Page 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
( X ) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1993
Commission file number 1-2964
TRANSAMERICA CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 94-0932740
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
600 Montgomery Street
San Francisco, California 94111
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (415) 983-4000
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
Common Stock--$1 Par Value New York Stock Exchange
Pacific Stock Exchange
Preference Stock Purchase Rights New York Stock Exchange
Pacific Stock Exchange
Depositary shares representing an New York Stock Exchange
interest in Preferred Stock - Series D
Securities registered pursuant to section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. ( X )
Aggregate market value of Common Stock, $1 par value, held by nonaffil-
iates of the registrant as of the close of business at March 4, 1994:
$3,899,847,696.
Number of shares of Common Stock, $1 par value, outstanding as of the
close of business on March 4, 1994: 75,568,523.
Documents incorporated by reference:
Portions of the Transamerica Corporation 1993 Annual Report to
Shareholders are incorporated by reference into Parts I and II. With the
exception of those portions which are incorporated by reference, the Trans-
america Corporation 1993 Annual Report is not deemed filed as part of this
Report.
Portions of the Proxy Statement of Transamerica Corporation dated
March 23, 1994 are incorporated by reference into Part III. (A definitive
proxy statement has been filed with the Commission since the close of the
fiscal year.)
Page 2
TABLE OF CONTENTS
Page
____
Part I:
Item 1. Business ................................................. 3
Item 2. Properties ............................................... 22
Item 3. Legal Proceedings ........................................ 22
Item 4. Submission of Matters to a Vote of Securities Holders .... 23
Item 4A. Executive Officers of the Registrant ..................... 23
Part II:
Item 5. Market for Registrant's Common Equity and Related Stock-
holder Matters ........................................... 23
Item 6. Selected Financial Data .................................. 23
Item 7. Management's Discussion and Analysis of Financial Condi-
tion and Results of Operations ........................... 24
Item 8. Financial Statements and Supplementary Data .............. 24
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure ...................... 24
Part III:
Item 10. Directors and Executive Officers of the Registrant ....... 25
Item 11. Executive Compensation ................................... 27
Item 12. Security Ownership of Certain Beneficial Owners and
Management ............................................... 27
Item 13. Certain Relationships and Related Transactions ........... 27
Part IV:
Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K ................................................. 27
Page 3
PART I
ITEM I. BUSINESS
Transamerica Corporation is a financial services organization which
engages through its subsidiaries in consumer lending, commercial lending,
leasing, real estate services, life insurance and asset management.
Transamerica was incorporated in Delaware in 1928.
On March 15, 1994, Transamerica completed the purchase of substantially
all of the assets of the container rental businesses of Tiphook plc for
$1,065,000,000 in cash. The transaction will be accounted for as a purchase
and the operations of the business acquired will be included in the
consolidated statement of income from the date of acquisition.
During 1993 Transamerica Corporation completed the sale of its former
property and casualty insurance subsidiary, Transamerica Insurance Group,
through an initial public offering in April 1993 and a secondary offering in
December 1993. Proceeds from the sales of stock, after underwriting
discounts, totaled $1,031,788,000. The proceeds were used to reduce
indebtedness, including $162,600,000 incurred to fund capital contributions
to, and $246,696,000 incurred to acquire certain assets from, the property and
casualty insurance operation in connection with the initial public offering,
and to commence a program of repurchasing shares of its common stock. In May
1993 Transamerica announced its intention to purchase up to 3,500,000 of its
common shares subject to acceptable market conditions. In December the
program was expanded to include an additional 2,500,000 shares. As of
December 31, 1993, Transamerica had purchased 3,560,000 million shares at a
cost of $197,894,200.
On July 17, 1990, Transamerica Corporation acquired FIFSI, Inc. (dba NOVA
Financial Services), a consumer lending subsidiary of First Interstate
Bancorp, for $117,455,000 in cash and the assumption of $445,400,000 of
liabilities. The transaction was accounted for as a purchase and the
operations of NOVA Financial Services have been included in the consolidated
statement of income from the date of acquisition.
On June 16, 1989, the outstanding common shares of Criterion Group, Inc.,
an independent asset management firm subsequently renamed Transamerica Asset
Management Group, Inc., were acquired for $95,723,000 in cash. The
transaction was accounted for as a purchase and the operations of Transamerica
Asset Management Group, Inc. included in the consolidated statement of income
from the date of acquisition.
Information concerning Transamerica's investment portfolio is
incorporated herein by reference to "Investment Portfolio" on page 38 and
"Note E. Investments" on pages 60 and 61 of the Transamerica Corporation 1993
Annual Report.
BUSINESS SEGMENT INFORMATION
Business segment data, as required by Statement of Financial Accounting
Standards No. 14, Financial Reporting for Segments of a Business Enterprise,
included in the tables in the Financial Review on pages 37 through 51 of the
Transamerica Corporation 1993 Annual Report are incorporated herein by
reference.
Page 4
The business activities of Transamerica's principal subsidiaries are
more fully described below.
FINANCE
The Corporation's finance services are provided by Transamerica Finance
Group, Inc. ("Transamerica Finance Group"), which conducts the consumer
lending, commercial lending and leasing operations, and by the Corporation's
real estate services operations.
During 1990 Transamerica Finance Group securitized $430,000,000 of
residential real estate secured consumer finance receivables and entered into
a five-year arrangement in which it securitized a $375,000,000 participation
interest in a pool of its insurance finance receivables. These
securitizations, which have been accounted for as sales, allowed Transamerica
Finance Group to improve its capital management and liquidity. At
December 31, 1993, $375,000,000 of securitized insurance finance receivables
and $59,437,000 of securitized real estate secured consumer finance
receivables remained outstanding. The consumer and commercial lending
operations continue to service these portfolios and remain partially at risk
through limited recourse provisions. The term "owned and serviced" is used
herein to describe Transamerica Finance Group's receivables portfolio and the
securitized receivables which it still services.
Consumer Lending
Transamerica Finance Group's consumer lending services are provided by
Transamerica Financial Services, headquartered in Los Angeles, California,
which has 561 branch lending offices. Branch offices are located in the
United States (548 in 41 states), Canada (11) and the United Kingdom (2).
Transamerica Financial Services makes both real estate secured and unsecured
loans to individuals. The company's customers typically borrow to
consolidate debt, finance home remodeling, pay for their children's college
educations, make major purchases, take vacations, and for other personal uses.
Transamerica Financial Services offers three principal loan products:
fixed rate real estate secured loans, revolving real estate secured lines of
credit and personal loans. The company's primary business is making fixed
rate, home equity loans that generally range up to $200,000. Approximately
84% of all finance receivables currently owned or serviced by the company are
secured by residential properties. Of the company's real estate portfolio,
50% is secured by first mortgages. Since 1991, the company has continued to
broaden its receivable portfolio by expanding its revolving real estate
secured lines of credit, its unsecured personal loan business and its purchase
of retail finance contracts from dealers (i.e., appliances, furniture and
services).
The following table sets forth certain statistical information relating
to the consumer lending operation's finance receivables for the years
indicated.
Page 5
Years Ended December 31,
______________________________________________________________
1993 1992 1991 1990 1989
(Dollar amounts in thousands)
Volume of finance receivables
acquired:
Instalment loans:
Secured by residential
real estate(1) .............. $1,039,394 $1,120,549 $1,308,941 $1,800,204 $1,283,538
Other(1)(2) ................... 524,241 436,521 310,607 276,240 194,126
__________ __________ __________ __________ __________
1,563,635 1,557,070 1,619,548 2,076,444 1,477,664
Other finance receivables(3) .... 29,181 4,843 5,310 5,773 7,694
__________ __________ __________ __________ __________
Total ....................... $1,592,816 $1,561,913 $1,624,858 $2,082,217 $1,485,358
========== ========== ========== ========== ==========
Finance receivables outstanding
at end of year:
Instalment loans:
Secured by residential
real estate(4) .............. $3,295,346 $3,353,918 $3,357,842 $3,053,210 $2,836,152
Other(2) ...................... 595,284 482,819 334,304 291,248 229,218
__________ __________ __________ __________ __________
3,890,630 3,836,737 3,692,146 3,344,458 3,065,370
Other finance receivables(3) .... 22,276 6,355 7,503 9,193 10,230
__________ __________ __________ __________ __________
3,912,906 3,843,092 3,699,649 3,353,651 3,075,600
Less unearned finance charges
and insurance premiums ........ 185,150 181,554 170,135 156,798 150,214
__________ __________ __________ __________ __________
Net finance receivables - owned . 3,727,756 3,661,538 3,529,514 3,196,853 2,925,386
Net finance receivables securi-
tized, sold and serviced(4) ... 59,437 125,832 233,474 394,597
__________ __________ __________ __________ __________
Net finance receivables owned
and serviced .................. $3,787,193 $3,787,370 $3,762,988 $3,591,450 $2,925,386
========== ========== ========== ========== ==========
Allowance for losses at end of
year(5)(6) ...................... $ 107,175 $ 107,183 $ 107,235 $ 102,349 $ 79,379
Ratio to outstandings less
unearned finance charges and
insurance premiums:
Owned(7) ........................ 2.83% 2.83% 2.85% 2.85% 2.71%
Owned and serviced .............. 2.83% 2.83% 2.85% 2.85%
Provision for credit losses
charged to income ............... $ 63,946 $ 48,897 $ 42,214 $ 35,617 $ 32,820
Credit losses (net of recoveries)(8) $ 64,430 $ 45,674 $ 33,887 $ 25,785 $ 25,214
Ratio to average net finance
receivables outstanding(9):
Owned ........................... 1.68% 1.21% 0.98% 0.79% 0.91%
Owned and serviced .............. 1.69% 1.21% 0.92% 0.79%
Page 6
<FN>
_______
(1) The 1993 and 1992 decreases in the volume of loans secured by
residential real estate were mainly due to sluggishness in the domestic
economy and a weak real estate market, particularly in California. Includes
$491,236,000 in 1990 related to the purchase of NOVA Financial Services on
July 17, 1990 (real estate - $458,650,000, other - $32,586,000).
(2) The increase in 1990 includes unsecured loans to executives and
professionals related to the purchase of NOVA. Increases since 1990 reflect
general expansion in the company's program of non-real estate secured loans.
(3) The increase in 1993 resulted from expansion into the retail finance
contract business, purchasing principally contracts on appliances, furniture
and services.
(4) In December 1990, $430,000,000 of real estate secured receivables
were securitized and accounted for as a sale. The amounts of securitized
receivables outstanding at the end of 1993, 1992, 1991 and 1990 are shown in
the table under the caption "Net finance receivables securitized, sold and
serviced."
(5) In connection with the acquisition of NOVA Financial Services in
1990, the company established an allowance for losses of $13,138,000 as of
the date of purchase.
(6) The 1993, 1992, 1991 and 1990 amounts include an allowance for
losses of $1,680,000, $3,561,000, $6,654,000 and $11,239,000 on the
securitized, sold and serviced portfolio. These amounts are included in other
liabilities in the consolidated balance sheet. The decreases were due to
credit losses sustained and the run off of the securitized receivables.
(7) The allowance for losses, as a percentage of receivables
outstanding, at December 31, 1990 was increased in response to the economic
uncertainties due to the decline in the U.S. economy and the resulting
slowdown in the residential housing market.
