SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
8-K
CURRENT
REPORT
PURSUANT
TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
Date
of report: |
|
May
3, 2005 |
|
(Date
of earliest event reported): |
|
April
28, 2005 |
|
LOEWS
CORPORATION |
(Exact
name of registrant as specified in its charter)
|
|
Delaware |
|
1-6541 |
|
13-2646102 | |
|
(State
or other jurisdiction of |
|
(Commission |
|
(I.R.S.
Employer | ||
|
incorporation
or organization) |
|
File
Number) |
|
Identification
No.) | ||
|
667
Madison Avenue, New York, N.Y. |
10021-8087 |
|
(Address
of principal executive offices)
|
(Zip
Code) |
|
Registrant’s
telephone number, including area
code: |
(212)
521-2000 |
|
NOT
APPLICABLE |
|
(Former
name or former address, if changed since last
report.) |
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2. below):
|
[ ] |
Written
communications pursuant to Rule 425 under the Securities Act (17 CRF
230.425) |
|
[ ] |
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12) |
|
[ ] |
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b)) |
|
[ ] |
Pre-commencement
communications pursuant to rule 13e-4 (c) under the Exchange Act (17 CFR
240.13e-4(c)) |
1
|
Item
2.02 |
Results
of Operations and Financial Condition. |
On May 3,
2005, Registrant issued a press release for Loews Corporation and a separate
press release for the Carolina Group providing information on their results of
operations for the first quarter of 2005. The press releases are furnished as
Exhibits 99.1 and 99.2 to this Form 8-K.
|
Item
4.02 |
Non-Reliance
on Previously Issued Financial Statements or a Related Audit Report or
Completed Interim Review |
The
Registrant will restate its financial results for prior years to correct its
accounting for several reinsurance contracts entered into by a subsidiary of CNA
Financial Corporation, a 91%-owned subsidiary of the Registrant (“CNA”),
primarily with a former affiliate of CNA, and CNA’s equity accounting for that
affiliate. The impact of this revised accounting results in a reduction to
shareholders’ equity as of December 31, 2004 of $27.3 million, or 0.2%, and an
increase in net income attributable to Loews common stock of $1.3 million, or
$0.01 per Loews common share, for the three months ended March 31, 2004. The
principal effects of this restatement for years 2002 - 2004 are as
follows:
|
Restated
Results as of and for the Year Ended December 31 |
|||||||||||||||||||
|
2004 |
2003 |
2002 |
|||||||||||||||||
|
Previously |
Previously |
Previously |
|||||||||||||||||
|
(In
millions, except per share data) |
Reported |
Restated |
Reported |
Restated |
Reported |
Restated |
|||||||||||||
|
Shareholders’
equity |
$ |
12,183.3 |
$ |
12,156.0 |
$ |
11,054.3 |
$ |
11,023.0 |
$ |
11,235.2 |
$ |
11,191.8 |
|||||||
|
Net
income (loss) attributable to: |
|||||||||||||||||||
|
Loews
common stock |
$ |
1,046.8 |
$ |
1,050.8 |
$ |
(725.9 |
) |
$ |
(713.8 |
) |
$ |
771.3 |
$ |
786.2 |
|||||
|
Carolina
Group stock |
184.5 |
184.5 |
115.2 |
115.2 |
140.7 |
140.7 |
|||||||||||||
|
Total |
$ |
1,231.3 |
$ |
1,235.3 |
$ |
(610.7 |
) |
$ |
(598.6 |
) |
$ |
912.0 |
$ |
926.9 |
|||||
|
Net
income (loss) per share attributable to: |
|||||||||||||||||||
|
Loews
common stock |
$ |
5.64 |
$ |
5.66 |
$ |
(3.91 |
) |
$ |
(3.85 |
) |
$ |
4.11 |
$ |
4.19 |
|||||
|
Carolina
Group stock |
$ |
3.15 |
$ |
3.15 |
$ |
2.76 |
$ |
2.76 |
$ |
3.50 |
$ |
3.50 |
|||||||
The
Registrant will file a Form 10-K/A for 2004 reflecting these adjustments and
their impact on disclosures as applicable for years 2002 - 2004. Accordingly,
the Registrant’s original financial statements and related independent
registered public accountants’ reports thereon for those periods should no
longer be relied upon. The Registrant’s periodic report on Form 10-Q for first
quarter 2005 will also reflect the adjustments.
