Press Release
Back
Carolina Group Reports Net Income for 2004

NEW YORK--(BUSINESS WIRE)--Feb. 10, 2005--Loews Corporation (NYSE:LTR) today reported Carolina Group net income for the 2004 fourth quarter of $161.6 million, compared to $119.1 million in the 2003 fourth quarter. Net income attributable to Carolina Group stock (NYSE:CG) for the fourth quarter of 2004 was $56.1 million, or $0.93 per share of Carolina Group stock, compared to $34.8 million, or $0.74 per share in the comparable period of the prior year.

The increase in net income attributable to Carolina Group stock for the fourth quarter of 2004, as compared to the comparable period of the prior year, is due to improved overall results of the Carolina Group and reflects the increased economic interest to 34.68% for the three months ended December 31, 2004, as compared to 29.23% for the comparable period of the prior year, due to the sale by Loews Corporation of 10,000,000 shares of Carolina Group stock in December of 2004. Net income per share of Carolina Group stock was not impacted by the sale of Carolina Group stock.

Net sales for the Carolina Group were $832.5 million in the fourth quarter of 2004, compared to $787.7 million in the 2003 fourth quarter. The increase in net sales reflects an increase in unit sales volume of 2.9%, partially offset by an increase in sales promotion expenses.

Results of operations of the Carolina Group include interest expense of $23.9 and $26.2 million, net of taxes, for the three months ended December 31, 2004 and 2003, respectively, on notional intergroup debt. At December 31, 2004, $1.871 billion principal amount of notional intergroup debt was outstanding.

Carolina Group net income for the year ended 2004 was $545.9 million, compared to $468.3 million in the prior year. Net income for the year ended 2003 included a $27.5 million charge ($17.1 million after taxes) to settle litigation with tobacco growers and a $28.0 million charge ($17.5 million after taxes) to resolve indemnification claims and trademark matters in connection with the 1977 sale by Lorillard of its international business. Net income attributable to Carolina Group stock for the year ended 2004 was $184.5 million, or $3.15 per share of Carolina Group stock, compared to $115.2 million, or $2.76 per share in the comparable period of the prior year. The increase in net income attributable to Carolina Group stock is primarily due to improved overall results of the Carolina Group.

Net sales for the Carolina Group were $3.348 billion in 2004, compared to $3.256 billion in 2003. The increase in net sales reflects a 0.4% increase in unit sales volume and a decrease in sales promotion expenses.

Results of operations of the Carolina Group include interest expense of $97.3 and $114.0 million, net of taxes, for the years ended 2004 and 2003, respectively, on notional intergroup debt.

The Carolina Group stock, commonly called a tracking stock, is intended to reflect the economic performance of a defined group of the Company's assets and liabilities, referred to as the Carolina Group, principally consisting of the Company's subsidiary Lorillard, Inc. The Carolina Group, a notional group, is not a separate legal entity. The purpose of this financial information is to provide investors with additional information to use in analyzing the results of operations and financial condition of the Carolina Group, and this financial information should be read in conjunction with the consolidated financial information of Loews Corporation.

As of December 31, 2004, there were 67,967,250 shares of Carolina Group stock outstanding representing a 39.19% economic interest. Depending on market conditions, the Company, for the account of the Carolina Group, from time to time may purchase shares of Carolina Group stock in the open market or otherwise.

Loews Corporation has issued a separate press release reporting its consolidated results for the fourth quarter of 2004, which accompanies this press release.

A conference call to discuss the fourth quarter results of Loews Corporation has been scheduled for 11:00 a.m. EDT, Thursday, February 10, 2005. A live broadcast of the call will be available online at the Loews Corporation website (www.loews.com). Please go to the website at least ten minutes before the event begins to register and to download and install any necessary audio software. Those interested in participating in the question and answer session of the conference call should dial (877) 692-2592. An online replay will be available at the Company's website following the call.

