Alleghany Corporation Announces Second Quarter Earnings.Business Editors NEW YORK--(BUSINESS WIRE)--Aug. 2, 2002 Net earnings from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the of Alleghany Corporation (NYSE-Y) in the second quarter of 2002 were $8.9 million, or $1.21 per share of common stock, compared with net earnings from continuing operations of $2.5 million, or $0.34 per share, in the second quarter of 2001, John J. Burns, Jr., President and chief executive officer of Alleghany, announced today. The 2002 second quarter results include net gains on investment transactions after taxes of $2.8 million, or approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $0.39 per share, compared with $0.6 million, or $0.08 per share, in the 2001 period. Net earnings including discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. were $8.9 million, or $1.21 per share, in the second quarter of 2002, compared with net losses of $9.3 million, or $1.26 per share, in the 2001 second quarter. Discontinued operations consist of the operations of Alleghany Asset Management prior to its disposition Act of disposing; transferring to the care or possession of another. The parting with, alienation of, or giving up of property. The final settlement of a matter and, with reference to decisions announced by a court, a judge's ruling is commonly referred to as disposition, regardless of in February February: see month. 2001 and the operations of Alleghany Underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. prior to its disposition in November November: see month. 2001. In the first six months of 2002, Alleghany's net earnings from continuing operations were $34.7 million, or $4.73 per share, compared with net earnings of $468.7 million, or $63.53 per share, in the first six months of 2001. The 2002 results include net gains on investment transactions after taxes of $25.3 million, or approximately $3.45 per share, primarily resulting from the disposition of 1.9 million shares of common stock of Burlington Burlington, town, Canada Burlington, town (1991 pop. 129,575), SE Ont., Canada, on Lake Ontario. First settled (1798) by Mohawk Loyalist Joseph Brandt, Burlington's economy was built on the shipment of wheat, lumber, and quarried rock by waterway. Northern Santa Fe Santa Fe, city, Argentina Santa Fe, city (1991 pop. 341,000), capital of Santa Fe prov., NE Argentina, a river port near the Paraná, with which it is connected by canal. for aggregate cash proceeds of $55.3 million. The 2001 results include an after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. gain from the disposition of Alleghany Asset Management of approximately $474.8 million, or approximately $64.35 per share, excluding certain expenses relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the closing of the transaction. World Minerals recorded pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta earnings of $7.7 million in the 2002 second quarter, compared with pre-tax earnings of $7.0 million in the 2001 second quarter, reflecting somewhat lower energy costs (particularly natural gas), reduced interest expense and cost controls. Revenues in the 2002 second quarter were $56.6 million, compared to $57.8 million in the second quarter of 2001, reflecting reduced demand in the U.S. and reduced demand in the European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. and Asian export markets for World Minerals' U.S.-produced products. Alleghany Insurance Holdings, a holding company for Alleghany's insurance operations, consisting principally of Capitol Capitol, seat of the U.S. Congress Capitol, seat of the U.S. government at Washington, D.C. It is the city's dominating monument, built on an elevated site that was chosen by George Washington in consultation with Major Pierre L'Enfant. Transamerica Corporation Transamerica Corporation is a holding company for various life insurance companies and investment firms doing business primarily in the United States. Transamerica began as a holding company controlled by A. P. which was acquired on January January: see month. 