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Lorillard, Inc. Reports Fourth Quarter And Full Year 2012 Results -- Raises Dividend 6.5%

 Lorillard, Inc. Reports Fourth Quarter And Full Year 2012 Results -- Raises
                                Dividend 6.5%

PR Newswire

GREENSBORO, N.C., Feb. 13, 2013

GREENSBORO, N.C., Feb. 13, 2013 /PRNewswire/ --

  oFourth quarter reported (GAAP) diluted earnings per share (on a split
    adjusted basis) increased 3.9% versus last year to $0.80, and annual
    reported (GAAP) diluted earnings per share increased 5.6% to a record
    $2.81.
  oFourth quarter adjusted (Non-GAAP) diluted earnings per share (on a split
    adjusted basis) increased 8.2% versus last year to $0.79, and annual
    adjusted (Non-GAAP) earnings per share increased 7.2% to a record $2.82.
  oNet sales in the fourth quarter increased 5.3% over last year to $1.704
    billion. Annual net sales increased 2.4% over last year to a record $6.623
    billion.
  oTotal Lorillard retail market share of cigarettes increased for the 10^th
    consecutive year to 14.4%, an increase of 0.3 share points.
  oIn its first year with Lorillard, blu eCigs distribution expanded to more
    than 50,000 stores resulting in fourth quarter net sales of $39 million
    and over a 30% retail market share.
  oShare repurchases totaled $304 million during the quarter under the $500
    million share repurchase program.
  oLorillard's Board of Directors declared a three-for-one stock split
    effected in the form of a 200% stock dividend to shareholders of record on
    December 14, 2012 which was distributed on January 15, 2013. All share and
    per share data within this release reflect the impact of the stock split.
  oLorillard's Board of Directors approved a 6.5% increase in its quarterly
    dividend to $0.55 per share.

Lorillard, Inc. (NYSE: LO) announced today its results for the quarter and
year ended December 31, 2012, including record levels of net sales, retail
market share and earnings per share for 2012 and a 6.5% increase in its
quarterly dividend.



Lorillard Financial Results Summary*
(Amounts in Millions, Except Per Share Data)
                      Three Months                   Year
                      Ended December 31,             Ended December 31,
                      2012         2011       % Chg  2012      2011      % Chg
Net Sales             $        $      5.3%   $     $      2.4%
                      1,704        1,618             6,623     6,466
Operating Income
 Reported (GAAP)     $       $      -1.5%  $     $      -0.7%
                      522          530            1,878     1,892
 Adjusted            514          505        1.8%   1,883     1,867     0.9%
(Non-GAAP)
Net income
 Reported (GAAP)     $       $      -0.3%  $     $      -1.5%
                      309          310            1,099     1,116
 Adjusted            304          295        3.1%   1,103     1,101     0.2%
(Non-GAAP)
Diluted earnings per
share
 Reported (GAAP)     $       $      3.9%   $     $     5.6%
                      0.80          0.77             2.81    2.66
 Adjusted            $       $      8.2%   $     $     7.2%
(Non-GAAP)           0.79          0.73             2.82    2.63
*See Reconciliation of Reported (GAAP) to Adjusted (Non-GAAP) results
table included with this release.



"Lorillard delivered strong financial and market share results in both the
fourth quarter and full year of 2012 despite a heightened competitive
environment," stated Murray S. Kessler, Lorillard Chairman President and CEO.
"We are very pleased to have delivered a double-digit shareholder return as
measured by EPS growth and the dividend yield during 2012 and to have grown
market share for the tenth consecutive year. We are confident in our ability
to continue this strong financial performance in 2013, as reflected by our
recent 3-for-1 stock split and today's announcement of a 6.5% dividend
increase."

Net sales increased by $86 million, or 5.3%, to $1.704 billion in the fourth
quarter of 2012 due to an increase in net sales of cigarettes of $47 million
and net sales of electronic cigarettes of $39 million. Net sales increased by
$157 million, or 2.4%, to $6.623 billion in 2012 due to an increase in net
sales of cigarettes of $96 million and net sales of electronic cigarettes of
$61 million.

Reported diluted earnings per share increased $0.03, or 3.9%, to $0.80 in the
fourth quarter of 2012, and increased $0.15, or 5.6%, to $2.81 in 2012.
Adjusted diluted earnings per share increased $0.06, or 8.2%, to $0.79 in the
fourth quarter of 2012, and increased $0.19, or 7.2%, to $2.82 in 2012 due
primarily to the impact of share repurchases, a lower effective tax rate, the
inclusion of operating income of the Electronic Cigarettes segment and an
increase in operating income in the Cigarettes segment for the full year,
offset partially by higher interest expense.