(8) Credit losses increased $18,756,000 (41%) in 1993 due to increased
losses on real estate secured instalment loans of $15,979,000 (55%) and on
non-real estate secured receivables of $2,777,000 (17%). Credit losses
increased $11,787,000 (35%) in 1992 due to increased losses on real estate
secured instalment loans of $5,033,000 (21%) and on non-real estate secured
receivables of $6,754,000 (70%). Credit losses increased $8,102,000 (31%) in
1991 due to increased losses on real estate secured instalment loans of
$4,074,000 (20%) and on non-real estate secured receivables of $4,028,000
(71%). The increases since 1990 in credit losses on real estate secured loans
resulted mainly from the continuing weakening of the California real estate
market. The 1993, 1992 and 1991 increases in credit losses on non-real estate
secured loans was caused by growth in the related receivables outstanding and
sluggishness in the domestic economy. With the adoption in the fourth quarter
of 1992 of a required new accounting rule, losses on the disposal of
repossessed assets were classified as operating expenses rather than as credit
losses. Data for periods prior to the fourth quarter of 1992 have not been
reclassified.
Page 7
(9) The changes in ratios were due to corresponding fluctuations in
credit losses (see note 8 above).
_____________________
Delinquent Receivables. The following table shows the ratio of finance
receivables which are contractually past due 60 days or more to finance
receivables outstanding for each category and in total for the years
indicated:
As of December 31,
_____________________________________
1993 1992 1991 1990 1989
Instalment loans:
Secured by residential real
estate ..................... 1.87% 1.85% 1.73% 1.48% 1.21%
Other ........................ 2.71 2.00 2.19 2.09 2.70
_____ _____ _____ _____ _____
2.00 1.87 1.77 1.53 1.32
Other finance receivables ...... 3.96 0.09 0.14
_____ _____ _____ _____ _____
Total - owned ................ 2.01 1.87 1.77 1.53 1.32
Securitized, sold and serviced . 2.47 2.15 1.95 1.17
_____ _____ _____ _____ _____
Total owned and serviced ..... 2.02% 1.87% 1.78% 1.49% 1.32%
===== ===== ===== ===== =====
The increasing delinquency through 1993 was principally due to the
sluggishness in the domestic economy and, in particular, the weakening in the
California real estate market.
Accounts in Foreclosure and Repossessed Assets. Generally, by the time
an account secured by residential real estate becomes past due 90 days,
foreclosure proceedings have begun, at which time the account is moved from
finance receivables to other assets and is written down to the estimated
realizable value of the collateral if less than the account balance. After
foreclosure, repossessed assets are carried at the lower of cost or fair
value less estimated selling costs. Accounts in foreclosure and repossessed
assets held for sale totaled $214,665,000 at December 31, 1993 compared to
$176,054,000 at December 31, 1992. The increase primarily reflects increased
repossessions in California and longer disposal times due to its weak real
estate market.
Commercial Lending
Transamerica Finance Group's commercial lending services are provided by
Transamerica Commercial Finance Corporation ("Transamerica Commercial
Finance"). Transamerica Commercial Finance operates from its executive
office in Chicago, Illinois, as well as from 88 branch lending offices.
Branch offices are located in the United States (58), Puerto Rico (16),
Canada (9) and Europe (5).
Page 8
Transamerica Commercial Finance made a decision late in the fourth
quarter of 1991 to exit the rent-to-own finance business, reduce lending to
certain asset based lending lines, accelerate disposal of repossessed assets
and liquidate receivables remaining from previously sold businesses. As a
result of this action the commercial lending operation recognized a special
after tax charge of $130,000,000.
In conjunction with the decision discussed above, Transamerica
Commercial Finance's operations were reorganized into three core business
units: inventory finance, insurance finance and business credit. The lending
activities of these core businesses are discussed below.
Inventory finance (also known as wholesale financing or floor plan
financing) consists principally of financing dealers' purchases from
distributors or manufacturers of goods for inventory. The products financed
primarily include boats and other recreational equipment, television and
stereo equipment, major appliances such as refrigerators, washers, dryers and
air conditioners, and manufactured housing. Loan terms typically provide for
repayment within 30 days following sale of the inventory by the borrower.
After initial review of a borrower's credit worthiness, the ongoing management
of credit risk in this area may include various monitoring techniques, such
as periodic physical inventory checks and review of the borrower's sales, as
well as maintenance of repurchase agreements with manufacturers which provides
a degree of security in the event of slow moving or obsolete inventory.
Insurance finance involves the financing of insurance premiums for
businesses, generally at fixed rates for terms of less than one year. The
receivables are secured by the company's right to cause the policies to be
canceled and receive the unearned premiums. Credit risk is managed by
requiring down payments from borrowers to mitigate the effects of possible
delays in receiving unearned premiums in the event of policy cancellation and
by monitoring the concentrations of potential return premiums among the
insurance carriers and their financial condition.
Business credit consists of secured loans, primarily revolving, to
manufacturers, distributors and selected service businesses, including
financial service companies. The loans are collateralized, with credit lines
typically from $5 million to $25 million and terms ranging from three to five
years. Actual borrowings are limited to specified percentages of the
borrower's inventory, receivables and other eligible collateral which are
regularly monitored to ascertain that receivables are within approved limits
and that the borrower is otherwise in compliance with the terms of the
arrangement. The loans to financial service companies are secured by their
respective finance receivable portfolios. The company manages its credit risk
in this area by monitoring the quality of the borrower's loan portfolio and
compliance with financial covenants.
As a result of the relatively short-term nature of the company's
financings, Transamerica Commercial Finance is able to adjust its finance
charges rather quickly in response to competitive factors and changes in its
costs. However, the interest rates at which Transamerica Commercial Finance
borrows funds for its businesses generally move more quickly than the rates
Page 9
at which it lends to customers. As a result, in rising interest rate
environments, margins are normally compressed until interest rates
restabilize. Conversely, in declining interest rate environments, margins
are generally enhanced.
In March 1992, the commercial lending operation purchased for cash a
business credit portfolio consisting of twelve manufacturer/distributor
accounts with a net outstanding balance of $134,000,000. In September 1991,
an inventory finance portfolio, which comprised lending arrangements with over
700 manufactured housing and recreational product dealers with a net balance
outstanding of $290,604,000, was purchased for cash. These transactions were
funded with short-term debt.
The commercial lending operation sold its automobile fleet leasing
operation in 1990 and its commercial leasing and wholesale automobile
financing operations in 1989. Finance receivables included in the assets sold
totaled $45,478,000 in 1990 and $534,734,000 in 1989. Also in 1990,
$375,000,000 of insurance finance receivables were securitized and accounted
for as a sale.
The following table sets forth certain statistical information relating
to the commercial lending operation's finance receivables for the years
indicated.
Page 10
Years Ended December 31,
__________________________________________________________________
1993 1992 1991 1990 1989
(Dollar amounts in thousands)
Volume of finance receivables
acquired:(1)
Inventory finance(2)............. $ 6,773,720 $ 6,225,899 $5,570,486 $ 6,029,587 $ 6,835,938
Insurance finance ............... 1,967,242 1,732,615 1,761,820 1,452,742 1,402,434
Business credit(3)............... 3,696,180 2,023,010 2,000,434 2,407,304 2,130,292
___________ ___________ __________ ___________ ___________
Core businesses ............... 12,437,142 9,981,524 9,332,740 9,889,633 10,368,664
Other(4) ........................ 170,705 427,909 84,139 194,338 907,468
___________ ___________ __________ ___________ ___________
Total ......................... $12,607,847 $10,409,433 $9,416,879 $10,083,971 $11,276,132
=========== =========== ========== =========== ===========
Finance receivables outstanding
at end of year:
Inventory finance(5) ............ $ 1,959,757 $ 1,873,895 $1,928,670 $ 1,872,191 $ 2,240,453
Insurance finance(6) ............ 354,322 284,738 323,958 218,622 560,728
Business credit(7)(8) ........... 553,859 575,984 288,776 968,216 897,128
___________ ___________ __________ ___________ ___________
Core businesses ............... 2,867,938 2,734,617 2,541,404 3,059,029 3,698,309
Other(9) ........................ 127,687 208,866 481,272 403,647 613,152
___________ ___________ __________ ___________ ___________
2,995,625 2,943,483 3,022,676 3,462,676 4,311,461
Less unearned finance charges ... 55,644 68,401 82,219 100,419 146,006
___________ ___________ __________ ___________ ___________
Net finance receivables - owned . 2,939,981 2,875,082 2,940,457 3,362,257 4,165,455
Net finance receivables securi-
tized, sold and serviced(6) ... 374,512 374,478 374,169 373,973
___________ ___________ __________ ___________ ___________
Net finance receivables owned
and serviced .................. $ 3,314,493 $ 3,249,560 $3,314,626 $ 3,736,230 $ 4,165,455
=========== =========== ========== =========== ===========
Allowance for losses at end of
year(10)(11)(12)............... $ 80,668 $ 91,263 $ 172,718 $ 102,748 $ 70,870
Ratio to outstandings less
unearned finance charges:(12)
Owned ........................... 2.71% 3.14% 5.84% 3.03% 1.70%
Owned and serviced .............. 2.43% 2.81% 5.21% 2.75%
Provision for credit losses
charged to income(11) ........... $ 33,098 $ 41,816 $ 248,472 $ 133,364 $ 51,078
Credit losses (net of
recoveries)(13) ................. $ 43,515 $ 121,137 $ 176,138 $ 100,638 $ 69,917
Ratio to average net finance
receivables outstanding:(14)
Owned ........................... 1.49% 4.18% 5.82% 2.68% 1.55%
Owned and serviced .............. 1.32% 3.71% 5.18% 2.57%
Page 11
<FN>
_______
(1) The volume increase in 1993 reflects the overall improvement in the
economy and increased sales and marketing programs in the core business
groups.
(2) Includes $290,604,000 in 1991 related to the purchase of lending
arrangements with manufactured housing and recreational products dealers.
(3) The volume increase in 1993 reflects a shift in focus from
participating in loans to directly originating loans. As a result, advances
and collections have increased. The 1992 amount includes $134,000,000 related
to the purchase of a portfolio of manufacturer/distributor business credit
arrangements.
(4) The 1993 decrease is due to reduced receivable levels in liquidating
portfolios. The 1992 increase mainly reflects additional borrowings by
customers in certain asset based lending lines, which were reclassified to the
"other" category in 1991 (see note 7), prior to implementation or completion
of work-out or liquidation arrangements. The declines in 1991 and 1990 were
due to the sale of the automobile fleet leasing operation in 1990 and the sale
of the commercial leasing and wholesale automobile financing operations in
1989.
(5) The 1993 increase was due to the increased volume primarily in home
and recreational products. The 1992 decrease was mainly due to faster paying
customers resulting from implementation of stronger portfolio management
procedures and efforts by certain borrowers to decrease the time that they
hold inventory by using "just in time" delivery arrangements.
(6) The 1993 increase was due to the increased volume. The 1992
decrease was due to a change in funding arrangements with one major customer.
In July 1990, $375,000,000 of insurance finance receivables were securitized
and accounted for as a sale. The amounts of securitized receivables
outstanding at the end of 1993, 1992, 1991 and 1990 are shown in the table
under the caption "Net finance receivables securitized, sold and serviced."
(7) The company's decision to exit the rent-to-own finance business and
reduce lending to certain asset based lending lines (formerly included in
business credit) resulted in the reclassification at December 31, 1991 of net
rent-to-own finance receivables totaling $221,247,000 to assets held for sale,
which are included in other assets in the consolidated balance sheet, and the
transfer of other receivables totaling $206,931,000 from business credit to
the "other" category set forth under finance receivables outstanding. Prior
year data has not been restated.
