EX-99.2 3 a2014q3-992xsfdxstockdivno.htm EXHIBIT 99.2 2014.Q3-99.2-SFD-Stock Div Non GAAP


EXHIBIT 99.2
TABLE 1
VECTOR GROUP LTD. AND SUBSIDIARIES
RECONCILIATION OF PRO-FORMA ADJUSTED REVENUES
(Unaudited)
(Dollars in Thousands)

 
 
 
 
 
 
 
 
 
 
 
 
 
Year Ended December 31,
 
LTM
 
 
 
 
 
 
 
 
 
June 30, 2014
 
2013
 
2012
 
2011
 
2010
Revenues, as revised
$
1,331,375

 
$
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)
228,269

 
416,453

 
378,175

 
346,309

 
348,136

Purchase accounting adjustments (b)
3,040

 
1,357

 
—

 
—

 
—

Total adjustments
231,309

 
417,810

 
378,175

 
346,309

 
348,136

 
 
 
 
 
 
 
 
 
 
Pro-forma Adjusted Revenues, as revised
$
1,562,684

 
$
1,497,731

 
$
1,473,708

 
$
1,483,955

 
$
1,414,682

 
 
 
 
 
 
 
 
 
 
Pro-forma Adjusted Revenues by Segment
 
 
 
 
 
 
 
 
 
Tobacco
$
1,008,767

 
$
1,014,341

 
$
1,084,546

 
$
1,133,380

 
$
1,063,289

Real Estate (c)
545,548

 
483,390

 
389,162

 
350,575

 
351,393

Corporate and Other
8,369

 
—

 
—

 
—

 
—

Total
$
1,562,684

 
$
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 last twelve months ended June 30, 2014, represents revenues from Douglas Elliman Realty, LLC from July 1, 2013 to December 13, 2013. 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 $503,310 for the last twelve months ended June 30, 2014 and $455,552, $384,267, $346,309, and $348,136 for the years ended December 31, 2013, 2012, 2011, and 2010, respectively.





TABLE 2
VECTOR GROUP LTD. AND SUBSIDIARIES
COMPUTATION OF PRO-FORMA ADJUSTED EBITDA
(Unaudited)
(Dollars in Thousands)
 
Three Months Ended
 
June 30,
 
March 31,
 
December 31,
 
September 30,
 
June 30,
 
March 31,

 
2014
 
2014
 
2013
 
2013
 
2013
 
2013
 
 
 
 
 
 
 
 
Net income (loss) attributed to Vector Group Ltd.
$
7,925

 
$
2,580

 
$
64,005

 
$
(36,891
)
 
$
13,511

 
$
(1,681
)
Interest expense
44,183

 
35,453

 
33,102

 
33,583

 
32,086

 
33,376

Income tax expense (benefit)
6,101

 
2,942

 
34,082

 
(18,969
)
 
10,017

 
(335
)
Net income attributed to non-controlling interest
5,106

 
949

 
(252
)
 
—

 
—

 
—

Depreciation and amortization
5,462

 
7,092

 
4,626

 
2,772

 
2,637

 
2,596

EBITDA
$
68,777

 
$
49,016

 
$
135,563

 
$
(19,505
)
 
$
58,251

 
$
33,956

Change in fair value of derivatives embedded within convertible debt (a)
(1,970
)
 
1,650

 
(10,636
)
 
(2,800
)
 
(2,450
)
 
(3,049
)
Equity (gain) loss on long-term investments (b)
273

 
(906
)
 
(1,296
)
 
53

 
(846
)
 
23

Loss (gain) on sale of investment securities available for sale
18

 
53

 
(42
)
 
99

 
197

 
(5,406
)
Equity income from non-consolidated real estate businesses (c)
1,808

 
(1,552
)
 
(6,151
)
 
(9,489
)
 
(6,804
)
 
(481
)
Loss on extinguishment of debt
—

 
—

 
—

 
—

 
—

 
21,458

Acceleration of interest expense related to debt conversion
439

 
3,679

 
12,414

 
—

 
—

 
—

Stock-based compensation expense (d)
464

 
523

 
586

 
678

 
686

 
569

Litigation settlement and judgment expense (e)
—

 
1,500

 
193

 
87,913

 
—

 
—

Impact of MSA Settlement (f)
(1,419
)
 
—

 
(860
)
 
(4,016
)
 
(1,345
)
 