This
restatement is based upon reconsideration of CNA’s accounting for its former
equity interest in Accord Re Ltd. (“Accord”), and for several reinsurance
contracts with Accord, but also includes two reinsurance agreements with
unaffiliated parties that are immaterial in the aggregate. A subsidiary of The
Continental Corporation (“TCC”) acquired a 49% ownership interest in Accord, a
Bermuda company, in 1989 upon Accord’s formation. TCC also provided capital
support to Accord through a guarantee from a TCC subsidiary. TCC was acquired by
CNA in 1995.
Reinsurance
relationships with Accord involved both property and casualty assumed
reinsurance risks that were written by TCC subsidiaries and 100% ceded to Accord
or reinsured from other cedents by Accord. Stop-loss protection in relation to
those risks was obtained by Accord from a wholly owned TCC
subsidiary.
All of
CNA’s reinsurance agreements with Accord relating to property risks were
commuted as of year-end 2001, leaving six reinsurance agreements with Accord
relating to casualty risks outstanding at that time. As of March 31, 2005 CNA
provides no capital support to and has no ownership interest in Accord. During
the period of CNA’s minority ownership, Accord also maintained reinsurance
relationships with reinsurers unaffiliated with CNA.
As
previously reported, CNA continues to respond to various subpoenas,
interrogatories and other requests for information received from state and
federal regulatory authorities relating to on-going insurance industry
investigations of non-traditional insurance products, including finite
reinsurance. As also previously reported, CNA agreed to undergo a state
regulatory financial examination of the Continental Casualty Company and its
insurance subsidiaries as of December 31, 2003. Such review includes
examination of certain of the finite reinsurance contracts entered into by
CNA and whether such contracts possess sufficient risk transfer characteristics
necessary to qualify for accounting treatment as reinsurance. In the course of
complying with these requests CNA conducted a comprehensive review of its finite
reinsurance relationships, including contracts with Accord. As a result of that
review management of the Registrant determined to recommend to the Audit
Committee of the Registrant’s Board of Directors that the adjustments recited
above be made to correct the accounting treatment of CNA’s reinsurance
agreements with and equity
2
interest
in Accord. After conferring with management and discussing the matter with
Deloitte & Touche LLP, the Registrant’s independent registered public
accountants, the Audit Committee adopted that recommendation on April 28, 2005.
It is possible that CNA’s analyses of, or accounting treatment for, other finite
reinsurance contracts could be questioned or disputed in the context of the
referenced state regulatory examination, and further restatements of the
Registrant’s financial results are possible as a consequence, which could have a
material adverse impact on the Registrant’s financial condition.
|
Item
9.01 |
Financial
Statements and Exhibits |
|
(a) |
Not
applicable. |
|
(b) |
Not
applicable. |
|
(c) |
Exhibits: |
|
Exhibit
Reference |
|||||||
|
Number |
Exhibit
Description |
||||||
|
99.1 |
Loews
Corporation press release, issued May 3, 2005, providing information on
first quarter results of operations for 2005. | ||||||
|
99.2 |
Carolina
Group press release, issued by Loews Corporation May 3, 2005, providing
information on first quarter results of operations for
2005. | ||||||
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
|
|
LOEWS
CORPORATION | |
|
|
(Registrant) | |
|
|
||
|
|
||
|
|
||
|
Dated: May
3, 2005 |
By: |
/s/
Gary W. Garson |
|
|
Gary
W. Garson | |
|
|
Senior
Vice President | |
|
General
Counsel | ||
|
and
Secretary | ||
3
Exhibit
99.2
 |
Contact: |
Peter
W. Keegan
Senior
Vice President
(212)
521-2950
Candace
Leeds
V.P.
of Public Affairs
(212)
521-2416
Joshua
E. Kahn
Investor
Relations
(212)
521-2788 |
FOR
IMMEDIATE RELEASE
CAROLINA
GROUP REPORTS NET INCOME
FOR
THE FIRST QUARTER OF 2005
NEW YORK,
May 3, 2005—Loews Corporation (NYSE:LTR) today reported Carolina Group net
income for the 2005 first quarter of $118.5 million, compared to $103.0 million
in the 2004 first quarter. Net income attributable to Carolina Group stock
(NYSE:CG) for the first quarter of 2005 was $46.5 million, or $0.68 per share of
Carolina Group stock, compared to $34.4 million, or $0.59 per share in the prior
year.
