EX-99.1 2 dex991.htm LORILLARD, INC. SLIDE PRESENTATION Lorillard, Inc. slide presentation
Analyst Presentation
June 2008
Exhibit 99.1

2
Safe Harbor Disclaimer
You
are
cautioned
that
certain
statements
made
in
this
presentation
are
“forward-looking”
statements
within
the
meaning of the
Private Securities Litigation Reform Act of 1995.  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
that
may
be
provided
by
management
concerning
future
financial
performance
(including future revenues, earnings or growth rates), ongoing business strategies or prospects, and possible actions by
Lorillard, Inc. are also forward-looking statements as defined by the Act.
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 Lorillard, Inc., that could cause actual results to
differ materially from those anticipated or projected.
Information
describing
factors
that
could
cause
actual
results
to
differ
materially
from
those
in
forward-looking
statements
is
available
in
Lorillard,
Inc.’s
various
filings
with
the
Securities
and
Exchange
Commission.
These
filings
are
available
from
the
SEC
over
the
Internet
or
on
hard
copy,
and
are,
in
some
cases,
available
from
Lorillard,
Inc.
as
well.
Forward-looking
statements
speak
only
as
of
the
time
they
are
made,
and
Lorillard,
Inc.
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 based.
This
forward-looking
statements
disclaimer
is
only
a
brief
summary
of
Lorillard,
Inc.’s
statutory
forward-looking-statements
disclaimer.
You
are
urged
to
read
that
disclaimer,
which
is
included
in
Lorillard’s
S-4
filing
with
the
SEC,
in full.

3
Regulation G Compliance
You are also reminded that during this presentation, certain non-GAAP financial measures,
such as EBIT, EBITDA and Operating Profit per unit may be discussed.  These measures
should not be considered an alternative to net income, or any other measure of financial
performance or liquidity presented in accordance with generally accepted accounting
principles (GAAP).  These measures are not necessarily comparable to a similarly titled
measure of another company.  Please refer to the accompanying slides for information that
reconciles
these
discussed
figures
with
the
most
comparable
GAAP
measures.

4
Today’s Presenters
Martin L. Orlowsky
Chairman, President and Chief Executive Officer
David H. Taylor
Executive Vice President, Finance and Planning, Chief Financial Officer

Overview of Lorillard
Martin L. Orlowsky
Chairman, President and Chief Executive Officer

6
Lorillard Overview
Third largest tobacco company in the United
States
Primarily focused on the premium price cigarette
market
Strong brand portfolio led by the Newport brand
#1 menthol cigarette brand
#2 overall cigarette brand
Other brands include: Old Gold, Maverick, Kent,
True and Max
Sells products only in the U.S., Puerto Rico and
U.S. possessions
Headquarters, manufacturing and research
facilities in Greensboro, NC

7
Investment Highlights
Leader in the best performing segments of the cigarette market
Significant Newport brand equity
Continuous increases in share of market
Strategy has resulted in industry-leading relative profitability
Track record of strong financial performance
Experienced management team
Newly
independent
status
of
Lorillard
will
provide
financial
flexibility
to
invest
in
growth initiatives and to continue to generate value for shareholders

8
$582
$642
$706
$826
$898
19.2%
19.8%
22.6%
17.9%
22.0%
$0
$200
$400
$600
$800
$1,000
2003
2004
2005
2006
2007
10.0%
15.0%
20.0%
25.0%
30.0%
% of Sales
Impressive Financial Performance
Net Sales
Net Income
($ in millions)
($ in millions)
$2,604
$2,690
$2,892
$3,056
$3,281
$652
$658
$676
$699
$688
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
$4,500
2003
2004
2005
2006
2007
$3,256
$3,348
$3,568
$3,755
$3,969
Net Sales (excl. Excise Taxes)
Excise Taxes
From
2003-2007,
net
sales
grew
at
a
5.1%
CAGR,
while
net
income
grew
at
an
11.5%
CAGR

