Attached files
| file | filename |
|---|---|
| 8-K - 8-K - VECTOR GROUP LTD | vgr-2015q3x8kstockdiv.htm |
| EX-99.1 - EXHIBIT 99.1 - VECTOR GROUP LTD | vgr-2015q3xex991sfd.htm |
EXHIBIT 99.2
TABLE 1
VECTOR GROUP LTD. AND SUBSIDIARIES
RECONCILIATION OF PRO-FORMA ADJUSTED REVENUES
(Unaudited)
(Dollars in Thousands)
Year Ended December 31, | |||||||||||||||||||
2014 | 2013 | 2012 | 2011 | 2010 | |||||||||||||||
Revenues, as revised | $ | 1,591,315 | $ | 1,079,921 | $ | 1,095,533 | $ | 1,137,646 | $ | 1,066,546 | |||||||||
Reclassification of revenues as a result of the consolidation of Douglas Elliman (a) | — | 416,453 | 378,175 | 346,309 | 348,136 | ||||||||||||||
Purchase accounting adjustments (b) | 1,768 | 1,357 | — | — | — | ||||||||||||||
Total adjustments | 1,768 | 417,810 | 378,175 | 346,309 | 348,136 | ||||||||||||||
Pro-forma Adjusted Revenues, as revised | $ | 1,593,083 | $ | 1,497,731 | $ | 1,473,708 | $ | 1,483,955 | $ | 1,414,682 | |||||||||
Pro-forma Adjusted Revenues by Segment | |||||||||||||||||||
Tobacco | $ | 1,021,259 | $ | 1,014,341 | $ | 1,084,546 | $ | 1,133,380 | $ | 1,063,289 | |||||||||
E-cigarettes | 8,589 | — | — | — | — | ||||||||||||||
Real Estate (c) | 563,235 | 483,390 | 389,162 | 350,575 | 351,393 | ||||||||||||||
Corporate and Other | — | — | — | — | — | ||||||||||||||
Total | $ | 1,593,083 | $ | 1,497,731 | $ | 1,473,708 | $ | 1,483,955 | $ | 1,414,682 | |||||||||
a. | Represents revenues of Douglas Elliman Realty, LLC for the respective annual periods. For the year ended December 31, 2013, represents revenues from Douglas Elliman Realty, LLC for the period from January 1, 2013 to December 13, 2013. On December 13, 2013, the Company increased its ownership of Douglas Elliman Realty, LLC from 50% to 70.59%. Consequently, after December 13, 2013, the Company consolidates the operations and financial position of Douglas Elliman Realty, LLC in its financial statements. The Company had previously accounted for its interest in Douglas Elliman Realty, LLC under the equity method and revenues from Douglas Elliman Realty, LLC was not included in the Company's revenues. |
b. | Amounts represent one-time purchase accounting adjustments to fair value for deferred revenues recorded in connection with the increase of the Company's ownership of Douglas Elliman Realty, LLC on December 13, 2013. |
c. | Includes Pro-forma Adjusted Revenues from Douglas Elliman Realty, LLC of $543,230, $456,909, $384,267, $346,309 and $348,136 for the years ended December 31, 2014, 2013, 2012, 2011 and 2010, respectively. |
TABLE 2
VECTOR GROUP LTD. AND SUBSIDIARIES
COMPUTATION OF PRO-FORMA ADJUSTED EBITDA
(Unaudited)
(Dollars in Thousands)
Year Ended December 31, | |||||||||||||||||||
2014 | 2013 | 2012 | 2011 | 2010 | |||||||||||||||
Net income attributed to Vector Group Ltd. | $ | 36,978 | $ | 38,944 | $ | 30,622 | $ | 75,020 | $ | 54,084 | |||||||||
Interest expense | 160,991 | 132,147 | 110,102 | 100,706 | 84,096 | ||||||||||||||
Income tax expense | 33,251 | 24,795 | 23,095 | 48,137 | 31,486 | ||||||||||||||
Net income (loss) attributed to non-controlling interest | 12,258 | (252 | ) | — | — | — | |||||||||||||
Depreciation and amortization | 24,499 | 12,631 | 10,608 | 10,607 | 10,790 | ||||||||||||||
EBITDA | $ | 267,977 | $ | 208,265 | $ | 174,427 | $ | 234,470 | $ | 180,456 | |||||||||
Change in fair value of derivatives embedded within convertible debt (a) | (19,409 | ) | (18,935 | ) | 7,476 | (7,984 | ) | (11,524 | ) | ||||||||||
