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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, 1994
Commission file number 1-2964
TRANSAMERICA CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 94-0932740
(State or other jurisdiction of (I.R.S. Employer 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
9-1/8% Cumulative Monthly Income New York Stock Exchange
Preferred Securities, Series A*
*Issued by Transamerica Delaware, LP, and
guaranteed by Transamerica Corporation
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. ( )
Aggregate market value of Common Stock, $1 par value, held by nonaffil-
iates of the registrant as of the close of business at February 28, 1995:
$3,777,377,854.
Number of shares of Common Stock, $1 par value, outstanding as of the
close of business on February 28, 1995: 69,180,828.
Documents incorporated by reference:
Portions of the Transamerica Corporation 1994 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 1994 Annual Report is not deemed filed as part of this
Report.
Portions of the Proxy Statement of Transamerica Corporation dated
March 17, 1995 are incorporated by reference into Part III. (A definitive
proxy statement has been filed with the Commission since the close of the
fiscal year.)
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TABLE OF CONTENTS
Page
____
Part I:
Item 1. Business ................................................. 3
Item 2. Properties ............................................... 21
Item 3. Legal Proceedings ........................................ 22
Item 4. Submission of Matters to a Vote of Securities Holders .... 22
Item 4A. Executive Officers of the Registrant ..................... 22
Part II:
Item 5. Market for Registrant's Common Equity and Related Stock-
holder Matters ........................................... 22
Item 6. Selected Financial Data .................................. 22
Item 7. Management's Discussion and Analysis of Financial Condi-
tion and Results of Operations ........................... 23
Item 8. Financial Statements and Supplementary Data .............. 23
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure ...................... 23
Part III:
Item 10. Directors and Executive Officers of the Registrant ....... 23
Item 11. Executive Compensation ................................... 26
Item 12. Security Ownership of Certain Beneficial Owners and
Management ............................................... 26
Item 13. Certain Relationships and Related Transactions ........... 26
Part IV:
Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K ................................................. 26
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PART I
ITEM I. BUSINESS
Transamerica Corporation is a financial services organization which
engages through its subsidiaries in consumer lending, commercial lending,
leasing, life insurance, real estate services and asset management.
Transamerica was incorporated in Delaware in 1928.
On March 15, 1994, Transamerica acquired substantially all the operating
assets of the Container Operations of Tiphook plc ("Tiphook"), a London-based
transportation equipment rental company, including certain dry cargo
containers, tank containers, tank chassis, operating leases and other assets
(collectively the "Container Operations") for $1,061,441,000 in cash.
Transamerica assumed certain specified liabilities of the Container Operations
including trade accounts payable. Transamerica did not assume any borrowings,
tax liabilities or contingent liabilities of Tiphook. The initial financing
of the acquisition was provided through short-term bank loans which have been
repaid and refinanced with long-term debt.
On April 13, 1994, Transamerica sold its remaining 21% ownership interest
in Sedgwick Group plc. Proceeds from the sale were $326,395,000, resulted in
no gain or loss and were used by Transamerica to purchase 4,500,000 shares of
its common stock and reduce debt.
On December 21, 1994, Transamerica sold its mutual fund subsidiary,
Transamerica Fund Management Company, for gross proceeds of $100,000,000. The
transaction resulted in an after tax gain of $4,857,000.
In 1993 Transamerica sold 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 and issuance costs, totaled
$1,031,788,000. The proceeds were used to reduce indebtedness, including
$409,296,000 incurred to fund cash transactions with the property and casualty
insurance operation in connection with the initial public offering, and to
commence a common stock purchase program.
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.
Information concerning Transamerica's investment portfolio is
incorporated herein by reference to "Investment Portfolio" on pages 60 and 61
and "Note E. Financial Instruments" on pages 70 through 75 of the Transamerica
Corporation 1994 Annual Report.
BUSINESS SEGMENT INFORMATION
"Note G. Business Segment Information" on page 77 of the Transamerica
Corporation 1994 Annual Report is incorporated herein by reference.
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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.
During 1990 Transamerica Finance Group entered into a five-year
arrangement in which it securitized a $375,000,000 participation interest in a
pool of its insurance premium finance receivables. The company also
securitized $430,000,000 of residential real estate secured consumer finance
receivables in 1990, none of which were outstanding at December 31, 1994.
These securitizations, which have been accounted for as sales, allowed
Transamerica Finance Group to improve its capital management and liquidity.
At December 31, 1994, $375,000,000 of securitized insurance premium finance
receivables remained outstanding. The consumer and commercial lending
operations continued to service these portfolios and remained partially at
risk through limited recourse provisions as long as such receivables remained
outstanding. The term "owned and serviced" is used herein to describe
Transamerica Finance Group's receivables portfolio and the securitized
receivables.
Consumer Lending
Transamerica Finance Group's consumer lending services are provided by
Transamerica Financial Services, based in Los Angeles, California, which has
568 branch lending offices. Branch offices are located in the United States
(549 in 41 states), Canada (13) and the United Kingdom (6). The consumer
lending operation makes both real estate secured and unsecured loans to
individuals. 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.
The consumer lending operation 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. Of the company's
net finance receivables outstanding at December 31, 1994, 81% are secured by
residential properties. Of the company's net finance receivables secured by
residential properties, 64% are secured by first mortgages. Company policy
generally limits the amount of cash advanced on any one loan, plus any
existing mortgage, to between 70% and 80% (depending on location) of the
appraised value of the mortgaged property, as determined by qualified
independent appraisers at the time of loan origination. Since 1991, the
consumer lending operation 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 from dealers of retail finance
contracts covering principally appliances, furniture and services.
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The following table sets forth certain statistical information relating
to the consumer lending operation's finance receivables for the years
indicated.
Years Ended December 31,
______________________________________________________________
1994 1993 1992 1991 1990
(Dollar amounts in thousands)
Volume of finance receivables
acquired:
Instalment loans:
Secured by residential
real estate(1) .............. $1,708,806 $1,039,394 $1,120,549 $1,308,941 $1,800,204
Other(2) ...................... 623,619 524,241 436,521 310,607 276,240
__________ __________ __________ __________ __________
2,332,425 1,563,635 1,557,070 1,619,548 2,076,444
Other finance receivables(3) .... 72,708 29,181 4,843 5,310 5,773
__________ __________ __________ __________ __________
Total ....................... $2,405,133 $1,592,816 $1,561,913 $1,624,858 $2,082,217
========== ========== ========== ========== ==========
Finance receivables outstanding
at end of year:
Instalment loans:
Secured by residential
real estate(1) .............. $3,522,966 $3,295,346 $3,353,918 $3,357,842 $3,053,210
Other(2) ...................... 758,798 595,284 482,819 334,304 291,248
__________ __________ __________ __________ __________
4,281,764 3,890,630 3,836,737 3,692,146 3,344,458
Other finance receivables(3) .... 58,197 22,276 6,355 7,503 9,193
__________ __________ __________ __________ __________
4,339,961 3,912,906 3,843,092 3,699,649 3,353,651
Less unearned finance charges
and insurance premiums ........ 197,975 185,150 181,554 170,135 156,798
__________ __________ __________ __________ __________
Net finance receivables - owned . 4,141,986 3,727,756 3,661,538 3,529,514 3,196,853
Net finance receivables securi-
tized, sold and serviced(4) ... 59,437 125,832 233,474 394,597
__________ __________ __________ __________ __________
Net finance receivables owned
and serviced .................. $4,141,986 $3,787,193 $3,787,370 $3,762,988 $3,591,450
========== ========== ========== ========== ==========
Allowance for losses at end of
year(5) ......................... $ 117,218 $ 107,175 $ 107,183 $ 107,235 $ 102,349
Ratio to outstandings less
unearned finance charges and
insurance premiums:
Owned ........................... 2.83% 2.83% 2.83% 2.85% 2.85%
Owned and serviced .............. 2.83% 2.83% 2.83% 2.85% 2.85%
Provision for credit losses
charged to income ............... $ 82,230 $ 63,946 $ 48,897 $ 42,214 $ 35,617
Credit losses (net of recoveries):
Real estate secured instalment
loans(6) ...................... $ 46,910 $ 45,229 $ 29,250 $ 24,217 $ 20,143
Non-real estate secured
receivables(7) ................ 28,350 19,201 16,424 9,670 5,642
Ratio to average net finance
receivables outstanding(8):
Owned ........................... 1.93% 1.68% 1.21% 0.98% 0.79%
Owned and serviced .............. 1.93% 1.69% 1.21% 0.92% 0.79%
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<FN>
_______
(1) The 1994 increase was mainly due to favorable results from new real
estate loan products and an improving real estate market other than in
California. The 1994 volume also included $117,000,000 of purchased
receivables. The 1993 and 1992 decreases were mainly due to sluggishness in
the domestic economy and a weak real estate market, particularly in
California. Volume 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 increases since 1990 reflect general expansion in consumer
lending's program of non-real estate secured loans.
