Vector Group (VGR) Begins Restructuring on Liggett Tobacco Operations; Will Cut Jobs

Vector Group (NYSE: VGR) disclosed the following on Tuesday:

On October 5, 2015, we commenced a restructuring of the tobacco operations of Liggett Group LLC and Liggett Vector Brands LLC, our sales, marketing and distribution agents for our Liggett and Vector Tobacco Inc. subsidiaries, respectively. Liggett Vector Brands is realigning its sales force and adjusting its business model to more efficiently serve its chain and independent accounts nationwide. In connection with the restructuring, the total workforce of our tobacco segment is expected to decline by approximately 95 full time employees (or about 17% of the workforce of our tobacco segment) by the end of 2015. As a result of these actions, we expect to recognize pre-tax restructuring charges during the third and fourth quarters of 2015 aggregating approximately $6 million. These charges are currently estimated to include approximately $1 million relating to employee severance and benefit costs, approximately $4 million for non-cash pension benefit related costs and $1 million in other associated costs. We estimate $10 million of annual cost savings from the restructuring and plan to reinvest the entire amount of cost savings into the tobacco segment's promotional and marketing programs.

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