VECTOR GROUP LTD. |
DELAWARE |
(State or Other Jurisdiction of Incorporation) |
1-5759 | 65-0949535 | |
(Commission File Number) | (I.R.S. Employer Identification No.) | |
4400 Biscayne Boulevard, Miami, Florida | 33137 | |
(Address of Principal Executive Offices) | (Zip Code) |
(305) 579-8000 |
(Registrant’s Telephone Number, Including Area Code) |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
(c) | Exhibit. |
Exhibit No. | Exhibit | |
99.1 | Press Release issued on July 30, 2014 |
VECTOR GROUP LTD. | ||
By: | /s/ J. Bryant Kirkland III | |
J. Bryant Kirkland III | ||
Vice President, Treasurer and Chief Financial Officer |
Contact: | Paul Caminiti/Emily Deissler/Benjamin Spicehandler | |
Sard Verbinnen & Co | ||
212-687-8080 | ||
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
(Unaudited) | (Unaudited) | ||||||||||||||
Revenues | |||||||||||||||
Tobacco* | $ | 250,556 | $ | 249,120 | $ | 483,948 | $ | 489,522 | |||||||
Real estate | 153,488 | 7,106 | 261,532 | 12,873 | |||||||||||
E-Cigarettes | 2,569 | — | 8,369 | — | |||||||||||
Total revenues | 406,613 | 256,226 | 753,849 | 502,395 | |||||||||||
Expenses: | |||||||||||||||
Cost of sales: | |||||||||||||||
Tobacco* | 179,773 | 180,430 | 347,939 | 353,386 | |||||||||||
Real estate | 97,763 | 6,015 | 165,087 | 10,236 | |||||||||||
E-Cigarettes | 1,746 | — | 5,293 | — | |||||||||||
Total cost of sales | 279,282 | 186,445 | 518,319 | 363,622 | |||||||||||
Operating, selling, administrative and general expenses | 67,023 | 25,541 | 132,500 | 51,437 | |||||||||||
Operating income | 60,308 | 44,240 | 103,030 | 87,336 | |||||||||||
Other income (expenses): | |||||||||||||||
Interest expense | (44,183 | ) | (32,086 | ) | (79,636 | ) | (65,462 | ) | |||||||
Loss on extinguishment of debt | — | — | — | (21,458 | ) | ||||||||||
Change in fair value of derivatives embedded within convertible debt | 1,970 | 2,450 | 320 | 5,499 | |||||||||||
Acceleration of interest expense related to debt conversion | (439 | ) | — | (4,118 | ) | — | |||||||||
Equity income from non-consolidated real estate businesses | (1,808 | ) | 6,804 | (256 | ) | 7,285 | |||||||||
Equity (loss) income on long-term investments | (273 | ) | 846 | 633 | 823 | ||||||||||
(Loss) gain on sale of investment securities available for sale | (18 | ) | (197 | ) | (71 | ) | 5,209 | ||||||||
Other, net | 3,575 | 1,471 | 5,701 | 2,280 | |||||||||||
Income before provision for income taxes | 19,132 | 23,528 | 25,603 | 21,512 | |||||||||||
Income tax expense | 6,101 | 10,017 | 9,043 | 9,682 | |||||||||||
Net income | 13,031 | 13,511 | 16,560 | 11,830 | |||||||||||
Net income attributed to non-controlling interest | (5,106 | ) | — | (6,055 | ) | — | |||||||||
Net income attributed to Vector Group Ltd. | $ | 7,925 | $ | 13,511 | $ | 10,505 | $ | 11,830 | |||||||
Per basic common share: | |||||||||||||||
Net income applicable to common shares attributed to Vector Group Ltd. | $ | 0.08 | $ | 0.14 | $ | 0.11 | $ | 0.13 | |||||||
Per diluted common share: | |||||||||||||||
Net income applicable to common shares attributed to Vector Group Ltd. | $ | 0.08 | $ | 0.14 | $ | 0.11 | $ | 0.13 | |||||||
Cash distributions and dividends declared per share | $ | 0.40 | $ | 0.38 | $ | 0.80 | $ | 0.76 |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Revenues | $ | 406,613 | $ | 256,226 | $ | 753,849 | $ | 502,395 | |||||||
Reclassification of revenues as a result of the consolidation of Douglas Elliman (a) | — | 113,647 | — | 188,184 | |||||||||||
Purchase accounting adjustments (b) | 29 | — | 1,683 | — | |||||||||||
Total adjustments | 29 | 113,647 | 1,683 | 188,184 | |||||||||||
Pro-forma Adjusted Revenues | $ | 406,642 | $ | 369,873 | $ | 755,532 | $ | 690,579 | |||||||
Pro-forma Adjusted Revenues by Segment | |||||||||||||||
Tobacco | $ | 250,556 | $ | 249,120 | $ | 483,948 | $ | 489,522 | |||||||
