UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 20, 2013
Lorillard, Inc.
(Exact name of registrant as specified in its charter)
DELAWARE | 001-34097 | 13-1911176 | ||
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
714 Green Valley Road
Greensboro, North Carolina 24708-7018
(Address of principal executive offices, including zip code)
(336) 335-7000
(Registrants telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 7.01 Regulation FD Disclosure.
Lorillard, Inc. (Lorillard or the Company) will be participating in investor meetings on March 20 and 21,
2013. A copy of the slide presentation that will be used for these meetings is furnished as Exhibit 99.1 to this Current Report on Form 8-K
(Form 8-K).
The information under Item 7.01 and in Exhibit 99.1 in this Form 8-K is being furnished and shall not be deemed to be filed for purposes of Section 18 of the Securities Exchange Act of 1934 (the Exchange Act) or otherwise subject to the liabilities of that section, nor shall it be incorporated by reference into a filing under the Securities Act of 1933, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Item 9.01. Financial Statements and Exhibits.
(d) | Exhibits |
99.1 | Lorillard, Inc. slide presentation dated March 20-21, 2013. |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
LORILLARD, INC. | ||||||||
(Registrant) | ||||||||
By: | /s/ David H. Taylor |
|||||||
David H. Taylor | ||||||||
Executive Vice President, Finance and Planning and Chief Financial Officer |
||||||||
Dated: March 20, 2013 |
![]() Exhibit 99.1
Investor Meetings
Investor Meetings
March 20-21, 2013
March 20-21, 2013 |
![]() Safe
Harbor Disclaimer Safe Harbor Disclaimer
1
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., and 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 (SEC). 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
disclaims 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 Inc.s Form 10-K and Form 10-Q filings
with the SEC. |
![]() A
Proven and Consistent Record of Success A Proven and Consistent Record of
Success Source: Lorillard filings.
* Earnings per share data adjusted to reflect 3-for-1 stock split
effected January 15, 2013. See reconciliation attached in Appendix A.
2
Retail Market Share
9.0%
9.2%
9.6%
10.0%
10.4%
11.0%
11.8%
12.9%
14.1%
Annual Adjusted Earnings Per Share*
+11.1%
CAGR
+570
bps
10 Consecutive Years of Growth
Newport
Total Lorillard
0%
2%
4%
6%
8%
10%
12%
14%
16%
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
8.7%
$1.35
$1.58
$1.72
$1.71
$1.91
$2.25
$2.63
$2.82
$1.00
$1.50
$2.00
$2.50
$3.00
2005
2006
2007
2008
2009
2010
2011
2012
14.4% |
![]() A
Proven and Consistent Record of Success A Proven and Consistent Record of
Success +79%
Annualized Dividend Per Share
Source: Lorillard filings. Since Lorillard spin-off completed in
June 2008. Dividend data adjusted to reflect 3-for-1 stock split effected January 15, 2013.
3
$313
$944
$1,589
$2,312
$3,119
$400
$1,310
$2,026
$3,613
$4,191
$0
$2,500
$5,000
$7,500
2008
2009
2010
2011
2012
Dividends
Buybacks
$713
$2,254
$3,615
$5,925
$7,310
Cumulative Cash Returned
More than $7.3 Billion Cash Returned to Investors
$1.23
$1.33
$1.50
$1.73
$2.07
$2.20
$1.00
$2.00
$3.00
Q3 2008
Q3 2009
Q3 2010
Q1 2011
Q1 2012
Q1 2013 |
![]() 2012
Was No Exception 2012 Was No Exception
Net Sales
(ex-FET)
Adjusted
EPS*
Lorillard Retail Market Share
Lorillard Share of Menthol
Lorillard Share of Premium
+4.1%
+7.2%
+0.3 share points
+0.2 share points
+0.1 share points
$1.4 Billion Cash Returned to Investors in 2012
Source: Lorillard filings. Cash returns made up of $807 MM in dividends plus $578 MM in
share repurchases.