(3) The increases in 1994 and 1993 resulted from expansion in the
retail finance contract business, which consists of purchasing retail finance
contracts from dealers principally on appliances, furniture and services. The
1994 volume included $7,855,000 of purchased contracts.
(4) In December 1990, $430,000,000 of real estate secured receivables
were securitized and accounted for as a sale. These receivables were
completely run off in 1994.
(5) The 1993, 1992, 1991 and 1990 amounts included 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 reported in other
liabilities in the consolidated balance sheet. The decreases were due to
credit losses sustained and the runoff, completed in 1994, of the securitized
receivables.
(6) The increases since 1990 resulted mainly from the continued weak
California real estate market. With the adoption in the fourth quarter of
1992 of a required new accounting rule, losses on the disposal of repossessed
assets, which amounted to $7,314,000 in 1994, $5,952,000 in 1993 and
$3,021,000 in 1992 were classified as operating expenses rather than as
credit losses. Data for periods prior to the fourth quarter of 1992 have not
been reclassified.
(7) The increases since 1990 were caused by growth in the related
receivables outstanding and, through 1993, by sluggishness in the domestic
economy.
(8) The changes in ratios were due to corresponding fluctuations in
credit losses (see notes 6 and 7 above).
_____________________
Delinquent Receivables. The following table shows the ratio of consumer
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:
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As of December 31,
_____________________________________
1994 1993 1992 1991 1990
Instalment loans:
Secured by residential real
estate ..................... 1.78% 1.87% 1.85% 1.73% 1.48%
Other(1) ..................... 3.35 2.71 2.00 2.19 2.09
_____ _____ _____ _____ _____
Total instalment loans ....... 2.06 2.00 1.87 1.77 1.53
Other finance receivables ...... 3.65 3.96 0.09 0.14
_____ _____ _____ _____ _____
Total - owned ................ 2.08 2.01 1.87 1.77 1.53
Securitized, sold and serviced . 2.47 2.15 1.95 1.17
_____ _____ _____ _____ _____
Total owned and serviced(2) .. 2.08% 2.02% 1.87% 1.78% 1.49%
===== ===== ===== ===== =====
_______
(1) The increase in 1994 reflects the changing mix of products in the
portfolio and the introduction of new products with higher delinquency
experience.
(2) The increases through 1993 were 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 $226,119,000 at December 31, 1994 compared to
$214,665,000 at December 31, 1993. The increase primarily reflects higher
inventory in California due to California's continuing weak real estate market
and resultant longer disposal times. Since future improvement may be impacted
by factors such as economic conditions and the state of the real estate
market, the extent and timing of any change in the trend of foreclosures and
repossessed assets remains uncertain.
Commercial Lending
Transamerica Finance Group's commercial lending services are provided by
three core business units: inventory finance, business credit and insurance
premium finance. The commercial lending business operates from its base in
Chicago, Illinois, as well as from 42 branch lending offices. Branch offices
are located in the United States (19), Puerto Rico (13), Canada (5) and Europe
(5). 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
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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.
Business credit consists of secured loans, primarily revolving, to
manufacturers, distributors and selected service businesses, including
financial service companies. The loans are collateralized and consist of
credit lines typically from $5 million to $25 million with 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 outstanding 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 commercial
lending operation manages its credit risk in this area by monitoring the
quality of the borrower's loan portfolio and compliance with financial
covenants.
Insurance premium 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 commercial lending operation'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.
The relatively short-term nature of the company's financings enables the
commercial lending operation to adjust its finance charges in response to
competitive factors and changes in its costs. The interest rates at which the
commercial lending operation borrows funds generally move more quickly than
the rates at which it lends to customers. As a result, in rising interest
rate environments, margins are normally compressed until changes in the prime
lending rates are effected. Conversely, in declining interest rate
environments, margins are generally enhanced. The commercial lending
operation did not experience margin compression in the rising interest rate
environment of 1994 primarily due to the rapid pace at which changes in its
lending rates responded to other rate changes during the year.
In 1994, the commercial lending operation sold its U.S. and Canadian
repossessed rent-to-own stores with a net carrying value of $17,666,000 and
in 1990, sold its automobile fleet leasing operation which included
$45,478,000 in finance receivables. Also in 1990, $375,000,000 of insurance
premium finance receivables were securitized and accounted for as a sale.
In 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 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.
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The following table sets forth certain statistical information relating
to the commercial lending operation's finance receivables for the years
indicated.
Years Ended December 31,
__________________________________________________________________
1994 1993 1992 1991 1990
(Dollar amounts in thousands)
Volume of finance receivables
acquired:
Inventory finance(1) ............ $ 7,347,448 $ 6,773,720 $ 6,225,899 $5,570,486 $ 6,029,587
Business credit(2) .............. 6,602,199 3,696,180 2,023,010 2,000,434 2,407,304
Insurance premium finance(3) .... 1,813,157 1,967,242 1,732,615 1,761,820 1,452,742
___________ ___________ ___________ __________ ___________
Core businesses ............... 15,762,804 12,437,142 9,981,524 9,332,740 9,889,633
Other(4) ........................ 74,860 170,705 427,909 84,139 194,338
___________ ___________ ___________ __________ ___________
Total ......................... $15,837,664 $12,607,847 $10,409,433 $9,416,879 $10,083,971
=========== =========== =========== ========== ===========
Finance receivables outstanding
at end of year:
Inventory finance(5) ............ $ 2,078,519 $ 1,959,757 $ 1,873,895 $1,928,670 $ 1,872,191
Business credit(6)(7) ........... 654,966 553,859 575,984 288,776 968,216
Insurance premium finance(8) .... 277,358 354,322 284,738 323,958 218,622
___________ ___________ ___________ __________ ___________
Core businesses ............... 3,010,843 2,867,938 2,734,617 2,541,404 3,059,029
Other(9) ........................ 75,262 127,687 208,866 481,272 403,647
___________ ___________ ___________ __________ ___________
3,086,105 2,995,625 2,943,483 3,022,676 3,462,676
Less unearned finance charges ... 50,264 55,644 68,401 82,219 100,419
___________ ___________ ___________ __________ ___________
Net finance receivables - owned . 3,035,841 2,939,981 2,875,082 2,940,457 3,362,257
Net finance receivables securi-
tized, sold and serviced(10) .. 374,461 374,512 374,478 374,169 373,973
___________ ___________ ___________ __________ ___________
Net finance receivables owned
and serviced .................. $ 3,410,302 $ 3,314,493 $ 3,249,560 $3,314,626 $ 3,736,230
=========== =========== =========== ========== ===========
Allowance for losses at end of
year(11)(12)(13)............... $ 90,669 $ 80,668 $ 91,263 $ 172,718 $ 102,748
Ratio to outstandings less
unearned finance charges:(13)
Owned ........................... 2.96% 2.71% 3.14% 5.84% 3.03%
Owned and serviced .............. 2.66% 2.43% 2.81% 5.21% 2.75%
Provision for credit losses
charged to income(12) ........... $ 18,320 $ 33,098 $ 41,816 $ 248,472 $ 133,364
Credit losses (net of
recoveries)(14) ................. $ 8,805 $ 43,515 $ 121,137 $ 176,138 $ 100,638
Ratio to average net finance
receivables outstanding:(15)
Owned ........................... 0.29% 1.49% 4.18% 5.82% 2.68%
Owned and serviced .............. 0.26% 1.32% 3.71% 5.18% 2.57%
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<FN>
_______
(1) The increases in 1994 and 1993 reflect the overall improvement in
the economy and increased sales and marketing programs. Volume in 1991
includes $290,604,000 related to the purchase of lending arrangements with
manufactured housing and recreational products dealers.