The
increase in net income attributable to Carolina Group stock for the first
quarter of 2005, as compared to the corresponding period of the prior year,
reflects the sale by Loews Corporation of 10,000,000 shares of Carolina Group
stock in December of 2004 and the higher overall results of the Carolina Group.
Net income per share of Carolina Group stock was not impacted by the sale of
Carolina Group stock in December of 2004. Carolina Group stock represents a
39.20% and 33.43% economic interest in the Carolina Group for the three months
ended March 31, 2005 and 2004, respectively.
Net sales
for the Carolina Group were $795.1 million in the first quarter of 2005,
compared to $767.9 million in the 2004 first quarter. The increase in net sales
reflects an increase in unit sales volume of 0.3% and a reduction in sales
promotion expenses.
Results
of operations of the Carolina Group include interest expense of $22.4 and $24.6
million, net of taxes, for the three months ended March 31, 2005 and 2004,
respectively, on notional intergroup debt. At March 31, 2005, $1.797 billion
principal amount of notional intergroup debt was outstanding.
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
Page 1 of
4
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
March 31, 2005, there were 68,027,309 shares of Carolina Group stock outstanding
representing a 39.22% economic interest. Depending on market and other
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 first quarter of 2005, which accompanies this press
release.
A
conference call to discuss the first quarter results of Loews Corporation has
been scheduled for 11:00 a.m. EDT, Tuesday, May 3, 2005. 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 following the call.
Page 2 of
4
Carolina
Group
Financial
Review
|
Three
Months Ended |
|||||||
|
March
31, |
|||||||
|
2005 |
2004 |
||||||
|
(Amounts
in millions, |
|||||||
|
except
per share data) |
|||||||
|
Net
sales (a) |
$ |
795.1 |
$ |
767.9 |
|||
|
Cost
of sales (a) (b) |
486.7 |
467.3 |
|||||
|
Selling,
advertising and administrative |
90.0 |
100.0 |
|||||
|
Total
operating costs and expenses |
576.7 |
567.3 |
|||||
|
Operating
income |
218.4 |
200.6 |
|||||
|
Investment
income |
12.2 |
8.5 |
|||||
|
Interest
expense |
(36.6 |
) |
(40.3 |
) | |||
|
Income
before income taxes |
194.0 |
168.8 |
|||||
|
Income
taxes |
75.5 |
65.8 |
|||||
|
Net
income |
118.5 |
103.0 |
|||||
|
Earnings
attributable to the Loews Group intergroup interest (c) |
72.0 |
68.6 |
|||||
|
Income
attributable to Carolina Group shareholders (d) |
$ |
46.5 |
$ |
34.4 |
|||
|
Per
share of Carolina Group stock (e) |
$ |
0.68 |
$ |
0.59 |
|||
|
Weighted
number of shares outstanding |
68.00 |
57.97 |
|||||
|
(a) |
Includes
excise taxes of $156.2 and $156.1 for the three months ended March 31,
2005 and 2004. |
|
(b) |
Includes
charges of $198.7 and $201.1 ($121.4 and $122.7 after taxes) to accrue
obligations under the State Settlement Agreements for the respective
periods. |
|
(c) |
The
Loews Group's intergroup interest in the earnings of the Carolina Group
reflected share equivalents amounting to 105,445,000 shares of 173,472,309
share and share equivalents outstanding in 2005 and share equivalents
amounting to 115,445,000 shares of 173,411,750 share and share equivalents
outstanding in 2004. As of March 31, 2005, there were 68,027,309 shares of
Carolina Group stock outstanding. |
|
(d) |
Represents
39.20% and 33.43% of the economic interest in the Carolina Group for the
three months ended March 31, 2005 and 2004. |
|
(e) |
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. |
Page 3 of
4
Carolina
Group
Supplemental
Information
The
following information regarding unit volume shipped by Lorillard Tobacco Company
to its direct buying customers by brand follows (all units in
thousands):
|
Three
Months Ended |
|||||||
|
March
31, |
|||||||
|
2005 |
2004 |
||||||
|
Full
Price Brands |
|||||||
|
Total
Newport |
7,521,694 |
7,379,958 |
|||||
|
Total
Kent Family |
174,495 |
210,449 |
|||||
|
Total
True |
137,592 |
160,764 |
|||||
|
Total
Max |
9,591 |
11,307 |
|||||
|
Total
Satin |
1,596 |
2,094 |
|||||
|
Total
Triumph |
528
|
||||||
|
Total
Full Price Brands |
7,844,968 |
7,765,100 |
|||||
|
Price/Value
Brands |
|||||||
|
Total
Old Gold |
191,319 |
218,814 |
|||||
|
Total
Maverick |
177,432 |
155,562 |
|||||
|
Total
Price/Value Brands |
368,751 |
374,376 |
|||||
|
Total
Domestic Cigarettes |
8,213,719 |
8,139,476 |
|||||
|
Total
Puerto Rico and U.S. Possessions |
166,764 |
211,864 |
|||||
|
Grand
Total |
8,380,483 |
8,351,340 |
|||||
|
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. |
Page 4 of
4
Exhibit
99.1
 |
Contact: |
Peter
W. Keegan
Senior
Vice President
(212)
521-2950
Candace
Leeds
V.P.
