Exhibit 99.2
Contact: Peter W. Keegan
Senior Vice President
(212) 521-2950
Candace Leeds
V.P. of Public Affairs
CAROLINA GROUP (212) 521-2416
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Joshua E. Kahn
LOEWS CORPORATION Investor Relations
- ----------------- (212) 521-2788
FOR IMMEDIATE RELEASE
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CAROLINA GROUP REPORTS NET INCOME
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FOR THE SECOND QUARTER OF 2004
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NEW YORK, July 29, 2004-Loews Corporation (NYSE:LTR) today reported Carolina
Group net income for the 2004 second quarter of $121.4 million, compared to
$108.4 million in the 2003 second quarter. Net income for the second quarter
of 2003 included a $26.0 million charge ($16.8 million after taxes) to settle
litigation with tobacco growers. Net income attributable to Carolina Group
stock (NYSE:CG) for the second quarter of 2004 was $40.6 million, or $0.70 per
share of Carolina Group stock, compared to $25.0 million, or $0.63 per share
in the comparable period of the prior year.
The increase in net income attributable to Carolina Group stock for the
second quarter of 2004, as compared to the corresponding period of the prior
year, reflects the sale by Loews Corporation of 18,055,000 shares of Carolina
Group stock in November of 2003. Net income per share of Carolina Group stock
was not impacted by the sale of Carolina Group stock in November of 2003.
Carolina Group stock represents a 33.43% and 23.01% economic interest in the
Carolina Group for the three months ended June 30, 2004 and 2003,
respectively.
Net sales for the Carolina Group were $868.1 million in the second quarter
of 2004, compared to $780.9 million in the 2003 second quarter. The increase
in net sales reflects lower sales promotion expenses (accounted for as a
reduction in net sales) and an increase in unit sales volume of 3.8%.
Results of operations of the Carolina Group include interest expense of
$24.3 and $30.6 million, net of taxes, for the three months ended June 30,
2004 and 2003, respectively, on notional intergroup debt. At June 30, 2004,
$1.98 billion principal amount of notional intergroup debt was outstanding.
Carolina Group net income for the first half of 2004 was $224.4 million,
compared to $232.8 million in the 2003 first half. Net income for the first
half of 2003 included a $26.0
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million charge ($16.8 after taxes) to settle litigation with tobacco growers
and a $28.0 million charge ($17.1 million after taxes) to resolve
indemnification claims and trademark matters in connection with the 1977 sale
by Lorillard of its international business. Net income attributable to
Carolina Group stock for the first half of 2004 was
$75.0 million, or $1.29 per share of Carolina Group stock, compared to $53.6
million, or $1.34 per share in the comparable period of the prior year. The
increase in net income reflects the November of 2003 sale by Loews Corporation
of Carolina Group stock discussed above.
Net sales for the Carolina Group were $1.636 billion in the first half of
2004, compared to $1.625 billion in the comparable period of the prior year.
The increase in net sales reflects an increase in unit sales volume of 1.2%
offset by increased sales promotion expenses (accounted for as a reduction in
net sales).
Results of operations of the Carolina Group include interest expense of
$48.9 and $59.9 million, net of taxes, for the six months ended June 30, 2004
and 2003, respectively, on notional intergroup debt.
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.
As of June 30, 2004, there were 57,966,750 shares of Carolina Group stock
outstanding representing a 33.43% 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.
# # #
Loews Corporation has issued a separate press release reporting its
consolidated results for the second quarter of 2004, which accompanies this
press release.
A conference call to discuss the second quarter results of Loews Corporation
has been scheduled for 11:00 a.m. EDT, Thursday, July 29, 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 following the call.
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Carolina Group
Financial Review
June 30,
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Three Months Six Months
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2004 2003 2004 2003
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(Amounts in millions, except per share data)
<s> <c> <c> <c> <c>
Net sales (a) $ 868.1 $ 780.9 $1,636.0 $1,625.1
Cost of sales (a) (b) 532.3 454.9 999.6 921.4
Selling, advertising and administrative (c) 103.3 120.1 203.3 254.8
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Total operating costs and expenses 635.6 575.0 1,202.9 1,176.2
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Operating income 232.5 205.9 433.1 448.9
Investment income 6.5 8.9 15.0 17.7
Interest expense (39.8) (47.3) (80.1) (95.5)
-----------------------------------------
Income before income taxes 199.2 167.5 368.0 371.1
Income taxes 77.8 59.1 143.6 138.3
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Net income 121.4 108.4 224.4 232.8
Earnings attributable to the Loews Group
intergroup interest 80.8 83.4 149.4 179.2
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Income attributable to Carolina Group
shareholders (d) $ 40.6 $ 25.0 $ 75.0 $ 53.6
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Per share of Carolina Group stock (e) $ 0.70 $ 0.63 $ 1.29 $ 1.34
=========================================
Weighted number of shares outstanding 57.97 39.91 57.97 39.91
=========================================
(a) Includes excise taxes of $169.5, $163.4, $325.7 and $320.3 for the respective periods.
(b) Includes charges of $234.3, $180.1, $435.4 and $377.6 ($142.8, $116.3, $265.5 and $236.9
after taxes) to accrue obligation under the State Settlement Agreements for the respective
periods.
(c) Includes a $26.0 charge ($16.8 after taxes) in the three and six months ended June 30, 2003
to settle litigation with tobacco growers and includes a $28.0 charge ($17.1 after taxes) in
the six months ended June 30, 2003 to resolve indemnification claims and trademark matters
in connection with the 1977 sale by Lorillard of its international business.
(d) Represents 33.43%, 23.01%, 33.43% and 23.01% of the economic interest in the Carolina Group
for the respective periods.
(e) 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.
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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 as follows (all units in
thousands):
June 30,
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Three Months Six Months
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2004 2003 2004 2003
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Full Price Brands
<s> <c> <c> <c> <c>
Total Newport 8,102,336 7,700,142 15,482,294 15,171,507
Total Kent Family 225,173 279,439 435,622 548,428
Total True 173,459 202,554 334,223 395,298
Total Max 12,006 14,481 23,313 28,089
Total Satin 2,133 2,871 4,227 5,697
Total Triumph 358 945 886 1,962
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Total Full Price Brands 8,515,465 8,200,432 16,280,565 16,150,981
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Price/Value Brands
Total Old Gold 234,240 271,575 453,054 517,920
Total Maverick 182,244 118,149 337,806 200,823
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Total Price/Value Brands 416,484 389,724 790,860 718,743
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Total Domestic Cigarettes 8,931,949 8,590,156 17,071,425 16,869,724
Total Puerto Rico and U.S. Possessions 199,476 209,723 411,340 401,741
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Grand Total 9,131,425 8,799,879 17,482,765 17,271,465
===============================================
Notes:
1. This information is unaudited and is not adjusted for returns.
2. Unit volume for a quarter is not necessarily indicative of unit volume for
any subsequent period.
3. Unit volume is not necessarily indicative of the level of revenues for any
period.
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