The following is a discussion of fourth quarter 2012 and full year 2012
performance of Lorillard's two operating segments, Cigarettes and Electronic
Cigarettes.

Cigarettes Segment Results



                          Three Months               Year
                          Ended December 31,         Ended December 31,
                          2012      2011      % Chg  2012      2011      % Chg
Net Sales                 $     $     2.9%   $     $     1.5%
                          1,665     1,618            6,562     6,466
Gross Profit
 Reported (GAAP)         $     $     -1.6%  $     $     0.8%
                           628     638           2,361     2,343
 Adjusted (Non-GAAP)    620       613       1.1%   2,360     2,318     1.8%
Selling, general and
administrative
 Reported (GAAP)         $     $     4.6%   $     $     7.3%
                           113     108            484     451
 Adjusted (Non-GAAP)    113       108       4.6%   479       451       6.2%
Operating Income
 Reported (GAAP)         $     $     -2.8%  $     $     -0.8%
                           515     530           1,877     1,892
 Adjusted (Non-GAAP)     507       505       0.4%   1,881     1,867     0.7%



Fourth Quarter 2012

Cigarette net sales increased $47 million to $1.665 billion in the fourth
quarter of 2012, compared to $1.618 billion in the fourth quarter of 2011, an
increase of 2.9%. The increase in cigarette sales resulted primarily from
higher average cigarette selling prices and higher cigarette unit sales
volume.

Total Lorillard wholesale cigarette unit volume, which includes Puerto Rico
and U.S. Possessions, increased 0.3% for the fourth quarter of 2012 compared
to the corresponding period of 2011. Domestic wholesale cigarette unit
volume, which excludes Puerto Rico and U.S. Possessions increased 0.4% for the
fourth quarter of 2012, compared to the corresponding period of 2011.
Adjusting for both the nominal negative impact of the relative change in
wholesale inventory patterns and the positive impact of one more shipping day
in the fourth quarter of 2012, Lorillard domestic wholesale shipments were
down an estimated 1.0% as compared to the fourth quarter of 2011. Total
cigarette industry domestic wholesale shipments decreased an estimated 0.8%
for the fourth quarter of 2012 compared to the fourth quarter of 2011.
Adjusting for the impact of the relative change in wholesale inventory
patterns and the positive impact of one more shipping day in the fourth
quarter of 2012, total cigarette industry domestic wholesale shipments
decreased an estimated 2.9% for the fourth quarter of 2012 compared to the
fourth quarter of 2011. See attached table for details of Lorillard's
wholesale shipments.

Total wholesale unit volume for Newport, the Company's flagship brand,
increased 0.7% for the fourth quarter of 2012 compared to the corresponding
period of 2011. Domestic wholesale cigarette unit volume for Newport, which
excludes Puerto Rico and U.S. Possessions, increased 0.9% for the fourth
quarter of 2012, compared to the corresponding period of 2011. Adjusting for
the impact of the relative change in wholesale inventory patterns and the
positive impact of one more shipping day in the fourth quarter of 2012,
Newport domestic wholesale shipments were down an estimated 0.6% as compared
to the fourth quarter of 2011. Domestic wholesale shipments for Maverick, the
Company's leading discount brand, decreased 0.4% for the fourth quarter of
2012 compared to the corresponding period in 2011.

Based on Lorillard's proprietary retail shipment data ("EXCEL"), which
measures shipments from wholesale to retail, Lorillard gained domestic retail
market share in the fourth quarter of 2012 as compared to the fourth quarter
of 2011 with an increase of 0.2 share points to 14.2%. Newport's domestic
retail market share increased 0.2 share points to 11.9% versus the fourth
quarter of 2011. Gains in market share were largely attributable to increased
promotional activity on Newport Menthol in the face of a heightened level of
competitive activity, which included both increased menthol price competition
and two competitive menthol new product launches. Total Lorillard share of
the menthol market at 38.3% was down 0.4 share points as compared to the
fourth quarter of 2011 during this highly competitive quarter.

