NEW YORK--(BUSINESS WIRE)--Feb. 12, 2004--Loews Corporation
(NYSE:LTR) (NYSE:CG) today reported consolidated net income (including
both the Loews Group and Carolina Group) for the 2003 fourth quarter
of $367.4 million, compared to $261.3 million for the fourth quarter
of 2002. Consolidated net loss for the year ended December 31, 2003
amounted to $610.7 million, compared to net income of $912.0 million
in 2002.
The following table summarizes the revenues, net income (loss) and
earnings per share information:
December 31,
--------------------------------------------
Three Months Year Ended
--------------------------------------------
(In millions, except per) 2003 2002 2003 2002
share data) --------------------------------------------
Consolidated:
Revenues (a) $ 4,335.7 $ 3,960.1 $16,461.0 $17,456.5
Net income (loss) $ 367.4 $ 261.3 $ (610.7) $ 912.0
Per Share: (b)
Income (loss) per share
of Loews common stock:
Income (loss) from
continuing
operations $ 1.79 $ 1.20 $ (4.21) $ 4.46
Discontinued
operations-net 0.01 0.30 (0.14)
Cumulative effect of
change in accounting
principle-net (0.21)
--------------------------------------------
Net income (loss) per
share of Loews common
stock $ 1.79 $ 1.21 $ (3.91) $ 4.11
============================================
Net income per share of
Carolina Group stock $ 0.74 $ 0.92 $ 2.76 $ 3.50
======================================================================
(a) Revenue includes premiums of $1,151.0 for the year ended December
31, 2002, 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.
Quarter Ended December 31, 2003 Compared With 2002
Consolidated income from continuing operations for the fourth
quarter of 2003 was $367.4 million, compared to $259.5 million in the
comparable period of the prior year. Income from continuing operations
includes net investment gains of $37.7 million (after tax and minority
interest), compared to net investment losses of $23.7 million (after
tax and minority interest) in the comparable period of the prior year.
Income from continuing operations attributable to Loews common
stock for the fourth quarter of 2003 amounted to $332.6 million or
$1.79 per share, compared to $222.6 million or $1.20 per share in the
comparable period of the prior year. Income from continuing operations
in the fourth quarter of 2003 includes net investment gains
attributable to Loews common stock of $37.5 million, compared to net
investment losses of $24.2 million in the comparable period of the
prior year.
Net investment gains increased $61.7 million (after tax and
minority interest) in the fourth quarter of 2003 as compared with the
same period in 2002. This increase was due primarily to a decrease in
investment related impairment charges for other-than-temporary
declines in market values of fixed maturity and equity securities
recorded in 2002, partially offset by a loss of $116.4 million (after
tax and minority interest) from CNA's sale of its Group Benefits
business to Hartford Financial Services Group, Inc. Investment related
impairment losses were $10.9 million in the fourth quarter of 2003,
compared to $208.8 million (after tax and minority interest) for the
same period in 2002.
Net income attributable to Carolina Group stock for the fourth
quarter of 2003 was $34.8 million or $0.74 per Carolina Group share,
compared to $36.9 million, or $0.92 per Carolina Group share in the
fourth 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 year ended December 31, 2003 and 2002.
Year Ended December 31, 2003 Compared With 2002
Net loss of $610.7 million for 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 $27.0 million or $0.14 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.
The 2003 results reflect the charges at CNA Financial Corporation,
the Company's 90% owned subsidiary, for net prior year development of
$1,667.4 million, net of tax and minority interest, which includes
premium and claim and allocated claim adjustment expense development.
Results for 2003 also include charges to increase bad debt reserves
for insurance and reinsurance receivables of $356.9 million.
The net prior year development consists of $1,202.0 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 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.
