NEW YORK--(BUSINESS WIRE)--Feb. 13, 2003--Loews Corporation (NYSE:LTR;CG) today reported consolidated net income (including both the Loews Group and Carolina Group) for the quarter ended December 31, 2002 of $290.2 million, compared to $191.0 million in 2001.
Consolidated net income for the year ended December 31, 2002, was $940.9 million, compared to a net loss of $587.1 million in 2001. The 2001 results include a restatement of previously reported financial results related to the life settlement business of the Company's CNA Financial Corporation subsidiary, as described below.
The following table summarizes the revenues, net income (loss) and earnings per share information.
December 31,
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Three Months Year Ended
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(In millions, except per share
data) 2002 2001 (c) 2002 2001 (c)
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Consolidated:
Revenues (a) $4,021.9 $4,999.0 $17,545.6 $18,769.6
Net income (loss) $290.2 $191.0 $940.9 $(587.1)
Per Share: (b)
Income (loss) per share of
Loews Common Stock:
Income (loss) from continuing
operations $1.37 $0.98 $4.65 $(2.79)
Discontinued operations-net 0.01 (0.17) 0.05
Cumulative effect of changes
in accounting
principles-net (0.21) (0.27)
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Net income (loss) $1.37 $0.99 $4.27 $(3.01)
======================================
Net income per share of Carolina
Group Stock $0.92 $3.50
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(a) Revenue for the three months and year ended 2001 has been restated
for comparative purposes to reflect the adoption of new accounting
principles related to the classification of certain sales
incentives by Lorillard and reimbursements received by Diamond
Offshore for "Out-of-Pocket" expenses incurred. Revenue also
includes premiums of $559.0 for the three months ended 2001, and
$1,151.0 and $2,218.0 for the years ended 2002 and 2001,
respectively, related to the National Postal Mail Handlers
contract at CNA which was transferred on July 1, 2002. (b) The Company has two classes of common stock, Loews Common Stock
and Carolina Group Stock, issued in February 2002. Earnings per
share data are presented for each class of Common Stock for the
periods they are outstanding. (c) Restated to reflect an adjustment to the Company's historical
accounting for CNA's investment in life settlement contracts and
the related revenue recognition.
Quarter Ended December 31, 2002 compared with 2001
Consolidated net operating income for the 2002 fourth quarter, which excludes net investment gains and discontinued operations, was $285.0 million, compared to a net operating loss of $47.2 million in the fourth quarter of 2001.
Net income attributable to Loews Common Stock for the 2002 fourth quarter was $253.3 million or $1.37 per share, compared to $191.0 million or $0.99 per share in the comparable period of the prior year. Net income in the 2002 fourth quarter includes net investment gains attributable to Loews Common Stock of $4.7 million, compared to $235.5 million in the comparable period of the prior year.
Net operating income attributable to Loews Common Stock for the 2002 fourth quarter, which excludes net investment gains and discontinued operations, was $248.6 million, compared to a net operating loss of $47.2 million in the comparable period of the prior year.
Net income attributable to Carolina Group Stock for the 2002 fourth quarter was $36.9 million or $0.92 per Carolina Group share. The Company is issuing a separate press release reporting the actual and pro forma results of the Carolina Group for the quarter and year ended December 31, 2002 and 2001.
Year Ended December 31, 2002 compared with 2001
Net income for 2002 included a loss from discontinued operations at CNA of $31.0 million or $0.17 per share of Loews Common Stock, compared to income from discontinued operations of $9.4 million or $0.05 per share of Loews Common Stock in the comparable period of the prior year. Results for 2002 also included a charge for accounting changes of $39.6 million or $0.21 per share of Loews Common Stock, related to accounting for goodwill and other intangible assets, compared to a charge of $53.3 million or $0.27 per share of Loews Common Stock in the comparable period of the prior year, related to accounting for derivative instruments at CNA.
Consolidated net operating income for the year ended December 31, 2002, which excludes net investment gains (losses), discontinued operations and the effects of accounting changes, was $1,099.3 million, compared to a loss of $1,333.1 million in the comparable period of the prior year.
