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)) |
Title of each class: | Trading | Name of each exchange |
Symbol(s) | on which registered: | |
Common stock, par value $0.10 per share | VGR | New York Stock Exchange |
(c) | Exhibit. |
VECTOR GROUP LTD. | ||
By: | /s/ J. Bryant Kirkland III | |
J. Bryant Kirkland III | ||
Senior Vice President, Treasurer and Chief Financial Officer |
Year Ended December 31, | |||||||||||||||||||
2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||
Statement of Operations Data: | |||||||||||||||||||
Total revenues (1) | $ | 1,870,262 | $ | 1,807,476 | $ | 1,690,949 | $ | 1,657,197 | $ | 1,591,315 | |||||||||
Operating income (2) | 224,049 | 235,648 | 234,505 | 205,936 | 211,561 | ||||||||||||||
Net income attributed to Vector Group Ltd. | 58,105 | 84,572 | 71,127 | 59,198 | 36,856 | ||||||||||||||
Per basic common share (3) | |||||||||||||||||||
Net income attributed to Vector Group Ltd. applicable to common shares | $ | 0.35 | $ | 0.54 | $ | 0.48 | $ | 0.40 | $ | 0.27 | |||||||||
Per diluted common share (3) | |||||||||||||||||||
Net income attributed to Vector Group Ltd. applicable to common shares | $ | 0.35 | $ | 0.54 | $ | 0.48 | $ | 0.40 | $ | 0.27 | |||||||||
Cash distributions declared per common share (3) | $ | 1.47 | $ | 1.40 | $ | 1.33 | $ | 1.27 | $ | 1.21 |
June 30, | December 31, | December 31, | December 31, | December 31, | December 31, | ||||||||||||||||||
2019 | 2018 | 2017 | 2016 | 2015 | 2014 | ||||||||||||||||||
Balance Sheet Data: | |||||||||||||||||||||||
Current assets | $ | 638,493 | $ | 872,221 | $ | 613,709 | $ | 705,463 | $ | 583,739 | $ | 751,397 | |||||||||||
Total assets | 1,455,160 | 1,549,504 | 1,328,278 | 1,404,035 | 1,280,615 | 1,389,042 | |||||||||||||||||
Current liabilities | 558,067 | 484,920 | 204,639 | 196,148 | 216,292 | 212,424 | |||||||||||||||||
Notes payable, embedded derivatives, long-term debt and other obligations, less current portion | 1,180,151 | 1,411,486 | 1,270,657 | 1,245,275 | 1,000,150 | 995,001 | |||||||||||||||||
Noncurrent employee benefits, deferred income taxes and other long-term liabilities | 323,638 | 200,464 | 184,742 | 215,884 | 186,334 | 202,297 | |||||||||||||||||
Stockholders' deficiency | (606,696 | ) | (547,366 | ) | (331,760 | ) | (253,272 | ) | (122,161 | ) | (20,680 | ) |
For the Three Months Ended | For the Six Months Ended | ||||||||||||||||||||||||||||||
June 30, 2019 | March 31, 2019 | December 31, 2018 | September 30, 2018 | June 30, 2018 | March 31, 2018 | June 30, 2019 | June 30, 2018 | ||||||||||||||||||||||||
Statement of Operations Data: | |||||||||||||||||||||||||||||||
Total revenues (4) | $ | 538,432 | $ | 420,924 | $ | 445,939 | $ | 513,869 | $ | 481,488 | $ | 428,966 | $ | 959,356 | $ | 910,454 | |||||||||||||||
Operating income (5) | 76,244 | 42,590 | 48,086 | 66,018 | 61,861 | 48,084 | 118,834 | 109,945 | |||||||||||||||||||||||
Net income attributed to Vector Group Ltd. | 39,307 | 14,953 | 21,074 | 12,002 | 17,818 | 7,211 | 54,260 | 25,029 | |||||||||||||||||||||||
Per basic common share (3) | |||||||||||||||||||||||||||||||
Net income attributed to Vector Group Ltd. applicable to common shares | $ | 0.25 | $ | 0.09 | $ | 0.13 | $ | 0.07 | $ | 0.11 | $ | 0.04 | $ | 0.34 | $ | 0.15 | |||||||||||||||
Per diluted common share (3) | |||||||||||||||||||||||||||||||
Net income attributed to Vector Group Ltd. applicable to common shares | $ | 0.25 | $ | 0.08 | $ | 0.13 | $ | 0.07 | $ | 0.11 | $ | 0.04 | $ | 0.33 | $ | 0.15 | |||||||||||||||
Cash distributions declared per common share (3) | $ | 0.38 | $ | 0.38 | $ | 0.38 | $ | 0.36 | $ | 0.36 | $ | 0.36 | $ | 0.76 | $ | 0.73 |
(1) | Revenues include excise taxes of $469,836, $460,561, $425,980, $439,647, and $446,086, respectively. |
(2) | Operating income includes $6,298, $2,721, $4,364, and $1,419 of income from MSA Settlements for the years ended December 31, 2018, 2017, 2015, and 2014, respectively and $247 of expense from MSA Settlements for the year ended December 31, 2016; and $1,784 of litigation judgment and settlement income for the year ended December 31, 2018, and $6,591, $20,000, $20,072, and $2,475 of litigation judgment and settlement expense for the years ended December 31, 2017, 2016, 2015, and 2014, respectively; and $41 and $1,819 of restructuring charges for the years ended December 31, 2016 and 2015, respectively. |
(3) | Per share computations include the impact of 5% stock dividends on September 27, 2019, September 27, 2018, September 28, 2017, September 29, 2016, September 29, 2015, and September 26, 2014, respectively. |
(4) | Revenues include excise taxes of $119,943, $104,633, $110,637, $130,428, $115,970, $112,801, $224,576, and $228,771, respectively. |
(5) | Operating income includes $2,808, $3,490 and $6,298 of income from MSA Settlements for the three months ended June 30, 2018 and March 31, 2018, and for the six months ended June 30, 2018, respectively; $655, $160, $525 and $655 of litigation settlement and judgment expense for the three months ended June 30, 2019, December 31, 2018, and June 30, 2018, and for the six months ended June 30, 2019, respectively; $2,469 and $1,944 of litigation settlement and judgment income for the three months ended March 31, 2018 and six months ended June 30, 2018, respectively. |
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%. |
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. |