Reported gross profit was $628 million, or 37.7% of net sales, in the fourth
quarter of 2012 and $638 million, or 39.4% of net sales, in the fourth quarter
of 2011. Adjusted gross profit was $620 million in the fourth quarter of 2012,
or 37.2% of net sales, compared to $613 million, or 37.9% of net sales, in the
fourth quarter of 2011. As detailed in the reconciliation table, adjusted
gross profit excludes the favorable impact on Lorillard's tobacco settlement
expense of mark-to-market pension adjustments recorded by Reynolds American in
the fourth quarters of 2012 and 2011. The increase in adjusted gross profit
reflects an increase in net sales, partially offset by higher costs related to
the State Settlement Agreements and higher raw material input costs (primarily
tobacco and other direct costs).

Selling, general and administrative costs increased $5 million to $113 million
in the fourth quarter of 2012 compared to the fourth quarter of 2011,
primarily due to higher compensation and benefit costs and higher legal costs
related to the Engle Progeny litigation.

Reported operating income for the Cigarettes segment decreased $15 million to
$515 million in the fourth quarter of 2012 from $530 million in the fourth
quarter of 2011. Adjusted operating income for the Cigarettes segment
increased $2 million to $507 million in the fourth quarter of 2012 from $505
million in the fourth quarter of 2011.

Full Year 2012

Cigarette net sales increased 1.5% to a record $6.562 billion in 2012,
compared to $6.466 billion in 2011. The increase resulted from higher average
cigarette selling prices, partially offset by lower cigarette unit sales
volume.

Total Lorillard wholesale cigarette unit volume, which includes Puerto Rico
and U.S. Possessions, decreased 1.4% for 2012 compared to 2011. Domestic
wholesale cigarette unit volume, which excludes Puerto Rico and U.S.
Possessions, also decreased 1.4% for 2012, compared to 2011. Adjusting for
the negative impact of changes in wholesale inventory patterns, Lorillard
domestic wholesale shipments decreased an estimated 0.8% compared to 2011.
Total cigarette industry domestic wholesale shipments decreased an estimated
2.5% for 2012 compared to 2011. Changes in total cigarette industry wholesale
inventory patterns had a minimal impact in 2012 as compared to 2011. See
attached table for details of Lorillard's wholesale shipments.

Total wholesale unit volume for Newport, the Company's flagship brand,
decreased 1.9% for 2012 compared to 2011. Domestic wholesale cigarette unit
volume for Newport, which excludes Puerto Rico and U.S. Possessions decreased
1.8% for 2012 compared to 2011. Adjusting for the negative impact of changes
in wholesale inventory patterns, Newport domestic wholesale shipments were
down an estimated 1.3%. Domestic wholesale shipments for Maverick, the
Company's leading discount brand, increased 3.5% for 2012 compared to 2011.

Based on the EXCEL database, Lorillard's domestic retail market share posted
gains in 2012 for the tenth consecutive year, increasing 0.3 share points to a
record 14.4%. Newport's domestic retail market share reached 12.1% for 2012,
an increase of 0.2 share points compared to 2011. Lorillard's domestic retail
share of the menthol market reached 39.3% for 2012, an increase of 0.2 share
points compared to 2011. Gains in market share were largely attributable to
unit volume outperformance of Newport Menthol in our core markets, geographic
promotional expansion of Newport Menthol, and continued growth of Maverick,
and were achieved despite the heightened level of competitive menthol
activity.

Reported gross profit was $2.361 billion, or 36.0% of net sales, in 2012 and
$2.343 billion, or 36.2% of net sales, in 2011. Adjusted gross profit was
$2.360 billion in 2012, or 36.0% of net sales, compared to $2.318 billion, or
35.8% of net sales, in 2011. As detailed in the reconciliation table, adjusted
gross profit excludes the favorable impact on Lorillard's tobacco settlement
expense of mark-to-market pension adjustments recorded by Reynolds American in
the fourth quarters of 2012 and 2011. Adjusted gross profit also excludes the
unfavorable impact on tobacco settlement expense of $7 million resulting from
a competitor's adjustments in the first quarter of 2012 to certain historical
components of the calculation of the industry volume adjustment offset under
the State Settlement Agreements. Such adjustments related to the competitor's
operating income for 2001 – 2005. The increase in adjusted gross profit
reflects the increase in net sales and lower costs for the Federal Assessment
for Tobacco Growers, partially offset by higher adjusted costs related to the
State Settlement Agreements, higher raw material input costs (primarily
tobacco and other direct costs) and higher Food and Drug Administration user
fees.