* See reconciliation attached in Appendix A.
|
![]() Source: Lorillard proprietary retail database (EXCEL) and Company
estimates. Altria
RJR
Altria
RJR
Altria
RJR
Altria
RJR
Altria
RJR
All Others
Altria
RJR
Others
90.5%
8.8%
2012 U.S. Cigarette Market Segmentation
Achieved by Relentlessly Pursuing our Strategic Plan
Achieved by Relentlessly Pursuing our Strategic Plan
5
0.5%
e-Cigs
Full Flavor
Non-Menthol
Non-Full Flavor Non-Menthol
Full Flavor
Menthol
NFF
Menthol
Discount
MST
Snus
0.2%
0%
20%
40%
60%
80%
100%
15.1 B Packs/Cans |
![]() The
Foundation of Our Strategy is the Strongest Menthol Brand in the Industry
The Foundation of Our Strategy is the Strongest
Menthol Brand in the Industry
Net Promoter Score
2012 Share of the
Menthol Market
Source: 2010 Lorillard Adult Consumer Survey and research company benchmarks
and Lorillard proprietary retail database (EXCEL).
6
Lorillard +0.2 pts
Newport
Cigarettes
Average
Cigars
Average
Overall CPG
Average
Beverage
Average
63%
57%
53%
23%
7%
39.3%
Newport
Other
Lorillard |
![]() With
The Best Pricing Dynamics With The Best Pricing Dynamics
Source: Lorillard proprietary retail database (EXCEL). Camel Menthol
includes Camel Crush. * Traditional premium price defined as within 50 cents
of most typical per-pack promotional level 7
2012 Percent of Menthol Promoted
With Factory Packed Discounts
Newport
Menthol
Marlboro
Mainline
Menthol
All
Marlboro
Menthol
Marlboro
Black
Menthol
Camel
Menthol
2012 Percent of Brand
At Traditional Premium Price*
Newport
Marlboro
1%
49%
26%
13%
36%
92%
69% |
![]() And
Pursuing Close-in Adjacencies And Pursuing Close-in Adjacencies
8
Just Under 1 share &
growing
90% Incremental
74% Sourced from
Premium
96% Positive Intent to
Purchase
Promotions into 12
new states
Narrows price gap vs.
competition
Unit volumes gaining
double-digits
Acquired April 2012
Growing rapidly
Leading technology
Inclusion in harm
reduction debate
30%-40% market share
Source: Lorillard proprietary retail database (EXCEL) and Newport
Non-Menthol Source of Business Survey, 2011 |
![]()
Category
estimated
at
$1B
with 100% annual growth*
Q4
national
retail
roll-out
75,000+ outlets currently
National TV and print
advertising campaign ($40
MM 2012 marketing spend)
Product enhancements &
quality controls
Increased manufacturing
capacity & inventory
blu eCigs is a Huge Opportunity
blu eCigs is a Huge Opportunity
9
* Source:
Nik
Modi
-
UBS
Research
estimates,
research
note
dated
9/23/2012 |
![]() And
e-cigs is a Business Worth Investing In And e-cigs is a Business Worth
Investing In 10
EPS Accretive Within First Full Year
94% awareness among adult smokers
23% trial among adult smokers
5% (or 22% of those who try) become regular users
Likelihood to buy more than doubled from 35% to 75% between
2010 and 2011
20% of users indicate they completely replaced cigarette smoking,
36% smoke less, and 99% are previous tobacco consumers
blu eCigs has the highest brand equity as measured by Net
Promoter Score methodology (46%)
* Source: Lorillard survey of 3,000 adult tobacco consumers, October 2011.
blu eCigs
blu eCigs
Key Industry Statistics
Key Industry Statistics |
![]()
National launch in May, no
SE required
Appeals to competitive
premium menthol smokers
Additional 50¢
buydown in
most states
Supported with strong retail
point-of-sale marketing
Positive consumer testing
with high future purchase
intent
We Remain Optimistic on 2013 in Cigarettes As Well,
Despite Regulatory Headwinds
11
4 92 |
![]() We
are Managing Through Regulatory Headwinds We are Managing Through Regulatory
Headwinds 12
Substantial Equivalence (SE) Applications
Implied 90 day reviews have waited more than 2 years
Process is moving forward; Lorillard has submitted Citizens Petition
FDA Review of Menthol
Awaiting peer-reviewed assessment of science and FDA comments
Lorillard will remain active in the process
providing comments and
defending our freedom to operate
Deeming Regulations on e-cigarettes
FDA regulations exerting authority over e-cigs expected in April
|
![]() Three
Financial Scenarios Depending on Regulatory Environment
All Delivering Double-Digit Shareholder Return*
Three Financial Scenarios Depending on Regulatory
Environment
All Delivering Double-Digit Shareholder Return*
Heightened promotion
environment (1%-3%
pricing)
No new products
Share repurchases from
free cash flow
Limited contribution from
blu eCigs
Low-Double Digit
High-Single Digit
Mid-Single Digit
Normal historical pricing
(4%-5%)
No new products
Share repurchases from
free cash flow
Limited contribution from
blu eCigs
Normal historical pricing
(4%-5%)
New incremental products
Additional leverage-driven
share repurchases
Meaningful contribution
from blu eCigs
13
Potential Long-Term EPS Growth Rate Scenarios
Potential Long-Term EPS Growth Rate Scenarios
* As measured by earnings per share growth and the dividend yield.