9
Experienced Leadership
Board of Directors
Management Team Members
Name
Occupation
Martin L. Orlowsky
Chairman, President and CEO of Lorillard
David H. Taylor
Director and EVP, Finance and Planning, CFO of Lorillard
Richard W. Roedel
Kit D. Dietz
Principal of Dietz Consulting LLC
Additional Directors To Be Named
Retired Chairman and CEO of BDO Seidman LLP
Name
Title
Year Joined
Martin L. Orlowsky
Chairman, President and CEO
1990
David H. Taylor
EVP, Finance and Planning, CFO
2008
Ronald S. Milstein
1996
Charles E. Hennighausen
EVP, Production Operations
2002
Randy B. Spell
EVP, Marketing and Sales
1977
Thomas R. Staab
SVP, Finance and Treasurer
1998
SVP, Legal and External Affairs, General
Counsel and Secretary

Industry Operating Environment

11
Trends in the U.S. Cigarette Market
Total U.S. cigarette market size of ~$50 billion
Industry
unit
volume
has
declined
at
a
3.1%
CAGR
over
the
past
5
years,
3.3%
in Q1 2008; premium segment declined at a slower rate (<2.0%)
Expected annual declines of 3% to 4% of total over the next several years
286
276
274
271
270
260
79
68
64
60
56
52
54
57
56
51
49
45
418
401
394
382
376
357
0
100
200
300
400
500
600
2002
2003
2004
2005
2006
2007
Premium
Discount
Deep Discount
(billions of cigarettes shipped)
Source:  Domestic wholesale shipments per MSAI.

12
Lorillard is Best Positioned in Market
Premium segment is largest in the market (~73% of the market)
Segment has gained share of market over the last five years
Lorillard
has
gained
share
of
premium
segment
over
the
last
five
years
Premium Segment
28% of the overall cigarette market
Segment has gained share of market over last five years
Relatively stable in recent years (~100 billion cigarettes shipped per year)
Newport is #1 menthol brand and has gained share of menthol segment over the last five years
(approx. 33%)
Menthol Segment

13
Premium Segment Growth
68.3%
68.8%
69.6%
71.1%
71.9%
72.8%
18.8%
17.0%
16.2%
15.7%
15.0%
14.6%
14.3%
13.3%
13.1%
12.6%
14.2%
13.0%
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
2002
2003
2004
2005
2006
2007
Premium
Discount
Deep discount
In the last 5 years, the premium segment continues to increase as a
percentage of the overall market
Source:  Domestic wholesale shipments per MSAI.

14
Menthol / Non-Menthol Segmentation
As consumer preferences continue to evolve,
Lorillard is best positioned to capitalize on that trend
26.0%
26.4%
26.4%
26.7%
27.4%
27.9%
74.0%
73.6%
73.6%
73.3%
72.6%
72.1%
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
2002
2003
2004
2005
2006
2007
Menthol
Non-Menthol
The menthol segment represented ~100 billion of the 357 billion cigarettes shipped
in the United States in 2007
Source:  Domestic wholesale shipments per MSAI.

15
Current Operating Environment
Industry could come under greater pressure in 2008 due to macro economic
pressures
1
st
quarter industry shipments declined at a rate slightly greater than trend
Level of competition continues to be high
Regulatory legislation
Excise tax pressures
Litigation

Growth Behind a Brand

17
Discount
5.7%
Premium
94.3%
Strong Brand Portfolio is Led by Newport
Others
6.1%
Newport
93.9%
2007 Sales: 
$3,969 million
Source:  Lorillard Shipment Data.
(1) Includes Old Gold, Maverick, Kent, True and Max brands.
Accounted for 94.3% of 2007
domestic shipments
Newport (93.9% of 2007 net sales)
Primary driver of profitability
Kent, True and Max
Mature
brands
--
harvesting
profit
Premium Brands
Accounted for 5.7% of 2007 domestic
shipments
Maverick and Old Gold
Maintain presence in lower price
segment
Discount Brands
2007 Net Sales Breakdown by Brand
2007 Volume Breakdown by Price
2007 Domestic
Shipments: 
35.8 billion
(1)

18
Newport is the Leader in the Menthol Segment
28.6%
29.2%
30.1%
31.5%
32.2%
32.9%
11.4%
12.8%
14.2%
15.0%
16.4%
8.7%
8.8%
8.5%
7.5%
6.8%
6.4%
9.9%
11.2%
11.5%
11.4%
11.1%
11.4%
11.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
2002
2003
2004
2005
2006
2007
Market Share
Newport
Marlboro Menthol
Kool
Salem
Newport continues to grow its leadership in the menthol segment
Source:  Domestic wholesale shipments per MSAI.

