Lorillard (LO) 10-Q 6 May 10 2010 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information (USD $)
In Billions, except Share data	3 Months Ended Mar. 31, 2010	Apr. 28, 2010	Jun. 30, 2009
Document and Entity Information [Abstract]
Entity Registrant Name	LORILLARD, INC.
Entity Central Index Key	0001424847
Document Type	10-Q
Document Period End Date	2010-03-31
Amendment Flag	false
Document Fiscal Year Focus	2,010
Document Fiscal Period Focus	Q1
Company Fiscal Year End Date	--12-31
Entity Well Known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float			11.3
Entity Common Stock Shares Outstanding		152,854,802

Consolidated Condensed Balance

Consolidated Condensed Balance Sheets (USD $)
In Millions	3 Months Ended Mar. 31, 2010	12 Months Ended Dec. 31, 2009
Assets:
Cash and cash equivalents	$1,659	$1,384
Accounts receivable, less allowances of $3 and $3	19	9
Other receivables	38	41
Inventories	321	281
Deferred income taxes	467	466
Total current assets	2,504	2,181
Plant and equipment	238	237
Prepaid pension assets	61	60
Deferred income taxes	47	48
Other assets	52	49
Total assets	2,902	2,575
Liabilities and Shareholders' Equity (Deficit):
Accounts and drafts payable	79	23
Accrued liabilities	311	318
Settlement costs	1,258	982
Income taxes	138	14
Total current liabilities	1,786	1,337
Long-term debt	735	722
Postretirement pension, medical and life insurance benefits	294	300
Other liabilities	124	129
Total liabilities	2,939	2,488
Commitments and Contingent Liabilities
Shareholders' Equity (Deficit):
Preferred stock, $0.01 par value, authorized 10 million shares	0	0
Common stock:
Authorized-600 million shares; par value $0.01 per share Issued-174 million and 174 million shares Outstanding-153 million and 156 million shares	2	2
Additional paid-in capital	233	234
Earnings retained in the business	1,359	1,282
Accumulated other comprehensive loss	(117)	(121)
Treasury stock at cost, 21 million and 18 million shares	(1,514)	(1,310)
Total shareholders' equity (deficit)	(37)	87
Total liabilities and shareholders' equity	$2,902	$2,575

1_Consolidated Condensed Balanc

Consolidated Condensed Balance Sheets (Parenthetical) (USD $)
In Millions	Mar. 31, 2010	Dec. 31, 2009
Assets:
Allowance	$3	$3
Shareholders' Equity (Deficit):
Preferred stock, par value	0.01	0.01
Preferred stock, shares authorized	10	10
Common stock:
Common stock, par value	0.01	0.01
Common stock, shares Authorized	600	600
Common stock, shares Issued	174	174
Common stock, shares Outstanding	153	156
Treasury stock at cost, shares	21	18

Consolidated Condensed Statemen

Consolidated Condensed Statements of Income (Unaudited) (USD $)
In Millions, except Per Share data	3 Months Ended Mar. 31, 2010	3 Months Ended Mar. 31, 2009
Consolidated Condensed Statements of Income [Abstract]
Net sales (including excise taxes of $437 and $150, respectively)	$1,360	$917
Cost of sales	882	534
Gross profit	478	383
Selling, general and administrative	96	89
Operating income	382	294
Investment income	1	1
Interest expense	(10)
Income before income taxes	373	295
Income taxes	141	111
Net income	$232	$184
Earnings per share:
Basic	1.5	1.09
Diluted	1.5	1.09
Weighted average number of shares outstanding:
Basic	154.55	168.07
Diluted	154.72	168.18

2_Consolidated Condensed Statem

Consolidated Condensed Statements of Income (Unaudited) (Parenthetical) (USD $)
In Millions	3 Months Ended Mar. 31, 2010	3 Months Ended Mar. 31, 2009
Consolidated Condensed Statements of Income [Abstract]
Excise taxes	$437	$150