4, 2002, recorded a pre-tax loss of $2.1 million in the second quarter of 2002 on revenues of $33.2 million. The 2002 losses primarily reflect a $1.6 million adverse loss development in fidelity Fidelity is a notion that at its most abstract level implies a truthful connection to a source or sources. Its original meaning dealt with loyalty and attentiveness to one's duty to a lord or a king, in a broader sense than the related concept of fealty. and surety An individual who undertakes an obligation to pay a sum of money or to perform some duty or promise for another in the event that person fails to act. surety n. lines of business and a $3.5 million increase in loss reserves. AIHL AIHL Australian Ice Hockey League recorded pre-tax earnings of $4.2 million from continuing operations in the second quarter of 2001, primarily reflecting investment income. Heads & Threads recorded pre-tax earnings of $0.6 million in the 2002 second quarter, compared with a pre-tax loss of $8.8 million in the 2001 second quarter, primarily reflecting reduced operating and interest expenses. Revenues in the 2002 second quarter were $29.0 million compared with $30.7 million in the second quarter of 2001, reflecting reduced demand in the U.S. economy. Highlights are as follows (in millions, except for shares and per share amounts):
Quarters Ended Six Months Ended
June 30 June 30
2002 2001 2002 2001
---- ---- ---- ----
Revenues from
continuing operations $131.4 $103.8 $282.0 $979.6
Earnings from continuing
operations, before taxes $13.4 $2.4 $52.7 $765.5
Earnings from continuing
operations, net $8.9 $2.5 $34.7 $468.7
Losses from discontinued
operations, net (Alleghany
Asset Management ("AAM")
and Alleghany Underwriting) $-- $(11.8) $-- $(22.6)
Net earnings (losses) $8.9 $(9.3) $34.7 $446.1
Basic earnings per share
of common stock
from continuing
operations(1) $1.21 $0.34 $4.73 $63.53
Basic losses per share
of common stock from
discontinued
operations (AAM and
Alleghany Underwriting)(1) $-- $(1.60) $-- $(3.07)
Basic earnings (losses)
per share
of common stock(1) $1.21 $(1.26) $4.73 $60.46
Diluted earnings (losses)
per share of common
stock from
continuing
operations(1) $1.11 $0.34 $4.62 $62.70
Diluted losses per share
of common stock from
discontinued operations
(AAM and Alleghany
Underwriting)(1) $-- $(1.60) $-- $(3.02)
Diluted earnings
(losses) per
share of common
stock(1) $1.11 $(1.26) $4.62 $59.68
Average number of
outstanding shares
of common stock(1) 7,332,402 7,388,656 7,337,815 7,377,808
(1) Adjusted to reflect the dividend of common stock declared in
March 2002.
The comparative contributions to earnings from continuing operations before taxes made by Alleghany's operating units operating unit A type of operating company that engages in transactions with outsiders and that is owned by another business. For example, in 1995 the stockholders of Capital Cities/ABC approved a $19 billion merger with the Walt Disney Company, whereupon World Minerals (industrial minerals business), Alleghany Insurance Holdings (insurance businesses) and Heads & Threads (industrial fasteners fasteners In construction, connectors between structural members. Bolted connections are used when it is necessary to fasten two elements tightly together, especially to resist shear and bending, as in column and beam connections. business), as well as by Alleghany's parent company and other operations, were as follows (in millions):
Three Months Ended Six Months Ended
June 30 June 30
------- -------
2002 2001 2002 2001
---- ---- ---- ----
World Minerals $7.7 $7.0 $10.7 $8.1
Alleghany Insurance
Holdings (2.1) 4.2 (0.9) 7.4
Heads & Threads 0.5 (8.8) 1.1 (12.7)
Parent company and other 7.3 -- 41.8 762.7
----- ----- ----- -------
$13.4 $2.4 $52.7 $765.5
===== ===== ===== =======
