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0000950123-11-015424.txt : 20110218
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20110218080903
ACCESSION NUMBER: 0000950123-11-015424
CONFORMED SUBMISSION TYPE: 10-K
PUBLIC DOCUMENT COUNT: 15
CONFORMED PERIOD OF REPORT: 20101231
FILED AS OF DATE: 20110218
DATE AS OF CHANGE: 20110218
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: LORILLARD, INC.
CENTRAL INDEX KEY: 0001424847
STANDARD INDUSTRIAL CLASSIFICATION: CIGARETTES [2111]
IRS NUMBER: 131911176
STATE OF INCORPORATION: DE
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: 10-K
SEC ACT: 1934 Act
SEC FILE NUMBER: 001-34097
FILM NUMBER: 11622712
BUSINESS ADDRESS:
STREET 1: 714 GREEN VALLEY ROAD
CITY: GREENSBORO
STATE: NC
ZIP: 27408
BUSINESS PHONE: 336.335.7000
MAIL ADDRESS:
STREET 1: 714 GREEN VALLEY ROAD
CITY: GREENSBORO
STATE: NC
ZIP: 27408
10-K
1
g25358e10vk.htm
FORM 10-K
e10vk
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended
December 31, 2010
OR
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE
SECURITIES EXCHANGE ACT OF 1934
For the Transition Period
From to
Commission File Number:
001-34097
Lorillard, Inc.
(Exact name of registrant as
specified in its charter)
Delaware
13-1911176
(State or other jurisdiction
of
incorporation or organization)
(I.R.S. Employer
Identification No.)
714 Green Valley Road,
Greensboro, North Carolina (Address of principal
executive offices)
27408-7018 (Zip
Code)
(336) 335-7000
(Registrants telephone number, including area code)
Securities registered pursuant to Section 12(b) of the
Act:
Title of Each Class
Name of Each Exchange on Which Registered
Common Stock, $0.01 par value
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the
Act:
None
Indicate by check mark if the registrant is a well-known
seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes þ No o
Indicate by check mark if the registrant is not required to file
reports pursuant to Section 13 or Section 15(d) of the
Act. Yes o No þ
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been
subject to such filing requirements for the past
90 days. Yes þ No o
Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Website, if any,
every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of
Regulation S-T
(§ 232.405 of this chapter) during the preceding
12 months (or for such shorter period that the registrant
was required to submit and post such
files). Yes þ No o
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of
Regulation S-K
is not contained herein, and will not be contained, to the best
of registrants knowledge, in definitive proxy or
information statements incorporated by reference in
Part III of this
Form 10-K
or any amendment to this
Form 10-K. o
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See the definitions of
large accelerated filer, accelerated
filer and smaller reporting company in Rule
12b-2 of the
Exchange Act. (Check one):
Large
accelerated
filer þ
Accelerated
filer o
Non-accelerated
filer o
Smaller
reporting
company o
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company
(as defined in
Rule 12b-2
of the
Act). Yes o No þ
The aggregate market value of voting and non-voting common
equity of the registrant held by nonaffiliates of the registrant
as of June 30, 2010 was $10.9 billion.
Class
Outstanding at February 11, 2011
Common Stock, $0.01 par value
145,552,670 shares
DOCUMENTS
INCORPORATED BY REFERENCE:
Portions of the definitive proxy statement for the
registrants 2011 Annual Meeting of Shareholders to be held
on May 19, 2011 are incorporated by reference into
Part III hereof.
Unless otherwise indicated or the context otherwise requires,
references to Lorillard, we,
us and our refer to Lorillard, Inc., a
Delaware corporation, and its subsidiaries. Lorillard,
Inc. refers solely to the parent company and
Lorillard Tobacco refers solely to Lorillard Tobacco
Company, the principal subsidiary of Lorillard, Inc.
FORWARD-LOOKING
STATEMENTS
Investors are cautioned that certain statements contained in
this Annual Report on
Form 10-K
are forward-looking statements. Forward-looking
statements include, without limitation, any statement that may
project, indicate or imply future results, events, performance
or achievements, and may contain the words expect,
intend, plan, anticipate,
estimate, believe, will be,
will continue, will likely result and
similar expressions. In addition, any statement concerning
future financial performance (including future revenues,
earnings or growth rates), ongoing business strategies or
prospects, and possible actions taken by us, which may be
provided by our management team are also forward-looking
statements as defined by the Private Securities Litigation
Reform Act of 1995.
Forward-looking statements are based on current expectations and
projections about future events and are inherently subject to a
variety of risks and uncertainties, many of which are beyond the
control of our management team, which could cause actual results
to differ materially from those anticipated or projected. These
risks and uncertainties include, among others:
the impact of regulatory initiatives, including the regulation
of cigarettes and a possible ban or regulation of menthol by the
Food and Drug Administration, and compliance with governmental
regulations;
the outcome of pending or future litigation, including risks
associated with adverse jury and judicial determinations, courts
reaching conclusions at variance with the general understandings
of applicable law, bonding requirements and the absence of
adequate appellate remedies to get timely relief from any of the
foregoing;
health concerns, claims, regulations and other restrictions
relating to the use of tobacco products and exposure to
environmental tobacco smoke;
the effect on pricing and consumption rates of legislation,
including actual and potential federal and state excise tax
increases, and tobacco litigation settlements;
continued intense competition from other cigarette
manufacturers, including significant levels of promotional
activities and the presence of a sizable deep discount category;
the continuing decline in volume in the domestic cigarette
industry;
the increasing restrictions on the marketing and use of
cigarettes through governmental regulation and privately imposed
smoking restrictions;
general economic and business conditions;
changes in financial markets (such as interest rate, credit,
currency, commodities and equities markets) or in the value of
specific investments;
the availability of financing upon favorable terms, the results
of our financing efforts and the impact of any breach of a debt
covenant or a credit rating downgrade;
potential changes in accounting policies by the Financial
Accounting Standards Board, the Securities and Exchange
Commission (the SEC) or regulatory agencies for the
industry in which we participate that may cause us to revise our
financial accounting
and/or
disclosures in the future, and which may change the way analysts
measure our business or financial performance;
the risk of fire, violent weather or other disasters adversely
affecting our production, storage and other facilities;
changes in the price, quality or quantity of tobacco leaf and
other raw materials available for use in our cigarettes;
reliance on a limited number of suppliers for certain raw
materials;
our ability to attract and retain the best talent to implement
our strategies as a result of the decreasing social acceptance
of cigarettes; and
the closing of any contemplated transactions and agreements.
Adverse developments in any of these factors, as well as the
risks and uncertainties described in Item 1.
Business, Item 1A. Risk Factors,
Item 7. Managements Discussion and Analysis of
Financial Condition and Results of Operations
Business Environment and elsewhere in this Annual Report
on
Form 10-K,
could cause our results to differ materially from results that
have been or may be anticipated or projected. Forward-looking
statements speak only as of the date of this Annual Report on
Form 10-K
and we expressly disclaim any obligation or undertaking to
update these statements to reflect any change in expectations or
beliefs or any change in events, conditions or circumstances on
which any forward-looking statement is or may be based.
INTRODUCTORY
NOTE
For periods presented in this Annual Report on
Form 10-K
prior to June 10, 2008, Lorillard, Inc. was a wholly-owned
subsidiary of Loews Corporation (Loews), a publicly
traded company listed on the New York Stock Exchange (the
NYSE). Our results of operations and financial
condition were included as a separate reporting segment in
Loewss financial statements and filings with the SEC.
Beginning in 2002 and through June 10, 2008, Loews had also
issued a separate class of its common stock, referred to as the
Carolina Group Stock, to track the economic
performance of Loewss 100% interest in Lorillard, Inc. and
certain liabilities, costs and expenses of Loews and Lorillard
arising out of or related to tobacco or tobacco-related
businesses. On June 10, 2008, we began operating as an
independent, publicly traded company pursuant to our separation
from Loews (the Separation). In connection with the
Separation, we entered into a Separation Agreement with Loews to
provide for the separation of our business from Loews as well as
providing for indemnification and allocation of taxes between
the parties.
Lorillard is the third largest manufacturer of cigarettes in the
United States. Founded in 1760, Lorillard is the oldest
continuously operating tobacco company in the United States.
Newport, our flagship menthol flavored premium cigarette brand,
is the top selling menthol and second largest selling cigarette
brand overall in the United States based on gross units sold in
2010. The Newport brand accounted for approximately 90.0% of our
sales revenue for the fiscal year ended December 31, 2010.
In addition to the Newport brand, our product line has four
additional brand families marketed under the Kent, True,
Maverick, and Old Gold brand names. These five brands include 43
different product offerings which vary in price, taste, flavor,
length and packaging. In 2010, we shipped 38.1 billion
cigarettes, all of which were sold in the United States and
certain U.S. possessions and territories. We sold our major
trademarks outside of the United States in 1977. We maintain our
headquarters and manufacture all of our products at our
Greensboro, North Carolina facility.
We produce cigarettes for both the premium and discount segments
of the domestic cigarette market. We do not compete in a
subcategory of the discount segment that we identify as the deep
discount segment. Premium brands are well known, established
brands marketed at higher retail prices. Discount brands are
generally less well recognized brands marketed at lower retail
prices. We define the deep discount subcategory to include
brands sold at the lowest retail prices. Deep discount
cigarettes are typically manufactured by smaller companies,
relative to us and other major U.S. manufacturers, many of
which have no, or significantly lower, payment obligations under
the State Settlement Agreements, consisting of the Master
Settlement Agreement among major tobacco manufacturers and
46 states and various other governments and jurisdictions
(the MSA) and the settlements of similar claims
brought by Mississippi, Florida, Texas and Minnesota.
Advertising
and Sales Promotion
The predominant form of promotion in the industry and for us
consists of retail price reduction programs, such as discounting
or lowering the price of a pack or carton of cigarettes in the
retail store. These programs are developed, implemented and
executed by our sales force through merchandising or promotional
agreements with retail chain accounts and independent retailers.
We focus our retail programs in markets and stores reflecting
unique potential for increased menthol sales. Our direct buying
wholesale customers provide us with information as to the
quantities of cigarettes shipped to their retail accounts on a
weekly basis. This data covers approximately 99% of wholesale
units shipped by us and our major competitors, and enables us to
analyze, plan and execute retail promotion programs in markets
and stores that optimize the most efficient and effective return
on our promotional investments.
We employ other promotion methods to communicate with our adult
consumers as well as with adult smokers of our competitors
products. These promotional programs include the use of direct
marketing communications, retail coupons, relationship marketing
and promotional materials intended to be displayed at retail.
Relationship marketing entails the use of various communication
techniques to directly reach adult consumers in order to
establish a relationship with them for the purpose of
advertising and promoting a product or products. We use our
proprietary database of smokers of our brands and smokers of our
competitors brands to reach adult consumers with targeted
communications about a given brand through age-restricted direct
mail and internet programs. We regularly review the results of
our promotional spending activities and adjust our promotional
spending programs in an effort to maintain our competitive
position. Accordingly, sales promotion costs in any particular
fiscal period are not necessarily indicative of costs that may
be realized in subsequent periods.
Advertising plays a relatively lesser role in our overall
marketing strategy. We advertise Newport in a limited number of
magazines that meet certain requirements regarding the age and
composition of their readership. Newport is our only brand that
receives magazine advertising support.
Advertising of tobacco products through television and radio has
been prohibited since 1971. Under the State Settlement
Agreements, the participating cigarette manufacturers agreed to
severe restrictions on their advertising and promotion
activities including, among other things:
prohibiting the targeting of youth in the advertising, promotion
or marketing of tobacco products;
banning the use of cartoon characters in all tobacco advertising
and promotion;
limiting each tobacco manufacturer to one brand-name event
sponsorship during any twelve-month period, which may not
include major team sports or events in which the intended
audience includes a significant percentage of youth;
banning all outdoor advertising of tobacco products with the
exception of small signs at retail establishments that sell
tobacco products;
banning tobacco manufacturers from offering or selling apparel
and other merchandise that bears a tobacco brand name, subject
to specified exceptions;
prohibiting the distribution of free samples of tobacco products
except within adult-only facilities;
prohibiting payments for tobacco product placement in various
media; and
banning gift offers based on the purchase of tobacco products
without sufficient proof that the intended gift recipient is an
adult.
On June 22, 2009 the federal Family Smoking Prevention and
Tobacco Control Act (the FSPTCA) was signed into law
granting authority over the regulation of tobacco products to
the FDA. Pursuant to the FSPTCA, the FDA reissued a set of
marketing and sales restrictions originally promulgated in 1995
as part of an unsuccessful effort by the agency to assert
jurisdiction over tobacco products. The FSPTCA also contains
other restrictions, some of which may be more stringent than
those found in the original 1995 FDA rule, affecting the
advertising, marketing and sale of cigarette products. See the
section entitled Legislation and Regulation below
for additional information concerning the marketing and sales
provisions of the FSPTCA. In addition, many states, cities and
counties have enacted legislation or regulations further
restricting tobacco advertising, marketing and sales promotions,
and others may do so in the future. We cannot predict the impact
of such initiatives on our marketing and sales efforts.
We fund a Youth Smoking Prevention Program, which is designed to
discourage youth from smoking by promoting parental involvement
and assisting parents in discussing the issue of smoking with
their children. We are also a founding member of the Coalition
for Responsible Tobacco Retailing which through its We
Card program trains retailers in how to prevent the
purchase of cigarettes by underage persons. In addition, we have
adopted guidelines established by the National Association of
Attorneys General to restrict advertising in magazines with
large readership among people under the age of 18.
Customers
and Distribution
Our field sales personnel are based throughout the United
States, and we maintain field sales offices in major cities
throughout the United States. Our sales department is divided
into regions based on geography and sales territories. We sell
our products primarily to wholesale distributors, who in turn
service retail outlets, chain store organizations, and
government agencies, including the U.S. Armed Forces. Upon
completion of the manufacturing process, we ship cigarettes to
public distribution warehouse facilities for rapid order
fulfillment to wholesalers and other direct buying customers. We
retain a portion of our manufactured cigarettes at our
Greensboro central distribution center and Greensboro
cold-storage facility for future finished goods replenishment.
As of December 31, 2010, we had approximately 500 direct
buying customers servicing more than 400,000 retail accounts. We
do not sell cigarettes directly to consumers. During 2010, 2009
and 2008, sales made by us to the McLane Company, Inc. comprised
27%, 26% and 26%, respectively, of our revenues. No other
customer accounted for more than 10% of 2010, 2009 or 2008
sales. We do not have any written sales agreements with our
customers, including the McLane Company, Inc. We do not have any
backlog orders.
Most of our customers buy cigarettes on a
next-day-delivery
basis. Customer orders are shipped from public distribution
warehouses via third party carriers. We do not ship products
directly to retail stores. In 2010, approximately 98% of our
customers purchased cigarettes using electronic funds transfer,
which provides immediate payment to us.
Raw
Materials and Manufacturing
In our production of cigarettes, we use domestic and foreign
grown burley and flue-cured leaf tobaccos, as well as aromatic
tobaccos grown primarily in Turkey and other Near Eastern
countries. We believe that there is an adequate supply of
tobacco leaf of the type and quality we require at competitive
prices from a combination of global sources, and that we are not
dependent on any one geographic region or country for our
requirements. An affiliate of Reynolds American Inc.
(RAI) manufactures all of our reconstituted tobacco
pursuant to our specifications, as set forth in the agreement
between us and RAI. Reconstituted tobacco is a form of tobacco
material manufactured as a paper-like sheet from small pieces of
tobacco that are too small to incorporate into the cigarette
directly and may include some tobacco stems, and which is used
as a component of cigarette blends.
We purchase our tobacco leaf through tobacco dealers, which
contract with leaf growers. Such purchases are made at
prevailing market prices in the country of origin. Due to the
varying size and quality of annual crops, changes in the value
of the U.S. dollar in relation to other foreign currencies
and other economic factors, tobacco prices have historically
fluctuated. We direct these dealers in the purchase of tobacco
according to our specifications for quality, grade, yield,
particle size, moisture content, and other characteristics. The
dealers purchase and process the whole leaf and then dry and
package it for shipment to and storage at our Danville, Virginia
facility. We have not experienced any difficulty in purchasing
our requirement of leaf tobacco.
We purchase more than 66% of our domestic leaf tobacco from one
dealer, Alliance One International, Inc. (Alliance
One). If Alliance One becomes unwilling or unable to
supply leaf tobacco to us, we believe that we can readily obtain
high-quality leaf tobacco from well-established, alternative
industry sources. However, we believe that such high-quality
leaf tobacco may not be available at prices comparable to those
we pay to Alliance One.
We store our tobacco in 29 storage warehouses on our
130-acre Danville,
Virginia facility. To protect against loss, amounts of all types
and grades of tobacco are stored in separate warehouses. Certain
types of tobacco used in our blends must be allowed to mature
over time to allow natural chemical changes that enhance certain
characteristics affecting taste. Because of these aging
requirements, we maintain large quantities of leaf tobacco at
all times. We believe our current tobacco inventories are
sufficient and adequately balanced for our present and expected
production requirements. If necessary, we can typically purchase
aged tobacco in the open market to supplement existing
inventories.
We produce cigarettes at our Greensboro, North Carolina
manufacturing plant, which has a production capacity of
approximately 200 million cigarettes per day and
approximately 50 billion cigarettes per year. Through
various automated systems and sensors, we actively monitor all
phases of production to promote quality and compliance with
applicable regulations.
Research
and Development
We have an experienced research and development team that
continuously evaluates new products and line extensions and
assesses new technologies and scientific advancements to be able
to respond to marketplace demands and developing regulatory
requirements. Our research and development efforts focus
primarily on:
developing quality products that appeal to adult consumers;
studying and developing consumer-acceptable products with the
potential for reduced exposure to smoke constituents or reduced
health risk;
identifying and investigating, through the use of internal and
external resources, suspect constituents of cigarette products
or their components to determine the feasibility of reduction or
elimination;
maintaining
state-of-the-art
knowledge about public health and scientific issues related to
cigarette products;
developing new, or modifying existing, products and processes to
promote quality control and to comply with current and
anticipated laws and regulations; and
collaborating and cooperating with outside public and private
scientific institutions and encouraging independent research
relating to cigarette products.
Tobacco-related research activities include: analysis of
cigarette components, including cigarette paper, filters,
tobacco and ingredients, including menthol; analysis of
mainstream and sidestream smoke; and modification of cigarette
design. We employ advanced scientific equipment in our research
efforts, including gas chromatographs, mass spectrographs and
liquid chromatographs. We use this equipment to structurally
identify and measure the amount of chemical compounds found in
cigarette smoke and various tobaccos. These measurements allow
us to better understand the relationship between the tobacco,
cigarette construction, and the smoke yielded from cigarettes.
In addition, advanced biological techniques are developed and
used to test the biological impact of tobacco smoke on cells and
advance our understanding of potential biomarkers for disease
risk.
Information
Technology
We are committed to the use of information technology throughout
the organization to provide operating effectiveness, cost
reduction and competitive advantages. We believe our system
platform provides the appropriate level of information in a
timely fashion to effectively manage the business. We utilize
proven technologies while also continuously exploring new
technologies consistent with our information technology
architecture strategy. Our information technology environment is
anchored by an SAP enterprise resource planning
(ERP) system designed to meet the processing and
analysis needs of our core business operations and financial
control requirements. The process control and production methods
in our manufacturing operation utilize scanning, radio frequency
identification, wireless technologies and software products to
monitor and control the manufacturing process. Our primary data
center is located at our corporate headquarters and is staffed
by an in-house team of experienced information technology
professionals. A satellite data center, located at our
manufacturing facility, supports our manufacturing environment.
In addition, we have a comprehensive redundancy and disaster
recovery plan in place.
Employees
As of December 31, 2010, we had approximately
2,700 full-time employees. As of that date, approximately
1,000 of those employees were represented by labor unions
covered by three collective bargaining agreements. Local
Union #317T Greensboro of the Bakery, Confectionery,
Tobacco Workers and Grain Millers International Union
(AFL-CIO-CLC) represents workers at our Greensboro manufacturing
plant. The agreement covering this Union expires in September
2011. Workers at our Danville, Virginia tobacco storage facility
are also represented by Local Union #317T Danville of the
Bakery, Confectionery, Tobacco Workers and Grain Millers
International Union (AFL-CIO-CLC) and Local Union #513 of
the National Conference of Firemen and Oilers/SEIU
(AFL-CIO-CLC). The current agreements with Local
Union #317T Danville and Local Union #513 will expire
in April 2012. We have historically had an amicable relationship
with the unions representing our employees.
We provide a retirement plan, a profit sharing plan and other
benefits for our hourly paid employees who are represented by
unions. In addition, we provide to our salaried employees a
retirement plan, group life, disability and health insurance
program and a savings plan. We also maintain an incentive
compensation plan for certain salaried employees.
We believe that our trademarks, including brand names, are
important to our business. We own the patents, trade secrets,
know-how and trademarks, including our brand names and the
distinctive packaging and displays, used by us in our business.
All of our material trademarks are registered with the
U.S. Patent and Trademark Office. Rights in these
trademarks in the United States will continue indefinitely as
long as we continue to use the trademarks.
We consider the blends of tobacco and the flavor formulas used
to make our brands to be trade secrets. These trade secrets are
generally not the subject of patents, though various of our
manufacturing processes are patented.
We sold the international rights to substantially all of our
major brands, including Newport, in 1977.
Competition
The domestic market for cigarettes is highly competitive.
Competition is primarily based on a brands taste; quality;
price, including the level of discounting and other promotional
activities; positioning; consumer loyalty; and retail display.
Our principal competitors are the two other major
U.S. cigarette manufacturers, Philip Morris USA Inc.
(Philip Morris), a subsidiary of Altria Group, Inc.
and R.J. Reynolds Tobacco Company (RJR Tobacco), a
subsidiary of RAI. We also compete with numerous other smaller
manufacturers and importers of cigarettes. We believe our
ability to compete even more effectively has been restrained in
some marketing areas as a result of retail merchandising
contracts offered by Philip Morris and RJR Tobacco which limit
the retail shelf space available to our brands. As a result, in
some retail locations we are limited in competitively supporting
our promotional programs, which may constrain sales.
Please read the sections entitled Item 7.
Managements Discussion and Analysis of Financial Condition
and Results of Operations Business Environment
and Selected Industry and Market Share
Data beginning on pages 28 and 30, respectively, for
additional information.
Legislation
and Regulation
Our business operations are subject to a variety of federal,
state and local laws and regulations governing, among other
things, the research, development and manufacture of cigarettes;
the development of new tobacco products; the publication of
health warnings on cigarette packaging and advertising; the sale
of tobacco products; restrictions on smoking in public places;
and fire safety standards. From time to time, new legislation
and regulations are proposed and reports are published by
government sponsored committees and others recommending
additional regulation of tobacco products.
We cannot predict the ultimate outcome of these proposals,
reports and recommendations. If they are enacted or implemented,
certain of these proposals could have a material adverse effect
on our business and our financial condition or results of
operations in the future.
Federal
Regulation
The Federal Comprehensive Smoking Education Act, which became
effective in 1985, requires that cigarette packaging and
advertising display one of the following four warning
statements, on a rotating basis:
(1) SURGEON GENERALS WARNING: Smoking Causes
Lung Cancer, Heart Disease, Emphysema, and may Complicate
Pregnancy.
(2) SURGEON GENERALS WARNING: Quitting Smoking
Now Greatly Reduces Serious Risks to Your Health.
(3) SURGEON GENERALS WARNING: Smoking By
Pregnant Women May Result in Fetal Injury, Premature Birth, and
Low Birth Weight.
This law also requires that each company that manufactures,
packages or imports cigarettes shall annually provide to the
Secretary of Health and Human Services a list of the ingredients
added to tobacco in the manufacture of cigarettes. This list of
ingredients may be submitted in a manner that does not identify
the company that uses the ingredients or the brand of cigarettes
that contain the ingredients.
In addition, bills have been introduced in Congress, including
those that would:
prohibit all tobacco advertising and promotion;
authorize the establishment of various anti-smoking education
programs;
provide that current federal law should not be construed to
relieve any person of liability under common or state law;
permit state and local governments to restrict the sale and
distribution of cigarettes;
direct the placement of advertising of tobacco products;
provide that cigarette advertising not be deductible as a
business expense;
prohibit the mailing of unsolicited samples of cigarettes and
otherwise restrict the sale or distribution of cigarettes in
retail stores, by mail or over the internet;
impose additional, or increase existing, excise taxes on
cigarettes and
require that cigarettes be manufactured in a manner that will
cause them, under certain circumstances, to be
self-extinguishing.
In June 2009, the U.S. Congress passed, and the President
signed into law, the Family Smoking Prevention and Tobacco
Control Act that grants the Food and Drug Administration
(FDA) authority to regulate tobacco products. The
legislation:
established a Tobacco Products Scientific Advisory Committee to,
among other things, evaluate the issues surrounding the use of
menthol as a flavoring or ingredient in cigarettes and issue a
nonbinding recommendation to the FDA regarding menthol by
March 23, 2011;
grants the FDA the regulatory authority to consider and impose
broad additional restrictions through a rule making process,
including a ban on the use of menthol in cigarettes;
requires larger and more severe health warnings, including
graphic images, on packs, cartons, and advertising;
bans the use of descriptors on tobacco products, such as
low tar and light;
requires the disclosure of ingredients and additives to
consumers;
requires pre-market approval by the FDA of all new products,
including substantially equivalent products;
requires pre-market approval by the FDA for all claims made with
respect to reduced risk or reduced exposure products;
allows the FDA to review existing products to determine whether
these products are substantially equivalent to other products in
the market;
allows the FDA to require the reduction of nicotine or any other
compound in cigarettes;
allows the FDA to mandate the use of reduced risk technologies
in conventional cigarettes;
allows the FDA to place more severe restrictions on the
advertising, marketing and sales of cigarettes; and
permits inconsistent state regulation of the advertising or
promotion of cigarettes and eliminate the existing federal
preemption of such regulation.
The legislation permits the FDA to impose restrictions regarding
the use of menthol in cigarettes, including a ban, if those
restrictions would be appropriate for the public health. Any ban
or material limitation on the use of menthol in cigarettes would
materially adversely affect our results of operations, cash
flows and financial condition. It is possible that such
additional regulation, including regulation of menthol short of
a ban thereof, could result in a decrease in cigarette sales in
the United States (including sales of our brands), increased
costs to us,
and/or the
development of a significant black market for cigarettes, which
may have a material adverse effect on our financial condition,
results of operations, and cash flows.
Environmental
Tobacco Smoke
Various publications and studies by governmental entities have
reported that environmental tobacco smoke (ETS)
presents health risks. In addition, public health organizations
have issued statements on the adverse health effects of ETS, and
scientific papers have been published that address the health
problems associated with ETS exposure. Various states, cities
and municipalities have restricted public smoking in recent
years, and these restrictions have been based at least in part
on the publications regarding the health risks believed to be
associated with ETS exposure.
The governmental entities that have published these reports have
included the Surgeon General of the United States, first in 1986
and again in 2006. The 2006 report, for instance, concluded that
there is no risk-free level of exposure to ETS. In 2000, the
Department of Health and Human Services listed ETS as a known
human carcinogen. In 1993, the U.S. Environmental
Protection Agency concluded that ETS is a human lung carcinogen
in adults and causes respiratory effects in children.
Agencies of state governments also have issued publications
regarding ETS, including reports by California entities that
were published in 1997, 1999 and 2006. In the 2006 study, the
California Air Resources Board determined that ETS is a toxic
air contaminant. Based on these or other findings, public health
concerns regarding ETS have lead and could continue to lead to
the imposition of additional restrictions on public smoking,
including bans, which could have a material adverse effect on
our business and financial condition or results of operations in
the future.
State
and Local Regulation
Many state, local and municipal governments and agencies, as
well as private businesses, have adopted legislation,
regulations or policies which prohibit or restrict, or are
intended to discourage, smoking, including legislation,
regulations or policies prohibiting or restricting smoking in
various places such as public buildings and facilities, stores,
restaurants and bars and on airline flights and in the
workplace. This trend has increased significantly since the
release of the EPAs report regarding ETS in 1993.
Two states, Massachusetts and Texas, have enacted legislation
requiring each manufacturer of cigarettes sold in those states
to submit an annual report identifying for each brand sold
certain added constituents, and providing nicotine
yield ratings and other information for certain brands. Neither
law allows for the public release of trade secret information.
A New York law which became effective in June 2004 requires
cigarettes sold in that state to meet a mandated standard for
ignition propensity. We developed proprietary technology to
comply with the standards and were compliant by the effective
date. Since the passage of the New York law, an additional
48 states and the District of Columbia have passed similar
laws utilizing the same technical standards. The effective dates
of these laws range from May 2006 to January 2011. As of
November 1, 2009, all of our cigarettes were manufactured
using this technology.
Other similar laws and regulations have been enacted or
considered by other state and local governments. We cannot
predict the impact which these regulations may have on our
business, though if enacted, they could have a material adverse
effect on our business and financial condition or results of
operations in the future.
Cigarettes are subject to substantial federal, state and local
excise taxes in the United States and, in general, such taxes
have been increasing. Effective April 1, 2009, the federal
excise tax on cigarettes increased to $50.33 per thousand
cigarettes (or $1.0066 per pack of 20 cigarettes) from $19.50
per thousand cigarettes (or $0.39 per pack of 20 cigarettes).
State excise taxes, which are levied upon and paid by the
distributors, are also in effect in the fifty states, the
District of Columbia and many municipalities. Increases in state
excise taxes on cigarette sales were implemented in six states
during 2010 and ranged from $0.40 per pack to $1.60 per pack.
For the twelve months ended December 31, 2010, the combined
state and municipal taxes ranged from $0.17 to $5.85 per pack of
cigarettes.
A federal law enacted in October 2004 repealed the federal
supply management program for tobacco growers and compensated
tobacco quota holders and growers with payments to be funded by
an assessment on tobacco manufacturers and importers. Cigarette
manufacturers and importers are responsible for paying 95.5% of
a $10.14 billion payment to tobacco quota holders and
growers over a ten-year period. The law provides that payments
will be based on shipments for domestic consumption.
Separation
Agreement with Loews Corporation
In connection with the Separation, we entered into a Separation
Agreement with Loews Corporation on May 7, 2008. The
Separation Agreement sets forth the relationship between
Lorillard and Loews following the Separation, including
provisions relating to indemnification and tax allocation
between the parties.
Indemnification
Provisions
We agreed to indemnify Loews and its officers, directors,
employees and agents against all costs and expenses arising out
of third party claims (including, without limitation,
attorneys fees, interest, penalties and costs of
investigation or preparation for defense), judgments, fines,
losses, claims, damages, liabilities, taxes, demands,
assessments and amounts paid in settlement based on, arising out
of or resulting from:
the ownership or the operation of our assets and properties, and
the operation or conduct of our businesses at any time prior to
or following the Separation (including with respect to any
smoking and health claims and litigation);
certain tax matters, as discussed below;
any other activities in which we may engage;
any action or omission by us (or any successor entity) that
causes the Separation to become taxable to Loews;
any breach by us of the Separation Agreement;
any other acts or omissions by us arising out of the performance
of our obligations under the Separation Agreement;
misstatements in or omissions from the registration statement
filed with regard to the Separation, other than misstatements or
omissions made in reliance on information relating to and
furnished by Loews for use in the preparation of such
registration statement; and
any taxes and related losses resulting from the receipt of any
such indemnity payment.
Our indemnification obligations, including the tax
indemnification obligations described below, are binding on our
successors. We are not permitted to merge, consolidate, transfer
or convey all or a significant portion of our properties or
assets unless the resulting entity, transferee or successor
expressly agrees in writing to be bound by these indemnification
obligations. Any equity security or equity interest of Lorillard
Licensing Company, LLC (Lorillard Licensing), an
indirect wholly-owned subsidiary and owner of our trademarks, or
any interest in the intellectual property owned by Lorillard
Licensing, is deemed a significant portion for
purposes of the foregoing.
We also agreed to release Loews and its shareholders, officers,
directors and employees from any liability owed by any of them
to us with respect to acts or events occurring on or prior to
the Separation date, except with respect to tax matters.
The Separation Agreement also provides that Loews will indemnify
us and our officers, directors, employees and agents against
losses, including but not limited to, litigation matters, and
other claims, based on, arising out of or resulting from:
any activity that Loews and its subsidiaries (other than us)
engage in;
any breach by Loews of the Separation Agreement;
any other acts or omissions by Loews arising out of the
performance of its obligations under the Separation
Agreement; and
misstatements in or omissions from the registration statement
filed with regard to the Separation, but only with respect to
misstatements or omissions made in reliance on information
relating to and furnished by Loews for use in the preparation of
such registration statement.
Loews agreed to release us and all of our directors, officers
and employees from any liability owed by any of us to Loews with
respect to acts or events occurring on or prior to the
Separation date, except with respect to tax matters.
Tax
Allocation Provisions
Following the Separation, we are no longer included in
Loewss consolidated group for federal income tax purposes.
In connection with the Separation, the Separation Agreement
provides certain tax allocation arrangements, pursuant to which
we will indemnify Loews for tax liabilities that are allocated
to us for taxable periods ending on or before the Separation
date. The amount of federal income taxes allocated to us for
such periods is generally equal to the federal income taxes that
would have been payable by us during such periods if we had
filed separate consolidated returns. In addition, with respect
to periods in which we were included in Loewss
consolidated group, Loews will indemnify us with respect to the
tax liability of the members of the Loews consolidated group
other than us. After the Separation, we have the right to be
notified of and participate in tax matters for which we are
financially responsible under the terms of the Separation
Agreement, although Loews will generally control such matters.
The Separation Agreement requires us (and any successor entity)
to indemnify Loews for any losses resulting from the failure of
the Separation to qualify as a tax-free transaction (except if
the failure to qualify is solely due to Loewss fault).
This indemnification obligation applies regardless of whether
the action is restricted as described above, or whether we or a
potential successor obtains a supplemental ruling or an opinion
of counsel.
The Separation Agreement further provides for cooperation
between us and Loews with respect to additional tax matters,
including the exchange of information and the retention of
records which may affect the income tax liability of the parties
to the Separation Agreement.
Available
Information
We are listed on the NYSE under the symbol LO. Our
principal offices are located at 714 Green Valley Road,
Greensboro, North Carolina 27408. Our telephone number is
(336) 335-7000.
Our corporate website is located at www.lorillard.com, and our
filings pursuant to Section 13(a) of the Exchange Act are
available free of charge on our website under the tabs
Investor Relations SEC Filings as soon
as reasonably practicable after such filings are electronically
filed with the SEC. Our Corporate Governance Guidelines, Code of
Business Conduct and Ethics and charters for the audit,
compensation and nominating and corporate governance committees
of our Board of Directors are also available on our website
under the tabs, Investor Relations Corporate
Governance and printed copies are available upon request.
The information contained on our website is not, and shall not
be deemed to be, a part of this Annual Report on
Form 10-K
or incorporated into any other filings we make with the SEC.
Investors may also read and copy any materials that we file at
the SECs Public Reference Room at 100 F Street,
N.E., Washington, D.C. 20549. Readers may obtain
information on the operation of the Public Reference Room by
calling the SEC at
1-800-SEC-0330.
The SEC also maintains an internet site at www.sec.gov that
contains our reports.
Item 1A.
RISK
FACTORS
FDA
regulation of menthol in cigarettes and concerns that
mentholated cigarettes may pose greater health risks could
adversely affect our business.
Some plaintiffs in our litigation and constituencies, including
the FDA and other public health agencies, have claimed or
expressed concerns that mentholated cigarettes may pose greater
health risks than non-mentholated cigarettes, including concerns
that mentholated cigarettes may make it easier to start smoking
and harder to quit and may seek restrictions or a ban on the
production and sale of mentholated cigarettes. Any ban or
material limitation on the use of menthol in cigarettes would
materially adversely affect our results of operations, cash flow
and financial condition.
Following the passage of the Family Smoking Prevention and
Tobacco Control Act in June 2009, the FDA established the
Tobacco Products Scientific Advisory Committee (the
TPSAC) to evaluate, among other things, the
impact of the use of menthol in cigarettes on the public health,
including such use among children,
African-Americans,
Hispanics, and other racial and ethnic minorities. In
addition, the FSPTCA permits the FDA to impose restrictions
regarding the use of menthol in cigarettes, including a ban, if
those restrictions would be appropriate for the public health.
The TPSAC held meetings on March
30-31, 2010,
July 15-16,
2010, September 27, 2010, October 7, 2010,
November 18, 2010 and January
10-11, 2011
to consider the issues surrounding the use of menthol in
cigarettes. TPSAC has scheduled further meetings on the use of
menthol in cigarettes, and TPSACs report and nonbinding
recommendations on menthol are currently due to the FDA by
March 23, 2011.
Since we are the leading manufacturer of mentholated cigarettes
in the United States, we could face increased exposure to
tobacco-related litigation as a result of such allegations. Even
if such claims are unsubstantiated, increased concerns about the
health impact of mentholated cigarettes could materially
adversely affect our sales, including sales of Newport. A ban or
limitation on the use of menthol in cigarettes by the FDA would
materially adversely affect our business.
The
regulation of cigarettes by the Food and Drug Administration may
materially adversely affect our business.
In June 2009, the U.S. Congress passed, and the President
signed into law, the Family Smoking Prevention and Tobacco
Control Act that grants the FDA authority to regulate tobacco
products. The legislation:
established a Tobacco Products Scientific Advisory Committee to,
among other things, evaluate the issues surrounding the use of
menthol as a flavoring or ingredient in cigarettes and issue a
nonbinding recommendation to the FDA regarding menthol by
March 23, 2011;
grants the FDA the regulatory authority to consider and impose
broad additional restrictions through a rule making process,
including a ban on the use of menthol in cigarettes;
requires larger and more severe health warnings, including
graphic images, on packs, cartons and advertising;
bans the use of descriptors on tobacco products, such as
low tar and light;
requires the disclosure of ingredients and additives to
consumers;
requires pre-market approval by the FDA of all new products,
including substantially equivalent products;
requires pre-market approval by the FDA for claims made with
respect to reduced risk or reduced exposure products;
allows the FDA to review existing products to determine whether
these products are substantially equivalent to other products in
the market;
allows the FDA to require the reduction of nicotine or any other
compound in cigarettes;
allows the FDA to mandate the use of reduced risk technologies
in conventional cigarettes;
allows the FDA to place more severe restrictions on the
advertising, marketing and sales of cigarettes; and
permits inconsistent state regulation of the advertising or
promotion of cigarettes and eliminates the existing federal
preemption of such regulation.
We believe that such regulation could have a material adverse
effect on our business. For example, under the FSPTCA, we must
file a report with the FDA substantiating that any cigarettes
introduced or modified after February 15, 2007 are
substantially equivalent to cigarettes on the market
before that date to enable the agency to determine whether the
new or modified products are substantially
equivalent to specific predicate products already being
sold. For any products introduced or modified between
February 15, 2007 and March 22, 2011, initial reports
must be filed with the FDA before March 23, 2011. The FDA
has announced that a product introduced or modified before
March 22, 2011 may remain on the market pending the
FDAs review, provided a substantially
equivalent report has been filed with the FDA on or before
March 22, 2011. We believe, based on the limited guidance
issued by the FDA to date, that we must file reports for all of
our cigarettes by March 23, 2011 since modifications have
been made to our products since 2007. While all of our
cigarettes may remain on the market pending the FDAs
review, they are subject to removal should the
FDA determine any are not substantially
equivalent.
The legislation also permits the FDA to impose restrictions
regarding the use of menthol in cigarettes, including a ban, if
those restrictions would be appropriate for the public health.
Any ban or material limitation on the use of menthol in
cigarettes would materially adversely affect our results of
operations, cash flows and financial condition. It is possible
that such additional regulation, including regulation of menthol
short of a ban thereof, could result in a decrease in cigarette
sales in the United States (including sales of our brands),
increased costs to us
and/or the
development of a significant black market for cigarettes, which
may have a material adverse effect on our financial condition,
results of operations, and cash flows.
As of
February 9, 2011, Lorillard Tobacco is a defendant in
approximately 9,758 tobacco-related lawsuits, including
approximately 701 cases in which Lorillard, Inc. is a
co-defendant. These cases, which are extremely costly to defend,
could result in substantial judgments against Lorillard Tobacco
and/or
Lorillard, Inc.
Numerous legal actions, proceedings and claims arising out of
the sale, distribution, manufacture, development, advertising,
marketing and claimed health effects of cigarettes are pending
against Lorillard Tobacco and Lorillard, Inc., and it is likely
that similar claims will continue to be filed for the
foreseeable future. In addition, several cases have been filed
against Lorillard Tobacco and other tobacco companies
challenging certain provisions of the MSA among major tobacco
manufacturers and 46 states and various other governments
and jurisdictions, and state statutes promulgated to carry out
and enforce the MSA.
Punitive damages, often in amounts ranging into the billions of
dollars, are specifically pleaded in a number of cases in
addition to compensatory and other damages. It is possible that
the outcome of these cases, individually or in the aggregate,
could result in bankruptcy. It is also possible that Lorillard
Tobacco and Lorillard, Inc. may be unable to post a surety bond
in an amount sufficient to stay execution of a judgment in
jurisdictions that require such bond pending an appeal on the
merits of the case. Even if Lorillard Tobacco and Lorillard,
Inc. are successful in defending some or all of these actions,
these types of cases are very expensive to defend. A material
increase in the number of pending claims could significantly
increase defense costs and have an adverse effect on our results
of operations and financial condition. Further, adverse
decisions in litigations against other tobacco companies could
have an adverse impact on the industry, including us.
A jury
has returned verdicts that award damages from Lorillard Tobacco
in a Conventional Product Liability Case.
In December 2010, a Massachusetts jury awarded $50 million
in compensatory damages to the estate of a deceased smoker,
$21 million in damages to the deceased smokers son,
and $81 million in punitive damages from Lorillard Tobacco
in a Conventional Product Liability Case, Evans v.
Lorillard Tobacco Company (Superior Court, Suffolk County,
Massachusetts). As of February 9, 2011, the case remained
pending before the trial court because the judge has not issued
a verdict as to a single claim that was not submitted for the
jurys consideration. It is possible the court will award
additional damages to the plaintiffs in its verdict that
addresses this final claim. As of February 9, 2011, the
court had not ruled on the motions filed by Lorillard Tobacco
following the verdicts, which includes motions for new trial,
for judgment notwithstanding the verdict, and for reduction or
elimination of the jurys damages awards. The court is not
expected to issue a final judgment until it disposes of the
final claim or it rules on Lorillard Tobaccos post-trial
motions. Lorillard Tobacco may file additional post-trial
motions after a final judgment is entered. Should the final
judgment award damages to the plaintiff, Massachusetts statutes
provide that the court may award prejudgment and post-judgment
interest. The opportunity for Lorillard Tobacco to initiate an
appeal from the verdicts in Evans will not begin until
the final judgment is entered. Plaintiff has asked the court to
enter a preliminary injunction that directs Lorillard Tobacco to
set aside $272 million in cash or cash equivalents to
secure the amounts awarded by the jury and the interest
obligations plaintiff expects the court to order in a final
judgment. As of February 9, 2011, the court had not ruled
on plaintiffs motion for preliminary injunction. It is
possible that the verdict in this case could lead to additional
litigation.
A
judgment has been rendered against Lorillard Tobacco in the
Scott litigation.
In July 2008, the District Court of Orleans Parish, Louisiana,
entered an amended final judgment in favor of the plaintiffs in
Scott v. The American Tobacco Company, et al.
(District Court, Orleans Parish, Louisiana, filed
May 24, 1996), a class action on behalf of certain
cigarette smokers resident in the State of Louisiana. In April
2010, the Louisiana Court of Appeal, Fourth Circuit, issued a
decision that modified the trial courts 2008 amended final
judgment. The Court of Appeals decision reduced the
judgment amount to approximately $242 million to fund a ten
year court-supervised smoking cessation program. The April 2010
decision ordered that an award of post-judgment interest will
accrue from July 2008. Interest awarded by the amended final
judgment will continue to accrue from July 2008 until the
judgment either is paid or is reversed on appeal. As of
February 9, 2011, judicial interest totaled approximately
$32.1 million. Lorillard Tobaccos share of any
judgment, including an award of post-judgment interest, has not
been determined. In the fourth quarter of 2007, we recorded a
pretax provision of approximately $66 million for this
matter. Lorillard, Inc., which was a party to the case in the
past, is no longer a defendant. The U.S. Supreme Court has
granted defendants application to stay execution of the
amended final judgment until defendants petition for writ
of certiorari to the U.S. Supreme Court is resolved. As of
February 9, 2011, the U.S. Supreme Court had not
determined whether it will grant review of defendants
certiorari petition. It is not possible to predict the final
outcome of this matter.
The
Florida Supreme Courts ruling in Engle has resulted in
additional litigation against cigarette manufacturers, including
us.
The case of Engle v. R.J. Reynolds Tobacco Co., et al.
(Circuit Court, Dade County, Florida, filed May 5,
1994) was certified as a class action on behalf of Florida
residents, and survivors of Florida residents, who were injured
or died from medical conditions allegedly caused by addiction to
smoking. The case was tried between 1998 and 2000 in a
multi-phase trial that resulted in verdicts in favor of the
class. In 2006, the Florida Supreme Court issued a ruling that,
among other things, determined that the case could not proceed
further as a class action. In February 2008, the trial court
entered an order on remand from the Florida Supreme Court that
formally decertified the class.
The 2006 ruling by the Florida Supreme Court in Engle
also permitted members of the Engle class to file
individual claims, including claims for punitive damages. The
Florida Supreme Court held that these individual plaintiffs are
entitled to rely on a number of the jurys findings in
favor of the plaintiffs in the first phase of
the Engle trial. These findings included that smoking
cigarettes causes a number of diseases; that cigarettes are
addictive or dependence-producing; and that the defendants,
including Lorillard Tobacco and Lorillard, Inc., were negligent,
breached express and implied warranties, placed cigarettes on
the market that were defective and unreasonably dangerous, and
concealed or conspired to conceal the risks of smoking.
Lorillard Tobacco is a defendant in approximately 7,100 cases
pending in various state and federal courts in Florida that were
filed by members of the Engle class (the Engle
Progeny Cases), including 695 cases in which
Lorillard, Inc. is a co-defendant.
As of February 9, 2011, Lorillard Tobacco was a defendant
in one Engle Progeny Case in which trial was underway.
Lorillard, Inc. is not a defendant in this trial. Neither
Lorillard Tobacco nor Lorillard, Inc. were defendants in three
additional Engle Progeny Cases in which trial was
underway as of February 9, 2011. In addition, Lorillard
Tobacco and Lorillard, Inc. are defendants in Engle
Progeny Cases that have been placed on courts 2011
trial calendars or in which specific trial dates have been set.
Trial schedules are subject to change and it is not possible to
predict how many of the Engle Progeny Cases pending
against Lorillard Tobacco or Lorillard, Inc. will be tried
during 2011. It also is not possible to predict whether some
courts will implement procedures that consolidate multiple
Engle Progeny Cases for trial.
As of February 9, 2011, verdicts have been returned in 32
Engle Progeny Cases since the Florida Supreme Court
issued its 2006 ruling. Lorillard Tobacco was a defendant in one
of the 32 trials. As of February 9, 2011, Lorillard, Inc.
had not been a defendant in any of the trials in which verdicts
were returned. Juries awarded compensatory damages and punitive
damages in 14 of these trials. The punitive damages awards have
totaled $527 million and have ranged from $270,000 to
$244 million. In six of the trials, juries awarded only
compensatory damages. In the twelve other trials, juries found
in favor of the defendants. In the single trial in which
Lorillard Tobacco had been a defendant as of February 9,
2011, the jury returned a verdict for the defendants. In some of
the trials decided in the defendants favor, plaintiffs
have filed motions challenging the verdicts. It is not possible
to predict the final outcome of this litigation.
The
judgment entered in the federal governments reimbursement
case, while not final in all respects, could restrict or limit
our defenses in other litigation.
In August 2006, a final judgment and remedial order was entered
in United States of America v. Philip Morris USA, Inc.,
et al. (U.S. District Court, District of Columbia,
filed September 22, 1999). The court based its final
judgment and remedial order on the governments only
remaining claims, which were based on the defendants
alleged violations of the Racketeering Influenced and Corrupt
Organizations Act (RICO). Lorillard, Inc. is not a
party to this matter, but Lorillard Tobacco is one of the
defendants in the case. Although the verdict did not award
monetary damages to the plaintiff, the final judgment and
remedial order imposed a number of requirements on the
defendants. Such requirements include, but are not limited to,
corrective statements by defendants related to the health
effects of smoking.
In 2009, a three judge panel of the Court of Appeals upheld
substantially all of the District Courts final judgment
and remedial order. In June 2010, the U.S. Supreme Court
denied the parties petitions seeking review of the case.
The case has been returned to the U.S. District Court,
District of Columbia for implementation of the Court of
Appeals directions in its 2009 ruling and for entry of an
amended final judgment. As of February 9, 2011, the trial
court had not entered the amended final judgment.
The 2006 final judgment and remedial order made many adverse
findings regarding the conduct of the defendants. It is possible
that the final opinion, final judgment and remedial order
entered by the court could form the basis of allegations by the
plaintiffs in other matters, or of additional judicial findings
by other courts against cigarette manufacturers. It is possible
that other courts could apply the findings in the United
States of America case to restrict or otherwise limit our
defenses in other litigation.
A
ruling by the United States Supreme Court could limit the
ability of cigarette manufacturers to contend that certain
claims asserted against them in product liability litigation are
barred. The Supreme Courts decision also could encourage
litigation involving cigarettes labeled as lights or
low tar.
In December 2008, the United States Supreme Court issued a
decision that neither the Federal Cigarette Labeling and
Advertising Act nor the Federal Trade Commissions
regulation of cigarettes tar and nicotine disclosures
preempts (or bars) some of plaintiffs claims. The decision
also more broadly addresses the scope of preemption based on the
Federal Cigarette Labeling and Advertising Act, and could
significantly limit cigarette manufacturers arguments that
certain of plaintiffs other claims in smoking and health
litigation, including claims based on the alleged concealment of
information with respect to the hazards of smoking, are
preempted. In addition, the Supreme Courts ruling could
encourage litigation against cigarette manufacturers, including
us, regarding the sale of cigarettes labeled as
lights or low tar, and it may limit
cigarette manufacturers ability to defend such claims. The
Supreme Court issued this ruling in a purported
lights class action, Good v. Altria Group,
Inc. We were not a defendant in Good.
The
U.S. Surgeon General has issued a report regarding the risks of
cigarette smoking to non-smokers that could result in additional
litigation against cigarette manufacturers, additional
restrictions placed on the use of cigarettes, and additional
regulations placed on the manufacture or sale of
cigarettes.
In a report entitled The Health Consequences of
Involuntary Exposure to Tobacco Smoke: A Report of the Surgeon
General, 2006, the U.S. Surgeon General summarized
conclusions from previous Surgeon Generals reports
concerning the health effects of exposure to second-hand smoke
by non-smokers. According to this report, scientific evidence
now supports six major conclusions:
Second-hand smoke causes premature death and disease in children
and in adults who do not smoke.
Children exposed to second-hand smoke are at an increased risk
for sudden infant death syndrome, acute respiratory infections
and ear problems.
Exposure of adults to second-hand smoke has immediate adverse
effects on the cardiovascular system and causes heart disease
and lung cancer.
The scientific evidence indicates that there is no risk-free
level of exposure to second-hand smoke.
Many millions of Americans, both children and adults, are
exposed to second-hand smoke in their homes and workplaces.
Eliminating smoking in indoor spaces fully protects non-smokers
from exposure to second-hand smoke. Separating smokers from
non-smokers, cleaning the air, and ventilating buildings cannot
eliminate exposures of non-smokers to second-hand smoke.
This report could form the basis of additional litigation
against cigarette manufacturers, including us. The report could
be used to support existing litigation against us or other
cigarette manufacturers. It also is possible that the Surgeon
Generals report could result in additional restrictions
placed on cigarette smoking or in additional regulations placed
on the manufacture or sale of cigarettes. It is possible that
such additional restrictions or regulations could result in a
decrease in cigarette sales in the United States, including
sales of our brands. These developments may have a material
adverse effect on our financial condition, results of
operations, and cash flows.
We
have substantial payment obligations under litigation settlement
agreements which will have a material adverse effect on our cash
flows and operating income in future periods.
In 1998, Lorillard Tobacco, Philip Morris Incorporated,
Brown & Williamson Tobacco Corporation and R.J.
Reynolds Tobacco Company (the Original Participating
Manufacturers) entered into the MSA with 46 states
and various other governments and jurisdictions to settle
asserted and unasserted health care cost recovery and other
claims. We and certain other U.S. tobacco product
manufacturers had previously settled similar claims brought by
Mississippi, Florida, Texas and Minnesota (the Initial
State Settlements and, together with the MSA, are referred
to as the State Settlement Agreements).
Under the State Settlement Agreements, we paid
$1.134 billion in 2010 and are obligated to pay between
$1.2 billion and $1.3 billion in 2011, primarily based
on 2010 estimated industry volume. Annual payments under the
State Settlement Agreements are required to be paid in
perpetuity and are based, among other things, on our domestic
market share and unit volume of domestic shipments, with respect
to the MSA, in the year preceding the year in which payment is
due, and, with respect to the Initial State Settlements, in the
year in which payment is due.
We are
unable to make a meaningful estimate of the amount or range of
loss that could result from an unfavorable outcome of certain
material pending litigation.
We record provisions in our consolidated financial statements
for pending litigation when we determine that an unfavorable
outcome is probable and the amount of loss can be reasonably
estimated. Except for the impact of the State Settlement
Agreements and the provision relating to the Scott case,
as described in the risk factor A judgment has been
rendered against Lorillard Tobacco in the Scott
litigation above, we are unable to make a meaningful
estimate of the amount or range of loss that could result from
an unfavorable outcome of material pending litigation and,
therefore, no material provision has been made in our
consolidated financial statements for any unfavorable outcome.
It is possible that our results of operations, cash flows and
financial position could be materially adversely affected by an
unfavorable outcome of certain pending or future litigation.
We
face intense competition and our failure to compete effectively
could have a material adverse effect on our profitability and
results of operations.
We compete primarily on the basis of product quality, brand
recognition, brand loyalty, service, marketing, advertising and
price. We are subject to highly competitive conditions in all
aspects of our business. The competitive environment and our
competitive position can be significantly influenced by weak
economic conditions, erosion of consumer confidence,
competitors introduction of low-priced products or
innovative products, higher cigarette taxes, higher absolute
prices and larger gaps between price categories, and product
regulation that diminishes the ability to differentiate tobacco
products.
Our principal competitors are the two other major
U.S. cigarette manufacturers, Philip Morris and RJR
Tobacco. We also compete against numerous other smaller
manufacturers or importers of cigarettes. If our major
competitors were to significantly increase the level of price
discounts offered to consumers, we could respond by increasing
price discounts, which could have a materially adverse effect on
our profitability and results of operations.
We are
subject to important limitations on advertising and marketing
cigarettes that could harm our competitive
position.
Television and radio advertisements of tobacco products have
been prohibited since 1971. Under the State Settlement
Agreements, we generally cannot use billboard advertising,
cartoon characters, sponsorship of concerts, non-tobacco
merchandise bearing Lorillards brand names and various
other advertising and marketing techniques. In addition, the MSA
prohibits the targeting of youth in advertising, promotion or
marketing of tobacco products. Accordingly, we have determined
not to advertise our cigarettes in magazines with large
readership among people under the age of 18. On June 22,
2009 the federal Family Smoking Prevention and Tobacco Control
Act was signed into law granting authority over the regulation
of tobacco products to the FDA. Pursuant to the FSPTCA, the FDA
reissued a set of marketing and sales restrictions originally
promulgated in 1995 as part of an unsuccessful effort by the
agency to assert jurisdiction over tobacco products. The FSPTCA
contains other restrictions on the advertising, marketing and
sale of cigarette products more stringent than those found in
the original FDA rule. In addition, many states, cities and
counties have enacted legislation or regulations further
restricting tobacco advertising, marketing and sales promotions,
and others may do so in the future. Additional restrictions may
be imposed or agreed to in the future. These limitations may
make it difficult to maintain the value of an existing brand if
sales or market share decline for any reason. Moreover, these
limitations significantly impair the ability of cigarette
manufacturers, including us, to launch new premium brands.
Changes
in laws, regulations and other requirements could adversely
affect our business, results of operations or financial
condition.
In addition to the regulation of our business by the FDA, our
business, results of operations or financial condition could be
adversely affected by new or future legal requirements imposed
by legislative or regulatory initiatives, including but not
limited to those relating to health care reform, climate change
and environmental matters. For example, the health care reform
legislation, which was signed into law in March 2010, resulted
in the repeal of $2 million of future tax deductions for
Medicare Part D subsidies for our retiree drug benefits and
could impact our accounting for retiree medical benefits,
employer-sponsored medical plans and related matters in future
periods. However, the extent of that impact, if any, cannot be
determined until regulations are promulgated and additional
interpretations of the health care law are available. New
legislation or regulations may result in increased costs
directly for our compliance or indirectly to the extent such
requirements increase the prices of goods and services because
of increased costs or reduced availability. We cannot predict
whether such legislative or regulatory initiatives will result
in significant changes to existing laws and regulations
and/or
whether any changes in such laws or regulations will have a
material adverse affect on our business, results of operations
or financial condition.
Sales
of cigarettes are subject to substantial federal, state and
local excise taxes.
On April 1, 2009, the federal excise tax on cigarettes
increased $0.6166 per pack to $1.0066 per pack to finance health
insurance for children. For the twelve months ended
December 31, 2010, combined state and local excise taxes
ranged from $0.17 to $5.85 per pack. Various states and
localities have raised the excise tax on cigarettes
substantially in recent years. In addition, increases in state
excise taxes on cigarette sales were implemented in six states
during 2010 and ranged from $0.40 per pack to $1.60 per pack. It
is our expectation that several states will propose further
increases in 2011 and in subsequent years. We believe that
increases in excise and similar taxes have had an adverse impact
on sales of cigarettes. In addition, we believe that the 2009
increase in the federal excise tax, as well as possible future
increases, the extent of which cannot be predicted, compounded
by poor economic conditions, could result in further volume
declines for the cigarette industry, including us, and an
increased sales shift toward lower priced discount cigarettes
rather than premium brands.
We are
dependent on the domestic cigarette business, which we expect to
continue to contract.
Although we conduct business in Puerto Rico, Guam and the
U.S. Virgin Islands, our cigarette business in the
50 states of the United States (the domestic
cigarette market) is currently our only significant
business. The domestic cigarette market has generally been
contracting and we expect it to continue to contract. We do not
have foreign cigarette sales that could offset these effects, as
we sold the international rights to substantially all of our
brands, including Newport, in 1977. As a result of price
increases, restrictions on advertising and promotions, increases
in regulation and excise taxes, health concerns, a decline in
