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:
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October
27, 2005
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(Date
of earliest event reported):
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October
27, 2005
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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
or organization)
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File
Number)
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Identification
No.)
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||
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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
CFR
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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On
October 27, 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 third quarter of 2005. The press releases are
furnished as Exhibits 99.1 and 99.2 to this Form 8-K.
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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 October 27, 2005, providing information
on third quarter results of operations for 2005.
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||||||
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99.2
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Carolina
Group press release, issued by Loews Corporation October 27, 2005,
providing information on third quarter results of operations for
2005.
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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: October
27, 2005
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By:
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/s/
Gary W. Garson
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Gary
W. Garson
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Senior
Vice President
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General
Counsel
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||
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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
Joshua
E. Kahn
Investor
Relations
(212)
521-2788
|
FOR
IMMEDIATE RELEASE
LOEWS
CORPORATION REPORTS
NET
INCOME FOR THE THIRD QUARTER OF 2005
NEW
YORK,
October 27, 2005—Loews Corporation (NYSE:LTR;CG) today reported consolidated net
income (including both the Loews Group and Carolina Group) for the 2005 third
quarter of $300.0 million, compared to $278.5 million in the 2004 third quarter.
Net income attributable to Loews common stock includes net investment gains
of
$34.0 million (after tax and minority interest) compared to net investment
losses of $30.2 million (after tax and minority interest) in the comparable
period of the prior year.
Net
income and earnings per share information attributable to Loews common stock
and
Carolina Group stock is summarized in the table below:
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September
30,
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|||||||||||||
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Three
Months
|
Nine
Months
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||||||||||||
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(In
millions, except per share data)
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2005
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2004
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2005
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2004
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|||||||||
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(Restated)
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(Restated)
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||||||||||||
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Net
income attributable to Loews common stock:
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|||||||||||||
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Income
before net investment gains (losses)
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$
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198.5
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$
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255.3
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$
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865.1
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$
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836.0
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|||||
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Net
investment gains (losses) (a)
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34.0
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(30.2
|
)
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38.7
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(230.5
|
)
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|||||||
|
Net
income attributable to Loews common stock
|
232.5
|
225.1
|
903.8
|
605.5
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|||||||||
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Net
income attributable to Carolina Group stock
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67.5
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53.4
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169.7
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128.4
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|||||||||
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Consolidated
net income
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$
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300.0
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$
|
278.5
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$
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1,073.5
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$
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733.9
|
|||||
|
Net
income per share:
|
|||||||||||||
|
Loews
common stock
|
$
|
1.25
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$
|
1.21
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$
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4.86
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$
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3.26
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|||||
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Carolina
Group stock
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$
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0.99
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$
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0.92
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$
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2.49
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$
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2.21
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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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September
30, 2005
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$
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69.68
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|||||||||||
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December
31, 2004
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$
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66.56
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|||||||||||
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(a)
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Includes
a loss of $352.9 (after tax and minority interest) for the nine months
ended September 30, 2004 related to CNA's sale of its individual
life
insurance business.
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Page
1 of
5
Impact
of Hurricanes on Third Quarter Results
Net
income for the three months ended September 30, 2005 includes a loss of $263.3
million as a result of Hurricanes Katrina, Rita, Dennis and Ophelia which
impacted the third quarter of 2005 results of Loews’s CNA, Diamond Offshore and
Boardwalk Pipelines subsidiaries. CNA incurred catastrophe losses of $268.3
million (after tax and minority interest) for the three and nine months ended
September 30, 2005 primarily as a result of the third quarter hurricanes, as
compared with losses from hurricanes of $158.8 million (after tax and minority
interest) for the three and nine months ended September 30, 2004. Diamond
Offshore recorded a gain of $8.9 million (after tax and minority interest)
for
the three months ended September 30, 2005 as a result of an insurance settlement
for a rig destroyed by Hurricane Katrina offset by losses incurred for damage
caused to other rigs located in the Gulf of Mexico during the third quarter
hurricanes. Boardwalk Pipelines incurred losses of $3.9 million (after taxes)
as
a result of various damage and disruption, primarily to its Gulf South pipeline,
as a result of the hurricanes.