Selling, general and administrative costs increased $33 million to $484
million in 2012 compared to 2011 primarily as a result of higher legal costs
related to the Engle Progeny litigation and $5 million of expenses incurred in
conjunction with the acquisition of blu eCigs.

Reported operating income for the Cigarettes segment decreased $15 million to
$1.877 billion in 2012 from $1.892 billion in 2011. Adjusted operating income
for the Cigarettes segment increased $14 million to $1.881 billion in 2012
from $1.867 billion in 2011.

Electronic Cigarettes Segment Results



                                  Three Months            Year
                                  Ended                  Ended
                                  December 31,            December 31,
                                  2012                    2012
Net Sales                         $         39   $        61
Gross Profit
 Reported (GAAP)                 $         16   $        21
 Adjusted (Non-GAAP)             16                      21
Selling, general and
administrative
 Reported (GAAP)                 $          9  $        20
 Adjusted (Non-GAAP)             9                       19
Operating Income
 Reported (GAAP)                 $          7  $         1
 Adjusted (Non-GAAP)             7                       2



Fourth Quarter and Full Year 2012

Net sales for the Electronic Cigarettes segment contributed $39 million to
Lorillard's total net sales for the fourth quarter of 2012, almost three times
the level of the prior quarter. Strong sales of blu eCigs resulted from
consumer marketing, expanded retail distribution as Lorillard's sales force
placed the brand into more than 50,000 retail outlets and strong repeat
purchases. Post-acquisition, sales of blu eCigs electronic cigarettes
contributed $61 million to Lorillard's total net sales for 2012.

According to our proprietary EXCEL database which now includes electronic
cigarettes, blu eCigs domestic retail market share of the electronic
cigarettes market for the fourth quarter was over 30%.

Gross profit was $16 million in the fourth quarter of 2012, or 41.0% of net
sales, and was $21 million, or 34.4% of net sales for the full year.

Selling, general and administrative costs were $9 million in the fourth
quarter of 2012 and $20 million for the full year and include marketing and
administrative costs associated with the blu eCigs' national retail roll-out.
Full year 2012 selling, general and administrative costs also include $1
million of expenses incurred in conjunction with the acquisition of blu eCigs,
which have been excluded from adjusted results above.

Reported operating income for the Electronic Cigarettes segment totaled $1
million in 2012. Operating income for the Electronic Cigarettes segment
totaled $7 million for the fourth quarter of 2012. Adjusted operating income
totaled $2 million in 2012.

"Our acquisition of blu eCigs has met or exceeded all of our expectations,
having achieved the goal of becoming accretive to earnings in its first year
with Lorillard, and establishing a new platform for expansion," stated David
H. Taylor, Executive Vice President, Finance and Planning and Chief Financial
Officer. "Continued product innovation, creative marketing and solid sales
and distribution execution will enhance consumer appeal and product
availability. We are excited about the prospects for this business behind a
brand that has strong consumer appeal and the potential for continued rapid
growth."

Dividend Declaration

Lorillard announced today that its Board of Directors approved a 6.5% increase
in the Quarterly dividend on its common stock to $0.55 per share. The
dividend is payable on March 11, 2013 to stockholders of record as of March 1,
2013. This marks the fifth dividend increase since Lorillard became an
independent publicly traded company in June 2008.

Agreement to Resolve Certain MSA Payment Adjustment Disputes

On December 18, 2012, Lorillard Tobacco, along with other participating
manufacturers, 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 Tobacco 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. If the settlement proceeds and is approved, Lorillard
Tobacco expects to receive credits over the next five years totaling at least
$196 million on its outstanding claims, with the majority of the credits
occurring in April 2013 and the remainder over the following four years. As
of February 11, 2013, the arbitration panel has not made its ruling with
regard to the settlement. No amounts have been included in 2012 results
related to this settlement. Certain non-settling states have objected to the
request for approval. No assurance can be given that the arbitration panel
will issue the order necessary for the agreement to proceed or that the
objections or any other such actions by nonsignatory states will be resolved
in a manner favorable to Lorillard.

Additional News

On November 12, 2012, the Board of Directors approved a three-for-one split of
Lorillard common stock effected in the form of a 200% stock dividend. The
additional shares were distributed on January 15, 2013.

On December 10, 2012, Lorillard, Inc. paid a quarterly dividend on its common
stock of $0.5167 per share to shareholders of record as of November 30, 2012.