of Public Affairs
(212)
521-2416
Joshua
E. Kahn
Investor
Relations
(212)
521-2788 |
FOR
IMMEDIATE RELEASE
LOEWS
CORPORATION REPORTS
NET
INCOME FOR THE FIRST QUARTER OF 2005
NEW YORK,
May 3, 2005—Loews Corporation (NYSE:LTR;CG) today reported consolidated net
income (including both the Loews Group and Carolina Group) for the 2005 first
quarter of $339.7 million, compared to $44.9 million in the 2004 first quarter.
Income before net investment losses attributable to Loews common stock amounted
to $308.0 million in the first quarter of 2005 compared to $310.8 million in the
comparable 2004 quarter. Net income attributable to Loews common stock includes
net investment losses of $14.8 million (after tax and minority interest),
compared to losses of $300.3 million in the comparable 2004 quarter, which
included an impairment loss of $368.3 million (after tax and minority interest)
for CNA’s sale of its individual life insurance business.
The
Company will restate its financial results for prior years to correct CNA’s
accounting for several reinsurance contracts, primarily with a former affiliate,
and CNA’s equity accounting for that affiliate. The Company will file a Form
10-K/A for 2004 reflecting the effects of the restatement, which will reduce
shareholders’ equity as of December 31, 2004 by $27.3 million, or
0.2%.
Net
income and earnings per share information attributable to Loews common stock and
Carolina Group stock is summarized in the table below.
|
Three
Months Ended March 31, |
|||||||
|
(In
millions, except per share data) |
2005 |
2004 |
|||||
|
(Restated) |
|||||||
|
Net
income attributable to Loews common stock: |
|||||||
|
Income
before net investment losses |
$ |
308.0 |
$ |
310.8 |
|||
|
Net
investment losses (a) |
(14.8 |
) |
(300.3 |
) | |||
|
Net
income attributable to Loews common stock |
293.2 |
10.5 |
|||||
|
Net
income attributable to Carolina Group stock |
46.5 |
34.4 |
|||||
|
Consolidated
net income |
$ |
339.7 |
$ |
44.9 |
|||
|
Net
income per share: |
|||||||
|
Loews
common stock |
$ |
1.58 |
$ |
0.06 |
|||
|
Carolina
Group stock |
$ |
0.68 |
$ |
0.59 |
|||
|
Book
value per share of Loews common stock at: March
31, 2005 |
$ |
66.44 |
|||||
|
December
31, 2004 |
$ |
66.56 |
|||||
(a) Includes
an impairment loss of $368.3 (after tax and minority interest) in 2004 related
to CNA's sale of its individual life insurance business.
Page 1 of
6
Net
income attributable to Loews common stock for the first quarter of 2005 amounted
to $293.2 million or $1.58 per share, compared to $10.5 million or $0.06 per
share in the comparable period of the prior year.
Net
income attributable to Carolina Group stock for the first quarter of 2005 was
$46.5 million or $0.68 per Carolina Group share, compared to $34.4 million, or
$0.59 per Carolina Group share in the first quarter of 2004. The Company is
issuing a separate press release reporting the results of the Carolina Group for
the quarter ended March 31, 2005.
Consolidated
revenues in the first quarter of 2005 amounted to $3.7 billion, compared to $3.5
billion in the comparable 2004 quarter.