(5,602
)
Gain on acquisition of Douglas Elliman
—

 
—

 
(60,842
)
 
—

 
—

 
—

Reclassification of EBITDA as a result of the consolidation of Douglas Elliman (g)
—

 
—

 
13,804

 
18,359

 
13,554

 
923

Other, net
(3,575
)
 
(2,126
)
 
(2,399
)
 
(2,871
)
 
(1,471
)
 
(809
)
Pro-forma Adjusted EBITDA
$
64,815

 
$
51,837

 
$
80,334

 
$
68,421

 
$
59,772

 
$
41,582

Pro-forma Adjusted EBITDA attributed to non-controlling interest
(5,604
)
 
(2,172
)
 
(4,060
)
 
(5,399
)
 
(3,986
)
 
(271
)
Pro-forma Adjusted EBITDA attributed to Vector Group Ltd.
$
59,211

 
$
49,665

 
$
76,274

 
$
63,022

 
$
55,786

 
$
41,311

 
 
 
 
 
 
 
 
 
 
 
 
Pro-forma Adjusted EBITDA by Segment
 
 
 
 
 
 
 
 
 
 
 
Tobacco
$
53,273

 
$
46,915

 
$
51,746

 
$
53,849

 
$
49,323

 
$
43,948

Real Estate (h)
18,523

 
9,091

 
32,983

 
17,447

 
13,299

 
1,137

Corporate and Other
(6,981
)
 
(4,169
)
 
(4,395
)
 
(2,875
)
 
(2,850
)
 
(3,503
)
Total
$
64,815

 
$
51,837

 
$
80,334

 
$
68,421

 
$
59,772

 
$
41,582

 
 
 
 
 
 
 
 
 
 
 
 
Pro-forma Adjusted EBITDA Attributed to Vector Group by Segment
 
 
 
 
 
 
 
 
 
 
 
Tobacco
$
53,273

 
$
46,915

 
$
51,746

 
$
53,849

 
$
49,323

 
$
43,948

Real Estate (i)
12,919

 
6,919

 
28,923

 
12,048

 
9,313

 
866

Corporate and Other
(6,981
)
 
(4,169
)
 
(4,395
)
 
(2,875
)
 
(2,850
)
 
(3,503
)
Total
$
59,211

 
$
49,665

 
$
76,274

 
$
63,022

 
$
55,786

 
$
41,311

                                      

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 before 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 $15,789, $7,386, $13,169, $18,395, $13,465, and $681 of Pro-forma Adjusted EBITDA for Douglas Elliman Realty, LLC for the three months ended June 30, 2014, March 31, 2014, December 31, 2013, September 30, 2013, June 30, 2013 and March 31, 2013, respectively. Amounts reported in this footnote reflect 100% of Douglas Elliman Realty, LLC's entire Pro-forma Adjusted EBITDA.
i.
Includes $11,145, $5,214, $9,109, $12,996, $9,479, and $410 of Pro-forma Adjusted EBITDA for Douglas Elliman Realty, LLC less non-controlling interest for the three months ended June 30, 2014, March 31, 2014, December 31, 2013, September 30, 2013, June 30, 2013 and March 31, 2013, respectively. Amounts reported in this footnote have adjusted Douglas Elliman Realty, LLC's Pro-forma Adjusted EBITDA for non-controlling interest.





TABLE 2
VECTOR GROUP LTD. AND SUBSIDIARIES
COMPUTATION OF PRO-FORMA ADJUSTED EBITDA
(Unaudited)
(Dollars in Thousands)
Continued
 
LTM
 
Year Ended December 31,
 
June 30, 2014
 
2013
 
2012
 
2011
 
2010
 
 
 
 
 
 
 
 
Net income attributed to Vector Group Ltd.
$
37,619

 
$
38,944

 
$
30,622

 
$
75,020

 
$
54,084

Interest expense
146,321

 
132,147

 
110,102

 
100,706

 
84,096

Income tax expense
24,156

 
24,795

 
23,095

 
48,137

 
31,486

Net income (loss) attributed to non-controlling interest
5,803

 
(252
)
 
—

 
—

 
—

Depreciation and amortization
19,952

 
12,631

 
10,608

 
10,607

 
10,790

EBITDA
$
233,851

 
$
208,265

 
$
174,427

 
$
234,470

 
$
180,456

Change in fair value of derivatives embedded within convertible debt (a)
(13,756
)
 
(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)
(1,876
)
 