19
Brand Marketing Strategy
Continue to focus on premium price segment
Leverage Newport’s strong brand equity position in the marketplace
Adjust Newport promotion spending consistent with the brand’s performance
and competitive actions
Selectively promote Newport in markets / stores with the highest
return on
investment
Maintain presence in the discount segment with Maverick / Old Gold without
marketing investment
Overall objective is to profitably grow Newport’s market share

20
Differentiated Sales Promotion Strategy
Higher average retail pricing
Fewer free goods promotions
Fewer line extensions
Brand-building initiatives
Selectively promote brand in markets
with highest returns on investment
Stronger sustainable growth
Consistent profitable growth
High returns on marketing investments
Better brand positioning
Lorillard
Competition
VS.
Heavier promotions to buy market share
Significant discounting and free
goods promotions
Extensive and undifferentiated product
lines and offerings
Growth in volume at cost of profitability
Artificially high volumes
Price driven sales
Most profitable operating model in the industry

21
Focused Marketing Initiatives
Retail Promotions
Retail discounts in stores with highest
potential returns
Relationship Marketing
7.5 million adult smoker names (Lorillard
and competition) in database
Custom Newport Magazine mailings
Targeted incentive program mailings
–
Retail coupons
–
Sweepstakes offers
–
Premium incentives
Point-of-Sale Marketing
In-store advertising
In-store merchandising displays
Media Advertising
Selective print media

22
Strong Sales and Distribution Network
Effective Sales Force
Direct salaried
Aligned geographically to
support business
Customer Driven
Retail store oriented
Cover 279,000 stores per year
(95% of total Industry cigarette
sales)
Wholesale distribution
590 direct buying accounts
utilizing 950 distribution centers
Rapid
order
fulfillment
–
next
day delivery
Breakdown of Sales Channels by Volume
Convenience/
Gas
56%
Supermarket
3.4%
Cigarette Store
7.9%
Grocery 5.1%
Drug 2.6%
Liquor 4.4%
Other  9.9%

23
Market Development / Growth Strategy
Focus on developed and developing markets:
Focus on sales areas that exhibit a combination of Newport and Premium Menthol
strength
Focus on stores with highest penetration of menthol segment
Invest marketing dollars in identified markets / stores for most 
profitable
Newport
market share growth
Developed Markets
Northeast, Southeast
Upper Midwest
Developing Markets
Select States West of the
Mississippi

Western States
Menthol Overview

25
Western Myths
Lorillard has a weak sales force and distribution network
in the West
Myth #1    -
Newport has virtually no business in the West
Myth #2     -
Newport is the Menthol Category “Builder”
Myth #3     -
Lorillard is either unable or unwilling to build business in
the West
Myth #4     -

26
Menthol Cigarette Volume By State
Source: Lorillard Proprietary Retail Data
Billions
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
Tot Menthol
Newport
Marlboro M
Kool
52 Weeks Ending May 31, 2008

27
Menthol Cigarette Volume By 23 Western States
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
Total Menthol
Newport
Marlboro Menthol
Kool
Source: Lorillard Proprietary Retail Data
Billions
52 Weeks Ending May 31, 2008

28
0.1% to 0.5% Menthol Volume
0.6% to 0.9% Menthol Volume
1.0% and above Menthol Volume
Total
10
7
6
23
2.5
5.3
14.7
22.4
2.6
5.5
15.3
23.4
# of
States
Menthol
Volume
(billions)
*% Menthol
Of Total U.S.
Units
Western States
Percent Menthol Volume Contribution
52 Weeks Ending May 2008
Source: Lorillard Proprietary Retail Data
* 96 Billion Units Shipped

29
23 Western States
Newport
Marlboro Menthol
Kool / Salem
A/O Prem Menthol
Discount Menthol
100.00
17.03
22.83
20.68
15.34
24.12
100
84
113
102
76
119
Market
Share
Menthol
Segment 
Share
Index To
Menthol
Market
Menthol Share Overview
23 Western States
Source: Lorillard Proprietary Retail Data
3.45
4.62
4.19
3.11
4.89

