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Carolina Group Reports Net Income for 2005

NEW YORK--(BUSINESS WIRE)--Feb. 16, 2006--Loews Corporation (NYSE:LTR; CG) today reported Carolina Group net income for the 2005 fourth quarter of $190.5 million, compared to $161.6 million in the 2004 fourth quarter. Net income attributable to Carolina Group stock for the fourth quarter of 2005 was $81.6 million, or $1.11 per share of Carolina Group stock, compared to $56.1 million, or $0.93 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 2005, as compared to the comparable period of the prior year, is due to improved overall results of the Carolina Group and reflects an increase in the amount of Carolina Group shares. Carolina Group stock represents a 42.86% and 34.68% economic interest in the Carolina Group for the three months ended December 31, 2005 and 2004, respectively.

Loews Corporation sold 10,000,000 shares of Carolina Group stock in each of December of 2004 and November of 2005. Net income per share of Carolina Group stock was not impacted by the sale of Carolina Group shares.

Net sales for the Carolina Group were $916.0 million in the fourth quarter of 2005, compared to $832.5 million in the 2004 fourth quarter, reflecting a decrease in sales promotion expenses (accounted for as a reduction in net sales), partially offset by a decrease in unit sales volume of 1.5%.

Results of operations of the Carolina Group include interest expense of $20.7 million and $23.9 million, net of taxes, for the three months ended December 31, 2005 and 2004, respectively, on notional intergroup debt. At December 31, 2005, $1.63 billion principal amount of notional intergroup debt was outstanding.

Carolina Group net income for the year ended 2005 was $623.1 million, compared to $545.9 million in the prior year. Net income attributable to Carolina Group stock for the year ended 2005 was $251.3 million, or $3.62 per share of Carolina Group stock, compared to $184.5 million, or $3.15 per share in the prior year. The increase in net income attributable to Carolina Group stock for the year ended 2005 is due to improved overall results of the Carolina Group and reflects the share sales as mentioned above. Carolina Group stock represents a 40.34% and 33.80% economic interest in the Carolina Group for the years ended December 31, 2005 and 2004, respectively.

Net sales for the Carolina Group were $3.568 billion in 2005, compared to $3.348 billion in the prior year. The increase in net sales reflects an increase in unit sales volume of 1.9% and reduced sales promotion expenses (accounted for as a reduction in net sales).

Results of operations of the Carolina Group include interest expense of $86.1 million and $97.3 million, net of taxes, for the years ended December 31, 2005 and 2004, 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, 2005, there were 78,191,678 shares of Carolina Group stock outstanding representing a 45.03% economic interest. Depending on market conditions, the Company may purchase, from time to time in the open market or otherwise, shares of Carolina Group stock for the Carolina Group account.

A separate press release reporting Loews Corporation's consolidated results for the fourth quarter and full year of 2005 is being issued contemporaneously with this report.

A conference call to discuss the fourth quarter and full year results of Loews Corporation has been scheduled for 11:00 a.m. EST, Thursday, February 16, 2006. 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
                          --------------------------------------------
                             2005       2004       2005       2004
                          --------------------------------------------

                          (Amounts in millions, except per share data)


Net sales (a)                 $916.0     $832.5   $3,567.8   $3,347.8

Cost of sales (a) (b)          509.4      461.2    2,114.4    1,965.6
Selling, advertising and
 administrative                 87.0       92.7      369.5      381.1
                          --------------------------------------------

Total operating costs and
 expenses                      596.4      553.9    2,483.9    2,346.7
                          --------------------------------------------

Operating income               319.6      278.6    1,083.9    1,001.1
Investment income and
 other (c)                      21.5       16.9       72.5       40.0
Interest expense               (33.9)     (38.1)    (140.9)    (157.5)
                          --------------------------------------------

Income before income taxes     307.2      257.4    1,015.5      883.6
Income taxes                   116.7       95.8      392.4      337.7
                          --------------------------------------------

Net income                     190.5      161.6      623.1      545.9
Earnings attributable to
 the Loews Group
 intergroup interest (d)       108.9      105.5      371.8      361.4
                          --------------------------------------------

Income attributable to
 Carolina Group
 shareholders (e)              $81.6      $56.1     $251.3     $184.5
                          ============================================

Per share of Carolina
 Group stock                   $1.11      $0.93      $3.62      $3.15
                          ============================================

Weighted diluted shares
 (f)                           73.51      60.07      69.49      58.50
                          ============================================

Notional intergroup debt
 owed by the Carolina
 Group to the Loews Group
  December 31, 2005         $1,626.9
  December 31, 2004          1,871.2

(a) Includes excise taxes of $164.7, $164.5, $676.1 and $658.1 for the
    respective periods.
(b) Includes charges of $218.2, $196.9, $876.4 and $845.9 ($135.7,
    $124.3, $537.7 and $522.6 after taxes) to accrue obligations under
    the State Settlement Agreements for the respective periods.
(c) Includes income from limited partnership investments of $3.2,
    $8.1, $16.0 and $18.0, ($2.0, $5.0, $9.8 and $11.1 after taxes)
    for the respective periods.
(d) The Loews Group's intergroup interest in the earnings of the
    Carolina Group reflects share equivalents amounting to 95,445,000
    shares of 173,632,130 share and share equivalents outstanding at
    December 31, 2005 and share equivalents amounting to 105,445,000
    shares of 173,412,250 share and share equivalents outstanding at
    December 31, 2004. As of December 31, 2005, there were 78,191,678
    shares of Carolina Group stock outstanding.
(e) Represents 42.86%, 34.68%, 40.34% and 33.80% of the economic
    interest in the Carolina Group for the respective periods
    presented.
(f) Earnings per share-assuming dilution and earnings per share-basic
    are the same for all periods presented because securities that
    could potentially dilute earnings per share in the future are
    insignificant or antidilutive.

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):

                                           December 31,
                            ------------------------------------------
                                Three Months         Years Ended
                            ------------------------------------------
                              2005      2004       2005       2004
                            ------------------------------------------

Full Price Brands

Total Newport               7,729,738 7,812,616 32,159,341 31,335,184
Total Kent Family             166,680   204,264    710,241    855,391
Total True                    137,772   160,998    574,752    663,191
Total Max                       9,531    10,848     39,268     45,525
Total Satin                     1,398     1,728      6,153      7,914
Total Triumph                                                     886
                            ------------------------------------------

Total Full Price Brands     8,045,119 8,190,454 33,489,755 32,908,091
                            ------------------------------------------

Price/Value Brands

Total Old Gold                200,982   216,469    834,501    903,173
Total Maverick                237,612   175,067    869,146    691,607
                            ------------------------------------------

Total Price/Value Brands      438,594   391,536  1,703,647  1,594,780
                            ------------------------------------------

Total Domestic Cigarettes   8,483,713 8,581,990 35,193,402 34,502,871

Total Puerto Rico and U.S.
 Possessions                  190,362   225,072    811,716    823,931
                            ------------------------------------------

Grand Total                 8,674,075 8,807,062 36,005,118 35,326,802
                            ==========================================

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.

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: Loews Corporation