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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February
16, 2006
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(Date
of earliest event reported):
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February
14, 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
or organization)
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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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On
February 16, 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 fourth quarter and year ended 2005. The
information disclosed in this report pursuant to Item 2.02, including the
exhibits attached hereto, is being furnished and shall not be deemed “filed” for
the purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange
Act”), or otherwise subject to the liability of that section, nor shall it be
deemed incorporated by reference in any filing under the Securities Act of
1933
or the Exchange Act, except as may be expressly set forth by specific reference
in such filing.
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Item
4.02 (a)
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Non-Reliance
on Previously Issued Financial Statements or a Related Audit Report
or
Completed Interim Review
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The
Registrant will restate its annual financial statements for the years 2001
through 2004, as well as its interim financial statements through September
30,
2005.
The
restatement is to correct the accounting for discontinued operations acquired
by
the Registrant’s 91%-owned subsidiary, CNA Financial Corporation (“CNA”) in
CNA’s merger with The Continental Corporation in 1995. A current review by CNA
of its discontinued operations identified an overstatement of the net assets
of
these discontinued operations and errors in accounting for the periodic results
of these operations.
As
a
result of this restatement, the Registrant’s consolidated financial statements
for 2001 through 2004, and the related independent registered public
accountant’s reports thereon, as well as the Registrant’s interim financial
statements through September 30, 2005, should no longer be relied upon. The
Registrant’s consolidated financial statements as of and for the year ended
December 31, 2005, to be filed on Form 10-K on or before March 16, 2006, will
include the effects of this restatement.
The
determination to restate was made by the Audit Committee of the Registrant’s
Board of Directors on February 14, 2006 upon Registrant management’s
recommendation and in consultation with Deloitte & Touche LLP, the
Registrant’s independent registered public accounting firm.
2
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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 February 16, 2006, providing information
on fourth quarter and year-end 2005 results of
operations.
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||||||
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99.2
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Carolina
Group press release, issued by Loews Corporation February 16, 2006,
providing information on fourth quarter and year-end 2005 results
of
operations.
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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: February
16, 2006
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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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and
Secretary
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||
3
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 2005
NEW
YORK,
February 16, 2006—Loews Corporation (NYSE:LTR;CG) today reported consolidated
net income (including both the Loews Group and Carolina Group) for the 2005
fourth quarter of $127.6 million, compared to $500.3 million in the 2004 fourth
quarter. Consolidated net income for the year ended December 31, 2005 was
$1,211.6 million, compared to $1,215.8 million in the prior year.
Net
income and earnings per share information attributable to Loews common stock
and
Carolina Group stock is summarized in the following table:
|
December
31,
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|||||||||||||
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Three
Months
|
Year
Ended
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||||||||||||
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(In
millions, except per share data)
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2005
|
2004
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2005
|
2004
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|||||||||
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(Restated)
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(Restated)
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||||||||||||
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Net
income attributable to Loews common stock:
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|||||||||||||
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Income
before net investment gains (losses)
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$
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86.8
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$
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359.7
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$
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951.9
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$
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1,195.7
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|||||
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Net
investment gains (losses) (a)
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(49.0
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)
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85.6
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(10.3
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)
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(144.9
|
)
|
||||||
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Income
from continuing operations
|
37.8
|
445.3
|
941.6
|
1,050.8
|
|||||||||
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Discontinued
operations, net
|
8.2
|
(1.1
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)
|
18.7
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(19.5
|
)
|
|||||||
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Net
income attributable to Loews common stock
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46.0
|
444.2
|
960.3
|
1,031.3
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|||||||||
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Net
income attributable to Carolina Group stock (b)
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81.6
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56.1
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251.3
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184.5
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|||||||||
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Consolidated
net income
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$
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127.6
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$
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500.3
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$
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1,211.6
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$
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1,215.8
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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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$
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0.20
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$
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2.40
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$
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5.06
|
$
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5.66
|
|||||
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Discontinued
operations, net
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0.05
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(0.01
|
)
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0.10
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(0.10
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)
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|||||||
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Net
income
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$
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0.25
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$
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2.39
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$
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5.16
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$
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5.56
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|||||
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Carolina
Group stock
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$
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1.11
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$
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0.93
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$
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3.62
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$
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3.15
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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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December
31, 2005
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$
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70.93
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|||||||||||
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December
31, 2004 - restated
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$
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65.56
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|||||||||||
| (a) |
Includes
a loss of $352.9 (after tax and minority interest) for the year ended
December 31, 2004 related to CNA's sale of its individual life insurance
business.
