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Carolina Group Reports Net Income for 2006

NEW YORK--(BUSINESS WIRE)--Feb. 12, 2007--Loews Corporation (NYSE:LTR) today reported Carolina Group net income for the 2006 fourth quarter of $220.0 million, compared to $190.5 million in the 2005 fourth quarter. Net income attributable to Carolina Group stock (NYSE:CG) for the fourth quarter of 2006 was $137.1 million, or $1.26 per share of Carolina Group stock, compared to $81.6 million, or $1.11 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 2006, as compared to the corresponding period of the prior year, is primarily due to increased unit sales and reflects an increase in the number of Carolina Group shares outstanding. Carolina Group stock represented a 62.34% and 42.86% economic interest in the Carolina Group for the three months ended December 31, 2006 and 2005, respectively.

Loews Corporation sold 15 million shares of Carolina Group stock in each of August and 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 $936.7 million in the fourth quarter of 2006, compared to $916.0 million in the 2005 fourth quarter.

Carolina Group net income for the year ended 2006 was $760.2 million, compared to $623.1 million in the prior year. Net income attributable to Carolina Group stock for the year ended 2006 was $416.4 million, or $4.46 per share of Carolina Group stock, compared to $251.3 million, or $3.62 per share in 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), increased unit sales and reflects the August and May of 2006 and November of 2005 sales by Loews Corporation of Carolina Group stock discussed above.

Net sales for the Carolina Group were $3.755 billion in 2006, compared to $3.568 billion in the prior year.

Results of operations of the Carolina Group include interest expense on notional intergroup debt of $16.2, $20.7, $71.1 and $86.1 million, net of taxes, for the three months and years ended December 31, 2006 and 2005, respectively. At December 31, 2006, $1.23 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 December 31, 2006 there were 108,325,806 shares of Carolina Group stock outstanding, representing a 62.3% 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 fourth quarter and full year of 2006 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, Monday, February 12, 2007. 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, or for international callers, (973) 582-2757. The conference ID number is 8347049. An online replay will be available at the Company's website following the call.

Carolina Group
Financial Review


                                               December 31,
                                    ----------------------------------
                                      Three Months     Years Ended
                                    ----------------------------------
                                      2006    2005    2006     2005
                                    ----------------------------------
                                    (Amounts in millions, except per
                                                share data)


Net sales (a)                       $  936.7 $916.0 $3,754.8 $3,567.8

Cost of sales (a) (b)                  521.5  509.4  2,159.5  2,114.4
Selling, advertising and
 administrative (c)                     68.9   87.0    354.3    369.5
                                    ----------------------------------

Total operating costs and expenses     590.4  596.4  2,513.8  2,483.9
                                    ----------------------------------

Operating income                       346.3  319.6  1,241.0  1,083.9
Investment income and other (d)         34.4   21.5    111.4     72.5
Interest expense                       (26.0) (33.9)  (115.6)  (140.9)
                                    ----------------------------------

Income before income taxes             354.7  307.2  1,236.8  1,015.5
Income taxes                           134.7  116.7    476.6    392.4
                                    ----------------------------------

Net income                             220.0  190.5    760.2    623.1
Earnings attributable to the Loews
 Group intergroup interest (e)          82.9  108.9    343.8    371.8
                                    ----------------------------------

Income attributable to Carolina
 Group shareholders (f)             $  137.1 $ 81.6 $  416.4 $  251.3
                                    ==================================

Per share of Carolina Group stock   $   1.26 $ 1.11 $   4.46 $   3.62
                                    ==================================

Weighted diluted number of shares     108.44  73.51    93.47    69.49
                                    ==================================

Notional, intergroup debt owed by
 the Carolina Group to the Loews
 Group
    December 31, 2006               $1,229.7
    December 31, 2005                1,626.9

(a) Includes excise taxes of $172.1, $164.7, $698.5 and $676.1 for the
     respective periods.
(b) Includes charges of $215.1, $218.2, $911.4 and $876.4 ($133.8,
     $135.7, $560.2 and $537.7 after taxes) to accrue obligations
     under the State Settlement Agreements for the respective periods.
(c) Includes restructuring costs of $3.7 and $20.1 for the three
     months and year ended December 31, 2006, related to early
     retirement and curtailment charges for Lorillard's pension and
     other postretirement benefit plans.
(d) Includes income from limited partnership investments of $9.2,
     $3.2, $25.8 and $16.0 ($5.8, $2.0, $15.9 and $9.8 after taxes)
     for the respective periods.
(e) The Loews Group's intergroup interest in the earnings of the
     Carolina Group reflected share equivalents amounting to
     65,445,000 shares of 173,770,806 share and share equivalents
     outstanding as of December 31, 2006 and share equivalents
     amounting to 95,445,000 shares of 173,632,130 share and share
     equivalents outstanding as of December 31, 2005. As of December
     31, 2006, there were 108,325,806 shares of Carolina Group stock
     outstanding.
(f) Represents 62.34%, 42.86%, 54.78% and 40.34% 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):

                                           December 31,
                            ------------------------------------------
                                Three Months         Years Ended
                            ------------------------------------------
                              2006      2005       2006       2005
                            ------------------------------------------

Full Price Brands

Total Newport               8,148,465 7,729,738 33,105,422 32,159,341
Total Kent Family             140,499   166,680    600,519    710,241
Total True                    120,600   137,772    509,831    574,752
Total Max                       8,172     9,531     33,723     39,268
Total Satin                       993     1,398      4,887      6,153
                            ------------------------------------------

Total Full Price Brands     8,418,729 8,045,119 34,254,382 33,489,755
                            ------------------------------------------

Price/Value Brands

Total Old Gold                196,010   200,982    803,669    834,501
Total Maverick                283,884   237,612  1,072,811    869,146
                            ------------------------------------------

Total Price/Value Brands      479,894   438,594  1,876,480  1,703,647
                            ------------------------------------------

Total Domestic Cigarettes   8,898,623 8,483,713 36,130,862 35,193,402

Total Puerto Rico and U.S.
 Possessions                  224,196   190,362    813,576    811,716
                            ------------------------------------------

Grand Total                 9,122,819 8,674,075 36,944,438 36,005,118
                            ==========================================

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
Senior Vice President
or
Candace Leeds, 212-521-2416
V.P. of Public Affairs
or
Investor Relations:
Darren Daugherty, 212-521-2788

SOURCE: Loews Corporation