Attached files
| file | filename |
|---|---|
| 8-K - 8-K - LOEWS CORP | form8k.htm |
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)
|
December 31, 2019
|
As Reported
|
Pro Forma
Adjustments |
Pro Forma
|
||||||||||
|
(In millions)
|
|||||||||||||
|
Assets:
|
|||||||||||||
|
Investments
|
$
|
51,250
|
$
|
(135
|
)
|
(a)
|
$
|
51,115
|
|||||
|
Cash
|
336
|
(21
|
)
|
(a)
|
315
|
||||||||
|
Receivables
|
7,675
|
(262
|
)
|
(a)
|
7,413
|
||||||||
|
Property, plant and equipment
|
15,568
|
(5,153
|
)
|
(a)
|
10,415
|
||||||||
|
Goodwill
|
767
|
767
|
|||||||||||
|
Deferred non-insurance warranty acquisition expenses
|
2,840
|
2,840
|
|||||||||||
|
Deferred acquisition costs of insurance subsidiaries
|
662
|
662
|
|||||||||||
|
Other assets
|
3,145
|
(263
|
)
|
(a)
|
2,882
|
||||||||
|
Total assets
|
$
|
82,243
|
$
|
(5,834
|
)
|
$
|
76,409
|
||||||
|
Liabilities and Equity:
|
|||||||||||||
|
Insurance reserves
|
$
|
38,614
|
$
|
38,614
|
|||||||||
|
Payable to brokers
|
108
|
108
|
|||||||||||
|
Short term debt
|
77
|
77
|
|||||||||||
|
Long term debt
|
11,456
|
$
|
(1,976
|
)
|
(a)
|
9,480
|
|||||||
|
Deferred income taxes
|
1,168
|
(316
|
)
|
(a)
|
852
|
||||||||
|
Deferred non-insurance warranty acquisition revenue
|
3,779
|
3,779
|
|||||||||||
|
Other liabilities
|
5,111
|
(579
|
)
|
(a)
|
4,532
|
||||||||
|
Total liabilities
|
60,313
|
(2,871
|
)
|
57,442
|
|||||||||
|
Commitments and contingent liabilities
|
|||||||||||||
|
Shareholders’ equity
|
19,119
|
(1,447
|
)
|
(b)
|
17,672
|
||||||||
|
Noncontrolling interests
|
2,811
|
(1,516
|
)
|
(a)
|
1,295
|
||||||||
|
Total equity
|
21,930
|
(2,963
|
)
|
18,967
|
|||||||||
|
Total liabilities and equity
|
$
|
82,243
|
$
|
(5,834
|
)
|
$
|
76,409
|
||||||
2
Loews Corporation and Subsidiaries
PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF INCOME
(Unaudited)
|
Year Ended December 31, 2019
|
As Reported
|
Pro Forma
Adjustments (c) |
Pro Forma
|
|||||||||
|
(In millions, except per share data)
|
||||||||||||
|
Revenues:
|
||||||||||||
|
Insurance premiums
|
$
|
7,428
|
$
|
7,428
|
||||||||
|
Net investment income
|
2,355
|
$
|
(6
|
)
|
2,349
|
|||||||
|
Investment gains
|
49
|
49
|
||||||||||
|
Non-insurance warranty revenue
|
1,161
|
1,161
|
||||||||||
|
Operating revenues and other
|
3,938
|
(982
|
)
|
2,956
|
||||||||
|
Total
|
14,931
|
(988
|
)
|
13,943
|
||||||||
|
Expenses:
|
||||||||||||
|
Insurance claims and policyholders’ benefits
|
5,806
|
5,806
|
||||||||||
|
Amortization of deferred acquisition costs
|
1,383
|
1,383
|
||||||||||
|
Non-insurance warranty expense
|
1,082
|
1,082
|
||||||||||
|
Operating expenses and other
|
4,950
|
(1,267
|
)
|
3,683
|
||||||||
|
Interest
|
591
|
(123
|
)
|
468
|
||||||||
|
Total
|
13,812
|
(1,390
|
)
|
12,422
|
||||||||
|
Income before income tax
|
1,119
|
402
|
1,521
|
|||||||||
|
Income tax expense
|
(248
|
)
|
(60
|
)
|
(308
|
)
|
||||||
|
Income from continuing operations
|
871
|
342
|
1,213
|
|||||||||
|
Amounts attributable to noncontrolling interests
|
61
|
(167
|
)
|
(106
|
)
|
|||||||
|
Net income attributable to Loews Corporation
|
$
|
932
|
$
|
175
|
$
|
1,107
|
||||||
|
Basic net income per common share
|
$
|
3.08
|
$
|
3.66
|
||||||||
|
Diluted net income per common share
|
$
|
3.07
|
$
|
3.65
|
||||||||
|
Basic weighted average number of shares outstanding
|
302.70
|
302.70
|
||||||||||
|
Diluted weighted average number of shares outstanding
|
303.35
|
303.35
|
||||||||||
3
Loews Corporation and Subsidiaries
NOTES TO PRO FORMA CONSOLIDATED CONDENSED FINANCIAL INFORMATION
(Unaudited)
|
(a)
|
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.
|
|
|
(b)
|
To adjust shareholders’ equity and recognize a loss upon the deconsolidation of Diamond at an estimated fair value of zero.
|
|
|
(c)
|
To eliminate revenues, expenses and noncontrolling interests related to the deconsolidation of Diamond.
|
4