Net operating income attributable to Loews Common Stock for the year ended December 31, 2002, which excludes net investment (losses) gains, discontinued operations and the effects of accounting changes, was $963.9 million, compared to a loss of $1,333.1 million in the comparable period of the prior year.
Net income attributable to Carolina Group Stock for the year ended December 31, 2002 was $140.7 million or $3.50 per Carolina Group share.
CNA's Life Settlement Contract Accounting
As a result of a periodic review of CNA's disclosure filings by the Division of Corporation Finance of the Securities and Exchange Commission, the Company is restating its financial statements as of and for the years ended December 31, 2001 to 2000 as well as its interim financial statements for the first three quarters of 2002. The restated financial statements reflect an adjustment to the Company's historical accounting for CNA's investment in life settlement contracts and the related revenue recognition.
The SEC concluded that FASB Technical Bulletin 85-4 "Accounting for Purchases of Life Insurance" should have been applied to CNA's investment in life settlement contracts. Under FTB 85-4, the carrying value of CNA's investment in life settlement contracts is limited to the cash surrender or contract value of the underlying life insurance policy, and revenues related to life insurance death benefits are recognized on a cash basis. The Company's historical accounting was to record an asset for the full amount paid to acquire the life settlement contract along with other direct costs, and to recognize revenue over the period the contract is held.
The adjustment related to life settlement contracts reduced both net operating income and net income in the fourth quarter and the full year of 2002 by $3.4 million and $8.3 million. The comparable impact in the prior period increased both net operating income and net income by $2.9 and $2.0 million for the fourth quarter and the full year of 2001. This restatement has reduced the Company's shareholders' equity at December 31, 2002 by approximately $228.3 million, which is expected to be recognized in operating income in the future as contracts mature.
At December 31, 2002, the book value per share of Loews Common Stock was $61.68, compared to $49.24 at December 31, 2001. The increase in book value per share of Loews Common Stock is primarily due to proceeds from the issuance of the Carolina Group Stock in February 2002 and the net economic interest attributable to the Loews Common Stock in the notional intergroup debt receivable from the Carolina Group.
At December 31, 2002, there were 185,441,200 shares of Loews Common Stock outstanding. During the year ended December 31, 2002, the Company purchased 6,065,600 shares of Loews Common Stock at an aggregate cost of $343.5 million. During the year ended December 31, 2002, the Company purchased 2,717,876 shares of CNA common stock at an aggregate cost of $73.1 million. The Company also purchased 340,000 shares of Carolina Group stock during the year ended December 31, 2002, for the account of the Carolina Group, at an aggregate cost of $7.7 million. Depending on market conditions, the Company from time to time purchases shares of its, and its subsidiaries', outstanding common stock in the open market or otherwise. In addition, in December 2002 the Company purchased $750.0 million of CNA series H cumulative preferred stock.
In February 2002 the Company created a second class of common stock, called Carolina Group Stock, a tracking stock intended to reflect the economic performance of a group of the Company's assets and liabilities, called the Carolina Group, principally consisting of the Company's subsidiary Lorillard, Inc., and in an initial public offering the Company issued shares of Carolina Group Stock representing a 23.17% interest in the economic performance of the Carolina Group. Loews Common Stock will continue to represent the economic performance of the Company's remaining assets, including the interest in the Carolina Group not represented by Carolina Group Stock. At December 31, 2002, the outstanding Carolina Group Stock represents a 23.01% economic interest in the economic performance of the Carolina Group.
A conference call to discuss the fourth quarter and full-year results of Loews Corporation and its Carolina Group has been scheduled for 11:00 a.m. EST, Thursday, February 13, 2003. The call can be accessed by dialing (877) 692-2592 or by visiting the Loews Corporation website (www.loews.com), where the Company will provide an online, real-time broadcast of this call. Please go to the website at least 10 minutes before the event begins to register and to download and install any necessary audio software. An online replay will be available at the Company's website for one week following the call.
A conference call to discuss the fourth quarter and full-year results of CNA has been scheduled for 10:00 a.m. EST, Thursday, February 13, 2003. The call can be accessed by dialing (800) 289-0493 or by visiting the CNA website (http://investors.cna.com), where CNA will provide an online, real-time broadcast of its call. Please go to the website at least 10 minutes before the event begins to register and to download and install any necessary audio software. An online replay will be available at CNA's website until the date of the next conference call or, until February 20, 2003, by dialing (888) 203-1112, passcode 671522.