|
Page
1 of
6
| (b) |
Reflects
Loews Corporation’s sales of 10,000,000 shares of Carolina Group stock in
each of November of 2005 and December of 2004. Net
income per share of Carolina Group stock was not impacted by these
sales.
|
The
Company will restate its financial results for prior years to correct the
accounting by the Company’s 91% owned subsidiary, the CNA Financial Corporation
(“CNA”), for business reported as discontinued operations.
Three
Months Ended December 31, 2005 Compared With 2004
Net
income attributable to Loews common stock for the fourth quarter of 2005
amounted to $46.0 million, or $0.25 per share, compared to $444.2 million,
or
$2.39 per share, in the comparable period of the prior year. The decrease in
net
income was primarily due to a loss related to CNA’s significant commutation of
reinsurance finite contracts ($203.5 million after tax and minority interest)
and non-commutation related adverse net development ($126.9 million after tax
and minority interest), partially offset by improved results at the Company’s
54% owned subsidiary, Diamond Offshore Drilling, Inc. (“Diamond
Offshore”).
Net
income attributable to Loews common stock includes net investment losses of
$49.0 million (after tax and minority interest) compared to net investment
gains
of $85.6 million (after tax and minority interest) in the comparable period
of
the prior year.
Net
income attributable to Carolina Group stock for the fourth quarter of 2005
was
$81.6 million, or $1.11 per Carolina Group share, compared to $56.1 million,
or
$0.93 per Carolina Group share, in the fourth quarter of 2004. The
increase in net income attributable to Carolina Group stock for the fourth
quarter of 2005 is due to improved overall results of the Carolina Group and
reflects the increase in the amount of Carolina Group shares.
The
Company is issuing a separate press release reporting the results of the
Carolina Group for the fourth quarter and full year of 2005.
Consolidated
revenues in the fourth quarters of 2005 and 2004 amounted to $4.1
billion.
Year
Ended December 31, 2005 Compared With 2004
Net
income attributable to Loews common stock for the year ended 2005 amounted
to
$960.3 million, or $5.16 per share, compared to $1,031.3 million, or $5.56
per
share, in the prior year. The results for the year ended December 31, 2005
include a benefit of $136.5 million related to a federal income tax settlement
due primarily to net refund interest and the release of federal income tax
reserves, and catastrophe losses at CNA of $304.8 million (after tax and
minority interest) primarily related to Hurricanes Wilma, Katrina, Rita, Dennis
and Ophelia. Net income also reflects the impact of the CNA commutations and
adverse net development discussed above, partially offset by improved results
at
Diamond Offshore. In 2004, CNA incurred catastrophe losses of $178.9 million
(after tax and minority interest) also primarily related to hurricanes. Net
income for 2004 also included $116.5 (after taxes) from an affiliate’s sale of
four ultra-large oil tankers.
Net
income attributable to Loews common stock includes net investment losses of
$10.3 million (after tax and minority interest) compared to net investment
losses of $144.9 million (after tax and minority interest) in the prior year
due
primarily to a loss of $352.9 million (after tax and minority interest) in
2004
from CNA’s sale of its individual life insurance business.
Page
2 of
6
Net
income attributable to Carolina Group stock for the year ended 2005 was $251.3
million, or $3.62 per Carolina Group share, compared to $184.5 million, or
$3.15
per Carolina Group share, in the prior year and is
primarily due to improved overall results and the stock sales as mentioned
above.
