CORRECTING and REPLACING Vector Group Reports Second Quarter 2013 Financial Results

CORRECTING and REPLACING Vector Group Reports Second Quarter2013Financial Results

MIAMI--(BUSINESS WIRE)-- Fourth paragraph, second sentence should read: ...decreased unit sales of approximately 12.4% in the 2013 six-month period... (sted ...decreased unit sales of approximately 8.4% in the 2013 six-month period...).

The corrected release reads:

VECTOR GROUP REPORTS SECOND QUARTER2013FINANCIAL RESULTS

Vector Group Ltd. (NYS: VGR) today announced financial results for the three and six months ended June 30, 2013.

Second quarter 2013 revenues were $249.1 million, compared to revenues of $276.6 million in the second quarter of 2012. The decline in revenues in 2013 was primarily due to decreased unit sales of approximately 14.0% in the 2013 period compared to the 2012 period, which was partially offset by higher pricing. The Company recorded operating income of $44.2 million in the second quarter of 2013, compared to operating income of $40.9 million in the second quarter of 2012. Net income for the 2013 second quarter was $13.5 million, or $0.15 per diluted common share, compared to $3.9 million, or $0.05 per diluted common share, in the 2012 second quarter. Adjusted EBITDA (as described below and in Table 2 attached hereto) was $46.2 million for the 2013 second quarter as compared to $44.3 million for the 2012 second quarter. The increase in Adjusted EBITDA for the three months ended June 30, 2013 as compared to the three months ended June 30, 2012 was primarily attributable to higher margins in the tobacco segment.

The results for the three months ended June 30, 2013 included non-cash interest expense related to the amortization of discount on the Company's convertible debt of $8.5 million that was offset by a pre-tax gain of $2.5 million from changes in the fair value of derivatives embedded within convertible debt and $1.3 million of pre-tax income related to the settlement of a long-standing dispute related to the Master Settlement Agreement. Adjusting for these items, second quarter 2013 Adjusted Operating Income was $42.9 million and second quarter 2013 Adjusted Net Income was $16.3 million or $0.18 per diluted share. The results for the three months ended June 30, 2012 included the acceleration of interest expense of $7.9 million related to the conversion of the Company's convertible debt, non-cash interest expense related to the amortization of discount on the Company's convertible debt of $4.0 million and pre-tax losses related changes in the fair value of derivatives embedded within convertible debt of $6.0 million. Adjusting for these items, second quarter 2012 Adjusted Operating Income was $40.9 million and second quarter 2012 Adjusted Net Income was $14.7 million or $0.17 per diluted share. The calculations of Adjusted Net Income and Adjusted Operating Income are described below and included in Tables 3 and 4 attached hereto.

For the six months ended June 30, 2013, revenues were $489.5 million, compared to $534.2 million for the first six months of 2012. The decline in revenues in 2013 was primarily due to decreased unit sales of approximately 12.4% in the 2013 six-month period compared to the 2012 period, which was partially offset by higher pricing. The Company recorded operating income of $87.3 million for the 2013 six-month period, compared to operating income of $74.4 million for the 2012 period. Net income for the 2013 six-month period was $11.8 million, or $0.13 per diluted common share, compared to net loss of $3.8 million, or $(0.05) per diluted common share, for the 2012 period. Adjusted EBITDA (as described below and in Table 2 attached hereto) was $86.9 million for the six months ended June 30, 2013 as compared to $81.3 million for the first six months of 2012. The increase in Adjusted EBITDA for the six months ended June 30, 2013 as compared to the six months ended June 30, 2012 was primarily attributable to higher margins in the tobacco segment.