Loews Corporation and Subsidiaries
Financial Review
December 31,
--------------------------------------
Three Months Years Ended
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2002 2001 (g) 2002 2001 (g)
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(Amounts in millions, except per share
data)
Revenues:
Insurance premiums and net
investment income (a) $2,740.7 $3,554.4 $11,918.3 $12,779.3
Manufactured products (b) 886.3 958.6 3,963.5 4,011.9
Other 394.9 486.0 1,663.8 1,978.4
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Total 4,021.9 4,999.0 17,545.6 18,769.6
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Expenses:
Insurance claims &
policyholders' benefits 1,849.6 2,513.9 8,392.0 11,279.8
Cost of manufactured products
sold (b) 465.1 516.8 2,226.5 2,282.9
Other (c) 1,241.0 1,610.7 5,229.8 6,029.1
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Total 3,555.7 4,641.4 15,848.3 19,591.8
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466.2 357.6 1,697.3 (822.2)
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Income tax expense (benefit) 149.6 150.7 600.2 (176.0)
Minority interest 26.4 18.6 85.6 (103.0)
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Total 176.0 169.3 685.8 (279.0)
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Income (loss) from continuing
operations 290.2 188.3 1,011.5 (543.2)
Discontinued operations-net 2.7 (31.0) 9.4
Cumulative effect of change in
accounting principles-net (d) (39.6) (53.3)
--------------------------------------
Net income (loss) $290.2 $191.0 $940.9 $(587.1)
======================================
Net income (loss) attributable
to:
Loews Common Stock:
Income (loss) from continuing
operations $253.3 $188.3 $870.8 $(543.2)
Discontinued operations-net 2.7 (31.0) 9.4
Cumulative effect of change in
accounting principles-net (d) (39.6) (53.3)
--------------------------------------
Loews Common Stock 253.3 191.0 800.2 (587.1)
Carolina Group Stock (e) 36.9 140.7
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$290.2 $191.0 $940.9 $(587.1)
======================================
Income (loss) per Loews common
stock (f):
Income (loss) from continuing
operations $1.37 $0.98 $4.65 $(2.79)
Discontinued operations-net 0.01 (0.17) 0.05
Cumulative effect of changes in
accounting principles-net (d) (0.21) (0.27)
--------------------------------------
Net income (loss) $1.37 $0.99 $4.27 $(3.01)
======================================
Net income per Carolina Group
common stock (f) $0.92 $3.50
======================================
Weighted number of shares
outstanding:
Loews Common Stock 185.44 191.49 187.59 195.33
Carolina Group Stock 39.91 40.15
(a) Includes investment (losses) gains of $(13.5), $326.6, $(158.5)
and $1,390.4 for the respective periods.
(b) Includes excise taxes of $149.6, $141.7, $667.6 and $618.1 paid on
sales of manufactured products for the respective periods.
(c) Includes a $200.0 charge related to an agreement with the Engle
class for the year ended December 31, 2001.
(d) Adoption of SFAS No. 142, accounting for goodwill and other
intangible assets in 2002 and SFAS No. 133, accounting for
derivative instruments and hedging activities in 2001, at the CNA
subsidiary.
(e) Represents 23.01% and 23.12% of the economic interest in the
Carolina Group for the three month and eleven month period ended
December 31, 2002 from the February 2002 initial public offering
of Carolina Group Stock.
(f) Earnings per common share-assuming dilution is not presented
because securities that could potentially dilute basic earnings
per common share in the future would have been insignificant or
antidilutive for the periods presented.
(g) Restated to reflect an adjustment to the Company's historical
accounting for CNA's investment in life settlement contracts and
the related revenue recognition.
