EX-99.2 3 cg_exbcomplete.htm EXHIBIT 99.2 cg_exbcomplete.htm
Exhibit 99.2


 
Contact:
Peter W. Keegan
Chief Financial Officer
(212) 521-2950
 
Darren Daugherty
Investor Relations
(212) 521-2788
 
Candace Leeds
Public Affairs
(212) 521-2416


CAROLINA GROUP REPORTS
NET INCOME FOR THE THIRD QUARTER OF 2007


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

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

     Net sales for the Carolina Group were $1,043.8 million in the third quarter of 2007, compared to $986.0 million in the 2006 third quarter.
 
     Carolina Group net income for the first nine months of 2007 was $649.4 million, compared to $540.2 million in the the first nine months of 2006. The increase in net income is primarily due to higher effective unit prices resulting from a December 2006 price increase and lower sales promotion expenses (accounted for as a reduction to net sales), partially offset by an increase in expenses for the State Settlement Agreements.

     Net income per share of Carolina Group stock for the first nine months of 2007 was $3.73, compared to $3.16 in the comparable period of the prior year.
 
     Net sales for the Carolina Group were $3.012 billion in the first nine months of 2007, compared to $2.818 billion in the comparable period of the prior year.
 

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     Results of operations of the Carolina Group include interest expense on notional intergroup debt of $11.6 million, $17.5 million, $39.1 million and $54.9 million, net of taxes, for the three and nine months ended September 30, 2007 and 2006, respectively. At September 30, 2007, $829.1 million principal amount of notional intergroup debt was outstanding.
 
     The Carolina Group stock, commonly called a tracking stock, is intended to reflect the economic performance of a defined group of the Company’s assets and liabilities, referred to as the Carolina Group, principally consisting of the Company’s subsidiary Lorillard, Inc. The Carolina Group, a notional group, is not a separate legal entity. The purpose of this financial information is to provide investors with additional information to use in analyzing the results of operations and financial condition of the Carolina Group, and this financial information should be read in conjunction with the consolidated financial information of Loews Corporation.

     As of September 30, 2007 there were 108,445,516 shares of Carolina Group stock outstanding, representing a 62.4% economic interest. Depending on market conditions, the Company, for the account of the Carolina Group, from time to time may purchase shares of Carolina Group stock in the open market or otherwise.

# # #

     A separate press release reporting Loews Corporation’s consolidated results for the third quarter of 2007 is being issued contemporaneously with this report.
 
     A conference call to discuss the third quarter results of Loews Corporation has been scheduled for 11:00 a.m. EST, Monday, October 29, 2007. A live webcast of the call will be available online at the Loews Corporation website (www.loews.com). Please go to the website at least ten minutes before the event begins to register and to download and install any necessary audio software. Those interested in participating in the question and answer session of the conference call should dial (877) 692-2592, or for international callers, (973) 582-2757.
 

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Carolina Group
Financial Review

   
September 30,
  
   
Three Months
    
Nine Months
  
   
2007
    
2006
    
2007
    
2006
  
       
   
(Amounts in millions, except per share data)
  
                         
Net sales (a)
   $
1,043.8
     $
986.0
     $
3,012.2
     $
2,818.1
  
                                 
Cost of sales (a) (b)
    
613.9
      
573.7
      
1,771.7
      
1,638.0
  
Selling, advertising and administrative (c)
    
81.7
      
83.6
      
246.5
      
285.4
  
                                 
Total operating costs and expenses
    
695.6
      
657.3
      
2,018.2
      
1,923.4
  
                                 
Operating income
    
348.2
      
328.7
      
994.0
      
894.7
  
Investment income and other (d)
    
36.0
      
29.7
      
96.7
      
77.0
  
Interest expense
     (19.3 )     (28.3 )     (65.5 )     (89.6 )
                                 
