Lorillard Reaches Agreement over Disputed MSA Adjustments

          Lorillard Reaches Agreement over Disputed MSA Adjustments

Company expects to receive more than $198 million in credits against future
MSA payments over the next five years

PR Newswire

GREENSBORO, N.C., Dec. 18, 2012

GREENSBORO, N.C., Dec. 18, 2012 /PRNewswire/ --Lorillard, Inc. (NYSE: LO),
the third largest manufacturer of cigarettes in the United States, announced
today that its wholly-owned subsidiary, Lorillard Tobacco Company, along with
other participating manufacturers, has agreed to a term sheet with 17 states
and the District of Columbia and Puerto Rico that resolves disputes under the
1998 Master Settlement Agreement (MSA) involving payment adjustments relating
to nonparticipating manufacturers.

The settlement would resolve the claims for the years 2003 through 2012 and
would put in place a new method for calculating this adjustment beginning in
2013. Under the terms of the agreement, Lorillard and other manufacturers will
receive credits against their future MSA payments over the next five years,
and the signatory states will be entitled to receive their allocable share of
the amounts currently being held in escrow resulting from these disputes. The
term sheet is subject to approval by the arbitration panel presiding over the
arbitration of the dispute for 2003.

Lorillard expects to receive credits over the next five years of at least $198
million on its outstanding claims, with the majority of the credits occurring
in April 2013 and the remainder over the following four years.

"We are very pleased to have settled this long-standing dispute with the
signatory states and believe that it is an equitable resolution for all
parties involved," stated Ronald S. Milstein, Executive Vice President and
General Counsel of Lorillard. "Importantly, today's announcement also puts
into place a new method to better determine future adjustments – providing
greater clarity for the states and Lorillard."

Under the MSA, the participating manufacturers (PMs) are entitled to reduce
their annual MSA payments for lost market share to companies that did not
participate in the MSA, subject to certain conditions being met. The PMs are
seeking adjustments to their payments for 2003-2012. The 2003 adjustment is
currently the subject of an arbitration proceeding between the PMs and many of
the MSA states. The arbitration proceeding will continue as to those states
that have not settled.

About Lorillard, Inc.

Lorillard, Inc. (NYSE: LO), through its Lorillard Tobacco Company subsidiary,
is the third largest manufacturer of cigarettes in the United States. Founded
in 1760, Lorillard is the oldest continuously operating tobacco company in the
U.S. Newport, Lorillard's flagship premium cigarette brand, is the top
selling menthol and second largest selling cigarette in the U.S. In addition
to Newport, the Lorillard product line has four additional cigarette brand
families marketed under the Kent, True, Maverick and Old Gold brand names.
These five brands include 39 different product offerings which vary in price,
taste, flavor, length and packaging. Lorillard, through its LOEC, Inc.
subsidiary, is also the leading electronic cigarette company in the U.S,
marketed under the blu eCigs brand. Newport, Kent, True, Maverick, Old Gold
and blu eCigs are the registered trademarks of Lorillard and its
subsidiaries. Lorillard maintains its headquarters and manufactures all of
its traditional cigarette products in Greensboro, North Carolina.

Forward-Looking Statements

Certain statements made in this press release are "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995, or
the Reform Act. Forward-looking statements include, without limitation, any
statement that may project, indicate or imply future results, events,
performance or achievements, and may contain the words "expect," "intend,"
"plan," "anticipate," "estimate," "believe," "may," "will be," "will
continue," "will likely result" and similar expressions. In addition, any
statement that may be provided by management concerning future financial
performance (including future revenues, earnings or growth rates), ongoing
business strategies or prospects and possible actions by Lorillard, Inc. are
also forward-looking statements as defined by the Reform Act.

Forward-looking statements are based on current expectations and projections
about future events and are inherently subject to a variety of risks and
uncertainties, many of which are beyond our control, that could cause actual
results to differ materially from those anticipated or projected. Information
describing factors that could cause actual results to differ materially from
those in forward-looking statements is available in Lorillard, Inc.'s filings
with the Securities and Exchange Commission (the "SEC"), including but not
limited to, our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.
These filings are available from the SEC over the Internet or in hard copy,
and are available on our website at www.lorillard.com. Forward-looking
statements speak only as of the time they are made, and we expressly disclaim
any obligation or undertaking to update these statements to reflect any change
in expectations or beliefs or any change in events, conditions or
circumstances on which any forward-looking statement is based.

SOURCE Lorillard, Inc.

Contact: Bob Bannon, Investor Relations, +1-336-335-7665
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