3_Consolidated Condensed Statem

Consolidated Condensed Statements of Shareholders Equity (Deficit) (Unaudited) (USD $)
In Millions	Comprehensive Income	Common Stock	Additional Paid-in Capital	Earnings Retained in the Business	Accumulated Other Comprehensive Loss	Treasury Shares	Total
Beginning Balance at Dec. 31, 2008		$2	$222	$965	($158)	($400)	$631
Comprehensive income:
Net income	184			184			184
Other comprehensive gains, pension liability, net of tax expense of $2 and $2 for the period ended Mar 31, 2009 and Mar 31, 2010	3				3		3
Comprehensive income	187
Dividends paid				(155)			(155)
Share-based compensation			6				6
Ending Balance at Mar. 31, 2009		2	228	994	(155)	(400)	669
Beginning Balance at Dec. 31, 2009		2	234	1,282	(121)	(1,310)	87
Comprehensive income:
Net income	232			232			232
Other comprehensive gains, pension liability, net of tax expense of $2 and $2 for the period ended Mar 31, 2009 and Mar 31, 2010	4				4		4
Comprehensive income	236
Dividends paid				(155)			(155)
Shares repurchased						(204)	(204)
Share-based compensation			(1)				(1)
Ending Balance at Mar. 31, 2010		$2	$233	$1,359	($117)	($1,514)	($37)

4_Consolidated Condensed Statem

Consolidated Condensed Statements of Shareholders' Equity (Deficit) (Parenthetical) (Unaudited) (USD $)
In Millions	3 Months Ended Mar. 31, 2010	3 Months Ended Mar. 31, 2009
Comprehensive income:
Other comprehensive gains, pension liability, tax	$2	$2
Comprehensive Income
Comprehensive income:
Other comprehensive gains, pension liability, tax	2	2
Accumulated Other Comprehensive Loss
Comprehensive income:
Other comprehensive gains, pension liability, tax	$2	$2

5_Consolidated Condensed Statem

Consolidated Condensed Statements of Cash Flows (Unaudited) (USD $)
In Millions	3 Months Ended Mar. 31, 2010	3 Months Ended Mar. 31, 2009
Cash flows from operating activities:
Net income	$232	$184
Adjustments to reconcile net cash provided by (used in) operating activities:
Depreciation and amortization	10	8
Deferred income taxes	1
Share-based compensation	2
Pension, health and life insurance benefits expense	8	11
Pension, health and life insurance contributions	(12)	(4)
Changes in operating assets and liabilities:
Accounts and other receivables	(7)
Inventories	(40)	(98)
Accounts payable and accrued liabilities	51	16
Settlement costs	276	243
Income taxes	124	97
Other assets		(4)
Other	2
Net cash provided by operating activities	647	453
Cash flows from investing activities:
Additions to plant and equipment	(10)	(10)
Net cash used in investing activities	(10)	(10)
Cash flows from financing activities:
Dividends paid	(155)	(155)
Shares repurchased	(204)
Debt issuance costs	(3)
Excess tax benefits from share-based arrangements		4
Net cash used in financing activities	(362)	(151)
Change in cash and cash equivalents	275	292
Cash and cash equivalents, beginning of year	1,384	1,191
Cash and cash equivalents, end of period	1,659	1,483
Cash paid for income taxes	$14	$14

Basis of Presentation

Basis of Presentation
	3 Months Ended Mar. 31, 2010
Basis of Presentation [Abstract]
Basis of Presentation	1. Basis of Presentation Overview. 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 condensed 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 reportable segment through its principal subsidiary, Lorillard Tobacco Company (Lorillard Tobacco). On May7, 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 June10, 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 June16, 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. Subsequent to the issuance of the Companys March31, 2009 consolidated condensed financial statements included in Form 8-K, filed on June11, 2009, the Company determined that immaterial errors existed in the footnote disclosure containing the condensed consolidating statement of cash flows for the three months ended March31, 2009. The Issuers statement of cash flows for the three months ended March31, 2009 has been corrected to reflect $100million 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 $100million 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 condensed statement of cash flows for the three months ended March31, 2009. Additionally, subsequent to the issuance of the Companys March31, 2009 consolidated condensed financial statements included in Form 8-K, filed on June11, 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, healt

Inventories

Inventories
	3 Months Ended Mar. 31, 2010
Inventories [Abstract]
Inventories	2. Inventories Inventories are valued at the lower of cost, determined on a last-in, first-out (LIFO) basis, or market and consisted of the following: March 31, December 31, 2010 2009 (In millions) Leaf tobacco $ 272 $ 236 Manufactured stock 45 41 Material and supplies 4 4 $ 321 $ 281 If the average cost method of accounting was used, inventories would be greater by approximately $193 and $189million at March31, 2010 and December31, 2009, respectively.