Gain on liquidation of long-term investments | — | — | — | (25,832 | ) | — | |||||||||||||
Equity (gain) loss on long-term investments (b) | (1,242 | ) | (2,066 | ) | 1,261 | 859 | (1,489 | ) | |||||||||||
Gain on sale of investment securities available for sale | 11 | (5,152 | ) | (1,640 | ) | (23,257 | ) | (19,869 | ) | ||||||||||
Equity income from real estate ventures (c) | (4,103 | ) | (22,925 | ) | (29,764 | ) | (19,966 | ) | (23,963 | ) | |||||||||
Gain on sale of townhomes | — | — | — | (3,843 | ) | — | |||||||||||||
Loss on extinguishment of debt | — | 21,458 | — | 1,217 | — | ||||||||||||||
Acceleration of interest expense related to debt conversion | 5,205 | 12,414 | 14,960 | — | — | ||||||||||||||
Stock-based compensation expense (d) | 3,251 | 2,519 | 5,563 | 3,183 | 2,704 | ||||||||||||||
Litigation settlement and judgment expense (e) | 2,475 | 88,106 | — | — | 19,161 | ||||||||||||||
Impact of MSA Settlement (f) | (1,419 | ) | (11,823 | ) | — | — | — | ||||||||||||
Gain on acquisition of Douglas Elliman | — | (60,842 | ) | — | — | — | |||||||||||||
Reclassification of EBITDA as a result of the consolidation of Douglas Elliman (g) | — | 46,640 | 31,558 | 30,991 | 44,778 | ||||||||||||||
Purchase accounting adjustments | 1,478 | — | — | — | — | ||||||||||||||
Other, net | (10,552 | ) | (7,550 | ) | (1,179 | ) | (1,736 | ) | (1,508 | ) | |||||||||
Pro-forma Adjusted EBITDA | $ | 243,672 | $ | 250,109 | $ | 202,662 | $ | 188,102 | $ | 188,746 | |||||||||
Pro-forma Adjusted EBITDA attributed to non-controlling interest | (15,858 | ) | (13,717 | ) | (9,281 | ) | (9,114 | ) | (13,169 | ) | |||||||||
Pro-forma Adjusted EBITDA attributed to Vector Group Ltd. | $ | 227,814 | $ | 236,392 | $ | 193,381 | $ | 178,988 | $ | 175,577 | |||||||||
Pro-forma Adjusted EBITDA by Segment | |||||||||||||||||||
Tobacco | $ | 211,168 | $ | 198,866 | $ | 185,798 | $ | 173,721 | $ | 157,528 | |||||||||
E-cigarettes | (13,124 | ) | (1,019 | ) | — | — | — | ||||||||||||
Real Estate (h) | 56,036 | 64,866 | 29,959 | 29,388 | 44,445 | ||||||||||||||
Corporate and Other | (10,408 | ) | (12,604 | ) | (13,095 | ) | (15,007 | ) | (13,227 | ) | |||||||||
Total | $ | 243,672 | $ | 250,109 | $ | 202,662 | $ | 188,102 | $ | 188,746 | |||||||||
Pro-forma Adjusted EBITDA Attributed to Vector Group by Segment | |||||||||||||||||||
Tobacco | $ | 211,168 | $ | 198,866 | $ | 185,798 | $ | 173,721 | $ | 157,528 | |||||||||
E-cigarettes | (13,124 | ) | (1,019 | ) | — | — | — | ||||||||||||
Real Estate (i) | 40,178 | 51,149 | 20,678 | 20,274 | 31,276 | ||||||||||||||
Corporate and Other | (10,408 | ) | (12,604 | ) | (13,095 | ) | (15,007 | ) | (13,227 | ) | |||||||||
Total | $ | 227,814 | $ | 236,392 | $ | 193,381 | $ | 178,988 | $ | 175,577 | |||||||||
a. | Represents income or losses recognized from changes in the fair value of the derivatives embedded in the Company's convertible debt. |
b. | Represents income or losses recognized on long-term investments that the Company accounts for under the equity method. |
c. | Represents equity income recognized from the Company's investment in certain real estate businesses that are not consolidated in its financial results. |
d. | Represents amortization of stock-based compensation. |
e. | Represents accrual for a settlement of an Engle progeny judgment. |