30
Texas  [5.0% (M) Vol]
Newport
Marlboro Menthol
Kool / Salem
California  [4.4% (M) Vol]
Newport
Marlboro Menthol
Kool / Salem
100.00
19.46
21.20
23.46
100.00
26.13
23.91
17.59
100
86
94
104
100
137
125
92
Index To
Menthol
Market
Menthol Share Overview
Strong Western States
Source: Lorillard Proprietary Retail Data
4.40
4.80
5.31
4.99
4.56
3.36
Market
Share
Menthol
Segment
Share

31
Menthol Share Overview
Texas By City
Texas
Dallas
Ft. Worth
Houston
5.31
8.43
6.19
9.78
23.46
24.29
23.78
29.01
21.20
11.40
16.80
13.85
4.80
3.96
4.37
4.67
19.46
37.57
27.15
25.29
4.40
13.04
7.07
8.52
Newport
Marlboro Men
Kool
/ Salem
Segment
Share
Segment
Share
Segment
Share
Source: Lorillard Proprietary Retail Data
Market
Share
Market
Share
Market
Share

32
California
Los Angeles
Oakland
Sacramento
San Bernardino
San Diego
San Francisco
Menthol Share Overview
California By City
3.36
4.64
7.09
4.06
4.23
3.35
4.21
17.59
17.55
14.64
15.77
15.30
14.51
17.04
23.91
13.68
6.82
18.45
16.27
26.28
21.78
4.56
3.61
3.30
4.75
4.50
6.07
5.38
26.13
45.73
58.33
35.34
43.94
29.01
34.09
4.99
12.08
28.24
9.10
12.15
6.69
8.42
Segment
Share
Newport
Marlboro Men
Kool
/ Salem
Segment
Share
Segment
Share
Source: Lorillard Proprietary Retail Data
Market
Share
Market
Share
Market
Share

33
Idaho  [0.2% (M) Vol]
Newport
Marlboro Menthol
Kool / Salem
Montana  [0.1% (M) Vol]
Newport
Marlboro Menthol
Kool / Salem
100.00
4.52
26.35
15.15
100.00
6.30
27.64
17.88
100
38
219
126
100
52
228
148
Index To
Menthol
Market
Menthol Share Overview
Weak Western States
Source: Lorillard Proprietary Retail Data
.54
3.17
1.82
.76
3.35
2.17
Market
Share
Menthol
Segment
Share

34
Growth Opportunities and Strategies
New Products and
Line Extensions
Will introduce if additive to profitable growth
Will not dilute Newport brand equity
Explore Smokeless
Tobacco Opportunity
Through Swedish Match Partnership
Triumph Snus
Test marketing began in February 2008
Too early for conclusions
Leverage Lorillard sales and marketing
Capital efficient entry to smokeless
Potential Acquisition
Opportunities
Explore and evaluate potential targets
Expand product offering
Expand geographic reach
Must make sense for shareholder value
creation
Universe of targets is limited

Financial Overview
David H. Taylor
Executive Vice President, Finance and Planning, Chief Financial Officer

36
Most Profitable Operating Model
$27.21
$28.35
$30.10
$34.13
$36.58
$22.29
$23.72
$25.02
$26.29
$28.07
$9.02
$13.43
$17.06
$18.63
$20.79
$0.00
$5.00
$10.00
$15.00
$20.00
$25.00
$30.00
$35.00
$40.00
2003
2004
2005
2006
2007
Adjusted Operating Profit
Per 1,000 Cigarettes
Lorillard
Philip Morris USA
Reynolds
Profitability of Lorillard vs. Competition
Lorillard operates the most profitable business model among major U.S. cigarette
companies, consistently outperforming key competitors
Note:
Based
on
Lorillard’s
analysis
of
competitors’
public
information.

37
Stable Volume and Growing Market Share
31.0
31.3
32.2
33.1
32.8
7.9%
8.4%
9.2%
8.8%
7.7%
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
2003
2004
2005
2006
2007
Volume
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
Market Share
Impressive and sustained growth in Newport market share and cigarettes
shipped
(billions of domestic cigarettes shipped)
Source:  Domestic wholesale shipments per MSAI.