Three
Months Ended September 30, 2005 Compared With 2004
Net
income attributable to Loews common stock for the third quarter of 2005 amounted
to $232.5 million or $1.25 per share, compared to $225.1 million or $1.21 per
share in the comparable period of the prior year.
Net
income attributable to Carolina Group stock for the third quarter of 2005 was
$67.5 million or $0.99 per Carolina Group share, compared to $53.4 million
or
$0.92 per Carolina Group share in the third quarter of 2004. The Company is
issuing a separate press release reporting the results of the Carolina Group
for
the third quarter of 2005.
Consolidated
revenues in the third quarter of 2005 amounted to $4.1 billion compared to
$3.8
billion in the comparable 2004 quarter.
Nine
Months Ended September 30, 2005 Compared With 2004
Loews
consolidated net income (including both the Loews Group and Carolina Group)
for
the first nine months of 2005 was $1,073.5 million, compared to $733.9 million
in the comparable period of the prior year.
Net
income attributable to Loews common stock for the first nine months of 2005
amounted to $903.8 million or $4.86 per share, compared to $605.5 million or
$3.26 per share in the comparable period of the prior year. Net income
attributable to Loews common stock includes net investment gains of $38.7
million (after tax and minority interest) compared to net investment losses
of
$230.5 million (after tax and minority interest) in the comparable period of
the
prior year due primarily to a 2004 loss of $352.9 million (after tax and
minority interest) for CNA’s sale of its individual life insurance business. The
results for the nine months ended September 30, 2005 include 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 CNA.
Net
income attributable to Carolina Group stock for the first nine months of 2005
was $169.7 million or $2.49 per Carolina Group share, compared to $128.4 million
or $2.21 per Carolina Group share in the comparable period of the prior
year.
Page
2 of
5
Consolidated
revenues in the first nine months of 2005 amounted to $11.9 billion compared
to
$11.2 billion in the comparable period of the prior year. The
increase in revenues is primarily due to the acquisition of Gulf South during
December 2004, improved results at Diamond Offshore and the absence of a loss
recorded in 2004 related to CNA’s sale of its individual life
business.
#
#
#
At
September 30, 2005, there were 185,746,595 shares of Loews common stock
outstanding and 68,180,678 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.
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 September
30,
2005, the outstanding Carolina Group stock represents a 39.27% economic interest
in the economic performance of the Carolina Group.
A
conference call to discuss the third quarter results of Loews Corporation has
been scheduled for 11:00 a.m. EDT, Thursday, October 27, 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 third quarter results of CNA has been scheduled
for 10:00 a.m. EDT, Thursday, October 27, 2005. A live broadcast of the call
will be available online at the CNA website (http://investor.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) 811-0677. 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. 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
