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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 23, 1997
Transamerica Corporation
(Exact name of registrant as specified in its charter)
Delaware 1-2964 94-0932740
(State or other (Commission File (I.R.S. Employer
jurisdiction of Number) Identification No.)
incorporation)
600 Montgomery Street
San Francisco, California 94111
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (415) 983-4000
Not applicable
(Former name or former address, if changed since last report.)
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Item 2. Acquisition or Disposition of Assets
On June 23, 1997, Transamerica Finance Corporation, a subsidiary of Transamerica
Corporation, sold substantially all of its real estate secured lending
operations to a subsidiary of Household International, Inc. for total proceeds
of $3.9 billion, or $1.1 billion after repayment of associated debt. A
definitive agreement for the sale was originally announced on May 21, 1997. The
amount of consideration received in the sale was determined through negotiations
with Household.
Proceeds from the transaction, net of expenses, will be used to pay down debt,
to purchase Transamerica Corporation's common stock and for other corporate
purposes. Transamerica previously announced that its board of directors has
authorized the purchase of up to 6 million of the company's common shares.
As a result of the sale, Transamerica's second-quarter results will include an
after-tax gain of $275 million ($4.01 per share) after taking into account
taxes, writedowns of intangibles and other items.
Item 7. Financial Statements and Exhibits
b) Pro forma financial information.
Unaudited Pro Forma Condensed
Balance Sheet as of
March 31, 1997........................................Page F-1
Unaudited Pro Forma Condensed
Income Statement for the
year ended December 31, 1996..........................Page F-2
Unaudited Pro Forma Condensed
Income Statement for the
three months ended March 31, 1997.....................Page F-3
The following unaudited pro forma consolidated financial statements as
of March 31, 1997, and for the year ended December 31, 1996 and the three months
ended March 31, 1997, reflect the financial position and results of operations
of Transamerica Corporation after giving effect to the transaction described in
Item 2 of this filing.
These pro forma statements have been prepared by Transamerica based
upon assumptions identified in the related footnotes. The pro forma adjustments
presented herein are shown for comparative purposes only, and Transamerica's
financial statements will reflect the transactions only from the transaction
date of June 23, 1997. The statements are based on the previously reported
historical financial statements of Transamerica and should be read in
conjunction with those financial statements and the related notes.
The pro forma consolidated balance sheet assumes the transaction took
place on March 31, 1997. The pro forma consolidated income statement for the
year ended December 31, 1996 assumes the transaction took place on January 1,
1996. The pro forma consolidated income statement for the three months ended
March 31, 1997 assumes the transaction took place on January 1, 1997.
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PRO FORMA FINANCIAL INFORMATION
TRANSAMERICA CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
March 31, 1997
(Unaudited)
(Amounts in Millions)
Historical Pro forma Pro forma
Amounts Adjustments Consolidated
ASSETS
Investments $29,156.9 $29,156.9
Finance receivables, net
of allowance for losses
and unearned fees 4,493.7 4,493.7
Equipment held for lease, net
of accumulated depreciation 3,048.3 3,048.3
Assets held for sale, net of
valuation allowance 3,829.0 a)$(3,539.6) 289.4
Other 9,478.0 9,478.0
----------- ----------- ---------
$50,005.9 $(3,539.6) $46,466.3
=========== =========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Life Insurance policy
liabilities $28,961.0 $28,961.0
Notes and loans payable 10,277.4 b)$ (144.6) 6,980.9
a) (3,151.9)
Other liabilities 6,329.3 c) 38.8 6,368.1