(2,066
)
 
1,261

 
859

 
(1,489
)
Gain on sale of investment securities available for sale
128

 
(5,152
)
 
(1,640
)
 
(23,257
)
 
(19,869
)
Equity income from non-consolidated real estate businesses (c)
(15,384
)
 
(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
16,532

 
12,414

 
14,960

 
—

 
—

Stock-based compensation expense (d)
2,251

 
2,519

 
5,563

 
3,183

 
2,704

Litigation settlement and judgment expense (e)
89,606

 
88,106

 
—

 
—

 
19,161

Impact of MSA Settlement (f)
(6,295
)
 
(11,823
)
 
—

 
—

 
—

Gain on acquisition of Douglas Elliman
(60,842
)
 
(60,842
)
 
—

 
—

 
—

Reclassification of EBITDA as a result of the consolidation of Douglas Elliman (g)
32,163

 
46,640

 
31,558

 
30,991

 
44,778

Other, net
(10,971
)
 
(7,550
)
 
(1,179
)
 
(1,736
)
 
(1,508
)
Pro-forma Adjusted EBITDA
$
265,407

 
$
250,109

 
$
202,662

 
$
188,102

 
$
188,746

Pro-forma Adjusted EBITDA attributed to non-controlling interest
(17,236
)
 
(13,717
)
 
(9,281
)
 
(9,114
)
 
(13,169
)
Pro-forma Adjusted EBITDA attributed to Vector Group Ltd.
$
248,171

 
$
236,392

 
$
193,381

 
$
178,988

 
$
175,577

 
 
 
 
 
 
 
 
 
 
Pro-forma Adjusted EBITDA by Segment
 
 
 
 
 
 
 
 
 
Tobacco
$
205,783

 
$
198,866

 
$
185,798

 
$
173,721

 
$
157,528

Real Estate (h)
78,044

 
64,866

 
29,959

 
29,388

 
44,445

Corporate and Other
(18,420
)
 
(13,623
)
 
(13,095
)
 
(15,007
)
 
(13,227
)
Total
$
265,407

 
$
250,109

 
$
202,662

 
$
188,102

 
$
188,746

 
 
 
 
 
 
 
 
 
 
Pro-forma Adjusted EBITDA Attributed to Vector Group by Segment
 
 
 
 
 
 
 
 
 
Tobacco
$
205,783

 
$
198,866

 
$
185,798

 
$
173,721

 
$
157,528

Real Estate (i)
60,808

 
51,149

 
20,678

 
20,274

 
31,276

Corporate and Other
(18,420
)
 
(13,623
)
 
(13,095
)
 
(15,007
)
 
(13,227
)
Total
$
248,171

 
$
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 $54,739 for the last twelve months ended June 30, 2014 and $45,710, $30,910, $30,991 and $44,778 for the years ended December 31 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 $38,463 for the last twelve months ended June 30, 2014 and $31,993, $21,629, $21,877 and $31,609 for the years ended December 31 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)


 
Three Months Ended
 
June 30,
 
March 31,
 
December 31,
 
September 30,
 
June 30,
 
March 31,
 
2014
 
2014
 
2013
 
2013
 
2013
 
2013
 
 
 
 
 
 
Net income (loss) attributed to Vector Group Ltd.
$
7,925

 
$
2,580

 
$
64,005

 
$
(36,891
)
 
$
13,511

 
$
(1,681
)
 
 
 
 
 
 
 
 
 
 
 
 
Acceleration of interest expense related to debt conversion
439

 
3,679

 
12,414

 
—

 
—

 
—

Change in fair value of derivatives embedded within convertible debt
(1,970
)
 
1,650

 
(10,636
)
 
(2,800
)
 
(2,450
)
 
(3,049
)
Non-cash amortization of debt discount on convertible debt
14,691

 
12,456

 
10,946

 
9,620

 
8,464

 
7,348

Loss on extinguishment of 11% Senior Secured Notes due 2015
—

 
—

 
—

 
—

 
—

 
21,458

Litigation settlement and judgment expense (a)
—

 
1,500

 
193

 
87,913

 
—

 
—

Impact of MSA Settlement (b)
(1,419
)
 
—

 
(860
)
 
(4,016
)
 
(1,345
)
 
(5,602
)
Interest income from MSA Settlement (b)
—

 
—

 
—

 
(1,971
)
 
—

 
—

Gain on acquisition of Douglas Elliman Realty, LLC (c)
 
