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Loews Annual Report, Year Ended Feb 23, 2007

Filing Date
Filed February 26, 2007
Period End
February 23, 2007
Security
L
In the record · 2016–202610-K1110-Q338-K83

L filed 11 annual reports (10-K), 33 quarterly reports (10-Q) and 83 current reports (8-K) between 2016 and 2026.

  1. FY2016 annual report10-K · Feb ’17Feb ’17
  2. Deal closed8-K · Apr ’20Apr ’20
  3. Leadership change8-K · Feb ’22Feb ’22
  4. Leadership change8-K · Dec ’25Dec ’25

01—Abstract

Summary

Summary of the 10-K filed February 26, 2007. Cited figures are marked; the original filing is the authoritative source.

Loews Corporation reported consolidated net income of $2,491.3 million for 2006, compared to $1,211.6 milliona in 2005, and consolidated revenues of $17.9 billion, compared to $16.0 billion.

Net income attributable to Loews common stock was $2,074.9 millionb, or $3.75 per share, versus $960.3 million, or $1.72 per share, in the prior year. Net income attributable to Carolina Group stock was $416.4 million, or $4.46 per share. The increase was primarily driven by improved results at CNA and Diamond Offshore, partially offset by a decrease in the share of Carolina Group earnings attributable to Loews common stock following additional Carolina Group stock sales in 2006.

Loews is a holding company whose operating subsidiaries include CNA Financial (89% owned, commercial property and casualty insurance), Lorillard (wholly owned, cigarettes), Boardwalk Pipeline (80% owned, natural gas pipelines), Diamond Offshore (51% owned, offshore drilling), Loews Hotels, and Bulova. Lorillard's tobacco business carries significant risk: the filing describes roughly 2,840 tobacco-related lawsuits pending against it, a February 2007 Louisiana appellate ruling in the Scott case, and a Florida Supreme Court decision in Engle that is not final. Lorillard also faces annual State Settlement Agreement payments that the filing estimates at $925.0 million to $975.0 millionc in 2007.

The filing reports that management concluded internal control over financial reporting was effective as of December 31, 2006, after remediating material weaknesses identified in prior periods. Shareholders' equity rose to $16,501.8 milliond from $13,092.1 million, and book value per Loews common share was $30.14 at year-end.

02—Key points

Key Highlights

  1. Consolidated net income of $2,491.3 million in 2006, up from $1,211.6 million in 2005.
  2. Net income per Loews common share of $3.75, compared with $1.72 in 2005.
  3. Carolina Group stock net income of $416.4 million, or $4.46 per share, versus $3.62 in 2005.
  4. CNA Financial net income of $1,041.2 million in 2006, versus $239.8 million in 2005, with Standard Lines' combined ratio improving to 101.6% from 120.3%.
  5. Lorillard net income of $826.2 million, up from $706.4 million, with about 2,840 tobacco-related lawsuits pending against it.
  6. Diamond Offshore net income of $352.0 million, compared with $126.9 million in 2005, and Boardwalk Pipeline's $3.3 billion expansion program is described for 2007 through 2009.
  7. Shareholders' equity increased to $16,501.8 million, and the company repurchased 13,934,500 Loews common shares for $509.8 million in 2006.

03—One dollar

04—Financials

Financial Highlights

Figures from 10-KFY2007filed February 26, 2007
Revenue$14.30BNet Income$2.49B17.4% Net MarginCash & Equivalents$160.00MFree Cash Flow$3.42B

Financial Statements

Revenue$14.30B
Interest Expense$319.00M
Net Income$2.49B

05—Questions

Frequently Asked Questions

  1. What drove the increase in Loews' 2006 earnings?

    The filing attributes the increase in net income primarily to improved results at CNA and Diamond Offshore. CNA's 2006 results benefited from significantly reduced catastrophe losses and a lower unfavorable net prior year development, and Diamond Offshore's revenues rose 62.6% on higher dayrates and utilization. These gains were partially offset by a decrease in the share of Carolina Group earnings attributable to Loews common stock, due to additional Carolina Group stock sales in 2006.

  2. What is the main litigation risk facing the company?

    The most significant litigation risk relates to Lorillard's tobacco business. The filing describes approximately 2,840 tobacco-related cases pending against Lorillard, a February 2007 Louisiana Court of Appeal ruling in the Scott case that reduced the award by approximately $312.0 million and struck about $440.0 million of prejudgment interest, and the Florida Supreme Court's 2006 decision in Engle, which affirmed the vacating of a $145.0 billion punitive damages award (including approximately $16.3 billion against Lorillard). The filing states that an unfavorable outcome could be material and, for Engle, could exceed Lorillard's assets.

  3. What is the Carolina Group tracking stock?

    Carolina Group stock is a tracking stock that reflects the economic performance of a notional group consisting primarily of Loews' 100% ownership of Lorillard, along with associated tobacco liabilities. As of February 9, 2007, outstanding Carolina Group stock represented a 62.3% economic interest in the Carolina Group. Holders of Carolina Group stock have 3/10 of a vote per share and together control approximately 5.6% of Loews' combined voting power.

  4. What are the company's major capital commitments?

    Boardwalk Pipeline is pursuing expansion projects that the filing estimates will cost approximately $3.3 billion, with investment expected from 2007 through 2009, before equity contributed by a purchaser of a 49.0% interest in Gulf Crossing Pipeline. Diamond Offshore has rig upgrade and newbuild commitments, including approximately $456.0 million in purchase obligations related to its Ocean Endeavor and Ocean Monarch upgrades and two new jack-up rigs.

06—Continue

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