the social acceptability of smoking, increased pressure from
anti-tobacco groups and other factors, industry-wide domestic
cigarette shipments have decreased at a compound annual rate of
approximately 3.5% during the period 2000 through 2010.
Industry-wide domestic cigarette shipments decreased by an
estimated 3.8% for 2010 compared to 2009, 8.6% for 2009 compared
to 2008, 3.3% for 2008 to 2007 and 5.0% during 2007, compared to
2006.
We
derive most of our revenue from one brand.
Our largest selling brand, Newport, accounted for approximately
90.0% of our sales revenue for 2010. Our principal strategic
plan revolves around the marketing and sales promotion in
support of the Newport brand. We cannot ensure that we will
continue to successfully implement our strategic plan with
respect to Newport or that implementation of our strategic plan
will result in the maintenance or growth of the Newport brand.
The
use of significant amounts of promotion expenses and sales
incentives in response to competitive actions and market price
sensitivity may have a material adverse impact on our
business.
Since 1998, the cigarette market has been increasingly price
competitive due to the impact of, among other things, higher
state and local excise taxes and the market share of deep
discount brands. In response to these and other competitor
actions and pricing pressures, we have engaged in significant
use of promotional expenses and sales incentives. The cost of
these measures could have a material adverse impact on our
business. We regularly review the results of our promotional
spending activities and adjust our promotional spending programs
in an effort to maintain our competitive position. Accordingly,
unit sales volume and sales promotion costs in any period are
not necessarily indicative of sales and costs that may be
realized in subsequent periods.
We
rely on a limited number of key executives and may continue to
experience difficulty in attracting and hiring qualified new
personnel in some areas of our business.
The loss of any of our key employees could adversely affect our
business. As a tobacco company, we may experience difficulty in
identifying and hiring qualified executives and other personnel
in some areas of our business. This difficulty is primarily
attributable to the health and social issues associated with the
tobacco industry. The loss of services of any key personnel or
our inability to attract and hire personnel with requisite
skills could restrict our ability to develop new products,
enhance existing products in a timely manner, sell products or
manage our business effectively. These factors could have a
material adverse effect on our results of operations and
financial condition.
We may
not be able to develop, produce or commercialize competitive new
products and technologies required by regulatory changes or
changes in consumer preferences.
Consumer health concerns and changes in regulations are likely
to require us to introduce new products or make substantial
changes to existing products. For example, 49 states and
the District of Columbia have passed legislation requiring
cigarette manufacturers to reduce the ignition propensity of
their products. We believe that there may be increasing pressure
from public health authorities to develop a conventional
cigarette, an alternative cigarette or an alternative tobacco
product that provides a demonstrable reduced risk of adverse
health effects. Certain of the other major cigarette makers have
already developed and marketed alternative cigarette products.
We may not be able to develop a reduced risk product that is
acceptable to consumers. In addition, the costs associated with
developing any such new products and technologies could be
substantial.
Increased
restrictions on smoking in public places could adversely affect
our sales volume, revenue and profitability.
In recent years, states and many local and municipal governments
and agencies, as well as private businesses, have adopted
legislation, regulations or policies which prohibit, restrict,
or discourage smoking; smoking in public buildings and
facilities, stores, restaurants and bars; and smoking on airline
flights and in the workplace. Other similar laws and regulations
are currently under consideration and may be enacted by state
and local governments in the future. Although we have no
empirical evidence of the effect of such restrictions, we
believe that restrictions on smoking in public and other places
may lead to a decrease in the number of people who smoke or a
decrease in the number of cigarettes smoked by smokers.
Increased restrictions on smoking in public and other places may
have caused a decrease, and may continue to cause a decrease in
the volume of cigarettes that would otherwise be sold by us
absent such restrictions, which may have a material adverse
effect on our sales volume, revenue and profits.
The
availability of counterfeit cigarettes could adversely affect
our sales volume, revenue and profitability.
Sales of counterfeit cigarettes in the United States, including
counterfeits of our Newport brand, could adversely impact sales
by the manufacturers of the brands that are counterfeited and
potentially damage the value and reputation of those brands.
Additionally, smokers who mistake counterfeit cigarettes for our
cigarettes may attribute quality and taste deficiencies in the
counterfeit product to our brands and discontinue purchasing our
brands. Although we do not believe that sales of counterfeit
Newport cigarettes have had a material adverse effect on our
sales volume, revenue and profits to date, the availability of
counterfeit Newport cigarettes together with substantial
increases in excise taxes and other potential price increases
could result in increased demand for counterfeit product that
could have a material adverse effect on our sales volume,
revenue and profits in the future.
We
rely on a single manufacturing facility for the production of
our cigarettes.
We produce all of our cigarettes at our Greensboro, North
Carolina manufacturing facility. If our manufacturing plant is
damaged, destroyed or incapacitated or we are otherwise unable
to operate our manufacturing facility, we may be unable to
produce cigarettes and may be unable to meet customer demand
which could have a material adverse effect on our sales volume,
revenue and profits.
We
rely on a small number of suppliers for certain of our domestic
leaf tobacco and reconstituted tobacco.
We purchase approximately 66% of our domestic leaf tobacco
through one supplier, Alliance One International, Inc. If
Alliance One becomes unwilling or unable to supply leaf tobacco
to us, we believe that leaf tobacco may not be available at
prices comparable to those we pay to Alliance One, which could
have a material adverse effect on our future profits. In
addition, we purchase all of our reconstituted tobacco from one
supplier, which is an affiliate of RAI, one of our major
competitors. Reconstituted tobacco is a form of tobacco material
manufactured as a paper-like sheet from small pieces of tobacco
that are too small to incorporate into the cigarette directly
and may include some tobacco stems, and which is used as a
component of cigarette blends. If RAI becomes unwilling or
unable to supply us and we are unable to find an alternative
supplier on a timely basis, our operations could be disrupted
resulting in lower production levels and reduced sales, which
could have a material adverse effect on our sales volume,
revenue and profits in the future.
We may
not be able to adequately protect our intellectual property,
which could harm the value of our brands and have a material
adverse effect on our business.
Our intellectual property is material to the conduct of our
business. Our ability to maintain and further build brand
recognition is dependent on the continued and exclusive use of
our trademarks, service marks, trade dress, trade secrets and
other proprietary intellectual property, including our name and
logo and the unique features of our tobacco products. If our
efforts to protect our intellectual property are ineffective,
thereby permitting a third-party to misappropriate or infringe
on our intellectual property, the value of our brands may be
harmed, which could have a material adverse effect on our
business and might prevent our brands from growing or
maintaining market share.
Provisions
in our certificate of incorporation and by-laws, and of Delaware
law, may prevent or delay an acquisition of us, which could
decrease the trading price of our Common Stock.
Our certificate of incorporation and by-laws contain provisions
that are intended to deter coercive takeover practices and
inadequate takeover bids and to encourage prospective acquirers
to negotiate with our Board of Directors rather than to attempt
a hostile takeover. These provisions include:
a board of directors that is divided into three classes with
staggered terms;
elimination of the right of our shareholders to act by written
consent;
rules regarding how our shareholders may present proposals or
nominate directors for election at shareholder meetings;
the right of our Board of Directors to issue preferred stock
without shareholder approval; and
limitations on the right of shareholders to remove directors.
Delaware law also imposes some restrictions on mergers and other
business combinations between us and any holder of 15% or more
of our outstanding Common Stock.
We believe these provisions protect our shareholders from
coercive or otherwise unfair takeover tactics by requiring
potential acquirers to negotiate with our Board of Directors and
by providing our board with time to assess any acquisition
proposal. These provisions are not intended to prevent such
takeovers. However, these provisions apply even if the offer may
be considered beneficial by some shareholders and could delay or
prevent an acquisition that our Board of Directors determines is
not in our best interests and those of our shareholders.
The
Separation Agreement between us and Loews contains provisions
that may prevent or discourage other companies from acquiring
us.
The tax-free nature of the Separation may be affected by certain
transactions undertaken by us. In particular, under
Section 355(e) of the Internal Revenue Code, the Separation
would become taxable to Loews if it was determined that 50% or
more of the shares of our Common Stock were acquired, directly
or indirectly, as part of a plan or series of related
transactions that included the Separation. If, as a result of
acquisitions of our Common Stock subsequent to the Separation,
the Separation becomes taxable pursuant to Section 355(e),
Loews would recognize a substantial gain for tax purposes as the
Separation would be treated as a sale of Lorillard for federal
income tax purposes. The Separation Agreement requires us (and
any successor entity) to indemnify Loews for any losses
resulting from the failure of the Separation to qualify as a tax
free transaction (except if the failure to qualify is solely due
to Loewss fault). This indemnification obligation applies
regardless of whether the action is restricted as described
above, or whether we or a potential acquirer obtains a
supplemental ruling or an opinion of counsel. These restrictions
and potential indemnification obligations may prevent or
discourage other companies from acquiring us.
We are
required to indemnify Loews against losses and other expenses
incurred at any time (including with respect to smoking and
health claims and litigation) with respect to our assets,
properties and businesses.
In the Separation Agreement, we have agreed to indemnify Loews
and its officers, directors, employees and agents against costs
and expenses (including, but not limited to, litigation matters
and other claims) based on, arising out of or resulting from,
among other things, the ownership or the operation of us and our
assets and properties, and the operation or conduct of us and
our businesses at any time prior to or following the Separation
(including with respect to smoking and health claims and
litigation). If Loews incurs legal or other fees or costs and
expenses resulting from the operation of our businesses or
otherwise with respect to us, we are required to reimburse Loews
for such losses and any legal or other fees related thereto,
which could be substantial. These indemnification obligations
may discourage third parties from trying to acquire us because
our indemnification obligations are binding on our successors
and we are prohibited by the Separation Agreement from merging,
consolidating or transferring all or a significant portion of
our properties or assets unless the resulting entity, transferee
or successor agrees to be bound by these indemnification
obligations. In addition, we could face substantial charges for
indemnification payments to Loews, which could have a material
adverse effect on our cash flows, financial condition and
results of operations.
We do not believe the Separation has altered or will alter our
legal exposure with respect to tobacco-related claims.
Item 1B.
UNRESOLVED
STAFF COMMENTS
None.
Item 2.
PROPERTIES
Our manufacturing facility is located on approximately
80 acres in Greensboro, North Carolina. This
854,300 square-foot plant contains modern high-speed
cigarette manufacturing machinery. The Greensboro facility also
includes a warehouse with shipping and receiving areas totaling
187,300 square feet. In addition,
we own tobacco receiving and storage facilities totaling
approximately 1,400,000 square feet in Danville, Virginia.
Our executive offices are located in a 130,000 square-foot,
four-story office building in Greensboro. Our
93,800 square-foot research facility is also located in
Greensboro.
Our principal properties are owned in fee and generally we own
all of the machinery we use. We believe that our properties and
machinery are in generally good condition. We lease sales
offices in major cities throughout the United States, a
cold-storage facility in Greensboro and warehousing space in 19
public distribution warehouses located throughout the United
States.
Item 3.
LEGAL
PROCEEDINGS
Information regarding legal proceedings is set forth in
Note 19 Legal Proceedings to our Consolidated
Financial Statements included in Part II, Item 8 of
this report. The disclosure set forth in Note 19
Legal Proceedings is incorporated herein by
reference.
Item 4.
SUBMISSION
OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
Executive
Officers of the Registrant
Name
Age
Position(s)
Murray S. Kessler
51
Chairman, President and Chief Executive Officer
David H. Taylor
55
Executive Vice President, Finance and Planning and Chief
Financial Officer
Ronald S. Milstein
54
Senior Vice President, Legal and External Affairs, General
Counsel and Secretary
Charles E. Hennighausen
56
Executive Vice President, Production Operations
Randy B. Spell
59
Executive Vice President, Marketing and Sales
Murray S. Kessler is Chairman, President and Chief
Executive Officer of Lorillard. He has served as President and
Chief Executive Officer of Lorillard since September, 2010 and
assumed the Chairmans position in January 2011. Prior to
joining Lorillard, Mr. Kessler was Vice Chair of Altria
Group, Inc. and President and Chief Executive Officer of UST LLC
(a wholly-owned subsidiary of Altria) in 2009. Prior to that
position, Mr. Kessler held a number of executive positions
at UST, Inc. from 2000 through 2009, including Chairman of the
Board, President and Chief Executive Officer.
David H. Taylor is the Executive Vice President, Finance
and Planning and Chief Financial Officer of Lorillard.
Mr. Taylor joined Lorillard in January 2008. Prior to
joining Lorillard, Mr. Taylor was a Senior Managing
Director with FTI Palladium Partners, a firm specializing in
providing interim management services. In that capacity, he
served as Interim Chief Financial Officer of Eddie Bauer
Holdings, Inc. from January 2006 to November 2007.
Ronald S. Milstein is the Senior Vice President, Legal
and External Affairs, General Counsel and Secretary of Lorillard
and has served in the same executive positions with Lorillard
since 2005. Previously, Mr. Milstein served as Vice
President, General Counsel, and Secretary for seven years.
Mr. Milstein has been with Lorillard since 1996.
Charles E. Hennighausen is the Executive Vice President,
Production Operations of Lorillard. Mr. Hennighausen has
served in the same position since he joined Lorillard in 2002.
Prior to joining Lorillard, Mr. Hennighausen served as
Senior Vice President, Operations and Product Supply at ConAgra
Frozen & Prepared Foods for three years. He also
served in a number of operations management positions with the
Campbell Soup Company.
Randy B. Spell is the Executive Vice President, Marketing
and Sales of Lorillard and has served in the same position with
Lorillard since 1999. Previously, Mr. Spell served as
Senior Vice President, Sales for four years and prior to that,
as Vice President, Sales for one year. Mr. Spell has been
with Lorillard since 1977.
MARKET
FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS
AND ISSUER PURCHASE OF EQUITY SECURITIES.
Our Common Stock began trading regular way on the
NYSE under the symbol LO on June 10, 2008.
There were 68 shareholders of record as of February 11,
2011. This figure excludes any estimate of the indeterminate
number of beneficial holders whose shares may be held of record
by brokerage firms and clearing agencies. The following table
presents the high and low sales prices of our Common Stock on
the NYSE as well as cash dividends declared per share during the
fiscal quarters indicated:
Cash
Dividends
Price per Share
Declared
Common Stock Market Price
High
Low
per Share
2010
Fourth Quarter
$
89.71
$
78.54
$
1.125
Third Quarter
83.03
70.87
1.125
Second Quarter
82.26
70.24
1.00
First Quarter
81.74
72.07
1.00
2009
Fourth Quarter
$
81.76
$
73.61
$
1.00
Third Quarter
78.57
66.46
1.00
Second Quarter
69.94
58.73
0.92
First Quarter
67.00
52.51
0.92
Dividend
Policy
Lorillards current policy is to return approximately
70-75% of
its earnings to shareholders in the form of dividends over the
long term. The declaration and payment of future dividends to
holders of our Common Stock will be at the discretion of our
Board of Directors and depend upon many factors, including our
financial condition, earnings, capital requirements of our
business, legal requirements, regulatory constraints, industry
practice, and other factors that the Board of Directors may deem
relevant. As a holding company with no material liquid assets
other than the capital stock of our subsidiaries, our ability to
pay dividends is dependent on the receipt of dividends from our
operating subsidiaries.
In 2010, we paid cash dividends of $155 million,
$152 million, $171 million and $167 million on
March 11, 2010, June 11, 2010, September 10, 2010
and December 13, 2010, respectively. In 2009, we paid cash
dividends of $155 million, $155 million,
$163 million and $158 million on March 12, 2009,
June 12, 2009, September 11, 2009 and
December 11, 2009, respectively. In 2008, we paid cash
dividends to Loews of $291 million and $200 million on
January 24, 2008 and April 28, 2008, respectively,
prior to the Separation. Following the Separation, we paid cash
dividends of $158 million and $155 million to
shareholders on September 12, 2008 and December 12,
2008, respectively. We expect to continue to pay cash dividends
on our Common Stock.
The following graph compares the cumulative total shareholder
return on our Common Stock from June 10, 2008, the date our
Common Stock commenced trading on a when issued
basis, to December 31, 2010 with the comparable cumulative
return of (i) the S&P 500 Index and (ii) the
S&P Tobacco Index. The graph assumes $100 was invested on
June 10, 2008 in our Common Stock and in each of the
indices and assumes that all cash dividends are reinvested. The
table below the graph shows the dollar value of those
investments as of the dates in the graph. The comparisons in the
graph are required by the SEC and are not intended to forecast
or be indicative of future performance of our Common Stock.
06/10/08
06/30/08
09/30/08
12/31/08
03/31/09
06/30/09
09/30/09
12/31/09
03/31/10
06/30/10
09/30/10
12/31/10
Lorillard Common Stock
100.00
90.25
94.01
75.59
84.12
93.59
104.03
113.75
108.11
104.84
118.70
122.96
S&P 500 Index
100.00
94.23
85.86
66.49
58.73
67.67
77.82
82.09
86.09
75.87
84.01
92.58
S&P 500 Tobacco Index
100.00
97.77
96.78
83.79
75.09
86.48
95.97
99.21
104.87
95.97
115.40
120.09
The performance graph and related information above shall not be
deemed soliciting material or to be
filed with the SEC, nor shall such information be
incorporated by reference into any future filing under the
Securities Act of 1933, as amended, or the Exchange Act, except
to the extent that we specifically incorporate it by reference
into such filing.
Purchases
of Equity Securities by the Issuer and Affiliated
Purchasers
In the fourth quarter of 2010, we repurchased the following
number of shares of our Common Stock:
Approximate
Total Number of
Dollar Value of
Shares Purchased
Shares that
Average
as Part of
May yet Be
Total Number
Price
Publicly
Purchased
of Shares
Paid per
Announced Plans
Under the Plans
(In millions, except for per share amounts)
Purchased
Share
or Programs
or Programs
October 1, 2010 October 31, 2010
1.3
$
81.43
1.3
$
805
November 1, 2010 November 30, 2010
1.3
$
85.25
1.3
$
692
December 1, 2010 December 31, 2010
0.8
$
82.00
0.8
$
624
Total
3.4
$
83.04
3.4
The shares repurchased were acquired under the share repurchase
program authorized by the Board of Directors on August 20,
2010 for a maximum of $1 billion. All repurchases were made
in open market transactions. We record the repurchase of shares
of Common Stock at cost based on the transaction date of the
repurchase. As of December 31, 2010, the maximum dollar
value of shares that could yet be purchased under the
August 20, 2010 repurchase program was $624 million.
The following table includes our selected historical
consolidated financial information as of the dates and for the
periods indicated. The selected historical consolidated
financial information as of and for the years ended
December 31, 2006 through 2010 have been derived from our
audited financial statements. You should read the following
selected historical consolidated financial data in conjunction
with Item 7. Managements Discussion and
Analysis of Financial Condition and Results of Operations
and our consolidated financial statements and related notes
appearing herein.
Years Ended December 31,
2010
2009
2008
2007
2006
(In millions, except per share data)
Results of Operations:
Net sales(1)
$
5,932
$
5,233
$
4,204
$
3,969
$
3,755
Cost of sales
3,809
3,327
2,434
2,313
2,166
Gross profit
2,123
1,906
1,770
1,656
1,589
Selling, general and administrative(2)
398
365
355
382
348
Operating income
1,725
1,541
1,415
1,274
1,241
Investment income(3)
4
5
20
109
103
Interest expense
(94
)
(27
)
(1
)
Income before income taxes
1,635
1,519
1,434
1,383
1,344
Income taxes
606
571
547
485
518
Net income
$
1,029
$
948
$
887
$
898
$
826
Diluted weighted average number of shares outstanding
151.79
164.62
172.21
173.92
173.92
Diluted earnings per share
$
6.78
$
5.76
$
5.15
$
5.16
$
4.75
Dividends per share
$
4.25
$
3.84
$
4.67
$
6.72
$
4.50
Ratio of earnings to fixed charges
18.4
57.3
N/M
N/M
N/M
(1)
Includes excise taxes of $1,879, $1,547, $712, $688 and
$699 million, respectively.
(2)
2008 included expenses of $18 million related to the
Separation of Lorillard from Loews, 2007 included a
$66 million charge related to litigation and 2006 included
a $20 million restructuring charge.
(3)
Includes income (loss) from limited partnership investments of
$0, $0, ($1), $34 and $26 million, respectively.
MANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following discussion should be read in conjunction with
our consolidated financial statements, the notes related to
those financial statements and Item 6. Selected
Financial Data appearing herein. In addition to historical
information, the following discussion contains forward-looking
statements based on current expectations that involve risks and
uncertainties. Actual results and the timing of certain events
may differ significantly from those projected in such
forward-looking statements due to a number of factors, including
those set forth in the Forward-Looking Statements,
Item 1A. Risk Factors, Business
Environment and elsewhere in this Annual Report on
Form 10-K.
Our consolidated financial statements are prepared in conformity
with accounting principles generally accepted in the United
States (GAAP).
Critical
Accounting Policies and Estimates
The preparation of the consolidated financial statements in
conformity with GAAP requires us to make estimates and
assumptions that affect the amounts reported in our consolidated
financial statements and the related notes. Actual results could
differ from those estimates. The financial statements include
our subsidiaries after the elimination of intercompany accounts
and transactions.
The consolidated financial statements and accompanying notes
have been prepared in accordance with GAAP, applied on a
consistent basis. We continually evaluate the accounting
policies and estimates used to prepare the consolidated
financial statements. Significant estimates in the consolidated
financial statements and related notes include:
(1) accruals for tobacco settlement costs, legal expenses
and litigation costs, sales incentive programs, income taxes and
share based compensation, (2) the determination of discount
and other rate assumptions for defined benefit pension and other
postretirement benefit expenses and (3) the valuation of
pension assets. In general, our estimates are based on
historical experience, evaluation of current trends, information
from third party professionals and various other assumptions
that we believe are reasonable under the known facts and
circumstances at the time.
We consider the accounting policies discussed below to be
critical to an understanding of our consolidated financial
statements as their application places the most significant
demands on managements judgment. Due to the inherent
uncertainties involved with this type of judgment, actual
results could differ significantly from estimates and may have a
material adverse impact on our results of operations and equity.
Revenue
Recognition
Revenue from product sales, net of sales incentives, is
recognized at the time ownership of the goods transfers to
customers and collectability is reasonably assured. Federal
excise taxes are recognized on a gross basis and are included in
both sales and cost of sales. Sales incentives include retail
price discounts, coupons and retail display allowances and are
recorded as a reduction of revenue based on amounts estimated as
due to customers and consumers at the end of a period based
primarily on use and redemption rates.
Tobacco
Settlement Costs
In 1998, we and the other Original Participating Manufacturers
entered into the MSA with 46 states and various other
governments and jurisdictions to settle asserted and unasserted
health care cost recovery and other claims. We and certain other
U.S. tobacco product manufacturers had previously settled
similar claims brought by Mississippi, Florida, Texas and
Minnesota (which are referred to as the Initial State
Settlements, and together with the MSA, are referred to as the
State Settlement Agreements). Our portion of ongoing adjusted
settlement payments and legal fees is based on our relative
share of the settling manufacturers domestic cigarette
shipments, with respect to the MSA, in the year preceding that
in which the payment is due, and, with respect to the Initial
State Settlements, in the year in which payment is due. We
record our portion of ongoing adjusted settlement payments as
part of cost of sales as product is shipped. Please read
State Settlement Agreements beginning on
page 36 for additional information.
We and other cigarette manufacturers continue to be confronted
with substantial litigation. Plaintiffs in most of the cases
seek unspecified amounts of compensatory damages and punitive
damages, although some seek damages ranging into the billions of
dollars. Plaintiffs in some of the cases seek treble damages,
statutory damages, return of profits, equitable and injunctive
relief, and medical monitoring, among other damages.
We believe that we have valid defenses to the cases pending
against us. We also believe we have valid bases for appeal of
the adverse verdicts against us. While we intend to defend
vigorously all tobacco products liability litigation, it is not
possible to predict the outcome of any of this litigation.
Litigation is subject to many uncertainties, and it is possible
that some of these actions could be decided unfavorably. We may
enter into discussions in an attempt to settle particular cases
if we believe it is appropriate to do so.
We record provisions in the consolidated financial statements
for pending litigation when we determine that an unfavorable
outcome is probable and the amount of loss can be reasonably
estimated. Except for the impact of the State Settlement
Agreements and the provision relating to the Scott case,
as described in Note 19 to our consolidated financial
statements beginning on page 76, our management is unable
to make a meaningful estimate of the amount or range of loss
that could result from an unfavorable outcome of material
pending litigation and, therefore, no material provision has
been made in our consolidated financial statements for any
unfavorable outcome. It is possible that our results of
operations, cash flows and financial position could be
materially adversely affected by an unfavorable outcome of
certain pending or future litigation.
Defense costs associated with product liability claims are a
significant component of our selling, general and administrative
expenses and are accrued as incurred. Defense costs may increase
in future periods, in part, as a result of the Engle
Progeny Cases as described in Note 19, Legal
Proceedings, to our consolidated financial statements
beginning on page 76. Numerous factors affect product
liability defense costs in any given period. The principal
factors are as follows:
the number and types of cases filed and appealed;
the number of cases tried and appealed;
the development of the law;
the application of new or different theories of liability by
plaintiffs and their counsel; and
litigation strategy and tactics.
Please read Note 19 Legal Proceedings, to our
consolidated financial statements beginning on page 76 for
detailed information regarding tobacco litigation affecting us.
Pension
and Postretirement Benefit Obligations
We are required to make a significant number of assumptions in
order to estimate the liabilities and costs related to our
pension and postretirement benefit obligations to employees
under our benefit plans. The assumptions that have the most
impact on pension costs are the discount rate, the expected
return on plan assets and the expected rate of compensation
increases. These assumptions are evaluated relative to current
market factors such as inflation, interest rates and fiscal and
monetary policies. Changes in these assumptions can have a
material impact on pension obligations and pension expense.
In determining the discount rate assumption, we utilized current
market information and liability information, including a
discounted cash flow analysis of our pension and postretirement
obligations. In particular, the basis for our discount rate
selection was the yield on indices of highly rated fixed income
debt securities with durations comparable to that of our plan
liabilities. The discount rate was determined by projecting the
plans expected future benefit payments as defined for the
projected benefit obligation, discounting those expected
payments using a theoretical zero-coupon spot yield curve
derived from a universe of high-quality bonds as of the
measurement date, and solving for the single equivalent discount
rate that resulted in the same projected benefit obligation.
The salary growth assumption reflects our long-term actual
experience and future and near-term outlook. Long-term return on
plan assets is determined based on historical portfolio results,
asset allocations and managements expectation of the
future economic environment. Our major assumptions are set forth
in Note 13 to our Consolidated Audited Financial Statements
beginning on page 56.
For 2010, hypothetical changes in the assumptions we used for
the pension plans would have had the following impact on our
pension expense:
A decrease of 25 basis points in the long-term rate of
return would have increased our pension expense by approximately
$2 million;
A decrease of 25 basis points in the discount rate would
have increased our pension expense by approximately
$2 million; and
An increase of 25 basis points in the future salary growth
rate would have increased our net pension expense by
approximately $1 million.
Income
Taxes
We account for income taxes in accordance with Accounting
Standard Codification Topic 740 - Income Taxes. Under
ASC 740, deferred tax assets and liabilities are determined
based on the differences between the financial statement and tax
bases of assets and liabilities, using enacted tax rates in
effect for the year in which the differences are expected to
reverse. Judgment is required in determining income tax
provisions and in evaluating tax positions. The uncertain tax
provisions of ASC 740 prescribe a recognition threshold and
a measurement attribute for the financial statement recognition
and measurement of tax positions taken or expected to be taken
in a tax return. For those benefits to be recognized, a tax
position must be more-likely-than-not to be sustained upon
examination by taxing authorities. The amount recognized is
measured as the largest amount of benefit that is greater than
50% likely of being realized upon ultimate settlement.
Additionally, ASC 740 provides guidance on the measurement,
derecognition, classification and disclosure of tax positions,
along with accounting for the related interest and penalties.
Inventories
Inventories are valued at the lower of cost, determined on a
last-in,
first-out (LIFO) basis, or market. The inventory of
leaf tobacco is classified as a current asset in accordance with
generally recognized trade practice although, due to the
duration of the aging processes, a significant portion of the
tobacco on hand will not be sold or used within one year.
Recent
Accounting Pronouncements
Please read Recently adopted accounting
pronouncements in Note 1 of the Notes to Consolidated
Financial Statements beginning on page 47.
Business
Environment
Participants in the U.S. tobacco industry, including us,
face a number of issues that have adversely affected their
results of operations and financial condition in the past and
will continue to do so, including:
A substantial volume of litigation seeking compensatory and
punitive damages ranging into the billions of dollars, as well
as equitable and injunctive relief, arising out of allegations
of cancer and other health effects resulting from the use of
cigarettes, addiction to smoking or exposure to environmental
tobacco smoke, including claims for economic damages relating to
alleged misrepresentation concerning the use of descriptors such
as lights, as well as other alleged damages.
Substantial annual payments continuing in perpetuity, and
significant restrictions on marketing and advertising have been
agreed to and are required under the terms of certain settlement
agreements, including the Master Settlement Agreement among
major tobacco manufacturers and 46 states and various other
governments and jurisdictions (the MSA) that we
entered into in 1998 along with Philip
Morris Incorporated, Brown & Williamson Tobacco
Corporation and R.J. Reynolds Tobacco Company (the other
Original Participating Manufacturers) to settle
asserted and unasserted health care cost recovery and other
claims. We and certain other U.S. tobacco product
manufacturers previously settled similar claims brought by
Mississippi, Florida, Texas and Minnesota (the Initial
State Settlements, and together with the MSA, the
State Settlement Agreements). The State Settlement
Agreements impose a stream of future payment obligations on us
and the other major U.S. cigarette manufacturers and place
significant restrictions on their ability to market and sell
cigarettes.
The domestic cigarette market, in which we currently conduct our
only significant business, continues to contract. As a result of
price increases, restrictions on advertising, promotions and
smoking in public and private facilities, increases in
regulation and excise taxes, health concerns, a decline in the
social acceptability of smoking, increased pressure from
anti-tobacco groups and other factors, domestic cigarette
shipments have decreased at a compound rate of approximately
3.5% from 2000 through 2010.
Increases in cigarette prices since 1998 have led to an increase
in the volume of discount and, specifically, deep discount
cigarettes. Cigarette price increases have been driven by
increases in federal, state and local excise taxes and by
manufacturer price increases. Price increases have led, and
continue to lead, to high levels of discounting and other
promotional activities for premium brands. Deep discount brands
have grown from an estimated share in 1998 of less than 2.0% to
an estimated 14.4% for the twelve months ended December 31,
2010, and continue to be a significant competitive factor in the
domestic market. We do not have sufficient empirical data to
determine whether the increased price of cigarettes has deterred
consumers from starting to smoke or encouraged them to quit
smoking, but it is likely that increased prices may have had an
adverse effect on consumption and may continue to do so.
The tobacco industry is subject to substantial and increasing
regulation. In June 2009, the U.S. Congress passed, and the
President signed into law, the Family Smoking Prevention and
Tobacco Control Act granting the FDA authority to regulate
tobacco products. Pursuant to the terms of the FSPTCA, the
FDA could promulgate regulations that could, among other
things, result in a ban on or restrict the use of menthol in
cigarettes. The law imposes and will impose new restrictions on
the manner in which cigarettes can be advertised and marketed,
require larger and more severe health warnings on cigarette
packaging, permit restriction of the level of tar and nicotine
contained in or yielded by cigarettes and may alter the way
cigarette products are developed and manufactured. In August
2009, we, along with RJR Tobacco, other tobacco manufacturers
and a tobacco retailer, filed a lawsuit in the
U.S. District Court for the Western District of Kentucky
against the FDA challenging the constitutionality of certain
restrictions on speech included in the FSPTCA. These
restrictions on speech include, among others, bans on the use of
color and graphics in certain tobacco product advertising,
limits on the right to make truthful statements regarding
modified risk tobacco products, a prohibition on making certain
statements about the FDAs regulation of tobacco products,
restrictions on the placement of outdoor advertising, a ban on
certain promotions offering gifts in consideration for the
purchase of tobacco products, a ban on brand name sponsorship of
events and the sale of brand name merchandise, and a ban on the
distribution of product samples. The suit also challenges the
laws requirement for extensive graphic warning labels on
all packaging and advertising. The complaint seeks a judgment
(i) declaring that such provisions of the law violate the
First and/or
Fifth Amendments of the U.S. Constitution and
(ii) enjoining the FDA from enforcing the unconstitutional
provisions of the law. On January 4, 2010, the district
court issued an order (a) striking down the provisions of
the law that banned the use of color and graphics in certain
tobacco product advertising and prohibited tobacco manufacturers
from making certain statements about the FDAs regulation
of tobacco products and (b) upholding the remaining
challenged advertising provisions. Both sides have appealed the
district courts ruling to the Sixth Circuit Court of
Appeals, and the appeal has been fully briefed. While we believe
there is established legal precedent supporting our claims we
cannot predict the outcome of any such appeal. Nor can we make
any assurances that any such appeal will be successful.
The federal government and many state and local governments and
agencies, as well as private businesses, have adopted
legislation, regulations or policies which prohibit, restrict or
discourage smoking, including legislation, regulations or
policies prohibiting or restricting smoking in public buildings
and facilities, stores, restaurants and bars, on airline flights
and in the workplace. Other similar laws and regulations are
currently under consideration and may be enacted by federal,
state and local governments in the future.
Substantial federal, state and local excise taxes are reflected
in the retail price of cigarettes. As of April 1, 2009, the
federal excise tax was $1.0066 per pack and for the twelve
months ended December 31, 2010 combined state and local
excise taxes ranged from $0.17 to $5.85 per pack. For the twelve
months ended December 31, 2010, excise tax increases
ranging from $0.40 to $1.60 per pack were implemented in six
states and the District of Columbia. Congress enacted and the
President signed into law an increase in the federal excise tax
on cigarettes by $0.6166 per pack to $1.0066 per pack, effective
April 1, 2009, to finance health insurance for children. It
is likely that increases in excise and similar taxes have had an
adverse impact on sales of cigarettes and that the most recent
increase and future increases, the extent of which cannot be
predicted, could result in further volume declines for the
cigarette industry, including us, and an increased sales shift
toward deep discount cigarettes rather than premium brands. In
addition, we and other cigarette manufacturers and importers are
required to pay an assessment under a federal law designed to
fund payments to tobacco quota holders and growers.
The domestic market for cigarettes is highly competitive.
Competition is primarily based on a brands taste; quality;
price, including the level of discounting and other promotional
activities; positioning; consumer loyalty; and retail display.
Our principal competitors are the two other major
U.S. cigarette manufacturers, Philip Morris and RJR
Tobacco. We also compete with numerous other smaller
manufacturers and importers of cigarettes, including deep
discount cigarette manufacturers. We believe our ability to
compete even more effectively has been restrained in some
marketing areas as a result of retail merchandising contracts
offered by Philip Morris and RJR Tobacco which limit the retail
shelf space available to our brands. As a result, in some retail
locations we are limited in competitively supporting our
promotional programs, which may constrain sales.
The following table presents selected industry and market share
data for Lorillard for years ended December 31, 2010, 2009
and 2008:
Selected
Industry and Market Share Data(1)
Year Ended December 31,
(Volume in billions)
2010
2009
2008
Lorillard total domestic unit volume
37.433
35.560
36.990
Industry total domestic unit volume
303.679
315.735
345.304
Lorillards share of the domestic market
12.3
%
11.3
%
10.7
%
Lorillards premium volume as a percentage of its domestic
volume
86.3
%
88.9
%
92.3
%
Lorillards share of the premium market
15.2
%
14.2
%
13.6
%
Total Newport share of the domestic market
10.5
%
9.8
%
9.7
%
Total Newport share of the premium market
14.9
%
13.9
%
13.3
%
Total menthol segment market share for the industry
29.6
%
28.8
%
28.4
%
Total discount segment market share for the industry
29.8
%
29.5
%
27.3
%
Newport Menthol share of the menthol market
35.0
%
34.1
%
34.0
%
Total Newport share of Lorillards total volume(2)
85.2
%
87.5
%
90.3
%
Total Newport share of Lorillards net sales(2)
90.0
%
91.5
%
93.6
%
(1)
Source: Management Science Associates, Inc. (MSAI),
an independent third-party database management organization that
collects wholesale shipment data from various cigarette
manufacturers. MSAI divides the
cigarette market into two price segments, the premium price
segment and the discount or reduced price segment. MSAIs
information relating to unit sales volume and market share of
certain of the smaller, primarily deep discount, cigarette
manufacturers is based on estimates derived by MSAI. Management
believes that volume and market share information for deep
discount manufacturers may be understated and, correspondingly,
market share information for the larger manufacturers, including
Lorillard, may be overstated by MSAI. Lorillard has made certain
adjustments to the data received from MSAI to reflect
managements judgment as to which brands are included in
the menthol segment.
(2)
Source: Lorillard shipment reports.
Income
Statement Captions
Net sales includes revenue from product sales, net of
sales incentives, and is recognized at the time that ownership
of the goods transfers to customers and collectability is
reasonably assured. Federal excise taxes are recognized on a
gross basis, and are included in both net sales and cost of
sales. Sales incentives include retail price discounts, coupons
and retail display allowances, and are recorded as a reduction
of revenue based on amounts estimated as due to customers and
consumers at the end of a period based primarily on use and
redemption rates.
Cost of sales includes federal excise taxes, leaf tobacco
cost, wrapping and casing material, manufacturing labor and
production salaries, wages and overhead, depreciation related to
manufacturing plant and equipment, research and development
costs, distribution, other manufacturing costs, State Settlement
Agreement expenses, the federal assessment for tobacco growers
and promotional product expenses. Promotional product expenses
include the cost, including all applicable excise taxes, of the
free portion of buy some get some free promotions.
Selling, general and administrative expenses includes
sales force expenses, legal and other costs of litigating and
administering product liability claims, administrative expenses
and advertising and marketing costs. Advertising and marketing
costs include items such as direct mail, advertising, agency
fees and point of sale materials.
Investment income includes interest and dividend income,
realized gains and losses on sale of investments and equity in
the earnings of limited partnership investments.
Interest expense includes interest expense related to
debt and income taxes.
Results
of Operations
Year
ended December 31, 2010 Compared to the Year ended
December 31, 2009
2010
2009
(In millions)
Net sales (including excise taxes of $1,879 and $1,547)
$
5,932
$
5,233
Cost of sales
3,809
3,327
Gross profit
2,123
1,906
Selling, general and administrative
398
365
Operating income
1,725
1,541
Investment income
4
5
Interest expense
(94
)
(27
)
Income before income taxes
1,635
1,519
Income taxes
606
571
Net income
$
1,029
$
948
Net sales. Net sales increased by
$699 million, or 13.4%, from $5.233 billion in 2009 to
$5.932 billion in 2010. Net sales increased
$287 million due to the increase in federal excise taxes
effective April 1, 2009,
$287 million due to higher unit sales volume and
$80 million due to higher average unit prices reflecting
price increases in February and March 2009 and February, May and
November 2010 and $45 million of lower sales incentives in
2010. Federal excise taxes are included in net sales and
increased $30.83 per thousand units, or $0.62 per pack of
20 units, to $50.33 per thousand cigarettes, or $1.01 per
pack of 20 cigarettes, effective April 1, 2009.
Our total unit volume and domestic unit volume increased 5.0%
and 5.3%, respectively, during 2010 compared to 2009. Unit
volume figures in this section are provided on a gross basis.
Total Newport unit volume and domestic Total Newport unit volume
increased 2.3% and 2.5%, respectively, during 2010 compared to
2009. Mavericks domestic wholesale shipments increased
31.5% in 2010 compared to 2009. Excluding the launch of Newport
Non-Menthol in the fourth quarter of 2010, Newports
domestic wholesale unit shipments increased 1.2% during the
current year. Industry-wide domestic unit volume decreased an
estimated 3.8% during 2010 compared to 2009. Industry shipments
of premium brands comprised 70.2% of industry-wide domestic unit
volume during 2010 compared to 70.5% during 2009.
Our total domestic wholesale market share, based on wholesale
shipments, increased by 1.0 share point during 2010 to
12.3% from 11.3% in 2009. Total Newport domestic wholesale
market share increased by 0.7 share points during 2010 to
10.5% from 9.8% in 2009.
Cost of sales. Cost of sales increased by
$482 million, or 14.5%, from $3.327 billion in 2009 to
$3.809 billion in 2010. The increase in cost of sales is
primarily due to the increase in federal excise taxes
($287 million), higher unit sales volume
($67 million), higher raw material costs, primarily tobacco
and wrapping materials ($7 million), higher expenses
related to the State Settlement Agreements ($84 million),
higher Food and Drug Administration fees ($26 million) and
the Federal Assessment for Tobacco Growers ($11 million).
We recorded pre-tax charges for our obligations under the State
Settlement Agreements of $1.212 billion and
$1.128 billion for the years ended December 31, 2010
and 2009, respectively, an increase of $84 million. The
$84 million increase is due to the impact of higher unit
sales ($54), the impact of the inflation adjustment
($32 million), partially offset by other adjustments
($2 million).
Selling, general and administrative. Selling,
general and administrative expenses increased $33 million,
or 9.0%, from $365 million in 2009 to $398 million in
2010 as a result of higher legal and compensation costs incurred
in the current year.
Interest expense. Interest expense increased
$67 million in 2010, compared to 2009, and reflects
interest on the senior notes issued in the second quarter of
2009, net of the effect of interest rate swap agreements, and
interest on the senior notes issued in the second quarter of
2010.
Income taxes. Income taxes increased
$35 million or 6.1%, from $571 million in 2009 to
$606 million in 2010. The change reflects the increase in
income before income taxes of $116 million in 2010 or 7.6%,
offset partially by a decrease in the effective tax rate from
37.6% to 37.1% for the years ended December 31, 2009 and
2010, respectively. The decrease was driven by a statutory
increase in the manufacturers deduction, offset partially by the
unfavorable impact of the repeal of future tax deductions for
Medicare Part D subsidies for retiree drug benefits
pursuant to the health care reform legislation enacted during
the first quarter of 2010.
Year
ended December 31, 2009 Compared to the Year ended
December 31, 2008
2009
2008
(In millions)
Net sales (including excise taxes of $1,547 and $712)
$
5,233
$
4,204
Cost of sales
3,327
2,434
Gross profit
1,906
1,770
Selling, general and administrative
365
355
Operating income
1,541
1,415
Investment income
5
20
Interest expense
(27
)
(1
)
Income before income taxes
1,519
1,434
Income taxes
571
547
Net income
$
948
$
887
Net sales. Net sales increased by
$1.029 billion, or 24.5%, from $4.204 billion in 2008
to $5.233 billion in 2009. Net sales increased
$835 million due to the increase in federal excise taxes
effective April 1, 2009 and $533 million due to higher
average unit prices reflecting price increases in May and
December 2008 and February and March 2009, partially offset by
$251 million due to lower unit sales volume and
$88 million of higher sales incentives. Federal excise
taxes are included in net sales and increased $30.83 per
thousand units, or $0.62 per pack of 20 units, to $50.33
per thousand cigarettes, or $1.01 per pack of 20 cigarettes,
effective April 1, 2009.
Our total unit volume and domestic unit volume decreased 3.9%
during 2009 compared to 2008. Unit volume figures in this
section are provided on a gross basis. Our domestic wholesale
shipments in 2009 reflect the negative impact of the federal
excise tax increase implemented on April 1, 2009. Total
Newport unit volume and domestic Newport unit volume decreased
6.9% during 2009 compared to 2008. Industry-wide domestic unit
volume decreased an estimated 8.6% during 2009 compared to 2008.
Industry shipments of premium brands comprised 70.5% of
industry-wide domestic unit volume during 2009 compared to 72.7%
during 2008.
Cost of sales. Cost of sales increased by
$893 million, or 36.7%, from $2.434 billion in 2008 to
$3.327 billion in 2009. The increase in cost of sales is
primarily due to the increase in federal excise taxes
($835 million), higher raw material costs, primarily
tobacco and wrapping materials ($74 million), higher
expenses related to the State Settlement Agreements
($11 million), the assessment of Food and Drug
Administration fees ($9 million) and higher pension expense
($15 million), partially offset by lower unit sales volume
($34 million) and the absence of free product promotions
($17 million). We recorded pre-tax charges for our
obligations under the State Settlement Agreements of
$1.128 billion and $1.117 billion for the years ended
December 31, 2009 and 2008, respectively, an increase of
$11 million. The $11 million increase is due to the
impact of the inflation adjustment ($30 million) and other
adjustments ($24 million), partially offset by lower unit
sales ($43 million).
Selling, general and administrative. Selling,
general and administrative expenses increased $10 million,
or 2.8%, from $355 million in 2008 to $365 million in
2009. The increase was primarily due to an increase in legal
expenses of $18 million due to the continuing defense costs
associated with the Engle Progeny Cases and higher
pension expense of $8 million, partially offset by a
decrease in marketing costs of $6 million and the absence
of an $18 million charge in 2008 related to the Separation.
Investment income. Investment income decreased
$15 million in 2009, compared to 2008 and the decrease
primarily reflects lower interest rates on investments.
Interest expense. Interest expense increased
$26 million in 2009, compared to 2008, and the increase
reflects interest on the Senior Notes issued in the second
quarter of 2009, net of the effect of interest rate swap
agreements.
Income taxes. Income taxes increased
$24 million or 4.4% from $547 million in 2008 to
$571 million in 2009. The change reflects the increase in
income before income taxes of $85 million in 2009 or 5.9%
partially offset by a decrease in the effective tax rate from
38.2% in 2008 to 37.6% in 2009. This decrease in the effective
tax rate impacts income tax expense by $9 million, and is
primarily due to the impact, in 2008, of the Separation on the
availability of the manufacturers deduction for the
pre-Separation period and the non-deductibility of certain
Separation expenses, and, in 2009, the favorable resolution of
certain state income tax matters, partially offset by an
increase in state tax rates.
Liquidity
and Capital Resources
Our cash and cash equivalents of $2.063 billion at
December 31, 2010 were invested in prime money market funds.
Cash
Flows
Cash flow from operating activities. The
principal source of liquidity for our business and operating
needs is internally generated funds from our operations. We
generated net cash flow from operations of $1.091 billion
for 2010 compared to $1.037 million for 2009. The increased
cash flow in 2010 primarily reflects the increase in net income.
Net cash flow from operations was $1.037 million for 2009,
compared to $980 million for 2008. The increased cash flow
in 2009 primarily reflects the increase in net income.
Cash flow from investing activities. Our cash
flow from investing activities used cash of $40 million for
the twelve months ended December 31, 2010 compared to
$51 million for 2009. The decrease in cash flow used by
investing activities in 2010 is due to decreased purchases of
equipment. Our cash flow from investing activities used cash of
$51 million for the twelve months ended December 31,
2009 compared to $201 million of cash provided in 2008. The
decrease in cash flow provided by investing activities in 2009
is primarily due to no investment purchases and sales.
Capital expenditures were $40 million, $51 million and
$44 million for 2010, 2009 and 2008, respectively. The
expenditures were primarily for the modernization of
manufacturing equipment. Our capital expenditures for 2011 are
forecast to be between $35 million and $45 million.
Cash flow from financing activities. Our cash
flow from operations has exceeded our working capital and
capital expenditure requirements in each of the years ended
December 31, 2010, 2009 and 2008. We paid cash dividends to
Loews of $291 million and $200 million on
January 24, 2008 and April 28, 2008, respectively. We
paid cash dividends to shareholders of $158 million and
$155 million on September 12, 2008 and
December 12, 2008, respectively. In 2009, we paid cash
dividends of $155 million, $155 million,
$163 million and $158 million on March 12, 2009,
June 12, 2009, September 11, 2009 and
December 11, 2009, respectively. In 2010, we paid cash
dividends of $155 million, $152 million,
$171 million and $167 million on March 11, 2010,
June 11, 2010, September 10, 2010 and
December 13, 2010, respectively.
In April 2010, Lorillard Tobacco issued $1 billion of
unsecured senior notes in two tranches pursuant to an Indenture,
dated June 23, 2009, and the Second Supplemental Indenture,
dated April 12, 2010 (the Second Supplemental
Indenture). The first tranche was $750 million
aggregate principal amount of 6.875% Notes due May 1,
2020 (the 2020 Notes), and the second tranche was
$250 million aggregate principal amount of
8.125% Notes due May 1, 2040 (the 2040
Notes). Lorillard Tobacco is the principal, wholly-owned
operating subsidiary of the Company and the 2020 Notes and 2040
Notes (the Notes) are unconditionally guaranteed on
a senior unsecured basis by the Company. The net proceeds from
the issuance will be used for general corporate purposes, which
may include, among other things, the repurchase, redemption or
retirement of securities including the Companys common
stock, acquisitions, additions to working capital and capital
expenditures.
Upon the occurrence of a change of control triggering event,
Lorillard Tobacco will be required to make an offer to
repurchase the Notes at a price equal to 101% of the aggregate
principal amount of the Notes, plus accrued interest. A
change of control triggering event occurs when there
is both a change of control (as defined in the
Second Supplemental Indenture) and the Notes cease to be rated
investment grade by both Moodys and S&P within
60 days of the occurrence of a change of control or public
announcement of the
intention to effect a change of control. The Notes are not
entitled to any sinking fund and are not redeemable prior to
maturity. The Notes contain covenants that restrict liens and
sale and leaseback transactions, subject to a limited exception.
During 2010, we repurchased approximately 9.0 million
shares at a cost of $79.74 per share and totaling
$716 million under the $1 billion repurchase program
announced on August 20, 2010, the $250 million
repurchase program announced February 25, 2010 and the
$750 million repurchase program announced July 27,
2009. As of February 11, 2011, the maximum dollar value of
shares that could yet be purchased under the $1 billion
program was $444 million.
Purchases by the Company under these programs were made from
time to time at prevailing market prices in open market
purchases, privately negotiated transactions, block purchase
techniques or otherwise, as determined by the Companys
management. The purchases were funded from existing cash
balances, including proceeds from the issuance of the Notes.
These programs do not obligate the Company to acquire any
particular amount of its common stock. The timing, frequency and
amount of repurchase activity will depend on a variety of
factors such as levels of cash generation from operations, cash
requirements for investment in the Companys business,
current stock price, market conditions and other factors.
Liquidity
We believe that cash flow from operating activities will be
sufficient for the foreseeable future to enable us to meet our
obligations under the State Settlement Agreements and to fund
our working capital and capital expenditure requirements. We
cannot predict our cash requirements related to any future
settlements or judgments, including cash required to bond any
appeals, if necessary, and can make no assurance that we will be
able to meet all of those requirements.
The rate of return on our pension assets in 2010 was a positive
11.9%. Our pension expense was approximately $17 million in
2010 and we anticipate pension expense of approximately
$13 million in 2011. We contributed $19 million to our
pension plans in 2010 and anticipate a contribution of
$15 million in 2011.
We believe that it is appropriate for a company of our size and
financial characteristics to have a prudent level of debt as a
component of our capital structure in order to reduce our total
cost of capital and improve total shareholder returns.
Accordingly, we raised $1 billion and $750 million of
debt financing in 2010 and 2009, respectively, and we expect
that we will seek to raise additional debt financing in the
future, although the structure, timing and amount of such
indebtedness has not yet been determined and will depend on a
number of factors, including, but not limited to the prevailing
credit and interest rate environment, our cash requirements, and
other business, financial and tax considerations. The proceeds
of any such debt financing may be used to fund stock
repurchases, acquisitions, dividends or for other general
corporate purposes. We presently have no commitments or
agreements with or from any third party regarding any debt
financing transactions and no assurance can be given that we
will ultimately pursue any debt financing or, if pursued, that
we will be able to obtain debt financing at the suggested levels
or on attractive terms.
In March 2010, Lorillard Tobacco, the principal, wholly owned
operating subsidiary of the Company, entered into a
$185 million revolving credit facility
(Revolver) that expires March 26, 2013 and is
guaranteed by the Company. Proceeds from the Revolver may be
used for general corporate and working capital purposes. The
interest rates on borrowings under the Revolver will be based on
prevailing interest rates and, in part, upon the credit rating
applicable to the Companys senior unsecured long-term debt.
The Revolver requires that the Company maintain a ratio of debt
to net income plus income taxes, interest expense, depreciation
and amortization expense, any extraordinary losses, any non-cash
expenses or losses and any losses on sales of assets outside of
the ordinary course of business (EBITDA) of not more
than 2.25 to 1 and a ratio of EBITDA to interest expense of not
less than 3.0 to 1. In addition, the Revolver contains customary
affirmative and negative covenants, including restrictions on
liens and sale and leaseback transactions subject to a limited
exception. The Revolver contains customary events of default,
including upon a change in control that could result in the
acceleration of all amounts and cancellation of all commitments
outstanding, if any, under the Revolver.
There were no borrowings under the Revolver during 2010.
State
Settlement Agreements
The State Settlement Agreements require us and the other
Original Participating Manufacturers (Philip Morris
Incorporated, Brown & Williamson Tobacco Corporation
and R.J. Reynolds Tobacco Company) to make aggregate annual
payments of $10.4 billion in perpetuity, subject to
adjustment for several factors described below. In addition, the
Original Participating Manufacturers are required to pay
plaintiffs attorneys fees, subject to an aggregate
annual cap of $500 million. These payment obligations are
several and not joint obligations of each of the Original
Participating Manufacturers. Our obligations under the State
Settlement Agreements will materially adversely affect our cash
flows and operating income in future years.
Both the aggregate payment obligations of the Original
Participating Manufacturers, and our payment obligations,
individually, under the State Settlement Agreements are subject
to adjustment for several factors which include:
inflation;
aggregate volume of Original Participating Manufacturers
cigarette shipments;
other Original Participating Manufacturers and our market
share; and
aggregate Original Participating Manufacturers operating income,
allocated to such manufacturers that have operating income
increases.
The inflation adjustment increases payments on a compounded
annual basis by the greater of 3.0% or the actual total
percentage change in the consumer price index for the preceding
year. The inflation adjustment is measured starting with
inflation for 1999. The volume adjustment increases or decreases
payments based on the increase or decrease in the total number
of cigarettes shipped in or to the 50 U.S. states, the
District of Columbia and Puerto Rico by the Original
Participating Manufacturers during the preceding year compared
to the 1997 base year shipments. If volume has increased, the
volume adjustment would increase the annual payment by the same
percentage as the number of cigarettes shipped exceeds the 1997
base number. If volume has decreased, the volume adjustment
would decrease the annual payment by 98.0% of the percentage
reduction in volume. In addition, downward adjustments to the
annual payments for changes in volume may, subject to specified
conditions and exceptions, be reduced in the event of an
increase in the Original Participating Manufacturers aggregate
operating income from domestic sales of cigarettes over base
year levels established in the State Settlement Agreements,
adjusted for inflation. Any adjustments resulting from increases
in operating income would be allocated among those Original
Participating Manufacturers who have had increases.
During 2010, we paid $1.134 billion under the State
Settlement Agreements, primarily based on 2009 volume. Included
in the above number was $92 million we deposited in an
interest-bearing escrow account in accordance with procedures
established in the MSA pending resolution of a claim by us and
the other Original Participating Manufacturers that they are
entitled to reduce their MSA payments based on a loss of market
share to non-participating manufacturers. Most of the states
that are parties to the MSA are disputing the availability of
the reduction and we believe that this dispute will ultimately
be resolved by judicial and arbitration proceedings. Our
$92 million reduction is based upon the Original
Participating Manufacturers collective loss of market share in
2006. In April of 2009, 2008, 2007 and 2006, we had previously
deposited $69 million, $72 million, $111 million
and $109 million, respectively, in the same escrow account
discussed above, which was based on a loss of market share in
2006, 2005, 2004 and 2003 to non-participating manufacturers. In
February 2009, we directed the transfer of $72 million from
this account to the non-disputed account, related to the loss of
market share in 2005, pursuant to an Agreement Concerning
Arbitration that we and other Participating Manufacturers
entered into with certain MSA states. This amount was then paid
to the MSA states. We and other Original Participating
Manufacturers have the right to claim additional reductions of
MSA payments in subsequent years under provisions of the MSA.
The following table presents the contractual cash payment
obligations of Lorillard as of December 31, 2010:
More
Less Than
Than 5
Total
1 Year
1-3 Years
3-5 Years
Years
(In millions)
Senior notes
$
1,750
$
$
$
$
1,750
Interest payments related to notes
1,590
133
398
266
793
Contractual purchase obligations
55
55
Operating lease obligations
3
2
1
Total
$
3,398
$
190
$
399
$
266
$
2,543
In addition to the obligations presented in the table above, as
of December 31, 2010, we believe that it is reasonably
possible that payments of up to $0.6 million may be made to
various tax authorities in the next twelve months related to
gross unrecognized tax benefits. We cannot make a reasonably
reliable estimate of the amount of liabilities for unrecognized
tax benefits that may result in cash settlements for periods
beyond twelve months.
As previously discussed, we have entered into the State
Settlement Agreements which impose a stream of future payment
obligations on us and the other major U.S. cigarette
manufacturers. Our portion of ongoing adjusted settlement
payments, including fees to settling plaintiffs attorneys,
are based on a number of factors which are described above. Our
cash payment under the State Settlement Agreements in 2010
amounted to $1.134 billion and we estimate our cash
payments in 2011 under the State Settlement Agreements will be
between $1.2 billion and $1.3 billion, primarily based
on 2010 estimated industry volume. Payment obligations are not
incurred until the related sales occur and therefore are not
reflected in the above table. Please see the discussion of the
calculation of the Original Participating Manufacturers base
payment obligations under the State Settlement Agreements under
State Settlement Agreements on page 36.
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We invest in financial instruments that involve market risk. Our
measure of market risk exposure represents an estimate of the
change in fair value of our financial instruments. Market risk
exposure is presented below for each class of financial
instrument we held at December 31, 2010, assuming immediate
adverse market movements of the magnitude described below. We
believe that the rate of adverse market movement represents a
measure of exposure to loss under hypothetically assumed adverse
conditions. The estimated market risk exposure represents the
hypothetical loss to future earnings and does not represent the
maximum possible loss nor any expected actual loss, even under
adverse conditions, because actual adverse fluctuations would
likely differ. In addition, since our investment portfolio is
subject to change based on our portfolio management strategy as
well as in response to changes in the market, these estimates
are not necessarily indicative of the actual results which may
occur. The market risk exposure represents the potential loss in
carrying value and pretax impact to future earnings caused by
the hypothetical change in price.
Exposure to market risk is managed and monitored by senior
management. Senior management approves our overall investment
strategy and has the responsibility to ensure that the
investment positions are consistent with that strategy with an
acceptable level of risk.
Interest rate risk. Our investments, which are
included in cash and cash equivalents, consist of money market
funds with financial institutions. Those investments are exposed
to fluctuations in interest rates. A sensitivity analysis, based
on a hypothetical 1% increase or decrease in interest rates on
our average 2010 investments, would cause an increase or
decrease in pre-tax income of approximately $21 million.
Our debt is denominated in US Dollars and has been issued
at a fixed rate. In September 2009, we entered into interest
rate swap agreements for a total notional amount of
$750 million to hedge changes in fair value of the Notes
due to changes in the designated benchmark interest rate.
Changes in the fair value of the derivative are recorded in
earnings along with offsetting adjustments to the carrying
amount of the hedged debt. A sensitivity analysis, based on a
hypothetical 1% change in LIBOR, would cause an increase or
decrease in pretax income of approximately $8 million for
2010.
Liquidity risk. We may be forced to cash
settle all or a portion of our derivative contracts before the
expiration date if our debt rating is downgraded below Ba2 by
Moodys or BB by S&P. This could have a negative
impact on our cash position. Early cash settlement would result
in the timing of our hedge settlement not being matched to the
cash settlement of the debt. Our current Moodys debt
rating is Baa2, and our current S&P debt rating is BBB-,
both of which are above the ratings at which settlement of our
derivative contracts would be required. See Note 10 for
additional information on derivatives.
To the Board of Directors and Shareholders of Lorillard, Inc.
Greensboro, North Carolina.
We have audited the accompanying consolidated balance sheets of
Lorillard, Inc. and Subsidiaries (the Company) as of
December 31, 2010 and 2009, and the related consolidated
statements of income, shareholders equity (deficit), and
cash flows for each of the three years in the period ended
December 31, 2010. Our audits also included the financial
statement schedule listed in the Index at Item 15. These
consolidated financial statements and financial statement
schedule are the responsibility of the Companys
management. Our responsibility is to express an opinion on the
consolidated financial statements and financial statement
schedule based on our audits.
We conducted our audits in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such consolidated financial statements present
fairly, in all material respects, the financial position of the
Company as of December 31, 2010 and 2009, and the results
of operations and cash flows for each of the three years in the
