EX-99.2 3 a992sfdq2.htm EXHIBIT 99.2 Exhibit


EXHIBIT 99.2
TABLE 1
VECTOR GROUP LTD. AND SUBSIDIARIES
RECONCILIATION OF ADJUSTED EBITDA
(Unaudited)
(Dollars in Thousands)

 
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

Interest expense
173,685

 
142,982

 
120,691

 
160,991

 
132,147

Income (benefit) tax expense
(1,582
)
 
49,163

 
41,233

 
33,165

 
23,672

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

 
6,139

 
7,274

 
12,258

 
(252
)
Depreciation and amortization
18,614

 
22,359

 
25,654

 
24,499

 
12,631

EBITDA
$
281,467

 
$
291,770

 
$
254,050

 
$
267,769

 
$
205,498

Change in fair value of derivatives embedded within convertible debt (a)
(35,919
)
 
(31,710
)
 
(24,455
)
 
(19,409
)
 
(18,935
)
Equity in losses (earnings) on long-term investments (b)
765

 
2,754

 
2,681

 
(3,140
)
 
(3,126
)
Impairment of investment securities
465

 
5,381

 
12,846

 
—

 
—

(Gain) loss on sale of investment securities available for sale
(169
)
 
(2,907
)
 
(11,138
)
 
11

 
(5,152
)
Equity in earnings from real estate ventures (c)
(21,395
)
 
(5,200
)
 
(2,001
)
 
(4,103
)
 
(22,925
)
Loss on extinguishment of debt
34,110

 
—

 
—

 
—

 
21,458

Acceleration of interest expense related to debt conversion
—

 
—

 
—

 
5,205

 
12,414

Stock-based compensation expense (d)
10,887

 
10,052

 
5,620

 
3,251

 
2,519

Litigation settlement and judgment expense (e)
6,591

 
20,000

 
20,072

 
2,475

 
88,106

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

 
(4,364
)
 
(1,419
)
 
(11,823
)
Restructuring expense
—

 
41

 
1,819

 
—

 
—

Gain on acquisition of Douglas Elliman
—

 
—

 
—

 
—

 
(60,842
)
Reclassification of EBITDA as a result of the consolidation of Douglas Elliman (g)
—

 
—

 
—

 
—

 
46,640

Purchase accounting adjustments (h)
(2,102
)
 
5,230

 
1,435

 
1,478

 
—

Other, net
(5,064
)
 
(3,224
)
 
(393
)
 
(10,273
)
 
(4,454
)
Adjusted EBITDA
$
266,915

 
$
292,434

 
$
256,172

 
$
241,845

 
$
249,378

Adjusted EBITDA attributed to non-controlling interest
(7,576
)
 
(10,696
)
 
(11,267
)
 
(15,858
)
 
(13,717
)
Adjusted EBITDA attributed to Vector Group Ltd.
$
259,339

 
$
281,738

 
$
244,905

 
$
225,987

 
$
235,661

 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA by Segment
 
 
 
 
 
 
 
 
 
Tobacco
$
253,179

 
$
268,121

 
$
243,067

 
$
208,997

 
$
197,741

E-cigarettes
(888
)
 
(1,403
)
 
(13,037
)
 
(13,124
)
 
(1,019
)
Real Estate (i)
27,848

 
38,716

 
38,111

 
56,036

 
64,866

Corporate and Other
(13,224
)
 
(13,000
)
 
(11,969
)
 
(10,064
)
 
(12,210
)
Total
$
266,915

 
$
292,434

 
$
256,172

 
$
241,845

 
$
249,378

 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA Attributed to Vector Group by Segment
 
 
 
 
 
 
 
 
 
Tobacco
$
253,179

 
$
268,121

 
$
243,067

 
$
208,997

 
$
197,741

E-cigarettes
(888
)
 
(1,403
)
 
(13,037
)
 
(13,124
)
 
(1,019
)
Real Estate (j)
20,272

 
28,020

 
26,844

 
40,178

 
51,149

Corporate and Other
(15,688
)
 
(13,000
)
 
(11,969
)
 
(10,064
)
 
(12,210
)
Total
$
256,875

 
$
281,738

 
$
244,905

 
$
225,987

 
$
235,661

                                      

a.
Represents income or losses recognized from changes in the fair value of the derivatives embedded in the Company's convertible debt.
b.
Represents equity in losses (earnings) 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.
f.
Represents the Company's tobacco segment'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.
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.
i.
Includes Adjusted EBITDA for Douglas Elliman Realty, LLC of $26,110, $36,657, $35,740, $50,655, and $45,710 for the years ended December 31, 2017, 2016, 2015, 2014, and 2013, respectively. Amounts reported in this footnote reflect 100% of Douglas Elliman Realty, LLC's entire Adjusted EBITDA.
j.
Includes Adjusted EBITDA for Douglas Elliman Realty, LLC less non-controlling interest of $18,431, $25,876, $25,229, $35,757, and $31,993 for the years ended December 31, 2017, 2016, 2015, 2014, and 2013, respectively. Amounts reported in this footnote have adjusted Douglas Elliman Realty, LLC's Adjusted EBITDA for non-controlling interest.





