Lorillard
Testimony of Laurence Tish by Cna and the Department of Insurance
Fields
- Author
- Bashwiner
- Fox
- Nussbaum
- Pollack, L.
- Reuben
- Tisch, L.
- Alias
- 91780361/91780398
- Area
- LEGAL DEPT FILE ROOM
- Type
- TRAN, TRANSCRIPT
- Named Organization
- Automatic Data Processing
- Board of Trustees
- Century Circuit
- Cna
- Cnaf
- Cna Board of Directors
- Cna Financial
- Cna Insurance
- Commercial Credit
- Continental Assurance
- Control Data
- Executive Comm
- Federation of Jewish Philanthropies
- Finance Comm
- Gimbel Brothers
- Grand Union
- Gulf Oil
- Inexco Oil
- Jewish Theological Seminary
- Jh Snyder
- Joint Distribution Comm
- Larwin
- Loews
- Loews Board
- Loews Theatres
- Metro Goldwyn Mayer
- Northwest Industries
- Ny Stock Exchange
- Ny Univ
- Securities + Exchange Commission
- Suffield Academy
- Sun Chemical
- Talcott Natl
- Tisch Hotels
- United Israel Appeal
- United Jewish Appeal of Greater Ny
- Whitney Museum of American Art
- Winterthur
- Lor, Lorillard
- American Jewish Comm
- Named Person
- Bennett
- Jordan
- Levathes
- Lipton
- Loew, M.
- Nussbaum
- Pollack, L.
- Snyder
- Surgeon General
- Tisch, L.A.
- Tisch, P.R.
- Tisch, R.
- Yellen, E.
- Xxjim
- Xxlarry <Tisch, L.>
- Xxpreston
- Document File
- 91780170/91780566/Broin Jurisdictional Briefing Preparation Notebook - Lorillard Entities
- Date Loaded
- 05 Jun 1998
- Request
- R1-004
- Author (Organization)
- Cna
- Litigation
- Stmn/Produced
- Site
- N14
- Characteristic
- MARG, MARGINALIA
- MISS, MISSING PAGES
- Brand
- Doral
- Kent
- Luke
- Marlboro
- Newport
- True
- Vantage
- Winston
- UCSF Legacy ID
- rcn80e00
Document Images
I
k
cussion off the record.)
residential real estate. L'oet4s' com~ori stock is
listed on the New York Stock Exchange. Loews'
has approximately 11:;500 shareholders of record.
Agt. rUSSBAUAi: Excuse me. I knoco -that there
is something'written here that is just being read--
this is off the,lrecord--
and Exchanse:Commission under-the
Exchange Act of 1934 and files mo*nthly '+
and quarterly reports and annual auditors' reports
under the Act.
iiallp. ~ormed In 1019 by
Marcus Loew, one of the early pioneers of the
.
motion picture industry. The modern history of
Loews dates from 1959 cahen pursuant to- the motion
picture industry antitrust*decree Loews was
separated into the present.Loews and the motion
picture production company,now called "Metro
Coldwyn IMayer". Contempornneously with the
creation, of the modern Loews in 1959, Tisch
Hotels, Znc, a private company owned by Laurence
,2(lo -
,
TISCH: Loews is registered with the
26
27
A. Tisch and
of Loews and
of the Board
Prcston R. Tisch.';. acquired control
Laurence A. Tisch beeame the Chairman.
of Loews. In 1974 Tisch Notels merged
into Loews and the Messrs. Tisch now own directly
the 5,507,550 shares of Loews previously owned
in corporate form.
",~rg c`'~r ' ~ai t h
Lo',z,iilard,Corporation, the business e'f which today
is more than halff of Loews total business, Loews
;can trace its corporate history to a business
founded in 1760 and continuously successful from
then to the present.
-In 1959 Loews principal business was the
operation of motion picture theatres, On August
31, 1959 Loews had total assets of $86,000,000 and
net worth of $59,000,000. For the fiscal year
then ended Loews had revenues of $46,000,000 and
I
net income of $2,000,000. Loecrs business was
suffering in 1959 the drastic effects of conpetition
from television and diversification was the order
.
of the day.