Financial
Restatement
The
Company will restate its financial results for prior years to correct CNA’s
accounting for several reinsurance contracts, primarily with a former affiliate,
and CNA’s equity accounting for that affiliate. The impact of this revised
accounting results in a reduction to shareholders’ equity as of December 31,
2004 of $27.3 million, or 0.2%, and an increase in net income attributable to
Loews common stock of $1.3 million, or $0.01 per Loews common share, for the
three months ended March 31, 2004.
The
Company will file a Form 10-K/A for 2004 reflecting the effects of the
restatement as follows:
|
Restated
Results as of and for the Year Ended December 31 |
|||||||||||||||||||
|
2004 |
2003 |
2002 |
|||||||||||||||||
|
Previously |
Previously |
Previously |
|||||||||||||||||
|
(In
millions, except per share data) |
Reported |
Restated |
Reported |
Restated |
Reported |
Restated |
|||||||||||||
|
Shareholders’
equity |
$ |
12,183.3 |
$ |
12,156.0 |
$ |
11,054.3 |
$ |
11,023.0 |
$ |
11,235.2 |
$ |
11,191.8 |
|||||||
|
Net
income (loss) attributable to: |
|||||||||||||||||||
|
Loews
common stock |
$ |
1,046.8 |
$ |
1,050.8 |
$ |
(725.9 |
) |
$ |
(713.8 |
) |
$ |
771.3 |
$ |
786.2 |
|||||
|
Carolina
Group stock |
184.5 |
184.5 |
115.2 |
115.2 |
140.7 |
140.7 |
|||||||||||||
|
Total |
$ |
1,231.3 |
$ |
1,235.3 |
$ |
(610.7 |
) |
$ |
(598.6 |
) |
$ |
912.0 |
$ |
926.9 |
|||||
|
Net
income (loss) per share attributable to: |
|||||||||||||||||||
|
Loews
common stock |
$ |
5.64 |
$ |
5.66 |
$ |
(3.91 |
) |
$ |
(3.85 |
) |
$ |
4.11 |
$ |
4.19 |
|||||
|
Carolina
Group stock |
$ |
3.15 |
$ |
3.15 |
$ |
2.76 |
$ |
2.76 |
$ |
3.50 |
$ |
3.50 |
|||||||
This
restatement is based upon reconsideration of CNA’s accounting for its former
equity interest in Accord Re Ltd. (“Accord”), and for several reinsurance
contracts with Accord, but also includes two reinsurance agreements with
unaffiliated parties that are immaterial in the aggregate. A subsidiary of The
Continental Corporation (“TCC”) acquired a 49% ownership interest in Accord, a
Bermuda company, in 1989 upon Accord’s formation. TCC also provided capital
support to Accord through a guarantee from a TCC subsidiary. TCC was acquired by
CNA in 1995.
Reinsurance
relationships with Accord involved both property and casualty assumed
reinsurance risks that were written by TCC subsidiaries and 100% ceded to Accord
or reinsured from other cedents by Accord. Stop-loss protection in relation to
those risks was obtained by Accord from a wholly owned TCC
subsidiary.
Page 2 of
6
All of
CNA’s reinsurance agreements with Accord relating to property risks were
commuted as of year-end 2001, leaving six reinsurance agreements with Accord
relating to casualty risks outstanding at that time. As of March 31, 2005 CNA
provides no capital support to and has no ownership interest in Accord.
During the period of CNA’s minority ownership, Accord also maintained
reinsurance relationships with reinsurers unaffiliated with CNA.
As
previously reported CNA continues to respond to various subpoenas,
interrogatories and other requests for information received from state and
federal regulatory authorities relating to on-going insurance industry
investigations of non-traditional insurance products, including finite
reinsurance. As also previously reported, CNA agreed to undergo a state
regulatory financial examination of the Continental Casualty Company and its
insurance subsidiaries as of December 31, 2003. Such review includes examination
of certain of the finite reinsurance contracts entered into by CNA and whether
such contracts possess sufficient risk transfer characteristics necessary to
qualify for accounting treatment as reinsurance. In the course of complying with
these requests CNA conducted a comprehensive review of its finite reinsurance
relationships, including contracts with Accord. It is possible that CNA’s
analyses of or accounting treatment for other finite reinsurance contracts could
be questioned or disputed in the context of the referenced state regulatory
examination, and further restatements of the Company’s financial results are
possible as a consequence, which could have a material adverse impact on the
Company’s financial condition.