On a per-share, after-tax basis After-tax basis The comparison basis used to analyze the net after-tax returns on a corporate taxable bond and a municipal tax-free bond. , the foregoing earnings contributions are as follows (the per-share figure by quarter may not equal the year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. per-share figure due to the timing of share transactions and rounding):
Three Months Ended June 30
Parent Total from
World Heads & Company continuing
2002 Minerals AIHL Threads and other operations
---- --------- ---- ------- -------- ----------
Operations $0.59 $(0.03) $0.05 $0.21 $0.82
Security
transactions -- (.09) -- 0.48 0.39
-------- ------- -------- -------- ---------
Total $0.59 $(0.12) $0.05 $0.69 $1.21
======== ======== ======== ======= =========
2001
Operations $0.57 $ 0.32 $(0.81) $0.18 $0.26
Security
transactions -- .07 -- 0.01 0.08
-------- --------- -------- -------- --------
Total $0.57 $ 0.39 $(0.81) $0.19 $0.34
======== ========= ======== ======== ========
Discontinued
operations
(AAM and
Alleghany
2002 Underwriting) Total
---- ------------------ -----
Operations $-- $0.82
Security
transactions -- 0.39
------ -----
Total $-- $1.21
====== =====
2001
Operations $(1.69) $(1.43)
Security
transactions 0.09 0.17
------- -------
Total $(1.60) $(1.26)
======= =======
Six Months Ended June 30
Parent Total from
World Heads & Company continuing
2002 Minerals AIHL Threads and other operations
---- -------- ----- ------- ----------- ------------
Operations $0.76 $ 0.14 $0.09 $0.29 $1.28
Security
transactions -- (0.24) -- 3.69 3.45
-------- ------- -------- ---------- -----------
Total $0.76 $(0.10) $0.09 $3.98 $4.73
======== ======= ======== ========== ===========
2001
Operations 0.65 $ 0.61 $(1.12) $(1.07) $(0.93)
Gain on Sale
of AAM -- -- -- 64.35 64.35
Security
transactions -- 0.07 -- 0.04 0.11
--------- -------- -------- ---------- -----------
Total $0.65 $ 0.68 $(1.12) $63.32 $63.53
========= ======= ======== ========== ===========
Discontinued
operations
(AAM and
Alleghany
2002 Underwriting) Total
------ ------------------ -------
Operations $-- $1.28
Security
transactions -- 3.45
-------- ---------
Total $-- $4.73
========= ==========
2001
Operations $(3.22) $(4.15)
Gain on Sale
of AAM 64.35
Security
transactions 0.15 0.26
--------- ----------
Total $(3.07) $60.46
========= ==========
As of June June: see month. 30, 2002, Alleghany beneficially owned approximately 16.0 million shares, or 4.2 percent, of the outstanding common stock of Burlington Northern Santa Fe Corporation, which had an aggregate market value on that date of approximately $480.0 million, or $30.00 per share, compared with a market value on March 31, 2002 of $482.9 million, or $30.18 per share. The aggregate cost of such shares is approximately $181.8 million, or $11.36 per share. Alleghany has previously announced that it may purchase shares of its common stock in open market transactions from time to time. In the second quarter of 2002, Alleghany purchased an aggregate of 78,186 shares of its common stock for approximately $14.5 million, at an average cost of about $185.44 per share. As of June 30, 2002, Alleghany had 7,288,952 shares of common stock outstanding (which includes the stock dividend declared de·clare v. de·clared, de·clar·ing, de·clares v.tr. 1. To make known formally or officially. See Synonyms at announce. 2. To state emphatically or authoritatively; affirm. 3. in March 2002). Alleghany common stockholders' equity Stockholders' Equity The portion of the balance sheet that includes capital received from investors in exchange for stock (paid-in capital), donated capital, and retained earnings. This is equal to total assets minus liabilities, preferred stock and intangible assets. per share at June 30, 2002 was $193.27 per share, a 2.2 percent increase from common stockholders' equity per share of $189.20 at December December: see month. 31, 2001 (both as adjusted for the stock dividend declared in March 2002).
