UNITED STATES
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 (Date of earliest event reported): April 26, 2020
(Exact name of registrant as specified in its charter)
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(State or other Jurisdiction of Incorporation)
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(Commission File Number)
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(IRS Employer Identification No.)
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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: (212 ) 521-2000
NOT APPLICABLE
(Former name or former address if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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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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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Securities registered pursuant to Section 12(b) of the Act:
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Title of each class
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Trading
Symbol(s)
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Name of each exchange
on which registered
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this
chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised
financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
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Completion of Acquisition or Disposition of Assets.
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Reference is made to the information disclosed under Item 8.01 below, which information is incorporated herein by reference. Under the Securities and
Exchange Commission Division of Corporation Finance’s Financial Reporting Manual, the deconsolidation of a subsidiary, such as the one described in Item 8.01 below, is included in the definition of “disposition” for purposes of Item 2.01 of Form 8-K.
| Item 8.01 |
Other Events.
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On April 26, 2020 (the “Filing Date”), Loews Corporation’s (“Loews”) approximately 53% owned subsidiary, Diamond Offshore Drilling, Inc., and certain of
its direct and indirect subsidiaries (collectively “Diamond”) filed voluntary petitions in the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”) seeking relief under Chapter 11 of the United States Bankruptcy
Code (the “Bankruptcy Code”). Diamond filed motions with the Bankruptcy Court seeking authorization to continue to operate its business as “debtors-in-possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable
provisions of the Bankruptcy Code and orders of the Bankruptcy Court.
Through the Filing Date, Diamond’s results continue to be consolidated into Loews’s financial statements and Loews recognizes in its earnings its
proportionate share of Diamond’s losses.
Effective as of the Filing Date, Loews will no longer consolidate Diamond’s results in its financial statements. Following deconsolidation, Loews will
account for its interest in Diamond using the cost method of accounting and initially record its investment at the estimated fair value on the Filing Date.
In connection with the deconsolidation, Loews expects to record in the second quarter of 2020 a significant non-cash loss to recognize the difference
between the carrying value and estimated fair value of its interest in Diamond as of the Filing Date.
Loews’s carrying value of Diamond at December 31, 2019 was $1.5 billion.
Loews is not responsible for, and does not provide guarantees of, the liabilities and obligations of its subsidiaries, including Diamond.
| Item 9.01 |
Financial Statements and Exhibits.
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(b) Pro Forma Financial Information.
Unaudited Pro Forma Consolidated Condensed Financial Information of the Registrant, which reflects the disposition described in Item 2.01, is attached hereto as Exhibit
99.1 and is incorporated herein by reference.
(d) Exhibits.
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Exhibit No.
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Unaudited Pro Forma Consolidated Condensed Financial Information.
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104
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Cover Page Interactive File (the cover page tags are embedded within the Inline XBRL document).
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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.
Date: April 27, 2020
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LOEWS CORPORATION
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By:
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/s/ Marc A. Alpert |
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Name:
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Marc A. Alpert |
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Title:
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Senior Vice President,
General Counsel
and Secretary
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Exhibit 99.1
Loews Corporation and Subsidiaries
PRO FORMA CONSOLIDATED CONDENSED FINANCIAL INFORMATION
(Unaudited)
On April 26, 2020 (the “Filing Date”), Loews Corporation’s (“Loews” or the “Company”) subsidiary, Diamond Offshore Drilling, Inc., and certain of
its direct and indirect subsidiaries (collectively “Diamond”) filed voluntary petitions in the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”) seeking relief under Chapter 11 of the United States Bankruptcy
Code. As a result of Diamond’s filing and applicable U.S. generally accepted accounting principles, the Company has concluded that it will no longer control Diamond for accounting purposes, and therefore, Diamond will be deconsolidated from the
Company’s consolidated financial statements effective as of the Filing Date.
The unaudited consolidated condensed pro forma balance sheet data as of December 31, 2019 is presented as if the deconsolidation of
Diamond had occurred on December 31, 2019. The unaudited consolidated condensed pro forma statement of income data for the year ended December 31, 2019 is presented as if the deconsolidation of Diamond had occurred as of January 1, 2019. For
purposes of the pro forma financial information, the Company has assumed the fair value of Diamond to be equal to zero. The unaudited consolidated condensed pro forma financial information is subject to adjustment and is presented for informational
purposes only and does not purport to represent what the Company’s results of operations or financial position would actually have been if deconsolidation had in fact occurred on the dates discussed above. It also does not project or forecast the
Company’s consolidated results of operations or financial position for any future date or period.