(8) The 1992 increase includes the purchase of a $134,000,000
manufacturer/distributor business credit portfolio. The 1991 decrease was
due principally to the reduction in rent-to-own finance receivables resulting
from the de-emphasis during the year, repossession of rent-to-own stores, and
the eventual decision to exit the business and the decision to reduce lending
to certain asset based lending lines (see note 7 regarding reclassification of
receivables outstanding at December 31, 1991). The 1990 increase was due to
increased financing of small consumer finance companies and domestic personal
computer retail stores.
Page 12
(9) The 1993 and 1992 decreases primarily reflect the liquidation of
receivables from businesses being exited, including $18,403,000 and
$87,406,000 of write offs. The 1991 increase was due to the reclassification
of receivables to be liquidated resulting from the company's decision to
reduce lending to certain asset based lending lines (see notes 7 and 8). The
1990 decline was due to the liquidation and sale of receivables from
businesses being exited (see note 4).
(10) The allowance for losses on the securitized, sold and serviced
portfolio was $938,000 at December 31, 1993, 1992, 1991 and 1990. This amount
is included in other liabilities in the consolidated balance sheet.
(11) The 1991 provision and allowance for losses at December 31, 1991
included $62,816,000 recorded as part of the special charge recognized as a
result of the company's decision to reduce lending to certain asset based
lending lines and to liquidate receivables remaining from previously sold
businesses. The increased provisions in 1991, excluding the special charge,
and in 1990 were in response to increased credit losses and higher than normal
delinquencies and nonearning receivables associated with the weak U.S. and
Canadian economies.
(12) The 1993 and 1992 reductions in the allowance for losses as a
percentage of receivables outstanding were attributable primarily to the
writeoff of delinquent and nonearning receivables in 1993 and 1992, and to
lower levels of delinquent and nonearning accounts in the remaining portfolio
at December 31, 1993 and 1992. In 1991, the percentages were increased
principally due to the company's decision to reduce lending to certain asset
based lending lines and to liquidate receivables remaining from previously
sold businesses (see note 11). The 1990 increase was in response to the weak
U.S. and Canadian economies resulting in higher than normal delinquencies and
nonearning receivables.
(13) In 1993 and 1992, charges to the allowance for losses on finance
receivables due to credit losses sustained decreased $77,622,000 (64%) and
$55,001,000 (31%). These decreases were caused mainly by decreases in
delinquent and nonearning receivables resulting from improved economic
conditions, the reclassification of certain receivables to assets held for
sale and in 1992, implementation of stronger portfolio management procedures.
In 1991 and 1990, credit losses increased $75,500,000 (75%) and $30,721,000
(44%) principally as a result of the depressed appliance and furniture rental
and Canadian computer markets associated with the general downturn in the U.S.
and Canadian economies.
(14) The changes in ratios were due to corresponding fluctuations in
credit losses (see note 13).
_____________________
Delinquent Receivables. Effective in 1993, the policy used for
determining delinquent receivables was revised to provide greater consistency
among the company's receivable portfolios. It is management's view that the
new methodology provides a better and more meaningful assessment of the
condition of the portfolios. Delinquent receivables are now defined as the
instalment balance for inventory finance and business credit receivables and
the receivable balance for all other receivables over 60 days past due.
Previously, delinquent receivables were generally defined as financed
Page 13
inventory sold but unpaid 30 days or more, the portion of business credit
loans in excess of the approved lending limit and all other receivable
balances contractually past due 60 days or more.
The following table shows the ratio of delinquent commercial finance
receivables to finance receivables outstanding for each category and in total
as of the end of each of the years indicated. Delinquency ratios for 1992 and
prior years have not been restated for the change in policy outlined above.
As of December 31,
_____________________________________
1993 1992 1991 1990 1989
Inventory finance(1) ........... 0.13% 0.82% 1.31% 3.42% 2.95%
Insurance finance .............. 0.54 0.57 1.03 2.02 1.78
Business credit(1)(2) .......... - 0.21 0.88 10.34 2.35
______ ______ ______ ______ _____
Core businesses .............. 0.15 0.66 1.22 5.51 2.63
Other(3) ....................... 19.14 22.42 25.84 12.79 9.54
______ ______ ______ ______ _____
Total - owned ............... 0.96% 2.21% 5.14% 6.36% 3.61%
====== ====== ====== ====== =====
Total owned and serviced ..... 0.86% 1.96% 4.57% 5.76% 3.61%
====== ====== ====== ====== =====
_______
(1) The decreases in 1992 and 1991 reflect write offs of delinquent
accounts (and accounting reclassifications - see note 2), implementation of
stronger portfolio management procedures and general improvement in the
economy. Increased delinquency in 1990 reflected the overall weak economy.
This trend began in 1989, when consumer spending, which supports these
businesses, began to decline. Particularly affected were the marine industry
(inventory finance), and the appliance and furniture rental and Canadian
computer markets (business credit).
(2) The decline in 1991 was due principally to rent-to-own finance
receivables being reclassified to assets held for sale, and certain finance
receivables being reclassified to the "other" category. These
reclassifications resulted from the company's decision to exit the rent-to-own
finance business and reduce its lending to certain asset based lending lines.
Prior year data have not been restated.
(3) Represents finance receivables retained from businesses sold or
exited which are being liquidated and receivables reclassified in 1991 due to
the company's decision to reduce lending to certain asset based lending lines
(see note 2).
_____________________
Nonearning Receivables. Effective in 1993, the policy used for
determining nonearning receivables was revised to provide greater consistency
among the company's receivable portfolios. It is management's view that the
new methodology provides a better and more meaningful assessment of the
condition of the portfolio. Nonearning receivables are now defined as
balances from borrowers that are over 90 days delinquent or at such earlier
time as full collectibility becomes doubtful. Previously, nonearning
Page 14
receivables were defined as balances from borrowers in bankruptcy or
litigation and other accounts for which full collectibility was doubtful.
Accrual of finance charges is suspended on nonearning receivables until such
time as past due amounts are collected. Nonearning receivables were
$33,617,000 (1.12% of receivables outstanding) and $92,548,000 (3.14%) of
receivables outstanding) at December 31, 1993 and 1992; the 1992 data has not
been restated. Those amounts exclude nonearning rent-to-own finance
receivables which have been reclassified to assets held for sale (see below).
Assets Held for Sale. Assets held for sale at December 31, 1993 totaled
$90,114,000, net of a $156,985,000 valuation allowance, and consisted of
rent-to-own finance receivables of $120,469,000, repossessed rent-to-own
stores of $107,227,000 and other repossessed assets of $19,403,000. Assets
held for sale at December 31, 1992 totaled $191,515,000, net of a
$121,549,000 valuation allowance, and comprised rent-to-own finance
receivables of $179,013,000, repossessed rent-to-own stores of $103,418,000
and other repossessed assets of $30,633,000. At December 31, 1993,
$27,489,000 of the rent-to-own finance receivables were classified as both
delinquent and nonearning. At December 31, 1992 delinquent rent-to-own
finance receivables were $15,397,000 and nonearning rent-to-own finance
receivables were $32,615,000. Delinquent and nonearning receivables as of
December 31, 1992 have not been restated for the change in policies effective
in 1993 as outlined above.
Leasing
Transamerica Leasing Inc. ("Transamerica Leasing") leases, services and
manages containers, chassis and trailers around the world. The company is
based in Purchase, New York and maintains 386 offices, depots and other
facilities in 44 countries. The company specializes in intermodal
transportation equipment, which allows goods to travel by road, rail or ship.
The company's customers include railroads, steamship lines and motor carriers.
On March 15, 1994, Transamerica purchased substantially all of the assets
of the container rental businesses of Tiphook plc for $1,065,000,000. The
acquired fleet of standard containers and tank containers totaled 361,000
units.
As of December 31, 1993, Transamerica Leasing's fleet consisted of
standard containers, refrigerated containers, domestic containers, tank
containers and chassis totaling 316,000 units which are owned or managed, and
leased from 347 depots worldwide, 36,500 rail trailers leased to all major
United States railroads and to roll on/roll off steamship operators,
shippers, shippers' agents and regional truckers, and 3,800 over-the-road
trailers in Europe. Transamerica Leasing began leasing tank containers for
carrying bulk liquids in 1990 and had 1,900 tank containers in its fleet at
December 31, 1993.
In November 1992, the company sold its domestic over-the-road trailer
business. Proceeds from the sale totaled $191,000,000 and resulted in no gain
or loss.
Page 15
Approximately 49% of the standard container, refrigerated container,
domestic container, tank container and chassis fleet is on term lease or
service contract minimum lease for periods of one to five years. Also, 34% of
the rail trailer fleet is on term lease or service contract minimum lease for
periods of one to five years.
The following table sets forth Transamerica Leasing's fleet size, in
units, for the years indicated:
As of December 31,
___________________________________________
1993 1992 1991 1990 1989
Containers and chassis ... 316,000 280,000 255,100 244,400 235,900
Rail trailers ............ 36,500 34,400 36,800 40,500 43,300
European trailers ........ 3,800 2,900 1,700 800
The following table sets forth Transamerica Leasing's fleet utilization
for the years indicated:
Years Ended December 31,
____________________________
1993 1992 1991 1990 1989
Containers and chassis(1) ..... 83% 85% 89% 90% 93%
Rail trailers(2) .............. 91% 84% 75% 79% 83%
European trailers ............. 89% 84% 83% 81%
_______
(1) The 1993 decline was due to slow economic growth in key European
economies and Japan; the 1992 decline was due to a higher than expected
industry-wide supply of equipment. The 1991 and 1990 reductions resulted from
a small decline in the rate of growth of world trade and a less favorable
geographic balance of business.
(2) The 1993 and 1992 increases were due to a smaller industry fleet,
higher domestic economic activity and because many shippers are moving from
trucks to rail transport for long-haul shipments; the 1991 and 1990 declines
were due to reduced domestic economic activity.
_____________________
Real Estate Services
Real estate services comprise real estate tax, realty and other services
and in 1989, title insurance.
Transamerica Real Estate Tax Service, a division of Transamerica
Corporation, prepares tax payments and reports and conducts tax searches with
respect to real property taxes and assessments, issues flood hazard
determinations in all 50 states, and provides real property information
services in several states. It also provides customers with on-line computer
system information. As of December 31, 1993, tax reports were generated for
Page 16
more than 3,000 institutional mortgage servicers and their borrowers. The
company operates from 35 offices throughout the United States.
The following table sets forth the number of tax service contracts under
management at the end of the years indicated and new tax service contracts
written during those years:
1993 1992 1991 1990 1989
(Amounts in thousands)
Tax service contracts
under management ....... 15,496 14,751 13,712 12,835 11,876
New tax service contracts 5,103 3,870 2,668 2,544 2,583
Transamerica's title operations were conducted by Transamerica Title
Insurance Company ("Transamerica Title"). On March 30, 1990 the Corporation
sold Transamerica Title. The sales price was $67,502,000 in cash and notes
receivable, which approximated the book value of the operation.
Transamerica Realty Services, Inc. owns and manages real estate in
various communities. Transamerica Realty Services, Inc. also provides real
estate services to other subsidiaries of the Corporation, including asset and
property management of real estate held for investment principally by the
Corporation's life insurance subsidiaries.
INSURANCE
Life Insurance
The Corporation's life insurance business is conducted by Transamerica
Occidental Life Insurance Company, by Transamerica Life Insurance and Annuity
Company, and by other life insurance subsidiaries (hereinafter collectively
referred to as "Transamerica Life Companies"). The Transamerica Life
Companies are primarily engaged in the business of writing life insurance and
annuities in all states of the United States, the District of Columbia, Puerto
Rico, the Virgin Islands, Guam, Canada, Taiwan and Hong Kong.
The following table sets forth certain statistical information relating
to the Transamerica Life Companies' operations.
