Attached files
| file | filename |
|---|---|
| EX-99.1 - EXHIBIT 99.1 - VECTOR GROUP LTD | vgr-2018q2xex991.htm |
| 8-K - 8-K - VECTOR GROUP LTD | vgr-2018q2x8kstockdiv.htm |
EXHIBIT 99.2
TABLE 1
VECTOR GROUP LTD. AND SUBSIDIARIES
RECONCILIATION OF ADJUSTED NET INCOME
(Unaudited)
(Dollars in Thousands, Except Per Share Amounts)
For the Three Months Ended | For the Six Months Ended | |||||||||||||||||||||||||||||||
June 30, | March 31, | December 31, | September 30, | June 30, | March 31, | June 30, | June 30, | |||||||||||||||||||||||||
2018 | 2018 | 2017 | 2017 | 2017 | 2017 | 2018 | 2017 | |||||||||||||||||||||||||
Net income (loss) attributed to Vector Group Ltd. | $ | 17,818 | $ | 7,211 | $ | 42,724 | $ | 19,264 | $ | 26,811 | $ | (4,227 | ) | $ | 25,029 | $ | 22,584 | |||||||||||||||
Change in fair value of derivatives embedded within convertible debt | (10,717 | ) | (10,567 | ) | (9,777 | ) | (9,437 | ) | (8,134 | ) | (8,571 | ) | (21,284 | ) | (16,705 | ) | ||||||||||||||||
Non-cash amortization of debt discount on convertible debt | 20,386 | 18,193 | 16,330 | 14,978 | 13,426 | 12,053 | 38,579 | 25,479 | ||||||||||||||||||||||||
Loss on extinguishment of debt | — | — | — | — | — | 34,110 | — | 34,110 | ||||||||||||||||||||||||
Litigation settlement and judgment expense, net (a) | 525 | (2,469 | ) | 800 | 4,104 | 102 | 1,585 | (1,218 | ) | 1,687 | ||||||||||||||||||||||
Impact of MSA Settlement (b) | (2,808 | ) | (3,490 | ) | — | (1,826 | ) | — | (895 | ) | (6,298 | ) | (895 | ) | ||||||||||||||||||
Impact of interest expense capitalized to real estate ventures, net | 4,324 | (1,953 | ) | (9,044 | ) | (1,108 | ) | 4,212 | (445 | ) | 2,371 | 3,767 | ||||||||||||||||||||
Douglas Elliman Realty, LLC purchase accounting adjustments (c) | 268 | 265 | 136 | (1,508 | ) | 251 | 321 | 533 | 572 | |||||||||||||||||||||||
Total adjustments | 11,978 | (21 | ) | (1,555 | ) | 5,203 | 9,857 | 38,158 | 12,683 | 48,015 | ||||||||||||||||||||||
Tax (expense) benefit related to adjustments | (3,351 | ) | 6 | 637 | (2,357 | ) | (3,944 | ) | (15,492 | ) | (3,339 | ) | (19,436 | ) | ||||||||||||||||||
Tax benefit from Tax Cuts and Jobs Act of 2017 (d) | — | — | (28,845 | ) | — | — | — | — | — | |||||||||||||||||||||||
Adjusted Net Income attributed to Vector Group Ltd. | $ | 26,445 | $ | 7,196 | $ | 12,961 | $ | 22,110 | $ | 32,724 | $ | 18,439 | $ | 34,373 | $ | 51,163 | ||||||||||||||||
Per diluted common share: | ||||||||||||||||||||||||||||||||
Adjusted Net Income applicable to common shares attributed to Vector Group Ltd. | $ | 0.18 | $ | 0.04 | $ | 0.07 | $ | 0.15 | $ | 0.22 | $ | 0.12 | $ | 0.22 | $ | 0.35 | ||||||||||||||||
a. Represents accruals for settlements of judgment expenses in the Engle progeny tobacco litigation and proceeds received from a litigation award at Douglas Elliman Realty, LLC, net of non-controlling interest.
b. | Represents the Company's tobacco segment's settlement of a long-standing dispute related to the Master Settlement Agreement. |
c. | Represents 70.59% of purchase accounting adjustments in the periods presented for assets acquired in connection with the increase of the Company's ownership of Douglas Elliman Realty, LLC, which occurred in 2013. |
d. Represents one-time benefit from change in tax rates to net deferred tax liabilities at December 31, 2017 as a result of Tax Cuts and Jobs Act of 2017.
