SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
8-K/A
CURRENT
REPORT
PURSUANT
TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
Date
of report:
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August
1, 2006
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(Date
of earliest event reported):
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August
1, 2006
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LOEWS
CORPORATION
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(Exact
name of registrant as specified in its charter)
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Delaware
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1-6541
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13-2646102
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(State
or other jurisdiction of
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(Commission
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(I.R.S.
Employer
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||
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incorporation)
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File
Number)
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Identification
No.)
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667
Madison Avenue, New York, N.Y.
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10021-8087
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(Address
of principal executive offices)
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(Zip
Code)
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Registrant’s
telephone number, including area
code:
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(212)
521-2000
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NOT
APPLICABLE
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(Former
name or former address, if changed since last
report.)
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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):
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[ ]
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Written
communications pursuant to Rule 425 under the Securities Act (17
CRF
230.425)
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[ ]
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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[ ]
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR
240.14d-2(b))
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[ ]
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Pre-commencement
communications pursuant to rule 13e-4 (c) under the Exchange Act
(17 CFR
240.13e-4(c))
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1
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Item
2.02
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Results
of Operations and Financial Condition.
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This amendment to the Form 8-K filed on August 1, 2006 is to correct
typographical errors in Exhibit 99.1 to conform to the Press Release as issued.
Column headings on pages 4 and 5 were corrected and Lorillard net income for
the
three months ended June 30, 2005 was corrected to $106.9 million on page
5.
On
August
1, 2006, 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 second quarter of 2006. The press releases are furnished
as
Exhibits 99.1 and 99.2 to this Form 8-K.
The
information under Item 2.02 and in Exhibits 99.1 and 99.2 in this Current Report
are being furnished and shall not be deemed “filed” for the purpose of Section
18 of the Securities Exchange Act of 1934, as amended, or otherwise subject
to
the liabilities of that Section. The information under Item 2.02 and in Exhibits
99.1 and 99.2 in this Current Report shall not be incorporated by reference
into
any registration statement or other document pursuant to the Securities Act
of
1933, as amended.
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Item
9.01
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Financial
Statements and Exhibits.
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(a)
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Not
applicable.
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(b)
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Not
applicable.
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(c)
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Exhibits:
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Exhibit
Reference
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|||||||
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Number
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Exhibit
Description
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||||||
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99.1
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Loews
Corporation press release, issued August 1, 2006, providing information
on
second quarter results of operations for 2006.
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||||||
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99.2
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Carolina
Group press release, issued by Loews Corporation August 1, 2006,
providing
information on second quarter results of operations for
2006.
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||||||
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.
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LOEWS
CORPORATION
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(Registrant)
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Dated: August
1, 2006
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By:
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s/
Gary W. Garson
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(Signature)
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By:
Gary W. Garson
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Senior
Vice President
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General
Counsel and Secretary
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||
2
Exhibit
99.1
 |
Contact:
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Peter
W. Keegan
Senior
Vice President
(212)
521-2950
Candace
Leeds
V.P.
of Public Affairs
(212)
521-2416
Darren
Daugherty
Investor
Relations
(212)
521-2788
|
FOR
IMMEDIATE RELEASE
LOEWS
CORPORATION REPORTS
NET
INCOME FOR THE SECOND QUARTER OF 2006
NEW
YORK,
August 1, 2006—Loews Corporation (NYSE:LTR;CG) today reported consolidated net
income (including both the Loews Group and Carolina Group) for the 2006 second
quarter of $568.7 million, compared to $435.6 million in the 2005 second
quarter. Consolidated net income for the six months ended June 30, 2006 was
$1,109.7 million, compared to $781.9 million in the prior year.