Page 17
Years Ended December 31,
____________________________________________________________________
1993 1992 1991 1990 1989
(Dollar amounts in thousands)
Insurance in force at
end of period:(1)(2)
Whole life and endowment .... $150,151,065 $139,475,971 $126,118,638 $122,179,305 $114,487,924
Individual term life ........ 172,441,372 160,517,919 156,996,821 145,177,179 130,683,723
Group life(3) ............... 7,838,176 6,252,910 4,656,433 3,062,966 737,000
Credit life(4) .............. 200,787 521,645 1,080,571 2,237,421 5,814,672
____________ ____________ ____________ ____________ ____________
Total ..................... $330,631,400 $306,768,445 $288,852,463 $272,656,871 $251,723,319
============ ============ ============ ============ ============
New insurance written:(2)
Whole life and endowment(5) . $ 29,303,712 $ 28,265,139 $ 25,182,326 $ 25,679,301 $ 29,435,274
Individual term life(6) ..... 46,724,456 41,235,278 36,385,130 39,867,771 33,519,609
Group life(3) ............... 2,057,706 2,002,644 1,273,166 2,518,760 568,518
Credit life(4) .............. 449 1,462 5,276 83,394 144,222
____________ ____________ ____________ ____________ ____________
Total ..................... $ 78,086,323 $ 71,504,523 $ 62,845,898 $ 68,149,226 $ 63,667,623
============ ============ ============ ============ ============
Premium income:(7)
Individual life and annui-
ties(8) ................... $ 543,580 $ 490,357 $ 481,606 $ 524,630 $ 518,859
Group life and annuities(9) . 95,004 104,087 165,318 120,722 399,540
Credit life(4) .............. (3,201) 7,594
Accident and health (individ-
ual, group and credit)(10) 227,640 219,285 62,977 48,259 47,269
____________ ____________ ____________ ____________ ____________
Total ..................... $ 866,224 $ 813,729 $ 709,901 $ 690,410 $ 973,262
============ ============ ============ ============ ============
Average individual life policy
in force at end of year
(actual dollar amounts) ..... $ 144,050 $ 138,015 $ 129,141 $ 121,600 $ 114,261
Average individual life policy
issued during year (actual
dollar amounts)(11) ......... $ 247,944 $ 245,394 $ 217,637 $ 204,463 $ 195,367
Number of individual life
policies in force at end of
year ........................ 1,200,076 1,171,616 1,141,154 1,147,077 1,121,219
Ratio of underwriting expenses
to premiums and other consid-
erations(12) ................ 8.9% 9.2% 9.3% 9.1% 9.6%
Lapse ratio--adjusted for de-
creases and expiries of
term insurance and rein-
surance assumed:(13)
Transamerica Life Companies . 8.9% 9.2% 11.0% 11.9% 12.0%
All U.S. stock life insur-
ance companies(14) ........ (15) 9.9% 10.4% 11.0% 11.6%
Page 18
<FN>
_______
(1) The annual change in insurance in force results from additions for
new insurance written less reductions from terminations. Approximately 70% to
80% of terminations in all years were voluntary (from lapse or surrender) with
the remaining amount caused by deaths and other decreases by contract.
(2) Reinsurance assumed has been included, except for intercompany
amounts. Reinsurance ceded has not been deducted.
(3) The increases through 1993 were due to sales of insurance through
salary deduction plans offered by employers.
(4) The company discontinued this line of business in 1988 causing the
large decreases in insurance in force and new insurance written since that
time. Insurance in force and new insurance written in 1989 to 1993 represents
business which is only cancelable at the policyholder's request. In 1990, the
company transferred the remaining operations of the credit insurance line to a
trust administered by an independent third party.
(5) The 1993 and 1992 increases were attributable to increased marketing
efforts. The 1990 decrease was due to reduced sales of Trendsetter policies.
Sales of Trendsetter have declined due to an increased emphasis on sales of
other life insurance products. In the first quarter of 1991, the company sold
its United Kingdom subsidiary which is the primary reason for the 1991
decrease.
(6) The 1993 and 1992 increases were due primarily to an increased level
of promotion efforts via direct marketing. The changes from 1989 to 1991 were
due primarily to changing levels of reinsurance assumed.
(7) Premiums on reinsurance assumed have been included; cancellations
and return premiums and premiums on reinsurance ceded have been deducted.
Considerations for supplementary contracts and deposit administration funds
received have not been included.
(8) The 1993, 1992, and 1990 increases were due primarily to increased
sales of individual annuity policies. In the first quarter of 1991, the
company sold its United Kingdom subsidiary which is the primary reason for the
1991 decrease.
(9) The changes were due primarily to changing levels of sales of group
annuity policies, principally single premium pension contracts.
(10) The 1993 and 1992 increases were due to an increased level of
reinsurance assumed.
(11) The 1993, 1992 and 1991 increases were primarily due to higher face
amounts of universal life products. The 1990 increase was primarily due to
higher face amounts for Trendsetter policies.
(12) The ratio is the percentage of salaries and other operating expenses
to premiums and other considerations.
Page 19
(13) The lapse ratio is calculated in accordance with the A.M. Best
Company, Inc. formula. It is the ratio of amounts of ordinary life insurance
terminated during the year to ordinary life insurance in force at the
beginning of the year plus new business issued during the prior year.
(14) Industry median, as provided by A.M. Best Company, Inc.
(15) Information not yet available for 1993.
_____________________
Transamerica Life Companies' individual life insurance business is
generated through a worldwide system of 619 field sales offices, 49 of which
are branch offices operated by employees and the remainder of which are
independent offices operated by independent general agents. These offices
house a sales force consisting of 68 employees of the Transamerica Life
Companies and approximately 2,500 independent agents operating under contract
on an exclusive or near exclusive basis, which together generated
approximately 41% of new premiums written in 1993. The remaining 59% of the
Transamerica Life Companies' individual life insurance business was generated
by more than 20,000 producing independent insurance brokers operating under
nonexclusive contracts.
In addition to its sales force, the Transamerica Life Companies have
approximately 2,300 home office employees in Los Angeles, California and
Charlotte, North Carolina who service outstanding policies and new business
submitted by agency offices, and more than 250 field sales office employees
serving its sales force.
Of life insurance in force at December 31, 1993, 21.4% was on residents
of California, followed by Texas (5.7%), Illinois (5.4%), Florida (3.4%) and
Pennsylvania (3.1%). No other state accounted for more than 3% of life
insurance in force. Canada accounted for 14.4% and all other foreign
operations accounted for 1.8% of life insurance in force.
Reinsurance. Portions of the Transamerica Life Companies' life insurance
risks are reinsured with other companies. The maximum amount of individual
insurance retained on any one life is $1,500,000 at ages 16 to 65 inclusive.
This maximum is reduced for health impairments, for other ages and for certain
other special classes of risks. The Transamerica Life Companies also reinsure
a minor part of their liability under accident and health policies.
For many years the Transamerica Life Companies have solicited life
reinsurance from other companies. As of December 31, 1993, the company was
accepting business from 473 companies under automatic reinsurance agreements
and from many other companies on a case by case basis.
Reserves. In accordance with the life insurance laws and regulations
under which they operate, the Transamerica Life Companies are required to
carry on their books as liabilities actuarial reserves to meet the obligations
on their various life insurance policies. Such life insurance reserves are
calculated pursuant to mortality and annuity tables in general use in the
United States and are the computed amounts which, with additions from premiums
to be received, and with interest on such reserves compounded annually at
certain assumed rates, will be sufficient to meet the Transamerica Life
Companies' policy obligations at their maturities if deaths occur in
accordance with mortality tables employed.
Page 20
Investments. The Transamerica Life Companies' investments at
December 31, 1993 totaled $20,890,554,000 which was invested as follows:
93.1% in fixed maturities; 2.5% in mortgage loans and real estate; 1.9% in
policy loans; 1.0% in common stocks; 0.9% in short-term investments; 0.3% in
nonredeemable preferred stocks; 0.3% in other long-term investments; and less
than 0.1% in redeemable preferred stocks. Fixed maturities are invested as
follows: 42.8% in industrial and other non-government bonds; 38.2% in United
States government bonds; 17.6% in public utility bonds; 0.8% in foreign
government bonds; and 0.6% in municipal bonds.
The following table sets forth pretax mean investment yields, including
interest earned and dividends received, before (gross) and after (net)
deducting investment expenses for the Transamerica Life Companies' various
investments. The yields are computed based on the mean of beginning and end
of year assets, producing results which vary somewhat from the daily average
yield.
Years Ended December 31,
____________________________________
1993 1992 1991 1990 1989
Fixed maturities, at amortized cost--gross(1) 9.16% 9.43% 9.91% 10.17% 10.35%
Equity securities, at market value--gross(2) 2.96 1.95 3.89 2.72 3.53
Mortgages--gross ............................ 10.53 9.50 9.86 9.96 10.01
Total invested assets:
Gross ..................................... 8.81 9.03 9.38 9.71 9.87
Net ....................................... 8.67% 8.87% 9.27% 9.53% 9.65%
<FN>
_______
(1) The decreases reflect the lower yields on new investments.
(2) The decreases in the 1992 and 1990 yields resulted from an increase
in the market value of the portfolio. The increase in 1991 was due to a shift
in mix to preferred stocks, which have higher returns.
_____________________
Asset Management
In 1989, the Corporation acquired all the outstanding common shares of
Criterion Group, Inc. (renamed Transamerica Asset Management Group, Inc.,
"Transamerica Asset Management"), an independent asset management firm. The
purchase price for the company was $95,723,000 in cash. Transamerica Asset
Management operates through its two subsidiaries, Criterion Investment
Management Company and Transamerica Fund Management Company. Transamerica
Fund Management Company is the marketing and investment manager of 19
separate portfolios of ten registered open-end diversified management
investment companies, or "mutual funds." Criterion Investment Management
Company is an investment advisor to public and private retirement funds.
Assets under the management of Transamerica Asset Management's subsidiaries
comprise:
Page 21
As of December 31,
__________________________
1993 1992 1991
(Amounts in millions)
Criterion Investment Management Company . $10,588 $ 9,990 $ 9,200
Transamerica Fund Management Company .... 3,137 2,768 2,530
_______ _______ _______
$13,725 $12,758 $11,730
======= ======= =======
Insurance Brokerage
On August 30, 1985, Fred. S. James & Co., Inc., the Corporation's former
insurance brokerage subsidiary, was exchanged for a 39% interest in Sedgwick
Group plc ("Sedgwick"), a London-based international insurance brokerage firm.
Prior to the events discussed below, the Corporation purchased an additional
24,415,000 shares to maintain its 39% equity interest.
On February 28, 1991, Transamerica sold 59,000,000 shares of Sedgwick for
cash, reducing its percentage ownership from 39% of Sedgwick's outstanding
shares to 25%.
During 1993, Transamerica's equity interest was reduced from 25% to 21%
due to a rights offering by Sedgwick.
REGULATION
Finance Activities
Transamerica Finance Group's consumer lending and commercial lending
operations are subject to various state and federal laws. Depending upon the
type of lending, these laws may require licensing and certain disclosures and
may limit the amounts, terms and interest rates that may be offered.
Insurance Activities
The Corporation's life insurance business, in common with those of other
companies in this industry, are subject to regulation and supervision in the
states, territories and countries in which they operate. Although the extent
of such regulation varies, in general state laws establish supervisory
agencies with broad powers relating to licensing of insurance companies and
their agents to transact business therein, supervising premium rates and forms
of policies used, and regulating the form and content of required financial
statements and the types of investments that may be made. Insurance companies
are also required to file annual reports with the supervisory agencies in
states in which they do business and are subject to periodic examination by
such agencies.
