EX-99.2 3 cg_exbcomplete.htm CAROLINA GROUP PRESS RELEASE Carolina Group Press Release
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 SECOND QUARTER OF 2007


NEW YORK, July 30, 2007—Loews Corporation (NYSE:LTR) today reported Carolina Group net income for the 2007 second quarter of $227.1 million, compared to $187.2 million in the 2006 second quarter. The increase in net income is primarily due to higher effective unit prices resulting from a December 2006 price increase, an increase in unit sales volume 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 second quarter of 2007 was $1.30, compared to $1.09 in the comparable period of the prior year. Carolina Group stock represented a 62.4% and 50.1% economic interest in the Carolina Group for the three months ended June 30, 2007 and 2006, respectively.

Net sales for the Carolina Group were $1,055.4 million in the second quarter of 2007, compared to $977.3 million in the 2006 second quarter.

Carolina Group net income for the first half of 2007 was $415.8 million, compared to $337.3 million in the 2006 first half. 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 half of 2007 was $2.39, compared to $1.96 in the comparable period of the prior year.

Net sales for the Carolina Group were $1.968 billion in the first half of 2007, compared to $1.832 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 $12.9 million, $18.1 million, $27.5 million and $37.4 million, net of taxes, for the three and six months ended June 30, 2007 and 2006, respectively. At June 30, 2007, $978.0 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.

At June 30, 2007 there were 108,443,641 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 second quarter of 2007 is being issued contemporaneously with this report.

A conference call to discuss the second quarter results of Loews Corporation has been scheduled for 11:00 a.m. EDT, Monday, July 30, 2007. A live broadcast 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. The conference ID number is 8937174. An online replay will be available at the Company’s website following the call.


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Carolina Group
Financial Review

   
June 30,
  
   
Three Months
  
Six Months
  
   
2007
  
2006
  
2007
  
2006
  
       
   
(Amounts in millions, except per share data)
  
                           
Net sales (a)
  
$
1,055.4
  
$
977.3
  
$
1,968.4
  
$
1,832.1
  
                           
Cost of sales (a) (b)
    
613.5
    
552.6
    
1,157.8
    
1,064.3
  
Selling, advertising and administrative (c)
    
82.9
    
108.9
    
164.8
    
201.8
  
                           
Total operating costs and expenses
    
696.4
    
661.5
    
1,322.6
    
1,266.1
  
                           
Operating income
    
359.0
    
315.8
    
645.8
    
566.0
  
Investment income and other (d)
    
26.4
    
21.3
    
60.7
    
47.3
  
Interest expense
    
(23.0
)
  
(29.8
)
  
(46.2
)
  
(61.3
)
                           
Income before income taxes
    
362.4
    
307.3
    
660.3
    
552.0
  
Income taxes
    
135.3
    
120.1
    
244.5
    
214.7
  
                           
Net income
    
227.1
    
187.2
    
415.8
    
337.3
  
Earnings attributable to the Loews Group intergroup                          
  interest (e)
    
85.4
    
93.4
    
156.5
    
175.9
  
                           
Income attributable to Carolina Group shareholders (f)
  
$
141.7
  
$
93.8
  
$
259.3
  
$
161.4
  
                           
Per share of Carolina Group stock
  
$
1.30
  
$
1.09
  
$
2.39
  
$
1.96
  
                           
Weighted diluted number of shares
    
108.56
    
86.11
    
108.54
    
82.24
  
                           
Notional, intergroup debt owned by the Carolina Group to
                          
the Loews Group
                          
June 30, 2007
  
$
978.0
                    
December 31, 2006
    
1,229.7
                    

(a)
Includes excise taxes of $180.0, $176.7, $341.7 and $340.6 for the respective periods.
(b)
Includes charges of $275.2, $236.5, $524.3 and $453.5 ($172.4, $144.0, $330.1 and $277.1 after taxes) to accrue obligations under the State Settlement Agreements for the respective periods.
(c)
Includes restructuring costs of $15.5 for the three and six months ended June 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 $8.4, $3.8, $19.3 and $10.4 ($5.3, $2.3, $12.1 and $6.3 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 173,888,641 share and share equivalents outstanding as of June 30, 2007 and share equivalents amounting to 80,445,000 shares of 173,736,246 share and share equivalents outstanding as of June 30, 2006. As of June 30, 2007, there were 108,443,641 shares of Carolina Group stock outstanding.
(f)
Represents 62.4%, 50.1%, 62.4% and 47.9% 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):

 
June 30,
 
Three Months
Six Months
 
2007
2006
2007
2006
         
Full Price Brands
        
         
Total Newport
8,716,456
8,360,490
16,448,029
16,138,155
Total Kent Family
127,740
159,003
244,707
305,019
Total True
115,440
134,946
220,110
255,864
Total Max
7,821
8,976
14,721
17,133
Total Satin
  
1,482
72
2,670
         
Total Full Price Brands
8,967,457
8,664,897
16,927,639
16,718,841
         
Price/Value Brands
        
         
Total Old Gold
162,606
211,293
311,558
395,109
Total Maverick
343,398
265,380
621,516
495,732
         
Total Price/Value Brands
506,004
476,673
933,074
890,841
         
Total Domestic Cigarettes
9,473,461
9,141,570
17,860,713
17,609,682
         
Total Puerto Rico and U.S. Possessions
212,652
212,064
402,744
400,032
         
Grand Total
9,686,113
9,353,634
18,263,457
18,009,714

Notes:
   
1.
This information is unaudited and 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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