period ended December 31, 2010, in conformity with
accounting principles generally accepted in the United States of
America. Also, in our opinion, such financial statement
schedule, when considered in relation to the basic consolidated
financial statements taken as a whole, presents fairly, in all
material respects, the information set forth therein.
We have also audited, in accordance with the standards of the
Public Company Accounting Oversight Board (United States), the
Companys internal control over financial reporting as of
December 31, 2010, based on the criteria established in
Internal Control Integrated Framework issued
by the Committee of Sponsoring Organizations of the Treadway
Commission and our report dated February 18, 2011 expressed an
unqualified opinion on the Companys internal control over
financial reporting.
Basis of presentation 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.
The consolidated 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 operating and reportable segment through its
principal subsidiary, Lorillard Tobacco Company (Lorillard
Tobacco or Issuer).
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.
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
Companys 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.
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.
In September 2009, Loews reimbursed Lorillard $14 million,
which was recorded as a receivable in 2008, related to
pre-Separation tax benefits and payments.
Subsequent to the issuance of the Companys 2008
consolidated financial statements included in
Form 8-K,
filed on June 11, 2009, the Company determined that
immaterial errors existed in the footnote disclosure containing
the condensed consolidating statement of cash flows for the year
ended December 31, 2008. The Issuers statement of
cash flows for the year ended December 31, 2008 has been
corrected to reflect $150 million return of capital,
previously reported as a financing inflow, as an investing
inflow. In addition, the statement of cash flows for All Other
Subsidiaries for the same period has been corrected to properly
include the $150 million payment to the Issuer, previously
reported as return of capital outflow within financing
activities, as a component of dividends paid also within
financing activities. These immaterial errors did not impact
operating cash flows for any consolidating entity and had no
impact on the consolidated statement of cash flows for the year
ended December 31, 2008.
Additionally, subsequent to the issuance of the Companys
2008 consolidated financial statements included in
Form 8-K,
filed on June 11, 2009, the Company amended the
presentation of pension and postretirement cash inflows and
outflows on the statement of cash flows by adding the lines
Pension, health and life insurance benefits expense
and Pension, health and life insurance contributions
to enhance the disclosure of pension related activities. These
changes have been reflected on the consolidated statement of
cash flows as well as the consolidating statements of cash flows
for the year ended December 31, 2008.
Also, subsequent to the issuance of the Companys 2008
consolidated financial statements included in
Form 8-K,
filed on June 11, 2009, the Company determined that
immaterial errors existed in the consolidated statements of
income for the year ended December 31, 2008. The
consolidated statement of income has been corrected to properly
classify $6 million for the year ended December 31,
2008, previously classified as
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
selling, general and administrative costs, as cost of sales.
Within the consolidating financial information footnote
(Note 18), the correction of the error was reflected in the
Issuer column.
Use of estimates The preparation of financial
statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions
that affect the reported amounts in the consolidated financial
statements and related notes. Significant estimates in the
consolidated financial statements and related notes include:
(1) accruals for tobacco settlement costs, litigation,
sales incentive programs, income taxes and share-based
compensation, (2) the determination of discount and other
rate assumptions for defined benefit pension and other
postretirement benefit expenses and (3) the valuation of
pension assets. Actual results could differ from those estimates.
Cash equivalents Cash equivalents consist of
short-term liquid investments with a maturity at date of
purchase of 60 days or less. Interest and dividend income
are included in investment income. The cost of securities sold
is based on the specific identification method and transactions
are recorded on the trade date.
Inventories Inventories are valued at the
lower of cost, determined on a
last-in,
first-out (LIFO) basis, or market. A significant
portion of leaf tobacco on hand will not be sold or used within
one year, due to the duration of the aging process. All
inventory of leaf tobacco, including the portion that has an
operating cycle that exceeds 12 months, is classified as a
current asset and is generally consistent with recognized trade
practice.
Depreciation Buildings, machinery and
equipment are depreciated for financial reporting purposes on
the straight-line method over estimated useful lives of those
assets of 40 years for buildings and 3 to 12 years for
machinery and equipment.
Derivative agreements In September 2009,
Lorillard Tobacco entered into interest rate swap agreements,
which the Company guaranteed, with a total notional amount of
$750 million. The interest rate swap agreements qualify for
hedge accounting and were designated as fair value hedges. Under
the swap agreements, Lorillard Tobacco receives a fixed rate
settlement and pays a variable rate settlement with the
difference recorded in interest expense. Changes in the fair
value of the swap agreements are recorded in other assets or
other liabilities with an offsetting adjustment to the carrying
amount of the hedged debt. See Notes 7 and 10.
Accumulated other comprehensive income (loss)
The components of accumulated other comprehensive income (loss)
(AOCI) include the pension liability and any
unrealized gains (losses) on available for sale investments, net
of related taxes.
Revenue recognition Revenue from product
sales, net of sales incentives, is recognized at the time
ownership of the goods transfers to customers and collectability
is reasonably assured. Federal excise taxes are recognized on a
gross basis, and are reflected in both net sales and cost of
sales. Sales incentives include retail price discounts, coupons
and retail display allowances and are recorded as a reduction of
revenue based on amounts estimated as due to customers and
consumers at the end of a period based primarily on use and
redemption rates. Sales to one customer represented 27%, 26% and
26% of total sales of Lorillard in 2010, 2009 and 2008,
respectively. Our largest selling brand, Newport, accounted for
approximately 90.0%, 91.5% and 93.6% of total sales of Lorillard
in 2010, 2009 and 2008, respectively.
Cost of sales Cost of sales includes federal
excise taxes, leaf tobacco cost, wrapping and casing material,
manufacturing labor and production salaries, wages and overhead,
research and development costs, distribution, other
manufacturing costs, State Settlement Agreement expenses, the
federal assessment for tobacco growers, Food and Drug
Administration fees, and promotional product expenses.
Promotional product expenses include the cost, including excise
taxes, of the free portion of buy some get some free
promotions. We purchased approximately 27.4%, 21.7% and 25.9% of
our leaf tobacco from one dealer in 2010, 2009 and 2008,
respectively.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Advertising and marketing costs Advertising
costs are recorded as expense in the year incurred. Marketing
and advertising costs that include such items as direct mail,
advertising, agency fees and point of sale materials are
included in selling, general and administrative expenses.
Advertising expense was $35 million, $40 million and
$47 million for the years ended December 31, 2010,
2009 and 2008, respectively.
Research and development costs Research and
development costs are recorded as expense as incurred, are
included in cost of sales and amounted to $19 million,
$19 million and $20 million for each of the years
ended December 31, 2010, 2009 and 2008, respectively.
Tobacco settlement costs Lorillard recorded
pre-tax charges of $1.212 billion, $1.128 billion and
$1.117 billion for the years ended December 31, 2010,
2009 and 2008, respectively, to accrue its obligations under the
State Settlement Agreements (see Note 19). Lorillards
portion of ongoing adjusted settlement payments and legal fees
is based on its share of total domestic cigarette shipments in
that year. Accordingly, Lorillard records its portion of ongoing
adjusted settlement payments as part of cost of sales as the
related sales occur. Payments are made annually and are
generally due in April of the year following the accrual of
costs. The settlement cost liability on the balance sheets
represents the unpaid portion of the Companys obligations
under the State Settlement Agreements.
Share-Based compensation costs Under the 2008
Incentive Compensation Plan, the fair market value of the
exercise price per share is based on the closing price at the
date of the grant. Share-based compensation expense is
recognized net of an estimated forfeiture rate and for shares
expected to vest, using a straight-line basis over the requisite
service period of the award.
Legal costs and loss contingencies Legal
costs are expensed as incurred and amounted to
$116 million, $98 million and $80 million for the
years ended December 31, 2010, 2009 and 2008, respectively.
Loss contingencies related to pending or threatened litigation
are accrued as a charge to selling, general and administrative
expense when both of the following conditions are met:
(i) a determination that it is probable that an asset has
been impaired or a liability has been incurred, and
(ii) the amount of loss can be reasonably estimated. See
Note 19 for a description of loss contingencies.
Income taxes Deferred tax assets and
liabilities are determined based on the differences between the
financial statement and tax bases of assets and liabilities,
using enacted tax rates in effect for the year in which the
differences are expected to reverse. Judgment is required in
determining income tax provisions and in evaluating tax
positions. For uncertain tax positions to be recognized, a tax
position must be more-likely-than-not to be sustained upon
examination by taxing authorities. The amount recognized is
measured as the largest amount of benefit that is greater than
50% likely of being realized upon ultimate settlement. Where
applicable, interest related to uncertain tax positions is
recognized in interest expense. Penalties, if incurred, are
recognized as a component of income tax expense.
Recently adopted accounting pronouncements
Lorillard adopted FASB ASC Subtopic
715-20
Employers Disclosures about Postretirement Benefit
Plan Assets. ASC Subtopic
715-20
requires disclosure of investment policies and strategies in
narrative form. ASC Subtopic
715-20 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. ASC Subtopic
715-20 was
effective for fiscal years ending after December 15, 2009.
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 Lorillards
financial position or results of operations.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
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 entitys
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 10 for related disclosure.
Lorillard adopted FASB ASC
Section 820-10-35
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 820-10-35
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 820-10-35
did not have a material impact on Lorillards financial
position or results of operations.
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
was reflected in our interim financial statements beginning with
the second quarter of 2009.
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 Lorillards financial position or
results of operations.
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 was
effective for the first period after the issue date of August
2009. ASU
2009-05 did
not have a material impact on Lorillards financial
position or results of operations.
Lorillard adopted FASB ASU
2010-06
Fair Value Measurements and Disclosures (Topic 820):
Improving Disclosures about Fair Value Measurements. ASU
2010-06
establishes additional disclosures related to fair value.
Transfers in and out of Level 1 and Level 2 and the
reasons for the transfers must be disclosed. Level 3
purchases, sales, issuances and settlements should be presented
separately rather than net. In addition, the level of
disaggregation and input and valuation techniques need to be
disclosed. The effective dates are periods beginning after
December 15, 2010 for the Level 3 purchases, sales,
issuances and settlements disclosure, and
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
periods beginning after December 15, 2009 for all other
provisions. ASU
2010-06 did
not have a material impact on Lorillards financial
position or results of operations.
Lorillard adopted FASB ASU
2010-09
Subsequent Events (Topic 855): Amendments to Certain
Recognition and Disclosure Requirements. ASU
2010-09
amends Topic 855 for SEC filers to eliminate the disclosure of
the date through which subsequent events have been reviewed. The
effective date was February 24, 2010. ASU
2010-09 did
not have a material impact on Lorillards financial
position or results of operations.
2.
Inventories
Inventories are valued at the lower of cost, determined on a
LIFO basis, or market and consisted of the following:
December 31,
2010
2009
(In millions)
Leaf tobacco
$
225
$
236
Manufactured stock
48
41
Materials and supplies
4
4
$
277
$
281
If the average cost method of accounting was used, inventories
would be greater by approximately $206 million and
$189 million at December 31, 2010 and 2009,
respectively.
3.
Plant and
Equipment, Net
Plant and equipment is stated at historical cost and consisted
of the following:
December 31,
2010
2009
(In millions)
Land
$
3
$
3
Buildings
89
87
Equipment
573
563
Total
665
653
Accumulated depreciation
(422
)
(416
)
Plant and equipment, net
$
243
$
237
Depreciation and amortization expense was $35 million,
$32 million and $32 million for 2010, 2009 and 2008,
respectively.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
4.
Other
Assets
Other assets were as follows:
December 31,
2010
2009
(In millions)
Other investments
$
$
15
Restricted cash
13
Debt issuance costs
17
5
Interest rate swap
19
Other prepaid assets
10
16
Total
$
46
$
49
5.
Accrued
Liabilities
Accrued liabilities were as follows:
December 31,
2010
2009
(In millions)
Legal fees
$
30
$
21
Salaries and other compensation
18
16
Medical and other employee benefit plans
31
30
Consumer rebates
59
86
Sales promotion
20
21
Excise and other taxes
52
78
Litigation accrual
68
Accrued bond interest
14
Other accrued liabilities
41
66
Total
$
333
$
318
6.
Commitments
Lorillard leases certain real estate and transportation
equipment under various operating leases. Listed below are
future minimum rental payments required under those operating
leases with non-cancelable terms in excess of one year.
December 31, 2010
(In millions)
2011
$
1.7
2012
1.2
2013
0.4
2014
0.1
2015
0.0
Net Minimum lease payments
$
3.4
Rental expense for all operating leases was $6 million,
$6 million and $6 million for 2010, 2009 and 2008,
respectively.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
At December 31, 2010, Lorillard had contractual purchase
obligations of approximately $55 million. These purchase
obligations include agreements to purchase machinery. Future
contractual purchase obligations at December 31, 2010 were
as follows:
2011
2012
2013
2014
2015
(In millions)
Contractual purchase obligations
$
55
$
0
$
0
$
0
$
0
7.
Fair
Value
Fair value is the price that would be received upon sale of an
asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. The
following fair value hierarchy is used in selecting inputs, with
the highest priority given to Level 1, as these are the
most transparent or reliable:
Level 1 Quoted prices for identical instruments
in active markets.
Level 2 Quoted prices for similar instruments
in active markets; quoted prices for identical or similar
instruments in markets that are not active; and model-derived
valuations in which all significant inputs are observable
directly or indirectly.
Level 3 Valuations derived from valuation
techniques in which one or more significant inputs are
unobservable.
Lorillard is responsible for the valuation process and as part
of this process may use data from outside sources in
establishing fair value. Lorillard performs due diligence to
understand the inputs used or how the data was calculated or
derived, and corroborates the reasonableness of external inputs
in the valuation process.
Assets and liabilities measured at fair value on a recurring
basis at December 31, 2010 were as follows:
Level 1
Level 2
Level 3
Total
(In millions)
Cash and Cash Equivalents:
Prime money market funds
$
2,063
$
$
$
2,063
Total cash and cash equivalents
$
2,063
$
$
$
2,063
Derivative Asset:
Interest rate swaps fixed to floating rate
$
$
19
$
$
19
Total derivative asset
$
$
19
$
$
19
Assets and liabilities measured at fair value on a recurring
basis at December 31, 2009 were as follows:
Level 1
Level 2
Level 3
Total
(In millions)
Cash and Cash Equivalents:
Prime money market funds
$
1,384
$
$
$
1,384
Total cash and cash equivalents
$
1,384
$
$
$
1,384
Derivative Liability:
Interest rate swaps fixed to floating rate
$
$
28
$
$
28
Total derivative liability
$
$
28
$
$
28
There were no transfers between Level 1 and Level 2
for the years ended December 31, 2010 and 2009.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The fair value of the money market funds, classified as
Level 1, utilized quoted prices in active markets.
The fair value of the interest rate swaps, classified as
Level 2, utilized a market approach model using the
notional amount of the interest rate swap multiplied by the
observable inputs of time to maturity and market interest rates.
See Note 10 for additional information on the interest rate
swaps.
8.
Credit
Agreement
In March 2010, Lorillard Tobacco, the principal, wholly-owned
operating subsidiary of the Company, entered into a
$185 million revolving credit facility
(Revolver) that expires March 26, 2013 and is
guaranteed by the Company. Proceeds from the Revolver may be
used for general corporate and working capital purposes. The
interest rates on borrowings under the Revolver are based on
prevailing interest rates and, in part, upon the credit rating
applicable to the Companys senior unsecured long-term debt.
The Revolver requires that the Company maintain a ratio of debt
to net income plus income taxes, interest expense, depreciation
and amortization expense, any extraordinary losses, any non-cash
expenses or losses and any losses on sales of assets outside of
the ordinary course of business (EBITDA) of not more
than 2.25 to 1 and a ratio of EBITDA to interest expense of not
less than 3.0 to 1. In addition, the Revolver contains customary
affirmative and negative covenants, including restrictions on
liens and sale and leaseback transactions subject to a limited
exception. The Revolver contains customary events of default,
including upon a change in control that could result in the
acceleration of all amounts and cancellation of all commitments
outstanding, if any, under the Revolver.
There were no borrowings under the Revolver during 2010.
9.
Long-Term
Debt
Long-term debt, net of interest rate swaps, consisted of the
following:
December 31,
December 31,
2010
2009
(In millions)
2019 Notes 8.125% Notes due 2019
$
769
$
722
2020 Notes 6.875% Notes due 2020
750
2040 Notes 8.125% Notes due 2040
250
Total long-term debt
$
1,769
$
722
In April 2010, Lorillard Tobacco issued $1 billion of
unsecured senior notes in two tranches pursuant to an Indenture,
dated June 23, 2009, and the Second Supplemental Indenture,
dated April 12, 2010 (the Second Supplemental
Indenture). The first tranche was $750 million
aggregate principal amount of 6.875% Notes due May 1,
2020 (the 2020 Notes), and the second tranche was
$250 million aggregate principal amount of
8.125% Notes due May 1, 2040 (the 2040
Notes). The net proceeds from the issuance will be used
for general corporate purposes, which may include, among other
things, the repurchase, redemption or retirement of securities
including the Companys common stock, acquisitions,
additions to working capital and capital expenditures.
In June 2009, Lorillard Tobacco issued $750 million of
8.125% unsecured senior notes due June 23, 2019 (the
2019 Notes) pursuant to an Indenture, dated
June 23, 2009, and First Supplemental Indenture, dated
June 23, 2009 (the Supplemental Indenture).
Lorillard Tobacco is the principal, wholly-owned operating
subsidiary of the Company and the 2019 Notes, 2020 Notes and
2040 Notes (together, the Notes) are unconditionally
guaranteed on a senior unsecured basis by the Company.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The interest rate payable on the 2019 Notes is subject to
incremental increases from 0.25% to 2.00% in the event either
Moodys Investors Services, Inc.
(Moodys), Standard & Poors
Ratings Services (S&P) or both Moodys and
S&P downgrade the 2019 Notes below investment grade (Baa3
and BBB- for Moodys and S&P, respectively). Our
current Moodys debt rating is Baa2 and our current
S&P debt rating is BBB-, both of which are investment grade.
Upon the occurrence of a change of control triggering event,
Lorillard Tobacco will be required to make an offer to
repurchase the Notes at a price equal to 101% of the aggregate
principal amount of the Notes, plus accrued interest. A
change of control triggering event occurs when there
is both a change of control (as defined in the
Supplemental Indenture) and the Notes cease to be rated
investment grade by both Moodys and S&P within
60 days of the occurrence of a change of control or public
announcement of the intention to effect a change of control. The
Notes are not entitled to any sinking fund and are not
redeemable prior to maturity. The Notes contain covenants that
restrict liens and sale and leaseback transactions, subject to a
limited exception. At December 31, 2010 and 2009, the
carrying value of the Notes was $1,769 million and
$722 million, respectively, and the fair value was
$1,865 million and $826 million, respectively. The
fair value of the Notes is based on market pricing.
10.
Derivative
Instruments
In September 2009, Lorillard Tobacco entered into interest rate
swap agreements, which the Company guaranteed, with a total
notional amount of $750 million to modify its exposure to
interest rate risk by effectively converting the interest rate
payable on the 2019 Notes from a fixed rate to a floating rate.
Under the agreements, Lorillard Tobacco receives interest based
on a fixed rate of 8.125% and pays interest based on a floating
one-month LIBOR rate plus a spread of 4.625%. The variable rates
were 4.886% and 4.856% as of December 31, 2010 and 2009,
respectively. The agreements expire in June 2019. The interest
rate swap agreements qualify for hedge accounting and were
designated as fair value hedges. Under the swap agreements,
Lorillard Tobacco receives a fixed rate settlement and pays a
variable rate settlement with the difference recorded in
interest expense. That difference reduced interest expense by
$24 and $6 million for the years ended 2010 and 2009,
respectively.
For derivatives designated as fair value hedges, which relate
entirely to hedges of long-term debt, changes in the fair value
of the derivatives are recorded in other assets or other
liabilities with an offsetting adjustment to the carrying amount
of the hedged debt. At December 31, 2010 and 2009, the
adjusted carrying amounts of the hedged debt were $769 and
$722 million, respectively. The amounts related to hedges
of long-term debt included in other assets as of
December 31, 2010 and other liabilities as of
December 31, 2009 were $19 million and
$28 million, respectively.
If our debt rating is downgraded below Ba2 by Moodys or BB
by S&P, the swap agreements will terminate and we will be
required to settle them in cash before their expiration date.
Our current Moodys debt rating is Baa2 and our current
S&P debt rating is BBB-, both of which are above the
ratings at which settlement of our derivative contracts would be
required.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
11.
Earnings
Per Share
Basic and diluted earnings per share (EPS) were
calculated using the following:
Year Ended
December 31,
2010
2009
2008
(In millions)
Net Earnings
$
1,029
$
948
$
887
Weighted Average Shares Outstanding Basic
151.59
164.48
172.09
Stock Options, Stock Appreciation Rights and Restricted Shares
0.20
0.14
0.12
Weighted Average Shares Outstanding Diluted
151.79
164.62
172.21
Options to purchase 0.6 million shares, 1.1 million
shares and 0.4 million shares of common stock were excluded
from the diluted earnings per share calculation because their
effect would be anti-dilutive for the years ended
December 31, 2010, 2009 and 2008, respectively.
Loews distributed its interest in the Company to holders of
Loews Carolina Group stock and Loews common stock in
a series of transactions which were completed on June 10,
2008 and June 16, 2008, respectively. The Company had
173,923,429 shares outstanding as of the Separation from
Loews. All prior period EPS amounts were adjusted to reflect the
new capital structure of the Company.
12.
Income
Taxes
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, Lorillard 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 December 31, 2010, there were no tax obligations
between Lorillard and Loews for periods prior to the Separation.
Following the Separation, Lorillard and its eligible
subsidiaries filed a stand alone consolidated federal income tax
return.
The Separation Agreement requires Lorillard (and any successor
entity) to indemnify Loews for any losses resulting from the
failure of the Separation to qualify as a tax-free transaction
(except if the failure to qualify is solely due to Loewss
fault). This indemnification obligation applies regardless of
whether Lorillard or a potential acquirer obtains a supplemental
ruling or an opinion of counsel.
The Separation Agreement further provides for cooperation
between Lorillard and Loews with respect to additional tax
matters, including the exchange of information and the retention
of records which may affect the income tax liability of the
parties to the Separation Agreement.
For 2007 and 2008, Lorillard, as a subsidiary in the Loews
consolidated federal income tax return, participated in the
Compliance Assurance Process (CAP) which is a
voluntary program for a limited number of large corporations.
Under CAP, the IRS conducts a real-time audit and works
contemporaneously with Lorillard to resolve any issues prior to
the filing of the tax return. Lorillards participation in
the CAP ended in 2010 when the IRS approved Loews 2008
consolidated federal income tax return as filed.
During 2008 and 2010, the IRS completed its examination of the
2007 and 2008 Loews consolidated federal income tax
returns, respectively, resulting in no changes being made to
Lorillards reported tax on the returns.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
For years after the Separation, Lorillard and its subsidiaries
file a consolidated federal income tax return. The 2008
consolidated federal income return filed by Lorillard and its
subsidiaries is currently under examination by the IRS.
A reconciliation of the beginning and ending amount of
unrecognized tax benefits is as follows:
2010
2009
2008
(In millions)
Balance at January 1,
$
39
$
29
$
33
Additions for tax positions of prior years
1
9
2
Reductions for tax positions of prior years
(15
)
(7
)
(3
)
Additions based on tax positions related to the current year
9
20
5
Settlements
(10
)
(2
)
Lapse of statute of limitations
(1
)
(2
)
(6
)
Balance at December 31,
$
33
$
39
$
29
At December 31, 2010, 2009 and 2008, there were
$22 million, $18 million and $19 million,
respectively, of tax benefits that, if recognized, would affect
the effective tax rate.
Lorillard recognizes interest accrued related to unrecognized
tax benefits and tax refund claims in interest expense and
recognizes penalties (if any) in income tax expense. During the
years ended December 31, 2010, 2009 and 2008, Lorillard
recognized an expense (benefit) of approximately
$3 million, ($1) million and $1 million in
interest and penalties. Lorillard had accrued interest and
penalties related to unrecognized tax benefits of
$14 million and $11 million at
December 31, 2010 and December 31, 2009, respectively.
Due to the potential for resolution of certain tax examinations
and the expiration of various statutes of limitation, it is
reasonably possible that Lorillards gross unrecognized tax
benefits balance may decrease by approximately $4 million
in the next twelve months.
Lorillard
and/or one
or more of its subsidiaries file income tax returns in the
U.S. federal jurisdiction, various states and city
jurisdictions and one foreign jurisdiction. Lorillards
consolidated federal income tax returns for the periods
following the Separation are subject to IRS examination. With
few exceptions, Lorillards state, local or foreign tax
returns are subject to examination by taxing authorities for
years after 2005.
The provision (benefit) for income taxes consisted of the
following:
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Deferred tax assets (liabilities) are as follows:
December 31,
2010
2009
(In millions)
Deferred tax assets:
Employee benefits
$
98
$
102
Settlement costs
456
421
State and local income taxes
14
12
Inventory
9
Litigation and legal
36
33
Other
10
6
Gross deferred tax assets
614
583
Deferred tax liabilities:
Depreciation
(52
)
(37
)
Inventory
(21
)
Federal effect of state deferred taxes
(32
)
(32
)
Gross deferred tax liabilities
(105
)
(69
)
Net deferred tax assets
$
509
$
514
Total income tax expense for the years ended December 31,
2010, 2009 and 2008 was different than the amounts of
$572 million, $531 million and $502 million,
computed by applying the statutory U.S. federal income tax
rate of 35% to income before taxes for each of the years.
A reconciliation between the statutory federal income tax rate
and Lorillards effective income tax rate as a percentage
of income is as follows:
2010
2009
2008
Statutory rate
35.0
%
35.0
%
35.0
%
Increase (decrease) in rate resulting from:
State taxes
4.5
4.6
4.1
Domestic manufacturers deduction
(2.5
)
(1.9
)
(1.3
)
Other
0.1
(0.1
)
0.4
Effective rate
37.1
%
37.6
%
38.2
%
13.
Retirement
Plans
Lorillard has defined benefit pension, postretirement benefits,
profit sharing and savings plans for eligible employees.
Pension and postretirement benefits The
Salaried Pension Plan provides benefits based on employees
compensation and service. The Hourly Pension Plan provides
benefits based on fixed amounts for each year of service.
Lorillard also provides medical and life insurance benefits to
eligible employees. Lorillard uses a December 31 measurement
date for its plans.
Lorillard also provides certain senior level management
employees with nonqualified, unfunded supplemental retirement
plans. While these plans are unfunded, Lorillard has certain
assets invested in an executive life insurance policy that are
to be used to provide for certain of these benefits.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Weighted-average assumptions used to determine benefit
obligations:
Pension
Other
Benefits
Postretirement Benefits
December 31,
December 31,
2010
2009
2010
2009
Discount rate
5.4%-5.8%
6.0
%
5.3%-5.5%
6.0
%
Rate of compensation increase
4.8%
4.8
%
Weighted-average assumptions used to determine net periodic
benefit cost:
Other Postretirement
Pension Benefits
Benefits
Year Ended December 31,
Year Ended December 31,
2010
2009
2008
2010
2009
2008
Discount rate
6.0
%
6.3
%
6.0
%
6.0
%
6.3
%
6.0
%
Expected long-term return on plan assets
7.5
%
7.5
%
7.5
%
Rate of compensation increase
4.8
%
5.0
%
5.0
%
The expected long-term rate of return for Plan assets is
determined based on widely-accepted capital market principles,
long-term return analysis for global fixed income and equity
markets and the active total return oriented portfolio
management style. The methodology used to derive asset class
risk/return estimates varies due to the nature of asset classes,
the availability of historical data, implications from currency,
and other factors. In many cases, where historical data is
available, data is drawn from indices such as MSCI or G7 country
data. For alternative asset classes where historical data may be
insufficient or incomplete, estimates are based on long-term
capital market conditions
and/or asset
class relationships. The expected rate of return for the Plan is
based on the target asset allocation and return assumptions for
each asset class. The estimated Plan return represents a nominal
compound return which captures the effect of estimated asset
class and market volatility.
Assumed health care cost trend rates for other postretirement
benefits:
Other Postretirement
Benefits
Year Ended
December 31,
2010
2009
Pre-65 health care cost trend rate assumed for next year
9.5
%
10.0
%
Post-65 health care cost trend rate assumed for next year
8.5
%
9.0
%
Rate to which the cost trend rate is assumed to decline (the
ultimate trend rate)
5.0
%
5.0
%
Year that the rate reaches the ultimate trend rate:
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Assumed health care cost trend rates have a significant effect
on the amounts reported for the health care plans. A
one-percentage-point change in assumed health care cost trend
rates would have the following effects:
One Percentage Point
Increase
Decrease
(In millions)
Effect on total of service and interest cost
$
1
$
(1
)
Effect on postretirement benefit obligations
$
12
$
(11
)
Net periodic pension and other postretirement benefit costs
include the following components:
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Information for pension plans with an accumulated benefit
obligation in excess of plan assets consisted of the following:
Pension Benefits
December 31,
2010
2009
(In millions)
Projected benefit obligation
$
558
$
517
Accumulated benefit obligation
501
464
Fair value of plan assets
459
416
The general principles guiding the investment of the Plan assets
are embodied in the Employee Retirement Income Security Act of
1974 (ERISA). These principles include discharging
Lorillards investment responsibilities for the exclusive
benefit of Plan participants and in accordance with the
prudent expert standards and other ERISA rules and
regulations. Investment objectives for Lorillards pension
Plan assets are to optimize the long-term return on Plan assets
while maintaining an acceptable level of risk, to diversify
assets among asset classes and investment styles, and to
maintain a long-term focus.
In 2009, Lorillard conducted an asset/liability study to
determine the optimal strategic asset allocation to meet the
Plans projected long-term benefit obligations and desired
funding status. The Plan is managed using a Liability Driven
Investment (LDI) framework which focuses on
achieving the Plans return goals while assuming a
reasonable level of funded status volatility.
Based on this LDI framework the asset allocation has two primary
components. The first component of the asset allocation is the
hedging portfolio which uses the Plans fixed
income portfolio to hedge a portion of the interest rate risk
associated with the Plans liabilities, thereby reducing
the Plans expected funded status volatility. The second
component is the growth/equity portfolio which is
designed to enhance portfolio returns. The growth portfolio is
broadly diversified across the following asset classes; Global
Equities, Long Short Equities, Absolute Return Hedge Funds,
Private Equity (including growth equity, buyouts, and other
illiquid assets deigned to enhance returns), and Private Real
Assets. Alternative investments, including hedge funds, are used
judiciously to enhance risk adjusted long-term returns while
improving portfolio diversification. Derivatives may be used to
gain market exposure in an efficient and timely manner.
Investment risk is measured and monitored on an ongoing basis
through annual liability measurements, periodic asset/liability
studies, and quarterly investment portfolio reviews.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The pension plans asset allocations were:
Asset Allocation as of
Allocation as of
12/31/10
12/31/09
(%)
(%)
Asset Class
U.S. Equity
15.1
13.9
Global ex U.S. Equity
11.6
10.9
Emerging Markets Equity
3.5
2.9
Absolute Return Hedge Funds
11.7
11.6
Equity Hedge Funds
12.9
12.4
Private Equity
4.2
6.7
Private Real Assets
1.0
0.8
Public Real Assets
2.4
Fixed Income
36.7
39.8
Cash Equivalents
0.9
1.0
Total
100.0
100.0
Fair Value Measurements The fair value
hierarchy has three levels based on the reliability of the
inputs used to determine fair value. Level 1 refers to fair
values determined based on quoted prices in active markets for
identical assets. Level 2 refers to fair values estimated
using significant other observable inputs. Level 3 includes
fair values estimated using significant non-observable inputs.
Plan assets using the fair value hierarchy as of
December 31, 2010 were as follows:
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Plan assets using the fair value hierarchy as of
December 31, 2009 were as follows:
Total
Level 1
Level 2
Level 3
(In millions)
Asset Class:
U.S. Equity
$
128
$
59
$
38
$
31
Global ex U.S. Equity
100
100
Emerging Markets Equity
27
27
Absolute Return Hedge Funds
107
26
81
Equity Hedge Funds
115
57
58
Private Equity
62
62
Private Real Assets
7
7
Fixed Income
366
366
Cash Equivalents
9
9
Total
$
921
$
425
$
257
$
239
Equity securities are primarily valued using a market approach
based on the quoted market prices of identical instruments.
Hedge funds are primarily based on NAVs calculated by the
fund and are not publicly available.
Private equity valuations are reported by the fund manager and
are based on the valuation of underlying investments, which
include inputs such as cost, operating results, discounted
future cash flows and market based comparable data.
Real estate values are reported by the fund manager and are
based on valuation of the underlying investments, which include
inputs such as cost, discounted future cash flows, independent
appraisals and market based on comparable data.
Fixed income securities are primarily valued using a market
approach with inputs that include broker quotes in a non-active
market.
Cash equivalents are primarily held in registered money market
funds which are valued using a market approach based on the
quoted market prices of identical instruments.
The following table presents a reconciliation of Level 3
assets held during the year ended December 31, 2010. For
the year ended December 31, 2010, there were no significant
transfers between levels 1, 2 and 3.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The following table presents a reconciliation of Level 3
assets held during the year ended December 31, 2009.
January 1,
Net Realized
Net Purchases,
Net Transfers
December 31,
2009
Unrealized
Issuances and
Into/(Out of)
2009
Balance
Gains/(Losses)
Settlements
Level 3
Balance
US Equity
6
25
31
Absolute Return Hedge Funds
119
31
(69
)
81
Equity Hedge Funds
40
9
9
58
Private Equity
47
13
2
62
Private Real Assets
4
3
7
The table below presents the estimated amounts to be recognized
from accumulated other comprehensive income into net periodic
benefit cost during 2011.
Other
Pension
Postretirement
Benefits
Benefits
(In millions)
Amortization of (gain) loss recognition
$
7
$
(2
)
Amortization of prior service cost
4
Total estimated amounts to be recognized
$
11
$
(2
)
Lorillard projects expected future minimum benefit payments as
follows.
Less
Other
Medicare
Postretirement
Drug
Expected future benefit payments
Pension Benefits
Benefit Plans
Subsidy
Net
(In millions)
2011
$
70
$
15
$
1
$
14
2012
67
16
1
15
2013
69
16
1
15
2014
70
16
1
15
2015
71
17
1
16
2016 2020
377
86
4
82
$
724
$
166
$
9
$
157
Lorillard expects to contribute $15 million to its pension
plans and $13 million to its other postretirement benefit
plans in 2011.
Profit Sharing Lorillard has a Profit Sharing
Plan for hourly employees. Lorillards contributions under
this plan are based on Lorillards performance with a
maximum contribution of 15% of participants earnings.
Contributions for 2010, 2009 and 2008 were $10 million,
$9 million and $9 million, respectively.
Savings Plan Lorillard sponsors an Employees
Savings Plan for salaried employees. Lorillard provides a
matching contribution of 100% of the first 3% of pay contributed
and 50% of the next 2% of pay contributed by employees.
Lorillard contributions for 2010, 2009 and 2008 were
$5 million, $4 million and $4 million,
respectively.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
14.
Share-Based
Compensation
Stock Option Plan On June 10, 2008,
Lorillard separated from Loews, and all of the outstanding
equity awards granted from the Carolina Group 2002 Stock Option
Plan (the Carolina Group Plan) were converted on a
one-for-one
basis to equity awards granted from the Lorillard Inc. 2008
Incentive Compensation Plan (the Lorillard Plan)
with the same terms and conditions. In May 2008,
Lorillards sole shareholder and Board of Directors
approved the Lorillard Plan in connection with the issuance of
the Companys Common Stock for the benefit of certain
Lorillard employees. The aggregate number of shares of the
Companys Common Stock for which options, stock
appreciation rights (SARs) or restricted stock may
be granted under the Lorillard Plan is 3,714,825 shares, of
which 714,825 were outstanding Carolina Group stock options
converted to the Lorillard Plan; and the maximum number of
shares of Lorillard Common Stock with respect to which options
or SARs may be granted to any individual in any calendar year is
500,000 shares. The exercise price per share may not be
less than the fair value of the Companys Common Stock on
the date of the grant. Generally, options and SARs vest ratably
over a four-year period and expire ten years from the date of
grant. The fair value of the awards immediately after the
Separation did not exceed the fair value of the awards
immediately before the Separation, as measured in accordance
with the provisions of ASC Topic 718, and no incremental
compensation expense was recorded as a result of the
modification of the Carolina Group awards.
A summary of the stock option and SAR transactions for the
Carolina Group Plan from January 1, 2008 through
June 10, 2008 follows:
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
A summary of the stock option and SAR transactions for the
Lorillard Plan for the post-separation period from June 11,
2008 to December 31, 2008, from January 1, 2009 to
December 31, 2009 and from January 1, 2010 to
December 31, 2010 follows:
2010
2009
2008
Weighted
Weighted
Weighted
Average
Average
Average
Number of
Exercise
Number of
Exercise
Number of
Exercise
Awards
Price
Awards
Price
Awards
Price
Awards outstanding at January 1, 2010 and 2009 and
June 11, 2008
1,525,185
$
65.60
814,950
$
57.21
714,825
$
42.93
Granted
254,728
77.84
810,421
70.59
111,000
69.94
Exercised
(252,787
)
53.39
(100,186
)
37.74
(10,875
)
31.00
Forfeited
(51,013
)
62.18
Awards outstanding, December 31
1,476,113
1,525,185
814,950
Awards exercisable, December 31
503,469
399,240
296,425
Shares available for grant, December 31
1,767,101
2,110,418
2,884,943
The following table summarizes information about stock options
and SARs outstanding in connection with the Lorillard Plan at
December 31, 2010:
Awards Outstanding
Awards Vested
Weighted
Weighted
Weighted
Average
Average
Average
Number of
Remaining
Exercise
Number of
Exercise
Range of exercise prices
Shares
Contractual Life
Price
Shares
Price
$20.00 34.99
67,579
3.6
$
29.25
67,579
$
29.25
35.00 49.99
57,438
4.8
45.15
57,438
45.15
50.00 64.99
253,362
7.3
59.52
97,125
58.08
65.00 79.99
670,818
7.9
72.15
170,043
72.78
80.00 84.30
426,916
8.1
81.12
111,284
81.39
During the period January 1, 2010 to December 31,
2010, Lorillard awarded non-qualified stock options totaling
254,728 shares. During the period January 1, 2006 to
December 31, 2009, Lorillard awarded SARs. In accordance
with the Lorillard Plan, Lorillard has the ability to settle
SARs in shares or cash and has the intention to settle in
shares. The SARs balance at December 31, 2010 was
1,150,252 shares and the non-qualified stock options
balance at December 31, 2010 was 325,861 shares.
The weighted average remaining contractual term of awards
outstanding and vested as of December 31, 2010, was
7.54 years and 6.23 years, respectively. The aggregate
intrinsic value of awards outstanding and vested at
December 31, 2010 was $19 million and
$10 million, respectively. The total intrinsic value of
awards exercised during the year ended December 31, 2010
was $8 million.
Lorillard recorded stock-based compensation expense of
$8 million, $5 million and $3 million related to
the Lorillard Plan during 2010, 2009 and 2008 respectively. The
related income tax benefits recognized were $3 million,
$2 million and $1 million for 2010, 2009 and 2008,
respectively. At December 31, 2010, the compensation cost
related to nonvested awards not yet recognized was
$7 million, and the weighted average period over which it
is expected to be recognized is 2.24 years.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The fair value of granted options and SARs for the Lorillard
Plan was estimated at the grant date using the Black-Scholes
pricing model with the following assumptions and results:
Year Ended December 31,
2010
2009
2008
Weighted average expected dividend yield
6.2
%
5.5
%
3.9
%
Weighted average expected implied volatility
23.6
%
30.5
%
34.0
%
Weighted average risk-free interest rate
1.9
%
2.3
%
2.9
%
Expected holding period (in years)
5.0
5.0
5.0
Weighted average fair value of awards
$
7.34
$
11.08
$
17.18
The expected dividend yield is based on the expected dividend
rate and the price of the Companys Common Stock over the
most recent period. The expected volatility is based upon the
implied volatility of traded call options on the Companys
Stock with remaining maturities of greater than 180 days.
The risk-free interest rate is based upon the interest rate on
U.S. Treasury securities with maturities that correspond
with the expected life of the applicable stock options. The
expected holding period is estimated based upon historical
exercise data for previously awarded options, taking into
consideration the vesting period and contractual lives of the
applicable options. Compensation expense is net of an estimated
forfeiture rate based on historical experience with similar
options.
Restricted Stock Plan As part of the
Lorillard Plan mentioned above, restricted stock may be granted
to employees (Employees)
and/or
non-employee directors (Directors) annually. The
restricted stock is included as part of the shares available for
grant shown above. The restricted stock was granted based on the
per share closing price of the Companys Common Stock on
the date of the grant.
Lorillard may grant shares of restricted stock to Employees
and/or
Directors, giving them in most instances all of the rights of
stockholders, except that they may not sell, assign, pledge or
otherwise encumber such shares for a vesting period of three
years for Employees or one year for Directors (Restriction
Period). Such shares are subject to forfeiture if certain
conditions are not met.
The fair value of the restricted shares at the date of grant is
amortized to expense ratably over the Restriction Period.
Lorillard recorded pre-tax expense related to restricted stock
for the years ended December 31, 2010, 2009 and 2008 of
$5 million, $2 million and $0.1 million,
respectively. The deferred tax benefit recorded related to this
expense for the years ended December 31, 2010 and 2009 were
$2 million and $0.6 million, respectively. The
unamortized expense related to restricted stock was
$11 million at December 31, 2010, and the weighted
average period over which it is expected to be recognized is
2.03 years.
Restricted stock activity was as follows for the years ended
December 31, 2010, 2009 and 2008:
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
15.
Share
Repurchase Programs
As of January 19, 2010, the Company completed its
$750 million share repurchase program that was announced on
July 27, 2009, after repurchasing an additional
1.1 million shares in January 2010 for $90 million at
an average purchase price of $78.36 per share. In February 2010,
the Board of Directors authorized the repurchase of up to
$250 million of the Companys common stock, which was
completed on May 26, 2010, after repurchasing
3.3 million shares at an average purchase price of $76.29
per share.
In August 2010, Lorillard, Inc. announced that its Board of
Directors had approved a new share repurchase program
authorizing the Company to repurchase in the aggregate up to
$1 billion of its outstanding common stock. Purchases by
the Company under this program may be made from time to time at
prevailing market prices in open market purchases, privately
negotiated transactions, block purchases or otherwise, as
determined by the Companys management. The repurchases
will be funded from existing cash balances, including proceeds
from the Companys April 2010 issuance of the Notes (see
Note 9 for a description of the Notes).
This program does not obligate the Company to acquire any
particular amount of common stock. The timing, frequency and
amount of repurchase activity will depend on a variety of
factors such as levels of cash generation from operations, cash
requirements for investment in the Companys business,
current stock price, market conditions and other factors. The
share repurchase program may be suspended, modified or
discontinued at any time and has no set expiration date. During
the year ended 2010, the Company repurchased approximately
9.0 million shares of its common stock at an average price
of $79.74 per share, for a total of $716 million.
As of December 31, 2010, total shares repurchased under
share repurchase programs authorized by the Board since the
Separation were as follows:
Number of
Amount
Shares
Authorized
Authorized
Completed
Repurchased
(In millions)
(In millions)
July 2008
$
400
October 2008
5.9
May 2009
250
July 2009
3.7
July 2009
750
January 2010
9.7
February 2010
250
May 2010
3.3
August 2010
1,000
4.5
Total
$
2,650
27.1
16.
Related
Party Transactions
Lorillard was a party to individual services agreements (the
Agreements) with Loews through June 9, 2008.
Under the Agreements, Loews performed certain administrative,
technical and ministerial services. Those services included
internal auditing, cash management, advice and assistance in
preparation of tax returns and obtaining insurance coverage.
Under the Agreements, the Company was required to reimburse
Loews for (i) actual costs incurred (such as salaries,
employee benefits and payroll taxes) of the Loews personnel
providing such services and (ii) all
out-of-pocket
expenses related to the provision of such services. Those
Agreements were terminated on June 10, 2008 with the
Separation from Loews. The Company was charged approximately
$100,000 for the support functions during the year ended
December 31, 2008. The Company believes, if these services
were provided by an independent third party, the cost incurred
would not differ materially.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
17.
Quarterly
Financial Data (Unaudited)
December 31
September 30
June 30
March 31
2010 Quarter Ended
Net sales
$
1,486
$
1,567
$
1,520
$
1,360
Gross profit
538
566
542
478
Net income
259
274
263
232
Net income per share, diluted
$
1.74
$
1.81
$
1.73
$
1.50
Basic weighted average number of shares outstanding
148.49
151.33
152.04
154.55
Diluted weighted average number of shares outstanding
148.76
151.54
152.22
154.72
2009 Quarter Ended
Net sales
$
1,378
$
1,419
$
1,519
$
917
Gross profit
481
488
552
383
Net income
242
235
286
184
Net income per share, diluted
$
1.52
$
1.44
$
1.71
$
1.09
Basic weighted average number of shares outstanding
158.72
163.58
167.66
168.07
Diluted weighted average number of shares outstanding
158.89
163.72
167.79
168.18
18.
Consolidating
Financial Information
In June 2009, Lorillard Tobacco issued Notes, which are
unconditionally guaranteed by the Company, as primary obligor,
for the payment and performance of Lorillard Tobaccos
obligation in connection therewith.
The following sets forth the condensed consolidating balance
sheets as of December 31, 2010 and 2009, condensed
consolidating statements of income for the years ended
December 31, 2010, 2009 and 2008, and condensed
consolidating statements of cash flows for the years ended
December 31, 2010, 2009 and 2008 for the Company as parent
guarantor (herein referred to as Parent), Lorillard
Tobacco (herein referred to as Issuer) and all other
non-guarantor subsidiaries of the Company and Lorillard Tobacco.
These condensed consolidating financial statements were prepared
in accordance with
Rule 3-10
of SEC
Regulation S-X,
Financial Statements of Guarantors and Issuers of
Guaranteed Securities Registered or Being Registered.
Lorillard accounts for investments in these subsidiaries under
the equity method of accounting.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
19.
Legal
Proceedings
Overview
As of February 9, 2011, 10,708 product liability cases are
pending against cigarette manufacturers in the United States.
Lorillard Tobacco is a defendant in 9,758 of these cases.
Lorillard, Inc. is a co-defendant in 701 pending cases. A
total of 7,082 of these lawsuits are Engle Progeny Cases,
described below. In addition to the product liability cases,
Lorillard Tobacco and, in some instances, Lorillard, Inc., are
defendants in Filter Cases and Tobacco-Related Antitrust Cases.
Pending cases against Lorillard are those in which Lorillard
Tobacco or Lorillard, Inc. have been joined to the litigation by
either receipt of service of process, or execution of a waiver
thereof, and a dismissal order has not been entered with respect
to Lorillard Tobacco or Lorillard, Inc. The table below lists
the number of certain tobacco-related cases pending against
Lorillard as of the dates listed. A description of each type of
case follows the table.
Total Number of Cases
Pending Against Lorillard as
Type of Case
of February 9, 2011
Conventional Product Liability Cases
36
Engle Progeny Cases
7,082
West Virginia Individual Personal Injury Cases
40
Flight Attendant Cases
2,590
Class Action Cases
6
Reimbursement Cases
4
Filter Cases
34
Tobacco-Related Antitrust Cases
1
Conventional Product Liability
Cases. Conventional Product Liability Cases are
brought by individuals who allege cancer or other health effects
caused by smoking cigarettes, by using smokeless tobacco
products, by addiction to tobacco, or by exposure to
environmental tobacco smoke. Lorillard Tobacco is a defendant in
each of the Conventional Product Liability cases listed in the
table above, and Lorillard, Inc. is a co-defendant in two of the
Conventional Product Liability cases.
Engle Progeny Cases. Engle Progeny Cases are
brought by individuals who purport to be members of the
decertified Engle class. These cases are pending in a
number of Florida courts. Lorillard Tobacco is a defendant in
each of the Engle Progeny Cases listed in the above table
and Lorillard, Inc. is a co-defendant in 695 Engle
Progeny Cases. Some of the Engle Progeny Cases have
been filed on behalf of multiple class members. The time period
for filing Engle Progeny Cases expired in January 2008
and no additional cases may be filed. It is possible that courts
may sever remaining suits filed by multiple class members into
separate individual cases. As of February 9, 2011, trial
was underway in one of the pending Engle Progeny Cases in
which Lorillard Tobacco is a defendant, Mrozek (Circuit
Court, Fourth Judicial Circuit, Duval County, Florida).
West Virginia Individual Personal Injury
Cases. In a 1999 administrative order, the West
Virginia Supreme Court of Appeals transferred a group of cases
brought by individuals who allege cancer or other health effects
caused by smoking cigarettes, by smoking cigars, or by using
smokeless tobacco products, to a single West Virginia court (the
West Virginia Individual Personal Injury Cases). The
plaintiffs claims alleging injury from smoking cigarettes
have been consolidated for trial. The plaintiffs claims
alleging injury from the use of other tobacco products have been
severed from the consolidated cigarette claims and have not been
consolidated for trial. Lorillard Tobacco is a defendant in each
of the West Virginia Personal Injury Cases listed in the above
table. Lorillard, Inc. is not a defendant in any of the West
Virginia Individual
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Personal Injury Cases. The time for filing a case that could be
consolidated for trial with the West Virginia Personal Injury
Cases expired in 2000.
Flight Attendant Cases. Flight Attendant Cases
are brought by non-smoking flight attendants alleging injury
from exposure to environmental smoke in the cabins of aircraft.
Plaintiffs in these cases may not seek punitive damages for
injuries that arose prior to January 15, 1997. Lorillard
Tobacco is a defendant in each of the Flight Attendant Cases
listed in the above table. Lorillard, Inc. is not a defendant in
any of the Flight Attendant Cases. The time for filing Flight
Attendant Cases expired in 2000 and no additional cases in this
category may be filed.
Class Action Cases. Class Action
Cases are purported to be brought on behalf of large numbers of
individuals for damages allegedly caused by smoking. Lorillard
Tobacco is a defendant in each of the Class Action Cases
listed in the above table, and Lorillard, Inc. is a co-defendant
in two of the Class Action Cases. Neither Lorillard Tobacco
nor Lorillard, Inc. is a defendant in additional
Class Action Cases that are pending against other cigarette
manufacturers, including approximately 35 lights
Class Action Cases and four Class Action Cases that
are based primarily on medical monitoring.
Reimbursement Cases. Reimbursement Cases are
brought by or on behalf of entities seeking equitable relief and
reimbursement of expenses incurred in providing health care to
individuals who allegedly were injured by smoking. Plaintiffs in
these cases have included the U.S. federal government,
U.S. state and local governments, foreign governmental
entities, hospitals or hospital districts, American Indian
tribes, labor unions, private companies and private citizens.
Three Reimbursement Cases are pending against Lorillard Tobacco
in the United States and one Reimbursement Case is pending in
Israel. Lorillard, Inc. is a co-defendant in two of the
Reimbursement Cases pending in the United States. Plaintiffs in
the Reimbursement Case in Israel have attempted to assert claims
against Lorillard, Inc. As of February 9, 2011, trial was
underway in one of the pending Reimbursement Cases, City of
St. Louis [Missouri] v. American Tobacco Co., Inc., et
al. (Circuit Court, City of St. Louis, Missouri).
Included in this category is the suit filed by the federal
government, United States of America v. Philip Morris
USA, Inc. (Phillip Morris), et
al., that sought to recover profits earned by the defendants
and other equitable relief. In August 2006, the trial court
issued its final judgment and remedial order and granted
injunctive and other equitable relief. The final judgment did
not award monetary damages. In May 2009, the final judgment was
largely affirmed by an appellate court. In June 2010, the
U.S. Supreme Court denied review of the case. See
Reimbursement Cases below.
Filter Cases. Filter Cases are brought by
individuals, including former employees of Lorillard Tobacco,
who seek damages resulting from their alleged exposure to
asbestos fibers that were incorporated into filter material used
in one brand of cigarettes manufactured by Lorillard Tobacco for
a limited period of time ending more than 50 years ago.
Lorillard Tobacco is a defendant in 33 of the 34 Filter Cases
listed in the above table. Lorillard, Inc. is a co-defendant in
two of the 33 Filter Cases that are pending against Lorillard
Tobacco. Lorillard, Inc. is also a defendant in one additional
Filter Case in which Lorillard Tobacco is not a defendant. As of
February 9, 2011, trial was underway in one pending Filter
Case, Lenney v. Armstrong International, Inc., et al.
(Superior Court of California, San Francisco County).
Tobacco-Related Antitrust Cases. A number of
cases have been brought against cigarette manufacturers alleging
that defendants conspired to set the price of cigarettes in
violation of federal and state antitrust and unfair business
practices statutes. In these cases, plaintiffs seek class
certification on behalf of persons who purchased cigarettes
directly or indirectly from one or more of the defendant
cigarette manufacturers. Lorillard Tobacco is a defendant in the
Tobacco-Related Antitrust Case in the table above. Lorillard,
Inc. is not a defendant in any of these cases.
Plaintiffs assert a broad range of legal theories in these
cases, including, among others, theories of negligence, fraud,
misrepresentation, strict liability, breach of warranty,
enterprise liability (including claims
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
asserted under the federal Racketeering Influenced and Corrupt
Organizations Act (RICO)), civil conspiracy,
intentional infliction of harm, injunctive relief, indemnity,
restitution, unjust enrichment, public nuisance, claims based on
antitrust laws and state consumer protection acts, and claims
based on failure to warn of the harmful or addictive nature of
tobacco products.
Plaintiffs in most of the cases seek unspecified amounts of
compensatory damages and punitive damages that may range into
the billions of dollars. Plaintiffs in some of the cases seek
treble damages, statutory damages, disgorgement of profits,
equitable and injunctive relief, and medical monitoring, among
other damages.
Tobacco-Related
Product Liability Litigation
Conventional
Product Liability Cases
Since January 1, 2009, verdicts have been returned in five
Conventional Product Liability Cases against cigarette
manufacturers. Lorillard Tobacco was the only defendant in one
of these five trials, Evans v. Lorillard Tobacco Company
(Superior Court, Suffolk County, Massachusetts). In December
2010, the jury in Evans awarded $50 million in
compensatory damages to the estate of a deceased smoker,
$21 million in damages to the deceased smokers son,
and $81 million in punitive damages. As of February 9,
2011, the case remained pending before the trial court because
the judge had not issued a verdict as to a single claim that was
not submitted for the jurys consideration. It is possible
the court will award additional damages to the plaintiffs in its
verdict that addresses this final claim. As of February 9,
2011, the court had not ruled on the motions Lorillard Tobacco
filed following the verdicts, which include motions for new
trial, for judgment notwithstanding the verdict, and for
reduction or elimination of the jurys damages awards. The
court is not expected to issue a final judgment until it
disposes of the final claim or it rules on Lorillard
Tobaccos pending post-trial motions. Lorillard Tobacco may
file additional post-trial motions after a final judgment is
entered. Should the final judgment award damages to the
plaintiff, Massachusetts statutes provide that the court may
award prejudgment and post-judgment interest. It is possible the
final judgment will incorporate the jurys finding that the
decedent was 30% responsible for her injuries, which could
reduce the jurys award of compensatory damages. The
opportunity for Lorillard Tobacco to initiate an appeal from the
verdicts in Evans will not begin until the final judgment
is entered. Plaintiff has asked the court to enter a preliminary
injunction that directs Lorillard Tobacco to set aside
$272 million in cash or cash equivalents to secure the
amounts awarded by the jury and the interest obligations
plaintiff expects the court to order in a final judgment. As of
February 9, 2011, the court had not ruled on
plaintiffs motion for preliminary injunction.
Neither Lorillard Tobacco nor Lorillard, Inc. was a defendant in
the four remaining trials since January 1, 2009. Juries
found in favor of the plaintiffs in each of these four trials.
One of the four trials resulted in an award of compensatory
damages to the plaintiff. Two of the four were re-trials that
were ordered by appellate courts in which the juries were
permitted to consider only the amounts of punitive damages to
award. These two trials resulted in verdicts that awarded the
plaintiffs $1.5 million in punitive damages in one of the
cases and $13.8 million in punitive damages in the second.
Appeals are pending in these three matters. In the fourth trial,
plaintiff was awarded compensatory damages and $4 million
in punitive damages. As of February 9, 2011, the court had
not addressed all post-verdict issues in the fourth case.
In rulings addressing cases tried in earlier years, some
appellate courts have reversed verdicts returned in favor of the
plaintiffs while other judgments that awarded damages to smokers
have been affirmed on appeal. Manufacturers have exhausted their
appeals and have been required to pay damages to plaintiffs in
eleven individual cases since 2001. Punitive damages were paid
to the smokers in five of these cases. Neither Lorillard Tobacco
nor Lorillard, Inc. was a party to any of these matters.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
As of February 9, 2011, trial was not underway in any
Conventional Product Liability Case. Some cases are scheduled
for trial in 2011, including one in which Lorillard Tobacco is a
defendant. Trial dates are subject to change.
Engle
Progeny Cases
In 2006, the Florida Supreme Court issued a ruling in
Engle v. R.J. Reynolds Tobacco Co., et al.,
that had been certified as a class action on behalf of
Florida residents, and survivors of Florida residents, who were
injured or died from medical conditions allegedly caused by
addiction to smoking. During a three-phase trial, a Florida jury
awarded compensatory damages to three individuals and
approximately $145 billion in punitive damages to the
certified class. In its 2006 decision, the Florida Supreme Court
vacated the punitive damages award, determined that the case
could not proceed further as a class action and ordered
decertification of the class. The Florida Supreme Court also
reinstated the compensatory damages awards to two of the three
individuals whose claims were heard during the first phase of
the Engle trial. These two awards totaled
$7 million, and both verdicts were paid in February 2008.
Lorillard Tobaccos payment to these two individuals,
including interest, totaled approximately $3 million.
The Florida Supreme Courts 2006 ruling also permitted
Engle class members to file individual actions, including
claims for punitive damages. The court further held that these
individuals are entitled to rely on a number of the jurys
findings in favor of the plaintiffs in the first phase of the
Engle trial. The time period for filing Engle
Progeny Cases expired in January 2008 and no additional
cases may be filed. In 2009, the Florida Supreme Court rejected
a petition that sought to extend the time for purported class
members to file an additional lawsuit.
Some of the Engle Progeny Cases were filed on behalf of
multiple plaintiffs. Various courts have entered orders severing
the cases filed by multiple plaintiffs into separate actions. In
2009, one Florida federal court entered orders that severed the
claims of approximately 4,400 Engle Progeny plaintiffs,
initially asserted in a small number of multi-plaintiff actions,
into separate lawsuits. In some cases, spouses or children of
alleged former class members have also brought derivative
claims. In 2010, one Florida federal court approved
plaintiffs motions to dismiss approximately 500 cases in
deference to cases filed by these individuals that are pending
in state court.
The Engle Progeny Cases are pending in various Florida
state and federal courts. Some of these courts, including courts
that have presided over Engle Progeny Cases that have
been tried, have issued rulings that address whether these
individuals are entitled to rely on a number of the jurys
findings in favor of the plaintiffs in the first phase of the
Engle trial. Some of these decisions have led to appeals,
and some of these appeals are pending. In one of these appeals,
the U.S. Court of Appeals for the Eleventh Circuit returned
to a federal trial court for further consideration the question
of how courts should apply the jurys findings in favor of
the plaintiffs in the first phase of the Engle trial. The
Court of Appeals determined that, based on Florida law,
plaintiffs in the Engle Progeny Cases are entitled to
some use of those jury findings but that, on the basis of the
appellate record, it was premature for the Court of Appeals to
decide what use plaintiffs can make of these findings. The Court
of Appeals did not address the question of the effect of federal
due process limitations on the application of the jury findings
on the basis that consideration of federal constitutional
limitations was not necessary to its decision. In another
appeal, an intermediate state appellate court issued a decision
in December 2010 in which it ruled that the trial court
correctly construed the Florida Supreme Courts 2006
decision and that it properly instructed the jury on the
preclusive effect of certain of the Engle jurys
findings.
Lorillard Tobacco and Lorillard, Inc. are defendants in Engle
Progeny Cases that have been placed on courts 2011
trial calendars or in which specific trial dates have been set.
Trial schedules are subject to change and it is not possible to
predict how many of the cases pending against Lorillard Tobacco
or Lorillard, Inc.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
will be tried during 2011. It also is not possible to predict
whether some courts will implement procedures that consolidate
multiple Engle Progeny Cases for trial.
As of February 9, 2011, trial was underway in four Engle
Progeny Cases. Lorillard Tobacco is a defendant in one of
these four cases, Mrozek, pending in the Circuit Court,
Fourth Judicial District, of Duval County, Florida. Lorillard,
Inc. was not a defendant in any of the four cases in which trial
was underway as of February 9, 2011.
Lorillard Tobacco was a defendant in one of the Engle
Progeny Cases in which a verdict was returned. In
Rohr v. R.J. Reynolds Tobacco Company, et al.
(Circuit Court, Broward County, Florida), a jury returned a
verdict in favor of the defendants, including Lorillard Tobacco.
Lorillard, Inc. was not a defendant in Rohr. Plaintiff in
Rohr did not pursue an appeal and the case is concluded.
As of February 9, 2011, verdicts have been returned in 31
Engle Progeny Cases since the Florida Supreme Court
issued its 2006 ruling that permitted members of the Engle
class to bring individual lawsuits in which neither
Lorillard Tobacco nor Lorillard, Inc. was a defendant at trial.
Juries awarded compensatory damages and punitive damages in 14
of the trials. The 14 punitive damages awards have totaled
$527 million and have ranged from $270,000 to
$244 million. In six of the trials, juries awards
were limited to compensatory damages. In the eleven remaining
trials, juries found in favor of the defendants.
As of February 9, 2011, defendants had noticed appeals in
each of the 20 verdicts in which plaintiffs were awarded
damages. None of the 20 Engle Progeny trials in which
plaintiffs were awarded damages since the Florida Supreme
Courts 2006 decision had reached a final resolution as of
February 9, 2011. In some of the trials decided in
defendants favor, plaintiffs have filed motions
challenging the verdicts. As of February 9, 2011, none of
these motions had resulted in rulings in favor of the plaintiffs.
In a case tried prior to the Florida Supreme Courts 2006
decision permitting members of the Engle class to bring
individual lawsuits, one Florida court allowed the plaintiff to
rely at trial on certain of the Engle jurys
findings. That trial resulted in a verdict for the plaintiffs in
which they were awarded approximately $25 million in
compensatory damages. Neither Lorillard Tobacco nor Lorillard,
Inc. was a party to this case. In March 2010, a Florida
appellate court affirmed the jurys verdict. The court
denied defendants petitions for rehearing in May 2010, and
the defendants have satisfied the judgment by paying the damages
award.
In June 2009, Florida amended the security requirements for a
stay of execution of any judgment during the pendency of appeal
in Engle Progeny Cases. The amended statute provides for
the amount of security for individual Engle Progeny Cases
to vary within prescribed limits based on the number of adverse
judgments that are pending on appeal at a given time. The
required security decreases as the number of appeals increases
to ensure that the total security posted or deposited does not
exceed $200 million in the aggregate. This amended statute
applies to all judgments entered on or after June 16, 2009
and expires on December 31, 2012. The plaintiffs in four
cases have challenged the constitutionality of the amended
