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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 27, 1994
Transamerica Corporation
(Exact name of registrant as specified in its charter)
Delaware 1-2964 94-0932740
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
600 Montgomery Street
San Francisco, California 94111
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (4l5) 983-4000
Not applicable
(Former name or former address, if changed since last report.)
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Item 5. Other Events.
Transamerica Corporation today reported net income per share of $1.40 for
the third quarter of 1994, consisting of $1.31 from continuing operations and
$0.09 of investment gains. On a comparable basis, adjusted net income for
1993's third quarter was $1.38 per share, which included $1.29 from continuing
operations, $0.12 of net investment gains and a $0.03 per share loss from
discontinued operations. The adjusted 1993 numbers exclude the effects of an
increase in deferred tax liabilities as a result of the federal tax rate
increase, and the favorable resolution of certain tax matters which were
offset in part by one-time charges. The unadjusted net income per share for
the third quarter of 1993 was $1.70 consisting of $1.61 from continuing
operations, $0.12 of investment gains and a $0.03 per share loss from
discontinued operations.
Net income per share for the first nine months of 1994 was $4.02, which
included $3.88 of income from continuing operations, $0.15 of investment gains
and a $0.01 loss from discontinued operations. Comparable net income per
share for 1993's first nine months, adjusted for those items discussed above,
was $3.95 per share, consisting of $3.52 of income from continuing
operations, $0.39 of investment gains and $0.04 from discontinued operations.
The unadjusted net income per share for the first nine months of 1993 was
$4.27 consisting of $3.84 of income from continuing operations, $0.39 of
investment gains and $0.04 from discontinued operations.
Income from continuing operations (before investment gains) on a
comparable basis for the third quarter of 1994 was $98.9 million, compared to
an adjusted $106.7 million for the same 1993 period. Nine-month 1994 income
from continuing operations was $303.5 million, compared to an adjusted $295.8
million for the first nine months of 1993. The unadjusted income from
continuing operations for the first nine months and third quarter of 1993 was
$320.9 million and $131.8 million.
Net income (including investment gains) for the third quarter of 1994 was
$104.9 million ($1.40 per share) compared to $138.9 million ($1.70 per share)
for the same 1993 period, which included certain one-time items that had a net
benefit of $25.1 million ($0.32 per share). Nine-month 1994 net income was
$313.6 million ($4.02 per share) versus $354.6 million ($4.27 per share) for
the same 1993 period which also included the third quarter 1993 special items
discussed previously.
LIFE INSURANCE OPERATIONS
Third-quarter 1994 operating income (excluding investment gains) from
Transamerica's life insurance activities was a record $64.8 million, up 18
percent from 1993's third quarter adjusted to exclude the 1993 special items.
The individual life insurance and life reinsurance businesses both reported
significant increases in operating income. The increase at the life
insurance division came from improved spreads and increased fees for universal
life products. The reinsurance line's benefit payments were lower than the
levels experienced last year. 1994's third quarter included $0.2 million of
after-tax investment income from amortization of discounts on securities
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called or expected to be called, versus $6.9 million (net of required
accelerated amortization of deferred policy acquisition costs) in the prior
year's quarter, reflecting 1993's higher bond call activity. The unadjusted
third quarter 1993 operating income was $51.1 million. Net income (including
gains from investment transactions) for the third quarter of 1994 was $71.0
million. Unadjusted net income for the third quarter of 1993 was $60.4
million.
FINANCE OPERATIONS
Consumer lending earnings were $22.7 million in the third quarter of
1994, down six percent from the third quarter of 1993. Earnings declined due
to an increase in the provision for losses and higher expenses, which were
mainly due to the company's branch expansion program. The loss provision
increase was due to higher credit losses on foreclosed real estate in Southern
California and additional reserves associated with growth in receivables.
During the third quarter of 1994, finance receivables grew $104 million, or
2.7 percent. Delinquencies 60 days and over improved to 2.04 percent at
September 30, 1994 from 2.07 percent at June 30, 1994, and 2.25 percent at
March 31, 1994. Net income (including goodwill amortization) for the third
quarter of 1994 and 1993 was $22.6 million and $24.0 million.
Earnings from Transamerica's commercial lending business were $13.1
million in the third quarter of 1994, an increase of 31 percent from 1993's
third quarter adjusted to exclude the 1993 special items. The improved
results were primarily due to increased margins in the inventory finance and
business credit loan portfolios. During the quarter, the company also
successfully completed the sale of the remainder of its previously repossessed
rent-to-own stores. The unadjusted third quarter 1993 results were a loss of
$33.4 million. Net income (including goodwill amortization) was $10.4 million
for the third quarter of 1994. The unadjusted net loss for the third quarter
of 1993 was $36.1 million.
Transamerica's leasing operation reported third-quarter 1994 earnings of
$16.4 million, up nine percent from 1993's third quarter results adjusted to
exclude the 1993 special items. The increase was primarily due to larger
fleet size, more on-hire rail trailer and chassis units, and a larger finance
lease portfolio. These factors more than offset lower utilization and rental
rates in the standard container line, and costs associated with the
consolidation of the Tiphook container fleet acquired earlier this year. The
unadjusted third quarter 1993 earnings were $10.7 million. Net income
(including goodwill amortization) for the third quarter of 1994 was $15.9
million. Unadjusted net income for the third quarter of 1993 was $10.2
million.