(2) The increases in 1994 and 1993 primarily reflect a shift in focus
from purchasing participations from other financial institutions to
originating and selling participations in loans. As a result, volume and
collections have increased. The 1992 amount includes $134,000,000 related to
the purchase of a manufacturer/distributor business credit portfolio.
(3) The decrease in 1994 primarily reflects increased market competition
and the weak property and casualty insurance market. The increase in 1993
reflects the overall improvement in the economy and increased sales and
marketing programs.
(4) The 1994 and 1993 decreases were due to reduced receivable levels in
the 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 6), prior to
implementation or completion of work-out or liquidation arrangements. The
decline in 1991 was due to the sale of the automobile fleet leasing operation
in 1990.
(5) The 1994 increase was due to increased volume in both consumer
electronics and appliances, and home and recreational products. 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) In 1991, the company decided to exit the rent-to-own finance
business and reduce lending to certain asset based lending lines (formerly
included in business credit) resulting 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 have not been restated.
(7) The 1994 increase resulted from a higher level of new business
during the year. 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 to reduce lending to certain asset
based lending lines (see note 6 regarding reclassification of receivables
outstanding at December 31, 1991).
Page 11
(8) The 1994 decrease was due to reduced volume particularly late in the
year. The 1993 increase was due to the increased volume. The 1992 decrease
was due to a change in funding arrangements with one major customer.
(9) The decreases since 1991 primarily reflect the liquidation of
receivables from businesses being exited, including write offs in 1994, 1993
and 1992 of $367,000, $18,403,000 and $87,406,000. 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 6 and 7).
(10) In 1990, $375,000,000 of insurance premium finance receivables were
securitized and accounted for as a sale. The amounts of securitized
receivables outstanding at year end are shown in the table under the caption
"Net finance receivables securitized, sold and serviced."
(11) Includes $938,000 of allowance for losses on the securitized, sold
and serviced portfolio at each year end which is reported in other liabilities
in the consolidated balance sheet.
(12) 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 (see notes 6 and 7). The increased provision in 1991, excluding
the special charge, was in response to increased credit losses and higher than
normal delinquencies and nonearning receivables associated with the weak U.S.
and Canadian economies.
(13) The 1994 increase in the allowance for losses was primarily
attributable to receivables growth in the core businesses. The 1993 and 1992
reductions in the allowance for losses as a percentage of receivables
outstanding were attributable primarily to the write off 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 decision to
reduce lending to certain asset based lending lines and to liquidate
receivables remaining from previously sold businesses (see note 12).
(14) In 1994, 1993 and 1992, charges to the allowance for losses on
finance receivables due to credit losses sustained decreased $34,710,000
(80%), $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 and stronger portfolio management procedures
implemented in 1992 and the reclassification of certain receivables to assets
held for sale in 1991. In 1991, credit losses increased $75,500,000 (75%)
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.
(15) The changes in ratios were due to corresponding fluctuations in
credit losses (see note 14).
_____________________
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Delinquent Receivables. Effective in 1993, the policy used for
determining delinquent receivables was revised to provide greater consistency
among the commercial lending operation'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 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,
______________________________________
1994 1993 1992 1991 1990
Inventory finance(1) ........... 0.11% 0.13% 0.82% 1.31% 3.42%
Business credit(1)(2) .......... - - 0.21 0.88 10.34
Insurance premium finance ...... 0.51 0.54 0.57 1.03 2.02
______ ______ ______ ______ ______
Core businesses .............. 0.12 0.15 0.66 1.22 5.51
Other(3) ....................... 20.63 19.14 22.42 25.84 12.79
______ ______ ______ ______ ______
Total - owned ............... 0.62% 0.96% 2.21% 5.14% 6.36%
====== ====== ====== ====== ======
Total owned and serviced ..... 0.55% 0.86% 1.96% 4.57% 5.76%
====== ====== ====== ====== ======
_______
(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.
(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.
Delinquency data exclude rent-to-own finance receivables which have been
reclassified to assets held for sale. The 1990 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).
_____________________
Page 13
Nonearning Receivables. Effective in 1993, the policy used for
determining nonearning receivables was revised to provide greater consistency
among the commercial lending operation'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. 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 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 $23,276,000 (0.75% of receivables outstanding) and $33,617,000 (1.12% of
receivables outstanding) at December 31, 1994 and 1993. Those amounts exclude
nonearning rent-to-own finance receivables which have been reclassified to
assets held for sale.
Assets Held for Sale. Assets held for sale at December 31, 1994 totaled
$10,908,000, net of a $65,086,000 valuation allowance, and consisted of rent-
to-own finance receivables of $72,381,000 and repossessed assets of
$3,613,000. In 1994, the commercial lending operation sold its U.S. and
Canadian repossessed rent-to-own stores. Assets held for sale at December 31,
1993 totaled $90,114,000, net of a $156,985,000 valuation allowance, and
comprised 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. At
December 31, 1994, $24,495,000 of the rent-to-own finance receivables were
classified as both delinquent and nonearning compared to $27,489,000 at
December 31, 1993.
Leasing
Transamerica Leasing Inc. leases, services and manages containers,
chassis and trailers around the world. The leasing operation is based in
Purchase, New York and maintains 564 offices, depots and other facilities in
50 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, the leasing operation purchased substantially all of
the assets of the container rental businesses of Tiphook plc for
$1,061,441,000. The acquired fleet of standard containers and tank containers
totaled 363,000 units.
In November 1992, the leasing operation sold its domestic over-the-road
trailer business. Proceeds from the sale, which resulted in no gain or loss,
totaled $191,000,000 and were used to reduce debt.
At December 31, 1994, the leasing operation's fleet consisted of standard
containers, refrigerated containers, domestic containers, tank containers and
chassis totaling 685,400 units which are owned or managed, and leased from 526
depots worldwide; 39,300 rail trailers leased to all major United States
railroads and to roll on/roll off steamship operators, shippers, shippers'
agents and regional truckers; and 5,700 over-the-road trailers in Europe.
Page 14
At December 31, 1994 and 1993, 33% and 49% of the standard container,
refrigerated container, domestic container, tank container and chassis fleet
were on term lease or service contract minimum lease for periods of one to ten
years. Also, at December 31, 1994 and 1993, 33% and 34% of the rail trailer
fleet were on term lease or service contract minimum lease for periods of one
to five years.