 
—

 
(60,842
)
 
—

 
—

 
—

Adjustment to reflect additional 20.59% of net income from Douglas Elliman Realty, LLC (c)
—

 
—

 
2,467

 
3,500

 
2,571

 
19

Out-of-period adjustment related to Douglas Elliman acquisition in 2013 (d)
—

 
(1,231
)
 
—

 
—

 
—

 
—

Douglas Elliman Realty, LLC purchase accounting adjustments (e)
1,223

 
2,356

 
1,165

 
—

 
—

 
—

Total adjustments
12,964

 
20,410

 
(45,153
)
 
92,246

 
7,240

 
20,174

 
 
 
 
 
 
 
 
 
 
 
 
Tax (expense) benefit related to adjustments
(5,360
)
 
(8,440
)
 
18,332

 
(37,445
)
 
(2,947
)
 
(7,407
)
 
 
 
 
 
 
 
 
 
 
 
 
Pro-forma Adjusted Net Income attributed to Vector Group Ltd.
$
15,529

 
$
14,550

 
$
37,184

 
$
17,910

 
$
17,804

 
$
11,086

 
 
 
 
 
 
 
 
 
 
 
 
Per diluted common share:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Pro-forma Adjusted Net Income applicable to common shares attributed to Vector Group Ltd.
$
0.15

 
$
0.14

 
$
0.36

 
$
0.18

 
$
0.18

 
$
0.11


                                      

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 20.59% of Douglas Elliman Realty, LLC's net income 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 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 which 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.
   




TABLE 3
VECTOR GROUP LTD. AND SUBSIDIARIES
RECONCILIATION OF PRO-FORMA ADJUSTED NET INCOME
(Unaudited)
(Dollars in Thousands, Except Per Share Amounts)
Continued

 
 
 
 
 
 
 
 
 
Year Ended December 31,
 
2013
 
2012
 
2011
 
2010
 
 
 
 
 
 
 
 
Net income attributed to Vector Group Ltd.
$
38,944

 
$
30,622

 
$
75,020

 
$
54,084

 
 
 
 
 
 
 
 
Acceleration of interest expense related to debt conversion
12,414

 
14,960

 
1,217

 
—

Change in fair value of derivatives embedded within convertible debt
(18,935
)
 
7,476

 
(7,984
)
 
(11,524
)
Non-cash amortization of debt discount on convertible debt
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)
88,106

 
—

 
—

 
19,161

Impact of MSA Settlement (b)
(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

Douglas Elliman Realty, LLC purchase accounting adjustments (f)
1,165

 
—

 
—

 
—

Gain on liquidation of long-term investments
—

 
—

 
(25,832
)
 
—

Gain on townhomes
—

 
—

 
(3,843
)
 
—

Total adjustments
74,507

 
46,399

 
(20,190
)
 
23,113

 
 
 
 
 
 
 
 
Tax (expense) benefit related to adjustments
(29,467
)
 
(19,332
)
 
8,197

 
(9,384
)
 
 
 
 
 
 
 
 
Pro-forma Adjusted Net Income attributed to Vector Group Ltd.
$
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.
$
0.85

 
$
0.61

 
$
0.68

 
$
0.73


                                      

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.
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.





TABLE 4
VECTOR GROUP LTD. AND SUBSIDIARIES
ANALYSIS OF NEW VALLEY LLC PRO-FORMA ADJUSTED REVENUES
(Unaudited)
(Dollars in Thousands)


 
 
 
 
 
 
 
 
 
 
 
 
 
Year Ended December 31,
 
LTM
 
 
 
 
 
 
 
 
 
June 30, 2014
 
2013
 
2012
 
2011
 
2010
Revenues
$
314,239

 
$
65,580

 
$
10,987

 
$
4,266

 
$
3,257

 
 
 
 
 
 
 
 
 
 
Reclassification of revenues as a result of the consolidation of Douglas Elliman (a)
228,269

 
416,453

 
378,175

 
346,309

 
348,136

Purchase accounting adjustments (b)
3,040

 
1,357

 
—

 
—

 
—

Total adjustments
231,309

 
417,810

 
378,175

 
346,309

 
348,136

 
 
 
 
 
 
 
 
 
 
Pro-forma Adjusted Revenues (c)
$
545,548

 
$
483,390

 
$
389,162

 
$
350,575

 
$
351,393


                              

a.
Represents revenues of Douglas Elliman Realty, LLC for the respective three month periods. For the last twelve months ended June 30, 2014, represents revenues of Douglas Elliman Realty, LLC from July 1, 2013 to December 13, 2013. For the year ended December 31, 2013, represents revenues of 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 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 $503,310 for the last twelve months ended June 30, 2014 and $455,552, $384,267, $346,309, and $348,136 for the years ended December 31, 2013, 2012, 2011, and 2010, respectively.





