1.0.0.3 false Basis of Presentation false 1 $ false false Shares Standard http://www.xbrl.org/2003/instance shares xbrli 0 USD Standard http://www.xbrl.org/2003/iso4217 USD iso4217 0 USDEPS Divide http://www.xbrl.org/2003/iso4217 USD iso4217 http://www.xbrl.org/2003/instance shares xbrli 0 2 Basis of Presentation [Abstract] 0 us-gaap_GeneralPoliciesAbstract us-gaap true na duration string No definition available. false false false false false true false false false 1 false false 0 0 false false No definition available. false 3 Basis of Presentation 1 us-gaap_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock us-gaap true na duration string No definition available. false false false false false false false false false 1 false false 0 0   <div style="font-family: 'Times New Roman',Times,serif">  <div align="center" style="font-size: 10pt; margin-top: 0pt"><b> </b> </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>1. Basis of Presentation</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     <i>Overview. </i>Lorillard, Inc., through its subsidiaries, is engaged in the manufacture and sale of cigarettes. Its principal products are marketed under the brand names of Newport, Kent, True, Maverick and Old Gold with substantially all of its sales in the United States of America. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     The consolidated condensed financial statements of Lorillard, Inc. (the “Company”), together with its subsidiaries (“Lorillard”), include the accounts of the Company and its subsidiaries after the elimination of intercompany accounts and transactions. The Company manages its operations on the basis of one reportable segment through its principal subsidiary, Lorillard Tobacco Company (“Lorillard Tobacco”). </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     On May 7, 2008, the Company amended its certificate of incorporation to effect a 1,739,234.29 for 1 stock split of its 100 shares of common stock then outstanding. All common share and per share information has been retroactively adjusted for the periods presented. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     On June 10, 2008, Loews Corporation (“Loews”) distributed 108,478,429 shares of common stock of the Company in exchange for and in redemption of all 108,478,429 outstanding shares of Loews’ Carolina Group stock, as described in the Registration Statement (File No. 333-149051) on Form S-4 filed with the Securities and Exchange Commission (the “SEC”) under the Securities act of 1933, as amended (the “Separation”). Pursuant to the terms of the Exchange Offer, described in the Registration Statement, on June 16, 2008, Loews accepted 93,492,857 shares of Loews common stock in exchange for 65,445,000 shares of the Company’s common stock. As a result of such distributions, Loews ceased to own any equity interest in the Company and the Company became an independent publicly held company. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Prior to the Separation, Lorillard was included in the Loews consolidated federal income tax return, and federal income tax liabilities were included on the balance sheet of Loews. Under the terms of the pre-Separation Tax Allocation Agreement between Lorillard and Loews, the Company made payments to, or was reimbursed by, Loews for the tax effects resulting from its inclusion in Loews’ consolidated federal income tax return. As of September 30, 2009, Loews reimbursed Lorillard $14 million related to pre-Separation tax benefits and payments. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     <i>Basis of Presentation. </i>The accompanying unaudited consolidated condensed financial statements reflect all adjustments necessary to present fairly the financial position as of September 30, 2009 and December 31, 2008 and the consolidated income, shareholders’ equity and cash flows for the three and nine months ended September 30, 2009 and 2008. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Results of operations for the three months and nine months for each of the years reported herein are not necessarily indicative of results of operations of the entire year. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     These consolidated condensed financial statements should be read in conjunction with the Consolidated Financial Statements and related Notes to Consolidated Financial Statements presented in the Company’s Annual Report on Form 10-K for the year ended December 31, 2008, filed with the SEC on March 2, 2009 and, as amended, in the Company’s Current Report on Form 8-K, filed with the SEC on June 11, 2009. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     In September 2009, the unaudited consolidated condensed statements of income for the three and nine months ended September 30, 2008 were revised by an immaterial amount from the consolidated condensed statements of income for the three and nine months ended September 30, 2008 filed with the SEC on November 4, 2008. The revised amounts include reclassifications of $2 million and $5 million from selling, general and administrative expense to cost of sales to more accurately reflect manufacturing costs for the three and nine month periods, respectively. There was no impact on operating income or net income. </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 6pt">     The immaterial change also impacted the unaudited condensed consolidating statements of income for the three and nine months ended September 30, 2008. The reclassification occurred on the Issuer’s statements of income in the amounts stated above. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     <i>Recently adopted accounting pronouncements. </i>Lorillard adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 105 “The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles” and FASB Accounting Standards Update (“ASU”) 2009-01 “Topic 105—Generally Accepted Accounting Principles—amendments based on Statement of Financial Accounting Standards No. 168—The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles.” The Codification is the sole source of authoritative GAAP for nongovernmental entities and includes applicable SEC rules as sources of authoritative GAAP for SEC registrants. The effective date is for interim and annual periods ending after September 15, 2009. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Lorillard adopted FASB ASC Paragraph 260-10-45-60 “Participating Securities and the Two-Class Method.” ASC 260-10-45-60 addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting and, therefore, need to be included in the earnings allocation in computing earnings per share. This interpretation was effective for financial statements issued for fiscal years beginning after December 15, 2008 and interim periods within those years. The adoption of ASC 260-10-45-60 did not have a material impact on Lorillard’s financial position or results of operations. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Lorillard adopted FASB ASC Topic 808 “Collaborative Arrangements.” ASC 808 defines a collaborative arrangement as an arrangement where the parties are active participants and have exposure to significant risks. Transactions with third parties should be classified in the financial statements in the appropriate category according to ASC Subtopic 605-45 “Principal Agent Considerations.” Payments between the partners of the collaborative agreement should be categorized based on the terms of the agreement, business operations and authoritative literature. ASC 808 was effective for fiscal years beginning after December 15, 2008. The adoption of ASC 808 did not have a material impact on Lorillard’s financial position or results of operations. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Lorillard adopted FASB ASC Section 815-10-50 “Disclosures about Derivative Instruments and Hedging Activities — an amendment of FASB Statement No. 133.” ASC 815-10-50 requires qualitative disclosures about the objectives and strategies for using derivatives; quantitative data about the fair value of, and gains and losses on, derivative contracts; and details of credit-risk-related contingent features in hedged positions. ASC 815-10-50 also requires enhanced disclosure around derivative instruments in financial statements accounted for under ASC Subtopic 815-20, “Accounting for Derivative Instruments and Hedging Activities,” and how hedges affect an entity’s financial position, financial performance and cash flows. ASC 815-10-50 was effective for fiscal years and interim periods beginning after November 15, 2008. Lorillard adopted ASC 815-10-50 in September 2009. See Note 8 for additional information on derivatives. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Lorillard adopted FASB ASC Topic 820 “Fair Value Measurements and Disclosures” on January 1, 2008, utilizing the one year deferral that was granted for the implementation of ASC 820 for all nonrecurring fair value measurements of non-financial assets and liabilities. The one year deferral expired on January 1, 2009. ASC 820 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. The adoption of ASC 820 did not have a material impact on Lorillard’s financial position or results of operations. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Lorillard adopted FASB ASC Section 820-10-35 “Determining the Fair Value of a Financial Asset When the Market for that Asset is Not Active.” ASC 820-10-35 clarifies the application of ASC 820 (described above) in a market that is not active. The effective date for ASC 820-10-35 was October 10, 2008. The adoption of ASC 820-10-35 did not have a material impact on Lorillard’s financial position or results of operations. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Lorillard adopted FASB ASC Section 820-10-65 “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly.” ASC 820-10-65 includes factors for evaluating if a market has a significant decrease in the volume and level of activity. If there has been a decrease, then the entity must do further analysis of the transactions or quoted prices to determine if the transactions were orderly. The entity cannot ignore available information and should apply appropriate risk adjustments in the fair value calculation. The effective date was for interim periods ending after June 15, 2009. The adoption of ASC 820-10-65 did not have a material impact on Lorillard’s financial position or results of operations. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Lorillard adopted FASB ASC Section 825-10-65 “Interim Disclosures about Fair Value of Financial Instruments.” ASC 825-10-65 requires interim disclosures on the fair value of financial instruments. The effective date was for interim periods ending after June 15, 2009. The adoption of ASC 825-10-65 did not have a material impact on Lorillard’s financial position or results of operations. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Lorillard adopted FASB ASC Topic 855 “Subsequent Events,” which sets forth (1) the period after the balance sheet date during which management of a reporting entity shall evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements, (2) the circumstances under which an entity shall recognize events or transactions occurring after the balance sheet date in its financial statements and (3) the disclosures that an entity shall make about events or transactions that occurred after the balance sheet date. ASC 855 applies to the accounting for and disclosure of subsequent events not addressed in other applicable generally accepted accounting principles (GAAP). ASC 855 was effective for financial statements issued for interim periods and fiscal years ending after June 15, 2009. The adoption of ASC 855 did not have a material impact on Lorillard’s financial position or results of operations. Lorillard has evaluated subsequent events through October 29, 2009, the date the consolidated condensed financial statements were issued. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Lorillard adopted FASB ASU 2009-02 “Omnibus Update—Amendments to Various Topics for Technical Corrections,” which made multiple technical corrections to the FASB Accounting Standards Codification. ASU 2009-02 did not have a material impact on Lorillard’s financial position or results of operations. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Lorillard adopted FASB ASU 2009-03 “SEC Update—Amendments to Various Topics Containing SEC Staff Accounting Bulletins.” ASU 2009-03 contains various technical corrections to the Accounting Standards Codification for the SEC sections. ASU 2009-03 did not have a material impact on Lorillard’s financial position or results of operations. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Lorillard adopted FASB ASU 2009-05 “Fair Value Measurements and Disclosures (Topic 820)—Measuring Liabilities at Fair Value.” Fair value of liabilities is defined as a price in an orderly transaction between market participants, but often liabilities are not transferred in the market due to significant restrictions. If a quoted price in an active market is available, it should be used and disclosed as a level 1 valuation. When that is not available, an entity can use either a) the quoted price of an identical liability when traded as an asset in an active or inactive market, b) the quoted price for similar liabilities traded as assets in an active market or c) a valuation technique, such as the income or present value approaches. No adjustments should be made for the existence of contractual restrictions that prevent transfer. The update is effective for the first period after the issue date of August 2009. ASU 2009-05 did not have a material impact on Lorillard’s financial position or results of operations. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Lorillard adopted FASB ASU 2009-07 “Accounting for Various Topics—Technical Corrections to SEC Paragraphs (SEC Update).” ASU 2009-07 contains various technical corrections to the Accounting Standards Codification for the SEC sections. ASU 2009-07 did not have a material impact on Lorillard’s financial position or results of operations. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     <i>Accounting pronouncements not yet adopted</i>. Lorillard is evaluating FASB ASC Section 718-10-35 “Employers’ Disclosures about Postretirement Benefit Plan Assets.” ASC 718-10-35 requires disclosure of investment policies and strategies in narrative form. ASC 718-10-35 also requires employer disclosure on the fair value of plan assets, including (a) the level in the fair value hierarchy, (b) a reconciliation of beginning and ending fair value balances for Level 3 assets and (c) information on inputs and valuation techniques. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Lorillard is evaluating FASB ASU 2009-12 “Fair Value Measurements and Disclosures (Topic 820): Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent).” ASU 2009-12 states that if an entity is able to redeem the investment with the investee at the net asset value (NAV) per share, the investment is a level 2 measurement. If the investment can not be redeemed at NAV, then it is a level 3 measurement. If there is a length of time before the entity can redeem the investment at NAV, the time period should be factored into the decision of whether it is a level 2 or 3 measurement. The disclosures, by major asset category, should include a) the fair value of the investments and significant investment strategies, b) an estimate of the period over which the investee may liquidate the underlying investments, c) the amount of unfunded commitments, d) a description of redemption terms and conditions and e) the circumstances for when an investment might not be redeemable. </div> </div>  <!-- Begin Block Tagged Note false false No definition available. No authoritative reference available. false false 1 2 false UnKnown UnKnown UnKnown false true