# #
#
At March
31, 2005, the book value per share of Loews common stock was $66.44, compared to
$66.56 at December 31, 2004. The decline in book value per share reflects
reduced unrealized gains in CNA’s fixed maturities portfolio and dividends paid
to shareholders offsetting net income for the first quarter of
2005.
At March
31, 2005, there were 185,637,349 shares of Loews common stock outstanding and
68,027,309 shares of Carolina Group stock outstanding. Depending on market and
other conditions, the Company from time to time purchases shares of its, and its
subsidiaries’, outstanding common stock in the open market or
otherwise.
The
Company has two classes of common stock, 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 Loews common stock, representing the
economic performance of the Company’s remaining assets, including the interest
in the Carolina Group not represented by Carolina Group stock. At March 31,
2005, the outstanding Carolina Group stock represents a 39.22% economic interest
in the economic performance of the Carolina Group.
A
conference call to discuss the first quarter results of Loews Corporation has
been scheduled for 11:00 a.m. EDT, Tuesday, May 3, 2005. 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 following the call.
A
conference call to discuss the first quarter results of CNA has been scheduled
for 10:00 a.m. EDT, Tuesday, May 3, 2005. 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
Page 3 of
6
and
answer session of the conference call should dial (800) 478-6251. An online
replay will be available at CNA’s website 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.
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 website (www.loews.com). Given these risk factors, investors and
analysts should not place undue reliance on forward-looking statements. Any such
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.
Page 4 of
6
Loews
Corporation and Subsidiaries
Financial
Review
|
Three
Months Ended March 31, |
|||||||
|
2005 |
2004
(e) |
||||||
|
(Restated) |
|||||||
|
(Amounts
in millions, except |
|||||||
|
per
share data) |
|||||||
|
Revenues: |
|||||||
|
Insurance
premiums and net investment income (a) |
$ |
2,330.5 |
$ |
2,246.5 |
|||
|
Manufactured
products (b) |
834.2 |
808.2 |
|||||
|
Other |
576.5 |
438.6 |
|||||
|
Total |
3,741.2 |
3,493.3 |
|||||
|
Expenses: |
|||||||
|
Insurance
claims & policyholders’ benefits |
1,433.2 |
1,638.2 |
|||||
|
Cost
of manufactured products sold (b) |
505.7 |
487.5 |
|||||
|
Other |
1,250.4 |
1,287.2 |
|||||
|
Total |
3,189.3 |
3,412.9 |
|||||
|
551.9 |
80.4 |
||||||
|
Income
tax expense |
177.3 |
46.2 |
|||||
|
Minority
interest |
34.9 |
(10.7 |
) | ||||
|
Total |
212.2 |
35.5 |
|||||
|
Net
Income |
$ |
339.7 |
$ |
44.9 |
|||
|
Net
income attributable to: |
|||||||
|
Loews
common stock |
$ |
293.2 |
$ |
10.5 |
|||
|
Carolina
Group stock (c) |
46.5 |
34.4 |
|||||
$ |
339.7 |
$ |
44.9 |
||||
|
Net
income per share of Loews common stock (d): |
$ |
1.58 |
$ |
0.06 |
|||
|
Net
income per share of Carolina Group stock (d) |
$ |
0.68 |
$ |
0.59 |
|||
|
Weighted
number of shares outstanding: |
|||||||
|
Loews
common stock |
185.61 |
185.47 |
|||||
|
Carolina
Group stock |
68.00 |
57.97 |
|||||
|
(a) |
Includes
investment losses of $22.8 and $452.0 (including an impairment loss of
$565.9 in 2004 related to CNA’s sale of its individual life insurance
business) for the respective periods. |
|
(b) |
Includes
excise taxes of $156.2 and $156.1 paid on sales of manufactured products
for the respective periods. |
|
(c) |
Represents