Consolidated
revenues for the year ended 2005 amounted to $16.0 billion compared to $15.2
billion in the prior year. The
increase in revenues is primarily due to the acquisition of Gulf South in
December of 2004, improved results at Diamond Offshore and the impact of a
loss
recorded in 2004 related to CNA’s sale of its individual life
business.
Financial
Restatement
The
Company will restate its financial statements for the years 2001 through 2004,
as well as its interim financial statements through September 30, 2005. The
restatement is to correct the accounting for discontinued operations acquired
in
CNA’s merger with The Continental Corporation in 1995. A current review of
discontinued operations identified an overstatement of the net assets of these
discontinued operations and errors in CNA’s accounting for the periodic results
of these operations.
The
Company will file a Form 10-K for 2005 reflecting the effects of the restatement
as follows:
|
Restated
Results as of and for the Year Ended December 31,
|
|||||||||||||
|
2004
|
2003
|
||||||||||||
|
Previously
|
Previously
|
||||||||||||
|
(In
millions, except per share data)
|
Reported
|
Restated
|
Reported
|
Restated
|
|||||||||
|
Shareholders’
equity
|
$
|
12,156.0
|
$
|
11,969.9
|
$
|
11,023.0
|
$
|
10,855.3
|
|||||
|
Net
income (loss) attributable to:
|
|||||||||||||
|
Loews
common stock
|
$
|
1,050.8
|
$
|
1,031.3
|
$
|
(713.8
|
)
|
$
|
(712.4
|
)
|
|||
|
Carolina
Group stock
|
184.5
|
184.5
|
115.2
|
115.2
|
|||||||||
|
Total
|
$
|
1,235.3
|
$
|
1,215.8
|
$
|
(598.6
|
)
|
$
|
(597.2
|
)
|
|||
|
Net
income (loss) per share attributable to:
|
|||||||||||||
|
Loews
common stock
|
$
|
5.66
|
$
|
5.56
|
$
|
(3.85
|
)
|
$
|
(3.84
|
)
|
|||
|
Carolina
Group stock
|
$
|
3.15
|
$
|
3.15
|
$
|
2.76
|
$
|
2.76
|
|||||
#
#
#
At
December 31, 2005, there were 185,846,889 shares of Loews common stock
outstanding and 78,191,678 shares of Carolina Group stock outstanding. Depending
on market conditions, the Company purchases, from time to time in the open
market or otherwise, shares of its and its subsidiaries’ outstanding common
stock.
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 December
31,
2005, the outstanding Carolina Group stock represented a 45.03% interest in
the
economic performance of the Carolina Group.
Page
3 of
6
A
conference call to discuss the fourth quarter results of Loews Corporation
has
been scheduled for 11:00 a.m. EST, Thursday, February 16, 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
fourth quarter results of CNA has been scheduled for 10:00 a.m. EST, Thursday,
February 16, 2006. 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 that 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.
