NEW YORK--(BUSINESS WIRE)--Aug. 1, 2006--Loews Corporation (NYSE:LTR) today reported Carolina Group net income for the 2006 second quarter of $187.2 million, compared to $142.1 million in the 2005 second quarter. Net income attributable to Carolina Group stock (NYSE:CG) for the second quarter of 2006 was $93.8 million, or $1.09 per share of Carolina Group stock, compared to $55.7 million, or $0.82 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 2006, as compared to the corresponding period of the prior year, is primarily due to higher effective unit prices reflecting lower sales promotion expenses (accounted for as a reduction to net sales) and reflects an increase in the amount of Carolina Group shares outstanding. Carolina Group stock represents a 50.09% and 39.22% economic interest in the Carolina Group for the three months ended June 30, 2006 and 2005, respectively.
Loews Corporation sold 15 million shares of Carolina Group stock in May of 2006 and 10 million shares in 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 $977.3 million in the second quarter of 2006, compared to $928.3 million in the 2005 second quarter.
Carolina Group net income for the first half of 2006 was $337.3 million, compared to $260.6 million in the 2005 first half. Net income attributable to Carolina Group stock for the first half of 2006 was $161.4 million, or $1.96 per share of Carolina Group stock, compared to $102.2 million, or $1.50 per share in the comparable period of the prior year. The increase in net income attributable to Carolina Group stock is primarily due to higher effective unit prices reflecting lower sales promotion expenses (accounted for as a reduction to net sales) and reflects the May of 2006 and November of 2005 sales by Loews Corporation of Carolina Group stock discussed above.
Net sales for the Carolina Group were $1.832 billion in the first half of 2006, compared to $1.723 billion in the comparable period of the prior year.
Results of operations of the Carolina Group include interest expense of $18.1, $21.0, $37.4 and $43.4 million, net of taxes, for the three and six months ended June 30, 2006 and 2005, respectively, on notional intergroup debt. At June 30, 2006, $1.46 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, 2006 there were 93,291,246 shares of Carolina Group stock outstanding representing a 53.7% 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 2006 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, Tuesday, August 1, 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
June 30,
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Three Months Six Months
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2006 2005 2006 2005
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(Amounts in millions, except per share data)
Net sales (a) $977.3 $928.3 $1,832.1 $1,723.4
Cost of sales (a) (b) 552.6 574.4 1,064.3 1,061.1
Selling, advertising and
administrative (c) 108.9 97.2 201.8 187.2
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Total operating costs and
expenses 661.5 671.6 1,266.1 1,248.3
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Operating income 315.8 256.7 566.0 475.1
Investment income and
other (d) (e) 21.3 18.3 47.3 30.5
Interest expense (29.8) (35.6) (61.3) (72.2)
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Income before income taxes 307.3 239.4 552.0 433.4
Income taxes 120.1 97.3 214.7 172.8
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Net income 187.2 142.1 337.3 260.6
Earnings attributable to
the Loews Group
intergroup interest (f) 93.4 86.4 175.9 158.4
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Income attributable to
Carolina Group
shareholders (g) $93.8 $55.7 $161.4 $102.2
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Per share of Carolina
Group stock $1.09 $0.82 $1.96 $1.50
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Weighted diluted number of
shares 86.11 68.10 82.24 68.08
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Notional, intergroup debt
owed by the Carolina
Group to the Loews Group
June 30, 2006 $1,462.3
December 31, 2005 1,626.9
(a) Includes excise taxes of $176.7, $179.0, $340.6 and $335.2 for the
respective periods.
(b) Includes charges of $236.5, $235.6, $453.5 and $434.3 ($144.0,
$139.8, $277.1 and $261.2 after taxes) to accrue obligations under
the State Settlement Agreements for the respective periods.
(c) Includes restructuring costs of $15.5 for the three and six months
ended June 30, 2006, related to early retirement and curtailment
charges for Lorillard's pension and other postretirement benefit
plans.
(d) Includes $6.1 of interest income, in the second quarter of 2005,
relating to a federal income tax settlement.
(e) Includes income from limited partnership investments of $3.8,
$2.5, $10.4 and $6.4 ($2.3, $1.4, $6.3 and $3.8 after taxes) for
the respective periods.
(f) The Loews Group's intergroup interest in the earnings of the
Carolina Group reflected share equivalents amounting to 80,445,000
shares of 173,736,246 share and share equivalents outstanding as
of June 30, 2006 and share equivalents amounting to 105,445,000
shares of 173,478,759 share and share equivalents as of June 30,
2005. As of June 30, 2006, there were 93,291,246 shares of
Carolina Group stock outstanding.
(g) Represents 50.09%, 39.22%, 47.85% and 39.21% of the economic
interest in the Carolina Group for the respective 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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2006 2005 2006 2005
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Full Price Brands
Total Newport 8,360,490 8,603,782 16,138,155 16,125,476
Total Kent Family 159,003 188,805 305,019 363,300
Total True 134,946 150,900 255,864 288,492
Total Max 8,976 10,348 17,133 19,939
Total Satin 1,482 1,617 2,670 3,213
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Total Full Price Brands 8,664,897 8,955,452 16,718,841 16,800,420
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Price/Value Brands
Total Old Gold 211,293 221,103 395,109 412,422
Total Maverick 265,380 218,892 495,732 396,324
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Total Price/Value Brands 476,673 439,995 890,841 808,746
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Total Domestic Cigarettes 9,141,570 9,395,447 17,609,682 17,609,166
Total Puerto Rico and U.S.
Possessions 212,064 220,620 400,032 387,384
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Grand Total 9,353,634 9,616,067 18,009,714 17,996,550
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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.
CONTACT: Carolina Group
Peter W. Keegan, 212-521-2950
Senior Vice President
OR
Candace Leeds, 212-521-2416
V.P. of Public Affairs
OR
Investor Relations:
Darren Daugherty, 212-521-2788
SOURCE: Carolina Group