UNITED STATES
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): July 14, 2005
Alleghany Corporation
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(Exact name of registrant as specified in its charter)
Delaware
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(State or other jurisdiction of incorporation)
1-9371 51-0283071
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(Commission File Number) (IRS Employer Identification Number)
7 Times Square Tower, 17th Floor
New York, New York 10036
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 752-1356
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Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 2.01 Completion of Acquisition or Disposition of Assets.
On July 14, 2005, Alleghany Corporation ("Alleghany") completed the sale
of its world-wide industrial minerals business, World Minerals Inc., to Imerys
USA, Inc., a wholly owned subsidiary of Imerys, S.A., pursuant to a Stock
Purchase Agreement dated as of May 19, 2005 by and among Imerys USA, Inc.,
Imerys, S.A. and Alleghany (the "Stock Purchase Agreement"). Under the terms of
the Stock Purchase Agreement, the purchase price was $230.0 million, which was
reduced by $13.2 million reflecting contractual obligations to be paid by the
purchaser after the closing, resulting in an adjusted purchase price of $216.8
million (the "Adjusted Purchase Price"). $206.8 million of the Adjusted Purchase
Price was paid in cash by the purchaser to Alleghany on the closing date, with
the remaining $10.0 million being held by the purchaser as security for certain
indemnification obligations undertaken by Alleghany pursuant to the Stock
Purchase Agreement. The $10.0 million hold back amount will bear interest at the
U.S. Treasury 10-year note rate and is scheduled to be released to Alleghany (to
the extent not applied toward such indemnification obligations) during the
period covering the fifth through the tenth anniversaries of the closing date.
The foregoing description of the transaction does not purport to be
complete and is qualified in its entirety by reference to the Stock Purchase
Agreement, a copy of which is filed as Exhibit 2.1 hereto and is incorporated
herein by reference.
A copy of the press release issued by Alleghany on July 14, 2005
announcing the completion of the sale of World Minerals Inc. is attached hereto
as Exhibit 99.1.
Item 9.01 Financial Statements and Exhibits.
(b) Pro forma financial information.
The following unaudited pro forma financial information is attached as
Annex A hereto:
(i) Alleghany Corporation Unaudited Pro Forma Consolidated Balance Sheet
as of March 31, 2005.
(ii) Alleghany Corporation Unaudited Pro Forma Consolidated Statement of
Earnings for the three months ended March 31, 2005.
(iii) Alleghany Corporation Unaudited Pro Forma Consolidated Statement of
Earnings for the year ended December 31, 2004.
The unaudited pro forma consolidated balance sheet as of March 31, 2005
included in Annex A attached hereto gives effect to the sale of Alleghany's
wholly-owned subsidiary World Minerals Inc. to Imerys USA, Inc. as if the sale
had occurred on March 31, 2005, and the unaudited pro forma consolidated
statements of earnings for the three months ended March 31, 2005 and for the
year ended December 31, 2004 included in Annex A attached hereto give effect to
such sale as if it had occurred on January 1, 2004. The unaudited pro forma
balance sheet as of March 31, 2005 reflects an after-tax gain on the transaction
of approximately $14.8 million. Unaudited pro forma financial information does
not purport to be indicative of either the results of future operations or
the results of operations that would have occurred had the transaction been
consummated on the dates indicated.
The unaudited pro forma financial statements included in Annex A attached
hereto should be read in conjunction with Alleghany's historical consolidated
financial statements and notes thereto previously filed in Alleghany's Annual
Report on Form 10-K for the year ended December 31, 2004 and Quarterly Report on
Form 10-Q for the period ended March 31, 2005.
(c) Exhibits. The following are filed as exhibits to this report:
Exhibit Number Exhibit Description
-------------- -------------------
2.1 Stock Purchase Agreement dated as of May 19,
2005 by and among Imerys USA, Inc., Imerys,
S.A. and Alleghany.
99.1 Press Release announcing the completion of the
sale by Alleghany of World Minerals Inc. to
Imerys USA, Inc.
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.
ALLEGHANY CORPORATION
Date: July 20, 2005 By: /s/ Peter R. Sismondo
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Name: Peter R. Sismondo
Title: Vice President,
Controller, Treasurer
and Assistant Secretary
ANNEX A
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
The following unaudited pro forma consolidated balance sheet as of March
31, 2005 gives effect to the sale of Alleghany's wholly-owned subsidiary World
Minerals Inc. to Imerys USA, Inc. as if the sale had occurred on March 31, 2005,
and the unaudited pro forma consolidated statements of earnings for the three
months ended March 31, 2005 and for the year ended December 31, 2004 give effect
to such sale as if it had occurred on January 1, 2004. The unaudited pro forma
balance sheet as of March 31, 2005 reflects an after-tax gain on the transaction
of approximately $14.8 million. Unaudited pro forma financial information does
not purport to be indicative of either the results of future operations or the
results of operations that would have occurred had the transaction been
consummated on the dates indicated.