Net
income and earnings per share information attributable to Loews common stock
and
Carolina Group stock is summarized in the table below:
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June
30,
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|||||||||||||
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Three
Months
|
Six
Months
|
||||||||||||
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(In
millions, except per share data)
|
2006
|
2005
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2006
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2005
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|||||||||
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(Restated)
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(Restated)
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||||||||||
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Net
income attributable to Loews common stock:
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|||||||||||||
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Income
before net investment gains (losses)
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$
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532.3
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$
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358.6
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$
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1,014.3
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$
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666.6
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|||||
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Net
investment gains (losses)
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(55.0
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)
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19.5
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(58.6
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)
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4.7
|
|||||||
|
Income
from continuing operations
|
477.3
|
378.1
|
955.7
|
671.3
|
|||||||||
|
Discontinued
operations, net
|
(2.4
|
)
|
1.8
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(7.4
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)
|
8.4
|
|||||||
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Net
income attributable to Loews common stock
|
474.9
|
379.9
|
948.3
|
679.7
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|||||||||
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Net
income attributable to Carolina Group stock (a)
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93.8
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55.7
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161.4
|
102.2
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|||||||||
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Consolidated
net income
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$
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568.7
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$
|
435.6
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$
|
1,109.7
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$
|
781.9
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|||||
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Net
income per share:
|
|||||||||||||
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Loews
common stock:
|
|||||||||||||
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Income
from continuing operations
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$
|
0.85
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$
|
0.68
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$
|
1.71
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$
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1.20
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|||||
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Discontinued
operations, net
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(0.01
|
)
|
0.02
|
||||||||||
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Net
income
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$
|
0.85
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$
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0.68
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$
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1.70
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$
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1.22
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|||||
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Carolina
Group stock
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$
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1.09
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$
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0.82
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$
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1.96
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$
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1.50
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|||||
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Book
value per share of Loews common stock at:
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|||||||||||||
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June
30, 2006
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$
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25.71
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|||||||||||
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December
31, 2005
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$
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23.64
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|||||||||||
(a) Reflects
Loews Corporation’s sale of 15 million shares of Carolina Group stock in May of
2006 and 10 million shares in November of 2005. Net income per share of Carolina
Group stock was not impacted by these sales.
Page
1 of 5
Three
Months Ended June 30, 2006 Compared With 2005
Net
income attributable to Loews common stock for the second quarter of 2006
amounted to $474.9 million or $0.85 per share, compared to $379.9 million or
$0.68 per share in the comparable period of the prior year. The increase in
net
income was primarily due to improved results at the Company’s 54% owned
subsidiary, Diamond Offshore Drilling, Inc. and increased investment income.
The
results for the second quarter of 2005 included a benefit of $109.2 million
related to a federal income tax settlement due primarily to net refund interest
and the release of federal income tax reserves at the Company’s 91% owned
subsidiary, CNA Financial Corporation.
Net
income attributable to Loews common stock includes net investment losses of
$55.0 million (after tax and minority interest) compared to net investment
gains
of $19.5 million (after tax and minority interest) in the comparable period
of
the prior year.
Net
income attributable to Carolina Group stock for the second quarter of 2006
was
$93.8 million or $1.09 per Carolina Group share, compared to $55.7 million,
or
$0.82 per Carolina Group share in the second quarter of 2005. The
increase in net income attributable to Carolina Group stock for the second
quarter of 2006 is primarily
due to higher effective unit prices reflecting lower sales promotion expenses
(accounted for as a reduction to net sales) and reflects an increase in the
amount of Carolina Group shares outstanding. The Company is issuing a separate
press release reporting the results of the Carolina Group for the second quarter
of 2006.
Consolidated
revenues in the second quarter of 2006 amounted to $4.3 billion, compared to
$4.0 billion in the comparable 2005 quarter.
Six
Months Ended June 30, 2006 Compared With 2005
Net
income attributable to Loews common stock amounted to $948.3 million, or $1.70
per share, in the first half of 2006 compared to $679.7 million, or $1.22 per
share, in the comparable period of the prior year. Net income attributable
to
Loews common stock includes net investment losses of $58.6 million (after tax
and minority interest) compared to net investment gains of $4.7 million (after
tax and minority interest) in the comparable period of the prior year. The
results for the six months ended June 30, 2005 included a benefit of $109.2
million from a federal income tax settlement discussed above. The increase
in
net income was primarily due to improved results at the Company’s 54% owned
subsidiary, Diamond Offshore Drilling, Inc. and increased investment
income.
Net
income attributable to Carolina Group stock for the first half of 2006 was
$161.4 million or $1.96 per Carolina Group share, compared to $102.2 million,
or
$1.50 per Carolina Group share in the comparable period of the prior year.