statute. As of February 9, 2011, the court hearing three of
the cases denied plaintiffs challenges while the court
hearing the fourth case had not issued a ruling.
West
Virginia Individual Personal Injury Cases
The West Virginia Individual Personal Injury Cases are brought
by individuals who allege cancer or other health effects caused
by smoking cigarettes, by smoking cigars, or by using smokeless
tobacco products are in a single West Virginia court. A total of
639 West Virginia Individual Personal Injury Cases are
pending. Most of the pending cases have been consolidated for
trial. The order that consolidated the cases for trial, among
other things, also limited the consolidation to those cases that
were filed by September 2000. No additional West Virginia
Personal Injury Cases may be consolidated for trial with this
group.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
In September 2000, there were approximately 1,250 West
Virginia Personal Injury Cases, and Lorillard Tobacco was named
in all but a few of them. Plaintiffs in most of the cases
alleged injuries from smoking cigarettes, and the claims
alleging injury from smoking cigarettes have been consolidated
for a multi-phase trial (the IPIC Cases).
Approximately 600 IPIC Cases have been dismissed in their
entirety. Lorillard Tobacco has been dismissed from
approximately 610 additional IPIC Cases because those plaintiffs
did not submit evidence that they used a Lorillard Tobacco
product. These additional IPIC Cases remain pending against
other cigarette manufacturers and some or all of the dismissals
of Lorillard Tobacco could be contested in subsequent appeals.
As of February 9, 2011, Lorillard Tobacco was a defendant
in 33 of the pending IPIC Cases. Lorillard, Inc. is not a
defendant in any of the IPIC Cases.
The court has severed from the IPIC Cases those claims alleging
injury from the use of tobacco products other than cigarettes,
including smokeless tobacco and cigars (the Severed IPIC
Claims). The Severed IPIC Claims involve 29
plaintiffs. Twenty-seven of these plaintiffs have asserted both
claims alleging that their injuries were caused by smoking
cigarettes as well as claims alleging that their injuries were
caused by using other tobacco products. The former claims will
be considered during the consolidated trial of the IPIC Cases,
while the latter claims are among the Severed IPIC Claims.
Lorillard Tobacco is a defendant in seven of the Severed IPIC
Claims. Lorillard, Inc. is not a defendant in any of the Severed
IPIC Claims. Two plaintiffs have asserted only claims alleging
that injuries were caused by using tobacco products other than
cigarettes, and no part of their cases will be considered in the
consolidated trial of the IPIC Cases (the Severed IPIC
Cases). Neither Lorillard Tobacco nor Lorillard, Inc. is a
defendant in either of the Severed IPIC Cases.
The court has entered a trial plan for the IPIC Cases that calls
for a multi-phase trial. The first phase of that trial is
scheduled to begin on October 17, 2011. As of
February 9, 2011, the Severed IPIC Claims and the Severed
IPIC Cases were not subject to a trial plan. None of the Severed
IPIC Claims or the Severed IPIC Cases were scheduled for
trial as of February 9, 2011. Trial dates are subject to
change.
Flight
Attendant Cases
Lorillard Tobacco and three other cigarette manufacturers are
the defendants in each of the pending Flight Attendant Cases.
Lorillard, Inc. is not a defendant in any of these cases. These
suits were filed as a result of a settlement agreement by the
parties, including Lorillard Tobacco, in Broin v. Philip
Morris Companies, Inc., et al. (Circuit Court,
Miami-Dade County, Florida, filed October 31, 1991), a
class action brought on behalf of flight attendants claiming
injury as a result of exposure to environmental tobacco smoke.
The settlement agreement, among other things, permitted the
plaintiff class members to file these individual suits. These
individuals may not seek punitive damages for injuries that
arose prior to January 15, 1997. The period for filing
Flight Attendant Cases expired in 2000 and no additional cases
in this category may be filed.
The judges who have presided over the cases that have been tried
have relied upon an order entered in October 2000 by the Circuit
Court of Miami-Dade County, Florida. The October 2000 order has
been construed by these judges as holding that the flight
attendants are not required to prove the substantive liability
elements of their claims for negligence, strict liability and
breach of implied warranty in order to recover damages. The
court further ruled that the trials of these suits are to
address whether the plaintiffs alleged injuries were
caused by their exposure to environmental tobacco smoke and, if
so, the amount of damages to be awarded.
Lorillard Tobacco was a defendant in each of the eight Flight
Attendant Cases in which verdicts have been returned. Defendants
have prevailed in seven of the eight trials. In one of the seven
cases in which a defense verdict was returned, the court granted
plaintiffs motion for a new trial and, following appeal,
the case has been returned to the trial court for a second
trial. The six remaining cases in which defense verdicts were
returned are concluded. In the single trial decided for the
plaintiff, French v. Philip Morris Incorporated,
et al., the jury awarded $5.5 million in damages.
The court, however, reduced this award to $500,000. This
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
verdict, as reduced by the trial court, was affirmed on appeal
and the defendants have paid the award. Lorillard Tobaccos
share of the judgment in this matter, including interest, was
approximately $60,000.
As of February 9, 2011, none of the Flight Attendant Cases
were scheduled for trial. Trial dates are subject to change.
In 2010, some of the attorneys who represent the plaintiffs in
the Flight Attendant Cases filed a motion for sanctions against
the defendants, including Lorillard Tobacco, in which plaintiffs
alleged that the defendants engaged in certain conduct. In the
motion for sanctions, as amended, plaintiffs contend that Philip
Morris USA, R.J. Reynolds Tobacco Company and Brown &
Williamson Tobacco Corporation tortuously interfered with
negotiations the plaintiffs in the Flight Attendant Cases
initiated with Lorillard Tobacco and caused Lorillard Tobacco to
reject plaintiffs offers of judgment. Plaintiffs in all of
the Flight Attendant Cases submitted offers of judgment to
Lorillard Tobacco during 2000 that proposed to resolve
plaintiffs claims against Lorillard Tobacco in each of the
pending Flight Attendant Cases in which plaintiffs allege lung
cancer for $15,000 and to resolve all remaining Flight Attendant
Cases for $2,650. Plaintiffs contend in the motion for sanctions
that Lorillard Tobaccos subsequent rejection of the offers
of judgment was prompted by an agreement it reached with Philip
Morris USA, R.J. Reynolds Tobacco Company and Brown &
Williamson Tobacco Corporation to partially indemnify Lorillard
Tobacco should it be required to satisfy any judgment for
attorneys fees returned against it in the Flight Attendant
Cases. Plaintiffs contend this agreement constitutes misconduct
and that it violates the Broin settlement agreement.
Plaintiffs seek $30 million in sanctions, plus interest of
9% from the date of the anticipated acceptance of the offers of
judgment, on behalf of all of the plaintiffs in the Flight
Attendant Cases.
Class Action
Cases
Lorillard Tobacco is a defendant in six pending
Class Action Cases. Lorillard, Inc. is a co-defendant in
two of these cases. In most of the pending cases, plaintiffs
seek class certification on behalf of groups of cigarette
smokers, or the estates of deceased cigarette smokers, who
reside in the state in which the case was filed.
Cigarette manufacturers, including Lorillard Tobacco, have
defeated motions for class certification in a total of 36 cases,
13 of which were in state court and 23 of which were in federal
court. Motions for class certification have also been ruled upon
in some of the lights cases or in other class
actions to which neither Lorillard Tobacco nor Lorillard, Inc.
was a party. In some of these cases, courts have denied class
certification to the plaintiffs, while classes have been
certified in other matters.
The Scott Case. In one of the class
actions pending against Lorillard Tobacco, Scott v. The
American Tobacco Company, et al. (District
Court, Orleans Parish, Louisiana, filed May 24, 1996), the
Louisiana Court of Appeal, Fourth Circuit, issued a decision in
April 2010 (the April 2010 Decision) that modified
the trial courts 2008 amended final judgment. The April
2010 Decision reduced the judgment amount from approximately
$264 million to approximately $242 million to fund a
ten year, court-supervised smoking cessation program. The April
2010 Decision also changed the date on which the award of
post-judgment interest will accrue to July 2008. Interest
awarded by the amended final judgment will continue to accrue
from July 2008 until the judgment either is paid or is reversed
on appeal. As of February 9, 2011, judicial interest
totaled approximately $32.1 million. Lorillard, Inc., which
was a party to the case in the past, is no longer a defendant.
In its April 2010 Decision, the Court of Appeal expressly
preserved defendants right to assert claims on unspent or
surplus funds, should any such funds be present, at the
conclusion of the ten-year smoking cessation program.
The Louisiana Supreme Court denied review of the petitions that
were filed by the defendants and the plaintiffs. The
U.S. Supreme Court has granted defendants application
to stay execution of the amended final
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
judgment until defendants petition for writ of certiorari
is resolved. As of February 9, 2011, the U.S. Supreme
Court had not determined whether it would grant review of
defendants certiorari petition.
In 1997, Scott was certified a class action on behalf of
certain cigarette smokers resident in the State of Louisiana who
desire to participate in medical monitoring or smoking cessation
programs and who began smoking prior to September 1, 1988,
or who began smoking prior to May 24, 1996 and allege that
defendants undermined compliance with the warnings on cigarette
packages.
Trial in Scott was heard in two phases. At the conclusion
of the first phase in July 2003, the jury rejected medical
monitoring, the primary relief requested by plaintiffs, and
returned sufficient findings in favor of the class to proceed to
a Phase II trial on plaintiffs request for a
statewide smoking cessation program. Phase II of the trial,
which concluded in May 2004, resulted in an award of
$591 million to fund cessation programs for Louisiana
smokers.
In February 2007, the Louisiana Court of Appeal reduced the
amount of the award by approximately $328 million; struck
an award of prejudgment interest, which totaled approximately
$440 million as of December 31, 2006; and limited
class membership to individuals who began smoking by
September 1, 1988, and whose claims accrued by
September 1, 1988. In January 2008, the Louisiana Supreme
Court denied plaintiffs and defendants separate
petitions for review. In May 2008, U.S. Supreme Court
denied defendants request that it review the case. The
case was returned to the trial court, which subsequently entered
an amended final judgment that ordered the defendants to pay
approximately $264 million to fund the court-supervised
smoking cessation program for the members of the certified
class. The Court of Appeals April 2010 Decision was an
appeal from this judgment.
Should the amended final judgment be sustained on appeal,
Lorillard Tobaccos share of that judgment, including the
award of post-judgment interest, has not been determined. In the
fourth quarter of 2007, Lorillard, Inc. recorded a pretax
provision of approximately $66 million for this matter
which was included in selling, general and administrative
expenses on the consolidated statements of income and was
reclassified from other liabilities to accrued liabilities in
the second quarter of 2010 on the consolidated balance sheets.
The parties filed a stipulation in the trial court agreeing that
an article of Louisiana law required that the amount of the bond
for the appeal be set at $50 million for all defendants
collectively. The parties further agreed that the plaintiffs
have full reservations of rights to contest in the trial court
the sufficiency of the bond on any grounds. Defendants
collectively posted a surety bond in the amount of
$50 million, of which Lorillard Tobacco secured 25%, or
$12.5 million, which is classified as restricted cash
within other current assets on the consolidated balance sheet.
While Lorillard Tobacco believes the limitation on the appeal
bond amount is valid as required by Louisiana law, in the event
of a successful challenge the amount of the appeal bond could be
set as high as 150% of the judgment and judicial interest
combined. If such an event occurred, Lorillard Tobaccos
share of the appeal bond has not been determined.
Other Class Action Cases. In one
Class Action Case pending against Lorillard Tobacco,
Brown v. The American Tobacco Company, Inc.,
et al. (Superior Court, San Diego County,
California, filed June 10, 1997), the California Supreme
Court in 2009 vacated an order that had previously decertified a
class and returned Brown to the trial court for further
activity. The trial court has informed the parties that it
believes the class previously certified in Brown has been
reinstated as a result of the California Supreme Courts
ruling. The class previously certified in Brown is
composed of residents of California who smoked at least one of
defendants cigarettes between June 10, 1993 and
April 23, 2001 and who were exposed to defendants
marketing and advertising activities in California. The trial
court also has ruled that it will permit plaintiffs to assert
claims regarding the allegedly fraudulent marketing of
light or ultra-light cigarettes. Trial
in Brown has been scheduled for May 2011. Trial dates are
subject to change. Lorillard, Inc. is not a defendant in
Brown.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
In another Class Action Case pending against Lorillard
Tobacco, Cleary v. Philip Morris Incorporated, et al.
(U.S. District Court, Northern District, Illinois,
filed June 3, 1998), a court allowed plaintiffs to amend
their complaint in an existing class action to assert claims on
behalf of a subclass of individuals who purchased
light cigarettes from the defendants, but it
subsequently dismissed the light cigarettes claims
asserted against Lorillard Tobacco. In June 2010, the court
dismissed plaintiffs remaining claims, and it entered
final judgment in defendants favor. Plaintiffs have
noticed an appeal from the final judgment, including the prior
ruling that dismissed plaintiffs lights claims
against Lorillard Tobacco, to the U.S. Court of Appeals for
the Seventh Circuit. Lorillard, Inc. is not a defendant in
Cleary.
Lights Class Action
Cases. Neither Lorillard Tobacco nor
Lorillard, Inc. is a defendant in another approximately 35
Class Action Cases in which plaintiffs claims are
based on the allegedly fraudulent marketing of light
or ultra-light cigarettes. Classes have been
certified in some of these cases. In one of the
lights Class Action Cases, Good v.
Altria Group, Inc., et al., the
U.S. Supreme Court ruled in December 2008 that neither the
Federal Cigarette Labeling and Advertising Act nor the Federal
Trade Commissions regulation of cigarettes tar and
nicotine disclosures preempts (or bars) some of plaintiffs
claims. In 2009, the Judicial Panel on Multidistrict Litigation
consolidated various federal court lights
Class Action Cases pending against Philip Morris USA or
Altria Group and transferred those cases to the
U.S. District Court of Maine. As of February 9, 2011,
16 cases were part of that consolidated proceeding.
Reimbursement
Cases
Lorillard Tobacco is a defendant in the three Reimbursement
Cases that are pending in the U.S. and it has been named as
a party to a case in Israel. Lorillard, Inc. is a co-defendant
in two of the three cases pending in the U.S. Plaintiffs in
the case in Israel have attempted to assert claims against
Lorillard, Inc. Plaintiffs in another case filed in the
U.S. have the option of pursuing an appeal from an order
entered in December 2010 that dismissed the case in favor of the
defendants. As of February 9, 2011, plaintiffs in this
matter had not sought appellate review of the dismissal order.
As of February 9, 2011, trial was underway in one of the
three Reimbursement Cases pending in the U.S., City of
St. Louis [Missouri] v. American Tobacco Co., Inc., et
al. (Circuit Court, City of St. Louis, Missouri, filed
November 25, 1998). Along with other cigarette
manufacturers, Lorillard Tobacco and Lorillard, Inc. are
defendants in City of St. Louis. Plaintiffs are
suing on behalf of 37 Missouri hospitals.
U.S. Government Case. In August
2006, the U.S. District Court for the District of Columbia
issued its final judgment and remedial order in the federal
governments reimbursement suit, United States of
America v. Philip Morris USA, Inc., et
al., (U.S. District Court, District of Columbia, filed
September 22, 1999). The final judgment and remedial order
concluded a bench trial that began in September 2004. Lorillard
Tobacco, other cigarette manufacturers, two parent companies and
two trade associations were defendants in this action during
trial. Lorillard, Inc. is not a party to this case.
In its 2006 final judgment and remedial order, the court
determined that the defendants, including Lorillard Tobacco,
violated certain provisions of the RICO statute, that there was
a likelihood of present and future RICO violations, and that
equitable relief was warranted. The government was not awarded
monetary damages. The equitable relief included permanent
injunctions that prohibit the defendants, including Lorillard
Tobacco, from engaging in any act of racketeering, as defined
under RICO; from making any material false or deceptive
statements concerning cigarettes; from making any express or
implied statement about health on cigarette packaging or
promotional materials (these prohibitions include a ban on using
such descriptors as low tar, light,
ultra-light, mild or
natural); from making any statements that low
tar, light, ultra-light,
mild or natural or low-nicotine
cigarettes may result in a reduced risk of disease; and from
participating in the management or control of certain entities
or their successors. The final judgment and remedial order also
requires the defendants, including Lorillard Tobacco, to make
corrective statements on their websites, in certain media, in
point-of-sale
advertisements, and on cigarette package inserts
concerning:
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
the health effects of smoking; the addictiveness of smoking;
that there are no significant health benefits to be gained by
smoking low tar, light,
ultra-light, mild or natural
cigarettes; that cigarette design has been manipulated to ensure
optimum nicotine delivery to smokers; and that there are adverse
effects from exposure to secondhand smoke. Lorillard Tobacco
could incur costs in excess of $10 million to implement the
final judgment and remedial order. The final judgment and
remedial order also requires defendants, including Lorillard
Tobacco, to make disclosures of disaggregated marketing data to
the government, and to make document disclosures on a website
and in a physical depository. The final judgment and remedial
order prohibits each defendant that manufactures cigarettes,
including Lorillard Tobacco, from selling any of its cigarette
brands or certain elements of its business unless certain
conditions are met.
The final judgment and remedial order has not yet been fully
implemented. Following trial, the final judgment and remedial
order was stayed because the defendants, the government and
several intervenors noticed appeals to the Circuit Court of
Appeals for the District of Columbia. In May 2009, a three judge
panel upheld substantially all of the District Courts
final judgment and remedial order. In September 2009, the Court
of Appeals denied defendants rehearing petitions as well
as their motion to vacate those statements in the appellate
ruling that address defendants marketing of low
tar or lights cigarettes, to vacate those
parts of the trial courts judgment on that issue, and to
remand the case with instructions to deny as moot the
governments allegations and requested relief regarding
lights cigarettes. The Court of Appeals stayed its
order that formally relinquished jurisdiction of
defendants appeal pending the disposition of the petitions
for writ of certiorari to the U.S. Supreme Court that were
noticed by the defendants, the government and the intervenors.
In June 2010, the U.S. Supreme Court denied all of the
petitions for writ of certiorari. The case has been returned to
the trial court for implementation of the Court of Appeals
directions in its 2009 ruling and for entry of an amended final
judgment.
While trial was underway, the Court of Appeals ruled that
plaintiff may not seek to recover profits earned by the
defendants. Prior to trial, the government had claimed that it
was entitled to approximately $280 billion from the
defendants for its claim to recover profits earned by the
defendants. The U.S. Supreme Court declined to address the
decisions dismissing recovery of profits when it denied review
of the governments and the intervenors petitions.
Settlement of State Reimbursement
Litigation. On November 23, 1998,
Lorillard Tobacco, Philip Morris Incorporated, Brown &
Williamson Tobacco Corporation and R.J. Reynolds Tobacco Company
(the Original Participating Manufacturers) entered
into the Master Settlement Agreement (MSA) with
46 states, the District of Columbia, the Commonwealth of
Puerto Rico, Guam, the U.S. Virgin Islands, American Samoa
and the Commonwealth of the Northern Mariana Islands to settle
the asserted and unasserted health care cost recovery and
certain other claims of those states. These settling entities
are generally referred to as the Settling States.
The Original Participating Manufacturers had previously settled
similar claims brought by Mississippi, Florida, Texas and
Minnesota, which together with the MSA are referred to as the
State Settlement Agreements.
The State Settlement Agreements provide that the agreements are
not admissions, concessions or evidence of any liability or
wrongdoing on the part of any party, and were entered into by
the Original Participating Manufacturers to avoid the further
expense, inconvenience, burden and uncertainty of litigation.
Lorillard recorded pretax charges for its obligations under the
State Settlement Agreements of $300 million and
$1.212 billion for the three and twelve months ended
December 31, 2010, respectively, and $280 million and
$1.128 billion for the three and twelve months ended
December 31, 2009, respectively. Lorillards portion
of ongoing adjusted settlement payments and legal fees is based
on its share of domestic cigarette shipments in the year
preceding that in which the payment is due. Accordingly,
Lorillard records its portions of ongoing adjusted settlement
payments as part of cost of manufactured products sold as the
related sales occur.
The State Settlement Agreements require that the domestic
tobacco industry make annual payments of $10.4 billion,
subject to adjustment for several factors, including inflation,
market share and industry volume.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
In addition, the domestic tobacco industry is required to pay
settling plaintiffs attorneys fees, subject to an
annual cap of $500 million, as well as an additional amount
of up to $125 million in each year through 2008. These
payment obligations are the several and not joint obligations of
each settling defendant. The State Settlement Agreements also
include provisions relating to significant advertising and
marketing restrictions, public disclosure of certain industry
documents, limitations on challenges to tobacco control and
underage use laws, and other provisions.
Lorillard Tobacco and the other Original Participating
Manufacturers have notified the States that they intend to seek
an adjustment in the amount of payments made in 2003 and
subsequent years pursuant to a provision in the MSA that permits
such adjustment if the companies can prove that the MSA was a
significant factor in their loss of market share to companies
not participating in the MSA and that the States failed to
diligently enforce certain statutes passed in connection with
the MSA. If the Original Participating Manufacturers are
ultimately successful, any adjustment would be reflected as a
credit against future payments by the Original Participating
Manufacturers under the agreement.
From time to time, lawsuits have been brought against Lorillard
Tobacco and other participating manufacturers to the MSA, or
against one or more of the states, challenging the validity of
the MSA on certain grounds, including as a violation of the
antitrust laws. See MSA-Related Antitrust Suit below.
In addition, in connection with the MSA, the Original
Participating Manufacturers entered into an agreement to
establish a $5.2 billion trust fund payable between 1999
and 2010 to compensate the tobacco growing communities in
14 states (the Trust). Payments to the Trust
ended in 2005 as a result of an assessment imposed under a
federal law, enacted in 2004, repealing the federal supply
management program for tobacco growers. Under the law, tobacco
quota holders and growers will be compensated with payments
totaling $10.1 billion, funded by an assessment on tobacco
manufacturers and importers. Payments under the law to
qualifying tobacco quota holders and growers commenced in 2005.
Lorillard believes that the State Settlement Agreements will
materially adversely affect its cash flows and operating income
in future years. The degree of the adverse impact will depend,
among other things, on the rates of decline in domestic
cigarette sales in the premium price and discount price
segments, Lorillards share of the domestic premium price
and discount price cigarette segments, and the effect of any
resulting cost advantage of manufacturers not subject to
significant payment obligations under the State Settlement
Agreements.
Filter
Cases
In addition to the above, claims have been brought against
Lorillard Tobacco and Lorillard, Inc. by individuals who seek
damages resulting from their alleged exposure to asbestos fibers
that were incorporated into filter material used in one brand of
cigarettes manufactured by Lorillard Tobacco for a limited
period of time ending more than 50 years ago. Lorillard
Tobacco is a defendant in 34 Filter Cases. Lorillard, Inc. is a
defendant in three Filter Cases, including two that also name
Lorillard Tobacco. Since January 1, 2009, Lorillard Tobacco
has paid, or has reached agreement to pay, a total of
approximately $15.6 million in settlements to finally
resolve 46 claims. The related expense was recorded in selling,
general and administrative expenses on the consolidated
statements of income. Since January 1, 2009, a verdict has
been returned in one Filter Case, Cox v. Asbestos
Corporation, Ltd., et al, which was tried in the Superior
Court of California, Los Angeles County. Plaintiffs in the
Cox case voluntarily dismissed Lorillard Tobacco from
their appeal to the California Court of Appeals and the matter
is concluded. As of February 9, 2011, trial was underway in
one Filter Case in which Lorillard Tobacco is a defendant,
Lenney v. Armstrong International, Inc., et al.,
(Superior Court of California, San Francisco County).
As of February 9, 2011, nine Filter Cases were scheduled
for trial or have been placed on courts trial calendars.
Trial dates are subject to change.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Tobacco-Related
Antitrust Cases
Indirect
Purchaser Suits
Approximately 30 antitrust suits were filed in 2000 and 2001 on
behalf of putative classes of consumers in various state courts
against cigarette manufacturers. The suits all alleged that the
defendants entered into agreements to fix the wholesale prices
of cigarettes in violation of state antitrust laws which permit
indirect purchasers, such as retailers and consumers, to sue
under price fixing or consumer fraud statutes. More than
20 states permit such suits. Lorillard Tobacco was a
defendant in all but one of these indirect purchaser cases.
Lorillard, Inc. was not named as a defendant in any of these
cases. Three indirect purchaser suits, in New York, Florida
and Michigan, thereafter were dismissed by courts in those
states, and the plaintiffs withdrew their appeals. The actions
in all other states, except for Kansas, were either voluntarily
dismissed or dismissed by the courts.
In the Kansas case, the District Court of Seward County
certified a class of Kansas indirect purchasers in 2002. In July
2006, the Court issued an order confirming that fact discovery
was closed, with the exception of privilege issues that the
Court determined, based on a Special Masters report,
justified further fact discovery. In October 2007, the Court
denied all of the defendants privilege claims, and the
Kansas Supreme Court thereafter denied a petition seeking to
overturn that ruling. Discovery currently is ongoing. As of
February 9, 2011, the Court had not set dates for
dispositive motions and trial.
MSA-Related
Antitrust Suit
In October 2008, Lorillard Tobacco was named as a defendant in
an action filed in the Western District of Kentucky, Vibo
Corporation, Inc. d/b/a/ General Tobacco v. Conway, et
al. The suit alleges that the named defendants, which
include 52 state and territorial attorneys general and 19
tobacco manufacturers, violated the federal Sherman Antitrust
Act of 1890 (the Sherman Act) by entering into and
participating in the MSA. The plaintiff alleges that MSA
participants, such as itself, that were not in existence when
the MSA was executed in 1998 but subsequently became
participants, are unlawfully required to pay significantly more
sums to the states than companies that joined the MSA within
90 days after its execution. In addition to the Sherman Act
claim, plaintiff has raised a number of constitutional claims
against the states. Plaintiff seeks a declaratory judgment in
its favor on all claims, an injunction against the continued
enforcement of the MSA, treble damages against the tobacco
manufacturer defendants, including Lorillard Tobacco, and
damages and injunctive relief against the states, including
contract recession and restitution. In December 2008, the court
dismissed the complaint against all defendants, including
Lorillard Tobacco. The court entered its final judgment
dismissing the suit in January 2010. Thereafter, the plaintiff
filed a notice of appeal to the federal Court of Appeals for the
Sixth Circuit. As of February 9, 2011, no other filings had
been made.
Defenses
Each of Lorillard Tobacco and Lorillard, Inc. believes that it
has valid defenses to the cases pending against it as well as
valid bases for appeal should any adverse verdicts be returned
against either of them. While Lorillard Tobacco and Lorillard,
Inc. intend to defend vigorously all tobacco products liability
litigation, it is not possible to predict the outcome of any of
this litigation. Litigation is subject to many uncertainties.
Plaintiffs have prevailed in several cases, as noted above. It
is possible that one or more of the pending actions could be
decided unfavorably as to Lorillard Tobacco, Lorillard, Inc. or
the other defendants. Lorillard Tobacco and Lorillard, Inc. may
enter into discussions in an attempt to settle particular cases
if either believe it is appropriate to do so.
Neither Lorillard Tobacco nor Lorillard, Inc. can predict the
outcome of pending litigation. Some plaintiffs have been awarded
damages from cigarette manufacturers at trial. While some of
these awards have been overturned or reduced, other damages
awards have been paid after the manufacturers have exhausted
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
their appeals. These awards and other litigation activities
against cigarette manufacturers continue to receive media
attention. In addition, health issues related to tobacco
products also continue to receive media attention. It is
possible, for example, that the 2006 verdict in United States
of America v. Philip Morris USA, Inc., et al.,
which made many adverse findings regarding the conduct of the
defendants, including Lorillard Tobacco, could form the basis of
allegations by other plaintiffs or additional judicial findings
against cigarette manufacturers. In addition, the ruling in
Good v. Altria Group, Inc., et al. could result in
further lights litigation. Any such developments
could have an adverse effect on the ability of Lorillard Tobacco
or Lorillard, Inc. to prevail in smoking and health litigation
and could influence the filing of new suits against Lorillard
Tobacco or Lorillard, Inc. Lorillard Tobacco and Lorillard, Inc.
also cannot predict the type or extent of litigation that could
be brought against either of them, or against other cigarette
manufacturers, in the future.
Lorillard records provisions in the consolidated financial
statements for pending litigation when it determines that an
unfavorable outcome is probable and the amount of loss can be
reasonably estimated. Except for the impact of the State
Settlement Agreements and Scott as described above,
management is unable to make a meaningful estimate of the amount
or range of loss that could result from an unfavorable outcome
of material pending litigation and, therefore, no material
provision has been made in the consolidated financial statements
for any unfavorable outcome. It is possible that
Lorillards results of operations or cash flows in a
particular quarterly or annual period or its financial position
could be materially adversely affected by an unfavorable outcome
or settlement of certain pending litigation.
Indemnification
Obligations
In connection with the Separation, Lorillard entered into a
separation agreement with Loews (the Separation
Agreement) and agreed to indemnify Loews and its officers,
directors, employees and agents against all costs and expenses
arising out of third party claims (including, without
limitation, attorneys fees, interest, penalties and costs
of investigation or preparation for defense), judgments, fines,
losses, claims, damages, liabilities, taxes, demands,
assessments and amounts paid in settlement based on, arising out
of or resulting from, among other things, Loews ownership
of or the operation of Lorillard and its assets and properties,
and its operation or conduct of its businesses at any time prior
to or following the Separation (including with respect to any
product liability claims).
Loews is a defendant in three pending product liability cases.
One of these is a Reimbursement Case in Israel and two are
purported Class Action Cases on file in U.S. courts.
Lorillard Tobacco also is a defendant in each of the three
product liability cases in which Loews is involved. Pursuant to
the Separation Agreement, Lorillard is required to indemnify
Loews for the amount of any losses and any legal or other fees
with respect to such cases.
Other
Litigation
Lorillard is also party to other litigation arising in the
ordinary course of business. The outcome of this other
litigation will not, in the opinion of management, materially
affect Lorillards results of operations or equity.
CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
Item 9A.
CONTROLS
AND PROCEDURES
Disclosure
Controls and Procedures
Our management, including our Chief Executive Officer and Chief
Financial Officer, evaluated the effectiveness of our disclosure
controls and procedures pursuant to Rule 13a 15
under the Exchange Act as of the end of the period covered by
this report. Based on that evaluation, our Chief Executive
Officer and Chief Financial Officer have concluded that, as of
the end of the period covered by this annual report, our
disclosure controls and procedures (as defined in
Rule 13a 15(e) under the Exchange Act) are
effective, in all material respects, to provide reasonable
assurance that information we are required to disclose in
reports that we file or submit under the Exchange Act is
recorded, processed, summarized and reported within the time
periods specified in SEC rules and forms, and that such
information is accumulated and communicated to our management,
including our Chief Executive Officer and Chief Financial
Officer, as appropriate, to allow timely decisions regarding
required disclosure.
Managements
Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining
adequate internal control over financial reporting, as defined
in
Rules 13a-15(f)
and
15d-15(f) of
the Exchange Act. Internal control over financial reporting is a
process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of
financial statements in accordance with accounting principles
generally accepted in the United States (GAAP). The
effectiveness of any system of internal control over financial
reporting is subject to inherent limitations, including the
exercise of judgment in designing, implementing, operating and
evaluating our internal control over financial reporting.
Because of these inherent limitations, internal control over
financial reporting cannot provide absolute assurance regarding
the reliability of financial reporting and the preparation of
financial statements in accordance with GAAP and may not prevent
or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that our
internal control over financial reporting may become inadequate
because of changes in conditions or other factors, or that the
degree of compliance with the policies or procedures may
deteriorate.
Management, with the participation of our Chief Executive
Officer and Chief Financial Officer, assessed the effectiveness
of our internal control over financial reporting as of
December 31, 2010 as required under Section 404 of the
Sarbanes-Oxley Act of 2002. Managements assessment of the
effectiveness of our internal control over financial reporting
was conducted using the criteria in Internal Control
Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission. Management reviewed
the results of its assessment with the Audit Committee of our
Board of Directors. Based on this assessment, management
concluded that our internal control over financial reporting was
effective as of December 31, 2010.
The effectiveness of our internal control over financial
reporting as of December 31, 2010 has been audited by
Deloitte & Touche LLP, our independent registered
public accounting firm, as stated in their attestation report
included herein.
Changes
in Internal Control over Financial Reporting
No change in our internal control over financial reporting (as
defined in
Rule 13a-15(f)
under the Exchange Act) occurred during our most recent fiscal
quarter that has materially affected, or is likely to materially
affect, our internal control over financial reporting.
REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of Lorillard, Inc.
Greensboro, North Carolina.
We have audited the internal control over financial reporting of
Lorillard, Inc. and Subsidiaries (the Company) as of
December 31, 2010 based on criteria established in
Internal Control Integrated Framework issued
by the Committee of Sponsoring Organizations of the Treadway
Commission. The Companys management is responsible for
maintaining effective internal control over financial reporting
and for its assessment of the effectiveness of internal control
over financial reporting, included in the accompanying
Managements Report on Internal Control over Financial
Reporting. Our responsibility is to express an opinion on the
Companys internal control over financial reporting based
on our audit.
We conducted our audit in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether effective internal control
over financial reporting was maintained in all material
respects. Our audit included obtaining an understanding of
internal control over financial reporting, assessing the risk
that a material weakness exists, testing and evaluating the
design and operating effectiveness of internal control based on
the assessed risk, and performing such other procedures as we
considered necessary in the circumstances. We believe that our
audit provides a reasonable basis for our opinion.
A companys internal control over financial reporting is a
process designed by, or under the supervision of, the
companys principal executive and principal financial
officers, or persons performing similar functions, and effected
by the companys board of directors, management, and other
personnel to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with
generally accepted accounting principles. A companys
internal control over financial reporting includes those
policies and procedures that (1) pertain to the maintenance
of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the
company; (2) provide reasonable assurance that transactions
are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company
are being made only in accordance with authorizations of
management and directors of the company; and (3) provide
reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of the
companys assets that could have a material effect on the
financial statements.
Because of the inherent limitations of internal control over
financial reporting, including the possibility of collusion or
improper management override of controls, material misstatements
due to error or fraud may not be prevented or detected on a
timely basis. Also, projections of any evaluation of the
effectiveness of the internal control over financial reporting
to future periods are subject to the risk that the controls may
become inadequate because of changes in conditions, or that the
degree of compliance with the policies or procedures may
deteriorate.
In our opinion, the Company maintained, in all material
respects, effective internal control over financial reporting as
of December 31, 2010, based on the criteria established in
Internal Control Integrated Framework issued
by the Committee of Sponsoring Organizations of the Treadway
Commission.
We have also audited, in accordance with the standards of the
Public Company Accounting Oversight Board (United States), the
consolidated financial statements and financial statement
schedule as of and for the year ended December 31, 2010 of
the Company and our report dated February 18, 2011 expressed an
unqualified opinion on those consolidated financial statements
and financial statement schedule.
DIRECTORS,
EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The information required by this item is contained in our proxy
statement for our 2011 Annual Meeting of Shareholders to be held
on May 19, 2011, to be filed pursuant to Section 14 of
the Exchange Act, and is incorporated herein by reference.
Item 11.
EXECUTIVE
COMPENSATION
The information required by this item is contained in our proxy
statement for our 2011 Annual Meeting of Shareholders to be held
on May 19, 2011, to be filed pursuant to Section 14 of
the Exchange Act, and is incorporated herein by reference.
Item 12.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
The information required by this item is contained in our proxy
statement for our 2011 Annual Meeting of Shareholders to be held
on May 19, 2011, to be filed pursuant to Section 14 of
the Exchange Act, and is incorporated herein by reference.
Item 13.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
The information required by this item is contained in our proxy
statement for our 2011 Annual Meeting of Shareholders to be held
on May 19, 2011, to be filed pursuant to Section 14 of
the Exchange Act, and is incorporated herein by reference.
Item 14.
PRINCIPAL
ACCOUNTANT FEES AND SERVICES
The information required by this item is contained in our proxy
statement for our 2011 Annual Meeting of Shareholders to be held
on May 19, 2011, to be filed pursuant to Section 14 of
the Exchange Act, and is incorporated herein by reference.
The Companys Consolidated Financial Statements included in
Item 8 hereof, as required at December 31, 2010 and
December 31, 2009, and for the periods ended
December 31, 2010, December 31, 2009 and
December 31, 2008, consist of the following:
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Cash Flows
Consolidated Statements of Shareholders Equity (Deficit)
Notes to Consolidated Financial Statements
(2) Financial Statement Schedule
Financial Statement Schedule of the Company appended hereto, as
required for the periods ended December 31, 2010,
December 31, 2009 and December 31, 2008, consists of
the following:
Valuation and Qualifying Accounts
(3) Exhibits
Exhibit
Number
Description
3
.1
Amended and Restated Certificate of Incorporation of Lorillard,
Inc., incorporated herein by reference to Exhibit 3.1 to our
Current Report on Form 8-K (File No. 1-34097) filed on June 12,
2008
3
.2
Amended and Restated Bylaws of Lorillard, Inc., as of February
25, 2010, incorporated herein by reference to Exhibit 3.2 to our
Current Report on Form 8-K filed (File No. 1-34097) on March 2,
2010
3
.3
Certificate of Amendment of Certificate of Incorporation of
Lorillard Tobacco Company and Certificate of Incorporation of
Lorillard Tobacco Company, incorporated herein by reference to
Exhibit 3.3 to Lorillard, Inc.s Registration Statement on
Form S-3 (File No. 333-159902) filed on June 11, 2009
3
.4
Bylaws of Lorillard Tobacco Company, incorporated herein by
reference to Exhibit 3.4 to Lorillard, Inc.s Registration
Statement on Form S-3 (File No. 333-159902) filed on June 11,
2009
4
.1
Specimen certificate for shares of common stock of Lorillard,
Inc., incorporated herein by reference to Exhibit 4.1 to our
Amended Registration Statement on Form S-4
(File No. 333-149051)
filed on May 9, 2008
4
.2
Indenture, dated June 23, 2009, among Lorillard Tobacco Company,
Lorillard, Inc. and The Bank of New York Mellon Trust Company,
N.A., as Trustee, incorporated by reference to Exhibit 4.1 to
our Current Report on Form 8-K (File No. 1-34097) filed on June
23, 2009
4
.3
First Supplemental Indenture, dated June 23, 2009, among
Lorillard Tobacco Company, Lorillard, Inc. and The Bank of New
York Mellon Trust Company, N.A., as Trustee, incorporated by
reference to Exhibit 4.2 to our Current Report on Form 8-K (File
No. 1-34097) filed on June 23, 2009
4
.4
Second Supplemental Indenture, dated April 12, 2010, among
Lorillard Tobacco Company, Lorillard, Inc. and The Bank of New
York Mellon Trust Company, N.A., as Trustee, incorporated by
reference to Exhibit 4.2 to our Current Report on Form 8-K (File
No. 1-34097) filed on April 12, 2010
4
.5
Form of 8.125% Senior Note due 2019 of Lorillard Tobacco
Company, incorporated by reference to Exhibit 4.3 to our Current
Report on Form 8-K (File No. 1-34097) filed on June 23, 2009
Form of 6.875% Senior Note due 2020 of Lorillard Tobacco
Company, incorporated by reference to Exhibit 4.3 to our Current
Report on Form 8-K (File No. 1-34097) filed on April 12, 2010
4
.7
Form of 8.125% Senior Note due 2040 of Lorillard Tobacco
Company, incorporated by reference of Exhibit 4.4 to our Current
Report on Form 8-K (File No. 1-34097) filed on April 12, 2010
4
.8
Form of Guarantee Agreement of Lorillard, Inc. for the
8.125% Senior Notes due 2019 of Lorillard Tobacco Company,
incorporated by reference to Exhibit 4.4 to Lorillard,
Inc.s Current Report on Form 8-K filed on June 23,
2009
4
.9
Form of Guarantee Agreement of Lorillard, Inc. for the
6.875% Senior Notes due 2020 of Lorillard Tobacco Company,
incorporated by reference to Exhibit 4.5 to our Current Report
on Form 8-K (File No. 1-34097) filed on April 12, 2010
4
.10
Form of Guarantee Agreement of Lorillard, Inc. for the
8.125% Senior Notes due 2040 of Lorillard Tobacco Company,
incorporated by reference to Exhibit 4.6 to our Current Report
on Form 8-K (File No. 1-34097) filed on April 12, 2010
10
.1
Separation Agreement between Loews Corporation and Lorillard,
Inc., Lorillard Tobacco Company, Lorillard Licensing Company,
LLC, One Park Media Services, Inc. and Plisa, S.A., incorporated
herein by reference to Exhibit 10.1 to our Quarterly Report on
Form 10-Q (File No. 1-34097) filed on August 7,
2008
10
.2
Amended and Restated Employment Agreement between Lorillard,
Inc. and Martin L. Orlowsky, dated December 19, 2008,
incorporated by reference to Exhibit 10.2 to our Annual Report
on Form 10-K (File No. 1-34097) filed on March 2, 2009
10
.3
Comprehensive Settlement Agreement and Release with the State of
Florida to settle and resolve with finality all present and
future economic claims by the State and its subdivisions
relating to the use of or exposure to tobacco products,
incorporated herein by reference to Exhibit 10 to Loewss
Report on Form 8-K (File No. 1-6541) filed September 5, 1997
10
.4
Comprehensive Settlement Agreement and Release with the State of
Texas to settle and resolve with finality all present and future
economic claims by the State and its subdivisions relating to
the use of or exposure to tobacco products, incorporated herein
by reference to Exhibit 10 to Loewss Report on Form 8-K
(File No. 1-6541) filed February 3, 1998
10
.5
State of Minnesota Settlement Agreement and Stipulation for
Entry of Consent Judgment to settle and resolve with finality
all claims of the State of Minnesota relating to the subject
matter of this action which have been or could have been
asserted by the State, incorporated herein by reference to
Exhibit 10.1 to Loewss Report on Form 10-Q for the
quarter ended March 31, 1998 (File No. 1-6541) filed
May 15, 1998
10
.6
State of Minnesota Consent Judgment relating to the settlement
of tobacco litigation, incorporated herein by reference to
Exhibit 10.2 to Loewss Report on Form 10-Q for the quarter
ended March 31, 1998 (File No. 1-6541) filed May 15, 1998
10
.7
State of Minnesota Settlement Agreement and Release relating to
the settlement of tobacco litigation, incorporated herein by
reference to Exhibit 10.3 to Loewss Report on Form 10-Q
for the quarter ended March 31, 1998 (File No. 1-6541) filed May
15, 1998
10
.8
State of Minnesota State Escrow Agreement relating to the
settlement of tobacco litigation, incorporated herein by
reference to Exhibit 10.6 to Loewss Report on Form 10-Q
for the quarter ended March 31, 1998 (File No. 1-6541) filed May
15, 1998
10
.9
Stipulation of Amendment to Settlement Agreement and For Entry
of Agreed Order, dated July 2, 1998, regarding the settlement of
the State of Mississippi health care cost recovery action,
incorporated herein by reference to Exhibit 10.1 to Loewss
Report on Form 10-Q for the quarter ended June 30, 1998
(File No. 1-6541) filed August 14, 2008
10
.10
Mississippi Fee Payment Agreement, dated July 2, 1998, regarding
the payment of attorneys fees, incorporated herein by
reference to Exhibit 10.2 to Loewss Report on Form 10-Q
for the quarter ended June 30, 1998 (File No. 1-6541) filed
August 14, 2008
Stipulation of Amendment to Settlement Agreement and For Entry
of Consent Decree, dated July 24, 1998, regarding the
settlement of the Texas health care cost recovery action,
incorporated herein by reference to Exhibit 10.4 to Loewss
Report on Form 10-Q for the quarter ended June 30, 1998
(File No. 1-6541)
filed on August 14, 2008
10
.12
Texas Fee Payment Agreement, dated July 24, 1998, regarding the
payment of attorneys fees, incorporated herein by
reference to Exhibit 10.5 to Loewss Report on Form 10-Q
for the quarter ended June 30, 1998 (File No. 1-6541) filed on
August 14, 2008
10
.13
Stipulation of Amendment to Settlement Agreement and For Entry
of Consent Decree, dated September 11, 1998, regarding the
settlement of the Florida health care cost recovery action,
incorporated herein by reference to Exhibit 10.1 to Loewss
Report on Form 10-Q for the quarter ended September 30, 1998
(File No. 1-6541) filed November 17, 2008
10
.14
Florida Fee Payment Agreement, dated September 11, 1998,
regarding the payment of attorneys fees, incorporated
herein by reference to Exhibit 10.2 to Loewss Report on
Form 10-Q for the quarter ended September 30, 1998 (File No.
1-6541) filed November 17, 2008
10
.15
Master Settlement Agreement with 46 states, the District of
Columbia, the Commonwealth of Puerto Rico, Guam, the U.S. Virgin
Islands, American Samoa and the Northern Marianas to settle the
asserted and unasserted health care cost recovery and certain
other claims of those states, incorporated herein by reference
to Exhibit 10 to Loewss Current Report on Form 8-K
(File No. 1-6541)
filed November 25, 1998
10
.16
Form of Assignment and Assumption of Services Agreement, dated
as of April 1, 2008, by and between R.J. Reynolds Tobacco
Company and R.J. Reynolds Global Products, Inc., with a joinder
by Lorillard Tobacco Company, incorporated herein by reference
to Exhibit 10.17 to our Amended Registration Statement on Form
S-4 (File No. 333-149051) filed on March 26, 2008
10
.17
Lorillard, Inc. 2008 Incentive Compensation Plan, incorporated
herein by reference to Exhibit 10.3 to our Quarterly Report on
Form 10-Q for the quarter ended June 30, 2009 (File No.
1-34097) filed on August 7, 2008
10
.18
Form of Lorillard, Inc. indemnification agreement for directors
and executive officers, incorporated herein by reference to
Exhibit 10.19 to our Amended Registration Statement on Form S-4
(File No. 333-149051)
filed on May 9, 2008
10
.19
Form of Severance Agreement for named executive officers,
incorporated herein by reference to Exhibit 10.2 to our Current
Report on Form 8-K (File No. 1-34097) filed on July 10,
2008
10
.20
Amendment to Supply Agreement for Reconstituted Tobacco, dated
October 30, 2008, by and between R.J. Reynolds Tobacco Company
and Lorillard Tobacco Company, incorporated herein by reference
to Exhibit 10.6 to our Quarterly Report on Form 10-Q for the
quarter ended September 30, 2008
(File No. 1-34097)
filed on November 4,
2008#
10
.21
Form of Stock Appreciation Rights Award Certificate,
incorporated herein by reference to Exhibit 10.7 to our
Quarterly Report on Form 10-Q for the quarter ended September
30, 2008
(File No. 1-34097)
filed on November 4, 2008
10
.22
Form of Stock Option Award Certificate, incorporated herein by
reference to Exhibit 10.22 to our Quarterly Report on Form 10-Q
for the quarter ended March 31, 2010 (File No. 1-34097) filed on
May 6, 2010
10
.23
Form of Restricted Stock Award Certificate, incorporated herein
by reference to Exhibit 10.2 of our Quarterly Report on Form
10-Q (File No. 1-34097) filed on May 5, 2009
10
.27
Credit Agreement, dated March 26, 2010, among Lorillard Tobacco
Company, as borrower, Lorillard, Inc., as parent guarantor, the
lenders referred to therein, and JPMorgan Chase Bank, N.A., as
Administrative Agent, incorporated herein by reference to
Exhibit 10.1 to our Current Report on Form 8-K (File No.
1-34097) filed on March 26, 2010
10
.25
Consulting Agreement between Lorillard, Inc. and Martin L.
Orlowsky, dated August 12, 2010, incorporated herein by
reference to Exhibit 10.2 to our Current Report on Form 8-K
(File No. 1-34097)
filed on August 12, 2010
Offer Letter between Lorillard, Inc. and Murray S. Kessler,
dated August 12, 2010, incorporated herein by reference to
Exhibit 10.3 to our Current Report on Form 8-K (File No.
1-34097) filed on August 12, 2010
10
.27
Severance Agreement between Lorillard, Inc. and Murray S.
Kessler, dated October 11, 2010, incorporated herein by
reference to Exhibit 10.26 to our Quarterly Report on Form
10-Q
(File No. 1-34097)
filed on October 27, 2010
11
.1
Statement regarding computation of earnings per share. (See Note
11 to the consolidated financial statements.)*
12
.1
Computation of Ratio of Earnings to Fixed Charges*
21
.1
Subsidiaries of Lorillard, Inc.*
23
.1
Consent of Registered Public Accounting Firm*
23
.2
Consent of Management Science Associates, Inc., incorporated
herein by reference to Exhibit 23.2 to our Annual Report on
Form 10-K
(File No.
1-34097)
filed on March 2, 2009
31
.1
Certification by the Chief Executive Officer of Lorillard, Inc.
pursuant to Rule 13a-14(a) or
Rule 15d-14(a)*
31
.2
Certification by the Chief Financial Officer of Lorillard, Inc.
pursuant to Rule 13a-14(a) or
Rule 15d-14(a)*
32
.1
Certification by the Chief Executive Officer and Chief Financial
Officer of Lorillard, Inc. pursuant to 18 U.S.C. Section
1350 (as adopted by Section 906 of the Sarbanes-Oxley Act of
2002)*
Pursuant to applicable securities laws and regulations, the
Company is deemed to have complied with the reporting obligation
relating to the submission of interactive data files in such
exhibits and is not subject to liability under any anti-fraud
provisions of the federal securities laws as long as the Company
has made a good faith attempt to comply with the submission
requirements and promptly amends the interactive data files
after becoming aware that the interactive data files fails to
comply with the submission requirements. Users of this data are
advised that, pursuant to Rule 406T, these interactive data
files are deemed not filed and otherwise are not subject to
liability.
#
Confidential treatment has been granted for certain portions of
this exhibit pursuant to an order under the Exchange Act of
1934, as amended, which portions have been omitted and filed
separately with the Securities and Exchange Commission.
Management or compensatory plan or arrangement required to be
filed pursuant to Item 601(b)(10) of
Regulation S-K.
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized on February 18, 2011.
LORILLARD, INC.
By:
/s/ MURRAY
S. KESSLER
Name: Murray S. Kessler
Title:
Chairman, President and
Chief Executive Officer
(Principal Executive Officer)
Pursuant to the requirements of the Securities Exchange Act of
1934, as amended, this Annual Report on
Form 10-K
has been signed by the following persons in the capacities
indicated on February 18, 2011. The undersigned hereby
constitute and appoint Murray S. Kessler, David H. Taylor and
Ronald S. Milstein, and each of them, their true and lawful
agents and attorneys-in-fact with full power and authority in
said agents and attorneys-in-fact, and in any one or more of
them, to sign for the undersigned and in their respective names
as directors and officers of Lorillard, Inc., any amendment or
supplement hereto. The undersigned hereby confirm all acts taken
by such agents and attorney-in-fact, or any one or more of them,
as herein authorized.
Signature
Title
/s/ MURRAY
S. KESSLER
Murray
S. Kessler
Chairman, President and Chief Executive Officer
(Principal Executive Officer)
/s/ DAVID
H. TAYLOR
David
H. Taylor
Executive Vice President, Finance and Planning and Chief
Financial Officer (Principal Financial Officer)
/s/ ANTHONY
B. PETITT
Anthony
B. Petitt
Vice President, Chief Accounting Officer and Controller
(Principal Accounting Officer)
VALUATION AND QUALIFYING ACCOUNTS OF LORILLARD, INC. AND
SUBSIDIARIES
Column A
Column B
Column C
Column D
Column E
Additions
Balance at
Charged to
Charged
Balance at
Beginning
Costs and
to Other
End of
Description
of Period
Expenses
Accounts
Deductions(1)
Period
(In millions)
For the Year Ended December 31, 2010
Deducted from assets:
Allowance for discounts
$
1
$
177
$
$
177
$
1
Allowance for doubtful accounts
2
2
Total
$
3
$
177
$
$
177
$
3
For the Year Ended December 31, 2009
Deducted from assets:
Allowance for discounts
$
$
175
$
$
174
$
1
Allowance for doubtful accounts
2
2
Total
$
2
$
175
$
$
174
$
3
For the Year Ended December 31, 2008
Deducted from assets:
Allowance for discounts
$
$
145
$
$
145
$
Allowance for doubtful accounts
2
$
2
Total
$
2
$
145
$
$
145
$
2
(1)
Discounts allowed.
97
EX-12.1
2
g25358exv12w1.htm
EX-12.1
exv12w1
Exhibit 12.1
LORILLARD, INC. AND SUBSIDIARIES
Computation of Ratio of Earnings to Fixed Charges
(In millions)
Year Ended December 31,
2010
2009
2008
2007
2006
Earnings from continuing operations before income taxes
$
1,635
$
1,519
$
1,434
$
1,383
$
1,344
Add:
Fixed Charges
94
27
Earnings available for fixed charges
$
1,729
$
1,546
$
1,434
$
1,383
$
1,344
Fixed Charges:
Interest expense, net of interest rate swaps:
$
94
$
27
$
$
$
Fixed Charges
$
94
$
27
$
$
$
Ratio of earnings to fixed charges
18.4
57.3
n/m
n/m
n/m
EX-21.1
3
g25358exv21w1.htm
EX-21.1
exv21w1
Exhibit 21.1
LORILLARD, INC.
Subsidiaries of the Registrant
As of December 31, 2010
Organized Under
Percentage Owned
Name of Subsidiary
Laws of
by Lorillard, Inc.
Lorillard Tobacco Company
Delaware
100
%
Lorillard Licensing Company LLC
North Carolina
100
%
One Park Media Services, Inc.
Delaware
100
%
The names of certain subsidiaries which, if considered as a single subsidiary, would not constitute
a significant subsidiary as any defined in Regulation S-X, have been omitted.
EX-23.1
4
g25358exv23w1.htm
EX-23.1
exv23w1
Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in Registration Statement No. 333-151595 on Form S-8
and Registration Statement No. 333-159902 on Form S-3 of our reports dated February 18, 2011,
relating to the consolidated financial statements and financial statement schedule of Lorillard,
Inc. and Subsidiaries (the Company) and the effectiveness of the Companys internal control over
financial reporting as of December 31, 2010, appearing in this Annual Report on Form 10-K of the
Company for the year ended December 31, 2010.
/s/Deloitte & Touche LLP
Charlotte, North Carolina
February 18, 2011
EX-31.1
5
g25358exv31w1.htm
EX-31.1
exv31w1
Exhibit 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
I, Murray S. Kessler, certify that:
1. I have reviewed this annual report on Form 10-K for the year ended December 31, 2010 of
Lorillard, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect to the period
covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in
this report, fairly present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the periods presented in this
report;
4. The registrants other certifying officer(s) and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) for the registrant and have:
a. Designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that material
information relating to the registrant, including its consolidated subsidiaries, is
made known to us by others within those entities, particularly during the period in
which this report is being prepared;
b. Designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally
accepted accounting principles;
c. Evaluated the effectiveness of the registrants disclosure controls and
procedures and presented in this report our conclusions about the effectiveness of the
disclosure controls and procedures, as of the end of the period covered by this report
based on such evaluation; and
d. Disclosed in this report any change in the registrants internal control over
financial reporting that occurred during the registrants most recent fiscal quarter
(the registrants fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect, the registrants
internal control over financial reporting; and
5. The registrants other certifying officer(s) and I have disclosed, based on our most recent
evaluation of internal control over financial reporting, to the registrants auditors and the
audit committee of the registrants board of directors (or persons performing the equivalent
functions):
a. All significant deficiencies and material weaknesses in the design or operation
of internal control over financial reporting which are reasonably likely to adversely
affect the registrants ability to record, process, summarize and report financial
information; and
b. Any fraud, whether or not material, that involves management or other employees
who have a significant role in the registrants internal control over financial
reporting.
Date: February 18, 2011
By:
/s/ Murray S. Kessler
Murray S. Kessler
President and Chief Executive Officer
EX-31.2
6
g25358exv31w2.htm
EX-31.2
exv31w2
Exhibit 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
I, David H. Taylor, certify that:
1. I have reviewed this annual report on Form 10-K for the year ended December 31, 2010 of
Lorillard, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect to the period
covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in
this report, fairly present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the periods presented in this
report;
4. The registrants other certifying officer(s) and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) for the registrant and have:
a. Designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that material
information relating to the registrant, including its consolidated subsidiaries, is
made known to us by others within those entities, particularly during the period in
which this report is being prepared;
b. Designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally
accepted accounting principles;
c. Evaluated the effectiveness of the registrants disclosure controls and
procedures and presented in this report our conclusions about the effectiveness of the
disclosure controls and procedures, as of the end of the period covered by this report
based on such evaluation; and
d. Disclosed in this report any change in the registrants internal control over
financial reporting that occurred during the registrants most recent fiscal quarter
(the registrants fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect, the registrants
internal control over financial reporting; and
5. The registrants other certifying officer(s) and I have disclosed, based on our most recent
evaluation of internal control over financial reporting, to the registrants auditors and the
audit committee of the registrants board of directors (or persons performing the equivalent
functions):
a. All significant deficiencies and material weaknesses in the design or operation
of internal control over financial reporting which are reasonably likely to adversely
affect the registrants ability to record, process, summarize and report financial
information; and
b. Any fraud, whether or not material, that involves management or other employees
who have a significant role in the registrants internal control over financial
reporting.
Date: February 18, 2011
By:
/s/ David H. Taylor
David H. Taylor
Executive Vice President, Finance and
Planning and Chief Financial Officer
EX-32.1
7
g25358exv32w1.htm
EX-32.1
exv32w1
Exhibit 32.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL
OFFICER PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the annual report on Form 10-K of Lorillard, Inc. (the Company) for the
year ended December 31, 2010, as filed with the Securities and Exchange Commission on the date
hereof (the Report), Murray S. Kessler, as Chief Executive Officer of the Company, and David H.
Taylor, as Chief Financial Officer of the Company, each hereby certifies, pursuant to 18 U.S.C. §
1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully
complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934;
and (2) The information contained in the Report fairly presents, in all material respects, the
financial condition and results of operations of the Company.
/s/ Murray S. Kessler
Murray S. Kessler
Chairman, President and Chief Executive
Officer (Principal Executive Officer)
Date:
February 18, 2011
/s/ David H. Taylor
Name:
David H. Taylor
Title:
Executive Vice President,
Finance and Planning and Chief Financial
Officer (Principal Financial Officer)
Date:
February 18, 2011
EX-99.1
8
g25358exv99w1.htm
EX-99.1
exv99w1
Exhibit 99.1
Certain Litigation Matters
Conventional Product Liability Cases:
A verdict that awarded damages to the plaintiff had been returned in the following
Conventional Product Liability Case that was pending against Lorillard Tobacco Company (Lorillard
Tobacco) as of December 31, 2010, through February 9, 2011:
Evans v. Lorillard Tobacco Company (Superior Court, Suffolk County, Massachusetts, filed
June 28, 2004).
Class Action Cases:
The following Class Action Cases were pending against Lorillard Tobacco as of December 31,
2010, through February 9, 2011:
Willard Brown v. The American Tobacco Company, et al. (Superior Court, San Diego County,
California, filed June 10, 1997).
Cleary v. Philip Morris Incorporated, et al. (U.S. District Court, Northern District,
Illinois, filed June 3, 1998).
Cypret v. The American Tobacco Company, et al. (Circuit Court, Jackson County, Missouri,
filed May 5, 1999). Lorillard, Inc. is also a defendant in the case.
Parsons v. AC&S Inc., et al. (Circuit Court, Ohio County, West Virginia, filed February
27, 1998).
Scott v. The American Tobacco Company, et al. (District Court, Orleans Parish, Louisiana,
filed May 24, 1996).
Young v. The American Tobacco Company, Inc., et al. (District Court, Orleans Parish,
Louisiana, filed November 12, 1997). Lorillard, Inc. is a defendant in the case.
Reimbursement Cases:
The following Reimbursement Cases were pending against Lorillard Tobacco as of December 31,
2010, through February 9, 2011:
City of St. Louis [Missouri] v. American Tobacco Co., Inc., et al. (Circuit Court, City of
St. Louis, Missouri, filed November 25, 1998).
Crow Creek Sioux Tribe v. The American Tobacco Company, et al. (Tribal Court, Crow Creek
Sioux Tribe, filed September 14, 1997). Lorillard, Inc. is also a defendant in the case.
National Committee to Preserve Social Security and Welfare v. Philip Morris USA, et al.
(U.S. District Court, Eastern District, New York, filed May 20, 2008). In December 2010, the
court entered an order that dismissed the case in favor of the defendants. As of February 9,
2011, the deadline for plaintiffs to petition the U.S. Supreme Court had not expired.
United States of America v. Philip Morris Incorporated, et al. (U.S. District Court,
District of Columbia, filed September 22, 1999).
In addition, a Reimbursement Case has been filed outside the U.S.:
Clalit Health Services v. Philip Morris Inc., et al. (District Court, Jerusalem, Israel).
Antitrust Claims:
The following Antitrust Cases were pending against Lorillard Tobacco as of December 31, 2010,
through February 9, 2011:
Smith v. Philip Morris, et al. (District Court, Seward County, Kansas, filed February 7,
2000).
Vibo Corporation, Inc. d/b/a/ General Tobacco v. Conway, et al. (U.S. District Court,
Western District, Kentucky, filed October 28, 2008).
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-Name Statement of Financial Accounting Standard (FAS)
-Number 95
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-Number 95
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-Number 95
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-Number 115
-Paragraph 18
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-Number 95
-Paragraph 15
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-Number 95
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-Number 95
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uefalsefalse-400000000-400falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryThe cash outflow to reacquire common stock during the period.Reference 1: http://www.xbrl.org/2003/role/presentationRef
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-Name Statement of Financial Accounting Standard (FAS)
-Number 95
-Paragraph 18
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-Number 95
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-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 04
-Article 3
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-Publisher FASB
-Name Emerging Issues Task Force (EITF)
-Number 95-13
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-Paragraph 18
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-Number 123R
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-Number 95
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truefalsefalse-372000000-372falsefalsefalsefalsefalse2truefalsefalse-793000000-793falsefalsefalsefalsefalse
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-Number 95
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IsNumeric>truefalsefalse11910000001191falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryIncludes currency on hand as well as demand deposits with banks or financial institutions. It also includes other kinds of accounts that have the general characteristics of demand deposits in that the Entity may deposit additional funds at any time and also effectively may withdraw funds at any time without prior notice or penalty. Cash eq
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USD ($)
USD ($) / shares
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<div style="margin-top: 6pt; font-size: 1pt"> 
</div>
<table border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent; text-align: left">
<!-- Table Width Row BEGIN -->
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<td width="65%"> </td><!-- colindex=01 type=maindata -->
<td width="2%"> </td><!-- colindex=02 type=gutter -->
<td width="1%" align="right"> </td><!-- colindex=02 type=lead -->
<td width="4%" align="right"> </td><!-- colindex=02 type=body -->
<td width="1%" align="left"> </td><!-- colindex=02 type=hang1 -->
<td width="3%"> </td><!-- colindex=03 type=gutter -->
<td width="1%" align="right"> </td><!-- colindex=03 type=lead -->
<td width="4%" align="right"> </td><!-- colindex=03 type=body -->
<td width="1%" align="left"> </td><!-- colindex=03 type=hang1 -->
<td width="3%"> </td><!-- colindex=04 type=gutter -->
<td width="1%" align="right"> </td><!-- colindex=04 type=lead -->
<td width="4%" align="right"> </td><!-- colindex=04 type=body -->
<td width="1%" align="left"> </td><!-- colindex=04 type=hang1 -->
<td width="3%"> </td><!-- colindex=05 type=gutter -->
<td width="1%" align="right"> </td><!-- colindex=05 type=lead -->
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<td width="1%" align="left"> </td><!-- colindex=05 type=hang1 -->
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<td>
 