TABLE 5
VECTOR GROUP LTD. AND SUBSIDIARIES
COMPUTATION OF NEW VALLEY LLC PRO-FORMA ADJUSTED EBITDA
(Unaudited)
(Dollars in Thousands)
 
Three Months Ended
 
June 30,
 
March 31,
 
December 31,
 
September 30,
 
June 30,
 
March 31,
 
2014
 
2014
 
2013
 
2013
 
2013
 
2013
 
 
 
 
 
 
 
 
 
 
Net income attributed to Vector Group Ltd. from subsidiary non-guarantors (a)
$
6,234

 
$
3,225

 
$
50,286

 
$
5,052

 
$
3,763

 
$
321

Interest expense (a)
3

 
34

 
4

 
3

 
3

 
4

Income tax expense (a)
5,249

 
3,541

 
34,394

 
3,493

 
2,625

 
228

Net income (loss) attributed to non-controlling interest (a)
5,106

 
949

 
(252
)
 
—

 
—

 
—

Depreciation and amortization
2,622

 
4,347

 
1,981

 
160

 
152

 
128

EBITDA
$
19,214

 
$
12,096

 
$
86,413

 
$
8,708

 
$
6,543

 
$
681

Income from non-guarantors other than New Valley
47

 
18

 
36

 
36

 
43

 
16

Equity income from non-consolidated real estate businesses (b)
1,808

 
(1,552
)
 
(6,151
)
 
(9,489
)
 
(6,804
)
 
(481
)
Gain on sale of townhomes
—

 
—

 
—

 
—

 
—

 
—

Gain on acquisition of Douglas Elliman
—

 
—

 
(60,842
)
 
—

 
—

 
—

Reclassification of EBITDA as a result of the consolidation of Douglas Elliman (c)
—

 
—

 
13,804

 
18,359

 
13,554

 
923

Other, net
(2,577
)
 
(1,486
)
 
(222
)
 
2

 
(76
)
 
(52
)
Pro-forma Adjusted EBITDA
$
18,492

 
$
9,076

 
$
33,038

 
$
17,616

 
$
13,260

 
$
1,087

Pro-forma Adjusted EBITDA attributed to non-controlling interest
(5,604
)
 
(2,172
)
 
(4,060
)
 
(5,399
)
 
(3,986
)
 
(271
)
Pro-forma Adjusted EBITDA attributed to New Valley LLC
$
12,888

 
$
6,904

 
$
28,978

 
$
12,217

 
$
9,274

 
$
816

 
 
 
 
 
 
 
 
 
 
 
 
Pro-forma Adjusted EBITDA by Segment
 
 
 
 
 
 
 
 
 
 
 
Real Estate (d)
$
18,523

 
$
9,091

 
$
32,983

 
$
17,447

 
$
13,299

 
$
1,137

Corporate and Other
(31
)
 
(15
)
 
55

 
169

 
(39
)
 
(50
)
Total (f)
$
18,492

 
$
9,076

 
$
33,038

 
$
17,616

 
$
13,260

 
$
1,087

 
 
 
 
 
 
 
 
 
 
 
 
Pro-forma Adjusted EBITDA Attributed to New Valley LLC by Segment
 
 
 
 
 
 
 
 
 
 
 
Real Estate (e)
$
12,919

 
$
6,919

 
$
28,923

 
$
12,048

 
$
9,313

 
$
866

Corporate and Other
(31
)
 
(15
)
 
55

 
169

 
(39
)
 
(50
)
Total (f)
$
12,888

 
$
6,904

 
$
28,978

 
$
12,217

 
$
9,274

 
$
816

                                      

