31, 1993. Additionally, $480.5 million (2.2% of the investment portfolio), net of allowance for losses of $65.3 million, was invested in mortgage loans and real estate including $349.3 million in commercial mortgage loans, $37.8 million in residential mortgage loans, $113.8 million in real estate investments and $44.9 million in foreclosed real estate. Foreclosed commercial real estate decreased $8.3 million (15.7%) from December 31, 1993 to March 31, 1994 due primarily to the sale of foreclosed properties. Problem loans, defined as delinquent loans and restructured loans yielding less than 8%, totaled $12.3 million at March 31, 1994. Problem loans decreased $6.2 million from December 31, 1993 to March 31, 1994. Allowances for possible losses of $65.3 million at March 31, 1994 and $70.7 million at December 31, 1993 have been established to cover possible losses from mortgage loans and real estate investments. The net unrealized gain on marketable equity securities, after related taxes, which is included in shareholders' equity decreased $26.5 million during the quarter ended March 31, 1994 and increased $13.7 million during the first quarter of 1993. 7 In the first quarter of 1994 Transamerica adopted Statement of Financial Accounting Standards No. 115, Accounting for Certain Investments in Debt and Equity Securities. This new standard requires Transamerica to report at fair value those investments which it does not have the positive intent and ability to hold to maturity. There is no effect on the income statement. To the extent the securities marked to fair value relate to interest sensitive insurance products an adjustment to deferred policy acquisition costs is also made. The effect of these adjustments, net of federal income taxes, is recorded in a separate component of shareholders' equity. All of Transamerica's investments in debt securities have been classified as available for sale at March 31, 1994. As of that date the unrealized gain included in shareholders' equity as a result of adopting this new accounting standard was $201.2 million. Changes in the earnings, capital requirements and liquidity of the Corporation's consolidated operations are best understood by considering the Corporation's separate business segments, which are discussed below. REVENUES AND INCOME BY LINE OF BUSINESS
THREE MONTHS ENDED MARCH 31, ---------------------------------- REVENUES INCOME ------------------ -------------- 1994 1993 1994 1993 -------- -------- ------ ------ (AMOUNTS IN MILLIONS) Consumer lending........................... $ 163.3 $ 160.2 $ 21.4 $ 24.2 Commercial lending......................... 89.9 94.2 11.4 7.6 Leasing.................................... 116.7 94.9 13.0 13.2 Real estate services....................... 89.0 72.7 24.6 19.6 Amortization of goodwill................... (3.3) (3.2) -------- -------- ------ ------ Finance.................................... 458.9 422.0 67.1 61.4 Life insurance............................. 767.6 722.2 58.9 58.5 Asset management........................... 10.7 10.7 0.8 (0.2) Amortization of goodwill................... (0.4) (0.4) -------- -------- ------ ------ Insurance.................................. 778.3 732.9 59.3 57.9 Unallocated investment transactions, interest and expenses, less related income taxes..................................... (1.8) (5.9) (22.7) (26.3) -------- -------- ------ ------ Total revenues and income from continuing operations................................ $1,235.4 $1,149.0 $103.7 $ 93.0 ======== ======== ====== ======
CONSUMER LENDING Consumer lending income, before the amortization of goodwill, for the first quarter of 1994 decreased $2.8 million (11%) from the first quarter of 1993 due to increased operating expenses and an increased provision for losses on receivables that more than offset higher revenues and lower interest expense. Revenues increased $3.1 million (2%) in the first quarter of 1994 compared to 1993's first quarter mainly due to increased finance charges resulting from slightly higher average owned finance receivables outstanding. Operating expenses for the first quarter of 1994 increased $6 million (13%) over the first quarter of 1993 mainly due to an increase in the number of branches, from 515 at March 31, 1993 to 570 at March 31, 1994, and new loan products, which are intended to stimulate future growth. The provision for losses on receivables increased $5.4 million (46%) due to increased credit losses. Credit losses, net 8 of recoveries, on an annualized basis as a percentage of average consumer finance receivables outstanding, net of unearned finance charges and insurance premiums, were 1.93% for the first quarter of 1994 compared to 1.25% for the first