NEW YORK--(BUSINESS WIRE)--Nov. 12, 2003--Loews Corporation
(NYSE:LTR;CG) today reported a consolidated net loss (including both
the Loews Group and Carolina Group) for the 2003 third quarter of
$1,382.9 million, compared to net income of $239.1 million for the
third quarter of 2002. Consolidated net loss for the nine months ended
September 30, 2003 amounted to $978.1 million, compared to net income
of $650.7 million for the nine months ended September 30, 2002.
The 2003 third quarter results include significant charges by CNA
Financial Corporation, the Company's 90% owned subsidiary, following
its recently completed reserve reviews. CNA announced a plan to
strengthen its capital base, which includes significant financial
support from Loews as described below.
The third quarter of 2003 results include the following charges at
CNA, net of tax and minority interest:
- Net prior year development of $1,345.8 million, which includes
premium and claim and allocated claim adjustment expense
development.
- Increase in bad debt reserves for insurance and reinsurance
receivables of $298.9 million.
The net prior year development consists of $880.4 million related
to core reserves and $465.4 million related to asbestos, environmental
pollution and mass tort ("APMT") reserves (after tax and minority
interest). The primary factors that led to the net prior year
development were CNA's previously announced third quarter of 2003
comprehensive reserve reviews, which include construction defect and
other volatile exposures, and a ground up analysis of APMT exposures.
The net prior year development also resulted in additional cessions to
CNA's reinsurance contracts, including the corporate aggregate
reinsurance treaties. These additional cessions resulted in $60.3
million of interest expense (after tax and minority interest), which
is recorded as a reduction in investment income.
To support statutory capital adversely impacted by the significant
third quarter charges, CNA has developed a capital plan, which
includes substantial support from Loews and possible sales or other
dispositions of businesses and assets. Under an agreement approved by
a special committee of independent members of CNA's Board of
Directors, Loews has agreed to purchase $750 million of a new series
of CNA non-voting convertible preferred stock, having terms that make
it economically equivalent to CNA common stock. The conversion price
is based on current average market prices of CNA common stock.
Proceeds from the preferred stock sale will be applied by CNA to
increase the statutory surplus of CNA's principal insurance
subsidiary, Continental Casualty Company ("CCC"). Under the agreement,
Loews has also committed up to $500 million of additional capital
support, through the purchase of surplus notes of CCC, in the event
that certain additions to CCC's statutory capital are not achieved by
February 26, 2004 from business or asset sales and related actions.
The obligation of Loews to consummate this agreement is subject to
certain customary closing conditions. In addition, Loews has indicated
its commitment to provide up to an additional $150 million by March
31, 2004, in a form to be determined, to support the statutory capital
of CCC in the event of additional shortfalls in relation to business
and asset sales. Other elements of the capital plan include the
October of 2003 sale of CNA Re renewal rights and withdrawal from the
assumed reinsurance business, CNA's previously announced initiative to
reduce operating expenses by $200 million and planned changes in the
ownership structure of certain insurance subsidiaries to align
statutory capital more efficiently.
The following table summarizes the revenues, net (loss) income and
earnings per share information:
September 30,
------------------------------------------
Three Months Nine Months
------------------------------------------
(In millions, except per
share data) 2003 2002 (a) 2003 2002 (a)
------------------------------------------
Consolidated:
Revenues (b) $ 3,940.0 $4,071.3 $12,125.3 $13,496.4
Net (loss) income $(1,382.9) $ 239.1 $ (978.1) $ 650.7
Per Share: (c)
(Loss) income per share of
Loews common stock:
(Loss) income from
continuing operations $ (7.90) $ 1.05 $ (6.01) $ 3.26
Discontinued operations-
net 0.30 0.30 (0.15)
Cumulative effect of
change in accounting
principle-net (0.21)
------------------------------------------
Net (loss) income per
share of Loews common
stock $ (7.60) $ 1.05 $ (5.71) $ 2.90
==========================================
Net income per share of
Carolina Group stock $ 0.67 $ 1.10 $ 2.01 $ 2.58
==========================================
(a) Restated to reflect an adjustment to the Company's historical
accounting for CNA's investment in life settlement contracts and
the related revenue recognition. The impact of this adjustment on
operating results in 2002 was insignificant.
(b) Revenue includes premiums of $1,151.0 for the nine months ended
September 30, 2002, related to the National Postal Mail Handlers
contract at CNA which was transferred on July 1, 2002.