As previously reported, in order to assist CNA in replenishing
statutory capital adversely impacted by the 2003 charges discussed
above, in November of 2003 Loews purchased $750 million of a new
series of CNA convertible preferred stock. Loews committed additional
capital support of up to $500 million by February 27, 2004 through the
purchase of surplus notes of Continental Casualty Company ("CCC"),
CNA's principal insurance subsidiary, in the event certain additions
to CCC's statutory capital are not achieved through asset sales. In
addition, Loews committed to an additional $150 million of capital
support by March 31, 2004, in a form to be determined.
As a result of CNA's sale of its group benefits business, Loews
expects that it will be obligated to purchase $45 million of CCC
surplus notes pursuant to such commitment. In addition, CNA has
recently announced that it has entered into an agreement to sell its
individual life business and has estimated that this sale will result
in an addition to CCC's statutory surplus in excess of $400 million.
However, this sale, which is subject to customary closing conditions
and regulatory approvals, is not expected to be consummated by
February 26, 2004. As a result, Loews will be obligated to purchase
$300 million of additional CCC surplus notes. CNA has stated that,
following the consummation of the individual life sale, it plans to
seek approval from the insurance regulatory authority for the
repayment of the surplus notes purchased in relation to such sale,
although no assurance can be given that sale of the individual life
business will be consummated or that the regulatory approval will be
obtained.
Consolidated loss from continuing operations for the year ended
2003 was $666.1 million, compared to income of $978.6 million in the
comparable period of the prior year. Loss from continuing operations
includes net investment gains of $338.3 million (after tax and
minority interest), compared to a loss of $116.7 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 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 year ended 2003 amounted to $781.3 million or $4.21 per share,
compared to income of $837.9 million or $4.46 per share in the
comparable period of the prior year. Loss from continuing operations
includes net investment gains attributable to Loews common stock of
$339.7 million, compared to losses of $122.0 million in the comparable
period of the prior year.
Net income attributable to Carolina Group stock for the year ended
2003 amounted to $115.2 million or $2.76 per Carolina Group share,
compared to $140.7 million or $3.50 per share in the prior year.
Components of Net Income (Loss)
December 31,
--------------------------------------------
Three Months Year Ended
--------------------------------------------
(In millions) 2003 2002 2003 2002
--------------------------------------------
Income (loss) before net
investment gains (losses)
attributable to Loews
common stock $ 295.1 $ 246.8 $(1,121.0) $ 959.9
Net investment gains
(losses) 37.5 (24.2) 339.7 (122.0)
--------------------------------------------
Income (loss) from
continuing operations 332.6 222.6 (781.3) 837.9
Discontinued operations-
net (a) 1.8 55.4 (27.0)
Cumulative effect of
change in accounting
principle-net (b) (39.6)
--------------------------------------------
Net income (loss)
attributable to Loews
common stock $ 332.6 $ 224.4 $ (725.9) $ 771.3
======================================================================
(a) Includes a gain of $56.7 in the year ended December 31, 2003 from
the sale of a hotel property. The year ended December 31, 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 December 31, 2003, the book value per share of Loews common
stock was $60.92 per Loews common share compared to $61.68 per Loews
common share at December 31, 2002.
At December 31, 2003, there were 185,447,050 shares of Loews
common stock outstanding and 57,965,000 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 40,250,000 shares of Carolina Group stock
representing an interest in the economic performance of the Carolina
Group. On November 25, 2003, the Company sold 18,055,000 shares of
Carolina Group stock. 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
December 31, 2003, the outstanding Carolina Group stock represents a
33.43% economic interest in the economic performance of the Carolina
Group.
A conference call to discuss the fourth quarter results of Loews
Corporation has been scheduled for 11:00 a.m. EST, Thursday, February
12, 2004. A live broadcast of the call will be available online at the
Loews Corporation Web site (www.loews.com). Please go to the Web site
at least 10 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 Web site for one week following the call.
A conference call to discuss the fourth quarter results of CNA has
been scheduled for 10:00 a.m. EST, Thursday, February 12, 2004. A live
broadcast of the call will be available online at the CNA Web site
(http://investors.cna.com). Please go to the Web site at least 10
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) 818-5264. An online replay will be available at
CNA's Web site 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 implementation of CNA's capital plan and the
impact on statutory capital, including the sale of CNA's individual
life business and the purchase by, and repayment to, the Company of
surplus notes.