|
September
30,
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|||||||||||||
|
Three
Months
|
Nine
Months
|
||||||||||||
|
2005
|
2004
(f)
|
2005
|
2004
(f)
|
||||||||||
|
(Restated)
|
(Restated)
|
||||||||||||
|
(Amounts
in millions, except per share data)
|
|||||||||||||
|
Revenues:
|
|||||||||||||
|
Insurance
premiums and net investment income (a)
|
$
|
2,541.5
|
$
|
2,291.8
|
$
|
7,222.5
|
$
|
7,146.5
|
|||||
|
Manufactured
products (b)
|
968.3
|
918.0
|
2,771.2
|
2,625.5
|
|||||||||
|
Other
(c) (d)
|
628.1
|
576.9
|
1,916.1
|
1,423.7
|
|||||||||
|
Total
|
4,137.9
|
3,786.7
|
11,909.8
|
11,195.7
|
|||||||||
|
Expenses:
|
|||||||||||||
|
Insurance
claims & policyholders’ benefits
|
1,871.4
|
1,596.1
|
4,886.4
|
4,854.8
|
|||||||||
|
Cost
of manufactured products sold (b)
|
562.6
|
523.7
|
1,662.4
|
1,558.6
|
|||||||||
|
Other
|
1,252.7
|
1,262.9
|
3,719.2
|
3,736.6
|
|||||||||
|
Total
|
3,686.7
|
3,382.7
|
10,268.0
|
10,150.0
|
|||||||||
|
451.2
|
404.0
|
1,641.8
|
1,045.7
|
||||||||||
|
Income
tax expense
|
104.6
|
121.4
|
446.6
|
292.6
|
|||||||||
|
Minority
interest
|
46.6
|
4.1
|
121.7
|
19.2
|
|||||||||
|
Total
|
151.2
|
125.5
|
568.3
|
311.8
|
|||||||||
|
Net
income
|
$
|
300.0
|
$
|
278.5
|
$
|
1,073.5
|
$
|
733.9
|
|||||
|
Net
income attributable to:
|
|||||||||||||
|
Loews
common stock
|
$
|
232.5
|
$
|
225.1
|
$
|
903.8
|
$
|
605.5
|
|||||
|
Carolina
Group stock (e)
|
67.5
|
53.4
|
169.7
|
128.4
|
|||||||||
|
$
|
300.0
|
$
|
278.5
|
$
|
1,073.5
|
$
|
733.9
|
||||||
|
Diluted
net income per share of Loews common stock
|
$
|
1.25
|
$
|
1.21
|
$
|
4.86
|
$
|
3.26
|
|||||
|
Diluted
net income per share of Carolina Group stock
|
$
|
0.99
|
$
|
0.92
|
$
|
2.49
|
$
|
2.21
|
|||||
|
Weighted
diluted number of shares:
|
|||||||||||||
|
Loews
common stock
|
186.03
|
185.62
|
185.93
|
185.62
|
|||||||||
|
Carolina
Group stock
|
68.23
|
57.98
|
68.14
|
57.99
|
|||||||||
|
(a)
|
Includes
investment gains (losses) of $60.0, $(49.6), $69.7 and $(409.4) for
the
respective periods. The nine months ended September 30, 2004 includes
a
loss of $618.6 related to CNA’s sale of its individual life
business.
|
|
(b)
|
Includes
excise taxes of $176.2, $167.9, $511.4 and $493.6 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)
|
Includes
income of $179.3 ($116.5 after taxes) in the three and nine months
ended
September 30, 2004 from an affiliate’s sale of four ultra-large crude oil
tankers.
|
|
(e)
|
Represents
39.26%, 33.43%, 39.23% and 33.43% of the economic interest in the
Carolina
Group for the respective periods.
|
|
(f)
|
Restated
to correct CNA’s accounting for several reinsurance contracts, primarily
with a former affiliate, and CNA’s equity accounting for that
affiliate.
|
Page
4 of
5
Loews
Corporation and Subsidiaries
Additional
Financial Information
|
September
30,
|
|||||||||||||
|
Three
Months
|
Nine
Months
|
||||||||||||
|
2005
|
2004
(i)
|
2005
|
2004
(i)
|
||||||||||
|
(Restated)
|
(Restated)
|
||||||||||||
|
(In
millions)
|
|||||||||||||
|
Revenues:
|
|||||||||||||
|
CNA
Financial
|
$
|
2,452.9
|
$
|
2,380.6
|
$
|
7,380.2
|
$
|
7,664.4
|
|||||
|
Lorillard
(a)
|
947.3
|
886.7
|
2,701.3
|
2,536.2
|
|||||||||
