EX-99.1 2 adjnciex991.htm EXHIBIT 99.1 Exhibit


TABLE 1
VECTOR GROUP LTD. AND SUBSIDIARIES
RECONCILIATION OF ADJUSTED EBITDA
(Unaudited)
(Dollars in Thousands)
 
Year Ended
 
December 31, 2018
 
December 31, 2017
 
December 31, 2016
 
December 31, 2015
 
 
 
 
 
 
 
 
Net income attributed to Vector Group Ltd.
$
58,105

 
$
84,572

 
$
71,127

 
$
59,198

Interest expense
203,780

 
173,685

 
142,982

 
120,691

Income tax expense (benefit)
21,552

 
(1,582
)
 
49,163

 
41,233

Net (loss) income attributed to non-controlling interest
(98
)
 
6,178

 
6,139

 
7,274

Depreciation and amortization
18,807

 
18,614

 
22,359

 
25,654

EBITDA
$
302,146

 
$
281,467

 
$
291,770

 
$
254,050

Change in fair value of derivatives embedded within convertible debt (a)
(44,989
)
 
(35,919
)
 
(31,710
)
 
(24,455
)
Equity in (earnings) losses on long-term investments (b)
(3,158
)
 
765

 
2,754

 
2,681

Net losses recognized on investment securities
9,570

 
660

 
3,487

 
2,129

Equity in earnings from real estate ventures (c)
(14,446
)
 
(21,395
)
 
(5,200
)
 
(2,001
)
Loss on extinguishment of debt
4,066

 
34,110

 
—

 
—

Stock-based compensation expense (d)
9,951

 
10,887

 
10,052

 
5,620

Litigation settlement and judgment expense (e)
(1,784
)
 
6,591

 
20,000

 
20,072

Impact of MSA Settlement (f)
(6,298
)
 
(2,721
)
 
247

 
(4,364
)
Restructuring expense
—

 
—

 
41

 
1,819

Purchase accounting adjustments (g)
608

 
(2,102
)
 
5,230

 
1,435

Other, net
(10,333
)
 
(5,426
)
 
(4,237
)
 
(814
)
Adjusted EBITDA
$
245,333

 
$
266,917

 
$
292,434

 
$
256,172

Adjusted EBITDA attributed to non-controlling interest
(3,319
)
 
(7,576
)
 
(10,696
)
 
(11,267
)
Adjustment to reflect additional 29.41% of Douglas Elliman Realty, LLC Adjusted EBITDA (h)
3,319

 
7,679

 
10,781

 
10,511

Adjusted EBITDA attributed to Vector Group Ltd.
$
245,333

 
$
267,020

 
$
292,519

 
$
255,416

 
 
 
 
 
 
 
 
Adjusted EBITDA by Segment
 
 
 
 
 
 
 
Tobacco
$
249,209

 
$
253,181

 
$
268,121

 
$
243,067

Real Estate (i)
11,154

 
27,848

 
38,716

 
38,111

Corporate and Other
(15,030
)
 
(14,112
)
 
(14,403
)
 
(25,006
)
Total
$
245,333

 
$
266,917

 
$
292,434

 
$
256,172

 
 
 
 
 
 
 
 
Adjusted EBITDA Attributed to Vector Group Ltd. by Segment
 
 
 
 
 
 
 
Tobacco
$
249,209

 
$
253,181

 
$
268,121

 
$
243,067

Real Estate (i)
11,154

 
27,951

 
38,801

 
37,355

Corporate and Other
(15,030
)
 
(14,112
)
 
(14,403
)
 
(25,006
)
Total
$
245,333

 
$
267,020

 
$
292,519

 
$
255,416

                                      

a.
Represents income recognized from changes in the fair value of the derivatives embedded in the Company’s convertible debt.
b.
Represents equity in (earnings) losses recognized from investments that the Company accounts for under the equity method.
c.
Represents equity in earnings 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 accruals for settlements of judgment expenses in the Engle progeny tobacco litigation and proceeds received from a litigation award at Douglas Elliman Realty, LLC.
f.
Represents the Company’s tobacco segment’s settlement of a long-standing dispute related to the Master Settlement Agreement.
g.
Represents 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.
h.
Represents 29.41% of Douglas Elliman Realty LLC's Adjusted EBITDA in the respective periods. On December 31, 2018, the Company increased its ownership of Douglas Elliman Realty, LLC from 70.59% to 100%.




i.
Includes Adjusted EBITDA for Douglas Elliman Realty, LLC of $11,284, $26,110, $36,657, and $35,740 for the years ended December 31, 2018, 2017, 2016, and 2015, respectively. Amounts reported in this footnote reflect 100% of Douglas Elliman Realty, LLC's entire Adjusted EBITDA.






