Exhibit 99.2
Contact: Peter W. Keegan
Senior Vice President
(212) 521-2950
Candace Leeds
V.P. of Public Affairs
(212) 521-2416
Joshua E. Kahn
Investor Relations
(212) 521-2788
FOR IMMEDIATE RELEASE
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CAROLINA GROUP REPORTS
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NET INCOME FOR 2003
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NEW YORK, February 12, 2004-Loews Corporation (NYSE:LTR) reported today
Carolina Group net income for the 2003 fourth quarter of $119.1 million,
compared to $160.3 million in the 2002 fourth quarter. Net income attributable
to the Loews Group intergroup interest for the fourth quarter of 2003 amounted
to $84.3 million, compared to $123.4 million in the comparable period of the
prior year. Net income attributable to Carolina Group stock (NYSE:CG) for the
fourth quarter of 2003 was $34.8 million, or $0.74 per share of Carolina Group
stock, compared to $36.9 million, or $0.92 per share in the prior year.
Carolina Group net income for the 2003 fourth quarter includes net
investment gains of $0.6 million, compared to $2.2 million in the prior year.
Net investment gains attributable to Carolina Group stock in the fourth
quarter of 2003 and 2002 were $0.2 million and $0.5 million.
Net sales for the Carolina Group were $787.7 million in the fourth quarter
of 2003, compared to $834.3 million in 2002. The decline in net sales reflects
increased sales promotion expenses, partially offset by improved unit sales
volume of 6.9%.
Carolina Group net income for the year ended 2003 was $468.3 million,
compared to $681.5 million in the comparable period of the prior year. Net
income for 2003 was reduced by after-tax charges of $17.1 million to settle
litigation with tobacco growers and $17.5 million to resolve indemnification
claims and trademark matters in connection with the 1977 sale by Lorillard of
its international business.
Net income attributable to the Loews Group intergroup interest for the year
ended 2003 amounted to $353.1 million, compared to $540.8 million in the
comparable period of the prior year. Net income attributable to Carolina Group
stock for the year ended 2003 was $115.2 million or $2.76 per share of
Carolina Group stock, compared to $140.7 million or $3.50 per share of
Carolina Group stock in 2002, and reflects eleven months of actual results
commencing with the initial issuance of Carolina Group stock by Loews
Corporation in February 2002.
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Carolina Group net income for the year ended 2003 includes net investment
losses of $6.3 million, compared to gains of $23.4 million in the prior year.
Net investment (losses) gains attributable to Carolina Group stock for the
years ended 2003 and 2002 were $(1.4) million and $5.3 million.
Net sales for the Carolina Group were $3.256 billion in 2003 compared to
$3.798 billion in 2002. The decline in net sales reflects lower unit sales
volume of 2.8% and increased sales promotion expenses.
On a pro forma basis, assuming the Carolina Group stock had been issued at
January 1, 2002, net income attributable to Carolina Group stock for the year
ended 2002 would have been $154.7 million or $3.85 per share of Carolina Group
stock.
This pro forma information is based on the historical results of operations
of the Carolina Group, adjusted to accrue interest expense at 8% per annum on
$2.500 billion of notional intergroup debt and an adjustment to income taxes
for the impact of the interest expense. Per share amounts are based on income
available to Carolina Group shareholders. At December 31, 2003, the
outstanding balance of notional debt was $2.032 billion.
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.
On November 25, 2003, Loews Corporation sold 18,055,000 shares of Carolina
Group stock for net proceeds of $399.5 million. As of December 31, 2003, there
were 57,965,000 shares of Carolina Group stock outstanding. 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.
# # #
Loews Corporation has issued a separate press release reporting its
consolidated results for the fourth quarter and full-year of 2003, which
accompanies this press release.
A conference call to discuss the fourth quarter and full-year results of
Loews Corporation has been scheduled for 11:00 a.m. EST, Thursday, February
12, 2004. 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. An
online replay will be available at the Company's website for one week
following the call.