Plant and Equipment

Plant and Equipment
	3 Months Ended Mar. 31, 2010
Plant and Equipment [Abstract]
Plant and Equipment	3. Plant and Equipment Plant and equipment is stated at cost and consisted of the following: March 31, December 31, 2010 2009 (In millions) Land $ 3 $ 3 Buildings 87 87 Equipment 562 563 Total 652 653 Accumulated depreciation (414 ) (416 ) Plant and equipment, net $ 238 $ 237

Other Assets

Other Assets
	3 Months Ended Mar. 31, 2010
Other Assets [Abstract]
Other Assets	4. Other Assets Other assets were as follows: March 31, December 31, 2010 2009 (In millions) Other investments $ 15 $ 15 Restricted cash 13 13 Debt issuance costs 8 5 Other prepaid assets 16 16 Total $ 52 $ 49

Accrued Liabilities

Accrued Liabilities
	3 Months Ended Mar. 31, 2010
Accrued Liabilities [Abstract]
Accrued Liabilities	5. Accrued Liabilities Accrued liabilities were as follows: March 31, December 31, 2010 2009 (In millions) Legal fees $ 26 $ 21 Salaries and other compensation 21 16 Medical and other employee benefit plans 31 30 Consumer rebates 48 86 Sales promotion 19 21 Excise and other taxes 86 78 Other accrued liabilities 80 66 Total $ 311 $ 318

Fair Value

Fair Value
	3 Months Ended Mar. 31, 2010
Fair Value [Abstract]
Fair Value	6. 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 as of March31, 2010, were as follows: Level 1 Level 2 Level 3 Total (In millions) Cash and Cash Equivalents: Prime money market funds $ 1,659 $ $ $ 1,659 Total cash and cash equivalents $ 1,659 $ $ $ 1,659 Derivative Liability: Interest rate swaps fixed to floating rate $ $ 15 $ $ 15 Total derivative instruments $ $ 15 $ $ 15 Asset and liabilities measured at fair value on a recurring basis at December31, 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 instruments $ $ 28 $ $ 28 There were no transfers between Level 1 and Level 2 for the twelve months ended December 31, 2009 or the three months ended March31, 2010. 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 9 for additional information on the interest rate swaps.

Credit Agreement

Credit Agreement
	3 Months Ended Mar. 31, 2010
Credit Agreement [Abstract]
Credit Agreement	7. Credit Agreement On March26, 2010, Lorillard Tobacco, the principal, wholly-owned operating subsidiary of the Company, entered into a $185million revolving credit facility (Revolver) that expires March26, 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 between March26, 2010 and March31, 2010.

Long Term Debt

Long Term Debt
	3 Months Ended Mar. 31, 2010
Long Term Debt [Abstract]
Long Term Debt	8. Long Term Debt In June2009, Lorillard Tobacco issued $750million aggregate principal amount of 8.125% unsecured senior notes due June23, 2019 (the 2019 Notes) pursuant to an Indenture, dated June 23, 2009, and First Supplemental Indenture, dated June23, 2009 (the Supplemental Indenture). The 2019 Notes are unconditionally guaranteed on a senior unsecured basis by the Company. 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 (SP) or both Moodys and SP downgrade the 2019 Notes below investment grade (Baa3 and BBB- for Moodys and SP, respectively). 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 SP within 60days 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 March31, 2010, the carrying value of the 2019 Notes was $735million and the fair value was $837million. The fair value of the 2019 Notes was based on market pricing.