TABLE 2
VECTOR GROUP LTD. AND SUBSIDIARIES
RECONCILIATION OF ADJUSTED EBITDA
(Unaudited)
(Dollars in Thousands)
 
Three Months Ended
 
December 31, 2018
 
September 30, 2018
 
June 30, 2018
 
March 31, 2018
 
 
 
 
 
 
 
 
Net income attributed to Vector Group Ltd.
$
21,074

 
$
12,002

 
$
17,818

 
$
7,211

Interest expense
58,328

 
51,084

 
48,421

 
45,947

Income tax (benefit) expense
(7,842
)
 
14,686

 
12,760

 
1,948

Net (loss) income attributed to non-controlling interest
(755
)
 
3,026

 
1,178

 
(3,547
)
Depreciation and amortization
4,764

 
4,707

 
4,749

 
4,587

EBITDA
$
75,569

 
$
85,505

 
$
84,926

 
$
56,146

Change in fair value of derivatives embedded within convertible debt (a)
(13,700
)
 
(10,005
)
 
(10,717
)
 
(10,567
)
Equity in losses (earnings) on long-term investments (b)
6,047

 
(3,230
)
 
(4,813
)
 
(1,162
)
Net losses recognized on investment securities
9,264

 
797

 
(3,236
)
 
2,745

Equity in (earnings) losses from real estate ventures (c)
(22,824
)
 
(294
)
 
2,112

 
6,560

Loss on extinguishment of debt
4,066

 
—

 
—

 
—

Stock-based compensation expense (d)
2,527

 
2,584

 
2,456

 
2,384

Litigation settlement and judgment expense (e)
160

 
—

 
525

 
(2,469
)
Impact of MSA Settlement (f)
—

 
—

 
(2,808
)
 
(3,490
)
Purchase accounting adjustments (g)
63

 
184

 
179

 
182

Other, net
(5,572
)
 
(2,048
)
 
(1,662
)
 
(1,051
)
Adjusted EBITDA
$
55,600

 
$
73,493

 
$
66,962

 
$
49,278

Adjusted EBITDA attributed to non-controlling interest
(1,471
)
 
(3,638
)
 
(1,906
)
 
3,696

Adjustment to reflect additional 29.41% of Douglas Elliman Realty, LLC Adjusted EBITDA (h)
(158
)
 
3,543

 
2,464

 
(2,530
)
Adjusted EBITDA attributed to Vector Group Ltd.
$
53,971

 
$
73,398

 
$
67,520

 
$
50,444

 
 
 
 
 
 
 
 
Adjusted EBITDA by Segment
 
 
 
 
 
 
 
Tobacco
$
59,563

 
$
65,339

 
$
62,328

 
$
61,979

Real Estate (i)
(249
)
 
11,697

 
8,464

 
(8,758
)
Corporate and Other
(3,714
)
 
(3,543
)
 
(3,830
)
 
(3,943
)
Total
$
55,600

 
$
73,493

 
$
66,962

 
$
49,278

 
 
 
 
 
 
 
 
Adjusted EBITDA Attributed to Vector Group Ltd. by Segment
 
 
 
 
 
 
 
Tobacco
$
59,563

 
$
65,339

 
$
62,328

 
$
61,979

Real Estate (i)
(1,878
)
 
11,602

 
9,022

 
(7,592
)
Corporate and Other
(3,714
)
 
(3,543
)
 
(3,830
)
 
(3,943
)
Total
$
53,971

 
$
73,398

 
$
67,520

 
$
50,444

                                      

a.
Represents income recognized from changes in the fair value of the derivatives embedded in the Company’s convertible debt.
b.
Represents equity in (earnings) losses recognized from investments that the Company accounts for under the equity method.
c.
Represents equity in (earnings) losses 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 accruals for settlements of judgment expenses in the Engle progeny tobacco litigation and proceeds received from a litigation award at Douglas Elliman Realty, LLC.
f.
Represents the Company’s tobacco segment’s settlement of a long-standing dispute related to the Master Settlement Agreement.
g.
Represents 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.
h.
Represents 29.41% of Douglas Elliman Realty LLC's Adjusted EBITDA in the respective 2018 periods. On December 31, 2018, the Company increased its ownership of Douglas Elliman Realty, LLC from 70.59% to 100%.
i.
Includes Adjusted EBITDA for Douglas Elliman Realty, LLC of $540, $12,048, $8,379 and negative $8,603 for the three months ended December 31, 2018, September 30, 2018, June 30, 2018 and March 31, 2018, respectively. Amounts reported in this footnote reflect 100% of Douglas Elliman Realty, LLC’s entire Adjusted EBITDA.