During the fourth quarter of 2012, the Company repurchased approximately 7.8
million shares at a cost of $304 million under its share repurchase program.
As of December 31, 2012, the maximum dollar value of shares that could yet be
purchased under the $500 million program was $109 million. For the full year,
the Company repurchased approximately 14.8 million shares at a cost of $578
million under its share repurchase programs.

Conference Call

A conference call to discuss 2012 results of Lorillard, Inc. has been
scheduled for 9:00 a.m. Eastern Time on February 13, 2013. A live broadcast of
the call will be available online at the Lorillard, Inc. website
(www.lorillard.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 (888) 239-6824 (domestic) or (706) 902-3787
(international). The passcode for this event is: 87738735.

An online replay will be available at the Company's website following the
call. If you wish to listen to the replay of this conference call, please
visit Lorillard's website at www.lorillard.com or dial (855) 859-2056
(domestic) or (404) 537-3406 (international) and enter passcode: 87738735.
The conference call will be available for replay in its entirety through
February 27, 2013.

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 a 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
(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.



Lorillard, Inc. and Subsidiaries

Consolidated Condensed Statements of Income
                                Three Months              Year
                                Ended December 31,        Ended December 31,
                                2012         2011         2012       2011
(Amounts in millions, except
per share data)
Net sales (a)                   $        $        $      $    
                                1,704        1,618        6,623      6,466
Cost of sales (a) (b)           1,060        980          4,241      4,123
Gross profit                    644          638          2,382      2,343
Selling, general and            122          108          504        451
administrative
Operating income                522          530          1,878      1,892
Investment income               1            1            4          3
Interest expense                (39)         (35)         (154)      (125)
Income before income taxes      484          496          1,728      1,770
Income taxes                    175          186          629        654
Net income                      $       $       $      $    
                                309         310         1,099      1,116
Earnings per share:
 Basic                         $       $       $      $    
                                0.80         0.77          2.82      2.67
 Diluted                       $       $       $      $    
                                0.80         0.77          2.81      2.66
Weighted average number of
shares outstanding:
 Basic                         384.87       399.78       389.27     417.32
 Diluted                       385.59       400.67       390.13     418.06
Segment data:
 Net sales
 Cigarettes (a)          $        $        $      $    
                                1,665        1,618        6,562      6,466
 Electronic Cigarettes   39           -            61         -
                                $        $        $      $    
                                1,704        1,618        6,623      6,466
 Operating income
 Cigarettes             $       $       $      $    
                                515         530         1,877      1,892
 Electronic Cigarettes   7            -            1          -
                                $       $       $      $    
                                522         530         1,878      1,892
Supplemental information:
 (a) Includes excise    $495         $493         $1,987     $2,014
taxes
 (b) Cost of sales
includes:
 - Charges to
accrue obligations under                                          

 the State    334          294          1,379      1,307
Settlement Agreements
 - Charges to
accrue obligations under the
                                29           27           118        120
 Federal
Assessment for Tobacco Growers
 - Charges to
accrue Food and Drug                                              

              16           16           66         61
Administration user fees



Lorillard, Inc. and Subsidiaries

Consolidated Condensed Balance Sheets
                                          December 31,      December 31,
                                          2012               2011
(In millions)
Assets:
Cash and cash equivalents                 $            $      
                                          1,720              1,634
Accounts receivable, less allowances of   18                 10
$3 and $2
Other receivables                         52                 83
Inventories                               410                277
Deferred income taxes                     557                535
Other current assets                      20                 25
 Total current assets              2,777              2,564
Plant and equipment, net                  298                262
Goodwill                                  64                 -
Intangible assets                         57                 -
Deferred income taxes                     48                 54
Other assets                              152                128
 Total assets                      $            $      
                                          3,396              3,008
Liabilities and Shareholders' Deficit:
Accounts and drafts payable               $          $        
                                          39                32
Accrued liabilities                       356                296
Settlement costs                          1,183              1,151
Income taxes                              23                 6
Total current liabilities                 1,601              1,485
Long-term debt                            3,111              2,595
Postretirement pension, medical and life  409                388
insurance benefits
Other liabilities                         52                 53
Total liabilities                         5,173              4,521
Commitments and Contingent Liabilities
Shareholders' Deficit:
Preferred stock, $0.01 par value,         -                  -
authorized 10 million shares
Common stock:
 Authorized – 600 million
shares; par value—$0.01 per share