(c) The Company has two classes of common stock, Loews common stock
and Carolina Group stock, issued in February 2002.
Three Months Ended September 30, 2003 Compared With 2002
Consolidated net loss in the third quarter of 2003 includes a gain
from discontinued operations of $55.8 million or $0.30 per share of
Loews common stock related to the sale of a hotel property, as
compared to $0.4 million in the prior year related to the operating
results for that property.
Consolidated loss from continuing operations for the third quarter
of 2003 was $1,438.7 million, compared to income of $238.7 million in
the comparable period of the prior year. Loss from continuing
operations includes net investment gains of $106.5 million (after tax
and minority interest), compared to $9.1 million (after tax and
minority interest) in the comparable period of the prior year. The net
loss reflects the unfavorable net prior year premium and loss
development and increase in bad debt reserves recorded in the third
quarter of 2003 as discussed above and lower results from Lorillard,
partially offset by the improvement in net investment gains.
Loss from continuing operations attributable to Loews common stock
for the third quarter of 2003 amounted to $1,465.5 million or $7.90
per share, compared to income of $194.3 million or $1.05 per share in
the comparable period of the prior year. Loss from continuing
operations in the third quarter of 2003 includes net investment gains
attributable to Loews common stock of $107.8 million, compared to $5.8
million in the comparable period of the prior year.
Net investment gains increased $102.0 million (after tax and
minority interest) in the third quarter of 2003 as compared with the
same period in 2002. This increase was due primarily to increased
gains related to derivative securities and a decrease in investment
related impairment charges for other-than-temporary declines in market
values of fixed maturity and equity securities, partially offset by
decreased gains on sales of fixed maturity securities. Investment
related impairment losses (after tax and minority interest) were $9.0
million for the third quarter of 2003 as compared with $129.6 million
for the same period in 2002.
Net income attributable to Carolina Group stock for the third
quarter of 2003 was $26.8 million or $0.67 per Carolina Group share,
compared to $44.4 million, or $1.10 per Carolina Group share in the
third quarter of 2002. The Company is issuing a separate press release
reporting the actual and pro forma results of the Carolina Group for
the quarter and nine months ended September 30, 2003 and 2002.
Nine Months Ended September 30, 2003 Compared With 2002
Net loss for the first nine months of 2003 includes a gain from
discontinued operations of $55.4 million or $0.30 per share of Loews
common stock related to the sale of a hotel property, as compared to a
loss from discontinued operations of $28.8 million or $0.15 per share
of Loews common stock in the prior year primarily related to CNA's
sale of its life operations in Chile. Net income in 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 at CNA.
Consolidated loss from continuing operations for the first nine
months of 2003 was $1,033.5 million, compared to income of $719.1
million in the comparable period of the prior year. Loss from
continuing operations includes net investment gains of $300.6 million
(after tax and minority interest), compared to a loss of $93.0 million
(after tax and minority interest) in the comparable period of the
prior year. The net loss reflects the unfavorable net prior year
premium and loss development and increase in bad debt reserves
recorded in the third quarter of 2003 as discussed above and lower
results from Lorillard, partially offset by the improvement in net
investment gains.
Loss from continuing operations attributable to Loews common stock
for the first nine months of 2003 amounted to $1,113.9 million or
$6.01 per share, compared to income of $615.3 million or $3.26 per
share in the comparable period of the prior year. Loss from continuing
operations includes net investment gains attributable to Loews common
stock of $302.2 million, compared to losses of $97.8 million in the
comparable period of the prior year.
Net income attributable to Carolina Group stock for the first nine
months of 2003 amounted to $80.4 million or $2.01 per Carolina Group
share, compared to $103.8 million or $2.58 per share in the comparable
period of the prior year.
Components of Net (Loss) Income
-------------------------------
September 30,
-------------------------------------
Three Months Nine Months
-------------------------------------
(In millions) 2003 2002 2003 2002
-------------------------------------
(Loss) income before net
investment gains (losses)
attributable to Loews common
stock $(1,573.3) $188.5 $(1,416.1) $713.1
Net investment gains (losses) 107.8 5.8 302.2 (97.8)
-------------------------------------
(Loss) income from continuing
operations (1,465.5) 194.3 (1,113.9) 615.3
Discontinued operations-net (a) 55.8 0.4 55.4 (28.8)
Cumulative effect of change in
accounting principle-net (b) (39.6)
-------------------------------------
Net (loss) income attributable
to Loews common stock $(1,409.7) $194.7 $(1,058.5) $546.9
=====================================
(a) Includes a gain of $56.7 in the quarter and nine months ended
September 30, 2003 from the sale of a hotel property. The nine
months ended September 30, 2002 includes a $31.0 loss from CNA's
sale of its life operations in Chile.