TABLE 2
VECTOR GROUP LTD. AND SUBSIDIARIES
RECONCILIATION OF ADJUSTED EBITDA
(Unaudited)
(Dollars in Thousands)

 
For the three months ended
 
December 31, 2017
 
September 30, 2017
 
June 30, 2017
 
March 31, 2017
 
 
 
 
 
 
 
 
Net income attributed to Vector Group Ltd.
$
42,724

 
$
19,264

 
$
26,811

 
$
(4,227
)
Interest expense
37,539

 
43,234

 
46,691

 
46,221

Income tax (benefit) expense
(24,099
)
 
6,472

 
18,827

 
(2,782
)
Net income attributed to non-controlling interest
227

 
1,214

 
4,735

 
2

Depreciation and amortization
4,586

 
4,386

 
4,613

 
5,029

EBITDA
$
60,977

 
$
74,570

 
$
101,677

 
$
44,243

Change in fair value of derivatives embedded within convertible debt (a)
(9,777
)
 
(9,437
)
 
(8,134
)
 
(8,571
)
Equity in (earnings) losses on long-term investments (b)
(2,058
)
 
303

 
1,459

 
1,061

Impairment of investment securities
286

 
53

 
87

 
39

Loss (gain) on sale of investment securities available for sale
114

 
(96
)
 
(37
)
 
(150
)
Equity in earnings (losses) from real estate ventures (c)
4,962

 
47

 
(15,291
)
 
(11,113
)
Loss on extinguishment of debt
—

 
—

 
—

 
34,110

Stock-based compensation expense (d)
2,431

 
2,430

 
3,020

 
3,006

Litigation settlement and judgment expense (e)
800

 
4,104

 
102

 
1,585

Impact of MSA Settlement (f)
—

 
(1,826
)
 
—

 
(895
)
Purchase accounting adjustments (g)
(14
)
 
(2,345
)
 
144

 
113

Other, net
(1,714
)
 
(1,821
)
 
(848
)
 
(1,169
)
Adjusted EBITDA
$
56,007

 
$
65,982

 
$
82,179

 
$
62,259

Adjusted EBITDA attributed to non-controlling interest
(653
)
 
(1,091
)
 
(5,347
)
 
(485
)
Adjusted EBITDA attributed to Vector Group Ltd.
$
55,354

 
$
64,891

 
$
76,832

 
$
61,774

 
 
 
 
 
 
 
 
Adjusted EBITDA by Segment
 
 
 
 
 
 
 
Tobacco
$
57,719

 
$
66,076

 
$
66,737

 
$
62,775

E-cigarettes
(283
)
 
(527
)
 
(1
)
 
(77
)
Real Estate (h)
2,531

 
3,719

 
18,643

 
2,955

Corporate and Other
(3,960
)
 
(3,286
)
 
(3,200
)
 
(3,394
)
Total
$
56,007

 
$
65,982

 
$
82,179

 
$
62,259

 
 
 
 
 
 
 
 
Adjusted EBITDA Attributed to Vector Group by Segment
 
 
 
 
 
 
 
Tobacco
$
57,719

 
$
66,076

 
$
66,737

 
$
62,775

E-cigarettes
(283
)
 
(527
)
 
(1
)
 
(77
)
Real Estate (i)
1,878

 
2,628

 
13,296

 
2,470

Corporate and Other
(3,960
)
 
(3,286
)
 
(3,200
)
 
(3,394
)
Total
$
55,354

 
$
64,891

 
$
76,832

 
$
61,774

                                      

a.
Represents income or losses recognized from changes in the fair value of the derivatives embedded in the Company's convertible debt.
b.
Represents equity in losses (earnings) 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.
f.
Represents the Company's tobacco segment's settlement of a long-standing dispute related to the Master Settlement Agreement.
g.
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.




h.
Includes Adjusted EBITDA for Douglas Elliman Realty, LLC of $2,357, $3,772, $18,225, and $1,756 for the three months ended December 31, 2017, September 30, 2017, June 30, 2017 and March 31, 2017, respectively. Amounts reported in this footnote reflect 100% of Douglas Elliman Realty, LLC's entire Adjusted EBITDA.
i.
Includes Adjusted EBITDA for Douglas Elliman Realty, LLC less non-controlling interest of $1,664, $2,663, $12,865, and $1,240 for the three months ended December 31, 2017, September 30, 2017, June 30, 2017 and March 31, 2017, respectively. Amounts reported in this footnote have adjusted Douglas Elliman Realty, LLC's Adjusted EBITDA for non-controlling interest.