Real Estate (c) | 153,517 | 120,753 | 263,215 | 201,057 | |||||||||||
Corporate and Other | 2,569 | — | 8,369 | — | |||||||||||
Total | $ | 406,642 | $ | 369,873 | $ | 755,532 | $ | 690,579 |
a. | Represents revenues of Douglas Elliman Realty, LLC in the respective 2013 periods. 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 were 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 $137,949, $119,539, $245,461, and $197,703 for the three and six months ended June 30, 2014 and 2013, respectively. |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Net income attributed to Vector Group Ltd. | $ | 7,925 | $ | 13,511 | $ | 10,505 | $ | 11,830 | |||||||
Interest expense | 44,183 | 32,086 | 79,636 | 65,462 | |||||||||||
Income tax expense | 6,101 | 10,017 | 9,043 | 9,682 | |||||||||||
Net income attributed to non-controlling interest | 5,106 | — | 6,055 | — | |||||||||||
Depreciation and amortization | 5,462 | 2,637 | 12,554 | 5,233 | |||||||||||
EBITDA | $ | 68,777 | $ | 58,251 | $ | 117,793 | $ | 92,207 | |||||||
Change in fair value of derivatives embedded within convertible debt (a) | (1,970 | ) | (2,450 | ) | (320 | ) | (5,499 | ) | |||||||
Equity loss (gain) on long-term investments (b) | 273 | (846 | ) | (633 | ) | (823 | ) | ||||||||
Loss (gain) on sale of investment securities available for sale | 18 | 197 | 71 | (5,209 | ) | ||||||||||
Equity income from non-consolidated real estate businesses (c) | 1,808 | (6,804 | ) | 256 | (7,285 | ) | |||||||||
Loss on extinguishment of debt | — | — | — | 21,458 | |||||||||||
Acceleration of interest expense related to debt conversion | 439 | — | 4,118 | — | |||||||||||
Stock-based compensation expense (d) | 464 | 686 | 987 | 1,255 | |||||||||||
Litigation settlement and judgment expense (e) | — | — | 1,500 | — | |||||||||||
Impact of MSA Settlement (f) | (1,419 | ) | (1,345 | ) | (1,419 | ) | (6,947 | ) | |||||||
Reclassification of EBITDA as a result of the consolidation of Douglas Elliman (g) | — | 13,554 | — | 14,477 | |||||||||||
Other, net | (3,575 | ) | (1,471 | ) | (5,701 | ) | (2,280 | ) | |||||||
Pro-forma Adjusted EBITDA | $ | 64,815 | $ | 59,772 | $ | 116,652 | $ | 101,354 | |||||||
Pro-forma Adjusted EBITDA attributed to non-controlling interest | (5,604 | ) | (3,986 | ) | (7,776 | ) | (4,257 | ) | |||||||
Pro-forma Adjusted EBITDA attributed to Vector Group Ltd. | $ | 59,211 | $ | 55,786 | $ | 108,876 | $ | 97,097 | |||||||
Pro-forma Adjusted EBITDA by Segment | |||||||||||||||
Tobacco | $ | 53,273 | $ | 49,323 | $ | 100,188 | $ | 93,271 | |||||||
Real Estate (h) | 18,243 | 13,299 | 27,334 | 14,436 | |||||||||||
Corporate and Other | (6,701 | ) | (2,850 | ) | (10,870 | ) | (6,353 | ) | |||||||
Total | $ | 64,815 | $ | 59,772 | $ | 116,652 | $ | 101,354 | |||||||
Pro-forma Adjusted EBITDA Attributed to Vector Group by Segment | |||||||||||||||
Tobacco | $ | 53,273 | $ | 49,323 | $ | 100,188 | $ | 93,271 | |||||||
Real Estate (i) | 12,639 | 9,313 | 19,558 | 10,179 | |||||||||||
Corporate and Other | (6,701 | ) | (2,850 | ) | (10,870 | ) | (6,353 | ) | |||||||
Total | $ | 59,211 | $ | 55,786 | $ | 108,876 | $ | 97,097 |
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 Adjusted EBITDA of Douglas Elliman Realty, LLC in the respective 2013 periods. 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 $15,789, $13,465, $23,175 and $14,146 of Pro-forma Adjusted EBITDA for Douglas Elliman Realty, LLC for the three and six months ended June 30, 2014 and 2013, respectively. Amounts reported in this footnote reflect 100% of Douglas Elliman Realty, LLC's entire Pro-forma Adjusted EBITDA. |