The
increase in net income attributable to Carolina Group stock is primarily
due to higher effective unit prices reflecting lower sales promotion expenses
(accounted for as a reduction to net sales) and reflects an increase in the
amount of Carolina Group shares outstanding.
Consolidated
revenues in the first half of 2006 amounted to $8.5 billion, compared to $7.8
billion in the comparable period of the prior year.
#
#
#
Page
2 of 5
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 June 30,
2006,
the outstanding Carolina Group stock represents a 53.7% economic interest in
the
economic performance of the Carolina Group.
A
conference call to discuss the second quarter results of Loews Corporation
has
been scheduled for 11:00 a.m. EDT, Tuesday, August 1, 2006. 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 second quarter results of CNA has been scheduled
for 10:00 a.m. EDT, Tuesday, August 1, 2006. 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) 500-0177. 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
3 of
5
Loews
Corporation and Subsidiaries
Financial
Review
|
June
30,
|
|||||||||||||
|
Three
Months
|
Six
Months
|
||||||||||||
|
2006
|
2005
(e)
|
2006
|
2005
(e)
|
||||||||||
|
|
(Restated)
|
(Restated)
|
|
||||||||||
|
(Amounts
in millions, except per share data)
|
|||||||||||||
|
Revenues:
|
|||||||||||||
|
Insurance
premiums and net investment income (a)
|
$
|
2,439.6
|
$
|
2,350.5
|
$
|
5,014.3
|
$
|
4,681.0
|
|||||
|
Manufactured
products (b)
|
1,020.7
|
968.7
|
1,919.1
|
1,802.9
|
|||||||||
|
Other
(c)
|
817.0
|
711.5
|
1,588.4
|
1,288.0
|
|||||||||
|
Total
|
4,277.3
|
4,030.7
|
8,521.8
|
7,771.9
|
|||||||||
|
Expenses:
|
|||||||||||||
|
Insurance
claims & policyholders’ benefits
|
1,432.2
|
1,581.8
|
2,924.2
|
3,015.0
|
|||||||||
|
Cost
of manufactured products sold (b)
|
574.7
|
594.1
|
1,108.0
|
1,099.8
|
|||||||||
|
Other
|
1,247.6
|
1,216.1
|
2,482.2
|
2,466.5
|
|||||||||
|
Total
|
3,254.5
|
3,392.0
|
6,514.4
|
6,581.3
|
|||||||||
|
1,022.8
|
638.7
|
2,007.4
|
1,190.6
|
||||||||||
|
Income
tax expense
|
337.2
|
164.7
|
671.4
|
342.0
|
|||||||||
|
Minority
interest
|
114.5
|
40.2
|
218.9
|
75.1
|
|||||||||
|
Total
|
451.7
|
204.9
|
890.3
|
417.1
|
|||||||||
|
Income
from continuing operations
|
571.1
|
433.8
|
1,117.1
|
773.5
|
|||||||||
|
Discontinued
operations, net
|
(2.4
|
)
|
1.8
|
(7.4
|
)
|
8.4
|
|||||||
|
Net
income
|
$
|
568.7
|
$
|
435.6
|
$
|
1,109.7
|
$
|
781.9
|
|||||
|
Net
income attributable to:
|
|||||||||||||
|
Loews
common stock:
|
|||||||||||||
|
Income
from continuing operations
|
$
|
477.3
|
$
|
378.1
|
$
|
955.7
|
$
|
671.3
|
|||||
|
Discontinued
operations, net
|
(2.4
|
)
|
1.8
|
(7.4
|
)
|
8.4
|
|||||||
|
Loews
common stock
|
474.9
|
379.9
|
948.3
|
679.7
|
|||||||||
|
Carolina
Group stock (d)
|
93.8
|
55.7
|
161.4
|
102.2
|
|||||||||
|
$
|
568.7
|
$
|
435.6
|
$
|
1,109.7
|
$
|
781.9
|
||||||
|
Income
per share of Loews common stock:
|
|||||||||||||
|
Income
from continuing operations
|
$
|
0.85
|
$
|
0.68
|
$
|
1.71
|
$
|
1.20
|
|||||
|
Discontinued
operations, net
|
(0.01
|
)
|
$
|
0.02
|
|||||||||
|
Diluted
net income
|
$
|
0.85
|
$
|
0.68
|
$
|
1.70
|
$
|
1.22
|
|||||
|
Diluted
net income per share of Carolina Group stock
|
$
|
1.09
|
$
|
0.82
|
$
|
1.96
|
$
|
1.50
|
|||||
|
Weighted
diluted number of shares:
|
|||||||||||||
|
Loews
common stock
|
556.16
|
557.70
|
557.21
|
557.62
|
|||||||||
|
Carolina
Group stock
|
86.11
|
68.10
|
82.24
|
68.08
|
|||||||||
|
(a)
|
Includes
investment gains (losses) of $(93.3), $32.5, $(91.3) and $9.7 for
the
respective periods.
