Loews Corporation and Subsidiaries PRO FORMA CONSOLIDATED CONDENSED FINANCIAL INFORMATION (Unaudited)
Exhibit 99.2
Loews Corporation and Subsidiaries
PRO FORMA CONSOLIDATED CONDENSED FINANCIAL INFORMATION
(Unaudited)
In August 2014, HighMount Exploration and Production Holding Corp. (“Holdco”), a wholly owned subsidiary of Loews Corporation (the “Company”), entered into an agreement to sell all of the membership interests of its wholly owned subsidiary, HighMount Exploration & Production LLC (“HighMount”), to privately held affiliates of EnerVest, Ltd. for $805 million, subject to adjustment. On September 30, 2014, Xxxxxx completed the sale of HighMount and received proceeds of $794 million. As previously reported in the Company’s Form 10-Q for the six months ended June 30, 2014, the assets and liabilities of HighMount were reclassified as discontinued operations on the Consolidated Condensed Balance Sheets as of June 30, 2014 and December 31, 2013 and the results of operations were reported as discontinued operations in the Consolidated Condensed Statements of Income for the three and six months ended June 30, 2014 and 2013.
The unaudited pro forma balance sheet data as of June 30, 2014 is presented as if the disposition had occurred on June 30, 2014. The unaudited pro forma statements of income data for the six month period ended June 30, 2014, and the years ended December 31, 2013, 2012 and 2011 are presented as if the disposition occurred at the beginning of each period. The unaudited pro forma financial information is subject to adjustment and is presented for informational purposes only and does not purport to represent what the Company’s results of operations or financial position would actually have been if the transaction had in fact occurred on the dates discussed above. It also does not project or forecast the Company’s consolidated results of operations or financial position for any future date or period.
1
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Pro Forma
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June 30, 2014
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Historical
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Adjustments
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Pro Forma
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(Dollar amounts in millions, except per share data)
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Assets:
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Investments
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$ | 52,951 | $ | 52,951 | ||||||||
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Cash
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277 | $ | 300 | (a) | 577 | |||||||
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Receivables
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8,441 | 8,441 | ||||||||||
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Property, plant and equipment
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14,133 | 14,133 | ||||||||||
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Goodwill
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355 | 355 | ||||||||||
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Assets of discontinued operations
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4,406 | (813 | ) | (b) | 3,593 | |||||||
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Other assets
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1,681 | 1,681 | ||||||||||
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Deferred acquisition costs of insurance subsidiaries
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650 | 650 | ||||||||||
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Total assets
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$ | 82,894 | $ | (513 | ) | $ | 82,381 | |||||
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Liabilities and Equity:
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Insurance reserves
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$ | 36,570 | $ | 36,570 | ||||||||
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Payable to brokers
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815 | 815 | ||||||||||
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Short term debt
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974 | 974 | ||||||||||
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Long term debt
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9,828 | 9,828 | ||||||||||
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Deferred income taxes
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996 | $ | 18 | (c) | 1,014 | |||||||
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Liabilities of discontinued operations
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3,946 | (603 | ) | (b) | 3,343 | |||||||
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Other liabilities
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4,410 | 42 | (c) | 4,452 | ||||||||
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Total liabilities
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57,539 | (543 | ) | 56,996 | ||||||||
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Commitments and contingent liabilities
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Shareholders’ equity
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19,857 | 30 | (d) | 19,887 | ||||||||
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Noncontrolling interests
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5,498 | 5,498 | ||||||||||
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Total equity
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25,355 | 30 | 25,385 | |||||||||
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Total liabilities and equity
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$ | 82,894 | $ | (513 | ) | $ | 82,381 | |||||
2
Loews Corporation and Subsidiaries
PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF INCOME
(Unaudited)
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Pro Forma
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Six Months Ended June 30, 2014
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Historical
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Adjustments (e)
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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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$ | 3,617 | $ | 3,617 | ||||||||
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Net investment income
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1,174 | 1,174 | ||||||||||
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Investment gains
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28 | 28 | ||||||||||
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Contract drilling revenues
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1,335 | 1,335 | ||||||||||
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Other
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1,127 | 1,127 | ||||||||||
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Total
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7,281 | 7,281 | ||||||||||
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Expenses:
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Insurance claims and policyholders’ benefits
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2,887 | 2,887 | ||||||||||
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Amortization of deferred acquisition costs
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664 | 664 | ||||||||||
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Contract drilling expenses
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765 | 765 | ||||||||||
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Other operating expenses
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1,657 | 1,657 | ||||||||||
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Interest
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248 | 248 | ||||||||||