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
|
December
31,
|
|||||||||||||
|
Three
Months
|
Years
Ended
|
||||||||||||
|
2005
|
2004
(f)
|
2005
|
2004
(f)
|
||||||||||
|
(Restated)
|
(Restated)
|
||||||||||||
|
(Amounts
in millions, except per share data)
|
|||||||||||||
|
Revenues:
|
|||||||||||||
|
Insurance
premiums and net investment income (a)
|
$
|
2,431.7
|
$
|
2,678.0
|
$
|
9,654.2
|
$
|
9,824.5
|
|||||
|
Manufactured
products (b)
|
981.2
|
889.7
|
3,752.4
|
3,515.2
|
|||||||||
|
Other
(c) (d)
|
695.1
|
484.4
|
2,611.2
|
1,897.2
|
|||||||||
|
Total
|
4,108.0
|
4,052.1
|
16,017.8
|
15,236.9
|
|||||||||
|
Expenses:
|
|||||||||||||
|
Insurance
claims & policyholders’ benefits
|
2,112.3
|
1,590.2
|
6,998.7
|
6,445.0
|
|||||||||
|
Cost
of manufactured products sold (b)
|
539.9
|
486.8
|
2,202.3
|
2,045.4
|
|||||||||
|
Other
|
1,251.1
|
1,192.0
|
4,970.3
|
4,917.7
|
|||||||||
|
Total
|
3,903.3
|
3,269.0
|
14,171.3
|
13,408.1
|
|||||||||
|
Income
from continuing operations before
|
|||||||||||||
|
income
taxes and minority interest
|
204.7
|
783.1
|
1,846.5
|
1,828.8
|
|||||||||
|
Income
tax expense
|
43.8
|
243.6
|
490.4
|
536.2
|
|||||||||
|
Minority
interest
|
41.5
|
38.1
|
163.2
|
57.3
|
|||||||||
|
Total
|
85.3
|
281.7
|
653.6
|
593.5
|
|||||||||
|
Income
from continuing operations
|
119.4
|
501.4
|
1,192.9
|
1,235.3
|
|||||||||
|
Discontinued
operations, net
|
8.2
|
(1.1
|
)
|
18.7
|
(19.5
|
)
|
|||||||
|
Net
income
|
$
|
127.6
|
$
|
500.3
|
$
|
1,211.6
|
$
|
1,215.8
|
|||||
|
Net
income attributable to:
|
|||||||||||||
|
Loews
common stock:
|
|||||||||||||
|
Income
from continuing operations
|
$
|
37.8
|
$
|
445.3
|
$
|
941.6
|
$
|
1,050.8
|
|||||
|
Discontinued
operations, net
|
8.2
|
(1.1
|
)
|
18.7
|
(19.5
|
)
|
|||||||
|
Loews
common stock
|
$
|
46.0
|
$
|
444.2
|
$
|
960.3
|
$
|
1,031.3
|
|||||
|
Carolina
Group stock (e)
|
81.6
|
56.1
|
251.3
|
184.5
|
|||||||||
|
$
|
127.6
|
$
|
500.3
|
$
|
1,211.6
|
$
|
1,215.8
|
||||||
|
Income
per Loews common stock:
|
|||||||||||||
|
Income
from continuing operations
|
$
|
0.20
|
$
|
2.40
|
$
|
5.06
|
$
|
5.66
|
|||||
|
Discontinued
operations, net
|
0.05
|
(0.01
|
)
|
0.10
|
(0.10
|
)
|
|||||||
|
Diluted
net income
|
$
|
0.25
|
$
|
2.39
|
$
|
5.16
|
$
|
5.56
|
|||||
|
Diluted
net income per share of Carolina Group stock
|
$
|
1.11
|
$
|
0.93
|
$
|
3.62
|
$
|
3.15
|
|||||
|
Weighted
diluted number of shares:
|
|||||||||||||
|
Loews
common stock
|
186.14
|
185.74
|
185.99
|
185.64
|
|||||||||
|
Carolina
Group stock
|
73.51
|
60.07
|
69.49
|
58.50
|
|||||||||
|
(a)
|
Includes
investment gains (losses) of $(82.9), $153.4, $(13.2) and $(256.0)
for the
respective periods. The year ended December 31, 2004 includes a loss
of
$618.6 related to CNA’s sale of its individual life
business.
|
|
(b)
|
Includes
excise taxes of $164.7, $164.5, $676.1 and $658.1 on sales of manufactured
products for the respective periods.
|
|
(c)
|
The
year ended December 31, 2005 includes net refund interest of $130.6
from a
federal income tax settlement.
|
|
(d)
|
Includes
income of $179.3 ($116.5 after taxes) in the year ended December
31, 2004
from an affiliate’s sale of four ultra-large crude oil
tankers.
|
|
(e)
|
Represents
42.86%, 34.68%, 40.34% and 33.80% of the economic interest in the
Carolina
Group for the respective periods.
|
|
(f)
|
Restated
to correct the accounting for CNA’s discontinued
operations.
