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Carolina Group Reports Net Income for the Second Quarter of 2005

NEW YORK, Jul 28, 2005 (BUSINESS WIRE) -- Loews Corporation (NYSE:LTR) today reported Carolina Group net income for the 2005 second quarter of $142.1 million, compared to $121.4 million in the 2004 second quarter. Net income attributable to Carolina Group stock (NYSE:CG) for the second quarter of 2005 was $55.7 million, or $0.82 per share of Carolina Group stock, compared to $40.6 million, or $0.70 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 2005, as compared to the corresponding period of the prior year, reflects the sale by Loews Corporation of 10,000,000 shares of Carolina Group stock in December of 2004. Net income per share of Carolina Group stock was not impacted by the sale of Carolina Group stock in December of 2004. Carolina Group stock represents a 39.22% and 33.43% economic interest in the Carolina Group for the three months ended June 30, 2005 and 2004, respectively.

Net sales for the Carolina Group were $928.3 million in the second quarter of 2005, compared to $868.1 million in the 2004 second quarter, reflecting an increase in unit sales volume of 5.3%.

Carolina Group net income for the first half of 2005 was $260.6 million, compared to $224.4 million in the 2004 first half. Net income attributable to Carolina Group stock for the first half of 2005 was $102.2 million, or $1.50 per share of Carolina Group stock, compared to $75.0 million, or $1.29 per share in the comparable period of the prior year. The increase in net income attributable to Carolina Group stock reflects the December of 2004 sale by Loews Corporation of Carolina Group stock discussed above.

Net sales for the Carolina Group were $1.723 billion in the first half of 2005, compared to $1.636 billion in the comparable period of the prior year. The increase in net sales reflects an increase in unit sales volume of 2.9% and reduced sales promotion expenses (accounted for as a reduction in net sales).

Results of operations of the Carolina Group include interest expense of $21.0, $24.3, $43.4 and $48.9 million, net of taxes, for the three and six months ended June 30, 2005 and 2004, respectively, on notional intergroup debt. At June 30, 2005, $1.76 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, 2005, there were 68,034,559 shares of Carolina Group stock outstanding representing a 39.22% 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 2005 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, Thursday, July 28, 2005. 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
                          --------------------------------------------
                             2005       2004       2005       2004
                          --------------------------------------------
                          (Amounts in millions, except per share data)


Net sales (a)             $   928.3  $   868.1  $ 1,723.4  $  1,636.0

Cost of sales (a) (b)         574.4      532.3    1,061.1       999.6
Selling, advertising and
 administrative                97.2      103.3      187.2       203.3
                          --------------------------------------------

Total operating costs and
 expenses                     671.6      635.6    1,248.3     1,202.9
                          --------------------------------------------

Operating income              256.7      232.5      475.1       433.1
Investment income and
 other (c)                     18.3        6.5       30.5        15.0
Interest expense              (35.6)     (39.8)     (72.2)      (80.1)
                          --------------------------------------------

Income before income
 taxes                        239.4      199.2      433.4       368.0
Income taxes                   97.3       77.8      172.8       143.6
                          --------------------------------------------

Net income                    142.1      121.4      260.6       224.4
Earnings attributable to
 the Loews Group
 intergroup interest (d)       86.4       80.8      158.4       149.4
                          --------------------------------------------

Income attributable to
 Carolina Group
 shareholders (e)         $    55.7  $    40.6  $   102.2  $     75.0
                          ============================================

Per share of Carolina
 Group stock (f)          $    0.82  $    0.70  $    1.50  $     1.29
                          ============================================

Weighted diluted shares       68.10      57.98      68.08       57.99
                          ============================================

Notional, intergroup debt
 owed by the Carolina
 Group to the Loews Group
   June 30, 2005          $ 1,764.7
   December 31, 2004        1,871.2


(a) Includes excise taxes of $179.0, $169.5, $335.2 and $325.7 for the
    respective periods.
(b) Includes charges of $235.6, 234.3, $434.3 and $435.4 ($139.8,
    $142.8, $261.2 and $265.5 after taxes) to accrue obligations under
    the State Settlement Agreements for the respective periods.
(c) Includes $6.1 of interest income, in the second quarter of 2005,
    relating to a federal income tax settlement.
(d) The Loews Group's intergroup interest in the earnings of the
    Carolina Group reflected share equivalents amounting to
    105,445,000 shares of 173,478,759 share and share equivalents
    outstanding in 2005 and share equivalents amounting to 115,445,000
    shares of 173,411,750 share and share equivalents outstanding in
    2004. As of June 30, 2005, there were 68,034,559 shares of
    Carolina Group stock outstanding.
(e) Represents 39.22%, 33.43%, 39.21% and 33.43% of the economic
    interest in the Carolina Group for the respective periods
    presented.
(f) Earnings per common share-assuming dilution is not presented
    because securities that could potentially dilute basic earnings
    per share in the future would have been insignificant or
    antidilutive for the 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
                        ----------------------------------------------
                            2005       2004        2005       2004
                        ----------------------------------------------

Full Price Brands

Total Newport            8,603,782  8,102,336  16,125,476  15,482,294
Total Kent Family          188,805    225,173     363,300     435,622
Total True                 150,900    173,459     288,492     334,223
Total Max                   10,348     12,006      19,939      23,313
Total Satin                  1,617      2,133       3,213       4,227
Total Triumph                             358                     886
                        ----------------------------------------------

Total Full Price Brands  8,955,452  8,515,465  16,800,420  16,280,565
                        ----------------------------------------------

Price/Value Brands

Total Old Gold             221,103    234,240     412,422     453,054
Total Maverick             218,892    182,244     396,324     337,806
                        ----------------------------------------------

Total Price/Value Brands   439,995    416,484     808,746     790,860
                        ----------------------------------------------

Total Domestic
 Cigarettes              9,395,447  8,931,949  17,609,166  17,071,425

Total Puerto Rico and
 U.S. Possessions          220,620    199,476     387,384     411,340
                        ----------------------------------------------

Grand Total              9,616,067  9,131,425  17,996,550  17,482,765
                        ==============================================


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.

SOURCE: Carolina Group

Loews Corporation
Peter W. Keegan, 212-521-2950
Candace Leeds, 212-521-2416
 or
Investor Relations:
Joshua E. Kahn, 212-521-2788