quarter of 1993. Credit losses increased mainly due to continued sluggishness in the California economy and a continued weak California real estate market. Interest expense declined $3.1 million (5%) due to a lower average interest rate. Net consumer finance receivables at March 31, 1994 included $3.1 billion of real estate secured loans, principally first and second mortgages secured by residential properties, of which approximately 49% are located in California. Company policy generally limits the amount of cash advanced on any one loan, plus any existing mortgage, to between 70% and 80% (depending on location) of the appraised value of the mortgaged property, as determined by qualified independent appraisers at the time of loan origination. Delinquent finance receivables, which are defined as receivables contractually past due 60 days or more, were $86.8 million (2.24% of finance receivables outstanding) at March 31, 1994 compared to $78.8 million (2.01% of finance receivables outstanding) at December 31, 1993 and $69.6 million (1.80% of finance receivables outstanding) at March 31, 1993. Management has established an allowance for losses equal to 2.83% of net consumer finance receivables outstanding at March 31, 1994, December 31, 1993 and March 31, 1993. Generally, by the time an account secured by residential real estate becomes past due 90 days, foreclosure proceedings have begun, at which time the account is moved from finance receivables to other assets and is written down to the estimated realizable value of the collateral if less than the account balance. After foreclosure, repossessed assets are carried at the lower of cost or fair value less estimated selling costs. Accounts in foreclosure and repossessed assets held for sale totaled $233.6 million at March 31, 1994 compared to $214.7 million at December 31, 1993 and $200.1 million at March 31, 1993. The increase primarily reflects a higher number of units in inventory in California, due to its continuing weak real estate market. COMMERCIAL LENDING Commercial lending income, before the amortization of goodwill, for the first quarter of 1994 increased $3.8 million (49%) over the first quarter of 1993. The increase was primarily due to stronger margins brought about by the declining interest rate environment. The interest rates at which the commercial lending operation borrows funds for its businesses have moved more quickly than the rates at which it lends to its customers. As a result, margins have been enhanced by the declining interest rate environment. Lower operating expenses and a lower provision for losses also contributed to the increase. Revenues in the first quarter of 1994 decreased $4.3 million (5%) from the first quarter of 1993 mainly as a result of lower finance charges in the liquidating portfolio and slightly reduced yields attributable to the current low interest rate environment. Expenses decreased in the first quarter of 1994 by $9.6 million (12%) from the first quarter of 1993. Interest expense declined $5.3 million (18%) due to a lower average interest rate. The provision for losses on receivables declined $2.2 million (24%) principally due to lower credit losses. Credit losses, on an annualized basis as a percentage of average commercial finance receivables outstanding, net of unearned finance charges, were a negative 0.08% as recoveries on previously recorded losses exceeded credit losses for the first quarter of 1994 compared to 1.57% in 1993's first quarter. Operating expenses declined $2.1 million (5%) mainly as a result of reduced expenses incurred relating to the management of the liquidating portfolio and restructuring of the commercial lending unit's infrastructure. 9 Net commercial finance receivables outstanding increased $228.8 million (8%) from December 31, 1993 to March 31, 1994 due to growth in the inventory finance and business credit portfolios. Management has established an allowance for losses equal to 2.76% of net commercial finance receivables outstanding as of March 31, 1994 compared to 2.71% at December 31, 1993 and 2.92% at March 31, 1993. Delinquent receivables, which are defined as the instalment balance for inventory finance and business credit receivables and the receivable balance for all other receivables over 60 days past due, were $25.6 million (0.80% of receivables outstanding) at March 31, 1994 compared to $28.9 million (0.96% of receivables outstanding) at December 31, 1993 and $56.8 million (1.84% of receivables outstanding) at March 31, 1993. Nonearning receivables, which are defined as balances from borrowers that are over 90 days delinquent or at such earlier time as full collectibility becomes doubtful, were $34.4 million (1.07% of