The unaudited pro forma financial statements should be read in conjunction
with Alleghany's historical consolidated financial statements and notes thereto
previously filed in Alleghany's Annual Report on Form 10-K for the year ended
December 31, 2004 and Quarterly Report on Form 10-Q for the period ended March
31, 2005.
ALLEGHANY CORPORATION
PRO FORMA CONSOLIDATED BALANCE SHEET
MARCH 31, 2005
(dollars in thousands)
(unaudited)
World
Minerals Pro Forma Pro Forma
Adjustments Adjustments Balance
As of 3/31/05 inc / (dec) inc / (dec) Sheet
------------- ----------- ----------- ----------
ASSETS
Available for sale securities at fair value:
Equity securities (cost: 2005 $276,370) $ 637,291 $ 0 $ 0 $ 637,291
Debt securities (cost: 2005 $1,481,008) 1,466,558 0 0 1,466,558
Short-term investments 265,733 (6,907) 202,219 461,045
---------- ----------- ----------- ----------
2,369,582 (6,907) 202,219 2,564,894
Cash 240,729 (17,879) 0 222,850
Notes receivable 91,665 0 9,130 100,795
Accounts receivable, net 63,008 (55,946) 0 7,062
Premium balances receivable 181,466 0 0 181,466
Reinsurance recoverables 648,922 0 0 648,922
Ceded unearned premium reserves 275,131 0 0 275,131
Deferred acquisition costs 55,514 0 0 55,514
Property and equipment at cost, net of
accumulated depreciation and amortization 164,976 (148,625) 0 16,351
Inventory 39,950 (39,950) 0 0
Goodwill and other intangibles, net of amortization 221,339 (50,451) 0 170,888
Deferred tax assets 110,738 (7,137) 3,010 106,611
Other assets 121,131 (7,171) 0 113,960
---------- ----------- ----------- ----------
$4,584,151 $ (334,066) $ 214,359 $4,464,444
========== =========== =========== ==========
LIABILITIES AND COMMON STOCKHOLDERS' EQUITY
Losses and loss adjustment expenses $1,266,411 $ 0 $ 0 $1,266,411
Unearned premiums 729,517 0 0 729,517
Reinsurance payable 121,794 0 0 121,794
Deferred tax liabilities 225,384 (19,131) 0 206,253
Subsidiaries' debt 138,860 (58,860) 0 80,000
Current taxes payable 46,008 (2,511) 2,181 45,678
Other liabilities 228,389 (56,777) 600 172,212
---------- ----------- ----------- ----------
Total liabilities 2,756,363 (137,279) 2,781 2,621,865
Common stockholders' equity 1,827,788 (196,787) 211,578 1,842,579
---------- ----------- ----------- ----------
$4,584,151 $ (334,066) $ 214,359 $4,464,444
========== =========== =========== ==========
See accompanying footnotes.
ALLEGHANY CORPORATION
PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS
MARCH 31, 2005
(dollars in thousands, except share and per share amounts)
(unaudited)
World
For the Minerals Pro Forma Pro Forma
period ended Adjustments Adjustments Statement of
3/31/05 inc / (dec) inc / (dec) Earnings
------------ ----------- ----------- ------------
REVENUES
Net premiums earned $ 213,552 $ 0 $ 0 $ 213,552
Net mineral and filtration sales 69,738 (69,738) 0 0
Interest, dividend and other income 17,562 162 0 17,724
Net gain on investment transactions 47,227 0 0 47,227
------------ ----------- ----------- ------------
Total revenues 348,079 (69,576) 0 278,503
------------ ----------- ----------- ------------
COSTS AND EXPENSES
Loss and loss adjustment expenses 115,277 0 0 115,277
Commissions and brokerage 53,044 0 0 53,044
Cost of mineral and filtration sales 56,954 (56,954) 0 0
Salaries, administrative and other
operating expenses 18,563 (10,410) 0 8,153
Corporate administration 9,081 0 0 9,081
Interest expense 1,352 (687) 0 665
------------ ----------- ----------- ------------
Total costs and expenses 254,271 (68,051) 0 186,220
------------ ----------- ----------- ------------
Earnings from continuing operations, before income taxes 93,808 (1,525) 0 92,283
Income taxes 32,937 (1,877) 0 31,060
------------ ----------- ----------- ------------
Earnings from continuing operations 60,871 352 0 61,223
Discontinued operations
Operations - - - -
Income taxes - - - -
------------ ----------- ----------- ------------
Earnings from discontinued operations, net - - - -
------------ ----------- ----------- ------------
Net earnings $ 60,871 $ 352 $ 0 $ 61,223
------------ ----------- ----------- ------------
Basic earnings per share of common stock
Continuing operations $ 7.74 $ 7.78
Discontinued operations - -
------------ ------------
$ 7.74 $ 7.78
------------ ------------
Diluted earnings per share of common stock
Continuing operations $ 7.72 $ 7.75
Discontinued operations - -
------------ ------------
$ 7.72 $ 7.75
------------ ------------
Average number of outstanding shares of common stock 7,896,309 7,896,309
------------ ------------
See accompanying footnotes.