Other Regulations
A number of jurisdictions in which the Corporation's subsidiaries
operate, including California, have adopted laws and regulations imposing
environmental controls on the development of real estate and related business
activities.
Page 22
EMPLOYEES
The Corporation and its subsidiaries employed approximately 10,700
persons at December 31, 1993.
COMPETITION
The Corporation's subsidiaries operate in highly competitive industries
in virtually all of their activities, in many cases competing with companies
with long established operating histories and substantial financial resources.
CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth the consolidated ratios of earnings from
continuing operations to fixed charges of Transamerica Corporation and its
subsidiaries for each of the five years ended December 31, 1993.
Years Ended December 31,
________________________________
1993 1992 1991 1990 1989
2.11 1.94 1.17 1.43 1.49
The ratios of earnings from continuing operations to fixed charges were
computed by dividing earnings from continuing operations before fixed charges
and income taxes by the fixed charges. Earnings consist of income from
continuing operations, to which has been added fixed charges and income taxes.
Fixed charges consist of interest and debt expense and one-third of rent
expense, which approximates the interest factor. Excluding the effects of the
previously discussed special charge ($130,000,000 after tax) recorded by the
commercial lending operation, the earnings to fixed charges ratio would have
been 1.46 for 1991.
ITEM 2. PROPERTIES
The executive offices of Transamerica Corporation are located in the
Transamerica Pyramid in San Francisco, California, a 48-story office building
owned by a subsidiary of Transamerica. In 1986 the subsidiary borrowed
$85,000,000, secured by a deed of trust on the property for ten years.
Approximately 17% of the 450,000 square feet of rentable space is occupied by
Transamerica and its subsidiaries.
Transamerica Life Companies own the Transamerica Center in Los Angeles,
California, which consists of a 32-story building, an 11-story building and a
10-story building. Transamerica Center is the home office of Transamerica
Life Companies, Transamerica Finance Group and certain other subsidiaries of
Transamerica. Approximately 73% of the 1,295,000 square feet of rentable
space is occupied by Transamerica subsidiaries.
ITEM 3. LEGAL PROCEEDINGS
Various pending or threatened legal proceedings by or against the
Corporation or one or more of its subsidiaries involve tax matters, alleged
Page 23
breaches of contract, torts, employment discrimination, violations of
antitrust laws and miscellaneous other causes of action arising in the course
of their businesses. Some of these proceedings involve claims for punitive or
treble damages in addition to other specific relief.
Based upon information presently available, and in light of legal and
other defenses and insurance coverage available to the Corporation and its
subsidiaries, contingent liabilities arising from threatened and pending
litigation, income taxes and other matters are not considered material in
relation to the consolidated financial position of the Corporation and its
subsidiaries.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
Not applicable.
ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT
See Item 10 in Part III of this Report.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The following information in the Transamerica Corporation 1993 Annual
Report is incorporated herein by reference:
Markets on which the Corporation's common stock is traded--"Common
Stock Listed and Traded," page 80.
High and low sale prices for the Corporation's common stock for each
quarter in 1993 and 1992--"Supplementary Financial Information,"
page 71.
Frequency and amount of cash dividends declared during 1993 and
1992--"Selected Eleven-Year Financial Data--Note C," page 72.
There were approximately 56,900 common stockholders of record as of the
close of business on March 4, 1994.
ITEM 6. SELECTED FINANCIAL DATA
The following items for each of the five years in the period ended
December 31, 1993, included in "Selected Eleven-Year Financial Data" on
pages 72 and 73 of the Transamerica Corporation 1993 Annual Report, are
incorporated herein by reference:
Page 24
Revenues
Income from continuing operations
Earnings per share of common stock--Income from
continuing operations
Dividends declared per share of common stock
Total assets
Notes and loans payable: Long-term debt
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information set forth under the caption "Financial Review" on
pages 37 through 51 of the Transamerica Corporation 1993 Annual Report, is
incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following consolidated financial statements and supplementary
financial information of the Corporation and its subsidiaries in the
Transamerica Corporation 1993 Annual Report are incorporated herein by
reference:
Consolidated Balance Sheet--December 31, 1993 and 1992--pages 52 and
53.
Consolidated Statement of Income--Years ended December 31, 1993,
1992 and 1991--page 54.
Consolidated Statement of Cash Flows--Years ended December 31,
1993, 1992 and 1991--page 55.
Consolidated Statement of Shareholders' Equity--Years ended
December 31, 1993, 1992 and 1991--page 56.
Notes to Financial Statements--December 31, 1993--pages 57 through
69.
Supplementary Financial Information--Years ended December 31, 1993
and 1992--page 71.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
Page 25
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information set forth under the caption "Information Concerning the
Nominees and Current Directors" in the Proxy Statement of Transamerica
Corporation dated March 23, 1994 is incorporated herein by reference.
The officers of the Corporation are listed below. Executive officers are
designated by an asterisk.
Name Position Age Name Position Age
____ ________ ___ ____ ________ ___
Frank C. Herringer* ..... President and Chief 51 Burton E. Broome* ....... Vice President and 58
Executive Officer Controller
David R. Carpenter* ..... Executive Vice President, 54 Kent L. Colwell* ........ Vice President--Real 63
Transamerica Corpor- Estate Services,
ation and Chairman, Transamerica Corpor-
President and Chief ation and President,
Executive Officer, Transamerica Realty
Transamerica Occidental Services, Inc.
Life Insurance Company James B. Dox ............ Vice President--Taxes 54
Richard H. Finn* ........ Executive Vice President, 59 David H. Hawkins ........ Vice President, Trans- 53
Transamerica Corpor- america Corporation
ation and President and Senior Vice Presi-
and Chief Executive dent and Treasurer,
Officer, Transamerica Transamerica Finance
Finance Group, Inc. Group, Inc.
Edgar H. Grubb* ......... Executive Vice President 54 Rona I. King ............ Vice President-- 46
and Chief Financial Human Resources
Officer Robert R. Lindberg* ..... Vice President and 53
Thomas J. Cusack* ....... Senior Vice President 38 Treasurer
Richard N. Latzer* ...... Senior Vice President 57 James B. Lockhart ....... Vice President-- 58
and Chief Investment Public Affairs
Officer, Transamerica Dennis W. Markus ........ Vice President-- 37
Corporation and Investor Relations
President and Chief William H. McClave ...... Vice President-- 50
Executive Officer, Corporate
Transamerica Invest- Communications
ment Services, Inc. Richard J. Olsen ........ Vice President-- 55
Christopher M. McLain* .. Senior Vice President, 50 Corporate Relations
General Counsel and James C. Peirano ........ Vice President 63
Secretary Judith M. Tornese ....... Vice President--Risk 51
Maureen Breakiron-Evans . Vice President and 39 Management
General Auditor
Page 26
Mr. Herringer was elected Chief Executive Officer in 1991. He has been
President of the Corporation since 1986.
Mr. Carpenter was elected Executive Vice President of the Corporation in
1993. He was Group Vice President of the Corporation from 1990 to 1993. He
has been Chairman, President and Chief Executive Officer of Transamerica
Occidental Life Insurance Company since 1985.
Mr. Finn was elected Executive Vice President of the Corporation in 1993.
He was Group Vice President of the Corporation from 1990 to 1993. He has been
President of Transamerica Finance Group, Inc. since 1988 and was elected its
Chief Executive Officer in 1990.
Mr. Grubb was elected Executive Vice President and Chief Financial
Officer of the Corporation in 1993. He was Senior Vice President of the
Corporation from 1989 to 1993. He was Senior Vice President and Chief
Financial Officer of Lucky Stores, Inc. from 1986 to 1989.
Mr. Cusack was elected Senior Vice President of the Corporation in 1993.
He was Vice President--Corporate Development of the Corporation from 1989 to
1993. He was Manager--Business Development and Strategy of General Electric
Company from 1987 to 1989.
Mr. Latzer was elected Senior Vice President and Chief Investment Officer
of the Corporation in 1988. Since 1988, he has been President and Chief
Executive Officer of Transamerica Investment Services, Inc.
Mr. McLain was elected Senior Vice President, General Counsel and
Secretary of the Corporation in 1990. He was previously a partner in the law
firm of Sonnenschein Nath & Rosenthal from 1989 to 1990, and was Vice
President, Secretary and General Counsel for Lucky Stores, Inc. from 1983 to
1989.
Ms. Breakiron-Evans was elected Vice President and General Auditor of the
Corporation in 1994. She was with Arthur Andersen & Co. from 1980 to 1994
where she served as an Audit Partner in the San Francisco office from 1990 to
1994.
Mr. Broome was elected Vice President and Controller of the Corporation
in 1979.
Mr. Colwell was elected Vice President--Real Estate Services of the
Corporation in 1977. Since 1972, he has been President of Transamerica Realty
Services, Inc., a subsidiary of the Corporation.
Mr. Dox was elected Vice President--Taxes of the Corporation in 1993. He
was a Tax Partner in the Los Angeles office of Ernst & Young from 1977 to
1993.
Mr. Hawkins was elected Vice President of the Corporation in 1993. He
has been Senior Vice President and Treasurer of Transamerica Finance Group,
Inc. since 1989.
Page 27
Ms. King was elected Vice President--Human Resources of the Corporation
in 1989.
Mr. Lindberg was elected Vice President and Treasurer of the Corporation
in 1987.
Mr. Lockhart was elected Vice President--Public Affairs of the
Corporation in 1979.
Mr. Markus was elected Vice President--Investor Relations of the
Corporation in 1992. He was Vice President of Exergy Inc. from 1989 to 1992
and Assistant Vice President of Progressive Corporation from 1986 to 1989.
Mr. McClave was elected Vice President--Corporate Communications of the
Corporation in 1981.
Mr. Olsen was elected Vice President--Corporate Relations of the
Corporation in 1981.
Mr. Peirano was elected Vice President of the Corporation in 1993. He
was Vice President--Taxes of the Corporation from 1983 to 1993.
Ms. Tornese was elected Vice President--Risk Management of the
Corporation in 1987.
There is no family relationship among any of the foregoing officers or
between any of the foregoing officers and any director of the Corporation.
ITEM 11. EXECUTIVE COMPENSATION
The information set forth under the caption "Executive Compensation and
Other Information" in the Proxy Statement of Transamerica Corporation dated
March 23, 1994 is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information set forth under the captions "Principal Stockholders,"
"Information Concerning the Nominees and Current Directors" and "Stockholdings
of Directors and Executive Officers" in the Proxy Statement of Transamerica
Corporation dated March 23, 1994 is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The textual information set forth under the caption "Information
Concerning the Nominees and Current Directors" in the Proxy Statement of
Transamerica Corporation dated March 23, 1994 is incorporated herein by
reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a)(1) and (2) The response to this portion of Item 14 is submitted as a
separate section of this report.
Page 28
(3) List of Exhibits:
EX-3(i) Transamerica Corporation Certificate of Incorporation,
as amended (incorporated by reference to Exhibit 4.5 of
the Registrant's Registration Statement on Form S-3
(File No. 33-43921) as filed with the Commission on
November 13, 1991 and to Exhibits 3 and 4 contained in
Form 8-A filed January 21, 1992, as amended by Form 8
filed January 27, 1992).
EX-3(ii) Transamerica Corporation By-Laws, as amended
(incorporated by reference to Exhibit 3 of the
Registrant's Quarterly Report on Form 10-Q (File No.
1-2964) for the quarter ended June 30, 1992).
EX-4.1 Stock Purchase Rights Agreement dated as of July 17,
1986 together with Amendment dated January 24, 1991
(incorporated by reference to Exhibit 4.1 of the
Registrant's Annual Report on Form 10-K (File No.