|
![]() Appendix A
Regulation G Reconciliations
Appendix A
Regulation G Reconciliations
Reconciliation of Reported (GAAP) to Adjusted (Non-GAAP)
Results
(Amounts in millions, except per share data) (Unaudited)
Year ended December 31, 2011
Gross
Profit
Operating
Income
Net
Income
Diluted
EPS
Reported (GAAP) results
$2,343
$1,892
$1,116
$2.66
GAAP results include the following:
1)
Impact of RAI mark-to-market pension accounting
adjustments on Lorillards tobacco settlement expense
included in cost of sales
(25)
(25)
(15)
(0.03)
Adjusted (Non-GAAP) results
$2,318
$1,867
$1,101
$2.63
Year ended December 31, 2012
Gross
Profit
Operating
Income
Net
Income
Diluted
EPS
Reported (GAAP) results
$2,382
$1,878
$1,099
$2.81
GAAP results include the following:
1)
Expenses incurred in conjunction with the acquisition of blu
eCigs
-
6
4
0.01
2)
Impact of RJRT adjustments to its 2001-2005 operating
income and restructuring charges on Lorillards tobacco
settlement expense included in cost of sales
7
7
5
0.01
3)
Impact of RAI mark-to-market pension accounting
adjustments on Lorillards tobacco settlement expense
included in cost of sales
(8)
(8)
(5)
(0.01)
Adjusted (Non-GAAP) results
$2,381
$1,883
$1,103
$2.82
14 |
![]() 15 |
8QI(A7*LN[
MGKT.#U^M>FZ;.\EA+O(/SL`5'!`/%<+%*;[Q%;JA'$H&[K@*O(_6NOM9S:6Y
ML60,%!8/CKU-885RY4WU.K,'%O;4\J\9%[O6[IX5'[MMI(.#_GK61#<-!;3R
MD!7B4MOQR."#^."175:C$BWURK+N9I"_'0YK"U[2Y[B![*Q;,]WB)"?<\G\L
M_E6BA%U+GITX0A251K:-[?(\?24S7#R8)+N3@^YKTGX)VT3?$#3)A.I978*B
MGELHU<_JWALZ7JLVF(658I6596&=RCIS^-;GP9MI(_B7I2LQQ'(P&T<.-C#`
M-=L)^\EYGC5\#-4G4?:_X7.W\8'_`(K#6Q_T_3_^C&KF/$?_`"+^I_\`7K+_
M`.@&NF\8G_BL-;_Z_I__`$8UF!0/E7<]$FO84=!YF2[`!<\GZ5S/P
MX`BNM:4DDFZD//H9#BN=\$E]5\46+W$\+):,\B['8[CL/'/IG->F:/:6\$C.
MJ%4E#;B>><]?SK2$^2:,:]-3IM+JG^1TVA3VB6L\=[(54NKJ!G).#FM!K_1T
M8GRWD;`&2.PZ5R:,5XY;MPI-3(LCD8B?![GBO5G[*]W+\3YK#U,5&"A"GMY'
M3IKEC'Q'9@#J,USNHNMU=2RKQN8L.^*5+>1@
N3LBB<\]E7''Y5V>J>
M(S]J,L8V06Q#18ZR#&3D=O3\:\ZTBYBT[Q)>1QQB.U,*QF.,#[I7!Q_.O0K:
MT`BBET4V]]NC*N\P&5SVQVXJU)O1%*G37O3.H:[E$9N#+(8-N\N&`&W&?Y5Y
MSKBRZG:W4RQI-/N\Z(LN0'!RN[^6:Z'6)-:_LV2&XFL8K=D*LAQR/0?@*Y&.
M8V)6:`#
M
N