Loews Corporation and Subsidiaries
Additional Financial Information
December 31,
---------------------------------------
Three Months Years Ended
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2002 2001(g) 2002 2001(g)
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(In millions)
Revenues:
CNA Financial $2,856.2 $3,358.7 $12,538.8 $11,826.6
Lorillard (a) 843.8 928.2 3,843.8 3,955.3
Loews Hotels 75.7 74.7 305.3 321.8
Diamond Offshore 189.9 243.6 783.9 981.1
Investment income-net
and other (b) 69.8 67.2 232.3 294.4
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4,035.4 4,672.4 17,704.1 17,379.2
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Investment gains (losses):
CNA Financial (64.6) 323.9 (202.0) 1,262.0
Corporate and other 51.1 2.7 43.5 128.4
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(13.5) 326.6 (158.5) 1,390.4
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Total $4,021.9 $4,999.0 $17,545.6 $18,769.6
=======================================
Income (Loss) Before Taxes:
CNA Financial (c) $175.1 $(326.6) $607.6 $(3,560.4)
Lorillard (d) (e) 246.7 323.1 1,038.5 1,104.3
Loews Hotels 1.2 6.4 20.6 29.8
Diamond Offshore 9.6 52.4 54.2 228.1
Investment income-net
and other (b) (12.0) (24.3) (88.3) (14.4)
---------------------------------------
420.6 31.0 1,632.6 (2,212.6)
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Investment gains (losses):
CNA Financial (64.6) 323.9 (202.0) 1,262.0
Corporate and other 50.3 2.7 35.3 128.4
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(14.3) 326.6 (166.7) 1,390.4
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Loews Common Stock 406.3 357.6 1,465.9 (822.2)
Carolina Group Stock (f) 59.9 231.4
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Total $466.2 $357.6 $1,697.3 $(822.2)
=======================================
Net Income (Loss):
CNA Financial (c) $102.2 $(252.4) $363.4 $(2,088.7)
Lorillard (d) (e) 151.8 197.8 630.4 672.2
Loews Hotels 0.1 4.3 12.7 19.5
Diamond Offshore 0.9 15.8 14.1 71.0
Investment income-net
and other (b) (6.4) (12.7) (56.7) (7.1)
---------------------------------------
248.6 (47.2) 963.9 (1,333.1)
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Investment gains (losses):
CNA Financial (27.2) 236.1 (104.1) 714.8
Corporate and other 31.9 (0.6) 11.0 75.1
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4.7 235.5 (93.1) 789.9
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Income (loss) from continuing
operations 253.3 188.3 870.8 (543.2)
Discontinued operations-net 2.7 (31.0) 9.4
Cumulative effect of changes in
accounting principles-net (39.6) (53.3)
---------------------------------------
Loews Common Stock 253.3 191.0 800.2 (587.1)
Carolina Group Stock (f) 36.9 140.7
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Total $290.2 $191.0 $940.9 $(587.1)
=======================================
(a) Includes excise taxes of $149.6, $141.7, $667.6 and $618.1 paid on
sales of manufactured products for the respective periods.
(b) Consists primarily of corporate investment income, interest
expenses, watch and clock operations and other unallocated
expenses.
(c) Includes charges of $189.0, $79.5 and $76.0 ($110.8, $46.1 and
$61.2 after taxes and minority interest) for the three months and
year ended December 31, 2001 related to restructuring and other
related charges, Enron related losses, and reserve strengthening
primarily for the current accident year, respectively, and $467.7
and $3,200.0 ($264.6 and $1,809.8 after taxes and minority
interest) for the year ended December 31, 2001 related to the
World Trade Center attack and a change in estimate of prior year
net loss and allocated loss adjustment expense reserves and
retrospective premium accruals, respectively.
(d) Represents the Loews Group's intergroup interest in the earnings
of the Carolina Group.
(e) Includes a $200.0 charge ($121.0 after taxes) related to an
agreement with the Engle class for the year ended December 31,
2001.
(f) Represents 23.01% and 23.12% of the economic interest in the
Carolina Group for the three month and eleven month period ended
December 31, 2002 from the February 2002 initial public offering
of Carolina Group Stock.
(g) Restated to reflect an adjustment to the Company's historical
accounting for CNA's investment in life settlement contracts and
the related revenue recognition.
--30--vp/ny*
| CONTACT: | Loews Corporation |
|---|---|
| Peter W. Keegan, 212/521-2950 | |
| Public Affairs: | |
| Candace Leeds, 212/521-2416 | |
| Investor Relations: | |
| Joshua E. Kahn, 212/521-2788 | |