|
|
(b)
|
Includes
excise taxes of $176.7, $179.0, $340.6 and $335.2 paid on sales of
manufactured products for the respective periods.
|
|
(c)
|
Includes
net refund interest of $129.7 from a federal income tax settlement
in the
second quarter of 2005.
|
|
(d)
|
Represents
50.09%, 39.22%, 47.85% and 39.21% of the economic interest in the
Carolina
Group for the respective periods.
|
|
(e)
|
Restated
to correct the accounting for the periodic results of CNA's discontinued
operations.
|
Page
4 of 5
Loews
Corporation and Subsidiaries
Additional
Financial Information
|
June
30,
|
|||||||||||||
|
Three
Months
|
Six
Months
|
||||||||||||
|
2006
|
2005
(g)
|
2006
|
2005
(g)
|
||||||||||
|
(Restated)
|
(Restated)
|
||||||||||||
|
(In
millions)
|
|||||||||||||
|
Revenues:
|
|||||||||||||
|
CNA
Financial
|
$
|
2,510.6
|
$
|
2,543.5
|
$
|
5,002.3
|
$
|
4,927.3
|
|||||
|
Lorillard
(a)
|
996.8
|
945.7
|
1,876.4
|
1,754.0
|
|||||||||
|
Boardwalk
Pipelines
|
132.5
|
119.4
|
307.5
|
270.7
|
|||||||||
|
Diamond
Offshore
|
519.3
|
298.2
|
978.0
|
562.9
|
|||||||||
|
Loews
Hotels
|
101.9
|
93.8
|
195.3
|
185.9
|
|||||||||
|
Investment
income-net and other (b)
|
|||||||||||||
|
Income
(loss) from trading portfolio (c)
|
23.3
|
(61.0
|
)
|
93.9
|
(52.8
|
)
|
|||||||
|
Other
|
86.2
|
58.6
|
159.7
|
114.2
|
|||||||||
|
4,370.6
|
3,998.2
|
8,613.1
|
7,762.2
|
||||||||||
|
Investment
(losses) gains:
|
|||||||||||||
|
CNA
Financial
|
(97.7
|
)
|
25.9
|
(88.9
|
)
|
9.2
|
|||||||
|
Corporate
and other
|
4.4
|
6.6
|
(2.4
|
)
|
0.5
|
||||||||
|
(93.3
|
)
|
32.5
|
(91.3
|
)
|
9.7
|
||||||||
|
Total
|
$
|
4,277.3
|
$
|
4,030.7
|
$
|
8,521.8
|
$
|
7,771.9
|
|||||
|
Income
Before Taxes:
|
|||||||||||||
|
CNA
Financial
|
$
|
451.3
|
$
|
310.8
|
$
|
797.6
|
$
|
575.2
|
|||||
|
Lorillard
|
181.2
|
180.3
|
345.8
|
335.2
|
|||||||||
|
Boardwalk
Pipelines
|
32.0
|
22.8
|
101.4
|
85.6
|
|||||||||
|
Diamond
Offshore
|
240.6
|
54.1
|
445.9
|
97.1
|
|||||||||
|
Loews
Hotels
|
19.6
|
18.3
|
33.5
|
39.6
|
|||||||||
|
Investment
income-net and other (b)
|
|||||||||||||
|
Income
(loss) from trading portfolio (c)
|
23.3
|
(61.0
|
)
|
93.9
|
(52.8
|
)
|
|||||||
|
Other
(d)
|
14.0
|
(13.0
|
)
|
16.0
|
(69.7
|
)
|
|||||||
|
962.0
|
512.3
|
1,834.1
|
1,010.2
|
||||||||||
|
Investment
(losses) gains:
|
|||||||||||||
|
CNA
Financial
|
(97.7
|
)
|
25.9
|
(88.9
|
)
|
9.2
|
|||||||
|
Corporate
and other
|