(b) Represents the effect of the adoption of SFAS No. 142, which was a
change in accounting for goodwill and other intangible assets at
CNA.
At September 30, 2003, the book value per share of Loews common
stock was $57.48 per Loews common share compared to $61.68 per Loews
common share at December 31, 2002.
At September 30, 2003, there were 185,447,050 shares of Loews
common stock outstanding and 39,910,000 shares of Carolina Group stock
outstanding. 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 February 2002 the Company created a 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. In an initial public offering,
the Company issued shares of Carolina Group Stock representing an
interest in the economic performance of the Carolina Group. Loews
common stock represents the economic performance of the Company's
remaining assets, including the interest in the Carolina Group not
represented by Carolina Group Stock. At September 30, 2003, 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 third quarter results of Loews
Corporation has been scheduled for 10:00 a.m. EST, Wednesday, November
12, 2003. A live broadcast of the call will be available online at the
Loews Corporation website (www.loews.com). Please go to the website at
least ten minutes before the event begins to register and to download
and install any necessary audio software. Those interested in
participating in the question and answer session of the conference
call should dial (877) 692-2592. An online replay will be available at
the Company's website for one week following the call.
A conference call to discuss the third quarter results of CNA has
been scheduled for 8:00 a.m. EST, Wednesday, November 12, 2003. A live
broadcast of the call will be available online at the CNA website
(http://investors.cna.com). Please go to the website at least ten
minutes before the event begins to register and to download and
install any necessary audio software. Those interested in
participating in the question and answer session of the conference
call should dial (800) 967-7140. An online replay will be available at
CNA's website for one week following the call.
FORWARD-LOOKING STATEMENTS
Statements contained in this press release which are not
historical facts are "forward-looking statements" within the meaning
of the federal securities laws. When included in this press release,
the words "believes," "expects," "plans," "intends," "anticipates,"
"estimates," "should," and similar expressions, and other statements
concerning the Company's future plans, objectives, and expected
performance are intended to identify forward-looking statements.
Forward-looking statements contained in this release include
statements regarding the insurance business of the Company's CNA
subsidiary, including the implementation of CNA's capital plan,
regular and ongoing insurance reserve reviews by CNA, ongoing state
regulatory exams of CNA's primary insurance company subsidiaries and
CNA's responses to the results of those reviews and exams. These
matters are highly complex and their outcome is inherently uncertain.
Therefore, forward-looking statements in this release regarding these
matters are inherently uncertain and subject to a variety of risks
that could cause actual results to differ materially from those
expected by management of the Company and CNA.
A discussion of the important risk factors and other
considerations that could materially impact these matters as well as
the Company's overall business and financial performance can be found
in the Company's reports filed with the Securities and Exchange
Commission and readers of this release are urged to review those
reports carefully when considering these forward-looking statements.
Copies of these reports are available through the Company's website
(www.loews.com). Given these risk factors, investors and analysts
should not place undue reliance on forward-looking statements.
These forward-looking statements speak only as of the date of this
press release. The Company expressly disclaims any obligation or
undertaking to release publicly any updates or revisions to any
forward-looking statement to reflect any change in the Company's
expectations with regard thereto or any change in events, conditions
or circumstances on which any forward-looking statement is based.