1-2964) for the year ended December 31, 1991).
EX-4.2*
EX-10.1 Form of Non-Qualified Stock Option Agreement under the
Registrant's 1971 and 1979 Non-Qualified Stock Option
Plan (incorporated by reference to Exhibit 10.4 of the
Registrant's Annual Report on Form 10-K (File No.
1-2964) for the year ended December 31, 1988).
EX-10.2 Executive Benefit Plan for Transamerica Corporation and
Affiliates, as amended (incorporated by reference to
Exhibit EX-10.2 of the Registrant's Annual Report on
Form 10-K (File No. 1-2964) for the year ended December
31, 1992).
EX-10.3 Form of Amended and Restated Consulting Agreement
effective January 1, 1994 between Transamerica
Airlines, Inc. and Glenn A. Cramer.
EX-10.4 Form of Consulting Agreement dated November 30, 1992,
between Transamerica Corporation and James R. Harvey
(incorporated by reference to Exhibit EX-10.4 of the
Registrant's Annual Report on Form 10-K (File No. 1-
2964) for the year ending December 31, 1992).
EX-10.5 Form of Amended and Restated Consulting Agreement dated
January 31, 1994 between Transamerica Corporation and
James R. Harvey.
_________
*Neither the Corporation nor its subsidiaries are
parties to any instrument with respect to long-term debt for
which securities authorized thereunder exceed 10% of the total
assets of the Corporation and its subsidiaries on a consolidated
basis. Copies of instruments with respect to long-term debt of
lesser amounts will be provided to the Commission upon request.
Page 29
Ex-10.6 1992 Bonus Plan (incorporated by reference to
Exhibit 10.6 of the Registrant's Annual Report on Form
10-K (File No. 1-2964) for the year ending December 31,
1991).
EX-10.7 1993 Bonus Plan (incorporated by reference to
Exhibit EX-10.7 of the Registrant's Annual Report on
Form 10-K (File No. 1-2964) for the year ended December
31, 1992).
EX-10.8 1985 Stock Option and Award Plan, as amended,
(including Amendments No. 1 through 5) (incorporated by
reference to Post-Effective Amendment No. 3 of the
Registrant's Registration Statement on Form S-8 (File
No. 33-26317) as filed with the Commission on March 30,
1990, and to Exhibit 10.11 of the Registrant's Annual
Report on Form 10-K (File No. 1-2964) for the year
ended December 31, 1990).
EX-10.9 Form of Non-Qualified Stock Option Agreement under the
Registrant's 1985 Stock Option and Award Plan.
EX-10.10 Form of Incentive Stock Option Agreement under the
Registrant's 1985 Stock Option and Award Plan
(incorporated by reference to Exhibit 10.9 of the
Registrant's Annual Report on Form 10-K (File No.
1-2964) for the year ended December 31, 1990).
EX-10.11 Form of Restricted Stock Award Agreement under the 1985
Stock Option and Award Plan.
EX-10.12 Form of Non-Qualified Stock Option Agreement for
Nonemployee Directors under the 1985 Stock Option and
Award Plan.
EX-10.13 Deferred Compensation Policy for Transamerica
Corporation and Affiliates effective January 1, 1987
(incorporated by reference to Exhibit 10.12 of the
Registrant's Annual Report on Form 10-K (File No.
1-2964) for the year ended December 31, 1991).
EX-10.14 Deferred Compensation Policy for Transamerica
Corporation and Affiliates effective January 1, 1988
(incorporated by reference to Exhibit EX-10.14 of the
Registrant's Annual Report on Form 10-K (File No.
1-2964) for the year ended December 31, 1992).
EX-10.15 Deferred Compensation Policy for Transamerica
Corporation and Affiliates effective January 1, 1989
(incorporated by reference to Exhibit 10.17 of the
Registrant's Annual Report on Form 10-K (File No.
1-2964) for the year ended December 31, 1989).
Page 30
EX-10.16 Deferred Compensation Policy for Transamerica
Corporation and Affiliates effective January 1, 1990
(incorporated by reference to Exhibit 10.18 of the
Registrant's Annual Report on Form 10-K (File No.
1-2964) for the year ended December 31, 1989).
EX-10.17 Deferred Compensation Policy for Transamerica
Corporation and Affiliates effective July 1, 1992
(incorporated by reference to Exhibit EX-10.17 of the
Registrant's Annual Report on Form 10-K (File No.
1-2964) for the year ended December 31, 1992).
EX-10.18 Deferred Compensation Policy for Transamerica
Corporation and Affiliates effective January 1, 1994.
EX-10.19 Form of Director Election to Defer 1994 Compensation.
EX-10.20 Form of Executive Election to Defer 1994 Compensation.
EX-10.21 1971 Non-Qualified Stock Option Plan of Transamerica
Corporation, as amended (including Amendment Nos. 1 and
2) (incorporated by reference to Exhibit EX-10.20 of
the Registrant's Annual Report on Form 10-K (File No.
1-2964) for the year ended December 31, 1992).
EX-10.22 1979 Stock Option Plan of Transamerica Corporation, as
amended (including Amendment Nos. 1 and 2)
(incorporated by reference to Exhibit EX-10.21 of the
Registrant's Annual Report on Form 10-K (File No.
1-2964) for the year ended December 31, 1992).
EX-10.23 Form of Termination Agreement between Transamerica
Corporation and certain of its executive officers
(incorporated by reference to Exhibit 10.23 of the
Registrant's Annual Report on Form 10-K (File No.
1-2964) for the year ended December 31, 1989).
EX-10.24 Form of Termination Agreement between Transamerica
Corporation and certain executive officers of certain
of its subsidiaries (incorporated by reference to
Exhibit 10.24 of the Registrant's Annual Report on
Form 10-K (File No. 1-2964) for the year ended
December 31, 1989).
EX-10.25 Public Offering Agreement (and Exhibits thereto) dated
January 28, 1993 by and among the Registrant, TIG
Holdings, Inc., and Jon W. Rotenstreich (incorporated
by reference to Exhibits 10.1, 10.2, 10.3, 10.4, 10.5
and 10.6 of the Registration Statement on Form S-1
(File No. 33-58122) as filed with the Commission on
February 10, 1993).
Page 31
EX-10.26 Separation Agreement (and Exhibits thereto) dated
January 28, 1993 by and among the Registrant, TIG
Holdings, Inc., and Transamerica Insurance Group
(incorporated by reference to Exhibits 3.3, 3.4 and
10.2 of the Registration Statement on Form S-1 (File
No. 33-58122) as filed with the Commission on
February 10, 1993).
EX-10.27 Reinsurance Agreement dated December 31, 1992 by and
between ARC Reinsurance Corporation and Transamerica
Insurance Company, as amended (incorporated by
reference to Exhibit EX-10.26 of the Registrant's
Annual Report on Form 10-K (File No. 1-2964) for the
year ended December 31, 1992).
EX-10.28 Letter dated December 31, 1992 from the Registrant to
Transamerica Insurance Company regarding ARC
Reinsurance Corporation (incorporated by reference to
Exhibit EX-10.27 of the Registrant's Annual Report on
Form 10-K (File No. 1-2964) for the year ended
December 31, 1992).
EX-11 Statement Re: Computation of Per Share Earnings.
EX-12 Ratio of Earnings to Fixed Charges Calculation.
EX-13 Portions of the Transamerica Corporation 1993 Annual
Report (to the extent such portions are expressly
incorporated herein).
EX-21 List of Subsidiaries of Transamerica Corporation.
EX-23 Consent of Ernst & Young to the incorporation by
reference of their report dated February 22, 1994 in
the Registrant's Registration Statements on Form S-8
(File Nos. 2-80934, 2-83724, 33-3722, 33-12324,
33-13389, 33-18911, 33-26317, 33-38267 and 33-43927)
and on Form S-3 (File Nos. 33-32419, 33-37889 and
33-1008).
EX-24 Powers of Attorney executed by the directors of the
Registrant.
Exhibits will be furnished to shareholders of the
Corporation upon written request and, with the exception of
Exhibit EX-13, upon payment of a fee of 30 cents per page, which
fee covers the Corporation's reasonable expenses in furnishing
such exhibits.
(b) Reports on Form 8-K filed in the fourth quarter of 1993: During the
quarter ended December 31, 1993, the Registrant filed a Report on Form 8-K,
dated November 19, 1993, announcing that it had reached an agreement in
principle to acquire, for cash, the assets of the container division of
Page 32
Tiphook plc, a London-based container, trailer and rail equipment lessor.
During such quarter, the Registrant also filed a Report on Form 8-K, dated
December 15, 1993, announcing that it had completed the public offering and
sale of its remaining 27% ownership interest in TIG Holdings, Inc., the
Registrant's former property and casualty insurance subsidiary.
(c) Exhibits: Certain of the exhibits listed in Item (a)(3) above have
been submitted under separate filings, as indicated.
(d) Financial Statement Schedules: The response to this portion of
Item 14 is submitted as a separate section of this report.
Page 33
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
TRANSAMERICA CORPORATION
Registrant
Burton E. Broome
Vice President and Controller
Date: March 25, 1994
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below on March 25, 1994 by the following persons on
behalf of the registrant and in the capacities indicated.
Signature Title
Principal Executive Officer:
FRANK C. HERRINGER* President and Chief Executive
Officer
Principal Financial Officer:
Edgar H. Grubb Executive Vice President and Chief Financial
Officer
Principal Accounting Officer:
Burton E. Broome Vice President and Controller
Directors:
GLENN A. CRAMER* Director
MYRON DU BAIN* Director
JAMES R. HARVEY* Chairman of the Board and Director
FRANK C. HERRINGER* Director
GORDON E. MOORE* Director
RAYMOND F. O'BRIEN* Director
CONDOLEEZZA RICE* Director
CHARLES R. SCHWAB* Director
FORREST N. SHUMWAY* Director
*Christopher M. McLain
Attorney-in-Fact
A majority of the members of the Board of Directors.
Page 34
ANNUAL REPORT ON FORM 10-K
ITEM 14(a)(1) and (2) and ITEM 14(d)
LIST OF FINANCIAL STATEMENTS AND
FINANCIAL STATEMENT SCHEDULES
and
FINANCIAL STATEMENT SCHEDULES
Year Ended December 31, 1993
TRANSAMERICA CORPORATION AND SUBSIDIARIES
SAN FRANCISCO, CALIFORNIA
Page 35
FORM 10-K--ITEM 14(a)(1) AND (2)
TRANSAMERICA CORPORATION AND SUBSIDIARIES
LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
Financial Statements:
The following consolidated financial statements of Transamerica Corpora-
tion and subsidiaries, included in the Transamerica Corporation 1993 Annual
Report, are incorporated by reference in Item 8:
Consolidated Balance Sheet--December 31, 1993 and 1992
Consolidated Statement of Income--Years ended December 31, 1993,
1992 and 1991
Consolidated Statement of Cash Flows--Years ended December 31, 1993,
1992 and 1991
Consolidated Statement of Shareholders' Equity--Years ended
December 31, 1993, 1992 and 1991
Notes to Financial Statements--December 31, 1993
Financial Statement Schedules:
The following consolidated financial statement schedules of Transamerica
Corporation and subsidiaries are included in Item 14(d).