f. | Represents the Company's tobacco business's settlement of a long-standing dispute related to the Master Settlement Agreement. |
g. | Represents EBITDA of Douglas Elliman Realty, LLC for all periods prior to December 13, 2013. On December 13, 2013, the Company increased its ownership of Douglas Elliman Realty, LLC from 50% to 70.59%. Consequently, after December 13, 2013, the Company consolidates the operations and financial position of Douglas Elliman Realty, LLC in its financial statements. The Company had previously accounted for its interest in Douglas Elliman Realty, LLC under the equity method, and operating income as well as depreciation and amortization expense from Douglas Elliman Realty, LLC, were not included in the Company's Adjusted EBITDA. |
h. | Includes Pro-forma Adjusted EBITDA for Douglas Elliman Realty, LLC of $50,655, $45,710, $30,910, $30,991, and $44,778 for the years ended December 31, 2014, 2013, 2012, 2011, and 2010 respectively. Amounts reported in this footnote reflect 100% of Douglas Elliman Realty, LLC's entire Pro-forma Adjusted EBITDA. |
i. | Includes Pro-forma Adjusted EBITDA for Douglas Elliman Realty, LLC less non-controlling interest of $35,757, $32,267, $21,629, $21,877, and $31,609 for the years ended December 31, 2014, 2013, 2012, 2011, and 2010 respectively. Amounts reported in this footnote have adjusted Douglas Elliman Realty, LLC's Pro-forma Adjusted EBITDA for non-controlling interest. |
TABLE 3
VECTOR GROUP LTD. AND SUBSIDIARIES
RECONCILIATION OF PRO-FORMA ADJUSTED NET INCOME
(Unaudited)
(Dollars in Thousands, Except Per Share Amounts)
June 30, | March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||||||||||
2015 | 2015 | 2014 | 2014 | 2014 | 2014 | ||||||||||||||||||
Net income attributed to Vector Group Ltd. | $ | 17,868 | $ | 20,956 | $ | 11,594 | $ | 14,879 | $ | 7,925 | $ | 2,580 | |||||||||||
Acceleration of interest expense related to debt conversion | — | — | 93 | 994 | 439 | 3,679 | |||||||||||||||||
Change in fair value of derivatives embedded within convertible debt | (5,256 | ) | (6,460 | ) | (11,962 | ) | (7,127 | ) | (1,970 | ) | 1,650 | ||||||||||||
Non-cash amortization of debt discount on convertible debt | 6,516 | 5,943 | 9,744 | 14,581 | 14,691 | 12,456 | |||||||||||||||||
Litigation settlement and judgment expense (a) | 1,250 | 843 | 750 | 225 | — | 1,500 | |||||||||||||||||
Impact of MSA Settlement (b) | 1,607 | — | — | — | (1,419 | ) | — | ||||||||||||||||
Out-of-period adjustment related to Douglas Elliman acquisition in 2013 (c) | — | — | — | — | — | (1,231 | ) | ||||||||||||||||
Douglas Elliman Realty, LLC purchase accounting adjustments (d) | 1,343 | 1,251 | 1,189 | 1,252 | 1,223 | 2,356 | |||||||||||||||||
Total adjustments | 5,460 | 1,577 | (186 | ) | 9,925 | 12,964 | 20,410 | ||||||||||||||||
Tax expense related to adjustments | (2,258 | ) | (652 | ) | 77 | (4,104 | ) | (5,360 | ) | (8,440 | ) | ||||||||||||
Adjustments to income tax expense due to purchase accounting (e) | — | — | 365 | 1,305 | — | — | |||||||||||||||||
Pro-forma Adjusted Net Income attributed to Vector Group Ltd. | $ | 21,070 | $ | 21,881 | $ | 11,850 | $ | 22,005 | $ | 15,529 | $ | 14,550 | |||||||||||
Per diluted common share: | |||||||||||||||||||||||
Pro-forma Adjusted Net Income applicable to common shares attributed to Vector Group Ltd. | $ | 0.17 | $ | 0.18 | $ | 0.10 | $ | 0.20 | $ | 0.14 | $ | 0.14 | |||||||||||
a. Represents accrual for a settlement of an Engle progeny judgment.