Forward-looking statements 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 Web site (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
December 31,
--------------------------------------------
Three Months Years Ended
--------------------------------------------
2003 2002 2003 2002
--------------------------------------------
(Amounts in millions, except per share data)
Revenues:
Insurance premiums and
net investment income
(a) $ 3,044.4 $ 2,690.5 $11,523.8 $11,868.1
Manufactured products
(b) 840.4 886.3 3,418.8 3,963.5
Other 450.9 383.3 1,518.4 1,624.9
--------------------------------------------
Total 4,335.7 3,960.1 16,461.0 17,456.5
--------------------------------------------
Expenses:
Insurance claims &
policyholders' benefits 1,946.7 1,849.6 9,915.6 8,392.0
Cost of manufactured
products sold (b) 483.2 465.1 1,972.8 2,226.5
Other 1,318.6 1,232.2 5,951.0 5,197.3
--------------------------------------------
Total 3,748.5 3,546.9 17,839.4 15,815.8
--------------------------------------------
587.2 413.2 (1,378.4) 1,640.7
--------------------------------------------
Income tax expense
(benefit) 201.2 130.6 (534.1) 579.8
Minority interest 18.6 23.1 (178.2) 82.3
--------------------------------------------
Total 219.8 153.7 (712.3) 662.1
--------------------------------------------
Income (loss) from
continuing operations 367.4 259.5 (666.1) 978.6
Discontinued operations-
net (c) 1.8 55.4 (27.0)
Cumulative effect of
change in accounting
principles-net (d) (39.6)
--------------------------------------------
Net income (loss) $ 367.4 $ 261.3 $ (610.7) $ 912.0
============================================
Net income (loss)
attributable to:
Loews common stock:
Income (loss) from
continuing
operations $ 332.6 $ 222.6 $ (781.3) $ 837.9
Discontinued
operations-net (c) 1.8 55.4 (27.0)
Cumulative effect of
change in accounting
principles-net (d) (39.6)
--------------------------------------------
Loews common stock 332.6 224.4 (725.9) 771.3
Carolina Group stock (e) 34.8 36.9 115.2 140.7
--------------------------------------------
$ 367.4 $ 261.3 $ (610.7) $ 912.0
============================================
Income (loss) per share of
Loews common stock (f):
Income (loss) from
continuing operations $ 1.79 $ 1.20 $ (4.21) $ 4.46
Discontinued operations-
net (c) 0.01 0.30 (0.14)
Cumulative effect of
changes in accounting
principles-net (d) (0.21)
--------------------------------------------
Net income (loss) $ 1.79 $ 1.21 $ (3.91) $ 4.11
============================================
Net income per share of
Carolina Group stock (f) $ 0.74 $ 0.92 $ 2.76 $ 3.50
============================================
Weighted number of shares
outstanding:
Loews common stock 185.45 185.44 185.45 187.59
Carolina Group stock 47.17 39.91 41.74 40.15
(a) Includes investment gains (losses) of $78.7, $(63.7), $581.9 and
$(208.7) for the respective periods.
(b) Includes excise taxes of $158.0, $149.6, $651.4 and $667.6 paid on
sales of manufactured products for the respective periods.
(c) Includes a gain of $56.7 in the year ended December 31, 2003 from
the sale of a hotel property. The year ended December 31, 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 29.23% and 24.59% of the economic interest in the
Carolina Group for the three months and year ended 2003 and 23.01%
and 23.12% for the three and eleven months ended December 31,
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.