The following table sets forth the leasing operation's fleet size, in
units, for the years indicated:
As of December 31,
___________________________________________
1994 1993 1992 1991 1990
Containers and chassis(1) 685,400 316,000 280,000 255,100 244,400
Rail trailers ............ 39,300 36,500 34,400 36,800 40,500
European trailers ........ 5,700 3,800 2,900 1,700 800
_______
(1) The 1994 increase was largely due to the acquisition of
substantially all of the operating assets of the container operations of
Tiphook plc and the acquisition of new standard and refrigerated containers.
___________________
The following table sets forth the leasing operation's fleet utilization
for the years indicated:
Years Ended December 31,
____________________________
1994 1993 1992 1991 1990
Containers and chassis(1) ..... 81% 83% 85% 89% 90%
Rail trailers(2) .............. 92% 91% 84% 75% 79%
European trailers(3) .......... 96% 89% 84% 83% 81%
_______
(1) The 1994 and 1993 declines were due to slow economic growth in key
European economies and Japan and, in 1994, the impact of the Tiphook fleet
acquisition. The 1992 decline was due to a higher than expected industry-wide
supply of equipment. The 1991 reduction resulted from a small decline in the
rate of growth of world trade and a less favorable geographic balance of
business.
(2) The 1994, 1993 and 1992 increases were primarily due to higher
domestic economic activity and because many shippers continued to move from
trucks to rail transport for long-haul shipments and, in 1993 and 1992, due to
a smaller industry fleet. The 1991 decline was due to reduced domestic
economic activity.
(3) The 1994 and 1993 increases were due to a greater number of units on
long term lease and improvement in the economy of the United Kingdom.
_____________________
Page 15
LIFE INSURANCE
Transamerica's life insurance business is conducted by Transamerica
Occidental Life Insurance Company, Transamerica Life Insurance and Annuity
Company, First Transamerica Life Insurance Company, Transamerica Life
Insurance Company of Canada and Transamerica Assurance Company (hereinafter
collectively referred to as "Transamerica Life Companies"). The Transamerica
Life Companies are primarily engaged in the business of underwriting,
distribution and reinsurance of investment based and traditional life
insurance products in all states of the United States, the District of
Columbia, Puerto Rico, the Virgin Islands, Guam, Canada, Taiwan and Hong Kong.
Page 16
The following table sets forth certain statistical information relating
to the Transamerica Life Companies' operations.
Years Ended December 31,
____________________________________________________________________
1994 1993 1992 1991 1990
(Dollar amounts in thousands)
Insurance in force at
end of period:(1)(2)
Whole life and endowment .... $153,162,434 $150,151,065 $139,475,971 $126,118,638 $122,179,305
Individual term life ........ 187,841,222 172,441,372 160,517,919 156,996,821 145,177,179
Group life(3) ............... 9,630,184 7,838,176 6,252,910 4,656,433 3,062,966
Credit life(4) .............. 132,619 200,787 521,645 1,080,571 2,237,421
____________ ____________ ____________ ____________ ____________
Total ..................... $350,766,459 $330,631,400 $306,768,445 $288,852,463 $272,656,871
============ ============ ============ ============ ============
New insurance written:(2)
Whole life and endowment(5) . $ 23,056,708 $ 29,303,712 $ 28,265,139 $ 25,182,326 $ 25,679,301
Individual term life(6) ..... 37,823,218 46,724,456 41,235,278 36,385,130 39,867,771
Group life(3) ............... 2,369,123 2,057,706 2,002,644 1,273,166 2,518,760
Credit life(4) .............. 449 1,462 5,276 83,394
____________ ____________ ____________ ____________ ____________
Total ..................... $ 63,249,049 $ 78,086,323 $ 71,504,523 $ 62,845,898 $ 68,149,226
============ ============ ============ ============ ============
Premium income:(7)
Individual life and annui-
ties(8) ................... $ 599,948 $ 543,580 $ 490,357 $ 481,606 $ 524,630
Group life and annuities(9) . 137,913 95,004 104,087 165,318 120,722
Credit life(4) .............. (3,201)
Accident and health (individ-
ual, group and credit)(10) 280,587 227,640 219,285 62,977 48,259
____________ ____________ ____________ ____________ ____________
Total ..................... $ 1,018,448 $ 866,224 $ 813,729 $ 709,901 $ 690,410
============ ============ ============ ============ ============
Average individual life policy
in force at end of year
(actual dollar amounts) ..... $ 149,064 $ 144,050 $ 138,015 $ 129,141 $ 121,600
Average individual life policy
issued during year (actual
dollar amounts)(11) ......... $ 243,634 $ 247,944 $ 245,394 $ 217,637 $ 204,463
Number of individual life
policies in force at end of
year ........................ 1,221,765 1,200,076 1,171,616 1,141,154 1,147,077
Ratio of underwriting expenses
to premiums and other consid-
erations(12) ................ 8.7% 8.9% 9.2% 9.3% 9.1%
Lapse ratio--adjusted for de-
creases and expiries of
term insurance and rein-
surance assumed:(13)
Transamerica Life Companies . 8.0% 8.9% 9.2% 11.0% 11.9%
All U.S. stock life insur-
ance companies(14) ........ (15) 9.8% 9.9% 10.4% 11.0%
Page 17
<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 1994 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. In 1990, the company transferred the remaining operations of the credit
insurance line to a trust administered by an independent third party.
Insurance in force represents business which is only cancelable at the
policyholder's request. New insurance written in 1990, 1991, 1992 and 1993
represents added business on existing policies.
(5) The 1994 decrease was due to reduced sales of Trendsetter policies.
The 1993 and 1992 increases were attributable to increased marketing efforts.
In the first quarter of 1991, the company sold its United Kingdom subsidiary
which is the primary reason for the 1991 decrease.
(6) The 1994 and 1991 decreases were due primarily to a reduced level
of reinsurance assumed. The 1993 and 1992 increases were due primarily to an
increased level of promotion efforts via direct marketing.
(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 1994, 1993 and 1992 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 1994, 1993 and 1992 increases were primarily due to an increased
level of reinsurance assumed.
(11) The 1994 decrease was primarily due to lower face amounts of
universal life products. The 1993, 1992 and 1991 increases were primarily due
to higher face amounts of universal life products.
(12) The ratio is the percentage of salaries and other operating expenses
to premiums and other considerations.
(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.
Page 18
(14) Industry median, as provided by A.M. Best Company, Inc.
(15) Information not yet available for 1994.
_____________________
Transamerica Life Companies' individual life insurance business is
generated through a system of 597 field sales offices primarily in the United
States and Canada, 47 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 70 employees of the
Transamerica Life Companies and approximately 2,000 independent agents
operating under contract on an exclusive or near exclusive basis, which
together generated approximately 36% of new premiums written in 1994. The
remaining 64% of the Transamerica Life Companies' individual life insurance
business was generated by more than 19,700 producing independent insurance
brokers operating under nonexclusive contracts.
In addition to its sales force, the Transamerica Life Companies have
approximately 2,400 home office employees in Los Angeles, California, Kansas
City, Missouri and Charlotte, North Carolina who service outstanding policies
and new business submitted by agency offices, and more than 350 field sales
office employees serving its sales force.