Loews Corporation and Subsidiaries
Financial Review
September 30,
------------------------------------------
Three Months Nine Months
------------------------------------------
2003 2002 (g) 2003 2002 (g)
------------------------------------------
(Amounts in millions, except per share
data)
Revenues:
Insurance premiums and
net investment income
(a) $ 2,678.1 $2,684.7 $ 8,479.4 $ 9,177.6
Manufactured products (b) 880.1 1,004.4 2,578.4 3,077.2
Other 381.8 382.2 1,067.5 1,241.6
------------------------------------------
Total 3,940.0 4,071.3 12,125.3 13,496.4
------------------------------------------
Expenses:
Insurance claims &
policyholders' benefits 4,032.2 1,850.1 7,968.9 6,542.4
Cost of manufactured
products sold (b) 532.7 553.2 1,489.6 1,761.4
Other 1,925.7 1,255.9 4,632.4 3,965.1
------------------------------------------
Total 6,490.6 3,659.2 14,090.9 12,268.9
------------------------------------------
(2,550.6) 412.1 (1,965.6) 1,227.5
------------------------------------------
Income tax (benefit)
expense (916.4) 156.5 (735.3) 449.2
Minority interest (195.5) 16.9 (196.8) 59.2
------------------------------------------
Total (1,111.9) 173.4 (932.1) 508.4
------------------------------------------
(Loss) income from
continuing operations (1,438.7) 238.7 (1,033.5) 719.1
Discontinued
operations-net (c) 55.8 0.4 55.4 (28.8)
Cumulative effect of change
in accounting principles-
net (d) (39.6)
------------------------------------------
Net (loss) income $(1,382.9) $ 239.1 $ (978.1) $ 650.7
==========================================
Net (loss) income
attributable to:
Loews common stock:
(Loss) income from
continuing operations $(1,465.5) $ 194.3 $(1,113.9) $ 615.3
Discontinued operations-
net (c) 55.8 0.4 55.4 (28.8)
Cumulative effect of
change in accounting
principles-net (d) (39.6)
------------------------------------------
Loews common stock (1,409.7) 194.7 (1,058.5) 546.9
Carolina Group stock (e) 26.8 44.4 80.4 103.8
------------------------------------------
$(1,382.9) $ 239.1 $ (978.1) $ 650.7
==========================================
(Loss) income per share of
Loews common stock (f):
(Loss) income from
continuing operations $ (7.90) $ 1.05 $ (6.01) $ 3.26
Discontinued operations-
net (c) 0.30 0.30 (0.15)
Cumulative effect of
changes in accounting
principles-net (d) (0.21)
------------------------------------------
Net (loss) income $ (7.60) $ 1.05 $ (5.71) $ 2.90
==========================================
Net income per share of
Carolina Group stock (f) $ 0.67 $ 1.10 $ 2.01 $ 2.58
==========================================
Weighted number of shares
outstanding:
Loews common stock 185.45 185.71 185.45 188.31
Carolina Group stock 39.91 40.19 39.91 40.23
(a) Includes investment gains (losses) of $179.5, $26.5, $503.2 and
$(145.0) for the respective periods.
(b) Includes excise taxes of $173.1, $161.5, $493.4 and $518.0 paid on
sales of manufactured products for the respective periods.
(c) Includes a gain of $56.7 in the quarter and nine months ended
September 30, 2003 from the sale of a hotel property. The nine
months ended September 30, 2002 includes a $31.0 loss from CNA's
sale of its life operations in Chile.
(d) Adoption of SFAS No. 142, accounting for goodwill and other
intangible assets at the CNA subsidiary.
(e) Represents 23.01% of the economic interest in the Carolina Group
for 2003 and 23.14% and 23.16% for the three and eight months
ended September 30, 2002.
(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
September 30,
------------------------------------------
Three Months Nine Months
------------------------------------------
2003 2002 (h) 2003 2002 (h)
------------------------------------------
(In millions)
Revenues:
CNA Financial $2,561.5 $2,763.3 $8,202.7 $9,682.6
Lorillard (a) 854.0 977.8 2,497.4 3,000.0
Loews Hotels 65.9 61.8 213.5 202.3
Diamond Offshore (b) 185.0 186.3 504.9 594.0
Texas Gas 45.0 68.1
Bulova 37.6 41.2 112.4 115.3
Investment income-net and
other (c) 11.5 14.4 23.1 47.2
------------------------------------------
3,760.5 4,044.8 11,622.1 13,641.4
------------------------------------------
Investment gains
(losses):
CNA Financial 164.3 23.9 476.9 (137.4)
Corporate and other 15.2 2.6 26.3 (7.6)
------------------------------------------
179.5 26.5 503.2 (145.0)
------------------------------------------
Total $3,940.0 $4,071.3 $12,125.3 $13,496.4