TABLE 2
VECTOR GROUP LTD. AND SUBSIDIARIES
RECONCILIATION OF ADJUSTED NET INCOME
(Unaudited)
(Dollars in Thousands, Except Per Share Amounts)
Year Ended December 31, | |||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||
Net income attributed to Vector Group Ltd. | $ | 84,572 | $ | 71,127 | $ | 59,198 | $ | 36,856 | $ | 37,300 | |||||||||
Acceleration of interest expense related to debt conversion | — | — | — | 5,205 | 12,414 | ||||||||||||||
Change in fair value of derivatives embedded within convertible debt | (35,919 | ) | (31,710 | ) | (24,455 | ) | (19,409 | ) | (18,935 | ) | |||||||||
Non-cash amortization of debt discount on convertible debt | 56,787 | 38,528 | 27,211 | 51,472 | 36,378 | ||||||||||||||
Loss on extinguishment of 11% Senior Secured Notes due 2015 | — | — | — | — | 21,458 | ||||||||||||||
Loss on extinguishment of 7.75% Senior Secured Notes due 2021 | 34,110 | — | — | — | — | ||||||||||||||
Litigation settlement and judgment expense (a) | 6,591 | 20,000 | 20,072 | 2,475 | 88,106 | ||||||||||||||
Impact of interest expense capitalized to real estate ventures, net | (6,385 | ) | (11,433 | ) | (9,928 | ) | — | — | |||||||||||
Impact of MSA Settlement (b) | (2,721 | ) | 247 | (4,364 | ) | (1,419 | ) | (11,823 | ) | ||||||||||
Interest income from MSA Settlement (c) | — | — | — | — | (1,971 | ) | |||||||||||||
Gain on acquisition of Douglas Elliman Realty, LLC (d) | — | — | — | — | (60,842 | ) | |||||||||||||
Restructuring expense (e) | — | 41 | 7,257 | — | — | ||||||||||||||
Adjustment to reflect additional 20.59% of net income from Douglas Elliman Realty, LLC (f) | — | — | — | — | 8,557 | ||||||||||||||
Out-of-period adjustment related to Douglas Elliman acquisition in 2013 (g) | — | — | — | (1,231 | ) | — | |||||||||||||
Douglas Elliman Realty, LLC purchase accounting adjustments (h) | (800 | ) | 5,057 | 5,303 | 6,019 | 1,165 | |||||||||||||
Total adjustments | 51,663 | 20,730 | 21,096 | 43,112 | 74,507 | ||||||||||||||
Tax expense related to adjustments | (21,156 | ) | (8,416 | ) | (8,778 | ) | (17,827 | ) | (29,467 | ) | |||||||||
One-time adjustment to income tax expense due to purchase accounting (i) | — | — | — | 1,670 | — | ||||||||||||||
Tax benefit from Tax Cuts and Jobs Act of 2017 (j) | (28,845 | ) | — | — | — | — | |||||||||||||
Adjusted Net Income attributed to Vector Group Ltd. | $ | 86,234 | $ | 83,441 | $ | 71,516 | $ | 63,811 | $ | 82,340 | |||||||||
Per diluted common share: | |||||||||||||||||||
Adjusted Net Income applicable to common shares attributed to Vector Group Ltd. | $ | 0.58 | $ | 0.59 | $ | 0.51 | $ | 0.50 | $ | 0.68 | |||||||||
a. Represents accruals for settlements of judgment expenses in the Engle progeny tobacco litigation.