I--Summary of Investments Other Than Investments in Related
Parties--December 31, 1993
III--Condensed Financial Information of Registrant--December 31,
1993 and 1992, and years ended December 31, 1993, 1992 and
1991
V--Supplementary Insurance Information--Years ended December 31,
1993, 1992 and 1991
VI--Reinsurance--Years ended December 31, 1993, 1992 and 1991
VIII--Valuation and Qualifying Accounts--Years ended December 31,
1993, 1992 and 1991
IX--Short-Term Borrowings--Years ended December 31, 1993, 1992 and
1991
X--Supplementary Income Statement Information--Years ended
December 31, 1993, 1992 and 1991
All other schedules provided for in the applicable accounting regulation
of the Securities and Exchange Commission pertain to items which do not appear
in the financial statements of Transamerica Corporation and subsidiaries or to
items which are not significant or to items as to which the required
disclosures have been made elsewhere in the financial statements and
supplementary notes, and such schedules have therefore been omitted.
Page 36
REPORT OF ERNST & YOUNG, INDEPENDENT AUDITORS
Board of Directors and Shareholders
Transamerica Corporation
We have audited the consolidated financial statements of Transamerica
Corporation and subsidiaries listed in Item 14(a)(1) and (2) of the Annual
Report on Form 10-K of Transamerica Corporation for the year ended
December 31, 1993. Our audits also included the financial statement
schedules listed in the index at Item 14(a)(1) and (2). These financial
statements and schedules are the responsibility of Transamerica Corporation's
management. Our responsibility is to express an opinion on these financial
statements and schedules based on our audits. The financial statements of
Sedgwick Group plc, used as the basis for recording the equity in net income
of that corporation, were audited by other auditors whose reports have been
furnished to us. Our opinion, insofar as it relates to the amounts of equity
in net income included for Sedgwick Group plc, is based solely on the reports
of other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and related
schedules are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements and related schedules. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits and the reports of other auditors provide a reasonable basis
for our opinion.
In our opinion, based on our audits and the reports of other auditors,
the consolidated financial statements referred to above present fairly, in all
material respects, the consolidated financial position of Transamerica
Corporation and subsidiaries at December 31, 1993 and 1992, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1993, in conformity with
generally accepted accounting principles. Also, in our opinion the related
financial statement schedules, when considered in relation to the basic
financial statements taken as a whole, present fairly, in all material
respects the information set forth therein.
In 1991, Transamerica Corporation changed its method of accounting for
post employment benefits other than pensions effective January 1, 1991.
Ernst & Young
San Francisco, California
February 22, 1994
Page 37
SCHEDULE I
TRANSAMERICA CORPORATION AND SUBSIDIARIES
_____________________
SCHEDULE I--SUMMARY OF INVESTMENTS OTHER
THAN INVESTMENTS IN RELATED PARTIES
DECEMBER 31, 1993
Column A Column B Column C Column D
_____________________________________________________________________________________________
Amount at
which shown in
Type of Investment Cost Value the balance sheet
_____________________________________________________________________________________________
(Amounts in thousands)
Fixed maturities held for investment:
Bonds and notes:
U.S. Treasury securities and obligations of
U.S. government authorities and agencies . $ 205,322 $ 219,820 $ 205,322
Obligations of states and political
subdivisions ............................. 163,069 181,712 163,069
Foreign governments ........................ 144,880 157,339 144,880
Corporate securities ....................... 6,537,657 7,257,278 6,537,657
Mortgage-backed securities ................. 8,571,135 9,118,005 8,571,135
Public utilities ........................... 2,927,116 3,172,187 2,927,116
Redeemable preferred stocks .................. 3,792 3,616 3,792
___________ ___________ ___________
Total fixed maturities ............... 18,552,971 $20,109,957 18,552,971
===========
Fixed maturities available for sale ............ 872,384 $ 920,206 872,384
===========
Equity securities:
Common stocks:
Public utilities ........................... 4,769 $ 5,250 5,250
Banks, trust and insurance companies ....... 10,712 6,475 6,475
Industrial, miscellaneous and all other .... 206,845 390,461 390,461
Nonredeemable preferred stocks ............... 52,774 63,914 63,914
___________ ___________ ___________
Total equity securities .............. 275,100 $ 466,100 466,100
===========
Mortgage loans on real estate .................. 399,130 $ 402,443 368,879
===========
Real estate .................................... 164,563 124,137
Loans to life insurance policyholders .......... 396,480 $ 373,140 396,480
===========
Short-term investments ......................... 190,849 $ 190,849 190,849
___________ =========== ___________
Total investments .................... $20,851,477 $20,971,800
=========== ===========
<FN>
_______
The differences between Column B and Column D as to mortgage loans on real estate
and real estate represents write downs and allowances for possible permanent impairment
in value.
Page 38
TRANSAMERICA CORPORATION AND SUBSIDIARIES SCHEDULE III
_____________________
SCHEDULE III--CONDENSED FINANCIAL INFORMATION OF REGISTRANT
TRANSAMERICA CORPORATION (PARENT COMPANY)
(Amounts in thousands except share data)
BALANCE SHEET
December 31,
1993 1992
Assets:
Investments in continuing operations ...................... $3,916,897 $3,417,735
Equity securities at market value (cost: $110,672) ........ 198,244
Notes and accounts receivable from continuing operations .. 508,611 359,031
Net assets of discontinued operations ..................... 1,103,907
Cash and cash equivalents ................................. 2,096 3,536
Other assets .............................................. 209,447 169,275
__________ __________
$4,835,295 $5,053,484
========== ==========
Liabilities and Shareholders' Equity:
Notes and loans payable ................................... $ 700,130 $ 861,197
Income taxes payable, net of deferred tax benefits of
$121,587 in 1993 and $11,476 in 1992 .................... 43,719 271,837
Income taxes due to subsidiaries .......................... 27,255 116,130
Notes and accounts payable to continuing operations ....... 346,014 134,301
Accounts payable and other liabilities .................... 354,681 369,961
Shareholders' equity:
Preferred Stock ($100 par value):
Authorized--1,200,000 shares; issuable in series,
cumulative
Outstanding--Dutch Auction Rate Transferable
Securities, 2,250 shares, at liquidation preference
of $100,000 per share ............................... 225,000 225,000
Outstanding--Series D, 400,000 shares, at liquidation
preference of $500 per share, cumulative dividend
rate of 8.5% ........................................ 200,000 200,000
Common Stock ($1 par value):
Authorized--150,000,000 shares
Outstanding--76,398,888 shares in 1993 and 79,170,880
shares in 1992, after deducting 3,339,574 shares in
treasury in 1993 .................................... 76,399 79,171
Additional paid-in capital .............................. 475,198 646,455
Retained earnings, including equity in undistributed net
income of subsidiaries of $1,831,159 in 1993 and
$1,594,607 in 1992 .................................... 2,297,883 2,100,236
Net unrealized gain on marketable equity securities ..... 124,082 83,496
Foreign currency translation adjustments ................ (35,066) (34,300)
__________ __________
3,363,496 3,300,058
__________ __________
$4,835,295 $5,053,484
========== ==========
NOTE TO BALANCE SHEET December 31,
1993 1992
Notes and loans payable comprise the following amounts:
Long-term debt due subsequent to one year:
Notes; interest at 8.32% to 10.0%; maturing through 2008 $445,600 $477,600
Commercial paper and other notes at various interest
rates and terms supported by credit agreements
expiring through 1996.................................. 254,530 383,597
________ ________
$700,130 $861,197
======== ========
<FN>
The aggregate annual maturities for the five years subsequent to December 31,
1993 are: 1994--None; 1995--$104,530; 1996--$285,000; 1997--$105,000; and 1998--
$100,000.
Transamerica hedges a portion of its variable interest rate obligations through
the use of interest rate exchange agreements which call for the payment of fixed rate
interest by Transamerica in return for the assumption by other contracting parties of
the variable rate cost. At December 31, 1993, exchange agreements covering the
notional amount of $110,000 at a weighted average fixed interest rate of 9.49%
expiring through 1996 were outstanding.
Page 39
SCHEDULE III
(Continued)
TRANSAMERICA CORPORATION AND SUBSIDIARIES
_____________________
SCHEDULE III--CONDENSED FINANCIAL INFORMATION OF REGISTRANT
TRANSAMERICA CORPORATION (PARENT COMPANY)
STATEMENT OF INCOME
Years Ended December 31,
1993 1992 1991
(Amounts in thousands)
Revenues:
Dividends from continuing operations ............. $115,350 $131,070 $272,470
Tax service fees ................................. 236,433 193,734 115,978
Interest, principally from continuing operations . 13,777 16,014 19,361
Loss on investment transactions .................. (5,909) (3,864)
________ ________ ________
359,651 340,818 403,945
Expenses:
Interest ......................................... 87,382 98,652 106,824
General and administrative ....................... 170,155 138,701 106,851
________ ________ ________
257,537 237,353 213,675
________ ________ ________
102,114 103,465 190,270
Income tax benefit ................................. 88,747 9,015 20,629
________ ________ ________
Income before equity in undistributed income of
continuing operations ............................ 190,861 112,480 210,899
Equity in undistributed income (loss) of
continuing operations ............................ 236,552 230,430 (189,856)
________ ________ ________
Income from continuing operations .................. 427,413 342,910 21,043
Income (loss) from discontinued operations ......... (50,000) (99,709) 39,726
Cumulative effect of change in accounting for
post employment benefits other than pensions ..... (10,633)
________ ________ ________
Net income ..................................... $377,413 $243,201 $ 50,136
======== ======== ========
NOTE TO STATEMENT OF INCOME
Transamerica has financed a portion of its investment in certain major operating
subsidiaries through borrowings by several other subsidiaries. In recognition of the
cost of these borrowings, unallocated interest, after taxes, discussed on page 50 of
the Transamerica Corporation 1993 Annual Report, comprises:
Years Ended December 31,
1993 1992 1991
(Amounts in thousands)
Interest expense of Registrant ................... $(87,382) $(98,652) $(106,824)
Interest income of Registrant .................... 13,777 16,014 19,361
________ ________ _________
(73,605) (82,638) (87,463)
Income tax benefit ............................... 25,762 28,097 29,737
________ ________ _________
Net interest expense of Registrant, after taxes .. (47,843) (54,541) (57,726)
Net interest expense, after taxes, of certain
subsidiaries ................................... (6,257) (6,959) (8,363)
________ ________ _________
Unallocated interest, after taxes ............ $(54,100) $(61,500) $ (66,089)
======== ======== =========
Page 40
SCHEDULE III
(Continued)
TRANSAMERICA CORPORATION AND SUBSIDIARIES
_____________________
SCHEDULE III--CONDENSED FINANCIAL INFORMATION OF REGISTRANT
TRANSAMERICA CORPORATION (PARENT COMPANY)
STATEMENT OF CASH FLOWS
Years Ended December 31,
1993 1992 1991
(Amounts in thousands)
Operating activities:
Income from continuing operations ................. $ 427,413 $342,910 $ 21,043
Adjustments to reconcile income from continuing
operations to net cash provided by operating
activities:
Depreciation and amortization ................... 4,018 3,665 3,939
Accounts payable and other liabilities .......... 34,720 (24,850) (2,858)
Income taxes payable, including related accounts
with continuing operations .................... (120,424) 23,469 48,886
Equity in undistributed (income) loss of
continuing operations ......................... (236,552) (230,430) 189,856
Net losses on investment transactions ........... 5,909 3,864
_________ ________ ________
Net cash provided by continuing operations .... 115,084 114,764 264,730
Investing activities:
Capital contributions to continuing operations .... (54,200) (16,185) (27,639)
Proceeds from public offering of discontinued
operations ...................................... 1,031,788
Cash transactions with discontinued operations .... (409,296)
Decrease (increase) in accounts with continuing
operations ...................................... (137,867) (42,507) 13,606
Other ............................................. (32,087) 15,519 7,109
_________ ________ ________
Net cash provided (used) by investing
activities .................................. 398,338 (43,173) (6,924)
Financing activities:
Proceeds from sale of preferred stock ............. 193,187
Proceeds from debt financing ...................... 68,400
Payments of commercial paper and other notes
supported by long-term credit agreements ........ (161,067) (157,388) (186,109)
Common stock transactions ......................... (174,029) 70,182 27,340
Dividends ......................................... (179,766) (178,569) (164,041)
_________ ________ ________
Net cash used by financing activities ......... (514,862) (72,588) (254,410)
_________ ________ ________
Increase (decrease) in cash and cash equivalents .... (1,440) (997) 3,396
Cash and cash equivalents at beginning of year .... 3,536 4,533 1,137
_________ ________ ________
Cash and cash equivalents at end of year .......... $ 2,096 $ 3,536 $ 4,533
========= ======== ========
Page 41
SCHEDULE V
TRANSAMERICA CORPORATION AND SUBSIDIARIES
_____________________
SCHEDULE V--SUPPLEMENTARY INSURANCE INFORMATION
Column A Column B Column C Column D Column E Column F
Future policy
Deferred benefits, Other policy
policy losses, claims and
acquisition claims and Unearned benefits Premium
Segment costs loss expenses premiums payable revenue
(Amounts in thousands)
Life insurance:
Year ended December 31:
1993 ..................... $1,929,332 $4,925,855 $ 6,758 $17,019,213 $866,224
1992 ..................... $1,811,992 $4,609,664 $ 9,213 $14,636,379 $813,729
1991 ..................... $1,691,024 $4,680,918 $16,619 $12,761,676 $709,901
Column G Column H Column I Column J Column K
Benefits, Amortization
claims, of deferred
Net losses and policy Other
investment settlement acquisition operating Premiums
income expenses costs expenses written
(Amounts in thousands)
Life insurance:
Year ended December 31:
1993 ..................... $1,725,760 $2,145,865 $232,659 (A) $330,007 $227,833 (B)
1992 ..................... $1,577,637 $2,059,243 $135,286 (A) $315,900 $226,381 (B)
1991 ..................... $1,508,039 $1,892,279 $172,139 $235,911 $ 54,808 (B)
<FN>
_______
(A) Includes required accelerated amortization of deferred policy acquisition costs associated
with interest-sensitive products due to realized investment gains of $62,852,000 in 1993 and
$33,208,000 in 1992.