4.4
|
6.6
|
(2.1
|
)
|
1.2
|
||||||||
|
(93.3
|
)
|
32.5
|
(91.0
|
)
|
10.4
|
||||||||
|
Loews
common stock
|
868.7
|
544.8
|
1,743.1
|
1,020.6
|
|||||||||
|
Carolina
Group stock (e)
|
154.1
|
93.9
|
264.3
|
170.0
|
|||||||||
|
Total
|
$
|
1,022.8
|
$
|
638.7
|
$
|
2,007.4
|
$
|
1,190.6
|
|||||
|
Net
Income:
|
|||||||||||||
|
CNA
Financial (f)
|
$
|
281.4
|
$
|
251.3
|
$
|
498.5
|
$
|
431.3
|
|||||
|
Lorillard
|
110.5
|
106.9
|
211.5
|
201.6
|
|||||||||
|
Boardwalk
Pipelines
|
16.5
|
13.7
|
52.2
|
51.6
|
|||||||||
|
Diamond
Offshore
|
87.6
|
19.9
|
159.9
|
34.1
|
|||||||||
|
Loews
Hotels
|
12.0
|
15.8
|
20.5
|
29.0
|
|||||||||
|
Investment
income-net and other (b)
|
|||||||||||||
|
Income
(loss) from trading portfolio (c)
|
15.1
|
(39.7
|
)
|
61.0
|
(34.3
|
)
|
|||||||
|
Other
(d)
|
9.2
|
(9.3
|
)
|
10.7
|
(46.7
|
)
|
|||||||
|
532.3
|
358.6
|
1,014.3
|
666.6
|
||||||||||
|
Investment
(losses) gains:
|
|||||||||||||
|
CNA
Financial
|
(57.9
|
)
|
15.2
|
(57.4
|
)
|
3.5
|
|||||||
|
Corporate
and other
|
2.9
|
4.3
|
(1.2
|
)
|
1.2
|
||||||||
|
(55.0
|
)
|
19.5
|
(58.6
|
)
|
4.7
|
||||||||
|
Income
from continuing operations
|
477.3
|
378.1
|
955.7
|
671.3
|
|||||||||
|
Discontinued
operations, net
|
(2.4
|
)
|
1.8
|
(7.4
|
)
|
8.4
|
|||||||
|
Loews
common stock
|
474.9
|
379.9
|
948.3
|
679.7
|
|||||||||
|
Carolina
Group stock (e)
|
93.8
|
55.7
|
161.4
|
102.2
|
|||||||||
|
Total
|
$
|
568.7
|
$
|
435.6
|
$
|
1,109.7
|
$
|
781.9
|
|||||
|
(a)
|
Includes
excise taxes of $176.7, $179.0, $340.6 and $335.2 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
a loss on interest rate swaps of $52.6 ($34.2 after taxes) for the
three
and six months ended June 30, 2005.
|
|
(d)
|
Includes
additional interest expense of $35.5 ($23.1 after taxes) related
to
charges from the early redemption of the Company's long-term debt
for the
six months ended June 30, 2005.
|
|
(e)
|
Represents
50.09%, 39.22%, 47.85% and 39.21% of the economic interest in the
Carolina
Group for the respective periods.
|
|
(f)
|
Includes
a benefit of $104.4, in the second quarter of 2005, relating primarily
to
net refund interest and the release of federal income tax
reserves.
|
|
(g)
|
Restated
to correct the accounting for the periodic results of CNA's discontinued
operations.
|
Page
5 of
5
Exhibit
99.2
 |
Contact:
|
Peter
W. Keegan
Senior
Vice President
(212)
521-2950
Candace
Leeds
V.P.