i. | Includes $11,145, $9,479, $16,359 and $9,889 of Pro-forma Adjusted EBITDA for Douglas Elliman Realty, LLC less non-controlling interest for the three and six months ended June 30, 2014 and 2013, respectively. Amounts reported in this footnote have adjusted Douglas Elliman Realty, LLC's Pro-forma Adjusted EBITDA for non-controlling interest. |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Net income attributed to Vector Group Ltd. | $ | 7,925 | $ | 13,511 | $ | 10,505 | $ | 11,830 | |||||||
Acceleration of interest expense related to debt conversion | 439 | — | 4,118 | — | |||||||||||
Change in fair value of derivatives embedded within convertible debt | (1,970 | ) | (2,450 | ) | (320 | ) | (5,499 | ) | |||||||
Non-cash amortization of debt discount on convertible debt | 7,563 | 8,464 | 20,019 | 15,812 | |||||||||||
Loss on extinguishment of 11% Senior Secured Notes due 2015 | — | — | — | 21,458 | |||||||||||
Litigation settlement and judgment expense (a) | — | — | 1,500 | — | |||||||||||
Impact of MSA Settlement (b) | (1,419 | ) | (1,345 | ) | (1,419 | ) | (6,947 | ) | |||||||
Adjustment to reflect additional 20.59% of net income from Douglas Elliman Realty, LLC (c) | — | 2,571 | — | 2,590 | |||||||||||
Out-of-period adjustment related to Douglas Elliman acquisition in 2013 (d) | — | — | (1,231 | ) | — | ||||||||||
Douglas Elliman Realty, LLC purchase accounting adjustments (e) | 1,223 | — | 3,579 | — | |||||||||||
Total adjustments | 5,836 | 7,240 | 26,246 | 27,414 | |||||||||||
Tax expense related to adjustments | (2,413 | ) | (2,947 | ) | (10,853 | ) | (10,354 | ) | |||||||
Pro-forma Adjusted Net Income attributed to Vector Group Ltd. | $ | 11,348 | $ | 17,804 | $ | 25,898 | $ | 28,890 | |||||||
Per diluted common share: | |||||||||||||||
Pro-forma Adjusted Net Income applicable to common shares attributed to Vector Group Ltd. | $ | 0.11 | $ | 0.19 | $ | 0.26 | $ | 0.31 |
b. | Represents the Company's tobacco segment's settlement of a long-standing dispute related to the Master Settlement Agreement. |
c. | Represents 20.59% of Douglas Elliman Realty LLC's net income in the respective 2013 periods. 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. |
d. | 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. |
e. | Amounts represent 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. |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Operating income | $ | 60,308 | $ | 44,240 | $ | 103,030 | $ | 87,336 | |||||||
Litigation settlement and judgment expense (a) | — | — | 1,500 | — | |||||||||||
Impact of MSA Settlement (b) | (1,419 | ) | (1,345 | ) | (1,419 | ) | (6,947 | ) | |||||||
Reclassification of operating income as a result of the consolidation of Douglas Elliman Realty, LLC (c) | — | 12,514 | — | 12,408 | |||||||||||
Douglas Elliman purchase accounting adjustments (d) | 1,733 | — | 5,070 | — | |||||||||||
Total adjustments | 314 | 11,169 | 5,151 | 5,461 | |||||||||||
Pro-forma Adjusted Operating Income (e) | $ | 60,622 | $ | 55,409 | $ | 108,181 | $ | 92,797 |
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 Adjusted Operating Income of Douglas Elliman Realty, LLC in the respective 2013 periods. 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 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 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. | Does not include a reduction for 29.41% non-controlling interest in Douglas Elliman Realty, LLC. |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Operating income from tobacco business | $ | 51,506 | $ | 48,294 | $ | 94,402 | $ | 95,454 | |||||||
Litigation settlement and judgment expense (a) | — | — | 1,500 | — | |||||||||||
Impact of MSA Settlement (b) | (1,419 | ) | (1,345 | ) | (1,419 | ) | (6,947 | ) | |||||||
Total adjustments | (1,419 | ) | (1,345 | ) | 81 | (6,947 | ) | ||||||||
Tobacco Adjusted Operating Income | $ | 50,087 | $ | 46,949 | $ | 94,483 | $ | 88,507 |
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. |
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