receivables outstanding) at March 31, 1994 compared to $33.6 million (1.12% of receivables outstanding) at December 31, 1993 and $73.7 million (2.38% of receivables outstanding) at March 31, 1993. Assets held for sale as of March 31, 1994 totaled $79.8 million, net of a $155.3 million valuation allowance, and consisted of rent-to-own finance receivables of $111.3 million, repossessed rent-to-own stores of $104.9 million and other repossessed assets of $18.9 million. Assets held for sale at December 31, 1993 totaled $90.1 million, net of a $157 million valuation allowance, and comprised rent-to-own finance receivables of $120.5 million, repossessed rent- to-own stores of $107.2 million and other repossessed assets of $19.4 million. Assets held for sale at March 31, 1993 totaled $175.4 million, net of a $119.9 million valuation allowance, and comprised rent-to-own finance receivables of $161.5 million, repossessed rent-to-own stores of $103.6 million and other repossessed assets of $30.2 million. Of the rent-to-own finance receivables, $26.8 million were classified as both delinquent and nonearning at March 31, 1994 compared to $27.5 million at December 31, 1993 and $35.6 million at March 31, 1993. LEASING As previously discussed on Page 6, on March 15, 1994, the leasing operation purchased substantially all of the assets of the container rental businesses of Tiphook plc for $1,065 million in cash. The acquired fleet of standard containers and tank containers totaled 363,000 units. The transaction has been accounted for as a purchase and the operations of the business acquired have been included in the results of the leasing operation from the date of acquisition. Results for the first quarter include the sixteen days of operations subsequent to the acquisition and reduced net income for the quarter by $300,000. Leasing income, excluding the effect of Tiphook discussed above and before the amortization of goodwill, for the first quarter of 1994 increased $100,000 (1%) from the first quarter of 1993 mainly as a result of higher utilization in the rail trailer business. Revenues, including $8.8 million from the Tiphook operation, for the first quarter of 1994 increased $21.8 million (23%) over the first quarter of 1993. The increase was mainly due to a larger standard and refrigerated container fleet, higher utilization in the rail trailer and European trailer product lines and a larger finance lease portfolio. Expenses, including $9.3 million from the Tiphook operation, for the first quarter of 1994 increased $21.9 million (30%) over the first quarter of 1993 mainly due to higher ownership and operating costs due to a larger fleet. The combined utilization (including Tiphook) of standard containers, refrigerated containers, domestic containers, tank containers and chassis averaged 82% for the first quarter of 1994 compared 10 to 81% during the first quarter of 1993. Rail trailer utilization was 90% for the first quarter of 1994 compared to 86% in the first quarter of 1993. European over-the-road trailer utilization was 96% during the 1994 first quarter compared to 86% during the comparable 1993 period. REAL ESTATE SERVICES Real estate services comprise Transamerica's real estate tax, property management and other services. Income for the first quarter of 1994 increased $5 million (25%) over the first quarter of 1993 primarily due to continued high levels of mortgage refinancings and higher levels of home sales. Revenues for the first quarter of 1994 increased $16.3 million over the first quarter of 1993 as a result of increased business at the real estate tax service operation where new life of loan tax service contracts written were 1 million in the first quarter of 1994 compared to 677,000 in the first quarter of 1993. LIFE INSURANCE Income for the first quarter of 1994 increased $400,000 (0.6%) over the first quarter of 1993. Income for the first quarter of 1994 and 1993 includes $3.3 million and $6.7 million net after tax gains from investment transactions. The life insurance, structured settlements, living benefits and group pension lines in 1994 all experienced increases in income over the first quarter of 1993, excluding net gains from investment transactions, resulting primarily from asset growth, increased charges on a larger base of interest-sensitive policies, improved or maintained interest spreads and expense control. Investment transactions in the first quarter of 1994 included after tax gains of $8 million realized on the sale of investments compared to $22.4 million in the first quarter of 1993. As required by generally accepted accounting principles, the amortization of deferred policy acquisition costs was accelerated by $1.8 million