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<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>Level 1</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>Level 2</b>
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<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>Level 3</b>
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<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>Total</b>
</td>
<td>
 
</td>
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<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="14" align="center" valign="bottom">
<b>(In millions)</b>
</td>
<td>
 
</td>
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<tr style="line-height: 3pt; font-size: 1pt">
<td> 
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Cash and Cash Equivalents:
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</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Prime money market funds
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
2,063
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
—
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
—
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
2,063
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="font-size: 1pt">
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 20pt">
Total cash and cash equivalents
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
2,063
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
—
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
—
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
2,063
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="font-size: 1pt">
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td nowrap="nowrap" align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Derivative Asset:
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Interest rate swaps — fixed to floating rate
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
—
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
19
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
—
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
19
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="font-size: 1pt">
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 20pt">
Total derivative asset
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
—
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
19
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
—
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
19
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="font-size: 1pt">
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td>
 
</td>
</tr>
</table>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
</div>
<div style="margin-top: 6pt; font-size: 1pt"> 
</div>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
Assets and liabilities measured at fair value on a recurring
basis at December 31, 2009 were as follows:
</div>
<div style="margin-top: 6pt; font-size: 1pt"> 
</div>
<table border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent; text-align: left">
<!-- Table Width Row BEGIN -->
<tr style="font-size: 1pt" valign="bottom">
<td width="65%"> </td><!-- colindex=01 type=maindata -->
<td width="2%"> </td><!-- colindex=02 type=gutter -->
<td width="1%" align="right"> </td><!-- colindex=02 type=lead -->
<td width="4%" align="right"> </td><!-- colindex=02 type=body -->
<td width="1%" align="left"> </td><!-- colindex=02 type=hang1 -->
<td width="3%"> </td><!-- colindex=03 type=gutter -->
<td width="1%" align="right"> </td><!-- colindex=03 type=lead -->
<td width="4%" align="right"> </td><!-- colindex=03 type=body -->
<td width="1%" align="left"> </td><!-- colindex=03 type=hang1 -->
<td width="3%"> </td><!-- colindex=04 type=gutter -->
<td width="1%" align="right"> </td><!-- colindex=04 type=lead -->
<td width="4%" align="right"> </td><!-- colindex=04 type=body -->
<td width="1%" align="left"> </td><!-- colindex=04 type=hang1 -->
<td width="3%"> </td><!-- colindex=05 type=gutter -->
<td width="1%" align="right"> </td><!-- colindex=05 type=lead -->
<td width="4%" align="right"> </td><!-- colindex=05 type=body -->
<td width="1%" align="left"> </td><!-- colindex=05 type=hang1 -->
</tr>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>Level 1</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>Level 2</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>Level 3</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>Total</b>
</td>
<td>
 
</td>
</tr>
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="14" align="center" valign="bottom">
<b>(In millions)</b>
</td>
<td>
 
</td>
</tr>
<tr style="line-height: 3pt; font-size: 1pt">
<td> 
</td>
</tr>
<!-- TableOutputBody -->
<tr valign="bottom" style="background: #cceeff">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Cash and Cash Equivalents:
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Prime money market funds
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
1,384
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
—
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
—
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
1,384
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="font-size: 1pt">
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 20pt">
Total cash and cash equivalents
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
1,384
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
—
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
—
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
1,384
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="font-size: 1pt">
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td nowrap="nowrap" align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Derivative Liability:
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Interest rate swaps — fixed to floating rate
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
—
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
28
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
—
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
28
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="font-size: 1pt">
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 20pt">
Total derivative liability
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
—
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
28
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
—
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
28
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="font-size: 1pt">
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td>
 
</td>
</tr>
</table>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
</div>
</div>
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USD ($)
USD ($) / shares
$Jan-01-2010_Dec-31-2010http://www.sec.gov/CIK0001424847duration2010-01-01T00:00:002010-12-31T00:00:00USDStandardhttp://www.xbrl.org/2003/iso4217USDiso42170USDEPSDividehttp://www.xbrl.org/2003/iso4217USDiso4217http://www.xbrl.org/2003/instancesharesxbrli0PureStandardhttp://www.xbrl.org/2003/instancepurexbrli0SharesStandardhttp://www.xbrl.org/2003/instancesharesxbrli0USDUSD$2true0lo_ShareBasedCompensationTablesAbstractlofalsenadurationShare based compensation tables.falsefalsefalsefalsefalsefalsefalsefalsefalsefalse1falsefalsefalse00falsefalsefalsefalsefalseOtherxbrli:stringItemTypestringShare based compensation tables.falsefalse3false0us-gaap_DisclosureOfShareBasedCompensationArrangementsByShareBasedPaymentAwardTextBlockus-gaaptruenadurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalseverboselabel1falsefalsefalse00<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
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<div align="left" style="font-size: 10pt; font-family: 'Times New Roman', Times">
<div style="margin-top: 6pt; font-size: 1pt"> 
</div>
<table border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent; text-align: left">
<!-- Table Width Row BEGIN -->
<tr style="font-size: 1pt" valign="bottom">
<td width="80%"> </td><!-- colindex=01 type=maindata -->
<td width="2%"> </td><!-- colindex=02 type=gutter -->
<td width="1%" align="right"> </td><!-- colindex=02 type=lead -->
<td width="6%" align="right"> </td><!-- colindex=02 type=body -->
<td width="1%" align="left"> </td><!-- colindex=02 type=hang1 -->
<td width="3%"> </td><!-- colindex=03 type=gutter -->
<td width="1%" align="right"> </td><!-- colindex=03 type=lead -->
<td width="5%" align="right"> </td><!-- colindex=03 type=body -->
<td width="1%" align="left"> </td><!-- colindex=03 type=hang1 -->
</tr>
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<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="6" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>2008</b>
</td>
<td>
 
</td>
</tr>
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>Weighted<br />
</b>
</td>
<td>
 
</td>
</tr>
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>Average<br />
</b>
</td>
<td>
 
</td>
</tr>
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>Number of<br />
</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>Exercise<br />
</b>
</td>
<td>
 
</td>
</tr>
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>Awards</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>Price</b>
</td>
<td>
 
