NEW YORK, Jul 28, 2005 (BUSINESS WIRE) -- Loews Corporation (NYSE:LTR) today reported Carolina Group net income for the 2005 second quarter of $142.1 million, compared to $121.4 million in the 2004 second quarter. Net income attributable to Carolina Group stock (NYSE:CG) for the second quarter of 2005 was $55.7 million, or $0.82 per share of Carolina Group stock, compared to $40.6 million, or $0.70 per share in the comparable period of the prior year.
The increase in net income attributable to Carolina Group stock for the second quarter of 2005, as compared to the corresponding period of the prior year, reflects 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 in December of 2004. Carolina Group stock represents a 39.22% and 33.43% economic interest in the Carolina Group for the three months ended June 30, 2005 and 2004, respectively.
Net sales for the Carolina Group were $928.3 million in the second quarter of 2005, compared to $868.1 million in the 2004 second quarter, reflecting an increase in unit sales volume of 5.3%.
Carolina Group net income for the first half of 2005 was $260.6 million, compared to $224.4 million in the 2004 first half. Net income attributable to Carolina Group stock for the first half of 2005 was $102.2 million, or $1.50 per share of Carolina Group stock, compared to $75.0 million, or $1.29 per share in the comparable period of the prior year. The increase in net income attributable to Carolina Group stock reflects the December of 2004 sale by Loews Corporation of Carolina Group stock discussed above.
Net sales for the Carolina Group were $1.723 billion in the first half of 2005, compared to $1.636 billion in the comparable period of the prior year. The increase in net sales reflects an increase in unit sales volume of 2.9% and reduced sales promotion expenses (accounted for as a reduction in net sales).
Results of operations of the Carolina Group include interest expense of $21.0, $24.3, $43.4 and $48.9 million, net of taxes, for the three and six months ended June 30, 2005 and 2004, respectively, on notional intergroup debt. At June 30, 2005, $1.76 billion principal amount of notional intergroup debt was outstanding.
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 June 30, 2005, there were 68,034,559 shares of Carolina Group stock outstanding representing a 39.22% 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.
A separate press release reporting Loews Corporation's consolidated results for the second quarter of 2005 is being issued contemporaneously with this report.
A conference call to discuss the second quarter results of Loews Corporation has been scheduled for 11:00 a.m. EDT, Thursday, July 28, 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
June 30,
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Three Months Six Months
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2005 2004 2005 2004
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(Amounts in millions, except per share data)
Net sales (a) $ 928.3 $ 868.1 $ 1,723.4 $ 1,636.0
Cost of sales (a) (b) 574.4 532.3 1,061.1 999.6
Selling, advertising and
administrative 97.2 103.3 187.2 203.3
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Total operating costs and
expenses 671.6 635.6 1,248.3 1,202.9
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Operating income 256.7 232.5 475.1 433.1
Investment income and
other (c) 18.3 6.5 30.5 15.0
Interest expense (35.6) (39.8) (72.2) (80.1)
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Income before income
taxes 239.4 199.2 433.4 368.0
Income taxes 97.3 77.8 172.8 143.6
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Net income 142.1 121.4 260.6 224.4
Earnings attributable to
the Loews Group
intergroup interest (d) 86.4 80.8 158.4 149.4
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Income attributable to
Carolina Group
shareholders (e) $ 55.7 $ 40.6 $ 102.2 $ 75.0
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Per share of Carolina
Group stock (f) $ 0.82 $ 0.70 $ 1.50 $ 1.29
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Weighted diluted shares 68.10 57.98 68.08 57.99
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Notional, intergroup debt
owed by the Carolina
Group to the Loews Group
June 30, 2005 $ 1,764.7
December 31, 2004 1,871.2
(a) Includes excise taxes of $179.0, $169.5, $335.2 and $325.7 for the
respective periods.
(b) Includes charges of $235.6, 234.3, $434.3 and $435.4 ($139.8,
$142.8, $261.2 and $265.5 after taxes) to accrue obligations under
the State Settlement Agreements for the respective periods.
(c) Includes $6.1 of interest income, in the second quarter of 2005,
relating to a federal income tax settlement.
(d) The Loews Group's intergroup interest in the earnings of the
Carolina Group reflected share equivalents amounting to
105,445,000 shares of 173,478,759 share and share equivalents
outstanding in 2005 and share equivalents amounting to 115,445,000
shares of 173,411,750 share and share equivalents outstanding in
2004. As of June 30, 2005, there were 68,034,559 shares of
Carolina Group stock outstanding.
(e) Represents 39.22%, 33.43%, 39.21% and 33.43% of the economic
interest in the Carolina Group for the respective periods
presented.
(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
The following information regarding unit volume shipped by Lorillard
Tobacco Company to its direct buying customers by brand follows (all
units in thousands):
June 30,
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Three Months Six Months
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2005 2004 2005 2004
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Full Price Brands
Total Newport 8,603,782 8,102,336 16,125,476 15,482,294
Total Kent Family 188,805 225,173 363,300 435,622
Total True 150,900 173,459 288,492 334,223
Total Max 10,348 12,006 19,939 23,313
Total Satin 1,617 2,133 3,213 4,227
Total Triumph 358 886
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Total Full Price Brands 8,955,452 8,515,465 16,800,420 16,280,565
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Price/Value Brands
Total Old Gold 221,103 234,240 412,422 453,054
Total Maverick 218,892 182,244 396,324 337,806
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Total Price/Value Brands 439,995 416,484 808,746 790,860
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Total Domestic
Cigarettes 9,395,447 8,931,949 17,609,166 17,071,425
Total Puerto Rico and
U.S. Possessions 220,620 199,476 387,384 411,340
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Grand Total 9,616,067 9,131,425 17,996,550 17,482,765
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Notes:
1. This information is unaudited and is not adjusted for returns.
2. Domestic unit volume includes units sold as well as promotional
units, and excludes volumes for Puerto Rico and U.S. Possessions.
3. Unit volume for a quarter is not necessarily indicative of unit
volume for any subsequent period.
4. Unit volume is not necessarily indicative of the level of revenues
for any period.
SOURCE: Carolina Group
Loews Corporation Peter W. Keegan, 212-521-2950 Candace Leeds, 212-521-2416 or Investor Relations: Joshua E. Kahn, 212-521-2788