|
Boardwalk
Pipelines
|
122.3
|
47.2
|
393.0
|
185.3
|
|||||||||
|
Diamond
Offshore
|
352.1
|
209.7
|
915.0
|
583.3
|
|||||||||
|
Loews
Hotels
|
81.5
|
66.9
|
267.4
|
233.9
|
|||||||||
|
Investment
income-net and other (b)
|
|||||||||||||
|
Income
from trading portfolio
|
62.5
|
11.5
|
9.7
|
64.6
|
|||||||||
|
Other
(c)
|
59.3
|
233.7
|
173.5
|
337.4
|
|||||||||
|
4,077.9
|
3,836.3
|
11,840.1
|
11,605.1
|
||||||||||
|
Investment
(losses) gains:
|
|||||||||||||
|
CNA
Financial (d)
|
67.1
|
(62.2
|
)
|
76.3
|
(411.4
|
)
|
|||||||
|
Corporate
and other
|
(7.1
|
)
|
12.6
|
(6.6
|
)
|
2.0
|
|||||||
|
60.0
|
(49.6
|
)
|
69.7
|
(409.4
|
)
|
||||||||
|
Total
|
$
|
4,137.9
|
$
|
3,786.7
|
$
|
11,909.8
|
$
|
11,195.7
|
|||||
|
Income
Before Taxes:
|
|||||||||||||
|
CNA
Financial
|
$
|
(101.0
|
)
|
$
|
(7.0
|
)
|
$
|
474.2
|
$
|
513.1
|
|||
|
Lorillard
(e)
|
200.0
|
210.8
|
535.2
|
535.0
|
|||||||||
|
Boardwalk
Pipelines
|
7.6
|
1.8
|
93.2
|
53.3
|
|||||||||
|
Diamond
Offshore
|
118.0
|
1.4
|
215.1
|
(29.1
|
)
|
||||||||
|
Loews
Hotels
|
5.5
|
(1.2
|
)
|
45.1
|
23.1
|
||||||||
|
Investment
income-net and other (b)
|
|||||||||||||
|
Income
from trading portfolio
|
62.5
|
11.5
|
9.7
|
64.6
|
|||||||||
|
Other
(c) (f)
|
(9.4
|
)
|
150.2
|
(79.1
|
)
|
86.0
|
|||||||
|
283.2
|
367.5
|
1,293.4
|
1,246.0
|
||||||||||
|
Investment
(losses) gains:
|
|||||||||||||
|
CNA
Financial (d)
|
67.1
|
(62.2
|
)
|
76.3
|
(411.4
|
)
|
|||||||
|
Corporate
and other
|
(7.0
|
)
|
12.4
|
(5.8
|
)
|
1.8
|
|||||||
|
60.1
|
(49.8
|
)
|
70.5
|
(409.6
|
)
|
||||||||
|
Loews
common stock
|
343.3
|
317.7
|
1,363.9
|
836.4
|
|||||||||
|
Carolina
Group stock (g)
|
107.9
|
86.3
|
277.9
|
209.3
|
|||||||||
|
Total
|
$
|
451.2
|
$
|
404.0
|
$
|
1,641.8
|
$
|
1,045.7
|
|||||
|
Net
Income:
|
|||||||||||||
|
CNA
Financial (h)
|
$
|
(31.2
|
)
|
$
|
17.7
|
$
|
400.1
|
$
|
375.6
|
||||
|
Lorillard
(e)
|
125.3
|
130.5
|
326.9
|
328.3
|
|||||||||
|
Boardwalk
Pipelines
|
4.5
|
1.0
|
56.1
|
32.0
|
|||||||||
|
Diamond
Offshore
|
40.6
|
0.1
|
74.7
|
(13.5
|
)
|
||||||||
|
Loews
Hotels
|
3.7
|
(0.8
|
)
|
32.7
|
14.0
|
||||||||
|
Investment
income-net and other (b)
|
|||||||||||||
|
Income
from trading portfolio
|
40.6
|
7.5
|
6.3
|
42.0
|
|||||||||
|
Other
(c) (f)
|
15.0
|
99.3
|
(31.7
|
)
|
57.6
|
||||||||
|
198.5
|
255.3
|
865.1
|
836.0
|
||||||||||
|
Investment
(losses) gains:
|
|||||||||||||
|
CNA
Financial (d)
|
38.6
|
(38.2
|
)
|
42.1
|
(231.6
|
)
|
|||||||
|
Corporate
and other
|
(4.6
|
)
|
8.0
|
(3.4
|
)
|
1.1
|
|||||||
|
34.0
|
(30.2
|
)
|
38.7
|
(230.5
|
)
|
||||||||
|
Loews
common stock
|
232.5
|
225.1
|
903.8
|
605.5
|
|||||||||
|
Carolina
Group stock (g)
|
67.5
|
53.4
|
169.7
|
128.4
|
|||||||||
|
Total
|
$
|
300.0
|
$
|
278.5
|
$
|
1,073.5
|
$
|
733.9
|
|||||
|
(a)
|
Includes
excise taxes of $176.2, $167.9, $511.4 and $493.6 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
income of $179.3 ($116.5 after taxes) in the three and nine months
ended
September 30, 2004 from an affiliate’s sale of four ultra-large crude oil
tankers.
|
|
(d)
|
Includes
an impairment loss of $618.6 ($352.9 after tax and minority interest)
related to CNA’s sale of its individual life insurance business for the
nine months ended September 30, 2004.