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Total
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6,221 | 6,221 | ||||||||||
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Income before income tax
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1,060 | 1,060 | ||||||||||
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Income tax expense
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(248 | ) | (248 | ) | ||||||||
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Income from continuing operations
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812 | 812 | ||||||||||
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Amounts attributable to noncontrolling interests
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(244 | ) | (244 | ) | ||||||||
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Income attributable to Loews Corporation
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from continuing operations
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$ | 568 | $ | - | $ | 568 | ||||||
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Basic and diluted income per share
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from continuing operations
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$ | 1.47 | $ | 1.47 | ||||||||
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Dividends per share
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$ | 0.125 | $ | 0.125 | ||||||||
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Basic weighted average number of shares outstanding
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386.53 | 386.53 | ||||||||||
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Diluted weighted average number of shares outstanding
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387.21 | 387.21 | ||||||||||
3
Loews Corporation and Subsidiaries
PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF INCOME
(Unaudited)
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Pro Forma
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Year Ended December 31, 2013
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Historical
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Adjustments (f)
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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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$ | 7,271 | $ | 7,271 | ||||||||
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Net investment income
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2,593 | 2,593 | ||||||||||
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Investment gains (losses)
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26 | $ | (1 | ) | 27 | |||||||
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Contract drilling revenues
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2,844 | 2,844 | ||||||||||
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Other
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2,319 | 260 | 2,059 | |||||||||
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Total
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15,053 | 259 | 14,794 | |||||||||
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Expenses:
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Insurance claims and policyholders’ benefits
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5,947 | 5,947 | ||||||||||
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Amortization of deferred acquisition costs
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1,362 | 1,362 | ||||||||||
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Contract drilling expenses
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1,573 | 1,573 | ||||||||||
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Other operating expenses
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3,664 | 543 | 3,121 | |||||||||
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Impairment of goodwill
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636 | 584 | 52 | |||||||||
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Interest
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442 | 17 | 425 | |||||||||
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Total
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13,624 | 1,144 | 12,480 | |||||||||
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Income (loss) before income tax
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1,429 | (885 | ) | 2,314 | ||||||||
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Income tax (expense) benefit
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(360 | ) | 310 | (670 | ) | |||||||
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Income (loss) from continuing operations
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1,069 | (575 | ) | 1,644 | ||||||||
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Amounts attributable to noncontrolling interests
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(474 | ) | (474 | ) | ||||||||
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Income (loss) attributable to Loews Corporation
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from continuing operations
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$ | 595 | $ | (575 | ) | $ | 1,170 | |||||
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Basic income per common share
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from continuing operations
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$ | 1.53 | $ | 3.01 | ||||||||
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Diluted income per common share
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from continuing operations
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$ | 1.53 | $ | 3.00 | ||||||||
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Dividends per share
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$ | 0.25 | $ | 0.25 | ||||||||
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Basic weighted average number of shares outstanding
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388.64 | 388.64 | ||||||||||
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Diluted weighted average number of shares outstanding
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389.51 | 389.51 | ||||||||||
4
Loews Corporation and Subsidiaries
PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF INCOME
(Unaudited)
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Pro Forma
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Year Ended December 31, 2012
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Historical
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Adjustments (f)
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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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$ | 6,882 | $ | 6,882 | ||||||||
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Net investment income
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2,349 | 2,349 | ||||||||||
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Investment gains
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57 | 57 | ||||||||||
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Contract drilling revenues
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2,936 | 2,936 | ||||||||||
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Other
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2,328 | $ | 297 | 2,031 | ||||||||
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Total
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14,552 | 297 | 14,255 | |||||||||
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Expenses:
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Insurance claims and policyholders’ benefits
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5,896 | 5,896 | ||||||||||
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Amortization of deferred acquisition costs
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1,274 | 1,274 | ||||||||||
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Contract drilling expenses