,
The first major diversification was
expansion into the hotel industry with the creation
of Loews liotcls nnd the comtnencement of construction
28
of the Americana and Summit hotels in New York
City in 1960. In the following years the hotel
business was expanded and further diversification
was sought. By 1968 Loews had 15 hotels in
operation or under construction and had acquired
or constructed a number of new motion pictu're
r ti.
theatcrs. At August 31, 1967 total assets had
grown to $210,000,000 and net worth to $91,000,000.
.Revenues as then reported were $137,000,000 and
net'income was $16,000,000 for the year ended '
August 31, 1907,
In 1968 Loews took several major steps
in implementation of its divcrsification program.
After having acquired 1,000,000 shares of
Commercial Credit Company, Loews made a registered
exchange offer*for the balance of the Commercial
Credit shares. Following the Loews.offer,
.Control Data Corporation made a competing offer
at a substantially higher price. Loews decided
not to engage in a contest with Control Data and
disposed of its holdin3s at a profit of more than
$30,000,000.
n
\ovcmbcr 30, 1968, following approval
&I
I
sPecia1 mcctings of the sh,-ircholdcrs of Lori11.1rd
29
Co- poration and Loews, Lbritlard, a highly
,
successful tobacco company, merged into Loews in
a transaction in which the Lorillard shareholders
received Loews' securities then valued at
$465,000,000. As a result of the Lorillard merger,
Loews entered the ranks of the billion do11a'r
corporations. At August 31, 1969, as then
reported,,Loews had total assets of $1,011,000,000
and net worth of $260,000,000. For the f iscal
year then ended revenues were.$554,000,000 and net
income was $3Z, 000, 000.
1969 marked the entry of Loews into
residential development through a joint venture
with J. li. Snyder Company and further expansion of
the theatre and hotel operations. Loews operations
continued to be highly profitable and careful
asset management during the three years prior to
August 31, 1970 resulted in Loews having current
~
assets available for further expansion of $237,000,00b
at that date. To obtain a higher than money
markct return on those funds Loaws invested them i
in marketablc securities.
*-+
The follot:ins tllrec ycars witncsscd the CO
. o
. w
c.n
30
continunnce of Locws highly succcssful opcrations
in the motion picture theatre, hotel, tobacco and
residential develoPmcnt busincsses. At August
31, 1973 asscts were $1,268,000,000 and net worth
was $397,000,000. For the fiscal year then
ended revenues were $766,000,000 and net inccme
. ,
modern history, Loews net income increased ~ore
than 30007. and net worth increased more than 600%.
Zn 19.~? several proposed acquisitions
was $63,000,000. Thus in the 14 years of its
failed to be consummated. These involved
agreements or iinderstandinos with the respective
managements to acquiYe Talcott hational Corp.,
through a cash tender offer; Century Circuit, Inc
through cash purchase of 65% of the stock; and
Gimbe7. Brothers Inc. throush a cash tender offer.
::The Talcott and Gimbcl tender offers failed when
third parties made offers at higher prices and
Loews decided not to increase its offer price.
The Century Circuit acquisition agreement expired
by its terms prior to obtaining necessary antitrust
clcaraclcc. Loec:s did not own any Talcutt
secitir.itics prior to its tendcr offcr for Talcott
e
31
.
and no profit was realized in connection with the
transaction. The same is true of the proposed
Century Circuit acquisition. As to the Gimbel
tender offer, when the expenses of the offer and
the cost of carrying the Gimbel investraent are
considered, Loews, which owned 1,657,800 shares
of Gimbel and sold them to the competing offeror
did not make a profit on the Gimbel investment.
,
Today Loews is engaged in production
and sale of tobacco .products; owning, leasing and
_jpernting eleven major hotels in the United States,
Canada, Europe and the Caribbean; exhibition of
motion pictures in the United States through the
ownership and operation of 75 motion picture
theatres; and development of, residential real
estate through a joint venture. A detailed
~.
description of the business and financial position
of Loews is contained in the December 21, 1973
Prospectus annexed as I-tem 1 and the 1~73 A.nnual
Repors: annexed as Item 2. Special,ref erence is
i
made to the ten-year financial revieco on pages 2-3
~
of the Annual Report showing ten-ycar inbreases in
R2;VI:NUI:S from $82, 000, 000 t o $766, 000, 000
. '
enjoin their efforts to impede the Loows offer.