Loews Corporation and Subsidiaries
Additional Financial Information
December 31,
--------------------------------------------
Three Months Years Ended
--------------------------------------------
2003 2002 2003 2002
--------------------------------------------
(In millions)
Revenues:
CNA Financial $ 3,053.3 $ 2,856.2 $11,256.0 $12,538.8
Lorillard (a) 798.0 843.8 3,295.4 3,843.8
Loews Hotels 72.5 64.1 286.0 266.4
Diamond Offshore 190.0 189.9 694.9 783.9
Texas Gas 75.1 143.2
Bulova 54.4 51.3 166.8 166.6
Investment income-net
and other (b) 13.7 18.5 36.8 65.7
--------------------------------------------
4,257.0 4,023.8 15,879.1 17,665.2
--------------------------------------------
Investment gains
(losses):
CNA Financial (c) (3.5) (114.8) 473.4 (252.2)
Corporate and other 82.2 51.1 108.5 43.5
--------------------------------------------
78.7 (63.7) 581.9 (208.7)
--------------------------------------------
Total $ 4,335.7 $ 3,960.1 $16,461.0 $17,456.5
============================================
Income (Loss) Before
Taxes:
CNA Financial $ 264.3 $ 175.1 $(2,789.6) $ 607.6
Lorillard (d)(e) 176.6 246.7 755.1 1,038.5
Loews Hotels 1.0 (1.6) 18.6 14.2
Diamond Offshore 2.9 9.6 (53.2) 54.2
Texas Gas 30.9 37.6
Bulova 8.4 9.4 18.0 21.5
Investment income-net
and other (b) (31.5) (21.4) (133.9) (109.8)
--------------------------------------------
452.6 417.8 (2,147.4) 1,626.2
--------------------------------------------
Investment gains
(losses):
CNA Financial (c) (3.5) (114.8) 473.4 (252.2)
Corporate and other 82.0 50.3 110.7 35.3
--------------------------------------------
78.5 (64.5) 584.1 (216.9)
--------------------------------------------
Loews common stock 531.1 353.3 (1,563.3) 1,409.3
Carolina Group stock (f) 56.1 59.9 184.9 231.4
--------------------------------------------
Total $ 587.2 $ 413.2 $(1,378.4) $ 1,640.7
============================================
Net Income (Loss):
CNA Financial $ 184.3 $ 102.2 $(1,523.9) $ 363.4
Lorillard (d)(e) 109.7 151.8 470.9 630.4
Loews Hotels (1.7) 11.2 8.7
Diamond Offshore (0.7) 0.9 (27.2) 14.1
Texas Gas 18.7 22.5
Bulova 5.3 5.3 11.8 11.8
Investment income-net
and other (b) (22.2) (11.7) (86.3) (68.5)
--------------------------------------------
295.1 246.8 (1,121.0) 959.9
--------------------------------------------
Investment gains
(losses):
CNA Financial (c) (15.5) (56.1) 265.7 (133.0)
Corporate and other 53.0 31.9 74.0 11.0
--------------------------------------------
37.5 (24.2) 339.7 (122.0)
--------------------------------------------
Income (loss) from
continuing operations 332.6 222.6 (781.3) 837.9
Discontinued operations-
net (g) 1.8 55.4 (27.0)
Cumulative effect of
changes in accounting
principles-net (39.6)
--------------------------------------------
Loews common stock 332.6 224.4 (725.9) 771.3
Carolina Group stock (f) 34.8 36.9 115.2 140.7
--------------------------------------------
Total $ 367.4 $ 261.3 $ (610.7) $ 912.0
============================================
(a) Includes excise taxes of $158.0, $149.6, $651.4 and $667.6 paid on
sales of manufactured products for the respective periods.
(b) Consists primarily of corporate investment income, interest
expenses and other unallocated expenses.
(c) Includes a loss of $116.4 (after tax and minority interest) for
CNA's sale of its Group Benefits business to Hartford Financial
Services Group, Inc.
(d) Represents the Loews Group's intergroup interest in the earnings
of the Carolina Group.
(e) Includes a $27.5 charge in the year ended December 31, 2003 ($17.1
after taxes) to settle litigation with tobacco growers and a $28.0
charge in the year ended December 31, 2003 ($17.5 after taxes) to
resolve indemnification claims and trademark matters in connection
with the 1977 sale by Lorillard of its international business.