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. | Includes pension charges that were reclassified to “Other, net” as a result of the adoption of ASU 2017-07 during the first quarter of 2018. |
f. | 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 and 2011. 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. |
g. | 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. |
h. | Represents 70.59% of purchase accounting adjustments in the periods presented for assets acquired in connection with the increase of the Company's ownership of Douglas Elliman Realty, LLC, which occurred in 2013. |
i. | 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. |
j. | Represents one-time benefit from change in tax rates to net deferred tax liabilities at December 31, 2017 as a result of Tax Cuts and Jobs Act of 2017. |
TABLE 3
VECTOR GROUP LTD. AND SUBSIDIARIES
RECONCILIATION OF ADJUSTED OPERATING INCOME
(Unaudited)
(Dollars in Thousands, Except Per Share Amounts)
For the Three Months Ended | For the Six Months Ended | |||||||||||||||||||||||||||||||
June 30, | March 31, | December 31, | September 30, | June 30, | March 31, | June 30, | June 30, | |||||||||||||||||||||||||
2018 | 2018 | 2017 | 2017 | 2017 | 2017 | 2018 | 2017 | |||||||||||||||||||||||||
Operating income | $ | 61,861 | $ | 48,084 | $ | 48,204 | $ | 59,723 | $ | 74,300 | $ | 53,421 | $ | 109,945 | $ | 127,721 | ||||||||||||||||
Litigation settlement and judgment expense, net (a) | 525 | (2,469 | ) | 800 | 4,104 | 102 | 1,585 | (1,944 | ) | 1,687 | ||||||||||||||||||||||
Impact of MSA settlement (b) | (2,808 | ) | (3,490 | ) | — | (1,826 | ) | — | (895 | ) | (6,298 | ) | (895 | ) | ||||||||||||||||||
Douglas Elliman Realty, LLC purchase accounting adjustments (c) | 380 | 375 | 193 | (2,136 | ) | 355 | 455 | 755 | 810 | |||||||||||||||||||||||
Total adjustments | (1,903 | ) | (5,584 | ) | 993 | 142 | 457 | 1,145 | (7,487 | ) | 1,602 | |||||||||||||||||||||
Adjusted Operating Income (d) | $ | 59,958 | $ | 42,500 | $ | 49,197 | $ | 59,865 | $ | 74,757 | $ | 54,566 | $ | 102,458 | $ | 129,323 | ||||||||||||||||
a. Represents accruals for settlements of judgment expenses in the Engle progeny tobacco litigation and proceeds received from a litigation award at Douglas Elliman Realty, LLC.
b. | Represents the Company's tobacco segment's settlement of a long-standing dispute related to the Master Settlement Agreement. |
c. | Amounts represent purchase accounting adjustments recorded in the periods presented in connection with the increase of the Company’s ownership of Douglas Elliman Realty, LLC, which occurred in 2013. |
d. Does not include a reduction for 29.41% non-controlling interest in Douglas Elliman Realty, LLC.
TABLE 4
VECTOR GROUP LTD. AND SUBSIDIARIES
RECONCILIATION OF ADJUSTED OPERATING INCOME
(Unaudited)
(Dollars in Thousands, Except Per Share Amounts)
Year Ended December 31, | |||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||
Operating income | $ | 235,648 | $ | 234,505 | $ | 205,936 | $ | 211,561 | $ | 111,305 | |||||||||
Litigation settlement and judgment expense, net (a) | 6,591 | 20,000 | 20,072 | 2,475 | 88,106 | ||||||||||||||
Restructuring expense | — | 41 | 1,819 | — | — | ||||||||||||||
Impact of MSA settlement (b) | (2,721 | ) | 247 | (4,364 | ) | (1,419 | ) | (11,823 | ) | ||||||||||
Reclassification of operating income as a result of the consolidation of Douglas Elliman Realty, LLC (c) | — | — | — | — | 42,598 | ||||||||||||||
Douglas Elliman Realty, LLC purchase accounting adjustments (d) | (1,133 | ) | 7,164 | 7,513 | 8,527 | 1,650 | |||||||||||||
Total adjustments | 2,737 | 27,452 | 25,040 | 9,583 | 120,531 | ||||||||||||||
Adjusted Operating Income (e) | $ | 238,385 | $ | 261,957 | $ | 230,976 | $ | 221,144 | $ | 231,836 | |||||||||
a. Represents accruals for settlements of judgment expenses in the Engle progeny tobacco litigation.