b. | Represents the Company's tobacco segment's settlement of a long-standing dispute related to the Master Settlement Agreement. |
c. | Represents an out-of-period adjustment related to a non-accrual of a receivable from Douglas Elliman in the fourth quarter of 2013 and would have increased the Company’s gain on acquisition of Douglas Elliman in 2013. |
d. | Represents 70.59% of one-time purchase accounting adjustments to fair value for assets acquired in connection with the increase of the Company's ownership of Douglas Elliman Realty, LLC on December 13, 2013. |
e. | Represents adjustments to income tax expense due to a change in the Company's marginal income tax rate from 40.6% to 41.35% as a result of its acquisition of 20.59% of Douglas Elliman Realty, LLC on December 13, 2013. |
TABLE 3
VECTOR GROUP LTD. AND SUBSIDIARIES
RECONCILIATION OF PRO-FORMA ADJUSTED NET INCOME
(Unaudited)
(Dollars in Thousands, Except Per Share Amounts)
Year Ended December 31, | |||||||||||||||||||
2014 | 2013 | 2012 | 2011 | 2010 | |||||||||||||||
Net income attributed to Vector Group Ltd. | $ | 36,978 | $ | 38,944 | $ | 30,622 | $ | 75,020 | $ | 54,084 | |||||||||
Acceleration of interest expense related to debt conversion | 5,205 | 12,414 | 14,960 | 1,217 | — | ||||||||||||||
Change in fair value of derivatives embedded within convertible debt | (19,409 | ) | (18,935 | ) | 7,476 | (7,984 | ) | (11,524 | ) | ||||||||||
Non-cash amortization of debt discount on convertible debt | 51,472 | 36,378 | 18,016 | 10,441 | 6,967 | ||||||||||||||
Loss on extinguishment of 11% Senior Secured Notes due 2015 | — | 21,458 | — | — | — | ||||||||||||||
Litigation settlement and judgment expense (a) | 2,475 | 88,106 | — | — | 19,161 | ||||||||||||||
Impact of MSA Settlement (b) | (1,419 | ) | (11,823 | ) | — | — | — | ||||||||||||
Interest income from MSA Settlement (c) | — | (1,971 | ) | — | — | — | |||||||||||||
Gain on acquisition of Douglas Elliman Realty, LLC (d) | — | (60,842 | ) | — | — | — | |||||||||||||
Adjustment to reflect additional 20.59% of net income from Douglas Elliman Realty, LLC (e) | — | 8,557 | 5,947 | 5,811 | 8,509 | ||||||||||||||
Out-of-period adjustment related to Douglas Elliman acquisition in 2013 (f) | (1,231 | ) | — | — | — | — | |||||||||||||
Douglas Elliman Realty, LLC purchase accounting adjustments (g) | 6,019 | 1,165 | — | — | — | ||||||||||||||
Gain on liquidation of long-term investments | — | — | — | (25,832 | ) | — | |||||||||||||
Gain on townhomes | — | — | — | (3,843 | ) | — | |||||||||||||
Total adjustments | 43,112 | 74,507 | 46,399 | (20,190 | ) | 23,113 | |||||||||||||
Tax (expense) benefit related to adjustments | (17,827 | ) | (29,467 | ) | (19,332 | ) | 8,197 | (9,384 | ) | ||||||||||
Adjustments to income tax expense due to purchase accounting (h) | 1,670 | — | — | — | — | ||||||||||||||
Pro-forma Adjusted Net Income attributed to Vector Group Ltd. | $ | 63,933 | $ | 83,984 | $ | 57,689 | $ | 63,027 | $ | 67,813 | |||||||||
Per diluted common share: | |||||||||||||||||||
Pro-forma Adjusted Net Income applicable to common shares attributed to Vector Group Ltd. | $ | 0.57 | $ | 0.81 | $ | 0.58 | $ | 0.64 | $ | 0.70 | |||||||||
a. Represents accrual for a settlement of an Engle progeny judgment.