(f) Represents 29.23% and 24.59% of the economic interest in the
Carolina Group for the three months and year ended 2003 and 23.01%
and 23.12% for the three and eleven months ended December 31,
2002.
(g) Includes a gain of $56.7 in the year ended December 31, 2003 from
the sale of a hotel property. The year ended December 31, 2002
includes a $31.0 loss from CNA's sale of its life operations in
Chile.
Carolina Group Reports Net Income for 2003
NEW YORK--Feb. 12, 2004--Loews Corporation (NYSE:LTR) reported
today Carolina Group net income for the 2003 fourth quarter of $119.1
million, compared to $160.3 million in the 2002 fourth quarter. Net
income attributable to the Loews Group intergroup interest for the
fourth quarter of 2003 amounted to $84.3 million, compared to $123.4
million in the comparable period of the prior year. Net income
attributable to Carolina Group stock (NYSE:CG) for the fourth quarter
of 2003 was $34.8 million, or $0.74 per share of Carolina Group stock,
compared to $36.9 million, or $0.92 per share in the prior year.
Carolina Group net income for the 2003 fourth quarter includes net
investment gains of $0.6 million, compared to $2.2 million in the
prior year. Net investment gains attributable to Carolina Group stock
in the fourth quarter of 2003 and 2002 were $0.2 million and $0.5
million.
Net sales for the Carolina Group were $787.7 million in the fourth
quarter of 2003, compared to $834.3 million in 2002. The decline in
net sales reflects increased sales promotion expenses, partially
offset by improved unit sales volume of 6.9%.
Carolina Group net income for the year ended 2003 was $468.3
million, compared to $681.5 million in the comparable period of the
prior year. Net income for 2003 was reduced by after-tax charges of
$17.1 million to settle litigation with tobacco growers and $17.5
million 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 year ended 2003 amounted to $353.1 million, compared to $540.8
million in the comparable period of the prior year. Net income
attributable to Carolina Group stock for the year ended 2003 was
$115.2 million or $2.76 per share of Carolina Group stock, compared to
$140.7 million or $3.50 per share of Carolina Group stock in 2002, and
reflects eleven 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 year ended 2003 includes net
investment losses of $6.3 million, compared to gains of $23.4 million
in the prior year. Net investment (losses) gains attributable to
Carolina Group stock for the years ended 2003 and 2002 were $(1.4)
million and $5.3 million.
Net sales for the Carolina Group were $3.256 billion in 2003
compared to $3.798 billion in 2002. The decline in net sales reflects
lower unit sales volume of 2.8% 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 year ended 2002 would have been $154.7 million or $3.85
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 December 31, 2003, the outstanding balance of
notional debt was $2.032 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.
On November 25, 2003, Loews Corporation sold 18,055,000 shares of
Carolina Group stock for net proceeds of $399.5 million. As of
December 31, 2003, there were 57,965,000 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 fourth quarter and full-year of 2003,
which accompanies this press release.
A conference call to discuss the fourth quarter and full-year
results of Loews Corporation has been scheduled for 11:00 a.m. EST,
Thursday, February 12, 2004. A live broadcast of the call will be
available online at the Loews Corporation Web site (www.loews.com).
Please go to the Web site at least 10 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 Web site for one week following the
call.