==========================================
(Loss) Income Before Taxes:
CNA Financial $(2,940.9) $55.9 $(3,053.9) $432.5
Lorillard (d) (e) 196.9 277.0 578.5 791.8
Loews Hotels (0.1) (1.1) 17.6 15.8
Diamond Offshore (8.4) 8.3 (56.1) 44.6
Texas Gas 4.1 6.7
Bulova 2.4 4.5 9.6 12.1
Investment income-net and
other (c) (29.4) (27.5) (102.4) (88.4)
------------------------------------------
(2,775.4) 317.1 (2,600.0) 1,208.4
------------------------------------------
Investment gains
(losses):
CNA Financial 164.3 23.9 476.9 (137.4)
Corporate and other 17.1 (2.5) 28.7 (15.0)
------------------------------------------
181.4 21.4 505.6 (152.4)
------------------------------------------
Loews common stock (2,594.0) 338.5 (2,094.4) 1,056.0
Carolina Group stock (f) 43.4 73.6 128.8 171.5
------------------------------------------
Total $(2,550.6) $412.1 $(1,965.6) $1,227.5
==========================================
Net (Loss) Income:
CNA Financial $(1,675.5) $35.6 $(1,708.2) $261.2
Lorillard (d) (e) 121.9 165.9 361.2 478.6
Loews Hotels (0.5) 11.2 10.4
Diamond Offshore (5.1) 2.8 (26.5) 13.2
Texas Gas 2.2 3.8
Bulova 1.6 2.3 6.5 6.5
Investment income-net and
other (c) (18.4) (17.6) (64.1) (56.8)
------------------------------------------
(1,573.3) 188.5 (1,416.1) 713.1
------------------------------------------
Investment gains (losses):
CNA Financial 94.7 14.8 281.2 (76.9)
Corporate and other 13.1 (9.0) 21.0 (20.9)
------------------------------------------
107.8 5.8 302.2 (97.8)
------------------------------------------
(Loss) income from
continuing operations (1,465.5) 194.3 (1,113.9) 615.3
Discontinued operations-
net (g) 55.8 0.4 55.4 (28.8)
Cumulative effect of
changes in accounting
principles-net (39.6)
------------------------------------------
Loews common stock (1,409.7) 194.7 (1,058.5) 546.9
Carolina Group stock (f) 26.8 44.4 80.4 103.8
------------------------------------------
Total $(1,382.9) $239.1 $(978.1) $650.7
==========================================
(a) Includes excise taxes of $173.1, $161.5, $493.4 and $518.0 paid on
sales of manufactured products for the respective periods.
(b) Revenue for 2002 has been restated for comparative purposes to
reflect the adoption of new accounting principles related to
reimbursements received by Diamond Offshore for "Out-of-Pocket"
expenses incurred.
(c) Consists primarily of corporate investment income, interest
expenses and other unallocated expenses.
(d) Represents the Loews Group's intergroup interest in the earnings
of the Carolina Group.
(e) Includes a $26.0 charge in the nine months ended September 30,
2003 ($16.8 after taxes) to settle litigation with tobacco growers
and a $28.0 charge in the nine months ended September 30, 2003
($17.1 after taxes) to resolve indemnification claims and
trademark matters in connection with the 1977 sale by Lorillard of
its international business.
(f) Represents 23.01% of the economic interest in the Carolina Group
for 2003 and 23.14% and 23.16% for the three and eight months
ended September 30, 2002.
(g) Includes a gain of $56.7 in the quarter and nine months ended
September 30, 2003 from the sale of a hotel property. The nine
months ended September 30, 2002 includes a $31.0 loss from CNA's
sale of its life operations in Chile.
(h) Restated to reflect an adjustment to the Company's historical
accounting for CNA's investment in life settlement contracts and
the related revenue recognition.
Carolina Group Reports Net Income for the Third Quarter of 2003
NEW YORK--Nov. 12, 2003--Loews Corporation (NYSE:LTR) reported
today Carolina Group net income for the 2003 third quarter of $116.4
million, compared to $191.7 million in the 2002 third quarter. Net
income attributable to the Loews Group intergroup interest for the
third quarter of 2003 amounted to $89.6 million, compared to $147.3
million in the comparable period of the prior year. Net income
attributable to Carolina Group stock (NYSE:CG) for the third quarter
of 2003 was $26.8 million, or $0.67 per share of Carolina Group stock,
compared to $44.4 million, or $1.10 per share in the prior year.
Carolina Group net income for the 2003 third quarter includes net
investment losses of $5.7 million, compared to gains of $14.3 million
in the prior year. Net investment (losses) gains attributable to
Carolina Group stock in the third quarter of 2003 and 2002 were $(1.3)
million and $3.3 million.