of Public Affairs
(212)
521-2416
Darren
Daugherty
Investor
Relations
(212)
521-2788
|
FOR
IMMEDIATE RELEASE
CAROLINA
GROUP REPORTS NET INCOME
FOR
THE SECOND QUARTER OF 2006
NEW
YORK,
August 1, 2006—Loews Corporation (NYSE:LTR) today reported Carolina Group net
income for the 2006 second quarter of $187.2 million, compared to $142.1 million
in the 2005 second quarter. Net income attributable to Carolina Group stock
(NYSE:CG) for the second quarter of 2006 was $93.8 million, or $1.09 per share
of Carolina Group stock, compared to $55.7 million, or $0.82 per share in the
comparable period of the prior year.
The
increase in net income attributable to Carolina Group stock for the second
quarter of 2006, as compared to the corresponding period of the prior year,
is
primarily due to higher effective unit prices reflecting lower sales promotion
expenses (accounted for as a reduction to net sales) and reflects an increase
in
the amount of Carolina Group shares outstanding. Carolina Group stock represents
a 50.09% and 39.22% economic interest in the Carolina Group for the three months
ended June 30, 2006 and 2005, respectively.
Loews
Corporation sold 15 million shares of Carolina Group stock in May of 2006 and
10
million shares in November of 2005. Net income per share of Carolina Group
stock
was not impacted by the sale of Carolina Group shares.
Net
sales
for the Carolina Group were $977.3 million in the second quarter of 2006,
compared to $928.3 million in the 2005 second quarter.
Carolina
Group net income for the first half of 2006 was $337.3 million, compared to
$260.6 million in the 2005 first half. Net income attributable to Carolina
Group
stock for the first half of 2006 was $161.4 million, or $1.96 per share of
Carolina Group stock, compared to $102.2 million, or $1.50 per share in the
comparable period of the prior year. The increase in net income attributable
to
Carolina Group stock is primarily due to higher effective unit prices reflecting
lower sales promotion expenses (accounted for as a reduction to net sales)
and
reflects the May of 2006 and November of 2005 sales by Loews Corporation of
Carolina Group stock discussed above.
Page
1
of
4
Net
sales
for the Carolina Group were $1.832 billion in the first half of 2006, compared
to $1.723 billion in the comparable period of the prior year.
Results
of operations of the Carolina Group include interest expense of $18.1, $21.0,
$37.4 and $43.4 million, net of taxes, for the three and six months ended June
30, 2006 and 2005, respectively, on notional intergroup debt. At June 30, 2006,
$1.46 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 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
June 30, 2006 there were 93,291,246 shares of Carolina Group stock outstanding
representing a 53.7% economic interest. 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.
#
#
#
A
separate press release reporting Loews Corporation’s consolidated results for
the second quarter of 2006 is being issued contemporaneously with this
report.
A
conference call to discuss the second quarter results of Loews Corporation
has
been scheduled for 11:00 a.m. EDT, Tuesday, August 1, 2006. 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
|
June
30,
|
|||||||||||||
|
Three
Months
|
Six
Months
|
||||||||||||
|
2006
|
2005
|
2006
|
2005
|
||||||||||
|
(Amounts
in millions, except per share data)
|
|||||||||||||
|
Net
sales (a)
|
$
|
977.3
|
$
|
928.3
|
$
|
1,832.1
|
$
|
1,723.4
|
|||||
|
Cost
of sales (a) (b)
|
552.6
|
574.4
|
1,064.3
|
1,061.1
|
|||||||||
|
Selling,
advertising and administrative (c)
|
108.9
|
97.2
|
201.8
|
187.2
|
|||||||||
|
Total
operating costs and expenses
|
661.5
|
671.6
|
1,266.1
|
1,248.3
|
|||||||||
|
Operating
income
|
315.8
|
256.7
|
566.0
|
475.1
|
|||||||||
|
Investment
income and other (d) (e)
|
21.3
|
18.3
|
47.3
|
30.5
|
|||||||||
|
Interest
expense
|
(29.8
|
)
|
(35.6
|
)
|
(61.3
|
)
|
(72.2
|
)
|
|||||
|
Income
before income taxes
|
307.3
|
239.4
|
552.0
|
433.4
|
|||||||||
|
Income
taxes
|
120.1
|
97.3
|
214.7
|
172.8
|
|||||||||
|
Net
income
|
187.2
|
142.1
|
337.3
|
260.6
|
|||||||||
|
Earnings
attributable to the Loews Group intergroup interest (f)
|
93.4
|
86.4
|
175.9
|
158.4
|
|||||||||
|
Income
attributable to Carolina Group shareholders (g)
|
$
|
93.8
|
$
|
55.7
|
$
|
161.4
|
$
|
102.2
|
|||||
|
Per
share of Carolina Group stock
|
$
|
1.09
|
$
|
0.82
|
$
|
1.96
|
$
|
1.50
|
|||||
|
Weighted
diluted number of shares
|
86.11
|
68.10
|
82.24
|
68.08
|
|||||||||
|
Notional,
intergroup debt owned by the Carolina Group to
|
|||||||||||||
|
the
Loews Group
|
|||||||||||||
|
June
30, 2006
|
$
|
1,462.3
|
|||||||||||
|
December
31, 2005
|
1,626.9
|
||||||||||||
|
(a)
|
Includes
excise taxes of $176.7, $179.0, $340.6 and $335.2 for the respective
periods.