b. | Represents the Company's tobacco segment's settlement of a long-standing dispute related to the Master Settlement Agreement. |
c. | Represents interest income from the Company's tobacco segment's settlement of a long-standing dispute related to the Master Settlement Agreement. |
d. | Represents gain associated with the increase of ownership of Douglas Elliman Realty, LLC. |
e. | Represents 20.59% of Douglas Elliman Realty LLC's net income from January 1, 2013 to December 13, 2013 and the years ended December 31, 2012, 2011, and 2010. On December 13, 2013, the Company increased its ownership of Douglas Elliman Realty, LLC from 50% to 70.59%. Consequently, after December 13, 2013, the Company includes an additional 20.59% of Adjusted Net Income from Douglas Elliman Realty, LLC in the Company's Adjusted Net Income. |
f. | Represents an out-of-period adjustment related to a non-accrual of a receivable from Douglas Elliman in the fourth quarter of 2013 and would have increased the Company’s gain on acquisition of Douglas Elliman in 2013. |
g. | Amounts represents 70.59% of one-time purchase accounting adjustments to fair value for assets acquired in connection with the increase of the Company's ownership of Douglas Elliman Realty, LLC on December 13, 2013. |
h. | Represents adjustments to income tax expense due to a change in the Company's marginal income tax rate from 40.6% to 41.35% as a result of its acquisition of 20.59% of Douglas Elliman Realty, LLC on December 13, 2013. |
TABLE 4
VECTOR GROUP LTD. AND SUBSIDIARIES
COMPUTATION OF NEW VALLEY LLC PRO-FORMA ADJUSTED EBITDA
(Unaudited)
(Dollars in Thousands)
Year Ended December 31, | |||||||||||||||||||
2014 | 2013 | 2012 | 2011 | 2010 | |||||||||||||||
Net income attributed to Vector Group Ltd. from subsidiary non-guarantors (a) | $ | 21,420 | $ | 59,422 | $ | 16,406 | $ | 12,917 | $ | 13,797 | |||||||||
Interest expense (a) | 41 | 14 | 23 | 32 | 41 | ||||||||||||||
Income tax expense (a) | 17,428 | 40,740 | 11,403 | 8,829 | 9,197 | ||||||||||||||
Net income (loss) attributed to non-controlling interest (a) | 12,258 | (252 | ) | — | — | — | |||||||||||||
Depreciation and amortization | 12,204 | 2,421 | 414 | 326 | 298 | ||||||||||||||
EBITDA | $ | 63,351 | $ | 102,345 | $ | 28,246 | $ | 22,104 | $ | 23,333 | |||||||||
Income from non-guarantors other than New Valley | 93 | 131 | — | — | — | ||||||||||||||
Equity income from real estate ventures (b) | (4,103 | ) | (22,925 | ) | (29,764 | ) | (19,966 | ) | (23,963 | ) | |||||||||
Gain on sale of townhomes | — | — | — | (3,843 | ) | — | |||||||||||||
Gain on acquisition of Douglas Elliman | — | (60,842 | ) | — | — | — | |||||||||||||
Reclassification of EBITDA as a result of the consolidation of Douglas Elliman (c) | — | 46,640 | 31,558 | 30,991 | 44,778 | ||||||||||||||
Purchase accounting adjustments | 1,478 | — | — | — | — | ||||||||||||||
Other, net | (4,786 | ) | (348 | ) | (136 | ) | — | — | |||||||||||
Pro-forma Adjusted EBITDA | $ | 56,033 | $ | 65,001 | $ | 29,904 | $ | 29,286 | $ | 44,148 | |||||||||
Pro-forma Adjusted EBITDA attributed to non-controlling interest | (15,858 | ) | (13,717 | ) | (9,281 | ) | (9,114 | ) | (13,169 | ) | |||||||||
Pro-forma Adjusted EBITDA attributed to New Valley LLC | $ | 40,175 | $ | 51,284 | $ | 20,623 | $ | 20,172 | $ | 30,979 | |||||||||
Pro-forma Adjusted EBITDA by Segment | |||||||||||||||||||
Real Estate (d) | $ | 56,036 | $ | 64,866 | $ | 29,959 | $ | 29,388 | $ | 44,445 | |||||||||
Corporate and Other | (3 | ) | 135 | (55 | ) | (102 | ) | (297 | ) | ||||||||||