Income before income taxes
    
364.9
      
330.1
      
1,025.2
      
882.1
  
Income taxes
    
131.3
      
127.2
      
375.8
      
341.9
  
                                 
Net income
    
233.6
      
202.9
      
649.4
      
540.2
  
Earnings attributable to the Loews Group intergroup
                                
interest (e)
    
87.9
      
85.0
      
244.4
      
260.9
  
                                 
Income attributable to Carolina Group shareholders (f)
   $
145.7
     $
117.9
     $
405.0
     $
279.3
  
                                 
Per share of Carolina Group stock
   $
1.34
     $
1.17
     $
3.73
     $
3.16
  
                                 
Weighted diluted number of shares
    
108.58
      
100.59
      
108.55
      
88.43
  
                                 
Notional, intergroup debt owed by the Carolina Group to
                                
the Loews Group
                                
September 30, 2007
   $
829.1
                          
December 31, 2006
    
1,229.7
                          

(a)
Includes excise taxes of $180.7, $185.8, $522.4 and $526.4 for the respective periods.
(b)
Includes charges of $277.1, $242.8, $801.4 and $696.3 ($177.5, $149.3, $507.6 and $426.4 after taxes) to accrue obligations under the State Settlement Agreements for the respective periods.
(c)
Includes restructuring costs of $0.9 and $16.4 for the three and nine months ended September 30, 2006, related to early retirement and curtailment charges for Lorillard's pension and other postretirement benefit plans.
(d)
Includes income from limited partnership investments of $11.5, $6.2, $30.8 and $16.6 ($7.4, $3.8, $19.5 and $10.1 after taxes) for the respective periods.
(e)
The Loews Group's intergroup interest in the earnings of the Carolina Group reflected share equivalents amounting to 65,445,000 shares of 173,890,516 share and share equivalents outstanding as of September 30, 2007 and share equivalents amounting to 65,445,000 shares of 173,754,871 share and share equivalents outstanding as of September 30, 2006. As of September 30, 2007, there were 108,445,516 shares of Carolina Group stock outstanding.
(f)
Represents 62.4%, 58.1%, 62.4% and 51.7% of the economic interest in the Carolina Group for the respective periods.


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Carolina Group
Supplemental Information

The following information regarding unit volume shipped by Lorillard Tobacco Company to its direct buying customers by brand follows (all units in thousands):

   
Three Months
    
Nine Months
  
   
2007
    
2006
    
2007
    
2006
  
                         
Full Price Brands
                        
                         
Total Newport
    
8,674,317
      
8,818,802
      
25,122,346
      
24,956,957
  
Total Kent Family
    
126,111
      
155,001
      
370,818
      
460,020
  
Total True
    
114,803
      
133,367
      
334,913
      
389,231
  
Total Max
    
7,299
      
8,418
      
22,020
      
25,551
  
Total Satin
            
1,224
      
72
      
3,894
  
                                 
Total Full Price Brands
    
8,922,530
      
9,116,812
      
25,850,169
      
25,835,653
  
                                 
Price/Value Brands
                                
                                 
Total Old Gold
    
157,920
      
212,550
      
469,478
      
607,659
  
Total Maverick
    
385,492
      
293,195
      
1,007,008
      
788,927
  
                                 
Total Price/Value Brands
    
543,412
      
505,745
      
1,476,486
      
1,396,586
  
                                 
Total Domestic Cigarettes
    
9,465,942
      
9,622,557
      
27,326,655
      
27,232,239
  
                                 
Total Puerto Rico and U.S. Possessions
    
190,050
      
189,348
      
592,794
      
589,380
  
                                 
Grand Total
    
9,655,992
      
9,811,905
      
27,919,449
      
27,821,619
  

Notes:
   
1.
This information is not adjusted for returns.
2.
Domestic unit volume includes units sold as well as promotional units, and excludes volumes for Puerto Rico and U.S. Possessions.
3.
Unit volume for a quarter is not necessarily indicative of unit volume for any subsequent period.
4.
Unit volume is not necessarily indicative of the level of revenues for any period.


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