ALLEGHANY CORPORATION
PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS
DECEMBER 31, 2004
(dollars in thousands, except share and per share amounts)
(unaudited)
World
For the year Minerals Pro Forma Pro Forma
ended Adjustments Adjustments Statement
12/31/04 inc / (dec) inc / (dec) of Earnings
------------ ----------- ----------- -----------
REVENUES
Net premiums earned $ 805,417 $ 0 $ 0 $ 805,417
Net mineral and filtration sales 285,587 (285,587) 0 0
Interest, dividend and other income 63,053 235 0 63,288
Net gain on investment transactions 86,870 0 0 86,870
------------ ----------- ----------- -----------
Total revenues 1,240,927 (285,352) 0 955,575
------------ ----------- ----------- -----------
COSTS AND EXPENSES
Loss and loss adjustment expenses 540,569 0 0 540,569
Commissions and brokerage 190,657 0 0 190,657
Cost of mineral and filtration sales 217,546 (217,546) 0 0
Salaries, administrative and other
operating expenses 75,950 (44,194) 0 31,756
Corporate administration 41,278 0 0 41,278
Interest expense 4,800 (2,383) 0 2,417
------------ ----------- ----------- -----------
Total costs and expenses 1,070,800 (264,123) 0 806,677
------------ ----------- ----------- -----------
Earnings from continuing operations, before income taxes 170,127 (21,229) 0 148,898
Income taxes 52,179 (5,979) 0 46,200
------------ ----------- ----------- -----------
Earnings from continuing operations 117,948 (15,250) 0 102,698
Discontinued operations
Operations (1,033) - - (1,033)
Income taxes (781) - - (781)
------------ ----------- ----------- -----------
Earnings from discontinued operations, net (252) - - (252)
------------ ----------- ----------- -----------
Net earnings $ 117,696 $ (15,250) $ 0 $ 102,446
------------ ----------- ----------- -----------
Basic earnings per share of common stock
Continuing operations $ 15.38 $ 13.13
Discontinued operations (0.03) (0.03)
------------ -----------
$ 15.35 $ 13.10
------------ -----------
Diluted earnings per share of common stock
Continuing operations $ 15.34 $ 13.07
Discontinued operations (0.03) (0.03)
------------ -----------
$ 15.31 $ 13.04
------------ -----------
Average number of outstanding shares of common stock 7,853,981 7,853,981
------------ -----------
See accompanying footnotes.
FOOTNOTES
1. The sale was completed on July 14, 2005.
2. Under the terms of the Stock Purchase Agreement, the purchase price was
$230.0 million, which was reduced by $13.2 million reflecting contractual
obligations to be paid by the purchaser after the closing, resulting in an
adjusted purchase price of $216.8 million (the "Adjusted Purchase Price").
$206.8 million of the Adjusted Purchase Price was paid in cash by the
purchaser to Alleghany on the closing date, with the remaining $10.0 million
being held by the purchaser as security for certain indemnification
obligations undertaken by Alleghany pursuant to the Stock Purchase
Agreement. The $10.0 million hold back amount will bear interest at the U.S.
Treasury 10-year note rate and is scheduled to be released to Alleghany (to
the extent not applied toward such indemnification obligations) during the
period covering the fifth through the tenth anniversaries of the closing
date.
Pro forma adjustments include (i) an increase in short-term investments of
$202.2 million reflecting the Adjusted Purchase Price less $4.5 million of
transaction expenses; (ii) a note receivable of $9.1 million, comprised of
the $10.0 million hold back amount less a $0.9 million interest rate
discount; (iii) a deferred tax asset of $3.0 million; (iv) current taxes
payable of approximately $2.2 million; and (v) another liability in the
amount of $0.6 million for product liability indemnification.
The net increase in common stockholders' equity is $14.8 million, which is
the gain on sale had the sale occurred on March 31, 2005.
1
Index to Exhibits
Exhibit Number Exhibit Description
-------------- -------------------
2.1 Stock Purchase Agreement dated as of May 19, 2005 by and
among Imerys USA, Inc., Imerys, S.A. and Alleghany.
99.1 Press Release announcing the completion of the sale by
Alleghany of World Minerals Inc. to Imerys USA, Inc.