in 1994 and $3.3 million in 1993 due to the investment gains. The accelerated amortization of deferred policy acquisition costs has been included in investment transactions as an offset to the related gains. Investment transactions in the first quarter of 1994 also reflected a downward adjustment of $2.9 million after tax, compared to $12.4 million in the first quarter of 1993, primarily for impairment in the value of certain nonperforming fixed maturity investments. Premiums and related income increased $38.4 million (13%) in the first quarter of 1994 compared to the first quarter of 1993 primarily due to higher policy charges on interest-sensitive policies and increased income from reinsurance assumed, partially offset by an increase in reinsurance premiums ceded. Net investment income for the first quarter of 1994 increased $12.2 million (3%) over the comparable 1993 period due primarily to increased investments. Net investment income for the first quarter of 1994 included a $4.6 million addition to investment income from the accretion of discounts on securities called or expected to be called. Net investment income for the first quarter of 1993 included a $15.6 million addition to investment income from such accretion of discounts. Life insurance benefits and expenses increased $43.5 million (7%) in the first quarter of 1994 over the first quarter of 1993 principally due to increased benefits attributable to the larger base of life insurance and annuities in force, higher benefit payments for reinsurance assumed and increased amortization of deferred policy acquisition costs (exclusive of accelerated amortization related to investment gains). Other expenses in the first quarter of 1993 included charges of $8.5 million primarily attributable to the establishment of an allowance for possible loss related to a receivable from the sale of a business unit in 1991 and anticipated guaranty fund assessments. 11 Cash provided by operations for the first quarter of 1994 was $96.8 million which was $273.7 million (74%) below the 1993 amount primarily as a result of the timing in the settlement of certain receivables and payables, including reinsurance receivables and payables. The company continues to maintain a sufficiently liquid portfolio to cover its operating requirements, with the remaining funds invested in longer term securities. ASSET MANAGEMENT Asset management results, before goodwill amortization, for the first quarter of 1994 were income of $800,000 compared to a loss of $200,000 for the comparable period of 1993. The improvement was due primarily to higher revenues from increased assets under management. UNALLOCATED INVESTMENT TRANSACTIONS, INTEREST AND EXPENSES Unallocated investment transactions, interest and expenses, after related income taxes, for the first quarter of 1994 decreased $3.6 million (14%) from the first quarter of 1993. The decrease was principally due to lower interest expense on lower outstanding debt. PART II. OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. At the Corporation's Annual Meeting of Stockholders held on April 28, 1994, its stockholders approved a number of proposals and nominations. Results of these proposals and nominations were:
VOTES VOTES BROKER VOTES FOR AGAINST WITHHELD ABSTENTIONS NON-VOTES ---------- ---------- --------- ----------- --------- Nomination for director: Forrest N. Shumway..... 64,711,147 -- 744,164 -- -- Peter V. Ueberroth..... 63,406,537 -- 2,048,774 -- -- Ratification of auditors. 64,717,756 396,621 -- 340,933 -- Ratifying an amendment to the 1985 Stock Option and Award Plan.......... 47,224,056 11,742,760 -- 1,040,113 5,448,381 Approving the adoption of the Value Added Incentive Plan.......... 59,494,828 4,906,908 -- 1,053,575 --
A total of 65,455,311 shares were present in person or by proxy at the Annual Meeting. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibits. EX-10.1 1994 Corporate Bonus Plan. EX-10.2 Value Added Incentive Plan. EX-10.3 Form of Non-qualified Stock Option Agreement under the 1985 Stock Option and Award Plan. EX-10.4 Form of Non-qualified Stock Option Agreement for Nonemployee Directors under the 1985 Stock Option and Award Plan. EX-10.5 Form of Amendment No. 6 to the 1985 Stock Option and Award Plan. EX-11 Statement Re: Computation of Per Share Earnings. EX-12 Computation of Ratio of Earnings to Fixed Charges.
(b) Reports on Form 8-K. None 12 SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED THEREUNTO DULY AUTHORIZED. TRANSAMERICA CORPORATION (Registrant) /s/ Burton E. Broome By: _________________________________ Burton E. Broome Vice President and Controller (Chief Accounting Officer) Date: May 9, 1994 13 -----END PRIVACY-ENHANCED MESSAGE-----