|
Page
5 of
6
Loews
Corporation and Subsidiaries
Additional
Financial Information
|
December
31,
|
|||||||||||||
|
Three
Months
|
Years
Ended
|
||||||||||||
|
2005
|
2004
(j)
|
2005
|
2004
(j)
|
||||||||||
|
(Restated)
|
(Restated)
|
||||||||||||
|
(In
millions)
|
|||||||||||||
|
Revenues:
|
|||||||||||||
|
CNA
Financial
|
$
|
2,491.4
|
$
|
2,519.2
|
$
|
9,871.6
|
$
|
10,172.7
|
|||||
|
Lorillard
(a)
|
936.1
|
848.2
|
3,637.4
|
3,384.4
|
|||||||||
|
Boardwalk
Pipelines (b)
|
178.3
|
79.8
|
571.3
|
265.1
|
|||||||||
|
Diamond
Offshore
|
379.1
|
252.3
|
1,294.1
|
835.6
|
|||||||||
|
Loews
Hotels
|
83.1
|
81.3
|
350.5
|
315.2
|
|||||||||
|
Investment
income-net and other (c)
|
|||||||||||||
|
Income
from trading portfolio
|
33.1
|
41.3
|
42.8
|
105.9
|
|||||||||
|
Other
(d)
|
89.8
|
76.6
|
263.3
|
414.0
|
|||||||||
|
4,190.9
|
3,898.7
|
16,031.0
|
15,492.9
|
||||||||||
|
Investment
gains (losses):
|
|||||||||||||
|
CNA
Financial (e)
|
(82.8
|
)
|
166.9
|
(6.5
|
)
|
(244.5
|
)
|
||||||
|
Corporate
and other
|
(0.1
|
)
|
(13.5
|
)
|
(6.7
|
)
|
(11.5
|
)
|
|||||
|
(82.9
|
)
|
153.4
|
(13.2
|
)
|
(256.0
|
)
|
|||||||
|
Total
|
$
|
4,108.0
|
$
|
4,052.1
|
$
|
16,017.8
|
$
|
15,236.9
|
|||||
|
Income
Before Taxes:
|
|||||||||||||
|
CNA
Financial
|
$
|
(288.9
|
)
|
$
|
252.9
|
$
|
185.3
|
$
|
766.0
|
||||
|
Lorillard
(f)
|
208.0
|
205.3
|
743.2
|
740.3
|
|||||||||
|
Boardwalk
Pipelines (b)
|
64.9
|
27.8
|
158.1
|
81.1
|
|||||||||
|
Diamond
Offshore
|
135.9
|
19.3
|
351.0
|
(9.8
|
)
|
||||||||
|
Loews
Hotels
|
4.9
|
8.1
|
50.0
|
31.2
|
|||||||||
|
Investment
income-net and other (c)
|
|||||||||||||
|
Income
from trading portfolio
|
33.1
|
41.3
|
42.8
|
105.9
|
|||||||||
|
Other
(d) (g)
|
(1.9
|
)
|
(13.8
|
)
|
(81.0
|
)
|
72.2
|
||||||
|
156.0
|
540.9
|
1,449.4
|
1,786.9
|
||||||||||
|
Investment
gains (losses):
|
|||||||||||||
|
CNA
Financial (e)
|
(82.8
|
)
|
166.9
|
(6.5
|
)
|
(244.5
|
)
|
||||||
|
Corporate
and other
|
(13.8
|
)
|
(5.8
|
)
|
(12.0
|
)
|
|||||||
|
(82.8
|
)
|
153.1
|
(12.3
|
)
|
(256.5
|
)
|
|||||||
|
Loews
common stock
|
73.2
|
694.0
|
1,437.1
|
1,530.4
|
|||||||||
|
Carolina
Group stock (h)
|
131.5
|
89.1
|
409.4
|
298.4
|
|||||||||
|
Total
|
$
|
204.7
|
$
|
783.1
|
$
|
1,846.5
|
$
|
1,828.8
|
|||||
|
Net
Income:
|
|||||||||||||
|
CNA
Financial (i)
|
$
|
(153.4
|
)
|
$
|
186.5
|
$
|
246.7
|
$
|
562.1
|
||||
|
Lorillard
(f)
|
128.9
|
128.8
|
455.8
|
457.1
|
|||||||||
|
Boardwalk
Pipelines (b)
|
36.0
|
16.8
|
92.1
|
48.8
|
|||||||||
|
Diamond
Offshore
|
52.6
|
4.2
|
127.3
|
(9.3
|
)
|
||||||||
|
Loews
Hotels
|
(1.5
|
)
|
7.4
|
31.2
|
21.4
|
||||||||
|
Investment