The results for the six months ended June 30, 2013 included a pretax loss of $21.5 million related to the extinguishment of the Company's 11% Senior Secured Notes due 2015 and non-cash interest expense related to the amortization of discount on the Company's convertible debt of $15.8 million offset by a pre-tax gain of $5.5 million from changes in the fair value of derivatives embedded within convertible debt and $6.9 million of pre-tax income resulting from the settlement of a long-standing dispute related to the Master Settlement Agreement. Adjusting for these items, Adjusted Operating Income for the six months ended June 30, 2013 was $80.4 million and Adjusted Net Income for the six months ended June 30, 2013 was $27.4 million or $0.31 per diluted share. The results for the six months ended June 30, 2012 included the acceleration of interest expense of $7.9 million related to the conversion of the Company's convertible debt, non-cash interest expense related to the amortization of discount on the Company's convertible debt of $7.4 million and pre-tax losses related changes in the fair value of derivatives embedded within convertible debt of $27.1 million. Adjusting for these items, Adjusted Operating Income for the six months ended June 30, 2012 was $74.4 million and Adjusted Net Income for the six months ended June 30, 2012 was $22.4 million or $0.26 per diluted share.

For the three and six months ended June 30, 2013, the Company's tobacco business had revenues of $249.1 million and $489.5 million, respectively, compared to $276.6 million and $534.2 million for the three and six months ended June 30, 2012, respectively. Operating income was $48.3 million for the second quarter of 2013 and $95.5 million for the first six months of 2013, compared to $44.6 million and $82.1 million for the three and six months ended June 30, 2012. The results for the three and six months ended June 30, 2013 included pre-tax income of $1.3 million and $6.9 million related to the settlement of a long-standing dispute related to the Master Settlement Agreement. Adjusting for the pre-tax income, Adjusted Operating Income from the Company's tobacco business for the three and six months of 2013 was $46.9 million and $88.5 million, respectively, a 5% and 8% respective increase over the year ago period. The calculation of Adjusted Operating Income from the Company's tobacco business is described below and included in Table 5 attached hereto.

Adjusted EBITDA, Adjusted Net Income and Adjusted Operating Income are financial measures not prepared in accordance with generally accepted accounting principles ("GAAP"). The Company believes that Adjusted EBITDA, Adjusted Net Income and Adjusted Operating Income are important measures that supplement discussions and analysis of its results of operations and enhances an understanding of its operating performance. The Company believes Adjusted EBITDA, Adjusted Net Income and Adjusted Operating Income provide investors and analysts with a useful measure of operating results unaffected by differences in capital structures, capital investment cycles and ages of related assets among otherwise comparable companies. Management uses Adjusted EBITDA, Adjusted Net Income and Adjusted Operating Income as measures to review and assess operating performance of the Company's business and management and investors should review both the overall performance (GAAP net income) and the operating performance (Adjusted EBITDA, Adjusted Net Income and Adjusted Operating Income) of the Company's business. While management considers Adjusted EBITDA, Adjusted Net Income and Adjusted Operating Income to be important, they should be considered in addition to, but not as substitutes for or superior to, other measures of financial performance prepared in accordance with GAAP, such as operating income, net income and cash flows from operations. In addition, Adjusted EBITDA, Adjusted Net Income and Adjusted Operating Income are susceptible to varying calculations and the Company's measurement of Adjusted EBITDA, Adjusted Net Income and Adjusted Operating Income may not be comparable to those of other companies. Attached hereto as Tables 2, 3, 4 and 5 is information relating to the Company's Adjusted EBITDA, Adjusted Net Income and Adjusted Operating Income for the three and six months ended June 30, 2013, and 2012.

Conference Call to Discuss Second Quarter 2013 Results

As previously announced, the Company will host a conference call and webcast on Thursday, August 1, 2013 at 11:00 A.M. (ET) to discuss second quarter 2013 results. Investors can access the call by dialing 800-859-8150 and entering 11159758 as the conference ID number. The call will also be available via live webcast at www.investorcalendar.com. Webcast participants should allot extra time before the webcast begins to register.

A replay of the call will be available shortly after the call ends on August 1, 2013 through August 15, 2013. To access the replay, dial 877-656-8905 and enter 11159758 as the conference ID number. The archived webcast will also be available at www.investorcalendar.com for 30 days.

Vector Group is a holding company that indirectly owns Liggett Group LLC and Vector Tobacco Inc. and directly owns New Valley LLC. Additional information concerning the company is available on the company's website, www.VectorGroupLtd.com.