ALLEGHANY CORPORATION AND SUBSIDIARIES
COMBINING BALANCE SHEET
(dollars in thousands)
(unaudited except for 12/31/01 figures)
WORLD HEADS & CORPORATE 06/30/02 12/31/01
ASSETS MINERALS THREADS AIH ACTIVITIES COMBINED COMBINED
----------- -------- -------- ------- ---------- -------- --------
Investments:
fixed $0 $0 $139,121 $343,318 $482,439 $0
equities 0 0 186,006 410,199 596,205 550,826
short term 4,012 0 49,289 221,545 274,846 796,511
------ ------ ------- -------- --------- ---------
4,012 0 374,416 975,062 1,353,490 1,347,337
Cash 13,858 (175) 12,694 5,899 32,276 15,717
Notes
receivable 12,075 0 753 79,461 92,289 91,536
Accounts
receivable 47,194 17,260 29,431 2,081 95,966 57,161
Reinsurance
receivable 0 0 155,849 0 155,849 0
Property
and
equipment,
net 162,589 4,540 5,338 220 172,687 169,622
Inventory 29,954 38,614 0 0 68,568 71,169
Goodwill and
other
intangibles 47,530 6,936 57,594 0 112,060 49,708
Other
assets 7,075 3,090 39,274 54,449 103,888 72,755
-------- ------- -------- ---------- ---------- ----------
$324,287 $70,265 $675,349 $1,117,172 $2,187,073 $1,875,005
-------- ------- -------- ---------- ---------- ----------
LIABILITIES
AND EQUITY
Taxes payable $0 $0($205,823) $238,026 $32,203 $90,209
Losses
and LAE 0 0 246,144 0 246,144 0
Other
liabilities 51,452 14,586 24,611 39,975 130,624 103,595
Unearned
premiums 0 0 65,812 0 65,812 0
Long-term
debt
of parent 0 0 0 0 0 0
Long-term
debt
of subs 58,741 11,025 0 104,000 173,766 181,856
Net
deferred tax
liability 14,566 (10,117) 31,988 93,381 129,818 108,763
------- ------- ------- ------- -------- -------
124,759 15,494 162,732 475,382 778,367 484,423
Stockholders'
equity 199,528 54,771 512,617 641,790 1,408,706 1,390,582
-------- ------- -------- ---------- ---------- ----------
$324,287 $70,265 $675,349 $1,117,172 $2,187,073 $1,875,005
-------- ------- -------- ---------- ---------- ----------
ALLEGHANY CORPORATION
COMBINING STATEMENTS OF EARNINGS
(dollars in thousands)
(unaudited)
THREE MONTHS ENDED JUNE 30, 2002
WORLD HEADS & CORPORATE
MINERALS AIH THREADS ACTIVITIES COMBINED
Revenues
Interest, dividend
and other income $ 57 $ 3,545 $ 0 $ 7,316 $10,918
Net insurance
premiums earned 0 30,647 0 0 30,647
Net fastener sales 0 0 28,953 0 28,953
Net mineral and
filtration sales 56,501 0 0 0 56,501
Net gain on sale of
subsidiary 0 72 0 0 72
Net gain (loss) on
investments 0 (1,043) 0 5,397 4,354
------- ------- ------- ------- -------
Total revenues 56,558 33,221 28,953 12,713 131,445
Costs and expenses
Commissions and
brokerage expenses 0 6,063 0 0 6,063
Salaries,
administrative
and other
operating
expenses 10,021 4,962 6,203 1,203 22,389
Losses and loss
adjustment
expenses 0 24,340 0 0 24,340
Cost of goods
sold - fasteners 0 0 22,002 0 22,002
Cost of mineral and
filtration sales 38,334 0 0 0 38,334
Interest expense 467 0 170 986 1,623
Corporate
administration 0 0 0 3,251 3,251
------- ------- ------- ------- -------
Total costs and
expenses 48,822 35,365 28,375 5,440 118,002
------- ------- ------- ------- -------
Earnings from
continuing
operations,
before taxes $ 7,736 ($2,144) $ 578 $ 7,273 13,443
======= ======= ======= ======= =======
Income taxes 4,547
-------
Earnings from
continuing operations 8,896
(Loss) from
discontinued
operations,
net of tax 0
-------
Net earnings $ 8,896
=======
THREE MONTHS ENDED JUNE 30, 2001
WORLD HEADS & CORPORATE
MINERALS AIH THREADS ACTIVITIES COMBINED
Revenues
Interest, dividend
and other income ($195) $ 3,453 $ 0 $10,891 $14,149
Net insurance
premiums earned 0 0 0 0 0
Net fastener sales 0 0 30,665 0 30,665
Net mineral and
filtration sales 58,023 0 0 0 58,023
Net gain on sale of
subsidiary 0 0 0 (13) (13)
Net gain (loss) on