39.20% and 33.43% of the economic interest in the Carolina Group for the
respective periods. |
|
(d) |
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. |
|
(e) |
Restated
to correct CNA’s accounting for several reinsurance contracts, primarily
with a former affiliate, and CNA’s equity accounting for that
affiliate. |
Page 5 of
6
Loews
Corporation and Subsidiaries
Additional
Financial Information
|
Three
Months Ended March 31, |
|||||||
|
2005 |
2004
(g) |
||||||
|
(Restated) |
|||||||
|
(In
millions) |
|||||||
|
Revenues: |
|||||||
|
CNA
Financial |
$ |
2,383.8 |
$ |
2,724.7 |
|||
|
Lorillard
(a) |
808.3 |
775.7 |
|||||
|
Boardwalk
Pipelines |
151.3 |
86.0 |
|||||
|
Diamond
Offshore |
264.7 |
185.9 |
|||||
|
Loews
Hotels |
92.1 |
80.7 |
|||||
|
Investment
income-net and other (b) |
63.8 |
92.3 |
|||||
|
3,764.0 |
3,945.3 |
||||||
|
Investment
(losses) gains: |
|||||||
|
CNA
Financial (c) |
(16.7 |
) |
(455.0 |
) | |||
|
Corporate
and other |
(6.1 |
) |
3.0 |
||||
|
(22.8 |
) |
(452.0 |
) | ||||
|
Total |
$ |
3,741.2 |
$ |
3,493.3 |
|||
|
Income
Before taxes: |
|||||||
|
CNA
Financial |
$ |
264.4 |
$ |
291.3 |
|||
|
Lorillard
(e) |
154.9 |
152.4 |
|||||
|
Boardwalk
Pipelines |
62.8 |
43.1 |
|||||
|
Diamond
Offshore |
43.0 |
(16.1 |
) | ||||
|
Loews
Hotels |
21.3 |
11.3 |
|||||
|
Investment
income-net and other (b) (d) |
(48.5 |
) |
(6.0 |
) | |||
|
497.9 |
476.0 |
||||||
|
Investment
(losses) gains: |
|||||||
|
CNA
Financial (c) |
(16.7 |
) |
(455.0 |
) | |||
|
Corporate
and other |
(5.4 |
) |
3.0 |
||||
|
(22.1 |
) |
(452.0 |
) | ||||
|
Loews
common stock |
475.8 |
24.0 |
|||||
|
Carolina
Group stock (f) |
76.1 |
56.4 |
|||||
|
Total |
$ |
551.9 |
$ |
80.4 |
|||
|
Net
Income: |
|||||||
|
CNA
Financial |
$ |
180.0 |
$ |
195.5 |
|||
|
Lorillard
(e) |
94.7 |
93.0 |
|||||
|
Boardwalk
Pipelines |
37.9 |
26.0 |
|||||
|
Diamond
Offshore |
14.2 |
(6.9 |
) | ||||
|
Loews
Hotels |
13.2 |
6.9 |
|||||
|
Investment
income-net and other (b) (d) |
(32.0 |
) |
(3.7 |
) | |||
|
308.0 |
310.8 |
||||||
|
Investment (losses)
gains: |
|||||||
|
CNA
Financial (c) |
(11.7 |
) |
(302.2 |
) | |||
|
Corporate
and other |
(3.1 |
) |
1.9 |
||||
|
(14.8 |
) |
(300.3 |
) | ||||
|
Loews
common stock |
293.2 |
10.5 |
|||||
|
Carolina
Group stock (f) |
46.5 |
34.4 |
|||||
|
Total |
$ |
339.7 |
$ |
44.9 |
|||
|
(a) |
Includes
excise taxes of $156.2 and $156.1 paid on sales of manufactured products
for the respective periods. |
|
(b) |
Consists
primarily of corporate investment income, interest expenses, the
operations of Bulova Corporation, equity earnings of Majestic Shipping
Corporation and other unallocated expenses. |
|
(c) |
Includes
an impairment loss of $565.9 ($368.3 after tax and minority interest)
related to CNA’s sale of its individual life insurance business for the
three months ended March 31, 2004. |
|
(d) |
Includes
additional interest expense of $35.5 and $17.0 ($23.1 and $11.1 after
taxes) related to charges from the early redemption of the Company’s
long-term debt for the three months ended March 31, 2005 and 2004,
respectively. |
|
(e) |
The
Loews Group’s intergroup interest in the earnings of the Carolina Group
declined from 66.57% in 2004 to 60.80% in 2005 due to the sale of Carolina
Group stock by Loews in December of 2004. |
|
(f) |
Represents
39.20% and 33.43% of the economic interest in the Carolina Group for the
respective periods. |
|
(g) |
Restated
to correct CNA’s accounting for several reinsurance contracts, primarily
with a former affiliate, and CNA’s equity accounting for that
affiliate. |
Page 6 of
6