income-net and other (c)
|
|||||||||||||
|
Income
from trading portfolio
|
21.5
|
26.9
|
27.8
|
68.9
|
|||||||||
|
Other
(d) (g) (i)
|
2.7
|
(10.9
|
)
|
(29.0
|
)
|
46.7
|
|||||||
|
86.8
|
359.7
|
951.9
|
1,195.7
|
||||||||||
|
Investment
gains (losses):
|
|||||||||||||
|
CNA
Financial (e)
|
(49.0
|
)
|
94.5
|
(6.9
|
)
|
(137.1
|
)
|
||||||
|
Corporate
and other
|
(8.9
|
)
|
(3.4
|
)
|
(7.8
|
)
|
|||||||
|
(49.0
|
)
|
85.6
|
(10.3
|
)
|
(144.9
|
)
|
|||||||
|
Income
from continuing operations
|
37.8
|
445.3
|
941.6
|
1,050.8
|
|||||||||
|
Discontinued
operations, net
|
8.2
|
(1.1
|
)
|
18.7
|
(19.5
|
)
|
|||||||
|
Loews
common stock
|
46.0
|
444.2
|
960.3
|
1,031.3
|
|||||||||
|
Carolina
Group stock (h)
|
81.6
|
56.1
|
251.3
|
184.5
|
|||||||||
|
Total
|
$
|
127.6
|
$
|
500.3
|
$
|
1,211.6
|
$
|
1,215.8
|
|||||
|
(a)
|
Includes
excise taxes of $164.7, $164.5, $676.1 and $658.1 on sales of manufactured
products for the respective periods.
|
|
(b)
|
Includes
operations of Gulf South from December 29, 2004.
|
|
(c)
|
Consists
primarily of corporate investment income, interest expenses, the
operations of Bulova Corporation, equity earnings of Majestic Shipping
Corporation and other unallocated expenses.
|
|
(d)
|
Includes
income of $179.3 ($116.5 after taxes) in the year ended December
31, 2004
from an affiliate’s sale of four ultra-large crude oil
tankers.
|
|
(e)
|
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
year ended December 31, 2004.
|
|
(f)
|
Represents
the Loews Group’s intergroup interest in the earnings of the Carolina
Group.
|
|
(g)
|
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 years ended December 31, 2005 and 2004,
respectively.
|
|
(h)
|
Represents
42.86%, 34.68%, 40.34% and 33.80% of the economic interest in the
Carolina
Group for the respective periods.
|
|
(i)
|
Includes
a benefit of $105.7 and $25.5 for CNA Financial and Corporate,
respectively, for the year ended December 31, 2005, relating primarily
to
net refund interest and the release of federal income tax
reserves.
|
|
(j)
|
Restated
to correct the accounting for CNA’s discontinued
operations.
|
Page
6 of
6
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 2005
NEW
YORK,
February 16, 2006—Loews Corporation (NYSE:LTR; CG) today reported Carolina Group
net income for the 2005 fourth quarter of $190.5 million, compared to $161.6
million in the 2004 fourth quarter. Net income attributable to Carolina Group
stock for the fourth quarter of 2005 was $81.6 million, or $1.11 per share
of
Carolina Group stock, compared to $56.1 million, or $0.93 per share in the
comparable period of the prior year.
