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 THIRD QUARTER OF 2004
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NEW YORK, October 28, 2004-Loews Corporation (NYSE:LTR) today reported
Carolina Group net income for the 2004 third quarter of $159.9 million,
compared to $116.4 million in the 2003 third quarter. Net income attributable
to Carolina Group stock (NYSE:CG) for the third quarter of 2004 was $53.4
million, or $0.92 per share of Carolina Group stock, compared to $26.8
million, or $0.67 per share in the comparable period of the prior year.
Net income attributable to Carolina Group stock for the third quarter of
2004 increased by $26.6 million, as compared to the comparable period of the
prior year. $16.6 million of this increase reflects the increased economic
interest (from 23.01% to 33.43%) of the Carolina Group stock in the Carolina
Group as a result of 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 this sale of Carolina Group stock.
Net sales for the Carolina Group were $879.3 million in the third quarter of
2004, compared to $842.8 million in the 2003 third quarter. The increase in
net sales reflects lower sales promotion expenses (accounted for as a
reduction in net sales) offset by a decrease in unit sales volume of 3.5%.
Results of operations of the Carolina Group include interest expense of
$24.3 and $27.9 million, net of taxes, for the three months ended September
30, 2004 and 2003, respectively, on notional intergroup debt. At September 30,
2004, $1.94 billion principal amount of notional intergroup debt was
outstanding.
Carolina Group net income for the first nine months of 2004 was $384.3
million, compared to $349.2 million in the comparable period of the prior
year. Net income for the first nine months of 2003 included a $26.0 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 nine months of 2004 was $128.4 million, or $2.21 per share of
Carolina Group stock, compared to $80.4 million, or $2.01 per share in the
comparable period of the prior year. The $48.0 million increase in net income
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attributable to Carolina Group stock includes an increase of $40.0 million due
to the November of 2003 sale by Loews Corporation of Carolina Group stock
discussed above.
Net sales for the Carolina Group were $2.515 billion in the first nine
months of 2004, compared to $2.468 billion in the comparable period of the
prior year. The increase in net sales reflects a decrease in sales promotion
expenses (accounted for as a reduction in net sales) offset by a decrease in
unit sales volume of 0.4%.
Results of operations of the Carolina Group include interest expense of
$73.3 and $87.8 million, net of taxes, for the nine months ended September 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 September 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 third quarter of 2004, which accompanies this
press release.
A conference call to discuss the third quarter results of Loews Corporation
has been scheduled for 11:00 a.m. EST, Thursday, October 28, 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
September 30,
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Three Months Nine 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) $ 879.3 $ 842.8 $2,515.3 $2,467.9
Cost of sales (a) (b) 504.8 514.0 1,504.4 1,435.4
Selling, advertising and
administrative (c) 85.1 98.0 288.4 352.8
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Total operating costs and expenses 589.9 612.0 1,792.8 1,788.2
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Operating income 289.4 230.8 722.5 679.7
Investment income 8.1 2.9 23.1 20.6
Interest expense (39.3) (45.2) (119.4) (140.7)
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Income before income taxes 258.2 188.5 626.2 559.6
Income taxes 98.3 72.1 241.9 210.4
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Net income 159.9 116.4 384.3 349.2
Earnings attributable to the Loews
Group intergroup interest 106.5 89.6 255.9 268.8
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Income attributable to Carolina
Group shareholders (d) $ 53.4 $ 26.8 $ 128.4 $ 80.4
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Per share of Carolina Group
stock (e) $ 0.92 $ 0.67 $ 2.21 $ 2.01
===========================================
Weighted number of shares
outstanding 57.97 39.91 57.97 39.91
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(a) Includes excise taxes of $167.9, $173.1, $493.6 and $493.4 for the
respective periods.
(b) Includes charges of $213.6, $214.6, $649.0 and $592.2 ($132.8, $132.5,
$398.3 and $369.6 after taxes) to accrue obligations under the State
Settlement Agreements for the respective periods.
(c) Includes a$26.0 charge ($16.8 after taxes) to settle litigation with
tobacco growers and a $28.0 charge ($17.1 after taxes) to resolve
indeminifaction claims and trademark matters in connection with the 1977
sale by Lorillard of its international business in the nine months ended
September 30, 2003.
(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
securites 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
Information regarding unit volume shipped by Lorillard Tobacco Company to its
direct buying customers by brand f
September 30,
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Three Months Nine Months
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2004 2003 2004 2003
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<s> <c> <c> <c> <c>
Full Price Brands
Total Newport 8,040,274 8,296,648 23,522,568 23,468,155
Total Kent Family 215,505 268,584 651,127 817,012
Total True 167,970 199,086 502,193 594,384
Total Max 11,364 13,410 34,677 41,499
Total Satin 1,959 2,637 6,186 8,334
Total Triumph 993 886 2,955
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Total Full Price Brands 8,437,072 8,781,358 24,717,637 24,932,339
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Price/Value Brands
Total Old Gold 233,650 269,552 686,704 787,472
Total Maverick 178,734 161,927 516,540 362,750
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Total Price/Value Brands 412,384 431,479 1,203,244 1,150,222
Total Domestic Cigarettes 8,849,456 9,212,837 25,920,881 26,082,561
Total Puerto Rico and U.S.
Possessions 187,519 153,017 598,859 554,758
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Grand Total 9,036,975 9,365,854 26,519,740 26,637,319
===============================================
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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