Of life insurance in force at December 31, 1994, 21.4% was on residents
of California, followed by Texas (6.0%), Illinois (5.3%), Florida (3.8%), New
York (3.7%) and Pennsylvania (3.3%). No other state accounted for more than
3% of life insurance in force. Canada accounted for 13.7% and all other
foreign operations accounted for 0.9% 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 $2,000,000 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, 1994, the company was
accepting business from 519 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 Canada 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 19
Investments. The Transamerica Life Companies' investments at
December 31, 1994 totaled $22,329,072,000 which was invested as follows: 94.1%
in fixed maturities; 2.2% in mortgage loans and real estate; 1.8% in policy
loans; 0.8% in common stocks; 0.7% in short-term investments; 0.2% in
nonredeemable preferred stocks; 0.2% in other long-term investments; and less
than 0.1% in redeemable preferred stocks. Fixed maturities are invested as
follows: 51.2% in industrial and other non-government bonds; 28.9% in United
States government bonds; 17.9% in public utility bonds; 1.0% in foreign
government bonds; and 1.0% 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,
____________________________________
1994 1993 1992 1991 1990
Fixed maturities, at amortized cost--gross(1) 8.26% 9.16% 9.43% 9.91% 10.17%
Equity securities, at market value--gross(2) 2.87 2.96 1.95 3.89 2.72
Mortgages--gross ............................ 10.70 10.53 9.50 9.86 9.96
Total invested assets:
Gross ..................................... 8.08 8.81 9.03 9.38 9.71
Net ....................................... 7.90% 8.67% 8.87% 9.27% 9.53%
<FN>
_______
(1) The decreases reflect the lower yields on new investments.
(2) The decrease in the 1992 yield 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.
_____________________
REAL ESTATE SERVICES AND ASSET MANAGEMENT
Real estate services comprise real estate tax, realty and other services.
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 information
through an on-line computer system. As of December 31, 1994, tax reports were
generated for more than 3,000 institutional mortgage servicers and their
borrowers. The company operates from 35 offices throughout the United States.
Page 20
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:
1994 1993 1992 1991 1990
(Amounts in thousands)
Tax service contracts
under management ....... 16,694 15,496 14,751 13,712 12,835
New tax service contracts 4,581 5,103 3,870 2,668 2,544
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.
Transamerica Asset Management, in 1994, operated through its two
subsidiaries, Criterion Investment Management Company and Transamerica Fund
Management Company. Transamerica Fund Management Company was sold on
December 21, 1994, for gross proceeds of $100,000,000 which resulted in an
after tax gain of $4,857,000. Criterion Investment Management Company is an
investment advisor to public and private retirement funds. Assets under the
management of Criterion Investment Management Company were $9,972,000,000,
$10,588,000,000 and $9,990,000,000 at December 31, 1994, 1993 and 1992. On
March 17, 1995, Transamerica announced it had entered into an agreement to
sell the assets of Criterion Investment Management Company. The sale is
expected to result in a small gain.
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.
Page 21
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.
EMPLOYEES
The Corporation and its subsidiaries employed approximately 10,800
persons at December 31, 1994.
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, 1994.
Years Ended December 31,
________________________________
1994 1993 1992 1991 1990
2.14 2.09 1.90 1.06 1.37
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. Fixed charges consist of interest and
debt expense and one-third of rent expense, which approximates the interest
factor.
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 71% of the 1,295,000 square feet of rentable
space is occupied by Transamerica subsidiaries.
Page 22
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
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 expected to have a material
effect on the consolidated financial position or results of operations 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 1994 Annual
Report is incorporated herein by reference:
Markets on which the Corporation's common stock is traded--"Common
Stock Listed and Traded," page 88.
High and low sale prices for the Corporation's common stock for each
quarter in 1994 and 1993--"Supplementary Financial Information,"
page 81.
Frequency and amount of cash dividends declared during 1994 and
1993--"Selected Eleven-Year Financial Data--Note E," page 82.
There were approximately 53,200 common stockholders of record as of the
close of business on February 28, 1995.
ITEM 6. SELECTED FINANCIAL DATA
The following items for each of the five years in the period ended
December 31, 1994, included in "Selected Eleven-Year Financial Data" on
pages 82 and 83 of the Transamerica Corporation 1994 Annual Report, are
incorporated herein by reference:
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
Page 23
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The textual information set forth under the caption "Financial Review" on
pages 44 through 61, together with the tables under the headings "Operating
Income by Line of Business" on page 45 and "Unallocated Interest and Other
Expenses" on page 58 of the Transamerica Corporation 1994 Annual Report, are
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 1994 Annual Report are incorporated herein by
reference:
Consolidated Balance Sheet--December 31, 1994 and 1993--pages 62 and
63.
Consolidated Statement of Income--Years ended December 31, 1994,
1993 and 1992--page 64.
Consolidated Statement of Cash Flows--Years ended December 31,
1994, 1993 and 1992--page 65.
Consolidated Statement of Shareholders' Equity--Years ended
December 31, 1994, 1993 and 1992--page 66.
Notes to Financial Statements--December 31, 1994--pages 67 through
79.
Supplementary Financial Information--Years ended December 31, 1994
and 1993--page 81.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information set forth under the caption "(1) Election of Directors"
in the Proxy Statement of Transamerica Corporation dated March 17, 1995 is
incorporated herein by reference.
Page 24
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 52 Kent L. Colwell* ........ Vice President--Real 64
Executive Officer Estate Services,
David R. Carpenter* ..... Executive Vice President, 55 Transamerica Corpor-
Transamerica Corpor- ation and President,
ation and Chairman Transamerica Realty
and Chief Executive Services, Inc.
Officer, Transamerica James B. Dox ............ Vice President--Taxes 55
Occidental Life David H. Hawkins ........ Vice President, Trans- 54
Insurance Company america Corporation
Richard H. Finn* ........ Executive Vice President, 60 and Senior Vice Presi-
Transamerica Corpor- dent and Treasurer,
ation and President Transamerica Finance
and Chief Executive Group, Inc.
Officer, Transamerica Robert R. Lindberg* ..... Vice President and 54
Finance Group, Inc. Treasurer
Edgar H. Grubb* ......... Executive Vice President, 55 James B. Lockhart ....... Vice President-- 59
Chief Financial Officer Public Affairs
and Secretary William H. McClave ...... Vice President-- 51
Thomas J. Cusack* ....... Senior Vice President 39 Corporate
Richard N. Latzer* ...... Senior Vice President 58 Communications
and Chief Investment Richard J. Olsen ........ Vice President-- 56
Officer, Transamerica Corporate Relations
Corporation and Rona King Pehrson ....... Vice President-- 47
President and Chief Human Resources
Executive Officer, James C. Peirano ........ Vice President 64
Transamerica Invest- Ronald C. Petrunoff ..... Vice President-- 31
ment Services, Inc. Investor Relations
Maureen Breakiron-Evans . Vice President and 40 George B. Sundby ........ Vice President--Financial 43
General Auditor Planning and Analysis
Burton E. Broome* ....... Vice President and 59 and Assistant Controller
Controller Judith M. Tornese ....... Vice President--Risk 52
Management
Page 25
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 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 Secretary of the Corporation in 1995. He 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.
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.
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.
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 with Ernst & Young LLP from 1977 to 1993, serving in the Los
Angeles office from 1983 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.
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. McClave was elected Vice President--Corporate Communications of the
Corporation in 1981.
Page 26
Mr. Olsen was elected Vice President--Corporate Relations of the
Corporation in 1981.
Ms. Pehrson was elected Vice President--Human Resources of the
Corporation in 1989.
Mr. Peirano was elected Vice President of the Corporation in 1993. He
was Vice President--Taxes of the Corporation from 1983 to 1993.