Derivative Instruments

Derivative Instruments
	3 Months Ended Mar. 31, 2010
Derivative Instruments [Abstract]
Derivative Instruments	9. Derivative Instruments In September2009, Lorillard Tobacco entered into interest rate swap agreements, which the Company guaranteed, with a total notional amount of $750million to modify its exposure to interest rate risk by 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 4.870% and 4.856% as of March31, 2010 and December31, 2009, respectively. The agreements expire in June2019. 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 $6million for the three months ended March 31, 2010. For derivatives designated as fair value hedges, which relate entirely to hedges of 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 March31, 2010 and December 31, 2009, the adjusted carrying amounts of the hedged debt outstanding were $735million and $722 million, respectively and the amounts included in other liabilities were $15million and $28 million, respectively. If our debt rating is downgraded below Ba2 by Moodys or BB by SP, the swap agreements will terminate and we will be required to cash settle them before their expiration date.

Earnings Per Share

Earnings Per Share
	3 Months Ended Mar. 31, 2010
Earnings Per Share [Abstract]
Earnings Per Share	10. Earnings Per Share Basic and diluted earnings per share (EPS) were calculated using the following: Three Months Ended March 31, 2010 2009 (In millions) Net Earnings $ 232 $ 184 Weighted Average Shares Outstanding Basic 154.55 168.07 Stock Options and Stock Appreciation Rights .17 .11 Weighted Average Shares Outstanding Diluted 154.72 168.18 Options to purchase 0.7million and 0.6million shares of common stock were excluded from the diluted earnings per share calculation because their effect would be anti-dilutive for the quarters ended March31, 2010 and March31, 2009, respectively.

Benefit Plans

Benefit Plans
	3 Months Ended Mar. 31, 2010
Benefit Plans [Abstract]
Benefit Plans	11. Benefit Plans Lorillard has defined benefit pension, postretirement benefits, profit sharing and savings plans for eligible employees. Net periodic benefit cost components were as follows: Three Months Ended March 31, Pension Benefits 2010 2009 (In millions) Service cost $ 4 $ 4 Interest cost 14 14 Expected return on plan assets (17 ) (15 ) Amortization of net loss 2 4 Amortization of prior service cost 1 1 Net periodic benefit cost $ 4 $ 8 Three Months Ended March 31. Other Postretirement Benefits 2010 2009 (In millions) Service cost $ 1 $ 1 Interest cost 3 3 Net periodic benefit cost $ 4 $ 4 Lorillard expects to contribute $19million to its pension plans and $15million to its other postretirement benefit plans in 2010, of which $8million and $4million has been contributed to the pension and postretirement benefit plans as of March31, 2010.

Share Repurchase Programs

Share Repurchase Programs
	3 Months Ended Mar. 31, 2010
Share Repurchase Programs [Abstract]
Share Repurchase Programs	12. Share Repurchase Program As of January19, 2010, the Company completed its $750million share repurchase program that was announced on July27, 2009, after repurchasing an additional 1.1million shares in January2010 for $90million at an average purchase price of $78.36 per share. In February2010, the Board of Directors authorized the repurchase of up to $250million of the Companys common stock. Purchases under this program were 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 were funded from existing cash balances. As of March31, 2010, the Company repurchased 1.5million shares of its common stock for $114 million at an average price of $75.60 per share with $136million the maximum remaining dollar value of shares that could be purchased under the program. This share repurchase program follows on prior share repurchase programs authorized by the Board since the Separation as set forth in the table below: Number of Amount Shares Authorized Authorized Completed Repurchased (In millions) (In millions) July2008 $ 400 October 2008 5.9 May2009 250 July 2009 3.7 July2009 750 January 2010 9.7 Total $ 1,400 19.3