Through the Filing Date, Diamond’s results continue to be consolidated into the Company’s financial statements and Loews recognizes in its earnings
its proportionate share of Diamond’s losses. Following deconsolidation, Loews will account for its interest in Diamond using the cost method of accounting and initially record its investment at the estimated fair value on the Filing Date. In
connection with the deconsolidation, Loews expects to record, in the second quarter of 2020, a significant non-cash loss to recognize the difference between the carrying value and estimated fair value of its interest in Diamond as of the Filing Date.
The pro forma consolidated condensed financial statements of Loews should be read in conjunction with the historical consolidated financial
statements of Loews and the related notes included in our 2019 Annual Report on Form 10-K.
1
Loews Corporation and Subsidiaries
PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
(Unaudited)
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December 31, 2019
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As Reported
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Pro Forma
Adjustments |
Pro Forma
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(In millions)
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Assets:
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Investments
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$
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51,250
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$
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(135
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(a)
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$
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51,115
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Cash
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336
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(21
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(a)
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315
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Receivables
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7,675
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(262
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(a)
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7,413
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Property, plant and equipment
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15,568
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(5,153
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)
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(a)
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10,415
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Goodwill
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767
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767
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Deferred non-insurance warranty acquisition expenses
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2,840
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2,840
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Deferred acquisition costs of insurance subsidiaries
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662
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662
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Other assets
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3,145
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(263
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(a)
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2,882
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Total assets
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$
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82,243
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$
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(5,834
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$
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76,409
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Liabilities and Equity:
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Insurance reserves
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$
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38,614
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$
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38,614
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Payable to brokers
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108
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108
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Short term debt
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77
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77
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Long term debt
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11,456
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$
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(1,976
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(a)
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9,480
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Deferred income taxes
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1,168
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(316
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(a)
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852
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Deferred non-insurance warranty acquisition revenue
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3,779
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3,779
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Other liabilities
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5,111
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(579
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(a)
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4,532
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Total liabilities
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60,313
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(2,871
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57,442
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Commitments and contingent liabilities
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Shareholders’ equity
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19,119
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(1,447
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(b)
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17,672
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Noncontrolling interests
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2,811
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(1,516
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(a)
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1,295
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Total equity
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21,930
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(2,963
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18,967
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Total liabilities and equity
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$
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82,243
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$
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(5,834
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$
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76,409
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2
Loews Corporation and Subsidiaries
PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF INCOME
(Unaudited)
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Year Ended December 31, 2019
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As Reported
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Pro Forma
Adjustments (c) |
Pro Forma
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(In millions, except per share data)
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Revenues:
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Insurance premiums
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$
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7,428
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$
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7,428
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Net investment income
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2,355
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$
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(6
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2,349
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Investment gains
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49
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49
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Non-insurance warranty revenue
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1,161
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1,161
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Operating revenues and other
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3,938
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(982
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2,956
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Total
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14,931
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(988
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13,943
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Expenses:
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Insurance claims and policyholders’ benefits
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5,806
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5,806
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Amortization of deferred acquisition costs
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1,383
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1,383
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Non-insurance warranty expense
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1,082
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1,082
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Operating expenses and other
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4,950
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(1,267
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3,683
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Interest
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591
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(123
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468
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Total
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13,812
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(1,390
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12,422
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Income before income tax
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1,119
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402
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1,521
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Income tax expense
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(248
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(60
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(308
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Income from continuing operations
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871
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342
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1,213
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Amounts attributable to noncontrolling interests
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61
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(167
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(106
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Net income attributable to Loews Corporation
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$
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932
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$
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175
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$
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1,107
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Basic net income per common share
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$
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3.08
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$
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3.66
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Diluted net income per common share
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$
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3.07
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$
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3.65
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Basic weighted average number of shares outstanding
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302.70
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302.70
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Diluted weighted average number of shares outstanding
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303.35
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303.35
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3
Loews Corporation and Subsidiaries
NOTES TO PRO FORMA CONSOLIDATED CONDENSED FINANCIAL INFORMATION
(Unaudited)
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(a)
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To eliminate assets, liabilities and noncontrolling interests related to the deconsolidation of Diamond, including deferred tax liabilities related to outside
basis difference for the Company’s investment in Diamond.
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(b)
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To adjust shareholders’ equity and recognize a loss upon the deconsolidation of Diamond at an estimated fair value of zero.
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(c)
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To eliminate revenues, expenses and noncontrolling interests related to the deconsolidation of Diamond.
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4