(B) Health insurance premiums written.
Page 42
SCHEDULE VI
TRANSAMERICA CORPORATION AND SUBSIDIARIES
_____________________
SCHEDULE VI--REINSURANCE
Column A Column B Column C Column D Column E Column F
Percentage
Ceded to Assumed of amount
Gross other from other Net assumed
Segment amount companies companies amount to net
(Dollar amounts in thousands)
Year ended December 31, 1993:
Life insurance in force ... $180,902,966 $95,719,350 $149,728,434 $234,912,050 63.7%
============ =========== ============ ============
Premium revenue:
Life insurance .......... $ 808,589 $ 663,959 $ 493,954 $ 638,584 77.4%
Accident and health
insurance ............. 80,469 251,685 398,856 227,640 175.2%
____________ ___________ ____________ ____________
$ 889,058 $ 915,644 $ 892,810 $ 866,224 103.1%
============ =========== ============ ============
Year ended December 31, 1992:
Life insurance in force ... $168,475,016 $92,052,408 $138,293,429 $214,716,037 64.4%
============ =========== ============ ============
Premium revenue:
Life insurance .......... $ 881,298 $ 928,817 $ 641,963 $ 594,444 108.0%
Accident and health
insurance ............. 39,633 173,492 353,144 219,285 161.0%
____________ ___________ ____________ ____________
$ 920,931 $ 1,102,309 $ 995,107 $ 813,729 122.3%
============ =========== ============ ============
Year ended December 31, 1991:
Life insurance in force ... $152,830,401 $88,424,013 $136,022,062 $200,428,450 67.9%
============ =========== ============ ============
Premium revenue:
Life insurance .......... $ 900,991 $ 806,135 $ 552,068 $ 646,924 85.3%
Accident and health
insurance ............. 51,639 56,373 67,711 62,977 107.5%
____________ ___________ ____________ ____________
$ 952,630 $ 862,508 $ 619,779 $ 709,901 87.3%
============ =========== ============ ============
Page 43
SCHEDULE VIII
TRANSAMERICA CORPORATION AND SUBSIDIARIES
_____________________
SCHEDULE VIII--VALUATION AND QUALIFYING ACCOUNTS
Column A Column B Column C Column D Column E
--------Additions--------
Charged to
Balance at Charged to other Balance at
beginning costs and accounts - Deductions - end of
Description of period expenses describe describe period
(Amounts in thousands)
Year ended December 31, 1993:
Deducted from asset accounts:
Allowance for losses -
Mortgage loans on real estate ..... $ 25,940 $10,396 (B) $ 6,085 (F) $ 30,251
Real estate ....................... 44,134 9,455 (B) 13,163 (G) 40,426
Consumer:
Finance receivables ............. 107,183 $ 63,946 476 (C) 64,430 (H) 107,175 (J)
Other assets .................... 2,206 5,952 (A) 5,611 (I) 2,547
Commercial:
Finance receivables ............. 91,263 33,098 (178)(D) 43,515 (H) 80,668 (K)
Other assets .................... 121,549 50,000 365 (E) 14,929 (I) 156,985
________ ________ _______ ________ ________
$392,275 $152,996 $20,514 $147,733 $418,052
======== ======== ======= ======== ========
Year ended December 31, 1992:
Deducted from asset accounts:
Allowance for losses -
Mortgage loans on real estate ..... $ 26,643 $21,260 (B) $ 21,963 (F) $ 25,940
Real estate ....................... 18,143 29,088 (B) 3,097 (G) 44,134
Consumer:
Finance receivables ............. 107,235 $ 48,897 (3,275)(L) 45,674 (H) 107,183 (J)
Other assets .................... 3,021 (A) 1,200 (M) 2,015 (I) 2,206
Commercial:
Finance receivables ............. 172,718 41,816 (2,134)(D) 121,137 (H) 91,263 (K)
Other assets .................... 142,062 2,030 (E) 22,543 (I) 121,549
________ ________ _______ ________ ________
$466,801 $ 93,734 $48,169 $216,429 $392,275
======== ======== ======= ======== ========
Year ended December 31, 1991:
Deducted from asset accounts:
Allowance for losses -
Mortgage loans on real estate ..... $ 18,420 $12,510 (B) $ 4,287 (F) $ 26,643
Real estate ....................... 13,350 7,593 (B) 2,800 (G) 18,143
Consumer finance receivables ...... 102,349 $ 42,214 (3,441)(L) 33,887 (H) 107,235 (J)
Commercial:
Finance receivables ............. 102,748 248,472 (2,364)(D) 176,138 (H) 172,718 (K)
Other assets .................... 121,125 (N) 20,937 (E) 142,062
________ ________ _______ ________ ________
$236,867 $411,811 $35,235 $217,112 $466,801
======== ======== ======= ======== ========
<FN>
(A) Provision charged to operating expenses for losses on disposal of repossessed assets.
(B) Included in gains on investment transactions.
(C) Increase in connection with purchase of receivables and other adjustments.
(D) Decrease in 1993 and 1992 was due to foreign exchange and other adjustments. The decrease in 1991 was due to
reclassification of valuation allowance on receivables reclassified to assets held for sale of $(4,221,000);
increase in connection with purchase of receivables and foreign exchange and other adjustments of $1,857,000.
(E) Increase in 1993 and 1992 was due to recoveries on assets held for sale and in 1991 the increase was due to
reclassification of valuation allowance on assets held for sale from repossessed assets of $16,716,000 and
from the allowance for losses on finance receivables of $4,221,000.
(F) Reduction in reserves associated with the settlement of mortgage loan transactions.
(G) Reduction in reserves associated with the settlement of real estate transactions.
(H) Charges for net credit losses.
(I) Charges for losses on disposal of assets held for sale.
(J) Includes $1,680,000 in 1993, $3,561,000 in 1992 and $6,654,000 in 1991 related to securitized, sold and
serviced receivables included in other liabilities in the consolidated balance sheet.
(K) Includes $938,000 in 1993, 1992 and 1991 related to securitized, sold and serviced receivables included in
other liabilities in the consolidated balance sheet.
(L) Decrease in amount included in other liabilities for securitized, sold and serviced receivables related to the
run off of the securitized outstandings and other adjustments.
(M) Reclassification of allowance for losses on receivables in process of foreclosure.
(N) Includes special charge of $117,304,000 plus an additional provision of $3,821,000 for valuation allowance on
assets held for sale which are included in other assets in the consolidated balance sheet.
Page 44
SCHEDULE IX
TRANSAMERICA CORPORATION AND SUBSIDIARIES
_____________________
SCHEDULE IX--SHORT-TERM BORROWINGS
Column A Column B Column C Column D Column E Column F
Maximum Average Weighted
Weighted amount amount average
Balance average outstanding outstanding interest rate
Category of aggregate at end of interest during the during the during the
short-term borrowings period rate(D)(E) period(F) period(G) period(D)(H)
(Dollar amounts in thousands)
Year ended December 31,
1993:
Commercial paper(A) ... $1,080,249 3.17% $1,080,249 $493,264 3.41%
Bank loans(B)(C) ...... 84,644 84,644 57,598 3.56%
Year ended December 31,
1992:
Commercial paper(A) ... $ 853 $ 79 4.21%
Bank loans(B) ......... 7,000 5,583 4.82%
Year ended December 31,
1991:
Commercial paper(A) ... $ 38,560 $ 3,213 6.34%
Bank loans(B) ......... $ 7,000 6.13% 93,797 9,134 6.46%
<FN>
_______
(A) Commercial paper notes are issued for maturities up to 270 days in the United
States and 365 days in Canada. Commercial paper balances have been reclassified to
long-term debt to the extent of available noncancelable long-term lines of credit.
(B) Bank loans have been reclassified to long-term debt to the extent of available
noncancelable long-term lines of credit.
(C) All short-term bank loans outstanding were denominated in foreign currencies.
(D) Excludes interest rates on short-term borrowings denominated in foreign currencies.
(E) Computed by dividing the annualized interest expense on the debt outstanding at
year end by the amount outstanding at year end.
(F) The maximum amount outstanding during 1993, 1992 and 1991 for combined commercial
paper and bank loans was $1,164,893,000, $7,853,000 and $132,357,000.
(G) Computed by dividing the total of the month-end balances outstanding by the number
of months in the year.
(H) Computed by dividing the actual interest expense by the average debt outstanding.
Page 45
SCHEDULE X
TRANSAMERICA CORPORATION AND SUBSIDIARIES
_____________________
SCHEDULE X--SUPPLEMENTARY INCOME STATEMENT INFORMATION
Column A Column B
Item Charged to costs and expenses
1993 1992 1991
(Amounts in thousands)
Year ended December 31:
Taxes, other than payroll and income taxes:
Premium taxes .......................... $25,556 $ 21,192 $ 25,049
Real estate and other taxes ............ 26,198 25,633 23,968
Maintenance and repairs .................. 45,642 60,024 55,852
_______ ________ ________
$97,396 $106,849 $104,869
======= ======== ========
Page 46
Differences Between the Circulated Document and the Electronically Filed
Document
1. The document which is filed with the New York and Pacific Stock Exchanges
will be a printed copy of the electronic document. However, the document
which will be mass produced for general distribution will have different
page numbering and page breaks than the electronically filed document.