The
increase in net income attributable to Carolina Group stock for the fourth
quarter of 2005, as compared to the comparable period of the prior year, is
due
to improved overall results of the Carolina Group and reflects an increase
in
the amount of Carolina Group shares. Carolina
Group stock represents a 42.86% and 34.68% economic interest in the Carolina
Group for the three months ended December 31, 2005 and 2004, respectively.
Loews
Corporation sold 10,000,000 shares of Carolina Group stock in each of December
of 2004 and 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 $916.0 million in the fourth quarter of 2005,
compared to $832.5 million in the 2004 fourth quarter, reflecting a decrease
in
sales promotion expenses (accounted for as a reduction in net sales), partially
offset by a decrease in unit sales volume of 1.5%.
Results
of operations of the Carolina Group include interest expense of $20.7 million
and $23.9 million, net of taxes, for the three months ended December 31, 2005
and 2004, respectively, on notional intergroup debt. At December 31, 2005,
$1.63
billion principal amount of notional intergroup debt was
outstanding.
Page
1 of
4
Carolina
Group net income for the year ended 2005 was $623.1 million, compared to $545.9
million in the prior year. Net income attributable to Carolina Group stock
for
the year ended 2005 was $251.3 million, or $3.62 per share of Carolina Group
stock, compared to $184.5 million, or $3.15 per share in the prior year. The
increase in net income attributable to Carolina Group stock for the year ended
2005 is due to improved overall results of the Carolina Group and reflects
the
share sales as mentioned above. Carolina Group stock represents a 40.34% and
33.80% economic interest in the Carolina Group for the years ended December
31,
2005 and 2004, respectively.
Net
sales
for the Carolina Group were $3.568 billion in 2005, compared to $3.348 billion
in the prior year. The increase in net sales reflects an increase in unit sales
volume of 1.9% and reduced sales promotion expenses (accounted for as a
reduction in net sales).
Results
of operations of the Carolina Group include interest expense of $86.1 million
and $97.3 million, net of taxes, for the years ended December 31, 2005 and
2004,
respectively, on notional intergroup debt.
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
December 31, 2005, there were 78,191,678 shares of Carolina Group stock
outstanding representing a 45.03% economic interest. Depending on market
conditions, the Company may purchase, from time to time in the open market
or
otherwise, shares of Carolina Group stock for the Carolina Group
account.
#
#
#
A
separate press release reporting Loews Corporation’s consolidated results for
the fourth quarter and full year of 2005 is being issued contemporaneously
with
this report.
A
conference call to discuss the fourth quarter and full year results of Loews
Corporation has been scheduled for 11:00 a.m. EST, Thursday, February 16, 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
|
December
31,
|
|||||||||||||
|
Three
Months
|
Years
Ended
|
||||||||||||
|
2005
|
2004
|
2005
|
2004
|
||||||||||
|
(Amounts
in millions, except per share data)
|
|||||||||||||
|
Net
sales (a)
|
$
|
916.0
|
$
|
832.5
|
$
|
3,567.8
|
$
|
3,347.8
|
|||||
|
Cost
of sales (a) (b)
|
509.4
|
461.2
|
2,114.4
|
1,965.6
|
|||||||||
|
Selling,
advertising and administrative
|
87.0
|
92.7
|
369.5
|
381.1
|
|||||||||
|
Total
operating costs and expenses
|
596.4
|
553.9
|
2,483.9
|
2,346.7
|
|||||||||
|
Operating
income
|
319.6
|
278.6
|
1,083.9
|
1,001.1
|
|||||||||
|
Investment
income and other (c)
|
21.5
|
16.9
|
72.5
|
40.0
|
|||||||||
|
Interest
expense
|
(33.9
|
)
|
(38.1
|
)
|
(140.9
|
)
|
(157.5
|
)
|
|||||
|
Income
before income taxes
|
307.2
|
257.4
|
1,015.5
|
883.6
|
|||||||||
|
Income
taxes
|
116.7
|
95.8
|
392.4
|
337.7
|
|||||||||
|
Net
income
|
190.5
|
161.6
|
623.1
|
545.9
|
|||||||||
|
Earnings
attributable to the Loews Group intergroup interest (d)
|
108.9
|
105.5
|
371.8
|
361.4
|
|||||||||
|
Income
attributable to Carolina Group shareholders (e)
|
$
|
81.6
|
$
|
56.1
|
$
|
251.3
|
$
|
184.5
|
|||||
|
Per
share of Carolina Group stock
|
$
|
1.11
|
$
|
0.93
|
$
|
3.62
|
$
|
3.15
|
|||||
|
Weighted
diluted shares (f)
|
73.51
|
60.07
|
69.49
|
58.50
|
|||||||||
|
Notional
intergroup debt owed by the Carolina Group to
|
|||||||||||||
|
the
Loews Group
|
|||||||||||||
|
December
31, 2005
|
$
|
1,626.9
|
|||||||||||
|
December
31, 2004
|
1,871.2
|
||||||||||||
|
(a)
|
Includes
excise taxes of $164.7, $164.5, $676.1 and $658.1 for the respective
periods.