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1,537 | 1,537 | ||||||||||
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Other operating expenses
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4,006 | 919 | 3,087 | |||||||||
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Interest
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440 | 14 | 426 | |||||||||
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Total
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13,153 | 933 | 12,220 | |||||||||
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Income (loss) before income tax
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1,399 | (636 | ) | 2,035 | ||||||||
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Income tax (expense) benefit
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(289 | ) | 223 | (512 | ) | |||||||
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Income (loss) from continuing operations
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1,110 | (413 | ) | 1,523 | ||||||||
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Amounts attributable to noncontrolling interests
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(542 | ) | (542 | ) | ||||||||
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Income (loss) attributable to Loews Corporation
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from continuing operations
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$ | 568 | $ | (413 | ) | $ | 981 | |||||
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Basic income per common share
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from continuing operations
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$ | 1.44 | $ | 2.48 | ||||||||
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Diluted income per common share
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from continuing operations
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$ | 1.43 | $ | 2.48 | ||||||||
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Dividends per share
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$ | 0.25 | $ | 0.25 | ||||||||
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Basic weighted average number of shares outstanding
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395.12 | 395.12 | ||||||||||
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Diluted weighted average number of shares outstanding
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395.87 | 395.87 | ||||||||||
5
Loews Corporation and Subsidiaries
PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF INCOME
(Unaudited)
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Pro Forma
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Year Ended December 31, 2011
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Historical
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Adjustments (f)
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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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$ | 6,603 | $ | 6,603 | ||||||||
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Net investment income
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2,063 | 2,063 | ||||||||||
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Investment losses
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(52 | ) | $ | (34 | ) | (18 | ) | |||||
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Contract drilling revenues
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3,254 | 3,254 | ||||||||||
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Other
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2,261 | 390 | 1,871 | |||||||||
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Total
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14,129 | 356 | 13,773 | |||||||||
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Expenses:
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Insurance claims and policyholders’ benefits
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5,489 | 5,489 | ||||||||||
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Amortization of deferred acquisition costs
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1,176 | 1,176 | ||||||||||
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Contract drilling expenses
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1,549 | 1,549 | ||||||||||
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Other operating expenses
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3,167 | 245 | 2,922 | |||||||||
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Interest
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522 | 46 | 476 | |||||||||
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Total
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11,903 | 291 | 11,612 | |||||||||
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Income before income tax
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2,226 | 65 | 2,161 | |||||||||
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Income tax expense
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(532 | ) | (23 | ) | (509 | ) | ||||||
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Income from continuing operations
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1,694 | 42 | 1,652 | |||||||||
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Amounts attributable to noncontrolling interests
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(632 | ) | (632 | ) | ||||||||
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Income attributable to Loews Corporation
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from continuing operations
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$ | 1,062 | $ | 42 | $ | 1,020 | ||||||
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Basic and diluted income per share
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from continuing operations
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$ | 2.62 | $ | 2.52 | ||||||||
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Dividends per share
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$ | 0.25 | $ | 0.25 | ||||||||
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Basic weighted average number of shares outstanding
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404.53 | 404.53 | ||||||||||
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Diluted weighted average number of shares outstanding
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404.32 | 405.32 | ||||||||||
6
Loews Corporation and Subsidiaries
NOTES TO PRO FORMA CONSOLIDATED CONDENSED FINANCIAL INFORMATION
(Unaudited)
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(a)
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To record proceeds from the disposition, net of payments for debt extinguishment and sale related fees.
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(b)
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To eliminate assets and liabilities of discontinued operations related to the sale of HighMount.
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(c)
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To record liabilities related to the sale and disposal of HighMount.
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(d)
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To adjust shareholders’ equity related to the sale of HighMount.
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(e)
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No pro forma adjustments were required for the six months ended June 30, 2014, since the results of operations for HighMount were presented as discontinued operations in the Company’s Form 10-Q.
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(f)
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To eliminate revenues and expenses related to the operations of HighMount. Income taxes are reported at the statutory rate.
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7