|
|
(b)
|
Includes
charges of $236.5, $235.6, $453.5 and $434.3 ($144.0, $139.8, $277.1
and
$261.2 after taxes) to accrue obligations under the State Settlement
Agreements for the respective periods.
|
|
(c)
|
Includes
restructuring costs of $15.5 for the three and six months ended June
30,
2006, related to early retirement and curtailment charges for Lorillard's
pension and other postretirement benefit plans.
|
|
(d)
|
Includes
$6.1 of interest income, in the second quarter of 2005, relating
to a
federal income tax settlement.
|
|
(e)
|
Includes
income from limited partnership investments of $3.8, $2.5, $10.4
and $6.4
($2.3, $1.4, $6.3 and $3.8 after taxes) for the respective
periods.
|
|
(f)
|
The
Loews Group's intergroup interest in the earnings of the Carolina
Group
reflected share equivalents amounting to 80,445,000 shares of 173,736,246
share and share equivalents outstanding as of June 30, 2006 and share
equivalents amounting to 105,445,000 shares of 173,478,759 share
and share
equivalents as of June 30, 2005. As of June 30, 2006, there were
93,291,246 shares of Carolina Group stock outstanding.
|
|
(g)
|
Represents
50.09%, 39.22%, 47.85% and 39.21% of the economic interest in the
Carolina
Group for the respective 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):
|
June
30,
|
|||||||||||||
|
Three
Months
|
Six
Months
|
||||||||||||
|
2006
|
2005
|
2006
|
2005
|
||||||||||
|
Full
Price Brands
|
|||||||||||||
|
Total
Newport
|
8,360,490
|
8,603,782
|
16,138,155
|
16,125,476
|
|||||||||
|
Total
Kent Family
|
159,003
|
188,805
|
305,019
|
363,300
|
|||||||||
|
Total
True
|
134,946
|
150,900
|
255,864
|
288,492
|
|||||||||
|
Total
Max
|
8,976
|
10,348
|
17,133
|
19,939
|
|||||||||
|
Total
Satin
|
1,482
|
1,617
|
2,670
|
3,213
|
|||||||||
|
Total
Full Price Brands
|
8,664,897
|
8,955,452
|
16,718,841
|
16,800,420
|
|||||||||
|
Price/Value
Brands
|
|||||||||||||
|
Total
Old Gold
|
211,293
|
221,103
|
395,109
|
412,422
|
|||||||||
|
Total
Maverick
|
265,380
|
218,892
|
495,732
|
396,324
|
|||||||||
|
Total
Price/Value Brands
|
476,673
|
439,995
|
890,841
|
808,746
|
|||||||||
|
Total
Domestic Cigarettes
|
9,141,570
|
9,395,447
|
17,609,682
|
17,609,166
|
|||||||||
|
Total
Puerto Rico and U.S. Possessions
|
212,064
|
220,620
|
400,032
|
387,384
|
|||||||||
|
Grand
Total
|
9,353,634
|
9,616,067
|
18,009,714
|
17,996,550
|
|||||||||
|
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