|
|
(b)
|
Includes
charges of $218.2, $196.9, $876.4 and $845.9 ($135.7, $124.3, $537.7
and
$522.6 after taxes) to accrue obligations under the State Settlement
Agreements for the respective periods.
|
|
(c)
|
Includes
income from limited partnership investments of $3.2, $8.1, $16.0
and
$18.0, ($2.0, $5.0, $9.8 and $11.1 after taxes) for the respective
periods.
|
|
(d)
|
The
Loews Group’s intergroup interest in the earnings of the Carolina Group
reflects share equivalents amounting to 95,445,000 shares of 173,632,130
share and share equivalents outstanding at December 31, 2005 and
share
equivalents amounting to 105,445,000 shares of 173,412,250 share
and share
equivalents outstanding at December 31, 2004. As of December 31,
2005,
there were 78,191,678 shares of Carolina Group stock
outstanding.
|
|
(e)
|
Represents
42.86%, 34.68%, 40.34% and 33.80% of the economic interest in the
Carolina
Group for the respective periods presented.
|
|
(f)
|
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):
|
December
31,
|
|||||||||||||
|
Three
Months
|
Years
Ended
|
||||||||||||
|
2005
|
2004
|
2005
|
2004
|
||||||||||
|
Full
Price Brands
|
|||||||||||||
|
Total
Newport
|
7,729,738
|
7,812,616
|
32,159,341
|
31,335,184
|
|||||||||
|
Total
Kent Family
|
166,680
|
204,264
|
710,241
|
855,391
|
|||||||||
|
Total
True
|
137,772
|
160,998
|
574,752
|
663,191
|
|||||||||
|
Total
Max
|
9,531
|
10,848
|
39,268
|
45,525
|
|||||||||
|
Total
Satin
|
1,398
|
1,728
|
6,153
|
7,914
|
|||||||||
|
Total
Triumph
|
886
|
||||||||||||
|
Total
Full Price Brands
|
8,045,119
|
8,190,454
|
33,489,755
|
32,908,091
|
|||||||||
|
Price/Value
Brands
|
|||||||||||||
|
Total
Old Gold
|
200,982
|
216,469
|
834,501
|
903,173
|
|||||||||
|
Total
Maverick
|
237,612
|
175,067
|
869,146
|
691,607
|
|||||||||
|
Total
Price/Value Brands
|
438,594
|
391,536
|
1,703,647
|
1,594,780
|
|||||||||
|
Total
Domestic Cigarettes
|
8,483,713
|
8,581,990
|
35,193,402
|
34,502,871
|
|||||||||
|
Total
Puerto Rico and U.S. Possessions
|
190,362
|
225,072
|
811,716
|
823,931
|
|||||||||
|
Grand
Total
|
8,674,075
|
8,807,062
|
36,005,118
|
35,326,802
|
|||||||||
|
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