Income taxes payable 867.7 a) 13.1 880.8
----------- ----------- ---------
46,435.4 (3,244.6) 43,190.8
Stockholders' equity 3,570.5 d) 275.0 3,275.5
b) (570.0)
----------- ----------- ---------
$50,005.9 $(3,539.6) $46,466.3
=========== =========== =========
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PRO FORMA FINANCIAL INFORMATION
TRANSAMERICA CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED INCOME STATEMENT
Year ended December 31, 1996
(Unaudited)
(Amounts in Millions Except Net Income Per Share)
Historical Pro forma Pro forma
Amounts Adjustments Consolidated
REVENUES
Investment income $2,102.2 $2,102.2
Premiums and related income 1,848.1 1,848.1
Finance charges 1,197.8 f)$ (598.9) 598.9
Leasing revenues 689.1 689.1
Other 390.4 390.4
-------- --------- ---------
6,227.6 (598.9) 5,628.7
EXPENSES
Life insurance benefits 2,805.8 2,805.8
Other life insurance costs 638.8 638.8
Interest and debt expense 384.3 e) (7.2) 152.7
f) (224.4)
Leasing operating costs 690.3 690.3
Provision for losses on receivables
and assets held for sale 283.0 f) (62.7) 220.3
Salaries and other operating expenses 840.3 f) (144.4) 695.9
-------- --------- ----------
5,642.5 (438.7) 5,203.8
-------- --------- ----------
Income before taxes 585.1 (160.2) 424.9
Income taxes 128.8 e) 2.5 61.0
f) (70.3)
-------- --------- ----------
Net income $ 456.3 $ (92.4) $ 363.9
======== ========= ==========
Net income per share of
common stock $ 6.59 $ 5.72
Average shares outstanding 66.6 g) (6.0) 60.6
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TRANSAMERICA CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED INCOME STATEMENT
Quarter ended March 31, 1997
(Unaudited)
(Amounts in Millions Except Net Income Per Share)
Historical Pro forma Pro forma
Amounts Adjustments Consolidated
REVENUES
Investment income $ 535.7 $ 535.7
Premiums and related income 456.8 456.8
Finance charges 269.5 f)$ (132.5) 137.0
Leasing revenues 188.9 188.9
Other 88.5 88.5
----------- ----------- ----------
1,539.4 (132.5) 1,406.9
EXPENSES
Life insurance benefits 695.0 695.0
Other life insurance costs 199.8 199.8
Interest and debt expense 163.6 e) (1.8) 109.6
f) (52.2)
Leasing operating costs 114.0 114.0
Provision for losses on
receivablesand assets
held for sale 36.4 f) (13.0) 23.4
Salaries and other operating 213.5 f) (32.8) 180.7
----------- ----------- ----------
1,422.3 (99.8) 1,322.5
----------- ----------- ----------
Income before taxes 117.1 (32.7) 84.4
Income taxes 36.1 e) 0.6 23.0
f) (13.7)
----------- ----------- ----------
Net income $ 81.0 $ (19.6) $ 61.4
=========== =========== ==========
Net income per share of
common stock $ 1.13 $ 0.91
Average shares outstanding 66.2 g) (6.0) 60.2
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a) Reflects the balance of assets sold and liabilities extinguished as of
March 31, 1997.
b) Reflects the proposed use of the net proceeds from the transaction.
Transamerica has previously announced its intent to purchase up to 6
million shares of its common stock. For pro forma purposes it was
assumed all the shares were purchased at a cost of $95 per share. The
remainder of the proceeds will be used, among other things, to reduce
outstanding indebtedness.
c) Reflects the accrual for expected costs incurred in connection with the
sale.
d) Reflects the after-tax gain recorded on the transaction.
e) Reflects the reduction in interest expense, using Transamerica's
average cost of variable debt of 5%, associated with the lower debt
outstanding as a result of using a portion of the total proceeds to
reduce outstanding indebtedness on a pro forma basis.
f) Reflects the elimination of the pro forma operating results of the
business sold.
g) Reflects the reduction to average shares outstanding as a result of the
pro forma purchase of 6 million shares of Transamerica common stock and
the corresponding adjustment to earnings per share.
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Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
TRANSAMERICA CORPORATION
(Registrant)
Burton E. Broome
Vice President and Controller
Date: July 7, 1997