investments 0 784 0 152 936
------- ------- ------- ------- -------
Total revenues 57,828 4,237 30,665 11,030 103,760
Costs and expenses
Commissions and
brokerage expenses 0 0 0 0 0
Salaries,
administrative and
other operating
expenses 9,810 0 12,289 344 22,443
Losses and loss
adjustment expenses 0 0 0 0 0
Cost of goods sold
- fasteners 0 0 26,046 0 26,046
Cost of mineral and
filtration sales 39,916 0 0 0 39,916
Interest expense 1,082 0 1,111 1,738 3,931
Corporate
administration 0 0 0 8,976 8,976
------- ------- ------- ------- -------
Total costs and
expenses 50,808 0 39,446 11,058 101,312
------- ------- ------- ------- -------
Earnings from
continuing operations,
before taxes $ 7,020 $ 4,237 ($8,781) ($28) 2,448
======= ======= ======= ======= =======
Income taxes (99)
-------
Earnings from
continuing operations 2,547
(Loss) from
discontinued operations,
net of tax (11,865)
-------
Net earnings ($9,318)
=======
ALLEGHANY CORPORATION
COMBINING STATEMENTS OF EARNINGS
(dollars in thousands)
(unaudited)
YEAR TO DATE ENDED JUNE 30, 2002
WORLD HEADS & CORPORATE
MINERALS AIH THREADS ACTIVITIES COMBINED
Revenues
Interest, dividend
and other income ($483) $ 6,845 $ 0 $13,543 $19,905
Net insurance
premiums earned 0 59,670 0 0 59,670
Net fastener sales 0 0 56,885 0 56,885
Net mineral and
filtration sales 106,484 0 0 0 106,484
Net gain on sale of
subsidiary 0 72 0 0 72
Net gain (loss) on
investments 0 (2,692) 0 41,639 38,947
------- ------- ------- ------- -------
Total revenues 106,001 63,895 56,885 55,182 281,963
Costs and expenses
Commissions and
brokerage expenses 0 11,556 0 0 11,556
Salaries,
administrative and
other operating
expenses 19,864 10,039 12,285 2,327 44,515
Losses and loss
adjustment expenses 0 43,227 0 0 43,227
Cost of goods sold -
fasteners 0 0 43,087 0 43,087
Cost of mineral and
filtration sales 74,574 0 0 0 74,574
Interest expense 898 0 433 1,965 3,296
Corporate
administration 0 0 0 9,014 9,014
------- ------- ------- ------- -------
Total costs and
expenses 95,336 64,822 55,805 13,306 229,269
------- ------- ------- ------- -------
Earnings from
continuing operations,
before taxes $10,665 ($927) $ 1,080 $41,876 52,694
======= ======= ======= ======= =======
Income taxes 17,990
-------
Earnings from
continuing operations 34,704
(Loss) from discontinued
operations, net of tax 0
-------
Net earnings $34,704
=======
YEAR TO DATE ENDED JUNE 30, 2001
WORLD HEADS & CORPORATE
MINERALS AIH THREADS ACTIVITIES COMBINED
Revenues
Interest, dividend
and other income ($296) $ 6,579 $ 0 $23,548 $29,831
Net insurance
premiums earned 0 0 0 0 0
Net fastener sales 0 0 64,428 0 64,428
Net mineral and
filtration sales 108,181 0 0 0 108,181
Net gain on sale of
subsidiary 0 0 0 775,810 775,810
Net gain (loss) on
investments 0 784 0 529 1,313
------- ------- ------- ------- -------
Total revenues 107,885 7,363 64,428 799,887 979,563
Costs and expenses
Commissions and
brokerage expenses 0 0 0 0 0
Salaries,
administrative and
other operating
expenses 18,915 0 21,777 749 41,441
Losses and loss
adjustment expenses 0 0 0 0 0
Cost of goods sold -
fasteners 0 0 53,133 0 53,133
Cost of mineral and
filtration sales 78,829 0 0 0 78,829
Interest expense 2,042 0 2,187 3,716 7,945
Corporate
administration 0 0 0 32,707 32,707
------- ------- ------- ------- -------
Total costs and
expenses 99,786 0 77,097 37,172 214,055
Earnings from
continuing operations,
before taxes $ 8,099 $ 7,363 ($12,669) $762,715 765,508
Income taxes 296,764
-------
Earnings from continuing operations 468,744
(Loss) from discontinued operations,
net of tax (22,653)
-------
Net earnings $446,091
=======
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