Net sales for the Carolina Group were $842.8 million in the third
quarter of 2003, compared to $963.4 million in 2002. The decline in
net sales reflects increased sales promotion expenses, partially
offset by improved unit sales volume of 5.9%.
Carolina Group net income for the first nine months of 2003 was
$349.2 million, compared to $521.2 million in the comparable period of
the prior year. Net income for 2003 was reduced by after-tax charges
of $16.8 million in the second quarter and $17.1 million in the first
quarter to settle litigation with tobacco growers and to resolve
indemnification claims and trademark matters in connection with the
1977 sale by Lorillard of its international business.
Net income attributable to the Loews Group intergroup interest for
the first nine months of 2003 amounted to $268.8 million, compared to
$417.4 million in the comparable period of the prior year. Net income
attributable to Carolina Group stock for the first nine months of 2003
was $80.4 million or $2.01 per share of Carolina Group stock, compared
to $103.8 million or $2.58 per share of Carolina Group stock and
reflects eight months of actual results, commencing with the initial
issuance of Carolina Group stock by Loews Corporation in February
2002.
Carolina Group net income for the first nine months of 2003
includes net investment losses of $6.9 million, compared to gains of
$21.2 million in the prior year. Net investment (losses) gains
attributable to Carolina Group stock in the 2003 and 2002 year to date
periods were $(1.6) million and $4.8 million.
Net sales for the Carolina Group in the first nine months of 2003
were $2.468 billion compared to $2.963 billion in the comparable 2002
period. The decline in net sales reflects lower unit sales volume of
4.4% and increased sales promotion expenses.
On a pro forma basis, assuming the Carolina Group stock had been
issued at January 1, 2002, net income attributable to Carolina Group
stock for the first nine months of 2002 would have been $117.8 million
or $2.93 per share of Carolina Group stock.
This pro forma information is based on the historical results of
operations of the Carolina Group, adjusted to accrue interest expense
at 8% per annum on $2.500 billion of notional intergroup debt and an
adjustment to income taxes for the impact of the interest expense. Per
share amounts are based on income available to Carolina Group
shareholders. At September 30, 2003, the outstanding balance of
notional debt was $2.163 billion.
The Carolina Group stock, commonly called a tracking stock, is
intended to reflect the economic performance of a defined group of the
Company's assets and liabilities, referred to as the Carolina Group,
principally consisting of the Company's subsidiary Lorillard, Inc. The
Carolina Group, a notional group, is not a separate legal entity. The
purpose of this financial information is to provide investors with
additional information to use in analyzing the results of operations
and financial condition of the Carolina Group, and this financial
information should be read in conjunction with the consolidated
financial information of Loews Corporation.
As of September 30, 2003, there were 39,910,000 shares of Carolina
Group stock outstanding. Depending on market conditions, the Company,
for the account of the Carolina Group, from time to time may purchase
shares of Carolina Group stock in the open market or otherwise.
Loews Corporation has issued a separate press release reporting
its consolidated results for the third quarter of 2003, which
accompanies this press release.
A conference call to discuss the third quarter results of Loews
Corporation has been scheduled for 10:00 a.m. EST, Wednesday, November
12, 2003. A live broadcast of the call will be available online at the
Loews Corporation website (www.loews.com). Please go to the website at
least ten minutes before the event begins to register and to download
and install any necessary audio software. Those interested in
participating in the question and answer session of the conference
call should dial (877) 692-2592. An online replay will be available at
the Company's website for one week following the call.
Carolina Group
Financial Review
September 30,
-------------------------------------------------
Three Months Nine Months Ended
-------------------------------------------------
2003 2002 2003 2002 2002 (e)
-------------------------------------------------
(Amounts in millions, except per share data)
Pro Forma
Net sales (a) $ 842.8 $ 963.4 $2,467.9 $2,963.4 $2,963.4
Cost of sales (a) (b) 514.0 539.1 1,435.4 1,726.9 1,726.9
Selling, advertising
and administrative
(c) 98.0 93.3 352.8 316.7 316.7
-------------------------------------------------
Total operating costs
and expenses 612.0 632.4 1,788.2 2,043.6 2,043.6
-------------------------------------------------
Operating income 230.8 331.0 679.7 919.8 919.8
Investment income (d) 2.9 37.1 20.6 69.5 69.5
Interest expense (45.2) (50.0) (140.7) (129.0) (150.0)
-------------------------------------------------
Income before income
taxes 188.5 318.1 559.6 860.3 839.3
Income taxes 72.1 126.4 210.4 339.1 330.9
-------------------------------------------------
Net income 116.4 191.7 349.2 521.2 508.4
Earnings attributable
to the Loews Group
intergroup interest
(f) 89.6 147.3 268.8 417.4 390.6
-------------------------------------------------
Income attributable
to Carolina Group
shareholders (g) $ 26.8 $ 44.4 $ 80.4 $ 103.8 $ 117.8
=================================================
Per share of Carolina
Group stock (h) $ 0.67 $ 1.10 $ 2.01 $ 2.58 $ 2.93
=================================================
Weighted number of
shares outstanding 39.91 40.19 39.91 40.23 40.23
=================================================
(a) Includes excise taxes of $173.1, $161.5, $493.4 and $518.0 for the
respective periods.