TABLE 3
VECTOR GROUP LTD. AND SUBSIDIARIES
RECONCILIATION OF ADJUSTED NET INCOME
(Unaudited)
(Dollars in Thousands, Except Per Share Amounts)
 
Three Months Ended
 
December, 31
 
September 30,
 
June 30,
 
March 31,
 
2018
 
2018
 
2018
 
2018
 
 
 
 
 
 
 
 
Net income attributed to Vector Group Ltd.
$
21,074

 
$
12,002

 
$
17,818

 
$
7,211

 
 
 
 
 
 
 
 
Change in fair value of derivatives embedded within convertible debt
(13,700
)
 
(10,005
)
 
(10,717
)
 
(10,567
)
Non-cash amortization of debt discount on convertible debt
25,173

 
22,871

 
20,386

 
18,193

Loss on extinguishment of debt
4,066

 
—

 
—

 
—

Litigation settlement and judgment expense (income) (a)
160

 
—

 
525

 
(2,469
)
Impact of MSA settlement (b)
—

 
—

 
(2,808
)
 
(3,490
)
Impact of net interest expense capitalized to real estate ventures
(472
)
 
(596
)
 
4,324

 
(1,953
)
Douglas Elliman Realty, LLC purchase accounting adjustments (c)
265

 
385

 
380

 
375

Adjustment to reflect additional 29.41% of net income from Douglas Elliman Realty, LLC (d)
(758
)
 
2,931

 
1,737

 
(2,381
)
Total adjustments
14,734

 
15,586

 
13,827

 
(2,292
)
 
 
 
 
 
 
 
 
Tax expense related to adjustments
(4,046
)
 
(4,459
)
 
(3,868
)
 
655

 
 
 
 
 
 
 
 
Adjusted Net Income attributed to Vector Group Ltd.
$
31,762

 
$
23,129

 
$
27,777

 
$
5,574

 
 
 
 
 
 
 
 
Per diluted common share:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted Net Income applicable to common shares attributed to Vector Group Ltd.
$
0.21

 
$
0.15

 
$
0.19

 
$
0.03

                                      

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 100% of purchase accounting adjustments in the periods presented for assets acquired in connection with the accounting for the Company’s acquisition of the 20.59% of Douglas Elliman Realty, LLC on December 31, 2013.
d.
Represents 29.41% of Douglas Elliman Realty LLC's net income in the respective 2018 periods. On December 31, 2018, the Company increased its ownership of Douglas Elliman Realty, LLC from 70.59% to 100%.






TABLE 4
VECTOR GROUP LTD. AND SUBSIDIARIES
RECONCILIATION OF ADJUSTED NET INCOME
(Unaudited)
(Dollars in Thousands, Except Per Share Amounts)
 
Year Ended
 
December 31,
 
2018
 
2017
 
2016
 
2015
 
 
 
 
 
 
 
 
Net income attributed to Vector Group Ltd.
$
58,105

 
$
84,572

 
$
71,127

 
$
59,198

 
 
 
 
 
 
 
 
Acceleration of interest expense related to debt conversion
—

 
—

 
—

 
—

Change in fair value of derivatives embedded within convertible debt
(44,989
)
 
(35,919
)
 
(31,710
)
 
(24,455
)
Non-cash amortization of debt discount on convertible debt
86,623

 
56,787

 
38,528

 
27,211

Loss on extinguishment of debt
4,066

 
34,110

 
—

 
—

Litigation settlement and judgment (income) expense (a)
(1,784
)
 
6,591

 
20,000

 
20,072

Impact of MSA settlement (b)
(6,298
)
 
(2,721
)
 
247

 
(4,364
)
Impact of net interest expense capitalized to real estate ventures
1,303

 
(6,385
)
 
(11,433
)
 
(9,928
)
Restructuring charges (c)
—

 
—

 
41

 
7,257

Douglas Elliman Realty, LLC purchase accounting adjustments (d)
1,405

 
(1,133
)
 
7,164

 
7,512

Adjustment to reflect additional 29.41% of net income from Douglas Elliman Realty, LLC (e)
1,529

 
6,281

 
6,196

 
6,518

Total adjustments
41,855

 
57,611

 
29,033

 
29,823

 
 
 
 
 
 
 
 
Tax expense related to adjustments
(11,718
)
 
(23,592
)
 
(10,932
)
 
(11,490
)
Impact of income tax adjustments (f)
—

 
(28,845
)
 
—

 
—

 
 