 Issued –525 million and 525   5                  5
million shares (outstanding

  382 million and 396 million
shares)
Additional paid-in capital                298                263
Retained earnings                         2,351              2,059
Accumulated other comprehensive loss      (241)              (228)
Treasury stock at cost, 143 million and   (4,190)            (3,612)
129 million shares
Total shareholders' deficit               (1,777)            (1,513)
 Total liabilities and                 $            $      
shareholders' deficit                     3,396              3,008



Lorillard, Inc. and Subsidiaries

Wholesale Cigarette Shipments
Information regarding unit volume shipped by Lorillard Tobacco Company to its
direct buying customers by brand follows:
                 Three Months                    Year
                 Ended December 31,              Ended December 31,
(All units in    2012          2011       % Chg  2012        2011        % Chg
thousands)
Premium Brands
Newport          8,263,979     8,190,476  0.9    33,125,424  33,741,402  -1.8
Kent             42,990        48,750     -11.8  175,116     203,436     -13.9
True             46,086        52,542     -12.3  186,732     215,394     -13.3
Total Premium    8,353,055     8,291,768  0.7    33,487,272  34,160,232  -2.0
Brands
Price/Value
Brands
Old Gold         113,640       128,214    -11.4  494,166     553,248     -10.7
Maverick         1,380,120     1,386,047  -0.4   5,509,452   5,320,931   3.5
Total
Price/Value      1,493,760     1,514,261  -1.4   6,003,618   5,874,179   2.2
Brands
Total Domestic   9,846,815     9,806,029  0.4    39,490,890  40,034,411  -1.4
Cigarettes
Total Puerto
Rico and U.S.    165,408       178,248    -7.2   661,302     695,880     -5.0
Possessions
Grand Total      10,012,223    9,984,277  0.3    40,152,192  40,730,291  -1.4
Cigarettes



Notes:
1. This information is not adjusted for returns or the impact of wholesale
   trade inventory fluctuations.
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.
5. The three months ended December 31, 2012 contained one more shipping day
   than the comparable period ended December 31, 2011.



Lorillard, Inc. and Subsidiaries

Selected Domestic Retail Cigarette Market Share Data (1)
                                  Three Months              Year
                                  Ended December 31,        Ended December 31,
                                  2012     2011    Pt Chg   2012  2011  Pt Chg
Lorillard                         14.2     14.0    0.2      14.4  14.1  0.3
Newport                           11.9     11.7    0.2      12.1  11.9  0.2
Total Industry Menthol            31.5     30.7    0.8      31.1  30.6  0.5
Lorillard Share of Menthol        38.3     38.7    -0.4     39.3  39.1  0.2
Segment
Newport Share of Menthol Segment  35.1     35.6    -0.5     36.1  36.2  -0.1
(1) Based on Lorillard's Proprietary Retail Database
("EXCEL")



Reconciliation of Reported (GAAP) to Adjusted (Non-GAAP) Results
(Amounts in millions, except per share data)

The reconciliation provided below reconciles the non-GAAP financial measures
adjusted gross profit, adjusted operating income, adjusted net income and
adjusted diluted earnings per share, with the most directly comparable GAAP
financial measures, reported gross profit, reported operating income, reported
net income and reported diluted earnings per share available to Lorillard
common stockholders, for the three and twelve months ended December 31, 2012,
and for the three and twelve months ended December 31, 2011. Lorillard
management uses adjusted (non-GAAP) measurements to set performance goals and
to measure the performance of the overall company, and believes that
investors' understanding of the underlying performance of the company's
continuing operations is enhanced through the disclosure of these metrics.
Adjusted (non-GAAP) results are not, and should not be viewed as, substitutes
for reported (GAAP) results.

The adjustments to reported results summarized below remove the following
items: (1) the favorable impact of mark-to-market pension adjustments recorded
by Reynolds American in the fourth quarters of 2012 and 2011 on Lorillard's
tobacco settlement expense; (2) the unfavorable impact of adjustments to
certain operating income data as reported in the years 2001 through 2005 by RJ
Reynolds Tobacco Company ("RJRT") in the first quarter of 2012 on Lorillard's
tobacco settlement expense, which is included in cost of sales on the
accompanying consolidated condensed statements of income; and (3) expenses
incurred in conjunction with the acquisition of blu eCigs which are included
in selling, general and administrative expenses on the accompanying
consolidated condensed statements of income.

