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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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) January 16, 1998
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LOEWS CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 1-6541 13-2646102
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(State or other jurisdiction (Commission (I.R.S. employer
of incorporation or organization) file number) identification no.)
667 Madison Avenue, New York, N.Y. 10021-8087
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (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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Item 5. Other Events.
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On January 16, 1998, together with other companies in the United States
tobacco industry, the Company's subsidiary, Lorillard Tobacco Company, entered
into a Comprehensive Settlement Agreement and Release (the "Settlement
Agreement") with the State of Texas to settle and resolve with finality all
present and future economic claims by the State and its subdivisions relating to
the use of or exposure to tobacco products. The Settlement Agreement is attached
as Exhibit 10 and the following summary of the Settlement Agreement is qualified
by reference thereto.
Under the Settlement Agreement, the settling defendants agreed to pay Texas an
up-front payment of $725 million in 1998, representing the State's estimate of
its share of the $10 billion initial payment under the proposed federal
resolution (the "Resolution") described in the Company's Current Report on Form
8-K, dated June 24, 1997. The settling defendants also agreed to reimburse Texas
and its private counsel for expenses in the estimated amount of $45 million. The
settling defendants also agreed to pay Texas $264 million to support a pilot
program aimed at reducing the use of tobacco by persons under the age of
eighteen. Lorillard Tobacco Company's share of all of the foregoing payments,
approximately $80 million, was charged to expense in the fourth quarter of 1997.
Beginning in November and December 1998, and on December 31 of each subsequent
year, the settling defendants will pay Texas 7.25% of the annual industry
payments contemplated to be paid to the states under the proposed Resolution.
These payments, which (except for payments in 1998) will be adjusted as provided
in the proposed Resolution, will be in the following estimated amounts; 1998:
$290 million; 1999: $326 million; 2000: $363 million; 2001: $471 million; 2002:
$471 million; and 2003 and thereafter: $580 million. These payments will be
allocated among the settling defendants in accordance with their relative unit
volume of domestic tobacco product sales.
The settling defendants also agreed to pay reasonable attorneys' fees to
Texas's private counsel. The amount of such fees will be set by a panel of
independent arbitrators but in no event will the industry be required under the
Settlement Agreement to pay more than $500 million per year towards fee awards
for all attorneys nationwide in connection with smoking and health cases. Each
of these payments would be allocated among the settling defendants in accordance
with their relative unit volume of domestic tobacco product sales.
The settling defendants also agreed to discontinue all tobacco product
billboards and transit advertisements in the State. The settling defendants also
agreed not to challenge existing or proposed legislative and administrative
initiatives to prohibit the sale of cigarettes in vending machines, except in
adult-only facilities, and to strengthen civil penalties for sales of tobacco
products to minors and for possession of tobacco products by minors.
If legislation implementing the proposed Resolution or its substantial
equivalent is enacted, the Settlement Agreement will remain in place, but the
terms of the federal legislation will supersede the Settlement Agreement (except
for the terms of the pilot program and payments thereunder, the up-front
payment, and the payments with respect to 1998) and the other payments described
above will be adjusted so that the State would receive the same payments as it
would receive under such legislation.
The Settlement Agreement also provides that if federal legislation
implementing the Resolution or its substantial equivalent is enacted, the
parties contemplate that Texas and any other similar state which has made an
exceptional contribution to secure resolution of these matters may apply to a
panel of independent arbitrators for reasonable compensation for its efforts in
securing the Resolution. The settling defendants have agreed not to oppose an
application of $329.5 million by Texas. The parties have agreed to a
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nationwide annual cap for all such payments of $100 million.
The Settlement Agreement also provides that if the settling defendants enter
into any future pre-verdict settlement agreement with a non-federal governmental
plaintiff on more favorable terms (after due consideration of relevant
differences in population or other appropriate factors), Texas will obtain
treatment at least as relatively favorable as such governmental plaintiff.
The Settlement Agreement provides that it is not an admission or concession or
evidence of any liability or wrongdoing on the part of any party, and is entered
into by the settling defendants solely to avoid the further expense,
inconvenience, burden and uncertainty of litigation.
Item 7. Exhibits.
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(c) Exhibits
10. Comprehensive Settlement Agreement and Release dated January 16, 1998.
99. Press Release dated January 16, 1998.
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, thereunto duly authorized.
LOEWS CORPORATION
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(Registrant)
Dated: February 3, 1998 By: /s/ Peter W. Keegan
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Peter W. Keegan
Senior Vice President
Chief Financial Officer
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