b. | Represents the Company's tobacco segment's settlement of a long-standing dispute related to the Master Settlement Agreement. |
c. | Represents Adjusted Operating Income of Douglas Elliman Realty, LLC in 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 consolidated the operations and financial position of Douglas Elliman Realty in its financial statements. The Company had previously accounted for its interest in Douglas Elliman under the equity method and operating income from Douglas Elliman Realty, LLC was not included in the Company's operating income. |
d. | Amounts represent purchase accounting adjustments recorded in the periods presented in connection with the increase of the Company’s ownership of Douglas Elliman Realty, LLC, which occurred in 2013. |
e. | Does not include a reduction for 29.41% non-controlling interest in Douglas Elliman Realty, LLC. |
TABLE 5
VECTOR GROUP LTD. AND SUBSIDIARIES
RECONCILIATION OF TOBACCO ADJUSTED OPERATING INCOME
AND TOBACCO ADJUSTED EBITDA
(Unaudited)
(Dollars in Thousands)
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||
June 30, | March 31, | December 31, | September 30, | June 30, | March 31, | June 30, | |||||||||||||||||||||||||
2018 | 2018 | 2017 | 2017 | 2017 | 2017 | 2018 | 2017 | ||||||||||||||||||||||||
Tobacco Adjusted Operating Income: | |||||||||||||||||||||||||||||||
Operating income from tobacco segment | $ | 62,515 | $ | 63,411 | $ | 54,874 | $ | 61,601 | $ | 64,281 | $ | 59,644 | $ | 125,926 | $ | 123,925 | |||||||||||||||
Litigation settlement and judgment expense (a) | 525 | — | 800 | 4,104 | 102 | 1,585 | 525 | 1,687 | |||||||||||||||||||||||
Impact of MSA settlement (b) | (2,808 | ) | (3,490 | ) | — | (1,826 | ) | — | (895 | ) | (6,298 | ) | (895 | ) | |||||||||||||||||
Total adjustments | (2,283 | ) | (3,490 | ) | 800 | 2,278 | 102 | 690 | (5,773 | ) | 792 | ||||||||||||||||||||
Tobacco Adjusted Operating Income | $ | 60,232 | $ | 59,921 | $ | 55,674 | $ | 63,879 | $ | 64,383 | $ | 60,334 | $ | 120,153 | $ | 124,717 | |||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||
June 30, | March 31, | December 31, | September 30, | June 30, | March 31, | June 30, | |||||||||||||||||||||||||
2018 | 2018 | 2017 | 2017 | 2017 | 2017 | 2018 | 2017 | ||||||||||||||||||||||||
Tobacco Adjusted EBITDA: | |||||||||||||||||||||||||||||||
Operating income from tobacco segment | $ | 62,515 | $ | 63,411 | $ | 54,874 | $ | 61,601 | $ | 64,281 | $ | 59,644 | $ | 125,926 | $ | 123,925 | |||||||||||||||
Litigation settlement and judgment expense (a) | 525 | — | 800 | 4,104 | 102 | 1,585 | 525 | 1,687 | |||||||||||||||||||||||
Impact of MSA settlement (b) | (2,808 | ) | (3,490 | ) | — | (1,826 | ) | — | (895 | ) | (6,298 | ) | (895 | ) | |||||||||||||||||
Total adjustments | (2,283 | ) | (3,490 | ) | 800 | 2,278 | 102 | 690 | (5,773 | ) | 792 | ||||||||||||||||||||
Tobacco Adjusted Operating Income | 60,232 | 59,921 | 55,674 | 63,879 | 64,383 | 60,334 | 120,153 | 124,717 | |||||||||||||||||||||||