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 $15,789, $7,386, $13,169, $18,395, $13,465, and $681 of Pro-forma Adjusted EBITDA for Douglas Elliman Realty, LLC for the three months ended June 30, 2014, March 31, 2014, December 31, 2013, September 30, 2013, June 30, 2013 and March 31, 2013, respectively. Amounts reported in this footnote reflect 100% of Douglas Elliman Realty, LLC's entire Pro-forma Adjusted EBITDA.
e.
Includes $11,145, $5,214, $9,109, $12,996, $9,479, and $410 of Pro-forma Adjusted EBITDA for Douglas Elliman Realty, LLC less non-controlling interest for the three months ended June 30, 2014, March 31, 2014, December 31, 2013, September 30, 2013, June 30, 2013 and March 31, 2013, respectively. Amounts reported in this footnote have adjusted Douglas Elliman Realty, LLC's Pro-forma Adjusted EBITDA for non-controlling 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 $6,981, $4,169, $4,395, $2,875, $2,850 and $3,503 for the three months ended June 30, 2014, March 31, 2014, December 31, 2013, September 30, 2013, June 30, 2013 and March 31, 2013, respectively.




TABLE 5
VECTOR GROUP LTD. AND SUBSIDIARIES
COMPUTATION OF NEW VALLEY LLC PRO-FORMA ADJUSTED EBITDA
(Unaudited)
(Dollars in Thousands)
Continued
 
LTM
 
Year Ended December 31,
 
June 30, 2014
 
2013
 
2012
 
2011
 
2010
 
 
 
 
 
 
 
 
Net income attributed to Vector Group Ltd. from subsidiary non-guarantors (a)
$
64,797

 
$
59,422

 
$
16,406

 
$
12,917

 
$
13,797

Interest expense (a)
44

 
14

 
23

 
32

 
41

Income tax expense (a)
46,677

 
40,740

 
11,403

 
8,829

 
9,197

Net income (loss) attributed to non-controlling interest (a)
5,803

 
(252
)
 
—

 
—

 
—

Depreciation and amortization
9,110

 
2,421

 
414

 
326

 
298

EBITDA
$
126,431

 
$
102,345

 
$
28,246

 
$
22,104

 
$
23,333

Income from non-guarantors other than New Valley
137

 
131

 
—

 
—

 
—

Equity income from non-consolidated real estate businesses (b)
(15,384
)
 
(22,925
)
 
(29,764
)
 
(19,966
)
 
(23,963
)
Gain on sale of townhomes
—

 
—

 
—

 
(3,843
)
 
—

Gain on acquisition of Douglas Elliman
(60,842
)
 
(60,842
)
 
—

 
—

 
—

Reclassification of EBITDA as a result of the consolidation of Douglas Elliman (c)
32,163

 
46,640

 
31,558

 
30,991

 
44,778

Other, net
(4,283
)
 
(348
)
 
(136
)
 
—

 
—

Pro-forma Adjusted EBITDA
$
78,222

 
$
65,001

 
$
29,904

 
$
29,286

 
$
44,148

Pro-forma Adjusted EBITDA attributed to non-controlling interest
(17,236
)
 
(13,717
)
 
(9,281
)
 
(9,114
)
 
(13,169
)
Pro-forma Adjusted EBITDA attributed to New Valley LLC
$
60,986

 
$
51,284

 
$
20,623

 
$
20,172

 
$
30,979

 
 
 
 
 
 
 
 
 
 
Pro-forma Adjusted EBITDA by Segment
 
 
 
 
 
 
 
 
 
Real Estate (d)
$
78,044

 
$
64,866

 
$
29,959

 
$
29,388

 
$
44,445

Corporate and Other
178

 
135

 
(55
)
 
(102
)
 
(297
)
Total (f)
$
78,222

 
$
65,001

 
$
29,904

 
$
29,286

 
$
44,148

 
 
 
 
 
 
 
 
 
 
Pro-forma Adjusted EBITDA Attributed to New Valley LLC by Segment
 
 
 
 
 
 
 
 
 
Real Estate (e)
$
60,808

 
$
51,149

 
$
20,678

 
$
20,274

 
$
31,276

Corporate and Other
178

 
135

 
(55
)
 
(102
)
 
(297
)
Total (f)
$
60,986

 
$
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 $54,739 for the last twelve months ended June 30, 2014 and $45,710, $30,910, $30,991 and $44,778 for the years ended December 31 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 $38,463 for the last twelve months ended June 30, 2014 and $31,993, $21,629, $21,877 and $31,609 for the years ended December 31 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 $18,420 for the twelve months ended June 30, 2014 and $13,623, $13,095, $15,007 and $13,227 for the years ended December 31 2013, 2012, 2011, and 2010, respectively.