Loews has also twice notified the
Directors of CNZA that it will hold them responsible
for the damages to Loews and the other shareholders
of ~ C\A caused by the course of eonduc t
be ing `pursue d
by CNA managercnt with the apparent approval of
CNA Board of Directors. Loews letters to the CNA
The basic managzment structure of Loews
consists of dutonomous operating Divisions reporting
to senior corporate manage;,;cnt supported by a liraited
Each division of Loews is headed by a President who
.has full responsibility for the operation of his
Division with the usual duties
and authority of a
chief executive officer. Thus the Division Presi-
dents hire and fire their senior executives
and
make the fundnmental decisions as to development
of new produc ts , acquis ition of new hotels , con-
struction of new theatres, adoption of new marketing
proornins and all of the other basic operating r,ntters
of thcir Uivisions. rach Division hss full ro-
33
bponsibility tor the preparation of its annual
budgct and its long range plans and forecasts.
The Division Presidents report to the President of
Loecos.
.ww--WMO~
The essential management philosophy is
that each divisional manaocment is responsible :or
the full operation of its specialized business and
each has complete authority to carry out that
responsibility.
The senior management of Loews is:
Laurence A. Tisch, t;hairman of the Board 3nd
Chief E: ecutive Officer
Preston R. Tisch, President &nd Chief
Operating Oif-icer
Lester Pollack, Senior Vice presiacnt
Senior management is supported by a home-office
staff performing the corporate accounting, finance,
*
treasury and icgal runctions. Thc nomc-oilice ~
~
, c
'
staff monitors the results of oFerntions of the `
~
~
Divisions for consolidated corpor4t e purposes,
,
assists in the decision makino process with resPect
to major capital expenditures and reviews and*
approves. the divisional budgets. The basic function 10
~
v
ot the homc-orficc staff and senior m.zna~c;,;cnt of
Loctas is to support the divisional mnna-,cmcnts wit1i
39
objectivc
advice
as
to
financial
probrams
and
caPita l.
expenditur_es.
The senior management of Loecos enjoys
the hi,hest reputation, not jus t for its,a lmos t
unparalleled record of business success, but also
for the civic and p1hilanthropic actLvities of the
individual members:
Lawrence A. Tisch is a Director of The
Grand Union Company, Su.. Chemical Coorporation,
Automatic Data Processing, Inc. and Inexco Oil
Corporation, andd a former Director of :;orthwest
Indus tries . 13e is a Trus tee and Cha ir,;,an of the
Finance Committee of the Board of Trustees ot the
Whitney :iuseum oi American Art, Trustee of New
. York University, Trustee of Suffield Academy,
President of the United Jewish A ppeal of Greater
New York, Member of the Executive Committee of the
Jewish Theological Seminary, Trustee-at-Large and -
Chairman of the Building Fund of the Federation of
Jewish Philanthropies, Director of the American
Jewish Committee, Member of the Executive Committce
of the Joilit Distribution Committee, Director of the
Unitcd Isrnc7. Aj,pcr+l and a vcnbcr, of the Public.zti.a;:
4CS
TT., hiUi3IE \: May I rec,ucst of the Hcarins
Exanincr th~t he get some coatcr for the witness?
j1E,1RI\C C: ::C::a r0Yes . Do you want to
take a short roccss?
T}IE WITNESS: 1o, Basically, my brother is
more considcr cd full-.time with the day to day
oaperntions of the hotel division, plus the cor-
porate Presidents, which is Lorillard, hotels,
theatres, reporting to him.
I am more involved in
the overall
financial planning, the overall investment pro-ra.:,,
the overall acquisition prodraT~, and also con-
sult, of course, on the operations of the various
i
divisions with him and, when it is necessary,
with the P::esidents of the variou' divisions.
Q You are the fin3ncicl:man, he is the
operations man?
A I think that is z fair way to put it.
Q That's as close as any. Now, in the
opening paragr-phs of your state:nent you describe
1:oews as being in motion pictures, hotels, tobacco
and some rcal estat;c,
Now, Iwonder, coulcl I cive you a copy