Mr. Petrunoff was elected Vice President--Investor Relations of the
Corporation in 1994. He held a number of positions within the commercial
lending operation between 1990 and 1994, most recently serving as managing
director of the European operations of commercial lending's inventory finance
unit. He was a marketing manager for GE Capital Corporation from 1989 to
1990.
Mr. Sundby was elected Vice President--Financial Planning and Analysis in
1995. He was Assistant Controller and Director of Accounting of the
Corporation from 1989 to 1995. He continues to serve as Assistant Controller.
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.
The information set forth under the caption "Securities Exchange Act of
1934" in the Proxy Statement of Transamerica Corporation dated March 17, 1995
is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
The information set forth under the captions "Director Compensation and
Benefits" and "Executive Compensation and Other Information" in the Proxy
Statement of Transamerica Corporation dated March 17, 1995 is incorporated
herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information set forth under the captions "Principal Stockholders"
and "Stockholdings of Directors and Executive Officers" in the Proxy Statement
of Transamerica Corporation dated March 17, 1995 is incorporated herein by
reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The textual information set forth under the captions "Director
Compensation and Benefits," "Compensation Committee Interlocks and Insider
Participation" and "Certain Transactions" in the Proxy Statement of
Transamerica Corporation dated March 17, 1995 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 27
(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 (incorporated by
reference to Exhibit EX-10.3 of the Registrant's Annual
Report on Form 10-K (File No. 1-2964) for the year
ended December 31, 1993).
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).
_________
*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 28
EX-10.5 Form of Amended and Restated Consulting Agreement dated
January 31, 1994 between Transamerica Corporation and
James R. Harvey (incorporated by reference to Exhibit
EX-10.5 of the Registrant's Annual Report on Form 10-K
(File No. 1-2964) for the year ended December 31,
1993).
EX-10.6 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-10.7 1994 Bonus Plan (incorporated by reference to Exhibit
EX-10.1 of the Registrant's Quarterly Report on Form
10-Q (File No. 1-2964) for the quarter ended March 31,
1994).
EX-10.8 1995 Bonus Plan.
EX-10.9 1985 Stock Option and Award Plan, as amended,
(including Amendments No. 1 through 6) (incorporated by
reference to Exhibit EX-10.5 of the Registrant's
Quarterly Report on Form 10-Q (File No. 1-2964) for the
quarter ended March 31, 1994, 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-10.10 Form of Non-Qualified Stock Option Agreement under the
Registrant's 1985 Stock Option and Award Plan
(incorporated by reference to Exhibit EX-10.3 of the
Registrant's Quarterly Report on Form 10-Q (File No.
1-2964) for the quarter ended March 31, 1994).
EX-10.11 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-10.12 Form of Restricted Stock Award Agreement under the 1985
Stock Option and Award Plan (incorporated by reference
to Exhibit EX-10.11 of the Registrant's Annual Report
on Form 10-K (File No. 1-2964) for the year ended
December 31, 1993).
EX-10.13 Form of Non-Qualified Stock Option Agreement for
Nonemployee Directors under the 1985 Stock Option and
Award Plan (incorporated by reference to Exhibit EX-
10.4 of the Registrant's Quarterly Report on Form 10-Q
(File No. 1-2964) for the quarter ended March 31,
1994).
Page 29
EX-10.14 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-10.15 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-10.16 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).
EX-10.17 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-10.18 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-10.19 Deferred Compensation Policy for Transamerica
Corporation and Affiliates effective January 1, 1994
(incorporated by reference to Exhibit EX-10.18 of the
Registrant's Annual Report on Form 10-K (File No. 1-
2964) for the year ended December 31, 1993).
EX-10.20 Deferred Compensation Policy for Transamerica
Corporation and Affiliates effective January 1, 1995.
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).
Page 30
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 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 Form of Termination Agreement between Transamerica
Corporation and certain of its officers and of its
subsidiaries.
EX-10.26 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).
EX-10.27 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-10.28 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-10.29 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-10.30 Transamerica Corporation 1995 Performance Stock Option
Plan.
EX-10.31 Transamerica Corporation Value Added Incentive Plan
(incorporated by reference to Exhibit EX-10.2 of the
Registrant's Quarterly Report on Form 10-Q (File No.
1-1964) for the quarter ended March 31, 1994).
Page 31
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 1994 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 LLP to the incorporation by
reference of their report dated February 15, 1995 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, 33-43927 and
33-55587) and on Form S-3 (File Nos. 33-32419,
33-37889, 33-41008 and 33-55047).
EX-24 Power of Attorney executed by the directors of the
Registrant.
EX-27 Financial Data Schedule.
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 1994: During the
quarter ended December 31, 1994, the Registrant filed a Report on Form 8-K,
dated October 27, 1994, announcing its results for the quarter and nine month
periods ending September 30, 1994. In addition, the 8-K announced that the
Registrant had initiated a tender offer to purchase up to 6.4 million
depositary shares representing interests in its 8.5% Preferred Stock,
Series D.
(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 32
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 27, 1995
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below on March 27, 1995 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, Chief Financial
Officer and Secretary
Principal Accounting Officer:
Burton E. Broome Vice President and Controller
Directors:
SAMUEL L. GINN* Director
JAMES R. HARVEY* Chairman of the Board and Director
FRANK C. HERRINGER* Director
GORDON E. MOORE* Director
RAYMOND F. O'BRIEN* Director
TONI REMBE* Director
CONDOLEEZZA RICE* Director
FORREST N. SHUMWAY* Director
PETER V. UEBERROTH* Director
*Robert D. Myers
Attorney-in-Fact
A majority of the members of the Board of Directors.
Page 33
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, 1994
TRANSAMERICA CORPORATION AND SUBSIDIARIES
SAN FRANCISCO, CALIFORNIA
Page 34
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 1994 Annual
Report, are incorporated by reference in Item 8:
Consolidated Balance Sheet--December 31, 1994 and 1993
Consolidated Statement of Income--Years ended December 31, 1994,
1993 and 1992
Consolidated Statement of Cash Flows--Years ended December 31, 1994,
1993 and 1992
Consolidated Statement of Shareholders' Equity--Years ended
December 31, 1994, 1993 and 1992
Notes to Financial Statements--December 31, 1994
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, 1994
II--Condensed Financial Information of Registrant--December 31,
1994 and 1993, and years ended December 31, 1994, 1993 and
1992
III--Supplementary Insurance Information--Years ended December 31,
1994, 1993 and 1992
IV--Reinsurance--Years ended December 31, 1994, 1993 and 1992
V--Valuation and Qualifying Accounts--Years ended December 31,
1994, 1993 and 1992
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 disclos-
ures have been made elsewhere in the financial statements and supplementary
notes, and such schedules have therefore been omitted.
Page 35
REPORT OF ERNST & YOUNG LLP, 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, 1994. 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.
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 provide a reasonable basis for our opinion.
In our opinion, 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, 1994 and 1993,
and the consolidated results of their operations and their cash flows for each
of the three years in the period ended December 31, 1994, 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.
As discussed in Note A to the consolidated financial statements,
Transamerica Corporation changed its method of accounting for certain debt
securities effective January 1, 1994.
