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Vector Group Reports Second Quarter 2012 Financial Results

Stocks in this article: VGR

Vector Group Ltd. (NYSE: VGR) today announced financial results for the three and six months ended June 30, 2012.

Second quarter 2012 revenues were $276.6 million, compared to revenues of $291.2 million in the second quarter of 2011. The decline in revenues in 2012 was primarily due to decreased unit sales of approximately 8.4% in the 2012 period compared to the 2011 period. The Company recorded operating income of $40.9 million in the 2012 second quarter, compared to operating income of $38.0 million in the second quarter of 2011. Net income for the 2012 second quarter was $3.9 million, or $0.05 per diluted common share, compared to $30.3 million, or $0.34 per diluted common share, in the 2011 second quarter. The results for the three months ended June 30, 2012 included a pre-tax expense on the acceleration of interest expense of $7.9 million related to the conversion of the Company's convertible debt 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 net income was $12.2 million or $0.15 per diluted share. The results for the three months ended June 30, 2011 included pre-tax gains from the liquidation of long-term investments of $19.5 million, changes in the fair value of derivatives embedded within convertible debt of $9.4 million, and the sale of a townhome of $577,000 offset by the acceleration of interest expense of $1.2 million related to the conversion of the Company's convertible debt. Adjusting for these items, second quarter 2011 operating income was $38.0 million and second quarter 2011 net income was $13.2 million or $0.16 per diluted share.

For the six months ended June 30, 2012, revenues were $534.2 million, compared to $551.6 million for the first six months of 2011. The decline in revenues in 2012 was primarily due to decreased unit sales of approximately 6.5% in the 2012 six-month period compared to the 2011 period. The Company recorded operating income of $74.4 million for the 2012 six-month period, compared to operating income of $69.4 million for the 2011 period. Net loss for the 2012 six-month period was $3.8 million, or $(0.05) per diluted common share, compared to net income of $49.7 million, or $0.61 per diluted common share, for the 2011 period. The results for the six months ended June 30, 2012 included pre-tax losses from changes in the fair value of derivatives embedded within convertible debt of $27.1 million and the acceleration of interest expense of $7.9 million related to the conversion of the Company's convertible debt. Adjusting for these items, net income for the six months ended June 30, 2012 was $17.7 million or $0.22 per diluted share. The results for the six months ended June 30, 2011 included pre-tax gains from the liquidation of long-term investments of $23.6 million, changes in the fair value of derivatives embedded within convertible debt of $8.9 million and the sales of townhomes of $3.7 million offset by the acceleration of interest expense of $1.2 million related to the conversion of the Company's convertible debt. Adjusting for these items, operating income for the six months ended June 30, 2011 was $69.4 million and net income for the six months ended June 30, 2011 was $28.5 million or $0.35 per diluted share.

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