 
 
 
 
 
 
Adjusted Net Income attributed to Vector Group Ltd.
$
88,242

 
$
89,746

 
$
89,228

 
$
77,531

 
 
 
 
 
 
 
 
Per diluted common share:
 
 
 
 

 
 
 
 
 
 
 
 
 
 
Adjusted Net Income applicable to common shares attributed to Vector Group Ltd.
$
0.58

 
$
0.60

 
$
0.62

 
$
0.55

                                      

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.
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.
d.
Represents 100% of purchase accounting adjustments in the periods presented for assets acquired in connection with the accounting for the Company’s acquisition of the 20.59% of Douglas Elliman Realty, LLC on December 31, 2013.
e.
Represents 29.41% of Douglas Elliman Realty, LLC's net income in the respective periods. On December 31, 2018, the Company increased its ownership of Douglas Elliman Realty, LLC from 70.59% to 100%.
f.
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 5
VECTOR GROUP LTD. AND SUBSIDIARIES
RECONCILIATION OF REAL ESTATE SEGMENT (NEW VALLEY LLC) ADJUSTED EBITDA
(Unaudited)
(Dollars in Thousands)
 
Year Ended
 
December 31, 2018
 
December 31, 2017
 
December 31, 2016
 
December 31, 2015
 
 
 
 
 
 
 
 
Net income attributed to Vector Group Ltd. from subsidiary non-guarantors (a)
$
14,779

 
$
37,610

 
$
13,477

 
$
11,668

Interest expense (a)
67

 
35

 
20

 
7

Income tax (benefit) expense (a)
3,949

 
210

 
9,335

 
8,890

Net income attributed to non-controlling interest (a)
(98
)
 
6,178

 
6,139

 
7,274

Depreciation and amortization
9,580

 
8,511

 
10,485

 
12,589

EBITDA
$
28,277

 
$
52,544

 
$
39,456

 
$
40,428

Loss from non-guarantors other than New Valley LLC
86

 
103

 
98

 
91

Equity in earnings from real estate ventures (b)
(14,446
)
 
(21,395
)
 
(5,200
)
 
(2,001
)
Purchase accounting adjustments (c)
608

 
(2,102
)
 
5,230

 
1,435

Litigation settlement and judgment income (d)
(2,469
)
 
—

 
—

 
—

Other, net
(1,725
)
 
(1,324
)
 
(939
)
 
(1,754
)
Adjusted EBITDA
$
10,331

 
$
27,826

 
$
38,645

 
$
38,199

Adjusted EBITDA attributed to non-controlling interest
(3,319
)
 
(7,576
)
 
(10,696
)
 
(11,267
)
Adjustment to reflect additional 29.41% of Douglas Elliman Realty, LLC Adjusted EBITDA (e)
3,319

 
7,679

 
10,781

 
10,511

Adjusted EBITDA attributed to Vector Group Ltd.
$
10,331

 
$
27,929

 
$
38,730

 
$
37,443

 
 
 
 
 
 
 
 
Adjusted EBITDA by Segment
 
 
 
 
 
 
 
Real Estate (f)
$
11,154

 
$
27,848

 
$
38,716

 
$
38,111

Corporate and Other
(823
)
 
(22
)
 
(71
)
 
88

Total (g)
$
10,331

 
$
27,826

 
$
38,645

 
$
38,199

 
 
 
 
 
 
 
 
Adjusted EBITDA Attributed to Vector Group Ltd. by Segment
 
 
 
 
 
 
 
Real Estate (f)
$
11,154

 
$
27,951

 
$
38,801

 
$
37,355

Corporate and Other
(823
)
 
(22
)
 
(71
)
 
88

Total (g)
$
10,331

 
$
27,929

 
$
38,730

 
$
37,443

                                      

a.
Amounts are derived from Vector Group Ltd.’s Condensed Consolidated Financial Statements.
b.
Represents equity in earnings recognized from the Company’s investment in certain real estate businesses that are not consolidated in its financial results.
c.
Represents 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.
Represents proceeds received from a litigation award at Douglas Elliman Realty, LLC.
e.
Represents 29.41% of Douglas Elliman Realty LLC's Adjusted EBITDA in the respective periods. On December 31, 2018, the Company increased its ownership of Douglas Elliman Realty, LLC from 70.59% to 100%.
f.
Includes Adjusted EBITDA for Douglas Elliman Realty, LLC of $11,284, $26,110, $36,657, and $35,740 for the years ended December 31, 2018, 2017, 2016, and 2015, respectively. Amounts reported in this footnote reflect 100% of Douglas Elliman Realty, LLC's entire Adjusted EBITDA.
g.
New Valley’s Adjusted EBITDA does not include an allocation of Vector Group Ltd.’s “Corporate and Other” segment expenses (for purposes of computing Adjusted EBITDA contained in Table 1 of this press release) of $15,030, $13,224, $13,000 and $11,969 for the years ended December 31, 2018, 2017, 2016, and 2015, respectively.