Total (f) | $ | 56,033 | $ | 65,001 | $ | 29,904 | $ | 29,286 | $ | 44,148 | |||||||||
Pro-forma Adjusted EBITDA Attributed to New Valley LLC by Segment | |||||||||||||||||||
Real Estate (e) | $ | 40,178 | $ | 51,149 | $ | 20,678 | $ | 20,274 | $ | 31,276 | |||||||||
Corporate and Other | (3 | ) | 135 | (55 | ) | (102 | ) | (297 | ) | ||||||||||
Total (f) | $ | 40,175 | $ | 51,284 | $ | 20,623 | $ | 20,172 | $ | 30,979 | |||||||||
a. | Amounts are derived from Vector Group Ltd.'s Consolidated Financial Statements. See Note entitled "Vector Group Ltd.'s Condensed Consolidating Financial Information" contained in Vector Group Ltd.'s Form 10-Q and 10-K for each respective period. |
b. | Represents equity income recognized from the Company's investment in certain real estate businesses that are not consolidated in its financial results. |
c. | Represents EBITDA of Douglas Elliman Realty, LLC for all periods prior to December 13, 2013. On December 13, 2013, the Company increased its ownership of Douglas Elliman Realty, LLC from 50% to 70.59%. Consequently, after December 13, 2013, the Company consolidates the operations and financial position of Douglas Elliman Realty, LLC in its financial statements. The Company had previously accounted for its interest in Douglas Elliman Realty, LLC under the equity method, and operating income as well as depreciation and amortization expense from Douglas Elliman Realty, LLC, were not included in the Company's Adjusted EBITDA. |
d. | Includes Pro-forma Adjusted EBITDA for Douglas Elliman Realty, LLC of $50,655, $45,710, $30,910, $30,991, and $44,778 for the years ended December 31, 2014, 2013, 2012, 2011, and 2010, respectively. Amounts reported in this footnote reflect 100% of Douglas Elliman Realty, LLC's entire Pro-forma Adjusted EBITDA. |
e. | Includes Pro-forma Adjusted EBITDA for Douglas Elliman Realty, LLC less non-controlling interest of $35,757, $32,267, $21,629, $21,877, and $31,609 for the years ended December 31, 2014, 2013, 2012, 2011, and 2010 respectively. Amounts reported in this footnote have adjusted Douglas Elliman Realty, LLC's Pro-forma Adjusted EBITDA for minority interest. |
f. | New Valley's Pro-forma Adjusted EBITDA does not include an allocation of Vector Group Ltd.'s "Corporate and Other" segment's expenses of $10,408, $12,604, $13,095, and $15,007 for the years ended December 31 2014, 2013, 2012, and 2011, respectively. |
TABLE 5
VECTOR GROUP LTD. AND SUBSIDIARIES
COMPUTATION OF DOUGLAS ELLIMAN REALTY, LLC PRO-FORMA ADJUSTED EBITDA
(Unaudited)
(Dollars in Thousands)
Twelve Months Ended | |||||||||||
December 31, | |||||||||||
2014 | 2013 | 2012 | |||||||||
Net income attributed to Douglas Elliman Realty, LLC | $ | 38,414 | $ | 38,095 | $ | 28,881 | |||||
Interest expense | 38 | 18 | 62 | ||||||||
Income tax expense | 1,374 | 996 | 780 | ||||||||
Depreciation and amortization | 11,855 | 6,209 | 3,664 | ||||||||
Douglas Elliman Realty, LLC EBITDA | $ | 51,681 | $ | 45,318 | $ | 33,387 | |||||
Equity income from real estate ventures (a) | (110 | ) | (57 | ) | (1,829 | ) | |||||
Purchase accounting adjustments | 1,478 | 1,357 | — | ||||||||
Income from Douglas Elliman Florida LLC | — | (930 | ) | (648 | ) | ||||||
Other, net | (2,394 | ) | 22 | — | |||||||
Douglas Elliman Realty, LLC Pro-forma Adjusted EBITDA | $ | 50,655 | $ | 45,710 | $ | 30,910 | |||||
a. | Represents equity income recognized from the Company's investment in certain real estate businesses that are not consolidated in its financial results. |