</td>
</tr>
<tr style="line-height: 3pt; font-size: 1pt">
<td> 
</td>
</tr>
<!-- TableOutputBody -->
<tr valign="bottom" style="background: #cceeff">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Awards outstanding, January 1
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
628,328
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
49.78
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom">
<td nowrap="nowrap" align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 20pt">
Granted
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
111,000
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
79.03
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td nowrap="nowrap" align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 20pt">
Exercised
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
(24,503
</td>
<td nowrap="nowrap" align="left" valign="bottom">
)
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
34.78
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="font-size: 1pt">
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Awards outstanding, June 10, 2008
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
714,825
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
42.93
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="font-size: 1pt">
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td>
 
</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Awards exercisable, June 10, 2008
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
307,303
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
32.51
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="font-size: 1pt">
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Shares available for grant, June 10, 2008
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
249,500
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="font-size: 1pt">
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
</tr>
</table>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
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<b>
<font style="font-family: 'Times New Roman', Times">
</font>
</b>
</div>
<div style="margin-top: 0pt; font-size: 1pt">
</div>
<div align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">
<b>
<font style="font-family: 'Times New Roman', Times">
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<div style="margin-top: 6pt; font-size: 1pt"> 
</div>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
A summary of the stock option and SAR transactions for the
Lorillard Plan for the post-separation period from June 11,
2008 to December 31, 2008, from January 1, 2009 to
December 31, 2009 and from January 1, 2010 to
December 31, 2010 follows:
</div>
<div style="margin-top: 6pt; font-size: 1pt"> 
</div>
<table border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent; text-align: left">
<!-- Table Width Row BEGIN -->
<tr style="font-size: 1pt" valign="bottom">
<td width="49%"> </td><!-- colindex=01 type=maindata -->
<td width="1%"> </td><!-- colindex=02 type=gutter -->
<td width="1%" align="right"> </td><!-- colindex=02 type=lead -->
<td width="6%" align="right"> </td><!-- colindex=02 type=body -->
<td width="1%" align="left"> </td><!-- colindex=02 type=hang1 -->
<td width="1%"> </td><!-- colindex=03 type=gutter -->
<td width="1%" align="right"> </td><!-- colindex=03 type=lead -->
<td width="5%" align="right"> </td><!-- colindex=03 type=body -->
<td width="1%" align="left"> </td><!-- colindex=03 type=hang1 -->
<td width="1%"> </td><!-- colindex=04 type=gutter -->
<td width="1%" align="right"> </td><!-- colindex=04 type=lead -->
<td width="6%" align="right"> </td><!-- colindex=04 type=body -->
<td width="1%" align="left"> </td><!-- colindex=04 type=hang1 -->
<td width="1%"> </td><!-- colindex=05 type=gutter -->
<td width="1%" align="right"> </td><!-- colindex=05 type=lead -->
<td width="5%" align="right"> </td><!-- colindex=05 type=body -->
<td width="1%" align="left"> </td><!-- colindex=05 type=hang1 -->
<td width="1%"> </td><!-- colindex=06 type=gutter -->
<td width="1%" align="right"> </td><!-- colindex=06 type=lead -->
<td width="6%" align="right"> </td><!-- colindex=06 type=body -->
<td width="1%" align="left"> </td><!-- colindex=06 type=hang1 -->
<td width="1%"> </td><!-- colindex=07 type=gutter -->
<td width="1%" align="right"> </td><!-- colindex=07 type=lead -->
<td width="5%" align="right"> </td><!-- colindex=07 type=body -->
<td width="1%" align="left"> </td><!-- colindex=07 type=hang1 -->
</tr>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="6" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>2010</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="6" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>2009</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="6" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>2008</b>
</td>
<td>
 
</td>
</tr>
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>Weighted<br />
</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>Weighted<br />
</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>Weighted<br />
</b>
</td>
<td>
 
</td>
</tr>
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>Average<br />
</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>Average<br />
</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>Average<br />
</b>
</td>
<td>
 
</td>
</tr>
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>Number of<br />
</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>Exercise<br />
</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>Number of<br />
</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>Exercise<br />
</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>Number of<br />
</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>Exercise<br />
</b>
</td>
<td>
 
</td>
</tr>
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>Awards</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>Price</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>Awards</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>Price</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>Awards</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>Price</b>
</td>
<td>
 
</td>
</tr>
<tr style="line-height: 3pt; font-size: 1pt">
<td> 
</td>
</tr>
<!-- TableOutputBody -->
<tr valign="bottom" style="background: #cceeff">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Awards outstanding at January 1, 2010 and 2009 and
June 11, 2008
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
1,525,185
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
65.60
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
814,950
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
57.21
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
714,825
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
42.93
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom">
<td nowrap="nowrap" align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 20pt">
Granted
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
254,728
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
77.84
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
810,421
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
70.59
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
111,000
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
69.94
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td nowrap="nowrap" align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 20pt">
Exercised
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
(252,787
</td>
<td nowrap="nowrap" align="left" valign="bottom">
)
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
53.39
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
(100,186
</td>
<td nowrap="nowrap" align="left" valign="bottom">
)
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
37.74
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
(10,875
</td>
<td nowrap="nowrap" align="left" valign="bottom">
)
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
31.00
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom">
<td nowrap="nowrap" align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 20pt">
Forfeited
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
(51,013
</td>
<td nowrap="nowrap" align="left" valign="bottom">
)
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
62.18
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
—
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
—
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="font-size: 1pt">
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Awards outstanding, December 31
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
1,476,113
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
1,525,185
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
814,950
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="font-size: 1pt">
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Awards exercisable, December 31
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
503,469
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
399,240
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
296,425
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="font-size: 1pt">
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Shares available for grant, December 31
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
1,767,101
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
2,110,418
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
2,884,943
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="font-size: 1pt">
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
</tr>
</table>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
</div>
</div>
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged NotefalsefalsefalsefalsefalseOtherus-types:textBlockItemTypestringDisclosure of components of a stock option or other award plan under which share-based compensation is awarded to employees, typically comprised of the amount of unearned compensation (deferred compensation cost), compensation expense, and changes in the quantity and fair value of the shares granted, exercised, forfeited, and issued and outstanding pertaining to that plan. Disclosure may also include nature and general terms of such arrangements that existed during the period and potential effects of those
arrangements on shareholders, effect of compensation cost arising from share-based payment arrangements on the income statement, method of estimating the fair value of the goods or services received, or the fair value of the equity instruments granted, during the period, cash flow effects resulting from share-based payment arrangements and, for registrants that accelerate vesting of out of the money share options, reasons for the decision to accelerate.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 123R
-Paragraph 64, 65, A240
falsefalse4false0lo_ShareBasedCompensationSummaryOfStockOptionsAndSarsOutstandingTextBlocklofalsenadurationShare based compensation summary of stock options and SARs outstanding.falsefalsefalsefalsefalsefalsefalsefalsefalsefalseverboselabel1falsefalsefalse00<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note Table: lo-20101231_note14_table2 - lo:ShareBasedCompensationSummaryOfStockOptionsAndSarsOutstandingTextBlock-->
<div align="left" style="font-size: 10pt; font-family: 'Times New Roman', Times">
<div style="margin-top: 6pt; font-size: 1pt"> 
</div>
<table border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent; text-align: left">
<!-- Table Width Row BEGIN -->
<tr style="font-size: 1pt" valign="bottom">
<td width="45%"> </td><!-- colindex=01 type=maindata -->
<td width="2%"> </td><!-- colindex=02 type=gutter -->
<td width="3%" align="right"> </td><!-- colindex=02 type=lead -->
<td width="1%" align="right"> </td><!-- colindex=02 type=body -->
<td width="3%" align="left"> </td><!-- colindex=02 type=hang1 -->
<td width="3%"> </td><!-- colindex=03 type=gutter -->
<td width="6%" align="right"> </td><!-- colindex=03 type=lead -->
<td width="1%" align="right"> </td><!-- colindex=03 type=body -->
<td width="6%" align="left"> </td><!-- colindex=03 type=hang1 -->
<td width="3%"> </td><!-- colindex=04 type=gutter -->
<td width="3%" align="right"> </td><!-- colindex=04 type=lead -->
<td width="1%" align="right"> </td><!-- colindex=04 type=body -->
<td width="3%" align="left"> </td><!-- colindex=04 type=hang1 -->
<td width="3%"> </td><!-- colindex=05 type=gutter -->
<td width="3%" align="right"> </td><!-- colindex=05 type=lead -->
<td width="1%" align="right"> </td><!-- colindex=05 type=body -->
<td width="3%" align="left"> </td><!-- colindex=05 type=hang1 -->
<td width="3%"> </td><!-- colindex=06 type=gutter -->
<td width="3%" align="right"> </td><!-- colindex=06 type=lead -->
<td width="1%" align="right"> </td><!-- colindex=06 type=body -->
<td width="3%" align="left"> </td><!-- colindex=06 type=hang1 -->
</tr>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="11" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>Awards Outstanding</b>
</td>
<td>
 
</td>
<td colspan="7" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>Awards Vested</b>
</td>
</tr>
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="3" nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="3" nowrap="nowrap" align="center" valign="bottom">
<b>Weighted<br />
</b>
</td>
<td>
 
</td>
<td colspan="3" nowrap="nowrap" align="center" valign="bottom">
<b>Weighted<br />
</b>
</td>
<td>
 
</td>
<td colspan="3" nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="3" nowrap="nowrap" align="center" valign="bottom">
<b>Weighted<br />
</b>
</td>
</tr>
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="3" nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="3" nowrap="nowrap" align="center" valign="bottom">
<b>Average<br />
</b>
</td>
<td>
 
</td>
<td colspan="3" nowrap="nowrap" align="center" valign="bottom">
<b>Average<br />
</b>
</td>
<td>
 
</td>
<td colspan="3" nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="3" nowrap="nowrap" align="center" valign="bottom">
<b>Average<br />
</b>
</td>
</tr>
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="3" nowrap="nowrap" align="center" valign="bottom">
<b>Number of<br />
</b>
</td>
<td>
 
</td>
<td colspan="3" nowrap="nowrap" align="center" valign="bottom">
<b>Remaining<br />
</b>
</td>
<td>
 
</td>
<td colspan="3" nowrap="nowrap" align="center" valign="bottom">
<b>Exercise<br />
</b>
</td>
<td>
 
</td>
<td colspan="3" nowrap="nowrap" align="center" valign="bottom">
<b>Number of<br />
</b>
</td>
<td>
 
</td>
<td colspan="3" nowrap="nowrap" align="center" valign="bottom">
<b>Exercise<br />
</b>
</td>
</tr>
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="left" valign="bottom" style="border-bottom: 1px solid #000000">
<b>Range of exercise prices</b>
</td>
<td>
 
</td>
<td colspan="3" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>Shares</b>
</td>
<td>
 
</td>
<td colspan="3" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>Contractual Life</b>
</td>
<td>
 
</td>
<td colspan="3" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>Price</b>
</td>
<td>
 
</td>
<td colspan="3" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>Shares</b>
</td>
<td>
 
</td>
<td colspan="3" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>Price</b>
</td>
</tr>
<tr style="line-height: 3pt; font-size: 1pt">
<td> 
</td>
</tr>
<!-- TableOutputBody -->
<tr valign="bottom" style="background: #cceeff">
<td nowrap="nowrap" align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
$20.00 — 34.99
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
67,579
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
3.6
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
29.25
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
67,579
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
29.25
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom">
<td nowrap="nowrap" align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 15pt">
35.00 — 49.99
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
57,438
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
4.8
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
45.15
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
57,438
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
45.15
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td nowrap="nowrap" align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 15pt">
50.00 — 64.99
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
253,362
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
7.3
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
59.52
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
97,125
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
58.08
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom">
<td nowrap="nowrap" align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 15pt">
65.00 — 79.99
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
670,818
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
7.9
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
72.15
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
170,043
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
72.78
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td nowrap="nowrap" align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 15pt">
80.00 — 84.30
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
426,916
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
8.1
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
81.12
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
111,284
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
81.39
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
</table>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
</div>
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged NotefalsefalsefalsefalsefalseOtherus-types:textBlockItemTypestringShare based compensation summary of stock options and SARs outstanding.No authoritative reference available.falsefalse5false0lo_FairValueOfGrantedOptionsAndStockAppreciationRightsTextBlocklofalsenadurationThe fair value of granted options and Stock Appreciation Rights Text Block.falsefalsefalsefalsefalsefalsefalsefalsefalsefalseverboselabel1falsefalsefalse00<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.or
g/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note Table: lo-20101231_note14_table3 - lo:FairValueOfGrantedOptionsAndStockAppreciationRightsTextBlock-->
<div align="left" style="font-size: 10pt; font-family: 'Times New Roman', Times">
<div style="margin-top: 6pt; font-size: 1pt"> 
</div>
<table border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent; text-align: left">
<!-- Table Width Row BEGIN -->
<tr style="font-size: 1pt" valign="bottom">
<td width="77%"> </td><!-- colindex=01 type=maindata -->
<td width="2%"> </td><!-- colindex=02 type=gutter -->
<td width="2%" align="right"> </td><!-- colindex=02 type=lead -->
<td width="1%" align="right"> </td><!-- colindex=02 type=body -->
<td width="2%" align="left"> </td><!-- colindex=02 type=hang1 -->
<td width="3%"> </td><!-- colindex=03 type=gutter -->
<td width="2%" align="right"> </td><!-- colindex=03 type=lead -->
<td width="1%" align="right"> </td><!-- colindex=03 type=body -->
<td width="2%" align="left"> </td><!-- colindex=03 type=hang1 -->
<td width="3%"> </td><!-- colindex=04 type=gutter -->
<td width="2%" align="right"> </td><!-- colindex=04 type=lead -->
<td width="1%" align="right"> </td><!-- colindex=04 type=body -->
<td width="2%" align="left"> </td><!-- colindex=04 type=hang1 -->
</tr>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="left" valign="bottom" style="border-bottom: 1px solid #000000">
<b>Year Ended December 31,</b>
</td>
<td>
 
</td>
<td colspan="3" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>2010</b>
</td>
<td>
 
</td>
<td colspan="3" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>2009</b>
</td>
<td>
 
</td>
<td colspan="3" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>2008</b>
</td>
</tr>
<tr style="line-height: 3pt; font-size: 1pt">
<td> 
</td>
</tr>
<!-- TableOutputBody -->
<tr valign="bottom" style="background: #cceeff">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Weighted average expected dividend yield
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
6.2
</td>
<td nowrap="nowrap" align="left" valign="bottom">
%
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
5.5
</td>
<td nowrap="nowrap" align="left" valign="bottom">
%
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
3.9
</td>
<td nowrap="nowrap" align="left" valign="bottom">
%
</td>
</tr>
<tr valign="bottom">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Weighted average expected implied volatility
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
23.6
</td>
<td nowrap="nowrap" align="left" valign="bottom">
%
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
30.5
</td>
<td nowrap="nowrap" align="left" valign="bottom">
%
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
34.0
</td>
<td nowrap="nowrap" align="left" valign="bottom">
%
</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Weighted average risk-free interest rate
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
1.9
</td>
<td nowrap="nowrap" align="left" valign="bottom">
%
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
2.3
</td>
<td nowrap="nowrap" align="left" valign="bottom">
%
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
2.9
</td>
<td nowrap="nowrap" align="left" valign="bottom">
%
</td>
</tr>
<tr valign="bottom">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Expected holding period (in years)
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
5.0
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
5.0
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
5.0
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Weighted average fair value of awards
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
7.34
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
11.08
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
17.18
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
</table>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
</div>
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged NotefalsefalsefalsefalsefalseOtherus-types:textBlockItemTypestringThe fair value of granted options and Stock Appreciation Rights Text Block.No authoritative reference available.falsefalse6false0lo_RestrictedStockActivityTextBlocklofalsenadurationRestricted stock activity.falsefalsefalsefalsefalsefalsefalsefalsefalsefalseverboselabel1falsefalsefalse00<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note Table: lo-20101231_note14_table4 - lo:RestrictedStockActivityTextBlock-->
<div align="left" style="font-size: 10pt; font-family: 'Times New Roman', Times">
<div style="margin-top: 6pt; font-size: 1pt"> 
</div>
<table border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent; text-align: left">
<!-- Table Width Row BEGIN -->
<tr style="font-size: 1pt" valign="bottom">
<td width="35%"> </td><!-- colindex=01 type=maindata -->
<td width="2%"> </td><!-- colindex=02 type=gutter -->
<td width="1%" align="right"> </td><!-- colindex=02 type=lead -->
<td width="6%" align="right"> </td><!-- colindex=02 type=body -->
<td width="1%" align="left"> </td><!-- colindex=02 type=hang1 -->
<td width="3%"> </td><!-- colindex=03 type=gutter -->
<td width="1%" align="right"> </td><!-- colindex=03 type=lead -->
<td width="6%" align="right"> </td><!-- colindex=03 type=body -->
<td width="1%" align="left"> </td><!-- colindex=03 type=hang1 -->
<td width="3%"> </td><!-- colindex=04 type=gutter -->
<td width="1%" align="right"> </td><!-- colindex=04 type=lead -->
<td width="6%" align="right"> </td><!-- colindex=04 type=body -->
<td width="1%" align="left"> </td><!-- colindex=04 type=hang1 -->
<td width="3%"> </td><!-- colindex=05 type=gutter -->
<td width="1%" align="right"> </td><!-- colindex=05 type=lead -->
<td width="6%" align="right"> </td><!-- colindex=05 type=body -->
<td width="1%" align="left"> </td><!-- colindex=05 type=hang1 -->
<td width="3%"> </td><!-- colindex=06 type=gutter -->
<td width="1%" align="right"> </td><!-- colindex=06 type=lead -->
<td width="6%" align="right"> </td><!-- colindex=06 type=body -->
<td width="1%" align="left"> </td><!-- colindex=06 type=hang1 -->
<td width="3%"> </td><!-- colindex=07 type=gutter -->
<td width="1%" align="right"> </td><!-- colindex=07 type=lead -->
<td width="6%" align="right"> </td><!-- colindex=07 type=body -->
<td width="1%" align="left"> </td><!-- colindex=07 type=hang1 -->
</tr>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="6" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>2010</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="6" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>2009</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="6" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>2008</b>
</td>
<td>
 
</td>
</tr>
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>Weighted-<br />
</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>Weighted-<br />
</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>Weighted-<br />
</b>
</td>
<td>
 
</td>
</tr>
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>Average<br />
</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>Average<br />
</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>Average<br />
</b>
</td>
<td>
 
</td>
</tr>
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>Grant Date<br />
</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>Grant Date<br />
</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>Grant Date<br />
</b>
</td>
<td>
 
</td>
</tr>
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>Number of<br />
</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>Fair Value<br />
</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>Number of<br />
</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>Fair Value<br />
</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>Number of<br />
</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>Fair Value<br />
</b>
</td>
<td>
 
</td>
</tr>
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>Awards</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>per Share</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>Awards</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>per Share</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>Awards</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>per Share</b>
</td>
<td>
 
</td>
</tr>
<tr style="line-height: 3pt; font-size: 1pt">
<td> 
</td>
</tr>
<!-- TableOutputBody -->
<tr valign="bottom" style="background: #cceeff">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Balance at January 1,
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
89,433
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
60.06
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
4,057
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
67.94
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
—
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom">
<td nowrap="nowrap" align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 20pt">
Granted
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
184,350
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
76.07
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
89,433
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
60.06
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
4,057
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
67.94
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td nowrap="nowrap" align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 20pt">
Vested
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
(9,990
</td>
<td nowrap="nowrap" align="left" valign="bottom">
)
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
60.06
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
(4,057
</td>
<td nowrap="nowrap" align="left" valign="bottom">
)
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
67.94
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
—
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom">
<td nowrap="nowrap" align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 20pt">
Forfeited
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
(11,110
</td>
<td nowrap="nowrap" align="left" valign="bottom">
)
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
70.33
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
—
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
—
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="font-size: 1pt">
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Balance at December 31,
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
252,683
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
89,433
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
4,057
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="font-size: 1pt">
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
</tr>
</table>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
</div>
</div>
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30
R79.xml
IDEA: Share Repurchase Program (Details Textuals)
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USD ($) / shares
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USD ($)
USD ($) / shares
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USD ($)
USD ($) / shares
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1/1/2010 - 1/31/2010
USD ($) / shares
USD ($)
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1/19/2010
USD ($)
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Part Three [Member]
7/27/2009
USD ($)
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2/1/2010 - 2/28/2010
USD ($) / shares
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2/25/2010
USD ($)
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1/1/2010 - 12/31/2010
USD ($)
USD ($) / shares
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8/31/2010
USD ($)
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8/20/2010
USD ($)
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-Name Accounting Research Bulletin (ARB)
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-Chapter 1
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-Number 95
-Paragraph 18
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-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 95
-Paragraph 20
-Subparagraph a
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31
R66.xml
IDEA: Retirement Plans (Details 7)
2.2.0.25truefalse061307 - Disclosure - Retirement Plans (Details 7)truefalseIn Millionsfalse1falsefalseUSDtruefalse{us-gaap_DefinedBenefitPlansDisclosuresDefinedBenefitPlansAxis} : Pension Benefits [Member]
12/31/2010
USD ($)
$BalanceAsOf_31Dec2010_Pension_Plans_Defined_Benefit_Memberhttp://www.sec.gov/CIK0001424847instant2010-12-31T00:00:000001-01-01T00:00:00falsefalsePension Benefits [Member]us-gaap_DefinedBenefitPlansDisclosuresDefinedBenefitPlansAxisxbrldihttp://xbrl.org/2006/xbrldius-gaap_PensionPlansDefinedBenefitMemberus-gaap_DefinedBenefitPlansDisclosuresDefinedBenefitPlansAxisexplicitMemberUSDStandard<
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12/31/2009
USD ($)
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-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
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<td>
<b><font style="font-family: 'Times New Roman', Times">13.  </font></b>
</td>
<td>
<b><font style="font-family: 'Times New Roman', Times">Retirement
Plans</font></b>
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Lorillard has defined benefit pension, postretirement benefits,
profit sharing and savings plans for eligible employees.
</div>
<div style="margin-top: 6pt; font-size: 1pt"> 
</div>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
<i>Pension and postretirement benefits</i> — The
Salaried Pension Plan provides benefits based on employees’
compensation and service. The Hourly Pension Plan provides
benefits based on fixed amounts for each year of service.
Lorillard also provides medical and life insurance benefits to
eligible employees. Lorillard uses a December 31 measurement
date for its plans.
</div>
<div style="margin-top: 6pt; font-size: 1pt"> 
</div>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
Lorillard also provides certain senior level management
employees with nonqualified, unfunded supplemental retirement
plans. While these plans are unfunded, Lorillard has certain
assets invested in an executive life insurance policy that are
to be used to provide for certain of these benefits.
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Weighted-average assumptions used to determine benefit
obligations:
</div>
<div style="margin-top: 6pt; font-size: 1pt"> 
</div>
<table border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent; text-align: left">
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<tr style="font-size: 1pt" valign="bottom">
<td width="63%"> </td><!-- colindex=01 type=maindata -->
<td width="2%"> </td><!-- colindex=02 type=gutter -->
<td width="10%"> </td><!-- colindex=02 type=maindata -->
<td width="3%"> </td><!-- colindex=03 type=gutter -->
<td width="1%" align="right"> </td><!-- colindex=03 type=lead -->
<td width="1%" align="right"> </td><!-- colindex=03 type=body -->
<td width="1%" align="left"> </td><!-- colindex=03 type=hang1 -->
<td width="3%"> </td><!-- colindex=04 type=gutter -->
<td width="10%"> </td><!-- colindex=04 type=maindata -->
<td width="3%"> </td><!-- colindex=05 type=gutter -->
<td width="1%" align="right"> </td><!-- colindex=05 type=lead -->
<td width="1%" align="right"> </td><!-- colindex=05 type=body -->
<td width="1%" align="left"> </td><!-- colindex=05 type=hang1 -->
</tr>
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<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="5" nowrap="nowrap" align="center" valign="bottom">
<b>Pension<br />
</b>
</td>
<td>
 
</td>
<td colspan="5" nowrap="nowrap" align="center" valign="bottom">
<b>Other<br />
</b>
</td>
</tr>
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="5" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>Benefits</b>
</td>
<td>
 
</td>
<td colspan="5" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>Postretirement Benefits</b>
</td>
</tr>
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="5" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>December 31,</b>
</td>
<td>
 
</td>
<td colspan="5" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>December 31,</b>
</td>
</tr>
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>2010</b>
</td>
<td>
 
</td>
<td colspan="3" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>2009</b>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>2010</b>
</td>
<td>
 
</td>
<td colspan="3" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>2009</b>
</td>
</tr>
<tr style="line-height: 3pt; font-size: 1pt">
<td> 
</td>
</tr>
<!-- TableOutputBody -->
<tr valign="bottom">
<td nowrap="nowrap" align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Discount rate
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="center" valign="bottom">
5.4%-5.8%
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
6.0
</td>
<td nowrap="nowrap" align="left" valign="bottom">
%
</td>
<td>
 
</td>
<td nowrap="nowrap" align="center" valign="bottom">
5.3%-5.5%
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
6.0
</td>
<td nowrap="nowrap" align="left" valign="bottom">
%
</td>
</tr>
<tr valign="bottom">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Rate of compensation increase
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="center" valign="bottom">
4.8%
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
4.8
</td>
<td nowrap="nowrap" align="left" valign="bottom">
%
</td>
<td>
 
</td>
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
</table>
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</div>
<div style="margin-top: 6pt; font-size: 1pt"> 
</div>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
Weighted-average assumptions used to determine net periodic
benefit cost:
</div>
<div style="margin-top: 6pt; font-size: 1pt"> 
</div>
<table border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent; text-align: left">
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<tr style="font-size: 1pt" valign="bottom">
<td width="65%"> </td><!-- colindex=01 type=maindata -->
<td width="2%"> </td><!-- colindex=02 type=gutter -->
<td width="1%" align="right"> </td><!-- colindex=02 type=lead -->
<td width="1%" align="right"> </td><!-- colindex=02 type=body -->
<td width="1%" align="left"> </td><!-- colindex=02 type=hang1 -->
<td width="3%"> </td><!-- colindex=03 type=gutter -->
<td width="1%" align="right"> </td><!-- colindex=03 type=lead -->
<td width="1%" align="right"> </td><!-- colindex=03 type=body -->
<td width="1%" align="left"> </td><!-- colindex=03 type=hang1 -->
<td width="3%"> </td><!-- colindex=04 type=gutter -->
<td width="1%" align="right"> </td><!-- colindex=04 type=lead -->
<td width="1%" align="right"> </td><!-- colindex=04 type=body -->
<td width="1%" align="left"> </td><!-- colindex=04 type=hang1 -->
<td width="3%"> </td><!-- colindex=05 type=gutter -->
<td width="1%" align="right"> </td><!-- colindex=05 type=lead -->
<td width="1%" align="right"> </td><!-- colindex=05 type=body -->
<td width="1%" align="left"> </td><!-- colindex=05 type=hang1 -->
<td width="3%"> </td><!-- colindex=06 type=gutter -->
<td width="1%" align="right"> </td><!-- colindex=06 type=lead -->
<td width="1%" align="right"> </td><!-- colindex=06 type=body -->
<td width="1%" align="left"> </td><!-- colindex=06 type=hang1 -->
<td width="3%"> </td><!-- colindex=07 type=gutter -->
<td width="1%" align="right"> </td><!-- colindex=07 type=lead -->
<td width="1%" align="right"> </td><!-- colindex=07 type=body -->
<td width="1%" align="left"> </td><!-- colindex=07 type=hang1 -->
</tr>
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<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="11" nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="11" nowrap="nowrap" align="center" valign="bottom">
<b>Other Postretirement<br />
</b>
</td>
</tr>
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="11" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>Pension Benefits</b>
</td>
<td>
 
</td>
<td colspan="11" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>Benefits</b>
</td>
</tr>
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="11" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>Year Ended December 31,</b>
</td>
<td>
 
</td>
<td colspan="11" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>Year Ended December 31,</b>
</td>
</tr>
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="3" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>2010</b>
</td>
<td>
 
</td>
<td colspan="3" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>2009</b>
</td>
<td>
 
</td>
<td colspan="3" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>2008</b>
</td>
<td>
 
</td>
<td colspan="3" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>2010</b>
</td>
<td>
 
</td>
<td colspan="3" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>2009</b>
</td>
<td>
 
</td>
<td colspan="3" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>2008</b>
</td>
</tr>
<tr style="line-height: 3pt; font-size: 1pt">
<td> 
</td>
</tr>
<!-- TableOutputBody -->
<tr valign="bottom" style="background: #cceeff">
<td nowrap="nowrap" align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Discount rate
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
6.0
</td>
<td nowrap="nowrap" align="left" valign="bottom">
%
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
6.3
</td>
<td nowrap="nowrap" align="left" valign="bottom">
%
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
6.0
</td>
<td nowrap="nowrap" align="left" valign="bottom">
%
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
6.0
</td>
<td nowrap="nowrap" align="left" valign="bottom">
%
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
6.3
</td>
<td nowrap="nowrap" align="left" valign="bottom">
%
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
6.0
</td>
<td nowrap="nowrap" align="left" valign="bottom">
%
</td>
</tr>
<tr valign="bottom">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Expected long-term return on plan assets
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
7.5
</td>
<td nowrap="nowrap" align="left" valign="bottom">
%
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
7.5
</td>
<td nowrap="nowrap" align="left" valign="bottom">
%
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
7.5
</td>
<td nowrap="nowrap" align="left" valign="bottom">
%
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Rate of compensation increase
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
4.8
</td>
<td nowrap="nowrap" align="left" valign="bottom">
%
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
5.0
</td>
<td nowrap="nowrap" align="left" valign="bottom">
%
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
5.0
</td>
<td nowrap="nowrap" align="left" valign="bottom">
%
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
</table>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
</div>
<div style="margin-top: 6pt; font-size: 1pt"> 
</div>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
The expected long-term rate of return for Plan assets is
determined based on widely-accepted capital market principles,
long-term return analysis for global fixed income and equity
markets and the active total return oriented portfolio
management style. The methodology used to derive asset class
risk/return estimates varies due to the nature of asset classes,
the availability of historical data, implications from currency,
and other factors. In many cases, where historical data is
available, data is drawn from indices such as MSCI or G7 country
data. For alternative asset classes where historical data may be
insufficient or incomplete, estimates are based on long-term
capital market conditions
<font style="white-space: nowrap">and/or</font> asset
class relationships. The expected rate of return for the Plan is
based on the target asset allocation and return assumptions for
each asset class. The estimated Plan return represents a nominal
compound return which captures the effect of estimated asset
class and market volatility.
</div>
<div style="margin-top: 6pt; font-size: 1pt"> 
</div>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
Assumed health care cost trend rates for other postretirement
benefits:
</div>
<div style="margin-top: 6pt; font-size: 1pt"> 
</div>
<table border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent; text-align: left">
<!-- Table Width Row BEGIN -->
<tr style="font-size: 1pt" valign="bottom">
<td width="89%"> </td><!-- colindex=01 type=maindata -->
<td width="2%"> </td><!-- colindex=02 type=gutter -->
<td width="1%" align="right"> </td><!-- colindex=02 type=lead -->
<td width="1%" align="right"> </td><!-- colindex=02 type=body -->
<td width="1%" align="left"> </td><!-- colindex=02 type=hang1 -->
<td width="3%"> </td><!-- colindex=03 type=gutter -->
<td width="1%" align="right"> </td><!-- colindex=03 type=lead -->
<td width="1%" align="right"> </td><!-- colindex=03 type=body -->
<td width="1%" align="left"> </td><!-- colindex=03 type=hang1 -->
</tr>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="7" nowrap="nowrap" align="center" valign="bottom">
<b>Other Postretirement<br />
</b>
</td>
</tr>
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="7" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>Benefits</b>
</td>
</tr>
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="7" nowrap="nowrap" align="center" valign="bottom">
<b>Year Ended<br />
</b>
</td>
</tr>
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="7" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>December 31,</b>
</td>
</tr>
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="3" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>2010</b>
</td>
<td>
 
</td>
<td colspan="3" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>2009</b>
</td>
</tr>
<tr style="line-height: 3pt; font-size: 1pt">
<td> 
</td>
</tr>
<!-- TableOutputBody -->
<tr valign="bottom" style="background: #cceeff">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Pre-65 health care cost trend rate assumed for next year
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
9.5
</td>
<td nowrap="nowrap" align="left" valign="bottom">
%
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
10.0
</td>
<td nowrap="nowrap" align="left" valign="bottom">
%
</td>
</tr>
<tr valign="bottom">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Post-65 health care cost trend rate assumed for next year
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
8.5
</td>
<td nowrap="nowrap" align="left" valign="bottom">
%
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
9.0
</td>
<td nowrap="nowrap" align="left" valign="bottom">
%
</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Rate to which the cost trend rate is assumed to decline (the
ultimate trend rate)
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
5.0
</td>
<td nowrap="nowrap" align="left" valign="bottom">
%
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
5.0
</td>
<td nowrap="nowrap" align="left" valign="bottom">
%
</td>
</tr>
<tr valign="bottom">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Year that the rate reaches the ultimate trend rate:
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td nowrap="nowrap" align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 20pt">
Pre-65
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
2020
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
2020
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom">
<td nowrap="nowrap" align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 20pt">
Post-65
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
2018
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
2018
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
</table>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
</div>
<!-- XBRL Pagebreak Begin -->
</div>
<!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<div style="margin-left: 0%">
<!-- BEGIN PAGE WIDTH -->
<div align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">
<b>
<font style="font-family: 'Times New Roman', Times">
</font>
</b>
</div>
<div style="margin-top: 0pt; font-size: 1pt">
</div>
<div align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">
<b>
<font style="font-family: 'Times New Roman', Times">
</font>
</b>
</div>
<!-- XBRL Pagebreak End -->
<div style="margin-top: 6pt; font-size: 1pt"> 
</div>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
Assumed health care cost trend rates have a significant effect
on the amounts reported for the health care plans. A
one-percentage-point change in assumed health care cost trend
rates would have the following effects:
</div>
<div style="margin-top: 6pt; font-size: 1pt"> 
</div>
<table border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent; text-align: left">
<!-- Table Width Row BEGIN -->
<tr style="font-size: 1pt" valign="bottom">
<td width="83%"> </td><!-- colindex=01 type=maindata -->
<td width="2%"> </td><!-- colindex=02 type=gutter -->
<td width="2%" align="right"> </td><!-- colindex=02 type=lead -->
<td width="1%" align="right"> </td><!-- colindex=02 type=body -->
<td width="2%" align="left"> </td><!-- colindex=02 type=hang1 -->
<td width="3%"> </td><!-- colindex=03 type=gutter -->
<td width="3%" align="right"> </td><!-- colindex=03 type=lead -->
<td width="1%" align="right"> </td><!-- colindex=03 type=body -->
<td width="3%" align="left"> </td><!-- colindex=03 type=hang1 -->
</tr>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="7" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>One Percentage Point</b>
</td>
</tr>
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="3" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>Increase</b>
</td>
<td>
 
</td>
<td colspan="3" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>Decrease</b>
</td>
</tr>
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="7" align="center" valign="bottom">
<b>(In millions)</b>
</td>
</tr>
<tr style="line-height: 3pt; font-size: 1pt">
<td> 
</td>
</tr>
<!-- TableOutputBody -->
<tr valign="bottom">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Effect on total of service and interest cost
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
1
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
(1
</td>
<td nowrap="nowrap" align="left" valign="bottom">
)
</td>
</tr>
<tr valign="bottom">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Effect on postretirement benefit obligations
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
12
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
(11
</td>
<td nowrap="nowrap" align="left" valign="bottom">
)
</td>
</tr>
</table>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
</div>
<div style="margin-top: 6pt; font-size: 1pt"> 
</div>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
Net periodic pension and other postretirement benefit costs
include the following components:
</div>
<div style="margin-top: 6pt; font-size: 1pt"> 
</div>
<table border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent; text-align: left">
<!-- Table Width Row BEGIN -->
<tr style="font-size: 1pt" valign="bottom">
<td width="62%"> </td><!-- colindex=01 type=maindata -->
<td width="2%"> </td><!-- colindex=02 type=gutter -->
<td width="1%" align="right"> </td><!-- colindex=02 type=lead -->
<td width="2%" align="right"> </td><!-- colindex=02 type=body -->
<td width="1%" align="left"> </td><!-- colindex=02 type=hang1 -->
<td width="3%"> </td><!-- colindex=03 type=gutter -->
<td width="1%" align="right"> </td><!-- colindex=03 type=lead -->
<td width="2%" align="right"> </td><!-- colindex=03 type=body -->
<td width="1%" align="left"> </td><!-- colindex=03 type=hang1 -->
<td width="3%"> </td><!-- colindex=04 type=gutter -->
<td width="1%" align="right"> </td><!-- colindex=04 type=lead -->
<td width="2%" align="right"> </td><!-- colindex=04 type=body -->
<td width="1%" align="left"> </td><!-- colindex=04 type=hang1 -->
<td width="3%"> </td><!-- colindex=05 type=gutter -->
<td width="1%" align="right"> </td><!-- colindex=05 type=lead -->
<td width="1%" align="right"> </td><!-- colindex=05 type=body -->
<td width="1%" align="left"> </td><!-- colindex=05 type=hang1 -->
<td width="3%"> </td><!-- colindex=06 type=gutter -->
<td width="1%" align="right"> </td><!-- colindex=06 type=lead -->
<td width="1%" align="right"> </td><!-- colindex=06 type=body -->
<td width="1%" align="left"> </td><!-- colindex=06 type=hang1 -->
<td width="3%"> </td><!-- colindex=07 type=gutter -->
<td width="1%" align="right"> </td><!-- colindex=07 type=lead -->
<td width="1%" align="right"> </td><!-- colindex=07 type=body -->
<td width="1%" align="left"> </td><!-- colindex=07 type=hang1 -->
</tr>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="10" nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="10" nowrap="nowrap" align="center" valign="bottom">
<b>Other Postretirement<br />
</b>
</td>
<td>
 
</td>
</tr>
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="10" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>Pension Benefits</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="10" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>Benefits</b>
</td>
<td>
 
</td>
</tr>
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="10" nowrap="nowrap" align="center" valign="bottom">
<b>Year Ended<br />
</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="10" nowrap="nowrap" align="center" valign="bottom">
<b>Year Ended<br />
</b>
</td>
<td>
 
</td>
</tr>
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="10" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>December 31,</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="10" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>December 31,</b>
</td>
<td>
 
</td>
</tr>
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>2010</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>2009</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>2008</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>2010</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>2009</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>2008</b>
</td>
<td>
 
</td>
</tr>
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="6" nowrap="nowrap" align="center" valign="bottom">
<b>(In millions)</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
</tr>
<tr style="line-height: 3pt; font-size: 1pt">
<td> 
</td>
</tr>
<!-- TableOutputBody -->
<tr valign="bottom" style="background: #cceeff">
<td nowrap="nowrap" align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Service cost
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
17
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
17
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
17
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
4
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
4
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
4
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom">
<td nowrap="nowrap" align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Interest cost
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
56
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
56
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
54
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
12
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
12
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
12
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Expected return on plan assets
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
(68
</td>
<td nowrap="nowrap" align="left" valign="bottom">
)
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
(61
</td>
<td nowrap="nowrap" align="left" valign="bottom">
)
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
(70
</td>
<td nowrap="nowrap" align="left" valign="bottom">
)
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
—
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
—
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
—
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Amortization of unrecognized net loss (gain)
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
7
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
15
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
1
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
(1
</td>
<td nowrap="nowrap" align="left" valign="bottom">
)
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
(1
</td>
<td nowrap="nowrap" align="left" valign="bottom">
)
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
(1
</td>
<td nowrap="nowrap" align="left" valign="bottom">
)
</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Amortization of unrecognized prior service cost
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
5
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
5
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
5
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
(1
</td>
<td nowrap="nowrap" align="left" valign="bottom">
)
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
(1
</td>
<td nowrap="nowrap" align="left" valign="bottom">
)
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
—
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="font-size: 1pt">
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Net periodic benefit cost
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
17
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
32
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
7
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
14
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
14
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
15
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="font-size: 1pt">
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td>
 
</td>
</tr>
</table>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
</div>
<!-- XBRL Pagebreak Begin -->
</div>
<!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<div style="margin-left: 0%">
<!-- BEGIN PAGE WIDTH -->
<div align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">
<b>
<font style="font-family: 'Times New Roman', Times">
</font>
</b>
</div>
<div style="margin-top: 0pt; font-size: 1pt">
</div>
<div align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">
<b>
<font style="font-family: 'Times New Roman', Times">
</font>
</b>
</div>
<!-- XBRL Pagebreak End -->
<div style="margin-top: 6pt; font-size: 1pt"> 
</div>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
The following provides a reconciliation of benefit obligations,
plan assets and funded status of the pension and postretirement
plans:
</div>
<div style="margin-top: 6pt; font-size: 1pt"> 
</div>
<table border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent; text-align: left">
<!-- Table Width Row BEGIN -->
<tr style="font-size: 1pt" valign="bottom">
<td width="68%"> </td><!-- colindex=01 type=maindata -->
<td width="2%"> </td><!-- colindex=02 type=gutter -->
<td width="1%" align="right"> </td><!-- colindex=02 type=lead -->
<td width="4%" align="right"> </td><!-- colindex=02 type=body -->
<td width="1%" align="left"> </td><!-- colindex=02 type=hang1 -->
<td width="3%"> </td><!-- colindex=03 type=gutter -->
<td width="1%" align="right"> </td><!-- colindex=03 type=lead -->
<td width="3%" align="right"> </td><!-- colindex=03 type=body -->
<td width="1%" align="left"> </td><!-- colindex=03 type=hang1 -->
<td width="3%"> </td><!-- colindex=04 type=gutter -->
<td width="1%" align="right"> </td><!-- colindex=04 type=lead -->
<td width="3%" align="right"> </td><!-- colindex=04 type=body -->
<td width="1%" align="left"> </td><!-- colindex=04 type=hang1 -->
<td width="3%"> </td><!-- colindex=05 type=gutter -->
<td width="1%" align="right"> </td><!-- colindex=05 type=lead -->
<td width="3%" align="right"> </td><!-- colindex=05 type=body -->
<td width="1%" align="left"> </td><!-- colindex=05 type=hang1 -->
</tr>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="6" nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="6" nowrap="nowrap" align="center" valign="bottom">
<b>Other<br />
</b>
</td>
<td>
 
</td>
</tr>
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="6" nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="6" nowrap="nowrap" align="center" valign="bottom">
<b>Postretirement<br />
</b>
</td>
<td>
 
</td>
</tr>
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="6" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>Pension Benefits</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="6" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>Benefits</b>
</td>
<td>
 
</td>
</tr>
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="6" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>December 31,</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="6" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>December 31,</b>
</td>
<td>
 
</td>
</tr>
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>2010</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>2009</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>2010</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>2009</b>
</td>
<td>
 
</td>
</tr>
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="14" nowrap="nowrap" align="center" valign="bottom">
<b>(In millions)</b>
</td>
<td>
 
</td>
</tr>
<tr style="line-height: 3pt; font-size: 1pt">
<td> 
</td>
</tr>
<!-- TableOutputBody -->
<tr valign="bottom" style="background: #cceeff">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Change in benefit obligation:
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 20pt">
Benefit obligation at January 1
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
962
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
927
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
206
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
196
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td nowrap="nowrap" align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 20pt">
Service cost
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
17
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
17
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
4
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
4
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom">
<td nowrap="nowrap" align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 20pt">
Interest cost
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
56
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
56
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
12
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
12
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 20pt">
Plan participants’ contributions
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
—
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
—
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
5
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
5
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom">
<td nowrap="nowrap" align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 20pt">
Amendments
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
—
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
4
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
—
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
—
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 20pt">
Actuarial (gain) loss
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
48
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
18
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
(11
</td>
<td nowrap="nowrap" align="left" valign="bottom">
)
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
8
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 20pt">
Benefits paid from plan assets
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
(60
</td>
<td nowrap="nowrap" align="left" valign="bottom">
)
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
(60
</td>
<td nowrap="nowrap" align="left" valign="bottom">
)
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
(20
</td>
<td nowrap="nowrap" align="left" valign="bottom">
)
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
(20
</td>
<td nowrap="nowrap" align="left" valign="bottom">
)
</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 20pt">
Medicare Part D Drug Subsidy
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
—
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
—
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
1
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
1
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="font-size: 1pt">
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 20pt">
Benefit obligation at December 31
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
1,023
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
962
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
197
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
206
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="font-size: 1pt">
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Change in plan assets:
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 20pt">
Fair value of plan assets at January 1
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
921
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
829
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
—
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
—
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 20pt">
Actual return on plan assets
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
109
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
129
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
—
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
—
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom">
<td nowrap="nowrap" align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 20pt">
Employer contributions
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
19
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
23
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
15
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
15
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 20pt">
Plan participants’ contributions
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
—
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
—
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
5
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
5
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 20pt">
Benefits paid from plan assets
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
(60
</td>
<td nowrap="nowrap" align="left" valign="bottom">
)
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
(60
</td>
<td nowrap="nowrap" align="left" valign="bottom">
)
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
(20
</td>
<td nowrap="nowrap" align="left" valign="bottom">
)
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
(20
</td>
<td nowrap="nowrap" align="left" valign="bottom">
)
</td>
</tr>
<tr valign="bottom" style="font-size: 1pt">
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 20pt">
Fair value of plan assets at December 31
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
989
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
921
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
—
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
—
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="font-size: 1pt">
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td nowrap="nowrap" align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 20pt">
Funded status
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
(34
</td>
<td nowrap="nowrap" align="left" valign="bottom">
)
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
(41
</td>
<td nowrap="nowrap" align="left" valign="bottom">
)
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
(197
</td>
<td nowrap="nowrap" align="left" valign="bottom">
)
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
(206
</td>
<td nowrap="nowrap" align="left" valign="bottom">
)
</td>
</tr>
<tr valign="bottom" style="font-size: 1pt">
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td>
 
</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Amounts recognized in the balance sheets consist of:
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom">
<td nowrap="nowrap" align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 20pt">
Noncurrent assets
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
66
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
60
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
—
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
—
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td nowrap="nowrap" align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 20pt">
Current liabilities
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
—
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
—
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
(13
</td>
<td nowrap="nowrap" align="left" valign="bottom">
)
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
(13
</td>
<td nowrap="nowrap" align="left" valign="bottom">
)
</td>
</tr>
<tr valign="bottom">
<td nowrap="nowrap" align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 20pt">
Noncurrent liabilities
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
(100
</td>
<td nowrap="nowrap" align="left" valign="bottom">
)
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
(101
</td>
<td nowrap="nowrap" align="left" valign="bottom">
)
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
(184
</td>
<td nowrap="nowrap" align="left" valign="bottom">
)
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
(193
</td>
<td nowrap="nowrap" align="left" valign="bottom">
)
</td>
</tr>
<tr valign="bottom" style="font-size: 1pt">
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Net amount recognized
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
(34
</td>
<td nowrap="nowrap" align="left" valign="bottom">
)
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
(41
</td>
<td nowrap="nowrap" align="left" valign="bottom">
)
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
(197
</td>
<td nowrap="nowrap" align="left" valign="bottom">
)
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
(206
</td>
<td nowrap="nowrap" align="left" valign="bottom">
)
</td>
</tr>
<tr valign="bottom" style="font-size: 1pt">
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Net actuarial (gain) loss
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
7
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
(50
</td>
<td nowrap="nowrap" align="left" valign="bottom">
)
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
(11
</td>
<td nowrap="nowrap" align="left" valign="bottom">
)
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
8
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Recognized actuarial gain (loss)
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
(7
</td>
<td nowrap="nowrap" align="left" valign="bottom">
)
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
(15
</td>
<td nowrap="nowrap" align="left" valign="bottom">
)
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
1
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
1
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Prior service cost
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
—
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
4
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
—
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
—
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Recognized prior service (cost)
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
(5
</td>
<td nowrap="nowrap" align="left" valign="bottom">
)
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
(5
</td>
<td nowrap="nowrap" align="left" valign="bottom">
)
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
—
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
—
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="font-size: 1pt">
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 30pt">
Total recognized other comprehensive (income) loss
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
(5
</td>
<td nowrap="nowrap" align="left" valign="bottom">
)
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
(66
</td>
<td nowrap="nowrap" align="left" valign="bottom">
)
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
(10
</td>
<td nowrap="nowrap" align="left" valign="bottom">
)
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
9
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="font-size: 1pt">
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td>
 
</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 30pt">
Total recognized net periodic benefit cost and other
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
12
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
(34
</td>
<td nowrap="nowrap" align="left" valign="bottom">
)
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
5
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
24
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="font-size: 1pt">
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td>
 
</td>
</tr>
</table>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
</div>
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</div>
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<div style="margin-left: 0%">
<!-- BEGIN PAGE WIDTH -->
<div align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">
<b>
<font style="font-family: 'Times New Roman', Times">
</font>
</b>
</div>
<div style="margin-top: 0pt; font-size: 1pt">
</div>
<div align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">
<b>
<font style="font-family: 'Times New Roman', Times">
</font>
</b>
</div>
<!-- XBRL Pagebreak End -->
<div style="margin-top: 6pt; font-size: 1pt"> 
</div>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
Information for pension plans with an accumulated benefit
obligation in excess of plan assets consisted of the following:
</div>
<div style="margin-top: 6pt; font-size: 1pt"> 
</div>
<table border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent; text-align: left">
<!-- Table Width Row BEGIN -->
<tr style="font-size: 1pt" valign="bottom">
<td width="89%"> </td><!-- colindex=01 type=maindata -->
<td width="2%"> </td><!-- colindex=02 type=gutter -->
<td width="1%" align="right"> </td><!-- colindex=02 type=lead -->
<td width="1%" align="right"> </td><!-- colindex=02 type=body -->
<td width="1%" align="left"> </td><!-- colindex=02 type=hang1 -->
<td width="3%"> </td><!-- colindex=03 type=gutter -->
<td width="1%" align="right"> </td><!-- colindex=03 type=lead -->
<td width="1%" align="right"> </td><!-- colindex=03 type=body -->
<td width="1%" align="left"> </td><!-- colindex=03 type=hang1 -->
</tr>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="7" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>Pension Benefits</b>
</td>
</tr>
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="7" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>December 31,</b>
</td>
</tr>
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="3" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>2010</b>
</td>
<td>
 