38
Summary Income Statement
Solid top-line and earnings profile
($ in millions)
2005
2006
2007
Net Sales
$3,568
$3,755
$3,969
% Growth
6.6%
5.2%
5.7%
Excise Taxes
676
699
688
Cost of Goods Sold
562
550
571
Settlement Costs
876
911
1,048
Gross Profit
$1,454
$1,595
$1,662
% Margin
40.7%
42.5%
41.9%
SG&A
370
354
388
Operating Income
$1,084
$1,241
$1,274
% Margin
30.4%
33.0%
32.1%
Net Income
$706
$826
$898
% Growth
10.0%
17.0%
8.7%
% Margin
19.8%
22.0%
22.6%
EBITDA
$1,132
$1,288
$1,314
% Growth
8.7%
13.8%
2.0%
% Margin
31.7%
34.3%
33.1%

39
Strong Cash Flow Generation
Lorillard has a history of generating strong and sustainable cash flow
($ in millions)
2005
2006
2007
Cash Flows from Operating Activities
$820
$778
$882
Less: Capital Expenditures
(31)
(30)
(51)
Free Cash Flow
$789
$748
$831
Less: Dividends to Loews
(646)
(783)
(1,170)
Free Cash Flow After Dividends
$143
($35)
($339)

40
Conservative Capitalization Profile
With $1 billion of new debt issuance, Lorillard’s debt / EBITDA would be ~0.8x
Balance preservation of financial flexibility and improving capital structure
($ in millions)
Q1 2008
Cash, Cash Equivalents and Marketable Securities
$1,607
Other Assets
1,143
Total Assets
$2,750
Debt
$0
Other Liabilities
1,852
Shareholder's Equity
898
Total Liabilities and Shareholder's Equity
$2,750
Credit Statistics
Debt / EBITDA
0.0x
Debt / Capitalization
0.0%
Lorillard
expects
to
issue
between
$750
million
-
$1
billion
of
debt
in
the
near
term

41
First Quarter 2008 Results
Net sales
Increase driven primarily by higher
average unit prices
Unit volume roughly flat, impacted by:
–
Downward wholesale inventory
adjustments
–
~200 million fewer promotional units
shipped
Gross profit unchanged
Increases in net sales offset by higher
State Settlement costs
Net income
Decline attributable to:
–
$13 million of expenses related to the
separation
–
$6 million in higher legal expenses
–
$22 million less investment income
($ in millions)
Q1 '07
Q1 '08
Net Sales
$913
$921
Excise Taxes
162
163
Cost of Goods Sold
134
135
Settlement Costs
249
257
Gross Profit
$369
$366
% Margin
40.4%
39.7%
SG&A
82
100
Operating Income
$287
$266
% Margin
31.4%
28.9%
Other Income (Expense), net
11
4
Income Taxes
(109)
(99)
Net Income
$189
$171
% Margin
20.7%
18.6%
EBITDA
$297
$275
% Margin
32.5%
29.8%

42
Outlook
Remainder of 2008
Level of competition will continue to be high
Lorillard cost structure will be impacted by:
–
Transaction costs
–
Incremental costs related to independence
–
Legal costs for Engle
Positive pricing impact beginning in May
Investment income impacted by nature and level of investments and rate environment
2008 and beyond
Revenue growth primarily net pricing
Settlement costs will continue to grow
Operating margins ~32%-33%

43
Outlook
Revenue Growth
Transition
Expenses
3.0% -
4.0%
~$25 million
Operating Margin
32% -
33%
2009 -
2012
3.0% -
4.0%
32% -
33%
~$9 million per year
2008

44
Long-Term Objectives
Revenue
Growth
EPS
Growth
Dividend
Yield
3% -
4%
5% -
7%
~5%
Total Shareholder Return
10% -
12%
Modest share repurchase
program funded with free
cash flow and debt issuance
Anticipated dividend payout
ratio of ~70% -
75%

45
Investment Highlights
Leader in the best performing segments of the cigarette market
Significant Newport brand equity
Continuous increases in share of market
Strategy has resulted in industry-leading relative profitability
Track record of strong financial performance
Experienced management team
Newly independent
status of Lorillard will provide financial flexibility to invest in
growth initiatives and to continue to generate value for shareholders

46
Reconciliation of Net Income to EBITDA
($ in millions)
2005
2006
2007
Q1 '07
Q1 '08
Net Income
$706
$826
$898
$189
$171
Add: Income Taxes
445
518
485
109
99
Other (Income) Expense, net
(67)
(103)
(109)
(11)
(4)
Operating Income
$1,084
$1,241
$1,274
$287
$266
Depreciation and Amortization
48
47
40
10
9
EBITDA
$1,132
$1,288
$1,314
$297
$275

Questions