|
|
(e)
|
The
Loews Group’s intergroup interest in the earnings of the Carolina Group
declined from 66.57% in 2004 to 60.73% in 2005 due primarily to the
sale
of Carolina Group stock by Loews in December of 2004.
|
|
(f)
|
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 nine months ended September 30, 2005 and 2004,
respectively.
|
|
(g)
|
Represents
39.26%, 33.43%, 39.23% and 33.43% of the economic interest in the
Carolina
Group for the respective periods.
|
|
(h)
|
Includes
a benefit of $104.4, for the nine months ended September 30, 2005,
relating primarily to net refund interest and the release of federal
income tax reserves.
|
|
(i)
|
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
5
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 THIRD QUARTER OF 2005
NEW
YORK,
October 27, 2005—Loews Corporation (NYSE:LTR) today reported Carolina Group net
income for the 2005 third quarter of $172.0 million, compared to $159.9 million
in the 2004 third quarter. Net income attributable to Carolina Group stock
(NYSE:CG) for the third quarter of 2005 was $67.5 million, or $0.99 per share
of
Carolina Group stock, compared to $53.4 million, or $0.92 per share in the
comparable period of the prior year.
The
increase in net income attributable to Carolina Group stock for the third
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. 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 39.26% and 33.43% economic interest in the Carolina Group
for
the three months ended September 30, 2005 and 2004, respectively. Net income
also increased due to $3.3 million ($2.1 million after taxes) of improved
performance of limited partnership investments.
Net
sales
for the Carolina Group were $928.4 million in the third quarter of 2005,
compared to $879.3 million in the 2004 third quarter, reflecting an increase
in
unit sales volume of 3.3%.
Carolina
Group net income for the first nine months of 2005 was $432.6 million, compared
to $384.3 million in the comparable period of the prior year. Net income
attributable to Carolina Group stock for the first nine months of 2005 was
$169.7 million, or $2.49 per share of Carolina Group stock, compared to $128.4
million, or $2.21 per share in the comparable period of the prior year. The
increase in net income attributable to Carolina Group stock reflects the
December of 2004 sale by Loews Corporation of Carolina Group stock discussed
above. Net income also increased due to $2.9 million ($1.7 million after taxes)
of improved performance of limited partnership investments.
Net
sales
for the Carolina Group were $2.652 billion in the first nine months of 2005,
compared to $2.515 billion in the comparable period of the prior year. The
increase in net sales reflects an increase in unit sales volume of 3.1% and
reduced sales promotion expenses (accounted for as a reduction in net
sales).
Results
of operations of the Carolina Group include interest expense of $22.0, $24.4,
$65.4 and $73.3 million, net of taxes, for the three and nine months ended
September 30, 2005 and 2004, respectively, on notional intergroup debt. At
September 30, 2005, $1.71 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.
Page
1 of
4
As
of
September 30, 2005, there were 68,180,678 shares of Carolina Group stock
outstanding representing a 39.27% 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 third quarter of 2005 is being issued contemporaneously with this
report.
A
conference call to discuss the third quarter results of Loews Corporation has
been scheduled for 11:00 a.m. EDT, Thursday, October 27, 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
|
September
30,
|
|||||||||||||
|
Three
Months
|
Nine
Months
|
||||||||||||
|
2005
|
2004
|
2005
|
2004
|
||||||||||
|
(Amounts
in millions, except per share data)
|
|||||||||||||
|
Net