               Three months ended December 31,     Year ended December 31, 2012
               2012
               Gross  Operating  Net     Diluted  Gross  Operating  Net     Diluted
               Profit  Income     Income  EPS      Profit  Income     Income  EPS
Reported       $644    $522       $309    $       $2,382  $1,878     $1,099  $ 
(GAAP) results                            0.80                                2.81
GAAP results
include the
following:
 (1)
Impact of RAI
mark-to-market


pension
accounting
adjustments

 on  (8)     (8)        (5)     (0.01)   (8)     (8)        (5)
Lorillard's
tobacco


settlement
expense
included
                                                                              (0.01)
 in
cost of sales
 (2)
Impact of RJRT
adjustments

 to
its 2001 -
2005 operating


income and
restructuring
               -       -          -       -        7       7          5       0.01

charges on
Lorillard's


tobacco
settlement
expense


included in
cost of sales
 (3)
Expenses
incurred in
conjunction


with the
acquisition of
blu eCigs     -       -          -       -        -       6          4       0.01


included in
selling,
general

 and
administrative
expenses
Adjusted
(Non-GAAP)     $636    $514       $304    $0.79    $2,381  $1,883     $1,103  $2.82
results



               Three months ended December 31,     Year ended December 31, 2011
               2011
               Gross  Operating  Net     Diluted  Gross  Operating  Net     Diluted
               Profit  Income     Income  EPS      Profit  Income     Income  EPS
Reported       $638    $530       $310    $       $2,343  $1,892     $1,116  $ 
(GAAP) results                            0.77                                2.66
GAAP results
include the
following:
 (1)
Impact of RAI
mark-to-market


pension
accounting


adjustments on (25)    (25)       (15)    ($0.04)  (25)    (25)       (15)    ($0.03)
Lorillard's


tobacco
settlement
expense


included in
cost of sales
Adjusted
(Non-GAAP)     $613    $505       $295    $0.73    $2,318  $1,867     $1,101  $2.63
results



Reconciliation of Reported (GAAP) to Adjusted (Non-GAAP) Operating Income by
Segment
(Amounts in millions)

Lorillard manages its operations on the basis of two operating and reportable
segments, Cigarettes and Electronic Cigarettes.

The Cigarettes segment consists principally of the operations of Lorillard
Tobacco and related entities. Lorillard Tobacco is the third largest
manufacturer of cigarettes in the United States. Founded in 1760, Lorillard is
the oldest continuously operating tobacco company in the United States.
Newport, Lorillard's flagship menthol-flavored premium cigarette brand, is the
top selling menthol and second largest selling cigarette overall in the United
States based on gross units sold during the years ended December 31, 2012 and
2011. In addition to the Newport brand, the Lorillard product line has four
additional brand families marketed under the Kent, True, Maverick and Old Gold
brand names. These five cigarette brands include 39 different product
offerings which vary in price, taste, flavor, length and packaging.

The Electronic Cigarettes segment consists principally of the operations of
LOEC and related entities. LOEC is a leading electronic cigarette company in
the United States, marketed under the blu eCigs brand. Lorillard acquired the
blu eCigs brand and other assets used in the manufacture, distribution,
development, research, marketing, advertising, sale and service of electronic
cigarettes on April 24, 2012.



                  Three months ended December    Year ended December 31, 2012
                  31, 2012
                              Electronic                     Electronic
                  Cigarettes  Cigarettes  Total  Cigarettes  Cigarettes  Total
Reported (GAAP)   $       $       $    $         $       $ 
operating income  515          7        522  1,877        1       1,878
GAAP results
include the
following:
 (1) Impact
of RAI
mark-to-market


pension
accounting
adjustments
                  (8)         -           (8)    (8)         -           (8)
 on
Lorillard's
tobacco
settlement


expense included
in cost of sales
 (2) Impact
of RJRT's
adjustment

 to its
2001 - 2005
operating

 income
andrestructuring

        -           -           -      7           -           7
charges on
Lorillard's
tobacco


settlement
expense


included in cost
of sales
 (3) Expenses
incurred in
conjunction

 with
the acquisition
of blu eCigs
                  -           -           -      5           1           6

included in
selling, general

 and
administrative
expenses
Adjusted          $       $       $    $         $       $ 
(Non-GAAP)        507          7        514  1,881        2       1,883
operating income





SOURCE Lorillard, Inc.

Website: http://www.lorillard.com
Contact: Robert Bannon, Director, Investor Relations, +1-336-335-7665
 
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