(b) Includes charges of $214.6, $255.2, $592.2 and $842.9 ($132.5,
$153.7, $369.6 and $510.6 after taxes) to accrue obligations under
the State Settlement Agreements for the respective periods.
(c) Includes a $26.0 charge in the nine months ended September 30,
2003 ($16.8 after taxes) to settle litigation with tobacco growers
and a $28.0 charge in the nine months ended September 30, 2003
($17.1 after taxes) to resolve indemnification claims and
trademark matters in connection with the 1977 sale by Lorillard of
its international business.
(d) Includes $(8.8), $22.1, $(10.6) and $32.7 of investment (losses)
gains for the respective periods.
(e) Includes pro forma adjustment to accrue interest expense at 8% per
annum on $2,500.0 of notional intergroup debt and an adjustment to
income taxes for the impact of the interest expense for the period
prior to the issuance of Carolina Group stock.
(f) Adjusted to reflect the Loews Group's intergroup interest in the
earnings of the Carolina Group after completion of the February 1,
2002 offering of 40,250,000 shares of Carolina Group stock. The
Loews Group's economic interest is expressed in share equivalents
amounting to 133,500,000 shares for a total of 173,750,000 shares
and share equivalents outstanding after the offering. As of
September 30, 2003, there were 39,910,000 shares of Carolina Group
stock outstanding.
(g) Represents 23.01% of the economic interest in the Carolina Group
for 2003 and 23.14% and 23.16% for the three and eight months
ended September 30, 2002. On a pro forma basis, the economic
interest is 23.17%.
(h) Earnings per common share-assuming dilution is not presented
because securities that could potentially dilute basic earnings
per share in the future would have been insignificant or
antidilutive for the periods presented. Pro forma earnings per
share of Carolina Group stock assumes the Carolina Group was a
separate group as of January 1, 2002.
Carolina Group
Supplemental Information
The following information regarding domestic U.S. unit volume shipped
by Lorillard Tobacco Company to its direct buying customers by brand
as follows (all units in billions):
September 30,
------------------------------
Three Months Nine Months
------------------------------
2003 2002 2003 2002
------------------------------
Premium Brands
Total Newport 8.296 7.626 23.468 24.276
Total Kent Family 0.268 0.330 0.817 1.041
Total True 0.198 0.233 0.594 0.721
Total Max 0.013 0.017 0.041 0.051
Total Satin 0.003 0.004 0.009 0.011
Total Triumph 0.001 0.001 0.003 0.004
------------------------------
Total Premium Brands 8.779 8.211 24.932 26.104
------------------------------
Discount Brands
Total Old Gold 0.269 0.339 0.787 1.016
Total Maverick 0.162 0.134 0.363 0.502
------------------------------
Total Discount Brands 0.431 0.473 1.150 1.518
------------------------------
Total Domestic Cigarettes 9.210 8.684 26.082 27.622
==============================
Notes:
1. This information is unaudited and is not adjusted for returns.
2. Domestic unit volume includes units sold as well as promotional
units, and excludes volumes for Puerto Rico and U.S. Possessions.
3. Unit volume for a quarter is not necessarily indicative of unit
volume for any subsequent period.
4. Unit volume is not necessarily indicative of the level of revenues
for any period.
CONTACT: Loews Corporation
Senior Vice President
Peter W. Keegan, 212-521-2950
or
V.P. of Public Affairs
Candace Leeds, 212-521-2416
or
Investor Relations
Joshua E. Kahn, 212-521-2788
SOURCE: Loews Corporation