Ernst & Young LLP
San Francisco, California
February 15, 1995
Page 36
SCHEDULE I
TRANSAMERICA CORPORATION AND SUBSIDIARIES
_____________________
SCHEDULE I--SUMMARY OF INVESTMENTS OTHER
THAN INVESTMENTS IN RELATED PARTIES
DECEMBER 31, 1994
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 available for sale:
Bonds and notes:
U.S. Treasury securities and obligations of
U.S. government authorities and agencies . $ 224,091 $ 204,609 $ 204,609
Obligations of states and political
subdivisions ............................. 341,895 335,527 335,527
Foreign governments ........................ 211,390 206,573 206,573
Corporate securities ....................... 9,384,415 9,119,602 9,119,602
Mortgage-backed securities ................. 7,792,522 7,367,375 7,367,375
Public utilities ........................... 3,990,051 3,800,162 3,800,162
Redeemable preferred stocks .................. 3,575 3,101 3,101
___________ ___________ ___________
Total fixed maturities ............... 21,947,939 $21,036,949 21,036,949
===========
Equity securities:
Common stocks:
Banks, trust and insurance companies ....... 10,659 $ 10,205 10,205
Industrial, miscellaneous and all other .... 219,423 368,897 368,897
Nonredeemable preferred stocks ............... 45,343 48,084 48,084
___________ ___________ ___________
Total equity securities .............. 275,425 $ 427,186 427,186
===========
Mortgage loans on real estate .................. 377,583 354,104
Real estate .................................... 127,640 101,359
Loans to life insurance policyholders .......... 412,938 412,938
Short-term investments ......................... 163,715 163,715
___________ ___________
Total investments .................... $23,305,240 $22,496,251
=========== ===========
<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 37
SCHEDULE II
TRANSAMERICA CORPORATION AND SUBSIDIARIES
_____________________
SCHEDULE II--CONDENSED FINANCIAL INFORMATION OF REGISTRANT
TRANSAMERICA CORPORATION (PARENT COMPANY)
(Amounts in thousands except share data)
BALANCE SHEET
December 31,
1994 1993
Assets:
Investments in continuing operations ...................... $3,727,923 $3,916,897
Equity securities at fair value (cost: $108,746 in 1994
and $110,608 in 1993) ................................... 201,870 198,244
Short-term investments .................................... 11,166
Notes and accounts receivable from continuing operations .. 213,657 508,611
Cash and cash equivalents ................................. 2,828 2,096
Other assets .............................................. 264,729 209,447
__________ __________
$4,422,173 $4,835,295
========== ==========
Liabilities and Shareholders' Equity:
Notes and loans payable ................................... $ 506,951 $ 700,130
Income taxes payable, net of deferred tax benefits of
$123,098 in 1994 and $121,587 in 1993 ................... 90,119 43,719
Income taxes due to continuing operations ................. 189,886 27,255
Notes and accounts payable to continuing operations ....... 490,812 346,014
Accounts payable and other liabilities .................... 408,586 354,681
Shareholders' equity:
Preferred Stock ($100 par value):
Authorized--1,200,000 shares; issuable in series
Outstanding--Dutch Auction Rate Transferable
Securities, 2,250 shares, at liquidation preference
of $100,000 per share ............................... 225,000 225,000
Outstanding--Series D, 181,642 shares in 1994 and
400,000 shares in 1993 at liquidation preference of
$500 per share ...................................... 90,821 200,000
Common Stock ($1 par value):
Authorized--150,000,000 shares
Outstanding--69,395,099 shares in 1994 and 76,398,888
shares in 1993, after deducting 10,343,363 and
3,339,574 shares in treasury in 1994 and 1993 ....... 69,395 76,399
Additional paid-in capital .............................. 96,449 475,198
Retained earnings, including equity in undistributed net
income of subsidiaries of $1,934,498 in 1994 and
$1,831,159 in 1993 .................................... 2,557,444 2,297,883
Net unrealized gain (loss) from investments marked to
fair value ............................................ (265,125) 124,082
Foreign currency translation adjustments ................ (38,165) (35,066)
__________ __________
2,735,819 3,363,496
__________ __________
$4,422,173 $4,835,295
========== ==========
Page 38
NOTE TO BALANCE SHEET December 31,
1994 1993
Notes and loans payable comprise the following amounts:
Short-term bank loans, commercial paper and current
portion of long-term debt ............................... $286,351
Long-term debt due subsequent to one year:
Notes; interest at 9.11% to 9.875%; maturing through 2008 220,600 $445,600
Commercial paper and other notes at various interest
rates and terms supported by credit agreements
expiring through 1996.................................. 254,530
________ ________
$506,951 $700,130
======== ========
<FN>
The aggregate annual maturities for the five years subsequent to December 31,
1994 are: 1995--$286,351; 1996--$10,000; 1997--$5,000; 1998--$100,000; and 1999--
none.
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, 1994, exchange agreements covering the
notional amount of $160,000 at a weighted average fixed interest rate of 9.36%
expiring through 2009 were outstanding.
In 1994, an affiliate of Transamerica issued $200 million of 9.125% cumulative
Monthly Income Preferred Securities (MIPS). Interest on the outstanding MIPS is
cumulative and payable monthly in arrears. Transamerica has agreed to guarantee to
pay in full any accrued and unpaid dividends declared, or the redemption price
including accrued and unpaid dividends, if the securities are called by the affiliate.
Page 39
SCHEDULE II
(Continued)
TRANSAMERICA CORPORATION AND SUBSIDIARIES
_____________________
SCHEDULE II--CONDENSED FINANCIAL INFORMATION OF REGISTRANT
TRANSAMERICA CORPORATION (PARENT COMPANY)
STATEMENT OF INCOME
Years Ended December 31,
1994 1993 1992
(Amounts in thousands)
Revenues:
Dividends from continuing operations ............. $361,847 $115,350 $131,070
Tax service fees ................................. 190,328 236,433 193,734
Interest, principally from continuing operations . 14,151 13,777 16,014
Investment income ................................ 8,988
Gain (loss) on investment transactions ........... 2,012 (5,909)
________ ________ ________
577,326 359,651 340,818
Expenses:
Interest ......................................... 101,992 87,382 98,652
General and administrative ....................... 177,779 170,155 138,701
________ ________ ________
279,771 257,537 237,353
________ ________ ________
297,555 102,114 103,465
Income tax benefit ................................. 26,333 88,747 9,015
________ ________ ________
Income before equity in undistributed income of
continuing operations, income of discontinued
operations and extraordinary loss ................ 323,888 190,861 112,480
Equity in undistributed income of continuing
operations excluding discontinued operations and
extraordinary loss ............................... 104,038 256,658 221,526
________ ________ ________
Income from continuing operations .................. 427,926 447,519 334,006
Loss from discontinued operations .................. (699) (47,022) (90,805)
Extraordinary loss on early extinguishment of
subsidiary debt .................................. (23,084)
________ ________ ________
Net income ..................................... $427,227 $377,413 $243,201
======== ======== ========
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 58 of
the Transamerica Corporation 1994 Annual Report, comprises:
Years Ended December 31,
1994 1993 1992
(Amounts in thousands)
Interest expense of Registrant ................... $(101,992) $(87,382) $(98,652)
Interest income of Registrant .................... 14,151 13,777 16,014
_________ ________ ________
(87,841) (73,605) (82,638)
Income tax benefit ............................... 30,744 25,762 28,097
_________ ________ ________
Net interest expense of Registrant, after taxes .. (57,097) (47,843) (54,541)
Net interest expense, after taxes, of certain
subsidiaries ................................... (1,250) (6,257) (6,959)
Intercompany eliminations ........................ 8,147