Carolina Group
Financial Review


                                              December 31,
                                   -----------------------------------
                                       Three Months      Years Ended
                                   -----------------------------------
                                       2004    2003     2004     2003
                                   -----------------------------------
                                    (Amounts in millions, except per
                                               share data)


Net sales (a)                       $ 832.5 $ 787.7 $3,347.8 $3,255.6

Cost of sales (a) (b)                 461.2   457.7  1,965.6  1,893.1
Selling, advertising and
 administrative (c)                    92.7   107.8    381.1    460.6
                                   -----------------------------------

Total operating costs and expenses    553.9   565.5  2,346.7  2,353.7
                                   -----------------------------------

Operating income                      278.6   222.2  1,001.1    901.9
Investment income                      16.9    11.5     40.0     32.1
Interest expense                      (38.1)  (42.1)  (157.5)  (182.8)
                                   -----------------------------------

Income before income taxes            257.4   191.6    883.6    751.2
Income taxes                           95.8    72.5    337.7    282.9
                                   -----------------------------------

Net income                            161.6   119.1    545.9    468.3
Earnings attributable to the Loews
 Group intergroup interest (d)        105.5    84.3    361.4    353.1
                                   -----------------------------------

Income attributable to Carolina
 Group shareholders (e)             $  56.1 $  34.8 $  184.5 $  115.2
                                   ===================================

Per share of Carolina Group
 stock (f)                          $  0.93 $  0.74 $   3.15 $   2.76
                                   ===================================

Weighted number of shares
 outstanding                          60.03   47.17    58.49    41.74
                                   ===================================

(a)Includes excise taxes of $164.5, $158.0, $658.1 and $651.4 for
    respective periods.
(b)Includes charges of $196.9, $193.0, $845.9 and $785.2 ($124.3,
    $119.9, $522.6 and $489.5 after taxes) to accrue obligations under
    the State Settlement Agreements for the respective periods.
(c)Includes a $27.5 charge in the year ended December 31, 2003 ($17.1
    after taxes) to settle litigation with tobacco growers and a $28.0
    charge in the year ended December 31, 2003 ($17.5 after taxes) to
    resolve indemnification claims and trademark matters in connection
    with the 1977 sale by Lorillard of its international business.
(d)Prior to December 13, 2004, the Loews Group's intergroup interest
    in the earnings of the Carolina Group reflected share equivalents
    amounting to 115,445,000 shares of 173,412,250 shares equivalents
    outstanding. Subsequent to the Loews Group's sale of 10,000,000
    shares of Carolina Group stock, the Loews Group's intergroup
    interest in the earnings of the Carolina Group reflected share
    equivalents amounting to 105,445,000 shares of 173,412,250 share
    and share equivalents outstanding. As of December 31, 2004, there
    were 67,967,250 shares of Carolina Group stock outstanding.
(e)Represents 34.68%, 29.23%, 33.80% and 24.59% of the economic
    interest in the Carolina Group for the respective periods.
(f)Earnings per common share-assuming dilution is not presented
    because securities that could potentially dilute basic earnings
    per share in the future would have been insignificant or
    antidilutive for the periods presented.



Carolina Group
Supplemental Information


Information regarding unit volume shipped by Lorillard Tobacco Company
 to its direct buying customers by brand follows (all units in
 thousands):

                                         December 31,
                         ---------------------------------------------
                              Three Months           Years Ended
                         ---------------------------------------------
                            2004       2003       2004        2003
                         ---------------------------------------------

Full Price Brands

Total Newport             7,812,616  7,508,067  31,335,184 30,976,222
Total Kent Family           204,264    246,597     855,391  1,064,086
Total True                  160,998    183,297     663,191    777,681
Total Max                    10,848     12,471      45,525     53,970
Total Satin                   1,728      2,496       7,914     10,830
Total Triumph                     -        772         886      3,731
                         ---------------------------------------------

Total Full Price Brands   8,190,454  7,953,700  32,908,091 32,886,520
                         ---------------------------------------------

Price/Value Brands

Total Old Gold              216,469    243,108     903,173  1,030,580
Total Maverick              175,067    151,590     691,607    514,341
                         ---------------------------------------------

Total Price/Value Brands    391,536    394,698   1,594,780  1,544,921
                         ---------------------------------------------

Total Domestic Cigarettes 8,581,990  8,348,398  34,502,871 34,431,441

Total Puerto Rico and
 U.S. Possessions           225,072    212,508     823,931    766,784
                         ---------------------------------------------

Grand Total               8,807,062  8,560,906  35,326,802 35,198,225
                         =============================================

Notes:

1. This information is unaudited and is not adjusted for returns. Unit
    volume for a quarter is not necessarily indicative of unit volume
    for any
2. subsequent period.
3. Unit volume is not necessarily indicative of the level of revenues
    for any period.

CONTACT: Loews Corporation
Peter W. Keegan, 212-521-2950
or
Candace Leeds, 212-521-2416
or
Investor Relations:
Joshua E. Kahn, 212-521-2788

SOURCE: Carolina Group