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Carolina Group Reports Net Income for the Second Quarter Of 2006

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,
                          --------------------------------------------
                               Three Months           Six Months
                          --------------------------------------------
                             2006       2005       2006       2005
                          --------------------------------------------

                          (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
                          --------------------------------------------

Total operating costs and
 expenses                      661.5      671.6    1,266.1    1,248.3
                          --------------------------------------------

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)
                          --------------------------------------------

Income before income taxes     307.3      239.4      552.0      433.4
Income taxes                   120.1       97.3      214.7      172.8
                          --------------------------------------------

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
                          --------------------------------------------

Income attributable to
 Carolina Group
 shareholders (g)              $93.8      $55.7     $161.4     $102.2
                          ============================================

Per share of Carolina
 Group stock                   $1.09      $0.82      $1.96      $1.50
                          ============================================

Weighted diluted number of
 shares                        86.11      68.10      82.24      68.08
                          ============================================

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,
                          --------------------------------------------
                               Three Months           Six Months
                          --------------------------------------------
                             2006       2005       2006       2005
                          --------------------------------------------

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
                          --------------------------------------------

Total Full Price Brands    8,664,897  8,955,452 16,718,841 16,800,420
                          --------------------------------------------

Price/Value Brands

Total Old Gold               211,293    221,103    395,109    412,422
Total Maverick               265,380    218,892    495,732    396,324
                          --------------------------------------------

Total Price/Value Brands     476,673    439,995    890,841    808,746
                          --------------------------------------------

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
                          --------------------------------------------

Grand Total                9,353,634  9,616,067 18,009,714 17,996,550
                          ============================================

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