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Carolina Group
Financial Review
December 31,
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Three Months Year Ended
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2003 2002 2003 2002 2002(e)
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(Amounts in millions, except per share data)
Pro Forma
<s> <c> <c> <c> <c> <c>
Net sales (a) $ 787.7 $ 834.3 $3,255.6 $3,797.7 $3,797.7
Cost of sales (a) (b) 457.7 445.5 1,893.1 2,172.4 2,172.4
Selling, advertising and administrative (c) 107.8 92.6 460.6 409.3 409.3
----------------------------------------------------
Total operating costs and expenses 565.5 538.1 2,353.7 2,581.7 2,581.7
----------------------------------------------------
Operating income 222.2 296.2 901.9 1,216.0 1,216.0
Investment income (d) 11.5 13.5 32.1 83.0 83.0
Interest expense (42.1) (49.4) (182.8) (178.4) (199.4)
----------------------------------------------------
Income before income taxes 191.6 260.3 751.2 1,120.6 1,099.6
Income taxes 72.5 100.0 282.9 439.1 430.9
----------------------------------------------------
Net income 119.1 160.3 468.3 681.5 668.7
Earnings attributable to the Loews Group
intergroup interest (f) 84.3 123.4 353.1 540.8 514.0
----------------------------------------------------
Income attributable to Carolina Group
shareholders (g) $ 34.8 $ 36.9 $ 115.2 $ 140.7 $ 154.7
====================================================
Per share of Carolina Group stock (h) $ 0.74 $ 0.92 $ 2.76 $ 3.50 $ 3.85
====================================================
Weighted number of shares outstanding 47.17 39.91 41.74 40.15 40.15
====================================================
(a) Includes excise taxes of $158.0, $149.6, $651.4 and $667.6 for the
respective periods.
(b) Includes charges of $193.0, $219.3, $785.2 and $1,062.2 ($119.9, $135.5,
$489.5 and $646.1 after taxes) to accrue obligations under the State
Settlement Agreements for the respective periods.
(c) Includes a $27.5 charge in the year ended December 31, 2003 ($17.1 after
taxes) to settle litigation with tobacco growers and a $28.0 charge in
the year ended December 31, 2003 ($17.5 after taxes) to resolve
indemnification claims and trademark matters in connection with the 1977
sale by Lorillard of its international business.
(d) Includes $1.0, $3.4, ($9.7) and $36.1 of investment gains (losses) for
the respective periods.
(e) Includes pro forma adjustment to accrue interest expense at 8% per annum
on $2,500.0 of notional intergroup debt and an adjustment to income taxes
for the impact of the interest expense for the period prior to the
issuance of Carolina Group stock.
(f) Prior to November 25, 2003, the Loews Group's intergroup interest in the
earnings of the Carolina Group reflected share equivalents amounting to
133,500,000 shares of 173,750,000 share and share equivalents
outstanding. Subsequent to the Loews Group's sale of 18,055,000 shares of
Carolina Group stock, the Loews Group's intergroup interest in the
earnings of the Carolina Group reflected share equivalents amounting to
115,445,000 shares of 173,410,000 share and share equivalents
outstanding. As of December 31, 2003, there were 57,965,000 shares of
Carolina Group stock outstanding.
(g) Represents 29.23% and 24.59% of the economic interest in the Carolina
Group for the three months and year ended December 31, 2003 and 23.01%
and 23.12% for the three and eleven months ended December 31, 2002. On a
pro forma basis, the economic interest is 23.13%.
(h) Earnings per common share-assuming dilution is not presented because
securities that could potentially dilute basic earnings per share in the
future would have been insignificant or antidilutive for the periods
presented. Pro forma earnings per share of Carolina Group stock assumes
the Carolina Group was a separate group as of January 1, 2002.
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Carolina Group
Supplemental Information
Domestic U.S. unit volume shipped by Lorillard Tobacco Company to its direct
buying customers by brand (all units in thousands):
December 31,
---------------------------------------------
Three Months Years Ended
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2003 2002 2003 2002
---------------------------------------------
<s> <c> <c> <c> <c>
Premium Brands
Total Newport 7,508,067 6,896,141 30,976,222 31,171,947
Total Kent Family 246,522 303,624 1,063,534 1,344,233
Total True 183,297 214,940 777,681 936,212
Total Max 12,471 15,303 53,970 66,192
Total Satin 2,496 3,084 10,830 14,000
Total Triumph 771 1,116 3,726 4,743
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Total Premium Brands 7,953,624 7,434,208 32,885,963 33,537,327
---------------------------------------------
Discount Brands
Total Old Gold 243,108 281,147 1,030,580 1,297,404
Total Maverick 151,590 94,880 514,341 596,938
---------------------------------------------
Total Discount Brands 394,698 376,027 1,544,921 1,894,342
---------------------------------------------
Total Domestic Cigarettes 8,348,322 7,810,235 34,430,884 35,431,669
=============================================
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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