</td>
<td colspan="3" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>2009</b>
</td>
</tr>
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="7" align="center" valign="bottom">
<b>(In millions)</b>
</td>
</tr>
<tr style="line-height: 3pt; font-size: 1pt">
<td> 
</td>
</tr>
<!-- TableOutputBody -->
<tr valign="bottom" style="background: #cceeff">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Projected benefit obligation
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
558
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
517
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Accumulated benefit obligation
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
501
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
464
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Fair value of plan assets
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
459
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
416
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
</table>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
</div>
<div style="margin-top: 6pt; font-size: 1pt"> 
</div>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
The general principles guiding the investment of the Plan assets
are embodied in the Employee Retirement Income Security Act of
1974 (ERISA). These principles include discharging
Lorillard’s investment responsibilities for the exclusive
benefit of Plan participants and in accordance with the
“prudent expert” standards and other ERISA rules and
regulations. Investment objectives for Lorillard’s pension
Plan assets are to optimize the long-term return on Plan assets
while maintaining an acceptable level of risk, to diversify
assets among asset classes and investment styles, and to
maintain a long-term focus.
</div>
<div style="margin-top: 6pt; font-size: 1pt"> 
</div>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
In 2009, Lorillard conducted an asset/liability study to
determine the optimal strategic asset allocation to meet the
Plan’s projected long-term benefit obligations and desired
funding status. The Plan is managed using a Liability Driven
Investment (“LDI”) framework which focuses on
achieving the Plan’s return goals while assuming a
reasonable level of funded status volatility.
</div>
<div style="margin-top: 6pt; font-size: 1pt"> 
</div>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
Based on this LDI framework the asset allocation has two primary
components. The first component of the asset allocation is the
“hedging portfolio” which uses the Plan’s fixed
income portfolio to hedge a portion of the interest rate risk
associated with the Plan’s liabilities, thereby reducing
the Plan’s expected funded status volatility. The second
component is the “growth/equity portfolio” which is
designed to enhance portfolio returns. The growth portfolio is
broadly diversified across the following asset classes; Global
Equities, Long Short Equities, Absolute Return Hedge Funds,
Private Equity (including growth equity, buyouts, and other
illiquid assets deigned to enhance returns), and Private Real
Assets. Alternative investments, including hedge funds, are used
judiciously to enhance risk adjusted long-term returns while
improving portfolio diversification. Derivatives may be used to
gain market exposure in an efficient and timely manner.
Investment risk is measured and monitored on an ongoing basis
through annual liability measurements, periodic asset/liability
studies, and quarterly investment portfolio reviews.
</div>
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</div>
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<div style="margin-left: 0%">
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<div align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">
<b>
<font style="font-family: 'Times New Roman', Times">
</font>
</b>
</div>
<div style="margin-top: 0pt; font-size: 1pt">
</div>
<div align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">
<b>
<font style="font-family: 'Times New Roman', Times">
</font>
</b>
</div>
<!-- XBRL Pagebreak End -->
<div style="margin-top: 6pt; font-size: 1pt"> 
</div>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
The pension plans asset allocations were:
</div>
<div style="margin-top: 6pt; font-size: 1pt"> 
</div>
<table border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent; text-align: left">
<!-- Table Width Row BEGIN -->
<tr style="font-size: 1pt" valign="bottom">
<td width="65%"> </td><!-- colindex=01 type=maindata -->
<td width="2%"> </td><!-- colindex=02 type=gutter -->
<td width="1%" align="right"> </td><!-- colindex=02 type=lead -->
<td width="15%" align="right"> </td><!-- colindex=02 type=body -->
<td width="1%" align="left"> </td><!-- colindex=02 type=hang1 -->
<td width="3%"> </td><!-- colindex=03 type=gutter -->
<td width="1%" align="right"> </td><!-- colindex=03 type=lead -->
<td width="11%" align="right"> </td><!-- colindex=03 type=body -->
<td width="1%" align="left"> </td><!-- colindex=03 type=hang1 -->
</tr>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>Asset Allocation as of<br />
</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>Allocation as of<br />
</b>
</td>
<td>
 
</td>
</tr>
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>12/31/10</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>12/31/09</b>
</td>
<td>
 
</td>
</tr>
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>(%)</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>(%)</b>
</td>
<td>
 
</td>
</tr>
<tr style="line-height: 3pt; font-size: 1pt">
<td> 
</td>
</tr>
<!-- TableOutputBody -->
<tr valign="bottom" style="background: #cceeff">
<td nowrap="nowrap" align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Asset Class
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom">
<td nowrap="nowrap" align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 20pt">
U.S. Equity
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
15.1
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
13.9
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 20pt">
Global ex U.S. Equity
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
11.6
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
10.9
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 20pt">
Emerging Markets Equity
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
3.5
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
2.9
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 20pt">
Absolute Return Hedge Funds
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
11.7
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
11.6
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 20pt">
Equity Hedge Funds
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
12.9
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
12.4
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td nowrap="nowrap" align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 20pt">
Private Equity
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
4.2
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
6.7
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 20pt">
Private Real Assets
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
1.0
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
0.8
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 20pt">
Public Real Assets
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
2.4
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom">
<td nowrap="nowrap" align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 20pt">
Fixed Income
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
36.7
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
39.8
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td nowrap="nowrap" align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 20pt">
Cash Equivalents
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
0.9
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
1.0
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="font-size: 1pt">
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td nowrap="nowrap" align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Total
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
100.0
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
100.0
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="font-size: 1pt">
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td>
 
</td>
</tr>
</table>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
</div>
<div style="margin-top: 6pt; font-size: 1pt"> 
</div>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
<i>Fair Value Measurements</i> — The fair value
hierarchy has three levels based on the reliability of the
inputs used to determine fair value. Level 1 refers to fair
values determined based on quoted prices in active markets for
identical assets. Level 2 refers to fair values estimated
using significant other observable inputs. Level 3 includes
fair values estimated using significant non-observable inputs.
Plan assets using the fair value hierarchy as of
December 31, 2010 were as follows:
</div>
<div style="margin-top: 6pt; font-size: 1pt"> 
</div>
<table border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent; text-align: left">
<!-- Table Width Row BEGIN -->
<tr style="font-size: 1pt" valign="bottom">
<td width="67%"> </td><!-- colindex=01 type=maindata -->
<td width="2%"> </td><!-- colindex=02 type=gutter -->
<td width="1%" align="right"> </td><!-- colindex=02 type=lead -->
<td width="2%" align="right"> </td><!-- colindex=02 type=body -->
<td width="1%" align="left"> </td><!-- colindex=02 type=hang1 -->
<td width="3%"> </td><!-- colindex=03 type=gutter -->
<td width="1%" align="right"> </td><!-- colindex=03 type=lead -->
<td width="4%" align="right"> </td><!-- colindex=03 type=body -->
<td width="1%" align="left"> </td><!-- colindex=03 type=hang1 -->
<td width="3%"> </td><!-- colindex=04 type=gutter -->
<td width="1%" align="right"> </td><!-- colindex=04 type=lead -->
<td width="4%" align="right"> </td><!-- colindex=04 type=body -->
<td width="1%" align="left"> </td><!-- colindex=04 type=hang1 -->
<td width="3%"> </td><!-- colindex=05 type=gutter -->
<td width="1%" align="right"> </td><!-- colindex=05 type=lead -->
<td width="4%" align="right"> </td><!-- colindex=05 type=body -->
<td width="1%" align="left"> </td><!-- colindex=05 type=hang1 -->
</tr>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>Total</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>Level 1</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>Level 2</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>Level 3</b>
</td>
<td>
 
</td>
</tr>
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="14" align="center" valign="bottom">
<b>(In millions)</b>
</td>
<td>
 
</td>
</tr>
<tr style="line-height: 3pt; font-size: 1pt">
<td> 
</td>
</tr>
<!-- TableOutputBody -->
<tr valign="bottom" style="background: #cceeff">
<td nowrap="nowrap" align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Asset Class:
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom">
<td nowrap="nowrap" align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 20pt">
U.S. Equity
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
150
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
47
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
30
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
73
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 20pt">
Global ex U.S. Equity
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
115
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
−
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
115
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
−
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 20pt">
Emerging Markets Equity
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
35
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
−
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
35
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
−
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 20pt">
Absolute Return Hedge Funds
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
116
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
−
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
29
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
87
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 20pt">
Equity Hedge Funds
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
127
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
−
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
64
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
63
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td nowrap="nowrap" align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 20pt">
Private Equity
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
41
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
−
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
−
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
41
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 20pt">
Private Real Assets
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
10
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
−
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
−
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
10
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 20pt">
Public Real Assets
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
24
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
−
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
12
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
12
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom">
<td nowrap="nowrap" align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 20pt">
Fixed Income
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
363
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
363
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
−
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
−
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td nowrap="nowrap" align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 20pt">
Cash Equivalents
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
8
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
−
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
8
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
−
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="font-size: 1pt">
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td nowrap="nowrap" align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Total
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
989
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
410
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
293
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
286
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="font-size: 1pt">
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td>
 
</td>
</tr>
</table>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
</div>
<!-- XBRL Pagebreak Begin -->
</div>
<!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<div style="margin-left: 0%">
<!-- BEGIN PAGE WIDTH -->
<div align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">
<b>
<font style="font-family: 'Times New Roman', Times">
</font>
</b>
</div>
<div style="margin-top: 0pt; font-size: 1pt">
</div>
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<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
Plan assets using the fair value hierarchy as of
December 31, 2009 were as follows:
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<div style="margin-top: 6pt; font-size: 1pt"> 
</div>
<table border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent; text-align: left">
<!-- Table Width Row BEGIN -->
<tr style="font-size: 1pt" valign="bottom">
<td width="67%"> </td><!-- colindex=01 type=maindata -->
<td width="2%"> </td><!-- colindex=02 type=gutter -->
<td width="1%" align="right"> </td><!-- colindex=02 type=lead -->
<td width="2%" align="right"> </td><!-- colindex=02 type=body -->
<td width="1%" align="left"> </td><!-- colindex=02 type=hang1 -->
<td width="3%"> </td><!-- colindex=03 type=gutter -->
<td width="1%" align="right"> </td><!-- colindex=03 type=lead -->
<td width="4%" align="right"> </td><!-- colindex=03 type=body -->
<td width="1%" align="left"> </td><!-- colindex=03 type=hang1 -->
<td width="3%"> </td><!-- colindex=04 type=gutter -->
<td width="1%" align="right"> </td><!-- colindex=04 type=lead -->
<td width="4%" align="right"> </td><!-- colindex=04 type=body -->
<td width="1%" align="left"> </td><!-- colindex=04 type=hang1 -->
<td width="3%"> </td><!-- colindex=05 type=gutter -->
<td width="1%" align="right"> </td><!-- colindex=05 type=lead -->
<td width="4%" align="right"> </td><!-- colindex=05 type=body -->
<td width="1%" align="left"> </td><!-- colindex=05 type=hang1 -->
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<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>Total</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>Level 1</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>Level 2</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>Level 3</b>
</td>
<td>
 
</td>
</tr>
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="14" align="center" valign="bottom">
<b>(In millions)</b>
</td>
<td>
 
</td>
</tr>
<tr style="line-height: 3pt; font-size: 1pt">
<td> 
</td>
</tr>
<!-- TableOutputBody -->
<tr valign="bottom" style="background: #cceeff">
<td nowrap="nowrap" align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Asset Class:
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom">
<td nowrap="nowrap" align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 20pt">
U.S. Equity
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
128
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
59
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
38
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
31
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 20pt">
Global ex U.S. Equity
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
100
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
—
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
100
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
—
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 20pt">
Emerging Markets Equity
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
27
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
27
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
—
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 20pt">
Absolute Return Hedge Funds
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
107
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
—
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
26
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
81
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 20pt">
Equity Hedge Funds
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
115
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
—
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
57
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
58
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td nowrap="nowrap" align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 20pt">
Private Equity
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
62
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
—
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
—
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
62
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 20pt">
Private Real Assets
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
7
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
—
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
—
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
7
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td nowrap="nowrap" align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 20pt">
Fixed Income
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
366
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
366
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
—
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
—
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom">
<td nowrap="nowrap" align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 20pt">
Cash Equivalents
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
9
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
—
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
9
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
—
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="font-size: 1pt">
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td nowrap="nowrap" align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Total
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
921
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
425
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
257
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
239
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="font-size: 1pt">
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td>
 
</td>
</tr>
</table>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
</div>
<div style="margin-top: 6pt; font-size: 1pt"> 
</div>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
Equity securities are primarily valued using a market approach
based on the quoted market prices of identical instruments.
</div>
<div style="margin-top: 6pt; font-size: 1pt"> 
</div>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
Hedge funds are primarily based on NAV’s calculated by the
fund and are not publicly available.
</div>
<div style="margin-top: 6pt; font-size: 1pt"> 
</div>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
Private equity valuations are reported by the fund manager and
are based on the valuation of underlying investments, which
include inputs such as cost, operating results, discounted
future cash flows and market based comparable data.
</div>
<div style="margin-top: 6pt; font-size: 1pt"> 
</div>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
Real estate values are reported by the fund manager and are
based on valuation of the underlying investments, which include
inputs such as cost, discounted future cash flows, independent
appraisals and market based on comparable data.
</div>
<div style="margin-top: 6pt; font-size: 1pt"> 
</div>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
Fixed income securities are primarily valued using a market
approach with inputs that include broker quotes in a non-active
market.
</div>
<div style="margin-top: 6pt; font-size: 1pt"> 
</div>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
Cash equivalents are primarily held in registered money market
funds which are valued using a market approach based on the
quoted market prices of identical instruments.
</div>
<div style="margin-top: 6pt; font-size: 1pt"> 
</div>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
The following table presents a reconciliation of Level 3
assets held during the year ended December 31, 2010. For
the year ended December 31, 2010, there were no significant
transfers between levels 1, 2 and 3.
</div>
<div style="margin-top: 6pt; font-size: 1pt"> 
</div>
<table border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent; text-align: left">
<!-- Table Width Row BEGIN -->
<tr style="font-size: 1pt" valign="bottom">
<td width="37%"> </td><!-- colindex=01 type=maindata -->
<td width="2%"> </td><!-- colindex=02 type=gutter -->
<td width="1%" align="right"> </td><!-- colindex=02 type=lead -->
<td width="6%" align="right"> </td><!-- colindex=02 type=body -->
<td width="1%" align="left"> </td><!-- colindex=02 type=hang1 -->
<td width="2%"> </td><!-- colindex=03 type=gutter -->
<td width="1%" align="right"> </td><!-- colindex=03 type=lead -->
<td width="9%" align="right"> </td><!-- colindex=03 type=body -->
<td width="1%" align="left"> </td><!-- colindex=03 type=hang1 -->
<td width="2%"> </td><!-- colindex=04 type=gutter -->
<td width="1%" align="right"> </td><!-- colindex=04 type=lead -->
<td width="10%" align="right"> </td><!-- colindex=04 type=body -->
<td width="1%" align="left"> </td><!-- colindex=04 type=hang1 -->
<td width="2%"> </td><!-- colindex=05 type=gutter -->
<td width="1%" align="right"> </td><!-- colindex=05 type=lead -->
<td width="9%" align="right"> </td><!-- colindex=05 type=body -->
<td width="1%" align="left"> </td><!-- colindex=05 type=hang1 -->
<td width="2%"> </td><!-- colindex=06 type=gutter -->
<td width="1%" align="right"> </td><!-- colindex=06 type=lead -->
<td width="9%" align="right"> </td><!-- colindex=06 type=body -->
<td width="1%" align="left"> </td><!-- colindex=06 type=hang1 -->
</tr>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>January 1, <br />
</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>Net Realized<br />
</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>Net Purchases,<br />
</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>Net Transfers<br />
</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>December 31,<br />
</b>
</td>
<td>
 
</td>
</tr>
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>2010<br />
</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>Unrealized<br />
</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>Issuances and<br />
</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>Into/(Out of)<br />
</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>2010<br />
</b>
</td>
<td>
 
</td>
</tr>
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>Balance</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>Gains/(Losses)</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>Settlements</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>Level 3</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>Balance</b>
</td>
<td>
 
</td>
</tr>
<tr style="line-height: 3pt; font-size: 1pt">
<td> 
</td>
</tr>
<!-- TableOutputBody -->
<tr valign="bottom" style="background: #cceeff">
<td nowrap="nowrap" align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
US Equity
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
31
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
11
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
7
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
24
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
73
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Absolute Return Hedge Funds
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
81
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
11
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
(5
</td>
<td nowrap="nowrap" align="left" valign="bottom">
)
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
—
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
87
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Equity Hedge Funds
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
58
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
2
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
3
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
—
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
63
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom">
<td nowrap="nowrap" align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Private Equity
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
62
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
4
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
(1
</td>
<td nowrap="nowrap" align="left" valign="bottom">
)
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
(24
</td>
<td nowrap="nowrap" align="left" valign="bottom">
)
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
41
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Private Real Assets
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
7
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
1
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
2
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
—
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
10
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Public Real Assets
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
—
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
2
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
10
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
—
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
12
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
</table>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
</div>
<!-- XBRL Pagebreak Begin -->
</div>
<!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<div style="margin-left: 0%">
<!-- BEGIN PAGE WIDTH -->
<div align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">
<b>
<font style="font-family: 'Times New Roman', Times">
</font>
</b>
</div>
<div style="margin-top: 0pt; font-size: 1pt">
</div>
<div align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">
<b>
<font style="font-family: 'Times New Roman', Times">
</font>
</b>
</div>
<!-- XBRL Pagebreak End -->
<div style="margin-top: 6pt; font-size: 1pt"> 
</div>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
The following table presents a reconciliation of Level 3
assets held during the year ended December 31, 2009.
</div>
<div style="margin-top: 6pt; font-size: 1pt"> 
</div>
<table border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent; text-align: left">
<!-- Table Width Row BEGIN -->
<tr style="font-size: 1pt" valign="bottom">
<td width="37%"> </td><!-- colindex=01 type=maindata -->
<td width="2%"> </td><!-- colindex=02 type=gutter -->
<td width="1%" align="right"> </td><!-- colindex=02 type=lead -->
<td width="6%" align="right"> </td><!-- colindex=02 type=body -->
<td width="1%" align="left"> </td><!-- colindex=02 type=hang1 -->
<td width="2%"> </td><!-- colindex=03 type=gutter -->
<td width="1%" align="right"> </td><!-- colindex=03 type=lead -->
<td width="9%" align="right"> </td><!-- colindex=03 type=body -->
<td width="1%" align="left"> </td><!-- colindex=03 type=hang1 -->
<td width="2%"> </td><!-- colindex=04 type=gutter -->
<td width="1%" align="right"> </td><!-- colindex=04 type=lead -->
<td width="10%" align="right"> </td><!-- colindex=04 type=body -->
<td width="1%" align="left"> </td><!-- colindex=04 type=hang1 -->
<td width="2%"> </td><!-- colindex=05 type=gutter -->
<td width="1%" align="right"> </td><!-- colindex=05 type=lead -->
<td width="9%" align="right"> </td><!-- colindex=05 type=body -->
<td width="1%" align="left"> </td><!-- colindex=05 type=hang1 -->
<td width="2%"> </td><!-- colindex=06 type=gutter -->
<td width="1%" align="right"> </td><!-- colindex=06 type=lead -->
<td width="9%" align="right"> </td><!-- colindex=06 type=body -->
<td width="1%" align="left"> </td><!-- colindex=06 type=hang1 -->
</tr>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>January 1,<br />
</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>Net Realized<br />
</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>Net Purchases,<br />
</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>Net Transfers<br />
</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>December 31,<br />
</b>
</td>
<td>
 
</td>
</tr>
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>2009<br />
</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>Unrealized<br />
</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>Issuances and<br />
</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>Into/(Out of)<br />
</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>2009<br />
</b>
</td>
<td>
 
</td>
</tr>
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>Balance</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>Gains/(Losses)</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>Settlements</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>Level 3</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>Balance</b>
</td>
<td>
 
</td>
</tr>
<tr style="line-height: 3pt; font-size: 1pt">
<td> 
</td>
</tr>
<!-- TableOutputBody -->
<tr valign="bottom" style="background: #cceeff">
<td nowrap="nowrap" align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
US Equity
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
—
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
6
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
25
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
—
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
31
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Absolute Return Hedge Funds
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
119
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
31
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
(69
</td>
<td nowrap="nowrap" align="left" valign="bottom">
)
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
—
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
81
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Equity Hedge Funds
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
40
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
9
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
9
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
—
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
58
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom">
<td nowrap="nowrap" align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Private Equity
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
47
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
13
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
2
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
—
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
62
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Private Real Assets
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
4
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
—
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
3
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
—
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
7
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
</table>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
</div>
<div style="margin-top: 6pt; font-size: 1pt"> 
</div>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
The table below presents the estimated amounts to be recognized
from accumulated other comprehensive income into net periodic
benefit cost during 2011.
</div>
<div style="margin-top: 6pt; font-size: 1pt"> 
</div>
<table border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent; text-align: left">
<!-- Table Width Row BEGIN -->
<tr style="font-size: 1pt" valign="bottom">
<td width="77%"> </td><!-- colindex=01 type=maindata -->
<td width="2%"> </td><!-- colindex=02 type=gutter -->
<td width="1%" align="right"> </td><!-- colindex=02 type=lead -->
<td width="4%" align="right"> </td><!-- colindex=02 type=body -->
<td width="1%" align="left"> </td><!-- colindex=02 type=hang1 -->
<td width="3%"> </td><!-- colindex=03 type=gutter -->
<td width="1%" align="right"> </td><!-- colindex=03 type=lead -->
<td width="10%" align="right"> </td><!-- colindex=03 type=body -->
<td width="1%" align="left"> </td><!-- colindex=03 type=hang1 -->
</tr>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>Other<br />
</b>
</td>
<td>
 
</td>
</tr>
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>Pension<br />
</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>Postretirement<br />
</b>
</td>
<td>
 
</td>
</tr>
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>Benefits</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>Benefits</b>
</td>
<td>
 
</td>
</tr>
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="6" align="center" valign="bottom">
<b>(In millions)</b>
</td>
<td>
 
</td>
</tr>
<tr style="line-height: 3pt; font-size: 1pt">
<td> 
</td>
</tr>
<!-- TableOutputBody -->
<tr valign="bottom" style="background: #cceeff">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Amortization of (gain) loss recognition
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
7
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
(2
</td>
<td nowrap="nowrap" align="left" valign="bottom">
)
</td>
</tr>
<tr valign="bottom">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Amortization of prior service cost
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
4
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
—
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="font-size: 1pt">
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Total estimated amounts to be recognized
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
11
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
(2
</td>
<td nowrap="nowrap" align="left" valign="bottom">
)
</td>
</tr>
<tr valign="bottom" style="font-size: 1pt">
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td>
 
</td>
</tr>
</table>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
</div>
<div style="margin-top: 6pt; font-size: 1pt"> 
</div>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
Lorillard projects expected future minimum benefit payments as
follows.
</div>
<div style="margin-top: 6pt; font-size: 1pt"> 
</div>
<table border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent; text-align: left">
<!-- Table Width Row BEGIN -->
<tr style="font-size: 1pt" valign="bottom">
<td width="53%"> </td><!-- colindex=01 type=maindata -->
<td width="2%"> </td><!-- colindex=02 type=gutter -->
<td width="1%" align="right"> </td><!-- colindex=02 type=lead -->
<td width="11%" align="right"> </td><!-- colindex=02 type=body -->
<td width="1%" align="left"> </td><!-- colindex=02 type=hang1 -->
<td width="3%"> </td><!-- colindex=03 type=gutter -->
<td width="1%" align="right"> </td><!-- colindex=03 type=lead -->
<td width="10%" align="right"> </td><!-- colindex=03 type=body -->
<td width="1%" align="left"> </td><!-- colindex=03 type=hang1 -->
<td width="3%"> </td><!-- colindex=04 type=gutter -->
<td width="1%" align="right"> </td><!-- colindex=04 type=lead -->
<td width="5%" align="right"> </td><!-- colindex=04 type=body -->
<td width="1%" align="left"> </td><!-- colindex=04 type=hang1 -->
<td width="3%"> </td><!-- colindex=05 type=gutter -->
<td width="1%" align="right"> </td><!-- colindex=05 type=lead -->
<td width="2%" align="right"> </td><!-- colindex=05 type=body -->
<td width="1%" align="left"> </td><!-- colindex=05 type=hang1 -->
</tr>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>Less<br />
</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
</tr>
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>Other<br />
</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>Medicare<br />
</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
</tr>
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>Postretirement<br />
</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>Drug<br />
</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
</tr>
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="left" valign="bottom" style="border-bottom: 1px solid #000000">
<b>Expected future benefit payments</b>
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>Pension Benefits</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>Benefit Plans</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>Subsidy</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>Net</b>
</td>
<td>
 
</td>
</tr>
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="14" align="center" valign="bottom">
<b>(In millions)</b>
</td>
<td>
 
</td>
</tr>
<tr style="line-height: 3pt; font-size: 1pt">
<td> 
</td>
</tr>
<!-- TableOutputBody -->
<tr valign="bottom" style="background: #cceeff">
<td nowrap="nowrap" align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
2011
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
70
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
15
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
1
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
14
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom">
<td nowrap="nowrap" align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
2012
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
67
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
16
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
1
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
15
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td nowrap="nowrap" align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
2013
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
69
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
16
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
1
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
15
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom">
<td nowrap="nowrap" align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
2014
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
70
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
16
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
1
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
15
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td nowrap="nowrap" align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
2015
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
71
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
17
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
1
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
16
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom">
<td nowrap="nowrap" align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
2016 — 2020
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
377
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
86
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
4
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
82
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="font-size: 1pt">
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
724
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
166
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
9
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
157
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="font-size: 1pt">
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
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Lorillard expects to contribute $15 million to its pension
plans and $13 million to its other postretirement benefit
plans in 2011.
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<i>Profit Sharing</i> — Lorillard has a Profit Sharing
Plan for hourly employees. Lorillard’s contributions under
this plan are based on Lorillard’s performance with a
maximum contribution of 15% of participants’ earnings.
Contributions for 2010, 2009 and 2008 were $10 million,
$9 million and $9 million, respectively.
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<i>Savings Plan</i> — Lorillard sponsors an Employees
Savings Plan for salaried employees. Lorillard provides a
matching contribution of 100% of the first 3% of pay contributed
and 50% of the next 2% of pay contributed by employees.
Lorillard contributions for 2010, 2009 and 2008 were
$5 million, $4 million and $4 million,
respectively.
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1/1/2010 - 12/31/2010
USD ($) / shares
USD ($)
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R31.xml
IDEA: Inventories (Tables)
2.2.0.25falsefalse0502 - Disclosure - Inventories (Tables)truefalsefalse1falsefalseUSDfalsefalse1/1/2010 - 12/31/2010
USD ($)
USD ($) / shares
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<div align="left" style="font-size: 10pt; font-family: 'Times New Roman', Times">
<div style="margin-top: 6pt; font-size: 1pt"> 
</div>
<table border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent; text-align: left">
<!-- Table Width Row BEGIN -->
<tr style="font-size: 1pt" valign="bottom">
<td width="87%"> </td><!-- colindex=01 type=maindata -->
<td width="2%"> </td><!-- colindex=02 type=gutter -->
<td width="1%" align="right"> </td><!-- colindex=02 type=lead -->
<td width="2%" align="right"> </td><!-- colindex=02 type=body -->
<td width="1%" align="left"> </td><!-- colindex=02 type=hang1 -->
<td width="3%"> </td><!-- colindex=03 type=gutter -->
<td width="1%" align="right"> </td><!-- colindex=03 type=lead -->
<td width="2%" align="right"> </td><!-- colindex=03 type=body -->
<td width="1%" align="left"> </td><!-- colindex=03 type=hang1 -->
</tr>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="6" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>December 31,</b>
</td>
<td>
 
</td>
</tr>
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>2010</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>2009</b>
</td>
<td>
 
</td>
</tr>
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="6" align="center" valign="bottom">
<b>(In millions)</b>
</td>
<td>
 
</td>
</tr>
<tr style="line-height: 3pt; font-size: 1pt">
<td> 
</td>
</tr>
<!-- TableOutputBody -->
<tr valign="bottom" style="background: #cceeff">
<td nowrap="nowrap" align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Leaf tobacco
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
225
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
236
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom">
<td nowrap="nowrap" align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Manufactured stock
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
48
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
41
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Materials and supplies
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
4
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
4
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="font-size: 1pt">
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
277
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
281
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="font-size: 1pt">
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td>
 
</td>
</tr>
</table>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
</div>
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
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37
R45.xml
IDEA: Legal Proceedings (Tables)
2.2.0.25falsefalse0519 - Disclosure - Legal Proceedings (Tables)truefalsefalse1falsefalseUSDfalsefalse1/1/2010 - 12/31/2010
USD ($)
USD ($) / shares
$Jan-01-2010_Dec-31-2010http://www.sec.gov/CIK0001424847duration2010-01-01T00:00:002010-12-31T00:00:00USDStandardhttp://www.xbrl.org/2003/iso4217USDiso42170USDEPSDividehttp://www.xbrl.org/2003/iso4217USDiso4217http://www.xbrl.org/2003/instancesharesxbrli0PureStandardhttp://www.xbrl.org/2003/instancepurexbrli0SharesStandardhttp://www.xbrl.org/2003/instancesharesxbrli0USDUSD$2true0lo_LegalProceedingsTablesAbstractlofalsenadurationLegal Proceedings.falsefalsefalsefalsefalsefalsefalsefalsefalsefalse1falsefalsefalse00falsefalsefalsefalsefalseOtherxbrli:stringItemTypestringLegal Proceedings.falsefalse3false0lo_NumberOfCasesPendingTextBlocklofalsenadurationNumber of Cases Pending.falsefalsefalsefalsefalsefalsefalsefalsefalsefalseverboselabel1falsefalsefalse00<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
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<div align="left" style="font-size: 10pt; font-family: 'Times New Roman', Times">
<div style="margin-top: 6pt; font-size: 1pt"> 
</div>
<table border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent; text-align: left">
<!-- Table Width Row BEGIN -->
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<td width="22%" align="right"> </td><!-- colindex=02 type=body -->
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</tr>
<!-- Table Width Row END -->
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<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>Total Number of Cases<br />
</b>
</td>
<td>
 
</td>
</tr>
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>Pending Against Lorillard as<br />
</b>
</td>
<td>
 
</td>
</tr>
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="left" valign="bottom" style="border-bottom: 1px solid #000000">
<b>Type of Case</b>
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>of February 9, 2011</b>
</td>
<td>
 
</td>
</tr>
<tr style="line-height: 3pt; font-size: 1pt">
<td> 
</td>
</tr>
<!-- TableOutputBody -->
<tr valign="bottom" style="background: #cceeff">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Conventional Product Liability Cases
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
36
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
<i>Engle </i>Progeny Cases
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
7,082
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
West Virginia Individual Personal Injury Cases
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
40
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Flight Attendant Cases
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
2,590
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td nowrap="nowrap" align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Class Action Cases
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
6
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom">
<td nowrap="nowrap" align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Reimbursement Cases
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
4
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td nowrap="nowrap" align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Filter Cases
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
34
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Tobacco-Related Antitrust Cases
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
1
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
</table>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
</div>
</div>
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<div style="margin-top: 6pt; font-size: 1pt"> 
</div>
<table border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent; text-align: left">
<!-- Table Width Row BEGIN -->
<tr style="font-size: 1pt" valign="bottom">
<td width="55%"> </td><!-- colindex=01 type=maindata -->
<td width="2%"> </td><!-- colindex=02 type=gutter -->
<td width="4%" align="right"> </td><!-- colindex=02 type=lead -->
<td width="1%" align="right"> </td><!-- colindex=02 type=body -->
<td width="4%" align="left"> </td><!-- colindex=02 type=hang1 -->
<td width="3%"> </td><!-- colindex=03 type=gutter -->
<td width="5%" align="right"> </td><!-- colindex=03 type=lead -->
<td width="1%" align="right"> </td><!-- colindex=03 type=body -->
<td width="5%" align="left"> </td><!-- colindex=03 type=hang1 -->
<td width="3%"> </td><!-- colindex=04 type=gutter -->
<td width="3%" align="right"> </td><!-- colindex=04 type=lead -->
<td width="1%" align="right"> </td><!-- colindex=04 type=body -->
<td width="3%" align="left"> </td><!-- colindex=04 type=hang1 -->
<td width="3%"> </td><!-- colindex=05 type=gutter -->
<td width="3%" align="right"> </td><!-- colindex=05 type=lead -->
<td width="1%" align="right"> </td><!-- colindex=05 type=body -->
<td width="3%" align="left"> </td><!-- colindex=05 type=hang1 -->
</tr>
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<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="3" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>December 31</b>
</td>
<td>
 
</td>
<td colspan="3" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>September 30</b>
</td>
<td>
 
</td>
<td colspan="3" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>June 30</b>
</td>
<td>
 
</td>
<td colspan="3" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>March 31</b>
</td>
</tr>
<tr style="line-height: 3pt; font-size: 1pt">
<td> 
</td>
</tr>
<!-- TableOutputBody -->
<tr valign="bottom" style="background: #cceeff">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
<b><u>2010 Quarter Ended</u></b>
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom">
<td nowrap="nowrap" align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Net sales
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
1,486
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
1,567
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
1,520
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
1,360
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td nowrap="nowrap" align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Gross profit
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
538
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
566
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
542
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
478
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom">
<td nowrap="nowrap" align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Net income
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
259
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
274
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
263
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
232
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Net income per share, diluted
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
1.74
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
1.81
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
1.73
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
1.50
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Basic weighted average number of shares outstanding
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
148.49
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
151.33
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
152.04
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
154.55
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Diluted weighted average number of shares outstanding
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
148.76
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
151.54
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
152.22
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
154.72
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="line-height: 9pt">
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
<b><u>2009 Quarter Ended</u></b>
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td nowrap="nowrap" align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Net sales
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
1,378
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
1,419
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
1,519
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
917
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom">
<td nowrap="nowrap" align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Gross profit
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
481
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
488
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
552
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
383
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td nowrap="nowrap" align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Net income
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
242
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
235
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
286
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
184
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Net income per share, diluted
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
1.52
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
1.44
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
1.71
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
1.09
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Basic weighted average number of shares outstanding
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
158.72
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
163.58
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
167.66
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
168.07
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Diluted weighted average number of shares outstanding
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
158.89
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
163.72
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
167.79
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
168.18
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
</table>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
</div>
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39
R73.xml
IDEA: Share-Based Compensation (Details)
2.2.0.25truefalse0614 - Disclosure - Share-Based Compensation (Details)truefalsefalse1falsefalseUSDtruefalse{us-gaap_ScheduleOfShareBasedCompensationArrangementByShareBasedPaymentAwardAwardTypeAndPlanNameAxis} : Carolina Group Plan [Member]
1/1/2008 - 6/10/2008
USD ($)
$OneHundredSixtyTwoDaysEnded_10Jun2008_Carolina_Group_Plan_Memberhttp://www.sec.gov/CIK0001424847duration2008-01-01T00:00:002008-06-10T00:00:00falsefalseCarolina Group Plan [Member]us-gaap_ScheduleOfShareBasedCompensationArrangementByShareBasedPaymentAwardAwardTypeAndPlanNameAxisxbrldihttp://xbrl.org/2006/xbrldilo_CarolinaGroupPlanMemberus-gaap_ScheduleOfShareBasedCompensationArrangementByShareBasedPaymentAwardAwardTypeAndPlanNameAxisexplicitMemberSharesStandardhttp://www.xbrl.org/2003/instancesharesxbrli0USDStandardhttp://www.xbrl.org/2003/iso4217USDiso42170USDUSD$2falsefalseUSDtruefalse{us-gaap_ScheduleOfShareBasedCompensationArrangementByShareBasedPaymentAwardAwardTypeAndPlanNameAxis} : Lorillard Plan [Member]
7/1/2008 - 12/31/2008
USD ($)
$SixMonthsEnded_31Dec2008_Lorillard_Plan_Memberhttp://www.sec.gov/CIK0001424847duration2008-07-01T00:00:002008-12-31T00:00:00falsefalseLorillard Plan [Member]us-gaap_ScheduleOfShareBasedCompensationArrangementByShareBasedPaymentAwardAwardTypeAndPlanNameAxisxbrldihttp://xbrl.org/2006/xbrldilo_LorillardPlanMemberus-gaap_ScheduleOfShareBasedCompensationArrangementByShareBasedPaymentAwardAwardTypeAndPlanNameAxisexplicitMemberUSDStandardhttp://www.xbrl.org/2003/iso4217USDiso42170SharesStandardhttp://www.xbrl.org/2003/instancesharesxbrli0USDUSD$3falsefalseUSDtruefalse{us-gaap_ScheduleOfShareBasedCompensationArrangementByShareBasedPaymentAwardAwardTypeAndPlanNameAxis} : Lorillard Plan [Member]
6/11/2008 - 12/31/2008
TwoHundredFourDaysEnded_31Dec2008_Lorillard_Plan_Memberhttp://www.sec.gov/CIK0001424847duration2008-06-11T00:00:002008-12-31T00:00:00falsefalseLorillard Plan [Member]us-gaap_ScheduleOfShareBasedCompensationArrangementByShareBasedPaymentAwardAwardTypeAndPlanNameAxisxbrldihttp://xbrl.org/2006/xbrldilo_LorillardPlanMemberus-gaap_ScheduleOfShareBasedCompensationArrangementByShareBasedPaymentAwardAwardTypeAndPlanNameAxisexplicitMember<
UnitID>SharesStandardhttp://www.xbrl.org/2003/instancesharesxbrli0USDStandardhttp://www.xbrl.org/2003/iso4217USDiso42170$4falsefalseUSDtruefalse{us-gaap_ScheduleOfShareBasedC
ompensationArrangementByShareBasedPaymentAwardAwardTypeAndPlanNameAxis} : Lorillard Plan [Member]
1/1/2010 - 12/31/2010
USD ($)
$TwelveMonthsEnded_31Dec2010_Lorillard_Plan_Memberhttp://www.sec.gov/CIK0001424847duration2010-01-01T00:00:002010-12-31T00:00:00falsefalseLorillard Plan [Member]us-gaap_ScheduleOfShareBasedCompensationArrangementByShareBasedPaymentAwardAwardTypeAndPlanNameAxisxbrldihttp://xbrl.org/2006/xbrldilo_LorillardPlanMemberus-gaap_ScheduleOfShareBasedCompensationArrangementByShareBasedPaymentAwardAwardTypeAndPlanNameAxisexplicitMemberSharesStandardhttp://www.xbrl.org/2003/instancesharesxbrli0USDStandardhttp://www.xbrl.org/2003/iso4217USDiso42170USDUSD$5falsefalseUSDtruefalse{us-gaap_ScheduleOfShareBasedCompensationArrangementByShareBasedPaymentAwardAwardTypeAndPlanNameAxis} : Lorillard Plan [Member]
1/1/2009 - 12/31/2009
USD ($)
$TwelveMonthsEnded_31Dec2009_Lorillard_Plan_Memberhttp://www.sec.gov/CIK0001424847duration2009-01-01T00:00:002009-12-31T00:00:00falsefalseLorillard Plan [Member]us-gaap_ScheduleOfShareBasedCompensationArrangementByShareBasedPaymentAwardAwardTypeAndPlanNameAxisxbrldihttp://xbrl.org/2006/xbrldilo_LorillardPlanMemberus-gaap_ScheduleOfShareBasedCompensationArrangementByShareBasedPaymentAwardAwardTypeAndPlanNameAxisexplicitMemberSharesStandardhttp://www.xbrl.org/2003/instancesharesxbrli0USDStandardhttp://www.xbrl.org/2003/iso4217USDiso42170USDUSD$2true0lo_SummaryOfStockOptionAndSarTransactionsAbstractlofalsenadurationSummary of the stock option and SAR transactions.falsefalsefalsefalsefalsefalsefalsefalsefalsefalseverboselabel1falsefalsefalse00falsefalsefalsetruefalse2falsefalsefalse00falsefalsefalsetruefalse3falsefalsefalse00falsefalsefalsetruefalse4falsefalsefalse00falsefalsefalsetruefalse5falsefalsefalse00falsefa
lsefalsetruefalseOtherxbrli:stringItemTypestringSummary of the stock option and SAR transactions.falsefalse3false0us-gaap_ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingNumberus-gaaptruenainstantNo definition available.falsefalsefalsefalsefalsefalsefalsetruefalsefalseperiodstartlabel1truefalsefalse628328628328falsefalsefalsetruefalse2falsefalsefalse00falsefalsefalsetruefalse3truefalsefalse714825714825falsefalsefalsetruefalse4truefalsefalse15251851525185falsefalsefalsetruefalse5truefalsefalse814950814950falsefalsefalsetruefalseSharesxbrli:sharesItemTypesharesThe number of shares reserved for issuance under stock option agreements awarded under the plan that validly exist and are outstanding as of the balance-sheet date, including vested options.Reference 1: http://www.xbrl.org/2003/role/presentationRef
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-Name Statement of Financial Accounting Standard (FAS)
-Number 123R
-Paragraph A240
-Subparagraph b(1)(a)
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-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 123R
-Paragraph A240
-Subparagraph b(1)(b)
falsefalse4false0us-gaap_ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsGrantsInPeriodus-gaaptruenadurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalseverboselabel1truefalsefalse111000111000falsefalsefalsetruefalse2falsefalsefalse00falsefalsefalsetruefalse<
/Cell>3truefalsefalse111000111000falsefalsefalsetruefalse4truefalsefalse254728254728falsefalsefalsetruefalse5truefalsefalse810421810421falsefalsefalsetruefalseSharesxbrli:sharesItemTypesharesThe quantity of shares issuable on stock options awarded under the plan during the reporting period.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 123R
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/Id>truefalsefalse-10875-10875falsefalsefalsetruefalse4truefalsefalse-252787-252787falsefalsefalsetruefalse5truefalsefalse-100186-100186falsefalsefalsetruefalseSharesxbrli:sharesItemTypesharesThe decrease in the number of reserved shares that could potentially be issued attributable to the exercise or conversion during the reporting period of previously issued stock options under the option plan.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 123R
-Paragraph A240
-Subparagraph b(1)(e)
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IsNumeric>falsefalsefalse00falsefalsefalsetruefalseSharesxbrli:sharesItemTypesharesThe number of shares under options that were cancelled during the reporting period as a result of occurrence of a terminating event specified in contractual agreements pertaining to the stock option plan.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 123R
-Paragraph A240
-Subparagraph b(1)(f)
truefalse7false0us-gaap_ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingNumberus-gaaptruenainstantNo definition available.falsefalsefalsefalsefalsefalsefalsefalsetruefalseperiodendlabel1
Id>truefalsefalse714825714825falsefalsefalsetruefalse2truefalsefalse814950814950falsefalsefalsetruefalse3truefalsefalse814950814950falsefalsefalsetruefalse4truefalsefalse14761131476113falsefalsefalsetruefalse5truefalsefalse15251851525185falsefalsefalsetruefalseSharesxbrli:sharesItemTypesharesThe number of shares reserved for issuance under stock option agreements awarded under the plan that validly exist and are outstanding as of the balance-sheet date, including vested options.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 123R
-Paragraph A240
-Subparagraph b(1)(a)
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-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 123R
-Paragraph A240
-Subparagraph b(1)(b)
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hasScenarios>5truefalsefalse399240399240falsefalsefalsetruefalseSharesxbrli:sharesItemTypesharesThe number of shares into which fully or partially vested stock options outstanding as of the balance-sheet date can be currently converted under the option plan.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 123R
-Paragraph A240
-Subparagraph b(1)(c), d(2)
truefalse9false0us-gaap_ShareBasedCompensationArrangementByShareBasedPaymentAwardNumberOfSharesAvailableForGrantus-gaaptruenainstantNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalsetotallabel<
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/Cell>3truefalsefalse28849432884943falsefalsefalsetruefalse4truefalsefalse17671011767101falsefalsefalsetruefalse<
/hasScenarios>5truefalsefalse21104182110418falsefalsefalsetruefalseSharesxbrli:sharesItemTypesharesThe difference between the maximum number of shares authorized for issuance under the plan (including the effects of amendments and adjustments), and the sum of: 1) the number of shares already issued upon exercise of options or other share-based awards under the plan, and 2) shares reserved for issuance on g
ranting of outstanding awards, net of cancellations and forfeitures, if applicable.No authoritative reference available.truefalse10false0us-gaap_ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingWeightedAverageExercisePriceus-gaaptruenainstantNo definition available.falsefalsefalsefalsefalsefalsefalsetru
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-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 123R
-Paragraph A240
-Subparagraph b(1)(a)
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/hasSegments>false5truefalsefalse37.7437.74falsetruefalsetruefalseEPSus-types:perShareItemTypedecimalShare based compensation arrangement by share based payment award weighted average exercise price exercised.No authoritative reference available.falsetrue13false0us-gaap_ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsForfeituresAndExpirationsInPeriodWeightedAverageExercisePriceus-gaaptruenadurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalsetotallabel1falsefalsefalse00falsefalsefalsetruefalse2falsefalsefalse00falsefalsefalsetruefalse3falsefal
sefalse00falsefalsefalsetruefalse4truefalsefalse62.1862.18falsetruefalsetruefalse5falsefals
efalse00falsefalsefalsetruefalseEPSus-types:perShareItemTypedecimalFor presentations that combine terminations, the weighted average price of expired options and the price at which grantees could have acquired the underlying shares with respect to stock options that were terminated during the reporting period due to noncompliance with plan terms during the reporting period .No authoritative reference available.truetrue14false0us-gaap_ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingWeightedAverageExercisePriceus-gaaptruenainstantNo definition available.falsefalsefalsefalsefalsefalsefalsefalsetruefalseperiodendlabel1truefalsefalse42.9342.93falsetruefalsetruefalse2truefalsefalse57.2157.21falsetruefalsetrue
false3truefalsefalse57.2157.21falsetruefalsetruefalse4falsefalsefalse00falsefalsefalsetruef
alse5truefalsefalse65.665.6falsetruefalsetruefalseEPSus-types:perShareItemTypedecimalThe weighted average price as of the beginning of the year at which grantees can acquire the shares reserved for issuance under the stock option plan.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 123R
-Paragraph A240
-Subparagraph b(1)(a)
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false5falsefalsefalse00falsefalsefalsetruefalseEPSus-types:perShareItemTypedecimalThe weighted-average price as of the balance sheet date at which grantees can acquire the shares reserved for issuance on vested portions of options outstanding and currently exercisable under the stock option plan.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 123R
-Paragraph A240
-Subparagraph b(1)(c)
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40
R49.xml
IDEA: Other Assets (Details)
2.2.0.25falsefalse0604 - Disclosure - Other Assets (Details)truefalseIn Millionsfalse1falsefalseUSDfalsefalse12/31/2010
USD ($)
$BalanceAsOf_31Dec2010http://www.sec.gov/CIK0001424847instant2010-12-31T00:00:000001-01-01T00:00:00USDStandardhttp://www.xbrl.org/2003/iso4217USDiso42170SharesStandardhttp://www.xbrl.org/2003/instancesharesxbrli0PureStandardhttp://www.xbrl.org/2003/instancepurexbrli0USDUSD$2falsefalseUSDfalsefalse12/31/2009
USD ($)
$BalanceAsOf_31Dec2009http://www.sec.gov/CIK0001424847instant2009-12-31T00:00:000001-01-01T00:00:00USDStandardhttp://www.xbrl.org/2003/iso4217USDiso42170SharesStandardhttp://www.xbrl.org/2003/instancesharesxbrli0PureStandardhttp://www.xbrl.org/2003/instancepurexbrli0USDUSD$3true0us-gaap_OtherAssetsNoncurrentAbstractus-gaaptruenadurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalseverboselabel1falsefalsefalse00falsefalsefalsefalsefalse2falsefalsefalse00falsefalsefalsefalsefalseOtherxbrli:stringItemTypestringNo definition available.falsefalse4false0us-gaap_OtherLongTermInvestmentsus-gaaptruedebitinstantNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalseverboselabel1truefalsefalse00falsetruefalsefalsefalse2truefalsefalse1500000015falsetruefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryOther noncurrent investments not otherwise specified in the taxonomy, not including investments in marketable securities.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 12
-Article 5
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-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 03
-Paragraph 1
-Subparagraph f
-Article 7
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/IsRatio>false00falsefalsefalsefalsefalse2truefalsefalse1300000013falsefalsefalsefalsefalseMonetary
Unit>xbrli:monetaryItemTypemonetaryCash and equivalents whose use in whole or in part is restricted for the long-term, generally by contractual agreements or regulatory requirements.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 1
-Article 5
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-Name Statement of Financial Accounting Standard (FAS)
-Number 133
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ElementDataType>xbrli:monetaryItemTypemonetaryCarrying amount as of the balance sheet date of amounts paid in advance which will be charged against earnings in periods after one year or beyond the operating cycle, if longer.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
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-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
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-Article 5
falsefalse27Other Assets (Details) (USD $)MillionsUnKnownUnKnownUnKnownfalsetrueXML
41
R53.xml
IDEA: Credit Agreement [Details]
2.2.0.25falsefalse0608 - Disclosure - Credit Agreement [Details]truefalseIn Millionsfalse1falsefalseUSDfalsefalse1/1/2010 - 12/31/2010
USD ($)
USD ($) / shares
$Jan-01-2010_Dec-31-2010http://www.sec.gov/CIK0001424847duration2010-01-01T00:00:002010-12-31T00:00:00USDStandardhttp://www.xbrl.org/2003/iso4217USDiso42170USDEPSDividehttp://www.xbrl.org/2003/iso4217USDiso4217http://www.xbrl.org/2003/instancesharesxbrli0PureStandardhttp://www.xbrl.org/2003/instancepurexbrli0SharesStandardhttp://www.xbrl.org/2003/instancesharesxbrli0USDUSD$2falsefalseUSDfalsefalse3/26/2010
USD ($)
$BalanceAsOf_26Mar2010http://www.sec.gov/CIK0001424847instant2010-03-26T00:00:000001-01-01T00:00:00USDStandardhttp://www.xbrl.org/2003/iso4217USDiso42170USDUSD$3true0lo_CreditAgreementTextualsAbstractlofalsenadurationCredit Agreement Textuals Abstract.falsefalsefalsefalsefalsefalsefalsefalsefalsefalseverboselabel1falsefalsefalse00falsefalsefalsefalsefalse2falsefalsefalse00falsefalsefalsefalsefalseOtherxbrli:stringItemTypestringCredit Agreement Textuals Abstract.falsefalse4false0us-gaap_LineOfCreditFacilityMaximumBorrowingCapacityus-gaaptruecreditinstantNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalseverboselabel1falsefalsefalse00falsefalsefalsefalsefalse2truefalsefalse185000000185falsetruefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryMaxi
mum borrowing capacity under the credit facility without consideration of any current restrictions on the amount that could be borrowed or the amounts currently outstanding under the facility.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 129
-Paragraph 2, 4
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-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 19, 22
-Article 5
falsefalse5false0us-gaap_LineOfCreditFacilityInitiationDateus-gaaptruenadurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalseverboselabel1falsefalse
IsRatio>false002010-03-262010-03-26falsefalsefalsefalsefalse2falsefalsefalse00falsefalsefalsefalsefalseOtherus-types:dateStringItemTypenormalizedstringReflects when the credit facility first became available, which may be presented in a variety of ways (year, month and year, day, month and year, quarter).Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 129
-Paragraph 2, 4
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-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
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-Article 5
falsefalse6false0us-gaap_LineOfCreditFacilityExpirationDateus-gaaptruenadurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalseverboselabel1falsefalsefalse002013-03-262013-03-26falsefalsefalsefalsefalse2falsefalsefalse00falsefalsefalsefalsefalseOtherus-types:dateStringItemTypenormalizedstringReflects when the credit facility terminates, which may be presented in a variety of ways (year, month and year, day, month and year, quarter).Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 129
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-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 19, 22
-Article 5
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reditinstantNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalseverboselabel1truefalsefalse00falsetruefalsefalsefalse2falsefalsefalse00falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryThe carrying value as of the balance sheet date of the current portion of long-term obligations drawn from a line of credit, which is a bank's commitment to make loans up to a specific amount. Examples of items that might be included in the a
pplication of this element may consist of letters of credit, standby letters of credit, and revolving credit arrangements, under which borrowings can be made up to a maximum amount as of any point in time conditional on satisfaction of specified terms before, as of and after the date of drawdowns on the line. Includes short-term obligations that would normally be classified as current liabilities but for which (a) postbalance sheet date issuance of a long term obligation to refinance the short term obligation on a long term basis, or (b) the enterprise has entered into a financing agreement that clearly permits the enterprise to refinance the short-term obligation on a long term basis and the following conditions are met (1) the agreement does not expire within 1 year and is not cancelable by the lender except for violation of an objectively determinable provision, (2) no violation exists at the BS date, and (3) the lender has entered into the financing agreement is expected to be financially capable of hono
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-Name Regulation S-X (SX)
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falsefalse27Credit Agreement [Details] (USD $)MillionsUnKnownUnKnownUnKnownfalsetrueXML
42
R18.xml
IDEA: Long Term Debt
2.2.0.25falsefalse0209 - Disclosure - Long Term Debttruefalsefalse1falsefalseUSDfalsefalse1/1/2010 - 12/31/2010
USD ($)
USD ($) / shares
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<!-- Begin Block Tagged Note 9 - us-gaap:LongTermDebtTextBlock-->
<div style="margin-left: 0%">
<div style="margin-top: 12pt; font-size: 1pt"> 
</div>
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<tr>
<td width="3%"></td>
<td width="97%"></td>
</tr>
<tr valign="top">
<td>
<b><font style="font-family: 'Times New Roman', Times">9.  </font></b>
</td>
<td>
<b><font style="font-family: 'Times New Roman', Times">Long-Term
Debt</font></b>
</td>
</tr>
</table>
<div style="margin-top: 6pt; font-size: 1pt"> 
</div>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
Long-term debt, net of interest rate swaps, consisted of the
following:
</div>
<div style="margin-top: 6pt; font-size: 1pt"> 
</div>
<table border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent; text-align: left">
<!-- Table Width Row BEGIN -->
<tr style="font-size: 1pt" valign="bottom">
<td width="73%"> </td><!-- colindex=01 type=maindata -->
<td width="2%"> </td><!-- colindex=02 type=gutter -->
<td width="1%" align="right"> </td><!-- colindex=02 type=lead -->
<td width="9%" align="right"> </td><!-- colindex=02 type=body -->
<td width="1%" align="left"> </td><!-- colindex=02 type=hang1 -->
<td width="3%"> </td><!-- colindex=03 type=gutter -->
<td width="1%" align="right"> </td><!-- colindex=03 type=lead -->
<td width="9%" align="right"> </td><!-- colindex=03 type=body -->
<td width="1%" align="left"> </td><!-- colindex=03 type=hang1 -->
</tr>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>December 31,<br />
</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>December 31,<br />
</b>
</td>
<td>
 
