EX-99.2 3 vgr-2019q2xex992sfdstockdiv.htm EXHIBIT 99.2 Exhibit


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,
 
 
2019
 
2019
 
2018
 
2018
 
2018
 
2018
 
2019
 
2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income attributed to Vector Group Ltd.
 
$
39,307

 
$
14,953

 
$
21,074

 
$
12,002

 
$
17,818

 
$
7,211

 
$
54,260

 
$
25,029

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Change in fair value of derivatives embedded within convertible debt
 
(3,788
)
 
(10,349
)
 
(13,700
)
 
(10,005
)
 
(10,717
)
 
(10,567
)
 
(14,137
)
 
(21,284
)
Non-cash amortization of debt discount on convertible debt
 
5,447

 
8,525

 
25,173

 
22,871

 
20,386

 
18,193

 
13,972

 
38,579

Loss on extinguishment of debt
 
—

 
—

 
4,066

 
—

 
—

 
—

 
—

 
—

Litigation settlement and judgment expense (income) (a)
 
655

 
—

 
160

 
—

 
525

 
(2,469
)
 
655

 
(1,944
)
Impact of MSA Settlement (b)
 
—

 
—

 
—

 
—

 
(2,808
)
 
(3,490
)
 
—

 
(6,298
)
Impact of net interest expense capitalized to real estate ventures
 
3,006

 
(930
)
 
(472
)
 
(596
)
 
4,324

 
(1,953
)
 
2,076

 
2,371

Douglas Elliman Realty, LLC purchase accounting adjustments (c)
 
—

 
—

 
265

 
385

 
380

 
375

 
—

 
755

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

 
—

 
(758
)
 
2,931

 
1,737

 
(2,381
)
 
—

 
(644
)
Total adjustments
 
5,320

 
(2,754
)
 
14,734

 
15,586

 
13,827

 
(2,292
)
 
2,566

 
11,535

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Tax (expense) benefit related to adjustments
 
(1,467
)
 
763

 
(4,046
)
 
(4,459
)
 
(3,868
)
 
655

 
(705
)
 
(3,213
)
Adjusted Net Income attributed to Vector Group Ltd.
 
$
43,160

 
$
12,962

 
$
31,762

 
$
23,129

 
$
27,777

 
$
5,574

 
$
56,121

 
$
33,351

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Per diluted common share:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted Net Income applicable to common shares attributed to Vector Group Ltd.
 
$
0.28

 
$
0.07

 
$
0.20

 
$
0.15

 
$
0.18

 
$
0.03

 
$
0.36

 
$
0.20

                                      

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 periods. On December 31, 2018, the Company increased its ownership of Douglas Elliman Realty, LLC from 70.59% to 100%.





TABLE 2
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
 
2014
 
 
 
 
 
 
 
 
 
 
Net income attributed to Vector Group Ltd.
$
58,105

 
$
84,572

 
$
71,127

 
$
59,198

 
$
36,856

 
 
 
 
 
 
 
 
 
 
Acceleration of interest expense related to debt conversion
—

 
—

 
—

 
—

 
5,205

Change in fair value of derivatives embedded within convertible debt
(44,989
)
 
(35,919
)
 
(31,710
)
 
(24,455
)
 
(19,409
)
Non-cash amortization of debt discount on convertible debt
86,623

 
56,787

 
38,528

 
27,211

 
51,472

Loss on extinguishment of debt
4,066

 
34,110

 
—

 
—

 
—

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

 
20,000

 
20,072

 
2,475

Impact of net interest expense capitalized to real estate ventures
1,303

 
(6,385
)
 
(11,433
)
 
(9,928
)
 
—

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

 
(4,364
)
 
(1,419
)
Restructuring charges (c)
—

 
—

 
41

 
7,257

 
—

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

 
(1,133
)
 
7,164

 
7,512

 
8,527

Out-of-period adjustment related to Douglas Elliman Realty, LLC acquisition in 2013 (e)
—

 
—

 
—

 
—

 
(1,231
)
Adjustment to reflect additional 29.41% of net income from Douglas Elliman Realty, LLC (f)
1,529

 
6,281

 
6,196

 
6,518

 
11,298

Total adjustments
41,855

 
57,611

 
29,033

 
29,823

 
56,918

 
 
 
 
 
 
 
 
 
 
Tax expense related to adjustments
(11,718
)
 
(23,592
)
 
(10,932
)
 
(11,490
)
 
(23,536
)
One-time adjustment to income tax expense due to purchase accounting (g)
—

 
—

 
—

 
—

 
1,670

Tax benefit from Tax Cuts and Jobs Act of 2017 (h)
—

 
(28,845
)
 
—

 
—

 
—

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

 
$
89,746

 
$
89,228

 
$
77,531

 
$
71,908

 
 
 
 
 
 
 
 
 
 
Per diluted common share:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted Net Income applicable to common shares attributed to Vector Group Ltd.
$
0.55

 
$
0.57

 
$
0.60

 
$
0.53

 
$
0.53

                                      

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 Company’s acquisition of the 20.59% of Douglas Elliman Realty, LLC on December 31, 2013.
e.
Represents an out-of-period adjustment related to a non-accrual of a receivable from Douglas Elliman Realty, LLC in the fourth quarter of 2013 and would have increased the Company’s gain on acquisition of Douglas Elliman in 2013.
f.
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%.
g.
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.
h.
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.