_________ ________ ________
Unallocated interest, after taxes ............ $ (50,200) $(54,100) $(61,500)
========= ======== ========
Page 40
SCHEDULE II
(Continued)
TRANSAMERICA CORPORATION AND SUBSIDIARIES
_____________________
SCHEDULE II--CONDENSED FINANCIAL INFORMATION OF REGISTRANT
TRANSAMERICA CORPORATION (PARENT COMPANY)
STATEMENT OF CASH FLOWS
Years Ended December 31,
1994 1993 1992
(Amounts in thousands)
Operating activities:
Income from continuing operations before extra-
ordinary item ................................... $ 427,926 $ 447,519 $334,006
Adjustments to reconcile income from continuing
operations to net cash provided by operating
activities:
Depreciation and amortization ................... 4,044 4,018 3,665
Accounts payable and other liabilities .......... 48,286 34,720 (24,850)
Income taxes payable, including related accounts
with continuing operations .................... 207,110 (120,424) 23,469
Equity in undistributed income of continuing
operations .................................... (104,038) (256,658) (221,526)
Net (gains) losses on investment transactions ... (2,012) 5,909
_________ _________ ________
Net cash provided by continuing operations .... 581,316 115,084 114,764
Investing activities:
Capital contributions to continuing operations .... (90,000) (54,200) (16,185)
Proceeds from public offering of discontinued
operations ...................................... 1,031,788
Cash transactions with discontinued operations .... (409,296)
Decrease (increase) in accounts with continuing
operations ...................................... 426,205 (137,867) (42,507)
Other ............................................. (61,013) (32,087) 15,519
_________ _________ ________
Net cash provided (used) by investing
activities .................................. 275,192 398,338 (43,173)
Financing activities:
Payments of commercial paper and other notes
supported by long-term credit agreements ........ (93,179) (161,067) (157,388)
Payment of long-term note ......................... (100,000)
Proceeds from sale of preferred stock ............. 193,187
Redemption of preferred stock ..................... (115,921)
Treasury stock purchases .......................... (386,983) (207,647)
Other common stock transactions ................... 7,973 33,618 70,182
Dividends ......................................... (167,666) (179,766) (178,569)
_________ _________ ________
Net cash used by financing activities ......... (855,776) (514,862) (72,588)
_________ _________ ________
Increase (decrease) in cash and cash equivalents .... 732 (1,440) (997)
Cash and cash equivalents at beginning of year .... 2,096 3,536 4,533
_________ _________ ________
Cash and cash equivalents at end of year .......... $ 2,828 $ 2,096 $ 3,536
========= ========= ========
Page 41
SCHEDULE III
TRANSAMERICA CORPORATION AND SUBSIDIARIES
_____________________
SCHEDULE III--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:
1994 ..................... $2,480,474 (A) $5,153,073 $7,300 $19,571,363 $1,018,448
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
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:
1994 ..................... $1,773,254 $2,356,398 $182,312 (B) $353,916 $280,049 (C)
1993 ..................... $1,725,760 $2,145,865 $232,659 (B) $330,007 $227,833 (C)
1992 ..................... $1,577,637 $2,059,243 $135,286 (B) $315,900 $226,381 (C)
<FN>
_______
(A) Includes a required fair value adjustment of $351,344,000 related to the adoption of Financial
Accounting Standards Statement No. 115, Accounting for Certain Investments in Debt and Equity
Securities.
(B) Includes required accelerated amortization of deferred policy acquisition costs associated
with interest-sensitive products due to realized investment gains of $6,279,000 in 1994,
$62,852,000 in 1993 and $33,208,000 in 1992.
(C) Health insurance premiums written.
Page 42
SCHEDULE IV
TRANSAMERICA CORPORATION AND SUBSIDIARIES
_____________________
SCHEDULE IV--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, 1994:
Life insurance in force ... $191,884,093 $115,037,553 $158,882,366 $235,728,906 67.4%
============ ============ ============ ============
Premium revenue:
Life insurance .......... $ 620,522 $ 394,303 $ 511,642 $ 737,861 69.3%
Accident and health
insurance ............. 8,573 295,311 567,325 280,587 202.2%
____________ ____________ ____________ ____________
$ 629,095 $ 689,614 $ 1,078,967 $ 1,018,448 105.9%
============ ============ ============ ============
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%
============ ============ ============ ============
Page 43
SCHEDULE V
TRANSAMERICA CORPORATION AND SUBSIDIARIES
_____________________
SCHEDULE V--VALUATION AND QUALIFYING ACCOUNTS
Column A Column B Column C Column D Column E
----------Additions----------
Balance at Charged to Charged to Balance at
beginning costs and other accounts - Deductions - end of
Description of period expenses describe describe period
(Amounts in thousands)
Year ended December 31, 1994:
Deducted from asset accounts:
Allowance for losses -
Mortgage loans on real estate .. $ 30,251 $ 197 (C) $ 6,969 (G) $ 23,479
Real estate .................... 40,426 2,124 (C) 16,269 (H) 26,281
Consumer:
Finance receivables .......... 107,175 $ 82,230 3,073 (D) 75,260 (I) 117,218 (K)
Other assets ................. 2,547 7,314 (A) 7,579 (J) 2,282
Commercial:
Finance receivables .......... 80,668 18,320 486 (E) 8,805 (I) 90,669 (L)
Other assets ................. 156,985 (5,211)(B) (1,308)(F) 85,380 (J) 65,086
________ ________ _______ ________ ________
$418,052 $102,653 $ 4,572 $200,262 $325,015
======== ======== ======= ======== ========
Year ended December 31, 1993:
Deducted from asset accounts:
Allowance for losses -
Mortgage loans on real estate .. $ 25,940 $10,396 (C) $ 6,085 (F) $ 30,251
Real estate .................... 44,134 9,455 (C) 13,163 (H) 40,426
Consumer:
Finance receivables .......... 107,183 $ 63,946 476 (D) 64,430 (I) 107,175 (K)
Other assets ................. 2,206 5,952 (A) 5,611 (J) 2,547
Commercial:
Finance receivables .......... 91,263 33,098 (178)(E) 43,515 (I) 80,668 (L)
Other assets ................. 121,549 50,000 365 (F) 14,929 (J) 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 (C) $ 21,963 (G) $ 25,940
Real estate .................... 18,143 29,088 (C) 3,097 (H) 44,134
Consumer:
Finance receivables .......... 107,235 $ 48,897 (3,275)(M) 45,674 (I) 107,183 (K)
Other assets ................. 3,021 (A) 1,200 (N) 2,015 (J) 2,206
Commercial:
Finance receivables .......... 172,718 41,816 (2,134)(E) 121,137 (I) 91,263 (L)
Other assets ................. 142,062 2,030 (F) 22,543 (J) 121,549
________ ________ _______ ________ ________
$466,801 $ 93,734 $48,169 $216,429 $392,275
======== ======== ======= ======== ========
<FN>
(A) Provision charged to operating expenses for losses on disposal of repossessed assets.
(B) Includes $5,273,000 reversal of valuation allowance from sale of the rent-to-own stores.
(C) Included in gains on investment transactions.
(D) Increase in connection with purchase of receivables and other adjustments.
(E) The 1994 increase and decreases in 1993 and 1992 were due to foreign exchange and other adjustments.
(F) The decrease in 1994 was associated with the settlement of litigation on previously charged off accounts.
The increases in 1993 and 1992 were due to recoveries on assets held for sale.
(G) Reduction in reserves associated with the settlement of mortgage loan transactions.
(H) Reduction in reserves associated with the settlement of real estate transactions.
(I) Charges for net credit losses.
(J) Charges for losses on disposal of assets held for sale, which in 1994 for commercial lending includes
$78,735,000 related to the disposal of the rent-to-own stores.
(K) Includes $1,680,000 in 1993 and $3,561,000 in 1992 related to securitized, sold and serviced receivables
included in other liabilities in the consolidated balance sheet.
(L) Includes $938,000 related to securitized, sold and serviced receivables reported in other liabilities in the
consolidated balance sheet.
(M) 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.
(N) Reclassification of allowance for losses on receivables in process of foreclosure.
Page 44
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.