Consolidating Financial Informa

Consolidating Financial Information
	3 Months Ended Mar. 31, 2010
Consolidating Financial Information [Abstract]
Consolidating Financial Information	13. Consolidating Financial Information The following sets forth the condensed consolidating balance sheets as of March31, 2010 and December31, 2009, condensed consolidating statements of income for the three months ended March 31, 2010 and 2009, and condensed consolidating statements of cash flows for the three months ended March31, 2010 and 2009 for Lorillard Tobacco (herein referred to as Issuer) as Issuer of the 2019 Notes (see Note 8 for description of the 2019 Notes), the Company as parent guarantor (herein referred to as Parent), and all other non-guarantor subsidiaries of the Company and Lorillard Tobacco (All Other Subsidiaries). These condensed consolidating financial statements were prepared in accordance with Rule3-10 of SEC RegulationS-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. Condensed Consolidating Balance Sheets March31, 2010 (In millions) (Unaudited) All Total Other Consolidating Parent Issuer Subsidiaries Adjustments Consolidated Assets: Cash and cash equivalents $ 175 $ 1,188 $ 296 $ $ 1,659 Accounts receivable, less allowances of $3 19 19 Other receivables 32 6 38 Inventories 321 321 Deferred income taxes 467 467 Total current assets 175 2,027 302 2,504 Investment in subsidiaries (190 ) 295 (105 ) Plant and equipment 238 238 Prepaid pension assets 61 61 Deferred income taxes (5 ) 48 4 47 Other assets 37 15 52 Total assets $ (20 ) $ 2,706 $ 321 $ (105 ) $ 2,902 Liabilities and Shareholders Equity (Deficit): Accounts and drafts payable $ $ 79 $ $ $ 79 Accrued liabilities 17 364 (70 ) 311 Settlement costs 1,258 1,258 Income taxes 73 65 138 Total current liabilities 17 1,774 (5 ) 1,786 Long-term debt 735 735 Postretirement pension, medical and life insurance benefits 294 294 Other liabilities 110 14 124 Total liabilities 17 2,913 9 2,939 Shareholders Equity (Deficit): Common stock 2 2 Additional paid-in capital 233 275 214 (489 ) 233 Earnings retained in the business 1,359 (365 ) 98 267 1,359 Accumulated other comprehe

Legal Proceedings

Legal Proceedings
	3 Months Ended Mar. 31, 2010
Legal Proceedings [Abstract]
Legal Proceedings	14. Legal Proceedings Tobacco Related Product Liability Litigation As of May3, 2010, approximately 11,215 product liability cases are pending against cigarette manufacturers in the United States. Lorillard Tobacco is a defendant in approximately 10,250 of these cases. Lorillard, Inc. is a co-defendant in approximately 695 cases. Approximately 7,575 of these lawsuits are Engle Progeny Cases, described below, which include approximately 4,400 Engle Progeny claims initially asserted in a small number of multi-plaintiff actions that were severed into separate lawsuits by one Florida federal court during 2009. The pending product liability cases are composed of the types of cases listed below. Pending cases 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. 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. As of May3, 2010, approximately 140 cases are pending against cigarette manufacturers, including approximately 30 cases against Lorillard Tobacco. Lorillard, Inc. is a co-defendant in three 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 approximately 7,575 Engle Progeny Cases. Lorillard, Inc. is a co-defendant in approximately 685 cases. Some of the cases have been filed on behalf of multiple class members. The time period for filing Engle Progeny Cases expired in January2008 and no additional cases may be filed. West Virginia Individual Personal Injury Cases. West Virginia Individual Personal Injury Cases are brought by individuals who allege cancer or other health effects caused by smoking cigarettes, by using smokeless tobacco products, or by addiction to cigarette smoking. The cases are pending in a single West Virginia court and have been consolidated for trial. Lorillard Tobacco is a defendant in approximately 50 of the 700 pending cases that are part of this proceeding. Lorillard, Inc. is not a defendant in any of these cases. The first phase of an anticipated three-phase trial of these consolidated cases is scheduled to begin on June1, 2010. 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 approximately 2,600 pending Flight Attendant Cases. Lorillard, Inc. is not a defendant in any of these cases. The time for filing Flight Attendant Cases expired in 2000 and no additional cases in this category may be filed. ClassAction Cases.

Subsequent Event

Subsequent Event
	3 Months Ended Mar. 31, 2010
Subsequent Event [Abstract]
Subsequent Event	15. Subsequent Event In April2010, Lorillard Tobacco issued $1billion of unsecured senior notes in two tranches (the Notes) pursuant to an Indenture, dated June23, 2009, and the Second Supplemental Indenture, dated April12, 2010 (the Supplemental Indenture). The first tranche was $750million aggregate principal amount of 6.875% Notes due May1, 2020, and the second tranche was $250million aggregate principal amount of 8.125% Notes due May1, 2040. Lorillard Tobacco is the principal, wholly-owned operating subsidiary of the Company and the Notes are unconditionally guaranteed on a senior unsecured basis by the Company. 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 SP within 60days 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. 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 its common stock, acquisitions, additions to working capital and capital expenditures.