TABLE 6
VECTOR GROUP LTD. AND SUBSIDIARIES
RECONCILIATION OF REAL ESTATE SEGMENT (NEW VALLEY LLC) ADJUSTED EBITDA
(Unaudited)
(Dollars in Thousands)
 
Three Months Ended
 
December 31, 2018
 
September 30, 2018
 
June 30, 2018
 
March 31, 2018
 
 
 
 
 
 
 
 
Net income attributed to Vector Group Ltd. from subsidiary non-guarantors (a)
$
15,694

 
$
4,703

 
$
2,926

 
$
(8,544
)
Interest expense (a)
4

 
7

 
7

 
49

Income tax (benefit) expense (a)
5,775

 
1,971

 
(803
)
 
(2,994
)
Net income (loss) attributed to non-controlling interest (a)
(755
)
 
3,026

 
1,178

 
(3,547
)
Depreciation and amortization
2,475

 
2,398

 
2,418

 
2,289

EBITDA
$
23,193

 
$
12,105

 
$
5,726

 
$
(12,747
)
Loss from non-guarantors other than New Valley LLC
15

 
18

 
19

 
34

Equity in (earnings) losses from real estate ventures (b)
(22,824
)
 
(294
)
 
2,112

 
6,560

Purchase accounting adjustments (c)
63

 
184

 
179

 
182

Litigation settlement and judgment income (d)
—

 
—

 
—

 
(2,469
)
Other, net
(705
)
 
(342
)
 
(336
)
 
(342
)
Adjusted EBITDA
$
(258
)
 
$
11,671

 
$
7,700

 
$
(8,782
)
Adjusted EBITDA attributed to non-controlling interest
(1,471
)
 
(3,638
)
 
(1,906
)
 
3,696

Adjustment to reflect additional 29.41% of Douglas Elliman Realty, LLC Adjusted EBITDA (e)
(158
)
 
3,543

 
2,464

 
(2,530
)
Adjusted EBITDA attributed to Vector Group Ltd.
$
(1,887
)
 
$
11,576

 
$
8,258

 
$
(7,616
)
 
 
 
 
 
 
 
 
Adjusted EBITDA by Segment
 
 
 
 
 
 
 
Real Estate (f)
(249
)
 
11,697

 
8,464

 
(8,758
)
Corporate and Other
(9
)
 
(26
)
 
(764
)
 
(24
)
Total (g)
$
(258
)
 
$
11,671

 
$
7,700

 
$
(8,782
)
 
 
 
 
 
 
 
 
Adjusted EBITDA Attributed to Vector Group Ltd. by Segment
 
 
 
 
 
 
 
Real Estate (f)
$
(1,878
)
 
$
11,602

 
$
9,022

 
$
(7,592
)
Corporate and Other
(9
)
 
(26
)
 
(764
)
 
(24
)
Total (g)
$
(1,887
)
 
$
11,576

 
$
8,258

 
$
(7,616
)

                                      

a.
Amounts are derived from Vector Group Ltd.’s Condensed Consolidated Financial Statements.
b.
Represents equity in (earnings) losses recognized from the Company’s investment in certain real estate businesses that are not consolidated in its financial results.
c.
Represents 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.
Represents proceeds received from a litigation award at Douglas Elliman Realty, LLC.
e.
Represents 29.41% of Douglas Elliman Realty LLC's Adjusted EBITDA in the respective 2018 periods. On December 31, 2018, the Company increased its ownership of Douglas Elliman Realty, LLC from 70.59% to 100%.
f.
Includes Adjusted EBITDA for Douglas Elliman Realty, LLC of $540, $12,048, $8,379 and negative $8,603 for the three months ended December 31, 2018, September 30, 2018, June 30, 2018 and March 31, 2018, respectively. Amounts reported in this footnote reflect 100% of Douglas Elliman Realty, LLC’s entire Adjusted EBITDA.
g.
New Valley’s Adjusted EBITDA does not include an allocation of Vector Group Ltd.’s “Corporate and Other” segment expenses (for purposes of computing Adjusted EBITDA contained in Table 2 of this press release) of $3,714, $3,543, $3,830 and $3,943 for the three months ended December 31, 2018, September 30, 2018, June 30, 2018 and March 31, 2018, respectively.