LOEWS CORP

Note 6. Property, Plant and Equipment

Depreciation expense and capital expenditures are as follows:

Capitalized interest related to the construction and upgrade of qualifying assets amounted to approximately $32 million, $17 million and $12 million for the years ended December 31, 2023, 2022 and 2021.

Asset Impairments

Loews Hotels & Co evaluates properties with indications that their carrying amounts may not be recoverable. It was determined that the carrying values oftwo properties in 2023 andtwo properties in 2022 were impaired. Loews Hotels & Co recorded aggregate impairment charges of $12 million ($9 million after tax) and $25 million ($19 million after tax) for the years ended December 31, 2023 and 2022, which are reported within Operating expenses and other on the Consolidated Statements of Operations.

Loews Hotels & Co utilizes an undiscounted probability-weighted cash flow analysis in testing the recoverability of its long-lived assets for potential impairment. Assumptions and estimates underlying this analysis include, among other things, (i) room revenue based on occupancy and average room rates, (ii) other revenue generated by the property, including food and beverage sales and ancillary services, as well as property specific revenue sources, (iii) operating expenses, including management and marketing fees and (iv) expenditures for repairs and refurbishments to maintain the asset’s value. When necessary, scenarios are developed using multiple assumptions of expected future events which Loews Hotels & Co assigns a probability of occurrence based on management’s expectations. This initial analysis results in a projected probability-weighted cash flow of the property, which is compared to the carrying value of the asset to assess recoverability. If the long-lived asset’s carrying value exceeds the undiscounted cash flows, Loews Hotels & Co compares the long-lived asset’s carrying value to fair value, estimating the fair value of the asset by discounting future cash flows using market participant assumptions or third-party indicators of fair value such as a recent independent appraisal. These calculations, at times, utilize significant unobservable inputs, including estimating the growth in the asset’s revenue and cost structure and are therefore considered Level 3 fair value measurements.