</td>
</tr>
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>2010</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>2009</b>
</td>
<td>
 
</td>
</tr>
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="6" align="center" valign="bottom">
<b>(In millions)</b>
</td>
<td>
 
</td>
</tr>
<tr style="line-height: 3pt; font-size: 1pt">
<td> 
</td>
</tr>
<!-- TableOutputBody -->
<tr valign="bottom" style="background: #cceeff">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
2019 Notes — 8.125% Notes due 2019
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
769
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
722
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
2020 Notes — 6.875% Notes due 2020
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
750
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
—
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
2040 Notes — 8.125% Notes due 2040
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
250
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
—
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="font-size: 1pt">
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 20pt">
Total long-term debt
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
1,769
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
722
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="font-size: 1pt">
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td>
 
</td>
</tr>
</table>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
</div>
<div style="margin-top: 6pt; font-size: 1pt"> 
</div>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
In April 2010, Lorillard Tobacco issued $1 billion of
unsecured senior notes in two tranches pursuant to an Indenture,
dated June 23, 2009, and the Second Supplemental Indenture,
dated April 12, 2010 (the “Second Supplemental
Indenture”). The first tranche was $750 million
aggregate principal amount of 6.875% Notes due May 1,
2020 (the “2020 Notes”), and the second tranche was
$250 million aggregate principal amount of
8.125% Notes due May 1, 2040 (the “2040
Notes”). The net proceeds from the issuance will be used
for general corporate purposes, which may include, among other
things, the repurchase, redemption or retirement of securities
including the Company’s common stock, acquisitions,
additions to working capital and capital expenditures.
</div>
<div style="margin-top: 6pt; font-size: 1pt"> 
</div>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
In June 2009, Lorillard Tobacco issued $750 million of
8.125% unsecured senior notes due June 23, 2019 (the
“2019 Notes”) pursuant to an Indenture, dated
June 23, 2009, and First Supplemental Indenture, dated
June 23, 2009 (the “Supplemental Indenture”).
</div>
<div style="margin-top: 6pt; font-size: 1pt"> 
</div>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
Lorillard Tobacco is the principal, wholly-owned operating
subsidiary of the Company and the 2019 Notes, 2020 Notes and
2040 Notes (together, the “Notes”) are unconditionally
guaranteed on a senior unsecured basis by the Company.
</div>
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</div>
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<div align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">
<b>
<font style="font-family: 'Times New Roman', Times">
</font>
</b>
</div>
<div style="margin-top: 0pt; font-size: 1pt">
</div>
<div align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">
<b>
<font style="font-family: 'Times New Roman', Times">
</font>
</b>
</div>
<!-- XBRL Pagebreak End -->
<div style="margin-top: 6pt; font-size: 1pt"> 
</div>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
The interest rate payable on the 2019 Notes is subject to
incremental increases from 0.25% to 2.00% in the event either
Moody’s Investors Services, Inc.
(“Moody’s”), Standard & Poor’s
Ratings Services (“S&P”) or both Moody’s and
S&P downgrade the 2019 Notes below investment grade (Baa3
and BBB- for Moody’s and S&P, respectively). Our
current Moody’s debt rating is Baa2 and our current
S&P debt rating is BBB-, both of which are investment grade.
</div>
<div style="margin-top: 6pt; font-size: 1pt"> 
</div>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
Upon the occurrence of a change of control triggering event,
Lorillard Tobacco will be required to make an offer to
repurchase the Notes at a price equal to 101% of the aggregate
principal amount of the Notes, plus accrued interest. A
“change of control triggering event” occurs when there
is both a “change of control” (as defined in the
Supplemental Indenture) and the Notes cease to be rated
investment grade by both Moody’s and S&P within
60 days of the occurrence of a change of control or public
announcement of the intention to effect a change of control. The
Notes are not entitled to any sinking fund and are not
redeemable prior to maturity. The Notes contain covenants that
restrict liens and sale and leaseback transactions, subject to a
limited exception. At December 31, 2010 and 2009, the
carrying value of the Notes was $1,769 million and
$722 million, respectively, and the fair value was
$1,865 million and $826 million, respectively. The
fair value of the Notes is based on market pricing.
</div>
</div>
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USD ($) / shares
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<td>
 
</td>
<td colspan="6" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>December 31,</b>
</td>
<td>
 
</td>
</tr>
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>2010</b>
</td>
<td>
 
</td>
<td>
 
</td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>2009</b>
</td>
<td>
 
</td>
</tr>
<tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">
 
</td>
<td>
 
</td>
<td colspan="6" align="center" valign="bottom">
<b>(In millions)</b>
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<td>
 
</td>
</tr>
<tr style="line-height: 3pt; font-size: 1pt">
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Land
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
3
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
3
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom">
<td nowrap="nowrap" align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Buildings
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
89
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
87
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
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Equipment
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
573
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
563
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<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="font-size: 1pt">
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td nowrap="nowrap" align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 20pt">
Total
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
665
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
653
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td nowrap="nowrap" align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt">
Accumulated depreciation
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
(422
</td>
<td nowrap="nowrap" align="left" valign="bottom">
)
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td nowrap="nowrap" align="right" valign="bottom">
(416
</td>
<td nowrap="nowrap" align="left" valign="bottom">
)
</td>
</tr>
<tr valign="bottom" style="font-size: 1pt">
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td style="border-top: 1px solid #000000">
 
</td>
<td>
 
</td>
</tr>
<tr valign="bottom">
<td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 20pt">
Plant and equipment, net
</div>
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
243
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
<td>
 
</td>
<td nowrap="nowrap" align="left" valign="bottom">
$
</td>
<td nowrap="nowrap" align="right" valign="bottom">
237
</td>
<td nowrap="nowrap" align="left" valign="bottom">
 
</td>
</tr>
<tr valign="bottom" style="font-size: 1pt">
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td>
 
</td>
<td>
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td style="border-top: 3px double #000000">
 
</td>
<td>
 
</td>
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-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 17
-Article 5
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-Publisher FASB
-Name Statement of Financial Accounting Concepts (CON)
-Number 6
-Paragraph 25
Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 18
-Article 5
Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 03
-Paragraph 12
-Article 7
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-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 19
-Subparagraph a
-Article 5
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-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 20
-Article 5
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-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 03
-Paragraph 15
-Subparagraph b(1)
-Article 7
Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 03
-Paragraph 15
-Article 9
Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 20
-Article 5
Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name FASB Interpretation (FIN)
-Number 48
-Paragraph 15, 21
Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 109
-Section Appendix E
-Paragraph 289
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-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 21
-Article 5
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-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 22
-Article 5
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-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 132R
-Paragraph 5
-Subparagraph c
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-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 132R
-Paragraph 6
Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 132R
-Paragraph 3
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-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 24
-Article 5
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e35210000003521falsefalsefalsefalsefalse2truefalsefalse24880000002488falsefalsefalsefalsefalse3falsefalsefalse00falsefalsefalsefalsefalse4falsefalsefalse00falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetarySum of the carrying amounts as of the balance sheet date of all liabilities that are recognized. Liabilities are probable future sacrifices of economic benefits arising from present obligations of an entity to transfer assets or provide services to other entities in the future.No authoritative reference available.truefalse28true0us-gaap_StockholdersEquityAbstractus-gaaptruenadurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalseverboselabel1falsefalsefalse00falsefalsefalsefalsefalse2falsefalsefalse00falsefalsefalsefalsefalse3falsefalsefalse00falsefalsefalsefalsefalse4falsefalsefalse00falsefalsefalsefalsefalseOtherxbrli:stringItemTypestringNo definition available.falsefalse29false0us-gaap_CommonStockValueus-gaaptruecreditinstantNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalseterselabel1truefalsefalse20000002falsefalsefalsefalsefalse2truefalsefalse20000002falsefalsefalsefalsefalse3falsefalsefalse00falsefalsefalsefalsefalse4falsefalsefalse00falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryDollar value of issued common stock whether issued at par value, no par or stated value. This item includes treasury stock repurchased by the entity. Note: elements for number of common shares, par value and other disclosure concepts are in another section within stockholders' equity.Reference 1: http://www.x
brl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 30
-Article 5
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sefalse00falsefalsefalsefalsefalse4falsefalsefalse00falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryValue received from shareholders in common stock-related transactions that are in excess of par value or stated value and amounts received from other stock-related transactions. Includes only common stock transactions (excludes preferred stock transactions). May be called contributed capital, capital in excess of par, capital surplus, or paid-in capital.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 31
-Article 5
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sefalse16660000001666falsefalsefalsefalsefalse2truefalsefalse12820000001282falsefalsefalsefalsefalse3falsefalsefalse00falsefalsefalsefalsefalse4falsefalsefalse00falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryThe cumulative amount of the reporting entity's undistributed earnings or deficit.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Principles Board Opinion (APB)
-Number 12
-Paragraph 10
Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 31
-Article 5
Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 04
-Article 3
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alsefalse-109000000-109falsefalsefalsefalsefalse2truefalsefalse-121000000-121falsefalsefalsefalsefalse3falsefalsefalse00falsefalsefalsefalsefalse4falsefalsefalse00falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryAccumulated change in equity from transactions and other events and circumstances from non-owner sources, net of tax effect, at fiscal year-end. Excludes Net Income (Loss), and accumulated changes in equity from transactions resulting from investments by owners and distributions to owners. Includes foreign currency translation items, certain pension adjustments, and unrealized gains and losses on certain investments in debt and equity securities as well as changes in the fair value of derivatives related to the effective portion of a designated cash flow hedge.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 04
-Article 3
Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Principles Board Opinion (APB)
-Number 12
-Paragraph 10
Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 130
-Paragraph 14, 17, 26
Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 31
-Article 5
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aryxbrli:monetaryItemTypemonetaryValue of common and preferred shares of an entity that were issued, repurchased by the entity, and are held in its treasury. Treasury stock is issued but is not outstanding. This stock has no voting rights and receives no dividends. Note that treasury stock may be recorded at its total cost or separately as par (or stated) value and additional paid in capital. Note: number of treasury shares concept is in another section within stockholders' equity.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name FASB Technical Bulletin (FTB)
-Number 85-6
-Paragraph 3
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Unit>xbrli:monetaryItemTypemonetaryTotal of all Stockholders' Equity (deficit) items, net of receivables from officers, directors owners, and affiliates of the entity which are attributable to the parent. The amount of the economic entity's stockholders' equity attributable to the parent excludes the amount of stockholders' equity which is allocable to that ownership interest in subsidiary equity which is not attributable to the parent (noncontrolling interest, minority interest). This excludes temporary equity and is sometimes called permanent equity.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Research Bulletin (ARB)
-Number 51
-Paragraph A3
-Appendix A
Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Staff Accounting Bulletin (SAB)
-Number Topic 4
-Section E
Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 29, 30, 31
-Article 5
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-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 32
-Article 5
Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 03
-Paragraph 25
-Article 7
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false00falsefalsefalsefalsefalse2falsefalsefalse00falsefalsefalsefalsefalse3falsefalsefalse00falsefalsefalsefalsefalse4falsefalsefalse00falsefalsefalsefalsefalse5falsefalseUSDtruefalse{dei_LegalEntityAxis} : Parent [Member]
12/31/2010
USD ($)
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12/31/2009
USD ($)
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12/31/2008
USD ($)
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12/31/2007
USD ($)
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No definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalseverboselabel1truefalsefalse163000000163falsefalsefalsefalsefalse2truefalsefalse130000000130falsefalsefalsefalsefalse3truefalsefalse1900000019falsefalsefalsefalsefalse4truefalsefalse6400000064falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryIncludes currency on hand as well as demand deposits with banks or financial institutions. It also includes other kinds of accounts that have the general characteristics of demand deposits in that the Entity may deposit additional funds at any time and a
lso effectively may withdraw funds at any time without prior notice or penalty. Cash equivalents, excluding items classified as marketable securities, include short-term, highly liquid investments that are both readily convertible to known amounts of cash, and so near their maturity that they present minimal risk of changes in value because of changes in interest rates. Generally, only investments with original maturities of three months or less qualify under that definition. Original maturity means original maturity to the entity holding the investment. For example, both a three-month US Treasury bill and a three-year Treasury note purchased three months from maturity qualify as cash equivalents. However, a Treasury note purchased three years ago does not become a cash equivalent when its remaining maturity is three months. Compensating balance arrangements that do not legally restrict the withdrawal or usage of cash amounts may be reported as Cash and Cash Equivalents, while legally restricted deposits hel
d as compensating balances against borrowing arrangements, contracts entered into with others, or company statements of intention with regard to particular deposits should not be reported as cash and cash equivalents.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 95
-Paragraph 7, 26
Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 95
-Paragraph 8, 9
Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 95
-Paragraph 7
-Footnote 1
Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 1
-Article 5
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-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 3
-Subparagraph a(1)
-Article 5
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-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 4
-Article 5
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Unit>xbrli:monetaryItemTypemonetaryCarrying amounts due as of the balance sheet date from parties or arising from transactions not otherwise specified in the taxonomy.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 8
-Article 5
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efalsefalse3falsefalsefalse00falsefalsefalsefalsefalse4falsefalsefalse00falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryCarrying amount (lower of cost or market) as of the balance sheet date of inventories less all valuation and other allowances. Excludes noncurrent inventory balances (expected to remain on hand past one year or one operating cycle, if longer).No authoritative reference available.falsefalse43false0us-gaap_DeferredTaxAssetsNetCurrentus-gaaptruedebitinstantNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalseverboselabel1truefalsefalse00falsefalsefalsefalsefalse2truefalsefalse00falsefalsefalsefalsefalse3falsefalsefalse00falsefalsefalsefalsefalse4falsefalsefalse00falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryThe current portion of the aggregate tax effects as of the balance sheet date of all future tax deductions arising from temporary differences between tax basis and generally accepted accounting principles basis recognition of assets, liabilities, revenues and expenses, which can only be deducted for tax purposes when permitted under enacted
tax laws; after deducting the allocated valuation allowance, if any, to reduce such amount to net realizable value. Deferred tax liabilities and assets shall be classified as current or noncurrent based on the classification of the related asset or liability for financial reporting. A deferred tax liability or asset that is not related to an asset or liability for financial reporting, including deferred tax assets related to carryforwards, shall be classified according to the expected reversal date of the temporary difference. An unrecognized tax benefit that is directly related to a position taken in a tax year that results in a net operating loss carryforward should be presented as a reduction of the related deferred tax asset.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 109
-Paragraph 41, 42, 43
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aryItemTypemonetaryAggregate carrying amount, as of the balance sheet date, of current assets not separately presented elsewhere in the balance sheet. Current assets are expected to be realized or consumed within one year (or the normal operating cycle, if longer).Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 8
-Article 5
truefalse45false0us-gaap_AssetsCurrentus-gaaptruedebitinstantNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalseverboselabel1truefalsefalse164000000164falsefalsefalsefalsefalse2truefalsefalse130000000130falsefalsefalsefalsefalse3falsefalsefalse00falsefalsefalsefalsefalse4falsefalsefalse00falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetarySum of the carrying amounts as of the balance sheet date of all assets that are expected to be realized in cash, sold, or consumed within one year (or the normal operating cycle, if longer). Assets are probable future economic benefits obtained or controlled by an entity as a result of past transactions or events.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 9
-Article 5
falsefalse46false0lo_InvestmentInSubsidiarieslofalsedebitinstantInvestment in subsidiaries.falsefalsefalsefalsefalsefalsefalsefalsefalsefalseverboselabel1truefalsefalse-387000000-387falsefalsefalsefalsefalse2truefalsefalse-20000000-20falsefalsefalsefalsefalse3falsefalsefalse00falsefalsefalsefalsefalse4falsefalsefalse00falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryInvestment in subsidiaries.No authoritative reference available.falsefalse47false0us-gaap_PropertyPlantAndEquipmentNetus-gaaptruedebitinstantNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalseverboselabel1truefalsefalse00falsefalsefalsefalsefalse2truefalsefalse00falsefalse<
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-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 13
-Subparagraph a
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Reference 2: http://www.xbrl.org/2003/role/presentationRef
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-Name Statement of Financial Accounting Standard (FAS)
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Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 03
-Paragraph 8
-Article 7
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-Name Statement of Financial Accounting Standard (FAS)
-Number 132R
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-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 109
-Paragraph 41, 42, 43
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etaryItemTypemonetaryAggregate carrying amount, as of the balance sheet date, of noncurrent assets not separately disclosed in the balance sheet due to materiality considerations. Noncurrent assets are expected to be realized or consumed after one year (or the normal operating cycle, if longer).Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 17
-Article 5
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-Publisher FASB
-Name Statement of Financial Accounting Concepts (CON)
-Number 6
-Paragraph 25
Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 18
-Article 5
Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 03
-Paragraph 12
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-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 19
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-Name Regulation S-X (SX)
-Number 210
-Section 02
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-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 03
-Paragraph 15
-Subparagraph b(1)
-Article 7
Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 03
-Paragraph 15
-Article 9
Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 20
-Article 5
Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name FASB Interpretation (FIN)
-Number 48
-Paragraph 15, 21
Reference 5: http://www.xbrl.org/2003/role/presentationRef
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-Name Statement of Financial Accounting Standard (FAS)
-Number 109
-Section Appendix E
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-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 21
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-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 22
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-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 132R
-Paragraph 5
-Subparagraph c
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-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 132R
-Paragraph 6
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-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 132R
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-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 24
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lsefalsefalsefalsefalsefalsefalseverboselabel1falsefalsefalse00falsefalsefalsefalsefalse2falsefalsefalse00falsefalsefalsefalsefalse3falsefalsefalse00falsefalsefalsefalsefalse4falsefalsefalse00falsefalsefalsefalsefalseOtherxbrli:stringItemTypestringNo definition available.falsefalse64false0us-gaap_CommonStockValueus-gaaptruecreditinstantNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalseterselabel1truefalsefalse20000002falsefalsefalsefalsefalse2truefalsefalse20000002falsefalsefalsefalsefalse3falsefalsefalse00falsefalsefalsefalsefalse4falsefalsefalse00falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryDollar value of issued common stock whether issued at par value, no par or stated value. This item includes treasury stock repurchased by the entity. Note: elements for number of common shares, par value and other disclosure concepts are in another section within stockholders' equity.Reference 1: http://www.xbrl.org/20
03/role/presentationRef
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-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 30
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sefalse00falsefalsefalsefalsefalse4falsefalsefalse00falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryValue received from shareholders in common stock-related transactions that are in excess of par value or stated value and amounts received from other stock-related transactions. Includes only common stock transactions (excludes preferred stock transactions). May be called contributed capital, capital in excess of par, capital surplus, or paid-in capital.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 31
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-Publisher AICPA
-Name Accounting Principles Board Opinion (APB)
-Number 12
-Paragraph 10
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-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 31
-Article 5
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-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 04
-Article 3
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alsefalse-109000000-109falsefalsefalsefalsefalse2truefalsefalse-121000000-121falsefalsefalsefalsefalse3falsefalsefalse00falsefalsefalsefalsefalse4falsefalsefalse00falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryAccumulated change in equity from transactions and other events and circumstances from non-owner sources, net of tax effect, at fiscal year-end. Excludes Net Income (Loss), and accumulated changes in equity from transactions resulting from investments by owners and distributions to owners. Includes foreign currency translation items, certain pension adjustments, and unrealized gains and losses on certain investments in debt and equity securities as well as changes in the fair value of derivatives related to the effective portion of a designated cash flow hedge.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 04
-Article 3
Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Principles Board Opinion (APB)
-Number 12
-Paragraph 10
Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 130
-Paragraph 14, 17, 26
Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 31
-Article 5
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aryxbrli:monetaryItemTypemonetaryValue of common and preferred shares of an entity that were issued, repurchased by the entity, and are held in its treasury. Treasury stock is issued but is not outstanding. This stock has no voting rights and receives no dividends. Note that treasury stock may be recorded at its total cost or separately as par (or stated) value and additional paid in capital. Note: number of treasury shares concept is in another section within stockholders' equity.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name FASB Technical Bulletin (FTB)
-Number 85-6
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-Publisher AICPA
-Name Accounting Research Bulletin (ARB)
-Number 51
-Paragraph A3
-Appendix A
Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Staff Accounting Bulletin (SAB)
-Number Topic 4
-Section E
Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 29, 30, 31
-Article 5
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-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 32
-Article 5
Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 03
-Paragraph 25
-Article 7
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12/31/2010
USD ($)
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12/31/2009
USD ($)
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12/31/2008
USD ($)
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12/31/2007
USD ($)
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d also effectively may withdraw funds at any time without prior notice or penalty. Cash equivalents, excluding items classified as marketable securities, include short-term, highly liquid investments that are both readily convertible to known amounts of cash, and so near their maturity that they present minimal risk of changes in value because of changes in interest rates. Generally, only investments with original maturities of three months or less qualify under that definition. Original maturity means original maturity to the entity holding the investment. For example, both a three-month US Treasury bill and a three-year Treasury note purchased three months from maturity qualify as cash equivalents. However, a Treasury note purchased three years ago does not become a cash equivalent when its remaining maturity is three months. Compensating balance arrangements that do not legally restrict the withdrawal or usage of cash amounts may be reported as Cash and Cash Equivalents, while legally restricted deposits
held as compensating balances against borrowing arrangements, contracts entered into with others, or company statements of intention with regard to particular deposits should not be reported as cash and cash equivalents.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 95
-Paragraph 7, 26
Reference 2: http://www.xbrl.org/2003/role/presentationRef
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-Name Statement of Financial Accounting Standard (FAS)
-Number 95
-Paragraph 8, 9
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-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 95
-Paragraph 7
-Footnote 1
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-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 1
-Article 5
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ElementDataType>xbrli:monetaryItemTypemonetaryAmount due from customers or clients, within one year of the balance sheet date (or the normal operating cycle, whichever is longer), for goods or services (including trade receivables) that have been delivered or sold in the normal course of business, reduced to the estimated net realizable fair value by an allowance established by the entity of the amount it deems uncertain of collection.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 3
-Subparagraph a(1)
-Article 5
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-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 4
-Article 5
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Monetaryxbrli:monetaryItemTypemonetaryCarrying amounts due as of the balance sheet date from parties or arising from transactions not otherwise specified in the taxonomy.Reference 1: http://www.xbrl.org/2003/role/presentationRef
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-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 8
-Article 5
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-Number 210
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-Number 210
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-Number 210
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-Name Statement of Financial Accounting Standard (FAS)
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-Number 210
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-Number 210
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-Name Regulation S-X (SX)
-Number 210
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-Name Statement of Financial Accounting Standard (FAS)
-Number 130
-Paragraph 14, 17, 26
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-Name Regulation S-X (SX)
-Number 210
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-Name Accounting Research Bulletin (ARB)
-Number 51
-Paragraph A3
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Reference 2: http://www.xbrl.org/2003/role/presentationRef
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-Name Staff Accounting Bulletin (SAB)
-Number Topic 4
-Section E
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-Name Regulation S-X (SX)
-Number 210
-Section 02
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-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 32
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12/31/2009
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12/31/2008
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12/31/2007
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nd deposits in that the Entity may deposit additional funds at any time and also effectively may withdraw funds at any time without prior notice or penalty. Cash equivalents, excluding items classified as marketable securities, include short-term, highly liquid investments that are both readily convertible to known amounts of cash, and so near their maturity that they present minimal risk of changes in value because of changes in interest rates. Generally, only investments with original maturities of three months or less qualify under that definition. Original maturity means original maturity to the entity holding the investment. For example, both a three-month US Treasury bill and a three-year Treasury note purchased three months from maturity qualify as cash equivalents. However, a Treasury note purchased three years ago does not become a cash equivalent when its remaining maturity is three months. Compensating balance arrangements that do not legally restrict the withdrawal or usage of cash amounts may be
reported as Cash and Cash Equivalents, while legally restricted deposits held as compensating balances against borrowing arrangements, contracts entered into with others, or company statements of intention with regard to particular deposits should not be reported as cash and cash equivalents.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 95
-Paragraph 7, 26
Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 95
-Paragraph 8, 9
Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 95
-Paragraph 7
-Footnote 1
Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 1
-Article 5
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DisplayZeroAsNone>false00falsefalsefalsefalsefalse4falsefalsefalse00falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryAmount due from customers or clients, within one year of the balance sheet date (or the normal operating cycle, whichever is longer), for goods or services (including trade receivables) that have been delivered or sold in the normal course of business, reduced to the estimated net realizable fair value by an allowance established by the entity of the amount it deems uncertain of collection.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 3
-Subparagraph a(1)
-Article 5
Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 4
-Article 5
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/Unit>xbrli:monetaryItemTypemonetaryCarrying amounts due as of the balance sheet date from parties or arising from transactions not otherwise specified in the taxonomy.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 8
-Article 5
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onetaryItemTypemonetaryIntercompany receivables.No authoritative reference available.falsefalse112false0us-gaap_InventoryNetus-gaaptruedebitinstantNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalseverboselabel1truefalsefalse00falsefalsefalsefalsefalse2truefalsefalse00falsefalsefalsefalsefalse3falsefalsefalse00falsefalsefalsefalsefalse4falsefalsefalse00falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryCarrying amount (lower of cost or market) as of the balance sheet date of inventories less all valuation and other allowances. Excludes noncurrent inventory balances (expected to remain on hand past one year or one operating cycle, if longer).No authoritative reference available.falsefalse113false0us-gaap_DeferredTaxAssetsNetCurrentus-gaaptruedebitinstantNo definition ava
ilable.falsefalsefalsefalsefalsefalsefalsefalsefalsefalseverboselabel1truefalsefalse10000001falsefalsefalsefalsefalse2truefalsefalse00falsefalsefalsefalsefalse3falsefalsefalse00falsefalsefalsefalsefalse4falsefalsefalse00falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryThe current portion of the aggregate tax effects as of the balance sheet date of all future tax deductions arising from temporary differences between tax basis and generally accepted accounting principles basis recognition of assets, liabilities, revenues and expenses, which can only be deducted for tax purposes when permitt
ed under enacted tax laws; after deducting the allocated valuation allowance, if any, to reduce such amount to net realizable value. Deferred tax liabilities and assets shall be classified as current or noncurrent based on the classification of the related asset or liability for financial reporting. A deferred tax liability or asset that is not related to an asset or liability for financial reporting, including deferred tax assets related to carryforwards, shall be classified according to the expected reversal date of the temporary difference. An unrecognized tax benefit that is directly related to a position taken in a tax year that results in a net operating loss carryforward should be presented as a reduction of the related deferred tax asset.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 109
-Paragraph 41, 42, 43
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taryItemTypemonetaryAggregate carrying amount, as of the balance sheet date, of current assets not separately presented elsewhere in the balance sheet. Current assets are expected to be realized or consumed within one year (or the normal operating cycle, if longer).Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 8
-Article 5
truefalse115false0us-gaap_AssetsCurrentus-gaaptruedebitinstantNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalseverboselabel1truefalsefalse720000000720falsefalsefalsefalsefalse2truefalsefalse591000000591falsefalsefalsefalsefalse3falsefalsefalse00falsefalsefalsefalsefalse4falsefalsefalse00falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetarySum of the carrying amounts as of the balance sheet date of all assets that are expected to be realized in cash, sold, or consumed within one year (or the normal operating cycle, if longer). Assets are probable future economic benefits obtained or controlled by an entity as a result of past transactions or events.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 9
-Article 5
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taryItemTypemonetaryInvestment in subsidiaries.No authoritative reference available.falsefalse117false0us-gaap_PropertyPlantAndEquipmentNetus-gaaptruedebitinstantNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalse<
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-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 13
-Subparagraph a
-Article 5
Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 12
-Paragraph 5
-Subparagraph b, c
Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 03
-Paragraph 8
-Article 7
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:monetaryItemTypemonetaryCumulative employer's contributions in excess of net pension cost recognized, before the adoption of the recognition provisions of FAS 158. Under FAS 158, prepaid pension costs are no longer recognized in the statement of financial position. Note that there is a separate concept for noncurrent assets relating to defined benefit pension and other defined benefit postretirement plans for use under the recognition provisions of FAS 158.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 132R
-Paragraph 5
-Subparagraph c(4)
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false00falsefalsefalsefalsefalse4falsefalsefalse00falsefalsefalsefalsefalseMonetary<
ElementDataType>xbrli:monetaryItemTypemonetaryThe noncurrent portion as of the balance sheet date of the aggregate carrying amount of all future tax deductions arising from temporary differences between tax basis and generally accepted accounting principles basis recognition of assets, liabilities, revenues and expenses, which can only be deducted for tax purposes when permitted under enacted tax laws; after the valuation allowance, if any, to reduce such amount to net realizable value. Deferred tax liabilities and assets shall be classified as current or noncurrent based on the classification of the related asset or liability for financial reporting. A deferred tax liability or asset that is not related to an asset or liability for financial reporting, including deferred tax assets related to carryforwards, shall be classified according to the expected reversal date of the temporary difference.Refere
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-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 109
-Paragraph 41, 42, 43
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xbrli:monetaryItemTypemonetaryAggregate carrying amount, as of the balance sheet date, of noncurrent assets not separately disclosed in the balance sheet due to materiality considerations. Noncurrent assets are expected to be realized or consumed after one year (or the normal operating cycle, if longer).Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 17
-Article 5
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false00falsefalsefalsefalsefalse4falsefalsefalse00falsefalsefalsefalsefalseMonetaryxbrli:monetar
yItemTypemonetarySum of the carrying amounts as of the balance sheet date of all assets that are recognized. Assets are probable future economic benefits obtained or controlled by an entity as a result of past transactions or events.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Concepts (CON)
-Number 6
-Paragraph 25
Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 18
-Article 5
Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 03
-Paragraph 12
-Article 7
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verboselabel1truefalsefalse00falsefalsefalsefalsefalse2truefalsefalse00falsefalsefalsefalsefalse3falsefalsefalse00falsefalsefalsefalsefalse4falsefalsefalse00falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryCarrying value as of the balance sheet date of liabilities incurred (and for which invoices have typically been received) and payable to vendors for goods and services received that are used in an entity's business. Used to reflect the current portion of the liabilities (due within one year or within the normal operating cycle if longer).Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 19
-Subparagraph a
-Article 5
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124false0us-gaap_AccruedLiabilitiesCurrentus-gaaptruecreditinstantNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalseverboselabel1truefalsefalse-66000000-66falsefalsefalsefalsefalse2truefalsefalse00falsefalsefalsefalsefalse3falsefalse<
/IsRatio>false00falsefalsefalsefalsefalse4falsefalsefalse00falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryCarrying value as of the balance sheet date of obligations incurred and payable, pertaining to costs that are statutory in nature, are incurred on contractual obligations, or accumulate over time and for which invoices have not yet been received or will not be rendered. Examples include taxes, interest, rent and utilities. Used to reflect the current portion of the liabilities (due within one year or within the normal operating cycle if longer).Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 20
-Article 5
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00falsefalsefalsefalsefalse4falsefalsefalse00falsefalsefalsefalsefalseMonetaryxbrli:monetaryItem
TypemonetaryIntercompany payables.No authoritative reference available.falsefalse126false0lo_SettlementCostslofalsecreditinstantSettlement costsfalsefalsefalsefalsefalsefalsefalsefalsefalsefalseverboselabel1truefalsefalse00falsefalsefalsefalsefalse2truefalsefalse00falsefalsefalsefalsefalse3falsefalsefalse00falsefalsefalsefalsefalse4falsefalsefalse00falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetarySettlement costsNo authoritative reference available.falsefalse127false0us-gaap_AccruedIncomeTaxesCurrentus-gaaptruecreditinstantNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalsetotallabel1truefalsefalse60000006falsefalsefalsefalsefalse2truefalsefalse00falsefalsefalsefalsefalse3falsefalsefalse00falsefalsefalsefalsefalse4falsefalsefalse00falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryCarrying amount as of the balance sheet date of the unpaid sum of the known and estimated amounts payable to satisfy all currently due domestic and foreign income tax obligations.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 03
-Paragraph 15
-Subparagraph b(1)
-Article 7
Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 03
-Paragraph 15
-Article 9
Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 20
-Article 5
Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name FASB Interpretation (FIN)
-Number 48
-Paragraph 15, 21
Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 109
-Section Appendix E
-Paragraph 289
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netaryItemTypemonetaryTotal obligations incurred as part of normal operations that are expected to be paid during the following twelve months or within one business cycle, if longer.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 21
-Article 5
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xbrli:monetaryItemTypemonetarySum of the carrying values as of the balance sheet date of all long-term debt, which is debt initially having maturities due after one year from the balance sheet date or beyond the operating cycle, if longer, but excluding the portions thereof scheduled to be repaid within one year (current maturities) or the normal operating cycle, if longer, and after deducting unamortized discount or premiums, if any.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 22
-Article 5
falsefalse130false0us-gaap_PensionAndOtherPostretirementDefinedBenefitPlansLiabilitiesNoncurrentus-gaaptruecreditinstantNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalseverboselabel1true
falsefalse00falsefalsefalsefalsefalse2truefalsefalse00falsefalsefalsefalsefalse3falsefalsefalse00falsefalsefalsefalsefalse4falsefalsefalse00falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryThis represents the noncurrent liability for underfunded plans recognized in the balance sheet that is associated with the defined benefit pension plans and other postretirement defined benefit plans.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 132R
-Paragraph 5
-Subparagraph c
Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 132R
-Paragraph 6
Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 132R
-Paragraph 3
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falsefalse1200000012falsefalsefalsefalsefalse2truefalsefalse1300000013falsefalsefalsefalsefalse3falsefalsefalse00falsefalsefalsefalsefalse4falsefalsefalse00falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryAggregate carrying amount, as of the balance sheet date, of noncurrent obligations not separately disclosed in the balance sheet due to materiality considerations. Noncurrent liabilities are expected to be paid after one year (or the normal operating cycle, if longer).Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 24
-Article 5
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i:monetaryItemTypemonetarySum of the carrying amounts as of the balance sheet date of all liabilities that are recognized. Liabilities are probable future sacrifices of economic benefits arising from present obligations of an entity to transfer assets or provide services to other entities in the future.No authoritative reference available.truefalse133true0us-gaap_StockholdersEquityAbstractus-gaaptruenadurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalseverboselabel1falsefalsefalse00falsefalsefalsefalsefalse2falsefalsefalse00falsefalsefalsefalsefalse3falsefalsefalse00falsefalsefalsefalsefalse4falsefalsefalse0<
RoundedNumericAmount>0falsefalsefalsefalsefalseOtherxbrli:stringItemTypestringNo definition available.falsefalse134false0us-gaap_CommonStockValueus-gaaptruecreditinstantNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalseterselabel1truefalsefalse00falsefalsefalsefalsefalse2truefalsefalse00falsefalsefalsefalsefalse3falsefalsefalse00falsefalsefalsefalsefalse4fa
lsefalsefalse00falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryDollar value of issued common stock whether issued at par value, no par or stated value. This item includes treasury stock repurchased by the entity. Note: elements for number of common shares, par value and other disclosure concepts are in another section within stockholders' equity.Reference 1: http://www.xbrl.org/2003/ro
le/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 30
-Article 5
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lsefalse00falsefalsefalsefalsefalse4falsefalsefalse00falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryValue received from shareholders in common stock-related transactions that are in excess of par value or stated value and amounts received from other stock-related transactions. Includes only common stock transactions (excludes preferred stock transactions). May be called contributed capital, capital in excess of par, capital surplus, or paid-in capital.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 31
-Article 5
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lsefalse558000000558falsefalsefalsefalsefalse2truefalsefalse383000000383falsefalsefalsefalsefalse3falsefalsefalse00falsefalsefalsefalsefalse4falsefalsefalse00falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryThe cumulative amount of the reporting entity's undistributed earnings or deficit.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Principles Board Opinion (APB)
-Number 12
-Paragraph 10
Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 31
-Article 5
Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 04
-Article 3
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/IsRatio>false00falsefalsefalsefalsefalse4falsefalsefalse00falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryAccumulated change in equity from transactions and other events and circumstances from non-owner sources, net of tax effect, at fiscal year-end. Excludes Net Income (Loss), and accumulated changes in equity from transactions resulting from investments by owners and distributions to owners. Includes foreign currency translation items, certain pension adjustments, and unrealized gains and losses on certain investments in debt and equity securities as well as changes in the fair value of derivatives related to the effective portion of a designated cash flow hedge.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 04
-Article 3
Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Principles Board Opinion (APB)
-Number 12
-Paragraph 10
Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 130
-Paragraph 14, 17, 26
Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 31
-Article 5
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xbrli:monetaryItemTypemonetaryValue of common and preferred shares of an entity that were issued, repurchased by the entity, and are held in its treasury. Treasury stock is issued but is not outstanding. This stock has no voting rights and receives no dividends. Note that treasury stock may be recorded at its total cost or separately as par (or stated) value and additional paid in capital. Note: number of treasury shares concept is in another section within stockholders' equity.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name FASB Technical Bulletin (FTB)
-Number 85-6
-Paragraph 3
falsefalse139false0us-gaap_StockholdersEquityus-gaaptruecreditinstantNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalsetotallabel1truefalsefalse772000000772falsefalsefalsefalsefalse2truefalsefalse597000000597falsefalsefalsefalsefalse3falsefalsefalse00falsefalsefalsefalsefalse4falsefalsefalse00falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryTotal of all Stockholders' Equity (deficit) items, net of receivables from officers, directors owners, and affiliates of the entity which are attributable to the parent. The amount of the economic entity's stockholders' equity attributable to the parent excludes the amount of stockholders' equity which is allocable to that ownership interest in subsidiary equity which is not attributable to the parent (noncontrolling interest, minority interest). This excludes temporary equity and is sometimes called permanent equity.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Research Bulletin (ARB)
-Number 51
-Paragraph A3
-Appendix A
Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Staff Accounting Bulletin (SAB)
-Number Topic 4
-Section E
Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 29, 30, 31
-Article 5
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-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 32
-Article 5
Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 03
-Paragraph 25
-Article 7
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12/31/2009
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s in that the Entity may deposit additional funds at any time and also effectively may withdraw funds at any time without prior notice or penalty. Cash equivalents, excluding items classified as marketable securities, include short-term, highly liquid investments that are both readily convertible to known amounts of cash, and so near their maturity that they present minimal risk of changes in value because of changes in interest rates. Generally, only investments with original maturities of three months or less qualify under that definition. Original maturity means original maturity to the entity holding the investment. For example, both a three-month US Treasury bill and a three-year Treasury note purchased three months from maturity qualify as cash equivalents. However, a Treasury note purchased three years ago does not become a cash equivalent when its remaining maturity is three months. Compensating balance arrangements that do not legally restrict the withdrawal or usage of cash amounts may be reported
as Cash and Cash Equivalents, while legally restricted deposits held as compensating balances against borrowing arrangements, contracts entered into with others, or company statements of intention with regard to particular deposits should not be reported as cash and cash equivalents.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 95
-Paragraph 7, 26
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-Name Statement of Financial Accounting Standard (FAS)
-Number 95
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-Name Statement of Financial Accounting Standard (FAS)
-Number 95
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-Publisher SEC
-Name Regulation S-X (SX)
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-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 3
-Subparagraph a(1)
-Article 5
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-Name Regulation S-X (SX)
-Number 210
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-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 8
-Article 5
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nder enacted tax laws; after deducting the allocated valuation allowance, if any, to reduce such amount to net realizable value. Deferred tax liabilities and assets shall be classified as current or noncurrent based on the classification of the related asset or liability for financial reporting. A deferred tax liability or asset that is not related to an asset or liability for financial reporting, including deferred tax assets related to carryforwards, shall be classified according to the expected reversal date of the temporary difference. An unrecognized tax benefit that is directly related to a position taken in a tax year that results in a net operating loss carryforward should be presented as a reduction of the related deferred tax asset.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 109
-Paragraph 41, 42, 43
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-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 8
-Article 5
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-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 9
-Article 5
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-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 13
-Subparagraph a
-Article 5
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-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 12
-Paragraph 5
-Subparagraph b, c
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-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 03
-Paragraph 8
-Article 7
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:monetaryItemTypemonetaryCumulative employer's contributions in excess of net pension cost recognized, before the adoption of the recognition provisions of FAS 158. Under FAS 158, prepaid pension costs are no longer recognized in the statement of financial position. Note that there is a separate concept for noncurrent assets relating to defined benefit pension and other defined benefit postretirement plans for use under the recognition provisions of FAS 158.Reference 1: http://www.xbrl.org/2003/role/presentationRef
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-Name Statement of Financial Accounting Standard (FAS)
-Number 132R
-Paragraph 5
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-Name Statement of Financial Accounting Standard (FAS)
-Number 109
-Paragraph 41, 42, 43
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netaryItemTypemonetaryAggregate carrying amount, as of the balance sheet date, of noncurrent assets not separately disclosed in the balance sheet due to materiality considerations. Noncurrent assets are expected to be realized or consumed after one year (or the normal operating cycle, if longer).Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 17
-Article 5
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etaryItemTypemonetarySum of the carrying amounts as of the balance sheet date of all assets that are recognized. Assets are probable future economic benefits obtained or controlled by an entity as a result of past transactions or events.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Concepts (CON)
-Number 6
-Paragraph 25
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-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 18
-Article 5
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-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 03
-Paragraph 12
-Article 7
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verboselabel1truefalsefalse00falsefalsefalsefalsefalse2truefalsefalse00falsefalsefalsefalsefalse3falsefalsefalse00falsefalsefalsefalsefalse4falsefalsefalse00falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryCarrying value as of the balance sheet date of liabilities incurred (and for which invoices have typically been received) and payable to vendors for goods and services received that are used in an entity's business. Used to reflect the current portion of the liabilities (due within one year or within the normal operating cycle if longer).Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
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-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 20
-Article 5
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-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 03
-Paragraph 15
-Subparagraph b(1)
-Article 7
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-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 03
-Paragraph 15
-Article 9
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-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 20
-Article 5
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-Publisher FASB
-Name FASB Interpretation (FIN)
-Number 48
-Paragraph 15, 21
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-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 109
-Section Appendix E
-Paragraph 289
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netaryItemTypemonetaryTotal obligations incurred as part of normal operations that are expected to be paid during the following twelve months or within one business cycle, if longer.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 21
-Article 5
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xbrli:monetaryItemTypemonetarySum of the carrying values as of the balance sheet date of all long-term debt, which is debt initially having maturities due after one year from the balance sheet date or beyond the operating cycle, if longer, but excluding the portions thereof scheduled to be repaid within one year (current maturities) or the normal operating cycle, if longer, and after deducting unamortized discount or premiums, if any.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 22
-Article 5
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falsefalse00falsefalsefalsefalsefalse2truefalsefalse00falsefalsefalsefalsefalse3falsefalsefalse00falsefalsefalsefalsefalse4falsefalsefalse00falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryThis represents the noncurrent liability for underfunded plans recognized in the balance sheet that is associated with the defined benefit pension plans and other postretirement defined benefit plans.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 132R
-Paragraph 5
-Subparagraph c
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-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 132R
-Paragraph 6
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-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 132R
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falsefalse00falsefalsefalsefalsefalse2truefalsefalse00falsefalsefalsefalsefalse3falsefalsefalse00falsefalsefalsefalsefalse4falsefalsefalse00falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryAggregate carrying amount, as of the balance sheet date, of noncurrent obligations not separately disclosed in the balance sheet due to materiality considerations. Noncurrent liabilities are expected to be paid after one year (or the normal operating cycle, if longer).Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 24
-Article 5
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ryItemTypemonetarySum of the carrying amounts as of the balance sheet date of all liabilities that are recognized. Liabilities are probable future sacrifices of economic benefits arising from present obligations of an entity to transfer assets or provide services to other entities in the future.No authoritative reference available.truefalse168true0us-gaap_StockholdersEquityAbstractus-gaaptruenadurationNo definition available.falsefalsefalsefals
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falsefalse00falsefalsefalsefalsefalse3falsefalsefalse00falsefalsefalsefalsefalse4falsefalsefalse00falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryDollar value of issued common stock whether issued at par value, no par or stated value. This item includes treasury stock repurchased by the entity. Note: elements for number of common shares, par value and other disclosure concepts are in another section within stockholders' equity.Reference 1: http://www.xbrl.org/2003/role/prese
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-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 30
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-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 31
-Article 5
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onetaryxbrli:monetaryItemTypemonetaryThe cumulative amount of the reporting entity's undistributed earnings or deficit.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Principles Board Opinion (APB)
-Number 12
-Paragraph 10
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-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 31
-Article 5
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-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 04
-Article 3
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falsefalse109000000109falsefalsefalsefalsefalse2truefalsefalse121000000121falsefalsefalsefalsefalse3falsefalsefalse00falsefalsefalsefalsefalse4falsefalsefalse00falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryAccumulated change in equity from transactions and other events and circumstances from non-owner sources, net of tax effect, at fiscal year-end. Excludes Net Income (Loss), and accumulated changes in equity from transactions resulting from investments by owners and distributions to owners. Includes foreign currency translation items, certain pension adjustments, and unrealized gains and losses on certain investments in debt and equity securities as well as changes in the fair value of derivatives related to the effective portion of a designated cash flow hedge.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 04
-Article 3
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-Publisher AICPA
-Name Accounting Principles Board Opinion (APB)
-Number 12
-Paragraph 10
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-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 130
-Paragraph 14, 17, 26
Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 31
-Article 5
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xbrli:monetaryItemTypemonetaryValue of common and preferred shares of an entity that were issued, repurchased by the entity, and are held in its treasury. Treasury stock is issued but is not outstanding. This stock has no voting rights and receives no dividends. Note that treasury stock may be recorded at its total cost or separately as par (or stated) value and additional paid in capital. Note: number of treasury shares concept is in another section within stockholders' equity.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name FASB Technical Bulletin (FTB)
-Number 85-6
-Paragraph 3
falsefalse174false0us-gaap_StockholdersEquityus-gaaptruecreditinstantNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalsetotallabel1truefalsefalse-385000000-385falsefalsefalsefalsefalse2truefalsefalse-561000000-561falsefalsefalsefalsefalse3falsefalsefalse00falsefalsefalsefalsefalse4falsefalsefalse00falsefalsefalsefalsefalseMonetaryxbrli:monetaryItemTypemonetaryTotal of all Stockholders' Equity (deficit) items, net of receivables from officers, directors owners, and affiliates of the entity which are attributable to the parent. The amount of the economic entity's stockholders' equity attributable to the parent excludes the amount of stockholders' equity which is allocable to that ownership interest in subsidiary equity which is not attributable to the parent (noncontrolling interest, minority interest). This excludes temporary equity and is sometimes called permanent equity.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Research Bulletin (ARB)
-Number 51
-Paragraph A3
-Appendix A
Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Staff Accounting Bulletin (SAB)
-Number Topic 4
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