REAL ESTATE OPERATIONS
Earnings from Transamerica's real estate services segment were $8.4
million in the third quarter of 1994, down 64 percent from 1993's third
quarter, adjusted to exclude the 1993 special items, primarily because of the
anticipated decline in refinancings due to higher mortgage interest rates.
The unadjusted third quarter 1993 earnings were $21.9 million.
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OTHER
On September 16, Transamerica announced a program to purchase up to 2
million shares of the company's common stock. As a result of this and other
previously announced share purchase programs, the number of common shares
outstanding at September 30, 1994 were 70.4 million compared to 77.6 million
at September 30, 1993.
Earlier this month, Transamerica announced an agreement to sell its
mutual fund subsidiary, Transamerica Fund Management Company, for gross
proceeds of approximately $100 million. The transaction is anticipated to
close by year end and will result in a small gain.
On October 14, Transamerica initiated a tender offer to purchase up to
6.4 million depositary shares (80 percent of the depositary shares
outstanding) representing interests in its 8.5% Preferred Stock, Series D. If
all 80 percent of the shares are purchased, $10.4 million of premium and
expenses related to the transaction will be charged directly to shareholders'
equity resulting in a $0.15 per share reduction in fourth-quarter earnings per
share.
Transamerica has also elected to call for redemption the entire $100
million outstanding of its 10 Percent Notes Due November 15, 1997. The notes
will be redeemed at par, plus interest accrued and unpaid, on November 30,
1994.
On October 25, Transamerica Corporation announced completion of the
offering by its affiliate, Transamerica Delaware, L.P., of $200 million of
cumulative Monthly Income Preferred Securities (MIPS), Series A, priced at
9.125 percent.
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TRANSAMERICA CORPORATION
UNAUDITED SUMMARY OF CONSOLIDATED NET INCOME
Nine months ended Three months ended
September 30 September 30
1994 1993 1994 1993
_________________________________________________________________
Finance
Consumer lending $ 68.4 $ 71.8 $ 22.7 $ 24.1
Commercial lending 38.5 (16.7) 13.1 (33.4)
Leasing 45.1 37.6 16.4 10.7
Amortization of goodwill (9.8) (9.8) (3.3) (3.3)
_________________________________
Total finance 142.2 82.9 48.9 (1.9)
Life insurance:
Income before investment
transactions 179.7 160.2 64.8 51.1
Investment transactions 13.2 34.4 6.2 9.3
_________________________________
192.9 194.6 71.0 60.4
Real estate services and
asset management:
Real estate services 48.9 61.1 8.4 21.9
Asset management 2.9 (0.5) 1.3 (0.6)
Amortization of goodwill (1.3) (1.3) (0.4) (0.5)
_________________________________
Total real estate
services and asset
management 50.5 59.3 9.3 20.8
Unallocated:
Interest and other
expenses (68.9) 18.5 (24.1) 61.8
Investment transactions (2.4) (3.9) (0.2) -
_________________________________
Income from continuing
operations 314.3 351.4 104.9 141.1
Income (loss) from
discontinued operations (0.7) 3.2 - (2.2)
_________________________________
Net income $313.6 $354.6 $104.9 $138.9
=================================
Earnings per Share of
Common Stock
Income from continuing
operations before
investment transactions $ 3.88 $ 3.84 $ 1.31 $ 1.61
Gain on investment
transactions 0.15 0.39 0.09 0.12
_________________________________
Income from continuing
operations 4.03 4.23 1.40 1.73
Income (loss) from
discontinued operations (0.01) 0.04 - (0.03)
_________________________________
Net income $ 4.02 $ 4.27 $ 1.40 $ 1.70
=================================
(Amounts in millions except for share data)
See notes on page 2
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TRANSAMERICA CORPORATION
NOTES TO UNAUDITED SUMMARY OF CONSOLIDATED NET INCOME
Note A - The summary of consolidated net income has been
reclassified to show income from discontinued operations
below income from continuing operations. Income from
discontinued operations comprises the operations of
Transamerica's equity investment in Sedgwick Group plc,
which was sold in April 1994.
Note B - Revenues from continuing operations for the nine months
ended September 30, 1994 and 1993 were $4.0 billion and
$3.6 billion and for the three months then ended were
$1.4 billion and $1.2 billion.
Note C - Earnings per share are based on the weighted average
number of shares outstanding for the nine months ended
September 30, 1994 and 1993 of 73.5 million and
79.0 million after deduction of preferred dividends.
Note D - Income from continuing operations before investment
transactions for the three months ended September 30,
1993 includes the following amounts comprising a benefit
from the resolution of certain tax matters, special after
tax charges and the $8.4 million revaluation of the
deferred tax liability as of January 1, 1993 from the
retroactive application of the federal income tax rate
increase in 1993 (amounts in millions):
Commercial Lending $ 43.4
Leasing 4.3
Real Estate Services 1.6
Life Insurance 3.6
Asset Management 1.2
Unallocated Interest and Expenses (79.2)
______
Net benefit $(25.1)
======
The effect on the first nine months of 1993 of the 1993
retroactive one percent federal tax rate increase which
was recorded by Transamerica in the 1993 third quarter is
excluded from the above table because the 1993 and 1994
tax provisions are now on a comparable statutory tax rate
basis.
Note E - The provisions for income taxes on income from continuing
operations for the nine months ended September 30, 1994
and 1993 were $182.7 million and $81.9 million and for
the three months then ended were $56.7 million and
$(40.7) million (net benefit).
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Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
TRANSAMERICA CORPORATION
(Registrant)
Burton E. Broome
Vice President and Controller
Date: October 27, 1994