Depreciation and amortization | 2,075 | 2,037 | 2,023 | 2,050 | 2,333 | 2,420 | 4,112 | 4,753 | |||||||||||||||||||||||
Stock-based compensation expense | 21 | 21 | 22 | 21 | 21 | 21 | 42 | 42 | |||||||||||||||||||||||
Total adjustments | 2,096 | 2,058 | 2,045 | 2,071 | 2,354 | 2,441 | 4,154 | 4,795 | |||||||||||||||||||||||
Tobacco Adjusted EBITDA | $ | 62,328 | $ | 61,979 | $ | 57,719 | $ | 65,950 | $ | 66,737 | $ | 62,775 | $ | 124,307 | $ | 129,512 | |||||||||||||||
a. | Represents accruals for settlements of judgment expenses in the Engle progeny tobacco litigation. |
b. | Represents the Company’s tobacco segment’s settlement of a long-standing dispute related to the Master Settlement Agreement. |
TABLE 6
VECTOR GROUP LTD. AND SUBSIDIARIES
RECONCILIATION OF TOBACCO ADJUSTED OPERATING INCOME
AND TOBACCO ADJUSTED EBITDA
(Unaudited)
(Dollars in Thousands)
Year Ended December 31, | |||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||
Tobacco Adjusted Operating Income: | |||||||||||||||||||
Operating income from tobacco segment | $ | 240,400 | $ | 237,524 | $ | 214,131 | $ | 196,948 | $ | 111,914 | |||||||||
Litigation settlement and judgment expense (a) | 6,591 | 20,000 | 20,072 | 2,475 | 88,106 | ||||||||||||||
Restructuring expense | — | 41 | 1,819 | — | — | ||||||||||||||
Impact of MSA settlement (b) | (2,721 | ) | 247 | (4,364 | ) | (1,419 | ) | (11,823 | ) | ||||||||||
Total adjustments | 3,870 | 20,288 | 17,527 | 1,056 | 76,283 | ||||||||||||||
Tobacco Adjusted Operating Income | $ | 244,270 | $ | 257,812 | $ | 231,658 | $ | 198,004 | $ | 188,197 | |||||||||
Year Ended December 31, | |||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||
Tobacco Adjusted EBITDA: | |||||||||||||||||||
Operating income from tobacco segment | $ | 240,400 | $ | 237,524 | $ | 214,131 | $ | 196,948 | $ | 111,914 | |||||||||
Litigation settlement and judgment expense (a) | 6,591 | 20,000 | 20,072 | 2,475 | 88,106 | ||||||||||||||
Restructuring expense | — | 41 | 1,819 | — | — | ||||||||||||||
Impact of MSA settlement (b) | (2,721 | ) | 247 | (4,364 | ) | (1,419 | ) | (11,823 | ) | ||||||||||
Total adjustments | 3,870 | 20,288 | 17,527 | 1,056 | 76,283 | ||||||||||||||
Tobacco Adjusted Operating Income | 244,270 | 257,812 | 231,658 | 198,004 | 188,197 | ||||||||||||||
Depreciation and amortization | 8,826 | 10,224 | 11,323 | 10,885 | 9,509 | ||||||||||||||
Stock-based compensation expense | 85 | 85 | 86 | 108 | 35 | ||||||||||||||
Total adjustments | 8,911 | 10,309 | 11,409 | 10,993 | 9,544 | ||||||||||||||
Tobacco Adjusted EBITDA | $ | 253,181 | $ | 268,121 | $ | 243,067 | $ | 208,997 | $ | 197,741 | |||||||||
a. | Represents accruals for settlements of judgment expenses in the Engle progeny tobacco litigation. |
b. | Represents the Company’s tobacco segment’s settlement of a long-standing dispute related to the Master Settlement Agreement. |