Carolina Group
Financial Review
December 31,
--------------------------------------------------
Three Months Year Ended
--------------------------------------------------
2003 2002 2003 2002 2002 (e)
--------------------------------------------------
(Amounts in millions, except per share data)
Pro Forma
Net sales (a) $ 787.7 $ 834.3 $3,255.6 $3,797.7 $3,797.7
Cost of sales (a)(b) 457.7 445.5 1,893.1 2,172.4 2,172.4
Selling, advertising
and administrative
(c) 107.8 92.6 460.6 409.3 409.3
--------------------------------------------------
Total operating
costs and expenses 565.5 538.1 2,353.7 2,581.7 2,581.7
--------------------------------------------------
Operating income 222.2 296.2 901.9 1,216.0 1,216.0
Investment income
(d) 11.5 13.5 32.1 83.0 83.0
Interest expense (42.1) (49.4) (182.8) (178.4) (199.4)
--------------------------------------------------
Income before income
taxes 191.6 260.3 751.2 1,120.6 1,099.6
Income taxes 72.5 100.0 282.9 439.1 430.9
--------------------------------------------------
Net income 119.1 160.3 468.3 681.5 668.7
Earnings
attributable to the
Loews Group
intergroup interest
(f) 84.3 123.4 353.1 540.8 514.0
--------------------------------------------------
Income attributable
to Carolina Group
shareholders (g) $ 34.8 $ 36.9 $ 115.2 $ 140.7 $ 154.7
==================================================
Per share of
Carolina Group
stock (h) $ 0.74 $ 0.92 $ 2.76 $ 3.50 $ 3.85
==================================================
Weighted number of
shares outstanding 47.17 39.91 41.74 40.15 40.15
==================================================
(a) Includes excise taxes of $158.0, $149.6, $651.4 and $667.6 for the
respective periods.
(b) Includes charges of $193.0, $219.3, $785.2 and $1,062.2 ($119.9,
$135.5, $489.5 and $646.1 after taxes) to accrue obligations under
the State Settlement Agreements for the respective periods.
(c) Includes a $27.5 charge in the year ended December 31, 2003 ($17.1
after taxes) to settle litigation with tobacco growers and a $28.0
charge in the year ended December 31, 2003 ($17.5 after taxes) to
resolve indemnification claims and trademark matters in connection
with the 1977 sale by Lorillard of its international business.
(d) Includes $1.0, $3.4, ($9.7) and $36.1 of investment gains (losses)
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) Prior to November 25, 2003, the Loews Group's intergroup interest
in the earnings of the Carolina Group reflected share equivalents
amounting to 133,500,000 shares of 173,750,000 share and share
equivalents outstanding. Subsequent to the Loews Group's sale of
18,055,000 shares of Carolina Group stock, the Loews Group's
intergroup interest in the earnings of the Carolina Group
reflected share equivalents amounting to 115,445,000 shares of
173,410,000 share and share equivalents outstanding. As of
December 31, 2003, there were 57,965,000 shares of Carolina Group
stock outstanding.
(g) Represents 29.23% and 24.59% of the economic interest in the
Carolina Group for the three months and year ended December 31,
2003 and 23.01% and 23.12% for the three and eleven months ended
December 31, 2002. On a pro forma basis, the economic interest is
23.13%.
(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
Domestic U.S. unit volume shipped by Lorillard Tobacco Company to its
direct buying customers by brand (all units in thousands):
December 31,
------------------------------------------------
Three Months Years Ended
------------------------------------------------
2003 2002 2003 2002
------------------------------------------------
Premium Brands
Total Newport 7,508,067 6,896,141 30,976,222 31,171,947
Total Kent Family 246,522 303,624 1,063,534 1,344,233
Total True 183,297 214,940 777,681 936,212
Total Max 12,471 15,303 53,970 66,192
Total Satin 2,496 3,084 10,830 14,000
Total Triumph 771 1,116 3,726 4,743
------------------------------------------------
Total Premium Brands 7,953,624 7,434,208 32,885,963 33,537,327
------------------------------------------------
Discount Brands
Total Old Gold 243,108 281,147 1,030,580 1,297,404
Total Maverick 151,590 94,880 514,341 596,938
------------------------------------------------
Total Discount Brands 394,698 376,027 1,544,921 1,894,342
------------------------------------------------
Total Domestic
Cigarettes 8,348,322 7,810,235 34,430,884 35,431,669
================================================
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, New York
Peter W. Keegan, 212-521-2950
Candace Leeds, 212-521-2416
Joshua E. Kahn, 212-521-2788
SOURCE: Loews Corp.
