Lorillard Enters into Agreement to Resolve Federal Engle Progeny Cases

GREENSBORO, N.C., Feb. 25, 2015 /PRNewswire/ -- Lorillard, Inc. LO today announced that its Lorillard Tobacco Company subsidiary, along with other cigarette manufacturers, have entered into a tentative agreement to resolve pending Engle progeny lawsuits in U.S. federal courts.

Under the terms of the tentative agreement, Lorillard will not be subject to any further legal proceedings pertaining to these Engle progeny cases currently pending against the Company in the federal district courts.  Federal Engle progeny cases currently in trial or previously concluded, along with Engle progeny cases pending in Florida state courts, are not part of the tentative agreement.  Lorillard will pay $15 million to resolve the federal cases and expects to record a charge in the first quarter of 2015 in connection with the agreement.

"We are pleased to have these federal Engle cases behind us," said Ronald Milstein, Lorillard's executive vice president and general counsel.  "We view the federal Engle progeny cases as a unique set of litigation, and the opportunity to resolve them on favorable terms is in the best interests of the Company and its shareholders. We will continue to vigorously defend ourselves in all current and future Engle progeny cases pending in the Florida state courts."

Engle progeny cases arose from a 1994 class action case on behalf of Florida residents, and survivors of Florida residents, who were injured or died from medical conditions allegedly caused by addiction to smoking.  The class was later decertified by the Florida Supreme Court; however, the court permitted members of the Engle class to file individual claims, including claims for punitive damages.  Lorillard, Inc. and Lorillard Tobacco Company have been named as defendants in cases in both state and federal courts in Florida that were filed by members of the Engle class.  These resulting Engle cases are commonly referred to as "Engle progeny" cases.

The tentative agreement is subject to final approval and will not become final unless all plaintiffs agree to participate or the parties reach an alternative agreement.  Until such final approval or other final resolution is reached, all trials against Lorillard Tobacco and the other manufacturers in federal courts are stayed pending final approval of the agreement.

About Lorillard, Inc.

Lorillard, Inc. LO, through its Lorillard Tobacco Company subsidiary, is the third largest manufacturer of cigarettes in the United States.  Founded in 1760, Lorillard Tobacco is the oldest continuously operating tobacco company in the U.S.  Newport, Lorillard Tobacco'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 Tobacco product line has four additional cigarette brand families marketed under the Kent, True, Maverick and Old Gold brand names. These five brands include 43 different product offerings which vary in price, taste, flavor, length and packaging.  Lorillard, Inc., through its other subsidiaries, is also a leading global electronic cigarette company, marketed under the blu eCigs brand in the U.S. and U.K.  Newport, Kent, True, Maverick, Old Gold and blu eCigs are the registered trademarks of Lorillard and its subsidiaries.  Lorillard maintains its corporate headquarters and manufactures all of its traditional cigarette products in Greensboro, North Carolina.

Forward-Looking Statements

This report contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 which represent the current expectations and beliefs of management of Lorillard, Inc. ("Lorillard") concerning the proposed transaction involving Reynolds American Inc. ("Reynolds American") and Lorillard (the "transaction") and other future events and their potential effects on Lorillard, including, but not limited to, statements relating to anticipated financial and operating results, the companies' plans, objectives, expectations and intentions, cost savings and other statements, including words such as "anticipate," "believe," "plan," "estimate," "expect," "intend," "will," "should," "may," and other similar expressions. Such statements are based upon the current beliefs and expectations of Lorillard's management, are not guarantees of future results and are subject to a significant number of risks and uncertainties. Actual results may differ materially from the results anticipated in these forward looking statements. Those factors include, without limitation: the ability to obtain governmental approvals of the transaction or to satisfy other conditions to the transaction on the proposed terms and timeframe; the possibility that the transaction does not close when expected or at all, or that the companies may be required to modify aspects of the transaction to achieve regulatory approval; the ability to realize the expected synergies resulting from the transaction in the amounts or in the timeframe anticipated; the ability to integrate Lorillard's businesses into those of Reynolds American's in a timely and cost-efficient manner; the impact of regulatory initiatives, including the regulation of cigarettes and electronic cigarettes and a possible ban or regulation of the use of menthol in cigarettes by the Food and Drug Administration, and compliance with governmental regulations; the outcome of pending or future litigation; health concerns, claims, regulations and other restrictions relating to the use of tobacco products and exposure to environmental tobacco smoke; the effect on pricing and consumption rates of legislation, including actual and potential federal and state excise tax increases, and tobacco litigation settlements; continued intense competition from other cigarette and electronic cigarette manufacturers; the continuing decline in volume in the domestic cigarette industry; changes in the price, quality or quantity of tobacco leaf and other raw materials available for use in Lorillard's cigarettes; reliance on a limited number of suppliers for certain raw materials; and other risks and uncertainties, including those detailed from time to time in Lorillard's periodic reports filed with the Securities and Exchange Commission (the "SEC"), including Lorillard's Current Reports on Form 8-K, Quarterly Reports on Form 10-Q and Annual Report on Form 10-K. In particular, we refer you to "Item 1A. Risk Factors" of Lorillard's 2013 Annual Report on Form 10-K, which was filed with the SEC on February 21, 2014, for additional information regarding the risks and uncertainties discussed above as well as additional risks and uncertainties that may affect Lorillard's actual results. The forward-looking statements in this report are qualified by these risk factors. Each statement speaks only as of the date of this report (or any earlier date indicated in this report) and Lorillard undertakes no obligation to update or revise any forward-looking statements to reflect subsequent events or circumstances. Investors, potential investors and others should give careful consideration to these risks and uncertainties.

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SOURCE Lorillard, Inc.