sales (a)
|
$
|
928.4
|
$
|
879.3
|
$
|
2,651.8
|
$
|
2,515.3
|
|||||
|
Cost
of sales (a) (b)
|
543.9
|
504.8
|
1,605.0
|
1,504.4
|
|||||||||
|
Selling,
advertising and administrative
|
95.3
|
85.1
|
282.5
|
288.4
|
|||||||||
|
Total
operating costs and expenses
|
639.2
|
589.9
|
1,887.5
|
1,792.8
|
|||||||||
|
Operating
income
|
289.2
|
289.4
|
764.3
|
722.5
|
|||||||||
|
Investment
income and other (c) (d)
|
20.5
|
8.1
|
51.0
|
23.1
|
|||||||||
|
Interest
expense
|
(34.8
|
)
|
(39.3
|
)
|
(107.0
|
)
|
(119.4
|
)
|
|||||
|
Income
before income taxes
|
274.9
|
258.2
|
708.3
|
626.2
|
|||||||||
|
Income
taxes
|
102.9
|
98.3
|
275.7
|
241.9
|
|||||||||
|
Net
income
|
172.0
|
159.9
|
432.6
|
384.3
|
|||||||||
|
Earnings
attributable to the Loews Group intergroup
interest (e)
|
104.5
|
106.5
|
262.9
|
255.9
|
|||||||||
|
Income
attributable to Carolina Group shareholders (f)
|
$
|
67.5
|
$
|
53.4
|
$
|
169.7
|
$
|
128.4
|
|||||
|
Per
share of Carolina Group stock
|
$
|
0.99
|
$
|
0.92
|
$
|
2.49
|
$
|
2.21
|
|||||
|
Weighted
diluted shares (g)
|
68.23
|
57.97
|
68.14
|
57.97
|
|||||||||
|
Notional,
intergroup debt owned by the Carolina Group to
|
|||||||||||||
|
the
Loews Group
|
|||||||||||||
|
September
30, 2005
|
$
|
1,709.8
|
|||||||||||
|
December
31, 2004
|
1,871.2
|
||||||||||||
|
(a)
|
Includes
excise taxes of $176.2, $167.9, $511.4 and $493.6 for the respective
periods.
|
|
(b)
|
Includes
charges of $223.9, $213.6, $658.2 and $649.0 ($140.8, $132.8, $402.0
and
$398.3 after taxes) to accrue obligations under the State Settlement
Agreements for the respective periods.
|
|
(c)
|
Includes
$6.1 of interest income, for the nine months ended September 30,
2005,
relating to a federal income tax settlement.
|
|
(d)
|
Includes
income from limited partnership investments of $6.4, $3.1, $12.8
and $9.9
($4.0, $1.9, $7.8 and $6.1 after taxes) for the respective
periods.
|
|
(e)
|
The
Loews Group's intergroup interest in the earnings of the Carolina
Group
reflected share equivalents amounting to 105,445,000 shares of 173,625,678
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 September 30, 2005, there were 68,180,678
shares of Carolina Group stock outstanding.
|
|
(f)
|
Represents
39.26%, 33.43%, 39.23% and 33.43% of the economic interest in the
Carolina
Group for the respective periods presented.
|
|
(g)
|
Earnings
per share-assuming dilution and earnings per share-basic are the
same for
all periods presented because securities that could potentially dilute
earnings per share in the future are insignificant or
antidilutive.
|
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):
|
September
30,
|
|||||||||||||
|
Three
Months
|
Nine
Months
|
||||||||||||
|
2005
|
2004
|
2005
|
2004
|
||||||||||
|
Full
Price Brands
|
|||||||||||||
|
Total
Newport
|
8,304,127
|
8,040,274
|
24,429,603
|
23,522,568
|
|||||||||
|
Total
Kent Family
|
180,261
|
215,505
|
543,561
|
651,127
|
|||||||||
|
Total
True
|
148,488
|
167,970
|
436,980
|
502,193
|
|||||||||
|
Total
Max
|
9,798
|
11,364
|
29,737
|
34,677
|
|||||||||
|
Total
Satin
|
1,542
|
1,959
|
4,755
|
6,186
|
|||||||||
|
Total
Triumph
|
|
|
|
886
|
|||||||||
|
Total
Full Price Brands
|
8,644,216
|
8,437,072
|
25,444,636
|
24,717,637
|
|||||||||
|
Price/Value
Brands
|
|||||||||||||
|
Total
Old Gold
|
221,097
|
233,650
|
633,519
|
686,704
|
|||||||||
|
Total
Maverick
|
235,210
|
178,734
|
631,534
|
516,540
|
|||||||||
|
Total
Price/Value Brands
|
456,307
|
412,384
|
1,265,053
|
1,203,244
|
|||||||||
|
Total
Domestic Cigarettes
|
9,100,523
|
8,849,456
|
26,709,689
|
25,920,881
|
|||||||||
|
Total
Puerto Rico and U.S. Possessions
|
233,970
|
187,519
|
621,354
|
598,859
|
|||||||||
|
Grand
Total
|
9,334,493
|
9,036,975
|
27,331,043
|
26,519,740
|
|||||||||
|
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