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Carolina Group Reports Net Income for the Third Quarter of 2007

NEW YORK--(BUSINESS WIRE)--Oct. 29, 2007--Loews Corporation (NYSE:LTR) today reported Carolina Group net income for the 2007 third quarter of $233.6 million, compared to $202.9 million in the 2006 third quarter. The increase in net income is primarily due to higher effective unit prices resulting from a December 2006 price increase and lower sales promotion expenses (accounted for as a reduction to net sales), partially offset by an increase in expenses for the State Settlement Agreements.

Net income per share of Carolina Group stock (NYSE:CG) for the third quarter of 2007 was $1.34, compared to $1.17 in the comparable period of the prior year. Carolina Group stock represented a 62.4% and 58.1% economic interest in the Carolina Group for the three months ended September 30, 2007 and 2006, respectively.

Net sales for the Carolina Group were $1,043.8 million in the third quarter of 2007, compared to $986.0 million in the 2006 third quarter.

Carolina Group net income for the first nine months of 2007 was $649.4 million, compared to $540.2 million in the first nine months of 2006. The increase in net income is primarily due to higher effective unit prices resulting from a December 2006 price increase and lower sales promotion expenses (accounted for as a reduction to net sales), partially offset by an increase in expenses for the State Settlement Agreements.

Net income per share of Carolina Group stock for the first nine months of 2007 was $3.73, compared to $3.16 in the comparable period of the prior year.

Net sales for the Carolina Group were $3.012 billion in the first nine months of 2007, compared to $2.818 billion in the comparable period of the prior year.

Results of operations of the Carolina Group include interest expense on notional intergroup debt of $11.6 million, $17.5 million, $39.1 million and $54.9 million, net of taxes, for the three and nine months ended September 30, 2007 and 2006, respectively. At September 30, 2007, $829.1 million 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 September 30, 2007 there were 108,445,516 shares of Carolina Group stock outstanding, representing a 62.4% 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 third quarter of 2007 is being issued contemporaneously with this report.

A conference call to discuss the third quarter results of Loews Corporation has been scheduled for 11:00 a.m. EDT, Monday, October 29, 2007. A live webcast 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.

Carolina Group
Financial Review


                                            September 30,
                                --------------------------------------
                                   Three Months        Nine Months
                                --------------------------------------
                                  2007      2006     2007      2006
                                --------------------------------------
                                (Amounts in millions, except per share
                                                 data)


Net sales (a)                   $1,043.8  $ 986.0  $3,012.2  $2,818.1

Cost of sales (a) (b)              613.9    573.7   1,771.7   1,638.0
Selling, advertising and
 administrative (c)                 81.7     83.6     246.5     285.4
                                --------------------------------------

Total operating costs and
 expenses                          695.6    657.3   2,018.2   1,923.4
                                --------------------------------------

Operating income                   348.2    328.7     994.0     894.7
Investment income and other (d)     36.0     29.7      96.7      77.0
Interest expense                   (19.3)   (28.3)    (65.5)    (89.6)
                                --------------------------------------

Income before income taxes         364.9    330.1   1,025.2     882.1
Income taxes                       131.3    127.2     375.8     341.9
                                --------------------------------------

Net income                         233.6    202.9     649.4     540.2
Earnings attributable to the
 Loews Group intergroup interest
 (e)                                87.9     85.0     244.4     260.9
                                --------------------------------------

Income attributable to Carolina
 Group shareholders (f)         $  145.7  $ 117.9  $  405.0  $  279.3
                                ======================================

Per share of Carolina Group
 stock                          $   1.34  $  1.17  $   3.73  $   3.16
                                ======================================

Weighted diluted number of
 shares                           108.58   100.59    108.55     88.43
                                ======================================

Notional, intergroup debt owed
 by the Carolina Group to the
 Loews Group
    September 30, 2007          $  829.1
    December 31, 2006            1,229.7

(a) Includes excise taxes of $180.7, $185.8, $522.4 and $526.4 for the
     respective periods.
(b) Includes charges of $277.1, $242.8, $801.4 and $696.3 ($177.5,
     $149.3, $507.6 and $426.4 after taxes) to accrue obligations
     under the State Settlement Agreements for the respective periods.
(c) Includes restructuring costs of $0.9 and $16.4 for the three and
     nine months ended September 30, 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 $11.5,
     $6.2, $30.8 and $16.6 ($7.4, $3.8, $19.5 and $10.1 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 173,890,516 share and share equivalents
     outstanding as of September 30, 2007 and share equivalents
     amounting to 65,445,000 shares of 173,754,871 share and share
     equivalents outstanding as of September 30, 2006. As of September
     30, 2007, there were 108,445,516 shares of Carolina Group stock
     outstanding.
(f) Represents 62.4%, 58.1%, 62.4% and 51.7% of the economic interest
     in the Carolina Group for the respective periods.
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):

                                           September 30,
                             -----------------------------------------
                                Three Months          Nine Months
                             -----------------------------------------
                               2007      2006       2007       2006
                             -----------------------------------------

Full Price Brands

Total Newport                8,674,317 8,818,802 25,122,346 24,956,957
Total Kent Family              126,111   155,001    370,818    460,020
Total True                     114,803   133,367    334,913    389,231
Total Max                        7,299     8,418     22,020     25,551
Total Satin                                1,224         72      3,894
                             -----------------------------------------

Total Full Price Brands      8,922,530 9,116,812 25,850,169 25,835,653
                             -----------------------------------------

Price/Value Brands

Total Old Gold                 157,920   212,550    469,478    607,659
Total Maverick                 385,492   293,195  1,007,008    788,927
                             -----------------------------------------

Total Price/Value Brands       543,412   505,745  1,476,486  1,396,586
                             -----------------------------------------

Total Domestic Cigarettes    9,465,942 9,622,557 27,326,655 27,232,239

Total Puerto Rico and U.S.
 Possessions                   190,050   189,348    592,794    589,380
                             -----------------------------------------

Grand Total                  9,655,992 9,811,905 27,919,449 27,821,619
                             =========================================

Notes:

1. This information 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: For Carolina Group:
Peter W. Keegan, 212-521-2950
Chief Financial Officer
or
Investor Relations:
Darren Daugherty, 212-521-2788
or
Public Affairs:
Candace Leeds, 212-521-2416

SOURCE: Carolina Group